<PAGE>
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)(z))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Home Health Corporation of America, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Registrant as Specified In Its Charter)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[_] 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.):
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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.
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<PAGE>
HOME HEALTH CORPORATION OF AMERICA, INC.
2200 Renaissance Boulevard, Suite 300
King of Prussia, PA 19406
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held November 12, 1996
----------------------------
To the Shareholders of Home Health Corporation of America, Inc.:
The 1996 Annual Meeting of Shareholders of Home Health Corporation of
America, Inc. will be held on Tuesday, November 12, 1996, at 8:30 a.m.,
prevailing time, at the Adam's Mark Hotel, City Line Avenue and Monument Road,
Philadelphia, Pennsylvania, for the purpose of considering and acting upon the
following:
1. To elect one Class A director to hold office for a term of
three years and until his successor is duly elected and qualified, as described
in the accompanying Proxy Statement; and
2. To transact such other business as may properly come before
the Annual Meeting.
Only shareholders of record at the close of business on October 1,
1996, are entitled to notice of, and to vote at, the Annual Meeting or any
adjournment or postponement thereof.
If the Annual Meeting is adjourned for one or more periods aggregating
at least 15 days because of the absence of a quorum, those shareholders entitled
to vote who attend the reconvened Annual Meeting, if less than a quorum as
determined under applicable law, shall nevertheless constitute a quorum for the
purpose of acting upon any matter set forth in this Notice of Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
By Order of the Board of Directors
Bruce J. Colburn
Chief Financial Officer and Secretary
King of Prussia, Pennsylvania
October 22, 1996
<PAGE>
HOME HEALTH CORPORATION OF AMERICA, INC.
2200 Renaissance Boulevard, Suite 300
King of Prussia, PA 19406
(610) 272-1717
-------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
--------------------------
The accompanying proxy is solicited by the Board of Directors of Home
Health Corporation of America, Inc. (the "Company" or "HHCA") for use at the
1996 Annual Meeting of Shareholders (the "Meeting") to be held on Tuesday,
November 12, 1996, at 8:30 a.m., prevailing time, at the Adam's Mark Hotel, City
Line Avenue and Monument Road, Philadelphia, Pennsylvania, and any adjournments
or postponements thereof. This Proxy Statement and accompanying proxy card are
first being mailed to shareholders on or about October 22, 1996.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited in person or by telephone,
telegraph or teletype by officers, directors or employees of the Company,
without additional compensation. Upon request, the Company will pay the
reasonable expenses incurred by record holders of the Company's Common Stock who
are brokers, dealers, banks or voting trustees, or their nominees, for mailing
proxy material and annual shareholder reports to the beneficial owners of the
shares they hold of record.
Only shareholders of record, as shown on the transfer books of the Company,
at the close of business on October 1, 1996 (the "Record Date") are entitled to
notice of, and to vote at, the Meeting. On the Record Date, there were
8,090,007 shares of Common Stock outstanding.
Proxies in the form enclosed, if properly executed and received in time for
voting, and not revoked, will be voted as directed on the proxies. If no
directions to the contrary are indicated, the persons named in the enclosed
proxy will vote all shares of Common Stock "for" the election of all nominees
for directors hereinafter named. Sending in a signed proxy will not affect a
shareholder's right to attend the Meeting and vote in person since the proxy is
revocable. Any shareholder who submits a proxy has the power to revoke it by,
among other methods, giving written notice to the Secretary of the Company at
any time before the proxy is voted.
The presence, in person or represented by proxy, of the holders of a
majority of the outstanding shares of Common Stock will constitute a quorum for
the transaction of business at the Meeting. All shares of the Company's Common
Stock present in person or represented by proxy and entitled to vote at the
Meeting, no matter how they are voted or whether they abstain from voting, will
be counted in determining the presence of a quorum. If the Meeting is adjourned
because of the absence of a quorum, those shareholders entitled to vote who
attend the adjourned meeting, although constituting less than a quorum as
provided herein, shall nevertheless constitute a quorum for the purpose of
electing directors. If the Meeting is adjourned for one or more periods
aggregating at least 15 days because of the absence of a quorum, those
shareholders entitled to vote who attend the reconvened Meeting, if less than a
quorum as determined under applicable law, shall nevertheless constitute a
quorum for the purpose of acting upon any matter set forth in the Notice of
Annual Meeting.
Each share of Common Stock is entitled to one vote on each matter which may
be brought before the Meeting. The election of directors will be determined by a
plurality vote and the nominee receiving the most "for" votes will be elected.
Approval of any other proposal will require the affirmative vote of a majority
of the shares cast on the proposal. Under the Pennsylvania Business Corporation
Law, an abstention, withholding of authority to vote or broker non-vote will not
have the same legal effect as an "against" vote and will not be counted in
determining whether the proposal has received the required shareholder vote.
1
<PAGE>
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall consist of
not fewer than 3 nor more than 9 directors, with the exact number to be fixed by
the Board of Directors. The Board of Directors has fixed the number of
directors at four. Pursuant to the Bylaws of the Company, the directors are
divided into three classes, which is required to be as nearly equal in number as
possible. One class of directors is to be elected annually for a term of three
years. The Board of Directors is currently comprised of two classes (Class A and
Class B) of one director each and one class (Class C) of two directors.
At the Meeting, shareholders will elect one Class A director to serve for a
term of three years and until his successor is elected and qualified. Unless
directed otherwise, the persons named in the enclosed proxy intend to vote such
proxy "for" the election of the listed nominee or, in the event of inability of
the nominee to serve for any reason, for the election of such other person as
the Board of Directors may designate to fill the vacancy. The Board has no
reason to believe that the nominee will not be a candidate or will be unable to
serve.
The following table sets forth information, as of the Record Date,
concerning the Company's directors and nominee for election to the Board of
Directors. The director nominee, Joseph F. Trustey, was nominated by the Board
of Directors and currently serves as a director. The nominee has consented to
being named in the Proxy Statement and to serve if elected.
<TABLE>
<CAPTION>
Name Age Position Director Term
---- --- -------- Since Expires
----- -------
<S> <C> <C> <C> <C>
Bruce J. Feldman/(1)/ 47 Chairman of the Board, 1982 1998
President and Chief
Executive Officer
G. Michael Bellenghi /(1)(2)/ 48 Director 1994 1997
Harvey Machaver /(1)(2)/ 71 Director 1985 1998
Joseph F. Trustey /(2)(3)/ 34 Director 1995 1996
</TABLE>
- ---------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Nominee for Director.
The following information about the Company's directors and nominee for
director is based, in part, upon information supplied by such persons.
Bruce J. Feldman, the founder of the Company, has served as President,
Chief Executive Officer and Chairman of the Company since it was founded in
December 1982. Prior to founding the Company, Mr. Feldman owned a Medicare-
certified home health agency, which became a subsidiary of the Company in 1982.
G. Michael Bellenghi has been a director and executive officer of Paragon
Management Group, Inc., a health care management consulting company located in
Malvern, Pennsylvania since 1990. He is also a director and chief executive
officer of Recordex Services, Inc., a medical records retrieval company located
in Malvern, Pennsylvania. Mr. Bellenghi also serves as a director of F.Y.I.
Incorporated, the parent company of Recordex Services, Inc., a company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934.
Harvey Machaver has been employed since 1990 as a consultant with Scopus
Evaluation Services, a health care consulting firm located in New York, New York
("Scopus").
2
<PAGE>
Joseph F. Trustey has been employed since 1992 by Summit Partners, L.P., a
venture capital firm, and currently serves as a general partner of that firm.
From 1990 to 1992, Mr. Trustey was employed as a strategy consultant with the
management consulting firm of Bain & Company, Inc.
Shareholder Nominations
Pursuant to the Company's Bylaws, no shareholder is permitted to nominate a
candidate for election as a director unless the shareholder is present in person
at the annual meeting and provides, in writing, to the Secretary of the Company
(a) information about the candidate that is equivalent to the information
concerning the candidates nominated by the Board of Directors that was contained
in the Company's proxy statement for the immediately preceding meeting at which
directors were elected if the Corporation distributed a proxy statement to its
shareholders in connection with such election of directors or (b) if the Company
did not distribute a proxy statement, the following information about such
candidate: (i) name, age, business and residence address of such candidate; (ii)
any position, office or arrangement held with the Company by such candidate and
a description thereof; (iii) a description of any arrangement between the
candidate and any other person(s) (naming such person(s)) pursuant to which he
was nominated as a director; (iv) the candidate's principal occupation for the
five years prior to the election; (v) the number of shares of the Company's
stock beneficially owned by the candidate; (vi) a description of any commercial
transaction or series of transactions involving the candidate in which the
Company (or any of its affiliates) has a direct or indirect material interest in
the transaction, including the amount of the transaction and the amount of the
candidate's interest in the transaction; and (vii) evidence of the consent of
such candidate to serve as a director if elected. The Bylaws also require that
the nominating shareholder provide the Company with the following information:
(a) the name and address as they appear on the Company's stock transfer books of
such nominating shareholder and of the beneficial owners (if any) of the
Company's capital stock registered in such shareholder's name and name and
address of other shareholders known by the nominating shareholder to be
supporting such candidate; (b) the class and number of shares of the Company's
capital stock which are held of record, beneficially owned or represented by
proxy by such nominating shareholder and any other shareholders known to such
nominating shareholder to be supporting such candidate as of the record date for
the annual meeting in question (if such the shareholders of the Company have
then been given notice of such date) and as of the date of the nominating
shareholder's notice. This information is required to be provided in writing at
least four (4) months prior to the annual meeting of shareholders.
If the Board of Director or a designated committee thereof determines that
any shareholder nomination was not timely made in accordance with the terms of
the Bylaws or that the information provided by the nominating shareholder does
not satisfy the informational requirements of the Bylaws in any material
respect, then such nomination will not be considered at the annual meeting in
question. If neither the Board of Directors nor such committee makes such a
determination as to the nominating shareholder's compliance with the Bylaws, the
judge(s) of election for the annual meeting, or if same have not been appointed
pursuant to the Bylaws, the Chairman of the annual meeting is required to
determine whether a nomination was made in accordance with these provisions. If
the Board of Directors, a designated committee thereof, the judge(s) of election
or the Chairman of the annual meeting, as the case may be, determines that a
nomination was made in accordance with the Bylaws, the Chairman will so declare
at the annual meeting and ballots will be provided for use at the meeting with
respect to such candidate.
Board of Directors, Committees and Attendance at Meetings
The Board of Directors held three meetings during fiscal 1996. Each
director attended 75% or more of the meetings of the Board and committees of
which they were members during fiscal 1996.
The Board of Directors has appointed a Compensation Committee to review and
make recommendations to the Board regarding the salaries, bonuses and other
forms of compensation for executive officers of the Company and to administer
various compensation and benefit plans. During fiscal 1996, the Compensation
Committee held three meetings.
3
<PAGE>
The Board of Directors also has appointed an Audit Committee to, among
other things, review the Company's accounting practices, internal accounting
controls and financial results and to oversee the engagement of the Company's
independent auditors. The Audit Committee held one meeting during fiscal 1996.
The Board of Directors has not appointed a standing Nominating Committee.
Director Compensation
Directors' Fees. Each director of the Company who is not also an officer
or employee of the Company receives a fee of $1,000 for each meeting of the
Board or any committee of the Board attended.
Consulting Arrangements. The Company has a consulting arrangement with
Scopus, of which Mr. Machaver is the principal stockholder. In fiscal 1996,
1995 and 1994, the Company paid consulting fees of approximately $40,000,
$40,000 and $37,000, respectively, to Scopus.
Stock Options. Under the Company's 1995 Employee and Consultant Equity
Plan, each non-employee director was granted on November 13, 1995 an option to
purchase 10,000 shares of Common Stock at an exercise price of $7.50 (the
"Directors' Options"). The Directors Options are currently exercisable with
respect to 5,000 shares and will become exercisable with respect to an
additional 2,500 shares on each of November 13, 1996 and November 13, 1997.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock (i) by each person who is known by the
Company to be the beneficial owner of more than 5% of the Common Stock, (ii) by
each director of the Company, (iii) by each executive officer of the Company
named in the Summary Compensation Table and (iv) by all directors and executive
officers of the Company as a group. Except as otherwise indicated, all
information is as of the Record Date and the beneficial owners of the Common
Stock listed below have sole investment and voting power with respect to such
shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned /(2)/
----------------------------------
Name and Address of Beneficial Owner/(1)/
Number Percent
- ----------------------------------------- ---------------- ---------------
<S> <C> <C>
Bruce J. Feldman /(3)/.................... 935,853 11.6%
Wellington Management Company /(4)/
75 State Street
Boston, MA 02109........................ 443,700 5.9%
Joseph Trustey/(5)/....................... 174,262 2.2%
Summit Partners /(6)/
600 Atlantic Avenue..................... 166,762 2.1%
Suite 2800
Boston, MA 02210
Fred J. Nicholas/(7)/..................... 53,083 *
James J. Swiniuch/(8)/.................... 26,716 *
Joseph J. Grilli /(9)/.................... 11,666 *
G. Michael Bellenghi/(9)/................. 7,500 *
</TABLE>
4
<PAGE>
<TABLE>
Shares Beneficially Owned /(2)/
----------------------------------
Name and Address of Beneficial Owner/(1)/
Number Percent
- ----------------------------------------- ---------------- ---------------
<S> <C> <C>
Harvey Machaver/(10)/ ................... 32,091 *
All Directors and Executive
Officers as a group
(10 persons)/(11)/ ................... 1,249,170 15.4%
</TABLE>
- -----------------------------
* Denotes less than 1.0%
(1) Except as otherwise shown, the address of each person listed above is in
care of the Company, 2200 Renaissance Boulevard, Suite 300, King of
Prussia, PA 19406.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment
power with respect to the shares. Shares of Common Stock subject to
securities currently exercisable or exercisable within 60 days following
October 1, 1996, are deemed outstanding for computing the share
ownership and percentage ownership of the person holding such
securities, but are not deemed outstanding for computing the percentage
of any other person.
(3) Includes 95,238 shares of Common Stock held by the Company's Profit
Sharing Plan, of which Mr. Feldman is sole voting trustee, an aggregate
of 100,000 shares of Common Stock for which Mr. Feldman is the sole
voting trustee pursuant to voting trust agreements that expire upon Mr.
Feldman's death, 106,250 shares of Common Stock which may be acquired
upon the exercise of currently exercisable stock options, and 5,000
shares of Common Stock which may be acquired upon the exercise of
currently exercisable warrants.
(4) The shares of Common Stock are owned by a variety of investment advisory
clients of Wellington Management Company ("Wellington"), which clients
receive dividends with respect to and proceeds from the sale of such
shares. No such client is known to beneficially own more than 5% of the
Common Stock. Wellington has shared investment power with respect to all
443,700 of the shares of Common Stock and shared voting power with
respect to 245,700 of the shares of Common Stock. The information set
forth herein with respect to the beneficial ownership of the Common
Stock is as of December 31, 1995 and is derived from a Schedule 13-G,
dated February 9, 1996, filed by Wellington with the Securities and
Exchange Commission.
(5) Includes 152,175 shares of Common Stock held by Summit Investors II,
L.P. of which Mr. Trustey is a general partner. Also includes 7,500
shares which may be acquired by Mr. Trustey upon the exercise of
currently exercisable options.
(6) Includes 152,175 shares of Common Stock held by Summit Ventures II,
L.P. and 14,587 shares held by Summit Investors II, L.P.
(7) Includes 52,083 shares of Common Stock which may be acquired upon the
exercise of currently exercisable options.
(8) Includes 25,416 shares of Common Stock which may be acquired upon the
exercise of currently exercisable options.
(9) Represents shares of Common Stock which may be acquired upon the
exercise of currently exercisable options.
(10) Consists of 20,000 shares of Common Stock which may be acquired upon
the exercise of currently exercisable warrants, 7,500 shares of Common
Stock which may be acquired upon the exercise of currently exercisable
options and 4,591 shares held jointly with Mr. Machaver's spouse.
(11) Includes an aggregate of 247,914 shares of Common Stock which may be
acquired upon the exercise of currently exercisable options and
warrants.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent
5
<PAGE>
shareholders are required by regulation of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company during or with respect to the Company's
most recent fiscal year and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten-percent beneficial owners were
complied with during fiscal 1996.
EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee of the Company's Board of Directors establishes
the Company's general compensation policies, compensation plans and specific
compensation levels of the Company's most highly compensated executive officers,
and reviews the design, administration and effectiveness of compensation
programs for other key executives. The Compensation Committee's executive
compensation policies are designed to provide competitive levels of
compensation, integrate pay with the Company's annual and long-term performance
goals, reward above-average corporate performance, recognize individual
initiative and achievements, and assist the Company in attracting and retaining
qualified executives.
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long term incentive compensation in
the form of stock options and various benefits generally available to full-time
employees of the Company, including participating in group medical and life
insurance plans. The Company seeks to be competitive with Compensation programs
offered by companies of a similar size within the health care industry based on
formal and informal surveys conducted by the Company.
Decisions with respect to the compensation of Bruce Feldman, the Chairman,
President and Chief Executive Officer of the Company, Fred Nicholas, Chief
Operating Officer of the Company and James J. Swiniuch, Vice President, Mergers,
Acquisitions and Business Development of the Company for fiscal 1996 were made
by the Compensation Committee. Decisions with respect to the compensation of all
other executive officers of the Company are made by Mr. Bruce Feldman within the
guidelines established by the Compensation Committee.
Base Salary. Prior to the beginning of each fiscal year, financial and
-----------
other goals are established for the Company. Each executive officer is
responsible for accomplishing the goals pertaining to his area of
responsibility. At the end of each fiscal year, a performance review takes place
with each executive officer to measure performance against those objectives.
Base salary decisions are made based on the results of the performance review as
well as other considerations such as the executive officer's level of
responsibility, years of service with the Company and professional background.
Annual Incentive Compensation. For fiscal 1996 the Company established a
-----------------------------
performance based bonus plan which awarded to executive officers bonus
compensation up to 10% of base salary if certain financial goals were achieved.
Information concerning bonus compensation paid to certain executive officers
with respect to fiscal 1996 is set forth in the Summary Compensation Table.
6
<PAGE>
Stock Options. The Company uses its Employee and Consultant Equity Plan
-------------
(the "Plan") as a long-term incentive plan for executive officers and lay
employees. The objectives of the Plan with respect to executive officers are to
align the long-term interests of executive officers and shareholders by creating
a direct link between executive compensation and shareholder return and to
enable executives to develop and maintain a significant long-term equity
interest in the Company. The Plan authorizes the Compensation Committee to award
stock options to officers and key employees. Stock options granted to executive
officers are based upon the level and degree of responsibility of the positions
they hold. In general under the Plan, options are granted with an exercise price
equal to the fair market value of the Common Stock on the date of grant and are
exercisable according to a vesting schedule determined by the Compensation
Committee at the time of grant. In fiscal 1996, the Compensation Committee
granted options to purchase an aggregate of 293,500 shares of Common Stock under
the Plan. Information concerning the option grants to certain executive officers
is set forth in the Summary Compensation Table.
Determination of Compensation of Chief Executive Officer. The Compensation
--------------------------------------------------------
Committee based Mr. Feldman's compensation for fiscal 1996 in part on a survey
of compensation paid to the chief executive officers of companies comparable to
the Company. The Compensation Committee also considered Mr. Feldman's role in
developing acquisition opportunities for the Company, the achievement by the
Company of certain financial goals and the performance of the Common Stock.
Policy with Respect to Section 162(m) of the Internal Revenue Code.
------------------------------------------------------------------
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder (collectively, "Section 162(m)"), denies a
deduction to any publicly held corporation, such as the Company, for certain
compensation exceeding $1,000,000 paid during a taxable year to the chief
executive officer and the four other highest paid executive officers, excluding,
among other things, certain performance-based compensation. Where appropriate,
the Compensation Committee has taken action to reduce the impact of this
provision. For example, the Compensation Committee intends that the Employee and
Consultant Equity Plan qualify for the performance-based exclusion. The
Compensation Committee continually evaluates to what extent Section 162(m) will
apply to its other compensation programs.
THE COMPENSATION COMMITTEE
Harvey Machaver, Chairman
G. Michael Bellenghi
Joseph F. Trustey
7
<PAGE>
Summary Compensation Table
The following table sets forth certain information regarding the
compensation paid to the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for services rendered in
all capacities to the Company for fiscal 1996 and fiscal 1995 (collectively the
"named executive officers"):
<TABLE>
<CAPTION>
Long Term
Annual Compensation /(1)/ Compensation
------------------------- ------------
Securities
Fiscal Year Underlying All Other
Name and Principal Position Salary Bonus Options Compensation
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bruce J. Feldman, 1996 $254,000 $43,600 75,000 33,792/(2)/
President and Chief 1995 244,869 25,000 - 58,573/(3)/
Executive Officer
Fred J. Nicholas 1996 155,000 15,500 50,000 -
Chief Operating Officer, 1995 127,728 14,000 5,000 14,000/(4)/
Corporate
Joseph J. Grilli 1996 110,000 11,000 10,000 -
Chief Operating Officer, 1995 108,769 10,500 5,000 10,500/(4)/
Mid- Atlantic Region
James J. Swiniuch 1996 110,000 2,500 25,000 -
Vice President, Mergers, 1995 103,307 11,000 5,000 11,000/(4)/
Acquisitions and Business
Development
</TABLE>
- -----------------
(1) Does not include the value of perquisites provided to certain executive
officers which in the aggregate did not exceed the lesser of $50,000 or
10% of such officer's salary and bonus.
(2) Consists of $15,460 of premiums on a split-dollar life insurance policy
and $18,324 relating to indebtedness to the Company that was forgiven
upon the attainment of certain operating results.
(3) Consists of $25,000 contributed to the Company's pension and profit
sharing plan, $15,000 of premiums on a split-dollar life insurance
policy and $18,573 relating to indebtedness to the Company that was
forgiven upon the attainment of certain operating results.
(4) Represents contributions to the Company's pension and profit sharing
plan.
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning stock
options granted during fiscal 1996 to the named executive officers. The
following table also sets forth the potential realizable value over the term
of the options (the period from grant date to the expiration date), based on
assumed rates of stock appreciation
8
<PAGE>
of 5% and 10%, compounded annually. These amounts do not represent the Company's
estimate of future stock price. Actual realizable values, if any, of stock
options will depend on the future performance of the Common Stock.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation For
Option Term (1)
- --------------------------------------------------------------------------- -------------------------------------
Number of
Securities Percent of Total
Underlying Options Granted
Options to Employees In Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
- ----------------------- ----------- ----------------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce J. Feldman....... 75,000 25.6% $7.50 11/13/05 $353,753 $896,480
Fred S. Nicholas....... 25,000 8.5% 7.50 11/13/05 117,918 298,827
25,000 8.5% 9.00 3/08/06 141,501 358,592
Joseph J. Grilli....... 10,000 3.4% 7.50 11/13/05 47,167 119,531
James J. Swiniuch...... 25,000 8.5% 7.50 11/13/05 117,918 298,827
</TABLE>
- ------------------------
(1) Represents the difference between the market value of the Common Stock
for which the option may be assuming that the market exercised, value of
the Common Stock appreciates in value from the date of grant to the end
of the option term at annualized rates of 5% and 10%, respectively, and
the exercise price of the option. The rates of appreciation used in this
table are prescribed by regulations of the Securities and Exchange
Commission and are not intended to forecast future appreciation of the
market value of the Common Stock.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning the
exercise of stock options during fiscal 1996 and the number and value of
unexercised options held at the end of fiscal 1996 by the named executive
officers.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Year-End Fiscal Year-End(1)
---------------------- -----------------------
Shares Acquired Value
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------- ------------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Bruce J. Feldman - - 56,250/18,750 $341,016/$113,672
Fred J. Nicholas - - 27,083/32,917 218,355/172,895
Joseph J. Grilli - - 11,667/8,333 124,885/61,365
James J. Swiniuch - - 25,416/9,584 197,414/79,774
</TABLE>
- ------------------------
(1) Calculated by determining the difference between the fair value of the
securities underlying the Options on June 30, 1996 and the exercise price.
9
<PAGE>
Employment Agreements
Bruce J. Feldman. On September 1, 1995, the Company entered into an
employment agreement with Bruce J. Feldman, President and Chief Executive
Officer of the Company, for an initial term of three years, subject to automatic
annual extensions of one year on August 31, 1996 and each anniversary
thereafter. Pursuant to the terms of Mr. Feldman's employment agreement, Mr.
Feldman is entitled to receive (i) an annual base salary of $284,000, or such
higher amount as the Compensation Committee may determine (the "Base Salary"),
(ii) an annual cash bonus based on the Company's achievement of specified levels
of net income as determined by the Compensation Committee and (iii) a deferred
annuity program of $15,000 per year and other benefits at least equivalent to
those provided to the Company's other executive officers. The Base Salary will
be reviewed by the Compensation Committee on not less than an annual basis.
Pursuant to the employment agreement, Mr. Feldman is also entitled to receive a
car allowance of $9,000 per year and received a non-qualified stock option grant
to purchase 75,000 shares of Common Stock at a per share exercise price of
$7.50. Of the shares subject to this option 50% vested on November 13, 1995, 25%
vested on August 31, 1996 and the remaining 25% will vest on August 31, 1997.
Mr. Feldman's employment agreement may be terminated by the Company with
or without cause, which is defined to include, among other things, the material
breach of the employment agreement by Mr. Feldman, gross negligence in the
performance of his duties, conviction of a felony or commission of a material
act of dishonesty or breach of trust with respect to the Company. The employment
agreement may also be terminated by Mr. Feldman for good reason, which includes,
among other things, the demotion or removal of Mr. Feldman, a material
diminishment of his responsibilities, a reduction in his Base Salary, failure to
be re-elected to the Board or upon a change in control of the Company. In the
event of termination for good reason (including the Company's failure to renew
the term of the employment agreement) by Mr. Feldman, or without cause by the
Company, Mr. Feldman will be entitled to receive, among other things, regular
payments of his Base Salary for three years and have any unvested stock options
and awards accelerate and become fully exercisable. In the event of termination
by the Company for cause or for any other reason, Mr. Feldman will be entitled
to receive any unpaid salary and benefits through the date of termination. Under
the employment agreement, Mr. Feldman is prohibited from disclosing confidential
information during and after the term of the agreement. In addition, Mr. Feldman
is prohibited from soliciting employees or customers of the Company or engaging
or participating in any business which competes with the Company within a 100-
mile radius of any of the Company's branch offices while he is employed by the
Company and for one year thereafter or, in the event of termination by Mr.
Feldman for good reason (including the Company's failure to renew the term of
the employment agreement) or by the Company without cause, for three years
thereafter.
Fred J. Nicholas. The Company entered into an employment agreement,
dated as of January 1, 1995, with Fred J. Nicholas, Chief Operating Officer of
the Company, for a term of three and one-half years. Pursuant to the terms of
Mr. Nicholas's employment agreement, Mr. Nicholas is entitled to receive (i) a
base salary of at least $140,000 per year, (ii) incentive compensation as
determined by the Board of Directors and (iii) other benefits similar to those
provided to the Company's other officers. Mr. Nicholas's employment agreement
may be terminated with our without cause by either party. In the event of
termination by the Company without cause, Mr. Nicholas will be entitled, under
certain circumstances, to continue to receive regular payments of his base
salary for a period of six months after the date of his termination. In all
other cases, in the event that Mr. Nicholas's employment agreement is
terminated, he is entitled to receive unpaid salary and benefits earned up to
the date of termination. In the event that Mr. Nicholas's employment is
terminated for any reason other than without cause by the Company, he is
prohibited from competing with the Company for a period of two years after such
termination.
10
<PAGE>
James J. Swiniuch. The Company entered into an employment agreement,
dated as of March 1, 1994, with James J. Swiniuch, Vice President, Mergers,
Acquisitions and Business Development, for a term of two years. In August 1995,
the Company extended the term of Mr. Swiniuch's employment agreement to March 1,
1998. Pursuant ot the terms of Mr. Swiniuch's employment agreement, Mr. Swiniuch
is entitled to receive (i) a base salary of at least $100,000 per year, (ii)
incentive compensation as determined by the Board of Directors and (iii) other
benefits similar to those provided to the Company's other officers. Mr.
Swiniuch's employment agreement may be terminated with or without cause by
either party. In the event of termination by the Company without cause, Mr.
Swiniuch will be entitled, under certain circumstances, to continue to receive
regular payments of his base salary for a period of four months after the date
of this termination. In all other cases of termination, he is entitled to
receive unpaid salary and benefits earned up to the date of termination. In the
event that Mr. Swiniuch's employment is terminated for any reason other than
without cause by the Company, he is prohibited from competing with the Company
for a period of two years after such termination.
Joseph J. Grilli. The Company entered into an employment agreement,
dated as of July 1, 1996, with Joseph J. Grilli, Vice President, Mid-Atlantic
area, for a term of three years. Pursuant to the terms of Mr. Grilli's
employment agreement, Mr. Grilli is entitled to receive (i) a base salary of
$125,000 per year, (ii) incentive compensation as determined by the Board of
Directors, and (iii) other benefits similar to those provided to the Company's
other officers. Mr. Grilli's employment agreement may be terminated with or
without cause by either party. In the event of termination by the Company
without cause, Mr. Grilli will be entitled, under certain circumstances, to
continue to receive regular payments of his base salary for a period of 12
months after the date of his termination. In all other cases, in the event that
Mr. Grilli's employment agreement is terminated, he is entitled to receive
unpaid salary and benefits earned up to the date of termination. In the event
Mr. Grilli's employment is terminated for any reason other than without cause by
the Company, he is prohibited from competing with the Company for a period of
one year.
Certain Transactions
On June 30, 1992, Summit Investors II, L.P. and Summit Ventures II, L.P.
(the "Summit Partnerships"), the Company and certain of its subsidiaries and
affiliates entered into certain agreements (the "Summit Agreements"), pursuant
to which, for aggregate consideration of approximately $3.0 million, the Summit
Partnerships acquired: (i) a $2.5 million Senior Subordinated Note; (ii)
1,181,259 shares of Common Stock; and (iii) 50,000 shares of the Company's
Series B preferred stock. In November 1995, the Senior Subordinated Note and the
Series B Preferred Stock were repaid. Mr. Joseph F. Trustey, a director of the
Company, is a partner of Summit Partners L.P., an affiliate of the Summit
Partnerships.
On September 29, 1995, the Summit Partnerships provided $3.0 million in
financing to the Company. Of such amount, $2.0 million was redeemable preferred
stock and $1.0 million was a subordinated debenture. In addition, the Summit
Partnerships received a warrant to acquire 155,414 shares of Common Stock at a
nominal exercise price. In November 1995, the Company repaid the preferred stock
and the subordinated debenture.
On June 30, 1992, the Company loaned the principal sum of approximately
$95,000 to Bruce J. Feldman, its President and Chief Executive Officer. The loan
matures on June 30, 1997 and is payable annually with interest at the rate of 8%
per annum until paid in full. This note may be forgiven contingent upon the
Company achieving certain annual profit performance criteria. The profit
performance criteria was met for fiscal 1993, 1994, 1995 and 1996, resulting in
a total forgiveness to date of approximately $77,000. As of June 30, 1996, the
principal balance due on the loan was approximately $18,000.
11
<PAGE>
Stock Performance Graph
The graph which follows shows the cumulative total return on Common
Stock since November 8, 1995, the date the Common Stock began trading on the
Nasdaq National Market, compared with the cumulative total return of companies
on the Nasdaq National Market (U.S. Companies) and shares of all healthcare
institutions tracked by Standard and Poors ("S&P Health Care"). Cumulative
total return on the Common Stock or the index equals the total increase in
value since November 8, 1995, assuming reinvestment of all Common Stock. The
graph assumes that $100 was invested on November 8, 1995 in Common Stock and in
each of the indexes.
<TABLE>
<CAPTION>
November 8, 1995 June 30, 1996
---------------- -------------
<S> <C> <C>
HHCA $100 $181
Nasdaq National Market (U.S.) $100 $114
S&P Health Care $100 $119
</TABLE>
12
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1997 Annual Meeting of Shareholders must
be submitted to the Company by June 24, 1997 to receive consideration for
inclusion in the Company's Proxy Statement.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Coopers & Lybrand L.L.P.,
independent accountants, to serve as the Company's independent auditors for
the year ending June 30, 1997. A representative of Coopers & Lybrand, L.L.P.
is expected to be present at the Annual Meeting and to be available to respond
to appropriate questions. The representative will have the opportunity to make
a statement if he so desires.
OTHER MATTERS
The Company is not presently aware of any matters (other than
procedural matters) which will be brought before the Meeting which are not
reflected in the attached Notice of the Meeting. The enclosed proxy confers
discretionary authority to vote with respect to any and all of the following
matters that may come before the Meeting: (i) matters which the Company does
not know, a reasonable time before the proxy solicitation, are to be presented
at the Meeting; (ii) approval of the minutes of a prior meeting of shareholders,
if such approval does not amount to ratification of the action taken at the
meeting; (iii) the election of any person to any office for which a bona fide
nominee named in this Proxy Statement is unable to serve or for good cause will
not serve; (iv) any proposal omitted from this Proxy Statement and the form of
proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of
1934; and (v) matters incident to the conduct of the Meeting. In connection
with such matters, the persons named in the enclosed proxy will vote in
accordance with their best judgment.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for fiscal 1996.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR FISCAL 1996 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WITHOUT CHARGE EXCEPT FOR EXHIBITS TO THE REPORT, BY
SENDING A WRITTEN REQUEST TO:
HOME HEALTH CORPORATION OF AMERICA, INC.
2200 Renaissance Boulevard
Suite 300
King of Prussia, PA 19406
Attention: Tina Labant
By Order of the Board of Directors
Bruce J. Colburn
Chief Financial Officer and Secretary
King of Prussia, Pennsylvania
October 22, 1996
13
<PAGE>
- --------------------------------------------------------------------------------
HOME HEALTH CORPORATION OF AMERICA, INC.
KING OF PRUSSIA, PA
PROXY FOR 1996 ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 12, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Bruce J. Feldman, Bruce J.
Colburn and Tina Labant, and each of them, as attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to appear at the annual meeting of shareholders of
Home Heath Corporation of America, Inc. to be held on the 12th day of November,
1996, and at any postponement or adjournment thereof, and to vote all of the
shares of Home Heath Corporation of America, Inc. which the undersigned is
entitled to vote, with all the powers and authority the undersigned would
possess if personally present. The undersigned hereby directs that this proxy
be voted as marked on the reverse side hereof.
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THE PERSONS
NAMED HEREIN INTEND TO VOTE FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS
LISTED ON THE REVERSE SIDE HEREOF.
A MAJORITY OF SAID ATTORNEYS AND PROXIES PRESENT AND ACTING AT THE MEETING IN
PERSON OR BY THEIR SUBSTITUTES (OR IF ONLY ONE IS PRESENT AND ACTING, THEN THAT
ONE) MAY EXERCISE ALL THE POWERS CONFERRED HEREBY. DISCRETIONARY AUTHORITY IS
CONFERRED HEREBY AS TO CERTAIN MATTERS DESCRIBED IN THE PROXY STATEMENT.
(Continued and to be signed and dated on the reverse side)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR --
VOTES AS IN THIS
EXAMPLE. ---
WITHHOLD AUTHORITY
1. ELECTION OF FOR TO VOTE FOR THE
DIRECTOR: Joseph NOMINEES
F. Trustey [ ] [ ]
2. To transact such other business as FOR AGAINST ABSTAIN
may properly come before the meeting or [ ] [ ] [ ]
any postponement or adjournment thereof.
RECEIPT OF THE NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND
PROXY STATEMENT DATED OCTOBER 22, 1996 IS HEREBY ACKNOWLEDGED.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON, INCLUDING ANY OFFICIAL
POSITION OR REPRESENTATIVE CAPACITY.
Signature(s): ____________ Date: _________ Signature(s): _________ Date: _______
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
- --------------------------------------------------------------------------------
