SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 Under Rule 14a-12
AFP IMAGING CORPORATION
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(Name of Registrant as Specified in Its Charter)
AFP IMAGING CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / 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:
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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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AFP Imaging Corporation
Notice of Annual Meeting of Shareholders
To Be Held On December 15, 2000
To the shareholders of AFP Imaging Corporation:
You are cordially invited to attend the Annual Meeting of Shareholders (The
"Annual Meeting") of AFP Imaging Corporation, a New York corporation (the
"Company"), which will be held on December 15, 2000 at the Company's offices,
250 Clearbrook Road, Elmsford, New York 10523, at 9:00 a.m., local time, to
consider and act upon the following matters:
1. To elect four directors of the Company to serve for the ensuing
year or 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, 2001; 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 6, 2000 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 17, 2000
Whether or not you plan to attend the Annual Meeting, please promptly complete,
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.
DEFINITIVE PROXY STATEMENT
The Board of Directors of AFP Imaging Corporation (the "Company") presents this
Proxy Statement to all shareholders of the Company and solicits their proxies
for the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
December 15, 2000. All proxies duly completed, executed and received will be
voted on all matters presented at the Annual Meeting in accordance with the
instructions given by such proxies. Directors are elected by a plurality of
votes cast, while the affirmative vote of a majority of votes cast is required
for approval of the ratification of the appointment of Arthur Andersen LLP as
the Company's independent public accountants for the year ending June 30, 2001.
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 the appointment 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 17, 2000.
The total number of shares of common stock, par value $.01 per share (the
"Common Stock"), of the Company outstanding as of November 6, 2000, was
9,271,054. The Common Stock is the only outstanding class of security of the
Company entitled to vote. Each share has one vote. Only shareholders of record
as of the close of business on November 6, 2000 will be entitled to vote.
Shareholders may vote at the Annual Meeting in person or by proxy. A shareholder
who is not the record owner of shares may not vote in person at the Annual
Meeting unless he presents a proxy from the shareholder's broker or other
nominee naming such shareholder as proxy.
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 days prior to the Annual Meeting for examination by any
shareholder.
ANNUAL REPORT
An Annual Report for the year ended June 30, 2000, containing financial and
other information about the Company and its subsidiary companies, is being
mailed with this Proxy Statement to all shareholders of record entitled to vote
at the Annual Meeting.
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,
each 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 nominees of the
Company's Board of Directors, unless the proxy withholds such authority or
otherwise contains contrary instructions. Proxies which 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 such four nominees. 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 concerning such person 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 other executive officers is also set forth
in the following table, and in the Summary Executive Compensation table below,
and accompanying footnotes.
1
Year First
Elected
Name & Age Director Position
- ---------- -------- --------
David Vozick (60) 1978 Chairman of the Board of Directors, Secretary and Treasurer
Donald Rabinovitch (54) 1978 Director and President
Robert Blatt (59) 1995 Director
Jack Becker (65) 1997 Director
David Vozick has been the Company's 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 the Company's 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, Inc. (Seat-holder), since 1985. Mr. Blatt is also the Chief Executive
Officer of New England National Golf Club, LLC. Mr. Blatt is a director and
Chairman of the Finance Committee of MTR Gaming Group, Inc. and its subsidiary,
Mountaineer Race Track and Gaming Resort. He also is a Vice-President and
Assistant Secretary of both entities. He is a member of the State Bar of
California.
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. He has been a member of the
Board of Directors of Paxar Corporation, a value added identification and
tracking solutions provider to retailers, apparel manufacturers and selected
markets (NYSE: PXR), since 1969.
Mr. Vozick and Mr. Rabinovitch are first cousins.
MEETINGS OF THE BOARD OF DIRECTORS AND INFORMATION REGARDING COMMITTEES
The Board of Directors of the Company held one regular meeting, four special
meetings, and one audit committee meeting during the fiscal year ended June 30,
2000. All directors attended all of the Board of Directors meetings, and all
committee members attended the Audit Committee meeting.
The Company no longer maintains an Audit Committee. The Board of Directors has
assumed the responsibilities of the Audit Committee.
The Company's policy is to pay fees to the outside Directors only for attendance
at meetings of the Board of Directors. Both Mr. Jack Becker and Mr. Robert Blatt
receive compensation of $2,500 per Board meeting and ten year stock option
grants under the Company's stock option plans of 3,000 shares of the Common
Stock with an exercise price equal to the closing price of the common stock on
the date of each meeting. Mr. Robert Blatt is also a paid consultant to the
Company, and counsels the Company on various business matters. In the fiscal
year ended June 30, 2000, he earned $19,800 in consulting fees. The Company paid
Snow Becker Krauss PC, its general counsel, approximately $59,700 during the
fiscal year ended June 30, 2000.
SECURITY OWNERSHIP
The following table sets forth, as of November 6, 2000, the beneficial ownership
of shares of Common Stock for (i) each person known by the Company to
beneficially own 5% or more of the outstanding shares of Common Stock, based on
filings with the Securities and Exchange Commission (the "SEC") and certain
other information, (ii) each director of the Company, (iii) each current
executive officer of the Company for whom information is given in the Executive
Compensation section of this Proxy Statement and (iv) all executive officers and
directors of the Company as a group. The Common Stock is the only outstanding
class of voting securities of the Company. Except as otherwise indicated, all
shares are beneficially owned, and investment and voting power is held by, the
persons named as owners.
2
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership (1),(4),(5),(6)
- ----------------- -------------------- --------------------------
David Vozick, Chairman of the
Board, Secretary and 1,532,603 (2),(4) 16.5%
Treasurer
250 Clearbrook Road
Elmsford, NY 10523
Donald Rabinovitch 1,383,803 (3),(4) 14.9%
Director and President
250 Clearbrook Road
Elmsford, NY 10523
Robert Blatt 730,963 (5) 7.9%
Director
1890 Palmer Avenue
Larchmont, NY 10538
Jack Becker 72,522 (6) .8%
Director
605 Third Avenue
New York, NY 10158
Seamus Carroll 194,000 (7) 2.1%
Vice President
250 Clearbrook Road
Elmsford, NY 10523
Elise Nissen 144,000 (8) 1.5%
Chief Financial Officer
250 Clearbrook Road
Elmsford, NY 10523
Executive Officers and Directors 4,057,891 (4),(5),(6),(7),(8) 40.3%
As a Group (6 Persons)
(1) Based on 9,271,054 shares of Common Stock, outstanding as of October 2,
2000. 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 held in trust for Mr. Rabinovitch's three children.
(4) As to the amounts owned by Messrs. Vozick and Rabinovitch, each amount does
not include 150,000 shares of Common Stock issuable upon exercise of stock
options issued to each of them, which have specific terms and conditions to
be satisfied prior to vesting. It also does include 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 and
those shares held in trust for their children. (See "Executive
Compensation")
(5) Includes 27,000 shares of Common Stock issuable upon exercise of stock
options issued to Mr. Blatt, all of which are currently exercisable.
(6) Includes 25,000 shares of Common Stock held by Snow Becker Krauss P.C.,
counsel to the Company, of which Mr. Becker is a principal, and 40,500
shares of Common Stock issuable upon exercise of stock options issued to
Mr. Becker, all of which are currently exercisable.
(7) Includes 194,000 shares of Common Stock issuable upon exercise of stock
options issued to Mr. Carroll, and does not include 100,000 shares of
Common Stock issuable upon exercise of stock options which have specific
terms and conditions prior to vesting.
(8) Includes 134,000 shares of Common Stock issuable upon exercise of stock
options issued to Ms. Nissen, all of which are currently exercisable.
3
SUMMARY EXECUTIVE COMPENSATION TABLES
The following table sets forth for the fiscal years ended June 30, 2000, 1999,
and 1998, the cash and certain other compensation paid by the Company to its
Chief Executive Officer and all other executive officers of the Company serving
as executive officers at June 30, 2000 whose annual salary and bonus earned
equaled or exceeded $100,000 during each year (the "Named Executive Officers").
Annual Compensation Long Term Compensation
------------------------------------------------- --------------------------------
Other Annual Restricted LTIP All Other
Salary Bonus Compensation Stock Options/SARS Payouts Compensation
Name and Position Year ($) (1) ($) (2) ($) (3) Awards (#) (4),(5) (#) (4) (#) (4)
- ----------------- ---- -------- ------- -------- ------ ----------- ------- -------
David Vozick 2000 $273,178 $0 $60,020 - 150,000 - -
Chairman of the Board & 1999 $267,400 $0 $60,940 - - - -
Secretary and Treasurer 1998 $294,540 $0 $62,135 - - - -
Donald Rabinovitch 2000 $273,043 $0 $29,449 - 150,000 - -
President and Director 1999 $267,400 $0 $30,952 - - - -
1998 $294,540 $0 $30,560 - - - -
Seamus Carroll 2000 $125,000 $0 $0 - 10,000 - -
Vice President Marketing/ 1999 $125,000 $0 $0 - 25,000 - -
New Business Development (6) 1998 $119,233 $0 $0 - 25,000 - -
Elise Nissen 2000 $100,000 $0 $0 - 45,000 - -
Chief Financial Officer (6) 1999 $100,000 $0 $0 - 10,000 - -
1998 $100,000 $0 $0 - - - -
(1) Amounts shown include cash compensation earned and accrued by the executive
officers.
(2) No cash bonuses were paid during the past fiscal years ended June 30, 1998,
1999, and 2000.
(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, 1998, 1999 and 2000. In September 1999, Mr. Carroll was issued 10,000
incentive stock options at $.31 per share. In July 1998, Mr. Carroll was
issued 25,000 incentive stock options at $1.00 per share, which reflected
the repricing of the 25,000 incentive stock options issued in January 1998
at $2.083 per share. In September 1999, Ms. Nissen was issued 45,000
incentive stock options at $.31 per share, which included the replacement
of 10,000 incentive stock options at $.50 per share, which was to expire in
October 1999. In July 1998, Ms. Nissen was issued 10,000 incentive stock
options at $1.00 per share, which reflected the repricing of the 5,000
incentive stock options issued in December 1996 at $1.375 per share, and
the replacement of 5,000 incentive stock options at $1.00 per share which
had expired in July 1998.
(5) In September 1999, Messrs. Vozick and Rabinovitch were each issued 150,000
incentive stock options at $.31 per share. These incentive stock options
have specific financial terms and conditions to be satisfied prior to
vesting. They are currently not exercisable.
(6) Seamus Carroll (40) and Elise Nissen (46) became executive officers of the
Company in 1998. Mr. Carroll joined the Company in 1996. He was appointed
VP of Operations/New Business Development in 1997 and VP of Marketing/New
Business Development in 1999. He was VP of Marketing for MacBeth Division
of Kollmorgan from 1995-1996. Ms. Nissen joined the Company in 1982. She
was appointed Chief Financial Officer in 1997. Prior to 1997, she served as
VP of Finance and Controller.
Stock Options held at end of Fiscal 2000
The following table sets forth the (a) number of shares underlying options
granted to each Named Executive Officer during the fiscal year ended June 30,
2000, (b) percentage that the grant represents of the total number of options
granted to all employees of the Company during the same period, (c) the per
share exercise price of each option, (d) the expiration date of each option, and
(e) the potential realizable value of such options at stated assumed annual
rates of stock appreciation.
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
- -------------------------------------------------------------------------------- -----------------------------------
Number of
Securities % of Total
Underlying Options/SARS
Options/ Granted to Exercise
SARS Employees of Base Expiration
Name Granted (#) in Fiscal Year Price ($/Sh) Date 5%($)(1) 10%($)(1)
---- ----------- -------------- ------------ ---- -------- ---------
David Vozick (2) 150,000 25.0% $.31 September 2009 $72,137 $109,645
Donald Rabinovitch (2) 150,000 25.0% $.31 September 2009 $72,137 $109,645
Seamus Carroll (2) 10,000 1.7% $.31 September 2004 $3,768 $4,539
Elise Nissen (2) 45,000 7.5% $.31 September 2004 $16,956 $ 20,424
4
(1) The closing bid price for the Company's Common Stock on June 30, 2000, was
quoted at $.4844 per share on the OTC Bulletin Board.
(2) The 150,000 incentive stock options issued to each of Messrs. Vozick and
Rabinovitch have specific financial terms and conditions, relating to the
Company's financial results, which are required to be satisfied during the
option term, prior to vesting. In any event, these incentive stock options
become fully vested 90 days prior to the end of the tenth year of the
issuance date. For the purposes of this table, the Company has assumed full
satisfaction of such requirements as of the date of grant. The incentive
stock options issued in July 2000 to Mr. Carroll and Ms. Nissen of 224,000
and 74,000 respectively, are excluded in this Table.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
-----------------------------------------------------
The following table sets forth for the fiscal year ended June 30, 2000, the
options exercised and the value of unexercised options at fiscal year end for
the named executive officers.
Number of unexercised Value of unexercised
Options/SARS at In-the-money Options/SARS
Shares Acquired Value Fiscal Year-End (#)(2),(3) at FiscalYear End ($) (1)
Name on exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------ ------------ ------------------------- --------------------------
David Vozick - $0 263,000/150,000 $0/$26,160
Donald Rabinovitch - $0 263,000/150,000 $0/$26,160
Seamus Carroll - $0 70,000/0 $1,744/$0
Elise Nissen - $0 75,000/0 $7,848/$0
(1) The closing bid price for the Company's Common Stock on June 30, 2000, was
quoted at $.4844 per share on the OTC Bulletin Board.
(2) These Options/SARS include 263,000 incentive stock options for each of
Messrs. Vozick and Rabinovitch, and 15,000 incentive stock options for Ms.
Nissen, all of which expired on July 12, 2000. These Options/SARS do not
include the Stock Options granted on July 14, 2000 to Mr. Carroll and Ms.
Nissen.
There were no repricing of options/SARS during Fiscal Year 2000.
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. 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 to the
executive officers for the past three years, however, incentive stock options
have been granted in the past three years.
Incentive Stock Options
The Company uses incentive stock options issued under its 1992, 1995, and 1999
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 the shareholders of the Company. Incentive stock options are
typically granted at the commencement of employment of key personnel and are
augmented by subsequent periodical grants. All stock option plans have been
approved by the shareholders of the Company.
5
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, 2000.
Respectfully submitted,
David Vozick, Donald Rabinovitch
Robert Blatt, Jack Becker
Performance Graph
AFP IMAGING CORP
Cumulative Total Return
---------------------------------------------------
6/95 6/96 6/97 6/98 6/99 6/00
AFP IMAGING CORPORATION 100.00 176.92 238.46 107.69 43.08 55.14
NASDAQ STOCK MARKET (U.S.) 100.00 128.39 156.15 205.58 296.02 437.30
PEER GROUP 100.00 131.85 155.04 199.96 191.41 170.15
Assumes $100 invested on June 30, 1995 in the 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 Forms 5 were
required for those persons, the Company believes that, during the period from
July 1, 1999 through June 30, 2000, all Section 16 (a) filing requirements
applicable to its Officers, Directors, and greater than ten percent beneficial
owners were complied with.
6
PROPOSAL TWO - RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been independent auditors of the Company's financial
statements since October 1980. To the Company's knowledge, such firm has no
financial interest, either direct or indirect, in the Company. 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 Proposal 2" the ratifying of the appointment
of the independent auditors.
CERTAIN TRANSACTIONS
The Company maintains $4.0 million of Directors and Officer's liability
insurance with RLI Insurance Company and The Safeco Insurance Company, both 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 $60,800 per annum.
On September 14, 2000, the Company granted 224,000 incentive stock options to
Mr. Carroll at $.375 per share, which equals the closing bid price on such date.
100,000 of such options require that specific performance goals be achieved
prior to such exercise. These options become fully vested ninety days prior to
the end of the fifth year of the issuance date. On July 14, 2000, the Company
granted 74,000 incentive stock options to Ms. Nissen at $.375 per share, which
equals the closing bid price on such date. On September 8, 1999, the Company
granted 150,000 incentive stock options to each of Messrs. Rabinovitch and
Vozick at $.31 per share, which equals the closing price on such date. Such
options require that the Company achieve specific performance goals prior to
such exercise. These options become fully vested ninety days prior to the end of
the tenth year of the issuance date.
SHAREHOLDER PROPOSALS
Shareholder Proposals for Inclusion in Next Year's Proxy Statement - To be
considered for inclusion in next year's Proxy Statement, shareholder proposals
must be received at the Company's principal's executive offices no later than
the close of business on July 20, 2001. Proposals should be addressed to David
Vozick, Secretary, AFP Imaging Corporation 250 Clearbrook Road, Elmsford, New
York, 10523.
Other Shareholder Proposals for Presentation at Next Year's Annual Meeting - For
any proposal that is not submitted for inclusion in next year's Proxy Statement,
but is instead sought to be presented directly at the 2001 Annual Meeting, SEC
rules will permit management to vote proxies in its discretion if the Company:
(1) receives notice of the proposal before the close of business on October 3,
2001, and advises shareholders in the 2001 Proxy Statement about the nature of
the matter and how management intends to vote on such matter; or (2) does not
receive notice of the proposal prior to the close of business on October 3,
2001. Notices of intention to present proposals at the 2001 Annual Meeting
should be addressed to David Vozick, Secretary, AFP Imaging Corporation, 250
Clearbrook Road, Elmsford, New York, 10523.
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 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, 2000, 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. A copy of the Form 10-K can also be retrieved
from the SEC's EDGAR Database on the Internet at http://www.sec.gov.
By Order of the Board of Directors
Elmsford, New York David Vozick,
November 17, 2000 Secretary
7
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 17, 2000 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 2000 Annual Meeting of Shareholders of AFP Imaging Corporation, to be held
on December 15, 2000 at 9:00 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)
/X/ Please mark your
votes as in this
example.
FOR all
nominees listed Withold Nominees:
at right Authority David Vozick
1. ELECTION OF DIRECTORS: / / / / Donald Rabinovitch
Jack Becker
Robert A. Blatt
To withhold authority for one or more
nominees, list such nominee here:
_______________________________________
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.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS NOMINATED. FOR THE ADOPTION OF THE
1995 STOCK OPTION PLAN 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
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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.)