NEWCARE HEALTH CORP
8-K, 1997-11-10
SKILLED NURSING CARE FACILITIES
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                 U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.

                                FORM 8-K

                             CURRENT REPORT

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

                           September 30, 1997
             ------------------------------------------------
             Date of Report (date of earliest event reported)

                       NEWCARE HEALTH CORPORATION
           ----------------------------------------------------
           Exact name of Registrant as Specified in its Charter

         Nevada                  0-24110              86-0594391
- ---------------------------   ---------------  ---------------------------
State or Other Jurisdiction   Commission File  IRS Employer Identification
     of Incorporation             Number                   Number

       6000 Lake Forrest Drive, Suite 315, Atlanta, Georgia  30328
       -----------------------------------------------------------
       Address of Principal Executive Offices, Including Zip Code

                            (404) 252-2923
           --------------------------------------------------
           Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 5.  OTHER EVENTS

     On September 30, 1997, NewCare Hospital Corporation ("NHC"), a majority-
owned subsidiary of NewCare Health Corporation (the "Company"), signed an
agreement to manage Tri-City Hospital, a 137 licensed-bed osteopathic acute
care hospital located in Dallas, Texas.  In addition, concurrently with the
execution of the management agreement, NHC paid $25,000 for a five year option
to purchase the Tri-City Hospital for a price equal to the debt on the
hospital at such time as the option is exercised.  The balance of this debt is
currently approximately $18.2 million.

     The hospital is a private, non-profit hospital comprised of a general
acute medical/surgical hospital, offering alcohol and drug treatment services,
psychiatric services, and various clinics.

     The management agreement has a five year term commencing October 17,
1997, and either party may terminate the agreement without cause or penalty,
effective September 30, 2000, by giving 90 days prior written notice.  The
agreement provides for a base fee of $100,000 per month plus a performance
incentive in an amount not to exceed a cumulative total of four percent (4%)
of net revenues billed per month.  The performance incentive will be based on
the accomplishment of certain performance criteria to be worked out by the
parties.

     NHC is obligated to provide a hospital administrator and a controller
during the term of the agreement, and such persons will be employees of NHC. 
The hospital will reimburse NHC for the costs and expenses associated with
NHC's provision of these key personnel.

     NHC also agreed to make available to the hospital during the first
twelve months of the management agreement an amount not to exceed $2 million
for the purpose of making capital improvement expenditures and for such other
purposes as the hospital and NHC may agree.  The repayment of principal and
interest on this loan will be subordinate to the payment of principal and
interest on any tax exempt debt of the hospital then outstanding.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

     (c)  EXHIBITS.

          Exhibit 10.1   Management Agreement with Tri-City Hospital
                         Centre, Inc.

          Exhibit 10.2   Option Agreement with Tri-City Hospital 
                         Centre, Inc.

                                   SIGNATURES

     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. 

                                    NEWCARE HEALTH CORPORATION

Dated: November 10, 1997            By/s/ James H. Sanregret
                                      -------------------------------
                                      James H. Sanregret
                                      Chief Financial Officer
                               -2-

                    MANAGEMENT AGREEMENT - PRIVATE

     This Agreement is entered into this 30th day of September, 1997, by and
between NEWCARE HOSPITAL CORPORATION, or its assigns, a Nevada corporation
("NewCare"), and TRI-CITY HEALTH CENTRE, INC. (the "Hospital"), a Texas non-
profit corporation located in Dallas, Texas.

     RECITALS

     WHEREAS, NewCare is a corporation which provides management assistance
and other administrative services to health care institutions; and

     WHEREAS, the Hospital is a private, non-profit hospital comprised of a
general acute medical/surgical hospital, offering alcohol and drug treatment
services, psychiatric services, and various clinics, and Hospital is seeking
management assistance which will enhance revenue, decrease costs, improve cash
flow, and generally improve the operational efficiency of the Hospital; and 

     WHEREAS, the Hospital, through its Board of Directors, wishes to engage
NewCare, and NewCare wishes to provide services to the Hospital under the
terms and conditions set forth in this Agreement;

     NOW, THEREFORE, the parties agree as follows:

     TERM.

     The term of this Agreement ("Term") shall commence on October 1, 1997
and shall terminate on September 30, 2002.  Either NewCare or Hospital may
terminate this Agreement without cause or penalty, effective September 30,
2000, by giving written notice of termination to the other party at least
ninety (90) days prior to that date.  

     RETENTION OF AUTHORITY BY HOSPITAL; REPRESENTATIONS AND WARRANTIES.

     Control Retained by Hospital.  In providing services and expertise
hereunder, NewCare shall from time to time make recommendations to the
Hospital's Board of Directors (the "Board") regarding the business, policies,
operations, and assets of the Hospital; provided, however, that the Hospital,
through the Board, shall retain all decision-making authority and shall
exercise control over the business, policies, operation, and assets of the
Hospital, in accordance with the Hospital's Charter and Bylaws.  NewCare shall
perform the services described in this Agreement in accordance with such of
the policies and directives of the Hospital as may be from time to time
provided to it in writing.

     NewCare Reliance on Board Policies.  The Board shall communicate in
writing all policies and directives to NewCare, and NewCare shall rely on and
assume the validity of communications from, and shall report to, the Board. 
All matters requiring professional medical judgments shall remain the
responsibility of the Hospital's Board and the Hospital's Medical Staff and
allied health professionals.  NewCare may rely on the recommendations of the
Hospital's Medical Staff (and their designated committees and departmental
chairmen) relative to the quality of professional services provided by
individuals with clinical privileges, and on the Board and the Medical Staff,
or any jointly appointed or Board appointed committee or representative as to
the adequacy and proper state of repair of all medical equipment and the
professional competency, training, and requisite supervision of nurses,
medical technicians, and other Medical Staff.  NewCare shall have no
responsibility for such judgments.

     The relationship between NewCare and the Hospital created by this
Agreement is one of principal and agent.  The Hospital and NewCare are not
partners, joint venturers, or independent contractors, and it is agreed that
NewCare is acting solely as the agent of the Hospital in performing services
to be provided by NewCare within the scope of this Agreement.

     Representations of the Hospital.  The Hospital represents the following
to be true:

     This Agreement has been duly authorized, executed, and delivered by the
Board as the governing body of the Hospital and represents the legal, valid,
and binding agreement of the Hospital and is enforceable against the Hospital
in accordance with its terms.

     The execution, delivery, and performance of this Agreement by the
Hospital and consummation by it of the transactions contemplated hereby do
not:  (a) require the consent, waiver, approval, license, or authorization of
any person or public authority which has not heretofore been obtained; (B)
violate any provision of law applicable to Hospital; (C) conflict with or
result in a default under, or create, any lien upon any of the property or
assets of Hospital pursuant to any agreement or instrument; or (D) violate any
judicial or administrative decree, regulation, or any other restriction of any
kind or character to which Hospital or Board is a party or by which Hospital
or any of its assets may be bound.

     MANAGEMENT ASSISTANCE OF NEWCARE.

     NewCare, through its CEO and CFO, and working with the personnel and
resources of the Hospital, will provide the following management assistance
during the Term of this Agreement.  NewCare shall follow the policies and
directives of the Board or any committee thereof in discharging its duties
hereunder.  Nothing in this Agreement is intended to alter, weaken, displace,
or modify the responsibility of the Board of the Hospital's direction and
control as set forth in the Hospital's Charter and Bylaws.

     Hospital Personnel Matters.  Except for the Key Personnel described in
Section 4 below, all Hospital personnel shall be employees or independent
contractors of the Hospital and shall be subject to the Hospital's personnel
policies.  NewCare, as agent for the Hospital, shall assist in the enforcement
and administration of the personnel policies established by the Hospital and
communicated in writing to NewCare in hiring, managing, and discharging
Hospital employees; provided, however, that matters with respect to
professional competency shall be determined with the assistance of the
appropriate Hospital or Medical Staff committee.  Furthermore, NewCare shall
assist the Hospital and its personnel director in determining the number and
qualifications of employees required for the efficient operation of the
Hospital and in establishing and revising wage scales, employee benefit
packages, in-service training programs, staffing schedules, and job
descriptions, all in order to accomplish the goals and objectives of the
Hospital and in accordance with policies and procedures established by the
Board.

     Budgets.  If requested by the Board during the Term of this Agreement,
NewCare shall assist with the preparation of an annual operating budget,
annual capital expenditures budget (if appropriate), and annual cash flow
projections, all designed to meet the goals and objectives of the Board.  In
addition, as requested by the Board, NewCare will supply any appropriate
revisions to the foregoing to reflect material changes during the fiscal year. 
If applicable, NewCare shall also compile, subject to the review of the Board,
any information the Hospital may be required to provide for the purpose of
rate review.  Once the Board approves said operating budget, NewCare shall be
entitled to proceed with expenditures contemplated thereby without further
Board approval; provided, however, that the Board may modify said budget from
time to time by written resolution, which modification shall then become the
new authorization for expenditures.

     Accounting.  NewCare shall supervise the Hospital's accounting system
and shall supervise the preparation of monthly and annual balance sheets and
statements of income and loss.  Annual statements shall be due following the
close of each fiscal year during the Term of this Agreement.  Any fees charged
by the Hospital's independent auditors shall be the responsibility of the
Hospital.  

     Charges.  NewCare shall supervise the issuance of bills and the
collection of accounts, in accordance with charge schedules and collection
policies established by the Board.  NewCare shall be entitled to obtain on
behalf of the Hospital the assistance of one or more collection agencies, as
approved by the Board.  NewCare shall carry out Board policy and exercise
reasonable care in managing the accounts and available cash of the Hospital by
maintaining accounts and/or certificates of deposit with a financial
institution or institutions authorized by the Hospital and by informing the
Hospital of the availability of any excess cash.  The permitted investment of
any excess cash shall be made by NewCare only upon the written direction of
the Board.

     Payments.  NewCare shall exercise reasonable care in supervising the
application of the Hospital's funds to the timely payment of Hospital's
liabilities and other obligations.  It is specifically agreed and understood,
however, that NewCare's obligations under this paragraph are subject to
availability of funds to make such payments.  Nothing contained herein shall
obligate NewCare to make any such payments from its own funds or resources or
to advance any monies whatsoever to the Hospital.  NewCare shall not be liable
either primarily or as guarantor for debts of the Hospital.

     Expenditures.  NewCare may reasonably rely on recommendations given to
NewCare by the Board or its designee as to the ordering of medical equipment
and supplies used in the diagnosis and treatment of patients.  Under
purchasing policies established by the Board, NewCare shall have the authority
to commit the Hospital's funds for the purchase or lease of supplies, goods,
and services reasonably necessary to the operation of the Hospital and to
cause the Hospital to negotiate, enter into, administer, and terminate
contracts therefor.

     Purchasing Program.

     Access.  NewCare will offer the Hospital access to any volume purchasing
program in which NewCare participates (the "Purchasing Program"), subject to
the requirements of the Purchasing Program.  Under the Purchasing Program,
participating hospitals may have access to discounted prices on goods and
services.  The Hospital may choose to participate in the Purchasing Program or
not, but if the Hospital chooses to participate in the Purchasing Program, the
Hospital must execute a written letter of understanding with the Purchasing
Program under which the Hospital agrees to comply with the requirements of the
Purchasing Program.

     Administrative Fees.  The Hospital acknowledges that NewCare and the
Purchasing Program may receive administrative fees from vendors in connection
with certain products that are purchased, licensed or leased by Hospital under
the Purchasing Program, including, without limitation, administrative fees for
providing marketing, distribution and promotion services to the Hospital. 
Such administrative fees will equal 3% or less of the purchase price of the
goods or services provided by the participating vendor.  NewCare shall
disclose to the Hospital in writing, on an annual basis, and to the Secretary
of Health and Human Services upon his or her request, the administrative fees
NewCare and the Purchasing Program receive as a result of Hospital's
purchases.

     LIMITATION OF WARRANTIES.  NewCare MAKES NO AND HEREBY DISCLAIMS ANY
WARRANTIES WHATSOEVER, AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES
INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WITH REGARD TO ANY GOODS OR SERVICES PURCHASED OR USED BY THE HOSPITAL UNDER
THE PURCHASING AGREEMENTS.

     Management Plan and Report.  NewCare shall submit to the Board for its
review and approval an annual management plan (the "Management Plan") designed
to implement the goals and objectives of the Hospital which will set forth the
efforts, methods, and resources to be used by NewCare and the timetable to be
observed to achieve such goals and objectives.  Upon acceptance of any
Management Plan, the Board hereby agrees to use its best efforts, and to cause
the Medical Staff to use their best efforts, to take or cooperate with the
actions recommended (to the extent such actions are within the control of the
Hospital, the Board, or the Medical Staff and not wholly within the control of
NewCare).

     Limitations on NewCare's Duties.  NewCare shall not have the authority
to:

          enter into or terminate contracts with physicians on behalf of the
Hospital, except as the Board may specifically authorize from time to time,
but NewCare shall have the authority on behalf of the Hospital to negotiate
and administer such contracts.

          enter into or terminate contracts with outside consultants on
behalf of the Hospital, except as the Board may specifically authorize from
time to time, but NewCare shall have the authority on behalf of the Hospital
to negotiate and administer such contracts.

          purchase capital assets without the prior approval of the Board
unless such approval is deemed granted as part of an approved annual budget or
within Board policies and procedures.

          enter into any leases which extend beyond the then current initial
or renewal term of this Agreement without the prior approval of the Board
unless such approval is deemed granted as part of an approved annual budget.

          enter into collective bargaining agreements covering or purporting
to cover employees of the Hospital without approval of the Board.


     Capital Improvement Loan.  Provided the Option Agreement of even date
herewith is approved by the Attorney General of Texas, NewCare agrees to make
available to Hospital during the first twelve (12) months of this Agreement an
amount not to exceed TWO MILLION DOLLARS ($2,000,000) for the purpose of
making capital improvement expenditures in such amount and for such purposes
as Hospital and NewCare may agree.  Any such amounts so advanced will be
evidenced by a promissory note bearing interest at a rate equal to the rate
paid by NewCare when borrowing funds (such rate currently being prime plus 3%)
and be repayable in full within sixty (60) months.  The repayment of principal
and interest related to the Capital Improvement Loan shall be subordinate to
the payment of principal and interest on any tax exempt debt of the Hospital
then outstanding.  

     KEY PERSONNEL

     Obligation to Provide.  NewCare shall provide the Hospital with the
services of a hospital administrator ("CEO") and, beginning on the 20th day of
this Agreement (or earlier, if the Board so agrees), a controller ("CFO"),
each of whom shall be acceptable to the Hospital on a continuing basis.  All
persons employed by NewCare whose full-time services are furnished to the
Hospital under this section are referred to as "Key Personnel".  All Key
Personnel shall be employees of NewCare throughout the Term of this Agreement. 
NewCare shall determine the amount and nature of and shall pay compensation
(as hereinafter described) to the Key Personnel for all services rendered by
them in connection with this Agreement.  Nevertheless, the selection of Key
Personnel and their replacements shall be subject to the Board's approval,
which shall not be unreasonably withheld.

     Covenant Not to Hire.  Until one year following the termination or
expiration of the Term of this Agreement, the Hospital will not, and will not
permit any of its Affiliates to, employ or offer to employ any individual who
has been employed, at any time during the Term of this Agreement, by NewCare
unless (i) such Key Personnel were employees of the Hospital immediately prior
to their becoming Key Personnel or (ii) NewCare gives its written consent
thereto, which consent shall be within the sole discretion of NewCare. 
Likewise, NewCare will not, and will not permit any of its Affiliates to,
employ or offer to employ any Hospital personnel, other than the Key
Personnel, until one year following the termination or expiration of the Term
of this Agreement unless the Hospital gives its written consent thereto.  The
parties recognize and agree that monetary damages are not an adequate remedy
for a breach by a party of this covenant not to hire employees of the other
party.  The parties agree that irreparable damage will result to a party and
its business from a breach of this covenant by the other party and that in the
event of a breach or a threatened breach of this covenant, in addition to
monetary damages, the injured party shall be entitled to an injunction
enjoining the other party from violating this covenant.

     Reimbursement of Compensation.  In addition to NewCare's management fee
hereunder, the Hospital shall, upon receipt of invoice, reimburse NewCare for
the costs and expenses associated with NewCare's provision of the Key
Personnel, including their salaries, taxes, fringe benefits, and business
expenses.  The amount of salary reimbursable hereunder shall be subject to the
Board's approval, which shall not be withheld if the salary is within the
range for similar hospitals covered by the NewCare compensation program.  The
term "fringe benefits" as used herein shall include all fringe benefits which
are or may become standard for administrative or managerial personnel of
NewCare (such as health insurance, disability insurances, life insurance,
retirement plans and, with respect to the CEO, automobile and automobile
expenses).  The Hospital shall also reimburse NewCare for the interim living
expenses of the CEO and CFO, which include local lodging, food, local
transportation, other out-of-pocket expenses, and two trips home per month.  

     It is specifically understood and agreed that reimbursable compensation
for Key Personnel shall be considered a payroll obligation of the Hospital for
purposes of setting priorities for payments of Hospital obligations.

     FEES AND EXPENSES.

     Amount.  The Hospital shall pay NewCare a base fee of $100,000 per month
during the term of this Agreement.  In addition, the Hospital shall pay
NewCare a performance incentive during the term of this Agreement, if earned,
in an amount not to exceed a cumulative total of four percent (4%) of net
revenues billed per month, which will be based upon the accomplishment of
various objective measures of NewCare's performance which comply in all
respects with the requirements of U.S. Treasury Rev. Proc. 93-19 and Rev.
Proc. 97-13. 

     Expenses.  In addition to NewCare's fee, the Hospital shall reimburse
NewCare for the expenses of the Key Personnel described in Section 4, as well
as the actual expenses of travel, lodging, meals, local transportation, and
other out-of-pocket expenses incurred by all NewCare other personnel and
consultants providing services under this Agreement.  The Hospital shall have
no obligation to reimburse NewCare for entertainment expenses incurred by its
employees which are not related to the business of the Hospital.  NewCare
shall use all reasonable measures to control expenses (such as using Holiday
Inn-level accommodations) and will submit detailed documentation to the
Hospital for all such expenses.

     When Due.  The base fees will be paid in equal monthly installments in
advance.  Any performance incentive earned by NewCare during the term of this
Agreement shall be due and payable within 30 days of NewCare's presentation to
the Board of documentation of the accomplishment of the required goals.  All
reimbursable expenses shall be due and payable within 14 days of the date of
invoice.  The Hospital agrees to pay NewCare interest, at the rate of twelve
percent (12%) per annum, on all fees and reimbursable expenses not paid when
due, said interest to accrue from the date originally due until payment is
made.  The Hospital agrees to be responsible for payment of all reasonable
legal fees and collection fees incurred by NewCare for collection of all past
due fees and reimbursable expenses. The base fee and performance incentive
shall be subordinate to the payment of principal and interest on any tax
exempt debt of the Hospital then outstanding.  

     DUTY TO COOPERATE.

     The parties acknowledge that the parties' mutual cooperation is critical
to the ability of NewCare to perform its duties hereunder successfully and
efficiently.  Accordingly, each party agrees to cooperate with the other fully
in formulating and implementing goals and objectives which are in the
Hospital's best interest.

     OWNERSHIP OF INFORMATION; CONFIDENTIALITY.

     NewCare Systems.  NewCare retains all ownership and other rights in all
systems, manuals, computer software, materials, and other information, in
whatever form, provided by or developed by NewCare in the performance of its
obligations hereunder (hereinafter collectively referred to as "Systems"). 
The Hospital shall maintain the confidentiality of the Systems and shall not
duplicate or permit the duplication of any portion of the Systems.  Any
Systems specifically developed for, or tailored for, the Hospital may be
retained by the Hospital following the termination of this Agreement.

     NewCare Purchasing Agreements.  The Hospital will not disclose the terms
or prices of any NewCare Purchasing Agreement to any third party unless
specifically authorized in writing to do so by NewCare.

     Hospital Information.  During the Term of this Agreement the Hospital
shall give NewCare full access to the Hospital, its facilities, and its
records.  NewCare shall maintain the confidentiality of patient records,
charges, wages, marketing strategies, and other confidential information
regarding the Hospital, its patients, employees, and physicians, except to the
extent that disclosure is required by law.  Further, NewCare will maintain the
confidentiality of the Hospital's proprietary computer systems, manuals, and
other proprietary information owned by or licensed to the Hospital and will
not disclose or permit disclosure of such information without the Hospital's
consent.

     LICENSING; ACCREDITATION.

     The Hospital shall take all steps reasonably necessary to keep the
Hospital fully licensed and, if eligible, duly accredited by the Joint
Commission for Accreditation of Healthcare Organizations or the American
Osteopathic Association, and NewCare shall cooperate in said endeavors.  The
Hospital shall do nothing willful to jeopardize Medicare, Medicaid, or other
third-party reimbursement arrangements.  Both the Hospital and NewCare shall
use all reasonable efforts to abide by all relevant laws, ordinances, rules,
and regulations of state, local, or federal governments.

     INSURANCE.

     Hospital.  The Hospital has and shall maintain throughout the Term of
this Agreement the following minimum insurance coverage:

      Comprehensive General Liability       $1,000,000 per occurrence
                                            $3,000,000 aggregate

      Hospital Professional Liability       $1,000,000 per occurrence
                                            $3,000,000 aggregate

      Directors' and Officers' Liability    $1,000,000

      Fidelity Bond                         $  500,000

     Immediately upon the effective date of this Agreement, the Hospital
shall cause NewCare to be named as an additional insured, with respect to this
Agreement, under the comprehensive general and hospital professional liability
policies.  Its rights to invoke the protection of such policies shall be
severable from and independent of the Hospital's rights, and these policies
shall not be terminable or non-renewable except upon thirty (30) days prior
written notice to NewCare.  Upon request, the Hospital shall give to NewCare a
copy of the endorsements naming NewCare as an additional insured.  Such
insurance policies shall also contain endorsements which reflect the primary
liability of the Hospital's insurance carrier for all covered losses provided
for in this Section 9, notwithstanding any insurance which may be maintained
by NewCare or any Affiliate thereof covering such loss and provide for
extended coverage or "tail" insurance.

     NewCare.  NewCare has and shall maintain throughout the Term of this
Agreement, insurance with at least the limits of coverage listed in subsection
9(a) above, including Fidelity Insurance in an amount no less than $500,000
insuring against dishonesty and other wrongdoing by its employees, officers
and directors.  Upon request, NewCare will furnish evidence of such insurance
to the Board.

     ACCESS TO BOOKS AND RECORDS.

     Upon the written request of the Secretary of Health and Human Services,
the Comptroller General, or any of their duly authorized representatives,
NewCare will make available those contracts, books, documents, and records
necessary to certify the nature and extent of the costs of providing services
under this Agreement.  Such inspection shall be available up to 4 years after
the rendering of such services.  If NewCare carries out any of the duties of
this Agreement through a subcontract with a value of $10,000 or more over a
12-month period with a related individual or organization, NewCare agrees to
include this requirement in any such subcontract.  This section is included
pursuant to and is governed by the requirements of Public Law 96-499, Sec.
952, and the regulations promulgated thereunder.

     BREACH.

     In the event of a breach of any obligation or covenant under this
Agreement, other than the obligation to pay money, the nonbreaching party
shall give the breaching party written notice of the specifics of the breach,
and the breaching party shall have a 30 day cure period (the "Cure Period") in
which to cure the breach.  Only if the breach is not cured within the
applicable Cure Period shall the nonbreaching party be entitled to pursue any
remedies it may have by reason of the breach.  A waiver of any breach of this
Agreement shall not constitute a waiver of any future breaches of this
Agreement, whether of a similar or dissimilar nature.

     TERMINATION OF AGREEMENT.

     This Agreement may be terminated prior to the expiration of the Term
only as follows and as set forth in Section 1 above, and any such termination
shall not affect any rights or obligations arising prior to the effective date
of termination:

     Breach.  In the event of a breach of this Agreement which is not cured
within the Cure Period set forth in Section 11, "Breach", or in the event of a
breach as to which no Cure Period is provided by this Agreement, the
nonbreaching party may terminate this Agreement upon no less than 30 days'
notice; provided that in the event that the Hospital fails to make any payment
to NewCare when due, NewCare may terminate this Agreement immediately upon
notice to the Hospital and may cease providing services to the Hospital unless
such failure to pay is solely the result of those certain subordination
provisions contained herein.  These remedies shall be in addition to any other
remedy available at law or in equity.  Failure to terminate this Agreement
shall not waive any breach of this Agreement.

     Representations.  Either party may terminate this Agreement upon 30 days
written notice in the event any representation made by the other party herein
is found to be untrue in any respect which would have a material adverse
effect upon the financial condition or business operations of the other party
or would have a material adverse effect upon the ability of the Hospital or
NewCare to perform under this Agreement.

     Casualty.  In the event that the physical plant housing the Hospital is
destroyed or is so damaged that it is reasonably anticipated that the Hospital
will not within 90 days commence repair or reconstruction with a view toward
resuming full operation, then either party may terminate this Agreement upon
no less than 30 days notice, provided that such notice is given within 30 days
following the destruction or damage.

     Insolvency.  NewCare may terminate this Agreement upon 30 days notice in
the event the Hospital becomes insolvent or fails to pay, or admits in writing
its inability to pay, its debts as they mature; or a trustee, receiver or
other custodian is appointed for the Hospital for all or a substantial part of
the Hospital's property and is not discharged within 30 days; or any
bankruptcy reorganization, debt, arrangement, or other proceeding under any
bankruptcy or insolvency law or any dissolution or liquidation proceeding is
instituted by or against the Hospital and if instituted against the Hospital
is consented to or acquiesced in by the Hospital or remains for 60 days
undismissed; or any warrant or attachment is issued against any substantial
portion of the property of the Hospital which is not released within 30 days
of service.

     Reorganization.  In the event that the Hospital undergoes a
reorganization which materially alters NewCare's duties or is reasonably
anticipated to have a material effect on NewCare's ability to perform
satisfactorily its duties hereunder, then NewCare may terminate this Agreement
upon no less than 30 days notice given no later than 60 days following the
effective date of the reorganization.

     Litigation.  NewCare may terminate this Agreement upon 30 days written
notice in the event there is entered against the Hospital one or more
judgments or decrees which would have a material adverse effect upon the
financial condition or business operations of the Hospital or the Hospital's
ability to perform under this Agreement.

     Licenses.  NewCare may terminate this Agreement upon 30 days written
notice in the event any material license or certification required by Hospital
to operate cannot be obtained or is suspended, terminated, or revoked.

     EFFECTS OF TERMINATION.

     In the event of the termination of this Agreement for any reason,
NewCare shall immediately be paid all fees theretofore earned and reimbursed
for all expenses incurred for which reimbursement is required under this
Agreement and otherwise.  This remedy shall be in addition to any other remedy
available at law or in equity.  The termination of this Agreement for any
reason shall be without prejudice to any payments or obligations which may
have accrued or become due hereunder prior to the date of termination or which
may become due after such termination.  If either party commences legal action
alleging any violation of this Agreement, the non-prevailing party shall pay
all costs and reasonable attorneys' fees incurred by the prevailing party in
connection with such action.

     INDEMNIFICATION AND HOLD HARMLESS.

     The provisions of this Section 14 shall survive the termination or
expiration of this Agreement.  The Hospital shall defend, indemnify, and save
NewCare and its directors, officers, employees, representatives, agents and
attorneys harmless from and against any and all liability and expenses of any
kind, including without limitation attorneys fees and expenses arising from
claims by third parties in connection with the activities or operation of the
Hospital unless such liability resulted from (1) the sole negligence of
NewCare outside the scope of its authority under this Agreement or (2) the
willful misconduct or gross negligence of NewCare in the provision of services
under this Agreement.  Such defense will be carried out by counsel
satisfactory to NewCare.

     NOTICES.

     All notices permitted or required by this Agreement shall be deemed
given when in writing and delivered personally or deposited in the United
States mail, postage prepaid, return receipt requested, addressed to the other
party at the address set forth below or such other address as the party may
designate in writing:

     To NewCare:        NewCare Hospital Corporation
                        6000 Lake Forrest Drive, Suite 200
                        Atlanta, Georgia  30328
                        Attn:  President

     To the Hospital:   Tri-City Health Centre, Inc.
                        7525 Scyene Road
                        Dallas, Texas  75227
                        Attn:  Chairman, Board of Directors

     ASSIGNMENT.

     NewCare may assign its rights hereunder without the prior written
consent of the Hospital. 

     BINDING EFFECT.

     This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their heirs, executors, administrators, assigns,
subtenants, successors in interest, and successors in ownership, operation, or
control of the Hospital.

     LIMITATION OF LIABILITY.

     NewCare's liability, if any, for loss or damages arising out of any
breach by NewCare of the provisions hereof shall in no event exceed the
aggregate fees paid NewCare by Hospital hereunder.

     WAIVER OF TRIAL BY JURY.

     Each party hereto hereby irrevocably waives any and all rights it may
have to demand that any action, proceeding or counterclaim arising out of or
in any way related to this Agreement or the relationships of the parties
hereto be tried by jury.  This waiver extends to any and all rights to demand
a trial by jury arising from any source including, but not limited to, the
Constitution of the United States or any state therein, common law or any
applicable statute or regulations.  Each party hereto acknowledges that it is
knowingly and voluntarily waiving its right to demand trial by jury.

     CONFIDENTIALITY OF AGREEMENT.

     NewCare and the Hospital agree that the terms and conditions of this
Agreement shall remain confidential, except with regard to the parties'
attorneys.  Neither NewCare nor the Hospital shall distribute this Agreement,
or any part thereof, to any third party unless required by law to do so.

     MISCELLANEOUS

     Headings.  Section heading are for convenience of reference only and
shall not be used to construe the meaning of any provision of this Agreement.

     Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one agreement.

     Severance.  Should any part of this Agreement be invalid or
unenforceable, such invalidity or unenforceability shall not affect the
validity and enforceability of the remaining portions.

     Authority.  Each individual signing this Agreement warrants that such
execution has been duly authorized by the party for which he or she is
signing.  The execution and performance of this Agreement by each party has
been duly authorized by all applicable laws and regulations and all necessary
corporate action, and this Agreement constitutes the valid and enforceable
obligation of each party in accordance with its terms.

     Law.  This Agreement shall be construed in accordance with the laws of
the State of Texas.

     Amendment.  This Agreement may not be modified except in a written
document executed by the party to be charged.

     Entire Agreement.  This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior agreements and representations
with respect to the subject matter hereof.

ATTEST:                            TRI-CITY HEALTH CENTRE, INC.

By: /s/ Michael Bingham            By: /s/ Michael Bingham
Title:_________________________       Michael Bingham
                                      Chairman, Board of Directors

                                   NEWCARE HOSPITAL CORPORATION

By: /s/ Toby Bartholow             By: /s/ Arthur Doloresco
Title:_________________________    Title:  President

                       OPTION AGREEMENT - PRIVATE

  THIS OPTION AGREEMENT ("Agreement"), dated September  30, 1997, is entered
into between TRI-CITY HEALTH CENTRE, INC., a Texas not-for-profit corporation,
("Seller"), and NEWCARE HOSPITAL CORPORATION OR ITS ASSIGNS, a Nevada
corporation ("Purchaser"); collectively called the Parties.

                               RECITALS

  A.   Seller owns certain land, improvements, tangible personal property,
furniture, fixtures, equipment, cash and cash accounts, accounts receivable,
inventory, supplies, licenses and all other tangible and intangible property
situated in Dallas County, Texas, and utilized in the operation of Tri-City
Hospital, a 137 licensed bed osteopathic acute care hospital whose address is
7525 Scyene Road, Dallas, Texas  75227 and its accompanying facilities
(collectively called the "Hospital Property").  

  B.   Seller desires to grant to Purchaser and Purchaser is desirous of
purchasing and obtaining from Seller an exclusive option to purchase such
Hospital Property from Seller under the terms and conditions set forth herein.

                              AGREEMENT

  NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the Parties hereby agree as follows:

                    ARTICLE 1:  OPTION TO PURCHASE

  1.1  Grant Of Option.  Subject to the terms and conditions of this
Agreement, Seller hereby grants to Purchaser the exclusive, irrevocable option
(the "Option") to purchase from Seller all of the Hospital Property whether
now existing or hereafter acquired, free and clear of all liens, encumbrances
or liabilities.  

  1.2  Consideration, Expiration and Exercise of Option.

       (a)  In consideration of the grant of the Option to Purchaser from
Seller, the Purchaser shall pay to the Seller TWENTY-FIVE THOUSAND AND NO/100
DOLLARS ($25,000.00).  Payment made by Purchaser for the option shall be non-
refundable to the Purchaser.  

       (b)  Unless sooner exercised, the Option shall expire on September
30, 2002 (the "Expiration Date"). 

       (c)  Purchaser may exercise the Option by giving written notice to
Seller on or before the Expiration Date of Purchaser's intent to purchase the
Hospital Property (the "Notice of Exercise").

       (d)  If Purchaser fails to give notice to Seller as provided in this
Section 1.2, then Purchaser shall be deemed to have irrevocably waived all of
its rights under this Agreement, and the option shall automatically expire
without need for further documentation.

  1.3  Purchase Price.  If the Option is exercised, then the purchase price
("Purchase Price") for the Hospital Property shall be an amount equal to the
debt on the Hospital Property at such time as the Option is exercised (whether
tax-exempt bonds, capital leases, accounts payable, that certain capital
improvement loan described in the Management Agreement of even date herewith
or other debt), which shall be payable as follows:

       The balance of the Purchase Price shall be paid by Purchaser at the
Closing (hereinafter defined) by extinguishment or assumption of the
hereinabove described debt then outstanding.

  1.4  Adjustments and Costs.

       (a)  All accounts for water, sewer, gas, electrical, telephone and
other public utilities payable by Seller shall be transferred to Purchaser's
name effective as of the Closing Date.

       (b)  Seller and Purchaser shall each pay their own costs and
expenses (such as attorneys' and consultants' costs and expenses) incurred by
such party in connection with the transactions contemplated by this Agreement
not adjusted or allocated as set forth in this Section 1.4 or otherwise
provided for in this Agreement.

  1.5  Independent Contract Consideration.  Purchaser has delivered to
Seller TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00) cash (the
"Independent Contract Consideration"), which amount has been bargained for and
agreed to as consideration for Purchaser's exclusive option to purchase the
Hospital Property and for Seller's execution and delivery of this Agreement. 
The Independent Contract Consideration is in addition to and independent of
all other consideration provided in this Agreement and is nonrefundable in all
events.

  1.6  Management Agreement.  The execution of this Option Agreement is
expressly conditioned upon the execution of that certain Management Agreement
of even date herewith by and between the parties hereto.

                          ARTICLE 2: CLOSING

  2.1  Closing.  The closing of the transaction contemplated by this
Agreement shall occur at the offices of the Seller in Dallas, Texas, or such
other place, as agreed to by the Parties, at 10:00 a.m. on the first business
day which is not less than 60 days after the date on which Purchaser delivers
the Notice of Exercise to Seller, or on such other date as may be agreed by
the Parties (the "Closing Date"). 

  2.2  Closing Obligations of the Parties.  The Parties shall execute and
deliver the following documents (the "Closing Documents") and otherwise cause
the following events to occur at the Closing, each being a condition precedent
to the others but all being deemed to have occurred simultaneously (and all
Closing Documents shall be in form and substance reasonably acceptable to
Seller and Purchaser):

       (a)  Seller shall execute, have acknowledged where appropriate, and
deliver to Purchaser the following items with respect to the Hospital
Property:

            (i)  a special warranty deed (the "Deed"), conveying to
Purchaser title to the Hospital Property, subject only to the Permitted
Exceptions.

            (ii) a bill of sale and assignment (the "Bill of Sale")
conveying to Purchaser all of Seller's interests in the Hospital Property; 

            (iii) all the original leases and unrecorded agreements
affecting the Hospital Property;

            (iv)  an affidavit of Seller stating that Seller is not a
foreign person in compliance with the requirements of Section 1445(b)(20) of
the Internal Revenue Code; and

            (v)  such affidavits and other documents as may be required or
reasonably requested by Purchaser or its attorneys to effect the consummation
of the transactions contemplated hereby.

       (b)  Purchaser shall execute, have acknowledged where appropriate,
and    deliver to Seller the following items:

            (i)  instruments necessary to provide the Purchase Price; and

            (ii)  such affidavits and other documents as may be required or
reasonably requested by Seller, its attorneys to effect the consummation of
the transactions contemplated hereby.

       (c)  Purchaser and Seller shall each execute settlement statements
showing payment of the costs of Closing.  Prorated items and costs shall be
charged or credited to Seller and Purchaser as provided in Section 1.4.

       (d)  Seller shall surrender possession of the Hospital Property to
Purchaser.

       (e)  Seller shall, at its sole cost and expense, cause a title
company acceptable to both Parties to issue and deliver to Purchaser an
Owner's Policy of Title Insurance Form T-1 (the "Title Policy") in the full
amount of the Purchase Price, dated as of the Closing Date, insuring
Purchaser's fee simple title to the Hospital Property to be good and
indefeasible subject only to the Permitted Exceptions and the standard printed
exceptions, except as otherwise to be deleted as described herein, contained
in the usual form of the Title Policy except that:

            (i)  the exception as to area and boundaries shall be deleted
except for "any shortages in area" and such deletion shall be an expense of
Purchaser;

            (ii)  the exception as to restrictive covenants shall be
endorsed to show those restrictive covenants currently filed of record, or if
there are none, shall be deleted;

            (iii)  the exception as to taxes shall be limited to standby
fees and taxes for the current year and subsequent years, and subsequent
assessments for prior years due to changes in land usage or ownership endorsed
"Not yet due and payable"; and

            (iv)  the exception as to mechanics liens shall be deleted.

                            ARTICLE 3: TITLE

  3.1  Owner's Title Evidence.  Within 20 days after the date of the Notice
of Exercise, Seller shall deliver to Purchaser at Seller's expense the
following items relating to the Hospital Property:

       (a)  A preliminary title insurance commitment (the "Commitment")
showing the status of record title to the Hospital Property, together with
legible copies of all documents evidencing exceptions to title shown therein
or otherwise affecting the Hospital Property.  Such preliminary title
insurance commitment shall commit the title company to insure title in the
Hospital Property in Purchaser in the amount of the Purchase Price.  The
Commitment shall affirmatively provide for the deletion, at Seller's sole
expense, of all standard printed exceptions of Schedule B-2 thereof.  On or
before Closing, Seller shall cause the Commitment to be endorsed so as to
change the effective date to a date not earlier than 3 days prior to closing;

       (b)  Two copies of a current ALTA survey (the "Survey") of the
Hospital Property, prepared by a registered Texas professional surveyor
("Surveyor") acceptable to the Parties.  The Survey shall certify to Purchaser
that: (i) the Survey was made and staked on the ground by the Surveyor; (ii)
the Survey shows the location and dimensions of all improvements, highways,
streets, roads, railroads, rivers, creeks, or other waterways, fences, any
easements, and rights-of-way visible on the ground or reflected in the
Commitment, on or adjacent to the Hospital Property, if any; (iii) there are
no visible discrepancies, conflicts, or encroachments except as shown on the
Survey; (iv) the Hospital Property does or does not lie in the 100-year flood
plain as established by the U.S. Army Corp of Engineers or any other
governmental body; (v) the Survey is a true, correct, and accurate
representation of the Hospital Property; and (vi) the Survey sets forth the
number of total acres/square feet (whichever is applicable) comprising the
Hospital Property, together with a metes and bounds description thereof.  All
easements and right-of-way shall be referenced to the recording information
applicable to the documents creating such easements or rights-of-way which
have been recorded with the County Clerk of Dallas County.  The Survey shall
locate and mark all corners and angles of the Hospital Property's perimeter on
the ground with permanent, buried iron surveyor's stakes.  The Survey shall:
(i) meet the requirement of a Category IA Survey, as promulgated by the Texas
Society of Professional Surveyors; and (ii) be sufficient to cause the title
company to delete (except for "shortages in area") the printed exception for
"discrepancies, conflicts or shortages in area or boundary lines, or
encroachments, or any overlapping of improvements" in the Title Policy; and
(iii) shall be acceptable to the title company for the purpose of deleting the
survey exception from the Title Policy.

       (c)  A certificate or certificates of taxes due covering the
Hospital Property prepared by the Treasurer of Dallas County, Texas.

  3.2  Title Defects.  If Purchaser objects to any matter contained in the
Commitment, or on the Survey or if Purchaser asserts the existence of any
encumbrance, encroachment or defect in or objection to title which renders
title to any portion of the Hospital Property unmarketable (any of which is
called a "Defect of Title"), Purchaser shall give written notice to Seller of
all Defects of Title within 15 days after the delivery of the Commitment and
the Survey or any updates to the Commitment or the Survey disclosing a Defect
of Title, but in no event later than Closing.  Any item to which Purchaser
does not object shall be deemed accepted by Purchaser (the "Permitted
Exceptions"). After receipt of such notice, Seller shall immediately proceed
to remove or cure all Defects of Title specified in the notice from Purchaser. 
If all such Defects of Title are not removed or cured prior to or within ten
days after the receipt of such notice, Purchaser may elect: (a) to accept
title to the Hospital Property subject to the uncured Defects of Title; or (b)
to terminate this Agreement.

               ARTICLE 4: REPRESENTATIONS AND WARRANTIES

  4.1  Seller's Representations and Warranties.  Seller represents and
warrants to Purchaser as follows:

  Seller is a not-for-profit corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and has full power and
authority to enter into this Agreement and to fulfill its obligations
hereunder.

  Seller has the full right, power and authority to sell and convey the
property, and has taken all action necessary to authorize the execution and
delivery of this Agreement by Seller and the performance of its obligations
hereunder.

  This Agreement and all documents contemplated hereby have been or will be
duly authorized and executed (and acknowledged where necessary) by the Parties
named as signatories in those documents, and all other necessary actions have
been or will be taken, so that this Agreement and all documents contemplated
herein are valid and binding upon Seller.

  The Hospital Property does not contain asbestos or material containing
asbestos.

  The Hospital Property does not contain PCBs or PCB Items, as those terms
are defined in 40 C.F.R. Part 761.

  The Hospital Property does not contain above ground or underground storage
tanks, as those terms are defined in 42 U.S.C. Section 691 et seq. of the
Resource Conservation Recovery Act ("RCRA").

  There is and has been no release of petroleum into the environment from an
above ground or underground storage tank at the Hospital Property, as those
terms are defined in RCRA.

  There is and has been no release or threatened release, other than
federally permitted releases, of hazardous substances or pollutants or
contaminants into the environment from or through the Hospital Property as
those terms are defined in 42 U.S.C. Sections 9601 et seq. of the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA");

  The Hospital Property is in compliance with all applicable federal, state
and local environmental statutes, regulations, ordinances, and any permits,
approvals, or judicial or administrative orders issued thereunder.

  The Hospital Property contains no conditions that could result in recovery
by any governmental or private party of remedial or removal costs, natural
resource damages, property damages, damages for personal injuries, other
costs, expenses or damages, or could result in injunctive relief, arising from
any alleged injury or threat of injury to health, safety, or the environment
relating to the Hospital Property.

  The Hospital Property has full and free access to and from public highways,
streets and/or roads adjacent to the Hospital Property and Seller has no
actual knowledge of any fact or condition which would result in the
termination of such access.  

  Seller has not received any notices or demands from any mortgagee of the
Hospital Property or from any state, municipal or county government or any
agency thereof with regard to the Hospital Property.

  Seller has not received any notice of, and has no other knowledge or
information of, any pending or contemplated change in any applicable law,
ordinance or restriction, or of any pending or threatened or judicial or
administrative action; or of any action pending or threatened by adjacent
landowners; or of any natural or artificial condition upon the Hospital
Property, or any party thereof, any of which would result in any material
change in the condition of the Hospital Property, or any part thereof, or in
any way limited or impede the operation of the Hospital Property, or any part
thereof, for any purpose.   

  4.2  Purchaser's Representations and Warranties.  Purchaser represents and
warrants as follows:

       (a)  Purchaser has full power and authority to enter into this
Agreement   and to fulfill its obligations hereunder.

       (b)  This Agreement and all documents contemplated hereby have been
duly authorized and executed (and acknowledged where necessary) by the Parties
named as signatories in those documents, and all other necessary actions have
been taken, so that this Agreement and all documents contemplated herein are
valid and binding upon Purchaser.

  4.3  Pre-Closing Covenants of Seller.  Following execution of this
Agreement and prior to Closing, Seller shall:

       (a)  pay all taxes and assessments affecting the Hospital Property
prior to the date such taxes and assessments are legally due and  owing.

       (b)  not encumber or permit to be encumbered the Hospital Property
in any manner that would materially impact the use of the Hospital Property.

       (c)  not engage in or permit any action on the Hospital Property
that would materially impact the value or use of the Hospital Property.

       (d)  not sell or otherwise dispose of the Hospital Property outside
of the ordinary course of business without the consent of NewCare. 

                         ARTICLE 5: RISK OF LOSS

  If, between the date of this Agreement and the Closing Date, any material
part of the Hospital Property is materially damaged or destroyed by fire or
other casualty, or if any material part of the Hospital Property is taken in
condemnation or under the right of eminent domain, whether material or not, or
proceedings for such taking shall be pending or threatened, Purchaser shall
have the right to terminate this Agreement by notice given to Seller within 10
days after receiving notice thereof.  Seller shall promptly notify Purchaser
of each occurrence of the kind specified above and shall give Purchaser such
information relating thereto as Purchaser may thereafter reasonably request. 
Alternatively, Purchaser may elect to purchase the Hospital Property
notwithstanding the damage or taking, without any abatement or diminution of
the Purchase Price, in which case Seller shall, on the Closing Date, deliver
to Purchaser any insurance proceeds or condemnation awards received by Seller
as a result of any occurrence specified herein and assign to Purchaser all of
Seller's right, title and interest in and to any insurance proceeds or
condemnation awards resulting from any such occurrence that have not yet been
received by Seller on that date.  Seller shall cooperate with and assist
Purchaser in collecting any such proceeds or awards.

                      ARTICLE 6: INDEMNIFICATION

  Seller shall, immediately and on demand, indemnify, defend and hold
harmless Purchaser and its (partners, officers, shareholders, directors),
together with all of their agents, affiliates, officers, directors, insurors
and employees (individually "Indemnified Party" and collectively "Indemnified
Parties") from and against any and all liabilities, judgments, injunctive
relief, costs and expenses, including without limitation legal fees and
disbursements, consultant fees, and costs and expenses incurred in
investigating, responding to discovery, or defending, involving claims,
demands, actions and causes of action, whether rightfully or wrongfully
brought or filed, to which any Indemnified Party may be subject arising out of
or relating in whole or in part to (i) ownership of the Hospital Property by
Seller, (ii) any actual or alleged contamination of the Hospital Property or
adjacent or neighboring land of, any hazardous or toxic substance, pollutant
or contaminant, petroleum, gasoline or diesel fuel, crude oil or any fraction
thereof, or any other substance regulated by or defined under any federal,
state, or local environmental statute (collectively referred to herein as
"Hazardous Substances"), (iii) any alleged injury or threat of injury to
health, safety or the environment relating to the Hospital Property or
adjacent or neighboring land, (iv) any actual or alleged noncompliance with
any federal, state or local environmental statutes, regulations, ordinances or
any permits, approvals or judicial or administrative orders issued thereunder,
giving rise to liability under any federal, state or local environmental
statutes or ordinances, or (v) any claim by any governmental or private party
for remedial or removal costs, natural resource damages, property damages,
damages for personal injuries, or corrective action costs under common law or
any federal, state, or local environmental statute.  The foregoing indemnity
shall be binding upon Seller whether or not any contamination by or presence
or release of Hazardous Substances was caused by Seller, whether or not Seller
has knowledge of such contamination, presence or release, whether or not such
contamination, presence or release was foreseeable or unforeseeable or whether
or not such contamination, presence or release is disclosed in or acknowledged
by any report, document, study or information obtained by or submitted or
provided to Purchaser.

                     ARTICLE 7: DEFAULT AND REMEDIES

  In the event that Purchaser or Seller fails to perform or comply with any
of its obligations or the terms contained in this Agreement, the injured party
shall have all rights and remedies available at law or in equity, including
damages, specific performance and termination of this Agreement, which
remedies shall be cumulative and not exclusive, except for circumstances where
an exclusive remedy is otherwise specified elsewhere in this Agreement.

                     ARTICLE 8: MISCELLANEOUS MATTERS

  8.1  Recording.  Neither party shall record this Agreement or any
memorandum of it without the consent of the party hereto, and any recording
without such consent shall be a material default hereunder.

  8.2  Assignment.  Purchaser may assign its rights hereunder without the
prior written consent of the Seller.

  8.3  Notices.  All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) on the
date of delivery, if delivered personally on the party to whom notice is
given, or if made by telecopy directed to the party to whom notice is to be
given at the telecopy number listed below, or (b) on receipt, if mailed to the
party to whom notice is to be given by first class mail, registered or
certified, return receipt requested, postage prepaid and properly addressed as
follows:

  To Seller:

  Tri-City Health Centre, Inc.
  7525 Scyene Road
  Dallas, Texas  75227
  Attn:  Chairman of the Board

  To Purchaser:

  NewCare Hospital Corporation
  6000 Lake Forrest Drive, Suite 200
  Atlanta, Georgia  30328
  Attn:  President

  8.4  Attorneys' Fees.  Should any litigation be commenced between the
Parties concerning the Hospital Property, this Agreement or the rights and
duties of either Seller or Purchaser in relation thereto, whether it be an
action for damages, or equitable or declaratory relief, or to collect any
indemnity provided for herein, the prevailing party in such litigation, in
addition to such other relief as may be granted by the court, shall also be
entitled to collect all of its costs in such action, including the costs of
investigation, settlement, expert witnesses and reasonable sums as and for
attorneys' fees together with all additional costs incurred in enforcing or
collecting any judgment rendered.

                   ARTICLE 9: INTERPRETATION OF AGREEMENT

  9.1  Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

  9.2  Headings.  The article and section headings in this Agreement are for
convenience only and shall not be used in its interpretation or considered
part of this Agreement.

  9.3  Effect of Agreement.  The entire agreement of the Parties is herein
written and the Parties are not bound by any agreements, understandings,
conditions or inducements otherwise than are expressly set forth and
stipulated hereunder.  No provision of this Agreement shall be altered,
amended, revoked or waived except by an instrument in writing signed by the
party to be charged with such amendment, revocation or waiver.  This Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and assigns.

  9.4  Severability.  If any clause or provision of this Agreement is
illegal, invalid or unenforceable under applicable present or future laws,
then it is the intention of the Parties that the remainder of this Agreement
shall not be affected but shall remain in full force and effect.

  9.5  Survival and Benefit.  The following provisions shall survive the
closing:  Article 4, Article 6, Section 8.4, and Article 9.  Seller
acknowledges that all of the conditions to this Agreement are for the sole
benefit of Purchase and that Purchaser may unilaterally waive the same.  

  9.6  Time.  Time is of the essence of this Agreement.  If any of the
conditions or obligations in this Agreement are not timely met by Purchaser or
Seller (including but not limited to tendering funds and signing of closing
documents on or before the Closing Date), then Purchaser or Seller, as the
case may be, shall be deemed to be in default hereunder, and the non-defaulting 
party may, at its option, exercise its rights under Article 7.

  9.7  Additional Instruments.   Each Party hereto shall, from time to time,
execute and deliver such additional instruments and documents as the other
Party or its counsel may reasonably request to effectuate the intent of this
Agreement. 

  9.8  Compliance with Laws, Ordinances and Regulations.  In performing the
obligations, covenants and conditions of this Agreement, Seller and Purchaser
shall comply with all applicable laws, ordinances and regulations.  

                 ARTICLE 10: ATTORNEY GENERAL APPROVAL

  10.1 Contingent on Approval.  The purchase of the Hospital Property by
NewCare pursuant to this Agreement is subject to and contingent upon the
review and approval by the Attorney General of the State of Texas of either
(a) this agreement, or (b) the purchase of the Hospital Property pursuant to
this agreement.

  IN WITNESS WHEREOF, the Parties have duly executed it as of this day and
year first above written.

                                SELLER:

                                TRI-CITY HEALTH CENTRE, INC.

                                By: /s/ Michael Bingham 
                                Title:  Chairman, Board of Directors

                                PURCHASER:

                                NEWCARE HOSPITAL CORPORATION

                                By: /s/ Arthur Doloresco
                                Title:  President


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