UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): June 13, 2007
PHC, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts
(State of Incorporation or Organization)
0-22916 04-2601571
(Commission File Number) (I.R.S. Employer Identification No.)
200 Lake Street, Suite 102, Peabody, Massachusetts 01960
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (978) 536-2777
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4c))
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Item 1.01. Entry into a Material Definitive Agreement
On June 13, 2007, the Company entered into an amended and restated
revolving credit, term loan and security agreement with CapitalSource Finance,
LLC to replace the Company's current agreement with the same lender to lower
interest rates and provide additional liquidity. Each of the Company's material
subsidiaries, other than Pivotal Research Centers, Inc, is a co-borrower under
the agreement. The agreement includes a term loan in the amount of $3,000,000
and an accounts receivable funding revolving credit agreement with a maximum
loan amount of $3,500,000. The $3,000,000 term loan will be used to pay-off the
balance of the current term loan of approximately $250,000, with remaining
amount available to be drawn as needed.
The term loan calls for interest at the prime rate plus three-quarters of
one percent (0.75%), but not less than 6.25%, with monthly principal payments of
$50,000 beginning July 1, 2007 through June 30, 2009, and increasing to $62,500
each month through October 2011, the maturity date of the term loan.
The revolving credit note carries interest at prime plus one-quarter of one
percent (0.25%), but not less than 4.75% paid through lock box payments of third
party accounts receivable. The revolving credit term is four years, renewable
for two additional one-year terms.
Pursuant to the security agreement, all of the assets of the Company
and its material subsidiaries, other than Pivotal Research Centers, Inc., secure
the obligations under the term loan note and the revolving credit note,
including a first mortgage on PHC of Michigan Inc.'s real property, a second
mortgage on PHC of Virginia Inc.'s real property, and a leasehold mortgage on
PHC of Utah, Inc.'s leasehold interests.
In connection with this transaction the Company paid approximately $40,000
in commitment and loan origination fees that will be amortized as additional
interest over the term of the agreement. Supplemental to the loan and security
agreement, the Company issued a warrant to purchase 250,000 shares of PHC, Inc.
Class A common stock at an exercise price of $3.09 per share. The warrant is
exercisable, in whole or in part, until June 13, 2017, and contains standard
adjustment provisions for dilution. The documents evidencing this transaction,
that is, the Amended and Restated Revolving Credit, Term Loan and Security
Agreement, as well as the Warrant, will be filed as exhibits to the Company's
annual report on form 10-K.
A copy of PHC, Inc.'s press release announcing the amended and restated
agreement is attached hereto as Exhibit 99.1 and is incorporated herein by this
reference.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibit is being furnished herewith:
Exhibit No. Exhibit Description
99.1 Press release issued by PHC, Inc. on June 18, 2007.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHC, INC.
Date: June 18, 2007 By: /s/ Bruce A. Shear
____________________________
Bruce A. Shear
President
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