John Fitzgibbon Memorial Hospital - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• John Fitzgibbon Memorial Hospital, Inc. and Fitzgibbon Health Services, as DIP Borrowers (collectively, the Debtors)
  • The DIP Borrowers and their successors shall be jointly and severally liable for repayment of any funds advanced pursuant to the DIP Term Sheet and the DIP Obligations

Agent / Lender(s)

• UMB Bank, N.A., as successor Master Trustee and Bond Trustee, as DIP Lender

DIP Commitments

• Priming super-priority senior secured postpetition credit facility (the "DIP Facility") in an aggregate amount not to exceed, at any time outstanding, aggregate commitments equal to the New Money Loan advanced plus the Roll-Up Loan (the "DIP Commitment"), comprised of:
  • New Money Loan — a debtor-in-possession loan facility in an aggregate amount not to exceed $4,000,000
    • An initial draw of $2,000,000 was funded pursuant to the Interim Order
    • Subsequent draws are subject to the prior approval of the DIP Lender and, at all times, pursuant to the Approved Budget to support operations and fund Case Expenses
  • Roll-Up Loan — a conversion or roll-up of all outstanding obligations under the Bond Indentures (except the 2016 Series Prepetition Residual Amount) into the DIP Loan, equal to approximately two times the New Money Loan advanced, to occur contemporaneously with each advance of the New Money Loan on a proportionate basis
    • Upon funding of the DIP Loan and conversion of the obligations under the Bond Indentures, the Roll-Up Loan constitutes part of the DIP Commitment and is entitled to all rights, liens, and protections granted to the DIP Lender
    • Of the Series 2016 Master Note related to the 2016 Bonds, $10,000.00 of the outstanding obligations (the "2016 Series Prepetition Residual Amount") shall not convert or roll-up into the DIP Loan and shall remain prepetition indebtedness owed by the Debtors
• Under the DIP Term Sheet, funding of an interim advance in the amount of $3 million was subject to entry of the Interim DIP Order, with funding of the balance of the DIP Commitment subject to entry of the Final DIP Order
• The DIP Facility is not a revolving loan, and the DIP Borrowers may not request or requisition funds under the DIP Documents that have already been borrowed and re-paid

Cash Collateral

• Cash Collateral consists of (i) cash collateral as defined in Section 363(a) of the Bankruptcy Code, including any accounts receivable, general intangibles, and all cash or cash equivalents, including cash in any deposit or securities accounts, wherever located; (ii) any cash or cash equivalents received as proceeds of DIP Collateral; and (iii) all other cash or cash equivalents of the DIP Borrowers
• Upon entry of the Final Order, all of the DIP Borrowers' cash — including amounts on deposit or maintained in any banking, checking, or other deposit accounts, amounts generated by the collection of accounts receivable or other disposition of the DIP Collateral, and the proceeds of any of the foregoing, wherever located — is the DIP Lender's Cash Collateral
• Subject to the terms of the DIP Documents, the DIP Lender consents to the use of Cash Collateral during the Chapter 11 Cases to fund (i) working capital, (ii) general corporate purposes, (iii) approved restructuring costs and expenses, and (iv) any other fees required under the DIP Documents, in each case subject to the Approved Budget, including Permitted Variances

Interest Rate

• PIK interest at 8.25%, with all interest due and payable on the Maturity Date, computed for the actual number of days elapsed on the basis of a 360-day year
• Default Interest Rate: 10.25%, accruing from and after the date on which an Event of Default occurs

Fees

• Exit Fee: 2.0% of the DIP Loan, fully earned and non-refundable upon entry of the Interim DIP Order and payable on the Maturity Date
• DIP Fees: reasonable and documented fees and expenses of the DIP Lender and its professionals, payable in kind and added to the principal balance of the DIP Facility on the Maturity Date, and constituting part of the DIP Obligations
• The Debtors shall indemnify and hold harmless the DIP Lender (solely in its capacity as DIP Lender) and its affiliates and their officers, directors, employees, agents, advisors, attorneys, and representatives (each, an "Indemnified Party") against claims, damages, losses, liabilities, and expenses arising out of or in connection with the DIP Facility or the transactions contemplated thereby, except to the extent arising from an Indemnified Party's gross negligence or willful misconduct

Maturity

• The Maturity Date is the earlier of:
  • The date on which an order is entered converting the case to Chapter 7
  • The effective date of a plan of reorganization
  • November 30, 2026
• Unless the DIP Borrowers request an extension and the DIP Lender, in its sole and reasonable discretion, consents in writing to such extension
• The DIP Obligations become due and payable, without notice or demand, on the Maturity Date, unless otherwise extended by written consent of the DIP Lender

Milestones

• Each of the following deadlines may be extended or waived with the prior written consent of the DIP Lender, in its sole discretion (which may be by e-mail), without further order of the Bankruptcy Court:
  • The Bankruptcy Court shall have entered the Interim DIP Order on or before June 5, 2026
  • The Debtors shall file, by no later than May 29, 2026, a revised asset purchase agreement and amended sale motion for the sale of the Debtors' assets to Strawberry Fields REIT pursuant to Section 363 of the Bankruptcy Code (the "Sale Motion")
  • The Bankruptcy Court shall have entered an order approving the sale contemplated by the Sale Motion (the "Sale") by no later than July 10, 2026
  • The Bankruptcy Court shall have entered the Final Order by July 24, 2026 (per the DIP Term Sheet, the Final DIP Order shall be entered no later than 21 days after the filing of the DIP Motion)
  • The Sale shall be consummated by no later than August 31, 2026
  • An order confirming a chapter 11 plan shall have been entered by no later than 60 days after consummation of the Sale

Carve Out

• The DIP Liens and DIP Superpriority Claims are subject and subordinate to payment of the Agreed Surcharge, which is senior to all claims and liens over all assets of the Debtors, including any DIP Collateral
• The Agreed Surcharge consists of:
  • All fees required to be paid to the Clerk of the Court and to the U.S. Trustee under 28 U.S.C. § 1930(a), together with any interest thereon pursuant to 31 U.S.C. § 3717 (the "Statutory Fees"), which shall not be subject to the Approved Budget
  • $10,000 for a hypothetical Chapter 7 trustee in the event of conversion of the cases to Chapter 7
  • Allowed Professional Fees of professionals retained by the Debtors (the "Debtor Professionals") and the Committee, if any (the "Committee Professionals")
• The maximum Agreed Surcharge for any Committee Professionals shall not exceed $300,000.00
• Commencing on the Friday of the first full calendar week following entry of the Final Order, and weekly thereafter, the Debtors shall fund segregated accounts (the "Funded Reserve Accounts") held in trust for the benefit of the Debtor Professionals in an amount equal to the applicable Professional Fees set forth in the Approved Budget; commencing June 17, 2026 and on the twentieth day of each subsequent month, the Debtor Professionals shall submit a report of the prior month's accrued fees and expenses, and the Debtors shall fund any shortfall between the amount budgeted and the actual amounts accrued (the "True-Up Amount")

Use of Proceeds

• Fund the postpetition working capital needs of the Debtors
• Pay the fees, costs, and expenses of the DIP Facility
• Pay the allowed administrative costs and expenses of the Chapter 11 Cases, including Case Expenses (Professional Fees and other costs, disbursements, and expenses provided in the Approved Budget), with the budgeted amount for Debtor Professional fees set aside in segregated escrow accounts
• In each case, solely in accordance with the DIP Term Sheet, the Approved Budget (subject to Permitted Variances), and the Final Order
• No portion of the DIP Loans, the Agreed Surcharge, or any cash collateral of the DIP Lender shall be used to assert any claim, cause of action, or objection against the DIP Lender or any of the Bondholders, or to challenge any claim or lien of the DIP Lender, the validity or enforceability of the Bond Documents, or any prepetition payment or transfer to the DIP Lender

Credit Bid

• Subject to Section 363(k) of the Bankruptcy Code, entry of the Final Order, and the amounts advanced and outstanding on the DIP Facility, the DIP Lender may credit bid all or any portion of its claims, including its DIP Obligations and DIP Superpriority Claim, in connection with any proposed sale of any, all, or substantially all of the DIP Borrowers' assets (provided that, as to MOB1, in order of the DIP Lender's priority), whether occurring pursuant to Section 363, as part of a reorganization plan under Section 1123 (including a plan subject to confirmation under Section 1129(b)(2)(A)(ii)), or a sale or disposition by a chapter 7 trustee under Section 725
• The Final DIP Order provides that the DIP Lender and the Master Trustee shall have the right to credit bid the DIP Facility Loans and the Bond Obligations, in whole or in part

Avoidance Actions

• The DIP Collateral shall not include, and no DIP Liens shall attach to, the Avoidance Actions or the proceeds thereof
• "Avoidance Actions" means any causes of action that could be brought under §§ 544–548 of the Bankruptcy Code or any applicable state fraudulent-transfer statute or similar statute

Securities and Priorities

• Subject to the Agreed Surcharge, the DIP Lender is granted allowed super-priority administrative expense claims pursuant to Section 364(c)(1) of the Bankruptcy Code (the "DIP Superpriority Claims") for all DIP Obligations, with priority over any and all administrative expense claims and unsecured claims against the DIP Borrowers or their estates, and with recourse to and payable from all prepetition and postpetition property and assets of the DIP Borrowers and their estates and all DIP Collateral and proceeds thereof
• To secure the DIP Obligations, the DIP Lender is granted continuing, valid, binding, enforceable, non-avoidable, and automatically and properly perfected DIP Liens on the DIP Collateral, in each case subject to the Agreed Surcharge, as follows:
  • Pursuant to Section 364(d)(1), first-priority senior priming liens on all assets and interests of the DIP Borrowers subject to Prepetition Liens (including the Prepetition Collateral), senior to the Prepetition Liens, with the exception of Community Bank's lien on MOB1 and its proceeds and the Prepetition Liens of AmerisourceBergen
  • Pursuant to Section 364(c)(2), first-priority liens on all DIP Collateral not otherwise subject to valid, enforceable, and non-avoidable liens, including +/- 44 acres of undeveloped real property in section 27/28 in township 50n and range 21; provided the DIP Liens shall not encumber any Avoidance Actions or the proceeds thereof
  • Pursuant to Section 364(c)(3), liens on the DIP Borrowers' property subject to valid, perfected, and non-avoidable liens in existence prior to the Petition Date (the "Permitted Prior Liens"), junior and subordinate to such Permitted Prior Liens
• Community Bank's lien on MOB1 remains superior to all of the DIP Lender's liens and claims; the DIP Lender is granted a springing lien that attaches solely to any proceeds of MOB1 remaining after the indefeasible payment in full, in cash, of all indebtedness under the Community Bank Note
• Notwithstanding anything to the contrary, the Prepetition Liens and security interests of AmerisourceBergen and of Community Bank of Marshall shall not be primed
• The DIP Liens shall not be made subject to or pari passu with any other lien or security interest granted in the Chapter 11 Cases or any Successor Case, and shall not be subject to Sections 510, 549, or 550 of the Bankruptcy Code, nor subordinate to any avoided-and-preserved lien under Section 551, any postpetition liens, or any intercompany or affiliate liens
• The Final Order is sufficient and conclusive evidence of the creation, validity, perfection, and priority of the DIP Liens and Adequate Protection Liens, without the necessity of filing or recording any financing statement or other instrument; the DIP Lender and Prepetition Secured Lenders are authorized, but not required, to make such filings, which shall be deemed filed as of the Petition Date
• The Debtors will not seek any other debtor-in-possession financing with liens senior or pari passu to the DIP Lender's liens during the pendency of the bankruptcy proceedings

Adequate Protection

Prepetition Secured Lenders

• The Prepetition Secured Lenders comprise the Trustee (UMB Bank, N.A., as successor Master Trustee and Bond Trustee), Community Bank of Marshall, and AmerisourceBergen Drug Corporation
  • The Debtors' Prepetition Bond Obligations arise under the Master Trust Indenture dated as of December 1, 1998 and are secured by the Fitzgibbon Services Deed of Trust and the Hospital Deed of Trust (the "Prepetition Bond Collateral"), and include the Authority's $12,400,000 Series 2010 Bonds and $7,550,000 Series 2016 Bonds loaned to the Debtors
  • Community Bank's indebtedness arises under the Community Bank Note dated September 30, 2023, secured by the Community Deed of Trust granting a lien on real property and proceeds known as "MOB1"
  • AmerisourceBergen's indebtedness arises under a secured credit line for the Hospital's pharmaceutical purchases
  • On the Petition Date, the Debtors filed the Bank of New York Adversary Proceeding, seeking, among other things, to avoid the lien granted on personal property (including the Debtors' accounts receivable) to secure the Prepetition Bond Obligations
• Adequate protection is provided solely to the extent of any decrease in the value of the Prepetition Secured Lenders' interests in the Prepetition Collateral (the "Diminution") resulting from the use, sale, or lease of the Prepetition Collateral, the DIP Liens and the Agreed Surcharge, or the imposition of the automatic stay, and consists of:
  • Adequate Protection Liens — continuing, valid, binding, enforceable, and perfected postpetition replacement liens on the DIP Collateral, solely to the extent the DIP Collateral constituted such lender's Prepetition Collateral, subject and subordinate only to the Agreed Surcharge and the DIP Liens; senior to all other security interests in, liens on, or claims against the respective Prepetition Collateral
  • Adequate Protection Superpriority Claims — administrative expense claims pursuant to Section 507(b), with priority over all other costs and expenses of the kind specified in Sections 503(b) or 507(a), subject only to the Agreed Surcharge and the DIP Liens and Claims
• The foregoing adequate protection attaches to the Prepetition Collateral securing each Prepetition Secured Lender and shall not extend to other types of collateral, except with respect to the Trustee, whose Prepetition Collateral is being primed by the DIP Facility
• As further adequate protection, the DIP Borrowers shall comply with specified affirmative covenants under the 2010 Loan Agreement, the 2010 Bond Indenture, and the Master Indenture (including maintenance of licenses and permits, continuing disclosure, tax covenants, legal existence and maintenance of property, and insurance); the Debtors shall provide the DIP Lender and the Master Trustee at least two business days' advance notice of any filings affecting the DIP Collateral or Prepetition Collateral; and, prior to declaring a Termination Event for non-compliance, the Trustee shall provide the Debtors at least five business days' written notice
• The automatic stay is modified solely to the extent necessary to permit the Trustee to receive payments or distributions made by the Debtors for and on behalf of the Bondholders, apply or make payments from funds or accounts maintained by the Trustee in accordance with the Bond Documents, and take any action authorized by the Final Order

Waivers

• Subject to entry of the Final Order, and except to the extent of the Agreed Surcharge:
  • Section 506(c): No expenses of administration of the cases shall be charged against or recovered from any DIP Collateral or the DIP Lender's Prepetition Collateral, without the DIP Lender's prior written consent, and the Debtors irrevocably waive and are prohibited from asserting any such surcharge claim
  • Marshaling: The DIP Lender shall not be subject to the equitable doctrine of "marshaling" or any similar doctrine with respect to the collateral securing the DIP Facility Loans
  • Section 552(b): The DIP Lender is entitled to all the rights and benefits of Section 552(b), and the "equities of the case" exception under Sections 552(b)(i) and (ii) shall not apply
  • Sections 552 and 726: Each Debtor and its estate is deemed to have irrevocably waived and agreed not to assert any claim or right under Sections 552 or 726 to avoid the imposition of the DIP Liens on any property acquired by the Debtor or its estate, or to seek to surcharge any costs or expenses relating to the DIP Collateral

Events of Default and Remedies

• The DIP Facility is subject to events of default usual and customary for debtor-in-possession facilities of this size, type, and purpose, including, among others:
  • The Interim DIP Order or Final DIP Order ceasing to be in full force and effect, or being vacated, reversed, stayed, modified, or amended, or the Final DIP Order not having been entered within 21 days after the DIP Motion is filed
  • Failure of the Debtors to comply with the Permitted Variances, to have an Approved Budget, or to comply with covenants in the DIP Documents (subject, in certain cases, to a five-business-day grace period)
  • Any unauthorized payment on account of prepetition indebtedness or payables
  • Dismissal or conversion of any of the cases to Chapter 7; appointment of a Chapter 11 trustee or examiner with enlarged powers; or the granting of any pari passu or senior superpriority claim or lien
  • Entry of an order granting relief from the automatic stay to the holder of any lien evidencing indebtedness in excess of $1 million to permit foreclosure on any Debtor's assets (excluding a grant of stay relief to Community Bank related to MOB1)
  • Any Debtor petitioning for additional financing pari passu or senior to the DIP Facility, or termination of the Debtors' exclusive period under Section 1121
  • Consummation of a sale of any material portion of the DIP Collateral without the DIP Lender's prior written consent (other than the contemplated Sale or an ordinary-course sale contemplated by the Approved Budget)
  • Confirmation of a plan that does not provide for payment in full in cash of the DIP Facility Loans or other treatment acceptable to the DIP Lender
  • Any challenge to the DIP Facility or the liens securing the DIP Obligations, or any investigation or claims asserted against the DIP Lender
  • Allowance of any claim under Section 506(c) against the DIP Collateral; any material inaccuracy in a Debtor's representation; the failure to meet any Milestone; or the occurrence of the Termination Date
• Upon a DIP Termination Event (the occurrence of the Maturity Date, or any material breach or Event of Default), the automatic stay is vacated and modified to permit the DIP Lender to deliver a Remedies Notice declaring the DIP Termination Declaration Date, declare all DIP Obligations immediately due and payable, suspend or terminate the DIP Facility, and charge default interest
• During the Waiting Period — the five (5) days following the DIP Termination Declaration Date under the Final Order (the DIP Term Sheet's corresponding "Remedies Notice Period" runs five business days) — the Debtors (or, under the DIP Term Sheet, the DIP Lender and/or the Debtors) may seek an emergency hearing (a "Stay Relief Hearing") to determine whether an Event of Default has occurred, and the Debtors may continue to use DIP Collateral (including Cash Collateral) in accordance with the Final Order and the Approved Budget

Approved Budget and Permitted Variances

• The Debtors delivered an initial DIP Budget (attached as Exhibit B), reflecting projected operating receipts, operating disbursements, non-operating disbursements, net operating cash flow, and liquidity for each one-week period covered
• The DIP Borrowers shall deliver a weekly budget for the 13-week period commencing on the first full week following entry of the Interim Order, subject to the DIP Lender's approval (such consent not to be unreasonably withheld, conditioned, or delayed)
• The DIP Budget shall provide for monthly payments of $950 to Community Bank of Marshall starting in August 2026, representing all current rents from MOB1; any rents generated by MOB1 are cash collateral of Community Bank of Marshall and shall not be subject to the DIP Lender's liens and claims until Community Bank of Marshall is indefeasibly paid in full
• To the extent the DIP Lender is indefeasibly paid in full, the DIP Budget shall automatically be amended to include full interest payments to Community Bank of Marshall on MOB1