Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
AutoInfo, Inc.
--------------
(Name of Registrant as Specified in Its Charter)
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(2) Aggregate number of securities to which transaction applies
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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AUTOINFO, INC.
6413 Congress Avenue
Suite 260
Boca Raton, Florida 33487
INFORMATION STATEMENT
----------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
THIS INFORMATION STATEMENT IS BEING PROVIDED TO
STOCKHOLDERS TO INFORM THEM OF STOCKHOLDER
ACTION TAKEN BY WRITTEN CONSENT OF A MAJORITY
OF AUTOINFO, INC. STOCKHOLDERS.
Pursuant to the requirements of Section 14(c) of the Securities Exchange
Act of 1934 and Section 228(d) of the General Corporation Law of the State of
Delaware (the "Delaware Corporation Law"), this Information Statement is being
furnished to the stockholders of record as of April 25, 2007 (the "Record Date")
of AutoInfo, Inc., a Delaware corporation ("AutoInfo"), in connection with the
approval of the AutoInfo 2006 Stock Option Plan which has been approved by
written consent of the holders of a majority of the outstanding voting
securities of AutoInfo.
OUTSTANDING SECURITIES AND VOTING RIGHTS
As of the Record Date, there were issued and outstanding 32,681,000 shares
of Common Stock. The Majority Stockholders (as identified below) held 18,838,312
shares of Common Stock, or approximately 58% of AutoInfo's issued and
outstanding Common Stock as of the Record Date.
Each holder of Common Stock would normally be entitled to one vote in
person or by proxy for each share of Common Stock in his or her name on the
books of AutoInfo, as of the Record Date, on any matter submitted to a vote of
stockholders. However, under Section 228(a) of the Delaware Corporation Law, any
action which may be taken at a stockholders' meeting may be taken by written
consent of the requisite number of stockholders required to take such action.
The proposed action requires the affirmative vote or written consent of a
majority of AutoInfo's outstanding Common Stock. On June 4, 2007, the Majority
Stockholders consented to this action by written consent.
Delaware Corporation Law does not afford to the stockholders the right to
dissent from the corporate action described in this Information Statement or to
receive an agreed or judicially appraised value for their shares.
The Majority Stockholders and the number of shares voted by them are as
follows:
Number of Percentage of
Stockholder Shares Voted Outstanding
----------- ------------ -------------
Harry Wachtel 5,002,658 15.3%
Thomas C. Robertson 100,000 *
Peter C. Einselen 300,000 *
Mark Weiss 875,000 2.7%
William I. Wunderlich 552,342 1.7%
James T. Martin/Lizstan Ltd. 5,970,000 18.3%
Kinderhook Partners, LP 6,038,312 18.5%
---------- ----
TOTAL 18,838,312 58.0%
========== ====
----------
* less than one percent.
APPROVAL OF THE AUTOINFO 2006 STOCK OPTION PLAN
In June 2006 the Board of Directors (the "Board") adopted, subject to
stockholder approval, the AutoInfo 2006 Stock Option Plan (the "2006 Plan"),
which provides for the grant to AutoInfo's employees, directors and consultants
of incentive and/or non-qualified stock options to purchase up to 3,000,000
shares of Common Stock.
The purpose of the 2006 Plan is to provide incentives to employees,
directors and consultants whose performance will contribute to our long-term
success and growth, to strengthen our ability to attract and retain employees,
directors and consultants of high competence, to increase the identity of
interests of such people with those of our stockholders and to help build
loyalty to AutoInfo through recognition and the opportunity for stock ownership.
A committee of the Board administers the 2006 Plan.
The following description of the 2006 Plan is a summary and is qualified
in its entirety by reference to the 2006 Plan, a copy of which is annexed hereto
as Appendix A.
Eligibility
Under the 2006 Plan, incentive stock options may be granted only to
employees and non-qualified stock options may be granted to employees, directors
and consultants. As of April 25, 2007, we had approximate fifty employees
eligible to participate in the 2006 Plan, the approximate number of non-employee
Board members who will be eligible to participate in the 2006 Plan is two and we
do not currently have any consultants that we are considering for participation
in the 2006 Plan. Options granted under the 2006 Plan, to date, are set forth in
the following table:
NEW PLAN BENEFITS
------------------------------------------------------------------------------
2006 PLAN
------------------------------------------------------------------------------
Name and Position Dollar Value($)(1) Number of Units
--------------------------------------- ------------------ ---------------
Harry M. Wachtel,
President and CEO $ 41,000 500,000
William I. Wunderlich,
EVP and CFO $ 25,000 300,000
Mark Weiss,
National account executive $ 17,000 200,000
All executive officers as a group(four) $ 83,000 1,000,000
All non-executive directors as a
group(two) $ 17,000 200,000
Non-executive officer employee group $205,000 845,000
----------
(1) Amounts are calculated using the provisions of Statement of Financial
Accounting Standards (SFAS) No. 123R, Share-based Payments.
2
Terms of Options
The 2006 Plan permits the granting of both incentive stock options and
non-qualified stock options. Generally, the option price of both incentive stock
options and non-qualified stock options must be at least equal to 100% of the
fair market value of the shares on the date of grant. The maximum term of each
option is ten years. For any participant who owns shares possessing more than
10% of the voting rights of AutoInfo's outstanding shares of Common Stock, the
exercise price of any incentive stock option must be at least equal to 110% of
the fair market value of the shares subject to such option on the date of grant
and the term of the option may not be longer than five years. Options become
exercisable at such time or times as the Board committee may determine at the
time it grants options.
Federal Income Tax Consequences
Non-qualified Stock Options. The grant of non-qualified stock options will
have no immediate tax consequences to AutoInfo or the grantee. The exercise of a
non-qualified stock option will require an employee to include in his gross
income the amount by which the fair market value of the acquired shares on the
exercise date (or the date on which any substantial risk of forfeiture lapses)
exceeds the option price. Upon a subsequent sale or taxable exchange of the
shares acquired upon exercise of a non-qualified stock option, an employee will
recognize long or short-term capital gain or loss equal to the difference
between the amount realized on the sale and the tax basis of such shares.
We will be entitled (provided applicable withholding requirements are met)
to a deduction for Federal income tax purposes at the same time and in the same
amount as the employee is in receipt of income in connection with the exercise
of a non-qualified stock option.
Incentive Stock Options. The grant of an incentive stock option will have
no immediate tax consequences to the employee. Beginning in 2006, companies are
required to recognize an immediate expense from the grant of incentive stock
options. If the employee exercises an incentive stock option and does not
dispose of the acquired shares within two years after the grant of the incentive
stock option nor within one year after the date of the transfer of such shares
to him (a "disqualifying disposition"), he will realize no compensation income
and any gain or loss that he realizes on a subsequent disposition of such shares
will be treated as a long-term capital gain or loss. For purposes of calculating
the employee's alternative minimum taxable income, however, the option will be
taxed as if it were a non-qualified stock option.
The following table sets forth, as of December 31, 2006, information
concerning our stock option plans, as well as information relating to other
equity compensation plans that we have adopted.
3
Equity Compensation Plan Information
Year Ended December 31, 2006
Number of securities
Number of Weighted- remaining available
securities to be average exercise for future issuance
issued upon price of under equity
exercise of outstanding compensation plans
outstanding options, (excluding securities
options, warrants warrants and reflected in column
Plan Category and rights rights (a))
----------------------------------- ----------------- ---------------- ---------------------
(a) (b) (c)
Equity compensation plans
approved by security holders
(1985, 1986, 1989, 1992,
1997, 1999, and 2003) .......... 5,262,000 $0.55 74,000
Equity compensation plans not
approved by security holders (1) 6,030,000 $0.82 6,465,000
========== ===== =========
Total ............................. 11,292,000 $0.70 6,539,000
========== ===== =========
----------
(1) Includes the following equity compensation plans:
o The 2006 Plan.
o In addition to the 2006 Plan, we established the 2006 Independent Sales
Agent Stock Option Plan (the "Sales Agent Plan") to align the interests of
our independent sales agents and affiliates with those of our
stockholders, to afford an incentive to such sales agents to continue as
such, to increase their efforts on our behalf and to promote the success
of our business. Generally, the Sales Agent Plan is administered by our
Board and provides (i) for the granting of non-qualified stock options,
(ii) that the maximum term for options granted under the plan is ten years
and (iii) that the exercise price for the options may not be less than
115% of the fair market value of our Common Stock on the date of grant.
o In 2005, we established the 2005 Independent Sales Agent Stock Option Plan
(the "2005 Sales Agent Plan") to align the interests of our independent
sales agents and affiliates with those of our stockholders, to afford an
incentive to such sales agents to continue as such, to increase their
efforts on our behalf and to promote the success of our business.
Generally, the 2005 Sales Agent Plan is administered by our Board and
provides (i) for the granting of non-qualified stock options, (ii) that
the maximum term for options granted under the plan is ten years and (iii)
that the exercise price for the options may not be less than 100% of the
fair market value of our Common Stock on the date of grant.
4
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of our
directors and executive officers:
Name Age Position
---- --- --------
Peter C. Einselen 67 Director
Thomas C. Robertson 61 Director
Harry Wachtel 48 President, chief executive officer and director
Mark Weiss 47 National account executive and director
William Wunderlich 59 Chief financial officer
Michael P. Williams 40 Chief operating officer and general counsel
PETER C. EINSELEN has been a director since January 1999. Mr. Einselen has
been an account executive since 1990 and served as senior vice president from
1990 to 2001 of Anderson & Strudwick, a brokerage firm. From 1983 to 1990, Mr.
Einselen was employed by Scott and Stringfellow, Incorporated, a brokerage firm.
THOMAS C. ROBERTSON has been a director since January 1999. Mr. Robertson
has been senior vice president since 2004 and was president and chief financial
officer from 1988 to 2004 and a director from 1988 to 2005 of Anderson &
Strudwick, a brokerage firm. Mr. Robertson has been president of Gardner &
Robertson, a money management firm, since 1997.
HARRY WACHTEL joined us in conjunction with the acquisition of Sunteck and
has been a director, and our president and chief executive officer since
December 7, 2000. Since 1997, he has been president of Sunteck. From 1992 to
1997, he served as vice president of sales and marketing for Pioneer Services,
Inc., a third party, non-asset based transportation logistics provider.
MARK WEISS joined us in conjunction with the acquisition of Sunteck and
has been a director since December 7, 2000. Since 1997, he has been employed by
Sunteck as a national account executive. From 1994 to 1997 he served as a
national account executive for Pioneer Services, Inc., a third party, non-asset
based transportation logistics provider. Mr. Weiss is the brother-in-law of Mr.
Wunderlich, our executive vice president and chief financial officer.
WILLIAM WUNDERLICH joined us in October 1992 as our vice president -
finance, became chief financial officer in January 1993, president in January
1999 and, in conjunction with the acquisition of Sunteck, became executive vice
president in December 2000. From 1990 to 1992, he served as vice president of
Goldstein Affiliates, Inc., a public 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. Mr. Wunderlich is the
brother-in-law of Mr. Weiss, one of our directors.
MICHAEL P. WILLIAMS joined us in January 2007 as our chief operating officer
and general counsel. From 2002 to 2006, Mr. Williams served as general counsel
and vice president of legal and business affairs for Vexure, Inc., a logistics
company. Prior to that, from 1999 to 2002, Mr. Williams served as general
counsel and vice president of legal and business affairs for Stonier
Transportation Group, Inc., a trucking and brokerage company. During his tenure
with Stonier and Vexure, Mr. Williams gained experience handling customer and
vendor contract negotiations, risk management strategies, human resources and
assets
5
management, and transportation and employment litigation matters. Mr. Williams
received his juris doctor cum laude from Thomas Cooley Law School, Lansing,
Michigan and his masters degree (LL.M.) in taxation from the University of
Florida, Gainesville. He has been a member of the Florida Bar since 1995.
Committees of the Board
Our Board has an audit committee and a compensation committee. The audit
committee reviews the scope and results of the audit and other services provided
by our independent accountants and our internal controls. The compensation
committee is responsible for the approval of compensation arrangements for our
officers and the review of our compensation plans and policies. Each committee
is comprised of Messrs. Einselen and Robertson, our non-employee independent
outside directors.
Our Board determined that the chairman of the audit committee, Mr.
Robertson, is an "audit committee financial expert," as that term is defined in
Item 407(d)(5) of Regulation S-K, and "independent" for purposes of current and
recently-adopted Nasdaq listing standards and Section 10A(m)(3) of the
Securities Exchange Act of 1934.
6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table, together with the accompanying footnotes, sets forth
information, as of the Record Date regarding stock ownership of all persons
known by us to own beneficially 5% or more of our outstanding Common Stock, all
directors, named executive officers and all directors and executive officers as
a group.
We determined beneficial ownership in accordance with rules promulgated by
the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Except as otherwise indicated, we believe that
the persons or entities named in the following table have sole voting and
investment power with respect to all shares of Common Stock as beneficially
owned by them, subject to community property laws where applicable. All
information with respect to beneficial ownership has been furnished to us by the
respective stockholder.
Name of Shares of Common Stock Percentage
Beneficial Owner (1) Beneficially Owned Of Ownership
------------------------------------ ---------------------- ------------
(i) Directors and Executive Officers
Harry Wachtel 6,785,342 (2) 20.5%
Thomas C. Robertson 555,000 (3) 1.7%
Peter C. Einselen 685,000 (4) 2.1%
Mark Weiss 1,075,000 (6) 3.3%
William I. Wunderlich 1,622,342 (5)(7) 4.8%
All executive officers and directors
as a group (6 persons) 9,440,000 (8) 26.7%
(ii) 5% Stockholders
James T. Martin/ Listan Ltd. 5,970,000 18.3%
Kinderhook Partners, LP 6,032,312 18.5%
Wasatch Advisors, Inc 3,229,225 9.9%
----------
(1) Unless otherwise indicated below, each director, executive officer and
each 5% stockholder has sole voting and investment power with respect to
all shares beneficially owned. The address for Mr. Wachtel, Mr. Weiss and
Mr. Wunderlich is c/o AutoInfo, Inc., 6413 Congress Avenue, Suite 260,
Boca Raton, FL 33487. The address for Mr. Martin is c/o Bermuda Trust
Company, Compass Point Road, 9 Bermudian Road, Hamilton HM11, Bermuda. The
address for Kinderhook Partners, LP is One Executive Drive, Suite 160,
Fort Lee, NJ 07024.
(2) Includes 1,282,342 shares with respect to which Mr. Wachtel has been
granted voting rights pursuant to voting proxy agreements and 500,000
shares issuable upon the exercise of stock options.
(3) Includes 455,000 shares issuable upon the exercise of stock options.
(4) Includes 385,000 shares issuable upon the exercise of stock options
(5) Includes 1,070,000 shares issuable upon the exercise of stock options.
(6) Includes 200,000 shares issuable upon the exercise of stock options and
875,000 shares with respect to which Mr. Weiss has granted voting rights
to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Weiss retains
full control over the disposition of these shares.
(7) Includes 407,342 with respect to which Mr. Wunderlich has granted voting
rights to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Wunderlich
retains full control over the disposition of these shares.
(8) Assumes that all currently exercisable options or warrants owned by
members of this group have been exercised.
7
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
We provide what we believe is a competitive total compensation package to
our executive management team through a combination of base salary, annual cash
and equity incentives and the right to participate in our broad-based benefits
program. We place significant emphasis on incentive compensation directly
related to our financial performance.
This Compensation Discussion and Analysis explains our compensation
philosophy, policies and practices with respect to our named executive officers
which includes our chief executive officer, chief financial officer, and our
national account executive.
The Objectives of our Executive Compensation Program
Our compensation committee is responsible for establishing and
administering our policies governing the compensation for all of our executive
officers. The compensation committee is composed entirely of non-employee
independent directors. See "Committees of the Board" above.
The purpose of our executive compensation program is to attract, retain
and motivate qualified executives to manage our business so as to maximize
profits and stockholder value. Executive compensation in the aggregate is made
up principally of the executive's annual base salary, a bonus based upon
operating earnings, a discretionary bonus which may be awarded by our
compensation committee and awards of stock or stock options under our Stock
Option Plans. Our compensation committee annually considers and makes
recommendations to our Board as to executive compensation including changes in
base salary, bonuses and awards of our stock or stock options.
Consistent with the above-noted purpose of the executive compensation
program, in recommending the aggregate annual compensation of our executive
officers, our compensation committee considers our overall performance and the
individual contribution and performance of the executive with our overall
performance being the more significant factor. While stockholders' total return
is important and is considered by the compensation committee, it is subject to
the vagaries of the public market place. Our executive compensation program
focuses on our strategic plans, corporate performance measures, and specific
corporate goals which should lead to a favorable stock price. The corporate
performance measure which our compensation committee considers include sales,
earnings, return on equity and comparisons of sales and earnings with prior
years and with budgets.
Our compensation committee does not rely on any fixed formulae or specific
numerical criteria in determining an executive's aggregate compensation. It
considers corporate and personal performance criteria, competitive compensation
levels, the economic environment and changes in the cost of living as well as
the recommendations of management. Our compensation committee then exercises
business judgment based on all of these criteria and the purposes of the
executive compensation program.
8
The Elements of Our Executive Compensation Program
Overall, our executive compensation programs are designed to be consistent with
the objectives and principles set forth above. The basic elements of our
executive compensation programs are summarized in the table below, followed by a
more detailed discussion of each element of compensation.
Element Characteristics Purpose
------------------------- ---------------------------------------------- ---------------------------------
Base salary Fixed annual cash compensation; all executives Keep our annual compensation
are eligible for periodic increases in base competitive with the market for
salary based on performance; targeted at the skills and experience necessary
median market pay level. to meet the requirements of the
executive's role with us.
--------------------------------------------------------------------------------------------------------------
Incentive bonus awards Performance-based annual cash and equity Motivate and reward for the
incentive earned based on company and achievement and over-performance
individual performance against target of our critical financial and
performance levels; targeted at the median strategic goals. Amounts earned
market pay level. for achievement of target
performance levels based on our
annual budget is designed to
provide a market-competitive pay
package at median performance;
potential for lesser or greater
amounts are intended to motivate
participants to achieve or exceed
our financial performance goals
and to not reward if performance
goals are not met.
--------------------------------------------------------------------------------------------------------------
Health & welfare benefits Fixed component. The same/comparable health & Provides benefits to meet the
welfare benefits (medical, dental, vision, health and welfare needs of
disability insurance and life insurance) are employees and their families.
available for all full-time employees.
--------------------------------------------------------------------------------------------------------------
Annual Compensation
To attract and retain executives with the ability and the experience
necessary to lead us and deliver strong performance to our stockholders, we
provide a competitive total compensation package. Base salaries are established
considering individual performance and experience, to ensure that each executive
is appropriately compensated.
Base Salary
Our compensation committee reviews salary ranges and individual salaries for
our executive officers and establishes the base salary for each executive
officer based on the following:
9
o consideration of median pay levels in our peer group among
individuals in comparable positions with transferable skills within
the transportation industry and comparable companies in general
industry;
o internal factors, such as, the individual's performance and
experience, and the pay of others on the executive team;
o our overall performance and the individual contribution and
performance of the executive with our overall performance being the
more significant factor; and
o with a focus on our strategic plans, corporate performance measures,
and specific corporate goals which should lead to a favorable stock
price including, our sales, earnings, return on equity and
comparisons of sales and earnings with prior years and with budgets.
When establishing the base salary of any executive officer, we believe that a
competitive base salary is necessary to attract and retain an executive
management team with the appropriate abilities and experience required to lead
us. The base salaries paid to our named executive officers are set forth below
in the Summary Compensation Table. We believe that the base salary paid to our
executive officers during 2006 achieves our executive compensation objectives,
compares favorably to our peer group and is within our target of providing a
base salary at the market median.
Incentive Bonus Awards
Cash Bonuses
Cash incentive bonus awards are solely based on established and
pre-approved percentages of pre-tax profit levels, are paid quarterly and
adjusted on an annual basis. Our compensation committee also exercises
discretion adjusting awards based on its consideration of our overall
performance during the year and each executive officer's individual performance,
other than the chief executive officer and the chief financial officer, based on
a review of the executive's performance as communicated to the compensation
committee by the chief executive officer.
Health and Welfare Benefits
All full-time employees, including our named executive officers, may
participate in our health and welfare benefit programs, including medical,
dental and vision care coverage, disability insurance and life insurance.
Overview of 2006 Compensation
We believe that the total compensation paid to our named executive
officers for the fiscal year ended December 31, 2006 achieves the overall
objectives of our executive compensation program. In accordance with our overall
objectives, executive compensation for 2006 was competitive with our peer group
and was weighted more heavily to pay for performance.
Employment Agreements, Severance Benefits and Change in Control Provisions
We have employment agreements with our chief executive officer, Harry M.
Wachtel, and our chief financial officer, William I. Wunderlich. We entered into
these agreements, effective January 1, 2007, to ensure the performance of their
roles for an extended period of time. In addition, we also considered the
critical nature of the position and our need to retain them when we committed to
these agreements. The agreements
10
provide for annual base salaries of $250,000 and $175,000, respectively, and for
participation in all executive benefit plans. Each of Mr. Wachtel's and Mr.
Wunderlich's agreements provide that they will each be entitled to a bonus equal
to 10% of our consolidated pre-tax profit (as defined in their respective
employment agreements) up to $1,250,000 and 5% of our consolidated pre-tax
profit in excess of $1,250,000. Annual salaries and bonuses shall not exceed
$750,000 for Mr. Wachtel and $675,000 for Mr. Wunderlich. The employment
contracts with both Mr. Wachtel and Mr. Wunderlich are for terms expiring in
December 2011. If either is terminated for cause or terminates without good
reason (as defined in the agreements), we are obligated to pay only those wages
and bonuses pursuant to the terms of our annual incentive plan and other
compensation then vested. If either Mr. Wachtel or Mr. Wunderlich is terminated
without cause or if either terminates his employment agreement for good reason
(as defined in the agreements), in addition to the payment of amounts then
vested, in exchange for a general release of all claims, such executive is
entitled to:
o The immediate vesting of any unvested stock options and one-year from the
date of such termination to exercise such options;
o Salary for the remaining term of the agreement, if any; and
o Bonus based on a pre-determined percentage of pre-tax profit for the
remaining term of the agreement, if any.
We have granted options that remain outstanding under our 2006 Plan. The
2006 Plan contains certain change in control provisions to ensure that our
executives remain with us through the closing of any sale of the business.
The 2006 Plan
Under our 2006 Plan, in the event of a "change in control" as defined in
the 2006 Plan, the following occurs with respect to options granted under the
2006 Plan:
o Each outstanding option automatically accelerates so that each option
becomes fully exercisable for all of the shares of the related class of
Common Stock at the time subject to such option immediately before the change
in control;
A change of control for purposes of the 2006 Plan is deemed to have
occurred if:
o Any "person" (a) other than us or any of our subsidiaries, (b) any of
our or our subsidiaries' employee benefit plans, (c) any "affiliate," (d)
a company owned, directly or indirectly, by our stockholders, or (e) an
underwriter temporarily holding our securities pursuant to an offering of
such securities, becomes the "beneficial owner," directly or indirectly,
of more than 50% of our voting stock;
o The individuals who constitute our Board on the effective date of the
2006 Plan (or any individual who was appointed to the Board by a majority
of the individuals who constitute our Board as of the effective date of
the 2006 Plan) cease for any reason to constitute at least a majority of
our Board.
o A merger or consolidation transferring greater than 50% of the voting
power of our outstanding securities to a person or persons different from
the persons holding those securities immediately prior to such
transaction; or
o The disposition of all or substantially all of our assets in a complete
liquidation or dissolution.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1996, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation over $1 million paid to the chief executive officer and four
11
other most highly compensated executive officers, unless the compensation is
considered performance based. The compensation disclosed in this report does not
exceed the $1 million limit, and executive compensation for 2006 is also
expected to qualify for deductibility. We currently intend to structure the
performance-based portion of our executive officers' compensation to achieve
maximum deductibility under Section 162(m) of the code with minimal sacrifices
in flexibility and corporate objective.
Although deductibility of compensation is preferred, tax deductibility is not a
primary objective of our compensation programs. We believe that achieving our
compensation objectives set forth above is more important than the benefit of
tax deductibility and we reserve the right to maintain flexibility in how we
compensate our executive officers that may result in limiting the deductibility
of amounts of compensation from time to time.
Summary Compensation Table
The following table sets forth certain information with respect to
compensation for the year ended December 31, 2006 earned by or paid to our chief
executive officer, chief financial officer and our other most highly compensated
executive officers in 2006 whose total compensation exceeded $100,000 (the
"named executive officers").
Name and Principal Position Year Salary ($) Bonus ($) Total ($)
--------------------------------------------------------------------------------
Harry M. Wachtel, 2006 $250,000 $269,000 $519,000
President and chief executive
officer
William I. Wunderlich, 2006 $175,000 $229,000 $404,000
Executive vice president and chief
financial officer
Mark Weiss, 2006 $137,000 -- $137,000
National account executive
Discussion of Summary Compensation
Our executive compensation policies and practices, pursuant to which the
compensation set forth in the Summary Compensation Table was paid, are described
above under "Compensation Discussion and Analysis." A summary of certain
material terms of our compensation plans and arrangements is set forth below.
Indemnification Arrangements
Our Certificate of Incorporation provides that we indemnify and hold harmless
each of our directors and officers to the fullest extent authorized by the
Delaware General Corporation Law, against all expense, liability and loss
(including attorney's fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith.
Our Certificate of Incorporation also provides that a director will not be
personally liable to us or to our stockholders for monetary damages for breach
of the fiduciary duty of care as a director. This provision does not eliminate
or limit the liability of a director:
o for breach of his or her duty of loyalty to us or to our
stockholders;
12
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the Delaware General Corporation Law (relating
to unlawful payments or dividends or unlawful stock repurchases or
redemptions); or
o for any improper benefit.
Outstanding Equity Awards
The following table sets forth certain information with respect to
outstanding equity awards at December 31, 2006 with respect to the named
executive officers.
Outstanding Equity Awards at Fiscal Year-End
Option Awards
--------------------------------------------------
Number of
Securities
Underlying
Unexercised Option
Options Exercise
Name Exercisable(1) Price Option Expiration Date
---- -------------- -------- ----------------------
William I. Wunderlich 270,000 $0.10 5/22/2007
William I. Wunderlich 500,000 $0.10 11/30/2009
----------
(1) Fully vested
(2) These options have been exercised prior to their expiration on 5/22/07.
Compensation of Directors
We do not pay any directors' fees. Directors are reimbursed for the costs
relating to attending Board and committee meetings. During 2006, Peter C.
Einselen and Thomas C. Robertson, our non-employee directors, each were granted
options to purchase 100,000 shares of our Common Stock at prices ranging from
$0.65 to $1.48 per share, 115% of the fair market value on the date of grant.
The following table provides compensation information for the year ended
December 31, 2006 for each of the independent members of our Board.
Director Compensation
Name Option Awards (1) Total
---- ----------------- -------
Thomas C. Robertson $21,700 (2) $21,700
Peter C. Einselen $21,700 (2) $21,700
----------
(1) Amounts are calculated using the provisions of Statement of Financial
Accounting Standards (SFAS) No. 123R, Share-based Payments.
(2) During 2006, each of Mr. Robertson and Mr. Einselen was granted four option
awards exercisable for 100,000 shares of our Common Stock in the aggregate,
respectively. Each award was for options exercisable for 25,000 shares of our
Common Stock. The award grant dates were 1/26/2006, 4/2/2006, 7/14/2006 and
10/12/2006 and the fair values (computed in accordance with SFAS 123R) on such
dates were $3,400, $4,500, $7,900 and $5,900, respectively.
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Compensation Committee Interlocks and Insider Participation
During 2006, the compensation committee consisted of Messrs. Einselen and
Robertson, both of whom are non-employee directors. To our knowledge, none of
our executive officers serve as a member of the Board or compensation committee,
or other committee serving an equivalent function, of any other entity that has
one or more of its executive officers serving as a member of our Board or
compensation committee. None of the persons who are members of our compensation
committee have ever been employed by us.
REPORT OF THE COMPENSATION COMMITTEE
The compensation committee has reviewed and discussed the Compensation
Discussion and Analysis with management and based on the review and discussion
the compensation committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Information Statement.
This report is submitted by the members of the compensation committee:
Thomas C. Robertson
Peter Einselen
Householding
The SEC's rules permit companies and intermediaries such as brokers to
satisfy delivery requirements for information statements with respect to two or
more stockholders sharing the same address by delivering a single information
statement addressed to those stockholders. This process, which is commonly
referred to as "householding," potentially provides extra convenience for
stockholders and cost savings for companies. Some brokers household information
statements, delivering a single information statement to multiple stockholders
sharing an address. Once you have received notice from your broker that they
will be householding materials to your address, householding will continue until
you are notified otherwise or until you revoke your consent. If at any time you
no longer wish to participate in householding and would prefer to receive a
separate information statement, please notify your broker. If you would like to
receive a separate copy of this information statement from us directly, please
contact us by:
o writing to:
AutoInfo, Inc.
6413 Congress Ave - Suite 260
Boca Raton, Florida 33487
Attention: William Wunderlich, Chief Financial Officer; or
o telephoning us at: (561) 988-9456.
OTHER BUSINESS
No further business was transacted by the written consent to corporate
action in lieu of meeting of stockholders to which this Information Statement
pertains.
By Order of the Board of Directors
Harry W. Wachtel
President, Chairman of the Board and
Chief Executive Officer
Dated: Boca Raton, Florida
June 11, 2007
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APPENDIX A
[2006 STOCK OPTION PLAN]
AUTOINFO, INC.
2006 STOCK OPTION PLAN
1. Purpose; Types of Awards; Construction.
The purpose of the AutoInfo, Inc. 2006 Stock Option Plan (the
"Plan") is to align the interests of officers, other key employees, consultants
and nonemployee directors of AutoInfo, Inc. (the "Company") and its affiliates
with those of the stockholders of the Company, to afford an incentive to such
officers, employees, consultants and directors to continue as such, to increase
their efforts on behalf of the Company and to promote the success of the
Company's business. To further such purposes, the Company may grant options to
purchase shares of the Company's common stock. The provisions of the Plan are
intended to satisfy the requirements of Section 16(b) of the Exchange Act (as
defined below) and of Section 162(m) of the Code (as defined below), and shall
be interpreted in a manner consistent with the requirements thereof, as now or
hereafter construed, interpreted and applied by regulations, rulings and cases.
2. Definitions.
As used in this Plan, the following words and phrases shall have the
meanings indicated below:
(a) "Agreement" shall mean a written agreement entered into
between the Company and an Optionee (as defined below) in connection with an
award under the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause," when used in connection with the termination of an
Optionee's employment by the Company or the cessation of an Optionee's service
as a consultant or a member of the Board, shall mean (i) the conviction of the
Optionee for the commission of a felony, or (ii) the willful and continued
failure by the Optionee to substantially perform his duties and obligations to
the Company or a Subsidiary (as defined below) (other than any such failure
resulting from his incapacity due to physical or mental illness), or (iii) the
willful engaging by the Optionee in misconduct that is demonstrably injurious to
the Company or a Subsidiary. For purposes of this Section 2(c), no act, or
failure to act, on an Optionee's part shall be considered "willful" unless done,
or omitted to be done, by the Optionee in bad faith and without reasonable
belief that his action or omission was in the best interest of the Company. The
Committee (as defined below) shall determine whether a termination of employment
is for Cause for purposes of the Plan.
(d) "Change in Control" shall mean the occurrence of the event set
forth in any of the following paragraphs:
(i) any Person (as defined below) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act (as
defined below), directly or indirectly, of securities of the Company (not
including in the securities beneficially
owned by such Person any securities acquired directly from the Company or
its subsidiaries) representing 50% or more of the combined voting power of
the Company's then outstanding securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving: individuals
who, on the date hereof, constitute the Board and any new director (other
than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Company or a direct or indirect subsidiary thereof with any other
corporation, other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its subsidiaries)
representing 50% or more of the combined voting power of the Company's
then outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this Section 2(d), "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) the Company
or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries, (iii)
an underwriter temporarily holding securities pursuant to an offering of such
2
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Committee" shall mean a committee established by the Board to
administer the Plan.
(g) "Common Stock" shall mean shares of common stock, $.001 par
value, of the Company.
(h) "Company" shall mean AutoInfo, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
(i) "Disability" shall mean an Optionee's inability to perform his
duties with the Company or on the Board by reason of any medically determinable
physical or mental impairment, as determined by a physician selected by the
Optionee and acceptable to the Company.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(k) "Fair Market Value" per share as of a particular date shall
mean (i) if the shares of Common Stock are then listed on a national securities
exchange, the closing sales price per share of Common Stock on the national
securities exchange on which the Common Stock is principally traded for the last
preceding date on which there was a sale of such Common Stock on such exchange,
or (ii) if the shares of Common Stock are then traded in an over-the-counter
market, the closing bid price for the shares of Common Stock in such
over-the-counter market for the last preceding date on which there was a sale of
such Common Stock in such market, or (iii) if the shares of Common Stock are not
then listed on a national securities exchange or traded in an over-the-counter
market, such value as the Committee, in its sole discretion, shall determine.
(l) "Incentive Stock Option" shall mean any option intended to be
and designated as an incentive stock option within the meaning of Section 422 of
the Code.
(m) "Nonemployee Director" shall mean a member of the Board who is
not an employee of the Company.
(n) "Nonqualified Option" shall mean an Option that is not an
Incentive Stock Option.
(o) "Option" shall mean the right, granted hereunder, to purchase
shares of Common Stock. Options granted by the Committee pursuant to the Plan
may constitute either Incentive Stock Options or Nonqualified Stock Options.
3
(p) "Optionee" shall mean a person who receives a grant of an
Option under the Plan.
(q) "Option Price" shall mean the exercise price of an Option to
purchase a share of Common Stock covered by such Option.
(r) "Parent" shall mean any company (other than the Company) in an
unbroken chain of companies ending with the Company if, at the time of granting
an Option, each of the companies other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other companies in such chain.
(s) "Plan" shall mean this AutoInfo, Inc. 2006 Stock Option Plan.
(t) "Rule 16b-3" shall mean Rule 16b-3, as from time to time in
effect, promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act, including any successor to such Rule.
(u) "Subsidiary" shall mean any company (other than the Company)
in an unbroken chain of companies beginning with the Company if, at the time of
granting an Option, each of the companies other than the last company in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other companies in
such chain.
(v) "Ten Percent Stockholder" shall mean an Optionee who, at the
time an Incentive Stock Option is granted, owns (or is deemed to own pursuant to
the attribution rules of Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary.
3. Administration.
The Plan, except as may otherwise be determined by the Board, shall
be administered by the Committee, the members of which shall be "nonemployee
directors" under Rule 16b-3 and "outside directors" under Section 162(m) of the
Code.
The Committee shall have the authority in its discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options; to
determine which Options shall constitute Incentive Stock Options and which
Options shall constitute Nonqualified Stock Options; to determine the purchase
price of the shares of Common Stock covered by each Option; to determine the
persons to whom, and the time or times at which awards shall be granted; to
determine the number of shares to be covered by each award; to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Agreements (which need not be
identical) and to
4
cancel or suspend awards, as necessary; and to make all other determinations
deemed necessary or advisable for the administration of the Plan.
The Committee may not delegate its authority to grant Options. The
Committee may employ one or more persons to render advice with respect to any
responsibility the Committee may have under the Plan. The Board shall have sole
authority, unless expressly delegated to the Committee, to grant Options to
Nonemployee Directors. All decisions, determination and interpretations of the
Committee shall be final and binding on all Optionees of any awards under this
Plan.
The Board shall have the authority to fill all vacancies, however
caused, in the Committee. The Board may from time to time appoint additional
members to the Committee, and may at any time remove one or more Committee
members. One member of the Committee shall be selected by the Board as chairman.
The Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members either present in person or participating by conference telephone at
a meeting or by written consent. The Committee may appoint a secretary and make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any award
granted hereunder.
4. Eligibility.
Awards may be granted to officers and other key employees of and
consultants to the Company, and its Subsidiaries, including officers and
directors who are employees, and to Nonemployee Directors. In determining the
persons to whom awards shall be granted and the number of shares to be covered
by each award, the Committee shall take into account the duties of the
respective persons, their present and potential contributions to the success of
the Company and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. Stock.
The maximum number of shares of Common Stock reserved for the grant
of awards under the Plan shall be Three Million (3,000,000), subject to
adjustment as provided in Section 9 hereof. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have been or may be
reacquired by the Company. The Company, during the term of this Plan, will at
all times reserve and keep available such number of shares of Common Stock as
shall be sufficient to satisfy the requirements of the Plan.
If any outstanding award under the Plan should for any reason
expire, be canceled or be forfeited without having been exercised in full, the
shares of Common Stock allocable to
5
the unexercised, canceled or terminated portion of such award shall (unless the
Plan shall have been terminated) become available for subsequent grants of
awards under the Plan.
6. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be evidenced by an
Agreement, in such form and containing such terms and conditions as the
Committee shall from time to time approve, which Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise specifically
provided in such Agreement:
(a) Number of Shares. Each Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) Type of Option. Each Agreement shall specifically state that
the Option constitutes an Incentive Stock Option or a Nonqualified Stock Option.
(c) Option Price. Each Agreement shall state the Option Price,
which shall not be less than one hundred percent (100%) of the Fair Market Value
per share of Common Stock covered by the Option on the date of grant. The Option
Price shall be subject to adjustment as provided in Section 9 hereof. The date
as of which the Committee adopts a resolution expressly granting an Option shall
be considered the day on which such Option is granted, unless such resolution
specifies a different date.
(d) Exercise Schedule and Period of Options. Each Agreement shall
provide the exercise schedule for the Option as determined by the Committee;
provided, however, that, the Committee shall have the authority to accelerate
the exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. The exercise
period shall be ten (10) years from the date of the grant of the Option unless
otherwise determined by the Committee; provided, however, that, in the case of
an Incentive Stock Option, such exercise period shall not exceed ten (10) years
from the date of grant of such Option. The exercise period shall be subject to
earlier termination as provided in Sections 6(f), 6(g) and 6(h) hereof. An
Option may be exercised, as to any or all full shares of Common Stock as to
which the Option has become exercisable, by written notice delivered in person
or by mail to the Chief Financial Officer of the Company, specifying the number
of shares of Common Stock with respect to which the Option is being exercised.
(e) Medium and Time of Payment. The Option Price multiplied by the
number of shares of Common Stock exercised by the Optionee shall be paid in
full, at the time of exercise, in cash.
(f) Termination. Except as provided in this Section 6(f) and in
Sections 6(g) and 6(h) hereof, an Option may not be exercised unless (i) with
respect to an Optionee who is an employee of the Company or a Subsidiary, the
Optionee is then in the employ of the Company or a Subsidiary (or a company or a
Parent or Subsidiary company of such company issuing or assuming the Option in a
transaction to which Section 424(a) of the Code applies), and unless the
6
Optionee has remained continuously so employed since the date of grant of the
Option and (ii) with respect to an Optionee who is a Nonemployee Director, the
Optionee is then serving as a member of the Board or as a member of a board of
directors of a company or a Parent or Subsidiary company of such company issuing
or assuming the Option. In the event that the employment of an Optionee shall
terminate or the service of an Optionee as a member of the Board shall cease
(other than by reason of death or Disability), all Options of such Optionee that
are exercisable at the time of such termination may, unless earlier terminated
in accordance with their terms, be exercised within ninety (90) days after the
date of such termination of service (or such different period as the Committee
shall prescribe).
(g) Death or Disability of Optionee. If an Optionee shall die
while employed by the Company or a Subsidiary or serving as a member of the
Board, or within ninety (90) days after the date of termination of such
Optionee's employment or cessation of such Optionee's service which shall not
have been for Cause, in which case this Section 6(g) shall not be applicable,
(or within such different period as the Committee may have provided pursuant to
Sections 6(f) hereof), or if the Optionee's employment shall terminate or
service shall cease by reason of Disability, all Options theretofore granted to
such Optionee (to the extent otherwise exercisable) may, unless earlier
terminated in accordance with their terms, be exercised by the Optionee or by
his beneficiary, at any time within one year after the death or Disability of
the Optionee (or such different period as the Committee shall prescribe). In the
event that an Option granted hereunder shall be exercised by the legal
representatives of a deceased or former Optionee, written notice of such
exercise shall be accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such legal representative to exercise such
Option. Unless otherwise determined by the Committee, Options not otherwise
exercisable on the date of termination of employment shall be forfeited as of
such date.
(h) Termination for Cause. In the event that the employment of an
Optionee shall terminate or the service of an Optionee as a member of the Board
shall cease for Cause, all Options of such Optionee that are exercisable at the
time of such termination may, unless earlier terminated in accordance with their
terms, be exercised within thirty (30) days after the date of such termination
of service (or such different period as the Committee shall prescribe).
(i) Other Provisions. The Agreements evidencing awards under the
Plan shall contain such other terms and conditions not inconsistent with the
Plan as the Committee may determine, including penalties for the commission of
competitive acts.
7. Nonqualified Stock Options.
Options granted pursuant to this Section 7 are intended to
constitute Nonqualified Stock Options and shall be subject only to the general
terms and conditions specified in Section 6 hereof.
8. Incentive Stock Options.
Options granted pursuant to this Section 8 are intended to
constitute Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to
7
the general terms and conditions specified in Section 6 hereof. An Incentive
Stock Option may not be granted to a Nonemployee Director or a consultant to the
Company.
(a) Value of Shares. The aggregate Fair Market Value (determined
as of the date the Incentive Stock Option is granted) of the shares of Common
Stock with respect to which Incentive Stock Options granted under this Plan and
all other option plans of any subsidiary become exercisable for the first time
by each Optionee during any calendar year shall not exceed $100,000.
(b) Ten Percent Stockholder. In the case of an Incentive Stock
Option granted to a Ten Percent Stockholder, (i) the Option Price shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the date of grant of such Incentive Stock Option, and (ii) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
9. Effect of Certain Changes.
(a) In the event of any stock dividend, recapitalization, merger,
consolidation, stock split, or combination or exchange of such shares, or other
similar transactions, each of the number of shares of Common Stock available for
awards, the number of such shares covered by outstanding awards, and the Option
Price, as appropriate, shall be equitably adjusted by the Committee to reflect
such event and preserve the value of such awards.
(b) Upon the occurrence of a Change in Control, each Option
granted under the Plan and then outstanding but not yet exercisable shall
thereupon become fully exercisable.
10. Surrender and Exchange of Awards.
The Committee may permit the voluntary surrender of all or a portion
of any Option granted under the Plan or any option granted under any other plan,
program or arrangement of the Company or any Subsidiary ("Surrendered Option"),
to be conditioned upon the granting to the Optionee of a new Option for the same
number of shares of Common Stock as the Surrendered Option, or may require such
voluntary surrender as a condition precedent to a grant of a new Option to such
Optionee. Subject to the provisions of the Plan, such new Option may be an
Incentive Stock Option or a Nonqualified Stock Option, and shall be exercisable
at the price, during such period and on such other terms and conditions as are
specified by the Committee at the time the new Option is granted.
11. Period During Which Awards May Be Granted.
Awards may be granted pursuant to the Plan from time to time within
a period of ten (10) years from the date the Plan is adopted by the Board, or
the date the Plan is approved by the shareholders of the Company, whichever is
earlier, unless the Board shall terminate the Plan at an earlier date.
8
12. Nontransferability of Awards.
Except as otherwise determined by the Committee, awards granted
under the Plan shall not be transferable otherwise than by will or by the laws
of descent and distribution, and awards may be exercised or otherwise realized,
during the lifetime of the Optionee, only by the Optionee or by his guardian or
legal representative.
13. Approval of Stockholders.
The Plan shall take effect upon its adoption by the Board and shall
terminate on the tenth anniversary of such date, but the Plan (and any grants of
awards made prior to the shareholder approval mentioned herein) shall be subject
to the approval of Company's shareholders, which approval must occur within
twelve months of the date the Plan is adopted by the Board.
14. Agreement by Optionee Regarding Withholding Taxes.
If the Committee shall so require, as a condition of exercise of a
Nonqualified Stock Option (a "Tax Event"), each Optionee who is not a
Nonemployee Director shall agree that no later than the date of the Tax Event,
such Optionee will pay to the Company or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local taxes of any kind
required by law to be withheld upon the Tax Event. Alternatively, the Committee
may provide that such an Optionee may elect, to the extent permitted or required
by law, to have the Company deduct federal, state and local taxes of any kind
required by law to be withheld upon the Tax Event from any payment of any kind
due the Optionee. The withholding obligation may be satisfied by the withholding
or delivery of Common Stock. Any decision made by the Committee under this
Section 14 shall be made in its sole discretion.
15. Amendment and Termination of the Plan.
The Board at any time and from time to time may suspend, terminate,
modify or amend the Plan; provided, however, that, unless otherwise determined
by the Board, an amendment that requires stockholder approval in order for the
Plan to continue to comply with Rule 16b-3, Section 162(m) of the Code or any
other law, regulation or stock exchange requirement shall not be effective
unless approved by the requisite vote of stockholders. Except as provided in
Section 9(a) hereof, no suspension, termination, modification or amendment of
the Plan may adversely affect any award previously granted, unless the written
consent of the Optionee is obtained.
16. Rights as a Stockholder.
An Optionee or a transferee of an award shall have no rights as a
stockholder with respect to any shares covered by the award until the date of
the issuance of a stock certificate to such for such shares. No adjustment shall
be made for dividends (ordinary or extraordinary,
9
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 9(a) hereof.
17. No Rights to Employment or Service as a Director or Consultant.
Nothing in the Plan or in any award granted or Agreement entered
into pursuant hereto shall confer upon any Optionee the right to continue in the
employ of the Company or any Subsidiary or as a member of the Board or a
consultant to the Company or any Subsidiary or to be entitled to any
remuneration or benefits not set forth in the Plan or such Agreement or to
interfere with or limit in any way the right of the Company or any such
Subsidiary to terminate such Optionee's employment or service. Awards granted
under the Plan shall not be affected by any change in duties or position of an
employee Optionee as long as such Optionee continues to be employed by the
Company or any Subsidiary.
18. Beneficiary.
An Optionee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Optionee, the executor or administrator of the Optionee's estate
shall be deemed to be the Optionee's beneficiary.
19. Governing Law.
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware.
20. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option or
other compensation plans in effect for the Company or any Subsidiary, nor shall
the Plan preclude the Company from establishing any other forms of incentive or
other compensation plans.
21. Singular, Plural; Gender.
Whenever used herein, nouns in the singular shall include the
plural, and the masculine pronoun shall include the feminine gender.
22. Headings, Etc., No Part Of Plan.
Headings of Sections hereof are inserted for convenience and
reference; they constitute no part of the Plan.
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