Exhibit 10.1
AMENDMENT NUMBER 2 TO THE
BEVERLY ENTERPRISES, INC.
ANNUAL INCENTIVE PLAN
     WHEREAS, the Beverly Enterprises, Inc. (the “Company”) and Pearl Senior
Care, Inc. (“PSC”) are parties to an Agreement and Plan of Merger, dated
August 16, 2005 (the “Agreement”, which term shall include all amendments
thereto), pursuant to which a subsidiary of PSC will be merged into the Company
(the “Transaction”); and
     WHEREAS, the Company maintains an Annual Incentive Plan (“AIP”) pursuant to
which annual bonuses are paid in accordance with performance metrics determined
by the Board of Directors of the Company; and
     WHEREAS, the Board previously scheduled the bonus payments for 2005 under
the AIP to occur at the earlier of the date of closing of the Transaction or
January 31, 2006; and
     WHEREAS, because the closing date of the Transaction has been extended, the
Board has re-scheduled the bonus payments for 2005 under the AIP to occur on any
day after February 15, 2006, through February 28, 2006, which timeframe is
consistent with the Company’s customary schedule for paying bonuses under the
AIP; and
     WHEREAS, the Board has authorized the appropriate officers of the Company
to adopt an amendment to the AIP to effectuate the Board’s rescheduling of the
2005 bonus payments under the AIP.
     NOW THEREFORE BE IT RESOLVED, that Section 7.4 (which was added to the AIP
as part of Amendment Number 1, effective January 1, 2005) is amended, effective
January 30, 2006, as follows:
     1. Subsection (b) is amended to provide in its entirety as follows: “The
annual Award amounts, as determined in accordance with the preceding
Section 7.4(a), shall be paid on any day after February 15, 2006, and on or
before February 28, 2006.”
     2. Subsection (c) shall be amended to provide in its entirety as follows:
“The AIP Award of a Participant who was not employed as an Employee on
December 31, 2005, shall receive his or her bonus in accordance with the
provisions of Section 5.2 of the Plan, which provides that (i) a Participant
whose employment terminated during 2005 on account of his or her retirement,
disability, or death shall be eligible to receive an AIP Award for 2005 and
(ii) a Participant whose employment terminated during 2005 for any reason other
than his or her retirement, disability, or death (whether because the
Participant’s employment with the Company terminated voluntarily (other than a
retirement), involuntarily (with or without Cause), or otherwise during 2005)
shall not be eligible to receive payment of an AIP Award for such Plan Year
unless the Compensation Committee, in its sole discretion, determines
otherwise.”
     3. Subsection (h)(3) is amended to provide in its entirety as follows:
“‘Target Date’ means December 31, 2005.”

 

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

 

     4. Except as specifically amended herein, the Plan (including Amendment
Number 1) remains in full force and effect.

            BEVERLY ENTERPRISES, INC.
      By:   /s/ Lawrence Deans         Lawrence Deans        SVP - Human
Resources     

-2-