UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
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
Filed by the Registrant
x
Filed by a Party other than the
Registrant
o
Check the appropriate box:
o
Preliminary
Proxy Statement
o
Confidential, for Use of
the
x
Definitive Proxy
Statement
Commission Only (as permitted
o
Definitive Additional
Materials
by Rule 14a-6(e)(2))
o
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.
o
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:
5. Total fee paid:
o
Fee paid previously with
preliminary materials.
o
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:
NATIONAL HOME HEALTH CARE CORP.
700 White Plains Road
Scarsdale, New York 10583
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on October 30, 2007
_______________
To the Stockholders of National Home Health Care Corp.:
NOTICE IS HEREBY GIVEN, that the 2006 annual meeting of stockholders (the
“
Meeting
”) of National Home Health Care Corp. (the
“
Company
”) will be held at the offices of Troutman Sanders LLP, The
Chrysler Building, 405 Lexington Avenue, New York, New York 10174, at 2:00 p.m., local
time, on Tuesday, October 30, 2007, for the following purposes:
|
|
(1)
|
To elect six directors of the Company to hold
office until the next annual meeting of stockholders and until their successors
shall have been duly elected and qual
ified; 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, the annual report to stockholders of the Company for the
Company’s fiscal year ended July 31, 2006 and the quarterly report on Form 10-Q of
the Company for its fiscal quarter ended April 30, 2007 are enclosed herewith. Only holders
of record of Common Stock of the Company at the close of business on September 28, 2007 are
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
October 2, 2007
All stockholders are cordially invited to attend the Meeting. If you do not expect to be
pr
e
sent, please date and sign the enclosed form of proxy and return it
promptly using the e
n
closed envelope. No postage is required if mailed in the
United States.
NATIONAL HOME HEALTH CARE CORP.
700 White Plains Road
Scarsdale, New York 10583
________________________
PROXY STATEMENT
________________________
This proxy statement is furnished to the holders of Common Stock, par value $.001 per share
(“
Common Stock
”), of National Home Health Care Corp. (the
“
Company
”) in connection with the solicitation by and on behalf of its
board of directors (the “
Board of Directors
”) of proxies
(“
Proxy
” or “
Proxies
”) for use at the 2006 Annual
Meeting of Stockholders (the “
Mee
t
ing
”) to be held on
Tuesday, October 30, 2007, at 2:00 p.m., local time, at the office of Troutman Sanders LLP,
The Chrysler Building, 405 Lexington Avenue, New York, New York 10174, and at any
adjournments or postponements thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. The cost of preparing, assembling, printing and
mailing the Notice of Annual Meeting of Stockholders, this proxy statement, Proxies and
annual reports is to be borne by the Company. The Company also will reimburse brokers who
are holders of record of Common Stock for their reasonable out-of-pocket expenses in
forwarding Proxies and Proxy soliciting material to the beneficial owners of such shares.
In addition to the use of mails, Proxies may be solicited without extra compensation by
directors, officers and employees of the Company by telephone, telecopy, telegraph, email
or personal interview.
The principal executive offices of the Company are located at 700 White Plains Road,
Scarsdale, New York 10583. This Proxy Statement and the accompanying form of Proxy are
being mailed on or about October 2, 2007.
It is important that your shares are represented at the Meeting, and, therefore, all
stockholders are cordially invited to attend the Meeting. However, whether or not you plan
to attend the Meeting, you are urged to, as promptly as possible, mark, sign, date and
return the enclosed proxy card, which requires no postage if mailed in the United States in
the enclosed pre-paid envelope. If you hold shares directly in your name and attend the
Meeting, you may vote your shares in person, even if you previously submitted a proxy
card.
A Proxy may be revoked by a stockholder at any time before its exercise by filing with
Steven Fialkow, the Secretary of the Company, at the address set forth above, an instrument
of revocation or a duly executed Proxy bearing a later date, or by attending the Meeting
and electing to vote in person. Attending the Meeting will not, in and of itself,
constitute revocation of a Proxy. Properly executed proxies will be voted in accordance
with instructions given by stockholders at the places provided for such purpose in the
accompanying form of Proxy. Unless otherwise specified, the shares represented by such
Proxies will be voted
FOR
the election of the six nominees for directorship named
herein.
The Company has allocated shares of Common Stock to certain employees under its Savings and
Stock Investment Plan (the
“Savings Plan”
) organized under Section
401(k) of the Internal Revenue Service. Separate Proxies are being transmitted to each
employee of the Company who is a participant in the Savings Plan. Shares held in a
participant’s account will be voted by the trustee of the Savings Plan as directed by
the participant in a signed Proxy for Savings Plan participants which is timely returned to
the Savings Plan’s trustee or its designee. Shares as to which the Savings Plan
trustee does not receive a timely direction will be voted by the trustee as directed by the
administrator of the Savings Plan in such manner as the Savings Plan administrator deems
proper in its fiduciary capacity for the benefit of the Savings Plan and its
participants.
2
VOTING SECURITIES
The close of business on September 28, 2007 has been fixed by the Board of Directors as the
record date (the “
Record Date
”) for the determination of stockholders
entitled to notice of, and to vote at, the Meeting and any adjournments or postponements
thereof. As of the Record Date, there were 5,662,531 shares of Common Stock issued and
outstanding. 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
issued and outstanding shares of Common Stock is necessary to constitute a quorum at the
Meeting. Votes withheld, abstentions and broker non-votes are included in determining
whether a quorum is present.
Directors are elected by a plurality of the votes cast at the Meeting. Votes withheld will
not be considered votes cast in the final tally of votes with regard to the proposal.
The Board of Directors has unanimously recommended a vote FOR of each nominee for
directorship named in the Proxy.
If you hold your shares through a broker, bank or other representative, generally the
broker, bank or other representative may only vote the shares that it holds for you in
accordance with your instructions. However, if the broker, bank or other representative
does not timely receive your instructions, it may vote on certain matters for which it has
discretionary authority. If a broker, bank or other representative cannot vote on a
particular matter because it does not have discretionary voting authority, this is a
“broker non-vote” on that matter. Brokers, banks and other representatives will
be able to exercise discretionary voting authority on each matter that is presently
scheduled to come before the Meeting.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding
the beneficial ownership of Common Stock as of September 14, 2007
by (i) each person or group known by the Company
to be the beneficial owner of more than 5% of the issued and
outstanding shares of Common Stock; (ii) each nominee for directorship; (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.
Unless otherwise indicated below, the address for each listed
director and executive officer is in care of National Home Health Care Corp., 700 White
Plains Road, Scarsdale, New York 10583. We have determined beneficial ownership in
accordance with the rules of the Securities and Exchange Commission (the
“
SEC
”)
and, as a result, include voting and/or investment power with
respect to shares. To our knowledge, except under applicable community property laws or as
otherwise indicated, the persons named in the table have sole voting and sole investment
control with respect to all shares shown as beneficially owned. The percentage of ownership
of Common Stock for each stockholder is based on 5,662,531 shares of Common Stock
outstanding as of September 14, 2007. The number of shares of Common Stock outstanding used
in calculating the percentage for each listed person includes the shares of Common Stock
underlying options held by that person that are exercisable within 60 days following the
Record Date.
|
Name and Address
of Beneficial
Owner
|
Amount and Nature of
Beneficial
Ownership
(1)
|
Percent of Class
(%)
|
|
AG Home Health Acquisition Corp;
and
AG Home Health LLC
c/o AG Special Situation
Corporation
245 Park Avenue
New York, NY 10167
|
|
|
|
2,794,252
|
(2)
|
49.3
|
%
|
|
|
|
Frederick H. Fialkow
|
|
|
|
1,995,110
|
(3)
|
35.2
|
%
|
|
|
|
Bernard Levine, M.D.
|
|
|
|
809,904
|
(4)
|
14.3
|
%
|
|
|
|
Steven Fialkow
|
|
|
|
142,075
|
(5)
|
2.5
|
%
|
|
|
|
Ira Greifer, M.D.
|
|
|
|
58,911
|
(6)
|
1.0
|
%
|
|
|
|
Robert C. Pordy, M.D.
|
|
|
|
6,454
|
(7)
|
*
|
|
|
|
|
Robert P. Heller
|
|
|
|
58,440
|
(8)
|
1.0
|
%
|
|
|
|
Harold Shulman, J.D.,
CPA
|
|
|
|
-
|
|
-
|
|
|
|
|
Salvatore Alternative
19355 Turnberry Way
Aventura, FL 33180
|
|
|
|
477,482
|
(9)
|
8.5
|
%
|
|
|
|
Heartland Advisors, Inc. and
William J. Nasgovitz
789 North Water Street
Milwaukee, WI 53202
|
|
|
|
441,000
|
(10)
|
7.8
|
%
|
|
|
|
Lawndale Capital Management, LLC
Andrew E. Shapiro and Diamond A
Partners,
L.P.
591 Redwood Highway, Suite 2345
Mill Valley, CA 94941
|
|
|
|
395,389
|
(11)
|
7.0
|
%
|
|
|
All executive officers and
directors as a group (7 persons)
|
|
|
|
3,070,894
|
(12)
|
52.6
|
%
|
|
_________________
*
Less than 1%
4
(1) Includes, where indicated,
shares allocated to certain individuals under
the
Savings
Plan
as of
September 14, 2007. 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 Savings Plan will vote such shares in the
same proportion as it votes all of the shares for which such trustee receives
instructions.
(2) AG Home Health
Acquisition Corp., a Delaware corporation
(“
AG Home
Health
”)
and
AG Home Health LLC, a
Delaware limited liability company
(
“Acquisition Corp.”)
may be deemed the beneficial owners of 2,794,252
shares of
Common
Stock, which are the shares subject to
a
voting agreement
dated November 28, 2006 between Bernard Levine, Frederick H.
Fialkow and Acquisition Corp (the “
Voting
Agreement
”)
. As a result of the
Voting
Agreement, AG Home
Health and Acquisition Corp. may be deemed to share voting power and dispositive power with
respect to
2,794,252
outstanding
shares
beneficially owned by Frederick H. Fialkow and Bernard Levine. AG Home Health is wholly
owned by AG Home Health Manager LLC, a Delaware limited partnership, which is wholly owned
by AG Funds, L.P., a Delaware limited partnership. The general partner of AG Funds, L.P. is
AG Funds GP, L.P., a Delaware limited partnership. JM Funds LLC, a Delaware limited
liability company, is the general partner of AG Funds GP, L.P. John M. Angelo and Michael
L. Gordon are the sole members of JM Funds LLC. Each of Messrs. Angelo and Gordon may be
deemed to have shared power to direct the voting and disposition of the shares deemed to be
beneficially owned by AG Home Health and Acquisition Corp., and therefore may be deemed to
be the beneficial owner of such shares.
(3)
Includes
66,816
shares of
Common
Stock allocated to Mr. Fialkow’s account under the
Savings Plan. Does not include 602 shares of
Common
Stock owned by Mr.
Fialkow’s wife, as to which shares Mr. Fialkow disclaims beneficial ownership.
Includes 1,995,110
shares of
Common
Stock that may be
deemed beneficially owned by AG Home Health and Acquisition Corp. as a result of the
Voting
Agreement.
(4) Includes 10,762 shares of
Common
Stock that may be acquired pursuant to currently
exercisable options granted under
the
Company’s 1992 Stock Option Plan and 1999 Stock Option
Plan (collectively, the
“Option
Plans”
).
Includes 799,142 shares of
Common Stock that may be deemed beneficially owned by AG Home
Health and Acquisition Corp. as a result of the Voting
Agreement.
(5) Represents 102,671 shares of
Common
Stock that may be acquired pursuant to currently
exercisable options granted under the
Option
Plans
and 39,404 shares of
Common Stock allocated to Mr. Fialkow’s account under the Savings
Plan. Does not include 2,866 shares of
Common
Stock owned by Mr.
Fialkow’s wife as custodian for Mr. Fialkow’s son, as to which shares Mr.
Fialkow disclaims beneficial ownership.
5
(6) Includes 10,762 shares of
Common
Stock that may be
acquired pursuant to currently exercisable options granted under the
Option
Plans.
(7) Includes 5,250 shares of Common
Stock that may be acquired pursuant to currently exercisable options granted under
the
Option
Plans.
(8) Includes 44,088 shares of
Common
Stock that may be
acquired pursuant to currently exercisable options granted under the
Option
Plans
and 12,809 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 owned by Salvatore Alternative is based solely on
a Schedule 13D/A
filed by such person with the SEC on
January 11, 2007. The Company
has no independent
knowledge of the accuracy or completeness of the information set forth in such Schedule
13D, 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 of
Common
Stock owned by Heartland Advisors, Inc. and William J.
Nasgovitz is based
solely
on a Schedule 13G/A filed by such persons with the SEC on
February 12, 2007.
The Company
has no independent knowledge of the accuracy or completeness
of the information set forth in such filings, but has no reason to believe that such
information is not complete or accurate.
(11) The amount and nature of beneficial ownership
of these shares of Common
Stock owned by Lawndale
Capital Management, LLC, Andrew E. Shapiro and Diamond A. Partners,
L.P. is based
solely
on a Schedule 13D/A
filed by such persons with the SEC on
May 16,
2007.
The Company
has no independent knowledge of the accuracy or completeness
of the information set forth in such filing, but has no reason to believe that such
information is not complete or accurate.
(12) Includes 173,533 shares of
Common
Stock that may be
acquired pursuant to currently exercisable options granted under the
Option
Plans, and
119,029
shares of
Common
Stock allocated
under the Savings Plan.
6
Change of Control
Resulting from Merger Agreement
The Company, AG Home Health and Acquisition Corp entered into
an Agreement and Plan of Merger, dated November 28, 2006, as amended (the “
Merger
Agreement
”), pursuant to which and subject to the conditions set forth therein,
Acquisition Corp. will merge with and into the Company, with the Company continuing as the
surviving corporation under the laws of the State of Delaware (the
“Merger”)
.
Pursuant to the Merger
Agreement, a
t the effective time and as a result of the Merger, except as otherwise
provided in the contribution agreement described under “Certain Relationships and
Related Transactions”, each share of Common Stock issued and outstanding immediately
prior to the effective time of the Merger will be cancelled, extinguished and converted
into the right to receive $12.75 per share payable in cash (the “
Merger
Consideration
”). In addition, each shareholder of Common Stock (other than the
executive officers of the Company and members of their families) will receive an additional
$0.10 per share in cash if a proposed settlement of a Delaware class action suit brought by
Helaba Invest Kapitalanlagegesellschaft mbH is approved. The Merger Agreement may be
terminated by any of the parties if there is any law that prohibits the consummation of the
Merger; if a governmental order is issued that prohibits the consummation of the Merger or
the payment of the Merger Consideration; or if the Merger is not consummated before
November 21, 2007. The Company’s shareholders approved the Merger Agreement on June
15, 2007.
On November 28, 2006, Bernard Levine and Frederick Fialkow
entered into the Voting Agreement pursuant to which Messrs. Levine and Fialkow each agreed
to vote for and to grant irrevocable proxies to Acquisition Corp’s designees for the
purpose of voting all of the their aggregate shares of Common Stock (approximately 49.4% of
the outstanding Common Stock) in favor of the Merger Agreement and the transactions
contemplated thereby and against any alternative proposals or Frustrating Transactions (as
defined by the Voting Agreement) in accordance with the provisions set forth therein.
7
Proposal
ELECTION OF DIRECTORS
At the Meeting, stockholders will elect six directors to serve until the next annual
meeting of stockholders and until their respective successors are elected and qualified.
Unless otherwise directed, the persons named in the Proxy intend to cast all Proxies
received
FOR
the election of Frederick H. Fialkow, Steven Fialkow, Ira Greifer,
M.D., Bernard Levine, M.D., Robert C. Pordy, M.D. and Harold Shulman, J.D., CPA, to serve
as directors upon their nomination at the Meeting. All nominees currently serve on the
Board of Directors and their terms expire at the Meeting. Each nominee has advised the
Company of his willingness to serve as a director of the Company. In case any nominee
should become unavailable for election to the Board of Directors for any reason, 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 then existing Board of
Directors.
Directors and Executive Officers
The following table sets forth certain information concerning the nominees for director and
the executive officers of the Company:
|
Name
|
Age
|
Year First Elected or Appointed Director
|
Present Position
with the Company
|
|
Frederick H. Fialkow
|
76
|
1985
|
Chairman of the Board of Directors
|
|
Bernard Levine, M.D.
|
78
|
1983
|
Director; Member of Audit, Compensation and Nominating Committees
|
|
Steven Fialkow
|
48
|
1991
|
President, Chief Executive Officer, Secretary and Director
|
|
Ira Greifer, M.D.
|
76
|
1983
|
Director; Member of Audit, Compensation, Nominating and Special Committees
|
|
Robert C. Pordy, M.D.
|
50
|
1995
|
Director; Member of Audit and Special Committees
|
|
Harold Shulman, J.D., CPA
|
72
|
2003
|
Director; Member of Audit, Compensation and Special Committees
|
|
Robert P. Heller
|
46
|
--
|
Vice President of Finance, Chief Financial Officer and Treasurer
|
All directors of the Company hold office until the next annual meeting of stockholders and
until their successors have been elected and qualified. The executive officers of the
Company are elected by the Board of Directors at the first meeting after each annual
meeting of the Company's stockholders and hold office until their death, resignation or
removal from office.
8
Information about Nominees for Directorship
The following is a brief summary of the background of each nominee for directorship:
Frederick H. Fialkow
has been Chairman of the Board of Directors 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 had been a Professor of Internal Medicine at New York University School of
Medicine with a sub-specialty in allergy and immunology. He is currently Professor
Emeritus. Dr. Levine devotes a portion of his time to private investment activities.
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., a
wholly owned subsidiary of the Company, from August 1995 until October 1997. He also served
as Executive Vice President of Health Acquisition Corp., a wholly owned subsidiary of the
Company (“
Health Acquisition
”), from May 1994 until August 1995, as
President of National HMO (New York), Inc., a wholly-owned subsidiary of the Company, 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 is a
Professor of Pediatrics at the Albert Einstein College of Medicine
(
“Einstein”
) and is a Senior Professor in the Department of Pediatrics
at Montefiore Medical Center (
“Montefiore”).
He is also the past
director of the Ira Greifer Children’s Kidney Center at the Children’s Hospital
at Montefiore. Dr. Greifer has been affiliated with Einstein and Montefiore since 1966.
Robert C. Pordy, M.D.
has been a director of the Company since December 1995. Since
January 1989, Dr. Pordy has been employed by Hoffmann-LaRoche, Inc., a biopharmaceutical
company, currently holding the position of Vice President, Medical Science.
Harold Shulman, J.D., CPA
has been a director of the Company since July 2003. In
1982, he was one of the founding shareholders of the accounting firm of Shulman, Cohen,
Furst & Co. P.C., a mid-size certified public accounting firm in New York City. Since
January 2006, he has been a partner at Citrin Cooperman & Company LLP, a New York-based
public accounting firm. Mr. Shulman is a Certified Public Accountant and is admitted to the
Bar of the State of New York.
9
Information about Non-Director Executive Officers
Robert P. Heller
, a Certified Public Accountant, has served as Vice President of
Finance, Chief Financial Officer and Treasurer of the Company since March 1989. Prior
thereto, he was an accountant with Eisner LLP, a firm of certified public accountants.
Meetings of the Board of Directors and of Committees
The Board of Directors held six meetings during the fiscal year ended July 31, 2006
(“
Fiscal 200
6
”). No director attended fewer than 75% of the
aggregate of (i) all of the meetings of the Board of Directors during Fiscal 2006 and (ii)
all of the meetings of all the committees of the Board of Directors on which he served
during Fiscal 2006. Four of the six members of the Board of Directors are independent as
defined in Rule 4200(a)(15) of the listing standards of the Nasdaq National Market
(“
Nasdaq
”).
The Company’s Board of Directors has a separate compensation committee, nominating
committee and audit committee.
The Company's compensation committee is currently composed of Drs. Greifer and Levine and
Mr. Shulman, each of whom is an independent director as defined in Rule 4200(a)(15) of the
Nasdaq’s listing standards. 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. A report of the
compensation committee is contained beginning on page 15. The compensation committee did
not hold any formal meetings during Fiscal 2006; however, its members met informally from
time to time.
The Company’s nominating committee is currently composed of Drs. Greifer and Levine,
each of whom is an independent director as defined in Rule 4200(a)(15) of the
Nasdaq’s listing standards. The nominating committee did not hold any meetings during
Fiscal 2006, but its members met informally from time to time.
The function of the nominating committee is to consider and recommend to the Board
candidates for appointment or election as directors. The specific functions and
responsibilities of the nominating committee are set forth in a written charter of the
nominating committee, adopted by the Board of Directors. A copy of the nominating committee
charter was included as an appendix to the Company’s proxy statement dated November
5, 2004.
A nominee to the Board of Directors must have such experience in business or financial
matters as would make such nominee an asset to the Board of Directors. In recommending
director candidates, the nominating committee takes into consideration such factors as it
deems appropriate based on the Company’s current needs. These factors may include:
professional and personal ethics and integrity; business, professional, or industry
knowledge and contacts; business and financial sophistication, common sense and wisdom, and
the ability to make informed judgments on a wide range of issues; relevant skills and
experience demonstrated through business, professional, charitable or civic affairs; the
ability to exercise independent judgment; as well as the candidate’s ability to
devote the required time and effort to serve on the Board.
10
The nominating committee will consider for nomination candidates recommended by
stockholders if the stockholders comply with the following requirements: If a stockholder
wishes to recommend a candidate to the nominating committee for consideration as a Board of
Directors’ nominee, such stockholder must submit in writing to the nominating
committee the recommended candidate’s name, a brief resume setting forth the
recommended candidate’s business and educational background and qualifications for
service, any other information relating to such nominee that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, and a notarized
consent signed by the recommended candidate stating the recommended candidate’s
willingness to be nominated and to serve. This information must be delivered to the
nominating committee at the Company’s address and must be received in a timely manner
as specified in the Company’s proxy statements (these timing requirements are not
applicable to persons nominated by or at the direction of the Board of Directors). The
timing requirements with respect to next year’s annual meeting are described in the
section of this proxy statement entitled “Stockholder Proposals.” The
nominating committee may request further information if it determines a potential candidate
may be an appropriate nominee.
The Company's audit committee is currently composed of Drs. Greifer, Levine and Pordy and
Mr. Shulman, each of whom meets the independence requirements for audit committee members
under the listing standards of Nasdaq, on which the Common Stock is quoted. The function of
the audit committee is to select and engage each year the independent registered public
accounting firm of the Company, to review the effectiveness of the Company's internal
accounting methods and procedures and to determine through discussions with the independent
registered public accounting firm whether any instructions or limitations have been placed
upon them in connection with the scope of their audit or its implementation. The Board of
Directors has adopted a charter for the audit committee, and the audit committee reviews
and reassesses its charter annually and recommends any changes to the Board of Directors
for approval. The audit committee held five meetings during Fiscal 2006. A report of the
audit committee follows.
Audit Committee Report
The audit committee oversees the Company's financial reporting process on behalf of the
Board of Directors. Management has the primary responsibility for the financial statements
and the reporting process, including the systems of internal controls. In fulfilling its
oversight responsibilities with respect to Fiscal 2006, the audit committee reviewed and
discussed the audited financial statements included in the Company's annual report on Form
10-K for Fiscal 2006 with management and BDO Seidman, LLP (“
BDO
”), the
Company’s independent registered public accounting firm, including a discussion of
the quality, and not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the financial
statements. The audit committee acts under the guidance of a written charter which has been
approved by the Board of Directors. The audit committee has had a written charter for
several years.
The audit committee reviewed with the Company’s independent registered public
accounting firm, who are responsible for expressing an opinion on the conformity of those
audited financial statements to generally accepted accounting principles, their judgments
as to the quality, and not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the audit committee by
Statement on Auditing Standards No. 61, as amended by Statement of Auditing Standards No.
90, relating to the conduct of the audit. In addition, the audit committee has discussed
with the independent registered public accounting firm such firm’s independence from
management and the Company including the matters in the written disclosures required by
Independence Standards Board Standard No. 1.
11
The audit committee discussed with the Company's independent registered public accounting
firm the overall scope and plans for their audit. The audit committee meets with the
Company’s independent registered public accounting firm, with and without management
present, to discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
The audit committee received the written disclosures and a letter from BDO stating that BDO
was an independent registered public accounting firm with respect to the Company within the
meaning of the federal securities laws and the rules and regulations thereunder, including
the independence rules adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002 and
Rule 3600T of the Public Company Accounting Oversight Board, which designates as interim
independence standards Rule 101 of the American Institute of Certified Public Accountants
Code of Professional Conduct and Standards Nos. 1, 2 and 3 of the Independence Standards
Board. The audit committee also discussed BDO’s independence with BDO and determined
that the provision of all services by BDO to the Company for Fiscal 2006 was compatible
with maintaining BDO’s independence under SEC rules governing the independence of a
company’s outside auditors.
In reliance on the reviews and discussions referred to above, the audit committee has
recommended to the Board of Directors (and the Board of Directors has approved) that the
audited financial statements be included in the Company's annual report on Form 10-K for
Fiscal 2006 for filing with the SEC. The audit committee also selected and engaged BDO as
the Company’s independent registered public accounting firm for the fiscal year ended
July 31, 2007.
Harold Shulman, J.D., CPA, Chair
Ira Greifer, M.D.
Bernard Levine, M.D.
Robert C. Pordy, M.D.
Audit Committee Financial Expert
The Board of Directors has determined that Harold Shulman, J.D., CPA, who is a member of
the Company’s audit committee, is an “audit committee financial expert”
and meets the independence requirements under Item 7(d)(3)(iv) of Schedule 14A under the
Securities Exchange Act of 1934.
Stockholder Communications with the Board of
Directors
Any stockholder who wishes to send communications to the Board of Directors should mail
them addressed to the intended recipient by name or position in care of: Corporate
Secretary, National Home Health Care Corp., 700 White Plains Road, Scarsdale, New York
10583. Upon receipt of any such communications, the Corporate Secretary will determine the
identity of the intended recipient and whether the communication is an appropriate
stockholder communication. The Corporate Secretary will send all appropriate stockholder
communications to the intended recipient. An “appropriate stockholder
communication” is a communication from a person claiming to be a stockholder in the
communication, and the subject of which relates solely to the sender’s interest as a
stockholder and not to any other personal or business interest.
12
In the case of communications addressed to the Board of Directors, the Corporate Secretary
will send appropriate stockholder communications to the Chairman of the Board. In the case
of communications addressed to the independent or outside directors, the Corporate
Secretary will send appropriate stockholder communications to the Chairman of the audit
committee. In the case of communications addressed to committees of the Board, the
Corporate Secretary will send appropriate stockholder communications to the chairman of
such committee.
The Board of Directors encourages all of its members to attend the Company’s annual
meeting of stockholders so that each director may listen to any concerns that stockholders
may have that are raised at the annual meeting. All of the members of the Board of
Directors attended the Company’s 2005 annual meeting of stockholders.
Section 16(a) Beneficial Ownership Reporting Compliance
Under section 16(a) of the Securities Act of 1934, the Company's directors and executive
officers, and persons who own more than ten percent (10%) of the Common Stock, are required
to file with 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 copies of such reports furnished to the Company during and/or
with respect to Fiscal 2006, the Company believes that there were no late or delinquent
filings.
Code of Ethics
The Company’s Board of Directors has adopted a Code of Ethics which applies to all of
the Company’s directors, executive officers and employees. A copy of the Code of
Ethics is available upon request to the Company’s Corporate Secretary at 700 White
Plains Road, Scarsdale, NY 10583.
Compensation Committee Interlocks and Insider Participation
The members of the Company's compensation committee are Drs. Greifer and Levine and Mr.
Shulman, all of whom are 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.
13
Performance Graph
The following graph compares the cumulative return to holders of Common Stock for the five
years ended July 31, 2006 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, 2001 in the Common Stock and
in each of the comparison groups, and assumes reinvestment of dividends.
|
Peer Group Companies (companies with an SIC code of 8082 – “Home
Health Care Services”)
|
|
ALLIED HEALTHCARE INTL INC.
|
GENTIVA HEALTH SERVICES INC.
|
|
AMEDISYS INC.
AMERICAN HOMEPATIENT INC.
|
LHC GROUP INC.
NATIONAL HOME HEALTH CARE CORP.
|
|
APRIA HEALTHCARE GROUP
|
NEW YORK HEALTH CARE INC.
|
|
CHEMED CORP.
|
VISTACARE INC.
|
|
|
|
|
|
|
14
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. The Company and Messrs. Steven
Fialkow and Robert Heller have entered into employment agreements dated as of August 1,
2005. Mr. Frederick Fialkow entered into an employment agreement dated as of November 1,
2001, which was extended on August 16, 2006 for a period of one year beginning November 1,
2006 and further extended on September 24, 2007 for a period equal to the earlier of one
year or the completion of the Merger. The Merger Agreement provides that Mr. Frederick
Fialkow’s employment agreement will terminate effective upon the completion of the
Merger. The Company and Messrs. Steven Fialkow and Robert Heller entered into new
employment agreements on November 28, 2006, amended as of June 4, 2007, effective upon the
completion of the Merger, which will replace their existing employment agreements. 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.
15
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. No additional options may be granted under the 1992 Stock Option
Plan. 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 for each executive officer, as
determined in accordance with the rules of the SEC relating to executive compensation, did
not exceed 10% of salary of such executive officer for Fiscal 2006.
Bonus
On the basis of the compensation committee's evaluation of the performance of management,
the Company provides to certain executive officers bonuses based on performance of the
Company.
Chief Executive Officer Compensation
The compensation of the Chief Executive Officer is based upon the same criteria, enunciated
above, as the other executive officers. No change was made to the base salary (except for
an annual cost of living increase adjustment) of Mr. Steven Fialkow, the Company’s
chief executive officer, during Fiscal 2006.
Certain Tax Legislation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“
Code
”) generally precludes a public company from taking a federal
income tax deduction for annual compensation in excess of $1,000,000 paid to its chief
executive officer or any of its four other most highly compensated executive officers.
Certain “performance based compensation,” however, is excluded from the
deduction limitation. The Company believes that all of the Fiscal 2006 compensation of the
Company’s executive officers is deductible.
|
|
|
Ira Greifer, M.D.
Bernard Levine, M.D.
Harold Shulman, J.D., CPA
Members of the Compensation Committee
|
|
16
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 they attend. In addition, members of the audit committee are paid an annual
fee of $5,000, payable quarterly, and members of the compensation committee are paid an
annual fee of $2,500.
Executive Compensation
The following table sets forth information concerning the annual and long-term compensation
for the Company’s last three fiscal years of the Company’s chief executive
officer and each other executive officer of the Company whose salary and bonus for Fiscal
2006 exceeded, in the aggregate, $100,000, for services rendered in all capacities to the
Company and its subsidiaries (the “
Named Executives
”):
|
Name and Principal
P
o
sition
|
Fiscal
Year
|
Annual Compensation
|
Long-Term
Co
m
pensation
Securities Unde
r
lying
Options
(#)
|
|
|
Salary ($)
|
Bonus ($)
|
All Other
Compensation ($)
|
|
|
|
|
|
|
|
|
Frederick H. Fialkow
Chairman of the Board of Directors
|
2006
2005
2004
|
$428,654
(1)
412,564
(1)
398,612
(1)
|
$144,979
115,286
208,158
|
0
0
0
|
$15,999
(2)
19,201
(3)
16,898
(4)
|
|
Steven Fialkow
President, Chief Executive Officer and Secretary
|
2006
2005
2004
|
$545,475
(5)
346,803
(5)
335,075
(5)
|
$ 39,198
96,808
190,438
|
0
0
0
|
$33,894
(6)
31,692
(7)
29,469
(8)
|
|
Robert P. Heller
Vice President of Finance, Chief Financial Officer and Treasurer
|
2006
2005
2004
|
$264,945
(9)
209,915
(9)
180,425
(9)
|
$ 9,800
24,202
55,534
|
0
0
0
|
$33,680
(10)
31,400
(11)
29,331
(12)
|
____________________
|
|
(1)
|
Includes payments of $123,654, $107,654 and $93,612 in Fiscal 2006, 2005 and
2004, respectively, for the compounded cost of living increase in salary
compensation pursuant to Mr. Fialkow’s employment agreement with the
Company.
|
|
|
(2)
|
Represents $7,199 paid to Mr. Fialkow as health insurance coverage and $8,800
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code.
|
|
|
(3)
|
Represents $10,801 paid to Mr. Fialkow as health insurance coverage and $8,400
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code.
|
17
|
|
(4)
|
Represents $8,698 paid to Mr. Fialkow as health insurance coverage and $8,200
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code.
|
|
|
(5)
|
Includes payments of $20,475, $21,803 and $10,075 in Fiscal 2006, 2005 and
2004, respectively, for the compounded cost of living increase in salary
compensation pursuant to Mr. Fialkow’s employment agreement with the
Company.
|
|
|
(6)
|
Represents $13,094 paid to Mr. Fialkow as health insurance coverage, $8,800
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code and $12,000
contributed by the Company to a deferred compensation plan for the benefit of
Mr. Fialkow.
|
|
|
(7)
|
Represents $11,292 paid to Mr. Fialkow as health insurance coverage, $8,400
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code and $12,000
contributed by the Company to a deferred compensation plan for the benefit of
Mr. Fialkow.
|
|
|
(8)
|
Represents $9,269 paid to Mr. Fialkow as health insurance coverage, $8,200
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code and $12,000
contributed by the Company to a deferred compensation plan for the benefit of
Mr. Fialkow.
|
|
|
(9)
|
Includes payments of $9,945, $12,703 and $5,425 in Fiscal 2006, 2005 and 2004,
respectively, for the compounded cost of living increase in salary compensation
pursuant to Mr. Heller’s employment agreement with the Company.
|
|
|
(10)
|
Represents $12,880 paid to Mr. Heller as health insurance coverage, $8,800
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code and $12,000
contributed by the Company to a deferred compensation plan for the benefit of
Mr. Heller.
|
|
|
(11)
|
Represents $11,000 paid to Mr. Heller as health insurance coverage, $8,400
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code and $12,000
contributed by the Company to a deferred compensation plan for the benefit of
Mr. Heller.
|
|
|
(12)
|
Represents $9,131 paid to Mr. Heller as health insurance coverage, $8,200
representing the Company’s matching contribution as deferred compensation
under the Savings Plan pursuant to Section 401(k) of the Code and $12,000
contributed by the Company to a deferred compensation plan for the benefit of
Mr. Heller.
|
Option/SAR Grants in Last Fiscal Year
No stock options or SARs were granted to any of the Named
Executives in
Fiscal
2006.
18
Option Exercises in Last Fiscal Year
and Year-End Option Value
The following table sets forth certain information concerning the number of shares of
Common Stock acquired upon the exercise of stock options during Fiscal 2006 and the number
and value at July 31, 2006 of shares of Common Stock subject to unexercised options held by
the Named Executive Officers.
|
Name
|
Shares Acquired
On Exercise (#)
|
Value Realized ($)
|
Number of Securities Underlying Unexercised
Options/SARs
at FY-End (#)
Exercisable/
Unexercisable
|
Value of Unexercised In-the-Money Options/SARs at
FY-End ($) Exercisable/
Unexercisable
|
|
Frederick H. Fialkow
(1)
|
--
|
--
|
57,750/0
|
$ 0/0
|
|
Steven Fialkow
|
--
|
--
|
102,671/0
|
678,587
/0
|
|
Robert P. Heller
|
--
|
--
|
44,088/0
|
280,384/0
|
______________
(1) The options held by Mr. Fialkow at July 31, 2006 have expired.
Employment and Related Agreements
Frederick H. Fialkow
. Effective November 1, 2001, the Company entered into an
amended and restated employment agreement with Mr. Fialkow for a term of five years with an
automatic renewal for an additional five years, unless one of the parties elects not to
renew the agreement. Pursuant to the agreement, Mr. Fialkow is employed as the Chairman of
the Company’s Board of Directors. The agreement provides for an annual salary of
$305,000 (before giving effect to cost of living adjustments). In addition, Mr. Fialkow is
entitled to receive an annual bonus in an amount equal to 4% 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. Under the agreement, upon a change of control of the
Company, Mr. Fialkow shall receive an amount equal to one-half of his annual salary as then
in effect.
On August 16, 2006, the Company agreed to extend
Mr. Fialkow’s existing employment agreement, on the same terms and conditions, for a
period of one year beginning November 1, 2006, subject to earlier termination by the
Company under certain circumstances
. On September 24, 2007, the Company agreed to
further extend Mr. Fialkow’s existing employment agreement, on the same terms and
conditions, for a period equal to the earlier of one year or the completion of the Merger.
The Merger Agreement provides that Mr. Fialkow’s employment agreement will terminate
effective upon the completion of the Merger.
Steven Fialkow.
Effective August 1, 2005, the Company entered into an employment
agreement with Mr. Fialkow, expiring on August 1, 2010, pursuant to which he is employed as
the Company’s President, Chief Executive Officer and Secretary. The agreement
provides for an annual base salary of $525,000 plus an annual cost of living adjustment. In
addition, Mr. Fialkow is entitled to receive an annual bonus in an amount equal to 4% of
the amount by which the Company’s income from operations in any fiscal year exceeds
$5,000,000. The maximum of
19
salary and bonus payable to Mr. Fialkow in respect of any fiscal year shall not exceed
$750,000. Under the agreement, if Mr. Fialkow’s employment is terminated by the
Company without cause or by him for any reason within one year following a change of
control of the Company, Mr. Fialkow shall receive an amount equal to 2.99 times his annual
base salary as then in effect and his bonus for the most recently completed fiscal year. In
connection with the Merger Agreement, Mr. Fialkow entered into a new employment agreement
with the Company dated November 28, 2006, as amended.
Pursuant
to the new employment agreement, Mr. Fialkow will be employed by the surviving corporation
as President, Chief Executive Officer and Secretary upon the completion of the Merger. The
new employment agreement is subject to the consummation of the Merger and has a five year
term commencing on the date of such Merger. The
new
employment agreement
contains substantially the same terms as Mr. Fialkow’s existing employment agreement,
except that:
(i)
the new employment agreement will expire approximately 2 years
after Mr. Fialkow’s existing agreement would expire;
(ii) his base salary will be reduced to $475,000 per
annum;
(iii)
his annual bonus will be calculated based on annually
increasing adjusted EBITDA targets rather than as a
percentage of operating profits;
(iv)
he will receive
an interest in AG Home Health equal to a specified percentage (not to exceed an aggregate
of 6.5%) of the future profits of the surviving corporation (after a preferred return on
the invested capital of the acquirors);
(v) in the
event certain financial goals are not achieved with respect to certain investors’
internal rate of return, any payments owed to him due to a change in control will be
reduced by $75,000;
and
(vi)
by continuing
his employment with the Company, he will not receive the
$1,755,028
payable to him
under the change of control provisions of his existing employment agreement, but would be
entitled to receive
change of control payments in the
event of
a subsequent change of control while the new
employment
agreement
is in effect.
Robert P. Heller.
Effective August 1, 2005, the Company entered into an employment
agreement with Mr. Heller, expiring on August 1, 2010, pursuant to which he is employed as
the Company’s Vice President of Finance, Chief Financial Officer and Treasurer. The
agreement provides for an annual base salary of $255,000 plus an annual cost of living
adjustment. In addition, Mr. Heller is entitled 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 $5,000,000. The maximum of salary and bonus payable to Mr. Heller in respect
of any fiscal year shall not exceed $350,000. Under the agreement, if Mr. Heller’s
employment is terminated by the Company without cause or by him for any reason within one
year following a change of control of the Company, Mr. Heller shall receive an amount equal
to 2.99 times his annual base salary as then in effect and his bonus for the most recently
completed fiscal year. In connection with the Merger Agreement, Mr. Heller entered into a
new employment agreement with the Company, dated November 28, 2006, as amended. Pursuant to
the new employment agreement, Mr. Heller will be employed by the surviving corporation as
Executive Vice President of Finance, Chief Financial Officer and Treasurer upon the
completion of the Merger.
The
new
employment agreement
is subject to the consummation of the Merger and has a five year term
commencing on the date of such Merger.
The new
employment agreement contains substantially the same terms as his existing employment
agreement, except that: (i) the new employment agreement will expire approximately 2
years after Mr. Heller’s existing agreement would expire; (ii) his base salary
will be reduced to $230,000 per annum; (iii) his annual bonus will be calculated based
on annually increasing adjusted EBITDA targets rather than as a percentage of operating
profits; (iv) he will receive an interest in AG Home Health equal to a specified
percentage (not to exceed
20
an aggregate of 3.0%) of the future profits of the surviving corporation; (v) in the
event certain financial goals are not achieved with respect to certain investors’
internal rate of return, any payments owed to him due to a change in control will be
reduced by $75,000; and (vi) by continuing his employment with the Company he will not
receive the $866,503 payable to him under the change of control provisions of his existing
employment agreement,
but would be entitled to receive
change of control payments in the event of a subsequent change
of control
while the new employment
agreement
is in
effect.
The employment agreements of Messrs. Frederick H. Fialkow, Steven Fialkow and Robert P.
Heller 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 and Robert P. Heller
from competing with the Company for a period of one year from the date of termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Health Acquisition Corp., a wholly-owned subsidiary of the Company, has leased office
premises, located in Queens, New York from a company controlled by Mr. Frederick H.
Fialkow, the 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. Net rent expense
under such lease was approximately $213,000 for Fiscal 2006. The Company believes that such
lease contains terms in the aggregate no less advantageous to the Company than could have
been obtained from an unrelated third party.
In connection with the Merger Agreement, on November 28, 2006, Mr. Frederick Fialkow
entered into a contribution agreement with the Company, Acquisition Corp and AG Home
Health, pursuant to which he has agreed to contribute to the Company, immediately prior to
the effective time of the Merger, a number of shares of Common Stock equal to eight million
dollars ($8,000,000) divided by the Merger Consideration, in exchange for the issuance by
the Company of a promissory note payable on the sixty sixth (66) month after the effective
time of the Merger bearing interest at eight percent (8%) per annum.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
BDO Seidman, LLP (
“BDO”
) has served as the independent registered public
accounting firm of the Company since 2001. The Company’s audit committee also
selected and engaged BDO as the Company’s independent registered public accounting
firm for the fiscal year ended July 31, 2007. Representatives of BDO are expected to be
present at the Meeting with the opportunity to make a statement and to be available to
respond to questions regarding any appropriate matters.
Audit Fees
Audit fees billed to the Company by BDO for its audit of the Company’s financial
statements included in the Company’s annual report on Form 10-K and for its review of
the financial statements included in the Company’s quarterly reports on Form 10-Q
filed with the SEC for Fiscal 2006 and 2005 were $139,000 and $117,000, respectively.
21
Audit-
Related Fees
There were no audit-related fees billed to the Company by BDO for Fiscal 2006 and 2005
respectively.
Tax Fees
Tax fees billed to the Company by BDO for the Company’s tax returns for Fiscal 2006
and 2005 were $38,000 and $34,000, respectively.
All Other Fees
Other fees billed to the Company by BDO for all other non-audit and non-tax services
provided by BDO, including the 401(k) Plan and cost report services, for Fiscal 2006 and
2005 were $31,000 and $20,000, respectively.
Pre-Approval Policies
The audit committee has adopted a procedure under which all
fees charged by
BDO must be pre-approved by the audit committee. All of the fees
described under the caption “All Other Fees” were pre-approved by the audit
committee.
MISCELLANEOUS
Stockholder Proposals
Stockholders wishing to present proposals at the 2007 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 2007 annual meeting of stockholders must submit their
proposals to the Company in writing on or before January 1, 2008.
If the Company does not receive notice by March 16, 2008 from a stockholder who intends to
present at the next annual meeting a proposal that is not discussed in the Company's proxy
statement, the persons named in the proxy accompanying the Company's proxy statement for
that annual meeting will have the discretionary authority to vote on such proposal at such
meeting.
Householding of Annual Meeting Materials
Some banks, brokers and other nominee record holders may be participating in the practice
of “householding” proxy statements and annual reports. This means that only one
copy of our proxy statement or annual report to stockholders may have been sent to multiple
stockholders in each household. The Company will promptly deliver a separate copy of either
document to any stockholder upon written or oral request sent to the Company at 700 White
Plains Road, Scarsdale, New York 10583, (914) 722-9000. Any stockholder who wishes to
receive separate copies of the annual report to stockholders and proxy statement in the
future, or any stockholder who is receiving multiple copies and would like to receive only
one copy per household, should contact the stockholder’s bank, broker, or other
nominee record holder, or such stockholder may contact the Company at the above address or
phone number.
22
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, including any matters or motions dealing with the conduct of the
Meeting.
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.
Annual Report to Stockholders
The Company’s 2006 annual report to stockholders and the Company’s quarterly
report on Form 10-Q for its fiscal quarter ended April 30, 2007 are being mailed to
stockholders simultaneously with the mailing of this proxy statement. Such report is not
incorporated herein and is not deemed to be a part of this proxy solicitation material.
By Order of the Board of Directors
Steven Fialkow
Secretary
Scarsdale, New York
October 2, 2007
23
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