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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
BIRMAN MANAGED CARE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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BIRMAN MANAGED CARE, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 9, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Birman Managed
Care, Inc. (the "Company") will be held at the Marriott Chattanooga Convention
Center, 2 Carter Plaza, Chattanooga, Tennessee 37402, on December 9, 1999 at
12:00 p.m. for the following purposes:
1. To elect five (5) directors to the Board of Directors to serve until
the Company's 2000 Annual Meeting of Stockholders and until their
successors have been duly elected and qualified.
2. To ratify the acts of the Company's officers and directors for the
preceding year.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on November 12, 1999 are
entitled to notice of and to vote at the Annual Meeting. A complete list of the
stockholders of the Company entitled to vote at the Annual Meeting will be
available for the examination of any stockholders for at least ten (10) days
prior to the Annual Meeting of the Company's principal executive office located
at 1025 Highway 111 South, Cookeville, Tennessee, 38501, and will also be
available for inspection at the Annual Meeting.
By Order of the Board of Directors
Sue D. Birman
Secretary and Director
Cookeville, Tennessee
November 15, 1999
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YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE 1999 ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES. YOUR PROXY
WILL BE REVOCABLE ANY TIME PRIOR TO ITS EXERCISE EITHER IN WRITING OR BY VOTING
YOUR SHARES PERSONALLY AT THE 1999 ANNUAL MEETING.
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BIRMAN MANAGED CARE, INC.
1025 HIGHWAY 111 SOUTH
COOKEVILLE, TENNESSEE 38501
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PROXY STATEMENT
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FOR ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 9, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Birman Managed Care, Inc., a Delaware corporation
(the "Company"), for use at its Annual Meeting of Stockholders to be held at
Marriott Chattanooga Convention Center, 2 Carter Plaza, Chattanooga, Tennessee,
37402 on December 9, 1999 at 12:00 p.m., and at any and all adjournments
thereof. The Company's principal executive office is located at 1025 Highway 111
South, Cookeville, Tennessee 38501. This Proxy Statement and the enclosed form
of proxy are being mailed to stockholders on or about November 15, 1999.
A form of proxy is enclosed for use at the Annual Meeting. The proxy must be
signed and dated by you or your authorized agent. A proxy may be revoked at any
time before it is exercised by giving written notice of revocation to the
Secretary of the Company or by submitting, prior to the time of the Annual
Meeting, a properly executed proxy bearing a later date. It may also be revoked
by attendance at the Annual Meeting and election to vote thereat. Stockholders
having executed and returned a proxy, who attend the Annual Meeting and desire
to vote in person, are requested to so notify the Secretary of the Company prior
to the time of the Annual Meeting. Subject to such revocation, all shares
represented by a properly executed proxy received in time for the Annual Meeting
will be voted by the proxy holders in accordance with the instructions on the
proxy.
If no instructions are specified on the proxy, all shares represented by valid
proxies received pursuant to this solicitation (and not revoked before they are
voted) will be voted "FOR" the election of the nominees for director set forth
herein and to "APPROVE" ratification of the acts of the officers and directors
of the Company taken during the previous year. If, however, any other matters
are properly presented at the Annual Meeting, the proxy will be voted in
accordance with the best judgment and in the discretion of the proxy holders.
For purposes of determining whether a proposal has received the necessary votes
to be approved, abstentions from voting on any matter other than in the election
of directors will have the effect of a vote "AGAINST" the proposal.
If you hold your shares of Common Stock in "street name" and you fail to
instruct your broker or nominee as to how to vote such shares of Common Stock,
your broker or nominee may, in its discretion, vote your shares of Common Stock
"FOR" the election of the nominees for director set forth herein and to
"APPROVE" ratification of the acts of the officers and directors of the Company
taken during the previous year.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Annual Meeting are as
follows:
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1. Electing five (5) directors to the Board of Directors to serve until
the 2000 Annual Meeting of Stockholders and until their successors
have been duly elected and qualified.
2. Ratify the acts of the officers and directors of the Company taken
during the previous year.
3. Transacting such other business as may properly come before the
meeting or any and all adjournment thereof.
PROPOSALS BY STOCKHOLDERS
Any proposal by stockholders of the Company intended to be presented at the 2000
Annual Meeting of Stockholders must be received by the Company for inclusion in
the Company's Proxy Statement and form of Proxy by June 30, 2000.
DISSENTERS' RIGHTS OF APPRAISAL
There are no dissenters' rights in connection with any vote of stockholders to
be taken at the 1999 Annual Meeting of Stockholders.
COSTS OF SOLICITATION OF PROXIES
The Company will bear the costs of this solicitation, including the expense of
preparing, assembling, printing and mailing this Proxy Statement and the
material used in this solicitation of proxies. It is contemplated that proxies
will be solicited principally through the mails, but directors, officers and
regular employees of the Company may solicit proxies personally or by telephone.
Although there is no formal agreement to do so, the Company may reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for the
reasonable expense in forwarding these proxy materials to their principals.
OUTSTANDING SHARES AND VOTING RIGHTS
There were 2,696,566 shares (reflects 1:3 reverse stock split July 7, 1999) of
the Company's common stock issued and outstanding, par value $0.003 per share
("Common Stock"), as of November 12, 1999, the record date (the "Record Date")
for the stockholders entitled to notice of and to vote at the Annual Meeting.
Each stockholder of record at the close of business on November 12, 1999 is
entitled to one vote for each share of common stock then held on each matter, or
any adjournments thereof. The Company's Certificate of Incorporation also
authorizes the issuance of up to 5,000,000 shares of preferred stock, par value
$0.001 per share, of which no shares are currently issued and outstanding.
A majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting must be present in person or represented by proxy at the Annual
Meeting in order to constitute a quorum for the transaction of business.
Abstentions and broker non-votes will be treated as shares present and entitled
to vote for purposes of determining the presence of a quorum.
The Company's Certificate of Incorporation does not authorize cumulative voting.
In the election of directors, the five (5) candidates receiving the highest
number of votes will be elected. Ratification of the acts of the officers and
directors of the Company taken during the previous year and approval of any
other matter which properly comes before the Meeting requires the affirmative
vote of the majority of the shares of the Common Stock present at the Meeting in
person or by proxy and entitled to vote.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of October 31, 1999 with respect
to the beneficial ownership of shares of Common Stock by (i) each person (or
group of affiliated persons) who is known by the Company to own beneficially
more than 5% of the Common Stock; (ii) each of the Named Executive Officers;
(iii) each of the directors; and (iv) all directors and executive officers of
the Company as a group.
COMMON SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED
- ------------------------------------ ------------------
PERCENT NUMBER
------- ------
David N. Birman, M.D.(1) 1,416,646 52.54%
Sue D. Birman(1) 1,416,646 52.54%
Richard M. Ross 66,667 2.47%
Darrel C. Silvey 12,850 .48%
Directors and officers as a group 1,496,163 55.49%
(1) Excludes 222,222 Escrow Shares, which were forfeited effective July 1, 1999
as a consequence of the Company's failure to reach certain
earnings-per-share targets. See "Principal Stockholders - Escrow Shares".
David N. Birman, M.D. disclaims beneficial ownership as to 183,564 shares
beneficially owned by Sue D. Birman individually. Sue D. Birman disclaims
beneficial ownership as to 1,312,003 shares beneficially owned by David N.
Birman, M.D. individually. The address of Dr. and Mrs. Birman is c/o the
Company at 1025 Highway 111 South, Cookeville, Tennessee 38501.
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be one or
more as shall be determined for time to time by the Board of Directors or
stockholders. The Board of Directors of the Company shall be elected at the
Annual Meeting and each director shall be elected to serve until the next annual
meeting or until his successor shall be elected and qualify. The Board of
Directors has established the number of directors at five (5) persons and as of
the date hereof, the Board of Directors consists of: David N. Birman, M.D., Sue
D. Birman, Richard M. Ross, Darrel C. Silvey and Richard A. Andrews.
Each of the persons listed in the table below are present members of the Board
of Directors of the Company and have been nominated for election to serve until
the 2000 Annual Meeting of Stockholders and until their successors are elected
and have qualified. Votes will be cast pursuant to the enclosed proxy in such a
way as to effect the election of said five (5) nominees. In the event that any
of the nominees should be unable to or unwilling to accept nomination for
election as a director, it is intended that the proxy holders will vote for the
election of such substitute nominees, if any, as shall be designated by the
Board of Directors.
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The following table sets forth certain information as of the Record Date with
respect to each person nominated and recommended to be elected by the Company's
current Board of Directors.
YEAR FIRST
ELECTED/
NAME AGE POSITION APPOINTED
DIRECTOR
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David N. Birman, M.D. 47 Chairman of the Board, President and 1991
Chief Executive Officer
Sue D. Birman 41 Corporate Secretary and Director 1991
Richard M. Ross 63 Director 1999
Darrel C. Silvey 60 Director 1999
Richard A. Andrews 53 Director 1999
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" EACH OF THE NOMINEES LISTED
ABOVE.
Set forth below are brief summaries of the background and business experience,
including principal occupation, of the Company's nominated directors and Named
Executives:
David N. Birman, M.D. has served as Chairman of the Board of Directors,
President, and Chief Executive Officer of the Company and its predecessor
corporations since May 1991. From February 1990 to mid-1991, Dr. Birman served
as Chairman of the Board of Birman, Mathes & Associates, Inc., a consulting
company providing quality management and Medicare reimbursement review services
to rural hospitals. From April 1989 until January 1990, Dr. Birman served as a
consultant, providing quality management and Medicare reimbursement review
services to five rural hospitals. Previously, Dr. Birman was employed by
Whitwell Medical Center, Whitwell, Tennessee where, as a physician assistant, he
performed certain clinical duties and developed patient care management
techniques and reporting strategies that formed the basis for development of the
Quality Management Program. Dr. Birman received his M.D. from the Universidad
Tecnologica de Santiago; his BA, with honors in Biology from Occidental College;
and certification as a physician assistant in primary care and surgery from the
University of Southern California School of Medicine.
Sue D. Birman has served as a director of the Company and its predecessor
corporations since May 1991, as their Chief Financial Officer from May 1991
until June 1996, and as Executive Vice President from May 1991 until October
1999. She was elected Corporate Secretary in March, 1997. From February 1990 to
mid-1991, Ms. Birman assisted Dr. Birman in the financial aspects and business
development of Birman, Mathes & Associates, Inc. From April 1989 until January
1990, Ms. Birman assisted Dr. Birman in the operation of his consulting firm.
Ms. Birman is the spouse of David N. Birman, M.D.
Richard M. Ross was appointed a Director of the Company in October 1999. Since
September 1999, Mr. Ross has served as Chair of the Board of Directors and Chief
Executive Officer of CareManagement.com, Inc. CareManagement.com, Inc. engages
in the management of absence, disability, and long-term care for self funded
employers and insurance companies. Mr. Ross has served as the managing partner
of Scottsdale/Middlesex and Associates, a general partner in real estate
partnerships since 1984, managing partner in Tamarack Advisors L.L.C., a real
estate firm consulting to developers since 1998, and managing partner of RRCG
LLC and Community Plan Resources L.L.C., both insurance and managed care
consulting groups since 1996. Mr. Ross was formerly a director of the Company
during the period February 1994 through August 1996, and currently provides
consulting services pursuant to a written contract.
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Darrel C. Silvey became a Director of the Company in October 1999. Mr. Silvey
has been the owner and President of Silvey Metalworks since 1970. Silvey
Metalworks engages in stainless steel sheet metal fabrication.
Richard A. Andrews became a Director of the Company in October 1999. Mr. Andrews
serves as Senior Vice President of Sirius Technologies America, Inc. Sirius
Technologies is an international high-tech software products company focused on
providing distributed enterprise-wide Electronic Medical Record (EMR) and
Central Data Repository (CDR) solutions for healthcare organizations. Since its
incorporation in 1988, Sirius has been solely focused on providing integrated
clinical solutions for the healthcare industry.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held a total of eight (8) meetings. On October 15, 1999,
Messrs. Rhodes, Higgins and Aut resigned as directors of the Company. These
directors delivered a letter stating that: "Birman Managed Care is faced with
significant challenges in the near future. Given that there are fundamental
business differences between management and the undersigned; previously
expressed by us at Board meetings, we have decided to resign as members of the
Board of Directors, effective immediately."
There are two committees of the Board of Directors: the Compensation Committee
and the Audit Committee. The Board of Directors does not have a Nominating
Committee. The Compensation Committee determines the Company's executive
compensation policies and practices and changes in compensation and benefits for
senior management. The Compensation Committee also administers the Company's
1995 Stock Option Plan. The Audit Committee reviews the internal accounting
procedures of the Company, consults with the Company's independent accountants,
and reviews the services provided by such accountants. Subsequent to the Annual
Meeting the Board of Directors will convene, at which time appointments to the
Audit Committee and Compensation Committee will be made.
The Compensation and Audit Committees conducted their business during regular
Board of Directors meetings and did not meet separately from the Board of
Directors.
SUMMARY COMPENSATION TABLE
The following table provides certain information concerning the compensation
earned by the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company who received compensation in
excess of $100,000 for services rendered in all capacities to the Company for
fiscal 1999 (the "Named Executive Officers").
Other Awards/
Annual Options All Other
Name and Then - Principal Position Year Salary Bonus Compensation (#) Compensation
- ------------------------------------- ------ --------- --------- ------------- --------- ---------------
David N. Birman, M.D. 1999 $ 275,986 $ -- $ 72,554 -- $ --
Chairman of the Board, President, 1998 359,257 -- 73,525 --
and Chief Executive Officer (1) (3) 1997 350,000 70,000 73,982 -- --
1996 350,000 60,000 69,025 -- --
--
Sue D. Birman 1999 146,790 -- 21,744 -- --
Executive Vice President, 1998 154,257 -- 14,194 -- --
Secretary, 1997 150,000 30,000 12,052 -- --
and Director (2) (3) 1996 150,000 40,000 11,834 -- --
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(1) Other Annual Compensation for David N. Birman, M.D. for fiscal 1999 was
$1,911 in medical insurance premiums, $43,794 in officer's life insurance
premiums, $24,849 in auto allowance, and $2,000 in 401(k) matching
contributions.
(2) Other Annual Compensation for Sue D. Birman for fiscal 1999 was $1,911 in
medical insurance premiums, $17,970 in auto allowance and $1,863 in 401(k)
matching contributions.
(3) David N. Birman and Sue D. Birman borrowed $18,000.00 from the Company
during fiscal year 1998-1999 at 10% interest. The principal amount and
accrued interest is due and payable on December 12, 1999.
EXECUTIVE BONUS PLAN
The Company has adopted an Executive Bonus Plan (the "Executive Bonus Plan")
pursuant to which officers of the Company are eligible to receive cash bonuses
after the close of each fiscal year of the Company. The Executive Bonus Plan is
administered by the Compensation Committee of the Board of Directors. Bonuses
are determined on the basis of (i) the operating profit of the Company, (ii) net
revenue growth of the Company achieved as a percentage of the goal established
by the Company at the beginning of the fiscal year, and (iii) the officer's
individual performance and contribution to the Company. An officer's bonus for
any fiscal year may not exceed such officer's annual base salary multiplied by
the Target Bonus Percentage as defined in the Executive Bonus Plan in such
fiscal year. No bonuses were paid or accrued for fiscal 1999.
STOCK OPTION PLANS
1995 Employee Stock Option Plan: The Company has adopted the 1995 Employee Stock
Option Plan (the "1995 Option Plan") pursuant to which key employees, including
officers and directors who are employees, and consultants of the Company are
eligible to receive incentive stock options as well as non-qualified stock
options and stock appreciation rights ("SARs"). The Plan, which expires in
October 2005, is administered by the Compensation Committee of the Board of
Directors. Incentive stock options granted under the Plan are exercisable for a
period of up to 10 years from the date of grant at an exercise price which is
not less than the fair market value of the Common Stock on the date of the
grant, except that the term of an incentive stock option granted under the Plan
to a stockholder owning more than 10% of the outstanding Common Stock may not
exceed five years and the exercise price of an incentive stock option granted to
such a stockholder may not be less than 110% of the fair market value of the
Common Stock on the date of the grant. Non-qualified stock options may be
granted on terms determined by the Compensation Committee of the Board of
Directors. SARs, which give the holder the privilege of surrendering such rights
for an amount of stock equal to the appreciation in the Common Stock between the
time of grant and the surrender, may be granted on any terms determined by the
Compensation Committee of the Board of Directors. The Plan also permits the
grant of new stock options to participants who tender shares of the Company's
Common Stock as payment of the exercise price of stock options or the payment of
withholding tax ("Reload Options"). The Reload Options will be granted at the
fair market value of a share of Common Stock on the date of the grant and will
be exercisable six months following the date of the grant. The Plan also
includes limited option valuation rights upon a change of control of the
Company.
1996 Directors' Option Plan: On September 9, 1996, the Company adopted the 1996
Non-Employee Directors' Non-Qualified Stock Option Plan (the "1996 Directors'
Plan"). A total of 100,000 shares of Common Stock are reserved for issuance
under the 1996 Directors' Plan. Under this plan, upon initial election to the
Board of Directors, non-employee directors are awarded options to purchase 6,000
shares of Common Stock. Upon each subsequent election to the Board of Directors,
non-employee directors receive option awards to purchase 3,000 shares of Common
Stock. These options, which have an exercise price equal to the fair market
value of
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the shares of Common Stock as of the date of grant, vest at the rate of 33.33%
per year. All options awarded under the 1996 Directors' Plan expire on the first
to occur of (i) 10 years after the date of grant, or (ii) 90 days after the date
the director is no longer serving in such capacity for reasons other than death
or disability.
FISCAL 1999 OPTION GRANTS
The following table sets forth certain information concerning individual grants
of incentive stock options to executive officers and directors during the fiscal
year ended June 30, 1999:
NUMBER OF PERCENTAGE
SHARES OF TOTAL
UNDERLYING OPTIONS EXERCISE
NAME OF DIRECTOR OPTIONS GRANTED PRICE EXPIRATION
OR OFFICER GRANTED UNDER PLAN PER SHARE DATE
- ---------- ------- ---------- --------- ----
Jeffrey L. Drake (1) 6,667 3.0% $ 6.30 7/30/03
Rockey Talley, M.D. (1) 6,667 3.0% $ 6.30 7/30/03
James J. Rhodes (1)(2) 1,000 0.4% $14.25 1/13/00
John D. Higgins (1)(2) 1,000 0.4% $14.25 1/13/00
Warren E. Aut (1)(2) 2,000 0.9% $15.00 1/13/00
(1) Amounts have been modified to reflect a 1:3 reverse stock split.
(2) Options expire ninety (90) days after resignation as directors of the
Company.
None of the persons named in the Summary Compensation Table exercised options
during the fiscal year ended June 30, 1999.
COMPANY ALTERNATIVE HEALTH PROGRAM
The Company maintains a plan by which under certain conditions employees may
seek and the Company will pay for nutritional counseling commonly known as
"alternative" health care. As part of this plan, employees are required to
report their treatments and allow the Company to monitor their treatment and
progress. The Company views this plan as a research project. The Company spent
approximately $92,000, and approximately nine Company employees participated in
this program in fiscal 1998. This program was discontinued for fiscal 1999.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with each of its current executive
officers. The employment agreements provide for annual salaries that generally
are subject to annual adjustments for increases in the Consumer Price Index;
participation in employee deferred compensation plans, stock options and
retirement and insurance plans; and include customary non competition,
nondisclosure, and severance provisions. Set forth below is a summary of other
principal provisions of those employment agreements:
In March 1996, the Company entered into an employment agreement with David N.
Birman, M.D. for a term expiring June 30, 2001, pursuant to which Dr. Birman
serves as Chief Executive Officer of the Company. The employment agreement
provides for an initial base salary of $350,000 per annum, participation in the
Executive Bonus Plan, and other compensation not to exceed $60,000 per annum.
The employment agreement provides for severance benefits upon termination as a
result of death, for "cause," by mutual agreement, and as a result of
disability. If Dr. Birman's employment is terminated for reasons other than
death, "cause," mutual agreement, or disability, he shall be entitled to receive
his base salary (as most recently adjusted) for the remainder of the
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initial term or the applicable renewal term and all unvested stock options
granted to him under 1995 Option Plan shall accelerate and become vested. If Dr.
Birman's employment is not renewed following expiration of the initial term or
the applicable renewal term, he shall be entitled to receive, as severance, his
base salary (as last adjusted) payable over the 12-month period following the
severance of his employment. In July 1998, as part of a cost reduction program,
Dr. Birman accepted a temporary 30% salary reduction.
In March 1996, the Company entered into an employment agreement with Sue D.
Birman for a term expiring June 30, 2001, pursuant to which Ms. Birman served as
Executive Vice President of the Company. The employment agreement provided for
an initial base salary of $150,000 per annum, participation in the Executive
Bonus Plan, and other compensation not to exceed $10,000 per annum. The
employment agreement provided for severance benefits upon termination as a
result of death, for "cause," by mutual agreement, and as a result of
disability. Effective October 31, 1999, Ms. Birman resigned as Executive Vice
President of the Company, but will continue to serve as Secretary and Director.
Ms. Birman and the Company are negotiating a consulting arrangement in lieu of
her employment.
COMPENSATION OF DIRECTORS
All directors must receive reimbursement for reasonable expenses incurred in
connection with their attendance at Board of Directors and committee meetings.
In addition, all non-employee directors receive $2,000 for each Board meeting
that they attend. All non-employee directors are also entitled to receive awards
and options to purchase shares of Common Stock under the 1996 Non-Employee
Directors' Non-Qualified Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Richard M. Ross served as Vice-Chairman, as a director of the Company from
February 1994 to August 1996 and currently serves as a director of the Company.
Effective September 1, 1996, Mr. Ross retired as Vice-Chairman and a newly
formed company controlled by Mr. Ross was engaged as a consultant to the Company
pursuant to a consulting agreement (the "Consulting Agreement"). While serving
as Vice-Chairman of the Company, Mr. Ross was actively involved in policy-making
matters relating to day-to-day operations of the Company and corporate finance.
As a consultant, Mr. Ross will undertake special assignments designated by Dr.
Birman and the Board of Directors including, among other things, developing
business plans for acquired companies and evaluating acquisition candidates. The
Consulting Agreement provides for Mr. Ross to serve as the provider of
consulting services thereunder, provides for a fee to be paid to the consultant
firm of $120,000 per annum payable in equal monthly installments over the
12-month term of the agreement, and provides for termination of the Consulting
Agreement by mutual agreement, upon the occurrence of an uncured material
breach, upon the death of Mr. Ross, or 10 days after receipt of notice of
termination from the consultant. Except as otherwise provided or as otherwise
agreed to by the parties, the Consulting Agreement will be renewed annually by
the Company for up to an additional five consecutive years.
The chairman and executive vice president of the Company, respectively, David N.
Birman, M.D. and Sue D. Birman, borrowed a total of $18,000.00 from the Company
over a period of months during fiscal 1999. The loan bears interest at the rate
of ten percent (10%) per annum and is due and payable on December 12, 1999.
John D. Higgins, a director of the Company until his resignation on October 15,
1999, is Senior Vice President -Corporate Finance of Royce Investment Group,
Inc., the representative of the underwriters for the Company's successful
February 1997 initial public offering of stock ("Royce"). Mr. Higgins was
elected to the Board pursuant to a provision in the Company's underwriting
agreement with Royce which allowed Royce to nominate one member of the Board of
Directors.
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In addition to underwriting commissions of $920,000, Royce and the other
underwriters received in connection with the Company's initial public offering a
non-accountable expense allowance of $345,000. As part of the underwriting
agreement, the Company also agreed to sell to Royce and its designees, for
nominal consideration, warrants to purchase up to 200,000 shares of the
Company's Common Stock. The warrants will be exercisable until February 12, 2001
at an exercise price of $7.50 per share (150% of the initial public offering
price of the Common Stock). The shares acquired upon exercise of the warrant may
not be transferred or hypothecated for one year after exercise. The Company has
agreed to register the shares so acquired at the Company's expense under the
Securities Act of 1933. The Company and Royce also entered into a one-year
financial consulting agreement under which the Company paid Royce a fee of
$172,500, i.e., 1.5% of the gross proceeds of the Company's initial public
offering including the sale of the over allotment. In addition, the Company and
Royce entered into a five-year agreement which provides that if Royce arranges
for the sale of substantially all of the assets of the Company or for a merger,
consolidation, or acquisition through and including February 12, 2001, Royce
will receive a fee based on a sinking scale ranging from 5% of the first $1.0
million of consideration, 4% of the consideration between $1.0 million and $2.0
million, and 3% of the consideration in excess of $2 million.
Section 16 (a) Beneficial Ownership Reporting Compliance
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
the Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Executive officers, directors and greater
than ten-percent stockholders are required by Securities and Exchange Commission
regulation to furnish to the Company with copies of all Section 16(a) forms they
file.
Messrs. Ross, Silvey and Andrews will be filing their Form 3's late due solely
to the amount of time required to obtain an ID Number from the Securities and
Exchange Commission in order to file the forms electronically.
INDEPENDENT PUBLIC ACCOUNTANTS
For fiscal year 1999 Marlin & Edmondson, P.C. were the Company's independent
public accountants. The Company is considering retaining Marlin & Edmondson,
P.C. to perform monthly accounting services and may therefore engage other
independent public accountants. No determination has been made to date.
Representatives of Marlin & Edmondson, P.C. will be present at the annual
meeting and will be available to respond to appropriate questions from
stockholders.
ANNUAL REPORT
Together with this Proxy Statement, the Company has distributed to each of its
stockholders an annual report for the fiscal year ended June 30, 1999. The
annual report contains consolidated financial statements of the Company and its
subsidiaries and the reports thereon of Marlin & Edmondson, P.C., the Company's
independent public accountants.
UPON WRITTEN REQUEST OF ANY PERSON ENTITLED TO VOTE AT THE MEETING, ADDRESSED TO
INVESTOR RELATIONS, BIRMAN MANAGED CARE, INC., 1025 HIGHWAY 111 SOUTH,
COOKEVILLE, TENNESSEE 38501, THE COMPANY WILL PROVIDE WITHOUT CHARGE AN
ADDITIONAL COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR 1999, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FILED WITH THE SECURITIES
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AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting. If,
however, other matters are properly brought before the Meeting, it is the
intention of the persons named in the accompanying form of proxy to vote the
shares represented thereby in accordance with their best judgment and in their
discretion, and authority to do so is included in the proxy.
By Order of the Board of Directors
Sue D. Birman
Secretary and Director
Cookeville, Tennessee
November 15, 1999
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PROXY
BIRMAN MANAGED CARE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the 1999 Annual
Report on Form 10-KSB and the Notice of Annual Meeting of Stockholders of Birman
Managed Care, Inc. (the "Company") to be held at the Marriott Chattanooga
Convention Center, 2 Carter Plaza, Chattanooga, Tennessee 37402 on December 9,
1999 at 12:00 p.m., Chattanooga time, and the Proxy Statement in connection
therewith; and (2) appoints David N. Birman, M.D. proxy with full power of
substitution for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing the name of the undersigned, or with respect to which the undersigned
is entitled to vote and act, at the meeting and at any adjournment thereof.
The undersigned directs that his proxy be voted as follows:
1. ELECTION OF DIRECTORS:
[ ] AUTHORITY to vote for all nominees listed below
(except for any person whose name is lined out below)
[ ] WITHHOLD AUTHORITY to vote for all the nominees listed below.
NOMINEES: David N. Birman, M.D., Sue D. Birman, Richard M. Ross,
Richard A. Andrews, and Darrel C. Silvey.
2. RATIFICATION OF THE ACTS OF THE OFFICERS AND DIRECTORS OF THE COMPANY
TAKEN DURING THE PREVIOUS YEAR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THE DISCRETION OF THE PROXY, ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING.
This proxy will be voted as specified above. If no specification is
made, this proxy will be voted FOR the election of Director nominees
named in Item 1 above and FOR the ratification in Item 2 above.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote or act with respect to the Common Stock of the Company and hereby ratifies
and confirms all that the proxy, his substitutes, or any of them, may lawfully
do by virtue hereof.
[SIGNATURES CONTAINED ON THE FOLLOWING PAGE.]
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Please date, sign, and mail this proxy in the enclosed envelope. No
postage is required.
Dated: , 1999
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Signature of Stockholder
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Signature of Stockholder
Please date this proxy and sign
your name exactly as it appears at
the left. Where there is more than
one owner, each should sign. When
signing as an attorney,
administrator, executor, guardian
or agent, please add your title as
such. If executed by a corporation,
the proxy should be signed by a
duly authorized officer.
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