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                                                                    EXHIBIT 10.1

                                                           NAME: DAVID DEVEREAUX

                        RETENTION STOCK OPTION AGREEMENT
             BEVERLY ENTERPRISES, INC. 1997 LONG-TERM INCENTIVE PLAN

         This Retention Stock Option Agreement is made effective the 1st day of
June, 2001 between BEVERLY ENTERPRISES, INC., a Delaware Corporation (the
"Corporation"), and David Devereaux, (the "Employee"), a full-time employee of
the Corporation or a subsidiary of the Corporation, under the following terms
and conditions.

                                        I
                                 GRANT OF OPTION

         The Corporation has, as of June 1, 2001, (hereinafter referred to as a
"Date of Grant"), granted to Employee a nonqualified stock option to purchase,
(hereinafter referred to as an "Option"), 100,000 shares of stock in accordance
with the Beverly Enterprises, Inc. 1997 Long-Term Incentive Plan (the "Plan").
Unless otherwise defined in this Retention Stock Option Agreement, capitalized
terms used herein have the meanings designated in the Plan.

                                       II
                                 EXERCISE PRICE

         With respect to the Option, the Exercise Price shall be 8.48 per share.

                                       III
                                     VESTING

         (a) Except as otherwise provided in the Plan the Option shall be
exercisable on June 1, 2004, if certain cumulative financial goals to be set by
management are met, or in all other cases, on June 1, 2008.

         (b) Each unvested option shall become fully vested on the date
Employee's employment with the Corporation or a subsidiary is terminated due to
death, disability or retirement.

                                       IV
                                 TERM OF OPTION

         With respect to the Option, the expiration date shall be ten (10) years
from the Date of Grant.

                                        V
                               NONTRANSFERABILITY

         (a) The Option shall not be transferable by the Employee except, after
the Employee's death, to his or her spouse, child, estate, personal
representative, heir or successor, by testamentary disposition or the laws of
descent and distribution. More particularly (but without limiting the generality
of the foregoing), the Option may not be assigned, transferred (except as
aforesaid), pledged or hypothecated in any way (whether by operation of law or
otherwise), and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of any
attachment or similar process upon the Option that would otherwise effect a
change in the ownership of the Option, shall terminate the Option; provided,
however, that in the case of the involuntary levy of any attachment or similar
involuntary process upon the Option, the Employee shall have thirty (30) days
after notice thereof to cure such levy or process before the Option terminates.

         (b) Notwithstanding paragraph (a) of this Article V, the Option may be
transferred by the Employee (i) pursuant to a qualified domestic relations
order, or (ii) with the prior approval of the Committee and on such terms and
conditions as the Committee in its sole discretion may approve, to (A) the
spouse, child, step-child, grandchild or step-grandchild of the Employee (each
an "Immediate Family Member"), (B) a trust the beneficiaries of which do not
include persons other than the Employee and Immediate Family



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Members, (C) a partnership (either general or limited) the partners of which do
not include persons other than the Employee and Immediate Family Members (or a
corporation the shareholders of which do not include persons other than the
Employee and Immediate Family Members), (D) a corporation the shareholders of
which do not include persons other than the Employee and Immediate Family
Members, or (E) any other transferee that is approved by the Committee in its
sole discretion.

         (c) This Retention Stock Option Agreement shall be binding on and
enforceable against any person who is a permitted transferee of the Option
pursuant to this Article V.

                                       VI
                               EXERCISE OF OPTION

         (a) Except as otherwise provided in the Plan and this Retention Stock
Option Agreement, the Option may be exercised during the lifetime of the
Employee only by the Employee and only while the Employee is in the employ of
the Corporation or any subsidiary.

         (b) Except as otherwise provided in the Plan, the Option must be
exercised, in accordance with its term, in writing, by the delivery of a written
notice to the Corporation in the form prescribed by the Committee setting forth,
with respect to each Option, the number of Shares to which the Option is to be
exercised and accompanied by full payment of the Exercise Price for the Shares.
Such exercise shall become effective upon receipt by the Corporation of the
written notice. The Exercise Price shall be payable to the Corporation in full
in cash, or its equivalent, or, to the extent permitted by applicable law and
not in violation of any instrument or agreement to which the Corporation is a
party, by delivery of Shares (not subject to any security interest or pledge)
valued at Fair Market Value at time of exercise, or by a combination of the
foregoing, or in any other form of payment acceptable to the Committee. The
Corporation reserves the right to require any Shares delivered by the Employee
in full or partial payment of the Exercise Price to be limited to those Shares
already owned by the Employee for at least six (6) months. As soon as
practicable, after the receipt of written notice and payment, the Corporation
shall deliver to the Employee stock certificates in an appropriate amount based
upon the number of Shares with respect to which the Option is exercised, issued
in the Employee's name.

                                       VII
                            TERMINATION OF EMPLOYMENT

         If the Employee's employment with the Corporation or any subsidiary is
terminated for any reason other than by the Employee's death, disability or
retirement, each Option may be exercised (for not more than the number of Shares
as to which the Employee might have exercised the Option on the date which
employment was terminated) at any time (A) prior to the normal expiration date
for such Option, in the event such normal expiration date is not more than three
(3) months following the date of such termination, or (B) within the three-month
period following the date of such termination, in the event that the Option's
normal expiration date is more than three (3) months following the date of
termination of employment.

                                      VIII
                                DEATH OF EMPLOYEE

         If the Employee dies while employed by the Corporation or any
subsidiary or during the three months after disability or retirement, such
Option may be exercised by such person or persons as shall have acquired the
Employee's rights with respect to the Option by will or the laws of descent and
distribution, at any time prior to the earlier of three (3) years from
Employee's death or the normal expiration date for such Option.

                                       IX
                                   DISABILITY

         If Employee's employment with the Corporation or any subsidiary is
terminated by reason of Disability, the Option may be exercised at any time (a)
prior to the normal expiration date for such Option, in the event such normal
expiration date is not more than three (3) years following the date of such
termination, or (b) within three (3) years following the date of such
termination in the event that the Option's normal expiration date is more than
three (3) years following the date of such termination.



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                                        X
                                   RETIREMENT

         If Employee's employment with the Corporation or any subsidiary is
terminated by reason of retirement, the Option may be exercised at any time (a)
prior to the normal expiration date for such Option, in the event the normal
expiration is not more than three (3) years following the date of such
termination, or (b) within three (3) years following the date of such
termination in the event that the Option's normal expiration date is more than
three (3) years following the date of such termination.

                                       XI
                           CHANGE OF CAPITAL STRUCTURE

         The number and kinds of Shares subject to the Option shall be subject
to adjustment as provided within the Plan.

                                       XII
                               COMPLIANCE WITH LAW

         No shares of Stock are issuable upon the exercise of any Option unless
legal counsel to the Corporation shall be satisfied that such issuance will be
in compliance with all applicable federal and state securities laws and
regulations and any other applicable laws or regulations. The Committee may
require, as a condition of any share issuance, that certain agreements,
undertakings, representations, certificates, and/or other information, as the
Committee may deem necessary or advisable, be executed or provided to the
Corporation to assure compliance with all such applicable laws or regulations.
Any certificates for shares of Stock delivered under the Plan may be subject to
such stop-transfer orders, restrictive legends, lock-up agreements, and such
other restrictions as the Committee shall deem advisable under the rules,
regulations, or other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed, any applicable federal
or state securities law, and any agreements with an underwriter, broker, or
dealer. In addition, if, at the time of the issuance of shares of Stock, any
law, rule, regulation, or other requirement of any governmental authority or
agency shall require the Corporation to take any action in connection with any
such shares to be issued, the issuance of such shares shall be deferred until
such required action is taken.

                                      XIII
                           CONTINUATION OF EMPLOYMENT

         This Retention Stock Option Agreement does not confer upon the Employee
any right to continue in the employ of the Corporation or any subsidiary, nor
shall it be construed as limiting, in any way, the right of the Corporation or
any subsidiary to terminate such employment at any time with or without cause or
to change the compensation paid to the Employee.

                                       XIV
                                   WITHHOLDING

         Except as otherwise provided in the Plan, the Corporation may make such
provisions as it may deem appropriate for the withholding of any taxes which the
Corporation determines it is required to withhold in connection with any option
exercise pursuant to the Plan. The Employee agrees that the full amount of the
taxes which are required to be withheld shall be deposited with the Corporation
prior to the distribution to the employee of any stock certificates or stock
sale proceeds.

                                       XV
                               GENERAL PROVISIONS

         (a) The Corporation shall at all times during the term of the Option
use its best efforts to reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of this Retention Stock Option
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of Shares pursuant hereto and all other fees and expenses
necessarily incurred by the Corporation in connection therewith, and will, from
time to time, use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Corporation, shall be applicable
thereto.



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         (b) Neither the Employee nor any beneficiary or other person claiming
under or through the Employee shall have any right, title, interest or privilege
in or to any Stock allocated or reserved for the purpose of the Plan or subject
to this Retention Stock Option Agreement except as to such Shares, if any, as
shall have been issued to such person upon exercise of any Option or any part of
it.

         (c) The Option hereby granted is subject to, and the Corporation and
the Employee agree to be bound by, all of the terms and provisions of the Plan
as the same may be amended from time to time in accordance with the terms
thereof, but no such amendment adopted after the Date of Grant of an Option
shall be effective as to any such Option without the Employee's consent insofar
as it may adversely affect the Employee's rights under this Retention Stock
Option Agreement.

         (d) All terms of and any rights under this Retention Stock Option
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware without giving effect to principles of conflicts
of law.

         (e) This Retention Stock Option Agreement may be amended, and any
provision hereof may be waived, only by a writing signed by the party to be
charged.

         (f) This Retention Stock Option Agreement, together with the Plan sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersedes all prior oral or written and
contemporaneous oral discussions, agreements and understandings of any kind or
nature.

         (g) This Retention Stock Option Agreement may be executed in two
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.

         (h) This Retention Stock Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective permitted successors
and assigns.


         IN WITNESS WHEREOF, the Corporation has caused this Retention Stock
Option Agreement to be duly executed by its officers thereunto duly authorized,
and the Employee has hereunto set his or her hand as of the date first above
written.


BEVERLY ENTERPRISES, INC.              EMPLOYEE

By:                                    By:
   -------------------------------        --------------------------------

Douglas J. Babb                        David Devereaux
Executive Vice President
Law and Government Relations,
and Secretary