Unassociated Document


    Execution
Copy

    


    


    LIMITED
RECOURSE SECURED PROMISSORY NOTE

    


    
      
        
          	
                  $5,000,000

                	
                  April
      15, 2009

                


        

      

    

    


    


    FOR VALUE RECEIVED, LTC Global, Inc., a
Nevada corporation (“Maker”), promises to
pay, subject to the terms and conditions contained herein, to the order of Penn
Treaty American Corporation, a Pennsylvania corporation (“Payee”), in lawful
money of the United States of America, the principal sum of FIVE MILLION DOLLARS
($5,000,000), in the manner provided below.

    


    This Note has been executed and
delivered pursuant to and in accordance with the terms and conditions of the
Termination and Limited Release Agreement, dated as of the date hereof, between
Maker and Payee (the “Termination
Agreement”).  This Note replaces the Promissory Note, dated as
of November 5, 2008, in the original principal amount of $10,250,000, issued by
Maker in favor of Payee.

    


    1. Payments.

    


    1.1. Interest.  The
principal amount outstanding under this Note shall accrue interest at a rate
equal to 0.721% per month.

    


    1.2. Payments.  Principal
and accrued interest under this Note shall be paid in monthly installments
(each, a “Monthly
Installment Payment”) on the fifteenth (15th) day of
each month (each, an “Installment Payment
Date”), commencing on May 15, 2009, until the Maturity Date (as defined
below) in an amount equal to the greater of (a) the aggregate amount of
Commissions (as defined below) received by Maker or its affiliates during the
immediately preceding month (the “Monthly Commission Based
Payment”) or (b) the Minimum Required Payment (as defined below) as of
such Installment Payment Date.  For purposes of this Note, “Minimum Required
Payment” shall mean, as of the applicable Installment Payment Date,
1.00721 times the Guarantee Balance (as defined below) as calculated for the
prior month, minus the Maximum Guarantee Balance for such Installment Payment
Date as set forth on Schedule A hereto, if positive.  For the purposes
of this Note, “Guarantee Balance”
means, as of an Installment Payment Date, the difference of (i) the product of
(A) 1.00721 times (B) the Guarantee Balance as calculated for the prior month
over (ii) the sum of (x) the Monthly Installment Payment for such Installment
Payment Date and (y) any voluntary prepayments by the Maker made since the prior
Installment Payment Date; provided that the prior month’s Guarantee Balance as
of May 15, 2009 shall mean $2,500,000.  Notwithstanding anything
herein to the contrary, all principal and accrued interest shall be due and
payable on the Maturity Date.

    


    1.3. Maturity
Date.  The earliest to occur of (a) the date on which the
original principal amount of this Note and all accrued interest thereon is paid
in full and (b) April 16, 2019.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    1.4. Collateral.  As
collateral security for the prompt and complete payment when due of the original
principal amount of this Note, accrued interest thereon (including any interest
accruing thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other amounts due
hereunder (in each case, whether at the stated maturity, by acceleration or
otherwise) (collectively, the “Obligations”), Maker
hereby grants to Payee a security interest in the Collateral (as defined below),
now owned by Maker in which Maker has or at any time in the future may acquire
any right title or interest.  Maker shall cause its affiliate, ACSIA
Long Term Care, Inc., a Delaware corporation (“ACSIA”), to execute a
mutually agreeable security agreement granting a security interest to Payee in
the Collateral owned by ACSIA, which security interest shall secure the
Obligations.  As used herein, the term “Collateral” shall
mean any and all commissions payable to Maker and ACSIA, from Penn Treaty
Network America Insurance Company and American Network Insurance Company in
connection with the solicitation, sale, production or servicing of long term
care insurance policies in force on or prior to the date hereof (the “Commissions”), other
than (i) commissions attributable to insurance policies produced by United
Insurance Group Agency, Inc. or by Specialty Planners, Inc. (f/k/a Associated
California State Insurance Agencies, Inc.), and (ii) commissions acquired by
Maker or its affiliates by way of purchase or business combination after the
date hereof.

    


    1.5. Manner of
Payment.  All payments of principal and interest on this Note
shall be made to Payee by wire transfer of immediately available funds to an
account designated in writing by Payee.

    


    1.6. Maximum
Amount.  Notwithstanding anything set forth herein to the
contrary, in no event shall Maker be obligated to pay an aggregate principal
amount hereunder in excess of $5,000,000 plus interest accrued
thereon.

    


    1.7. Prepayment.  Maker
may, without premium or penalty, at any time and from time to time, prepay all
or any portion of the outstanding principal balance due under this
Note.

    


    2. Events of Default;
Remedies.

    


    2.1. Events of Default.
The occurrence of any of the following events will deemed to be an “Event of Default”
under this Note: (i) the nonpayment of principal, interest or other indebtedness
under this Note on the date the same shall become due and payable, whether at
maturity, by acceleration or otherwise; (ii) the failure of Maker to comply with
or perform any of its obligations under the Termination Agreement or the failure
of any representation or warranty hereunder or under the Termination Agreement
to be true as of the time made; (iii) the failure of ACSIA to comply with or
perform any of its obligations under the Security Agreement, dated as of the
date hereof, between Payee and ACSIA (the “Security Agreement”)
or the failure of any representation or warranty made by ACSIA under the
Security Agreement to be true as of the time made; (iv) the commencement of an
involuntary case or the filing of a petition against Maker or ACSIA seeking
arrangement, adjustment or composition of or in respect of Maker or


     

     

    
      
        
        

      

      
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    ACSIA
under the Federal bankruptcy laws, as now or hereafter constituted, or under any
other applicable Federal or state bankruptcy or insolvency or other similar law,
or seeking the appointment of a receiver, liquidator, custodian, trustee (or
similar official) of Maker or ACSIA for any substantial part of its property, or
seeking the winding-up or liquidation of its affairs (and such involuntary case
or petition is not dismissed within 30 days after the filing thereof), or (v)
the commencement by Maker or ACSIA of a voluntary case or the institution by
Maker or ACSIA of proceedings to be adjudicated a bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it, under the Federal bankruptcy laws as now or hereafter constituted, or any
other applicable Federal or state bankruptcy or insolvency or other similar law,
or the consent by Maker or ACSIA to the appointment of or taking possession by a
receiver, liquidator, trustee, custodian (or other similar official) of Maker or
ACSIA for any substantial part of its property, or the making by it of any
assignment for the benefit of its creditors or the admission by it in writing of
its inability to pay its debts generally as they become due or the failure of
Maker or ACSIA to generally pay its debts as such debts become due.

    


    2.2. Remedies.  Upon
the occurrence of an Event of Default described in clause (i) or (ii) above,
Payee may, at its option, by written notice to Maker declare the entire unpaid
balance of principal together with interest accrued thereon and all other sums
due under this Note to be immediately due and payable.  If there shall
occur an Event of Default  described in clause (iii) or (iv) above,
the entire unpaid balance of principal together with interest accrued and unpaid
thereon and all other sums due under this Note shall be immediately due and
payable on the date on which such Event of Default occurs, without notice to
Maker.  In addition, upon the occurrence of an Event of Default, Payee
may exercise, in addition to all other rights and remedies granted to it in this
Note, all other rights and remedies a secured party under the Uniform Commercial
Code, as enacted in the State of Delaware, including without limitation, the
right to collect, receive, appropriate and realize upon the Collateral, or any
part thereof.  Payee may also recover all costs of suit and other
expenses in connection therewith, together with reasonable attorney’s fees
incurred in connection with collection of the amounts due hereunder or the
enforcement of its rights hereunder and interest on any judgment obtained by
Payee at the legal rate until actual payment is made to Payee of the full amount
due Payee.

    


    2.3. Limited
Recourse.  Notwithstanding anything herein to the contrary,
with respect to all payments due hereunder other than the Minimum Required
Payment due as of any Installment Payment Date, the sole recourse of Payee
hereunder shall be to Maker’s and Maker’s Affiliates’ interest in the
Collateral.

    


    3. Miscellaneous.

    


    3.1. Waiver.  The
rights and remedies of Payee under this Note shall be cumulative and not
alternative.  No waiver by Payee of any right or remedy under this
Note shall be effective unless in a writing signed by Payee.  Neither
the failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege.  To the maximum extent
permitted by applicable law (a) no claim 

     

     

    
      
        
        

      

      
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    or right
of Payee arising out of this Note can be discharged by Payee, in whole or in
part, by a waiver or renunciation of the claim or right unless in a writing,
signed by Payee, (b) no waiver that may be given by Payee will be applicable
except in the specific instance for which it is given and (c) no notice to or
demand on Maker will be deemed to be a waiver of any obligation of Maker or of
the right of Payee to take further action without notice or demand as provided
in this Note.  Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.

    


    3.2. Authority.  Maker
hereby represents that it has full power, authority and legal right to execute
and deliver this Note and the Termination Agreement, to perform its obligations
hereunder and thereunder, and that this Note and the Termination Agreement
constitutes the valid and binding obligations of Maker enforceable against Maker
in accordance with their respective terms.

    


    3.3. Notices.  Any
notice required or permitted to be given hereunder shall be given in accordance
with Section 6 of the Termination Agreement.

    


    3.4. Severability.  If
any provision of this Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect.  Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.  This Note is subject to the
express condition that at no time shall Maker be obligated or required to pay
interest on the principal balance due hereunder at a rate which could subject
Payee to either civil or criminal liability as a result of being in excess of
the maximum interest rate which Maker is permitted by applicable law to contract
or agree to pay.

    


    3.5. Governing
Law.  This Note shall be governed by the laws of the State of
Delaware without regard to conflicts of laws principles.

    


    3.6. Parties in
Interest.  This Note shall bind Maker and its successors and
assigns.  This Note shall not be assigned or transferred by Maker or
Payee without the express prior written consent of the other party.

    *  *  *  *  *


    
      
         


      

      
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    IN
WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first
written above.

    


    


    
      
        
          	 
      	
                  LTC
      GLOBAL, INC.

                
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                  By: /s/
      Richard Pitbladdo

                
	 
      	
                  Name:
      Richard Pitbladdo

                
	 
      	
                  Title:
      Chief Financial
Officer

                


        

      

    


    
      
         


      

      
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    SCHEDULE
A

    


    MAXIMUM
GUARANTEE BALANCE

    


    
      
        	
                Installment
      Payment 

                Date

              	
                Maximum
      Guarantee 

                Balance

              
	 
      	
                $2,500,000.00

              
	
                15-May-09

              	
                $2,466,547.52

              
	
                15-Jun-09

              	
                $2,432,853.93

              
	
                15-Jul-09

              	
                $2,398,917.51

              
	
                15-Aug-09

              	
                $2,364,736.49

              
	
                15-Sep-09

              	
                $2,330,309.12

              
	
                15-Oct-09

              	
                $2,295,633.62

              
	
                15-Nov-09

              	
                $2,260,708.20

              
	
                15-Dec-09

              	
                $2,225,531.07

              
	
                15-Jan-10

              	
                $2,190,100.40

              
	
                15-Feb-10

              	
                $2,154,414.37

              
	
                15-Mar-10

              	
                $2,118,471.14

              
	
                15-Apr-10

              	
                $2,082,268.86

              
	
                15-May-10

              	
                $2,045,805.65

              
	
                15-Jun-10

              	
                $2,009,079.64

              
	
                15-Jul-10

              	
                $1,972,088.94

              
	
                15-Aug-10

              	
                $1,934,831.63

              
	
                15-Sep-10

              	
                $1,897,305.80

              
	
                15-Oct-10

              	
                $1,859,509.50

              
	
                15-Nov-10

              	
                $1,821,440.80

              
	
                15-Dec-10

              	
                $1,783,097.72

              
	
                15-Jan-11

              	
                $1,744,478.29

              
	
                15-Feb-11

              	
                $1,705,580.52

              
	
                15-Mar-11

              	
                $1,666,402.40

              
	
                15-Apr-11

              	
                $1,626,941.91

              
	
                15-May-11

              	
                $1,587,197.02

              
	
                15-Jun-11

              	
                $1,547,165.67

              
	
                15-Jul-11

              	
                $1,506,845.80

              
	
                15-Aug-11

              	
                $1,466,235.34

              
	
                15-Sep-11

              	
                $1,425,332.18

              
	
                15-Oct-11

              	
                $1,384,134.22

              
	
                15-Nov-11

              	
                $1,342,639.33

              
	
                15-Dec-11

              	
                $1,300,845.38

              
	
                15-Jan-12

              	
                $1,258,750.20

              
	
                15-Feb-12

              	
                $1,216,351.63

              
	
                15-Mar-12

              	
                $1,173,647.48

              
	
                15-Apr-12

              	
                $1,130,635.54

              


         

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

         

        	
                15-May-12

              	
                $1,087,313.61

              
	
                15-Jun-12

              	
                $1,043,679.44

              
	
                15-Jul-12

              	
                $999,730.78

              
	
                15-Aug-12

              	
                $955,465.37

              
	
                15-Sep-12

              	
                $910,880.93

              
	
                15-Oct-12

              	
                $865,975.15

              
	
                15-Nov-12

              	
                $820,745.73

              
	
                15-Dec-12

              	
                $775,190.32

              
	
                15-Jan-13

              	
                $729,306.57

              
	
                15-Feb-13

              	
                $683,092.13

              
	
                15-Mar-13

              	
                $636,544.61

              
	
                15-Apr-13

              	
                $589,661.60

              
	
                15-May-13

              	
                $542,440.69

              
	
                15-Jun-13

              	
                $494,879.44

              
	
                15-Jul-13

              	
                $446,975.41

              
	
                15-Aug-13

              	
                $398,726.12

              
	
                15-Sep-13

              	
                $350,129.07

              
	
                15-Oct-13

              	
                $301,181.78

              
	
                15-Nov-13

              	
                $251,881.70

              
	
                15-Dec-13

              	
                $202,226.30

              
	
                15-Jan-14

              	
                $152,213.02

              
	
                15-Feb-14

              	
                $101,839.28

              
	
                15-Mar-14

              	
                $51,102.48

              
	
                15-Apr-14

              	
                $0.00

              


      

    

    


    
 

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