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LISA HILL FENNING (SBN 89238) HARRY GARNER (SBN 254942) ARNOLD & PORTER LLP 777 South Figueroa Street, 44th Floor Los Angeles, California 90017 Telephone: 213.243.4000 Facsimile: 213.243.4199 Lisa.Fenning@aporter.com Harry.Garner@aporter.com Proposed Counsel to the Debtor and Debtor-in-Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION In re DOWNEY REGIONAL MEDICAL CENTERHOSPITAL, INC., a California non-profit, public benefit corporation, Debtor. Case No.: 09-bk-34714 Chapter 11 EMERGENCY MOTION OF DEBTOR FOR ENTRY OF INTERIM AND FINAL DIP ORDERS (A) AUTHORIZING DEBTOR TO OBTAIN POSTPETITION FINANCING; (B) GRANTING SUPERPRIORITY EXPENSE CLAIMS AND SECURITY INTERESTS; AND (C) GRANTING OTHER RELIEF UNDER 11 U.S.C. 105, 361, 362, 363 AND 364, F.R.B.P. 2002 AND 4001; AND LBRS 20021 AND 4001-2; MEMORANDUM IN SUPPORT THEREOF; EXHIBITS A AND B HEARING Date: September __, 2009 Time: Place: Courtroom: 1475 United States Bankruptcy Court 255 E. Temple Street Los Angeles, CA 90012

15 16 17 18 19 20 21 22 23 24 25 26 27 28 Tax I.D. 95-1903935

1 2 3 4 5 6 7 8 9 10 11 12 IV. 13 V. 14 A. 15 B. 16 C. 17 18 D. 19 E. 20 21 22 23 24 25 26 27 28 VI. VII. VIII. I. II. III.

TABLE OF CONTENTS

Page JURISDICTION AND VENUE ..............................................................................................1 PROCEDURAL STATUS .......................................................................................................2 BACKGROUND .....................................................................................................................2 A. B. C. D. E. The Business of the Hospital .......................................................................................2 The Causes of the Bankruptcy Filing...........................................................................3 The Tax-Exempt Bonds ...............................................................................................5 Other Prepetition Secured Debt ...................................................................................6 The DIP Loan and Summary of Terms Contained in the DIP Credit Agreement. ...................................................................................................................7

RELIEF REQUESTED..........................................................................................................17 BASIS FOR RELIEF .............................................................................................................17 Emergency Consideration of this Motion Is Appropriate ..........................................17 Approving the DIP Credit Agreement Is Appropriate ...............................................18 Debtor Has Satisfied the Requirements Under Bankruptcy Code 364(c) and Should Be Allowed to Borrow on a Superpriorityand Senior Secured Basis..................................................................................................22 Debtor Has Satisfied the Requirements of Bankruptcy Code 364(d) .....................23 The DIP Loan Is Supported by the Exercise of Sound Business Judgment and Good Faith ..........................................................................................25

REQUEST FOR FINAL HEARING .....................................................................................27 WAIVER OF BANKRUPTCY RULE 6004(h) ....................................................................28 CONCLUSION ......................................................................................................................29

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Unsecured Creditors Comm. v. First Natl Bank and Trust Co. (In re Ellingsen MacLean Oil Co.), 65 B.R. 358 (W.D. Mich. 1986) .................................... 28 In re Vanguard Diversified, Inc., 31 B.R. 364 (Bankr. E.D.N.Y. 1983)...................................................................................... 29 In re Roblin Indus., Inc., 52 B.R. 241 (Bankr. N.D.N.Y. 1985) ..................................................................................... 29 In re Stacy Farms, 78 B.R. 494 (Bankr. S.D. Ohio 1987)..................................................................................... 21 In re Stein & Day, Inc., 87 B.R. 290-92 (Bankr. S.D.N.Y. 1988)................................................................................. 28 CASES In re Adams Apple, Inc., 829 F.2d 1484 (9th Cir. 1987)................................................................................................. 28 In re Ames Dept Stores, Inc., 115 B.R. 34 (Bankr. S.D.N.Y. 1990) ................................................................................ 21, 27 Bray v. Shenandoah Fed. Say. & Loan Assn (In re Snowshoe Co., Inc.), 789 F.2d 1085 (4th Cir. 1986)..................................................... 21 In re FCX, Inc., 54 B.R. 833 (Bankr. E.D.N.C. 1985) ...................................................................................... 29 In re Keystone Camera Prods. Corp., 126 B.R. 177 (Bankr. D.N.J. 1991)......................................................................................... 28 In re Quigley Gen. Elec. Co. (hi re Elec. City, Inc.), 43 B.R. 336-38 (Bankr. W.D. Wash. 1984)............................................................................ 29 In re Reading Tube Indus., 72 B.R. 329 (Bankr. E.D. Pa. 1987)........................................................................................ 21 Resolution Trust Co. v. Official Unsecured Creditors Committee (In re Defender Drug Stores, Inc.), 145 B.R. 312 (B.A.P. 9th Cir. 1992) .............................. 27 Richmond Leasing v. Capital Bank, N.A., 762 F.2d 1303 (5th Cir. 1985)................................................................................................. 27 TABLE OF AUTHORITIES Page(s)

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STATUTES AND RULES 11 U.S.C. 105 ..................................................................................................................... 1, 9, 30 11 U.S.C. 361 ......................................................................................................... 1, 9, 19, 27, 30 11 U.S.C. 362 ..................................................................................................................... 1, 9, 30 11 U.S.C. 363 ..................................................................................................................... 1, 9, 30 11 U.S.C. 364 ................................................................................................... 1, 9, 19, 20, 27, 30 11 U.S.C. 364(a) ........................................................................................................................ 20 11 U.S.C. 364(c) ........................................................................................................................ 24

9 10 11 12 13 14 15 16 17 18 19 20 21 22 28 U.S.C. 1409 ............................................................................................................................. 1 23 Fed. R. Bankr. P. 2002 .................................................................................................... 1, 9, 19, 30 24 25 26 27 28 Fed. R. Bankr. P. 4001 .................................................................................................... 1, 9, 19, 30 Fed. R. Bankr. P. 4001(c)................................................................................................ 8, 9, 20, 29 Fed. R. Bankr. P. 4001(c)(2) ......................................................................................................... 20 Fed. R. Bankr. P. 6004 .......................................................................................................... 1, 9, 30 11 U.S.C. 364(c)(1)........................................................................................................ 24, 26, 27 11 U.S.C. 364(c)(1)-(3).............................................................................................................. 25 11 U.S.C. 364(c)(3).................................................................................................................... 25 11 U.S.C. 364(d) ............................................................................................................ 25, 26, 27 11 U.S.C. 364(d)(1)(A) .............................................................................................................. 21 11 U.S.C. 507 ..................................................................................................................... 1, 9, 30 11 U.S.C. 1107(a) ........................................................................................................................ 2 11 U.S.C. 1108 ................................................................................................................. 2, 20, 28 28 U.S.C. 157 ............................................................................................................................... 1 28 U.S.C. 157(b)(2)(D) ................................................................................................................ 1 28 U.S.C. 1334 ............................................................................................................................. 1 28 U.S.C. 1408 ............................................................................................................................. 1

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Fed. R. Bankr. P. 9014 .................................................................................................... 1, 9, 19, 30 LBR 2002-2......................................................................................................................... 1, 19, 30 LBR 2081-1(a)(9).......................................................................................................................... 20 LBR 4001-2..................................................................................................................... 1, 9, 19, 30 LBR 9013 ............................................................................................................................ 1, 19, 30

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TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE, CREDITORS HOLDING THE TWENTY LARGEST UNSECURED CLAIMS, ANY ALLEGED SECURED CREDITORS, THE OFFICE OF THE UNITED STATES TRUSTEE, AND OTHER PARTIES IN INTEREST: Downey Regional Medical Center-Hospital, Inc., the debtor and debtor-in-possession in the above captioned case (the Debtor), hereby moves the Court for the entry of an interim order (the Interim DIP Order), substantially in the form annexed hereto as Exhibit B, approving certain postpetition financing, and following a final hearing (the Final Hearing), requests entry of a final order granting the relief requested herein (the Final DIP Order). Debtor requests pursuant to Local Bankruptcy Rule (LBR) 2081-1(a)(9) and LBR 90751(a) that the Court schedule an interim hearing (the Interim Hearing) on this Motion on less than 48 hours notice, upon timely notice to the Office of the United States Trustee (UST), creditors holding the twenty largest unsecured claims, Debtors alleged secured creditors, and other parties in interest (collectively, the Interested Parties). A copy of this Motion was served, concurrent with the filing hereof with the Court, on the Interested Parties by courier or overnight delivery. SUMMARY OF RELIEF REQUESTED By this Motion, Debtor seeks interim and final approval of the $15 million postpetition financing (the DIP Loan) that it has negotiated with Healthcare Finance Group (HFG or DIP Lender), substantially on the terms and conditions set forth in the form of Secured Super-Priority Debtor In Possession Loan and Security Agreement (the DIP Credit Agreement) between Debtor and DIP Lender, a true and correct copy of which is attached as Exhibit A, and the proposed Interim DIP Order, a true and correct copy of which is attached as hereto as Exhibit B. Debtor does not have sufficient sources of working capital to carry on the operation of its business during this case without the DIP Loan. Uninterrupted operations are critical to a successful reorganization, and the financing provided by the DIP Loan will ensure that Debtors vendors continue their business relationship with an operating company and allow the Debtor to continue providing necessary services to patients. Because a successful reorganization process will require the Debtor to maintain its ongoing operations until the process has been completed, the

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relief requested in the Motion is essential to preserving the Debtors estate. The terms and conditions of the proposed DIP Loan are fair and reasonable under the circumstances. This Motion is based on the attached Memorandum of Points and Authorities (the Memorandum); the Declaration of Robert E. Fuller in Support of the Debtors Chapter 11 Petition and First Day Motions (the Fuller Declaration), filed with the Court concurrently herewith; and the arguments, evidence, and representations that may be presented at or prior to the hearing on this Motion. Pursuant to LBR 9075-1(a)(7), if you wish to oppose this Motion you may present a written or oral response to the Motion at the time of the hearing on the Motion. WHEREFORE, Debtor respectfully requests that the Court (ii) following the Interim Hearing, enter the Interim DIP Order approving the DIP Loan with DIP Lender under sections 105, 361, 362, 363(c)(1)-(3), 364(d)(1), 364(e), and 507(b) of the Bankruptcy Code, Bankruptcy Rules 2002, 4001, 6004 and 9014, and LBR 4001-2, 2002-2 and 9013, on the terms set forth in the DIP Credit Agreement; (ii) approve the form and scope of notice of the Final Hearing and schedule the Final Hearing on the Motion; (iii) following the Final Hearing, enter the Final DIP Order; and (iv) grant such other and further relief as may be just and proper. Dated: Los Angeles, California September 14, 2009 Respectfully Submitted, /s/ Lisa Hill Fenning Lisa Hill Fenning (SBN 89238) Harry Garner (SBN 254942) Arnold & Porter LLP 777 South Figueroa Street, 44th Floor Los Angeles, California 90017 Telephone: 213.243.4000 Facsimile: 213.243.4199 Proposed Counsel to the Debtor and Debtor-inPossession

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MEMORANDUM OF POINTS AND AUTHORITIES Downey Regional Medical Center-Hospital, Inc., the debtor and debtor-in-possession in the above captioned case (Debtor or Hospital), hereby moves this Court (a) for the entry of an interim order, substantially in the form attached hereto as Exhibit B (the Interim DIP Order) authorizing Debtor to enter into certain postpetition financing and scheduling a final hearing on the Motion (the Final Hearing), and (b) for entry of a final order (the Final DIP Order) granting the relief requested herein (the Motion). Specifically, Debtor seeks interim and final approval of the $15 million postpetition financing (the DIP Loan) that it has negotiated with Healthcare Finance Group (HFG or DIP Lender), substantially on the terms and conditions set forth in the form of Secured Super-Priority Debtor In Possession Loan and Security Agreement (the DIP Credit Agreement) between Debtor and DIP Lender, a true and correct copy of which is attached hereto as Exhibit A, and authority to enter into the DIP Credit Agreement and such other documents, agreements and instruments reasonably necessary to document the DIP Loan, including without limitation deposit account control agreements, one or more lockbox agreements (the Lockbox Agreements), mortgages and certain other documents granting a lien upon, or control of the DIP Collateral (as defined below) (collectively, the Ancillary DIP Agreements). In support of the Motion, Debtor relies upon and incorporates by reference the Declaration of Robert E. Fuller in Support of the Debtors Chapter 11 Petition and First Day Motions (the Fuller Declaration). In further support of the Motion, Debtor, by and through its undersigned counsel, respectfully states as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction to consider the Motion under 28 U.S.C. 157 and 1334.

This is a core proceeding under 28 U.S.C. 157(b)(2)(D). Venue of this case and the Motion in this District is proper under 28 U.S.C. 1408 and 1409. The statutory predicates for the relief requested herein are sections 105, 361, 362, 363, 364, and 507 of chapter 11 of title 11 of the United States Code (the Bankruptcy Code), Rules 2002, 4001, 6004, 9013 and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and Rules 2002-2, 4001-2 , and 9013-1 of the Local Bankruptcy Rules (LBRs).

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II.

PROCEDURAL STATUS 2. On September 14, 2009 (the Petition Date), Debtor commenced a case (the

Chapter 11 Case) by filing a petition for relief under chapter 11 of the Bankruptcy Code. 3. Debtor continues to operate its business and to manage its property as a debtor and

debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in Debtors Chapter 11 Case. 4. States Trustee. III. BACKGROUND A. 5. The Business of the Hospital The Hospital is a nonprofit general acute care and teaching hospital licensed for 199 No creditors committee has been appointed in this Chapter 11 Case by the United

beds located in Downey, California. The Hospital currently operates 181 staffed inpatient beds, including an intensive care unit, a neo-natal intensive care unit for newborns with special health issues, a birth center, and definitive observation units, besides general medical-surgical beds. It services approximately 14,000 inpatients per year in all services. The Hospitals average length of stay is less than 4 days on a very acute population, making it one of the most efficient in the state. 6. The Hospital offers a wide variety of clinical services and provides virtually all

clinical services of a major tertiary university hospital except for organ transplants. The Hospital has 11 operating rooms, and a very busy surgical practice. It offers same day surgeries, and specializes in open heart surgery, general surgery, orthopedic surgery, and neurosurgery. It operates on over 7,000 patients annually. The Hospital also has numerous specialty outpatient services, seeing over 80,000 outpatients annually, including non-invasive cardiology, radiology, endoscopy, and physical therapy. 7. The Hospital also has an emergency room of 22 beds. The emergency room is not

designated as a trauma unit, but it is equipped for and services trauma patients who are regularly brought to the Hospital in extremis or who come in via transportation other than ambulance. The emergency room services over 50,000 patients annually. Therefore, at about 2,500 patients per bed annually, it is one of the busiest in the area. The emergency room is burdened because since 2001

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there have been four major emergency rooms closed on the I-105 corridor, including Martin Luther King Hospital, leaving only three remaining general emergency rooms in the area including the Hospital.1 B. 8. The Causes of the Bankruptcy Filing Although nominally profitable on an accrual basis, the Hospital has been forced to

commence the Chapter 11 Case as a result of a liquidity crisis. This crisis has two primary causes. First, the Hospital has incurred substantial losses as a result of severe problems on the finance side of its business (now largely corrected) due to defective charge capture practices and software billing practices (the Charge Capture System Problems) that resulted in the Hospital not collecting all the revenues to which it would be entitled. Second, the Hospital was incurring significant losses due to problems with respect to its capitation arrangements (the Capitation Program) with certain physician groups and health plans (the Capitation Program Problems). These losses were so severe that the Hospital concluded it had to terminate the Capitation Program to staunch the long-term hemorrhaging of cash, despite the short term cash flow interruption and claims that would result (the Capitation Exit Consequences). The Hospital has taken steps to exit the Capitation Program and adopt a fee-for-service model, but the exit costs are substantial. The combination of the Charge Capture System and Capitation Program Problems has left the Hospital with no cash reserves since March 2008. 9. In essence, due to software and process failings, the Hospitals financial, billing and

collections systems had failed to capture charges which led to incomplete bills for a significant portion of its services for nearly a decade, causing unrecoverable losses. A cost-accounting problem caused the misallocation of costs to the capitation contracts, resulting in the Hospitals books showing a profit in capitation where none really existed. These problems have been investigated, diagnosed, and continue to be remedied under the direction of a new chief executive officer, Kenneth Strople, who took the reins in 2007, Robert Fuller, the chief operating officer, and consultant Richard Yardley, the acting chief financial officer. Given sufficient time to operate
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There is also a Kaiser Permanente Facility in the area, and although its emergency room is technically open to everyone, paramedic operators tend to take only Kaiser patients to this facility.

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under a regime in which charges are properly captured, bills are complete when invoiced, and financial reports provide reliable real-time information, the Hospital should be able to repay its debts in full. 10. However, demands by certain creditors for immediate payment and for payment of

more than the Hospital believes it owes in some cases prevented an orderly restructuring outside of bankruptcy and forced this filing. Much of the pressure has come from the physician groups who have asserted claims in excess of $9 million against the Hospital related to the termination of the capitation contracts. 11. The exit from the Capitation Program created three distinct cash drains: (1) the tail of

claims for services provided out-of-network by other hospitals and health care providers, (2) the claims by the physician groups participating in the Capitation Program for risk-sharing profit splits, much of which is disputed by the Hospital (the Risk Share Claims), and (3) the transitional loss of cash occasioned by the change in business model out of capitation (where under the Hospital was paid up front, before services were rendered) to fee-for service (where under the Hospital is paid in arrears, typically up to 150 days following the rendering of services), some of which was eased by the $8.8 million in advances by the insurers who participated in the program. However, the Hospital does not have the financial capacity to bridge the costs of exiting capitation within the time frame being demanded by impacted parties. In short, this reorganization filing has resulted from demands made by parties who greatly benefitted from the Capitation Program while it was operational (the physicians), but who are now not patient enough to allow the Hospital to implement its new business model and return to financial stability before demanding payment. 12. The immediate problem that forced the Hospital to file this Case arose from an

arbitration brought by one of the physician groups and the potential for the other two groups to follow suit. The physician groups are expected to assert claims for over $9 million. 13. Alliance Physicians Medical Group (Alliance), one of the physician groups,

recently filed an arbitration in an attempt to collect their alleged risk share profits from 2006 to 2008. In its arbitration, Alliance claimed it was owed up to $4.7 million or more. It sought to attach the Hospitals bank accounts in the fall of 2008. The arbitrators award is imminent, and the

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Hospital believes that Alliance will seek immediate enforcement by attaching the Hospitals bank accounts. 14. The threat of attachments relating to the estimated $9 million of Risk Share Claims

has scared off prospective lenders who would not want the loan proceeds intended for critically needed working capital to be diverted to paying historical disputed debts. Such a diversion of funds would shut down the Hospital. The automatic bankruptcy stay will protect the Hospital from the catastrophic interruption of its operations that would result from such an attachment. C. 15. The Tax-Exempt Bonds The Hospitals principal secured debt consists of certain tax-exempt bonds were

authorized and issued in the original aggregate principal amount of $68,485,000 by the California Health Facilities Financing Authority (the Authority), to fund certain capital projects of the Hospital (the Bonds), pursuant to an Indenture dated as of August 1, 1993 (the Original Indenture) as amended by, among other things, the First Supplemental Indenture, dated as of February 26, 2004, 1998 (the Supplemental Indenture, together with the Original Indenture, the Indenture), entered into between the Authority and Norwest Bank Minnesota, National Association n/k/a Wells Fargo Bank, National Association, as Indenture Trustee (the Indenture Trustee). 16. Simultaneous with the issuance of the Bonds, the Authority loaned proceeds of the

Bond issuance to the Hospital pursuant to a Loan Agreement, dated as of August 1, 1993, between the Authority and the Hospital (the Original Loan Agreement). The Loan Agreement was amended by the First Amendment to Loan Agreement dated as of February 26, 2004 (the First Amendment, together with the Original Loan Agreement, the Loan Agreement The Indenture and the Loan Agreement with all other documents related thereto are hereinafter referred to as the Bond Documents). As security for the payment of all amounts due under the Loan Agreement, the Hospital granted to the Authority, inter alia, (i) a first priority security interest (the Bond Lien) on Gross Operating Revenues (Gross Receipts), consisting of all of its accounts receivables, revenues, income and receipts, and rights to receive the same, as set forth more

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particularly in the Bond Documents (collectively, the Gross Receipts together with the Bond Funds, the Prepetition Bond Collateral). 17. Pursuant to the Bond Documents, the Authoritys rights under the Loan Agreement,

including all of the security interests and rights and remedies granted by Debtor to the Authority in the Pre-Petition Bond Collateral, were assigned to the Indenture Trustee, subject to the retention of certain rights by the Authority. The Indenture Trustee has the sole right to exercise the rights and benefits granted to the Authority under the Bond Documents. 18. As of Petition Date, Debtor was indebted under the Bond Documents in the principal

amount of approximately $26 million (including principal and interest), with interest continuing to accrue at a per diem of about $3,900 (the Bond Claim). It is Debtors understanding that the Indenture Trustee has also incurred attorneys fees and expenses that, according to the Bond Documents, would also be includable in the Bond Claim (the Prepetition Expense Claim). 19. A portion of the initial proceeds of the Bonds was used to create a Bond Reserve

Account, and certain other accounts and funds are held by the Indenture Trustee under the terms of the Bond Documents (collectively, the Bond Funds). As of Petition Date, the balance held in the Bond Funds was approximately $6.8 million. These funds also constitute security for the Bond Claim. 20. As of Petition Date, Debtor has net accounts receivable of approximately $43 million

that constitute Prepetition Bond Collateral. This amount is within the typical range for the past four months, as new receivables are generated and old receivables are collected. D. 21. Other Prepetition Secured Debt To Debtors knowledge, other than some equipment lease UCC filings and certain

statutory tax liens, as of Petition Date, the Hospitals only other secured creditor is Apollo Health Street, Inc. (Apollo), one of the Hospitals former billing and collections servicers. In March 2009, the Hospital entered into a settlement agreement that provided for termination of the parties contract and payment by the Hospital of about $2.3 million to resolve disputes about amounts due to Apollo (the Apollo Settlement). Approximately $1.2 million remains outstanding. The Apollo Settlement also granted Apollo a security interest in the Hospitals accounts receivable (the Apollo

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Lien). It is Debtors understanding that the Indenture Trustee and DIP Lender contend the Apollo Lien is junior to the Bond Lien and may be invalid, because, inter alia, the Hospital did not obtain the consent of the Indenture Trustee before granting the Apollo Lien. 22. The Hospital also maintained a secured line of credit with Bank of the West, having

a prepetition balance of about $7.1 million. Bank of the West also guaranteed two equipment leases in the total amount of $2 million, and provided a letter of credit for $100,000. These obligations totaling about $9.2 million were secured by a lien on the leased equipment and on certain investment securities in brokerage accounts having an estimated market value of more than $10 million (the BOTW Liens). However, prior to the Petition Date, the Hospital liquidated the investment collateral securing the BOTW Liens, repaid the credit line obligations owing to Bank of the West, and has obtained a release of the BOTW Liens with respect to the investment collateral. The equipment liens remain in place. E. 23. The DIP Loan and Summary of Terms Contained in the DIP Credit Agreement. Due to the Capitation Exit Consequences, Debtor needs $15 million in debtor in

possession financing to be able to pay its immediate expenses during this Chapter 11 Case. As of Petition Date, Debtor has about $340,000 in cash on hand, about $43 million in accounts receivable, and no other liquid assets. Debtors monthly cash expenses average $12.5 million, including about $5.92 million for payroll and about $1.8 million for other employee-related obligations. Monthly net cash collections have been averaging about $12 million over the past four months, although improvement is expected within a few months, due to the correction of the Charge Capture System Problems and improved cash flow from fee-for-service patients. Without using the cash it collects, Debtor has no other source of income from which to pay its bills. Use of the Indenture Trustees collateral Debtors Gross Receipts is thus critical for the ongoing business of Debtor. 24. However, because the Hospital has still been experiencing negative cash flow

which is projected to turn positive due to the improvements of the Charge Capture System and other steps implemented by new management use of the Indenture Trustees Gross Receipts collateral is not enough to fund operations. The Hospital also requires DIP financing. Without financing, the Hospital would have to close its doors.

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25.

The DIP Lien (as defined below) would prime the Bond Lien in the Prepetition

Collateral. Persuaded by the urgent need for additional liquidity, the Indenture Trustee has not objected to being subordinated to the new money. In consideration of the material increase in the Indenture Trustees risk profile, Debtor has agreed to provide, and the Indenture Trustee has agreed to accept, adequate protection as set forth more fully in a proposed stipulated cash collateral order including the following: (a) continued payment of the regularly scheduled payments provided for under the Bond Documents; (b) a replacement lien on Gross Receipts; (c) in addition to the lien on Gross Receipts, a lien in substantially all of Debtors assets, junior only to existing prepetition encumbrances (if any) and the senior lien to be grant to DIP Lender to secure the DIP Loan; and (d) guarantees of Debtors parent DRMCI and affiliate Properties, with the Properties guarantee to be secured by a lien on the medical office building it owns, subject to existing encumbrances (the MOB Lien), to be released upon confirmation if the plan of reorganization provides for a Working Capital credit line (as defined in the Bond Documents) of $5 million or less. 26. Debtor has discussed with Apollo the need to use its cash collateral and to prime the

Apollo Lien by granting the super-priority DIP Lien. Debtor has offered additional collateral and other adequate protection in consideration of such use and priming, and hopes to reach agreement with Apollo no later than the hearing on the Final DIP Order. 27. DIP Lender has offered to provide a DIP Loan in the amount of up to $15 million, on

a revolving basis, secured by a priming lien in substantially all of Debtors assets except for leased and purchase money financed equipment. The DIP Loan is essentially structured as an accounts receivable financing in which advances are based upon a formula for eligible accounts, but under all the circumstances, DIP Lender insists upon security in addition to the Hospitals receivables. The terms of the DIP Loan are set forth in the form of DIP Credit Agreement attached as Exhibit A to this Motion. The Hospital is working with DIP Lender to complete due diligence and documentation of the DIP Loan, which must be finalized before DIP Lender will make any advances. 28. The DIP Loan is the result of arms length negotiations between Debtor and DIP

Lender. The commitment of DIP Lender to extend the DIP Loan is set forth in (and subject to the

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terms and conditions of) the DIP Credit Agreement and the Interim DIP Order. A summary of key provisions is set forth in the Concise Statement2 below, together with citations to specific sections or paragraphs to the DIP Credit Agreement and the Interim DIP Order, as required by Bankruptcy Rule 4001-2(c).3 PROVISION Borrower CONTENT Debtor as debtor in possession. LOCATION DIP Credit Agreement at 1; Interim DIP Order at 1. DIP Credit Agreement at 1; Interim DIP Order at 1. DIP Credit Agreement at 1; Interim DIP Order at 2. DIP Credit Agreement 6.01-6.03 ; Interim DIP Order 18, 19.

Lender

HFG as agent for lender group

Total Commitment and Borrowing Limits

Interim DIP Advance: $4,000,000. Final DIP Facility: Up to a maximum of $15,000,000 with $5,000,000 minimum usage. Interim DIP Advance: 1. Entry of the Interim DIP Order in form acceptable to DIP Lender. 2. Control agreements with designated lockboxes and lockbox accounts established in favor of DIP Lender for all collection accounts. 3. Approval of the credit committee of DIP Lender or its assigns. 4. 5. Completion of due diligence. Agreement to allow Cymetrix to act as DIP

Borrowing Conditions

The following summary is qualified in all respects by the actual terms and conditions of the DIP Credit Agreement and the Interim DIP Order. In the event of a conflict between the summary set forth herein, the DIP Documents and the Interim DIP Order, the Interim DIP Order shall control. Local Bankruptcy Rule 4001-2(d) also requires that Debtor either file form F4001-2 with the Motion or file a statement consistent with that form. Debtor submits that the concise statement now required by Bankruptcy Rule 4001(c) is consistent with form F4001-2.
3

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PROVISION

CONTENT Lenders hot back up servicer. 6. Fully functional interface with DIP Lenders A/R systems. 7. Opinion letters by Debtors counsel as requested by DIP Lender. Final DIP Facility: 1. No Event of Default under Interim DIP Order. 2. Entry of the Final DIP Order.

LOCATION

3. Delivery to DIP Lender of any additional requested documents, information and materials. Uses of Funds 1. Hospital operations per lender approved budget (the DIP Budget). 2. Payment of the $380,000 Facility Fee. DIP Credit Agreement 2.07; Interim DIP Order 4(b).

3. Payment of Placement Fee of 1.25% of Final DIP Facility to HNB Capital, Debtors investment banker. 4. Payment of the Carve Out for court costs and professional fees (including committee professionals). 5. Payment of adequate protection payments to Indenture Trustee on the Bond Claim. 6. Other Permissible Uses listed in the DIP Financing Orders or as agreed by DIP Lender and Debtor, with Indenture Trustees consent.. Interest Non-Default Interest Rate: 3-month LIBOR + 6.25% (with LIBOR minimum of 2.75%), calculated daily, payable monthly. Default Interest Rate: 3-month LIBOR + 10.25%. Maturity Earlier of one year from entry of Interim DIP Order or plan confirmation, provided the Final DIP Credit Agreement at 14, 11.02; Interim DIP DIP Credit Agreement 2.02; Interim DIP Order 15.

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PROVISION

CONTENT DIP Order has been entered.

LOCATION Order 8. DIP Credit Agreement 2.01(i); Interim DIP Order 7.

Mandatory Prepayments

1. Upon receipt of proceeds from Extraordinary Receipts (excluding gifts, charitable contributions, bequests and grants). 2. Upon sale of collateral (other than in the ordinary course). 3. Upon sale of Debtors real property (if DIP Loan is in default).

Events of Default 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Standard provisions found in post-petition financing agreements, including, but not limited to: 1. Dismissal, conversion, or appointment of a trustee or examiner with enlarged powers. 2. Entry of order for relief from stay permitting foreclosure on assets exceeding $50,000 in the aggregate. 3. Entry of an order reversing, amending, supplementing, staying the Interim DIP Order or the Final DIP Order. 4. Postpetition liens or security interests in excess of $50,000, absent DIP Lender consent. 5. Any judgment against Debtor in excess of $50,000 as to any post-petition date obligation not covered by insurance and the enforcement of the judgment has not been stayed. 6. Any filing by Debtor challenging the DIP Loan or DIP Lien. 7. Confirmation of a plan that fails to provide for payment in full the DIP Loan. 8. Dismissal of the Case without providing for payment of the DIP Loan. 9. Any filing by Debtor that could reasonably be expected to result in a material impairment of

DIP Credit Agreement 11.01; Interim DIP Order 25.

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PROVISION

CONTENT the rights or interests of DIP Lender; 10. Any court determination with respect to a motion, pleading or proceeding brought by another party that results in a material impairment of the DIP Lenders rights, claims or liens. 11. Creation of any other superpriority administrative expense claim or lien (other than the Carve Out). 12. Failure to obtain a Final DIP Order within 30 days of entry of the Interim DIP Order. 13. Interim DIP Advance exceeding at any time 75% of Eligible Accounts Receivable. 14. Any default under the DIP Loan Agreement. 15. Any failure by Debtor to meet the DIP Budget or the 13 week rolling forecasts, as modified by permitted variances. 16. Failure of Debtor to provide timely reports.

LOCATION

Liens/Collateral 18 19 20 21 22 23 24 25 26 27 28 Fees

Valid and perfected first priority priming liens on and security interests in substantially all of the tangible and intangible assets of Debtor and real estate owned by Debtor, except Bond Funds, gifts, charitable contributions, bequests and grants (the DIP Collateral). Placement Fee: Fee payable to HNB Capital, LLC of 1.25 % of the committed amount of the DIP Loan. Facility Fee: $380,000. The Placement Fee and Facility Fee shall be 50% payable upon such funding of the Initial DIP Advance or incurrence of the Non-Utilization Fee and 50% payable on the earlier of five (5) business days after entry of the Final DIP Order or 30 days after entry of the Interim DIP Order.

DIP Credit Agreement 3.01; Interim DIP Order 20.

DIP Credit Agreement 2.02; Interim DIP Order 15.

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PROVISION

CONTENT Collateral Tracking Fee: 0.50% per annum, calculated daily, payable monthly on the average outstanding balance. Non-Utilization Fee: 0.50% per annum, calculated daily, payable monthly on the difference between $4,000,000 (prior to entry of the Final DIP Order) or $15,000,000 (after entry of the Final DIP Order) and the average outstanding balance. Exit Fee: 2.0% upon permanent repayment of the DIP Loan, provided that the Exit Fee will be credited against the facility fee related to a chapter 11 plan exit financing facility if DIP Lender chooses to provide exit financing. Minimum Usage Fee: A fee, calculated daily, payable monthly, equal to interest that would have accrued but for the actual amount of the outstanding Interim DIP Advances being less than $4,000,000 at any time, and $5,000,000 under the Final DIP Facility. Wire Transfer Fees: $40 per wire transfer. Expenses: $70,000 paid prepetition for legal and other expenses.

LOCATION

Grant of priority claim or lien pursuant to 364(c) and (d)

Super-priority administrative expense claim pursuant to 364(c)(1): Subject to the Carve Out; includes super-priority claims with respect to avoidance action claims and recoveries and otherwise unencumbered assets. First-priority lien on substantially all of the property of the estate: Excludes, inter alia, (i) leased or purchase money-financed equipment subject to valid and perfected pre-petition security interests, (ii) proceeds of avoiding power actions; (iii) the Bond Funds; and (iv) restricted gifts, bequests and grants. Junior lien on estate assets (mostly equipment) that are subject to valid existing encumbrances.

DIP Credit Agreement 3.01, 9.20; Interim DIP Order 20, 21.

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PROVISION

CONTENT Adequate protection/junior lien to Indenture Trustee and Apollo: (i) on same collateral that is subject to DIP Lien and subject to the same exclusions; (ii) adequate protection liens to be granted pursuant to cash collateral orders entered concurrently with Interim DIP Loan Order (iii) Apollos junior lien to remain subject to all defenses and objections.

LOCATION

Reporting Requirements

1. Weekly rolling 13 week forecasts by line item of net cash flow (including cash receipts and cash disbursements), expenditures (accounts payable) and Borrowing Base. 2. Weekly reports of actual net cash flow (including cash receipts and cash disbursements) and expenditures (accounts payable). 3. 4. An updated weekly Borrowing Base. Daily cash balance reports.

DIP Credit Agreement 8.05, Exhibit B; Interim DIP Order 11.

5. Weekly variance reports explaining any variance in the actual cash flows and borrowing base report from the Budget and the most recent thirteen week forecast. Lockboxes 1. Lockboxes and lockbox accounts over which DIP Lender will have control for nongovernmental payments; 2. Lockboxes over which Debtor will have control with respect to all remittances from governmental payors, (the Governmental Remittance Lockbox), subject to Debtors agreement to allow the funds in such lockbox to be swept to lockboxes controlled by DIP Lender. Carve-Out 1. The Carve-Out will be $500,000 on a rolling basis and will include: a) all court and U.S. Trustee fees under 28 U.S.C. 1930(a); b) fees and expenses up to $15,000 for the benefit of a potential chapter 7 trustee; and DIP Credit Agreement at 4; Interim DIP Order 22. DIP Credit Agreement 4.01; Interim DIP Order 6.

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PROVISION

CONTENT c) allowed professional fees and expenses for both Debtor and Committee professionals. 2. For the purpose of clarity, the Carve-Out shall not be reduced by (i) amounts paid to Professional Persons or on account of Court and UST Fees prior to the delivery by DIP Lender of a notice of an Event of Default or (ii) retainers held by Professional Persons.

LOCATION

Adequate protection or priority for a prepetition claim Determination of the validity, enforceability, priority, or amount of a prepetition claim or lien Waiver or modification of Bankruptcy Code provisions or applicable rules relating to the automatic stay

No prepetition claim.

N/A.

No prepetition claims or liens.

N/A

Without stay or further court order: Upon giving notice of default and termination by DIP Lender, (i) DIP Lender shall have the right to cease any further DIP Advances, and (ii) the unpaid balance of the Interim DIP Obligations (and any unpaid and accrued interest) shall automatically be accelerated and become immediately due and payable. On 3 business days notice, unless the Court orders otherwise, DIP Lender will have relief from the automatic stay for all purposes and Debtor shall have no further right to use of cash collateral unless Debtor, the Indenture Trustee, or the Committee contest whether an Event of Default has occurred by filing a motion within that 3 business day period. Subject to the Courts convenience, the hearing shall be within 5 business days after filing of the motion. Failure to seek a prompt hearing will cause the stay to be deemed terminated without further order. No relief under 105: Debtor and the

DIP Credit Agreement 11.02; Interim DIP Order 26.

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PROVISION

CONTENT Committee shall not have the right to seek relief, including, without limitation, under 105 that would impair or restrict the rights and remedies of the DIP Lender.

LOCATION

Waiver or modification of right to file a plan, seek extension of exclusivity period, request use of cash collateral, or request authority to obtain credit Establishment of deadlines regarding filing a plan, etc.

The DIP Loan terminates upon plan confirmation. No other use of cash collateral or loans are permitted..

DIP Credit Agreement 11.02; Interim DIP Order 25.

Event of Default if Debtor has not filed a plan (and disclosure statement) in the Case at least ninety days before the Maturity Date, which plan does not provide for the payment in full of the DIP Loan on its effective date. DIP Lender is permitted but not required to perfect under applicable nonbankruptcy law. Enforcement of remedies remains subject to applicable nonbankruptcy law.

Interim DIP Order 25.

Waiver or modification of the applicability of nonbankruptcy law relating to the perfection, etc. Release, etc., regarding any estate claims or causes of action Indemnification

DIP Credit Agreement 3.02; Interim DIP Order 24.

No. No prepetition lending relationship or potential claims.

N/A

Yes. Full indemnification of DIP Lender for losses, claims or damages arising from DIP Loan, including payment of (i) DIP Lenders attorneys fees and costs, and (ii) any taxes paid by DIP Lender as a result of Debtors failure to pay required taxes. Surcharge is prohibited, except for Carve Out. For avoidance of doubt, budgeted administrative expenses and other amounts may be paid in the ordinary course, unless a notice -16-

DIP Credit Agreement 2.05; Interim DIP Order 16.

Release or waiver of surcharge claim under 506(c)

DIP Credit Agreement 3.04; Interim DIP Order 23

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PROVISION

CONTENT of default has been issued by DIP Lender..

LOCATION

Granting of liens on avoidance actions

No.

IV.

RELIEF REQUESTED 29. By this Motion, Debtor requests that the Court (i) following the Interim Hearing,

enter the Interim DIP Order approving the DIP Loan with DIP Lender 105, 361, 362, 363(c)(1)(3), 364(c) and (d), 364(e), and 507(b), Bankruptcy Rules 2002, 4001, 6004, 9013 and 9014, and LBRs 2002-2, 4001-2, and 9013-1, on the terms set forth in the DIP Credit Agreement; (ii) approve the form and scope of notice of the Final Hearing and schedule the Final Hearing on the Motion; (iii) following the Final Hearing, enter the Final DIP Order; and (iv) grant such other and further relief as may be just and proper. V. BASIS FOR RELIEF A. 30. Emergency Consideration of this Motion Is Appropriate Bankruptcy Rule 4001(c) governs the procedure for consideration of motions to

obtain post-petition financing. Subsection (c)(2) provides for an expedited consideration of the Motion: If the motion so requests, the court may conduct a hearing before such 15 day period expires, but the court may authorize the obtaining of credit only to the extent necessary to avoid immediate and irreparable harm to the estate pending a final hearing. See Fed. R. Bankr. P. 4001(c)(2). LBR 2081-1(a)(9) also provides for an expedited consideration of the Motion. 31. The DIP Loan is needed to pay Debtors essential operating expenses. If Debtor is

not authorized to obtain financing under the DIP Loan and the AncillaryDIP Agreements in the amount of not more than $4 million at the outset of this Chapter 11 Case, it will be unable to operate the hospital. Debtor also will be unable to pay its vendors, who likely will cease to provide goods

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and services to Debtor. Ultimately, Debtor will be unable to serve its many patients, putting their welfare and safety in jeopardy. Such an outcome would cause immediate and irreparable harm to Debtors estate. The interim relief requested by Debtor is precisely what is contemplated by Bankruptcy Rule 4001(c)(2) and should be granted. B. 32. Approving the DIP Credit Agreement and Ancillary DIP Agreements Is Appropriate As a debtor in possession, Debtor is authorized to operate its business under 1108.

7 As part of that operation, Debtor may incur unsecured debt in the ordinary course of business. See 8 11 U.S.C. 364(a). The Bankruptcy Code offers a debtor in possession additional flexibility to the 9 extent it needs additional credit, but cannot attract such credit on unsecured terms. Section 364 10 provides a progression of various protections to induce a post-petition lender to extend credit to a 11 debtor in possession. 12 33. 13 lien, Debtor must show that it is unable to obtain the necessary credit otherwise and the lienholder 14 to be primed (to the extent that such priming is not consensual) is adequately protected. Section 15 364, however, does not impose upon a debtor in possession the onerous duty to seek credit from 16 every possible lender before concluding that such credit is available. See Bray v. Shenandoah Fed. 17 Say. & Loan Assn (In re Snowshoe Co., Inc.), 789 F.2d 1085, 1088 (4th Cir. 1986); In re Ames 18 Dept Stores, Inc., 115 B.R. 34, 40 (Bankr. S.D.N.Y. 1990) (holding that contacting four financial 19 institutions regarding a loan satisfied the requirements of 364(d)(1)(A)). Instead, a good faith 20 effort to obtain less burdensome credit from other sources is all that is required of a debtor, 21 especially when time is of the essence. See, e.g., In re Reading Tube Indus., 72 B.R. 329, 333 22 (Bankr. E.D. Pa. 1987); In re Stacy Farms, 78 B.R. 494, 498 (Bankr. S.D. Ohio 1987). 23 34. 24 Debtorand certainly the only one able to do so in time to fund Debtors payroll on September 22, 25 2009. Due to the specialized nature of Medicare, Medi-Cal, and third party payor systems and their 26 control over the revenues and cash flow available for hospitals, only a relative handful of lenders 27 are willing to provide medical accounts receivables financing in the $15 million range under the 28 DIP Lender is the only lender ready and willing to make a working capital loan to To justify a post-petition credit on superpriority basis or by granting a priming

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best of circumstances. And these were not the best of circumstances. The global economic crisis that struck in the fall of 2008 and its continuing impact on the availability of financing have stymied all efforts by the Hospital to raise the necessary funds for the past 15 months. With the credit markets still in turmoil, its financial statements under review due to the Charge Capture System Problems, and Alliance and other parties pressing significant Exit Claims, the Hospital has been unable to obtain other viable offers of financing. 35. Indeed, the Hospital has been seeking financing since May 2008, when it retained

London & Pacific Capital Advisers LLC (L&P) as its exclusive investment banker to explore refinancing alternatives. That search became extremely urgent in August 2008, following its decision to exit the Capitation Program and recognized that the short-term financial impact of the Capitation Exit Consequences could be as much as $30 million. Given its lack of any cash reserves, the Hospital began a multi-front process of trying to obtain the financing needed to sustain itself during the transition. 36. First, the Hospital tried to obtain bank loans. At the time, the Hospital had a secured

bank line of credit with Bank of the West, with a balance of about $6.7 million. That line was collateralized by investment securities, which of course lost considerable face value in the collapse of the stock markets. The Hospital sought to increase that line, but lacked additional liquid collateral. Bank of the West refused to increase the line or provide any other form of financing. Despite talks with numerous banks, no one was interested in extending the credit line following the collapse of the credit markets in October 2008. 37. Second, the Hospital tried to obtain mezzanine financing from hedge funds or other

non-bank lenders. L&P initially proposed a two level re-capitalization of the Hospitals financing; an intermediate term mezzanine level of $15 million above the bank credit line and a long term $25 million top level. L&P informed the Hospital that, although initial talks were held with a variety of lenders, mostly hedge funds, that the October market collapse had caused market paralysis for such loans. 38. Third, the Hospital approached its participating health plans for financial help. The

Hospital was successful in obtaining approximately $8.8 million in temporary bridge loans and

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other assistance, including offers for the following: $365,000 short term advance from Blue Shield, $1.3 million advance from SCAN, $5 million intermediate term loan from United/Pacificare, and a total of $3.3 million in loans and advances from Health Net. The Hospital received the Blue Shield advance in September 2008, and subsequently repaid it. The SCAN offer expired before the Hospital was able to meet one or two of its conditions, but it was replaced with a separate cash flow facility that assisted in speeding up cash flow from them. No repayment was required as it was a one-time resetting of the payment flows that in essence permanently advanced the Hospital 45 days of payments from SCAN, which was worth about $600,000. The Hospital has borrowed and still owes about $4.5 million on the United/Pacificare loan. The Hospital received and subsequently repaid an $800,000 advance from Health Net, and has borrowed about another $1.5 million on longer terms that it still owes. 39. The health plan loans and advances enabled the Hospital to keep its doors open.

However, they were all very short-term: some have already had to be repaid; others are due to be repaid starting in January 2010. In January 2009, once the extent of the assistance from the health plans became fully known, the Hospital and L&P intensified their efforts to identify a trade accounts lender who would provide a three-year, $15 million line, to assist in meeting the Hospitals liquidity needs. Six term sheet offers were received in January; five developed by L&P and one by the Hospital. The Hospital initially worked with two of the lenders, but after a couple of weeks exclusivity was demanded and the Hospital began working with CapitalSource, a Maryland-based trade accounts lender. 40. The Hospital and CapitalSource worked from January through June in an effort to

agree upon terms of a potential line of credit. When no agreement was forthcoming, the Hospital finally discontinued its efforts with CapitalSource in July, and notified L&P of the termination of its relationship as well. 41. Thereafter, the Hospital reconnected with two of the lenders previously showing

interest, and one additional new lender, HFG. One of the prior lenders was willing only to entertain a $5 million line. Negotiations did not progress beyond the expression of interest phase. The Hospital terminated L&Ps contract due to the lack of progress toward closure.

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42.

In early July 2009, in order to meet the diligence and other requirements to complete

a financing with HFG, the Hospital had no choice but to seek the assistance of another investment banker to help address its critical funding needs. It retained Howard Brand of HNB Capital, L.L.C. (HNB Capital), an independent investment banker specializing in healthcare financing. A separate application to retain HNB Capital is being filed concurrently. 43. HNB Capital analyzed Debtors situation, the history of its contacts with potential

lenders, the urgent nature of its cash needs, and investigated the overall financial situation. HNB Capital advised senior management that L&P had contacted the appropriate potential lenders, but that most of them do not provide DIP financing. It quickly became apparent that HFG was one of very few, if not the only lender willing to fund a loan that could satisfy the Hospitals needs. The Hospital decided to proceed with HFG on the exclusive basis that HFG required. 44. The DIP Loan was originally intended to be a regular, nonbankruptcy loan. By the

middle of August, the Hospital indicated that due to the pressing of contingencies beyond its control, it would need funding in September. However, primarily because of the threatened attachment of the Debtors bank accounts by Alliance and potentially other physician groups, HFG decided that it was only willing to make the financing available in the form of a DIP Loan in a chapter 11 case, and then only on the basis of a priming lien. 45. While not advantageous in many respects, the terms of the DIP Loan are the best

terms that the Hospital could negotiate with HFG, and HFG is the only lender willing to provide this financing. Although CapitalSources proposed January 2009 term sheet had lower interest rates and fees than the DIP Loan, that lender was never willing to commit to make a loan on the terms it had proposed. In the meantime, the Hospitals cash position has become even more strained. That DIP Lender would insist upon higher rates and fees, and more stringent conditions is, unfortunately, not a surprise, given that the Hospital has no other viable offers left on the table. 46. Debtor does not have sufficient sources of working capital to carry on the operation

of its business during this case without the DIP Loan. Uninterrupted operations are critical to a successful reorganization, and the financing provided by the DIP Loan will ensure that Debtors vendors continue their business relationship with an operating company and allow the Debtor to

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continue providing necessary services to patients. Because a successful reorganization process will require the Debtor to maintain its ongoing operations until the process has been completed, the relief requested in the Motion is essential to preserving the Debtors estate. The terms and conditions of the proposed DIP Loan, as set forth in further detail herein and as supplemented by the Ancillary DIP Agreements, are fair and reasonable under the circumstances.

C.
47.

Debtor Has Satisfied the Requirements Under Bankruptcy Code 364(c) and Should Be Allowed to Borrow on a Superpriorityand Senior Secured Basis The DIP Credit Agreement provides DIP Lender with the following protections: a. A super-priority administrative expense claim pursuant to

364(c)(1), subject to the Carve Out, with priority over any and all administrative expenses, and payable from all assets of the estate, including proceeds of avoidance actions, whether or not such proceeds or property is recovered from a judgment, settlement or otherwise, in the event that the Interim DIP Obligations are not indefeasibly paid in cash in full. b. A valid and perfected first-priority lien on property of the estate

(other than (i) leased or purchase money-financed equipment of Debtor subject to valid and perfected pre-petition security interests and (ii) proceeds of avoidance actions) pursuant to 364(d), which lien shall include a first-priority lien on Accounts existing pre-petition and created post-petition, all inventory, general intangibles related to the accounts and inventory, all commercial tort claims and all deposit accounts; and c. A valid and perfected junior lien on the following property of the

estate pursuant to 364(c)(3) that is subject to valid existing encumbrances, including leased or purchase money-financed equipment of Debtor subject to valid and perfected prepetition security interests. Other than the requirement of notice and a hearing, the only statutory prerequisite for obtaining secured credit on a superpriority basis under 364(c)(1)-(3) is that the [debtor in possession] is unable to obtain unsecured credit allowable under 503(b)(1) of this title as an administrative expense. This threshold test is satisfied here.

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48.

As set forth in above and in the Fuller Declaration, despite its efforts, Debtor, as of

the Petition Date, was unable to obtain unsecured credit sufficient to finance its operations. Moreover, Debtor simply cannot obtain alternative financing of the magnitude proposed under the DIP Credit Agreement on an unsecured basis, even if the resulting claim were to be allowed as an administrative claim, because Debtor is likely to be unable to pay any such administrative claim without the consent of Indenture Trustee, which has a lien on Debtors Accounts. Debtor has evaluated alternative post-petition financing concepts, none of which contemplate a financing on anything other than a fully secured basis. And even DIP Lender has agreed to provide funding to Debtor only if it is given the added protection and benefits provided by the DIP Credit Agreement. Consequently, Debtor should be permitted to borrow under the DIP Credit Agreement on a superpriority, senior secured, and junior secured basis under 364(c)(1)-(3), as such borrowing is the only source of funds available to Debtor at this time. D. 49. Debtor Has Satisfied the Requirements of Bankruptcy Code 364(d) Under the DIP Credit Agreement, DIP Lender is requiring that the funds advanced

under the DIP Loan be secured by a lien that has priority over the Bond Lien and all other liens except liens on equipment to secure purchase money or financing leases which were valid and perfected on the Petition Date, but consents to a junior lien on all property of the estate to be granted in favor of the Indenture Trustee pursuant to the Cash Collateral Orders, and a junior lien in favor of Apollo subject, however, to all defenses and objections to the Apollo Lien. 50. The only statutory prerequisites for obtaining credit on a priming lien basis under

364(d) are that the [debtor in possession] is unable to obtain such credit otherwise and that, absent the consent of the secured creditor sought to be primed, there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior or equal lien is proposed to be granted. Each of these tests is satisfied in this case. 51. As set forth above, Debtor simply cannot obtain alternative financing of the

magnitude proposed under the DIP Loan on an unsecured basis. Debtor is unable to obtain unencumbered access to its receivables because of the Bond Lien, and Debtor otherwise does not have unencumbered sources of cash to fund its operations. Due to the uncertainty created by the

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current economic crisis, even DIP Lender has refused to extend credit post-petition without the superpriority and the priming protections afforded by 364(c)(1) and (d), and Debtor has been unable to obtain financing on any other feasible and more favorable terms. DIP Lender has specifically required that the DIP Lien prime the Bond Lien and the Apollo Lien with respect to substantially all the assets of the estate, except as set forth in the DIP Credit Agreement. 52. As set forth in the proposed Cash Collateral Orders, in exchange for replacement

liens, Indenture Trustee has agreed to subordinate its prepetition lien to the competing liens arising in connection with the DIP Loan. However, Indenture Trustee has conditioned its consent to be primed upon the provision of such protections as described in the Cash Collateral Orders, including that, without limitation, Debtor has agreed to provide Indenture Trustee with replacement liens to adequately protect it from any diminution in value of its security interests, and Debtors parent and certain of its affiliates have agreed to provide certain secured guarantees. Indenture Trustee is also protected by the advance of funds under the DIP Loan because the value created by maintaining Debtor as a going concern benefits all creditor constituencies. 53. Debtor has asked Apollo to consent as well, and discussions are ongoing. Even if

Apollos consent cannot be obtained, Debtor contends that adequate protection of the Apollo Lien is established by the proposed grant of a replacement junior lien in Accounts estimated at $43 million, plus a supplemental junior lien in substantially all of Debtors assets, including plant, furniture, fixtures, and equipment with a book value of at least $50 million, inventory of at least $16.2 million, the Land worth an estimated $6.2 million, and such other assets as are subject to pledge. 4 54. Debtor submits that the entirety of the protection being offered to the Indenture

Trustee and Apollo is adequate for the purposes of 361. The financing provided under the DIP

Because the UCC financing statement with respect to the Apollo Lien was filed after that of the Indenture Trustee, the Apollo Lien is presumptively junior to the Bond Lien, even though the Apollo Settlement stated that Apollo was being granted a first priority lien in Accounts. The grant of the replacement and supplemental liens in favor of Apollo are subject to the reservation of rights by DIP Lender and the Indenture Trustee to contest the Apollo Lien in its entirety, and by Debtor to contest its priority, as set forth in the orders governing use of cash collateral to be entered concurrently with the DIP Orders.

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Loan will enable the Debtor to continue its operations and preserve its ability to reorganize, which is ultimately for the benefit of the estate and creditors. E. 55. The DIP Loan Is Supported by the Exercise of Sound Business Judgment and Good Faith The fact that Debtor has satisfied the requirements of 364, of course, does not end

5 the inquiry, as these sections are permissive, not mandatory. See 11 U.S.C. 364(c)(1) and (d) 6 (after notice and a hearing, the court may authorize the obtaining of credit or the incurring of 7 debt) (emphasis added). Generally, however, courts give broad deference to business decisions of 8 a debtor in possession. See Resolution Trust Co. v. Official Unsecured Creditors Committee (In re 9 Defender Drug Stores, Inc.), 145 B.R. 312, 317 (B.A.P. 9th Cir. 1992) Richmond Leasing v. Capital 10 Bank, N.A., 762 F.2d 1303, 1311 (5th Cir. 1985). Moreover, a bankruptcy court generally will 11 respect a debtor in possessions business judgment regarding the need for and the proposed use of 12 funds. As the court noted in In re Ames Dept Stores, Inc., 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 56. A courts discretion under section 364 is to be utilized on grounds that permit reasonable business judgment to be exercised so long as the financing agreement does not contain terms that leverage the bankruptcy process and powers or its purpose is not so much to benefit the estate as it is to benefit a party in interest. In re Ames Dept Stores, Inc., 115 B.R. at 40. The power of the debtor in possession to incur secured debt follows necessarily from

the general power of the debtor in possession to operate its business in the exercise of its business judgment pursuant to 1108. Without the ability to incur secured debt, the debtor in possession would be placed at a significant competitive disadvantage and its efforts to reorganize could be seriously impaired. 57. In the present case, Debtors decision to enter into the DIP Loan represents an

exercise of sound business judgment in the continued operation of Debtors business and preservation of going concern value and the possibility of reorganization. Moreover, the terms of the proposed transaction are fair, reasonable, and adequate given the circumstances of the Debtor. Like most business decisions, Debtors decision to enter into the DIP Loan will both confer a number of benefits on Debtor and impose several tradeoffs. The DIP Loan should provide the

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Debtor with sufficient capital to operate its business in the ordinary course, pending the formulation and confirmation of a plan of reorganization. DIP Lender also agreed to fund certain carve-outs for payment of statutory fees, professional fees, and other necessary expenses. Further, the terms of the DIP Loan have been negotiated in good faith and at arms length by and between the parties, with all parties represented by counsel. Any credit extended under the DIP Loan should be held to qualify as having been extended in good faith by DIP Lender as that term is used in 364(e). 58. The concessions that Debtor has made in exchange for the DIP Loan are

commonplace in complex financing arrangements and are amply justified here in light of the benefits conferred upon Debtor under the DIP Loan and the absence of any other available financing. In fact, bankruptcy courts routinely recognize that concessions by debtors similar (or even greater) to those made here are often included in both debtor-in-possession financing and cash collateral arrangements. See e.g.,In re Adams Apple, Inc., 829 F.2d 1484, 1488 (9th Cir. 1987) ([S]ection 364 was designed to provide a debtor a means to obtain credit after filing bankruptcy. As such, cross collateralization clauses appear to be covered by section 364.); In re Keystone Camera Prods. Corp., 126 B.R. 177, 182-83 (Bankr. D.N.J. 1991); In re Stein & Day, Inc., 87 B.R. 290-92 (Bankr. S.D.N.Y. 1988) (providing for payment of pre-petition debt); Unsecured Creditors Comm. v. First Natl Bank and Trust Co. (In re Ellingsen MacLean Oil Co.), 65 B.R. 358 (W.D. Mich. 1986), affil, 834 F.2d 599 (6th Cir. 1987), cert. denied, 488 U.S. 817 (1988) (validation of liens, repayment of debt, cross collateralization); In re FCX, Inc., 54 B.R. 833, 840-41 (Bankr. E.D.N.C. 1985) (cross collateralization); In re Quigley Gen. Elec. Co. (hi re Elec. City, Inc.), 43 B.R. 336-38 (Bankr. W.D. Wash. 1984) (stipulation provided for post-petition lien and conceded validity of lien). 59. Such concessions are especially justified in cases where the failure to approve the

requested financing threatens to doom any prospects the debtor has for a successful restructuring. See, e.g., In re Roblin Indus., Inc., 52 B.R. 241, 245 (Bankr. N.D.N.Y. 1985) (approving cross collateralization; if in fact [the lenders] are undersecured [and] absent financing the debtor would in all likelihood shut down, [then] liquidation would follow, and unsecured creditors would receive no distribution from the debtors estate); In re Vanguard Diversified, Inc., 31 B.R. 364 (Bankr.

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E.D.N.Y. 1983) (approving cross collateralization and the granting of a super-administrative priority claim in favor of a pre-petition lender where, among other things, failure to provide such financing would result in the failure of the chapter 11 case and the value of the encumbered assets at liquidation were less than the lenders claims). 60. The proposed Interim DIP Order provides that the automatic stay provisions of

Bankruptcy Code 362 are vacated and modified to the extent necessary to permit the DIP Lender to exercise certain rights and remedies as provided for in the DIP Credit Agreement without further order of or application to the Court. However, except with respect to certain rights available on the Termination Date (as defined in the DIP Credit Agreement), under the terms of the proposed Interim DIP Order, the DIP Lender must provide Debtor, the United States Trustee, the Indenture Trustee, Apollo, and counsel for the Committee with three business days written notice prior to exercising any such rights or remedies under the DIP Credit Agreement or upon a shorter period of time after notice and a hearing. Moreover, Debtor and any other parties in interest may seek within the three business day notice period an expedited hearing before this Court to be conducted within five days business days thereafter (subject to the convenience of the Courts calendar) solely for the purpose of considering whether, in fact, an Event of Default (as defined in the DIP Credit Agreement) has occurred. Stay modification provisions of this sort are ordinary and usual features of DIP financing facilities and, in Debtors business judgment, are reasonable under the present circumstances. 61. In sum, the substantial benefits the Debtor will derive from the proposed financing

amply justify the Debtors decision to enter into the DIP Loan, a decision that the Court should approve as being in the best interests of the Debtor and the estate. VI. REQUEST FOR FINAL HEARING 62. Pursuant to Bankruptcy Rule 4001(c), Debtor respectfully requests that the Court

schedule a Final Hearing for no later than twenty (20) days from the date that the Court enters the Interim DIP Order. Debtors request for interim approval of the DIP Loan is intended to provide an amount of cash sufficient to permit the Debtor to continue to operate during the near term and maintain the confidence of vendors and employees. Accordingly, in order to maintain their

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operations and the confidence of their vendors and employees, the Debtors will need prompt final approval of the DIP Loan. 63. The Debtors request that they be permitted to serve notice of the Motion, the Interim

DIP Order and the Final Hearing by telecopy, overnight delivery service, hand delivery or U.S. mail to (a) the United States Trustee; (b) counsel for the Indenture Trustee, (c) the Twenty Largest Unsecured Creditors as set forth in the list filed by Debtor pursuant to Bankruptcy Rule 1007(d), (d) all parties in interest on whom service is required by Debtors order limiting notice entered in this Case and their counsel, (e) Apollo, and all other known holders of liens on Debtors assets, (f) counsel to the Committee, if any has been appointed, (g) the California Department of Public Health Licensing and Certification Program, (h) the United States Department of Health and Human Services Centers for Medicare and Medicaid Services, (i) the California Department of Justice, Attorney Generals Office, (j) the California Health Facilities Financing Authority, (k) the other parties on whom the Court directed service on the record of the Interim Hearing, and (l) if practicable, on the applicable state and local taxing agencies. Debtor requests that the Court determine such notice to be good and sufficient notice of the Final Hearing under Bankruptcy Rule 4001. Debtor also requests that such notice of approval of the Interim DIP Order shall state that any party in interest objecting to the DIP Loan or the terms of the Final Order shall file written objections with the Court no later than ten calendar days prior to the Final Hearing. VII. WAIVER OF BANKRUPTCY RULE 6004(H) 64. Debtor further seeks a waiver of any stay of the effectiveness of the Interim DIP

Order. Pursuant to Bankruptcy Rule 6004(h), [a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 10 days after entry of the order, unless the court orders otherwise. As set forth above, authorizing the DIP Loan on an interim basis is necessary because Debtor does not have enough working capital to carry on the operation of its business, and the interim financing will preserve Debtors operations in the very near term. Accordingly, Debtor submits that ample cause exists to justify a waiver of the ten (10) day stay imposed by Bankruptcy Rule 6004(h), to the extent it applies.

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VIII. CONCLUSION WHEREFORE, Debtor respectfully requests that the Court (i) following the Interim Hearing, enter the Interim DIP Order approving the DIP Loan with DIP Lender under Bankruptcy Code 105, 361, 362, 363, 364(c) - (d), and 364(e), Bankruptcy Rules 2002, 4001, 9013 and 9014, and LBRs 2002-2, 4001-2, and 9013-1, on the terms set forth in the DIP Credit Agreement; (ii) approve the form and scope of notice of the Final Hearing and schedule the Final Hearing on the Motion; (iii) following the Final Hearing, enter the Final DIP Order; and (iv) grant such other and further relief as may be just and proper.

Dated: Los Angeles, California September 14, 2009

Respectfully Submitted, /s/ Lisa Hill Fenning Lisa Hill Fenning (SBN 89238) Harry Garner (SBN 254942) Arnold & Porter LLP 777 South Figueroa Street, 44th Floor Los Angeles, California 90017 Telephone: 213.243.4000 Facsimile: 213.243.4199 Proposed Counsel to the Debtor and Debtor-inPossession

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Exhibit A

[MCGUIREWOODS LLP DRAFT 9/14/09 FOR DISCUSSION PURPOSES ONLY]

SECURED SUPER-PRIORITY DEBTOR IN POSSESSION LOAN AND SECURITY AGREEMENT

Dated as of September __, 2009

Among DOWNEY REGIONAL MEDICAL CENTER-HOSPITAL, INC. (d/b/a DOWNEY REGIONAL MEDICAL CENTER), a non-profit public benefit corporation organized under the laws of the State of California and a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code as the Debtor

THE LENDERS FROM TIME TO TIME PARTIES HERETO

and

HEALTHCARE FINANCE GROUP, INC., as Agent

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TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS................................................................................................. 1 Definitions............................................................................................ 1 Other Terms; Rules of Construction .................................................. 19 DIP Advances .................................................................................... 19 Interest and Fees ................................................................................ 21 Computation of Interest; Payment of Fees......................................... 23 Procedures for Payment ..................................................................... 23 Indemnities......................................................................................... 24 Maximum Interest.............................................................................. 26 Use of Proceeds of DIP Loan............................................................. 26 Grant of Security Interests ................................................................. 26 Perfection of Security Interests.......................................................... 26 Covenants of the Debtor with Respect to Collateral.......................... 27 Performance by Agent of the Debtors Obligations .......................... 28 Limitation on Agents Duty in Respect of Collateral ........................ 28 Payment Mechanics ........................................................................... 29 Misdirected Payments; EOBs........................................................... 29 No Rights of Withdrawal ................................................................... 30 Collections on the Receivables; Distributions ................................... 30 Distribution of Funds to the Lenders ................................................. 30 Servicing Receivables........................................................................ 31 Distributions to the Debtor Generally................................................ 32 Conditions Precedent to the Initial Funding Date.............................. 32 Conditions Precedent to Incremental Facility Effective Date............ 33 -i\DRMC: DIP Loan and Security Agreement #9830081 (v.8).doc

Section 1.01 Section 1.02 ARTICLE II. Section 2.01 Section 2.02 Section 2.03 Section 2.04 Section 2.05 Section 2.06 Section 2.07 ARTICLE III. Section 3.01 Section 3.02 Section 3.03 Section 3.04 Section 3.05 ARTICLE IV. Section 4.01 Section 4.02 Section 4.03 ARTICLE V. Section 5.01 Section 5.02 Section 5.03 Section 5.04 ARTICLE VI. Section 6.01 Section 6.02

AMOUNTS AND TERMS OF THE LOANS.............................................. 19

SECURITY .................................................................................................... 26

PAYMENT MECHANICS............................................................................ 29

COLLECTION AND DISTRIBUTION........................................................ 30

CONDITIONS PRECEDENT ....................................................................... 32

TABLE OF CONTENTS (continued) Page Section 6.03 ARTICLE VII. ARTICLE VIII. Section 7.01 Section 8.01 Section 8.02 Section 8.03 Section 8.04 Section 8.05 Section 8.06 Section 8.07 Section 8.08 Section 8.09 Section 8.10 Section 8.11 Section 8.12 Section 8.13 Section 8.14 ARTICLE IX. Section 9.01 Section 9.02 Section 9.03 Section 9.04 Section 9.05 Section 9.06 Section 9.07 Section 9.08 Section 9.09 Section 9.10 Conditions Precedent to all Funding Dates........................................ 33 Representations and Warranties......................................................... 34 Compliance with Laws, etc................................................................ 38 Offices, Records and Books of Account, Names............................... 38 Performance and Compliance with Contracts and Credit and Collection Policy................................................................................ 38 Audits; Appraisals.............................................................................. 38 Reporting Requirements .................................................................... 39 Notice of Proceedings; Overpayments............................................... 39 Taxes .................................................................................................. 39 Preservation of Existence................................................................... 39 DIP Documents.................................................................................. 40 Implementation of Approved Patient Consent Forms ....................... 40 Invoices .............................................................................................. 40 Intentionally Omitted ......................................................................... 40 Equipment .......................................................................................... 40 Insurance ............................................................................................ 40 Corporate Documentation.................................................................. 41 Debt.................................................................................................... 41 Bond Debt .......................................................................................... 41 Liens, etc ............................................................................................ 41 Capital Expenditures; Lease Obligations........................................... 41 Asset Sales; Sale/Leaseback Transaction; Etc................................... 41 Change In Business............................................................................ 41 Change in Credit and Collection Policy............................................. 42 Change in Payment Instructions ........................................................ 42 Deviation from Terms of Receivable, etc .......................................... 42 -ii\DRMC: DIP Loan and Security Agreement #9830081 (v.8).doc

REPRESENTATIONS AND WARRANTIES.............................................. 34 AFFIRMATIVE COVENANTS ................................................................... 38

NEGATIVE COVENANTS .......................................................................... 41

TABLE OF CONTENTS (continued) Page Section 9.11 Section 9.12 Section 9.13 Section 9.14 Section 9.15 Section 9.16 Section 9.17 Section 9.18 Section 9.19 Section 9.20 Section 9.21 ARTICLE X. Section 10.01 Section 10.02 ARTICLE XI. Section 11.01 Section 11.02 Section 11.03 Section 11.04 ARTICLE XII. ARTICLE XIII. Section 12.01 Section 13.01 Section 13.02 Section 13.03 Section 13.04 Section 13.05 Section 13.06 Section 13.07 Mergers and Acquisitions; Dissolutions ............................................ 42 No Instruments ............................................................................... 42 Margin Loan Restrictions .................................................................. 42 Loans or Investments ......................................................................... 43 Transactions with Affiliates............................................................... 43 Distributions....................................................................................... 43 Deviation from Approved Patient Consent Form .............................. 43 Subsidiaries ........................................................................................ 43 ERISA, Etc......................................................................................... 43 Chapter 11 Claims.............................................................................. 43 The DIP Orders .................................................................................. 44 Cash Flow to Expenditures Tests....................................................... 44 Minimum EBITDA............................................................................ 44 Events of Default ............................................................................... 44 Events of Default; Remedies ............................................................. 46 Attorney-in-Fact................................................................................. 47 License .............................................................................................. 48 Agency Provisions ............................................................................. 48 Amendments, etc................................................................................ 51 Notices, etc......................................................................................... 52 Assignments; Participations............................................................... 52 Further Assurances; Financing Statements ........................................ 54 Costs and Expenses; Collection Costs ............................................... 54 Confidentiality ................................................................................... 55 Term and Termination; Early Termination and Prepayment Fees .................................................................................................... 55 -iii\DRMC: DIP Loan and Security Agreement #9830081 (v.8).doc

FINANCIAL COVENANTS......................................................................... 44

EVENTS OF DEFAULT............................................................................... 44

THE AGENT ................................................................................................. 48 MISCELLANEOUS ...................................................................................... 51

TABLE OF CONTENTS (continued) Page Section 13.08 Section 13.09 Section 13.10 Section 13.11 Section 13.12 Section 13.13 Section 13.14 Section 13.15 Section 13.16 Section 13.17 No Liability........................................................................................ 56 Entire Agreement; Severability.......................................................... 57 GOVERNING LAW.......................................................................... 57 JURISDICTION AND VENUE ........................................................ 57 WAIVER OF JURY TRIAL; JUDICIAL REFERENCE.................. 58 Execution in Counterparts.................................................................. 60 Intentionally Omitted ......................................................................... 60 Confidentiality and Notices ............................................................... 60 Accounting Information..................................................................... 60 USA PATRIOT ACT......................................................................... 60

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EXHIBITS Exhibit A Exhibit B Exhibit C Exhibit I Exhibit II Exhibit III Exhibit IV Exhibit V Exhibit VI Exhibit VII Exhibit VIII Exhibit IX Form of Interim Cash Collateral Order Form of Interim DIP Order Reporting Requirements Eligibility Criteria Form of Borrowing Base Report Receivable Information Form of Notice to Obligors Transmission of Electronic Data Files Form of Business Associate Agreement Closing Document Checklist Form of Depositary Agreements Form of Compliance Certificate

SCHEDULES Schedule I Schedule II Schedule III Schedule IV Schedule V Addresses for Notices Disclosures Lockbox Information Net Value Factors Credit and Collection Policy

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SECURED SUPER-PRIORITY DEBTOR IN POSSESSION LOAN AND SECURITY AGREEMENT, dated as of September __, 2009, among DOWNEY REGIONAL MEDICAL CENTER-HOSPITAL, INC. (d/b/a DOWNEY REGIONAL MEDICAL CENTER), a non-profit public benefit corporation organized under the laws of the State of California and a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code (the Debtor), and HEALTHCARE FINANCE GROUP, INC., a Delaware corporation (HFG), in its capacity as a lender with a DIP Commitment (together with its successors and permitted assigns in such capacity, the Lenders), and as administrative agent and collateral agent (together with its successors and permitted assigns in such capacities, the Agent) for the Lenders. W I T N E S S E T H: WHEREAS, on September [14], 2009 (the Petition Date), the Debtor filed a voluntary petition for relief (the Case) under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Central District of California, Los Angeles Division (the Bankruptcy Court); and WHEREAS, the Debtor is continuing to operate its businesses and manage its properties as debtor in possession under Sections 1107 and 1108 of the Bankruptcy Code; and WHEREAS, the Debtor has requested that the Lenders provide a secured superpriority credit facility of up to $15,000,000 in order to fund the continued operation of the Debtors business as debtor and debtor in possession under the Bankruptcy Code, up to $4,000,000 of which will be made available on an interim basis prior to the Incremental Facility Effective Date (as defined below); and WHEREAS, the Lenders are willing to make available to the Debtor such postpetition loans upon the terms and subject to the conditions set forth herein; and WHEREAS, the Debtor has agreed to secure its obligations to the Lenders hereunder with, inter alia, security interests in, and liens on, substantially all of its real and personal property and assets, all as more fully provided herein; NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01 Definitions. As used in this Agreement (including the Exhibits and Schedules attached hereto), the following terms shall have the following meanings: Accrued Amounts means, as at any date, the aggregate amount of accrued or incurred but unpaid or unreimbursed (whether or not due and payable) (a) interest on the DIP Loan, (b) Non-Utilization Fee, (c) Minimum Usage Fees, (d) Collateral Tracking Fees, and (e) legal and due diligence costs and expenses.

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Adjusted Borrowing Limit means the Borrowing Limit, minus (a) Accrued Amounts, minus (b) the Carve Out (to the extent required to be deducted by the Agent or the Required Lenders), minus (c) the Medicare/Medicare Reserve and any additional availability reserves as may be established and maintained from time to time by the Agent, including reserves for offsets or recoupment against Receivables. Adjusted Expected Net Value means, with respect to any Eligible Receivable, the Expected Net Value, minus such adjustments and reserves as may be made or established and maintained from time to time by the Agent (including the Medicare/Medicaid Reserve, reserves for deferred revenue, unapplied cash and credit balances and other reserves). Advance Rate Percentage means 75%. Affiliate means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person or is a director or officer of such Person. For the purposes of this definition, control, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. Agent has the meaning set forth in the preamble hereto. Agreement means this Secured Super-Priority Debtor In Possession Loan and Security Agreement, as amended, restated, modified, or supplemented from time to time in accordance with the terms hereof. Approved Patient Consent Form means each type of patient consent form, in form and substance satisfactory to the Agent, to be signed by each patient for which a Receivable will be created on or after the Initial Funding Date, which authorizes certain demographic and medical information with respect to such patient to be disclosed by any Debtor to its lenders agents and their servicing agents. Asset Sale means any sale, lease, conveyance, transfer or other disposition of assets by the Debtor (including by way of merger or consolidation or sale-leaseback transaction, but not including sales of inventory in the ordinary course of business), whether in one transaction or a series or group of transactions. Assignment and Assumption means an assignment and assumption agreement in a form reasonably satisfactory to the Agent. Authorized Officer means an officer of the Debtor designated from time to time by the Debtor in a written notice to the Agent, which designation shall continue in force and effect until terminated in a written notice to the Agent from the Debtor. Avoidance Action means claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other avoidance actions under the Bankruptcy Code, and all monies and other property of any kind received therefrom.
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Bankruptcy Code means Title 11, United States Code. Bankruptcy Court is defined in the recitals to this Agreement or shall mean any other court having competent jurisdiction over the Case. Bond Debt means, collectively, the Debt incurred by the Debtor pursuant to the Bond Debt Documents. Bond Debt Documents means, collectively: (a) that certain Indenture dated as of August 1, 1993, as amended by the First Supplemental Indenture, dated as of February 26, 2004, entered into between the California Health Care Facilities Financing Authority and Norwest Bank Minnesota, National Association n/k/a Wells Fargo Bank, National Association, as Indenture Trustee; (b) the Loan Agreement, dated as of August 1, 1993, between the California Health Care Facilities Financing Authority and the Debtor, as amended by the First Amendment to Loan Agreement dated as of February 26, 2004; and (c) any documents related thereto; as each of them may be amended, restated, or otherwise modified from time to time. Bond Funds means the Bond Reserve Account established under the Bond Debt Documents, and all other funds held by the Bond Trustee related to those certain $68,845,000 California Health Care Facilities Financing Authority Hospital Revenue Bonds (Downey Community Hospital), Series 1993 all as more fully set forth in the Interim Cash Collateral Order. As of September 11, 2009, the balance of the Bond Funds was $6,785,359.53. Bond Intercreditor Agreement means any intercreditor or similar agreement, if any, entered into from time to time by and between the Agent and the Bond Trustee or any holder of the Bond Debt (as amended, restated, or otherwise modified from time to time). Bond Loan Agreement means that certain Loan Agreement dated as of August 1, 1993 between California Health Facilities Financing Authority and the Debtor, as amended by the First Amendment to Loan Agreement dated as of February 26, 2004. Bond Trustee means Wells Fargo Bank, National Association, as trustee under the Bond Debt Documents, and its successors and assigns in such capacity. Borrowing Base means, as of any time, an amount equal to the product of (a) the Adjusted Expected Net Value of Eligible Receivables of the Debtor at such time (as indicated on line VIII of the Borrowing Base Report as Adjusted Expected Net Value), and (b) the Advance Rate Percentage (as set forth on line IX of the Borrowing Base Report. Borrowing Base Report means a certificate (which may be sent by Transmission), signed by an Authorized Officer of the Debtor, substantially in the form set forth in Exhibit II hereto, which shall provide the most recently available information with respect to the Eligible Receivables of the Debtor (segregated by the classes (if any) set forth on Schedule IV hereto) that is set forth in the aged accounts receivable trial balance and books and records of the Debtor, in form and substance satisfactory to the Agent.

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Borrowing Base Deficiency means, as of any date, the positive difference, if any, between (a) the sum of the Outstanding Balance of the DIP Loan, minus (b) an amount equal to the Adjusted Borrowing Limit indicated on the most recent Borrowing Base Report or Monthly Report or as otherwise determined by the Agent. Borrowing Limit means the lesser of (a) the Total DIP Commitment and (b) the Borrowing Base as of such time. Business Day means any day on which banks are not authorized or required to close in New York City, New York or Los Angeles, California. Capital Lease means, as applied to any Person, any lease of any Property (whether real, personal or mixed) by that Person as lessee, the obligations of which are required, in accordance with GAAP, to be capitalized on the balance sheet of that Person. Carve Out means the Carve Out as defined in the Interim DIP Order or the Final DIP Order, as applicable. Case has the meaning set forth in the preamble hereto, and included all successor or converted cases under the Bankruptcy Code in respect thereof. Cash Collateral Orders means the Interim Cash Collateral Order or the Final Cash Collateral Order, as applicable. Chattel Paper has the meaning given to such term in the UCC. Claim has the meaning given to such term in Section 101(5) of the Bankruptcy Code. CMS means the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services. Code means the Internal Revenue Code of 1986, as amended, replaced or supplemented from time to time. Collateral means all of the following property now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right, title or interests (or the power to transfer any such right, title or interests to a secured party): (a) (b) (c) Debtor Lockbox Account; all Receivables; all Chattel Paper; to the maximum extent not prohibited by applicable law, the

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(d) (e) (f)

all Deposit Accounts; all Documents; all Equipment;

(g) all General Intangibles, including all Intellectual Property and all franchise rights and licenses, and federal, state and local tax refund claims of all kinds; (h) (i) (j) (k) (l) (m) (n) Schedule II; (o) all other goods and personal property of the Debtor, whether tangible or intangible, wherever located; (p) all property of the Debtor held by the Agent or any Lender, including all property of every description, in the possession or custody of or in transit to the Agent or such Lender for any purpose, including safekeeping, collection or pledge, for the account of the Debtor, or as to which the Debtor may have any right or power; (q) to the extent not otherwise included, all monies and other property of any kind that is, after the Petition Date, received by the Debtor in connection with refunds with respect to taxes, assessments and governmental charges imposed on the Debtor or any of its property or income; (r) to the extent not otherwise included, all causes of action (other than Avoidance Actions) and all monies and other property of any kind received therefrom, and all monies and other property of any kind recovered by the Debtor; (s) all insurance claims; all Instruments; all Inventory; all Investment Property; all Letter-of-Credit Rights; all Real Property; all vehicles covered by a certificate of title law of any state; all Commercial Tort Claims, including those described on

(t) to the extent not otherwise included, all other property of any kind or character granted as collateral for the Lender Debt pursuant to the terms of the DIP Orders; (u) to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and
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products of, each of the foregoing, any and all proceeds of insurance, indemnity, warranty or guaranty payable to the Debtor from time to time with respect to any of the foregoing; and (v) and all Records;

provided, however, that the Collateral shall not include (x) the Bond Funds, (y) any Real Property lease held by the Debtor; provided, further that (notwithstanding the foregoing) the Collateral shall in any event include all Proceeds, substitutions or replacements of any such Real Property lease (except in the case of a substitution or replacement thereof that is a Real Property lease); or (z) any Excluded Assets. Collateral Tracking Fee has the meaning set forth in Section 2.02(d). Collection Account means the Agents account maintained at Bank of New York, ABA # 021000018, GLA 111565, For Further Credit to Account #205779, Ref: HFG Healthco-4, LLC, Attn: Shawn Campbell, or such other bank account designated by the Agent from time to time. Collections means all cash collections, wire transfers, electronic funds transfers and other cash proceeds of Receivables deposited in or transferred to the Collection Account; provided, that except in the calculation of the Borrowing Base and the Non-Utilization Fee hereunder (which shall apply Collections as of the date of receipt in the Collection Account), Collections shall be applied hereunder only following a 3 Business Day clearance period applied thereto. Commercial Tort Claim has the meaning given to such term in the UCC. Committee means the official statutory committee of unsecured creditors, if any, approved in the Case pursuant to Section 1102 of the Bankruptcy Code. Compliance Certificate means a certificate (which may be sent by Transmission), signed by an Authorized Officer of the Debtor, in the form set forth in Exhibit IX, duly completed. Contracts means, collectively, all rights of the Debtor under all leases, contracts and agreements to which the Debtor is now or hereafter a party, including all rights of the Debtor to receive moneys due or to become due thereunder or pursuant thereto, but excluding rights under (but not excluding proceeds of) any lease, contract or agreement (including any license) that by the terms thereof, or under applicable law, cannot be assigned or a security interest granted therein in the manner contemplated by this Agreement unless consent from the relevant party or parties has been obtained and under the terms of which lease, contract or agreement any such assignment or grant of a security interest therein in the absence of such consent would, or could, result in the termination thereof, but only to the extent that (a) such rights are subject to such contractual or legal restriction and (b) such restriction is not, or could not be, rendered ineffective pursuant to the UCC of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity.
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Contractual Obligation of any Person means any obligation, agreement, undertaking or similar provision of any security issued by such Person or of any agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or other instrument (excluding a DIP Document) to which such Person is a party or by which it or any of its property is bound or to which any of its property is subject. Control Agreement means each deposit account control agreement in favor of the Agent relating to a deposit account of the Debtor, in form and substance satisfactory to the Agent. Credit and Collection Policy means those account receivable credit and collection policies and practices of the Debtor as in effect on the date of this Agreement and set forth in Schedule V hereto, as modified from time to time with the consent of the Agent. Debt of any Person means (without duplication): (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments or upon which interest payments are customarily made, (c) all obligations of such Person to pay the deferred purchase price of Property or services (other than trade payables or other accounts payable incurred in the ordinary course of such Persons business and not outstanding for more than 90 days after the date such payable was created), (d) all Debt of others directly or indirectly Guaranteed (which term shall not include endorsements in the ordinary course of business) by such Person, (e) all obligations created under Capital Leases of such Person, and (f) all obligations secured by a Lien on any Property owned by such Person, whether or not the obligations secured thereby have been assumed by such Person or are non-recourse to the credit of such Person (but only to the extent of the value of such Property). Debtor has the meaning set forth in the preamble hereto. Debtor Account means initially account #[__________] of the Debtor at [_________], ABA #[_______], or such other bank account designated by the Debtor by notice to the Agent from time to time. Debtor Lockbox Account means the account set forth on Schedule III hereto in the name of the Debtor and controlled by the Debtor to deposit Collections received by wire transfer and automated clearinghouse payments directly from Governmental Entities, all as more fully set forth in the applicable Depositary Agreement. Default means an event, act or condition that with the giving of notice or the lapse of time, or both, would constitute an Event of Default. Denied Receivable means any Receivable to which any related representations or warranties (including the Eligibility Criteria) have been discovered at any time to have been breached. Deposit Account has the meaning given to such term in the UCC.
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Depositary Agreements means each of (i) the Three Party Lockbox Agreement Amendment to Cash Management Terms and Conditions, (ii) the Government Receivables Account Agreement (Standing Revocable Instructions), and (iii) the Deposit Account Control Agreement (Contingency), each dated the date hereof, among the Debtor, the Agent, and the Lockbox Bank, in substantially the forms attached hereto as Exhibit VIII. DIP Advance has the meaning set forth in Section 2.01(a). DIP Budget has the meaning set forth in the DIP Orders. DIP Commitment means the commitment of each Lender to make DIP Advances up to the amount set forth below the signature of such Lender on the signature page of this Agreement or as set forth in the applicable Assignment and Assumption. DIP Documents means this Agreement, the Depositary Agreements, the Lockbox Agreements, each Borrowing Base Report, each Monthly Report, each Control Agreement, the DIP Orders, the Bond Intercreditor Agreement (if any), and each other document or instrument now or hereafter executed and/or delivered to the Agent or any Lender pursuant to or in connection herewith or therewith (including each other agreement now existing or hereafter created providing collateral security for the payment or performance of any Lender Debt). DIP Loan has the meaning set forth in Section 2.01(a). DIP Orders means the Interim DIP Order or the Final DIP Order, as applicable. Distribution means any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any Equity Interests in the Debtor, any return of capital to the Debtors equity holders as such, or any action to purchase, retire, defease, redeem or otherwise acquire for value or make any payment in respect of any Equity Interests in the Debtor or any warrants, rights or options to acquire any such interests, now or hereafter outstanding. Document has the meaning given to such term in the UCC. Eligible Assignee means any Lender, any Affiliate of any Lender, any other financial institution or fund that extends credit or buys loans as one of its businesses including insurance companies, mutual funds and lease financing companies, and any trust or special purpose funding vehicle; provided, that neither the Debtor nor any Affiliate of the Debtor shall be an Eligible Assignee. Eligibility Criteria means the criteria and basis for determining whether a Receivable shall be deemed by the Agent to qualify as an Eligible Receivable, all as set forth in Exhibit I hereto, as such Eligibility Criteria may be modified from time to time as determined by the Agent in its credit judgment upon notice to the Debtor. Eligible Receivables means Receivables of the Debtor that satisfy the Eligibility Criteria, as determined by the Agent.
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Employee Benefit Plan means any employee benefit plan within the meaning of Section 3(3) of ERISA maintained by the Debtor or any of its ERISA Affiliates, or with respect to which any of them have any liability. Environmental Laws means any and all applicable federal, state and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and DIP Orders of courts or Governmental Entity, relating to the protection of human health from exposure to hazardous materials or the environment, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C. 331 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. 300, et seq.), the Environmental Protection Agencys regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), and the rules and regulations thereunder, each as amended or supplemented from time to time. Environmental Laws include but are not limited to requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of hazardous materials. EOB means the explanation of benefit or remittance advice from an Obligor that identifies the services rendered on account of the Receivable specified therein. Equipment has the meaning given to such term in the UCC. Equity Interest means any share, interest or other equivalent of capital stock of any Person, whether voting or non-voting and whether common or preferred (including any membership interest in a not-for-profit entity), all options, warrants and other rights to acquire, and all securities convertible into, any of the foregoing, all rights to receive interest, income, dividends, distributions, returns of capital and other amounts (whether in cash, securities, property, or a combination thereof), and including all rights to receive amounts due and to become due under or in respect of any investment agreement or upon the termination thereof, and all other rights, powers, privileges, interests, claims and other property in any manner arising out of or relating to any of the foregoing. ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder as from time to time in effect. ERISA Affiliate means any trade or business (whether or not incorporated) that, together with the Debtor, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA. Event of Default has the meaning set forth in Section 11.01. Event of Loss means the occurrence of any event by which any item of Collateral of the Debtor is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a Governmental Entity for any period of time.
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Exchange Act means The Securities Exchange Act of 1934, as amended, and as it may be further amended from time to time. Excluded Assets means, collectively, (a) any and all cash or other property received by the Debtor in the form of gifts, charitable donations, bequests or grants (including special purpose grants made by a Governmental Entity) that are by their terms, restricted in the manner in which they may be utilized by the Debtor to the extent, and only to the extent, that such restrictions would prohibit the granting of any such bequests or grants as collateral hereunder or prohibit the payment of any such bequests or grants to the Agent for application to the Lender Debt; and (b) all Avoidance Actions; provided that nothing herein shall affect the status of the Lender Debt as a Superpriority Claim as more particularly set forth in the DIP Orders. Excluded Claims has the meaning set forth in Section 2.05(b). Exit Fee has the meaning set forth in Section 2.02(g). Expected Net Value means, with respect to any Eligible Receivable, the gross unpaid amount of such Receivable on the date of creation thereof, times the Net Value Factor. Extraordinary Receipt means, the receipt by the Debtor of (a) cash receipts not in the ordinary course of business (including proceeds of insurance on Collateral or business interruption insurance (but excluding in any event Excluded Assets and any proceeds from workers compensation or D&O insurance), pension plan reversions, foreign, United States, state or local tax refunds, judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, indemnity payments, and any purchase price adjustment received in connection with any purchase agreement); and (b) to the extent permitted to be included hereunder by the DIP Orders, proceeds of all Avoidance Actions. Final Cash Collateral Order means that certain final order issued by the Bankruptcy Court authorizing the Debtors use of certain cash collateral in which the Bond Trustee has an interest, and that is otherwise in form and substance satisfactory to the Agent and the Lenders in their sole discretion. Final DIP Order means an order of the Bankruptcy Court pursuant to Section 364 of the Bankruptcy Code, approving permanent post-petition secured and superpriority indebtedness to be provided to the Debtor by the Agent and the Lenders pursuant to this Agreement, and as to which no stay has been entered and that has not been reversed, modified, vacated or overturned, and that is otherwise in form and substance satisfactory to the Agent and the Lenders in their sole discretion. First Day DIP Orders means all DIP Orders entered by the Bankruptcy Court on the Petition Date or within five Business Days of the Petition Date or based on motions filed on or within five Business Days of the Petition Date. Foreign Lender means any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
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Full Payment means, with respect to any Lender Debt, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during the Case and any other bankruptcy or other insolvency proceeding; (b) if such Lender Debt is inchoate or contingent in nature, cash collateralization thereof (or delivery of a standby letter of credit acceptable to the Agent in its sole discretion), in an amount reasonably satisfactory to the Agent; and (c) a release of any Indemnified Claims of the Debtor against each Indemnified Party arising on or before the payment date. No Lender Debt shall be deemed to have been paid in full until all DIP Commitments and all other obligations of the Agent and the Lenders hereunder have expired or been expressly terminated in writing. Funding Date means any Business Day on which a DIP Advance is made at the request of the Debtor in accordance with provisions of this Agreement. GAAP means generally accepted accounting principles in the United States of America. General Intangible has the meaning given to such term in the UCC. Governmental Entity means the United States of America, any state thereof, any political subdivision of a state thereof and any agency or instrumentality of the United States of America or any state or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Payments from Governmental Entities shall be deemed to include payments governed under the Social Security Act (42 U.S.C. 1395 et seq.), including payments under Medicare, Medicaid and TRICARE/CHAMPUS, and payments administered or regulated by CMS. Guaranty by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay), or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect the obligee of such Debt or other obligation of the payment thereof or to protect the obligee against loss in respect thereof (in whole or in part), provided that the term Guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The term Guaranty used as a verb has a corresponding meaning. HFG has the meaning set forth in the preamble hereto. Incremental Facility Effective Date means the date on which each of the conditions precedent set forth in Section 6.02 have been satisfied. Indemnified Claims has the meaning set forth in Section 2.05(b). Indemnified Party has the meaning set forth in Section 2.05(b).
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Interim Cash Collateral Order means that certain interim order issued by the Bankruptcy Court substantially the form of Exhibit A and otherwise in form and substance satisfactory to the Agent in its sole discretion. Interim DIP Order means that certain order issued by the Bankruptcy Court in substantially the form of Exhibit B and otherwise in form and substance satisfactory to the Agent in its sole discretion. Initial Funding Date means the date of funding of the initial DIP Advance(s). Initial Term has the meaning set forth in Section 13.07(a). Instrument has the meaning given to such term in the UCC, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. Insolvency means, with respect to any Person, such Person shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against such Person seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including the entry of an order for relief, or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Property) shall occur; or such Person shall take any action to authorize any of the actions set forth above. Insurer means any Person (other than a Governmental Entity) that in the ordinary course of its business or activities agrees to pay for healthcare goods and services received by individuals, including commercial insurance companies, nonprofit insurance companies (such as the Blue Cross, Blue Shield entities), employers or unions that self insure for employee or member health insurance, prepaid health care organizations, preferred provider organizations, health maintenance organizations, commercial hospitals, physicians groups or any other similar Person. Insurer includes insurance companies issuing health, personal injury, workers compensation or other types of insurance but does not include any individual guarantor. Intellectual Property means, collectively, all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses and trade secrets, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. Interest Period means each one month period (or shorter period ending on the Maturity Date); provided, that the initial Interest Period shall commence on the Initial Funding
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Date and shall end on the last calendar day of the month in which the Initial Funding Date occurred. Inventory has the meaning given to such term in the UCC. Investment Property has the meaning given to such term in the UCC. IRC means the Internal Revenue Code of 1986, as amended (or any successor statute thereto) and the regulations thereunder. Issuance means the issuance by the Debtor of Debt (other than the DIP Loan and Permitted Debt), or the issuance by the Debtor of any Equity Interest. Land means all of those plots, pieces or parcels of land now owned, leased or hereafter acquired or leased or purported to be owned, leased or hereafter acquired or leased by the Debtor. Last Service Date means, with respect to any Eligible Receivable, the date set forth on the related invoice or statement as the most recent date on which services, goods or merchandise were provided by the Debtor to the related patient or customer. Lenders has the meaning set forth in the preamble hereto. Lender Debt means and includes any and all amounts due, whether now existing or hereafter arising, under this Agreement or any other DIP Document in respect of the DIP Loan, including any and all principal, interest, penalties, fees, charges, premiums, indemnities and costs owed or owing to the Agent or any Lender by the Debtor (including but not limited to the Facility Fee and the Exit Fee), in each instance, whether absolute or contingent, direct or indirect, secured or unsecured, due or not due, primary or secondary, joint or several, arising by operation of law or otherwise, and all interest and other charges thereon, including post-petition interest. Lender Group means (a) the Agent and each Lender, and (b) each of their respective agents and delegates identified from time to time to effectuate this Agreement. Lender Lockbox means the lockbox located at the address set forth on Schedule III to receive checks and EOBs with respect to Receivables payable by Insurers and other non-Governmental Entities. Lender Lockbox Account means the account(s) at the Lockbox Bank as set forth on Schedule III as associated with the Lender Lockbox and established by the Debtor to deposit Collections, including Collections received in the Lender Lockbox and Collections received by wire transfer directly from Insurers and all other Non-Governmental Entities, all as more fully set forth in the Depositary Agreement. Letter-of-Credit Right has the meaning given to such term in the UCC.
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LIBOR for any Interest Period, means the rate per annum established by the Agent two Business Days prior to the first day of such Interest Period based on an annualized 90day interest rate (calculated on the basis of actual days elapsed over a 360-day year) equal to the offered rate that appears on page 3750 of the Dow Jones Market for U.S. dollar deposits on the date of determination; provided, however, that for purposes of this Agreement, in no event shall LIBOR be less than 2.75% at any time. Lien means any lien, charge, deed of trust, mortgage, security interest, tax lien, pledge, hypothecation, assignment, preference, priority, other charge or encumbrance, or any other type of preferential arrangement of any kind or nature whatsoever by or with any Person (including any conditional sale or title retention agreement), whether arising by contract, operation of law, or otherwise. Lockbox means the Lender Lockbox. Lockbox Account means either the Debtors Lockbox Account or the Lender Lockbox Account, as the context requires. Lockbox Bank means the applicable bank set forth on Schedule III hereto. Material Adverse Effect means (a) a material adverse effect on the business, Properties, assets, liabilities, operations, prospects or condition (financial or other) of the Debtor, (b) the material impairment of the ability of the Debtor to perform its obligations under this Agreement or any of the other DIP Documents, (c) the material impairment of the validity or enforceability of, or the rights, remedies or benefits available to the Agent or the Lenders under, this Agreement or any other DIP Document, or (d) the material impairment of the validity, perfection or priority of any Lien granted in favor of the Agent pursuant to this Agreement or any other DIP Document. Maturity Date means the earliest of (a) the Termination Date, (b) the occurrence of an Event of Default described in paragraph (i) or (n) of Section 11.01 and (c) the declaration by the Agent or Required Lenders of the Maturity Date in accordance with Section 11.02(a). Maximum Permissible Rate has the meaning set forth in Section 2.06. Medicaid means the medical assistance program established by Title XIX of the Social Security Act (42 U.S.C. Secs. 1396 et seq.) and any statutes succeeding thereto. Medicare means the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act (42 U.S.C. Secs. 1395 et seq.) and any statutes succeeding thereto. Medicare/Medicaid Reserve means, as of any date of determination, an amount, determined by the Agent in its sole discretion, equal to the sum of (a) the amount of retroactive settlements estimated to be due and owing to Governmental Entities and (b) without
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duplication, 100% of those amounts for which payment plans have been established with the appropriate Governmental Entity. Minimum Balance Requirement means (a) at all times prior to the Incremental Facility Effective Date, $4,000,000, and (b) at all times from and after the Incremental Facility Effective Date, $5,000,000. Minimum Usage Fee has the meaning set forth in Section 2.03(g). Misdirected Payment means any form of payment in respect of a Receivable made by an Obligor in a manner other than as provided in the Notice sent to such Obligor. Monthly Report means a report (which may be sent by Transmission), signed by the Debtor, containing the following information as of month-end: (a) the information contained on Exhibit II; (b) confirmation that the electronic download of transaction files to the Agent is complete; and (c) confirmation that the electronic download of the monthly aged trial balance to the Agent is complete. Multiemployer Plan means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Debtor or any ERISA Affiliate has any obligation or liability, contingent or otherwise. Net Proceeds means with respect to any Asset Sale, Issuance or Extraordinary Receipt by the Debtor, the aggregate amount of cash proceeds (after a reasonable estimate of taxes payable in connection therewith and payment of associated fees and expenses (including reasonable fees and expenses of counsel, accountants, appraisers, brokers, investment bankers and, with respect to any Issuance, any reasonable underwriters discount and, with respect to Asset Sales, repayment of any Debt secured specifically by and with a first priority (as set forth in the DIP Orders) lien on the asset, the sale or disposition of which gave rise to such Asset Sale) received or receivable by such Person, and cash proceeds paid from time to time to such Person with respect to any promissory note or other instrument or security delivered in connection therewith. Net Value Factor means, initially, the percentages set forth on Schedule IV attached hereto, as such percentages may be adjusted, upwards or downwards, in the sole discretion of the Agent, based on actual collection experience. Non-Utilization Fee has the meaning set forth in Section 2.02(c). Notice means a notice letter on any Debtors corporate letterhead to an Obligor in substantially the form attached hereto as Exhibit IV. Obligor means an Insurer, Governmental Entity or other Person, as applicable, who is responsible for the payment of all or any portion of a Receivable. Other Taxes has the meaning set forth in Section 2.04(b).
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Outstanding Balance means as of any date of determination, the aggregate outstanding principal balance of the DIP Loan, plus the amount of interest, fees, reimbursable expenses and other amounts payable to the Agent and the Lenders by the Debtor that are at such date due and payable and that remain unpaid beyond the due date therefor. PBGC means the Pension Benefit Guaranty Corporation. Permitted Debt means Debt outstanding on the Petition Date, the Lender Debt, and any post-petition Debt approved by the Agent and the Required Lenders as part of the DIP Budget. Permitted Liens means any of the following: (a) Liens securing the Lender Debt;

(b) Liens in existence on the Petition Date, but not the extension of coverage thereof to any other property or assets; (c) junior Liens in favor of the Bond Trustee;

(d) junior Liens on accounts in favor of Apollo Health Care, subject, however, to all defenses and objections to any such Liens or Claims secured thereby; (e) valid and perfected pre-petition Liens on leased or purchase money financed Equipment of the Debtor; (f) Liens for taxes, assessments or other governmental charges or statutory obligations that (i) are not delinquent or remain payable without any penalty or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP and (ii) the Debtor has the financial ability to pay, with all penalties and interest, without resulting in a Material Adverse Effect; (g) with respect to any real property occupied by any Debtor, all easements, rights of way, licenses and similar encumbrances on title that do not (i) secure obligations for the payment of money or (ii) materially impair the value of such property or the use of such Property for its intended purposes; and (h) to the extent constituting Liens, Liens consisting of restrictions on gifts, charitable donations, bequests or grants (including special purpose grants made by a Governmental Entity) to the extent that such restrictions were implemented in the ordinary course. Person means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Entity.
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Petition Date has the meaning set forth in the preamble hereto. Plan means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA, Section 412 of the IRC or Section 302 of ERISA, and in respect of which any Debtor or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an employer as defined in Section 3(5) of ERISA. Pro Rata Share means, with respect to a Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Lenders DIP Commitment and the denominator of which is the Total DIP Commitment, or if no DIP Commitments are in effect, a fraction (expressed as a percentage), the numerator of which is the amount of Lender Debt owed to such Lender and the denominator of which is the aggregate amount of the Lender Debt owed to the Lenders. Property means property of all kinds, movable, immovable, corporeal, incorporeal, real, personal or mixed, tangible or intangible (including all rights relating thereto), whether owned or acquired on or after the date of this Agreement. Real Property of any Person means the Land of such Person, together with the right, title and interest of such Person, if any, in and to the streets, the Land lying in the bed of any streets, roads or avenues, opened or proposed, in front of, the air space and development rights pertaining to the Land and the right to use such air space and development rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all royalties and rights appertaining to the use and enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil and gas rights, together with all of the buildings and other improvements now or hereafter erected on the Land, and any fixtures appurtenant thereto. Receivable Information means the information listed on Exhibit III hereto (together with any other information relating to the Receivables provided by the Debtor to the Agent from time to time) as such Exhibit may be modified by the Agent in consultation with the Debtor from time to time. Receivables means all accounts, instruments, general intangibles and healthcare-insurance receivables, all other obligations for the payment of money and goodwill, whether now existing or hereafter arising, including all payments based on a cost report settlement or expected settlement, and all proceeds of any of the foregoing, in each case, including rights of payment arising out of the rendition of medical, surgical, diagnostic or other professional medical services or the sale of medical products by the Debtor in the ordinary course of its business, including all third-party reimbursable portions or third-party directly payable portions of health-careinsurance receivables or general intangibles owing by an Obligor, including all rights to reimbursement under any agreements with and payments from Obligors, patients or other Persons, together with all books, records and other property evidencing or related to the foregoing, and all proceeds of any of the foregoing; provided, that Receivables shall not include any Excluded Assets.
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Records means all of the Debtors present and future books and records of account of every kind or nature, service and management agreements, invoices, ledger cards, statements, correspondence, memoranda, credit files, data processing records and other data relating to the Receivables and the other Collateral or any account debtor or Obligor, together with all computer software, and the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of the Debtor with respect to the foregoing maintained with or by any other Person) and other property at any time used or useful in connection with, evidencing, embodying, referring to, or relating to, any of the foregoing. Related Person means any incorporator, equityholder (or immediate family member of an equityholder), Affiliate (other than the Agent), agent, attorney, officer, director, member, manager, employee or partner of any Lender or its members or its equityholders. Required Lenders means, at any time, Lenders holding DIP Commitments representing at least 66% of the Total DIP Commitment or, if the DIP Commitments shall have been terminated, holding at least 66% of the outstanding DIP Loan. Securities Entitlement has the meaning given to such term in the UCC. Subsidiary means any corporation or entity of which at least a majority of the outstanding shares of stock or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors (or Persons performing similar functions) of such corporation or entity (irrespective of whether or not at the time, in the case of a corporation, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Debtor. Taxes has the meaning set forth in Section 2.04(a). Term has the meaning set forth in Section 13.07. Termination Date the earliest of (a) thirty (30) days from the date of the entry of the Interim DIP Order if a Final DIP Order has not been issued, or such later date to which the Agent and the Required Lenders may consent in writing, (b) provided that a Final DIP Order is entered, one (1) year from and after the date of the entry of the Interim DIP Order, (c) the date (if any) specified as the Termination Date in any notice of an Event of Default delivered by the Agent to the Debtor, the United States Trustee in the Case, and the Committee, which shall be deemed given immediately upon docketing in the Courts ECF system, or (d) the effective date of a plan of reorganization in the Case. Total DIP Commitment means (a) prior to the Incremental Facility Effective Date, $4,000,000; and (b) from and after the Incremental Facility Effective Date, $15,000,000. Transmission means, upon establishment of a computer interface between the Debtor and the Agent or an FTP site, in each case in accordance with the specifications
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established by the Agent, the transmission of Receivable Information through such computer interface or FTP site or e-mail communication to the Agent in a manner satisfactory to the Agent. TRICARE/CHAMPUS means the Civilian Health and Medical Program of the Uniformed Service, a program of medical benefits covering former and active members of the uniformed services and certain of their dependents, financed and administered by the United States Departments of Defense, Health and Human Services and Transportation and established pursuant to 10 USC 1071-1106, and all regulations promulgated thereunder including (a) all federal statutes (whether set forth in 10 USC 1071-1106 or elsewhere) affecting TRICARE/CHAMPUS; and (b) all rules, regulations (including 32 CFR 199), manuals, DIP Orders and administrative, reimbursement and other guidelines of all Governmental Entities (including the Department of Health and Human Services, the Department of Defense, the Department of Transportation, the Assistant Secretary of Defense (Health Affairs), and the Office of TRICARE/CHAMPUS, or any Person or entity succeeding to the functions of any of the foregoing) promulgated pursuant to or in connection with any of the foregoing (whether or not having the force of law) in each case as may be amended, supplemented or otherwise modified from time to time. UCC means the Uniform Commercial Code as in effect from time to time in effect in the specified or applicable jurisdiction. Variances has the meaning set forth in the DIP Orders. Section 1.02 Other Terms; Rules of Construction. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. Defined terms and calculations in connection with the covenants and other provisions of this Agreement, including Article X, shall be based upon and utilize GAAP applied in a manner consistent with that used in preparing the financial statements referred to in Section 8.05. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. Unless the context otherwise provides to the contrary, the term month means a calendar month. The terms herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, from means from and including,, through means through and including, and to and until each mean to but excluding,. The terms including and include shall mean including, without limitation, and, for purposes of each DIP Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any DIP Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the DIP Documents); (c) any Section or Article mean, unless the context otherwise requires, a Section or Article of this Agreement; (d) any Exhibits mean, unless the context otherwise requires, Exhibits attached hereto, and any Schedules mean, unless the context otherwise
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requires, the Schedules attached hereto, all of which are hereby incorporated by reference; and (e) unless otherwise specified, discretion of the Agent or any Lender mean the sole and absolute discretion of such Person. The Debtor shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by the Agent or any Lender under any DIP Documents. No provision of any DIP Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Whenever the phrase to the best of the Debtors knowledge or words of similar import are used in any DIP Documents, it means actual knowledge of an officer, or knowledge that an officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which such phrase relates. Any Event of Default shall be deemed to be continuing unless and until waived in writing by the Agent and the Required Lenders. ARTICLE II. AMOUNTS AND TERMS OF THE LOANS Section 2.01 DIP Advances.

(a) The Lender(s) agree to lend to the Debtor from time to time during the Term, subject to and upon the terms and conditions herein set forth, on any Funding Date, such amounts as in accordance with the terms hereof may be requested by the Debtor from time to time (each such borrowing, a DIP Advance and the aggregate outstanding principal balance of all DIP Advances from time to time, the DIP Loan). (b) The aggregate outstanding principal amount of DIP Advances made by any Lender shall not at any time exceed the amount of such Lenders DIP Commitment. The sum of the principal amount of the DIP Loan outstanding at any time shall not exceed an amount equal to the Adjusted Borrowing Limit. (c) Subject to the limitations herein (including the conditions to funding DIP Advances set forth in Article VI hereof), the Debtor may borrow, repay (without premium or penalty, except as expressly set forth in this Agreement) and reborrow DIP Advances under each Lenders DIP Commitment. The DIP Loan shall not exceed, and the Lenders shall not have any obligation to make any DIP Advance that would result in the DIP Loan being in excess of, the Adjusted Borrowing Limit at any time. If at any time the DIP Loan exceeds the Adjusted Borrowing Limit at such time, the Debtor shall promptly (and in any event within one Business Day) eliminate such excess by repaying the DIP Loan in an amount equal to such excess. The Lenders may, but shall not be obligated to, make any or all adequate protection payments required to be made to the Bond Trustee upon the Debtors failure to timely do so or if they otherwise elect to do so; provided that the Agent shall have notified the Debtor of the Lenders election and making of such payment(s). All such adequate protection payments will be charged to the Debtor as a DIP Advance. (d) Each Lender, at its option, may make any DIP Advance by causing any domestic or foreign branch or Affiliate of such Lender to make such DIP Advance; provided
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that any exercise of such option shall not affect the obligation of the Debtor to repay such DIP Advance in accordance with the terms of this Agreement. (e) Whenever the Debtor desires a DIP Advance be made, the Debtor shall, not later than 2:00 p.m. (New York City time) one Business Day prior to the proposed Funding Date of the DIP Advance, provide the Agent with a Borrowing Base Report, which shall constitute notice (which notice, in each case, shall be irrevocable) of the desire to make a borrowing of a DIP Advance. Each such Borrowing Base Report shall be signed by an Authorized Officer of the Debtor, shall specify the date on which the Debtor desires to make a borrowing of a DIP Advance (which in each instance shall be a Business Day) and shall specify the requested amount of the proposed DIP Advance (which shall not be less than $100,000). Promptly following receipt of such Borrowing Base Report, the Agent shall advise each Lender of the details thereof and of the amount of such Lenders Pro Rata Share of the requested DIP Advance. In the event that one or more payments in respect of any Lender Debt shall become due and payable, the Debtor shall be deemed to have made an irrevocable request for DIP Advances in an aggregate amount equal to such payments, and the proceeds of such DIP Advances shall be applied by the Agent directly to make such payments; provided, however, that if any conditions contained herein to the funding of the aggregate amount of such DIP Advances shall not have been satisfied, such DIP Advances shall be made only to the extent that the Required Lenders have consented thereto. (f) Each Lender shall make each DIP Advance to be made by it hereunder on the proposed Funding Date thereof by wire transfer of immediately available funds by 12:00 noon, (New York City time) to the account of the Agent most recently designated by it for such purpose by notice to the Lenders. The Agent will make such DIP Advances available to the Debtor by promptly transferring the amount so received, in like funds, to the Debtor Account. The DIP Advances made by the Lenders on any Funding Date shall be made by the Lenders ratably in accordance with their respective DIP Commitments. The failure of any Lender to make any DIP Advance or portion thereof required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the DIP Commitments of the Lenders are several and no Lender shall be responsible for any other Lenders failure to make DIP Advances as required. (g) On the Maturity Date, each Lenders DIP Commitment shall terminate automatically. Upon such termination, the DIP Loan (together with all other Lender Debt) shall become, without further action by any Person, immediately due and payable together with all accrued interest thereon plus any fees, premiums, charges or costs provided for hereunder with respect thereto, and the Exit Fee. (h) The Debtor may (in addition to any reduction by application of the Collections in accordance with Section 5.02) on any Business Day voluntarily prepay the outstanding principal amount of the DIP Loan in whole or in part; provided, however, that the Debtor shall provide the Agent with at least one weeks prior written notice to the extent such prepayment is in an amount equal to or greater than $3,000,000.

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(i) The Debtor shall prepay the outstanding principal amount of the DIP Loan in an amount equal to all Net Proceeds received by it from time to time (such prepayment to be effectuated by deposit, within one Business Day of receipt thereof, of all Net Proceeds into the Lender Lockbox or Lender Lockbox Account for application to the Lender Debt); provided, however, that no mandatory prepayment will be required in connection with the Debtors receipt of Net Proceeds of an Asset Sale of any Real Property, or any Issuance secured by any Real Property, in either case at fair market value (it being understood and agreed that a regularly conducted and non-collusive sale pursuant to Section 363 of the Bankruptcy Code after notice and a hearing shall be deemed to establish fair market value) so long as no Event of Default has occurred and is continuing at or prior to the closing of such sale or Issuance, provided, further, that if an Event of Default has occurred and is continuing, the Required Lenders may, in their sole and absolute discretion, require application of the Net Proceeds of any such sale or Issuance to be applied as a mandatory prepayment of the Lender Debt. The DIP Commitments shall be permanently reduced on a dollar-for-dollar basis by the aggregate amount of all mandatory prepayments made or required to have been made pursuant to this clause (i) during the Term, except to the extent that any such mandatory prepayment made hereunder is made with the proceeds of casualty insurance and the Collateral lost or damaged is replaced or repaired within 30 days of such prepayment. Together with each mandatory prepayment hereunder, the Debtor shall pay the Exit Fee in accordance with Section 2.02(g). Section 2.02 Interest and Fees.

(a) Interest on the DIP Loan. The Debtor shall pay to the Agent, for the account of the Lenders: (i) interest on the average daily Outstanding Balance of the DIP Loan during the prior month on the first Business Day of each month, and (ii) all accrued and unpaid interest on the Outstanding Balance of the DIP Loan on the Maturity Date (whether by acceleration or otherwise), in each case, at an interest rate per annum equal to LIBOR plus 6.25%. (b) Default Interest. At all times following the occurrence of any Default or Event of Default, without notice to the Debtor interest on the DIP Loan shall accrue, at the Agents discretion, at a rate per annum equal to 4.00% in excess of the rate then otherwise applicable. Interest accrued pursuant to this paragraph (b) shall be payable on the earlier of (i) the next date for payment of interest pursuant to paragraph (a) above, and (ii) the date on which Agent shall make demand therefor. (c) Non-Utilization Fee. The Debtor shall pay to the Agent, for the ratable account of the Lenders, in arrears, on the first Business Day of each month and the Maturity Date, a fee (the Non-Utilization Fee) equal to 0.50% per annum on the average amount, calculated on a daily basis, by which the Total DIP Commitments exceeded the greater of (i) the aggregate amount of DIP Advances that were outstanding during the prior month, or (ii) the average Minimum Balance Requirement during the prior month. (d) Collateral Tracking Fee. The Debtor shall pay to the Agent, for its own account, an account receivable tracking fee (the Collateral Tracking Fee), due in arrears on the first Business Day of each month and on the Maturity Date, in an amount equal to the
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product of: (i) the average Outstanding Balance of the DIP Loan for the prior month (or portion thereof), calculated as the arithmetic average of all daily balances; multiplied by (ii) a fraction, expressed as a decimal, the numerator of which is equal to the actual number of days in the prior month (or portion thereof) and the denominator of which is 30; multiplied by (iii) 0.50%. (e) Facility Fee. The Debtor shall pay to the Agent, for the account of the Lenders a facility fee (the Facility Fee) of $380,000 with respect to the DIP Loan. The Facility Fee shall be fully earned upon the entry of the Interim DIP Order and shall be payable in immediately available funds in two equal installments of $190,000 each, due (i) on the date of the entry of the Initial DIP Order and (ii) the earlier of five (5) Business Days after entry of the Final DIP Order or 30 days after entry of the Interim DIP Order; provided that the failure to obtain entry of the Final DIP Order within such 30 days is not due to a default or breach of the DIP Documents by the Agent or Lenders. (f) Minimum Usage Fee. If at any time and from time to time, the outstanding principal amount of the DIP Loan is below the Minimum Balance Requirement, the Debtor shall pay to the Agent, for the account of each Lender, in arrears on the first Business Day of each month and on the Maturity Date or on such other date on which the Lenders obligation to make DIP Advances shall terminate, a fee (the Minimum Usage Fee) equal to the rate of interest calculated and payable pursuant to Section 2.03(a) and, if otherwise applicable, Section 2.02(b), multiplied by the positive difference between the Minimum Balance Requirement and the aggregate amount of the average daily outstanding DIP Advances during the prior month (or portion thereof). (g) Exit Fee. Together with each permanent repayment of the DIP Loan (whether pursuant to the mandatory prepayment provisions of this Agreement or otherwise) or the reduction or termination of any of the DIP Commitments, the Debtor shall pay to the Agent, for the account of each Lender, an exit fee (the Exit Fee), equal to 2.0% of the amount so permanently prepaid or reduced or terminated, as applicable; provided that in the event that the Agent, in its sole and absolute discretion, provides the Debtor with post-reorganization senior financing, the aggregate amount of the Exit Fee actually paid to the Agent hereunder will be credited against the facility fee related to such chapter 11 plan exit financing facility. (h) Wire Transfer Fees. The Debtor agrees to pay to the Agent, in consideration of electronic funds transfer transactions initiated by the Agent or the Lenders at the request of the Debtor, a wire transfer fee in the amount of $40.00 for each such transaction. The Debtor irrevocably authorizes the Agent to charge any and all such fees to the DIP Loan. Section 2.03 Computation of Interest; Payment of Fees.

(a) Interest on the DIP Loans and fees and other amounts calculated on the basis of a rate per annum shall be computed on the basis of actual days elapsed over a 360day year. (b) Whenever any payment to be made hereunder or under any other DIP Document shall be stated to be due and payable on a day that is not a Business Day, such
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payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in computing interest on such payment. (c) All fees owed by the Debtor under this Agreement are, and shall be deemed hereunder for all purposes to be, fully earned and non-refundable on the due date thereof. Section 2.04 Procedures for Payment.

(a) Each payment hereunder and under the other DIP Documents shall be made not later than 2:00 p.m. (New York City time) on the day when due in lawful money of the United States of America without counterclaim, defense, offset, claim or recoupment of any kind and free and clear of, and without deduction for, any present or future withholding or other taxes, duties, levies, imposts, deductions, charges or other liabilities of any nature imposed on such payments or prepayments by or on behalf of any Governmental Entity, except for taxes upon or determined by reference to a Lenders net income imposed by the jurisdiction in which such Lender is organized or has its principal or registered lending office (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities hereinafter referred to as Taxes). If any such Taxes are so levied or imposed on any payment to any Lender, the Debtor will make additional payments in such amounts as may be necessary so that the net amount received by such Lender, after withholding or deduction for or on account of all Taxes, including deductions applicable to additional sums payable under this Section 2.04, will be equal to the amount provided for herein or in the other DIP Documents. Whenever any Taxes are payable by the Debtor with respect to any payments hereunder, the Debtor shall furnish promptly to the Agent information, including certified copies of official receipts (to the extent that the relevant governmental authority delivers such receipts), evidencing payment of any such Taxes so withheld or deducted. If the Debtor fails to pay any such Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required information evidencing payment of any such Taxes so withheld or deducted, the Debtor shall indemnify the Agent and each Lender for any incremental Taxes, interest or penalties that may become payable by the Agent or such Lender as a result of any such failure. (b) Notwithstanding anything to the contrary contained in this Agreement, the Debtor shall pay any present or future stamp or documentary taxes, any intangibles tax or any other sales, excise or property taxes, charges or similar levies now or hereafter assessed that arise from and are attributable to any payment made hereunder or from the execution, delivery or performance of, or otherwise with respect to, this Agreement or any other DIP Documents and any and all recording fees relating to any DIP Documents securing any Lender Debt (Other Taxes). (c) The Debtor shall indemnify the Agent and each Lender for the full amount of any and all Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.04) paid or payable by the Agent or such Lender (whether or not such Taxes or Other Taxes were correctly or legally asserted) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto.
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Indemnification payments due to the Agent or any Lender under this Section 2.04 shall be made within 10 days from the date the Agent or such Lender makes written demand therefor. (d) Without prejudice to the survival of any other agreement of the Debtor hereunder, the agreements and obligations of the Debtor contained in this Section 2.04 shall survive the Full Payment of all Lender Debt. (e) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Debtor to such Lender resulting from each DIP Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (f) The register maintained by the Agent with respect to the DIP Loans, shall include accounts for each Lender, in which accounts (taken together) shall be recorded (i) the rate and amount of each DIP Advance made hereunder, (ii) the amount of each DIP Lenders DIP Commitment and the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Debtor to each Lender hereunder, and (iv) the amount of any sum received by the Agent from the Debtor hereunder and each Lenders share thereof. The parties hereto acknowledge and agree that the entries made by the Agent as provided in this Section 2.04(f) shall be conclusive and binding for all purposes, absent manifest error. (g) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Debtor is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments under any DIP Document shall deliver to the Agent and the Debtor, at the time or times prescribed by applicable law or reasonably requested by the Agent or the Debtor, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Foreign Lender, if requested by the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Agent as will enable the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Without limiting the generality of the foregoing, a Foreign Lender shall deliver to the Agent and to the Debtor (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender hereunder (and from time to time thereafter upon the request of the Agent or the Debtor, but only if such Foreign Lender is legally entitled to do so), (a) duly completed copies of IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) duly completed copies of IRS Form W-8ECI; (c) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (i) a certificate to the effect that such Foreign Lender is not (A) a bank within the meaning of section 881(c)(3)(A) of the Code, (B) a 10 percent shareholder of the Debtor within the meaning of section 881(c)(3)(B) of the Code, or (C) a controlled foreign corporation described in section 881(c)(3)(C) of the Code, and (ii) duly completed copies of IRS Form W-8BEN; or (d) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States federal withholding tax, duly completed
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together with such supplementary documentation as may be prescribed by applicable law to permit the Debtor to determine the withholding or deduction required to be made. Section 2.05 Indemnities.

(a) The Debtor hereby agrees to indemnify the Agent and each Lender on demand against any loss or expense that the Agent or such Lender or a branch or an Affiliate of such Person may sustain or incur as a consequence of: (i) any default in payment or prepayment of the principal amount of the DIP Loan or any portion thereof or interest accrued thereon, as and when due and payable (at the due date thereof, by irrevocable notice of payment or prepayment, or otherwise); (ii) the effect of the occurrence of any Default or Event of Default upon the DIP Loan or any portion thereof; (iii) the payment or prepayment of the principal amount of the DIP Loan or any portion thereof on any day other than the last day of an Interest Period; or (iv) the failure by the Debtor to accept any DIP Advance or any portion thereof after the Debtor has requested such borrowing; in each case including any loss or expense sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain the DIP Loan or any portion thereof. The Agent or Lender, as applicable, shall provide to the Debtor a statement, supported when applicable by documentary evidence, explaining the amount of any such loss or expense it incurs, which statement shall be conclusive and binding for all purposes, absent manifest error. (b) The Debtor hereby agrees to indemnify and hold harmless the Agent, the Lenders, and each of their respective Affiliates, directors, officers, agents, representatives, counsel and employees and each other Person, if any, controlling them or any of their respective Affiliates within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20(a) of the Exchange Act (each, an Indemnified Party), from and against any and all losses, claims, damages, costs and expenses (including reasonable counsel fees and disbursements) and liabilities that may be incurred by or asserted against such Indemnified Party with respect to or arising out of the DIP Commitments hereunder, the DIP Loan contemplated hereby, the DIP Documents, the Collateral (including the use thereof by any of such Persons or any other Person, the exercise by any Indemnified Party of rights and remedies or any power of attorney with respect thereto, and any action or inaction of any Indemnified Party under and in accordance with any DIP Documents), the use of proceeds of any financial accommodations provided hereunder, any investigation, litigation or other proceeding (pending or threatened) relating thereto, or the role of any such Person or Persons in connection with the foregoing whether or not they or any other Indemnified Party is named as a party to any legal action or proceeding (Indemnified Claims). The Debtor will not, however, be responsible to any Indemnified Party hereunder for any Indemnified Claims to the extent that a court having jurisdiction shall have determined by a final nonappealable judgment that any such Indemnified Claim shall have arisen out of or resulted solely from actions taken or omitted to be taken by such Indemnified Party by reason of its willful misconduct or gross negligence (Excluded Claims). Further, should any employee of an Indemnified Party, in connection with such employees employment by such Indemnified Party, be involved in any legal action or proceeding in connection with the transactions contemplated hereby (other than relating to an Excluded Claim), the Debtor hereby agrees to pay to such Indemnified Party such reasonable per diem compensation as such Indemnified Party shall request for each employee for each day or
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portion thereof that such employee is involved in preparation and testimony pertaining to any such legal action or proceeding. Each Indemnified Party shall give the Debtor prompt notice of any Indemnified Claim with respect to which such Indemnified Party is seeking indemnification hereunder, setting forth a description of those elements of the Indemnified Claim of which such Indemnified Party has knowledge. The Indemnified Party shall be permitted hereunder to select counsel to defend such Indemnified Claim at the expense of the Debtor. The Indemnified Parties and the Debtor and their respective counsel shall cooperate with each other in all reasonable respects in any investigation, trial and defense of any such Indemnified Claim and any appeal arising therefrom. Section 2.06 Maximum Interest. No provision of this Agreement shall require the payment to any Lender or permit the collection by any Lender of interest in excess of the maximum rate of interest from time to time permitted (after taking into account all consideration that constitutes interest) by laws applicable to the Lender Debt and binding on such Lender (such maximum rate being such Lenders Maximum Permissible Rate). If the amount of interest (computed without giving effect to this Section 2.06) payable to any Lender in respect of any interest computation period would exceed the amount of interest computed in respect of such period at such Lenders Maximum Permissible Rate, the amount of interest payable to such Lender in respect of such period shall be computed at such Lenders Maximum Permissible Rate and any excess shall be applied to reduce any Lender Debt (other than interest) then owing to such Lender in such order as it shall determine. Section 2.07 Use of Proceeds of DIP Loan. The Debtor shall use the proceeds of each DIP Advance solely in accordance with the DIP Budget, subject to the permitted Variances: (a) to fund post-petition operating expenses of the Debtor incurred in the ordinary course of business, (b) to pay adequate protection payments to the Bond Trustee to the extent required by the Cash Collateral Orders, (c) to pay certain other costs and expenses of administration of the Case to be specified in writing to the Agent, and (d) for working capital and other general corporate purposes of the Debtor not in contravention of any requirement of law or the DIP Documents. The Debtor shall use the entire amount of the proceeds of each DIP Advance in accordance with this Section 2.07; provided, however, that nothing herein shall in any way prejudice or prevent the Agent or the Lenders from objecting, for any reason, to any requests, motions or applications made in the Bankruptcy Court, including any applications for interim or final allowances of compensation for services rendered or reimbursement of expenses incurred under Sections 105(a), 330 or 331 of the Bankruptcy Code, by any party in interest, and provided, further, that the Debtor shall not use the proceeds from any Advance for any purpose that is prohibited under the Bankruptcy Code. ARTICLE III. SECURITY Section 3.01 Grant of Security Interests. To induce the Lenders to make the DIP Loans, the Debtor hereby grants to the Agent, for itself and for the benefit of the Lender Group, as security for the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all Lender Debt (including all indemnification and reimbursement obligations to
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the Lender Group hereunder), a continuing first priority Lien and security interest (subject only to the Carve Out) in and to, and a right of set-off against, all Collateral. Section 3.02 Perfection of Security Interests.

(a) The Debtor shall, at its expense, perform any and all steps that may be reasonably requested by the Agent at any time to perfect, maintain, protect, and enforce the Agents Lien in the Collateral, including (i) executing and filing financing or continuation statements, and amendments thereof, in form and substance satisfactory to the Agent, (ii) maintaining complete and accurate books and records, and (iii) taking such other steps as are deemed necessary or desirable to maintain the Agents Lien in the Collateral. (b) The Debtor hereby authorizes the Agent to execute and file financing statements or continuation statements, and amendments thereto, on the Debtors behalf covering the Collateral. The Administrative Agent may file one or more financing statements disclosing the Agents Lien under this Agreement without the signature of the Debtor appearing thereon. The Debtor shall pay the costs of, or incidental to, any recording or filing of any financing statements concerning the Collateral. The Debtor agrees that a carbon, photographic, photostatic, or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement. (c) Notwithstanding subsections (a) and (b) of this Section 3.02, or any failure on the part of the Debtor or the Agent to take any of the actions set forth in such subsections, the Liens and security interests granted herein shall be deemed valid, enforceable and perfected by entry of the Interim DIP Order and the Final DIP Order, as applicable. No financing statement, notice of lien, mortgage, deed of trust or similar instrument in any jurisdiction or filing office need be filed or any other action taken in order to validate and perfect the Liens and security interests granted by or pursuant to this Agreement, the Interim DIP Order or the Final DIP Order. Section 3.03 Covenants of the Debtor with Respect to Collateral. The Debtor hereby covenants and agrees with the Agent that from and after the date of this Agreement and until the Full Payment of all Lender Debt: (a) Maintenance of Records. The Debtor will keep and maintain, at its own cost and expense, satisfactory and complete records of the Collateral, in all material respects, including a record of all payments received and all credits granted with respect to the Collateral and all other dealings concerning the Collateral. For the Agents further security, the Debtor agrees that the Agent shall have a property interest in all of the Debtors books and records pertaining to the Collateral and, upon the occurrence and during the continuation of an Event of Default, the Debtor shall deliver and turn over any such books and records to the Agent or to its representatives at any time on demand of the Agent. (b) Indemnification With Respect to Collateral. In any suit, proceeding or action brought by the Agent relating to any Receivable, Chattel Paper, Contractual Obligations, General Intangible, Investment Property, Instrument, Intellectual Property or other
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Collateral for any sum owing thereunder or to enforce any provision of any Receivable, Chattel Paper, Contractual Obligations, General Intangible, Investment Property, Instrument, Intellectual Property or other Collateral, the Debtor will save, indemnify and keep the Lender Group harmless from and against all expense, loss or damage suffered by the Lender Group by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder, arising out of a breach by the Debtor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from the Debtor, and all such obligations of the Debtor shall be and remain enforceable against and only against the Debtor and shall not be enforceable against the Agent or any Lender. (c) Limitation on Liens on Collateral. The Debtor will not create, permit or suffer to exist, and will defend the Collateral against and take such other action as is necessary to remove, any Lien on the Collateral except Liens expressly permitted under this Agreement and will defend the right, title and interest of the Agent in and to all of the Debtors rights under the Chattel Paper, Leases, Real Estate, Contracts, DIP Documents, General Intangibles, Instruments, Investment Property and to the Intellectual Property, Equipment and Inventory and in and to the proceeds thereof against the claims and demands of all Persons whomsoever other than claims or demands arising out of Liens permitted hereunder. (d) Commercial Tort Claims. The only Commercial Tort Claims of the Debtor existing on the date hereof (regardless of whether the amount, defendant or other material facts can be determined) are those listed on Schedule II. The Debtor agrees that, if it shall acquire any interest in any Commercial Tort Claim (whether from another Person or because such Commercial Tort Claim shall have come into existence), (i) the Debtor shall, promptly following such acquisition, deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, a notice of the existence and nature of such Commercial Tort Claim and deliver a supplement to Schedule II containing a specific description of such Commercial Tort Claim, (ii) the provision of Section 3.01 shall apply to such Commercial Tort Claim and (iii) the Debtor shall execute and deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, any certificate, agreement and other document, and take all other action, deemed by the Agent to be reasonably necessary or appropriate for the Agent to obtain a first-priority, perfected security interest in all such Commercial Tort Claims. Any supplement to Schedule II delivered pursuant to this Section 3.04(e) shall, after the receipt thereof by the Agent, become part of Schedule II for all purposes hereunder other than in respect of representations and warranties made prior to the date of such receipt. Section 3.04 Performance by Agent of the Debtors Obligations. If the Debtor fails to perform or comply with any of its agreements contained in this Agreement and the Agent, as provided for by the terms of this Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the expenses of the Agent incurred in connection with such performance or compliance, together with interest thereon at the rate then in effect hereunder, shall be payable by the Debtor to the Agent on demand and shall constitute Lender Debt secured by the Collateral. Performance of the Debtors obligations as permitted under this Section 3.05 shall in no way constitute a violation of the automatic stay provided by Section 362 of the Bankruptcy Code and the Debtor hereby waives applicability thereof.
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Moreover, the Agent shall in no way be responsible for the payment of any costs incurred in connection with preserving or disposing of Collateral pursuant to Section 506(c) of the Bankruptcy Code and the Collateral may not be charged for the incurrence of any such cost. Section 3.05 Limitation on Agents Duty in Respect of Collateral. Neither the Agent nor any Lender shall have any duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of it or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto, except that the Agent shall, with respect to the Collateral in its possession or under its control, deal with such Collateral in the same manner as the Agent deals with similar property for its own account. ARTICLE IV. PAYMENT MECHANICS Section 4.01 Payment Mechanics.

(a) On or prior to the Initial Funding Date, the Debtor, the Agent, and the Lockbox Bank shall have entered into the Depositary Agreements and shall have caused the Lockbox Banks to establish the Lockbox and the Lockbox Accounts. (b) The Debtor shall prepare, execute and deliver to (or, in the case of Notice to an Insurer, provide to the Agent for delivery to) each Obligor (or, in the case of a Governmental Entity, its fiscal intermediary) who is proposed to be a payor of Receivables, with copies to the Agent, on or prior to the Initial Funding Date, a Notice, which Notice shall state that all present and future Receivables owing to the Debtor are subject to the Lien of the Agent and that: (i) in the case of any Notice to an Insurer, all checks and EOBs from such Insurer on account of Receivables shall be sent to the Lender Lockbox and all wire transfers from such Insurer on account of Receivables shall be wired directly into the Lender Lockbox Account; and (ii) in the case of any Notice to a Governmental Entity, all payments from such Governmental Entity on account of Receivables shall be sent by wire transfer or automated clearinghouse to the Debtor Lockbox Account. All EOBs from any Governmental Entity shall be sent electronically to the Debtor and the Agent shall be provided access thereto (which access may be by means of inclusion of such electronic EOBs in the Transmissions). (c) The Debtor covenants and agrees that, on and after the Initial Funding Date, all invoices (and, if provided by the Debtor, return envelopes) to be sent to Obligors shall set forth: (i) in the case of Insurers, only the address of a designated Lender Lockbox as a return address for payment of Receivables by check and delivery of EOBs, and only a Lender Lockbox Account with respect to wire transfers for payment of Receivables; and (ii) in the case of Governmental Entities, only the Debtor Lockbox Account with respect to wire transfers and automated clearinghouse payments for payment of Receivables. The Debtor hereby further covenants and agrees to instruct and notify each of the members of its accounting and collections staff to provide identical information in communications with Obligors with respect to payment of Receivables, wire transfers and EOBs.

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(d) The Debtor shall maintain its Debtor Lockbox Account solely and exclusively for the receipt of payments on account of Receivables from Governmental Entities. The Debtor shall take all actions necessary to ensure that no payments from any Person other than a Governmental Entity shall be deposited in the Debtor Lockbox Account. The Debtor shall deposit, within one Business Day of receipt thereof, all checks from any Governmental Entity on account of Receivables delivered to the Debtor and all Net Proceeds into the Lender Lockbox Account for application to the Lender Debt. Section 4.02 Misdirected Payments; EOBs.

(a) In the event that the Debtor receives an EOB or a Misdirected Payment in the form of a check, the Debtor shall immediately send such EOB or check to the appropriate Lender Lockbox or deposit the same into the Debtor Lockbox Account, as the case may be. In the event that the Debtor receives a Misdirected Payment in the form of cash or wire transfer, the Debtor shall immediately wire transfer the amount of such Misdirected Payment directly into the appropriate Lender Lockbox Account. All Misdirected Payments shall be sent promptly upon receipt thereof, and in no event later than the close of business on the first Business Day after receipt thereof. (b) The Debtor shall take such actions as are reasonably necessary or as are reasonably requested by the Agent to ensure that future payments from any Obligor of a Misdirected Payment shall be made in accordance with any Notice previously delivered to such Obligor or, in the case of any Person that is an Insurer and has not previously been sent a Notice, to a designated Lender Lockbox, in the case of checks and EOBs, or a designated Lender Lockbox Account, in the case of wire transfers, including (i) delivering to such Obligor a new Notice in form and substance satisfactory to the Agent, and (ii) contacting such Obligor by telephone to (x) convey new directions for payment, or (y) confirm the instructions previously set forth in any Notice to such Obligor. If the Debtor does not promptly (and in any event, within one Business Day from the Agents request) take such actions or such similar actions as the Agent may request, then the Agent, its assigns or designees, or any member of the Lender Group, may, to the maximum extent permitted by law, execute and deliver such Notices, contact such Obligors to convey such instructions or directions, or take such similar actions as the Agent, its assigns or designees or any member of the Lender Group may, in its discretion, deem appropriate. Section 4.03 No Rights of Withdrawal. The Debtor shall not have any rights of direction or withdrawal with respect to amounts held in the Lender Lockbox Accounts. ARTICLE V. COLLECTION AND DISTRIBUTION Section 5.01 Collections on the Receivables; Distributions. The Agent, for the account of the Lenders, shall be entitled: (a) to receive and hold as Collateral all Receivables, deposits and all Collections on Receivables in accordance with the terms of the Depositary Agreements; and (b) to have and exercise any and all rights, to the extent permitted by, and in a manner consistent with, all applicable laws and regulations, to collect, record, track and, during
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the continuance of an Event of Default, take all actions to obtain Collections with respect to all Receivables. The Debtor hereby consents to the distribution by the Agent of all Collections and proceeds of Collateral in accordance with this Article V and hereby authorizes and directs the Agent to distribute all Collections and proceeds of Collateral in accordance with this Article V. Section 5.02 Distribution of Funds to the Lenders. On each Business Day (provided, with respect to distributions made prior to the Maturity Date and so long as no Event of Default exists, that the Debtor shall have successfully sent by Transmission to the Agent all Receivable Information required with respect to the Receivables), the Agent shall distribute any and all cash Collections in the Collection Account (provided, with respect to distributions made prior to the Maturity Date and so long as no Event of Default exists, that such Collections were deposited in the Collection Account prior to 12:00 p.m. (New York City time) on the immediately preceding Business Day), and all other proceeds or other amounts with respect to the Collateral, as follows: FIRST, to the Agent, an amount in cash equal to expenses incurred with respect to the administration, service and maintenance of the Agents Lien on the Collateral and all fees and collection costs that are due and payable, if any, as set forth in Sections 2.05 and 13.05, until such amounts have been paid in full; SECOND, to the Agent, for the account of the Lenders, an amount in cash equal to fees, interest and expenses that are due and payable to the Lenders as of such Business Day and have not otherwise been paid in full by the Debtor, if any, until such amounts have been paid in full; THIRD, to the Agent, for the account of the Lenders, an amount in cash equal to: (a) in the case of distributions made prior to the Maturity Date and so long as no Event of Default exists, the Borrowing Base Deficiency, if any, until such amount is paid in full, and then the reduction of the principal amount of the DIP Loan, if any, until such amount has been paid in full; and (b) with respect to distributions made on or after the Maturity Date or while an Event of Default exists, the principal amount of the DIP Loan, until such amount has been paid in full; FOURTH, to the Agent, for the account of the Agent and/or any applicable Lenders, an amount in cash equal to the aggregate amount of any other Lender Debt due and payable on such Business Day, if any, until such amount has been paid in full; and FIFTH, to the Debtor, all remaining amounts of Collections, as requested. Section 5.03 Servicing Receivables. Subject to the review and authority of the Agent, the Debtor shall administer and service the Receivables (i) in compliance at all times with all legal requirements and the terms and conditions of this Agreement, (ii) in accordance with industry standards for servicing receivables of the type included in the Collateral to the extent that such standards do not conflict with the terms and conditions of this Agreement, (iii) in a manner consistent in all respects with the Credit and Collection Policy, and (iv) until such time as a successor servicer shall be designated and shall accept appointment pursuant to this Section. The Debtor shall establish and maintain electronic data processing services for monitoring,
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administering and collecting the Receivables in accordance with the foregoing standards and shall, within three Business Days of the deposit of any checks, other forms of cash deposits, EOBs or other written matter into a Lockbox, post such information to its electronic data processing services. (a) The Debtor shall not change in any material respect its existing policies and procedures with respect to the administration and servicing of accounts receivable (including the amount and timing of write-offs) without the prior written consent of the Agent. (b) If the Debtor determines that a payment with respect to a Receivable has been received directly by a patient or any other Person, the Debtor shall promptly advise the Agent, and demand that such patient or other Person remit and return such funds. If such funds are not promptly received by the Debtor, the Debtor shall take all reasonable steps to obtain such funds. (c) Upon the occurrence and during the continuance of an Event of Default: (i) the Agent may terminate the Debtors performance of servicing responsibilities with respect to the Receivables and appoint another Person to succeed the Debtor in the performance of such servicing responsibilities (which replacement may be effectuated through the outplacement to a third-party collection firm obligated to use commercially reasonable efforts to maximize collections in accordance with the provisions of Article 9 of the UCC), in which event the Debtor shall immediately transfer to any successor servicer designated by the Agent all records, computer access and other information as shall be necessary or desirable, in the judgment of any such successor servicer, to perform such responsibilities; and (ii) at the Required Lenders request, all enforcement and collection proceedings with respect to the Receivables shall, unless prohibited by applicable law, be instituted and prosecuted in the name of the Agent. The Debtor shall otherwise cooperate fully with such successor servicer. (d) The members of the Lender Group and the Debtor shall comply with the requirements of the Business Associate Addendum set forth in Exhibit VI. Section 5.04 Distributions to the Debtor Generally. All remaining amounts of Collections pursuant to Section 5.02, as requested by the Debtor, shall be deposited in the Debtor Account. ARTICLE VI. CONDITIONS PRECEDENT Section 6.01 Conditions Precedent to the Initial Funding Date. The making of the initial DIP Advance on the Initial Funding Date is subject to the conditions precedent that the Agent shall have received on or before the Initial Funding Date the following (or evidence of the following), each document (unless otherwise indicated) dated such date and executed by each Person party thereto, in form and substance satisfactory to the Agent: (a) The Bankruptcy Court shall have entered the Interim DIP Order, certified by the Clerk of the Bankruptcy Court as having been duly entered, and the Interim DIP
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Order shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed without the prior written consent of the Agent. (b) All motions and other documents filed in connection with this Agreement, the other DIP Documents and the credit facility evidenced hereby and thereby and all First Day DIP Orders shall be in form and substance satisfactory to the Agent in its sole discretion. (c) The Debtor shall have paid (or shall pay from the initial DIP Advances) the initial installment of the Facility Fee for application pursuant to Section 2.02(f) and all other closing costs and expenses, including attorneys fees. (d) The Agent shall have received executed originals of this Agreement and the other DIP Documents, originals or copies (as specified by the Agent) of all of the other documents and opinions listed on the Closing Document Checklist attached hereto as Exhibit VII, and such other certificates, documents, agreements and information as the Agent may reasonably request. (e) The Debtor will be in compliance in all material respects with all applicable laws and regulations, and shall have obtained all licenses, consents and approvals necessary to operate its business and shall have obtained all material and appropriate approvals pertaining to all applicable governmental, ERISA, retiree health benefits, workers compensation and other requirements, regulations and laws including Environmental Laws. (f) Control Agreements, if required in Agents sole discretion, shall be executed in favor of the Agent over all of the Debtors Deposit Accounts, and procedures to sweep proceeds therein to the Lockboxes and the Lockbox Accounts. (g) The Lockboxes and Lockbox Accounts shall have been established and be subject to the Depositary Agreements. (h) Satisfactory business due diligence review by the Agent of the Debtor and the DIP Budget, cash flow projections and operating plan and other relevant information. (i) Satisfactory legal due diligence review, including but not limited to the Debtors disclosure to the Agent of the extent and amount of rights of setoff or recoupment arising from the Debtors capitation or risk-sharing contracts or agreements by claimants which are account debtors of the Debtor. (j) Appointment of Cymetrix to act as Agents hot back up servicer on terms and conditions acceptable to the Agent. Section 6.02 Conditions Precedent to Incremental Facility Effective Date. The increase in the DIP Commitments contemplated to occur on the Incremental Facility Effective Date shall be subject to the conditions precedent that on or before October __, 2009 [30 days after closing]:
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(a) continuing.

No Default or Event of Default shall have occurred and be

(b) The Bankruptcy Court shall have entered the Final DIP Order, certified by the Clerk of the Bankruptcy Court as having been duly entered, and the Final DIP Order shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed without the prior written consent of the Agent and the Required Lenders. (c) The Agent shall have received a leasehold deed of trust of the Debtor in favor of Agent on the Debtors interest in the lease from the City of Downey to the Debtor, and the consent of the City of Downey thereto, each in forms acceptable to the Agent in its sole and absolute discretion. (d) The Agent shall have received an intercreditor agreement between the Agent, the Indenture Trustee and such other parties as the DIP Lender deems necessary in its sole discretion, satisfactory to the agent and the Required Lenders in their sole and absolute discretion. (e) The Agent shall have received an assignment and agreement in favor of Agent, effective upon a Termination Date, from Siemens or the Debtors alternative information technology services provider (who shall be satisfactory to the Agent), in form satisfactory to the Agent and the Required Lenders in their sole and absolute discretion. (f) The Bankruptcy Court shall have approved the appointment of an outside financial advisor to the Debtor which is acceptable to the Agent and the Required Lenders, with a scope of service acceptable to the Agent and the Required Lenders. (g) The Debtor shall have delivered a drive-by appraisal of the Debtors Land in form acceptable to the Agent and the Required Lenders in their sole and absolute discretion. (h) The Agent shall have received such additional documents, information and materials as the Agent or any Lender, may reasonably request. Section 6.03 Conditions Precedent to all Funding Dates. Each DIP Advance on a Funding Date (including the initial DIP Advance) shall be subject to the conditions precedent that (a) at least one Business Day prior to such Funding Date, the Debtor shall have delivered to the Agent a Borrowing Base Report and such other information as may be requested by the Agent, in form and substance satisfactory to the Agent, and (b) on such Funding Date that the following statements shall be true and correct (and acceptance of the proceeds of such DIP Advance shall be deemed a representation and warranty by the Debtor that such statements are then true and correct): (i) the representations and warranties contained in Article VII hereof and Exhibit I hereto are true and correct on and as of the date of such DIP Advance as though made on and as of such date (except any representation or warranty
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that expressly indicates that it is being made as of a specific date, in which case such representation or warranty shall be true and correct as of such specified date); and (ii) no event has occurred and is continuing, or would result from such DIP Advance or any actions connected therewith, that constitutes a Default or an Event of Default. ARTICLE VII. REPRESENTATIONS AND WARRANTIES Section 7.01 Representations and Warranties. The Debtor hereby makes, and shall be deemed to have made, on the Initial Funding Date, on each subsequent Funding Date, and upon delivery of each Borrowing Base Report, the following representations and warranties to the Agent and each Lender: (a) The Debtor is duly formed and organized, validly existing and in good standing under the laws of the State of California. The Debtor is duly qualified to do business, and is in good standing, in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect. (b) Upon entry of the applicable DIP Orders, the execution, delivery and performance by the Debtor of the DIP Documents to which it is a party and any other documents to be delivered by it thereunder, (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action (iii) do not contravene (1) its organizational documents, (2) any law, rule or regulation applicable to it (including laws, rules and regulations relating to section 501(c)(3) of the Code, usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices, licensing and privacy), (3) except as set forth on Schedule II, any contractual restriction binding on or affecting it or its Property, or (4) any order, writ, judgment, award, injunction or decree binding on or affecting it or its Property, (iv) do not result in or require the creation of any Lien upon or with respect to any of its Properties, other than the security interests created by this Agreement and the other DIP Documents, and (v) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or non-renewal of any permit, license, authorization or approval applicable to its operations or any of its Properties. Except as expressly disclosed to the Agent in writing prior to the date hereof, the Debtor is not in violation of any material term of any material agreement or instrument binding on or otherwise affecting it or any of its Properties other than defaults arising solely from the filing of the Case. (c) No investment banking, brokerage, finders or similar fees are payable to any Person (other than the payment of the Placement Fee (as defined in the DIP Orders) and fees to the Agent under the DIP Documents and other than) in connection with the execution, delivery and performance of this Agreement, the other DIP Documents or the transactions contemplated hereby or thereby.

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(d) Subject to the entry of the DIP Orders, this Agreement is, and the other DIP Documents will be, when delivered hereunder, the legal, valid and binding obligation of the Debtor, enforceable against the Debtor in accordance with its terms. (e) The Debtor has all power and authority, and has all permits, licenses, accreditations, certifications, authorizations, approvals, consents and agreements of all Obligors, Governmental Entities, accreditation agencies and other Persons (including, (i) accreditation by the appropriate Governmental Entities and industry accreditation agencies, (ii) accreditation and certifications as a provider of healthcare services eligible to receive payment and compensation and to participate under Medicare, Medicaid, TRICARE/CHAMPUS, Blue Cross/Blue Shield and other equivalent programs and (iii) valid provider identification numbers and licenses to generate the Receivables) necessary or required for it (A) to own the assets (including Receivables) that it now owns, (B) to carry on its business as now conducted, (C) to execute, deliver and perform the DIP Documents to which it is a party, and (D) if applicable, to receive payments from the Obligors in the manner contemplated in this Agreement and the other DIP Documents. (f) Except as disclosed on Schedule II hereto, the Debtor has not been notified by any Governmental Entity, accreditation agency or any other Person, during the immediately preceding 24 month period, that such Person has rescinded or not renewed, or is reasonably likely to rescind or not renew, any permit, license, accreditation, certification, authorization, approval, consent or agreement granted to it or to which it is a party and no other condition exists or event has occurred that, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non renewal of any permit, license, authorization, approval, entitlement or accreditation, and to the best of the Debtors knowledge, there is no claim that any thereof is not in full force and effect. (g) Schedule II sets forth the full and complete corporate structure of the Debtor and its Affiliates as of the Initial Funding Date, including the sole member of the Debtor. Except as set forth on Schedule II, there are no outstanding Debt securities of the Debtor. The Debtor has no Subsidiaries. (h) The Agent has received complete copies of the Bond Debt Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof. Except as set forth in the Cash Collateral Orders, none of such documents and agreements has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument which has heretofore been delivered to the Agent. (i) Schedule II contains a correct and complete list (indicating the location of such real property by street address and state) of all real property owned or leased by the Debtor. (j) As of the Initial Funding Date, all conditions precedent set forth in Article VI have been fulfilled or waived in writing by the Agent, and as of each Funding Date, all
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conditions precedent set forth in Section 6.02(c) shall have been fulfilled or waived in writing by the Agent. (k) The audited financial statements of the Debtor for the fiscal year 2007, the draft financial statements of the Debtor for the fiscal year 2008, and each of the interim financial statements for the fiscal year 2009 (through June 30, 2009), together with all subsequent financial statements of the Debtor furnished to the Agent, fairly present the financial condition of the Debtor as of the dates referred to therein and the results of the operations of the Debtor for the periods ended on such dates, all in accordance with GAAP (except, where applicable, for the absence of normal and otherwise immaterial year-end audit adjustments and the absence of footnotes). Since the Petition Date, other than the filing of the Case, there has been no change that has had or resulted in, or is reasonably likely to have or result in, a Material Adverse Effect. All information provided in the application for the financing effectuated by this Agreement, and each other document, report and Transmission provided by or on behalf of the Debtor to the Lender Group is or shall be true and accurate in all material respects as of its date and as of the date so furnished; provided that, with respect to projected financial information, the Debtor represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. The Debtor has disclosed to the Agent all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to have or result in a Material Adverse Effect, and, as of the Initial Funding Date, there exists no contingent liability or other fact or circumstance that could reasonably be expected to have or result in a Material Adverse Effect that has not been set forth on Schedule II hereto. (l) Except as disclosed on Schedule II hereto, other than the Case, there is no pending or, to its knowledge, threatened action or proceeding or investigation, injunction, writ or order affecting the Debtor before or by any court, Governmental Entity or arbitrator that could reasonably be expected to have or result in a Material Adverse Effect or that purports to affect the legality, validity or enforceability of this Agreement or any other DIP Document. (m) The Debtor is the legal and beneficial owner of the Collateral and upon the execution of the DIP Documents, the entry of the Interim DIP Order, and the filing of the UCC financing statements with respect thereto (i) the Agent will hold a valid, perfected and continuing Lien in the Collateral (with the priorities set forth in the DIP Orders) as security for the Lender Debt, free and clear of any Lien (including any Lien in favor of the Internal Revenue Service, any Employee Benefit Plan, any Multiemployer Plan or the PBGC) other than Permitted Liens. No effective financing statement or other instrument similar in effect covering the Receivables is on file in any recording office other than those evidencing Permitted Liens, and no competing notice or notice inconsistent with the transactions contemplated in this Agreement has been sent to any Obligor. (n) The Debtors exact name, principal place of business and chief executive office and the office where its keeps its records concerning the Receivables and other Collateral are located at the addresses referred to on Schedule I hereto and, as of the Initial Funding Date, except as disclosed on Schedule II hereto, there have been no other such locations
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for the four immediately prior months. Except as disclosed on Schedule II hereto, the Debtor has not changed its principal place of business or chief executive office in the last five years. Except as disclosed on Schedule II hereto, the Debtor has not used and does not now use any fictitious or trade name during the five years immediately prior to the date of this Agreement and as of the Initial Funding Date, it has not changed its name in the last 24 months. (o) All required Notices have been prepared and delivered to the Agent for mailing to the Obligors, and all invoices issued on or after September __, 2009, bear only the appropriate remittance instructions for payment direction to the Lockboxes or the Lockbox Accounts, as the case may be. (p) The Debtor has filed on a timely basis all tax returns (federal, state and local) required to be filed and has paid, or made adequate provision for payment of, all taxes, assessments and other governmental charges due from it. No tax Lien has been filed and is now effective against it or any of the Debtors Properties except any Lien in respect of taxes and other charges not yet due or contested in good faith by appropriate proceedings and for which appropriate reserves in accordance with GAAP have been established. To the Debtors best knowledge, and except as disclosed on Schedule II hereto, there is no pending investigation by any taxing authority nor any pending but unassessed tax liability relating to the Debtor. (q) The Debtor maintains only one Debtor Lockbox Account, as more particularly described on Schedule III hereto, for Receivables the Obligors with respect to which are Governmental Entities; the Lender Lockbox is the only post office box and the Lender Lockbox Account is the only lockbox account maintained for Receivables, the Obligors with respect to which are not Governmental Entities; and no direction is in effect directing Obligors to remit payments on Receivables other than to the applicable Lockbox, and Lockbox Accounts, each as described on Schedule III. (r) The Debtor has no Plans or Multiemployer Plans, or, except as set forth on Schedule II, any material consulting agreements, executive employment agreements, executive compensation plans, deferred compensation agreements, employee stock purchase, stock option or severance plans. (s) Only Approved Patient Consent Forms for which favorable opinions of counsel have been received and in compliance with all applicable laws, rules and regulations are being obtained from each patient and customer receiving services or products. (t) Schedule II accurately and completely sets forth, as of the date hereof, all asserted actions, suits, proceedings, and disputes, and all potential set-offs, deductions, defenses or counterclaims in excess of $10,000 individually that have been or that reasonably could be expected to be asserted by an Obligor with respect to any of the Receivables, and includes therewith the maximum amount of such potential set-off, deduction, defense or counterclaim. Without limiting the generality of the foregoing, Schedule II also sets forth the amount of all amounts payable as of the date hereof by the Debtor to each of the following (including each of their respective Affiliates): Cymetrix Corporation, Siemens,
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PacificCare/United HealthCare, Healthnet, and any other commercial insurance provider who is also an Obligor on Receivables. (u) The information prepared or furnished by or on behalf of the Debtor in connection with this Agreement or the consummation of the transactions contemplated hereunder taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading. All facts known to the Debtor material to an understanding of the financial condition, business, properties or prospects of the Debtor have been disclosed to the Agent. ARTICLE VIII. AFFIRMATIVE COVENANTS Until the Full Payment of all Lender Debt, the Debtor agrees to perform all covenants in this Article VIII. Section 8.01 Compliance with Laws, etc. The Debtor shall comply in all material respects with all applicable laws (including Environmental Laws), rules, regulations and DIP Orders. The Debtor shall obtain, maintain and preserve, and take all necessary action to timely renew, all material permits, licenses, authorizations, approvals, entitlements and accreditations necessary or useful in the proper conduct of its business. Section 8.02 Offices, Records and Books of Account, Names. The Debtor shall keep its principal place of business and chief executive office and the offices where it keeps its records concerning the Collateral at its address set forth on Schedule I or, upon 30 days prior notice to the Agent, at any other locations in jurisdictions where all actions reasonably requested by the Agent or otherwise necessary to protect, maintain and perfect the Agents Lien on the Collateral have been taken and completed. The Debtor shall maintain proper books and accounts in which full, true and correct entries in conformity with GAAP are made of all dealings and transactions in relation to its business and activities and shall not make any notation on its books and records, including any computer files, that is inconsistent with the assignment of the Collateral to the Agent as collateral security. The Debtor shall maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables and related contracts and pertinent documentation with respect to all other Collateral in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for collecting all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable) and for providing the Receivable Information. The Debtor shall keep its exact legal name as set forth on Schedule I hereto and will not change its name without providing 30 days prior written notice to the Agent and taking and completing all actions reasonably requested by the Agent or otherwise necessary to protect, maintain and perfect the Agents Lien on the Collateral. Section 8.03 Performance and Compliance with Contracts and Credit and Collection Policy. The Debtor shall, at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under all
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contracts related to the Receivables and other Collateral. The Debtor shall timely and fully comply in all material respects with the Credit and Collection Policy in regard to the Collateral, including each Receivable and the related contract, and it shall maintain, at its expense, in full operation each of the bank accounts and lockboxes required to be maintained under this Agreement. The Debtor shall do nothing, nor suffer or permit any other Person, to impede or interfere with the collection by the Agent, or any other Person designated by the Agent or on its behalf, of the Collateral, including the Receivables. Section 8.04 Audits; Appraisals. The Debtor shall, at any time and from time to time during regular business hours as requested by the Agent, permit the Agent (who may be accompanied by any members of the Lender Group) or its representatives, upon reasonable notice or during the continuance of any Event of Default without notice, and subject to compliance with applicable law in the case of review of patient/customer information, (i) on a confidential basis, to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in the Debtors or any of its Affiliates possession or under its or their control relating to the Collateral including the related contracts, and (ii) to visit the Debtors or any of its Affiliates offices and properties for the purpose of examining and auditing such materials described in clause (i) above, and (iii) to discuss accounting, financial and general business matters and matters relating to the Collateral or the Debtors performance under the DIP Documents or under the contracts relating to the Collateral with any of the Debtors or any of its Affiliates officers or employees having knowledge of such matters. Section 8.05 Reporting Requirements. The Debtor shall comply with all Reporting Requirements (as defined in the DIP Orders) and, without limiting the Reporting Requirements, shall provide to the Agent (in multiple copies, if requested by the Agent) the reports, financial statements and other items set forth on Exhibit C at the times specified therein. Section 8.06 Notice of Proceedings; Overpayments. The Debtor shall promptly notify the Agent (and modify the next Borrowing Base Report to be delivered hereunder to reflect same) in the event of any action, suit, proceeding, dispute, set-off, deduction, defense or counterclaim that is asserted by an Obligor with respect to any of the Receivables. The Debtor shall make all payments to the Obligors necessary to prevent the Obligors from offsetting any earlier overpayment by the Obligors against any amounts the Obligors owe on any Receivables. Section 8.07 Taxes. The Debtor shall, and shall cause each of its Subsidiaries to, (i) file when due all federal, national and state income and other tax returns and other reports that it is required to file; and (ii) pay, or provide for the payment, when due, of all taxes (including sales taxes), fees, assessments and other governmental charges against it or upon its Property, income or franchises, including taxes relating to the transactions contemplated under this Agreement, make all required withholding and other tax deposits, and establish adequate reserves for the payment of all such items, and provide to the Agent, upon request, satisfactory evidence of its timely compliance with the foregoing; provided, however, so long as the Debtor have notified the Agent in writing, the Debtor or any of its Subsidiaries need not pay any such amount (x) that it is contesting in good faith by appropriate proceedings diligently pursued, (y) with respect to which it has established proper reserves as provided in GAAP, and (z) for
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which no Lien (other than a Permitted Lien) results from such non-payment. Except pursuant to any tax sharing agreement disclosed in Schedule II hereto, the Debtor shall not have any obligation under any tax sharing agreement. Section 8.08 Preservation of Existence. The Debtor shall preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where the failure to maintain such qualification would have or result in a Material Adverse Effect. Section 8.09 DIP Documents. The Debtor shall, at its sole expense, timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the DIP Documents, maintain the DIP Documents in full force and effect, enforce each DIP Document in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Agent, and make upon any party to the DIP Documents such demands and requests for information and reports or for action as the Debtor is entitled to make thereunder and as may be from time to time reasonably requested by the Agent. The Debtor shall not permit any waiver, modification or amendment of any DIP Document, except as may be requested (or consented to in their sole discretion) by the Agent or Lenders. Section 8.10 Implementation of Approved Patient Consent Forms. As soon as possible after the Initial Funding Date and in any event no later than [September __, 2009], the Debtor shall deliver to the Agent a certificate of an Authorized Officer stating that the Approved Patient Consent Forms are the only forms being used by the Debtor. Section 8.11 Invoices. The Debtor shall take all reasonable steps to ensure that all invoices rendered or dispatched on or after the Initial Funding Date contain only the remittance instructions required under Article IV of this Agreement. Section 8.12 Intentionally Omitted.

Section 8.13 Equipment. The Debtor shall, in accordance with sound business practices, maintain all equipment and other Properties used by it in its business (other than obsolete or worn-out equipment) in good repair, working order and condition (normal wear and tear excepted) and make all necessary repairs, renewals, replacements and improvements thereof so that the value and operating efficiency thereof shall at all times be maintained and preserved. Section 8.14 Insurance. The Debtor shall keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated, including, all Collateral, against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations conducting a similar business in similar locales. Each policy referred to in this Section 8.14 shall provide that it will not be canceled, amended, or reduced except after not less than 30 days prior notice to the Agent and shall also provide that the Agent (and/or its designees and assigns) shall be named as loss (or coloss) payee and additional insured, as applicable and as its interests may appear, and such interests shall not be invalidated by any act or negligence of the Debtor or any of its Affiliates.
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The Debtor shall advise the Agent promptly of any policy cancellation, reduction, or amendment. Each insurance policy for property, casualty, liability and business interruption coverage for the Debtor shall name the Agent as lender loss payee (as its interests may appear) or an additional insured, as appropriate. ARTICLE IX. NEGATIVE COVENANTS Until the Full Payment of all Lender Debt, the Debtor agrees to perform all covenants in this Article IX. Section 9.01 Corporate Documentation. The Debtor shall not modify, amend or alter its organizational documents in any manner that is adverse to the interests of the Agent or any Lender or in any other material manner. Section 9.02 Debt. The Debtor shall not incur or assume any Debt following the Initial Funding Date other than Permitted Debt. Section 9.03 Bond Debt. Except as set forth in the Cash Collateral Orders, the Debtor shall not enter into any material amendment, waiver or modification of the Bond Debt Documents (or any of them) or any related agreements unless (a) such amendment, waiver or modification is not prohibited by the Bond Intercreditor Agreement (if any), and (b) a copy of all documents executed or delivered in connection with such amendment, waiver or modification has been provided to the Agent. The Debtor shall not, directly or indirectly at any time pay, prepay, defease, purchase or redeem any of the Bond Debt except as may be expressly provided for in the DIP Budget and the Cash Collateral Orders. Section 9.04 Liens, etc. The Debtor shall not create or suffer to exist any Liens upon or with respect to any of its Properties (including any Collateral) or assign any right to receive income in respect thereof, except Permitted Liens. Section 9.05 Capital Expenditures; Lease Obligations. The Debtor shall not make or become committed to make any capital expenditures, or enter into, or suffer to exist, any lease of real or personal Property as lessee or sublessee (other than a those leases in existence on the Petition Date), unless such capital expenditures or leases and all payments due in respect thereof are properly reflected in the DIP Budget. Section 9.06 Asset Sales; Sale/Leaseback Transaction; Etc. The Debtor shall not (except with the Agents prior written consent, to be given or withheld in its sole discretion or at the direction of the Required Lenders in their sole discretion) sell, assign (by operation of law or otherwise), transfer, lease, sublease, liquidate or otherwise dispose of (including pursuant to any sale/leaseback transaction) any of its Properties (including any Collateral), or assign any right to receive income in respect thereof, other than: (a) sales of inventory in the ordinary course of its business; and

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(b) replacement and disposition of worn out and obsolete equipment in the ordinary course of business; provided, that the foregoing limitations are not intended to prevent the Debtor from rejecting unexpired leases or executory contracts pursuant to Section 365 of the Bankruptcy Code in connection with the Case. Section 9.07 Change In Business. The Debtor shall not engage in any business other than the business engaged in by it on the Initial Funding Date. Section 9.08 Change in Credit and Collection Policy. The Debtor shall not make any material change in the Credit and Collection Policy without the prior written consent of the Agent. Section 9.09 Change in Payment Instructions. The Debtor shall not terminate, or suffer or permit the termination of, any of the Lockboxes or the Lockbox Accounts, or make any change or replacement (i) in the instructions contained in any Notice or otherwise, (ii) regarding payments with respect to Receivables to be made to the Lockboxes or the Lockbox Accounts, (iii) in the Standing Revocable Instruction referred to in the Depositary Agreements or otherwise, or (iv) regarding payments to be made to the Agent, except upon the prior and express written direction of the Agent. Section 9.10 Deviation from Terms of Receivable, etc. Except in accordance with the Credit and Collection Policy, the Debtor shall not, without the prior written consent of the Agent: (a) compromise, adjust, extend, satisfy, subordinate, rescind, set off, waive, amend, or otherwise modify, or permit or agree to any deviation from, the terms and conditions of any Receivable or materially or adversely modify or waive any term or condition of any contract related thereto; (b) (x) amend, modify, supplement or delete in any way or to any extent any provision for uncollectible accounts and free care applicable to any Receivable or (y) amend, modify or supplement in any way or to any extent any financial category or change in any way or to any extent the manner in which any financial category is treated or reflected in its records; (c) alter or modify (x) its claims processing system, or (y) its third party billing system, as applicable (except for technical changes of an immaterial nature); or (d) change, modify or rescind any direction contained in any invoice or previously delivered Notice. Section 9.11 Mergers and Acquisitions; Dissolutions. Neither the Debtor nor any of its Subsidiaries shall consummate or enter into any transaction or agreement that shall result or be intended to result in a merger, acquisition, dissolution or wind-up, unless such
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transaction provides by its express terms for the Full Payment of all Lender Debt on the effective date of such transaction. Section 9.12 No Instruments. The Debtor shall not take any action that would allow, result in or cause any Eligible Receivable to be evidenced by an instrument within the meaning of the UCC of the applicable jurisdiction. Section 9.13 Margin Loan Restrictions. No portion of the proceeds of any borrowing hereunder shall be used in any manner that might cause the borrowing or the application of such proceeds to violate Regulation U, T, or X of the Board of Governors of the Federal Reserve System or any other regulation of such . Section 9.14 Loans or Investments. Except with respect to loans and investments set forth on Schedule II, the Debtor shall not enter into an agreement to make any loans to or investments in any Person, other than loans and advances to physicians for reasonable travel, relocation and business expenses in the ordinary course of business, provided, that (i) such loans and advances comply with all applicable laws and regulations (including the Sarbanes Oxley Act of 2002 and any successor laws or regulations, as amended from time to time) and (ii) the aggregate outstanding amount of all such loans and advances shall not exceed $[_________] at any time outstanding during the term of this Agreement. Section 9.15 Transactions with Affiliates. The Debtor shall not sell, transfer, distribute, or pay any money or property, including any fees or expenses of any nature (including any fees or expenses for management services), to any Affiliate, or lend or advance money or property to any Affiliate, or invest in (by capital contribution or otherwise) or purchase or repurchase any equity interest or indebtedness, or any Property, of any Affiliate, or become liable under any Guaranty for the obligations of any Affiliate except as set forth on Schedule II. Notwithstanding the foregoing, the Debtor may engage in transactions with Affiliates in the ordinary course of business, in amounts and upon terms fully disclosed to the Agent, and no less favorable to the Debtor than would be obtained in a comparable arms-length transaction with a third party who is not an Affiliate. Section 9.16 Distributions. The Debtor shall not make, or enter into any agreement to make, or enter into any transaction or agreement that shall result or be intended to result in, any dividends or other Distributions being paid to any Person. Section 9.17 Deviation from Approved Patient Consent Form. The Debtor shall not, without the prior written consent of the Agent, substitute, alter, modify or change in any way the Approved Patient Consent Form. Section 9.18 Subsidiaries. The Debtor shall not maintain, suffer to exist, create or acquire any Subsidiaries. Section 9.19 ERISA, Etc.. Neither the Debtor nor any of its ERISA Affiliates shall become a party to, or otherwise be obligated on, any Plan or Multiemployer Plan. The Debtor shall not become a party to or otherwise become obligated on any material: consulting agreement, executive employment agreement, executive compensation plan, deferred
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compensation agreement, or any employee stock purchase, stock option or severance plan except those set forth on Schedule II. Section 9.20 Chapter 11 Claims. Except as set forth in the Cash Collateral Orders, the Debtor shall not agree to, incur, create, assume, suffer to exist or permit (a) except to the extent set forth in the DIP Budget, any administrative expense, unsecured claim, or other super-priority claim or lien that is pari passu with or senior to the claims of the Agent and the Lenders against the Debtor hereunder (other than to incur Indebtedness that will cause the Full Payment of all Lender Debt; provided, that the incurrence of such Indebtedness shall be conditioned by the Bankruptcy Court upon the Full Payment of the Lender Debt), or apply to the Bankruptcy Court for authority to do so, except for the Carve Out or (b) the extension of any existing adequate protection or the grant of further adequate protection or apply to the Bankruptcy Court for authority to do so, in each case pursuant to this clause (b) without the consent of the Agent in its sole discretion. Section 9.21 The DIP Orders. The Debtor shall not make or seek any change, amendment or modification, or any application or motion for any change, amendment or modification, to the Interim or Final DIP Order without the prior written consent of the Agent. ARTICLE X. FINANCIAL COVENANTS Until the Full Payment of all Lender Debt, the Debtor agrees to perform all covenants in this Article X. Section 10.01 Cash Flow to Expenditures Tests. The Debtor shall comply with the Cash Flow to Expenditures Tests as set forth in the DIP Orders and shall not permit or suffer to exist any Variances in excess of the maximum amounts permitted thereunder. Section 10.02 Minimum EBITDA. EBITDA of the Debtor and its Subsidiaries on a consolidated basis and calculated on a monthly basis shall not be less than $1,200,000. As used herein, EBITDA of any Person for any period means, the sum of (a) net income (or net loss) of such Person (calculated before extraordinary items, it being understood and agreed that bankruptcy expenses shall not be deemed extraordinary items) during such period plus (b) the sum of the following, in each case (unless otherwise indicated) to the extent included in determining such net income (or net loss): (i) interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) during such period; plus (ii) income taxes accruing, paid or payable during such period; plus (iii) depreciation and amortization expense; minus (vi) gains from asset dispositions outside of the normal course of business minus (vii) pension liability adjustment to the extent excluded in determining such net income (or net loss), determined in each case in accordance with GAAP. For the purposes of determining EBITDA of any Person for any period, net income (or net loss) means and refers to the amount set forth on the applicable financial statements of such Person for such period as Net Increase/Decrease in Unrestricted Assets.

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ARTICLE XI. EVENTS OF DEFAULT Section 11.01 Events of Default. Each of the following shall be an Event of Default: (a) The Debtor shall default in the due and punctual payment of any payment, fee or expense owing to the Agent or any Lender pursuant to any of the DIP Documents, when and as the same shall become due and payable, except that the Debtor shall have up to one day to cure such a default on the DIP Loan with respect to a Borrowing Base Deficiency, whether pursuant to Article II of this Agreement, at maturity, by acceleration or otherwise. (b) Any material provision of this Agreement or any other DIP Document shall at any time fail for any reason to be in full force and effect, or this Agreement or any other DIP Document shall terminate, be terminated or become void or unenforceable by the Agent or any Lender party thereto for any reason whatsoever without the prior written consent of the Agent. (c) This Agreement and the other DIP Documents and the DIP Orders shall, for any reason, cease to create a valid Lien on any of the Collateral purported to be covered thereby or such Lien shall cease to be a perfected Lien having the priority provided herein pursuant to Section 364 of the Bankruptcy Code against the Debtor, or the Debtor shall so allege in any pleading filed in any court. (d) The Debtor shall default in the performance or observance of any covenant, agreement or provision contained in: (i) the DIP Order, Article IV, Article V, Sections 8.03, 8.05, 8.06, 8.07, 8.08, 8.09, 8.10, 8.11, 8.14, Article IX or Article X; or (ii) any other Section or Article of this Agreement or any other DIP Document or in any other instrument or document evidencing or creating any obligation, guaranty or Lien in favor of the Agent in connection with or pursuant to this Agreement or any Lender Debt, and, in the case of any default referred to in this clause (ii), such default continues for a period of 3 Business Days. (e) A Revocation Order (as defined in the Depositary Agreement) shall have been sent or any change or replacement shall have been made in the standing revocable instructions (as described in each of the Depositary Agreement(s)) or any bank (including the Lockbox Bank) at which any deposit account, blocked account, or lockbox account (including the Lockbox Accounts) is maintained shall fail to comply with any of the terms of any deposit account, blocked account, lockbox account or similar agreement (including any Depositary Agreement) to which such bank is a party. (f) Any representation or warranty made or deemed made by the Debtor under or in connection with this Agreement or any other DIP Document or any information or report delivered by the Debtor pursuant to this Agreement or any other DIP Document shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered.
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(g) As of any date of determination, any Debtor is found to have been overpaid by Governmental Entities during any period covered by an audit conducted by CMS or any State entity and such overpayment is not repaid within three days of its due date or reserved for in a manner reasonably acceptable to the Agent. (h) There shall have occurred any event, or any condition shall exist, other than the filing of the Case, that has had or resulted in, or could reasonably be expected to have or result in, a Material Adverse Effect since the Petition Date. (i) The Debtor or any of its Subsidiaries is enjoined, restrained or in any way prevented by the order of any court or any Governmental Entity from conducting all or any material part of its business for more than 5 days. (j) The Case is (or the Bankruptcy Court shall make a ruling requiring that the Case be) dismissed, suspended or converted to a case under Chapter 7 of the Bankruptcy Code, or the Debtor shall file any pleading requesting any such relief; or an application shall be filed by the Debtor for the approval of, or there shall arise, (i) any other Claim having priority senior to or pari passu with the claims of the Agent and the Lenders under the DIP Documents or any other claim having priority over any or all administrative expenses of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code (other than the Carve Out) or (ii) any Lien on the Collateral having a priority senior to or pari passu with the Liens and security interests granted herein, except as may otherwise be expressly provided herein. (k) The Debtor shall file a motion seeking, or the Bankruptcy Court shall enter, an order (i) approving payment of any prepetition Claim, (ii) granting relief from the automatic stay applicable under Section 362 of the Bankruptcy Code to any holder of any Lien to permit foreclosure (or the granting of a deed in lieu of foreclosure or the like) on any assets having a book value in excess of $50,000 in the aggregate, (iii) approving any other settlement or other stipulation with any creditor of the Debtor, other than the Agent and the Lenders, or otherwise providing for payments as adequate protection or otherwise to such creditor; or (iv) approving payment of or granting any adequate protection with respect to pre-petition Debt. Notwithstanding the foregoing, the Debtors motion for the entry of, and the Bankruptcy Courts entry of, the Cash Collateral Orders shall not constitute an Event of Default under this subparagraph (k). (l) the DIP Orders. (m) Any judgment in excess of $50,000 as to any post-petition date obligation not covered by insurance is rendered against the Debtor and the enforcement of the judgment has not been stayed. (n) The Debtor (or any of its successors or assigns) files a motion or application or adversary proceeding challenging the validity, enforceability, perfection or priority of any claim or Lien securing or pertaining to this Agreement, the other DIP Documents and the credit facility evidenced hereby and thereby or the Lender Debt.
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An order is entered reversing, amending, supplementing, staying

(o) A plan of reorganization is confirmed in the Case that does not provide for Full Payment of all Lender Debt (on the effective date of such plan of reorganization or liquidation), or any order is entered that dismisses the Case and which order does not provide for Full Payment of all Lender Debt, or the Debtor seeks support or fails to contest the filing or confirmation of a plan or the entry of an order that does not provide for Full Payment of all Lender Debt. (p) The filing of a motion, pleading, or proceeding by the Debtor, or any of its Affiliates, that could reasonably be expected to result in a material impairment of the rights or interests of the Agent or any Lender; or a determination by the Bankruptcy Court or any other Governmental Entity with respect to a motion, pleading or proceeding brought by another party that results in a material impairment of the rights, claims and liens relating to this Agreement, the other DIP Documents and the credit facility evidenced hereby and thereby or the Lender Debt. (q) As a result of an act or omission of the Debtor, the Debtor is unable to maintain the Transmission interface described in Exhibit V to the commercially reasonable satisfaction of the Agent, or the electronic information servicing capabilities of the Debtor are not functioning, in either case, for a period of more than three consecutive Business Days. (r) The Debtor has sent multiple Transmissions to the Agent in a manner that is not in compliance with the specifications set forth in Exhibit V. (s) Any Termination Event as defined in the Interim Cash Collateral Order (or any similar event under the Final Cash Collateral Order) shall have occurred or the Debtors authorization to use cash collateral of the Bond Trustee is otherwise terminated or stayed for any reason. (t) If the Debtor fails, within 15 days after entry of the Interim DIP Order, to file an application to retain an outside financial advisor to the Debtor who is acceptable to DIP Lender, with a scope of service acceptable to the DIP Lender, each in its sole and absolute discretion, and authorizing the financial advisor to make (i) periodic reports on the Debtor's finances and operations in form and frequency reasonably acceptable to the Agent and the Required Lenders, and (ii) its data, analysis and personnel available to the Agent or its professionals on reasonable notice and at reasonable times, to answer the Agents and its professionals questions with respect to the matters within such financial advisers scope of service. Section 11.02 Events of Default; Remedies. (a) Subject to the provisions set forth in the DIP Orders, if any Event of Default shall occur and be continuing, the Agent may, and at the request of the Required Lenders with respect to the DIP Loan, shall, without further order of, application to, or action by, the Bankruptcy Court (except as expressly required by the Interim DIP Order), by notice to the Debtor, take any of the following actions: (x) declare the Maturity Date to have occurred and all
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Lender Debt, shall become immediately due and payable in full; (y) terminate all commitments and obligations of the Lenders hereunder, and (z) without limiting any rights hereunder and subject to applicable law, replace the Debtor in its performance of any or all of its Receivables servicing responsibilities; provided, that with respect to the Event of Default in paragraphs (i) or (n) of Section 11.01, the Maturity Date shall be deemed to have occurred automatically and without notice and all Lender Debt shall automatically become immediately due and payable and all commitments and obligations of the Lenders shall be terminated without any notice or demand of any kind. Upon any such declaration or designation, the Agent and the Lenders shall have, in addition to the rights and remedies that it may have under this Agreement, all other rights and remedies provided in the Interim DIP Order, after default under the UCC and under other applicable law, which rights and remedies shall be cumulative. In addition to the remedies set forth above, subject solely to any requirement of the giving of notice by the terms of the Interim DIP Order, the Agent may exercise any remedies provided for by this Agreement and the other DIP Documents in accordance with the terms hereof and thereof or any other remedies provided by applicable law. Each Lender agrees that it will not have any right individually to enforce or seek to enforce this Agreement or any other DIP Document or to realize upon any Collateral for the Lender Debt, it being understood and agreed that such rights and remedies may be exercised only by the Agent in its discretion granted hereunder or at the direction of the applicable Lenders as set forth hereunder. (b) The Debtor hereby irrevocably authorizes and instructs the Agent and each Lender to set-off the full amount of any Lender Debt that has become due and payable against (i) any Collections, (ii) any other proceeds of Collateral, or (iii) the principal amount of any DIP Advance requested on or after the date that any such any Lender Debt became due and payable. No further notification, act or consent of any nature whatsoever is required prior to the exercise by the Agent or any Lender of such right of set off; provided, however, the Agent shall notify the Debtor: (1) that a set off pursuant to this Section 11.02(b) occurred, (2) the amount of such set off, and (3) a description of the Lender Debt that was due and payable. Section 11.03 Attorney-in-Fact. The Debtor hereby irrevocably designates and appoints the Agent and each Lender and each other Person in the Lender Group, to the extent permitted by applicable law and regulation, as such Debtors attorney-in-fact, which irrevocable power of attorney is coupled with an interest, with authority (and to the extent not prohibited under applicable law and regulations) to (i) endorse or sign such Debtors name to remittances, invoices, assignments, checks (other than, absent a court order, payments from Governmental Entities), drafts or other instruments or documents in respect of the Receivables, (ii) notify Insurers to make payments on the Receivables directly to the Agent, and (iii) bring suit in such Debtors name and settle or compromise such Receivables as the Agent or Required Lenders may, in their discretion, deem appropriate. The Lender Group agrees that it will forbear from exercising the power of attorney or any rights granted pursuant to this Section 11.03, except upon the occurrence and during the continuation of an Event of Default. The Debtor hereby ratifies, to the extent permitted by law, all that said attorneys shall lawfully do or cause to be done by virtue hereof. Exercise of the powers granted hereunder is not a violation of the automatic stay provided by Section 362 of the Bankruptcy Code and the Debtor waives applicability thereof. The power of attorney granted pursuant to this Section 11.03 is a power coupled with an interest and shall be irrevocable until Full Payment of the Lender Debt.
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Section 11.04 License. The Agent is hereby granted an irrevocable, nonexclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all General Intangibles and other Intellectual Property of the Debtor, computer hardware and software, customer lists, and other Property, in collecting, or otherwise exercising any rights or remedies with respect to, any Collateral. The Debtors rights and interests under any General Intangibles or other Intellectual Property shall inure to the Agents benefit. ARTICLE XII. THE AGENT Section 12.01 Agency Provisions. (a) Each of the Lenders hereby irrevocably appoints HFG as its administrative and collateral agent and authorizes the Agent to take such actions on behalf of such Lender and to exercise such powers as are delegated to the Agent by the terms hereof and the other DIP Documents, together with such actions and powers as are reasonably incidental thereto. (b) Each Lender authorizes and directs the Agent to enter into this Agreement and the other DIP Documents, for the benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the Agent in accordance with the terms of this Agreement or the other DIP Documents, and the exercise by the Agent of its powers set forth herein or therein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. Each Lender agrees that any action taken by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 13.01), in accordance with the terms of this Agreement or the other DIP Documents, and the exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 13.01) of their respective powers set forth herein or therein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. (c) Each Person serving as an agent hereunder and/or under the other DIP Documents shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an agent and each such Person and its respective Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Debtor or any Affiliate thereof as if it were not an agent hereunder or under the other DIP Documents. (d) The Agent shall not have any duties or obligations except those expressly set forth herein or in the other DIP Documents. Without limiting the generality of the foregoing, (a) the Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or thereby that the Agent is required to exercise pursuant to written instructions by the Required Lenders (or such other number or percentage of the
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Lenders as shall be necessary under the circumstances as provided in Section 13.01), and (c) except as expressly set forth herein, the Agent shall not have any duty to disclose, and shall not be liable for any failure to disclose, any information relating to the Debtor that is communicated to or obtained by any of them serving as an agent or any of their respective Affiliates in any capacity. The Agent shall not be liable for any action taken or not taken by it (a) with respect to the DIP Loan, with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 13.01), or (b) in the absence of its own gross negligence or willful misconduct. The Agent shall not be deemed to have knowledge of any Default unless and until notice thereof is given to the Agent by any Debtor or a Lender, and the Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent. (e) The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. The Agent may consult with legal counsel (who may be counsel for the Debtor), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. (f) The Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Agent. The Agent and any such sub agent may perform any and all its duties and exercise its rights and powers through its respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub agent and to the Related Parties of the Agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Agent. (g) With respect to the release of Collateral, the Lenders hereby irrevocably authorize the Agent to release any Lien granted to or held by it upon any Property covered by this Agreement or the other DIP Documents (i) upon Full Payment of all Lender Debt; or (ii) constituting Property being sold or disposed of in compliance with the provisions of the DIP Documents (and the Agent may rely in good faith conclusively on any certificate stating that the Property is being sold or disposed of in compliance with the provisions of the DIP Documents, without further inquiry); provided, however, that (x) the Agent shall not be required to execute any release on terms that, in the Agents opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without
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recourse or warranty, and (y) such release shall not in any manner discharge, affect or impair any Liens upon all interests retained, all of which shall continue to constitute part of the Property covered by the DIP Documents. (h) With respect to perfecting security interests in Collateral that, in accordance with Article 9 of the UCC or any comparable provision of any Lien perfection statute in any applicable jurisdiction, can be perfected only by possession, each Lender hereby appoints each other Lender and the Agent as its agent for the purpose of perfecting such interest. Should any Lender obtain possession of any such Collateral, such Lender shall notify the Agent, and, promptly upon the Agents request, shall deliver such Collateral to the Agent or in accordance with the Agents instructions. (i) Intentionally Omitted.

(j) Subject to the appointment and acceptance of a successor agent as provided in this paragraph, the Agent may resign at any time by notifying the Lenders and the Debtor; provided, that unless such resignation is accepted by the Lenders, such resignation shall not become effective until the appointment of a successor Agent pursuant to the terms of this Section 12.02(j). Upon any such notice of resignation, the Required Lenders shall have the right to appoint a successor for the Agent. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the Agent gives notice of its resignation, then the Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the acceptance of its appointment as the Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Debtor to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed in writing among the Debtor and such successor. After any Agents resignation hereunder, the provisions of this Article and Sections 2.05 and 13.05 shall continue in effect for the benefit of such retiring Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as the Agent. (k) Each Lender acknowledges that it has, independently and without reliance upon the Agent or any Related Party thereof or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, or any Related Party thereof or any other Lender, and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder. (l) Each of the Lenders irrevocably authorizes the Agent, at its option and in its discretion, to enter into the Bond Intercreditor Agreement (if any) and to take such actions as required or permitted thereunder from time to time. Each Lender hereby agrees to be bound by the terms of the Bond Intercreditor Agreement (if any) and acknowledges that the
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Bond Trustee and the holders represented by the Bond Trustee in connection with the Bond Debt Documents are third party beneficiaries of this Section 12.01(l). ARTICLE XIII. MISCELLANEOUS Section 13.01 Amendments, etc. (a) (1) No amendment or waiver of any provision of this Agreement or consent to any departure therefrom by a party hereto shall be effective unless in a writing signed by the Agent, the Required Lenders, and the Debtor, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment shall (i) increase the DIP Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of the DIP Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby, (iii) postpone the Maturity Date of the DIP Loan without the written consent of each Lender directly affected thereby, (iv) increase any percentage contained in the definition of Borrowing Base without the written consent of each Lender, (v) release all or a material portion of the Collateral without the consent of the Agent, (vi) release any Guaranty (other than in accordance with its terms) of the DIP Loan without the written consent of each Lender directly affected thereby, or (vii) change any of the provisions of this Section or the definition of Required Lenders or any other provisions hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender affected thereby; and (2) no such agreement shall amend, modify or otherwise affect the rights or duties of the Agent hereunder without the prior written consent of the Agent. (b) No failure on the part of the Agent or any Lender or the Debtor to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. Section 13.02 Notices, etc. All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which may include email, facsimile and telephone calls followed promptly by hard copy or facsimile communication) and shall be delivered to each applicable party, at the address set forth under its name on Schedule I hereto (or, in the case of a Lender, as set forth in the Assignment and Assumption pursuant to which it became a party hereto) or at such other address as shall be designated by such party in a notice to the other parties hereto; provided that any notice by Agent to the Debtor of any Event of Default may also be deemed given (and received) immediately upon docketing in the Courts ECF system. All notices by the Debtor to the Agent shall be delivered by an Authorized Officer. Notices and communications by email and facsimile shall be effective when sent (and shall be immediately followed by hard copy sent by regular mail), and notices and communications sent by other means shall be effective when received. Without in any way limiting the Debtors obligation to confirm in writing any telephonic notice of a borrowing, the Agent may act without
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liability upon the basis of telephonic notice believed by the Agent in good faith to be from an Authorized Officer of the Debtor prior to receipt of written confirmation. Section 13.03 Assignments; Participations. (a) (1) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns; provided, that the Debtor may not assign any of its rights or obligations hereunder or any interest herein without the prior written consent of the Agent and Lenders. (b) Subject to the conditions set forth in paragraph (c) of this Section, each Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its commitments and the advances or loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of the Agent, provided that no consent of the Agent shall be required for an assignment to an assignee that is a Lender immediately prior to giving effect to such assignment or to any Affiliate or branch of any Lender, or to any trust or special purpose funding vehicle, whether or not the Agent maintains any interest in such trust or special purpose funding vehicle. The Agent shall notify the Debtor of any such assignment; provided, however, that failure to so notify the Debtor shall not affect the validity of such assignment. In the event that, as a result of one or more assignments pursuant to this paragraph (b), there shall be more than one Lender hereunder, then the commitment of each Lender to make DIP Loans hereunder shall be several and not joint. (c) conditions: (i) the assignee shall be an Eligible Assignee with the financial ability to perform as a Lender under this Agreement and the other DIP Documents; (ii) with respect to assignments of the DIP Commitments, except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire amount of the assigning Lenders DIP Commitment or DIP Advances, the amount of the DIP Commitment or DIP Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent) shall not be less than $1,000,000 unless the Agent otherwise consents; and (iii) the parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that such fee shall not apply to an assignment to another Lender or an Affiliate of the assigning Lender. (d) Subject to acceptance by the Agent, as the case may be, pursuant to paragraph (e) of this Section with respect to assignments of the DIP Loan, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and shall be bound by the terms of
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Assignments shall be subject to the following additional

each of the other DIP Documents, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement and the other DIP Documents (and, in the case of an Assignment and Assumption covering all of the assigning Lenders rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.05 and 13.05). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 13.03 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (f) of this Section. (e) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee and the processing and recordation fee referred to in paragraph (c)(iii), if applicable, and any written consent to such assignment required by paragraph (b) of this Section, the Agent shall accept such Assignment and Assumption. (f) Any Lender may, without the consent of the Debtor, any other Lender or the Agent, sell participations to one or more banks or other entities (a Participant) in all or a portion of such Lenders rights and obligations under this Agreement (including, if applicable, all or a portion of its commitments and the loans and advances owing to it); provided that (A) such Lenders obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Debtor, the other Lenders and the Agent shall continue to deal solely and directly with such Lender in connection with all of such Lenders rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 13.01(a) that affects such Participant. The Debtor agrees, to the fullest extent permitted under applicable law, that each Participant shall be entitled to the benefits of Section 2.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section. A Participant shall not be entitled to receive any greater payment under Section 2.05 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Debtors prior written consent. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights (and subject to the consent of the Agent, the Collateral) under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. Section 13.04 Further Assurances; Financing Statements. The Debtor shall, and shall cause its Subsidiaries to, at the Debtors expense, promptly execute and deliver all further
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instruments and documents, and take all further action that the Agent or any Lender may request, from time to time, as may be necessary or proper in the reasonable opinion of the Agent or such Lender to carry out more effectively the provisions and purposes of this Agreement and the other DIP Documents, in order to perfect, protect or more fully evidence the assignment as security of the Receivables and the other Collateral, or to enable the Agent and Lenders to exercise or enforce their respective rights hereunder and under the other DIP Documents. Without limiting the generality of the foregoing, the Debtor shall, upon the request of the Agent, execute and file such UCC financing or continuation statements, or amendments thereto or assignments thereof, and such other documents or notices, as may be, in the reasonable opinion of the Agent, necessary or appropriate. The Debtor hereby authorizes the Agent to file one or more financing or continuation statements and amendments thereto and assignments thereof, relative to all or any of the Collateral now existing or hereafter arising without the Debtors signature where permitted by law. If the Debtor fails to perform any of its agreements or obligations under this Agreement, the Agent may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Agent incurred in connection therewith shall be payable by the Debtor. Section 13.05 Costs and Expenses; Collection Costs. The Debtor agrees to pay on demand (i) all reasonable non-legal costs and expenses of the Agent and each Lender in connection with the preparation, execution, delivery and administration of this Agreement and the DIP Documents; (ii) the reasonable fees and expenses of counsel for each member of the Lender Group in connection with this Agreement and the transactions contemplated hereby; (iii) all reasonable costs and out-of-pocket expenses, if any (including reasonable counsel fees and expenses), of the Agent and Lenders in connection with any waiver, modification, supplement or amendment hereto, or any action to collect, enforce, protect, maintain, preserve or foreclose its interests with respect to any DIP Document or Collateral and (iv) any and all wire fees initiated by Agent or any Lender to or for the benefit of the Debtor. The Debtor further agrees to pay on the Initial Funding Date and thereafter on demand (1) all reasonable costs and expenses incurred by the Agent or any Lender in connection with periodic audits of the Collateral (including the Receivables), books and records, accounting, financial and general business matters of the Debtor, (2) all reasonable costs and expenses incurred by the Agent to accommodate any significant coding or data system changes made by the Debtor that would affect the transmission or interpretation of data received through the interface, (3) all reasonable costs and expenses incurred by the Agent resulting from a lack of either cooperation or responsiveness of the Debtor to agreed-upon protocol and schedules; provided, that the Debtor has been informed of the alleged lack of cooperation or responsiveness and has been provided the opportunity to correct such problems, and (4) all successor and substitute servicing costs. Without limiting the generality of the foregoing, the expenses, costs, charges and fees referred to in this Section may include the following: recording costs, appraisal costs, paralegal fees, costs and expenses; accountants fees, costs and expenses; court costs and expenses; photocopying and duplicating expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram charges; telecopier charges; secretarial overtime charges; and expenses for travel, lodging and food. Section 13.06 Confidentiality. Each of the parties hereto hereby acknowledges that this Agreement and the other DIP Documents (including any information relating to the
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Debtor or any member of the Lender Group) contain confidential and proprietary information. Unless otherwise required by applicable law, each of the parties hereto hereby agrees to maintain the confidentiality of this Agreement (and all drafts, memos and other documents delivered in connection herewith including any information relating to the Debtor or any member of the Lender Group delivered hereunder) in communications with third parties and otherwise and to take all reasonable actions to prevent the unauthorized use or disclosure of and to protect the confidentiality of such confidential information; provided, that such confidential information may be included in ay filing made with the Court and may otherwise be disclosed (in accordance with applicable laws) on a confidential need-to-know basis to (i) the Debtors legal counsel, accountants and investors, (ii) each member of the Lender Group, investors in and creditors of any Lender, or the Agent, appropriate rating agencies with respect to such Persons, and each of their respective legal counsel and auditors, (iii) to the Bond Trustee and its counsel, (iv) any Person, if such information otherwise becomes available to such Person or publicly available through no fault of any party governed by this Section 13.06, (v) any Governmental Entity requesting such information, and (vi) any other Person with the written consent of each affected party, which consent shall not be unreasonably withheld. Each member of the Lender Group hereby agrees to, and shall take reasonable steps to cause each other member of the Lender Group to, comply with all applicable laws (including the provisions set forth in the Business Associate Addendum set forth in Exhibit VI) regarding confidential patient information, if any, it receives in connection with the transactions described in this Agreement. The Debtor hereby authorizes the Agent and each Lender, at Agents and such Lenders own expense, to make announcements of the financial arrangement entered into among the Debtor and the Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as the Agent and Lenders shall deem appropriate. The Debtor hereby grants the Agent the right to place one or more advertisements in newspapers and journals, on its website and in its other materials (all, at its own expense) that recites the transaction hereunder, the amount of such transaction and utilizes the corporate logo of the Debtor. Section 13.07 Term and Termination; Early Termination and Prepayment Fees. (a) This Agreement shall have a term commencing on the Initial Funding Date and expiring on the Termination Date (the Term). (b) The obligations of the Lenders under this Agreement shall continue in full force and effect from the Initial Funding Date until the Maturity Date. (c) Upon each permanent payment applied to the DIP Loan, and the termination of the DIP Commitments (including by reason of an Event of Default), the Debtor shall pay to the Agent for the account of the Lenders the applicable Exit Fee. (d) The termination of this Agreement shall not affect any rights of the Agent or any Lender or any obligations of the Debtor arising on or prior to the effective date of such termination, and the Debtors duties and obligations hereunder shall continue to be fully operative until Full Payment of all Lender Debt (including all Lender Debt incurred on or prior to such termination).
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(e) The Liens and rights granted to the Agent hereunder for the benefit of the Lenders shall continue in full force and effect, notwithstanding the termination of this Agreement, until the Full Payment of all Lender Debt. Upon Full Payment of all Lender Debt, the Agent shall, at the Debtors sole cost and expense, execute and deliver such documents as the Debtor shall reasonably request to evidence such termination. (f) All indemnities of the Debtor contained herein shall survive termination hereof and Full Payment of all Lender Debt unless otherwise provided. In furtherance and not in limitation of the foregoing, if after receipt of any payment of all or any part of the Lender Debt, the Agent or any Lender is for any reason compelled to surrender such payment to any Person or entity because such payment is determined to be void or voidable as a preference, an impermissible setoff, a diversion of trust funds or for any other reason, this Agreement shall continue in full force (except that the DIP Commitment shall have been terminated), and the Debtor shall be liable to, and shall indemnify and hold the Agent and each Lender harmless for the amount of such payment surrendered until the applicable Lenders and the Agent shall have been finally and irrevocably paid in full in cash. The provisions of the foregoing sentence shall be and remain effective notwithstanding any contrary action that may have been taken by the Agent or any Lender in reliance upon such payment, and any such contrary action so taken shall be without prejudice to the Agents and Lenders rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final and irrevocable. Section 13.08 No Liability. Neither this Agreement nor any document executed in connection herewith shall constitute an assumption by the Agent or any Lender of any obligation to any Obligor or any patient or customer of the Debtor. Notwithstanding any other provision herein, no recourse under any obligation, covenant, agreement or instrument of the Agent or any Lender contained herein or with respect hereto shall be had against any Related Person whether arising by breach of contract, or otherwise at law or in equity (including any claim in tort), whether express or implied, it being understood that the agreements and other obligations of the Agent and each Lender herein and with respect hereto are solely its corporate obligations; provided, however, nothing herein shall operate as a release of any liability that may arise as a result of such Related Persons gross negligence or willful misconduct. Section 13.09 Entire Agreement; Severability. This Agreement, including all exhibits and schedules hereto and the other DIP Documents, embody the entire agreement and understanding of the parties concerning the subject matter contained herein. This Agreement supersedes any and all prior agreements and understandings between the parties, whether written or oral. If any provision of this Agreement shall be declared invalid or unenforceable, the parties hereto agree that the remaining provisions of this Agreement shall continue in full force and effect. Section 13.10 GOVERNING LAW. THIS AGREEMENT, AND ALL MATTERS ARISING OUT OF OR RELATED TO THIS AGREEMENT, SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT
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WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES RELATED THERETO, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Section 13.11 JURISDICTION AND VENUE. ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST THE DEBTOR WITH RESPECT TO ANY OF THE LENDER DEBT, THIS AGREEMENT, THE OTHER DOCUMENTS OR ANY RELATED AGREEMENT MAY BE BROUGHT IN THE BANKRUPTCY COURT OR IN ANY COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, STATE OF NEW YORK, UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE DEBTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE DEBTOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS. THE DEBTOR WAIVES THE RIGHT TO REMOVE ANY JUDICIAL PROCEEDING BROUGHT AGAINST THE DEBTOR IN ANY STATE COURT TO ANY FEDERAL COURT. ANY JUDICIAL PROCEEDING BY THE DEBTOR AGAINST THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, ANY DIP DOCUMENTS, OR ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN THE BANKRUPTCY COURT OR IN A FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, STATE OF NEW YORK, UNITED STATES OF AMERICA. IN ANY SUCH LITIGATION, EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT THEIR ADDRESSES SET FORTH ON SCHEDULE I. Section 13.12 WAIVER OF JURY TRIAL; JUDICIAL REFERENCE. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION (A) ARISING UNDER THIS AGREEMENT, THE OTHER DIP DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR THERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE OTHER DIP DOCUMENTS OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
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OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT OR SUCH OTHER LOAN DOCUMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. SOLELY IN THE EVENT THAT NOTWITHSTANDING THE PARTIES ELECTION OF NEW YORK LAW, CALIFONRIA LAW IS APPLIED, THE WAIVER OF JURY TRIAL SET FORTH IN THIS SECTION 13.12 IS NOT ENFORCEABLE, AND EACH PARTY TO SUCH ACTION DOES NOT SUBSEQUENTLY WAIVE IN AN EFFECTIVE MANNER UNDER APPLICABLE LAW ITS RIGHT TO A TRIAL BY JURY, THE PARTIES HERETO HEREBY AGREE TO CAUSE VENUE OF SUCH ACTION TO BE TRANSFERRED TO A COURT OF COMPETENT JURISDICTION LOCATED IN LOS ANGELES, CALIFORNIA AND ELECT THEREAFTER TO PROCEED AS FOLLOWS: (a) WITH THE EXCEPTION OF THE ITEMS SPECIFIED IN CLAUSE (b) BELOW, ANY CONTROVERSY, DISPUTE OR CLAIM (EACH, A CONTROVERSY) BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DIP DOCUMENT WILL BE RESOLVED BY A REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 638, ET SEQ. OF THE CALIFORNIA CODE OF CIVIL PROCEDURE (CCP), OR THEIR SUCCESSOR SECTIONS, WHICH SHALL CONSTITUTE THE EXCLUSIVE REMEDY FOR THE RESOLUTION OF ANY CONTROVERSY, INCLUDING WHETHER THE CONTROVERSY IS SUBJECT TO THE REFERENCE PROCEEDING. EXCEPT AS OTHERWISE PROVIDED ABOVE, VENUE FOR THE REFERENCE PROCEEDING WILL BE IN ANY COURT IN WHICH VENUE IS APPROPRIATE UNDER APPLICABLE LAW (THE COURT). (b) THE MATTERS THAT SHALL NOT BE SUBJECT TO A REFERENCE ARE THE FOLLOWING: (i) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN PERSONAL PROPERTY; (ii) EXERCISE OF SELF HELP REMEDIES (INCLUDING SET-OFF); (iii) APPOINTMENT OF A RECEIVER; AND (iv) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING DIP ORDERS OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (i) AND (ii) OR TO SEEK OR OPPOSE FROM A COURT OF COMPETENT JURISDICTION ANY OF THE ITEMS DESCRIBED IN CLAUSES (iii) AND (iv). THE EXERCISE OF, OR OPPOSITION TO, ANY OF THOSE ITEMS DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PURSUANT TO THIS AGREEMENT. (c) THE REFEREE SHALL BE A RETIRED JUDGE OR JUSTICE SELECTED BY MUTUAL WRITTEN AGREEMENT OF THE PARTIES. IF THE PARTIES DO NOT AGREE WITHIN TEN (10) DAYS OF A WRITTEN REQUEST TO DO SO BY ANY PARTY, THEN, UPON REQUEST OF ANY PARTY, THE REFEREE SHALL BE
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SELECTED BY THE PRESIDING JUDGE OF THE COURT (OR HIS OR HER REPRESENTATIVE). A REQUEST FOR APPOINTMENT OF A REFEREE MAY BE HEARD ON AN EX PARTE OR EXPEDITED BASIS, AND THE PARTIES AGREE THAT IRREPARABLE HARM WOULD RESULT IF EX PARTE RELIEF IS NOT GRANTED. (d) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT THAT WHEN ANY PARTY SO REQUESTS, A COURT REPORTER WILL BE USED AT ANY HEARING CONDUCTED BEFORE THE REFEREE, AND THE REFEREE WILL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH A REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COURT REPORTER. SUBJECT TO THE REFEREES POWER TO AWARD COSTS TO THE PREVAILING PARTY, THE DEBTOR SHALL BEAR THE COST OF THE REFEREE AND THE COURT REPORTER AT TRIAL. (e) THE REFEREE SHALL BE REQUIRED TO DETERMINE ALL ISSUES IN ACCORDANCE WITH EXISTING APPLICABLE CASE LAW AND STATUTORY LAW. THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE COURT WILL BE APPLICABLE TO THE REFERENCE PROCEEDING. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF, ENTER EQUITABLE DIP ORDERS THAT WILL BE BINDING ON THE PARTIES AND RULE ON ANY MOTION THAT WOULD BE AUTHORIZED IN A COURT PROCEEDING. THE REFEREE SHALL ISSUE A DECISION AT THE CLOSE OF THE REFERENCE PROCEEDING WHICH DISPOSES OF ALL CLAIMS OF THE PARTIES THAT ARE THE SUBJECT OF THE REFERENCE. PURSUANT TO CCP SECTION 644, SUCH DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT OR AN ORDER IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT AND ANY SUCH DECISION WILL BE FINAL, BINDING AND CONCLUSIVE. THE PARTIES RESERVE THE RIGHT TO APPEAL FROM THE FINAL JUDGMENT OR ORDER OR FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE. THE PARTIES RESERVE THE RIGHT TO FINDINGS OF FACT, CONCLUSIONS OF LAWS, A WRITTEN STATEMENT OF DECISION, AND THE RIGHT TO MOVE FOR A NEW TRIAL OR A DIFFERENT JUDGMENT, WHICH NEW TRIAL, IF GRANTED, IS ALSO TO BE A REFERENCE PROCEEDING UNDER THIS PROVISION. (f) The foregoing reference to the CCP shall apply notwithstanding the provisions of Section 13.10; provided, that the inclusion of the reference provisions in this Section 13.12 shall not otherwise affect or limit in any way the parties choice of New York law.

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Section 13.13 Execution in Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Section 13.14 Intentionally Omitted. Section 13.15 Intentionally Omitted. Section 13.16 Accounting Information. The Debtor hereby authorizes the Agents and the Lenders to discuss the financial condition of the Debtor with its independent public accountants and agrees that such discussion or communication shall be without liability to such Person or the independent public accountants. Section 13.17 USA PATRIOT ACT. The Debtor acknowledges and consents that, in accordance with the reporting requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the Act), the Lenders may require, obtain, verify and record information that identifies the Debtor, which information includes the name and addresses of the Debtor and its principals, as well as any other information that will allow the Agent and the Lenders to identify the Debtor and its principals in accordance with, and otherwise comply with the requirements of, the Act. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. DOWNEY REGIONAL MEDICAL CENTERHOSPITAL, INC. (d/b/a DOWNEY REGIONAL MEDICAL CENTER), a non-profit public benefit corporation organized under the laws of the State of California and a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code By: Name: Title:

HEALTHCARE FINANCE GROUP, INC., as Lender and Agent By: Name: Title:

DIP Commitment: Prior to the Incremental Facility Effective Date: $4,000,000 Following the Incremental Facility Effective Date: $15,000,000

[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT] S-1

EXHIBIT A FORM OF INTERIM CASH COLLATERAL ORDER

[ATTACHED]

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EXHIBIT B FORM OF INTERIM DIP ORDER

[ATTACHED]

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EXHIBIT C REPORTING REQUIREMENTS

On the first Business Day following the Debtors request for the initial DIP Advance: On each Funding Date, and more frequently if requested by the Agent: Daily, on each Business Day, beginning on the Business Day following the entry of the Interim DIP Order: Weekly, on each Tuesday, beginning with Tuesday of the [first] week following entry of the Interim DIP Order: Weekly, on each Wednesday, beginning with Wednesday of the first week following entry of the Interim DIP Order:

(a) A Borrowing Base Report calculating the Borrowing Base as of the close of business as of the day of the request for the Interim DIP Advance. (b) The Debtors good faith estimates of amounts of Receivables that are subject to offset by any Governmental Entity.

(c) A report, as of the close of the immediately preceding Business Day, stating the Debtors actual cash balances, in form and in detail reasonably satisfactory to the Agent and the Required Lenders.

(d) A Variance Report, in a form reasonably satisfactory to the Agent and the Required Lenders, together with a certification from an Authorized Officer certifying that the report fairly presents the results of operations of the Debtor for such period. (e) Irrespective of whether Debtor has requested a DIP Advance, a Borrowing Base Report calculating the Borrowing Base as of the close of business of Tuesday of the previous week, together with supporting information in form and substance acceptable to the Agent and the Required Lenders. (f) A Thirteen Week Forecast (as defined in the DIP Orders), which Thirteen Week Forecast shall be subject to the consent of the Agent and the Required Lenders in their sole and absolute discretion. (g) An Actual Cash Flows Report (as defined in the DIP Orders) for the week ending on the preceding Wednesday (together with comparative figures set forth in each of the Actual Cash Flows Reports previously delivered to the Agent), together with a certification from an Authorized Officer certifying that the report fairly presents the financial condition and results of operations of the Debtor for such period. (h) Patient census, and changes in the patient volume and patient mix since the prior report, at the Debtors hospital facility. (i) Any other matters material to the Debtors continuing operation
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of its business. Monthly, on or prior to the 10th (j) A copy of the Monthly Report, together with a revised day of each month: Borrowing Base Report based on reconciliations and adjustments reflected in such Monthly Report, certified by the chief financial officer of the Debtor. Monthly, as soon as available and in any event no later than 30 days after the end of each month that is not the last month of a fiscal quarter and 45 days after the end of each month that is the last month of a fiscal quarter of the Debtor: (k) Combined and combining balance sheets, income statements and statements of changes in cash flow of the Debtor as of the end of such month or quarter. (l) A Compliance Certificate. (m)Statistical report, including census, statistics and such other information as may be requested by the Agent. (n) If adjusted from the prior months value, internally prepared cost report settlement estimates with respect to Governmental Entities. Annually, as soon as available and in any event within 90 days after the end of each fiscal year of the Debtor: (o) A copy of the audited individual and combined and combining financial statements (together with explanatory notes thereon) and the auditors unqualified report letter for such year for the Debtor, containing financial statements for such year audited by independent certified public accountants of recognized standing acceptable to the Agent and a copy of any management letter or written report submitted to the Debtor by independent certified public accountants with respect to the business, condition (financial or otherwise), operations, prospects, or Properties of the Debtor; (p) A Compliance Certificate; (q) A report satisfactory in form to the Agent, listing all material insurance coverage maintained as of the date of such report by the Debtor and all material insurance planned to be maintained by the Debtor in the subsequent fiscal year. As and when reported to the United States Trustee: As and when reported to the Bond Trustee: Promptly (and in no event later than one Business Day following the Debtor obtaining (r) All interim reports and operating statements.

(s) All reports given or required to be given under any cash collateral order or adequate protection stipulation between the Debtor and the Bond Trustee. (t) Any breach by the Debtor of any covenants or representations and warranties hereunder or under any other DIP Document,
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actual knowledge thereof), notice in reasonable detail of:

including upon discovery of a breach of the Eligibility Criteria. (u) The occurrence of any Default or any Event of Default, such notice to be accompanied by a statement of the Authorized Officer of the Debtor setting forth details of such Default or Event of Default, and the action that the Debtor has taken and/or proposes to take with respect thereto. (v) Any Lien asserted or claim made against a Receivable or any Lien asserted or claim made against any other Collateral other than a Permitted Lien. (w) The occurrence of any other event that could reasonably be expected to adversely affect the value of any equipment, inventory, real property or other assets of the Debtor, the other Collateral or the interest of the Agent therein. (x) Any notice of any investigations or audits (including cost reports or similar audits regarding the valuation of receivables payments) of the Debtor being conducted by any federal, state or county Governmental Entity or its agents or designees, and the results thereof. (y) Any matter that could reasonably be expected to have or result in a Material Adverse Effect.

As soon as available:

(z) Copies of each financial statement, report, notice or proxy statement sent by the Debtor to its stockholders generally. (aa) Copies of each press release or other statement made available by the Debtor to the public concerning developments in the business of the Debtor. (bb) Copies of any statement or report furnished by the Debtor to any other party pursuant to the terms of any indenture, loan, or credit or similar agreement and not otherwise required to be furnished to the Agent or any Lender pursuant to this Agreement.

Upon request by Agent

(cc) Such other information respecting the Receivables, the equipment, inventory, real property or other assets of the Debtor, the other Collateral or the condition or operations, financial or otherwise, of the Debtor as the Agent or any of the Lenders may from time to time reasonably request.

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EXHIBIT I ELIGIBILITY CRITERIA The following shall constitute the eligibility criteria for acceptance of Receivables for financing and inclusion in the Borrowing Base under the Agreement (the Eligibility Criteria): (a) The information provided by the Debtor with respect to each such Receivable is complete and correct and all documents, attestations and agreements relating thereto that have been delivered to the Agent are true and correct. (b) All information set forth in the bill and supporting claim documents with respect to such Receivable is true, complete and correct; if additional information is requested by the Obligor, the Debtor has provided, or will promptly provide, the same, and if any error has been made with respect to such information, the Debtor will promptly correct the same and, if necessary, rebill such Receivable. (c) The Debtor has billed the applicable Obligor and has delivered to such Obligor all requested supporting claim documents with respect to such Receivable and no amounts with respect to such Receivable have been paid as of the date and time of the inclusion of such Receivable in the Borrowing Base. The Debtor has, or has the right to use, valid identification numbers and licenses to generate valid Receivables. (d) The Debtors Medicare and Medicaid cost reports with respect to such Receivable for all cost reporting periods ending on or before the date of the last audited cost report have been examined and audited by (i), as to Medicaid, the applicable state agency or other CMS designated agent or agents of such state agency, charged with such responsibility or (ii), as to Medicare, the Medicare intermediary or other CMS designated agents charged with such responsibility; and there is no basis for any Governmental Entity to assert an offset with respect to such Receivable against the Debtor. (e) Each such Receivable (i) is payable in an amount not less than its Expected Net Value, by the Obligor or Obligors identified by the applicable Debtor in its records as being obligated to do so, (ii) is based on an actual and bona fide rendition of services or sale of goods to the patient by the Debtor in the ordinary course of business, (iii) is denominated and payable only in U.S. dollars in the United States, (iv) is an account or general intangible within the meaning of the UCC of the state in which the Debtor is incorporated, and is not evidenced by any instrument or chattel paper, (v) shall be subject to a patient consent form approved by the Agent and executed by the applicable patient, (vi) is net of any contractual allowances, deductible limitations, commissions, fees, or other discounts and (vii) does not cover any treatment for alcohol, drug or substance abuse, workers compensation claims or personal injury claims. There are no payors other than the Obligor or Obligors identified in the Debtors records as the payors primarily liable on such Receivable. (f) Each such Receivable (i) is not the subject of any action, suit, proceeding or dispute (pending or threatened), setoff, counterclaim, defense, abatement, suspension,
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deferment, deductible, reduction or termination by the Obligor thereof (except for statutory rights of Governmental Entities that are not pending or threatened), and (ii) is not past, or within 60 days of, the statutory limit for collection applicable to the Obligor thereof or is not aged more than 150 days from its Last Service Date. (g) Each such Receivable is not due from any Governmental Entity based on any cost report settlement or expected settlement. (h) The Debtor has no Guaranty of, letter of credit providing credit support for, or collateral security for, such Receivable, other than any such guaranty, letter of credit or collateral security as has been assigned to the Agent, and any such guaranty, letter of credit or collateral security is not subject to any Lien in favor of any other Person. (i) The goods and services constituting the basis for such Receivable were medically necessary for the customer or patient, and the customer or patient has received such goods and services. (j) The fees charged for the goods and services constituting the basis for such Receivable are consistent with the usual, customary and reasonable fees charged by other similar medical providers for the same or similar goods in the Debtors community and in the community in which the patient resides. (k) The Obligor with respect to each such Receivable (i) is not currently the subject of any bankruptcy, insolvency or receivership proceeding, nor is it unable to make payments on its obligations when due, (ii) is located in the United States of America, (iii) is not a subsidiary, parent or other Person that is an Affiliate of the Debtor, (iv) is not the Obligor of any Receivable that was a Defaulted Receivable (as defined below) in the past 12 months, and (v) is an Insurer with a credit quality acceptable to the Agent or a Governmental Entity. For purposes hereof, Defaulted Receivable means a Receivable (i) as to which the Obligor thereof or any other Person obligated thereon instituted or suffered any Insolvency, or (ii) that has not been paid in full on or following the 180th day following the Last Service Date with respect thereto or otherwise, consistent with the Credit and Collection Policy, would have been written off the Debtors books as uncollectible. (l) The financing of such Receivables hereunder is made in good faith and without actual intent to hinder, delay or defraud present or future creditors of the Debtor. (m) Any insurance policy, contract or other instrument obligating an Obligor to make payment with respect to such Receivable (i) does not contain any provision prohibiting the grant of a Lien in such payment obligation from the patient to the Debtor, or from the Debtor to the Agent, (ii) has been duly authorized and, together with such Receivable, constitutes the legal, valid and binding obligation of the Obligor in accordance with its terms, (iii) together with such Receivable, does not contravene in any material respect any requirement of law applicable thereto, and (iv) was in full force and effect and applicable to the customer or patient at the time the goods or services constituting the basis for such Receivable were sold or performed.

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(n) The insurance policy, contract or other instrument obligating a Governmental Entity to make payment with respect to such Receivable (i) has been duly authorized and, together with the applicable Receivable, constitutes the legal, valid and binding obligation of the Governmental Entity in accordance with its terms, (ii) together with the applicable Receivable, does not contravene in any material respect any requirement of law applicable thereto, and (iii) was in full force and effect and applicable to the customer or patient at the time the goods or services constituting the basis for such Receivable were sold or performed. (o) No consents by any third party to the grant of a security interest in such Receivable are required other than consents previously obtained in writing by the Debtor, a copy of each such consent having been provided to the Agent. (p) The inclusion of such Receivable in the Borrowing Base would not increase the total aggregate gross value of all Receivables in the Borrowing Base for any Obligor (or group of Obligors) listed below, as a percentage of the total aggregate gross value of Receivables of all Obligors in the Borrowing Base, above the corresponding percentages listed below: Obligor Medicare Medicaid Blue Cross/Blue Shield All Commercial Insurance Obligors, HMOs and PPOs any single AAA rated (non-governmental) Obligor any single AA rated (non-governmental) Obligor any single A rated (non-governmental) Obligor any single BBB rated (non-governmental) Obligor any single unrated (non-governmental) Obligor Maximum Eligibility 75% 75% 40% 40% 10% 6% 4% 3% 2%

(q) Unless specifically verified by the Debtor and accepted by the Agent, no single Eligible Receivable is in an amount in excess of [$50,000]. (r) If the percentage of Eligible Receivables aged over [90/120] days at any point in time is greater than [___] % of the total Eligible Receivables, the dollar amount of Eligible Receivables over the aforementioned percentage will not be considered Eligible Receivables. (s) No Lien that is still in effect on the applicable Funding Date has been made with respect to or granted in any such Receivable except for the Lien in favor of the Agent and other Permitted Liens.
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(t) [Each such Receivable, regardless of whether otherwise eligible, is not due from an Obligor if [__]% or more of the total amount of Receivables due from such Obligor are not Eligible Receivables.]

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EXHIBIT II FORM OF BORROWING BASE REPORT HEALTHCARE FINANCE GROUP, INC. Report Submission Date:__________ As of Date:_________ I II Gross Receivables Balance as of: _________ Deductions to Gross Receivables: Ineligible Receivables Cross-Aged Other Ineligibles Total Ineligible A/R Gross Eligible Receivables as of: __________ Net Value Factor Expected Net Value Additions to Expected Net Value Expected Net Value of New Receivables Adjustments Deductions to Expected Net Value Collections Aged Claims Deferred Revenue Unapplied Cash Credit Balances Medicare/Medicaid Reserve Horizon Reserve Other Adjustments/Reserves Adjusted Expected Net Value Advance Rate Borrowing Base
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III IV V VI

VII

VIII IX X

XI

Revolving Commitment Borrowing Limit (Lesser of Revolving Commitment and Borrowing Base) Less: Accrued Amounts Less: Minimum Liquidity Block (Reserve) Adjusted Borrowing Limit Outstanding Revolving Loan Balance Prior Report Less: Collections Total Interest, Fees, Charges & Expenses Revolving Advance Request This Report Revolving Loan Balance This Report Net Availability

XII XIII XIV XV XVI XVII XVIII XIX XX XXI

The undersigned desires to make a borrowing of a DIP Advance on ______, 200_ in the amount of $__________. The undersigned represents and warrants that the foregoing information is true, complete and correct and that the collateral reflected herein complies with and conforms to the Eligibility Criteria set forth in Exhibit I to the Secured Super-Priority Debtor In Possession Loan and Security Agreement between the undersigned and HEALTHCARE FINANCE GROUP INC., a Delaware corporation (HFG) and any supplements and amendments, if any, thereto (the Agreement; capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in the Agreement). The undersigned promises to pay to HFG the new loan balances reflected above, plus interest, as set forth in the Agreement. The undersigned represents and warrants that (1) as of the date hereof, (x) the Debtor is in compliance with each of the terms, covenants, and conditions set forth in the Agreement and that no Default or Event of Default exists or is continuing under the Agreement, and (y) if this Borrowing Base is being delivered in connection with a request for a DIP Advance, the representations, warranties and covenants contained in Articles VII, VIII, IX and X
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of the Loan Agreement are and will be true, correct, and in compliance both before and after giving effect to the DIP Advance requested herein and to the application of the proceeds thereof, as though made on and as of such date (it being understood and agreed that any representation or warranty that by its terms is made on a specified date shall be required to be true and correct only as of such specified date), (2) within 90 days preceding and through the date hereof, the Debtor has not received any notice from any state or federal regulatory or law enforcement agency citing specific deficiencies that (x) pose immediate jeopardy to the health or safety of the patients in any of the Debtors facilities; or (y) would otherwise threaten the Debtors continued participation in the Medicare, Medicaid, Medical and/or any other applicable government program, (3) within 90 days preceding and through the date hereof, the Debtor is not subject to any investigatory visits by and has not received any correspondence from any state or federal agency alleging possible improper billing or claims activity, and (4) the aggregate amount of cost report settlement liability owing to Medicare/Medicaid is $______. As of the date hereof, the Debtor has not diverted or permitted to be diverted any such payments on Receivables from the Lockbox Accounts or issued any Revocation Order as defined in the Depositary Agreements). DOWNEY REGIONAL MEDICAL CENTER-HOSPITAL, INC. (d/b/a DOWNEY REGIONAL MEDICAL CENTER), a non-profit public benefit corporation organized under the laws of the State of California and a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code, as Debtor and as servicer of Primary Servicing Responsibilities

By:

__________________________ Name: Title:

Date: ____________

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EXHIBIT III RECEIVABLE INFORMATION Subject to compliance with and the limitations of applicable law in effect from time to time, including patient confidentiality restrictions that may limit or otherwise proscribe the providing of requested medical information, the following information shall, as appropriate, be provided by the Debtor to the Agent with respect to the Receivables, together with such other information and in such form as may reasonably be requested from time to time by the Agent (the Receivable Information): customer/patient information; insured party and other policy-related information; services and products classification information (i.e., D.R.G. and other like information established by the Debtor from time to time to classify services rendered by the Debtor or goods sold at or by the Debtors institutions); Obligor required information (i.e., information provided in the ordinary course of business to any specified Obligor or any other information required to be provided to an Obligor pursuant to any agreement, contract or other arrangement with such Obligor); and billing information (i.e., all information provided by the Debtor on invoices to Obligors and any other information required to be provided pursuant to the Credit and Collection Policy and, to the extent the Transmission will not be via computer interface, including a copy of the admitting face sheet, CMS Form and a detailed copy of the bill).

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EXHIBIT IV FORM OF NOTICE TO OBLIGORS [Letterhead of the Debtor] [Date] [Name and Address of Obligor] Re: Change of Account and Address for Provider [# ]

To Whom it May Concern: Please be advised that we are granting in favor of HEALTHCARE FINANCE GROUP INC. a security interest in all of our existing and future receivables payable by you to us. Accordingly, you are hereby directed to make: Section 2. All wire transfers directly to the following account:

Account # ABA # Confirm Phone Number: Attention: Section 3. All Explanation of Benefits, remittance advices and other forms of payment, including checks, to the following address:

Reference: HEALTHCARE FINANCE GROUP INC. The foregoing directions shall apply to all existing receivables payable to us and (until further notice) to all receivables arising in the future and may not be revoked except by a writing executed by the Agent. Please acknowledge your receipt of this notice by signing the enclosed copy of this letter and returning it in the enclosed envelope.

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Thank you for your cooperation in this matter. DOWNEY REGIONAL MEDICAL CENTERHOSPITAL, INC. (d/b/a DOWNEY REGIONAL MEDICAL CENTER)

By: [Authorized Officer] Agreed to and Acknowledged: [Name of Obligor] By: Title:

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EXHIBIT V TRANSMISSION OF ELECTRONIC DATA FILES 1. The Agent will convey appropriate data requirements and guidelines to the Debtor in order for the Debtor to provide the necessary data files from its accounts receivable system(s). The Agent will require data files of a format reasonably acceptable to the lender that contains the Debtors accounts receivable information and summary reports. This will include, but not be limited to, detailed charges, payments, adjustments, write offs, aging summary information, insurance master detail and control totals. The above mentioned data files will be provided to the Agent via secure electronic transfer through the Agents secure FTP site. These files will be provided on an on-going basis according to an established schedule. The Debtor shall give the Agent at least ten Business Days notice of any coding changes or electronic data processing system modifications made by the Debtor that could affect the Agents processing or interpretation of the data received. The Agent shall have no responsibility to return to the Debtor any information that the Debtor provides via e-mails or through the secure FTP site. The Debtor will prepare detailed accounts receivable data files of all transaction types for all of its sites that are included in the program. The weekly or monthly cutoff, as applicable, will occur at a predetermined time in each such period, and such cutoff date for all of the sites must occur at exactly the same time. The cutoff date that will be selected will be at the end of business for a specific day of the week or month, as applicable, or in other words, at the end of the Debtors transaction posting process for that day. The Debtor will temporarily maintain a copy of the accounts data files in the event that the data is degraded or corrupted during transmission, and needs to be retransmitted. The Agent will be responsible for the management of the hardware, communications and software used in the program. 5. The Agents data analyst will receive the receivables data files, and confirm that the files have been passed without degradation or corruption of data by balancing the detailed items to the control totals that accompany the files. Any problems in this process will be reported to the Debtor so that the receivables data file can be re-transmitted, if necessary. Once the receipt of the receivables data files has been confirmed, the Agent will perform certain tests and edits to determine which receivables meet the Eligibility Criteria. Compliance with concentration limits will be verified by the Agent. The Debtor will create the necessary data files for each of the eligible sites. The data files will contain all detail transactions posted to the accounts receivable system for the specified period (and will indicate the site and the number of items and total dollars on each transaction report for control purposes). The data files will contain balances that
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2.

3. 4.

6.

7.

reflect the transactions posted on the Debtors systems through the end of business of the specified period. The Debtor will transmit the data files to the Agent according to the established schedule. The Debtor should, again, maintain the backup of each of these data files in the event that a re-transmission is necessary. 8. The Agents data analyst will confirm that the data files have been received, and will communicate any problems to the Debtor in order to initiate a re-transmission. The Agent will then post the transaction files and consequently update the affected balances. Upon completion of the posting process, the Agent will generate summary reports of the posting process that the Agent will use to complete various funding activities. The Agent summary reports will reference the Debtors transaction codes and activity to codes that are common to the funding program. The Agent will then compare the updated accounts balances on the Agents system to the corresponding account balances reflected on the applicable receivable data file. The Agent expects that the balances for the funded receivables will be congruent, and any discrepancies will be immediately examined and resolved through the cooperative effort of the Agent and the Debtor. The Agent will produce discrepancy reports (e.g., RollForward or Out of Balance reports) and the Debtor shall respond promptly to such reports. Once the reconciliation process has been completed and any discrepancies between the Agents and the Debtors receivable data files resolved through the discrepancy report process described in paragraph 9 above, the Agent will then process the receivables file and advise the Lenders that they may make additional DIP Loans with respect to any new receivable that has satisfied the Eligibility Criteria. The Agent will then proceed through exactly the same process described in paragraph 6 above. The Agent will use commercially reasonable efforts to comply with, and to cause the members of the Lender Group to comply with, all laws and regulations applicable to its duties hereunder, including patient confidentiality laws and regulations, including as set forth under the Health Insurance Portability and Accountability Act of 1996.

9.

10.

11.

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EXHIBIT VI BUSINESS ASSOCIATE ADDENDUM PROTECTED HEALTH INFORMATION 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings. Capitalized terms contained herein and not otherwise defined herein shall have the meanings given to such terms under the Privacy Standards (as defined below). Business Associate means each member of the Lender Group that, on behalf of the Covered Entity, performs or assists in the performance of a function or activity involving the Use or Disclosure of Protected Health Information. Covered Entity means the Debtor. Designated Record Set means a group of records maintained by or for the Covered Entity that is: a. The medical records and billing records about Individuals maintained by or for the Covered Entity; or b. Used, in whole or in part, by or for the Covered Entity to make decisions about Individuals. For purposes of this definition, the term Record means any item, collection, or grouping of information that includes Protected Health Information and is maintained, collected, used, or disseminated by or for the Covered Entity. Disclose, Disclosed, or Disclosure means the release, transfer, provision of, access to, or divulging in any other manner of information outside the entity holding the information. Electronic Media shall have the same meaning as the term electronic media in 45 CFR 160.103. Electronic Protected Health Information shall have the same meaning as the term electronic protected health care information in 45 CFR 160.103, limited to the information that the Business Associate creates, receives, maintains, or transmits from or on behalf of the Covered Entity. HIPAA means the Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191 (the Act), the privacy standards adopted by the U.S. Department of Health and Human Services (HHS) as they may be amended from time to time, 45 C.F.R. parts 160 and 164, subparts A and E (the Privacy Rule), the security standards adopted by HHS as they may be amended from time to time, 45 C.F.R., parts 160, 162 and 164, subparts C (the Security Rule), and the Privacy provisions (Subtitle D) of the Health Information Technology
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for Economic Clinical Health Act, Division A, Title XIII of Pub. L. 111-5, and its implementing regulations (the HITECH Act). Individual shall have the same meaning as the term individual in 45 CFR 160.103 and shall include a person who qualifies as a personal representative in accordance with 45 CFR 164.502(g). Individually Identifiable Health Information is information, including demographic information collected from an Individual, that: a. Is created or received by the Covered Entity or Business Associate; and

b. Relates to the past, present, or future physical or mental health or condition of an Individual, the provision of health care to an Individual, or the past, present, or future payment for the provision of health care to an Individual; and, i. That identifies the Individual; or,

ii. With respect to which there is a reasonable basis to believe the information can be used to identify the Individual. Privacy Standards means the Standards for Privacy of Individually Identifiable Health Information contained in 45 CFR Parts 160 and 164. Protected Health Information or PHI means any Individually Identifiable Health Information that is transmitted or maintained in any form or medium pursuant to the Service Agreement, including, but not limited to, by Electronic Media, but excluding any Individually Identifiable Health Information excluded from the definition of Protected Health Information under the Privacy Standards. Required by Law shall have the same meaning as the term required by law in 45 CFR 164.103. Security Standards shall mean the Security Standards at 45 CFR Parts 160 and 164. Use or Used means, with respect to Individually Identifiable Health Information, the sharing, employment, application, utilization, examination, or analysis of such information within an entity that maintains such information. 2. Use and Disclosure of Protected Health Information. The Business Associate agrees that it and its employees, officers, and directors (collectively, its Employees) will not Use or Disclose the Protected Health Information provided to it by the Covered Entity under this Agreement except as permitted or required by this Agreement or as otherwise Required by Law, and will ensure that each of its agents, including subcontractors (collectively, its Agents), to whom it provides Protected Health Information received from, or created or received by the Business Associate on behalf of, the Covered Entity agrees in writing to the same restrictions and
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conditions that apply to the Business Associate throughout this Exhibit VI with respect to such information. Further, the Business Associate may: a. Use the Protected Health Information received by the Business Associate in its capacity as the Business Associate if necessary for the proper management and administration of the Business Associate or to carry out its legal responsibilities; or, b. Disclose the Protected Health Information received by the Business Associate in its capacity as the Business Associate if necessary for the proper management and administration of the Business Associate or to carry out its legal responsibilities, if: i. the Disclosure is Required by Law; or,

ii. the Business Associate obtains reasonable assurances from the person to whom the Protected Health Information is Disclosed that it will be held confidentially and Used or further Disclosed only as Required by Law or for the purpose for which it was Disclosed to the person, and the person agrees in writing to notify the Business Associate of any instances of which it is aware in which the confidentiality of the Protected Health Information has been breached; or, c. De-identify Protected Health Information and may aggregate, manipulate, use, disclose, sell, publish and distribute such de-identified health information and data provided that such de-identification is in accordance with HIPAA. 3. Business Associate Records. The Business Associate agrees that it will implement a suitable record keeping system that enables the Business Associate to trace all Disclosures of Protected Health Information as would be required by the Covered Entity to respond to a request by an Individual for an accounting of Disclosures of Protected Health Information under the Privacy Standards in accordance with 45 CFR 164.528. 4. Appropriate Safeguards for Privacy of Information. The Business Associate agrees that it will use appropriate safeguards to prevent Use or Disclosure of Protected Health Information other than as are permitted by this Agreement and this Exhibit VI. Without limiting the generality of the foregoing sentence, the Business Associate will: a. Implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of Electronic Protected Health Information as required by the Security Standards; b. Ensure that any Agents to whom the Business Associate provides Electronic Protected Health Information agree to implement reasonable and appropriate safeguards to protect Electronic Protected Health Information; and c. Report to the Covered Entity any security incident (as defined by the Security Standards) of which the Business Associate becomes aware.
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5. Reporting Inappropriate Use or Disclosure of Information. The Business Associate shall notify the Covered Entity of any Use or Disclosure prohibited hereunder of Protected Health Information of which the Business Associate becomes aware. Business Associate agrees to report to Covered Entity the aggregate number of unsuccessful, unauthorized attempts to access, use, disclose, modify or destroy electronic versions of any of Covered Entitys PHI or interfere with systems operations in an Information System containing Covered Entitys PHI, of which Covered Entity becomes aware, provided that: (a) such reports will be provided only as frequently as the parties mutually agree, but no more than once per month; and, (b) if the definition of Security Incident is amended under the Security Rule to remove the requirement for reporting unsuccessful attempts to use, disclose, modify or destroy electronic PHI, this Section 5 shall no longer apply as of the effective date of such information. 6. Access to Information. To the extent the Business Associate possesses or maintains Protected Health Information in a Designated Record Set, the Business Associate shall, within a reasonable time period following the request of the Covered Entity, provide the Covered Entity with access to Protected Health Information about an Individual contained in a Designated Record Set in order for the Covered Entity to meet the requirements under 45 CFR 164.524. 7. Amendment of Protected Health Information. To the extent the Business Associate possesses or maintains Protected Health Information in a Designated Record Set, the Business Associate agrees that it will, within a reasonable time period of such a request by the Covered Entity, make available Protected Health Information for amendment and incorporate any amendments to Protected Health Information in a Designated Record Set that the Covered Entity directs or agrees to under 45 CFR 164.526. 8. Accounting of Disclosures. The Business Associate agrees to provide to the Covered Entity, within a reasonable time period after being notified, information collected in accordance with Section 3 of this Exhibit VI in order to permit the Covered Entity to respond to a request by an Individual for an accounting of Disclosures of Protected Health Information in accordance with 45 CFR 164.528. 9. Information to be Available to the Secretary. The Business Associate agrees that it will make its internal practices, books, and records relating to the Use and Disclosure of Protected Health Information received from, or created or received by the Business Associate on behalf of, the Covered Entity available to the Secretary of the Department of Health and Human Services for purposes of determining the Covered Entitys compliance with the Privacy Standards. 10. Obligations of Covered Entity. Covered Entity shall notify Business of any restriction on the use or disclosure of PHI to which Covered Entity has agreed in accordance with the relevant provisions of HIPAA, to the extent that such restriction may affect Business Associates use or disclosure of PHI. Covered Entity agrees (i) to use appropriate safeguards to maintain and ensure the confidentiality, privacy and security of PHI transmitted to Business Associate pursuant to this Exhibit VI, in accordance with the standards and requirements of HIPAA and the Privacy Rule and, as applicable, the Security Rule, until such PHI is received by Business Associate; (ii) to inform Business Associate of any consent or authorization, including any changes in or withdrawal of any such consent or authorization, provided to the Covered Entity by
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an individual pursuant to 45 C.F.R. 164.506 or 164.508; and (iii) that Business Associate may make any use or disclosure of Covered Entitys PHI permitted under 45 C.F.R. 164.512. 11. Term and Termination. a. Term. This Exhibit VI shall be effective as of the effective date first set forth above in this Agreement. b. Termination for Cause. Upon reasonable determination by the Covered Entity of a material breach by the Business Associate hereunder, the Covered Entity shall provide an opportunity for the Business Associate to cure the breach or end the violation. If the Business Associate does not cure the breach or end the violation within a reasonable time period after notice of the exact nature of the breach and the proposed cure, the Covered Entity shall, if feasible, terminate: (a) this Exhibit VI; and (b) all of the provisions of the DIP Documents that involve the Use or Disclosure of Protected Health Information; provided, however, that such termination shall be deemed to be infeasible unless and until this Agreement is likewise terminated in accordance with its terms or the Business Associate otherwise agrees in writing to such termination. If neither termination nor cure is feasible in accordance with this paragraph, the Covered Entity shall report the violation to the Secretary of the Department of Health and Human Services and shall provide the Business Associate with a copy of such report. c. Effect of Termination. (i) Except as set forth in clause 3.b. below, upon termination of this Exhibit VI, for any reason, the Business Associate shall return or destroy all Protected Health Information received from the Covered Entity, or created or received by the Business Associate on behalf of the Covered Entity. This provision shall apply to Protected Health Information that is in the possession of Agents of the Business Associate. The Business Associate shall retain no copies of the Protected Health Information. (ii) In the event that the Business Associate determines that returning or destroying the Protected Health Information is infeasible, the Business Associate shall provide to the Covered Entity notification of the conditions that make return or destruction infeasible. Upon such determination by the Business Associate that return or destruction of Protected Health Information is infeasible, the Business Associate shall extend the protections of this Exhibit VI to such Protected Health Information and limit further Uses and Disclosures of such Protected Health Information to those purposes that make the return or destruction infeasible, for so long as the Business Associate maintains such Protected Health Information. 12. Regulatory References. A reference in this Exhibit VI to a section in HIPAA means the section as in effect or as amended.

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13. Subpoenas. Each party will provide written notice to the other party of any subpoena or other legal process seeking PHI received from or created on behalf of Covered Entity. Such written notice shall be provided within 48 hours of receipt of a subpoena or other legal process.

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EXHIBIT VII CLOSING DOCUMENT CHECKLIST [See Attached]

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EXHIBIT VIII FORM OF DEPOSITARY AGREEMENTS [See Attached]

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SCHEDULE I ADDRESSES FOR NOTICE If to the Agent or Lender : Healthcare Finance Group Inc. 199 Water Street, 20th Floor New York, New York 10038 Attention: Chief Credit Officer Tel: (212) 785-9212 Fax: (212) 785 8501 With a copy (which shall not constitute notice) to: McGuireWoods LLP 1800 Century Park East, 8th Floor Los Angeles, California 90067 Attention: Gary D. Samson, Esq. Tel: (310) 315-8200 Fax: (310) 315-8210 If to the Debtor: [__________________________ ___________________________ ___________________________ Attention: __________________ Tel: _______________________ Fax: _______________________]

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SCHEDULE II DISCLOSURES

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SCHEDULE III LOCKBOX INFORMATION

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SCHEDULE IV NET VALUE FACTORS To be determined by the Agent during due diligence review

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SCHEDULE V CREDIT AND COLLECTION POLICY

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Exhibit B

LA: 568607v1

1 MCGUIREWOODS LLP

2 Jodie M. Grotins (SBN 261409) th 3 Los Angeles, California 90067 4 Facsimile: (310) 315-8210

William H. Kiekhofer, III (SBN 94022) 1800 Century Park East, 8 Floor Telephone: (310) 315-8200

5 jgrotins@mcguirewoods.com 6 7 8 9 10 11 12 In re 13

wkiekhofer@mcguirewoods.com

Attorneys for Healthcare Finance Group, Inc.

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION CASE NO. Chapter 11

Downey Regional Medical Center14 Hospital, Inc.,


15 16 17 18 19 20 21 22 23 24 25 26 27 28

Debtor and Debtor-in-Possession. INTERIM DIP ORDER (A) AUTHORIZING DEBTOR TO OBTAIN POSTPETITION FINANCING; (B) GRANTING SUPERPRIORITY EXPENSE CLAIMS AND SECURITY INTERESTS; AND (C) GRANTING OTHER RELIEF UNDER 11 U.S.C. 105, 361, 362, 363 AND 364, F.R.B.P. 2002 AND 4001; AND LBRS 2002-1 AND 4001-2) DATE: TIME: PLACE:

Upon the Emergency Motion Of Debtor For Entry Of Interim And Final DIP

2 Orders (A) Authorizing Debtor To Obtain Postpetition Financing; (B) Granting 3 Superpriority Expense Claims And Security Interests; And (C) Granting Other 4 Relief Under 11 U.S.C. 105, 361, 362, 363 and 364, F.R.B.P. 2002 and 4001; 5 and LBRs 2002-1 AND 4001-2 (the Motion), dated September 14, 2009, of 6 Downey Regional Medical Center-Hospital, Inc. as debtor and debtor-in-possession 7 (Debtor), in the above-captioned chapter 11 case (the Case) under sections 105, 8 361, 362, 363, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e) and 507(b) of title 9 11 of the United States Code, 11 U.S.C. 101, et seq. (as amended, the 10 Bankruptcy Code), and Rules 2002, 4001 and 9014 of the Federal Rules of 11 Bankruptcy Procedure (the Bankruptcy Rules) and Local Rules for the 12 Bankruptcy Court for the Central District of California (the Local Rules) 4001-2, 13 2002-2(a)(4) and 9013, seeking, among other things: 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
I

i)

authorization for Debtor to enter into and to be bound by, and the

approval of (A) the provisions of that certain Secured Super-Priority Debtor In Possession Loan and Security Agreement (the DIP Credit Agreement), by and among Debtor, as borrower, the lenders party thereto from time to time and Healthcare Finance Group, Inc., as administrative and collateral agent for such lenders (in such capacity, the DIP Lender) and (B) the provisions of the other documents, agreements and instruments reasonably necessary to document the financing and transactions contemplated herein , including without limitation deposit account control agreements, one or more lockbox agreements, mortgages and any other documents granting a lien upon, or control (for Uniform Commercial Code purposes) of the DIP Collateral (as defined below) as security for payment of the Interim DIP Facility (collectively, the Ancillary DIP Agreements; the DIP Credit Agreement, the Ancillary DIP Agreements, this Order (this Interim DIP Order) and the Final DIP Order (as defined below), collectively, the DIP
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Documents), and that the DIP Documents are entered into in connection with postpetition financing (the DIP Loan or the DIP Financing) consisting of a superpriority and senior, priming lien-secured credit facility (collectively, the DIP Facility) pursuant to which: (i) Debtor, on an interim basis, may (a) borrow from the DIP Lender revolving loans up to an aggregate principal amount outstanding at any time not to exceed $4,000,000 under the terms of the DIP Credit Agreement and this Interim DIP Order to provide working capital for Debtor until the Termination Date in an amount sufficient to prevent immediate and irreparable harm to the estate prior to a Final Hearing (as defined below) on the Motion and (b) pay fees to the DIP Lender of $380,000 (the Facility Fee),which fee shall be fully earned upon the funding of the Interim DIP Advances, payable (x) 50 % upon entry of the Interim DIP Order and (y) 50% on the earlier of five (5) business days after entry of the Final DIP Order (as defined below) or 30 days after entry of this Interim DIP Order, provided (with respect to the portion of the Facility Fee set forth in subclause (y)) that the failure to obtain entry of the Final DIP Order within such 30 days is not due to a default or breach of the DIP Documents by the DIP Lender (the Interim DIP Advances or the Interim DIP Facility), (ii) conditioned on the execution and satisfaction of the conditions to lending under all of the DIP Documents, and upon entry of the Final DIP Order, Debtor, on a final basis, may borrow from the DIP Lender revolving loans up to an aggregate principal amount outstanding at any time not to exceed $15,000,000 (inclusive of the Interim DIP Advances) under the terms of the DIP Credit Agreement and upon the entry of the Final DIP Order (as defined below) to provide working capital for Debtor until the Termination Date (as defined below); ii) authorization for Debtor to execute and enter into the DIP

Documents and to perform such other and further acts as may be required in
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

connection with the DIP Documents; iii) authorization to appoint Cymetrix to act as DIP Lenders hot

back up servicer to service the Debtors accounts receivable in the event that Debtor is no longer deemed able to perform this function satisfactorily, iv) limitation of Debtors right to surcharge any DIP Collateral (as

defined below) under sections 506(c) and 552(b) of the Bankruptcy Code; v) under Bankruptcy Rule 4001 and Local Rule 4001-2, an interim

hearing (the Interim Hearing) on the Motion for approval of this Interim DIP Order; and vi) a final hearing (the Final Hearing) to be held within 21 days

after entry of this Interim DIP Order to consider final approval of the DIP Documents, entry of a Final DIP Order approving the DIP Documents and authorizing the balance of the borrowings under the DIP Documents on a final basis (the Final DIP Order), as set forth in the Motion and the DIP Documents which will be filed with this Court prior to the Final Hearing.

Debtor having served notice pursuant to sections 102(1), 361, 362, 363 and

18 364 of the Bankruptcy Code and Bankruptcy Rules 2002, 4001(b) and (c) and Local 19 Bankruptcy Rules 4001-2, 2002-2(a)(4) and 9013, of the Motion, the relief 20 requested therein on an interim basis and the Interim Hearing on, among others, 21 Debtors Twenty Largest unsecured creditors as set forth in the list filed by Debtor 22 pursuant to Bankruptcy Rule 1007(d) (the Twenty Largest Creditors List); the 23 Indenture Trustee under that certain Amended and Restated Indenture dated August 24 1, 1993, as amended by that certain first Supplemental Indenture dated as of 25 February 26, 2004 (as so amended, the "Indenture") between Debtor and Norwest 26 Bank Minnesota, National Association now known as Wells Fargo Bank, National 27 Association, as Indenture Trustee, (the Indenture Trustee); Apollo Health Street, 28 Inc. ("Apollo"); all known holders of liens on Debtors assets; and the Office of the -3-

1 United States Trustee for the District of California (the United States Trustee); 2

The Debtor having filed this chapter 11 case (the "Case") on September 14,

3 2009 (the "Petition Date") 4 5 2009; 6

The Interim Hearing having been held by this Court on _____________,

The Court having heard and considered concurrently with the Motion the

7 the Debtor's Motion To Approve the "Interim Order Regarding Use Of Cash 8 Collateral and Adequate Protection" (the "Interim Cash Collateral Order") with 9 regard to the use of cash collateral claimed by the Indenture Trustee and Apollo, and 10 having approved and granted the Interim Cash Collateral Order; 11

Upon the record made by Debtor at the Interim Hearing, the record in this

12 Case and the Declaration of Robert E. Fuller dated September 14, 2009, in support 13 of First Day Pleadings, and it appearing that the Indenture Trustee and Apollo do 14 not object to the approval of this Interim DIP Order (or any objection is overruled), 15 and that interests of all other holders of liens on the DIP Collateral (as defined 16 below) are also adequately protected, and after due deliberation and consideration 17 and sufficient cause appearing therefor: 18 19

IT IS FOUND, DETERMINED, ORDERED AND ADJUDGED, that: 1. Disposition. The Motion is granted on an interim basis on the terms set

20 forth in this Interim DIP Order. Any objections to the relief sought in the Motion or 21 this Interim DIP Order that have not been previously resolved or withdrawn, and all 22 reservations of rights contained therein, are overruled on the merits, except as 23 objections to a Final DIP Order. This Interim DIP Order shall be valid, binding and 24 enforceable on all parties in interest and fully effective immediately upon entry, 25 subject only to the entry of the Final DIP Order. 26

2.

Jurisdiction and Venue. This Court has jurisdiction over the Case and

27 the Motion as a core proceeding and over the parties and property affected hereby 28 under 28 U.S.C. 157(b) and 1334. Venue is proper before this Court under 28 -4-

1 U.S.C. 1408 and 1409. No request has been made for the appointment of a 2 trustee or examiner. 3

3.

Notice. Under the circumstances, the notice given by Debtor of the

4 Motion, the relief requested therein, and the Interim Hearing pursuant to Bankruptcy 5 Rules 2002, 4001(b) and (c) and Local Bankruptcy Rules 4001-2, 2002-2(a)(4) and 6 9013 constitutes appropriate, due and sufficient notice thereof and complies with 7 Bankruptcy Rules 2002, 4001(b) and (c) and Local Bankruptcy Rules 4001-2, 20028 2(a)(4) and 9013, and the notice of the relief to be sought at the Final Hearing as 9 prescribed hereinbelow is adequate and appropriate. 10 11

4.

Findings Regarding the DIP Financing. a. The DIP Credit Agreement and the Ancillary DIP Agreements

12 have been negotiated in good faith and at arms length between all parties thereto, 13 all of which were or have been represented by experienced counsel and financial 14 advisers, are fair and reasonable under the circumstances, are for reasonably 15 equivalent value and fair consideration, are enforceable in accordance with their 16 terms, and have been and shall be deemed to have been entered into and extended in 17 good faith, as that term is used in Section 364(e) of the Bankruptcy Code 18

b.

Debtor does not have available sources of working capital and

19 financing to carry on the operation of its business without obtaining the DIP 20 Financing. Debtor needs interim funding of the DIP Financing as authorized herein 21 (i) to finance, among other things, the orderly continuation of the operation of its 22 business; (ii) to maintain business relationships with vendors, suppliers and 23 customers; (iii) to finance payroll; (iv) to make capital expenditures to the extent set 24 forth in the DIP Budget (as defined below); (v) to satisfy other working capital and 25 operational needs; (vi) to pay the Facility Fee, 50% upon entry of the Interim DIP 26 Order and 50% upon entry of the Final DIP Order, and to pay Prepetition Expense 27 Deposit Insufficiency and DIP Lenders Fees and Expenses (as defined below) 28 pursuant to the terms hereof; (vii) to pay the Carve Out (as defined below); (viii) to -5-

1 pay such items as are set forth by line item in the DIP Budget; (ix) to the extent 2 reflected in the DIP Budget as part of the adequate protection payments to the 3 Indenture Trustee, payment of the regularly scheduled, non-default amounts due to 4 be paid by Debtor to the Indenture Trustee under the terms of the relevant Bond 5 Documents (Bond Payments); (x) to the extent reflected in the DIP Budget, 6 payment of all amounts required by an order of this Court as adequate protection for 7 the of the Indenture Trustees cash collateral, including amounts necessary to pay 8 the fees and expense of the Indenture Trustee including fees of counsel and 9 professionals, but excluding any amounts payable to the Indenture Trustee to satisfy 10 or cure any deficiency, whether existing on the Petition Date or arising thereafter, in 11 the Bond Reserve Account Requirement under, and as those terms are defined in, 12 the Indenture; (x) as and to the extent provided in the DIP Budget, to pay fees and 13 expenses to HNB Capital, LLC ("HNB") in the amount of 1.25 % of the committed 14 amount of the DIP Facility (the Placement Fee), (xi) fees payable to Cymetrix as 15 and when it acts as DIP Lenders hot back up servicer of the Debtors accounts 16 receivable in the event that Debtor is deemed not able to service the accounts 17 receivable (xii) for other lawful purposes in the ordinary course of Debtors business 18 not prohibited by the DIP Credit Agreement or this Interim DIP Order 19 (Permissible Uses). The access of Debtor to sufficient working capital and 20 liquidity through borrowings under the DIP Facility is vital to the preservation and 21 maintenance of the going concern values of Debtor and to a successful 22 reorganization of Debtor. 23

c.

Debtor is unable to obtain financing on more favorable terms

24 from sources other than the DIP Lender under the DIP Credit Agreement and the 25 DIP Documents and is unable to obtain adequate unsecured credit allowable under 26 sections 364(c)(1) or 503(b)(1) of the Bankruptcy Code as an administrative 27 expense. Debtor is also unable to obtain secured credit from sources other than the 28 DIP Lender that would be allowable under sections 364(c)(2), 364(c)(3) and -6-

1 364(d)(1) of the Bankruptcy Code for the purposes set forth in the DIP Credit 2 Agreement and Superpriority Claims as defined and set forth herein. The terms of 3 the DIP Credit Agreement, including but not limited to the limitation of advances to 4 not greater than seventy-five percent (75%) of the collectible value of the Eligible 5 Receivables (as defined in the DIP Credit Agreement) at all times and (ii) payment 6 of the Facility Fee, are fair and commercially reasonable and in the best interests of 7 creditors. 8

d.

The terms of the DIP Credit Agreement, the Ancillary DIP

9 Agreements and this Interim DIP Order are fair and commercially reasonable, 10 reflect Debtors prudent exercise of business judgment consistent with its fiduciary 11 duties and constitute reasonably equivalent value and fair consideration. 12

e.

The amounts paid to DIP Lender as expense deposits prior to

13 Debtors decision to structure this financing as debtor in possession financing, and 14 in connection with the prepetition structuring and documentation of the DIP Facility 15 (the Prepetition Financing Expense Deposits) are fair, reasonable, appropriate, 16 and benefited the Debtor, provided, however, that any unused Prepetition Financing 17 Expense Deposit shall be credited against the Debtor's postpetition indemnification 18 obligation in respect to DIP Lender's post-petition attorneys fees and expenses (but 19 not any other fees) payable pursuant to paragraph 15 and 16 hereof, and further 20 provided that Debtor is authorized to pay postpetition with advances under the DIP 21 Loan or otherwise any amounts of DIP Lender's attorneys fees and expenses 22 incurred by DIP Lender prepetition which are not paid in full from the Prepetition 23 Financing Deposits (the "Prepetition Financing Expense Deposit Insufficiency"). 24

f.

The DIP Credit Agreement, the Ancillary DIP Agreements and

25 the terms of the DIP Facility have been negotiated in good faith and at arms length 26 among Debtor and the DIP Lender, and all of Debtors obligations and indebtedness 27 arising under, in respect of or in connection with the DIP Facility, the DIP Credit 28 Agreement and the Ancillary DIP Agreements, including without limitation, any and -7-

1 all amounts due, whether now existing or hereafter arising, under DIP Credit 2 Agreement or any Ancillary Agreement, including any and all principal, interest, 3 penalties, fees, charges, premiums, indemnities and costs owed or owing to the 4 Agent or any Lender by the Debtor (including, without limitation, the Facility Fee 5 and the Exit Fee), in each instance, whether absolute or contingent, direct or 6 indirect, secured or unsecured, due or not due, primary or secondary, joint or 7 several, arising by operation of law or otherwise, and all interest and other charges 8 thereon, including post-petition interest (collectively, the Interim DIP 9 Obligations), shall be deemed to have been extended by the DIP Lender and its 10 affiliates in good faith, as that term is used in section 364(e) of the Bankruptcy Code 11 and in express reliance upon the protections offered by section 364(e) of the 12 Bankruptcy Code, and the Interim DIP Obligations, the DIP Lien (as defined below) 13 and the Superpriority Claims (as defined below) shall be entitled to the full 14 protection of section 364(e) of the Bankruptcy Code in the event that this Interim 15 DIP Order or any provision hereof is vacated, reversed or modified, on appeal or 16 otherwise, or by denial of the Final DIP Order or modification of the terms of the 17 financing authorized by this Interim DIP Order by the terms of the Final DIP Order. 18

g.

Debtor has requested immediate entry of this Interim DIP Order

19 under Bankruptcy Rules 4001(b)(2) and 4001(c)(2) and Local Rule 4001-2 and 20 waiver of any applicable stay under Bankruptcy Rule 6004(h). Absent granting the 21 relief sought by this Interim DIP Order, Debtors estate will be immediately and 22 irreparably harmed. Consummation of the financing under this Interim DIP Order 23 and the DIP Credit Agreement is therefore in the best interest of Debtors estate 24 consistent with its fiduciary duties. 25 26

5.

Authorization of the DIP Financing Under the DIP Credit Agreement. a. Interim DIP Advances. Subject to the satisfaction of the

27 conditions precedent set forth in the DIP Credit Agreement, pursuant to and upon 28 entry of this Interim DIP Order, Debtor is hereby authorized to enter into, and shall -8-

1 be bound by the provisions of, the DIP Credit Agreement. Debtor is hereby, based 2 on entry of this Interim DIP Order, authorized to borrow the Interim DIP Advances 3 and to pay interest, fees and expenses related to Interim DIP Advances to the extent 4 necessary as a source of working capital, including, but not limited to, to pay (i) 5 $190,000 of the Facility Fee upon the occurrence of the initial advance of the 6 Interim DIP Advances (the "Initial Advance"), which shall occur upon the earlier 7 of (x) the Debtor's first borrowing of funds from the DIP Lender or (y) the Debtor's 8 first accrual of minimum usage fees pursuant to paragraph 15.b.iv of this Interim 9 DIP Order; (ii) the remaining $190,000 of the Facility Fee on the earlier of five (5) 10 business days after entry of the Final DIP Order or 30 days after entry of this Interim 11 DIP Order; (iii) 50% of the Placement Fee upon the funding of the Interim DIP 12 Advance; (iv) the remaining 50% of the Placement Fee on the earlier of five (5) 13 business days after entry of the Final DIP Order or 30 days after entry of this Interim 14 DIP Order; provided (with respect to the fees in subclauses (ii) and (iv)) that the 15 failure to obtain entry of the Final DIP Order within such 30 days is not due to a 16 default or breach of the DIP Documents by the DIP Lender. 17

b.

Additional Advances Under the DIP Loan Other Than the

18 Interim DIP Advances Conditioned on Issuance of a Final DIP Order. Debtor shall 19 not have authority to borrow, and the DIP Lender shall not be obligated to lend, any 20 advances pursuant to the DIP Documents other than the Interim DIP Advances until 21 the Court has entered the Final DIP Order and all of the conditions for such lending 22 set forth in the DIP Credit Agreement have been satisfied or waived by the DIP 23 Lender. Upon entry of the Final DIP Order, Debtor shall be authorized to borrow 24 the full amount of the DIP Loan pursuant to the DIP Documents and all limitations 25 set forth therein. 26

c.

Debtor is obligated to repay the Interim DIP Obligations under

27 the DIP Credit Agreement in accordance with the terms of this Interim DIP Order 28 and the DIP Credit Agreement. The proceeds of the Interim DIP Advances shall be -9-

1 used for the purposes, and subject to the terms and conditions, set forth herein and in 2 the DIP Credit Agreement. 3

d.

The DIP Loan, including without limitation, all Interim DIP

4 Advances, will be made available only after cash dominion arrangements 5 satisfactory to the DIP Lender have been effected so that available balances in all 6 deposit accounts of Debtor are swept to Designated Lockboxes and Lockbox 7 Accounts. 8

e.

The Debtor is hereby authorized to engage Cymetrix to act (i) as

9 its primary servicer in the ordinary course of business and (ii) as the DIP Lenders 10 hot back up servicer for the Accounts in the event that Debtor is no longer deemed 11 able to perform this function satisfactorily, it being hereby determined that 12 Cymetrixs engagement in such capacities does not constitute the appointment of a 13 professional and therefore that approval of Cymetrix in such capacities pursuant to 14 section 327 of the Bankruptcy Code is not required. 15 16

6.

Lockboxes Established Pursuant to Interim DIP Order. a. As a condition precedent to any funding of the DIP Facility, the

17 Debtor shall have caused any bank currently in control of any lockbox(es) and 18 lockbox account(s), and other bank accounts to execute control or similar 19 agreements in favor of the DIP Lender pursuant to which the DIP Lender will have 20 exclusive control over such lockbox(es) and account(s) in accordance with this 21 paragraph 6 and the DIP Credit Agreement. 22

b.

With respect to accounts receivable owing to Debtor by

23 governmental payors, Debtor shall establish a remittance account (the 24 Governmental Remittance Account) to receive remittances from such 25 governmental payors. The Debtor shall direct (i) all government payors to remit 26 directly to the Governmental Remittance Account and (ii) the holder of such 27 Governmental Remittance Account to further remit all collections and other receipts 28 received in the Government Remittance Account to the DIP Lender; - 10 -

c.

With respect to all other accounts receivable, Debtor will

2 irrevocably direct all non-governmental payors to remit all amounts due, payable or 3 paid upon such accounts receivable to one or more lockboxes (the Designated 4 Lockboxes) and lockbox accounts (the Designated Lockbox Accounts) under 5 the DIP Lenders exclusive control. 6

d.

Debtor is authorized to enter into one or more tri-party

7 agreements among Debtor, DIP Lender and each bank described above in order to 8 effectuate the foregoing remittance arrangements. 9

e.

Debtor is required to notify all payors (including both pre-

10 petition and post-petition) to remit payments to the Designated Lockboxes and 11 Designated Lockbox Accounts, as applicable, for deposit, and Debtor will remit all 12 amounts it receives in kind to the Designated Lockboxes and Designated Lockbox 13 Accounts, as applicable. 14

f.

All deposits into the Designated Lockboxes and Designated

15 Lockbox Accounts will be swept to the DIP Lender daily to be applied (i) first, to 16 expenses incurred with respect to the administration, service and maintenance of the 17 DIP Lenders lien on the DIP Collateral and all fees and collection costs that are due 18 and payable, if any, pursuant to the DIP Credit Agreement; (ii) second, to all fees, 19 interest and expenses that are due and payable to the DIP Lender; (iii) third, to the 20 reduction of the principal amount of the DIP Loan; (iv) fourth, to any other Interim 21 DIP Obligations owing to the DIP Lender; and (v) fifth to Debtor. For the purposes 22 of calculating the Borrowing Base (as defined below) and the Non-Utilization Fee 23 hereunder, collections shall be applied as of the date of receipt in the Designated 24 Lockbox Account. For all other purposes, including calculation of interest expense 25 on the DIP Loan, all collections of Accounts shall be applied after clearance period 26 after a business clearance period of three (3) business days after receipt of funds in 27 the Designated Lockbox Account. 28

7. Mandatory Prepayments. Unless otherwise agreed by DIP Lender in


- 11 -

1 its sole and absolute discretion, and except as provided below, the DIP Loan shall be 2 mandatorily prepaid and the maximum amount of the DIP Loan shall be 3 permanently reduced by net proceeds received from all Extraordinary Receipts (as 4 defined in the DIP Credit Agreement), including, but not limited to, dispositions of 5 DIP Collateral outside the ordinary course of business, including all proceeds from 6 sales of equipment, fixed assets, proceeds of other sales of DIP Collateral (but 7 excluding, for the purpose of clarity, Debtors collection of its accounts receivable 8 in the ordinary course of business, which shall be swept to the Designated 9 Lockboxes and Designated Lockbox Accounts, but shall not permanently reduce the 10 maximum amount of the DIP Loan), all insurance proceeds from any casualty to 11 DIP Collateral and all proceeds of any condemnation award in respect of, any DIP 12 Collateral (but excluding insurance or condemnation award proceeds to the extent 13 reasonably required to replace or repair facilities or equipment that are necessary for 14 Debtors' business operations) (Collateral Disposition Proceeds), provided, 15 however, that the DIP Lien on the Land will be released without requiring 16 mandatory prepayment if the Land (as defined below) is either sold at the fair 17 market value or refinanced on commercially reasonable terms based on the fair 18 market value of the Land, in each case as agreed upon by DIP Lender and Debtor 19 (or, if they cannot agree or if another party in interest disputes their agreed upon fair 20 market value or the commercial reasonableness of loan terms, as determined by the 21 Court upon notice and a hearing in valuation hearing conducted in proceedings 22 under Bankruptcy Code Sections 363 (as respects a sale of the Land) or 364 (as 23 respects a refinancing of the Land), further provided that no Event of Default has 24 occurred at or prior to the closing of such sale or refinancing, and provided further, 25 that if an Event of Default has theretofore occurred, DIP Lender may, in its sole and 26 absolute discretion, require application of the net proceeds of any sale or refinance 27 of the Land as a permanent pay down of the DIP Loan. All Collateral Disposition 28 Proceeds and other Extraordinary Receipts (subject to the exclusions set forth - 12 -

1 herein) shall be promptly deposited to a Designated Lockbox or Designated 2 Lockbox Account, as applicable, and swept to reduce the DIP Loan. 3

8.

Termination Date. Subject to compliance with the terms and

4 conditions of the DIP Credit Agreement and this Interim DIP Order, Debtor is 5 authorized, during the period from the date of entry of this Interim DIP Order 6 through and including the Termination Date (defined below) to use the Interim DIP 7 Advances. The term Termination Date means the earliest of (a) thirty (30) days 8 from the date of this Interim DIP Order if a Final DIP Order has not been issued or, 9 such later date to which the DIP Lender may consent in writing, (b) provided that a 10 Final DIP Order is entered, one (1) year from and after the date of this Interim DIP 11 Order (the "Maturity Date") (c) the date (if any) specified as the Termination Date 12 in any notice of an Event of Default delivered by the DIP Lender to the Debtor, the 13 United States Trustee, the Indenture Trustee, and the Committee, which notice shall 14 be deemed given immediately upon docketing in the Courts ECF system, or (d) the 15 effective date of a plan of reorganization in the Case. If the DIP Lender and Debtor 16 consent to an extension of the Termination Date, they shall notify the Indenture 17 Trustee and the Committee. 18

9.

Requests for Interim DIP Advances. Subject to the limitations of this

19 Interim DIP Order and the DIP Credit Agreement, including the limitation to 20 Permissible Uses and the DIP Financial Covenants (as defined below), so long as 21 the Termination Date has not occurred and no Event of Default has occurred and is 22 continuing, Debtor may request Interim DIP Advances by delivering to the DIP 23 Lender, a report, prepared in accordance with the criteria applicable to Borrowing 24 Base Reports as defined in the DIP Credit Agreement (each, a Borrowing Base 25 Report), setting forth a borrowing base (Borrowing Base) as of any date of 26 determination thereof, equal to seventy-five percent (75%) of the collectible value of 27 the Eligible Receivables (as defined in the DIP Credit Agreement) using the 28 methodology prescribed by the DIP Credit Agreement. Interim DIP Advances may - 13 -

1 be requested on not less than one (1) Business Days advance notice to the DIP 2 Lender and not more frequently than once per day, with a maximum borrowing 3 limitation of seventy-five percent (75%) of the collectible value of the Eligible 4 Receivables (as defined in the DIP Credit Agreement) (DIP Advance Rate), less 5 applicable reserves. Borrowing Base Reports will be deemed to be Debtors 6 representation and warranty that (i) the Interim DIP Advances requested are 7 necessary to fund Debtors operating expenses after utilization and application of all 8 other available cash of Debtor, (ii) the intended uses thereof are Permissible Uses 9 and are consistent with the terms of this Interim DIP Order and the DIP Credit 10 Agreement and are necessary in order for Debtor to satisfy its obligations in the 11 ordinary course of business or as otherwise permitted under this Interim DIP Order 12 and the DIP Credit Agreement; (iii) Debtor has observed and performed in all 13 material respects all applicable obligations and requirements contained in this 14 Interim DIP Order and the DIP Credit Agreement, and satisfied each condition to 15 the requests for Interim DIP Advances contained in this Interim DIP Order and the 16 DIP Credit Agreement to be observed, performed or satisfied by it, and (iv) no 17 Event of Default under this Interim DIP Order or the DIP Credit Agreement, and no 18 event or condition that with notice or the lapse of time, or both, would constitute an 19 Event of Default, has occurred and is continuing under this Interim DIP Order or the 20 DIP Credit Agreement. 21

10.

Interim DIP Budget. Debtor will only use the proceeds of Interim DIP

22 Advances for Permissible Uses, including, subject to the Variances (as defined 23 below), (i) the costs and expenses associated with the operation of Debtors business 24 and the conduct of the Case in the amounts and categories of Debtors delivered to 25 and agreed by the DIP Lender prior to entry of this Interim DIP Order in the form 26 attached hereto as Exhibit 1 and which is hereby approved (the Interim DIP 27 Budget), setting forth by line item net cash flow (including cash receipts and cash 28 disbursements), expenditures (accounts payable) and collateral values projected by - 14 -

1 Debtor on a weekly basis for the time period from the date on which this Case was 2 filed with the Court (the Petition Date) for a period of sixteen (16) weeks and (ii) 3 the additional items expressly set forth in this Interim DIP Order. 4

11.

Reporting Requirements. Debtor will provide the DIP Lender with any

5 written financial information or reporting on the same terms as provided in the DIP 6 Credit Agreement. In addition, from and after entry of this Interim DIP Order, 7 Debtor shall deliver to the DIP Lender, the Indenture Trustee, and the Committee 8 the following: 9

a.

Irrespective of whether Debtor has requested an Interim DIP

10 Advance, on each Wednesday, beginning with Wednesday of the first week 11 following entry of this Interim DIP Order, a Borrowing Base Report calculating the 12 Borrowing Base as of the close of business of Tuesday of each week, together with 13 supporting information supporting information in form and substance acceptable to 14 the DIP Lender. 15

b.

The first Business Day following Debtors request for an Interim

16 DIP Advance, a Borrowing Base Report calculating the Borrowing Base as of the 17 close of business as of the day of the request for the Interim DIP Advance. 18

c.

On each Wednesday, Debtor shall report (i) patient census, and

19 changes in the patient volume and patient mix since the prior report, at the Debtors 20 hospital facility and (ii) any other matters material to the Debtors continuing 21 operation of its business. 22

d.

On each Wednesday, beginning with Wednesday of the first

23 week following entry of this Interim DIP Order, Debtor shall deliver a rolling 16 24 week forecast by line item of net cash flow (including cash receipts and cash 25 disbursements), expenditures (accounts payable) and Borrowing Base (each a 26 Sixteen Week Forecast), which Sixteen Week Forecast shall be subject to the 27 consent of the DIP Lender in its sole and absolute discretion, and when so approved, 28 each Sixteen Week Forecast shall constitute an amendment of the Interim DIP - 15 -

1 Budget or, as the case may be, the prior Sixteen Week Forecast, and as so amended 2 the applicable Interim DIP Budget or Sixteen Week Forecast shall constitute the 3 DIP Budget). 4

e.

On each Wednesday, beginning with Wednesday of the second

5 week following entry of this Interim DIP Order, Debtor shall deliver a report, for the 6 week ending on the preceding Wednesday, of actual net cash flow (including cash 7 receipts and cash disbursements) and expenditures (accounts payable in each case 8 comparing Debtors actual performance to the DIP Budget, in a form reasonably 9 satisfactory to the DIP Lender, and a certification from an Authorized Officer (as 10 defined in the DIP Credit Agreement) certifying that the reports fairly present the 11 financial condition and results of operations of Debtor for such period (each an 12 Actual Cash Flows Report). 13

f.

On each Tuesday, beginning with Tuesday of the second week

14 following entry of this Interim DIP Order, Debtor shall deliver to the DIP Lender a 15 reasonably detailed explanation for any Variances in the Actual Cash Flows Report 16 from the DIP Budget, in a form reasonably satisfactory to the DIP Lender (each, a 17 Variance Report). 18

g.

On each Business Day, beginning on the Business Day following

19 the entry of this Interim DIP Order, Debtor shall deliver to the DIP Lender a report, 20 as of the close of the immediately preceding Business Day, stating Debtors actual 21 cash balances, in form and in detail reasonably satisfactory to the DIP Lender. 22

h.

As and when reported to the United States Trustee, all interim

23 reports and operating statements. 24

i.

As and when reported to the Indenture Trustee, all reports given

25 or required to be given under any cash collateral order or adequate protection 26 stipulation between the Debtor and the Indenture Trustee. 27

j.

The DIP Lender may, through its employees or through such

28 expert consultants, counsel, and financial advisors, have access to the Debtor's - 16 -

1 premises and non-attorney-client privileged, business records as provided in the DIP 2 Credit Agreement. The Debtor will cooperate, consult with and provide the DIP 3 Lenders employees, counsel, consultants and advisors all non-attorney-client 4 privileged information and reports as provided in the DIP Credit Agreement. (Items 5 (a) through (j), individually and collectively, the Reporting Requirements). 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

12. a.

DIP Financial Covenants Cash Flow to Expenditure Tests. As measured at any time, i. the Debtor's actual disbursements measured for the lesser of four (4) weeks or the number of full weekly periods preceding and inclusive of the weekly period being considered (each, an Applicable Period) shall not be in the aggregate more than 115% of projected cumulative, weekly disbursements in the DIP Budget for the Applicable Period; ii. the Debtor's actual cumulative disbursements for an Applicable Period (other than in respect of salary and employee benefits) on a line item basis shall not be more than 125% of projected cumulative disbursements in the DIP Budget for such Applicable Period, provided that there shall be no permitted variation from the Budget for Bond Payments; iii. the Debtor's actual cumulative disbursements for an Applicable Balance in respect of salary and employee benefits shall not be greater than 115% of projected cumulative, weekly disbursements in the DIP Budget for such Applicable Period; iv. For any Applicable Period, if (a) the "Cumulative Net Cash Flow" in the DIP Budget is a negative number, the
- 17 -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Cumulative Net Cash Flow as reported in the Weekly Reports for such Applicable Period must not be less than 115% of such negative number, or (b) the Cumulative Net Cash Flow in the DIP Budget is a positive number, the Cumulative Net Cash Flow as reported in the Weekly Reports for such Applicable Period must not be less than 85% of such positive number, provided however, if the Variance (as defined below) is less than $100,000 it will not be considered a Default under this Covenant. The "Variances" are the absolute value difference between the DIP Budget Cumulative Net Cash Flow and the Cumulative Net Cash Flow reported in the Weekly Reports for any Applicable Period. v. Each of the foregoing Cash Flow to Expenditure Tests shall be measured and tested on a weekly basis, commencing on the Filing Date and shall collectively be referred to as the "Cash Flow to Expenditure Tests"). b. EBITDA Test. EBITDA (as defined below) of the Debtor

19 and its Subsidiaries on a consolidated basis and calculated on a monthly basis shall 20 not be less than $1,200,000. As used herein, EBITDA of any Person for any 21 period means, the sum of (a) net income (or net loss) of such Person during such 22 period (calculated before extraordinary items, provided, however, that bankruptcy 23 expenses, including but not limited to fees and expenses accrued by or paid to 24 Professional Persons (as defined below) shall not be deemed extraordinary items) 25 plus (b) the sum of the following, in each case (unless otherwise indicated) to the 26 extent included in determining such net income (or net loss): (i) interest expense 27 (including that portion attributable to Capital Leases in accordance with GAAP (as 28 such terms are defined in the DIP Credit Agreement) and capitalized interest) during - 18 -

1 such period; plus (ii) income taxes accruing, paid or payable during such period; 2 plus (iii) depreciation and amortization expense; minus (vi) gains from asset 3 dispositions outside of the normal course of business minus (vii) pension liability 4 adjustment to the extent excluded in determining such net income (or net loss), 5 determined in each case in accordance with GAAP. For the purposes of determining 6 EBITDA of any Person for any period, net income (or net loss) means and refers 7 to the amount set forth on the applicable financial statements of such Person for 8 such period as Net Increase/Decrease in Unrestricted Assets (the "EBITDA 9 Test"). 10

c.

The Cash Flow to Expenditure Tests and the EBITDA Test shall

11 be referred to as the DIP Financial Covenants. 12

13.

DIP Loan Covenants. Debtor shall observe all covenants in the DIP

13 Credit Agreement and in this Interim DIP Order at all times prior to the Termination 14 Date and the indefeasible payment in full of all outstanding Interim DIP Advances. 15 The DIP Loan, including, the Interim DIP Advances, shall not exceed seventy-five 16 percent (75%) of the collectible value of the Eligible Receivables (as defined in the 17 DIP Credit Agreement) at any time. 18

14.

Implementation, Supplementation and Modification of DIP Credit

19 Agreement. In furtherance of this Interim DIP Order and without further approval of 20 this Court: 21

a.

Debtor is authorized and directed to perform all acts, to make,

22 execute and deliver all instruments and documents (including, without limitation, 23 the execution or recordation of security agreements, pledge agreements, fixture 24 filings, mortgages, hypothecs, deeds of trust, control agreements and financing 25 statements), and to pay all fees that may be reasonably required or necessary for 26 Debtors performance of its Interim DIP Obligations and this Interim DIP Order, 27 including, without limitation: the non-refundable payment to the DIP Lender, as the 28 case may be, of the Facility Fee, the fees referred to in the DIP Credit Agreement - 19 -

1 and reasonable costs and expenses as may be due from time to time, including, 2 without limitation, fees and expenses of the professionals retained as provided for 3 herein and in the DIP Credit Agreement; 4

b.

The DIP Lender and Debtor may agree in writing executed by

5 both of them to (x) the execution, delivery and performance of one or more waivers, 6 consents or forbearances under the DIP Credit Agreement (it being understood that 7 no further approval of the Court shall be required for waivers, consents or 8 forbearances under the DIP Credit Agreement, or any amendment, waiver, consent 9 or forbearance fees paid in connection therewith); (y) to make any non-material 10 amendments or modifications to the DIP Credit Agreement; and (z) to make any 11 Material Modification or Amendment (as defined below) to the DIP Credit 12 Agreement; provided that notice of any Material Modification or Amendment to the 13 DIP Credit Agreement shall be filed with the Bankruptcy Court and served by 14 Debtor on the Indenture Trustee, the Committee and their respective counsel, and 15 the United States Trustee, whom shall each have five (5) business days from the 16 date of such filing within which to object in writing to such proposed Material 17 Modification or Amendment; provided further that if the Indenture Trustee, the 18 Committee or the United States Trustee timely objects to any such Material 19 Modification or Amendment to the DIP Credit Agreement, then such Material 20 Modification or Amendment shall only be permitted pursuant to an order of this 21 Court after notice and a hearing. For purposes of this paragraph, a Material 22 Modification or Amendment of the DIP Credit Agreement" shall mean any 23 modification or amendment that operates to (1) shorten the maturity of the 24 extensions of credit under the DIP Credit Agreement, (2) increase the aggregate 25 amount of any of the commitments thereunder, (3) increase the rate of interest or 26 any other existing fees or charges payable thereunder (other than to the extent 27 contemplated in the DIP Credit Agreement as in effect on the date hereof) or (4) 28 otherwise modify the DIP Credit Agreement in a manner materially less favorable to - 20 -

1 Debtor and its estate, but shall exclude any forbearance or waiver which may occur 2 after an notice of an Event of Default; 3

c.

To the extent that a variance of the expenditures related to

4 patient services in the Cumulative Cash Flow as reported in the Weekly Report 5 exceed the expenditures related to patient services in the DIP Budget for such 6 Applicable Period due to increases in patient volumes, patient mix or acuity above 7 those levels normally incurred or reasonably anticipated at the time of the 8 preparation of the DIP Budget, and such increases in patient volumes or acuity are 9 expected to result in commensurately higher levels of Accounts, the Debtor may 10 request (and, if so, shall provide supporting operational statistical information to 11 support such request) from the DIP Lender a waiver of default under the Cash Flow 12 to Expenditure Tests. Based upon its reasonable judgment, the Lender may in its 13 sole discretion consent to such waiver of a default; and 14

d.

Debtor is authorized and directed to perform all other acts

15 required under or in connection with the DIP Credit Agreement. 16

15.

Interest, Fees and Expenses. Debtor shall pay the following, all as

17 more particularly set forth in the DIP Credit Agreement: 18

a.

Interest. On the first business day of each month, current cash

19 payment of all accrued and unpaid interest on the Interim DIP Obligations at the rate 20 equal to 3-month LIBOR plus 6.25% per annum, in each case, payable for the 21 immediate prior month (or portion thereof), in arrears, and payable on the 22 Termination Date or thereafter on demand. The rate set for 3-month LIBOR shall 23 not be less than 2.75%. On the occurrence and during the continuation of an Event 24 of Default, interest will be payable on all Interim DIP Obligations at a rate that is 25 4% above the otherwise applicable rate. Interest calculations will be based on a 360 26 day year and actual days elapsed. None of the fees, costs and expenses payable 27 under this paragraph shall be subject to separate or prior approval by this Court and 28 no recipient of these payments shall be required to file a motion or interim or final - 21 -

1 fee application pursuant to the provisions of sections 327, 328, 329, 330 or 331 of 2 the Bankruptcy Code in regard thereto. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

b. i. ii.

Fees Payable to DIP Lender. The Facility Fee as described above. Collateral Tracking Fee. 0.50% per annum, accruing daily but payable monthly, on the average outstanding balance. iii. Non-Utilization Fee. 0.50% per annum, accruing daily but payable monthly, on the difference between the maximum principal amount of the DIP Loan under the applicable Interim DIP Order or the Final DIP Order, and the average outstanding balance. iv. Exit Fee. 2.0% upon permanent repayment of the loan at any time provided that the Exit Fee will be credited against the facility fee related to a chapter 11 plan exit financing facility provided that the DIP Lender, in its discretion, provides post reorganization senior financing. v. Minimum Usage Fee. A fee, accruing daily but payable monthly, equal to interest that would have accrued but for the actual amount of the outstanding Interim DIP Advances being less than $4,000,000 at any time following entry of this Interim DIP Order and until entry of the Final DIP Order, and $5,000,000 at any time from the entry of the Final DIP Order until the Termination Date. vi. Wire Transfer Fees. $40.00 per wire transfer, or so much other amount as is reasonably necessary to reimburse DIP Lender for its out-of-pocket expense for bank charges and overhead in connection with execution and confirmation of wire transfers.
- 22 -

c.

All Prepetition Financing Expense Deposit Insufficiency, and all

2 accrued and unpaid fees and expenses incurred after the Petition Date which are 3 payable on account of services rendered to the DIP Lender, or any of its respective 4 affiliates, with regard to the negotiation, documentation and implementation of the 5 DIP Credit Agreement or its participation in, or enforcement of rights in regard to, 6 the DIP Facility, or pertaining to the Case ("DIP Lender Fees and Expenses"), 7 including the reasonable fees and disbursements of counsel, financial advisors and 8 other consultants for the DIP Lender, or any of their respective affiliates, within five 9 (5) business days after receipt of invoices from these professionals. 10

d.

The Prepetition Financing Expense Deposits are approved and

11 deemed to have been indefeasibly paid to DIP Lender and not subject to avoidance 12 or offset by Debtor or the Estate, subject only to DIP Lenders obligation to credit 13 any unused portion of the Prepetition Financing Expense Deposits against the 14 indemnification of fees and expenses as provided in the following paragraph. 15 16 17

e.

Fees Payable to HNB: 1.25% of the committed amount of the DIP Facility.

16.

Indemnification. Debtor shall indemnify the DIP Lender (and its

18 respective directors, officers, employees, agents, attorneys, affiliates and advisors, 19 collectively, the Indemnitees) on the terms provided in Section 2.05 of the DIP 20 Credit Agreement, and will reimburse, indemnify, pay and hold Indemnitees 21 harmless from and against fees and expenses described in paragraph 15 hereof, and 22 fees and expenses relating to the negotiation, documentation, administration, or 23 enforcement of the DIP Loan, including, inter alia, all fees and expenses relative to 24 the DIP Lenders appearance or participation in Debtors contemplated Chapter 11 25 Case from and after the entry of this Interim DIP Order and Final DIP Order. 26 Debtor shall pay the DIP Lenders fees and expenses (and those of its counsel and 27 other professionals) within five (5) business days after delivery to Debtor of 28 invoices therefore (which may be redacted to remove the DIP Lender's attorney- 23 -

1 client privileged communications), provided that such indemnity shall not, as to any 2 Indemnitee, be available to the extent that such indemnified liabilities are 3 determined by a court of competent jurisdiction by final and nonappealable 4 judgment to have resulted from the gross negligence or willful misconduct of such 5 Indemnitee, and provided further that DIP Lender will credit against Debtors post6 petition indemnification obligation as respect DIP Lender's attorneys fees any 7 unused portion of the Prepetition Financing Expense Deposits.. 8

17.

Effectiveness of DIP Credit Agreement. Upon entry of this Interim DIP

9 Order (the Effective Date) the DIP Credit Agreement shall constitute valid and 10 binding obligations of Debtor, enforceable against Debtor in accordance with their 11 respective terms and the terms of this Interim DIP Order for all purposes during the 12 Case, any subsequently converted case of Debtor under Chapter 7 of the Bankruptcy 13 Code or after the dismissal of the Case. No obligation, payment, transfer or grant of 14 security under the DIP Credit Agreement or this Interim DIP Order shall be stayed, 15 restrained, voidable, avoidable or recoverable under the Bankruptcy Code or under 16 any applicable law (including without limitation, under sections 502(d), 548 or 549 17 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer 18 Act, Uniform Fraudulent Conveyance Act or similar statute or common law), or 19 subject to any defense, reduction, setoff, recoupment or counterclaim. 20

18.

Conditions Precedent to Interim DIP Advances and DIP Loan. Interim

21 DIP Advances under this Interim DIP Order and advances under the DIP Loan 22 under the Final DIP Order are conditioned on the satisfaction of all of the conditions 23 precedent described in the DIP Credit Agreement and include, but are not limited to, 24 the following: 25

a.

Due service of the Interim/Final DIP Motion on required parties

26 in form acceptable to the DIP Lender in its sole and absolute discretion. 27

b.

Entry of this Interim DIP Order and approval for the Interim DIP

28 Advances in form acceptable to the DIP Lender in sole and absolute discretion, - 24 -

1 including scheduling of hearing on Final DIP Order, in form acceptable to the DIP 2 Lender in its sole and absolute discretion. 3

c.

DIP Lender shall have received executed originals of the DIP

4 Credit Agreement and the Other DIP Documents and the credit facility evidenced 5 thereby. 6

d.

Control agreements executed in favor of the DIP Lender over all

7 collection accounts, and procedures to sweep proceeds therein to the Designated 8 Lockboxes and the Designated Lockbox Accounts. 9

e.

The Designated Lockboxes and Designated Lockbox Accounts

10 shall have been established in favor of the DIP Lender. 11

f.

Satisfactory business due diligence review by the DIP Lender of

12 Debtor and the DIP Budget, cash flow projections and operating plan and other 13 relevant information. 14

g.

Debtor is in compliance with all applicable laws and regulations,

15 and shall have obtained all licenses, consents and approvals necessary to operate its 16 business and shall have obtained all material and appropriate approvals pertaining to 17 all applicable governmental, ERISA, retiree health benefits, workers' compensation 18 and other requirements, regulations and laws including Environmental Laws (as 19 defined in the DIP Credit Agreement). 20

h.

Appointment of Cymetrix to act as DIP Lenders hot back up

21 servicer to service the Accounts in the event that Debtor is no longer deemed able to 22 perform this function satisfactorily. 23

i.

The DIP Lender shall have received and been satisfied with all

24 applicable orders entered by the Bankruptcy Court in the event special authority is 25 needed. 26

j.

The DIP Lender shall have established a fully functional

27 interface with Debtors Account Receivables systems. 28

k.

Satisfactory legal due diligence review, including but not limited


- 25 -

1 to the Debtor's disclosure to the DIP Lender of the extent and amount of rights of 2 setoff or recoupment arising from the Debtor's capitation or risk-sharing contracts or 3 agreements by claimants which are account debtors of the Debtor. 4 5 Lender. 6

l.

Opinion Letters by Debtors counsel as requested by the DIP

19.

Conditions Precedent to Final DIP Facility. Conditions precedents

7 shall include but are not limited to: 8

a.

No Event of Default has occurred under this Interim DIP Order

9 or the DIP Credit Agreement, and no event or condition that with notice or the lapse 10 of time, or both, would constitute an Event of Default, has occurred and is 11 continuing under this Interim DIP Order or the DIP Credit Agreement. 12

b.

The Court shall have entered the Final DIP Order in form

13 acceptable to DIP Lender in its discretion, certified by the Clerk of the Bankruptcy 14 Court as having been duly entered, and the Final DIP Order shall be in full force and 15 effect and shall not have been vacated, reversed, modified, amended or stayed 16 without the prior written consent of the DIP Lender. 17

c.

The DIP Lender shall have received a leasehold deed of trust of

18 the Debtor in favor of DIP Lender on the Debtor's interest in the lease from the City 19 of Downey and to the Debtor, and the consent of the City of Downey thereto, each 20 in forms acceptable to DIP Lender in its sole and absolute discretion. 21

d.

The DIP Lender shall have received an Intercreditor Agreement

22 between the DIP Lender, the Indenture Trustee and such other parties as the DIP 23 Lender deems necessary in its sole discretion, satisfactory to DIP Lender in its sole 24 and absolute discretion. 25

e.

The DIP Lender shall have received a consent to an assignment

26 and agreement in favor of DIP Lender, effective upon a Termination Date, from the 27 Siemens or the Debtor's alternative information technology services provider (who 28 shall be satisfactory to DIP Lender), in form satisfactory to DIP Lender in its sole - 26 -

1 and absolute discretion. 2

f.

The Court shall have approved the appointment of an outside

3 financial advisor to the Debtor which is acceptable to DIP Lender, with a scope of 4 service acceptable to the DIP Lender. 5

g.

The Debtor shall have delivered a "drive-by" appraisal of the

6 Land (as defined below) in form acceptable to DIP Lender in its sole and absolute 7 discretion. 8

h.

The DIP Lender shall have received such additional documents,

9 information and materials as the DIP Lender may reasonably request. 10

20.

DIP Liens. As security for the Initial DIP Obligations, effective and

11 perfected upon the date of entry of this Interim DIP Order and without the necessity 12 of the execution or recordation of filings by Debtor, of security agreements, pledge 13 agreements, fixture filings, mortgages, hypothecs, deeds of trust, control 14 agreements, financing statements or other similar documents, or the possession or 15 control by the DIP Lender of, or over, any DIP Collateral, the following security 16 interests and liens are hereby granted to the DIP Lender for its own benefit on all 17 tangible and intangible assets of Debtor, whether now existing or hereafter arising, 18 and whether or not encumbered prior to the petition date, including, but not limited 19 to: (i) all Accounts generated post-petition and proceeds thereof, (ii) all pre-petition 20 Accounts and proceeds thereof, (iii) all intangibles, (iv) real property (the Land), 21 (v) all other assets of Debtor including but not limited to inventory and equipment, 22 and (vi) any and all cash of Debtor (whether maintained with the DIP Lender or 23 otherwise), and the proceeds of all the foregoing (clauses (i) through (vi) 24 collectively, but excluding any and all cash or other property received by Debtor in 25 the form of gifts, charitable donations, bequests or grants that are by their terms, 26 restricted in the manner in which they may be utilized by Debtor to the extent, and 27 only to the extent, that such restrictions would prohibit the granting of any such 28 bequests or grants as collateral or prohibit the payment of any such bequests or - 27 -

1 grants to the DIP Lender, the DIP Collateral), provided, however, that DIP 2 Collateral shall not include (i) Debtors claims and causes of action under sections 3 502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other 4 avoidance actions under the Bankruptcy Code (collectively, the Avoidance 5 Actions) and (ii) any funds or accounts held or maintained by the Indenture 6 Trustee under the terms of the Indenture, including but not limited to the Bond 7 Funds as that term is defined in the Interim Cash Collateral Order (all such liens and 8 security interests granted to the DIP Lender pursuant to this Interim DIP Order and 9 the DIP Credit Agreement, the DIP Liens), with the following priorities, and 10 subject, in this Case, to the Carve Out: 11

a. Senior, Priming, First Priority Priming Lien on Substantially All

12 Assets. Except as provided in subparagraph (b) below, pursuant to section 364(d) of 13 the Bankruptcy Code, a valid, binding, continuing, enforceable, fully-perfected, 14 senior and priming first priority senior security interest in and lien upon all DIP 15 Collateral except leased or purchase money-financed equipment of Debtor which 16 was on the petition date herein subject to valid and perfected pre-petition security 17 interests. 18

b.

Junior DIP Lien.

DIP Lender is granted a junior lien pursuant

19 to Section 11 U.S.C. 364(c)(3) on leased or purchase money-financed equipment 20 of Debtor which was on the Petition Date subject to valid and perfected security 21 interests. 22

c.

For avoidance of doubt, the DIP Lender consents to a junior lien

23 on all property of the estate to be granted in favor of the Indenture Trustee pursuant 24 to an adequate protection or cash collateral stipulation between Debtor and the 25 Indenture Trustee which is reasonably acceptable to DIP Lender and is approved by 26 the Court, and a junior lien on all property of the estate in favor of Apollo Health 27 Care, subject, however, to all defenses and objections to Apollos lien and claim. 28

21.

Superpriority Claims. Subject to the Carve Out, pursuant to section


- 28 -

1 364(c)(1) of the Bankruptcy Code, all of the Interim DIP Obligations shall constitute 2 allowed senior administrative expense claims against Debtor with priority over any 3 and all unpaid administrative expenses, diminution claims and all other claims 4 against Debtor, now existing or hereafter arising, of any kind whatsoever (the 5 Superpriority Claims), including, without limitation, all other unpaid 6 administrative expenses of the kind specified in sections 503(b) and 507(b) of the 7 Bankruptcy Code, and over any and all administrative expenses or other claims 8 arising under sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546, 9 726, 1113 or 1114 of the Bankruptcy Code, and shall at all times be senior to the 10 rights of Debtor, any successor trustee or any creditor, in this Case or any 11 subsequent proceedings under the Bankruptcy Code, whether or not such expenses 12 or claims may become secured by a judgment lien or other non-consensual lien, levy 13 or attachment, which allowed claims shall be payable from and have recourse to all 14 pre- and post-petition property of Debtor and all proceeds thereof. The 15 Superpriority Claims granted hereunder shall also have recourse to any and all 16 proceeds or property in respect of (i) any and all proceeds of Avoidance Actions (the 17 Avoidance Action Proceeds) whether or not such proceeds or property is 18 recovered from a judgment, settlement or otherwise, and in (ii) the Debtor's rights, 19 choses in action, or claims of any kind whatsoever, choate or inchoate, present or 20 residual, which for any reason cannot be made subject to the DIP Lien 21 ("Unencumbered Assets"). Prior to Payment In Full Of The DIP Loan, Debtor 22 agrees that it will not sell, pledge, hypothecate or otherwise encumber any 23 Avoidance Action Proceeds or Unencumbered Assets. 24

22.

Carve Out. For purposes hereof, Carve Out shall mean the sum Court

25 and UST Fees, Potential Chapter 7 Fees and Post Default Professional Fees as 26 defined and limited in subparagraphs (a) through (d) below: 27

a.

All fees required to be paid to the Clerk of the Bankruptcy Court

28 and to the Office of the United States Trustee under section 1930(a) of title 28 of the - 29 -

1 United States Code plus interest at the statutory rate (without regard to the notice set 2 forth in subparagraph (c) below) (Court and UST Fees); 3

b.

Fees and expenses up to $15,000 incurred by a trustee under

4 section 726(b) of the Bankruptcy Code (without regard to the notice set forth in 5 subparagraph (c) below) (the Potential Chapter 7 Trustee Fees); 6

c.

To the extent allowed by the Court, all professional fees and

7 expenses (the Post Default Professional Fees) which had not for any reason been 8 paid to or held by Professional Persons (as defined below) prior to the first business 9 day following the earlier of the delivery by (x) the DIP Lender of a notice of an 10 Event of Default which specifies a Termination Date under this Interim DIP Order 11 or the DIP Credit Agreement or (y) the delivery by the Indenture Trustee of a notice 12 of the occurrence of a Termination Event as that term is used in the Interim Cash 13 Collateral Order, whether such Post Default Professional Fees are allowed by the 14 Bankruptcy Court prior to or after delivery of such notice of an Event of Default or 15 the occurrence of a Termination Event, and incurred by (i) persons or firms retained 16 by Debtor pursuant to section 327, 328 or 363 of the Bankruptcy Code, (ii) any 17 statutory committee hereafter appointed in the Case, or (iii) a patient care 18 ombudsman appointed pursuant to section 333 of the Bankruptcy Code 19 (collectively, the Professional Persons). 20

d.

The carve out to provide for the potential liabilities for Court and

21 UST Fees, Potential Chapter 7 Fees and Post Default Professional Fees shall be in 22 an amount of $500,000 (the "Carve Out") and, for the avoidance of doubt, shall not 23 be affected or enlarged by the Variances. The DIP Lender may in is sole and 24 absolute discretion establish collateral reserves or availability blocks from the 25 Borrowing Base for the Carve Out. 26

e.

For the purpose of clarity, the Carve Out shall not be reduced by

27 (i) amounts paid to Professional Persons or on account of Court and UST Fees by 28 Debtor prior to the delivery by the DIP Lender or the Indenture Trustee of the - 30 -

1 notices described in subsection (c) of this paragraph or (ii) retainers received by 2 Professional Persons prior to the filing of the Case. 3

f.

The Carve Out under the Interim Cash Collateral and this Interim

4 DIP Order shall constitute a single Carve Out. 5

23.

Limitation on Charging Expenses Against DIP Collateral. Effective

6 upon the entry of the Final DIP Order, except to the extent of the Carve Out, no 7 expenses of administration of this Case or any future proceeding that may result 8 from this Case, including liquidation in bankruptcy or other proceedings under the 9 Bankruptcy Code, may be charged against or recovered from the DIP Collateral 10 under sections 506(c) and 552(b) of the Bankruptcy Code or any similar principle of 11 law, without the prior written consent of the DIP Lender, and no consent of the DIP 12 Lender may be implied from any other action, inaction, or acquiescence by the DIP 13 Lender, provided however that DIP Lender shall be deemed to have consented to the 14 payment in the ordinary course of business of operating expenses provided for in the 15 approved Budgets. Except on the terms as provided in this Interim DIP Order, 16 Debtor is enjoined and prohibited from (i) using the Interim DIP Advances; (ii) 17 using the DIP Collateral; (iii) applying to any court for an order authorizing the use 18 of the DIP Collateral or unencumbered property as collateral for debtor in 19 possession financing other than the DIP Facility under the DIP Credit Agreement. 20 21

24.

Perfection of DIP Liens. a. The DIP Lender is hereby authorized, but not required, to file or

22 record any one or more financing statements, trademark filings, copyright filings, 23 patent assignments, real estate mortgages, hypothecs, fixture filings, deeds of trust, 24 notices of lien or similar instruments (collectively, Notice Filings) in any 25 jurisdiction, or take possession of or control over, or take any other action in order 26 to validate and perfect the liens and security interests granted to the DIP Lender 27 hereunder. The DIP Liens granted under this Interim DIP Order shall constitute 28 valid and duly perfected security interests and liens, and the DIP Lender is hereby - 31 -

1 not required to file or record any Notice Filings which otherwise may be required 2 under federal or state law in any jurisdiction, or take any action, including taking 3 possession, to validate and perfect such security interests and liens, and such liens 4 and security interests shall be deemed valid, perfected, allowed, enforceable, non5 avoidable and not subject to challenge dispute or subordination, as of the Effective 6 Date. The failure of Debtor to execute any documentation relating to the 7 enforceability, priority or perfection of the DIP Liens shall in no way affect the 8 validity, perfection or priority of the DIP Liens. 9

b.

If the DIP Lender, in its sole discretion, elects to file any Notice

10 Filings or otherwise to confirm perfection of such DIP Liens, Debtor shall cooperate 11 with and assist in such process, the stay imposed under section 362 of the 12 Bankruptcy Code is hereby lifted to permit the filing and recording of a certified 13 copy of this Interim DIP Order or the Final DIP Order or any such Notice Filings, 14 and all such documents shall be deemed to have been filed and recorded at the time 15 of and on the Effective Date. Any error, omission or other defect in any such filing 16 shall not affect the validity, enforceability, priority or perfection of any DIP Lien 17 granted under this Interim DIP Order. 18

c.

A certified copy of this Interim DIP Order may, in the discretion

19 of the DIP Lender, be filed with or recorded in filing or recording offices in addition 20 to or in lieu of such Notice Filings, and all filing offices are hereby authorized and 21 directed to accept such certified copy of this Interim DIP Order or the Final DIP 22 Order for filing and recording. The DIP Lien may be perfected against the Land by 23 recordation or by this Interim DIP Order and/or Final DIP Order or Abstract thereof 24 in the appropriate state or county filing office. 25

25.

Events of Default. In addition to the Events of Default under the DIP

26 Credit Agreement, which are incorporated herein and constitute events of default 27 hereunder, the following shall constitute events of default (each, an Event of 28 Default) under this Interim DIP Order: - 32 -

a.

If Debtor fails, within 15 days after entry of this Interim DIP

2 Financing Order, to file an application to retain an outside financial advisor to the 3 Debtor who is acceptable to DIP Lender, with a scope of service acceptable to the 4 DIP Lender, each in its sole and absolute discretion, and authorizing the financial 5 advisor to make (i) periodic reports on the Debtor's finances and operations in form 6 and frequency reasonably acceptable to DIP Lender, and (ii) its data, analysis and 7 personnel available to the DIP Lender or its professionals on reasonable notice and 8 at reasonable times, to answer the DIP Lender's and its professionals' questions with 9 respect to the matters within such financial advisers scope of service. 10

b.

The Case is dismissed or converted to a Chapter 7 case; or if a

11 Chapter 11 trustee, a responsible officer, or an examiner with enlarged powers 12 relating to the operation of the business of Debtor (powers beyond those established 13 in section 1106(a)(3) and (4) of the Bankruptcy Code) is appointed in the Case and 14 the order appointing such trustee, responsible officer or examiner shall not have 15 been reversed or vacated within 3 days of entry thereof. 16

c.

The Bankruptcy Court enters an order granting relief from the

17 automatic stay to the holder or holders of a security interest to permit foreclosure (or 18 the granting of a deed in lieu of foreclosure or the like) on any assets of Debtor 19 which have an aggregate value in excess of $50,000. 20

d.

An order is entered reversing, amending, supplementing,

21 suspending or staying this Interim DIP Order or the Final DIP Order. 22

e.

If Debtor creates, incurs or causes to exist any postpetition liens

23 or security interests other than those granted pursuant to this Interim DIP Order and 24 Final DIP Order to which the DIP Lender has consented in writing which exceeds 25 $50,000 at any one time, provided, however, that DIP Lender shall be deemed to 26 have consented to liens junior to the DIP Liens in favor of the Indenture Trustee and 27 Apollo. 28

f.

Any judgment in excess of $50,000 as to any post-petition date


- 33 -

1 obligation not covered by insurance is rendered against Debtor and the enforcement 2 of the judgment has not been stayed. 3

g.

Debtor (or any of its successors or assigns) files a motion or

4 application or adversary proceeding challenging the validity, enforceability, 5 perfection or priority of any claim or lien securing or pertaining to the DIP Loan. 6

h.

Debtor has not filed a plan (and disclosure statement) in the Case

7 at least ninety (90) days before the Maturity Date, which plan does not provide for 8 the Payment In Full of the DIP Loan on the effective date of such plan. 9

i.

A plan is confirmed in the Case that does not provide for

10 termination of the DIP Loan and payment in full in cash of outstanding obligations 11 pursuant to the DIP Credit Agreement (on the effective date of a plan of 12 reorganization or liquidation), or any order is entered that dismisses the Case and 13 which order does not provide for such termination and payment, or Debtor seeks 14 support or fails to contest the filing or confirmation of a plan or the entry of an order 15 that does not provide for full and immediate payment and satisfaction of the DIP 16 Loan. 17

j.

The filing of a motion, pleading, or proceeding by Debtor, or any

18 of its affiliates, that could reasonably be expected to result in any impairment of the 19 rights or interests of the DIP Lender or a determination by a court with respect to a 20 motion, pleading or proceeding brought by another party that results in any 21 impairment of the rights, claims and liens relating to the DIP Loan and any 22 obligations related to the DIP Loan. 23

k.

Any other superpriority administrative expense claim or lien

24 (other than the Carve Out) which is pari passu with or senior to the Superpriority 25 Claims or DIP Liens of the DIP Lender is granted in the Case, provided, however, 26 for avoidance of doubt, payment of operating expenses in the ordinary course of 27 business pursuant to the DIP Budget is permitted. 28

l.

Failure to obtain Final DIP Order approving the DIP Credit


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1 Agreement transaction within thirty (30) days of the filing of this Interim DIP Order. 2

m.

If the Interim DIP Advances exceeds at any time seventy-five

3 percent (75%) of the collectible value of the Eligible Receivables (as defined in the 4 DIP Credit Agreement). 5

n.

Any failure of Debtors actual performance to meet the

6 requirement of the DIP Budget, as modified by the Cash Flow Variances and the 7 Cash Flow Materiality Criterion. 8

o.

Failure of Debtor to satisfy in a timely fashion any of the

9 Reporting Requirements of this Interim DIP Order. 10

p.

Debtor default in the due and punctual payment of any payment,

11 fee or expense owing to DIP Lender pursuant to any of the DIP Documents, when 12 and as the same shall become due and payable, whether pursuant to Article II of DIP 13 Credit Agreement, at maturity, by acceleration or otherwise, except that prior to an 14 Event of Default the Debtor shall have up to one business day to cure such a default 15 on the DIP Loan with respect to a Borrowing Base Deficiency (as defined in the DIP 16 Credit Agreement). 17

q.

Any material provision of DIP Credit Agreement or any other

18 DIP Document shall at any time fail for any reason to be in full force and effect, or 19 the DIP Credit Agreement or any other DIP Document shall terminate, be terminated 20 or become void or unenforceable by the DIP Lender for any reason whatsoever 21 without the prior written consent of DIP Lender. 22

r.

The Credit Agreement and the other DIP Documents and the DIP

23 Orders shall, for any reason, cease to create a valid lien on any of the DIP Collateral 24 purported to be covered thereby or such lien shall cease to be a perfected lien having 25 the priority provided herein pursuant to Section 364 of the Bankruptcy Code against 26 Debtor, or Debtor shall so allege in any pleading filed in any court. 27

s.

Debtor shall default in the performance or observance of any

28 covenant, agreement or provision contained in the DIP Credit Agreement or any - 35 -

1 other DIP Document or in any other instrument or document evidencing or creating 2 any obligation, guaranty or lien in favor of DIP Lender in connection with or 3 pursuant to the DIP Credit Agreement. 4

t.

The Debtor, without DIP Lender's written consent, alters or

5 modifies any direction concerning (i) the remittances of government payors to the 6 Governmental Remittance Account (ii) the remittances of the holder of the 7 Governmental Remittance Account to the Designated Lockboxes or Designated 8 Lockbox Accounts or (iii) or the remittance of any non-government payor to the 9 Designated Lockboxes or Designated Lockbox Accounts, or otherwise 10

u.

A Modification (as defined in the depositary agreement) shall

11 have been sent or any change or replacement shall have been made in the standing 12 revocable instructions (as described in each of the depositary agreement(s)) or any 13 bank at which any deposit account, blocked account, or lockbox account (including 14 the Designated Lockboxes and Designated Lockbox Accounts) is maintained shall 15 fail to comply with any of the terms of any deposit account, blocked account, 16 lockbox account or similar agreement (including any depositary agreement) to 17 which such bank is a party. 18

v.

Any Termination Event shall have occurred under the Interim

19 Cash Collateral Order. 20

w.

Any representation or warranty made or deemed made by the

21 Debtor under or in connection with this Interim DIP Order, DIP Credit Agreement or 22 any other DIP Document or any information or report delivered by the Debtor 23 pursuant to this Interim DIP Order, DIP Credit Agreement or any other DIP 24 Document shall prove to have been incorrect or untrue in any material respect when 25 made or deemed made or delivered. 26

x.

As of any date of determination, Debtor is found to have been

27 overpaid by Governmental Entities (as defined in the DIP Credit Agreement) during 28 any period covered by an audit conducted by the Centers for Medicare and Medicaid - 36 -

1 Services of the United States Department of Health and Human Services or any state 2 entity and such overpayment is not repaid within three days of its due date or 3 reserved for in a manner reasonably acceptable to the Agent. 4

y.

There shall have occurred any event, or any condition shall exist,

5 other than the filing of the Case, that has had or resulted in, or could reasonably be 6 expected to have or result in, a Material Adverse Effect (as defined in the DIP Credit 7 Agreement) since the Petition Date. 8

z.

The Debtor enters into any transaction or agreement that could

9 reasonably be expected to result in a Change of Control (as defined in the DIP 10 Credit Agreement) that is to become effective prior to payment in full of the DIP 11 Loan; or a Change of Control shall have occurred prior to payment in full of the DIP 12 Loan. 13

aa.

Debtor is enjoined, restrained or in any way prevented by the

14 order of any court or any Governmental Entity from conducting all or any material 15 part of its business for more than 5 days. 16 17

26.

Protection of the DIP Lenders Rights. a. Remedies on Termination Date. Subject to the following

18 provisions of this paragraph and the Court's determination of the outcome on a 19 Relief From Default Motion (as defined below), on and after the Termination Date, 20 the DIP Lender shall have the exclusive right to exercise all rights and remedies 21 under the DIP Documents as provided below, including in respect of exercising all 22 rights and remedies to dispose of the DIP Collateral, in such commercially 23 reasonable manner as the DIP Lender may determine to effect the repayment of the 24 DIP Facility with the proceeds of such dispositions. After the occurrence and during 25 the continuance of an Event of Default that has not either (i) been waived by the DIP 26 Lender or (ii) solely with regard to the remedies set forth in subparagraph c. below, 27 unless temporarily stayed by the filing of a Relief From Default Motion or by the 28 Court's issuance of a Relief From Default Order (as defined below), the DIP Lender - 37 -

1 may undertake the following remedies, for which the automatic stay of section 2 362(a) of the Bankruptcy Code is hereby lifted: 3

b.

Remedies Available Without Notice Or Further Court Approval.

4 On the Termination Date, without further Order of the Court, the automatic stay 5 having been hereby lifted for such purposes, and without regard to any temporary 6 stay arising from the filing of a Relief From Default Motion, (i) Debtors right to 7 obtain Interim DIP Advances on the terms and conditions set forth in the DIP Credit 8 Agreement and in this Interim DIP Order shall terminate automatically, (ii) the 9 unpaid balance of the Interim DIP Obligations (and any unpaid and accrued interest) 10 shall automatically be accelerated and become immediately due and payable, (iii) 11 the Debtor shall not alter any direction given pursuant to this Interim DIP Order in 12 regard to the remittances of payment to the Governmental Remittance Account or to 13 Designated Lockboxes and Designated Lockbox Accounts, (iv) the DIP Lender may 14 sweep funds from the Designated Lockbox Accounts and apply them to outstanding 15 DIP Loans and (v) the Debtor shall not alter or interfere with Cymetrix's role as 16 servicer the Accounts. 17

c.

Remedies Available Upon Three Business Days Notice.

18 Subject only to the Court's issuance of a Relief From Default Order, except for the 19 actions authorized to be taken by the DIP Lender without notice or further Court 20 order under the prior subparagraph, upon providing three business days notice of an 21 Event of Default under this Interim DIP Order or under the DIP Credit Agreement to 22 Debtor, the United States Trustee, the Indenture Trustee, Apollo, and any official, 23 statutory committee hereinafter appointed herein (each, a "Committee"), DIP 24 Lender shall be entitled to exercise all of its rights and remedies against the DIP 25 Collateral by foreclosure, collection, suit, receivership or otherwise pursuant to the 26 DIP Credit Agreement and applicable law. Following notice of an Event of Default, 27 Debtor, the Indenture Trustee or the Committee may contest whether an Event of 28 Default has occurred and is material by filing a motion (the "Relief From Default - 38 -

1 Motion") with the Court within three (3) business days of the notice of an Event of 2 Default. The timely filing and service of a Relief From Default will temporarily 3 stay the DIP Lender from taking actions against the DIP Collateral (except for 4 actions by the DIP Lender pursuant to the prior subparagraph, which will not be so 5 stayed) but until the Court enters its order granting or denying the Relief From 6 Default Motion (the "Relief From Default Order"). Subject to the convenience of 7 the Courts calendar, the hearing on a Relief From Default Motion shall be within 8 five (5) business days of Debtors filing of the Relief From Default Motion. If a 9 Relief From Default Motion is not timely filed and served and the hearing is not 10 timely sought, or if the Relief From Default Motion is denied, the DIP Lender will 11 have relief from the automatic stay for all purposes and Debtor shall have no further 12 remedy or recourse with regard to the DIP Collateral, including but not limited to no 13 right to request use of DIP Collateral as cash collateral. On a Relief From Default 14 Motion, or any other hearing regarding any exercise of rights or remedies after an 15 Event of Default has occurred, the only issue that may be raised by the Debtor or the 16 Committee, and the only issue for the Court to determine, is whether an Event of 17 Default under the Interim DIP Order or the DIP Credit Agreement has, in fact, 18 occurred. Debtor and the Committee shall not have the right to seek relief, 19 including, without limitation, under section 105 of the Bankruptcy Code, to the 20 extent such relief would in any way impair or restrict the rights and remedies of the 21 DIP Lender set forth in this Interim DIP Order or the DIP Credit Agreement. The 22 delay or failure of the DIP Lender to seek relief or otherwise exercise or enforce its 23 rights and remedies under this Interim DIP Order or the DIP Credit Agreement shall 24 not constitute a waiver of the DIP Lenders rights or remedies. 25

d.

Limitations On Marshaling. In no event shall the DIP Lender be

26 subject to the equitable doctrine of marshaling or any similar doctrine with respect 27 to the DIP Collateral. 28

27.

Preservation of Rights Granted Under this Interim DIP Order.


- 39 -

a.

No claim or lien having a priority superior to or pari passu with

2 those granted by this Interim DIP Order to the DIP Lender in respect to the DIP 3 Collateral shall be granted or allowed while any portion of the Interim DIP 4 Obligations remains outstanding. Subsequent to the Petition Date, Debtor shall not 5 grant to any party or suffer any liens senior to the DIP Lender, except with the DIP 6 Lenders prior written consent. The DIP Liens shall not be subject or subordinate to 7 (i) any lien or security interest that is avoided and preserved for the benefit of 8 Debtor and its estate under section 551 of the Bankruptcy Code, (ii) any liens arising 9 after the Petition Date including, without limitation, any liens or security interests 10 granted in favor of any federal, state, municipal or other governmental unit, 11 commission, board or court for any tax liability of Debtor, whether secured or 12 unsecured, including property taxes for which liability is in rem, in personam, or 13 both, except a tax of a kind specified in section 507(a)(8) of the Bankruptcy Code, 14 (iii) any intercompany or affiliate liens of Debtor or (iv) subordinated to or made 15 pari passu with any other lien or security interest under sections 363 or 364 of the 16 Bankruptcy Code or otherwise. 17

b.

Unless all Interim DIP Obligations shall have been indefeasibly

18 paid in full and all Interim DIP Obligations terminated, Debtor shall not seek (i) any 19 order modifying or extending this Interim DIP Order without the prior written 20 consent of the DIP Lender, and no such consent shall be implied by any other 21 action, inaction or acquiescence of the DIP Lender, (ii) any order modifying or 22 extending this Interim DIP Order or adversely affecting the rights, priorities and 23 liens provided herein without the prior written consent of the DIP Lender or (iii) an 24 order converting or dismissing the Case. If an order dismissing the Case under 25 section 1112 of the Bankruptcy Code or otherwise is at any time entered, such order 26 shall provide (in accordance with sections 105 and 349 of the Bankruptcy Code) that 27 (x) the DIP Liens and the Superpriority Claims in favor of the DIP Lender pursuant 28 to this Interim DIP Order shall continue in full force and effect and shall maintain - 40 -

1 their priorities as provided in this Interim DIP Order until all Interim DIP 2 Obligations shall have been indefeasibly paid in cash and satisfied in full and the 3 Interim DIP Obligations shall have been terminated and that such Superpriority 4 Claims and the DIP Liens remain binding on all parties in interest, and (y) this Court 5 shall retain jurisdiction, notwithstanding such dismissal, for the purposes of 6 enforcing the Superpriority Claims and the DIP Liens to the fullest extent authorized 7 by statute and applicable law. 8

c.

If any or all of the provisions of this Interim DIP Order are

9 hereafter reversed, modified, vacated or stayed, such reversal, modification, vacatur 10 or stay shall not affect (i) the validity, priority or enforceability of any Interim DIP 11 Obligations incurred prior to the actual receipt of written notice by the DIP Lender, 12 as applicable, of the effective date of such reversal, modification, vacatur or stay or 13 (ii) the validity or enforceability of the DIP Liens or the Superpriority Claims 14 authorized or created hereby with respect to any Interim DIP Obligations. 15 Notwithstanding any such reversal, modification, vacatur or stay, any Interim DIP 16 Obligations incurred by Debtor to the DIP Lender prior to the actual receipt of 17 written notice by the DIP Lender of the effective date of such reversal, modification, 18 vacatur or stay shall be governed in all respects by the original provisions of this 19 Interim DIP Order, as applicable, and the DIP Lender shall be entitled to all the 20 rights, remedies, privileges and benefits granted in sections 363(m) and 364(e) of 21 the Bankruptcy Code and this Interim DIP Order with respect to all Interim DIP 22 Obligations. 23

d.

Except as expressly provided in this Interim DIP Order or the

24 DIP Credit Agreement, the DIP Liens, the Superpriority Claims, and the Interim 25 DIP Obligations, and all other rights and remedies of the DIP Lender granted by the 26 provisions of this Interim DIP Order shall survive, and shall not be modified, 27 impaired or discharged by (i) the entry of an order converting the Case to a case 28 under chapter 7, dismissing the Case, terminating the joint administration of the - 41 -

1 Case or by any other act or omission or (ii) the entry of an order confirming a plan 2 of reorganization in the Case and, pursuant to section 1141(d)(4) of the Bankruptcy 3 Code, Debtor having hereby waived any discharge of any remaining Interim DIP 4 Obligations. The terms and provisions of this Interim DIP Order shall continue in 5 this Case, in any successor Case if this Case ceases to be jointly administered, or in 6 any superseding chapter 7 Case under the Bankruptcy Code, and the DIP Liens, the 7 Superpriority Claims, the Interim DIP Obligations, and all other rights and remedies 8 of the DIP Lender granted by the provisions of this Interim DIP Order shall continue 9 in full force and effect until the Interim DIP Obligations are indefeasibly paid in 10 full. 11

28.

Limitation on Use of the Interim DIP Advances. Debtor has waived

12 any and all claims and causes of action against the DIP Lender and its respective 13 agents, affiliates, subsidiaries, directors, officers, representatives, attorneys or 14 advisors, directly related to the DIP Credit Agreement and this Interim DIP Order or 15 the negotiation of the terms thereof. Notwithstanding anything herein or in any 16 other order by this Court to the contrary, no borrowings under the DIP Credit 17 Agreement or proceeds of the DIP Collateral or the Carve Out may be used for any 18 of the following without the prior written consent of each affected party: (a) to 19 object, contest or raise any defense to, the validity, perfection, priority, extent or 20 enforceability of any amount due under the this Interim DIP Order, the DIP Credit 21 Agreement, or the DIP Liens or Superpriority Claims granted under this Interim DIP 22 Order or the DIP Credit Agreement, (b) to assert any claims or defenses or causes of 23 action against the DIP Lender or their respective agents, affiliates, subsidiaries, 24 directors, officers, representatives, attorneys or advisors, (c) to prevent, hinder or 25 otherwise delay the DIP Lenders assertion, enforcement or realization on the DIP 26 Collateral in accordance with the DIP Credit Agreement or this Interim DIP Order, 27 (d) to seek or to modify any of the rights granted to the DIP Lender hereunder, 28 under this Interim DIP Order or under the DIP Credit Agreement or the DIP - 42 -

1 Documents, or (e) to pay any amount on account of any claims arising before the 2 Petition Date unless such payments are approved by an order of this Court and 3 consented to by the DIP Lender. 4

29.

Interim DIP Order Governs. To the fullest extent permissible under

5 the Bankruptcy Code and existing law, the provisions of this Interim DIP Order, 6 including all findings, are binding on all parties in interest in this Case, including the 7 DIP Lender, the Indenture Trustee, Apollo, the Committee, and Debtor and its 8 respective successors and assigns (including any Chapter 7 or Chapter 11 trustee 9 subsequently appointed or elected for the bankruptcy estate of any of Debtor) and 10 inures to the benefit of the DIP Lender and Debtor and its respective successors and 11 assigns; provided that the DIP Lender has no obligation to extend any financing to 12 any Chapter 7 trustee or similar responsible person appointed for the bankruptcy 13 estate of Debtor. To the extent that there is a conflict among the Motion, the DIP 14 Credit Agreement, the DIP Documents and this Interim DIP Order, this Interim DIP 15 Order will govern and control. 16

30.

Headings. Sections headings used herein are for convenience only and

17 are not to affect the construction of or to be taken into consideration in interpreting 18 this Interim DIP Order. 19

31.

Waiver of any Applicable Stay. Any applicable stay (including, without

20 limitation, under Bankruptcy Rule 6004(h)) is hereby waived and shall not apply to 21 this Interim DIP Order. 22

32.

Final Hearing. The Final Hearing will be held on _______________

23 2009 at _____ ___.m. (prevailing Pacific time) before this Court (the Final 24 Hearing). 25

33.

Notice Of Final Hearing And Final DIP Order. Debtor shall, within

26 one (1) Business Day after the entry of this Interim DIP Order, mail by overnight 27 mail (i) a notice of the Final Hearing and the objection deadlines set forth below (the 28 Final Hearing Notice), and (ii) copies of this Interim DIP Order on (a) the - 43 -

1 United States Trustee; (b) counsel for the Indenture Trustee, (c) the Twenty Largest 2 Unsecured Creditors as set forth in the list filed by Debtor pursuant to Bankruptcy 3 Rule 1007(d), (d) all parties in interest on whom service is required by Debtors 4 order limiting notice entered in this Case and their counsel and (e) Apollo, and all 5 other known holders of liens on Debtors assets, (f) counsel to the Committee, if any 6 has been appointed (g) California Department of Public Health Licensing and 7 Certification Program, (h) United States Department of Health and Human Services 8 Centers for Medicare and Medicaid Services, (i) the California Department of 9 Justice, Attorney Generals Office, (j) the California Health Facilities Financing 10 Authority, and (k) the other parties on whom the Court directed service on the 11 record of the Interim Hearing. Objections by any party in interest to this Interim 12 DIP Order shall be filed with this Court and served by overnight mail or personal 13 delivery to the parties listed below at the addresses set forth below no later than 14 September [--], 2009 at 4:00 p.m. (prevailing Pacific time). At the Final Hearing, 15 this Court will consider the objections properly filed and served. Any party in 16 interest objecting to the relief sought at the Final Hearing must serve a written 17 objection on (i) Lisa Hill Fenning, Arnold & Porter LLP, 44th Floor, 777 South 18 Figueroa Street, Los Angeles, CA 90017-5844, lisa.fenning@aporter.com, 19 attorneys for Debtor; (ii) William H. Kiekhofer, McGuireWoods LLP, 1800 Century 20 Park East, Suite 800, Los Angeles, CA 90067, wkiekhofer@mcguirewoods.com, 21 attorneys for the DIP Lender; (iii) Jeffry A. Davis (SBN 103299), Mintz Levin Cohn 22 Ferris Glovsky And Popeo P.C., 3580 Carmel Mountain Road, Suite 300, San 23 Diego, CA 92130, jdavis@mintz.com and William W. Kannel Mintz Levin Cohn 24 Ferris Glovsky And Popeo P.C., One Financial Center, Boston, MA 02111, 25 wkannel@mintz.com and (iv) the Office of the United States Trustee for the Central 26 District of California, and file the objection with the Clerk of the United States 27 Bankruptcy Court for the Central District of California at Edward R. Roybal Federal 28 Building and Courthouse, 255 E. Temple Street, Room 940 Los Angeles, CA 90012 - 44 -

1 or in the Electronic Court Filing (ECF) system of the Bankruptcy Court for the 2 Central District of California, in each case to allow actual receipt by above-named 3 parties who are required to be served objections no later than September [--], 2009 4 at 4:00 p.m. (prevailing Pacific time). 5 6 Dated: September _____, 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 45 9864345.10

2009

Honorable [Name] United States Bankruptcy Judge

Exhibit 1

Downey Regional Medical Center Analysis of Projected Cash Flow For the 16 Weeks Ending January 1, 2010 1 18-Sep-09 Cash Receipts Medicare Medical Commercial Other Total Cash Receipts Cash Disbursements 401k Contribution Gross Payroll Payroll Taxes - Employer Insurance - Health Workers Comp Claims Total Payroll Related Disbursements Advertising Audit Fees Ambulance Building Rent Capital Expenditures Operating Leases Consulting & Mgmt Fees Contracted Services Equipment Lease Equipment Rental Food & Beverages Freight Insurance - General Insurance - Workers Comp. Cymetrix Capital Leases Materials Medical Professional Fees Miscellaneous Forms (Office Supplies) Plant Maint & Repairs Postage & Courier Purchased Services Sales Taxes Siemens Taxes/Licenses Telephone Education Utilities Total Non-Payroll Related Disbursements TOTAL OPERATING DISBURSEMENTS Bankruptcy Expenses U.S. Trustee FTI Committee (Counsel & Financial Ad) Medical Ombudsman Lender Interest Lender Facility Fee Legal Omni Adequate Protection-Bonds TOTAL SPECIAL DISBURSEMENTS TOTAL DISBURSEMENTS Net Cash Flow CUMM CASH FLOW Cash Balances Beginning of Period LOC Advance End of Period $ $ $ 687,500 190,000 1,504,000 7,500 2,389,000 2 25-Sep-09 $ 687,500 $ 190,000 $ 1,598,000 7,500 2,483,000 3 02-Oct-09 $ 737,500 $ 190,000 $ 1,880,000 28,500 2,836,000 4 09-Oct-29 $ 737,500 $ 190,000 $ 1,880,000 7,500 2,815,000 5 16-Oct-09 $ 737,500 $ 200,000 $ 1,974,000 7,500 2,919,000 6 23-Oct-09 $ 737,500 $ 200,000 $ 1,974,000 7,500 2,919,000 7 30-Oct-09 $ 737,500 $ 200,000 $ 2,068,000 7,500 3,013,000 8 06-Nov-09 $ 757,500 $ 200,000 $ 2,068,000 28,500 3,054,000 9 13-Nov-09 $ 757,500 $ 200,000 $ 2,068,000 7,500 3,033,000 10 20-Nov-09 $ 757,500 $ 200,000 $ 2,362,000 7,500 3,327,000 11 27-Nov-09 $ 757,500 $ 200,000 $ 2,362,000 7,500 3,327,000 12 04-Dec-09 $ 757,500 $ 210,000 $ 2,362,000 28,500 3,358,000 13 11-Dec-09 $ 757,500 $ 210,000 $ 2,362,000 7,500 3,337,000 14 18-Dec-09 $ 757,500 $ 210,000 $ 2,362,000 7,500 3,337,000 15 25-Dec-09 $ 757,500 $ 210,000 $ 2,362,000 7,500 3,337,000 16 01-Jan-10 $ 757,500 $ 210,000 $ 2,068,000 7,500 3,043,000

TOTAL $ 11,880,000 $ 3,210,000 $ 33,254,000 $ 183,000 $ 48,527,000

66,000 2,820,000 217,000 800,000 18,000 818,000 18,000 3,121,000 18,000 18,000 5,000 50,000 2,000 21,521 53,137 -

66,000 2,820,000 217,000 18,000 3,121,000 800,000 18,000 818,000

66,000 2,820,000 217,000 18,000 3,121,000 18,000 18,000 1,200 2,000 45,000 53,137 184,000 130,124 -

66,000 2,820,000 217,000 18,000 3,121,000 800,000 18,000 818,000

66,000 2,820,000 217,000 18,000 3,121,000 18,000 18,000 1,200 40,000 2,000

66,000 2,820,000 217,000 18,000 3,121,000 800,000 18,000 818,000

66,000 2,820,000 217,000 18,000 3,121,000

18,000 18,000 1,200 20,000

66,000 2,820,000 217,000 18,000 3,121,000

$ 528,000 $ 22,560,000 $ 1,736,000 $ 3,200,000 $ 288,000 28,312,000 $ 8,600 $ 110,000 $ 8,000 $ 244,563 $ $ 212,548 $ 552,000 $ 390,373 $ 14,332 $ 88,216 $ 311,392 $ 83,392 $ 760,000 $ 300,000 $ 865,116 $ 238,000 $ 8,259,457 $ 444,000 $ 800,000 $ 580,928 $ 131,216 $ 23,200 $ 3,586,971 $ 96,000 $ 947,913 $ 60,000 $ 100,000 $ 19,200 $ 600,000 $ 19,835,417 $ 48,147,417

45,000

21,521

45,000 53,137

21,521

45,000

53,137

2,000 -

19,462 5,212 190,000

19,462 5,212 100,000

19,462 5,212

3,583 22,054 19,462 5,212

19,462 5,212 190,000

19,462 5,212

19,462 5,212

3,583 22,054 19,462 5,212

184,000 130,124

19,462 5,212 190,000 $ 288,372 512,877 50,000 36,308 8,201 1,450 224,186 $ 315,971 25,000 1,200 130,000 $ 2,167,363 $ 2,985,363

19,462 5,212

19,462 5,212

3,583 22,054 19,462 5,212

184,000 130,124 19,462 5,212 190,000 $ 288,372 502,192 50,000 36,308 8,201 1,450 224,186 $ 315,971 25,000 1,200 130,000 $ 2,133,199 $ 2,951,199 502,192 50,000 36,308 8,201 1,450 224,186 1,200 $ 893,211 $ 4,014,211 59,500 502,192 50,000 36,308 8,201 1,450 224,186 24,000 $ 15,000 1,200 $ 1,221,048 $ 1,239,048 19,462 5,212 19,462 5,212 200,000 3,583 22,054 19,462 5,212

$ 534,247 50,000 36,308 8,201 1,450 224,181 25,000 1,200 190,000 1,330,261 2,148,261 59,500 534,247 50,000 36,308 8,201 1,450 224,186 24,000 1,200 $ 1,116,903 $ 4,237,903 $ $ 534,247 50,000 36,308 8,201 1,450 224,186 $ 15,000 1,200 973,787 991,787

288,372 523,562 148,000 50,000 36,308 8,201 1,450 224,186 315,971 1,200 523,562 50,000 36,308 8,201 1,450 224,186 25,000 1,200 150,000 $ 1,593,705 $ 2,411,705 523,562 50,000 36,308 8,201 1,450 224,186 24,000 1,200 $ 893,581 $ 4,014,581 59,500 523,562 50,000 36,308 8,201 1,450 224,186 15,000 1,200 $ 1,000,418 $ 1,018,418 512,877 148,000 50,000 36,308 8,201 1,450 224,186 1,200 $ 1,054,054 $ 4,175,054 $ $ $ $ 75,000 75,000 16,000 $ $ 284,000 $ 40,000 40,000 13,000

512,877 50,000 36,308 8,201 1,450 224,186 24,000 1,200 $ 882,896 $ 4,003,896

59,500 512,877 50,000 36,308 8,201 1,450 224,186 15,000 1,200 $ 1,029,733 $ 1,047,733

502,192 148,000 50,000 36,308 8,201 1,450 224,186 1,200 $ 1,021,848 $ 4,142,848

502,192 50,000 36,308 8,201 1,450 224,186 1,200

$ $

$ 1,647,561 $ 4,768,561

$ 875,848 $ 3,996,848

$ $ $ 16,000

65,000 75,000 $ $

$ $ 284,000

40,000

75,000

539,695 $ - $ - $ - $ 494,000 $ - $ - $ - $ 494,000 $ - $ - $ - $ 823,695 40,000 944,000 40,000 53,000 510,000 215,000 2,971,956 4,237,903 991,787 4,808,561 3,355,705 4,014,581 1,058,418 4,228,054 3,495,363 4,218,896 1,047,733 4,142,848 (582,956) (1,754,903) 1,844,213 (1,993,561) (436,705) (1,095,581) 1,954,582 (1,174,054) (462,363) (891,896) 2,279,267 (784,848) (582,956) (2,337,859) (493,646) (2,487,207) (2,923,912) (4,019,493) (2,064,911) (3,238,965) (3,701,328) (4,593,224) (2,313,957) (3,098,805) 340,000 4,000,000 3,757,044 3,757,044 $ 2,002,141 2,002,141 $ 3,846,354 3,846,354 $ 1,852,793 1,852,793 1,000,000 $ 2,416,088 2,416,088 $ 1,320,507 1,320,507 $ 3,275,089 3,275,089 $ 2,101,035 2,101,035 $ 1,638,672 1,638,672 746,776 746,776 $ 3,026,043 3,026,043 $ 2,241,195

$ 13,000 $ 215,000 $ 200,000 16,000 $ 48,000 40,000 $ 120,000 $ 568,000 40,000 $ 125,000 $ 280,000 $ 10,000 $ 10,000 - $ 494,000 $ - $ - $ 2,021,695 96,000 754,000 3,475,695 3,047,199 4,768,211 1,239,048 3,996,848 51,623,112 289,801 (1,431,211) 2,097,952 (953,848) (3,096,112) (2,809,005) (4,240,216) (2,142,264) (3,096,112) $ $ 75,000 50,000 2,530,995 $ 1,099,784 1,099,784 $ 3,197,736 3,197,736 $ 340,000 $ 5,000,000 $ 2,243,888 $ 2,243,888

2,241,195 $ 2,530,995

9/14/2009

6:38 PM

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