Document:

HealthMont, Inc. Side Letter Agreement

 EXHIBIT 10.49 
  
 HealthMont, Inc. 
 111 Long Valley Road 
 Brentwood, Tennessee 37027 

  
 October 15, 2002 
  
 SunLink Health Systems, Inc. 
 900 Circle 75
Parkway 
 Suite 1300 
 Atlanta, Georgia 30339 
 Attn: Robert M. Thornton 
  

	 	RE:	 	Agreement and Plan of Merger by and among SunLink Health Systems, Inc., HM Acquisition Corp. and Healthmont, Inc., dated as of October 14, 2002 and Certain Related Matters

  
 Dear Sirs: 
  
 We refer to the Agreement and Plan of Merger by and among SunLink Health
Systems, Inc., (“Sunlink”) HM Acquisition Corp. and HealthMont, Inc. (“HealthMont”), dated as of October 15, 2002 (the “Merger Agreement”). All capitalized terms used herein which are not separately
defined, are used as the same are defined in the Merger Agreement. 
 In consideration of, among other things, the mutual covenants contained
herein and in the Merger Agreement and the Divestco Disposition Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 (1) SunLink or the Surviving Corporation, will, within thirty (30) days of the Closing, secure and purchase an extended discovery period (or tail) policy,
with respect to, or replacement policy for, (hereinafter, in either case, referred to as the “Tail Policy”) with respect to HealthMont’s existing directors, officers and employment practices liability insurance policy (the
“Existing Policy”) for a term through August 31, 2005 and providing the same amount of coverage as the Existing Policy on terms, taken as a whole, no less advantageous to the existing insureds than those contained in the Existing
Policy, and, if purchased under the Existing Policy within the time periods set forth in the Existing Policy (a true and correct copy of which HealthMont warrants has previously been furnished to SunLink); provided, however, that if the
premium for such Tail Policy exceeds $180,000, then any sums paid over $180,000 (the “Excess Premium”) will reduce the amount of the Divestco Contingent Capital Contribution (but not to an amount which is less than zero) which would
otherwise be made to Divestco pursuant to Section 5.24 of the Merger Agreement and Section 8.2 of the Divestco Disposition Agreement, unless the amount of any Shortfall (expressed as a positive number) plus the amount of any Excess
Premium (expressed as a positive number) is less than $150,000. 

 SunLink Health Systems, Inc. 
 October 15, 2002 
 Page 2 
  
 In no event shall SunLink be obligated to expend more than $266,000 to procure such Tail Policy and SunLink’s obligation to expend up to $266,000
shall not be increased by any and all amounts credited with respect to any premiums previously paid or hereafter refunded with respect to the Existing Policy. HealthMont and Sunlink will provide each other with such cooperation and information as
either of them reasonably may request of the other to ensure that SunLink will have the right to procure such Tail Policy pursuant to the Existing Policy and to permit SunLink to procure a Tail Policy by using an insurance broker of SunLink’s
choice. 
  
 (2) For purposes of the calculations set forth in
Section 5.24 of the Merger Agreement and thereby the Surviving Corporation’s obligation to make or not make the Divestco Contingent Capital Contribution under Section 8.2 of the Divestco Disposition Agreement, any payment by
HealthMont of the $40,000 extension fee and expenses (the “Extension Fee and Expenses”) under Section 6 of that certain letter dated as of October 10, 2002 from Heller Healthcare Finance, Inc. and acknowledged and agreed to by
HealthMont, HealthMont of Texas, Inc., SunLink, and the other signatories thereto (the “Consent Letter”) shall not be deemed to reduce the Net Working Capital of HealthMont as of the Closing Date (or, if the Net Working Capital of
HealthMont is negative as of the Closing Date, shall not increase the amount of any Net Working Capital deficit) for purposes of Section 5.24 of the Merger Agreement. Furthermore, if, as of the Closing Date, HealthMont shall not have
sufficient working capital or borrowing capacity under the Revolving Loan Agreement (as such term is defined in the Consent Letter) to pay such Extension Fee and Expenses at the Closing and HealthMont shall not otherwise be in default under the
terms of the Merger Agreement (except to the extent any such default is waived), and the Merger Agreement shall not otherwise have been terminated in accordance with its terms, then SunLink will pay, or cause to be paid (whether as proceeds of one
or more Revolving Credit Loans referred to in such Consent Letter or otherwise) such Extension Fee and Expenses. 
  
 Please indicate your agreement to the foregoing by signing in the space indicated below and return a copy to us. 
  
  

	 HEALTHMONT, INC.
  

	 By:
	 	 /s/ Timothy S. Hill

	 Name:
	 	 Timothy S. Hill

	 Title:
	 	 Chief Executive Officer and President

	
	 HEALTHMONT OF TEXAS, INC.
  

	 By:
	 	 /s/ Timothy S. Hill

	 Name:
	 	 Timothy S. Hill

	 Title:
	 	 President

 SunLink Health Systems, Inc. 
 October 15, 2002 
 Page 3 
  
 ACKNOWLEDGED AND AGREED: 
  

	 SUNLINK HEALTH SYSTEMS, INC.
  

	 By:
	 	 /s/ Robert M. Thornton, Jr.

	 Name:
	 	 Robert M. Thornton, Jr.

	 Title:
	 	 President and Chief Executive Officer

	
	HM ACQUISITION CORP.
		
	 By:
	 	 /s/ Joseph T. Morris

	 Name:
	 	 Joseph T. Morris

	 Title:
	 	 PresidentHealthMont, Inc. Disclosure Schedule

 EXHIBIT 10.50 
  
 HEALTHMONT, INC. 
  
 COMPANY DISCLOSURE SCHEDULE 
  
 This Company Disclosure Schedule has been prepared and delivered in accordance with that certain Agreement and Plan of Merger, dated as of October 15,
2002 (the “Agreement”), by and among SunLink Health Systems, Inc., an Ohio corporation (“SunLink” or “Parent”), HM Acquisition Corp., a Delaware corporation (“Merger Sub”), on the one hand, and HealthMont,
Inc., a Tennessee corporation (the “Company”), on the other hand. Unless the context otherwise requires, terms that are not defined in this Company Disclosure Schedule shall have the meanings set forth in the Agreement. 
  
 The Company Disclosure Schedule is qualified in its entirety by reference to
specific provisions of the Agreement. Inclusion of the information herein shall not be construed as an admission that such information is material to the business, financial condition or results of operations of the Company except to the extent that
the Agreement requires that such information for a particular Section is material. 
  
 Matters reflected in these schedules are not necessarily limited to matters required by the Agreement to be reflected herein. Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. 
  
 Headings have been inserted for each schedule for convenience of reference only and shall to no extent have the effect of amending or changing the express description of such schedules as set forth in the Purchase Agreement. A disclosure
made in one schedule need not be made in another schedule if such disclosure on its face would reasonably put the party to whom such disclosure is made on notice of the applicability of such disclosure to other schedules, and would not make the
disclosure in the other schedule materially misleading, and would not result in the omission of any material fact necessary in light of the circumstances to make the disclosure in such other schedule or schedules (or the absence of any such
disclosure) not misleading. The disclosure of an item by a party in one schedule shall not result in any duty on the part of the party to whom such disclosure is made to inquire as to the application of such matter to any other section of the
Company Disclosure Schedule. 
  

 1 

 Section 1.6 
  
 Director Consulting Agreements 
  
 The Company has entered into a Consulting Agreement with each of the following directors of the Company (collectively, the
“Director Consulting Agreements”): 
  
 Richard E. Ragsdale 

E. Thomas Chaney 
 Joel S. Kanter 
 Gene E. Burleson 
 Kay L. Brown 
 Jay M. Haft 
 Arlen B. Reynolds 
  

 2 

 Section 3.2 
  
 Subsidiaries and Affiliates 
  

Section 3.2(a) 
  

	 A.
	  	Name of Company Subsidiaries Jurisdiction	  	Qualification
			
	 	  	1. HealthMont of Georgia, Inc. Tennessee	  	Tennessee, Georgia
			
	 	  	2. HealthMont of Texas, Inc. Tennessee	  	Tennessee, Texas
			
	 	  	3. HealthMont of Texas I, LLC Tennessee	  	Tennessee, Texas
			
	 	  	4. HealthMont of Missouri, Inc. Tennessee	  	Tennessee, Missouri
			
	 	  	5. HealthMont of West Virginia, Inc. Tennessee	  	Tennessee
			
	 B.
	  	Other Securities Owned by Company	  	 
			
	 	  	None	  	 

  
 Section 3.2(b) 
  
 Liens held on Capital Stock of Company Subsidiaries 
  
 The Company and each of the Company Subsidiaries is a party to (i) that
certain Mortgage Loan Agreement (the “Mortgage Loan Agreement”), dated as of August 31, 2000, with Heller Healthcare Finance, Inc. (“Heller”), and (ii) that certain Revolving Loan and Security Agreement (the “Revolving Loan
Agreement” and together with the Mortgage Loan Agreement, the “Heller Loan Documents”)), dated as of August 31, 2000, with Heller. 
  
 The collateral for the loan evidenced by the Revolving Loan Agreement includes those items listed in Section 3.1 of the Revolving Loan Agreement. The
Company and the Parent acknowledge that the collateral for such loan does not include the capital stock of the Company Subsidiaries because the stock certificates evidencing the capital stock of the Company Subsidiaries are currently held by and are
under the control of the Company and have not been pledged to Heller or a bailee or affiliate of Heller. In the event that the definition of “general intangibles” in Section 3.1(f) of the Revolving Loan Agreement is 

  

 3 

 
held to include the capital stock of the Company Subsidiaries as collateral under the Revolving Loan Agreement, the Company and the Parent acknowledge that
such interpretation will not be considered a breach of the Company’s representations and warranties under this Agreement. 
  

 4 

 Section 3.3 
  
 Capitalization 
  
 Section 3.3(b) 
  
 Under the Shareholders’ Agreement, dated as of August     , 2000, among the Company and the shareholders of the Company
(the “Shareholders’ Agreement”): 
  

	 	1.	 	The shareholders are obligated to vote such that five (5) directors consist of persons nominated by the Sovereign Shareholders (as defined in the Shareholders’ Agreement”)
and three (3) directors consist of persons nominated by the Founders (as defined in the Shareholders’ Agreement). 

  

	 	2.	 	Certain types of significant transactions (including the Merger) must be approved by a majority of the directors, plus at least one director nominated by the Founders.

  
 Section 3.3(d) 
  
 In addition to the Heller Warrants, the Company has outstanding the following
Company Derivative Securities: 
  

	 NAME OF STOCKHOLDER

	  	Options @
1.82

	  	Options @
2.75

	  	Total Options

	  	Options to
be
Forgiven

	 	 	Remaining
Options

	  	Warrants
@ 1.25

	 Arlen B. Reynolds
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	 
	 Kay L. Brown
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	 
	 Joel S. Kanter
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	200,000
	 Gene E. Burleson & M. Jan Burleson
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	80,000
	 Jay Haft and Clayre Haft
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	 
	 Richard E. Ragsdale
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	200,000
	 Chaney Family Partnership LTD
	  	10,000	  	5,000	  	15,000	  	0	 	 	15,000	  	160,000
	 Timothy S. Hill
	  	 	  	40,000	  	40,000	  	(40,000	)	 	0	  	20,000
	 Greg Griffith
	  	14,000	  	4,000	  	18,000	  	(18,000	)	 	0	  	 
	 Lori Petrie
	  	7,000	  	3,000	  	10,000	  	(10,000	)	 	0	  	 
	 Janet Meders
	  	7,000	  	3,000	  	10,000	  	(10,000	)	 	0	  	 

  

 5 

	 Cheryl Cheney
	  	5,000	  	3,000	  	8,000	  	(8,000	)	 	0
	 Leslie Bingham
	  	14,000	  	8,000	  	22,000	  	(22,000	)	 	0
	 Jerry Torba
	  	-	  	10,000	  	10,000	  	(10,000	)	 	0
	 Cherrie Klamer
	  	-	  	4,000	  	4,000	  	(4,000	)	 	0
	 Tom Butler
	  	-	  	60,000	  	60,000	  	(60,000	)	 	0
	 Tom Scott
	  	8,000	  	5,000	  	13,000	  	(13,000	)	 	0
	 Steve Love
	  	4,000	  	2,000	  	6,000	  	(6,000	)	 	0

  
  

 6 

 Section 3.6 
  
 Vote Required 
  
 The Shareholder Approval requirement is now seventy-five percent (75%). 
  

 7 

 Section 3.7 
  
 Consents and Approvals 
  
 Section 3.7(a) 
  
 Pursuant to the Heller Loan Documents, the consent of Heller is necessary for the Company to complete the transactions contemplated by this Agreement.

  
 Section 3.7(b) 
  
 None. 
  

 8 

 Section 3.8 
  
 Financial Statements 
  
 Section 3.8(b) 
  
 None. 
  
 Section 3.8(d) 
  
 None.

  

 9 

 Section 3.9 
  
 Undisclosed Liabilities 
  

	A.	 	The Company is a party to a certain Master Lease Agreement, dated as of January 15, 2001, with Comdisco Healthcare Group, Inc. (“Comdisco”) related to the lease of certain
equipment described in the schedules attached thereto (the “Comdisco Lease Agreement”). Certain equipment leased pursuant to the Comdisco Lease Agreement is used at the Eastmoreland Hospital, which hospital is no longer owned by the
Company. GKPS, Inc. (“GKPS”), the current owner of the hospital, assumed the Company’s obligations under Comdisco Lease Agreement when it purchased the hospital from the Company, but the Company remains liable to Comdisco under the
agreement. 

  
 The equipment leased pursuant to the
Comdisco Lease Agreement that is used at Eastmoreland Hospital consists of the following: 
  

	 	1.	 	Acuson X-10 ART Ultrasound (60-month lease; $1,548/month) 

	 	2.	 	Siemens Mobile 1.0 Impact Expert MRI (60-month lease; $12,248/month) 

	 	3.	 	GE High Speed Advantage RP CT (60-month lease; $6,686/month) 

  
 Attached is a schedule showing the total amount for which HealthMont may be liable under each of the above as of the date of the Agreement. 
  

	B.	 	Symphony Healthcare V, LLC (f/k/a HealthMont of Oregon V, LLC) leases certain real property located in Multnomah County, Oregon (the lease agreement, as amended. being referred to
herein as the “Woodland Park Lease Agreement”). The Company is guarantor under the Woodland Park Lease Agreement in an amount up to $500,000. GKPS, current owner of the Woodland Park Hospital, assumed the Company’s obligations as
guarantor when it purchased the hospital from the Company, but the Company remains liable to the lessor under the lease agreement to the extent of its guaranty. 

  

	C.	 	The Company is a party to certain capital leases (the “LinvaTec Leases”) with LinvaTec Financial Services (“LinvaTec”) related to equipment located at Woodland
Park Hospital, which is no longer owned by the Company. GKPS, the current owner of the hospital, assumed the Company’s obligations under the LinvaTec Leases, but the Company remains liable to LinvaTec under the lease agreements.

  
 The equipment leased pursuant to the LinvaTec
leases consists of the following: 
  

	 	1.	 	2 Apex 3 chip camera controller 

	 	2.	 	2 Sony Medical Monitor 20” 

	 	3.	 	2 Sony UP5/MD printer 

  

 10 

	 	4.	 	3 Autoclav 300D Eyecap camera head 

	 	5.	 	2 Xenon light source 

	 	6.	 	1 Laparoflator console 252 

  
 Attached is a schedule showing the total amount for which HealthMont may be liable under each of the above as of the date of the Agreement. 
  

	D.	 	The agreements described in subparagraphs A.9., 14., and 15. of Section 3.20 of this Company Disclosure Schedule may relate in part to equipment used at Eastmoreland Hospital and/or
Woodland Park Hospital. GKPS, the current owner of the hospitals, assumed the Company’s obligations under these agreements, but the Company remains liable to the lessors under the agreements. 

  
 Attached is a schedule showing the total amount for which HealthMont may be
liable under each of the above as of the date of the Agreement. 
  

	E.	 	When the Company sold the subsidiaries that own Eastmoreland Hospital and Woodland Park Hospital to GKPS, it retained the following liabilities: 

  

	 	1.	 	Douglas Grimm 

  

	 	i.	 	Incident Occurrence Date: 5/99-10/00 

  

	 	ii.	 	Incident Report Date: 6/1/01 

  

	 	iii.	 	Description: Former employee requesting severance pay from New American Healthcare 

  

	 	iv.	 	Plaintiff Atty: Linda L. Marshall, 3 Monroe Pike, Suite P, Lake Oswego, OR 97035 

  

	 	v.	 	Status: Demand made on HealthMont through summons (jury trial requested) 

  

	 	vi.	 	Claim: $38,423.07 plus legal fees 

  

	 	vii.	 	HealthMont Attorney: Caroline R. Guest, Davis, Wright Tremaine, 1300 SW Fifth Ave., Portland, OR 97201 

  

	 	2.	 	Pat Rice 

  

	 	i.	 	Incident Occurrence Date: 8/3/01 

  

	 	ii.	 	Incident Report Date: 8/31/01 

  

	 	iii.	 	Description: Employee (night shift charge nurse) defied physician orders for a patient admitted and when reprimanded became very upset. Employee was diagnosed with manic, paranoid
behavior by staff psychiatrist. Employee was subsequently terminated. 

  

	 	iv.	 	Plaintiff Atty: Oregon Bureau Labor & Ind., 800 NE Oregon Street #32, Portland, OR 97232 

  

	 	v.	 	Status: Precautionary file established 

  

	 	vi.	 	Claim: None to date 

  

 11 

	 	  	Sep-02

	  	Oct-02

	  	Nov-02

	  	Dec-02

	  	Jan-03

	  	Feb-03

	  	Mar-03

	  	Apr-03

	  	May-03

	  	Jun-03

	  	Jul-03

	  	Aug-03

	  	Sep-03

	  	Oct-03

	 HealthMont Payment Guarantees:
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Dolly
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 RJ Young (copiers)
	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447
	 Comdisco
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 CT
	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446
	 R&F
	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788
	 IBM AS400 lease
	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693
	 Woodland Park Hospital (Portland)
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 RJ Young (copiers)
	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348
	 IBM AS400 lease
	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032	  	3,032
	 Linvatec
	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411	  	2,411
	 Eastmoreland Hospital (Portland)
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 RJ Young (copiers)
	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767
	 Comdisco
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Ultrasound
	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548
	 MRI
	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248
	 CT
	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482
	 Monthly Total
	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210	  	59,210
	 Cumulative Total
	  	2,549,813	  	2,490,603	  	2,431,393	  	2,372,183	  	2,312,973	  	2,253,763	  	2,194,553	  	2,135,343	  	2,076,133	  	2,016,923	  	1,957,712	  	1,898,502	  	1,839,292	  	1,780,082
	 Woodland Park Hospital (Portland)
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Hospital Lease (flat $500,000 guarantee for lease default on 20 plus year lease)

	 	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000
	 Total
	  	3,049,813	  	2,990,603	  	2,931,393	  	2,872,183	  	2,812,973	  	2,753,763	  	2,694,553	  	2,635,343	  	2,576,133	  	2,516,923	  	2,457,712	  	2,398,502	  	2,339,292	  	2,280,082

  

 12 

  

	 	  	Nov-03

	  	Dec-03

	  	Jan-04

	  	Feb-04

	  	Mar-04

	  	Apr-04

	  	May-04

	  	Jun-04

	  	Jul-04

	  	Aug-04

	  	Sep-04

	  	Oct-04

	  	Nov-04

	  	Dec-04

	  	Jan-05

	  	Feb-05

	  	Mar-05

	  	Apr-05

	 HealthMont Payment Guarantees:
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Dolly
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 RJ Young (copiers)
	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	1,447	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Comdisco
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 CT
	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446	  	7,446
	 R&F
	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788	  	3,788
	 IBM AS400 lease
	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693	  	1,693
	 Woodland Park Hospital (Portland)
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 RJ Young (copiers)
	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	3,348	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 IBM AS400 lease
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Linvatec
	  	2,411	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Eastmoreland Hospital (Portland)
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 RJ Young (copiers)
	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	1,767	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Comdisco
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Ultrasound
	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548	  	1,548
	 MRI
	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248	  	12,248
	 CT
	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482	  	20,482
	 Monthly Total
	  	56,178	  	53,767	  	53,767	  	53,767	  	53,767	  	53,767	  	53,767	  	53,767	  	53,767	  	53,767	  	47,205	  	47,205	  	47,205	  	47,205	  	47,205	  	47,205	  	47,205	  	47,205
	 Cumulative Total
	  	1,720,872	  	1,664,694	  	1,610,927	  	1,557,160	  	1,503,393	  	1,449,626	  	1,395,859	  	1,342,092	  	1,288,325	  	1,234,558	  	1,180,791	  	1,133,586	  	1,086,381	  	1,039,176	  	991,971	  	944,766	  	897,560	  	850,355
	 Woodland Park Hospital (Portland)
	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 Hospital Lease (flat $500,000 guarantee for lease default on 20 plus year lease)
	  	 	  	 	  	 	  	 
	 	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000	  	500,000
	 Total
	  	2,220,872	  	2,164,694	  	2,110,927	  	2,057,160	  	2,003,393	  	1,949,626	  	1,895,859	  	1,842,092	  	1,788,325	  	1,734,558	  	1,680,791	  	1,633,586	  	1,586,381	  	1,539,176	  	1,491,971	  	1,444,766	  	1,397,560	  	1,350,355

  

 13 

	 	 	May-05

	 	Jun-05

	 	Jul-05

	 	Aug-05

	 	Sep-05

	 	Oct-05

	 	Nov-05

	 	Dec-05

	 	Jan-06

	 	Feb-06

	 	Mar-06

	 	Apr-06

	 	May-06

	 	Jun-06

	 	Jul-06

	 	Aug-06

	 	Sep-06

	 	Oct-06

	 HealthMont Payment Guarantees:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Dolly
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 RJ Young (copiers)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Comdisco
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 CT
	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	7,446	 	 	 	 	 	 	 	 
	 R&F
	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	3,788	 	 	 	 	 	 	 	 
	 IBM AS400 lease
	 	1,693	 	1,693	 	1,693	 	1,693	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Woodland Park Hospital (Portland)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 RJ Young (copiers)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 IBM AS400 lease
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Linvatec
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Eastmoreland Hospital (Portland)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 RJ Young (copiers)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Comdisco
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Ultrasound
	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	1,548	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 MRI
	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	12,248	 	 	 	 	 	 	 	 
	 CT
	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482	 	20,482
	 Monthly Total
	 	47,205	 	47,205	 	47,205	 	47,205	 	45,512	 	45,512	 	45,512	 	45,512	 	45,512	 	45,512	 	45,512	 	43,964	 	43,964	 	43,964	 	20,482	 	20,482	 	20,482	 	20,482
	 Cumulative Total
	 	803,150	 	755,945	 	708,740	 	661,535	 	614,330	 	568,818	 	523,306	 	477,794	 	432,282	 	386,770	 	341,258	 	295,746	 	251,782	 	207,819	 	163,855	 	143,373	 	122,891	 	102,409
	 Woodland Park Hospital (Portland)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Hospital Lease (flat $500,000 guarantee for lease default on 20 plus year lease)
	 	 	 	 	 	 	 	 
	 	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000	 	500,000
	 Total
	 	1,303,150	 	1,255,945	 	1,208,740	 	1,161,535	 	1,114,330	 	1,068,818	 	1,023,306	 	977,794	 	932,282	 	886,770	 	841,258	 	795,746	 	751,782	 	707,819	 	663,855	 	643,373	 	622,891	 	602,409

  

 14 

	 	 	Nov-06

	 	Dec-06

	 	Jan-07

	 	Feb-07

	 	Total

	 	 Will
 Remain

	 	 Working
 To
remove

	    	 
	 HealthMont Payment
Guarantees:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	    	 
	 Dolly
	 	 	 	 	 	 	 	 	 	0	 	 	 	 	    	 
	 RJ Young (copiers)
	 	 	 	 	 	 	 	 	 	34,728	 	34,728	 	 	    	 
	 Comdisco
	 	 	 	 	 	 	 	 	 	0	 	0	 	 	    	 
	 CT
	 	 	 	 	 	 	 	 	 	342,522	 	342,522	 	 	    	 
	 R&F
	 	 	 	 	 	 	 	 	 	174,248	 	174,248	 	 	    	 
	 IBM AS400 lease
	 	 	 	 	 	 	 	 	 	60,948	 	60,948	 	 	    	 
	 Woodland Park
Hospital (Portland)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	    	 
	 RJ Young (copiers)
	 	 	 	 	 	 	 	 	 	80,352	 	 	 	80,352	    	Credit app being completed
	 IBM AS400 lease
	 	 	 	 	 	 	 	 	 	42,448	 	42,448	 	 	    	 
	 Linvatec
	 	 	 	 	 	 	 	 	 	36,166	 	 	 	 	    	 
	 Eastmoreland
Hospital (Portland)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	    	 
	 RJ Young (copiers)
	 	 	 	 	 	 	 	 	 	42,408	 	 	 	42,408	    	Credit app being completed
	 Comdisco
	 	 	 	 	 	 	 	 	 	0	 	 	 	 	    	 
	 Ultrasound
	 	 	 	 	 	 	 	 	 	66,582	 	 	 	66,582	    	Working with GE-should hear back next week
	 MRI
	 	 	 	 	 	 	 	 	 	563,390	 	 	 	563,390	    	 
	 CT
	 	20,482	 	20,482	 	20,482	 	20,482	 	1,106,022	 	 	 	1,106,022	    	 
	 Monthly Total
	 	 20,482
	 	20,482	 	20,482	 	20,482	 	 	 	 	 	 	    	 
	 Cumulative Total
	 	 81,928
	 	61,446	 	40,964	 	20,482	 	2,549,813	 	654,894	 	1,858,754	    	 
	 Woodland Park
Hospital (Portland)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	    	 
	 Hospital Lease (flat $500,000 guarantee for lease default on 20 plus year lease)
	 	 	    	 
	 	 	500,000    	 	500,000	 	500,000	 	500,000	 	       110,000  To get removed. Six weeks to get finalized.
	 Total
	 	 581,928
	 	561,446	 	540,964	 	520,482	 	 	 	 	 	 	    	 

  
  

 15 

 Section 3.10 
  
 Absence of Certain Changes 
  

	A.	 	Arrangements relating to the Divestco Disposition. (Sections 3.10(b)(i) and (ii)) 

  

	B.	 	Draws under the Revolving Loan Agreement. (Section 3.10(b)(iv)) 

  

	C.	 	The Company intends to take the actions disclosed in Section 5.1 of the Company Disclosure Schedule. 

  

	D.	 	The Company has entered into a Settlement Agreement with GKPS, dated as of August 20, 2002, and certain related agreements (the “GKPS Settlement Agreements”) settling
certain disputes related to the acquisition by GKPS of the stock of certain of the Company’s subsidiaries. As part of that settlement, the Company released certain claims against GKPS, relinquished its rights to certain property tax refunds and
cancelled a promissory note from GKPS in the original principal amount of $600,000, all as described more particularly in the GKPS Settlement Agreements. (Sections 3.10(b)(iv) and (vii)) 

  

	E.	 	The Company has entered into a Lease Termination Agreement (the “Lease Termination Agreement”) with The Dover Centre LLC (the “Lessor”), dated as of August 27,
2002, terminating the lease of the Company’s corporate offices located at 113 Seaboard Lane, Franklin, Williamson County, Tennessee, Suite C-200 in Building C of Phase I of the Dover Centre. Pursuant to the Lease Termination Agreement, the
Company must pay Lessor $275,000. In connection with the Lease Termination Agreement, the Company has closed its corporate offices and sold certain office furniture and other equipment. (Section 3.10(b)(x)) 

  

	F.	 	The Company has entered into Separation and Settlement Agreements (the “Separation and Settlement Agreements”) with the former employees listed below, which agreements
require the payment of severance in the amounts set forth opposite their names (Section 3.10(b)(iii)): 

  

	 Name        

	  	Title

	  	Severance

	 Corporate Severance
	  	 	  	 	 
	 Ingram, David
	  	VP	  	$	28,739
	 Price, Ann
	  	M	  	$	14,312
	 Hunt, Jeanette
	  	AA	  	$	1,594
	 McCarthy, Jane
	  	AA	  	$	2,160
	 Reed, Shari
	  	AA	  	$	9,000

  

 16 

	G.	 	The Company entered into a letter agreement (the “NAHC Settlement Agreement”) with New American Healthcare Corporation (“NAHC”) settling certain claims of the
Company against NAHC stemming from the Company’s acquisition of certain hospitals from NAHC in August 2000. (Section 3.10(b)(xv)) 

  

	H.	 	The Company amended that certain letter agreement (the “Overline Loan Agreement”), dated as of January 17, 2002, between the Company and certain subsidiaries, on the one
hand, and Heller, on the other hand, generally extending the maturity date of the overline loan referenced therein (the “Overline Loan”) from August 31, 2002 to August 31, 2003. Any reference in this Company Disclosure Schedule to the
Heller Loan Documents shall be deemed to include the Overline Loan Agreement. (Section 3.10(b)(x)) 

  

	I.	 	The Company has entered into a Letter of Credit Reimbursement Agreement (the “Letter of Credit Reimbursement Agreement”), dated as of August
            , 2002, with Timothy S. Hill, E. Thomas Chaney, Chicago Private Investments, Inc., Gene E. Burleson and Richard E. Ragsdale (collectively, the “Lending Directors”), on
the other hand, relating to the reimbursement of the Lending Directors in the event the letters of credit maintained by the Lending Directors that secure the Overline Loan are drawn upon. Such reimbursement is to be in the form of Shares, as more
fully described in the agreement. (Section 3.10(b)(xiii)) 

  

	J.	 	The Company has entered into a Separation Agreement and General Release, dated as of             , 2001, with Gene Wright
(the “Wright Separation Agreement”) pursuant to which the Company redeemed from Mr. Wright a total of 450,670 Shares in consideration for, among other things, the forgiveness of certain loans from the Company. (Sections 3.10(b)(vii) and
(xiii)) 

  

	K.	 	The Company has entered into a Separation Agreement and General Release, dated as of June 24, 2002, with Gary Tharpe (the “Tharpe Separation Agreement”) pursuant to which
the Company redeemed from Mr. Tharpe a total of 42,016 Shares. (Sections 3.10(b)(vii) and (xiii)) 

  

	L.	 	The Company has entered into a Separation Agreement and General Release, dated as of July 15, 2002, with Jerry Christine (the “Christine Separation Agreement”). (Sections
3.10(b)(vii) and (xiii)) 

  

	M.	 	The Company entered into that certain Amendment No. 4 to Mortgage Loan Agreement (the “Mortgage Loan Agreement”), dated as of March 31, 2002, between the Company and
certain subsidiaries, on the one hand, and Heller, on the other hand, generally making certain modifications to certain financial covenant provisions in the Mortgage Loan Agreement. Any reference herein to the Heller Loan Documents is deemed to
include this amendment. (Section 3.10(b)(x)) 

  

 17 

	N.	 	The Company has entered into that certain Founders Stock Redemption Agreement (the “Founders Stock Redemption Agreement”), dated as of
            , 2002, between the Company, on the one hand, and certain founding shareholders of the Company, on the other hand, pursuant to which the Company will redeem certain shares held
by such shareholders prior to the Closing. (Sections 3.10(b)(i) and (ii)) 

  

	O.	 	The Company intends to make an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, with respect to the transactions effected pursuant to the GKPS
Agreements. (Sections 3.10(b)(xvii)) 

  

 18 

 Section 3.11 
  
 Litigation 
  

	A.	 	Adel 

  

	 	1.	 	The Georgia Department of Community Health has alleged Medicaid overpayments of approximately $106,000 relating to periods during which the hospital was owned by New American
Healthcare Corporation. The Company is no longer challenging this claim and has been reimbursed the amount of the overpayments pursuant to the NAHC Settlement Agreement. 

  

	 	2.	 	See attached. 

  

	B.	 	Callaway 

  
 See attached. 
  

	C.	 	Dolly Vinsant 

  
 See attached. 
  

	D.	 	Other 

  
 See Section 3.9.E. of this Company Disclosure Schedule. 
  

 19 

 HEALTHMONT, INC. 
  
 Month End: 10/08/2002 
  
 ACTIVE/THREATENED/POTENTIAL LIGITATION-MASTER LIST 
  

	 Hospital

	 	 Case
Name

	 	 Incident
 Occurred

	 	 Incident
 Reported

	 	 Description

	 	 Legal Action By
 Potential Plaintiff

	 	 HealthMont
 Attorney

	 	 Potential
 Plaintiff Request

	 	 Current Status

									
	 Dolly
	 	 	 	3/14/01	 	5/21/01	 	25 y/o female admitted for chronic cholecystitis. Patient subsequently underwent laparascopic surgery & open choledochoduodenostmy with anastomosis. Patient had transsection of
common bile duct.	 	 Kent Buckingham
 Buckingham Law Firm
 1707 West Wall Street
 Midland, TX 79701
 915-570-1919
	 	St. Paul notified	 	None to date	 	Precautionary file established
									
	 Adel
	 	 	 	03/26/01	 	06/07.01	 	Patient admitted to ER due to auto accident. Patient received a chest Tube before being life-flighted to another facility. He complained that His wallet was missing with $4,300.
Sheriff’s office said the wife had The wallet. Later the family said there was the money missing along with A necklace and two rings. Two months later hospital received letter From atty stating the patient’s chest tube was installed
incorrectly.	 	 Faye Edmondson
 Harrison & Edmondson,
LLC
 125 W. Columbus Street
 Dadeville, AL
36853
	 	St. Paul notified	 	$4,300 and jewelry	 	Precautionary file established
									
	 	 	 	 	09/29/01	 	02/05/02	 	Patient born in hospital 9/29/01 then transferred to Phoebe? Patient was seen again on 10/31/01 and again on 11/22/01. Dr. Rubio Stated that patient is deceased but does not have any
information. Patient was not brought to Adel. Hospital has received a request For medical records.	 	 Langdale, Vallotton,
 Linahan &
Wetherington
 1007 N. Patterson St.
 Valdosta, GA 31603-1571
	 	St. Paul notified	 	No request to date	 	Precautionary file established
									
	 	 	 	 	03/17/02	 	03/19/02	 	Two year old treated in ER on morning of 3/17/02 for fever, Nausea, vomiting & loss of appetite and discharged home. Evening 3/17/02 ambulance brought child in code with
Diagnosis of cardiorespiratory arrest, etiology unclear, child Deceased. Child also seen in ER 4 days prior with diagnosis Of influenza. Autopsy being performed. Medical records requested.	 	 Fulp &Holt
 207 E. Gordon
Street
 P.O. Box 1571
 Valdosta, GA 31603-1571
	 	St. Paul notified	 	No request to date	 	Precautionary file established
									
	 	 	 	 	01/30/01	 	08/28/02	 	Patient brought to ER via EMS with diagnosis of Retroperitoneal hematoma, acute blood loss anemia. Patient transferred to South GA Med Ctr then expired.	 	 Gregory, Christy & Maniklal
 708 16th Ave
E
 Cordelle, GA 31015
 229-273-7150
	 	St. Paul notified	 	Copy of Medical Records	 	Precautionary file established
									
	 	 	 	 	11/07/00	 	08/03/02	 	Patient to emergency room via EMS in full arrest. Entire record sent to Potential Plaintiff.	 	 Robins, Laplan, Milder & Ciresi, L.L.P.
 One Atlanta Plaza
 950 East Paces Ferry Road N.E.
 Atlanta, GA
	 	 St. Paul notified
 08/30/2002
	 	Copy of Medical Records	 	Precautionary file established
									
	 	 	 	 	02/07/02	 	10/04/02	 	Patient seen in ER on 2/07/02 and claims she stumbled on steps in MRI unit Three days ago complaining of swollen right foot with redness to big toe.	 	 M. Stan Ballew
 PO Drawer 1188
 Tifton, GA 31793
	 	 St. Paul notified
 10/04/02
	 	Copy of Medical Records	 	Precautionary file established
									
	 Callaway
	 	 	 	03/29/01	 	04/04/01	 	Patient reesented to ER with abdominal pain and subsequently died as a Result of a ruptured ectopic pregnancy.	 	 Padberg Law Firm
 1010 Market
Street
 Suite 650
 St. Louis, MO 63101
 314-621-2900
	 	St. Paul notified	 	Husband of deceased stated that he would be suing the hospital regarding the hospital care.	 	Notification of suit served on 4/3/02
									
	 	 	 	 	06/05/01	 	07/11/02	 	Patient admitted for a bowel obstruction, experienced complications Following surgery and was transferred to another hospital. On 6/27/01 she expired.	 	 Robert E. Keaney
 Jerome J. Duff & Assoc. Inc.
 1015 Locust Street, Suite 605
 St. Louis, MO 63101-1322
 314-621-3833
	 	St. Paul notified	 	No request to date	 	Precautionary file established.

  

 20 

 Section 3.12 
  
 Employee Benefit Plans 
  

	A.	 	Employees at Adel, Georgia may purchase certain types of supplemental medical policies, and upon separation from service have the right to retain those policies. (Section 3.12(f))

  

	B.	 	Each of the hospitals provides medical and dental coverage to its employees through welfare plans that are self-funded. The plans are administered by Employee Benefits Services.
They maintain reinsurance generally for claims in excess of $50,000 through American National Insurance Company/CCH. (Section 3.12(g)) 

  
 Section 3.12(l) 
  
 None 
  

 21 

 Section 3.14 
  
 Environmental Laws 
  
 None, other than as stated in the following Phase I and Phase II reports previously furnished to Parent: 
  

	A.	 	Phase I Environmental Site Assessment for Dolly Vinsant Memorial Hospital dated June 26, 2000. 

  

	B.	 	Phase I Environmental Site Assessment for Memorial Hospital of Adel dated June 26, 2000. 

  

	C.	 	Report of Phase I Environmental Site Assessment for Callaway Community Hospital dated December 5, 2000. 

  

	D.	 	Report of Limited Phase II Environmental Site Assessment for Callaway Community Hospital dated December 5, 2000. 

  

 22 

 Section 3.17 
  
 Employees 
  

 23 

 GENERAL LIST 
  

 24 

 HealthMont, Inc. Corporate Office Employees as of 04/01/02 
  
 “Confidential portion of material has been omitted and filed separately
with the SEC” 
  

 25 

 HealthMont, Inc. 
 Board of Directors 
 Annual Consulting Compensation Amounts 
  

	 Board Member

	  	Annual Compensation

	 Kay L. Brown
	  	$	15,000.00
	 Gene E. Burleson
	  	$	15,000.00
	 E. Thomas Chaney
	  	$	49,000.00
	 Jay M. Haft
	  	$	15,000.00
	 Joel S. Kanter
	  	$	15,000.00
	 Richard E. Ragsdale
	  	$	44,000.00
	 Arlen B. Reynolds
	  	$	15,000.00
	 	  	
	

	 Total
	  	$	168,000.00
	 	  	
	

  

 26 

 “Confidential portion of material has been omitted and filed separately with the SEC”

  

 27 

 Section 3.19 
  
 Interested Party Transactions 
  

Section 3.19(a) 
  

	A.	 	On August 31, 2000, the Company made a loan to Tim Hill in the original principal amount of $ 89,000. Loan will be repaid at or prior to Closing, in the form of the Company shares
as set forth in that certain Non-Competition Agreement and General Release, dated October             , 2002, between Tim Hill and the Company. 

  

	B.	 	The Company has entered into the Director Consulting Agreements. 

  

	C.	 	The Company intends to effect the Divestco Disposition. 

  

	D.	 	The Company has entered into the Letter of Credit Reimbursement Agreement. 

  
 Section 3.19(b) 
  
 None 
  
 Section 3.19(c) 
  
 None

  

 28 

 Section 3.20 
  
 Contracts 
  
 Section 3.20(a) 
  

	A.	 	General Agreements 

  

	 	1.	 	Amended and Restated Employment Agreement, dated as of February 1, 2002, between the Company and Timothy S. Hill. 

  

	 	2.	 	Wright Separation Agreement. 

  

	 	3.	 	Tharpe Separation Agreement. 

  

	 	4.	 	Shareholders’ Agreement. 

  

	 	5.	 	Heller Loan Documents. 

  

	 	6.	 	Asset Purchase Agreement, dated as of August 31, 2000, among the Company, on the one hand, and NAHC and certain of its subsidiaries, on the other hand, and certain agreements
related thereto (the “NAHC Agreements”). 

  

	 	7.	 	Stock Purchase Agreement, dated as of February 28, 2002, between the Company and GKPS, and certain agreements related thereto (the “GKPS Agreements”).

  

	 	8.	 	Agreement between the Company and Healthcare Management Systems, Inc. (software license) 

  

	 	9.	 	End of Lease Supplement, dated September 6, 2001, between the Company and IBM Credit Corporation, amending that certain Term Lease Master Agreement, dated April 27, 1998, and
Quicklease Agreement, dated October 20, 1998, between New American Healthcare Corporation (computer hardware lease) 

  

	 	•	 	Recurring Amounts Due: See End of Lease Supplement for schedule of monthly payments. 

  

 29 

	 	10.	 	Agreement between the Company and Hospital Resource Management, L.C. (chargemaster maintenance) 

  

	 	•	 	Dated: November 7, 2001 

	 	•	 	Amended: May 3, 2002 

	 	•	 	Recurring Amounts Due: $4,500 per month 

  

	 	11.	 	Agreement between the Company and LBMC Healthcare Group (reimbursement services) 

  

	 	12.	 	Agreement between the Company and MSLI, GP (license for Microsoft software) 

  

	 	13.	 	Lease Agreement between the Company and The Dover Centre, LLC (office lease). This Lease Agreement was terminated, generally effective as of September 15, 2002, pursuant to the
Lease Termination Agreement. 

  

	 	14.	 	Agreement between the Company and Minnesota Mining and Manufacturing Company (coding software license) 

  

	 	15.	 	Agreement between the Company and R.J. Young Leasing (copiers at the Company facilities, including the Hospitals) 

  

	 	16.	 	Agreement between the Company and SSI Group Inc. (software license) 

  

	 	17.	 	Property Tax Consulting Agreement with the Company: 

  

	 	•	 	Dated: October 26, 2001 

	 	•	 	Name: Easley, McCaleb & Associates, Inc. 

	 	•	 	Services: Property Tax Consultants 

	 	•	 	Rate of Compensation: $1,250 flat fee per hospital/$10 per bed 

  

	 	18.	 	Comdisco Lease Agreement 

  

	 	19.	 	Agreement between the Company and MCI WorldCom Communications, Inc. (telecommunications/internet services) 

  

	 	20.	 	Agreement between the Company and Broadline (group purchasing agreement) 

  

	 	21.	 	LinvaTec Leases 

  

	 	22.	 	GKPS Settlement Agreements 

  

	 	23.	 	Lease Termination Agreement 

  

 30 

	 	24.	 	Separation and Settlement Agreements 

  

	 	25.	 	NAHC Settlement Agreement 

  

	 	26.	 	Letter of Credit Reimbursement Agreement 

  

	 	27.	 	Christine Separation Agreement 

  

	 	28.	 	Service Agreement between the Company and Cambridge Integrated Services Group, Incorporated (claims management) 

  

	 	•	 	Dated: October 1, 2002 

	 	•	 	Termination Date: September 30, 2003 

  

	 	29.	 	Services Agreement between the Company and David B. Ingram (information services) 

  

	 	•	 	Dated: September 23, 2002 

	 	•	 	Termination Date: December 31, 2002 

  

	 	30.	 	Founders Stock Redemption Agreement. 

  

	B.	 	Agreements Related to Adel 

  

	 	1.	 	Lease Agreement between the Company and Lucy Acree (lease of annex on North Hutchinson) 

  

	 	•	 	Commencement Date: October 30, 1998 

	 	•	 	Termination Date: October 31, 2005 

	 	•	 	Recurring Amounts Due: $1,800 per month as of November 1, 2000 (subject to annual increases) 

  

	 	2.	 	Following month-to-month lease agreements related to leases of the real property described in subparagraphs 3 through 7 of Section 3.24A of the Company Disclosure Schedule:

  

	 	(a)	 	Home Health Building located at 1905 South Hutchinson, Adel, Georgia 

	 	•	 	Commencement Date: November 1, 1998 

	 	•	 	Recurring Amount Due: $1,250 per month 

  

	 	(b)	 	Medical Record Storage Building located at 100 Memorial Drive 

	 	•	 	Commencement Date: June 7, 1999 

	 	•	 	Recurring Amount Due: $600 per month 

  

	 	(c)	 	Surgeon’s Office located at 901 N. Parrish, Adel Georgia 

  

 31 

	 	•	 	Commencement Date: July 1, 2000 

	 	•	 	Recurring Amount Due: $500 per month 

  

	 	(d)	 	Memorial Hospital Annex located at 8098 N. Hutchinson, Adel, Georgia 

	 	•	 	Commencement Date: June 15, 2000 

	 	•	 	Recurring Amount Due: $500 per month 

  

	 	3.	 	Equipment Lease between HealthMont of Georgia, Inc. and Acuson Corporation 

  

	 	•	 	Signing Date: October 17, 2000, by Company; May 16, 2001, by Acuson 

	 	•	 	Termination Date: 60 months commencing on Term Commencement Date (undefined) 

	 	•	 	Recurring Amounts Due: $4,266.97 per month 

  

	 	4.	 	Magnetic Resonance Imaging Shared Service Agreement between HealthMont of Georgia, Inc. and Diversified Imaging Services, Inc. (MRI Services) 

  

	 	•	 	Commencement Date: November 1, 2000 

	 	•	 	Termination Date: November 1, 2002, renewable for one successive one-year period 

	 	•	 	Recurring Amounts Due: See Fee Schedule, Section 15 

  

	 	5.	 	Agreement between HealthMont of Georgia, Inc. and Dowling Enterprises (preventive maintenance for hospital systems) 

  

	 	•	 	Commencement Date: October 1, 2000 

	 	•	 	Termination Date: September 30, 2001 

	 	•	 	Recurring Amounts Due: $900 per month 

	 	•	 	Addendum I: October 19, 2000 

	 	•	 	Addendum II: October 19, 2000 

  

	 	6.	 	Agreement between HealthMont of Georgia, Inc. and Morrison Management Specialists, Inc. (food services) 

  

	 	•	 	Commencement Date: September 1, 2000 

	 	•	 	Termination Date: Renewable for one-year periods 

	 	•	 	Recurring Amounts Due: Regular Monthly Billing, including management fee, pursuant to Article 2 

	 	•	 	Amendment: August 1, 2002 

  

 32 

	 	  7.	 	Master Rental and License Agreement between HealthMont of Georgia, Inc. and Pyxis Corporation 

  

	 	•	 	Dated: May 1, 2001 

	 	•	 	Termination Date: 60 months from April 1, 2001 

	 	•	 	Recurring Amounts Due: $2,844 per month 

  

	 	  8.	 	Physician Recruitment Agreement 

  

	 	•	 	Dated: July 26, 2001 

	 	•	 	Name: Kent Biehler, DPM 

	 	•	 	Position: Podiatrist 

	 	•	 	Rate of Compensation: Income guarantee based on gross receipts of [****] per year, which amount is split with hospital in Nashville, Georgia 

	 	•	 	Termination Date: September 30, 2004 

	 	•	 	Addendum: July 26, 2001 

  

	 	  9.	 	Managed Care Contract between Memorial Hospital of Adel, Inc. and Blue Cross and Blue Shield of Georgia, Inc. 

  

	 	•	 	Dated: May 15, 1997 

	 	•	 	Termination Date: Renewable one-year terms 

	 	•	 	Amendment: April 5, 2002 

  

	 	10.	 	Professional Services Agreement 

  

	 	•	 	Dated: March 19, 1997 

	 	•	 	Name: Thomas Fausett, M.D. 

	 	•	 	Position: Family Practice 

	 	•	 	Rate of Compensation: Provides for payments based on physician’s net revenue 

	 	•	 	Termination Date: June 30, 2001 (loan forgiveness period extends for as long as physician working at hospital) 

  

	 	11.	 	Physician Assistance Agreement 

  

	 	•	 	Dated: October 11, 1999 

	 	•	 	Name: Fred H. Fritzsche, Jr., M.D. 

	 	•	 	Position: Family Practice 

	 	•	 	Rate of Compensation: Income guarantee based on net receipts of [****] per year 

	 	•	 	Termination Date: August 1, 2003 (by letter dated 12/13/01, it looks like he may have wanted to repudiate the contract) 

  
 [****] Confidential portion of material has been omitted and filed separately with the SEC.

  

 33 

	 	12.	 	Lease Agreement between the Company and GE Capital Healthcare Financial Services (lease of GEGS Millennium MPS) 

  

	 	•	 	Commencement Date: March 19, 2002 

	 	•	 	Termination Date: 60 months from Commencement Date 

	 	•	 	Recurring Amount Due: $3,713.50 per month plus tax 

  

	 	13.	 	Lease Agreement between the Company and GE Healthcare Financial Services (lease of GE Sanographic 800T) 

  

	 	•	 	Commencement Date: March 19, 2002 

	 	•	 	Termination Date: 60 months from Commencement Date 

	 	•	 	Recurring Amount Due: $1,216.08 per month plus tax 

  

	 	14.	 	Exclusive Professional Services Agreement 

  

	 	•	 	Dated: October 1, 2001 

	 	•	 	Name: General Anesthesia Services, LLC 

	 	•	 	Services: Anesthesia Services 

	 	•	 	Rate of Compensation: [****] per year 

	 	•	 	Termination Date: September 30, 2004 

  

	 	15.	 	Physician Recruitment Agreement 

  

	 	•	 	Dated: July 25, 2001 

	 	•	 	Name: Mary R. Howell, M.D. 

	 	•	 	Position: Obstetrician and Gynecologist 

	 	•	 	Rate of Compensation: Income guarantee based on gross receipts of [****] per year to be split with hospital in Nashville, Georgia (60% to be paid by Adel) 

	 	•	 	Termination Date: September 30, 2002 (provides for two-year forgiveness of loan period up to September 30, 2004) 

  

	 	16.	 	Mobile MRI Services Agreement 

  

	 	•	 	Dated: August 14, 2002 

	 	•	 	Name: Shared Imaging 

	 	•	 	Commencement Date: November 2002 

	 	•	 	Termination Date: 12 months following Commencement Date 

	 	•	 	Recurring Amounts Due: See Exhibit A, page 1 

  

	 	17.	 	Cooperating Provider Network Hospital Cooperating Provider Agreement between Memorial Hospital of Adel and America’s Health Plan, Inc., dated July 1, 1997.

  
 [****] Confidential portion of material has been omitted and
filed separately with the SEC. 
  

 34 

	 	18.	 	Health Care Provider Network Agreement Hospital – National between BCE Emergis Corporation and Memorial Hospital of Adel, dated August 1, 2002. 

  

	 	19.	 	Master Preferred Provider Network Hospital Agreement between Beech Street Corporation and Memorial Hospital of Adel, Inc., dated January 27, 1997. 

  

	 	20.	 	Facility Contract between Community Care Network, Inc. and Memorial Hospital of Adel, Inc., dated December 10, 1997. 

  

	 	21.	 	Hospital Participation Agreement between the State of Georgia, Department of Community Health, Division of Public Employee Health Benefits and Memorial Hospital of Adel, dated
January 1, 2000. 

  

	 	22.	 	Agreement between CompFirst, Inc. and Memorial Hospital of Adel, Inc., dated August 21, 1997. 

  

	 	23.	 	Hospital Contract between First Health Group Corp., acting in its capacity as owner and operator of The First Health® Network and Memorial Hospital of Adel, dated March 2, 1999, and amended on March 2,
1999, March 10, 1999, and June 12, 2000. 

  

	 	24.	 	Hospital Participation Agreement, State of Georgia, between FOCUS Healthcare Management, Inc. and Memorial Hospital of Adel, Inc., dated January 16, 1998. 

 

	 	25.	 	Hospital Participation Agreement for the State of Georgia Department of Community Health (DCH) between Memorial Hospital of Adel, Inc. and Georgia 1st, Inc., dated April 4, 2000.

  

	 	26.	 	Hospital Agreement between Memorial Hospital of Adel and Humana Military Healthcare Services, Inc., dated September 29, 1998. 

  

	 	27.	 	PPO Participating Facility Agreement between MultiPlan, Inc. and Memorial Hospital of Adel, dated May 2, 1995. 

  

	 	28.	 	Network Facility Agreement between National Provider Network, Incorporated and Memorial Hospital, dated July 13, 1999. 

  

	 	29.	 	PPO Hospital Participation Agreement between Principal Health Care of Georgia, Inc. and Memorial Hospital of Adel, dated March 1, 1998. 

  

	 	30.	 	Provider Agreement between Memorial Hospital of Adel and Provider Networks of America, Inc., dated April 4, 1997. 

  

 35 

	 	31.	 	Affiliate Hospital Participation Agreement between South Georgia Health Partners, L.L.C. and Memorial Hospital of Adel, dated September 17, 2001. 

  

	 	32.	 	Hospital Agreement between SpecialNet, Inc. and Memorial Hospital of Adel, dated March 1, 1998. 

  

	 	33.	 	Participating Hospital Agreement between UNICARE Life & Health Insurance Company and Memorial Hospital of Adel, dated September 25, 1998. 

  

	 	34.	 	Health Care Service Facility Agreement between Memorial Hospital of Adel and USA Managed Care Organization, Inc., dated August 26, 1997. 

  

	C.	 	Agreements Related to Callaway 

  

	 	1.	 	Managed Care Contract between HealthMont of Missouri, Inc. and Dana Corporation d/b/a American Health Group, dated October 1, 2001. 

  

	 	2.	 	Managed Care Contract between Callaway Community Hospital and Right Choice Managed Care, Inc. (Blue Cross/Blue Shield), dated February 10, 2000. 

  

	 	3.	 	Managed Care Contract between HealthMont of Missouri, Inc. and Beech Street Corporation, dated February 1, 2001. 

  

	 	4.	 	Agreement between HealthMont of Missouri, Inc. and Chem/Aqua (water quality assurance program) 

  

	 	•	 	Commencement Date: January 4, 2002 

	 	•	 	Termination Date: January 3, 2003 

	 	•	 	Recurring Amount Due: $716.45 per month plus taxes and freight 

  

	 	5.	 	Managed Care Agreement between HealthMont of Missouri, Inc. and Health Value Management, Inc. 

  

	 	6.	 	Managed Care Contract between HealthMont of Missouri, Inc. and Cigna HealthCare of St. Louis, Inc., dated October 1, 2001. 

  

	 	7.	 	Managed Care Contract between HealthMont of Missouri, Inc. and CorVel Corporation, dated May 31, 2001. 

  

 36 

	 	8.	 	Physical Therapy Agreement 

  

	 	•	 	Dated: March 1, 2002 

	 	•	 	Termination Date: March 1, 2005 

	 	•	 	Name: Critchfield Physical Therapy, P.C. 

	 	•	 	Services: Physical Therapy 

	 	•	 	Rate of Compensation: [****] per outpatient and [****] per inpatient 

  

	 	9.	 	Agreement between HealthMont of Missouri, Inc. and Specialized Imaging Services, Inc. (nuclear medicine equipment rental) 

  

	 	•	 	Dated: February 1, 2002 

	 	•	 	Termination Date: February 1, 2005 

	 	•	 	Recurring Amount Due: $2,700 per month 

  

	 	10.	 	Emergency Services Agreement 

  

	 	•	 	Dated: September 26, 2001 

	 	•	 	Termination Date: One-year renewable terms 

	 	•	 	Name: ECS of Missouri, Inc. 

	 	•	 	Services: Emergency Services 

	 	•	 	Rate of Compensation: Approximately [****] annually 

  

	 	11.	 	Physician Employment Agreement 

  

	 	•	 	Dated: January 24, 2002 

	 	•	 	Name: Ghassan H. Elkadi, M.D. 

	 	•	 	Position: Internal Medicine Physician 

	 	•	 	Rate of Compensation: Base rate of [****], plus bonus award 

	 	•	 	Termination Date: (three years from commencement date which was based on the approval of, or entry into U.S. in, H-1B status and receipt of J-1 visa waiver)

  

	 	12.	 	Agreement between HealthMont of Missouri, Inc. and George D. Groce, M.D. and Jane L. Groce (lease for hospital space) 

  

	 	•	 	Commencement Date: January 1, 2001 

	 	•	 	Termination Date: January 1, 2002 

	 	•	 	Recurring Amount Due: [****] per month 

  
 [****] Confidential portion of material has been omitted and filed separately with the SEC. 
  

 37 

	 	13.	 	Managed Care Agreement between HealthMont of Missouri, Inc. and HealthCare and USA of Missouri, LLC 

  

	 	•	 	Dated: April 1, 1996 

	 	•	 	Amendment Number 1: March 5, 1996 

	 	•	 	Amendment Number 2: December 1, 2001 

  

	 	14.	 	Managed Care Agreement between HealthMont of Missouri, Inc. and HealthLink HMO, Inc., dated August 1, 2001. 

  

	 	15.	 	Managed Care Contract between HealthMont of Missouri, Inc. and HealthLink, Inc., dated August 1, 2001. 

  

	 	16.	 	Managed Care Contract between HealthMont of Missouri, Inc. and Humana Kansas City, Inc. and Humana Insurance Company, dated September 12, 2001. 

  

	 	17.	 	Childbirth Instruction Agreement 

  

	 	•	 	Dated: March 20, 2002 

	 	•	 	Name: Lori Johnson 

	 	•	 	Services: Pre-Natal Classes 

	 	•	 	Rate of Compensation: [****] per 6-week session 

	 	•	 	Termination Date: Term is for six 6-week sessions 

  

	 	18.	 	Physical Therapy Agreement 

  

	 	•	 	Dated: January 1, 2001 

	 	•	 	Name: Daniel L. Kuebler 

	 	•	 	Services: Home Health Physical Therapy 

	 	•	 	Rate of Compensation: [****] per visit and $0.30 per mile 

	 	•	 	Termination Date: Originally January 1, 2002 with renewable one-year terms 

  

	 	19.	 	Agreement for Biological Specimen Collection 

  

	 	•	 	Dated: February 26, 2002 

	 	•	 	Termination Date: None; can be terminated by either party with 30 days’ notice 

	 	•	 	Name: LabOne 

	 	•	 	Services: Biological specimen Collection 

  
 [****] Confidential portion of material has been omitted and filed separately with the SEC. 
  

 38 

	 	20.	 	Professional Services Agreement 

  

	 	•	 	Dated: January 1, 2001 

	 	•	 	Name: Professional Associates, LLC 

	 	•	 	Services: Home Health Medical Social Services 

	 	•	 	Rate of Compensation: [****] per visit and $0.31 per mile 

	 	•	 	Expiration Date: Originally January 1, 2002 with one-year renewable terms 

  

	 	21.	 	Consulting Agreement 

  

	 	•	 	Dated: April 9, 2001 

	 	•	 	Name: Midwest Radiation Safety Consultants 

	 	•	 	Services: Nuclear Medicine Consulting 

	 	•	 	Rate of Compensation: [****] per quarter 

	 	•	 	Termination Date: April 9, 2002 with renewable one-year terms 

  

	 	22.	 	Managed Care Contract between HealthMont of Missouri, Inc. and Missouri Care Health Plan, dated April 1, 2002. 

  

	 	23.	 	Managed Care Agreement between HealthMont of Missouri, Inc. and Multiplan, Inc. 

  

	 	24.	 	Managed Care Agreement between HealthMont of Missouri, Inc. and One Health Plan of Kansas Missouri, Inc., dated December 5, 2001. 

  

	 	25.	 	Pharmacy Services Agreement 

  

	 	•	 	Dated: May 16, 2002 

	 	•	 	Name: PharmaSource Healthcare, Inc. 

	 	•	 	Services: Operation and Management of Hospital Pharmacy Department 

	 	•	 	Rate of Compensation: [****] per month and 127% of actual salary costs 

	 	•	 	Termination Date: May 7, 2004 with renewable two-year terms 

  

	 	26.	 	Managed Care Contract between HealthMont of Missouri, Inc. and ppoNEXT, Inc., dated December 1, 2001. 

  

	 	27.	 	Managed Care Contract between HealthMont of Missouri, Inc. and Private Healthcare Systems, Inc., dated April 26, 2001. 

  

	 	28.	 	Rapid Response Testing and Specimen Collection Agreement 

  

	 	•	 	Dated: May 30, 2001 

  

	 	2.	 	Managed Care agreement between HealthMont of Texas I, LLC and AmCare Health Plans of Texas, Inc., dated April 1, 2002. 

  

	 	3.	 	Agreement between HealthMont of Texas I, LLC and AES NewEnergy, Inc. (retail electric services) 

  

	 	•	 	Dated: January 3, 2002 

	 	•	 	Termination Date: February 2003 

	 	•	 	Recurring Amounts Due: Based on monthly utility usage 

  

	 	4.	 	Professional Services Agreement 

  

	 	•	 	Dated: April 17, 2001 

	 	•	 	Name: A.S.A.P. Nursing Agency, LLC 

	 	•	 	Services: Nursing Services 

  
 [****] Confidential portion of material has been omitted and filed separately with the SEC. 
  

 39 

	 	•	 	Name: Quest Diagnostics Inc. 

	 	•	 	Services: Rapid response testing and specimen collection 

	 	•	 	Rate of Compensation: Attachment 1 lists payment terms for various testing 

	 	•	 	Termination Date: May 30, 2002 

  

	 	29.	 	Sleep Disorder Testing Agreement 

  

	 	•	 	Dated: April 1, 2002 

	 	•	 	Name: WH Somnography Sleep Disorder Labs 

	 	•	 	Services: Provide in-hospital sleep disorder testing 

	 	•	 	Rate of Compensation: Dependent on healthcare plan of patient 

	 	•	 	Termination Date: April 30, 2004 

  

	 	30.	 	Managed Care Contract between HealthMont of Missouri, Inc. and UnitedHealthcare of the Midwest, Inc., dated September 15, 2001. 

  

	 	31.	 	Managed Care Contract between HealthMont of Missouri, Inc. and USA Managed Care Organization, Inc. 

  

	 	•	 	Dated: September 2, 1997 

	 	•	 	Termination Date: Renewable one-year terms 

  

	 	32.	 	Agreement for Medical and Related Services between HealthMont of Missouri, Inc. doing business as Callaway Community Hospital and Fulton State Hospital, dated March 27, 2001.

  

	 	33.	 	Hospital Participation Agreement between Group Health Plan, Inc. and Callaway Community Hospital, dated June 19, 1997, and amended April 8, 1998. 

  

	 	34.	 	Hospital Contract between Affordable Health Care Concepts and Callaway Community Hospital, dated July 22, 1993. 

  

	 	35.	 	Nurse Practitioner Recruitment Agreement, dated September 16, 2002, between HealthMont of Missouri, Inc. and Barbara Lynne Sanchez. 

  

	D.	 	Agreements Related to Dolly Vinsant 

  

	 	1.	 	Agreement between HealthMont of Texas I, LLC and Alcon Laboratories (equipment lease for Phaco Machine) 

  

	 	•	 	Commencement Date: February 2002 

	 	•	 	Termination Date: February 2005 

	 	•	 	Recurring Amounts Due: $394.06 per month 

  

 40 

	 	•	 	Rate of Compensation: Rate solicited under Section 3 of Agreement 

	 	•	 	Termination Date: April 17, 2003 

  

	 	5.	 	Agreement between HealthMont of Texas I, LLC and Beckman Coulter (lease of laboratory equipment) 

  

	 	•	 	Dated: February 28, 2002 

	 	•	 	Termination Date: February 28, 2007 

	 	•	 	Recurring Amounts Due: Approximately $10,800 per month 

  

	 	6.	 	Physician Recruitment Agreement 

  

	 	•	 	Date: January 14, 2002 

	 	•	 	Name: Alejandro Biglione 

	 	•	 	Position: Internal Medicine Physician 

	 	•	 	Rate of Compensation: Income guarantee based on gross receipts of [****] per month 

	 	•	 	Termination Date: December 2, 2003 but loan forgiveness period continues until December 2, 2005 

  

	 	7.	 	Managed Care Agreement between NAHC II of Texas, Inc. and USA Managed Care Organization, Inc. (children’s health insurance program—“CHIP”)

  

	 	8.	 	Emergency Services Agreement 

  

	 	•	 	Commencement Date: November 1, 1998 

	 	•	 	Name: Emergency Care Specialists of Texas, P.A. 

	 	•	 	Services: Emergency medical services 

	 	•	 	Rate of Compensation: [****] per month 

	 	•	 	Termination Date: Original termination date October 31, 2001 

  
 [****] Confidential portion of material has been omitted and filed separately with the SEC. 
  

 41 

	 	•	 	Amended: September 1, 2000 

  

	 	  9.	 	Managed Care Agreement between HealthMont of Texas I, LLC and Health Value Management, Inc. 

  

	 	10.	 	Nursing Services Agreement 

  

	 	•	 	Dated: February 15, 2001 

	 	•	 	Name: Intensivo Nursing Service, Inc. 

	 	•	 	Services: Nursing staff coverage 

	 	•	 	Rate of Compensation: Rate schedule on Exhibit A of Agreement 

	 	•	 	Termination Date: Originally February 15, 2002 

  

	 	11.	 	Physician Recruitment Agreement 

  

	 	•	 	Dated: June 6, 2001 

	 	•	 	Name: Arnulfo Izquierdo, D.O. 

	 	•	 	Position: Family Medicine Practitioner 

	 	•	 	Rate of Compensation: Income guarantee based on gross receipts of [****] per month 

	 	•	 	Termination Date: Original term ends August 12, 2002 and forgiveness of loan period ends August 12, 2005 

  

	 	12.	 	Medical Staffing Agreement 

  

	 	•	 	Commencement Date: May 17, 2001 

	 	•	 	Name: Medical Staffing Network, Inc. 

	 	•	 	Services: Nurse staffing services 

	 	•	 	Rate of Compensation: Rates on last page of agreement 

	 	•	 	Termination Date: Original term ends May 16, 2002 unless renewed 

  

	 	13.	 	Managed Care Agreement between HealthMont of Texas I, LLC and Private Healthcare Systems, Inc., dated November 5, 2001. 

  

	 	14.	 	Administrative Services Agreement 

  

	 	•	 	Dated: November 17, 1999 

	 	•	 	Name: Special Care Hospital Management Corporation 

	 	•	 	Services: Inpatient emergency medical/surgical detoxification services and chemical dependency education 

	 	•	 	Rate of Compensation: [****] per month 

	 	•	 	Termination Date: Original termination date September 1, 2002 with renewable one-year terms 

  
 [****]  Confidential portion of material has been omitted and filed separately with the SEC. 
  

 42 

	 	15.	 	Managed Care Contract between HealthMont of Texas I, LLC and Texas Department of Health 

  

	 	16.	 	Managed Care Contract between HealthMont of Texas I, LLC and Texas Rehabilitation Commission,  dated October 20, 1996. 

  

	 	17.	 	Managed Care Contract between HealthMont of Texas I, LLC and Texas True Choice, Inc./Ethix Southwest, Inc.,  dated August 7, 2001. 

  

	 	18.	 	Managed Care Contract between HealthMont of Texas I, LLC and UnitedHealthcare of Texas, Inc., UnitedHealthcare Insurance Company, United Healthcare Services, Inc. and United Health
Networks, Inc. 

  

	 	19.	 	Managed Care Contract between HealthMont of Texas I, LLC and UP & UP Health Services, dated May 1, 1996. 

  

	 	20.	 	Agreement between HealthMont of Texas I, LLC and The Scope Exchange, Inc. (lease of GI equipment) 

  

	 	•	 	Commencement Date: January 24, 2002 

	 	•	 	Termination Date: January 24, 2005 

	 	•	 	Recurring Amount Due: $2,400 per month 

  

	 	21.	 	Agreement between HealthMont of Texas I, LLC and Regions Financial Corporation (master equipment lease for telephone system) 

  

	 	22.	 	Purchase/Service Agreement between HealthMont of Texas I, LLC and AVAYA Communication (purchase of telephone system) 

  

	 	23.	 	Term promissory note from Petros Chapanos, M.D. in the original principal amount of $55,000, maturity date:  January 1, 2007 

  

	 	24.	 	Term promissory note from Prasad Movva, M.D. in the original principal amount of $25,000, maturity date:  February 1, 2005 

  

	 	25.	 	Term promissory note from Jody M. Griswold, D.O. in the original principal amount of $50,000; maturity date:  March 1, 2005 

  

	 	26.	 	Managed Care Agreement with South Texas Veterans Health Care System. 

  

	 	27.	 	Managed Care Agreement with USC Health Services, dated May 1, 1998. 

  

	 	28.	 	Managed Care Agreement with Unicare Life and Health Insurance Company, dated July 28, 1998. 

  

 43 

	 	29.	 	Managed Care Agreement with Texas Municipal League Group Benefits Risk Pool/TML Intergovernmental Employee Benefits Pool, dated July 28, 1998. 

  

	 	30.	 	Managed Care Agreement with ProAmerica Managed Care Inc., dated July 1, 1994 and amended July 17, 1999. 

  

	 	31.	 	Managed Care Agreement with Preferred Health Network Inc., dated June 1, 1993 and amended April 12, 1993. 

  

	 	32.	 	Managed Care Agreement with PHP Healthcare corporation dated October 15, 1997. 

  

	 	33.	 	Managed Care Agreement with Newton Healthcare Network LLC. 

  

	 	34.	 	Managed Care Agreement with MultiPlan Inc., dated March 1, 1993. 

  

	 	35.	 	Managed Care Agreement with National Healthcare Alliance Inc., dated June 1, 1994. 

  

	 	36.	 	Managed Care Agreement with MedicalControl Network Solutions, Inc., dated June 1, 1999. 

  

	 	37.	 	Managed Care Agreement with MedCorp. Southwest, Inc., dated May 1, 1993. 

  

	 	38.	 	Managed Care Agreement with Med-Care Advantage Corp., dated December 15, 1995. 

  

	 	39.	 	Managed Care Agreement with HealthSmart Preferred Care, Inc., dated April 10, 2000. 

  

	 	40.	 	Managed Care Agreement with Health Strategies, Inc., dated January 1, 1994. 

  

	 	41.	 	Managed Care Agreement with Guardian Resources, Inc., dated August 1, 1998. 

  

	 	42.	 	Managed Care Agreement with BCBSTX, dated July 15, 1996 and amended April 3, 2000. 

  

	 	43.	 	Managed Care Agreement with Teachers Retirement System of Texas, Inc. 

  

 44 

 Section 3.20(a)(i) 
  
 None 
  
 Section 3.2(a)(vii) 
  
 None 
  
 Section 3.20(b) 
  
 None 
  
 Section 3.20(c) 
  
 None 
  

 45 

 Section 3.21 
  
 Licenses and Accreditations 
  

	A.	 	Adel Licenses and Accreditations 

  

	 	1.	 	Hospital Permit granted November 1, 1998 by the Georgia Department of Human Resources, Effective Date 9/1/2000, #037-597 

  

	 	2.	 	Nursing Home or Intermediate Care Home Permit issued November 1, 1998 by the Georgia Department of Human Resources, 1-037-1561 

  

	 	3.	 	Home Health Agency License granted to Memorial Hospital of Adel to operate Memorial Home Health, license granted by the Georgia Department of Human Resources, effective 10/1/01
– 9/30/02, #037-101 

  

	 	4.	 	Occupation Tax Certification No. 375 issued by the City of Adel, Georgia, expiration date December 31, 2002. Boiler and Pressure Vessel Operating Permit, expiration date April 30,
1992. Certificate of Inspection of Boiler Room issued April 8, 1999 by Georgia Department of Labor, expiration date April 1, 2000 (inspection has been delayed; new certificate cannot be issued until inspection is performed); Certificate of
Inspection of new wing and fire tube issued May 6, 1999 by Georgia Department of Labor, expiration date May 1, 2002 (new inspection to be scheduled by Zurich, the company that insures the boilers, as soon as possible).

  

	 	5.	 	Control Substance Registration Certificate, DEA registration no. BM6194841 and DEA registration no. BM6194839, issued by the United States Department of Justice Drug Enforcement
Administration, expiration date January 31, 2002, #BM6194839, expires 1/31/05 and #BH6990914, expires 10/31/03. 

  

	 	6.	 	Georgia State Board of Pharmacy, Pharmacy and License No. 005557 issued by the State of Georgia, expiration date June 30, 2001, #005557, expires 6/30/03. 

 

	 	7.	 	CLIA Laboratory Certificate of Accreditation issued by the Department of Health and Human Services Healthcare Financing Administration, CLI ID No. 11D0265621, expiration date
November 17, 2001, expires 11/17/03. 

  

	 	8.	 	Certified Mammography Facility, as certified by the U.S. Department of Health and Human Services Public Health Service Food and Drug Administration, expiration date February 28,
2003. 

  

	 	9.	 	Georgia Radioactive Materials License issued by the Georgia Department of Natural Resources, license no. GA.571-1, expiration date 8/31/05. 

  

	 	10.	 	Accreditation by the Joint Commission on Accreditation of Healthcare Organizations, 2000-2003. 

  

	B.	 	Dolly Vinsant Licenses and Accreditations 

  

 46 

	 	1.	 	Hospital License No. 000245 from the Texas Department of Health, expiration August 31, 2002. 

  

	 	2.	 	Texas Sales and Use Tax Permit for Tax Payer No. 3-00029-3302-3, effective October 21, 1976. 

  

	 	3.	 	Pharmacy License issued by the Texas Board of Pharmacy to Dolly Vinsant Memorial Hospital, #20672, expiration 11/02. 

  

	 	4.	 	Controlled Substance Registration Certificate issued by the United States Department of Justice Drug Enforcement Administration, DEA registration no. BN5632547, expiration October
31, 2000, #BD7001542, expiration 6/30/03. 

  

	 	5.	 	CLIA Laboratory Certificate of Accreditation issued by the Department of Health and Human Services Health Care Financing Administration, #45D0660557, expiration 11/30/03.

  

	 	6.	 	Radioactive Material License No. L04567, issued by the Texas Department of Health Bureau of Radiation Control, expiration date April 30, 2002. 

  

	 	7.	 	Accreditation issued by the Joint Commission on Accreditation of Health Care Organizations dated July 1, 1998 effective for three years from April 18, 1998.

  

	 	8.	 	Petroleum Storage Tank registered to New American Healthcare Corp. by the Texas Natural Resource Conservation Commission (“TNRCC”), Facility ID No. 69803, Owner Account ID
No. 53650, registration does not expire but TNRCC requires notification of transfer of ownership. 

  

	 	9.	 	Boiler Certificate of Operation, #C-99L07993, expiration date 10/27/03. 

  

	C.	 	Callaway Licenses and Accreditations 

  

	 	1.	 	Missouri Department of Health & Senior Services – CCH License, Expiration Date: 12/31/2002, License #463-1 

  

	 	2.	 	Missouri Department of Health Home Health License, Expiration Date: 11/30/2002, License #709 

  

	 	3.	 	City of Fulton Business License, Expiration Date: 02/28/2003, License #20010600 

  

 47 

	 	4.	 	DEA, Expiration Date: 08/31/2003, License #BC7153858 

  

	 	5.	 	BNDD, Expiration Date: 12/31/2004, License #19605 

  

	 	6.	 	Missouri Board of Pharmacy, Expiration Date: 10/31/2003, License #2001000394 

  

	 	7.	 	HCFA, CLIA Certificate, Expiration Date: 11/30/2002, CLIA ID: 26D0446483 

  

	 	8.	 	Missouri Department of Health Certified Mammography Facility, Expiration Date: 12/31/2002 

  

	 	9.	 	JCAHO, 2003 

  

 48 

 Section 3.22 
  
 Insurance 
  
 HEALTHMONT, INC. 
 Full List of Lines
of Coverage 
  
 Covered Hospitals 
  
 Dolly Vinsant Memorial Hospital—Retro Date: September 1, 2000 
 Memorial Hospital of Adel, Inc.—Retro Date: September 1, 2000 
 Calloway
Community Hospital—Retro Date: January 1, 2001 
  

	 Coverage Line

	 	 Carrier

	 	 Policy #

	 	 	 	 Limits

	 Property
	 	Zurich	 	 [****]
 8/31/00—8/31/02
	 	$	147,508,654	 	Blanket
	 	 	 	 	 	 	$	53,496,414	 	Business Interruption
	 	 	 	 	 	 	$	15,000	 	Deductible
	 	 	 	 	 	 	$	50,000	 	Flood Limit
	 	 	 	 	 	 	$	50,000	 	Earth Movement Limit
	 	 	 	 	 	 	$	15,000	 	Deductible except for Woodland Park & Eastmoreland
	 	 	 	 	 	 	5% of PD and BI value or $100,000 whichever is greater
	 	 	 	 	 	 	$	25,000	 	Windstorm deductible applies to Dolly Memorial Hospital
					
	 Hospital Professional Liability Hospital General Liability
 (GL & HPL)l
	 	St. Paul Fire & Marine	 	 [****]
 8/31/01—8/31/02
	 	 $
 $
	 1,000,000
 300,000
	 	 Each Occurrence
 Fire Damage—Each
Event
 Pollution Liability Hazard—Ea.

	 	 	 	 	 	 	 	 	 	Event
	 	 	 	 	 	 	 	 	 	Pollution Liability Hazard
	 	 	 	 	 	 	$	2,000,000	 	Aggregate—All Events
	 	 	 	 	 	 	$	50	 	Damage Deductible/Per claim
	 	 	 	 	 	 	$	250,000	 	Deductible/Annual/Aggregate
					
	 Umbrella Liability
	 	St. Paul Insurance Co.	 	 [****]
 8/31/01—8/31/02
	 	 $
 $
	 10,000,000
 10,000,000
	 	 Occurrence Limit
 Aggregate
Limit

	 	 	 	 	 	 	 	 	 	 
					
	 Automobile Liability
	 	St. Paul Mercury Insurance Co.	 	 [****]
 8/31/01—8/31/02
	 	 $
 $
	 1,000,000
 1,000,000
	 	 Limit of Liability
 Uninsured
Motorists

	 	 	 	 	 	 	$	2,000	 	Medical Payments
	 	 	 	 	 	 	$	2,500	 	Personal Injury Protection
	 	 	 	 	 	 	$	500	 	Collision Deductible
	 	 	 	 	 	 	$	250	 	Comprehensive Deductible
					
	 Texas Automobiles
	 	St. Paul Mercury Insurance Co.	 	 [****]
 8/31/01—8/31/02
	 	 $
 $
	 1,000,000
 1,000,000
	 	 Limit of Liability
 Uninsured
Motorists

	 	 	 	 	 	 	$	2,500	 	Medical payments
	 	 	 	 	 	 	$	2,500	 	Personal Injury Protection
	 	 	 	 	 	 	$	500	 	Collision Deductible
	 	 	 	 	 	 	$	250	 	Comprehensive Deductible
				
	 Workers Compensation
	 	American Home Assurance	 	 [****]
 8/31/01—8/31/02
	 	State Statutory Limits
					
	 Workers Compensation—Georgia
	 	 	 	 [****]
 8/31/01—8/31/02
	 	 	 	 	 
	     Employers Liability
	 	 	 	 	 	$	1,000,000	 	Each Accident
	 	 	 	 	 	 	$	1,000,000	 	Policy Limit
	 	 	 	 	 	 	$	1,000,000	 	Each Employee
	     Calloway Community Hospital
 (Covered by Separate State policy)
	 	Missouri Hospital Association	 	 [****]
 1/01/02—1/01/03
	 	 	 	 	 
					
	 Heliport
 (Coverage for Calloway Community Hospital)
	 	National Union	 	 [****]
 1/1/02—1/1/03
	 	 $
 $
	 3,000,000
 1,000
	 	 Per Occurrence
 Medical Payments Per
Person

	 	 	 	 	 	 	 	 	 	 
					
	 Sensitive Risk
	 	Gulf Insurance Company	 	 [****]
 8/31/01—8/31/02
	 	 $
 $
	 3,000,000
 250,000
	 	 Limit of Liability—Each Loss
 Maximum
Benefit applicable to any one

	 	 	 	 	 	 	 	 	 	person
	 	 	 	 	 	 	$	1,250,000	 	Aggregate Limit for any one accident
					
	 Crime
	 	National Union Fire Insurance co.	 	[****]	 	$	1,000,000	 	Fiduciary Limit
	 	 	 	 	8/31/01—8/31/02	 	$	25,000	 	Deductible
					
	 Fiduciary
	 	National Union Fire Insurance Co.	 	[****]	 	$	3,000,000	 	Fiduciary Limit
	 	 	 	 	4/31/00—4/31/01	 	$	0	 	Deductible
					
	 Directors and Officers
	 	National Union Fire Insurance Co.	 	[****]	 	$	5,000,000	 	Limit of Liability
	 Executive Directors & Officers
	 	 	 	8/31/01—8/31/02	 	$	100,000	 	Retention Limit
	 	 	 	 	 	 	$	100,000	 	Employment Practices

 [****]  Confidential portion of material has been omitted and filed separately with the SEC. 

 
  

 49 

 SCHEDULE OF YOUR CURRENT INSURANCE 
 As of September 30, 2002 
 Prepared for: HealthMont, Inc. 
  

	 Type of Coverage

	  	 Policy Limits

	  	Policy Period

	  	 Company & Policy Number

	  	Annual Premium

	 Property
	  	Limit	  	 	  	08/31/02 to
08/31/03	  	Zurich
[****]	  	$115,233
	 	  	$36,062,431	  	Blanket Occurrence Limit as follows:	  	 	  	 	  	 
	 	  	Included	  	Building	  	 	  	 	  	 
	 	  	Included	  	Contents	  	 	  	 	  	 
	 	  	Included	  	Improvements and Betterments	  	 	  	 	  	 
	 	  	Included	  	EDP	  	 	  	 	  	 
	 	  	Included	  	Business Interruption	  	 	  	 	  	 
						
	 	  	Sublimits	  	 	  	 	  	 	  	 
	 	  	$36,062,431	  	Flood per occurrence at Premises Outside a 500 Year Flood Plain	  	 	  	 	  	 
	 	  	$10,000,000	  	Flood per occurrence at Premises Outside a 100 Year Flood Plain but Within a 500 Year Flood Plain	  	 	  	 	  	 
	 	  	$  5,000,000	  	Flood per occurrence at Locations Within a 100 Year Flood Plain	  	 	  	 	  	 
	 	  	Excluded	  	Earthquake (Zone 1)	  	 	  	 	  	 
	 	  	$25,000,000	  	Earthquake (Zone 2)	  	 	  	 	  	 
	 	  	$36,062,431	  	Earthquake Annual Aggregate (Zone 3 & 4)	  	 	  	 	  	 
	 	  	$         1,000	  	Per Patient Property with $500,000 Annual Aggregate	  	 	  	 	  	 
	 	  	$     250,000	  	Transit (Aggregate Liability in any single occurrence)	  	 	  	 	  	 
	 	  	$  5,000,000	  	Valuable Paper	  	 	  	 	  	 
	 	  	$  2,500,000	  	Accounts Receivable	  	 	  	 	  	 
	 	  	$     250,000	  	Exhibition Floater	  	 	  	 	  	 
	 	  	$  1,000,000	  	Service Interruption	  	 	  	 	  	 
	 	  	$  2,000,000	  	Building Ordinance/Demolition/Increased Cost of Construction	  	 	  	 	  	 
	 	  	$  5,000,000	  	Extra Expense—Schedule Premises	  	 	  	 	  	 

  
 [****] Confidential portion of
material has been omitted and filed separately with the SEC. 
  
 Note: This
Policy Schedule is only an outline of coverage that has been prepared for your convenience. Actual Policy Language must be consulted for any definitive evaluation of coverage terms and conditions. 
  

 50 

 SCHEDULE OF YOUR CURRENT INSURANCE 
 As of September 30, 2002 
 Prepared for: HealthMont, Inc. 
  

	 Type of Coverage

	  	 Policy Limits

	  	Policy Period

	  	 Company & Policy Number

	  	Annual Premium

	 Deductibles
	  	$       25,000	  	Except	  	 	  	 	  	 
	 	  	 	  	1X Daily Average Value for Business Income	  	 	  	 	  	 
	 	  	$     100,000	  	Flood at Premises Outside a 500 Year Flood Plain	  	 	  	 	  	 
	 	  	$     250,000	  	Flood at Premises Outside a 100 Year Flood Plain but Within a 500 Year Flood Plain	  	 	  	 	  	 
	 	  	$     500,000	  	Flood each Building Within a 100 Year Flood Plain	  	 	  	 	  	 
	 	  	$     500,000	  	Flood each Building Contents Within a 100 Year Flood Plain	  	 	  	 	  	 
	 	  	$     500,000	  	Flood Business Income at Premises Within a 100 Year Flood Plain	  	 	  	 	  	 
	 	  	$     100,000	  	Earthquake (Zone 3, 4 and 5) (Zone 1 excluded)	  	 	  	 	  	 
	 	  	$     100,000	  	Wind except	  	 	  	 	  	 
	 	  	$     250,000	  	For Dolly Vinsant Memorial Hospital, San Benito, TX	  	 	  	 	  	 
	 	  	$       25,000	  	Service Interruption Property Damage with 24 hour waiting period followed by a $25,000 deductible except 72 hour Waiting Period followed by a $25,000 deductible for Dolly Vinsant
Memorial Hospital	  	 	  	 	  	 
						
	Boiler and Machinery Sublimits	  	$36,062,431	  	Combined Property Damage/Business Interruption	  	08/31/02 to
08/31/03	  	Zurich
[****]	  	Included
	 	  	$  1,000,000	  	Spoilage	  	 	  	 	  	 
	 	  	$       25,000	  	Hazardous Substance	  	 	  	 	  	 
	 	  	$       25,000	  	Ammonia Contamination	  	 	  	 	  	 
	 	  	$       25,000	  	Water Damage	  	 	  	 	  	 
	 	  	Deductible:	  	$25,000 Property Damage	  	 	  	 	  	 
	 	  	 	  	1 Times Average Daily Value for Business Interruption	  	 	  	 	  	 

  
 [****] Confidential portion of
material has been omitted and filed separately with the SEC. 
  
 Note: This
Policy Schedule is only an outline of coverage that has been prepared for your convenience. Actual Policy Language must be consulted for any definitive evaluation of coverage terms and conditions. 
  

 51 

 SCHEDULE OF YOUR CURRENT INSURANCE 
 As of September 30, 2002 
 Prepared for: HealthMont, Inc. 
  

	 Type of Coverage

	 	Policy Limits

	 	Policy Period

	 	 Company & Policy Number

	 	Annual Premium

	 General Liability/
	 	$	3,000,000	 	General Aggregate	 	08/31/02 to	 	Lexington Insurance	 	$	1,350,000 +
	(occurrence form)
Health Care	 	$	3,000,000	 	Products and Completed Operations Aggregate	 	08/31/03	 	 Company
 [****]
	 	  
  
	 Taxes and
 Surcharges

	 Professional
 (claims
made)
	 	 $
 $
 $
 $
 $
	 1,000,000
 1,000,000
 50,000
 5,000
 500,000
	 	 Personal and Advertising Injury
 Each Occurrence Limit
 Fire Damage Limit (any one fire)
 Medical Expenses Limit (any one person)
 Deductible
	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
						
	 Employee Benefits
	 	 $
 $
	 1,000,000
 1,000
	 	 Aggregate Limit (claims made)
 Deductible
	 	 	 	Lexington Insurance Co.	 	 	Included
	 	 	 	 	 	 	 	 	 	 
						
	 Crime
	 	 $
 $
	 1,000,000
 25,000
	 	 Limit of Liability
 Deductible
	 	08/31/02 to
08/31/03	 	 National Union Fire Ins. Company
 [****]
	 	$	6,984
	 	 	 	 	 
						
	 Automobile
	 	 $
 $
 $
 $
 $
 $
	 1,000,000
 1,000,000
 2,000
 35,000
 250
 500
	 	 Combined Single Limit
 Uninsured
Motorist (Owned Autos)
 Medical Payments
 Hired Car Physical
Damage
 Deductible—Comprehensive
 Deductible—Collision
	 	08/31/02 to
08/31/03	 	 St. Paul Fire & Marine
 [****]
	 	$	9,379
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
						
	Automobile
(Texas)	 	 $
 $
 $
 $
 $
 $
	 1,000,000
 1,000,000
 2,500
 35,000
 250
 500
	 	 Combined Single Limit
 Uninsured
Motorist (Owned Autos)
 Medical Payments
 Hired Car Physical
Damage
 Deductible—Comprehensive
 Deductible—Collision
	 	08/31/02 to
08/31/03	 	 St. Paul Fire & Marine
 [****]
	 	$	1,146
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
						
	 Aviation
	 	 $
 $
	 5,000,000
 1,000
	 	 Each Occurrence
 Medical
Expenses
	 	01/01/01 to
01/01/02	 	 National Union
 [****]
	 	$	3,545
	 	 	 	 	 	 	 	 	 	 	 

  
 [****] Confidential portion of
material has been omitted and filed separately with the SEC. 
  

	*	 	This policy is on a “Claims Made” basis, which means that the policy in force at the time of the loss is the responding party. Late reporting could result in
declination of coverage by the carrier. 

  
 Note: This Policy
Schedule is only an outline of coverage that has been prepared for your convenience. Actual Policy Language must be consulted for any definitive evaluation of coverage terms and conditions. 
  

 52 

 SCHEDULE OF YOUR CURRENT INSURANCE 
 As of September 30, 2002 
 Prepared for: HealthMont, Inc. 
  

	 Type of Coverage

	  	Policy Limits

	  	Policy Period

	  	 Company & Policy Number

	  	Annual Premium

	 Workers Compensation
	  	Statutory	  	 	  	 	  	 
						
	 Employers Liability
	  	 $1,000,000
 $1,000,000
 $1,000,000
	  	 Each Accident
 Policy
Limit
 Each Employee
	  	08/31/02 to
08/31/03	  	 American Home Assurance
 [****]
	  	$348,650
	  	  	  	  	  
	  	  	  	  	  
						
	 Special Coverage
	  	$3,000,000	  	Limit of Liability	  	08/31/02 to
08/31/03	  	 Gulf Insurance Company
 [****]
	  	$    2,800
						
	Directors & Officers Liability	  	 $5,000,000
 $100,000
	  	 Limit of Liability
 Retention
	  	08/31/02 to
08/31/03	  	 National Union Fire Ins. Co.
 [****]
	  	$  97,500
						
	 Fiduciary
	  	 $3,000,000
 $3,000,000
	  	 Each Loss
 Aggregate
	  	08/31/02 to
08/31/03	  	 National Union Fire Ins. Co.
 [****]
	  	$    7,300

  
 [****] Confidential portion of
material has been omitted and filed separately with the SEC. 
  
 Note: This
Policy Schedule is only an outline of coverage that has been prepared for your convenience. Actual Policy Language must be consulted for any definitive evaluation of coverage terms and conditions. 
  
  

 53 

 Section 3.23 
  
 Books and Records 
  
 None. 
  

 54 

 Section 3.24 
  
 Real Property 
  
 Section 3.24(a) 
  

	A.	 	Adel Real Property 

  

	 	1.	 	Memorial Hospital/Convalescent Center (owned) 

  

	 	2.	 	OB/GYN Clinic located at 308 N. Parrish, Adel, Georgia (owned) 

  

	 	3.	 	Home Health Building located at 1905 South Hutchinson, Adel, Georgia (leased) 

  

	 	4.	 	Medical Record Storage Building located at 206 E. Memorial Dr., Adel, Georgia (leased) 

  

	 	6.	 	Surgeon’s Office located at 901 N. Parrish, Adel, Georgia (leased) 

  

	 	7.	 	Memorial Hospital Annex located at 808 N. Hutchinson, Adel, Georgia (leased) 

  

	B.	 	Dolly Vinsant 

  

	 	1.	 	Real property consists of 7.498 acres of land on the southeast quarter of block #81 of San Benito Land and Water Company Subdivision, City of San Benito, Texas, and the structures
(hospital and maintenance building) that lie on the property. 

  

	 	2.	 	Leases for the purpose of medical office practice are active for three parcels of the hospital building totaling approximately 4000 square feet. The Company is the lessor. 

  

	C.	 	Callaway 

  

	 	See	 	attached description of owned real property. 

  

	 	Under	 	the Heller Loan Documents, Heller possesses a Lien with respect to real property of the Company and the Subsidiaries. 

  
 Section 3.24(c) 
  
 None. 
  

 55 

 Section 3.24(e) 
  
 None. 
  
 Section 3.24(f) 
  
 None.

  

 56 

 Exhibit “A” 
  
 Legal Description 
  
 Part of Section 18, Township 47 North, Range 9 West, Callaway County, Missouri, described as follows: 
  
 Commencing at an Aluminum State Monument at the Southeast corner of said Section 18; thence N 81° 44’ 27” W,
1041.05 feet to a 1⁄2” iron pin at the Southwest corner of Lot 1, of the Corrected Plat of Westminster College Subdivision, Recorded in Plat Book 8, page 12, said point being the True Point of Beginning, thence N 89° 18’ 24” E
along the north right of way line of South Hospital Drive, 165.00’ to a 1⁄2” iron pin at a point of curve; thence continuing along said North right of way line on a curve to the left having a central angle of 25° 05’ 08”,
a radius of 795.00’, an arc distance of 348.07’, and a chord bearing and distance of N 76° 45’ 50” E, 345.30’ to a point of compound curve; thence continuing along said right of way line in a Northeasterly to
Northwesterly direction, on a curve to the left having a central angle of 88° 50’ 00”, a radius of 625.00’, an arc distance of 969.02’, and a chord bearing and distance of N 19° 48’ 19” E, 874.84’ to a
point of reverse curve; thence continue along the Westerly right of way line of said South Hospital Drive in a Northwesterly direction on a curve to the right having a central angle of 16° 15’ 00”, a radius of 1065.00’, an arc
distance of 302.05’, and a chord bearing and distance of N 16° 29’ 13” W, 301.04’ to a concrete monument on the South right of way line of Missouri State Route “F”; thence S 81° 38’ 16” W along said
right of way line, 135.00’ to a 1⁄2” iron pin at a point of curve; thence continue along said right of way line on a curve to the right having a central angle of 17° 07’ 09”, a radius of 1562.69’, an arc distance of
466.91’, and a chord bearing and distance of N 81° 18’ 24” W, 465.17’ to a 1⁄2” iron pin; thence leaving said right of way line S 20° 28’ 53” W, 152.75’ to a 1⁄2” iron pin; thence N 89°
58’ 07” W, 57.31’ to a 1⁄2” iron pin at the Northwest corner of said Lot 1; thence S 0° 15’ 35” W, along the West line of said Lot 1, 1076.28’ to the True Point of Beginning, 
  
 EXCEPT THEREFROM, a tract of land being a part of Lot 1 of the corrected Plat
of Westminster College Subdivision #1, a subdivision filed for public record in Plat Book 8, Page 12, of Callaway County Land Records, located in Section 18, Township 47 North, Range 9 West, Callaway County, Missouri, described as follows:
Commencing at a point on the Northern right of way line of South Hospital Drive, 50’ wide, said point being on the South boundary line of said Lot 1, said point bears N 89° 18’ 24” E, 39.17’ from the Southwest corner of said
Lot 1; thence leaving said right of way line along the projection of the Southeast wall of the existing Hospital N 49° 45’ 02” E, 582.58’ to the corner of the existing wall; thence S 12° 32’ 32” E, 32.76’ to the
True Point of Beginning, thence S 40° 14’ 58” E, 32.87’ to a point; thence S 49°45’ 02” W, 39.33’ to a point; thence N 40° 14’ 58” W, 32.87 feet to a point; thence N 49° 45’ 02” E,
39.33’ to the True Point of Beginning. 
  
 G230788.1

  
  

 57 

 Section 3.25 
  
 Tangible Personal Property; Investment Assets 
  
 Section 3.25(a) 
  

	A.	 	Each lessor of equipment leased to the Company or any of its Subsidiaries possesses a Lien with respect to the equipment so leased. Such leases include those listed in Section
3.20(a)A.9, A.15, A.18, A.21, B.3, D.1, D.5, D.20, D.21. 

	

	B.	 	Under the Heller Loan Documents, Heller possesses a Lien with respect to personal property of the Company and the Subsidiaries, including machinery, equipment, furniture and
fixtures. 

  
 Section 3.25(b) 
  
 None. 
  

 58 

 Section 3.26 
  
 Bank and Brokerage Accounts 
  

HealthMont, Inc. 
  
 Bank Account Numbers 
  

	 	  	Account
Number

	 	 Intended Use

	  	 Signatory

	 HealthMont, Inc. — Corporate
	  	 	 	 	  	 
	 Regions Bank
 500 Corporate Centre Drive
	  	[****]	 	CONCENTRATION	  	Timothy S. Hill, Gerald S. Christine
	 Franklin, TN 37067
	  	[****]	 	Co-wide A/P	  	Timothy S. Hill, Gerald S. Christine
	 	  	[****]	 	Corp. Manual A/P	  	Timothy S. Hill, Gerald S. Christine
	 	  	 	 	 	  	 
	 	  	[****]	 	Co-wide Payroll	  	Timothy S. Hill, Gerald S. Christine
	 	  	[****]	 	Management Payroll	  	Timothy S. Hill, Gerald S. Christine
	 	  	 	 	 	  	 
	 	  	[****]	 	 Employee Benefits Medical
 Claims
	  	Timothy S. Hill, Gerald S. Christine,
Bradley P. Ray, Larry R. Dust
				
	 	  	[****]	 	Customer Debit Account	  	Timothy S. Hill, Gerald S. Christine
	 	  	 	 	 	  	 
	 BankOne, Texas
 1717 Main Street
 Dallas, TX 75201
	  	[****]	 	Lockbox Account	  	Timothy S. Hill
				
	 Dolly Vinsant Memorial Hospital
	  	 	 	 	  	 
	 BankOne, TX
 1717 Main Street
 Dallas, TX 75201
	  	 [****]
 P.O. Box 972400
	 	 Lockbox Account Number
 Lockbox P.O.
Number
	  	Timothy S. Hill
				
	 Coastal Bank
 198 South Sam Houston
 San Benito, TX 78586
	  	 [****]
 [****]
	 	 Depository
 Tax Deposit & Impress
Account
	  	 Timothy S. Hill, Ann R. Price
 Leslie
Bingham, Harvey Torres, Timothy S. Hill, Ann R. Price

				
	 Memorial Hospital of Adel
 BankOne, TX
 1717 Main Street
 Dallas, TX 75201
	  	 [****]
 P.O. Box 972398
  
  
	 	 Lockbox Account Number
 Lockbox P.O.
Number
	  	 Timothy S. Hill

				
	 Adel Banking Company
 101 N. Hutchinson Ave.
 P.O. Box 191
 Adel, GA 31620
	  	[****]	 	Depository	  	Timothy S. Hill, Ann R. Price
				
	 First State Bank & Trust
 Company of Valdosta
 527 N. Patterson Street
 Valdosta, GA 31601
	  	[****]	 	MasterCard/Visa	  	Timothy S. Hill, Gerald S. Christine
				
	 Farmers & Merchants Bank
 301 West Fourth Street
 P.O. Box 560
 Adel, GA 31620
	  	 [****]
 [****]
 [****]
	 	 Tax Deposit
 Impress
 Resident Trust Account
	  	 Timothy S. Hill, Greg Griffith, Lori
Petrie, Janet Meders
 Timothy S. Hill, Greg Griffith, Lori
Petrie, Janet Meders
 Timothy S. Hill, Greg Griffith, Lori
Petrie, Janet
Meders

				
	 Callaway Community Hospital
 BankOne, TX
 1717 Main Street
 Dallas, TX 75201
	  	 
[****]
 P.O. Box 972508
	 	 
Lockbox Account Number
 Lockbox P.O.
Number
	  	
Timothy S. Hill
				
	 Central Bank
 P.O. Box 779
 Jefferson City, MO 65102
	  	 [****]
 [****]
 [****]
	 	 Depository
 Payroll Tax & Impress
Account
 Checking Account
	  	 Timothy S. Hill, Ann R. Price
 Timothy S.
Hill, Gerald M. Torba,
 Deborah I. Horne
 Timothy S. Hill, Ann R.
Price

	 07/10/2002
	  	 	 	 	  	 

  
 [****] Confidential portion of
material has been omitted and filed separately with the SEC. 
  

 59 

 Section 3.27 
  
 Powers of Attorney 
  
 Easley, McCaleb & Associates, Inc. has a power of attorney related to the Property Tax Consulting Agreement listed in Section 3.20(a)A.17. 

 

 60 

 Section 3.28 
  
 Accounts Receivable 
  
 None. 
  

 61 

 Section 3.30 
  
 Healthcare Licenses 
  

	A.	 	See Section 3.21 of this Company Disclosure Schedule. 

  

	B.	 	The Company owns rights to the servicemark “HealthMont, Inc.,” which is currently pending approval from the United States Patent and Trademark Office.

  

	C.	 	HealthMont of Georgia, Inc. owns the right to the names: (i) Memorial Hospital of Adel; (ii) Memorial Home Health; and (iii) Memorial Convalescent Center. 

 

	D.	 	HealthMont of Texas, Inc. owns the right to use the names: (i) Dolly Vinsant Memorial Hospital; (ii) The Dolly V L.C.; (iii) The Dolly, Inc.; (iv) The Dolly Home Healthcare; (v)
Dolly Home Oxygen Service; and (vi) San Benito Medical Associates After Hours Clinic. 

  

 62 

 Section 3.31 
  
 Medicare Participation/Accreditation 
  
 None. 
  

 63 

 Section 3.33 
  
 Medical Staff Matters 
  
 None. 
  

 64 

 Section 3.34 
  
 Sensitive Payments 
  
 None. 
  

 65 

 Section 3.35 
  
 Healthcare Reports and Documents 
  
 The only extension the Company has requested outside of the normal guidelines for filing a healthcare report was for the
Callaway Medicaid Cost Report for period ending 3/31/01. 
  

 66 

 Section 5.1 
  
 Conduct of the Business of the Company 
  
 Section 5.1(b)(vi) 
  

	A.	 	In consideration of a general release in form reasonably acceptable to Parent and in consideration of all rights to receive shares of the Company or any successor thereto, whether
under any Company Benefit Plan, Company Derivative Security, employment agreement, consulting agreement or otherwise, the Company may pay the following amounts as severance (which amounts shall be in lieu of, and not in addition to, any severance
benefits otherwise payable) to the persons set forth below prior to the Effective Date. 

  

	 Name        

	  	Title

	  	Severance

	 Corporate Severance
	  	 	  	 
	 Hill, Tim
	  	CEO	  	$175,000
	 Butler, Tom
	  	AVP	  	50,000
	 Scott, Tom
	  	AVP	  	50,000
	 Love, Steve
	  	M	  	20,000

  

	B.	 	The Company will acquire a tail for its directors and officers insurance. 

  

	C.	 	The Company may take such other actions as agreed upon from time to time by the Company and the Parent. 

  
 Section 5.1(b)(x) 
  
 None 
  
 Section 5.1(b)(xi) 
  
 None

  
 Section 5.1(b)(xiv) 
  
 None 
  
 Section 5.1(b)(xvi) 
  
 None 
  
 Section 5.1(c) 
  

 67 

 None. 
  
 Section 5.1(e) 
  
 None 
  

 68 

 Section 5.7 
  
 Company Stock Options 
  

Options granted to the following directors/entities will be outstanding as of the Effective Time: 
  

	 Arlen B. Reynolds
	  	15,000
	 Kay L. Brown
	  	15,000
	 Joel S. Kanter
	  	15,000
	 Gene E. and M. Jan Burleson
	  	15,000
	 Jay and Clayre Haft
	  	15,000
	 Richard E. Ragsdale
	  	15,000
	 Chaney Family Partnership
	  	15,000

  

 69 

 Section 5.8 
  
 Company Warrants 
  
 All Company Warrants other than the Heller Warrants will be cancelled on or before the Effective Time. 
  

 70 

 Section 5.14(a) 
  
 Healthcare Approvals 
  

The Company may be required: (i) to file notice with the State of Georgia at least thirty (30) days prior to consummation of the Merger; (ii) to file
notice with the State of Missouri within fifteen (15) days after consummation of the Merger; and (iii) to file notice with the State of Texas within fifteen (15) days after consummation of the Divestco Disposition. 
  

 71 

 Section 5.24(a) 
  
 Closing Net Working Capital 
  
 HealthMont, Inc. 
 Working Capital Computation 
  

	 	  	March 31, 2002

	  	August 31, 2002

	 
	 	  	Total

	  	Dolly

	  	Total W/O Dolly

	  	Total

	  	Dolly

	  	Total W/O Dolly

	 
	 Current Assets:
	  	 	  	 	  	 	  	 	  	 	  	 	 
	 Cash
	  	$567	  	$205	  	$362	  	$235	  	$147	  	$88	 
	 Total accounts receivable
	  	4,397	  	945	  	3,452	  	4,834	  	1,546	  	3,288	 
	 Investory
	  	714	  	209	  	505	  	804	  	214	  	590	 
	 Prepaid expense
	  	567	  	58	  	509	  	160	  	29	  	131	 
	 	  	
	  	
	  	
	  	
	  	
	  	
	

	 Total current assets
	  	$6,245	  	$1,417	  	$4,828	  	$6,033	  	$1,936	  	$4,097	 
	 Current liabilities:
	  	 	  	 	  	 	  	 	  	 	  	 	 
	 Accounts payable
	  	$2,870	  	$496	  	$2,374	  	$3,332	  	$833	  	$2,499	 
	 Accrued expenses
	  	1,915	  	163	  	1,752	  	1,787	  	219	  	1,568	 
	 Current portion capital leases
	  	368	  	161	  	207	  	388	  	166	  	222	 
	 Change in Revolver
	  	0	  	 	  	0	  	190	  	 	  	190	 
	 	  	
	  	
	  	
	  	
	  	
	  	
	

	 Total current liabilities
	  	$5,153	  	$820	  	$4,333	  	$5,697	  	$1,218	  	$4,479	 
	 Net working capital
	  	 	  	 	  	$495	  	 	  	 	  	($382	)
		
	 Net working capital at testing date cannot be less
than             ($150,000)

	  	Fail

	 
							
	 Computation of change in revolver:
	  	 	  	 	  	 	  	 	  	 	  	 	 
	 Current portion LTD (revolver)
	  	 	  	 	  	 	  	 	  	 	  	 	 
	 Base
	  	$3,889	  	$3,889	  	$3,889	  	 	  	 	  	$3,889	 
	 Current balance
	  	3,889	  	3,889	  	4,079	  	 	  	 	  	4,079	 
	 	  	
	  	
	  	
	  	 	  	 	  	
	

	 Change
	  	$0	  	$0	  	$190	  	 	  	 	  	$190	 
	 	  	
	  	
	  	
	  	 	  	 	  	
	

  

 72 

 Section 5.24(b) 
  
 Closing Hospital-Level EBITDA 
  
 HealthMont, Inc. 
 EBITDA Test 
  

	 	  	August-02

	 
	 Prior twelve month EBITDA:
	  	 	 	 	 	 	 	 
	 Adel
	  	 	 	 	 	$	1,368,935	 
	 Callaway
	  	 	 	 	 	 	1,683,483	 
	 	  	 	 	 	 	
	
	

	 Subtotal
	  	 	 	 	 	$	3,052,418	 
	 Less Prior year contractuals:
	  	 	 	 	 	 	 	 
	 Adel
	  	$	(231,597	)	 	 	 	 
	 Medicare PY
	  	 	92,452	 	 	 	 	 
	 Medicaid PY
	  	 	 	 	 	 	 	 
	 Callaway
	  	 	 	 	 	 	 	 
	 Medicare PY
	  	 	(128,071	)	 	 	 	 
	 Medicaid PY
	  	 	(28,243	)	 	 	 	 
	 	  	
	
	
	 	 	 	 
	 Total prior year amounts
	  	 	 	 	 	$	(295,459	)
	 Add back cost related to Surgeon:
	  	 	 	 	 	 	 	 
	 Jun-02
	  	 	23,414	 	 	 	 	 
	 Jul-02
	  	 	23,458	 	 	 	 	 
	 Aug-02
	  	 	23,778	 	 	 	 	 
	 Sep-02
	  	 	23,872	 	 	 	 	 
	 	  	
	
	
	 	 	 	 
	 Total cost add back
	  	 	 	 	 	 	94,522	 
	 	  	 	 	 	 	
	
	

	 	  	 	 	 	 	$	2,851,481	 
	 EBITDA test:
	  	 	 	 	 	 	 	 
	 Base EBITDA
	  	$	3,000,000	 	 	 	 	 
	 Collar %
	  	 	90.83	%	 	 	 	 
	 Collar amount
	  	 	 	 	 	 	2,725,000	 
	Test	  	Pass

	 

  

 73 

 Section 6.1(p) 
  
 Indebtedness Described in Section 6.1(p)(iv) 
  

	A.	 	Any Indebtedness identified in Section 3.9 of this Company Disclosure Schedule. 

  

	B.	 	Liabilities incurred pursuant to any action permitted under Section 5.1 of this Company Disclosure Schedule. 

  

	C.	 	Contingent liabilities associated with HealthMont of Texas, Inc. (“HealthMont of Texas”) as to which HealthMont of Texas has agreed to indemnify the Company pursuant to
the Indemnification Agreement. 

  

 74 

 Section 8.1 
  
 Divestco Liabilities 
  

	A.	 	Pursuant to the Divestco Disposition Agreement, the Company, as part of the Company Debt Restructuring, will cause Divestco to be released from any further liability to Heller and
will cause any liens held by Heller on the stock and assets of Divestco to be released. 

  

	B.	 	After completion of the Divestment, the Company will retain liability under the Comdisco Lease Agreement, the LinvaTec Leases and the agreements listed in subparagraphs A.9., 14.,
and 15. of Section 3.20. See also the attachment to Section 3.9. Divestco has agreed to indemnify the Company for these contingent liabilities. 

  

 75 

 Executed as of this 15th day of October, 2002. 
  

	HEALTHMONT, INC. 
		
	 By:
	 	 /s/    TIMOTHY S.
HILL        

	Its:	 	President

  

 76

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