Exhibit 10.1

AMENDED AND RESTATED PROMISSORY NOTE

DATE: July 29, 2003

Malibu, California

THIS AMENDED AND RESTATED PROMISSORY NOTE (THIS “NOTE”), SUPERSEDES AND REPLACES
THAT CERTAIN PROMISSORY NOTE DATED DECEMBER 31, 2001 MADE BY HEALTHCARE
HOLDINGS, INC., AS MAKER, IN FAVOR OF LTC PROPERTIES, INC., AS PAYEE IN THE
ORIGINAL PRINCIPAL AMOUNT OF SEVEN MILLION DOLLARS ($7,000,000.00) (THE
“ORIGINAL NOTE”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, Maker and Payee agree as follows:

RECITALS

A.         As of the date hereof, Maker certifies, acknowledges and agrees the
outstanding principal balance of the Note plus accrued interest as of July 29,
2003 is $7,631,917.81 prior to any additional amounts borrowed under B below.

B.         Subject to the limitations described herein, Maker desires to amend
this Note from Payee to enable Maker to borrow from Payee up to an additional
Two Million dollars ($2,000,000) and to allow Maker to “upstream” any additional
advances to Maker’s parent company, CLC Healthcare, Inc. (“CLC”).

C.         At Maturity Date, as hereinafter defined, for value received, Maker
hereby promises to pay to the order of Payee, at Payee’s principal place of
business in Malibu, California, or such other place as Payee may from time to
time designate, the principal sum then outstanding. Principal amounts
outstanding will accrue interest at the rate of 5%, compounded annually,
(“Compounded Interest”). In addition, during the term of the Note, Maker shall
pay to Payee on an annual basis accrued interest at the rate of 2% (“Annual
Interest”) on the principal balance then outstanding on each December 31st and
ending with the last payment of Annual Interest on December 31, 2006. All
principal and accrued Compound Interest shall be due on or before December 31,
2006 (the “Maturity Date”). Principal and interest due hereunder shall be
payable in lawful money of the United States.

1.          Payments on Maturity Date. Assuming no acceleration by Payee and no
prepayment in full of the Loan by Maker, on the Maturity Date, Maker shall pay
to Payee the entire outstanding principal, compound interest and accrued
interest owing to Payee by Maker under this Note.

2.          Prepayments. Maker shall have the right to prepay all or any part of
the principal and accrued interest balance of this Note any time without
premium, penalty, or charge of any kind whatsoever; provided, however, there
shall be no discount of any kind for any prepayment.

3.          Security Documents. This Note is a full recourse obligation of the
Maker and is secured by all of the assets of Maker, whether heretofore or
hereafter, including, but not limited to the Assisted Living Concepts, Inc.
“(ALF”) common shares currently held by Maker. Reference is made to the Security
Documents for a description of the collateral provided for therein and the
rights of Payee with respect to such collateral.

4.          Sale of Collateral. Maker may not at any time sell all or a portion
of the Collateral underlying this Note without Payee’s written consent. One
hundred percent (100%) of the proceeds, as hereinafter defined, must be remitted
to the Payee within 3 business days of receipt of such proceeds. “Proceeds” is
defined as total cash received before any costs, expenses or fees associated
with such sale. Such Proceeds, to the extent of the proceeds, will first be
applied to reduce any accrued but unpaid Annual Interest, second to reduce any
accrued but unpaid Compounded Interest and finally to reduce the principal of
the Note.

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5.          Restrictive Covenants. Maker hereby covenants and agrees with Payee
that, for so long as the obligations of Maker under this Note remain outstanding
under the Note, Maker will comply with all of the following:

(a)        Maker will not, and will not permit any subsidiary of Maker to,
create, assume, incur or suffer to exist any lien or encumbrance of any kind,
upon all or any portion of the Collateral (as defined in the Security
Documents).

(b)        Maker will not, and will not permit any subsidiary to pay a dividend,
provide any loan guaranty, lend money or borrow any additional sums beyond this
Note without prior approval of Payee.

(c)        Maker will not, and will not permit any subsidiary to (i) lease,
assign or sell all or substantially all of its property or business to any other
Person (as hereinafter defined), (ii) merge or consolidate with or into any
other Person, (iii) purchase or lease or otherwise acquire all or substantially
all of the assets of any other Person, (iv) sell, transfer, pledge or otherwise
dispose of capital stock of Maker or any of its subsidiaries, (v) liquidate,
suspend or dissolve its business operations, (vi) change its name, identity or
corporate, partnership or other structure, or (vii) change the current principal
place of business or chief executive office, in each case without the prior
written consent of Payee.

6.          Acknowledgement and Restrictive Covenant of CLC Healthcare, Inc.,
parent of Maker (“CLC”). CLC hereby acknowledges that it has heretofore pledged
as collateral all of the outstanding stock of Maker pursuant to that certain
First Amendment to Second Amended and Restated Promissory Note and Security
Agreement dated October 1, 2002, which obligation remains in effect, and hereby
further covenants and agrees with Payee that, for so long as the obligations of
Maker under this Note remain outstanding, CLC will not pledge the stock of
Maker, or otherwise encumber the stock of Maker, in any manner for any reason.

7.          Change of Control. Notwithstanding anything to the contrary
contained herein, upon a Change of Control (as hereinafter defined) Payee may,
in its sole discretion, declare the entire balance of principal and interest
hereon immediately due and payable, together with all applicable charges and
payments due hereunder, all costs of collection, including reasonable attorneys’
fees and all other costs and expenses incurred, and shall have all remedies
available under the Security Documents, at law or in equity. For purposes of
this Note, a “Change of Control” shall mean and include (i) the sale by Maker,
or CLC (each hereinafter referred to as “Party”) and/or any subsidiary of either
Party of all or substantially all of the assets of either Party and its
subsidiaries taken as a whole, (ii) any Acquisition by any person or any persons
acting together which would constitute a “group” for purposes of Section 13(d)
of the Exchange Act (a “Group”) of 30% or more of the total voting power of all
classes of capital stock of either Party entitled to vote generally in the
election of the Board of Directors of either Party, (iii) any Acquisition by any
person or Group of the power to elect, appoint or cause the election or
appointment of at least a majority of the members of the Board of Directors of
either party, through beneficial ownership of the capital stock or otherwise,
or, (iv) a majority of the members of the Boards of Directors of either Party
cease to be Continuing Directors (as hereinafter defined). As used herein,
“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of either party, who (i) was a member of the Boards of
Directors of either Party on the date of this Note, or (ii) was nominated for
election or elected to such Board with the approval of a majority of the
Continuing Directors who were members of such Boards at the time of such
nomination or election. For the purposes of this definition, “Acquisition” of
the power or properties and assets stated in the preceding sentence means the
earlier of (a) the actual possession thereof and (b) the consummation of any
transaction or series of related transactions which, with the passage of time,
will give such Person or Persons that actual possession thereof. As used herein,
“Person” shall mean an individual, corporation, trust, partnership, joint
venture, unincorporated organization, government agency or any agency or
political subdivision thereof, or other entity.

8.          Late Payment Charge; No Waiver. MAKER ACKNOWLEDGES THAT LATE PAYMENT
TO PAYEE OF ANY SUMS DUE HEREUNDER WILL CAUSE PAYEE TO INCUR COSTS NOT
CONTEMPLATED HEREUNDER, THE EXACT AMOUNT OF WHICH WILL BE IMPRACTICABLE OR
EXTREMELY DIFFICULT TO ASCERTAIN. SUCH COSTS INCLUDE, BUT ARE NOT LIMITED TO,
PROCESSING AND ACCOUNTING CHARGES. ACCORDINGLY, IF ANY INSTALLMENT IS NOT
RECEIVED BY PAYEE WHEN DUE, OR IF ANY REMAINING PRINCIPAL AND ACCRUED BUT UNPAID
INTEREST OWING UNDER THIS NOTE IS NOT PAID IN FULL ON THE MATURITY DATE, MAKER

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SHALL THEN PAY TO PAYEE AN ADDITIONAL SUM OF FIVE PERCENT (5%) OF THE OVERDUE
AMOUNT AS A LATE CHARGE. THE PARTIES HEREBY AGREE THAT THE LATE CHARGE
REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS PAYEE WILL INCUR BY
REASON OF LATE PAYMENT. THIS PROVISION SHALL NOT, HOWEVER, BE CONSTRUED AS
EXTENDING THE TIME FOR PAYMENT OF ANY AMOUNT HEREUNDER, AND ACCEPTANCE OF SUCH
LATE CHARGE BY PAYEE SHALL IN NO EVENT CONSTITUTE A WAIVER OF MAKER’S DEFAULT
WITH RESPECT TO SUCH OVERDUE AMOUNT NOR PREVENT PAYEE FROM EXERCISING ANY OF ITS
OTHER RIGHTS AND REMEDIES WITH RESPECT TO SUCH DEFAULT.

 

 

 

 

 

 

INITIAL:  

 

 

 

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Maker

 

 

 

9.          Default. The occurrence of any of the following shall constitute an
event of default (“Event of Default”) under this Note:

(a)        failure to make any payment of principal, interest, or any other sums
due hereunder within five (5) business days of the date due;

(b)        the occurrence of any breach or default of any other obligation of
Maker, CLC, or any of their respective subsidiaries, monetary or otherwise,
hereunder or otherwise, which breach or default (except as provided below) shall
continue for more than ten (10) calendar days after Maker or CLC has received
written notice thereof from Payee;

(c)        notwithstanding anything to the contrary contained in this Section,
immediately upon the breach or default of any provision of Sections 4, 5 and 6
hereof; or

(d)         a breach or default under the Security Documents.

10.       Acceleration Rights; Remedies. Upon the occurrence of an Event of
Default or Change of Control hereunder, Payee may, in its sole discretion,
declare the entire balance of principal and interest hereon immediately due and
payable, together with all applicable charges and payments due hereunder, costs
of collection, including reasonable attorneys’ fees and all other costs and
expenses incurred, and shall have any and all remedies available under the
Security Documents, at law or in equity.

11.       Attorneys’ Fees and Costs. In the event it becomes necessary for Payee
to utilize legal counsel for the enforcement of this Note or any of its terms,
if Payee is successful in such enforcement by legal proceedings or otherwise,
Payee shall be reimbursed immediately by Maker for all reasonable attorneys’
fees and other costs and expenses.

12.       Waivers. Maker of this Note hereby waives diligence, demand,
presentment for payment, exhibit of this Note, notice of non-payment or
dishonor, protest and notice of protest, notice of demand, notice of election of
any right of holder hereof, any and all exemption rights against this
indebtedness, and expressly agrees that, at Payee’s election, the time for
performance of any obligation under this note may be extended from time to time,
without notice and that no such extension, renewal, or partial release shall
release Maker from its obligation of payment of this Note or any installment
hereof, and consents to offset of any sums owed to Maker by the holder hereof at
any time.

13.       Assignment/Transfer by Payee. Payee, in Payee’s sole and absolute
discretion, and without notice to Maker, shall have the absolute right to sell,
assign, gift, transfer, convey, encumber or otherwise dispose of all or a
portion of the holder’s rights in this Note or any other agreement related
thereto. Maker may not assign, gift, transfer, convey, encumber or otherwise
dispose of all or a portion of its rights, nor delegate its duties or
obligations under this Note or any other agreement related thereto.

14.       Governing Law. This Note shall in all respects be interpreted,
enforced, and governed by and under the internal law of the State of California
without resort to choice of law principles.

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15.       Severability. Every provision hereof is intended to be several. If any
provision of this Note is determined by a court of competent jurisdiction to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the other provisions hereof, which shall
remain binding and enforceable.

16.       Compliance With Usury Laws. It is the intention of the parties hereto
to conform strictly to applicable usury laws regarding the use, forbearance or
detention of the indebtedness evidenced by this Note, whether such laws are not
or hereafter in effect, including the laws of the Untied States of America or
any other jurisdiction whose laws are applicable, and including subsequent
revisions to or judicial interpretations of those laws, in each case to the
extent they are applicable to this Note (the “Applicable Usury Laws”); provided,
however, if such laws shall hereafter permit higher rates of interest, then the
Applicable Usury Laws shall be the laws allowing the higher rate of interest.
Accordingly, the following shall apply:

(a)        If any acceleration of the Maturity Date of this Note or any payment
by maker or any other person or entity results in the amount of interest
contracted for, charged, taken, reserved, received by or paid by Maker or such
other person or entity on the principal amount outstanding, from time to time,
on the Note being deemed to have been in excess of the Maximum Amount (as
hereinafter defined) or if any transaction contemplated hereby would otherwise
be usurious under any Applicable Usury Laws, then, in that event,
notwithstanding anything to the contrary in this Note, it is agreed as follows:
(i) the provisions of this Section 17 shall govern and control; (ii) the
aggregate of all interest under Applicable Usury Laws that is contracted for,
charged, taken, reserved or received under this Note, or under any of the other
aforesaid agreements or instruments or otherwise shall under no circumstances
exceed the Maximum Amount, and any excess shall either be refunded to Maker or
applied in reduction of principal, if permitted by California law, in the sole
discretion of Payee; (iii) neither Maker nor any other person or entity shall be
obligated to apply the amount of such interest to the extent it is in excess of
the Maximum Amount; (iv) any interest contracted for, charge, reserved, taken or
received in excess of the Maximum Amount shall be deemed an accidental or bona
fide error and canceled automatically to the extent of such excess; and (v) the
effective rate of interest on the Loan shall be ipso facto reduced to the
Highest Lawful Rate (as hereinafter defined), and the provision of this Note
shall be deemed reformed, without the necessity of the execution of any new
document, so as to comply with all Applicable Usury Laws. All sums paid, or
agreed to be paid, to Payee for the use, forbearance, or the detention of the
indebtedness of Maker to payee evidenced by this Note shall, to the fullest
extent permitted by the Applicable Usury Laws, be amortized, pro-rated,
allocated and spread throughout the full term of the indebtedness evidenced by
this Note so that the actual rate of interest does not exceed the Highest Lawful
Rate in effect at any particular time during the full term thereof. As used
herein, the term “Maximum Amount” means the maximum non-usurious amount of
interest which may be lawfully contracted for, charged, reserved, taken or
received by Payee in connection with the indebtedness evidenced by this Note
under all applicable Usury Laws.

(b)        If at any time interest on the Loan, together with any fees and
additional amounts payable hereunder or under any other agreements or
instruments that are deemed to constitute interest under Applicable Usury Laws
(the “Additional Interest”), exceeds the Highest Lawful Rate, then the amount of
interest to accrue pursuant to this Note shall be limited, notwithstanding
anything to the contrary in this Note, or any other agreement or instrument, to
the amount of interest that would accrue at the Highest Lawful Rate; provided,
however, that to the fullest extent permitted by Applicable Usury Laws, any
subsequent reductions in the interest rate shall not reduce the interest to
accrue pursuant to this Note below the Highest Lawful Rate until the aggregate
amount of interest actually accrued pursuant to this Note, together with all
Additional Interest, equals the amount of Interest which would have accrued if
the Highest Lawful Rate had at all times been in effect and such Additional
Interest, if any, had been paid in full.

For purposes of this Note, the term “Highest Lawful Rate” means the maximum rate
of interest and other charges (if any such maximum exists) for the forbearance
of the payment of monies, if any that may be charged, contracted for, reserved,
taken or received under all Applicable Usury Laws on the principal balance of
this Note from time to time outstanding.

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17.       Notices. Any notice or other communication required or permitted to be
given under this Note shall be in writing and sent by United States mail,
registered or certified mail, postage prepaid, return receipt requested, and
addressed as follows:

 

If to Maker:

 

Healthcare Holdings, Inc.
22917 Pacific Coast Hwy, Suite 350
Malibu, California 90265
Attention: Chief Financial Officer

 

 

 

with a copy to:

 

Healthcare Holdings, Inc
22917 Pacific Coast Hwy, Suite 350
Malibu, California 90265
Attention: Legal Department

 

 

 

If to Parent:

 

CLC Healthcare, Inc.
7610 N. Stemmons Fwy, Suite 500
Dallas, Texas 75247
Attention: Chief Financial Officer

 

 

 

If to Payee:

 

LTC Properties, Inc.
22917 Pacific Coast Hwy, Suite 350
Malibu, California 90265
Attention: Chief Financial Officer

 

 

 

with a copy to:

 

LTC Properties, Inc.
22917 Pacific Coast Hwy, Suite 350
Malibu, California 90265
Attention: Legal Department

or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid. If personally delivered, such notices or
other communications shall be deemed delivered upon delivery. If sent by United
States mail, registered or certified mail, postage prepaid, return receipt
requested, such notices or other communications shall be deemed delivered upon
delivery or refusal to accept delivery as indicated on the return receipt.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Maker has caused this Note to be executed as of the date
first above written.

  

 

 

MAKER:

HEALTHCARE HOLDINGS, INC.,
a Nevada corporation

 

By: 

/s/ KIMBERLY DAUGHERTY

 

 

 

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Name: 

Kimberly Daugherty

 

 

Its: 

Senior Vice President

 

 

 

 

 

 

PARENT:

CLC HEALTHCARE, INC.,
a Nevada corporation

 

 

By: 

/s/ ANDREW KERR

 

 

 

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Name: 

Andrew Kerr

 

 

Its: 

Chief Financial Officer

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