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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Managed Care Solutions, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
561906 10 8
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(CUSIP Number)
James A. Burns
Managed Care Solutions, Inc.
7600 North 16th Street, Suite 150
Phoenix, Arizona 85020
602-943-5660
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
January 1, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a Statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with this statement [_].
The information required on the remainder of this cover page (the pages numbered
2 through 14 herein) shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject
to the liabilities of that section of the Act but shall be subject to all other
provisions of the Act.
Page 1 of pages
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CUSIP NO. 561906 10 8 13D
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James A. Burns
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(E) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
U.S.A.
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SOLE VOTING POWER
7
NUMBER OF
243,090
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
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EACH SOLE DISPOSITIVE POWER
9
REPORTING
243,090
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
243,090
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
5.5
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TYPE OF REPORTING PERSON*
14
IN
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ITEM 1. Security and Issuer
This statement relates to the common stock, $.01 par value (the
"Common Stock"), of Managed Care Solutions, Inc., a Delaware corporation (the
"Company"), which has its principal executive offices at 7600 North 16th Street,
Suite 150, Phoenix, Arizona 85020.
ITEM 2. Identity and Background
(a), (b) and (c): This statement is being filed by James A. Burns
("Mr. Burns"). Mr. Burns' business address is c/o Managed Care Solutions, Inc.,
7600 North 16th Street, Suite 150, Phoenix, Arizona 85020 and his principal
occupation is as President and Chief Executive Officer of the Company.
(d) and (e): During the last five years, Mr. Burns has not been (a)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction resulting in any judgment, decree
or final order enjoining future violation of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(f): Mr. Burns is a citizen of the United States.
ITEM 3. Source and Amount of Funds or Other Consideration
Mr. Burns was a shareholder in each of three Arizona corporations,
Ventana Health Systems, Inc., Managed Care Solutions, Inc. and Arizona Health
Concepts, Inc. (the "MCS Companies") which became wholly owned subsidiaries of
the Company on March 1, 1996 as a result of the merger transactions (the
"Mergers") described in Item 4. Pursuant to such transactions, the shares of
the MCS Companies held by Mr. Burns were converted into 205,590 of the shares of
Common Stock reported in this statement. At the time of the Mergers, Mr. Burns
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received an option to purchase 150,000 shares of Common Stock, which will become
exercisable as to 25% (37,500) of such shares on March 1, 1997. Mr. Burns is
filing this statement because, under Rule 13d-3, he is now deemed to
beneficially own the 37,500 option shares which vest on March 1, and as a
result, to beneficially own more than 5% of the Company's outstanding Common
Stock under such rule.
ITEM 4. Purpose of Transaction
Pursuant to an Agreement and Plan of Merger dated as of November 20,
1995 (the "Merger Agreement") among the MCS Companies, the Company, and three
wholly owned subsidiaries of the Company (the "Merger Subsidiaries"), on March
1, 1996 each of the Merger Subsidiaries was merged with and into one of the MCS
Companies, and the previously outstanding shares of the MCS Companies were
converted into the right to receive, in the aggregate, 51% of the Common Stock
outstanding immediately after the Mergers (representing 49.9% of the voting
power with respect to the Company as a result of 6.85 shares of Voting Preferred
Stock of the Company being issued and outstanding).
In accordance with the Merger Agreement, the number of directors of
the Company was increased from six to eight, two of the directors in office
prior to the Mergers resigned, and four officers and directors of the MCS
Companies, including Mr. Burns, were elected as directors of the Company. In
addition, Mr. Burns became Vice Chairman of the Company.
The foregoing description of certain terms of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, which is Exhibit
1 to this statement and is incorporated herein by reference. Since the date of
the Mergers, a former officer and director of
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the MCS Companies has resigned as an officer and director of the Company and Mr.
Burns has been elected President and Chief Executive Officer of the Company.
The shares of Common Stock reported in this statement are held for
investment purposes. Depending on trading prices of the Common Stock and upon
Mr. Burns' personal financial position and goals from time to time, Mr. Burns
may, subject to any applicable statutory or other limitations, purchase
additional shares of Common Stock or dispose of shares of Common Stock in the
open market, in privately negotiated transactions, or otherwise. Mr. Burns
retains the right to evaluate his position in the future and change his intent
with respect to any future actions.
Other than as described above, Mr. Burns has no plans or proposals
which relate to, or may result in, any of the matters listed in Items 4(a)-(j)
of Schedule 13D (although he reserves the right to develop such plans).
ITEM 5. Interest in Securities of the Issuer
(a): Mr. Burns is the beneficial owner of 205,590 shares of Common
Stock, and holds an option exercisable within 60 days as to 37,500 shares of
Common Stock (as to which he disclaims beneficial ownership). The shares
currently held by Mr. Burns, together with the 37,500 shares subject to option,
represent approximately 5.5% of the issued and outstanding Common Stock.
(b): Mr. Burns has the sole power to vote and dispose of the shares
of Common Stock beneficially owned by him.
(c): Mr. Burns has not engaged in any transactions in the Common
Stock within the last 60 days. This statement is being filed because Mr.
Burns' option to purchase Common Stock will become exercisable with respect to
37,500 shares within 60 days.
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(d): Not applicable.
(e): Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
On March 1, 1996, Mr. Burns entered into an employment agreement with
the Company pursuant to which the Company agreed to employ Mr. Burns for a
minimum period of three years and pursuant to which Mr. Burns received options
to purchase 150,000 shares of Common Stock. Such options vest as to 25% of the
shares covered thereby on March 1 in each of 1997, 1998, 1999 and 2000, have an
exercise price of $3.25 per share, and a duration of ten years.
In connection with an investment in the Company by Blue Cross and Blue
Shield of Texas, Inc. ("BCBSTX"), Mr. Burns entered into an agreement with
BCBSTX dated September 30, 1996 pursuant to which (i) Mr. Burns may not (subject
to certain exceptions) sell any Common Stock on or prior to September 30, 1997
without the prior consent of BCBSTX, and (ii) on or after October 1, 1997, Mr.
Burns may not sell more than one percent of the outstanding Common Stock in any
six-month period, and may not sell any shares of Common Stock without first
offering such shares to BCBSTX. Mr. Burns' agreement with BCBSTX is Exhibit 3 to
this statement and is incorporated herein by reference.
Except as set forth above, Mr. Burns does not have any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Company, including, but not limited
to, transfer or voting of any such securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
ITEM 7. Material to Be Filed as Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description Page
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<C> <S> <C>
1 Merger Agreement, dated November 20, 1995
among the Company, the Merger Subsidiaries
and the MCS Companies (incorporated by
reference to Exhibit 2 to the Company's
Registration Statement No. 333-558 on Form
S-4)
2 Employment Agreement, dated March 1, 1996,
between the Company and Mr. Burns (incorporated
by reference to Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the fiscal year
ended May 31, 1996).
3 Letter Agreement, dated September 30, 1996,
between Mr. Burns and Blue Cross and Blue
Shield of Texas, Inc.
</TABLE>
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Signatures
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 13, 1997
/s/ James A. Burns
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James A. Burns
7
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Exhibit 3
September 30, 1996
Blue Cross Blue Shield of Texas, Inc.
901 South Central Expressway
Richardson, Texas 75080
Gentlemen:
The undersigned understands that Blue Cross Blue Shield of Texas, Inc.
("BCBSTX") proposes to enter into Secured Convertible Term Loan Agreement with
Managed Care Solutions, Inc. ("MCS") pursuant to which BCBSTX proposes to loan
MCS $3,000,000 (the "Loan").
As an inducement to BCBSTX and in consideration of BCBSTX's agreement to
make the Loan and for other good and valuable consideration, receipt of which is
hereby acknowledged, the undersigned agrees that without your prior written
consent, he will not, directly or indirectly, prior to September 30, 1997,
offer, sell, contract to sell, pledge (except as provided below), grant any
option to purchase or otherwise dispose of any Common Stock, $.01 par value per
share (the "Common Stock"), including, without limitation, shares of Common
Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock which may be issued upon exercise of a
stock option or warrant, or any securities convertible into or exercisable or
exchangeable for such Common Stock or, in any manner, transfer all or a portion
of the economic consequences associated with or measured by the ownership of the
Common Stock, without the prior written consent of BCBSTX; provided, however,
that the undersigned may (i) at any time, transfer the Common Stock pursuant to
a bona fide gift made to a family member or to a charitable organization or to a
trust solely for the benefit therefor (provided that such transferee shall prior
thereto agree in writing to all of the restrictions on transfer referred to in
this letter and deliver a copy of such agreement to BCBSTX in form and substance
satisfactory to BCBSTX), or (ii) pledge the Common Stock to a lender as part of
a bona fide loan to the undersigned in an amount which at the time of such
pledge does not exceed more than 50% of the fair market value of such pledged
Common Stock and, such lender may, upon prior written notice to BCBSTX, sell or
otherwise dispose of such Common Stock as an exercise of its remedies under the
terms of the loan after a default on such loan by the undersigned, it being
understood that the undersigned will not enter into a pledge agreement unless
the lender agrees to be bound, and cause any transferee of such Common Stock as
a result of the lender's exercise of
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Blue Cross Blue Shield of Texas, Inc.
September 30, 1996
Page 2
its rights under such pledge to be bound, by the provisions of this clause (ii)
with respect to the shares of Common Stock so pledged.
On and after October 1, 1997, the undersigned agrees that without your
prior written consent, he will not offer, sell, contract to sell or pledge
(except as provided above), grant any option to purchase or otherwise dispose of
any Common Stock (including, without limitation, shares of Common Stock which
may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations of the Securities and Exchange Commission and shares of
Common Stock which may be issued upon the exercise of a stock option or warrant)
or any securities convertible into or exercisable or exchangeable for Common
Stock, or in any manner, transfer all or a portion of the economic consequences
associated with or measured by the ownership of the Common Stock, in an amount
which constitutes more than 1% of the outstanding Common Stock of the Company
during any six-month period ending on September 30. Notwithstanding the
foregoing, no such transaction shall occur until the undersigned shall have
given BCBSTX the first right to purchase any and all of such Common Stock on the
same terms and conditions of such proposed transaction. Such right of first
refusal shall be given to BCBSTX by means of a written notice from the
undersigned to BCBSTX that sets forth the name of the proposed transferee, the
number of shares proposed to be disposed of, the price per share, and all other
terms and conditions of the proposed disposition. If such terms and conditions
include the payment of noncash consideration, the fair value of such noncash
consideration shall, at BCBSTX's option be determined by the Board of Directors
of the Company in its reasonable judgment and BCBSTX shall be entitled to pay
the fair value of such consideration in cash. If BCBSTX shall not have exercised
such first right of refusal within 10 days of receiving written notice of the
undersigned's intent to enter into such a transaction, the undersigned shall be
entitled to proceed with such transaction, so long as such transaction is
consummated upon terms and conditions no less favorable to the undersigned than
those stated in the written notice of such proposed disposition and such
transaction is consummated 10 days after the expiration of BCBSTX's right of
first refusal or notice from BCBSTX in writing that it does not intend to
exercise its first right of refusal. Notwithstanding the foregoing, if the
undersigned proposed to sell stock within the above described 1% limit in a Rule
144 transaction, he will submit his completed Form 144 to BCBSTX. BCBSTX shall
have the right to purchase the shares which he proposes to sell for a period of
10 days following receipt of such form at the aggregate market value of such
shares set forth on the completed form. If BCBSTX does not elect to exercise its
right within ten days, the undersigned shall have the right to sell the shares
covered by his notice within 90 days following delivery of such notice in a bona
fide Rule 144 sale.
In addition, the undersigned agrees that the Company may (1) with respect
to any shares of Common Stock for which the undersigned is the record holder,
cause the transfer agent for the Company to note stop transfer instructions with
respect to such shares of Common Stock on the transfer books and records of the
Company and (ii) with respect to any shares of Common Stock for which the
undersigned is the beneficial holder but not the record holder, cause the record
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Blue Cross Blue Shield of Texas, Inc.
September 30, 1996
Page 3
holder of such shares of Common Stock to cause the transfer agent for the
Company to note stop transfer instructions with respect to such shares of Common
Stock on the transfer books and records of the Company.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this letter agreement, and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors, and assigns of the undersigned.
This letter agreement shall be in effect and enforceable by BCBSTX until the
earlier of (i) one year after the conversion of the Loan into Common Stock or
(ii) payment of the Loan in full in cash. The provisions of this letter shall
inure to the benefit of BCBSTX and its successors and assigns and their
respective successors and assigns.
Very truly yours,
/s/ James A. Burns
James A. Burns
Accepted:
BLUE CROSS AND BLUE SHIELD
OF TEXAS, INC.
By: /s/ Michael R. Lewis
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