Dynacq Healtchare - Chapter 11 DIP Terms

Asset Purchase Agreement Summary

Parties Involved

• Sellers: Dynacq Healthcare, Inc.; Vista Community Medical Center, L.L.P. ("VCMC"); Vista Land & Equipment, L.L.C. ("VLE"); Doctors Practice Management, Inc.; Surgery Specialty Clinicians, Inc.; Vista Hospital of Dallas, L.L.P.; and Ambulatory Infusion Therapy Specialists, Inc.
• Purchasers (collectively, "Buyer"):
  • GrayStreet BIB Credit, LLC ("GrayStreet Buyer")
  • Legent Hospital Northwest Houston, LLC, d/b/a Legent North Houston Surgical Hospital ("Legent Buyer")
• The Sellers own and operate a Medicare-certified, physician-owned hospital and medical office building located at 4301 Vista Road, Pasadena, TX 77504 (the "Business").
• The DIP Lender is Caliburn Capital, LLC.
• Gordian Group, LLC serves as the Sellers' investment banker, whose fees or commissions are borne by the Sellers.
• On Dec. 8, 2025 (the "Petition Date"), the Sellers filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, jointly administered under Case No. 25-90798 (ARP).
• The Buyer is a good-faith purchaser entitled to the protections of Section 363(m) of the Bankruptcy Code with respect to all Purchased Assets.

Assets Being Sold

• The Amended APA contemplates the sale of substantially all of the Sellers' assets, divided between the two Buyers, free and clear of all liens (other than permitted liens) and liabilities (other than assumed liabilities), on an "as is, where is" basis.
• GrayStreet Assets include:
  • The real property located at 4301 Vista Road, Pasadena, Harris County, TX 77504, consisting of approximately 4.5799 acres, together with all improvements, buildings, facilities, structures, parking lots, mechanical systems, fixtures, and all ancillary real property rights, privileges, easements, minerals, and rights-of-way.
  • All leases and tenancies granting leasehold interests in the real property, including security deposits and records.
  • All Assigned Contracts designated as assigned to GrayStreet Buyer in Schedule 3.6, including Policy No. MXI93094939 issued by AGCS Marine Insurance Company.
• Legent Assets include:
  • All tangible personal property, including medical supplies, drugs, inventory, supplies, furniture, and equipment used in connection with the Business.
  • All intellectual property, including trademarks, trade names, logos, patents, copyrights, and applications therefor.
  • All Assigned Contracts designated as assigned to Legent Buyer in Schedule 3.6.
  • All permits, licenses, registrations, provider numbers, and approvals set forth on Exhibit G (the "Assumed Permits"), including all related surveys, records, cost reports, and regulatory filings.
  • All proceeds derived from the Legent Assets, including collections attributable to all medical services billed under the CMS Certification Number of VCMC after the Closing Date, even if received by the Sellers.
• "Purchased Assets" means the GrayStreet Assets and the Legent Assets, excluding any Excluded Assets.

Excluded Assets

• The following assets are excluded from the sale:
  • Cash and cash equivalents related to the operation of the Business prior to the Closing.
  • All bank accounts, safety deposit boxes, lock boxes, and other cash management accounts.
  • All accounts receivable arising from the operation of the Business prior to Closing.
  • All equity securities and net operating losses of any Seller.
  • All Excluded Contracts.
  • All permits other than the Assumed Permits.
  • Any claim, right, or interest to any tax refund or reimbursement due to the Sellers or their affiliates, except to the extent relating to any tax period for which the Buyer is responsible.
  • All retainers held by the Debtors' professionals.
  • The rights of the Sellers under the Agreement and all cash and non-cash consideration payable or deliverable to the Sellers under the Agreement.

Purchase Price

• The aggregate consideration for the Purchased Assets consists of:
  • $6,250,000 in cash;
  • Cure Costs, if any, payable by Legent Buyer to the extent attributable to Assigned Contracts assigned to Legent Buyer and by GrayStreet Buyer to the extent attributable to Assigned Contracts assigned to GrayStreet Buyer; plus
  • The assumption of Assumed Liabilities by GrayStreet Buyer as listed on Schedule 2.5(a)(iii).
• Legent Buyer delivered a deposit of $125,000 to Sellers prior to execution and delivery of the Agreement.
• The Purchase Price and Assumed Liabilities are to be allocated among the Purchased Assets in accordance with Section 1060 of the Internal Revenue Code per the Allocation Schedule attached as Exhibit J.

Credit Bid

• The Purchase Price, less the Deposit, is payable by credit bid from the DIP Lender (Caliburn Capital, LLC) in an amount to be determined by GrayStreet Buyer and the DIP Lender in their sole and absolute discretion, with the balance payable by wire transfer of immediately available funds.

Bid Protections

• Break-Up Fee: $187,500, payable to GrayStreet Buyer if the Agreement is not accepted as the Winning Bid in accordance with the Bidding Procedures.
• Expense Reimbursement: GrayStreet Buyer's reasonable, documented out-of-pocket fees, costs, and expenses actually incurred, owed, or paid to third parties, in an aggregate amount not to exceed $150,000 (inclusive of attorneys' fees, consulting fees, accounting fees, and other out-of-pocket expenses).

Assumed Liabilities

• The following liabilities are assumed by the applicable Buyer:
  • All liabilities arising under the Assigned Contracts assumed by the applicable Buyer that become due and payable from and after Closing, excluding any breach or default prior to Closing.
  • All Cure Costs payable by the applicable Buyer with respect to its Assigned Contracts.
  • All liabilities arising from or related to the Purchased Assets purchased by the applicable Buyer from and after the Closing Date.
  • All liabilities set forth in Schedule 2.5(a)(iii), assumed by the applicable Buyer as indicated therein.
  • All property taxes arising in connection with the real property that are due and owing after the Closing Date (assumed by GrayStreet Buyer).
  • Any costs and expenses necessary to provide "adequate assurance of future performance" with respect to the Assigned Contracts assumed by each Buyer.
  • All taxes assessed with respect to the Purchased Assets purchased by each Buyer for any period ending after the Closing Date, including all transfer taxes.

Excluded Liabilities

• Except for the Assumed Liabilities, the Buyer does not assume any liabilities of the Sellers, including:
  • All taxes owed by Sellers for any period ending on or prior to the Closing Date (except as expressly provided as Assumed Liabilities).
  • All liabilities related to the Excluded Assets.
  • All liabilities under any indebtedness, including indebtedness owed to any stockholder, member, affiliate, or subsidiary of the Sellers.
  • All liabilities with respect to Seller Transaction Expenses.
  • All liabilities under the Assumed Permits arising from or related to the period prior to the Closing Date.

Assumption and Assignment of Contracts

• The Contract and Cure Schedule sets forth each contract to which any Seller is a party or by which any Seller is bound and that is used in or related to the Purchased Assets, along with applicable Cure Costs and a description of each contract.
• No later than three business days prior to the Sale Hearing, each Buyer was required to designate each contract on the Contract and Cure Schedule as "Included" or "Excluded." The Buyer retained the right, in its sole and absolute discretion, to change any such designation until Closing.
• The Sellers are responsible for the verification and commercially reasonable calculation of all Cure Costs for each Assigned Contract. Cure Costs are payable by Legent Buyer for contracts assigned to Legent Buyer, and by GrayStreet Buyer for contracts assigned to GrayStreet Buyer.
• Unless otherwise agreed, the Sale Order provides that all Excluded Contracts as of the Closing are deemed rejected by the Debtors pursuant to Section 365 of the Bankruptcy Code.

Sale Free and Clear; Sale Order Provisions

• On the Closing Date, the Purchased Assets were sold to the Buyer free and clear of all liens (except for GrayStreet Permitted Liens and Legent Permitted Liens) and liabilities (other than Assumed Liabilities).
• Assigned Contracts were assumed by the Sellers and assigned to the Buyer pursuant to Section 365 of the Bankruptcy Code, with the Buyer paying the Cure Costs due in connection therewith.
• All causes of action against counterparties to the Assigned Contracts related to such contracts were released and waived by the Sellers, subject to Sellers' right to assert defenses against claims by such counterparties.
• All persons and entities holding claims against the Sellers or their assets arising prior to the Closing have no claims against the Buyer, its affiliates, or the Purchased Assets, subject to rights arising out of Assumed Liabilities.
• The Sale Order contains findings that: (i) the Buyer is a good-faith buyer under Section 363(m); (ii) the Buyer is not a successor to the Sellers; (iii) the Sellers' Texas hospital license (with continuing physician ownership compliance) and Medicare-issued Provider Transaction Access Number (450831) are active, in full force and effect, and transferrable to the Buyer; and (iv) the sale did not involve any improper conduct, including collusion, and cannot be avoided under Section 363(n).
• The Sale Order provides that the transactions may be consummated immediately upon entry and that the 14-day stay under Bankruptcy Rule 6004(h) is waived.

Healthcare Regulatory Matters

• The Hospital is a Medicare-certified, physician-owned hospital that was owned by physicians (or immediate family members of such physicians) and enrolled with the Medicare program as of July 7, 2010.
• The Hospital has eight operating rooms, zero procedure rooms, and 37 beds. Since July 7, 2010, the Hospital has not increased the number of operating rooms, procedure rooms, or beds beyond those for which it was licensed on the ACA date.
• The Hospital is qualified for participation in, and has current and valid provider contracts with, the Medicare program and is in material compliance with applicable conditions of participation. The Hospital is entitled to receive, and is receiving, payment under the Medicare program for services rendered to qualified beneficiaries and is not subject to any withholds, offsets, recoupments, payment plans, or settlement amounts.
• As conditions to closing, the Sellers were required to provide:
  • Evidence that the Sellers' Texas hospital license (with continuing physician ownership compliance) and Medicare-issued Provider Transaction Access Number (450831) are active and in good standing, including that VCMC has updated its Medicare enrollment record to disclose all 5% or more direct and indirect owners and to indicate that the Hospital is a physician-owned hospital.
  • Evidence that the Sellers submitted a Plan of Correction to Texas HHS on or before March 23, 2026, addressing all deficiencies cited in the Texas HHS Survey conducted on Feb. 19, 2026, with Legent Buyer having the opportunity to review and approve such Plan of Correction prior to submission.
  • Evidence that a claim was submitted to Medicare (not including a Medicare Advantage plan) within 60 days prior to the Closing Date.
  • Evidence that all regulatory filings, including each of the CMS-855A change of ownership applications, have been submitted to the applicable regulatory authorities.
• Prior to the Closing, VCMC was required to update its CMS enrollment for Medicare ID 450831 to accurately disclose all individuals and entities holding at least a 5% direct or indirect ownership interest in VCMC and that the Hospital is a physician-owned hospital. Both VCMC and Legent Buyer were required to submit CMS 855-A change of ownership filings at or prior to the Closing.
• Following the Closing, Legent Buyer has the right, in its sole discretion, to provide notices to governmental authorities with respect to the Assumed Permits (other than Medicare ID 450831) indicating whether such permits will be relinquished or assigned to Legent Buyer or its assignee.

Physician Ownership

• The aggregate physician ownership or investment interests in the Business total 66.59%, broken down as follows:
  • Chiu M. Chan: 47.78%
  • Ella Y. Chan: 11.33%
  • Kam Wah Cheng: 2.32%
  • Ping S. Chu: 1.95%
  • Bert Chan: 1.43%
  • Eric Chan: 1.41%
  • Ying Chu: 0.23%
  • Xiao H. Li & Immediate Family Members: 0.14%
• The percentage of physician ownership has not, at any time following March 23, 2010, exceeded the percentage as of that date. The Business has not offered ownership interests to physicians on more favorable terms than those offered to non-physicians, has not provided loans or financing to physician investors, and distributes all investment returns proportionally to ownership interests.
• Each physician owner is board certified in their medical specialty and maintains active medical staff privileges at the Hospital.

Exceptions to Compliance

• A letter dated March 10, 2026, from the Texas Health and Human Services Commission cited state deficiencies for the Hospital from a survey completed on Feb. 19, 2026, related to an ongoing mold remediation effort. The Sellers are responsible for preparing and submitting all responses to Texas HHS regarding the Plan of Correction, keeping Legent Buyer reasonably informed of all material communications, and using commercially reasonable efforts to obtain acceptance of the Plan of Correction and secure reinstatement of the Hospital license.
• A 2023/2024 Fire Extinguisher/Sprinkler Issue Citation.

Licenses and Permits

• Medicare ID 450831 (Vista Community Medical Center, L.L.P.) — Issued: July 7, 2010; No expiration.
• NPI 1891718789 (Vista Community Medical Center, L.L.P.) — No expiration.
• Texas DSHS Hospital License 006941 (Surgery Specialty Hospitals of America Southeast Houston) — Issued: April 16, 1999; Expires: April 30, 2026.
• DEA BV6277924 (Surgery Specialty Hospitals of America Southeast Houston) — Issued: Feb. 25, 2026; Expires: Feb. 28, 2029.
• Texas Board of Pharmacy License (Hospital - Independent) 19541 — Issued: April 23, 1999; Expires: April 30, 2027.
• TDSHS X-Ray Registration R17026 — Issued: Jan. 1, 1989; Expires: Aug. 31, 2030.
• CLIA Laboratory Certification 45D0496271 — Issued: Sept. 1, 1992; Expires: Dec. 22, 2027.
• CIHQ Accreditation (CIHQ ID: 1250) — Issued: March 1, 2025; Expires: March 1, 2028.
• COLA Laboratory Accreditation 7481 — Issued: Aug. 19, 2024; Expires: Aug. 19, 2026.

Conditions to Closing

• The Buyer's obligation to close was subject to, among other conditions:
  • The representations and warranties of the Sellers being true and correct in all respects (or, for certain representations, except where failures have not had and would not reasonably be expected to have a Material Adverse Effect).
  • The Sellers having performed and complied with their covenants and agreements in all material respects and delivered the required closing documents.
  • No governmental authority having enacted, issued, or entered any order making the Closing illegal or otherwise prohibiting consummation.
  • The Sellers' Texas hospital license (with continuing physician ownership compliance) and Medicare-issued Provider Transaction Access Number (450831) being valid, active, and in full force and effect.
  • The Sale Order having been entered by the Bankruptcy Court, including a waiver of the 14-day stay under Bankruptcy Rule 6004(h), and being a Final Order.
  • No Material Adverse Effect having occurred and continuing from the Effective Date until the Closing Date.
• The Sellers' obligation to close was subject to, among other conditions:
  • The representations and warranties of the Buyer being true and correct in all respects (or, for certain representations, except where failures would not reasonably be expected to materially prevent, restrict, or delay consummation).
  • The Buyer having performed and complied with its covenants and agreements in all material respects and delivered the required closing documents and payments.
  • No governmental authority having enacted, issued, or entered any order making the Closing illegal or otherwise prohibiting consummation.
  • The Sale Order having been entered by the Bankruptcy Court and being a Final Order.
  • The Sellers having received the Purchase Price.

Termination

• The Agreement could be terminated prior to Closing:
  • By mutual written consent of Legent Buyer, GrayStreet Buyer, and the Sellers.
  • By either party if any applicable law makes consummation illegal or prohibited, or if consummation would violate any Final Order of any governmental authority.
  • By the Sellers upon written notice if the Buyer breached any representation, warranty, or covenant such that any closing condition becomes incapable of being satisfied without cure (subject to a 10-business-day cure period), or if the Closing has not occurred before or on April 30, 2026.
  • By the Buyer upon written notice if any Seller breached any representation, warranty, or covenant such that any closing condition becomes incapable of being satisfied without cure (subject to a 10-business-day cure period), or if the Closing has not occurred before or on April 30, 2026.
  • By the Buyer if an "Event of Default" is declared by the DIP Lender under the Final DIP Order.
  • By the Buyer if the Bankruptcy Court enters a Final Order for the appointment of a trustee or examiner with expanded powers (other than at the request of the Buyer) and such trustee or examiner takes action to interfere with the contemplated transactions.
  • By the Buyer if the Chapter 11 Cases are dismissed or converted to Chapter 7.
  • By the Buyer if any Seller consummates a plan that does not authorize or approve the contemplated transactions.
  • By the Buyer if any Seller executes an Alternate Agreement or takes affirmative steps to effect an Alternate Transaction (provided the Agreement may not be terminated if the Buyer is the Back-Up Bidder).
  • By the Buyer if the Buyer is not the Winning Bidder at the Auction (provided the Agreement may not be terminated if the Buyer is the Back-Up Bidder).
• Outside termination date: April 30, 2026.

Post-Closing Arrangements

• At Closing, GrayStreet Buyer delivered to Legent Buyer a real property lease for the VCMC Hospital premises for a term of six months and a nominal rent amount.
• A Transition Agreement was executed between VCMC and Legent Buyer pursuant to which: (A) Legent Buyer is granted the right to bill under the Medicare number of VCMC following the Closing; (B) VCMC agrees to transmit to Legent Buyer all related collections for services billed under the Medicare number of VCMC following the Closing; and (C) VCMC will obtain tail insurance in customary amounts for its professional liability policy at the end of the transition period.
• A Billing License was granted by VCMC to Legent Buyer to use VCMC's billing identification information (including name, Medicare provider numbers, related national provider identifiers, federal employer identification number, and related billing information) for purposes of submitting claims to Medicare for services provided by Legent Buyer at the new location (801 Bissonnet Street, Bellaire, Texas 77041) after the Closing. The Billing License remains effective until CMS and the appropriate Medicare Administrative Contractor approve the CHOW Applications and issue a tie-in notice.
• All amounts collected in the name of VCMC for services provided by Legent Buyer after the Closing belong to Legent Buyer, and any amounts received by VCMC or the Sellers are to be remitted on a weekly basis to Legent Buyer by wire transfer.
• Both VCMC and Legent Buyer have filed Medicare change of ownership applications (855-A CHOW Applications) to transfer Medicare ID 450831 and relocate the Hospital to the new location, with such applications remaining pending as of the Closing.
• The Sellers and Buyer are to cooperate in responding to inquiries, deficiencies, and additional questions from governmental authorities with respect to regulatory filings until such time as the Medicare 855-A CHOW Applications are approved and the tie-in notice is received.
• Post-Closing, the Sellers and their affiliates are prohibited from using any name, trademark, or service mark that is similar or deceptively similar to any intellectual property included in the Purchased Assets.
• The Buyer is required to provide Sellers access to all records included in the Purchased Assets for periods prior to the Closing and to preserve such records until the latest of three years after the Closing Date, the required retention period for government records, or the conclusion of the Chapter 11 Cases.

Intellectual Property and Domain Names

• Domain Name: www.ssha.us.com (Registrar: register.com/networksolutions.com; Expiration: Jan. 30, 2027).
• All trademark registrations, trademark applications, and associated goodwill were assigned and transferred to Legent Buyer. No trademark registrations or pending applications were identified on Schedule 1 to the Trademark Assignment Agreement.

Litigation

• Vista Med. Ctr. Hosp. v. Tex. Mut. Ins. Co., Case No. 03-21-00242-CV, Tex. App.–Austin (Stop-Loss Litigation) — Stayed pursuant to 11 U.S.C. § 362.
• W L Gore & Associates Inc vs. Surgery Specialty Clinicians Inc., Cause No. 202484254, 165th Dist. Ct., Harris County, Tex. (Breach of Contract) — Stayed pursuant to 11 U.S.C. § 362.
• El Paso Vinton Diagnostics PM vs. Eric Chan, MD, Cause No. 202473116, 234th Dist. Ct., Harris County, Tex. (Breach of Contract) — Order of Nonsuit signed Oct. 7, 2025.
• Medline Industries, LP v. VCMC, Case No. 25-cv-7163 (N.D. Ill. June 26, 2025) (Breach of Contract) — Stayed pursuant to 11 U.S.C. § 362.
• 4301 Ventura Holdings, L.L.C., et al. v. Dynacq, et al., Cause No. 202575713, 129th Dist. Ct., Harris County, Tex. (Breach of Contract) — Stayed pursuant to 11 U.S.C. § 362.
• Bio-Medical Applications of Texas Inc v. Vista Community Medical Center LLC., Cause No. 202488833, 234th Dist. Ct., Harris County, Tex. (Breach of Contract) — Stayed pursuant to 11 U.S.C. § 362.
• Sallee, Crystaline v. Vista Community Medical Center LLP d/b/a Surgery Specialty Hospitals, Cause No. 202083494, 270th Dist. Ct., Harris County, Tex. (Personal Injury) — Order of Nonsuit signed April 2, 2024.
• Quan, Dennis v. Vista Community Medical Center LLP d/b/a Surgery Specialty Hospitals, Cause No. 202215687, 189th Dist. Ct., Harris County, Tex. (Quantum Meruit/Unjust Enrichment) — Dismissed for Want of Prosecution May 13, 2025.
• US Bank National Association d/b/a US Bank Equipment Finance v. Surgery Specialty Clinicians Inc., Cause No. 202263235, 152nd Dist. Ct., Harris County, Tex. (Breach of Contract) — Agreed Judgment entered April 15, 2025.
• McKesson Medical Surgical Inc. v. Vista Community Medical Center LLP, Cause No. 202359610, 133rd Dist. Ct., Harris County, Tex. (Breach of Contract) — Order of Nonsuit signed July 24, 2024.
• Serene Concepts, LLC d/b/a Pinnacle Environmental Services v. Vista Community Medical Center, LLP, Cause No. 23-DCV-304520, 458th Dist. Ct., Fort Bend County, Tex. (Breach of Contract) — Agreed Judgment entered Feb. 9, 2024.
• Elizabeth Schaible v. Gary M. Horndeski, MD; Surgery Specialty Hospitals of America – Southeast Houston, LLC, Cause No. 2025DCV4960, County Court at Law No. 6, El Paso County, Tex. (Personal Injury) — Stayed pursuant to 11 U.S.C. § 362.

Key Dates

• Petition Date: Dec. 8, 2025
• Final DIP Order: Jan. 6, 2026
• Bidding Procedures Order: Jan. 13, 2026
• Texas HHS Survey: Feb. 19, 2026
• Sale Hearing: March 3, 2026
• Texas HHS Deficiency Letter: March 10, 2026
• Sale Order Deadline: March 18, 2026
• Effective Date / Closing Date: March 20, 2026
• Plan of Correction Due to Texas HHS: On or before March 23, 2026
• Notice of Closing Filed: March 24, 2026
• Outside Termination Date: April 30, 2026