<PAGE>
As filed with the Securities and Exchange Commission on December 31, 1997
Registration No 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
AFP IMAGING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New York 13-5670050
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
250 Clearbrook Road, Elmsford, New York 10523
(Address of principal executive offices) (Zip Code)
1992 EMPLOYEE STOCK OPTION PLAN
1995 STOCK OPTION PLAN
AND
CONSULTANT'S OPTION PLAN
(Full Title of the Plan)
David Vozick, Chairman
AFP IMAGING CORPORATION
250 Clearbrook Road
Elmsford, New York 10523
(914) 592-6100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
A copy of all communications, including communications sent to the agent for
service should be sent to:
Jack Becker, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, N.Y. 10158-0125
(212) 687-3860
-----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Amount Proposed Maximum Proposed Maximum
of Securities to to be Offering Aggregate Amount of
be Registered Registered Price Per Share Offering Price Registration Fee
<S> <C> <C> <C> <C>
Stock Options 400,000(1) -- -- (2)
Common Stock,
par value
$.01 per share 400,000(3)(4) $ .75(5) $300,000 $90.91
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Title of Each Class Amount Proposed Maximum Proposed Maximum
of Securities to to be Offering Aggregate Amount of
be Registered Registered Price Per Share Offering Price Registration Fee
<S> <C> <C> <C> <C>
Stock Options 1,100,000(6) -- -- (2)
Common Stock,
par value
$.10 per share 1,100,000(7)(8) $ 2.03(5) $2,233,000 $676.67
Stock Options 150,000(9) -- -- (2)
Common Stock,
par value
$.01 per share 150,000(10) $ 2.37 $355,500 $107.73
Total ............................................................................ $875.31
</TABLE>
(1) Represents options granted or to be granted pursuant to the 1992 Employee
Stock Option Plan (the "1992 Plan") of AFP Imaging Corporation (the
"Registrant"). Each option entitles the holder thereof to purchase one
share of the common stock, .01 par value (the "Common Stock"), of the
Registrant.
(2) No registration fee is required pursuant to Rule 457(h)(2).
(3) The amount being registered represents 79,380 shares of Common Stock
issued to employees of the Registrant as a result of the exercise of
options granted under the 1992 Plan (of which 59,880 were exercised by
affiliates of the Company, as defined in Rule 405 under the Securities
Act of 1933, as amended) and 320,620 shares of Common Stock purchasable
upon exercise of options previously granted or which may become available
for regrant pursuant to the 1992 Plan.
(4) Pursuant to Rule 416, includes an indeterminate number of shares of Common
Stock which may become issuable pursuant to the anti-dilution provisions of
the 1992 Plan.
(5) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(h)(1) based upon the average exercise price.
(6) Represents options granted or to be granted pursuant to the 1995 Stock
Option Plan (the "1995 Plan") of the Registrant. Each option entitles the
holder thereof to purchase one share of the Common Stock of the Registrant.
(7) The amount being registered represents 20,000 shares of Common Stock issued
to employees of the Registrant as a result of the exercise of options
granted under the 1995 Plan (of which none were exercised by Affiliates of
the Company) and 1,080,000 shares of Common Stock purchasable upon
exercise of options previously granted, available for grant and/or which
may become available for regrant pursuant to the 1995 Plan.
(8) Pursuant to Rule 416, includes an indeterminate number of shares of Common
Stock which may become issuable pursuant to the antidilution provisions of
the 1995 Plan.
(9) Represents options granted to a certain Director of the Registrant, in his
capacity as a consultant of the Registrant and not as a Director, outside
of the 1992 Plan and the 1995 Plan for services to be performed to the
Registrant (the "Consultant's Options").
(10) Represents shares purchasable upon exercise of the Consultant's Options.
NOTE
-ii-
<PAGE>
This Registration Statement includes a form of prospectus to be used by
certain persons who may be deemed to be affiliates of the Registrant in
connection with the resale of shares of Common Stock received by such persons
pursuant to the exercise of options granted under the Registrant's 1992 Plan,
under the Registrant's 1995 Plan and under the Stock Option Agreement dated
September 19, 1997 between the Registrant and Robert L. Rosen, which shares are
subject to this Registration Statement.
-iii-
<PAGE>
PROSPECTUS
AFP IMAGING CORPORATION
1,650,000 SHARES
This Prospectus has been prepared by AFP Imaging Corporation, a New York
corporation (the "Company"), for use upon resale of shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), by certain officers
and directors of the Company who may be considered "affiliates" (as defined in
Rule 405 under the Securities Act of 1933, as amended (the "Securities Act")) of
the Company (collectively, the "Selling Shareholders") who have acquired or may
acquire Common Stock upon exercise of options ("Options") granted or which may
become available for regrant under the AFP Imaging Corporation 1992 Employee
Stock Option Plan (the "1992 Plan"), granted or to be granted or which may
become available for regrant under the AFP Imaging Corporation 1995 Stock Option
Plan (the "1995 Plan"), or granted pursuant to the Stock Option Agreement dated
September 19, 1997 between the Company and Robert L. Rosen (the "Consultant's
Option Plan") to purchase an aggregate of 1,650,000 shares of Common Stock (the
"Shares"). The maximum number of Shares which may be offered or sold hereunder
is subject to adjustment in the event of stock splits or dividends,
recapitalizations and other similar changes affecting the Common Stock. The
Common Stock is listed on the NASDAQ Sma11Cap Market, and it is anticipated that
the Selling Shareholders will offer shares of Common Stock for resale at
prevailing prices on the Nasdaq SmallCap Market (or other market, if the Common
Stock is then trading thereon) on the date of sale. See "Plan of Distribution."
The Company will receive none of the proceeds from the sale of the Common Stock
offered hereby, but it will receive the exercise price upon exercise of Options.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION; NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
any offer to sell or sale of the securities to which this Prospectus relates,
and if given or made, such information or representations must not be relied
upon as having been authorized. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, imply that there has been no
change in the facts herein set forth since the date hereof. This Prospectus
does not constitute an offer to sell to or a solicitation of any offer to buy
from any person in any state in which any such offer or solicitation would be
unlawful.
The date of this Prospectus is December 31, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at
Seven World Trade Center, New York, New York 10048, and at Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material may be obtained, at prescribed rates, by writing to the Commission,
Public Reference Section, 450 Fifth Street, N.W. Washington, D.C. 20549. The
Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically. The Common Stock is listed on the Nasdaq SmallCap
Market. Copies of reports, proxy statements and other information concerning the
Company may also be inspected at the office of Nasdaq SmallCap Market, 1735 K
Street, N.W., Washington, D.C. 20006.
A registration statement on Form S-8 with respect to the Shares (the
"Registration Statement") has been filed with the Commission under the
Securities Act. This Prospectus constitutes the Prospectus of the Company that
is filed as part of such Registration Statement with respect to the sale of the
Shares by the Selling Shareholders. As permitted by the rules and regulations of
the Commission, this Prospectus omits certain information contained in the
Registration Statement and reference is hereby made to the Registration
Statement for further information with respect to the Company and the Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference the documents listed below:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1997 ("Form 10-K");
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 ("Form 10-Q").
All documents subsequently filed by the Company after the date of this
Prospectus pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of filing of such documents. Any statement contained in a
previously filed document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement herein modifies or supersedes such statement; and any statement
contained herein shall be deemed to be modified or superseded to the extent that
a statement in any document subsequently filed, which is incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the information that has been incorporated by reference in
this Prospectus (not including exhibits to such information, unless such
exhibits are specifically incorporated by reference into the information which
this Prospectus incorporates). Written requests for copies of such information
should be directed to the Company at 250 Clearbrook Road, Elmsford, New York
10523, Attention: Secretary. Telephone requests may be directed to the Secretary
at (914) 592-6100.
THE COMPANY
2
<PAGE>
The Company's principal products and services are as follows:
Medical, Dental and Industrial X-Ray Processors & Accessories
The Company manufactures and distributes a line of free-standing and table
top medical, dental and industrial x-ray film processors. Various models of
these machines are capable of processing or developing up to 400 films per hour.
The exposed film is inserted into equipment and returned to the operator
developed, fixed, washed and dried. The equipment can be located either in a
dark room site or adapted to a daylight self-loading system. These units are
used for diagnostic x-ray imaging and industrial, non-destructive testing
applications. The Company's products are distributed worldwide through an
unaffiliated dealer network.
Digital Dental Imaging Systems
The Company manufactures and distributes a filmless digital dental
radiography system, based on electronic imaging technology. Such technology
creates dental images on a computer screen that operates in a Windows based
software environment. Currently, these products are being sold in Europe, Latin
America and Asia. The Company will introduce these products into North American
markets in fiscal 1998.
Diagnostic Imagers and Viewers
The Company manufactures a line of digital and analog multiformat compact
cameras to permanently record and document the images produced during diagnostic
examinations from several different applications. The cameras can produce
anywhere from one to six images on films that can be processed and developed in
Company manufactured film processors. The Company has the distribution rights to
a line of European monitors specifically designed for the high resolution needs
of the medical display market.
X-Ray Systems
The Company has the distribution rights to a European dental x-ray machine
for the North American market. The x-ray film exposed by each of these units is
then developed in the Company's processors. This x-ray product is also
compatible with the Company's digital x-ray unit.
Graphic Arts Processors
The Company manufactures and distributes various sized graphic arts
processors which develop different photosensitive materials such as rapid access
film and papers. These processors are intended for use with photo typesetting,
graphics and other pre-printing press applications. Newspapers, publishers and
commercial printers are primarily customers for these products.
The executive offices of the Company are located at 250 Clearbrook Road,
Elmsford, New York 10523, and the Company's telephone number is (914) 592-6100.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. However, the Company expects to use the proceeds from the exercise of
the Options for working capital and other general corporate purposes.
SELLING SHAREHOLDERS
3
<PAGE>
The shares of Common Stock to which this Prospectus relates are being
registered for reoffers and resales by the Selling Shareholders who have
acquired or may acquire such shares pursuant to the exercise of Options. The
Selling Shareholders named below may resell all, a portion or none of such
shares from time to time.
The table below sets forth with respect to each Selling Shareholder, based
upon information available to the Company as of December 30, 1997, the number of
shares of Common Stock beneficially owned before and after the sale of the
shares offered hereby; the number of shares to be sold; and the percent of the
outstanding shares of Common Stock owned before and after the sale of the Common
Stock offered hereby.
<TABLE>
<CAPTION>
Name of Number of Number of Number of Percentage of Shares of Common
Beneficial Shares of Common Shares to be Shares Owned Stock Owned
Owner Stock Owned Sold After Offering
Before Offering After Offering
(1)(2) (1)(2)
<S> <C> <C> <C> <C> <C>
David Vozick 1,861,963(3)(5) 300,000 1,561,963 19.2% 16.1%
(Chairman,
Secretary and
Treasurer)
Donald Rabinovitch 1,693,863(4)(5) 300,000 1,393,863 17.5% 14.4%
(President and
Director)
Robert L. Rosen 646,895(6) 150,000 496,895 6.7% 5.1%
(Director)
Robert Blatt 703,963 0 703,963 7.3% 7.3%
(Director)
Jack Becker 41,022(7) 9,000 32,022 * *
(Director)
Elise Nissen 50,000(8) 50,000 0 1% -
(Chief Financial
Officer)
Shamus Carrall 35,000(9) 35,000 0 * -
(Chief Operating
Officer)
</TABLE>
* Represents less than 1% of the shares of Cornrnon Stock Outstanding
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all Common
Stock beneficially owned by them. A person is deemed to be the beneficial
owner of securities that can be acquired by such person within 60 days from
the date hereof upon the exercise of options. Each beneficial owner's
percentage ownership is determined by assuming that options are held by
such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised.
(2) Based on 9,767,950 shares of Common Stock outstanding as of December 30,
1997.
(3) Include shares held in trust for Mr. Vozick's three children.
(4) Includes 231,000 shares owned by Mr. Rabinovitch's three children.
4
<PAGE>
(5) In the case of both Messrs. Vozick and Rabinovitch, the amount includes
275,060 stock options issued to each of them of which all are currently
exercisable and 24,940 stock options previously exercised by each. It also
includes 150,000 shares of Common Stock owned of record by Mr. Vozick's
family foundation and 140,000 shares of Common Stock owned of record by Mr.
Rabinovitch's family foundation. Messrs. Vozick and Rabinovitch disclaim
beneficial ownership with respect to the shares owned by their respective
family foundations.
(6) Includes stock options to acquire 150,000 shares of the Company, all of
which are currently exercisable. Such options were issued in consideration
for consulting services to be provided at a future date.
(7) Includes 9,000 stock options issued which are currently exercisable and
25,000 shares held by Snow Becker Krauss P.C., counsel to the Company, of
which Mr. Becker is a principal.
(8) Includes 10,000 shares of Common Stock received upon the exercise of stock
options previously exercised and 40,000 stock options which are all
currently exercisable.
(9) Consists of 35,000 stock options which are all currently exercisable.
PLAN OF DISTRIBUTION
The Shares may be sold or transferred for value by the Selling
Shareholders, or by pledgees, donees, transferees or other successors in
interest to the Selling Shareholders, in one or more transactions on the NASDAQ
SmallCap Market (or any successor stock exchange), in negotiated transactions or
in a combination of such methods of sale, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at prices
otherwise negotiated. The Selling Shareholders may effect such transactions by
selling the Shares to or through brokers-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the
Securities for whom such broker-dealers may act as agent (which compensation may
be less than or in excess of customary commissions). The Selling Shareholders
and any broker-dealers that participate in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares sold by them may be deemed to be underwriting discounts and
commissions under the Securities Act. All selling and other expenses incurred by
individual Selling Shareholders will be borne by such Selling Shareholders.
Upon the Company's being notified by a Selling Shareholder that any
material arrangement has been entered into with a broker or dealer for the sale
of Shares through a secondary distribution, or a purchase by a broker or dealer,
a supplemented Prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (a) the name of each of such Selling
Shareholder and the participating broker-dealers, (b) the number of Shares
involved, (c) the price at which such Shares are being sold, (d) the
commissions paid or the discounts or concessions allowed to such
broker-dealers, (e) where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in the Prospectus, as supplemented, and (f) other facts material to the
transaction.
In addition to any such number of Shares sold hereunder, a Selling
Shareholder may, at the same time, sell any shares of Common Stock, including
the Shares, owned by him in compliance with all of the requirements of Rule 144
under the Securities Act, regardless of whether such shares are covered by this
Prospectus.
There is no assurance that any of the Selling Shareholders will sell any or
all of the Shares offered hereby.
The Company will pay all expenses in connection with this offering, other
than commissions and discounts of underwriters, dealers or agents.
5
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon for the Company by Snow Becker Krauss P.C., 605 Third Avenue, New York, New
York 10158. Snow Becker Krauss P.C. owns 25,000 shares of Common Stock (the "SBK
Shares"). In addition, Jack Becker, a member of Snow Becker Krauss P.C. and a
director of the Company, beneficially owns, directly and indirectly, an
aggregate of 41,022 shares of Common Stock, which amount includes the SBK
Shares.
EXPERTS
The audited financial statements and schedules incorporated by reference in
this Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein by
reliance upon the authority of said firm as experts in giving said reports.
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, offficers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchamge Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The following documents filed with the Securities and Exchange Commission
(the "Commission") by AFP Imaging Corporation, a New York corporation (the
"Registrant"), pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration statement.
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997.
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
Item 4. Description of Securities.
Not applicable.
<PAGE>
Item 5. Interests of Named Experts and Counsel
Snow Becker Krauss P.C., counsel to the Registrant, owns 25,000 shares of
Common Stock (the "SBK Shares"). In addition, Jack Becker, a member of Snow
Becker Krauss P.C. and a Director of the Registrant, owns, directly or
indirectly, an aggregate of 41,022 shares of Common Stock, which amount includes
the SBK Shares.
Item 6. Indemnification of Directors and Officers.
Under the New York Business Corporation Law (the "NYBCL"), a corporation
may indemnify any person made, or threatened to be made, a party to any action
or proceeding, except for shareholder derivative suits, by reason of the fact
that he or she was a director or officer of the corporation, provided such
director or officer acted in good faith for a purpose which he or she reasonably
believed to be in the best interests of the corporation and, in criminal
proceedings, had no reasonable cause to believe his or her conduct was unlawful.
Indemnification may be provided against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorney's fees actually and
necessarily incurred as a result of such action, proceeding or appeal therefrom.
New York law also provides that expenses incurred in defending a civil or
criminal action may be paid by the corporation in advance of the final
disposition of such proceedings upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it is ultimately determined
that such person was not entitled to such indemnification.
In the case of shareholder derivative suits, the corporation may indemnify
any person by reason of the fact that he or she was a director or officer of the
corporation if he or she acted in good faith for a purpose which he or she
reasonably believed to be in the best interest of the corporation, except that
no indemnification may be made in respect of (i) a threatened action, or a
pending action which is settled or otherwise disposed of, or (ii) any claim,
issue or matter as to which such person has been adjudged to be liable to the
corporation, unless and only to the extent that the court in which the action
was brought, or, if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such portion of
the settlement amount and expenses as the court deems proper.
The indemnification and advancement of the expenses described above under
the NYBCL is not exclusive of other indemnification rights to which a director
or officer may be entitled, whether contained in the certificate of
incorporation or by-laws or when authorized by (i) such certificate of
incorporation or by-laws, (ii) a resolution of shareholders, (iii) a resolution
of directors, or (iv) an agreement providing for such indemnification, provided
that no indemnification may be made to or on behalf of any director or officer
if a judgment or other final adjudication adverse to the director or officer
establishes that his or her acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled.
Any person who has been successful on the merits or otherwise in the
defense of a civil or criminal action or proceeding will be entitled to
indemnification. Except as provided in the preceding sentence, unless ordered by
a court pursuant to the NYBCL, any indemnification under the NYBCL pursuant to
the above paragraphs may be made only if authorized in the specific case and
after a finding that the director or officer met the requisite standard of
conduct (i) by the disinterested directors if a quorum is available or (ii) in
the event a quorum of disinterested directors is not available, if so directed
by either (A) the board upon the written opinion of independent legal counsel or
(B) by the shareholders.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF THE
REGISTRANT PURSUANT TO THE FOREGOING PROVISIONS, OR OTHERWISE, THE REGISTRANT
HAS BEEN ADVISED THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION
SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT
AND IS, THEREFORE, UNENFORCEABLE.
Item 7. Exemption From Registration Claimed.
<PAGE>
Not applicable.
Item 8. Exhibits.
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 1992 Employee Stock Option Plan.
4.2 1995 Stock Option Plan.
4.3 Stock Option Agreement between the Registrant
and Robert L. Rosen.
5.1 Opinion of Snow Becker Krauss P.C.
23.1 Consent of Snow Becker Krauss P.C. (included in
Exhibit 5.1 hereto).
23.2 Consent of Arthur Andersen LLP.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13 (a) or Section 15 (d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons of
the Registrant pursuant to any arrangement, provision or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that claim
<PAGE>
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Elmsford, State of New York, on this 31st day of
December 1997.
AFP IMAGING CORPORATION
By: /s/ David Vozick
----------------------------------
David Vozick
Chairman of the Board of Directors
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David Vozick and Jack Becker and each of
them as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) and supplements to this Registration Statement, and to file the same
with the Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons, in
the capacities indicated, on December 31, 1997:
/s/ David Vozick /s/ Jack Becker
- -------------------------------------- ---------------------------
David Vozick, Chairman of the Board of Jack Becker, Director
Directors, Secretary and Treasurer
/s/ Donald Rabinovitch /s/ Robert Blatt
- -------------------------------------- ---------------------------
Donald Rabinovitch, Robert Blatt, Director
President and Director
(Principal Executive Officer)
/s/ Elise Nissen
- --------------------------------------
Elise Nissen,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit Page Number
- ----------- ---------------------- -----------
4.1 1992 Employee Stock Option Plan.
4.2 1995 Stock Option Plan.
4.3 Stock Option Agreement between the Registrant
and Robert L. Rosen.
5.1 Opinion of Snow Becker Krauss P.C.
23.1 Consent of Snow Becker Krauss P.C. (included
in Exhibit 5.1 hereto).
23.2 Consent of Arthur Andersen LLP.
<PAGE>
EXHIBIT 4.1
AFP IMAGING CORPORATION 1992 EMPLOYEE STOCK OPTION PLAN
1. Purposes
The AFP IMAGING CORPORATION 1992 EMPLOYEE STOCK OPTION PLAN (the "Plan")
is intended to provide the employees of AFP Imaging Corporation (the "Company")
with an added incentive to continue their services to the Company and to induce
them to exert their maximum efforts toward the Company's success. By thus
encouraging employees and promoting their continued association with the
Company, the Plan may be expected to benefit the Company and its Stockholders.
The Plan allows the Company to grant Incentive Stock Options ("ISOs") (as
defined in Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code")) and NonQualified Stock Options ("NQSOs") not intended to qualify under
Section 422(b) of the Code (collectively the "Options").
2. Shares Subject to the Plan.
The total number of shares of Common Stock of the Company, $.01 par value
per share (the "Common Stock"), that may be subject to Options granted under
the Plan shall be 400,000 in the aggregate, subject to adjustment as provided in
Paragraph 8 of the Plan. The Company shall at all times while the Plan is in
force reserve such number of shares of Common Stock as will be sufficient to
satisfy the requirement of outstanding Options granted under the Plan. In the
event any Option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased shares subject thereto shall
again be available for granting of Options under the Plan.
3. Eligibility.
Options may be granted to employees, which term as used in the Plan
includes officers and directors of the Company or of a "subsidiary" or "parent"
of the Company, as the quoted terms are defined within Section 424 of the Code.
Options may be granted from time to time under the Plan to one or more employees
of the Company, including employees who have previously been granted Options
under the Plan.
4. Administration of the Plan.
The Plan shall be administered by the Board of Directors of the Company
as such Board of Directors may be composed from time to time or by a Stock
Option Committee (the "Committee") comprised of two disinterested persons (the
term "disinterested" having the meaning ascribed to it by Rule 16b-3 of the
Securities Exchange Act of 1934 (the "1934 Act")) appointed by such Board of
Directors of the Company. As and to the extent authorized by the Board of
Directors of the Company, the Committee may exercise the power and authority
vested in the Board of Directors under the Plan. Within the limits of the
express provisions of the Plan, the Board of Directors shall have the authority,
in its discretion, to determine the individuals to whom, and the time or times
at which, Options shall be granted, the character of such Options (whether ISO
or NQSO) and the number of shares of Common Stock to be subject to each Option,
and to interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of Option
agreements that may be entered into in connection with Options (which need not
be identical), subject to the limitation that agreements granting ISOs must be
consistent with requirements for the ISOs being qualified as "incentive stock
options" as provided in Section 422 of the Code, and to make all other
determinations and take all other actions necessary or advisable for the
administration of the Plan. In making such determinations, the Board of
Directors may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the Company's
success, and such other factors as the Board of Directors, in its discretion,
shall deem relevant. The Board of Directors' determinations on the matters
referred to in this paragraph shall be conclusive.
5. Terms of Options.
<PAGE>
The Board or the Committee may grant either ISOs or NQSOs. An ISO or an
NQSO enables the optionee to purchase from the Company, at any time during a
specified exercise period, a specified number of shares of Common Stock at a
specified price (the "Option Price"). The character and terms of each Option
granted under the Plan shall be determined by the Board of Directors consistent
with the provisions of the Plan, including the following:
(a) An Option granted under the Plan must be granted within 10 years
from the date the Plan is adopted, or the date the Plan is approved by the
Stockholders of the Company, whichever is earlier.
(b) The Option Price of the Common Stock subject to each ISO shall not be
less than the fair market value of such Common Stock at the time such ISO is
granted. Such fair market value shall be determined by the Board of Directors
and, if the Common Stock is listed on a national securities exchange or traded
on the over-the-counter market, the fair market value shall be the closing price
on such exchange, or the mean of the closing bid and asked prices of the Common
Stock on the over-the-counter market, as reported by the National Association
of Securities Dealers Automated Quotation System or the National Quotation
Bureau, Inc., as the case may be, on the day on which the Option is granted or,
if there is no closing price or bid or asked price on that day, the closing
price or mean of the closing bid and asked prices on the most recent day
preceding the day on which the Option is granted for which such prices are
available. If an ISO is granted to any individual who, immediately before the
ISO is to be granted, owns (directly or through attribution) more than 10% of
the total combined voting power of all classes of capital stock of the Company
or a subsidiary or parent of the Company, the Option Price of the Common Stock
subject to such ISO shall not be less than 110% of the fair market value per
share of the Common Stock at the time such ISO is granted.
(c) In no event shall any Option granted under the Plan have an
expiration date later than 10 years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in paragraph 6 hereof. If an ISO is granted to any individual who,
immediately before the ISO is granted, owns (directly or through attribution)
more that 10% of the total combined voting power of all classes of capital stock
of the Company or of a subsidiary or parent of the Company, such ISO shall by
its terms expire and shall not be exercisable after the expiration of five (5)
years from the date of its grant.
(d) Unless otherwise provided in any Option agreement under the Plan, an
Option granted under the Plan shall become exercisable, in whole at any time or
in part from time to time, but in no case may an Option (i) be exercised as to
less than one hundred (100) shares of Common Stock at any one time, or the
remaining shares of Common Stock covered by the Option if less than one hundred
(100), and (ii) become fully exercisable more than five years from the date of
its grant nor shall less than 20% of the Option become exercisable in any of
the first five years of the Option.
(e) An Option granted under the Plan shall be exercised by the delivery
by the holder thereof to the Company at its principal office (to the attention
of the Secretary) of written notice of the number of full shares of Common Stock
with respect to which the Option is being exercised, accompanied by payment in
full, in cash or by certified check payable to the order of the Company, of the
Option Price of such Common Stock, or, at the discretion of the Committee or the
Board, by the delivery of Common Stock having a fair market value equal to the
Option Price (provided, in order to qualify as an ISO, more than two years shall
have passed since the date of grant and one year from the date of exercise), or
at the option of the Committee or the Board, by a combination of cash and such
shares (subject to the restriction above) held by the employee that have a fair
market value together with such cash that shall equal the Option Price, and at
the discretion of the Committee or Board by having the Company withhold from
the Common Stock to be issued upon exercise of the Option that number of shares
having a fair market value equal to the tax withholding amount due.
(f) The holder of an Option shall have none of the rights of a
Stockholder with respect to the Common Stock covered by such holder's Option
until such Common Stock shall be issued to such holder upon the exercise of the
Option.
(g) An ISO granted under the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and any ISOs granted under
the Plan may be exercised during the lifetime of the holder thereof only by the
holder. No Option granted under the Plan shall be subject to execution,
attachment or other process.
<PAGE>
(h) The aggregate fair market value, determined as of the time any ISO is
granted and in the manner provided for by subparagraph (b) of this Paragraph 5,
of the Common Stock with respect to which ISOs granted under the Plan are
exercisable for the first time during any calendar year and under incentive
stock options qualifying as such in accordance with Section 422 of the Code
granted under any other Incentive Stock Option plan maintained by the Company or
its parent or subsidiary corporations, shall not exceed $100,000.
6. Death or Termination of Employment.
(a) If the employment of a holder of an ISO under the Plan shall be
terminated voluntarily by the employee or for cause, such holder's ISO shall
expire within thirty (30) days after such termination. If such employment shall
terminate for any reason other then death, voluntary termination by the employee
or for cause, then such ISO may be exercised at any time within three (3) months
after such termination, subject to the provisions of subparagraph (f) of this
Paragraph 6. For the purposes of this subparagraph (a), the retirement of an
individual either pursuant to a pension or retirement plan adopted by the
Company or at the normal retirement date prescribed from time to time by the
Company shall be deemed to be a termination of such individual's employment
other than voluntarily by the employee or for cause.
(b) If the holder of an ISO under the Plan dies (i) while employed by the
Company or a subsidiary or parent corporation or (ii) within three (3) months
after the termination of such holder's employment other then voluntarily by the
employee or for cause, such ISO may, subject to the provisions of subparagraph
(f) of this Paragraph 6, be exercised by a legatee or legatees of such Option
under such individual's last will or by such individual's personal
representatives or distributees at any time within one year after the
individual's death.
(c) If the employment of a holder of an NQSO under the Plan shall be
terminated voluntarily by the employee or for cause, then such holder's NQSO
shall expire within thirty (30) days after such termination. If such employment
shall terminate for any reason other than death, voluntary termination by the
employee or for cause, then such NQSO may be exercised at any time within three
(3) months after the date of such termination, subject to the provisions of
subparagraph (f) of this Paragraph 6. For the purposes of this subparagraph (c),
the retirement of an individual either pursuant to a pension or retirement plan
adopted by the Company or at the normal retirement date prescribed from time to
time by the Company shall be deemed to be a voluntary termination of such
individual's employment by the employee.
(d) If the holder of an NQSO under the Plan dies (i) while employed by
the Company or a subsidiary or parent corporation or (ii) within three (3)
months after the termination of his employment either voluntarily or for cause,
such NQSO may, subject to the provisions of subparagraph (f) of this Paragraph
6, be exercised by a legatee or legatees of such NQSO under such individual's
last will or by such individual's personal representatives or distributees at
any time within one year after the individual's death.
(e) If the holder of an Option under the Plan becomes disabled within the
definition of section 22(e)(3) of the Code while employed by the Company or a
subsidiary or parent corporation, such option may, subject to the provisions of
subparagraph (f) of this Paragraph 6, be exercised at any time within one year
after such holder's termination of employment due to the disability.
(f) An Option may not be exercised pursuant to this Paragraph 6 except to
the extent that the holder was entitled to exercise the Option at the time of
termination of employment or death, and in any event may not be exercised after
the original expiration date of the Option.
7. Leave of Absence.
For the purposes of the Plan, an individual who is on military or sick
leave or other bona fide leave of absence (such as temporary employment by the
Government) shall be considered as remaining in the employ of the Company or of
a subsidiary or parent corporation for ninety (90) days or such longer period as
such individual's right to reemployment is guaranteed either by statute or by
contract.
<PAGE>
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding Common Stock is hereafter changed
by reason of recapitalization, reclassification, stock split-up, combination or
exchange of shares of Common Stock or the like, or by the issuance of dividends
payable in Common Stock, an appropriate adjustment shall be made by the Board of
Directors in the aggregate number of shares of Common Stock available under the
Plan and in the number of shares of Common Stock and price per share of Common
Stock subject to outstanding Options. In the event of the proposed dissolution,
liquidation, merger or sale of substantially all of the assets of the Company,
all outstanding Options under the Plan will automatically terminate, unless
otherwise provided by the Board of Directors. The Board of Directors or the
Committee may in its discretion make provision for accelerating the
exercisability of Options under the Plan in such circumstances.
(b) Any adjustment in the number of shares of Common Stock shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next lower whole number of
shares of Common Stock.
9. Further Conditions of Exercise.
(a) Unless the Common Stock issuable upon the exercise of an Option under
the Plan have been registered with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, prior to the exercise of the
Option, the notice of exercise shall be accompanied by a representation or
agreement of the individual exercising the Option to the Company to the effect
that such Common Stock is being acquired for investment and not with a view to
the resale or distribution thereof or such other documentation as may be
required by the Company, unless in the opinion of counsel to the Company such
representation, agreement or documentation is not necessary to comply with said
Act.
(b) The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange on which the
Common Stock may then be listed or until there has been qualification under or
compliance with such state or federal laws, rules or regulations as the Company
may deem applicable. The Company shall use reasonable efforts to obtain such
listing, qualification and compliance.
(c) The Board or Committee may make such provisions and take such steps
as it may deem necessary or appropriate for the withholding of any taxes that
the Company is required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with the exercise of any Option, including, but not limited to (i) the
withholding of payment of all or any portion of such Option until the holder
reimburses the Company for the amount the Company is required to withhold with
respect to such taxes, or (ii) the canceling of any number of shares of Common
Stock issuable upon exercise of such Option in an amount aufficient to reimburse
the Company for the amount it is required to so withhold, or (iii) the selling
of any property contingently credited by the Company for the purpose of
exercising such Option, in order to withhold or reimburse the Company for the
amount it is required to so withhold.
10. Termination, Modification and Amendment.
The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board of Directors, or the date the Plan is approved by the Stockholders of the
Company, or such date of termination, as hereinafter provided, and no Option
shall be granted after termination of the Plan.
The Plan may from time to time be terminated, modified or amended by the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Company entitled to vote thereon.
The Board of Directors of the Company may at any time, prior to ten (10)
years from the earlier of the date of the adoption of the Plan by such Board of
Directors or the date the Plan is approved by the Stockholders, terminate the
Plan or from time to time make such modifications or amendments of the Plan as
it may deem advisable; provided, however, that the Board of Directors shall not,
without approval by the affirmative vote of the holders
<PAGE>
of a majority of the outstarding shares of capital stock of the Company
entitled to vote thereon, increase (except a provided by Paragraph 8) the
maximum number of shares of Common Stock as to which Options may be granted
under the Plan, materially change the standards of eligibility under the Plan or
materially increase the benefits which may accrue to participants under the
Plan. Any amendment to the Plan which, in the opinion of counsel to the Company,
will be deemed to result in the adoption of a new Plan, will not be effective
until approved by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Company entitled to vote thereon.
No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Option without the consent of the
individual to whom such option shall have been previously granted.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of Directors
of the Company. The Plan shall be subject to approval by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon within one year before or after adoption of the
Plan by the Board of Directors.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement executed
pursuant hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted hereunder any right to remain in the employ of the Company
or of a subsidiary or parent of the Company or in any way limit the right of the
Company, or of any parent or subsidiary thereof, to terminate the employment of
any employee.
13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the employees of the
Company, nor shall the Plan preclude the Company from establishing any other
form of stock option plan, incentive plan or any other compensation plan for
employees of the Company.
<PAGE>
EXHIBIT 4.2
AFP IMAGING CORPORATION
1995 STOCK OPTION PLAN
1. Purposes
The AFP IMAGING CORPORATION 1995 STOCK OPTION PLAN (the "Plan") is intended
to provide the employees, directors, independent contractors and consultants of
AFP Imaging Corporation (the "Company") and its subsidiaries with an added
incentive to commence employment with the Company, continue their services to
the Company and to induce them to exert their maximum efforts toward the
Company's success. By thus encouraging employees, directors, independent
contractors and consultants and promoting their continued association with the
Company, the Plan may be expected to benefit the Company and its stockholders.
The Plan allows the Company to grant Incentive Stock Options ("ISOs") (as
defined in section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code")) and Non-Qualified Stock Options ("NQSOs") not intended to qualify under
Section 422(b) of the Code (collectively the "Options").
2. Shares Subject to the Plan
The total number of Common Shares of the Company, $.01 par value per share,
that may be subject to Options granted under the Plan shall be 600,000 in the
aggregate, subject to adjustment as provided in Paragraph 8 of the Plan. The
Company shall at all times while the Plan is in force reserve such number of
Common Shares as will be Sufficient to satisfy the requirement of outstanding
Options granted under the Plan. In the event any Option granted under the Plan
shall expire or terminate for any reason without having been exercised in full
or shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject thereto shall again be available for granting of
Options under the Plan.
3. Eligibility.
ISO's may be granted from time to time under the Plan to one or more key
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. A key employee is any
person employed with the Company or of a subsidiary or parent of the Company. An
Officer is an employee for the above purposes. However, a director of the
Company who is not otherwise an employee is not deemed an employee for such
purposes. NQSOs may be granted from time to time under the Plan to one or more
employees of the Company, Officers, members of the Board of Directors,
independent contractors, consultants and other individuals who are not employees
of, but are involved in the continuing development and success of the Company
and/or of a subsidiary of the Company, including persons who have previously
been granted Options under the Plan.
4. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors of the Company
as such Board of Directors may be composed from time to time and/or by a Stock
Option committee (the "Committee") which shall be comprised of at least two
disinterested persons (the term "disinterested" having the meaning ascribed to
it by Rule 16b-3 of the Securities Exchange Act of 1934 (the "1934 Act"))
appointed by such Board of Directors of the Company. As and to the extent
authorized by the Board of Directors of the Company, the Committee may exercise
the power and authority vested in the Board of Directors under the Plan. Within
the limits of the express provisions of the Plan, the Board of Directors or
Committee shall have the authority, in its discretion, to determine the
individuals to whom, and the time or times at which, Options shall be granted,
the character of such Options (whether ISO or NQSO) and the number of Common
Shares to be subject to each Option, the manner and form in which the optionee
can tender payment upon the exercise of his Option, and to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of Option agreements that may be entered into
in connection with Options (which need not be identical), subject to the
limitation that agreements granting ISOs must be consistent with the
requirements for the ISOs being qualified as "incentive stock options" as
provided in Section 422 of the Code, and to make all other determinations and
take all other actions necessary or
<PAGE>
advisable for the administration of the Plan. In making such determinations, the
Board of Directors and/or the Committee may take into account the nature of the
services rendered by such individuals, their present and potential contributions
to the Company's success, and such other factors as the Board of Directors
and/or the Committee, in its discretion, shall deem relevant. The Board of
Directors' and/or the Committee's determinations on the matters referred to in
this Paragraph shall be conclusive.
(b) Notwithstanding anything contained herein to the contrary, at anytime
during the period the Company has two "disinterested directors", the Committee,
if one has been appointed to administer the Plan with respect to grants to all
persons or solely with respect to persons subject to Section 16 of the 1934 Act,
shall have the exclusive right to grant Options to persons subject to Section 16
of the 1934 Act and set forth the terms and conditions thereof. With respect to
persons subject to Section 16 of the 1934 Act, transactions under the Plan are
intended, to the extent possible, to comply with all applicable conditions of
Rule 16b-3, as amended from time to time, (and its successor provisions, if any)
under the 1934 Act. To the extent any provision of the Plan or action by the
Board of Directors or Committee fails to so comply, it shall be deemed null and
void to the extent permitted by law and deemed advisable by the Board of
Directors and/or such Committee.
5. Terms of Options.
Within the 1imits of the express provisions of the Plan, the Board of
Directors or the Committee may grant either ISOs or NQSOs. An ISO or an NQSO
enables the optionee to purchase from the Company, at any time during a
specified exercise period, a specified number of Common Shares at a specified
price (the "Option Price"). The character and terms of each Option granted under
the Plan shall be determined by the Board of Directors and/or the Committee
consistent with the provisions of the Plan, including the following:
(a) An Option granted under the Plan must be granted within 10 years from
the date the Plan is adopted, or the date the Plan is approved by the
stockholders of the Company, whichever is earlier.
(b) The Option Price of the Common Shares subject to each ISO shall not be
less than the fair market value of such Common Shares at the time such ISO is
granted. Such fair market value shall be determined by the Board of Directors
and, if the Common Shares are listed on a national securities exchange or traded
on the over-the-counter market, the fair market value shall be the closing price
on such exchange, or the mean of the closing bid and asked prices of the Common
Shares on the over-the-counter market, as reported by the National Association
of Securities Dealers Automated Quotation System (NASDAQ), the National
Association of Securities Dealers OTC Bulletin Board or the National Quotation
Bureau, Inc., as the case may be, on the day on which the Option is granted or,
if there is no closing price or bid or asked price on that day, the closing
price or mean of the closing bid and asked prices on the most recent day
preceding the day on which the Option is granted for which such prices are
available. If an ISO is granted to any individual who, immediately before the
ISO is to be granted, owns (directly or through attribution) more than 10% of
the total combined voting power of all classes of capital stock of the Company
or a subsidiary or parent of the Company, the Option Price of the Common Shares
subject to such ISO shall not be less than 110% of the fair market value per
share of the Common Shares at the time such ISO is granted.
(c) The Option Price of the Common Shares subject to an NQSO granted
pursuant to the Plan shall be determined by the Board of Directors or the
Committee, in its sole discretion.
(d) In no event shall any Option granted under the Plan have an expiration
date later than 10 years from the date of its grant, and all Options granted
under the Plan shall be subject to earlier termination as expressly provided in
Paragraph 6 hereof. If an ISO is granted to any individual who, immediately
before the ISO is granted, owns (directly or through attribution) more that 10%
of the total combined voting power of all classes of capital stock of the
Company or of a subsidiary or parent of the Company, such ISO shall by its
terms expire and shall not be exercisable after the expiration of five (5) years
from the date of its grant.
(e) Unless otherwise provided in any Option agreement under the Plan, an
Option granted under the Plan shall become exercisable, in whole at any time or
in part from time to time, but in no case may an Option (i) be exercised as to
less than one hundred (100) Common Shares at any one time, or the remaining
Common Shares covered by the Option if less than one hundred (100), and (ii)
become fully exercisable more than five years from the date of its grant nor
shall less than 20% of the Option become exercisable in any of the first five
years of the Option.
<PAGE>
The Board of Directors or the Committee, in its sole discretion, may at such
time or times as it deems appropriate, if ever, accelerate all or part of the
vesting provisions with respect to one or more outstanding options. The
acceleration of one option shall not infer that any option is or to be
accelerated.
(f) An Option granted under the Plan shall be exercised by the delivery by
the holder thereof to the Company at its principal office (to the attention of
the Secretary) of written notice of the number of full Common Shares with
respect to which the Option is being exercised, accompanied by payment in full,
which payment at the option of the optionee shall be in the form of (i) cash or
certified or bank check payable to the order of the Company, of the Option Price
of such Common Shares, or, (ii) if permitted by the Committee or the Board of
Directors, as determined by the Committee or the Board of Directors in its sole
discretion at the time of the grant of the Option with respect to an ISO and at
or prior to the time of exercise with respect to a NQSO, by the delivery of
Common Shares having a fair market value equal to the Option Price or the
delivery of an interest-bearing promissory note having an original principal
balance equal to the Option Price and an interest rate not below the rate which
would result in imputed interest under the Code (provided, in order to qualify
as an ISO, more than one year shall have passed since the date of grant and one
year from the date of exercise), or (iii) at the option of the Committee or the
Board of Directors,determined by the Committee or the Board of Directors in its
sole discretion at the time of the grant of the Option with respect to an ISO
and at or prior to the time of exercise with respect to a NQSO, by a combination
of cash, promissory note and/or such Common Shares (subject to the restriction
above) held by the employee that have a fair market value together with such
cash and principal amount of any promissory note that shall equal the Option
Price, and, in the case of a NQSO, at the discretion of the Committee or Board
of Directors by having the Company withhold from the Common Shares to be issued
upon exercise of the Option that number of shares having a fair market value
equal to the exercise price and/or the tax withholding amount due, or otherwise
provide for withholding as set forth in Paragraph 9(c) hereof. The Option Price
may also be paid in full by a broker-dealer to whom the optionee has submitted
an exercise notice consisting of a fully endorsed Option, or through any other
medium of payment as the Board of Directors and/or the committee, in its
discretion, shall authorize.
(g) The holder of an Option shall have none of the rights of a shareholder
with respect to the Common Shares covered by such holder's Option until such
Common Shares shall be issued to such holder upon the exercise of the Option.
(h) All Options granted under the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and any ISO granted under
the Plan may be exercised during the lifetime of the holder thereof only by the
holder. No Option granted under the Plan shall be subject to execution,
attachment or other process.
(i) The aggregate fair market value, determined as of the time any ISO is
granted and in the manner provided for by Subparagraph (b) of this Paragraph 5,
of the Common Shares with respect to which ISOs granted under the Plan are
exercisable for the first time during any calendar year and under incentive
stock options qualifying as such in accordance with Section 422 of the Code
granted under any other incentive stock option plan maintained by the Company or
its parent or subsidiary corporations, shall not exceed $100,000. Any grant of
Options in excess of such amount shall be deemed a grant of a NQSO.
6. Death or Termination of Employment.
(a) Subject to the provisions of subparagraph (d) of this Paragraph 6 and
except as otherwise determined by the Board of Directors or the Committee in its
sole discretion, if the employment of a holder of an ISO under the Plan shall be
terminated for any reason other than cause or the death or the disability of the
holder, such holder's ISO shall expire within three (3) months after such
termination. Except as otherwise determined by the Board of Directors or the
Committee, in its sole discretion, if the employment of a holder of an Option
shall terminate for cause, then any unexercised ISO and/or NQSO granted to the
holder shall expire as at the time of termination. If the employment of a holder
of an Option (exclusive of his ISOs) shall be terminated for any reason other
than cause or the death or the disability of the holder, such holder's Options,
other than his ISOs, may be exercised during the earlier of (i) the respective
terms thereof, or (ii) the subsequent death or disability of the respective
holder, subject to the provisions of subparagraphs (b) and (d) of this Paragraph
6, unless the Board of Directors or the Committee shall in its sole discretion
set forth to the contrary in the holder's Option Agreement.
<PAGE>
(b) If the holder of an Option granted under the Plan dies (i) while
employed by the Company or a subsidiary or parent corporation or (ii) within
three (3) months after the termination of such holder's employment, such Options
may, subject to the provisions of subparagraph (d) of this Paragraph 6, be
exercised by a legatee or legatees of such Option under such individual's last
will or by such individual's personal representatives or distributees at any
time within such time as determined by the Board of Directors or the Committee
in its sole discretion, but in no event less than six months after the
individual's death, to the extent such Options were exercisable as of the date
of death or date of termination of employment, whichever date is earlier.
(c) If the holder of an Option under the Plan becomes disabled within the
definition of section 22(e) (3)of the Code while employed by the Company or a
subsidiary or parent corporation, such Option may, subject to the provisions of
subparagraph (d) of this Paragraph 6, be exercised at any time within six months
after such holder's termination of employment due to the disability.
(d) Except as otherwise determined by the Board of Directors or the
Committee in its sole discretion, an Option may not be exercised pursuant to
this Paragraph 6 except to the extent that the holder was entitled to exercise
the Option at the time of termination of employment or death, and in any event
may not be exercised after the original expiration date of the Option.
7. Leave of Absence.
For the purposes of the Plan, an individual who is on military or sick
leave or other bona fide leave of absence (such as temporary employment by the
Government) shall be considered as remaining in the employ of the Company or of
a subsidiary or parent corporation for ninety (90) days or such longer period as
such individual's right to reemployment is guaranteed either by statute or by
contract.
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding common Shares are hereafter changed
by reason of recapitalization, reclassification, stock split-up, combination or
exchange of Common Shares or the like, or by the issuance of dividends payable
in Common Shares, an appropriate adjustment shall be made by the Board of
Directors, as determined by the Board of Directors and/or the Committee, in the
aggregate number of Common Shares available under the Plan, in the number of
Common Shares issuable upon exercise of outstanding Options, and the Option
Price per share. In the event of the proposed dissolution, liquidation, merger,
consolidation or sale of substantially all the assets of the Company, subject to
subparagraph (b) below, all outstanding Options under the Plan will
automatically terminate, unless otherwise provided by the Board of Directors of
the Company or any authorized committee thereof. The Board of Directors or the
Committee may in its discretion make provision for accelerating the
exercisability of Options under the Plan in such circumstances.
(b) Any option granted under the Plan, unless waived by the Board of
Directors or the Committee, may, at the discretion of the Board of Directors of
the Company and said other corporation, be exchanged for options to purchase
shares of capital stock of another corporation which the Company, and/or a
subsidiary thereof is merged into, consolidated with, or all or a substantial
portion of the property or stock of which is acquired by said other corporation
or separated or reorganized into. The terms, provisions and benefits to the
optionee of such substitute option(s) shall in all respects be identical to the
terms, provisions and benefits of optionee under his Option(s) prior to said
substitution. To the extent the above may be inconsistent with Sections
424(a)(1) and (2) of the Code, the above shall be deemed interpreted so as to
comply therewith
(c) Any adjustment in the number of Common Shares shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of Common Shares would result from any such adjustment,
the adjustment shall be revised to the next higher whole number of Common
Shares.
9. Further Conditions of Exercise
(a) Unless the Common Shares issuable upon the exercise of an Option have
been registered with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, prior to the exercise of the Option, an
optionee must represent in writing to the Company that such Common Shares are
being
<PAGE>
acquired for investment purposes only and not with a view towards the further
resale or distribution thereof, and must supply to the Company such other
documentation as may be required by the Company, unless in the opinion of
counsel to the Company such representation, agreement or documentation is not
necessary to comply with said Act.
(b) The Company shall not be obligated to deliver any Common Shares until
they have been listed on each securities exchange on which the Common Shares may
then be listed or until there has been qualification under or compliance with
such state or federal laws, rules or regulations as the Company may deem
applicable.
(c) The Board of Directors or Committee may make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of any
taxes that the Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to withhold in
connection with the exercise of any Option, including, but not limited to, (i)
the withholding of payment of all or any portion of such Option until the holder
reimburses the Company for the amount the Company is required to withhold with
respect to such taxes, or (ii) the canceling of any number of Common Shares
issuable upon exercise of such Option in an amount sufficient to reimburse the
Company for the amount it is required to so withhold, (iii) the selling of any
property contingently credited by the Company for the purpose of exercising such
Option, in order to withhold or reimburse the Company for the amount it is
required to so withhold, or (iv) withholding the amount due from such employee's
wages if the employee is employed by the Company or any subsidiary thereof.
10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board of Directors, or the date the Plan is approved by the stockholders of the
Company, or such date of termination, as hereinafter provided, and no Option
shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or amended by
the affirmative the holders of a majority of the outstanding shares of capital
stock of the Company entitled to vote thereon.
(c) The Board of Directors of the Company may at any time, prior to ten
(10) years from the earlier of the date of the adoption of the Plan by such
Board of Directors or the date the Plan is approved by the stockholders,
terminate the Plan or from time to time make such modifications or amendments of
the Plan as it may deem advisable; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the Company entitled to
vote thereon, increase (except as provided by Paragraph 8) the maximum number of
Common Shares as to which Options or shares may be granted under the Plan,
materially change the standards of eligibility under the Plan or amend any
provision hereof which requires stockholder approval in order to preserve the
status of the Plan as a plan qualifying under Rule 16b-3 of the 1934 Act if the
Plan would otherwise qualify thereunder. Any amendment to the Plan which, in the
opinion of counsel to the Company, will be deemed to result in the adoption of
a new Plan, will not be effective until approved by the affirmative vote of the
holders of a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon.
(d) No ternnination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Option without the consent of the
individual to whom such Option shall have been previously granted.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of Directors of
the Company. The Plan shall be subject to approval by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon within one year before or after adoption of the
Plan by the Board of Directors.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement executed pursuant
hereto shall be deemed to confer upon any individual to whom an Option is or may
be granted hereunder any right to remain in the
<PAGE>
employ of the Company or of a subsidiary or parent of the Company or in any way
limit the right of the Company, or of any parent or subsidiary thereof, to
terminate the employment of any employee.
13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the Company, nor
shall the Plan preclude the Company from establishing any other form of stock
option plan, incentive plan or any other compensation plan.
[The total number of Shares subject to the Plan under paragraph 2 was
increased to 1,100,000 upon approval of shareholders of the Company on December
18, 1997.]
<PAGE>
EXHIBIT 4.3
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of the 19th day of September, 1997, by and between
AFP IMAGING CORPORATION, a New York corporation with offices at 250 Clearbrook
Road, Elmsford, New York 10533 (the "Company") and Robert L. Rosen, with a
business office at 825 Third Avenue, New York, New York 10022 (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee has this date entered into a Consulting Agreement
with the Company ("Consulting Agreement") pursuant to which upon the termination
of Optionee's services as a director of the Company, Optionee will provide
advisory services for the Company for a one (1) year term (the "Term"); and
WHEREAS, as partial consideration for the services to be performed by the
Optionee under the Consulting Agreement, the Company has agreed to grant
Optionee an option to purchase 150,000 common shares of the Company at a per
share exercise price equal to the average of the closing prices of the Company's
common shares during each of the ten trading days ending on October 12, 1997 and
each of the ten trading days commencing on the first trading day after October
12, 1997 (whether or not the Term has then commenced).
NOW, THEREFORE, in consideration of the Optionee entering into the
Consulting Agreement, and for other good and valuable consideration, the Company
hereby grants to the Optionee an option to purchase Common Shares, $.01 par
value per share ("Common Shares"), of the Company on the following terms and
conditions:
1. Option.
The Company hereby grants to the Optionee non qualified stock options to
purchase, until 5:00 p.m. New York City time, on October 12, 2001 (the
"Termination Date"), up to an aggregate of One Hundred Fifty Thousand (150,000)
fully paid and non-assessable Common Shares (the "Shares").
2. Purchase Price.
The purchase price per Share shall be the average of the closing price of
the Common Shares during each of the ten trading days ending on October 12, 1997
and each of the ten trading days commencing on the first trading day after
October 12, 1997 (the "Exercise Price"). The Company shall pay all original
issue or transfer taxes on the exercise of the options and all other fees and
expenses necessarily incurred by the Company in connection therewith.
3. Exercise of Option.
(a) The Optionee shall notify the Company by registered or certified mail,
return receipt requested, addressed to its principal office as to the number of
Shares which Optionee desires to purchase under the options herein granted,
which notice shall be accompanied by payment (by cash or certified check) of the
option price therefor as specified in Paragraph 2 above. As soon as practicable
thereafter, the Company shall cause to be delivered to the Optionee certificates
issued in the Optionee's name evidencing the Shares purchased by the Optionee.
(b) The option granted hereunder may be exercised by the Optionee at any
time on the first day of the Term and continuing through the Ternnination Date.
4. Divisibility and Non-Assignability of the Option.
(a) The Optionee may exercise the option herein granted from time to time
subject to the provisions above with respect to any whole number of Shares
included therein, but in no event may an option be
<PAGE>
exercised as to less than one hundred (100) Shares at any one time, or the
remaining Shares covered by the option if less than one hundred (100).
(b) The Optionee may not give, grant, sell, exchange, transfer legal title,
pledge, assign or otherwise encumber or dispose of the options herein granted or
any interest therein prior to commencing services under the Consulting
Agreement.
5. Stock as Investment.
(a) By accepting this option, the Optionee agrees for himself, his heirs
and legatees that any and all shares of Common Shares purchased hereunder shall
be acquired for investment purposes only and not for sale or distribution, and
upon the issuance of any or all of the Shares issuable under the option granted
hereunder, the Optionee, or his heirs or legatees receiving such shares, shall
deliver to the Company a representation in writing, that such shares are being
acquired in good faith for investment purposes only and not for sale or
distribution. Company may place a "stop transfer" order with respect to such
shares with its transfer agent and place an appropriate restrictive legend on
the stock certificate(s) evidencing such shares.
(b) Unless a registration statement is filed with the Securities and
Exchange Commission covering the shares issuable upon the exercise of the
Option, such shares will be restricted securities. Sales of such restricted
securities may be made only in compliance with an available exemption from such
registration. The Company undertakes to use its best efforts to file by October
31, 1997, but in any event will file by December 31, 1997, a Form S-8
Registration Statement under which, among other things, this option and the
Common Shares underlying such option shall be registered. The Company shall bear
the cost of such filing.
6. Restriction on Issuance of Shares.
The Company shall not be required to issue or deliver any certificate for
Shares purchased upon the exercise of any option granted hereunder unless (a)
the issuance of such shares has been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or counsel to the
Company shall have given an opinion that such registration is not required; (b)
approval, to the extent required, shall have been obtained from any state
regulatory body having jurisdiction thereof; and (c) permission for the listing
of such shares, if required, shall have been given by any national securities
exchange on which the Common Shares of the Company are at the time of issuance
listed.
7. Withholding.
Optionee agrees to cooperate with the Company to take all steps necessary
or appropriate for any required withholding of taxes by the Company under law or
regulation in connection therewith.
8. Recapitalization.
In the event of changes in the outstanding Common Shares by reason of stock
dividends, stock splits, recapitalizations, or reorganizations, the number and
class of Shares as to which the option may be exercised shall be correspondingly
increased to reflect an increase in the outstanding Common Shares or decreased
to reflect a decrease in the outstanding Common Shares, and the exercise price
shall be inversely adjusted by the Company so that the aggregate option price
for all shares covered after the change in outstanding Common Shares shall be
the same as the aggregate Exercise Price for the Common Shares remaining subject
to such option immediately prior to the change in the outstanding shares of
Common Shares. No adjustment shall be made with respect to stock dividends or
splits which do not exceed 2% in any fiscal year, cash dividends or the issuance
to shareholders of the Company of rights to subscribe for additional Common
Shares or other securities, or rights of preferred stockholders to receive
shares of Common Shares in lieu of cash dividends. Neither the issuance of
convertible securities, other than as a dividend, nor the conversion or exercise
of any security which may be outstanding from time to time shall be
characterized as a recapitalization or a reorganization.
Any adjustment in the number of shares shall apply proportionately to only
the unexercised portion of the option granted hereunder. If fractions of a share
would result from any such adjustment, the adjustment shall be revised to the
next higher whole number of shares so long as such increase does not result in
the holder of the option
<PAGE>
being deemed to own more than 5% of the total combined voting power or value of
all classes of stock of the Company or its subsidiaries.
9. Effect of Mergers, Consolidations or Sales of Assets.
Anything contained herein to the contrary notwithstanding, a consolidation
or merger of the Company with or into another company after the commencement of
the Term, where the Company is not the survivor or not a wholly owned subsidiary
of either, or the conveyance of all or substantially all of the assets of the
Company to another company, shall cause the unexercised options to terminate
automatically, unless otherwise provided by the Company's Board of Directors.
If any unexercised option is not terminated pursuant to the preceding
paragraph, an Option granted under the Plan, may, at the discretion of the Board
of Directors of the Company and said other corporation, be exchanged for options
to purchase shares of capital stock of another corporation which the Company,
and/or a subsidiary thereof is merged into, consolidated with, or all or a
substantial portion of the property or stock of which is acquired by said other
corporation or separated or reorganized into. The terms, provisions and benefits
to the optionee of such substitute option(s) shall in all respects be identical
to the terms, provisions and benefits of optionee under his Option(s) prior to
said substitution.
10. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns.
11. No Rights in Option Stock.
Optionee shall have no rights as a shareholder in respect of Common Shares
as to which the option granted hereunder shall not have been exercised and
payment made as herein provided.
12. Miscellaneous.
This Agreement shall be construed under the laws of the State of New York,
without application to the principles of conflicts of law. Headings have been
included herein for convenience of reference only, and shall not be deemed a
part of this Agreement. References in this Agreement to the pronouns "him," "he"
and "his" are not intended to convey the masculine gender alone and are employed
in a generic sense and apply equally to the feminine gender or to an entity.
1N WITNESS WHEREOF, the panics have executed this Agreement as of the day
and year first above written.
AFP IMAGING CORPORATION
By:
--------------------
ACCEPTED AND AGREED TO:
-----------------------
<PAGE>
EXHIBIT 5.1
December 31, 1997
AFP Imaging Corporation
250 Clearbrook Road
Elmsford, New York 10523
Re: Registration Statement on Form S-8 Relating to 1,650,000 Shares
of Common Stock, Par Value $. 01 Per Share, of AFP Imaging
Corporation Issuable Under the 1992 Employee Stock Option Plan,
the 1995 Stock Option Plan or a Certain Stock Option Agreement
Gentlemen:
We are counsel to AFP Imaging Corporation, a New York corporation (the
"Company"), in connection with the filing by the Company with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), of a registration statement on Form S-8 (the "Registration
Statement") relating to 1,650,000 shares (the "Shares") of the Company's common
stock, par value $.01 per share (the "Common Stock"), issuable upon the exercise
of options granted, as well as stock options to be granted, pursuant to the
Company's 1992 Employee Stock Option Plan (the "1992 Plan"), the Company's 1995
Stock Option Plan (the "1995 Plan") or the Stock Option Agreement dated
September 19, 1997 between the Company and Robert L. Rosen (the "Consultant's
Plan") (the 1992 Plan, the 1995 Plan and the Consultant's Plan hereafter
referred to as "the Plans").
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
and By-Laws of the Company, as each is currently in effect, the Registration
Statement, the Plans, resolutions of the Board of Directors of the Company
relating to the adoption of and amendments to the Plans and the proposed
registration and issuance of the Shares and such other corporate documents and
records and other certificates, and we have made such investigations of law as
we have deemed necessary or appropriate in order to render the opinions
hereinafter set forth.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to any facts material
to the opinions expressed herein which were not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Company and others.
Based upon and subject to the foregoing, we are of the opinion that the
Shares to be issued upon exercise of any options duly granted pursuant to the
terms of the Plans have been duly and validly authorized and, when the Shares
have been paid for in accordance with the terms of the Plans and certificates
therefore have been duly executed and delivered, such Shares will be duly and
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference in the Registration Statement to
this firm under the heading "Interests of Named Experts and Counsel." In
<PAGE>
giving this consent, we do not hereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act, or the
rules and regulations of the Securities and Exchange Commission thereunder.
This firm owns 25,000 shares of Common Stock (the "SBK Shares"). In
addition, Jack Becker, a member of this firm and director of the Company,
baneficially owns, directly and indirectly, an aggregate of 41,022 shares of
Common Stock, including the SBK Shares.
Very truly yours,
/s/ Snow Becker Krauss P.C.
SNOW BECKER KRAUSS P.C.
<PAGE>
Exhibit 23.2
Consent of Independent Public Accountant
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated August 13, 1997,
included in AFP Imaging Corporation's Form 10-K for the year ended June 30,
1997, and to all references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
/s/Arthur Andersen, LLP
New York, New York
December 30, 1997
