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Exhibit 10.3 FIRST AMENDMENT
TO THE
BEVERLY ENTERPRISES, INC.
1997 LONG-TERM INCENTIVE PLAN
As Amended and Restated Effective as of June 1, 2001 First Amendment made effective the 1st day of June, 2004, by Beverly Enterprises, Inc.
(the Corporation). W I T N E S S E T H: WHEREAS, the Corporation sponsors the Beverly Enterprises, Inc. 1997 Long-Term Incentive Plan,
as amended and restated effective as of June 1, 2001 (the Plan); WHEREAS, the Corporation has reserved 15,000,000 shares of the Corporations common stock, par
value $0.10 per share (Common Stock), to be issued under the Plan, provided that no more than
7,500,000 shares may be issued pursuant to awards of Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Bonus Stock or Other Stock Unit Awards (collectively, the
Full Value Awards), and no more than 7,500,000 shares may be issued pursuant to awards of
Incentive Stock Options (ISOs) (as all such awards are defined in the Plan); WHEREAS, the Corporation wishes to reserve an additional 5,250,000 shares of Common Stock, for
a total of 20,250,000 shares, to be issued under the Plan, with all such additional shares
available to be issued as Full Value Awards or ISOs; WHEREAS, the Corporation also wishes to amend the Plan to (i) reflect the reservation of such
additional shares of Common Stock for issuance as any permissible Awards thereunder, including Full
Value Awards and ISOs, (ii) clarify that the vesting of Restricted Stock granted under the Plan may
accelerate in the event of death, disability or a Change in Control, (iii) permit the early vesting
by the Committee of Restricted Stock granted under the Plan upon the occurrence of a change in
control, termination of employment without cause, or other event as may be required in an
employment, change in control, severance, or other agreement the Corporation or one of its
affiliates may have entered into or may enter into from time to time with a participant in the
Plan, (iv) permit performance-based cash bonuses to be paid under the Plan, to the extent that such
awards are not already allowed, and (v) make certain other technical changes thereto; WHEREAS, Section 14.8 of the Plan provides that the Board of Directors of the Corporation (the
Board) or the Nominating and Compensation Committee of the Board (the Committee) may amend the
Plan at anytime, provided that any such amendment is made with shareholder approval if required by
applicable law or regulation; and




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WHEREAS, the Corporation has determined that the reservation of the 5,250,000 additional
shares of Common Stock and the other amendments to the Plan generally require shareholder approval,
and such approval will be sought; NOW, THEREFORE, the Plan is hereby amended effective as the date such amendments and the
reservation of such additional shares of Common Stock are duly approved by the Corporations
shareholders, unless otherwise provided herein:  1.
    The last sentence of Section 1 of the Plan is amended in its entirety to read as follows:The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options (intended
to qualify under Section 422 of the Code), Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares, Performance Units, Performance-Based Cash
Bonuses, Bonus Stock, and any other Stock Unit Awards or stock-based forms of awards as the
Committee may determine in its sole and complete discretion at the time of grant.2.
    Section 2.3 of the Plan is amended in its entirety to read as follows:2.3 Award means, individually or collectively, a grant under this Plan of any one of the
following: Nonqualified Stock Options; Incentive Stock Options; Stock Appreciation Rights;
Restricted Stock; Restricted Stock Units; Performance Shares; Performance Units;
Performance-Based Cash Bonuses; Bonus Stock; or Other Stock Unit Awards.3.
    Section 2.11 of the Plan is amended effective as of January 1, 2004, by replacing the phrase
Compensation Committee with the phrase Nominating and Compensation Committee.4.
    Section 2.32 of the Plan is amended in its entirety to read as follows:2.32 Performance Award means a performance-based Award, which may be in the form of
either Performance Shares, Performance Units, or Performance-Based Cash Bonuses.5.
    A new Section 2.33 is added to the Plan, with the subsequent Subsections in Section 2 and the
applicable cross-references being renumbered accordingly, to read as follows:2.33 Performance-Based Cash Bonus means a cash bonus Award, designated as a
Performance-Based Cash Bonus, granted to a Participant pursuant to Section 9 herein, the
value of which is determined, in whole or in part, by the attainment of pre-established
goals relating to the Companys financial or operating performance as deemed appropriate by
the Committee and described in the Agreement. 2




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6.
    Section 5.1 of the Plan is amended by replacing the phrase fifteen million (15,000,000)
with the phrase twenty million, two hundred and fifty thousand (20,250,000), and by
replacing the phrase seven million, five hundred thousand (7,500,000) with the phrase
twelve million, seven hundred and fifty thousand (12,750,000).7.
    Section 5.2 of the Plan is amended by replacing the phrase seven million, five hundred
thousand (7,500,000) with the phrase twelve million, seven hundred and fifty thousand
(12,750,000).8.
    The last sentence of Section 8.4 of the Plan is amended to read as follows:The foregoing limitations notwithstanding, the Committee in its sole discretion may reduce
or remove the restrictions or reduce or remove the Period of Restriction with respect to
Restricted Stock or Restricted Stock Units (a) upon assumption of, or in substitution for,
restricted stock or restricted stock units of a company with which the Company participates
in an acquisition, separation, or similar corporate transaction, (b) in the event of the
death or disability of the Participant, (c) upon a Change in Control of the Company, or (d)
as may be required in an employment, change in control, severance, or other agreement the
Company may enter into with a Participant from time to time in the case of an involuntary
termination without Cause, normal retirement, or a Change in Control.9.
    Section 9 of the Plan is amended in its entirety to read as follows:Section 9. Performance Awards 9.1 Grant of Performance Awards.Subject to the terms and provisions of the Plan and
applicable law, the Committee, at any time and from time to time, may grant Performance
Awards in the form of either Performance Units, Performance Shares or Performance-Based Cash
Bonuses to Participants subject to such Performance Goals and Performance Period as it shall
determine. The Committee shall have complete discretion in determining the number and value
of Performance Awards granted to each Participant. Participants receiving Performance Awards
are not required to pay the Company therefor (except for applicable tax withholding) other
than the rendering of services. 9.2 Value of Performance Awards.The Committee shall determine the number and value of
Performance Units, Performance Shares or Performance-Based Cash Bonuses granted to each
Participant as a Performance Award. The Committee shall set Performance Goals in its
discretion for each Participant who is granted a Performance Award. The extent to which such
Performance Goals are met will determine the value of the Performance Award to the
Participant. Such Performance Goals may be particular to a Participant, may relate to the
performance of the Subsidiary which employs him or her, may be based on the division which
employs him or her, may be based on the performance of the Company generally, or a
combination of the foregoing. The 3




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Performance Goals may be based on achievement of balance sheet or income statement
objectives, or any other objectives established by the Committee. The Performance Goals may
be absolute in their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated. The terms and conditions of each Performance
Award will be set forth in an Agreement. Except as specifically provided herein, including,
without limitation, Section 14.13, the Committee shall have no authority to reduce or remove
the Performance Goals or Performance Period without the express consent of the stockholders
of the Company. Furthermore, except in the case of the Participants death or disability,
or a Change of Control of the Company, no Performance Award shall become vested or payable
less than one (1) year after its grant. 9.3 Settlement of Performance Awards.After a Performance Period has ended, the holder
of a Performance Award shall be entitled to receive the value thereof based on the degree to
which the Performance Goals established by the Committee and set forth in the Agreement have
been satisfied. 9.4 Form of Payment.Payment of the amount to which a Participant shall be entitled
upon the settlement of a Performance Unit or Performance Share shall be made in cash, Stock,
or a combination thereof as determined by the Committee. Payment of the amount to which a
Participant shall be entitled upon the settlement of a Performance-Based Cash Bonus shall be
made in cash. Payment may be made as prescribed by the Committee.  10.
    The last sentence of Section 12(a) of the Plan is amended to read as follows:In establishing Performance Measures, the Committee shall consider one or more of the
following business or financial goals of the Company: absolute or relative increases in
total stockholder return, stock price, economic value added, return on capital employed,
return on assets or net assets, revenues, sales, income, operating income, net income,
operating margin, profit margin, earnings per share, return on equity, cash flow, earnings
before interest, taxes, depreciation and amortization (EBITDA), EBITDA margin, operating
margin or net worth of the Company, any of its Subsidiaries, divisions or other areas of the
Company.11.
    A new sentence is added to the end of Section 12(c) of the Plan to read as follows:In addition, the Committee may appropriately adjust any evaluation of performance under a
Performance Measure to exclude any of the following events that occur during a performance
period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such laws or provisions
affecting reported results, (iv) accruals for reorganization and restructuring programs and
(v) any extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in managements discussion and analysis of financial condition and
results of operations appearing in the Companys annual report to stockholders for the
applicable year. 4