SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q SB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-20354
Phoenix Healthcare Corporation
(Exact name of small business issuer as specified in its charter)
Delaware 23-2596710
(State or other jurisdiction of I.R.S. Employer
incorporation of organization) Identification No.
4514 Travis Street, Suite 330, Dallas, Texas 75205
(Address of principal executive offices) (Zip Code)
214-599-9777
(Issuer's telephone number, including area code)
Former name, former address and
former fiscal year, if changed
since last report
Check whether the Issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months (or for such shorter periods that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. [ ] YES [ X ] NO
As of April 15, 2000, there were 49,287,812 shares of Common Stock issued
and outstanding, 533,333 shares of Series A Senior Convertible Preferred Stock
issued and outstanding, and 100,000 shares of Series B Preferred Stock issued
and outstanding.
Transitional Small Business Disclosure Format [ ] YES [ X ] NO
<PAGE>
PHOENIX HEALTHCARE CORPORATION
FORM 10-Q
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION.................................. 1
Item 1. Financial Statements................................... 1
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999............... 1
Consolidated Statements of Operations
for the periods ended March 31, 2000 and 1999...... 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 2000 and 1999 ............. 3
Notes to Consolidated Financial Statements........... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
Item 3. Quanitative and Qualitative Information About
Market Risk ......................................... 10
Part II. OTHER INFORMATION...................................... 10
Item 1. Legal Proceedings...................................... 10
Item 2. Changes in Securities and Use of Proceeds.............. 11
Item 3. Defaults upon Senior Securities........................ 11
Item 4. Submission of Matters to a Vote of Security Holders.... 11
Item 5. Other Information...................................... 11
Item 6. Exhibits............................................... 11
Signatures
<PAGE>
<TABLE>
Part I. Financial Information
Item 1: Financial Statements
PHOENIX HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
<CAPTION>
(unaudited)
March 31, December 31,
ASSETS 2000 1999
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ........................... $ -- $ 15,802
Deposits and other .................................. 9,223 8,904
------------ ------------
Total current assets ............................. 9,223 24,706
PROPERTY AND EQUIPMENT, net ........................... 86,426 92,102
OTHER ASSETS
Intangible assets, net .............................. 381,677 400,000
------------ ------------
TOTAL ASSETS .......................................... $ 477,326 $ 516,808
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable - related party ....................... $ 1,393,557 $ 1,310,021
Accounts payable .................................... 366,219 392,177
Accrued expenses and other current liabilities ...... 246,094 685,694
Net current liabilities of discontinued
operations ......................................... 9,951,230 14,472,208
------------ ------------
Total current liabilities ........................... 11,957,100 16,860,100
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.001 par value, 5,000,000 shares
authorized:
Series A, 533,333 shares issued and outstanding ... 533 533
Series B, 100,000 shares issued and outstanding ... 100 100
Common Stock, $.001 par value, 50,000,000 shares
authorized; 49,037,812 and 27,440,337 issued and
outstanding in 2000 and 1999, respectively ........ 49,037 36,253
Additional Paid-In Capital .......................... 43,962,782 38,097,836
Accumulated Deficit.................................. (55,492,226) (54,478,014)
------------ ------------
(11,479,774) (16,343,292)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)................................ $ 477,326 $ 516,808
============ ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
PHOENIX HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(unaudited)
<CAPTION>
Three Months Ended
March 31
2000 1999
----------- -----------
<S> <C> <C>
Operating Expenses
General and administrative ...................... $ 1,119,532 $ 763,158
----------- -----------
Loss from continuing operations before other income
(expense) ....................................... (1,119,532) (763,158)
----------- -----------
Other income (expense)
Other income ................................ 42,589 0
Interest expenses .......................... (53,459) 32,977
Depreciation and amortization .............. (29,068) 0
----------- -----------
(39,938) (32,977)
----------- -----------
Loss from continuing operations
before discontinued operations .............. (1,159,470) (796,135)
----------- -----------
Discontinued Operations
Net gain (loss) on settlement
of discontinued accounts ................ 145,258 0
Net loss from operations ...................... 0 (1,593,315)
----------- -----------
Gain (loss) from discontinued operations ...... 145,258 (1,593,315)
----------- -----------
Net Loss .......................................... $(1,014,212) $ 2,389,450
=========== ===========
Basic and Diluted Loss per Share
Continuing operations ......................... $ (.03) $ (.04)
Discontinued operations ....................... -- (.08)
Loss per Common Share ............................. $ (.03) $ (.12)
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
PHOENIX HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(unaudited)
<CAPTION>
Three Months Ended
March 31, March 31,
2000 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................. $(1,014,212) $(2,389,450)
Adjustments to reconcile net loss to net cash
provided (utilized) by operating activities:
Depreciation and amortization .............. 29,068 231,094
Provision for doubtful accounts receivable ......... -- 390,212
Common stock issued for services rendered ............ 651,200 --
Changes in
Accounts receivable ................................ -- 201,301
Inventory .......................................... -- (24,332)
Prepaid expenses and other ......................... (319) (46,625)
Accounts payable and accrued expenses .............. 9,442 815,716
Net current liabilities of discontinued
operations ..................................... 230,552 --
----------- -----------
Net cash provided (utilized) by operating activities (94,269) (822,084)
----------- -----------
INVESTING ACTIVITIES
Purchase of property and equipment ................... (3,392) (18,283)
Changes in other assets .............................. (1,677) (92,867)
Increase in restricted costs ......................... (5,875)
----------- -----------
Net cash utilized by investing activities ............ (5,069) (117,025)
FINANCING ACTIVITIES
Short-term borrowings, net ........................... 83,536 617,652
Proceeds of long-term debt, net ...................... -- 290,598
----------- -----------
Net cash provided (utilized) by financing activities . 83,536 908,250
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ....... (15,802) (30,859)
Cash and cash equivalents, beginning of period ....... 15,802 279,364
----------- -----------
Cash and cash equivalents, end of period ............. $ -- $ 248,505
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE>
PHOENIX HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS ENDED MARCH 31, 2000 AND 1999
NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
During interim periods, Phoenix Healthcare Corporation ("The Company") follows
the accounting policies set forth in its Annual Report on Form 10-K SB filed
with the Securities and Exchange Commission. Users of financial information
produced in interim periods are encouraged to refer to the footnotes contained
in the Annual Report when reviewing interim financial results.
In management's opinion, the accompanying interim financial statements contain
all material adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial condition, the results of operations,
and the statements of cash flows of the Company for the interim periods.
A summary of the Company's significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements is as
follows:
Business
The Company is a Delaware Corporation organized in June 1988. The Company
has historically been engaged in providing healthcare management and
ancillary services to the long-term care industry. In December 1999, the
Company announced the strategic repositioning of the Company through which
it completed an exit from the under performing health care services
business and anticipates emerging as a provider of business solutions.
This new business is designed to reposition the Company as a technology
company. The Company has embarked on its new initiative to deliver
knowledge-based media and communications in a fully interactive
environment utilizing broadband and wireless communications technologies.
To execute its strategies, the Company is operating on a model that
manages the convergence of data, media and communications technologies to
provide next level business-to-business solutions.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company,
and its wholly-owned subsidiaries. All intercompany transactions and
accounts have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
The Company maintains cash accounts, which at times may exceed federally
insured limits. The Company has not experienced any losses from
maintaining cash accounts in excess of federally insured limits.
Management believes that the Company does not have significant credit risk
related to its cash accounts.
Property and Equipment
Property and equipment is stated at cost. The cost of property is
depreciated over the estimated useful lives of the respective assets using
primarily the straight-line method. Normal maintenance and repair costs
are charged against income. Major expenditures for renewals and
betterments, which extend useful lives, are capitalized. When property and
equipment is sold or otherwise disposed of, the asset gain or loss is
included in operations. Property and equipment is principally comprised of
office furniture, fixtures and equipment having useful lives ranging from
three to seven years for purposes of computing depreciation.
4
<PAGE>
Intangible Assets
The Company evaluates the carrying value of its long-lived assets and
identifiable intangibles when events or changes in circumstance indicate
that the carrying amount of such assets may not be recoverable. The review
includes an assessment of industry factors, contract retentions, cash flow
projections and other factors the Company believes are relevant.
Intangible assets reported by the Company currently include capitalized
license rights representing the costs of acquiring software and related
intellectual property rights. Such costs are being amortized over future
periods during which the Company anticipates deriving income from the
related assets. The period over which such costs are being amortized
generally does not exceed fifteen years.
Income Taxes
The Company employs the asset and liability method in accounting for
income taxes pursuant to Statement of Financial Accounting Standards
(SFAS) No. 109 "Accounting for Income Taxes." Under this method, deferred
tax assets and liabilities are determined based on temporary differences
between the financial reporting and tax bases of assets and liabilities
and net operating loss carryforwards, and are measured using enacted tax
rates and laws that are expected to be in effect when the differences are
reversed.
Earnings Per Share
The Company adopted Statement of Financial Accounting Standard No. 128
"Earnings per Share" ("SFAS 128") in 1997.
Basic earnings per share are based upon the weighted average number
of common shares outstanding during the period.
Diluted earnings per share are based upon the weighted average
number of common shares outstanding during the period plus the
number of incremental shares of common stock contingently issuable
upon exercise of stock options and warrants, unless their effect is
anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of
revenue and expenses during the reported periods. Actual results
could differ from these estimates.
Reclassifications
Certain reclassifications, particularly related to the presentation
of discontinued operations, have been made to 1999 amounts to
conform with the 2000 presentation.
5
<PAGE>
NOTE 2: GOING CONCERN
For the three months ended March 31, 2000, the Company reported a net loss from
continuing operations of $1,159,470.
For the year ended December 31, 1999, the Company reported a net loss of
$10,894,212. This is largely attributable to recent net operating losses and the
resultant losses on disposal associated with now discontinued operations
totaling $9,274,247. Recent operating losses reported by the Company through
March 31, 2000, coupled with the burden of prior period corporate obligations
have exhausted the Company's capital resources and had a material effect on
short term liquidity and the Company's ability to satisfy its obligations. At
March 31, 2000, the Company reports a working capital deficit of $11,947,877
compared with a working capital deficit of $16, 835, 394 at December 31, 1999.
The Company requires an infusion of new capital, an increased business base and
a higher level of profitability to meet its short term obligations.
In light of the Company's current financial position, its inability to
independently meet its short-term corporate obligations, its need to further
capitalize existing operations and its dependency on revenue growth to support
continuing operations, its viability as a going concern is uncertain. While the
Company has experienced an infusion of limited new working capital, there can be
no assurance that management's efforts to re-direct and re-capitalize the
Company will be successful.
NOTE 3: SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the quarter ended March 31, 2000, the Company converted approximately
$895,292 of debt (including accrued, but unpaid interest of approximately $57,
175) related to discontinued operations through the issuance of 2,212,281 shares
of the Company's common stock. $241,667 of the converted debt (927,859 shares of
the Company's common stock) was held by Executive Officers of the Company.
In March 2000, the Board of Directors approved the issuance of 1,669,546 shares
of common stock to the Company's Chairman and Chief Executive Officer and
1,5202,580 shares of common stock to the former President of the Company in lieu
of accrued salaries at December 31, 1999, of $475,000.
In March 2000, the Company authorized the issuance of 7,400,000 shares of common
stock in connection with the appointment of a new Executive Vice President of
the Company who will also serve in the capacity of President of Healthcare
Information Technologies, Inc. ("HIT"), the recently acquired and wholly owned
subsidiary of the Company. The Company entered into an employment agreement with
this executive effective January 1, 2000 for a period of three years with an
annual compensation level of $240,000. The employment contract terms are
substantially similar to those used for other Company executives. The issuance
of the shares resulted in a one-time, non-cash, charge to operations of $651,200
for the quarter ended March 31, 2000.
NOTE 4: DISCONTINUED OPERATIONS
During 1999, the Company discontinued all remaining business operations
associated with providing healthcare management and ancillary services.
Net current accounts of discontinued operations at March 31, 2000 and December
31, 1999 are detailed as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000 Prior Nursing Trinity Southland Total
- -------------- Ancillaries Operations Rehab Medical Accounts
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Accounts payable and accrued
expenses $ -- $(1,000,000) $ (237,585) $ -- $(1,237,585)
Judgment creditor obligations (1,415,910) (1,980,238) -- -- (3,396,148)
Loans in default -- -- (2,306,702) -- (2,306,702)
Other notes payable -- -- (1,660,795) (1,350,000) (3,010,795)
------------------------------------------------------------------------
Total net current liabilities $(1,415,910) $(2,980,238) $(4,205,082) (1,350,000) (9,951,230)
========================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999 Prior Nursing Trinity Southland Total
- ----------------- Ancillaries Operations Rehab Medical Accounts
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Accounts payable and accrued
expenses $ (870,516) $ (3,985,722) $ (308,176) $ -- $ (5,164,414)
Judgment creditor obligations (1,964,014) -- -- -- (1,964,014)
Loans in default -- (1,980,238) (2,352,747) -- (4,332,985)
Other notes payable -- -- (1,660,795) (1,350,000) (3,010,795)
------------------------------------------------------------------------
Total net current liabilities $ (2,834,530) $ (5,965,960) $ (4,321,718) $ (1,350,000) $(14,472,208)
========================================================================
</TABLE>
Reductions in net current liabilities of discontinued operations represented the
extinguishment of debt obligations through conversion of common stock and
disposition of stock of companies that are no longer part of the Company's
operating structure. $3,856,238 associated with debt forgiveness and
disposition of subsidiary companies was credited to Paid-in-Capital in the
accompanying financial statements. For the quarter ended March 31, 2000, the
Company realized a net gain on settlement of accounts of $145,258 attributable
to a note payable. The debt forgiveness, disposition of subsidiary companies
and gain on settlement of account were with entities controlled by the Company's
Chairman and Chief Executive Officer.
There were no operating losses from discontinued operations for the quarter
ended March 31, 2000. Net losses from discontinued operations reported for the
quarter ended March 31, 1999 are detailed as follows:
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1999 Prior Nursing Management Total
- ---------------------------- Ancillaries Operations Services Accounts
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 1,240,111 $ 4,571,161 $ 144,600 $ 5,955,872
Operating expenses (2,207,519) (4,201,340) (206,356) (6,615,215)
Property and capital related (139,892) (383,702) -- (523,594)
Other-net (127,493) (282,885) -- (410,378)
---------------------------------------------------------
Net (Loss) $(1,234,793) $ (296,766) $ (61,756) $(1,593,315)
========================================================
</TABLE>
NOTE 5: COMMITMENTS AND CONTINGENCIES
The Company is a defendant in certain lawsuits involving third-party creditors
whose claims arise from transactions which largely occurred under prior
management and are related to discontinued operations. Management believes that
it has sufficiently reserved for these claims in its financial statements at
March 31, 2000.
NOTE 6: RELATED PARTY TRANSACTIONS
The Company is obligated under the terms of a line of credit agreement to Match,
Inc. in the amount of $1,554,352 including $160,795 reflected in Net Current
Liabilities of Discontinued Operations at March 31, 2000. Ronald E. Lusk,
Chairman, Chief Executive Officer and President of the Company controls Match,
Inc. as its sole stockholder and President. The line of credit agreement with
Match, Inc. is available up to a limit of $2,000,000, bears interest at
approximately 10%, is due on demand and is secured by stock and assets of
subsidiary companies. This note obligation includes accrued interest of $107,064
at March 31, 2000. To date, there have been no interest payments made to Match,
Inc.
Match, Inc. is the sole holder of all of the issued and outstanding Series A
Preferred Stock of the Company at March 31, 2000.
In November 1999, the Company voluntarily surrendered the common stock of
Southland Medical Supply, Inc., ("Southland"), a wholly owned subsidiary, to
Match, Inc. as consideration in satisfaction of Southland's participation in the
line of credit note obligation in the amount of $145,258. This action was
contemplated by the Company in connection with efforts to discontinue operations
of Southland. In turn, Match, Inc. has proceeded with the liquidation of
residual assets represented by Southland's inventory, furniture, fixtures and
equipment. In the event such liquidation results in value exceeding Southland's
loan balance, the Company will be entitled to a corresponding reduction in loan
amounts due to Match, Inc.
7
<PAGE>
In August 1999, the Company issued 3,200,000 shares of common stock in
connection with converting a note obligation of Trinity Rehab, Inc., a wholly
owned subsidiary of the Company, to equity. The outstanding amount of this note
obligation upon conversion totaled approximately $800,000. Mr. Lusk held a
one-third interest in this note obligation and was the beneficiary of 1,066,667
shares of common stock issued in connection with this transaction.
In December 1999, the Company consummated a transaction pursuant to which it
acquired all of the issued and outstanding capital stock of HIT. The purchase
price of the HIT capital stock was the issuance of 6,513,158 shares of the
Company's common stock. Immediately prior to the transaction, Mr. Lusk, Chairman
and Chief Executive Officer of the Company, owned ninety-five percent (95%) of
the HIT capital stock and served as sole director and president of HIT. Other
than the foregoing, there are no material relationships between HIT and the
Company.
In April 2000, the Company entered into a credit agreement with Level 3
Management to provide the Company a line of credit not to exceed $1,000,000
("Line"). A. Kirk Still, an Executive Officer of the Company, has an ownership
interest in Level 3 Management. Proceeds of the Line will be used for working
capital purposes. The Line bears interest of 1% over the prime commercial
lending rate. The agreement also provides for the issuance of warrants for
1,315,789 shares of the Company's common stock. Twenty-five percent of the
warrants are exercisable if loans under the Line equal or exceed $250,000 but
are less than $350,000. Thereafter, the warrants are exercisable at varying
amounts as the borrowings increase under the Line.
NOTE 7: SIGNIFICANT TRANSACTIONS
In March 2000, the Company sold the stock of certain subsidiary companies that
were discontinued in 1999 and prior years and recognized debt forgiveness
associated with operations discontinued in 1999 in the amount of $3,856,238. The
Company also realized a gain on settlement of an account related to previously
discontinued operations for $145,258 in the quarter ended March 31, 2000. All of
these transactions were with entities controlled by the Company's Chairman, and
Chief Executive Officer. The $3,856,238 was credited to Paid-in-Capital in the
accompanying financial statements.
NOTE 8: SUBSEQUENT EVENTS
In April 2000, the Company converted $118,750 of accrued compensation of
executive officers for the quarter ended March 31, 2000, into 540,339 shares of
the Company's common stock.
Item 2: Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Forward Looking Statements
This form 10-Q includes certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 with respect to the
financial condition, results of operations and business of the Company. When
used herein, the words "anticipate," "believe," "estimate" and "expect" and
similar expressions, as they relate to the Company's management, are intended to
identify forward-looking statements. Such statements reflect significant
assumptions, risks and subjective judgments by the Company's management
concerning anticipated results. These assumptions and judgments may or may not
prove to be correct. Moreover such forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ materially from
those contemplated in such forward-looking statements. Forward-looking
statements speak only as to the date hereof.
8
<PAGE>
Business and Business Strategy
In December 1999, the Company announced the strategic repositioning of the
Company through which it completed an exit from under performing health care
services business and anticipates emerging as a provider of business solutions.
This new business is designed to reposition the Company as a technology company.
The company has embarked on its new initiative to deliver knowledge-based media
and communications in a fully interactive environment utilizing broadband and
wireless communications technologies. To execute its strategies, the Company is
operating on a model that manages the convergence of data, media and
communications technologies to provide next level business-to-business
solutions.
The Company's triumvirate organizational structure facilitates the operation on
three complimentary divisions known as the Knowledge Group, the Media Group, and
the Communication Group. The Companies in each group deliver highly specialized
products and services to targeted business and consumer profiles while offering
development and support capability to the other divisions.
The Knowledge Group provides web-centric software solutions in an Applications
Service Provider (ASP) environment. This model facilitates the transformation of
data into knowledge-based systems that permit real time analysis and
decision-making. In December of 1999, HIT became the first wholly owned
subsidiary in the Knowledge Group and has developed a modular technology
platform that provides software solutions for the healthcare industry. HIT
expects to release MEDeTRACK, the first in a suite of modular applications, in
the second quarter of 2000. This web-enabled application automates the ordering,
tracking and billing of medical supplies using patient-specific information for
healthcare providers and players.
The Media Group develops and distributes interactive content and programming
designed to exploit the convergence of radio, television and telephone with
internet communications technologies. In March of 2000, the Company announced
the formation of Converged Media, Inc. to deliver content rich programming for
radio, interactive television and internet simulcast. In addition to its value
as an entertainment medium, this format provides advertisers with an efficient
method to reach targeted audiences.
The Communications Group is focused on the development and management of
broadband and wireless communications software applications and technologies.
Its current purpose is to provide technical support for the distribution and
operation of products and services provided by the Knowledge and Media Groups.
The Company plans to announce significant developments in the second and third
quarter of 2000 regarding acquisitions and formation of strategic business
alliances and partnerships.
These three divisions operate on a business model, which manages the functions
of data, media and communications through three distinct levels of development.
The Company's mission is to fully develop all of its products through these
three levels to deliver knowledge-based applications via interactive media
communications technologies.
Consistent with this new strategic direction, the Company will concentrate its
efforts on rapidly growing its technology initiatives to establish the Company
as a viable player in the development and marketing of software and
internet-based technologies and solutions for business and consumer
applications.
Results of Operations
The Company's consolidated financial statements reflect a loss from continuing
operations of $1,159,470 for the quarter ended March 31, 2000, compared with a
net loss from continuing operations of $796,135 for the prior year quarter ended
March 31, 1999.
The losses for both periods represent general and administrative expenses
reported by the Company and are exclusively related to corporate expenses and
related corporate overhead. Significant components of general and administrative
expenses for the quarter ended March 31, 2000 include accrued executive
compensation of $178,750, a non-cash charge for executive compensation related
to a stock grant for an executive officer of the company of $651,200,
professional fees of $142,825, salaries and wages of $80,000 and other expenses
of $66,757. Other income for the quarter ended March 31, 2000 totaled $42,589,
the majority of which represented collections of previously written off accounts
9
<PAGE>
receivable of discontinued operations. For the quarter ended March 31, 1999,
major components included accrued executive compensation of $262,500,
professional fees of $380,599 and other corporate overhead of $120,059. The
lower expense levels in 2000 are generally attributed to fewer people, reduced
legal fees and reductions in spending levels.
Depreciation and amortization for the quarter ended March 31, 2000 totaled
$29,068 with $20,000 representing amortization of intangibles that were acquired
in 1999 while charges for the prior year quarter were minimal.
Interest expense from continuing operations for the quarter ended March 31, 2000
was $53,459 compared to $32,977 for the quarter ended March 31, 1999. The
increase was principally comprised of interest expense associated with the
settlement of a note of a previously discontinued operation.
In the quarter ended March 31, 2000, the Company incurred extinguishment of debt
related to discontinued operations and disposed of the stock of certain
subsidiaries related to previously discontinued operations. The transactions
resulted in a net gain of $3,856,238 and was credited to Paid-in-Capital in the
accompanying financial statements. In the quarter ended March 31, 2000, the
Company also realized a gain on settlement of an account related to discontinued
operations in the amount of $145,258. The transactions were with entities
controlled by the Company's Chairman and Chief Executive Officer. For the
quarter ended March 31, 1999, the Company incurred losses from operations of
discontinued operations of $1,593,315. The 1999 amount represents actual losses
incurred from operations of the discontinued business segments.
Liquidity and Capital Resources
As discussed in Note 2 to the Financial Statements, in light of the Company's
current financial position, its viability as a going concern is uncertain.
For the three months ended March 31, 2000, the Company reported a net loss of
$1,159,470 from continuing operations. Recent operating losses reported by the
Company through March 31, 2000 have exhausted the Company's capital resources
and had a material adverse effect on short-term liquidity and the Company's
ability to satisfy its obligations.
At March 31, 2000, the Company reports a working capital deficit of $11,947,877
compared with a working capital deficit of $16,835,394 at December 31, 1999. The
working capital deficit position results largely from the recording of net
liabilities and related reserves associated with the discontinuance of the
healthcare service business segments in December 1999. The Company requires an
infusion of new capital, an increased business base and a higher level of
profitability to meet its short-term obligations.
Notes payable at March 31, 2000, totaled $1,393,557 representing principally
working capital financing.
Accounts payable at March 31, 2000, totaled $366,219 compared to $392,177 at
December 31, 1999.
Accrued expenses and other current liabilities at March 31, 2000 totaled
$246,094 compared with $685,694 at December 31, 1999. The December 31, 1999
balance includes $475,000 of accrued compensation to executive officers that was
converted into common stock in March 2000. Net current liabilities of
discontinued operations at March 31, 2000 were $9,951,230 compared to
$14,472,208 at December 31, 2000. The decrease was principally attributed to
conversion of certain notes into common stock of the Company, extinguishment of
certain other obligations and the disposition of previously discontinued
operations.
Item 3: Quanitative and Qualitative Information About Market Risk
The Company does not engage in trading market risk sensitive instruments.
Neither does the Company purchase as investments, hedges or for purposes "other
than trading" instruments that are likely to expose the Company to market risk,
whether interest rate, foreign currency exchange, commodity price or equity
price risk. The Company has issued no debt instruments, entered into no forward
or futures contracts, purchased no options and entered into no swaps. The
Company's primary market risk exposure is that of interest rate risk.
10
<PAGE>
Part II. Other Information
Item 1: Legal Proceedings
Nothing to report.
Item 2: Changes In Securities and Use of Proceeds
During the quarter ended March 31, 2000, the Company converted approximately
$895,292 of long-term debt into 2,212,281 shares of the Company's common stock.
During the quarter ended March 31, 2000, the Company issued 3,172,126 shares of
its common stock to its Chairman and Chief Executive Officer and former
President in lieu of accrued compensation at December 31, 1999 of $475,000.
During the quarter ended March 31, 2000, the Company issued 7,400,000 shares of
its common stock in connection with the appointment of a new Executive Vice
President of the Company who will also serve as President of Healthcare
Information Technologies, Inc., a wholly-owned subsidiary.
In April 2000, the Company converted $118,750 of accrued compensation of
executive officers for the quarter ended March 31, 2000 into 540,339 shares of
the Company's common stock.
Item 3: Defaults Upon Senior Securities
At March 31, 2000 and to date, the Company is in payment default on senior debt
obligations in the principal amount totaling approximately $2,600,000. The
interest payment arrearage through March 31, 2000 for senior securities
approximates $20,000.
Item 4: Submission Of Matters To A Vote Of Security Holders
Nothing to report.
Item 5: Other Information
Nothing to report.
Item 6: Exhibits And Reports On Form 8-K
(a) Exhibits
10 Additional Exhibits
10.1 Employment Agreement of A. Kirk Still
10.2 Employment Agreement of Robert J. Starzyk
(b) The Company filed the following report on Form 8-K during the first
quarter of 2000:
DATE ITEMS REPORTED
3/10/00 Disposition of Southland Medical Supply, Inc.
Disposition of OHI Corporation
Acquisition of Healthcare Information Technologies, Inc.
Disposition of Trinity Rehab, Inc.
11
<PAGE>
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 thereunto duly authorized.
PHOENIX HEALTHCARE CORPORATION
May 11, 2000
By: /S/ RONALD E. LUSK
---------------------------------------
Ronald E. Lusk
Chairman of the Board, President and
Chief Executive Officer
12
EMPLOYMENT AGREEMENT
BETWEEN
PHOENIX HEALTHCARE CORPORATION
AND
ALAN KIRK STILL
THIS AGREEMENT made and entered into as of the 1st day of January, 2000 by
and between Phoenix Healthcare Corporation, a Delaware corporation (the
"Corporation"), and Alan Kirk Still, a resident of Texas (hereinafter referred
to as "Executive").
WHEREAS, the parties, for and in consideration of the mutual and
reciprocal covenants and agreements hereinafter contained, and intending to be
legally bound hereby, do contract and agree as follows:
1. PURPOSE AND EMPLOYMENT. The Corporation's primary business is the
deployment of a technology-enabled data, media and communications platform to be
used in the execution of its business-to-business and business-to-consumer
strategies in the healthcare, telecommunication, insurance and media industries
(the "Business"). The Corporation will, through wholly-owned subsidiaries,
develop, acquire and license software applications and technologies to be
marketed and distributed in Service Bureau and Application Service Provider
environments. The purpose of this Agreement is to define the relationship
between the Corporation and Executive. The Corporation hereby employs Executive,
and Executive hereby accepts employment by the Corporation, all upon the terms
and conditions hereinafter set forth.
2. POSITION AND SCOPE OF DUTIES.
(a) Executive shall serve the Corporation as its Executive Vice President.
At all times, Executive shall report to, discharge his duties in consultation
with and be under the direct supervision and control of the Corporation's
Chairman and Chief Executive Officer, shall perform such duties, consistent with
the Executive's employment as a senior corporate executive of the Corporation,
shall hold such other titles with respect to the Corporation, or any of its
divisions, subsidiaries, or affiliates, as the Corporation's Board of Directors
may from time to time determine, and shall comply with all applicable provisions
of the Corporation's certificate of incorporation. Executive shall, subject to
the direction of the Corporation's Chairman and Chief Executive Officer, have
authority to formulate policies for and oversee all aspects of the Corporation
and its divisions, subsidiaries, and affiliates. As to employees under his
jurisdiction, including those working directly under his supervision, Executive
shall use his best efforts (i) to employ and retain only employees who are
capable and willing to perform according to applicable legal requirements and
applicable policies of the Corporation, and also (ii) to assure that such
personnel are properly trained and supervised. Subject to the direction of the
Corporation's Chairman and Chief Executive Officer, Executive may hire and
terminate the employment of any other employee of the Corporation, or of any of
their divisions, subsidiaries or affiliates, who is under his jurisdiction.
(b) Executive shall devote his primary business time to the business and
affairs of the Corporation, excluding any periods of vacation, sick leave, and
disability to which Executive is entitled; and he shall fulfill his duties to
the Corporation to the best of his ability. However, it shall not be a violation
of this Agreement for the Executive to (i) serve on corporate, civic, or
charitable boards or committees, (ii) deliver lectures, fulfill speaking
<PAGE>
engagements, or teach at educational institutions, and (iii) manage his personal
finances and passive investments, so long as none of such activities (singularly
or collectively) significantly interfere with the performance of the Executive's
responsibilities as an employee of the Corporation in accordance with this
Agreement.
(c) A description of the specific duties and responsibilities of the
Executive is contained in Exhibit A attached to this Agreement.
3. TERM. The term of this Agreement shall be for a period of three (3)
years commencing January 1, 2000 (the "Term") unless terminated earlier by
mutual agreement of the parties or by either party in accordance with Section 8
of this Agreement. Upon completion of the original three-year Term, the
Agreement shall automatically be renewed for a period of one (1) year as of each
succeeding January 1st (beginning January 1st, 2003); provided, that the
Corporation may terminate the Agreement as of any such renewal date by providing
ninety (90) days advance written notice to the Executive.
4. COMPENSATION DURING EMPLOYMENT. For all the services to be
rendered by Executive hereunder, the Corporation shall pay to Executive a
base salary, bonuses, and incentive compensation as follows:
(a) BASE SALARY. Executive shall be paid an annual base salary of Two
Hundred Forty Thousand dollars ($240,000.00), payable in equal monthly
installments. Payment of such salary may be made in shares of Corporation Common
Stock (the "Shares"), cash, or a combination thereof, as determined by the
Corporation's Chairman and Chief Executive Officer, in his sole discretion,
taking into account the Corporation's cash flow requirements and any other
aspect of the Corporation's financial condition deemed relevant by the
Corporation's Chairman and Chief Executive Officer. The value of any Shares paid
to the Executive under this provision shall be based on the per share price of
the last trade of Shares as reported on NASDAQ or the OTC bulletin board, as
applicable, for the last trading day of the applicable pay period (or if Shares
were not traded on such date, for the closest preceding date on which a trade
occurred). The Corporation's Chairman and Chief Executive Officer may increase
the Executive 's annual base salary effective as of any anniversary date of this
Agreement in such amounts as the Chairman and Chief Executive Officer deems
appropriate in his sole discretion.
(b) STOCK GRANT. Upon the execution of this Agreement, Executive
-----------
shall receive a one time grant of Seven Million Four Hundred Thousand
(7,400,000) Shares.
(c) EXECUTIVE'S INCENTIVE COMPENSATION. Executive may be entitled to such
bonuses and incentive compensation as may be determined by the Chairman and
Chief Executive Officer in his sole discretion. Each such bonus or incentive
compensation may be paid in cash or Shares or combination thereof as the
Chairman and Chief Executive Officer shall determine in his sole discretion.
Such incentive compensation may also include options to purchase shares of the
Corporation's Common Stock pursuant to a plan established by the Corporation's
Board of Directors.
5. OTHER BENEFITS. In addition to other benefits conferred under this
Agreement, Executive shall have the right to participate in (on the same terms
and conditions as available to other senior executives of the Corporation) all
pension plans, retirement plans, deferred compensation plans, executive
compensation plans, major medical, group health, disability, accidental death
and group term life insurance plans, "fringe" benefit plans (including
permissible sick days or leave days), and other employee benefit plans that the
Corporation shall, from time to time, generally confer upon other senior
executives of the Corporation.
-2-
<PAGE>
6. VACATION, HOLIDAYS, ETC. Executive shall be entitled to five (5) weeks
vacation with pay (or such greater length of time as may be approved from time
to time by the Corporation's Board of Directors) during each fiscal year of the
Corporation, such vacation to be taken by Executive at such times as shall be
consistent with the business requirements of the Corporation. In addition,
Executive shall also be entitled to such holidays as are customary in the
Corporation. Unused holidays and days of vacation may not be carried over form
one fiscal year to another, and additional income will not be given for vacation
time or holidays not taken.
7. EXPENSES. Executive is expected from time to time, to incur reasonable
expenses as he reasonably deems to be for the Corporation's benefit and for
promoting the business of the Corporation, including expenses for entertainment,
travel, and similar items. Executive shall be promptly reimbursed for all such
reasonable expenses (in accordance with the policies and procedures regarding
employee business-related expense from time to time established by the
Corporation for its senior executive officers) upon his presenting to the
Corporation a detailed itemized expense voucher therefor in accordance with
applicable corporate policies. Executive may also draw funds from the
Corporation, but only to the extent necessary and appropriate, for reasonable
expenses to be incurred on behalf of the Corporation and then only in accordance
with applicable corporate policies. Detailed records of the expenditure of such
funds shall be tendered by Executive for expenses incurred on behalf of the
Corporation in accordance with applicable corporate policies, and if any portion
of such funds are unexpended or unaccountable, then Executive shall promptly
return such unexpended or unaccountable sums to the Corporation.
8. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE. Notwithstanding the provisions of Section 3
hereof, the Corporation shall have the right to terminate this Agreement
immediately upon giving written notice to the Executive (or Executive's personal
or legal representatives, if appropriate), for any of the following reasons:
(1) Death of the Executive;
(2) Inability of the Executive, by reason of physical or mental
disability ("Disability"), to continue to perform his duties hereunder for the
remainder of the term of this Agreement;
(3) Just Cause, which is defined herein to mean: (a) Executive's
gross negligence in performing his duties hereunder; (b) Executive's willful
failure or refusal to perform his duties hereunder; (c) Executive's intentional
wrongful act or wrongful failure to act that materially and adversely affects
the business affairs of the Corporation; or (d) Executive's commission of any
act of fraud, commission of any felony, material breach of any provision of this
Agreement, involvement in any material conflict of interest or self dealing
transaction in violation of the applicable corporate laws of the State of
Delaware, or other breach of any of his quasi-fiduciary duties to the
Corporation in violation of the applicable corporate laws of the State of
Delaware (including, but not limited to, the duties of due care, loyalty, and
fair dealing).
(b) TERMINATION BENEFITS. If this Agreement expires, or if during the Term
the Corporation terminates this Agreement and Executive's employment hereunder
as a result of any of the following, Executive will be entitled to the following
termination compensation or severance benefits:
(1) DEATH. If during the Term, Executive's employment is
terminated by reason of death, the Corporation shall thereafter have no
liability to Executive's estate hereunder, except to timely pay and provide his
estate the following: (i) the portion, if any, of Executive's Base Salary for
-3-
<PAGE>
the period up to the date of death that remains unpaid; (ii) any bonuses and
incentive compensation for any preceding year or for the current year that have
been earned (pro-rated to the date of death), but have not been paid as of the
date of death; and (iii) all other payments and benefits that Executive is
eligible to receive, but have not yet been received as of the date of death,
under all benefit plans, retirement plans, and other arrangements that, by their
terms, apply.
(2) DISABILITY. If during the Term, Executive's employment is
terminated due to Executive's Disability as defined in paragraph 8(a)(2) above,
the Corporation shall, after such effective date of termination, have no
liability to Executive hereunder, except to timely pay and provide the Executive
the following: (i) the portion, if any, of Executive's Base Salary for the
period up to the effective date of termination that remains unpaid; (ii) any
bonuses and incentive compensation for any preceding year or for the current
year (pro-rated to the effective date of termination) that have been earned, but
have not been paid as of the effective date of termination; and (iii) all other
payments and benefits that Executive is eligible to receive, but have not yet
been received as of the effective date of termination, under all benefit plans,
retirement plans, and other arrangements that, by their terms, apply.
(3) JUST CAUSE. If during the Term, Executive's employment is
terminated for Just Cause as specified in Section 8(a)(3) above, the Corporation
shall, after such effective date of expiration or termination, have no liability
to Executive hereunder, except to timely pay and provide the Executive the
following: (i) any bonuses and incentive compensation for any preceding year or
for the current year (pro-rated to the effective date of termination; and (ii)
all other payments and benefits that Executive is eligible to receive, but have
not yet been received as of the effective date of termination, under all benefit
plans, retirement plans, and other arrangements that, by their terms, apply. To
the extent that any insurance coverages maintained by the Corporation for the
benefit of Executive have conversion privileges into individual policies, the
Executive, upon his termination of employment or within any applicable grace
periods thereafter, may (at his sole cost) so convert such coverages, as well as
exercise (at his sole cost) all rights of continuation prescribed by applicable
law.
(4) WITHOUT CAUSE. If during the Term, Executive's employment
is terminated without the Executive's written consent and without Just Cause for
any reason whatsoever other than disability or death, the Corporation shall,
after such effective date or expiration or termination, have no liability to
Executive hereunder, except to timely pay and provide the Executive the
following: (i) the same Base Salary, bonuses and incentive compensation,
benefits, and other compensation that the Executive would otherwise be entitled
to receive hereunder through the remaining unexpired Term hereof as though no
termination or expiration had occurred; (ii) any bonuses and incentive
compensation for any preceding year or for the current year that have been
earned, but have not been paid as of the effective date of termination; (iii)
all other payment and benefits that Executive is eligible to receive, but have
not yet been received as of the effective date of termination. To the extent
that any insurance coverages maintained by the Corporation for the benefit of
Executive have conversion privileges into individual policies, the Executive,
upon his termination of employment or within any applicable grace periods
thereafter, may (at his sole cost) so convert such coverages, as well as
exercise (at his sole cost) all rights of continuation prescribed by applicable
law.
(5) TERMINATION BY EXECUTIVE. In the event that Executive
terminates this Agreement for any reason, the Corporation shall, after such
effective date of termination, have no liability to Executive hereunder, except
as specified in Section 8(b)(3) hereof, as if the Corporation had terminated the
Executive for Cause.
-4-
<PAGE>
9. RESTRICTIVE COVENANTS OF EXECUTIVE.
(a) DEFINITIONS. For the purposes of this Agreement:
(1) "CONFIDENTIAL INFORMATION" shall mean any information relating
to the Corporation or to the business of the Corporation (or to any of its
parents, subsidiaries or affiliates) (whether proprietary or otherwise) not
generally known to the public or known by Executive otherwise than as a
consequence of or through his employment with the Corporation and treated by the
Corporation as being confidential, including, but not limited to, research,
marketing, customer lists, databases, financing sources, methods, techniques and
systems, all of which shall be deemed by the Corporation and Executive as being
Confidential Information.
(2) "PERSON" shall mean an individual, a partnership, an
association, a corporation, a trust, an unincorporated organization, or any
other business entity or enterprise, provided, however, that the term "Person"
shall not include the Corporation.
(b) ACKNOWLEDGEMENTS. Executive agrees and acknowledges that: (i) he will
be in a position of confidence and trust with the Corporation and he will have
access to Confidential Information; (ii) the nature and periods of restrictions
imposed by the covenants set forth in this Section are fair, reasonable and
necessary to protect and preserve for the Corporation the benefits of this
Agreement and that such restrictions will not prevent Executive from earning a
livelihood; (iii) the Corporation would sustain irreparable loss and damage if
Executive were to breach any of such covenants; and (iv) the covenants herein
set forth are made as an inducement to and have been relied upon by the
Corporation in entering this Agreement.
(c) CONFIDENTIAL INFORMATION. Executive hereby covenants and agrees that
Executive shall not, directly or indirectly, during the Term of this Agreement
and for three (3) years after Executive's employment is terminated for whatever
reason, disclose to any Person or use or otherwise exploit for Executive's own
benefit or for the benefit of any other Person any Confidential Information that
was disclosed to Executive or acquired by Executive while an employee of the
Corporation. Upon the termination or expiration of this Agreement, Executive
shall return to the Corporation all material in Executive's possession or
control which is of a confidential matter relating to the Corporation's
business. These provision shall survive the termination or expiration of this
Agreement.
(d) NON-COMPETITION.
(1) Executive hereby agrees that during the Term and for one (1)
year following the termination of the Executive's employment by the Corporation,
however occurring, he will not, directly or indirectly, expressly or tacitly,
for himself or on behalf of any Person, (i) act as a director, officer, manager,
shareholder, partner, member, advisor, executive or consultant to any business
that provides services or products which are directly competitive with the
services or products being provided by or which are being produced or developed
by the Corporation, or are under investigation by the Corporation at the
expiration of the Term and with which Executive had contact as an employee of
the Corporation, or (ii) recruit investors on behalf of an entity which engages
in activities that are directly competitive with the services or products being
provided or that are being produced or developed by the Corporation, or are
under investigation by the Corporation at the expiration of the Term and with
which Executive had contact as an employee of the Corporation.
(2) Executive hereby agrees that during the Term and for one (1)
year following the termination of the Executive's employment by the Corporation,
however occurring, he will not, directly or indirectly, expressly or tacitly,
-5-
<PAGE>
for himself or on behalf of any Person, solicit, suggest or direct others to
solicit for hire any person employed by the Corporation at the time of
termination of the Executive's employment by the Corporation.
(3) Executive hereby agrees that during the Term and for one (1)
year following the termination of the Executive's employment by the Corporation,
however occurring, he will not, directly or indirectly, expressly or tacitly,
for himself or on behalf of any Person, solicit, divert or attempt to
appropriate, to any Person which competes with the Corporation, any Person who
is or was a customer of the Corporation or an actively sought prospective
customer of the Corporation with which he had contact as an employee of the
Corporation during the Term.
(e) CONSENT TO COURT-ORDERED REMEDY. Executive acknowledges that his
breach of any covenant set forth in this Section 9 will result in irreparable
injury to the Corporation and that the Corporation's remedies at law for such a
breach are inadequate and extremely difficult to calculate or determine.
Accordingly, Executive agrees and consents that upon such a breach or threatened
breach by Executive of any covenant set forth herein, the Corporation shall be
entitled to such remedies in law or equity as may be determined by the court for
such a breach or threatened breach.
(f) REMEDIES CUMULATIVE AND CONCURRENT. The rights and remedies of the
Corporation, as provided in this Section 9 shall be cumulative and concurrent
and may be pursued separately, successively or together against Executive at the
sole discretion of the Corporation, and may be exercised as often as occasion
therefor shall arise. The failure to exercise any right or remedy shall in no
event be construed as a waiver or release thereof.
10. INDEMNITY. To the fullest extent permitted by law, the Corporation
shall indemnify Executive and hold him harmless for any acts or decisions made
by him in good faith while performing services for the Corporation. In addition,
to the fullest extent permitted by law, the Corporation shall pay all expenses,
including attorneys' fees, actually and necessarily incurred by Executive in
connection with the defense of any action, suit or proceeding challenging such
acts of decisions and in connection with any appeal thereon including the costs
of settlement. This indemnification obligation shall survive the termination of
the Executive's employment hereunder.
11. WAIVER OF BREACH OF VIOLATION NOT DEEMED CONTINUING. The waiver
by either party of a breach or violation of any provision of this Agreement
shall not operate as or be construed to be a waiver of any subsequent breach
hereof.
12. NOTICES. Any and all notices required or permitted to be given
under this Agreement will be sufficient if furnished in writing, personally
delivered or sent by certified mail, return receipt requested as follows:
To Executive:
A. Kirk Still
423 Canyon Ridge Drive
Richardson, Texas 75080
-6-
<PAGE>
To the Corporation:
Phoenix Healthcare Corporation
Attn: Chairman and Chief Executive Officer
4514 Travis Street
Suite 330
Dallas, Texas 75205
13. SECURITIES LAW COMPLIANCE. The Executive represents and agrees that he
is acquiring any Shares he receives under this Agreement for his own account and
not with the intention reselling or distributing the Shares, except as permitted
under this Agreement and any applicable federal and state securities laws. The
Corporation shall have the right to take any actions it may deem necessary or
appropriate to ensure that the Shares granted to the Executive complies with
applicable federal and state securities laws.
14. TAX LIABILITY. The Corporation may withhold from any payment made
pursuant to this Agreement any federal, state or local taxes required to be
withheld from such payment. The Executive shall make such arrangements as may be
required or be satisfactory to the Corporation (in its sole discretion) for the
payment of any tax withholding obligations that arise in connection with the
granting of Shares under this Agreement. The Corporation shall not be required
to issue any Shares under this Agreement until such obligations are satisfied.
15. GOVERNING LAW. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Texas. The parties hereto consent
to jurisdiction and venue in the Texas state courts in Dallas, Texas and United
States District Court for the Northern District of Texas, Dallas Division.
16. PARAGRAPH HEADINGS. The paragraph headings contained in this
Agreement are for convenience only and shall in no manner be construed as a
part of this Agreement.
17. ENTIRE AGREEMENT. This Agreement supersedes all prior discussions and
agreements between the Corporation, or any of its officers, directors,
employees, or agents, and Executive with respect to all mattes relating to the
employment by the Corporation of Executive and all other matters contained
herein, and this Agreement constitutes the sole and entire agreement with
respect thereto. Any representation, inducement, promise or agreement, whether
oral or written, between the Corporation, or any of its officers, directors,
employees, or agents, and Executive which is not embodied herein shall be of no
force or effect.
18. SUCCESSORS AND ASSIGNORS. This Agreement shall be binding upon,
and shall inure to the benefit of, the Corporation and Executive and their
respective heirs, personal and legal representatives, successors, and assigns.
19. SEVERABILITY. If any term, covenant or condition of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable the remainder of this Agreement or the application of
such terms, covenants and conditions to persons or circumstances other than
those as to which it is held invalid or unenforceable shall be affected thereby
and each term, covenant or condition of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
-7-
<PAGE>
IN WITNESS WHEREOF, the Corporation has hereunder to caused this Agreement
to be executed by its duly authorized offices and seals to be hereunto affixed,
and Executive has hereunto set his hand and seal, all being done in duplicate
originals delivered to each party as of the day and year first above written.
/S/ A. KIRK STILL
- ------------------------------------ -------------------------------------
Witness A. Kirk Still
ATTEST: Phoenix Healthcare Corporation
By: /S/ RONALD E. LUSK
- ---------------------------------- ----------------------------------
Ronald E. Lusk
Chairman of the Board, President
and Chief Executive Officer
-8-
<PAGE>
EXHIBIT A
DESCRIPTION OF SPECIFIC DUTIES AND RESPONSIBILITIES
Executive shall serve the Corporation as its Executive Vice President and
Healthcare Information Technologies, Inc. ("HIT"), a wholly-owned subsidiary of
the Corporation, as its President. At all times, Executive shall report to,
discharge his duties in consultation with and be under the direct supervision
and control of the Corporation's Chairman and Chief Executive Officer. Executive
shall perform such duties, consistent with the Executive's employment as a
senior corporate executive, shall hold such other titles with respect to the
Corporation, or any of its divisions, subsidiaries or affiliates, as the
Corporation's Board of Directors may from time to time determine, and shall
comply with all applicable provisions of the Corporation's certificate of
incorporation and bylaws.
As the President of HIT, the Executive shall, subject to the direction of
the Corporation's Chairman and Chief Executive Officer, have the authority to
formulate policies for and administer all operational aspects of HIT's business.
As to employees under Executive's jurisdiction, including those working
directly under his supervision, Executive shall use his best efforts to (i)
employ and retain only employees who are capable and willing to perform
according to applicable legal requirements and applicable policies of the
Corporation, and (ii) assure that such personnel are properly trained and
supervised. Subject to the direction of the Corporation's Chairman and Chief
Executive Officer, Executive may hire and terminate the employment of any other
employee of the Corporation, or any of its divisions, subsidiaries or
affiliates, who is under his jurisdiction.
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
BETWEEN
PHOENIX HEALTHCARE CORPORATION
AND
ROBERT J. STARZYK
THIS AGREEMENT made and entered into as of the 1st day of April, 2000 by
and between Phoenix Healthcare Corporation, a Delaware corporation (the
"Corporation"), and Robert J. Starzyk, a resident of Georgia (hereinafter
referred to as "Executive").
WHEREAS, the parties, for and in consideration of the mutual and
reciprocal covenants and agreements hereinafter contained, and intending to be
legally bound hereby, do contract and agree as follows:
1. PURPOSE AND EMPLOYMENT. The Corporation's primary business is the
deployment of a technology-enabled data, media and communications platform to be
used in the execution of its business-to-business and business-to-consumer
strategies in the healthcare, telecommunication, insurance and media industries
(the "Business"). The Corporation will, through wholly-owned subsidiaries,
develop, acquire and license software applications and technologies to be
marketed and distributed in Service Bureau and Application Service Provider
environments. The purpose of this Agreement is to define the relationship
between the Corporation and Executive. The Corporation hereby employs Executive,
and Executive hereby accepts employment by the Corporation, all upon the terms
and conditions hereinafter set forth.
2. POSITION AND SCOPE OF DUTIES.
(a) Executive shall serve the Corporation as its Executive Vice President
and Chief Financial Officer. At all times, Executive shall report to, discharge
his duties in consultation with and be under the direct supervision and control
of the Corporation's Chairman and Chief Executive Officer, shall perform such
duties, consistent with the Executive's employment as a senior corporate
executive of the Corporation, shall hold such other titles with respect to the
Corporation, or any of its divisions, subsidiaries, or affiliates, as the
Corporation's Board of Directors may from time to time determine, and shall
comply with all applicable provisions of the Corporation's certificate of
incorporation. Executive shall, subject to the direction of the Corporation's
Chairman and Chief Executive Officer, have authority to formulate policies for
and oversee all aspects of the Corporation and its divisions, subsidiaries, and
affiliates. As to employees under his jurisdiction, including those working
directly under his supervision, Executive shall use his best efforts (i) to
employ and retain only employees who are capable and willing to perform
according to applicable legal requirements and applicable policies of the
Corporation, and also (ii) to assure that such personnel are properly trained
and supervised. Subject to the direction of the Corporation's Chairman and Chief
Executive Officer, Executive may hire and terminate the employment of any other
employee of the Corporation, or of any of their divisions, subsidiaries or
affiliates, who is under his jurisdiction.
(b) Executive shall devote his primary business time to the business and
affairs of the Corporation, excluding any periods of vacation, sick leave, and
disability to which Executive is entitled; and he shall fulfill his duties to
the Corporation to the best of his ability. However, it shall not be a violation
of this Agreement for the Executive to (i) serve on corporate, civic, or
charitable boards or committees, (ii) deliver lectures, fulfill speaking
engagements, or teach at educational institutions, and (iii) manage his personal
finances and passive investments, so long as none of such activities (singularly
or collectively) significantly interfere with the performance of the Executive's
responsibilities as an employee of the Corporation in accordance with this
Agreement.
<PAGE>
(c) A description of the specific duties and responsibilities of the
Executive is contained in Exhibit A attached to this Agreement.
3. TERM. The term of this Agreement shall be for a period of three (3)
years commencing April 1, 2000 (the "Term") unless terminated earlier by mutual
agreement of the parties or by either party in accordance with Section 8 of this
Agreement. Upon completion of the original three-year Term, the Agreement shall
automatically be renewed for a period of one (1) year as of each succeeding
January 1st (beginning April1st, 2003); provided, that the Corporation may
terminate the Agreement as of any such renewal date by providing ninety (90)
days advance written notice to the Executive.
4. COMPENSATION DURING EMPLOYMENT. For all the services to be
rendered by Executive hereunder, the Corporation shall pay to Executive
a base salary, bonuses, and incentive compensation as follows:
(a) BASE SALARY. Executive shall be paid an annual base salary of Two
Hundred Twenty Thousand dollars ($220,000.00), payable in equal monthly
installments during the first year of this Agreement. Payment of such salary in
future years may be made in shares of Corporation Common Stock (the "Shares"),
cash, or a combination thereof, as determined by the Executive, in his sole
discretion, The value of any Shares paid to the Executive under this provision
shall be based on the per share price of the last trade of Shares as reported on
NASDAQ or the OTC bulletin board, as applicable, for the last trading day of the
applicable pay period (or if Shares were not traded on such date, for the
closest preceding date on which a trade occurred). The Corporation's Chairman
and Chief Executive Officer may increase the Executive 's annual base salary
effective as of any anniversary date of this Agreement in such amounts as the
Chairman and Chief Executive Officer deems appropriate in his sole discretion.
(b) STOCK GRANT. As inducement for Executive to become Executive Vice
President and Chief Financial Officer, Executive shall receive a one time grant
of Two Hundred Fifty Thousand (250,000) Shares of the Company's common stock on
March 1, 2000.
(c) EXECUTIVE'S INCENTIVE COMPENSATION. Executive may be entitled to such
bonuses and incentive compensation as may be determined by the Chairman and
Chief Executive Officer in his sole discretion. Each such bonus or incentive
compensation may be paid in cash or Shares or combination thereof as the
Chairman and Chief Executive Officer shall determine in his sole discretion.
Such incentive compensation may also include options to purchase shares of the
Corporation's Common Stock pursuant to a plan established by the Corporation's
Board of Directors.
5. OTHER BENEFITS. In addition to other benefits conferred under this
Agreement, Executive shall have the right to participate in (on the same terms
and conditions as available to other senior executives of the Corporation) all
pension plans, retirement plans, deferred compensation plans, executive
compensation plans, major medical, group health, disability, accidental death
and group term life insurance plans, "fringe" benefit plans (including
permissible sick days or leave days), and other employee benefit plans that the
Corporation shall, from time to time, generally confer upon other senior
executives of the Corporation.
-2-
<PAGE>
6. VACATION, HOLIDAYS, ETC. Executive shall be entitled to five (5) weeks
vacation with pay (or such greater length of time as may be approved from time
to time by the Corporation's Board of Directors) during each fiscal year of the
Corporation, such vacation to be taken by Executive at such times as shall be
consistent with the business requirements of the Corporation. In addition,
Executive shall also be entitled to such holidays as are customary in the
Corporation. Unused holidays and days of vacation may not be carried over form
one fiscal year to another, and additional income will not be given for vacation
time or holidays not taken.
7. EXPENSES. Executive is expected from time to time, to incur reasonable
expenses as he reasonably deems to be for the Corporation's benefit and for
promoting the business of the Corporation, including expenses for entertainment,
travel, and similar items. Executive shall be promptly reimbursed for all such
reasonable expenses (in accordance with the policies and procedures regarding
employee business-related expense from time to time established by the
Corporation for its senior executive officers) upon his presenting to the
Corporation a detailed itemized expense voucher therefor in accordance with
applicable corporate policies. Executive may also draw funds from the
Corporation, but only to the extent necessary and appropriate, for reasonable
expenses to be incurred on behalf of the Corporation and then only in accordance
with applicable corporate policies. Detailed records of the expenditure of such
funds shall be tendered by Executive for expenses incurred on behalf of the
Corporation in accordance with applicable corporate policies, and if any portion
of such funds are unexpended or unaccountable, then Executive shall promptly
return such unexpended or unaccountable sums to the Corporation. Executive shall
be reimbursed for all reasonable costs incurred in relocating from Georgia to
the Dallas, Texas area including, but not necessarily limited to packing,
loading, and delivery and unpacking of belongings as well as reasonable travel
and lodging costs of Executive and his spouse between Georgia and Texas.
Additionally, Executive will be reimbursed for living costs incurred for
temporary housing in Texas until Executive's home in Georgia is sold.
Additionally, Executive will be reimbursed for travel costs to Georgia until
relocation is completed.
8. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE. Notwithstanding the provisions of Section 3
hereof, the Corporation shall have the right to terminate this Agreement
immediately upon giving written notice to the Executive (or Executive's personal
or legal representatives, if appropriate), for any of the following reasons:
(1) Death of the Executive;
(2) Inability of the Executive, by reason of physical or mental
disability ("Disability"), to continue to perform his duties hereunder for the
remainder of the term of this Agreement;
(3) Just Cause, which is defined herein to mean: (a) Executive's
gross negligence in performing his duties hereunder; (b) Executive's willful
failure or refusal to perform his duties hereunder; (c) Executive's intentional
wrongful act or wrongful failure to act that materially and adversely affects
the business affairs of the Corporation; or (d) Executive's commission of any
act of fraud, commission of any felony, material breach of any provision of this
Agreement, involvement in any material conflict of interest or self dealing
transaction in violation of the applicable corporate laws of the State of
Delaware, or other material breach of any of his quasi-fiduciary duties to the
Corporation in violation of the applicable corporate laws of the State of
Delaware (including, but not limited to, the duties of due care, loyalty, and
fair dealing).
-3-
<PAGE>
(b) TERMINATION BENEFITS. If this Agreement expires, or if during the Term
the Corporation terminates this Agreement and Executive's employment hereunder
as a result of any of the following, Executive will be entitled to the following
termination compensation or severance benefits:
(1) DEATH. If during the Term, Executive's employment is terminated
by reason of death, the Corporation shall thereafter have no liability to
Executive's estate hereunder, except to timely pay and provide his estate the
following: (i) the portion, if any, of Executive's Base Salary for the period up
to the date of death that remains unpaid; (ii) any bonuses and incentive
compensation for any preceding year or for the current year that have been
earned (pro-rated to the date of death), but have not been paid as of the date
of death; and (iii) all other payments and benefits that Executive is eligible
to receive, but have not yet been received as of the date of death, under all
benefit plans, retirement plans, and other arrangements that, by their terms,
apply.
(2) DISABILITY. If during the Term, Executive's employment is
terminated due to Executive's Disability as defined in paragraph 8(a)(2) above,
the Corporation shall, after such effective date of termination, have no
liability to Executive hereunder, except to timely pay and provide the Executive
the following: (i) the portion, if any, of Executive's Base Salary for the
period up to the effective date of termination that remains unpaid; (ii) any
bonuses and incentive compensation for any preceding year or for the current
year (pro-rated to the effective date of termination) that have been earned, but
have not been paid as of the effective date of termination; and (iii) all other
payments and benefits that Executive is eligible to receive, but have not yet
been received as of the effective date of termination, under all benefit plans,
retirement plans, and other arrangements that, by their terms, apply.
(3) JUST CAUSE. If during the Term, Executive's employment is
terminated for Just Cause as specified in Section 8(a)(3) above, the Corporation
shall, after such effective date of expiration or termination, have no liability
to Executive hereunder, except to timely pay and provide the Executive the
following: (i) any bonuses and incentive compensation for any preceding year or
for the current year (pro-rated to the effective date of termination; and (ii)
all other payments and benefits that Executive is eligible to receive, but have
not yet been received as of the effective date of termination, under all benefit
plans, retirement plans, and other arrangements that, by their terms, apply. To
the extent that any insurance coverages maintained by the Corporation for the
benefit of Executive have conversion privileges into individual policies, the
Executive, upon his termination of employment or within any applicable grace
periods thereafter, may (at his sole cost) so convert such coverages, as well as
exercise (at his sole cost) all rights of continuation prescribed by applicable
law.
(4) WITHOUT CAUSE. If during the Term, Executive's employment is
terminated without the Executive's written consent and without Just Cause for
any reason whatsoever other than disability or death, the Corporation shall,
after such effective date or expiration or termination, have no liability to
Executive hereunder, except to timely pay and provide the Executive the
following: (i) the same Base Salary, bonuses and incentive compensation,
benefits, and other compensation that the Executive would otherwise be entitled
to receive hereunder through the remaining unexpired Term hereof as though no
termination or expiration had occurred; (ii) any bonuses and incentive
compensation for any preceding year or for the current year that have been
earned, but have not been paid as of the effective date of termination; (iii)
all other payment and benefits that Executive is eligible to receive, but have
not yet been received as of the effective date of termination. To the extent
that any insurance coverages maintained by the Corporation for the benefit of
Executive have conversion privileges into individual policies, the Executive,
upon his termination of employment or within any applicable grace periods
thereafter, may (at his sole cost) so convert such coverages, as well as
exercise (at his sole cost) all rights of continuation prescribed by applicable
law.
-4-
<PAGE>
(5) TERMINATION BY EXECUTIVE. In the event that Executive terminates
this Agreement for any reason, the Corporation shall, after such effective date
of termination, have no liability to Executive hereunder, except as specified in
Section 8(b)(3) hereof, as if the Corporation had terminated the Executive for
Cause; provided, however, that if the Executive elects to terminate this
agreement due to: (i) a breach of this Agreement by the Corporation; (ii) a
change in job description or duties; (iii) the relocation of the Executive
without his written consent; or (iv) a change in control of the Corporation
resulting from either a sale or merger of the assets, or of stock of the
Corporation, then any such termination shall be deemed a termination for good
reason and shall be treated as a termination without cause by the Corporation
pursuant to Paragraph 8.(b)(4).
9. RESTRICTIVE COVENANTS OF EXECUTIVE.
(a) DEFINITIONS. For the purposes of this Agreement:
(1) "CONFIDENTIAL INFORMATION" shall mean any information relating
to the Corporation or to the business of the Corporation (or to any of its
parents, subsidiaries or affiliates) (whether proprietary or otherwise) not
generally known to the public or known by Executive otherwise than as a
consequence of or through his employment with the Corporation and treated by the
Corporation as being confidential, including, but not limited to, research,
marketing, customer lists, databases, financing sources, methods, techniques and
systems, all of which shall be deemed by the Corporation and Executive as being
Confidential Information.
(2) "PERSON" shall mean an individual, a partnership, an
association, a corporation, a trust, an unincorporated organization, or any
other business entity or enterprise, provided, however, that the term "Person"
shall not include the Corporation.
(b) ACKNOWLEDGEMENTS. Executive agrees and acknowledges that: (i) he will
be in a position of confidence and trust with the Corporation and he will have
access to Confidential Information; (ii) the nature and periods of restrictions
imposed by the covenants set forth in this Section are fair, reasonable and
necessary to protect and preserve for the Corporation the benefits of this
Agreement and that such restrictions will not prevent Executive from earning a
livelihood; (iii) the Corporation would sustain irreparable loss and damage if
Executive were to breach any of such covenants; and (iv) the covenants herein
set forth are made as an inducement to and have been relied upon by the
Corporation in entering this Agreement.
(c) CONFIDENTIAL INFORMATION. Executive hereby covenants and agrees that
Executive shall not, directly or indirectly, during the Term of this Agreement
and for three (3) years after Executive's employment is terminated for whatever
reason, disclose to any Person or use or otherwise exploit for Executive's own
benefit or for the benefit of any other Person any Confidential Information that
was disclosed to Executive or acquired by Executive while an employee of the
Corporation. Upon the termination or expiration of this Agreement, Executive
shall return to the Corporation all material in Executive's possession or
control which is of a confidential matter relating to the Corporation's
business. These provision shall survive the termination or expiration of this
Agreement.
(d) CONSENT TO COURT-ORDERED REMEDY. Executive acknowledges that his
breach of any covenant set forth in this Section 9 will result in irreparable
injury to the Corporation and that the Corporation's remedies at law for such a
breach are inadequate and extremely difficult to calculate or determine.
Accordingly, Executive agrees and consents that upon such a breach or threatened
breach by Executive of any covenant set forth herein, the Corporation may be
entitled to such remedies in law or equity as may be determined by the court for
such a breach or threatened breach.
-5-
<PAGE>
(e) REMEDIES CUMULATIVE AND CONCURRENT. The rights and remedies of the
Corporation, as provided in this Section 9 shall be cumulative and concurrent
and may be pursued separately, successively or together against Executive at the
sole discretion of the Corporation, and may be exercised as often as occasion
therefor shall arise. The failure to exercise any right or remedy shall in no
event be construed as a waiver or release thereof.
10. INDEMNITY. To the fullest extent permitted by law, the Corporation
shall indemnify Executive and hold him harmless for any acts or decisions made
by him in good faith while performing services for the Corporation. In addition,
to the fullest extent permitted by law, the Corporation shall pay all expenses,
including attorneys' fees, actually and necessarily incurred by Executive in
connection with the defense of any action, suit or proceeding challenging such
acts of decisions and in connection with any appeal thereon including the costs
of settlement. This indemnification obligation shall survive the termination of
the Executive's employment hereunder.
11. WAIVER OF BREACH OF VIOLATION NOT DEEMED CONTINUING. The
waiver by either party of a breach or violation of any provision of this
Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
12. NOTICES. Any and all notices required or permitted to be
given under this Agreement will be sufficient if furnished in writing,
personally delivered or sent by certified mail, return receipt requested
as follows:
To Executive:
Robert J. Starzyk
1531 Spalding Drive
Dunwoody, Georgia 30350
To the Corporation:
Phoenix Healthcare Corporation
Attn: Chairman and Chief Executive Officer
4514 Travis Street
Suite 330
Dallas, Texas 75205
13. SECURITIES LAW COMPLIANCE. The Executive represents and agrees that he
is acquiring any Shares he receives under this Agreement for his own account and
not with the intention reselling or distributing the Shares, except as permitted
under this Agreement and any applicable federal and state securities laws. The
Corporation shall have the right to take any actions it may deem necessary or
appropriate to ensure that the Shares granted to the Executive complies with
applicable federal and state securities laws.
-6-
<PAGE>
14. TAX LIABILITY. The Corporation may withhold from any payment made
pursuant to this Agreement any federal, state or local taxes required to be
withheld from such payment. The Executive shall make such arrangements as may be
required or be satisfactory to the Corporation (in its sole discretion) for the
payment of any tax withholding obligations that arise in connection with the
granting of Shares under this Agreement. The Corporation shall not be required
to issue any Shares under this Agreement until such obligations are satisfied.
15. GOVERNING LAW. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Texas. The parties hereto consent
to jurisdiction and venue in the Texas state courts in Dallas, Texas and United
States District Court for the Northern District of Texas, Dallas Division.
16. PARAGRAPH HEADINGS. The paragraph headings contained in
this Agreement are for convenience only and shall in no manner be
construed as a part of this Agreement.
17. ENTIRE AGREEMENT. This Agreement supersedes all prior discussions and
agreements between the Corporation, or any of its officers, directors,
employees, or agents, and Executive with respect to all mattes relating to the
employment by the Corporation of Executive and all other matters contained
herein, and this Agreement constitutes the sole and entire agreement with
respect thereto. Any representation, inducement, promise or agreement, whether
oral or written, between the Corporation, or any of its officers, directors,
employees, or agents, and Executive which is not embodied herein shall be of no
force or effect.
18. SUCCESSORS AND ASSIGNORS. This Agreement shall be binding
upon, and shall inure to the benefit of, the Corporation and Executive
and their respective heirs, personal and legal representatives,
successors, and assigns.
19. SEVERABILITY. If any term, covenant or condition of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable the remainder of this Agreement or the application of
such terms, covenants and conditions to persons or circumstances other than
those as to which it is held invalid or unenforceable shall be affected thereby
and each term, covenant or condition of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the Corporation has hereunder to caused this Agreement
to be executed by its duly authorized offices and seals to be hereunto affixed,
and Executive has hereunto set his hand and seal, all being done in duplicate
originals delivered to each party as of the day and year first above written.
/S/ ROBERT J. STARZYK
- ---------------------------------- -------------------------------------
Witness Robert J. Starzyk
ATTEST: Phoenix Healthcare Corporation
By: /S/ RONALD E. LUSK
- ---------------------------------- ----------------------------------
Ronald E. Lusk
Chairman of the Board, President
and Chief Executive Officer
-7-
<PAGE>
EXHIBIT A
DESCRIPTION OF SPECIFIC DUTIES AND RESPONSIBILITIES
Executive shall serve the Corporation as its Executive Vice President and
Chief Financial Officer. At all times, Executive shall report to, discharge his
duties in consultation with and be under the direct supervision and control of
the Corporation's Chairman and Chief Executive Officer. Executive shall perform
such duties, consistent with the Executive's employment as a senior corporate
executive, shall hold such other titles with respect to the Corporation, or any
of its divisions, subsidiaries or affiliates, as the Corporation's Board of
Directors may from time to time determine, and shall comply with all applicable
provisions of the Corporation's certificate of incorporation and bylaws.
As to employees under Executive's jurisdiction, including those working
directly under his supervision, Executive shall use his best efforts to (i)
employ and retain only employees who are capable and willing to perform
according to applicable legal requirements and applicable policies of the
Corporation, and (ii) assure that such personnel are properly trained and
supervised. Subject to the direction of the Corporation's Chairman and Chief
Executive Officer, Executive may hire and terminate the employment of any other
employee of the Corporation, or any of its divisions, subsidiaries or
affiliates, who is under his jurisdiction.
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<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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<CURRENT-ASSETS> 9,223
<PP&E> 86,426
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0
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<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,119,532
<OTHER-EXPENSES> 13,521
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