<PAGE>   1
                                                                   EXHIBIT 10.63

                                                               EXECUTION VERSION

                                SIXTH AMENDMENT
                              TO CREDIT AGREEMENT
                                     AMONG
                           BEVERLY ENTERPRISES, INC.,
               BEVERLY HEALTH AND REHABILITATION SERVICES, INC.,
               (FORMERLY KNOWN AS BEVERLY CALIFORNIA CORPORATION)
                    THE SUBSIDIARY GUARANTORS LISTED HEREIN,
                           THE LENDERS LISTED HEREIN,
                                      AND
                          THE NIPPON CREDIT BANK, LTD.
                          LOS ANGELES AGENCY, AS AGENT

                           Dated as of July 25, 1995



                 THIS SIXTH AMENDMENT dated as of July 25, 1995 (this
"Amendment"), is entered into by and among BEVERLY ENTERPRISES, INC., a
Delaware corporation ("BEI"), BEVERLY HEALTH AND REHABILITATION SERVICES, INC.
(formerly known as Beverly California Corporation), a California corporation
("Borrower"), the SUBSIDIARY GUARANTORS listed on the signature pages hereof
(together with BEI, the "Guarantors"), the LENDERS listed on the signature
pages hereof (such lenders, together with each Person that may or has become a
party to the Credit Agreement (as hereinafter defined) pursuant to subsection
10.8 thereof, are referred to herein individually as a "Lender" and
collectively as the "Lenders"), and THE NIPPON CREDIT BANK, LTD., Los Angeles
Agency ("Nippon"), as agent for the Lenders (in such capacity, the "Agent").
This Amendment amends the Credit Agreement dated as of March 2, 1993 by and
among BEI, Borrower, Agent and Lenders, as amended by that certain First
Amendment to Credit Agreement dated as of May 6, 1994, as further amended by
that certain Second Amendment to Credit Agreement dated as of May 19, 1994, as
further amended by that certain Third Amendment to Credit Agreement dated as of
November 1, 1994, as further amended by that certain Fourth Amendment to Credit
Agreement dated as of November 9, 1994, and as further amended by that certain
Fifth Amendment to Credit Agreement dated as of December 30, 1994 (as so
amended, the "Credit Agreement"), as set forth herein.

                                    RECITALS

                 WHEREAS, Borrower desires to amend the Credit Agreement in
certain respects;

                 WHEREAS, Lenders and Agent have agreed to approve such
amendments;
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                 WHEREAS, the Obligations of the Borrower under the Credit
Agreement are secured by the Collateral Documents, including inter alia, that
certain Mortgage, Assignment of Leases and Rents, Security Agreement, Financing
Statement and Fixture Filing dated March 2, 1993 and filed on March 8, 1993,
now appearing of record at Page 837 of Book 808 in the office of the Recorder
of Crittenden County, Arkansas in favor of Nippon Credit Trust Company, as
Collateral Agent (the "Collateral Agent") from Beverly Enterprises - Arkansas
Inc., a Wholly-Owned Subsidiary of the Borrower (the "Arkansas Mortgage");

                 WHEREAS, the Borrower has requested the Lenders and the Agent
to authorize the release by the Collateral Agent of the Arkansas Mortgage;

                 WHEREAS, the Lenders and the Agent are willing so to authorize
the release of the Arkansas Mortgage upon the terms and subject to the
conditions set forth herein, including the amendment of the Credit Agreement in
certain respects and the grant by Beverly Enterprises - Arkansas Inc. in favor
of the Collateral Agent of a first priority Lien in all the right, title and
interest of Beverly Enterprises - Arkansas Inc. in and to that certain real
property known as West Memphis Nursing and Rehabilitation, 800 West Broadway,
West Memphis, Arkansas 72301 and more described in Annex "A" attached hereto
(the "Replacement Arkansas Property");

                 WHEREAS, Guarantors desire to reaffirm the effectiveness
respectively of the Subsidiary Guaranty Agreement and the BEI Guaranty
Agreement;

                                   AGREEMENT

                 NOW, THEREFORE, in consideration of the terms and conditions
herein contained, BEI, Borrower, Guarantors, Agent and Lenders agree as
follows:

         1.      Definitions. Interpretation. All capitalized terms defined
above and elsewhere in this amendment shall be used herein as so defined.
Unless otherwise defined herein, all other capitalized terms used herein shall
have the respective meanings given to those terms in the Credit Agreement, as
amended by this Amendment. The rules of construction set forth in Section I of
the Credit Agreement shall, to the extent not inconsistent with the terms of
this Amendment, apply to this Amendment and are hereby incorporated by
reference.

         2.      Amendment to Credit Agreement. Subject to conditions set forth
in paragraph 5 hereof, the Credit Agreement is hereby amended as follows:

                 (a)      The introductory paragraph is amended by deleting
         "BEVERLY CALIFORNIA CORPORATION" appearing in the third line



                                       2
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         thereof and replacing it with "BEVERLY HEALTH AND REHABILITATION
         SERVICES, INC. (formerly known as Beverly California Corporation)."

                 (b)      Subsection 1.1 is amended by changing the
         definition of "Borrower" set forth therein to read in its
         entirety as follows:

                          "Borrower" means Beverly Health and Rehabilitation
                 Services, Inc. (formerly known as Beverly California
                 Corporation), a California corporation.

                 (c)      Subsection 5.11(c) is amended by deleting such
         subsection in its entirety and replacing it with the following:

                          (c) Capital contributions to Beverly Funding Corp.,
                 if, after giving effect thereto, the aggregate capital of 
                 Beverly Funding Corp. does not exceed 25% of the maximum 
                 amount of Permitted Receivables Financing Securities that 
                 Beverly Funding Corp. is able to issue under its Receivables 
                 Financing Program as it may exist from time to time;

                 (d)      Subsection 5.13 C. is amended by deleting such
         subsection in its entirety and replacing it with the following:

                          C.      Neither BEI nor any of its Subsidiaries will
                 create, assume or suffer to exist any Lien on any patient 
                 accounts receivable of BEI or any of its Subsidiaries that 
                 are rights to payment for goods sold or services rendered at 
                 any facility that constitutes a portion of the Collateral, 
                 except for Liens on patient accounts receivable of BEI and its
                 Subsidiaries granted to secure Permitted Receivables Financing
                 Securities; provided, that the net amount of all uncollected 
                 accounts receivable owing to BEI or any of its Subsidiaries 
                 over which such a Lien is granted, together, without 
                 duplication, with the net amount of all uncollected accounts 
                 receivable owing to BEI or any of its Subsidiaries that are 
                 assigned to secure such a Permitted Receivables Financing 
                 Securities shall not exceed at any time 175% of the aggregate 
                 principal amount of all Permitted Receivables Financing
                 Securities then outstanding.


                                       3
<PAGE>   4
                 (e)      Section 5.24 is amended by deleting such section in
         its entirety and replacing it with the following:

                 5.24     Permitted Receivables Financing Securities

                          The aggregate principal amount of all Permitted
                  Receivables Financing Securities outstanding at any time 
                  shall not exceed $100,000,000.

                 (f)      Schedule C is amended by deleting such schedule in
         its entirety and replacing it with the new Schedule C set forth in 
         Annex "B" attached hereto.

                 3.       RELEASE AND REPLACEMENT OF THE ARKANSAS MORTGAGE.

                          Upon the satisfaction of the conditions set forth in
Section 5, and upon the concurrent delivery by Beverly Enterprises - Arkansas
Inc. to the Collateral Agent of a Mortgage in substantially the form of Annex
"C" attached hereto the effect of which is to grant to the Collateral Agent a
first priority Lien on the Replacement Arkansas Property (the "Replacement
Arkansas Mortgage"), the Agent shall execute and deliver to the Collateral
Agent a Collateral Release Request in the form of Annex "D" attached hereto.

                 4.       Representations and Warranties.  In order to induce
the Agent and the Lenders to enter into this Amendment each of BEI and Borrower
represents and warrants to the Agent and the Lenders that:

                          (a)     The representations and warranties of each
                 Loan Party contained in the Credit Agreement are true, 
                 correct and complete in all material respects on and as of 
                 the date hereof to the same extent as though made on and as 
                 of the date hereof except to the extent that such
                 representations and warranties specifically relate to an 
                 earlier date, in which case they are true, correct and 
                 complete in all material respects as of such earlier date;

                          (b)     No event has occurred and is continuing or
                 would result from the execution of this Amendment that 
                 constitutes an Event of Default or Potential Event of Default;

                          (c)     Each Loan Party has performed in all material
                 respects all agreements and satisfied all conditions that the
                 Credit Agreement and this Amendment provide shall be performed
                 by it on or before the date hereof;

                          (d)     The execution, delivery and performance of
                 this Amendment, the Replacement Arkansas Mortgage, and the 
                 Credit Agreement as amended by this Amendment, by each Loan 
                 Party which is a party thereto are within the corporate power 
                 and authority of each such Loan Party and, as of the Sixth 
                 Amendment Effective Date (as hereinafter defined), will be



                                       4
<PAGE>   5
                 duly authorized by all necessary corporate action on the part
                 of each Loan Party, and this Amendment as of the Sixth
                 Amendment Effective Date, are duly executed and delivered by
                 each of such Loan Parties which is a party thereto and will
                 constitute a valid and binding agreement of each of such Loan
                 Parties, enforceable against such Loan Parties in accordance
                 with their terms, except as may be limited by bankruptcy,
                 insolvency, reorganization, moratorium or similar laws or
                 equitable principles relating or limiting creditors' rights
                 generally or by equitable principles relating to
                 enforceability. The Credit Agreement constitutes and, as of
                 the Sixth Amendment Effective Date, the Credit Agreement, as
                 amended by this Amendment, and the Replacement Arkansas
                 Mortgage will constitute, a valid and binding agreement of
                 each applicable Loan Party, enforceable against each
                 applicable Loan Party in accordance with their respective
                 terms, except as may be limited by bankruptcy, insolvency,
                 reorganization, moratorium or similar laws or equitable
                 principles, relating to or limiting creditors' rights
                 generally or by equitable principles relating to
                 enforceability.
        
                          (e)     The execution and delivery by each applicable
                 Loan Party of this Amendment and the Replacement Arkansas 
                 Mortgage, and the performance by each such Loan Party of the 
                 Credit Agreement as amended by this Amendment, and the 
                 Replacement Arkansas Mortgage, do not and will not (i)
                 violate any provision of any law or any governmental rule or
                 regulation applicable to any Loan Party, the Certificate or 
                 Articles of Incorporation or Bylaws of any Loan Party or any 
                 order, judgment or decree of any court or other agency of 
                 government binding on any Loan Party, (ii) conflict with, 
                 result in a breach of or constitute (with due notice or lapse 
                 of time or both) a default under any instrument that is 
                 material, individually or in the aggregate, and that is 
                 binding on such Loan Party, (iii) result in or require the 
                 creation or imposition of any Lien upon any of the properties
                 or assets of any Loan Party (other than any Liens created 
                 under the Replacement Arkansas Mortgage and any of the other 
                 Loan Documents in favor of Agent on behalf of Lenders), or (iv)
                 require any approval or consent of any Person under any 
                 instrument that is material, individually or in the 
                 aggregate, and that is binding on such Loan Party.

                        (f)     The execution and delivery by each applicable 
                 Loan Party of this Amendment and the Replacement Arkansas 
                 Mortgage, and the performance by each such Loan Party of the 
                 Credit Agreement as amended by this Amendment, and the
                 Replacement Arkansas Mortgage, do not and will not require 
                 any registration with, consent or approval of, or notice to, 
                 or other action to, with or by, any federal, state or other 
                 governmental authority or regulatory body.



                                       5
<PAGE>   6

                       (g)    The Replacement Arkansas Mortgage and the other 
         Collateral Documents, when executed and delivered in accordance with 
         this Amendment, will create valid security interests in and mortgage 
         liens on the Collateral purported to be covered thereby, which 
         security interests and mortgage liens, when recorded or filed pursuant
         to the requirements hereof and in the credit Agreement, will remain 
         perfected security interests and mortgage leins, prior to all Liens 
         other than Permitted Liens.

                 5.    CONDITIONS TO EFFECTIVENESS. Section 2 of this Amendment
shall become effective only upon the satisfaction of all of the following
conditions precedent (the date of satisfaction of such conditions being
referred to herein as the "Sixth Amendment Effective Date"):

                       (a)    On or before the Sixth Amendment Effective Date,
         Borrower shall deliver to the Lenders (or to the Agent for the Lenders
         with sufficient originally executed copies, as appropriate, for each
         Lender and its counsel)  the following, each, unless otherwise noted,
         dated the Sixth Amendment Effective Date, duly executed and delivered
         by the parties thereto:

                             (i) Signature and incumbency certificates of each
                   of BEI, Borrower, Beverly Enterprises - Arkansas Inc. and 
                   each Subsidiary Guarantor of its respective  officers 
                   executing this Amendment and/or the Replacement Arkansas 
                   Mortgage certified by such party's respective secretary or 
                   assistant secretary; and

                             (ii) Executed counterparts of this Amendment.
  
                       (b)    On or before the Sixth Amendment Effective Date, 
         the Borrower shall have delivered to the Agent the Replacement 
         Arkansas Mortgage, duly executed by Beverly Enterprises -  Arkansas 
         Inc., together with the following:

                             (i) evidence satisfactory to the Agent of the
                   filing of proper financing statements and fixture filings 
                   duly filed under the Uniform Commercial Code (or any 
                   equivalent or similar legislation) in form and substance 
                   satisfactory to the Agent in each jurisdiction as may be 
                   reasonably necessary or desirable, in each case to 
                   effectively perfect the first priority security interests 
                   in the Replacement Arkansas Mortgage and any other 
                   Collateral created by the Replacement Arkansas Mortgage;

                             (ii) evidence satisfactory to the Agent of 
                   the filing of amendments to that certain UCC-1 financing 
                   statement number 840810 filed with the Secretary of State 
                   of the State of Arkansas amending such financing statement 
                   to (a) release the security interest in the




                                      6
<PAGE>   7
              Collateral created by the Arkansas Mortgage and (b) include a
              first priority security interest in the Collateral created by the
              Replacement Arkansas Mortgage;

                    (iii)    evidence that a counterpart of the Replacement
              Arkansas Mortgage has been duly recorded in all places that are
              reasonably necessary effectively to create a valid and
              enforceable first priority Lien on the Replacement Arkansas
              Property in favor of the Agent or the Collateral Agent subject
              only to Permitted Liens;

                    (iv)     a title insurance policy with respect to the
              Replacement Arkansas Property in the form of an American Land
              Title Association Standard Loan Policy Form 1970, with ALTA
              Endorsement Form 1 coverage, insuring that on the Sixth Amendment
              Effective Date, Beverly Enterprises - Arkansas Inc. owns fee
              simple title to such real property and that the Replacement
              Arkansas Mortgage is a valid first priority Lien on such
              Replacement Arkansas Property in an amount equal to at least
              $2,400,000. Such title insurance policy shall contain CLTA
              Endorsements 100, 104, 110.9, 111.5, 116, 116.1 (for properties
              for which surveys presently exist), 116.4 and 123.2 (or ALTA
              Endorsements corresponding thereto) and CLTA Endorsements or ALTA
              Endorsements relating to usury, subdivisions, mortgagee's alien
              status, morgagee's conduct of business and tie-in provisions, to
              the extent available or applicable. Except as approved by the
              Agent in writing prior to the Sixth Amendment Effective Date, no
              such title insurance policy shall contain any survey exceptions,
              exceptions for rights of parties in possession, easements not of
              record or installments of taxes or special assessments (other
              than taxes and special assessments not then payable), or any
              other exceptions to coverage not approved by the Agent. Each such
              title insurance policy shall contain such reinsurance agreements
              as the Agent may reasonably require; and

                        
                    (v)     evidence of the insurance required by the terms of
              the Replacement Arkansas Mortgage.


              (c)    On or before the Sixth Amendment Effective Date, all
         corporate and other proceedings taken or to be taken in connection
         with the transactions contemplated hereby and all documents incidental
         thereto not previously found acceptable by the Agent, acting on behalf
         of the Lenders, and its counsel shall be satisfactory in form and
         substance to the Agent and such counsel, and the Agent and such
         counsel shall





                                           7







<PAGE>   8
                 have received all such counterpart originals or certified
                 copies of such documents as the Agent may reasonably request.

                          (d) On or before the Sixth Amendment Effective Date,
                 the Borrower shall have caused payment to the Agent of all
                 amounts regarding the costs and expenses reasonably incurred by
                 Agent in connection with this Amendment.

         6.      Acknowledgment and Agreement of Guarantors.  Each Guarantor
acknowledges that it has reviewed the terms and provisions of the Credit
Agreement and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms
that the Guaranty Agreement and the Collateral Documents to which it is a party
or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all Obligations, Guarantied Obligations (as defined
in the applicable Guaranty Agreements) and Secured Obligations (as defined in
the Collateral Documents), as the case may be, including, without limitation,
the payment and performance of all Obligations of Borrower now or hereafter
existing under or in respect of the Credit Agreement as amended by this
Amendment and the Notes defined therein.

         Each Guarantor acknowledges and agrees that any of the Guaranty
Agreements and the Collateral Documents to which it is a party or otherwise
bound shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of this Amendment. Each Guarantor represents
and warrants that all representations and warranties contained in the Credit
Agreement as amended by this Amendment and the Guaranty Agreements and the
Collateral Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the Sixth Amendment
Effective Date to the same extent as though made on and as of that date except
to the extent that such representations and warranties specifically relate to
an earlier date, in which case they are true, correct and complete in all
material respects as of such earlier date.

         Each guarantor acknowledges and agrees that in addition to all the
other waivers agreed to and made by Guarantor as set forth in the Guaranty
Agreement and the  Collateral Documents to which it is a party or otherwise
bound, and pursuant to the provisions of California Civil Code Section 2856,
"Guarantor waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed the Guarantor's rights of subrogation and reimbursement against
the principal by the




                                      8
<PAGE>   9
operation of Section 580d of the Code of Civil Procedure or otherwise."

         Each Guarantor acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Guarantor is not
required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to the credit Agreement effected pursuant to this
Amendment or any other Loan Document and (ii) that neither the terms of the
Credit Agreement, any other Loan Document nor this Amendment shall be deemed to
require the consent of any Guarantor to any future amendments to the credit
Agreement.

         7. APPRAISAL OF REPLACEMENT ARKANSAS PROPERTY. Within fifteen (15)
days after the Sixth Amendment Effective Date, Borrower shall obtain and
deliver to Agent an appraisal of the Replacement Arkansas Property in form,
scope and substance satisfactory to Agent, to be conducted by an independent
appraisal firm approved by Agent showing that the appraisal value of the
Replacement Arkansas Property equals or exceeds the appraisal value of the real
property on which the Agent had a first priority Lien pursuant to the Arkansas
Mortgage.

         8. EFFECTIVENESS; COUNTERPARTS. This Amendment may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Amendment (other than the provisions of Section 2) shall
become effective upon the execution of a counterpart hereof by all Lenders and
each of the Loan Parties and receipt of written or telephonic notification of 
such execution and authorization of delivery thereof.

         9. FEES AND EXPENSES. The borrower acknowledges that all costs, fees
and expenses as described in subsection 10.4 of the Credit Agreement incurred by
the Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of the Borrower.

         10. EFFECT OF AMENDMENT. It is hereby agreed that, except as
specifically provided herein, this Amendment does not in any way affect or
impair the terms and conditions of the Credit Agreement, and all terms and
conditions of the Credit Agreement are to remain in full force and effect
unless otherwise specifically amended or changed pursuant to the terms and
conditions of this Amendment.

         11. APPLICABLE LAW. This Amendment and the rights and obligations of
the parties hereto and all other aspects hereof shall be deemed to be made
under, shall be governed by, and shall be construed and enforced in accordance
with, the laws of the State of New York without regard to principles of
conflicts of laws.




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<PAGE>   10
           WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.

                                       BEI:

                                       BEVERLY ENTERPRISES, INC.


                                       By: 
                                          -------------------------------------
                                       Title: 
                                             ----------------------------------

                                       Borrower:

                                       BEVERLY HEALTH AND REHABILITATION 
                                       SERVICES, INC.


                                       By: 
                                          -------------------------------------
                                       Title:
                                             ----------------------------------
                                                                            
                                       Agent:

                                       THE NIPPON CREDIT BANK, LTD., 
                                       LOS ANGELES AGENCY,
                                       as Agent and as a Lender


                                       By:
                                          -------------------------------------
                                       Title:
                                             ----------------------------------




                                     S-1

<PAGE>   11

                                        Lenders:                         
                                                                         
                                        THE NIPPON CREDIT BANK, LTD.,    
                                        LOS ANGELES AGENCY,              
                                        as Agent and as a Lender         
                                                                         
                                                                         
                                        By:
                                           ------------------------------------
                                        Title: 
                                              ---------------------------------
                                                                         
                                        TORONTO-DOMINION (TEXAS), INC.   
                                        as a Lender                      
                                                                         
                                                                         
                                        By:
                                           ------------------------------------
                                        Title:
                                              ---------------------------------
 

                            [Signatures Continued]




                                     S-2
<PAGE>   12
                                         The Subsidiary Guarantors:          
                                                                             
                                              American Transitional Care     
                                              Centers of Texas, Inc.         
                                                                             
                                              American Transitional Care     
                                              Dallas-Ft. Worth, Inc.         
                                                                             
                                              American Transitional Health   
                                              Care, Inc.                     
                                                                             
                                              American Transitional          
                                              Hospitals, Inc.                
                                                                             
                                              American Transitional          
                                              Hospitals of Indiana, Inc.     
                                                                             
                                              American Transitional          
                                              Hospitals of Oklahoma, Inc.    
                                                                             
                                              American Transitional          
                                              Hospitals of Tennessee, Inc.   
                                                                             
                                              ATH Del Oro, Inc.              
                                                                             
                                              ATH Heights, Inc.              
                                                                             
                                              ATH Tucson, Inc.               
                                                                             
                                              Beverly Enterprises -          
                                               Alabama, Inc.                 
                                                                             
                                              Beverly Enterprises -          
                                               Arkansas, Inc.                
                                                                             
                                              Beverly Enterprises -          
                                               Florida, Inc.                 
                                                                             
                                              Beverly Enterprises -          
                                               Georgia, Inc.                 
                                                                             
                                              Beverly Enterprises            
                                              Japan Limited                  
                                                                             
                                              Beverly Enterprises -          
                                               Maryland, Inc.                
                                                                             
                                              Beverly Enterprises -          
                                               Massachusetts, Inc.           
                                                                             
                                              Beverly Enterprises -          
                                               Minnesota, Inc.               
                                                                             
                                                                             


                                     S-3

<PAGE>   13
                                                Beverly Enterprises -       
                                                 Mississippi, Inc.          
                                                                            
                                                Beverly Enterprises -       
                                                 Missouri, Inc.             
                                                                            
                                                Beverly Enterprises -       
                                                 Nebraska, Inc.             
                                                                            
                                                Beverly Enterprises -       
                                                 North Carolina, Inc.       
                                                                            
                                                Beverly Enterprises -       
                                                 Oregon                     
                                                                            
                                                Beverly Enterprises -       
                                                 Wisconsin, Inc.            
                                                                            
                                                Commercial Management,      
                                                 Inc.                       
                                                                            
                                                Hallmark Convalescent       
                                                 Homes, Inc.                
                                                                            
                                                Hospital Facilities         
                                                 Corporation                
                                                                            
                                                Moderncare of Lumberton,    
                                                 Inc.                       
                                                                            
                                                Nebraska City S-C-H, Inc.   
                                                                            
                                                South Dakota - Beverly      
                                                 Enterprises, Inc.          
                                                                            
                                                Vantage Healthcare          
                                                 Corporation                
                                                                            
                                                AGI-Camelot, Inc.           
                                                                            
                                                AGI-McDonald County         
                                                 Health Care, Inc.          
                                                                            
                                                Beverly Enterprises -       
                                                 Arizona, Inc.              
                                                                            
                                                Beverly Enterprises -       
                                                 California, Inc.           
                                                                            
                                                Beverly Enterprises -       
                                                 Colorado, Inc.             
                                                                            
                                                Beverly Enterprises -       
                                                 Connecticut, Inc.          




                                     S-4
                                                                            
<PAGE>   14
                                               Beverly Enterprises -     
                                                Garden Terrace, Inc.     
                                                                         
                                               Beverly Enterprises -     
                                                Hawaii, Inc.             
                                                                         
                                               Beverly Enterprises -     
                                                Idaho, Inc.              
                                                                         
                                               Beverly Enterprises -     
                                                Illinois, Inc.           
                                                                         
                                               Beverly Enterprises -     
                                                Indiana, Inc.            
                                                                         
                                               Beverly Enterprises -     
                                                Kansas, Inc.             
                                                                         
                                               Beverly Enterprises -     
                                                Kentucky, Inc.           
                                                                         
                                               Beverly Enterprises -     
                                                Louisiana, Inc.          
                                                                         
                                               Beverly Enterprises -     
                                                Michigan, Inc.           
                                                                         
                                               Beverly Enterprises -     
                                                New Jersey, Inc.         
                                                                         
                                               Beverly Enterprises -     
                                                Ohio, Inc.               
                                                                         
                                               Beverly Enterprises -     
                                                Pennsylvania, Inc.       
                                                                         
                                               Beverly Enterprises -     
                                                South Carolina, Inc.     
                                                                         
                                               Beverly Enterprises -     
                                                Tennessee, Inc.          
                                                                         
                                               Beverly Enterprises -     
                                                Texas, Inc.              
                                                                         
                                               Beverly Enterprises -     
                                                Utah, Inc.               
                                                                         
                                               Beverly Enterprises -     
                                                Virginia, Inc.           
                                                                         
                                               Beverly Enterprises -     
                                                Washington, Inc.         
                                                                         



                                     S-5
                            
<PAGE>   15
                                            Beverly Enterprises -         
                                             West Virginia, Inc.          
                                                                          
                                            Beverly Indemnity, Ltd.       
                                                                          
                                            Beverly Manor Inc. of         
                                             Hawaii                       
                                                                          
                                            Beverly Savana Cay Manor,     
                                             Inc.                         
                                                                          
                                            Columbia-Valley Nursing       
                                             Home, Inc.                   
                                                                          
                                            Computran Systems, Inc.       
                                                                          
                                            Continental Care Centers      
                                             of Council Bluffs, Inc.      
                                                                          
                                            Forest City Building Ltd.     
                                                                          
                                            Home Medical Systems,         
                                             Inc.                         
                                                                          
                                            Kenwood View Nursing          
                                             Home, Inc.                   
                                                                          
                                            Liberty Nursing Homes,        
                                             Incorporated                 
                                                                          
                                            Medical Arts Health           
                                             Facility of                  
                                             Lawrenceville, Inc.          
                                                                          
                                            Nursing Home Operators,       
                                             Inc.                         
                                                                          
                                            Petersen Health Care,         
                                             Inc.                         
                                                                          
                                            Pharmacy Corporation of      
                                             America                      
                                                                          
                                            Salem No. 1, Inc.             
                                                                          
                                            South Alabama Nursing         
                                             Home, Inc.                   
                                                         



                                     S-6
                          
<PAGE>   16
                                            Taylor County Health         
                                             Facility, Incorporated      
                                                                         
                                            Alliance Health Services,    
                                             Inc.                        
                                                                         
                                            Healthcare Prescription      
                                             Services, Inc.              
                                                                         
                                            Dunnington Drugs, Inc.       
                                                                         
                                            Insta-Care Holdings, Inc.    
                                                                         
                                        By: /s/ [ILLEGIBLE]
                                           ------------------------------------
                                        Title: Sr. Vice President and Treasurer
                                              ---------------------------------



                                     S-7