National Home Health Care Corp – ‘DEF 14A’ for 12/7/99

On:  Wednesday, 11/10/99   ·   For:  12/7/99   ·   Accession #:  910680-99-404   ·   File #:  0-12927

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Definitive Proxy Solicitation Material   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Schedule 14A / Proxy Statement                        28    113K 

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DEF 14A
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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 [  ]                                 

Check the appropriate box:                                                      

[ ]    Preliminary Proxy Statement            [ ]  Confidential, for Use of the 
[X]    Definitive Proxy Statement                  Commission Only (as permitted
[ ]    Definitive Additional Materials             by Rule 14a-6(e)(2))         
[ ]    Soliciting Material Pursuant                                             
to Rule 14a-11(c) or Rule 14a-12                                  

 National Home Health Care Corp.
------------------------------------- 
(Name of Registrant as Specified in Its Charter)

----------------------------------
(Name of Person(s) Filing Proxy Statement,
 if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

[X]    No fee required.                                                         

       [   ]   Fee  computed  on table  below per Exchange Act Rules 14a-6(i)(4)
and 0-11.                                         

               1.   Title of each  class  of  securities  to  which  transaction
applies:                                

               2.   Aggregate number of securities to which transaction applies:

               3.   Per  unit  price or other  underlying  value of  transaction
                    computed  pursuant to Exchange  Act Rule 0-11 (Set forth the
                    amount on which the filing fee is  calculated  and state how
it was determined):                     

 4. Proposed maximum aggregate value of transaction:

5.   Total fee paid:                              

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[  ]   Fee paid previously with preliminary materials.                

     [  ]   Check  box if  any  part  of  the  fee is  offset  as  provided   by
            Exchange  Act  Rule 0-11(a)(2) and  identify the  filing  for  which
            the  offsetting fee  was paid  previously.  Identify  the   previous
            filing  by  registration  statement number, or  the Form or Schedule
and the date of its filing.                             

1.   Amount Previously Paid:                            

2.   Form, Schedule or Registration Statement No.:      

3.   Filing Party:                                      

4.   Date Filed:                                        

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 NATIONAL HOME HEALTH CARE CORP.
 700 White Plains Road
 Scarsdale, New York 10583
 ---------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 To be held December 7, 1999
 ---------------

To the Stockholders of National Home Health Care Corp.:                         

         The Annual Meeting of  Stockholders  of National Home Health Care Corp.
(the  "Company")  will be held at the offices of Parker Chapin Flattau & Klimpl,
LLP, 1211 Avenue of the Americas,  New York, New York, at 10:00 A.M. on Tuesday,
December 7, 1999, for the following purposes:                                   

     (1)  To elect five  directors  of the Company to hold office until the next
          Annual Meeting of Stockholders  and until their  successors shall have
been duly elected and qualified;                            

(2)  To approve the Company's 1999 Stock Option Plan; and             

     (3)  To consider and  transact  such other  business as may  properly  come
before the meeting or any adjournment thereof.              

         A Proxy Statement,  form of proxy and the Annual Report to Stockholders
of the Company for the fiscal  year ended July 31, 1999 are  enclosed  herewith.
Only  holders of record of Common  Stock of the Company at the close of business
on  November  10, 1999 will be entitled to notice of, and to vote at, the Annual
Meeting  and any  adjournments  thereof.  A  complete  list of the  stockholders
entitled to vote will be available for inspection by any stockholder  during the
meeting. In addition,  the list will be open for examination by any stockholder,
for any purpose  germane to the meeting,  during  ordinary  business hours for a
period of at least 10 days prior to the meeting at the  offices of the  Company,
located at 700 White Plains Road, Scarsdale, New York 10583.                    

                                   By Order of the Board of Directors,

                                Steven Fialkow
                           Secretary

Scarsdale, New York                                                             
November 11, 1999                                                               

--------------------------------------------------------------------------------
All stockholders are cordially invited to attend the meeting. If you do not     
expect to be present, please date and sign the enclosed form of proxy and return
it promptly using the enclosed envelope. No postage is required if mailed in the
United States.                                                                  
--------------------------------------------------------------------------------

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 NATIONAL HOME HEALTH CARE CORP.
 700 White Plains Road
 Scarsdale, New York 10583

------------------------

 PROXY STATEMENT

------------------------

         This Proxy Statement is furnished in connection  with the  solicitation
by the board of directors  (the "Board of  Directors")  of National  Home Health
Care Corp. (the "Company") of proxies in the form enclosed. Such proxies will be
voted at the annual  meeting of  stockholders  of the  Company to be held at the
offices of Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, New
York, New York, at 10:00 A.M. on Tuesday,  December 7, 1999 (the  "Meeting") and
at any  adjournments  thereof,  for the purposes  set forth in the  accompanying
Notice of Annual Meeting of Stockholders.                                       

         The principal executive offices of the Company are located at 700 White
Plains Road,  Scarsdale,  New York 10583.  This Proxy Statement and accompanying
form of proxy are being mailed on or about November 11, 1999 to all stockholders
of record on November 10, 1999 (the "Record Date").                             

         Any stockholder  giving a proxy has the power to revoke the same at any
time before it is voted.  The cost of  soliciting  proxies  will be borne by the
Company. The Company has no contract or arrangement with any party in connection
with the solicitation of proxies.  Following the mailing of the proxy materials,
solicitation  of proxies may be made by officers and employees of the Company by
mail, telephone,  telegram or personal interview. Properly executed proxies will
be voted in accordance  with  instructions  given by  stockholders at the places
provided  for  such  purpose  in  the   accompanying   proxy.   Unless  contrary
instructions are given by stockholders,  the shares  represented by such proxies
are  intended  to be voted in favor of the  election  of the five nom  inees for
director named herein and for approval of the Company's 1999 Stock Option Plan. 

 VOTING SECURITIES

         Stockholders  of record as of the close of  business on the Record Date
will be entitled  to notice of, and to vote at, the Meeting or any  adjournments
thereof.  On the Record Date, there were 5,056,250  outstanding shares of common
stock,  par value $.001 per share,  of the Company  (the "Common  Stock").  Each
holder of  Common  Stock is  entitled  to one vote for each  share  held by such
holder. The presence, in person or by proxy, of the holders of a majority of the
outstanding  shares of Common Stock is  necessary to  constitute a quorum at the
Meeting. Proxies submitted which contain abstentions or broker non-votes will be
deemed present at the Meeting in determining the presence of a quorum.          

         Shares of Common  Stock that are voted to abstain  with  respect to any
matter will be considered  cast with respect to that matter.  Shares  subject to
broker  non-votes  with respect to any matter will not be  considered  cast with
respect to that matter.                                                         

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PROPOSAL 1
 ELECTION OF DIRECTORS

         Unless  otherwise  indicated,  the shares  represented  by all  proxies
received by the Board of  Directors  will be voted at the Meeting in  accordance
with their terms and, in the absence of contrary instructions,  for the election
of Frederick H. Fialkow, Steven Fialkow, Ira Greifer, M.D., Bernard Levine, M.D.
and Robert C. Pordy, M.D. to serve until the next Annual Meeting of Stockholders
and until their successors are elected and qualified. Although it is anticipated
that each nominee  will be available to serve as a director,  should any nominee
be  unavailable  to serve,  the persons named in the proxies have  discretionary
authority to vote the proxies for one or more  alternative  nominees who will be
designated by the Board of Directors.                                           

EXECUTIVE OFFICERS AND DIRECTORS                                                

     The following table sets forth certain information  concerning the nominees
for director and executive officers of the Company:                             

YEAR FIRST    
ELECTED OR    
               APPOINTED    PRESENT POSITION
NAME             AGE      DIRECTOR    WITH THE COMPANY          
----             ---     ----------   ----------------          

Frederick H. Fialkow      68        1985      Chairman of the Board of Directors
                                       and Chief Executive Officer

Bernard Levine, M.D.      71        1983      Director                          

Steven Fialkow            40        1991      President, Chief Operating        
                                           Officer, Secretary and Director

Ira Greifer, M.D.         68        1983      Director                          

Robert C. Pordy, M.D.     42        1995      Director                          

Robert P. Heller          38         --       Vice President of Finance and     
                                   Chief Financial Officer

Richard Garofalo          48         --       President of Health Acquisition   
                 Corp.

         The  Company's   directors  are  elected  at  each  Annual  Meeting  of
Stockholders  of the  Company  to serve  for a term of one  year or until  their
successors are duly elected and  qualified.  Officers serve at the discretion of
the Board of Directors. The terms of office of all officers and directors expire
at the time of the annual meeting each year.                                    

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INFORMATION ABOUT DIRECTORS AND NOMINEES                                        

         The following is a brief summary of the background of each director and
nominee:                                                                        

         FREDERICK H. FIALKOW has been Chief Executive Officer of the Company as
well as Chairman of the Board of Directors since February 1988 and was President
of the Company from  February 1988 until October 1997. He has been a Director of
the  Company  since  April 1985.  Frederick  H.  Fialkow is the father of Steven
Fialkow.                                                                        

         BERNARD  LEVINE,  M.D.,  has been a Director of the Company  since July
1983. For more than 20 years he has been a Professor of Internal Medicine at New
York  University  School  of  Medicine  with a  sub-speciality  in  Allergy  and
Immunology.  Dr. Levine devotes a portion of his time as a private consultant to
the health care industry.                                                       

         STEVEN  FIALKOW has been a Director of the Company since  December 1991
and has served as Secretary of the Company since September 1995 and as President
and Chief  Operating  Officer of the Company  since  October  1997. He served as
Executive Vice President of New England Home Care, Inc. from August 1995 through
October 1997. He also served as Executive Vice  President of Health  Acquisition
Corp.  from May 1994 to August  1995,  as  President of National HMO (New York),
Inc.  from April 1989 to April 1994 and as Vice  President  of National HMO (New
York), Inc. from August 1984 to March 1989. Steven Fialkow is a certified public
accountant. He is the son of Frederick H. Fialkow.                              

         IRA GREIFER,  M.D. has been a Director of the Company  since July 1983.
He has been a Professor  and Director of  Pediatrics  at the  Children's  Kidney
Center of the Montefiore  Medical Center - Albert  Einstein  College of Medicine
since 1966.                                                                     

         ROBERT  C.  PORDY,  M.D.,  has been a  director  of the  Company  since
December  1995.   Since  April  1993,  Dr.  Pordy  has  served  as  Director  of
International  Cardiovascular  Clinical  Research at  Hoffman-La  Roche Inc.,  a
biopharmaceutical company.                                                      

INFORMATION ABOUT NON-DIRECTORS EXECUTIVE OFFICERS                              

         RICHARD GAROFALO has served as President of Health Acquisition Corp., a
wholly owned subsidiary of the Company, since January 1988.                     

         ROBERT P. HELLER,  a certified  public  accountant,  has served as Vice
President  of Finance and Chief  Financial  Officer of the  Company  since March
1989. Prior thereto, he was an accountant with Richard A. Eisner & Company, LLP,
a firm of certified public accountants.                                         

MEETINGS OF THE BOARD OF DIRECTORS AND OF COMMITTEES                            

         The Board of Directors held four meetings  during the fiscal year ended
July 31, 1999 ("Fiscal 1999"). Each director attended at least 75% of (i) all of
the  meetings of the Board of Directors  during  Fiscal 1999 and (ii) all of the
meetings of all the Committees on which he served.                              

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         The Company's  Audit  Committee is currently  composed of Drs.  Levine,
Pordy  and   Greifer.   The   function  of  the  Audit   Committee  is  to  make
recommendations  concerning the selection  each year of independent  auditors of
the Company,  to review the effectiveness of the Company's  internal  accounting
methods and procedures and to determine through discussions with the independent
auditors  whether any  instructions or limitations have been placed upon them in
connection  with the  scope of their  audit  or its  implementation.  The  Audit
Committee held one meeting during Fiscal 1999 and acted by unanimous consent one
time; in addition, its members met informally from time to time.                

         The  Compensation  Committee is currently  composed of Drs. Greifer and
Levine. The function of the Compensation Committee is to review and recommend to
the  Board  of  Directors   policies,   practices  and  procedures  relating  to
compensation  of key employees and to administer  employee  benefit  plans.  The
Compensation  Committee held two meetings  during Fiscal 1999; in addition,  its
members met informally from time to time.                                       

         The  Nominating  Committee  is currently  composed of Mr.  Frederick H.
Fialkow  and Drs.  Greifer,  Levine  and Pordy.  Its  function  is to  recommend
nominees  for the Board of  Directors.  The  Nominating  Committee  did not meet
formally  during Fiscal 1999;  however,  its members met informally from time to
time.                                                                           

         The Quality Assurance  Committee is currently  composed of Drs. Greifer
and Levine.  Its  function is to review and  recommend to the Board of Directors
policies,  practices and procedures  relating to quality assurance in connection
with health care services. The Quality Assurance Committee did not meet formally
during Fiscal 1999; however, its members met informally from time to time.      

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

         Section 16(a) of the Securities  Act of 1934, as amended,  requires the
Company's  directors and executive  officers,  and persons who own more than ten
percent of the Company's  Common Stock, to file with the Securities and Exchange
Commission  (the "SEC")  initial  reports of ownership and reports of changes in
ownership  of Common Stock and other equity  securities  of the Company.  To the
Company's  knowledge,  based  solely on a review of the  copies of such  reports
furnished to the Company during the fiscal year ended July 31, 1999,  there were
no late or delinquent filings.                                                  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

         The members of the  Compensation  Committee of the  Company's  Board of
Directors are Drs. Ira Greifer and Bernard Levine,  non-employee  directors.  No
member of the Compensation Committee has a relationship that would constitute an
interlocking  relationship  with  executive  officers  or  directors  of another
entity.                                                                         

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PERFORMANCE GRAPH                                                               

      The following  graph compares the  cumulative  return to holders of Common
Stock for the five years ended July 31, 1999 with the  National  Association  of
Securities Dealers Automated Quotation System Market Index and a SIC group index
for the same period.  The  comparison  assumes $100 was invested at the close of
business  on July 29,  1994 in the  Common  Stock and in each of the  comparison
groups,  and  assumes  reinvestment  of  dividends.  The  Company  paid  no cash
dividends during the periods.                                                   

 TOTAL STOCKHOLDERS RETURNS - DIVIDENDS REINVESTED

ANNUAL RETURN PERCENTAGE

                                    Years   Ending
                              July      July      July       July     July
COMPANY NAME/INDEX               1995      1996      1997       1998     1999   
                              ----      ----      ----       ----     ----

NATIONAL HOME HEALTH CARE        31.80     65.54     -9.46     -12.08    -12.14 
NASDAQ US INDEX                  40.40      8.96     47.57      17.72     42.62 
PEER GROUP                       24.29    -23.21     22.32      -3.08     40.22 

 INDEXED RETURNS

          Base                  Years Ending
Period                    
                         July     July     July     July     July     July
COMPANY NAME/INDEX          1994     1995     1996     1997     1998     1999   
                         ------   ------    -----    -----   ------   ------
NATIONAL HOME HEALTH CARE    100    131.80   218.18   197.54   173.68   152.60  
NASDAQ US INDEX              100    140.40   152.98   225.75   265.75   379.01  
PEER GROUP                   100    124.29    95.44   116.75   113.15   158.66  

------------------------                                                        

(1)  The peer group selected by the Company  includes those companies within the
     Company's Standard  Industrial Code ("SIC") of "home health care services".
     The  companies  which  comprise  the SIC group  are  Amedisys  Inc.,  Apria
     Healthcare  Group,  Cancer  Treatment  Holding,   Caretenders   Healthcorp,
     Community Care Services Inc., Coram Healthcare Corp., DYNACQ  International
     Inc., Help At Home Inc.,  Home Health Corp. of America Inc.,  Hooper Holmes
     Inc., Hospital Staffing Services Inc., Housecall Medical Rscs Inc., In Home
     Health Inc., Infu-Tech Inc., Interwest Home Medical Inc., Matria Healthcare
     Inc., New York Health Care Inc.,  Numed Home Health Care Inc.,  Option Care
     Inc.,  Pediatric  Services of America  Inc.,  PHC  Inc./MA - CL A,  Simione
     Central  Holdings  Inc.,  Staff  Builders  Inc.,  Star Multi Care Services,
Transworld Healthcare Inc., and Wellpoint Health Network - CLA.       

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 REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION

OVERVIEW AND PHILOSOPHY                                                         

         The  Compensation  Committee  of the  Board of  Directors  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  by the Board of  Directors,  determines  the
compensation  to be paid to the Chief  Executive  Officer  and each of the other
executive officers 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 - base bonuses
and various benefits, including medical and pension plans generally available to
employees of the Company.  Since the employment  agreements entered into between
the Company and its executive officers in 1997, amendments have been made to the
compensation arrangements of Messrs. Frederick Fialkow, Steven Fialkow, Garofalo
and Heller. See "Executive Compensation--Employment and Related Agreements."    

BASE SALARY                                                                     

         Base  salary   levels  for  the   Company's   executive   officers  are
competitively  set  relative  to  companies  in the  health  care  industry.  In
determining   salaries,   the  Committee  also  takes  into  account  individual
experience and performance and specific issues particular to the Company.       

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.       

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1992 STOCK OPTION PLAN                                                          

     The 1992 Stock Option Plan authorizes the  Compensation  Committee to award
key  executives  stock  options.  Options  granted under the plan may be granted
containing  terms  determined by the Committee,  including  exercise  period and
price; provided,  however, that the plan requires that exercise price may not be
less than the fair market value of the Common Stock on the date of the grant and
the exercise period may not exceed ten years, subject to further limitations.   

BENEFITS                                                                        

         The Company provides to executive officers medical and pension benefits
that generally are available to Company employees. The amount of perquisites, as
determined  in  accordance  with  the  rules  of  the  Securities  and  Exchange
Commission relating to executive compensation,  did not exceed 10% of salary for
Fiscal 1999.                                                                    

BONUS                                                                           

         Following  consultations with its financial advisor and in light of the
Compensation  Committee's  satisfaction with the performance of management,  the
Company  provides to certain  executive  officers  bonuses based on  performance
and/or a change of control of the Company.                                      

CHIEF EXECUTIVE OFFICER COMPENSATION                                            

         During Fiscal 1999, the Compensation  Committee  discussed amending the
employment  agreements of the Company's executive officers,  including Frederick
H. Fialkow,  who has been the Company's Chief Executive Officer since 1988. Each
employment agreement became effective on November 1, 1997 and had a term of four
years,   except  Mr.  Fialkow's,   which  had  a  term  of  five  years.   After
acknowledgment  of the  achievements  and  performance  of each of the executive
officers,  including Mr. Fialkow,  the Committee authorized the Company to enter
into an amendment to each employment agreement with each such executive officer,
including  an amended and  restated  employment  agreement  with  respect to Mr.
Fialkow,  containing the material  terms set forth under the caption  "Executive
Compensation--Employment  and Related  Agreements." With respect to Mr. Fialkow,
the amended and restated employment agreement,  among other things, extended the
term thereof until  November 30, 2003,  to be  coterminous  with the  employment
agreements of the other executive  officers,  and increased to $305,000 the base
amount upon which his annual salary is calculated  (before giving effect to cost
of living adjustments). In making these compensation decisions, the Compensation
Committee  specifically  considered  the Company's  recent  revenue and earnings
performance  in the  context  of the  very  difficult  time  for  the  Company's
industry,  as  well as the  increased  risk  of  loss  of  qualified  management
personnel as occurred during the prior year with respect to an executive officer
of the Company.                                                                 

         In addition,  during Fiscal 1999, the Compensation Committee granted to
the Company's  four  executive  officers,  pursuant to the Company's  1992 Stock
Option Plan, options to purchase an aggregate of 151,902 shares of Common Stock.
Each executive  officer received a number of options  proportionate to his share
of an aggregate of 159,920  then-outstanding  options,  which were  scheduled to
expire during 1999. These expiring options were purchased from the executive    

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officers by the Company at a price per option  equal to the fair market value of
the Common Stock minus the exercise price thereof.  The replacement options were
granted at an exercise  price equal to the fair market value of the common stock
on the date of grant and for a term of ten years  (except  with  respect  to Mr.
Fialkow,  for whom the exercise  price is 110% of fair market value and the term
is five years).  The  Compensation  Committee  authorized  the repurchase by the
Company of the options and granted the replacement  options in order to continue
the economic  benefit to each  optionee and preserve for each  optionee the same
incentive benefits provided by the expiring options. The Compensation  Committee
agreed that the stock  options  represented  a valuable  method of retaining and
incentivizing   valued   employees,   particularly   in  light  of  the  adverse
circumstances of the Company's industry, and noted that the options granted were
limited by the remaining options available under the Company's 1992 Stock Option
Plan.                                                                           

             Ira Greifer, M.D.
                Bernard Levine, M.D.

                                 Members of the Compensation Committee

STANDARD REMUNERATION OF DIRECTORS                                              

         The Company's  non-employee directors are paid a fee of $3,500 for each
meeting of the Board of Directors attended.                                     

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 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth certain information regarding the beneficial
ownership  of Common Stock at October 27, 1999 by (i) each person or group known
by the  Company to be the  beneficial  owner of more than 5% of the  outstanding
shares of Common  Stock;  (ii) each nominee for  director of the Company;  (iii)
each of the executive  officers named in the Summary  Compensation  Table herein
under "Executive Compensation;" and (iv) all directors and executive officers of
the Company as a group:                                                         

NAME AND ADDRESS                             AMOUNT AND NATURE        PERCENT   
OF BENEFICIAL OWNER                       OF BENEFICIAL OWNERSHIP(1)  OF CLASS  
-------------------                       -----------------------     --------  

FREDERICK H. FIALKOW                           1,692,907(2)             32.9%   
700 WHITE PLAINS ROAD                                                           
SCARSDALE, NY 10583                                                             

BERNARD LEVINE, M.D.                             730,305 (3)            14.4%   
210 RIVERSIDE DRIVE                                                             
NEW YORK, NY  10025                                                             

STEVEN FIALKOW                                   95,854 (4)              1.9%   
700 WHITE PLAINS ROAD                                                           
SCARSDALE, NY 10583                                                             

IRA GREIFER, M.D.                                49,131 (3)               *     
150 EXECUTIVE DRIVE                                                             
MANHASSET, NY 11040                                                             

ROBERT C. PORDY, M.D.                             1,092                   *     
140 EAST 72ND STREET                                                            
NEW YORK, NY 10021                                                              

RICHARD GAROFALO                                 57,843 (5)              1.1%   
99 RUSTIC AVENUE                                                                
MEDFORD, NY 11763                                                               

ROBERT P. HELLER                                 37,594 (6)               *     
617 FIR COURT                                                                   
NORWOOD, NJ 07648                                                               

TRAFALGER MANAGEMENT                            425,802 (7)              8.4%   
N.V.1-7 WILLENSTAD                                                              
CURACAO, NETHERLANDS ANTILLES                                                   

ALL EXECUTIVE OFFICERS AND DIRECTORS,         2,664,728 (8)             50.4%   
AS A GROUP (7 PERSONS)                                                          

------------------------------                                                  
*    LESS THAT 1%                                                               

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(1)  INCLUDES,  WHERE INDICATED,  SHARES ALLOCATED TO CERTAIN  INDIVIDUALS UNDER
     THE COMPANY'S  SAVINGS AND STOCK INVESTMENT PLAN (THE "SAVINGS PLAN") AS OF
     JUNE 30, 1999. UNDER THE TERMS OF THE SAVINGS PLAN, IF A PARTICIPANT  FAILS
     TO GIVE TIMELY INSTRUCTIONS AS TO THE VOTING OF SHARES OF COMMON STOCK HELD
     IN A PARTICIPANT'S  ACCOUNT,  THE TRUSTEE OF THE PLAN WILL VOTE SUCH SHARES
     IN THE SAME PROPORTION AS IT VOTES ALL OF THE SHARES FOR WHICH SUCH TRUSTEE
RECEIVES INSTRUCTIONS.                                                

(2)  DOES NOT INCLUDE 546 SHARES OF COMMON STOCK OWNED BY MR. FIALKOW'S WIFE, AS
     TO WHICH SHARES MR. FIALKOW DISCLAIMS BENEFICIAL OWNERSHIP. INCLUDES 77,779
     SHARES  OF  COMMON  STOCK  WHICH  MAY BE  ACQUIRED  PURSUANT  TO  CURRENTLY
     EXERCISABLE OPTIONS GRANTED UNDER THE COMPANY'S 1992 STOCK OPTION PLAN (THE
     "1992 PLAN") AND 62,598 SHARES OF COMMON STOCK  ALLOCATED TO MR.  FIALKOW'S
ACCOUNT UNDER THE SAVINGS PLAN.                                       

(3)  INCLUDES  5,459  SHARES OF COMMON  STOCK WHICH MAY BE ACQUIRED  PURSUANT TO
CURRENTLY EXERCISABLE OPTIONS GRANTED UNDER THE 1992 PLAN.            

(4)  INCLUDES  64,747  SHARES OF COMMON STOCK WHICH MAY BE ACQUIRED  PURSUANT TO
     CURRENTLY EXERCISABLE OPTIONS GRANTED UNDER THE 1992 PLAN AND 31,107 SHARES
    OF COMMON STOCK ALLOCATED TO MR. FIALKOW'S ACCOUNT UNDER THE SAVINGS PLAN.

(5)  INCLUDES  41,227  SHARES OF COMMON STOCK WHICH MAY BE ACQUIRED  PURSUANT TO
     CURRENTLY EXERCISABLE OPTIONS GRANTED UNDER THE 1992 PLAN AND 14,978 SHARES
     OF COMMON STOCK ALLOCATED TO MR. GAROFALO'S ACCOUNT UNDER THE SAVINGS PLAN.

(6)  INCLUDES  25,556  SHARES OF COMMON STOCK WHICH MAY BE ACQUIRED  PURSUANT TO
     CURRENTLY EXERCISABLE OPTIONS GRANTED UNDER THE 1992 PLAN AND 10,638 SHARES
   OF COMMON STOCK ALLOCATED TO MR. HELLER'S ACCOUNT UNDER THE SAVINGS PLAN.

(7)  THE AMOUNT AND NATURE OF  BENEFICIAL  OWNERSHIP  OF THESE  SHARES OF COMMON
     STOCK BY TRAFALGER  MANAGEMENT,  N.V.  ("TRAFALGER") IS BASED SOLELY ON THE
     RECORDS OF THE COMPANY'S  TRANSFER  AGENT,  AMERICAN STOCK TRANSFER & TRUST
     COMPANY.  TRAFALGER HAS THE POWER TO VOTE, DIRECT THE VOTE,  DISPOSE OF, OR
     DIRECT THE DISPOSITION  OF, THESE SHARES.  THE COMPANY'S BOARD OF DIRECTORS
     HAS  NO  INDEPENDENT  KNOWLEDGE  OF THE  ACCURACY  OR  COMPLETENESS  OF THE
     INFORMATION SET FORTH BY SUCH TRANSFER AGENT,  BUT HAS NO REASON TO BELIEVE
THAT SUCH INFORMATION IS NOT COMPLETE OR ACCURATE.                    

(8)  INCLUDES  220,227 SHARES OF COMMON STOCK WHICH MAY BE ACQUIRED  PURSUANT TO
     CURRENTLY  EXERCISABLE  OPTIONS  GRANTED  UNDER THE 1992  PLAN AND  119,321
SHARES OF COMMON STOCK ALLOCATED UNDER THE SAVINGS PLAN.              

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EXECUTIVE COMPENSATION                                                          

     The following table sets forth  information  concerning the annual and long
term compensation  during the Company's last three fiscal years of the Company's
Chief Executive Officer and other most highly compensated  executive officers of
the  Company,  whose  salary and bonus for Fiscal 1999  exceeded  $100,000,  for
services rendered in all capacities to the Company and its subsidiaries:        

                                                        [Enlarge/Download Table]


                                                                         LONG-TERM             
                                               ANNUAL COMPENSATION     COMPENSATION            
                                               -------------------     ------------            
                                                                    SECURITIES                 
                                                                    UNDERLYING       ALL OTHER 
NAME AND PRINCIPAL POSITION           YEAR   SALARY      BONUS      OPTIONS        COMPENSATION
---------------------------           ----   ------      -----      ----------     ------------
                                                                                               
Frederick H. Fialkow                  1999  $298,333    $44,765(1)   77,779(4)      $78,804(5) 
     Chairman of the Board and Chief  1998   285,000     61,499(2)    -----           3,758    
     Executive Officer                1997   285,000     71,497(3)    -----           3,267    

Steven Fialkow                        1999   172,674       -----     34,747(6)       47,811(7) 
     President, Chief Operating       1998   150,742       -----     30,000           3,890    
     Officer and Secretary            1997   122,957       -----      -----           5,344    

Robert P. Heller                      1999   138,338       -----     15,556(8)       23,650(9) 
     Vice President of Finance and    1998   119,962       -----     10,000           3,134    
     Chief Financial Officer          1997   112,349       -----      -----           2,568    

Richard Garofalo                      1999   157,500      53,144     21,227(10)      32,293(11)
     President of                     1998   157,500      67,502     20,000           5,006    
     Health Acquisition Corp.         1997   157,500      42,491      -----           3,451    

----------------------                                                          

(1)  Includes  $44,765,  which  represents  the  payment  of the cost of  living
     increase in salary compensation for the last three fiscal years pursuant to
Mr. Fialkow's employment agreement with the Company.                  

(2)  Includes  $39,446,  which  represents  the  payment  of the cost of  living
     increase in salary compensation for the last three fiscal years pursuant to
Mr. Fialkow's employment agreement with the Company.                  

(3)  Includes  $32,038,  which  represents  the  payment  of the cost of  living
     increase in salary compensation for the last three fiscal years pursuant to
Mr. Fialkow's employment agreement with the Company.                  

(4)  This option was granted to Mr.  Fialkow on April 27,  1999,  simultaneously
     with the  repurchase  by the  Company  from  Mr.  Fialkow,  pursuant  to an
     exception to Section  16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
     Act,  as amended,  of an option to  purchase up to 81,885  shares of Common
Stock.                                                                

(5)  Includes  $7,793  representing  the  Company's  matching   contribution  as
     deferred  compensation under the Company's Savings Plan pursuant to Section
401(k) of the Internal Revenue Code of 1986, as amended (the          

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     "Code"),  and $71,011 representing the difference ($0.87 per share) between
     the price  paid by the  Company to Mr.  Fialkow  for the  repurchase  of an
     option to purchase  81,885 shares of Common Stock ($3.50 per share) and the
exercise price of such option ($2.63 per share).                      

(6)  This option was granted to Mr.  Fialkow on April 27,  1999,  simultaneously
     with the  repurchase  by the  Company  from  Mr.  Fialkow,  pursuant  to an
     exception to Section  16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
     Act,  as amended,  of an option to  purchase up to 36,581  shares of Common
Stock.                                                                

(7)  Includes  $7,334  representing  the  Company's  matching   contribution  as
     deferred  compensation under the Company's Savings Plan pursuant to Section
     401(k) of the Code,  and $40,477  representing  the  difference  ($1.11 per
     share)  between  the  price  paid by the  Company  to Mr.  Fialkow  for the
     repurchase  of an option to purchase  36,581  shares of Common Stock ($3.50
per share) and the exercise price of such option ($2.39 per share).   

(8)  This option was  granted to Mr.  Heller on April 27,  1999,  simultaneously
     with  the  repurchase  by the  Company  from  Mr.  Heller,  pursuant  to an
     exception to Section  16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
     Act,  as amended,  of an option to  purchase up to 16,377  shares of Common
Stock.                                                                

(9)  Includes  $5,529  representing  the  Company's  matching   contribution  as
     deferred  compensation under the Company's Savings Plan pursuant to Section
     401(k) of the Code,  and $18,121  representing  the  difference  ($1.11 per
     share)  between  the  price  paid  by the  Company  to Mr.  Heller  for the
     repurchase  of an option to purchase  16,377  shares of Common Stock ($3.50
per share) and the exercise price of such option ($2.39 per share).   

(10) This option was granted to  Mr. Garofalo on April 27, 1999,  simultaneously
     with the  repurchase  by  the  Company  from Mr.  Garofalo,  pursuant to an
     exception to  Section 16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
     Act,  as  amended,  of an option to purchase up to 22,347  shares of Common
Stock.                                                                

(11) Includes  $7,566  representing  the  Company's   matching  contribution  as
     deferred compensation  under the Company's Savings Plan pursuant to Section
     401(k) of the Code, and  $24,727  representing  the  difference  ($1.11 per
     share)  between  the  price  paid by the  Company to Mr.  Garofalo  for the
     repurchase  of  an option to purchase  22,347 shares of Common Stock ($3.50
per share) and the exercise price of such option ($2.39 per share).   

OPTION GRANTS IN LAST FISCAL YEAR                                               
---------------------------------                                               

      The following table contains  information at July 31, 1999 relating to the
number of options  granted  during  the 1999  fiscal  year to those  individuals
listed in the Summary Compensation Table. All options are currently exercisable.

                                                        [Enlarge/Download Table]

                                                                               POTENTIAL REALIZABLE 
                                                                                  VALUE-AT-ASSUMED  
                      NUMBER OF   % OF TOTAL                                      ANNUAL RATES OF   
                      SECURITIES  OPTIONS                                           STOCK PRICE     
                      UNDERLYING  GRANTED                                       APPRECIATION FOR    
                      OPTIONS     TO EMPLOYEES    EXERCISE OR    EXPIRATION      OPTION-TERMS       
NAME                  GRANTED     IN FISCAL 1999  BASE-PRICE        DATE          5%           10%  
----                  ----------  --------------  -----------    ----------    -------      --------
                                                                                                    
Frederick H. Fialkow  77,779(1)       43%           $3.99      April 26, 2004  $85,746      $189,306
Steven Fialkow        34,747(2)       19.2%         $3.625     April 26, 2009  $79,353      $200,273
Robert P. Heller      15,556(3)        8.6%         $3.625     April 26, 2009  $35,526       $89,660
Richard Garofalo      21,227(4)       11.7%         $3.625     April 26, 2009  $48,477      $122,347

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-------------------                                                             

(1)   This option was granted to Mr.  Fialkow on April 27, 1999,  simultaneously
      with the  repurchase  by the  Company  from Mr.  Fialkow,  pursuant  to an
      exception to Section 16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
      Act,  as amended,  of an option to purchase up to 81,885  shares of Common
Stock.                                                              

(2)   This option was granted to Mr.  Fialkow on April 27, 1999,  simultaneously
      with the  repurchase  by the  Company  from Mr.  Fialkow,  pursuant  to an
      exception to Section 16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
      Act,  as amended,  of an option to purchase up to 36,581  shares of Common
Stock.                                                              

(3)   This option was granted to Mr.  Heller on April 27,  1999,  simultaneously
      with the  repurchase  by the  Company  from  Mr.  Heller,  pursuant  to an
      exception to Section 16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
      Act,  as amended,  of an option to purchase up to 16,377  shares of Common
Stock.                                                              

(4)   This option was granted to Mr. Garofalo on April 27, 1999,  simultaneously
      with the  repurchase  by the  Company  from Mr.  Garofalo,  pursuant to an
      exception to Section 16(b)  provided by Rule 16b-3(e) of the 1934 Exchange
      Act,  as amended,  of an option to purchase up to 22,347  shares of Common
Stock.                                                              

OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE           

     The following  table contains  information at July 31, 1999 relating to the
number of options exercised during the 1999 fiscal year and the number and value
of  unexercised  options  held  by  those  individuals  listed  in  the  Summary
Compensation Table.                                                             

                                                        [Enlarge/Download Table]

                                              NUMBER OF SECURITIES      VALUE OF      
                       SHARES                      UNDERLYING       UNEXERCISED-IN-THE
                      ACQUIRED                UNEXERCISED-OPTIONS   MONEY OPTIONS AT  
                         ON                    AT FISCAL YEAR-END   FISCAL YEAR-END   
                      EXERCISE   VALUE           EXERCISABLE /      EXERCISABLE /     
NAME                     (#)    REALIZED ($)     UNEXERCISABLE      UNEXERCISABLE (1) 
----                  --------  ------------  --------------------  ----------------- 
                                                                                      
Frederick H. Fialkow    ----      ----           77,779 / 0                  0 / 0    
Steven Fialkow          ----      ----           64,747 / 0             $7,602 / 0    
Robert P. Heller        ----      ----           25,556 / 0             $3,403 / 0    
Richard Garofalo        ----      ----           41,227 / 0             $4,644 / 0    

------------------                                                              

(1)  Determined  based on the fair market value of  underlying  securities  (the
     closing  bid  price  ($3.8438)  per  share of  Common  Stock on the  Nasdaq
     National  Market) at fiscal year end (July 30,  1999),  minus the  exercise
price.                                                                

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EMPLOYMENT AND RELATED AGREEMENTS                                               

         FREDERICK H. FIALKOW.  Effective  December 1, 1998, the Company entered
into a five-year  amended and restated  employment  agreement  with Mr.  Fialkow
pursuant  to which he is  employed  as the  Company's  Chairman of the Board and
Chief Executive  Officer.  The agreement,  among other things,  is automatically
renewable for an additional five-year period, unless terminated at the option of
either party.  The agreement  extended the term of employment until November 30,
2003, and increased to $305,000 the base amount upon which Mr.  Fialkow's annual
salary is calculated  (before giving effect to cost of living  adjustments).  In
addition,  Mr. Fialkow is entitled to receive an annual bonus in an amount equal
to 5% of the Company's  consolidated  net income  (before  income taxes) in such
year in which the consolidated  net income is in excess of $3,000,000,  provided
that the bonus may not exceed $150,000 in any year.                             

         STEVEN FIALKOW.  Effective November 1, 1997, the Company entered into a
four-year employment agreement with Mr. Fialkow pursuant to which he is employed
as the Company's President,  Chief Operating Officer and Secretary.  The term of
the  agreement  may be  extended  in writing  by both  parties,  unless  earlier
terminated.  The agreement  provided for an annual base salary of $157,500,  but
was  amended  on  December  1,  1998 to  provide  for an annual  base  salary of
$180,000, and was amended again on October 7, 1999 to provide for an annual base
salary of $230,000. The amendment to the agreement also extended the term of the
agreement  to five years.  In  addition,  Mr.  Fialkow is entitled to receive an
annual  bonus in an amount  equal to 3% of the  amount  by which  the  Company's
income from  operations  in such year exceeds  $3,300,000.  The  agreement  also
provides for a grant to Mr.  Fialkow of an option to purchase  30,000  shares of
the Company's Common Stock, pursuant to the 1992 Plan.                          

         ROBERT P. HELLER.  Effective November 1, 1997, the Company entered into
a  four-year  employment  agreement  with  Mr.  Heller  pursuant  to which he is
employed as the Company's  Executive Vice President of Finance,  Chief Financial
Officer and  Treasurer.  The term of the agreement may be extended in writing by
both parties,  unless earlier  terminated.  The agreement provided for an annual
base salary of  $122,500,  but was amended on December 1, 1998 to provide for an
annual base salary of $140,000. The amendment to the agreement also extended the
term of the agreement to five years.  The Company's  Board of Directors also may
grant  bonuses to Mr.  Heller.  The  agreement  also provides for a grant to Mr.
Heller of an option to purchase  10,000  shares of the  Company's  Common Stock,
pursuant to the 1992 Plan.                                                      

         RICHARD GAROFALO.  Effective November 1, 1997, the Company entered into
a  four-year  employment  agreement  with Mr.  Garofalo  pursuant to which he is
employed as the  President  of Health  Acquisition  Corporation,  a wholly owned
subsidiary of the Company.  The term of the agreement may be extended in writing
by both  parties,  unless  earlier  terminated,  and provides for an annual base
salary of  $157,500.  An  amendment  to the  agreement  dated  December  1, 1998
extended  the  term of the  agreement  to five  years.  The  Company's  Board of
Directors  also may grant bonuses to Mr.  Garofalo.  The agreement also provides
for a grant to Mr.  Garofalo  of an  option  to  purchase  20,000  shares of the
Company's Common Stock, pursuant to the 1992 Plan.                              

         The  employment  agreements  of Messrs.  Frederick H.  Fialkow,  Steven
Fialkow,   Heller  and  Garofalo  contain   confidentiality   and  nondisclosure
provisions  relating to the Company's business and all confidential  information
developed or made known to each individual during his respective                

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term  of  employment.   The  agreements  also  contain  certain  non-competition
provisions that preclude Messrs.  Frederick H. Fialkow,  Steven Fialkow,  Heller
and Garofalo from  competing  with the Company for a period of one year from the
date of termination.                                                            

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

         A lease for office premises  maintained by Health  Acquisition Corp., a
wholly owned  subsidiary of the Company,  located in Queens,  New York is with a
company owned (in whole or in part) and controlled by the Company's  Chairman of
the Board of Directors and Chief Executive Officer,  which company also is owned
in part by a  director  of the  Company  who is also  the  President  and  Chief
Operating Officer of the Company. Rent expense under such lease is approximately
$129,000 per year.  The Company  believes that such lease  contains terms in the
aggregate no less  advantageous  to the Company than  otherwise  could have been
obtained from an unrelated third party.                                         

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PROPOSAL 2
APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN

         On October 7, 1999,  the  Company's  Board of  Directors  approved  the
Company's  1999 Stock  Option Plan (the "1999 Stock  Option  Plan") and directed
that the 1999 Stock Option Plan be submitted to the Company's  stockholders  for
approval at the Meeting.  The Board of  Directors  adopted the 1999 Stock Option
Plan, which covers 500,000 shares of Common Stock, upon evaluating the Company's
existing  compensation programs and the Company's long-range goals and expansion
plans.                                                                          

         The  Board  concluded  that the  addition  of a stock  option  plan was
necessary for the Company to continue to attract,  motivate and retain qualified
employees and directors.                                                        

THE 1999 STOCK OPTION PLAN                                                      

         The following is a discussion of certain terms of the 1999 Stock Option
Plan:                                                                           

Types of Grants and Eligibility                               
-------------------------------                               

         The 1999 Stock  Option Plan is designed to provide an  incentive to key
employees (including officers and directors who are key employees), non-employee
directors and consultants of the Company and its present and future subsidiaries
and to  offer  an  additional  inducement  in  obtaining  the  services  of such
individuals.  The 1999 Stock Option Plan  provides  for the grant of  "incentive
stock  options"  ("ISOs")  within the  meaning of Section  422 of the Code,  and
nonqualified stock options ("NQSOs").                                           

Shares Subject to the 1999 Stock Option Plan                  
--------------------------------------------                  

         The aggregate number of shares of Common Stock for which options may be
granted  under the 1999  Stock  Option  Plan may not exceed  500,000;  provided,
however, that the maximum number of shares of Common Stock with respect to which
options  may be granted  to any  individual  in any  fiscal  year may not exceed
100,000.  Such shares of Common Stock may consist  either in whole or in part of
authorized but unissued shares of Common Stock or shares of Common Stock held in
the treasury of the Company.  Shares of Common Stock  subject to an option which
for any reason expires, is canceled or is terminated unexercised or which ceases
for any reason to be exercisable may again become  available for the granting of
options under the 1999 Stock Option Plan.                                       

Administration of the 1999 Stock Option Plan                  
--------------------------------------------                  

         The 1999 Stock  Option Plan is  administered  by the Board of Directors
which,  to the extent it so determines,  may delegate its powers with respect to
the  administration of the 1999 Stock Option Plan to a committee of the Board of
Directors (the  "Committee")  consisting of not less than two directors (or such
greater  number  as  required  by  law),  each of whom  will be a  "non-employee
director"  within  the  meaning  of rules  and  regulations  promulgated  by the
Securities and Exchange Commission.  References in the 1999 Stock Option Plan to
determinations   or  actions  by  the  Committee   will  be  deemed  to  include
determinations and actions by the Board of Directors.                           

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         Subject to the express  provisions  of the 1999 Stock Option Plan,  the
Committee has the  authority,  in its sole  discretion,  with respect to options
granted  pursuant to the 1999 Stock Option Plan to a key employee of the Company
or a subsidiary thereof, to determine, among other things: the key employees and
consultants who are to receive options; the times when they may receive options;
whether an option  granted to an employee is to be an ISO or a NQSO;  the number
of shares of Common Stock to be subject to each option; the term of each option;
the date  each  option  is to  become  exercisable;  whether  an option is to be
exercisable in whole, in part or in installments,  and, if in installments,  the
number of shares of Common Stock to be subject to each installment;  whether the
installments  are to be  cumulative;  the date  each  installment  is to  become
exercisable and the term of each installment;  whether to accelerate the date of
exercise of any  installment;  whether  shares of Common  Stock may be issued on
exercise  of an  option as partly  paid,  and,  if so,  the  dates  when  future
installments  of the  exercise  price are to become due and the  amounts of such
installments;  the  exercise  price of each  option;  the form of payment of the
exercise price;  whether to restrict the sale or other disposition of the shares
of Common  Stock  acquired  upon the exercise of an option and to waive any such
restriction;  and  whether to subject  the  exercise of all or any portion of an
option to the fulfillment of  contingencies  as specified in an applicable stock
option contract.  With respect to all options, the Committee has such discretion
to construe  the  applicable  stock option  contracts  and the 1999 Stock Option
Plan, with the consent of the optionee, to cancel or modify an option,  provided
such option as modified  would be permitted to be granted on such date under the
terms of the 1999 Stock Option Plan; to  prescribe,  amend and rescind rules and
regulations  relating  to the 1999  Stock  Option  Plan;  and to make all  other
determinations  necessary or advisable for  administering  the 1999 Stock Option
Plan.                                                                           

Eligibility; Grants                                           
-------------------                                           

         The  Committee  may,  consistent  with the  purposes  of the 1999 Stock
Option  Plan,  grant  options  from time to time,  to key  employees  (including
officers  and  directors  who are key  employees)  of the  Company or any of its
subsidiaries.  Options  granted will cover such number of shares of Common Stock
as the Committee may determine;  provided,  however,  that the maximum number of
shares subject to options that may be granted to any employee in any fiscal year
of the Company  under the 1999 Stock Option Plan (the "162(m)  Maximum") may not
exceed 100,000; and further provided,  however,  that the aggregate market value
(determined at the time the option is granted) of the shares of Common Stock for
which any  eligible  person may be granted ISOs under the 1999 Stock Option Plan
or any other  plan of the  Company,  or of the parent or any  subsidiary  of the
Company,  which are  exercisable  for the first time by such optionee during any
calendar  year will not exceed  $100,000.  The $100,000 ISO  limitation  will be
applied by taking ISOs into account in the order in which they were granted. Any
option (or any portion thereof) granted in excess of such amount will be treated
as a NQSO.                                                                      

         On the date the 1999  Stock  Option  Plan is  adopted  by the  Board of
Directors, every outside director will be granted an Outside Director Option (as
defined  herein) to purchase 5,000 shares of Common Stock.  In addition,  at the
end of the first  fiscal year of the Company in which its Net Income (as defined
below) exceeds each of $4,000,000,  $5,000,000,  $6,000,000,  $7,000,000,  etc.,
each  person who is an outside  director  of the Company on the last day of such
fiscal year will be granted an Outside  Director Option to purchase 2,500 shares
of Common  Stock.  For purposes of this  paragraph,  "Net Income"  means the net
after-tax income of the Company and its consolidated subsidiaries, as determined
from the Company's audited financial statements. The Outside Director           

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Options  described in this paragraph with respect to a given fiscal year will be
granted as soon as the Company's  audited  financial  statements for such fiscal
year become  available.  In the event the remaining  shares  available for grant
under  the 1999  Stock  Option  Plan are not  sufficient  to grant  the  Outside
Director Options to each such outside director in any year, the number of shares
subject  to  the  Outside  Director  Options  for  such  year  will  be  reduced
proportionately.  Neither the Board of Directors nor the Committee will have any
discretion  with  respect to the  selection  of  directors  to  receive  Outside
Director Options or the amount, the price or the timing with respect thereto.   

Exercise Price                                                
--------------                                                

         The  exercise  price of the shares of Common Stock under each option is
to be determined by the Committee; provided, however, that the exercise price is
not to be less than 100% of the fair market value of the Common Stock subject to
such option on the date of grant; and further provided,  that if, at the time an
ISO is granted,  the optionee owns (or is deemed to own under Section  424(d) of
the Code) shares  possessing more than 10% of the total combined voting power of
all classes of stock of the Company,  of any of its subsidiaries or of a parent,
the  exercise  price of such ISO may not be less  than  110% of the fair  market
value of the Common Stock subject to such ISO on the date of grant. The exercise
price of the shares of Common Stock under each NQSO granted pursuant to the 1999
Stock Option Plan to a director of the Company who, at the time of the grant, is
not an employee of the company or any of its subsidiaries  (each such option, an
"Outside  Director Option") will be equal to the fair market value of the Common
Stock subject to the option on the date of grant.                               

Term                                                          
----                                                          

         The term of each option granted  pursuant to the 1999 Stock Option Plan
is established by the Committee,  in its sole discretion,  at or before the time
such option is  granted;  provided,  however,  that the term of each ISO granted
pursuant to the 1999 Stock Option Plan is to be for a period not  exceeding  ten
years from the date of grant thereof, and further provided, that if, at the time
an ISO is granted,  the optionee owns (or is deemed to own under Section  424(d)
of the Code)  shares  possessing  more than ten  percent  of the total  combined
voting power of all classes of stock of the Company,  of any of its subsidiaries
or of a parent,  the term of the ISO is to be for a period  not  exceeding  five
years from the date of grant.  Each Outside Director Option is to be exercisable
for a term of five years commencing on the date of grant.                       

Exercise                                                      
--------                                                      

         An option (or any part or  installment  thereof),  to the  extent  then
exercisable,  is to be exercised by giving  written notice to the Company at its
principal  office.  Payment in full of the aggregate  exercise price may be made
(a) in cash or by  certified  check,  or (b) in the  case of an  option  granted
pursuant  to the 1999 Stock  Option  Plan to a key  employee of the Company or a
subsidiary  thereof and if the applicable  stock option  contract at the time of
grant so permits,  with the  authorization  of the  Committee,  with  previously
acquired  shares of Common Stock having an aggregate  fair market value,  on the
date of exercise,  equal to the  aggregate  exercise  price of all options being
exercised,  or (c) with any  combination of cash,  certified  check or shares of
Common Stock.                                                                   

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         A person  entitled  to receive  Common  Stock upon the  exercise  of an
option will not have the rights of a stockholder  with respect to such shares of
Common Stock until the date of issuance of a stock  certificate  to him for such
shares;  provided,  however,  that until such stock  certificate is issued,  any
option holder using previously  acquired shares of Common Stock in payment of an
option  exercise  price will continue to have the rights of a  stockholder  with
respect to such previously acquired shares.                                     

Termination of Relationship                                   
---------------------------                                   

         Any employee holder of an option whose employment with the Company (and
its parent and  subsidiaries) has terminated for any reason other than his death
or disability may exercise such option, to the extent exercisable on the date of
such termination, at any time within three months after the date of termination,
but not  thereafter  and in no event after the date the option  would  otherwise
have expired; provided, however, that if his employment is terminated either (a)
for cause,  or (b) without the consent of the  Company,  said option  terminates
immediately.  Options  granted to employees under the 1999 Stock Option Plan are
not  affected  by any  change in the  status of the  holder so long as he or she
continues to be a full-time  employee of the  Company,  its parent or any of its
subsidiaries  (regardless  of having been  transferred  from one  corporation to
another).                                                                       

         An Outside Director Option may be exercised at any time during its five
year term; provided,  however,  that if the holder of an Outside Director Option
ceases  to be a  director  of the  Company  (other  than as a result of death or
disability),  unless the holder becomes a director or an employee of the Company
or any of its  subsidiaries,  the holder may exercise such option, to the extent
exercisable on the date of such cessation, at any time within three months after
the  date of such  cessation,  but not  thereafter,  and in no event  after  the
expiration of the term of the option.                                           

Death or Disability                                           
-------------------                                           

         If an optionee dies (a) while he is employed by the Company, its parent
or any of its subsidiaries, (b) within three months after the termination of his
employment  (unless such termination was for cause or without the consent of the
Company),  or (c) within one year following the termination of his employment by
reason of  disability,  an  employee's  option may be  exercised,  to the extent
exercisable on the date of his death,  by his executor,  administrator  or other
person at the time entitled by law to his rights under such option,  at any time
within one year after death,  but not  thereafter and in no event after the date
the option would otherwise have expired.                                        

         Any optionee  whose  employment  has terminated by reason of disability
may exercise his option,  to the extent  exercisable  upon the effective date of
such  termination,  at any  time  within  one  year  after  such  date,  but not
thereafter  and in no event  after  the date the  option  would  otherwise  have
expired.                                                                        

         The term of an Outside  Director  Option  will not be  affected  by the
death or disability of the optionee.  In such case,  the option may be exercised
at any time during its term by his  executor,  administrator  or other person at
the time entitled by law to the optionee's rights under such option.            

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Adjustments Upon Changes in Common Stock                      
----------------------------------------                      

         Notwithstanding  any other provisions of the 1999 Stock Option Plan, in
the event of any  change in the  outstanding  Common  Stock by reason of a share
dividend, recapitalization,  merger or consolidation in which the Company is the
surviving corporation,  split-up, combination or exchange of shares or the like,
the aggregate  number and kind of shares  subject to the 1999 Stock Option Plan,
the aggregate number and kind of shares subject to each  outstanding  option and
the  exercise  price  thereof  will be  appropriately  adjusted  by the Board of
Directors, whose determination will be conclusive.                              

         In the event of (a) the liquidation or dissolution of the Company,  (b)
a merger or consolidation in which the Company is not the surviving corporation,
or (c) any other capital reorganization (other than a recapitalization) in which
more than 50% of the shares of Common Stock of the Company  entitled to vote are
exchanged,  any outstanding  options will  terminate,  unless other provision is
made therefor in the transaction.                                               

Amendments and Termination of the 1999 Stock Option Plan      
--------------------------------------------------------      

         No option may be granted under the 1999 Stock Option Plan after October
6, 2009.  The Board of  Directors,  without  further  approval of the  Company's
stockholders,  may at any time suspend or terminate  the 1999 Stock Option Plan,
in whole or in part,  or amend it from time to time in such  respects  as it may
deem  advisable,  including,  without  limitation,  in order  that ISOs  granted
thereunder meet the  requirements  for "incentive  stock options" under the Code
and to comply with the provisions of certain rules and  regulations  promulgated
by the  Securities  and  Exchange  Commission,  among  other  things;  provided,
however,  that no amendment  may be  effective  without the  requisite  prior or
subsequent   stockholder  approval  which  would  (a)  except  as  required  for
anti-dilution adjustments, increase the maximum number of shares of Common Stock
for  which  options  may be  granted  under  the 1999  Stock  Option  Plan,  (b)
materially  increase  the benefits to  participants  under the 1999 Stock Option
Plan, or (c) change the eligibility  requirements  for  individuals  entitled to
receive options under the 1999 Stock Option Plan.                               

Non-Transferability of Options                                
------------------------------                                

         No option granted under the 1999 Stock Option Plan may be  transferable
otherwise than by will or the laws of descent and distribution,  and options may
be exercised,  during the lifetime of the holder thereof, only by such holder or
such  holder's  legal  representatives.  Except to the  extent  provided  above,
options may not be assigned,  transferred,  pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise)  and may not be subject to
execution, attachment or similar process.                                       

Withholding Taxes                                             
-----------------                                             

         The Company may withhold  cash and/or,  with the  authorization  of the
Committee,  shares of Common Stock to be issued having an aggregate  fair market
value  equal to the amount  which it  determines  is  necessary  to satisfy  its
obligation  to withhold  federal,  state and local  income  taxes or other taxes
incurred by reason of the grant or exercise of an option,  its  disposition,  or
the  disposition of the underlying  shares of Common Stock.  Alternatively,  the
Company may require                                                             

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the holder to pay to the Company such amount, in cash, promptly upon demand. The
Company may not be required to issue any shares of Common Stock  pursuant to any
such option until all required payments have been made.                         

Federal Income Tax Consequences                               
-------------------------------                               

         The following is a general summary of certain  material  federal income
tax  consequences  of the grant and exercise of the options under the 1999 Stock
Option Plan and the sale of any underlying  security.  This description is based
on current law which is subject to change,  possibly  with  retroactive  effect.
This discussion does not purport to address all tax  considerations  relating to
the grant and  exercise  of the options or  resulting  from the  application  of
special rules to a particular  optionee  (including  an optionee  subject to the
reporting and short-swing  profit  provisions under Section 16 of the Securities
Exchange  Act of 1934,  as amended,  and an optionee  exercising  an option with
previously owned shares),  and state, local,  foreign and other tax consequences
inherent in the  ownership  and exercise of stock  options and the ownership and
disposition  of any  underlying  security.  An optionee  should consult with the
optionee's own tax advisors with respect to the tax consequences inherent in the
ownership and exercise of stock options and the ownership and disposition of any
underlying security.                                                            

ISOs EXERCISED WITH CASH                                      

         No taxable  income will be  recognized by an optionee upon the grant or
exercise of an ISO. The  optionee's  tax basis in the shares  acquired  upon the
exercise  of an ISO with cash will be equal to the  exercise  price  paid by the
optionee for such shares.                                                       

         If the shares  received  upon  exercise of an ISO are  disposed of more
than one year after the date of transfer of such shares to the optionee and more
than two years from the date of grant of the option, the optionee will recognize
long-term  capital  gain or loss on such  disposition  equal  to the  difference
between  the  selling  price and the  optionee's  basis in the  shares,  and the
Company will not be entitled to a deduction. Long-term capital gain is generally
subject to more favorable tax treatment than short-term capital gain or ordinary
income.                                                                         

         If the shares  received  upon the  exercise  of an ISO are  disposed of
prior  to the end of the two-  years-from-grant/one-year-after-transfer  holding
period (a "disqualifying  disposition"),  the excess (if any) of the fair market
value of the shares on the date of transfer of such shares to the optionee  over
the  exercise  price (but not in excess of the gain  realized on the sale of the
shares) will be taxed as ordinary  income in the year of such  disposition,  and
the Company generally will be entitled to a deduction in the year of disposition
equal to such amount. Any additional gain or any loss recognized by the optionee
on such disposition will be short-term or long-term capital gain or loss, as the
case may be, depending upon the period for which the shares were held.          

NQSOs EXERCISED WITH CASH                                     

         No taxable  income will be  recognized by an optionee upon the grant of
an NQSO.  Upon the  exercise of an NQSO,  the excess of the fair market value of
the shares  received at the time of exercise  over the exercise  price  therefor
will be taxed as ordinary income,  and the Company will generally be entitled to
a corresponding deduction. The optionee's tax basis in the shares acquired      

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upon the exercise of such NQSO will be equal to the  exercise  price paid by the
optionee for such shares plus the amount of ordinary income so recognized.      

         Any gain or loss recognized by the optionee on a subsequent disposition
of shares purchased  pursuant to an NQSO will be short-term or long-term capital
gain or loss,  depending  upon the period during which such shares were held, in
an amount equal to the  difference  between the selling price and the optionee's
tax basis in the shares.                                                        

ALTERNATIVE MINIMUM TAX                                       

         In addition to the federal income tax consequences  described above, an
optionee  who  exercises an ISO may be subject to the  alternative  minimum tax,
which is payable  only to the  extent it  exceeds  the  optionee's  regular  tax
liability. For this purpose, upon the exercise of an ISO, the excess of the fair
market  value of the  shares  over the  exercise  price is an  adjustment  which
increases the optionee's  alternative  minimum taxable income. In addition,  the
optionee's  basis in such shares is  increased  by such  amount for  purposes of
computing the gain or loss on disposition of the shares for alternative  minimum
tax purposes. If the optionee is required to pay an alternative minimum tax, the
amount of such tax which is attributable to deferral preferences  (including the
ISO adjustment) is allowable as a tax credit against the optionee's  regular tax
liability  (net of other  non-refundable  credits) in subsequent  years.  To the
extent the credit is not used,  it is carried  forward.  An  optionee  of an ISO
should consult with the optionee's tax advisors concerning the applicability and
effect on the optionee of the alternative minimum tax.                          

NEW PLAN BENEFITS                                                               

         Subject to  stockholder  approval of the 1999 Stock  Option  Plan,  set
forth below is the number of shares of Common Stock underlying options currently
determined to be granted under the 1999 Stock Option Plan to each of the persons
indicated:                                                                      

                                            Dollar Value(1)    Number of Options

Non-Executive Directors as a Group           $ 0                      
                                          ------------        ------------

---------------                                                                 

(1)  Based on the fair  market  value  per share of  $3.8438  on the last day of
fiscal 1999.                                                          

 THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL.

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 VOTING REQUIREMENTS

         Assuming  a quorum is  present,  a  plurality  of the votes cast at the
Meeting will be required for the election of directors.  The affirmative vote of
the majority of shares of Common Stock present in person or represented by proxy
at the Meeting and entitled to vote on such matter will be required for approval
of the 1999 Stock Option Plan.  Shares of Common Stock that are voted to abstain
with respect to any matter will be considered  cast with respect to that matter.
Shares  subject to broker  non-votes  with  respect  to any  matter  will not be
considered cast with respect to that matter.                                    

         THE BOARD OF DIRECTORS HAS  UNANIMOUSLY  RECOMMENDED A VOTE IN FAVOR OF
EACH NOMINEE NAMED IN THE PROXY AND FOR PROPOSAL 2.                             

 MISCELLANEOUS

STOCKHOLDER PROPOSALS                                                           

         Stockholders wishing to present proposals at the 2000 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 2000
Annual  Meeting of  Stockholders  must submit their  proposals to the Company in
writing on or before July 14, 2000.                                             

         If the Company  does not receive  notice by  September  27, 1999 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.               

OTHER MATTERS                                                                   

         The Board of Directors of the Company  knows of no other matter to come
before the meeting. However, if any matters requiring a vote of the stockholders
arise, it is the intention of the persons named in the enclosed form of proxy to
vote such proxy in accordance with their best judgment.                         

PROXIES                                                                         

         All stockholders are urged to fill in their choices with respect to the
matters to be voted on, sign and promptly return the enclosed form of proxy.    

                                    By Order of the Board of Directors

                                  Steven Fialkow
                             Secretary
Scarsdale, New York                                                             
November 11, 1999                                                               

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PROXY                              PROXY CARD                              PROXY
-----                                                                      -----

 NATIONAL HOME HEALTH CARE CORP.
ANNUAL MEETING OF STOCKHOLDERS
 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The  undersigned  Stockholder of Common Stock of National Home Health Care Corp.
(the "Company") hereby revokes all previous proxies, acknowledges receipt of the
Notice of the  Stockholders'  Meeting to be held on December 7, 1999, and hereby
appoints  Frederick H. Fialkow and Steven Fialkow,  and each of them, as proxies
of the  undersigned,  with full  power of  substitution,  to vote and  otherwise
represent  all of the  shares  of the  undersigned  at said  meeting  and at any
adjournment or  adjournments  thereof with the same effect as if the undersigned
were present and voting the shares.  The shares  represented by this proxy shall
be voted in the following manner:                                               

(1)   Election of directors                                           

  |_|   FOR all nominees listed below      |_|  WITHHOLD AUTHORITY to vote
           (except as indicated)                   for all nominees listed below

         To withhold authority for any individual  nominee,  strike through that
nominee's name in the list below:                                               

Frederick H. Fialkow                                
Steven Fialkow                                      
Ira Greifer, M.D.                                   
Bernard Levine, M.D.                                
Robert C. Pordy, M.D.                               

(2)  Approval of the Company's 1999 Stock Option Plan.                

           |_|    FOR          |_|     AGAINST          |_|    ABSTAIN

     (3) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.                               

[CONTINUED AND TO BE SIGNED ON REVERSE SIDE]

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THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED FOR EACH OF THE ABOVE NOMINEES,  FOR THE APPROVAL OF
THE COMPANY'S  1999 STOCK OPTION PLAN AND FOR SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING AS THE PROXY HOLDERS DEEM ADVISABLE.                    

                                           Dated:  _______________________, 1999

                                           -------------------------------------
               Signature

                                           -------------------------------------
                Print Name

                                           -------------------------------------
                             (Title, if appropriate)

This  proxy  should be signed by the  Stockholder(s)  exactly as his or her name
appears hereon.  Persons signing in a fiduciary capacity should so indicate.  If
shares are held by joint tenants or as community property,  both should sign. If
a  corporation,  this  proxy  should  be signed  in full  corporate  name by the
president or other  authorized  officer and should bear the corporate seal. If a
partnership, please sign in partnership name by authorized person.              

 TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK,
SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
 ENCLOSED ENVELOPE

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEF 14A’ Filing		Date		First		Last			Other Filings
		10/6/09		23
		4/26/09		15
		4/26/04		15
		11/30/03		10		17
		7/14/00		26
For Period End:		12/7/99		3		27
		11/11/99		3		26
Filed on:		11/10/99		3		4
		10/27/99		12
		10/7/99		17		19
		9/27/99		26
		7/31/99		3		16			10-K
		7/30/99		16
		6/30/99		13
		4/27/99		14		16
		12/1/98		17
		11/1/97		10		17
		7/29/94		8
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