SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
AFP Imaging Corporation
(Name of Issuer)
Common Stock, par value $0.01
(Title of Class of Securities)
001058106
(CUSIP Number)
Mr. Robert L. Rosen (212) 750-9595
New Ballantrae Partners, L.P. 825 Third Avenue
New York, New York 10022
(Name, address and telephone number of person
authorized to receive notices and communications)
October 8, 1997
(Date of event which requires filing of this statement)
______________________
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D, and
is filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with the statement
[ ]. (A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more than five
percent of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent or
less of such class.) (See Rule 13d-7.)
<Page 1 of 26 Pages>
13D/A
CUSIP No. 001058106
______________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. New Ballantrae Partners, L.P.
OF ABOVE PERSON
______________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
______________________________________________________________________________
(3) SEC USE ONLY
______________________________________________________________________________
(4) SOURCE OF FUNDS WC
______________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
______________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
______________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER 2,083,333*
SHARES ___________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER - 0 -
OWNED BY ___________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER 2,083,333*
REPORTING ___________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER - 0 -
______________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 2,083,333*
______________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES / /
______________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.8%*
______________________________________________________________________________
(14) TYPE OF REPORTING PERSON PN
______________________________________________________________________________
____________________
* Includes (i) 1,371,461 shares of common stock of AFP Imaging Corporation
(the "Company") underlying 1,371,461 shares of Convertible Preferred Stock,
Series A of the Company (the "Series A Stock") and (ii) 711,872 shares of
Junior Convertible Preferred Stock, Series B of the Company (the "Series B
Stock"), each convertible at the option of the holder thereof, as further
described herein.
<Page 2 of 26 Pages>
13D/A
CUSIP No. 001058106
______________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. RLR Partners, L.L.C.
OF ABOVE PERSON
______________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
______________________________________________________________________________
(3) SEC USE ONLY
______________________________________________________________________________
(4) SOURCE OF FUNDS Not Applicable
______________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
______________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
______________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER 2,083,333 (all shares are
SHARES owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER - 0 -
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER 2,083,333 (all shares are
REPORTING owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER - 0 -
______________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 2,083,333 (all shares are
owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES / /
______________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.8%*
______________________________________________________________________________
(14) TYPE OF REPORTING PERSON OO
______________________________________________________________________________
____________________
* Includes (i) 1,371,461 shares of common stock of the Company underlying
1,371,461 shares of Series A Stock and (ii) 711,872 shares of common stock of
the Company underlying 711,872 shares of Series B Stock, each convertible at
the option of the holder thereof, as further described herein.
<Page 3 of 26 Pages>
13D/A
CUSIP No. 001058106
______________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. Robert L. Rosen
OF ABOVE PERSON
______________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
______________________________________________________________________________
(3) SEC USE ONLY
______________________________________________________________________________
(4) SOURCE OF FUNDS Not Applicable
______________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
______________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION United States
______________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER 2,083,333 (all shares are
SHARES owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER - 0 -
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER 2,083,333 (all shares are
REPORTING owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER - 0 -
______________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 2,083,333 (all shares are
owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES / /
______________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.8%*
______________________________________________________________________________
(14) TYPE OF REPORTING PERSON IN
______________________________________________________________________________
____________________
* Includes (i) 1,371,461 shares of common stock of the Company underlying
1,371,461 shares of Series A Stock and (ii) 711,872 shares of common stock of
the Company underlying 711,872 shares of Series B Stock, each convertible at
the option of the holder thereof, as further described herein.
<Page 4 of 26 Pages>
13D/A
CUSIP No. 001058106
______________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. Frank O'Bryan
OF ABOVE PERSON
______________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
______________________________________________________________________________
(3) SEC USE ONLY
______________________________________________________________________________
(4) SOURCE OF FUNDS Not Applicable
______________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
______________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION United States
______________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER 2,083,333 (all shares are
SHARES owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER - 0 -
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER 2,083,333 (all shares are
REPORTING owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER - 0 -
______________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 2,083,333 (all shares are
owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES / /
______________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.8%*
______________________________________________________________________________
(14) TYPE OF REPORTING PERSON IN
______________________________________________________________________________
____________________
* Includes (i) 1,371,461 shares of common stock of the Company underlying
1,371,461 shares of Series A Stock and (ii) 711,872 shares of common stock of
the Company underlying 711,872 shares of Series B Stock, each convertible at
the option of the holder thereof, as further described herein.
<Page 5 of 26 Pages>
13D/A
CUSIP No. 001058106
______________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. Steven Roth
OF ABOVE PERSON
______________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /x/
(b) / /
______________________________________________________________________________
(3) SEC USE ONLY
______________________________________________________________________________
(4) SOURCE OF FUNDS Not Applicable
______________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
______________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION United States
______________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER 2,083,333 (all shares are
SHARES owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER - 0 -
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER 2,083,333 (all shares are
REPORTING owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER - 0 -
______________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 2,083,333 (all shares are
owned for the account of New Ballantrae Partners, L.P.*
______________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES / /
______________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.8%*
______________________________________________________________________________
(14) TYPE OF REPORTING PERSON IN
______________________________________________________________________________
____________________
* Includes (i) 1,371,461 shares of common stock of the Company underlying
1,371,461 shares of Series A Stock and (ii) 711,872 shares of common stock of
the Company underlying 711,872 shares of Series B Stock, each convertible at
the option of the holder thereof, as further described herein.
<Page 6 of 26 Pages>
This Amendment No. 1 amends the statement on Schedule 13D with
respect to the Common Stock (as described herein) of AFP Imaging Corporation
which was filed on October 23, 1995 by the undersigned (the "Original
Filing"). Pursuant to Rule 13d-2(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), this Amendment restates the entire text
of Schedule 13D. This Amendment indicates which of the paragraphs of the
Schedule 13D are amended by stating prior to any such paragraph that it is
amended and restated.
Except as specifically provided herein, this Amendment does not
modify any of the information reported in the Original Filing.
* * *
Item 1. Security and Issuer.
This statement on Schedule 13D (the "Statement") relates to the
common stock, par value $.01 per share (the "Common Stock"), of AFP Imaging
Corporation, a New York corporation (the "Company"), whose principal executive
offices are located at 250 Clearbrook Road, Elmsford, New York 10523.
Item 2. Identity and Background.
(a) This statement is filed by (i) New Ballantrae Partners,
L.P., a Delaware limited partnership ("Ballantrae"); (ii) RLR Partners,
L.L.C., a Delaware limited liability company ("RLR"), which is the sole
general partner of Ballantrae; (iii) Robert L. Rosen, the chief executive
officer and managing member of RLR and a limited partner of Ballantrae;
(iv) Frank O'Bryan, a managing member of RLR and a limited partner of
Ballantrae; and (v) Steven Roth, a managing member of RLR and a limited
partner of Ballantrae. Ballantrae, RLR, Mr. Rosen, Mr. O'Bryan and Mr. Roth
are collectively referred to as the "Reporting Persons."
(b) The principal business address of Ballantrae, RLR and Mr.
Rosen is 825 Third Avenue, New York, New York 10022. The principal business
address of Mr. O'Bryan is 2955 Main Street, Irvine, California 92614. The
principal business address of Mr. Roth is Park 80 W, Plaza II, Saddle Brook,
New Jersey 07662.
(c) (i) The principal business of Ballantrae consists of
investing in securities of public and private companies and other
tangible and intangible assets.
(ii) The general partner of Ballantrae is RLR. The
principal business of RLR is to act as general partner of
Ballantrae.
(iii) The managing members of RLR are Robert L. Rosen, Frank
O'Bryan and Steven Roth (together, the "Managing Members"). Each
of the Managing Members became managing members upon the formation
of RLR, on September 12, 1995. The principal business of Mr.
<Page 7 of 26 Pages>
Rosen is to act as chief executive officer and managing member of
Ballantrae. The principal business of Mr. O'Bryan is Chairman of
the Board of WMC Mortgage Corp. The principal business of Mr.
Roth is the Chairman of the Board and Chief Executive Officer of
Vornado Realty Trust. RLR, as the general partner of Ballantrae,
and Messrs. Rosen, O'Bryan and Roth as the Managing Members of
RLR, may be deemed to be the beneficial owners of the securities
owned by Ballantrae.
(d) None of the persons referred to in paragraph (a) above has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations of similar misdemeanors).
(e) None of the persons referred to in paragraph (a) above has,
during the last five years, been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
(f) Ballantrae and RLR are organized under the laws of the State
of Delaware. The Managing Members are citizens of the United States.
Item 3. Source and Amount of Funds.
The net total cost to Ballantrae of purchasing the Preferred
Shares (described in Item 4 below) consisted of the $2,500,000 in cash. The
Preferred Shares purchased by Ballantrae were purchased with working capital.
Item 4 is amended and restated as follows:
Item 4. Purpose of Transaction.
The Reporting Persons acquired (i) 1,371,461 shares of the
Company's Convertible Preferred Stock, Series A (the "Series A Stock") and
(ii) 711,872 shares of the Company's Junior Convertible Preferred Stock,
Series B (the "Series B Stock" and, together with the Series A Stock, the
"Preferred Shares") on October 12, 1995 pursuant to a Subscription Agreement
(the "Subscription Agreement"), dated October 12, 1995 by and between
Ballantrae and the Company. A copy of the Subscription Agreement is attached
as Exhibit A to the Original Filing and is incorporated herein by reference.
The Preferred Shares were purchased by Ballantrae for a cash purchase price of
$1.20 per share, or an aggregate purchase price of $2,500,000.
The Reporting Persons acquired the Preferred Shares to provide
additional capital to the Company so it could grow and diversify in order to
develop long term shareholder value.
<Page 8 of 26 Pages>
The Preferred Shares are convertible, at the option of the holder
thereof and without the payment of additional consideration by the holder
thereof, into an equal number of shares of Common Stock (subject to anti-
dilutive adjustment). The Preferred Shares vote on all matters upon which the
holders of Common Stock are entitled to vote, with each share of Preferred
Stock being entitled to vote the number of shares of Common Stock into which
it is then convertible. Ballantrae has certain registration rights relating
to the Preferred Shares and shares of Common Stock underlying the Preferred
Stock, which are set forth in the Registration Rights Agreement, a copy of
which is attached as Exhibit B to the Original Filing and is incorporated
herein by reference. A copy of the Company's charter amendment relating to
the Series B Stock is attached as Exhibit C to the Original Filing and is
incorporated herein by reference.
In addition, Ballantrae entered into a Shareholders Agreement with
Donald Rabinovitch and David Vozick, directors and officers of the Company
(together with Ballantrae, the "Shareholders"), dated as of October 12, 1995
(the "Shareholders Agreement"), a copy of which is attached as Exhibit D to
the Original Filing and is incorporated herein by reference. Each Shareholder
had agreed, so long as each Shareholder beneficially owns certain minimum
thresholds of securities of the Company, to vote all voting securities of the
Company over which it or he has voting control so that (i) at the next annual
meeting of the shareholders of the Company, the authorized number of directors
on the Board of Directors (the "Board") would be increased to, and remain at
five directors; (ii) each of (x) two directors designated by Ballantrae,
(y) Messrs. Vozick and Rabinovitch, and (z) one director to be proposed by
Messrs. Vozick and Rabinovitch and approved by Ballantrae would be included in
the management slate of nominees to the Board and elected to the Board; and
(iii) the Board establish an executive committee of which Messrs. Rosen,
Vozick and Rabinovitch would be the only members and of which Mr. Rosen would
be the chairman.
Under the terms of the Shareholders Agreement, until such time as
any Shareholder ceased to own a certain amount of securities (and subject to
certain exempted transfers as more fully described in the Shareholders
Agreement) of the Company, (i) each Shareholder had the right to participate
in a transfer by another Shareholder of securities of the Company to a third
party and (ii) each Shareholder had a right of first refusal with respect to
securities of the Company held by the other Shareholders.
In connection with the execution and consummation of the
Subscription Agreement, the Board was reconstituted such that one director of
the Board resigned and, until the first annual meeting of shareholders of the
Company (as described above), the Board consisted of: (i) Mr. Vozick; (ii)
Mr. Rabinovitch; and (iii) two designees of Ballantrae, Mr. Rosen and Mr.
O'Bryan.
Pursuant to a letter agreement between Ballantrae and the Company
dated September 19, 1997 (the "Letter Agreement"), which became effective on
<Page 9 of 26 Pages>
October 8, 1997, the Shareholders Agreement was amended. Frank O'Bryan
resigned from the Board and Ballantrae designated Mr. Jack Becker as his
replacement. Following such designation, the Shareholders Agreement was
terminated.
Pursuant to the Letter Agreement, Messrs. Rosen, Vozick and
Rabinovitch shall take such action as directors of the Company and will vote
all of the Common Stock over which they have voting control so that Messrs.
Rosen, Vozick, Rabinovitch, Becker and Robert Blatt shall be included in the
management slate of nominees to the Board, and said persons shall use their
best efforts to ensure that such persons are elected to the Board for the
period from the date of the Letter Agreement to a date ending with the close
of business not earlier than October 12, 1998. On or after the earlier of (i)
the date Mr. Rosen beneficially owns less than fifty percent of his
distributable share of the Preferred Shares (or the Common Stock into which it
is converted), based on his percentage interest in Ballantrae as of the date
of the Letter Agreement, and (ii) October 12, 1998, Mr. Rosen and/or Mr.
Becker shall resign from the Board upon the request of a majority of the
Board.
Pursuant to the Letter Agreement, on or before the later of (i) the
close of business on October 12, 1997 and (ii) the day any Common Stock
receivable upon a conversion of the Preferred Shares would be freely tradeable
(without volume limitations) if distributed to the Ballantrae general and
limited partners who are not affiliated with the Company, Ballantrae shall
convert into Common Stock of the Company such number of the Preferred Shares
as is at least equal to the percentage of Ballantrae not beneficially owned by
Mr. Rosen and promptly distribute the same to the Ballantrae general and
limited partners, pro rata to their general and limited partnership interests,
so that the Ballantrae general and limited partners, other than Mr. Rosen,
receive all the shares of Common Stock of the Company to which they are
entitled based on their percentage interest in Ballantrae. Ballantrae shall
be permitted to defer or delay the conversion of the Preferred Shares and/or
distribution of the Common Stock issuable upon such conversion if, in Mr.
Rosen's reasonable judgment, such conversion or distribution would likely
interfere with or materially delay or render more difficult any merger,
consolidation, acquisition, offering or similar transaction then being
contemplated by the Company.
On or before October 12, 1999, Mr. Rosen shall convert or cause
Ballantrae and any person whose Preferred Shares are deemed to be beneficially
owned by Mr. Rosen to convert the Preferred Shares which were not converted
pursuant to the provision described in the preceding paragraph. In the event
either Ballantrae or Mr. Rosen transfer the Preferred Shares on or after the
date of effectiveness of the Letter Agreement, such transfer and any
subsequent transfers of Preferred Shares shall be subject to the requirement
that such Preferred Shares be converted on or before October 12, 1999.
The Letter Agreement also amended the Registration Rights Agreement
to delete Section 1 thereof (relating to demand registration rights) and
<Page 10 of 26 Pages>
provide that the registration rights granted under the Registration Rights
Agreement shall not enure to the Ballantrae general and limited partners who
are not affiliated with the Company immediately after Ballantrae's
distribution to such partners under the provisions described in the foregoing
paragraphs.
Pursuant to a stock option agreement between Mr. Rosen and the
Company dated as of September 19, 1997 (the "Stock Option Agreement") attached
hereto as Exhibit G, Mr. Rosen obtained non-qualified stock options to
purchase 150,000 shares of the Common Stock, which are not exercisable until
after the eventual termination of Mr. Rosen's service as a director of the
Company under the Letter Agreement. Mr. Rosen obtained such non-qualified
stock options as consideration for his agreement to provide consulting
services (the "Consulting Agreement") to the Company for a one-year period
commencing on the first day following the termination of his service as
director. The Consulting Agreement, dated September 19, 1997, is attached
hereto as Exhibit H.
Except as set forth above, the Reporting Persons have no present
plans or intentions that would result in or relate to any of the transactions
described in subparagraphs (a) through (j) of Item 4 of this Statement.
Item 5. Interest in Securities of the Issuer.
Paragraph (a) is amended and restated as follows:
(a) The aggregate percentage of Common Stock reported by each
Reporting Person herein is based upon 9,554,518 shares of Common Stock
outstanding, which is the total number of shares of Common Stock outstanding
as of August 29, 1997 (assuming full conversion of the Preferred Shares), as
reported by the Company to Ballantrae in the Subscription Agreement.
As of the date hereof:
(i) Ballantrae owns 2,083,333 Preferred Shares, which, upon
conversion thereof, constitutes approximately 21.8% of the Common
Stock outstanding.
(ii) RLR and the Managing Members do not directly own any
Common Stock or Preferred Shares. By reason of Rule 13d-3
promulgated under the Exchange Act ("Rule 13d-3"), RLR and the
Managing Members may be deemed to own beneficially the 2,083,333
Preferred Shares owned by Ballantrae, and the 2,083,333 shares of
Common Stock into which the Preferred Shares are convertible.
(b) Ballantrae has the power to vote and dispose of 2,083,333
Preferred Shares beneficially owned by it, which power may be exercised by
RLR, its general partner and by the Managing Members, as managing members of
RLR.
<Page 11 of 26 Pages>
(c) Other than as set forth herein, there were no transactions in
the Common Stock or the Preferred Shares effected by the Reporting Persons
within the 60-day period prior to the date of this filing.
(d) No person other than each respective owner referred to herein
of Preferred Shares is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, such
Preferred Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Other than as described in this Statement (including, without
limitation, under Item 4 above), none of the Reporting Persons has any
contracts, arrangements, understandings or relationships (legal or otherwise)
with each other or with any other person with respect to any securities of the
Company including but not limited to transfer or voting of any securities of
the Company, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7 is amended and restated as follows:
Item 7. Material to be Filed as Exhibits.*
Exhibit A Subscription Agreement, dated October 12, 1995, by and
between Ballantrae and the Company
Exhibit B Registration Rights Agreement, dated as of October 12,
1995, by and between Ballantrae and the Company
Exhibit C Certificate of Amendment of the Certificate of
Incorporation of the Company, dated October 11, 1995
Exhibit D Shareholders Agreement, dated as of October 12, 1995,
by and among Ballantrae, Mr. Vozick and Mr.
Rabinovitch
Exhibit E Joint Filing Statement, dated October 20, 1995
Exhibit F Letter Agreement, dated September 19, 1997
Exhibit G Stock Option Agreement, dated September 19, 1997
Exhibit H Consulting Agreement, dated September 19, 1997
_________________
* Pursuant to Rule 13d-2(c) of the Exchange Act, Exhibits A-E listed
herein have not been refiled with this amendment.
<Page 12 of 26 Pages>
SIGNATURE
After reasonable inquiry and to the best of their knowledge and
belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Dated: October 17, 1997
NEW BALLANTRAE PARTNERS, L.P.
By: RLR PARTNERS, L.L.C.,
its General Partner
By: /s/Robert L. Rosen
__________________________
Robert L. Rosen,
Chief Executive Officer
RLR PARTNERS, L.L.C.
By: /s/Robert L. Rosen
_________________________________
Robert L. Rosen,
Chief Executive Officer
/s/Robert L. Rosen
______________________________________
Robert L. Rosen, Individually
/s/Frank O'Bryan
______________________________________
Frank O'Bryan, Individually
/s/Steven Roth
______________________________________
Steven Roth, Individually
<Page 13 of 26 Pages>
Exhibit F
---------
NEW BALLANTRAE PARTNERS, L.P. ROBERT L. ROSEN
825 Third Avenue 825 Third Avenue
New York, New York 10022 New York, New York 10022
September 19, 1997
AFP IMAGING CORPORATION
250 Clearbrook Road
Elmsford, New York 10533
Mr. David Vozick
250 Clearbrook Road
Elmsford, New York 10533
Mr. Donald Rabinovitch
250 Clearbrook Road
Elmsford, New York 10533
Gentlemen:
On October 12, 1995, AFP Imaging Corporation (the "Company") sold
1,371,461 shares of its Series A Convertible Preferred Stock and 711,872
shares of its Series B convertible Preferred Stock (collectively the "Shares")
to New Ballantrae Partners, L.P., a Delaware limited partnership
("Ballantrae") for an aggregate consideration of $2,500,000. The general
partner of Ballantrae is RLR Partners, L.L.C., the chief executive officer of
which is Robert L. Rosen ("Rosen").
In connection with the sale of the Shares, Ballantrae, David Vozick
("Vozick") and Donald Rabinovitch ("Rabinovitch") entered into a Shareholders
Agreement (the "Shareholders Agreement"). The Shareholders Agreement contains
provisions regarding the composition of the Board of Directors of the Company
(the "Board"). The parties to the Shareholders Agreement agreed to vote all
of their voting securities of the Company and take all other necessary or
desirable actions within his or its control to cause the Board to be comprised
of Messrs. Vozick and Rabinovitch, two Directors designated by Ballantrae (the
"Ballantrae Designees"), and at such time as permitted under law, a fifth
Director to be jointly proposed by Messrs. Vozick and Rabinovitch and approved
by Ballantrae (the "Independent Designee"). The Shareholders Agreement also
provides for the establishment of an executive committee of the Board,
comprised of Messrs. Rosen, Vozick and Rabinovitch, of which Mr. Rosen is
chairman.
<Page 14 of 26 Pages>
The Shareholders Agreement also contains provisions with respect to
rights of first refusal upon proposed sales of the securities subject to the
Shareholders Agreement and co-sale rights upon certain transfers of the
Company's securities.
In connection with Ballantrae's acquisition of the Shares,
Ballantrae and the Company entered into a Registration Rights Agreement dated
as of October 12, 1995 (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, Ballantrae has rights to require the Company on
two occasions to register a minimum of 500,000 of the Shares held by
Ballantrae on Form S-1 or other long-form registrations, if available, as well
as unlimited demand registration rights on Form S-2 or S-3, if available, and
"piggyback" rights to register Shares upon certain public offerings by the
Company and provided further that the Company cannot grant any person any
additional registration rights without the consent of Ballantrae.
The parties have agreed that the efficient management of the Company
requires that the aforesaid agreements be amended and modified.
Accordingly, for one dollar and other good and valuable
consideration, the parties to this letter have agreed as follows:
(a) Ballantrae shall deliver to the Board the resignation
therefrom of Frank O'Bryan and designate Jack Becker as a director of the
Company together with Rosen as the Ballantrae Designees effective upon the
execution of this letter and the satisfaction of the conditions set forth
below.
(b) Immediately after Ballantrae's designation set forth in (a)
above, the Shareholders Agreement shall be terminated.
(c) Rosen, Vozick and Rabinovitch shall take such action as
directors of the Company and will vote all of their Common Shares of the
Company over which they have voting control and shall take all other necessary
or desirable actions within their control so that Rosen, Vozick, Rabinovitch,
Robert Blatt and Jack Becker shall be included in the management slate of
nominees to the Board and said persons shall use their best efforts to ensure
that such persons are elected to the Board for the period from the date hereof
to a date ending with the close of business not earlier than October 12, 1998.
On or after the earlier of (i) the date Rosen beneficially owns less than
fifty percent (50%) of his distributable share of the Shares (or the Common
Stock into which it is converted), based on his percentage interest in
Ballantrae as at the date hereof, and (ii) October 12, 1998, Rosen and/or
Becker shall resign from the Board upon the request of a majority of the
Board. For so long as Rosen is a director of the Company, and as a means to
assure appropriate Board review of proposed corporate actions, the parties
hereto covenant and agree that all transactions, other than those in the
ordinary course of the Company's business, involving a commitment or
expenditure by the Company or any subsidiary thereof of $100,000 or more shall
be submitted for approval by the Board (and not any Executive Committee
<Page 15 of 26 Pages>
thereof). For purposes of the foregoing, advances to customers or suppliers
of $100,000 or more shall not be deemed in the ordinary course of the
Company's business.
(d) Effective upon the execution of this letter and the
satisfaction of the conditions set forth below, the Registration Rights
Agreement shall be automatically amended to delete Section 1 thereof (relating
to demand registration rights) and provide that the registration rights
granted under the Registration Rights Agreement shall not enure to the
Ballantrae general and limited partners who are not affiliated with the
Company immediately after Ballantrae's distribution to such partners as
provided in (e) below.
(e) On or before the later of (i) the close of business on
October 12, 1997 and (ii) the day any Common Stock receivable upon a
conversion of the Shares would be freely tradeable (without volume
limitations) if distributed to the Ballantrae general and limited partners who
are not affiliated with the Company, Ballantrae shall convert into Common
Shares of the Company such number of the Shares as is at least equal to the
percentage of Ballantrae not beneficially owned by Rosen and promptly
distribute same to the Ballantrae general and limited partners, pro rata to
their general and limited partnership interests, so that the Ballantrae
general and limited partners other than Rosen, receive all the shares of
Common Stock of the Company to which they are entitled based on their
percentage interest in Ballantrae. Ballantrae shall be permitted to defer or
delay the conversion of the Shares and/or distribution of the Common Shares
issuable upon such conversion if in Rosen's reasonable judgment, such
conversion or distribution would likely interfere with or materially delay or
render more difficult any merger, consolidation, acquisition, offering or
similar transaction then being contemplated by the Company.
(f) On or before October 12, 1999, Rosen shall convert or cause
Ballantrae and any person whose Shares are deemed to be beneficially owned by
Rosen to convert the Shares not converted pursuant to (e) above. In the event
either Ballantrae or Rosen transfer the Shares on or after the date this
letter becomes binding upon the parties hereto, such transfer and any
subsequent transfers of said shares shall be subject to the requirement that
such Shares be converted on or before October 12, 1999.
(g) Until the later of such time as Rosen converts all his
Shares into Common Stock of the Company and Rosen is no longer a director of
the Company, in the event of any corporate action proposed to be taken by the
Company, which action requires the affirmative vote or consent of the holders
of both or either class of Company's Preferred Stock (i.e. the Shares), Rosen
agrees that he shall cause his Shares to be present for the purposes of a
quorum at a meeting of the holders of the Shares and of either class thereof,
and at a meeting of Common Stockholders of the Company and unless otherwise
agreed upon by Messrs. Vozick and Rabinovitch, shall vote such Shares in such
manner consistent with the manner in which Rosen voted as a director with
respect to such corporate action.
<Page 16 of 26 Pages>
If the foregoing is consistent with your understanding, please sign
a copy of this letter agreement and return it to the undersigned. Upon
receipt thereof, this letter agreement shall become binding upon the parties
hereto. In the event the aforementioned are not returned and executed by
September 30, 1997, this letter shall be of no force and effect.
Very truly yours,
NEW BALLANTRAE PARTNERS, L.P.
_______________________________
By: RLR Partners, L.L.C.
Its: General Partner
By: Robert L. Rosen
Its: Chief Executive Officer
_____________________________
Robert L. Rosen, Individually
Facsimile #__________________
Agreed and Accepted:
AFP IMAGING CORPORATION
By: _____________________________
David Vozick, Chairman of the
Board of Directors
_____________________________
David Vozick, Individually
________________________________
Donald Rabinovitch, Individually
<Page 17 of 26 Pages>
Exhibit G
---------
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").
W I T N E S S E T H:
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
<Page 18 of 26 Pages>
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 commencing on the first day of the Term and continuing
through the Termination 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 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
<Page 19 of 26 Pages>
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 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 or 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.
<Page 20 of 26 Pages>
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.
1l. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
AFP IMAGING CORPORATION
By: __________________________
ACCEPTED AND AGREED TO:
____________________________
<Page 21 of 26 Pages>
Exhibit H
---------
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of September 19, 1997 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
"Consultant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires following the termination of Robert L.
Rosen's services as a director of the Company to receive advisory services in
connection with (a) assisting in determining the financial needs of the
Company, including evaluation of commercial and investment banking activities,
(b) evaluating future mergers and acquisitions, (c) long term planning and (d)
assessing different ventures which the Company may enter (collectively, the
"Objectives"); and
WHEREAS, the Consultant has established his expertise in the areas
comprising the Objectives and desires to provide advisory services as provided
herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements, and upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby covenant and agree as follows:
Section 1. Retention of Consultant. The Company shall engage
the Consultant for the Term (as defined below), subject to the terms and
conditions of this Agreement.
Section 2. Services. (a) At such times as are mutually
convenient to the Consultant and the Company during the Term, the Consultant
shall provide such advisory services to the Company and its subsidiaries
(collectively hereinafter referred to as the "Company") as the Company shall
reasonably request in connection with the Objectives. The Consultant shall
not be obligated to spend any minimum hours of services per month.
Notwithstanding anything contained herein to the contrary, Consultant shall
only perform such services as the Company expressly directs Consultant to
perform and in no event shall the Consultant be required to identify merger or
acquisition targets or financing sources or assist in the structuring of such
mergers, acquisitions or financings.
Section 3. Compensation. For services rendered by the
Consultant pursuant to this Agreement, the Company shall pay Consultant the
following:
<Page 22 of 26 Pages>
(a) $200,000, payable in 12 equal monthly payments of $16,667
commencing on the first business day of the Term.
(b) a four-year option to purchase 150,000 common shares of the
Company 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).
The parties hereto acknowledge that Consultant is not entitled to
any other compensation for any services rendered by Consultant in any capacity
as at the date hereof other than any fees that may be due Consultant in his
capacity as a director of the Company and is not and shall not be entitled to
any other additional compensation from the Company except as otherwise
provided in a writing executed by the parties hereto after the date hereof.
In the event the Consultant is requested during the Term to identify merger or
acquisition targets or financing sources or to assist in the structuring of
such mergers, acquisitions or financings, the Company and the Consultant shall
first reach written agreement on acceptable terms and conditions for such
additional services.
Section 4. Expenses. The Company shall pay the Consultant, on a
monthly basis, all reasonable costs and out-of-pocket expenses incurred by the
Consultants in connection with its obligations and duties under this
Agreement; provided, however, that the Consultant shall obtain the prior
written consent of the Company for any single item of expense in excess of
$500.
Section 5. Non-Disclosure Covenant.
The Consultant acknowledges that his position with the Company is
one of trust and confidence and that during the course of his engagement
hereunder, he may become acquainted with Confidential Information, as
hereinafter defined. The Consultant further acknowledges that the provisions
of this Section 5 are essential to the terms of its continued engagement
hereunder, and that this Section 5 shall be binding upon the Consultant during
the Term and after the termination of this Agreement, irrespective of whether
this Agreement is terminated by the Company or by the Consultant for any
reason. The Consultant covenants and agrees that he will not at any time
during the Term or subsequent to the termination of this Agreement, use,
reveal, divulge, or make known to any person, firm or corporation, any
Confidential Information made known to him or of which he has become aware,
regardless of whether developed, prepared, devised or otherwise created in
whole or in part by the efforts of the Consultant. The Consultant further
covenants and agrees that he will retain all Confidential Information in trust
for the sole benefit of the Company and will not divulge or deliver or show
any Confidential Information to any unauthorized person, including without
limitation, any other employer or employee or affiliate of the Consultant, and
the Consultant will not make use of, or in any manner seek to convert for his
own use, any Confidential Information in an independent business however
<Page 23 of 26 Pages>
unrelated to the business of the Company. The Consultant agrees to use his
best efforts to cause his employees who have any access to the Confidential
Information or third parties he may engage with respect to the Company or
otherwise discuss Company matters in connection with his services hereunder to
keep such information confidential, and if requested by the Company, have
third parties execute similar confidentiality agreements.
For purposes herein, the term "Confidential Information" shall mean
any information and material that the Company regards as confidential,
including without limitation, formulas, processes, ingredients, drawings,
methods, manufacturing, trade secrets, know how, inventions, product
developments, engineering, plans, notebooks, research, reports, memoranda,
information and material received by the Company in confidence from third
parties, information and material relating to charterers, vendors, suppliers,
customers, costs, prices, sources of supply, royalties or distribution and
other commercial, financial, business, technical and scientific information
and material that is not available to the general public. The foregoing
provisions of this Section 5 shall not apply to information or material that:
(a) was known by the Consultant before the disclosure by the
Company and was not received or derived directly or indirectly from the
Company or in violation of any restrictions on disclosure or use of such
information; or
(b) was generally publicly known prior to the disclosure or
after the time of disclosure becomes generally publicly known through no act
or failure to act of the Consultant; or
(c) was made known to the Consultant by a third party entitled
to disclose the information to the Consultant, which third party (i) did not
derive it directly or indirectly from the Company and (ii) was not subject to
any restrictions on disclosure or use of such information or material that
benefit the Company;
(d) was specifically approved for disclosure by prior written
consent by the Company; or
(e) was disclosed pursuant to a Court Order or pursuant to any
other legal requirement.
Section 6. Remedies.
The Consultant acknowledges that the restrictive covenants set forth
in Section 5 hereof are essential terms and conditions of its continued
engagement with the Company and that the Company will have no adequate remedy
at law in the event of any actual or threatened violation of any such
covenants. The Consultant, therefore, agrees that the Company shall be
entitled to a decree or order by any court located in White Plains, New York
or New York City enjoining such threatened or actual violation of any of such
covenant. Such decree or order, to the extent appropriate, shall specifically
enforce the full performance of any such covenant by the Consultant, and the
Consultant hereby consents to the jurisdiction of the aforementioned courts.
<Page 24 of 26 Pages>
Enforcement of any remedy under this Section 6 shall not reduce or adversely
affect any other remedy which may be available to the Company in law or in
equity, and nothing herein shall prevent the Company from seeking injunctive
or other relief hereunder, even if a subsequent employer of the Consultant is
joined as a party defendant or co-defendant in any proceeding hereunder.
Section 7. Indemnification.
The Company shall indemnify and hold harmless the Consultant for
services as a consultant against any losses, claims, damages, liabilities and
expenses, including reasonable attorneys' fees, arising out of the
Consultant's services pursuant to this Agreement, performed during the term
hereof. However, the Company will not be liable under this Section to the
extent that any loss, claim, damage, liability or expense is found in a final
judgment by a court of competent jurisdiction to have resulted from the
Consultant's (i) fraud, (ii) gross negligence to the extent such is deemed to
constitute bad faith, or (iii) willful misconduct. It shall be deemed
conclusively established that for purposes of this Agreement, the Consultant
is acting in good faith with respect to actions taken by him on the advice of
legal counsel. The Company agrees to notify the Consultant promptly of the
assertion of any claim or the commencement of any action or proceeding
relating to any matter which involved the Consultant and the Company and the
Consultant agrees to notify the Company promptly of the assertion of any claim
or the commencement of any action or proceeding relating to any matter which
involved the Company and the Consultant. The Company will handle the defense
of any matter which it may be required to indemnify Consultant hereunder.
Section 8. Term. This Agreement shall be for a term commencing
on the first business day following the termination of Mr. Rosen's services as
a director of the Company and terminating on the first anniversary of such
date (the "Term").
Section 9. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York.
Any dispute between the parties hereto arising from or relating to the terms
of this Agreement shall be submitted to arbitration in New York, New York
under the auspices of the American Arbitration Association.
Section 10. Waiver of Breach.
The failure by the Company to exercise any rights or powers hereunder shall
not be construed as a waiver thereof. The waiver by the Company of a breach
of any provision of this Agreement by the Consultant shall not operate nor be
construed as a waiver of any subsequent breach by the Consultant.
Section 11. Entire Agreement; Amendments. This Agreement
contains the entire agreement and understanding between the parties and
supersedes and preempts any prior understandings or agreements, whether
written or oral. The provisions of this Agreement may be amended or waived
only with the prior written consent of the Company and the Consultant.
<Page 25 of 26 Pages>
Section 12. Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of, and shall be enforceable by the
Consultant and the Company and their respective successors and assigns;
provided, however, that the rights and obligations of the Consultant under
this Agreement shall not be assignable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
AFP IMAGING CORPORATION
By: _________________________
Name:
Title:
_______________________________
Robert L. Rosen
<Page 26 of 26 Pages>
