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                                                                   EXHIBIT 10.26




                          AMENDMENT NUMBER ONE TO THE
                             BEVERLY HOLDINGS, INC.
                         NON-EMPLOYEE DIRECTOR DEFERRED
                               COMPENSATION PLAN

     Amendment made this 11th day of December, 1997, by Beverly Enterprises,
Inc. (the "Corporation").

                              W I T N E S S E T H:

     WHEREAS, effective as of December 3, 1997, Beverly Enterprises, Inc. (as in
existence prior to the "Transaction" referenced below) (hereinafter referred to
as "Old Beverly") transferred its healthcare business to a wholly-owned
subsidiary of Old Beverly, i.e., New Beverly Holdings, Inc. ("NBHI"), which was
then spun-off to the shareholders of Old Beverly, all pursuant to the Agreement
and Plan of Distribution by and between Old Beverly, NBHI and Capstone Pharmacy
Services, Inc. ("Capstone") dated as of April 15, 1997; and

     WHEREAS, immediately following such spin-off, Old Beverly merged with and
into Capstone, with Capstone as the surviving corporation, all pursuant to the
Agreement and Plan of Merger by and between Old Beverly and Capstone dated as of
April 15, 1997 (all the aforementioned transactions to be referred to herein
collectively as the "Transaction"); and

     WHEREAS, pursuant to the Transaction, the Corporation changed its name
from NBHI to Beverly Enterprises, Inc. and assumed the sponsorship of the
Beverly Enterprises, Inc. Non-Employee Directors' Stock Deferred Compensation
Plan (as adopted by Old Beverly effective May 29, 1997) (the "Plan"); and

     WHEREAS, the Corporation desires, in light of the Transaction, to amend the
Plan to reflect adjustments to the Deferred Share Unit Accounts of the
Participants therein; and

     WHEREAS, the Corporation desires, in light of the Transaction, to amend
the Plan to increase the number of Annual Deferred Share Unit Grants under
Section 5 thereof to reflect adjustments in the value of the Corporation's
Stock following the Transaction; and

     WHEREAS, Section 12 of the Plan provides that it may be amended, modified
or terminated at any time;
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     NOW, THEREFORE, the Plan is hereby amended as follows:

     1.   Section 2(d) of the Plan is amended to read as follows:

               "Company" means Beverly Enterprises, Inc., which shall mean "Old
               Beverly" prior to the date of the Transaction, and shall mean New
               Beverly Holdings, Inc. ("NBHI") (which has changed its name to
               Beverly Enterprises, Inc.) subsequent to said date.

     2.   The Plan is amended by adding a new Section 2(t) to read as follows:

               "Transaction" means, collectively, those transactions which are
               described in the Agreement and Plan of Distribution by and
               between Beverly Enterprises, Inc. ("Old Beverly"), New Beverly
               Holdings, Inc. ("NBHI"), and Capstone Pharmacy Services, Inc.
               ("Capstone"), dated as of April 15, 1997, and the Agreement and
               Plan of Merger by and between Old Beverly and Capstone dated as
               of April 15, 1997.

     3.   The Plan is amended by adding a new Section 23 to read as follows:

               As of the date of the Transaction, each Participant's Accounts
               under the Plan as expressed as a number of Deferred Share Units,
               shall be adjusted by dividing the number of Deferred Share Units
               by the Distribution Stock Fraction, as that term is defined in
               the documents described in Section 2(t). Subsequent to the
               Transaction, all subsequent additions to the Plan and all Account
               balances shall be deemed invested in Common Stock of New Beverly
               Holdings, Inc. (now known as Beverly Enterprises, Inc.), and
               shall fluctuate in value accordingly.


     4.   The Plan is amended by replacing the second sentence of Section 5
thereof with the following:

               "Beginning with 1988 and each year thereafter, each director will
               receive a grant of 675 Deferred Share Units, credited as of the
               last day of the Stock's active trading in the month of January in
               the respective Plan Year."




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     IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
executed by a duly authorized representative, as of the day and year first
written above.

                                        BEVERLY ENTERPRISES, INC.

                                        By:
                                            ------------------------------------
                                        Its:
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