EXHIBIT 10.10
DEMAND PROMISSORY NOTE
$30,000 Fort Smith, Arkansas
April 1, 2002
ON DEMAND, FOR VALUE RECEIVED, the undersigned, RICHARD SKELLY
("Maker"), promises to pay to BEVERLY ENTERPRISES, INC. ("Holder"), at One
Thousand Beverly Way, Fort Smith, Arkansas 72919, or such other place as Holder
may direct by written notice to Maker, the principal sum of THIRTY THOUSAND
DOLLARS and 00/100 ($30,000), plus interest thereon at the applicable federal
rate as provided in Section 1 below. Principal, together with all accrued and
unpaid interest thereon shall be due and payable upon demand at the address of
Holder set forth above.
SECTION 1. INTEREST RATE. All unpaid amounts owed pursuant to the terms
of this Note shall bear interest at the lesser of (a) the maximum rate of
interest permitted by applicable law (the "Maximum Rate") or (b) the federal
short-term rate in effect during the periods in which any amount owed pursuant
to the terms of this Note is outstanding, with such federal short-term rate
being (i) compounded semi-annually, for the period beginning on the date of this
Note through June 30, 2002, and (ii) revised for the six-month period beginning
on July 1, 2002, and again revised every six-month period thereafter, in
accordance with the applicable federal short-term rate published by the Internal
Revenue Service that is in effect on the first month of that semi-annual period
(i.e., January or July as the case may be); provided, however, that for any
entire calendar year that the Note remains outstanding, this Note shall bear
interest at the "blended annual rate" which is published annually by the
Internal Revenue Service.
SECTION 2. DEFAULT BY MAKER. Upon failure of Maker to pay any sums due
hereunder, whether interest or principal, the entire outstanding principal
balance, including any previously accrued but unpaid interest, shall bear
interest at the rate equal to the lesser of (a) five percent (5%) above the
applicable federal rate, or (b) the Maximum Rate.
SECTION 3. FORGIVENESS AND REPAYMENT OF LOAN.
(a) On December 31 of each year for which Maker has been a full-time
employee of Holder for such year, Holder will forgive one-fourth of the original
stated balance set forth above of the loan evidenced by this Note and accrued,
but unpaid interest. If Maker is employed by the Holder on December 31 of the
fourth year following the date of this Note, Holder will forgive all outstanding
principal, accrued, but unpaid interest, and all other amounts owed pursuant to
this Note. If, prior to December 31 of the fourth year following the date of
this Note, Maker's employment is terminated by Holder, Without Cause (as defined
in the Employment Agreement referenced in Section 7 below (the "Employment
Agreement")) or due to a Change in Control (as defined in the Employment
Agreement), Holder will forgive all outstanding principal, accrued but unpaid
interest, and all other amounts owed pursuant to this Note.
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(b) If, prior to December 31 of the fourth year following the date of
this Note, Maker terminates his employment with Holder, or Holder terminates
Maker's employment For Cause (as defined in the Employment Agreement), the
entire remaining outstanding principal amount together with all remaining
accrued but unpaid interest on such amount and all other remaining amounts owing
pursuant to the terms of this Note, shall immediately be due and payable
effective as of the date of termination of Maker's employment. To the fullest
extent permitted by applicable law, Maker grants to Holder the right to offset,
without notice, all or a portion of the amounts owed by Maker pursuant to the
terms of this Note against any amounts owed by Holder to Maker.
SECTION 4. PREPAYMENT. Maker may prepay this Note, in whole or in part,
at any time or from time to time before demand, without premium or penalty.
Maker hereby waives presentment, notice of dishonor, notice of acceleration,
demand for payment, protest and notice of protest of this Note.
SECTION 5. BINDING EFFECT. This Note shall be binding upon Maker, his
heirs, executors, administrators, successors and assigns.
SECTION 6. ALTERATION, AMENDMENT OR WAIVER. No alteration, amendment or
waiver of any provision of this Note shall constitute a waiver of any other term
hereof, or otherwise release or discharge the liability of Maker under this
Note. Maker agrees to pay all costs of collection when incurred, including,
without limitation, reasonable attorneys' fees.
SECTION 7. EMPLOYMENT AGREEMENT. This Note is subject to the terms and
conditions of the Employment Agreement between Maker and Holder attached hereto
as ADDENDUM A, and incorporated herein for all purposes.
SECTION 8. GOVERNING LAW. This Note is governed by and shall be
construed in accordance with the laws of the State of Delaware. If any term or
condition of this Note or its application to either party shall, to any extent,
be invalid or unenforceable, the remainder of the Note, or the application of
such term or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
or condition of this Note shall be valid and shall be enforced to the fullest
extent permitted by law.
SECTION 9. OFFSETS. Maker shall have no right to offset against any
amount owed pursuant to the terms of this Note for any amounts owed by Holder to
Maker.
SECTION 10. USURY SAVING PROVISION. It is the intent of Maker and
Holder in the execution of this Note to contract in strict compliance with
applicable usury law. In furtherance thereof, Maker and Holder stipulate and
agree that none of the terms and provisions contained in this Note, or in any
other instrument executed in connection herewith, shall ever be construed to
create a contract to pay interest at a rate in excess of the Maximum Rate.
Neither Maker nor any guarantors, endorsers or other parties now or hereafter
becoming liable for payment of this Note shall ever be obligated or required to
pay interest on this Note at a rate in excess of the Maximum Rate, and the
provisions of this paragraph shall control over all other provisions of this
Note and any other documents now or hereafter executed that may be in apparent
conflict
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herewith. If the principal of this Note is prepaid, and as a result thereof the
interest received for the actual period of existence of the loan evidenced by
this Note exceeds the Maximum Rate, the Holder shall credit the amount of such
excess against the principal balance of this Note then outstanding and thereby
shall render inapplicable any and all penalties of any kind provided by
applicable law as a result of such excess interest; provided, however, that if
the principal hereof has been paid in full, such excess shall be refunded to
Maker. If the Holder shall receive money (or anything else) that is determined
to constitute interest and that would increase the effective interest rate on
this Note to a rate in excess of the Maximum Rate, the amount determined to
constitute interest in excess of the Maximum Rate shall be credited against the
principal balance of this Note then outstanding or, if the principal balance has
been paid in full, refunded to Maker, in which event any and all penalties of
any kind under applicable law as a result of such excess interest shall be
inapplicable. If the Holder shall not actually receive, but shall contract for,
request or demand, a payment of money (or anything else) that is determined to
constitute interest and that would increase the effective interest rate
contracted for or charged on this Note to a rate in excess of the Maximum Rate,
the Holder shall be entitled, following such determination, to waive or rescind
the contractual claim, request or demand for the amount determined to constitute
interest in excess of the Maximum Rate, in which event any and all penalties of
any kind under applicable law as a result of such excess interest shall be
inapplicable. By execution of this Note, Maker acknowledges that Maker believes
the loan evidenced by this Note to be non-usurious and agrees that if, at any
time, Maker should have reason to believe that such loan is in fact usurious,
Maker will give the Holder notice of such condition. Maker agrees that the
Holder shall have sixty (60) days following receipt of such written notice in
which to make appropriate refund or other adjustment in order to correct such
condition if in fact such condition exists. Additionally, if, from any
circumstance whatsoever, fulfillment of any provision hereof shall, at the time
fulfillment of such provision is due, involve transcending the Maximum Rate
then, ipso facto, the obligation to be fulfilled shall be reduced to the Maximum
Rate. The term "APPLICABLE LAW" as used in this Note shall mean the laws of the
State of Delaware or the laws of the United States, whichever laws allow the
greater rate of interest, as such laws now exist or may be changed or amended or
come into effect in the future.
SECTION 11. COGNOVIT NOTE. THE UNDERSIGNED HEREBY AUTHORIZES ANY
ATTORNEY AT LAW TO APPEAR FOR THE UNDERSIGNED, IN AN ACTION ON THIS NOTE, AT ANY
TIME AFTER THE SAME BECOMES DUE, AS HEREIN PROVIDED, IN ANY COURT OF RECORD IN
OR OF THE STATE OF ARKANSAS, OR ELSEWHERE, TO WAIVE THE ISSUING AND SERVICE OF
PROCESS AGAINST THE UNDERSIGNED AND TO CONFESS JUDGMENT IN FAVOR OF THE HOLDER
OF THIS NOTE AGAINST THE UNDERSIGNED FOR THE AMOUNT THAT MAY BE DUE, WITH
INTEREST AT THE RATE HEREIN MENTIONED AND COSTS OF SUIT, AND TO WAIVE AND
RELEASE ALL ERRORS IN SAID PROCEEDINGS AND JUDGMENT, AND ALL PETITIONS IN ERROR,
AND RIGHT OF APPEAL FROM THE JUDGMENT RENDERED. THE UNDERSIGNED AGREES THAT THE
HOLDER'S ATTORNEY MAY CONFESS JUDGMENT PURSUANT TO THE FOREGOING WARRANT OF
ATTORNEY. THE UNDERSIGNED FURTHER AGREES THAT THE ATTORNEY CONFESSING JUDGMENT
PURSUANT TO THE FOREGOING WARRANT OF ATTTORNEY MAY RECEIVE A LEGAL FEE OR OTHER
THING OF VALUE FROM THE HOLDER OF THIS NOTE.
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WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
MAKER:
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Richard Skelly
HOLDER:
BEVERLY ENTERPRISES, INC.
By:
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Name:
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Title:
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