SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SCAN-GRAPHICS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[INSERT NAME OF FILER WHEN APPLICABLE]
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SCAN-GRAPHICS, INC.
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 26, 1996
To the Shareholders of
Scan-Graphics, Inc.
The Annual Meeting of Shareholders of Scan-Graphics, Inc. (the
"Company") will be held at The Wings Club, 52 Vanderbilt Avenue, 18th Floor, New
York, New York, on Wednesday, June 26, 1996 at 11:00 A.M. (Local Time), for the
following purposes:
1. To elect 6 directors to serve for the ensuing year.
2. To transact such other business as may properly come
before the meeting.
Only shareholders of record on April 30, 1996 are entitled to
notice of and to vote at the meeting.
By Order of the Board of Directors
MICHAEL A. MULSHINE
Secretary
May 31, 1996
YOU ARE CORDIALLY INVITED AND URGED TO ATTEND THE ANNUAL MEETING IN PERSON.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY ON THE ENCLOSED CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND
VOTE IN PERSON IF THEY DESIRE.
<PAGE>
Scan-Graphics, Inc.
700 Abbott Drive
Broomall, Pennsylvania 19008-4373
Telephone (215) 328-1040
PROXY STATEMENT
This Proxy Statement, the foregoing notice and the enclosed
proxy are being sent to shareholders on or about May 31, 1996, in connection
with the solicitation of proxies for use by the Board of Directors of
Scan-Graphics, Inc. (the "Company"), Broomall, Pennsylvania, at the Annual
Meeting of Shareholders of the Company (the "Meeting") which will be held at The
Wings Club, 52 Vanderbilt Avenue, 18th Floor, New York, New York, on Wednesday,
June 26, 1996 at 11:00 A.M. (Local Time), for the purposes set forth in the
foregoing Notice of Annual Meeting, and any adjournment or postponement thereof.
Record Date and Outstanding Stock
The record date for determining those shareholders entitled to
vote at the Annual Meeting was April 30, 1996. At that date, the Company had
outstanding, 500,000 shares of Class A Convertible Preferred Stock Series A, par
value $2.00 per share ("Class A Stock"), 125,000 shares of Class A Convertible
Preferred Stock Series C, par value $10.00 per share ("Class A Series C Stock"),
and 10,429,081 shares of Common Stock, par value $0.001 per share ("Common
Stock").
Proxies
Solicitation. Solicitation of proxies is being made by
management at the direction of the Company's Board of Directors, without
additional compensation, through the mail, in person or by telegraph or
telephone. The cost will be borne by the Company. In addition, the Company will
request brokers and other custodians, nominees and fiduciaries to forward proxy
soliciting material to the beneficial owners of shares held of record by such
persons, and the Company will reimburse them for their expenses in so doing.
Revocation. The execution of a proxy does not affect the right
to vote in person at the meeting, and a proxy may be revoked by the person
giving it prior to the exercise of the powers conferred by it. A shareholder may
revoke a proxy by communicating in writing to the Secretary of the Company at
the address indicated above or by executing and delivering a proxy bearing a
later date. In addition, persons attending the meeting in person may withdraw
their proxies. Unless proxy is revoked or withdrawn, the shares represented
thereby will be voted or the votes withheld at the Annual Meeting or at any
adjournments thereof in the manner described in this Proxy Statement
Signatures in Certain Cases. If a shareholder is a
Corporation, the enclosed proxy should be signed in its corporate name by an
authorized officer and his or her title should be indicated. If stock is
registered in the name of two or more trustees or other persons, the proxy may
be signed by one of them. If stock is registered in the name of a decedent, the
proxy should be signed by an executor or administrator, and his or her title as
such should follow the signature.
Quorum and Voting
The presence, in person or by proxy, of shareholders entitled
to cast a majority of the votes which all shareholders are entitled to cast on
each matter to be voted upon at the meeting is necessary for a quorum as to that
matter. The favorable vote of a majority of the votes cast at the Meeting by the
Class A Series A Stock, Class A Series C Stock and the Common Stock, voting as a
single class, is required for approval for all business which will come before
the meeting except for the election of directors who will be elected by at least
a plurality of the votes cast at the Meeting.
1
<PAGE>
Under the Pennsylvania Business Corporation Law, if a shareholder (including a
nominee, broker or other record owner) either records the fact of abstention, in
person or by proxy, or fails to vote in person and does not return a duly
executed Proxy Card, such action would not be considered a "vote cast," and
would have no effect on the outcome of the vote on the matter. If a shareholder
returns a duly executed Proxy Card but has made no specifications with respect
to voting matters, the persons named as proxy agents intend (unless instructed
otherwise by the shareholder) to vote for each of the nominees for director
named in this Proxy Statement.
Holders of Class A Series A Stock, Class A Series C Stock and
Common Stock of record at the close of Business on April 30, 1996, will be
entitled to one vote per share on all business of the meeting. Shareholders do
not have the right to cumulate their votes for the election of directors.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth information regarding the
ownership of the Company's voting securities on April 30, 1996, assuming
conversion of the Class B Stock into ten shares of Common Stock, assuming
conversion of Class A Series A Stock into one share of Common Stock, assuming
conversion of Class A Series C Stock, into 20 shares of Common Stock and
including options and warrants by (i) each person known by the Company to be the
beneficial owner of more than five percent of any class of its voting
securities, (ii) each Director and Executive Officer, and (iii) all Directors
and Executive Officers as a group. Percentages less than 1% are not shown.
<TABLE>
<CAPTION>
Amount & Nature of Percentage of
Beneficial Owner Beneficial Ownership Outstanding Shares
- ---------------- -------------------- -----------------
<S> <C> <C>
Andrew E. Trolio(*)
759 Louise Drive
Springfield, PA 19064 3,027,500 (1) 21.04%
Michael A. Mulshine(**)
2517 Route 35, Suite D-201
Manasquan, NJ 08736 402,668 (2) 2.9%
Anthony M. Trolio(***) 216,637 1.6%
Howard L. Morgan (**) 154,508 (3) 1.1%
David S. Hirsch (**) 239,508 (4) 1.8%
Joseph N. Battista(***) 30,000 -
James C. Sargent(**) 101,508 (5) -
Robert A. Garber(**) 300,000 2.2%
All Directors and Executive Officers
as a group (8 persons) 4,472,329 28.6%
</TABLE>
- ---------------
(*) Executive Officer & Director
(**) Director
(***) Executive Officer
2
<PAGE>
(1) Includes 60,000 shares of Common Stock held by Mr. Trolio's wife, as to
all of which shares Mr. Trolio disclaims beneficial ownership. Includes
500,000 shares of Class A Series A Stock owned by Mr. Trolio. This
represents 100% of such shares outstanding. Includes 400,000 shares
issuable upon conversion of Class A Series C Stock.
(2) Includes 17,930 shares of Common Stock held jointly by Mr. Mulshine and
his wife. Includes 10,000 shares issuable upon conversion of Class A
Series C Stock.
(3) Includes 20,000 shares of issuable upon conversion of Series C Stock.
(4) Includes 50,000 shares of issuable upon conversion of Series C Stock.
(5) Includes 50,000 shares of issuable upon conversion of Series C Stock.
The foregoing table also includes shares which the following
directors and executive officers have the right to acquire within sixty days
upon the exercise of options and warrants: Mr. A. E. Trolio, 300,000 options,
812,500 warrants; Mr. Mulshine, 44,286 options, 255,333 warrants; Mr. A. M.
Trolio, 170,000 options; Mr. Morgan, 71,508 options; Mr. Hirsch 56,508 options,
50,000 warrants; Mr. Battista, 30,000 options, Mr. Sargent, 71,508 options, and
Mr. Garber, 300,000 warrants. The information contained in the following table
is included in the preceding beneficial ownership table where applicable.
The following table presents information provided to the
Company as to the beneficial ownership of the Company's Class A Series A Stock
as of April 30, 1996.
Amount & Nature of Percentage of
Beneficial Owner Beneficial Ownership Outstanding Shares
- ---------------- -------------------- ------------------
Andrew E. Trolio (1) 500,000 100.00
(1) Includes 220,000 shares owned by Lin-Lea Corporation, a company owned by
Andrew E. Trolio.
The following table presents information provided to the
Company as to the beneficial ownership of the Company's Class A Series C Stock
as of April 30, 1996.
Amount & Nature of Percentage of
Beneficial Owner Beneficial Ownership Outstanding Shares
- ---------------- -------------------- ------------------
Andrew E. Trolio 20,000 16.00
Howard L. Morgan 1,000 .80
James C. Sargent 1,000 .80
David S. Hirsch 2,500 2.00
Michael A. Mulshine 500 .40
William W. & Sheryl S. Rider 4,000 3.20
David Green 4,000 3.20
George Hooper 5,000 4.00
Thomas Marquez 30,000 24.00
Richard N. Mercurio, Trustee 10,000 8.00
Marquez Family Trust
Richard N. Mercurio, Trustee 10,000 8.00
Meredith Ann Marquez,
Present Interest Trust
Paul Becker 1,000 .80
William Ritger 6,000 4.80
John Strauss 30,000 24.00
--------- -------
125,000 100.00
3
<PAGE>
ELECTION OF DIRECTORS
At the Meeting, the Shareholders will elect six directors,
each to hold office until the 1997 Annual Meeting of Shareholders and until a
successor has been elected and qualified.
The Board of Directors has nominated for election the six
persons designated below as the Company's directors. All nominees have consented
to be named and to serve if elected. If a nominee, at the time of his election,
is unable or unwilling to serve, and as a result another nominee is designated,
the persons named in the enclosed proxy or their substitute will have
discretionary authority to vote or to refrain from voting for the other nominee
in accordance with their judgment. Unless contrary instructions are given, the
shares represented by the enclosed proxy will be voted "FOR" the election of
Andrew E. Trolio, R. Barry Borden, Robert A. Garber, David S. Hirsch, Michael A.
Mulshine and James C. Sargent.
The Board of Directors recommends a vote FOR each of the nominees for director.
NOMINEES
<TABLE>
<CAPTION>
Position
Name Age Since Position with the Company
- ---- --- -------- -------------------------
<S> <C> <C> <C>
Andrew E. Trolio 66 1972 Chairman of the Board, Chief Executive
Officer, President and Director (2)
R. Barry Borden 56 1996 Director
Robert A. Garber 46 1996 Director
David S. Hirsch 60 1992 Director (3)
Michael A. Mulshine 56 1985 Secretary and Director (1)
James C. Sargent 80 1992 Director
</TABLE>
- -------------------
(1) Member of the Company's Compensation Committee
(2) Member of the Company's Audit Committee.
(3) Member of the Company's Stock Option Committee
Background
The business experience, principal occupation and employment of the
nominees have been as follows:
Andrew E. Trolio is chairman of the Board, President and Chief
Executive Officer of the Company. He founded the Company in 1972. From 1961 to
1971 he was President, Director and Founder of KDI Adtrol, Inc., a company which
manufactured photo-optical recording and reading devices for motion picture
cameras. He is also credited with several patents as inventor or co-inventor.
Mr. Trolio is a Trustee of Cabrini College and has served as Chairman of the
Finance and Audit Committees and is currently a Fellow of The Society of
Photo-Optical Instrument Engineers.
R. Barry Borden has over 30 years of experience in starting
and managing businesses in the computer hardware and software industry. Since
March 1996 he has served as Chairman and CEO of Mergent International, a
supplier of software for data security on PC Desktops and enterprise wide
networks. Since 1984, Mr. Borden has been President of LMA Group Inc., a general
management consulting firm. From 1968 to 1980, Mr. Borden was the founder,
President and CEO of Delta Data Systems, a CRT Terminal manufacturer, and from
1981 to 1984 he was founder, Chairman and CEO of Franklin Computer Corporation,
a manufacturer of microcomputers, and in 1989 he served as President and CEO of
Cricket Software, Inc., a supplier of graphics software. Mr. Borden has also
served as a director or advisor to Opcode Systems, Inc., a supplier of software
for musicians; Health Care Financial Resources, a unit of First Pennsylvania
Bank; Matterhorn Growth Fund, a stock mutual fund; and Exmachina, a supplier of
software for wireless messaging. Mr. Borden received a BSEE degree from the
University of Pennsylvania in 1961.
4
<PAGE>
Robert A. Garber has served as Vice President and Chief
Financial Officer of Tangent Engineering, Inc. since August of 1993. He now
serves as Tangent's Chief Operating Officer. Mr. Garber has specialized in
domestic and international corporate finance, asset based lending, investment
banking, where he held various senior management positions, including positions
with Chase Manhattan Bank, United States Leasing Corporation and Litton
Industries. Mr. Garber was one of the founders of ICON Group, Inc., a New York
based investment banking and securities organization. Robert A. Garber is a
graduate of New York's Bernard Baruch College, having earned a BS in Business
Administration and Finance.
David S. Hirsch, a Director of the Company since January 1992,
retired in 1991 from Wertheim Schroder & Co., Incorporated and its predecessor
firms where he was a principal for the last five years. Mr. Hirsch is also a
director of Numar Corporation, Reprise Capital Corporation and Postal Buddy
Corporation. He received an AB degree from Cornell University in 1957 and an MBA
degree from Harvard University in 1959.
Michael A. Mulshine has been a Director and Secretary of the
Company since May 1985 and has been associated with the Company on a management
consulting basis since 1979. He has been a principal of Osprey Partners, a
management consulting firm, since 1977. Mr. Mulshine has been a Director of
VASCO Corp., an OTC traded company, since 1991, and has been a Director of
Environmental Tectonics Corporation, an ASE traded company, since 1994.
Additionally, Mr. Mulshine serves on the board of directors of INRESCO INC. and
Software Solutions International, Inc. He received his BSEE degree from Newark
College of Engineering in 1961.
James C. Sargent, a Director of the Company since January
1992, is Counsel to the law firm of Opton, Handler, Gottleib, Feiler & Katz. He
was previously a partner and counsel to Whitman & Ransom. He was Regional
Administrator from 1955 to 1956 of the New York Regional Office of the
Securities and Exchange Commission and served as Commissioner of the Securities
and Exchange Commission from 1956 to 1960.
Board and Committee Meetings
The Board of Directors held six meetings in 1995. During 1995
each incumbent director attended at least 75% of the aggregate of (1) the total
number of meetings of the Board during the period for which such incumbent was a
director, and (2) the total number of meetings held by all committees on which
such incumbent served.
The Board of Directors has a Compensation Committee, an Audit
Committee and a Stock Option Committee. The Compensation Committee is
responsible for developing and executing plans for the compensation of the
executive officers, including the CEO, of the Company. This committee met twice
during 1995. The Audit Committee meets with the Company's independent certified
public accountants to review the scope and results of auditing procedures and
the Company's accounting procedures and controls. This committee met once during
1995. The Stock Option Committee administers the Scan-Graphics, Inc. 1992
Long-Term Incentive Plan, including the determination, subject to the plan
provisions, of the individuals eligible to receive awards, the individuals to
whom awards should be granted, the nature of the award to be granted, the number
of awards to be granted, and the exercise price, vesting schedule and term and
all other conditions and terms of the awards to be granted. This committee met
three times during 1995.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation
The following table provides information concerning the annual
and long-term compensation of the chief executive officer and each other
executive officer of the Company for services rendered in all capacities during
fiscal years 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Stock Option All Other
Principal Position Year Salary Bonus Awards (Shares) Compensation(1)(2)
- ------------------ ---- ------ ----- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Andrew E. Trolio 1995 $115,284 55,000 $ 8,445
President and Chief 1994 $ 90,000 150,000 $ 3,650
Executive Officer 1993 $110,769 -0- $10,680
and Chairman of the Board
Anthony M. Trolio 1995 $121,923 50,000 $ 5,300
Executive 1994 $ 70,000 50,000 $ 2,650
Vice President 1993 $ 78,462 -0- $ 7,950
Joseph N. Battista 1995 $ 22,346 -0- $ -0-
Vice President Finance 1994 $ 70,000 -0- $ 1,250
1993 $ 70,000 -0- $ 3,750
</TABLE>
- ---------------------
(1) In fiscal year 1995, no executive officer received perquisites or other
personal benefits, securities or property which exceeded the lesser of
$50,000 or 10% of such executive officer's salary and bonus.
(2) The amounts disclosed in this column represent premiums paid by the
Company for insurance annuities as of December 31, 1995, these insurance
policies had a cash surrender value of $3,283, $18,134 and
$-0- to Messrs. A. E. Trolio, A.M. Trolio and Battista, respectively.
6
<PAGE>
Certain Employment Arrangements
On January 1, 1991, the Company entered into an Employment
Agreement with Andrew E. Trolio, President, Chief Executive Officer and Chairman
of the Board of the Company (the "CEO Agreement"). The CEO Agreement has a term
of five years and continues thereafter on a year-to-year basis. Compensation
during this period will be $150,000 as a base annual salary plus additional
compensation as directed by the Board of Directors. In the event of termination
of employment, the Company is obligated to retain Mr. Trolio as a part time
consultant at the rate of 40% of the annual compensation at the time of
termination. The term of the part time consultant arrangement will be equal to
one-half the number of years the employee has served as a full time employee. In
the event of a change in control of the Company, and/or in the event of
termination, the Company is obligated to pay Mr. Trolio an immediate lump sum
severance payment equal to two years' annual salary and deferred compensation,
if any. In addition, upon termination of employment by the Company, the Company
will, if Mr. Trolio desires, purchase all outstanding options and warrants
previously granted to him at a cash purchase price equal to the amount of the
aggregate fair market value of the shares, less the aggregate exercise price for
such shares. If such termination had occurred on December 31, 1995, the Company
would have been obligated to pay Mr. Trolio $300,000. The termination
remuneration described above is not payable in the event of termination for
cause.
On January 1, 1991, the Company entered into an Employment
Agreement with Anthony M. Trolio, its Executive Vice President (the "EVP
Agreement"). The EVP Agreement has a term of three years and continues
thereafter on a year-to-year basis. Compensation during this period will be
$90,000 as a base annual salary plus additional compensation as directed by the
Board of Directors. In the event the Company is acquired during the life of the
EVP Agreement or any renewal term thereof, and the acquirer chooses to terminate
Mr. Trolio, or fails to renew the EVP Agreement for at least one year, the
Company is obligated to pay Mr. Trolio an immediate lump sum severance payment
equal to one year annual salary plus an amount equal to the accrued deferred
compensation, plus bonuses and commissions, if any. In addition, upon
termination of employment by the Company, the Company will, if Mr. Trolio
desires, purchase all outstanding options and warrants previously granted to him
at a cash purchase price equal to the amount of the aggregate fair market value
of the shares, less the aggregate exercise price for such shares. If such
termination had occurred on December 31, 1995, the Company would have been
obligated to Mr. Trolio $90,000. The termination remuneration described above is
not payable in the event of termination for cause.
Option Grants
The following table provides, as to the Chief Executive
Officer and each other executive officer of the Company, additional information
concerning grants of stock options during fiscal year 1995. No stock
appreciation rights have been granted by the Company.
<TABLE>
<CAPTION>
Percentage of
Total Options
Granted to
Option Employees in Exercise Price Expiration
Name Grants Fiscal Year 1995 (per share) Date
---- ------ ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Andrew E. Trolio.................... 55,000 .7% $ 1.00 7/2/2000
Anthony M. Trolio................... 50,000 .6% $ 1.00 7/2/2000
Joseph N. Battista.................. -0- -0- $ -0- -0-
</TABLE>
7
<PAGE>
Option Exercises and Fiscal Year-End Values
The following table provides, as to the Chief Executive
Officer and each other executive officer of the Company, information concerning
unexercised stock options granted in fiscal year 1995 and prior years. No stock
appreciation rights have been granted by the Company.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options at
at December 31, 1995 December 31, 1995(1)
------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew E. Trolio................. 300,000 -0- $869,312 -0-
Anthony M. Trolio................ 155,000 -0- $476,937 -0-
Joseph N. Battista............... 50,000 -0- $ 84,375 -0-
</TABLE>
- ------------------
(1) Based on the closing price of the Company's Common Stock as reported on
the NASDAQ System on that date ($3.50), net of the option exercise
price.
8
<PAGE>
Compensation of Directors
Directors who are not employees of the Company are eligible
under the Scan-Graphics, Inc. 1992 Long-Term Incentive Plan to receive annual
grants of options on the first business day of January. The size of the annual
grant is determined by dividing $50,000 by the fair market value of a share of
Common Stock on the date of the option grant. Fair market value is the mean of
the highest and lowest quoted bid prices of the Common Stock as furnished by the
National Association of Security Dealers, Inc. Automated Quotation ("NASDAQ")
System. The maximum number of options granted in any one year to a Director
under the plan is 25,000. Each non-employee director was issued a 14,286 share
option grant for 1996.
Other Compensation Arrangements
In October 1994, the Board of Directors approved the Osprey
Partners Management Consulting Agreement for the year 1995. This agreement
included the issuance of 60,000 warrants to purchase common stock. During this
period, Osprey Partners provided management consulting and financial advisor
services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its principal office and manufacturing
facility from Lin-Lea Corporation, a company which is owned by Andrew E. Trolio.
This facility lease, which was renewed on September 1, 1994 and continues
through August 31, 1997, with an option to renew for two years, provides for the
payment of an annual base rental of $96,000 and excess real estate taxes. Rent
expense charged to operations was $96,000 for the year ended December 31, 1995.
It is management's belief that the terms of the facility lease are favorable to
the Company based on the commercially available terms in the business park where
the Company is located. The Company's current lease payments are 11% to 15%
below comparable market rates.
The Company incurred commission fees expenses of $72,500 for
the year ended December 31, 1995, to Osprey Partners, a company owned by Mr.
Mulshine. These commission expenses were incurred for the private placement of
securities. Osprey Partners also provides management consulting services to the
Company on an "as needed" basis.
On June 1, 1995 the Company extended for one (1) year a line
of credit agreement with Andrew E. Trolio and Lin-Lea Corporation, owned by
Andrew E. Trolio, to lend up to $150,000 in the form of loans and deferred rent
payments. The interest rate is the banking prime rate, plus 1%, or the interest
charged to the chief executive officer to secure borrowings. The amount of loans
and rent due outstanding as of December 31, 1995 were $54,455 and $ -0-,
respectively and interest payable of $4,000. On February 15, 1995, the Board of
Directors approved the stock option committees issuance of 125,000 common stock
warrants on December 27, 1994 to the chief executive officer of the Company for
consideration of this credit facility.
Notes payable to officers of Tangent Engineering accrue
interest at 5% per annum, are due on demand and are without collateral. At
December 31, 1995 and 1994, the balance was $259,241 and $78,567 respectively,
and interest paid on the notes during the years ended December 31, 1995 and 1994
totaled $13,000 and $4,000 respectively.
The Company entered into a consulting agreement with Joseph N.
Battista, to provide consulting services on an on-going basis. The amount for
consulting services paid in 1995 was $6,550.
9
<PAGE>
COST OF SOLICITATION OF PROXIES
The Company will bear the cost of soliciting proxies for the
Meeting, including the cost of preparing, assembling and mailing proxy
materials, the handling and tabulation of proxies received and charges of
brokerage houses and other institutions, nominees and fiduciaries in forwarding
such materials to beneficial owners. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or facsimile
by directors, officers or regular employees of the Company, or by a professional
proxy solicitation organization engaged by the Company.
OTHER MATTERS
Management is not aware of any other matters to be presented
for action at the Meeting or any adjournment thereof. However, if any other
matters come before the Meeting, it is intended that shares represented by Proxy
will be voted in accordance with the judgment of the persons voting them.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP, has served as the Company's independent
certified public accountants since 1989 and is expected to continue to serve in
such capacity for the current year. A representative of the firm will be
available by telephone at the Meeting to respond to appropriate shareholders'
questions.
SHAREHOLDER PROPOSAL
Any shareholder who, in accordance with and subject to the
provisions of the rules of the Securities and Exchange Commission and applicable
laws of the Commonwealth of Pennsylvania, wishes to submit a proposal for
inclusion in the Company's Proxy Statement for its 1997 Annual Meeting of
Shareholders, must deliver such proposal, in writing, to the attention of the
Secretary of the Company at the Company's principal executive offices at 700
Abbott Drive, Broomall, Pennsylvania 19008, not later than December 20, 1996.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's 1995 Annual Report to Shareholders,
which includes the Company's Annual Report on Form 10-K (including the financial
statements and schedules thereto), is being transmitted herewith, but does not
form a part of the proxy solicitation materials.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS PROXY
STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS MOST
RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO MICHAEL A.
MULSHINE, SECRETARY, AT 700 ABBOTT DRIVE, BROOMALL, PA 19008.
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Scan-Graphics, Inc.
Proxy for Annual Meeting of Shareholders June 26, 1996
The undersigned hereby appoints ANDREW E. TROLIO and MICHAEL
A. MULSHINE, or either of them acting in the absence of the other, with full
power of substitution, the proxy or proxies of the undersigned to attend the
annual meeting of shareholders of Scan-Graphics, Inc., to be held on Wednesday,
June 26, 1996, and at any adjournments thereof, to vote the shares of stock that
the signer would be entitled to vote if personally present as indicated below
and on the reverse side hereof and on any other matters brought before the
meeting, all as set forth in the May 31, 1996 proxy statement, receipt of which
is hereby acknowledged.
Please date, sign and return promptly
This proxy is solicited on behalf of
the Board of Directors of Scan-Graphics, Inc.
1. ELECTION OF DIRECTORS: Nominees: Andrew E.Trolio, R. Barry Borden, Robert
A. Garber, David S. Hirsch, Michael A. Mulshine and James C. Sargent.
/ / FOR all nominees / / WITHHOLD authority for all nominees.
/ / WITHHOLD authority for the following nominee(s) and vote FOR all other
nominees.
________________________________________________________________________________
The Board of Directors recommends that you vote FOR all nominees.
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Your signature(s) on this proxy form should be exactly as your name and/or names
appear on this proxy. If the stock is held jointly, each holder should sign. If
signing is by an attorney, executor, administrator, trustee or guardian, please
give full title.
Dated:_________________________1996
____________________________________________
Signature
____________________________________________
Signature
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the fully executed proxy is returned,
such shares will be voted in accordance with the recommendations of the Board of
Directors FOR all nominees.
