<PAGE>
SCHEDULE 14A
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
/X/ Definitive Proxy Statement of the Commission only
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AFP IMAGING CORPORATION
-----------------------
(Name of Registrant as Specified In Its Charter)
AFP IMAGING CORPORATION
-----------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
No fee required.
(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.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
AFP Imaging Corporation
Notice of Annual Meeting of Shareholders
To Be Held On December 18, 1998
To the shareholders of
AFP Imaging Corporation:
You are cordially invited to attend the Annual Meeting of Shareholders of AFP
Imaging Corporation, a New York corporation (the Company), which will be held
on December 18, 1998 at the Company's offices, 250 Clearbrook Road, Elmsford,
New York 10523, at 9:30 a.m., New York time, to consider and act upon the
following matters:
1. To elect four directors of the Company to serve for the ensuing
year and until their successors are duly elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as the independent
public accountants of the Company's financial statements for the
fiscal year ending June 30, 1999; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only Shareholders of record at the close of business on November 10, 1998 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By order of the Board of Directors
David Vozick,
Secretary
Elmsford, New York
November 20, 1998
Whether or not you plan to attend the Annual Meeting, please sign and date the
enclosed Proxy, which is being solicited by the Board of Directors of the
Company, and promptly return it to the Company in the enclosed postage
pre-paid envelope. The Proxy may be revoked at any time before it is voted and
Shareholders executing proxies may attend the Annual Meeting and vote there in
person should they so desire.
Note that the time and location of the Annual Meeting is: December 18, 1998 at
9:30 a.m.
AFP Imaging Corporation
250 Clearbrook Road
Elmsford, New York 10523
<PAGE>
PROXY STATEMENT
The Board of Directors of AFP Imaging Corporation (the "Company") presents
this Proxy Statement to all Shareholders and solicits their proxies for the
Annual Meeting of Shareholders to be held on December 18, 1998. All proxies
duly executed and received will be voted on all matters presented to the
Annual Meeting in accordance with the instructions given by such proxies. In
the absence of specific instructions, proxies so received will be voted for
the named nominees for election to the Company's Board of Directors and for
the ratification of Arthur Andersen LLP as the Company's independent public
accountants. Shares represented by proxies which are marked "abstain" for Item
2 on the proxy card and proxies which are marked to deny discretionary
authority on all other matters will not be included in the vote totals, and
therefore will have no effect on the vote. In addition, where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not provided voting instructions (commonly referred to as "broker
non-votes"), those shares will not be included in the vote totals. The Board
of Directors does not anticipate that any of its nominees will be unavailable
for election and does not know of any other matters that may be brought before
the Annual Meeting. In the event that any other matter should come before the
Annual Meeting or any nominee is not available for election, the persons named
in the enclosed proxy have discretionary authority to vote all proxies not
marked to the contrary with respect to such matters in accordance with their
best judgment. The proxy may be revoked at any time before being voted, by
written notice of revocation delivered to the Company prior to the Annual
Meeting, or by giving notice at the Annual Meeting. The Company will pay the
entire expense of soliciting these proxies, which solicitation will be by use
of the mails, such mailing to take place on or about November 20, 1998.
The total number of shares of Common Stock of the Company outstanding as of
November 10, 1998, was 9,271,054. The Common Stock is the only outstanding
class of security of the Company. Each share has one vote. Only Shareholders
of record as of the close of business on November 10, 1998 will be entitled to
vote.
A list of Shareholders entitled to vote at the Annual Meeting will be
available at the Company's office, 250 Clearbrook Road, Elmsford, New York
10523, for a period of ten (10) days prior to the Annual Meeting for
examination by any Shareholder.
ANNUAL REPORT
An Annual Report for the year ended June 30, 1998, containing financial and
other information about the Company and its subsidiary companies, is being
mailed at this time to all Shareholders of record entitled to vote at the
Annual Meeting on December 18, 1998.
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL ONE - ELECTION OF DIRECTORS
The Company's Board of Directors has nominated David Vozick, Donald
Rabinovitch, Jack Becker and Robert A. Blatt for election as Directors at the
Annual Meeting to hold office for a one-year term or until their successors
shall be elected and duly qualified. It is intended that the accompanying form
of Proxy will be voted for the election as Directors of the four (4) nominees
named below, unless the Proxy contains contrary instructions. Proxies which
direct the Proxy holders to abstain and do not direct the Proxy holders to
vote for or withhold authority in the matter of electing Directors will be
voted for the election of the four (4) nominees named below. Proxies cannot be
voted for a greater number of persons than the number of nominees named in the
Proxy Statement.
In the event any one or more of the aforesaid nominees is unable to serve, it
is the intention of the persons named in the Proxy to vote for the election of
substitutes proposed by the Board of Directors or, if no substitute is
proposed, for the remaining nominees. Management has no reason to believe that
any of the nominees will be unable to serve and each nominee has advised the
Company that he can and will serve as a Director of the Company in the event
he is so elected.
The following table sets forth as to each nominee for election: (1) such
person's name; (2) the year in which such person was first elected a Director
of the Company; (3) biographical information for the last five years; (4)
certain other directorships, if any, held by such person; (5) positions and
offices held with the Company; and (6) such person's age. The information
regarding the Company's executive officers is also set forth in the following
table, and in the Summary Executive Compensation table below, and accompanying
footnotes.
1
<PAGE>
Year First
Elected
Name & Age Director Position
David Vozick (58) 1978 Chairman of the Board of Directors,
Secretary and Treasurer
Donald Rabinovitch (52) 1978 Director and President
Robert Blatt (57) 1995 Director
Jack Becker (63) 1997 Director
David Vozick has been Chairman of the Board of Directors, Secretary and
Treasurer since the Company was founded in October 1978. He is a co-founder of
the Company.
Donald Rabinovitch has been President since the Company was founded in October
1978. He is a co-founder of the Company.
Robert Blatt is Chairman and majority owner of CRC Group Inc., a developer,
owner and operator of commercial real estate, and a member of the New York Stock
Exchange since 1985. Mr. Blatt is also the Chief Executive Officer of
Championship Golf Enterprises, LLC, and Island Golf Resorts. Mr. Blatt is a
Director of MTR Gaming Group, Inc. and its subsidiary, Mountaineer Race Track
and Gaming Resort.
Jack Becker has been a practicing attorney in New York State since 1960 and is a
principal of Snow Becker Krauss P.C., general counsel to the Company. This firm
has been retained by the Company for more than the past three years and will be
retained by the Company for the current fiscal year. Mr. Becker is a recognized
authority in public and private securities financings. He has been a member of
the Board of Directors of Paxar Corporation since 1969.
Mr. Vozick and Mr. Rabinovitch are first cousins.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Set forth below is information concerning stock ownership of each class of
equity securities of the Company owned by each director and nominee of the
Company, individually, by each executive officer named in the Summary
Executive Compensation Table below, by all executive officers and directors of
the Company as a group, and all persons known by the Company to own
beneficially 5% or more of the Company's voting securities based upon the
respective number of shares of Common Stock outstanding as of October 28,
1998. Beneficial ownership as reported in the following table has been
determined in accordance with Rule 13d-3 of the Securities Exchange Act of
1934. Accordingly, all shares over which the directors, nominees and executive
officers named in the group directly or indirectly have or share voting or
investment power have been deemed to be beneficially owned by such person.
2
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership (1),(4),(5),(6) Title of Class
- ---------------- -------------------- --------------- --------------
<S> <C> <C> <C>
David Vozick/Secretary 1,806,963 (2),(4) 18.9% Common Stock
Treasurer and Director
250 Clearbrook Road
Elmsford, NY 10523
Donald Rabinovitch 1,658,863 (3),(4) 17.4% Common Stock
Director and President
250 Clearbrook Road
Elmsford, NY 10523
Robert Blatt 703,963 7.6% Common Stock
Director
1890 Palmer Avenue
Larchmont, NY 10538
Jack Becker 45,522 (5) .5% Common Stock
Director
605 Third Avenue
New York, NY 10158
Seamus Carroll 60,000 (6) .6% Common Stock
Vice President
250 Clearbrook Road
Elmsford, NY 10523
Elise Nissen 50,000 (6) .5% Common Stock
Chief Financial Officer
250 Clearbrook Road
Elmsford, NY 10523
Joseph A. Cohen 728,435 (7) 7.9% Common Stock
825 Third Avenue
New York, NY 10022
Executive Officers and Directors 4,323,811 (4),(5),(7) 43.5 % Common Stock
as a Group (6 Persons)
</TABLE>
(1) Based on 9,271,054 shares of Common Stock, outstanding as of October 28,
1998. Common Stock votes as a single class on a share-for-share basis. Unless
otherwise noted, the Company believes that all persons named in the table have
sole voting and investment power with respect to all Common Stock beneficially
owned by them. A person is deemed to be the beneficial owner of securities
that can be acquired by such person within 60 days from the date hereof upon
the exercise of options. Each beneficial owner's percentage ownership is
determined by assuming that options that are held by such person (but not
those held by any other person) and which are exercisable within 60 days from
the date hereof have been exercised.
(2) Includes 186,000 shares held in trust for Mr. Vozick's three children.
(3) Includes 156,000 shares owned by Mr. Rabinovitch's three children.
(4) In the case of both Messrs. Vozick and Rabinovitch, the amount includes
275,060 stock options issued to each of them of which all are currently
exercisable. It also includes 140,000 shares of Common Stock owned of record
by Mr. Vozick's family foundation and 125,000 shares of Common Stock owned of
record by Mr. Rabinovitch's family foundation. Messrs. Vozick and Rabinovitch
disclaim beneficial ownership with respect to the shares owned by their
respective family foundations. (See "Executive Compensation")
(5) Includes 25,000 shares held by Snow Becker Krauss P.C., counsel to the
Company, of which Mr. Becker is a principal, and 13,500 stock options issued
to Mr. Becker, all of which are currently exercisable.
(6) Includes 40,000 stock options issued to Ms. Nissen and 60,000 stock
options issued to Mr. Carroll, all of which are currently exercisable.
(7) Mr. Cohen is neither an employee, Officer or Director of the Company.
Includes 400,193 shares of Common Stock directly owned by Mr. Cohen and
328,242 shares of Common Stock owned by various individuals and entities
through which Mr. Cohen may be deemed to be the beneficial owner under Rule
13d-3 of the Securities Exchange Act of 1934. Mr. Cohen disclaims beneficial
ownership of these shares of Common Stock pursuant to Rule 13d-4 of the
Securities Exchange Act of 1934.
3
<PAGE>
SUMMARY EXECUTIVE COMPENSATION TABLE
The following table sets forth for the fiscal years ended June 30, 1998, 1997
and 1996, the cash and certain other compensation paid by the Company to the
"Named Executive Officers" of the Company, each whose annual salary and bonus
earned exceeded $100,000 during each year.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------------- -------------------------------------------------
Other Annual Restricted LTIP All Other
Salary Bonus Compensation Stock Options/SARS Payouts Compensation
Name and Position Year ($)(1) ($)(2) ($)(3) Awards (#)(4) (#)(4) (#)(4)
- ----------------- ---- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Vozick 1998 $294,540 $ 0 $ 62,135 -- -- -- --
Chairman of the Board & 1997 $297,870 $ 0 $ 41,827 -- -- -- --
Secretary and Treasurer 1996 $285,350 $ 0 $ 38,673 -- $216,975 -- --
Donald Rabinovitch 1998 $294,540 $ 0 $ 30,560 -- -- -- --
President and Director 1997 $297,870 $ 0 $ 31,829 -- -- -- --
1996 $285,350 $ 0 $ 29,081 -- $216,975 -- --
Seamus Carroll 1998 $119,233 $ 0 $ 0 -- $ 52,075 -- --
Vice President Operations and
New Business Development (5)
Elise Nissen 1998 $100,000 $ 0 $ 0 -- -- -- --
Chief Financial Officer (5)
</TABLE>
(1) Amounts shown include cash compensation earned and accrued by the
executive officers. 1996 excludes an amount accrued in fiscal 1995.
(2) No cash bonuses were paid during the past three fiscal years.
(3) The total amounts for each fiscal year consist of premiums paid by the
Company for life and disability insurance policies for their personal
benefit and an automobile allowance.
(4) No restricted stock awards, stock appreciation rights ("SARS") or
long-term incentive payouts ("LTIP") were granted during the fiscal
years ended June 30, 1996, 1997 and 1998. Messrs. Vozick and Rabinovitch
were each granted 263,000 incentive stock options at $.825 per share in
July 1995. Mr. Carroll was granted 25,000 incentive stock options at
$2.083 per share in January 1998. In July 1998, these stock options were
cancelled and replaced with 25,000 incentive stock options at $1.00 per
share.
(5) Seamus Carroll (38) and Elise Nissen (44) became executive officers of
the Company in 1998. Mr. Carroll joined the Company in 1996, he was
appointed VP of Operations & New Business Development in 1997. He was VP
of Marketing worldwide for MacBeth division of Kollmorgan from
1995-1996. From 1993 to 1995 he was VP of Sales and Marketing for
worldwide sales at Visiplex Instruments Ltd. Ms. Nissen joined the
Company in 1982. She was appointed Chief Financial Officer in 1997.
Prior to such, she served as VP of Finance and Controller.
Stock Options held at end of Fiscal 1998
The following table indicates the total number and value of exercisable and
unexercisable stock options granted during, and held at the end of, the year-
ended June 30, 1998 to each of the Executive Officers of the Company. No SARs
were granted or exercised in the 1998 fiscal year.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
------------------------------------------------------------------------ ----------------------------
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise
SARs Employees of Base Expiration
Name Granted (#) in Fiscal Year Price ($/Sh) Date 5%($) 10%($)
---- ----------- -------------- ------------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Seamus Carroll (1) 25,000 100% $2.083 January 2003 $63,297 $76,243
</TABLE>
As indicated in Note 4 above, the incentive stock options for Mr. Carroll were
cancelled in July 1998 and replaced with an equivalent amount of options
excercisable at $1.00 per share. All amounts reflect the stock options
outstanding at June 30, 1998 at $2.083.
4
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
The following table sets forth for the fiscal year ended June 30, 1998, the
options exercised and the value of unexercised options at fiscal year end for
the named executive officers.
<TABLE>
<CAPTION>
Number of unexercised Value of unexercised
Options/SARS at In-the-money Options/SARS
Shares Acquired Value Fiscal Year-End (#) at Fiscal Year End ($) (1)
Name on exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
David Vozick - $ 0 275,060/0 $17,070/0
Donald Rabinovitch - $ 0 275,060/0 $17,070/0
Seamus Carroll - $ 0 60,000/0 $0/0
$0/0
Elise Nissen - $ 0 40,000/0 $5,625/0
</TABLE>
(1) The closing bid price for the Company's Common Stock on June 30, 1998,
was quoted at $.875 per share on NASDAQ SmallCap Market.
Compensation Committee Interlocks and Insider Participation
The Board of Directors does not have a Compensation Committee. Executive
compensation is determined according to each individual's responsibilities and
Company philosophy as determined by the Board of Directors itself. None of the
executive officers of the Company has served during the last fiscal year on
the Board of Directors or Compensation Committee of any other entity whose
officers also served on the Board of Directors of the Company.
Report of the Board of Directors on Executive Compensation
Executive Compensation
The Company's executive compensation philosophy is to provide competitive
levels of compensation by recognizing the need for multi-discipline management
responsibility, achievement of the Company's performance goals, individual
initiative and achievement, and allow the Company to attract and retain
management with the skills critical to the long-term success of the Company.
Management compensation is intended to be set at levels that the Board of
Directors believes is consistent with responsibilities in other comparable
companies. The Company's executive compensation has four major components:
base salary, performance incentive, incentive stock options and other
compensation.
Executive Base Salaries
Base salaries are determined by evaluating the various responsibilities for
the position held, the experience of the individual, and by comparison to
positions at companies within similar industries. The Board of Directors
reviews base salaries and determines increases based upon an officer's
contribution to corporate performance, the rate of inflation, and competitive
market conditions.
Performance Incentives
The Board of Directors utilizes performance incentives based upon criteria
relating to revenues, income and operating goals to augment the base salaries
received by executive officers. No performance incentives have been paid or
granted to the executive officers for the past three years.
Incentive Stock Options
The Company uses incentive stock options issued under its 1992 and 1995
Employee Stock Option Plans as a means to attract, retain and encourage
management and to align the interests of executive officers with the long-term
interest of all shareholders. Incentive stock options are typically granted at
the commencement of employment of key personnel and are augmented by
subsequent periodical grants. All incentive stock option plans are approved by
the Shareholders.
Benefits and Other Compensation
The Company offers a life, health and disability benefit package to its
executive officers, which is similar to the package offered to all of its
employees. The Company provides supplemental life and disability insurance
coverage as well as an automobile allowance to its two senior officers, as
other compensation.
Retirement and Post Retirement Benefits
The Company does not offer a post-retirement health plan to its executive
officers or employees. The Company does offer a 401(k) retirement savings plan
to its executive officers which is the identical plan offered to all of its
employees.
The Company maintains a profit sharing plan and trust pursuant to which
participants receive certain benefits upon retirement, death, disability and,
to a limited extent, upon termination of employment for other reasons.
Allocation among participants' interests, including officers and directors who
are employees, is in accordance with current Internal Revenue Service
regulations. The aggregate amount contributed by the Company each fiscal year
is determined by the Board of Directors following a review of the profits of
such fiscal year. The defined contribution plan requires no minimum
contribution by the Company. The Company did not contribute to the Plan for
the year ended June 30, 1998.
Respectfully submitted,
David Vozick, Donald Rabinovitch
Robert Blatt, Jack Becker
5
<PAGE>
Performance Graph
Research Data Group Peer Group Total Return Worksheet
Afp Imaging Corp (AFPC)
Cumulative Total Return
---------------------------------------------------
6/93 6/94 6/95 6/96 6/97 6/98
AFP IMAGING CORPORATION 100.00 81.82 109.09 209.09 281.82 127.27
PEER GROUP 100.00 104.48 119.71 163.79 193.21 254.58
NASDAQ STOCK MARKET (U.S.) 100.00 100.96 134.77 173.03 210.38 277.69
Assumes $100 invested on June 30, 1993 in the Company's Common Stock, the
NASDAQ Stock Index and the Peer Group Index. Total return assumes reinvestment
of dividends. The Peer Group comprises companies nationwide which compete
against the Company in its industry segment of dental products manufacturers
and distributors. None of the Companies competing with the Company offer a
fully comparable range of products and services. The performances of each
company have been weighted according to their respective stock market
capitalization for purposes of arriving at a peer group average. Each member
of the peer group has been publicly traded for at least five years.
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, Directors and greater than ten percent shareholders are
required by regulation to furnish the Company with copies of all Section 16
(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5's were
required for those persons, the Company believes that, during the period from
July 1, 1997 through June 30, 1998, all filing requirements applicable to its
Officers, Directors, and greater than ten percent beneficial owners were
complied with.
PROPOSAL TWO - RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been independent auditors of the Company's accounts
since October 1980. Such firm has no financial interest, either direct or
indirect, in the Company. Selection of the auditors for the fiscal year ending
June 30, 1999 will be made by the Board of Directors subject to approval by the
Shareholders. A representative of Arthur Andersen LLP is expected to attend the
meeting and have an opportunity to make a statement and/or respond to
appropriate questions from Shareholders. Management recommends voting "FOR" the
ratification of the appointment of the auditors.
OTHER TRANSACTIONS
The Company maintains $4.0 million of Directors and Officer's liability
insurance with RLI Insurance Company, The Connecticut Indemnity Company, and
the TIG Company, all of which insure the Company and the directors and
officers of the Company in accordance with the indemnification provisions of
the New York Business Corporation Law. These policies are renewed each year in
May and currently costs the Company an aggregate of $54,750 per annum.
In October 1997, Robert L. Rosen and New Ballantrae Partners, L.P. entered
into an agreement with the Company, David Vozick and Donald Rabinovitch
whereunder, among other things, the parties agreed to terminate the
shareholders' agreement among such parties and New Ballantrae Partners, L.P.,
agreed to a timetable to convert its Series A and B Preferred Shares of the
Company and distribute such shares to its partners. Furthermore, pursuant to
such agreement, Robert L. Rosen agreed to resign from the Board, if so
requested by a majority of the Board, on the earlier of October 12, 1998 and
the date, if ever, when Mr. Rosen's beneficial ownership of the Company's
capital shares is less than fifty percent (50%) of the number of the Company's
capital shares he would be entitled to upon the liquidation of New Ballantrae
Partners, L.P.
6
<PAGE>
Robert Rosen resigned his directorship of the Company effective October 16,
1998 and agreed to continue as a consultant as described below. The Company
and Mr. Rosen amended the terms of Mr. Rosen's existing consulting agreement
and modified his existing stock option agreement. The term of the consulting
agreement dated September 19, 1997, which became effective upon Mr. Rosen's
resignation as a director was increased from one year to three years with an
increase in the aggregate cash compensation payable thereunder from $200,000
to $300,000. The option agreement was modified by increasing the term from
three years to four years, the number of shares underlying the option from
150,000 to 300,000 common shares, and reducing the exercise price from
$2.636545 to $0.75 per share. Additionally, the Company and Mr. Rosen agreed,
among other things, to covenants with respect to confidentiality and certain
restrictions of stock repurchases by Mr. Rosen. On October 19, 1998, the
Company repurchased 496,895 shares of the Company's common stock owned by
Robert Rosen for an aggregate consideration of $372,671.75 or $0.75 per share
(equal to the closing price of the Company's common stock on the NASDAQ
SmallCap Market at the date the parties agreed in principle to the
transaction).
MEETING OF THE BOARD OF DIRECTORS AND INFORMATION REGARDING COMMITTEES
The Board of Directors of the Company held five regular meetings and five
special meetings during the fiscal year ended June 30, 1998. All Directors
attended all of the meetings.
The Board of Directors has an Executive Committee and an Audit Committee. The
Executive Committee did not hold any meetings during the fiscal year ended June
30, 1998. The Audit Committee was established this fiscal year and is comprised
of the three outside directors. The Audit Committee held two meetings, May 1998
and September 1998. The Audit Committee is responsible for the development and
implementation of policies, procedures and other matters relating to ethics and
business integrity. The Audit Committee is also responsible for the Company's
accounting practices, internal financial controls, financial reporting, the
engagement of the independent accountants and the review of their report upon
the completion of each audit. The Audit Committee accepted the audit report of
the independent accountants.
The Company's policy is not to pay any fees to Directors for attendance at
meetings of the Board of Directors, except for Mr. Jack Becker, counsel to the
Company. His director's compensation is $2,500 per Board meeting and a stock
option grant under the Company's 1995 Stock Option Plan of 3,000 shares of the
Company's common stock with an exercise price equal to the closing price of
the Company's common stock on the date of said meeting.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of Shareholders of the Company which are intended to be presented at
the next Annual Meeting must be received by the Company no later than July 20,
1999 in order that they may be included in the proxy statement and form of
proxy relating to that meeting.
COSTS OF SOLICITATION
The costs of soliciting proxies will be borne by the Company. The Company will
also reimburse brokerage firms and other custodians, nominees and fiduciaries,
if any, for reasonable out-of-pocket expenses incurred by them in connection
with forwarding solicitation materials to beneficial owners of Common Stock
and Preferred Stock held of record by such persons. Solicitation by the
Company will be primarily by mail.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
Upon the written request of a Shareholder of the Company, addressed to David
Vozick, Secretary of the Company, AFP Imaging Corporation, 250 Clearbrook
Road, Elmsford, New York, 10523, the Company will provide without charge to
such Shareholder a copy of the Company's Annual Report on Form 10-K for its
fiscal year ended June 30, 1998, including all statements and schedules to be
filed with the Securities Exchange Commission pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934.
By Order of the Board of Directors
Elmsford, New York David Vozick,
November 20, 1998 Secretary
7
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
AFP IMAGING CORPORATION
The undersigned Shareholder of AFP Imaging Corporation, a New York corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated November 20, 1998 and hereby appoints David Vozick
and Donald Rabinovitch, and each of them with full power of substitution,
proxies and attorneys-in-fact, on behalf and in the name of the undersigned at
the 1998 Annual Meeting of Shareholders of AFP Imaging Corporation, to be held
on December 18, 1998 at 9:30 a.m., local time, at the Company's offices, 250
Clearbrook Road, Elmsford, New York 10523, and at any adjournments thereof, and
to vote all shares of Common Stock which the undersigned would be entitled to
vote if then and there personally present, on the matters set forth on the
reverse:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
[x] Please mark your votes as in this example.
1. ELECTION OF DIRECTORS:
Nominees:
[ ] FOR all nominees listed at right David Vozick
[ ] Withhold authority Donald Rabinovitch
Jack Becker
(If you wish to withhold authority to vote for Robert A. Blatt
any individual nominee, strike a line through
that nominee's name in list at right.)
2. Proposal to ratify the appointment of Arthur Andersen LLP as the independent
public accountants of the Company.
[ ] For
[ ] Against
[ ] Abstain
3. Upon such other matters which may properly come before the meeting or any
adjournment or adjournments thereof.
[ ] For
[ ] Against
[ ] Abstain
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS NOMINATED AND RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE ANNUAL
MEETING.
A majority of such attorneys or substitutes as shall be present and shall act at
said Annual Meeting or any adjournment or adjournments thereof (or if only one
shall be present and act, then that one) shall have and may exercise all of the
powers of said attorneys-in-fact, hereunder.
SIGNATURE ____________________ DATE _________________ ________________________
Please Print
Note: (This proxy should be marked, dated and signed by the shareholder(s)
exactly as the name appears hereon and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should
sign. If the signer is a corporation, please sign in the full corporate
name and give the title of the signing officer.)
