TERMINATION AND LIMITED RELEASE AGREEMENT
Execution
Copy
This TERMINATION AND LIMITED RELEASE
AGREEMENT (this “Agreement”), dated as
of April 24, 2009, is by and between LTC Global, Inc., a Nevada corporation
(“LTC”), and
Penn Treaty American Corporation, a Pennsylvania corporation (“Penn
Treaty”).
WHEREAS, LTC, Penn Treaty and
United Insurance Group Agency, Inc., a Michigan corporation (“UIG”), are parties to
that certain Stock Purchase Agreement, dated as of November 5, 2008 (the “Purchase Agreement”),
pursuant to which LTC acquired all of the issued and outstanding shares of
capital stock of UIG;
WHEREAS, a portion of the
Purchase Price payable pursuant to the Purchase Agreement was paid by the
issuance on November 5, 2008 by LTC of a promissory note to Penn Treaty in the
original principal amount of $10,250,000 (the “Seller
Note”);
WHEREAS, pursuant to the
Purchase Agreement, LTC and Penn Treaty entered into the Pledge Agreement to
secure all obligations of LTC to Penn Treaty under the Seller Note;
WHEREAS, the outstanding
principal amount of the Seller Note as of April 15, 2009, after giving effect to
all payments made hereunder, is $8,262,188 all of which is due and owing to Penn
Treaty as of the date hereof;
WHEREAS, the parties have
agreed to refinance the Seller Note;
WHEREAS, in order to
effectuate the refinancing of the Seller Note, on the Closing Date (as defined
below), LTC shall issue to Penn Treaty a limited recourse promissory note, dated
as of April 15, 2009, in the original principal amount of $5,000,000
substantially in the form and on the terms of Exhibit A hereto (the
“New Note”),
LTC shall pay to Penn Treaty cash in an amount equal to $3,262,188 and Penn
Treaty shall cancel the Seller Note;
WHEREAS, contemporaneously
with the issuance by LTC of the New Note to Penn Treaty and the cancellation of
the Seller Note by Penn Treaty, the parties intend to terminate the Pledge
Agreement; and
WHEREAS, capitalized terms
used and not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Cancellation and
Termination. Subject to the terms and conditions set forth
herein, LTC and Penn Treaty agree that upon the Closing (as defined below), the
Seller Note shall be cancelled in all respects, shall be void and of no further
force or effect and fully discharged as a matter of record. Upon the
Closing, LTC and Penn Treaty hereby acknowledge
and agree
that the Seller Note and the Pledge Agreement shall be terminated and of no
further force or effect and that Penn Treaty’s and LTC’s rights and obligations
thereunder, express or implied, are fully extinguished. In
furtherance of the foregoing, Penn Treaty agrees that, from and after the
Closing, Penn Treaty will take all actions necessary to effectuate the release
of any and all Encumbrances that it has with respect to the Collateral (as
defined in the Pledge Agreement).
2. Closing. The
closing of the transactions contemplated hereby shall be effective as of the
delivery of the closing deliveries described below (the “Closing”) at the
offices of Xxxxx Xxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at
10:00 a.m. on April 24, 2009, or at such time and place as the parties mutually
agree (the “Closing
Date”).
3. Closing
Deliveries.
(a) At the
Closing, Penn Treaty shall deliver to LTC the following original
documents:
(i) Seller
Note marked “CANCELED” across its face; and
(ii) UIG Stock
Certificate No. 007 issued to LTC for 2,000 shares of capital stock of
UIG.
(b) At the
Closing, LTC shall:
(i) deliver
to Penn Treaty the New Note, duly executed by LTC;
(ii) pay to
Penn Treaty the amount of Three Million Two Hundred Sixty-Two Thousand One
Hundred Eighty-Eight Dollars and 00/100 ($3,262,188) by wire transfer of
immediately available funds to such bank account as shall be designated in
writing by Penn Treaty;
(iii) cause
ACSIA Long Term Care, Inc., a Delaware corporation and indirect wholly-owned
subsidiary of LTC (“ACSIA”), to execute
and deliver to Penn Treaty a security agreement in the form and on the terms of
Exhibit B
hereto;
(iv) file a
uniform commercial code financing statement covering the Collateral (as defined
in the New Note) with the Delaware Secretary of State naming ACSIA as debtor and
Penn Treaty as secured party;
(v) use its
best efforts to cause the assignment of the Collateral to ACSIA from another
affiliate of LTC, including obtaining all necessary consents thereto and
approvals therefor, as soon as is practicable but in any event within 60 days of
the date hereof (except for any consents required to be obtained from Penn
Treaty or its affiliates, in which case such 60 day time period shall apply only
to the formal request for consent together with otherwise fully executed copies
of all related documents); and
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(vi) use its
best efforts to cause the release of any lien on any part of the Collateral that
exists as of the date hereof, as soon as practicable but in any event within 60
days of the date hereof, and provide evidence of such release to Penn
Treaty.
4. Acknowledgment. For
purposes of clarification, the parties acknowledge and agree that from and after
the Closing Date, LTC shall have no further obligations under the Purchase
Agreement with respect to the Seller Note.
5. Limited Release by
LTC. Effective on the Closing Date, in consideration of this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, LTC, on behalf of itself and on behalf of the
direct and indirect subsidiaries of LTC, and their respective Affiliates, and
the officers, directors, stockholders, members, managers, current and former
employees, agents and attorneys and the respective successors and assigns of any
of them, hereby releases and forever discharges Penn Treaty and its past,
present and future officers, directors, stockholders, employees, agents and
Affiliates, and the respective heirs, administrators, successors and assigns of
each of the foregoing (each, a “Penn Treaty
Releasee”) from any and all actions, causes of action, suits,
liabilities, debts, damages, losses, costs, expenses (including attorney’s
fees), liabilities, obligations, claims of any kind, controversies, agreements,
trespasses, judgments, executions, demands, counterclaims, defenses, and other
claims of any kind or nature whatsoever (including, without limitation, claims
for indemnification and contribution), whether in law or in equity, whether
known or unknown, whether asserted or not, and any and all rights, duties,
liabilities, and obligations, whether presently enforceable or enforceable in
the future regarding, arising from, or in any manner relating to the conduct of
the defendants in the action captioned UIG v. Xxxxxxx Xxxxxxxxx, et al.
Oakland County Circuit Court Case No. 08-096069-CK.
6. Notices. Any
notice required or permitted to be given hereunder shall be given in accordance
with Section 11.1 of the Purchase Agreement.
7. Amendments and
Waivers. This Agreement may be amended only by written
instrument signed by LTC and Penn Treaty. No waiver of any provision
of this Agreement by the LTC or Penn Treaty shall be effective unless in writing
and signed by LTC or Penn Treaty, as the case may be.
8. Binding Effects;
Benefits. This Agreement shall inure to the benefit of the
parties hereto and shall be binding upon the parties hereto and their respective
successors and assigns, heirs and legal representatives. Except as
otherwise set forth herein, nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
9. Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the except conflicts of law
provisions) of the State of Delaware.
10. Entire
Agreement. This Agreement embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes
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and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
11. Conflict. In
the event of any conflict between this Agreement and the Purchase Agreement, the
terms of this Agreement shall prevail.
12. Severability. In
case any one or more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired.
13. Counterparts. This
Agreement may be executed in more than one counterpart, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument.
* * * * *
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IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the day and year first
above written.
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LTC
GLOBAL, INC.
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By:
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/s/ Xxxxxxx Xxxxxxxxx
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Name:
Xxxxxxx Xxxxxxxxx
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Title:
Chief Financial Officer
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PENN
TREATY AMERICAN CORPORATION
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By:
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/s/ Xxxxxx Xxxxxxxx
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Name:
Xxxxxx Xxxxxxxx
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Title:
CEO and
Chariman
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EXHIBIT
A
Form
of New Note
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EXHIBIT
B
Form
of Security Agreement
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