Looking for an agreement? Search from over 1 million agreements now.

Forbearance Agreement No. 3

This is an actual contract between Southland Health Services, and General Electric Capital.
Browse the agreement preview below and buy the entire agreement for $35
Search This Document
Exhibit 10.7

FORBEARANCE AGREEMENT NO. 3

THIS FORBEARANCE AGREEMENT No. 3 (this " Agreement" ) is made and entered into as of September 1, 2005 by and among 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, " Borrower" ), BAD TOYS HOLDINGS, INC., a Nevada corporation (" Parent" ), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, aka GE COMMERCIAL FINANCE HEALTHCARE FINANCIAL SERVICES CF (" CF" ), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, aka GE COMMERCIAL FINANCE HEALTHCARE FINANCIAL SERVICES EF (" EF" ) (collectively, CF and EF and their successors, endorsees, transferees, affiliates, and assigns are referred to as " GECC" ). RECITALS FIRST: Borrower, Parent, and GECC are parties to that certain Restructuring Agreement, dated as of March 18, 2005, as amended by that certain Amendment No. 1 To Restructuring Agreement, dated as of April 29, 2005 (as amended, the " Restructuring Agreement" ). SECOND: Borrower has been in default under the CF Documents for an extensive period of time pursuant to Existing Defaults (as that term is defined in the Forbearance Agreements) and other matters stated in the Forbearance Agreements, and interest is accruing, and continues to accrue at the Default Rate as defined in Section 1.16 of the Loan Agreement. Borrower continues to be in default under the EF Documents on account of the Emergystat Stock Purchase. THIRD: In addition, Borrower has failed to pay a significant portion of its payroll taxes due in May 2005, and has failed to any payroll taxes due in June 2005, July 2005, and the first two weeks of August (collectively, the " 2005 Unfunded Payroll Taxes" ). Such failure constitutes an Event of Default (the " 2005 Tax Default" ). Schedule 1, attached hereto and by this reference made a part hereof, sets forth, among other things, a complete and accurate list of all 2005 Unfunded Payroll Taxes. FOURTH: The CF Documents require Borrower to notify CF promptly if an Event of Default occurs or an event that, with the giving of notice or lapse of time, or both, could constitute an Event of Default. FIFTH: Borrower failed to notify CF of the 2005 Unfunded Payroll Taxes for June, July, and August notwithstanding CF' s repeated requests for written verification that payroll taxes were being paid current. Further, Borrower failed to notify CF that Borrower did not pay all of the May 2005 payroll taxes even though, as part of CF' s substantial and extensive financial accommodations to Borrower, CF had agreed to Borrower' s request not to require a reduction in the amount of the CF Obligations at the end of July 2005 in order to facilitate Borrower' s payment of May 2005 payroll taxes. It was not until the week of August 15, 2005, that Lender learned of this and the existence of the 2005 Unfunded Payroll Taxes. SIXTH: CF has made substantial and extensive financial accommodations to Borrower under the terms and conditions of the Forbearance Agreements, the Tri-Party Agreement, and the Restructuring Agreement. EF also has accommodated Borrower' s requests to forbear under the terms and conditions of the Restructuring Agreement. SEVENTH: The forbearance period with respect to both the EF Obligations and the CF Obligations expired on August 31, 2005. EIGHTH: In light of the expiration of the forbearance period, the continued existence of the Existing Defaults, the 2005 Tax Default, and Borrower' s failure to comply with the terms and conditions of the Forbearance Agreements and the Restructuring Agreement: (i) GECC has no obligation of any kind to provide further funding or financial accommodations to Borrower under the GECC Documents or otherwise, (ii) GECC is entitled to declare the CF Obligations and the EF Obligations immediately due and payable, and (iii) GECC is entitled to exercise immediately its rights and remedies against Borrower and the Consolidation Note Collateral pursuant to any and all of the GECC Documents and applicable law on account of the Existing Defaults and the 2005 Tax Default. NINTH: Borrower and Parent have represented to GECC that: (i) discussions between Parent and Barron Partners LP regarding an offering of equity in Parent continue and are contemplated to conclude next week, (ii) Parent plans to use the proceeds of such equity offering to pay the Unfunded Payroll Taxes, related penalties, and the 2005 Unfunded Payroll Taxes, (iii) Borrower continues to make progress toward obtaining refinancing from Meridian Commercial Healthcare Finance sufficient to pay in full the CF Obligations and the EF Obligations, (iv) Borrower continues to work diligently with the IRS to resolve the Enforcement Notice, as well as the Unfunded Payroll Taxes, and (v) Johnny Glenn Crawford has threatened to evict Borrower from its corporate headquarters. TENTH: Borrower is asking GECC to continue to forbear from exercising its collection and other rights, and to continue to make advances under the CF Documents. GECC is willing to agree to this request by Borrower but only under the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises and agreements, provisions and covenants herein contained, each of Borrower, Parent, and GECC agrees as follows:

1. Definitions . Unless otherwise defined in this Agreement or in the above Recitals, all capitalized terms used herein shall have the meanings ascribed to them in the Forbearance Agreements and the Restructuring Agreement as applicable. In addition, the following capitalized terms shall have the meanings set forth below:

1.1 " Existing Defaults" means (i) all Existing Defaults (as that term is defined in the Forbearance Agreements) and defaults with respect to other matters stated in the Forbearance Agreements, and (ii) the 2005 Tax Default.


- 2 -

1.2 " Forbearance Agreements" means all of the forbearance letter agreements between CF and Borrower identified and set forth in Schedule " 2" attached hereto.

1.3 " GECC Documents" means all of the CF Documents, the EF Documents, the Consolidation Note, the Forbearance Agreements, the Restructuring Agreement, the Tri-Party Agreement, and all notes, loan agreements, security agreements, guaranties, deeds of trust, and other instruments and documents, executed and delivered in connection therewith in favor of CF and/or EF, whether such documents and instruments are now existing or hereafter created, as the same have been and may be further amended, replaced, supplemented or otherwise modified from time to time, including but not limited to the Restructuring Agreement.

1.4 " 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.

2. Recitals . Each of Borrower and Parent hereby acknowledges that all of the Recitals stated above are true and accurate, and by this reference are incorporated into and made a part of the body of this Agreement.

3. Limited Forbearance . Subject to all of the provisions of this Agreement, GECC will forbear from exercising its rights and remedies under the GECC Documents and otherwise with respect to the Existing Defaults and the Enforcement Notice Default, and subject to the terms and conditions of the CF Documents, CF will continue to make advances to Borrower, from September 1, 2005, through September 30, 2005 (the " Extended Forbearance Period" ) if, and only if, each and all of the following are satisfied timely and continue to be satisfied:

3.1 Scheduled Mandatory Payments Under Consolidation Note .

3.1.1 On or before September 30, 2005, Borrower shall pay to GECC, and Parent shall cause Borrower to pay to GECC, and GECC shall have received payment in full, in immediately available funds, of the entire amount of both the CF Obligations and the EF Obligations, as determined by CF and EF and in accordance with the GECC Documents. Such payment shall permanently reduce such obligations, and upon receipt of such payment in full CF shall have no further obligation to make advances or otherwise extend credit to Borrower. 3.1.2 Borrower shall continue to make regularly scheduled payments when due to GECC with respect to the EF Obligations until such time when GECC shall have received payment in full of the entire amount of the EF Obligations, and nothing contained in this Agreement shall be construed to excuse or extend the time or times when such regularly scheduled payments are due.

- 3 -

3.2 Crawford Relationship Status Reports . 3.2.1 Lease . Upon execution and delivery of this Agreement, Borrower shall deliver to Lender: (i) a true and complete (including all exhibits, schedules, and other attachments) copy of the fully executed lease between Borrower, as lessee, and Johnny Glenn Crawford (" Crawford" ) or an entity controlled by Crawford, as lessor, of Borrower' s corporate headquarters located at 126 Emergystat Loop, Vernon, Alabama 35592 (the " Headquarters Lease" ), and (ii) all amendments, modifications, replacements, extensions and other agreements in any way affecting the Headquarters Lease.

3.2.2 Status Reports . Upon execution and delivery of this Agreement and continuing on each Monday thereafter, Borrower shall deliver to GECC, in form, content, and detail satisfactory to GECC, (i) a written report (executed and certified by Borrower' s authorized representatives) describing any and all actions, communications (both verbal and written), negotiations with Crawford during the previous week regarding the Headquarters Lease and the overall relationship between Borrower and Crawford, and (ii) true and complete copies (executed and certified by Borrower' s authorized representatives) of all correspondence and other documentation exchanged between Borrower and Crawford including, but not limited to, all eviction notices, threats of eviction, and legal actions commenced or threatened by Crawford. 3.3 Guarantor Consent . Upon execution and delivery of this Agreement by Borrower to GECC, Borrower shall deliver to GECC the Consent And Agreement Of Guarantor form attached this Agreement duly executed by Parent.

3.4 Lawsuit Status Reports . Commencing on Tuesday, September 6, 2005, and continuing on each Monday thereafter, Borrower shall deliver to GECC, in form, content, and detail satisfactory to GECC, written reports (executed and certified by Borrower' s authorized representatives) describing any and all actions, communications, negotiations with Pacific Capital, L.P. regarding the Pacific Capital Lawsuit during the previous week, including but not limited to, any settlement proposals, proposed motions, dismissal discussions, and discussions regarding GECC as a defendant in the Pacific Capital Lawsuit.

3.5 Current Payroll Taxes . Commencing on September 1, 2005, and continuing thereafter: (i) without exception Borrower shall pay timely and in full each and every payroll tax amount when due, and (ii) within one (1) Business Day of each such payroll tax payment made, shall deliver to CF written confirmation (in form, substance, and detail satisfactory to CF, and executed and certified by authorized representatives of Borrower) of each such payroll tax payment made, including, but not limited to, the amount, date paid, and taxing authority. Each of Borrower and Parent hereby acknowledges and agrees that any failure by Borrower to perform fully and continuously under this Section 3.5 shall constitute an automatic Event of Default hereunder and under the CF Documents and shall automatically terminate the Extended Forbearance Period, all without the need for any further notice or declaration of any kind by CF.


- 4 -

3.6 Incorporation Of GECC Documents . During the Extended Forbearance Period, and unless expressly modified in this Agreement, Borrower shall comply with and satisfy, and shall continue to comply with and satisfy, all terms, conditions, and requirements of the GECC Documents, all without any waiver of or other effect upon GECC' s continuing rights thereunder and otherwise.

3.7 Resolution Of The Enforcement Notice . With respect to the Enforcement Notice (as defined in the Twentieth Forbearance Agreement), and in order to confirm the status of the Enforcement Notice and that Borrower is using its best efforts to resolve the Enforcement Notice, Borrower agrees to do the following: (i) continue to deliver to CF copies of any documents related to the Enforcement Notice, including, but not limited to, all communications between Borrower and the IRS regarding the Enforcement Notice, with such copies to be delivered to CF simultaneously with their submission by or delivery to Borrower, (ii) arrange for a teleconference(s) between Borrower, an authorized representative of the IRS, and CF to be held at such date(s) and time(s) reasonably requested by CF, to discuss the Enforcement Notice, (iii) hereby expressly authorizes CF to contact the IRS directly regarding the Enforcement Notice; and (iv) commencing on Friday, September 2, 2005, and on each Friday thereafter, to deliver to CF a detailed written report, in form, content, and detail satisfactory to CF (executed and certified by Borrower' s authorized representatives) describing the status of the Enforcement Notice and the Unfunded Payroll Taxes, all appeals, offers, or other actions Borrower has taken with respect to such matters, and of any response(s) or other communications Borrower has received from the IRS. Borrower understands, acknowledges, and agrees that if the IRS takes any action against Borrower or its assets at any time with respect to the Enforcement Notice or otherwise, GECC shall have no obligation to forbear from exercising, and GECC shall be entitled to exercise immediately, all of its rights and remedies under the Loan Agreement, the other GECC Documents, and this Agreement.

3.8 Continuing Obligations Regarding Unfunded Payroll Taxes . Borrower' s obligations regarding the Enforcement Notice in Section 3.7 above are in addition to Borrower' s continuing obligation to comply with and satisfy all terms of the Forbearance Agreements regarding the Unfunded Payroll Taxes, all of which remain in full force and effect. In addition to the foregoing, the non-complia
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |