Document:

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                                                                 EXHIBIT 10.38

                                    AMENDMENT

         THIS AMENDMENT, dated as of December 29, 2000 (this "Amendment"), is
entered into by and among BEVERLY ENTERPRISES, INC., a Delaware corporation
(together with its permitted successors and assigns, the "Company"), as a
Lessee, as Construction Agent and as the Parent Guarantor; ALL SUBSIDIARIES OF
THE COMPANY NOW OR HEREAFTER BECOMING PARTIES TO THE PARTICIPATION AGREEMENT
REFERENCED HEREIN, as Lessees (collectively, the "Subsidiary Lessees" and,
together with the Company in its capacity as Lessee, the "Lessees"); BANK OF
MONTREAL GLOBAL CAPITAL SOLUTIONS, INC., a Delaware corporation, as Lessor and
as Agent Lessor (together with its successors in such capacity, the "Agent
Lessor"); the various financial institutions as are or may from time to time
become Lenders under the Loan Agreement (together with their respective
permitted successors and assigns, the "Lenders"); and BANK OF MONTREAL, as
Administrative Agent for the lenders (together with its successors in such
capacity, the "Administrative Agent") (collectively, the "Parties").

         WHEREAS, the Parties wish to amend the definitions of certain terms
defined in Appendix A to the Participation Agreement;

         WHEREAS, the Parties wish to amend the pricing grid applicable to the
transactions represented by the Participation Agreement and the other documents
executed in connection therewith;

         NOW THEREFORE, the parties hereto agree as follows:

         Section 1. Definitions. Capitalize terms used but not otherwise defined
in this Amendment shall, unless the context otherwise requires, have the
respective meanings specified in Appendix A to the Amended and Restated
Participation Agreement dated as of August 28, 1998, among the Company, the
Subsidiary Lessees, the Agent Lessor, the Lenders and the Administrative Agent
(as amended, supplemented, amended and restated or otherwise modified from time
to time in accordance with the provisions thereof, the "Participation
Agreement"); and the rules of interpretation set forth in such Appendix A shall
apply to this Amendment.

         Section 2. Amendments to Appendix A to the Participation Agreement. The
parties hereto hereby

                  (i) amend Appendix A to the Participation Agreement by adding
         the following definition:

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                  "Specified Restructuring Charges" means the restructuring
                  charges, writedowns, severance costs and special charges, the
                  material components of which are described in the memorandum
                  dated December 15, 2000 from the Company to the Administrative
                  Agent, in each case to the extent actually incurred by the
                  Representative or one of its Consolidated Subsidiaries.

                  (ii) amend the definition of "Consolidated Net Income" in
         Appendix A to the Participation Agreement to read as follows:

                  "Consolidated Net Income" means, for any period, the net
                  income (loss) (calculated (a) before preferred and common
                  stock dividends and (b) exclusive of the effect of (i) any
                  extraordinary or other material non-recurring gain or loss
                  outside the ordinary course of business and (ii) Specified
                  Restructuring Charges in an aggregate amount, on a pretax
                  basis, during the term of the Master Lease not to exceed
                  $105,000,000) of the Representative and its Consolidated
                  Subsidiaries, determined on a consolidated basis for such
                  period.

                  (iii) amend the definition of "Consolidated Net Worth" in
         Appendix A to the Participation Agreement to read as follows:

                  "Consolidated Net Worth" means at any date the consolidated
                  stockholders' equity of the Representative and its
                  Consolidated Subsidiaries at such date, without giving effect
                  to Specified Restructuring Charges in an amount not to exceed,
                  on a pretax basis, $105,000,000.

                  (iv) amend the definition of "Lessor Margin" in Appendix A to
         the Participation Agreement by adding at end of the definition the
         following:

         "provided, that on March 31, 2001 the LIBO Margin is increased for each
Pricing Category by 0.25%; provided, further, that at such time as interest
margins under the Morgan Credit Agreement are modified, the LIBO Margin and Base
Rate Margin for each Pricing Category will be adjusted to reflect the new
pricing structure of the Morgan Credit Agreement plus 0.50%".

                  (v) amend the definition of "Loan Margin" in Appendix A to the
         Participation Agreement by adding at end of the definition the
         following:

         "provided, that on March 31, 2001 the LIBO Margin is increased for each
Pricing category by 0.25%; provided, further, that at such time as interest
margins under the Morgan

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Credit Agreement are modified, the LIBO Margin and Base Rate Margin for each
Pricing Category will be adjusted to reflect the new pricing structure of the
Morgan Credit Agreement plus 0.50%".

         Section 3. Conditions to Effectiveness. This Amendment shall become
effective, as of the date hereof, on the date on which (i) each of the Company,
the Subsidiary Lessees, the Agent Lessor, the Administrative Agent and the
Required Participants shall have executed and delivered a counterpart hereof,
and (ii) each of the Participants executing this Amendment shall have received
from the Company payment of a fee equal to three-sixteenths of one percent (3/16
of 1%) of such Participant's aggregate Commitment.

         Section 4. Representations and Warranties. The Company and each
Subsidiary Lessee hereby represents and warrants unto the Lessors, the Lenders,
the Lessor Agent and the Administrative Agent as set forth in this Section 4:

                  (a) Validity, et. This Amendment constitutes the legal, valid
         and binding obligation of each Lessee enforceable against such Lessee
         in accordance with its terms, subject, as to enforceability, to
         bankruptcy, insolvency, reorganization and other similar laws affecting
         enforcement of creditor rights generally (insofar as any such law
         relates to the bankruptcy, insolvency, reorganization or similar event
         of the Company or any Subsidiary Lessee), principles of good faith and
         fair dealing and, as to the availability of specific performance or
         other injunctive relief, the discretionary power of a court to deny
         such relief.

                  (b) No Event of Default. No Event of Default has occurred and
         is continuing.

         Section 5. Operative Document; Ratification of the Operative Documents.
This Amendment shall be deemed to be an Operative Document entered into in
connection with the Participation Agreement. Except as expressly set forth
herein, the terms, provisions and conditions of the Participation Agreement and
the other Operative Documents shall remain in full force and effect and are in
all respects hereby ratified and confirmed in each and every respect.

         Section 6. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provisions hereof.

         Section 7. Execution in Counterparts. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.

         Section 8. Governing Law; Entire Agreement. THIS AMENDMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH

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MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS
TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Amendment and the
other Operative Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.

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                                                                  EXHIBIT 10.41

                       AMENDMENT NO. 2 TO CREDIT AGREEMENT

         AMENDMENT dated as of October 31, 1999 to the Credit Agreement dated as
of April 30, 1998 (as amended by Amendment No. 1 thereto dated as of September
30, 1999, the "CREDIT AGREEMENT") among Beverly Enterprises, Inc. (the
"BORROWER"), the BANKS listed therein (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").

                                   WITNESSETH

         WHEREAS, the Credit Agreement requires the Borrower and its
Subsidiaries to deliver Mortgages (as defined in the Credit Agreement) and to
perform certain other related obligations on or prior to October 31, 1999;

         WHEREAS, the Borrower has requested an amendment to the Credit
Agreement to (i) extend the time by which Mortgages in respect of certain of the
real property collateral listed on Schedule V to the Credit Agreement must be
delivered, and related actions taken, to November 30, 1999 and (ii) permit the
Borrower to substitute other facilities for such real property collateral if
such Mortgages cannot be delivered, or such actions taken, by such date;

         WHEREAS, the Banks and the Agent are willing to amend the Credit
Agreement for such purposes on the terms set forth herein,

         NOW, THEREFORE, the parties hereto agree as follows:

         SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has 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, for so long as this Amendment and
Waiver remains effective, refer to the Credit Agreement as amended hereby.

         SECTION 2. New Definition of "Alternate Facility". The following new
definitions are hereby added to Section 1.01 of the Credit Agreement in the
appropriate alphabetical order:

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         "ALTERNATE FACILITY" means, respect of any Designated Facility, the
real property interest of the Borrower or any of its Subsidiaries in a nursing
home, related real property improvements and equipment owned and operated by the
Borrower or such Subsidiary proposed by the Borrower as substituted collateral
to be subjected to a Mortgage in place of the Mortgage to be provided on such
Designated Facility, which nursing home, real property improvements and
equipment (i) are reasonably acceptable to the Agent and (ii) have associated
Consolidated EBITDA for the two fiscal quarters ending June 30, 1999 at least
equal to the associated Consolidated EBITDA for such fiscal quarters for such
Designated Facility."

         "DESIGNATED FACILITY" means either Facility No. 71 or Facility 660."

         "FACILITY NO. 71" means the Green Hill Manor Nursing Facility nursing
home and related real estate improvements and equipment referred to on Schedule
V hereto."

         "FACILITY NO. 660" means the Beverly Manor-Honolulu nursing home and
related real estate improvements and equipment referred to on Schedule V
hereto."

         SECTION 3. Amendment to Definition of "Mortgages". The definition of
Mortgages set forth in Section 1.01 of the Credit Agreement is hereby amended to
read in its entirety as follows:

         "`MORTGAGES' means the mortgages or deeds of trust relating to the real
property collateral described in Schedule V hereto (or, in the case of any
Designated Facility in respect of which a Mortgage cannot be delivered, or the
other actions required under Section 5.20 cannot be taken, on or prior to
November 30, 1999, an Alternate Facility with respect to such Designated
Facility) in form and substance reasonably satisfactory to the Agent, in each
case as the same may be amended from time to time."

         SECTION 4. Amendment to Section 5.20. Section 5.20 of the Credit
Agreement is hereby amended by:

         (a) amending the language prior to subsection (a) thereof to read in
its entirety as follows:

         "On or prior to (i) in the case of the Mortgages relating to each of
the real properties listed on Schedule V hereto (other than a Designated
Facility), October 31, 1999 (the "MORTGAGE DUE DATE") and (ii) in the case of
the Mortgages

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relating to any Designated Facility or Alternate Facility in respect thereof,
November 30, 1999 (the "ALTERNATE MORTGAGE DUE DATE"),"; and

         (b) adding, at the end of subsection (g) thereof but before the period,
the phrase "or the Alternate Mortgage Due Date, as the case may be."

         SECTION 5. Representations of Borrower. The Borrower represents and
warrants that (i) the representations and warranties of the Borrower set forth
in Article 4 of the Credit Agreement are true on and as of the Amendment
Effective Date and (ii) no Default has occurred and is continuing on such date.

         SECTION 6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York

         SECTION 7. Counterparts. 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.

         SECTION 8. Effectiveness. This Amendment shall become effective as of
the date hereof on the date (the "AMENDMENT EFFECTIVE DATE") when the Agent
shall have received from the Borrower, the Subsidiary Guarantors, the Agent and
the Required Banks a counterpart hereof signed by such party or facsimile or
other written confirmation (in form satisfactory to the Agent) that such party
has signed a counterpart hereof.

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