BEVERLY ENTERPRISES INC /DE/
8-K, 1994-01-04
SKILLED NURSING CARE FACILITIES
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<PAGE>   1




                       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):  January 4, 1994



                           BEVERLY ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)



<TABLE>
<S>                                         <C>                              <C>                            
        Delaware                              1-9550                             95-4100309                 
    (State or other                         (Commission                         (IRS Employer               
jurisdiction of incorporation)              File Number)                     Identification No.)            
</TABLE>                                                                       


<TABLE>
  <S>                                                                <C>                            
     1200 South Waldron Road, Suite 155                                 72903                       
            Fort Smith, Arkansas                                                                    
  (Address of principal executive offices)                           (Zip Code)                     
</TABLE>                                                                       



       Registrant's telephone number, including area code: (501) 452-6712
<PAGE>   2
ITEM 5.  OTHER EVENTS

         Attached hereto are certain Exhibits which are filed herewith in
connection with and as related to Beverly Enterprises, Inc.'s (the
"Registrant") Registration Statement (No. 33-50965) on Form S-3 (which under
Rule 429 constituted both a new registration statement of the Registrant and a
post-effective amendment to the Registrant's previously filed Form S-3
registration statement (No. 33-59630), including the related Preliminary
Prospectus with respect to the securities registered thereby, and a Form T-1
pursuant to the Trust Indenture Act of 1939, as amended) which Registration
Statement became effective under the Securities Act of 1933, as amended, on
November 17, 1993.
<PAGE>   3

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

(A)      FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.  
                                                     
         Not Applicable.                             
                                                     
(B)      PRO FORMA FINANCIAL INFORMATION             
                                                     
         Not Applicable.                             
                                                     
(C)      EXHIBITS.                                   
                 
<TABLE>
<CAPTION>
                   EXHIBIT
                   NUMBER                  DESCRIPTION
                   ------                  -----------
                    <S>                    <C>
                     1.1                   Form of Underwriting Agreement for the Notes*
                     4.1                   Form of Indenture for the First Mortgage Bonds**
                     4.2                   Form of Indenture for the Notes***
                     4.3                   Form of Indenture for the Subordinated Notes***
                     4.4                   Form of First Supplemental Indenture for the Notes*
                     5.1                   Opinion Letter of Richards, Layton & Finger as to the validity of the Mortgage 
                                           Bonds**
                     5.2                   Opinion Letter of Giroir & Gregory, Professional Association as to the         
                                           validity of the Notes and the Subordinated Notes***
                    12.1                   Computation of Ratio of Earnings to Fixed Charges of the Registrant***
                    23.1                   Consent of Ernst & Young***
                    23.2                   Consent of Richards, Layton & Finger (included in its opinion letter filed as 
                                           Exhibit 5.1)**
                    23.3                   Consent of Giroir & Gregory, Professional Association (included in its opinion 
                                           letter filed as Exhibit 5.2)
                    24.1                   Power of Attorney of the Registrant's Directors and Officers***
                    25.1                   Statement of Eligibility of Trustee for the Mortgage Bonds on Form T-1**
                    25.2                   Statement of Eligibility of Trustee for the Mortgage Bonds on Form T-2**
                    25.3                   Statement of Eligibility of Trustee for the Notes on Form T-1**
</TABLE>

- --------------------

  *      Filed herewith.

 **      Incorporated by reference to the similarly designated exhibit to the
         Registrant's Registration Statement on Form S-3, Registration File No.
         33-59860.

***      Previously filed as an exhibit to the Registrant's Registration
         Statement on Form S-3 dated November 9, 1993, Registration File No.
         33-50965.



                                       3
<PAGE>   4
                                      
                                  SIGNATURE

         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.


                                     BEVERLY ENTERPRISES, INC.
 


                                     By: /s/SCOTT M. TABAKIN
                                         ---------------------------------------
                                         Scott M. Tabakin, Vice President,
                                         Controller and Chief Accounting Officer




                                      4

<PAGE>   1






                                                                  CONFORMED COPY


                     $25,000,000* PRINCIPAL AMOUNT OF 8.75%
                                 NOTES DUE 2003

                           BEVERLY ENTERPRISES, INC.

                             UNDERWRITING AGREEMENT



                                                               December 21, 1993


Dain Bosworth Incorporated
J.C. Bradford & Co.
c/o Dain Bosworth Incorporated
790 North Milwaukee Street
Milwaukee, Wisconsin  53202

Ladies and Gentlemen:

                 SECTION 1.       INTRODUCTION.  Beverly Enterprises, Inc., a
Delaware corporation (the "Company"), hereby confirms its agreement to issue
and sell to you (collectively, the "Underwriters") the Company's 8.75% Notes
due 2003 in aggregate principal amount of $25,000,000 (the "Firm Notes").   In
addition, the Company hereby confirms its agreement to grant to the
Underwriters the right to purchase up to an additional $3,750,000 in aggregate
principal amount of the Company's 8.75% Notes due 2003 upon the terms and for
the purpose set forth in Section 3(b) hereof (the "Option Notes").  The Firm
Notes and, to the extent such option is exercised, the Option Notes are herein
collectively referred to as the "Notes."   The Notes shall be issued under an
indenture, expected to be dated as of December 30, 1993 (the "Indenture"),
between the Company and Boatmen's Trust Company, as trustee (the "Trustee") and
a first supplement thereto (the "Supplemental Indenture").

                 The terms which follow, when used in this Agreement, shall
have the meanings indicated.  "Registration Statement" shall mean the
registration statement filed under the Securities Act of 1933, as amended (the
"Securities Act"), referred to in Section 2(a) below, including (a) the
prospectus constituting a part thereof; (b) all documents incorporated therein
or deemed to be incorporated therein by reference and all exhibits thereto, as
from time to time amended or supplemented pursuant to the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise;
and (c) any and all prospectus supplements (including any preliminary
prospectus supplements) filed under the Securities Act with respect thereto
(collectively, the "Prospectus Supplements").  "Preliminary Prospectus" means
any

_______________________

         *       Not including $3,750,000 aggregate principal amount of Notes
issuable by the Company subject to the Underwriters' exercise of their
over-allotment option provided for in Section 3(b) hereof.
<PAGE>   2
prospectus included in the Registration Statement and in any amendment thereto
prior to the effective date of the Registration Statement.  "Basic Prospectus"
shall mean the prospectus included in the Registration Statement.  "Prospectus"
shall mean the Basic Prospectus, together with any Prospectus Supplements
relating to the Notes, including all documents incorporated therein or deemed
to be incorporated therein by reference, as from time to time amended or
supplemented pursuant to the Securities Act, the Exchange Act or otherwise.
"Rules and Regulations" means the rules and regulations promulgated by the
Securities and Exchange Commission (the "Commission") under any and all of the
Securities Act, the Exchange Act and/or the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").  "Rule 158," "Rule 424," Rule 429" and
"Rule 430A" refer to such Rules and Regulations under the Securities Act.
"Rule 430A Information" means information with respect to the Notes and the
offering thereof permitted to be omitted from the Registration Statement when
it became effective and any Prospectus Supplement pursuant to Rule 430A under
the Rules and Regulations under the Securities Act.

                 The Company understands that the Underwriters propose to make
a public offering (the "Offering") of the Notes as soon as practicable after
(i) the Registration Statement becomes effective with the Commission and the
Notes are qualified under all applicable state securities laws (the "Blue Sky
Laws"); (ii) the Indenture has been qualified under the Trust Indenture Act;
and (iii) this Agreement has been executed and delivered by the parties hereto
and thereto.

                 The Company hereby confirms its agreements with respect to the
purchase of the Notes by the Underwriters as follows:

                 SECTION 2.       COMPANY REPRESENTATIONS AND WARRANTIES.  The
Company hereby represents and warrants to, and agrees with, each Underwriter
that:

                 (a)      The Company has prepared and filed with the
Commission under the Securities Act Registration Statement (No.  33-50965) on
Form S-3 (which under Rule 429 constituted both a new registration statement of
the Company and a post-effective amendment to the Company's previously filed
Form S-3 registration statement No. 33-59630, including the related Preliminary
Prospectus with respect to the securities registered thereby, and a Form T-1
pursuant to the Trust Indenture Act, which Registration Statement became
effective under the Securities Act on November 17, 1993 (the "Effective Date").
Such Registration Statement and Preliminary Prospectus may have been amended or
supplemented by the Company from time to time prior to the date hereof; any
such amendment to the Registration Statement was so prepared and filed by the
Company and any such amendment has become effective under the Securities Act.
Prospectus Supplements relating to the Notes have been prepared by the Company.
Each Prospectus Supplement was filed, and if not previously filed, such
Prospectus Supplement will be filed, by the Company pursuant to Rule 424.
Copies of such Registration Statement and Preliminary Prospectus, any such
amendment or supplement, each Prospectus Supplement and all documents
incorporated by reference or deemed to be incorporated by reference therein
which were filed by the Company with the Commission on or prior to the date
hereof have been delivered to you (including one fully executed copy of the
Registration





                                     -2-
<PAGE>   3
Statement, each amendment thereto and the Form T-1 delivered to counsel for the
Underwriters).  The Company has included in such Registration Statement, as of
the Effective Date, all information (other than Rule 430A Information and
information relating specifically to the terms of the Notes and the offering
thereof) required by the Securities Act and the Rules and Regulations to be
included in the Prospectus with respect to the Notes and the offering and sale
thereof.  Except to the extent the Underwriters shall agree in writing to a
modification, the Registration Statement and the Prospectus shall be in all
substantive respects in the form furnished to the Underwriters prior to the
date hereof or, to the extent not completed on the date hereof, shall contain
only such specific additional information and other changes as the Company has
advised the Underwriters, prior to the date hereof, will be included or made
therein.  The Company satisfies all conditions and requirements for use of Form
S-3 and the filing of the Registration Statement under the Securities Act and
the applicable Rules and Regulations.

                 (b)      The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, and the
Registration Statement, at the Effective Date, any post-effective amendment
thereto, at the time it became effective under the Securities Act, the
Registration Statement and the Prospectus, as of the date hereof and at the
Closing Time, and any amendment or supplement thereto, conformed or will
conform in all material respects to the requirements of the Securities Act, the
Exchange Act, the Trust Indenture Act and the Rules and Regulations; and no
such document included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; except that the
foregoing does not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the only
such information relates to the selling concession and dealer reallowance
relating to the Notes set forth under the caption "Underwriting" in the most
recent Prospectus Supplement prepared on or prior to the date hereof, and the
identity of, and allocations of Notes to, the Underwriters named therein,
together with the stabilization paragraph on Page S-2 thereof) or information
contained in the Form T-1, other than information furnished to the Trustee by
the Company specifically for inclusion therein.  The documents incorporated or
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, when they became effective or were filed with the Commission, as
the case may be, under the Exchange Act, conformed, and any documents so filed
and incorporated by reference or deemed to be incorporated after the date
hereof and on or prior to the Closing Time will, when they are filed with the
Commission, conform, in all material respects with the requirements of the
Securities Act, the Exchange Act and the Rules and Regulations, as applicable.

                 (c)      The Company and each subsidiary of the Company is
duly organized and validly existing and in good standing under the laws of the
respective jurisdictions of their organization or incorporation, as the case
may be, with full power and authority (corporate, partnership and other, as the
case may be) to own their properties and conduct their businesses as now
conducted and described in the Registration Statement or Prospectus and are
duly qualified or authorized to do business and are in good standing in all
jurisdictions wherein the nature of their business or the character of property
owned or leased by them requires them to





                                      -3-
<PAGE>   4
be qualified or authorized to do business, except for jurisdictions in which
the failure to so qualify would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.  As used in this Agreement, the
term "subsidiary" includes any corporation, joint venture or partnership in
which the Company or any subsidiary of the Company has an ownership interest
and which would be required to be set forth pursuant to Item 601 of Regulation
S-K under the Securities Act as Exhibit 21 if such Exhibit 21 was filed with
the Registration Statement.

                 (d)      The outstanding stock of each of the Company's
subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
All of the outstanding stock of each of the Company's subsidiaries is owned by
the Company, directly or indirectly.

                 (e)      The Notes have been duly and validly authorized and,
when executed by the Company and authenticated by the Trustee in accordance
with the terms of the Indenture and the Supplemental Indenture (assuming the
due authorization, execution and delivery of the Indenture and the Supplemental
Indenture by the Trustee), and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will constitute the valid and
binding obligations of the Company, entitled to the benefits of the Indenture
and the Supplemental Indenture, enforceable against the Company in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).

                 (f)      The Company has full right, power and authority to
enter into this Agreement, the Indenture and the Supplemental Indenture and to
execute, sell and deliver the Notes to the Underwriters as provided herein.
This Agreement, the Indenture and the Supplemental Indenture have been duly
authorized, executed and delivered by the Company and constitute valid and
binding agreements of the Company enforceable against the Company in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).  The Indenture (including as supplemented by
the Supplemental Indenture) conforms in all material respects to the
requirements of, and has been qualified under, the Trust Indenture Act.  No
consent, approval, authorization or order of any court or governmental agency
or body or third party is required for the performance of this Agreement, the
Indenture or the Supplemental Indenture by the Company or the consummation by
the Company of the transactions contemplated hereby or thereby, except such as
have been obtained and such as may be required under the Securities Act, the
Trust Indenture Act or Blue Sky Laws in connection with the purchase and
distribution of the Notes by the Underwriters.  The issue and sale of the Notes
by the Company, the Company's performance of this Agreement, the Indenture and
the Supplemental Indenture and the consummation of the transactions
contemplated hereby or thereby will not result in a breach or violation of, or
conflict with, any of the terms and provisions of, or constitute a default by





                                      -4-
<PAGE>   5
the Company or any of its subsidiaries under any (i) indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or to which the Company or any of
its subsidiaries or any of their respective properties is subject; (ii) the
Certificate or Articles of Incorporation or bylaws of the Company or any of its
subsidiaries; or (iii) any statute or any material judgment, decree, order,
rule or regulation of any court or governmental agency or body applicable to
the Company or any subsidiary or any of their respective properties.  Neither
the Company nor any subsidiary is in violation of its respective Certificate or
Articles of Incorporation, partnership agreement or joint venture agreement, as
the case may be, or bylaws or any law, administrative rule or regulation or
arbitrators' or administrative or court decree, judgment or order or in any
violation or default (there being no existing state of facts which with notice
or lapse of time or both would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, deed of trust, mortgage, loan agreement, note, lease,
agreement or other instrument or permit to which it is a party or by which it
or any of its properties is or may be bound, which violation or default would
have a material adverse effect on the Company and its subsidiaries taken as a
whole.

                 (g)      The Notes, the Indenture and the Supplemental
Indenture conform in all material respects to the descriptions thereof
contained in the Prospectus.

                 (h)      The consolidated financial statements and the related
notes of the Company and its subsidiaries included in the Registration
Statement and the Prospectus present fairly the consolidated financial
position, results of operations and changes in financial position and cash flow
of the Company and its subsidiaries, at the dates and for the periods to which
they relate and, except as otherwise stated in the Registration Statement or
the Prospectus, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated.  The other financial statements and schedules included in, as
schedules to or incorporated by reference or deemed to be incorporated by
reference in the Registration Statement conform to the requirements of the
Securities Act, the Exchange Act and the Rules and Regulations and accurately
present in all material respects the information required to be stated therein
for the periods shown.  The financial and statistical data set forth in the
Prospectus under the captions "Prospectus Summary-the Company" and "Summary
Financial and Other Data," "The Company," "Capitalization," "Selected Financial
and Other Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" accurately present in all material
respects the information set forth therein.  Ernst & Young, whose reports on
the Company's financial statements are incorporated by reference in the
Registration Statement, are independent accountants with respect to the Company
as required by the Securities Act and the Rules and Regulations.

                 (i)      The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, its Quarterly Reports on Form 10-Q for
each of the quarters ended March 31, 1993, June 30, 1993 and September 30,
1993, respectively, its Current Report on Form 8-K dated July 15, 1993 and its
Current Report on Form 8-K dated July 27, 1993, as amended, at the time of
filing thereof with the Commission, conformed in all material respects to the





                                      -5-
<PAGE>   6
requirements of the Exchange Act and the Rules and Regulations and each such
document, and any other documents incorporated by reference or deemed to be
incorporated by reference in the Registration Statement or the Prospectus, does
not or will not, as of the Effective Date and the date of the Prospectus,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                 (j)      Subsequent to December 31, 1992, neither the Company
nor any subsidiary has sustained any material loss or interference with its
business or properties from (i) fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or (ii) any labor dispute or
court or governmental action, order or decree, which, in either case, is not
disclosed in the Prospectus.  Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus (i) the
Company has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the ordinary
course of business and (ii) there has not been any materially adverse change in
the capital stock, partnership interests, joint venture interests, long-term
debt, obligations under capital leases or short-term borrowings of the Company
and its subsidiaries taken as a whole, nor any materially adverse change in the
business, prospects, financial position, net worth or results of operations of
the Company and its subsidiaries taken as a whole, except in each case as
described in or contemplated by the Prospectus.

                 (k)      Except as described in the Prospectus, there is not
pending, or to the knowledge of the Company threatened, any action, suit,
proceeding, inquiry or investigation, to which the Company, any of its
subsidiaries or any of their officers or directors is a party, or to which the
property of the Company or any subsidiary is subject, before or brought by any
court or governmental agency or body, wherein an unfavorable decision, ruling
or finding would prevent or materially hinder the consummation of this
Agreement, the Indenture or the Supplemental Indenture or result in a material
adverse change in the business condition (financial or other), financial
position, net worth or results of operations of the Company and its
subsidiaries taken as a whole.

                 (l)      There are no contracts or other documents required by
the Securities Act or by the Rules and Regulations to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as required
(either physically or by incorporation by reference).

                 (m)      The Company's system of internal accounting controls
taken as a whole is sufficient to meet the broad objectives of internal
accounting control insofar as those objectives pertain to the prevention or
detection of errors or irregularities in amounts that would be material in
relation to the Company's consolidated financial statements taken as a whole.
Except as disclosed in the Prospectus, neither the Company nor any of its
subsidiaries nor any employee or agent of the Company or any subsidiary has
made any payment of funds of the Company or any subsidiary or received or
retained any funds in violation of any law (including, without limitation, any
federal or state illegal remuneration or "anti-kickback" law respecting





                                      -6-
<PAGE>   7
Medicaid or Medicare programs), rule or regulation that would have a materially
adverse effect on the Company and its subsidiaries taken as a whole.

                 (n)      The Company and its subsidiaries, taken as a whole,
operate their respective businesses in conformity in all material respects with
all applicable statutes, laws, ordinances, decrees, orders, rules and
regulations of any governmental body.  The Company and its subsidiaries, taken
as a whole, hold all material licenses, consents, certificates of need and
approvals, and have satisfied all material eligibility and other similar
requirements imposed by nursing home, health or similar regulatory bodies,
administrative agencies or other governmental bodies, agencies or officials, or
that are related to private or governmental programs for the reimbursement or
payment of healthcare costs, in each case as required for the conduct of the
respective businesses in which they are engaged and as described in the
Prospectus.

                 (o)      Neither the Company nor any of its subsidiaries is
currently engaging in any activity, whether alone or in concert with others,
which constitutes a violation of any federal or state laws (including, but not
limited to, federal antifraud and abuse or similar laws pertaining to the
Medicare, Medicaid or any other federal or state health or insurance program,
and federal or state laws pertaining to insurance fraud) prohibiting fraudulent
or abusive practices connected in any way with the provision of healthcare
services or the billing for such services provided to a beneficiary of any
federal or state health or insurance program, except such violations which in
the aggregate would not have a material adverse effect upon the Company and its
subsidiaries taken as a whole.

                 (p)      Neither the Company nor any of its subsidiaries has
received any notice of violation of, or been threatened with, a charge of
violating and are not under investigation with respect to a possible violation
of any provision of any law, regulation or order, which the Company reasonably
believes is likely to result in a material adverse effect on the Company and
its subsidiaries taken as a whole.

                 (q)      Except as disclosed in the Prospectus, no labor
dispute or disturbance exists with the Company's employees or the employees of
its subsidiaries or is imminent which could reasonably be expected to have a
materially adverse effect on the Company and its subsidiaries taken as a whole.

                 (r)      The Company is not and, upon the sale of the Notes in
accordance herewith and in accordance with the Indenture and the Supplemental
Indenture and the application of the net proceeds of such sale as described
under the caption "Use of Proceeds" in the most recent Prospectus Supplement
prepared prior to or on the date hereof, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.

                 (s)      Neither the Company nor any of its subsidiaries nor
any agent acting on its behalf has taken or will take any action that might
cause this Agreement or the sale of the





                                      -7-
<PAGE>   8
Notes to violate Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System, in each case as in effect, or as the same may hereafter
be in effect, at the Closing Time.

                 (t)      The operation of the Company and its subsidiaries has
been and is now in compliance in all material respects with applicable state
and federal environmental contamination and protection statutes, ordinances and
regulations, except where non-compliance will not have a material adverse
effect on the Company and its subsidiaries taken as a whole.

                 (u)      The Company and each of its subsidiaries have filed
all necessary federal, state and foreign income and franchise tax returns and
have timely paid all taxes shown as due thereon, except where the amount or
validity of taxes is currently being contested in good faith; the Company has
no knowledge of any tax deficiency which has been asserted or threatened
against the Company or any of its subsidiaries which could adversely affect the
business, operations or properties of the Company and its subsidiaries taken as
a whole.

                 Any certificates signed by any officers of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty of the Company to the Underwriters as to matters
covered thereby and the Underwriters and counsel for the Underwriters (to the
extent reasonably necessary to enable such counsel to render any opinion
required hereunder) are entitled to rely thereon.  Any certificate delivered by
the officers of the Company to its counsel for purposes of enabling such
counsel to render the opinions referred to in Section 6(b)(i) will also be
furnished to you and counsel for the Underwriters and shall be deemed to be
additional representations and warranties by the Company to the Underwriters as
to the matters covered thereby and the Underwriters and counsel for the
Underwriters (to the extent reasonably necessary to enable such counsel to
render any opinion required hereunder) are entitled to rely thereon.

                 SECTION 3.PURCHASE, SALE AND DELIVERY OF NOTES TO THE
UNDERWRITERS.

                 (a)      On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the Underwriters the Firm Notes,
and the Underwriters agree to purchase, severally and not jointly, the
respective principal amounts of Firm Notes set forth opposite each
Underwriter's name in Schedule I hereto.  The purchase price payable by the
Underwriters to the Company for each Firm Note shall be 96.5% of the principal
amount thereof.  The respective obligations of each Underwriter to the Company
shall be to purchase from the Company that principal amount of Firm Notes set
forth opposite the name of such Underwriter in Schedule I hereto.  In making
this Agreement, the Underwriters are contracting severally, and not jointly;
the agreement of each Underwriter is to purchase only its respective principal
amount of Firm Notes as specified in Schedule I.

                 (b)      In addition, on the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters to purchase the Option Notes at the same price as the Firm





                                      -8-
<PAGE>   9
Notes set forth above.  The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part at any time (but not more
than once) solely for the purpose of covering over-allotments which may be made
in connection with the offering of the Firm Notes, upon written notice by you
to the Company setting forth the principal amount of Option Notes as to which
the Underwriters are then exercising the option and the time, date and place of
payment and delivery for such Option Notes.  Such time and date of delivery
("Date of Delivery") shall be determined by you, but shall not be less than
three nor more than seven full business days after the exercise of said option,
nor in any event prior to the Closing Time, unless otherwise agreed by you and
the Company.  If the option is exercised as to all or any portion of the Option
Notes, the Option Notes shall be purchased by the Underwriters in the same
respective proportions as the Firm Notes.

                 (c)      Payment of the purchase price for, and delivery of
certificates for, the Firm Notes to be purchased by the Underwriters shall be
made at the offices of Dain Bosworth Incorporated, 790 North Milwaukee Street,
Milwaukee, Wisconsin 53202 or through the facilities of The Depository Trust
Company, or at such other place as shall be mutually agreed upon by you and the
Company, at 9:00 a.m. local time on the fifth business day following the
commencement of the Offering, or such other time not later than ten full
business days after such commencement date as shall be agreed upon by you and
the Company (such time and date of payment and delivery being herein called the
"Closing Time").  In addition, in the event that any or all of the Option Notes
are purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Notes, shall be made at the
above-mentioned offices of Dain Bosworth Incorporated or through the facilities
of The Depository Trust Company, or at such other place as shall be mutually
agreed upon by you and the Company, on the Date of Delivery as specified in the
notice from the Underwriters to the Company.  Payment for the Notes being
purchased by the Underwriters shall be made to the Company by certified or
official bank check in next-day funds, payable to the order of the Company, or
in such other manner (including by wire transfer of immediately available
funds) as mutually agreed by the Company and the Underwriters, against delivery
to the Underwriters of certificates for the Notes to be purchased by them.
Certificates for the Notes shall be in such denominations and registered in
such names as the Underwriters may request in writing at least two full
business days before the Closing Time or the Date of Delivery, as the case may
be.  The certificates for the Firm Notes or Option Notes to be purchased by the
Underwriters will be made available for examination and packaging by the
Underwriters not later than 8:30 a.m. on the last business day prior to the
Date of Delivery at the facilities of The Depository Trust Company in New York,
New York or at such other place as shall be mutually agreed upon by you and the
Company.

                 SECTION 4.       COVENANTS OF THE COMPANY.  The Company hereby
covenants with the Underwriters as follows:

                 (a)      The Company shall comply with the provisions of, and
make all requisite filings with the Commission pursuant to, Rules 424 and 430A
and will notify you promptly prior to all such filings.  The Company shall
notify you promptly of any request by the Commission for any amendment of, or
supplement to, the Registration Statement, the Prospectus, or for any





                                      -9-
<PAGE>   10
additional or supplemental information; the Company shall prepare and file with
the Commission all required Prospectus Supplements relating to the Notes; and
the Company shall not file any amendment of, or supplement to, the Registration
Statement or the Prospectus, which is not approved by you after reasonable
notice thereof.  The Company shall advise you promptly upon its receipt or
knowledge of the issuance by the Commission, any state securities commission or
authority (collectively, the "Blue Sky Authorities") or any jurisdiction or
other regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, suspending or preventing the use
of the Prospectus or suspending the qualification of the Indenture or the Notes
for offering or sale in any jurisdiction, or of the institution of any
proceeding for any such purpose; and the Company shall use its best efforts to
prevent the issuance of any stop order or other such order and, should a stop
order or other such order be issued, to obtain as soon as possible the lifting
thereof.

                 (b)      The Company will take or cause to be taken all
necessary action and furnish to whomever you direct such information as may be
reasonably required in qualifying the Notes for offer and sale under the Blue
Sky Laws of all of the United States and its territories and will continue such
qualifications in effect for as long as may be reasonably necessary to complete
the distribution.  The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not presently qualified or where it would be subject
to taxation as a foreign corporation.

                 (c)      Within the time during which a prospectus relating to
the Notes is required to be delivered under the Securities Act, the Company
shall comply with all requirements imposed upon it by the Securities Act, as
now and hereafter amended, and by the Rules and Regulations, as from time to
time in force, so far as is necessary to permit the continuance of offers and
sales of, or dealings in, the Notes as contemplated by the provisions hereof
and the Prospectus.  If during such period any event occurs as a result of
which the Registration Statement or the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Prospectus to
comply with the Securities Act or the Rules and Regulations thereunder, the
Company shall promptly notify the Underwriters and shall amend the Registration
Statement or supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.

                 (d)      The Company will furnish without charge to the
Underwriters copies of the Registration Statement (at least one of which shall
be signed and shall be accompanied by all exhibits, including any which are
incorporated by reference, which have not previously been furnished), and so
long as delivery of a prospectus by an Underwriter or a dealer is required
under the Securities Act, as many copies of each of the Preliminary Prospectus,
the Basic Prospectus and each Prospectus Supplement, and all amendments and
supplement thereto, including any prospectus or supplement prepared after the
Effective Date or the date hereof, in each case as soon as available and in
such quantities as the Underwriters may reasonably request.





                                      -10-
<PAGE>   11
                 (e)      The Company shall make generally available to its
security holders, in the manner contemplated by Rule 158(b) under the
Securities Act as promptly as practicable and in any event no later than 60
days after the end of its fiscal quarter in which the first anniversary of the
Effective Date occurs, an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act covering a period of at least 12
consecutive months beginning after the Effective Date.

                 (f)      The Company will apply the net proceeds from the sale
of the Notes as set forth under the caption "Use of Proceeds" in the most
recent Prospectus Supplement prepared prior to or on the date hereof and will
use its reasonable best efforts to apply such proceeds as more specifically
described in Schedule II hereto.

                 (g)      So long as any of the Notes are outstanding, the
Company will furnish to each of you three copies as soon as available, of each
proxy statement and each annual report, quarterly report and current report
filed by the Company with the Commission on Forms 10-K, 10-Q and 8-K,
respectively (and all amendments thereto), or such similar reports of the
Company as may be designated or required under the Exchange Act and the Rules
and Regulations thereunder, and such other reports, documents, notices and
information as shall be furnished by the Company from time to time to its
shareholders generally, the holders of the Notes, the Trustee under the
Indenture, the New York Stock Exchange, Pacific Stock Exchange or any other
securities exchange on which any class of securities of the Company is then
listed or traded.

                 (h)      Other than as permitted by the Securities Act and the
Rules and Regulations and with your consent, the Company will not distribute
any prospectus or other offering material in connection with the Offering.

                 (i)      The Company will not take, and will use its best
efforts to cause each of its directors and officers not to take, directly or
indirectly, any action designed to, or which might reasonably be expected to,
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Notes.

                 SECTION 5.       PAYMENT OF EXPENSES.  Whether or not the
transactions contemplated by this Agreement are consummated, or if this
Agreement is terminated for any reason, the Company will pay all costs, fees
and expenses incident to the performance of its obligations under this
Agreement, including, without limiting the generality of the foregoing, (a) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), any Preliminary Prospectus, the Basic
Prospectus, the Prospectus Supplements and each amendment or supplement
thereto; (b) the preparation, issuance and delivery of certificates for the
Notes to the Underwriters, including any transfer taxes; (c) the cost of all
certificates representing the Notes; (d) the fees and disbursements of the
Company's counsel and accountants; (e) the qualification of the Notes under
applicable Blue Sky Laws, including filing fees and the reasonable fees and
disbursements of the Underwriters' counsel in connection therewith and in
connection with the preparation of all Blue Sky Surveys; (f) the





                                      -11-
<PAGE>   12
printing and delivery to the Underwriters in such quantities as they shall
request of copies of the Registration Statement, any Preliminary Prospectus,
the Basic Prospectus, the Prospectus Supplements, each amendment or supplement
to the foregoing, all documents incorporated by reference therein or deemed to
be incorporated by reference therein and the other documents in connection with
the Offering; (g) the printing and delivery to the Underwriters (and any
dealers participating in the Offering) in such quantities as they may
reasonably request, of copies of all Blue Sky Surveys, this Agreement, the
Indenture, the Supplemental Indenture, any Selling Agreement and other
underwriting documents and papers relating to the Offering; (h) any fees of any
independent national statistical rating organization to provide a rating of the
creditworthiness of the Notes; (i) filing fees incurred for registering the
Notes (and all other securities registered by the Company pursuant to the
Registration Statement) under the Securities Act; (j) the fees and expenses of
the Trustee under the Indenture and the Supplemental Indenture, including such
Trustee's reasonable legal fees and disbursements; (k) all travel, lodging and
reasonable living expenses incurred by the Company in connection with
marketing, dealer and other meetings attended by the Company in marketing the
Notes; and (l) all other costs and expenses incident to the performance of the
Company's obligations hereunder and under the Indenture and the Supplemental
Indenture.

                 If the sale to the Underwriters of any Notes at the Closing
Time is not consummated because any condition to the Underwriters' obligations
hereunder is not satisfied or because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or comply with any
provision hereof, the Company shall reimburse the Underwriters for all of its
reasonable out-of-pocket expenses paid or payable to third parties, including
fees and disbursements of counsel for the Underwriters incurred by the
Underwriters in connection with the contemplated purchase, offer and sale of
the Notes, its due diligence investigation of the Company, its preparation to
market and the marketing of the Notes, and in performance of its obligations
hereunder.

                 SECTION 6.       CONDITIONS TO THE OBLIGATIONS OF
UNDERWRITERS.  The several obligations of the Underwriters to purchase and pay
for the Notes hereunder are subject to the accuracy of the representations and
warranties of the Company herein contained as of the date hereof and at the
Closing Time, to the accuracy of the statements of the officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of
its obligations hereunder and to the satisfaction of the following further
conditions (any one or more of which may be waived by the Underwriters as
hereinafter provided):

                 (a)      The Registration Statement and all post-effective
amendments thereto shall have become effective with the Commission not later
than 5:30 p.m. on the date hereof or, with your consent, at a later time and
date not later, however, than 1:00 p.m. on the second business day following
the date hereof; and at the Closing Time, no stop order suspending the
effectiveness of the Registration Statement or the sale of the Notes or the
qualification of the Indenture shall have been issued under the Securities Act,
the Trust Indenture Act, the Rules and Regulations or any Blue Sky Laws or
proceedings therefor initiated or threatened by the Commission or any Blue Sky
Authorities and no order suspending the Offering or authorization





                                      -12-
<PAGE>   13
for final use of the Prospectus shall have been issued or proceedings therefor
initiated or threatened by the Commission or any Blue Sky Authorities; any
request of the Commission for inclusion of additional or supplemental
information in the Registration Statement or the Prospectus, documents
incorporated by reference therein or deemed to be incorporated by reference
therein or otherwise, shall have been complied with by the Company to your
reasonable satisfaction; the Notes shall have been qualified for sale under all
Blue Sky Laws; the Indenture (including as supplemented by the Supplemental
Indenture) shall have been qualified under the Trust Indenture Act and the
applicable Rules and Regulations.  The Rule 430A Information previously omitted
from the effective Registration Statement shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed time period
and, prior to the Closing Time, the Company shall have provided evidence
satisfactory to you of such timely filing (or a post-effective amendment
providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rules 430A and 424(b)).

                 (b)      At the Closing Time, the Underwriters shall have
received:

                          (i)     The favorable opinion, dated as of the
Closing Time, of Giroir & Gregory, Professional Associates, counsel for the
Company in form and substance satisfactory to counsel for the Underwriters, to
the effect that:

                                  (A)      The Company has full legal right,
power and authority to enter into this Agreement, the Indenture and the
Supplemental Indenture.  This Agreement, the Indenture and the Supplemental
Indenture have each been duly authorized, executed and delivered by the Company
and are each the legal, valid and binding agreement of the Company, enforceable
in accordance with its terms, except as may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights generally, and except as enforcement may
be limited by the exercise of judicial discretion in applying general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law) and except as the obligations of the Company
under the indemnification and contribution provisions hereof may be limited by
public policy under certain circumstances under federal or state securities
laws.

                                  (B)      The Registration Statement has
become effective under the Securities Act.  To the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for that purpose have been initiated or
threatened by the Commission or any Blue Sky Authority.  The Company has filed
a form of Prospectus Supplement under the Securities Act pursuant to Rule
424(b) in the manner and at the time required by Rule 430A.

                                  (C)      At the Effective Date and on the
Closing Date, the Registration Statement, including the Rule 430A Information
(other than the financial statements and supporting schedules and other
financial and statistical data included or incorporated by reference therein,
as to which no opinion need be rendered), complied as to form in all material





                                      -13-
<PAGE>   14
respects with the requirements of the Securities Act and the applicable Rules
and Regulations, and the Prospectus, and all amendments or supplements thereto
(other than the financial statements and supporting schedules and other
financial and statistical data included or incorporated by reference therein,
as to which no opinion need be rendered), received all required authorizations
of the Commission for use in final form and complied as to form in all material
respects with the requirements of the Securities Act and the applicable Rules
and Regulations.  Each document filed pursuant to the Exchange Act (other than
financial statements and supporting schedules and other financial and
statistical data included or incorporated by reference therein, as to which no
opinion need be rendered) and incorporated by reference or deemed to be
incorporated by reference in the Registration Statement or the Prospectus
complied when so filed as to form in all material respects with the
requirements of the Exchange Act and the applicable Rules and Regulations.

                                  (D)      The Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of Delaware, possessed of full corporate power and
authority under the Delaware General Corporation Law to own its properties and
conduct its business as described in the Prospectus.

                                  (E)      No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this Agreement,
the Indenture and the Supplemental Indenture by the Company or the consummation
of the transactions contemplated by this Agreement, the Indenture and the
Supplemental Indenture, including the issuance and sale of the Notes, except
such as have been obtained for (i) compliance with the Securities Act; (ii)
compliance with the Blue Sky Laws applicable to the Offering; and (iii)
qualification of the Indenture under the Trust Indenture Act.

                                  (F)      The Notes have been duly and validly
authorized for issuance and sale pursuant to this Agreement and, when
authenticated by the Trustee and issued, delivered and sold in accordance with
this Agreement, the Indenture and the Supplemental Indenture, will have been
duly and validly executed, authenticated, issued and delivered and will
constitute valid and binding obligations of the Company, entitled to the
benefits provided by the Indenture and the Supplemental Indenture and
enforceable against the Company in accordance with their terms, except as may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and
except as enforcement may be limited by the exercise of judicial discretion in
applying general principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law).  The form of certificate
used to evidence the Notes is in due and proper form as contemplated by the
Indenture and the Supplemental Indenture and complies with all statutory
requirements.  The terms and provisions of the Indenture, the Supplemental
Indenture and the Notes conform in all material respects to the descriptions
thereof contained in the Prospectus.  Upon payment for, and delivery of, the
Notes pursuant to this Agreement, assuming that the Underwriters (with due
corporate power) purchase the Notes in good faith without notice of any





                                      -14-
<PAGE>   15
adverse claims, the Underwriters will acquire good and marketable title to the
Notes, to the knowledge of such counsel, free and clear of all liens,
encumbrances or claims.

                                  (G)      The Indenture has been duly
qualified under the Trust Indenture Act and the applicable Rules and
Regulations.

                                  (H)      To the knowledge of such counsel,
the Company (including its subsidiaries) is not, and as a result of the
Offering will not be, an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.

                                  (I)      The execution and delivery of this
Agreement, the Indenture and the Supplemental Indenture by the Company, the
incurrence of the obligations herein set forth and the consummation of the
transactions herein and therein contemplated, including issuance and sale of
the Notes, will not violate any of the provisions of the Certificate of
Incorporation or bylaws of the Company and, to the knowledge of such counsel,
will not contravene or result in a breach of, or default under, any obligation,
agreement, or condition contained in any material contract, franchise, license,
lease, indenture, loan agreement or other material instrument of the Company to
which it is a party or has a beneficial interest in or by which it may be
bound, or, to the knowledge of such counsel, violate or conflict with any law,
administrative regulation or administrative or court decree.

                                  (J)      The statements in the Basic
Prospectus under the caption "Description of the Debt Securities" and in the
Prospectus Supplements under the caption "Description of the Notes," to the
extent such statements constitute matters of law or legal conclusions, have
been reviewed by such counsel and are correct in all material respects.

                 Such opinion shall also include a confirmation, dated as of
the Closing Time, in form and substance satisfactory to counsel for the
Underwriters, to the effect that Giroir & Gregory, Professional Association,
has participated in conferences with officers and other representatives of the
Company, representatives of the independent accountants for the Company, the
Underwriters, and counsel for the Underwriters at which the contents of the
Registration Statement, the Preliminary Prospectus and the Prospectus and
related matters were discussed and, although they are not passing upon and do
not assume any responsibility for the factual accuracy, completeness or
fairness of the statements contained in the Registration Statement, the
Preliminary Prospectus or the Prospectus, on the basis of the foregoing and
based on their knowledge of the Company, such counsel has no reason to believe
that the Registration Statement (including the Rule 430A Information), at the
Effective Date and at the Closing Time, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading or that the
Prospectus, at the time it was filed or transmitted to the Commission for
filing and at the Closing Time, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that they need
express no





                                      -15-
<PAGE>   16
view as to financial statements, supporting schedules and other financial and
statistical data included therein).

                 In rendering the foregoing opinions, Giroir & Gregory,
Professional Association may rely as to factual matters on certificates of
public officials and executive officers and directors of the Company, original
copies of which certificates shall be attached to such opinion.

                          (ii)    The favorable opinion, dated as of the
Closing Time, of Robert W. Pommerville, Senior Vice President, General Counsel
and Secretary of the Company, in form and substance satisfactory to counsel for
the Underwriters, to the effect that:

                                  (A)      The Company has full legal right,
power and authority to enter into this Agreement, the Indenture and the
Supplemental Indenture.  This Agreement, the Indenture and the Supplemental
Indenture have each been duly authorized, executed and delivered by the
Company.

                                  (B)      The Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of Delaware, possessed of full corporate power and
authority under the Delaware General Corporation Law to own its properties and
conduct its business as described in the Prospectus.

                                  (C)      No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this Agreement,
the Indenture and the Supplemental Indenture by the Company or the consummation
of the transactions contemplated by this Agreement, the Indenture and the
Supplemental Indenture, including the issuance and sale of the Notes, except
such as have been obtained for (i) compliance with the Securities Act; (ii)
compliance with the Blue Sky Laws applicable to the Offering; and (iii)
qualification of the Indenture under the Trust Indenture Act.

                                  (D)      The Notes have been duly and validly
authorized for issuance and sale pursuant to this Agreement and, when
authenticated by the Trustee and issued, delivered and sold in accordance with
this Agreement, the Indenture and the Supplemental Indenture, will have been
duly and validly executed, authenticated, issued and delivered.  The form of
certificate used to evidence the Notes is in due and proper form as
contemplated by the Indenture and the Supplemental Indenture and complies with
all statutory requirements.  The terms and provisions of the Indenture, the
Supplemental Indenture and the Notes conform in all material respects to the
descriptions thereof contained in the Prospectus.  Upon payment for and
delivery of the Notes pursuant to this Agreement, assuming that the
Underwriters (with due corporate power) purchase the Notes in good faith
without notice of any adverse claims, the Underwriters will acquire good and
marketable title to the Notes, to the knowledge of such counsel, free and clear
of all liens, encumbrances or claims.





                                      -16-
<PAGE>   17
                                  (E)      The statements in the Basic
Prospectus under the caption "Description of the Debt Securities" and in the
Prospectus Supplements under the caption "Description of the Notes," to the
extent such statements constitute matters of law or legal conclusions, have
been reviewed by such counsel and are correct in all material respects.

                                  (F)      The Company satisfies the conditions
and requirements for the use of Form S-3 and filing the Registration Statement
under the Securities Act and the applicable Rules and Regulations in connection
with the Offering.

                                  (G)      The Company and its subsidiaries
have obtained and currently possess all material licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses, unless the failure to do so would not have a material
adverse effect on the business of the Company and its subsidiaries taken as a
whole; to the knowledge of such counsel, all such licenses, permits and other
governmental authorizations are in full force and effect and the Company and
each subsidiary of the Company are in all material respects complying
therewith; to the knowledge of such counsel, the Company is duly qualified and
in good standing as a foreign corporation in each jurisdiction in which the
character of its properties or the nature of its businesses makes such
qualification necessary, except where failure to qualify would not have a
material adverse effect on the business, assets or financial condition of the
Company and its subsidiaries taken as a whole.

                                  (H)      Each of the subsidiaries of the
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, and to
the knowledge of such counsel, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which it owns
or leases substantial properties or in which the conduct of its business
requires such qualification other than jurisdictions in which the failure so to
qualify, when considered in the aggregate and not individually, would not have
a material adverse effect on the Company and its subsidiaries considered as one
enterprise; all of the issued and outstanding capital stock of each subsidiary
has been duly and validly issued and is fully paid and non-assessable (other
than directors' qualifying shares); and other than pledges referred to or
incorporated by reference in the Prospectus, the capital stock of each such
subsidiary is, to such counsel's knowledge, owned by the Company, directly or
through subsidiaries, free and clear of any pledge, lien, encumbrance, claim or
equity; provided, however, that the foregoing shall not apply to a subsidiary
which accounted for less than 5% of the revenues of the Company and its
consolidated subsidiaries in the year ended December 31, 1992.

                                  (I)      Such counsel does not know of any
legal or governmental proceedings pending or threatened against the Company or
any other subsidiary required to be described in the Prospectus which are not
described as required, nor of any material contracts or other documents of a
character required to be described in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement by the Securities
Act or by the applicable Rules and Regulations, which have not been described
or filed (either physically





                                      -17-
<PAGE>   18
or by incorporation by reference as permitted by the applicable Rules and
Regulations) as required.

                                  (J)      Neither the Company nor any
subsidiary of the Company is in violation of its respective charter or bylaws
and the existing contracts and agreements filed as exhibits to the Registration
Statement have been duly authorized by the Company, are legal, valid and
binding contracts and agreements of the Company and there is no default by the
Company in the due performance or observance of any of the material
obligations, agreements, covenants or conditions contained in any such
contract, agreement or other document.

                                  (K)      The execution and delivery of this
Agreement, the Indenture and the Supplemental Indenture by the Company, the
incurrence of the obligations herein set forth and the consummation of the
transactions herein and therein contemplated will not violate any of the
provisions of the Certificate of Incorporation or bylaws of the Company and
will not contravene or result in a breach of, or default under, any obligation,
agreement, or condition contained in any material contract, franchise, license,
lease, indenture, loan agreement or other material instrument of the Company to
which it is a party or has a beneficial interest in or by which it may be
bound, or, to the knowledge of such counsel, violate or conflict with any law,
administrative regulation or administrative or court decree.

                                  (L)      The information in the Prospectus
under the captions "Business-Governmental Regulation and Reimbursement" and
"Investment Considerations-Governmental Regulations and Reimbursement", each of
which purports to summarize the provisions of statutes and regulations
applicable to the Company, and the information under the caption "Legal
Proceedings" in the Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1992 which is incorporated by reference in the Prospectus and
under the caption "Employees" in the Prospectus, to the extent such information
constitutes  matters of law, summaries of legal matters or legal conclusions,
have been reviewed by such counsel and are each correct in all material
respects.

                 Such opinion shall also include a confirmation, dated as of
the Closing Time, in form and substance satisfactory to counsel for the
Underwriters, to the effect that although such counsel is not passing upon and
does not assume any responsibility for the factual accuracy, completeness or
fairness of the statements contained in the Registration Statement, the
Preliminary Prospectus or the Prospectus, such counsel has no reason to believe
that the Registration Statement (including the Rule 430A Information), at the
Effective Date and at the Closing Time, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading or that the
Prospectus, at the time it was filed or transmitted to the Commission for
filing and at the Closing Time, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that such
counsel need express no view as to financial statements, supporting schedules
and other financial and statistical data included therein).





                                      -18-
<PAGE>   19
                          (iii)   The favorable opinion dated as of the Closing
Time of Foley & Lardner, counsel for the Underwriters, with respect to the
status of the Company as a Delaware corporation, the authorization, execution
and delivery and enforceability of this Agreement, the Indenture and the
Supplemental Indenture by and against the Company, the validity of the Notes
and other legal matters relating to the Offering as the Underwriters may
require, and the Company shall have furnished to such counsel such documents
and certificates as they may reasonably request for the purpose of enabling
them to pass upon such matters.

                 (c)      At the Closing Time, there shall not have been, since
the respective dates as of which information is given in the most recent
Prospectus Supplement prepared prior to or on the date hereof, any material
adverse change in the condition of the Company and its subsidiaries taken as a
whole, whether or not arising in the ordinary course of business.  The
Underwriters shall have received a certificate of the Chief Executive Officer
and the Chief Financial Officer of the Company, dated as of the Closing Time,
to the effect that (i) there has been no such material adverse change relating
to the Company and its subsidiaries taken as a whole; (ii) the representations
and warranties of the Company in this Agreement are true and correct with the
same force and effect as though expressly made at and as of the Closing Time;
(iii) the Company has complied with all agreements relating to the sale of the
Notes to the Underwriters and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time; (iv) no stop order
suspending the effectiveness of the Registration Statement, or the
qualification of the sale of the Notes or the qualification of the Indenture,
has been issued and no proceedings for that purpose have been initiated or, to
the knowledge of such person, threatened by the Commission or any Blue Sky
Authority; (v) such person, in his capacity as the Chief Executive Officer or
the Chief Financial Officer of the Company, respectively, has carefully
examined the Registration Statement and the Prospectus and, in his opinion as
such an officer, at the Effective Date and at the Closing Time, the
Registration Statement and the Prospectus did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (vi) since the
Effective Date, no event has occurred that should have been set forth in an
amendment of, or supplement to, the Registration Statement or the Prospectus
that has not been so set forth; (vii) subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus
and, except as contemplated or referred to in the Prospectus, the Company or
its subsidiaries have not incurred any direct or contingent liabilities or
obligations material to the Company and its subsidiaries taken as a whole, or
entered into any material transactions, except liabilities, obligations or
transactions in the ordinary course of business, and there has not been any
change in the authorized or outstanding capital stock or funded debt of the
Company or any material adverse change in the financial position, net worth or
results of operations of the Company and its subsidiaries taken as a whole; and
(viii) except as is otherwise set forth or incorporated by reference into the
Registration Statement and the Prospectus, there are no actions, suits or
proceedings before any court or governmental agency, authority or body now
pending or, to the best of their knowledge, threatened to which the Company or
its subsidiaries is a party or of which the business or property of the Company
or its subsidiaries is subject which may affect the performance of this
Agreement, the Indenture, the Supplemental Indenture





                                      -19-
<PAGE>   20
or the consummation of the transactions herein and therein contemplated or
which might result in any material adverse change in the condition (financial
or otherwise), business or prospects of the Company and its subsidiaries taken
as a whole.

                 (d)      At the time this Agreement is executed and also on
the Closing Time there shall be delivered to you a letter addressed to you,
from Ernst & Young, the Company's independent accountants, the first letter to
be dated the date of this Agreement and the second letter to be dated the
Closing Time which shall be in form and substance satisfactory to you and shall
contain information as of a date within five days of the respective date of
such letter.  There shall not have been any materially adverse change or
decrease set forth in any of the letters referred to in this subsection (d)
which makes it impracticable or inadvisable in your discretionary judgment to
proceed with the Offering or the purchase of the Notes as contemplated hereby.

                 (e)      At the Closing Time, counsel for the Underwriters
shall have been furnished with such documents and certificates as they may have
reasonably requested no later than three days prior to the Closing Time for the
purpose of enabling them to pass upon the sale of the Notes as herein
contemplated and related material proceedings or in order to evidence the
accuracy or completeness of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained.  All material
proceedings taken by the Company in connection with the sale of the Notes as
herein contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.

                 All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to the Underwriters and to legal counsel for the Underwriters.
All statements contained in any certificate, letter or other document delivered
pursuant hereto by or on behalf of the Company shall be deemed to constitute
representations and warranties of the Company.  The Underwriters may waive in
writing the performance of any one or more of the conditions specified in this
Section 6 or extend the time for their performance.

                 If any condition specified in this Section 6 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Company at any time at or prior
to the Closing Time, and such termination shall be without liability of any
party to any other party, except as provided in Section 5 hereof and except
that the provisions of Sections 7 and 8 hereof shall survive the termination of
this Agreement.

                 SECTION 7.       INDEMNIFICATION.

                 (a)      The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims (whether commenced or threatened), damages, expenses, liabilities or
actions in respect thereof (collectively, "Claims"), joint or several, to which
such Underwriter or each such controlling person may become subject under the





                                      -20-
<PAGE>   21
Securities Act, the Exchange Act, the Trust Indenture Act, Blue Sky Laws,
applicable Rules and Regulations or other federal or state statutory laws or
regulations, at common law or otherwise (including payments made in settlement
of any litigation, if such settlement is effected with the written consent of
the Company, which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon (i) the inaccuracy or breach of any
representation, warranty or covenant of the Company contained in this Agreement
or (ii) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any amendment or supplement thereto or document incorporated by
reference therein or deemed to be incorporated by reference therein, or in any
application filed under any Blue Sky Law or other document executed by the
Company for that purpose or based upon written information furnished by the
Company and filed in any state or other jurisdiction to qualify any or all of
the Notes under the Blue Sky Laws thereof (any such document, application or
information being hereinafter called a "Blue Sky Application") or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.  The
Company agrees to reimburse each Underwriter and each such controlling person
for any legal fees or other expenses incurred by such Underwriter or any such
controlling person in connection with investigating or defending any such Claim
(subject to subsections (b), (c) and (d) below) provided, however, that the
Company will not be liable for such fees and expenses in any such case to the
extent that:

                          (i)     any such Claim arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Preliminary Prospectus, the Prospectus,
any amendment or supplement thereto or document incorporated by reference
therein or in any Blue Sky Application in reliance upon and in conformity with
the written information furnished by the Underwriters through you to the
Company expressly for use therein (it being understood that the only such
information relates to the selling concession and dealer reallowance relating
to the Notes set forth under the caption "Underwriting" in the most recent
Prospectus Supplement prepared prior to or on the date hereof, and the identity
of, and allocations of Notes, to the Underwriters named therein, together with
the stabilization paragraph on Page S-2 thereof);

                          (ii)    such statement or omission was contained or
made in any Preliminary Prospectus and corrected in the Prospectus and (A) any
such Claim suffered or incurred by any Underwriter (or any person who controls
any Underwriter) resulted from an action, claim or suit by any person who
purchased Notes which are the subject thereof from such Underwriter in the
Offering, and (B) such Underwriter failed to deliver a copy of the Prospectus
(as then amended or supplemented, if the Company shall have amended or
supplemented the Prospectus) to such person at or prior to the confirmation of
the sale of such Notes in any case where such delivery is required by the
Securities Act, unless such failure was due to failure by the Company to
provide copies of the Prospectus (as so amended or supplemented) to the
Underwriters as required by this Agreement.  This indemnity agreement shall be
in addition to any liability which the Company may otherwise have.





                                      -21-
<PAGE>   22
                 (b)      Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors and each of its
executive officers who signs the Registration Statement, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any Claim to which the Company or any such director,
officer or controlling person may become subject under the Securities Act, the
Exchange Act, Trust Indenture Act, Blue Sky Laws, applicable Rules and
Regulations or other federal or state statutory laws or regulations, at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Underwriter, which consent shall
not be unreasonably withheld), insofar as such Claim arises out of or is based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, the Preliminary Prospectus, the Prospectus, any
amendment or supplement thereto, any document incorporated by reference therein
or in any Blue Sky Application, or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Preliminary Prospectus, the Prospectus, any amendment or
supplement thereto, any document incorporated by reference therein or in any
Blue Sky Application, in reliance upon and in conformity with the written
information furnished by the Underwriters through you expressly for use therein
(it being understood that the only such information relates to the selling
concession and dealer reallowance relating to the Notes set forth under the
caption "Underwriting" in the most recent Prospectus Supplement prepared prior
to or on the date hereof, and the identity of, and allocations of Notes to, the
Underwriters named therein, together with the stabilization paragraph on Page
S-2 thereof).  Each Underwriter will severally reimburse any legal fees or
other expenses reasonably incurred by the Company or any such director,
executive officer or controlling person in connection with investigating or
defending any such Claim, and from any and all Claims resulting from failure of
an Underwriter to deliver a copy of the Prospectus, if the person asserting
such Claim purchased Notes from such Underwriter and a copy of the Prospectus
(as then amended or supplemented, if the Company shall have amended or
supplemented the Prospectus) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Notes to such person, if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such Claim.  This indemnity agreement shall be in addition to
any liability which such Underwriter may otherwise have.

                 (c)      Promptly after receipt by an indemnified party under
subsection (a) or (b) of this Section 7 of notice of the commencement of any
action in respect of a Claim, such indemnified party will, if a Claim in
respect thereof is to be made against an indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
an indemnifying party from any liability it may have to any indemnified party
otherwise than under such subsection.  In case any such action is brought
against any indemnified party, and such indemnified party notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to





                                      -22-
<PAGE>   23
participate in and, to the extent that it may wish, jointly with all other
indemnifying parties, similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded,
based upon written advice of its counsel, that there may be legal defenses
available to the indemnified party and/or other indemnified parties which are
different from, or additional to, those available to the indemnifying party and
that the raising or pursuing of such different or additional defenses would
result in a conflict of interest for such joint counsel, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties and to be reimbursed for such legal fees
and expenses upon compliance with subsection (d) below.

                 (d)      Upon receipt of notice from the indemnifying party to
such indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of counsel
selected by the indemnifying party, the indemnifying party will not be liable
to such indemnified party under subsection (a) or (b) of this Section 7 for any
legal fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:

                          (i)     the indemnified party shall have employed
separate counsel in connection with the assumption of legal defenses in
accordance with the proviso to the last sentence of subsection (c) of this
Section 7 (it being understood, however, that the indemnifying party shall not
be liable for the legal fees and expenses of more than one separate counsel,
approved by you, if one or more of the Underwriters or their controlling
persons are the indemnified parties);

                          (ii)    the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the indemnified party's
notice to the indemnifying party of commencement of the action; or

                          (iii)   the indemnifying party has authorized the
employment of counsel at the expense of the indemnifying party.

                 SECTION 8.       CONTRIBUTION.

                 (a)      If the indemnification provided for in Section 7
hereof is unavailable to an indemnified party in respect of any Claims referred
to therein, then each indemnifying party, in lieu of indemnifying such
indemnified party shall, subject to the limitations hereinafter set forth,
contribute to the amount paid or payable by such indemnified party as a result
of such Claims:





                                      -23-
<PAGE>   24
                          (i)     in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, from the Offering and sale of the Notes; or

                          (ii)    if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the respective relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the statements or omissions
which resulted in such Claims, as well as any other relevant equitable
considerations.

                 (b)      The respective relative benefits received by the
Company, on the one hand, and the Underwriters, on the other hand, shall be
deemed to be in such proportion so that the Underwriters are responsible for
the portion of the Claims represented by the percentage that the underwriting
discount per Note appearing on the cover page of the most recent Prospectus
Supplement prior to the date hereof bears to the proceeds to the Company per
Note appearing thereon, and the Company is responsible for the remaining
portion.  The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by or
on behalf of the Company or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The amount paid or payable by a party as a result
of Claims referred to above shall be deemed to include, subject to the
limitations set forth in this Section 7, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
Claim.

                 (c)      The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata or per capita allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to in
the immediately preceding paragraph.  Notwithstanding the other provisions of
this Section 8, (i) no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to their respective
underwriting commitments and not joint.

                 SECTION 9.       DEFAULT OF UNDERWRITERS.  It shall be a
condition to this Agreement and to the obligation of the Company to sell and
deliver the Notes hereunder, and to the obligations of each Underwriter to
purchase the Notes in the manner as described herein, that, except as
hereinafter provided in this Section 9, each of the Underwriters shall purchase
and pay





                                      -24-
<PAGE>   25
for all Notes agreed to be purchased by such Underwriter hereunder upon tender
to you of all such Notes in accordance with the terms hereof.  If any
Underwriter or Underwriters default in its or their obligations to purchase
Notes hereunder on the Closing Time and the aggregate number of Notes which
such defaulting Underwriter or Underwriters agreed but failed to purchase does
not exceed 10% of the total number of Notes which the Underwriters are
obligated to purchase on the Closing Time, you may make arrangements
satisfactory to the Company for the purchase of such Notes by other persons,
including any of the Underwriters, but if no such arrangements are made by the
Closing Time the nondefaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder with respect to Notes, to
purchase the Notes which such defaulting Underwriters agreed but failed to
purchase on the Closing Time.  If any Underwriter or Underwriters so default
and the aggregate number of Notes with respect to which such default or
defaults occur is greater than the above percentage and arrangements
satisfactory to you and the Company for the purchase of such Notes by other
persons are not made within 24 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be paid by the Company pursuant to
Section 5 hereof.  Nothing in this Section 9 and no action taken pursuant to
this Section 9 shall relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.

                 In the event that Notes to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties, you
or the Company shall have the right to postpone the Closing Time for not more
than five business days in order that the necessary changes in the Prospectus,
as well as any other arrangements, may be effected.  As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section.  Nothing herein will relieve a defaulting Underwriter from
liability for its default.

                 SECTION 10.      REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY.  All representations, warranties and agreements contained in
this Agreement (including, but not limited to, the representations and
warranties of the Company set forth in Section 2 hereof, the covenants of the
Company set forth in Section 4 and Section 5 hereof and the respective
indemnification and contribution agreements of the Company and the Underwriters
contained in Sections 7 and 8 hereof, respectively), or contained in
certificates of officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Underwriters or any officer, director or controlling person
of the Underwriters, or by or on behalf of the Company, and shall survive
delivery of the Notes to the Underwriters.  The aforesaid expense payment
provision in Section 5 and the indemnification and contribution agreements in
Sections 7 and 8 hereof also shall survive following any termination or
cancellation of this Agreement.

                 SECTION 11.      TERMINATION.  Without limiting the right to
terminate this Agreement pursuant to any other provision hereof, this Agreement
may be terminated by you prior to the Closing Time, if in your judgment,
payment for and delivery of the Notes is rendered impracticable or inadvisable
because:





                                      -25-
<PAGE>   26
                 (a)      additional governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange, the American Stock Exchange or
over-the-counter market, or trading in securities generally shall have been
suspended on either such exchange or on NASDAQ or a general banking moratorium
shall have been established by federal, New York, Arkansas or Wisconsin
authorities;

                 (b)      any event shall have occurred or shall exist which
makes untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or the Prospectus or which is not
reflected in the Registration Statement or the Prospectus but should be
reflected therein to make the statements or information contained therein not
misleading in any material respect; or

                 (c)      an outbreak or escalation of major hostilities or
other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred or shall have
accelerated to such extent, in your judgment, as to have a material adverse
effect on the general securities market or make it impracticable or inadvisable
to proceed with completion of the sale of and payment for the Notes as provided
in this Agreement.

                 Any termination pursuant to this Section 11 shall be without
liability on the part of any Underwriter to the Company or on the part of the
Company to any Underwriter (except for expenses to be paid by the Company
pursuant to Section 5 hereof and except as to indemnification or contribution
to the extent provided in Sections 7 and 8 hereof).

                 SECTION 12.      NOTICES.  All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed, delivered, telecopied (with receipt confirmed) or
telegraphed and confirmed.  Notices to you or the Underwriters shall be
directed to Dain Bosworth Incorporated at 790 North Milwaukee Street,
Milwaukee, Wisconsin 53202, attention of David P. Schieldrop, Vice President
and to J.C. Bradford & Co., 330 Commerce Street, Nashville, Tennessee 37201,
attention of Catherine Gemmato-Smith, with a copy to Foley & Lardner at 777
East Wisconsin Avenue, Milwaukee, Wisconsin 53202, attention of Benjamin F.
Garmer, III, Esq. and Steven R. Barth, Esq.  Notices to the Company shall be
directed to it at 1200 South Waldron Road, Suite 155, Fort Smith, Arkansas
72913-3324, attention Robert W. Pommerville, Esq., with a copy to Giroir &
Gregory, Professional Associates, 111 Center Street, Suite 1900, Little Rock,
Arkansas 72201, attention C.J. Giroir, Jr., Esq. and H. Watt Gregory, III, Esq.

                 SECTION 13.      SUCCESSORS.  This Agreement shall inure to
the benefit of and be binding upon the Underwriters, the Company and their
respective successors and assigns.  Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors,
heirs and legal representatives and the controlling persons and officers and
directors referred to in Sections 7 and 8 hereof and their heirs and legal
representatives, any legal or equitable right,





                                      -26-
<PAGE>   27
remedy or claim under or in respect of this Agreement or any provision herein
contained.  This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their respective successors, heirs and legal representatives and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of any Notes from the Underwriters shall be deemed to be a
successor by reason merely of such purchase.

                 SECTION 14.      GOVERNING LAW AND TIME.  This Agreement shall
be governed by and construed in accordance with the internal laws of the State
of Delaware applicable to agreements made and to be performed in said state.
Specified times of day, except as otherwise noted, refer to Washington, D.C.
time.

                 SECTION 15.      ENTIRE AGREEMENT.  This Agreement embodies
the entire agreement between the parties hereto with respect to the
transactions contemplated herein, and there have been and are no agreements
between the parties with respect to such transactions other than as set forth
or provided for therein.

                 SECTION 16.      COUNTERPARTS.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.





                                      -27-
<PAGE>   28
                 If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.

                                         Very truly yours,

                                         BEVERLY ENTERPRISES, INC.



                                         By:    /s/ SCHUYLER HOLLINGSWORTH, JR. 
                                                Title: Senior Vice President
                                                       and Treasurer

CONFIRMED AND ACCEPTED
as of the date first above written:

DAIN BOSWORTH INCORPORATED
J.C. BRADFORD & CO.

BY:  DAIN BOSWORTH INCORPORATED

On behalf of itself and as the authorized
representative of the other Underwriters
identified in the attached Schedule I



By:    /s/ DAVID SCHIELDROP                  
Title: David P. Schieldrop, Vice President





                                      -28-
<PAGE>   29
                           BEVERLY ENTERPRISES, INC.

                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                                               Principal  Amount of Firm
                                       Name of Underwriter                       Notes to be Purchased  
                                       -------------------                     -------------------------
                         <S>                                                          <C>
                         Dain Bosworth Incorporated  . . . . . . . . . .              $ 16,250,000

                         J.C. Bradford & Co. . . . . . . . . . . . . . .              $  8,750,000

                                                                                      $ 25,000,000
                                                                                      ============
</TABLE>
<PAGE>   30
                           BEVERLY ENTERPRISES, INC.

                                  SCHEDULE II


<TABLE>
<CAPTION>
                                                                                                          
                                                                                             MORTGAGE PAYOFF/
 FAC.                                                                        NUMBER          ACQUISITION COST        ESTIMATED
 NO.             FACILITY NAME                    CITY, STATE                OF BEDS          AS OF 10/31/93           VALUE
 ---             -------------                    -----------                -------          --------------           -----
 <S>                                              <C>                         <C>               <C>                <C>
 Mortgage Payoffs:
 ---------------- 

 0034       Amory Manor                           Amory, MS                    120              $   724,380        $ 2,500,000
            Coupon 14.00%, Penalty of 107%
 0052       Lee Manor                             Tupelo, MS                   120                  860,980          2,570,000
            Coupon 14.00%, Penalty 106.5%

 0209       Community Nursing                     Bowling Green, OH            100                   71,024          3,750,000
            Coupon 12.50%, No penalty
 0280       William Penn                          Lewiston, PA                 121                1,328,775          2,400,000
            Coupon 15.00%, No penalty
            Paid off 7/93

 0443       Independent Health Care               Independence, MO             120                  637,915          3,530,000
            Coupon 12.50%, Penalty 103.5%

 0869       Whitewater Health Care                St. Charles, MN               76                1,061,166          1,900,000
            Coupon 12.00%, No penalty
 0883       Moorhead HCC                          Moorhead, MN                  89                  496,523          2,100,000
            Coupon 12.00%, No penalty

 0886       Rochester Healthcare Center           Rochester, MN                 68                  186,223          2,250,000
            Coupon 15.00%, No penalty
            Coupon 9.625%, No penalty                                                                                         
                                                                                                -----------        -----------
            Subtotal                                                                            $ 5,935,000        $21,000,000

 Acquisitions:
 ------------ 

 0190       Surry Community Nursing               Mt. Airy, NC                 120                3,200,000          3,200,000
 2112       Greenville Nursing                    Greenville, TX               120                2,300,000          2,300,000
 2118       Nederland Nursing                     Nederland, TX                110                1,750,000          1,750,000
                                                                                                -----------        -----------
            Subtotal                                                                            $ 7,250,000        $ 7,250,000
            Excess Proceeds                                                                      11,815,000
                                                                                                -----------
                                                                             1,164              $25,000,000        $28,250,000
                                                                             =====              ===========        ===========




</TABLE>


<PAGE>   1

                                                                  CONFORMED COPY


________________________________________________________________________________
________________________________________________________________________________


                          FIRST SUPPLEMENTAL INDENTURE

                                  ___________


                            Dated December 30, 1993


                                   __________



                           BEVERLY ENTERPRISES, INC.

                                      AND

                        BOATMEN'S TRUST COMPANY, TRUSTEE




                                   __________



                         (SUPPLEMENTAL TO THE INDENTURE
                         DATED AS OF DECEMBER 30, 1993,
                     EXECUTED BY BEVERLY ENTERPRISES, INC.
                    AND BOATMEN'S TRUST COMPANY, AS TRUSTEE)



                                   __________



                      (PROVIDING FOR 8.75% NOTES DUE 2003)

________________________________________________________________________________
________________________________________________________________________________


<PAGE>   2
                 THIS FIRST SUPPLEMENTAL INDENTURE, dated as of December 30,
1993, made and entered into by and between BEVERLY ENTERPRISES, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(hereinafter referred to as the "Company"), and BOATMEN'S TRUST COMPANY, a
Missouri trust company (hereinafter referred to as the "Trustee"), as Trustee
under the Indenture dated as of December 30, 1993 (hereinafter referred to as
the "Indenture"):


                                  WITNESSETH :

                 WHEREAS, the Company, by resolutions of its Board of Directors
duly adopted, has determined forthwith to issue a series of notes under the
Indenture, as hereby amended, to be known and designated as 8.75% Notes Due
2003 (hereinafter sometimes referred to as the "8.75% Notes"), and to be
authenticated and issued only as registered notes without coupons; and

                 WHEREAS, the Company desires, in accordance with the
provisions of Section 3.01 and Article Twelve of the Indenture, to execute this
supplemental indenture for the purpose of (i) creating the 8.75% Notes, and
(ii) modifying or amending the Indenture in the particulars and to the extent
hereinafter in this supplemental indenture specifically provided; and

                 WHEREAS, the execution and delivery by the Company of this
supplemental indenture have been duly authorized by the Board of Directors of
the Company; and the Company has requested and hereby requests, the Trustee to
enter into and join with the Company in the execution and delivery of this
supplemental indenture; and

                 WHEREAS, the 8.75% Notes are to be authorized, authenticated
and issued only in the form of registered notes without coupons, and each of
such notes shall be substantially in the following form, to wit:

                          {FORM OF FACE OF 8.75% NOTE}

No.                                                           CUSIP  087851 AG 6
                                                              {Principal Amount}

                           BEVERLY ENTERPRISES, INC.

                              8.75% NOTE DUE 2003

         BEVERLY ENTERPRISES, INC., a corporation duly organized  and existing
under the laws of the State of Delaware (together with any successor
corporation that is permitted under the Indenture hereinafter referred to,
herein referred  to as the "Company"), for value received, hereby promises to
pay to __________________, or registered assigns, the principal sum of
__________________ DOLLARS on December 31, 2003, at the office or agency of the
Company in Kansas City, Missouri, in such coin or currency of the United States
of America as at the time of payment is legal tender for the payment of public
and private debts, and to pay to the registered holder hereof, as hereinafter
provided, interest on said principal sum at the rate per annum specified in the
title of this Note, in like coin or currency, on the first day of each month,
commencing February 1, 1994, until the principal hereof is paid or made
available for payment.  Subject to certain exceptions provided in the Indenture
hereinafter referred to, interest shall accrue from the most recent date to
which interest has been paid or duly
<PAGE>   3
provided for or, if no interest has been paid or duly provided for, from the
date of original issuance of the Notes.

         The interest so payable on any first day of each month will, subject
to certain exceptions provided in the Indenture hereinafter referred to, be
paid to the person in whose name this Note is registered at the close of
business on the twenty-fifth day of each month immediately preceding such first
day of each month whether or not such twenty-fifth day of each month is a
Business Day (as defined in the Indenture).  Payment of interest may be made at
the option of the Company by check mailed by first-class mail to the address of
the person entitled thereto at such address as shall appear on the registry
books of the Company.

         As provided in the Indenture, this Note shall be deemed to be a
contract made under the laws of the State of Delaware, and for all purposes
shall be governed by and construed in accordance with the laws of such State.

         Reference is made to the further provisions of this Note set forth on
the reserve hereof.  Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.

         This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.

         IN WITNESS WHEREOF, BEVERLY ENTERPRISES, INC. has caused this
instrument to be duly executed under its corporate seal.

Dated:

                                       BEVERLY ENTERPRISES, INC.



                                       By: _____________________________________
                                                  Chairman, President or
                                                      Vice President

{CORPORATE SEAL}

Attest:


_________________________
       Secretary





                                      -2-
<PAGE>   4
                        [FORM OF REVERSE OF 8.75% NOTE]

                           BEVERLY ENTERPRISES, INC.

                              8.75% NOTE DUE 2003

         This Note is one of a duly authorized series of Notes of the Company
(herein referred to as the "Notes"), issued and to be issued in one or more
series under and pursuant to an indenture, dated as of December 30, 1993, duly
executed and delivered between the Company and Boatmen's Trust Company, a
Missouri trust company, trustee (herein referred to as the "Trustee"), as
amended and supplemented by an indenture supplemental thereto dated December
30, 1993 creating the series to which this Note is issued (said indenture as so
amended and supplemented being hereinafter referred to as the "Indenture"), to
which Indenture reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Notes, and the terms upon which
the Notes are, or are to be, authenticated and delivered.  This Note is one of
the Notes of the series designated on the face hereof.

         If an Event of Default, as defined in the Indenture, with respect to
Notes of this series shall have occurred and be continuing, the principal
amount of the Notes of this series plus any accrued interest to the date of
acceleration may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.  The Indenture provides that in certain events such
declaration and its consequences may be waived by the holders of a majority in
aggregate principal amount of the Notes of each affected series then
outstanding or outstanding on the record date, if any, fixed therefor in
accordance with the provisions of the Indenture, on behalf of the holders of
all the Notes of such series.  It is also provided in the Indenture that the
holders of a majority in aggregate principal amount of the Notes of each
affected series at the time or on any such record date outstanding may on
behalf of the holders of all of the Notes of such series waive, prior to such
declaration, any past default under the Indenture and its consequences, except
a default in the payment of the principal of (premium, if any) or interest on
any of the Notes of such series.

         This Note is unsecured by any collateral, including the assets of the
Company or any of its Subsidiaries (as defined in the Indenture).

         The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes of each series to be affected under the
Indenture then outstanding or outstanding on the record date, if any, fixed
therefor in accordance with the provisions of the Indenture, evidenced as in
the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes of such series; provided, however, that, as
provided in Section 12.02 of the Indenture, without the consent of the holder
of each outstanding Note no such supplemental indenture shall, inter alia,
extend the stated maturity of any Note or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal thereof, or reduce any
premium payable upon the redemption thereof, or reduce the amount payable
thereon in the event of acceleration or the amount thereof payable in
bankruptcy, the consent of the holders of which is required for any such
supplemental indenture.

         Any such consent or waiver by the registered holder of this Note
(unless effectively revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future holders





                                      -3-
<PAGE>   5
of this Note and of any Note issued in exchange or substitution herefor,
irrespective of whether or not any notation of such consent or waiver is made
upon this Note or such other Note.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, at the rate and in the currency herein
prescribed.

         The Notes are issuable as fully registered Notes without coupons in
the denominations of $1,000 and any integral multiple of $1,000.  At the office
or agency to be maintained by the Company referred to on the face hereof, and
in the manner and subject to the limitations provided in the Indenture, Notes
of this series may be exchanged for a like aggregate principal amount of Notes
of this series in other authorized denominations, without payment of any charge
other than a sum sufficient to reimburse the Company for any tax or other
governmental charge incident thereto.  Principal of and interest on this Note
are payable at the office or agency of the Company referred to on the face
hereof, except that, at the option of the Company, payment of interest hereon
may be made by check mailed to the address of the person entitled thereto as
such address shall appear on the registry books of the Company.

         This Note may not be redeemed prior to December 31, 1996.  The Notes
of this series are subject to redemption on or after December 31, 1996, at the
option of the Company, in whole or in part on any date prior to maturity, upon
mailing by first-class mail a notice of such redemption not less than 30 nor
more than 60 days prior to the date fixed for redemption to the holders of
Notes of this series to be redeemed in whole or in part at their addresses as
they shall appear upon the registry books of the Company, all as provided in
the Indenture.  Any such notice which is mailed in the manner hereinabove
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives the notice.  If redeemed on or after December 31, 1996, the
redemption price for the Notes of this series shall be equal to 100% of the
principal amount thereof, together with accrued and unpaid interest to the date
fixed for redemption.

         Any Notes called for redemption are subject to being purchased from
the holder of such Notes at the redemption price by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Notes.

         In the event that there shall occur a Fundamental Structural Change
(as defined in the Indenture) of the Company, then each holder may present his
Notes (or any portion thereof which is $1,000 in amount or any integral
multiple thereof) for payment prior to maturity at 100% of the principal amount
thereof, together with accrued and unpaid interest to the date of payment (but
without any premium).  Exercise of this repurchase option by a holder is
irrevocable and is not subject to any individual or aggregate limitations on
the holders' right of repurchase.  Neither the Company nor the Trustee have the
ability to waive the Company's obligation to repurchase a holder's Notes upon
request in the event of a Fundamental Structural Change.  The Company shall
give notice of the Fundamental Structural Change within 30 days of its
occurrence, and, in order to exercise the repurchase option, a holder must
deliver to the Trustee by the 90th day after the occurrence of such change (i)
written notice of such holder's request for repurchase, in form satisfactory to
the Trustee, signed by the registered holder or his duly authorized
representative, and (ii) the Notes to be repurchased, free and clear of any
liens or encumbrances of any kind.  The Company shall repurchase the Notes on
the date which is 100 days after the occurrence of the Fundamental Structural
Change which triggered the repurchase option.





                                      -4-
<PAGE>   6
         Upon request, the Company will, upon the death of the holder of this
Note, purchase from such holder, at 100% of the principal amount, this Note (up
to $25,000 per holder in principal amount per calendar year), together with
interest accrued and unpaid to the Repayment Date (as defined in the
Indenture), within 30 days following a request therefor from the holder's
authorized representative, in accordance with the provisions of the Indenture,
if (i) this Note has been registered in the holder's name since the original
date of issuance by the Company or for a period of at least six months prior to
the date of the holder's death, whichever is less, (ii) the Trustee is notified
in writing of the request for such purchase within one year after the holder's
death and notices of subsequent requests for such purchase are given within one
year after such preceding notice thereof, (iii) requests for such purchase on
account of the deaths of holders of this series of Notes in any one calendar
year period do not exceed $250,000 in principal amount in the aggregate (plus
interest accrued on such amount) (if such requests exceed $250,000 in principal
amount in any one calendar year period, the Company shall redeem such Notes up
to $250,000 in principal amount in the order in which such requests for
purchase were received), and (iv) the Company is not subject to any law,
regulation or administrative directive preventing such purchase.

         Upon surrender of this Note, the transfer of this Note is registrable
by the registered holder hereof in person or by his attorney duly authorized in
writing on the registry books of the Company at the office or agency to be
maintained by the Company referred to on the face hereof, subject to the terms
of the Indenture but without payment of any charge other than a sum sufficient
to reimburse the Company for any tax or other governmental charge incident
thereto.  Upon any such registration of transfer, a new Note or Notes of this
series in an authorized denomination or denominations, for the same aggregate
principal amount, will be issued to the transferee in exchange herefor.

         Prior to due presentation for registration of transfer, the Company,
the Trustee, any paying agent and any Note registrar may deem and treat the
person in whose name this Note shall be registered upon the registry books of
the Company as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing
hereon), for the purpose of receiving payment of or on account of the principal
hereof and interest due hereon, and for all other purposes, and neither the
Company nor the Trustee nor any paying agent nor any Note registrar shall be
affected by any notice to the contrary.  All such payments shall be valid and
effectual to satisfy and discharge the liability on this Note to the extent of
the sum or sums so paid.

         No recourse shall be had for the payment of the principal of, or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.





                                      -5-
<PAGE>   7
                 AND WHEREAS, on each of the 8.75% Notes (whether in temporary
or definitive form) there is to be endorsed a certificate of the Trustee
substantially in the following form, to wit:

                             TRUSTEE'S CERTIFICATE

                 This is one of the Notes of the series designated in the
within-named Indenture and referred to therein.

                                           BOATMEN'S TRUST COMPANY,
                                           as Trustee



                                           By: _______________________________
                                                     Authorized Signatory


                 NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the receipt whereof is hereby acknowledged,
and in order, pursuant to the terms of the Indenture, to provide for the
issuance under the Indenture, as hereby amended, of the 8.75% Notes and to fix
the terms, provisions and characteristics of the 8.75% Notes and the aggregate
principal amount of 8.75% Notes that may be outstanding at any one time under
the Indenture, as hereby amended, and in order to modify and amend the
Indenture in the particulars and to the extent hereinafter in this supplemental
indenture specifically provided, the Company hereby covenants and agrees with
the Trustee, as follows:

                                  ARTICLE ONE

                 A series of notes issuable under the Indenture, as hereby
amended, and to be known and designated as "8.75% Notes Due 2003", is hereby
created and authorized. The aggregate principal amount of 8.75% of Notes that
may be at any one time outstanding under the Indenture, as hereby amended
(excluding the principal amount of any Notes authenticated and delivered upon
the registration of transfer of, or in exchange for, or in lieu of, other 8.75%
Notes pursuant to Sections 3.05, 3.06, 3.07, 4.03 and 12.04 of the Indenture
and excluding any Notes which, pursuant to Section 3.04 of the Indenture, are
deemed never to have been authenticated and delivered), shall not exceed
$25,000,000, plus the aggregate principal amount of the 8.75% Notes purchased
by the underwriters of the 8.75% Notes pursuant to Section 3(b) of the
Underwriting Agreement dated December 21, 1993 between the Company and Dain
Bosworth Incorporated and J. C. Bradford & Co. to cover over-allotments, but
which shall not exceed $3,750,000.  The 8.75% Notes shall be substantially in
the form hereinbefore recited.  Each of the 8.75% Notes shall be due and
payable December 31, 2003; shall be dated the date of their authentication;
shall be payable as to principal and interest, in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts, at the office or agency of the Company in
Kansas City, Missouri; and subject to the exception set forth in Section 3.03
of the Indenture, shall bear interest from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from the date of original issuance, at the rate per annum
specified in the title of these Notes, payable on the first day of each month,
commencing February 1, 1994, until the principal thereof is paid or made
available for payment, to the registered holder thereof, as provided in this
Article One.





                                      -6-
<PAGE>   8
                 The interest so payable on each of the 8.75% Notes on any
first day of each month will, subject to certain exceptions set forth in
Section 3.03 of the Indenture, be paid to the person in whose name such 8.75%
Note is registered at the close of business on the twenty-fifth day of each
month immediately preceding such first day of each month whether or not such
twenty-fifth day of each month is a Business Day (as defined in the Indenture).
Payment of interest on the 8.75% Notes may be made at the option of the Company
by check mailed by first-class mail to the address of the person entitled
thereto at such address as shall appear on the registry books of the Company.

                 The 8.75% Notes may not be redeemed prior to December 31,
1996.  The 8.75% Notes are subject to redemption on or after December 31, 1996,
at the option of the Company, in whole or in part on any date prior to
maturity, upon the notice and in the manner and with the effect provided in the
Indenture, as hereby amended, at 100% of the principal amount thereof, together
with accrued and unpaid interest to the date fixed for redemption.

                 The Company, upon the death of any holder of 8.75% Notes, will
purchase such holder's 8.75% Notes in the manner and upon the conditions
prescribed in Sections 4.08, 4.09 and 4.10 of the Indenture, as hereby
modified; provided, however, that the Company shall not be required to make
purchases pursuant to Section 4.08 of the Indenture, as hereby modified, of
more than $25,000 in principal amount in any one calendar year period (plus
interest accrued on such amount) on 8.75% Notes held by any one deceased holder
thereof or of more than an aggregate of $250,000 in principal amount (plus
interest accrued on such amount) on 8.75% Notes held by any number of deceased
holders thereof in any one calendar year period.

                 As provided in, and in the manner and upon the conditions
prescribed in, Section 8.01(d) of the Indenture, as hereby modified, an "Event
of Default," whenever used in such Indenture, as hereby modified, with respect
to the 8.75% Notes, shall include the occurrence of an event of default as
defined in any mortgage, indenture or other debt instrument or instruments
securing or evidencing an indebtedness of the Company or its Subsidiaries which
results in indebtedness in excess of $20,000,000 being accelerated.  In
addition, an "Event of Default," whenever used in the Indenture, as hereby
modified, with respect to the 8.75% Notes, shall mean, in addition to the other
"Events of Default" set forth in Section 8.01 of the Indenture, as hereby
modified, the failure of the Company to maintain at all times a consolidated
stockholders' equity of at least $400,000,000.

                 The 8.75% of Notes shall, from time to time, be executed on
behalf of the Company, and sealed with the corporate seal of the Company, in
the manner provided in Section 3.04 of the Indenture.

                                  ARTICLE TWO

                 SECTION 1.  Article Five of the Indenture is hereby amended by
striking out the word "{RESERVED}" and by inserting, in lieu thereof, the
following:

                     "AUTHENTICATION AND DELIVERY OF NOTES

                 SECTION 5.01.  Authentication and delivery.  At any time or
         from time to time after the execution and delivery of this Indenture,
         the Company may deliver Notes of any series executed by the Company to
         the Trustee for authentication, together with a Company Order (as
         hereinafter defined) for the authentication and delivery of such
         Notes; and the Trustee in accordance with such Company Order shall
         authenticate and





                                      -7-
<PAGE>   9
         make available for delivery such Notes.  Whenever requesting the
         authentication and delivery of Notes of a particular series under this
         Section 5.01, the Company shall file with the Trustee:

                          (a) A Board Resolution of the Company authorizing the
                 execution and requesting the authentication and delivery of
                 the Notes of such series applied for in the principal amount
                 therein specified, authorizing and designating such Notes and
                 specifying the officer or officers of the Company to whom or
                 upon whose order such Notes shall be delivered;

                          (b)     An executed supplemental indenture;

                          (c)     An Officers Certificate delivered in
                 accordance with Sections 12.05 and 16.05; and

                          (d)     An Opinion of Counsel stating as to the
                 matters set forth in Sections 12.05 and 16.05 and further
                 stating that:

                                  (i)      The issuance of such Notes and the
                          execution and delivery of the supplemental indenture
                          pertaining thereto have been duly authorized by all
                          requisite corporate action on the part of the
                          Company;

                                  (ii)     The supplemental indenture providing
                          for the issuance of such Notes has been duly
                          executed, acknowledged and delivered by the Company
                          to the Trustee and is the valid and binding
                          obligation of the Company, enforceable against it in
                          accordance with its terms, except as such may be
                          limited by bankruptcy, insolvency, fraudulent
                          transfer, reorganization, moratorium and similar laws
                          of general applicability relating to or affecting the
                          enforcement of creditors' rights generally, and to
                          general equitable principles; and

                                  (iii)    Such Notes, when authenticated and
                          delivered by the Trustee and issued by the Company in
                          the manner and subject to the conditions specified in
                          such Opinion of Counsel, will constitute valid and
                          legally binding obligations of the Company,
                          enforceable against it in accordance with their
                          terms, except as such may be limited by bankruptcy,
                          insolvency, fraudulent transfer, reorganization,
                          moratorium and similar laws of general applicability
                          relating to or affecting the enforcement of
                          creditors' rights generally, and to general equitable
                          principles.

                 Notwithstanding the provisions of this Section 5.01, if all
         Notes of a series are not to be originally issued at one time, it
         shall not be necessary to deliver the Officers' Certificate or the
         Company Order and Opinion of Counsel otherwise required pursuant to
         this Section 5.01 at or prior to the time of authentication of each
         Note of such series if such documents are delivered at or prior to the
         time of authentication upon original issuance of the first Note of
         such series to be issued.





                                      -8-
<PAGE>   10
                 For purposes of this Section 5.01, a "Company Order" shall
         mean a written order signed in the name of the Company by its Chairman
         of the Board, President or any Vice President and by its Chief
         Financial Officer, Treasurer, an Assistant Treasurer, Secretary or an
         Assistant Secretary, and delivered to the Trustee."

                 SECTION 2.       Section 7.03 of the Indenture is hereby
amended and expanded by adding thereto a new subsection to be known as Section
7.03(d) and to read as follows:

                 "(d)  The Company covenants and agrees to transmit, or cause
         the Trustee to transmit, to the holders of the Notes designated as
         8.75% Notes Due 2003 within thirty days after the filing thereof with
         the Trustee, in the manner and to the extent provided in subsection
         (c) of Section 7.04, the reports required to be filed with the Trustee
         pursuant to subsections (a) and (b) of this Section 7.03; provided,
         that the Company may transmit, or cause the Trustee to transmit, to
         such Noteholders, (i) in lieu of the Company's Forms 10-K and 10-Q,
         annual and quarterly reports to shareholders of the Company containing
         statements of financial condition and operations for such periods and
         an undertaking to transmit such Form 10-K or 10-Q, as the case may be,
         to any Noteholder entitled thereto requesting the same, and (ii) in
         lieu of any Company Form 8-K, a notice briefly describing the event
         which is the subject of such Form 8-K and an undertaking to transmit
         such Form 8-K to any Noteholder entitled thereto requesting the same."

                 SECTION 3.       From and after the effective time of the
foregoing amendments to the Indenture, the Table of Contents and all provisions
of the Indenture inconsistent with such amendments shall be modified to the
extent necessary to accord with the provisions of such amendments.

                                 ARTICLE THREE

                 SECTION 1.       The provisions of this supplemental indenture
shall become and be effective from and after the execution hereof; and the
Indenture, as hereby amended, shall remain in full force and effect.

                 SECTION 2.       Each reference in the Indenture or in this
supplemental indenture to any article, section, term or provision of the
Indenture shall mean and be deemed to refer to such article, section, term or
provision of the Indenture, as amended by this supplemental indenture, except
where the context otherwise indicates.

                 SECTION 3.       All the covenants, provisions, stipulations
and agreements in this supplemental indenture contained are and shall be for
the sole and exclusive benefit of the parties hereto, their successors and
assigns, and of the holders and registered owners from time to time of the
bonds and of the coupons issued and outstanding from time to time under and
secured by the Indenture, as hereby amended.

                 This supplemental indenture may be simultaneously executed in
any number of counterparts and all said counterparts executed and delivered,
each as an original, shall constitute but one and the same instrument.





                                      -9-
<PAGE>   11
                 IN WITNESS WHEREOF, BEVERLY ENTERPRISES, INC. has caused this
instrument to be executed in its corporate name by its Chairman of the Board,
its President or one of its Vice Presidents, and its corporate seal to be
hereunto affixed, and the same to be attested and countersigned by one of its
Vice Presidents, its Secretary or one of its Assistant Secretaries; and
BOATMEN'S TRUST COMPANY, for the purpose of entering into and joining with the
Company in the execution of this supplemental indenture, has caused this
instrument to be executed in its corporate name by its President, one of its
Vice Presidents or one of its Assistant Vice Presidents, and its corporate seal
to be hereunto affixed, and the same to be attested and countersigned by its
Secretary or one of its Assistant Secretaries, in counterparts, all as of the
day and year first above written.

                                           BEVERLY ENTERPRISES, INC.


                                           By:    /s/ ROBERT W. POMMERVILLE
                                           Name:  Robert W. Pommerville
                                           Title: Senior Vice President,
                                                   General Counsel & Secretary

ATTEST AND COUNTERSIGNED:


By:    /s/ JOHN W. MACKENZIE                                    (CORPORATE SEAL)
Name:  John W. MacKenzie
Title: Assistant Secretary

                                           BOATMEN'S TRUST COMPANY



                                           By:    /s/ KATHLEEN A. LEACH
                                           Name:  Kathleen A. Leach
                                           Title: Assistant Vice President

ATTEST AND COUNTERSIGNED:


By:    /s/ CYNTHIA S. PILGRIM                                   (CORPORATE SEAL)
Name:  Cynthia S. Pilgrim
Title: Assistant Secretary





                                      -10-
<PAGE>   12
STATE OF ARKANSAS         )
                          )       SS.
COUNTY OF SEBASTAN        )


                 Personally came before me, this 30th day of December, 1993,
Robert W. Pommerville and John W. MacKenzie, the Senior Vice President, General
Counsel and Secretary and an Assistant Secretary, respectively, of the
within-named Beverly Enterprises, Inc., a corporation organized under the laws
of the State of Delaware, to me known to be the persons who executed the
foregoing instrument as such Robert W.  Pommerville and John W. MacKenzie and
to me known to be such Senior Vice President, General Counsel and Secretary and
Assistant Secretary of said corporation, and acknowledged that they executed
the foregoing instrument as such officers of such corporation by its authority.


                                            /s/ LYNDA F. HAYES
                                            Notary Public, Sebastan County,
                                            Arkansas
                                            My commission expires: April 1, 2001


                                                                 (NOTARIAL SEAL)





                                      -11-
<PAGE>   13
STATE OF MISSOURI         )
                          )       SS.
COUNTY OF JACKSON         )


                 Personally came before me, this 30th day of December, 1993,
Kathleen A. Leach and Cynthia S. Pilgrim, an Assistant Vice President and an
Assistant Secretary, respectively, of the within-named Boatmen's Trust Company,
a Missouri trust company, to me known to be the persons who executed the
foregoing instrument as such Kathleen A. Leach and Cynthia S. Pilgrim and to me
known to be such Assistant Vice President and Assistant Secretary of said
corporation, and acknowledged that they executed the foregoing instrument as
such officers of such corporation by its authority.



                                       /s/ PAULA G. CLARKIN
                                       Notary Public, Jackson County,
                                       Missouri
                                       My commission expires: September 20, 1996


                                                                 (NOTARIAL SEAL)





                                      -12-


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