Dynacq Healthcare - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Dynacq Healthcare, Inc., Vista Community Medical Center, L.L.P, Vista Land & Equipment, L.L.C., Doctors Practice Management, Inc., Surgery Specialty Clinicians, Inc., Vista Hospital of Dallas, L.L.P., and Ambulatory Infusion Therapy Specialists, Inc., as Borrowers

Agent / Lender(s)

• Caliburn Capital, LLC, as Administrative Agent
• The lenders party thereto, as DIP Lenders

DIP Commitments

• $5 million senior secured superpriority multi-draw term loan facility comprised of:
  • $2 million in new money term loans available on an interim basis, to be funded within two business days following entry of the interim order
  • $3 million in additional new money term loans available upon entry of the final order

Cash Collateral

• The debtors are authorized to use cash collateral, defined as all present and future cash including funds in deposit accounts, to administer the chapter 11 cases and fund operations in accordance with the approved budget.

Interest Rate

• 15.0% per annum
• Default Rate Increase: 3.0%

Fees

• Commitment Fee: 5.0% of the DIP facility, earned and due upon entry of the final order
• Reimbursement of Costs: The debtors shall reimburse the DIP agent for all reasonable professional fees and expenses on a monthly basis.

Maturity

• The earliest to occur of:
  • The effective date of a plan of reorganization
  • Consummation of a section 363 sale
  • Acceleration of the DIP loans following an event of default that remains uncured for 10 business days
• Milestones: The debtors must comply with the following case milestones:
  • Petition Date + 1 day: File emergency DIP motion
  • Petition Date + 7 business days: Entry of the interim order
  • Petition Date + 10 days: File motion for sale/bid procedures
  • Petition Date + 45 days: Entry of the sale procedure order and the final DIP order
  • Petition Date + 90 days: Bid deadline
  • Petition Date + 100 days: Entry of the sale order
  • Sale Order + 14 days: Closing of the sale
  • Maturity Date: Payment in full of DIP obligations

Carve Out

• Post-Carve Out Trigger Cap: $150,000 for professional fees incurred after the delivery of a trigger notice
• Chapter 7 Trustee Fee: $25,000
• Pre-trigger allowed professional fees are funded in accordance with the budget

Use of Proceeds

• Working capital and general corporate purposes, including costs related to the asset sale
• Payment of interest, fees, and expenses related to the DIP facility
• Payment of allowed professional fees and administrative costs
• Payment of approved prepetition expenses

Credit Bid

• The DIP agent (or its assignee) has the right to credit bid up to the full amount of the DIP obligations in connection with any sale of the debtors' assets pursuant to section 363(k).

Avoidance Actions

• The DIP collateral includes the proceeds of avoidance actions arising under Chapter 5 of the Bankruptcy Code.

Challenge Period and Budget

• Challenge Period: Parties-in-interest have until February 6, 2026, to investigate the validity and priority of prepetition liens. An official committee of unsecured creditors, if formed, has 60 days from its formation to complete such investigation.
• Budget Updates: The debtors must deliver an updated budget to the DIP agent by 5:00 p.m. CT on every fourth Friday following entry of the DIP orders.

Securities and Priorities

• The DIP obligations constitute allowed superpriority administrative expense claims against the debtors, subject only to the carve-out.
• The DIP agent is granted valid, perfected security interests in and liens on all of the debtors' assets, including avoidance action proceeds, with the following priorities:
  • Priming Liens: First-priority priming liens on all DIP collateral not subject to a permitted lien, subject only to the carve-out.
  • Junior Liens: Junior liens on any DIP collateral subject to a permitted lien, subordinate to such permitted liens and the carve-out.
• Texas Taxing Authorities: Valid, senior, perfected, and unavoidable pre- and postpetition statutory tax liens held by Texas Taxing Authorities retain their priority and are not primed by the DIP liens.

Waivers

• Subject to entry of the final order:
  • Section 506(c): Waiver of the right to surcharge collateral for costs of administration.
  • Section 552(b): Waiver of the "equities of the case" exception.
  • Marshaling: Waiver of the equitable doctrine of marshaling.

Permitted Variance

• The budget is tested weekly on a cumulative basis, with non-compliance triggered by:
  • Negative variance of more than 10.0% regarding disbursements
  • Negative variance of more than 10.0% regarding net cash flow