EXHIBIT 10.40
CROSS-COLLATERALIZATION, CROSS-DEFAULT
AND CROSS-GUARANTY AGREEMENT
THIS CROSS-COLLATERALIZATION, CROSS-DEFAULT AND CROSS-GUARANTY AGREEMENT (this
"Agreement") is made as of this 31 day of May, 2005 among (A) AHC PURCHASER,
INC., a Delaware corporation ("SENIOR BORROWER"), AHC PURCHASER HOLDING II,
INC., a Delaware corporation ("MEZZANINE BORROWER"), ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation ("GUARANTOR"), ITHACA XXXXX TENANT, INC.,
ITHACA STERLING COTTAGE OPERATOR, INC., NIAGARA STERLING COTTAGE OPERATOR, INC.,
NIAGARA XXXX TENANT, INC. and XXXXXXX XXXXXXXX COTTAGE OPERATOR, INC., each a
New York corporation (collectively, "NY GUARANTORS"), AHC PURCHASER HOLDING,
INC., a Delaware corporation ("AHC GUARANTOR"), and ALTERNATIVE LIVING SERVICES
- NEW YORK, INC., a Delaware corporation ("ALS-NY"), and (B) XXXXXXX XXXXX
CAPITAL, a Division of Xxxxxxx Xxxxx Business Financial Services Inc., a
Delaware corporation (collectively, with its successors and assigns, "LENDER").
RECITALS:
A. The term "Junior Obligors" as used herein shall mean Mezzanine Borrower
and Guarantor, collectively. The term "Senior Obligors" as used herein
shall mean Senior Borrower, Guarantor, NY Guarantors, AHC Guarantor and
ALS-NY, collectively. The term "Obligors" as used herein shall mean the
Junior Obligors and the Senior Obligors, collectively. The term
"Indebtedness" as used herein shall mean all payment obligations of any
Obligor now or hereafter arising out of the Loan Documents. The term
"Junior Indebtedness" shall mean all Indebtedness of any Junior Obligor
arising other than by reason of this Agreement. The term "Senior
Indebtedness" shall mean all Indebtedness of any Senior Obligor arising
other than by reason of this Agreement. The term "Obligations" as used
herein shall mean all other obligations of any Obligor now or hereafter
arising out of the Loan Documents. The term "Junior Obligations" shall
mean all Obligations of any Junior Obligor arising other than by reason of
this Agreement. The term "Senior Obligations" shall mean all Obligations
of any Senior Obligor arising other than by reason of this Agreement.
B. The entities comprising the Obligors and Lender are parties to various
mezzanine and senior loan agreements, promissory notes and security
instruments evidencing, securing and/or governing mezzanine and senior
loans in the aggregate maximum principal amount of $72,500,000 (all
documents now or hereafter evidencing, securing, governing or relating to
the foregoing indebtedness, and any subsequent increase to such
indebtedness, are hereinafter referred to collectively as the "Loan
Documents").
C. It is the intention of the Obligors and Lender that (A) all entities
comprising the Junior Obligors be and become obligated as guarantors for
the due and punctual payment of all Senior Indebtedness evidenced by the
Loan Documents and the due and punctual performance of all Senior
Obligations of any Senior Obligor under the Loan Documents, and (B) all
entities comprising the Senior Obligors be and become obligated as
guarantors for the due and punctual payment of all Junior Indebtedness
evidenced by the Loan Documents and the due and punctual performance of
all Junior Obligations of any Junior Obligor under the Loan Documents. The
Obligors operate as a common enterprise and will derive substantial value
by reason of the benefits of the cross-guaranties and
cross-collateralization provided for herein.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Obligators and
Lender hereby covenant and agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein shall
have the meanings given them in the foregoing recitals.
2. CROSS GUARANTY. Mezzanine Borrower hereby unconditionally and
irrevocably guaranties to Lender, and to its successors, endorsees, transferees
and assigns, (a) the prompt and complete payment when due, whether at the stated
maturity, by acceleration or otherwise, of all Senior Indebtedness, and (b) the
prompt and complete performance of all Senior Obligations. Each of the Senior
Obligors hereby unconditionally and irrevocably guaranties to Lender, and to its
successors, endorsees, transferees and assigns, (a) the prompt and complete
payment
when due, whether at the stated maturity, by acceleration or otherwise, of all
Junior Indebtedness, and (b) the prompt and complete performance of all Junior
Obligations.
3. CROSS-DEFAULT. In addition to all other rights and benefits granted to
Lender under the Loan Documents, an "Event of Default" (as such term is defined
in or used in each of the Loan Documents) shall be deemed to have occurred under
all of the Loan Documents upon the occurrence of (a) any "Event of Default" (as
defined in any Loan Document) under any Loan Document, or (b) a default beyond
any applicable grace or cure period provided for under any Loan Document. The
term "Default Condition" shall mean (a) an "Event of Default," if that term is
defined or used in the applicable Loan Document, and (b) a default beyond any
available grace or cure period in the applicable Loan Document.
4. CROSS-COLLATERALIZATION. In addition to all other rights and benefits
granted to Lender under the Loan Documents, all collateral, whether real or
personal property, pledged or assigned by any Obligor to Lender as security for
any portion of the Indebtedness and/or Obligations shall further serve as
collateral security for all other portions of the Indebtedness and all other
Obligations and all security interests, pledges and assignments made by any
Obligor under any Loan Document are hereby reaffirmed and remade on such basis.
Upon the occurrence of a Default Condition, Lender shall be entitled to exercise
any and all remedies provided for in each of the Loan Documents or otherwise
available at law or in equity, to satisfy any of the Indebtedness and
Obligations, in such order and in such priority as Lender shall deem appropriate
in its sole discretion. Lender shall not be required to resort to any other
security or other remedies before proceeding upon the collateral supporting the
Indebtedness and Obligations. Following the occurrence of a Default Condition,
Lender may proceed against any Obligor or any of the collateral securing the
Indebtedness and Obligations at any time it sees fit, independently of or
concurrently with any other remedies.
5. LOANS LINKED. Notwithstanding any provision to the contrary in any of
the Loan Documents, (a) none of the Indebtedness may be prepaid in full or
terminated without the simultaneous prepayment in full of all of the
Indebtedness, (b) any prepayment in full of any promissory note evidencing a
portion of the Indebtedness shall entitle Lender to accelerate the maturity date
of all other promissory notes evidencing any portion of the Indebtedness and
declare all of the Indebtedness to be immediately due and payable, and (c) no
collateral securing or encumbered by any of the Loan Documents will be released
until all Indebtedness is satisfied and all Obligations have been performed in
full. All references contained in the Loan Documents to the "Loan Documents" (as
such term is defined or used therein) or to any Loan Document shall refer to all
of the Loan Documents.
6. CONSENTS AND AFFIRMATION. Each of the Obligors hereby consent to all of
the Loan Documents and hereby reaffirm their respective obligations under all of
the Loan Documents to which they are a party.
7. SUPPORT OF OTHER OBLIGORS OBLIGATIONS; WAIVERS AND SUBORDINATION.
(a) Each Obligor acknowledges and agrees that (i) all references to
an individual Obligor's Indebtedness and Obligations under the Loan
Documents and to failures to perform or make payments required thereunder
shall also be deemed to refer to all other Obligors' Indebtedness and
Obligations under the Loan Documents, and (ii) the references to Lender's
rights and remedies under the Loan Documents shall apply generally to
actions taken or obligations incurred with respect to each of the
Obligors.
(b) Each Obligor hereby represents, warrants and covenants to Lender
that (i) it has received adequate consideration for the execution of this
Agreement and the other Loan Documents to the extent that they obligate it
to act as a guarantor for the benefit of any of the other Obligors; (ii)
the Loan Documents comply with any and all agreements between each of the
Obligors regarding the Obligor's execution thereof; (iii) Lender has made
no representation to any Obligor as to the creditworthiness of any other
Obligor; and (iv) it has adequate means of obtaining financial and other
information pertaining to the other Obligors' financial condition and any
facts or circumstances that might in any way affect such Obligor's
Indebtedness or Obligations under the Loan Documents, and Lender shall
have no obligation to disclose to any Obligor any information or furnish
any material acquired in the course of Lender's relationship with any
other Obligor.
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(c) Each Obligor waives any and all rights to require Lender, in
connection with any of the Indebtedness and Obligations, to (i) proceed
against any person, including itself or any of the other Obligors; (ii)
proceed against or exhaust any collateral of the other Obligors or any
other person; (iii) give notice of the terms, time and place of any public
or private sale of personal property security held from Obligor or comply
with any other provision of the applicable Uniform Commercial Code (but
such waiver shall apply to each Obligor only in its capacity as a
guarantor, and shall not apply to any notice to such Obligor in its
capacity as a borrower or grantor of collateral); (iv) pursue any other
remedy in Lender's power; or (v) make any presentment, demand for
performance, or give any notice of nonperformance, protest, notice of
protest or notice of dishonor.
(d) Each Obligor hereby expressly waives (i) any and all rights to
subrogation, indemnification and contribution and any other rights and
defenses that are or may become available to such Obligor by reason of the
fact that the Loan Documents secure Indebtedness and Obligations of any of
the other Obligors; (ii) any and all rights to enforce any remedy which
Lender now has or may hereafter have against the other Obligors and any
benefit of, and any right to participate in, any security now or hereafter
held by Lender for the Indebtedness or Obligations, (iii) notice of any
and all defaults by any Obligor; (iv) the benefit of all appraisement,
valuation, marshalling, forbearance, stay, extension, redemption,
homestead, exemption and moratorium laws now or hereafter in effect; (v)
any defense based on the failure of Lender to file or enforce a claim
against the estate of any other person or entity in any administrative,
bankruptcy or other proceeding; (vi) any defense based on an election of
remedies by Lender, whether or not such election may affect in any way the
recourse, subrogation or other rights it may have against any other
Obligor, any other guarantor or any other person in connection with the
guaranteed Indebtedness and Obligations; (vii) all demands for payment
and/or performance; and (viii) any and all other rights or defenses any
Obligor may have because any of the other Obligors' Indebtedness or
Obligations are secured by the Loan Documents. The foregoing waiver is
intended to be as broad as is legally permitted under applicable law and
shall be interpreted and construed accordingly. Each of the Obligors
hereby: (i) consents to any release of any guarantor of Indebtedness or
Obligations or substitution or addition of any guarantor or any release of
any collateral for any of the Indebtedness or Obligations; (ii) agrees
that no delay by Lender in enforcing any of its rights or remedies, nor
any extension of time, nor any modifications, supplements, increases or
amendments hereafter made to the Loan Documents or the Indebtedness or
Obligations evidenced thereby, shall limit or impair its liability as a
guarantor or obligor, as the case may be; (iii) expressly consents to any
such delays, extensions, modifications, supplements, increases and
amendments with the same force and effect as though its written consent
had been given to each of them; and (iv) agrees that its guaranty of the
Indebtedness and the Obligations shall extend to and include all
Indebtedness and Obligations evidenced by any extension, modification,
supplement, increase or amendment to the Loan Documents. The intention of
this Section is that each of the Obligors, in their capacities as
guarantors under the Loan Documents, shall remain liable hereunder as
guarantors of all Indebtedness and Obligations from time to time existing
under the Loan Documents notwithstanding any act, omission or thing which
might otherwise operate as a legal or equitable discharge of a guarantor.
(e) Without limiting the generality of the other waivers set forth
herein, each Obligor also hereby expressly waives:
(i) any defense arising by reason of any invalidity or
unenforceability of any document evidencing the Indebtedness or
Obligations or any disability of any other Obligor;
(ii) any duty of Lender to advise Obligors of any information
known to Lender regarding the financial condition of any of the
other; and
(iii) any defense arising by reason of any election by Lender
pursuant to Section 1111(b)(2) of the United States Bankruptcy Code
or any
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similar or successor section or based upon any borrowing or grant of
a security interest under Section 364 of such Code or any similar or
successor section.
(f) Each Obligor hereby subordinates to the Indebtedness and
Obligations any and all indebtedness and other obligations owed to it by
the other Obligors. Furthermore, each Obligor hereby subordinates all
existing and future liens, security interests, assignments and other
charges and other interests it has from time to time in property of the
other Obligors (whether now owned or hereafter acquired) to all liens,
security interests, assignments and other charges held by Lender from time
to time in such property.
8. GENERAL.
(a) Loan Documents. This Agreement shall constitute a "Loan
Document" as such term is defined in (or used in) each of the Loan
Documents.
(b) Headings. The headings of the Sections, subsections, paragraphs
and subparagraphs hereof are provided herein for and only for convenience
of reference, and shall not be considered in construing their contents.
(c) Construction. As used herein, all references made (i) in the
neuter, masculine or feminine gender shall be deemed to have been made in
all such genders, (ii) in the singular or plural number shall be deemed to
have been made, respectively, in the plural or singular number as well,
and (iii) to any Section, subsection, paragraph or subparagraph shall,
unless therein expressly indicated to the contrary, be deemed to have been
made to such Section, subsection, paragraph or subparagraph of this
Agreement. The Recitals are incorporated herein as a substantive part of
this Agreement and the parties hereto acknowledge that such Recitals are
true and correct.
(d) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns hereunder.
(e) Severability. If any term, provision, covenant or condition of
this Agreement or the application of such term, provision, covenant or
condition to any party or circumstance shall be found by a court of
competent jurisdiction to be, to any extent, invalid or unenforceable, the
remainder of this Agreement and the application of such term, provision,
covenant, or condition to parties or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby,
and each term, provision, covenant or condition shall be valid and
enforced to the fullest extent permitted by law.
(f) Joint and Several Liability. Each person or entity constituting
an Obligor shall be jointly and severally liable for all of the
obligations of all Obligors under this Agreement.
(g) Further Assurances. Obligors hereby agree that at any time and
from time to time, at the expense of Obligors, Obligors will promptly
execute and deliver all further instruments and documents, and take all
further action, that may be necessary or that Lender may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Lender or any of its agents
to exercise and enforce its rights and remedies under this Agreement with
respect to any portion of such collateral.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original, but all
of which shall constitute one in the same instrument. As used in this
Agreement, the term "this Agreement" shall include all attachments,
exhibits, schedules, riders and addenda.
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(i) Governing Law. This agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, without
regard to any otherwise applicable principles of conflicts of laws.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, intending to be legally bound, and intending that this
Agreement constitute an instrument executed under seal, the parties have caused
this Agreement to be executed under seal as of the date first written above.
SENIOR BORROWER:
AHC PURCHASER, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
Borrower's Tax ID No. 00-0000000
MEZZANINE BORROWER:
AHC PURCHASER HOLDING II, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
Borrower's Tax ID No. 00-0000000
NY GUARANTORS:
ITHACA XXXXX TENANT, INC., a New York
corporation
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxx, President
ITHACA STERLING COTTAGE OPERATOR, INC., a
New York corporation
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Xxxxxxx Xxxxxxx, President
NIAGARA XXXX TENANT, INC., a New York
corporation
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxx, President
(SIGNATURES CONTINUED NEXT PAGE)
NY GUARANTORS, CONTINUED:
XXXXXXX XXXXXXXX COTTAGE OPERATOR, INC.,
a New York corporation
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Xxxxxxx Xxxxxxx, President
NIAGARA STERLING COTTAGE OPERATOR, INC.,
a New York corporation
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Xxxxxxx Xxxxxxx, President
GUARANTOR:
ALTERRA HEALTHCARE CORPORATION, a Delaware
corporation
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
AHC GUARANTOR:
AHC PURCHASER HOLDING, INC., a Delaware
corporation
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
ALS-NY:
ALTERNATIVE LIVING SERVICES - NEW YORK,
INC., a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
(SIGNATURES CONTINUED ON NEXT PAGE)
LENDER:
XXXXXXX XXXXX CAPITAL, a Division of
Xxxxxxx Xxxxx Business Financial Services
Inc., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President