PHOENIX HEATHCARE CORP
8-K, 2000-03-10
SKILLED NURSING CARE FACILITIES
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 8-K

                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): August 10, 1999

                         PHOENIX HEALTHCARE CORPORATION
             (Exact name of registrant as specified in its charter)

================================================================================
          Delaware                  0-20354                      23-2596710
- --------------------------------------------------------------------------------
(State or other jurisdiction      (Commission                  (IRS Employer
     of incorporation)            File Number)               Identification No.)
================================================================================

================================================================================
4514 Travis Street, Suite 330, Dallas, TX                           75205
 (Address of principal executive offices)                         (Zip Code)
================================================================================

       Registrant's telephone number, including area code: (214) 599-9777


                                      -1-
<PAGE>


ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.

        (A) DISPOSITION OF SOUTHLAND MEDICAL SUPPLY, INC.(1)

        On February 3, 1999, Phoenix Healthcare Corporation (The "REGISTRANT")
entered into an agreement whereby Match, INC. ("CREDITOR"), a company
wholly-owned by Ronald E. Lusk, Chairman and Chief Executive Officer of the
Registrant, agreed to provide the Registrant with a line of credit in the amount
up to $2,000,000 (the "LOAN"). As security for the line of credit, the
Registrant gave the Creditor a security interest in all the assets of Southland
Medical Supplies, Inc., d/b/a/ Southland Medical Supply ("SOUTHLAND"), a
wholly-owned subsidiary of the Registrant.

        On November 15, 1999, the Creditor notified the Registrant that it had
defaulted on its obligations outstanding in the principal amount of $954,628
pursuant to the Loan and took possession of the secured assets, including supply
inventory, furniture, fixtures and equipment.

        (B) DISPOSITION OF OHI CORPORATION

        On August 10, 1999, the Registrant entered into an agreement with
National Health Investors, Inc. ("NHI"), its largest creditor, for the full
release and settlement of over $44 million of the Registrant's debt obligations.
As part of the settlement, the Registrant has formally assigned its ownership,
lease and management interests in its New England based nursing home operations
held by OHI Corporation (d/b/a/ Oasis Healthcare), its operating subsidiary, to
NHI. NHI was the lender under three loan agreements: the "Heartland Loan
Agreement," the "Warner Loan Agreement" and the "Buckley Loan Agreement." NHI
was also the direct lender to the Registrant with respect to a Note Purchase
Loan Agreement and Promissory Note, the "Trinity Loan Agreement" and "Trinity
Loan." The Registrant, and all named borrowers herein, were in default of their
existing loan obligations to NHI prior to this transaction.

        The parties to the Heartland Loan Agreement dated July 1, 1996, include
NHI together with Heartland Healthcare Corporation, a Massachusetts
not-for-profit corporation, VCP Realty Limited Partnership, Epsom Health Limited
Partnership, and Maple Leaf Health Limited Partnership, each a New Hampshire
Limited Partnership and the holder of collateral assignments of leases to OHI's
New England based nursing home operations located in New Hampshire. The
borrowers under the Heartland Loan include Epsom Manor, Inc., Epsom Manor
Retirement and Congregate Living Center Inc., Villa Crest Inc., and Maple Leaf
Health Care, Inc. Under the Warner Loan Agreement, dated May 31, 1997, NHI was
the lender with respect to OHI Realty I, L.P. ("OHI LP") and OHI Corp. NHI was
also the lender under the Buckley Loan Agreement, dated March 15, 1997, on
behalf of Buckley Nursing Home, Inc. and Greenfield Associates Real Estate Trust
Inc. The Registrant was the guarantor of all loan obligations.

- ----------
(1) On April 22, 1999, the Registrant filed a Form 8-K regarding the acquistion
of Southland Medical Supply, Inc. At the time of filing, it was impracticable
for the Registrant to provide the required historical and pro forma financial
statements and information required. Such statements and information have, to
date, not been filed. The Registrant believes that, in light of the information
provided in Item 7 of this Form 8-K, it is no longer necessary to amend the Form
8-K filed on April 22, 1999.

                                      -2-
<PAGE>


        The parties to the Trinity Loan Agreement and Trinity Loan, dated
January 6, 1998, include NHI as the direct lender, and the Registrant, as
borrower. As collateral for the loan, OHI LP, of which the registrant is a
general partner, and OHI Corp. granted mortgages on their real property and
leasehold estates to secure the Registrant's obligations to NHI.

        In connection with the Settlement Agreement (the "SETTLEMENT
AGREEMENT"), the Registrant is relieved of its direct debt obligations in the
amount of $9.8 million and loan guarantees aggregating $35.8 million. Under the
terms of the Settlement Agreement, a valuation of the facilities was not
conducted as all parties stipulated that the value of the collateral did not
equal or exceed the amount of the indebtedness. The Registrant has secured a
full release and indemnification from NHI with regard to all capital debt and
credit obligations associated with OHI Corp.'s nursing home operations.

        (C) ACQUISITION OF HEALTHCARE INFORMATION TECHNOLOGIES, INC.

        On December 15, 1999, the Registrant consummated a transaction pursuant
to which it acquired 100 shares of the common stock of Healthcare Information
Technologies, Inc. ("HIT"), representing all the issued and outstanding stock of
HIT (the "HIT SHARES"). The purchase price of the HIT Shares was 6,513,158
shares of Registrant's common stock. HIT, based in Dallas, Texas, is a
technology based company that provides information technologies to healthcare
providers. Among the assets acquired are certain healthcare management system
and software licensing agreements for which the Registrant has secured exclusive
interest.

        Immediately prior to the transaction, Ronald E. Lusk, Chairman and Chief
Executive Officer of Registrant, owned ninety-five percent (95%) of the HIT
Shares and served as sole director and President of HIT. Other than the
foregoing, there are no material relationships between HIT and Registrant or any
of its affiliates, any officer or director of Registrant, or any associate of
such an officer or director.

ITEM 5. OTHER EVENTS.

        (A) DISPOSITION OF TRINITY REHAB, INC.

        On November 24, 1999, the Registrant discontinued operations of Trinity
Rehab, Inc. ("Trinity"), a wholly-owned subsidiary of the Registrant. On that
date, Trinity terminated the employment of all of its employees and terminated
its existing contracts.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

        PRO FORMA FINANCIAL INFORMATION.

        (A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.

        (B) PRO FORMA FINANCIAL INFORMATION.

        (C) EXHIBITS. The exhibits listed in the exhibit index are filed as part
            of, or incorporated by reference in, this current report on Form
            8-K.

                                      -3-
<PAGE>


                                    SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                            PHOENIX HEALTHCARE CORPORATION



Date: MARCH 8, 2000                         By: Ronald E. Lusk
      -------------                         Chairman and Chief Executive Officer


                                  EXHIBIT INDEX

EXHIBIT     DESCRIPTION

2.1         Stock Purchase Agreement dated as of December 15, 1999 by and among
            Phoenix Healthcare Corporation, Ronald E. Lusk and Carekeeper
            Software, Inc.



                                      -4-



                                   EXHIBIT 2.1
                            STOCK PURCHASE AGREEMENT

        THIS STOCK PURCHASE  AGREEMENT (the "Agreement") is dated as of December
15, 1999, by and among PHOENIX HEALTHCARE  CORPORATION,  a Delaware  corporation
("Purchaser"),  RONALD E. LUSK ("Lusk") and CAREKEEPER SOFTWARE, INC., a Georgia
corporation  ("CareKeeper")  (Lusk and  CareKeeper are  hereinafter  referred to
collectively as "Sellers").

                                    RECITALS:

        WHEREAS,  Sellers  collectively  own one hundred  percent  (100%) of the
issued and outstanding  shares of the capital stock (the "Shares") of Healthcare
Information Technologies, Inc., a Delaware corporation (the "Company");

        WHEREAS, Lusk owns ninety-five percent (95%) of the Shares and is the
sole director and President of the company;

        WHEREAS,  CareKeeper  owns  five  percent  (5%) of the  Shares  and is a
passive investor exercising no control or authority over the Company;

        WHEREAS, the Company is engaged in the business of managing data, media
and communications systems (the "Business"); and

        WHEREAS,  Sellers desires to sell the Shares to Purchaser, and Purchaser
desires to  purchase  the Shares  from  Sellers,  upon the terms and  conditions
hereinafter set forth.

        NOW,  THEREFORE,  for  and  in  consideration  of the  mutual  promises,
covenants  and  conditions  herein  contained  and for other  good and  valuable
consideration,  the receipt and adequacy of which are hereby  acknowledged,  the
parties hereto, intending to be legally bound, agree as follows:

                                    ARTICLE I
                           SALE AND TRANSFER OF SHARES

        1.1  PURCHASE  AND SALE.  Subject  to the terms and  conditions  of this
Agreement,  Sellers shall sell, convey, transfer and deliver to Purchaser at the
Closing (as hereinafter  defined),  and Purchaser shall purchase and accept, all
of the  Shares,  free  and  clear of all  security  interests,  liens,  charges,
pledges, claims, demands or encumbrances (collectively, "Encumbrances"). Sellers
shall deliver to Purchaser at the Closing stock  certificates  representing  the
Shares  duly  endorsed by Sellers for  transfer to  Purchaser  as of the Closing
Date.

                                      -5-
<PAGE>


        1.2 PURCHASE  PRICE.  The purchase  price for the Shares (the  "Purchase
Price") shall be an aggregate of six million five hundred thirteen  thousand one
hundred  fifty-eight  (6,513,158)  shares of Purchaser  Common Stock,  $.001 par
value, payable to each Seller as follows:

                (a)     Lusk: six million one hundred eighty-seven thousand five
hundred (6,187,500) shares; and

                (b)     CareKeeper:   three  hundred  twenty-five  thousand  six
hundred fifty-eight (325,658) shares.

        1.3 CLOSING.  The closing  hereunder (the "Closing") shall take place at
4514 Travis Street, Suite 330, Dallas, Texas, on December 15, 1999 (the "Closing
Date"), or at such later date as mutually agreed to by the parties.

                                   ARTICLE II
                    REPRESENTATIONS AND WARRANTIES OF SELLER

        As an  inducement  to Purchaser to execute this  Agreement  and to enter
into the  transactions  contemplated by this Agreement,  Lusk (and CareKeeper as
expressly indicated herein) represents and warrants to Purchaser that:

        2.1  ORGANIZATION,  GOOD  STANDING AND  AUTHORITY  OF THE  COMPANY.  The
Company is a corporation  duly organized,  validly existing and in good standing
under the laws of the State of  Delaware.  The  Company has full  authority  and
power to carry on its  business as it is now  conducted,  and to own,  lease and
operate the assets owned,  leased or operated by it. The Company is qualified to
do  business  and is in  good  standing  and has all  required  and  appropriate
licenses in each  jurisdiction  in which its failure to obtain or maintain  such
qualification,  good  standing or  licensure  would have a material  and adverse
impact  on  the  condition  (financial  or  otherwise),  assets,  properties  or
prospects of the Business.

        2.2  AGREEMENT  NOT IN BREACH OF OTHER  INSTRUMENTS.  The  execution and
delivery of this Agreement,  the consummation of the  transactions  contemplated
hereby and the  fulfillment  of the terms hereof will not violate or result in a
breach of any of the terms or  provisions  of, or  constitute  a default (or any
event which,  with notice or the passage of time,  or both,  would  constitute a
default)  under, or conflict with or result in the termination of, or accelerate
the performance required by, (i) any agreement, indenture or other instrument to
which  the  Company  or a Seller  is a party or by which it is  bound,  (ii) the
Certificate of Incorporation,  Bylaws or similar organizational documents of the
Company or CareKeeper,  (iii) any judgment, decree, order or award of any court,
governmental body or arbitrator by which the Company, Lusk or


                                      -6-
<PAGE>


CareKeeper is bound,  or (iii) any law, rule or regulation  applicable to the
Company, Lusk or CareKeeper.

        2.3 NO LEGAL BAR.  Neither Lusk nor  CareKeeper  are  prohibited  by any
order,  writ,  injunction or decree of any body of competent  jurisdiction  from
consummating  the  transactions  contemplated  by this  Agreement  and all other
agreements  referenced  herein,  and no action or proceeding is pending  against
Lusk or CareKeeper  which  questions the validity of this  Agreement or any such
other agreements,  any of the transactions contemplated hereby or thereby or any
action  which has been taken by any of the  parties in  connection  herewith  or
therewith or in connection with any of the transactions  contemplated  hereby or
thereby.

        2.4 TITLE;  POSSESSION.  Lusk and  CareKeeper  have good and  marketable
title to the  Shares  being  transferred  hereby  and there are no  Encumbrances
whatsoever with respect thereto.

        2.5  AUTHORIZATION.  Lusk and CareKeeper  have full capacity,  power and
authority  to enter  into this  Agreement  and all other  agreements  referenced
herein,  and Lusk and CareKeeper have been duly  authorized to execute,  endorse
and deliver the stock certificates  representing the Shares.  This Agreement and
each other  agreement and  instrument  to be executed by Lusk and  CareKeeper in
connection  herewith have been (or upon  execution will have been) duly executed
and delivered by Lusk and  CareKeeper,  have been (or upon  execution  will have
been)  effectively  authorized  by all necessary  corporate  action on behalf of
CareKeeper and constitute (or upon execution will constitute)  legal,  valid and
binding obligations of Lusk and CareKeeper,  enforceable against each of them in
accordance with their respective terms.

        2.6  CAPITALIZATION.  The  authorized  equity  securities of the Company
consist of one thousand  (1,000)  shares of Common  Stock,  par value $1.00,  of
which one hundred (100) shares are issued and  outstanding  and  constitute  the
Shares. Ronald E. Lusk owns ninety-five (95) shares and CareKeeper owns five (5)
shares.  There is no agreement,  contract,  obligation,  promise or  undertaking
(whether written or oral,  expressed or implied) relating to the issuance,  sale
or transfer of any equity securities or other securities of the Company.

        2.7 FINANCIAL  STATEMENTS.  Except as disclosed on Schedule 2.7 attached
hereto,  the  unaudited  financial  statements  of the Company  (the  "Financial
Statements") are substantially  complete and correct in all material respects as
of the respective dates and for the respective periods.

        2.8 ABSENCE OF CERTAIN  CHANGES.  EXCEPT AS  DISCLOSED  ON SCHEDULE  2.8
attached hereto or as otherwise  provided for or contemplated in this Agreement,
since the date of the most recent Financial  Statements,  there has not been any
(i) transaction or occurrence relating to the


                                      -7-
<PAGE>


Company or the Business other than in the ordinary course of business, (ii) sale
or  disposition  of any  assets or  property  of the  Company  other than in the
ordinary course of business,  or (iii) event or condition of any character which
could have or has had a material and adverse effect on the condition  (financial
or otherwise),  assets, properties,  customer or employee relations or prospects
of the Company.

        2.9 PERSONAL  PROPERTY.  The Company owns or has the right to use,  free
and  clear of any  Encumbrance,  all of the  tangible  and  intangible  personal
property now used by it in the  operation of the Business or the use of which is
necessary for the  performance  of any contract or proposal to which the Company
is a  party,  including,  but not  limited  to,  the End User  Software  License
Agreement  No.  PD2393  between the Company,  as licensee,  and  CareKeeper,  as
licensor,  computer  software  and  programs,  software  in  progress,  computer
operating  systems and applications,  United States and foreign patents,  patent
applications,  trade names, trademarks,  trade name and trademark registrations,
copyright  registrations  and  applications  for  any of the  foregoing  and all
licenses or similar  agreements or  arrangements to which the Company is a party
either  as  licensee  or  licensor  for each such  item of  intangible  personal
property.  The  Company  owns or has the  right to use,  free  and  clear of any
Encumbrance, such intangible personal property.

        2.10    TAXES. Except as disclosed on Schedule 2.10 Attached hereto:

                (a)     Within  the times and in the manner  prescribed  by law,
the  Company  has filed all  federal,  state  and local tax  returns  (including
information  returns) and all tax returns for foreign  countries,  provinces and
other  governmental  bodies having  jurisdiction to levy taxes upon the Company,
and has paid all taxes shown to be due to any taxing  authority  with respect to
all periods ending prior to the Closing Date;

                (b)     All tax returns filed by the Company through the Closing
Date constitute complete and accurate  representations of the tax liabilities of
the Company as appropriate  for such years and  accurately  sets forth all items
(to the extent required to be included or reflected in such returns) relevant to
its  future  tax  liabilities,  including  the tax bases of its  properties  and
assets; and

                (c)     All deposits  and payments of taxes  required to be made
have been fully paid and deposited in a timely manner.

        As used in this  Section  2.10,  the  term  "taxes"  shall  include  all
federal, state, local, foreign or other income, gross profits, payroll, workers'
compensation, unemployment, withholding,


                                      -8-
<PAGE>


excise,  sales, use,  property,  ad valorem or other taxes of any kind or nature
whatsoever, together with any penalties or interest applicable thereto.

        2.11  LITIGATION.  Except as disclosed on SCHEDULE 2.11 Attached hereto,
there is no action,  suit,  proceeding or  investigation to which the Sellers or
the Company is a party  (either as plaintiff  or  defendant)  presently  pending
(which,  in the case of Sellers,  might result,  directly or indirectly,  in any
loss, claim, liability,  obligation,  expense or other damage to Purchaser), nor
has any such action, suit,  proceeding or investigation been pending at any time
since January 1, 1998,  before any court or  governmental  agency,  authority or
body or arbitrator;  to the best knowledge of Sellers, there is no action, suit,
proceeding  or  investigation  threatened  against  the  Sellers and to the best
knowledge  of Lusk,  there  is no  action,  suit,  proceeding  or  investigation
threatened against the Company and there is no basis for any such action,  suit,
proceeding or investigation with respect to the Sellers or the Company.

        2.12  COMPLIANCE  WITH  LAWS.  The  Company is in and always has been in
compliance in all material respects with all applicable federal, state and local
laws, regulations and rules, ordinances and administrative orders (collectively,
"Laws"), including such Laws affecting the conduct of the Business and ownership
of the Company's assets or properties.

        2.13 NO  UNDISCLOSED  LIABILITIES.  Except  as and  only  to the  extent
specifically  reflected or reserved  against in the  Financial  Statements,  and
except for ongoing  operating  expenses  incurred in the ordinary  course of the
Business,  to the best  knowledge of Lusk,  the Company has no  obligations of a
material nature, whether absolute,  accrued, contingent or otherwise, or whether
due or to become due (including,  without  limitation,  any liability for taxes,
interest,   penalties  or  other  charges  payable  with  respect  to  any  such
liability),  except as specifically  set forth elsewhere in this Agreement or in
the Schedules attached hereto.

        2.14 SELLERS'  INVESTIGATION  AND EXPERIENCE.  Sellers  acknowledge that
Purchaser is making no representations or warranties  whatsoever with respect to
the value of the Purchase Price or the rights  provided by the Purchase Price to
a  holder  thereof.  Sellers  further  acknowledge  that  prior  to the  Closing
Purchaser has made available to Sellers an adequate opportunity to ask questions
and receive  answers  from any person  authorized  to act on behalf of Purchaser
regarding  Purchaser,   its  operations,   business,   financial  condition  and
prospects,  and  that  all  documents,  records,  books  and  other  information
pertaining  to Purchaser  and the value of the Purchase  Price  requested by the
Sellers have been made available or delivered to Sellers to the extent Purchaser
possesses such documents,  records,  books and other  information  pertaining to
Purchaser or can acquire such without  unreasonable  expense or effort.  Sellers
have

                                      -9-
<PAGE>


undertaken any and all investigation  with respect to Purchaser and the Purchase
Price which Sellers deem necessary or desirable with respect to the transactions
contemplated herein and is relying solely on their investigation as to the value
of the  Purchase  Price  and  the  risks  of  ownership  thereof.  Sellers  have
substantial  experience  in  investments  comparable  to an  investment  in  the
Purchase Price, have the resources necessary and appropriate to assume the risks
of an investment in the Purchase Price and to protect their  interests  therein,
and have  been  advised  by  legal  counsel  with  respect  to the  transactions
contemplated herein.

        2.15  INVESTMENT  INTENT.  Sellers are receiving the Purchase  Price for
their own account and not on behalf of any other  person.  Sellers are receiving
the Purchase Price for investment  and not with a view to  distribution  or with
the intent to divide its  participation  with others by  reselling  or otherwise
distributing the Purchase Price.  Sellers  understand that the Purchase Price is
being  transferred  hereunder without  registration  under the Securities Act of
1933, as amended (the "1933 Act"),  and any applicable state securities laws, by
reason  of  its  issuance  in  a  transaction   exempt  from  the   registration
requirements  of the 1933 Act and such state laws,  and that it must be held for
at least one (1) year unless it is  subsequently  registered  under the 1933 Act
and such state  laws,  or such  subsequent  disposition  thereof is exempt  from
registration. Each Seller is an "accredited investor" within the meaning of Rule
501, promulgated under the 1933 Act.

        2.16    LEGEND.  Each certificate  representing the Purchase Price shall
bear  the  following  legend,  or a  similar  legend  reasonably  deemed  by the
Purchaser to constitute an appropriate  notice of the provisions  hereof and the
applicable securities laws (any such certificate not having such legend shall be
surrendered  upon demand by the Purchaser  and so endorsed):

                On the  face  of the  certificate:

                TRANSFER  OF  THIS  STOCK  IS  RESTRICTED  IN  ACCORDANCE   WITH
                CONDITIONS PRINTED ON THE REVERSE OF THIS CERTIFICATE.

                On the reverse of the certificate:

                SHARES  OF  STOCK  REPRESENTED  BY THIS  CERTIFICATE  HAVE  BEEN
                ACQUIRED BY THE HOLDER FOR INVESTMENT  PURPOSES ONLY AND NOT FOR
                RESALE,  TRANSFER OR DISTRIBUTION,  HAVE BEEN ISSUED PURSUANT TO
                EXEMPTIONS  FROM THE  REGISTRATION  REQUIREMENTS  OF  APPLICABLE
                STATE AND FEDERAL  SECURITIES  LAWS,  AND MAY NOT BE OFFERED FOR
                SALE,  SOLD OR  TRANSFERRED  OTHER THAN  PURSUANT  TO  EFFECTIVE
                REGISTRATION  UNDER SUCH LAWS, OR IN  TRANSACTIONS  OTHERWISE IN
                COMPLIANCE  WITH OR EXEMPT  FROM SUCH  LAWS,  AND UPON  EVIDENCE
                REASONABLY  SATISFACTORY  TO THE

                                      -10-
<PAGE>


                COMPANY OF  COMPLIANCE  WITH OR EXEMPTION  FROM SUCH LAWS, AS TO
                WHICH THE COMPANY MAY RELY UPON AN OPINION OF COUNSEL REASONABLY
                SATISFACTORY TO THE COMPANY.

        2.17    NO  BROKERAGE  FEES.  Sellers  have  not  dealt  with,  nor  are
obligated  to make any  payment  to, any finder,  broker,  investment  banker or
financial  advisor in connection  with any of the  transactions  contemplated by
this Agreement and all other agreements  referenced  herein, or the negotiations
looking toward the  consummation  of such  transactions  contemplated  hereby or
thereby.

        2.18    NO  MISSTATEMENTS  OR  OMISSIONS.  To the  best  of  Lusk's  and
CareKeeper's knowledge no representation, warranty or disclosure made by Lusk or
CareKeeper,  as applicable,  to Purchaser or Purchaser's  representatives  is or
will be false or  misleading  as to any  material  fact or omits or will omit to
state a material fact  necessary to make the  statements  contained  therein not
misleading.

                                   ARTICLE III
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

        As an inducement to Sellers to execute this  Agreement and to enter into
the  transactions  contemplated  by this  Agreement,  Purchaser  represents  and
warrants to Sellers that:

        3.1     ORGANIZATION,  GOOD  STANDING  AND  AUTHORITY.  Purchaser  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  The Company has full  authority and power to carry on
its business as it is now  conducted,  and to own,  lease and operate the assets
owned,  leased or  operated  by it.  The  Agreement  has been  duly  authorized,
executed and delivered by Purchaser and  constitutes a legal,  valid and binding
obligation of Purchaser,  enforceable  against  Purchaser in accordance with its
terms.

        3.2     AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.  The execution and
delivery of this Agreement,  the consummation of the  transactions  contemplated
hereby and the  fulfillment  of the terms hereof will not violate or result in a
breach of any of the terms or  provisions  of, or  constitute  a default (or any
event which,  with notice or the passage of time,  or both,  would  constitute a
default)  under, or conflict with or result in the termination of, or accelerate
the performance required by, (i) any agreement, indenture or other instrument to
which  Purchaser  is a party or by which it is bound,  (ii) the  Certificate  of
Incorporation,  Bylaws or similar organizational  documents of Purchaser,  (iii)
any  judgment,  decree,  order  or  award  of any  court,  governmental  body or
arbitrator  by which  Purchaser is bound,  or (iv) any law,  rule or  regulation
applicable to Purchaser.

                                      -11-
<PAGE>


        3.3     NO LEGAL BAR.  Purchaser is not  prohibited by any order,  writ,
injunction or decree of any body of competent jurisdiction from consummating the
transactions  contemplated by this Agreement and all other agreements referenced
herein, and no action or proceeding is pending against Purchaser which questions
the  validity  of  this  Agreement  or any  such  other  agreements,  any of the
transactions  contemplated  hereby or thereby or any action which has been taken
by any of the parties in connection  herewith or therewith or in connection with
any of the transactions contemplated hereby or thereby.

        3.4     CAPITALIZATION.   The  authorized  capital  stock  of  Purchaser
consists of (i) 50,000,000 shares of Purchaser Common Stock, $.001 par value, of
which, as of September 30, 1999,  27,440,337  shares are issued and outstanding,
and (ii) 5,000,000  shares of Purchaser  Preferred  Stock,  $.001 par value,  of
which,  as of the Closing  Date,  533,333  Series A shares and 100,000  Series B
shares are issued and outstanding.  All of the issued and outstanding  shares of
Purchaser's  capital stock are, and all shares  comprising  the Purchaser  Price
shall be, validly issued, fully paid and non-assessable.

        3.5     NO  BROKERAGE  FEES.  Purchaser  has  not  dealt  with,  nor  is
obligated  to make any  payment  to, any finder,  broker,  investment  banker or
financial  advisor in connection  with any of the  transactions  contemplated by
this Agreement and all other agreements  referenced  herein, or the negotiations
looking toward the  consummation  of such  transactions  contemplated  hereby or
thereby.

        3.6     NO  MISSTATEMENTS  OR  OMISSIONS.  To the  best  of  Purchaser's
knowledge,  no  representation,  warranty or  disclosure  made by  Purchaser  to
Sellers or Sellers'  representatives is or will be false or misleading as to any
material fact or omits or will omit to state a material  fact  necessary to make
the statements contained therein not misleading.

                                   ARTICLE IV
                                 INDEMNIFICATION

        4.1     INDEMNIFICATION  BY LUSK.  Lusk hereby  agrees to indemnify  and
hold  Purchaser,  its  officers,  directors,  controlling  persons  and  agents,
harmless from and against any claim, liability, obligation, loss or other damage
(including,  without  limitation,   reasonable  attorneys'  fees  and  expenses)
asserted  against,   imposed  upon  or  incurred  by  Purchaser,  its  officers,
directors,  controlling persons and agents,  arising out of any inaccuracy in or
breach of any of the  representations  and warranties set forth in Article II of
this Agreement.

        4.2     INDEMNIFICATION   BY  PURCHASER.   Purchaser  hereby  agrees  to
indemnify  and hold  Sellers  harmless  from and against  any claim,  liability,
obligation,  loss or other damage


                                      -12-
<PAGE>


(including,  without  limitation,   reasonable  attorneys'  fees  and  expenses)
asserted  against,  imposed  upon or  incurred  by a Seller  arising  out of any
inaccuracy in or breach of any of Purchaser's representations and warranties set
forth in Article III of this Agreement.

        4.3     CLAIMS  PROCESS.  As soon  as is  reasonably  practicable  after
Purchaser  or a Seller  becomes  aware of any claim that it has which is covered
under this Article IV, Purchaser or the Seller, as the case may be ("Indemnified
Party") shall notify the other party  ("Indemnifying  Party") in writing,  which
notice shall  describe the claim in reasonable  detail,  and shall  indicate the
amount  (estimated,  if necessary to the extent  feasible) of the claim.  In the
event of a third  party  claim  which is subject to  indemnification  under this
Article IV, the  Indemnifying  Party shall promptly defend such claim by counsel
of its own choosing,  subject to the approval of the  Indemnified  Party,  which
approval  shall not  unreasonably  be withheld or delayed,  and the  Indemnified
Party shall cooperate with the Indemnifying  Party in the defense of such claim,
including  the  settlement  of  the  matter  on  the  basis  stipulated  by  the
Indemnifying  Party (with the Indemnifying Party being responsible for all costs
and expenses of such  settlement).  Any such settlement shall include a complete
and unconditional release of the Indemnified Party from the claim.

        4.4     SURVIVAL;  CLAIMS. The  representations and warranties set forth
in Articles II and III above, and the  indemnification  rights set forth in this
Article IV, shall survive for a period of one (1) year after the date hereof. No
party shall have any liability for any breach of any  representation or warranty
set forth  herein  unless the other party shall have given it written  notice of
such  breach  promptly  upon  becoming  aware  of same and  prior  to the  first
anniversary  of the date of this  Agreement.  Such  notice  shall  identify  the
applicable  Section of this  Agreement,  the alleged  breach and the amounts for
which the indemnitor is alleged to be liable in detail.  The indemnitor shall be
entitled to assume the defense of any third-party claim, provided that it admits
in writing its obligation to indemnify the indemnitee for such claim.

                                    ARTICLE V
                                  MISCELLANEOUS

        5.1     EXPENSES.  Each  party  hereto  shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated by this
Agreement  including,  without  limitation,  fees, costs and expenses of its own
financial CONSULTANTS, accountants and counsel.

        5.2     ATTORNEYS'  FEES.  In the event  any  party  brings an action to
enforce this Agreement,  the prevailing party or parties in such action shall be
entitled to recover reasonable costs incurred in connection therewith, including
reasonable attorneys' fees.

                                      -13-
<PAGE>


        5.3     ENTIRE AGREEMENT. This Agreement (including all Exhibits hereto)
supersedes any and all other  agreements,  oral or written,  between the parties
hereto with  respect to the  subject  matter  hereof,  and  contains  the entire
agreement  between such parties  with respect to the  transactions  contemplated
hereby.   No  party  to  this  Agreement  shall  be  entitled  to  rely  on  any
representation, warranty or agreement not set forth in this Agreement.

        5.4     AMENDMENTS.  This  Agreement  shall not be  modified  or amended
except by an instrument in writing  signed by or on behalf of all of the parties
hereto.

        5.5     SUCCESSORS; ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties  hereto and
their  respective  successors and permitted  transferees and assignees.  Neither
this Agreement nor any interest herein may directly or indirectly be transferred
or assigned by any party,  in whole or in part,  without the written  consent of
the other parties, which consent shall not be unreasonably withheld.

        5.6     NOTICES. Any notice,  demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly given on the earlier of (a) the date actually  received
by the party in question,  by whatever means and however  addressed,  or (b) the
date sent by  telecopy,  or on the date of personal  delivery,  if  delivered by
hand, or on the date signed for if sent,  prepaid, by Federal Express or similar
nationally-recognized overnight delivery service, to the following addresses, or
to such other addresses as either party may request,  in the case of Seller,  by
notifying  Purchaser,  and in the case of Purchaser,  by notifying Seller:

        If to Purchaser:        Phoenix Healthcare Corporation
                                4514 Travis Street
                                Suite 330 Dallas,
                                TX 75205
                                Attn: Ronald E. Lusk
                                Telephone: (888) 900-1133
                                Telecopy: (214) 599-9790

        With copies to:         Reed Smith Shaw & McClay LLP
                                1301 K Street, N.W.
                                Suite 1100 - East Tower
                                Washington, DC 20005
                                Attn: Scott D. Chenevert, Esq.
                                Telephone: (202) 414-9489
                                Telecopy: (202) 414-9299

                                      -14-
<PAGE>


        If to Ronald E. Lusk:   Ronald E. Lusk
                                4514 Travis Street
                                Suite 330
                                Dallas, TX 75205
                                Telephone: (888) 900-1133
                                Telecopy: (214) 599-9790

        If to CareKeeper:       CareKeeper Software, Inc.
                                One Dunwoody Park, Suite 240
                                Atlanta, GA 30338
                                Attn: Jake Levy, President
                                Telephone: (770) 392-1542
                                Telecopy: (770) 392-1805

        With copies to:         Altman, Kritzer & Levick, P.C.
                                6400 Powers Ferry Road, NW
                                Suite 224
                                Atlanta, GA 30339
                                Attn: Ted Blum
                                Telephone: (770) 951-6577

        5.7     WAIVER.  No waiver  hereunder shall be valid unless set forth in
writing.

        5.8     SEVERABILITY.  In the event that any term or  provision  of this
Agreement or any  application  thereof  shall be held by a tribunal of competent
jurisdiction  to be unlawful or  unenforceable,  the remainder of this Agreement
and any other application of such term or provision shall continue in full force
and  effect  and  the  parties  shall   endeavor  to  replace  the  unlawful  or
unenforceable  provision with one that is lawful and enforceable and which gives
the fullest effect to the intent of the parties as expressed herein.

        5.9     NO THIRD PARTY  BENEFICIARY.  This  Agreement is for the benefit
of, and may be enforced  only by,  Seller and  Purchaser,  and their  respective
successors and permitted  transferees and assignees,  and is not for the benefit
of, and may not be enforced by, any third party.

        5.10    APPLICABLE   LAW.  This  Agreement  shall  be  governed  by  and
construed  and  enforced  in  accordance  with,  the laws of the State of Texas,
without regard to the conflicts of laws provisions thereof.

        5.11    CONSTRUCTION.  The titles and  headings to  sections  herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the  meaning  or  interpretation  of this  Agreement.  The  parties
acknowledge  that each party and its counsel  have  reviewed  and  revised  this
Agreement and that  consequently any rule of construction to the effect


                                      -15-
<PAGE>


that any  ambiguities  are to be  resolved  against  the  drafting  party is not
applicable in the  interpretation of this Agreement or any exhibits or schedules
hereto.

        5.12    REFERENCES TO BEST  KNOWLEDGE.  All references in this Agreement
to the best  knowledge of Sellers  shall mean the  knowledge or awareness of the
Sellers.  Each  such  individual  shall  be  deemed  to  have  "knowledge"  of a
particular  fact or other matter if such  individual  is actually  aware of such
fact or other matter.

        5.13    COUNTERPARTS.  This  Agreement  may be  executed  in two or more
counterparts, all of which shall be considered one and the same agreement.


                            [SIGNATURE PAGE FOLLOWS]

                                      -16-
<PAGE>


        IN  WITNESS  WHEREOF,  the  parties  have  caused  this  Stock  Purchase
Agreement to be duly executed as of the date and year first above written.


                                    PHOENIX HEALTHCARE CORPORATION:


                                    BY:                 /s/
                                       -------------------------------------

                                       Name: Ronald E. Lusk
                                       Its: Chairman and Chief Executive Officer



                                    RONALD E. LUSK:


                                                        /s/
                                       -------------------------------------



                                    CAREKEEPER SOFTWARE, INC.:


                                    BY:                 /s/
                                       -------------------------------------
                                       Name: Jake Levy
                                       Its: President

                                      -17-
<PAGE>


                                    SCHEDULES

                  2.7                           Financial Statements
                  2.8                           Changes in Business
                  2.10                          Taxes
                  2.11                          Litigation


                                      -18-
<PAGE>


PHOENIX HEALTHCARE CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1999
(Unaudited)

                                     Previously      Pro Forma       Pro Forma
                                      Reported      Adjustments      Restated
                                     -----------    -----------     -----------

ASSETS
CURRENT ASSETS
  Cash and cash equivalents              148,712        (45,601)        103,111
  Accounts receivable, net             6,188,210     (6,188,210)             --
  Inventory                            2,662,852     (2,662,852)             --
  Prepaid expenses and other
    current assets                        71,712        (70,724)            988
                                     -----------    -----------     -----------
     Total current assets              9,071,486     (8,967,387)        104,099

PROPERTY AND EQUIPMENT, net            1,057,661     (1,057,661)             --
OTHER ASSETS
  Intangible assets, net               2,442,353     (2,042,353)        400,000

                                     -----------    -----------     -----------
TOTAL ASSETS                          12,571,500    (12,067,401)        504,099
                                     ===========    ===========     ===========

LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)

CURRENT LIABILITIES
  Notes payable, banks and other       4,564,137     (4,564,137)             --
  Accounts payable                     4,458,802     (3,413,065)      1,045,737
  Due to Stockholder                   1,059,539             --       1,059,539
  Accrued expenses and other
    current liabilities                4,973,858     (4,556,868)        416,990
  Net current liabilities of
    discontinued operations            6,837,513         66,669       6,904,182
                                     -----------    -----------     -----------
    Total current liabilities         21,893,849    (12,467,401)      9,426,448

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          27,440          6,513          33,953
  Additional Paid In Capital          37,327,182        393,487      37,720,669
  Accumulated Deficit                (46,677,604)            --     (46,677,604)
                                     -----------    -----------     -----------
                                      (9,322,349)       400,000      (8,922,349)

                                     ===========    ===========     ===========
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY (DEFICIT)      12,571,500    (12,067,401)        504,099
                                     ===========    ===========     ===========


                                      -19-
<PAGE>


PHOENIX HEALTHCARE CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1999
(Unaudited)

                                     Previously       Proforma       Proforma
                                      Reported      Adjustments      Restated
                                     -----------    -----------     -----------

Operating revenue                      9,188,301     (9,188,301)             --

Operating expenses:
  Ancillary services                  10,990,592    (10,990,592)             --
  General and administrative           1,325,314             --       1,325,314
  Interest expense                       802,698       (747,936)         54,762
  Property lease expense                 268,061       (268,061)             --
  Depreciation and amortization
    expense                              518,558       (518,558)             --
                                     -----------    -----------     -----------
                                      13,905,223    (12,525,147)      1,380,076
                                     -----------    -----------     -----------

Income (loss) from continuing
  operations before other
  income (expense) and
  discontinued operations             (4,716,922)     3,336,846      (1,380,076)

Other income (expense)
  Interest income and other
    income (expense)                     (28,985)      (171,300)       (200,285)
                                     -----------    -----------     -----------

Income (loss) from continuing
  operations before
  discontinued operations             (4,745,907)     3,165,546      (1,580,361)

Discontinued operations:
  Income (loss) from
    discontinued operations              180,277     (3,165,546)     (2,985,269)
  Net gain on disposition of
    property interests and
    settlement of corporate
    obligations                        1,471,828             --       1,471,828
                                     -----------    -----------     -----------
                                       1,652,105     (3,165,546)     (1,513,441)
                                     -----------    -----------     -----------
NET LOSS                              (3,093,802)                   (3,093,802)
                                     ===========                    ===========
Basic and diluted loss per share
    Continuing operations                  (0.20)                         (0.07)
    Discontinued operations                 0.07                          (0.06)
                                     -----------    -----------     -----------
      Loss per Common Share                (0.13)            --           (0.13)
                                     ===========    -----------     ===========

Weighted average number of shares
  of common stock and equivalents
  outstanding                         24,564,613                     24,564,613
                                     ===========                    ===========

                                      -20-
<PAGE>


PHOENIX HEALTHCARE CORPORATION7
NOTES TO PRO FORMA FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)

The  accompanying  financial  statements  have been  adjusted to reflect the pro
forma effect of the disposition of OHI Corporation  ("OHI")  effective on August
10, 1999;  the  disposition  of Southland  Medical  Supply,  Inc.  ("Southland")
effective  on  November  24,  1999;  the  disposition  of  Trinity  Rehab,  Inc.
("Trinity") on November 24, 1999; and the acquisition of Healthcare  Information
Technologies,  Inc.  ("HIT") on December 15, 1999.  The  disposition  of OHI was
previously  reported as  discontinued  operations for the period ended September
30,  1999.  The  accompanying  pro  forma  adjustments  have  been  made  to the
consolidated  financial  statements  previously  filed by the Registrant for the
period  ended  September  30,  1999 and  reported  on Form  10Q.  The  principal
components of the pro forma adjustments are as follows.

CONSOLIDATED BALANCE SHEET

Current assets are reduced by $8,967,387  representing  accounts associated with
Southland and Trinity in the amounts of $6,136,164 and $2,331,223, respectively,
as well as residual  accounts  receivable  associated  with OHI in the amount of
$500,000.  The  principal  components  of Southland  accounts  include  accounts
receivable  and  inventory  in  the  amounts  of  $3,373,987   and   $2,662,852,
respectively.  Trinity  accounts  include  accounts  receivable in the amount of
$2,331,223.  Substantially  all  accounts  receivable  and  inventory  is  being
liquidated to satisfy secured creditor obligations of Southland and Trinity.

Property and  equipment is being  reduced by  furniture,  fixtures and equipment
associated  with Southland in the amount of  $1,057,661.  These assets are being
liquidated to satisfy secured creditor obligations of Southland.

Intangible  assets  associated  with  Southland and Trinity in the aggregate net
amount of $2,442,353 are written off in connection  with  discontinuing  related
business operations.

Current liabilities are reduced by $12,467,401 representing the related accounts
associated with Southland and Trinity.  Notes payable,  banks and other totaling
$4,564,137 include accounts associated with Southland and Trinity in the amounts
of $3,046,817 and $1,517,320 respectively.  Accounts payable totaling $3,413,065
include  accounts  associated  with  Southland  and  Trinity  in the  amounts of
$2,943,751  and  $469,314,  respectively.  Accrued  expenses  and other  current
liabilities  totaling  $4,556,868  associated with Southland and Trinity include
$1,761,868  and  2,795,000,  respectively.  The net current  liabilities  of all
discontinued  operations  reported  on a pro forma basis at  September  30, 1999
total $6,904,182.

                                      -21-
<PAGE>


PHOENIX HEALTHCARE CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)

CONSOLIDATED BALANCE SHEET - CONTINUED

Stockholders' equity is increased by $400,000  representing the intangible asset
valuation of license rights resulting from the acquisition of HIT. This reflects
the valuation  attributable to the issue of 6,513,158  shares of common stock on
December 15, 1999 in connection with this purchase transaction.

CONSOLIDATED STATEMENT OF OPERATIONS

Operating  revenue is reduced by $9,188,301  representing  operating  revenue of
Southland and Trinity for the nine-month period in the amounts of $6,421,155 and
$2,767,146,  respectively.  Associated  operating  expenses for the period total
$10,990,592  and is comprised of accounts  associated with Southland and Trinity
in the amounts of $7,239,240 and $3,751,352, respectively.

Interest  expense  adjustments in the amount of $747,936  include  Southland and
Trinity amounts of $670,924 and $77,012, respectively. Property lease expense of
$268,061 is attributable  exclusively to Southland operations.  Depreciation and
amortization expense totaling $518,558 includes Southland and Trinity amounts of
$319,630 and  $198,928,  respectively.  Other  income  reported in the amount of
$171,300 is attributable exclusively to Southland operations.

The aggregate  operating  loss from  discontinued  operations  reported on a pro
forma basis at September 30, 1999 totals $2,985,269.

COMMON STOCK OUTSTANDING

The pro forma number of common stock shares outstanding at September 30, 1999 is
reported  as  increased  by  6,513,158   representing  the  common  stock  issue
associated  with the HIT  purchase  acquisition  transaction.  Such  shares  are
excluded from the weighted average number of shares at September 30, 1999 as the
common stock issue date was subsequently effected on December 15, 1999.

                                      -22-
<PAGE>


PHOENIX HEALTHCARE CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)



FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED

The financial  statements and  descriptive  disclosures of the  acquisitions  of
Trinity and Southland were included in the Registrant's  filings of Form 10Q for
the quarters ended March 31, 1999 and June 30, 1999,  respectively.  In light of
these business  operations  having been subsequently  discontinued  during 1999,
separate financial statements are not provided.

HIT was incorporated in December 1998 and had no substantive business operations
during 1999. The initial  capitalization of HIT is reflected in the accompanying
pro forma financial statements.



                                      -23-


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