EXHIBIT 10.6
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this
“ Agreement ”) is entered into effective
as of July 15, 2005 by and between EMERGYSTAT, INC., a
Mississippi corporation, EMERGYSTAT OF SULLIGENT, INC., an Alabama
corporation, EXTENDED EMERGENCY MEDICAL SERVICES, INC., an Alabama
corporation, MED EXPRESS OF MISSISSIPPI, LLC, a Mississippi limited
liability company (collectively, “ Emergystat
”) , BAD TOYS HOLDINGS, INC., a Nevada corporation
(“ Bad Toys ”) (in this Agreement,
Emergystat and Bad Toys shall be referred to collectively as
“ Indemnitor ”) , and GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation, aka GE COMMERCIAL
FINANCE HEALTHCARE FINANCIAL SERVICES CF (“
Indemnitee ”) .
RECITALS
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FIRST:
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Pursuant to
that certain Loan And Security Agreement dated as of April 30,
2003, between Indemnitee, as lender, and Indemnitor, as borrower,
as modified by a series of written forbearance and other agreements
(collectively, “ Existing Loan Documentation
” ), Indemnitee provides a revolving credit facility to
Indemnitor.
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SECOND:
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In early Fall
2004, Indemnitee learned that Indemnitor was engaging in some type
of business arrangement with Quality Care Ambulance Service, Inc.,
and Quality Transportation Services, Inc. (collectively, “
Quality Care ” ) and/or Southland Health Services,
Inc., and/or related entities (collectively, “
Southland ” ) whereby, among other things, Quality
Care or Southland provides ambulance services to certain
geographical areas and Indemnitor performs the actual billing for
such services. This results in accounts receivable being generated
in which Indemnitor holds no interest.
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THIRD:
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Promptly after
becoming aware of Indemnitor’s arrangement with Quality
Care/Southland, Indemnitee required, and Indemnitor expressly
agreed, that to the extent Indemnitor comes into possession of any
accounts receivable or proceeds therefrom that are not owned by
Indemnitor (including, but not limited to, any such property that
is owned by Southland or Quality Care), Indemnitor will strictly
segregate and keep all such non-Indemnitor funds separate from
Indemnitor’s accounts receivable and proceeds therefrom, and
all non-Indemnitor funds will be maintained at all times in bank or
other accounts that are separate from any bank or other accounts
which contain accounts receivable or proceeds therefrom of
Indemnitor.
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FOURTH:
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In April 2005,
Pacific Capital commenced the Pacific Capital Lawsuit against
Indemnitor and Indemnitee, alleging, among other things, that
Pacific Capital is a secured creditor of Quality Care and that
Pacific Capital holds security interests senior to Indemnitee in
Quality Care’s accounts receivables. Although Indemnitee has
never claimed an interest in any of Quality Care’s property,
Indemnitee, as a named defendant in the Pacific Capital Lawsuit,
has incurred, and continues to
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incur, costs
and expenses, including, but not limited to, attorneys’ fees,
on account of and relating to the Pacific Capital
Lawsuit.
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FIFTH:
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One of the
conditions of Indemnitee’s continued forbearance from
exercising it rights under the Existing Loan Documentation is the
execution and delivery of this Agreement by Indemnitor to
Indemnitee. This Agreement is the Indemnification Agreement
referenced in that certain Forbearance Agreement No. 2, dated as of
July 15, 2005, between Indemnitor and Indemnitee.
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NOW, THEREFORE, for good and
valuable consideration the receipt and sufficiency of which are
hereby acknowledged, Indemnitor and Indemnitee hereby agree as
follows:
1. Recitals . Each
entity constituting Indemnitor hereby acknowledges that all of the
Recitals stated above are true and accurate. By this reference, the
above Recitals are incorporated into and made a part of the body of
this Agreement.
2. Definitions . All
capitalized terms used herein shall have the meanings ascribed to
them in the above Recitals or in the remainder of this Agreement.
In addition, the following capitalized terms shall have the
meanings set forth below:
2.1 “ Expenses
” means (i) any and all expenses (including, but not
limited to, attorneys’ fees, travel expenses, fees of
experts, transcript costs, filing fees, witness fees,) and (ii) any
and all other costs, expenses and obligations of any other nature
whatsoever (including but not limited to judgments, fines,
penalties, all settlement amounts, all amounts with respect to
establishing or enforcing a right to indemnification under this
Agreement, applicable law or otherwise), paid or incurred by
Indemnitee in connection with or in any way relating to
investigating, preparing to defend, defending, responding to, being
a witness in, participating in (including on appeal): (a) the
Pacific Capital Lawsuit, (b) any Proceeding based on the same or
similar set of facts as alleged in the Pacific Capital Lawsuit
(whether or not commenced by Pacific Capital), and (c) any
Proceeding arising out of or relating to Indemnitor’s
relationships with Quality Care or Southland.
2.2 “ Loss
” means any and all amounts which Indemnitee is or
becomes legally obligated to pay as a result of or in connection
with a claim or claims made against Indemnitee in (a) the Pacific
Capital Lawsuit, (b) any Proceeding based on the same or similar
set of facts as alleged in the Pacific Capital Lawsuit (whether or
not commenced by Pacific Capital), and (c) any Proceeding arising
out of or relating to Indemnitor’s relationships with Quality
Care or Southland, including, but not limited to, amounts for
damages, judgments, fines, losses, interest, awards, settlements,
penalties, diminutions of value of any kind or
character.
2.3 “ Pacific
Capital ” means Pacific Capital, L.P., a Delaware
limited partnership.
2.4 “ Pacific Capital
Lawsuit ” means Case No. 2:05CV103 pending in the
United States District Court, Eastern District at Greeneville,
Tennessee, captioned as Pacific Capital, L.P. v. Emergystat, Inc.,
et al , and any other state or federal proceeding
based on the same or similar factual allegations.
Page 2
2.5 “ Proceeding
” means any threatened, pending, or completed action,
suit, self-help action by a third party, proceeding or alternative
dispute resolution mechanism, or any hearing, inquiry, or
investigation that Indemnitee in good faith believes might lead to
the institution of any such action, suit, self-help action,
proceeding, hearing, or alternative dispute resolution mechanism,
whether civil, criminal, judicial, administrative, investigative or
otherwise, including, but not limited to, the Pacific Capital
Lawsuit.
3. Indemnification .
Indemnitor shall indemnify and hold harmless Indemnitee and its
successors, endorsees, transferees, affiliates, and assigns
(collectively encompassed, for purposes of the indemnification by
Indemnitor set forth in this Agreement, by references to “
Indemnitee ”) for any and all Expenses and Losses
suffered or incurred by Indemnitee. Indemnitor’s agreement to
so indemnify and hold harmless Indemnitee is
unconditional.
4. Joint and Several .
The term “Indemnitor” as used in this Agreement shall
mean all parties constituting Indemnitor, and each one of them, and
all such parties, and their respective successors and assigns,
shall be jointly and severally obligated hereunder. All obligations
of Indemnitor under this Agreement shall be joint and several
obligations.
5. Indemnification
Procedures .
5.1 Prior to this
Agreement . Indemnitor hereby acknowledges and agrees that
prior to this Agreement: (i) Indemnitee and Indemnitor had agreed
that Indemnitor would indemnify Indemnitee for all Expenses and
Losses incurred by Indemnitee, (ii) the amounts of such
