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                                                                     Exhibit 4.1


                           CERTIFICATE OF DESIGNATIONS

                                       OF

                      SERIES B AND SERIES C PREFERRED STOCK

                                       OF

                           NATIONAL AUTO CREDIT, INC.

                              ---------------------
                     Pursuant to Section 151 of the General
                    Corporation Law of the State of Delaware
                              ---------------------

         The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of National Auto Credit, Inc. (the
"CORPORATION"), a Delaware corporation, at a meeting duly called and held, a
quorum being present:

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of Article FOURTH
of the Corporation's Restated Certificate of Incorporation, two new series of
Preferred Stock of the Corporation are hereby created and designated as the
Series B Preferred Stock and the Series C Preferred Stock.

         The rights, preferences, privileges, and restrictions granted to and
imposed on the Series B Preferred Stock, which series shall consist of 275,000
authorized shares, are as set forth in Articles I and III below.

         The rights, preferences, privileges, and restrictions granted to and
imposed on the Series C Preferred Stock, which series shall consist of 735,000
authorized shares, are as set forth in Articles II and III below.

         I.       THE SERIES B PREFERRED STOCK

         1.  CONVERSION.

         (a) VOLUNTARY CONVERSION. The Holders (as hereinafter defined) of
shares of the Series B Preferred Stock shall have the right to convert such
shares as follows:

                (i) RIGHT TO CONVERT. Each share of Series B Preferred Stock
shall be convertible, at the option of the Holder thereof, at any time after the
date of issuance of such share, at the office of the Corporation or, if there
then be such a registrar and transfer agent, the registrar and transfer agent
for such stock, into ten (10) (as the same may be adjusted pursuant to
SUBSECTION (C) BELOW, the "SERIES B CONVERSION RATE"), shares of the
Corporation's common stock ("COMMON STOCK"), par value $.05 per share, which
shares of Common Stock upon issuance shall be validly issued, fully paid and
nonassessable. As used herein, the "HOLDER" of any share of capital stock or
other security shall mean the registered holder thereof as reflected in the
books and records of the Corporation or, if there be such a registrar and
transfer agent, in the books and record of the registrar and transfer agent for
such share of capital stock or other security.



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                  (ii) MECHANICS OF CONVERSION. Any Holder of shares of Series B
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, only upon (A) the surrender of the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or, if there then be such a
registrar and transfer agent, at the office of the registrar and of any transfer
agent for the Series B Preferred Stock, and (B) the delivery by such Holder of
written notice to the Corporation at its principal corporate office of such
Holder's election to convert the same, which notice shall state therein the name
or names in which the certificate or certificates for shares of Common Stock
issuable upon the conversion of such shares of Series B Preferred are to be
issued. The Corporation shall, as soon as practicable thereafter, issue and
deliver, or cause to be issued and delivered, at such office to such Holder, or
to the specified nominee or nominees of such Holder, a certificate or
certificates for the number of shares of Common Stock to which such Holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series B Preferred Stock to be converted, and as of the close of
business on such date, (A) the Holder of the shares of Series B Preferred Stock
surrendered for conversion shall cease to have any voting or other rights
attendant to or associated with such shares, excepting only the right to receive
shares of Common Stock upon the conversion thereof as contemplated hereby, and
(B) the Person (as hereinafter defined) or Persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock. As used
herein, "PERSON" means any individual, corporation, partnership (general or
limited), limited liability company, joint venture or other business entity.

         (b)  MANDATORY CONVERSION.

                  (i) AUTOMATIC CONVERSION. Upon the occurrence of a Reading
Termination (as hereinafter defined), each and all of the outstanding shares of
Series B Preferred Stock shall automatically convert into shares of Common Stock
at the Series B Conversion Rate. As used herein, a "READING TERMINATION" means
the termination of that certain Stock Purchase And Standstill Agreement, dated
as of November 3, 2000, by and among, on the one hand, Reading Entertainment,
Inc., FA, Inc., Citadel Holding Corporation and Craig Corporation and, on the
other hand, the Corporation.

                  (ii) MECHANICS OF CONVERSION. Promptly following a Reading
Conversion, the Corporation shall furnish or cause to be furnished to each
Holder of outstanding shares of Series B Preferred Stock written notice, which
notice shall state (A) that a Reading Conversion has occurred and that, as a
consequence thereof, all of the outstanding shares of Series B Preferred Stock
have been converted automatically into shares of Common Stock and (B) the Series
B Conversion Rate then in effect and shall request that such Holder surrender
and deliver to the Corporation or, if there then be such a registrar and
transfer agent, the registrar and transfer agent for the Common Stock and Series
B Preferred Stock, the stock certificate or certificates representing all of the
shares of Series B Preferred Stock owned or held by such Holder. Promptly
following the surrender and delivery of such stock certificate or certificates
as so requested, the Corporation shall issue and deliver, or cause to be issued
and delivered, at the Corporation's principal office or the office of such
registrar and transfer agent to such Holder a certificate or certificates for
the number of shares of Common Stock into which the shares of Series B Preferred
Stock so surrendered have been converted. As of the close of business on the
date a Reading Termination occurs, the Holder of any shares of Series B
Preferred Stock shall


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cease to have any voting or other rights attendant to or associated with such
shares, excepting only the right to receive shares of Common Stock upon the
conversion thereof as contemplated hereby, and upon surrender and delivery of
the stock certificate or certificates for his, her or its shares of Series B
Preferred Stock as provided above, such Holder shall be treated for all purposes
as the record holder of the shares of Common Stock issuable upon conversion of
such shares as contemplated above.

         (c)  CONVERSION RATE ADJUSTMENTS OF SERIES B PREFERRED STOCK.

         In the event that the Corporation shall, at any time or from time to
time while the shares of Series B Preferred Stock are outstanding, (i) declare a
dividend or distribution on the Common Stock in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock into a greater number of shares
or (iii) combine the outstanding shares of Common Stock into a smaller number of
shares, in each case, whether by reclassification of shares, recapitalization of
the Corporation (including a recapitalization effected by a merger or
consolidation) or otherwise, the Series B Conversion Rate in effect shall be
proportionately adjusted so that the Holder of any share of Series B Preferred
Stock converted after the record date for (or, if there be no record date for
such event, the effective date of) such events shall be entitled to receive,
upon conversion of his/her/its shares of Preferred Stock, the number of shares
of Common Stock that such Holder would have been entitled to receive had such
Series B Preferred Stock been converted immediately prior to such record date
(or, if there be no record, such effective date). The Series B Conversion Rate
shall be adjusted, cumulatively, for each and every event set forth above in
this paragraph occurring prior to the effective date of the conversion.

         In case of any consolidation or merger of the Corporation with another
Person, each share of Series B Preferred Stock shall thereafter be convertible
only into the number of shares of stock or other securities or property,
including cash, to which a Holder of the number of shares of Common Stock
deliverable upon conversion of such share of the Series B Preferred Stock would
have been entitled received upon such consolidation or merger had such share of
Series B Preferred Stock been converted immediately prior to the record date for
(or, if there be no record date for such event, the effective date of) such
consolidation or merger; and, in any such case, appropriate adjustments shall be
made in the application of the provisions herein set forth with respect to the
rights and interests thereafter of the Holders of the Series B Preferred Stock
to the end that the provisions set forth herein (including provisions with
respect to changes in and other adjustments of the Series B Conversion Rate)
shall thereafter be applicable, as nearly as may be reasonable, in relation to
any shares of stock or other securities thereafter deliverable upon the
conversion of shares of Series B Preferred Stock.

         (d) NOTICES OF ADJUSTMENT. Whenever one or more adjustments to the
Series B Conversion Rate are required by the provisions of this subsection (d),
the Corporation shall promptly place on file with the registrar and transfer
agent, if any, for the Common Stock and the Series B Preferred Stock, and with
the Secretary of the Corporation, a statement signed by two officers of the
Corporation stating the adjusted Series B Conversion Rate. Such statement shall
set forth in reasonable detail such facts as shall be necessary to show the
reason and the manner of computing each such adjustment. Promptly after each
adjustment to the Series B Conversion Rate, the Corporation shall mail a notice
thereof to each Holder of shares of Series B Preferred Stock containing a brief
description of the transaction causing such adjustment and the resulting




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Series B Conversion Rate. The Corporation shall, upon the written request at any
time of any Holder of shares of Series B Preferred Stock, furnish or cause to be
furnished to such Holder a certificate setting forth (A) any adjustment and
readjustment of the Series B Conversion Rate pursuant to this subsection (c)
above, (B) the Series B Conversion Rate at the time in effect, and (C) the
number of shares of Common Stock and the amount, if any, of other property that
at the time would be received upon the conversion of a share of Series B
Preferred Stock.

         (e) NO IMPAIRMENT. Absent prior written consent of the Holders of a
majority of the outstanding shares of Series B Preferred Stock, the Corporation
shall not enter into any standstill or similar agreement, or any modification or
amendment thereof, that would prohibit or restrict in any material respect
(including by requiring stockholder approval) the ability of the corporation to
issue shares of Common Stock upon conversion of the Series B Preferred Stock.

         (f) NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon the conversion of any share or shares of the Series B Preferred
Stock, and the number of shares of Common Stock to be issued shall be rounded up
or down to the nearest whole share (with one-half being rounded upward). Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the total number of shares of Series B Preferred Stock the
Holder thereof is at the time converting into shares of Common Stock and the
number of shares of Common Stock issuable upon such aggregate conversion.

         (f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series B Preferred Stock, in
addition to such other remedies as shall be available to the Holder of such
shares of Series B Preferred Stock, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite shareholder approval of any necessary amendment
to the Certificate of Incorporation of the Corporation.

         2.  VOTING RIGHTS.

                  (a) GENERAL VOTING RIGHTS. The Holder of each share of Series
B Preferred Stock shall have the right to one vote for each share of Common
Stock into which such share of Series B Preferred Stock could then be converted,
and with respect to such vote, such Holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the bylaws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote;
provided, however, that, notwithstanding anything contained herein to the
contrary, for so long as the Holders of shares of Series B Preferred Stock,
voting as a class, shall be entitled hereunder to elect one or more members to
the Corporation's Board of Directors




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(the "BOARD"), the holders of shares of Series B Preferred Stock shall not
otherwise be able to exercise any vote with respect to the election of any
member to the Board.. Fractional votes shall not, however, be permitted and any
fractional voting rights available on an as-converted basis (after aggregating
all shares into which shares of Series B Preferred Stock held by each Holder
could be converted) shall be rounded to the nearest whole number (with one-half
being rounded upward).

                  (b) CLASS VOTING FOR THE ELECTION OF DIRECTORS. For so long as
at least two hundred and five thousand (205,000 shares) of Series B Preferred
Stock are issued and outstanding, the Holders of shares of Series B Preferred
Stock, voting separately as a class, shall be entitled to nominate and elect the
lesser of (i) two (2) members to the Board or (ii) a number of directors that
would represent one-sixth (1/6) of the entire membership of the Board; and for
so long as at least one hundred and ten thousand (110,000) shares of Series B
Preferred Stock are issued and outstanding, the Holders of shares of Series B
Preferred Stock, voting separately as a class, shall be entitled to nominate and
elect one (1) member to the Board. To the extent the Holders of shares of Series
B Preferred Stock shall be entitled to nominate or elect two (2) members to the
Board, such right shall be exercisable only with respect to members of the Board
who have different terms as members of the Board unless all members of the Board
have the same term. For foregoing right to nominate or elect members to the
Board shall (except with respect to certain vacancies as provided below) only
apply with respect to an election at an annual meeting of shareholders of the
Corporation and shall first be available (subject to the foregoing terms and
conditions) with respect to the first annual meeting of shareholders of the
Corporation next following the initial issuance of shares of Series B Preferred.
At least twenty (20) days prior to the distribution by the Corporation to its
shareholders of a proxy statement relating to any annual meeting at which the
Holders of shares of Series B Preferred Stock shall, as provided above, be
entitled to nominate and elect a member to the Board, the Corporation shall give
written notice (a "PROPOSED ANNUAL MEETING NOTICE") of such proposed annual
meeting to all Holders of the then outstanding shares of Series B Preferred
Stock and shall therein solicit from such Holders a nominee to be elected a
member of the Board at such meeting. Following receipt of a Proposed Annual
Meeting Notice from the Corporation, any Holder shall be entitled to give the
Corporation written notice (a "NOMINEE NOTICE") specifying such individual (any
such individual, a "PROPOSED CANDIDATE") as such Holder may wish to have
nominated for election to the Board at the next annual meeting of shareholders,
which notice shall be signed by such Holder, and upon the giving of any Nominee
Notice, the Holder giving the same shall be deemed to have voted all of
his/her/its shares of Series B Preferred Stock in favor of the nomination of the
Proposed Candidate named in such Notice for election to the Board. The
Corporation shall include in the proxy statement for such annual meeting, as a
candidate for election to the Board at such meeting, the Proposed Candidate who
has received the most votes from Holders as reflected in Nominee Notices
received by the Corporation prior to the close of business on the fifteenth
(15th) day following the date on which the Corporation gave the Proposed Annual
Meeting Notice (or prior to the close of business on the business day next
preceding such fifteenth day, if such fifteenth day is not a business day);
provided, however, that the Corporation shall not be required to include such
Proposed Candidate in such proxy statement as a nominee for election to the
Board unless, on or before the close of business on such fifteenth day (or prior
to the close of business on the business day next preceding such fifteenth day,
if such fifteenth day is not a business day), in writing signed by such Proposed
Candidate, all such information with respect to such Proposed Candidate as may
be required to




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be set forth in such proxy statement under applicable law and such other
information as the Corporation may reasonably request. The Holders of shares of
Series B Preferred Stock shall not be entitled to take any action at any meeting
at which Holders of shares of Series B Preferred Stock are entitled to act
separately as a class unless a quorum thereof is present in person or
represented by proxy, where a quorum shall consist of the Holders of a majority
of the then issued and outstanding shares of Series B Preferred Stock, and with
respect to any vote to be taken by the Holders of shares of Series B Preferred
Stock voting separately as a class, each Holder shall be entitled to one (1)
vote for each share of Series B Preferred Stock owned of record by such Holder.

         In the case of any vacancy (other than a vacancy caused by removal) in
the office of a director elected by the Holders of Series B Preferred Stock as
contemplated by the foregoing provisions of this Section 2, the remaining
director elected by the Holders of Series B Preferred Stock as contemplated by
the foregoing provisions of this Section 2 (if there should be such a director)
shall be entitled to elect a successor to hold office for the unexpired term of
the director whose place shall be vacant. Any director who shall have been
elected by the Holders of shares of Series B Preferred Stock, or by any director
so elected as provided in the immediately preceding sentence, may be removed
during the aforesaid term of office, either with or without cause, by, and
(except as provided in the last sentence of this subsection (c)) only by, the
affirmative vote of the Holders of shares of Series B Preferred Stock, given
either at a special meeting of such Holders duly called for that purpose or
pursuant to a written consent of such Holders, and any vacancy thereby created
may be filled by the Holders of shares of Series B Preferred Stock represented
at the meeting or pursuant to unanimous written consent. Notwithstanding
anything contained in herein to the contrary, any director elected by the
Holders of shares of Series B Preferred Stock may be removed by the affirmative
vote of at least two-thirds (2/3) of the entire Board, exclusive of such
director, if such director has, during the period such director was serving on
the Board, (i) been guilty of fraud, embezzlement or defalcation against the
Board, the Corporation or any of its subsidiaries or against any customer,
client, vendor or supplier of the Corporation or any of its subsidiaries, (ii)
been employed as an officer of the Corporation or any of its subsidiaries and
such employment has been terminated for cause or (iii) has been convicted of any
criminal act for which such director can be incarcerated for one year or more
(regardless of whether such director is in fact incarcerated).

         II.      THE SERIES C CONVERTIBLE PARTICIPATING PREFERRED STOCK

         1. REDEMPTION BY HOLDER.

         (a) TIMING OF REDEMPTION RIGHT. At any time after the earlier of
September 30, 2003 or the occurrence of a Redemption Event (as hereinafter
defined), but in any event, no earlier than January 1, 2003, a Holder of shares
of Series C Preferred Stock shall be entitled to give a Redemption Notice (as
hereinafter defined) with respect to such of those shares as such Holder desires
to have the Corporation redeem. Following receipt of an appropriate Redemption
Notice, the Corporation (as more fully set forth below) shall, to the extent it
may lawfully do so, redeem the shares of Series C Preferred Stock specified in
such Notice by paying in cash therefor in an amount (the "REDEMPTION PAYMENT
AMOUNT") equal to the product of (A) the number of shares of Series C Preferred
Stock with respect to which such Redemption Notice has been given times (B) the
greater of (x) $15.00 (as adjusted for any stock splits, stock dividends,
recapitalizations





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or the like) plus all declared but unpaid dividends on such shares or (y) ten
(10) times the Fair Market Value (as hereinafter defined) of a share of Common
Stock as of the date the Redemption Notice is received by the Corporation;
Notwithstanding anything contained herein to the contrary, no Redemption Notice
may be given, and if given shall not be effective, with respect to any shares of
Series C Preferred Stock unless such shares shall no longer be subject to
forfeiture pursuant to the Merger Agreement.

         (b) TIMING OF REDEMPTION PAYMENTS. Within thirty (30) days following
receipt of any valid Redemption Notice, the Corporation shall pay to the Holder
giving such Notice an amount equal to the lesser of (i) the full Redemption
Payment Amount due to such Holder or (ii) the product of (A) the number of
shares of Series C Preferred Stock being redeemed times (B) thirty dollars ($30)
(as adjusted for any stock splits, stock dividends, recapitalizations or the
like) (the amount of such product being hereinafter referred to as the "INITIAL
CAP AMOUNT"). In the event the Redemption Payment Amount payable to any Holder
of Series C Preferred Stock exceeds the Initial Cap amount payable to such
Holder, the unpaid balance of such amount (such unpaid balance due to any such
Holder, together with interest thereon at the rate of eight percent (8%) per
annum from the date such Initial Cap Amount was due hereunder until such amount
is paid, being hereinafter referred to as such Holder's "REDEMPTION BALANCE
AMOUNT") shall be paid to such Holder in accordance with the following
provisions of this subsection (b). Within ninety (90) days following the end of
each fiscal year, the Corporation shall, to the extent it may legally do so, pay
and apply to all Holders who, as of the end so such fiscal year, had a
Redemption Balance Amount due to them an amount equal to the lesser of (A) the
aggregate Redemption Balance Amounts owned to all such Holders as of the end of
such fiscal year and (B) the Free Cash Flow of the Corporation for such fiscal
year. In the event the Free Cash Flow of the Corporation for any fiscal year (or
the portion thereof that the Corporation is legally permitted to pay) shall not
be sufficient to pay the full Redemption Balance Amounts due to all such Holders
as of the end of such fiscal year, such Free Cash Flow (or the portion thereof
that the Corporation is legally permitted to pay) shall be paid to and among
such Holders in proportion to the respective Redemption Balance Amounts owed to
them as of the end of such fiscal year. The Corporation may (but is shall not be
obligated), to the extent it may legally do so, pay any Redemption Balance
Amount sooner than required above, provided that it shall not pay any portion of
an Redemption Balance Amount due to any Holder of shares of Series C Preferred
Stock unless it concurrently pays an equal portion (determined on the basis of
the amount of the respective Redemption Balance Amounts as of the end of the
calendar month next preceding the date of payment) of all other outstanding
Redemption Balance Amounts.

                  (c) TERMINATION OF RIGHTS. Upon surrender of any shares of
Series C Preferred Stock to for redemption as contemplated above, the Holder of
such shares shall cease to have any rights attendant to or associated with such
shares, excepting only the right to receive payment for such shares as provided
above.

                  (d) DEFINITIONS. As used herein, the following terms shall
have the following respective meanings:

                  (i) "FAIR MARKET PRICE" of a share of Common Stock as of any
date means the average of the daily Trading Prices for a share of Common Stock
for the twenty (20) consecutive trading days commencing 20 days before
immediately preceding such date, where the Trading





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Price for a share of Common Stock on any trading day shall be (i) the last sale
price on such day on the principal stock exchange or the Nasdaq National Market
on which shares of Common Stock are then listed or admitted to trading, (ii) if
no sale of Common Stock takes place on such day on any such exchange or market,
the average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange or market, (iii) if the Common Stock are
not then listed or admitted to trading on any stock exchange or such market, the
average of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by Nasdaq or the National Quotation
Bureau, Inc. (or, if neither Nasdaq or the National Quotation Bureau, Inc. is at
the time is engaged in business of reporting such prices, then such prices as
furnished by any similar firm then engaged in such business, or if there is no
such firm, as furnished by any member of the National Association of Securities
Dealers ("NASD") selected in good faith by the Board).

                  (ii) "FREE CASH FLOW" of the Corporation for any fiscal year
means (a) the after-tax income of the Corporation (determined on a consolidated
basis) for such fiscal year plus the amount of depreciation and amortization
that were deducted for the purposes of determining the taxable income of the
Corporation (determined on a consolidated basis) for such fiscal year LESS (b)
the amount of any debt service required to be paid by the Corporation
(determined on a consolidated basis) during the next following fiscal year.

                  (iii) "MERGER AGREEMENT" means that certain Merger Agreement
And Plan of Reorganization, dated as of December 15, 2000, by and among the
Corporation, ZLT Acquisition Corp., ZoomLot Corporation and the Shareholders of
ZoomLot Corporation, as the same existed on December 15, 2000.

                  (iv) "REDEMPTION EVENT" means the occurrence of any Valuation
Event or the achievement of any Objective that would render any of the shares of
Series C Preferred Stock no longer subject to forfeiture under the terms of the
Merger Agreement.

                  (v) "REDEMPTION NOTICE" means a written notice that is timely
given by the Holder of shares of Series C Preferred Stock to the Corporation at
its principal offices, that is signed by such Holder, that specifies the shares
of Series C Preferred Stock that such Holder wishes to have redeemed and that is
accompanied by the stock certificates that represent the shares of Series C
Preferred Stock that such Holder desires to have redeemed and that are being
surrendered to the Corporation for redemption and cancellation.

                  (vi) "VALUATION EVENT" means any of the following: (i) the
execution by the Surviving Corporation (as defined in the Merger Agreement) or
one of its subsidiaries, during the Forfeiture Period (as defined in the Merger
Agreement), of an agreement that provides for a private cash equity investment
in the Surviving Corporation or such subsidiary of not less than $10 million and
pursuant to which the pre-money valuation of the Surviving Corporation and its
subsidiaries is $30 million or more, provided that the transaction contemplated
by such agreement closes prior to or within 120 days following the Expiration
Date (as defined in the Merger Agreement); (ii) the execution, during the
Forfeiture Period, of an agreement for the sale by the Corporation of all or
substantially all of the equity or assets of the Surviving Corporation in a
transaction in which the Surviving Corporation and/or its subsidiaries are
valued at $30 million or more, provided that the transaction contemplated by
such agreement closes prior to or





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within 120 days following the Expiration Date; (iii) the execution, during the
Forfeiture Period, of an agreement or plan that provides for (A) a firm
commitment underwritten initial public offering by the Surviving Corporation,
(B) a reverse merger pursuant to which the Surviving Corporation or any of its
subsidiaries is to become a reporting company under the Securities Exchange Act
of 1934 (the "EXCHANGE ACT"), (C) a spin off in whole or in part of the capital
stock of the Surviving Corporation or any of its subsidiaries to the
shareholders of the Corporation, or (D) any event similar to the events in (A),
(B) and (C), in each such case in which the Surviving Corporation or any of its
subsidiaries is valued at $30 million or more pre-money and, in the case of an
initial public offering, the proceeds are not less than $10 million, provided in
each of the foregoing cases that the transaction contemplated by such agreement
or plan closes prior to or within 120 days following the Expiration Date; (iv)
the execution, during the Forfeiture Period, of an agreement to provide a
private cash equity investment in the Corporation or any of its subsidiaries of
not less than $10 million and pursuant to which the pre-money valuation of the
Surviving Corporation and its subsidiaries is $30 million, wherein $10 million
or more of the proceeds of such investment is intended for the Surviving
Corporation or any of the Surviving Corporation's subsidiaries, provided that
the transaction contemplated by such agreement closes prior to or within 120
days following the Expiration Date; (v) the termination by the Surviving
Corporation of the employment of Ray Fidel, Mark Sauder and Eric Splaver, other
than for "cause" (as such term is defined or understood under New York law) or
on account of their disability, if the Surviving Corporation is, at the time of
each of such terminations, in compliance in all material respects with the
performance and development criteria set forth in EXHIBIT E to the Merger
Agreement; or (vi) the Corporation undergoes a Change in Control, where "CHANGE
OF CONTROL" means any of the following: (A) any merger of the Corporation in
which the Corporation is not the continuing or surviving entity or pursuant to
which capital stock of the Corporation would be converted into cash, securities
or other property, other than a merger of the Corporation in which the holders
of the Corporation's capital stock immediately prior to such merger have the
same proportionate ownership of beneficial interest of common stock or other
voting securities of the surviving entity immediately after such merger or (B)
the failure of the individuals who either constituted the Board at the
conclusion of the first meeting of shareholders of the Corporation following the
Closing (as defined in the Merger Agreement), were elected by the Holders of
shares of Series B Preferred Stock or by a director who was elected by the
Holders of shares of Series B Preferred Stock or were elected or approved by any
director who was elected by the Holders of shares of Series B Preferred Stock or
by a director who was elected by the Holders of shares of Series B Preferred
Stock to constitute a majority of the Board, excluding, however, the election,
or the nomination for election by the Corporation's shareholders, of any new
director approved by a vote of at least two-thirds of the directors then still
in office who were directors at the conclusion of the first meeting of
shareholders of the Corporation following the Closing or by vote of the Holders
of shares of Series B Preferred Stock or by a director who was elected by vote
of the Holders of shares of Series B Preferred Stock; or (C) any person (other
than any Shareholder (as defined in the Merger Agreement) or affiliate of any
Shareholder) acquiring more than 50% of the Corporation's issued and outstanding
capital stock unless such acquisition, or the transaction pursuant to which such
acquisition was made, was approved or consented to by the Board. For each
Valuation Event described in clause (i) through (iv) above, the minimum
investment and pre-money valuation criteria shall each be increased
dollar-for-dollar for any amount in excess of $6.5 million (or, if less, such
lesser amount of funding as may be required to be provided to the


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Surviving Corporation pursuant to Section 1.11(b) of the Merger Agreement) in
funding provided to the Surviving Corporation by the Corporation.

         2. REDEMPTION BY THE CORPORATION.

         (a) TIMING OF REDEMPTION RIGHT. At any time after January 1, 2003, the
Corporation shall have the right to redeem all or any portion of the outstanding
of shares of Series C Preferred Stock. The Corporation may exercise such right
by giving written notice (a "NOTICE OF REDEMPTIOn") to all Holders of shares of
Series C Preferred Stock specifying the date such notice is being given to such
Holders, the total number of shares of Series C Preferred Stock the Corporation
has elected to redeem and the portion (the "REDEMPTION PORTION") of all then
outstanding shares of Series C Preferred Stock that such number represents.
Within thirty (30) days following receipt of any Notice of Redemption, each
Holder of shares of Series C Preferred Stock shall deliver and surrender for
redemption to the Corporation at its principal business office a certificate or
certificates representing the redemption Portion of all shares of Series C
Preferred Stock held of record by such Holder as of the date the Notice of
Redemption was given (which certificate shall represent, FIRST, to the extent
such Holder has any shares of Series C Preferred Stock that are Nonforfeitable
Shares (as defined in the Merger Agreement), such shares of Series C Preferred
Stock, second, to the extent such Holder has any shares of Series C Preferred
Stock that, although Forfeitable Shares (as defined in the Merger Agreement),
are no longer subject to forfeiture under the Merger Agreement, such shares, and
third, only to the extent such Holder does not have any shares of Series C
Preferred Stock that are Nonforfeitable Shares or that, although Forfeitable
Shares, are no longer subject to forfeiture under the Merger Agreement, other
shares of Series C Preferred Stock.

         (b) PAYMENT FOR SHARES CALLED FOR REDEMPTION. Within thirty (30) days
following receipt of certificates representing shares of Series C Preferred
Stock called for redemption as contemplated above, the Corporation shall pay to
the Holder of such shares an amount equal to the product of (A) the number of
shares of Series C Preferred Stock being redeemed times (B) the greater of (x)
$15.00 (as adjusted for any stock splits, stock dividends, recapitalizations or
the like) plus all declared but unpaid dividends on such shares or (y) ten (10)
times the Fair Market Value of a share of Common Stock as of the date the Notice
of Redemption was given to Holder of shares of Series C Preferred Stock.

                   (c) TERMINATION OF RIGHTS. The Holder of such shares of
Series C Preferred Stock called for redemption as contemplated above shall cease
to have any rights attendant to or associated with such shares, excepting only
the right to receive payment for such shares as provided above.

         3. Voting Rights. No voting rights shall be attendant to or associated
with the shares of Series C Preferred Stock.

         III.    DESIGNATIONS COMMON TO BOTH SERIES B AND C PREFERRED STOCK

         1. DIVIDEND PROVISIONS. No dividends shall be made with respect to any
share of Common Stock unless a dividend in an amount equal to ten (10) times the
amount of the



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dividend payable with respect to a share of Common Stock is paid with respect to
each share of the Series B and C Preferred Stock.

         2. LIQUIDATION DISTRIBUTIONS. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntary or involuntary,
the Holders of shares of Series B and C Preferred Stock shall be entitled to
receive an amount per share equal to ten (10) times the amount payable per share
of Common Stock upon such liquidation, dissolution or winding up. .

         3. NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the Holders of any class of securities for the
purpose of determining the Holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each Holder of shares of Series B or C Preferred Stock, at least
ten (10) days prior to the date specified therein, a notice specifying the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.

         4. NOTICES GENERALLY; STATUS OF HOLDER. Any notice required or
contemplated herein to be given to any Holders of shares of Series B or C
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to such Holder at his/her/its address appearing
on the books and records of the Corporation or of the registrar and transfer
agent for shares of the Series B and C Preferred Stock. Any notice required or
contemplated herein to be given to the Corporation shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to the
Corporation at the address of its then principal office and to the attention of
the President of the Corporation. For all purposes hereof, the Corporation shall
be entitled to treat the Holder of any shares of Series B or C Preferred Stock
as the true and rightful owner of such shares, regardless of any notice or claim
to the contrary.

         5. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares of
Series B or C Preferred Stock shall be converted or redeemed as contemplated
above, such shares shall be cancelled, but the same shall revert to authorized
but unissued shares of preferred stock of the corporation, without designation,
until such time as, by appropriate resolution of the Board, such shares are
designated as a difference series of preferred, following which such shares may
again be issued with such rights, preferences, privileges, and restrictions as
may be specified in such resolutions.

         6. AMENDMENT AND WAIVER. The waiver (including any prospective waiver)
of any provision hereof or of any breach of any obligation hereunder shall be
effective, and any amendment, modification or other change of any provision
hereof shall be effective, (i) as against the Corporation (and against its
successors and assigns), if in writing signed by the Corporation and approved by
a duly adopted resolution of the Board, (ii) as against any Holder of any shares
of Series B or C Preferred Stock (and against such Holder's heirs,
administrators, executors, legal representatives, successors and assigns), if in
writing signed by such Holder, (iii) as against all Holders of any shares of
Series B Preferred Stock (and against all such Holders' heirs, administrators,
executors, legal representatives, successors and assigns), if in writing signed
by the Shareholders' Representative (as defined in the Merger Agreement) or by
or more





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<PAGE>   12

Holders of shares of Series B Preferred Stock who, at the time such writing is
signed, individually or in the aggregate own of record a majority of the issued
and outstanding shares of Series B Preferred Stock, (iv) as against all Holders
of any shares of Series C Preferred Stock (and against all such Holders' heirs,
administrators, executors, legal representatives, successors and assigns), if in
writing signed by the Shareholders' Representative or by one or more Holders of
shares of Series C Preferred Stock who, at the time such writing is signed,
individually or in the aggregate own of record a majority of the issued and
outstanding shares of Series C Preferred Stock, and (v) as against all Holders
of any shares of Series B or C Preferred Stock (and against all such Holders'
heirs, administrators, executors, legal representatives, successors and
assigns), if in writing signed by the Shareholders' Representative or by one or
more Holders of shares of Series B and/or C Preferred Stock who, at the time
such writing is signed, individually or in the aggregate own of record a
majority of the issued and outstanding shares of Series B and C Preferred Stock,
taken together. Without limiting the generality of the foregoing, any and all
provisions of this Certificate of Designations may be waived or amended,
modified or otherwise changed, but no such waiver, amendment, modification or
other change shall be binding on the Corporation unless the same has been
approved by a duly approved resolution of the Board.

         7. RESTRICTIONS ON TRANSFER. Notwithstanding anything contained herein
to the contrary, nothing contained herein shall obligate the Corporation to
issue any securities to any nominee or assignee of any Holder of shares of
Series B or C Preferred Stock if such issuance would violate any federal or
state securities laws or any other laws or would be violative of any contract,
court order or other restraint binding upon such Holder or is such securities
are subject to any stop transfer order or instructions.

         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed in its name and on its behalf this ______ day of
December, 2000, by a duly authorized officer of the Corporation.

                                          NATIONAL AUTO CREDIT, INC.

                                          By:___________________________________
                                              Name: James J.  McNamara
                                              Title:  Chief Executive Officer







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