SECURITY AGREEMENT
THIS
SECURITY AGREEMENT, dated as of April 23, 2009 (this “Agreement”), is
granted by ACSIA LONG TERM CARE, INC., a Delaware corporation (the “Grantor”), to PENN
TREATY AMERICAN CORPORATION, a Pennsylvania corporation (together with its
successors and assigns, the “Secured
Party”).
Preliminary
Statements
On the
date hereof, the LTC Global, Inc., a Nevada corporation (the “Debtor”), has issued
a $5,000,000 Limited Recourse Secured Promissory Note (as amended, supplemented
or modified from time to time, the “Promissory Note”) to
the Secured Party. To induce the Secured Party to accept the
Promissory Note and to make the loans and/or financial accommodations to the
Debtor contemplated thereunder, the Grantor, a wholly-owned subsidiary of the
Debtor, is entering into this Agreement with the Secured Party.
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant of Security
Interest.
1.1 The
Grantor hereby grants to the Secured Party a security interest in the personal
property listed on Schedule A hereto and all proceeds thereof (the “Collateral”) as
security for the prompt and complete payment when due of all Obligations (as
defined in the Promissory Note).
1.2 The
Grantor hereby irrevocably authorizes the Secured Party at any time and from
time to time to file in any filing office in any Uniform Commercial Code
jurisdiction any financing statements and amendments thereto that contain any
information required by part 5 of Article 9 of the Uniform Commercial Code for
the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether the Grantor is an organization, the type of
organization and any organization identification number issued to the Grantor,
and (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral
relates. The Grantor agrees to furnish any such information to the
Secured Party promptly upon request. The Grantor also ratifies its
authorization for the Secured Party to have filed in any Uniform Commercial Code
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof.
1.3 At
any time and from time to time, upon the written request of the Secured Party
and at the sole expense of the Grantor, the Grantor shall promptly and duly
execute and deliver any and all such further instruments and documents and take
such further actions as the Secured Party may deem desirable to obtain the full
benefits of this Agreement and of the rights and powers herein granted,
including filing any financing or continuation statements under the UCC with
respect to the liens granted hereunder as to those jurisdictions that are not
Uniform Commercial Code jurisdictions.
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2. Enforcement of Security
Interest. Upon the occurrence of an “Event of Default” as set
forth in the Promissory Note, the Secured Party shall have all of the rights and
remedies of a secured party against a defaulting debtor provided in the Delaware
Uniform Commercial Code for the enforcement of the Secured Party’s security
interest in the Collateral.
3. Representations and
Warranties.
3.1. Except
as permitted under the Termination and Limited Release Agreement, dated as of
the date hereof, between the Secured Party and the Debtor (the “Termination
Agreement”), Grantor owns the collateral free and clear of any and all liens,
encumbrances or claims of others, other than any liens imposed by law or
otherwise arising in the ordinary course of business of the Grantor with respect
to amounts not yet past due or, if past due, that are being contested in good
faith. Except as permitted under the Termination Agreement, no
security agreement, financing statement or other public notice with respect to
any part of the Collateral is on file or recorded in any public office except
such as may have been filed in favor of the Secured Party or permitted under the
Termination Agreement.
3.2 Upon
release of any lien on the Collateral as required under the Termination
Agreement, the liens granted hereby constitute first priority liens on the
Collateral in favor of the Secured Party, except as permitted under the
Termination Agreement,.
4. Actions and
Proceedings. THE GRANTOR HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT SITTING IN THE
STATE OF DELAWARE, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT; PROVIDED, HOWEVER, THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR SHALL OPERATE TO PRECLUDE THE SECURED PARTY FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF THE SECURED PARTY. THE GRANTOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND HEREBY WAIVES ANY OBJECTION WHICH IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE
GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE GRANTOR AT THE ADDRESS FOR NOTICE SET FORTH HEREIN AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
5. Waiver of Jury
Trial. THE PARTIES HERETO HEREBY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE SECURED PARTY AND THE
GRANTOR ARISING OUT
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OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
6. Address for
Notices. All notices, requests and demands to or upon the
Secured Party or the Grantor shall be effective if made in writing and shall be
deemed to be delivered (A) upon receipt (i) if delivered by hand or by Federal
Express or other national overnight courier, or (ii) if sent by telegraph, or
(B) when sent, answer back received, in the case of notice by telex or
facsimile, or (C) five (5) days after deposited in the mail, air postage
prepaid, to the following address or to such other address of the Secured Party
or the Grantor as may be hereafter notified by the Secured Party or the Grantor
to the other:
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if
to the Grantor:
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ACSIA
Long Term Care, Inc.
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Xxxxxxx,
XX 0000000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
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Attn:
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Facsimile:
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if
to the Secured Party:
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Penn
Treaty American Corporation
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0000
Xxxxxx Xxxxx, Xxxxx 000
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Xxxxxx,
XX 00000
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| Attn: Xxxxxx Xxxxxxxx | |
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7. Expenses. The Grantor
shall pay all fees, costs and expenses (including attorneys' fees, legal
expenses and court costs) incurred by the Secured Party in enforcing or
protecting the liens granted hereby or any of its rights or remedies under this
Agreement, all of which shall be payable on demand and constitute
Obligations.
8. Delaware
Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THAT STATE.
9. Defined Terms. Terms
used herein (including any Schedules hereto) and otherwise not herein defined
shall have the meanings assigned to such terms in the Uniform Commercial Code,
as adopted in the State of Delaware and in effect on the date
hereof.
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IN WITNESS WHEREOF, the
Grantor has executed this Agreement as of the date and year first above
written.
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ACSIA
LONG TERM CARE, INC.
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By:
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/s/ Xxxxxxx Xxxxxxxxx
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Name:
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Xxxxxxx
Xxxxxxxxx
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Its:
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Vice
President
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ACCEPTED:
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PENN
TREATY AMERICAN CORPORATION
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By: /s/
Xxxxxx Xxxxxxxx
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Name:
Xxxxxx Xxxxxxxx
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Title: CEO
and Chairman
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SCHEDULE A
to
granted
by
ACSIA
Long Term Care, Inc., as “Grantor”
in favor
of
Penn
Treaty American Corporation,
as the
“Secured Party”
Description of
Collateral
All
right, title and interest of the Grantor in, to and under any and all
commissions payable to Grantor 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 of the Promissory Note, 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 Grantor or its
affiliates by way of purchase or business combination after the date of the
Promissory Note.
