EXHIBIT 10.10

 

       

        Private Client Group

LOGO [g32410image001.jpg]      

        Merrill Lynch Business

        Financial Services Inc.

        222 North LaSalle Street

        17th Floor

        Chicago, Illinois 60601

        (312) 499-3110

        FAX: (312) 368-1387

       

        October 29, 2004

 

Mr. Phillip Chan

Dynacq Healthcare, Inc.

10304 Interstate 10 East

Suite 369

Houston, Texas 77029

 

Re: Assumption Agreement

 

Reference is hereby made to:

 

(a) that certain WCMA REDUCING REVOLVER LOAN AND SECURITY AGREEMENT NO.
582-07L53 (as such agreement is from time to time amended, extended or restated
“Reducing Revolver”) between MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
(“MLBFS”) and DYNACQ INTERNATIONAL, INC., a corporation formerly organized under
the laws of the State of Nevada (“Original Customer”);

 

(b) all other agreements between MLBFS and Original Customer in connection
therewith; and

 

(c) all agreements for the benefit of MLBFS pursuant to which a person or entity
has either guaranteed, or provided collateral for, Original Customer’s Reducing
Revolver and other Obligations to MLBFS including without limitation each of
Vista Healthcare, Inc., Vista Land and Equipment, L.L.C., Doctors Practice
Management, Inc., Vista Community Medical Center, LLP (successor to Vista
Community Medical Center L.L.C.), Ambulatory Infusion Therapy Specialist, Inc.,
and Surgi+Group, Inc. (each such person or entity, a “Guarantor” and
collectively, the “Guarantors”).

 

All such agreements, as previously amended, or amended from time to time,
restated and/or extended, are hereafter collectively called the “Loan
Documents”. Capitalized terms used herein and not defined herein shall have the
meaning set forth in the Loan Documents.

 

The undersigned, DYNACQ HEALTHCARE, INC., represents and warrants that as of
November 14, 2003, it is a corporation organized and existing under the laws of
the State of Delaware (“New Customer”, New Customer and the Guarantors shall
collectively be referred to as “Obligors”). New Customer hereby represents and
warrants to MLBFS that New Customer has assumed all of the business, properties
and obligations of Original Customer as of November 14, 2003 through a merger
with Original Customer in which New Customer is the surviving entity. In
connection therewith, Obligors have agreed to confirm in writing to MLBFS the
assumption of the Obligations, Reducing Revolver and other Loan Documents which
occurred by operation of law on November 14, 2003. Accordingly, effective as of
November 14, 2003, the Obligors represent and warrant, as follows:

 

(1) New Customer agrees that it has assumed and does hereby assume all
Obligations, covenants and warranties of Original Customer under the Loan
Documents in the same manner and with the same effect as if such Obligations,
covenants and warranties were originally Obligations, covenants and warranties
of New Customer. Guarantors each consent and agree to the assumption set forth
herein, and agree that the Unconditional Guaranty, Security Agreement or other
documents executed by each such Guarantor shall extend to and be deemed an
unconditional guaranty of, and grant of security interest to MLBFS in the
Collateral securing the Obligations of both Original Customer and New Customer,
jointly and severally, in the same manner and with the same effect as if New
Customer and Original Customer were originally jointly and severally named as
the “Customer” under the Loan Documents and in such Unconditional Guaranty,
Security Agreement or other document.

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(2) Without limiting the foregoing, Obligors agree that: (a) all amounts owed by
Original Customer to MLBFS under the Loan Documents are now owed by New Customer
to MLBFS as New Customer’s direct and primary Obligations, which amounts are
guaranteed and collateralized by the Guarantors pursuant to the Loan Documents;
(b) such amounts will be paid to MLBFS with interest in the manner and at the
time or times specified in the Loan Documents; (c) New Customer now solely owns
all property heretofore owned by Original Customer and included in the
definition of Collateral under the Reducing Revolver, and all such property is
subject to the liens and security interests of MLBFS; and (d) subject to the
terms of the Loan Documents, New Customer hereby grants to MLBFS a continuing
first lien and security interest upon all other property included in the
definition of Collateral now owned or hereafter acquired by New Customer. All
references in the Loan Documents to “Customer” shall hereafter be deemed
references to New Customer. All notices to “Customer” under the Loan Documents
shall be sent solely to New Customer at the address set forth above, or at such
other address as may hereafter be specified in a written notice to MLBFS, and
MLBFS shall attempt, but not be required, to send a copy of all such notices to
the attention of Holly A. Hubenak, Deputy General Counsel, at Customer’s
address. The Loan Documents are hereby amended to reflect the assumption
described herein and add thereto the covenants, warranties and agreements of
Obligors included in this Letter Agreement. Except as expressly amended hereby,
the Loan Documents shall continue in full force and effect upon all of their
terms and conditions.

 

Obligors shall indemnify, defend and hold MLBFS harmless from and against any
and all losses, liabilities, cost and expenses (including reasonable attorneys’
fees and expenses) arising out of or related to the assumption of the Loan
Documents pursuant hereto, or any claim of Original Customer or anyone claiming
through or under Original Customer with respect to the Loan Documents or the
Collateral, any fees paid to MLBFS in connection the Loan Documents or any of
the transactions contemplated thereby, excluding, however, from said indemnity,
any such claim, liabilities, cost and expenses arising directly out of the
willful wrongful act or active gross negligence of MLBFS.

 

Obligors further represent and warrant to MLBFS that: (a) no Default or Event of
Default has occurred and is continuing under any of the Loan Documents except
for the Events of Default described in the Notice of Default and Demand for
payment from MLBFS dated October 5, 2004; (b) no Obligor has any defense to
payment of any amounts owing, or any right of claim or counterclaim against
MLBFS for any reason under, the Loan Documents; (c) the execution, delivery and
performance by Obligors of this Assumption Agreement and each other document
required to be executed by any Obligor or any other entity or person in
connection herewith: (i) has been duly authorized by all requisite action, (ii)
does not and will not violate or conflict with any law or other governmental
requirement, or any of the agreements, instruments or documents which formed or
govern Obligors, and (iii) does not and will not breach or violate any of the
provisions of, and will not result in a default by any Obligor under any other
agreement, instrument or document to which it is a party or by which it or its
properties are bound.

 

Subject to the terms and conditions hereof and the Amendment to Reducing
Revolver and other Loan Documents of even date hereof, MLBFS hereby consents to
the assumption by New Customer of the Obligations of Original Customer under the
Reducing Revolver described in the Loan Documents and the change from Vista
Community to an “LLP” from an “LLC”, without waiving any provision of the Loan
Documents.

 

Notwithstanding the foregoing, Obligors must execute and return the duplicate
copy of this Assumption Agreement by November 2, 2004.

 

Very truly yours,

 

Merrill Lynch Business Financial Services Inc.

By

 

/s/ Tara E. Slomka

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Tara E. Slomka

   

Assistant Vice President &

   

Senior Real Estate Closing Manager

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Agreed by New Customer: Dynacq Healthcare, Inc.

By:

 

/s/ Philip Chan

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Printed Name: Philip Chan

Title: Vice President - Finance

Agreed by Guarantors: Vista Healthcare, Inc.

By:

 

/s/ Philip Chan

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Printed Name: Philip Chan

Title: President

Vista Land and Equipment, L.L.C.

By:

 

Doctors Practice Management, Inc., Manager

Printed Name: /s/ Philip Chan Philip Chan

Title: President

Doctors Practice Management, Inc.

By:

 

/s/ Philip Chan

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Printed Name: Philip Chan

Title: President

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Vista Community Medical Center, LLP (successor to Vista Community Medical Center
L.L.C)

 

By:

 

Doctors Practice Management, Inc., Its General Partner

Printed Name: /s/ Philip Chan / Philip Chan

Title: President

Ambulatory Infusion Therapy Specialist, Inc.

By:

 

/s/ Connie Hudec

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Printed Name: Connie Hudec

Title: President

Surgi+Group, Inc.

By:

 

/s/ Philip Chan

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Printed Name: Philip Chan

Title: President