SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
National Home Health Care Corp.
---------------------------------------------
(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):
4. Proposed maximum aggregate value of transaction:
<PAGE>
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>
NATIONAL HOME HEALTH CARE CORP.
700 White Plains Road
Scarsdale, New York 10583
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held December 7, 2000
---------------
TO THE STOCKHOLDERS OF NATIONAL HOME HEALTH CARE CORP.:
The annual meeting of stockholders (the "Meeting") of National Home
Health Care Corp. (the "Company") will be held at the offices of Parker Chapin
LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174, at
9:30 a.m., local time, on Thursday, December 7, 2000, for the following
purposes:
(1) To elect five directors of the Company to hold office until
the next annual meeting of stockholders and until their
successors shall have been duly elected and qualified; and
(2) To consider and transact such other business as may properly
come before the Meeting or any adjournment thereof.
A proxy statement, form of proxy and the annual report to stockholders
of the Company for the fiscal year ended July 31, 2000 are enclosed herewith.
Only holders of record of common stock of the Company at the close of business
on November 6, 2000 will be entitled to notice of, and to vote at, the Meeting
and any adjournments thereof.
By Order of the Board of Directors,
Steven Fialkow
Secretary
Scarsdale, New York
November 7, 2000
================================================================================
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
EXPECT TO BE PRESENT, PLEASE DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN
IT PROMPTLY USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
================================================================================
<PAGE>
NATIONAL HOME HEALTH CARE CORP.
700 White Plains Road
Scarsdale, New York 10583
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation
by the board of directors (the "Board of Directors") of National Home Health
Care Corp. (the "Company") of proxies in the form enclosed. Such proxies will be
voted at the annual meeting of stockholders of the Company to be held at the
offices of Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, New
York, New York 10174, at 9:30 a.m., local time, on Thursday, December 7, 2000
(the "Meeting") and at any adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders.
The principal executive offices of the Company are located at 700 White
Plains Road, Scarsdale, New York 10583. This Proxy Statement and accompanying
form of proxy are being mailed on or about November 7, 2000 to all stockholders
of record at the close of business on November 6, 2000 (the "Record Date").
Any stockholder giving a proxy has the power to revoke the same at any
time before it is voted. The cost of soliciting proxies will be borne by the
Company. The Company has no contract or arrangement with any party in connection
with the solicitation of proxies. Following the mailing of the proxy materials,
solicitation of proxies may be made by officers and employees of the Company by
mail, telephone, telegram or personal interview. Properly executed proxies will
be voted in accordance with instructions given by stockholders at the places
provided for such purpose in the accompanying proxy. Unless contrary
instructions are given by stockholders, the shares represented by such proxies
are intended to be voted in favor of the election of the five nominees for
directorship named herein.
VOTING SECURITIES
Stockholders of record at the close of business on the Record Date will
be entitled to notice of, and to vote at, the Meeting or any adjournments
thereof. On the Record Date, there were 4,946,458 outstanding shares of common
stock, par value $.001 per share, of the Company (the "Common Stock"). Each
holder of Common Stock is entitled to one vote for each share held by such
holder. The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Meeting. Proxies submitted which contain abstentions or broker non-votes will be
deemed present at the Meeting in determining the presence of a quorum.
Shares of Common Stock that are voted to abstain with respect to any
matter will be considered cast with respect to that matter. Shares subject to
broker non-votes with respect to any matter will not be considered cast with
respect to that matter.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise indicated, the shares represented by all proxies
received by the Board of Directors will be voted at the Meeting in accordance
with their terms and, in the absence of contrary instructions, for the election
of Frederick H. Fialkow, Steven Fialkow, Ira Greifer, M.D., Bernard Levine, M.D.
and Robert C. Pordy, M.D. to serve until the next annual meeting of stockholders
and until their successors are elected and qualified. Although it is anticipated
that each nominee will be available to serve as a director, should any nominee
be unavailable to serve, the persons named in the proxies have discretionary
authority to vote the proxies for one or more alternative nominees who will be
designated by the Board of Directors.
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the
nominees for director and the executive officers of the Company:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED PRESENT POSITION
NAME AGE DIRECTOR WITH THE COMPANY
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Frederick H. Fialkow 69 1985 Chairman of the Board of Directors
Bernard Levine, M.D. 72 1983 Director
Steven Fialkow 41 1991 President, Chief Executive Officer, Secretary and
Director
Ira Greifer, M.D. 69 1983 Director
Robert C. Pordy, M.D. 43 1995 Director
Robert P. Heller 39 -- Vice President of Finance and Chief Financial
Officer
Richard Garofalo 49 -- President of Health Acquisition Corp.
</TABLE>
The Company's directors are elected at each annual meeting of
stockholders of the Company to serve for a term of one year or until their
successors are duly elected and qualified. Officers serve at the discretion of
the Board of Directors. The terms of office of all officers and directors expire
at the time of the annual meeting each year.
INFORMATION ABOUT DIRECTORS AND NOMINEES
The following is a brief summary of the background of each director and
nominee:
-2-
<PAGE>
FREDERICK H. FIALKOW has been Chairman of the Board of Directors of the
Company since February 1988, and was Chief Executive Officer from February 1988
until December 1999 and President from February 1988 until October 1997. He has
been a Director of the Company since April 1985. Frederick H. Fialkow is the
father of Steven Fialkow.
BERNARD LEVINE, M.D., has been a Director of the Company since July
1983. For more than 20 years he has been a Professor of Internal Medicine at New
York University School of Medicine with a sub-specialty in Allergy and
Immunology. Dr. Levine devotes a portion of his time as a private consultant to
the health care industry.
STEVEN FIALKOW has been a Director of the Company since December 1991,
and has served as Secretary since September 1995, as President since October
1997 and as Chief Executive Officer since December 1999. He served as Chief
Operating Officer from October 1997 until December 1999, and as Executive Vice
President of New England Home Care, Inc. from August 1995 until October 1997. He
also served as Executive Vice President of Health Acquisition Corp. from May
1994 until August 1995, as President of National HMO (New York), Inc. from April
1989 until April 1994 and as Vice President of National HMO (New York), Inc.
from August 1984 until March 1989. Steven Fialkow is a certified public
accountant. He is the son of Frederick H. Fialkow.
IRA GREIFER, M.D. has been a Director of the Company since July 1983.
He has been a Professor and Director of Pediatrics at the Children's Kidney
Center of the Montefiore Medical Center - Albert Einstein College of Medicine
since 1966. He also is the President of National Kidney Foundation of New
York/New Jersey, Inc., a not-for-profit organization with programs in the areas
of research on kidney and related diseases, public and patient educational
services and professional education.
ROBERT C. PORDY, M.D., has been a director of the Company since
December 1995. Since April 1993, Dr. Pordy has served as Director of
International Cardiovascular Clinical Research at Hoffman-La Roche Inc., a
biopharmaceutical company.
INFORMATION ABOUT NON-DIRECTORS EXECUTIVE OFFICERS
RICHARD GAROFALO has served as President of Health Acquisition Corp.
since January 1988.
ROBERT P. HELLER, a certified public accountant, has served as Vice
President of Finance and Chief Financial Officer of the Company since March
1989. Prior thereto, he was an accountant with Richard A. Eisner & Company, LLP,
a firm of certified public accountants.
MEETINGS OF THE BOARD OF DIRECTORS AND OF COMMITTEES
The Board of Directors held four meetings and acted by unanimous
consent one time during the fiscal year ended July 31, 2000 ("Fiscal 2000").
Each director attended (i) all of the meetings of the Board of Directors during
Fiscal 2000 and (ii) all of the meetings of all the committees of the Board of
Directors on which he served during Fiscal 2000.
-3-
<PAGE>
The Company's audit committee is currently composed of Drs. Levine,
Pordy and Greifer. The function of the audit committee is to make
recommendations concerning the selection each year of independent auditors of
the Company, to review the effectiveness of the Company's internal accounting
methods and procedures and to determine through discussions with the independent
auditors whether any instructions or limitations have been placed upon them in
connection with the scope of their audit or its implementation. The audit
committee held one meeting during Fiscal 2000; in addition, its members met
informally from time to time.
The Company's compensation committee is currently composed of Drs.
Greifer and Levine. The function of the compensation committee is to review and
recommend to the Board of Directors policies, practices and procedures relating
to compensation of key employees and to administer employee benefit plans. The
compensation committee held two meetings during Fiscal 2000; in addition, its
members met informally from time to time.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under section 16(a) of the Securities Act of 1934, as amended, the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, are required to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of the Common Stock and other equity securities of the
Company. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company during the fiscal year ended July 31,
2000, there were no late or delinquent filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's compensation committee are Drs. Ira Greifer
and Bernard Levine, non-employee directors. No member of the compensation
committee has a relationship that would constitute an interlocking relationship
with executive officers or directors of another entity.
-4-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative return to holders of Common
Stock for the five years ended July 31, 2000 with the National Association of
Securities Dealers Automated Quotation System Market Index and an SIC group
index for the same period. The comparison assumes $100 was invested at the close
of business on July 31, 1995 in the Common Stock and in each of the comparison
groups, and assumes reinvestment of dividends. The Company paid no cash
dividends during the periods.
TOTAL STOCKHOLDERS RETURNS - DIVIDENDS REINVESTED
-------------------------------------------------
ANNUAL RETURN PERCENTAGE
<TABLE>
<CAPTION>
Years Ending
July July July July July
COMPANY NAME/INDEX 1996 1997 1998 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NATIONAL HOME HEALTH CARE 65.54 -9.46 -12.08 -12.14 17.07
NASDAQ US INDEX 8.96 47.57 17.69 42.92 42.33
PEER GROUP (1) -23.21 22.49 -1.43 40.22 4.36
INDEXED RETURNS
Base Years Ending
Period
COMPANY NAME/INDEX July July July July July July
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
NATIONAL HOME HEALTH CARE 100 165.54 149.88 131.78 115.78 135.54
NASDAQ US INDEX 100 108.96 160.79 189.22 270.43 384.91
PEER GROUP (1) 100 76.79 94.06 92.71 130.00 135.66
</TABLE>
----------------------------------
(1) The peer group selected by the Company includes those companies within the
Company's Standard Industrial Code ("SIC") of "home health care services". The
companies which comprise the SIC group are Almost Family Inc., Amedisys Inc.,
Apria Healthcare Group, Cancer Treatment Holding, Community Care Services Inc.,
Coram Healthcare Corp., DYNACQ International Inc., Help At Home Inc., Home
Health Corp. of America Inc., Hooper Holmes Inc., Hospital Staffing Services
Inc., Housecall Medical Resources Inc., In Home Health Inc., Infu-Tech Inc.,
Interwest Home Medical Inc., Matria Healthcare Inc., New York Health Care Inc.,
Numed Home Health Care Inc., Option Care Inc., Pediatric Services of America
Inc., PHC Inc./MA - CL A, Simione Central Holdings Inc., Staff Builders Inc.,
Star Multi Care Services, Transworld Healthcare Inc. and Wellpoint Health
Network - CLA.
-5-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The compensation committee is composed entirely of non-employee
directors and is responsible for developing and making recommendations to the
Board of Directors with respect to the Company's executive compensation
policies. In addition, the compensation committee, pursuant to authority
delegated thereto by the Board of Directors, determines the compensation to be
paid to the Company's chief executive officer and each other executive officer
of the Company.
The objectives of the Company's executive compensation program are to:
* Support the achievement of desired Company
performance
* Provide compensation that will attract and retain
superior talent and reward performance
The executive compensation program provides an overall level of
compensation opportunity that is competitive within the health care industry, as
well as with a broader group of companies of comparable size and complexity.
EXECUTIVE OFFICER COMPENSATION PROGRAM
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, specific performance-based bonuses
and various benefits, including medical and pension plans generally available to
employees of the Company. Since the employment agreements entered into between
the Company and its executive officers in 1997, amendments have been made to the
compensation arrangements of Messrs. Frederick Fialkow, Steven Fialkow, Garofalo
and Heller.
See "Executive Compensation--Employment and Related Agreements."
BASE SALARY
Base salary levels for the Company's executive officers are
competitively set relative to companies in the health care industry. In
determining salaries, the compensation committee also takes into account
individual experience and performance and specific issues particular to the
Company.
-6-
<PAGE>
STOCK OPTION PROGRAM
The stock option program is the Company's long-term incentive plan for
providing an incentive to key employees (including directors and officers who
are key employees) and to directors who are not employees of the Company.
1992 AND 1999 STOCK OPTION PLANS
The 1992 and 1999 Stock Option Plans authorize the compensation
committee to award key executives stock options. The 1992 Stock Option Plan has
been exhausted as to shares available for grant thereunder. Options granted
under the 1999 Stock Option Plan may be granted containing terms determined by
the compensation committee, including exercise period and price; provided,
however, that such plan requires that the exercise price may not be less than
the fair market value of the Common Stock on the date of the grant and that the
exercise period may not exceed ten years, subject to further limitations.
BENEFITS
The Company provides to executive officers medical and pension benefits
that generally are available to Company employees. The amount of perquisites, as
determined in accordance with the rules of the SEC relating to executive
compensation, did not exceed 10% of salary for Fiscal 2000.
BONUS
Following consultations with its financial advisor and in light of the
compensation committee's satisfaction with the performance of management, the
Company provides to certain executive officers bonuses based on performance
and/or a change of control of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
During Fiscal 2000, the compensation committee discussed amending the
employment agreements of the Company's executive officers, including Frederick
H. Fialkow, who was the Company's Chief Executive Officer from February 1988
until December 1999 (whereupon he retained his position as Chairman of the
Board), and Steven Fialkow, who became the Company's Chief Executive Officer in
December 1999. Each employment agreement became effective on November 1, 1997
and expires on November 1, 2002, except Mr. Fialkow's employment agreement,
which expires on November 30, 2003. After acknowledgment of the achievements and
performance of each of the executive officers, including Messrs. Fialkow, the
compensation committee authorized the Company to enter into amendments to each
employment agreement with each such executive officer. The employment agreements
as amended to date are described under the caption "Executive
Compensation--Employment and Related Agreements." With respect to Frederick H.
Fialkow, the only material change to his employment compensation terms in the
Fiscal 2000 amendment was the deletion of the $150,000 limit on his
performance-based bonus. With respect to Steven H. Fialkow, the only material
change to his employment compensation terms in the Fiscal 2000 amendment was
-7-
<PAGE>
the increase in his base salary to $265,000 per year. In making these
compensation decisions, the compensation committee specifically considered the
Company's recent revenue and earnings performance in the context of the very
difficult time for the Company's industry, as well as the increased risk of loss
of qualified management personnel.
In addition, during Fiscal 2000 the compensation committee granted to
the Company's four executive officers, pursuant to the Company's 1999 Stock
Option Plan, options to purchase an aggregate of 200,000 shares of Common Stock.
The options were granted at an exercise price equal to the fair market value of
the Common Stock on the date of grant and for a term of ten years (except with
respect to Frederick H. Fialkow, for whom the exercise price is 110% of fair
market value and the term is five years). The compensation committee agreed that
the stock options, in addition to stock options granted in prior years,
represented a valuable method of retaining and incentivizing valued employees,
particularly in light of the adverse circumstances of the Company's industry.
Ira Greifer, M.D.
Bernard Levine, M.D.
Members of the Compensation Committee
STANDARD REMUNERATION OF DIRECTORS
The Company's non-employee directors are paid a fee of $3,500 for each
meeting of the Board of Directors attended.
-8-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock at November 2, 2000 by (i) each person or
group known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock; (ii) each nominee for director of the
Company; (iii) each of the executive officers named in the Summary Compensation
Table herein under "Executive Compensation;" and (iv) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (1) OF CLASS
------------------- --------------------------- --------
<S> <C> <C>
Frederick H. Fialkow 1,796,407 (2)
700 White Plains Road 35.2%
Scarsdale, NY 10583
Bernard Levine, M.D. 729,846 (3)
210 Riverside Drive 14.7%
New York, NY 10025
Steven Fialkow 172,854 (4)
700 White Plains Road 3.4%
Scarsdale, NY 10583
Ira Greifer, M.D. 48,672 (5)
150 Executive Drive *
Manhasset, NY 11040
Robert C. Pordy, M.D. 6,092(6)
140 East 72nd Street *
New York, NY 10021
Richard Garofalo 74,843 (7)
99 Rustic Avenue 1.5%
Medford, NY 11763
Robert P. Heller 64,594 (8)
617 Fir Court 1.3%
Norwood, NJ 07648
Trafalgar Management 425,802 (9)
N.V.1-7 Willenstad 8.6%
Curacao, Netherlands Antilles
Heartland Advisors, Inc. 395,000 (10)
790 North Milwaukee Street 7.9%
Milwaukee, WI 53202
Dimensional Fund Advisors Inc. 250,639 (11)
1299 Ocean Avenue 5.1%
Santa Monica, CA 90401
All executive officers and directors, 2,893,308 (12)
as a group (7 persons) 53.9%
</TABLE>
------------------------------------
* Less than 1%.
-9-
<PAGE>
(1) Includes, where indicated, shares allocated to certain individuals
under the Company's Savings and Stock Investment Plan (the "Savings
Plan") as of June 30, 2000. Under the terms of the Savings Plan, if a
participant fails to give timely instructions as to the voting of
shares of Common Stock held in a participant's account, the trustee of
the Plan will vote such shares in the same proportion as it votes all
of the shares for which such trustee receives instructions.
(2) Does not include 546 shares of Common Stock owned by Mr. Fialkow's
wife, as to which shares Mr. Fialkow disclaims beneficial ownership.
Includes 77,779 and 75,000 shares of Common Stock that may be acquired
pursuant to currently exercisable options granted under the Company's
1992 Stock Option Plan (the "1992 Plan") and 1999 Stock Option Plan
(the "1999 Plan"), respectively, and 66,963 shares of Common Stock
allocated to Mr. Fialkow's account under the Savings Plan.
(3) Includes 5,000 shares of Common Stock that may be acquired pursuant to
currently exercisable options granted under the 1992 Plan.
(4) Represents 64,747 and 75,000 shares of Common Stock that may be
acquired pursuant to currently exercisable options granted under the
1992 Plan and 1999 Plan, respectively, and 33,107 shares of Common
Stock allocated to Mr. Fialkow's account under the Savings Plan.
(5) Includes 5,000 shares of Common Stock that may be acquired pursuant to
currently exercisable options granted under the 1992 Plan.
(6) Includes 5,000 shares of Common Stock that may be acquired pursuant to
currently exercisable options granted under the 1992 Plan.
(7) Includes 41,227 and 25,000 shares of Common Stock that may be acquired
pursuant to currently exercisable options granted under the 1992 Plan
and 1999 Plan, respectively, and 6,978 shares of Common Stock allocated
to Mr. Garofalo's account under the Savings Plan.
(8) Includes 25,556 and 25,000 shares of Common Stock that may be acquired
pursuant to currently exercisable options granted under the 1992 Plan
and 1999 Plan, respectively, and 12,638 shares of Common Stock
allocated to Mr. Heller's account under the Savings Plan.
(9) The amount and nature of beneficial ownership of these shares of Common
Stock by Trafalgar Management, N.V. ("Trafalgar") is based solely on
the records of the Company's transfer agent, American Stock Transfer &
Trust Company. Trafalgar has the power to vote, direct the vote,
dispose of, or direct the disposition of, these shares. The Board of
Directors has no independent knowledge of the accuracy or completeness
of the information set forth by such transfer agent, but has no reason
to believe that such information is not complete or accurate.
(10) The amount and nature of beneficial ownership of these shares by
Heartland Advisors, Inc. is based solely on the Schedule 13G filings as
submitted thereby. The Company has no independent knowledge of the
accuracy or completeness of the information set forth in such Schedule
13G filings, but has no reason to believe that such information is not
complete or accurate.
(11) Dimensional Fund Advisors Inc. has provided to the Company the
information regarding the amount and nature of beneficial ownership of
these shares as of September 30, 2000.
(12) Includes 224,309 and 200,000 shares of Common Stock which may be
acquired pursuant to currently exercisable options granted under the
1992 Plan and 1999 Plan, respectively, and 119,666 shares of Common
Stock allocated under the Savings Plan.
-10-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long term compensation during the Company's last three fiscal years of the
Company's Chief Executive Officer and other most highly compensated executive
officers of the Company, whose salary and bonus for Fiscal 2000 exceeded
$100,000, for services rendered in all capacities to the Company and its
subsidiaries:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
FISCAL ------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) OPTIONS (#) COMPENSATION ($)
--------------------------- ---- ------------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Frederick H. Fialkow
Chairman of the Board and 2000 $305,000 $135,784(1) 75,000 $11,991(5)
Chief Executive Officer 1999 298,333 44,765(2) 77,779(4) 8,804(6)
(until December 1999) 1998 285,000 61,499(3) -- 3,758
Steven Fialkow
President, Chief Executive 2000 220,277 34,915 75,000 12,138(8)
Officer (since December 1999) 1999 172,674 -- 34,747(7) 47,811(9)
and Secretary 1998 150,742 -- 30,000 3,890
Robert P. Heller 2000 140,000 14,138 25,000 12,030(11)
Vice President of Finance and 1999 138,338 -- 15,556(10) 23,650(12)
Chief Financial Officer 1998 119,962 -- 10,000 3,134
Richard Garofalo 2000 235,000 5,819 25,000 12,035(14)
President of 1999 157,500 53,144 21,227(13) 32,293(15)
Health Acquisition Corp. 1998 157,500 67,502 20,000 5,006
</TABLE>
--------------------
(1) Includes payment of $51,585 for the compounded cost of living increase
in salary compensation pursuant to Mr. Fialkow's employment agreement
with the Company.
(2) Represents payment for the compounded cost of living increase in salary
compensation pursuant to Mr. Fialkow's employment agreement with the
Company.
(3) Includes payment of $39,446 for the compounded cost of living increase
in salary compensation pursuant to Mr. Fialkow's employment agreement
with the Company.
(4) This option was granted to Mr. Fialkow on April 27, 1999,
simultaneously with the repurchase by the Company from Mr. Fialkow of
an option to purchase up to 81,885 shares of Common Stock.
(5) Includes $5,191 paid to Mr. Fialkow as health insurance coverage and
$6,800 representing the Company's matching contribution as deferred
compensation under the Company's Savings Plan pursuant to Section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code")
(6) Includes $7,793 representing the Company's matching contribution as
deferred compensation under the Company's Savings Plan pursuant to
Section 401(k) of the Code, and $71,011 representing the difference
-11-
<PAGE>
($0.87 per share) between the price paid by the Company to Mr. Fialkow
for the repurchase of an option to purchase 81,885 shares of Common
Stock ($3.50 per share) and the exercise price of such option ($2.63
per share).
(7) This option was granted to Mr. Fialkow on April 27, 1999,
simultaneously with the repurchase by the Company from Mr. Fialkow of
an option to purchase up to 36,581 shares of Common Stock.
(8) Includes $5,338 paid to Mr. Fialkow as health insurance coverage and
$6,800 representing the Company's matching contribution as deferred
compensation under the Company's Savings Plan pursuant to Section
401(k) of the Code.
(9) Includes $7,334 representing the Company's matching contribution as
deferred compensation under the Company's Savings Plan pursuant to
Section 401(k) of the Code, and $40,477 representing the difference
($1.11 per share) between the price paid by the Company to Mr. Fialkow
for the repurchase of an option to purchase 36,581 shares of Common
Stock ($3.50 per share) and the exercise price of such option ($2.39
per share).
(10) This option was granted to Mr. Heller on April 27, 1999, simultaneously
with the repurchase by the Company from Mr. Heller of an option to
purchase up to 16,377 shares of Common Stock.
(11) Includes $5,230 paid to Mr. Heller as health insurance coverage and
$6,800 representing the Company's matching contribution as deferred
compensation under the Company's Savings Plan pursuant to Section
401(k) of the Code.
(12) Includes $5,529 representing the Company's matching contribution as
deferred compensation under the Company's Savings Plan pursuant to
Section 401(k) of the Code, and $18,121 representing the difference
($1.11 per share) between the price paid by the Company to Mr. Heller
for the repurchase of an option to purchase 16,377 shares of Common
Stock ($3.50 per share) and the exercise price of such option ($2.39
per share).
(13) This option was granted to Mr. Garofalo on April 27, 1999,
simultaneously with the repurchase by the Company from Mr. Garofalo of
an option to purchase up to 22,347 shares of Common Stock.
(14) Includes $5,235 paid to Mr. Garofalo as health insurance coverage and
$6,800 representing the Company's matching contribution as deferred
compensation under the Company's Savings Plan pursuant to Section
401(k) of the Code.
(15) Includes $7,566 representing the Company's matching contribution as
deferred compensation under the Company's Savings Plan pursuant to
Section 401(k) of the Code, and $24,727 representing the difference
($1.11 per share) between the price paid by the Company to Mr. Garofalo
for the repurchase of an option to purchase 22,347 shares of Common
Stock ($3.50 per share) and the exercise price of such option ($2.39
per share).
-12-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
The following table contains information at July 31, 2000 relating to
the number of options granted during the 2000 fiscal year to those individuals
listed in the Summary Compensation Table. All options are currently exercisable:
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED ANNUAL
UNDERLYING OPTIONS GRANTED RATES OF STOCK PRICE
OPTIONS TO EMPLOYEES IN EXERCISE OR APPRECIATION FOR
NAME GRANTED FISCAL 2000 BASE PRICE EXPIRATION DATE OPTION TERMS
---- ------- ----------- ---------- --------------- -------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Frederick H. Fialkow 75,000 30.5% $4.675 December 6, 2004 $ 56,189 $162,562
Steven Fialkow 75,000 30.5% $4.25 December 6, 2009 $172,369 $508,087
Robert P. Heller 25,000 10.2% $4.25 December 6, 2009 $ 66,831 $169,362
Richard Garofalo 25,000 10.2% $4.25 December 6, 2009 $ 66,831 $169,362
</TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
---------------------------------------------------------------------
The following table contains information at July 31, 2000 relating to
the number of options exercised during the 2000 fiscal year and the number and
value of unexercised options held by those individuals listed in the Summary
Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT AT FISCAL YEAR-END
ACQUIRED FISCAL YEAR-END EXERCISABLE/
ON EXERCISE VALUE EXERCISABLE/ ------------
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
---- -------- ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Frederick H. Fialkow ---- ---- 152,779 / 0 39,667 / 0
Steven Fialkow ---- ---- 139,747 / 0 49,153 / 0
Robert P. Heller ---- ---- 50,556 / 0 19,861 / 0
Richard Garofalo ---- ---- 66,227 / 0 24,823 / 0
------------------
</TABLE>
(1) Determined based on the fair market value of underlying securities (the
closing bid price ($4.50) per share of Common Stock on the Nasdaq National
Market) at fiscal year end (July 31, 2000), minus the exercise price.
-13-
<PAGE>
EMPLOYMENT AND RELATED AGREEMENTS
Frederick H. Fialkow. Effective December 1, 1998, the Company entered
into an amended and restated employment agreement with Mr. Fialkow expiring
November 30, 2003, pursuant to which, as amended to date, he is employed as the
Company's Chairman of the Board. The agreement provides for a base amount of
$305,000 upon which Mr. Fialkow's annual salary is calculated (before giving
effect to cost of living adjustments). In addition, Mr. Fialkow is entitled to
receive an annual bonus in an amount equal to 5% of the Company's consolidated
net income (before income taxes) in each year in which the consolidated net
income is in excess of $3,000,000. The employment agreement was amended as of
August 1, 2000 to delete the limit of such bonus to $150,000.
Steven Fialkow. Effective November 1, 1997, the Company entered into an
employment agreement with Mr. Fialkow expiring November 1, 2002, pursuant to
which, as amended to date, he is employed as the Company's President, Chief
Executive Officer and Secretary. The agreement was amended as of August 1, 2000
to increase the annual base salary from $230,000 to $265,000. In addition,
pursuant to the agreement Mr. Fialkow is entitled to receive an annual bonus in
an amount equal to 3% of the amount by which the Company's income from
operations in any fiscal year exceeds $3,300,000.
Robert P. Heller. Effective November 1, 1997, the Company entered into
an employment agreement with Mr. Heller expiring November 1, 2002, pursuant to
which, as amended to date, he is employed as the Company's Vice President of
Finance, Chief Financial Officer and Treasurer. The agreement was amended as of
August 1, 2000 to increase the annual base salary from $140,000 to $160,000 and,
commencing with fiscal 2000, to entitle Mr. Heller to receive an annual bonus in
an amount equal to 1% of the amount by which the Company's income from
operations in any fiscal year exceeds $3,300,000.
Richard Garofalo. Effective November 1, 1997, the Company entered into
an employment agreement with Mr. Garofalo expiring November 1, 2002, pursuant to
which, as amended to date, he is employed as the President of Health Acquisition
Corporation, a wholly owned subsidiary of the Company. The agreement was amended
as of August 1, 2000 to increase the annual base salary from $157,500 to
$235,000. The Board of Directors also has authorized the Chairman of the Board
to grant bonuses to Mr. Garofalo based on performance.
The employment agreements of Messrs. Frederick H. Fialkow, Steven
Fialkow, Heller and Garofalo contain confidentiality and nondisclosure
provisions relating to the Company's business and all confidential information
developed or made known to each individual during his respective term of
employment. The agreements also contain certain non-competition provisions that
preclude Messrs. Frederick H. Fialkow, Steven Fialkow, Heller and Garofalo from
competing with the Company for a period of one year from the date of
termination.
-14-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A lease for office premises maintained by Health Acquisition Corp., a
wholly owned subsidiary of the Company, located in Queens, New York is with a
company owned (in whole or in part) and controlled by the Company's Chairman of
the Board of Directors and by Steven Fialkow, who is a director and the
President, Chief Executive Officer and Secretary of the Company. Rent expense
under such lease is approximately $226,000 per year. The Company believes that
such lease contains terms in the aggregate no less advantageous to the Company
than otherwise could have been obtained from an unrelated third party.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
On July 7, 1999, the Company dismissed Richard A. Eisner & Company, LLP
("Eisner"), and engaged Holtz Rubenstein & Co., LLP, as the Company's
independent public accountants. The decision to change auditors was approved by
the Company's audit committee. During the Company's two fiscal years ended July
31, 1997 and 1998, there were no disagreements with Eisner on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, nor did Eisner's reports on the financial statements for
such periods contain an adverse opinion or disclaimer of opinion, nor were such
reports qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the filing of a Current Report on Form 8-K dated
July 7, 1999 with the SEC regarding the Company's change in accountants, Eisner,
by letter addressed to the SEC and filed with the Form 8-K, indicated that it is
in agreement with the statements in the preceding sentence.
VOTING REQUIREMENTS
Assuming a quorum is present, a plurality of the votes cast at the
Meeting will be required for the election of directors. Shares of Common Stock
that are voted to abstain with respect to any matter will be considered cast
with respect to that matter. Shares subject to broker non-votes with respect to
any matter will not be considered cast with respect to that matter.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY RECOMMENDED A VOTE IN FAVOR OF
EACH NOMINEE NAMED IN THE PROXY.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Stockholders wishing to present proposals at the 2001 annual meeting of
stockholders and wishing to have their proposals presented in the proxy
statement distributed by the Board of Directors in connection with the 2001
annual meeting of stockholders must submit their proposals to the Company in
writing on or before July 10, 2001.
-15-
<PAGE>
OTHER MATTERS
The Board of Directors of the Company knows of no other matter to come
before the Meeting. However, if any matters requiring a vote of the stockholders
arise, it is the intention of the persons named in the enclosed form of proxy to
vote such proxy in accordance with their best judgment.
PROXIES
All stockholders are urged to fill in their choices with respect to the
matters to be voted on, sign and promptly return the enclosed form of proxy.
By Order of the Board of Directors
Steven Fialkow
Secretary
Scarsdale, New York
November 7, 2000
-16-
<PAGE>
PROXY PROXY CARD PROXY
----- -----
NATIONAL HOME HEALTH CARE CORP.
ANNUAL MEETING OF STOCKHOLDERS
------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of common stock of National Home Health Care Corp. (the
"Company") hereby revokes all previous proxies, acknowledges receipt of the
Notice of the Stockholders' Meeting to be held on December 7, 2000, and hereby
appoints Frederick H. Fialkow and Steven Fialkow, and each of them, as proxies
of the undersigned, with full power of substitution, to vote and otherwise
represent all of the shares of the undersigned at said meeting and at any
adjournment or adjournments thereof with the same effect as if the undersigned
were present and voting the shares. The shares represented by this proxy shall
be voted in the following manner:
(1) Election of directors
<TABLE>
<CAPTION>
<S> <C>
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote
(except as indicated) for all nominees listed below
</TABLE>
To withhold authority for any individual nominee, strike through that
nominee's name in the list below:
Frederick H. Fialkow
Steven Fialkow
Ira Greifer, M.D.
Bernard Levine, M.D.
Robert C. Pordy, M.D.
(2) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
[CONTINUED AND TO BE SIGNED ON REVERSE SIDE]
-17-
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED FOR EACH OF THE ABOVE NOMINEES AND FOR SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXY HOLDERS DEEM
ADVISABLE.
Dated: __________________, 2000
--------------------------------
Signature
--------------------------------
Print Name
--------------------------------
(Title, if appropriate)
This proxy should be signed by the stockholder exactly as his or her name
appears hereon. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign. If
a corporation, this proxy should be signed in full corporate name by the
president or other authorized officer and should bear the corporate seal. If a
partnership, please sign in partnership name by authorized person.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK,
SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE
