AUTOINFO, INC.
1600 Route 208
Fair Lawn, New Jersey 07410
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 12, 1996
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To the Stockholders of
AutoInfo, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of AutoInfo,
Inc. (the "Company") will be held at the executive offices of the Company, 1600
Route 208, Fair Lawn, New Jersey 07410 on January 12, 1996 at 9:00 a.m., Eastern
Standard Time, for the following purposes:
1. To elect a board of six directors.
2. To consider and take action upon such other matters as may
properly come before the meeting or any adjournments thereof.
The close of business on December 6, 1995 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting. Whether or
not you expect to attend, you are requested to sign, date and return the
enclosed proxy promptly. Stockholders who execute proxies retain the right to
revoke them at any time prior to the voting thereof. A return envelope which
requires no postage if mailed in the United States in enclosed for your
convenience.
By Order of the Board of Directors
William Wunderlich, Secretary
Dated: December 12, 1995
<PAGE>
AUTOINFO, INC.
1600 Route 208
Fair Lawn, New Jersey 07410
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of AutoInfo, Inc. (the "Company") of proxies in the form
enclosed for the Annual Meeting of Stockholders to be held at the executive
offices of the Company, 1600 Route 208, Fair Lawn, New Jersey 07410 on January
12, 1996 at 9:00 A.M. Eastern Standard Time, and for any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. The Board of Directors knows of no other
business which will come before the meeting.
All shares represented by each properly executed unrevoked proxy received
in time for the meeting will be voted as specified. In the absence of any
specification, proxies will be voted for the election of the six persons listed
herein as nominees as directors and in the judgment of the Board of Directors on
any other matters which may properly come before the meeting. Any stockholder
giving a proxy has the power to revoke the same at any time before it is voted.
The approximate date on which this Proxy Statement and the accompanying
form of proxy along with the Company's 1995 Annual Report will be mailed to the
Company's stockholders is December 12, 1995. The principal executive offices of
the Company are located at 1600 Route 208, Fair Lawn, New Jersey 07410.
VOTING SECURITIES
Only stockholders of record at the close of business on December 6, 1995 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. On the record date there were issued and outstanding 7,777,752 Common
Shares. Each outstanding Common Share is entitled to one vote upon all matters
to be acted upon at the meeting. The affirmative vote of holders of a plurality
of the shares of Common Stock present or represented at the Annual Meeting is
required for the election of directors.
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<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that all Section 16(a) filing requirements applicable to its officers
and directors were complied with.
The following table, together with the accompanying footnotes, sets forth
information, as of December 1, 1995, regarding stock ownership of all persons
known by the Company to own beneficially 5% or more of the Company's outstanding
Common Stock, all directors and nominees, and all directors and officers of the
Company as a group.
Name of Shares of Common Stock Percentage
Beneficial Owner Beneficially Owned(1) of Ownership
(i) Directors
Jason Bacher 336,272(2) 4.5%(5)
Robert Fagenson 30,750(3) * (5)
Andrew Gaspar 45,000 *
Howard Nusbaum 171,531 2.2%
Jerome Stengel 30,000 *
Scott Zecher 331,746 4.3%
All executive officers 1,038,632(4) 13.1%(6)
and directors as a group
(7 persons)
(ii) 5% Stockholders;
Ashford Capital Management, Inc.(7)
P.O. Box 4172
Greenville, Delaware 19807 403,200 5.2%
Dimensional Fund
Advisors, Inc.(7)
1299 Ocean Avenue
Santa Monica, CA 90401 391,100 5.0%
Irving B. Harris(7)
2 North LaSalle Street
Suite 505
Chicago, IL 60602 467,731 5.9%
Ryback Management Corporation(8)
7711 Corondelet Avenue
St. Louis, Missouri 63105 970,850 12.5%
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Steel Partners II L.P.(8)
750 Lexington Avenue
New York, New York 10022 1,133,500 14.6%
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* Less than 1%
(1) Unless otherwise indicated below, each director, executive officer and each
5% stockholder has sole voting and investment power with respect to all
shares beneficially owned.
(2) Includes 50,000 shares subject to currently exercisable options.
(3) Includes (i) 1,500 shares owned by the Fagenson & Co. Profit Sharing Plan
and Employee Pension Plan, of which Mr. Fagenson is a trustee, and (ii)
29,250 shares issuable upon exercise of a Common Stock purchase warrant
held by Mr. Fagenson which is currently exercisable.
(4) Includes 152,583 shares subject to currently exercisable options or
warrants.
(5) Assumes that all currently exercisable options or warrants owned by this
individual have been exercised.
(6) Assumes that all currently exercisable options or warrants owned by members
of the group have been exercised.
(7) Information with respect to this stockholder has been derived from the
Schedule 13G filed by such stockholder with the Securities and Exchange
Commission.
(8) Information with respect to this stockholder has been derived from the
Schedule 13D filed by such stockholder with the Securities and Exchange
Commission.
ELECTION OF DIRECTORS
At the meeting, six Directors will be elected by the stockholders to serve
until the next annual meeting or until their successors are elected and
qualified. The accompanying form of proxy will be voted for the election as
Directors of the six persons named below, unless the proxy contains contrary
instructions. Proxies cannot be voted for a greater number of persons than the
number of nominees named herein. Management has no reason to believe that any of
the nominees will not be a candidate or will be unable to serve. However, in the
event that any of the nominees should become unable or unwilling to serve as
Director, the proxy will be voted for the election of such person or persons as
shall be designated by the Board of Directors.
ANDREW GASPAR age 47, was named Chairman of the Board on March 29, 1995.
Mr. Gaspar has, since March 1991, been President of the general partner of R.S.
Lauder, Gaspar & Co. and Vice-Chairman of The Central European Development
Corporation, venture capital firms doing business in the United States and
Eastern Europe. Prior thereto, Mr. Gaspar was a Managing Director of E.M.
Warburg Pincus & Co., a venture banking and investment advisory firm, a position
he held since 1982 through March, 1991. He holds a B.S. degree from Columbia
University, an M.S. degree from Northeastern University and an M.B.A. degree
from Harvard Business School. He has been a director of the Company since 1978.
SCOTT ZECHER, age 36, joined the Company in January 1984, and became its
President and Chief Operating Officer in January 1993. Prior to becoming
President, he held the position of Executive Vice President and Chief Financial
Officer. He became a director of the Company in 1989. From 1980 to 1984, he was
with the accounting firm of KPMG Peat Marwick. Mr. Zecher is a Certified Public
Accountant with a B.A. degree in Accounting and Economics from the City
University of New York at Queens College.
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<PAGE>
JASON BACHER, age 57, has been a director of the Company since its
inception in 1976. From its inception in 1976 through March 29, 1995 Mr. Bacher
was Chairman of the Board and the Chief Executive Officer of the Company. Mr.
Bacher has been associated with the automobile salvage industry since 1961 as a
principal of Bacher Tire Company, Inc., an automobile recycler located in the
New York metropolitan area. In connection with the sale by the Company of a
principal portion of its business to ADP Claims Solutions on April 1, 1995, Mr.
Bacher joined ADP Claims Solutions.
ROBERT FAGENSON, age 47, has been an officer and director of Fagenson &
Co., Inc., a registered broker-dealer, for more than five years. Mr. Fagenson is
a member of the Board of Directors of the New York Stock Exchange. Since April
1983, Mr. Fagenson has also served as the Secretary and a director of Starr
Securities, Inc., a registered broker-dealer, which was the underwriter of the
Company's initial public offering in May 1986. Mr. Fagenson has been a director
of the Company since June 1986. Mr. Fagenson is also a director of Healthy
Planets Products, Inc., Microtel Franchise and Development Corp. and Rentway,
Inc. Mr. Fagenson has a B.S. degree in Business Administration from Syracuse
University.
HOWARD NUSBAUM, age 47, has been a director of the Company since its
inception in 1976. Mr. Nusbaum, who earned a B.A. degree from Brooklyn College,
has been a consultant to the automobile recycling industry since 1976.
JEROME STENGEL, 59, has been a Vice President, Treasurer and Chief
Financial Officer of Genovese Drug Stores, Inc., an American Stock Exchange
company, for more than five years. Mr. Stengel is a Certified Public Accountant
with a B.B.A. degree from the City University of New York. He has been a
director of the Company since 1987.
Management Recommends a Vote for the Election of the Foregoing Nominees.
BOARD OF DIRECTOR MEETINGS
During the year ended May 31, 1995, the Board of Directors held ten
meetings. Each director standing for re-election attended at least 75% of such
meetings.
BOARD OF DIRECTOR COMMITTEES
The Board maintains an Audit Committee comprised of Messrs. Fagenson,
Gaspar and Stengel and a Compensation Committee comprised of Messrs. Bacher,
Fagenson and Stengel. Each committee member is a non-employee director. The
Audit Committee approves the selection of the Company's auditors and meets and
interacts with the auditors to discuss questions in regard to the Company's
financial reporting. The Compensation Committee evaluates the performance of the
Company's executive employees and determines the salaries and other
compensations payable to such persons. During the last full fiscal year, the
Compensation Committee met twice and the Audit Committee met once, with all
members present at each respective Committee meeting.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Summary Compensation Table below includes, for each of the fiscal years
ended May 31, 1995, 1994 and 1993, individual compensation for services to the
Company and its subsidiaries paid to: (1) the Chief Executive Officer; and (2)
the other most highly paid executive officers of the Company in Fiscal 1995
whose salary and bonus exceeded $100,000 (together, the "Named Executives").
<TABLE>
<CAPTION>
Long-Term All
Annual Compensation Compensation Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
<S> <C> <C> <C> <C> <C>
Jason Bacher(2) 1995 $125,000 $182,854(3) - $4,300
Chairman of the Board 1994 $135,417 $ 45,000 75,000 $4,063
and Chief Executive Officer 1993 $125,000 $ 18,166 - $3,750
Scott Zecher 1995 $145,000 $235,000(3) 80,000 $4,230
President and 1994 $144,000 $ 50,000 - $3,240
Chief Operating Officer 1993 $125,000 $ 18,166 100,000 $2,690
William Wunderlich 1995 $103,333 $ 80,000(3) 40,000 $5,500
Treasurer and Chief 1994 $ 91,250 $ 19,000 35,000 $3,068
Financial Officer 1993 $ 55,624 $ 2,000 50,000 $1,063
</TABLE>
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(1) Represents amounts contributed to the Company's 401(k) deferred
compensation plan.
(2) Mr. Bacher resigned as Chairman of the Board and Chief Executive Officer on
March 29, 1995.
(3) Includes a one-time bonus relating to the ADP transaction in the amount of
$100,000 to Jason Bacher, $150,000 to Scott Zecher and $50,000 to William
Wunderlich.
Employment Agreements
Messrs. Zecher and Wunderlich are employed by the Company pursuant to
employment agreements which expire in April 1998 and April 1997, respectively.
These agreements provide for minimum annual compensation of $150,000 and
$120,000, respectively, and provide for annual review by the Board of Directors.
The Company has entered into supplemental employment agreements (the
"Supplemental Employment Agreements") with Messrs. Zecher and Wunderlich (the
"Covered Executives"), which provide that if there is a Change in Control of the
Company (as defined therein) during the Protected Period (described below), the
terms of the Supplemental Employment Agreements will supersede the Covered
Executives' existing employment agreements and will govern the terms of the
Covered Executives' employment following the Change in Control for a three-year
term, in the case of Mr. Zecher, and a two-year term, in the case of Mr.
Wunderlich (the "Employment Term"). For these purposes, the Protected Period is
a three-year period which commenced on April 10, 1995 and is automatically
extended for one year on April 10, 1996 and each April 10 thereafter, unless the
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<PAGE>
Company otherwise notifies the Covered Executive at least 90 days prior thereto.
The Supplemental Employment Agreements provide that during the Employment Term
the Covered Executives will remain employed in their capacities with the Company
as of the Change in Control and will continue to receive an annual salary (the
"Base Salary") and benefits at least equal to that which they received prior to
the Change in Control and an annual bonus at least equal to the Covered
Executive's average annual bonus during the three years prior to the Change in
Control. The Supplemental Employment Agreements provide that if, during the
Employment Term, the Covered Executive's employment is terminated by the Company
other than for Cause or Disability or by the Executive either for Good Reason or
during the 60-day Window Period commencing on the anniversary of the Change in
Control (as each of the foregoing terms are defined in the applicable
Supplemental Employment Agreement), the Covered Executive would receive a
severance payment equal to the sum of his Base Salary and the higher of his
annual bonus for the then most recent year or his average annual bonus during
the three years preceding the Change in Control (the "Highest Annual Bonus")
multiplied by two, in the case of Mr. Zecher, and one and one-half, in the case
of Mr. Wunderlich. In addition, the restrictions on any stock-related incentive
awards held by the Covered Executive would lapse and he would be entitled to
continued coverage under the Company's life, health and disability benefits for
two years following termination of his employment (three years in the case of
Mr. Zecher) or until he receives similar benefits from a new employer. If Mr.
Zecher's employment is terminated (as described above) prior to April 10, 1996,
he would receive severance equal to three (rather than two) times his Base
Salary and Highest Annual Bonus. Mr. Zecher's Supplemental Employment Agreement
also provides that if he is subject to excise taxes under Section 4999 of the
Internal Revenue Code on any payments or benefits triggered by a Change in
Control, he will be entitled to receive an additional amount such that after the
payment of all applicable taxes he will retain an amount equal to that which he
would have retained absent the excise taxes. In connection with the Supplemental
Employment Agreements, the Company also approved the creation and funding of an
Employee Protection Trust, which is a form of grantor trust under which the
assets of the trust remain subject to the satisfaction of the general claims of
the Company's creditors, to provide for the payment of all benefits payable
under the Supplemental Employment Agreements.
The Supplemental Employment Agreements were entered into on April 10, 1995,
after Steel Partners II LP acquired 14.9% of the Company's Common Stock. In the
opinion of the Board, it was necessary and desirable to enter into the
Supplemental Employment Agreements and to implement the Employee Protection
Trust so that the Covered Executives would concentrate on performing their
duties and promoting the best interests of the Company and its stockholders
without being concerned about the possibility of a Change in Control. In the
opinion of the Board of Directors, the provisions of the Supplemental Employment
Agreements and the Employee Protection Trust would not have any significant
impact on the decision of any person or entity relating to whether or not to
acquire the Company or effect a Change in Control although a person or entity
7
<PAGE>
interested in acquiring, or effecting a Change in Control, of the Company may
view the provisions of the Supplemental Employment Agreement and the funding of
the Employee Protection Trust as making it more difficult to consummate an
acquisition, or effect a Change in Control, of the Company. In addition, in the
opinion of the Board of Directors, entering into the Supplemental Employment
Agreements and implementing the Employe Protection Trust and the funding thereof
would not have an adverse impact on the Company's ability to execute its
business strategy in pursuing value for the benefit of all stockholders.
Restricted Stock Grants
In November 1987, the Company issued 410,000 shares of Common Stock
pursuant to restricted stock bonus grants to key executives, directors and
consultants. In January 1994, the Company issued 15,000 shares of Common Stock
pursuant to a restricted stock bonus grant to a non-employee director. Such
shares vest ratably over a period of 30 years. The unvested portion is subject,
upon the occurrence of certain events, to either forfeiture or accelerated
vesting.
401(k) Cash or Deferred Compensation
The Company maintains a tax-qualified 401(k) cash or deferred compensation
plan that covers all employees who have completed 30 days of service with the
Company and have attained age 21. Participants are permitted, within the
limitations imposed by the Internal Revenue Code, to make pre-tax contributions
to the plan pursuant to salary reduction agreements. The Company makes a 50%
matching cash contribution on up to a 6% contribution by the employee. In
addition, the Company may, in its discretion, make additional contributions as
permitted by the Internal Revenue Code. The contributions of the participants
and the Company are held in separate accounts. Participants' contributions are
always fully vested. The Company's contributions vest proportionally over a five
year period commencing on the employee's date of employment.
Stock Option Plans
In February 1986, the Company's stockholders approved the AutoInfo 1985
Stock Option Plan (the "1985 Plan") which provides that a total of 555,000
shares of Common Stock are subject to options granted thereunder. In November
1986, the Company's stockholders approved the AutoInfo 1986 Stock Option Plan
(the "1986 Plan") which provides that a total of 637,500 shares of Common Stock
are subject to options granted thereunder. In October 1989, the Company's
stockholders approved the AutoInfo 1989 Stock Plan (the "1989 Plan") which
provides that a total of 300,000 shares of Common Stock are subject to options
granted thereunder. In November 1992, the Company's stockholders approved the
AutoInfo 1992 Stock Option Plan (the "1992 Plan") which provides that a total of
350,000 shares of Common Stock are subject to options granted thereunder. (The
1985 Plan, 1986 Plan, 1989 Plan and 1992 Plan are sometimes referred to herein
as the "Option Plans".)
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<PAGE>
Under the Option Plans, the Company may grant options to purchase Common
Stock to its officers, key employees, directors, and, in the case of the 1985
and 1992 Plans, to non-employees performing services for the Company. Payment of
the option exercise price is to be made (i) in cash, (ii) by delivery of Common
Stock already owned by and in the possession of the option holder, or (iii) if
so provided for in the option being exercised, by delivery of the option
holder's promissory note in favor of the Company. If an option granted under an
Option Plan expires, terminates or is canceled without being exercised in full,
the unpurchased shares subject to such options will again be available for
options to be granted under such Plan. Options may be granted in the form of
incentive stock options ("Incentive Option") or options which do not qualify for
the favorable tax treatment of Incentive Options which are known as
non-qualified options.
The Option Plans are administered by a committee of the Board of Directors
consisting of Messrs. Fagenson and Stengel who are ineligible to participate in
the Plans.
No options may be exercised more than ten years from the date of grant, and
no options may be granted after December 16, 1996, December 31, 1996, December
31, 1999 and December 31, 2002 under the 1985 Plan, 1986 Plan, 1989 Plan, and
1992 Plan, respectively.
The option price of each Incentive Option granted under the Option Plans
shall be not less than 100% of the fair market value of the Common Stock as of
the date the option is granted (110% of the fair market value if the grant is to
an employee holding 10% or more of the Company's outstanding Common Stock).
Options other than Incentive Options may be granted at an exercise price as
determined by the Board. The exercise prices of such non-qualified options must
be at least 85% of the fair market value of the underlying shares of Common
Stock at the date of grant. Options granted are not transferable and are subject
to various other conditions and restrictions. All Incentive Options granted
before December 31, 1986 must be exercised in the order in which they were
granted regardless of the differences in the exercise prices.
Option Grants in Fiscal Year 1995
Shown below is information on grants of stock options pursuant to the Company's
Stock Option Plans during the fiscal year ended May 31, 1995, to the Named
Executives who are reflected in the Summary Compensation Table.
Individual Gains in Fiscal 1995
-------------------------------
<TABLE>
<CAPTION>
Name Options Percentage of Total Exercise Expiration Date Potential Realized Values at
Granted Options Granted to Price Per Assumed Annual Rates of Stock
Employees in Fiscal Share (1) Price Appreciation for Option Term (1)
Year 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Jason Bacher 0 0 -- -- -- --
Scott Zecher 80,000 29.63% $4.125 4/10/05 $158.668 $448,123
William Wunderlich 40,000 14.81% $4.125 4/10/05 $ 79,334 $224,081
</TABLE>
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(1) Based on 110% of the closing price on NASDAQ/NMS on the date.
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Aggregate Options Exercised in Fiscal Year 1995 and Fiscal Year-End Option
Values
Shown below is information with respect to (i) options exercised by the Named
Executives pursuant to the Option Plans during Fiscal 1995; and (ii) unexercised
options granted in Fiscal 1995 and prior years under the Option Plans to the
Named Executives and held by them at May 31, 1995.
<TABLE>
<CAPTION>
Number of Unexercised Values of Unexercised
Shares Options at 5/31/95 In-the-Money
Acquired Value Realized Exercisable/Unexercisable Options at 5/31/95(1)
Name on Exercise Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Jason Bacher 0 0 0/75,000 $0/$0
Scott Zecher 216,799 330,480 0/113,333 $0/$4167
William Wunderlich 0 0 45,000/80,000 $16,667/$8,333
</TABLE>
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(1) Based on the closing price as quoted on NASDAQ/NMS on the date.
Director Compensation
The Company pays a Directors fee of $750 for each meeting attended by a
non-employee director.
Compensation Committee Interlocks and Insider Participation
During the Company's last fiscal year, Messrs. Fagenson, Gaspar and Stengel
served on the Compensation Committee of the Board of Directors. Other than in
their capacities as directors of the Company, none of Messrs. Fagenson, Gaspar
or Stengel were employed by the Company during such times.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
To the Board of Directors:
Compensation Policies Applicable To Executive Officers
The purpose of the Company's executive compensation program is to attract,
retain and motivate qualified executives to manage the business of the Company
so as to maximize profits and shareholder value. Executive compensation in the
aggregate is made up principally of the executive's annual base salary, a bonus
which may be awarded by the Company's Compensation Committee and awards of
Company stock or stock options under the Company's Stock Option Plans. The
Company's Compensation Committee annually considers and makes recommendations to
the Board of Directors as to executive compensation including changes in base
salary, bonuses and awards of Company stock or stock options.
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<PAGE>
Consistent with the above-noted purpose of the executive compensation
program, it is the policy of the Compensation Committee, in recommending the
aggregate annual compensation of executive officers of the Company, to consider
the overall performance of the Company, the performance of the division of the
Company for which the executive has responsibility and the individual
contribution and performance of the executive. The performance of the Company
and of the division for which the executive has responsibility are significant
factors in determining aggregate compensation although they are not necessarily
determinative. While shareholders' total return is important and is considered
by the Compensation Committee, it is subject to the vagaries of the public
market place and the Company's compensation program focuses on the Company's
strategic plans, corporate performance measures, and specific corporate goals
which should lead to a favorable stock price. The corporate performance measures
which the Compensation Committee considers include sales, earnings, return on
equity and comparisons of sales and earnings with prior years and with budgets.
The Compensation Committee does not rely on any fixed formulae or specific
numerical criteria in determining an executive's aggregate compensation. It
considers both corporate and personal performance criteria, competitive
compensation levels, the economic environment and changes in the cost of living
as well as the recommendations of management. The Compensation Committee then
exercises business judgment based on all of these criteria and the purposes of
the executive compensation program.
Compensation of the Chief Executive Officer
Mr. Bacher's base salary of $125,000 for 1995 (which constituted a
ten-month proration of his $150,000 base salary) was based principally on his
rights under his four-year employment agreement with the Company dated January
1, 1995 which was terminated on March 29, 1995 in connection with the ADP
transaction. In addition, Mr. Bacher received a bonus of $182,854 which the
Committee granted to him in recognition of the Company's performance in 1995
under his leadership, including his role in consummating the Company's
transaction with ADP Solutions.
Respectfully submitted,
AutoInfo, Inc. Compensation Committee
(Robert Fagenson and Jerome Stengel)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 28, 1995 the Company entered into a Promissory Note and Security
and Pledge Agreement with Scott Zecher, its President, Chief Operating Officer
and a Director, pursuant to which the Company lent to Mr. Zecher, consistent
with the Company's past practice, the sum of $466,796.64, in connection with Mr.
Zecher's exercise of options to acquire 216,799 shares of the Company's Common
Stock (the "Shares") under the Company's 1985 and 1986 Stock Option Plans. The
Note, which is non-interest bearing, is secured by the Shares and is payable on
the earlier of May 31, 1996 or out of proceeds of the underlying collateral. As
a result of such exercise, the percentage of outstanding shares of common stock
owned by executive officers and directors of the Company increased from
approximately 8.7% to approximately 11.5%. This increase may discourage a party
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<PAGE>
from instituting a take-over attempt with regard to the Company. The purpose of
the Company granting an interest free loan for the purpose of exercising in-the
money stock options is the same as the purpose of the Company for granting stock
options to key employees and officers; namely, to encourage such key employees
and officers to acquire an increased personal interest in the success and
progress of the Company. The granting of the stock options provides the key
employee or officer with the potential to benefit from the success and growth of
the Company and the interest free loan enables such key employee or officer to
actually realize the benefit when the stock option becomes in-the-money.
On June 22, 1995, the Company entered into a Settlement Agreement with
Ryback Management Corporation ("Ryback"), Eric C. Ryback and Lawrence Callahan
(the "Agreement"; Ryback together with Eric C. Ryback and Lawrence Callahan,
collectively, the "Ryback Parties"). As more fully described below, the
Settlement provides that, for a period of five (5) years, Ryback, the holder of
approximately 14.8% of the Company's outstanding shares at the time the
Agreement was entered into, will vote such shares on all matters in accordance
with the recommendation of the Company's Board of Directors (the "Board"),
unless, as a result of the recommendation, the Board's "outside directors" (as
such term is hereinafter defined) would not continue to constitute a majority,
in which case, the shares would be voted in the same proportion as the vote of
other stockholders. The Agreement also provided for the dismissal of the
Company's litigation against the Ryback Parties and for mutual releases from the
Company to the Ryback Parties and from the Ryback Parties to the Company.
Pursuant to the Agreement, Ryback agreed that during the term of the
Agreement, unless specifically requested in writing in advance by the Board,
Ryback will not, and will cause its affiliates and associates (as such terms are
used within Rule 126-2 (as such rule is currently in effect) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) not to, alone
or in concert with others (and neither Ryback nor any affiliate or associate of
Ryback will advise, assist or encourage others to), directly or indirectly: (i)
by purchase or otherwise, acquire, or agree to acquire, ownership (including,
but not limited to, beneficial ownership) of any shares of Common Stock of the
Company (the "Common Stock"), including securities convertible into Common
Stock, or direct or indirect rights or options to acquire such ownership; (ii)
make any public announcement with respect to, or submit any proposal for, the
acquisition of beneficial ownership of Common Stock (or securities convertible
into Common Stock or direct or indirect rights or options to acquire such
beneficial ownership), or for or with respect to any extraordinary transaction
or merger, consolidation, sale of substantial assets or business combination
involving the Company or any of its affiliates, (iii) make, or in any way
participate in, any "solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A under the Exchange Act (the "Exchange Act")) or become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) to vote, or seek to advise or influence any
person or entity with respect to the voting of, any voting securities of the
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Company or any of its affiliates; (iv) form, join or in any way participate in a
"group" (as such term is used in Section 1 3d(3) of the Exchange Act) to take
any action otherwise prohibited by the terms of the Agreement; (v) initiate or
propose any stockholder proposals for submission to a vote of stockholders,
whether by action at a stockholder meeting or by written consent, with respect
to the Company or any of its affiliates or propose any person for election to
the Board of the Company or any of its affiliates or propose the removal of any
member of the Board of the Company or any of its affiliates; (vi) otherwise seek
to control the management or policies of the Company or any of its affiliates,
including, without limitation, taking any action to seek to obtain
representation on the Board of the Company or any of its affiliates; (vii)
institute, prosecute or pursue against the Company (or any of its officers,
directors, representatives, trustees, employees, attorneys, advisors, agents,
affiliates or associates) (a) any claim with respect to any action hereafter
duly approved the Board or (b) any claim on behalf of a class of the Company's
security holders; (viii) disclose to any third party, or make any filing under
the Exchange Act (including, without limitation, under Section 13(d) thereof)
disclosing, any intention, plan or arrangement inconsistent with the foregoing;
(ix) publicly oppose any duly authorized Board action or recommendation; (x)
initiate any communication with any customer or supplier of the Company or any
other person which does or is contemplating doing business or entering into a
transaction with the Company with a view interfering or otherwise adversely
affecting the relationship between the Company and or the applicable customer,
supplier or other person; (xi) enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing; or (xii) request the Company (or its directors, officers, employees
or agents) to amend or waive any provision of the Agreement or otherwise seek
any modification to or waiver of any of the agreements or obligations of Ryback,
or any of its affiliates or associates, under the Agreement.
The Agreement also provides that during the term of the Agreement, Ryback
will not and will cause its associates and affiliates not to, transfer, assign,
pledge, sell, hypothecate or otherwise dispose (a "disposition") of any capital
stock of the Company owned by it, except if all of the following conditions are
satisfied with respect to such disposition: (i) the applicable disposition
together with all other dispositions for the account of Ryback and its
associates and affiliates during the one month period immediately preceding the
date of such disposition does not exceed one percent of the outstanding Common
Stock, as shown on the most recent applicable report or statement published by
the Company; (ii) such disposition shall be by means of a "broker's transaction"
within the meaning of rule 144(g) under the Securities Act of 1933, as amended;
and (iii) with respect to any such disposition, the seller shall instruct its
broker that such broker shall make due inquiry and shall not make the
disposition to any person (including any agent of such person) if Ryback and/or
its affiliates or associates or such broker knows, or has reason to believe,
that such person, together with such persons, affiliates and associates, owns,
collectively (with its associates and affiliates), or, will
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own, collectively (with its associates and affiliates), upon consummation of the
disposition, 3% or more of the outstanding Common Stock as shown on the most
recent applicable report or statement published by the Company.
The Agreement also provides that during its term, with respect to each
matter submitted to the stockholders of the Company for a vote, whether at a
meeting or pursuant to any consent of stockholders, including, without
limitation, any matter submitted to the stockholders of the Company relating to
the election or removal of directors, Ryback agrees to, and agrees to cause its
affiliates and associates to, vote (whether by proxy or otherwise) all shares of
Common Stock owned by Ryback and/or any of its affiliates and associates in
accordance with the applicable duly authorized recommendation of the Board;
provided, however, that, with respect to any recommendation relating to the
election or removal of directors, if, assuming such recommendation were adopted
by the stockholders of the Company, less than a majority of all directors
constituting the Board would be "outside directors" (as such term is hereinafter
defined), Ryback and its associates and affiliates shall vote their shares in
the same proportion as the votes of all other outstanding voting securities of
the Company voting on such applicable matter. As used in the Agreement, the term
"outside directors" refer to directors who are not also officers or employees of
the Company.
TOTAL RETURN COMPARISON
The following graph sets forth a five-year comparison of total returns for:
(1) the Company; (2) a Company selected Peer Group (comprised of Data
Transmission Network Corp., INCOMNET, Inc., Triad Systems Corporation and Policy
Management Systems Corporation); and (3) the NASDAQ - US CRSP Total Return
Index.
[The following table was represented by a chart in the printed material]
Date AutoInfo, Inc. Peer Group NASDAQ US
---- -------------- ---------- ---------
5/90 100 100 100
5/91 119 126 114
5/92 92 160 133
5/93 81 109 160
5/94 86 120 168
5/95 78 162 201
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GENERAL
The management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such other
matters in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such other matters is conferred by such
proxies upon the persons voting them.
The Company expects representatives of Arthur Andersen & Company, the
Company's independent auditors, to be present at the Annual Meeting and to
respond to pertinent questions of stockholders.
The Company will bear the cost of preparing, assembling and mailing the
Proxy, Proxy Statement and other material which may be sent to the stockholders
in connection with this solicitation. In addition to the solicitation of proxies
by use of the mail, officers and regular employees may solicit the return of
proxies. The Company may reimburse persons holding stock in their names or in
the names of other nominees for their expenses in sending proxies and proxy
material to principals. Proxies may be solicited by mail, personal interview,
telephone and telegraph.
The Company will provide without charge to each person being solicited by
this Proxy Statement, on the written consent of any such person, a copy of the
Annual Report of the Company on Form 10-K for the year ended May 31 1995 (as
filed with the Securities and Exchange Commission) including the financial
statements thereto. All such requests should be directed to William Wunderlich,
Secretary, AutoInfo, Inc., 1600 Route 208, Fair Lawn, New Jersey 07410.
All proposals of stockholders intended to be included in the proxy
statement to be presented at the 1996 Annual Meeting of Stockholders must be
received at the Company's executive offices no later than June 28, 1996 and
should be directed to the Secretary of AutoInfo, Inc.
By Order of the Board of
Directors
William Wunderlich,
Secretary
Dated: December 12, 1995
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