<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
--
/XX/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended April 30, 1996
---------------
OR
--
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
------------------- --------------------
Commission file number: 0-16235
-------
PHP HEALTHCARE CORPORATION
--------------------------
(exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 54-1023168
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11440 Commerce Park Drive, Reston, Virgina 20191
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 758-3600
--------------
</TABLE>
Securities registered pursuant Common Stock, $.01 par value
to Section 12(b) of the Act: Preferred Stock Purchase Rights
Each registered on the New York
Stock Exchange
Securities registered pursuant Common Stock, $.01 par value
to Section 12(g) of the Act: Preferred Stock Purchase Rights
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of June 30, 1996 the aggregate market value of the Common Stock
held by non-affiliates of the Registrant was approximately $248 million. As of
June 30, 1996 the number of shares of Common Stock of the Registrant issued and
outstanding was 10,966,950.
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its annual report on Form 10-K by
restating such portions in their entirety as set forth in the pages attached
hereto:
Part III, Items 10 through 13.
2
<PAGE>
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information required by this Item for executive officers is set forth
in Part I of this report under the heading "Executive Officers of the Company".
The following sets forth certain information as of the date hereof with
respect to the Company's directors. The Board of Directors is classified into
three classes whose terms are staggered to expire in different years. The term
of office of one class of directors expires each year in rotation so that one
class is elected at each annual meeting of shareholders for a full three-year
term. The terms of three of the present directors expire at the 1996 annual
meeting. The other six directors will continue in office for the remainder of
their terms as indicated below.
<TABLE>
<CAPTION>
Term as
Positions or Served as Director
Offices Director Expires at
with the Continuously the Annual
Name Company Since Meeting in Age
---- ------------ ------------ ---------- ---
<S> <C> <C> <C> <C>
Charles H. Robbins Chairman of 1976 1998 65
the Board and
Chief
Executive
Officer
Jack M. Mazur President 1976 1998 54
Michael D. Starr Senior 1985 1998 52
Executive Vice
President and
Treasurer
George E. Schafer, M.D. Senior Vice 1981 1997 73
President,
Medical
Affairs
Julien J. Lavoie Senior Vice 1989 1996 64
President
Paul T. Cuzmanes None 1989 1997 51
Donald J. Ruffing None 1991 1996 75
Charles P. Reilly None 1991 1997 53
Joseph G. Mathews None 1993 1996 62
</TABLE>
The following are brief summaries of the business experience during at
least the past five years of each of the directors of the Company.
Charles H. Robbins founded the Company in 1976 and has been President,
Chief Executive Officer and Chairman of the Board since its inception. In
October 1995, Mr. Mazur assumed the responsibilities of President. From 1973 to
1975, Mr. Robbins was Vice President and Director of Operations of
Tabershaw/Cooper Associates, Inc., a medical consulting firm, and Technical
Director, Health and Medical Systems of Informatics Inc.; from 1971 to 1973, he
was Manager, Medical Information Systems of Computer Science Corporation; and
from 1961 to 1970, he held various positions with the Office of the Surgeon
General of the United States Army and the Army Medical Department. In those
positions, Mr. Robbins was engaged in directing studies and developing programs
relating to various health care related activities.
Jack M. Mazur has been a director of the Company since 1976. From 1976
through May 1986 Mr. Mazur served as Assistant Secretary of the Company, from
June 1986 to October 1993 as Secretary of the Company, from August 1989 to
October 1995 as Senior Executive Vice President of the Company. In October
1995, Mr. Mazur became President of the Company. Prior to August 1989, Mr.
Mazur was engaged in the practice of law.
3
<PAGE>
Michael D. Starr has been employed by the Company in various financial and
operational positions since 1976 and has been a director since 1985. Mr. Starr
was Controller of the Company from 1976 to 1981, Vice President, Finance and
Administration from 1981 to 1986, and has been Executive Vice President since
March 1986. In October 1995, Mr. Starr became Senior Executive Vice President.
Julien J. Lavoie was Federal Program Manager of EDS Communications
Corporation, a contract services company, from 1987 to 1991, when he joined the
Company as Vice President. Previously, Mr. Lavoie served as President of
Productivity Management Services, Inc., a service company in the U.S. government
privatization program, from 1986 to 1987, and was Vice President Integration
Services for the Martin Marietta Data Systems Corporation, a major government
contractor, from 1983 to 1986.
Donald J. Ruffing is a retired Colonel in the U.S. Air Force. In 1990, Mr.
Ruffing served as a team member of the Peer and Application Reviews, Refugee
Mental Health Programs for the National Institute of Mental Health. From 1980
to 1985, Mr. Ruffing served as a project manager for the Company at St.
Elizabeth's Hospital. Mr. Ruffing completed 32 years in medical services
management with the U.S. Air Force. Upon his retirement, he was the Chief of
the Air Force Medical Service Corps, Office of the Surgeon General, where he was
responsible for developing plans, policies and procedures for the management of
the Air Force Medical Service Corps.
Joseph G. Mathews joined the Company as a Director in July 1993. Since
1985, Mr. Mathews has owned and operated Joseph G. Mathews & Associates, an
insurance brokerage firm. Mr. Mathews' professional designations include
Chartered Financial Consultant and Master of Science Financial Services. In
addition to serving on the Company's Board, Mr. Mathews is a member of the
boards of directors of Lake of the Ozarks General Hospital, Mark Twain Bank,
Sanford Brown College and Learfield Communication. Mr. Mathews also serves on
the Lindenwood College Board.
George E. Schafer, M.D. served as Vice President/Medical Director of the
Company from 1980 to 1993 and a director of the Company since 1981. Dr. Schafer
currently serves as Vice President Medical Affairs. Prior to joining the
Company, Dr. Schafer was a private consultant from 1978 to 1980. Dr. Schafer
was Surgeon General of the United States Air Force from 1975 to 1978 and retired
from the Air Force with the rank of Lieutenant General. Dr. Schafer held
various positions with the Air Force, commencing as a Flight Surgeon in 1947,
through various command positions from 1949 to 1975, and became Deputy Surgeon
General and then Surgeon General of the Air Force in 1975.
Paul T. Cuzmanes is a partner with the law firm of Wilson, Elser,
Moskowitz, Edelman & Dicker and has been engaged in the practice of law since
1976. Mr. Cuzmanes specializes in health care law, commercial law and the
representation of municipalities. He is also a fellow in the American Society
of Pharmaceutical Law.
Charles P. Reilly is the managing general partner of Shamrock Investments,
a financial advisory and investment firm that specializes in the health care
industry. From 1979 until founding Shamrock Investments in 1987, Mr. Reilly
served as Director, Senior Executive Vice President and Chief Development
Officer for American Medical International Corporation, a large multi-hospital
management company. In that position, Mr. Reilly was responsible for the
acquisition of new health care facilities and related business both in the
United States and abroad, oversaw the development of the company's integrated
health care services and facilities and directed the activities of AMI Group
Health Services, a division of American Medical International Corporation. Mr.
Reilly currently serves as Chairman of the Board of Directors of Dynamic Health,
Inc., an acute care hospital company, and as a director of G & L Realty
Corporation, a NYSE health care real estate investment trust (REIT). Mr. Reilly
has served as a director, trustee and governing council member of the Federation
of American Healthcare Systems, The National Committee for Quality Health Care
and the American Hospital Association, and has previously served as a board
director for several corporations.
4
<PAGE>
From August 1994 to August 1995, Mr. Reilly was an officer of the Company,
serving as a member of the Executive Council.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Executive
officers, directors and greater than ten percent shareholders are required by
the SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5
they file.
Based on the Company's review of the copies of such forms it has received
and written representations from certain reporting persons that they were not
required to file Forms 5 for the fiscal year, except as noted below, the Company
believes that all its executive officers, directors and greater than ten percent
shareholders complied with all filing requirements applicable to them with
respect to transactions during fiscal 1996. Certain of the Company's executive
officers and directors failed to report on a timely basis certain option grants
and stock issuances under the Company's Stock Option Plan and Directors'
Retainer Plan, as follows: Charles H. Robbins (one late report with respect to
two transactions), Jack M. Mazur (one late report with respect to two
transactions), Michael D. Starr (one late report with respect to two
transactions), (Julien J. Lavoie (one late report with respect to three
transactions), George E. Shafer, M.D. (one late report with respect to two
transactions), Joseph G. Mathews (one late report with respect to one
transaction), Donald Ruffing (one late report with respect to one transaction),
Anthony M. Picini (one late report with respect to three transactions). These
transactions were reported on Forms 5 filed in June 1996. Additionally, Paul T.
Cuzmanes sold certain shares in August 1995, but did not report the dispositions
until the filing of Form 5 in June 1996.
Item 11. Executive Compensation
----------------------
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
------------
Annual Compensation Awards
------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Name and Other Annual All Other
Principal Compensation Options/SARS Compensation
Position Year Salary ($) Bonus ($) ($) Award(s) ($)
-------- ---- ---------- -------- --- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Robbins, 1996 615,385 -0- /(1)/ -0- 11,413(2)
Chairman and Chief 1995 500,000 83,333 790,000 11,827
Executive Officer 1994 500,000 -0- -0- 50,428
Jack M. Mazur, 1996 538,463 -0- /(1)/ -0- 9,636/(3)/
President 1995 400,000 66,667 720,000 9,688
1994 400,000 -0- -0- 7,673
Michael D. Starr, 1996 325,770 -0- /(1)/ -0- 9,362/(4)/
Senior Executive Vice 1995 275,000 -0- 290,000 9,688
President 1994 275,000 -0- -0- 3,969
John P. Cole 1996 330,000 -0- /(1)/ -0- 1,636/(7)/
Executive Vice 1995 176,346/(5)/ -0- 30,000/(6)/ 1,488
President 1994 -0- -0- -0- -0-
William J. Lubin, 1996 207,692 -0- /(1)/ 15,000 706/(8)/
Executive Vice 1995 154,800 -0- 100,000 620
President 1994 -0- -0- -0- -0-
</TABLE>
- ---------------------
5
<PAGE>
Notes to Summary Compensation Table:
/(1)/ Each of the named executive officers receives certain
perquisites, including the use of Company automobiles; such perquisites,
however, do not exceed the lesser of $50,000 or 10% of such officer's
salary and bonus.
/(2)/ Includes $3,013 term life insurance premiums, $8,000 director's
fees, and $400 in 401(k) Plan matching fees. Mr. Robbins has elected to be
paid his director's fees in stock pursuant to the Directors' Retainer Plan.
/(3)/ Includes $1,236 term life insurance premiums, $8,000 director's
fees, and $400 in 401(k) Plan matching fees. Mr. Mazur has elected to be
paid his director's fees in stock pursuant to the Directors' Retainer Plan.
/(4)/ Includes $962 term life insurance premiums, $8,000 director's
fees, and $400 in 401(k) Plan matching fees. Mr. Starr has elected to be
paid his director's fees in stock pursuant to the Directors' Retainer Plan.
/(5)/ Salary shown is that from Mr. Cole's date of employment,
September 29, 1994, through the end of the fiscal year.
/(6)/ Does not include options for 38,000 shares received by Mr.
Cole upon the merger of JP Cole & Associates into the Company in October
1994.
/(7)/ Includes $1,236 term life insurance premiums and $400 in 401(k)
Plan matching fees.
/(8)/ Includes $306 term life insurance premiums and $400 in 401(k)
Plan matching fees.
Option Grants in 1996
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants for Option Term
- ----------------------------------------------------------------------------------------------------------------------------------
No. of % of Total
Securities Options
Underlying Granted to Market
Options Employees Exercise Price Expiration
Name Granted in 1996 Price Grant Date Date 0% 5% 10%
---- ---------- ---------- -------- ---------- ---------- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Robbins --- --- --- --- --- --- --- ---
Jack M. Mazur --- --- --- --- --- --- --- ---
Michael D. Starr --- --- --- --- --- --- --- ---
John P. Cole --- --- --- --- --- --- --- ---
William J. Lubin 15,000 5.7% $27.25 $27.25 1/25/2006 -0- $259,500 $657,450
</TABLE>
6
<PAGE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs Options/SARs
at 4/30/96 at 4/30/96
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- ---------------- ------------ ---------------------- -----------------------
<S> <C> <C> <C> <C>
Charles H. Robbins -0- -0- 263,333/526,667 $6,990,125/$13,980,250
Jack M. Mazur -0- -0- 240,000/480,000 $6,378,330/$12,756,667
Michael D. Starr -0- -0- 96,667/193,333 $2,548,375/$5,096,750
John P. Cole -0- -0- 49,000/19,000 $1,274,000/$494,000
William J. Lubin -0- -0- 33,333/81,667 $849,563/$1,747,875
</TABLE>
- ------------------
401(k) Plan
The Company established the PHP Healthcare Corporation 401(k) Plan (the
"401(k) Plan") effective January 1, 1991, pursuant to which employees may defer
compensation for income tax purposes under Section 401(k) of the Internal
Revenue Code. Participant contributions will be invested at all times in any or
all of six funds at the direction of the participant. Participant contributions
will be matched up to $400 annually by the Company. The Company contributed
$400 to the 401(k) Plan during fiscal year 1996 on behalf of each of the named
executive officers.
Director Compensation
Each director of the Company is paid $2,000 per quarter for his services as a
director, plus $650 for each special meeting of the Board. In addition, each
outside director is paid $1,200 for attending up to three committee meetings
annually and $500 for each additional committee meeting. Each director is
reimbursed for travel expenses relating to attending meetings of the Board of
Directors and its committees.
The Company has adopted a Directors' Retainer Plan. Commencing May 1, 1993,
for any fiscal quarter each director of the Company may elect to have the full
amount of his retainer paid in the form of common stock of the Company. The
number of shares issued is calculated based on the then current market value of
the stock.
Employment Agreements
The Company has entered into Employment Agreements with each of Charles H.
Robbins, Jack M. Mazur and Michael D. Starr. Under these agreements, Mr.
Robbins is employed as Chief Executive Officer, Mr. Mazur is employed as
President and Mr. Starr is employed as Senior Executive Vice President. The
agreements are each renewable automatically on May 1 of each year unless
terminated by either the executive
7
<PAGE>
or the Company on ninety (90) days advance notice, or otherwise in accordance
with the agreements, except that no notice may be given by the Company sooner
than three years after a Change in Control (as defined in the agreements). The
agreements are currently in effect through April 30, 1997. In the event of
termination because of the executive's death or disability, the Company will pay
the executive or his estate a lump sum severance payment equal to one year's
salary and a pro rata bonus for the year in which the termination occurs. In the
event the Company terminates the agreement other than for cause, death or
disability or the executive terminates the agreement because of certain adverse
changes following a Change in Control of the Company, then (a) the Company must
pay the executive a lump sum amount equal to three times the sum of the
executive's base salary and bonus; (b) the executive is entitled, for a period
of three years, to continuation of coverage at the Company's expense of the
executive's disability, medical and dental benefits; (c) all restrictions on any
outstanding awards granted to the executive will lapse and be immediately
vested, all stock options will become fully exercisable and the executive will
have the right to require the company to purchase for cash any shares of
unrestricted stock and stock purchased upon the exercise of any options.
The Company also has entered into an employment agreement with John P. Cole.
Under this agreement, Mr. Cole is employed as Executive Vice President of the
Company for a period of two years with an annual salary of $330,000. Options to
purchase 30,000 shares of the Company's common stock at $4.50 per share were
granted to Mr. Cole pursuant to this agreement. The options are exercisable
ratably over one year in increments of three months starting at the grant date
of September 29, 1994.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
None.
8
<PAGE>
Item 12. Security Ownership Of Certain Beneficial Owners And Management
--------------------------------------------------------------
The following table sets forth information as of June 30, 1996, with
respect to the beneficial ownership of Common Stock by each person known to the
Company to be the beneficial owner of more than 5% of its outstanding shares of
Common Stock, by each director of the Company, each named executive officer, and
by all directors and executive officers of the Company as a group. On June 30,
1996 there were 10,966,950 shares of the Company's Common Stock issued and
outstanding. (Certain of the shares reported in the following table may be
deemed to be owned by more than one person here listed. As a result, those
shares are included in more than one entry on the table.)
<TABLE>
<CAPTION>
Name and Address No. of Shares Percent of Class
- ----------------------------------------------------------------------------
<S> <C> <C>
Voting Agreement Group /(1)/ 4,223,222 34.0%
Charles H. Robbins and Ellen
E. Robbins;
Jack M. Mazur and Lynn Mazur;
VACHR, Inc.; Michael D. Starr;
Shamrock Investments; Charles
P. Reilly;
Michael E. Gallagher
11440 Commerce Park Drive
Reston, VA 20191
Shamrock Investments /(2)/ 1,078,036/(3)/ 9.5%
Charles P. Reilly
Michael E. Gallagher
2049 Century Park East, Suite
3330
Los Angeles, CA 90067
Bosko Djordjevic and Elizabeth 653,000 6.0%
A. Keck, Trustee
505 S. Beverly Drive, Suite
215
Beverly Hills, CA 90212
Charles H. Robbins 1,926,742/(4)/ 16.9%
Jack M. Mazur 413,960/(5)/ 3.7%
Michael D. Starr 292,470/(7)/ 2.6%
Charles P. Reilly 739,579/(8)/ 6.6%
2049 Century Park East, Suite
3330
Los Angeles, CA 90067
John P. Cole 319,000/(9)/ 2.9%
George E. Schafer, M.D. 47,969 /(6)/
4 Imperial Oaks
San Antonio, TX 78248
Julien J. Lavoie 72,718/(10)/ /(6)/
William J. Lubin 35,667/(11)/ /(6)/
Joseph G. Mathews 8,531 /(6)/
3510 Highway O
Wright City, MO 63390
</TABLE>
9
<PAGE>
Donald J. Ruffing 7,445 /(6)/
11104 Woodlawn Boulevard
Upper Marlboro, MD 20772
Paul T. Cuzmanes 3,837 /(6)/
250 West Pratt Street
Baltimore, MD 21201
All directors and executive 3,696,481/(12)/ 29.8%
officers as a group (12 persons)
_________________
/(1)/ The persons listed are parties to a Voting Agreement dated as of October
7, 1994, constitute a group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act") and jointly filed
a Schedule 13D with the Securities and Exchange Commission on October 11,
1994.
/(2)/ The persons listed constitute a group (separate from the group above
listed) within the meaning of Section 13(d)(3) of the 1934 Act and jointly
filed a Schedule 13D with the Securities and Exchange Commission on
October 11, 1994 reflecting the aggregate beneficial ownership of 609,067
shares of Common Stock, options to purchase an additional 357,859 shares
of Common Stock, and promissory notes of the Company which are convertible
into 111,110 shares of Common Stock.
/(3)/ Does not include 3,145,186 shares which are deemed to be beneficially
owned by this group by virtue of its participation in the Voting Agreement
Group set forth above.
/(4)/ Includes 300,000 shares owned by Mr. Robbins' spouse, Ellen E. Robbins, as
trustee for the benefit of their children. Includes 443,333 shares which
Mr. Robbins presently could acquire upon the exercise of options granted
by the Company. Does not include 2,296,480 shares which are deemed to be
beneficially owned by Mr. Robbins by virtue of his participation in the
Voting Agreement Group set forth above.
/(5)/ Includes 406,667 shares which Mr. Mazur presently could acquire upon the
exercise of options granted by the Company. Does not include 512,014
shares, or 4.67% of the class, owned by VACHR, Inc., a corporation owned
by Mr. Mazur's spouse, Lynn Mazur, or the other 3,297,248 shares which are
deemed to be beneficially owned by Mr. Mazur by virtue of his
participation in the Voting Agreement Group set forth above. Does not
include 30,000 shares owned by J&J Investment Partnership, a partnership
wholly owned by members of Mr. Mazur's family and of which Mr. Mazur
disclaims beneficial ownership.
/(6)/ Represents less than 1% of the shares of the Company's outstanding stock.
/(7)/ Includes 156,667 shares which Mr. Starr presently could acquire upon the
exercise of options granted by the Company. Does not include 3,930,752
shares which are deemed to be beneficially owned by Mr. Starr by virtue of
his participation in the Voting Agreement Group set forth above.
/(8)/ Includes 214,096 shares subject to options which Mr. Reilly could acquire,
59,963 shares which may be acquired by Mr. Reilly upon conversion of a
promissory note of the Company, 22,500 shares which Mr. Reilly could
acquire upon the exercise of options granted by the Company to Shamrock
Investments, a partnership of which Mr. Reilly is the managing general
partner, 6,173 shares which may be acquired by Mr. Reilly upon conversion
of a promissory note of the Company issued to Shamrock Investments and
200,000 shares owned by Shamrock Investments. See Item 13, "Certain
Transactions and Business Relationships." Does not include an additional
3,483,643 shares which are deemed to be beneficially owned by Mr. Reilly
by virtue of his participation in the Voting Agreement Group set forth
above.
10
<PAGE>
/(9)/ Includes 49,000 shares which Mr. Cole presently could acquire upon the
exercise of options granted by the Company.
/(10)/ Includes 65,333 shares which Mr. Lavoie presently could acquire upon the
exercise of options granted by the Company.
/(11)/ Represents 35,667 shares which Mr. Lubin presently could acquire upon
exercise of options granted by the Company.
/(12)/ Does not include the shares that may be deemed to be owned by certain of
these persons as a result of their participation in the Voting Agreement
Group set forth above.
Item 13. Certain Transactions and Business Relationships
-----------------------------------------------
In September 1995, the Company retained Shamrock Investments ("Shamrock") as
a financial advisor. Charles P. Reilly, a director of the Company, is the
managing general partner of Shamrock and Michael E. Gallagher is a general
partner of Shamrock. In fiscal 1996, the Company paid Shamrock $200,000 for
financial advisory services.
As of August 1, 1994, Messrs. Reilly and Gallagher entered into one-year
employment agreements with the Company pursuant to which they assisted the
Company's Executive Council in strategic planning, served along with Messrs.
Robbins, Mazur, and Starr as members of the Executive Committee of Management,
and performed other duties assigned by the Board of Directors of the Company.
Pursuant to these agreements, as of August 1, 1994, Messrs. Reilly and Gallagher
were employed at annual salaries of $1,000 each and were granted options to
purchase 137,142 and 102,858 shares of Common Stock, respectively, at an
exercise price of $4.50 per share which options expire in September 2004. On
September 29, 1994, Mr. Cole entered into a two-year employment agreement with
the Company pursuant to which he serves as Executive Vice President of the
Company. Pursuant to this agreement, Mr. Cole was granted options to purchase
30,000 shares of Common Stock at an exercise price of $4.50 per share, which
expire in September 2004. The foregoing options are exercisable ratably over a
one-year period and become exercisable immediately in the event of a change of
control of the Company. The exercise price of the options represents the fair
market value of the Common Stock on the date a preliminary agreement was
reached, subject to approval by the Board of Directors of the Company.
On October 7, 1994, Messrs. Robbins and Mazur, and their spouses, Messrs.
Starr, Reilly and Gallagher and Shamrock entered into a Voting Agreement under
which the parties have agreed to cause their shares of Common Stock to be voted,
with respect to each matter put to a vote of the Company's shareholders, in
accordance with the two-thirds vote of the shares owned by the parties on the
date of the Voting Agreement. The parties entered into the Voting Agreement in
order to assure the continuation of the policies of the current management of
the Company, which they believe to be in the best interest of the Company and
its shareholders. The Voting Agreement expires two years after the date
thereof, unless otherwise agreed by the parties.
The Company has adopted a Senior Executive Loan Program (the "Program"),
pursuant to which loans to senior executive officers may be made up to three and
one-half times the officer's annual salary. Each loan must be repaid within one
year and bears interest at two percent above the Company's short-term borrowing
rate. All loans are collateralized by the shares of the Company's Common Stock
owned by the senior executive officer. The due dates on amounts outstanding
were extended in 1996 for twelve months. Beginning in fiscal year 1993, there
were loans made under the Program to each of Charles H. Robbins and Jack M.
Mazur. The largest amount outstanding during fiscal 1996 to Mr. Robbins was
$1,465,000 and to Mr. Mazur was $1,798,000. The interest rate on these loans as
of June 30, 1996 was 8.5%.
11
<PAGE>
In accordance with the Board of Directors' approval, the Company makes
premium payments relating to certain insurance policies on behalf of certain
officers of the Company. These advances are owed to the Company and are
collateralized by assignment of the underlying cash surrender value and related
death benefit. During 1996, the officers signed promissory notes bearing
interest at 7% and due in April 2002 for the amounts advanced. The amount
outstanding as of April 30, 1996, to Mr. Robbins was $724,000, to Mr. Mazur was
$173,000, and to Mr. Starr was $165,000.
Paul Cuzmanes is a partner with the law firm of Wilson, Elser, Moskowitz,
Edelman & Dicker, which firm the Company retained in fiscal 1996.
For further information with respect to related party transactions, see Note
10 of Notes to Consolidated Financial Statements.
12
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHP HEALTHCARE CORPORATION
Date: August 28, 1996 By: /s/ Anthony M. Picini
--------------- -------------------------------------
Anthony M. Picini
Senior Vice President and
Chief Financial Officer
13
