<PAGE> 1
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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
___ SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1994
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________ TO __________
COMMISSION FILE NUMBER 1-9550
BEVERLY ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4100309
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SOUTH WALDRON ROAD, NO. 155
FORT SMITH, ARKANSAS 72903
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (501) 452-6712
INDICATE BY CHECK MARK WHETHER REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
___ ___
SHARES OF REGISTRANT'S COMMON STOCK, $.10 PAR VALUE, OUTSTANDING,
EXCLUSIVE OF TREASURY SHARES, AT JULY 29, 1994 -- 83,110,802
==============================================================================
______________________________________________________________________________
<PAGE> 2
BEVERLY ENTERPRISES, INC.
FORM 10-Q
JUNE 30, 1994
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Income . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 8
Part II -- Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
1
<PAGE> 3
PART I
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1994 AND DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 75,182 $ 73,773
Accounts receivable-patient, less allowance for doubtful accounts:
1994 - $20,068; 1993 - $19,561 . . . . . . . . . . . . . . . . . . . 356,332 340,249
Accounts receivable-nonpatient, less allowance for doubtful accounts:
1994 - $283; 1993 - $343 . . . . . . . . . . . . . . . . . . . . . . 6,162 6,329
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,882 4,617
Operating supplies . . . . . . . . . . . . . . . . . . . . . . . . . . 61,571 62,915
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 25,674 27,050
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . 38,213 33,817
---------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 567,016 548,750
Property and equipment, net of accumulated depreciation and amortization:
1994 - $564,087; 1993 - $544,611 . . . . . . . . . . . . . . . . . . 1,181,869 1,153,370
Other assets:
Notes receivable, less allowance for doubtful notes:
1994 - $9,865; 1993 - $10,440 . . . . . . . . . . . . . . . . . . . . 41,232 41,689
Designated and restricted funds . . . . . . . . . . . . . . . . . . . . 40,274 44,948
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,347 72,209
Operating and leasehold rights and licenses, net . . . . . . . . . . . 24,312 25,819
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,848 106,745
---------- -----------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . 289,013 291,410
---------- -----------
$2,037,898 $ 1,993,530
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124,709 $ 119,212
Accrued wages and related liabilities . . . . . . . . . . . . . . . . . 124,525 126,909
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,715 9,519
Accrued restructuring costs . . . . . . . . . . . . . . . . . . . . . . 17,402 34,310
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . 69,886 63,433
Current portion of long-term obligations . . . . . . . . . . . . . . . 41,631 42,873
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . 3,589 625
---------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 391,457 396,881
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 712,893 706,695
Deferred income taxes payable . . . . . . . . . . . . . . . . . . . . . . 70,641 72,765
Other liabilities and deferred items . . . . . . . . . . . . . . . . . . 78,649 78,180
Commitments and contingencies
Stockholders' equity:
Preferred stock:
Series B, shares issued and outstanding: 3,000,000 . . . . . . . . . 150,000 150,000
Series A, shares issued and outstanding: 999,999 . . . . . . . . . . -- 100,000
Funds designated for the redemption of Series A preferred stock . . . -- (100,000)
Common stock, shares issued:
1994 - 87,081,560; 1993 - 85,845,400 . . . . . . . . . . . . . . . . 8,708 8,585
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . 592,459 578,239
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,226 42,320
Treasury stock, at cost: 3,977,800 shares . . . . . . . . . . . . . . . (40,135) (40,135)
---------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . 784,258 739,009
---------- -----------
$2,037,898 $ 1,993,530
========== ===========
</TABLE>
See accompanying notes.
2
<PAGE> 4
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net operating revenues . . . . . . . . . . . . . . . . . $719,030 $ 714,440 $ 1,431,218 $1,405,657
Interest income . . . . . . . . . . . . . . . . . . . . . 3,623 3,722 7,330 7,030
-------- --------- ----------- ----------
Total revenues . . . . . . . . . . . . . . . . . . 722,653 718,162 1,438,548 1,412,687
Costs and expenses:
Operating and administrative:
Wages and related . . . . . . . . . . . . . . . . . . 386,662 392,680 771,778 778,123
Other . . . . . . . . . . . . . . . . . . . . . . . . 270,713 265,927 541,351 522,158
Interest . . . . . . . . . . . . . . . . . . . . . . . 14,544 16,303 28,995 32,565
Depreciation and amortization . . . . . . . . . . . . . 21,513 21,556 44,139 42,687
-------- --------- ----------- ----------
Total costs and expenses . . . . . . . . . . . . . 693,432 696,466 1,386,263 1,375,533
-------- --------- ----------- ----------
Income before provision for income taxes . . . . . . . . 29,221 21,696 52,285 37,154
Provision for income taxes . . . . . . . . . . . . . . . 9,643 7,160 17,254 12,261
-------- --------- ----------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 19,578 $ 14,536 $ 35,031 $ 24,893
======== ========= =========== ==========
Net income per share of common stock:
Primary . . . . . . . . . . . . . . . . . . . . . . . . $ .21 $ .18 $ .37 $ .31
======== ========= =========== ==========
Fully diluted . . . . . . . . . . . . . . . . . . . . . $ .20 $ .17 $ .37 $ .30
======== ========= =========== ==========
Shares used to compute net income per share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . 84,521 81,299 84,444 81,308
======== ========= =========== ==========
Fully diluted . . . . . . . . . . . . . . . . . . . . . 95,774 88,481 84,443 88,465
======== ========= =========== ==========
</TABLE>
Primary earnings per share for the three-month and six-month periods
ended June 30, 1994 and fully diluted earnings per share for the six-month
period ended June 30, 1994 were computed by dividing net income, after
deduction of preferred stock dividends, by the weighted average number of
shares of common stock outstanding during the period and the weighted average
number of shares issuable upon exercise of stock options, calculated using the
treasury stock method. For fully diluted earnings per share, conversion of the
Company's Series B preferred stock (as defined herein), 7.625% convertible
subordinated debentures and zero coupon notes would have an anti-dilutive
effect for such periods and, therefore, were not assumed. Fully diluted
earnings per share for the three-month period ended June 30, 1994 was computed
by dividing net income by the weighted average number of shares of common stock
outstanding during the period, the weighted average number of shares issuable
upon exercise of stock options, calculated using the treasury stock method, and
the assumed conversion of the Company's Series B preferred stock. Conversion
of the Company's 7.625% convertible subordinated debentures and zero coupon
notes would have an anti-dilutive effect and, therefore, were not assumed.
Primary earnings per share for the three-month and six-month periods
ended June 30, 1993 were computed by dividing net income by the weighted
average number of shares of common stock and dilutive common stock equivalents
outstanding during the period. Common stock equivalents included the Company's
Series A preferred stock (as defined herein) and the weighted average number of
shares issuable upon exercise of stock options, calculated using the treasury
stock method. Fully diluted earnings per share for the three-month and
six-month periods ended June 30, 1993 were computed as above and assumed
conversion of the Company's 9% convertible subordinated debentures. Conversion
of the Company's 7.625% convertible subordinated debentures and zero coupon
notes would have an anti-dilutive effect and, therefore, were not assumed.
See accompanying notes.
3
<PAGE> 5
BEVERLY ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 35,031 $ 24,893
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 44,139 42,687
Provision for reserves and discounts on patient, notes
and other receivables, net . . . . . . . . . . . . . . . . . 6,483 9,261
Gains on dispositions of facilities, net . . . . . . . . . . . (3,100) (2,037)
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . 833 (1,447)
Net increase (decrease) in insurance reserves . . . . . . . . 198 (9,597)
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable - patient . . . . . . . . . . . . . . (24,358) (16,481)
Operating supplies . . . . . . . . . . . . . . . . . . . . (677) (263)
Prepaid expenses and other receivables . . . . . . . . . . (2,150) (3,777)
Accounts payable and other accrued expenses . . . . . . . 773 (4,088)
Income taxes payable . . . . . . . . . . . . . . . . . . . 1,790 4,684
Other, net . . . . . . . . . . . . . . . . . . . . . . . . (7,502) (4,838)
-------- ---------
Total adjustments . . . . . . . . . . . . . . . . . . 16,429 14,104
-------- ---------
Net cash provided by operating activities . . . . . . 51,460 38,997
Cash flows from investing activities:
Payments for acquisitions, net of cash acquired . . . . . . . . . . (29,113) (18,964)
Proceeds from dispositions of facilities and other assets . . . . . 32,764 5,850
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . (39,199) (40,012)
Construction in progress, net . . . . . . . . . . . . . . . . . . . (13,323) (4,601)
Payments on notes receivable . . . . . . . . . . . . . . . . . . . 5,756 2,193
Other, net . . . . . . . . . . . . . . . . . . . . . . . . (11,599) (5,220)
-------- ---------
Net cash used for investing activities . . . . . . . . (54,714) (60,754)
Cash flows from financing activities:
Proceeds from issuance of long-term obligations . . . . . . . . . . 25,000 41,541
Net borrowings under revolving credit agreement . . . . . . . . . . -- 5,000
Repayments of long-term obligations . . . . . . . . . . . . . . . . (29,374) (32,318)
Proceeds from exercise of stock options . . . . . . . . . . . . . . 13,508 986
Deferred financing costs . . . . . . . . . . . . . . . . . . . . . (3,141) (5,574)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . (4,125) (500)
Proceeds from designated funds, net . . . . . . . . . . . . . . . . 2,795 757
-------- ---------
Net cash provided by financing activities . . . . . . 4,663 9,892
-------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . 1,409 (11,865)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . 73,773 49,597
-------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . $ 75,182 $ 37,732
======== =========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . $ 28,799 $ 31,729
Income taxes (net of refunds) . . . . . . . . . . . . . . . . . . 14,631 8,875
</TABLE>
See accompanying notes.
4
<PAGE> 6
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
(i) The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, and include all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the three-month and six-month periods ended June 30, 1994 and 1993 pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures in these condensed consolidated financial
statements are adequate to make the information presented not misleading.
These condensed consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and the notes
thereto included in the Company's 1993 Annual Report on Form 10-K filed
with the Securities and Exchange Commission. The results of operations for the
three-month and six-month periods ended June 30, 1994 are not necessarily
indicative of the results for a full year. Unless the context indicates
otherwise, the Company means Beverly Enterprises, Inc. and its consolidated
subsidiaries.
Certain prior year amounts have been reclassified to conform with the
1994 presentation.
(ii) The provisions for income taxes for the three-month and
six-month periods ended June 30, 1994 and 1993 are based on estimated annual
tax rates of 33%. The Company's effective tax rate is lower than the federal
statutory rate primarily due to the utilization of certain tax credit
carryforwards, partially offset by the impact of state income taxes. The
provisions for income taxes consist of the following for the three-month and
six-month periods ended June 30 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Federal:
Current . . . . . . . . . . . . . . . . $ 7,054 $ 5,387 $ 13,026 $ 10,126
Deferred . . . . . . . . . . . . . . . 251 38 45 (837)
State:
Current . . . . . . . . . . . . . . . . 2,086 1,311 3,395 2,385
Deferred . . . . . . . . . . . . . . . 252 424 788 587
------- --------- ---------- ---------
$ 9,643 $ 7,160 $ 17,254 $ 12,261
======= ========= ========== =========
</TABLE>
(iii) During the six months ended June 30, 1994, the Company
acquired 10 nursing facilities (1,246 beds), which were previously leased by
the Company, and certain other assets, for approximately $29,163,000 cash,
approximately $9,580,000 assumed and acquired debt and approximately $1,143,000
security and other deposits. Also during such period, the Company sold,
subleased or terminated the leases on 42 nursing facilities (3,735 beds) (11 of
such facilities were included in the 1992 restructuring program discussed
below) and certain other assets for cash proceeds of approximately $33,417,000
and approximately $681,000 notes receivable. The Company recognized pre-tax
losses of approximately $9,000,000 for the 11 facilities included in the 1992
restructuring program. Such losses were included in the $57,000,000 pre-tax
restructuring charge discussed below. The Company recognized pre-tax gains of
approximately $3,000,000 related to the remaining dispositions, which were
primarily included in the Company's operating results for the six months ended
June 30, 1994. The operations of these facilities were immaterial to the
Company's financial position and results of operations.
During the year ended December 31, 1992, the Company recognized a
$57,000,000 pre-tax restructuring charge related to a program to discontinue
the Company's operation of 33 nursing facilities with historically poor
financial performance, and to replace, relocate or sell certain other assets
(the "1992 restructuring program"). This charge included the estimated
operating losses to be incurred by these 33 facilities during the anticipated
period required
5
<PAGE> 7
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
to implement the program. Certain transactions which were reserved as part of
the 1992 restructuring program were not completed by the originally anticipated
one-year implementation period; however, it is anticipated that the remaining
transactions will be substantially completed during 1994. The Company
evaluates the reserves established in connection with the remaining
transactions on a regular basis and believes the current reserves are adequate.
On July 8, 1994, the Company filed a Registration Statement on Form
S-4 with the Securities and Exchange Commission to register 3,099,030 common
shares, all or a portion of which will be used for the acquisition of American
Transitional Hospitals, Inc. ("ATH"), as previously announced. The Company
filed an amendment to such Registration Statement which was declared effective
on August 5, 1994. The stockholders of ATH have until September 1, 1994, to
vote on the transaction. The Company anticipates that the acquisition will be
accounted for as a pooling-of-interests and closing is expected to occur on or
before September 30, 1994. The transaction is subject to the satisfaction of
certain conditions, including receipt of ATH stockholder approvals. The
acquisition of ATH by the Company is not expected to have a material effect on
the Company's financial position or results of operations.
The Company has entered into an agreement to purchase three
institutional pharmacy subsidiaries of Synetic, Inc., through Pharmacy
Corporation of America, a subsidiary of the Company, in exchange for cash of
approximately $107,300,000. The acquisition will be accounted for as a
purchase. Closing is subject to satisfaction of certain conditions, including
receipt of regulatory and Synetic stockholder approvals. The Company has
obtained a financing commitment to complete the transaction. The Synetic
businesses provide pharmaceutical dispensing services in New England and
Indiana to approximately 45,000 patients in various institutions, including
nursing homes, transitional care facilities, correctional facilities and group
homes.
(iv) In May 1994, the Company entered into a $25,000,000 promissory
note (the "Note") which bears interest at the rate of 7.75% per annum. The
Note is due in equal quarterly installments of approximately $708,000,
including principal and interest, beginning in September, 1994, with a balloon
payment due in June, 2001. The Note is secured by a mortgage interest in 11
nursing facilities and a security interest in certain personal property. In
addition, the Company amended certain of its credit agreements during the
second quarter of 1994 to change various restrictive covenants, release certain
collateral and adjust the interest rate calculations.
During 1993, the Company completed the sale of 3,000,000 shares of
$2.75 Cumulative Convertible Exchangeable Preferred Stock (the "Series B
preferred stock") through a public offering. On January 3, 1994, the Company
used approximately $100,000,000 of the net proceeds from such offering to
redeem all of the Company's cumulative convertible preferred stock (the "Series
A preferred stock").
(v) There are various lawsuits and regulatory actions pending
against the Company arising in the normal course of business, some of which
seek punitive damages. The Company does not believe that the ultimate
resolution of these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.
(vi) Effective July 31, 1987, Beverly Enterprises, a California
corporation ("Beverly California"), became a wholly-owned subsidiary of
Beverly Enterprises, Inc., a Delaware corporation ("Beverly Delaware").
Beverly Delaware (the parent) provides financial, administrative and legal
services to Beverly California for which Beverly California is charged
management fees.
6
<PAGE> 8
BEVERLY ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
The following summarized unaudited financial information is being
reported because Beverly California's 7.625% convertible subordinated
debentures due March 2003 and its zero coupon notes (collectively, the "Debt
Securities") and its senior secured notes (the "Senior Secured Notes") are
publicly held. Beverly Delaware is co-obligor of the Debt Securities and
guarantor of the Senior Secured Notes. Summary unaudited financial information
for Beverly California is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenues . . . . . . . . . . . . . . . . . $722,934 $ 718,519 $ 1,439,082 $ 1,413,337
Total costs and expenses . . . . . . . . . . . . 693,706 696,832 1,386,839 1,376,267
Net income . . . . . . . . . . . . . . . . . . . 19,583 14,530 35,003 24,837
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 1994 DECEMBER 31, 1993
------------- -----------------
<S> <C> <C>
Current assets . . . . . . . . . . . . . . . . . $ 490,445 $ 468,441
Long-term assets . . . . . . . . . . . . . . . . 1,503,606 1,483,400
Current liabilities . . . . . . . . . . . . . . . 388,689 392,244
Long-term liabilities . . . . . . . . . . . . . . 849,435 838,673
</TABLE>
In addition to Beverly Delaware, one of its direct wholly-owned
subsidiaries and each of Beverly California's material wholly-owned
subsidiaries (collectively, the "Subsidiary Guarantors") have guaranteed the
obligations of Beverly California under the Senior Secured Notes. Separate
financial statements of Beverly California and the Subsidiary Guarantors are
not considered to be material to holders of the Senior Secured Notes since the
guaranty of each of the Subsidiary Guarantors is joint and several and full and
unconditional (except that liability thereunder is limited to an aggregate
amount equal to the largest amount that would not render its obligations
thereunder subject to avoidance under Section 548 of the Bankruptcy Code of
1978, as amended, or any comparable provisions of applicable state law), and
the aggregate net assets, earnings and equity of the Subsidiary Guarantors and
Beverly California together, after adjustment for intercompany management fees,
are substantially equivalent to the net assets, earnings and equity of Beverly
Delaware on a consolidated basis.
7
<PAGE> 9
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1994
(UNAUDITED)
OPERATING RESULTS
SECOND QUARTER 1994 COMPARED TO SECOND QUARTER 1993
Net income was $19,578,000 for the three months ended June 30, 1994, as
compared to net income of $14,536,000 for the same period in 1993. Net
operating revenues increased approximately $4,600,000 for the three months
ended June 30, 1994, as compared to the same period in 1993. This increase
consists of the following: increases of approximately $51,200,000 for
facilities which the Company operated during each of the three-month periods
ended June 30, 1994 and 1993 ("same facility operations"); increases of
approximately $2,100,000 due to the acquisition of three facilities in 1993;
offset by decreases of approximately $48,700,000 due to the disposition of, or
lease terminations on, 42 facilities in 1994 and 43 facilities in 1993.
Operating and administrative costs decreased approximately $1,200,000 for the
three months ended June 30, 1994, as compared to the same period in 1993. This
decrease consists of the following: decreases of approximately $43,100,000 due
to the disposition of, or lease terminations on, 42 facilities in 1994 and 43
facilities in 1993; offset by increases of approximately $39,900,000 for same
facility operations and approximately $2,000,000 due to the acquisition of
three facilities in 1993.
The increase in net operating revenues for same facility operations
for the three months ended June 30, 1994, as compared to the same period in
1993, was due to the following: approximately $24,100,000 due to increased
ancillary revenues as a result of providing additional ancillary services to
the Company's Medicare and private-pay patients; approximately $26,700,000 due
primarily to increases in Medicaid room and board rates, and to a lesser
extent, private and Medicare room and board rates; and approximately
$6,200,000 due to increases in pharmacy revenues and various other items.
These increases in net operating revenues were partially offset by
approximately $5,800,000 due to a decrease in same facility occupancy to 88.5%
for the three months ended June 30, 1994, as compared to 89.5% for the same
period in 1993.
The increase in operating and administrative costs for same facility
operations for the three months ended June 30, 1994, as compared to the same
period in 1993, was due to the following: approximately $18,700,000 due to
increased wages and related expenses principally due to higher wages and
greater benefits intended to attract and retain qualified personnel, the hiring
of therapists on staff as opposed to contracting for their services, and
increased staffing levels in the Company's nursing facilities to cover
increased patient acuity; approximately $17,800,000 due to additional ancillary
costs (excluding wages and related expenses) associated with the increase in
ancillary services provided to the Company's Medicare and private-pay patients;
and approximately $3,400,000 due primarily to increases in pharmacy-related
costs and various other items.
Ancillary revenues are derived from providing services to residents
beyond room and board care. These services include occupational, physical,
speech, respiratory and IV therapy, as well as, sales of pharmaceutical
products and other services. The Company's overall ancillary revenues for the
three months ended June 30, 1994 were $175,997,000 and represented 24.5% of net
operating revenues, as compared to $153,705,000 of ancillary revenues for the
same period in 1993 which represented 21.5% of net operating revenues for the
three months ended June 30, 1993. Although the Company is pursuing further
growth of ancillary revenues through expansion of specialty services, such as
rehabilitation and sub-acute care, there can be no assurance that such growth
will continue. Growth in ancillary revenues, as well as increases in Medicare
census, have also resulted in higher costs for the Company due to higher acuity
services being provided to these patients. The Company's overall ancillary
costs, excluding wages and related expenses, were $96,230,000 for the three
months ended June 30, 1994, compared to $85,164,000 for the same period in
1993.
8
<PAGE> 10
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
Interest expense decreased approximately $1,800,000 as compared to the
same period in 1993 primarily due to the repayment of approximately $45,000,000
of debt with a portion of the proceeds from issuance of the Series B preferred
stock (as defined herein) and the conversion of approximately $46,000,000 in
principal amount of the Company's 9% convertible subordinated debentures into
common stock. Such transactions were completed during the third quarter of
1993.
SIX MONTHS 1994 COMPARED TO SIX MONTHS 1993
Net income was $35,031,000 for the six months ended June 30, 1994, as
compared to net income of $24,893,000 for the same period in 1993. Net
operating revenues and operating and administrative costs increased
approximately $25,600,000 and $12,800,000, respectively, for the six months
ended June 30, 1994, as compared to the same period in 1993. These increases
consist of the following: increases in net operating revenues and operating
and administrative costs for facilities which the Company operated during each
of the six-month periods ended June 30, 1994 and 1993 ("same facility
operations") of approximately $110,600,000 and $91,600,000, respectively;
increases in net operating revenues and operating and administrative costs of
approximately $4,600,000 and $4,200,000, respectively, due to the acquisition
of three facilities in 1993; and decreases in net operating revenues and
operating and administrative costs of approximately $89,600,000 and
$83,000,000, respectively, due to the disposition of, or lease terminations on,
42 facilities in 1994 and 43 facilities in 1993.
The increase in net operating revenues for same facility operations
for the six months ended June 30, 1994, as compared to the same period in 1993,
was due to the following: approximately $54,600,000 due to increased ancillary
revenues as a result of providing additional ancillary services to the
Company's Medicare and private-pay patients; approximately $53,200,000 due
primarily to increases in Medicaid room and board rates, and to a lesser
extent, private and Medicare room and board rates; approximately $3,700,000 due
to a shift in the Company's patient mix to a higher Medicare census; and
approximately $11,400,000 due to increases in pharmacy revenues and various
other items. The Company's Medicare, private and Medicaid census for same
facility operations was 12%, 19%, and 68%, respectively, for the six months
ended June 30, 1994, as compared to 11%, 19%, and 69%, respectively, for the
same period in 1993. These increases in net operating revenues were partially
offset by approximately $12,300,000 due to a decrease in same facility
occupancy to 88.5% for the six months ended June 30, 1994, as compared to 89.6%
for the same period in 1993.
The increase in operating and administrative costs for same facility
operations for the six months ended June 30, 1994, as compared to the same
period in 1993, was due to the following: approximately $39,900,000 due to
increased wages and related expenses principally due to higher wages and
greater benefits intended to attract and retain qualified personnel, the hiring
of therapists on staff as opposed to contracting for their services, and
increased staffing levels in the Company's nursing facilities to cover
increased patient acuity; approximately $43,700,000 due to additional
ancillary costs (excluding wages and related expenses) associated with the
increase in ancillary services provided to the Company's Medicare and
private-pay patients; and approximately $8,000,000 due primarily to increases
in pharmacy-related costs and various other items.
The Company's overall ancillary revenues for the six months ended June
30, 1994 were $346,190,000 and represented 24.2% of net operating revenues, as
compared to ancillary revenues of $295,042,000 for the same period in 1993
which represented 21.0% of net operating revenues for the six months ended June
30, 1993. The Company's overall ancillary costs, excluding wages and related
expenses, were $191,701,000 for the six months ended June 30, 1994, compared to
$162,848,000 for the same period in 1993.
Interest expense decreased approximately $3,600,000 as compared to the
same period in 1993 primarily due to the repayment of approximately $45,000,000
of debt with a portion of the proceeds from issuance of the Series B preferred
9
<PAGE> 11
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
stock (as defined herein) and the conversion of approximately $46,000,000 in
principal amount of the Company's 9% convertible subordinated debentures into
common stock. Such transactions were completed during the third quarter of
1993. Depreciation and amortization expense increased approximately $1,500,000
as compared to the same period in 1993 primarily due to the acquisition of
previously-leased nursing facilities, partially offset by a decrease due to the
disposition of or lease terminations on certain nursing facilities.
The Company's future operating performance will continue to be
affected by the issues facing the long-term health care industry as a whole,
including the maintenance of occupancy, the availability of nursing personnel,
the adequacy of funding of governmental reimbursement programs, the demand for
nursing home care and the nature of any health care reform measures that may be
taken by the federal government, as discussed below, as well as by any state
governments. The Company's ability to control costs, including its wages and
related expenses which continue to rise and represent the largest component of
the Company's operating and administrative expenses, will also significantly
impact its future operating results.
As a general matter, increases in the Company's operating costs result
in higher patient rates under Medicaid programs in subsequent periods.
However, the Company's results of operations will continue to be affected by
the time lag in most states between the increases in reimbursable costs and the
receipt of related reimbursement rate increases. Medicaid rate increases,
adjusted for inflation, are generally based upon changes in costs for a full
calendar year period. The time lag before such costs are reflected in
permitted rates varies from state to state, with a substantial portion of the
increases taking effect up to 18 months after the related cost increases.
The Clinton Administration is actively pursuing reform of the health
care system. The White House Task Force on Health Care Reform studied the
issue of health care reform and presented its report and recommendations to
the Administration. The Administration proposed health care reform legislation
to Congress in October 1993 and other proposed health care reform legislation
is being debated and formulated. Among the proposals under consideration are
insurance market reforms to increase the availability of group health insurance
to small businesses, requirements that all businesses offer health insurance
coverage to their employees and the creation of a single governmental health
insurance plan that would cover all citizens. These proposals and industry and
other groups' recommendations will likely impact the form and content of any
future health care reform legislation. As a result, the Company is unable to
predict the type of legislation or regulations that may be adopted or the
impact, if any, on the Company. There can be no assurance that any health care
reform will not adversely affect the Company's financial position or results of
operations.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1994, the Company had approximately $75,182,000 in cash
and cash equivalents and net working capital of approximately $175,559,000.
The Company anticipates that approximately $23,645,000 of its existing cash at
June 30, 1994, while not legally restricted, will be utilized for funding
insurance claims, and the Company does not expect to use such cash for other
purposes. The Company has $50,000,000 of unused commitments under its
revolving credit agreement and $15,000,000 of unused commitments under its
commercial paper program as of June 30, 1994.
Net cash provided by operating activities for the six months ended
June 30, 1994 was approximately $51,460,000, an increase of approximately
$12,463,000 from the prior year due primarily to an improvement in the
Company's operations and various other items. Net cash used for investing
activities was approximately $54,714,000 and net cash provided by financing
activities was approximately $4,663,000 for the six months ended June 30, 1994.
The Company primarily used cash generated from operations to fund capital
expenditures and construction totaling approximately $52,522,000. The Company
received cash proceeds of approximately $31,000,000 from the sale or sublease
of 28 nursing facilities in the state of Texas, and received $12,000,000 in
cash proceeds from the exercise of an option grant
10
<PAGE> 12
BEVERLY ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
for 1,000,000 common shares at $12.00 per share. In addition, the Company
issued approximately $25,000,000 in long-term obligations. A portion of such
proceeds was used to repay approximately $29,374,000 of long-term obligations
and to fund acquisitions of approximately $29,113,000. In April 1994, the
Company filed a Registration Statement on Form S-3 with the Securities and
Exchange Commission to register the 1,000,000 common shares purchased under the
option grant. This did not result in any additional proceeds to the Company.
On July 8, 1994, the Company filed a Registration Statement on Form
S-4 with the Securities and Exchange Commission to register 3,099,030 common
shares, all or a portion of which will be used for the acquisition of American
Transitional Hospitals, Inc. ("ATH"), as previously announced. The Company
filed an amendment to such Registration Statement which was declared effective
on August 5, 1994. The stockholders of ATH have until September 1, 1994, to
vote on the transaction. The Company anticipates that the acquisition will be
accounted for as a pooling-of-interests and closing is expected to occur on or
before September 30, 1994. The transaction is subject to the satisfaction of
certain conditions, including receipt of ATH stockholder approvals. The
acquisition of ATH by the Company is not expected to have a material effect on
the Company's financial position or results of operations.
The Company has entered into an agreement to purchase three
institutional pharmacy subsidiaries of Synetic, Inc., through Pharmacy
Corporation of America, a subsidiary of the Company, in exchange for cash of
approximately $107,300,000. The acquisition will be accounted for as a
purchase. Closing is subject to satisfaction of certain conditions, including
receipt of regulatory and Synetic stockholder approvals. The Company has
obtained a financing commitment to complete the transaction. The Synetic
businesses provide pharmaceutical dispensing services in New England and
Indiana to approximately 45,000 patients in various institutions, including
nursing homes, transitional care facilities, correctional facilities and group
homes.
In May 1994, the Company entered into a $25,000,000 promissory note
(the "Note") which bears interest at the rate of 7.75% per annum. The Note is
due in equal quarterly installments of approximately $708,000, including
principal and interest, beginning in September, 1994, with a balloon payment
due in June, 2001. In addition, the Company amended certain of its credit
agreements during the second quarter of 1994 to change various restrictive
covenants, release certain collateral and adjust the interest rate
calculations.
During 1993, the Company completed the sale of 3,000,000 shares of
$2.75 Cumulative Convertible Exchangeable Preferred Stock (the "Series B
preferred stock") through a public offering. On January 3, 1994, the Company
used approximately $100,000,000 of the net proceeds from such offering to
redeem all of the Company's cumulative convertible preferred stock (the "Series
A preferred stock"). The Series A preferred stock dividend rate was scheduled
to increase from 1% to 10% on January 1, 1994.
The Company believes that its existing cash and cash equivalents,
working capital from operations, borrowings under its banking arrangements and
commercial paper program, proceeds from issuance of certain debt securities and
refinancings of certain existing indebtedness will be adequate to repay its
debts due within one year of approximately $41,631,000, to make normal
recurring capital additions and improvements for the twelve months ending June
30, 1995 of approximately $100,000,000, to make selective acquisitions,
including the purchase of previously-leased facilities, and to meet working
capital requirements.
11
<PAGE> 13
PART II
BEVERLY ENTERPRISES, INC.
OTHER INFORMATION
JUNE 30, 1994
(UNAUDITED)
ITEM 1. LEGAL PROCEEDINGS
There are various lawsuits and regulatory actions pending against the
Company arising in the normal course of business, some of which seek punitive
damages. The Company does not believe that the ultimate resolution of these
matters will have a material adverse effect on the Company's consolidated
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 19, 1994, the Company held its Annual Meeting of Stockholders
in Fort Smith, Arkansas, for the purposes of electing seven members of the
Board of Directors, considering Amendment No. 1 to the Beverly Enterprises,
Inc. 1993 Long-Term Incentive Stock Plan, considering the Beverly Enterprises,
Inc. Annual Incentive Plan, considering the Beverly Enterprises, Inc.
Non-Employee Directors' Stock Option Plan, ratifying the appointment of Ernst &
Young as independent auditors for 1994, considering an Independent
Stockholders' Resolution recommending the preparation of a special report to
stockholders on patient care related lawsuits filed against the Company and the
issuance of instructions to legal counsel to refrain from sealing court
settlements involving the Company, and transacting such other business as may
have properly come before the meeting or any adjournment thereof.
The following table sets forth the directors elected at such meeting
and the number of votes cast for and withheld for each director:
<TABLE>
<CAPTION>
DIRECTOR FOR WITHHELD
-------- --- --------
<S> <C> <C>
Beryl F. Anthony, Jr. . . . . . . . 50,528,871 376,511
David R. Banks . . . . . . . . . . 50,533,638 371,744
Curt F. Bradbury . . . . . . . . . 50,552,399 352,983
James R. Greene . . . . . . . . . . 50,552,905 382,477
Jon E. M. Jacoby . . . . . . . . . 50,516,449 388,933
Louis W. Menk . . . . . . . . . . . 50,485,563 419,819
Will K. Weinstein . . . . . . . . . 50,535,540 369,842
</TABLE>
Amendment No. 1 to the Beverly Enterprises, Inc. 1993 Long-Term
Incentive Stock Plan was approved at the meeting. The following table sets
forth the number of votes for and against, as well as abstentions as to this
matter:
<TABLE>
<S> <C>
For . . . . . . . . . . 51,689,078
Against . . . . . . . . 2,953,809
Abstentions . . . . . . 434,031
</TABLE>
The Beverly Enterprises, Inc. Annual Incentive Plan was approved at
the meeting. The following table sets forth the number of votes for and
against, as well as abstentions as to this matter:
<TABLE>
<S> <C>
For . . . . . . . . . . 48,973,739
Against . . . . . . . . 5,661,042
Abstentions . . . . . . 465,132
</TABLE>
12
<PAGE> 14
BEVERLY ENTERPRISES, INC.
OTHER INFORMATION (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
The Beverly Enterprises, Inc. Non-Employee Directors' Stock Option
Plan was approved at the meeting. The following table sets forth the number of
votes for and against, as well as abstentions as to this matter:
<TABLE>
<S> <C>
For . . . . . . . . . . 52,182,878
Against . . . . . . . . 2,429,830
Abstentions . . . . . . 488,192
</TABLE>
The appointment of Ernst & Young as independent auditors for 1994 was
ratified at the meeting. The following table sets forth the number of votes
for and against, as well as abstentions as to this matter:
<TABLE>
<S> <C>
For . . . . . . . . . . 54,770,625
Against . . . . . . . . 156,892
Abstentions . . . . . . 146,564
</TABLE>
The Independent Stockholders' Resolution was not approved at the
meeting. The following table sets forth the number of votes for and against,
as well as abstentions as to this matter:
<TABLE>
<S> <C>
For . . . . . . . . . . 3,557,143
Against . . . . . . . . 47,188,450
Abstentions . . . . . . 3,950,219
</TABLE>
ITEM 6(A). EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Indenture dated as of December 27, 1990 (the "Senior Secured Note Indenture"), among Beverly California, Beverly
Enterprises and Yasuda Bank and Trust Company (U.S.A.) with respect to Senior Secured Floating Rate Notes due 1995 and
14 1/4% Senior Secured Fixed Rate Notes due 1997 (incorporated by reference to Exhibit 4.1 to the Registration Statement
on Form S-4 of Beverly California, Beverly Enterprises and the Registrants set forth on the Table of Additional Co-
Registrants filed on February 8, 1991 (File No. 33-38954))
4.2 Supplemental Indenture No. 1, dated as of September 20, 1991, to the Senior Secured Note Indenture (incorporated by
reference to Exhibit 4.1 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1991)
4.3 Supplemental Indenture No. 2, dated as of September 26, 1991, to the Senior Secured Note Indenture (incorporated by
reference to Exhibit 4.2 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1991)
4.4 Supplemental Indenture No. 3, dated as of March 11, 1992, to the Senior Secured Note Indenture (incorporated by
reference to Exhibit 4 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
4.5 Supplemental Indenture No. 4, dated as of July 21, 1993, to the Senior Secured Note Indenture (incorporated by reference
to Exhibit 4.5 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.6 Subsidiary Guaranty dated as of December 27, 1990 by Beverly Enterprises, Beverly California and the Subsidiary
Guarantors listed therein (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 of Beverly
California, Beverly Enterprises and the Registrants set forth on the Table of Additional Co-Registrants filed on
February 8, 1991 (File No. 33-38954))
4.7 Subsidiary Guaranty dated as of April 1, 1991 by Beverly Enterprises, Beverly California and the Subsidiary Guarantors
listed therein (incorporated by reference to Exhibit 4.5 to Beverly Enterprises' Annual Report on Form 10-K for the year
ended December 31, 1991)
4.8 Subsidiary Guaranty dated as of October 31, 1991 by Beverly Enterprises, Beverly California and Northshore Rehab
Association, Inc. as Subsidiary Guarantor (incorporated by reference to Exhibit 4.6 to Beverly Enterprises' Annual
Report on Form 10-K for the year ended December 31, 1991)
4.9 Subsidiary Guaranty dated as of December 30, 1991 by Beverly Enterprises, Beverly California and Beverly Indemnity, Inc.
as Subsidiary Guarantor (incorporated by reference to Exhibit 4.7 to Beverly Enterprises' Annual Report on Form 10-K for
the year ended December 31, 1991)
4.10 Indenture dated as of August 1, 1993 between Beverly Enterprises and Chemical Bank, as Trustee with respect to Beverly
Enterprises' 5 1/2% Convertible Subordinated Debentures due August 1, 2018, issuable upon exchange of Beverly
Enterprises' $2.75 Cumulative Convertible Exchangeable Preferred Stock (the "Subordinated Debenture Indenture")
(incorporated by reference to Exhibit 4.10 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993)
4.11 Certificate of Designation, Powers, Preferences and Rights, and the Qualifications, Limitations or Restrictions Thereof,
of the Series of Preferred Stock to be designated $2.75 Cumulative Convertible Exchangeable Preferred Stock of Beverly
Enterprises (the "$2.75 Certificate of Designation") (incorporated by reference to Exhibit 4.12 to Beverly Enterprises'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
4.12 Indenture dated as of April 1, 1993 (the "First Mortgage Bond Indenture"), among Beverly Enterprises, Delaware Trust
Company, as Corporate Trustee, and Richard N. Smith, as Individual Trustee, with respect to First Mortgage Bonds
(incorporated by reference to Exhibit 4.1 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993)
4.13 First Supplemental Indenture dated as of April 1, 1993 to the First Mortgage Bond Indenture, with respect to 8 3/4%
First Mortgage Bonds (Series A) due 2008 (incorporated by reference to Exhibit 4.2 to Beverly Enterprises' Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993)
4.14 Second Supplemental Indenture dated as of July 1, 1993 to the First Mortgage Bond Indenture, with respect to 8 5/8%
First Mortgage Bonds (Series B) due 2008 (replaces Exhibit 4.1 to Beverly Enterprises' Current Report on Form 8-K dated
July 15, 1993)(incorporated by reference to Exhibit 4.15 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993)
4.15 Indenture dated as of December 30, 1993 (the "Notes Indenture"), between Beverly Enterprises, Inc. and Boatmen's Trust
Company, as Trustee, with respect to the Notes (incorporated by reference to Exhibit 4.2 to Beverly Enterprises'
Registration Statement on Form S-3 filed on November 9, 1993 (File No. 33-50965))
4.16 First Supplemental Indenture dated as of December 30, 1993 to the Notes Indenture, with respect to 8.75% Notes due 2003
(incorporated by reference to Exhibit 4.4 to Beverly Enterprises' Current Report on Form 8-K dated January 4, 1994)
In accordance with item 601(b)(4)(iii) of Regulation S-K, certain instruments pertaining to Beverly Enterprises' long-
term obligations have not been filed; copies thereof will be furnished to the Securities and Exchange Commission upon
request.
10.1 * Amended and Restated 1981 Beverly Stock Option Plan (incorporated by reference to Post-Effective Amendment No. 2 on Form
S-8 to Beverly Enterprises' Registration Statement on Form S-4 filed on July 31, 1987 (File No. 33-13243))
10.2 * Amended and Restated 1981 Beverly Incentive Stock Option Plan (incorporated by reference to Post-Effective Amendment No.
2 on Form S-8 to Beverly Enterprises' Registration Statement on Form S-4 filed on July 31, 1987 (File No. 33-13243))
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.3 * 1985 Beverly Nonqualified Stock Option Plan (incorporated by reference to Post-Effective Amendment No. 2 on Form S-8 to
Beverly Enterprises' Registration Statement on Form S-4 filed on July 31, 1987 (File No. 33-13243))
10.4 * Amended and Restated Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan (as amended by Amendment No. 1)
10.5 * Beverly Enterprises, Inc. Annual Incentive Plan (incorporated by reference to Exhibit A to Beverly Enterprises
definitive proxy for the Annual Meeting of Stockholders held May 19, 1994)
10.6 * Retirement Plan for Outside Directors (incorporated by reference to Exhibit 10.5 to Beverly Enterprises' Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993)
10.7 * Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan (incorporated by reference to Exhibit B to Beverly
Enterprises definitive proxy for the Annual Meeting of Stockholders held May 19, 1994)
10.8 * Executive Medical Reimbursement Plan (incorporated by reference to Exhibit 10.5 to Beverly Enterprises' Annual Report on
Form 10-K for the year ended December 31, 1987)
10.9 * Amended and Restated Beverly Enterprises, Inc. Executive Life Insurance Plan and Summary Plan Description (incorporated
by reference to Exhibit 10.7 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1993)
10.10 * Executive Physicals Policy (incorporated by reference to Exhibit 10.8 to Beverly Enterprises' Quarterly Report on Form
10-Q for the quarter ended June 30, 1993)
10.11 * Amended and Restated Deferred Compensation Plan effective July 18, 1991 (incorporated by reference to Exhibit 10.6 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1991)
10.12 * Executive Retirement Plan (incorporated by reference to Exhibit 10.9 to Beverly Enterprises' Annual Report on Form 10-K
for the year ended December 31, 1987)
10.13 * Amendment No. 1, effective as of July 1, 1991, to the Executive Retirement Plan (incorporated by reference to Exhibit
10.8 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1991)
10.14 * Amendment No. 2, effective as of December 12, 1991, to the Executive Retirement Plan (incorporated by reference to
Exhibit 10.9 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1991)
10.15 * Amendment No. 3, effective as of July 31, 1992, to the Executive Retirement Plan (incorporated by reference to Exhibit
10.10 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
10.16 * Form of Indemnification Agreement between Beverly Enterprises and its officers, directors and certain of its employees
(incorporated by reference to Exhibit 19.14 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
June 30, 1987)
10.17 * Form of request by Beverly Enterprises to certain of its officers or directors relating to indemnification rights
(incorporated by reference to Exhibit 19.5 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987)
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.18 * Form of request by Beverly Enterprises to certain of its officers or employees relating to indemnification rights
(incorporated by reference to Exhibit 19.6 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987)
10.19 * Agreement dated December 29, 1986 between Beverly Enterprises and Stephens Inc. (incorporated by reference to Exhibit
10.20 to Beverly Enterprises' Registration Statement on Form S-1 filed on January 18, 1990 (File No. 33-33052))
10.20 * Severance Plan for Corporate and Regional Employees effective December 1, 1989 (incorporated by reference to Exhibit
10.21 to Amendment No. 1 to Beverly Enterprises' Registration Statement on Form S-1 filed on February 26, 1990 (File No.
33-33052))
10.21 * Form of Restricted Stock Performance Agreement dated June 28, 1990 under the 1985 Beverly Nonqualified Stock Option Plan
(incorporated by reference to Exhibit 10.22 to Beverly Enterprises' Registration Statement on Form S-1 filed on July 30,
1990 (File No. 33-36109))
10.22 * Form of Agreement Concerning Benefits Upon Severance dated as of September 1, 1990 between Beverly Enterprises and
certain officers of Beverly Enterprises (incorporated by reference to Exhibit 10.23 to Beverly Enterprises' Registration
Statement on Form S-1 filed on July 30, 1990 (File No. 33-36109))
10.23 * First Amendment to Agreement Concerning Benefits Upon Severance dated as of April 25, 1993 between Beverly Enterprises
and Ronald C. Kayne (incorporated by reference to Exhibit 10.22 to Beverly Enterprises' Annual Report on Form 10-K for
the year ended December 31, 1993)
10.24 * Beverly Enterprises Company Car Policy effective May 1, 1988 (incorporated by reference to Exhibit 10.18 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
10.25 Master Lease Document - General Terms and Conditions dated December 30, 1985 for Leases between Beverly California and
various subsidiaries thereof as lessees and Beverly Investment Properties, Inc. as lessor (incorporated by reference to
Exhibit 10.12 to Beverly California's Annual Report on Form 10-K for the year ended December 31, 1985)
10.26 Agreement dated as of December 29, 1986 among Beverly California, Beverly Enterprises - Texas, Inc., Stephens Inc. and
Real Properties, Inc. (incorporated by reference to Exhibit 28 to Beverly California's Current Report on Form 8-K dated
December 30, 1986) and letter agreement dated as of July 31, 1987 among Beverly Enterprises, Beverly California, Beverly
Enterprises - Texas, Inc. and Stephens Inc. with reference thereto (incorporated by reference to Exhibit 19.13 to
Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended June 30, 1987)
10.27 Credit Agreement, dated as of March 24, 1992, among Beverly Enterprises, Inc., Beverly California Corporation, the
Lenders listed therein, Bank of Montreal as Co-Agent, and The Long Term Credit Bank of Japan, Ltd. Los Angeles Agency
as Agent (the "LTCB Credit Agreement") (incorporated by reference to Exhibit 10.2 to Beverly Enterprises' Quarterly
Report on Form 10-Q for the quarter ended March 31, 1992)
10.28 Amendment No. 1 dated as of April 7, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit 10.3 to
Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.29 Second Amendment dated as of May 11, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit 10.23 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
10.30 Third Amendment dated as of March 1, 1993 to the LTCB Credit Agreement (incorporated by reference to Exhibit 10.24 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.31 Seventh Amendment dated as of May 2, 1994 to the LTCB Credit Agreement
10.32 Master Sale and Servicing Agreement dated as of December 1, 1990 among Beverly Funding Corporation, Beverly California,
the wholly-owned subsidiaries of Beverly Enterprises listed therein, Beverly Enterprises and certain wholly-owned
subsidiaries of Beverly Enterprises which may become parties thereto (incorporated by reference to Exhibit 10.27 to the
Registration Statement on Form S-4 of Beverly California, Beverly Enterprises and the Registrants set forth on the Table
of Additional Co-Registrants filed on February 8, 1991 (File No. 33-38954))
10.33 First Omnibus Amendment to Liquidity Agreement, Depository Agreement, Pledge and Security Agreement and Master Sale and
Servicing Agreement dated as of July 1, 1991 (incorporated by reference to Exhibit 10.1 to Beverly Enterprises'
Quarterly Report on Form 10-Q for the quarter ended September 30, 1991)
10.34 Second Amendment to Master Sale and Servicing Agreement dated as of March 1, 1992 (incorporated by reference to Exhibit
10.4 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.35 Second Omnibus Amendment to Master Sale and Servicing Agreement, Pledge Agreement and Selling Subsidiary Agreements
dated as of September 28, 1992, among Beverly Funding Corporation, Beverly California Corporation, Beverly Enterprises,
Inc., the wholly-owned subsidiaries of Beverly Enterprises, Inc. listed on the signature pages and the Banks listed on
the signature pages (incorporated by reference to Exhibit 10 to Beverly Enterprises' Quarterly Report on Form 10-Q for
the quarter ended September 30, 1992)
10.36 Credit Agreement dated as of March 2, 1993 among Beverly Enterprises, Inc., Beverly California Corporation, the Lenders
listed therein, and the Nippon Credit Bank, Ltd. Los Angeles Agency as Agent (the "Nippon Credit Agreement")
(incorporated by reference to Exhibit 10.29 to Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1992)
10.37 Second Amendment dated as of May 19, 1994 to the Nippon Credit Agreement
10.38 Credit Agreement dated as of March 1, 1993 among Beverly California Corporation, Beverly Enterprises, Inc., the Banks
listed therein, Morgan Guaranty Trust Company of New York as Issuing Bank and Agent (the "Morgan Credit Agreement")
(incorporated by reference to Exhibit 10.30 to Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1992)
10.39 First Amendment dated as of May 3, 1993 to the Morgan Credit Agreement (incorporated by reference to Exhibit 10.34 to
Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1993)
10.40 Second Amendment dated as of September 30, 1993 to the Morgan Credit Agreement (incorporated by reference to Exhibit
10.35 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1993)
10.41 Third Amendment dated as of April 6, 1994 to the Morgan Credit Agreement
10.42 Data Processing Agreement, dated as of August 1, 1992, by and between Systematics Telecommunications Services, Inc. and
Beverly California Corporation (incorporated by reference to Exhibit 10 to Beverly Enterprises' Quarterly Report on Form
10-Q for the quarter ended June 30, 1992)
11.1 Computation of Net Income Per Share
</TABLE>
* Exhibits 10.1 through 10.24 are the management contracts,
compensatory plans, contracts and arrangements in which any
director or named executive officer participates.
17
<PAGE> 19
ITEM 6(B). REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K dated April 7, 1994,
which reported under Item 5 that the Consent of Independent Auditors dated
April 1, 1994 which was filed as Exhibit 23.1 to the Company's Registration
Statement No. 33-53013 had a typographical error, and filed under Item 7 the
corrected Consent of Independent Auditors.
18
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEVERLY ENTERPRISES, INC.
Registrant
Dated: August 11, 1994 By: SCOTT M. TABAKIN
_______________________________
Scott M. Tabakin
Vice President, Controller and
Chief Accounting Officer
19
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Indenture dated as of December 27, 1990 (the "Senior Secured Note Indenture"), among Beverly California, Beverly
Enterprises and Yasuda Bank and Trust Company (U.S.A.) with respect to Senior Secured Floating Rate Notes due 1995 and
14 1/4% Senior Secured Fixed Rate Notes due 1997 (incorporated by reference to Exhibit 4.1 to the Registration Statement
on Form S-4 of Beverly California, Beverly Enterprises and the Registrants set forth on the Table of Additional Co-
Registrants filed on February 8, 1991 (File No. 33-38954))
4.2 Supplemental Indenture No. 1, dated as of September 20, 1991, to the Senior Secured Note Indenture (incorporated by
reference to Exhibit 4.1 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1991)
4.3 Supplemental Indenture No. 2, dated as of September 26, 1991, to the Senior Secured Note Indenture (incorporated by
reference to Exhibit 4.2 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1991)
4.4 Supplemental Indenture No. 3, dated as of March 11, 1992, to the Senior Secured Note Indenture (incorporated by
reference to Exhibit 4 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
4.5 Supplemental Indenture No. 4, dated as of July 21, 1993, to the Senior Secured Note Indenture (incorporated by reference
to Exhibit 4.5 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.6 Subsidiary Guaranty dated as of December 27, 1990 by Beverly Enterprises, Beverly California and the Subsidiary
Guarantors listed therein (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 of Beverly
California, Beverly Enterprises and the Registrants set forth on the Table of Additional Co-Registrants filed on
February 8, 1991 (File No. 33-38954))
4.7 Subsidiary Guaranty dated as of April 1, 1991 by Beverly Enterprises, Beverly California and the Subsidiary Guarantors
listed therein (incorporated by reference to Exhibit 4.5 to Beverly Enterprises' Annual Report on Form 10-K for the year
ended December 31, 1991)
4.8 Subsidiary Guaranty dated as of October 31, 1991 by Beverly Enterprises, Beverly California and Northshore Rehab
Association, Inc. as Subsidiary Guarantor (incorporated by reference to Exhibit 4.6 to Beverly Enterprises' Annual
Report on Form 10-K for the year ended December 31, 1991)
4.9 Subsidiary Guaranty dated as of December 30, 1991 by Beverly Enterprises, Beverly California and Beverly Indemnity, Inc.
as Subsidiary Guarantor (incorporated by reference to Exhibit 4.7 to Beverly Enterprises' Annual Report on Form 10-K for
the year ended December 31, 1991)
4.10 Indenture dated as of August 1, 1993 between Beverly Enterprises and Chemical Bank, as Trustee with respect to Beverly
Enterprises' 5 1/2% Convertible Subordinated Debentures due August 1, 2018, issuable upon exchange of Beverly
Enterprises' $2.75 Cumulative Convertible Exchangeable Preferred Stock (the "Subordinated Debenture Indenture")
(incorporated by reference to Exhibit 4.10 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993)
4.11 Certificate of Designation, Powers, Preferences and Rights, and the Qualifications, Limitations or Restrictions Thereof,
of the Series of Preferred Stock to be designated $2.75 Cumulative Convertible Exchangeable Preferred Stock of Beverly
Enterprises (the "$2.75 Certificate of Designation") (incorporated by reference to Exhibit 4.12 to Beverly Enterprises'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993)
4.12 Indenture dated as of April 1, 1993 (the "First Mortgage Bond Indenture"), among Beverly Enterprises, Delaware Trust
Company, as Corporate Trustee, and Richard N. Smith, as Individual Trustee, with respect to First Mortgage Bonds
(incorporated by reference to Exhibit 4.1 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993)
4.13 First Supplemental Indenture dated as of April 1, 1993 to the First Mortgage Bond Indenture, with respect to 8
3/4% First Mortgage Bonds (Series A) due 2008 (incorporated by reference to Exhibit 4.2 to Beverly Enterprises'
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993)
4.14 Second Supplemental Indenture dated as of July 1, 1993 to the First Mortgage Bond Indenture, with respect to 8 5/8%
First Mortgage Bonds (Series B) due 2008 (replaces Exhibit 4.1 to Beverly Enterprises' Current Report on Form 8-K dated
July 15, 1993)(incorporated by reference to Exhibit 4.15 to Beverly Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993)
4.15 Indenture dated as of December 30, 1993 (the "Notes Indenture"), between Beverly Enterprises, Inc. and Boatmen's Trust
Company, as Trustee, with respect to the Notes (incorporated by reference to Exhibit 4.2 to Beverly Enterprises'
Registration Statement on Form S-3 filed on November 9, 1993 (File No. 33-50965))
4.16 First Supplemental Indenture dated as of December 30, 1993 to the Notes Indenture, with respect to 8.75% Notes due 2003
(incorporated by reference to Exhibit 4.4 to Beverly Enterprises' Current Report on Form 8-K dated January 4, 1994)
In accordance with item 601(b)(4)(iii) of Regulation S-K, certain instruments pertaining to Beverly Enterprises' long-
term obligations have not been filed; copies thereof will be furnished to the Securities and Exchange Commission upon
request.
10.1 * Amended and Restated 1981 Beverly Stock Option Plan (incorporated by reference to Post-Effective Amendment No. 2 on Form
S-8 to Beverly Enterprises' Registration Statement on Form S-4 filed on July 31, 1987 (File No. 33-13243))
10.2 * Amended and Restated 1981 Beverly Incentive Stock Option Plan (incorporated by reference to Post-Effective Amendment No.
2 on Form S-8 to Beverly Enterprises' Registration Statement on Form S-4 filed on July 31, 1987 (File No. 33-13243))
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.3 * 1985 Beverly Nonqualified Stock Option Plan (incorporated by reference to Post-Effective Amendment No. 2 on Form S-8 to
Beverly Enterprises' Registration Statement on Form S-4 filed on July 31, 1987 (File No. 33-13243))
10.4 * Amended and Restated Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan (as amended by Amendment No. 1)
10.5 * Beverly Enterprises, Inc. Annual Incentive Plan (incorporated by reference to Exhibit A to Beverly Enterprises
definitive proxy for the Annual Meeting of Stockholders held May 19, 1994)
10.6 * Retirement Plan for Outside Directors (incorporated by reference to Exhibit 10.5 to Beverly Enterprises' Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993)
10.7 * Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan (incorporated by reference to Exhibit B to Beverly
Enterprises definitive proxy for the Annual Meeting of Stockholders held May 19, 1994)
10.8 * Executive Medical Reimbursement Plan (incorporated by reference to Exhibit 10.5 to Beverly Enterprises' Annual Report on
Form 10-K for the year ended December 31, 1987)
10.9 * Amended and Restated Beverly Enterprises, Inc. Executive Life Insurance Plan and Summary Plan Description (incorporated
by reference to Exhibit 10.7 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1993)
10.10 * Executive Physicals Policy (incorporated by reference to Exhibit 10.8 to Beverly Enterprises' Quarterly Report on Form
10-Q for the quarter ended June 30, 1993)
10.11 * Amended and Restated Deferred Compensation Plan effective July 18, 1991 (incorporated by reference to Exhibit 10.6 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1991)
10.12 * Executive Retirement Plan (incorporated by reference to Exhibit 10.9 to Beverly Enterprises' Annual Report on Form 10-K
for the year ended December 31, 1987)
10.13 * Amendment No. 1, effective as of July 1, 1991, to the Executive Retirement Plan (incorporated by reference to Exhibit
10.8 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1991)
10.14 * Amendment No. 2, effective as of December 12, 1991, to the Executive Retirement Plan (incorporated by reference to
Exhibit 10.9 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1991)
10.15 * Amendment No. 3, effective as of July 31, 1992, to the Executive Retirement Plan (incorporated by reference to Exhibit
10.10 to Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
10.16 * Form of Indemnification Agreement between Beverly Enterprises and its officers, directors and certain of its employees
(incorporated by reference to Exhibit 19.14 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
June 30, 1987)
10.17 * Form of request by Beverly Enterprises to certain of its officers or directors relating to indemnification rights
(incorporated by reference to Exhibit 19.5 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987)
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.18 * Form of request by Beverly Enterprises to certain of its officers or employees relating to indemnification rights
(incorporated by reference to Exhibit 19.6 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987)
10.19 * Agreement dated December 29, 1986 between Beverly Enterprises and Stephens Inc. (incorporated by reference to Exhibit
10.20 to Beverly Enterprises' Registration Statement on Form S-1 filed on January 18, 1990 (File No. 33-33052))
10.20 * Severance Plan for Corporate and Regional Employees effective December 1, 1989 (incorporated by reference to Exhibit
10.21 to Amendment No. 1 to Beverly Enterprises' Registration Statement on Form S-1 filed on February 26, 1990 (File No.
33-33052))
10.21 * Form of Restricted Stock Performance Agreement dated June 28, 1990 under the 1985 Beverly Nonqualified Stock Option Plan
(incorporated by reference to Exhibit 10.22 to Beverly Enterprises' Registration Statement on Form S-1 filed on July 30,
1990 (File No. 33-36109))
10.22 * Form of Agreement Concerning Benefits Upon Severance dated as of September 1, 1990 between Beverly Enterprises and
certain officers of Beverly Enterprises (incorporated by reference to Exhibit 10.23 to Beverly Enterprises' Registration
Statement on Form S-1 filed on July 30, 1990 (File No. 33-36109))
10.23 * First Amendment to Agreement Concerning Benefits Upon Severance dated as of April 25, 1993 between Beverly Enterprises
and Ronald C. Kayne (incorporated by reference to Exhibit 10.22 to Beverly Enterprises' Annual Report on Form 10-K for
the year ended December 31, 1993)
10.24 * Beverly Enterprises Company Car Policy effective May 1, 1988 (incorporated by reference to Exhibit 10.18 to Beverly
Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
10.25 Master Lease Document - General Terms and Conditions dated December 30, 1985 for Leases between Beverly California and
various subsidiaries thereof as lessees and Beverly Investment Properties, Inc. as lessor (incorporated by reference to
Exhibit 10.12 to Beverly California's Annual Report on Form 10-K for the year ended December 31, 1985)
10.26 Agreement dated as of December 29, 1986 among Beverly California, Beverly Enterprises - Texas, Inc., Stephens Inc. and
Real Properties, Inc. (incorporated by reference to Exhibit 28 to Beverly California's Current Report on Form 8-K dated
December 30, 1986) and letter agreement dated as of July 31, 1987 among Beverly Enterprises, Beverly California, Beverly
Enterprises - Texas, Inc. and Stephens Inc. with reference thereto (incorporated by reference to Exhibit 19.13 to
Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended June 30, 1987)
10.27 Credit Agreement, dated as of March 24, 1992, among Beverly Enterprises, Inc., Beverly California Corporation, the
Lenders listed therein, Bank of Montreal as Co-Agent, and The Long Term Credit Bank of Japan, Ltd. Los Angeles Agency
as Agent (the "LTCB Credit Agreement") (incorporated by reference to Exhibit 10.2 to Beverly Enterprises' Quarterly
Report on Form 10-Q for the quarter ended March 31, 1992)
10.28 Amendment No. 1 dated as of April 7, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit 10.3 to
Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.29 Second Amendment dated as of May 11, 1992 to the LTCB Credit Agreement (incorporated by reference to Exhibit 10.23 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
10.30 Third Amendment dated as of March 1, 1993 to the LTCB Credit Agreement (incorporated by reference to Exhibit 10.24 to
Beverly Enterprises' Annual Report on Form 10-K for the year ended December 31, 1992)
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.31 Seventh Amendment dated as of May 2, 1994 to the LTCB Credit Agreement
10.32 Master Sale and Servicing Agreement dated as of December 1, 1990 among Beverly Funding Corporation, Beverly California,
the wholly-owned subsidiaries of Beverly Enterprises listed therein, Beverly Enterprises and certain wholly-owned
subsidiaries of Beverly Enterprises which may become parties thereto (incorporated by reference to Exhibit 10.27 to the
Registration Statement on Form S-4 of Beverly California, Beverly Enterprises and the Registrants set forth on the Table
of Additional Co-Registrants filed on February 8, 1991 (File No. 33-38954))
10.33 First Omnibus Amendment to Liquidity Agreement, Depository Agreement, Pledge and Security Agreement and Master Sale and
Servicing Agreement dated as of July 1, 1991 (incorporated by reference to Exhibit 10.1 to Beverly Enterprises'
Quarterly Report on Form 10-Q for the quarter ended September 30, 1991)
10.34 Second Amendment to Master Sale and Servicing Agreement dated as of March 1, 1992 (incorporated by reference to Exhibit
10.4 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended March 31, 1992)
10.35 Second Omnibus Amendment to Master Sale and Servicing Agreement, Pledge Agreement and Selling Subsidiary Agreements
dated as of September 28, 1992, among Beverly Funding Corporation, Beverly California Corporation, Beverly Enterprises,
Inc., the wholly-owned subsidiaries of Beverly Enterprises, Inc. listed on the signature pages and the Banks listed on
the signature pages (incorporated by reference to Exhibit 10 to Beverly Enterprises' Quarterly Report on Form 10-Q for
the quarter ended September 30, 1992)
10.36 Credit Agreement dated as of March 2, 1993 among Beverly Enterprises, Inc., Beverly California Corporation, the Lenders
listed therein, and the Nippon Credit Bank, Ltd. Los Angeles Agency as Agent (the "Nippon Credit Agreement")
(incorporated by reference to Exhibit 10.29 to Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1992)
10.37 Second Amendment dated as of May 19, 1994 to the Nippon Credit Agreement
10.38 Credit Agreement dated as of March 1, 1993 among Beverly California Corporation, Beverly Enterprises, Inc., the Banks
listed therein, Morgan Guaranty Trust Company of New York as Issuing Bank and Agent (the "Morgan Credit Agreement")
(incorporated by reference to Exhibit 10.30 to Beverly Enterprises' Annual Report on Form 10-K for the year ended
December 31, 1992)
10.39 First Amendment dated as of May 3, 1993 to the Morgan Credit Agreement (incorporated by reference to Exhibit 10.34 to
Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1993)
10.40 Second Amendment dated as of September 30, 1993 to the Morgan Credit Agreement (incorporated by reference to Exhibit
10.35 to Beverly Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 1993)
10.41 Third Amendment dated as of April 6, 1994 to the Morgan Credit Agreement
10.42 Data Processing Agreement, dated as of August 1, 1992, by and between Systematics Telecommunications Services, Inc. and
Beverly California Corporation (incorporated by reference to Exhibit 10 to Beverly Enterprises' Quarterly Report on Form
10-Q for the quarter ended June 30, 1992)
11.1 Computation of Net Income Per Share
</TABLE>
* Exhibits 10.1 through 10.24 are the management contracts,
compensatory plans, contracts and arrangements in which any
director or named executive officer participates.
<PAGE> 1
EXHIBIT 10.4
BEVERLY ENTERPRISES, INC.
1993 LONG-TERM INCENTIVE STOCK PLAN
(AS AMENDED BY PROPOSED AMENDMENT NO. 1)
ARTICLE I.
ESTABLISHMENT, PURPOSE AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Beverly Enterprises, Inc.
(hereinafter referred to as the "Company"), a Delaware corporation, hereby
establishes an incentive compensation plan to be known as the "1993 Long Term
Incentive Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. Unless otherwise defined herein, all capitalized terms shall
have the meanings set forth in Section 2.1 herein. The Plan permits the grant
of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock,
Performance Awards in the form of Performance Units, or Performance Shares and
Other Stock Unit Awards.
The Plan was adopted by the Board of Directors on March 17, 1993, and
shall become effective as of July 1, 1993 (the "Effective Date"), subject to
the approval by vote of stockholders of the Company in accordance with
applicable laws. Awards may be granted prior to stockholder approval of the
Plan, but each such Award shall be subject to the approval of the Plan by the
stockholders.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote
the success of the Company and its Subsidiaries by providing incentives to Key
Employees that will promote the identification of their personal interest with
the long-term financial success of the Company and with growth in stockholder
value. The Plan is designed to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Key Employees upon
whose judgment, interest, and special effort the successful conduct of its
operation is largely dependent.
1.3 DURATION OF THE PLAN. The Plan shall commence on the
Effective Date, as described in Section 1.1 herein, and shall remain in effect,
subject to the right of the Board of Directors to terminate the Plan at any
time pursuant to Article 12 herein, until June 30, 2003, at which time it shall
terminate except with respect to Awards made prior to, and outstanding on, that
date, which shall remain valid in accordance with their terms.
ARTICLE II.
DEFINITIONS
2.1 DEFINITIONS. Except as otherwise defined in the Plan, the
following terms shall have the meanings set forth below:
(a) "AFFILIATE" shall have the meaning ascribed to such term in
Rule 12b-2 under the Exchange Act.
(b) "AGREEMENT" means a written agreement implementing the grant
of each Award signed by an authorized officer of the Company and by the
Participant.
A-1
<PAGE> 2
(c) "AWARD" means individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock,
Performance units, Performance Shares, or Other Stock Unit Awards.
(d) "AWARD DATE" or "GRANT DATE" means the date on which an Award
is made by the Committee under this Plan.
(e) "BENEFICIAL OWNER" shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act.
(f) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
of the Company.
(g) "CHANGE IN CONTROL" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(i) Any person, corporation or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Exchange Act,
becomes the beneficial owner of shares of the Company having 30% or
more of the total number of votes that may be cast for the election of
directors of the Company; or
(ii) As the result of, or in connection with, any tender or
exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing (a
"Transaction"), the persons who were directors of the Company before
the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company or its
assets; or
(iii) If at any time, (w) the Company shall consolidate with, or
merge with, any other Person and the Company shall not be the
continuing or surviving corporation, (x) any Person shall consolidate
with, or merge with, the Company, and the Company shall be the
continuing or surviving corporation and in connection therewith, all
or part of the outstanding Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other
property, (y) the Company shall be a party to a statutory share
exchange with any other Person after which the Company is subsidiary
of any other Person, or (z) the Company shall sell or otherwise
transfer 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons.
(h) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(i) "COMMITTEE" means the Compensation Committee of the Board
which will administer the Plan pursuant to Article 3 herein.
(j) "COMPANY" means Beverly Enterprises, Inc., including all
Affiliates and wholly-owned Subsidiaries, or any successor thereto as provided
in Article 14 herein.
(k) "CONTINUING DIRECTOR" means an individual who was a member of
the Board of Directors on the Effective Date or whose subsequent nomination for
election or reelection of the Board of Directors was recommended or approved by
the affirmative vote of two-thirds of the Continuing Directors then in office.
A-2
<PAGE> 3
(l) "COVERED PARTICIPANT" means a Participant who is a "covered
employee" as defined in Section 162(m)(3) of the Code, and the regulations
promulgated thereunder, or who the Committee believes will be such a covered
employee for a Performance Period, and who the Committee believes will have
renumeration in excess of $1,000,000 for the Performance Period, as provided in
Section 162(m) of the Code.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, on any given date, the closing
price of Stock as reported on the New York Stock Exchange composite tape on
such day or, if no Shares were traded on the New York Stock Exchange on such
day, then on the next preceding day that Stock was traded on such exchange, all
as reported by such source as the Committee may select.
(o) "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Stock, granted under Article 6 herein, which is designated as an incentive
stock option and is intended to meet the requirements of Section 422A of the
Code.
(p) "KEY EMPLOYEE" means an officer or other key employee of the
Company or its Subsidiaries, who, in the opinion of the Committee, can
contribute significantly to the growth and profitability of, or perform
services of major importance to, the Company and its Subsidiaries. Key
Employee does not include directors of the Company who are not also employees
of the Company or its Subsidiaries.
(q) "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to
purchase Stock, granted under Article 6 herein, which is not intended to be an
Incentive Stock Option.
(r) "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option.
(s) "OTHER STOCK UNIT AWARD" means awards of Stock or other awards
that are valued in whole or in part by reference to, or are otherwise based on,
Shares or other securities of the Company.
(t) "PARTICIPANT" means a Key Employee who has been granted an
Award under the Plan.
(u) "PERFORMANCE AWARD" means a performance-based Award, which may
be in the form of either Performance Shares or Performance Units.
(v) "PERFORMANCE PERIOD" means the time period designated by the
Committee during which performance goals must be met, which period shall be the
calendar year.
(w) "PERFORMANCE SHARE" means an Award, designated as a
performance share, granted to a Participant pursuant to Article 8 herein, the
value of which is determined, in whole or in part, by the value of Stock in a
manner deemed appropriate by the Committee and described in the Agreement.
(x) "PERFORMANCE UNIT" means an Award, designated as a performance
unit, granted to a Participant pursuant to Article 8 herein, the value of which
is determined, in whole or in part, by the attainment of preestablished goals
relating to Company
A-3
<PAGE> 4
financial or operating performance as deemed appropriate by the Committee and
described in the Agreement.
(y) "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is restricted, pursuant to Article 7
herein.
(z) "PERSON" shall have the meaning ascribed in such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(aa) "PLAN" means the Beverly Enterprises, Inc. 1993 Long-Term
Incentive Stock Plan as herein described and as hereafter from time to time
amended.
(bb) "RESTRICTED STOCK" means an Award of Stock granted to a
Participant pursuant to Article 7 herein.
(cc) "SECRETARY" means the officer designated as the Secretary of
the Company.
(dd) "STOCK" or "SHARES" means the common stock of the Company.
(ee) "SUBSIDIARY" shall mean a corporation at least 50% of the
total combined voting power of all classes of stock of which is owned by the
Company, either directly or through one or more of its Subsidiaries.
ARTICLE III.
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Committee
which shall have all powers necessary or desirable for such administration.
The express grant in this Plan of any specific power to the Committee shall not
be construed as limiting any power or authority of the Committee. In addition
to any other powers and, subject to the provisions of the Plan, the Committee
shall have the following specific powers: (i) to determine the terms and
conditions upon which the Awards may be made and exercised; (ii) to determine
all terms and provisions of each Agreement, which need not be identical; (iii)
to construe and interpret the Agreements and the Plan; (iv) to establish,
amend, or waive rules or regulations for the Plan's administration; (v) to
accelerate the exercisability of any Award, the end of a Performance Period or
termination of any Period of Restriction; and (vi) to make all other
determinations and take all other actions necessary or advisable for the
administration of the Plan.
3.2 SELECTION OF PARTICIPANTS. The Committee shall have the
authority to grant Awards under the Plan, from time to time, to such Key
Employees as may be selected by it. Each Award shall be evidenced by an
Agreement.
3.3 DECISIONS BINDING. All determinations and decisions made by
the Committee pursuant to the provisions of the Plan shall be final,
conclusive, and binding.
3.4 RULE 16b-3 REQUIREMENTS. Notwithstanding any other provision
of the Plan, the Committee may impose such conditions on any Award, and the
Board amend the Plan in any such respects, as may be required to satisfy the
requirements of Rule 16b-3, as amended (or any successor or similar rule),
under the Exchange Act.
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3.5 INDEMNIFICATION OF COMMITTEE. In addition to such other rights
of indemnification as they may have as directors or as members of the
Committee, the members of the Committee shall he indemnified by the Company
against reasonable expenses, including attorneys' fees, actually and reasonably
incurred in connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan or any Award granted or made hereunder, and against all amounts
reasonably paid by them in settlement thereof or paid by them in satisfaction
of a judgment in any such action, suit or proceeding, if such members acted in
good faith and in a manner which they believed to be in, and not opposed to,
the best interests of the Company and its Subsidiaries.
ARTICLE IV.
STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in
Section 4.4 herein, the maximum aggregate number of Shares that may be issued
pursuant to Awards made under the Plan shall not exceed 3,000,000. No more
than one-half of the aggregate number of such Shares shall be issued in
connection with Restricted Stock Awards, Performance Awards, or Other Stock
Unit Awards. Except as provided in Sections 4.2 and 4.3 herein, the issuance
of Shares in connection with the exercise of, or as other payment for, Awards
under the Plan shall reduce the number of Shares available for future Awards
under the Plan.
4.2 LAPSED AWARDS OR FORFEITED SHARES. If any Award granted under
this Plan terminates, expires, or lapses for any reason other than by virtue of
exercise of the Award, or if Shares issued pursuant to Awards are forfeited,
any Stock subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 DELIVERY OF SHARES AS PAYMENT. In the event a Participant
pays the Option Price for Shares pursuant to the exercise of an Option with
previously acquired Shares, the number of Shares available for future Awards
under the Plan shall be reduced only by the net number of new Shares issued
upon the exercise of the option.
4.4 CAPITAL ADJUSTMENTS. The number and class of Shares subject
to each outstanding Award, the Option Price and the aggregate number and class
of Shares for which Awards thereafter may be made shall be subject to such
adjustment, if any, as the Committee deems appropriate, such that:
(a) If the outstanding Shares are increased, decreased or
exchanged, through merger, consolidation, sale of all or substantially all of
the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split or other distribution in respect
of such Shares, for a different number of kind of Shares, or if additional
Shares or new or different Shares are distributed in respect of such Share, an
appropriate and proportionate adjustment shall be made in: (i) the maximum
number of Shares as provided in Section 4.1 herein; (ii) the number of Shares
subject to then outstanding Awards; and (iii) the price for each Share subject
to such Awards, but without change in the aggregate purchase price as to which
such Options remain exercisable or Restricted Stock releasable.
(b) Adjustments under this Section 4.4 shall be made by the
Committee, subject to the approval of the Board of Directors, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. No fractional
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interests shall be issued under the Plan on account of such adjustments.
ARTICLE V.
ELIGIBILITY
Persons eligible to participate in the Plan include all employees of
the Company and its Subsidiaries who, in the opinion of the Committee, are Key
Employees. Key Employees may not include directors of the Company who are not
employees of the Company or its Subsidiaries.
ARTICLE VI.
STOCK OPTIONS
6.1 GRANT OF OPTIONS TO KEY EMPLOYEES. Subject to the terms and
provisions of the Plan, Options may be granted to Key Employees at any time and
from time to time as shall be determined by the Committee. The Committee shall
have complete discretion in determining the number of Shares subject to Options
granted to each Key Employee, provided, however, that the aggregate Fair Market
Value (determined at the time the Award is made) of Shares with respect to
which a Key Employee may first exercise ISOs granted under the Plan during any
calendar year may not exceed $100,000 or such amount as shall be specified in
Section 422A of the Code and rules and regulation thereunder.
6.2 OPTION AGREEMENT. Each Option grant shall be evidenced by an
Agreement that shall specify the type of Option granted, the Option Price (as
hereinafter defined), the duration of the Option, the number of Shares to which
the Option pertains, any conditions imposed upon the exercisability of Options
in the event of retirement, death, disability, or other termination of
employment, and such other provisions as the Committee shall determine. The
Agreement shall specify whether the Option is intended to be an Incentive Stock
Option within the meaning of Section 422A of the Code, or a Nonqualified Stock
Option not intended to be within the provisions of Section 422A of the Code.
6.3 OPTION PRICE. The exercise price per share of Stock covered
by an Option ("Option Price") shall be determined by the Committee subject to
the following limitations. The Option Price shall be not less than 100% of the
Fair Market Value of such Stock on the Grant Date, except that the Option Price
for a NQSO may be set at not less than 85 percent of the Fair Market Value of
the Stock on the Grant Date if the Committee grants the amount of the discount
from 100% of the Fair Market Value of such Stock in lieu of a cash payment.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as
the Committee shall determine at the time of grant provided, however, that no
option shall be exercisable later than the tenth (10th) anniversary of its
Award Date.
6.5 EXERCISABILITY. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine, which need not be the same for all Participants.
No Option, however, shall be exercisable until the expiration of at least
twelve months after the Award Date, except that such limitation shall not apply
in the case of death or disability of the Participant.
6.6 METHOD OF EXERCISE. Options shall be exercised by the
delivery of a written notice to the Company in the form prescribed by the
Committee setting forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares. The Option
Price shall be payable to the Company in full either in cash, by delivery of
Shares of Stock valued a
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Fair Market Value at the time of exercise or by a combination of the foregoing.
As soon as practicable, after receipt of written notice and payment, the
Company shall deliver to the Participant, stock certificates in an appropriate
amount based upon the number of Shares with respect to which the Option is
exercised, issued in the Participant's name. No Participant who is awarded an
Option shall have rights as a stockholder until the date of exercise of the
Option.
6.7 CASHLESS EXERCISE. To the extent permitted under the
applicable laws and regulations, at the request of the Participant, the Company
agrees to cooperate in a "cashless exercise" of the Option.
6.8 OPTIONS AWARDED UPON STOCK DELIVERY EXERCISE. The Committee,
in its discretion, may provide in the Agreement that, in the event a
Participant pays the Option Price for an Option by delivery of previously
acquired Shares, the Participant will be granted a new Option ("Replacement
Option") for that number of Shares delivered in payment of the Option Price of
the original Option ("Original Option"). The Committee shall determine the
terms and conditions of the Replacement Option, provided, however, that the
Option Price of the Replacement Option shall be the Fair Market Value of Shares
on its Award Date and the term of the Replacement Option shall expire upon the
expiration date of the Original Option.
6.9 NONTRANSFERABILITY OF OPTIONS. No Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and
distribution. Further, all Options granted to a Participant under the Plan
shall be exercisable during his lifetime only by such Participant or his
guardian or legal representative.
ARTICLE VII.
RESTRICTED STOCK
7.1 GRANT OF RESTRICTED STOCK. Subject to the terms and
provisions of the plan, the Committee, at any time and from time to time, may
grant shares of Restricted Stock Plan under the Plan to such Participants and
in such amounts as it shall determine. Participants receiving Restricted Stock
Awards are not required to pay the Company therefor (except for applicable tax
withholding) other than the rendering of services and/or until other conditions
are satisfied as determined by the Committee in its sole discretion.
7.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall
be evidenced by an Agreement that shall specify the Period of Restriction; the
conditions which must be satisfied prior to removal of the restriction; the
number of Shares of Restricted Stock granted; and such other provisions as the
Committee shall determine.
7.3 TRANSFERABILITY. Except as provided in this Article 7 and
subject to the limitation in the next sentence, the Shares of Restricted Stock
granted hereunder may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated until the termination of the applicable Period of
Restriction or upon earlier satisfaction of other conditions as specified by
the Committee in its sole discretion and set forth in the Agreement. No
restriction shall be removed until the expiration of at least twelve months
after the Award Date, except that such limitation shall not apply in the case
of death or disability of the Participant. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be exercisable
during his lifetime only by such Participant or his guardian or legal
representative.
7.4 OTHER RESTRICTIONS. The Committee shall impose such other
restrictions on any Restricted Stock granted pursuant to the Plan as it may
deem advisable including, without limitation, restrictions under applicable
Federal
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or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
Alternatively, the Committee, in its sole discretion, may have Restricted Stock
issued without legend and held by the Secretary until such time all
restrictions are satisfied.
7.5 CERTIFICATE LEGEND. In the event the Committee elects to
legend the certificates representing Restricted Stock, and in addition to any
legends placed on certificates pursuant to Section 7.4 herein, each certificate
representing shares of Restricted Stock granted pursuant to the Plan shall bear
the following legend:
The sale of other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the Beverly
Enterprises, Inc. 1993 Long-Term Incentive Stock Plan, in the rules and
administrative procedures adopted pursuant to such Plan, and in an Agreement
dated XXXXXXXXXX. A copy of the Plan, such rules and procedures, and such
Agreement may be obtained from the Secretary of Beverly Enterprises, Inc.
7.6 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Article 7, Restricted Stock covered by each Award made under the Plan shall be
provided and become freely transferable by the Participant after the last day
of the Period of Restriction and/or upon the satisfaction of other conditions
as determined by the Committee. Once the Shares are released from the
restrictions, the Participant shall be entitled to have removed any legend that
may have been placed on certificates pursuant to Section 7.4 and 7.5 herein.
Except: as specifically provided in this Article 7, the Committee shall have no
authority to reduce or remove the restrictions or to reduce or remove the
Period of Restriction without the express consent of the stockholders of the
Company. Any shares of Restricted Stock issued pursuant to this Article 7
shall provide that the minimum Period of Restriction shall be three (3) years,
which Period of Restriction would permit the removal of restrictions on no more
than one-third (1/3) of the shares of Restricted Stock at the end of the first
year following the Grant Date, and the removal of the restrictions on an
additional one subsequent year. In no event shall any restrictions be removed
from shares of Restricted Stock during the first year following the Grant Date.
If the grant of Restricted Stock is performance based, the total Period of
Restriction for any or all shares of Restricted Stock so granted shall be no
less than one (1) year.
7.7 VOTING RIGHTS. During the Period of Restriction, Participants
in whose name Restricted Stock is granted hereunder may exercise full voting
rights with respect to those Shares.
7.8 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants in whose name Restricted Stock is granted hereunder
shall be entitled to receive all dividends and other distribution paid with
respect to those Shares. If any such dividends or distributions are paid in
Shares, the Shares shall be subject to the same restrictions on transferability
as the Restricted Stock with respect to which they were distributed.
7.9 TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. Unless otherwise
provided in the Agreement, in the event that a Participant terminates his
employment with the Company or one of its Subsidiaries due to the earlier of
attaining age 65 or normal retirement (as defined in the rules of the Company
in effect at the time) , any remaining Period of Restriction applicable to the
Restricted Stock pursuant to section 7.3 herein shall automatically terminate
and, except as otherwise provided in Section 7.4 herein, the Restricted Stock
shall thereby be delivered to such Participant and be free of restrictions.
7.10 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the
event a Participant's employment is terminated because of death or disability
during the Period of Restriction, any remaining Period of Restriction
applicable to the Restricted Stock pursuant to Section 7.3 herein shall
automatically terminate
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and, except as otherwise provided in Section 7.4 herein, the Restricted Stock
shall thereby be released and free of restrictions.
7.11 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. Unless otherwise
provided in the Agreement, in the event that a Participant terminates his
employment with the Company for any reason other than for death, disability, or
retirement, as set forth in Section 7.9 and 7.10 herein, during the Period of
Restriction, then any Restricted Stock still subject to restrictions as of the
date of such termination shall automatically be forfeited and, if held by the
Participant, returned to the Company.
ARTICLE VIII.
PERFORMANCE AWARDS
8.1 GRANT OF PERFORMANCE AWARDS. Subject to the terms and
provisions of the Plan, Performance Awards in the form of either Performance
Units or Performance Shares may be granted to Participants at any time and from
time to time as shall be determined by the Committee. The Committee shall have
complete discretion in determining the number of Performance Units or
Performance Shares granted to each Participant. Participants receiving
Performance Awards are not required to pay the Company therefore (except for
applicable tax withholding) other than the rendering of services.
8.2 VALUE OF PERFORMANCE AWARDS. The Committee shall determine
the number of Performance Units or Performance Shares granted to each
Participant as a Performance Award. The Committee shall set performance goals
in its discretion for each Participant who is granted a Performance Award. The
extent to which such performance goals are met will determine the value of the
Performance Unit or Performance Share to the Participant. Such performance
goals may be particular to a Participant, may relate to the performance of the
Subsidiary which employs him, may be based on the performance of the Company
generally, or a combination of the foregoing. The performance goals may be
based on achievement of balance sheet or income statement objectives, or any
other objectives established by the Committee. The performance goals may be
absolute in their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated. The terms and
conditions of each Performance Award shall be set forth in an Agreement.
8.3. SETTLEMENT OF PERFORMANCE AWARDS. After a Performance Period
has ended, the holder of a Performance Unit or Performance Share shall be
entitled to receive the value thereof based on the degree to which the
performance goals established by the Committee and set forth in the Agreement
have been satisfied.
8.4. FORM OF PAYMENT. Payment of the amount to which a Participant
shall be entitled upon the settlement of a Performance Award shall be made in
cash, Stock, or a combination thereof as determined by the Committee. Payment
may be made in a lump sum or installments as prescribed by the Committee.
8.5. NONTRANSFERABILITY. No Performance Units or Performance
Shares granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution. All rights with respect to Performance Units and
Performance Shares granted to a Participant under the Plan shall not be
exercisable until the expiration of twelve months after the Award Date and
thereafter during his lifetime only by such Participant or his guardian or
personal representative.
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ARTICLE IX.
OTHER STOCK UNIT AWARDS
9.1 GRANT. The Committee is authorized to grant to Participants,
either alone or in addition to other Awards made under the Plan, Other Stock
Unit Awards, in lieu of cash payments, to be issued at such times, subject to
or based upon achievement of such performance or other goals and on such other
terms and conditions as the Committee shall deem appropriate and specify in the
Agreement relating thereto, which need not be the same with respect to each
Participant. Stock or other securities granted pursuant to Other Stock Unit
Awards may be issued for no cash consideration or for such minimum
consideration as may be required by applicable law. Stock or other securities
purchased pursuant to Other Stock Unit Awards may be purchased for such
purchase price as the Committee shall determine, which price shall not be less
than 75% of the Fair Market Value of the Stock or other securities on the Award
Date.
9.2 SALE AND TRANSFERABILITY. Stock or other securities issued
pursuant to Other Stock Unit Awards may not be sold by a Participant until the
expiration of at least twelve months from the Award Date, except that such
limitation shall not apply in the case of death or disability of a Participant.
To the extent Other Stock Unit Awards are deemed to be derivative securities
within the meaning of Rule 16b-3 under the Exchange Act, a Participant's rights
with respect to such Awards shall not vest or be exercisable until the
expiration of at least twelve months from the Award Date. To the extent an
Other Stock Unit Award granted under the Plan is deemed to be a derivative
security within the meaning of Rule 16b-3 under the Exchange Act, it may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. All rights
with respect to such Other Stock Unit Awards granted to a Participant under the
Plan shall be exercisable during his lifetime only by such Participant or his
guardian or personal representative.
ARTICLE X.
CHANGE IN CONTROL
In the event of a Change in Control of the Company, the Committee
shall ensure the following actions: (i) all Options then outstanding under the
Plan shall become fully exercisable and remain so for the duration of the
Option as specified in the Agreement; and (ii) all restrictions or conditions
related to grants of Restricted Stock shall be deemed immediately and fully
satisfied and all certificates representing such Restricted Stock shall be
released or have any legend removed by the Secretary, and thereby become freely
transferable.
ARTICLE XI.
MODIFICATION, EXTENSION, AND RENEWAL OF AWARDS
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend, or renew outstanding Awards, or accept
the surrender of outstanding Awards (to the extent not yet exercised) granted
under the Plan and authorize the granting of new Awards pursuant to the Plan in
substitution therefor, and the substituted Awards may specify a longer term
than the surrendered Awards or may contain any other provisions that are
authorized by the Plan, provided, however, that the Committee may not modify
outstanding Awards or grant new Awards in substitution for outstanding Awards
that specify a lower exercise price. Except as limited by the foregoing
sentence, the Committee may also modify the terms of an outstanding Agreement.
Notwithstanding the foregoing, however, no modification of an Award shall,
without the consent of the Participant, adversely affect the rights or
obligations of the Participant.
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ARTICLE XII.
AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN
12.1 AMENDMENT, MODIFICATION, AND TERMINATION. At any time and
from time to time, the Board may terminate, amend, or modify the Plan. Such
amendment or modification may be without shareholder approval except to the
extent that such approval is required by the Code, pursuant to the rules under
Section 16 of the Exchange Act, by any national securities exchange or system
on which the Stock is then listed or reported, by any regulatory body having
jurisdiction with respect thereto or under any other applicable laws, rules, or
regulations.
12.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan, other than pursuant to Section 4.4 herein, shall in
any manner adversely affect any Award theretofore granted under the Plan,
without the written consent of the Participant.
ARTICLE XIII.
WITHHOLDING
13.1 TAX WITHHOLDING. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy Federal, State, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment under or as a result of this Plan.
13.2 STOCK WITHHOLDING. With respect to withholding required upon
the exercise of Nonqualified Stock Options, or upon the lapse of restrictions
on Restricted Stock, or upon the occurrence of any other similar taxable event,
participants may elect, subject to the approval of the Committee, to satisfy
the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value equal to the amount required to be
withheld. The value of the Shares to be withheld shall be based on Fair Market
Value of the Shares on the date that the amount of tax to be withheld is to be
determined. All elections shall be irrevocable and be made in writing, signed
by the Participant on forms approved by the Committee in advance of the day
that the transaction becomes taxable.
ARTICLE XIV.
SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
ARTICLE XV.
GENERAL
15.1 REQUIREMENTS OF LAW. The granting of Awards and the issuance
of Shares under this Plan shall he subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies as may be
required. No Shares shall be issued or transferred pursuant to this Plan
unless and until all legal requirements applicable to such issuance or transfer
have, in the opinion of counsel to the Company, been complied with. In
connection with any such issuance or transfer, the person acquiring the Shares
shall, if requested by the Company, give assurances satisfactory to counsel to
the Company
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in respect to such matters as the Company may deem desirable to assure
compliance with all applicable legal requirements.
15.2 EFFECT OF PLAN. The establishment of the Plan shall not
confer upon any Participant any legal or equitable right against the Company, a
Subsidiary, or the Committee, except as expressly provided in the Plan. The
Plan does not constitute an inducement or consideration for the employment of
any Participant, nor is it a contract between the Company or any of its
Subsidiaries and any Participant. Participation in the Plan shall not give any
Participant any right to be retained in the service of the Company or any of
its Subsidiaries. No award and no right under the Plan, contingent or
otherwise, shall be assignable or subject to any encumbrance, pledge or charge
of any nature except that, under such rules and regulations as the Committee
may establish pursuant to the terms of the Plan, a beneficiary may be
designated in respect to the Award in the event of the death of the holder of
the Award and except, also, that if the beneficiary shall be the executor or
administrator of the estate of the holder of the Award, any rights in respect
to such Award may be transferred to the person or persons or entity (including
a trust) entitled thereto under the will of the holder of such Award or under
the laws relating to descent and distribution.
15.3 CREDITORS. The interests of any Participant under the Plan or
any Agreement are not subject to the claims of creditors and may not, in any
way, be assigned, alienated, or encumbered.
15.4 GOVERNING LAW. The Plan, and all Agreements hereunder, shall
be governed, construed, and administered in accordance with and governed by the
laws of the State of Arkansas and the intention of the Company is that ISOs
granted under the Plan quality as such under Section 422A of the Code.
15.5 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
ARTICLE XVI.
SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
Notwithstanding any other provision of this Plan to the contrary, any
Awards paid to Covered Participants under this Plan shall be subject to the
following conditions:
(a) All performance measures, goals, standards, formulas, or
criteria relating to Covered Participants ("Performance Measures")
for a relevant Performance Period shall be established by the
Committee in writing prior to the beginning of the Performance
Period, or by such other later date for the Performance Period as may
be permitted under Section 162(m) of the Code. Performance Measures
may include alternate and multiple Performance Measures and may be
based on one or more business criteria. In establishing Performance
Measures, the Committee shall consider an internal budget for factors
such as earnings per share, return on equity, revenue growth, cash
flow, income and operating margins.
(b) The Performance Measures must be objective and must satisfy
the third party "objectivity" standards under Section 162(m) of the
Code, and the regulations promulgated thereunder.
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(c) The Performance Measures shall not allow for any discretion by
the Committee as to an increase in any Award, but discretion to lower
an Award is permissible.
(d) The award and payment of any Award under this Plan to a
Covered Participant with respect to a relevant Performance Period
shall be contingent upon the attainment of the Performance Measures
that are applicable to such Covered Participant. The Committee shall
certify in writing prior to the payment of any such Award that such
applicable Performance Measures relating to the Award are satisfied.
Approved minutes of a meeting of the Committee may be used for this
purpose.
(e) The maximum Award that may be paid to any Covered Participant
under the Plan pursuant to Articles VIII and IX for any Performance
Period is 100 percent of the Covered Participant's base salary as of
the first day of that Performance Period. The maximum number of
shares of Stock subject to Options or Restricted Stock granted to any
Covered Participant for any Performance Period shall be 300,000, and
any grant of a NQSO at less than 100 percent of Fair Market Value
shall be subject to the attainment of Performance Measures as
provided herein.
(f) All Awards to Covered Participants under this Plan shall be
further subject to such other conditions, restrictions, and
requirements as the Committee may determine to be necessary to carry
out the purposes of this Article XVI.
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EXHIBIT 10.31
SEVENTH AMENDMENT
TO CREDIT AGREEMENT
AMONG
BEVERLY ENTERPRISES, INC.,
BEVERLY CALIFORNIA CORPORATION,
THE SUBSIDIARY GUARANTORS LISTED HEREIN,
THE LENDERS LISTED HEREIN,
BANK OF MONTREAL, AS CO-AGENT,
AND
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
LOS ANGELES AGENCY, AS AGENT
DATED AS OF MAY 2, 1994
THIS SEVENTH AMENDMENT dated as of May 2, 1994 (this "AMENDMENT"), is
entered into by and among BEVERLY ENTERPRISES, INC., a Delaware corporation
("BEI"), BEVERLY CALIFORNIA CORPORATION, a California corporation ("BORROWER"),
the SUBSIDIARY GUARANTORS listed on the signature pages hereof (together with
BEI, the "GUARANTORS"), the LENDERS listed on the signature pages hereof (such
lenders, together with each Person that may or has become a party to the Credit
Agreement (as defined below) pursuant to subsection 10.8 thereof, are
referred to herein individually as a "LENDER" and collectively as the
"LENDERS"), BANK OF MONTREAL as co-agent for the Lenders (in such capacity, the
"CO-AGENT"), and THE LONG-TERM CREDIT BANK OF JAPAN, LTD., Los Angeles Agency
("LTCB"), as agent for the Lenders (in such capacity, the "AGENT"). This
Amendment amends the Credit Agreement dated March 24, 1992 by and among BEI,
Borrower, Co-Agent, Agent and Lenders, as amended by that First Amendment to
Credit Agreement dated April 7, 1992 by and among BEI, Borrower, Co-Agent,
Agent and the Lenders, as further amended by that Second Amendment to Credit
Agreement dated as of May 11, 1992 by and among BEI, Borrower, Co-Agent, Agent
and the Lenders, as further amended by that Third Amendment to Credit Agreement
dated as of March 1, 1993 by and among BEI, Borrower, Co-Agent, Agent and the
Lenders, as further amended by that Fourth Amendment to Credit Agreement dated
as of November 1, 1993 by and among BEI, Borrower, Co-Agent, Agent and the
Lenders, as further amended by that Fifth Amendment to Credit Agreement dated
as of March 21, 1994 by and among BEI, Borrower, Co-Agent, Agent and the
Lenders, as further amended by that Sixth Amendment to Credit Agreement dated
as of April 22, 1994 by and among BEI, Borrower, Co-Agent, Agent and the
Lenders (said Credit Agreement, as so amended, the "CREDIT AGREEMENT"), as set
forth herein. Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement.
<PAGE> 2
RECITALS
WHEREAS, Borrower desires to amend the Credit Agreement in certain
respects;
WHEREAS, Lenders, Co-Agent and Agent have agreed to approve such
amendments;
WHEREAS, Guarantors desire to reaffirm the effectiveness respectively
of the Subsidiary Guaranty Agreement and the BEI Guaranty Agreement;
NOW, THEREFORE, in consideration of the terms and conditions herein
contained, BEI, Borrower, Guarantors, Co-Agent, Agent and Lenders agree as
follows:
AGREEMENT
SECTION 1. AMENDMENTS TO DEFINITIONS
(a) Subsection 1.1 of the Credit Agreement is hereby amended by the
addition of the following definitions in alphabetical order:
"'APPLICABLE MARGIN' means, for any day, the rate per annum set forth
under the column heading 'Applicable Margin' below for the higher of the
S&P Rating or the Moody's Rating in effect on such day:
<TABLE>
<CAPTION>
Higher of S&P Rating
or Moody's Rating
--------------------
S&P Rating Moody's Rating Applicable Margin
---------- -------------- -----------------
<S> <C> <C>
BBB+(or higher) Baa1(or higher) 0.75%
BBB Baa2 1.00%
BBB- Baa3 1.25%
BB+ Ba1 1.75%
BB or BB- Ba2 or Ba3 2.00%
B+(or lower) or no rating B1(or lower) or no rating 2.50%
</TABLE>
Any change in the Applicable Margin shall become effective on the day on
which a change in the Moody's Rating or the S&P Rating that requires a
change in the Applicable Margin in accordance with this definition shall
be announced publicly by the respective rating agency.
'APPRAISED VALUE' means, with respect to any asset subjected to or
released from any Lien securing any Designated Obligations or any Pooled
Mortgage Debt, the
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<PAGE> 3
value of such asset as determined by an independent appraisal performed
within 90 days of, and as of a date not less than 90 days prior to, the
date upon which such asset is subjected to or released from such Lien.
'BEI 1992 DISPOSITION PLAN' means the disposition plan announced by BEI
on November 9, 1992 relating to the proposed disposition of certain
facilities and the establishment of reserves therefor, in each case, as
summarized in Schedule VII to the Morgan Credit Agreement as in effect as of
March 1, 1993.
'COMMERCIAL PAPER BACKSTOP FACILITY' means a credit facility entered
into by a Special Purpose Commercial Paper Issuer for the purposes of
providing liquidity with respect to commercial paper issued by such Special
Purpose Commercial Paper Issuer and of financing transactions of the type
intended to be financed with the proceeds of such commercial paper.
'COMMERCIAL PAPER PROGRAM' means a program pursuant to which a Special
Purpose Commercial Paper Issuer issues commercial paper secured by (i)
Medicaid, Medicare or other patient accounts receivable purchased from BEI
and its Subsidiaries or (ii) security interests in Medicaid, Medicare or
other patient accounts receivable granted by BEI and its Subsidiaries.
'CONSOLIDATED CAPITAL EXPENDITURES' means, for any period, the sum,
without duplication, of (i) the total amount of additions to property and
equipment of BEI and its Consolidated Subsidiaries during such period of
the types classified as "Capital expenditures" or "Payments for
acquisitions, net of cash acquired" on the consolidated statement of cash
flows included in the Coverage Base Financials and (ii) all investments
(whether by means of share purchase, capital contribution, loan, time
deposit or otherwise) made by BEI or any of its Subsidiaries during such
period in Beverly Japan Corporation; provided that "Consolidated Capital
Expenditures" shall exclude (A) the application of insurance or
condemnation proceeds to rebuilding facilities as permitted by the Morgan
Credit Agreement and the Security Documents (as defined in the Morgan
Credit Agreement), (B) any acquisition by BEI or any of its Subsidiaries of
any assets in connection with and as part of a Workout Transaction and (C)
any acquisition by BEI or any of its Subsidiaries of any assets as part of
a Lease Termination Acquisition.
'CONSOLIDATED RENTAL EXPENSE' means, for any period, the gross rental
expense of BEI and its Consolidated Subsidiaries with respect to leases of
real property and improvements of real property less, with respect to any
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<PAGE> 4
facility identified in the BEI 1992 Disposition Plan, the amount of such
gross rental expense with respect to such facility for such period to the
extent, but only to the extent, that such expense is charged against the
reserves established in respect of such facility as part of the BEI 1992
Disposition Plan prior to March 1, 1993, determined on a consolidated basis
for such period.
'COVERAGE BASE FINANCIALS' means the consolidated balance sheet of BEI
and its Consolidated Subsidiaries as of December 31, 1991 and the related
consolidated statements of operation, stockholders' equity and cash flows
for the year then ended, together with the notes thereto, included in BEI's
1991 Form 10-K and reported on without qualification by Ernst & Young.
'COVERAGE CONSOLIDATED EBIDA' means, for any period, Coverage
Consolidated Net Income of BEI and its Consolidated Subsidiaries for such
period plus, without duplication, any amounts deducted in determining such
consolidated net income (loss) in respect of (a) Consolidated Interest
Charges for such period and (b) expenses for such period of the types
classified as "depreciation and amortization" on the consolidated
statements of operation included in the Coverage Base Financials.
'COVERAGE CONSOLIDATED NET INCOME' means, for any period, the net
income (calculated (a) before preferred and common stock dividends, and (b)
exclusive of the effect of any extraordinary or other material non-recurring
gain or loss outside the ordinary course of business) of BEI and its
Consolidated Subsidiaries, determined on a consolidated basis for such
period.
'DESIGNATED OBLIGATIONS' shall have the meaning set forth in subsection
5.13.
'FIXED CHARGE COVERAGE RATIO' means, on any date, the ratio of (i) the
sum of Coverage Consolidated EBIDA and Consolidated Rental Expense for the
four consecutive fiscal quarters most recently ended on or prior to such
date to (ii) the sum of Consolidated Interest Charges, Consolidated Rental
Expense and Consolidated Capital Expenditures for such four fiscal
quarters.
'INCREMENTAL POOLED MORTGAGE DEBT' means, at any time with respect to
any Pooled Mortgage Debt, the excess (but not less than zero) of (i) the
aggregate principal amount of such Pooled Mortgage Debt outstanding at such
time over (ii) the sum, without duplication, of (A) an amount equal to 80%
of the cost of acquisition or construction of any Initial Pooled Mortgage
Assets that have been acquired or constructed by BEI or any of its
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<PAGE> 5
Subsidiaries within 90 days of the incurrence of such Pooled Mortgage
Debt and that are subject to a Lien securing such Pooled Mortgage Debt; (B)
the aggregate principal amount of all Debt (including, without limitation,
any obligation with respect to any letter of credit or similar instrument)
and contingent obligations that had been secured by a Lien permitted under
clauses (i), (v), (vi), (vii), (ix) or (x) of subsection 5.13A (or
permitted under clause (xi) of subsection 5.13A as it relates to any of the
foregoing clauses) on some or all of such Initial Pooled Mortgage Assets,
which Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
either were refinanced by such Pooled Mortgage Debt or repaid within 180
days prior to the incurrence of such Pooled Mortgage Debt; and (C) the
value of any Initial Cash Collateral at such time.
'INITIAL POOLED MORTGAGE ASSETS' means (i) assets from two or more
facilities on which Liens securing Debt (including, without limitation, any
obligation with respect to any letter of credit or similar instrument) and
contingent obligations are created within 90 days after the incurrence of
such Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
('INITIAL POOLED MORTGAGE FACILITIES') and (ii) cash proceeds of such Debt
(including, without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations (and Temporary
Cash Investments made with such proceeds) that are held by a trustee to
secure such Debt (including, without limitation, any obligation with
respect to any letter of credit or similar instrument) and contingent
obligations ('INITIAL CASH COLLATERAL').
'LEASE TERMINATION ACQUISITION' means any acquisition by BEI or any of
its Subsidiaries of a facility and related property that is made in
connection with the early termination of a leasehold interest of BEI or any
of its Subsidiaries in such facility.
'MATERIAL DEBT' means Debt (including, without limitation, any
obligation with respect to any letter of credit or similar instrument) and
contingent obligations (other than such Debt (including, without limitation,
any obligation with respect to any letter of credit or similar instrument)
and contingent obligations that arise under this Agreement) of BEI and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $15,000,000.
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<PAGE> 6
'MOODY'S RATING' means, for any day, the rating of BEI's senior
unsecured indebtedness by Moody's Investors Service, Inc. in effect on
such day.
'MORGAN' means Morgan Guaranty Trust Company of New York and its
successors.
'MORGAN COLLATERAL' means the real property and related personal
property that constitute Collateral (as defined in the Morgan Credit
Agreement), as of the Morgan Effective Date.
'MORGAN EFFECTIVE DATE' means March 3, 1993.
'MORGAN FINANCING DOCUMENTS, means the Morgan Credit Agreement, the
Notes (as defined in the Morgan Credit Agreement), the Subsidiary Guaranty
(as defined in the Morgan Credit Agreement) and the Security Documents (as
defined in the Morgan Credit Agreement).
'MORGAN OBLIGATIONS' shall have the meaning set forth in subsection
5.13.
'NEW ASSETS' shall have the meaning set forth in subsection 5.13.
'NIPPON' means The Nippon Credit Bank, Ltd. and its successors.
'NIPPON COLLATERAL' means the real property and related personal
property that constitutes Collateral (as defined in the Nippon Credit
Agreement) as of the Morgan Effective Date.
'NIPPON CREDIT AGREEMENT' means that certain Credit Agreement, dated as
of March 2, 1993, among Borrower, BEI, the lenders party thereto (the
"NIPPON LENDERS") and Nippon, as agent, as amended, supplemented or
modified.
'NIPPON FINANCING DOCUMENTS' means the Nippon Credit Agreement, the
Nippon Notes and the Nippon Mortgages.
'NIPPON MORTGAGES' means the Mortgages (as defined in the Nippon Credit
Agreement).
'NIPPON NOTES' means the Notes (as defined in the Nippon Credit
Agreement) in favor of the Nippon Lenders.
'NIPPON OBLIGATIONS' shall have the meaning set forth in subsection
5.13.
'POOLED MORTGAGE ASSETS' means Initial Pooled Mortgage Assets or
Substitute Pooled Mortgage Assets.
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<PAGE> 7
'POOLED MORTGAGE DEBT' means Debt (including, without limitation, any
obligation with respect to any letter of credit or similar instrument) and
contingent obligations secured by Pooled Mortgage Assets.
'REFINANCED DEBT' shall have the meaning set forth in subsection 5.15.
'REFINANCING DEBT' shall have the meaning set forth in subsection 5.15.
'S&P RATING' means, for any day, the rating of BEI's senior unsecured
indebtedness by Standard & Poor's Corporation on such day.
'SENIOR NOTE AGREEMENT' means that certain Indenture, dated as of
December 27, 1990, among Borrower, BEI and Yasuda Bank and Trust Company
(U.S.A.), as Trustee, as amended, supplemented or modified.
'SENIOR NOTE COLLATERAL' means the real property and related personal
property described in Exhibit A to the Collateral Release Agreement (as
defined in the Morgan Credit Agreement).
'SENIOR NOTE DOCUMENTS' means the Senior Notes (as defined in the
Senior Note Agreement), the Senior Note Agreement, the Trust Agreement (as
defined in the Senior Note Agreement) and the Senior Note Mortgages.
'SENIOR NOTE MORTGAGES' means the mortgages related to the Senior Note
Collateral.
'SENIOR NOTE OBLIGATIONS' shall have the meaning set forth in subsection
5.13.
'SPECIAL PURPOSE COMMERCIAL PAPER ISSUER' means a Wholly-Owned
Subsidiary of BEI the sole purpose of which is to issue commercial paper
and to purchase Medicare, Medicaid or other patient accounts receivable of
BEI and its Subsidiaries and make advances to BEI and its Subsidiaries
secured by security interests in such Medicare, Medicaid or other patient
accounts receivable, which accounts receivable and security interests
therein are to be pledged to secure such commercial paper and borrowings
by such Special Purpose Commercial Paper Issuer under a Commercial Paper
Backstop Facility.
'SUBSTITUTE POOLED MORTGAGE ASSETS' means assets on which Liens are
created in substitution of, or in addition to, any Initial Pooled Mortgage
Facilities to secure Debt (including, without limitation, any obligation
with respect to any letter of credit or
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<PAGE> 8
similar instrument) and contingent obligations that are secured by such
Initial Pooled Mortgage Assets.
'TEMPORARY CASH INVESTMENT' means any investment (whether by means of
share purchase, capital contribution, loan, time deposit or otherwise) in
(i) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, (ii)
commercial paper with maturities of not more than 180 days rated at least
P-1 by Moody's Investors Service or A-1 by Standard & Poor's Corporation,
(iii) deposit accounts in, and certificates of deposit, repurchase
agreements and bankers' acceptances of, Wilmington Trust Company or United
States branches of other commercial banks whose unsecured senior long-term
debt is rated A or better by Moody's Investors Service or Standard & Poor's
Corporation, in each case maturing within one year from the date of
acquisition thereof or (iv) in addition to the accounts and instruments
referred to in clause (iii), deposit accounts and certificates of deposit in
United States branches of banks insured by the Federal Deposit Insurance
Corporation that do not aggregate more than $100,000 in any one bank.
'WORKOUT TRANSACTION' means any adjustment, renegotiation, exchange,
subordination, amendment, sale or other disposition of any note receivable,
investment in any Person (whether by means of share purchase, capital
contribution, loan, time deposit or otherwise) or other similar asset of BEI
or any of its Subsidiaries, any release, subordination, renegotiation or
other adjustment or any Lien securing any Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument), contingent obligation or other obligation of any Person held
by or owed to BEI or any of its Subsidiaries, any acquisition of any asset
by BEI or any of its Subsidiaries or the making of any investment in an
Person (whether by means of share purchase, capital contribution, loan,
time deposit or otherwise) by BEI or any of its Subsidiaries, in each case
in connection with (i) the foreclosure, enforcement or realization by BEI
or any such Subsidiary on any Lien securing any Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument), contingent obligation or other obligation of any Person held
by or owed to BEI or any such Subsidiary or (ii) any renegotiation,
composition, adjustment, amendment or restructuring of, or any other
similar arrangement with respect to, any such Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument), contingent obligation or other obligation, in each case in
connection with the bankruptcy,
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<PAGE> 9
insolvency, financial distress or other similar condition of such
Person; provided that any such adjustment, renegotiation, exchange,
subordination, amendment, sale, disposition, release or acquisition or the
making of any such investment in any Person (whether by means of share
purchase, capital contribution, loan, time deposit or otherwise) (A) will,
in the reasonable opinion of an Authorized Financial Officer of BEI, in
light of the circumstances affecting the relevant obligor, be likely to
maximize the amount to be realized by BEI and its Subsidiaries with respect
to such Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument), contingent obligation or other
obligation or (B) is imposed on BEI or any of its Subsidiaries pursuant to
voting arrangements mandated by any law or contract arrangements binding
upon BEI or such Subsidiary.'"
(b) Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting therefrom the definition of "Permitted Commercial Paper" and
replacing such definition with the following:
"'PERMITTED COMMERCIAL PAPER' means commercial paper issued by a Special
Purpose Commercial Paper Issuer pursuant to a Commercial Paper Program and
borrowings by a Special Purpose Commercial Paper Issuer under a related
Commercial Paper Backstop Facility."
(C) Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting therefrom the definition of "Permitted Liens" and replacing such
definition with the following:
"'PERMITTED LIENS' means, with respect to any Collateral, those Liens
set forth below:
(i) Liens created or permitted by the Collateral Documents;
(ii) Liens for taxes, assessments or governmental charges or claims the
payment of which is not at the time required by subsection 5.17;
(iii) Statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iv) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of
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<PAGE> 10
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(v) Any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay;
(vi) Easements, rights-of-way, restrictions, other similar charges or
encumbrances, in each case that do not interfere with the ordinary conduct
of the business of BEI or any of its Subsidiaries; and
(vii) Liens (excluding Liens securing Debt) set forth on the title
insurance policies delivered in connection with the Mortgages that the
Agent may approve in its sole discretion."
(d) Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting therefrom the definition of "Consolidated Interest Charges" and
replacing such definition with the following:
"'CONSOLIDATED INTEREST CHARGES' means for any period all items for
such period of the types classified as 'interest' on
the consolidated statement of operations included in the Coverage Base
Financials."
(e) Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting therefrom the definition of "Morgan Credit Agreement" and replacing
such definition with the following:
"'MORGAN CREDIT AGREEMENT' means that certain Credit Agreement, dated
as of March 1, 1993, among Borrower, BEI, the banks party thereto, Morgan,
as issuing bank and as agent, as amended, supplemented or modified."
SECTION 2. AMENDMENTS WITH RESPECT TO THE ELIGIBLE
COLLATERAL APPRAISAL VALUE
(a) Subsection 2.6B of the Credit Agreement is hereby amended by
deleting the references to "160%" in the second and sixteenth lines thereof and
replacing such references with "125%".
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<PAGE> 11
(b) Subsection 3.2D of the Credit Agreement is hereby amended by
deleting the reference to "160%" in the eighth line thereof and replacing such
reference with "125%"
(c) Subsection 5.18A of the Credit Agreement is hereby amended by
deleting the reference to "160%" in the third line thereof and replacing such
reference with "125%".
(d) Subsection 5.18D of the Credit Agreement is hereby amended by
deleting the references to "160%" in the second and eleventh lines thereof and
replacing such references with "125%".
(e) Subsection 5.18E of the Credit Agreement is hereby amended by
deleting the reference to "160%" in the third line thereof and replacing such
reference with "125%".
SECTION 3. AMENDMENT TO SUBSECTION 2.7A OF THE CREDIT AGREEMENT
Subsection 2.7A of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and replacing it with the following:
"A. EURODOLLAR RATE LOANS. During such periods as such Loan is a
Eurodollar Rate Loan, at a rate per annum equal at all times during each
Interest Period for such Loan to the Adjusted Eurodollar Rate for such
Interest Period plus the Applicable Margin; provided, that after the
occurrence and during the continuation of any Event of Default, the
Eurodollar Rate Loans shall bear interest from the date on which such Event
of Default shall have occurred until such amount is paid in full at a rate
per annum equal at all times to 2.0% per annum above the rate of interest
otherwise payable under this subsection 2.7A, in each case payable in
arrears on each Interest Payment Date and on the date of any prepayment
thereof, unless such amounts are past due, in which case they shall be
payable on demand."
SECTION 4. AMENDMENT TO SUBSECTION 5.1 OF THE CREDIT AGREEMENT
Subsection 5.1 of the Credit Agreement is hereby amended by deleting
the final word "and" from clause H thereof, relettering clause I thereof as
clause "J" and inserting a new clause I as follows:
"I. promptly upon the occurrence of any change in the S&P Rating or the
Moody's Rating from such ratings last notified to the Lenders, a written
notice of such change setting forth the details thereof; and"
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SECTION 5. AMENDMENT TO SUBSECTION 5.5 OF THE CREDIT AGREEMENT
Subsection 5.5 of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and replacing it with the following:
"5.5 FIXED CHARGE COVERAGE RATIO
The Fixed Charge Coverage Ratio shall not be less than 1.00 to 1.00 at
any time."
SECTION 6. AMENDMENT TO SUBSECTION 5.8 OF THE CREDIT AGREEMENT
Subsection 5.8 of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and replacing it with the following:
"5.8 CONSOLIDATED DEBT FOR BORROWED MONEY TO CONSOLIDATED
EBITDA RATIO
On the last day of each fiscal quarter, the ratio of (a) the quotient
derived by dividing the sum of Consolidated Debt For Borrowed Money as of
the last day of each of the four fiscal quarters ending on such date, by
four, to (b) the sum of (i) Consolidated EBITDA and (ii) EBITDA for Sold
Facility for each facility the Debt of which is guaranteed by BEI or a
Subsidiary and which is included in Consolidated Debt for Borrowed Money for
such four fiscal quarters shall not be more than 6.00 to 1.00."
SECTION 7. AMENDMENT TO SUBSECTION 5.13A OF THE CREDIT AGREEMENT
Subsection 5.13A of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and replacing it with the following:
"A. Neither BEI nor any of its Subsidiaries will create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except the following:
(i) Liens existing on the Morgan Effective Date securing Debt
(including, without limitation, any obligation with respect to any
letter of credit or similar instrument), contingent obligations and
other obligations outstanding on the Morgan Effective Date;
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<PAGE> 13
(ii) Liens created or permitted by the Collateral Documents;
(iii) Liens on the Nippon Collateral securing the obligations ("NIPPON
OBLIGATIONS") of BEI and its Subsidiaries under the Nippon Financing
Documents and Liens on the Morgan Collateral securing obligations ("MORGAN
OBLIGATIONS") of BEI and its Subsidiaries under the Morgan Financing
Documents; provided that, in each case, the amount of Debt (including,
without limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations secured thereby does not
exceed the amount that has been or may be borrowed thereunder as of the
Morgan Effective Date;
(iv) Liens on the Senior Note Collateral securing the obligations
("SENIOR NOTE OBLIGATIONS" and, together with the Nippon Obligations and
the Morgan Obligations, the "DESIGNATED OBLIGATIONS") of BEI and its
Subsidiaries outstanding on the Morgan Effective Date under the Senior
Note Documents;
(v) any Lien on any asset of any corporation that becomes a
Consolidated Subsidiary of BEI after the Morgan Effective Date that exists
at the time such corporation becomes such a Consolidated Subsidiary and
(other than in a Workout Transaction) not created in contemplation
thereof;
(vi) any Lien existing on any asset prior to the acquisition thereof,
acquired after the Morgan Effective Date by BEI or a Subsidiary of BEI and
(other than in a Workout Transaction) not created in contemplation
thereof;
(vii) any Lien on any asset securing Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument) or contingent obligations incurred or assumed for the purpose
of financing all or any part of the cost of acquiring or constructing such
asset or reconstructing substantially all of such asset, provided that
such Lien attaches to such asset concurrently with or within 90 days after
the acquisition thereof;
(viii) any Lien on any asset securing Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument) or contingent obligations incurred or assumed for the purpose
of improving or making any
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addition to such asset, provided that (A) such Lien attaches to such
asset concurrently with or within 180 days after the completion of the
improvement thereof or addition thereto and (B) the aggregate principal
amount of all such Debt (including, without limitation, any obligation
with respect to any letter of credit or similar instrument) and contingent
obligations secured by any such Lien shall not, at any time, exceed
$20,000,000;
(ix) Liens securing Debt (including, without limitation, any obligation
with respect to any letter of credit or similar instrument) or contingent
obligations incurred in connection with the early termination of a lease,
provided that the aggregate amount of all such Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by any such Lien shall not,
at any time, exceed $20,000,000;
(x) Liens securing industrial development revenue bonds (or securing
contingent obligations to issuers of letters of credit issued to support
industrial development revenue bonds) arising in connection with the
conversion of the interest rate on such bonds from floating to long-term
fixed rates or from fixed rates to other long-term fixed rates;
(xi) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt (including, without limitation, any obligation with
respect to any letter of credit or similar instrument) or contingent
obligations secured by any Lien permitted by any of the foregoing clauses
of this subsection 5.13A, provided that the principal amount of such Debt
(including, without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations is not
increased and such Debt (including, without limitation, any obligation
with respect to any letter of credit or similar instrument) and contingent
obligations are not secured by any additional assets other than assets
that relate directly to the facility subject to the original financing;
(xii) Liens on Medicare, Medicaid or other patient accounts receivable
of BEI or any of its Subsidiaries granted to secure Permitted Commercial
Paper, provided that the net amount of all uncollected accounts receivable
owing to BEI or any of its Subsidiaries over which such a Lien is
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<PAGE> 15
granted, together, without duplication, with the net amount of all
uncollected accounts receivable owing to BEI or any of its Subsidiaries
that are assigned to secure such Permitted Commercial Paper, shall not
exceed, at any time, 175% of the aggregate principal amount of all
Permitted Commercial Paper then outstanding;
(xiii) Liens incidental to the conduct of its business or the ownership
of its assets that (A) do not secure Debt (including, without limitation,
any obligation with respect to any letter of credit or similar instrument)
or contingent obligations and (B) do not in the aggregate materially
detract from the value of its assets or materially impair the use thereof
in the operation of its business;
(xiv) Liens on assets (other than Nippon Collateral) securing Nippon
Obligations, Liens on assets (other than Morgan Collateral) securing
Morgan Obligations or Liens on assets (other than Senior Note Collateral)
securing Senior Note Obligations (such assets collectively, "NEW ASSETS"),
provided that the sum of (A) the excess of the Appraised Value of all New
Assets over the Appraised Value of all Nippon Collateral, Morgan
Collateral and Senior Note Collateral no longer subject to any Lien
securing any Designated Obligations, (B) the amount set forth in subclause
(A) of clause (xvi) of this subsection 5.13A and (C) the aggregate
principal amount of all Incremental Pooled Mortgage Debt and all Debt
(including, without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations secured by
Liens permitted under clause (xvii) of this subsection 5.13A shall not at
any time exceed $50,000,000;
(xv) Liens on Initial Pooled Mortgage Assets, provided that the sum of
the amounts set forth in subclause (A) of each of clause (xiv) and clause
(xvi) of this subsection 5.13A and the aggregate principal amount of all
Incremental Pooled Mortgage Debt and all Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by Liens permitted under
clause (xvii) of this subsection 5.13A shall not at any time exceed
$50,000,000;
(xvi) Liens on Substitute Pooled Mortgage Assets, provided that the sum
of (A) the excess of the Appraised Value of all Substitute Pooled
15
<PAGE> 16
Mortgage Assets over the Appraised Value of all Initial Pooled Mortgage
Facilities no longer subject to any Lien securing any Pooled Mortgage
Debt, (B) the amounts set forth in subclause (A) of clause (xiv) of this
subsection 5.13A, (C) the aggregate principal amount of all Incremental
Pooled Mortgage Debt and (D) all Debt (including, without limitation,
any obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by Liens permitted
under clause (xvii) of this subsection 5.13A shall not at any time
exceed $50,000,000; and
(xvii) Liens not otherwise permitted under clauses (i) through
(xvi) of this subsection 5.13A, provided that the sum of the amounts
set forth in subclause (A) of each of clause (xiv) and clause (xvi) of
this subsection 5.13A and the aggregate principal amount of all
Incremental Pooled Mortgage Debt and all Debt (including, without
limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations secured by Liens
permitted under this clause (xvii) shall not at any time exceed
$50,000,000.
Notwithstanding the foregoing, neither BEI nor any of its Subsidiaries
will create, assume or suffer to exist any Lien on any Collateral now owned
or hereafter acquired by it, except the Permitted Liens."
SECTION 8. AMENDMENT TO SUBSECTION 5.15 OF THE CREDIT AGREEMENT
Subsection 5.15 of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and replacing it with the following:
"5.15 INCURRENCE OF DEBT
BEI will not permit any of its Subsidiaries (other than the Borrower)
to incur, assume or suffer to exist any Debt (including, without limitation,
any obligation with respect to any letter of credit or similar instrument) or
any contingent obligation, except:
(a) Debt (including, without limitation, any obligation with
respect to any letter of credit or similar instrument) and contingent
obligations outstanding on March 1, 1993 and listed in Schedule II
attached to the Morgan Credit Agreement as in effect as of March 1,
1993;
16
<PAGE> 17
(b) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
incurred in connection with the early termination of a lease, provided that
the aggregate principal amount of all such Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument) and contingent obligations outstanding at any time shall not
exceed $20,000,000;
(c) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
secured by a Lien permitted pursuant to clause (v) or (vi) of subsection
5.13;
(d) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
("REFINANCING DEBT") incurred to refinance Debt (including, without
limitation, any obligation with respect to any letter of credit or similar
instrument) and contingent obligations ("REFINANCED DEBT") permitted under
clauses (a) through (c) above, provided that (i) the principal amount of
such Refinancing Debt shall not exceed the principal amount of such
Refinanced Debt and (ii) such Refinancing Debt shall have a weighted average
life of not less than the remaining weighted average life of such Refinanced
Debt or such Refinancing Debt shall not have any required payments of
principal prior to February 15, 1997;
(e) Permitted Commercial Paper, provided that the aggregate principal
amount of all Permitted Commercial Paper outstanding at any time shall not
exceed $100,000,000;
(f) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
incurred under the Loan Documents;
(g) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
incurred under the Morgan Financing Documents, the Nippon Financing
Documents or the Senior Note Documents not in excess of the amounts
specified in clauses (iii) and (iv) of subsection 5.13A;
(h) Guarantees by any Subsidiary of BEI of any obligation of BEI or any
of its other
17
<PAGE> 18
Subsidiaries that such guaranteeing Subsidiary would have been
permitted to incur hereunder as a primary obligation;
(i) Debt (including, without limitation, any obligation under any
letter of credit or similar instrument) and contingent obligations
consisting of advances from BEI or any of its Subsidiaries in connection
with the normal operation of the business of BEI and its Subsidiaries;
(j) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
incurred in connection with and as part of a Workout Transaction;
(k) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
incurred or assumed for the purpose of financing the cost of acquiring,
constructing or improving an asset of BEI or any of its Subsidiaries;
(l) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations
secured by Pooled Mortgage Assets, provided that the aggregate principal
amount of all Incremental Pooled Mortgage Debt and all Debt (including,
without limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations permitted under clause (m) of
this subsection 5.15 shall not at any time exceed $50,000,000; and
(m) Debt (including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent obligations not
otherwise permitted under clauses (a) through (l) of this subsection 5.15,
provided that the aggregate principal amount of all Incremental Pooled
Mortgage Debt and all Debt (including, without limitation, any obligation
with respect to any letter of credit or similar instrument) and contingent
obligations permitted under this clause (m) shall not at any time exceed
$50,000,000."
18
<PAGE> 19
SECTION 9. AMENDMENT TO SUBSECTION 6.4 OF THE CREDIT AGREEMENT
Subsection 6.4 of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and replacing it with the following:
"6.4 BREACH OF OTHER AGREEMENTS
Any event or condition shall occur that results in the acceleration of
the maturity, or requires the early redemption or prepayment, of any
Material Debt or any event or condition shall occur and be continuing that
enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of any Material Debt or any Person acting on such
holder's behalf to accelerate the maturity, or require the early redemption
or prepayment, thereof (unless such event or condition shall have been
waived and any acceleration or required redemption or prepayment rescinded),
provided that the fact that the interest paid on any industrial development
revenue bonds ceases to be exempt from federal income taxation shall not
constitute an Event of Default under this subsection 6.4 unless such
industrial development revenue bonds are accelerated, redeemed or prepaid or
the aggregate principal amount of industrial development revenue bonds
subject to acceleration or early redemption or prepayment as a result of
such event or condition shall be at least $15,000,000; or"
SECTION 10. AMENDMENT TO EXHIBIT VIII OF THE CREDIT AGREEMENT
(a) Exhibit VIII of the Credit Agreement is hereby amended by deleting
section A.1 of Attachment No. 1 thereof in its entirety and replacing it with
section A.1 set forth in Exhibit A attached hereto.
(b) Exhibit VIII of the Credit Agreement is hereby further amended by
deleting section A.4(a) of Attachment No. 1 thereof in its entirety and
replacing it with section A.4(a) set forth in Exhibit B attached hereto.
(c) Exhibit VIII of the Credit Agreement is hereby further amended by
deleting section C(a) of Attachment No. 1 thereof in its entirety and replacing
it with section C(a) set forth in Exhibit C attached hereto.
(d) Exhibit VIII of the Credit Agreement is hereby further amended by
adding at the end of Attachment No. 1 thereof sections D and E set forth in
Exhibit D attached hereto.
19
<PAGE> 20
SECTION 11. REPRESENTATIONS AND WARRANTIES
In order to induce Agent, Co-Agent and Lenders to enter into this
Amendment, each of BEI and Borrower represents and warrants to Agent, Co-Agent
and Lenders that:
(a) The representations and warranties of each Loan Party contained in
the Credit Agreement are true, correct and complete in all material respects on
and as of the date hereof to the same extent as though made on and as of the
date hereof except to the extent that such representations and warranties
specifically relate to an earlier date, in which case they are true, correct
and complete in all material respects as of such earlier date;
(b) No event has occurred and is continuing or would result from the
execution of this Amendment that constitutes an Event of Default or Potential
Event of Default;
(c) Each Loan Party has performed in all material respects all
agreements and satisfied all conditions that the Credit Agreement and this
Amendment provide shall be performed by it on or before the date hereof;
(d) The execution, delivery and performance of this Amendment and the
Credit Agreement as amended by this Amendment, by each Loan Party are within
the corporate power and authority of each such Loan Party and, as of the
Seventh Amendment Effective Date (as hereinafter defined), will be duly
authorized by all necessary corporate action on the part of each Loan Party,
and this Amendment, as of the Seventh Amendment Effective Date, is duly
executed and delivered by each of such Loan Parties and will constitute a valid
and binding agreement of each of such Loan Parties, enforceable against such
Loan Parties in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability. The Credit Agreement constitutes and, as
of the Seventh Amendment Effective Date, the Credit Agreement, as amended by
this Amendment, will constitute, valid and binding agreement of BEI and
Borrower, enforceable against BEI and Borrower in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles, relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
(e) The execution and delivery by each Loan Party of this Amendment
and the performance by each Loan Party of the Credit Agreement as amended by
this Amendment, do not and will not (i) violate any provision of any law or any
20
<PAGE> 21
governmental rule or regulation applicable to any Loan Party, the Certificate
or Articles of Incorporation or Bylaws of any Loan Party or any order, judgment
or decree of any court or other agency of government binding on any Loan Party,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any instrument that is material,
individually or in the aggregate, and that is binding on such Loan Party, (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of any Loan Party (other than any Liens created under
any of the Loan Documents in favor of Agent on behalf of Lenders), or (iv)
require any approval or consent of any Person under any instrument that is
material, individually or in the aggregate, and that is binding on such Loan
Party.
(f) The execution and delivery by each Loan Party of this Amendment
and the performance by each Loan Party of the Credit Agreement as amended by
this Amendment, do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
SECTION 12. CONDITIONS TO EFFECTIVENESS
Sections 1 through 10 of this Amendment shall become effective only
upon the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "SEVENTH
AMENDMENT EFFECTIVE DATE"):
A. On or before the Seventh Amendment Effective Date, BEI, Borrower
and each Subsidiary Guarantor shall deliver to Lenders (or to Agent for Lenders
with sufficient originally executed copies, as appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Seventh
Amendment Effective Date:
(i) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Amendment,
certified as of the Seventh Amendment Effective Date by its corporate
secretary or an assistant secretary as being in full force and effect
without modification or amendment;
(ii) Signature and incumbency certificates of its officers
executing this Amendment certified by its secretary or an assistant
secretary; and
(iii) Executed counterparts of this Amendment.
B. Lenders and their respective counsel shall have received originally
executed copies of one or more favorable written opinions of Robert W.
Pommerville, general counsel for
21
<PAGE> 22
BEI, and Weil, Gotshal & Manges, counsel for BEI, Borrower and each Subsidiary
Guarantor, in form and substance reasonably satisfactory to Agent and its
counsel, dated as of the Seventh Amendment Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit E to this
Amendment and as to such other matters as Agent acting on behalf of Lenders may
reasonably request.
C. On or before the Seventh Amendment Effective Date, each Lender
shall have delivered to Agent a counterpart of this Amendment originally
executed by a duly authorized officer of such Lender or by telex or telephonic
confirmation.
D. On or before the Seventh Amendment Effective Date:
(i) Borrower shall have caused payment to each Lender of an
amendment fee equal to 0.10% of the aggregate principal amount of Loans of
such Lender outstanding on the Seventh Amendment Effective Date;
(ii) Borrower shall have caused payment to Agent of all amounts
regarding the costs and expenses reasonably incurred by Agent in connection
with this Amendment which Borrower has agreed to pay;
(iii) Borrower shall have delivered to Agent (with sufficient
copies for each Lender) an Appraisal dated on or a recent date prior to
the Seventh Amendment Effective Date covering all Collateral (other than
Collateral which will be released after taking into account the provisions
of this Amendment and after taking into account the prepayment of Loans
made on or prior to the Seventh Amendment Effective Date), which Appraisal
shall show that the Eligible Collateral Appraisal Value of all Eligible
Collateral (other than any such Collateral which will be so released) is
greater than 125% of the aggregate outstanding principal amount of the
Loans;
(iv) Amendment No. 3 dated as of March 15, 1994 to the Morgan
Credit Agreement (as defined in the Credit Agreement as amended by this
Amendment) shall have become effective in all respects; and
(v) An amendment to the Nippon Credit Agreement (as defined in the
Credit Agreement as amended by this Amendment), which amendment decreases
the minimum ratio of (x) the appraised value of the Collateral (as defined
in the Nippon Credit Agreement) to (y) the aggregate principal amount of
Debt outstanding under the Nippon Credit Agreement to 1.25 to 1.00, shall
have effective in all respects.
22
<PAGE> 23
E. On or before the Seventh Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Agent and such counsel, and Agent and
such counsel shall have received all such counterpart originals or certified
copies of such documents as Agent may reasonably request.
SECTION 13. THE GUARANTIES
Each Guarantor acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each
Guarantor hereby confirms that the Guaranty Agreement and the Collateral
Documents to which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guaranty or secure, as the case may be, to
the fullest extent possible the payment and performance of all Obligations,
Guarantied Obligations (as defined in the applicable Guaranty Agreements) and
Secured Obligations (as defined in the Collateral Documents), as the case may
be, including, without limitation, the payment and performance of all
Obligations of Borrower now or hereafter existing under or in respect of the
Credit Agreement as amended by this Amendment and the Notes defined therein.
Each Guarantor acknowledges and agrees that any of the Guaranty
Agreements and the Collateral Documents to which it is a party or otherwise
bound shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or
limited by the execution or effectiveness of this Amendment. Each Guarantor
represents and warrants that all representations and warranties contained in
the Credit Agreement as amended by this Amendment and the Guaranty Agreements
and the Collateral Documents to which it is a party or otherwise bound are
true, correct and complete in all material respects on and as of the Seventh
Amendment Effective Date to the same extent as though made on and as of that
date except to the extent that such representations and warranties specifically
relate to an earlier date, in which case they are true, correct and complete in
all material respects as of such earlier date.
Each Guarantor acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Guarantor is not
required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to the Credit Agreement effected pursuant to this
Amendment or any other Loan Document and (ii) that neither the terms of the
Credit Agreement, any other Loan
23
<PAGE> 24
Document nor this Amendment shall be deemed to require the consent of any
Guarantor to any future amendments to the Credit Agreement.
SECTION 14. COUNTERPARTS; EFFECTIVENESS
This Amendment may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Amendment
(other than the provisions of Sections 1 through 10 hereof) shall become
effective upon the execution of a counterpart hereof by all Lenders and each of
the Loan Parties and receipt of written or telephonic notification of such
execution and authorization of delivery thereof.
SECTION 15. FEES AND EXPENSES
Borrower acknowledges that all costs, fees and expenses as described
in subsection 10.4 of the Credit Agreement incurred by Agent and its counsel
with respect to this Amendment and the documents and transactions contemplated
hereby shall be for the account of Borrower.
SECTION 16. EFFECT OF AMENDMENT
It is hereby agreed that, except as specifically provided herein, this
Amendment does not in any way affect or impair the terms and conditions of the
Credit Agreement, and all terms and conditions of the Credit Agreement are to
remain in full force and effect unless otherwise specifically amended or
changed pursuant to the terms and conditions of this Amendment.
SECTION 17. APPLICABLE LAW
This Amendment and the rights and obligations of the parties hereto
and all other aspects hereof shall be deemed to be made under, shall be
governed by, and shall be construed and enforced in accordance with, the laws
of the State of New York without regard to principles of conflicts of laws.
24
<PAGE> 25
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BEI:
BEVERLY ENTERPRISES, INC.
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title: Senior Vice President and Treasurer
Borrower:
BEVERLY CALIFORNIA CORPORATION
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title: Senior Vice President and Treasurer
AGENT, CO-AGENT AND LENDERS:
THE LONG-TERM CREDIT BANK OF JAPAN,
LOS ANGELES AGENCY,
as Agent and as a Lender
By: /s/ YUTAKA KAMISAWA
Title: Deputy General Manager
BANK OF MONTREAL,
as Co-Agent and as a Lender
By: /s/ DANIEL A. BROWN
Title: Director
S-1
<PAGE> 26
LENDERS:
INTERNATIONALE NEDERLANDEN (U.F.)
CAPITAL CORPORATION
By: /s/ J.W. LATIMER
Title: Managing Director
NIPPON SANSO NETHERLANDS B.V.
By: /s/ NOBUYOSHI ASAI
Title: Managing Director
U.S. NATIONAL BANK OF OREGON
By: /s/ JANET JORDAN
Title: Vice President
NICHIJUKIN (USA), LTD.
By: /s/ KAYUAKI OGAWA
Title: Treasurer and Secretary
ORIX USA CORPORATION
By:
Title:
S-2
<PAGE> 27
NIPPON SHINPAN FINANCE
(U.S.A.) CO., LTD.
By: /s/ SHUICHI TANAKAMARU
Title: President
THE SUBSIDIARY GUARANTORS:
Beverly Enterprises -
Alabama, Inc.
Beverly Enterprises -
Arkansas, Inc.
Beverly Enterprises -
Florida, Inc.
Beverly Enterprises -
Georgia, Inc.
Beverly Enterprises -
Maryland, Inc.
Beverly Enterprises -
Massachusetts, Inc.
Beverly Enterprises -
Minnesota, Inc.
Beverly Enterprises -
Mississippi, Inc.
Beverly Enterprises -
Missouri, Inc.
Beverly Enterprises -
Nebraska, Inc.
Beverly Enterprises -
North Carolina, Inc.
Beverly Enterprises -
Oregon
Beverly Enterprises -
Wisconsin, Inc.
S-3
<PAGE> 28
Commercial Management,
Inc.
Hallmark Convalescent
Homes, Inc.
Hospital Facilities
Corporation
Moderncare of Lumberton,
Inc.
Nebraska City S-C-H, Inc.
South Dakota - Beverly
Enterprises, Inc.
Vantage Healthcare
Corporation
AGI-Camelot, Inc.
AGI-McDonald County
Health Care, Inc.
Beverly Enterprises -
Arizona, Inc.
Beverly Enterprises -
California, Inc.
Beverly Enterprises -
Colorado, Inc.
Beverly Enterprises -
Connecticut, Inc.
Beverly Enterprises -
Garden Terrace, Inc.
Beverly Enterprises -
Hawaii, Inc.
Beverly Enterprises -
Idaho, Inc.
Beverly Enterprises -
Illinois, Inc.
Beverly Enterprises -
Indiana, Inc.
Beverly Enterprises -
Kansas, Inc.
S-4
<PAGE> 29
Beverly Enterprises -
Kentucky, Inc.
Beverly Enterprises -
Louisiana, Inc.
Beverly Enterprises -
Michigan, Inc.
Beverly Enterprises -
New Jersey, Inc.
Beverly Enterprises -
Ohio, Inc.
Beverly Enterprises -
Pennsylvania, Inc.
Beverly Enterprises -
South Carolina, Inc.
Beverly Enterprises -
Tennessee, Inc.
Beverly Enterprises -
Texas, Inc.
Beverly Enterprises -
Utah, Inc.
Beverly Enterprises -
Virginia, Inc.
Beverly Enterprises -
Washington, Inc.
Beverly Enterprises -
West Virginia, Inc.
Beverly Indemnity, Ltd.
Beverly Manor Inc. of
Hawaii
Beverly Savana Cay Manor,
Inc.
Columbia-Valley Nursing
Home, Inc.
Computran Systems, Inc.
S-5
<PAGE> 30
Continental Care Centers
of Council Bluffs, Inc.
Forest City Building Ltd.
Home Medical Systems,
Inc.
Kenwood View Nursing
Home, Inc.
Liberty Nursing Homes,
Incorporated
Medical Arts Health
Facility of
Lawrenceville, Inc.
Nursing Home Operators,
Inc.
Petersen Health Care,
Inc.
Pharmacy Corporation of
America
Salem No. 1, Inc.
South Alabama Nursing
Home, Inc.
Taylor County Health
Facility, Incorporated
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title: Senior Vice President & Treasurer
S-6
<PAGE> 31
Exhibit A
<TABLE>
<S> <C> <C> <C>
1. (a) Minimum Fixed Charge Coverage Ratio permitted for
the Applicable Period pursuant to subsection 5.5 . . . . . 1.00:1.00
(b) (i) Coverage Consolidated EBIDA for the four
consecutive fiscal quarters immediately
preceding and including the Period End
Date (the "APPLICABLE PERIOD") . . . . . . . . . $________
(ii) Consolidated Rental Expense for the
Applicable Period . . . . . . . . . . . . . . . . $________
(iii) Sum of Coverage Consolidated EBIDA and
Consolidated Rental Expense for the
Applicable Period (Item (b)(i) plus Item
(b)(ii)). . . . . . . . . . . . . . . . . . . . . $________
(c) (i) Consolidated Interest Charges for the
Applicable Period . . . . . . . . . . . . . . . . $________
(ii) Consolidated Rental Expense for the
Applicable Period . . . . . . . . . . . . . . . . $________
(iii) Consolidated Capital Expenditures for
the Applicable Period . . . . . . . . . . . . . . $________
(iv) Sum of Consolidated Interest Charges,
Consolidated Rental Expense and
Consolidated Capital Expenditures for
the Applicable Period (Item (c)(i)
plus Item (c)(ii) plus Item (c)(iii)) . . . . . . $________
(d) Actual Fixed Charge Coverage Ratio for the
Applicable Period (ratio of Item (b)(iii)
to Item (c) (iv)) . . . . . . . . . . . . . . . . . . . . ___: 1.00
</TABLE>
A-1
<PAGE> 32
Exhibit B
<TABLE>
<S> <C> <C> <C>
4. (a) Maximum Consolidated Debt for Borrowed
money to Consolidated EBITDA ratio permitted
for the Applicable Period pursuant to
subsection 5.8 . . . . . . . . . . . . . . . . . . . . 6.00:1.00
</TABLE>
B-1
<PAGE> 33
Exhibit C
<TABLE>
<S> <C> <C> <C>
1. (a) Minimum Eligible Collateral Appraisal Value
percentage as permitted and described in
subsection 5.18A . . . . . . . . . . . . . . . . . . . . . 125%
</TABLE>
C-1
<PAGE> 34
Exhibit D
<TABLE>
<S> <C> <C>
D. Negative Pledge
---------------
(a) Maximum aggregate principal amount of Debt
(including, without limitation, any obligation
with respect to any letter of credit or
similar instrument) and contingent obligations
secured by Liens on assets permitted pursuant to
subsection 5.13A(viii) . . . . . . . . . . . . . . . . . . $20,000,000
(b) Actual aggregate principal amount of all such
Debt (including, without limitation, any obligation
with respect to any letter of credit or similar
instrument) and contingent obligations on the
Period End Date . . . . . . . . . . . . . . . . . . . . . $__________
(c) Maximum aggregate amount of Debt (including,
without limitation, any obligation with respect
to any letter of credit or similar instrument)
and contingent obligations secured by any
Lien and incurred in connection with early
termination of leases permitted
pursuant to subsection 5.13A(ix) . . . . . . . . . . . . . $20,000,000
(d) Actual aggregate amount of such Debt (including,
without limitation, any obligation with respect
to any letter of credit or similar instrument) and
contingent obligations on the Period End Date . . . . . . $__________
(e) (i) Maximum excess Appraised Value of all
New Assets plus excess Appraised Value
of Substitute Pooled Mortgage Assets plus
aggregate principal amount of all
Incremental Pooled Mortgage Debt and all
Debt (including, without limitation, any
obligation with respect to any letter of
credit or similar instrument) and
contingent obligations secured by Liens
permitted under subsection 5.13A(xvii) . . . . . $50,000,000
(ii) Excess of the Appraised Value of all New
Assets over the Appraised Value of all
Nippon Collateral, Morgan Collateral, and
Senior Note Collateral no longer subject
to any Lien securing Designated Obligations
on the Period End Date . . . . . . . . . . . . . $__________
</TABLE>
D-1
<PAGE> 35
<TABLE>
<S> <C> <C>
(iii) Excess of the Appraised Value of all
Substitute Pooled Mortgage Assets over the
Appraised Value of all Initial Pooled
Mortgage Facilities no longer subject to any
Lien securing any Pooled Mortgage Debt on
the Period End Date . . . . . . . . . . . . . . . $__________
(iv) Aggregate principal amount of all Incremental
Pooled Mortgage Debt and all Debt (including,
without limitation, any obligation with
respect to any letter of credit or similar
instrument) and contingent obligations secured
by Liens permitted under subsection 5.13A(xvii)
on the Period End Date . . . . . . . . . . . . . $__________
(v) Actual sum under subsections 5.13A(xiv), (xv),
(xvi) and (xvii) on the Period End Date (Item
(e)(ii) plus Item e(iii) plus Item (e)(iv)) . . . $__________
E. Incurrence of Debt
------------------
(a) Maximum aggregate principal amount of Debt (including,
without limitation, any obligation with respect to
any letter of credit or similar instrument) and
contingent obligations incurred by BEI's Subsidiaries
(other than Borrower) in connection with early
termination of leases permitted pursuant to subsection
5.15(b) . . . . . . . . . . . . . . . . . . . . . . . . $20,000,000
(b) Actual aggregate principal amount of such Debt (including,
without limitation, any obligation with respect to any
letter of credit or similar instrument) and contingent
obligations outstanding on the Period End Date . . . . . . $___________
(c) Maximum aggregate principal amount of all Permitted
Commercial Paper permitted pursuant to subsection
5.15(e) . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
(d) Actual aggregate principal amount of all Permitted
Commercial Paper outstanding on the Period End Date . . . $___________
</TABLE>
D-2
<PAGE> 36
<TABLE>
<S> <C> <C>
(e) Maximum aggregate principal amount of Incremental
Pooled Mortgage Debt and all Debt (including, without
limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent
obligations permitted under clause (m) of
subsection 5.15 . . . . . . . . . . . . . . . . . . . . . . $50,000,000
(f) Actual aggregate principal amount of Incremental Pooled
Mortgage Debt and all Debt (including, without limitation,
any obligation with respect to any letter of credit or
similar instrument) and contingent obligations permitted
under clause (m) of subsection 5.15 on the Period End
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
</TABLE>
D-3
<PAGE> 37
Exhibit E
Matters to be Covered by Opinion of Counsel to Loan Parties
1. Each of the Loan Parties is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted except where the failure to obtain such governmental licenses,
authorizations, consents and approvals would not, in my/our reasonable
judgment, have a material adverse effect on the business operations,
properties, assets, business prospects or condition of the Loan Parties taken
as a whole.
2. The execution, delivery and performance by each of the Loan
Parties of the Amendment and performance by each Loan Party party thereto of
the Credit Agreement, as amended by the Amendment (the "Amended Credit
Agreement") (i) are within the corporate powers of each of the Loan Parties and
have been duly authorized by all necessary corporate action, (ii) require no
action by or in respect of, or filing with any Federal, New York, California,
Michigan or Delaware governmental body, agency or official, (iii) do not
contravene the articles or certificate of incorporation or by-laws or each Loan
Party, (iv) to the best of my/our knowledge, do not contravene any provision of
Delaware corporate, Federal, New York, California or Michigan law or regulation
applicable to each Loan Party, (v) to the best of my/our knowledge, do not
contravene or constitute a default under any agreement, judgment, injunction,
order, decree or other instrument that is material individually or in the
aggregate and that is binding upon each Loan Party and (vi) to the best of
my/our knowledge, will not result in the creation or imposition of any Lien on
any asset of the Loan Parties.
3. The Amendment has been duly executed and delivered by the Loan
Parties.
4. Each of the Amendment and the Amended Credit Agreement
constitutes the legal, valid and binding obligation of each Loan Party party
thereto, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
E-1
<PAGE> 1
EXHIBIT 10.37
SECOND AMENDMENT
TO CREDIT AGREEMENT
AMONG
BEVERLY ENTERPRISES, INC.,
BEVERLY CALIFORNIA CORPORATION,
THE SUBSIDIARY GUARANTORS LISTED HEREIN,
THE LENDERS LISTED HEREIN,
AND
THE NIPPON CREDIT BANK, LTD.
LOS ANGELES AGENCY, AS AGENT
DATED AS OF MAY 19, 1994
THIS SECOND AMENDMENT dated as of May 19, 1994 (this "AMENDMENT"), is
entered into by and among BEVERLY ENTERPRISES, INC., a Delaware corporation
("BEI"), BEVERLY CALIFORNIA CORPORATION, a California corporation ("BORROWER"),
the SUBSIDIARY GUARANTORS listed on the signature pages hereof (together with
BEI, the "GUARANTORS"), the LENDERS listed on the signature pages hereof (such
lenders, together with each Person that may or has become a party to the Credit
Agreement (as defined below) pursuant to subsection 10.8 thereof, are referred
to herein individually as a "LENDER" and collectively as the "LENDERS"), and
THE NIPPON CREDIT BANK, LTD., Los Angeles Agency ("NIPPON"), as agent for the
Lenders (in such capacity, the "AGENT"). This Amendment amends the Credit
Agreement dated as of March 2, 1993 by and among BEI, Borrower, Agent and
Lenders (as amended by that certain First Amendment to Credit Agreement dated
as of May 6, 1994, the "CREDIT AGREEMENT"), as set forth herein. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, Borrower desires to amend the Credit Agreement in certain
respects;
WHEREAS, Lenders and Agent have agreed to approve such amendments;
WHEREAS, Guarantors desire to reaffirm the effectiveness respectively
of the Subsidiary Guaranty Agreement and the BEI Guaranty Agreement;
NOW, THEREFORE, in consideration of the terms and conditions herein
contained, BEI, Borrower, Guarantors, Agent and Lenders agree as follows:
<PAGE> 2
AGREEMENT
SECTION 1. AMENDMENTS TO DEFINITIONS
(a) Subsection 1.1 of the Credit Agreement is hereby
amended by the addition of the following definitions in alphabetical order:
"'APPLICABLE MARGIN' means, for any day, the rate per annum
set forth under the column heading 'Applicable Margin' below for the
higher of the S&P Rating or the Moody's Rating in effect on such day:
<TABLE>
<CAPTION>
Higher of S&P Rating
or Moody's Rating
-------------------
S&P Rating Moody's Rating Applicable Margin
---------- -------------- -----------------
<S> <C> <C>
BBB+(or higher) Baa1(or higher) O.75%
BBB Baa2 1.00%
BBB- Baa3 1.25%
BB+ Ba1 1.75%
BB OR BB- Ba2 OR Ba3 2.00%
B+(or lower) or no rating B1(or lower) or no rating 2.50%
</TABLE>
Any change in the Applicable Margin shall become effective on the day
on which a change in the Moody's Rating or the S&P Rating that
requires a change in the Applicable Margin in accordance with this
definition shall be announced publicly by the respective rating
agency.
'APPRAISED VALUE' means, with respect to any asset subjected
to or released from any Lien securing any Designated Obligations or
any Pooled Mortgage Debt, the value of such asset as determined by an
independent appraisal performed within 90 days of, and as of a date
not less than 90 days prior to, the date upon which such asset is
subjected to or released from such Lien.
'BEI 1992 DISPOSITION PLAN' means the disposition plan
announced by BEI on November 9, 1992 relating to the proposed
disposition of certain facilities and the establishment of reserves
therefor, in each case, as summarized in Schedule VII to the Morgan
Credit Agreement as in effect as of March 1, 1993.
'COMMERCIAL PAPER BACKSTOP FACILITY' means a credit facility
entered into by a Special Purpose Commercial Paper Issuer for the
purposes of providing liquidity with respect to commercial paper
issued by such Special Purpose Commercial Paper Issuer and of
financing transactions of the
2
<PAGE> 3
type intended to be financed with the proceeds of such commercial
paper.
'COMMERCIAL PAPER PROGRAM' means a program pursuant to which a
Special Purpose Commercial Paper Issuer issues commercial paper
secured by (i) Medicaid, Medicare or other patient accounts receivable
purchased from BEI and its Subsidiaries or (ii) security interests in
Medicaid, Medicare or other patient accounts receivable granted by BEI
and its Subsidiaries.
'CONSOLIDATED CAPITAL EXPENDITURES' means, for any period, the
sum, without duplication, of (i) the total amount of additions to
property and equipment of BEI and its Consolidated Subsidiaries during
such period of the types classified as "Capital expenditures" or
"Payments for acquisitions, net of cash acquired" on the consolidated
statement of cash flows included in the Coverage Base Financials and
(ii) all investments (whether by means of share purchase, capital
contribution, loan, time deposit or otherwise) made by BEI or any of
its Subsidiaries during such period in Beverly Japan Corporation;
provided that "Consolidated Capital Expenditures" shall exclude (A)
the application of insurance or condemnation proceeds to rebuilding
facilities as permitted by the Morgan Credit Agreement and the
Security Documents (as defined in the Morgan Credit Agreement), (B)
any acquisition by BEI or any of its Subsidiaries of any assets in
connection with and as part of a Workout Transaction and (C) any
acquisition by BEI or any of its Subsidiaries of any assets as part of
a Lease Termination Acquisition.
'CONSOLIDATED RENTAL EXPENSE' means, for any period, the gross
rental expense of BEI and its Consolidated Subsidiaries with respect
to leases of real property and improvements of real property less,
with respect to any facility identified in the BEI 1992 Disposition
Plan, the amount of such gross rental expense with respect to such
facility for such period to the extent, but only to the extent, that
such expense is charged against the reserves established in respect of
such facility as part of the BEI 1992 Disposition Plan prior to March
1, 1993, determined on a consolidated basis for such period.
'COVERAGE BASE FINANCIALS' means the consolidated balance
sheet of BEI and its Consolidated Subsidiaries as of December 31, 1991
and the related consolidated statements of operation, stockholders'
equity and cash flows for the year then ended, together with the notes
thereto, included in BEI's 1991 Form 10-K and reported on without
qualification by Ernst & Young.
'COVERAGE CONSOLIDATED EBIDA' means, for any period, Coverage
Consolidated Net Income of BEI and its Consolidated
3
<PAGE> 4
Subsidiaries for such period plus, without duplication, any amounts
deducted in determining such consolidated net income (loss) in respect
of (a) Consolidated Interest Charges for such period and (b) expenses
for such period of the types classified as "depreciation and
amortization" on the consolidated statements of operation included in
the Coverage Base Financials.
'COVERAGE CONSOLIDATED NET INCOME' means, for any period, the
net income (calculated (a) before preferred and common stock
dividends, and (b) exclusive of the effect of any extraordinary or
other material nonrecurring gain or loss outside the ordinary course
of business) of BEI and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
'DESIGNATED OBLIGATIONS' shall have the meaning set forth in
subsection 5.13.
'FIXED CHARGE COVERAGE RATIO' means, on any date, the ratio of
(i) the sum of Coverage Consolidated EBIDA and Consolidated Rental
Expense for the four consecutive fiscal quarters most recently ended
on or prior to such date to (ii) the sum of Consolidated Interest
Charges, Consolidated Rental Expense and Consolidated Capital
Expenditures for such four fiscal quarters.
'INCREMENTAL POOLED MORTGAGE DEBT' means, at any time with
respect to any Pooled Mortgage Debt, the excess (but not less than
zero) of (i) the aggregate principal amount of such Pooled Mortgage
Debt outstanding at such time over (ii) the sum, without duplication,
of (A) an amount equal to 80% of the cost of acquisition or
construction of any Initial Pooled Mortgage Assets that have been
acquired or constructed by BEI or any of its Subsidiaries within 90
days of the incurrence of such Pooled Mortgage Debt and that are
subject to a Lien securing such Pooled Mortgage Debt; (B) the
aggregate principal amount of all Debt {including, without limitation,
any obligation with respect to any letter of credit or similar
instrument) and contingent obligations that had been secured by a Lien
permitted under clauses (i), (v) (vi), (vii), (ix) or (x) of
subsection 5.13A (or permitted under clause (xi) of subsection 5.13A
as it relates to any of the foregoing clauses) on some or all of such
Initial Pooled Mortgage Assets, which Debt (including, without
limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations either were refinanced
by such Pooled Mortgage Debt or repaid within 180 days prior to the
incurrence of such Pooled Mortgage Debt; and (C) the value of any
Initial Cash Collateral at such time.
'INITIAL POOLED MORTGAGE ASSETS' means (i) assets from two or
more facilities on which Liens securing Debt
4
<PAGE> 5
(including, without limitation, any obligation with respect to any
letter of credit or similar instrument) and contingent obligations are
created within 90 days after the incurrence of such Debt (including,
without limitation, any obligation with respect to any letter of
credit or similar instrument) and contingent obligations ('INITIAL
POOLED MORTGAGE FACILITIES') and (ii) cash proceeds of such Debt
{including, without limitation, any obligation with respect to any
letter of credit or similar instrument) and contingent obligations
(and Temporary Cash Investments made with such proceeds) that are held
by a trustee to secure such Debt (including, without limitation, any
obligation with respect to any letter of credit or similar instrument)
and contingent obligations ('INITIAL CASH COLLATERAL').
'LEASE TERMINATION ACQUISITION' means any acquisition by BEI
or any of its Subsidiaries of a facility and related property that is
made in connection with the early termination of a leasehold interest
of BEI or any of its Subsidiaries in such facility.
'LTCB' means The Long-Term Credit Bank of Japan, Ltd. and its
successors.
'LTCB COLLATERAL' means the real property and related personal
property that constitutes Collateral (as defined in the LTCB Credit
Agreement) as of the Morgan Effective Date.
'LTCB CREDIT AGREEMENT' means that certain Credit Agreement,
dated as of March 24, 1992, among Borrower, BEI, the lenders party
thereto (the "LTCB Lenders"), Bank of Montreal, as co-agent, and LTCB,
as agent, as amended, supplemented or modified.
'LTCB FINANCING DOCUMENTS' means the LTCB Credit Agreement,
the LTCB Notes and the LTCB Mortgages.
'LTCB MORTGAGES' means the Mortgages (as defined in the LTCB
Credit Agreement).
'LTCB NOTES' means the Notes (as defined in the LTCB Credit
Agreement) in favor of the LTCB Lenders.
'LTCB OBLIGATIONS' shall have the meaning set forth in
subsection 5.13.
'MATERIAL DEBT' means Debt (including, without limitation, any
obligation with respect to any letter of credit or similar instrument)
and contingent obligations (other than such Debt (including, without
limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations that arise under this
Agreement) of BEI and/or one or more of its Subsidiaries,
5
<PAGE> 6
arising in one or more related or unrelated transactions, in an
aggregate principal amount exceeding $15,000,000.
'MOODY's Rating' means, for any day, the rating of bei's
senior unsecured indebtedness by Moody's Investors Service, Inc. in
effect on such day.
'MORGAN' means Morgan Guaranty Trust Company of New York and
its successors.
'MORGAN COLLATERAL' means the real property and related
personal property that constitute Collateral (as defined in the Morgan
Credit Agreement), as of the Morgan Effective Date.
'MORGAN EFFECTIVE DATE' means March 3, 1993.
'MORGAN FINANCING DOCUMENTS' means the Morgan Credit
Agreement, the Notes (as defined in the Morgan Credit Agreement), the
Subsidiary Guaranty (as defined in the Morgan Credit Agreement) and
the Security Documents (as defined in the Morgan Credit Agreement).
'MORGAN OBLIGATIONS' shall have the meaning set forth in
subsection 5.13.
'NEW ASSETS' shall have the meaning set forth in subsection
5.13.
'POOLED MORTGAGE ASSETS' means Initial Pooled Mortgage Assets
or Substitute Pooled Mortgage Assets.
'POOLED MORTGAGE DEBT' means Debt (including, without
limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations secured by Pooled
Mortgage Assets.
'REFINANCED DEBT' shall have the meaning set forth in
subsection 5.15.
'REFINANCING DEBT' shall have the meaning set forth in
subsection 5.15.
'S&P RATING' means, for any day, the rating of BEI'S senior
unsecured indebtedness by Standard & Poor's Corporation on such day.
'SENIOR NOTE AGREEMENT' means that certain Indenture, dated as
of December 27, 1990, among Borrower, BEI and Yasuda Bank and Trust
Company (U.S.A.), as Trustee, as amended, supplemented or modified.
'SENIOR NOTE COLLATERAL' means the real property and related
personal property described in Exhibit A to the
6
<PAGE> 7
Collateral Release Agreement (as defined in the Morgan Credit
Agreement).
'SENIOR NOTE DOCUMENTS' means the Senior Notes (as defined in
the Senior Note Agreement), the Senior Note Agreement, the Trust
Agreement (as defined in the Senior Note Agreement) and the Senior
Note Mortgages.
'SENIOR NOTE MORTGAGES' means the mortgages related to the
Senior Note Collateral.
'SENIOR NOTE OBLIGATIONS' shall have the meaning set forth in
subsection 5.13.
'SPECIAL PURPOSE COMMERCIAL PAPER ISSUER' means A Wholly-Owned
Subsidiary of BEI the sole purpose of which is to issue commercial
paper and to purchase Medicare, Medicaid or other patient accounts
receivable of BEI and its Subsidiaries and make advances to BEI and
its Subsidiaries secured by security interests in such Medicare,
Medicaid or other patient accounts receivable, which accounts
receivable and security interests therein are to be pledged to secure
such commercial paper and borrowings by such Special Purpose
Commercial Paper Issuer under a Commercial Paper Backstop Facility.
'SUBSTITUTE POOLED MORTGAGE ASSETS' means assets on which
Liens are created in substitution of, or in addition to, any Initial
Pooled Mortgage Facilities to secure Debt (including, without
limitation, any obligation with respect to any letter of credit or
similar instrument) and contingent obligations that are secured by
such Initial Pooled Mortgage Assets.
'TEMPORARY CASH INVESTMENT' means any investment (whether by
means of share purchase, capital contribution, loan, time deposit or
otherwise) in (i) direct obligations of the united states or any
agency thereof, or obligations guaranteed by the united states or any
agency thereof, (ii) commercial paper with maturities of not more than
180 days rated an least P-1 by Moody's Investors Service or A-1 by
Standard & Poor's Corporation, (iii) deposit accounts in, and
certificates of deposit, repurchase agreements and bankers'
acceptances of, Wilmington Trust Company or United States branches of
other commercial banks whose unsecured senior long-term debt is rated
A or better by Moody's Investors Service or Standard & Poor's
Corporation, in each case maturing within one year from the date of
acquisition thereof or (iv) in addition to the accounts and
instruments referred to in clause (iii), deposit accounts and
certificates of deposit in United States branches of banks insured by
the Federal Deposit Insurance Corporation that do not aggregate more
than $100,000 in any one bank.
7
<PAGE> 8
'WORKOUT TRANSACTION' means any adjustment, renegotiation,
exchange, subordination, amendment, sale or other disposition of any
note receivable, investment in any Person (whether by means of share
purchase, capital contribution, loan, time deposit or otherwise) or
other similar asset of BEI or any of its Subsidiaries, any release,
subordination, renegotiation or other adjustment of any Lien securing
any Debt (including, without limitation, any obligation with respect
to any letter of credit or similar instrument), contingent obligation
or other obligation of any Person held by or owed to BEI or any of its
Subsidiaries, any acquisition of any asset by BEI or any of its
Subsidiaries or the making of any investment in any Person (whether by
means of share purchase, capital contribution, loan, time deposit or
otherwise) by BEI or any of its Subsidiaries, in each case in
connection with (i) the foreclosure, enforcement or realization by BEI
or any such Subsidiary on any Lien securing any Debt (including,
without limitation, any obligation with respect to any letter of
credit or similar instrument), contingent obligation or other
obligation of any Person held by or owed to BEI or any such Subsidiary
or (ii) any renegotiation, composition, adjustment, amendment or
restructuring of, or any other similar arrangement with respect to,
any such Debt (including, without limitation, any obligation with
respect to any letter of credit or similar instrument), contingent
obligation or other obligation, in each case in connection with the
bankruptcy, insolvency, financial distress or other similar condition
of such Person; provided that any such adjustment, renegotiation,
exchange, subordination, amendment, sale, disposition, release or
acquisition or the making of any such investment in any Person
(whether by means of share purchase, capital contribution, loan, time
deposit or otherwise) (A) will, in the reasonable opinion of an
Authorized Financial Officer of BEI, in light of the circumstances
affecting the relevant obligor, be likely to maximize the amount to be
realized by BEI and its Subsidiaries with respect to such Debt
(including, without limitation, any obligation with respect to any
letter of credit or similar instrument), contingent obligation or
other obligation or (B) is imposed on BEI or any of its Subsidiaries
pursuant to voting arrangements mandated by any law or contract
arrangements binding upon BEI or such Subsidiary.'"
(b) Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting therefrom the definition of "Permitted Commercial Paper"
and replacing such definition with the following:
"'PERMITTED COMMERCIAL PAPER' means commercial paper issued
by a Special Purpose Commercial Paper Issuer pursuant to a Commercial
Paper Program and borrowings by a Special
8
<PAGE> 9
Purpose Commercial Paper Issuer under a related Commercial Paper
Backstop Facility."
(c) Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting therefrom the definition of "Permitted Liens" and replacing
such definition with the following:
"'PERMITTED LIENS' means, with respect to any Collateral,
those Liens set forth below:
(i) Liens created or permitted by the Collateral
Documents;
(ii) Liens for taxes, assessments or governmental charges
or claims the payment of which is not at the time required by
subsection 5.17;
(iii) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor;
(iv) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money);
(v) Any attachment or judgment Lien, unless the judgment
it secures shall not, within 60 days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall
not have been discharged within 60 days after the expiration of any
such stay;
(vi) Easements, rights-of-way, restrictions, other similar
charges or encumbrances, in each case that do not interfere with the
ordinary conduct of the business of BEI or any of its Subsidiaries;
and
(vii) Liens (excluding Liens securing Debt) set forth on
the title insurance policies delivered in connection with the
Mortgages that the Agent may approve in its sole discretion."
(d) Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting therefrom the definition of
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<PAGE> 10
"Consolidated Interest Charges" and replacing such definition with the
following:
"'CONSOLIDATED INTEREST CHARGES' means for any period all
items for such period of the types classified as 'interest' on the
consolidated statement of operations included in the Coverage Base
Financials."
(e) Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting therefrom the definitions of "New Morgan Credit Agreement"
and "Old Morgan Credit Agreement" and adding the following definition in
alphabetical order:
"'MORGAN CREDIT AGREEMENT' means that certain Credit
Agreement, dated as of March 1, 1993, among Borrower, BEI, the banks
party thereto, Morgan, as issuing bank and as agent, as amended,
supplemented or modified."
The Credit Agreement and other Loan Documents also are amended by changing all
references to "New Morgan Credit Agreement" or "Old Morgan Credit Agreement"
therein to "Morgan Credit Agreement."
(f) Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting therefrom the definition of "LTCB Agreement."
SECTION 2. AMENDMENTS WITH RESPECT TO THE ELIGIBLE COLLATERAL APPRAISAL
VALUE
(a) Subsection 2.6B of the Credit Agreement is hereby amended
by deleting the references to "160%" in the second and sixteenth lines thereof
and replacing such references with "125%"
(b) Subsection 3.2D of the Credit Agreement is hereby amended
by deleting the reference to "160%" in the eighth line thereof and replacing
such reference with "125%"
(c) Subsection 5.18A of the Credit Agreement is hereby amended
by deleting the reference to "160%" in the third line thereof and replacing
such reference with "125%"
(d) Subsection 5.18D of the Credit Agreement is hereby amended
by deleting the references to "160%" in the second and eleventh lines thereof
and replacing such references with "125%"
(e) Subsection 5.18E of the Credit Agreement is hereby amended
by deleting the reference to "160%" in the third line thereof and replacing
such reference with "125%"
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<PAGE> 11
SECTION 3. AMENDMENT TO SUBSECTION 2.7A OF THE CREDIT AGREEMENT
Subsection 2.7A of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing it with the following:
"A. EURODOLLAR RATE LOANS. During such periods as such Loan is
a Eurodollar Rate Loan, at a rate per annum equal at all times during
each Interest Period for such Loan to the Adjusted Eurodollar Rate for
such Interest Period plus the Applicable Margin; provided, that after
the occurrence and during the continuation of any Event of Default,
the Eurodollar Rate Loans shall bear interest from the date on which
such Event of Default shall have occurred until such amount is paid in
full at a rate per annum equal at all times to 2.0% per annum above
the rate of interest otherwise payable under this subsection 2.7A, in
each case payable in arrears on each Interest Payment Date and on the
date of any prepayment thereof, unless such amounts are past due, in
which case they shall be payable on demand."
SECTION 4. AMENDMENT TO SUBSECTION 5.1 OF THE CREDIT AGREEMENT
Subsection 5.1 of the Credit Agreement is hereby amended by
deleting the final word "and" from clause H thereof, relettering clause I
thereof as clause "J" and inserting a new clause I as follows:
"I. promptly upon the occurrence of any change in the S&P
Rating or the Moody's Rating from such ratings last notified to the
Lenders, a written notice of such change setting forth the details
thereof; and"
SECTION 5. AMENDMENT TO SUBSECTION 5.5 OF THE CREDIT AGREEMENT
Subsection 5.5 of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing it with the following:
"5.5 FIXED CHARGE COVERAGE RATIO
The Fixed Charge Coverage Ratio shall not be less than 1.00 to
1.00 at any time."
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<PAGE> 12
SECTION 6. AMENDMENT TO SUBSECTION 5.8 OF THE CREDIT AGREEMENT
Subsection 5.8 of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing it with the following:
"5.8 CONSOLIDATED DEBT FOR BORROWED MONEY TO CONSOLIDATED
EBITDA RATIO
On the last day of each fiscal quarter, the ratio of (a) the
quotient derived by dividing the sum of Consolidated Debt For Borrowed
Money as of the last day of each of the four fiscal quarters ending on
such date, by four, to (b) the sum of (i) Consolidated EBITDA and (ii)
EBITDA for Sold Facility for each facility the Debt of which is
guaranteed by BEI or a Subsidiary and which is included in
Consolidated Debt for Borrowed Money for such four fiscal quarters
shall be more than 6.00 to 1.00."
SECTION 7. AMENDMENT TO SUBSECTION 5.13A OF THE CREDIT AGREEMENT
Subsection 5.13A of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing it with the following:
"A. Neither BEI nor any of its Subsidiaries will create,
assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except the following:
(i) Liens existing on the Morgan Effective Date
securing Debt (including, without limitation, any obligation
with respect to any letter of credit or similar instrument),
contingent obligations and other obligations outstanding on
the Morgan Effective Date;
(ii) Liens created or permitted by the Collateral
Documents;
(iii) Liens on the LTCB Collateral securing the
obligations ("LTCB OBLIGATIONS") of BEI and its Subsidiaries
under the LTCB Financing Documents and Liens on the Morgan
Collateral securing obligations ("MORGAN OBLIGATIONS") of BEI
and its Subsidiaries under the Morgan Financing Documents;
provided that, in each case, the amount of Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations
secured thereby does not exceed the amount that has been or
may be borrowed thereunder as of the Morgan Effective Date;
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<PAGE> 13
(iv) Liens on the Senior Note Collateral securing the
obligations ("SENIOR NOTE OBLIGATIONS" and, together with the
LTCB Obligations and the Morgan Obligations, the "DESIGNATED
OBLIGATIONS") of BEI and its Subsidiaries outstanding on the
Morgan Effective Date under the Senior Note Documents;
(v) any Lien on any asset of any corporation that
becomes a Consolidated Subsidiary of BEI after the Morgan
Effective Date that exists at the time such corporation
becomes such a Consolidated Subsidiary and (other than in a
Workout Transaction) not created in contemplation thereof;
(vi) any Lien existing on any asset prior to the
acquisition thereof, acquired after the Morgan Effective Date
by BEI or a Subsidiary of BEI and (other than in a Workout
Transaction) not created in contemplation thereof;
(vii) any Lien on any asset securing Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) or contingent obligations
incurred or assumed for the purpose of financing all or any
part of the cost of acquiring or constructing such asset or
reconstructing substantially all of such asset, provided that
such Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof;
(viii) any Lien on any asset securing Debt
(including, without limitation, any obligation with respect to
any letter of credit or similar instrument) or contingent
obligations incurred or assumed for the purpose of improving
or making any addition to such asset, provided that (A) such
Lien attaches to such asset concurrently with or within 180
days after the completion of the improvement thereof or
addition thereto and (B) the aggregate principal amount of all
such Debt (including, without limitation, any obligation with
respect to any letter of credit or similar instrument) and
contingent obligations secured by any such Lien shall not, at
any time, exceed $20,000,000;
(ix) Liens securing Debt (including, without
limitation, any obligation with respect to any letter of
credit or similar instrument) or contingent obligations
incurred in connection with the early termination of a lease,
provided that the aggregate amount of all such Debt
(including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent
obligations secured
13
<PAGE> 14
by any such Lien shall not, at any time, exceed $20,000,000;
(x) Liens securing industrial development revenue
bonds (or securing contingent obligations to issuers of
letters of credit issued to support industrial development
revenue bonds) arising in connection with the conversion of
the interest rate on such bonds from floating to long-term
fixed rates or from fixed rates to other long-term fixed
rates;
(xi) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) or contingent obligations
secured by any Lien permitted by any of the foregoing clauses
of this subsection 5.13A, provided that the principal amount
of such Debt (including, without limitation, any obligation
with respect to any letter of credit or similar instrument)
and contingent obligations is not increased and such Debt
(including, without limitation, any obligation with respect to
any letter of credit or similar instrument) and contingent
obligations are not secured by any additional assets other
than assets that relate directly to the facility subject to
the original financing;
(xii) Liens on Medicare, Medicaid or other patient
accounts receivable of BEI or any of its Subsidiaries granted
to secure Permitted Commercial Paper, provided that the net
amount of all uncollected accounts receivable owing to BEI or
any of its Subsidiaries over which such a Lien is granted,
together, without duplication, with the net amount of all
uncollected accounts receivable owing to BEI or any of its
Subsidiaries that are assigned to secure such Permitted
Commercial Paper, shall not exceed, at any time, 175% of the
aggregate principal amount of all Permitted Commercial Paper
then outstanding;
(xiii) Liens incidental to the conduct of its
business or the ownership of its assets that (A) do not secure
Debt (including, without limitation, any obligation with
respect to any letter of credit or similar instrument) or
contingent obligations and (B) do not in the aggregate
materially detract from the value of its assets or materially
impair the use thereof in the operation of its business;
(xiv) Liens on assets (other than LTCB Collateral)
securing LTCB Obligations, Liens on assets (other than Morgan
Collateral) securing Morgan Obligations or Liens on assets
(other than Senior Note Collateral) securing Senior Note
obligations (such assets collectively, "NEW
14
<PAGE> 15
ASSETS"), provided that the sum of (A) the excess of the
Appraised Value of all New Assets over the Appraised Value of
all LTCB Collateral, Morgan Collateral and Senior Note
Collateral no longer subject to any Lien securing any
Designated Obligations, (B) the amount set forth in subclause
(A) of clause (xvi) of this subsection 5.13A and (C) the
aggregate principal amount of all Incremental Pooled Mortgage
Debt and all Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by Liens
permitted under clause (xvii) of this subsection 5.13A shall
not at any time exceed $50,000,000;
(xv) Liens on Initial Pooled Mortgage Assets,
provided that the sum of the amounts set forth in subclause
(A) of each of clause (xiv) and clause (xvi) of this
subsection 5.13A and the aggregate principal amount of all
Incremental Pooled Mortgage Debt and all Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations
secured by Liens permitted under clause (xvii) of this
subsection 5.13A shall not at any time exceed $50,000,000;
(xvi) Liens on Substitute Pooled Mortgage Assets,
provided that the sum of (A) the excess of the Appraised Value
of all Substitute Pooled Mortgage Assets over the Appraised
Value of all Initial Pooled Mortgage Facilities no longer
subject to any Lien securing any Pooled Mortgage Debt, (B) the
amounts set forth in subclause (A) of clause (xiv) of this
subsection 5.13A, (C) the aggregate principal amount of all
Incremental Pooled Mortgage Debt and (D) all Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations
secured by Liens permitted under clause (xvii) of this
subsection 5.13A shall not at any time exceed $50,000,000; and
(xvii) Liens not otherwise permitted under clauses
(i) through (xvi) of this subsection 5.13A, provided that the
sum of the amounts set forth in subclause (A) of each of
clause (xiv) and clause (xvi) of this subsection 5.13A and the
aggregate principal amount of all Incremental Pooled Mortgage
Debt and all Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by Liens
permitted under this clause (xvii) shall not at any time
exceed $50,000,000.
15
<PAGE> 16
Notwithstanding the foregoing, neither BEI nor any of its
Subsidiaries will create, assume or suffer to exist any Lien on any
Collateral now owned or hereafter acquired by it, except the Permitted
Liens."
SECTION 8. AMENDMENT TO SUBSECTION 5.15 OF THE CREDIT AGREEMENT
Subsection 5.15 of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing with the following:
"5.15 INCURRENCE OF DEBT
BEI will not permit any of its Subsidiaries (other than the
Borrower) to incur, assume or suffer to exist any Debt (including,
without limitation, any obligation with respect to any letter of
credit or similar instrument) or any contingent obligation, except:
(a) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations outstanding on March 1,
1993 and listed in Schedule II attached to the Morgan Credit
Agreement as in effect as of March 1, 1993;
(b) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations incurred in connection
with the early termination of a lease, provided that the
aggregate principal amount of all such Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations
outstanding at any time shall not exceed $20,000,000;
(c) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by a Lien
permitted pursuant to clause (v) or (vi) of subsection 5.13;
(d) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations ("REFINANCING DEBT")
incurred to refinance Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations ("Refinanced Debt")
permitted under clauses (a) through (c) above, provided that
(i) the principal amount of such Refinancing Debt shall not
exceed the principal amount of such
16
<PAGE> 17
Refinanced Debt and (ii) such Refinancing Debt shall have a
weighted average life of not less than the remaining weighted
average life of such Refinanced Debt or such Refinancing Debt
shall not have any required payments of principal prior to
February 15, 1997;
(e) Permitted Commercial Paper, provided that the
aggregate principal amount of all Permitted Commercial Paper
outstanding at any time shall not exceed $100,000,000;
(f) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations incurred under the Loan
Documents;
(g) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations incurred under the
Morgan Financing Documents, the LTCB Financing Documents or
the Senior Note Documents not in excess of the amounts
specified in clauses (iii) and (iv) of subsection 5.13A;
(h) Guarantees by any Subsidiary of BEI of any
obligation of BEI or any of its other Subsidiaries that such
guaranteeing Subsidiary would have been permitted to incur
hereunder as a primary obligation;
(i) Debt (including, without limitation, any
obligation under any letter of credit or similar instrument)
and contingent obligations consisting of advances from BEI or
any of its Subsidiaries in connection with the normal
operation of the business of BEI and its Subsidiaries;
(j) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations incurred in connection
with and as part of a Workout Transaction;
(k) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations incurred or assumed for
the purpose of financing the cost of acquiring, constructing
or improving an asset of BEI or any of its Subsidiaries;
(l) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by Pooled
Mortgage Assets, provided that the aggregate principal amount
of all Incremental Pooled Mortgage
17
<PAGE> 18
Debt and all Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument) and contingent obligations permitted under clause
(m) of this subsection 5.15 shall not at any time exceed
$50,000,000; and
(m) Debt (including, without limitation, any
obligation with respect to any letter of credit or similar
instrument), and contingent obligations not otherwise
permitted under clauses (a) through (1) of this subsection
5.15, provided that the aggregate principal amount of all
Incremental Pooled Mortgage Debt and all Debt (including,
without limitation, any obligation with respect to any letter
of credit or similar instrument) and contingent obligations
permitted under this clause (m) shall not at any time exceed
$50,000,000."
SECTION 9. AMENDMENT TO SUBSECTION 6.4 OF THE CREDIT AGREEMENT
Subsection 6.4 of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and replacing with the following:
"6.4 BREACH OF OTHER AGREEMENTS
Any event or condition shall occur that results in the
acceleration of the maturity, or requires the early redemption or
prepayment, of any Material Debt or any event or condition shall occur
and be continuing that enables (or, with the giving of notice or lapse
of time or both, would enable the holder of any Material Debt or any
Person acting on such holder's behalf to accelerate the maturity, or
require the early redemption or prepayment, thereof (unless such event
or condition shall have been waived and any acceleration or required
redemption or prepayment rescinded), provided that the fact that the
interest paid on any industrial development revenue bonds ceases to be
exempt from federal income taxation shall not constitute an Event of
Default under this subsection 6.4 unless such industrial development
revenue bonds are accelerated, redeemed or prepaid or the aggregate
principal amount of industrial development revenue bonds subject to
acceleration or early redemption or prepayment as a result of such
event or condition shall be at least $15,000,000; or"
SECTION 10. AMENDMENT TO EXHIBIT VIII OF THE CREDIT AGREEMENT
(a) Exhibit VIII of the Credit Agreement is hereby amended by
deleting section A.1 of Attachment No. 1 thereof in
18
<PAGE> 19
its entirety and replacing it with section A.1 set forth in Exhibit A attached
hereto.
(b) Exhibit VIII of the Credit Agreement is hereby further
amended by deleting section A.4(a) of Attachment No. 1 thereof in its entirety
and replacing it with section A.4(a) set forth in Exhibit B attached hereto.
(c) Exhibit VIII of the Credit Agreement is hereby further
amended by deleting section C(a) of Attachment No. 1 thereof in its entirety
and replacing it with section C(a) set forth in Exhibit C attached hereto.
(d) Exhibit VIII of the Credit Agreement is hereby further
amended by (i) adding immediately after section C of Attachment No. 1 thereof
new sections D and E set forth in Exhibit D attached hereto, (ii) relettering
current section D of Attachment No. 1 thereof to section "F" and (iii) deleting
in its entirety current section E of Attachment No. 1 thereof.
SECTION 11. REPRESENTATIONS AND WARRANTIES
In order to induce Agent and Lenders to enter into this
Amendment, each of BEI and Borrower represents and warrants to Agent and
Lenders that:
(a) The representations and warranties of each Loan Party
contained in the Credit Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as though
made on and as of the date hereof except to the extent that such
representations and warranties specifically relate to an earlier date, in
which case they are true, correct and complete in all material respects as of
such earlier date;
(b) No event has occurred and is continuing or would result
from the execution of this Amendment that constitutes an Event of Default or
Potential Event of Default;
(c) Each Loan Party has performed in all material respects all
agreements and satisfied all conditions that the Credit Agreement and this
Amendment provide shall be performed by it on or before the date hereof;
(d) The execution, delivery and performance of this Amendment
and the Credit Agreement as amended by this Amendment, by each Loan Party are
within the corporate power and authority of each such Loan Party and, as of the
Second Amendment Effective Date (as hereinafter defined), will be duly
authorized by all necessary corporate action on the part of each Loan Party,
and this Amendment, as of the Second Amendment Effective Date, is duly executed
and delivered by each of such Loan Parties and will constitute a valid and
binding agreement of each of such Loan
19
<PAGE> 20
Parties, enforceable against such Loan Parties in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability. The
Credit Agreement constitutes and, as of the Second Amendment Effective Date,
the Credit Agreement, as amended by this Amendment, will constitute, a valid
and binding agreement of BEI and Borrower, enforceable against BEI and Borrower
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles,
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
(e) The execution and delivery by each Loan Party of this
Amendment and the performance by each Loan Party of the Credit Agreement as
amended by this Amendment, do not and will not (i) violate any provision of any
law or any governmental rule or regulation applicable to any Loan Party, the
Certificate or Articles of Incorporation or Bylaws of any Loan Party or any
order, judgment or decree of any court or other agency of government binding on
any Loan Party, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any instrument that is
material, individually or in the aggregate, and that is binding on such Loan
Party, (iii) result in or require the creation or imposition of any Lien upon
any of the properties or assets of any Loan Party (other than any Liens created
under any of the Loan Documents in favor of Agent on behalf of Lenders), or
(iv) require any approval or consent of any Person under any instrument
that is material, individually or in the aggregate, and that is binding
on such Loan Party.
(f) The execution and delivery by each Loan Party of this
Amendment and the performance by each Loan Party of the Credit Agreement as
amended by this Amendment, do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
SECTION 12. CONDITIONS TO EFFECTIVENESS
Sections 1 through 10 of this Amendment shall become effective
only upon the satisfaction of all of the following conditions precedent (the
date of satisfaction of such conditions being referred to herein as the "Second
Amendment Effective Date"):
A. On or before the Second Amendment Effective Date, BEI,
Borrower and each Subsidiary Guarantor shall deliver to Lenders (or to Agent
for Lenders with sufficient originally executed copies, as appropriate, for
each Lender and its counsel)
20
<PAGE> 21
the following, each, unless otherwise noted, dated the Second Amendment
Effective Date:
(i) Resolutions of its Board of Directors approving
and authorizing the execution, delivery, and performance of this
Amendment, certified as of the Second Amendment Effective Date by its
corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
(ii) Signature and incumbency certificates of its
officers executing this Amendment certified by its secretary or an
assistant secretary; and
(iii) Executed counterparts of this Amendment.
B. Lenders and their respective counsel shall have
received originally executed copies of one or more favorable written opinions
of Robert W. Pommerville, general counsel for BEI, and Weil, Gotshal & Manges,
counsel for BEI, Borrower and each Subsidiary Guarantor, in form and substance
reasonably satisfactory to Agent and its counsel, dated as of the Second
Amendment Effective Date and setting forth substantially the matters in the
opinions designated in Exhibit E to this Amendment and as to such other matters
as Agent acting on behalf of Lenders may reasonably request.
C. On or before the Second Amendment Effective Date,
each Lender shall have delivered to Agent a counterpart of this Amendment
originally executed by a duly authorized officer of such Lender or by telex or
telephonic confirmation.
D. On or before the Second Amendment Effective Date:
(i) Borrower shall have caused payment to each Lender
of an amendment fee equal to 0.25% of the aggregate principal amount
of Loans of such Lender outstanding on the Second Amendment Effective
Date;
(ii) Borrower shall have caused payment to Agent of
all amounts regarding the costs and expenses reasonably incurred by
Agent in connection with this Amendment which Borrower has agreed to
pay;
(iii) Borrower shall have delivered to Agent (with
sufficient copies for each Lender) an Appraisal dated on or a recent
date prior to the Second Amendment Effective Date covering all
Collateral (other than Collateral which will be released after taking
into account the provisions of this Amendment and after taking into
account the prepayment of Loans made on or prior to the Second
Amendment Effective Date), which Appraisal shall show that the
Eligible Collateral Appraisal Value of all Eligible Collateral (other
than any such Collateral which will be so released) is
21
<PAGE> 22
greater than 125% of the aggregate outstanding principal amount of the Loans;
(iv) Amendment No. 3 dated as of March 15, 1994 to the Morgan
Credit Agreement (as defined in the Credit Agreement as amended by
this Amendment) shall have become effective in all respects; and
(v) An amendment to the LTCB Credit Agreement (as defined in
the Credit Agreement as amended by this Amendment), which amendment
decreases the minimum ratio of (x) the appraised value of the
Collateral (as defined in the LTCB Credit Agreement) to (y) the
aggregate principal amount of Debt outstanding under the LTCB Credit
Agreement to 1.25 to 1.00, shall have become effective in all
respects.
E. On or before the Second Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and such counsel,
and Agent and such counsel shall have received all such counterpart originals
or certified copies of such documents as Agent may reasonably request.
SECTION 13. THE GUARANTIES
Each Guarantor acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each
Guarantor hereby confirms that the Guaranty Agreement and the Collateral
Documents to which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guaranty or secure, as the case may be, to
the full extent possible the payment and performance of all Obligations,
Guarantied Obligations (as defined in the applicable Guaranty Agreements) and
Secured Obligations (as defined in the Collateral Documents), as the case may
be, including, without limitation, the payment and performance of all
Obligations of Borrower now or hereafter existing under or in respect of the
Credit Agreement as amended by this Amendment and the Notes defined therein.
Each Guarantor acknowledges and agrees that any of the
Guaranty Agreements and the Collateral Documents to which it is a party or
otherwise bound shall continue in full force and effect and that all of its
obligations thereunder shall be valid and enforceable and shall not be impaired
or limited by the execution or effectiveness of this Amendment. Each Guarantor
represents and warrants that all representations and warranties contained in
the Credit Agreement as amended by this Amendment and the Guaranty Agreements
and the Collateral Documents to which it is a
22
<PAGE> 23
party or otherwise bound are true, correct and complete in all material
respects on and as of the Second Amendment Effective Date to the same extent as
though made on and as of that date except to the extent that such
representations and warranties specifically relate to an earlier date, in which
case they are true, correct and complete in all material respects as of such
earlier date.
Each Guarantor acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Amendment,
such Guarantor is not required by the terms of the Credit Agreement or any
other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment or any other Loan Document and (ii) that
neither the terms of the Credit Agreement, any other Loan Document nor this
Amendment shall be deemed to require the consent of any Guarantor to any future
amendments to the Credit Agreement.
SECTION 14. COUNTERPARTS; EFFECTIVENESS
This Amendment may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Amendment
(other than the provisions of Sections 1 through 10 hereof) shall become
effective upon the execution of a counterpart hereof by all Lenders and each of
the Loan Parties and receipt of written or telephonic notification of such
execution and authorization of delivery thereof.
SECTION 15. FEES AND EXPENSES
Borrower acknowledges that all costs, fees and expenses as
described in subsection 10.4 of the Credit Agreement incurred by Agent and its
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.
SECTION 16. EFFECT OF AMENDMENT
It is hereby agreed that, except as specifically provided
herein, this Amendment does not in any way affect or impair the terms and
conditions of the Credit Agreement, and all terms and conditions of the Credit
Agreement are to remain in full force and effect unless otherwise specifically
amended or changed pursuant to the terms and conditions of this Amendment.
23
<PAGE> 24
SECTION 17. APPLICABLE LAW
This Amendment and the rights and obligations of the parties
hereto and all other aspects hereof shall be deemed to be made under, shall be
governed by, and shall be construed and enforced in accordance with, the laws
of the State of New York without regard to principles of conflicts of laws.
24
<PAGE> 25
WITNESS the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
BEI:
BEVERLY ENTERPRISES, Inc.
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title:
Borrower:
BEVERLY CALIFORNIA CORPORATION
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title:
Agent:
NIPPON CREDIT BANK, LTD.
LOS ANGELES AGENCY,
as Agent and as a Lender
By: /s/ BERNARDO CORREA-HENSCHKE
Title:
Lenders:
THE NIPPON CREDIT BANK, LTD.,
LOS ANGELES AGENCY,
as Agent and as a Lender
By: /s/ BERNARDO CORREA-HENSCHKE
Title:
S-2
<PAGE> 26
The Subsidiary Guarantors:
Beverly Enterprises -
Alabama, Inc.
Beverly Enterprises -
Arkansas, Inc.
Beverly Enterprises -
Florida, Inc.
Beverly Enterprises -
Georgia, Inc.
Beverly Enterprises -
Maryland, Inc.
Beverly Enterprises -
Massachusetts, Inc.
Beverly Enterprises -
Minnesota, Inc.
Beverly Enterprises -
Mississippi, Inc.
Beverly Enterprises -
Missouri, Inc.
Beverly Enterprises -
Nebraska, Inc.
Beverly Enterprises -
North Carolina, Inc
Beverly Enterprises -
Oregon
Beverly Enterprises -
Wisconsin, Inc.
S-3
<PAGE> 27
Commercial Management,
Inc.
Hallmark Convalescent
Homes, Inc.
Hospital Facilities
Corporation
Moderncare of Lumberton,
Inc.
Nebraska City S-C-H, Inc.
South Dakota - Beverly
Enterprises, Inc.
Vantage Healthcare
Corporation
AGI - Camelot, Inc.
AGI-McDonald County
Health Care, Inc.
Beverly Enterprises -
Arizona, Inc.
Beverly Enterprises -
California, Inc.
Beverly Enterprises -
Colorado, Inc.
Beverly Enterprises -
Connecticut, Inc.
Beverly Enterprises -
Garden Terrace, Inc.
Beverly Enterprises -
Hawaii, Inc.
Beverly Enterprises -
Idaho, Inc.
Beverly Enterprises -
Illinois, Inc.
Beverly Enterprises -
Indiana, Inc.
Beverly Enterprises -
Kansas, Inc.
S-4
<PAGE> 28
Beverly Enterprises -
Kentucky, Inc.
Beverly Enterprises -
Louisiana, Inc.
Beverly Enterprises -
Michigan, Inc.
Beverly Enterprises -
New Jersey, Inc.
Beverly Enterprises -
Ohio, Inc.
Beverly Enterprises -
Pennsylvania, Inc.
Beverly Enterprises -
South Carolina, Inc.
Beverly Enterprises -
Tennessee, Inc.
Beverly Enterprises -
Texas, Inc.
Beverly Enterprises -
Utah, Inc.
Beverly Enterprises -
Virginia, Inc.
Beverly Enterprises -
Washington, Inc.
Beverly Enterprises -
West Virginia, Inc.
Beverly Indemnity, Ltd.
Beverly Manor Inc.
of Hawaii
Beverly Savana Cay Manor,
Inc.
Columbia-Valley Nursing
Home, Inc.
Computran Systems, Inc.
S-5
<PAGE> 29
Continental Care Centers
of Council Bluffs, Inc.
Forest City Building Ltd.
Home Medical Systems,
Inc.
Kenwood View Nursing
Home, Inc.
Liberty Nursing Homes,
Incorporated
Medical Arts Health
Facility of
Lawrenceville, Inc.
Nursing Home Operators,
Inc.
Petersen Health Care,
Inc.
Pharmacy Corporation of
America
Salem No. 1, Inc.
South Alabama Nursing
Home, Inc.
Taylor County Health
Facility, Incorporated
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title:
S-6
<PAGE> 30
Exhibit A
<TABLE>
<S> <C> <C>
1. (a) Minimum Fixed Charge Coverage Ratio permitted for
the Applicable Period pursuant to subsection 5.5 . . . . . . . . . . 1.00:1.00
(b) (i) Coverage Consolidated EBIDA for the four
consecutive fiscal quarters immediately
preceding and including the Period End
Date (the "APPLICABLE PERIOD") . . . . . . . . . . . . . . $________
(ii) Consolidated Rental Expense for the Applicable
Period . . . . . . . . . . . . . . . . . . . . . . . . . . $________
(iii) Sum of Coverage Consolidated EBIDA and Consolidated
Rental Expense for the Applicable Period (Item (b)(i)
plus Item (b)(ii)) . . . . . . . . . . . . . . . . . . . . $________
(c) (i) Consolidated Interest Charges for the Applicable
Period . . . . . . . . . . . . . . . . . . . . . . . . . . $________
(ii) Consolidated Rental Expense for the Applicable
Period . . . . . . . . . . . . . . . . . . . . . . . . . . $________
(iii) Consolidated Capital Expenditures for the Applicable
Period . . . . . . . . . . . . . . . . . . . . . . . . . . $________
(iv) Sum of Consolidated Interest Charges, Consolidated Rental
Expense and Consolidated Capital Expenditures for the
Applicable Period (Item (c)(i) plus Item (c)(ii) plus
Item(c)(iii)) . . . . . . . . . . . . . . . . . . . . . . $________
(d) Actual Fixed Charge Coverage Ratio for the Applicable Period
(ratio of Item (b)(iii) to Item (c)(iv)) . . . . . . . . . . . . . ____:1.00
</TABLE>
A-1
<PAGE> 31
Exhibit B
<TABLE>
<S> <C> <C>
4. (a) Maximum Consolidated Debt for Borrowed Money to Consolidated
EBITDA ratio permitted for the Applicable Period pursuant to
subsection 5.8 . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00: 1.00
</TABLE>
B-1
<PAGE> 32
Exhibit C
<TABLE>
<S> <C> <C>
1. (a) Minimum Eligible Collateral Appraisal Value percentage as
permitted and described in subsection 5.18A . . . . . . . . . . . . 125%
</TABLE>
C-1
<PAGE> 33
Exhibit D
<TABLE>
<S> <C> <C>
D. Negative Pledge
---------------
(a) Maximum aggregate principal amount of Debt (including,
without limitation, any obligation with respect to any
letter of credit or similar instrument) and contingent
obligations secured by Liens on assets permitted pursuant
to subsection 5.13A(viii) . . . . . . . . . . . . . . . . . . . . $20,000,000
(b) Actual aggregate principal amount of all such Debt (including,
without limitation, any obligation with respect any letter of
credit or similar instrument) and contingent obligations on
the Period End Date . . . . . . . . . . . . . . . . . . . . . . . $__________
(c) Maximum aggregate amount of Debt (including, without limitation,
any obligation with respect to any letter of credit or similar
instrument) and contingent obligations secured by any Lien
and incurred in connection with early termination of leases
permitted pursuant to subsection 5.13A(ix) . . . . . . . . . . . $20,000,000
(d) Actual aggregate amount of such Debt (including, without
limitation, any obligation with respect to any letter of
credit or similar instrument) and contingent obligations
on the Period End Date . . . . . . . . . . . . . . . . . . . . . $__________
(e) (i) Maximum excess Appraised Value of all New Assets plus
excess Appraised Value of Substitute Pooled Mortgage Assets
plus aggregate principal amount of all Incremental Pooled
Mortgage Debt and all Debt (including, without limitation,
any obligation with respect to any letter of credit or
similar instrument) and contingent obligations secured by
Liens permitted under subsection 5.13A(xvii) . . . . . . . . . . $50,000,000
(ii) Excess of the Appraised Value of all New Assets over
the Appraised Value of all LTCB Collateral, Morgan
Collateral, and Senior Note Collateral no longer subject
to any Lien securing Designated Obligations on the Period
End Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
</TABLE>
D-1
<PAGE> 34
<TABLE>
<S> <C> <C>
(iii) Excess of the Appraised Value of all Substitute
Pooled Mortgage Assets over the Appraised Value of all
Initial Pooled Mortgage Facilities no longer subject to
any Lien securing any Pooled Mortgage Debt on the Period
End Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
(iv) Aggregate principal amount of all Incremental Pooled
Mortgage Debt and all Debt (including, without limitation,
any obligation with respect to any letter of credit or
similar instrument) and contingent obligations secured by
Liens permitted under subsection 5.13A(xvii) on the Period
End Date . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
(v) Actual sum under subsections 5.13A(xiv), (xv), (xvi)
and (xvii) on the Period End Date (Item (e)(ii) plus Item
e(iii) plus Item (e)(iv)) . . . . . . . . . . . . . . . . . . . $_________
E. Incurrence of Debt
------------------
(a) Maximum aggregate principal amount of Debt (including,
without limitation, any obligation with respect to any
letter of credit or similar instrument) and contingent
obligations incurred by BEI's Subsidiaries (other than
Borrower) in connection with early termination of
leases permitted pursuant to subsection 5.15(b) . . . . . . . . $20,000,000
(b) Actual aggregate principal amount of such Debt (including,
without limitation, any obligation with respect to any
letter of credit or similar instrument) and contingent
obligations outstanding on the Period End Date. . . . . . . . . $__________
(c) Maximum aggregate principal amount of all Permitted
Commercial Paper permitted pursuant to subsection 5.15(e) . . . $100,000,000
(d) Actual aggregate principal amount of all Permitted
Commercial Paper outstanding on the Period End Date . . . . . . $__________
(e) Maximum aggregate principal amount of Incremental Pooled
Mortgage Debt and all debt (including, without limitation,
any obligation with respect to any letter of credit or
similar instrument) and contingent obligations permitted
under clause (m) of subsection 5.15 . . . . . . . . . . . . . . $50,000,000
</TABLE>
D-2
<PAGE> 35
<TABLE>
<S> <C>
(F) Actual aggregate principal amount of Incremental Pooled
Mortgage Debt and all Debt (including, without limitation,
any obligation with respect to any letter of credit or
similar instrument) and contingent obligations permitted
under clause (m) of subsection 5.15 on the Period End Date . . $__________
</TABLE>
D-3
<PAGE> 36
Exhibit E
Matters to be Covered by Opinion of Counsel to Loan Parties
1. Each of the Loan Parties is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted except where the failure to obtain such governmental licenses,
authorizations, consents and approvals would not, in my/our reasonable
judgment, have a material adverse effect on the business operations,
properties, assets, business prospects or condition of the Loan Parties taken
as a whole.
2. The execution, delivery and performance by each of the Loan
Parties of the Amendment and performance by each Loan Party party thereto of
the Credit Agreement, as amended by the Amendment (the "Amended Credit
Agreement") (i) are within the corporate powers of each of the Loan Parties
and have been duly authorized by all necessary corporate action, (ii) require
no action by or in respect of, or filing with any Federal, New York,
California, Michigan or Delaware governmental body, agency or official, (iii)
do not contravene the articles or certificate of incorporation or by-laws or
each Loan Party, (iv) to the best of my/our knowledge, do not contravene any
provision of Delaware corporate, Federal, New York, California or Michigan law
or regulation applicable to each Loan Party, (v) to the best of my/our
knowledge, do not contravene or constitute a default under any agreement,
judgment, injunction, order, decree or other instrument that is material
individually or in the aggregate and that is binding upon each Loan Party and
(vi) to the best of my/our knowledge, will not result in the creation or
imposition of any Lien on any asset of the Loan Parties.
3. The Amendment has been duly executed and delivered by the Loan
Parties.
4. Each of the Amendment and the Amended Credit Agreement
constitutes the legal, valid and binding obligation of each Loan Party party
thereto, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
E-1
<PAGE> 1
EXHIBIT 10.41
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT dated as of April 6, 1994 among BEVERLY CALIFORNIA
CORPORATION, a California corporation (the "Borrower"), BEVERLY ENTERPRISES,
INC., a Delaware corporation (the "Guarantor"), the BANKS listed on the
signature pages hereof (the "Banks"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Issuing Bank (the "Issuing Bank"), and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Guarantor, the Banks, the Issuing
Bank and the Agent have heretofore entered into a Credit Agreement dated as of
March 1, 1993 (as amended, the "Credit Agreement"); and
WHEREAS, the Borrower, the Guarantor, the Banks, the Issuing
Bank and the Agent desire to amend the Credit Agreement as hereinafter provided;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Credit Agreement shall have the meaning assigned to such term in the Credit
Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and
each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Credit Agreement shall from and after
the date hereof refer to the Credit Agreement as amended hereby.
SECTION 2. Amendment to Section 1.01 of the Credit
Agreement. Section 1.01 of the Credit Agreement is hereby amended by deleting,
from the second line of the definition of "Security Documents" contained
therein, the expression "and the Mortgages".
SECTION 3. Amendment to Section 2.06(b) of the Credit
Agreement. Section 2.06(b) of the Credit Agreement is hereby amended by
replacing the expression "1-1/4%" contained in the definition of "Margin"
included therein with the expression "1-3/8%".
<PAGE> 2
SECTION 4. Amendment to Section 2.07(f) of the Credit
Agreement. Section 2.07(f) of the Credit Agreement is hereby amended by:
(i) replacing the expressing "1-1/2%" on the seventh line
thereof with the expression "1-5/8%"; and
(ii) replacing the expression "1-1/4%" on the eleventh
line thereof with the expression "1-3/8%".
SECTION 5. Amendment to Article V of the Credit
Agreement. Article V of the Credit Agreement is hereby amended by deleting in
its entirety Section 5.08 thereof.
SECTION 6. Amendment to Section 6.01(n) of the Credit
Agreement. Section 6.01(n) of the Credit Agreement is hereby amended by
(a) adding, following the word "no" on the seventh line
thereof, the word "other";
(b) adding a semicolon following the word "Liens" on the
seventh line thereof; and
(c) deleting all of such Section following such word
"Liens".
SECTION 7. Amendment of Schedule I to the Pledge
Agreement. Schedule I to the Pledge Agreement is hereby amended by replacing
such Schedule I in its entirety by Exhibit A hereto.
SECTION 8. Termination and Release of Mortgages. Each
Bank hereby consents to the termination of each Mortgage and the release of all
Liens created thereunder. In furtherance thereof, each Bank hereby consents to
the execution and delivery by the Agent and any Trustee under any Mortgage to
the Grantor under such Mortgage, at the expense of the Borrower, of such
documents as the Borrower or such Grantor shall reasonably request to evidence
the termination of such Mortgage and the release of the Liens created
thereunder.
SECTION 9. Release of certain Collateral under the Pledge
Agreement. (a) each Bank hereby consents to the release from the Liens created
under the Pledge Agreement, of all Subsidiary Shares (as defined in the Pledge
Agreement) other than Subsidiary Shares issued by Pharmacy.
(b) Each Bank hereby consents to the delivery by the Agent
to the Obligors of all certificates in the possession of the Agent evidencing
Subsidiary Shares owned
2
<PAGE> 3
by the Obligors (other than Subsidiary Shares issued by Pharmacy).
(c) Each Bank hereby consents to the execution and delivery
by the Agent to the applicable Obligors, at the expense of the Borrower, of such
documents as the Borrower or any applicable Obligor shall reasonably request to
evidence the release of the Subsidiary Shares (other than the Subsidiary Shares
issued by Pharmacy) from the Liens created under the Pledge Agreement.
SECTION 10. Representations and Warranties. (a) The
Borrower and the Guarantor hereby represent and warrant that each of the
representations and warranties made by them in the Financing Documents are true
in all material respects on and as of the date hereof.
(b) The Borrower and the Guarantor hereby represent and
warrant that no Default has occurred and is continuing as of the date hereof.
SECTION 11. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 12. Counterparts; Effectiveness. (a) This
Amendment may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
(b) This Amendment shall become effective on and as of the
date (the "Amendment Effective Date") (which date may not be later than June 15,
1994) upon which the Agent shall have received:
(i) duly executed counterparts hereof signed by the
Borrower, the Guarantor, each Subsidiary Guarantor, the Issuing Bank,
the Agent and each of the Banks (or, in the case of any party as to
which an executed counterpart shall not have been received, the Agent
shall have received telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
and
(ii) evidence satisfactory to the Required Banks that
neither (A) the ratio of (x) the appraised value (determined on the
basis of (x) for any portion of such Collateral as to which the
Borrower and its Subsidiaries shall not have received more recent
appraisals, the appraisals used in connection with the closing of the
LTCB Credit Agreement and (y) for any portion of such Collateral as to
which the Borrower or
3
<PAGE> 4
any of its Subsidiaries shall have received more recent appraisals,
the most recent appraisals thereof so received) of the Collateral (as
defined in the LTCB Credit Agreement) existing on the Amendment
Effective Date to (y) the aggregate principal amount of Debt
outstanding under the LTCB Credit Agreement on the Amendment Effective
Date nor (B) the ratio of (x) the appraised value (determined on the
basis of (x) for any portion of such Collateral as to which the
Borrower and its Subsidiaries shall not have received more recent
appraisals, the appraisals used in connection with the closing of the
Nippon Credit Agreement and (y) for any portion of such Collateral as
to which the Borrower or any of its Subsidiaries shall have received
more recent appraisals, the most recent appraisals thereof so
received) of the Collateral (as defined in the Nippon Credit
Agreement) existing on the Amendment Effective Date to (y) the
aggregate principal amount of Debt outstanding under the Nippon Credit
Agreement on the Amendment Effective Date, is greater than 1.25:100.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
BORROWER
BEVERLY CALIFORNIA CORPORATION
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title: Senior Vice President and Treasurer
GUARANTOR
BEVERLY ENTERPRISES, INC.
By: /s/ SCHUYLER HOLLINGSWORTH, JR.
Title
BANKS
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ MICHAEL C. MAUER
Title: Vice President
THE BANK OF NEW YORK
By: /s/ LISA A. BROWN
Title: Vice President
CHEMICAL BANK
By: /s/ WILLIAM J. CAGGIANO
Title: Managing Director
5
<PAGE> 6
NATIONSBANK OF TEXAS, N.A.
By: /s/ BIANCA HEMMEN
Title: Vice President
BHF - BANK
BERLINER HANDELS UND
FRANKFURTER BANK
By: /s/ ROBERT SUEHNHOLZ
Title: Senior Vice President
By: /s/ PETER J. BECKER
Title: Assistant Vice President
BANK OF HAWAII
By: /s/ JOSEPH T. DONALDSON
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ STEPHEN V. PROSTOR
Title: Assistant Vice President
THE LONG TERM CREDIT BANK OF
JAPAN LTD.,
LOS ANGELES AGENCY
By: /s/ Y. KAMISAWA
Title: Deputy General Manager
6
<PAGE> 7
ISSUING BANK
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Issuing Bank
By: /s/ MICHAEL C. MAUER
Title: Vice President
AGENT
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ MICHAEL C. MAUER
Title: Vice President
Consented and Agreed to as of
the Amendment Effective Date:
SUBSIDIARY GUARANTORS
AGI-Camelot, Inc.
AGI-McDonald County Health Care, Inc.
AHP, Inc.
Associated Healthcare Professionals, Inc.
Beverly Enterprises - Alabama, Inc.
Beverly Enterprises - Arizona, Inc.
Beverly Enterprises - California, Inc.
Beverly Enterprises - Colorado, Inc.
Beverly Enterprises - California, Inc.
Beverly Enterprises - Connecticut, Inc.
Beverly Enterprises - Florida, Inc.
Beverly Enterprises - Garden Terrace, Inc.
Beverly Enterprises - Georgia, Inc.
Beverly Enterprises - Hawaii, Inc.
Beverly Enterprises - Idaho, Inc.
Beverly Enterprises - Illinois, Inc.
Beverly Enterprises - Indiana, Inc.
Beverly Enterprises - Kansas, Inc.
Beverly Enterprises - Kentucky, Inc.
Beverly Enterprises - Louisiana, Inc.
Beverly Enterprises - Maryland, Inc.
Beverly Enterprises - Massachusetts, Inc.
Beverly Enterprises - Michigan, Inc.
Beverly Enterprises - Minnesota, Inc.
7
<PAGE> 8
Beverly Enterprises - Mississippi, Inc.
Beverly Enterprises - Missouri, Inc.
Beverly Enterprises - Nebraska, Inc.
Beverly Enterprises - New Jersey, Inc.
Beverly Enterprises - North Carolina, Inc.
Beverly Enterprises - Ohio, Inc.
Beverly Enterprises - Oregon, Inc.
Beverly Enterprises - Pennsylvania, Inc.
Beverly Enterprises - South Carolina, Inc.
Beverly Enterprises - Tennessee, Inc.
Beverly Enterprises - Texas, Inc.
Beverly Enterprises - Utah, Inc.
Beverly Enterprises - Virginia, Inc.
Beverly Enterprises - Washington, Inc.
Beverly Enterprises - West Virginia, Inc.
Beverly Enterprises - Wisconsin, Inc.
Beverly Enterprises Japan Limited
Beverly Indemnity Limited
Beverly Manor Inc. of Hawaii
Beverly Savana Cay Manor, Inc.
Columbia-Valley Nursing Home, Inc.
Commercial Management, Inc.
Computran Systems, Inc.
Continental Care Centers of
Council Bluffs, Inc.
Forest City Building Ltd.
Hallmark Convalescent Homes, Inc.
Hospital Facilities Corporation
Home Medical Systems, Inc.
Kenwood View Nursing Home, Inc.
Liberty Nursing Homes, Incorporated
Medical Arts Health Facility of
Lawrenceville, Inc.
Moderncare of Lumberton, Inc.
Nebraska City S-C-H, Inc.
Nursing Home Operators, Inc.
Petersen Health Care, Inc.
Pharmacy Corporation of America
Salem No. 1, Inc.
South Alabama Nursing Home, Inc.
South Dakota - Beverly Enterprises, Inc.
Taylor County Health Facility, Incorporated
Vantage Healthcare Corporation
North Shore Rehab. Association, Inc.
All by /s/ SCHUYLER HOLLINGSWORTH, JR.
Title:
8
<PAGE> 9
EXHIBIT A
<TABLE>
<CAPTION>
Number of Number of
Authorized Issued Percent
Name of (Common) (Common) Name of Owned by
Subsidiary Shares Shares Holder Holder
- ---------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Pharmacy 1,000 1,000 Beverly 100%
Corporation California
of America Corporation
</TABLE>
<PAGE> 1
BEVERLY ENTERPRISES, INC.
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER SHARE
THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------
1994 1993
---- ----
<S> <C> <C>
PRIMARY:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,578 $ 14,536
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . (2,063) --
----------- -----------
Net income applicable to common shares . . . . . . . . . . . . . . . $ 17,515 $ 14,536
=========== ===========
Applicable common shares:
Weighted average outstanding shares during the period . . . . . . 83,081 74,483
Assumed conversion of Series A preferred stock . . . . . . . . . -- 5,300
Weighted average shares issuable upon exercise of
common stock equivalents outstanding
(principally stock options) using
the "treasury stock" method . . . . . . . . . . . . . . . . . . 1,440 1,516
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,521 81,299
=========== ===========
Net income per share of common stock . . . . . . . . . . . . . . . . $ 0.21 $ 0.18
=========== ===========
FULLY DILUTED:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,578 $ 14,536
Reduction of interest and amortization expenses
resulting from assumed conversion of 7.625%
convertible subordinated debentures . . . . . . . . . . . . . . . --(a) --(a)
Reduction of interest and amortization expenses
resulting from assumed conversion of 9%
convertible subordinated debentures . . . . . . . . . . . . . . . --(b) 1,089
Reduction of interest and amortization expenses
resulting from assumed conversion of zero coupon notes . . . . . --(a) --(a)
Less applicable income taxes . . . . . . . . . . . . . . . . . . . . -- (359)
----------- -----------
Adjusted net income applicable to common shares . . . . . . . . . . $ 19,578 $ 15,266
=========== ===========
Applicable common shares:
Weighted average outstanding shares during the period . . . . . . 83,081 74,483
Assumed conversion of Series A preferred stock . . . . . . . . . -- 5,300
Assumed conversion of Series B preferred stock . . . . . . . . . 11,253 --
Weighted average shares issuable upon exercise of
common stock equivalents outstanding (principally
stock options) using the "treasury stock" method . . . . . . . 1,440 1,567
Assumed conversion of 7.625% convertible
subordinated debentures . . . . . . . . . . . . . . . . . . . . --(a) --(a)
Assumed conversion of 9% convertible
subordinated debentures . . . . . . . . . . . . . . . . . . . . --(b) 7,131
Assumed conversion of zero coupon notes . . . . . . . . . . . . . --(a) --(a)
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,774 88,481
=========== ===========
Net income per share of common stock . . . . . . . . . . . . . . $ 0.20 $ 0.17
=========== ===========
</TABLE>
________________
(a) Conversion would be anti-dilutive and is therefore not assumed in the
computation of primary or fully diluted net income per share of common
stock.
(b) The 9% convertible subordinated debentures were converted to common
stock during the third quarter of 1993.
<PAGE> 2
BEVERLY ENTERPRISES, INC.
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER SHARE (Continued)
THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------
1994 1993
---- ----
<S> <C> <C>
PRIMARY:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,031 $ 24,893
Preferred stock dividends . . . . . . . . . . . . . . . . . (4,125) --
------------- --------------
Net income applicable to common shares . . . . . . . . . . . $ 30,906 $ 24,893
============= ==============
Applicable common shares:
Weighted average outstanding shares during the period . . 82,896 74,445
Assumed conversion of Series A preferred stock . . . . . . -- 5,300
Weighted average shares issuable upon exercise
of common stock equivalents outstanding
(principally stock options) using the
"treasury stock" method . . . . . . . . . . . . . . . . 1,548 1,563
------------- --------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 84,444 81,308
============= ==============
Net income per share of common stock . . . . . . . . . . . . . $ 0.37 $ 0.31
============= ==============
FULLY DILUTED:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,031 $ 24,893
Reduction of interest and amortization expenses
resulting from assumed conversion of 7.625%
convertible subordinated debentures . . . . . . . . . . . --(a) --(a)
Reduction of interest and amortization expenses
resulting from assumed conversion of 9%
convertible subordinated debentures . . . . . . . . . . . --(b) 2,178
Reduction of interest and amortization expenses
resulting from assumed conversion of zero coupon notes . . --(a) --(a)
Less applicable income taxes . . . . . . . . . . . . . . . . -- (719)
------------- --------------
Adjusted net income . . . . . . . . . . . . . . . . . . . . 35,031 26,352
Preferred stock dividends . . . . . . . . . . . . . . . . . (4,125) --
------------- --------------
Adjusted net income applicable to common shares . . . . . . $ 30,906 $ 26,352
============= ==============
Applicable common shares:
Weighted average outstanding shares during the period . . 82,896 74,445
Assumed conversion of Series A preferred stock . . . . . . -- 5,300
Assumed conversion of Series B preferred stock . . . . . . --(a) --
Weighted average shares issuable upon exercise of
common stock equivalents outstanding
(principally stock options) using the
"treasury stock" method . . . . . . . . . . . . . . . . 1,547 1,589
Assumed conversion of 7.625% convertible
subordinated debentures . . . . . . . . . . . . . . . . --(a) --(a)
Assumed conversion of 9% convertible
subordinated debentures . . . . . . . . . . . . . . . . --(b) 7,131
Assumed conversion of zero coupon notes . . . . . . . . . --(a) --(a)
------------- --------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 84,443 88,465
============= ==============
Net income per share of common stock . . . . . . . . . . . $ 0.37 $ 0.30
============= ==============
</TABLE>
_________________
(a) Conversion would be anti-dilutive and is therefore not assumed in the
computation of primary or fully diluted net income per share of common
stock.
(b) The 9% convertible subordinated debentures were converted to common stock
during the third quarter of 1993.