AUTOINFO, INC.
Non-Qualified Stock Option Agreement
December 6, 1995
AutoInfo, Inc., a Delaware corporation (the "Company") hereby grants to
Robert E. Upton, Jr. (the "Optionee"), a non-qualified stock option to purchase
a total of 375,000 shares of the Company's Common Stock, par value $.01 per
share, at the price of $3.00 per share on the terms and conditions set forth
herein. As used herein, the term "Company" includes any affiliates of the
Company.
1. Exercisability; Term.
This option shall become effective on the date of grant and shall be
exercisable as follows:
(a) If the net income before income taxes of AutoInfo Finance of
Virginia, Inc. ("AFV") as determined by the independent accountants who audit
the books of AFV (hereinafter called "Net Income") for 1996 shall equal or
exceed the "Target Amount" for 1996 as set forth on Exhibit A hereto, then,
thereafter this option shall be exercisable as to 75,000 shares. If the Net
Income for 1996 shall be between 75% of the Target Amount (the "Minimum Amount")
for 1996 and the Target Amount for 1996, then, thereafter this option shall be
exercisable as to that number of shares as shall equal (A) 56,250 plus (B)
18,750 multiplied by a fraction the numerator of which shall be the Net Income
for 1996 and the denominator of which shall be the Target Amount for 1996.
(b) If the Net Income for 1997 shall equal or exceed the Target Amount
for 1997, then, thereafter this option shall be exercisable as to 75,000
additional shares. If the
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Net Income for 1997 shall be between the Minimum Amount for 1997 and the Target
Amount for 1997, then, thereafter this option shall be exercisable as to that
additional number of shares as shall be equal to (A) 56,250 plus (B) 18,750
multiplied by a fraction the numerator of which shall be the Net Income for 1997
and the denominator of which shall be the Target Amount for 1997.
(c) If the Net Income for 1998 shall equal or exceed the Target Amount
for 1998, then, thereafter this option shall be exercisable as to 75,000
additional shares. If the Net Income for 1998 shall be between the Minimum
Amount for 1998 and the Target Amount for 1998, then, thereafter this option
shall be exercisable as to that additional number of shares as shall be equal to
(A) 56,250 plus (B) 18,750 multiplied by a fraction the numerator of which shall
be the Net Income for 1998 and the denominator of which shall be the Target
Amount for 1998.
(d) If the Net Income for 1999 shall equal or exceed the Target Amount
for 1999, then, thereafter this option shall be exercisable as to 75,000
additional shares. If the Net Income for 1999 shall be between the Minimum
Amount for 1999 and the Target Amount for 1999, then, thereafter this option
shall (i) be exercisable as to that additional number of shares as shall be
equal to (A) 56,250 plus (B) 18,750 multiplied by a fraction the numerator of
which shall be the Net Income for 1999 and the denominator of which shall be the
Target Amount for 1999.
(e) If the Net Income for 2000 shall equal or exceed the Target Amount
for 2000, then, thereafter this option shall be exercisable as to 75,000
additional shares. If the Net Income for 2000 shall be between the Minimum
Amount for 2000 and the Target Amount for 2000, then, thereafter this option
shall be exercisable as to that additional number of shares
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as shall be equal to (A) 56,250 plus (B) 18,750 multiplied by a fraction the
numerator of which shall be the Net Income for 2000 and the denominator of which
shall be the Target Amount for 2000.
(f) This option shall be exercisable with respect to all of the shares
covered hereby on and after April 15, 2001.
(g) This option shall expire ten years from the date hereof (the
"Termination Date").
2. Written Notice of Exercise.
This option may be exercised only by the delivery to the Secretary or
Treasurer of the Company at its principal office within the time specified in
paragraph l, of a written notice of exercise substantially in the form described
in paragraph 8.
3. Anti-Dilution Provisions.
(a) If there is any stock dividend, stock split, or combination of
shares of Common Stock of the Company, the number and amount of shares then
subject to this option shall be proportionately and appropriately adjusted; no
change shall be made in the aggregate purchase price to be paid for all shares
subject to this option, but the aggregate purchase price shall be allocated
among all shares subject to this option after giving effect to the adjustment.
(b) If there is any other change in the Common Stock of the Company,
including recapitalization, reorganization, sale or exchange of assets, exchange
of shares, offering of subscription rights, or a merger or consolidation in
which the Company is the surviving corporation, an adjustment, if any, shall be
made in the shares then subject to this option as the Board of Directors may
deem equitable. Failure of the Board of Directors to provide for an adjustment
pursuant to this subparagraph prior to the effective date of any Company action
referred to herein shall be conclusive evidence that no adjustment is required
in consequence of such action.
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(c) If the Company is merged into or consolidated with any other
corporation, or if it sells all or substantially all of its assets to any other
corporation, then either (i) the Company shall cause provisions to be made for
the continuance of this option after such event, or for the substitution for
this option of an option covering the number and class of securities which the
Optionee would have been entitled to receive in such merger or consolidation by
virtue of such sale if the Optionee had been the holder of record of a number of
shares of Common Stock of the Company equal to the number of shares covered by
the unexercised portion of this option, or (ii) the Company shall give to the
Optionee written notice of its election not to cause such provision to be made
and this option shall become exercisable in full (or, at the election of the
Optionee, in part) at any time during a period of 20 days, to be designated by
the Company, ending not more than 10 days prior to the effective date of the
merger, consolidation or sale, in which case this option shall not be
exercisable to any extent after the expiration of such 20-day period. In no
event, however, shall this option be exercisable after the Termination Date.
4. Investment Representation; Legend on Certificates; Special Restriction
on Resale.
The Optionee agrees that until such time as a registration statement under
the Securities Act of 1933 becomes effective with respect to this option and/or
the stock underlying this option, the Optionee is taking this option and will
take the stock underlying this option, for investment and not for resale or
distribution. The Company shall have the right to place upon the face of any
stock certificate or certificates evidencing shares issuable upon the exercise
of this option such legend as the Board of Directors may prescribe for the
purpose of preventing disposition of such shares in violation of the Securities
Act of 1933, as now or hereafter provided.
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5. Non-Transferability.
This option shall not be transferable by the Optionee other than by will or
by the laws of descent or distribution, and is exercisable during the lifetime
of the Optionee only by the Optionee.
6. Certain Rights Not Conferred by Option.
The Optionee shall not, by virtue of holding this option, be entitled to
any rights of a stockholder in the Company.
7. Expenses.
The Company shall pay all original issue and transfer taxes with respect to
the issuance and transfer of shares of Common Stock of the Company pursuant
hereto and all other fees and expenses necessarily incurred by the Company in
connection therewith.
8. Exercise of Options.
(a) This option shall become exercisable, in accordance with its terms.
(b) An option shall be exercisable by written notice of such exercise,
in the form prescribed by the Board of Directors to the Secretary or Treasurer
of the Company, at its principal office. The notice shall specify the number of
shares for which the option is being exercised (which number, if less than all
of the shares then subject to exercise, shall be 50 or a multiple thereof) and
shall be accompanied by payment in full of the purchase price of such shares. No
shares shall be delivered upon exercise of any option until all laws, rules and
regulations which the Board of Directors may deem applicable have been complied
with. If a registration statement under the Securities Act of 1933 is not then
in effect with respect to the shares issuable upon such exercise, it shall be a
condition precedent that the person exercising the option give to the Company a
written representation and undertaking, satisfactory in form and substance to
the Board of Directors, that he is acquiring the shares for his own account for
investment and not with a view to the distribution thereof.
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(c) The person exercising an option shall not be considered a record
holder of the stock so purchased for any purpose until the date on which he is
actually recorded as the holder of such stock in the records of the Company.
(d) This option shall be exercisable only so long as the Optionee shall
continue to be an employee of the Company and for thirty (30) days after
termination of such employment. If the Optionee shall have been an employee of
the Company at the time of his death or permanent disability then this option
shall be exercisable by his personal representative or him, as the case may be,
for a period ending one year from the date of death or permanent disability. In
no event, however, shall this option be exercisable after the Termination Date.
9. Covenant not to Compete or Otherwise Injure the Company; Work Product.
The acceptance by the Optionee of this option shall constitute the
acceptance of and agreement to all of the terms and conditions contained herein
and in the Plan, and shall further constitute a covenant and agreement on the
part of the Optionee to the effect that, without any additional compensation:
(a) The Optionee shall, so long as he is employed by the Company, devote
his full business time to the business of the Company, and for a period of 24
months after the termination of his employment with the Company, he will not
engage in any competitive activities as herein defined:
Activities competitive with the activities of the Company shall mean the
following:
(i) Hiring, offering to hire, enticing away or in any other
manner persuading or attempting to persuade any officer, employee or agent of
the Company to discontinue his relationship with the Company without the written
permission of the Company unless the Optionee clearly establishes that the
relationship was initiated by the other party thereto;
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(ii) Directly or indirectly soliciting, diverting, taking away or
attempting to solicit, divert, or take away any business of the Company of which
the Optionee has any knowledge during the term of his employment, unless the
Optionee clearly establishes that the relationship was initiated by the other
party thereto. The term "business" shall mean actual or proposed contracts or
arrangements for products or services of the Company and any reasonable
extension or continuation of the business of the Company as constituted upon the
termination of Optionee's employment.
(b) The Optionee shall not make or permit to be made, except in
pursuance of his duties and for the sole use and account of the Company or its
nominees, any copies, abstracts or summaries of any Company reports, papers,
documents or programs, whether made by him or by others.
(c) The Optionee cedes and grants and agrees to cede and grant to the
Company, all rights to possession, copying, and title in and to, any Company
reports, papers, documents or programs, or copies, abstracts or summaries
thereof, in any form, coming into possession of the Optionee during and because
of his employment by the Company, whether made or prepared by him or by others.
(d) The Optionee shall keep confidential and not disclose to others,
except as required by his service as an employee or by law, any matter or thing
ascertained by him through his association with the Company, not otherwise
publicly known, the disclosure of which might possibly be contrary to the best
interests of any person, firm or corporation doing business with the Company, or
of the Company.
(e) If any product, invention, discovery, patent, patented item,
formula, improvement or process relating to the business of the Company (the
"Work Product") is created, conceived, developed and discovered by the Optionee
either solely or jointly with others during the period of his service as an
employee of the Company, he shall forthwith disclose the same to the Company and
does hereby assign to it any and all such Work Product and all of his rights
thereto. At any time, whether during the period of service as an employee
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or thereafter, upon request by the Company, Optionee will execute and deliver to
the Company an instrument assigning to the Company his entire right, title and
interest in and to any or all such Work Product, and applications for letters
patent therefor, or reissues thereof; he will execute and deliver application
papers for letters patent in any country for any and all such Work Product, as
may be required by the Company; he will execute and similarly deliver any and
all other papers and do such other acts as may in the opinion of the Company be
desirable to more effectively convey to the Company the rights intended hereby
to be conveyed; he will aid and assist the Company in the prosecution or defense
of any claim or litigation involving any and all of said Work Products;
provided, however, that the foregoing services which Optionee agrees to render
shall be rendered at no expense to him.
Notwithstanding anything to the contrary contained in this Section 9, in
the event that the Company terminates Upton's employment agreement pursuant to
Section 7(d) of the Employment Agreement of even date herewith (the "Employment
Agreement"), then the covenant and agreement contained in subparagraph (a) of
this Section 9 shall be modified as provided in Section 8 of the Employment
Agreement.
10. Continued Employment.
Nothing herein shall be deemed to create any employment agreement or
guaranty of continued employment or limit in any way the Company's right to
terminate Optionee's employment at any time.
AUTOINFO, INC.
By:/s/ Scott Zecher
--------------------------------
Accepted as of the date
first set forth above.
/s/ Robert E. Upton, Jr.
- ----------------------------------
Optionee
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EXHIBIT A
Year Target Amount
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1996 $ 3,983,000
1997 $ 7,147,000
1998 $ 10,462,000
1999 $ 14,998,000
2000 $ 21,304,000