EXHIBIT 10.76
December 24, 2002
Beverly Enterprises - Washington, Inc.
1000 Beverly Way
Fort Smith, Arkansas 72919
Re: $5,000,000 Term Loan
Ladies and Gentlemen:
BANK OF AMERICA, N.A. (the "Lender") is pleased to make available to
BEVERLY ENTERPRISES - WASHINGTON, INC., a California corporation (the
"Borrower"), a term loan on the terms and subject to the conditions set forth
below. Terms not defined herein have the meanings assigned to them in Exhibit A
hereto.
1. THE LOAN.
(a) THE LOAN. Subject to the terms and conditions set forth
herein, the Lender agrees to make available to the Borrower on
the date hereof a term loan (the "Loan") in an aggregate ----
principal amount of $5,000,000. Once repaid, the Loan may not
be reborrowed.
(b) BORROWINGS, CONVERSIONS, CONTINUATIONS. The Borrower may
request that the Loan be (i) made as or converted to a Base
Rate Loan by irrevocable notice to be received by the Lender
not later than 11:00 a.m. on the Business Day of the borrowing
or conversion, or (ii) made or continued as, or converted to,
a Eurodollar Rate Loan by irrevocable notice to be received by
the Lender not later than 11:00 a.m. three Business Days prior
to the Business Day of the borrowing, continuation or
conversion. If the Borrower fails to give a notice of
conversion or continuation prior to the end of any Interest
Period in respect of any Eurodollar Rate Loan, the Borrower
shall be deemed to have requested that such Loan be converted
to a Base Rate Loan on the last day of the applicable Interest
Period. If the Borrower requests that a Loan be continued as
or converted to a Eurodollar Rate Loan, but fails to specify
an Interest Period with respect thereto, the Borrower shall be
deemed to have selected an Interest Period of one month.
Notices pursuant to this Paragraph 1(b) may be given by
telephone if promptly confirmed in writing.
Each Eurodollar Rate Loan and each Base Rate Loan shall be in
a principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof. There shall not be more than two
different Interest Periods in effect at any time.
(c) INTEREST. At the option of the Borrower, the Loan shall bear
interest at a rate per annum equal to (i) the Eurodollar Rate
plus the Applicable Margin; or (ii) the Base Rate plus the
Applicable Margin. Interest on a Base Rate Loan when the Base
Rate is determined by the Lender's "prime rate" shall be
calculated on the basis of a year of 365 or 366 days and
actual days elapsed. All other interest hereunder shall be
calculated on the basis of a year of 360 days and actual days
elapsed.
The Borrower promises to pay interest (i) for each Eurodollar
Rate Loan, (A) on the last day of the applicable Interest
Period, and, if the Interest Period is longer than three
months, on the respective dates that fall every three months
after the beginning of the Interest Period, and (B) on the
date of any conversion of such Loan to a Base Rate Loan; (ii)
for each Base Rate Loan, on the last Business Day of each
calendar quarter; and (iii)
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 2
for each Base Rate Loan and Eurodollar Rate Loan, on the
Maturity Date. If the time for any payment is extended by
operation of law or otherwise, interest shall continue to
accrue for such extended period.
After the date any principal amount of the Loan is due and
payable (whether on the Maturity Date, upon acceleration or
otherwise), or after any other monetary obligation hereunder
shall have become due and payable (in each case without regard
to any applicable grace periods), the Borrower shall pay, but
only to the extent permitted by law, interest (after as well
as before judgment) on such amounts at a rate per annum equal
to the Base Rate plus 2%. Furthermore, while any Event of
Default exists, the Borrower shall pay interest on the
principal amount of the Loan at a rate per annum equal to the
Base Rate plus 2%. Accrued and unpaid interest on past due
amounts shall be payable on demand.
In no case shall interest hereunder exceed the amount that the
Lender may charge or collect under applicable law.
(d) EVIDENCE OF THE LOAN. The Loan and all payments thereon shall
be evidenced by the Lender's loan accounts and records;
provided, however, that upon the request of the Lender, the
Loan may be evidenced by a promissory note in the form of
Exhibit B hereto in addition to such loan accounts and
records. Such loan accounts, records and promissory note shall
be conclusive absent manifest error of the amount of the Loan
and payments thereon. Any failure to record the Loan or
payment thereon or any error in doing so shall not limit or
otherwise affect the obligation of the Borrower to pay any
amount owing with respect to the Loan.
(e) REPAYMENT. The Borrower promises to pay the outstanding
principal amount of the Loan in six (6) consecutive quarterly
installments as follows, unless accelerated sooner pursuant to
paragraph 5:
<Table>
<Caption>
PAYMENT DATES PAYMENT AMOUNT
------------- --------------
March 31, 2003, $833,333.33
June 30, 2003,
September 30, 2003,
December 31, 2003
and March 31, 2004
Maturity Date $833,333.35
</Table>
The Borrower shall make all payments required hereunder not
later than 2:00 p.m. on the date of payment in same day funds
in Dollars at the office of the Lender located at 101 North
Tryon Street, Charlotte, North Carolina 28255 or such other
address as the Lender may from time to time designate in
writing.
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 3
All payments by the Borrower to the Lender hereunder shall be
made to the Lender in full without set-off or counterclaim and
free and clear of and exempt from, and without deduction or
withholding for or on account of, any present or future taxes,
levies, imposts, duties or charges of whatsoever nature
imposed by any government or any political subdivision or
taxing authority thereof. The Borrower shall reimburse the
Lender for any taxes imposed on or withheld from such payments
(other than taxes imposed on the Lender's income, and
franchise taxes imposed on the Lender, by the jurisdiction
under the laws of which the Lender is organized or any
political subdivision thereof).
(g) PREPAYMENTS.
(i) Optional. The Borrower may, upon three Business
Days' notice, in the case of a Eurodollar Rate Loan, and upon
same-day notice in the case of a Base Rate Loan, prepay the
Loan on any Business Day; provided that the Borrower pays all
Breakage Costs (if any) associated with such prepayment on the
date of such prepayment. Prepayments of a Eurodollar Rate Loan
must be accompanied by a payment of interest on the amount so
prepaid. Prepayments of a Eurodollar Rate Loan must be in a
principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof. Prepayments of a Base Rate Loan
must be in a principal amount of $1,000,000 or, if less, the
entire principal amount thereof then outstanding.
(ii) Mandatory. At the Lender's option, the Loan and
all other sums outstanding hereunder and under the other Loan
Documents, including all interest thereon, shall be
immediately due and payable upon the occurrence of either of
the following events: (A) the replacement, restatement or
refinancing of the Parent Credit Agreement or (B) any sale,
transfer or other disposition of all or substantially all of
the Collateral.
2. CONDITIONS PRECEDENT.
(a) CONDITIONS PRECEDENT TO THE LOAN. As a condition precedent to the Loan
hereunder, the Lender must receive the following from the Borrower in
form and substance satisfactory to the Lender:
(i) the enclosed duplicate of this Agreement duly
executed and delivered on behalf of the Borrower;
(ii) a certified borrowing resolution or other evidence of
the Borrower's authority to borrow;
(iii) a certificate of incumbency;
(iv) if requested by the Lender, a promissory note as
contemplated in Paragraph 1(d) above;
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December 24, 2002
Page 4
(v) an executed and notarized Mortgage, together with UCC
financing statements, a real estate title insurance
policy, a survey and an environmental report, in each
case as required by the Lender;
(vi) an executed Parent Guaranty;
(vii) a certificate of insurance naming the Lender as loss
payee and/or additional insured, as applicable; and
(viii) such other documents and certificates (including
legal opinions of counsel to the Borrower and the
Parent) as the Lender may reasonably request.
(b) CONDITIONS TO EACH CONTINUATION AND CONVERSION. As a
condition precedent to each continuation and conversion of the
Loan:
(i) The Borrower must furnish the Lender with, as
appropriate, a notice of continuation and conversion;
(ii) each representation and warranty set forth in
Paragraph 3 below shall be true and correct in all
material respects as if made on the date of such
continuation and conversion; and
(iii) no Default shall have occurred and be continuing on
the date of such continuation and conversion.
Each notice of continuation and conversion shall be deemed a
representation and warranty by the Borrower that the
conditions referred to in clauses (ii) and (iii) above have
been met.
3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
that:
(a) EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. It
(i) is a corporation duly organized or formed, validly
existing and in good standing under the laws of the state of
its organization or formation, (ii) has the power and
authority and the legal right to (A) own and operate its
properties, to lease the properties it operates and to conduct
its business and (B) execute, deliver and perform its
obligations under the Loan Documents, (iii) is duly qualified
and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct
of its business requires such qualification, and (iv) is in
compliance with all laws (included tax laws), except in each
case referred to in clause (iii) or clause (iv), to the extent
that failure to do so could not reasonably be expected to have
a Material Adverse Effect.
(b) POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance of this Agreement and the other Loan
Documents by the Borrower are within its powers and have been
duly authorized by all necessary action, and this Agreement is
and the other Loan Documents, when executed, will be legal,
valid and binding obligations of the Borrower, enforceable in
accordance with their respective
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 5
terms. The execution, delivery and performance of this
Agreement and the other Loan Documents are not in
contravention of law or of the terms of the Borrower's organic
documents and will not result in the breach of or constitute a
default under, or result in the creation of a lien under any
indenture, agreement or undertaking to which the Borrower is a
party or by which it or its property may be bound or affected.
No approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any governmental
authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or
enforcement against, the Borrower of this Agreement or any
other Loan Document except for mortgage filings and financing
statement filings to perfect the security interest of the
Lender.
(c) NO MATERIAL ADVERSE EFFECT. Since December 31, 2001, there has
been no event or circumstance that has or could reasonably be
expected to have a Material Adverse Effect.
(d) NO MATERIAL LITIGATION. Except as disclosed in the Parent's
10-K filed for the period ending December 31, 2001, no
litigation or governmental proceeding is pending or, to the
best knowledge of the Borrower, threatened by or against the
Borrower or the Parent which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
(e) NO DEFAULT. No Default has occurred and is continuing.
(f) USE OF PROCEEDS. The proceeds of the Loan will be used solely
for general business purposes and in accordance with
requirements of law, and will not be used, directly or
indirectly, immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose.
(g) ENVIRONMENTAL MATTERS. All facilities owned or leased by the
Borrower or its Subsidiaries have been and continue to be in
material compliance with all material environmental laws and
regulations.
4. COVENANTS. So long as principal of and interest on the Loan or any
other amount payable hereunder or under any other Loan Document remains
unpaid or unsatisfied:
(a) INFORMATION. The Borrower shall deliver to the Lender:
(i) within 90 days after the end of its fiscal year, an
operating statement and balance sheet of the Borrower
(which shall not be required to be prepared in
accordance with GAAP) and within 90 days after the
end of its fiscal year, an operating statement of the
of the Borrower regarding the operations of the
facility encumbered by the Mortgage. Each such
financial statement shall accurately reflect the
financial position of the Borrower or such facility,
as applicable, in all material respects.
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 6
(ii) promptly upon the Borrower's obtaining knowledge of
any Default, a certificate of the chief financial
officer of the Borrower setting forth the details
thereof and any action that the Borrower is taking or
proposes to take with respect thereto;
(iii) promptly upon the Borrower's obtaining knowledge
thereof, notice of any matter that has resulted or
could reasonably be expected to result in a Material
Adverse Effect (including litigation and
environmental matters); and
(iv) from time to time such additional information
regarding the financial condition or business of the
Borrower and its Subsidiaries as the Lender may
reasonably request.
(b) OTHER AFFIRMATIVE COVENANTS. The Borrower shall, and shall
cause each of its Subsidiaries to:
(i) preserve and maintain all of its rights, privileges,
and franchises necessary or desirable in the normal
conduct of its business;
(ii) comply with the requirements of all applicable laws,
rules, regulations, and orders of governmental
authorities;
(iii) pay and discharge when due all taxes, assessments,
and governmental charges or levies imposed on it or
on its income or profits or any of its property,
except for any such tax, assessment, charge, or levy
the payment of which is being contested in good faith
and by proper proceedings and against which adequate
reserves are being maintained;
(iv) maintain all of its properties owned or used in its
business in good working order and condition ordinary
wear and tear excepted;
(v) permit representatives of the Lender, during normal
business hours, to examine, copy, and make extracts
from its books and records, to inspect its
properties, and to discuss its business and affairs
with its officers, directors, and accountants;
(vi) comply with its material contractual obligations; and
(vii) maintain insurance in such amounts, with such
deductibles, and against such risks as is customary
for similarly situated businesses and otherwise in
compliance with the Mortgage.
(c) NEGATIVE COVENANTS. The Borrower shall not, nor shall it
permit any of its Subsidiaries to:
(i) after the date hereof, create, incur, assume
or suffer to exist any other indebtedness or
guaranty obligation, except (A) trade debt
incurred in the ordinary course of business
and (B) purchase money indebtedness to
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 7
finance the purchase of fixed assets in an
aggregate principal amount not to exceed
$250,000;
(ii) create, incur, assume or suffer to exist any
lien upon any of its property, assets or
revenues, whether now owned or hereafter
acquired, other than liens securing purchase
money indebtedness permitted to be incurred
hereunder; or
(iii) make any disposition (including pursuant to
a sale and leaseback transaction) of any or
all of the Collateral, other than the
disposition of machinery and equipment no
longer used or useful in the conduct of the
Borrower's business.
5. EVENTS OF DEFAULT. The following are "Events of Default:"
(a) The Borrower fails to pay any principal of the Loan as and on
the date when due; or
(b) The Borrower fails to pay any interest on the Loan, or any
portion thereof, within three days after the date when due; or
the Borrower fails to pay any other fee or amount payable to
the Lender under any Loan Document, or any portion thereof,
within five days after the date due; or
(c) The Borrower fails to perform or observe any term, covenant or
agreement contained in Paragraph 4(c)hereof; or
(d) The Borrower fails to perform or observe any other covenant or
agreement (not specified above) contained in any Loan Document
on its part to be performed or observed and such failure
continues for 30 days after the earlier of (i) the Borrower
becoming aware of such failure or (ii) the Lender notifying
the Borrower of such failure; or
(e) Any representation, warranty, certification or statement of
fact made or deemed made by or on behalf of the Borrower
herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be
incorrect or misleading when made or deemed made; or
(f) The Borrower or any of its Subsidiaries (i) fails to make any
payment in respect of any indebtedness (other than
indebtedness hereunder) or guaranty obligation having an
aggregate principal amount in excess of $500,000 when due
(whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise), or (ii) fails to observe
or perform any other agreement or condition relating to any
such indebtedness or guaranty obligation or contained in any
instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur, the effect of which
default or other event is to cause, or to permit the holder or
holders of such indebtedness or beneficiary or beneficiaries
of such guaranty obligation (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such
indebtedness to be demanded or become due or to be
repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 8
redeem such indebtedness to be made, prior to its stated
maturity, or such guaranty obligation to become payable or
cash collateral in respect thereof to be demanded. For
purposes of this clause (f), "indebtedness" shall not include
trade debt incurred in the ordinary course of business and due
within six months of the incurrence thereof); or
(g) The Borrower or any of its Subsidiaries institutes or consents
to the institution of any proceeding under Debtor Relief Laws,
or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed
without the application or consent of the Borrower or such
Subsidiary and the appointment continues undischarged or
unstayed for 60 calendar days; or any proceeding under Debtor
Relief Laws relating to the Borrower or any Subsidiary or to
all or any material part of the Borrower's or such
Subsidiary's property is instituted without the consent of the
Borrower or such Subsidiary and continues undismissed or
unstayed for 60 calendar days, or an order for relief is
entered in any such proceeding; or
(h) The Borrower is unable or admits in writing its inability or
fails generally to pay its debts as they become due; or
(i) A final judgment against the Borrower or any of its
Subsidiaries is entered for the payment of money in excess of
$500,000 (to the extent not covered by insurance by a carrier
that has not denied coverage and has the ability to perform)
and such judgment remains unsatisfied without procurement of a
stay of execution within 30 calendar days after the date of
entry of judgment; or
(j) Any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of the
Lender or satisfaction in full of all the indebtedness
hereunder, ceases to be in full force and effect or is
declared by a court of competent jurisdiction to be null and
void, invalid or unenforceable in any respect; or the Borrower
or the Parent denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document; or
(k) A Change of Control occurs;
(l) The failure of the Parent to comply with the Incorporated
Covenants (as defined in the Parent Guaranty); or
(m) The occurrence of an Event of Default (as defined in the
Parent Credit Agreement as in effect on the date hereof).
Upon the occurrence of an Event of Default, the Lender may declare all
sums outstanding hereunder and under the other Loan Documents,
including all interest thereon, to be immediately due and payable,
whereupon the same shall become and be immediately due and payable,
without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or other notices or demands of any
kind or character, all of which are hereby expressly waived; provided,
however, that upon the occurrence of an actual or deemed entry of an
order for
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 9
relief with respect to the Borrower under the Bankruptcy Code
of the United States of America, all sums outstanding hereunder and
under each other Loan Document, including all interest thereon, shall
become and be immediately due and payable, without notice of default,
presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character, all of
which are hereby expressly waived.
6. MISCELLANEOUS.
(a) All references herein and in the other Loan Documents to any
time of day shall mean the local (standard or daylight, as in
effect) time of Charlotte, North Carolina.
(b) The Borrower shall be obligated to pay all Breakage Costs.
(c) If at any time the Lender, in its sole discretion, determines
that (i) adequate and reasonable means do not exist for
determining the Eurodollar Rate, or (ii) the Eurodollar Rate
does not accurately reflect the funding cost to the Lender of
making Eurodollar Rate Loans, the Lender's obligation to make
or maintain Eurodollar Rate Loans shall cease for the period
during which such circumstance exists.
(d) The Borrower shall reimburse or compensate the Lender, upon
demand, for all costs incurred, losses suffered or payments
made by the Lender which are applied or reasonably allocated
by the Lender to the transactions contemplated herein (all as
determined by the Lender in its reasonable discretion) by
reason of any and all future reserve, deposit, capital
adequacy or similar requirements against (or against any class
of or change in or in the amount of) assets, liabilities or
commitments of, or extensions of credit by, the Lender; and
compliance by the Lender with any directive, or requirements
from any regulatory authority, whether or not having the force
of law.
(e) No amendment, waiver or other modification of any provision of
this Agreement or of any other Loan Document shall be
effective unless such amendment, waiver or modification shall
be in writing and signed by the Borrower and the Lender, and
any such amendment, waiver or modification shall then be
effective only for the period and on the conditions and for
the specific instance specified in such writing. No failure or
delay by the Lender in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
rights, power or privilege.
(f) Except as otherwise expressly provided herein, notices and
other communications to each party provided for herein shall
be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telecopy to the address
provided from time to time by such party. Any such notice or
other communication sent by overnight courier service, mail or
telecopy shall be effective on the earlier of actual receipt
and (i) if sent by overnight courier service, the scheduled
delivery date, (ii) if sent by mail, the fourth Business Day
after deposit in the U.S. mail first class postage prepaid,
and (iii) if sent by telecopy, when transmission in legible
form is complete. All notices and other communications sent by
the other means listed in the first sentence of this paragraph
shall be effective upon receipt. Notwithstanding anything to
the contrary contained herein, all
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 10
notices (by whatever means) to the Lender pursuant to
Paragraph 1(b) hereof shall be effective only upon receipt.
Any notice or other communication permitted to be given, made
or confirmed by telephone hereunder shall be given, made or
confirmed by means of a telephone call to the intended
recipient at the number specified in writing by such Person
for such purpose, it being understood and agreed that a
voicemail message shall in no event be effective as a notice,
communication or confirmation hereunder.
The Lender shall be entitled to rely and act upon any notices
(including telephonic notices of borrowings, conversions and
continuations) purportedly given by or on behalf of the
Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii)
the terms thereof, as understood by the recipient, varied from
any confirmation thereof. The Borrower shall indemnify the
Lender, its affiliates and the officers, directors, employees,
agents and attorneys-in-fact of the Lender and such affiliates
from all losses, costs, expenses and liabilities resulting
from the reliance by such Person on each notice purportedly
given by or on behalf of the Borrower. All telephonic notices
to and other communications with the Lender may be recorded by
the Lender, and the Borrower hereby consents to such
recording.
(g) This Agreement shall inure to the benefit of the parties
hereto and their respective successors and assigns, except
that the Borrower may not assign its rights and obligations
hereunder. The Lender may at any time (i) assign all or any
part of its rights and obligations hereunder to any other
Person with the consent of the Borrower, such consent not to
be unreasonably withheld, provided that no such consent shall
be required if the assignment is to an affiliate of the Lender
or if a Default exists, and (ii) grant to any other Person
participating interests in all or part of its rights and
obligations hereunder without notice to the Borrower. The
Borrower agrees to execute any documents reasonably requested
by the Lender in connection with any such assignment. All
information provided by or on behalf of the Borrower to the
Lender or its affiliates may be furnished by the Lender to its
affiliates and to any actual or proposed assignee or
participant.
(h) The Borrower shall pay the Lender, on demand, all reasonable
out-of-pocket expenses and legal fees (including the allocated
costs for in-house legal services) incurred by the Lender in
connection with any instruments or agreements executed in
connection herewith or, to the extent permitted by applicable
law, the enforcement of this Agreement.
(i) Whether or not the transactions contemplated hereby are
consummated, the Borrower shall indemnify and hold harmless
the Lender, its affiliates, and their respective directors,
officers, employees, counsel, agents and attorneys-in-fact
(collectively the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses and
disbursements (including fees, disbursements and expenses of
counsel) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in
connection with (a) the execution, delivery, enforcement,
performance or administration of any Loan Document or any
other agreement, letter or instrument delivered in connection
with the transactions
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 11
contemplated thereby or the consummation of the transactions
contemplated thereby, (b) the Loan or the use or proposed use
of the proceeds therefrom, or (c) any actual or prospective
claim, litigation, investigation or proceeding relating to any
of the foregoing, whether based on contract, tort or any other
theory (including any investigation of, preparation for, or
defense of any pending or threatened claim, investigation,
litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"), in all cases,
whether or not caused by or arising, in whole or in part, out
of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the
extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct
of such Indemnitee. No Indemnitee shall be liable for any
damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar
information transmission systems in connection with this
Agreement, nor shall any Indemnitee have any liability for any
indirect or consequential damages relating to this Agreement
or any other Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the
Closing Date). The agreements in this Paragraph 6(i) shall
survive the repayment, satisfaction or discharge of all the
other Obligations. All amounts due under this Paragraph 6(i)
shall be payable within ten Business Days after demand
therefor.
(j) If any provision of this Agreement or the other Loan Documents
is held to be illegal, invalid or unenforceable, (i) the
legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents
shall not be affected or impaired thereby and (ii) the parties
shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid
provisions the economic effect of which comes as close as
possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(k) This Agreement may be executed in one or more counterparts,
and each counterpart, when so executed, shall be deemed an
original but all such counterparts shall constitute but one
and the same instrument.
(l) This Agreement and the other Loan Documents are governed by,
and shall be construed in accordance with, the laws of the
State of New York and the applicable laws of the United States
of America. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court and each
state court in the City of New York for the purposes of all
legal proceedings arising out of or relating to any of the
Loan Documents or the transactions contemplated thereby. The
Borrower irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of
copies of such process to the Borrower at its address set
forth beneath its signature hereto. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 12
(m) THE BORROWER AND THE LENDER EACH WAIVE THEIR RESPECTIVE RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(n) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Beverly Enterprises - Washington, Inc.
December 24, 2002
Page 13
Please indicate your acceptance of the Loan on the foregoing terms and
conditions by returning an executed copy of this Agreement to the undersigned.
BANK OF AMERICA, N.A.
By:
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Name:
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Title:
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Accepted and Agreed to as of the date first written above:
BEVERLY ENTERPRISES - WASHINGTON, INC.
By:
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Name:
----------------------------------
Title:
---------------------------------
Date:
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EXHIBIT A
DEFINITIONS
Agreement: This letter agreement, as amended, restated,
extended, supplemented or otherwise modified in
writing from time to time.
Applicable Margin: The following percentages per annum, based upon the
Pricing Ratio (as defined in the Parent Credit
Agreement as in effect on the date hereof) as set
forth in the most recent certificate delivered by the
Parent to the Lender pursuant to Section 5.01(d) of
the Parent Credit Agreement (as incorporated by
reference pursuant to Section 4 of the Parent
Guaranty):
<Table>
<Caption>
Pricing Applicable Margin for Applicable Margin for
Ratio Eurodollar Rate Loans Base Rate Loans
------- --------------------- ---------------------
I 2.125% 1.125%
II 2.375% 1.375%
III 2.625% 1.625%
IV 2.875% 1.875%
</Table>
The Applicable Rate in effect on the date hereof
shall be determined based upon Pricing Level II.
Base Rate: For any day, a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate plus 1/2 of
1% and (b) the rate of interest in effect for such
day as publicly announced from time to time by the
Lender as its "prime rate." The Lender's prime rate
is a rate set by the Lender based upon various
factors including the Lender's costs and desired
return, general economic conditions and other
factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below
such announced rate. Any change in the prime rate
announced by the Lender shall take effect at the
opening of business on the day specified in the
public announcement of such change.
Base Rate Loan: A Loan bearing interest based on the Base Rate.
Breakage Costs: Any loss, cost or expense incurred by the Lender
(including any loss of anticipated profits and any
loss or expense arising from the liquidation or
reemployment of funds obtained by the Lender to
maintain the relevant Eurodollar Rate Loan or from
fees payable to terminate the deposits from which
such funds were obtained) as a result of (i) any
continuation, conversion, payment or prepayment of
any Eurodollar Rate Loan on a day other than the last
day of the Interest Period therefor (whether
voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or (ii) any failure by
the Borrower (for a reason other than the failure of
the Lender to make a Loan when all conditions to
making such Loan have been met by the Borrower in
accordance with the terms hereof) to prepay, borrow,
continue or convert any Eurodollar Rate Loan on a
date or in the amount notified by the Borrower. The
certificate of the Lender as to its costs of funds,
losses and expenses incurred shall be conclusive
absent manifest error.
Business Day: Any day other than a Saturday, Sunday, or other day
on which commercial banks are authorized to close
under the laws of, or are in fact closed in, the
State of New York or the state where the Lender's
lending office is located and, if such day relates to
any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and
between banks in the London interbank eurodollar
market.
Change of Control: The Parent fails to own 100% of the shares of capital
stock of, or other equity interests in, the Borrower.
Code: The Internal Revenue Code of 1986, as amended from
time to time.
Collateral: The "Collateral" as defined in the Mortgage.
Debtor Relief Laws: The Bankruptcy Code of the United States of America,
and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the
United States of America or other applicable
jurisdictions from time to time in effect affecting
the rights of creditors generally.
Default: Any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the
passage of time, or both, would be an Event of
Default.
Dollar or $: The lawful currency of the United States of America.
Eurodollar Rate: For any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined
pursuant to the following formula:
Eurodollar Rate = Eurodollar Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Base Rate" means, for such
Interest Period:
(a) the rate per annum equal to the
rate determined by the Lender to be the
offered rate that appears on the page of the
Telerate screen (or any successor thereto)
that displays an average British Bankers
Association Interest Settlement Rate for
deposits in Dollars (for delivery on the
first day of such Interest Period) with a
term equivalent to such Interest Period,
determined as of approximately 11:00 a.m.
(London time) two Business Days prior to the
first day of such Interest Period, or
(b) if the rate referenced in the
preceding clause (a) does not appear on such
page or service or such page or service
shall not be available, the rate per annum
equal to the rate determined by the Lender
to be the offered rate on such other page or
other service that displays an average
British Bankers Association Interest
Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest
Period) with a term equivalent to such
Interest Period, determined as of
approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such
Interest Period, or
(c) if the rates referenced in the
preceding clauses (a) and (b) are not
available, the rate per annum determined by
the Lender as the rate of interest at which
deposits in Dollars for delivery on the
first day of such Interest Period in same
day funds in the approximate amount of the
Eurodollar Rate Loan being made, converted
or continued and with a term equivalent to
such Interest Period would be offered by the
Lender's London Branch to major banks in the
London interbank eurodollar market at their
request at approximately 4:00 p.m. (London
time) two Business Days prior to the first
day of such Interest Period.
"Eurodollar Reserve Percentage" means, for
any day during any Interest Period, the reserve
percentage (expressed as a decimal, carried out to
five decimal places) in effect on such day applicable
to the Lender under regulations issued from time to
time by the Board of Governors of the Federal Reserve
System for determining the maximum reserve
requirement (including any emergency, supplemental or
other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Eurodollar Rate for
each outstanding Eurodollar Rate Loan shall be
adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
Eurodollar Rate Loan: A Loan bearing interest based on the Eurodollar Rate.
Event of Default: Has the meaning set forth in Paragraph 5.
Federal Funds Rate: For any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds
transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day,
as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding
Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate
(rounded upward, if necessary, to a whole multiple of
1/100 of 1%) charged to the Lender on such day on
such transactions as determined by the Lender.
Interest Period: For each Eurodollar Rate Loan, (a) initially, the
period commencing on the date the Eurodollar Rate
Loan is disbursed or converted from a Base Rate Loan
and (b) thereafter, the period commencing on the last
day of the preceding Interest Period, and, in each
case, ending on the earlier of (x) the Maturity Date
and (y) one, two, three or six months thereafter, as
requested by the Borrower; provided that:
(i) any Interest Period that would
otherwise end on a day that is not a
Business Day shall be extended to the next
succeeding Business Day unless such Business
Day falls in another calendar month, in
which case such Interest Period shall end on
the next preceding Business Day; and
(ii) any Interest Period which begins
on the last Business Day of a calendar month
(or on a day for which there is no
numerically corresponding day in the
calendar month at the end of such Interest
Period) shall end on the last Business Day
of the calendar month at the end of such
Interest Period.
Loan Documents: This Agreement, the Parent Guaranty, the Mortgage and
the promissory note and fee letter, if any, delivered
in connection with this Agreement.
Material Adverse Effect: (a) A material adverse change in, or a material
adverse effect upon, the business, financial
position, results of operations or prospects of the
Borrower and its Subsidiaries taken as a whole; (b) a
material adverse change in, or a material adverse
effect upon, the business, financial position,
results of operations or prospects of the Parent and
its Subsidiaries taken as a whole; (c) a material
impairment of the ability of the Borrower or the
Parent to perform its obligations under any Loan
Document; or (d) a material adverse effect upon the
legality, validity, binding effect or enforceability
against the Borrower or the Parent of any Loan
Document. The term "Material Adverse Effect" shall
not include any reduction or adverse modification of
amounts or rates payable to healthcare providers
generally pursuant to a federal or state health care
program that results from the action or inaction of a
federal, state, or local government or agency.
Maturity Date: June 24, 2004.
Mortgage: That certain Deed of Trust, Assignment of Rents and
Leases, Fixture Filing and Security Agreement dated
as of the date hereof executed by the Borrower in
favor of Fidelity National Title Insurance Company of
Washington for the benefit of the Lender, as amended,
restated, extended, supplemented or otherwise
modified in writing from time to time.
Parent: Beverly Enterprises, Inc., a Delaware corporation.
Parent Credit Agreement: That certain Amended and Restated Credit Agreement
dated as of April 25, 2001 among the Parent, the
financial institutions party thereto and Morgan
Guaranty Trust Company of New York, as issuing bank
and administrative agent.
Parent Guaranty: That certain Guaranty dated as of the date hereof
executed by the Parent in favor of the Lender, as
amended, restated, extended, supplemented or
otherwise modified in writing from time to time.
Person: Any natural person, corporation, limited liability
company, trust, joint stock company, association,
company, partnership, governmental authority or other
entity.
Subsidiary: With respect to any Person, a corporation,
partnership, joint venture, limited liability company
or other business entity of which a majority of the
shares of securities or other interests having
ordinary voting power for the election of directors
or other governing body (other than securities or
interests having such power only by reason of the
happening of a contingency) are at the time
beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person.
Unless otherwise specified, all references herein to
a "Subsidiary" or to "Subsidiaries" refer to a
Subsidiary or Subsidiaries of the Borrower.
EXHIBIT B
FORM OF PROMISSORY NOTE
$5,000,000 December 24, 2002
FOR VALUE RECEIVED, the undersigned, BEVERLY ENTERPRISES - WASHINGTON,
INC., a California corporation (the "Borrower"), hereby promises to pay to the
order of BANK OF AMERICA, N.A. (the "Lender") the principal sum of Five Million
Dollars ($5,000,000) or, if less, the aggregate unpaid principal amount of all
the Loan made by the Lender to the Borrower pursuant to the letter agreement,
dated as of even date herewith (such letter agreement, as it may be amended,
restated, extended, supplemented or otherwise modified from time to time, being
hereinafter called the "Agreement"), between the Borrower and the Lender, at
such times as provided in the Agreement. The Borrower further promises to pay
interest on the unpaid principal amount of the Loan evidenced hereby from time
to time at the rates, on the dates, and otherwise as provided in the Agreement.
The loan account records maintained by the Lender shall at all times be
conclusive evidence, absent manifest error, as to the amount of the Loan and
payments thereon; provided, however, that any failure to record any payment
thereon or any error in doing so shall not limit or otherwise affect the
obligation of the Borrower to pay any amount owing with respect to the Loan.
This promissory note is the promissory note referred to in, and is
entitled to the benefits of, the Agreement, which Agreement, among other things,
contains provisions for acceleration of the maturity of the Loan evidenced
hereby upon the happening of certain stated events and also for prepayments on
account of principal of the Loan prior to the maturity thereof upon the terms
and conditions therein specified.
Unless otherwise defined herein, terms defined in the Agreement are
used herein with their defined meanings therein. This promissory note shall be
governed by, and construed in accordance with, the laws of the State of New
York.
BEVERLY ENTERPRISES - WASHINGTON, INC.
By
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Name
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Title
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