MM MecCORMICK BARSTOW LLP ATTORNEYS AT LAWN reagent ronment coer ening todenees Whore 1936820 September 1, 2017 Via U.S. Mai & E-Man, Bruce Greene Marshall Grossman Baker Hostetler Orrick 11601 Wilshire Boulevard, Suite 1400 777 South Figueroa Street, Suite 3200 Los Angeles, CA 90025 Los Angeles, CA 90017 Re: _ Tulare Local Healthcare District Our File No.: 36894-00000 Dear Me, Greene and Mr, Grossman: It has come to our attention that HCCA (through Dr. Benzeevi and other agents) is attempting to obtain a loan on behalf of the Tulare Local Healtheare District (“the District”) for approximately $100 million, using the District's real and personal property as collateral for such loan. The District demands that HCCA immediately cease and desist from such efforts unless and until approved by the Board, We request written confirmation from you that HCCA will follow this instruction. ‘As you know, the Board took action on July 27, 2017 at its special meeting to rescind Resolution Nos. 851 and 852. In so doing, the Board rescinded and terminated HCCA's authority to enter into loans on behalf of the District without the express approval of the Board, and similarly terminated HCCA’s authority to use the Distriet’s property as collateral and security for such loans, HCCA was provided with notice of this Board action following the July 27, 2017 special meeting. Despite the clear directive of the Board, we are informed that FCCA, Dr. Benzeevi, and other employees/agents of HCCA, are presently taking inventory of all of the District's real and personal property with the intent of pledging sueh property as security for a loan in the amount of $100 million. You are hereby on notice that the Board does not consent to, authorize, or approve of such action ‘To the extent that HCCA believes that the above-described loan, or some other loan, is necessary Tor the Distriet’s operation and maintenance of the Tulare Regional Medical Center, a loan proposal must be presented to the Board for its review and consideration, Such presentation should include the terms of the loan, the proposed lender, any planned security interest or pledge of the District's property, a disclosure of any and all personal interest that Dr. Benzeevi ar any of his family members have in the proposed lending y, disclosure of any and all personal benefits or payments that Dr. Benzeevi or yy of his family members would receive from the loan, disclosure of any potential conflicts of interest relating to the loan, the purpose of the loan, and HCCA’s intended use and allocation of the funds received from the lender. If presented with this information, the Board will promptly consider the request and schedule a meeting to review. analyze, and determine whether or not to authorize the reque: exwer AYwi McCORMICK BARSTOW LLP ATTORNEYS AT LAW September 1, 2017 Page 2 However, if HCCA continues to pursite this or other loans without Board approval, be advised that it does so without legal authority of authorization by the Distriet’s Board. In the event that any damages are incurred by the Distriot from HCCA’sand Dr. Benzeevi's refusal to heed this instruction, the District intends to pursue all legal remedies available, including but not limited to injunctive relief. If you have any questions, please feel free to contact us Very truly yours, : ‘Timothy L. Thompson Mandy L. Jeffcoach Nikole E. Cunningham McCormick Barstow LLP Ce: Kevin Northeralt (via email only) ¢ Jamaica (via email only) Senovia Gutierrez (via email only) Richard Torrez (via email only) {94-00000 4685056.Niki Cunningham From: Grossman, Marshall Sent: Friday, September 01, 2017 4:55 PM To: Niki Cunningham Subjec Re: Tulare Local Healthcare District | appreciate your diligence in sending a letter on the eve of the three day holiday but | am out of the office and will not be dealing with its content until | return on Tuesday. {trust that you understand that Mr. Green and I have different differs. 's, have different roles and our clients represent: While we will open up these attachments on Tuesday please now tell me who you represent. In other words on whose behalf are you writing? Thank you behalf are you writing, Sent from my iPhone On Sep 1, 2017, at 4:15 PM, Niki Cunningham wrote: Mr. Greene and Mr. Grossman, Please see attached, NIKI CUNNINGHAM Attorney MeCormick Barstow, LLP Test nr Fan Stet Po asta Frou, ca saecor2 {E53\t352259 aren (S50) 2500 exHBiT, “BCONFIDENTIALITY NOTICE: E-mail may contain confidential information that is legally privileged. Do not read this e-mail if you are not the intended recipient, This e-mail transmission, and any documents, files or previous e-mail messages attached to it may contain confidential and proprietary information that is legally privileged. If you are not the intended recipient, or a person responsible for delivering it to the intended recipient, you are hereby notified that any disclosure, copying, distribution or use of any of the information contained in or attached to this transmission is STRICTLY PROHIBITED. If you have received this transmission in error, please immediately notify us by forwarding this to info@mccormickbarstow.com or by telephone at (559) 433-1300, and destroy the original transmission and its attachments without reading or saving it in any manner. Thank you. <2017_09_01_16_08_34.pdt> NOTICE TO RECIPIENT | This e-mail ls meant for only the intended recipient of tha transmission, and may be a communication pivleged by law Ifyou received this &-mailin err, any review, vse, dissemination, dstibution, or copying ofthis e-mails strictly prohibited. Please noiy us immediately of the error by return e-mail and please delete tis message fram your system. Thank you in advance for yout cooperation. For more information about Ontck, please vist itp/w.omrick cam,From: Grossman, Marshall Sent: Thursday, September 14, 2017 6:05 PM To: Tim Thompson Ce: Mandy Jeffcoach; Niki Cunningham Subject: Re: Your 9/1/ letter ‘Atno time did I acknowledge that our client was seeking a $100 million loan. We made no secret of the fact that it was seeking financial help. But you have used your exaggeration without any named source and in an effort to paint what is clearly a false picture. Who is your source; perhaps we can both meet with your source and find out the basis for hey fairy tail. If you don't mind now I'm going to go off-line because I'm presiding over a community meeting Sent from my iPhone > On Sep 14, 2017, at 5:06 PM, Tim Thompson wrote: > > > > > Mr. Grossman, > > This is the first time that HCCA has disputed our information that itis attempting to obtain a loan, secured by the District’s property. In fact, you acknowledged that was their plan during our meeting in Sacramento on Sept. 6. We also never received a substantive response to the attached Sept. 1 letter and you did not dispute that HICCA was attempting to secure such a loan. Thus, I am not clear on what you contend is false. Is it the amount of “approximately $100M” or some other fact. If the correction needed is the amount, please comply with our previous requests on behalf of the Board to compel your client to disclose the amount, the lender, and any potential conflicts/necessary disclosures of any self interest in the requested loan. What is stated in the letter, as ‘well as in the other declarations before the court, is correct with respect to what was reported to each declarant. > I will not identify, based on our work product/atty client privilege, who informed us of this information or identify the employees who may be involved as they fear your client will retaliate against them and terminate their employment. > > > > > [McCormick Barstow, LLP] > > > Tim Thompson > Attomey > McCormick Barstow, LLP > 7647 North Fresno Street> P.O. Box 28912 > Fresno, CA 93729-8912 > (559) 433-1300 main > (559) 433-2300 fax > > Tim.Thompson@mecormickbarstow.com > > > [www.mecormickbarstow.com) > > [www.mecormickbarstow.com} > > > CONFIDENTIALITY NOTICE: E-mail may contain confidential information that is legally privileged. Do not read this e-mail if you are not the intended recipient. This e-mail transmission, and any documents, files or previous e-mail messages attached to it may contain confidential and proprietary information that is legally privileged. If you are not the intended recipient, or a person responsible for delivering it to the intended recipient, you are hereby notified that any disclosure, copying, distribution or use of any of the information contained in or attached to this transmission is STRICTLY PROHIBITED. If you have received this transmission in error, please immediately notify us by forwarding this to info@mecormickbarstow.com or by telephone at (559) 433-1300, and destroy the original transmission and its attachments without reading or saving it in any manner. Thank you. > > From: Grossman, Marshall {mailto:mgrossman@orrick.com] > Sent: Thursday, September 14, 2017 12:28 PM > To: Tim Thompson > Ce: Grossman, Marshall > Subject: Your 9/1/ letter > > Your September | letter is laden with false information, I am sure you would like to get to the bottom of it. To keep things simple, who is it that informed you that our client “is attempting to obtain a loan on behalf of the District for approximately $100 million? That statement is false. Yet you present it as fact (hearsay at that) in the motions you now have before the Court. Please correct your filing without delay. We view the balance of that letter as merely an expressing of your views and see no need to further comment at this time. > > Marshall B. Grossman > Partner > Orrick > Los Angeles > > [V-card] > T +1-213-612-2255 > mgrossman@orrick.com > [Orrick} [Fortune 100 Best Companies to Work for 2017 - 2nd Year in a Row] vVVVVVV¥VVVVV¥ > NOTICE TO RECIPIENT | This e-mail is meant for only the intended recipient of the transmission, and may be a communication privileged by law. If you received this e-mail in error, any review, use, dissemination, distribution, or copying of this e-mail is strictly prohibited. Please notify us immediately of the error by return e-mail and please delete this message from your system. Thank you in advance for your cooperation. > > For more information about Orrick, please visit http//www.orrick.com. > > > > > > > > <117091420060000635.png> > <117091420060000835.png> > <117091420060001035.png> > <2017.09.01 NEC Lir to Greene, Grossman re Loan (TRMC).PDF> NOTICE TO RECIPIENT | This e-mail is meant for only the intended recipient of the transmission, and may be a communication privileged by law. If you received this e-mail in error, any review, use, dissemination, distribution, or copying of this e-mail is strictly prohibited. Please notify us immediately of the error by return e-mail and please delete this message from your system. Thank you in advance for your cooperation. For more information about Orrick, please visit http://www.orrick.com.wi McCORMICK BARSTOW LLP ATTORNEYS AT LAW Teeny nee engi Goes anenosemtncon ‘ie reo econ pigs Fewinenaes ou stent “Sinesocana esi eee See wena npn Set Sus ‘enon (72) 20.818 Forman aster tas veons, wv ornce cost ea Soret Roa, us 80 ‘Lavage heres 213 "Prenat fas Sree Sn, ‘Fagpose gems 09 Fargonaene September 11,2017 Via U.S. Matt & E-MAIL, Mare Levinson Marshall Grossman Orrick Orrick 400 Capitol Mall, Suite 3000 777 South Figueroa Street, Suite 3200 Sacramento, CA 95814-4497 Los Angeles, CA 90017 Re; Tulare Local Healthcare District ‘Our File No.: 36894-00000 Dear Mr. Levinson and Mr. Grossman: ‘Asa follow-up to our meeting on September 6, 2017, the following is our document request. Keep in mind this request is being made consistent with Paragraph 7 (g) of the Management Services Agreement. While the section calls for an inspection to occur, based on our meeting and ongoing dialogue, we would request that the documents be electronically provided. ‘Aswe indicated, the production of these documents will allow us to begin evaluating this ‘matter with an eye towards resolution. Until we have the necessary information, we are not in a position to fully advise our client; hence the request for the following information: * * All financial statements for the District/Hospital from 2013 to the present; All balance sheets for the District/Hospital from 2013 to the present; All profit and loss statements for the DistricHospital from 2013 tothe present; The detailed trial balances for the District's general ledger on a quarterly and annual basis from 2013 to the present; ‘The chart of accounts for the District's general ledger describing the accounts, sub-accounts, assigned account numbers and other descriptions; ‘All cost reporting for the District/Hospital from 2013 to the present; All payroll reports for the last 2 years; Monthly bank reconciliations for the last 2 years; Al vendor contracts for the DistricVHospital from 2013 to the present; All accounts receivables for the District/Hospital from 2013 to the present; exer)At McCORMICK BARSTOW LLP ATTORNEYS AT LAW Bruce Greene Marshall Grossman September 11, 2017 Page 2 * ° * Current accounts payable for the District/Hospital; Audited financial statements for 2015, 2016 and 2017 (assuming 2017 is available) for the District/Hospital; ‘All loan ‘agreements and/or promissory notes between HCCA and the Hospital/District; All loan agreements and/or promissory notes made by the Hospital/District to third parties; All loan agreements and/or promissory notes to which the Hospital/District have a repayment obligation; All documents, including but not limited to any accountings, loan documents, and bank records which evidence the approximate $7.6 million HCCA claims it is owed from the District/Hospital; List of all pending lawsuits naming HCCA and/or TRMC; ‘The most recent 9900 filed with the IRS (assuming there is one); Copies of all engagement letters between the District Hospital and any lawyer and/or accountant; Copies ofall engagement letters between HCCA/Dr, Benzeevi and any lawyer and/or accountant for which the lawyer and/or accountant was paid with District funds; 4 Signature cards for all bank accounts for the Distriot/Hospital; + Employment contracts that may exist between the District/Hospital and third parties; + A check disbursement record for the last year; “A vendor report identifying the current status of all vendors and the current obligation to each; and All requests for funding made on behalf of the District/Hospital in the last year.wi McCORMICK BARSTOW LLP ATTORNEYS AT LAW Bruce Greene Marshall Grossman September 11, 2017 Page 3 ‘We look forward to hearing from you. Very truly yours, Llog— ‘Timothy L. Yhompson Mandy L. Jeffcoach Nikole E. Cunningham McCormick Barstow LLP 36894-00000 4695565.————— From: Levinson, Mare A, Sent: “Tuesday, September 12, 2017 7:51 PM To: ‘Mandy Jeffcoach (mand jeffcoach@mecormickbarstow.com) Tim Thompson ce: Grossman, Marshall Subject: ‘Tulare Local HealthCare District - Financial data -- Subject to the negotiation privilege ‘Attachments: ‘4th Quarter Finandials- FY17-pdt; Agenda.paf; HCCA Finance Comm Report 4th Quarter- July 2017,pptx, Board pdf; Budget pdf Tim and Mandy, As promised during Marshail's and my call with Mandy and Niki Cunningham on Friday the 8th, attached Is financial information distributed at the July 25, 2017 meeting of the Finance Committee of the District Board, Specifically, attached is a four-page document that includes a statement of revenue and expenses through 6/30/17 as well as a balance sheet. The attached PowerPoint also was distributed, | won't elaborate on the financial information because it speaks for itself, but wil note that the balance sheet shows [IEEE of cash as of 6/30/17 and of current, liablities. That said, it also shows almost EEE of net patient receivables and knot of other receivables, but those assets do not solve the liquidity problem that the District faced on as well as the one it faces today. I've also attached (i) as the icon entitled Agenda, the agenda for the Finance Committee meeting showing that the Qé fly financials would be discussed; and (i) as the icon entitled Board, the agenda for the July 26, 2017 board meeting showing that there would be a presentation of the fly 2018 budget. I know that such presentation was made because, as | told Mandy and Niki, the proposed budget was posted on Kevin Northcraft's Facebook page on August 24, 2017 at 6:19 p.m. A copy of that budget is attached as the icon entitled Budget. I should add that both agendas and the fly 18 budget may be found on the HCCA website: http://teamhcca.com/our-local lare-regional-medical-center/board-meetinas/ Finally, we invited you during the September 6th meeting to request documents/data you would like on a “priority” basis of perhaps “10 in number.” Marshall and | were surprised to receive a burdensome list with 25 categories, some reaching back to 2013 and many others going back two years, Much of that discovery-ike request is not relevant to our present discussion and will not ‘advance resolution of the challenging issue at hand, namely reaching a consensual resolution that preserves the Hospital as a going concern under competent management. Monthly (and as of this, calendar year quarterly) complete financial reports have been presented in open meetings, have been approved by the Board, and are available publicly as are three annual audits done by outside firms as well as multiple ratings reviews by Fitch and Moody's. Finally, such a burdensome request presents HCCA with great expense, and will interfere with its ability to operate the Hospital, Thus, while we will work with HCCA to provide meaningful data within a realistic time frame, do not expect full compliance with the document request. Mare exnetMarc Levinson SenleeCouet One Socamenie © Tote semAg10 ‘malevreondenskcom orrick Distaseed Dowioad togWw McCORMICK BARSTOW LLP ATTORNEYS AT LAW ey Rorwe “vasa curate sae “Gonos Teena 818 Tengo cama Basin ee ‘tne MIT em it, Sut September 12, 2017 ‘VIAU.S. Matt & E-MaiL Mare Levinson Marshall Grossman Orrick Orrick 400 Capitol Mall 777 South Figueroa Street, Suite 3200 Suite 3000 Los Angeles, CA 90017 Sacramento, CA 95814-4497 Re; Tulare Local Healthcare District Our File No.: 36894-00000 Dear Mr. Levinson and Mr. Grossman: ‘This letter is in response to your email dated September 12, 2017. Initially, while we appreciate you forwarding to us information apparently handed out during the July board meeting', frankly that information is meaningless to the overall picture as the balance sheet fails to provide any meaningful detail of the liabilities. In fact, there is no mention anywhere in the documents which would have put the board on notice of the purported balance owing to HCCA which forms, in part, the basis of the Notice of Default served on September 8, 2017. Further, as we understand the current crisis at the Hospital, the linen and kitchen vendors have walked out of the Hospital due to unpaid bills and there was a 5 day notice of default sent by Southem Edison threatening to shut off the electricity to the Hospital because invoices had not been pai Setting aside for the moment that HCCA has failed to notify the Board of these serious problems, HCCA is preventing the Board from addressing these issues as there are no specifics in the unaudited “balance sheet for the period ended 6/30/2017.” While your client may view our request for information as burdensome and mirroring that of a document request, your client’s stated goal, at least as it was communicated to ‘us on September 6, 2017, was to continue in its current role going forward. How is the Board expected to make any informed decision without having the historic information As you are aware, the July meeting did not take place (and no presentation was given) because of Ms. Wilbourn’s refusal to “declare” Senovia Gutierrez as a board meeting, thereby causing Mr. Jamaica to leave the meeting so no quorum was present. Thus, while the 4 page quarterly unaudited balance sheet may have been made available on HCAA’s website, there was no report about its contents, the financial liabilities of the Hospital or managemen/HCCA’s plan to address the serious financi Hospital. Further, since that time, HCCA has made no attempt to inform the Board (whether you include Ms. Gutierrez or not) of the finan in which the Hospital finds itself. It would appear as if HCCA has breached its fiduciary duty to the Board to keep it apprised of what is going on with the Hospital. exprwi cCORMICK BARSTOW LLP ATTORNEYS AT-LAW Mare Levinson Marshall Grossman September 12, 2017 Page 2 about HCAA’s services and the Hospital's financial position? We ean tell you that it cannot, particularly given the current erisis and the fact that it is clear that HCCA has not been taking steps to fulfill its obligations to properly manage the Hospital by cither making sure there are sufficient funds to keep the Hospital operating and/or advising the Board of the financial crisis which the Hospital faces and proposing a meaningful plan to adelress the issues The requested documents are those that any management service company should be ‘maintaining in the regular course of business. This is particularly true where you have a hospital that is receiving federal and state monies and is accountable to a government agency. In addition, as you confirmed in our recent meeting, the fact that HCCA is trying to delay Board action as itis attempting to obtain a loan secured by the District's assets fiom which it could pay itself, demonstrates these financial records should be readily available since we presume any legitinrate lender would require the same. ‘The fact that CCA appears unwilling to provide the requested information is troubling, particularly given the clear crisis in which the Hospital finds itself. The Hospital and Board is absolutely hamstrung in their ability to attempt to rectify the current problems, and provide patient care as it has no information about the terms of the vendor contracts, what is owed, what has been paid, upcoming obligations, etc. We are disappointed by the fact that HCA will not fully comply with the document request: 1 teust they have been advised that these requests will be made again once the properly constituted board, as you put it. is affirmed, which as we understand it could occur as early as Friday Very truly yours, [Nye — Timothy L, Thompson Mandy L.. Jeffcoach Nikole E. Cunningham McCormick Barstow LLLP 3499-00010 4700081.1S orrick September 8, 2017 By FodEx Overnight & E-Mail Tulare Local Healthcare District ericom dba Tulare Regional Medical Center Altn: Chair of the Board Marchal! 8. Grossman 869 North Cherry Street Tulare, CA 93274 baste sbell@tulareregional.org F st pi3612 2499 Re: Notice of Material Breach of Management Services Agreement Dear Chairperson: ‘As you know, this firm is counsel to Healthcare Conglomerate Associates, LLC (‘CCA’) (including Dr, Benzeevi in his capacity as ts representative). Reference is made to the Management Services ‘Agreement entered into between HCA and Tulare Local Healthcare District, d/b/a Tulare Regional Medical Center (the "District’), dated May 29, 2014 (the "MSA’). Capitalized terms used in this notice not otherwise defined have the meanings set forth in the MSA ‘This letter shall constitute a written notice by HCCA of the District's breach of the MSA and is given pursuant to Section 10(a)i) of the MSA, We hereby notify the District that ithas breached the MSA with respect to the following. 1. Inbreach of Section 3(b)(i), the District has failed to timely furnish HCCA with sufficient funds to timely pay the expenses relating to the Operations, including funding of operating expenses and ‘non-operating expenses, since at least December 21, 2016, totaling $2,118,634.60. Breaches of Section 3 of the MSA are a material breach pursuant to Section 3(¢)iv) 2. Inbreach of Section 3(¢)(i), the District has interfered, directly or indirectly, with HCCA's decisions or the daily Operations, including HCCA's ability to perform its obligations under the MSA. This includes the District's interference, through Governing Body members Kevin Northeraft and Michael Jamaica, with HCCA’s abilty (o obtain funding for the benefit of the Hospital. Breaches of Section 3 of the MSA are a material breach pursuant to Section 3(dXiv) 3. In breach of Section 3(¢)ii), the District and members ofits Governing Body (Kevin Northeraft and Michael Jamaica) have disclosed confidential or negative information regarding, or taking any action that is materially detrimental to the reputation of, HCCA and Dr. Benzeevi thet defame, disparage ot in any way criticize their personal or business reputation, practices, of conduct. Examples of such statements were previously provided to Mr. Northcraft and Mr Jamaica in my letter dated August 9, 2017 to them, and are incorporated by this reference, The complained of statements have not been made in good faith, as the District and the members of GS EXHIBITS2 orrick Tulare Local Healthcare District September 8, 2017 Page 2 the Governing Body have not used reasonable efforts to verify the truthfulness and objectivity of those statements prior to making or adopting them in a non-confidential forum, which would have revealed their inaccuracies. Breaches of Section 3 of the MSA are a material breach pursuant to Section 3(d)(W). 4, In breach of Section 4(b)(ti), the District has failed to reimburse HCCA for expenses and charges incurred in connection with the Leased Employees. While HCCA has leased its employees pursuant to its obligations under the MSA, the District has failed to reimburse HCCA in the amount of $5,532,047.79 for these Leased Employees since at least July 31, 2015 as required by the MSA. 5. In breach of Section 6a), the District has failed to pay HCCA the Management Fee, HCCA has, provided management services pursuant to the MSA, and the District has failed to pay the required Management Fee, totaling $526,086.86, since at least August 1, 2017. 6. Inbreach of Section 6(c), the District has failed to reimburse HCCA's monthly expenses incurred ton behalf of the District as of August 31, 2017. 7. In breach of Section 11(o}, the District, thtough Governing Body members Kevin Notthcratt and ‘Michael Jamaica, has interfered with HCCA’s ability to perform its obligations by purporting to unreasonably withdraw consent relating to third-party funding during unlawful meetings of the Governing Body, 8 The monetary breaches identified in paragraphs 1-2, and 4-6 can be cured by the District. If these breaches are not cured within ten (10) days as provided for in the MSA then they will be a District Default of the MSA according to the terms of the MSA. Certain actions resulting in damage and liabilly to HGCA are not capable of being cured, including the breaches identified in paragraphs 3 and 7. If you consider otherwise, please So state and explain how they may be cured in reply to this letter. This notice is without prejudice to HCCA's rights, claims and defenses, all of which are expressly reserved. Sincerely yours, Narssan Bo frerr mtr Marshalt 8. Grossmanorrick Tulare Local Healthcare District September 8, 2017 Page 3 ce: Dooley, Herr, Pedersen & Berglund Bailey; Attn: Kris Pedersen (via email only) McCormick Barstow LLP; Altn: Timothy Thompson (via email only) Baker Hostetler, Attn: Bruce Greene (via email only)Ww McCORMICK BARSTOW LLP ATTORNEYS AT LAW inventions a cage sist sD ‘ziocsRKU September 18, 2017 Via US, Jat. & E-MAIL Marshall Grossman Orrick 777 South Figueroa Street, Suite 3200 Los Angeles, CA 90017 Re: Tulare Local Healthcare District Our File No.: 36894-00000 Dear Mr. Grossman: ‘This letter is in response to the “Notice of Material Breach of Management Services Agreement” sent by you on behalf of your elient Healthcare Conglomerate Associates, LLC (*HECA”) on September 8, 2017. As our office has repeatedly informed you orally and in writing, the District is in need of | significant information concerning the financial obligations of the District as created by HCA. This written request was sent to you, as HCCAs counsel, on September 11, 2017. To date, and with the exception of information that was intended to be presented at a August board meeting, no information has been provided. As we explained on September 12, 2017, without the requested information, the Board cannot adequately address the financial issues facing the District, including HCCA’s notice of purported default and its role in the conduct alleged. Until our client is provided with the requested information. it is not in a position to address, must less cure; the purported defaults under the Agreement. The District does not concede or recognize that any breach has been committed by it, and reserves all defenses to.such claims, Very truly yours, imothy t Thompson Mandy L. Jeffeoach Nikole E. Cunningham McCormick Barstow LLP C: Chair of the Board os 47082441 eer HeSeptember 15, 2017 Tulare Regional Medical Center Attention: Kevin Northeraft, Michael Jamaica & Richard Torrez 869 North Cherry Street Tulare, CA 93724 northee@aol.com mikejamaica@sbeglobal.net tacboxing@gmail.com Via U.S. Mail and Electronic Mait CC: Dooley, Her, Pedersen & Berglund Bailey ‘Attention: Kris Pedersen 100 Willow Plaza, Suite 300 Visalia, CA 93291 kpedersen@dhlaw.net, * CC: McCormick Barstow LLP Attention: Tim Thompson 1647 N. Fresno Street Fresno, CA 93720 CC: Baker & Hostetler LLP Attention: Bruce Greene 11601 Wilshire Boulevard, Suite 1400 Los Angeles, CA 90025-0509 Via U.S, Mail and Electronic Mail Dear Messrs. Northeraft, Jamaica and Torrez: Pursuant to Section 10(a)(ii) of the May 29, 2014 Management Services Agreement (“MSA”), Tulare Local Health Care District dba Tulare Regional Medical Center (the “District” is hereby notified by Healthcare Conglomerate Associates, LLC (“HCCA") that HCCA deems itself insecure, Accordingly, under Section 10(a)(ii), HCCA shall have no obligation to continuing performing under the MSA more than thirty (30) days from the date of this letter, unless the District provides HCCA with an unconditional irrevocable letter of credit (the “Letter of Credit”) from a U.S. banking institution acceptable to HCCA, insured by a federal insurance agency. The 1Letter of Credit must meet all of the requirements set out in Section 10(a)iii) of the MSA and ‘must be in the amount of the Termination Fee as specified in Section 10(b)(ii) of the MSA (870,000 per month first increased by the CPI, then multiplied by the remaining months of the MSA and then discounted to present value as provided in Section 10(b)(i)(1}-(2)). HICCA has deemed itself insecure under Section 10(a)ii) of the MSA because an event has ‘occurred, failed to occur or is threatened, and an objective condition exists or is threatened, which significantly impairs the prospects that obligations of the District will be paid when due and which significantly affects the financial or business condition of the District. In particular, two new members of the Tulare Local Healthcare District Board (“Board”), Kevin Northeraft and Michael Jamaica, have and continue to publicly threaten and take actions against HCCA and its rights under the MSA, including to “get rid of HCA” in breach of the MSA, and to take actions obstructing HCCA in its ability to operate the District under the terms of the MSA. ‘The Letter of Credit mecting all ofthe contractual requirements of the MSA must be provided to the undersigned within 30 days at the following address: Healthcare Conglomerate Associates Attention: Benny Benzeevi, M.D. 10940 Wilshire Blvd., Suite 1600 Los Angeles, CA 90024 If the District fails to provide HCCA with the required Letter of Credit within 30 days of the date of this notification in accordance with the MSA, HCCA shall have the right to immediately terminate the MSA (“with no right on the part of the District to cure same”) and the Termination Fee shall then be due end payable to HCCA. Very tnuly yours, Benny Benzeevi, M.D.Tim Thompson Thursday, September 28, 2017 10:29 PM ‘Grossman, Marshall ‘Levinson, Marc A. ‘Larsen, Cynthia J; Mandy Jeffcoach; Niki Cunningham Subject: RE: Tulare Hospital District . cynthia, Below is a link to a video taken during a staff meeting tonight, which was called by HCCA to address HCCA’s apparent failure to pay TRMC staff members. http://www.visaliatimesdelta.com/videos/news/2017/09/28/raw-video-trme-officials-call-thursday-2622internal- disaster%22/106103610/ ‘As you will see in this video, contrasted with what we listened to last night, there are obvious false representations being made by Mr. Germany to the TRMC staff members. Specifically, Mr. Germany represents in this staff meeting that HCCA has presented the board with “a lot of information regarding loans”, including the “details and terms of those Joans”, and “the board is going to be considering the loans”. Mr. Germany goes on to say that HCCA “really anticipates the board approving the loans” and “it’s in the board's hands now”, while referencing a special meeting that is supposedly being held on Monday. Mr. Germany represented that discussions regarding these loans took place both in open and closed session last night. None of this occurred. Consistent with my earlier requests this evening of your office to provide much needed information, will you also please immediately provide us with all of this information regarding loans, etc. that Mr. Germany, on behalf of HCCA, referenced in hs staff meeting. The board has none of this information, and Mr. Germany’s statements to the TRMC staff tonight were false and intentionally misleading. From: Tim Thompson Sent: Thursday, September 28, 2017 7:58 PM To: ‘Grossman, Marshal! Ce: ‘Levinson, Marc A"; Larsen, Cynthia J.; Mandy Jeffcoach; Niki Cunningham Subject: RE: Tulare Hospital District Your clients know what they disclosed and failed to disclose last night at the Board meeting. The information requested here is straight forward and goes directly to the health and safety of the patients at TRMC: (1) has HCCA failed to pay any or all of the hospital employees, (2) have staff walked off the job or failed to report to work as a result of HCCA's failure to timely pay the hospital staff, (3) has the second floor of the hospital been closed due to the staff walking off the job, (4) is HCCA transferring or attempting to transfer the current patients (appx, 14-20) to other hospitals or “otherwise discharge those patients from the hospital, (5) is HCCA attempting to discontinue emergency room services to the public (6) has HCCA instructed staff to not admit any new patients to the hospital, and (7) is HCCA attempting to, close the hospital in the near future without providing notice of that plan to the Board of Directors and without providing the required notices to the State and other agencies? You criticize the Board for relying on reports from the hospital staff, characterizing those reports as “rumors’, but the people with answers to these simple questions — HCCA and Dr. Benzeevi— refuse to provide this information to the Board, It is critical that HCA immediately answer these questions and provide the Board with this information. The Board must be informed of what is going on at the hospital. EXHIBIT |