AUTOINFO, INC.
1600 Route 208
Fair Lawn, New Jersey 07410
(201) 703-0500
----------
REVOCATION OF CONSENT STATEMENT
BY BOARD OF DIRECTORS IN
OPPOSITION TO THE PARTIES WHO REFER TO
THEMSELVES AS THE AUTOINFO STOCKHOLDERS COMMITTEE
May 15, 1995
Dear Fellow Stockholders:
This Revocation of Consent Statement is furnished by the Board of Directors
(the "Board") of AutoInfo, Inc., a Delaware corporation (the "Company"), to the
holders of outstanding shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), in connection with the Board's opposition to the
solicitation (the "Steel Partners Solicitation") by (i) Mr. Warren G.
Lichtenstein, the 29-year-old founder and Chairman of the Board of Steel
Partners, Ltd., a New York corporation ("Partners") (Partners is the general
partner of the general partner of Steel Partners II, L.P., a Delaware Limited
Partnership ("Steel")), (ii) Mr. Lawrence Butler, the 32-year-old co-founder and
President of Partners and (iii) Mr. Jack L. Howard, a 33-year-old limited
partner of the general partner of Steel (Messrs. Lichtenstein, Butler and
Howard, who refer to themselves as the "AutoInfo Stockholders Committee", are
referred to herein, collectively, as the "Steel Partners Parties"), of written
stockholder consents to (i) remove, without cause, all of the current members of
the Board, (ii) elect to the Board a slate of six nominees designated by the
Steel Partners Parties (the "Steel Partners Nominees") and (iii) amend the
Company's By-laws to provide that any acquisition by the Company, whether by
stock purchase, merger, asset acquisition or other similar type transaction,
where the consideration to be paid by the Company is more than fifty percent of
the Company's assets at the time of such transaction, will be subject to the
approval of a majority of the Company's stockholders. This Statement and the
enclosed GREEN Revocation of Consent Card are first being mailed to stockholders
on or about May 15, 1995.
THE BOARD UNANIMOUSLY OPPOSES THE STEEL PARTNERS PARTIES SOLICITATION. THE
BOARD URGES YOU NOT TO SIGN ANY BLUE CONSENT CARD SENT TO YOU BY THE STEEL
PARTNERS PARTIES.
IF YOU PREVIOUSLY SIGNED AND RETURNED THE BLUE CONSENT CARD TO THE STEEL
PARTNERS PARTIES YOU HAVE EVERY RIGHT TO CHANGE YOUR MIND. WHETHER OR NOT YOU
HAVE SIGNED THE BLUE CONSENT CARD, THE BOARD URGES YOU TO SIGN, DATE AND MAIL
THE ENCLOSED GREEN REVOCATION OF CONSENT CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED. REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR REVOCATION OF CONSENT
IS IMPORTANT. PLEASE ACT TODAY!
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR
HER TO EXECUTE A GREEN REVOCATION OF CONSENT CARD, VOTING AS RECOMMENDED BY
AUTOINFO'S BOARD OF DIRECTORS, ON YOUR BEHALF. YOU SHOULD ALSO SIGN, DATE AND
MAIL YOUR GREEN REVOCATION OF CONSENT CARD WHEN YOU RECEIVE IT IN THE MAIL.
PLEASE DO SO AT ONCE.
If you have any questions about giving your revocation of consent or
require assistance, please call:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (Collect)
or
CALL TOLL FREE (800) 326-3066
<PAGE>
The Board is soliciting against the Steel Partners Solicitation. Consider
these facts:
o The current Board believes that it has a successful track record in
enhancing shareholder value. For example, the current Board recently
recommended, and successfully consummated, with the approval of
approximately 98% of the votes cast by stockholders in a stockholder
vote relating to the approval of such transaction, the sale of the
principal portion of the Company's operating businesses to a subsidiary
of Automatic Data Processing, Inc., ADP Claims Solutions Group, Inc.
("ADP Solutions"), for a purchase price of $30,350,000 (the "Proceeds")
and a taxable gain of approximately $21,000,000. The operations of the
businesses sold were started by the Company at the time of its
inception in 1976 and were expanded through a series of acquisitions
and through internal growth.
o With an average tenure in office of approximately 13 years, the present
Board directed the Company through the majority of the period the
Company has been in business. Additionally, five Board members (Andrew
Gaspar, Scott Zecher, Robert Fagenson, Jason Bacher and Howard Nusbaum)
have been with the Company since its initial public offering in 1986.
o The current Board is working closely with management of the Company to
implement a plan to best utilize the Proceeds. As always, the primary
focus is on enhancing value for all the Company's stockholders. The
options being considered by the current Board include potential
acquisitions, redemptions of Common Stock and the payment of a
substantial portion of the Proceeds as a dividend to stockholders. The
Board has fixed no deadline by which any of these actions would be
taken.
o The Steel Partners Nominees have stated their intention to rescind the
Shareholder Rights Plan (the "Plan") adopted by the current Board on
March 30, 1995. The Board's purpose in adopting the Plan was and is to
protect the interests of the Company's stockholders from abusive
takeover tactics, including attempts to acquire control of the Company
at an inadequate price, without paying any "control premium" to the
Company's stockholders. Although the Plan may discourage certain tender
offers and other attempts to change control of the Company, making it
more difficult to remove the current board and incumbent management, on
balance, in the Board's opinion, the Plan is important to ensure that
any change in control transaction effected with respect to the Company
would only be effected in a manner in which the interests of all the
Company's stockholders are fairly and adequately represented. The Plan
does not block any stockholder, or any other person, from suggesting
proposals which would have the effect of enhancing stockholder value.
Steel already owns 14.9% of the Company's outstanding Common Stock. Any
rescission of the Plan would permit Steel to acquire additional shares
of Common Stock without Board approval and would thereby facilitate the
ability of Steel to acquire effective control of the Company without
paying a "control premium" to you and all other stockholders.
o Prior to March 30, 1995, Steel orally requested that the current Board
of Directors permit it to acquire additional shares of the Company's
Common Stock without becoming subject to Section 203 of the Delaware
General Corporation Law. This law generally provides that if a
stockholder acquires 15% or more of a corporation's outstanding stock
(unless such acquisition was made with the prior approval of the board
of directors of the corporation), any business combination transaction
between that corporation and the interested stockholder must be
approved by the holders of two thirds of the outstanding stock of the
corporation which is not owned by the interested stockholder. Although
the Steel Partners Nominees have not disclosed any intention to effect
a business combination transaction between the Company and some other
entity which Steel and/or the partners of Steel control, if the Steel
Partners Nominees succeed in obtaining control of the Company through
the Steel Partners Solicitation, Steel will be able to effect a
business combination with an entity controlled by Steel and/or the
partners of Steel without affording stockholders of the Company the
protection of Section 203.
2
<PAGE>
THE CONSENT PROCEDURE
The record date for determination of the stockholders of the Company
entitled to execute, withhold or revoke consents relating to the Steel Partners
Solicitation is the close of business on May 1, 1995 (the "Record Date"). Under
Delaware law, unrevoked consents from the holders of record of a majority of the
outstanding shares of Common Stock on the Record Date are necessary for the
Company's stockholders to effectively act by written consent to (i) remove
without cause all of the members of the current Board, (ii) elect the Steel
Partners Nominees and (iii) amend the Company's by-laws to provide that any
acquisition by the Company, whether by stock purchase, merger, asset acquisition
or other similar type transaction, where the consideration to be paid by the
Company is more than fifty percent of the Company's assets at the time of such
transaction, will be subject to the approval of a majority of the Company's
stockholders. As of April 28, 1995, 3 days prior to the Record Date, there were
7,732,252 shares of Common Stock outstanding, each entitled to one vote per
share.
Under Section 228 of the General Corporation Law of the State of Delaware,
consents must be delivered within 60 days of the earliest dated consent
delivered to the Company. The earliest dated consent was delivered by the Steel
Partners Parties to the Company on April 13, 1995. Accordingly, any consent
dated or delivered to the Company after June 11, 1995 will not be valid.
A stockholder may revoke any previously signed consent by signing, dating
and returning a GREEN Revocation of Consent Card. A consent may also be revoked
by delivery of a written revocation of consent to the Steel Partners Parties.
Stockholders are urged, however, to deliver all revocations of consents to D.F.
King & Co., Inc., at 77 Water Street, 20th Floor, New York, N.Y. 10005. The
Company requests that if a revocation is instead delivered to the Steel Partners
Parties, a photostatic copy of the revocation also be delivered to the Company,
c/o D.F. King & Co., Inc. at the address set forth above, so that the Company
will be aware of all revocations. Any revocation of consent may itself be
revoked at any time by signing, dating and returning a subsequently dated blue
consent card sent to you by the Steel Partners Parties to the Steel Partners
Parties, or by delivery of a written revocation of such revocation of consent to
the Company or the Steel Partners Parties.
Section 7 of Article 1 of the Company's By-laws establishes a mechanism to
ensure that consent solicitations are conducted in a fair and orderly manner. As
contemplated by Section 7 of Article 1, the Company will retain an independent
inspector of elections in connection with the Steel Partners Solicitation.
3
<PAGE>
INFORMATION REGARDING THE CURRENT DIRECTORS AND
EXECUTIVE OFFICERS
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 conducting 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 from 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.
JASON BACHER, age 56, has been Chairman of the Board and the Chief
Executive Officer of the Company from its inception in 1976 through March 29,
1995. 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 Solutions on April 1, 1995, Mr.
Bacher joined ADP Solutions.
SCOTT ZECHER, age 36, joined the Company in January 1984, and was named 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.
ROBERT FAGENSON, age 46, 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 from 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, age 58, 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.
WILLIAM WUNDERLICH, age 47, joined the Company in October 1992 as its Vice
President-Finance and became Chief Financial Officer in January 1993. From 1990
to 1992, he served as Vice President of Goldstein Affiliates, Inc., a public
insurance adjusting company. From 1981 to 1990 he served as Executive Vice
President, Chief Financial Officer and a Director of Novo Corporation, a
manufacturer of consumer products. Mr. Wunderlich is a Certified Public
Accountant with a B.A. degree in Accounting and Economics from the City
University of New York at Queens College.
BOARD OF DIRECTOR MEETINGS
During the year ended May 31, 1994, the Board held four meetings. Each of
the current members of the Board attended at least 75% of such meetings.
BOARD OF DIRECTOR COMMITTEES
The Board maintains an Audit Committee and a Compensation Committee, both
of which are comprised of Messrs. Fagenson, Gaspar and Stengel, all of whom are
non-employee directors. 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 compensation payable to such persons. Each
such Committee met twice during the last full fiscal year with all members
present.
4
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Summary Compensation Table below includes, for each of the fiscal years
ended May 31, 1994, 1993 and 1992, 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 during the fiscal
year ended May 31, 1994 whose salary and bonus exceeded $100,000 (together, the
"Named Executives").
<TABLE>
<CAPTION>
Annual Compensation Long-Term All
------------------- Compensation Other
Name and Principal Position Year Salary Bonus Options Compensation (1)
--------------------------- ---- ------ ----- ------- ----------------
<S> <C> <C> <C> <C> <C>
Jason Bacher(2)......................... 1994 $135,417 $45,007 75,000 $4,063
Chairman of the Board and 1993 $125,000 $18,166 -- $3,750
Chief Executive Officer 1992 $123,333 $ 7,500 -- $3,125
Scott Zecher............................ 1994 $144,000 $65,000 -- $3,240
President and 1993 $134,500 $37,000 100,000 $2,690
Chief Operating Officer 1992 $125,000 $15,000 -- $2,500
Dale Schuster(3)........................ 1994 $100,000 $29,000 -- $3,000
Senior Vice President 1993 $ 91,667 $25,000 30,000 $2,733
1992 $ 55,615 $10,000 125,000 $1,463
William Wunderlich...................... 1994 $ 91,250 $19,000 35,000 $3,068
Treasurer and 1993 $ 55,624 $ 2,000 50,000 $1,063
Chief Financial Officer
</TABLE>
- --------
(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) Mr. Schuster resigned as Senior Vice President on June 6, 1994.
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
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.
5
<PAGE>
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. If Mr. Wunderlich's employment is terminated
(as described above) prior to October 10, 1995, he would receive severance equal
to two (rather than one and one-half) 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.
The Supplemental Employment Agreements were entered into on April 10, 1995,
after Steel 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 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 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.
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 collectively
referred to herein as the "Option Plans".)
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 option will again be available for
options to be granted under such Plan. Options may be granted in the form of
incentive stock options ("Incentive Options") or options which do not qualify
for the favorable tax treatment of Incentive Options which are known as
non-qualified options.
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<PAGE>
The Option Plans are administered by a committee of the Board of Directors
consisting of Messrs. Fagenson, Gaspar and Stengel, who are ineligible to
participate in the Option 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 difference in the exercise prices.
Option Grants in Fiscal Year 1994
Shown below is information on grants of stock options pursuant to the
Company's Stock Option Plans during the fiscal year ended May 31, 1994, to the
Named Executives who are reflected in the Summary Compensation Table.
<TABLE>
<CAPTION>
Individual Gains in Fiscal 1994
-------------------------------------------- Potential Realized Values
Percentage of at Assumed Annual Rates of
Total Options Stock Price Appreciation
Granted Exercise for Option Term(1)
Options to Employees Price Per Expiration --------------------------
Name Granted in Fiscal Year Share(1) Date 5% 10%
---- ------- -------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jason Bacher........................ 75,000 51.7% $3.75 4/16/04 $176,877 $448,240
Scott Zecher ....................... 0 -- -- -- -- --
Dale Schuster ...................... 0 -- -- -- -- --
William Wunderlich ................. 35,000 24.1% $3.75 4/16/04 $82,542 $209,179
</TABLE>
- --------
(1) Based on the closing price on NASDAQ/NMS on the date.
Aggregate Options Exercised in Fiscal Year 1994 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 1994; and (ii)
unexercised options granted in Fiscal 1994 and prior years under the Option
Plans to the Named Executives and held by them at May 31, 1994.
<TABLE>
<CAPTION>
Values of
Number of Unexercised Unexercised In-the-Money
Shares Options at 5/31/94 Options at 5/31/94 (1)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- --------- -------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Jason Bacher ....................... 0 0 0/75,000 $ 0/$ 9,375
Scott Zecher ....................... 0 0 183,465/66,667 $354,464/$33,333
Dale Schuster ...................... 0 0 93,333/61,667 $ 15,416/$15,208
William Wunderlich ................. 0 0 16,666/68,334 $ 14,583/$33,541
</TABLE>
- --------
(1) Based on the closing price as quoted on NASDAQ/NMS on the date.
Director Compensation
The Company pays each non-employee director a fee of $750 for each meeting
attended by such director.
7
<PAGE>
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.
Board Compensation Committee Report 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.
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 the executive officers of the Company, to
consider 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 $150,000 for 1994 was based principally on his
rights under his four-year employment agreement with the Company dated January
1, 1994. In addition, Mr. Bacher received a bonus of $45,007 which the Committee
granted to him in recognition of the Company's increased revenue and earnings in
1994 under his leadership.
Respectfully submitted,
AutoInfo, Inc. Compensation Committee
(Robert Fagenson, Andrew Gaspar 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 the proceeds of the underlying collateral.
As a result of such exercise, the percentage of outstanding shares of common
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<PAGE>
stock owned by executive officers and directors of the Company increased from
approximately 8.9% to approximately 11.7%. This increase may discourage Steel
and/or any other interested party 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.
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 is represent as a graph in the printed copy.
AutoInfo, Inc. Peer Group NASDAQ US
5/89 100 100 100
5/90 225 104 104
5/91 269 130 119
5/92 206 165 139
5/93 181 112 167
5/94 194 124 175
9
<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 April 28, 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.
<TABLE>
<CAPTION>
Shares of
Name of Common Stock Percentage
Beneficial Owner Beneficially Owned (1) of Ownership
---------------- ---------------------- ------------
<S> <C> <C>
(i) Directors:
Jason Bacher ................................................ 331,272(2) 4.3%(5)
Robert Fagenson ............................................. 30,750(3) * (5)
Andrew Gaspar ............................................... 45,000 *
Howard Nusbaum .............................................. 191,531 2.5%
Jerome Stengel .............................................. 30,000 *
Scott Zecher ................................................ 331,746 4.3%
All executive officers and directors
as a group (7 persons)..................................... 1,005,299(4) 12.8%(6)
(ii) 5% Stockholders:
Ashford Capital Management, Inc. (7)
P.O. Box 4172
Greenville, DE 19807 ...................................... 403,200 5.2%
Dimensional Fund Advisors, Inc. (7)
1299 Ocean Avenue
Santa Monica, CA 90401..................................... 391,100 5.1%
Irving B. Harris (7)
2 North LaSalle Street
Suite 505
Chicago, IL 60602.......................................... 568,333(8) 7.4%
Ryback Management Corporation (7)
7711 Corondelet Ave.
St. Louis, MO 63105........................................ 903,350 11.7%
Steel Partners II L.P. (9)
750 Lexington Ave.
New York, NY 10022......................................... 1,080,000 14.0%
</TABLE>
- --------
* 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 25,000 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 99,250 shares subject to currently exercisable options or
warrants.
10
<PAGE>
(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 SEC.
(8) Includes 273,333 shares subject to currently exercisable warrants.
(9) Information with respect to this stockholder has been derived from the
Schedule 13D filed by such stockholder with the SEC.
SOLICITATION OF REVOCATIONS
Cost and Method
The cost of the solicitation of revocations of consent will be borne by the
Company. The Company estimates that the total expenditures with such
solicitation (including the fees and expenses of the Company's attorneys and
public relations firm and advertising, printing, mailing, travel and other
costs, but excluding salaries and wages of officers and employees and the fees
and expenses of D.F. King & Co., Inc. described below) will be approximately
$100,000, of which none has been spent to date. In addition to solicitation by
mail, directors, officers and other employees of the Company may, without
additional compensation, solicit revocations by mail, in person, by
telecommunication or by other electronic means.
The Company has retained D.F. King & Co., Inc., at an estimated fee of
$25,000, plus reasonable out-of-pocket expenses, to assist in the solicitation
of revocations. Approximately 40 persons will be utilized by such firm in its
efforts. The Company will reimburse brokerage houses, banks, custodians and
other nominees and fiduciaries for out-of-pocket expenses incurred in forwarding
the Company's consent revocation materials to, and obtaining instructions
relating to such materials from, beneficial owners of Common Stock.
The Company has also agreed to indemnify D.F. King & Co., Inc. against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws.
Participants in the Solicitation
Under applicable regulations of the SEC, each member of the Board may be
deemed to be "participants" in the Company's solicitation of revocations of
consent. The business address of each participant is as follows: Mr. Jason
Bacher, 48 Magnolia Lane, Roslyn Heights, New York 11577; Mr. Robert Fagenson,
Fagenson & Co., Inc., 19 Rector Street, 16th Floor, New York, New York 10006;
Mr. Andrew Gaspar, R.S. Lauder, Gaspar and Co. L.P., 767 Fifth Avenue, Suite
4200, New York, New York 10153; Mr. Howard Nusbaum, 43 Heritage Lane, Stamford,
Connecticut 06903; Mr. Jerome Stengel, Genovese Drug Stores, Inc., 80 Marcus
Drive, Melville, New York 11747; and Mr. Scott Zecher, AutoInfo, Inc., 1600
Route 208, Fair Lawn, New Jersey 07410.
Schedule A hereto sets forth transactions in the Company's securities by
the "participants" listed above during the last two years. Information about the
present Capital Stock ownership of these participants is provided in "Beneficial
Ownership of Common Stock".
Except as set forth in this Revocation of Consent Statement, (i) no
participant referred to above is, or was within the past year, a party to any
contract, arrangement or understanding with any person with respect to any of
the Company's securities, and (ii) neither any of the participants referred to
above nor any of their respective associates has any arrangement or
understanding with any person with respect to any future employment by the
Company or its affiliates, or with respect to any future transaction as to which
the Company or any of its affiliates will or may be a party.
11
<PAGE>
STOCKHOLDER PROPOSAL
Any stockholder who desires to present a proposal to be considered at the
Company's next annual meeting may do so, provided that such stockholder
satisfies the eligibility requirements established by the SEC. To be considered
for submission at the meeting, such proposal must be received by the Company
(addressed to the attention of the Secretary) not later than May 31, 1995. To be
submitted at the meeting, any such proposal must be a proper subject for
stockholder action under the laws of the State of Delaware, and must otherwise
conform to applicable regulations of the SEC.
We appreciate your support and encouragement.
ANDREW GASPAR SCOTT ZECHER
Chairman of the Board President and Chief Operating Officer
12
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
YOUR VOTE IS IMPORTANT. REGARDLESS of the number of shares of AutoInfo
Common Stock you own, please vote as recommended by your Board of Directors by
signing, dating and promptly mailing your GREEN CARD.
1. If your shares are registered in your own name, please sign, date and
mail the enclosed GREEN Revocation of Consent Card to D.F. King & Co., Inc., in
the postage-paid envelope provided.
2. If you have previously signed and returned a blue consent card to the
Steel Partners Parties, you have every right to change your mind. Remember, only
your latest dated card will count. You may revoke any blue consent card already
sent to the Steel Partners Parties by signing, dating and mailing the enclosed
GREEN Revocation of Consent Card in the post-paid envelope provided.
3. If your shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can sign a GREEN Revocation of Consent Card with
respect to your shares and only after receiving your specific instructions.
Accordingly, please sign, date and mail the enclosed GREEN Revocation of Consent
Card in the post-paid envelope provided. To ensure that your shares are voted,
you should also contact the person responsible for your account and give
instructions for a GREEN Revocation of Consent Card to be issued representing
your shares. Please do so for each separate account you maintain.
4. After signing and dating the enclosed GREEN Revocation of Consent Card,
please do not sign or return any blue consent card. Please do not even vote
"consent withheld" on the Steel Partners Parties' blue consent card even as a
vote to protest.
If you have any questions about giving your revocation of consent or
require assistance, please call:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (Collect)
or
CALL TOLL FREE (800) 326-3066
- --------------------------------------------------------------------------------
13
<PAGE>
SCHEDULE A
The following table sets forth all purchases and sales of the Company's
securities by the participants referred to above during the two years. Unless
otherwise indicated, all transactions are in the public market.
<TABLE>
<CAPTION>
Number of Shares of Capital
Name Stock Purchased (or Sold) Date
---- ------------------------- ----
<S> <C> <C>
Scott Zecher.......................... 216,799 shares acquired pursuant to 4/28/95
exercise of options
</TABLE>
14
<PAGE>
REVOCATION OF CONSENT
Solicited on Behalf of the Board of Directors of
AUTOINFO, INC.
IN OPPOSITION TO THE SOLICITATION OF THE AUTOINFO STOCKHOLDERS COMMITTEE
The undersigned, a holder of shares of Common Stock, par value $.01 per
share (the "Common Stock"), of AutoInfo, Inc. (the "Company"), acting with
respect to all the shares of Common Stock held by the undersigned at the close
of business on May 1, 1995, hereby acts as follows concerning the proposals of
the AutoInfo Stockholders Committee set forth below:
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A "REVOCATION"
TO PROPOSAL NO. 1.
AUTOINFO STOCKHOLDERS COMMITTEE PROPOSAL NO. 1
Resolution that all present directors of the Company, and any other
directors elected or appointed to the Board of Directors of the Company prior to
the effective date of these resolutions in addition to or in lieu of the
foregoing individuals are hereby removed, without cause, as directors of the
Company.
<TABLE>
<S> <C>
/ / REVOCATION / / NON-REVOCATION
The undersigned hereby revokes any and all consents and proxies The undersigned does not revoke any consents or proxies
for consents which the undersigned may have given for the for consents which the undersigned may have given for
AutoInfo Stockholders Committee Proposal No. 1. the AutoInfo Stockholders Committee Proposal No. 1.
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A "REVOCATION"
TO PROPOSAL NO. 2.
AUTOINFO STOCKHOLDERS COMMITTEE PROPOSAL NO. 2
Resolution that Warren G. Lichtenstein, Lawrence Butler, Jack L. Howard,
Marshall D. Butler, Jan R. Sussman and James Benenson, Jr. are elected as
directors of the Company to fill the vacancies of the Board of Directors
occasioned by the foregoing removal of directors, to serve in that capacity
until their successors are duly elected and qualified.
<TABLE>
<S> <C>
/ / REVOCATION / / NON-REVOCATION
The undersigned hereby revokes any and all consents and proxies The undersigned does not revoke any consents or proxies
for consents which the undersigned may have given for the for consents which the undersigned may have given for
AutoInfo Stockholders Committee Proposal No. 2. the AutoInfo Stockholders Committee Proposal No. 2.
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A "REVOCATION"
TO PROPOSAL NO. 3.
AUTOINFO STOCKHOLDERS COMMITTEE PROPOSAL NO. 3
Resolution that the Bylaws be amended, with subsequent Articles to be
renumbered as appropriate, by inserting the following article following ARTICLE
III:
ARTICLE IV
BUSINESS COMBINATIONS
Prior to the consummation by the Corporation of any stock purchase, merger,
asset acquisition or other similar type transaction where the consideration
to be delivered by the Corporation is more than fifty (50) percent of the
Corporation's assets at the time of such transaction (a "Business
Combination"), the Corporation shall submit such Business Combination to its
stockholders for approval regardless of whether the Business Combination is
<PAGE>
of a type which normally would require such stockholder approval under the
DGCL. In the event that the holders of a majority of the outstanding Common
Stock present at a duly called stockholders meeting vote for the approval of
the Business Combination or act by consent in lieu of a stockholders'
meeting, the Corporation shall be authorized to consummate the Business
Combination.
<TABLE>
<S> <C>
/ / REVOCATION / / NON-REVOCATION
The undersigned hereby revokes any and all consents and proxies The undersigned does not revoke any consents or proxies
for consents which the undersigned may have given for the for consents which the undersigned may have given for
AutoInfo Stockholders Committee Proposal No. 3. the AutoInfo Stockholders Committee Proposal No. 3.
</TABLE>
Please indicate your opposition to the AutoInfo Stockholders Committee
proposals by marking the boxes for "Revocation" and signing, dating and mailing
this revocation card promptly, using the enclosed, postage paid envelope. If you
mark any of the boxes for "Non-Revocation", any consent you may have given to
that particular proposal of the AutoInfo Stockholders Committee will not be
revoked. If you need additional revocation cards or assistance, call D. F. King
& Co., Inc., toll free, at (800) 522-5001.
UNLESS OTHERWISE INDICATED ABOVE, THIS REVOCATION CARD REVOKES ALL PRIOR
CONSENTS GIVEN WITH RESPECT TO ANY OR ALL OF THE PROPOSALS SET FORTH HEREIN.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE CONSENT STATEMENT OF THE
COMPANY, DATED , 1995, IN OPPOSITION TO THE SOLICITATION OF THE AUTOINFO
STOCKHOLDERS COMMITTEE. UNLESS YOU SPECIFY OTHERWISE, BY SIGNING AND DELIVERING
THIS REVOCATION CARD TO THE COMPANY, YOU WILL BE DEEMED TO HAVE REVOKED CONSENT
TO ALL OF THE PROPOSALS SET FORTH HEREIN.
Revocations of consents can only be given by a stockholder of record.
Date:............................., 1995
........................................
Signature (Title, if any)
........................................
Signature, if held jointly
Please sign your name above exactly as it appears hereon and date your
card. When shares are registered in the name of more than one person, the
revocation card should be signed by all named holders. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or authorized
officer. If a partnership, please sign in partnership name by authorized person.
