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LETTER OF CREDIT
MORGAN STANLEY ASSET FUNDING INC.
1221 Avenue of the Americas, 27th Floor
New York, New York 10020
Date: December 20, 2005
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IRREVOCABLE STANDBY
OUR NO. 2A
LETTER OF CREDIT
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ADVISING BANK
ACCOUNT PARTY
Fillmore Strategic Investors, L.L.C.
140 Pacific Avenue
San Francisco, California 94111
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BENEFICIARY
STATED AMOUNT
Beverly Enterprises, Inc.
$10,000,000
One Thousand Beverly Way
Ft. Smith, AR 72919
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EXPIRY DATE
April 18, 2006
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Sir or Madam:
Morgan Stanley Asset Funding Inc., a
Delaware corporation ("ISSUER") hereby
issue, at the request and for the account
of the Account Party, in your favor,
our Irrevocable Standby Letter of Credit
No. 2A in an amount not to exceed in
the aggregate TEN MILLION DOLLARS
($10,000,000) (the "STATED AMOUNT"), effective
immediately and expiring at our office at
1221 Avenue of the America, 27th
Floor, New York, New York 10020 or at any
other office in the city and state of
New York which may be designated by us by
written notice delivered to you, with
our close of business, New York time, April
18, 2006 (the "EXPIRY DATE"), unless
earlier terminated by Beneficiary in
accordance with the terms below.
This Letter of Credit is being issued
pursuant to that certain Revolving Credit
Agreement dated November 18, 2005, as
amended on or about the date hereof and as
the same may be further amended, restated
or modified from time to time (the
"CREDIT AGREEMENT"), by and among Account
Party, Morgan Stanley Asset Funding
Inc., a Delaware corporation, as agent for
Issuer and each of the other lending
institutions thereto (in such capacity,
"AGENT").
Purpose and Confirmation:
This Letter of Credit shall be used as
security for the benefit of the
Beneficiary pursuant to Section 6.8.5 of
the Agreement and Plan of Merger by and
among SBEV Property Holdings LLC,
Beneficiary, and the
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other parties thereto dated as of August
16, 2005, as amended by that certain
First Amendment thereto dated as of August
23, 2005, and as further amended by
that certain Second Amendment thereto dated
as of September 22, 2005, and as
further amended by that certain Third
Amendment thereto dated as of November 20,
2005 and as further amended by that certain
Fourth Amendment thereto dated on or
about the date hereof (as amended and
restated and as the same may be further
amended, restated or modified from time to
time, the "MERGER AGREEMENT"); and by
Beneficiary's acceptance of this Letter of
Credit, Beneficiary hereby confirms
that this Letter of Credit satisfies the
delivery of letter credit requirement
in Section 6.8.5 of the Merger Agreement or
hereby waives any variation from
such requirements.
Stated Amount:
The Stated Amount shall be automatically
reduced by the amount of any drawing
hereunder.
Drawings:
An amount up to the Stated Amount under
this Letter of Credit is available to
the Beneficiary from time to time upon the
following conditions:
1.
Presentation of this Letter of Credit (in case of a drawing of
the
entire Stated Amount) and a dated drawing request ("DRAWING
REQUEST"),
in the form of EXHIBIT A, drawn on us bearing the number of this
Letter
of Credit duly executed and delivered by the Beneficiary,
accompanied
by a statement of the Beneficiary setting forth the following:
"We hereby certify and confirm to you that we are permitted to
draw
upon Morgan Stanley Asset Funding Inc. Irrevocable Letter of Credit
No.
2A dated December 20, 2005, issued by Morgan Stanley Asset Funding
Inc.
in favor of Beverly Enterprises, Inc., as Beneficiary, pursuant to
the
terms and conditions of the Agreement and Plan of Merger by and
among
SBEV Property
Holdings LLC, Beneficiary, and other parties thereto
dated on or about August 16, 2005, as amended by that certain
First
Amendment thereto dated as of August 23, 2005, and as further
amended
by that certain Second Amendment thereto dated as of September
22,
2005, and as further amended by that certain Third Amendment
thereto
dated as of November 20, 2005 and as further amended by that
certain
Fourth Amendment thereto dated on or about the date hereof (the
"MERGER
AGREEMENT")."
2.
Issuer shall not have any obligation to honor any Drawing Request
under
this Letter of Credit, unless, prior to the date of initial
drawing,
Agent shall have received, in form and substance acceptable to
Agent,
in its sole and absolute discretion, a Drawing Request duly
executed by
Beneficiary.
Partial and/or multiple drawings are
permitted. This Letter of Credit is not
assignable or transferable in whole or in
part.
The above drawing request and all
communications with respect to this Letter of
Credit shall be in writing, addressed to us
at 1221 Avenue of the Americas, 27th
Floor, New York, New York 10020, fax no.
212-507-4950, Attention: Peter
Woroniecki, referencing this Letter of
Credit No. 2A and presented to us by
delivery in person or facsimile
transmission at such address, and the original
of the above drawing request or such
communica
