PHC, INC.
200 Lake Street
Suite 102
Peabody, Massachusetts 01960
November 18, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
PHC, Inc., which will be held on December 23, 1999, at 2:00 PM, at the corporate
offices of PHC, Inc., 200 Lake Street, Suite 102, Peabody, Massachusetts 01960.
The following Notice of Annual Meeting of Stockholders and Proxy Statement
describes the items to be considered by the stockholders and contains certain
information about PHC, Inc.'s officers and directors.
Please sign and return the enclosed proxy card as soon as possible in the
envelope provided so that your shares can be voted at the meeting in accordance
with your instructions. Even if you plan to attend the meeting, we urge you to
sign and promptly return the enclosed proxy. You can revoke it at any time prior
to the meeting, or vote your shares personally if you attend the meeting. We
look forward to seeing you.
Sincerely,
/s/ Bruce A. Shear
President
<PAGE>
PHC, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 23, 1999
The Annual Meeting of Stockholders of PHC, Inc. (the "Company") will be
held at our Corporate offices at 200 Lake Street, Suite 102, Peabody,
Massachusetts, on December 23, 1999, at 2:00 PM, for the following purposes:
1. To elect five directors (two to be elected by the holders of the Company's
Class A Common Stock and three to be elected by the holders of the
Company's Class B Common Stock) to hold office until the annual meeting
next following their election and until their successors are duly elected
and qualified;
2. To ratify the selection by the Board of Directors of BDO Seidman, LLP as
the Company's independent auditors; and
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on November 5, 1999
as the record date for determination of stockholders entitled to notice of, and
to vote at the annual meeting and at any adjournment thereof.
All stockholders are cordially invited to attend the meeting.
By order of the Board of Directors
/s/ Paula C. Wurts, Assistant Clerk
Peabody, Massachusetts
November 18, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
PHC, INC.
200 Lake Street
Suite 102
Peabody, Massachusetts 01960
(978) 536-2777
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PHC, Inc. (the "Company") for use at the
Annual Meeting of Stockholders to be held at the Corporate offices of the
Company at 200 Lake Street, Suite 102, Peabody, Massachusetts on December 23,
1999 at 2:00 PM (Boston time), and at any adjournment of that meeting (the
"Annual Meeting"). Each proxy will be voted in accordance with the instructions
specified, and if no instruction is specified, the proxy will be voted in favor
of the proposals set forth in the Notice of Annual Meeting. Any proxy may be
revoked by a stockholder at any time before it is exercised by filing a later
dated proxy or written notice of revocation with Paula C. Wurts, Assistant Clerk
of the Company, or by voting in person at the Annual Meeting.
The Company's Annual Report on Form 10-KSB for the year ended June 30, 1999
is being mailed to stockholders together with this Proxy Statement. The Company
will furnish any exhibit to the Company's Annual Report on Form 10-KSB upon the
payment of a processing fee of ten cents per page plus mailing costs. The date
of mailing of this Proxy Statement is expected to be on or about November 18,
1999.
The Board of Directors has fixed November 5, 1999 as the record date for
the determination of stockholders entitled to vote at the Annual Meeting (the
"Record Date"). On that date there were outstanding and entitled to vote
5,610,194 shares of Class A Common Stock and 727,170 shares of Class B Common
Stock of the Company (the shares of Class A Common Stock and Class B Common
Stock are referred to collectively herein as the "Shares"). Each share of Class
A Common Stock is entitled to one vote and each share of Class B Common Stock is
entitled to five votes. The holders of the Company's Class A Common Stock are
entitled to elect two members of the Company's Board of Directors (the "Class A
Directors") and holders of the Company's Class B Common Stock are entitled to
elect all the remaining members of the Company's Board of Directors (the "Class
B Directors"). Holders of Class A Common Stock will receive proxy cards which
will be different from those received by the holders of Class B Common Stock.
The proxy cards received by the holders of Class A Common Stock will contain a
proposal relating to the election of the two members of the Board of Directors
to be elected by the holders of the Class A Common Stock, in addition to any
other proposals to be voted upon during the General Session. Holders of Class B
Common Stock will receive proxy cards which will contain a proposal relating to
the election of the three members of the Board of Directors to be elected by the
holders of the Class B Common Stock, in addition to any other proposals to be
voted upon during the General Session.
The Annual Meeting will comprise three related but separate sessions: (i) a
special session of the holders of Class A Common Stock, during which session
only holders of Class A Common Stock are entitled to vote, for the separate
election by such holders of two directors, and no other business may properly
come before the meeting; (ii) a special session of the holders of Class B Common
Stock, during which session only holders of Class B Common Stock are entitled to
vote, for the separate election by such holders of three directors, and no other
business may properly come before the meeting; and (iii) a general session of
the holders of the Class A Common Stock and the Class B Common Stock for
ratification of the selection of independent auditors and for the conduct of
such other business as may properly come before the Annual Meeting. The presence
in person or by proxy of holders of shares of Class A Common Stock and Class B
Common Stock outstanding as of the Record Date which, combined, have the right
to cast a majority of the votes which may be cast with respect to matters
arising during the General Session will constitute a quorum for the conduct of
business at the General Session. The presence in person or by proxy of holders
of shares of Class A Common Stock and Class B Common Stock outstanding as of the
Record Date which have the right to cast a majority of the votes which may be
cast with respect to matters arising during the Class A Session and the Class B
Session, respectively, will constitute a quorum for purposes of the Class A
Session and the Class B Session, respectively.
The affirmative vote of the holders of a plurality of the shares of each of
Class A Common Stock and Class B Common Stock represented at the meeting is
required for the election of the Class A Directors and the Class B Directors,
respectively. Approval of each of the other matters that is before the meeting
will require the affirmative vote of the holders of a majority of the Shares
represented at the meeting and voting thereon. No votes may be taken at the
meeting, other than a vote to adjourn, unless the appropriate quorum (as set
forth in the preceding paragraph) has been constituted. Shares voted to abstain
or to withhold as to a particular matter, or as to which a nominee (such as a
broker holding shares in street name for a beneficial owner) has no voting
authority in respect of a particular matter, shall be deemed represented for
quorum purposes. Such shares, however, shall not be deemed to be voting on such
matters, and therefore will not be the equivalent of negative votes as to such
matters. Votes will be tabulated by the Company's transfer agent subject to the
supervision of persons designated by the Board of Directors as inspectors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of shares of the Company's Class A Common Stock, and Class B Common Stock (the
only classes of voting capital stock of the Company currently outstanding) as of
October 16, 1999, except with respect to the two 5% owners which is as of
November 5, 1999, by (i) each person known by the Company to beneficially own
more than 5% of any class of the Company's voting securities, (ii) each director
of the Company, (iii) the Company's Chief Executive Officer, (iv) each of the
Company's four most highly compensated executive officers other than its Chief
Executive Officer who were serving as officers of the Company at the end of the
1999 fiscal year and whose salary and bonus for the 1999 fiscal year exceeded
$100,000 and (v) all directors and officers of the Company as a group (the
individuals specified in subsections (iii) and (iv) hereof collectively are
referred to herein as the "Named Executive Officers"). Unless otherwise
indicated below, to the knowledge of the Company, all persons listed below have
sole voting and investment power with respect to their shares of Common Stock,
except to the extent authority is shared by spouses under applicable law. In
preparing the following table, the Company has relied on the information
furnished by the persons listed below:
Name and Address Amount and Nature Percent of
Title of Class of Beneficial Owner of Beneficial Owner Class (12)
Class A Common Stock Gerald M. Perlow
c/o PHC, Inc.
200 Lake Street
Peabody, MA 01960 27,750(1) *
Donald E. Robar
c/o PHC, Inc.
200 Lake Street
Peabody, MA 01960 22,750(2) *
Bruce A. Shear
c/o PHC, Inc.
200 Lake Street
Peabody, MA 01960 58,000(3) 1.0%
Robert H. Boswell
c/o PHC, Inc.
200 Lake Street
Peabody, MA 01960 83,844(4) 1.5%
Howard W. Phillips
P. O. Box 2047
East Hampton, NY 11937 11,750(5) *
William F. Grieco
115 Marlborough Street
Boston, MA 02116 71,030(6)(7) 1.3%
J. Owen Todd
c/o Todd and Weld
1 Boston Place
Boston, MA 02108 59,280(7) 1.1%
ProFutures Special Equities
Fund, LP
11612 Bee Cave Rd STE 100
Austin, TX 78734 751,082(9) 12.1%
<PAGE>
Name and Address Amount and Nature Percent of
Title of Class of Beneficial Owner of Beneficial Owner Class (12)
All Directors and Officers
as a Group (7 persons) 311,285(8) 5.3%
Class B Common Stock
(10) Bruce A. Shear
c/o PHC, Inc.
200 Lake Street
Peabody, MA 01960 671,259(11) 92.8%
All Directors and Officers
as a Group (7 persons) 671,259 92.8%
* Less than 1%.
1. Includes 17,750 shares of Class A Common Stock issuable pursuant to
currently exercisable stock options or stock options which will become
exercisable within sixty days, having an exercise price range of $1.03 to
$6.63 per share.
2. Includes 21,250 shares of Class A Common Stock issuable pursuant to
currently exercisable stock options or stock options which will become
exercisable within sixty days, having an exercise price range of $1.03 to
$6.63 per share.
3. Includes 50,000 shares of Class A Common Stock issuable pursuant to
currently exercisable stock options, having an exercise price range of
$1.17 to $2.63 per share. Excludes an aggregate of 59,280 shares of Class A
Common Stock owned by the Shear Family Trust and the NMI Trust, ("Trusts")
of which Bruce A. Shear is a remainder beneficiary.
4. Includes an aggregate of 71,500 shares of Class A Common Stock issuable
pursuant to currently exercisable stock options at an exercise price range
of $1.20 to $1.25 per share.
5. Includes 11,750 shares of Class A Common Stock issuable pursuant to
currently exercisable stock options having an exercise price range of $1.03
to $3.50 per share.
6. Includes 11,750 shares of Class A Common Stock issuable pursuant to
currently exercisable stock options, having an exercise price range of
$1.03 to $3.50 per share
7. Messrs. Todd and Grieco are the two trustees of the Trusts which
collectively hold 59,280 shares of the Company's outstanding class A common
stock. Gertrude Shear, Bruce A. Shear's mother, is the lifetime beneficiary
of the Trusts. In addition to the shares held by the Trusts, to the best of
the Company's knowledge, Gertrude Shear currently owns less than 1% of the
Company's outstanding class B common stock.
8. Includes an aggregate of 215,500 shares of Class A Common Stock issuable
pursuant to currently exercisable stock options. Of those options, 5,500
have an exercise price of $6.63 per share, 10,000 have an exercise price of
$5.00 per share, 19,500 have an exercise price of $3.50 per share, 37,500
have an exercise price of $2.63 per share, 3,000 have an exercise price of
$2.06 per share, 119,250 have an exercise price of $1.25 per share, 6,250
have an exercise price of $1.20 per share, 12,500 have an exercise price of
$1.17 per share and 2,000 have an exercise price of $1.03 per share.
9. Includes 458,750 shares of Class A Common Stock estimated as issuable upon
the conversion of 367 shares of currently convertible series B preferred
stock, which is convertible at 80% of the closing bid price of the class A
common stock as reported by NASDAQ for the five trading days immediately
preceding the conversion, and 165,522 shares of class A common stock
issuable upon the exercise of warrants issued in connection with various
financing and private placement transactions and currently exercisable at
prices ranging from $2.31 to $2.90 per share.
10. Each share of Class B Common Stock is convertible into one share of Class A
Common Stock automatically upon any sale or transfer or at any time at the
option of the holder.
11. Includes 56,369 shares of Class B Common Stock pledged to Steven J. Shear
of 2 Addison Avenue, Lynn, Massachusetts 01902, Bruce A. Shear's brother,
to secure the purchase price obligation of Bruce A. Shear in connection
with his purchase of his brother's stock in the Company in December 1988.
In the absence of any default under this obligation, Bruce A. Shear retains
full voting power with respect to these shares.
12. Represents percentage of equity of class, based on numbers of shares listed
under the column headed "Amount and Nature of Beneficial Ownership". Each
share of Class A Common Stock is entitled to one vote per share and each
share of Class B Common Stock is entitled to five votes per share on all
matters on which stockholders may vote (except that the holders of the
Class A Common Stock are entitled to elect two members of the Company's
Board of Directors and holders of the Class B Common Stock are entitled to
elect all the remaining members of the Company's Board of Directors).
By virtue of the fact that class B shareholders have the right to elect
three of the five members of the Board of Directors and Mr. Shear owns of 92% of
the class B shares, Mr. Shear has the right to elect the nominees and therefore
control the Board of Directors.
Based on the number of shares listed under the column headed "Amount and
Nature of Beneficial Ownership," the following persons or groups held the
following percentages of voting rights for all shares of common stock combined
as of October 16, 1999:
Bruce A. Shear ........................................36.72%
J. Owen Todd............................................0.64%
William F. Grieco.......................................0.77%
ProFutures Special Equities Fund, LP....................7.61%
All Directors and Officers as a Group
(7 persons)..........................................38.75%
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The directors and officers of the Company as of June 30, 1999 are as
follows:
Name Age Position
Bruce A. Shear 44 Director, President and Chief Executive
Officer
Robert H. Boswell 50 Senior Vice President
Paula C. Wurts 50 Controller, Assistant Clerk and Assistant
Treasurer
Gerald M. Perlow, M.D. (1)(2) 61 Director and Clerk
Donald E. Robar (1)(2) 62 Director and Treasurer
Howard W. Phillips 69 Director
William F. Grieco (1) 45 Director
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
All of the directors hold office until the annual meeting of stockholders
next following their election, or until their successors are elected and
qualified. The Compensation Committee reviews and sets executive compensation.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board. There are no family relationships among any of the
directors or officers of the Company.
Information with respect to the business experience and affiliations of the
directors and officers of the Company is set forth below.
BRUCE A. SHEAR has been President, Chief Executive Officer and a Director
of the Company since 1980 and Treasurer of the Company from September 1993 until
February 1996. From 1976 to 1980 he served as Vice President, Financial Affairs,
of the Company. Mr. Shear has served on the Board of Governors of the Federation
of American Health Systems for over ten years. Mr. Shear received an M.B.A. from
Suffolk University in 1980 and a B.S. in Accounting and Finance from Marquette
University in 1976.
ROBERT H. BOSWELL has served as the Senior Vice President of the Company
since February 1999 and as executive vice president of the Company from 1992 to
1999. From 1989 until the spring of 1994 Mr. Boswell served as the Administrator
of the Company's Highland Ridge Hospital facility where he is based. Mr. Boswell
is principally involved with the Company's substance abuse facilities. From 1981
until 1989, he served as the Associate Administrator at the Prevention Education
Outpatient Treatment Program--the Cottage Program, International. Mr. Boswell
graduated from Fresno State University in 1975 and from 1976 until 1978 attended
Rice University's doctoral program in philosophy. Mr. Boswell is a Board Member
of the National Foundation for Responsible Gaming and the Chair for the National
Center for Responsible Gaming.
PAULA C. WURTS has served as the Controller of the Company since 1989 and
as Assistant Treasurer since 1993 and as Assistant Clerk since January 1996. Ms.
Wurts served as the Company's Accounting Manager from 1985 until 1989. Ms. Wurts
received an Associate's degree in Accounting from the University of South
Carolina in 1980, a B.S. in Accounting from Northeastern University in 1989 and
passed the examination for Certified Public Accountants. She received a Master's
Degree in Accounting from Western New England College in 1996.
<PAGE>
GERALD M. PERLOW, M.D. has served as a Director of the Company since May
1993 and as Clerk since February 1996. Dr. Perlow is a cardiologist in private
practice in Lynn, Massachusetts, and has been Associate Clinical Professor of
Cardiology at the Tufts University School of Medicine since 1972. Dr. Perlow is
a Diplomat of the National Board of Medical Examiners and the American Board of
Internal Medicine (with a subspecialty in cardiovascular disease) and a Fellow
of the American Heart Association, the American College of Cardiology, the
American College of Physicians and the Massachusetts Medical Center. From 1987
to 1990, Dr. Perlow served as the Director, Division of Cardiology, at
AtlantiCare Medical Center in Lynn, Massachusetts. From October 30, 1996 to
March 1, 1997, Dr. Perlow served as President and Director of Shliselberg
Physician Services, P.C. formerly Perlow Physicians, P.C. which has a management
contract with BSC. Dr. Perlow currently holds no ownership interest in
Shliselberg Physician Services, P.C. Dr. Perlow received compensation of $8,333
for the period. Dr. Perlow received a B.A. from Harvard College in 1959 and an
M.D. from Tufts University School of Medicine in 1963.
DONALD E. ROBAR has served as a Director of the Company since 1985 and as
the Treasurer since February 1996. He served as the Clerk of the Company from
1992 to 1996. Dr. Robar has been a professor of Psychology since 1961, most
recently at Colby-Sawyer College in New London, New Hampshire. Dr. Robar
received an Ed.D. from the University of Massachusetts in 1978, an M.A. from
Boston College in 1968 and a B.A. from the University of Massachusetts in 1960.
HOWARD W. PHILLIPS has served as a Director of the Company since August 27,
1996 and has been employed by the Company as a public relations specialist since
August 1, 1995. From 1982 until October 31, 1995, Mr. Phillips was the Director
of Corporate Finance for D.H. Blair Investment Corp. From 1969 until 1981, Mr.
Phillips was associated with Oppenheimer & Co. where he was a partner and
Director of Corporate Finance. Mr. Phillips currently is a member of the Board
of Directors of Food Court Entertainment Network, Inc., an operator of shopping
mall television networks, and Telechips Corp., a manufacturer of visual phones.
WILLIAM F. GRIECO has served as a Director of the Company since February
18, 1997. Since August 1999 Mr. Grieco has been a self-employed law consultant.
From November 1995 to July 1999 he served as Senior Vice President and General
Counsel for Fresenius Medical Care North America. From 1989 until November of
1995, Mr. Grieco was a partner at Choate, Hall & Stewart. Mr. Grieco received a
BS from Boston College in 1975, an MS in Health Policy and Management from
Harvard University in 1978 and a JD from Boston College Law School in 1981.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held four meetings during the fiscal year 1999. During fiscal
year 1999, each director attended 100% of the total number of meetings of the
Board (held during the period for which he was a director) and the total number
of meetings held by all Board committees on which such director served (during
the periods that he served as a member). The Board has a standing audit
committee and a standing compensation committee, but does not have a standing
nominating committee. The audit committee is composed of Dr. Perlow, Mr. Robar
and Mr. Grieco. The audit committee held no meetings during fiscal year 1999.
The principal functions of the audit committee are to make recommendations to
the Board regarding the selection of the Company's independent accountants, to
consult with the Company's independent accountants and financial and accounting
staff and to review and report to the Board with respect to the scope of audit
procedures, accounting practices and internal accounting and financial controls.
The compensation committee is composed of Dr. Perlow and Mr. Robar. The
compensation committee held one meeting during fiscal year 1999. The principal
functions of the compensation committee are to review and make recommendations
to the Board on all compensation and hiring issues that relate to officers and
senior staff members.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Employment Agreements
The Company has not entered into any employment agreements with its
executive officers. The Company owns and is the beneficiary on a $1,000,000 key
man life insurance policy on the life of Bruce A. Shear.
Executive Compensation
Two executive officers of the Company received compensation in the 1999
fiscal year, which exceeded $100,000. The following table sets forth the
compensation paid or accrued by the Company for services rendered to these
executives in fiscal year 1999,1998, and 1997:
Summary Compensation Table
Annual Compensation Long Term
Compensation
Awards
(a) (b) (c) (d) (e) (g) (i)
Name and Other Annual Securities All Other
Principal Year Salary Bonus Compensation Underlying Compensation
Position ($) ($) ($) Options/SARs ($)
(#)
Bruce A. Shear 1999 $300,195(1) -- $ 6,490(2) 50,000 $21,622
President and 1998 $309,167(1) -- $ 8,363(3) 50,000 $51,256
Chief Executive 1997 $294,167(1) -- $12,633(4) -- --
Officer
Robert H. Boswell 1999 $111,083 $800 $ 7,955(5) 65,000 $29,753
Senior Vice 1998 $102,750 -- $ 7,836(6) 15,000 $14,149
President 1997 $ 92,750 -- $ 6,897(7) 5,000 $ 6,821
(1) Although the Board of Director authorized base salary effective July 1,
1995 is $310,000 base salary was drawn as listed above.
(2) This amount represents (i) $1,341 contributed by the Company to the
Company's Executive Employee Benefit Plan on behalf of Mr. Shear, (ii)
$2,792 in premiums paid by the Company with respect to life insurance for
the benefit of Mr. Shear and (iii) $2,357 personal use of a Company car
held by Mr. Shear.
(3) This amount represents (i) $1,341 contributed by the Company to the
Company's Executive Employee Benefit Plan on behalf of Mr. Shear (ii)
$4,768 in premiums paid by the Company with respect to life insurance for
the benefit of Mr. Shear, and (iii) $2,254 personal use of a Company car
held by Mr. Shear.
(4) This amount represents (i) $2,687 contributed by the Company to the
Company's Executive Employee Benefit Plan on behalf of Mr. Shear, (ii)
$6,769 in premiums paid by the Company with respect to life insurance for
the benefit of Mr. Shear, and (iii) $3,177 personal use of a Company car
held by Mr. Shear.
(5) This amount represents (i) $6,000 automobile allowance, (ii) $357
contributed by the Company to the Company's Executive Employee Benefit Plan
on behalf of Mr. Boswell, (iii) $704 in other benefits paid by the Company
on behalf of Mr. Boswell and (vi) $894 in benefit derived from the purchase
of shares through the employee stock purchase plan.
(6) This amount represents (i) $6,000 automobile allowance, (ii) $408
contributed by the Company to the Company's Executive Employee Benefit Plan
on behalf of Mr. Boswell, (iii) $408 in other benefits paid by the Company
on behalf of Mr. Boswell (iv) $115 in Class A Common Stock issued to
employees and (v) $905 in benefit derived from the purchase of shares
through the employee stock purchase plan.
(7) This amount represents (i) $6,000 automobile allowance and (ii) $897 in
benefit derived from the purchase of shares through the employee stock
purchase plan.
Stock Options Grants
The following table provides information about options granted to the named
executive officers during fiscal 1999 under the Company's Stock Plan, Employee
Stock Purchase Plan and Non-Employee Director Stock Plan.
Individual Grants
(a) (b) (c) (d) (e)
Name Number of % of Total
Securities Options/SARs
Underlying Granted to Execerise of
Options/SARs Employees in Base Price Expiration
Granted (#) in Fiscal Year ($/Shares) Date
Bruce A. Shear 50,000 23.5% $1.17 3/15/2004
Robert H. Boswell 50,000 23.5% $1.25 9/15/2003
15,000 7.0% $1.20 2/23/2004
All Directors and
Officers as a
group (7 Persons) 183,000 83.8% $1.03-$1.25 9/15/2003-2/23/2004
Option Exercises and Fiscal 1999 Year-End Values
The following table provides information about options exercised by the
named executive officers during fiscal 1999 and the number and value of options
held at the end of fiscal 1999.
(a) (b) (c) (d) (e)
Name Shares
Acquired on Value Number of Value
Exercise (#) Realized Securities of
($) Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/Sars
FY-End (#) at FY-End ($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
Bruce A. Shear -- -- 37,500/62,500 $0/$0
Robert H. Boswell -- -- 69,000/45,000 $0/$0
All Directors and
Officers as a
group (7 persons) -- -- 198,000/163,250 $0/$0
<PAGE>
Compensation of Directors
Directors who are employees of the Company receive no compensation for
services as members of the Board. Directors who are not employees of the Company
receive $2,500 stipend per year and $1,000 for each Board meeting they attend.
In addition, directors of the Company are entitled to receive certain stock
option grants under the Company's Non-Employee Director Stock Option Plan (the
"Director Plan").
ELECTION OF DIRECTORS
The members of the Board of Directors elected at the Annual Meeting will be
classified into two classes of directors. Two directors will be elected by the
holders of the Company's Class A Common Stock and the balance of the directors
will be elected by the holders of the Company's Class B Common Stock . The terms
of the present directors expire at the Annual Meeting or when the successors are
chosen and qualified, if later. The Board of Directors has fixed at five the
number of directors to be elected at the Annual Meeting.
The nominees for Class A Directors for election at the Annual Meeting are
Donald E. Robar and Gerald M. Perlow. The nominees for Class B Directors for
election at the Annual Meeting are Bruce A. Shear, Howard W. Phillips and
William F. Grieco. The proxy for holders of Class A Common Stock will be voted
to elect as Class A Directors the two nominees (Donald E. Robar and Gerald M.
Perlow), unless authority to vote for the election of directors is withheld by
marking the proxy to that effect or the proxy is marked with the names of
directors as to whom authority to vote is withheld. The proxy for holders of
Class B Common Stock will be voted to elect as Class B Directors the three
nominees (Bruce A. Shear, Howard W. Phillips and William F. Grieco), unless
authority to vote for the election of directors is withheld by marking the proxy
to that effect. Donald E. Robar, Gerald M. Perlow, Bruce A. Shear, Howard W.
Phillips and William F. Grieco are presently directors of the Company and have
consented to serve if reelected.
Each director will be elected to hold office until the next annual meeting
of stockholders following the 1999 Annual Meeting (2000) and until his successor
is elected and qualified. If a nominee becomes unavailable, the proxy may be
voted, unless authority has been withheld as to the nominee, for the election of
a substitute.
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR.
APPROVAL OF AUDITORS
The Board has selected the firm of BDO Seidman, LLP, independent certified
public accountants, as auditors of the Company for the fiscal year ending June
30, 2000 and is submitting the selection to stockholders for approval. The Board
recommends a vote "FOR" this proposal. Unless the proxy indicates otherwise, the
shares represented by the enclosed proxy will be voted to approve such
selection.
Although there is no legal requirement that this matter be submitted to a vote
of stockholders, the Board believes that the selection of independent auditors
is of sufficient importance to seek stockholder ratification. In the event BDO
Seidman, LLP is not ratified by the affirmative vote of the holders of shares
representing a majority of the votes cast at the Annual Meeting, the Board may
reconsider its selection. A representative of BDO Seidman, LLP is expected to
attend the Annual Meeting. Such representative will have an opportunity to make
a statement and will be available to respond to appropriate questions from
stockholders.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE ABOVE SELECTION
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based on a review of Forms 3 and 4 furnished to the company, all directors,
officers and beneficial owners of more than ten percent of any class of equity
securities of the Company registered pursuant to Section 12 of the Securities
Exchange Act filed on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
For approximately the last ten years, Bruce A. Shear, a director and the
President and Chief Executive Officer of the Company, and persons affiliated and
associated with him have made a series of unsecured loans to the Company and its
subsidiaries to enable them to meet ongoing financial commitments. The
borrowings generally were entered into when the Company did not have financing
available from outside sources and, in the opinion of the Company, were entered
into at market rates given the financial condition of the Company and the risks
of repayment at the time the loans were made. As of June 30, 1999, the Company
owed an aggregate of $200,000 to related parties.
During the period ended June 30, 1999, the Company paid Mr. Shear and
affiliates approximately $157,600 in principal and accrued interest under
various notes. As of June 30, 1999, the Company owed Bruce A. Shear $100,000 on
a promissory note, which is dated August 13, 1998, bears interest at the rate of
12% per year and is payable on demand and Tot Care, Inc., an affiliate of Bruce
A. Shear, $100,000 on promissory notes dated May 28, 1998 and June 9, 1998 which
bear interest at the rate of 12% per year and are payable on demand.
STOCKHOLDER PROPOSALS FOR 2000 MEETING
Proposals of stockholders intended to be presented and director nominations
intended to be made at the 2000 Annual Meeting of Stockholders must be received
by the Company at its principal office, 200 Lake Street, Suite 102, Peabody,
Massachusetts 01960, Attention: Paula C. Wurts, Assistant Clerk, not later than
July 21, 2000 for inclusion in the proxy statement for that meeting. Any
proposal of a stockholder to be presented at the Company's annual meeting of
stockholders in 2000, which has not been included in the Company's proxy
material, must be received not later than October 4, 2000 to be considered
timely.
<PAGE>
OTHER MATTERS
The Board does not know of any other matters that may come before the
Annual Meeting. However, if any other matters are properly presented to the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise to act, in accordance with their judgment on such
matters.
All costs of solicitation of proxies by management will be borne by the
Company. In addition to solicitations by mail, the Company's directors, officers
and regular employees, without additional remuneration, may solicit proxies by
telephone or personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting materials to the beneficial owners of the
Company's stock held in the names of such brokers, custodians and fiduciaries,
and the Company will reimburse them for their out-of-pocket expenses in this
connection.
By order of the Board of Directors
/s/ Paula C. Wurts, Assistant Clerk
November 18, 1999
The Board hopes that stockholders will attend the meeting, WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A prompt response will greatly
facilitate arrangements for the meeting, and your cooperation will be
appreciated. Stockholders who attend the meeting may vote their stock personally
even though they have sent in their proxies.
<PAGE>
REVOCABLE PROXY - CLASS A COMMON STOCK
PHC, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of PHC, Inc., a Massachusetts corporation, (the
"Company") hereby acknowledges receipt of the Notice of 1999 Annual Meeting of
Stockholders and Annual Report on Form 10-KSB for fiscal year ended June 30,
1999 and hereby appoints Bruce A. Shear and Paula C. Wurts, and both of them, as
proxies, with full power to each of substitution, and hereby authorizes either
of them to represent and to vote, as designated on the reverse side, all the
shares of Class A Common Stock of the Company held of record by the undersigned
on November 5, 1999 at the Annual Meeting of Stockholders to be held at 2:00
p.m. (Boston time), on December 23, 1999 at the Corporate offices of PHC, Inc.,
200 Lake Street, Suite 102, Peabody, Massachusetts 01960, and at any
adjournments or postponements thereof. The undersigned stockholder hereby
revokes any proxy or proxies heretofore given.
(Continued And To Be Signed and Dated On Reverse Side)
(BACK)
<PAGE>
FORM OF PROXY FOR CLASS A COMMON STOCK SHAREHOLDERS
[X} Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY
Nominees:
Donald E. Robar [ ] [ ]
Gerald M. Perlow [ ] [ ]
1. To elect Donald E.
Robar and Gerald M. Perlow as the FOR AGAINST ABSTAIN
Class A Directors of the Company, 2. To ratify the [ ] [ ] [ ]
each to hold the office until selection by the Board of Directors
the annual meeting next following of BDO Seidman, LLP as the Company's
his election: independent auditors for the 2000
fiscal year.
For, all nominees except as noted below. 3. In their discretion, the Proxies
are authorized to vote upon such
other matters as may properly come
before the meeting or any
adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER
DIRECTED, OR IF NO DIRECTION IS
MADE, FOR SUCH PROPOSALS, AND IN
ACCORDANCE WITH THE DETERMINATION
OF THE PROXY HOLDERS AS TO OTHER
MATTERS. THE UNDERSIGNED
STOCKHOLDER HEREBY ACKNOWLEDGES
RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
SIGNATURE DATE DATE
(SIGNATURE IF HELD JOINTLY)
_______________________________________________________________________________
Note: Please sign exactly as name appears on this proxy. All joint owners should
sign. When signing as attorney, executor, administrator, trustee, guardian or
custodian for a minor, please give your full title as such. If a corporation,
please sign full corporate name and indicate signer's office. If a partner sign
in the partnership name.
(FRONT)
<PAGE>
REVOCABLE PROXY - CLASS B COMMON STOCK
PHC, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of PHC, Inc., a Massachusetts corporation, (the
"Company") hereby acknowledges receipt of the Notice of 1999 Annual Meeting of
Stockholders and Annual Report on Form 10-KSB for fiscal year ended June 30,
1999 and hereby appoints Bruce A. Shear and Paula C. Wurts, and both of them, as
proxies, with full power to each of substitution, and hereby authorizes either
of them to represent and to vote, as designated on the reverse side, all the
shares of Class B Common Stock of the Company held of record by the undersigned
on November 5, 1999 at the Annual Meeting of Stockholders to be held at 2:00
p.m. (Boston time), on December 23, 1999 at the Corporate offices of PHC, Inc.,
200 Lake Street, Suite 102, Peabody, Massachusetts 01960, and at any
adjournments or postponements thereof. The undersigned stockholder hereby
revokes any proxy or proxies heretofore given.
(Continued And To Be Signed And Dated On Reverse Side)
(BACK)
<PAGE>
FORM OF PROXY FOR CLASS B COMMON STOCK SHAREHOLDERS
[X} Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY
Nominees:
Bruce A. Shear [ ] [ ]
Howard W. Phillips [ ] [ ]
William F. Grieco [ ] [ ]
1. To elect Bruce A.
Shear, Howard W. Phillips and
William F. Grieco as the FOR AGAINST ABSTAIN
Class B Directors of the Company, 2. To ratify the [ ] [ ] [ ]
each to hold the office until selection by the Board of Directors
the annual meeting next following of BDO Seidman, LLP as the Company's
his election: independent auditors for the 2000
fiscal year.
For, all nominees except as noted below. 3. In their discretion, the Proxies
are authorized to vote upon such
other matters as may properly come
before the meeting or any
adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER
DIRECTED, OR IF NO DIRECTION IS
MADE, FOR SUCH PROPOSALS, AND IN
ACCORDANCE WITH THE DETERMINATION
OF THE PROXY HOLDERS AS TO OTHER
MATTERS. THE UNDERSIGNED
STOCKHOLDER HEREBY ACKNOWLEDGES
RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
SIGNATURE DATE DATE
(SIGNATURE IF HELD JOINTLY)
_______________________________________________________________________________
Note: Please sign exactly as name appears on this proxy. All joint owners should
sign. When signing as attorney, executor, administrator, trustee, guardian or
custodian for a minor, please give your full title as such. If a corporation,
please sign full corporate name and indicate signer's office. If a partner sign
in the partnership name.
(FRONT)
