8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 28, 2009

Penn Treaty American Corporation

(Exact name of registrant as specified in its charter)

Pennsylvania	001-14681	23-1664166
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2500 Legacy Drive Suite 130, Frisco, Texas  75034

(Address of Principal Executive Offices)       (Zip Code)

Registrant’s telephone number, including area code:  (469)362-1214

3440 Lehigh Street, Allentown, Pennsylvania  18103

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item  1.01  Entry into a Material Definitive Agreement.

On April 28, 2009, Penn Treaty American Corporation (the “Company”) closed on a Termination and Limited Release Agreement (the “Release”) and a $5,000,000 Limited Recourse Secured Promissory Note (the “New Note”) with LTC Global, Inc., a Nevada corporation (“LTC Global”) and, in connection therewith, a Security Agreement with ACSIA Long Term Care, Inc., an affiliate of LTC Global.

The agreements were entered into in connection with a Stock Purchase Agreement and related agreements with LTC Global dated as of November 5, 2008, whereby the Company sold all of the issued and outstanding shares of capital stock (the “Shares”) of its wholly-owned subsidiary, United Insurance Group Agency, Inc. (“UIG”), to LTC Global.

Pursuant to the Stock Purchase Agreement, LTC Global purchased the Shares for $14.25 million (the “Purchase Price”), with $10.25 million of the Purchase Price payable pursuant to the terms of a promissory note (the “Original Note”) payable upon the earlier of (i) 120 days from November 5, 2008 or (ii) the completion of certain executed commission assignments.  Certain amounts were paid upon the completion of certain commission assignments, and at the due date, the aggregate principal and interest outstanding under the Original Note was $8,262,188.

On January 6, 2009, two of the Company's subsidiaries, Penn Treaty Network America Insurance Company and American Network Insurance Company, were placed into rehabilitation under the control of the Pennsylvania Department of Insurance.  The LTC Global group of companies is a general creditor of the Company's subsidiaries, with renewal commission rights valued at approximately $12 million gross of credit impairment.  As a result of the entry into rehabilitation, the associated commission rights owned by LTC Global subsidiaries were no longer eligible as collateral under LTC Global’s primary credit facility.  LTC Global advised the Company that payment of the Original Note at this time would have an impact on its liquidity and therefore, asked the Company for an extension of credit to enable LTC Global to continue its growth plan without interruption.  As a result, the Company agreed to refinance a portion of the amount outstanding on the Original Note conditioned upon a release of potential indemnification obligations of the Company related to actions of former officers of UIG.

Pursuant to the Release, the Company canceled the Original Note and LTC Global (i) paid to the Company $3,262,188; (ii) delivered to the Company the New Note; and (iii) released the Company from any and all liability related to the conduct of the defendants in the action captioned UIG v. Patrick Patterson, et al. Oakland County Circuit Court Case No. 08-096069-CK.

Pursuant to the New Note, UIG will pay to the Company principal and accrued interest in monthly installment payments.  The New Note matures on April 16, 2019 or such earlier date upon which the original principal amount and all accrued interest thereon has been paid in full.

As collateral for the amounts due under the New Note, Penn Treaty received a security interest in certain commissions payable to ACSIA from Penn Treaty Network America Insurance Company and American Network Insurance Company.

Item 1.02  Termination of a Material Definitive Agreement.

As described in Item 1.01 and incorporated herein by reference, the Original Note has been cancelled and replaced by the New Note.

Item 9.01  Financial Statements and Exhibits.

(d)           Exhibits.

Exhibit	Description
10.1	Termination and Limited Release Agreement between LTC Global, Inc. and Penn Treaty American Corporation
10.2	$5,000,000 Limited Recourse Secured Promissory Note
10.3	Security Agreement by and between ACSIA Long Term Care, Inc. and Penn Treaty American Corporation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PENN TREATY AMERICAN CORPORATION
May 4, 2009	By:  /s/ Eugene Woznicki
	Name:  Eugene Woznicki
	Title:  Chief Executive Officer

EXHIBIT INDEX

Exhibit	Description
10.1	Termination and Limited Release Agreement between LTC Global, Inc. and Penn Treaty American Corporation
10.2	$5,000,000 Limited Recourse Secured Promissory Note
10.3	Security Agreement by and between ACSIA Long Term Care, Inc. and Penn Treaty American Corporation

EX-10.1

Execution Copy

TERMINATION AND LIMITED RELEASE AGREEMENT

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 Nixon Peabody LLP, 437 Madison Avenue, New York, New York 10022 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. Patrick Patterson, 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.

LTC GLOBAL, INC.
By:	/s/ Richard Pitbladdo
	Name: Richard Pitbladdo
	Title: Chief Financial Officer
PENN TREATY AMERICAN CORPORATION
By:	/s/ Eugene Woznicki
	Name: Eugene Woznicki
	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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EX-10.2

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

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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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EX-10.3

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:

if to the Grantor:

ACSIA Long Term Care, Inc.

Medford, OR 9750133 North Central Avenue, Suite 317

Attn:

Facsimile:

if to the Secured Party:

Penn Treaty American Corporation

2500 Legacy Drive, Suite 130

Frisco, TX 75034

Attn: Eugene Woznicki

Facsimile:

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.

ACSIA LONG TERM CARE, INC.
By:	/s/ Richard Pitbladdo
Name:	Richard Pitbladdo
Its:	Vice President

ACCEPTED:
PENN TREATY AMERICAN CORPORATION
By: /s/ Eugene Woznicki
	Name: Eugene Woznicki
	Title:   CEO and Chairman

SCHEDULE A

to

Security Agreement

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.