Document:

Exhibit
10.5

 

SECOND
AMENDMENT TO CREDIT AGREEMENT

 

To each of the Lenders

signatory hereto

 

Ladies and Gentlemen:

 

Reference is
hereby made to that certain Credit Agreement dated as of December 26, 2003
(as amended hereby and heretofore amended, the “Credit
Agreement”), between the undersigned,
LTC Properties, Inc., the Guarantors party thereto, the Lenders party
thereto, Bank of Montreal, as Administrative Agent, Harris Nesbitt Corp., as
Co-Lead Arranger and Book Manager and Key Bank National Association, as
successor in interest to Key Corporate Capital Inc., as Co-Lead Arranger and
Syndication Agent.  All capitalized terms
used herein without definition shall have the same meanings herein as such
terms have in the Credit Agreement.

 

The Company has
requested that Merrill Lynch Capital, a Division of Merrill Lynch Business
Financial Services Inc., a Delaware corporation (“Merrill
Lynch”) be added as a Lender with a Commitment of $20,000,000
pursuant to Section 1.14 of the Credit Agreement and the Lenders are
willing to amend the Credit Agreement to do so under the terms and conditions
set forth in this agreement (herein, the “Amendment”).

 

1.             ADDITION
OF NEW LENDER.

 

Upon satisfaction
of the conditions precedent set forth in Section 3 below, the Credit Agreement
shall be and hereby is amended as follows:

 

1.1           Merrill Lynch
Capital, a Division of Merrill Lynch Business Financial Services Inc., a
Delaware corporation (the “New Lender”)
shall be deemed a Lender signatory to the Credit Agreement and shall have all
the rights, benefits, duties and obligations of a Lender under the Credit
Agreement and the Loan Documents. 
Accordingly, all references in the Credit Agreement and the Loan
Documents to the terms “Lender” and “Lenders” shall be deemed to include, and be a reference to,
the New Lender.  The New Lender agrees
that it will perform all of the duties and obligations which by the terms of
the Credit Agreement and the Loan Documents are required to be performed by it
as a Lender with a Commitment of $20,000,000.

 

 

1.2           The following address
shall be deemed to appear on the New Lender’s signature page in the Credit
Agreement as so amended for the New Lender:

 

Merrill Lynch Capital,

a Division of Merrill Lynch Business Financial Services Inc.

222 N. LaSalle
Street, 16th Floor

Chicago, IL  60601

 

Attention:      John
H. Ferguson, V

Assistant Vice President, Operations

Telephone:    (312)
499-3361

Telecopy:      (312)
750-6240

 

2.             AMENDMENTS.

 

Subject to the
satisfaction of the conditions precedent set forth in Section 3 below, the
Credit Agreement shall be and hereby is amended as follows:

 

2.1.          Section 1.5(b) of the
Credit Agreement shall be amended in its entirety to read as follows:

 

(b)           Notice to the Lenders. 
The Administrative Agent shall (i) give prompt telephonic or facsimile
notice of each Borrowing notice received from Borrower pursuant to Section
1.5(a) above, (ii) send a facsimile copy to each Lender within
five (5) Business Days of the date of receipt of each notice from the
Borrower received pursuant to Section 1.5(a) above and (iii) if such
notice requests the Lenders to make Eurodollar Loans, the Administrative Agent
shall give notice to the Borrower and each Lender by like means of the interest
rate applicable thereto promptly after the Administrative Agent has made such
determination.

 

2.2           The defined term “Commitment” appearing in Section 5.1 of the Credit
Agreement is hereby amended by deleting the last sentence thereof and replacing
it with the following:

 

The Borrower and
the Lenders acknowledge and agree that the Commitments of the Lenders aggregate
$65,000,000 as of October 5, 2004.

 

2.3.          Schedule I to the Credit
Agreement is hereby amended and restated in its entirety in the form attached
hereto as Schedule I.

 

2

 

3.             CONDITIONS PRECEDENT.

 

The effectiveness of this
Amendment is subject to the satisfaction of all of the following conditions
precedent:

 

3.1.          The Borrower, the
Administrative Agent and the Lenders shall each have executed and delivered
this Amendment.

 

3.2.          The Borrower shall have
executed and delivered a Note to Merrill Lynch in the amount of its
Commitment, such new Note to constitute a ”Note”
for all purposes of the Credit Agreement and the other Loan Documents upon the
Administrative Agent’s receipt of the same for the New Lender.

 

3.3           All legal matters
incident to the execution and delivery of this Amendment and the instruments
and documents contemplated hereby shall be satisfactory to the Lenders and
their counsel; and the Administrative Agent shall have received (with a signed
copy for each Lender) (i) the favorable written opinion of counsel for the
Borrower in form and substance satisfactory to the Administrative Agent and
(ii) the signed Certificate of the Secretary or an Assistant Secretary of
the Borrower, dated the date hereof, certifying (x) a true and correct
copy of resolutions adopted by the Board of Directors of the Borrower
authorizing or ratifying the execution, delivery and performance of the Credit
Agreement as amended by this Amendment and the other instruments and documents
called for above, including the Note to be issued to the New Lender and
(y) the incumbency and specimen signatures of officers of the Borrower
executing the documents referred to in clause (x) above and any other
documents delivered to the Administrative Agent in connection with this
Amendment.

 

3.4.          The Guarantors shall
have executed and delivered their consent to this Amendment in the space
provided for that purpose below.

 

4.             EQUALIZATION OF OUTSTANDING LOANS.

 

Anything contained in the
Credit Agreement to the contrary notwithstanding, upon satisfactory completion
of the conditions precedent to the effectiveness of this Amendment set forth
above, Merrill Lynch shall advance to the Administrative Agent an amount equal
to its ratable share of all outstanding Loans and the Administrative Agent
shall allocate such amount to each of the other Lenders so that after giving
effect thereto each Lender holds its ratable share of the total of the Loans
then outstanding.  On such date, the
Lender’s respective interests in outstanding Letters of Credit shall also be
adjusted to reflect Merrill Lynch’s pro rata interest therein.

 

5.             REPRESENTATIONS.

 

In order to induce the
Lenders to execute and deliver this Amendment, the Borrower hereby represents
to the Administrative Agent and the Lenders that as of the date hereof the
representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and

 

3

 

remain true and correct (except to the extent the same expressly relate
to an earlier date) and the Borrower is in compliance with all of the terms and
conditions of the Credit Agreement and the other Loan Documents and no Default
or Event of Default has occurred and is continuing under the Credit Agreement
or shall result after giving effect to this Amendment.

 

6.             MISCELLANEOUS.

 

6.1           By signing below, the
New Lender hereby (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to Section 8.5 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Amendment; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action as Administrative Agent on its behalf
and to exercise such powers under the Credit Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; and (iv) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the other Loan Documents are
required to be performed by it as a Lender.

 

6.2.          Except as specifically
amended herein, the Credit Agreement shall continue in full force and effect in
accordance with its original terms. 
Reference to this specific Amendment need not be made in the Credit
Agreement, or any other instrument or document executed in connection
therewith, or in any certificate, letter or communication issued or made
pursuant to or with respect to the Credit Agreement, any reference in any of
such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.

 

6.3.          The Borrower agrees to
pay on demand all reasonable costs and expenses of or incurred by the
Administrative Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment and the other instruments and documents
contemplated hereby, including the reasonable fees and expenses of counsel for
the Administrative Agent.

 

6.4.          This Amendment may be
executed in any number of counterparts, and by the different parties on
different counterpart signature pages, all of which taken together shall
constitute one and the same agreement. 
Any of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed to
be an original.  This Amendment shall be
governed by the internal laws of the State of New York.

 

[SIGNATURES PAGES TO FOLLOW]

 

4

 

This Second Amendment to
Credit Agreement is dated as of October 5, 2004.

 

	
   

  	
  LTC PROPERTIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
   

  	
  Title

  	
  Sr. Vice
  President and Treasurer

  	
   

  
								

 

5

 

Accepted and
agreed to as of the date and year last above written.

 

	
   

  	
  BANK OF MONTREAL,
  Chicago Branch, in

  its individual capacity as a Lender, as

  L/C Issuer, and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Thomas A.
  Batterham

  	
   

  
	
   

  	
  Title

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEY BANK NATIONAL
  ASSOCIATION, as

  successor in interest to KEY CORPORATE

  CAPITAL INC., in its individual capacity as a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Florentina
  Djulvezan

  	
   

  
	
   

  	
  Title

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK LEUMI USA,
  in its individual capacity as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Joung Hee
  Hong

  	
   

  
	
   

  	
  Title

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Merrill Lynch Capital,
  a Division of Merrill

  Lynch Business Financial Services Inc., in its

  individual capacity as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Brett
  Robinson

  	
   

  
	
   

  	
  Title

  	
  Vice President

  	
   

  
									

 

6

 

GUARANTORS’
ACKNOWLEDGMENT

 

The undersigned each
hereby consent to the Second Amendment to Credit Agreement as set forth above
and confirm all of the undersigneds’ obligations thereunder remain in full
force and effect.  The undersigned each
further agree that the consents of the undersigned to any further amendments to
the Credit Agreement shall not be required as a result of this consent having been
obtained.

 

	
  Dated as of October 5, 2004.

  	
   

  
	
   

  	
   

  
	
   

  	
  LTC-WEST, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
  Title

  	
  Sr. Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FLORIDA-LTC,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
  Title

  	
  Sr. Vice President
  and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LTC GP I, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
  Title

  	
  Sr. Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
								

 

7

 

	
   

  	
  LTC GP VI, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
  Title

  	
  Sr. Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NORTH
  CAROLINA REAL ESTATE

  INVESTMENTS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
  Title

  	
  Sr. Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EDUCATION PROPERTIES
  INVESTORS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Alex J.
  Chavez

  	
   

  
	
   

  	
  Title

  	
  Sr. Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
  /s/ Andre
  Dimitriadis

  	
   

  
	
   

  	
  Title

  	
  Chairman &
  CEO

  	
   

  
											

 

8

 

SCHEDULE
I

 

COMMITMENTS

 

	
  NAME
  OF LENDER

  	
   

  	
  CREDIT COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  Montreal, Chicago Branch

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Key Bank
  National Association, as successor in interest to Key Corporate
  Capital Inc.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Merrill Lynch
  Capital, a Division of Merrill Lynch Business Financial Services Inc.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank Leumi USA

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  65,000,000Exhibit
10.6

 

AMENDED
RESTATED AND CONSOLIDATED

PROMISSORY
NOTE

DATE: October 1,
2004

 

Malibu, California

 

THIS
AMENDED RESTATED AND CONSOLIDATED PROMISSORY NOTE (THIS “NOTE”), AMENDS,
RESTATES, CONSOLIDATES AND REPLACES (BUT DOES NOT SATISFY) THAT CERTAIN: (A)
PROMISSORY NOTE DATED MARCH 30, 1998 IN THE PRINCIPAL AMOUNT OF
$8,000,000.00, AS AMENDED AND RESTATED BY THAT AMENDED AND RESTATED PROMISSORY
NOTE DATED MAY 19, 1998 IN THE PRINCIPAL AMOUNT OF $20,000,000.00, AS AMENDED
BY A SECOND AMENDED AND RESTATED PROMISSORY NOTE DATED JUNE 8, 2001 IN THE
PRINCIPAL AMOUNT OF $20,000,000.00, AS AMENDED BY A FIRST AMENDMENT TO SECOND
AMENDED AND RESTATED PROMISSORY NOTE DATED OCTOBER 10, 2002, AND AS
AMENDED BY A SECOND AMENDMENT TO SECOND AMENDED AND RESTATED PROMISSORY NOTE
DATED OCTOBER 19, 2003, ALL PAYABLE TO LTC PROPERTIES, INC. AS PAYEE AND
CLC HEALTHCARE, INC. (FORMERLY KNOWN AS LTC EQUITY HOLDING COMPANY, INC.,
FORMERLY KNOWN AS LTC HEALTHCARE, INC.) AS MAKER (COLLECTIVELY, THE “CLC NOTES”)
AND (B) PROMISSORY NOTE DATED DECEMBER 31, 2001 IN THE PRINCIPAL AMOUNT OF
$7,000,000.00 AS AMENDED BY AN AMENDED AND RESTATED PROMISSORY NOTE DATED JULY 29,
2003, BOTH PAYABLE TO LTC PROPERTIES, INC. AS PAYEE AND HEALTHCARE HOLDINGS,
INC. AS MAKER AND EXECUTED BY CLC HEALTHCARE, INC. (COLLECTIVELY, THE “HHI
NOTES”).

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, CLC Healthcare, Inc. and
Healthcare Holdings, Inc. (jointly, severally and separately the “Maker” and
LTC Properties, Inc. (“Payee”) agree as follows:

 

RECITALS

 

A.                                   As
of the date hereof, Maker certifies and agrees the outstanding principal
balance of the CLC Notes and HHI Notes
plus accrued interest as of October 1,
2004 is $20,042,590.69 prior to any additional amounts borrowed under Paragraph B below (the “Loan”).

 

B.                                     Subject
to the limitations described herein, Maker requests or may request additional sums to be advanced by Payee as
follows:  (a) up to $250,000.00 to
CLC Healthcare, Inc. for capital improvements
to property known as Mara Villa Care Center located at 4825 South 7thStreet, Phoenix, Arizona 85042; (b) up
to $250,000.00 for general capital improvements to properties occupied by Maker
and owned by Payee; and (c) up to $500,000.00 for settlement of litigation
concerning Kindred Rehab Services v. Centers of Long Term Care of Texas, Inc.
pending in the U.S. District Court, Northern District of Texas, Dallas
Division.  It is agreed and understood
that any advances requested by Maker under this Paragraph B shall be subject to
the sole and absolute discretion of Payee. 
Maker will, at Payee’s request, provide all documentation as Payee deems
necessary with respect to any of the aforementioned advances, including but not
limited to, invoices, contracts, work orders, settlement agreements and the
like relative to the particular requested advance.

 

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 plus all accrued and outstanding interest as may be recorded on the grid
attached hereto and made a part hereof. 
Absent manifest error, all amounts recorded by Payee will be deemed
conclusively binding on the Maker. 
Principal amounts outstanding will accrue interest at the rate of 8%, compounded monthly, (“Compounded Interest”) and accrues to the balance of the
Note.  Interest accrued to the Note
balance shall not reduce amounts eligible to be advanced under Section B
of this Note.  All principal and accrued Compounded Interest shall be due on or
before October 1, 2007 (the
“Maturity Date”).  Principal and interest
due

 

 

hereunder shall be
payable in lawful money of the United States.  Amounts borrowed and repaid
hereunder may not be reborrowed.

 

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, Compounded Interest and accrued
interest owing to Payee by Maker under this Note.  Provided
however, certain mandatory prepayments of the Loan shall be required as set
forth in the Security Agreement (as hereinafter defined).

 

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 certain of the Assisted Living
Concepts, Inc. “(ALF”) common shares currently held by Healthcare Holdings, Inc. and subject to a Control Agreement dated March 7,
2002 (“Control Agreement”) among Healthcare Holdings, Inc., the Payee and
Solomon Smith Barney Inc. 
Reference is made to the Amended,
Restated and Consolidated Security Agreement among the Maker and Payee of even date herewith (“Security
Agreement”, the Control Agreement and Security Agreement hereinafter the “Security
Documents”) for a description of the Collateral provided for therein and the rights of Payee with
respect to such Collateral.  All obligations under this Note are secured
by the Collateral set forth in
the Security Documents.

 

4.                                       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.

 

5.                                       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 Healthcare Holdings, Inc, or CLC Healthcare, Inc. (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

 

2

 

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.

 

6.                                       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 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:

  	
  /s/ gt & jh

  	
   

  
	
   

  	
   

  	
    Maker

  

 

7.                                       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 and 5 hereof; or

 

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

 

8.                                       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.

 

9.                                       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.

 

3

 

10.                                 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.

 

11.                                 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.

 

12.                                 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.

 

13.                                 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.

 

14.                                 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

 

4

 

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.

 

15.                                 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.

  
	
   

  	
  7610 N. Stemmons Fwy,
  Suite 500

  
	
   

  	
  Dallas, Texas 75247

  
	
   

  	
  Attention: Chief Financial
  Officer

  
	
   

  	
   

  
	
  with a copy to:

  	
  Healthcare Holdings,
  Inc.

  
	
   

  	
  7610 N. Stemmons Fwy,
  Suite 500

  
	
   

  	
  Dallas, Texas 75247

  
	
   

  	
  Attention: Legal
  Department

  
	
   

  	
   

  
	
  and:

  	
  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

  

 

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]

 

5

 

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/ Gary Trebert

  	
   

  
	
   

  	
  Name:

  	
  Gary Trebert

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  MAKER:

  
	
   

  	
   

  
	
   

  	
  CLC
  HEALTHCARE, INC.,

  
	
   

  	
  a
  Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jeff Head

  	
   

  
	
   

  	
  Name:

  	
  Jeff Head

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  
					

 

6

 

SCHEDULE OF ADVANCES AND PAYMENT
OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of

  Advance

  	
   

  	
  Amount of Principal

  Paid or Repaid

  	
   

  	
  Unpaid Principal

  Balance

  	
   

  	
  Notation

  Made by

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]