<PAGE> 1
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 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ALMOST FAMILY, INC.
(Name of Registrant as Specified in Its Charter)
ALMOST FAMILY, INC.
(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 149-6(i) (1)
and B-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of other underlying value of transaction
computer pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
October 10, 2000
To Our Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders of
Almost Family, Inc. on Friday, November 3, 2000. The meeting will be held at the
Marriott Louisville East, 1903 Embassy Square Boulevard, Louisville, Kentucky,
at 10:30 a.m. local time.
Three matters will be voted on at this meeting. Please take the time to read
carefully each of the proposals for stockholder action described in the
accompanying proxy materials.
Whether or not you plan to attend, you can ensure that your shares are
represented at the meeting by promptly completing, signing and dating your proxy
form and returning it in the enclosed envelope. In the event you attend the
meeting you may revoke your proxy and vote your shares in person.
Thank you for your continued support of our Company.
Sincerely,
/s/ William B. Yarmuth
----------------------------------------------
William B. Yarmuth
Chairman of the Board,
President & CEO
<PAGE> 3
ALMOST FAMILY, INC.
100 Mallard Creek Road, Suite 400
Louisville, Kentucky 40207
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 3, 2000
To the Stockholders:
The Annual Meeting of Stockholders (the "Annual Meeting") of Almost Family, Inc.
(the "Company"), will be held at the Mariott Louisville East, 1903 Embassy
Square Boulavard, Louisville, Kentucky 40299, on Friday, November 3, 2000, at
10:30 a.m. local time for the following purposes:
(1) To elect a Board of eight directors to serve until the next annual meeting
of stockholders;
(2) To approve the Company's 2000 Stock Option Plan;
(3) To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditor for the fiscal year ending March 31, 2001; and
(4) To transact such other business as may properly come before the meeting or
any adjournments thereof.
A Proxy Statement describing matters to be considered at the Annual Meeting is
attached to this Notice. Only stockholders of record at the close of business on
September 20, 2000, are entitled to receive notice of and to vote at the
meeting.
By Order of the Board of Directors
/s/ C. Steven Guenthner
--------------------------------------------
C. Steven Guenthner
Secretary
Louisville, Kentucky
October 10, 2000
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN PROVIDED.
IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE> 4
ALMOST FAMILY, INC.
100 Mallard Creek Road, Suite 400
Louisville, Kentucky 40207
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 3, 2000
GENERAL INFORMATION
This Proxy Statement and accompanying proxy are being furnished in connection
with the solicitation of proxies by the Board of Directors (the "Board") of
Almost Family, Inc., a Delaware corporation (the "Company"), to be voted on at
the Annual Meeting of Stockholders (the "Annual Meeting") and any adjournments
thereof. The Annual Meeting will be held at the Louisville Marriott East, 1903
Embassy Square Boulevard, Louisville, Kentucky 40299, on Friday, November 3,
2000, at 10:30 a.m. local time for the purposes set forth in this Proxy
Statement and the accompanying Notice of Annual Meeting. This Proxy Statement
and accompanying proxy are first being mailed to stockholders on or about
October 10, 2000.
A stockholder signing and returning a proxy has the power to revoke it at any
time before the shares subject to it are voted by (i) notifying the Secretary of
the Company in writing of such revocation, (ii) filing a duly executed proxy
bearing a later date or (iii) attending the Annual Meeting and voting in person.
If the proxy is properly signed and returned to the Company and not revoked, it
will be voted in accordance with the instructions contained therein. Unless
contrary instructions are given, the proxy will be voted FOR the nominees for
director named in the Proxy Statement, FOR approval of the 2000 Stock Option
Plan, FOR the ratification of the appointment of the independent auditor as
described therein and in the discretion of proxy holders on such other business
as may properly come before the Annual Meeting.
The original solicitation of proxies by mail may be supplemented by telephone
and other means of communication and through personal solicitation by officers,
directors and other employees of the Company, at no compensation. Proxy
materials will also be distributed through brokers, custodians and other like
parties to the beneficial owners of the Company's common stock, par value $.10
per share (the "Common Stock"), and the Company will reimburse such parties for
their reasonable out-of-pocket and clerical expenses incurred in connection
therewith.
RECORD DATE AND VOTING SECURITIES
The Board has fixed the record date (the "Record Date") for the Annual Meeting
as the close of business on September 20, 2000. At the Record Date, there were
outstanding 3,151,163 shares of Common Stock (each of which is entitled to one
vote per share on all matters to be considered at the Annual Meeting). A
majority of the total number of shares of outstanding Common Stock present in
person or by proxy is required to constitute a quorum to transact business at
the
1
<PAGE> 5
Annual Meeting. Shares of common stock represented by properly executed proxies
received before the close of voting at the annual meeting will be voted as
directed by the stockholders, unless revoked as described below. Under Delaware
law, proxies marked as abstentions are not counted as votes cast. In addition,
shares held in street name that have been designated by brokers on proxy cards
as not voted will not be counted as votes cast. If no instructions are given,
shares represented by executed but unmarked proxies will be voted FOR election
of the individuals nominated as directors and FOR approval of the proposals
being submitted to the Company's stockholders at the annual meeting. If any
other matter is brought before the annual meeting, shares represented by proxies
will be voted by the proxy holders as directed by a majority of the board of
directors.
A stockholder who completes and returns the proxy that accompanies this
proxy statement may revoke that proxy at any time before the closing of the
polls at the annual meeting. A stockholder may revoke a proxy by filing a
written notice of revocation with, or by delivering a duly executed proxy
bearing a later date to, the Secretary of the Company at the Company's main
office address at any time before the annual meeting. Stockholders may also
revoke proxies by delivering a duly executed proxy bearing a later date to the
inspector of election at the annual meeting before the close of voting, or by
attending the annual meeting and voting in person. The presence of a stockholder
at the annual meeting will not automatically revoke the stockholder's proxy.
SECURITY OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth as of March 31, 2000, certain information with
respect to the beneficial ownership of the Company's Common Stock of (i) each
executive officer of the Company named in the Summary Compensation Table set
forth herein under "Executive Compensation," (ii) each director or nominee for
director of the Company, (iii) all directors and executive officers as a group
and (iv) each person known to the Company to be the beneficial owner of more
than 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)(2)
----------------------------
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
DIRECTORS AND EXECUTIVE OFFICERS OWNERSHIP OF CLASS
-------------------------------- --------- --------
<S> <C> <C>
William B. Yarmuth 397,883(3) 12.04%
100 Mallard Creek Road, Suite 400
Louisville, KY 40207
Mary A. Yarmuth 397,883(4) 12.04%
C. Steven Guenthner 55,341(5) 1.74
Steven B. Bing 12,340(6) *
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C> <C>
Patrick B. McGinnis 21,129(7) *
Donald G. McClinton 27,049(8) *
Tyree G. Wilburn 21,000(9) *
Jonathan D. Goldberg 18,957(10) *
Wayne T. Smith 112,873(11) 3.57%
W. Earl Reed, III 40,000 1.27%
Patrick T. Lyles 23,546(12) *
Directors and Executive Officers as a
Group (11 persons) 730,118(13) 21.25%
OTHER FIVE PERCENT BENEFICIAL OWNERS
------------------------------------
HEALTHSOUTH Rehabilitation 1,015,101(14) 31.21%
Corporation
Two Perimeter Park South
Birmingham, AL 35243
Heartland Advisors, Inc. 308,900 9.80%
790 North Milwaukee Street
Milwaukee, WI 53202
Yarmuth Family Limited Partnership 157,723(15) 5.01%
100 Mallard Creek Road, Suite 400
Louisville, KY 40207
</TABLE>
----------
* Represents less than 1% of class.
(1) Based upon information furnished to the Company by the named persons, and
information contained in filings with the Securities and Exchange Commission
(the "Commission"). Under the rules of the Commission, a person is deemed to
beneficially own shares over which the person has or shares voting or investment
power or has the right to acquire beneficial ownership within 60 days. Unless
otherwise indicated, the named person has the sole voting and investment power
with respect to the number of shares of Common Stock set forth opposite such
person's name. Options exercisable within 60 days of March 31, 2000 have been
included.
(2) Assumes inclusion of the shares of Common Stock issuable upon exercise of
outstanding redeemable warrants; assumes conversion of Series A Convertible
Preferred Stock into Common Stock.
3
<PAGE> 7
(3) Includes 8,886 shares as to which Mr. Yarmuth shares voting and investment
power pursuant to a family trust and an option for 125,000 shares vested and
exercisable, and 29,500 exercisable options owned by Mrs. Yarmuth in addition to
32,427 shares owned directly by Mrs. Yarmuth.
(4) Includes the same ownership components as stated for Mr. Yarmuth.
(5) Includes 27,500 shares subject to currently exercisable options.
(6) Includes 12,000 shares subject to currently exercisable options.
(7) Includes 11,500 shares subject to currently exercisable options and 3,629
phantom shares within the Non-Employee Directors Deferred Compensation Plan.
(8) Includes 11,500 shares subject to currently exercisable options and 5,549
phantom shares within the Non-Employee directors Deferred Compensation Plan.
(9) Includes 11,000 shares subject to currently exercisable options.
(10) Includes 10,000 shares subject to currently exercisable options and 4,957
phantom shares within the Non-Employee Directors Deferred Compensation Plan.
(11) Includes 10,000 shares subject to currently exercisable options and 4,748
phantom shares within the Non-Employee Directors Deferred Compensation Plan.
(12) Includes 17,500 shares subject to currently exercisable options.
(13) Includes currently exercisable options held by all directors and executive
officers as a group to purchase 265,000 shares of Common Stock and 18,833
phantom shares held by Non-Employee Directors within the Non-Employee Directors
Deferred Compensation Plan.
(14) Includes currently exercisable warrants for the purchase of 200,000 shares
of Common Stock.
(15) Robert N. Yarmuth is the general partner and is the brother of William B.
Yarmuth.
PREFERRED STOCK
The Company has no shares of Preferred Stock outstanding. Warrants to purchase
66,600 shares of Preferred Stock expired during the year.
4
<PAGE> 8
ITEM 1
ELECTION OF DIRECTORS
At the Annual Meeting, eight directors will be elected to serve until the next
annual meeting of stockholders. To be elected, a nominee must receive a
plurality of the votes cast in the election at the annual meeting. Proxies
cannot be voted for a greater number of persons than are named. Although it is
not anticipated that any of the nominees will decline or be unable to serve, if
that should occur, the proxy holders may, in their discretion, vote for
substitute nominees. Directors are elected by a plurality of the votes cast.
NOMINEES FOR ELECTION AS DIRECTORS
Set forth below is a list of Board members who will stand for re-election at the
Annual Meeting, together with their ages, all Company positions and offices each
person currently holds and the year in which each person joined the Board of
Directors.
<TABLE>
<CAPTION>
POSITION DIRECTOR
NAME AGE OR OFFICE SINCE
---- --- --------- -----
<S> <C> <C> <C>
William B. Yarmuth 48 Chairman of the Board 1991
Steven B. Bing 53 Director 1992
Donald G. McClinton 67 Director 1994
Patrick B. McGinnis 53 Director 1994
Tyree G. Wilburn 48 Director 1996
Jonathan D. Goldberg 49 Director 1997
Wayne T. Smith 54 Director 1997
W. Earl Reed, III 49 None N/A
</TABLE>
William B. Yarmuth. Mr. Yarmuth has been a director of the Company since 1991,
when the Company acquired National Health Industries ("National"), where Mr.
Yarmuth was Chairman, President and Chief Executive Officer. After the
acquisition, Mr. Yarmuth became the President and Chief Operating Officer of the
Company. Mr. Yarmuth became Chairman and CEO in 1992. He was Chairman of the
Board, President and Chief Executive Officer of National from 1981 to 1991.
Steven B. Bing. Mr. Bing was elected a director in January 1992. Mr. Bing is a
vice president of Prosperitas Investment Partners, L.P., a Louisville, Kentucky
based venture fund. From 1989 to March 1992, Mr. Bing was President of ICH
Corporation, an insurance holding company.
5
<PAGE> 9
From 1984 to 1989, he served as Senior Vice President of ICH Corporation. He is
also a trustee of the University of Louisville and a director of various
closely-held business entities.
Donald G. McClinton. Mr. McClinton was elected a director in October 1994. Mr.
McClinton is President and part owner of Skylight Thoroughbred Training Center,
Inc., a thoroughbred course training center. He is also a director of
Mid-America Bancorp and Jewish Hospital Health Systems. From 1986 to 1994, Mr.
McClinton was co-chairman of Interlock Industries, a privately held conglomerate
in the metals and transportation industries.
Patrick B. McGinnis. Mr. McGinnis was elected a director in October 1994. Mr.
McGinnis is the co-founder of Healthcare Recoveries, Inc. and serves as its
Chairman and Chief Executive Officer. Healthcare Recoveries, Inc. is a provider
of subrogation and other claims recovery services to the health care industry.
From 1979 to 1988, Mr. McGinnis was Vice President-Finance and Planning for
Humana Inc.
Tyree G. Wilburn. Mr. Wilburn was elected a director in January 1996. Mr.
Wilburn is a private investor. From 1992 to 1996, Mr. Wilburn was Chief
Development Officer of Community Health Systems, Inc., and most recently,
Executive Vice President and Chief Financial and Development Officer. From 1974
to 1992, Mr. Wilburn was with Humana Inc. where he held senior and executive
positions in mergers and acquisitions, finance, planning, hospital operations,
audit and investor relations.
Jonathan D. Goldberg. Mr. Goldberg was elected a director in February 1997. Mr.
Goldberg is the managing partner of the law firm of Goldberg and Simpson in
Louisville, Kentucky and has served in that capacity for the last five years.
Wayne T. Smith. Mr. Smith was elected a director in March 1997. Mr. Smith is
President and Chief Executive Officer of Community Health Systems, Inc. Mr.
Smith was President and Chief Operating Officer of Humana Inc. from 1993 to 1996
and served with Humana Inc. from 1973 to 1993 in various capacities, including
numerous positions as vice president and divisional president.
W. Earl Reed, III. Mr. Reed is being nominated to serve his first term as a
director. Mr. Reed has served as Chairman, President and Chief Executive Officer
of Rehab Designs of America, a private venture-capital backed orthotics and
prosthetics healthcare company, since March 1, 2000. Mr. Reed has been a partner
with The Allegro Group, a healthcare financial advisory firm which advises
public and private healthcare organizations, since September, 1998. From 1987 to
1998 Mr. Reed was Chief Financial Officer and member of the board of directors
of Vencor, Inc.
MEETINGS OF THE BOARD OF DIRECTORS
The Board met on six occasions during the previous fiscal year. Each incumbent
director attended at least 75% of the aggregate of the meetings of the Board and
its committees on which such director served during his period of service.
6
<PAGE> 10
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation Committee. The
Board does not have an executive committee or a nominating committee; executive
committee and nominating functions are performed by the entire Board.
The principal duties of the Audit Committee include reviewing the scope of the
audit, the corporate accounting practices and policies with the independent
auditors, reviewing with the independent auditors their final report, reviewing
with independent auditors overall accounting and financial controls and
consulting with the independent auditors.
The members of the Audit Committee are the six outside members of the Company's
Board of Directors, Messrs. Bing, Goldberg, McClinton, McGinnis, Smith and
Wilburn. The Audit Committee met once during the 2000 fiscal year.
The principal duties of the Compensation Committee are to review the
compensation of directors and officers of the Company and to prepare
recommendations and periodic reports to the Board concerning such matters. The
Compensation Committee also administers the Company's employee stock option
plans. The members of the Compensation Committee are Messrs. Bing, Goldberg,
McClinton, McGinnis, Smith and Wilburn. The Compensation Committee met once
during the 2000 fiscal year.
COMPENSATION OF DIRECTORS
Directors who are not also employees of the Company are entitled to compensation
at a rate of $1,250 for each Board of Directors meeting attended and $250 for
each committee meeting attended that is scheduled independently. In addition,
non-employee directors are eligible to receive stock options under the Almost
Family, Inc. 1993 Stock Option Plan for Non-Employee Directors (the "Directors'
Plan") adopted by the Board on February 17, 1993, and subsequently approved by
stockholders. Pursuant to the terms of the Directors' Plan, Mr. Wilburn was
granted options to purchase 2,000 shares of the Company's Common Stock at $2.625
per share, Mr. Goldberg was granted options to purchase 2,000 shares of the
Company's Common Stock at $2.875 per share and Mr. Smith was granted options to
purchase 2,000 shares of the Company's Common Stock at $3.00 per share. The
Directors' options vest 25% the day following six months after the date of
grant, and 25% on each of the first, second, and third anniversary dates of the
grant. During 1999 the terms of the Director's options relative to a total of
68,000 shares were amended to decrease the exercise price to $2.63 (the market
value at the date of amendment). No other terms of the options were changed.
WILLIAM YARMUTH EMPLOYMENT AGREEMENT
The Company has a year-to-year employment agreement with William B. Yarmuth, its
Chairman of the Board, President and Chief Executive Officer. Under the terms of
the agreement, Mr. Yarmuth earns an annual base salary of $190,000 and is
eligible for a performance based cash incentive of 35% of annual base salary.
The agreement includes a covenant not to compete
7
<PAGE> 11
for a period of two years and potential termination payments to Mr. Yarmuth of
two times his annual salary.
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 own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of stock ownership and reports of
changes in stock ownership and to provide the Company with copies of all such
filed forms. Based solely on its review of such copies or written
representations from reporting persons, the Company believes that all reports
were filed on a timely basis during fiscal 2000.
RECOMMENDATION
Assuming the presence of a quorum, directors will be elected by a plurality of
the votes cast at the Annual Meeting by holders of Common Stock voting for the
election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
EACH OF THE EIGHT NOMINEES FOR DIRECTOR OF THE COMPANY.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid by the
Company for services rendered in all capacities during the last three fiscal
years to the Chief Executive Officer and the most highly compensated executive
officers who earned $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (NO. OF SHARES)
--------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
William B. Yarmuth 2000 $190,000 $50,000(2) 0
Chairman of the Board, 1999 $190,000 0 100,000
President and Chief Executive Officer 1998 $190,000 $75,596 17,000(3)
Mary A. Yarmuth 2000 $132,121 0 0
Senior Vice President 1999 $130,050 0 20,000
Operations 1998 $129,854 $36,904 15,000(3)
C. Steven Guenthner 2000 $132,121 $25,000(2) 0
Senior Vice President 1999 $130,050 0 20,000
Secretary/Treasurer and 1998 $129,854 $36,904 15,000(3)
Chief Financial Officer
Patrick T. Lyles 2000 $121,911 $25,000(2) 0
Senior Vice President 1999 $120,000 0 15,000
Planning and Development 1998 $ 43,386(1) $12,330 20,000
</TABLE>
--------
(1) Mr. Lyles was employed by the Company on October 6, 1997.
(2) Bonuses for these individuals were awarded by the Board for the successful
sale of the product operations in November 1999.
(3) Stock Options for these individuals were granted to replace stock options
cancelled in connection with the repricing of the Company's stock options on
December 14, 1998.
9
<PAGE> 13
OPTION GRANTS IN FISCAL 2000
No stock options were granted to Mr. Yarmuth or the other most highly
compensated executive officers during the fiscal year ending March 31, 2000.
OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END VALUES
Mary A. Yarmuth exercised stock options during the 2000 fiscal year as set forth
below. In addition, set forth below is information with respect to the number
and value of unexercised stock options held by the named executive officers at
the end of the 2000 fiscal year.
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised Options In-The-Money At
Shares At Fiscal Year-End Fiscal Year-End
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable(1)
---- -------- -------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William B. Yarmuth 0 0 125,000 125,000 $45,313 $45,313
Mary A. Yarmuth 19,500 6,459 29,500 29,500 $ 9,906 $ 9,906
C. Steven Guenthner 0 0 27,500 27,500 $ 9,531 $ 9,531
Patrick T. Lyles 0 0 17,500 17,500 $ 6,563 $ 6,563
</TABLE>
(1) These amounts represent the market value less the exercise price.
The market value of the Common Stock was $2.81 based on the closing bid price
per share at March 31, 2000, on the NASDAQ National Market System.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The Compensation Committee of the Board of Directors is comprised of Messrs.
Bing, Goldberg, McClinton, McGinnis, Smith and Wilburn, each a non-employee
director of the Company. The Compensation Committee is responsible for advising
the Board of Directors on matters relating to the compensation of the Company's
executive officers and administering the Company's stock option plans. Set forth
below is a report submitted by the Compensation Committee describing its
compensation policies and the committee's decisions relating to compensation of
executive officers during the 2000 fiscal year.
The Compensation Committee's policies concerning the compensation of the
Company's executive officers are summarized as follows:
- Compensation awarded by the Company should be effective in attracting,
motivating and retaining key executives;
- Executive officers of the Company should be compensated at a level which is
comparable to other executives with similar skills and qualifications; and
- The Company's compensation programs should give executive officers a
financial interest in the Company similar to the interests of the Company's
stockholders.
The Company's executive officers are compensated through a combination of
salary, annual bonuses (when appropriate) and grants of stock options under the
Company's option plans. The annual salaries of the Company's executives are
reviewed from time to time by the Compensation Committee. The Compensation
Committee recommends to the Board of Directors that adjustments be made where
necessary in order for the annual salaries of the Company's executives to be
competitive with the salaries in the health care field. To establish such
executive salaries, the Compensation Committee compares the Company's salaries
with those of other home health care companies and public companies with similar
market capitalizations as selected by the Compensation Committee. Officers of
the Company are eligible for performance based cash incentives based on the
Company's achievement of annual goals and objectives established by the
Compensation Committee. For fiscal 2000 the goals and objectives included
meeting earnings targets and accomplishing development and expansion objectives.
Based on these goals and objectives, Mr. Yarmuth, the Chief Executive Officer,
received a bonus of $50,000 and the other executive officers named in the
Summary Compensation Table received and bonuses in the aggregate amount of
$50,000.
The Compensation Committee periodically grants stock options under the Company's
option plans in order to provide executive officers and other employees with an
additional incentive to strive for the success of the Company's business so as
to increase the price of the Company's Common Stock. The Compensation Committee
believes that stock options are a valuable tool in encouraging executive
officers to align their interests with the interests of the stockholders and to
11
<PAGE> 15
manage the Company for the long term. There were no stock options granted to
executive officers.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
William B. Yarmuth, the Chairman, President and Chief Executive Officer of the
Company, is eligible to participate in the same executive compensation plans
available to the Company's other executive officers. Mr. Yarmuth's salary of
$190,000 for the 2000 fiscal year was determined pursuant to his employment
agreement. Mr. Yarmuth received a bonus of $50,000. See discussion regarding
incentive compensation under "Compensation Policies" above.
OBRA DEDUCTIBILITY LIMITATION
Under the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), subject to certain
exceptions and transition provisions, the allowable deduction for compensation
paid or accrued with respect to the chief executive officer and each of the four
most highly compensated executive officers of a publicly held corporation, is
limited to $1 million per year, per executive officer. The Company has
determined not to take any actions at this time with respect to its compensation
plans that might be necessary to exempt compensation under such plans from the
OBRA deductibility limitation.
THE COMPENSATION COMMITTEE:
Steven B. Bing
Jonathan D. Goldberg
Donald G. McClinton
Patrick B. McGinnis
Wayne T. Smith
Tyree G. Wilburn
12
<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE STOCKHOLDER RETURN
The graph that follows compares the cumulative return experienced by holders of
the Company's Common Stock during the last five fiscal years to the returns of
the CRP Index for NASDAQ stock market (U.S. Companies) and the returns of a peer
group index comprised of other publicly-traded companies within the home
healthcare industry. The graph assumes the investment of $100 on March 31, 1995
in the Company's Common Stock and each of the indices, and the reinvestment of
all dividends paid during the period of the securities comprising the indices.
<TABLE>
<CAPTION>
Fiscal Year-Ended March 31,
---------------------------------------------------------------------
(Fiscal Year End. March 31) 1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Almost Family, Inc. $ 100.00 113.46 86.54 119.23 30.77 $ 43.28
NASDAQ Stock Market 100.00 135.79 150.94 228.86 309.21 575.38
(US Companies)
Self-Determined Peer Group 100.00 94.67 63.10 41.62 11.99 24.27
</TABLE>
------------------------------------------------------------------------------
In addition to the Company, the peer group includes the following home health
care companies Hospital Staffing Services, Inc.; In Home Health, Inc.; and U.S.
HomeCare Corporation. The Peer Group Index for the 1998 fiscal year includes
Hospital Staffing Services, Inc. through March 12, 1998, the last day on which
its shares were traded on the New York Stock Exchange.
13
<PAGE> 17
ITEM 2
APPROVAL OF THE 2000 STOCK OPTION PLAN
[SUBJECT TO REVISION PURSUANT TO TERMS OF PLAN AS APPROVED]
On September 29, 2000 our board of directors approved the 2000 stock option
plan and reserved an aggregate of 500,000 shares of our Common Stock for
issuance under the plan. We are presenting the 2000 stock option plan to the
shareholders for their approval at the annual meeting. The last stock option
plan implemented by the Company was in 1991. As of September 29, 2000, our 1991
stock option plan had available for issuance only 150,000 options out of the
500,000 options authorized under this plan. However, that plan expires in
February 2001, after which no options could be granted.
The primary purpose of the 2000 stock option plan is to increase the number
of shares of our Common Stock available for issuance under our stock option plan
to ensure that we can continue to grant stock options to employees at levels
determined appropriate by our board of directors and our compensation committee.
Our board of directors believes that the number of options currently available
for future option grants under our 1991 stock option plan is insufficient.
The full text of the 2000 stock option plan, as adopted by the board of
directors, is set forth in Attachment A to this proxy statement. Our summary of
the 2000 stock option plan is subject to, and qualified in its entirety by, the
copy of the plan attached to this proxy statement.
PURPOSE
The general purpose of the 2000 stock option plan, as with our 1991 stock
option plan, is to assist us in the recruitment, retention and motivation of
employees who are in a position to make contributions to our progress. The 2000
stock option plan offers a significant incentive to our employees by enabling
these individuals to acquire shares of our Common Stock, which increases their
proprietary interest in the growth and success of our company.
ADMINISTRATION
The 2000 stock option plan is administered by the compensation committee of
our board of directors. This committee is composed of six "non-employee
directors," as this term is defined in Rule 16b-3, which is a board member who:
- is not currently an officer or employee of our company;
- does not receive compensation, either directly or indirectly, from us
for services rendered as a consultant or in any other non-director
capacity except for an amount that does not exceed $60,000;
- does not possess an interest in any other related party transactions
exceeding $60,000; and
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- is not engaged in a business relationship for which disclosure would
be required in accordance with Item 404(b) of Regulation S-K.
Subject to the limitations set forth in the 2000 stock option plan, the
compensation committee has broad authority to determine:
- the recipients of options grants (including initial grants to incoming
directors);
- the option exercise term; and
- the rate at which the options may be exercised (including acceleration
of vesting).
ELIGIBILITY AND SHARES SUBJECT TO THE 2000 STOCK OPTION PLAN
The principal terms and conditions of the 2000 stock option plan are
summarized below:
- 500,000 shares of our Common Stock have been reserved for issuance
upon exercise of options.
- This plan provides for the grant of both incentive stock options and
non-qualified or nonstatutory stock options. Incentive stock options
may be granted only to our employees, including directors who are also
employees. Non-qualified stock options may be granted to our
employees, including directors who are also employees, directors and
independent contractors.
- If any options granted expire, are canceled or otherwise terminate for
any reason, without having been exercised in full, then the shares
allocable to the unexercised portion of these options again become
available for issuance under the plan.
- The maximum term of each option granted is 10 years.
- Unless the compensation committee approves different terms for an
option grant, stock options must be exercised before the earlier of
the expiration date of the option or within 90 days after termination
of the optionee's employment, except that the period is extended on
specified events, including death and termination due to disability.
- The exercise price of shares of our Common Stock subject to options
under the 2000 stock option plan must not be less than the fair market
value of our Common Stock on the date of grant. With respect to an
employee who owns more than ten percent of the total combined voting
power of all classes of our capital stock, the exercise price of any
option granted must not be less than 110% of the fair market value of
our Common Stock on the date of grant for the option to qualify as an
incentive stock option.
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- During an optionee's lifetime, the options will be exercisable only by
the optionee and are generally not transferable. In the event of
death, the optionee's options will not be transferable other than by
will or by the laws of descent and distribution.
In addition to cash payments, the 2000 stock option plan authorizes the
compensation committee to permit an optionee to pay the exercise price of an
option by delivery of shares of our Common Stock held by the optionee for at
least six months.
Based upon the closing price of $4.18 for our Common Stock on The Nasdaq Small
Cap Market on September 29, 2000, the maximum aggregate value of the underlying
securities to be issued under the 2000 stock option plan is $2,100,000. The
actual value of the securities to be issued will be determined by the fair
market value of the underlying securities on the date(s) the securities are
issued.
DURATION, AMENDMENT AND TERMINATION
Our board of directors may amend, suspend or terminate the 2000 stock
option plan at any time, except that any amendment, suspension or termination
will not affect any previous option grants. Our shareholders must approve,
however, any amendment of the 2000 stock option plan that:
- increases the number of shares available for issuance;
- materially changes the class of persons who are eligible for the grant
of incentive stock options; or
- if required by the rules under the Securities Exchange Act of 1934,
would materially increase the benefits accruing to participants under
the 2000 stock option plan or would materially modify the eligibility
requirements for participation in the 2000 stock option plan.
We do not need to receive shareholder approval for any other amendment of the
2000 stock option plan. Unless terminated by our board of directors, the 2000
stock option plan will terminate on September 29, 2010, and we may not grant
options or sell stock under the 2000 stock option plan following the termination
date.
EFFECT OF CORPORATE EVENTS
Immediately prior to the occurrence of any of the following transactions,
the exercisability or vesting of the options issued under the 2000 stock option
plan will accelerate automatically:
- a merger or acquisition where we are not the surviving entity;
- a sale, transfer or other disposition of all or substantially all of
our assets; or
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- any reorganization or business combination where 50% or more of our
outstanding voting stock is transferred to different holders.
However, the exercisability or vesting of an outstanding option under the 2000
stock option plan will not accelerate if:
- its acceleration is subject to other applicable limitations imposed by
the compensation committee at the time of the grant; or
- in connection with the transaction triggering the acceleration, the
option either is assumed by the successor corporation or its parent
company or is replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or its parent company.
Our compensation committee will make this final, binding and
conclusive determination.
The exercisability of incentive stock options, if accelerated, will still
remain subject to a maximum dollar limitation of $100,000 imposed on the
exercise of stock options under the 2000 stock option plan. Except as otherwise
provided in the 2000 stock option plan, all outstanding stock options will, if
not previously exercised or assumed by the successor corporation or its parent
company, terminate and cease to be outstanding upon the occurrence of an
acceleration event described in the preceding paragraph.
FEDERAL INCOME TAX INFORMATION
Incentive Stock Options. Incentive stock options under the 2000 stock
option plan are intended to be eligible for the federal income tax treatment
accorded to "incentive stock options." There are generally no federal income tax
consequences to the optionee or us by reason of the grant or exercise of an
incentive stock option other than a disqualifying disposition as described
below. However, the exercise of an incentive stock option may increase the
optionee's alternative minimum tax liability, if any.
If an optionee holds stock acquired through the exercise of an incentive
stock option for at least two years from the date on which the option is granted
and at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, then any gain or loss on a disposition of
the stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods,
at the time of disposition, then the optionee will realize taxable ordinary
income equal to the lesser of:
- the excess of the stock's fair market value on the date of exercise
over the exercise price; or
- the optionee's actual gain, if any, on the purchase and sale.
The optionee's additional gain, or any loss upon the disqualifying
disposition will be a capital gain or loss which will be long-term or short-term
depending on whether the stock was held for more than one year. To the extent
the optionee recognizes ordinary income by reason of a
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disqualifying disposition, we generally will be entitled (subject to the
requirement of reasonableness and the satisfaction of a tax reporting
obligation) to a corresponding business expense deduction in the tax year in
which the disqualifying disposition occurs.
Non-Qualified Stock Options. There generally are no tax consequences to the
optionee or us by reason of the grant of a non-qualified stock option. Upon
exercise of a non-qualified stock option, the optionee will recognize taxable
ordinary income equal to the difference between the stock's fair market value on
the date of exercise and the option exercise price. With respect to employees,
we are required to withhold taxes in an amount based on the ordinary income
recognized. Subject to the requirement of reasonableness and the satisfaction of
any withholding obligation, we generally will be entitled to a business expense
deduction equal to the taxable ordinary income realized by the optionee. Upon
disposition of the stock, the optionee will recognize a capital gain or loss
equal to the difference between the selling price and the sum of the amount paid
for this stock plus any amount recognized as ordinary income upon exercise of
the option. This gain or loss will be long or short-term depending on whether
the stock was held for more than one year. Slightly different rules may apply to
optionees who acquire stock subject to repurchase options or who are subject to
Section 16(b) of the Securities Exchange Act of 1934.
Potential Limitation on Company Deductions. We may be denied a deduction if
we compensate a covered employee by more than $1,000,000 in a taxable year under
Section 162(m) of the Internal Revenue Code. This deduction limitation, however,
does not apply to compensation that qualifies as "performance-based
compensation." Compensation attributable to stock options will qualify as
performance-based compensation if:
- the option plan contains a per-employee limitation on the number of
shares for which options may be granted during a specified period;
- the per-employee limitation is approved by the shareholders;
- the option is granted by a compensation committee comprised solely of
"outside directors;" and
- the exercise price of the option is no less than the fair market value
of the stock on the date of grant.
In addition, compensation attributable to stock options will qualify as
performance-based compensation if the option is granted by a compensation
committee comprised solely of "outside directors" and is granted or is
exercisable only upon the achievement of an objective performance goal
established by the compensation committee while the outcome is substantially
uncertain and approved by the shareholders.
The 2000 stock option plan provides for, but does not require, the
administration of the plan in a manner that satisfies the above conditions.
Accordingly, we may not be able to claim a tax deduction for exercises of
non-qualified stock options or disqualifying dispositions of incentive stock
options by any of our top five (5) highest paid executives to the extent that
the income
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from these exercises or dispositions, combined with their other taxable
compensation for the year, exceeds $1 million. Our board of directors will
evaluate whether compliance will materially benefit our company.
The foregoing discussion is intended to be a general summary only of
the federal income tax aspects of options granted under the 2000 stock option
plan. Tax consequences may vary depending on the particular circumstances at
hand. In addition, administrative and judicial interpretations of the
application of the federal income tax laws are subject to change. Furthermore,
no information is given with respect to state or local taxes that may be
applicable. Participants in the 2000 stock option plan who are residents of or
are employed in a country other than the United States may be subject to
taxation in accordance with the tax laws of that particular country in addition
to or instead of United States federal income taxes.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2000 STOCK
OPTION PLAN.
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ITEM 3
RATIFICATION OF INDEPENDENT AUDITOR
The Board of Directors has appointed Arthur Andersen LLP as its independent
auditor for the fiscal year ending March 31, 2001. Representatives of Arthur
Andersen are expected to be present at the Annual Meeting where they will have
an opportunity to make a statement, if they desire to do so, and to respond to
appropriate questions.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR ANDERSEN
LLP AS THE COMPANY'S INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING MARCH 31,
2001.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the next annual meeting of
stockholders must be received by the Company by, June 12, 2001, in order to be
considered for inclusion in the Company's proxy materials for such meeting, and
will be considered untimely if not received by the Company by August 25, 2001.
FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2000 accompanies this Proxy Statement. Stockholders may obtain copies of
exhibits at $0.25 per page to cover the Company's costs in furnishing such
copies by sending a written request to C. Steven Guenthner, Almost Family, Inc.,
100 Mallard Creek Road, Suite 400, Louisville, Kentucky 40207.
OTHER BUSINESS
The Board of Directors is not aware of any other matters to be presented at the
Annual Meeting other than those set forth in the Notice of Annual Meeting and
routine matters incident to the conduct of the meeting. If any other matters
should properly come before the Annual Meeting or any adjournment or
postponement thereof, the persons named in the proxy, or their substitutes,
intend to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ C. Steven Guenthner
------------------------------------------
C. Steven Guenthner
Secretary
Louisville, Kentucky
October 6, 2000
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ATTACHMENT A
ALMOST FAMILY, INC.
2000
STOCK OPTION PLAN
Almost Family, Inc. (the "Company") hereby establishes a stock option
plan (the "Plan") for the benefit of its employees, as set forth below.
SECTION 1 -- PURPOSE
The Company adopts this compensation program for certain key employees
to, among other things, (a) increase the profitability and growth of the
Company; (b) provide competitive employee compensation while obtaining the
benefits of tax deferral; (c) attract and retain exceptional personnel and
encourage excellence in the performance of individual responsibilities; and (d)
motivate key employees to contribute to the Company's success.
SECTION 2 -- DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings
below unless the context clearly indicates otherwise:
2.1 "BOARD" shall mean the Board of Directors of the Company.
2.2 "CHANGE OF CONTROL" of the Company shall mean (i) the acquisition
of the power to direct, or cause the direction of, the management and policies
of the Company by a person (not previously possessing such power), acting alone
or in conjunction with others, whether through the ownership of Stock, by
contract or otherwise, or (ii) the acquisition, directly or indirectly, of the
power to vote more than 25% of the outstanding Stock, by any person or by two or
more persons acting together, except an acquisition from the Company or an
acquisition by the Company, the Company's management, or by a Company sponsored
employee benefit plan, or (iii) the business of the Company is disposed of
pursuant to a partial or complete liquidation, sale of assets, or otherwise. For
purposes of this Section 2.2, the term "person" means a natural person,
corporation, limited liability company, partnership, joint venture, trust,
government or instrumentality of the government, and customary agreements with
or between underwriters and selling group members with respect to a bona fide
public offering of the Stock or any other class of common stock of the Company
shall be disregarded.
2.3 "CHAIRMAN" shall mean the Chairman of the Committee.
2.4 "CODE" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
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2.5 "COMPENSATION COMMITTEE OF THE BOARD" shall mean the Compensation
Committee appointed by the Board from time to time pursuant to Section 4.1,
which shall administer the Plan.
2.6 "DISABILITY" shall mean a permanent disability within the meaning
of Section 22(e) of the Code.
2.7 "EMPLOYEE" shall mean an employee of the Company or any of its
Subsidiaries who has been designated by the Committee, under the criteria in
Section 5, as eligible to participate in the Plan.
2.8 "FAIR MARKET VALUE" shall mean, as of any date, the fair market
value of Stock determined as follows:
(i) If the Stock is listed on any established stock exchange or a
national market system including without limitation the National Market of the
National Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq")
System, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported), as quoted on such system or
exchange, or the exchange with the greatest volume of trading in Stock for the
last market trading day prior to the time of determination, as reported in The
Wall Street Journal or such other source as the Committee deems reliable; or
(ii) In the absence of an established market for the Stock, the
Fair Market Value thereof shall be the price which the Committee, acting in good
faith determines through any reasonable valuation method that a share of Stock
might change hands between a willing buyer and a willing seller, neither being
under any compulsion to buy or to sell and both having reasonable knowledge of
the relevant facts.
2.9 "INCENTIVE STOCK OPTION" shall mean an option to purchase Stock
granted under Section 6 of the Plan which is designated by the Committee as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.
2.10 "NAMED EXECUTIVE" means any individual who, on the last day of the
Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four most highly compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Securities Exchange Act of 1934 (the "Exchange Act").
2.11 "NONQUALIFIED STOCK OPTION" shall mean an option to purchase Stock
granted under Section 6 of the Plan which is not intended to be an Incentive
Stock Option.
2.12 "OPTION" shall mean an Incentive Stock Option or a Nonqualified
Stock Option.
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2.13 "OPTION PERIOD" shall mean the period from the date of the grant
of an Option to the date when the period for exercise of an Option expires as
stated in the terms of the Stock Option Agreement.
2.14 "OPTIONEE" shall mean an Employee who has been granted an Option
to purchase shares of Stock under the provisions of the Plan.
2.15 "PLAN" shall mean this Almost Family, Inc. 2000 Stock Option Plan.
2.16 "REPORTING PERSON" means an Officer, Director, or greater than 10%
stockholder of the Company within the meaning of Rule 16a-2 under the Exchange
Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange
Act.
2.17 "RETIREMENT" shall mean Termination of Employment with the Company
or any of its Subsidiaries after attaining age 65 (or earlier with the Company's
or the Subsidiary's consent).
2.18 "STOCK" shall mean the Company's voting common stock of $0.10 par
value per share.
2.19 "STOCK OPTION AGREEMENT" shall mean an agreement between an
Optionee and the Company covering the specific terms and conditions of an
Option.
2.20 "SUBSIDIARY" OR "SUBSIDIARIES" shall mean any corporation which at
the time qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" in Section 424(f) of the Code.
2.21 "TERMINATION OF EMPLOYMENT" shall be deemed to have occurred at
the close of business on the last day on which an Employee is carried as an
active employee on the records of the Company or any of its Subsidiaries. The
Committee shall determine whether an authorized leave of absence, or other
absence on military or government service, constitutes severance of the
employment relationship between the Company or a Subsidiary and the Employee.
SECTION 3 -- STOCK SUBJECT TO THE PLAN
3.1 Authorized Stock. Subject to adjustment as provided in this
Section, the aggregate number of shares of Stock subject to an Option under the
Plan shall 500,000 shares of Stock. Stock delivered under the Plan may consist,
in whole or in part, of authorized and unissued shares or shares acquired from
shareholders upon such terms as the Board deems appropriate for reserve in
connection with exercises hereunder.
3.2 Effect of Expirations. If any Option granted under the Plan expires
or terminates without exercise, the Stock no longer subject to such Option shall
be available to be re-awarded under the Plan.
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3.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, share combination, or other change in the corporate
structure of the Company or any other increase or decrease in the number of
issued shares of Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration", an
appropriate and proportionate adjustment shall be made by the Committee in the
number and kind of shares which may be delivered under the Plan, and in the
number and kind of or price of shares subject to outstanding Options; provided
that the number of shares subject to any Option shall always be a whole number.
If any adjustment under this Section would create a fractional share of Stock or
a right to acquire a fractional share of Stock, such fractional share shall be
disregarded and the number of shares of Stock reserved under this Plan and the
number subject to any Options granted under this Plan shall be the next lower
number of shares of Stock, rounding all fractions downward. Any adjustment of an
Incentive Stock Option under this Section shall be made in such a manner so as
not to constitute a "modification" within the meaning of Section 424(h) of the
Code. If the Company shall at any time merge, consolidate with or into another
corporation or association, or enter into a statutory share exchange or any
other similar transaction in which shares of Stock are converted as a matter of
law into securities and/or other property, except as provided in Section 9.8,
each Optionee will thereafter receive, upon the exercise of an Option, the
securities or property to which a holder of the number of shares of Stock then
deliverable upon the exercise of such Option would have been entitled if such
Option had been exercised immediately prior to such merger, consolidation, or
share exchange and the Company shall take such steps in connection with such
merger, consolidation or share exchange as may be necessary to assure that the
provisions of this Plan shall thereafter be applicable, as nearly as is
reasonably possible, in relation to any securities or property thereafter
deliverable upon the exercise of such Option. A sale of all or substantially all
the assets of the Company for a consideration (apart from the assumption of
obligations) consisting primarily of securities shall be deemed a merger or
consolidation for the foregoing purposes.
SECTION 4 -- ADMINISTRATION
4.1 Committee Governance. This Plan shall be administered by the
Committee which shall consist of three or more Independent Directors appointed
by the Board, and in a manner that shall permit Options to qualify for the
exemption set forth in Rule 16b-3 under the Exchange Act and as
performance-based compensation under Section 162(m) of the Code. The number of
members of the Committee shall be determined by the Board. The Board shall add
or remove members from the Committee as it sees fit, and vacancies shall be
filled by the Board. The Committee shall select one of its members as the
chairperson of the Committee and shall hold meetings at such times and places as
it may determine. The Committee may appoint a secretary and, subject to the
provisions of the Plan and to policies determined by the Board, may make such
rules and regulations for the conduct of its business as it shall deem
advisable. Written action of the Committee may be taken by a majority of its
members, and actions so taken shall be fully effective as if taken by a vote of
a majority of the members at a meeting duly called and held. A majority of
Committee members shall constitute a quorum for purposes of meeting. The
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act of a majority of the members present at any meeting for which there is a
quorum shall be a valid act of the Committee.
4.2 Committee to Interpret Plan. Subject to the express terms and
conditions of the Plan, the Committee shall have sole power (i) to construe and
interpret the Plan; (ii) to establish, amend or waive rules for its
administration; (iii) to determine and accelerate the exercisability of any
Option; (iv) to correct inconsistencies in the Plan or in any Stock Option
Agreement, or any other instrument relating to an Option; and (v) subject to the
provisions of Section 8, to amend the terms and conditions of any outstanding
Option, to the extent such terms and conditions are within the discretion of the
Committee as provided in the Plan. Notwithstanding the foregoing, no action of
the Board or the Committee may, without the consent of the person or persons
entitled to exercise any outstanding Option, adversely affect the rights of such
person or persons.
4.3 Exculpation. No member of the Board or the Committee shall be
liable for actions or determinations made in good faith with respect to the
Plan, or for awards under it.
4.4 Selection of Employee Optionees. The Committee shall have the
authority to grant Options from time to time to such Employees as may be
selected by it in its sole discretion.
4.5 Decisions Binding. All determinations and decisions made by the
Board or the Committee pursuant to the provisions of the Plan, including factual
interpretations, shall be final, conclusive and binding on all persons,
including the Company, its shareholders, Optionees and their estates and
beneficiaries.
4.6 Administration With Respect to Reporting Persons. With respect to
Options granted to Reporting Persons and Named Executives, the Plan shall be
administered so as to permit such Options to qualify for the exemption set forth
in Rule 16b-3 and to qualify as performance-based compensation under Section
162(m) of the Code.
4.7 Stock Option Agreements. Each Option granted to an Employee under
Section 6 of the Plan shall be evidenced by a Stock Option Agreement which shall
be signed by the Chief Executive Officer or Secretary of the Company, as
authorized by the Committee and by the Optionee, and shall contain such terms
and conditions as may be approved by the Committee, which need not be the same
in all cases. Any Stock Option Agreement may be supplemented or amended in
writing from time to time as approved by the Committee, provided that the terms
of such Agreements as amended or supplemented, as well as the terms of the
original Stock Option Agreement, are not inconsistent with the provisions of the
Plan. An Employee who receives an Option under the Plan shall not, with respect
to the Option, be deemed to have become an Optionee, or to have any rights with
respect to the Option, unless and until the Employee has executed a Stock Option
Agreement or other instrument evidencing the Option and shall have delivered an
executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of the Option. The Committee may condition any
Option grant upon the agreement by the Optionee to such confidentiality,
non-competition and non-solicitation covenants as the Committee deems
appropriate.
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4.8 Limitations on Options.
(a) Subject to adjustment as provided in Section 3.3, the maximum
number of shares of Stock that may be issued pursuant to Options under the Plan
to any one Employee during any one fiscal year of the Company shall not exceed
200,000 shares (as adjusted under Section 3.3). Such limit shall not be adjusted
to restore shares of Stock with respect to which the related Option is
terminated, surrendered or cancelled.
(b) No part an Option may be exercised to the extent the exercise would
cause the Optionee to have compensation from the Company and its affiliated
companies for any year in excess of $1 million and which is nondeductible by the
Company and its affiliated companies pursuant to Code Section 162(m). Any
portion of an Option not exercisable because of this limitation shall continue
to be exercisable in any subsequent year in which the exercise would not cause
the loss of the Company's or its affiliated companies' compensation tax
deduction, provided such exercise occurs before lapse of the Option, and
otherwise complies with the terms and conditions of the Plan and Stock Option
Agreement. Notwithstanding the forgoing, the Board may waive application of this
Section 4.8 to any Optionee in its discretion.
SECTION 5 -- ELIGIBILITY
Employees of the Company and its Subsidiaries who are expected to
contribute substantially to the growth and profitability of the Company and its
Subsidiaries are eligible for selection by the Committee under Section 4.4 to
receive Options.
SECTION 6 -- GRANT OF OPTIONS
6.1 Grant. Both Incentive Stock Options and Nonqualified Stock Options
may be granted under the Plan. If an Option is designated as an Incentive Stock
Option but does not qualify as such under Section 422 of the Code, the Option
(or portion thereof) shall be treated as a Nonqualified Stock Option, and
governed by Section 83 of the Code. All Options granted under the Plan shall be
evidenced by an Option Agreement in such form as the Committee may from time to
time approve. All Options are subject to the terms and conditions of this
Section 6 and such additional terms and conditions contained in the Option
Agreement, which need not be the same in each case (but not inconsistent with
the provisions of the Plan) as the Committee finds desirable.
6.2 Option Price. The purchase price per share of Stock covered by an
Option shall be determined by the Committee but shall not be less than 100% of
the Fair Market Value of such Stock on the date the Option is granted. An
Incentive Stock Option granted to any person who, at the time the Option is
granted, owns or is deemed to own within the meaning of Section 424(d) of the
Code, stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its parent or any Subsidiary, shall have
an exercise price which is at least 110% of the Fair Market Value of the Stock
subject to the Option.
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6.3 Option Period. The Option Period shall be determined by the
Committee, and unless otherwise specifically provided in the Option Agreement,
no Option shall be exercisable later than ten years from the date of grant.
Notwithstanding the foregoing, in the case of an Optionee owning (within the
meaning of Section 424(d) of the Code), at the time an Incentive Stock Option is
granted, more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary, such Incentive Stock Option shall not be
exercisable later than five years from the date of grant. Options may expire
prior to the end of the Option Period due to the Optionee's Termination of
Employment as provided in Section 7, or in accordance with any provision of the
Option Agreement. No Option may be exercised at any time unless such Option is
valid and outstanding as provided in this Plan.
6.4 Limitation on Amount of Incentive Stock Options. The aggregate Fair
Market Value (determined as of the time the Option is granted) of the Stock with
respect to which a Optionee's Incentive Stock Options are exercisable for the
first time during any calendar year (under this and all other stock option plans
of the Company, any Subsidiary or any parent corporation) shall not exceed
$100,000. Options or portions of Options exercisable as a result of acceleration
under Section 9.8 in excess of the $100,000 limit described herein shall be
treated as a Nonqualified Stock Option for tax purposes.
6.5 Nontransferability of Options. No Option shall be transferable by
the Optionee otherwise than by will or by the laws of descent and distribution,
and such option shall be exercisable, during the Optionee's lifetime, only by
the Optionee.
SECTION 7 -- EXERCISE OF OPTIONS
7.1 Exercise. An Option may be exercised, so long as it is valid and
outstanding, from time to time in part or as a whole, subject to any limitations
with respect to the number of shares for which the Option may be exercised at a
particular time and to such other conditions (e.g., exercise could be
conditioned on performance) as the Committee in its discretion may specify upon
granting an Option to an Employee or as otherwise provided in this Section 7.
7.2 Method of Exercise. To exercise an Option, the Optionee or the
other person(s) entitled to exercise the Option shall give written notice of
exercise to the Committee, specifying the number of full shares to be purchased.
Such notice shall be accompanied by payment in full in cash for the Stock being
purchased plus, in the case of Nonqualified Stock Options, any required
withholding tax as provided in Section 10. If permitted by the Committee, in its
sole discretion, payment in full or in part may be made in the form of Stock
owned by the Optionee for at least 6 months (based on the Fair Market Value of
the Stock on the date the Option is exercised) evidenced by negotiable Stock
certificates registered either in the sole name of the Optionee or the names of
the Optionee and spouse, or by any combination of cash or shares. No shares of
Stock shall be issued unless the Optionee has fully complied with the provisions
of this Section 7.2.
7.3 Termination of Employment. After an Employee's Termination of
Employment, an Option may be exercised, subject to adjustment as provided in
Section 3.3 or 9.8, only with
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respect to the number of shares of Stock which the Employee could have acquired
by an exercise of the Option immediately before the Termination of Employment
but in no event after the expiration date of the Option as specified in the
applicable Stock Option Agreement. Except to the extent shorter or longer
periods are provided in the Stock Option Agreement by the Committee, an
Employee's right to exercise an Option upon Termination of Employment shall
terminate:
(i) At the expiration of three months (Incentive Stock
Options) or one year (Nonqualified Stock Options)
after the Employee's Retirement; provided, however, if
an Incentive Stock Option is not exercised after three
months, it will remain exercisable until one year
following the Employee's Retirement and be treated as
a Nonqualified Stock Option for purposes of the Plan
when it is exercised; or
(ii) At the expiration of one year in the event of
Disability of the Employee; or
(iii) At the expiration of one year after the Employee's
death if the Employee's Termination of Employment
occurs by reason of death; any Option exercised under
this subparagraph (iii) may be exercised in full by
the legal representative of the estate of the Employee
or by the person or persons who acquire the right to
exercise such Option by bequest or inheritance; or
(iv) No later than three months after the Employee's
Termination of Employment for any reason other than
Retirement, Disability, death.
SECTION 8 -- AMENDMENTS AND TERMINATION
8.1 Amendments and Termination. The Committee may terminate, suspend,
amend or alter the Plan, but no action of the Committee may:
(a) Impair or adversely affect the rights of an Optionee under an
Option, without the Optionee's consent; or,
(b) Without the approval of the shareholders:
(i) Increase the total amount of Stock which may be
delivered under the Plan pursuant to Incentive Stock
Options or the limit in Section 4.8 on grants to
individual employees, except as is provided in Section
3 of the Plan;
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<PAGE> 32
(ii) Decrease the option price of any Incentive Stock
Option to less than the option price on the date the
Option was granted;
(iii) Extend the maximum Option Period, or
(iv) Extend the period during which Incentive Stock Options
may be granted, as specified in Section 12.
8.2 Conditions on Options. In granting an Option, the Committee may
establish any conditions that it determines are consistent with the purposes and
provisions of the Plan, including, without limitation, a condition that the
granting of an Option is subject to the surrender for cancellation of any or all
outstanding Options held by the Optionee. Any new Option made under this section
may contain such terms and conditions as the Committee may determine, including
an exercise price that is lower than that of any surrendered Option.
8.3 Selective Amendments. Any amendment or alteration of the Plan may
be limited to, or may exclude from its effect, particular classes of Optionees.
SECTION 9 -- GENERAL PROVISIONS
9.1 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive compensation, and the Plan is not intended to
constitute a plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended, and shall not extend, with respect to any
payments not yet made to an Optionee, any rights that are greater than those of
a general creditor of the Company.
9.2 Transfers, Leaves of Absence and Other Changes in Employment
Status. For purposes of the Plan (i) a transfer of an Employee from the Company
to a Subsidiary, or vice versa, or from one Subsidiary to another; or (ii) a
leave of absence, duly authorized in writing by the Company or a Subsidiary, for
military service or sickness, or for any other purpose approved by the Company
or a Subsidiary if the period of such leave does not exceed 90 days; or (iii)
any leave of absence in excess of 90 days approved by the Company, shall not be
deemed a Termination of Employment. The Committee, in its sole discretion
subject to the terms of the Stock Option Agreement, shall determine the
disposition of all Options made under the Plan in all cases involving any
substantial change in employment status other than as specified herein.
9.3 Restrictions on Distribution of Stock. No shares shall be issued or
transferred pursuant to an Option unless the Committee determines, in its sole
discretion, that such issuance or transfer complies with all relevant provisions
of applicable securities and other laws and the requirements of any stock
exchange upon which the Company's shares may then be listed.
9.4 Assignment Prohibited. Subject to the provisions of the Plan and
the Stock Option Agreement, no Option shall be assigned, transferred, pledged or
otherwise encumbered by the Optionee otherwise than by will or by the laws of
descent and distribution, and such Options shall be exercisable, during the
Optionee's lifetime, only by the Optionee. Options shall
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<PAGE> 33
not be pledged or hypothecated in any way, and shall not be subject to any
execution, attachment, or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of an Option contrary to the
provisions of the Plan, or the levy of any process upon an Option, shall be
null, void and without effect.
9.5 Other Compensation Plans. Nothing contained in the Plan shall
prevent the Company from adopting other compensation arrangements.
9.6 Limitation of Authority. No person shall at any time have any right
to receive an Option hereunder and no person shall have authority to enter into
an agreement on behalf of the Company for the granting of an Option or to make
any representation or warranty with respect thereto, except as granted by the
Board or the Committee. Optionees shall have no rights in respect to any Option
except as set forth in the Plan and the applicable Stock Option Agreement.
9.7 No Right to Employment. Neither the action of the Company in
establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan or any Stock Option Agreement, or any provision of the
Plan, shall be construed as giving to any person the right to be retained in the
employ of the Company or any Subsidiary.
9.8 Change of Control. If granted by the Committee in the Stock Option
Agreement, in the event of a Change of Control, Options granted under the Plan
shall become exercisable in full whether or not otherwise exercisable at such
time, and any such Option shall remain exercisable in full thereafter until it
expires pursuant to its terms. In the event of a Change of Control, each
outstanding Option may be assumed or an equivalent option or right shall be
substituted by the successor corporation or a parent or subsidiary of such
successor corporation. If such successor corporation does not agree to assume
the outstanding Options or to substitute equivalent options or rights, then each
Option, at the direction and discretion of the Committee:
(i) may (subject to such conditions, if any, as the Committee
deems appropriate under the circumstances) be cancelled
unilaterally by the Company in exchange for (a) a transfer
to such Optionee of the number of whole shares of Stock, if
any, equal in Fair Market Value to the then-difference
between the exercise price of the Option and the Fair Market
Value of the Stock issuable upon the Option's exercise, or
(b) a cash payment equal in to the then-difference between
the exercise price of the Option and the Fair Market Value
of the Stock issuable upon the Option's exercise.
(ii) may be cancelled unilaterally by the Company if the exercise
price equals or exceeds the Fair Market Value of a share of
Stock on a date set by the Board.
9.9 Option Period. No Option granted under the Plan shall be
exercisable or payable more than 10 years from the date of grant.
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<PAGE> 34
9.10 Not a Shareholder. The person or persons entitled to exercise, or
who have exercised, an Option shall not be entitled to any rights as a
shareholder of the Company with respect to any shares subject to the Option
until such person or persons shall have become the holder of record of such
shares.
9.11 Headings. The headings in this Plan have been inserted solely for
convenience of reference and shall not be considered in the interpretation or
construction of this Plan.
9.12 Governing Law. The validity, interpretation, construction and
administration of this Plan shall be governed by the laws of the Commonwealth of
Kentucky.
SECTION 10 -- TAXES
10.1 Tax Withholding. All Optionees shall make arrangements
satisfactory to the Committee to pay to the Company, at the time of exercise in
the case of a Nonqualified Stock Option, any federal, state or local taxes
required to be withheld with respect to such shares. If such Optionee shall fail
to make such tax payments as are required, the Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Optionee.
10.2 Share Withholding. If permitted by the Committee, the tax
withholding obligation may be satisfied by the Company retaining shares of Stock
with a Fair Market Value (determined on the date the amount required to be
withheld is determined (the "Tax Date")) equal to the minimum amount required to
be withheld. Any Stock so withheld will not be counted against the number of
shares available for issuance under Section 3.1 of the Plan. Any surrender by a
Reporting Person of previously owned Stock to satisfy tax withholding
obligations arising upon exercise of this Option must comply with the applicable
provisions of Rule 16b-3. All elections by an Optionee to have Stock withheld to
satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Committee and shall be subject to the following restrictions:
(i) the election must be made on or prior to the applicable Tax
Date;
(ii) once made, the election shall be irrevocable as to the Option
or portion of an Option as to which the election is made; and
(iii) all elections shall be subject to the consent or disapproval
of the Committee.
SECTION 11 -- EFFECTIVE DATE OF PLAN
The Plan shall be effective on the date (the "Effective Date") when the
Board adopts the Plan, subject to approval of the Plan by a majority of the
total votes eligible to be cast at a meeting of shareholders following adoption
of the Plan by the Board, which vote shall be taken
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<PAGE> 35
within 12 months of the Effective Date; provided, however, that Options may be
granted before obtaining shareholder approval of the Plan, but any such Options
shall be contingent upon such shareholder approval being obtained and may not be
exercised before such approval.
SECTION 12 -- TERM OF PLAN
Unless terminated earlier by the Committee, no Option shall be granted
under the Plan more than ten years after the Effective Date as defined in
Section 11.
* * * * *
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<PAGE> 36
REVOCABLE PROXY
ALMOST FAMILY, INC.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of ALMOST FAMILY, INC., a Delaware
corporation (the "Company"), hereby appoints WILLIAM B. YARMUTH and C. STEVEN
GUENTHNER, and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting on Friday,
November 3, 2000, at 10:30 a.m. local time, and at any adjournment thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
(except as marked to the contrary below): For All
For Withheld Except
[ ] [ ] [ ]
William B. Yarmuth, Steven B. Bing, Donald G. McClinton, Patrick B. McGinnis,
Tyree G. Wilburn, Jonathan D. Goldberg, Wayne T. Smith and W. Earl Reed,
III.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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2. PROPOSAL TO APPROVE THE 2000 STOCK
OPTION PLAN: For Against Abstain
[ ] [ ] [ ]
2. PROPOSAL TO RATIFY THE APPOINTMENT
OF ARTHUR ANDERSEN LLP as independent
auditors for the Company. [ ] [ ] [ ]
4. DISCRETIONARY AUTHORITY: To vote with discretionary authority with respect to
all other matters which may properly come before the Annual Meeting.
This proxy, when properly executed, will be voted in accordance with
any directions given above. IF NO ELECTION IS MADE, THE PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 and 3.
MANAGEMENT RECOMMENDS A VOTE FOR THE ABOVE MATTERS.
Please be sure to sign and date this Proxy in the box below.
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Date
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Stockholder sign above Co-holder (if any) sign above
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
ALMOST FAMILY, INC.
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Please sign exactly as name appears on label. If shares are held by joint
tenants, all parties in the joint tenancy must sign. When signing as attorney,
executor, administrator, trustee or guardian, please indicate the capacity in
which signing. If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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