0000891554-95-000128.txt : 19950829 0000891554-95-000128.hdr.sgml : 19950829 ACCESSION NUMBER: 0000891554-95-000128 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950828 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOINFO INC CENTRAL INDEX KEY: 0000351017 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 132867481 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11497 FILM NUMBER: 95567795 BUSINESS ADDRESS: STREET 1: 1600 ROUTE 208 CITY: FAIR LAWN STATE: NJ ZIP: 07410 BUSINESS PHONE: 2017030500 MAIL ADDRESS: STREET 1: 1600 ROUTE 208 CITY: FAIR LAWN STATE: NJ ZIP: 07410 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-K ---------------- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended Commission May 31, 1995 File No. 0-14786 AUTOINFO, INC. (Exact name of Registrant as specified in its charter) Delaware 13-2867481 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1600 Route 208, Fair Lawn, New Jersey 07410 (Address of Principal Executive Officer) (Zip Code) (Registrant's telephone number, including area code) (201) 703-0500 Securities registered under Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO _____ As of August 17, 1995, the Registrant had outstanding 7,757,752 shares of Common Stock. The aggregate market value of the Registrant's Common Stock held by nonaffiliates as of August 17, 1995 was approximately $22,333,000. DOCUMENTS INCORPORATED BY REFERENCE Part III Portions of the Registrant's annual proxy statement are incorporated by reference. Part IV Certain exhibits listed in response to Item 14(a)(3) have been included in prior filings made by the Registrant under the Securities Act of 1933 and the Securities Exchange Act of 1934. 1 PART I Item 1: BUSINESS General During fiscal year 1995 and subsequent to its fiscal year end, AutoInfo, Inc. (the "Company") sold substantially all of its operating assets. As a result, the Company's sole remaining operating business provides long distance telephone communications services. The long distance telephone communication service is marketed to over 2,000 customers through an independent commissioned sales force currently comprised of approximately 30 members. In addition, the Company is actively seeking out and evaluating acquisition candidates and expansion opportunities. On April 1, 1995, the Company sold its Orion Network (a communication and trading network for the automobile parts salvage industry based principally on satellite telecommunications technology), Compass Network (a communication and trading network for the automobile parts salvage industry based principally on voice communications technology), Checkmate Computer Systems (a computer inventory management system for the automobile parts salvage industry), and Insurance Parts Locator (an information database service on the availability of recycled automotive parts provided to automobile insurers) businesses to ADP Claims Solutions Group, Inc. ("ADP") for $30,350,000 in cash. The Company has a preferred stock investment in ComputerLogic, Inc., a provider of management information systems to the automotive collision and parts industry, convertible at the Company's option into 38% of its outstanding capital stock as well as an option to acquire the balance of the outstanding capital stock based upon a formularized valuation. As a result of the sale of the Company's businesses providing computerization and communications services to the automotive industry, and due to the lack of synergistic strategic opportunities, the Company has no intention of exercising its option and has written-off this investment totalling $1,804,000, including unpaid fees and preferred stock dividends of $155,000. Subsequent to the fiscal year end, on July 20, 1995, the Company sold its Insurance Inspection Services business, a provider of photo inspection services to the automotive casualty insurance industry, for $3,750,000 in cash. Competition The Company competes with numerous companies that provide long distance telephone communication services on the basis of price and service. Patents, Trademarks and Copyrights "AUTOINFO" is a registered trademark and service mark of the Company. Employees The Company currently has 7 full-time employees. None of the Company's employees are represented by a labor union. The Company considers its relationship with its employees to be good. 2 Directors and Executive Officers The following table provides certain information with respect to the directors and executive officers of the Company: Name Age Position ---- --- -------- Andrew Gaspar 47 Director, Chairman of the Board Scott Zecher 36 Director, President, Chief Operating Officer William Wunderlich 47 Chief Financial Officer, Secretary, Treasurer Jason Bacher 57 Director Robert Fagenson 46 Director Howard Nusbaum 47 Director Jerome Stengel 58 Director Directors of the Company are elected annually by the stockholders of the Company to serve one year terms and until their successors have been elected and qualified. All officers serve at the discretion of the Board of Directors. No director or executive officer has any family relationship with any other director or executive officer. 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. 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. 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. 3 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 substantial portion of its operating assets to ADP on April 1, 1995, Mr. Bacher became an employee of ADP. 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. Item 2: PROPERTIES The Company maintains an operational facility of approximately 800 square feet at 6818 Grover St., Omaha, Nebraska. The lease for such facility runs through June 1996 at an annual rental of $10,000. AutoInfo Insurance Inspection Services, which was sold on July 20, 1995, rents approximately 5,100 square feet of space at 1600 Route 208, Fair Lawn, New Jersey. The lease runs through May 1997 at an annual rental of approximately $76,000. The Company intends to sublet this space. The Company rents approximately 2,900 square feet of space at 1600 Route 208, Fair Lawn, New Jersey where it maintains its executive offices. The lease runs through November 1997 at an annual rental of approximately $44,000, subject to certain rent escalation provisions. The Company believes that its present facilities are suitable and adequate for its reasonably foreseeable growth. Item 3: LEGAL PROCEEDINGS The Company is not a party to any legal proceedings other than ordinary routine litigation incidental to its business. Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A special meeting of the stockholders of the Company was held on March 30, 1995 in New York, New York, pursuant to notice. At such meeting, the stockholders approved the sale of certain of the assets of the Company, comprised of all of the operating assets relating to its Orion Network, Compass Network, Checkmate Computer Systems and Insurance Parts Locator businesses, to ADP Claims Solutions Group, Inc., a wholly-owned subsidiary of Automatic Data Processing, Inc., for $30,350,000 in cash. 4 PART II Item 5: PRICE RANGE OF COMMON STOCK The Company's Common Stock is traded in the over-the-counter market and is quoted through the National Association of Securities Dealers Automated Quotation System ("NASDAQ") on the National Market System under the symbol AUTO. The following table sets forth, for the periods indicated, the high and low closing bid quotations per share for the Company's Common Stock as reported by NASDAQ. High Low ---- --- Fiscal year ended May 31, 1993 First quarter ..................................... 4 3/8 3 1/4 Second quarter .................................... 3 7/8 3 Third quarter ..................................... 5 3 3/4 Fourth quarter .................................... 4 1/8 3 1/2 Fiscal year ended May 31, 1994 First quarter ..................................... 4 3 11/16 Second quarter .................................... 4 5/8 3 1/4 Third quarter ..................................... 4 5/8 3 7/8 Fourth quarter .................................... 4 1/8 3 5/8 Fiscal year ended May 31, 1995 First quarter ..................................... 4 2 3/4 Second quarter .................................... 3 1/8 2 1/2 Third quarter ..................................... 3 1/2 3 3/16 Fourth quarter .................................... 3 59/64 3 1/4 As of August 8, 1995, the closing bid price per share for the Company's Common Stock, as reported by NASDAQ was $3.125. As of August 8, 1995, the Company had approximately 400 stockholders of record. Dividend Policy The Company has never declared or paid a cash dividend on its Common Stock. It has been the policy of the Company's Board of Directors to retain all available funds to finance the development and growth of the Company's business. The payment of cash dividends in the future will be dependent upon the earnings and financial requirements of the Company and other factors deemed relevant by the Board of Directors. 5 Item 6: SELECTED CONSOLIDATED FINANCIAL DATA The following is a summary of selected consolidated financial data relating to the Company. This summary has been restated to present the businesses sold as discontinued operations.
Year Ended May 31, ------------------------------------------------------ (In Thousands, Except Per Share Data) 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Statement of Operations Data: Revenues $ 4,798 $ 4,196 $ 4,414 $ 1,825 $ 192 Loss from continuing operations before income tax benefit (2,809) (317) (494) (590) (431) Benefit from income taxes (635) (98) (176) (173) (36) Loss from continuing operations (2,174) (219) (318) (417) (395) Income from discontinued operations 1,615 2,239 2,054 1,638 2,798 Gain on sale of discontinued operations 8,885 - - - - Net income 8,326 2,021 1,736 1,221 2,403 Net income (loss) per share: From continuing operations (.29) (.03) (.04) (.05) (.06) From discontinued operations .22 .30 .28 .22 .39 From gain on sale of discontinued operations 1.19 - - - - ----- ------ ------ ------ ------ Net income per share 1.12 .27 .24 .17 .33 ----- ------ ------ ------ ------ Balance Sheet Data: Total assets $42,357 $26,387 $19,975 $18,611 $17,430 Working capital 31,304 20,531 4,195 3,199 6,868 Long-term debt 4,000 4,161 0 215 724 Retained earnings (accumulated deficit) 13,199 4,873 2,852 1,116 (105) Stockholders' equity 30,121 20,857 18,625 16,872 15,435
6 Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Company's working capital was $31.3 million and liquid assets amounted to $38.8 million as of May 31, 1995. The Company has sufficient liquid assets to meet its short and long term capital requirements. The total amount of debt outstanding as of May 31, 1995 was $4,161,000, of which $161,000 is due in less than one year. This debt primarily relates to the $4 million of 7.55% subordinated noted issued by the Company in January 1994. The Company has adequate resources to meet these obligations. Subsequent to the close of the year ended May 31, 1995, the Company received cash of $3,750,000 in connection with the sale of certain operating assets of its insurance inspection services division business. Any gain or loss on the sale as well as the resulting income tax provision or benefit is not expected to be material. (See Note 12 to the Consolidated Financial Statements.) Inflation and changing prices had no material impact on revenues or the results of operations for the year ended May 31, 1995. There are no trends or commitments which may have an impact on the Company's liquidity. Accounts receivable decreased $238,860 as of May 31, 1995 compared with May 31, 1994. The decrease is attributable to the write-off of dividends and fees receivable relating to the Company's investment in Preferred Stock (See Note 6). Income taxes payable increased by $7,059,396 primarily related to taxes due on the gain on sale of assets of discontinued operations. Results of Operations On April 1, 1995, the Company consummated the sale of certain assets, net of certain liabilities, constituting the operating assets of the Orion Network, Compass Network, Checkmate Computer Systems, and Insurance Parts Locator businesses. The Results of Operations of these businesses have been classified as discontinued operations. The Company's continuing operations consist of its insurance inspection services and long distance services businesses. Except as otherwise noted, the following discussion of the results of operations is with respect to the Company's continuing operations. YEARS ENDED MAY 31, 1995 AND 1994 Revenues For the years ended May 31, 1995 and 1994, the Company's revenues were derived from the sale of insurance inspection services (79% and 58%, respectively) and the sale of long distance telephone services (21% and 42%, respectively). Total revenues for the year ended May 31, 1995 were $4,797,531, an increase of 14% or $601,831 over total revenues of $4,195,700 for the prior year. Revenues from the Company's insurance inspection services business increased by $1,373,000 due to the acquisitions consummated in the fourth quarter of the prior fiscal year. This increase was offset by a decline in revenue of $723,000 in the Company's telephone reseller division due primarily to reduced network usage levels and volume rebates from AT&T ($200,000) received in the prior fiscal year in connection with the achievement of certain network usage levels. 7 Operating Expenses System and support costs for the year ended May 31, 1995 increased by 68% to $1,992,881 from $1,187,499 for the prior year. The increase was primarily related to the increase in revenue of the Company's insurance inspection services business. Salaries and employee benefit expenses for the year ended May 31, 1995 increased by 10% to $2,057,496 from $1,874,052 for the prior year. The increase was primarily related to the increase in revenue of the Company's insurance inspection services business. Selling and administrative expenses for the year ended May 31, 1995 decreased by 8% to $1,657,672 from $1,530,514 for the prior year. The decrease was related to the reduction of selling expenses directly related to the decline in revenues in the Company's Telephone Reseller Division. Depreciation and amortization expense for the year ended May 31, 1995 increased by 66% to $413,926 from $249,759 for the prior year. The increase was primarily due to depreciation and amortization of acquisition costs associated with the Company's insurance inspection services business. Other (Income) Expenses Interest income was $568,449, an increase of $409,155 over $159,294 for the prior year period. This was directly attributable to the investment of the proceeds of the $4,000,000 subordinated notes issued by the Company in January 1994 and the proceeds from the sale of assets of $30,350,000 in April 1995. Dividend income was $0 as compared with $115,258 for the prior year. This decrease is directly related to the write-off of the Company's Preferred Stock investment. Interest expense was $315,908, an increase of $184,821 over $131,087 for the prior year. This was directly related to the $4,000,000 subordinated notes issued by the Company in January 1994 and notes payable issued in connection with an acquisition in January 1994. Preferred stock investment write-off was $1,804,256. As a result of the sale of the Company's businesses providing computerization and communication services to the automotive industry, the lack of synergistic business opportunity and the inability to remit management fees and preferred stock dividends as they became due, the Company has written off its preferred stock investment in ComputerLogic, Inc. (See Note 6 to the Consolidated Financial Statements.) Minority interest in net loss of partnership was $67,133 compared with $185,923 for the prior year. The Company acquired the minority interest in September 1994. Loss from Continuing Operations and Income Tax Benefit Loss from continuing operations before taxes for the year ended May 31, 1995 was $2,809,026 compared to $316,736 in the prior year, an increase of $2,492,290. This increase is attributable to the write-off of the Company's Preferred Stock investment ($1,804,000), the reduction in the minority interest in the net loss associated with the Company's insurance service business ($119,000), the increase in depreciation and amortization of acquisition costs ($114,000), and the impact of the decline in revenue in the Company's Telephone Reseller Division. The income tax benefit for the year ended May 31, 1995 was $634,623, or 22.6% of the loss before income taxes compared to $98,171, or 31.0% in the prior year. The decrease in percentage was the result of the write-off of the Company's Preferred Stock investment with no current tax benefit. The net loss from continuing operations was $2,174,403 for the year ended May 31, 1995 an increase of $1,955,838 as compared to $218,565 in the prior year. 8 Income From Discontinued Operations Income from discontinued operations for the year ended May 31, 1995 was $1,614,936 as compared to $2,239,313 in the prior year, a decrease of $624,377. The income for fiscal year 1995 reflects the ten month period up to the date of sale. In addition, the decrease was caused by lower margins on the sale of computer systems ($200,000) and the impact of reduced revenues from the sale of automotive supplies ($60,000). Gain on Sale of Discontinued Operations The gain on the sale of discontinued operations for the year ended May 31, 1995 relates solely to the sale of the operating assets of the Company's Orion Network, Compass Network, Checkmate Computer Systems and Insurance Parts Locator businesses on April 1, 1995 to ADP Claims Solutions Group, Inc. The gross proceeds of $30,350,000 in cash resulted in a gain of $8,885,688 after applicable taxes of $7,658,641. Years Ended May 31, 1994 and 1993 For the years ended May 31, 1994 and 1993, the Company's revenues were derived from the sale of insurance inspection services (58% in both years) and the sale of long distance telephone services (42% in both years). Total revenues for the year ended May 31, 1994 were $4,195,700, a decrease of 5%, or $218,181 over total revenues of $4,413,881 for the prior year. Operating Expenses System and support costs for the year ended May 31, 1994 decreased by 20% to $1,187,499 from $1,477,639 for the prior year. The decrease was primarily related to the elimination of site costs for a portion of photo inspection services. Salaries and employee benefit expenses for the year ended May 31, 1994 increased by 13% to $1,874,052 from $1,657,201 for the prior year. The increase was principally attributable to the increase in revenue of the Company's insurance inspection services business. Selling and administrative expenses for the year ended May 31, 1994 decreased by 20% to $1,530,514 from $1,914,869 for the prior year. These decreases were directly attributable to reduced selling costs associated with the reduced revenues in the Company's telephone reseller division. Depreciation and amortization expense for the year ended May 31, 1994 increased by 38% to $249,759 from $181,423 for the prior year period. This was due to depreciation and amortization of acquisition costs associated with the insurance inspection services business. Other (Income) Expenses Interest expense was $131,087, an increase of $110,669 over $20,418 for the prior year period. This was directly related to the $4,000,000 subordinated notes issued by the Company in January 1994 and notes payable issued in connection with an acquisition in January 1994. Interest income was $159,294, an increase of $80,657 over $78,637 for the prior year period. This was directly attributable to the investment of the proceeds of the $4,000,000 subordinated notes issued by the Company in January 1994. Minority interest in net loss of partnership was $185,923, an increase of $36,110 over $149,813 for the prior year period. This increase was directly related to the increase in the operations in the Company's insurance inspection services business. 9 Loss from Continuing Operations and Income Tax Benefit Loss from continuing operations before taxes for the year ended May 31, 1994 was $316,736 compared to $493,961 in the prior year, a decrease of $177,225. This decrease is attributable to increased profit in the Company's telephone reseller division. The income tax benefit for the year ended May 31, 1994 was $98,171, or 31.0% of the loss before income taxes compared to $176,200, or 35.7% in the prior year. The decrease in percentage was the result of credits relating to amendments to and refunds from the prior year. Income from Discontinued Operations Income from discontinued operations for the year ended May 31, 1994 was $2,239,313 as compared to $2,053,959 in the prior year, an increase of $185,354. The increase was caused by an increase in revenues in the satellite and voice communications networks of $760,000. Trends and Uncertainties During the year ended May 31, 1995, increased competition had an adverse impact on the sale of computer systems and the results of operations. Item 8: Financial Statements and Supplementary Data The response to this item is submitted as a separate section of this Report beginning on page F-1. Item 9: Disagreements on Accounting and Financial Disclosure Not applicable. PART III Item 10: Directors and Executive Officers of the Registrant Item 11: Executive Compensation Item 12: Security Ownership of Certain Beneficial Owners and Management Item 13: Certain Relationships and Related Transactions Pursuant to General Instruction G, the information required by Part III shall be incorporated by reference from the Registrant's definitive proxy statement for the fiscal year ended May 31, 1995 which is to be filed with the Commission. 10 PART IV Item 14: Exhibits, Financial Statements and Reports on Form 8-K Financial Statements The financial statements listed in the accompanying index to financial statements on Page F-1 are filed as part of this report. Exhibits The Exhibits listed below are filed as part of this Report. No. 2A Agreement and Plan of Merger between AutoInfo, Inc. (New York) and AutoInfo, Inc. (Delaware), January 20, 1987. (2) No. 3A Certificate of Incorporation of the Company. (3) No. 3B Amended and restated By-Laws of the Company. (11) No. 4A Specimen Stock Certificate. (4) No. 4B Form of Warrant Agreement and form of Warrant issued to Starr Securities, Inc., Martin Vegh and Robert Fagenson, May 20, 1986. (1) No. 4C Rights Agreement, dated as of March 30, 1995, between AutoInfo, Inc. and American Stock Transfer & Trust Company, as Rights Agent.(5) No. 9A Settlement Agreement, dated June 22, 1995, between AutoInfo, Inc. and Ryback Management Corporation, et al.* No. 10A 1985 Stock Option Plan. (1) No. 10B 1986 Stock Option Plan. (3) No. 10C 1989 Stock Option Plan. (7) No. 10D 1992 Stock Option Plan. (10) No. 10E Employment Agreement between AutoInfo, Inc. and Scott Zecher dated as of January 1, 1994, as amended by Agreement dated April 10, 1995.* No. 10F Supplemental Employment Agreement between AutoInfo, Inc. and Scott Zecher dated as of April 10, 1995.* No. 10G Employment Agreement between AutoInfo, Inc. and William Wunderlich dated as of April 10, 1995.* No. 10H Supplemental Employment Agreement between AutoInfo, Inc. and William Wunderlich dated as of April 10, 1995.* No. 10I Form of AutoInfo, Inc. Employee Protection Trust Agreement dated August 17, 1995.* 11 No. 10J Form of Restricted Stock Grant Agreement between AutoInfo, Inc. and certain executive officers, directors and consultants. (4) No. 10K Series A Convertible Preferred Stock Purchase Agreement dated as of December 19, 1991 between ComputerLogic, Inc., Richard A. Palmer and AutoInfo, Inc. (8) No. 10L Series B Preferred Stock Purchase Option Agreement dated as of December 19, 1991 between ComputerLogic, Inc., Richard A. Palmer and AutoInfo, Inc. (8) No. 10M Outstanding Stock Purchase Option Agreement dated as of December 19, 1991 between ComputerLogic, Inc., Richard Palmer and AutoInfo, Inc. (8) No. 10N Note Agreement dated January 10, 1994 between AutoInfo, Inc. and certain investors with respect to issuance of $4 million of 7.55% Subordinated Notes due January 9, 2000 and 533,333 Common Stock Purchase Warrants.(6) No. 10O Asset Purchase Agreement dated January 31, 1995 between ADP Claims Solutions Group, Inc. and AutoInfo, Inc.(9) No. 10P Promissory Note and Security and Pledge Agreement dated April 28, 1995 between AutoInfo, Inc. and Scott Zecher.* No. 11A Calculation of earnings per share.* No. 23A Consent of Arthur Andersen LLP, independent public accountants.* -------------------------------- *Filed as an Exhibit hereto. (1) This Exhibit was filed as an Exhibit to the Company's Registration Statement on Form S-18 (File No. 33-3526-NY) and is incorporated herein by reference. (2) This Exhibit was filed as an Exhibit to the Company's Current Report on Form 8-K dated January 6, 1987 and is incorporated herein by reference. (3) These Exhibits were filed as Exhibits to the Company's definitive proxy statement dated October 20, 1986 and are incorporated herein by reference. (4) These Exhibits were filed as Exhibits to the Company's Registration Statement on Form S-1 (File No. 33-15465) and are incorporated herein by reference. (5) This Exhibit was filed as an Exhibit to the Company's Registration Statement on Form 8-A filed April 13, 1995, and is incorporated herein by reference. (6) This Exhibit was filed as an Exhibit to the Company's Annual Report on Form 10-K for the year ended May 31, 1994 and is incorporated herein by reference. (7) This Exhibit was filed as an Exhibit to the Company's definitive proxy statement dated September 25, 1989 and is incorporated herein by reference. (8) These Exhibits were filed as Exhibits to the Company's Current Report on Form 8-K dated December 19, 1991 and are incorporated herein by reference. (9) This Exhibit was filed as an Exhibit to the Company's definitive proxy statement dated March 1, 1995 and is incorporated herein by reference. (10) This Exhibit was filed as an Exhibit to the Company's definitive proxy statement dated October 2, 1992 and is incorporated herein by reference. (11) This Exhibit was filed as an Exhibit to the Company's Current Report on Form 8-K dated March 30, 1995 and is incorporated herein by reference. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d), the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on August 17, 1994 on its behalf by the undersigned, thereunto duly authorized. AUTOINFO, INC. By:_________________________________ Scott Zecher, President and Chief Operating Officer Pursuant to the requirements of the Securities Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated. ________________________ Director and Chairman August , 1995 Andrew Gaspar ________________________ Director, President and August , 1995 Scott Zecher Chief Operating Officer ________________________ Chief Financial Officer, August , 1995 William Wunderlich Secretary and Treasurer ________________________ Director August , 1995 Jason Bacher ________________________ Director August , 1995 Robert Fagenson ________________________ Director August , 1995 Howard Nusbaum ________________________ Director August , 1995 Jerome Stengel 13 AUTOINFO, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Public Accountants......................... F-2 Consolidated Balance Sheets - as of May 31, 1995 and 1994........ F-3 Consolidated Statements of Operations for the Years Ended May 31, 1995, 1994 and 1993................................ F-4 Consolidated Statements of Stockholders' Equity for the Years Ended May 31, 1995, 1994 and 1993...................... F-5 Consolidated Statements of Cash Flows for the Years Ended May 31, 1995, 1994 and 1994................................ F-6 Notes to Consolidated Financial Statements....................... F-7 Information required by schedules called for under Regulation S-X is either not applicable or is included in the consolidated financial statements or notes thereto. F-1 ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To AutoInfo, Inc.: We have audited the accompanying consolidated balance sheets of AutoInfo, Inc. (a Delaware corporation) and subsidiaries as of May 31, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended May 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AutoInfo, Inc. and subsidiaries as of May 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 1995, in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP New York, New York July 11, 1995 F-2 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 1995 AND 1994 ASSETS 1995 1994 ---- ---- Current assets: Cash $ 521,868 $ 445,484 Short-term investments 38,314,489 7,063,691 Accounts receivable, net of allowance for doubtful accounts (May 31, 1995 - $63,772; May 31, 1994 - $113,504) 583,975 822,835 Net book value of assets of discontinued operations (Note 3) - 13,453,483 Other current assets 120,074 114,502 ----------- ----------- Total current assets 39,540,406 21,899,995 Property, equipment and furniture (at cost), net of accumulated depreciation (May 31, 1995 - $1,263,765; May 31, 1994 - $1,006,152) 692,784 595,290 Goodwill and other intangibles, net of accumulated amortization (May 31, 1995 - $286,490; May 31, 1994 - $130,179) 1,766,503 1,936,062 Investment, at cost - 1,637,199 Other assets 357,406 318,878 ----------- ----------- $42,357,099 $26,387,424 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 160,869 $ 623,096 Accounts payable 400,544 291,312 Income taxes payable 7,131,543 72,147 Accrued liabilities 543,357 382,902 ----------- ----------- Total current liabilities 8,236,313 1,369,457 ----------- ----------- Long-term debt 4,000,000 4,160,869 ----------- ----------- Commitments and contingencies (Note 9) Stockholders' equity: Common Stock - authorized 20,000,000 shares $.01 par value; issued and outstanding - 7,756,252 at May 31, 1995 and 7,253,286 at May 31, 1994 77,563 72,533 Additional paid-in capital 17,725,267 16,344,194 Officer note receivable (Note 10) (466,797) - Deferred compensation under stock bonus plan (414,686) (432,847) Retained earnings 13,199,439 4,873,218 ----------- ----------- Total stockholders' equity 30,120,786 20,857,098 ----------- ----------- $42,357,099 $26,387,424 =========== =========== See Accompanying Notes To Consolidated Financial Statements F-3 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED MAY 31, 1995, 1994 AND 1993 1995 1994 1993 ---- ---- ---- REVENUES $4,797,531 $4,195,700 $4,413,881 ---------- ---------- ---------- Operating expenses: System and support costs 1,992,881 1,187,499 1,477,639 Salaries and employee benefits 2,057,496 1,874,052 1,657,201 Selling, general and administrative 1,657,672 1,530,514 1,914,869 Depreciation and amortization 413,926 249,759 181,423 ---------- ---------- ---------- Total operating expenses 6,121,975 4,841,824 5,231,132 ---------- ---------- ---------- Loss from operations (1,324,444) (646,124) (817,251) ---------- ---------- ---------- Other (income) expenses: Interest income (568,449) (159,294) (78,637) Dividend income - (115,258) (115,258) Interest expense 315,908 131,087 20,418 Preferred stock investment write-off 1,804,256 - - Minority interest in net loss of partnership (67,133) (185,923) (149,813) ---------- ---------- ---------- Total other (income) expenses 1,484,582 (329,388) (323,290) ---------- ---------- ---------- Loss from continuing operations before income tax benefit (2,809,026) (316,736) (493,961) Income tax benefit (634,623) (98,171) (176,200) ---------- ---------- ---------- Loss from continuing operations (2,174,403) (218,565) (317,761) Income from discontinued operations, net of income taxes of $804,878, $1,005,814 and $1,138,931, respectively (Note 3) 1,614,936 2,239,313 2,053,959 Gain on sale of discontinued operations, net of income taxes of $7,658,641 (Note 3) 8,885,688 - - ---------- ---------- ---------- Net income $8,326,221 $2,020,748 $1,736,198 ========== ========== ========== Per share data: Loss from continuing operations ($.29) ($.03) ($.04) Income from discontinued operations .22 .30 .28 Gain on sale of discontinued operations 1.19 - - ---------- ---------- ---------- Net income per share $1.12 $.27 $.24 ========== ========== ========== Weighted average number of common and common equivalent shares 7,410,548 7,416,721 7,342,044 --------- --------- --------- See Accompanying Notes To Consolidated Financial Statements F-4 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED MAY 31, 1995, 1994 AND 1993
Shares of Deferred Common Additional Officer Compensation Stock Common Paid-In Note Under Stock Retained Outstanding Stock Capital Receivable Bonus Plan Earnings ----------- ----- ------- ---------- ---------- -------- Balance, June 1, 1992 7,119,336 $71,193 $16,118,428 $ - $(434,201) $1,116,272 Amortization of Deferred Compensation - - - - 17,083 - Net Income - - - - - 1,736,198 --------- ------- ----------- --------- --------- ----------- Balance, May 31, 1993 7,119,336 71,193 16,118,428 - (417,118) 2,852,470 Common Stock Pursuant to Stock Bonus Plan 15,000 150 32,662 - (32,812) - Exercise of Stock Option 118,950 1,190 193,104 - - - Amortization of Deferred Compensation - - - 17,083 - Net Income - - - - - 2,020,748 --------- ------- ----------- --------- --------- ----------- Balance, May 31, 1994 7,253,286 72,533 16,344,194 - (432,847) 4,873,218 Exercise of Stock Options 502,966 5,030 1,234,365 - - - Amortization of Deferred Compensation - - - - 18,161 - Acceleration of Vesting Rights of Employee Stock Options - - 146,708 - - - Loan to Officer for the Exercise of Stock Options (466,797) Net Income - - - - - 8,326,221 --------- ------- ----------- --------- --------- ----------- Balance, May 31, 1995 7,756,252 $77,563 $17,725,267 $(466,797) $(414,686) $13,199,439 ========= ======= =========== ========= ========= ===========
See Accompanying Notes To Consolidated Financial Statements F-5 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED MAY 31, 1995, 1994 AND 1994
1995 1994 1993 ---- ---- ---- Cash Flows from Operating Activities: Net income $ 8,326,221 $2,020,748 $ 1,736,198 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization expenses 413,926 249,759 181,423 Amortization of deferred compensation 18,161 17,083 17,083 Gain on sale of discontinued operations (16,544,329) - - Preferred stock investment write-off 1,637,199 - - Changes in assets and liabilities: Accounts receivable, net 238,860 (253,901) (95,223) Other current assets (5,572) 135,957 (4,454) Other assets (38,528) (255,018) 17,911 Income taxes payable 7,059,396 5,468 (85,316) Accounts payable and accrued liabilities 269,687 287,006 27,902 --------- --------- ---------- Net cash provided by continuing operations 1,375,021 2,207,102 1,795,524 --------- --------- ---------- Net cash provided by discontinued operations and non-cash charges (205,480) (965,257) (403,060) --------- --------- ---------- Cash Flows from Investing Activities: Proceeds from the sale of discontinued operations 30,350,000 - - Officer note receivable (466,797) - - Acquisitions - (948,639) - Capital expenditures (341,861) (173,635) (81,595) Purchases of short-term investments (31,250,798) (3,743,031) (810,012) ---------- --------- ---------- Net cash (used for) investing activities (1,709,456) (4,865,305) (891,607) --------- --------- ---------- Cash Flows from Financing Activities: Issuance of notes - 4,000,000 - Reduction of borrowings (623,096) (277,406) (536,020) Exercise of stock options 1,239,395 194,294 - --------- --------- ---------- Net cash provided by (used for) financing activities 616,299 3,916,888 (536,020) --------- --------- ---------- Net increase (decrease) in cash 76,384 293,428 (35,163) Cash at beginning of year 445,484 152,056 187,219 --------- --------- ---------- Cash at end of year $ 521,868 $ 445,484 $ 152,056 ========= ========= ==========
-------------------------- Supplemental Disclosures of Non-cash Investing and Financing Activities: In connection with acquisitions during the year ended May 31, 1994, the Company entered into Notes payable of $844,759. See Accompanying Notes To Consolidated Financial Statements F-6 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 Note 1 - Business and summary of significant accounting policies Business During fiscal year 1995 and subsequent to its fiscal year end, AutoInfo, Inc. and subsidiaries (the "Company") sold substantially all of its operating assets. As a result, the Company's sole remaining operating business provides long distance telephone communications services. The Company is actively seeking out and evaluating acquisition candidates and expansion opportunities. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition The Company recognizes revenue from insurance inspection services and long distance telephone communications services as services are rendered. Short-term Investments Short-term investments include common stock and bond funds, money market instruments and municipal bonds. Investments are carried at cost which approximates market value. (See Note 4). Property, Equipment and Furniture Depreciation of equipment and furniture is provided on the straight-line method over the estimated useful lives of the related assets which range from three to five years. Goodwill and Other Intangibles The excess of cost over the fair value of net assets acquired is allocated to goodwill and other intangibles and is being amortized using the straight-line method over periods of up to twenty years. The Company evaluates the carrying value of goodwill, and the remaining amortization periods based upon the projected discounted cash flows of the operations of the acquired entities. Based upon these evaluations to date, no impairment of goodwill exists at May 31, 1995. Net Income Per Share Net income per share of common stock is based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The net income per share and the weighted average number of common and common equivalent shares represent primary earnings per share data. Fully diluted earnings per share is not presented since its effect is not significant. F-7 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 Income Taxes The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes" which requires the use of the liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted Statutory Tax Rates to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Deferred income taxes have not been provided for as the effect of temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities are immaterial. Note 2 - Business Acquisitions In January and April 1994, the Company acquired the automotive photo inspection business of D.B. Kelley Associates, Inc., and Equifax Services, Inc., respectively. The aggregate purchase price consisted of approximately $1,500,000 in cash and notes. The results of operations of these businesses have been consolidated with the Company since January 31, 1994 and April 16, 1994, respectively. The acquisitions have been accounted for under the purchase method of accounting and, accordingly, the purchase price was allocated to assets acquired based upon their estimated fair market value at the date of acquisition. The excess of the purchase price over the fair market value of net assets acquired has been recorded as goodwill. Note 3 - Discontinued Operations On April 1, 1995, the Company sold the assets relating to its Orion Network, Compass Network, Checkmate Computer Systems, and Insurance Parts Locator businesses to ADP Claims Solutions Group, Inc., for $30,350,000 in cash. The gain on the sale was $8,885,688 after applicable taxes of $7,658,641. Prior years have been restated to present the businesses sold as discontinued operations. Summarized results of operations and financial position data of the discontinued operations were as follows: Years Ended May 31, -------------------------------------- 1995 1994 1993 ---- ---- ---- Results of Operations: Revenues $13,723,654 $16,371,697 $14,882,694 Income from operations 2,414,895 3,243,901 3,213,162 Income before income taxes 2,419,814 3,245,127 3,192,890 Income taxes 804,878 1,005,814 1,138,931 Net income from discontinued operations 1,614,936 2,239,313 2,053,959 ========== ========== ========== As of May 31, 1994 ------------------ Balance Sheet: Current Assets $ 1,986,675 Net property, equipment and furniture 3,196,789 Net goodwill and other intangibles 8,793,627 Net license costs 273,492 Other Assets 100,000 Current liabilities (897,100) ---------- Net book value of assets of discontinued operations $13,453,483 ========== F-8 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 Note 4 - Short-Term Investments Effective June 1, 1994, the Company, as required, adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". This pronouncement establishes the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. This statement supersedes Statement No. 12 "Accounting for Certain Marketable Securities". The effect of the adoption of this pronouncement was not material. In connection with the adoption of SFAS No. 115, debt and equity securities used as part of the Company's investment management that may be sold in response to cash needs, changes in interest rates, and other factors have been classified as securities available for sale. Such securities are reported at cost which approximates fair value and have maturities of less than one year and included common stock and bond funds ($3,520,041 as of May 31, 1995 and $3,577,584 as of May 31, 1994), money market instruments ($3,159,808 as of May 31, 1995 and $1,786,107 as of May 31, 1994) and municipal bonds ($31,634,640 as of May 31, 1995 and $1,700.000 as of May 31, 1994). As of May 31, 1995 unrealized gains and losses were not material. Unrealized gains and losses, if material, would be excluded from earnings and reported as a separate component of stockholders' equity (on an after tax basis). During the years ended May 31, 1995 and 1994, gains or losses arising from the disposition of marketable securities were not material. Gains and losses on disposition of securities are recognized on the specific identification method in the period in which they occur. Note 5 - Accrued Liabilities The components of accrued liabilities at May 31 were as follows: 1995 1994 ---- ---- Payroll and related costs $ 76,856 $116,526 Professional Fees 196,431 29,500 Interest 126,243 118,693 Other 143,827 118,183 -------- -------- $543,357 $382,902 ======== ======== Note 6 - Investment In December 1991, the Company acquired a Preferred Stock Investment (3,293 shares of $500 par value, 7% cumulative convertible preferred stock) in ComputerLogic, Inc., a Georgia Corporation, which offers computer based products to the automobile parts and repair industries. The Preferred Stock elects not less than 40% of the ComputerLogic board of directors. The Company's Preferred Stock Investment is convertible into 38% of the outstanding capital stock of ComputerLogic, Inc. The Company also has the option to increase its investment for additional consideration as described in the purchase agreement. The purchase price consisted of cash of $1,250,000 and 101,667 shares of the Company's Common Stock. The investment was being carried at the lower of cost or net realizable value. F-9 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 As a result of the sale of the Company's businesses providing computerization and communications services to the automotive industry and the resulting lack of synergistic business opportunities, the Company has no intention of exercising its option to increase its investment. Additionally, ComputerLogic has been unable to remit to the Company any management fees and certain preferred stock dividends as they become due. The Company has therefore written off its preferred stock investments totalling $1,804,256 which included unpaid management fees and unpaid preferred stock dividends of $155,460 as of May 31, 1995. Note 7 - Long-term Debt Long-term debt consists of the following: MAY 31, ---------------- 1995 1994 ---- ---- Subordinated notes due January 2000 payable in equal annual installments in January 1998, 1999 and 2000 with interest at 7.55% paid semi-annually $4,000,000 $4,000,000 Note payable to former owner of acquired business, due in January 1996 with interest at 4% payable in equal monthly installments 160,869 357,710 Debt incurred in connection with acquisition, payable in equal installments in October 1994 and April 1995 - 426,255 --------- --------- 4,160,869 4,783,965 Less current portion of long-term debt 160,869 623,096 --------- --------- Long-term debt $4,000,000 $4,160,869 --------- --------- The Company paid interest of approximately $308,000, $14,000 and $48,000 during fiscal years 1995, 1994 and 1993, respectively. The Company has an available unused line of credit in the amount of $2,000,000 which expires on September 30, 1995. F-10 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 Note 8 - Income Taxes For the years ended May 31, 1995, 1994 and 1993, the provision (benefit) for income taxes consists of the following: 1995 1994 1993 ---- ---- ---- Federal $ (611,690) $ (85,837) $ (161,428) State (22,933) (12,334) (14,772) --------- --------- --------- Income tax benefit on loss from continuing operations $ (634,623) $ (98,171) $ (176,200) --------- --------- --------- Income taxes on income from discontinued operations: Federal $ 884,452 $ 879,445 $1,043,434 State (79,574) 126,369 95,497 --------- --------- --------- $ 804,878 $1,005,814 $1,138,931 --------- --------- --------- Income taxes on gain on sale of discontinued operations: Federal $7,148,753 $ - $ - State 509,888 - - --------- --------- --------- $7,658,641 $ - $ - ========= ========= ========= The following table reconciles the Company's effective income tax benefit on loss from continuing operations to the Federal Statutory Rate for the years ended May 31, 1995, 1994 and 1993: 1995 1994 1993 ---- ---- ---- Federal Statutory Rate (34.0)% (34.0)% (34.0)% Effect of: State and local taxes, net of federal benefit (.5) (3.9) (3.9) Benefit from tax exempt income (6.1) - - Preferred stock investment write-off 20.3 - - Credits resulting from amendments to and refunds from prior year returns - 5.7 - Other, net (2.3) 1.2 2.2 ----- ----- ----- (22.6)% (31.0)% (35.7)% ===== ===== ===== The Company paid income taxes of approximately $884,000, $1,119,000 and $1,178,000 during fiscal years 1995, 1994 and 1993, respectively. F-11 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 Note 9 - Commitments and Contingencies Leases The Company is obligated under noncancellable operating leases for premises and equipment expiring at various dates through 1999. Future minimum lease payments are $170,000, $148,000, $35,000 and $500 for each of the four year periods ended May 31, 1999. Lease expense for the years ended May 31, 1995, 1994 and 1993 was approximately $384,000, $434,000 and $393,000, respectively. 401(k) Plan The Company is obligated under its 401(k) Plan to match fifty percent of employee contributions up to a maximum of three percent of eligible compensation. 401(k) Plan expense for the years ended May 31, 1995, 1994 and 1993 was approximately $72,000, $73,000 and $68,000, respectively. Other Agreements 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"). 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, F-12 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 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. In connection with the Supplemental Employment Agreements, the Company also approved the creation of an Employment Protection Trust Agreement which is a form of a 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. Note 10 - Stockholders' Equity Stock Bonus Plan In January 1994, the Company issued 15,000 shares of Common Stock pursuant to a restricted stock bonus plan to a Director. In June 1987 and November 1987, the Company issued 410,000 shares of Common Stock pursuant to a restricted stock bonus plan to key executives and consultants. These shares will vest ratably every two years over a period of 30 years. The unvested portion is subject, upon the occurrence of certain events, to either forfeiture or accelerated vesting. Such shares are recorded at their estimated fair market value as determined by the Board of Directors and are charged as compensation expense ratably over the vesting period. Warrants In connection with the $4,000,000 7.55% subordinated long-term notes issued in January 1994, the Company issued six year warrants to purchase 533,333 shares of Common Stock at a per share price of $4.00. The Company has reserved 533,333 shares of Common Stock for issuance upon the exercise of these warrants. No such warrants have been exercised to date. In connection with a May 1986 public offering of Common Stock, the Company issued warrants to the underwriter for the purchase of 96,000 shares of its Common Stock at a per share price of $4.80. During fiscal 1992, 66,750 warrants to purchase shares of the Company's Common Stock expired. The remaining 29,250 warrants are exercisable through May 1996. The Company has reserved 29,250 shares of Common Stock for issuance upon the exercise of these warrants. Stock Option Plans The Company has four stock option plans under which officers and other key employees may acquire shares of Common Stock. Options have been granted at not less than fair market value on the date of grant and expire ten years from that date. Options are exercisable immediately after the granting date except where exercise is otherwise limited at the time of granting. F-13 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 Option information for the three year period ended May 31, 1995 is as follows: Number of Option Price Shares Per Share --------- ------------ Outstanding at June 1, 1992 723,749 $1.625 to $4.125 Granted during the year 332,000 $3.00 to $3.50 Forfeited during the year (135,000) $3.50 to $4.125 ------- -------------- Outstanding at May 31, 1993 920,749 $1.625 to $4.125 Granted during the year 165,000 $3.75 to $4.00 Exercised during the year (118,950) $1.625 to $1.75 Forfeited during the year (269,000) $3.00 to $4.00 ------- ------------- Outstanding at May 31, 1994 697,799 $1.625 to $4.125 Granted during the year 270,000 $2.75 to $4.125 Exercised during the year (502,966) $1.625 to $3.375 Forfeited during the year ( 30,000) $3.00 to $3.75 ------- ------------- Outstanding at May 31, 1995 434,833 $1.75 to $4.125 ------- -------------- Options exercisable at May 31, 1995, 1994 and 1993 were 177,055, 380,799 and 477,082 shares, respectively. At May 31, 1995, 434,833 shares of the Company's authorized Common Stock were reserved to cover future exercise of options, and 280,751 shares were available for future grants. In connection with the sale of discontinued operations, the Company accelerated the vesting provisions relating to outstanding options held by employees of the businesses sold. As of May 31, 1995, the vesting of options to purchase 175,333 shares were accelerated resulting in a charge against the gain on sale of discontinued operations of $146,708. On April 10, 1995, an officer of the Company exercised options to acquire 216,799 shares. In connection with this exercise, the Company received a full recourse, non-interest bearing note due in May 1996, secured by a pledge of the acquired shares in the amount of $466,797. Note 11 - Acquisition of Minority Interest In September 1994, the Company acquired the minority interest in its insurance inspection services business pursuant to a formularized valuation which resulted in no additional consideration being due. Accordingly, there is no provision for minority interest in net loss of partnership for any period subsequent to August 31, 1994. Note 12 - Subsequent Event In July 1995, the Company consummated the sale of certain assets net of certain liabilities constituting the operating assets of its Insurance Inspection Division for $3,750,000 in cash. Revenues pertaining to this business segment included in the Consolidated Statement of Operations were $3,767,103, $2,394,203 and $2,510,762 for the fiscal years ended May 31, 1995, 1994 and 1993, respectively. F-14 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1995, 1994 AND 1993 The gain or loss on the sale of this segment, as well as the results of operations for the period from June 1, 1995 through the date of sale, are subject to the finalization of certain events relating to the transaction. The Company does not expect any resulting gain or loss or the results of operations for the period from June 1, 1995 through the date of sale to be material. F-15 EX-9.A 2 SETTLEMENT AGREEMENT Exhibit 9.A EXECUTION COPY SETTLEMENT AGREEMENT dated as of June 22, 1995 between AutoInfo, Inc. (the "Company"), Ryback Management Corporation ("Ryback"), Eric C. Ryback ("ER") and Lawrence Callahan ("LC"). WHEREAS, on June 14, 1995, the Company commenced a lawsuit in United States District Court for the District of Delaware against, among others, Ryback, ER and LC (collectively, the "Ryback Defendants") alleging that the Ryback Defendants violated Sections 13(d) and 13(g) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"; the "Litigation") and the Company and Ryback desire to settle the Litigation; WHEREAS in consideration for agreeing to settle the Litigation, the Company and Ryback have agreed to enter into and abide by the terms of this Agreement; WHEREAS the Ryback Defendants deny all of the Company's allegations of wrongful and/or unlawful conduct by the Ryback Defendants, including, but not limited to, the allegations that the Ryback Defendants violated Sections 13(d) and 13(g) of the Exchange Act, but wish to avoid the expense and distraction of litigation; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereby agree as follows: ARTICLE I Representations SECTION 1.1. Representations of the Company. The Company hereby represents and warrants to Ryback that (i) the Company has the full legal right, power and authority to enter into and perform this Agreement, (ii) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated herein have been duly authorized by the Company, and (iii) this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. SECTION 1.2. Representations of Ryback. Ryback hereby represents and warrants to the Company that (i) Ryback has the full legal right, power and authority to enter into and perform this Agreement, (ii) the execution and delivery of this Agreement by Ryback and the consummation by Ryback of the transactions contemplated herein have been duly authorized by Ryback, (iii) this Agreement constitutes the legal, valid and binding obligation of Ryback enforceable against Ryback in accordance with its terms, (iv) on the date hereof, Ryback is the beneficial owner of 1,142,850 shares of the Company's outstanding common stock (713,000 of which are owned by the Lindner Fund and 429,850 of which are owned by the Lindner Bulwark Fund) and neither Ryback nor any affiliate or associate of Ryback beneficially owns or will own any other securities of the Company or rights or interests in any such securities, and (v) Ryback does not have any agreements, arrangements or understandings with any person regarding any possible stockholder proposal or proxy solicitation with respect to the Company or with regard to the voting of any securities of the Company. SECTION 1.3. Representations of ER and LC. Each of ER and LC hereby represents and warrants with respect to himself, individually and not jointly, that on the date hereof, except with respect to the securities specified in Section 1.2(iv) above, (i) neither ER nor LC beneficially own any outstanding common stock of the Company or any other securities of the Company or any rights or interest in any such securities and (ii) neither ER nor LC is a party to any agreement, arrangement or understanding with any person regarding any possible stockholder proposal or proxy solicitation with respect to the Company or with regard to the voting of any securities of the Company. ARTICLE II Standstill, Transfers and Voting SECTION 2.1. Standstill Provisions. (a) During the term of this Agreement, unless specifically requested in writing in advance by the Board of Directors of the Company (the "Board"), Ryback will not, and will cause its affiliates and associates 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, 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) 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 Company or any of its affiliates; 2 (iv) form, join or in any way participate in a "group" (as such term is used in Section 13d(3) of the Exchange Act) to take any action otherwise prohibited by the terms of this 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 Directors or any of its affiliates or propose the removal of any member of the Board of Directors 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 Directors 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 Company's Board of Directors 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 of Director 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 this Agreement (including without limitation this Section 2.1(a)) 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 this Agreement. 3 SECTION 2.2. Transfers. (a) During the term of this 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 common stock outstanding of the Company, 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 own, collectively (with its associates and affiliates), upon consummation of the disposition, 3% or more of the outstanding common stock of the Company as shown on the most recent applicable report or statement published by the Company. Notwithstanding the foregoing, any disposition by the Lindner Bulwark Fund after the second anniversary of this Agreement shall not require satisfaction of the condition specified in clause (i) of this Section 2.2(a). (b) Any transfer of shares of the Common Stock in violation of this Section 2.2 may be suspended on the books of the Company. SECTION 2.3 Voting. With respect to each matter submitted to the stockholders of the Company for a vote, during the term of this Agreement, whether at a meeting or pursuant to any consent of shareholders, 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 of Directors; 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 defined in Section 4.9, Ryback and its associates and affiliates shall vote 4 their shares in the same proportion as the votes of all other outstanding voting securities of the Company voting on such applicable matter. ARTICLE III Dismissal of Litigation and Releases SECTION 3.1. Dismissal of Lititgation. AutoInfo, Inc. shall, as soon as practicable, dismiss without prejudice, the Litigation against the Ryback Defendants and shall withdraw all of its outstanding discovery requests to the Ryback Defendants including the First Request for Production of Documents dated June 15, 1995, the First Set of Interrogatories dated June 15, 1995 and the First Notice of Depositions dated June 19, 1995. SECTION 3.2. Release of Ryback Defendants. Subject to Section 3.4, the Company hereby forever releases, discharges and acquits the Ryback Defendants and each of their past, present or future parent and subsidiary corporations, affiliates, stockholders, agents, successors, assigns, directors, employees, representatives, attorneys, spouses, marital communities, next of kin, heirs, executors and administrators from and against any and all claims, demands, judgments, actions and causes of actions, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever in law, admiralty or equity, which AutoInfo, Inc. and/or any of its parent companies, subsidiaries, heirs, executors, administrators, successors, agents, affiliates and assigns ever had, now have or hereafter can, shall or may have against the Ryback Defendants, for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the date of this Agreement. SECTION 3.3. Release of the Company. The Ryback Defendants, individually and jointly, hereby forever release, discharge and acquit AutoInfo, Inc. and its past, present and future parent and subsidiary corporations, affiliates, agents, successors, assigns, directors, employees, representatives, attorneys, spouses, marital communities, next of kin, heirs, executors and administrators from and against any and all claims, demands, judgments, actions and causes of action, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in law, admiralty or equity, which any of the Ryback Defendants, and/or any of their parent companies, subsidiaries, officers, directors, employees, heirs, executors, administrators, successors, agents, affiliates and assigns ever had, now have or hereafter can, shall or may have against AutoInfo, Inc. for, upon, or by reason of any matter, cause or thing 5 whatsoever from the beginning of the world to the date of this Agreement. SECTION 3.4. Non Released Claims. It is further agreed and understood that (a) the above general release does not pertain to, or affect, the parties' obligations and rights under this Agreement and that all parties reserve all rights to enforce the obligations set forth in this Agreement and (b) that should any part of this Agreement be preliminarily or permanently adjudicated to be invalid by any court or, in the event Ryback shall fail to comply with the provisions of this Agreement for any reason whatsoever, the releases contained herein shall be deemed null and void. ARTICLE IV Miscellaneous SECTION 4.1. Fees and Expenses. Each party hereto shall pay the fees and expenses of its investment banking advisors, attorneys, accountants and other advisors, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. SECTION 4.2. Severability. Except as provided in Section 3.4 above, if any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect. SECTION 4.3. Legend. Ryback will, and will cause its affiliates and associates to, present or cause to be presented promptly all certificates, to the extent such certificates are in existence on the date hereof or from time to time, evidencing shares of Common Stock owned by Ryback and/or its affiliates and associates for the placement thereon of the following legend, which legend will remain on such certificates until such time as the shares represented by such certificates are no longer subject to the restrictions of this Agreement: THIS SECURITY IS SUBJECT TO THE PROVISIONS OF THE SETTLEMENT AGREEMENT DATED AS OF JUNE 22, 1995, AMONG THE ISSUER AND RYBACK MANAGEMENT CORPORATION AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH SETTLEMENT AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF THE ISSUER AND WILL BE FURNISHED TO ANY PERSON UPON REQUEST. 6 SECTION 4.4. Specific Enforcement; No Right to Terminate; Consent to Jurisdiction. (a) The Company, ER, LC and Ryback acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they may be entitled by law or equity. (b) The parties hereto further agree that they shall not be permitted or have the right to terminate or suspend performance of any provision of this Agreement, it being agreed that all provisions of this Agreement shall continue and be specifically enforceable in all events and under all circumstances regardless of any events, occurrences, actions or omissions before or after the date hereof. In furtherance of the foregoing, the parties hereto agree that they shall not be permitted to, and shall not, bring any claim seeking to terminate or suspend performance of any provision of this Agreement or seeking any determination that any provision of this Agreement (including, without limitation, this Section 4.4) is invalid, inapplicable or unenforceable. (c) Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of (a) the Chancery Court of the State of Delaware, New Castle County, (b) the Superior Court of the State of Delaware, New Castle County, and (c) the United States District Court for the District of Delaware, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the parties hereto agrees to commence any action, suit or proceeding relating hereto in the Chancery Court of the State of Delaware, New Castle County, or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, either in the Superior Court of the State of Delaware, New Castle County or in the United States District Court for the District of Delaware. Each party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's respective address set forth below shall be effective service of process for any action, suit or proceeding brought in any such court with respect to any matters to which it has submitted to jurisdiction in this Section 4.4(c). Each party hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Chancery Court of the State of Delaware, New Castle County, (ii) the Superior Court of the State of Delaware, New Castle County, or (iii) the United States District Court for the District of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. 7 SECTION 4.5. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the matters covered hereby and this Agreement may be amended only by an agreement in writing executed by the parties hereto. SECTION 4.6. Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) when personally delivered or delivered by telex (with correct answer-back received) or telecopy on a business day during normal business hours at the address or number designated below or (b) on the business day following the date of mailing by overnight courier, fully prepaid, addressed to such address, whichever shall first occur. The addresses for such communications shall be: If to the Company: AutoInfo, Inc. 1600 Route 208 Fair Lawn, New Jersey 07410 Attn.: Scott Zecher Facsimile: (201) 703-0500 Confirmation: (201) 703-1777 with a copy to: Dreyer and Traub LLP 101 Park Avenue New York, New York 10178 Attn.: Kenneth S. Rose, Esq. Facsimile: (212) 984-6262 Confirmation: (212) 984-6126 and Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attn.: Douglas Flaum, Esq. Facsimile: (212) 859-8259 Confirmation: (212) 859-4000 8 If to Ryback, ER or LC: Ryback Management Corporation 7711 Carondelet Avenue, Suite 700 St. Louis, Missouri 63105 Attn: Lawrence Callahan Facsimile: (314) 727-3866 Confirmation: (314) 727-5305 (x219) with a copy to: Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 Attn.: Paul R. Rentenbach Facsimile: (313) 568-6832 Confirmation: (313) 568-6973 Any party hereto may from time to time change its address for notices under this Section 4.6 by giving at least 10 days' notice of such changed address to the other parties hereto. SECTION 4.7. Waivers. No waiver by either party of any breach of any provision hereof shall be deemed to be a continuing waiver in the future thereof or a waiver of any other provision hereof; nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. SECTION 4.8. Certain Understandings. The Company understands and agrees that this Settlement Agreement and the consideration given in exchange therefor by the Ryback Defendants do not constitute and are not to be construed as an admission of liability or wrongdoing of any kind on the part of the Ryback Defendants, by whom all liability and wrongdoing are denied. SECTION 4.9. Construction. The headings of the Articles, Sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to effect the construction hereof. All section and article references are to this Agreement, unless otherwise expressly provided. As used in this Agreement (i) "hereof", "hereunder", "herein" and words of like impact shall be deemed to refer to this Agreement in its entirety and not just a particular section of this agreement, (ii) "beneficially own" shall have the meaning of such term within Rule 13d-3 (as such rule is currently in effect) under the Exchange Act, (iii) "affiliate" 9 and "associate" shall each have the meaning of such terms within Rule 12b-2 (as such rule is currently in effect) under the Exchange Act, and (iv) "outside director" shall mean a director who is not also an officer and/or employee of the Company. SECTION 4.10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and legal representatives. No party hereto shall assign this Agreement or any rights hereunder without the prior written consent of the other parties hereto. SECTION 4.11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware without regard to the principles of conflict of laws. SECTION 4.12. Termination. This Agreement shall terminate on the fifth anniversary of the date hereof. SECTION 4.13. Counterparts. This Agreement may be executed in counterparts each of which shall be deemed an original and, all of which, when taken together, shall constitute one Agreement. 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement or have caused this Agreement to be duly executed by their respective authorized officers as of the date hereof. AUTOINFO, INC. By: /s/ Scott Zecher ------------------------------------ Name: Scott Zecher Title: President and Chief Operating Officer RYBACK MANAGEMENT CORPORATION By: /s/ ------------------------------------ Name: Title: /s/ Eric C. Ryback ------------------------------------ Eric C. Ryback /s/ Lawrence Callahan ------------------------------------ Lawrence Callahan 11 Approved as to Form Only FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: /s/ Paul Reinstein --------------------------------------- Paul Reinstein Counsel for AutoInfo, Inc. Dykema Gossett By: /s/ Derek I. Meier --------------------------------------- Derek I. Meier Counsel for Ryback Management Corporation, Eric E. Ryback and Lawrence Callahan 12 EX-10.E 3 EMPLOYMENT AGREEMENT [AutoInfo Logo] April 10, 1995 Mr. Scott Zecher 1341 Hudson Road Teaneck, New Jersey 07666 Re: Employment Agreement dated January 1, 1994 Dear Scott: Reference is made to the Employment Agreement dated as of January 1, 1994 by and between AutoInfo, Inc. (the "Company") and you (the "Agreement"). On April 10, 1995 the Compensation Committee of The Board of Directors of the Company by unanimous approval made the following amendments to the Agreement: 1. The term of the Agreement has been extended through and including April 30, 1998 and paragraph 3 of the Agreement is hereby amended accordingly; 2. Your salary shall be at the rate of $150,000 per year and paragraph 4 of the Agreement is hereby amended accordingly; and 3. For the twelve month period commencing on the date hereof, you shall be entitled to a bonus in the amount of $100,000 payable in two equal installments. Paragraph 5 of the Agreement is hereby amended accordingly; provided, however, that at the end of such twelve month period the existing provisions of paragraph 5 shall continue in full force and effect. All of the other terms and conditions of the Agreement shall remain in full force and effect and shall not be effected by this amendment. By Order of the Board of Directors /s/ Andrew Gaspar ------------------------------------ Andrew Gaspar, Chairman of the Board AGREED TO ACCEPTED: /s/ Scott Zecher ------------------- Scott Zecher EMPLOYMENT AGREEMENT AGREEMENT dated as of January 1, 1994 by and between AutoInfo, Inc., a Delaware corporation ("Auto") and Scott Zecher residing at 1341 Hudson Road, Teaneck, New Jersey 07666 ("Zecher"). WHEREAS, Zecher is currently the President and Chief Operating Officer of Auto; and WHEREAS, the Company desires to assure itself of the benefit of Zecher's services and experience for a period of time; and WHEREAS, Zecher is willing to enter into an agreement to that end with the Company upon the terms and conditions herein set forth. NOW THEREFORE, in consideration of the premises and covenants herein contained, the parties hereto agree as follows: 1. Employment. Auto hereby employs Zecher as its President and Chief Operating Officer and Zecher hereby accepts such employment and agrees to perform his duties and responsibilities hereunder in accordance with the terms and conditions hereinafter set forth. 2. Duties and Responsibilities. Zecher shall be the President and Chief Operating Officer of Auto during the Employment Term (as defined below), with full authority with respect to all operations of Auto. Zecher shall report to and be subject to the direction of the Chairman of the Board ("Chairman") and Board of Directors (the "Board") of Auto and Zecher shall perform such duties as may be assigned to him from time to time by the Chairman or the Board; provided, that such duties shall be of a nature consistent with the dignity and authority of the positions of President and Chief Operating Officer. During the Employment Term Zecher shall, subject to the Company's vacation policy, devote substantially all of his normal business time and attention to the businesses of Auto and its subsidiaries and affiliates and shall perform such duties in a diligent, trustworthy, loyal, businesslike and efficient manner, all for the purpose of advancing the business of Auto and its subsidiaries and affiliates. Nothing contained in this Agreement shall be deemed to prohibit Zecher from devoting a nominal amount of his time to his (and his family's) personal investments, provided, however, that, in case of conflict, the performance of Zecher's duties under this Agreement shall take precedence over his activities with respect to such investments. 3. Term. The Term of this Agreement shall commence on the date hereof and shall continue until July 31, 1997, unless terminated prior thereto in accordance with the terms and provisions hereof (the "Employment Term"). 4. Compensation. Auto shall pay to Zecher a salary at the rate of $144,000 per year, payable in such manner as Auto shall determine, but in no event any less often than monthly, less withholding required by law and other deductions agreed to by Zecher. Zecher's annual salary may be increased during the Employment Term in the sole discretion of the Board. 5. Bonus. In addition to the compensation provided for in Paragraph 4 of this Agreement, Zecher shall during the Employment Term participate in the Company's then existing and effective profit sharing and bonus plans. Furthermore Zecher shall receive such other bonuses as determined in the sole discretion of the Board. Any bonuses shall be paid in such manner as the parties mutually agree. 6. Principal Office Without Zecher's consent, Auto shall not require Zecher to maintain his principal office in any location other than the Northern New Jersey area. 7. Expenses and Benefits. (a) Auto shall, consistent with Auto's policy of reporting and reimbursement of business expenses, reimburse Zecher for such other ordinary and necessary entertainment and business related expenses as shall be incurred by Zecher in the course of the performance of his duties under this Agreement. 2 (b) Auto recognizes that Zecher will be required to incur significant travel in rendering services to Auto hereunder and in connection therewith Auto shall during the Employment Term provide Zecher with an automobile (which Auto at its option may either purchase or lease in its or Zecher's name) which the parties agree shall be an automobile of Zecher's reasonable choice and Auto shall pay all of the expenses associated with the operation of such automobile including, without limitation, maintenance, fuel, repair and insurance costs. Zecher shall have the right upon termination of this Agreement to have any automobile lease assigned to him upon his assumption of the obligations thereunder. (c) Zecher shall be entitled to participate, to the extent he qualifies, in such life insurance, hospitalization, disability and other medical insurance plans or programs as are generally made available to executive officers of Auto which shall be consistent with the programs and benefits currently offered to Zecher. 8. Termination. (a) Auto shall have the right to terminate this Agreement for disability in the event Zecher suffers any illness or incapacity of such character as to substantially disable him from performing his duties hereunder for a period of more than one hundred and eighty (180) consecutive days in any one calendar year upon Auto giving at least thirty (30) days written notice of its intention to so terminate. If Zecher shall resume his duties hereunder within thirty (30) days following the receipt of such notice and shall perform such duties for forty (40) days of the next sixty (60) consecutive days thereafter, the Employment Term shall continue without interruption and such notice of intention to terminate shall have no further force or validity. (b) This Agreement shall terminate upon the death of Zecher, except that Zecher's salary shall be payable to his estate for one hundred eighty (180) days thereafter, together with all accrued bonuses and outstanding unreimbursed expenses. 3 (c) Auto may terminate this Agreement at any time with Reasonable Cause upon five (5) days written notice to Zecher. "Reasonable Cause" means (i) conviction of a crime involving moral turpitude; (ii) Zecher having engaged in any activity in competition with Auto, without Auto's consent; (iii) Zecher having divulged any secret or confidential information of a material nature belonging to Auto, without Auto's consent, except as required by law; (iv) Zecher's dishonesty or misconduct that is damaging or detrimental to Auto in any material respect; or (v) Zecher's breach of any material term of this Agreement; provided, however, that notice under this provision shall not be effective unless Zecher shall have first received written notice from Auto of the specific acts or omissions alleged to constitute a breach of any material term of this Agreement, and such breach continues unremedied for a period of fifteen (15) days after such notice. (d) If either (i) a third person, including a "group" as defined in Section 13(d) (3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of Auto having 25% or more of the total number of votes that may be cast for the election of directors of Auto or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of Auto before the Transaction shall cease to constitute a majority of the Board or the Board of Directors of any successor to Auto; then and in such event for a period of one hundred and twenty (120) days following the occurrence of such an event Zecher may elect to terminate this Agreement upon five (5) days prior written notice to Auto and upon such termination Zecher shall be entitled to receive, in addition to any other payments due to Zecher pursuant to this Agreement, a severance payment equal to the greater of (a) $250,000, or (b) the compensation due to Zecher for the balance of the Employment Term. Upon the occurrence of a Transaction, the Company will cause to be placed in escrow with Dreyer and Traub an amount sufficient to cover the Company's obligations to Zecher under this paragraph 8(d) (the "Escrow"). The Escrow, or any applicable portion thereof, 4 will be distributed to Zecher upon his election to terminate this Agreement as provided for hereinabove. Any balance of the Escrow will be returned to the Company. 9. Non-Competition. Zecher covenants and agrees that during his employment hereunder and for a period of two years after his employment hereunder is terminated, he will not, without the prior written consent of Auto, (a) compete with the business of Auto or any of its subsidiaries or affiliates and, in particular, he will not without such consent, directly or indirectly, own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing or control of, or be connected as a director, officer, employee, partner, consultant or agent with, any business in competition with or similar to the business of Auto or any of its subsidiaries or affiliates; provided, however, that Zecher may own up to two percent of the capital stock of any publicly traded corporation in competition with the business of Auto or any of its subsidiaries or affiliates if the fair market value of such corporation's outstanding capital stock exceeds $100 million, and (b) divert, take away, interfere with or attempt to take away any present or former employee or customer of Auto or any of its subsidiaries or affiliates. The provisions of this Section 9 shall no longer be applicable if Zecher's employment is terminated by Auto (other than for cause) or by Zecher pursuant to the provisions of Section 8(d) hereof during the Employment Term. In the event that the provisions of this Section 9 should ever be deemed to exceed the time or geographic limitations or any other limitations permitted by applicable law, then such provisions shall be deemed reformed to the maximum permitted by applicable law. Zecher acknowledges and agrees that the foregoing covenant is an essential element of this Agreement and that, but for the agreement of Zecher to comply with the covenant, the Company would not have entered into this Agreement, and that the remedy at law for any breach of the covenant will be inadequate and the Company, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. 5 10. Confidential Information. Zecher recognizes and acknowledges that the customer lists, patents, inventions, copyrights, methods of doing business, trade secrets and proprietary information of Auto including, without limitation, as the same may exist from time to time, are valuable, special and unique assets of the business of Auto. Except in the ordinary course of business or as required by law, Zecher shall not, during or after the Employment Term, disclose any such list of customers or any part thereof, any such patents, inventions, copyrights, methods of doing business, trade secrets or proprietary information which are not otherwise in the public domain to any person, firm, corporation or other entity for any reason whatsoever. In addition, Zecher specifically acknowledges and agrees that the remedy at law for any breach of the foregoing shall be inadequate and that AutoInfo and the Company, in addition to any other relief available to them, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. 11. COBRA. In the event of Zecher's death during the term of this Agreement, Auto shall make all COBRA medical premium payments for Zecher's family for the three year period following his death. 12. Opportunities. During his employment with Auto, Zecher shall not take any action which might divert from Auto or any of its subsidiaries or affiliates any opportunity which would be within the scope of any of the present or future businesses of Auto or any of its subsidiaries or affiliates. 13. Contents of Agreement, Parties in Interest, Assignment, etc. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Zecher hereunder which are of a personal nature shall neither be assigned nor transferred in whole or in party by Zecher. This Agreement shall not be amended except by a written instrument duly executed by Auto and Zecher. 6 14. Severability. If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, such term or provision shall be ineffective to the extend of such invalidity or unenforceability without invalidating the remaining terms and provisions hereof, and this Agreement shall be construed as if such invalid or unenforceable term or provision had not been contained herein. 15. Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other party shall be in writing and shall be deemed to have been duly given when delivered personally or five (5) days after dispatch by registered or certified mail, postage prepaid, return receipt requested, to the party to whom the same is so given or made: If to Auto addressed to: AutoInfo, Inc. 1600 Route 208 Fair Lawn, New Jersey 07410 Attn: President with a copy to: Dreyer and Traub 101 Park Avenue New York, New York 10178 Attn: Kenneth S. Rose, Esq. If to Zecher addressed to: Scott Zecher 1341 Hudson Road Teaneck, N.J. 07666 or at such other address as the one party shall specify to the other party in writing. 16. Counterparts and Headings. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all which together shall constitute one and the same instrument. All headings are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. 17. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New Jersey. 7 18. Arbitration. Any disputes arising hereunder shall be submitted to arbitration before a single arbitrator in New York City under the rules and regulations of the American Arbitration Association. Any award in such arbitration proceeding may be enforced in any court of competent jurisdiction. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. AUTOINFO, INC. By: /s/ Jason Bacher ---------------------- Jason Bacher, Chairman of the Board /s/ Scott Zecher ---------------------- Scott Zecher 8 EX-10.F 4 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS AGREEMENT entered into as of the 10th day of April, 1995, by and between AutoInfo, Inc. (the "Company"), and Scott Zecher (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a Change in Control (as hereinafter defined) exists and that the threat of or the occurrence of a Change in Control can result in significant distractions of its key management personnel because of the uncertainties inherent in such a situation; WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure his continued dedication and efforts in such event without undue concern for his personal financial and employment security; and WHEREAS, in order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits during the term of his employment following a Change in Control, in the event his employment is terminated as a result of, or in connection with, a Change in Control and to provide the Executive with the Gross-Up Payment (as hereinafter defined). NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Employment Term. (a) The "Employment Term" shall commence on the first date during the Protected Period (as defined in Section 1 (c) below) on which a Change in Control occurs (the "Effective Date") and shall expire on the third anniversary of the Effective Date; provided, however, that on each anniversary of the Effective Date, the Employment Term shall automatically be extended for one (1) year unless either the Company or the Executive shall have given written notice to the other at least ninety (90) days prior thereto that the Employment Term shall not be so extended. (b) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated prior to the Effective Date and the Executive reasonably demonstrates that such termination (1) was at the request of a Third Party (as hereinafter defined) who has effectuated a Change in Control or (2) otherwise occurred in connection with, or in anticipation of, a Change in Control, then for all purposes of this Agreement, the Effective Date shall mean the date immediately prior to the date of such termination of the Executive's employment. (c) For purposes of this Agreement, the "Protected Period" shall be the three (3) year period commencing on April 10, 1995; provided, however, that the Protected Period shall be automatically extended for one (1) year on April 9, 1996 and on each April 9, thereafter unless the Company shall have given written notice to the Executive at least ninety (90) days prior thereto that the Protected Period shall not be so extended; and provided further, however, that notwithstanding any such notice by the Company not to extend, the Protected Period shall not end if prior to the expiration thereof any Third Party has indicated an intention or taken steps reasonably calculated to effect a Change in Control, in which event the Protected Period shall end only after such Third Party publicly announces that it has abandoned all efforts to effect a Change in Control. 2. (a) Subject to the provisions of Section 8 hereof, the Company agrees to continue to employ the Executive and the Executive agrees to remain in the employ of the Company during the Employment Term. During the Employment Term, the Executive shall be employed as the President and Chief Operating Officer of the Company or in such other senior executive capacity as may be mutually agreed to in writing by the parties. The Executive shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar executive capacity. He shall also promote, by entertainment or otherwise, the business of the Company. (b) During the Employment Term, excluding periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during usual business hours to the business and affairs of the Company to the extent necessary to discharge the responsibilities assigned to the Executive hereunder. The Executive may (1) serve on corporate, civil or charitable boards or committees, (2) manage personal investments and (3) deliver lectures and teach at educational institutions, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities hereunder. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. 3. Compensation. (a) Base Salary. During the Employment Term, the Company agrees to pay or cause to be paid to the Executive annual base salary at a rate at least equal to the highest rate of the Executive's annual base salary as in effect at any time within ninety (90) days preceding the Effective Date, and as may be increased from time to time (hereinafter referred to as the "Base Salary"). Such Base Salary shall be payable in accordance with the Company's customary practices applicable to its executives. (b) Annual Bonus. In addition to Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Term, an annual bonus (the "Annual Bonus") in cash at least equal to the average of the annual bonus paid or payable during the three full fiscal years ended prior to the Effective Date (or such lesser period for which the annual bonuses were paid or payable to the Executive) (the "Recent Average Bonus"). Each such Annual Bonus shall be paid in two semi-annual payments no later than one month following each six and twelve month anniversary hereunder, unless the Executive shall elect to defer the receipt of such Annual Bonus. 4. Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to employees generally, including, without limitation, all pension, retirement, profit sharing, savings, medical, hospitalization, disability, dental, life or travel accident insurance benefit plans. Unless otherwise provided herein, the compensation and benefits under, -2- and the Executive's participation in, such plans, practices and programs shall be on the same basis and terms as are applicable to employees of the Company generally, but in no event on a basis less favorable in terms of benefit levels and coverage than the most favorable of such plans, practices and programs covering the Executive at any time within ninety (90) days preceding the Effective Date, or if more favorable, at any time thereafter. 5. Executive Benefits. During the Employment Term, the Executive shall be entitled to participate in all executive benefit or incentive compensation plans maintained or established by the Company for the purpose of providing compensation and/or benefits to executives of the Company. Unless otherwise provided herein, the compensation and benefits under, and the Executive's participation in, such plans shall be on the same basis and terms as other similarly situated executives of the Company, but in no event on a basis less favorable in terms of benefit levels or reward opportunities than the most favorable benefit levels and reward opportunities applicable to the Executive at any time within ninety (90) days preceding the Effective Date, or if more favorable, at any time thereafter. No additional compensation provided under any of such plans shall be deemed to modify or otherwise affect the terms of this Agreement or any of the Executive's entitlements hereunder. 6. Other Benefits. (a) Automobile. The Company recognizes that Employee will be required to incur significant travel in rendering services to the Company hereunder and in connection therewith the Company during the Employment Term shall provide Employee with an automobile (which the Company at its option may either purchase or lease in its or Employee's name) which the parties agree shall be an automobile of the Employee's reasonable choice and the Company shall pay all of the expenses associated with the operation of such automobile including, without limitation, maintenance, fuel, repair and insurance costs. (b) Expenses. The Executive shall be entitled to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company. 7. Vacation and Sick Leave. During the Employment Term, at such reasonable times as the Board shall in its discretion permit, the Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment under this Agreement, provided that: (a) The Executive shall be entitled to annual vacation in accordance with the policies as periodically established by the Board for similarly situated executives of the Company; provided, however, that in no event shall the Executive's annual vacation entitlement be less than five weeks per year. (b) The Executive shall be entitled to sick leave (without loss of pay) in accordance with the Company's policies as in effect from time to time. -3- 8. Termination. During the Employment Term, the Executive's employment hereunder may be terminated under the following circumstances: (a) Cause. The Company may terminate the Executive's employment for "Cause." A termination of employment is for "Cause" if the Executive (1) has been convicted of a felony or (2) intentionally engaged in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; provided, however that no termination of the Executive's employment shall be for Cause as set forth in clause (2) above until (i) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (2) and specifying the particulars thereof in detail, and (ii) the Executive shall have been provided an opportunity to be heard by the Board (with the assistance of the Executive's counsel if the Executive so desires). No act, nor failure to act, on the Executive's part, shall be considered "intentional" unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the Company. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by the Executive after a Notice of Termination is given by the Executive shall constitute Cause for purposes of this Agreement. (b) Disability. The Company may terminate the Executive's employment after having established the Executive's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity which impairs the Executive's ability to substantially perform his duties under this Agreement which continues for a period of at least one hundred eighty (180) consecutive days. The Executive shall be entitled to the compensation and benefits provided for under this Agreement for any period during Employment Term and prior to the establishment of the Executive's Disability during which the Executive is unable to work due to a physical or mental infirmity. Notwithstanding anything contained in this Agreement to the contrary, until the Termination Date specified in a Notice of Termination (as each term is hereinafter defined) relating to the Executive's Disability, the Executive shall be entitled to return to his position with the Company as set forth in this Agreement in which event no Disability of the Executive will be deemed to have occurred. (c) Good Reason. (1) The Executive may terminate his employment for "Good Reason." For purposes of this Agreement, Good Reason shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (viii) hereof: (i) a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with his status, title, position or responsibilities; or any removal of the Executive from or failure to reappoint or reelect him to any of such offices or positions, except in connection with the termination of his employment for Disability, Cause, as a result of his death or by the Executive other than for Good Reason; (ii) a reduction in the Executive's Base Salary or any failure to pay the Executive any compensation or benefits to which he is entitled within five days of the date due; -4- (iii) the Company's requiring the Executive to be based at any place outside a 30-mile radius from Fair Lawn, New Jersey, except for reasonably required travel on the Company's business which is not greater than such travel requirements prior to the Change in Control; (iv) the failure by the Company to (A) continue in effect (without reduction in benefit level, and/or reward opportunities) any material compensation or employee benefit plan in which the Executive was participating immediately prior to the Effective Date, including, but not limited to, the medical coverage afforded the Executive and his family, unless a substitute or replacement plan has been implemented which provides substantially identical compensation or benefits to the Executive; (v) the insolvency or the filing (by any party, including the Company) of a petition for bankruptcy of the Company; (vi) any material breach by the Company of any provision of this Agreement; (vii) any purported termination of the Executive's employment for Cause by the Company which does not comply with the terms of Section 8(a); or (viii) the failure of the Company to obtain an agreement, satisfactory to the Executive, from any successor or assign of the Company to assume and agree to perform this Agreement, as contemplated in Section 13 hereof. (2) Any event or condition described in Section 8(c)(1)(i) through (viii) which occurs prior to a Change in Control but which the Executive reasonably demonstrates (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control (a "Third Party"), or (B) otherwise arose in connection with, or in anticipation of a Change in Control, shall constitute Good Reason for purposes of this Agreement notwithstanding that it occurred prior to the Change in Control. (3) The Executive's right to terminate his employment pursuant to this Section 8(c) shall not be affected by his incapacity due to physical or mental illness. (d) Voluntary Termination. The Executive may voluntarily terminate his employment hereunder at any time. 9. Compensation Upon Termination. Upon termination of the Executive's employment during the Employment Term, the Executive shall be entitled to the following benefits: (a) If the Executive's employment with the Company shall be terminated (1) by the Company for Cause or Disability, (2) by reason of the Executive's death, or (3) by the Executive other than for Good Reason or during the 60-day period commencing on the first anniversary of the date of the Effective Date (the "Window Period"), the Company shall pay the Executive all amounts earned or accrued through the Termination Date but not paid as of the Termination Date, including (i) Base Salary, (ii) reimbursement for reasonable and necessary -5- expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, (iii) vacation pay, and (iv) sick leave (collectively, "Accrued Compensation"). In addition to the foregoing, if the Executive's employment is terminated by the Company for Disability or by reason of the Executive's death, the Company shall pay to the Executive or his beneficiaries an amount equal to the "Pro Rata Bonus" (as hereinafter defined). The "Pro Rata Bonus" is an amount equal to the "Highest Annual Bonus" (as hereinafter defined) multiplied by a fraction the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365. The "Highest Annual Bonus" is an amount equal to the greater of (A) the Annual Bonus paid or payable, to the Executive (and annualized for any fiscal year consisting of less than twelve full months or for which the Executive has been employed for less than twelve full months) for the most recently completed fiscal year during the Employment Term, if any, and (B) the Recent Average Bonus. The Executive's entitlement to any other compensation or benefits shall be determined in accordance with the Company's employee benefit plans and other applicable programs and practices then in effect. (b) If the Executive's employment with the Company shall be terminated (other than by reason of death), (1) by the Company other than for Cause or Disability, (2) by the Executive for Good Reason or (3) by the Executive for any reason within the Window Period, the Executive shall be entitled to the following: (i) the Company shall pay the Executive all Accrued Compensation and a Pro-Rata Bonus; (ii) the Company shall pay the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount (the "Severance Amount") in cash equal to either (y) if the Termination Date occurs on or before April 9, 1996, three times the sum of (A) the Executive's Base Salary at the highest rate in effect at any time subsequent to the 90th day prior to the Effective Date and (B) the Highest Annual Bonus; or (z) if the Termination Date occurs on or after April 10, 1996, two times the sum of (A) the Executive's Base Salary at the highest rate in effect at any time subsequent to the 90th day prior to the Effective Date and (B) the Highest Annual Bonus; (iii) for 36 months (the "Continuation Period"), the Company shall at its expense continue on behalf of the Executive and his dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the Effective Date or at any time thereafter or (y) to other similarly situated executives who continue in the employ of the Company during the Continuation Period. The coverage and benefits (including deductibles and costs) provided in this Section 9(b)(iii) during the Continuation Period shall be no less favorable to the Executive and his dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x) and (y) above. The Company's obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder so long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This Subsection (iii) shall not be interpreted so as to -6- limit any benefits to which the Executive, his dependents or beneficiaries may be entitled under any of the Company's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits; (iv) (A) the restrictions on any outstanding incentive awards (including restricted stock and stock options) granted to the Executive under the Company's Stock Option Plans or under any other incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested, and all performance units granted to the Executive shall become 100% vested and (B) the Executive shall have the right to require the Company to purchase, for cash, any shares of unrestricted stock or shares purchased upon exercise of any options, at a price equal to the fair market value of such shares on the date of purchase by the Company. (v) during the Continuation Period, the Company shall at its expense continue to provide the Executive with an automobile as provided for in Section 6(a). (c) The amounts provided for in Sections 9(a) and 9(b)(i) and (ii) shall be paid within five days after the Executive's Termination Date. (d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 9(b)(iii). (e) The severance pay and benefits provided for in Sections 9(a) and 9(b)(i) and (ii) shall be in lieu of any other severance pay to which the Executive may be entitled under any Company severance plan, program or arrangement or pursuant to the Employment Agreement dated January 1, 1994, as amended, between the Company and the Executive. 10. Definitions. (a) Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (1) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its -7- voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a "Subsidiary") (ii) the Company or its Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); and (2) The individuals who, as of April 10, 1995 are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Company's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (3) Approval by stockholders of the Company of: (i) A merger, consolidation or reorganization involving the Company, unless such merger, consolidation or reorganization is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a merger, consolidation or reorganization of the Company where: (A) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving Corporation, and (C) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the -8- then outstanding Voting Securities), has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities. (ii) A complete liquidation or dissolution of the Company; or (iii) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). (4) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (b) Notice of Termination. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which indicates the specific termination provision in this Agreement, if any, relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Any purported termination by the Company or by the Executive shall be communicated by written Notice of Termination to the other. For purposes of this Agreement, no such purported termination of employment shall be effective without such Notice of Termination. (c) Termination Date. Etc. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, his date of death, or in all other cases, the date specified in the Notice of Termination subject to the following: (1) If the Executive's employment is terminated by the Company for Cause or due to Disability, the date specified in the Notice of Termination shall be at least thirty (30) days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of his duties during such period of at least thirty (30) days; and (2) If the Executive's employment is terminated for Good Reason or during a Window Period Termination, the date specified in the Notice of Termination shall not be more than sixty (60) days from the date the Notice of Termination is given to the Company. -9- 11. Excise Tax Payments. (a) In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), to the Executive or for his benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment with the Company or a change in ownership or effective control of the Company or of a substantial portion of its assets (a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties, other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on his return, imposed with respect to such taxes and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) An initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company's expense by an accounting firm selected by the Company and reasonably acceptable to the Executive which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within five days of the Termination Date, if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this Section 11(b) shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. The existence of the Dispute shall not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the Determination. Upon the final resolution of a Dispute, the Company shall promptly pay to the Executive any additional amount required by such resolution. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Section 11(c) below. (c) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments. 12. Unauthorized Disclosure. During the period that the Executive is actively employed by the Company, the Executive shall not make any Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by the Executive without the consent of the Board (other than -10- pursuant to a court order) to any person, other than an employee or director of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of the Company or as may be legally required, of any material confidential information obtained by the Executive while in the employ of the Company (including any material confidential information with respect to any of the Company's customers or methods of distribution) the disclosure of which is demonstrably and materially injurious to the Company; provided, however, that such term shall not include the use or disclosure by the Executive, without consent, of any information known generally to the public (other than as a result of disclosure by him in violation of this Section 12) or any information not otherwise considered confidential and material by a reasonable person engaged in the same business as that conducted by the Company. 13. Successors and Assigns. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term "Company" as used herein shall include such successors and assigns. The term "successors and assigns" as used herein shall mean a corporation or other entity' acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative. 14. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, or (c) the Executive's hearing before the Board as contemplated in Section 8(a) of this Agreement; provided, however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Executive's termination of employment under circumstances described in Section l(a)) occurred on or after a Change in Control. 15. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. -11- 16. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its subsidiaries and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its subsidiaries shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 17. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, defense, recoupment, or other right which the Company may have against the Executive or others. 18. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 19. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflict of law principles thereof. Any action brought by any party to this Agreement shall be brought and maintained in a court of competent jurisdiction in New Castle county of the State of Delaware. 20. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 21. No Guaranteed Employment. The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, prior to the Effective Date, may be terminated by either the Executive or the Company at any time. Moreover, if prior to the Effective Date, the Executive's employment with the Company terminates, the Executive shall have no further rights under this Agreement. 22. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. -12- IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written. AUTOINFO, INC. By: /s/ Andrew Gaspar ------------------------------- Andrew Gaspar, Chairman of the Board of Directors ATTEST: /s/ William Wunderlich ------------------------------ Secretary /s/ Scott Zecher ------------------------------- Scott Zecher -13- EX-10.G 5 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT AGREEMENT dated as of April 10, 1995 by and between AutoInfo, Inc., a Delaware corporation ("Auto") and William Wunderlich residing at 14 Frost Pond Road, Stanford, Connecticut 06903 ("Wunderlich"). WHEREAS, Wunderlich is currently the Chief Financial Officer of Auto; and WHEREAS, the Company desires to assure itself of the benefit of Wunderlich's services and experience for a period of time; and WHEREAS, Wunderlich is willing to enter into an agreement to that end with the Company upon the terms and conditions herein set forth. NOW THEREFORE, in consideration of the premises and covenants herein contained, the parties hereto agree as follows: 1. Employment. Auto hereby employs Wunderlich as its Chief Financial Officer and Wunderlich hereby accepts such employment and agrees to perform his duties and responsibilities hereunder in accordance with the terms and conditions hereinafter set forth. 2. Duties and Responsibilities. Wunderlich shall be the Chief Financial Officer of Auto during the Employment Term (as defined below). Wunderlich shall report to and be subject to the direction of the President and Board of Directors (the "Board") of Auto and Wunderlich shall perform such duties as may be assigned to him from time to time by the President or the Board; provided, that such duties shall be of a nature consistent with the dignity and authority of the positions of Chief Financial Officer. During the Employment Term Wunderlich shall, subject to the Company's vacation policy, devote substantially all of his normal business time and attention to the businesses of Auto and its subsidiaries and affiliates and shall perform such duties in a diligent, trustworthy, loyal, businesslike and efficient manner, all for the purpose of advancing the business of Auto and its subsidiaries and affiliates. Nothing contained in this Agreement shall be deemed to prohibit Wunderlich from devoting a nominal amount of his time to his (and his family's) personal investments, provided, however, that, in case of conflict, the performance of Wunderlich's duties under this Agreement shall take precedence over his activities with respect to such investments. 3. Term. The Term of this Agreement shall commence on the date hereof and shall continue until April 30, 1997, unless terminated prior thereto in accordance with the terms and provisions hereof (the "Employment Term"). 4. Compensation. Auto shall pay to Wunderlich a salary at the rate of $120,000 per year, payable in such manner as Auto shall determine, but in no event any less often than monthly, less withholding required by law and other deductions agreed to by Wunderlich. Wunderlich's annual salary may be increased during the Employment Term in the sole discretion of the Board. 5. Bonus. In addition to the compensation provided for in Paragraph 4 of this Agreement, Wunderlich shall during the Employment Term participate in the Company's then existing and effective profit sharing and bonus plans. Furthermore Wunderlich shall receive such other bonuses as determined in the sole discretion of the Board. Any bonuses shall be paid in such manner as the parties mutually agree. During the year ending April 30, 1996, Wunderlich shall be entitled to receive, in semi-annual payments, a bonus in the amount of $30,000. 6. Principal Office. Without Wunderlich's consent, Auto shall not require Wunderlich to maintain his principal office in any location other than the Northern New Jersey area. 7. Expenses and Benefits. (a) Auto shall, consistent with Auto's policy of reporting and reimbursement of business expenses, reimburse Wunderlich for such other ordinary and necessary entertainment and business related expenses as shall be incurred by Wunderlich in the course of the performance of his duties under this Agreement. (b) Auto recognizes that Wunderlich will be required to incur significant travel in rendering services to Auto hereunder and in connection therewith Auto shall during the Employment Term provide Wunderlich with a automobile allowance of $750 per month which the parties agree shall be used to pay all of the 2 expenses associated with the operation of an automobile including, without limitation, maintenance, repair and insurance costs. (c) Wunderlich shall be entitled to participate, to the extent he qualifies, in such life insurance, hospitalization, disability and other medical insurance plans or programs as are generally made available to executive officers of Auto which shall be consistent with the programs and benefits currently offered to Wunderlich. 8. Termination. (a) Auto shall have the right to terminate this Agreement for disability in the event Wunderlich suffers any illness or incapacity of such character as to substantially disable him from performing his duties hereunder for a period of more than one hundred and eighty (180) consecutive days in any one calendar year upon Auto giving at least thirty (30) days written notice of its intention to so terminate. If Wunderlich shall resume his duties hereunder within thirty (30) days following the receipt of such notice and shall perform such duties for forty (40) days of the next sixty (60) consecutive days thereafter, the Employment Term shall continue without interruption and such notice of intention to terminate shall have no further force or validity. (b) This Agreement shall terminate upon the death of Wunderlich, except that Wunderlich's salary shall be payable to his estate for one hundred eighty (180) days thereafter, together with all accrued bonuses and outstanding unreimbursed expenses. (c) Auto may terminate this Agreement at any time with Reasonable Cause upon five (5) days written notice to Wunderlich. "Reasonable Cause" means (i) conviction of a crime involving moral turpitude; (ii) Wunderlich having engaged in any activity in competition with Auto, without Auto's consent; (iii) Wunderlich having divulged any secret or confidential information of a material nature belonging to Auto, without Auto's consent, except as required by law; (iv) Wunderlich's dishonesty or misconduct that is damaging or detrimental to Auto in any material respect; or (v) Wunderlich's breach of any material term of this Agreement; provided, however, that notice under this provision shall not be effective unless Wunderlich shall have first received written notice from Auto 3 of the specific acts or omissions alleged to constitute a breach of any material term of this Agreement, and such breach continues unremedied for a period of fifteen (15) days after such notice. (d) If either (i) a third person, including a "group" as defined in Section 13(d) (3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of Auto having 25% or more of the total number of votes that may be cast for the election of directors of Auto or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of Auto before the Transaction shall cease to constitute a majority of the Board or the Board of Directors of any successor to Auto; then and in such event for a period of one hundred and twenty (120) days following the occurrence of such an event Wunderlich may elect to terminate this Agreement upon five (5) days prior written notice to Auto and upon such termination Wunderlich shall be entitled to receive, in addition to any other payments due to Wunderlich pursuant to this Agreement, a severance payment equal to the greater of (a) $150,000, or (b) the compensation due to Wunderlich for the balance of the Employment Term. Upon the occurrence of a Transaction, the Company will cause to be placed in escrow with Dreyer and Traub an amount sufficient to cover the Company's obligations to Wunderlich under this paragraph 8(d) (the"Escrow"). The Escrow, or any applicable portion thereof, will be distributed to Wunderlich upon his election to terminate this Agreement as provided for hereinabove. Any balance of the Escrow will be returned to the Company. 9. Non-Competition. Wunderlich covenants and agrees that during his employment hereunder and for a period of two years after his employment hereunder is terminated, he will not, without the prior written consent of Auto, (a) compete with the business of Auto or any of its subsidiaries or affiliates and, in particular, he will not without such consent, directly or indirectly, own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing or control of, or be connected as a director, officer, employee, partner, consultant or agent with, any business in competition with or similar to the business of Auto or any of its subsidiaries or affiliates; provided, however, that Wunderlich may own up to two percent of 4 the capital stock of any publicly traded corporation in competition with the business of Auto or any of its subsidiaries or affiliates if the fair market value of such corporation's outstanding capital stock exceeds $100 million, and (b) divert, take away, interfere with or attempt to take away any present or former employee or customer of Auto or any of its subsidiaries or affiliates. The provisions of this Section 9 shall no longer be applicable if Wunderlich's employment is terminated by Auto (other than for cause) or by Wunderlich pursuant to the provisions of Section 8(d) hereof during the Employment Term. In the event that the provisions of this Section 9 should ever be deemed to exceed the time or geographic limitations or any other limitations permitted by applicable law, then such provisions shall be deemed reformed to the maximum permitted by applicable law. Wunderlich acknowledges and agrees that the foregoing covenant is an essential element of this Agreement and that, but for the agreement of Wunderlich to comply with the covenant, the Company would not have entered into this Agreement, and that the remedy at law for any breach of the covenant will be inadequate and the Company, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. 10. Confidential Information. Wunderlich recognizes and acknowledges that the customer lists, patents, inventions, copyrights, methods of doing business, trade secrets and proprietary information of Auto including, without limitation, as the same may exist from time to time, are valuable, special and unique assets of the business of Auto. Except in the ordinary course of business or as required by law, Wunderlich shall not, during or after the Employment Term, disclose any such list of customers or any part thereof, any such patents, inventions, copyrights, methods of doing business, trade secrets or proprietary information which are not otherwise in the public domain to any person, firm, corporation or other entity for any reason whatsoever. In addition, Wunderlich specifically acknowledges and agrees that the remedy at law for any breach of the foregoing shall be inadequate and that AutoInfo and the Company, in addition to any other relief available to them, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. 5 11. COBRA. In the event of Wunderlich's death during the term of this Agreement, Auto shall make all COBRA medical premium payments for Wunderlich's family for the three year period following his death. 12. Opportunities. During his employment with Auto, Wunderlich shall not take any action which might divert from Auto or any of its subsidiaries or affiliates any opportunity which would be within the scope of any of the present or future businesses of Auto or any of its subsidiaries or affiliates. 13. Contents of Agreement, Parties in Interest, Assignment, etc. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Wunderlich hereunder which are of a personal nature shall neither be assigned nor transferred in whole or in party by Wunderlich. This Agreement shall not be amended except by a written instrument duly executed by Auto and Wunderlich. 14. Severability. If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, such term or provision shall be ineffective to the extend of such invalidity or unenforceability without invalidating the remaining terms and provisions hereof, and this Agreement shall be construed as if such invalid or unenforceable term or provision had not been contained herein. 15. Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other party shall be in writing and shall be deemed to have been duly given when delivered personally or five (5) days after dispatch by registered or certified mail, postage prepaid, return receipt requested, to the party to whom the same is so given or made: If to Auto addressed to: AutoInfo, Inc. 1600 Route 208 Fair Lawn, New Jersey 07410 Attn: President 6 with a copy to: Dreyer and Traub 101 Park Avenue New York, New York 10178 Attn: Kenneth S. Rose, Esq. If to Wunderlich addressed to: William Wunderlich 14 Frost Pond Road Stanford, Connecticut 06903 or at such other address as the one party shall specify to the other party in writing. 16. Counterparts and Headings. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all which together shall constitute one and the same instrument. All headings are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. 17. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New Jersey. 18. Arbitration. Any disputes arising hereunder shall be submitted to arbitration before a single arbitrator in New York City under the rules and regulations of the American Arbitration Association. Any award in such arbitration proceeding may be enforced in any court of competent jurisdiction. 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. AUTOINFO, INC. By: /s/ Andrew Gaspar ----------------------- Andrew Gaspar, Chairman of the Board /s/ William Wunderlich ----------------------- William Wunderlich 8 EX-10.H 6 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS AGREEMENT entered into as of the 10th day of April, 1995, by and between AutoInfo, Inc. (the "Company"), and William Wunderlich (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a Change in Control (as hereinafter defined) exists and that the threat of or the occurrence of a Change in Control can result in significant distractions of its key management personnel because of the uncertainties inherent in such a situation; WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure his continued dedication and efforts in such event without undue concern for his personal financial and employment security; and WHEREAS, in order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits during the term of his employment following a Change in Control, in the event his employment is terminated as a result of, or in connection with, a Change in Control. NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Employment Term. (a) The "Employment Term" shall commence on the first date during the Protected Period (as defined in Section 1 (c) below) on which a Change in Control occurs (the "Effective Date") and shall expire on the second anniversary of the Effective Date; provided, however, that on each anniversary of the Effective Date, the Employment Term shall automatically be extended for one (1) year unless either the Company or the Executive shall have given written notice to the other at least ninety (90) days prior thereto that the Employment Term shall not be so extended. (b) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated prior to the Effective Date and the Executive reasonably demonstrates that such termination (1) was at the request of a Third Party (as hereinafter defined) who has effectuated a Change in Control or (2) otherwise occurred in connection with, or in anticipation of, a Change in Control, then for all purposes of this Agreement, the Effective Date shall mean the date immediately prior to the date of such termination of the Executive's employment. (c) For purposes of this Agreement, the "Protected Period" shall be the two (2) year period commencing on April 10, 1995; provided, however, that the Protected Period shall be automatically extended for one (1) year on April 9, 1996 and on each April 9, thereafter unless the Company shall have given written notice to the Executive at least ninety (90) days prior thereto that the Protected Period shall not be so extended; and provided further, however, that notwithstanding any such notice by the Company not to extend, the Protected Period shall not end if prior to the expiration thereof any Third Party has indicated an intention or taken steps reasonably calculated to effect a Change in Control, in which event the Protected Period shall end only after such Third Party publicly announces that it has abandoned all efforts to effect a Change in Control. 2. (a) Subject to the provisions of Section 8 hereof, the Company agrees to continue to employ the Executive and the Executive agrees to remain in the employ of the Company during the Employment Term. During the Employment Term, the Executive shall be employed as the Chief Financial Officer of the Company or in such other senior executive capacity as may be mutually agreed to in writing by the parties. The Executive shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar executive capacity. He shall also promote, by entertainment or otherwise, the business of the Company. (b) During the Employment Term, excluding periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during usual business hours to the business and affairs of the Company to the extent necessary to discharge the responsibilities assigned to the Executive hereunder. The Executive may (1) serve on corporate, civil or charitable boards or committees, (2) manage personal investments and (3) deliver lectures and teach at educational institutions, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities hereunder. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. 3. Compensation. (a) Base Salary. During the Employment Term, the Company agrees to pay or cause to be paid to the Executive annual base salary at a rate at least equal to the highest rate of the Executive's annual base salary as in effect at any time within ninety (90) days preceding the Effective Date, and as may be increased from time to time (hereinafter referred to as the "Base Salary"). Such Base Salary shall be payable in accordance with the Company's customary practices applicable to its executives. (b) Annual Bonus. In addition to Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Term, an annual bonus (the "Annual Bonus") in cash at least equal to the average of the annual bonus paid or payable during the three full fiscal years ended prior to the Effective Date (or such lesser period for which the annual bonuses were paid or payable to the Executive) (the "Recent Average Bonus"). Each such Annual Bonus shall be paid in two semi-anual payments no later than one month following each six and twelve month anniversary hereunder, unless the Executive shall elect to defer the receipt of such Annual Bonus. 4. Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to employees generally, including, without limitation, all pension, retirement, profit sharing, savings, medical, hospitalization, disability, dental, life or travel accident insurance benefit plans. Unless otherwise provided herein, the compensation and benefits under, and the Executive's participation in, such plans, practices and programs shall be on the same basis and terms as are applicable to employees of the Company generally, but in no event on a basis less favorable in terms of benefit levels and coverage than the most favorable of such plans, practices and programs covering the Executive at any time within ninety (90) days preceding the Effective Date, or if more favorable, at any time thereafter. 2 5. Executive Benefits. During the Employment Term, the Executive shall be entitled to participate in all executive benefit or incentive compensation plans maintained or established by the Company for the purpose of providing compensation and/or benefits to executives of the Company. Unless otherwise provided herein, the compensation and benefits under, and the Executive's participation in, such plans shall be on the same basis and terms as other similarly situated executives of the Company, but in no event on a basis less favorable in terms of benefit levels or reward opportunities than the most favorable benefit levels and reward opportunities applicable to the Executive at any time within ninety (90) days preceding the Effective Date, or if more favorable, at any time thereafter. No additional compensation provided under any of such plans shall be deemed to modify or otherwise affect the terms of this Agreement or any of the Executive's entitlements hereunder. 6. Other Benefits. (a) Automobile. The Company recognizes that Employee will be required to incur significant travel in rendering services to the Company hereunder and in connection therewith the Company during the Employment Term shall provide Employee with a monthly automobile allowance of $750.00 which the parties agree shall pay all expenses associated with the operation of an automobile including, without limitation, maintenance, repair and insurance costs. (b) Expenses. The Executive shall be entitled to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company. 7. Vacation and Sick Leave. During the Employment Term, at such reasonable times as the Board shall in its discretion permit, the Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment under this Agreement, provided that: (a) The Executive shall be entitled to annual vacation in accordance with the policies as periodically established by the Board for similarly situated executives of the Company; provided, however, that in no event shall the Executive's annual vacation entitlement be less than four weeks per year. (b) The Executive shall be entitled to sick leave (without loss of pay) in accordance with the Company's policies as in effect from time to time. 8. Termination. During the Employment Term, the Executive's employment hereunder may be terminated under the following circumstances: (a) Cause. The Company may terminate the Executive's employment for "Cause." A termination of employment is for "Cause" if the Executive (1) has been convicted of a felony or (2) intentionally engaged in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; provided, however that no termination of the Executive's employment shall be for Cause as set forth in clause (2) above until (i) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (2) and specifying the particulars thereof in detail, and (ii) the Executive shall have been provided an opportunity to be heard by the Board (with the assistance of the Executive's 3 counsel if the Executive so desires). No act, nor failure to act, on the Executive's part, shall be considered "intentional" unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the Company. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by the Executive after a Notice of Termination is given by the Executive shall constitute Cause for purposes of this Agreement. (b) Disability. The Company may terminate the Executive's employment after having established the Executive's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity which impairs the Executive's ability to substantially perform his duties under this Agreement which continues for a period of at least one hundred eighty (180) consecutive days. The Executive shall be entitled to the compensation and benefits provided for under this Agreement for any period during Employment Term and prior to the establishment of the Executive's Disability during which the Executive is unable to work due to a physical or mental infirmity. Notwithstanding anything contained in this Agreement to the contrary, until the Termination Date specified in a Notice of Termination (as each term is hereinafter defined) relating to the Executive's Disability, the Executive shall be entitled to return to his position with the Company as set forth in this Agreement in which event no Disability of the Executive will be deemed to have occurred. (c) Good Reason. (1) The Executive may terminate his employment for "Good Reason." For purposes of this Agreement, Good Reason shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (viii) hereof: (i) a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with his status, title, position or responsibilities; or any removal of the Executive from or failure to reappoint or reelect him to any of such offices or positions, except in connection with the termination of his employment for Disability, Cause, as a result of his death or by the Executive other than for Good Reason; (ii) a reduction in the Executive's Base Salary or any failure to pay the Executive any compensation or benefits to which he is entitled within five days of the date due; (iii) the Company's requiring the Executive to be based at any place outside a 30-mile radius from Fair Lawn, New Jersey, except for reasonably required travel on the Company's business which is not greater than such travel requirements prior to the Change in Control; (iv) the failure by the Company to (A) continue in effect (without reduction in benefit level, and/or reward opportunities) any material compensation or employee benefit plan in which the Executive was participating immediately prior to the Effective Date, including, but not limited to, the medical coverage afforded the Executive and his family, unless a substitute or 4 replacement plan has been implemented which provides substantially identical compensation or benefits to the Executive; (v) the insolvency or the filing (by any party, including the Company) of a petition for bankruptcy of the Company; (vi) any material breach by the Company of any provision of this Agreement; (vii) any purported termination of the Executive's employment for Cause by the Company which does not comply with the terms of Section 8(a); or (viii) the failure of the Company to obtain an agreement, satisfactory to the Executive, from any successor or assign of the Company to assume and agree to perform this Agreement, as contemplated in Section 13 hereof. (2) Any event or condition described in Section 8(c)(1)(i) through (viii) which occurs prior to a Change in Control but which the Executive reasonably demonstrates (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control (a "Third Party"), or (B) otherwise arose in connection with, or in anticipation of a Change in Control, shall constitute Good Reason for purposes of this Agreement notwithstanding that it occurred prior to the Change in Control. (3) The Executive's right to terminate his employment pursuant to this Section 8(c) shall not be affected by his incapacity due to physical or mental illness. (d) Voluntary Termination. The Executive may voluntarily terminate his employment hereunder at any time. 9. Compensation Upon Termination. Upon termination of the Executive's employment during the Employment Term, the Executive shall be entitled to the following benefits: (a) If the Executive's employment with the Company shall be terminated (1) by the Company for Cause or Disability, (2) by reason of the Executive's death, or (3) by the Executive other than for Good Reason or during the 60-day period commencing on the first anniversary of the date of the Effective Date (the "Window Period"), the Company shall pay the Executive all amounts earned or accrued through the Termination Date but not paid as of the Termination Date, including (i) Base Salary, (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, (iii) vacation pay, and (iv) sick leave (collectively, "Accrued Compensation"). In addition to the foregoing, if the Executive's employment is terminated by the Company for Disability or by reason of the Executive's death, the Company shall pay to the Executive or his beneficiaries an amount equal to the "Pro Rata Bonus" (as hereinafter defined). The "Pro Rata Bonus" is an amount equal to the "Highest Annual Bonus" (as hereinafter defined) multiplied by a fraction the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365. The "Highest Annual Bonus" is an amount equal to the greater of (A) the Annual Bonus paid or payable, to the Executive (and annualized for any fiscal year consisting of less than twelve full months or for 5 which the Executive has been employed for less than twelve full months) for the most recently completed fiscal year during the Employment Term, if any, and (B) the Recent Average Bonus. The Executive's entitlement to any other compensation or benefits shall be determined in accordance with the Company's employee benefit plans and other applicable programs and practices then in effect. (b) If the Executive's employment with the Company shall be terminated (other than by reason of death), (1) by the Company other than for Cause or Disability, (2) by the Executive for Good Reason or (3) by the Executive for any reason within the Window Period, the Executive shall be entitled to the following: (i) the Company shall pay the Executive all Accrued Compensation and a Pro-Rata Bonus; (ii) the Company shall pay the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount (the "Severance Amount") in cash equal to either (y) if the Termination Date occurs on or before October 9, 1995, two times the sum of (A) the Executive's Base Salary at the highest rate in effect at any time subsequent to the 90th day prior to the Effective Date and (B) the Highest Annual Bonus; or (z) if the Termination Date occurs on or after October 10, 1995, one and one-half times the sum of (A) the Executive's Base Salary at the highest rate in effect at any time subsequent to the 90th day prior to the Effective Date and (B) the Highest Annual Bonus; (iii) for 24 months (the "Continuation Period"), the Company shall at its expense continue on behalf of the Executive and his dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the Effective Date or at any time thereafter or (y) to other similarly situated executives who continue in the employ of the Company during the Continuation Period. The coverage and benefits (including deductibles and costs) provided in this Section 9(b)(iii) during the Continuation Period shall be no less favorable to the Executive and his dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x) and (y) above. The Company's obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder so long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This Subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive, his dependents or beneficiaries may be entitled under any of the Company's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits; (iv) (A) the restrictions on any outstanding incentive awards (including restricted stock and stock options) granted to the Executive under the Company's Stock Option Plans or under any other incentive plan or arrangement (including the Company's 401K Plan) shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested, and all performance units granted to the Executive shall become 100% vested and (B) the Executive shall have the right to require the Company to purchase, for cash, any shares of unrestricted stock or shares purchased upon exercise of any options, 6 at a price equal to the fair market value of such shares on the date of purchase by the Company. (v) during the Continuation Period, the Company shall at its expense continue to provide the Executive with an automobile as provided for in Section 6(a). (c) The amounts provided for in Sections 9(a) and 9(b)(i) and (ii) shall be paid within five days after the Executive's Termination Date. (d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 9(b)(iii). (e) The severance pay and benefits provided for in Sections 9(a) and 9(b)(i) and (ii) shall be in lieu of any other severance pay to which the Executive may be entitled under any Company severance plan, program or arrangement or pursuant to the Employment Agreement of even date herewith between the Company and the Executive. 10. Definitions. (a) Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (1) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a "Subsidiary") (ii) the Company or its Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); and (2) The individuals who, as of April 10, 1995 are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Company's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Exchange 7 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (3) Approval by stockholders of the Company of: (i) A merger, consolidation or reorganization involving the Company, unless such merger, consolidation or reorganization is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a merger, consolidation or reorganization of the Company where: (A) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, and (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving Corporation, and (C) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities), has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities. (ii) A complete liquidation or dissolution of the Company; or (iii) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). (4) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this 8 sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (b) Notice of Termination. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which indicates the specific termination provision in this Agreement, if any, relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Any purported termination by the Company or by the Executive shall be communicated by written Notice of Termination to the other. For purposes of this Agreement, no such purported termination of employment shall be effective without such Notice of Termination. (c) Termination Date. Etc. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, his date of death, or in all other cases, the date specified in the Notice of Termination subject to the following: (1) If the Executive's employment is terminated by the Company for Cause or due to Disability, the date specified in the Notice of Termination shall be at least thirty (30) days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of his duties during such period of at least thirty (30) days; and (2) If the Executive's employment is terminated for Good Reason or during a Window Period Termination, the date specified in the Notice of Termination shall not be more than sixty (60) days from the date the Notice of Termination is given to the Company. 11. Unauthorized Disclosure. During the period that the Executive is actively employed by the Company, the Executive shall not make any Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by the Executive without the consent of the Board (other than pursuant to a court order) to any person, other than an employee or director of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of the Company or as may be legally required, of any material confidential information obtained by the Executive while in the employ of the Company (including any material confidential information with respect to any of the Company's customers or methods of distribution) the disclosure of which is demonstrably and materially injurious to the Company; provided, however, that such term shall not include the use or disclosure by the Executive, without consent, of any information known generally to the public (other than as a result of disclosure by him in violation of this Section 11) or any information not otherwise considered confidential and material by a reasonable person engaged in the same business as that conducted by the Company. 12. Successors and Assigns. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term 9 "Company" as used herein shall include such successors and assigns. The term "successors and assigns" as used herein shall mean a corporation or other entity' acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative. 13. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, or (c) the Executive's hearing before the Board as contemplated in Section 8(a) of this Agreement; provided, however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Executive's termination of employment under circumstances described in Section l(a)) occurred on or after a Change in Control. 14. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 15. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its subsidiaries and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its subsidiaries shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 16. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, defense, recoupment, or other right which the Company may have against the Executive or others. 17. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other 10 party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 18. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflict of law principles thereof. Any action brought by any party to this Agreement shall be brought and maintained in a court of competent jurisdiction in New Castle county of the State of Delaware. 19. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 20. No Guaranteed Employment. The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, prior to the Effective Date, may be terminated by either the Executive or the Company at any time. Moreover, if prior to the Effective Date, the Executive's employment with the Company terminates, the Executive shall have no further rights under this Agreement. 21. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written. AUTOINFO, INC. By: /s/ Andrew Gaspar ----------------------- Andrew Gaspar, Chairman of the Board of Directors ATTEST: /s/ Kenneth S. Rose ------------------------------ Assistant Secretary /s/ William Wunderlich ----------------------- William Wunderlich 11 EX-10.I 7 EMPLOYEE PROTECTION TRUST AGREEMENT Exhibit 10.I AUTOINFO, INC. EMPLOYEE PROTECTION TRUST AGREEMENT (a) This Agreement made this ____ day of August 1995 by and between AutoInfo, Inc. ("Company") and United Jersey Bank ("Trustee"); (b) WHEREAS, Company has entered into severance agreements or arrangements (the "Agreement(s)") with certain of its employees (the "Employee(s)") as listed in Appendix. (c) WHEREAS, Company may incur liability under the terms of such Agreement(s) with respect to the individuals participating in such Agreement(s). (d) WHEREAS, Company wishes to establish a trust (hereinafter called "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of Company's creditors in the event of Company's Insolvency, as herein defined, until paid to Employees in such manner and at such times as specified in the Agreement(s); (e) WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Agreement(s); NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: Section 1. Establishment Of Trust (a) Company hereby deposits with Trustee in trust $10, which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement. (b) Unless otherwise agreed in writing by all Employees, upon a Threatened Change in Control or a Change in Control (each as such term is herein defined), Company shall, as soon as possible, but in no event later than two business days following the Threatened Change in Control or Change in Control, make a contribution to the Trust in such amount as may be reflected in the Payment Schedule attached hereto for the purposes of paying to the Employees the benefits to which they are entitled pursuant to the Agreements (by way of example, $1,991,534 if the date hereof also constituted the date of a Change in Control); provided, however, that if such Threatened Change in Control or Change in Control occurs on or after October 10, 1995, that portion of the contribution to be allocated to Mr. Wunderlich shall be reduced by $76,087, and provided further, that if such Threatened Change in Control or Change in Control occurs on or after April 10, 1996, that portion of the contribution to be allocated to Mr. Zecher shall be reduced by an amount then to be determined as the amount by which payments pursuant to Section 9(b)(ii) of his Agreement have been reduced as of such date (based on certification from Company's accountants as to the reduced obligation of Company under Mr. Zecher's Agreement). (c) The Trust hereby established shall be irrevocable; provided, however that, (i) in the event the Trust has been funded prior to October 9, 1995 pursuant to Section 1(b) hereof, at any time after October 9, 1995, Company may withdraw from the principal of the Trust allocable to Mr. Wunderlich an amount up to $76,087, provided that Mr. Wunderlich's Termination Date (as defined in his Agreement) has not occurred on or prior to October 9, 1995, and (ii) in the event the Trust has been funded prior to April 9, 1996 pursuant to Section 1(b) hereof, at any time after April 9, 1996, Company may withdraw from the principal of the Trust allocable to Mr. Zecher an amount then to be determined as the amount by which payments pursuant to Section 9(b)(ii) of his Agreement have been reduced as of April 10, 1996 (based on certification from Company's accountants as to the reduced obligation of Company under Mr. Zecher's Agreement), provided that Mr. Zecher's Termination Date (as defined in his Agreement) has not occurred on or prior to April 9, 1996. Company shall indemnify and hold harmless Trustee for any liability resulting from the withdrawal of funds by Company pursuant to this Section 1(c). (d) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (e) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Employees and general creditors as herein set forth. Employees shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Agreement(s) and this Trust Agreement shall be mere unsecured contractual rights of Employees against Company. Any assets held by the Trust will be subject to the claims of Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3(a) herein. (f) Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Employee shall have any right or duty to compel such additional deposits. 2 Section 2. Payments to Employees. (a) Company has delivered to Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Employee under the terms of each Employee's Agreement, and such amounts shall be paid in cash to the Employee by Trustee upon receipt of notice from the Employee as set forth in Section 2(b) hereof. Except as otherwise provided herein, Trustee shall make payments to the Employees in accordance with such Payment Schedule. Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Agreement(s) and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by Company. (b) Upon receipt by Trustee of notice ("Employee Notice") delivered to Trustee by an Employee stating that the conditions to the payment to such Employee of amounts under his Agreement have been satisfied, specifying the section of his Agreement pursuant to which payments are to be made and the amounts to which the Employee is entitled, Trustee shall pay to such Employee the benefits specified in the Employee Notice. (c) Company may make payment of benefits directly to Employees as they become due under the terms of the Agreement(s) and shall inform Trustee of such payments upon the making of such payments. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Agreement(s), Company shall make the balance of each such payment as it falls due. Trustee shall notify Company where principal and earnings are not sufficient. (d) Payments made by Trustee to an Employee pursuant to this Trust Agreement shall be in satisfaction of Company's obligations as set forth in an Employee Notice pursuant to which payments are being made. Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary When Company is Insolvent. (a) Trustee shall cease payment of benefits to Employees if Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due, or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below. 3 (1) The Board of Directors of Company shall have the duty to inform Trustee in writing of Company's Insolvency. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become Insolvent, Trustee shall determine whether Company is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Employees. (2) Unless Trustee has actual knowledge of Company's Insolvency, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's solvency. (3) If at any time Trustee has determined that Company is Insolvent, Trustee shall discontinue payments to Employees and shall hold the assets of the Trust for the benefit of Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Employees as general creditors of the Company with respect to benefits due under the Agreement(s) or otherwise. (4) Trustee shall resume the payment of benefits to Employees in accordance with Section 2 of this Trust Agreement only after Trustee has determined the Company is not Insolvent (or is no longer Insolvent). (c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Employees under the terms of the Agreement(s) for the period of such discontinuance, less the aggregate amount of any payments made to Employees by Company in lieu of the payments provided for hereunder during any such period of discontinuance. Section 4. Payments to Company. Except as provided in Sections 1(c), 3 and 6 hereof, Company shall have no right or power to direct Trustee to return to Company or to divert to others any of the Trust assets before all payment of benefits have been made to Employees pursuant to the terms of the Agreement(s). 4 Section 5. Investment Authority. (a) The Trust's assets shall be held, invested and reinvested by Trustee in its discretion, subject to any investment guidelines provided to Trustee by the Company's Chief Financial Officer or any person designated in writing by the Chief Financial Officer (the "Investment Guidelines"). (b) During a Threatened Change in Control Period and following a Change in Control, the Investment Guidelines may not be amended or modified without the written consent of all Employees. (c) In the exercise of its authority and discretion hereunder, and subject to the Investment Guidelines, Trustee shall have from time to time and at any time, the power: (1) to invest and reinvest this Trust, without distinction between principal and income, in shares of stock (whether common or preferred) or other evidences of ownership, bonds, debentures, notes or other evidences of indebtedness, unsecured or secured by mortgages on real or personal property wherever situated (including any part interest in a bond and mortgage or note and mortgage whether insured or uninsured), mutual funds and other property, or part interest in property, real or personal, foreign or domestic, and in order to reduce the rate of interest rate fluctuations, contracts, as either buyer or seller, for the future delivery of United States Treasury securities and comparable federal-government-backed securities; (2) to sell, convey, redeem, exchange, grant options for the purchase or exchange of, or otherwise dispose of, any real or personal property, at public or private sale, for cash or upon credit, with or without security, without obligation on the part of any person dealing with Trustee to see to the application of the proceeds of or to inquire into the validity, expediency or propriety of any such disposition; (3) to exercise, personally or by general or limited proxy, the right to vote any shares of stock, bonds or other securities held in this Trust, to delegate discretionary voting power to trustees of a voting trust for any period of time, and to exercise, personally or by power of attorney, any other right appurtenant to any securities or other property of this Trust; (4) to join in or oppose any reorganization, recapitalization, consolidation, merger or liquidation, or any plan therefor, or any lease, mortgage or sale of the property of any organization the securities of which are held in this Trust; to pay from this Trust any assessments, charges or compensation specified in any plan of reorganization, recapitalization, consolidation, merger or liquidation; to deposit any property with any committee or depository; and to retain any property allotted to this Trust in any reorganization, recapitalization, consolidation, merger or liquidation; 5 (5) to exercise or sell any conversion or subscription or other rights appurtenant to any stock, security or other property held in this Trust; (6) to borrow from any lender (including Trustee in its individual capacity) money, in any amount and upon any reasonable terms and conditions, for purposes of this Agreement, and to pledge or mortgage any property held in this Trust to secure the repayment of any such loan; (7) to compromise, settle or arbitrate any claim, debt, or obligation of or against this Trust; to enforce or abstain from enforcing any right, claim, debt or obligation, and to abandon any property determined by it to be worthless; (8) to make loans of securities held in this Trust to registered brokers and dealers upon such terms and conditions as are permitted by applicable law and regulations, and in each instance to permit the securities so lent to be registered in the name of the borrower or a nominee of the borrower, provided that in each instance the loan is adequately secured and neither the borrower nor any affiliate of the borrower has discretionary authority or control with respect to the assets of this Trust involved in the transaction or renders investment advice with respect to those assets; and (9) to invest and reinvest any property in this Trust in any other form or type of investment not specifically mentioned in this Section. (d) In no event may Trustee invest in securities (including stock or rights to acquire stock) or obligations issued by Company, other than a de minimis amount held in common investment vehicles in which Trustee invests. Except as provided in Section 5(b) hereof with respect to the amendment of the Investment Guidelines following a Change in Control, all rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with any Employee. Section 6. Disposition of Income. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be returned to Company. Section 7. Accounting by Trustee. Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between Company and Trustee. Within sixty (60) days following the close of each calendar year and within sixty (60) days after the removal or resignation of Trustee, Trustee shall deliver to Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding 6 year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. Section 8. Responsibility of Trustee. (a) Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that Trustee shall incur no liability to any person for any action pursuant to a direction, request or approval given by Company or an Employee which is contemplated by, and in conformity with, the terms of the Agreement(s) or this Trust and is given in writing by Company or an Employee. In the event of a dispute with respect to this Trust Agreement between Company and any Employee or between Employees, Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) For purposes of this Trust Agreement, if Trustee receives notification in writing from Company or an Employee that a Change in Control or a Threatened Change in Control has occurred, Trustee may rely on such notification; provided, however, that the absence of such notification from Company or an Employee shall not be construed for purposes of this Trust Agreement as meaning that a Change in Control or a Threatened Change in Control has not occurred if in fact a Change in Control or a Threatened Change in Control has occurred; and provided further, that Trustee shall not be liable for any action taken or failure to act, in either case which is consistent with such notification or lack of notification. (c) If Trustee undertakes or defends any litigation arising in connection with this Trust, Company agrees to indemnify Trustee against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. (d) Trustee may consult with legal counsel (who may also be counsel for Company generally) with respect to any of its duties or obligations hereunder. (e) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. 7 (f) Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to a loan any person the proceeds of any borrowing against such policy. (g) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. Section 9. Fees and Expenses of Trustee. Trustee shall receive from Company as compensation for its services as Trustee such amounts as may, from time to time, be agreed upon in writing between Company and Trustee. If Company does not pay such fees and expenses in a reasonably timely manner, Trustee may obtain payment from the Trust. Section 10. Resignation and Removal of Trustee. (a) Trustee may resign at any time by written notice to Company, which shall be effective sixty (60) days after receipt of such notice unless Company and Trustee agree otherwise. (b) Trustee may be removed by Company on sixty (60) days' notice or upon shorter notice accepted by Trustee; provided, however, that Trustee may not be removed by Company during a Threatened Change in Control Period or during the three-year period following a Change in Control without the written consent of all Employees. (c) Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within sixty (60) days after receipt of notice of resignation, removal or transfer, unless Company extends the time limit. (d) If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date or resignation or removal under paragraph(s) (a) or (b) of this Section 10. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. 8 Section 11. Appointment of Successor. (a) If Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, Company may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by Company or the successor Trustee to evidence the transfer. (b) Notwithstanding the foregoing, if Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof during a Threatened Change in Control Period or following a Change in Control, the appointment of a successor Trustee shall be subject to the written consent of all Employees. (c) The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from another past event, or any condition existing at the time it becomes successor Trustee. Section 12. Amendment or Termination. (a) This Trust Agreement may be amended by a written instrument executed by Trustee and Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Agreement(s) or shall make the Trust revocable. (b) The Trust shall not terminate until the date on which Employees are no longer entitled to benefits pursuant to the terms of the Agreement(s). Upon termination of the Trust any assets remaining in the Trust shall be returned to Company. (c) Upon written approval of Employees entitled to payment of benefits pursuant to the terms of the Agreement(s), Company may terminate this Trust prior to the time all benefit payments under the Agreement(s) have been made. All assets in the Trust at termination shall be returned to Company. (d) Notwithstanding Sections 12(a)-(c) hereof, no provision of this Trust Agreement may be amended during a Threatened Change in Control Period or following a Change in Control without the written consent of all Employees, and no amendment of this Trust Agreement shall be effective without the written consent of all Employees if any Employee reasonably demonstrates that such 9 amendment was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control. Section 13. Miscellaneous. (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Employees under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of New Jersey. Section 14. Definitions. (a) A "Change in Control" means the occurrence during the term of this Trust Agreement of: (1) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a "Subsidiary") (ii) the Company or its Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); (2) The individuals who, as of April 10, 1995 are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Company's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, 10 such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (3) Approval by stockholders of the Company of: (i) A merger, consolidation or reorganization involving the Company, unless such merger, consolidation or reorganization is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a merger, consolidation or reorganization of the Company where: (A) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, and (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving Corporation, and (C) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of thirty percent (30%) or more of the then outstanding Voting Securities), has Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities. (ii) A complete liquidation or dissolution of the Company; or 11 (iii) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). (4) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (b) A "Threatened Change in Control" means the occurrence of any of the following events (but no event other than the following events), except as otherwise provided below: (1) Any Person initiates a tender offer or exchange offer to acquire securities of Company representing thirty percent (30%) or more of the combined voting power of Company's then-outstanding securities, or (2) Any Person solicits proxies for the election of directors within any single twelve (12)-month period representing at least one third (rounded down to the nearest whole number) of the number of directors then on the Board, whose election or nomination is not approved by a majority of the Incumbent Board then serving as members of the Board, or (3) Any Person proposes the merger, consolidation, transfer, sale, liquidation, or dissolution of Company. Notwithstanding the foregoing, a Threatened Change in Control shall not be deemed to occur pursuant to this Section 14(b) solely because of an acquisition, proposal, or tender offer made or effected in connection with a Non-Control Acquisition. (c) A "Threatened Change in Control Period" means the period commencing on the date that a Threatened Change in Control has occurred and ending upon the earliest of: (1) the date when the tender offer or exchange offer described in Section 14(b)(1) is terminated without any securities described therein of Company being purchased thereunder, or 12 (2) the date when any Person described in Section 14(b)(2) fails to effect the election within any single twelve (12)-month period of one third or more of the number of directors then on the Board, whose election or nomination is not approved by a majority of the Incumbent Board then serving as members of the Board, or (3) the date when the Person making the proposal described in Section 14(b)(3) publicly announces or informs Company in writing that such proposal has been terminated or abandoned, or (4) the date a Change in Control occurs. Section 15. Effective Date. This Trust Agreement shall be effective as of the day and year first above written. IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed as of the day and year first above written. AUTOINFO, INC. UNITED JERSEY BANK By:__________________________ By:__________________________ Title:_______________________ Title:_______________________ 95972 13 PAYMENT SCHEDULE Scott Zecher ("Employee") The following amounts have been or will be contributed to the AutoInfo, Inc. Employee Protection Trust for the benefit of Employee and have initially been or will be allocated for the payment of benefits as follows: Item 1. $1,287,184 for payment in respect of benefits as provided in Sections 9 and 11 of the Employee's Agreement in accordance with the instructions set forth in an Employee Notice in accordance with Section 2(b) of the Trust Agreement, provided that (a) if such contribution is made on or after April 10, 1996, the amount of contribution shall be reduced by, or (b) if such contribution has been made (and if Mr. Zecher's Termination Date (as defined in his Agreement) has not occurred on or prior to April 9, 1996, Company may withdraw an amount then to be determined as the amount by which payments pursuant to Section 9(b)(ii) of his Agreement have been reduced as of such date (based on certification from Company's accountants as to the reduced obligation of Company under Mr. Zecher's Agreement); and Item 2. $200,000 for payment in respect of benefits as provided in Section 14 of the Employee's Agreement in accordance with the instructions set forth in an Employee Notice in accordance with Section 2(b) of the Trust Agreement. PAYMENT SCHEDULE William Wunderlich ("Employee") The following amounts have been or will be contributed to the AutoInfo, Inc. Employee Protection Trust for the benefit of Employee and have initially been or will be allocated for the payment of benefits as follows: Item 1. $304,350 for payment in respect of benefits as provided in Section 9 of the Employee's Agreement in accordance with the instructions set forth in an Employee Notice in accordance with Section 2(b) of the Trust Agreement, provided that (a) if such contribution is made on or after October 10, 1995, the amount of contribution shall be reduced by $76,087, or (b) if such contribution has been made (and if Mr. Wunderlich's Termination Date (as defined in his Agreement) has not occurred) on or prior to October 9, 1995, then at any time after October 9, 1995, Company may withdraw $76,087; and Item 2. $200,000 for payment in respect of benefits as provided in Section 13 of the Employee's Agreement in accordance with the instructions set forth in an Employee Notice in accordance with Section 2(b) of the Trust Agreement. Appendix Employment Agreement, dated as of April 10, 1995, by and between AutoInfo, Inc. and William Wunderlich Employment Agreement, dated as of April 10, 1995, by and between AutoInfo, Inc. and Scott Zecher EX-10.P 8 PROMISSORY NOTE PROMISSORY NOTE THIS NOTE IS NON-NEGOTIABLE $466,797.64 New York, New York April 28, 1995 SCOTT ZECHER ("Zecher"), residing at 1341 Hudson Road, Teaneck, New Jersey 07666, FOR VALUE RECEIVED, hereby promises to pay to AUTOINFO, INC. a Delaware corporation ("Noteholder"), at the offices of the Company at 1600 Route 208, Fair Lawn, New Jersey 07410 (or such other address as is designated in writing by the Noteholder) on May 31, 1996 (or such sooner time as provided below) the principal amount of Four Hundred Sixty Six Thousand Seven Hundred Ninety Seven and 64/100 ($466,797.64) Dollars in lawful money of the United States of America without interest. If this Promissory Note, or any payment hereunder, falls due on a Saturday, Sunday or a New York public holiday, this Promissory Note shall fall due or such payment shall be made on the next succeeding business days. Zecher waives presentment for payment, demand, notice of nonpayment, notice of protest and protest of this Promissory Note, and all of the notices not expressly provided for herein in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Promissory Note. This Promissory Note is not subject to setoff. Upon the occurrence of any of the following specified Events of Default (each an "Event of Default"): 1. Zecher pursuant to or within the meaning of Title 11, U.S. Code or any similar federal or state law for the relief of debtors (a "Bankruptcy Law"): A. commences a voluntary case or proceeding; B. consents to the entry of an order for relief against it in an involuntary case or proceeding; C. consents to the appointment of a custodian, receiver or other similar official for it or for all or substantially all of its property; or D. makes a general assignment for the benefit of its creditors. THEN, AND IN ANY SUCH EVENT, AND AT ANY TIME THEREAFTER IF ANY EVENT OF DEFAULT SHALL THEN BE CONTINUING, THE NOTEHOLDER BY WRITTEN NOTICE TO ZECHER, MAY DECLARE THE PRINCIPAL OF THIS NOTE TO BE DUE, WHEREUPON THE SAME SHALL FORTHWITH BECOME DUE AND PAYABLE. -1- In the event that Zecher's employment by AutoInfo, Inc. is terminated, voluntarily or involuntarily and with or without cause, the entire unpaid principal amount of this Note may be declared due and payable by the Noteholder upon one-hundred eighty (180) days written notice to Zecher. This Promissory Note is the document referred to in the Security and Pledge Agreement between Zecher and the Noteholder of even date herewith and is further subject to the provisions thereof. All notices provided for herein shall be deemed given if sent by certified mail, return receipt requested, to the address of the party set forth above, or to such other address as designated in writing to the other party. /s/ Scott Zecher ------------------------ Scott Zecher -2- SECURITY AND PLEDGE AGREEMENT AGREEMENT, dated as of April 28, 1995 by and between Scott Zecher ("Zecher") and Autolnfo, Inc., a Delaware corporation ("Auto"). WHEREAS, Zecher has on the date hereof delivered to Auto a promissory note in the principal amount of $466,797.64, a copy of which is annexed hereto as Exhibit A (the "Note"), evidencing a loan in the principal amount of $466,797.64 from Auto to Zecher in connection with Zecher's exercise of options to acquire Auto Common Stock; and WHEREAS, Zecher has agreed to pledge his 216,799 shares of Auto Common Stock issuable in connection with the option exercise (the "Shares") as security for the repayment of the debt evidenced by the Note. NOW, THEREFORE, the parties hereto agree as follows: 1. Security Interest in Pledged Shares. (a) Zecher hereby grants to Auto, as collateral security for the performance of his obligations under the Note, a security interest in the Shares and all profits, dividends and other distributions with respect to or other rights in connection with the Shares (collectively, the "Collateral"). (c) Zecher hereby delivers transfers, conveys and assigns to, and pledges and hypothecates with Auto the shares and certificate(s) representing the Shares, accompanied by signature guaranteed stock power(s) duly executed in blank in proper form for transfer. 2. Sale of Security in Satisfaction of Note. In the event Zecher elects to repay the Note out of the proceeds of the Shares he shall advise Auto to such effect in writing. Upon such event the Shares shall be delivered to Dreyer and Traub, as escrow agent ("D&T"). D&T shall deliver the Shares to such selling broker as Zecher shall designate, upon receipt in writing from such broker an undertaking that the net proceeds of the sale of the Shares will be delivered to D&T, as escrow agent. Upon receipt of such proceeds, D&T shall deliver to Auto a check in the amount of any unpaid principal and accrued interest on the Note then due and payable plus any other amount then due and owing from Zecher to Auto. The remainder, if any, shall be paid by check to Zecher. 3. Rights and Remedies of Auto. If at any time hereafter, Zecher shall fail to make payment when due under the Note (an "Event of Default") and such Event of Default shall continue for a period of fifteen days after written notice thereof to Zecher, then: 3.1 Voting Dividends, etc. Auto shall have all voting and consensual powers pertaining to the Shares. In order to permit Auto to exercise such voting or other powers, Zecher shall, upon the written request of Auto, from time to time execute and deliver to Auto appropriate proxies. 3.2 Registration in Name of Auto. Auto shall have the right at any time and from time to time thereafter to transfer any of the Shares into its name or the name of a nominee or nominees. Nothing contained in this Section 3.2 shall deprive Zecher of any rights of redemption provided by law. 3.3 Sale of Collateral. In addition to any other rights and remedies which Auto may have, it may immediately and without demand exercise any and all rights and remedies granted to a secured party upon the occurrence of an Event of Default under the Uniform Commercial Code. 3.4 Duty with Respect to Collateral. The duty of Auto and D&T with respect to the Collateral shall be solely to use reasonable care in the physical custody and preservation thereof, and Auto and D&T shall not be under any obligation to take any action in regard to the Collateral or any part thereof, except as provided herein. 3.5 Application of Proceeds. Auto shall apply the purchase price or other moneys collected, received or held by it in respect of the Collateral in the following order: (a) to the payment of all costs, expenses, liabilities and advances, including reasonable attorneys' fees and disbursements, incurred or made by Auto in the protection, exercise, or enforcement of its interests, rights, powers, or remedies hereunder upon the occurrence of any Event of Default; (b) to the payment of the unpaid principal of and accrued interest on the Note then due and payable; (c) to the payment of any other amounts due from Zecher to Auto; and (d) the remainder, if any, to Zecher. 3.6 Return of Collateral. Auto shall return to Zecher all Collateral then held by it pursuant to this Agreement and any transfer documents executed by Zecher with respect thereto, as soon as there shall be no amounts unpaid or otherwise owing to Auto under the Note or this Agreement. The Collateral so returned shall not, as the result of any transaction entered into or action taken by Auto, be subject to any lien, encumbrance, attachment or other state of facts which result in any diminution of the title of Zecher therein, but shall otherwise be returned without recourse upon or warranty by Auto. 4. Miscellaneous. 4.1 Auto Appointed Attorney-in-Fact. Zecher hereby constitutes and appoints, effective as of the occurrence of an Event of Default and while the same is continuing, Auto as attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument, including without limitation, financing statements and instruments of assignment in the ease of a sale of Collateral upon default, which Auto may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. If Zecher shall fail to do any act or thing which it has covenanted to do hereunder, Auto as attorney-in-fact or in its own right, may (but shall not be obligated to) do the same or cause it to be done. 4.2 No Waiver, etc. No action taken by Auto shall be deemed to constitute a waiver by Auto of compliance by Zecher with any representation, warranty, covenant, or agreement contained in this Agreement. No course of dealing between the parties hereto and no failure or delay on the part of Auto in exercising any right, power, or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise of any such right, power or privilege. The rights and remedies provided in this Agreement are cumulative and are in addition to, and not exclusive of, any other rights or remedies provided by law, in equity, by statute, or otherwise. No notice to or demand on Zecher in any case shall entitle Zecher to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Auto to take any other or further action in any circumstances without notice or demand. The waiver of a breach of any provision of this Agreement or of an Event of Default shall not operate or be construed as a waiver of any subsequent breach or Event of Default. 4.3 Notices. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or sent by certified mail, return receipt requested, postage prepaid, to the parties hereto as follows: to Zecher at 1341 Hudson Road, Teaneck, New Jersey 07666; to Auto at 255 West Spring Valley Avenue, Maywood, New Jersey 07607, Attn: Chairman; with a copy to Dreyer and Traub, 101 Park Avenue, New York, New York 10178, Attn: Kenneth S. Rose, Esq. 4.4 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remainder of this Agreement or the reminder of such provision. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. 4.5 Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not be deemed to be a part of this Agreement or to affect the meaning or interpretation of this Agreement. 4.6 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 4.7 Choice of Law. This agreement shall be governed by the laws of the State of New Jersey. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands on the date first above written. /s/ Scott Zecher --------------------------------- Scott Zecher AUTOINFO, INC. By: /s/ William Wunderlich --------------------------------- William Wunderlich, Chief Financial Officer EX-11.A 9 CALCULATION OF EARNINGS PER SHARE Exhibit 11 AUTOINFO, INC. Calculation of Earnings Per Share
Years ended May 31, ----------------------------------------- 1995 1994 1993 ---- ---- ---- Primary and Fully Diluted Earnings (Loss): Loss from continuing operations $(2,174,403) $ (218,565) $ (317,761) Income from discontinued operations 1,614,936 2,239,313 2,053,959 Gain on sale of discontinued operations 8,885,688 -- -- ----------- ----------- ----------- Earnings from operations applicable to Common Stock $ 8,326,221 $ 2,020,748 $ 1,736,198 ----------- ----------- ----------- Shares: Weighted average number of common shares outstanding 7,307,657 7,177,564 7,119,336 Added shares issuable from assumed exercise of options and warrant 102,891 239,157 222,708 ----------- ----------- ----------- Weighted average number of common shares as adjusted 7,410,548 7,416,721 7,342,044 ----------- ----------- ----------- Primary and Fully Diluted Earnings (Loss): From continuing operations $ (.29) $ (.03) $ (.04) From discontinued operations .22 .30 .28 From gain on sale of discontinued operations 1.19 -- -- ----------- ----------- ----------- Earnings per common share $ 1.12 $ .27 $ .24 =========== =========== ===========
EX-23.A 10 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into AutoInfo, Inc.'s previously filed Registration Statement File No. 33-34442. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP New York, New York August 22, 1995 EX-27 11 ART. 5 FDS FOR THE 10-K
5 12-MOS MAY-31-1995 JUN-01-1994 MAY-31-1995 521,868 38,314,489 647,747 (63,772) 0 39,540,406 1,956,549 (1,263,765) 42,357,099 963,702 4,000,000 77,563 0 0 30,043,223 42,357,099 4,797,531 4,797,531 0 6,121,975 0 0 315,908 (2,809,026) (634,623) (2,174,403) 10,500,624 0 0 8,326,221 1.120 1.120