Document:

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                                                                   EXHIBIT 10.21

                            BEVERLY ENTERPRISES, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                            EFFECTIVE JANUARY 1, 1998
              (AMENDED AND RESTATED EFFECTIVE AS OF APRIL 1, 2000)

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
ARTICLE I  PURPOSE AND ESTABLISHMENT..............................................................................3

1.1      PURPOSE           .......................................................................................3

ARTICLE II  DEFINITIONS...........................................................................................3

2.1      "AFFILIATE"..............................................................................................3
2.2      "BENEFICIARY"............................................................................................4
2.3      "BOARD"..................................................................................................4
2.4      "CHANGE IN CONTROL"......................................................................................4
2.5      "CODE"   ................................................................................................5
2.6      "COMMENCEMENT DATE"......................................................................................5
2.7      "COMMITTEE"..............................................................................................5
2.8      "COMPENSATION"...........................................................................................6
2.9      "CREDITED SERVICE".......................................................................................6
2.10     "DISABILITY".............................................................................................6
2.11     "EARLY RETIREMENT BENEFIT"...............................................................................7
2.12     "EARLY RETIREMENT DATE"..................................................................................7
2.13     "EFFECTIVE DATE".........................................................................................7
2.14     "EMPLOYER"...............................................................................................7
2.15     "ERISA"..................................................................................................7
2.16     "EXCHANGE ACT"...........................................................................................7
2.17     "FINAL AVERAGE COMPENSATION".............................................................................7
2.18     "NORMAL RETIREMENT BENEFIT"..............................................................................8
2.19     "NORMAL RETIREMENT DATE".................................................................................8
2.20     "PARTICIPANT"............................................................................................8
2.21     "PERSON".................................................................................................8
2.22     "PLAN"...................................................................................................9
2.23     "PLAN YEAR"..............................................................................................9
2.24     "RETIREMENT BENEFIT".....................................................................................9
2.25     "YEAR OF GRANDFATHERED SERVICE"..........................................................................9

ARTICLE III  ELIGIBILITY AND PARTICIPATION........................................................................9

3.1      ELIGIBILITY..............................................................................................9
3.2      PARTICIPATION...........................................................................................10

ARTICLE IV  AMOUNT AND PAYMENT OF RETIREMENT BENEFIT.............................................................10

4.1      AMOUNT OF NORMAL RETIREMENT BENEFIT.....................................................................10
4.2      AMOUNT OF EARLY RETIREMENT BENEFIT......................................................................10
4.3      DEATH, DISABILITY, OR CHANGE IN CONTROL.................................................................11
4.4      (A)  PAYMENT OF RETIREMENT BENEFIT......................................................................12
         (B)  LUMP SUM OPTION....................................................................................12
4.5      WITHHOLDING AND PAYROLL TAXES...........................................................................13
4.6      PAYMENT IN EVENT OF LEGAL DISABILITY....................................................................13
4.7      GRANDFATHER RULES.......................................................................................14
4.8      FORFEITURE FOR CAUSE OR COMPETITION.....................................................................15
4.9      SUSPENSION OF BENEFITS..................................................................................15
</TABLE>

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<TABLE>
<S>                                                                                                             <C>
ARTICLE V  DESIGNATION OF BENEFICIARY............................................................................15

5.1      BENEFICIARY DESIGNATION.................................................................................15
5.2      CHANGE OF BENEFICIARY...................................................................................16
5.3      NO DESIGNATED BENEFICIARY...............................................................................16
5.4      DOUBT AS TO BENEFICIARY.................................................................................17

ARTICLE VI  APPEALS PROCEDURE AND ARBITRATION....................................................................17

6.1      CLAIMS AND APPEAL PROCEDURE.............................................................................17
6.2      BINDING ARBITRATION.....................................................................................18

ARTICLE VII  UNFUNDED NATURE OF PLAN.............................................................................18

7.1      THE PLAN IS UNFUNDED....................................................................................18
7.2      EMPLOYER'S RIGHT TO ESTABLISH TRUST FUND................................................................19

ARTICLE VIII  ADMINISTRATION; AMENDMENTS AND TERMINATION; RIGHTS
           AGAINST THE EMPLOYER..................................................................................20

8.1      ADMINISTRATION    ......................................................................................20
8.2      LIABILITY OF COMMITTEE; INDEMNIFICATION.................................................................20
8.3      AMENDMENT AND/OR TERMINATION............................................................................21
8.4      RIGHTS AGAINST THE EMPLOYER.............................................................................21
8.5      EXPENSES    ............................................................................................22

ARTICLE IX  GENERAL AND MISCELLANEOUS............................................................................22

9.1      SPENDTHRIFT CLAUSE......................................................................................22
9.2      SEVERABILITY............................................................................................22
9.3      CONSTRUCTION............................................................................................22
9.4      GOVERNING LAW...........................................................................................23
9.5      SEPARATENESS OF PLAN....................................................................................23
9.6      DISCLAIMER..............................................................................................23
9.7      RELEASE     ............................................................................................23
9.8      SUCCESSORS AND ASSIGNS..................................................................................24
</TABLE>

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                            BEVERLY ENTERPRISES, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                    ARTICLE I
                            PURPOSE AND ESTABLISHMENT

1.1      PURPOSE

         Effective as of January 1, 1998, Beverly Enterprises, Inc., established
the "Beverly Enterprises, Inc. Supplemental Executive Retirement Plan," an
unfunded plan "maintained by the employer primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees," within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA. This Plan is intended to constitute a "nonqualified deferred compensation
plan" for purposes of Section 3121(v)(2) of the Code as well as 4 U.S.C. Section
114. The Plan has been amended and restated effective as of April 1, 2000.

                                   ARTICLE II
                                   DEFINITIONS

2.1      "AFFILIATE"

         "Affiliate" means (a) a corporation, trade or business that, together
with any Employer, is a member of a controlled group of corporations or an
affiliated service group or under common control (within the meaning of section
414(b), (c) or (m) of the Code), but only for the period during which such other
entity is so affiliated with any Employer, and (b) any other entity required to
be aggregated with any Employer pursuant to Department of Treasury regulations
under section 414(o) of the Code.

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                    Amended and Restated as of April 1, 2000

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2.2      "BENEFICIARY"

         "Beneficiary" means one or more persons, trusts, estates or other
entities designated or deemed to have been designated in accordance with Article
V of this Plan, that are entitled to receive benefits under this Plan in the
event of the Participant's death.

2.3      "BOARD"

         "Board" means the Board of Directors of Beverly Enterprises, Inc.

2.4      "CHANGE IN CONTROL"

         "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been satisfied:

         (a) Any person, corporation or other entity or group, including any
"group" as defined in Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner of shares having 30% or more of the total number of votes that
may be cast for the election of directors of Beverly Enterprises, Inc. (the
"Company"); or

         (b) As the result of, or in connection with, any tender or exchange
offer, merger or other business combination, sale of assets or contested
election, or any combination of the foregoing (a "Transaction"), the persons who
were directors of the Company before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any successor to the
Company or its assets; or

         (c) If at any time (i) the Company shall consolidate with, or merge
with, any other Person and the Company shall not be the continuing or surviving
corporation, (ii) any Person shall consolidate with, or merge with, the Company,
and the Company shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding stock shall be

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                    Amended and Restated as of April 1, 2000

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changed into or exchanged for stock or other securities of any other Person or
cash or any other property, (iii) the Company shall be a party to a statutory
share exchange with any other Person after which the Company is a Subsidiary of
any other Person, or (iv) the Company shall sell or otherwise transfer 50% or
more of the assets or earnings power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons; provided, however, that notwithstanding
anything to the contrary set forth above, a Change in Control shall not include
any transfer to a consolidated subsidiary, reorganization, spin-off, split-up,
distribution, or other similar or related transaction(s) or any combination of
the foregoing in which the core business and assets of the Company and its
subsidiaries (taken as a whole) are transferred to another entity ("Controlled")
with respect to which (1) the majority of the Board of Directors of the Company
(as constituted immediately prior to such transaction(s) also serve as directors
of Controlled and immediately after such transaction(s) constitute a majority of
Controlled's board of directors, and (2) more than 70% of the shareholders of
the Company (immediately prior to such transaction(s)) become shareholders or
other owners of Controlled and immediately after the transaction(s) control more
than 70% of the ownership and voting rights of Controlled.

2.5      "CODE"

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

2.6      "COMMENCEMENT DATE"

         "Commencement Date" means the date on which a Participant or, if
applicable, a Beneficiary, begins to receive payments under the Plan.

2.7      "COMMITTEE"

         "Committee" means the Compensation Committee of the Board, or any such
other committee designated by the Board.

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2.8      "COMPENSATION"

         "Compensation" means the annual base salary, excluding bonus,
commissions, overtime, employee benefits, relocation allowance, incentive
payments, directors fees and other special payments or fees, paid to a
Participant by any Employer for employment services rendered to any Employer,
but before reduction for compensation deferred pursuant to all qualified,
non-qualified and Code Section 125 plans of any Employer. "Compensation" shall
not include any tax gross-up payments, whether made in connection with an
employee benefit plan or otherwise.

2.9      "CREDITED SERVICE"

         "Credited Service" means the period of service (in years and months,
with any remaining partial month to be credited as a full month), measured on an
"elapsed time" basis, that a Participant has been employed by an Employer
commencing with the later of (a) the Participant's initial participation in the
Plan (and, if he ceases to be an active employee Participant and later becomes
an active employee Participant again, recommencing on his date of
reparticipation as an active employee Participant), and (b) the Participant's
attainment of age 50. A Participant's Credited Service will cease at the
earliest of (i) his termination of employment, (ii) his attainment of 15 years
of Credited Service, or (iii) his ceasing to be an active employee Participant.

2.10     "DISABILITY"

         "Disability" means or refers to a disability that the Committee has
found would qualify the Participant (upon the expiration of any applicable
waiting period) for payment of benefits under the Employer's long-term
disability income plan. If the Employer does not continue to maintain a
long-term disability income plan, "Disability" shall mean any physical or mental
disability that the Committee determines, in its sole discretion, to be total
and permanent.

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2.11     "EARLY RETIREMENT BENEFIT"

         "Early Retirement Benefit" means the annual Retirement Benefit
calculated as described in Section 4.2 of this Plan.

2.12     "EARLY RETIREMENT DATE"

         "Early Retirement Date" means the date on which the Participant attains
age 60.

2.13     "EFFECTIVE DATE"

         "Effective Date" means the effective date of this Plan, which is
January 1, 1998.

2.14     "EMPLOYER"

         "Employer" means Beverly Enterprises, Inc. and any Affiliate that has
adopted this Plan with the approval of Beverly Enterprises, Inc.

2.15     "ERISA"

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

2.16     "EXCHANGE ACT"

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute thereto, together with any rules, regulations, and
interpretations promulgated thereunder or with respect thereto.

2.17     "FINAL AVERAGE COMPENSATION"

         "Final Average Compensation" means the average of the Compensation paid
to a Participant during the three (3) consecutive full Plan Years of Credited
Service immediately preceding (and, if a full Plan Year, including) the Plan
Year in which the Participant retires, dies,

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or becomes Disabled. If the result would increase a Participant's Final Average
Compensation, then the actual Compensation paid in the year of his retirement,
death, or Disability shall be counted as one of the three Plan Years. If a
Participant has less than three full Plan Years of Credited Service
Compensation, his Final Average Compensation shall be determined by taking into
account all of such Compensation, divided by the number of months of Credited
Service and then multiplied by 12. For purposes hereof, Compensation shall only
be taken into account during the periods when the Participant earns Credited
Service hereunder. For purposes of computing Final Average Compensation,
Compensation in excess of $1,000,000 in any year shall be disregarded.

2.18     "NORMAL RETIREMENT BENEFIT"

         "Normal Retirement Benefit" means the annual Retirement Benefit
calculated as described in Section 4.1 of this Plan.

2.19     "NORMAL RETIREMENT DATE"

         "Normal Retirement Date" means the date on which the Participant
attains age 65.

2.20     "PARTICIPANT"

         "Participant" means an employee or former employee of the Employer who
has satisfied the requirements of Section 3.2 of this Plan.

2.21     "PERSON"

         "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

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                    Amended and Restated as of April 1, 2000

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2.22     "PLAN"

         "Plan" means the Beverly Enterprises, Inc. Supplemental Executive
Retirement Plan, as set forth in this document, and as it may be amended from
time to time.

2.23     "PLAN YEAR"

         "Plan Year" means the twelve (12) consecutive month period commencing
on each January 1st and ending on each December 31.

2.24     "RETIREMENT BENEFIT"

         "Retirement Benefit" means the annual benefit payable to a Participant
under this Plan.

2.25     "YEAR OF GRANDFATHERED SERVICE"

         For purposes of Section 4.7 only, "Year of Grandfathered Service" means
each full twelve (12) consecutive month period that a Participant has been
employed by an Employer, commencing with the Participant's date of hire (and, if
rehired, recommencing on his date of rehire).

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

3.1      ELIGIBILITY

         Participation in the Plan shall be limited to a select group of
management and highly compensated employees of the Employer. From that group,
the Committee shall select from time to time, in its sole discretion, employees
to participate in the Plan. The Committee also has the authority to terminate an
employee's participation in the Plan at any time.

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3.2      PARTICIPATION

         An eligible employee shall become a Participant hereunder on the date
as of which the Committee determines in its sole discretion that he shall be a
Participant. The Participant shall deliver to the Committee such properly
completed enrollment and/or beneficiary designation forms as the Committee may
require. The Committee may, in its absolute discretion, from time to time select
individuals for or delete individuals from participation in the Plan.

                                   ARTICLE IV
                    AMOUNT AND PAYMENT OF RETIREMENT BENEFIT

4.1      AMOUNT OF NORMAL RETIREMENT BENEFIT

         A Participant's annual Retirement Benefit shall be the product of (a)
3-1/3%, (b) the Participant's Final Average Compensation, and (c ) the
Participant's years (including partial years) of Credited Service. A Normal
Retirement Benefit is only payable upon the Participant terminating employment
with the Employer at or after attaining his Normal Retirement Date.

4.2      AMOUNT OF EARLY RETIREMENT BENEFIT

         (a) If a Participant retires on or after his Early Retirement Date but
before his Normal Retirement Date, he may elect to receive an Early Retirement
Benefit. A Participant's Early Retirement Benefit shall be calculated in the
same manner as the Participant's Normal Retirement Benefit.

         (b) If a Participant terminates employment prior to his Early
Retirement Date, he shall not be entitled to any Retirement Benefit hereunder,
except as provided in Section 4.3, concerning death, Disability, or Change in
Control.

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                    Amended and Restated as of April 1, 2000

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4.3      DEATH, DISABILITY, OR CHANGE IN CONTROL

         (a) If a Participant terminates employment prior to age 60, he is not
entitled to an Early Retirement Benefit (or to any benefit hereunder) unless he
ceases employment by virtue of death or Disability, or unless a Change in
Control occurs. In the event of Disability prior to age 60, or in the event of a
Change in Control, a Participant may elect to receive an Early Retirement
Benefit commencing as of the first business day in the calendar year following
his termination of employment or at any time thereafter, provided that his
Commencement Date may not begin in the case of Disability as long as the
Participant is still receiving disability income benefits under any Employer
sponsored long-term disability plan or insurance. If a Participant dies prior to
age 60, his Beneficiary may not commence benefits hereunder until the first
business day of the calendar year following the date the Participant would have
attained age 60 had he not died.

         (b) In addition, in the event of a Change in Control, the following
special rules shall apply. First, each Participant who is an active employee at
the time of the Change in Control ("Covered Participant") shall be automatically
credited with an additional five (5) years of Credited Service, but in no event
shall his total years of Credited Service exceed the lesser of (a) 15 years or
(b) the number of years he otherwise could have earned as of his Normal
Retirement Date. Second, each Covered Participant shall be entitled to a
Retirement Benefit upon his termination of employment, regardless of his age,
pursuant to Section 4.3(a) above. Third, each Covered Participant's Final
Average Compensation shall be the greater of (a) his Final Average Compensation
determined under Section 2.16 (substituting his termination of employment for
his retirement date, where relevant), or (b) the Participant's average
Compensation during the three (3) consecutive full Plan Years immediately
preceding (and, if a

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full Plan Year, including) the Plan Year in which the Change in Control occurs.
For purposes of computing Final Average Compensation, Compensation in excess of
$1,000,000 in any year shall be disregarded.

4.4      (a)      PAYMENT OF RETIREMENT BENEFIT

         Except as provided in (b) below, if a Participant's Credited Service is
fifteen (15) years, his Retirement Benefit shall be paid annually, as of the
first business day of each year, for 15 years. Except as provided in (b) below,
if a Participant's Credited Service is less than fifteen (15) years, his
Retirement Benefit shall be paid annually, as of the first business day of each
year, for a number of years equal to his years of Credited Service. If his years
of Credited Service include a partial year, his final annual installment shall
be prorated accordingly. The Commencement Date shall be as of the first business
day of January in the calendar year immediately following the calendar year in
which the Participant retires, dies, becomes Disabled, or, in the case of a
Change in Control, otherwise terminates employment, or as soon thereafter as is
administratively practicable (subject to delayed commencement for death or
Disability, to the extent provided in Section 4.3 above). If a Participant dies
before the Commencement Date, the payment(s) shall be made to his designated
Beneficiary. If a Participant dies after the Commencement Date, but before all
of his payments have been made, the remainder of the payments shall be made to
his designated Beneficiary.

         (b)      LUMP SUM OPTION

         Notwithstanding Section 4.4(a) above, a Participant may elect, in lieu
of the annual installments specified above, a single lump sum payment payable as
of the date the first installment would otherwise have been due. The single lump
sum payment shall be equal to

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(a) the discounted present value of the Retirement Benefit payable as an annual
installment, times (b) 85%. The present value shall be determined based on a
discount rate equal to the average Moody's Aa corporate bond returns for the
month of November immediately preceding the Participant's Commencement Date.

4.5      WITHHOLDING AND PAYROLL TAXES

         All amounts payable hereunder to any Participant or Beneficiary shall
be reduced by any and all federal, state and local taxes that are required to be
withheld by the Employer, as determined in the sole discretion of the Employer.
Employment taxes with respect to amounts credited hereunder shall be payable in
accordance with Section 3121(v)(2) of the Code and may be withheld from a
Participant's Compensation if due prior to the time of a distribution hereunder.

4.6      PAYMENT IN EVENT OF LEGAL DISABILITY

         If the Committee receives evidence that a Participant or Beneficiary
entitled to receive any payment under the Plan is physically or mentally
incompetent to receive such payment, is a minor, is under a legal disability, or
is otherwise unable to apply such payments in furtherance of his own interest
and advantage, the Committee may, in its sole discretion, direct the payment to
any other person or trust which has been legally appointed by a court of
competent jurisdiction or, in the event that no such person has been appointed,
to any person whom the Committee, in its sole discretion, determines to be
responsible for the care of the Participant or Beneficiary. Payment to any
person or trust in accordance with this Section will fully discharge the
obligations of the Plan and the Employer to such Participant or Beneficiary.

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4.7      GRANDFATHER RULES

         (a) Notwithstanding anything to the contrary herein, any Participant
who had 15 Years of Grandfathered Service and had attained age 60 as of March
31, 2000, shall be entitled to a Retirement Benefit equal to the greater of (a)
the Retirement Benefit he would have been entitled to under the Plan as it was
constituted immediately prior to this April 1, 2000 amendment and restatement,
as if the pre-April 1, 2000 version of the Plan had continued unchanged, or (b)
the Retirement Benefit otherwise payable hereunder.

         (b) Notwithstanding anything to the contrary herein, any Participant
who is named on Exhibit "A" attached hereto will be given a one-time irrevocable
election to choose, on or before December 31, 2000, whether to either (i) be
credited with 15 Years of Grandfathered Service on his Normal Retirement Date
and be eligible for a full Normal Retirement Benefit at that time under the Plan
as it was in effect immediately prior to this April 1, 2000 amendment and
restatement, as if the pre-April 1, 2000 version of the Plan had continued
unchanged (but under which such Participant would not be entitled to any
Retirement Benefit under the Plan if his employment terminated prior to age 65,
unless due to death, Disability, or a Change in Control), or (ii) have his
Retirement Benefit determined solely under the terms of the current Plan, as
amended and restated, effective as of April 1, 2000, and any later amendments
thereto as may be adopted from time to time.

         (c) Notwithstanding the Participant's years of Credited Service, the
Participant named on Exhibit "B", to the extent so required by his employment
agreement with the Employer, shall be entitled to a Normal Retirement Benefit
equal to 50 percent of his Final Average Compensation upon retiring at or after
his Normal Retirement Date, with a 5 percentage point

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(versus 5 percent) reduction for each year he retires prior thereto, such that
he shall be entitled to an Early Retirement Benefit equal to 25 percent of his
Final Average Compensation if he retires at his Early Retirement Date. No
benefit shall be payable under this Section if the Participant terminates
employment prior to his Early Retirement Date.

4.8      FORFEITURE FOR CAUSE OR COMPETITION

         Notwithstanding anything herein to the contrary, a Participant shall
forfeit all benefits hereunder and shall have no rights or claim to any benefits
under this Plan if he is terminated for cause, summarily discharged (including
resignation in lieu thereof), or violates any covenant not to compete to which
he may be a party, all as determined by the Committee in its sole discretion,
unless the Committee also determines that such Participant shall nonetheless be
eligible for such benefit notwithstanding such termination, discharge,
resignation, or violation. Moreover, in the case of a violation of a noncompete
covenant occurring or coming to light after any payments are received hereunder,
the Participant must refund all such prior payments to the Employer.

4.9      SUSPENSION OF BENEFITS

         If a Participant in payment status is rehired, his Retirement Benefit
shall be suspended until he retires again, and his subsequent Retirement Benefit
will be appropriately adjusted for any prior payments.

                                    ARTICLE V
                           DESIGNATION OF BENEFICIARY

5.1      BENEFICIARY DESIGNATION

         Each Participant shall have the right to designate his Beneficiary
(both primary as well as contingent) to receive any benefits payable under the
Plan to a Beneficiary upon the death of a

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Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of the Employer
in which the Participant participates. A Participant shall make any designation
of Beneficiary or Beneficiaries by completing and signing the applicable form
and returning it to the Committee or its designated agent. If the Participant
names someone other than his spouse as a Beneficiary, a spousal consent, if
required by the Committee, must be signed by that Participant's spouse on a form
designated by the Committee and returned to the Committee.

5.2      CHANGE OF BENEFICIARY

         A Participant shall have the right to change a Beneficiary by
completing, signing and otherwise complying with the terms of the required form
and the Committee's rules and procedures, as in effect from time to time. Upon
the acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Committee shall
be entitled to rely on the last Beneficiary designation filed with the Committee
prior to the Participant's death.

5.3      NO DESIGNATED BENEFICIARY

         If a Participant fails to designate a Beneficiary as provided in
Section 5.1 above or if all designated Beneficiaries predecease the Participant
or die prior to the complete distribution of the Participant's benefits, then
the Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the benefits
remaining under the Plan to be paid to a Beneficiary shall be payable to the
executor or personal representative of the Participant's estate in a single lump
sum payment pursuant to Section 4.4(b).

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                    Amended and Restated as of April 1, 2000

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5.4      DOUBT AS TO BENEFICIARY

         If the Committee has any doubt as to the proper Beneficiary to receive
payments pursuant to this Plan, the Committee shall have the right to withhold
such payments until this matter is resolved to the Committee's satisfaction.

                                   ARTICLE VI
                        APPEALS PROCEDURE AND ARBITRATION

6.1      CLAIMS AND APPEAL PROCEDURE

         Any Participant or Beneficiary of a deceased Participant (a "Claimant")
may deliver to the Committee a written claim for a determination with respect to
the amounts distributable to such Claimant from the Plan. If such a claim
relates to the contents of a notice received by the Claimant, the claim must be
made within 60 days after such notice was received by the Claimant. All other
claims must be made within 180 days of the date on which the event that caused
the claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.

         The Committee shall consider a Claimant's claim within a reasonable
time, and shall notify the Claimant in writing of its determination. If the
Committee requires additional information, the Committee shall request such
information from the Claimant.

         Within 60 days after receiving a notice from the Committee that a claim
has been denied, in whole or in part, a Claimant (or the Claimant's duly
authorized representative) may file with the Committee a written request for a
review of the denial of the claim. The Committee shall render a written decision
on review within a reasonable period of time after receipt of the Claimant's
appeal.

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                    Amended and Restated as of April 1, 2000

                                       17
<PAGE>   19

         A Claimant's compliance with the foregoing provisions of this Section
6.1 is a mandatory prerequisite to a Claimant's right to commence any other
action (as described below in Section 6.2) with respect to any claim for
benefits under this Plan.

6.2      BINDING ARBITRATION

         A claimant may contest the Committee's denial of his appeal only by
submitting the matter to binding arbitration before a single arbitrator agreed
to by the Claimant and the Committee. Any arbitration shall be held in Fort
Smith, Arkansas, unless otherwise agreed to by the Committee and the Claimant.
The arbitration shall be conducted pursuant to the Commercial Arbitration Rules
of the American Arbitration Association. The arbitrator's authority shall be
limited to the affirmance or reversal of the Committee's denial of the appeal,
and the arbitrator shall have no power to alter, add to or subtract from any
provision of this Plan. Except as otherwise required by ERISA, the arbitrator's
decision shall be final and binding on all parties to the maximum extent allowed
by law. The arbitrator shall have no power to award any punitive, exemplary,
consequential, or special damages, and under no circumstances shall an award
contain any amount that in any way reflects any of such types of damages. Each
party shall bear its own attorney's fees and costs of arbitration. Judgment on
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.

                                   ARTICLE VII
                             UNFUNDED NATURE OF PLAN

7.1      THE PLAN IS UNFUNDED

         The Plan is an "unfunded plan primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees," within the

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       18
<PAGE>   20

meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The Employer shall
not be required to segregate funds to pay Retirement Benefits and nothing in
this Plan shall be construed as providing for such segregation. The Participant,
his Beneficiary and any other person(s) having or claiming a right to payments
hereunder or to any interest in this Plan shall have no funded, secured, or
preferential right to payment hereunder, but rather shall rely solely on the
unsecured promise of the Employer. Nothing herein shall be construed to give the
Participant, his Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account or
property of any kind whatsoever owned by the Employer or in which it may have
any right, title or interest now or in the future; provided that the Participant
or any Beneficiary shall have the right to enforce his claim against the
Employer in the same manner as any unsecured creditor of the Employer. Each
Participant, by participating hereunder, agrees to waive any priority creditor
status for wage payments.

7.2      EMPLOYER'S RIGHT TO ESTABLISH TRUST FUND

         Notwithstanding Section 7.1, the Employer may, in its absolute
discretion, establish a trust fund and contribute to such trust fund assets that
shall be held therein, subject to the claims of the Employer's creditors in the
event of the insolvency or bankruptcy of the Employer, until paid to
Participants or Beneficiaries in accordance with the terms of the Plan. The
Employer shall not establish any trust fund that would cause the Plan to fail to
be an unfunded plan for purposes of Title I of ERISA.

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       19
<PAGE>   21

                                  ARTICLE VIII
                         ADMINISTRATION; AMENDMENTS AND
                    TERMINATION; RIGHTS AGAINST THE EMPLOYER

8.1      ADMINISTRATION

         (a) The Committee shall administer the Plan and shall have the full and
absolute discretionary power and authority to construe and interpret the
provisions of the Plan and to determine a Participant's eligibility for benefits
hereunder.

         (b) Any determination made by the Committee pursuant to the authority
granted under subsection (a) shall be conclusive and binding on all
Participants, Beneficiaries and any other person who at any time have, or claim
to have, any interest whatsoever under this Plan.

         (c) Pursuant to Section 401(a)(1) of ERISA, it is intended that the
Plan and the administration thereof shall be exempt from Part 4 of Title I of
ERISA. The Committee and the members thereof shall not be deemed to be
fiduciaries within the meaning of Section 3(21) of ERISA, and shall not be
subject to the terms of Part 4 of Title I of ERISA.

8.2      LIABILITY OF COMMITTEE; INDEMNIFICATION

         To the extent permitted by law, no member of the Committee shall be
liable to any person for any action taken or omitted in connection with the
interpretation and administration of this Plan, unless attributable to his own
gross negligence or willful misconduct. To the maximum extent required or
permitted under applicable law, the Employer shall indemnify the members of the
Committee against any and all claims, losses, damages, and expenses, including
any amounts paid in settlement with the Committee's approval and any attorney's
fees, arising from their action or failure to act.

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       20
<PAGE>   22

8.3      AMENDMENT AND/OR TERMINATION

         The Employer reserves the right to alter, amend or terminate the Plan
or any part hereof. Any such alteration, amendment or termination may be
effected by resolution of the Board or Committee acting in accordance with the
bylaws (or other applicable governing document) of the Employer, in such manner
as the Board or Committee may determine and for any reason whatsoever. Any such
amendment or termination shall become effective upon the date stated therein,
with or without prior notice, and shall be binding upon all Participants and
Beneficiaries. No past practice, pattern, or course of conduct shall operate so
as to preclude any amendment to the Plan, at any time or for any reason. An
amendment may be enacted even if an event is imminent which would otherwise,
absent such amendment, result in additional benefits or rights to a Participant.
However, nothing herein shall be construed so as to give the Employer any
discretion which would otherwise operate so as to preclude any desired pooling
of interest accounting.

8.4      RIGHTS AGAINST THE EMPLOYER

         The establishment of this Plan shall not be construed as giving to any
Participant, Beneficiary or other person any legal, equitable or other rights
(other than rights expressly granted by the provisions of the Plan) against the
Employer, or its officers, directors, agents or shareholders, or as giving to
any Participant or Beneficiary any equity or other interest in the assets or
business of the Employer or in shares of Employer stock or giving any employee
the right to be retained in the employment of the Employer. This Plan does not
constitute a contract of employment and all Participants shall be subject to
discharge to the same extent they would have been if this Plan had never been
adopted.

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       21
<PAGE>   23

8.5      EXPENSES

         The cost of this Plan and the expenses of administering the Plan shall
be borne by the Employer.

                                   ARTICLE IX
                            GENERAL AND MISCELLANEOUS

9.1      SPENDTHRIFT CLAUSE

         Except as provided in a domestic relations order, no right, title or
interest of any kind in the Plan shall be transferable or assignable by any
Participant or Beneficiary or be subject to alienation, anticipation,
encumbrance, garnishment, attachment, execution or levy of any kind, whether
voluntary or involuntary, nor subject to the debts, contracts, liabilities,
engagements, or torts of the Participant or Beneficiary. Any attempt to so
alienate, anticipate, encumber, sell, transfer, assign, pledge, garnish, attach
or otherwise subject to legal or equitable process or dispose of any interest in
the Plan shall be void.

9.2      SEVERABILITY

         In the event that any provision of this Plan shall be declared illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions of this Plan but shall be fully severable and this Plan
shall be construed and enforced as if said illegal or invalid provision had
never been a part of this Plan.

9.3      CONSTRUCTION

         The article and section headings are included only for convenience of
reference and are not to be taken as limiting or extending the meaning of any of
the terms and provisions of this

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       22
<PAGE>   24

Plan. Whenever appropriate, words used in the singular shall include the plural
or the plural may be read as the singular. When used herein, the masculine
gender includes the feminine gender.

9.4      GOVERNING LAW

         The validity and effect of this Plan and the rights and obligations of
all persons affected hereby shall be construed and determined in accordance with
the laws of the State of Arkansas, unless superseded by federal law.

9.5      SEPARATENESS OF PLAN

         Nothing in this Plan shall operate or be construed in any way to
modify, amend or affect the terms and provisions of any other plan established
or maintained by an Employer except as may otherwise be expressly provided.

9.6      DISCLAIMER

         The Employer makes no representations, warranties, or assurances and
assumes no responsibility as to the state or federal tax consequences of this
Plan or participation herein.

9.7      RELEASE

         Except in the case of a Change in Control, as a condition to making any
payment under the Plan, or to giving effect to any designation of a Beneficiary
or other election or other action under the Plan by any Participant or any other
person, the Committee may require such consents or releases as it determines to
be appropriate, and further may require any such designation, election or other
action to be in writing, in a prescribed form and to be filed with the Committee
in a manner prescribed by the Committee. In the event the Committee determines,
in its discretion, that multiple conflicting claims may be made as to all or a
part of the same benefit,

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       23
<PAGE>   25

the Committee may delay the making of any payment until such conflict or
multiplicity of claims is resolved.

9.8      SUCCESSORS AND ASSIGNS

         The Plan shall be binding upon and shall inure to the benefit of the
Employer, its successors, purchasers, and assigns, and all Participants,
Beneficiaries and their heirs, executors, administrators, successors and
assigns.

         IN WITNESS WHEREOF, Beverly Enterprises, Inc., hereby adopts the Plan
as of the Effective Date set forth above.

ATTEST:                                     BEVERLY ENTERPRISES, INC.

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

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       24
<PAGE>   26

                                   EXHIBIT "A"

                  James Griffith
                  Donald Dotson
                  Thomas Jerald Moore

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       25
<PAGE>   27

                                   EXHIBIT "B"

                  William R. Floyd

                     Supplemental Executive Retirement Plan
                    Amended and Restated as of April 1, 2000

                                       26<PAGE>   1
                                                                   EXHIBIT 10.22

                            BEVERLY ENTERPRISES, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                             AS AMENDED AND RESTATED
                             EFFECTIVE JULY 1, 2000

                                    * * * * *

         SECTION 1. PURPOSE. The purpose of the Plan is for the Company to
provide certain select executives of the Company with an opportunity to defer
receipt of compensation for services rendered to the Company. It is intended
that the Plan shall aid the Company in retaining and attracting employees whose
abilities, experience and judgment can contribute to the continued progress of
the Company. The Plan is intended to be a so-called "top hat plan" under ERISA,
i.e., an unfunded plan of deferred compensation for the benefit of a select
group of highly compensated or management employees. The Plan is also a
nonqualified deferred compensation arrangement under Internal Revenue Code
Section 3121(v).

         The Plan was originally effective on January 1, 1997. This Amendment
and Restatement is being effected to make various technical changes to the Plan.
The effective date of this Amendment and Restatement is January 1, 2000.

         SECTION 2. DEFINITIONS.

         (a) "Account(s)" means the Deferral Account, the Supplemental
Contributions Account and/or the Matching Contributions Account, as the context
requires.

<PAGE>   2
         (b) "Bonus" means any special and/or discretionary cash compensation
amounts in excess of Salary, determined by the Company to be payable to a
Participant with respect to services rendered.

         (c) A "Change of Control" shall be deemed to have taken place if: (i)
any person, corporation, or other entity or group, including any "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, other than
any employee benefit plan then maintained by the Company, becomes the beneficial
owner of shares of the Company having 30 percent or more of the total number of
votes that may be cast for the election of Directors of the Company; (ii) as the
result of, or in connection with, any contested election for the Board of
Directors of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any combination of the foregoing (a
"Transaction"), the persons who were Directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company or its assets, or (iii) at any time
(a) the Company shall consolidate or merge with any other Person and the Company
shall not be the continuing or surviving corporation, (b) any Person shall
consolidate or merge with the Company, and the Company shall be the continuing
or surviving corporation and in connection therewith, all or part of the
outstanding Company stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, (c) the Company
shall be a party to a statutory share exchange with any other Person after which
the Company is a subsidiary of any other Person, or (d) the Company shall sell
or otherwise transfer fifty percent (50%) or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or Persons.

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 2

<PAGE>   3

         Notwithstanding anything to the contrary contained herein, a Change in
Control shall not include any transfer to a consolidated subsidiary,
reorganization, spin-off, split-up, distribution, or other similar or related
transaction(s) or any combination of the foregoing in which the core business
and assets of the Company and its subsidiaries (taken as a whole) are
transferred to another entity ("Controlled") with respect to which (1) the
majority of the Board of Directors of the Company (as constituted immediately
prior to such transaction(s)) also serve as directors of Controlled and
immediately after such transaction(s) constitute a majority of Controlled's
board of directors, and (2) more than 70% of the shareholders of the Company
(immediately prior to such transaction(s)) become shareholders or other owners
of Controlled and immediately after the transaction(s) control more than 70% of
the ownership and voting rights of Controlled.

         (d) "Committee" means the Compensation Committee of the Company's Board
of Directors.

         (e) "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.

         (f) "Continuous Service" means a Participant's uninterrupted services
with the Company or any affiliate. Service shall not be deemed interrupted by a
leave of absence authorized by the Committee, an absence due to mandatory
military service or an absence due to disability while the Participant is
receiving benefits under any short-term or long-term disability plan or
arrangement maintained or sponsored by the Company.

         (g) "Deferred Compensation" means the sum of Salary and Bonus that are
the subject of an elective deferral under Section 5.

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 3

<PAGE>   4

         (h) "Deferred Compensation Plan" means the Beverly Enterprises, Inc.
Deferred Compensation Plan that was amended and restated effective July 17,
1991.

         (i) "Deferral Account" means the bookkeeping account established for a
Participant under the Plan and to which Deferred Compensation amounts with
respect to such Participant are credited from time to time, as adjusted from
time to time as provided in the Plan.

         (j) "Deferred Compensation Election Form" means the form pursuant to
which Eligible Executives elect to become Participants in the Plan and defer
compensation thereunder, in such form as the Committee determines from time to
time in its sole discretion.

         (k) "Disability" means total and permanent mental or physical
disability as determined by the Committee in its sole discretion in accordance
with standards and procedures similar to those under the Company's broad-based
regular long-term disability plan, if any. At any time that the Company does not
maintain such a long-term disability plan, Disability shall mean the inability
of a Participant, as determined by the Committee in its sole discretion,
substantially to perform such Participant's regular duties and responsibilities
due to a medically determinable physical or mental illness which has lasted (or
can reasonably be expected to last) for a period of three (3) consecutive
months.

         (l) "Eligible Executive" means any employee of the Company who is
selected for participation by the Committee.

         (m) "Matching Contributions Account" means the bookkeeping account
established for a Participant under the Plan and to which the Company's matching
contributions under Section 5(b) of the Plan are credited from time to time, as
adjusted from time to time under the Plan.

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 4

<PAGE>   5

         (n) "Participant" means an employee of the Company who has at any time
made elective Salary and/or Bonus deferrals to the Plan and for whom an Account
has been created under the Plan.

         (o) "Person" shall have the meaning ascribed to such term in section
3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d).

         (p) "Plan" means the Beverly Enterprises, Inc. Executive Deferred
Compensation Plan, as set forth herein and as amended from time to time.

         (q) "Plan Year"' means the calendar year.

         (r) "Retirement" means attainment of sixty (60) years of age and
termination of employment.

         (s) "Rollover Account" means the bookkeeping account established for a
Participant under the Plan and to which the Deferred Compensation Plan balance
is credited under Section 12.

         (t) "Salary" means the regular base compensation paid by the Company to
an employee (without regard to any reduction thereof pursuant to the Plan or any
other elective salary deferral arrangement under any other plan (e.g., Pre-Tax
Premium Plan, Dependent Care Assistance Plan, Health Care Spending Account)
maintained by the Company), exclusive of Bonus payments and any other incentive
payments made by the Company to such employee.

         (u) "Supplemental Contributions Account" means the bookkeeping account
established for the Participant under the Plan and to which the Company's
supplemental contributions under Section 5(c) of the Plan are credited from time
to time, as adjusted from time to time under the Plan.

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 5

<PAGE>   6

         (v) "Unforeseeable Emergency" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or a dependent of the Participant, loss of the Participant's
property due to casualty, or other similar extraordinary unforeseeable
circumstances arising as a result of events beyond the control of the
Participant. The circumstances that will constitute an "Unforeseeable Emergency"
would depend on the facts of each case, but, in any case, payment may not be
made in the event that such hardship is or may be relieved:

                           (1) through reimbursement or compensation by
                  insurance or otherwise,

                           (2) by liquidation of the Participant's assets, to
                  the extent that liquidation of such assets would not itself
                  cause severe financial hardship, or

                           (3) by cessation of Deferred Compensation under the
                  Plan (or cessation of elective deferrals under any other
                  Company Retirement or Savings Plan). The need to send a
                  Participant's child to college or the desire to purchase a
                  home shall not be an Unforeseeable Emergency.

         (w) "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.

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 6

<PAGE>   7

         (x) "Capstone Stock" means the common stock, par value $0.01 per share,
of Capstone Pharmacy Services, Inc., a Delaware corporation, (which has changed
its name to PharMerica, Inc.).

         SECTION 3. ELIGIBILITY. Individuals eligible to participate in the Plan
shall consist of the Eligible Executives of the Company, as determined from time
to time by the Committee. The Committee may terminate an individual's
designation as an Eligible Executive at any time which shall result in the
immediate termination of such individual's participation in the Plan and the
cancellation of such individual's Deferred Compensation Election Form with
respect to any Compensation which is unearned at such time. The Committee may
establish one or more criteria upon which eligibility to participate in the Plan
is based, and in such case, an Eligible Executive's failure to continue to meet
such criteria shall be deemed a termination of eligibility, whether or not
specifically so determined or considered by the Committee. Furthermore, unless
otherwise provided by the Committee, an individual's fulfillment of such
criteria shall not render such individual eligible to participate in the Plan
absent a specific designation of such individual as an Eligible Executive by the
Committee.

         SECTION 4. ADMINISTRATION.

         (a) The Plan shall be administered by the Committee. The Committee has
complete fiduciary discretion and authority to construe and interpret the Plan;
promulgate, amend and rescind rules and regulations relating to the
implementation, administration and maintenance of the Plan; decide all questions
of eligibility and benefits (including underlying factual determinations); and
adjudicate all claims and appeals. The Committee may designate persons other
than members of the Committee to carry out the day-to-day ministerial
administration of the Plan under such conditions and limitations as it may
prescribe; provided, however, that the

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 7

<PAGE>   8

Committee shall not delegate its authority with regard to the determination of
Eligible Employees. The Committee's determinations under the Plan need not be
uniform and may be made selectively among Participants, whether or not such
Participants are similarly situated. Any determination, decision or action of
the Committee in connection with the construction, interpretation,
administration, implementation or maintenance of the Plan shall be final,
conclusive and binding upon all Participants and any person(s) claiming under or
through any Participants.

         (b) The Company will indemnify and hold harmless the Committee and each
member thereof against any cost or expense (including without limitation
attorney's fees) or liability (including without limitation any sum paid in
settlement of a claim with the approval of the Company) arising out of any act
or omission to act, except in the case of willful misconduct or gross
negligence.

         SECTION 5. PARTICIPATION; ELECTIVE DEFERRALS: MATCHING CONTRIBUTIONS.

         (a) To elect to participate in the Plan for a particular Plan Year, an
Eligible Executive must execute a Deferred Compensation Election Form and file
such form with the Committee (or its designee) before the Commencement of such
Plan Year. To participate in the Plan during the year in which the Plan is first
implemented, the Eligible Executive must make an election to defer Salary
compensation for services to be performed subsequent to the election and/or to
defer Bonus compensation, in each case, within 30 days after the effective date
of the Plan. To participate in the Plan during the first year in which an
individual becomes eligible to participate in the Plan, the new Eligible
Executive must make an election to defer Salary compensation for services to be
performed subsequent to the election and/or to defer Bonus compensation, in each

         Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 8

<PAGE>   9

case, within 30 days after the date the new Eligible Executive becomes eligible.
Such election shall:

                           (i) contain a statement that the Eligible Executive
                  elects to defer a portion of the Eligible Executive's Salary
                  (up to 25% thereof, in increments of 1% or in fixed dollar
                  amounts per pay period) and/or Bonus (up to 100% thereof, in
                  increments of 1% or a fixed dollar amount) for a specified
                  Plan Year that becomes payable to the Eligible Executive after
                  the filing of such election;

                           (ii) apply only to the Salary otherwise payable to
                  the Eligible Executive during the Plan Year for which such
                  election is made and to any Bonus payment that is attributable
                  to the Eligible Executive's services rendered to the Company
                  during the Plan Year for which such election is made (whether
                  or not actually payable in such Plan Year); and

                           (iii) be irrevocable with respect to the Plan Year to
                  which it applies (unless canceled due to loss of Eligible
                  Executive status during the Plan Year pursuant to Section 3).
                  Upon receipt of an Eligible Executive's deferral election, the
                  Company shall establish as an accounting entry an individual
                  Deferral Account for such Eligible Executive and such Eligible
                  Executive shall become a Participant under the Plan.
                  Thereafter, the Company shall credit the Executive's Deferral
                  Account with all Deferred Compensation which would otherwise
                  have been payable to the Eligible Executive in the absence of
                  an election under the Plan. The Deferral Account shall be
                  credited monthly in an amount equal to the sum of the Deferred
                  Compensation that would otherwise have been paid by the
                  Company in accordance with the Company's normal payroll
                  practices for the immediately preceding month as soon as is
                  administratively feasible. The Company shall

        Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                     Page 9

<PAGE>   10

                  maintain such Account for each individual who has made any
                  contribution to the Plan until such Account is paid to the
                  Participant pursuant to Section 6 or 9, or forfeited pursuant
                  to Section 11.

                  (b) the Company shall, if on the first day of any such month
         the Eligible Executive is employed by the Company, credit matching
         contributions to the Eligible Executive's Matching Contributions
         Account in an amount equal to 25% of the first 6% of Salary and Bonus
         actually deferred under the Plan by the Eligible Executive in respect
         to the preceding month as soon as is administratively feasible.
         Notwithstanding the foregoing, no further Company matching
         contributions will be made to the Plan with respect to any Salary
         and/or Bonus deferred to the Plan on or after July 1, 2000.

                  (c) From time to time, the Company may, in its sole
         discretion, credit supplemental contributions to the Eligible
         Executive's Supplemental and Matching Contributions Account in such
         amounts as the Company shall determine in its sole discretion.

                  (d) Those Eligible Executives who constitute Retained
         Employees, as that term is defined in the documents describing the
         Transaction, shall be entitled to receive a matching contribution with
         respect to their deferrals which were made during the month containing
         the date of the Transaction, regardless of whether such employees
         remain employed by the Company as of the first day of the month
         following the date of the Transaction.

                  SECTION 6. PAYMENT OF DEFERRED COMPENSATION. The vested
         accrued balances in a Participant's Accounts shall be paid to a
         Participant, or, in the case of any Participant's death prior to
         payment, the Participant's designated beneficiary(ies), in stock in one
         lump sum commencing as soon as it is administratively feasible after
         the month in which the termination of the Participant's employment
         occurs. However, if employment ends due to the Participant's

        Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                    Page 10

<PAGE>   11

         Retirement, then payment will be made or commence within the first
         fifteen (15) days of the following calendar year, in the form of either
         a single lump sum of company stock or in annual installments of company
         stock or with the Committee's consent in cash, up to fifteen (15)
         years, pursuant to the participant's advance written election received
         at least twenty four (24) months prior to said Retirement. Such
         election of distribution method shall be made at the time of deferral
         and may be changed at any time prior to the Participant's Retirement as
         long as it is made at least twenty four (24) months prior to the
         Participant's Retirement. Notwithstanding the foregoing, that portion
         of a Participant's Account balance which is deemed invested in Capstone
         Stock will be payable pursuant to the terms of this Section 6 in either
         cash or Capstone Stock, within the complete discretion of the
         Committee.

                  SECTION 7. INVESTMENT OF ACCOUNT BALANCES. During and for each
         Plan Year, the accrued balances in each Deferral Account, Supplemental
         Contributions Account and Matching Contributions Account will be deemed
         to be invested, as soon as is administratively feasible during the
         month following the month in which elective deferrals, supplemental
         contributions and matching contributions are credited to their
         respective Accounts under the Plan, in the Company's Common stock,
         including dividends. At the end of each Plan Year, the Accounts shall
         be adjusted and increased or decreased by the results of such deemed
         investment for such Plan Year pursuant to Section 8.

                  If a Participant elects to defer the distribution of his or
         her Account balance under the Plan pursuant the installment
         distribution election, the undistributed vested portion of the
         Participant's Account will continue to be credited with investment
         gains or losses as described under this Section 7 unless the
         Participant elects to have the undistributed vested Account balances
         deemed invested at a fixed rate of interest as determined by the
         Committee. Such an

        Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                    Page 11

<PAGE>   12

         investment election must be made in the same manner, and subject to the
         same restrictions, as the Participants Distribution Election described
         in Section 6.

                  Notwithstanding the foregoing, as of the date of the
         Transaction, the balances of each Participant's Deferral Account,
         Rollover Account, Supplemental Contributions Account and Matching
         Account shall be deemed invested in shares of New Beverly Holdings,
         Inc. ("NBHI") and Capstone Pharmacy Services, Inc. ("Capstone") common
         stock in the ratio of .44 shares of Capstone common stock and one (1)
         share of NBHI common stock for each share of Old Beverly Common Stock
         in which said Accounts were previously deemed invested under this
         Section 7. Such adjusted Account balances shall be further adjusted
         based upon the fluctuations in value of NBHI and Capstone Stock until
         distributed to the Participant pursuant to the terms of the Plan.

                  Subsequent to the date of the Transaction, all further
         additions to a Participant's Deferral Account, Supplemental
         Contributions Account, Rollover Account, and Matching Account shall be
         deemed invested solely in shares of NBHI common stock, in accordance
         with the terms of this Section 7. Therefore, at the end of each Plan
         Year, each Participant's total account value shall be the sum of (i)
         the value of each of his accounts as of the date of the Transaction, as
         adjusted for the performance of NBHI and Capstone common stock, plus
         (ii) the value of all contributions made subsequent to the date of the
         Transaction, as adjusted for the change in the value of NBHI common
         stock.

                  SECTION 8. VALUATION. At the end of each Plan Year, the vested
         and unvested balances in the Deferral Account, Supplemental
         Contributions Account and the Matching Contributions Account of each
         Participant shall be determined by the Company, taking into account any
         increase or decrease therein for such Plan Year under Section 7,
         including

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<PAGE>   13

         dividends. The balance determined, as of the end of each Plan Year,
         shall be communicated in writing to each Participant as soon as
         practicable after the end of the Plan Year. In the case of any
         distribution under Section 6 above, the vested and unvested balances in
         the Deferral Account, Supplemental Contributions Account and the
         Matching Contributions Account of any affected Participant shall be
         determined by the Company immediately prior to the date of any such
         distribution or otherwise as close to such date as administratively
         practicable.

                  SECTION 9. DISTRIBUTION IN CASES OF HARDSHIP. The Committee
         may make distributions to a Participant from the vested balances in
         such Participant's Deferral Account, Supplemental Contributions Account
         or Matching Contributions Account upon a showing by such Participant
         that an Unforeseeable Emergency has occurred. Such distributions shall
         be limited to the amount shown to be necessary to meet the
         Unforeseeable Emergency.

                  SECTION 10. VESTING. Notwithstanding anything contained herein
         to the contrary, a Participant's accrued balance in such Participant's
         Deferral Account (and the amounts payable with respect thereto) shall
         be fully vested at all times. A Participant's accrued balance in such
         Participant's Matching Contributions Account (and the amounts payable
         with respect thereto) and in such Participant's Supplemental
         Contributions Account (and the amounts payable with respect thereto)
         shall, in each case, become 100% vested after a Participant completes
         five years of continuous service with the Company. Notwithstanding the
         immediately preceding sentence, if (a) the Participant dies, (b) the
         Participant's employment with the Company is terminated due to
         Disability or (c) a Change of Control occurs, such Participant's
         accrued balance in the Matching Contributions Account and Supplemental
         Contributions Account shall be fully vested as of the date of death,
         the date of such termination or the date of any such Change of Control,
         as the case may be.

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<PAGE>   14

                  SECTION 11. FORFEITURE. If a Participant's employment with the
         Company is terminated for any reason (other than death) prior to such
         Participant's vesting under Section 10, such unvested Participant's
         accrued balance in such Participant's Matching Contributions Accounts
         (and the amounts payable with respect thereto) and in such
         Participant's Supplemental Contributions Account (and the amounts
         payable with respect thereto) shall, in each case, be forfeited by such
         Participant. Any amounts so forfeited under the Plan shall be used to
         offset other Plan liabilities or to pay administrative expenses under
         the Plan.

                  SECTION 12. ROLL OVER OF DEFERRED COMPENSATION PLAN BALANCES.
         Those Participants in this Plan who also have balances in the Deferred
         Compensation Plan can elect to have the value of their Deferred
         Compensation Plan credited to this Plan at any time. The amount
         credited will not be eligible for the Matching Contributions under
         section 5 (b). The balance of the Participant's Deferred Compensation
         Plan will be credited to the Participants Rollover Account as soon as
         is administratively feasible during the month following the month in
         which the election to roll over the balance is made, at the same time
         as other contributions are credited pursuant to Section 7.

                  SECTION 13. AMENDMENT. The Plan may be amended, modified or
         terminated at any time, for any reason, without notice, by the
         Committee except that no such amendment, modification or termination
         shall have a material adverse effect on the vested accrued balance of
         any Participant's Deferral Account, Supplemental Contributions Account
         and/or Matching Contributions Account as of the effective date of any
         such amendment, modification or termination, without the consent of the
         Participant, or, if the Participant is dead, his or her
         beneficiary(ies).

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<PAGE>   15
                  SECTION 14. PARTICIPANT'S RIGHT UNSECURED; NO DUTY TO INVEST.
         The right of a Participant to receive any distribution hereunder shall
         be an unsecured claim against the general assets of the Company. No
         Company assets shall in any way be subject to any prior claim by any
         Participant. The Company shall have no duty whatsoever to set aside or
         invest any amounts credited to any Deferral Account, Supplemental
         Contributions Account or Matching Contributions Account established
         under the Plan. Nothing in the Plan shall confer upon any employee of
         the Company any right to continued employment with the Company, nor
         shall it interfere in any way with the right of the Company to
         terminate the employment of any employee at any time for any reason. A
         Participant shall have no right, title, or interest whatsoever in or to
         any specific assets of the Company, nor any investments, if any, which
         the Company may make to aid it in meeting its obligations hereunder.
         Nothing contained in this Plan, and no action taken pursuant to its
         provisions, shall create or be construed to create a trust of any kind,
         or a fiduciary relationship, between the Company and any Participant or
         any other person. The Company will maintain a "rabbi" trust agreement
         to provide for a source of funds out of which all or any portion of the
         benefits under the Plan may be satisfied.

                  SECTION 15. RESTRICTIONS ON ALIENATION. No amount deferred or
         credited to any Account under the Plan shall be subject in any manner
         to anticipation, alienation, sale, transfer, assignment, pledge,
         encumbrance, levy or charge. Any attempt to so anticipate, alienate,
         sell, transfer, assign, pledge, encumber, levy or charge the same shall
         be void; nor shall any amount in any manner be subject to any claims
         for the debts, contracts, liabilities, engagements or torts of the
         Participant (or the Participant's beneficiary or personal
         representative) entitled to such benefit. No Participant shall be
         entitled to borrow at any time any portion of the Participant's Account
         balances under the Plan.

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<PAGE>   16

                  Notwithstanding the foregoing, a Participant's interest in the
         Plan may be transferred pursuant to a domestic relations order which is
         entered by a court of competent jurisdiction incident to a divorce,
         however, the person claiming any share of a Participant's interest
         pursuant to such an order shall not be entitled to receive a
         distribution from the Plan until such time as distributions commence or
         could have commenced to the affected Participant. Furthermore, such
         transferred interest shall be subject to the same terms, conditions,
         and restrictions of the Plan as were applicable to the Participant.

                  SECTION 16. WITHHOLDING. The Participants, their
         beneficiaries, personal representatives and any transferee pursuant to
         a domestic relations order ("Recipient") shall bear any and all
         federal, foreign, state or local income or any other tax imposed on
         amounts paid under the Plan. Employment taxes on amounts allocated to
         Participant's Accounts will be withheld when services are rendered or
         later, when such amounts vest. All distributions from the Plan are
         subject to applicable withholding taxes. Each Recipient is responsible
         for satisfying his or her withholding obligations (whether by cash
         payments to the Company, broker assisted sales under Federal Reserve
         Regulation T whereby the broker forwards the required withholding to
         the Company, or otherwise) prior to the Plan making any distributions.
         In the absence of the Recipient satisfying such withholding
         obligations, the Company shall deduct and withhold all required taxes
         from any distribution hereunder and shall reduce and offset a
         Recipient's distribution accordingly.

                  SECTION 17. PARTICIPANTS BOUND BY TERMS OF THE PLAN. By
         electing to become a Participant, each Eligible Executive shall be
         deemed conclusively to have accepted and consented to all terms of the
         Plan and all actions or decisions made by the Company with regard to
         the Plan. Such terms and consent shall also apply to and be binding
         upon the beneficiaries,

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<PAGE>   17

         personal representatives and other successors in interest of each
         Participant. Each Participant shall receive a copy of the Plan. SECTION

                  18. DESIGNATION OF BENEFICIARY(IES). Each Participant under
         the Plan may designate a beneficiary or beneficiaries to receive any
         payment which under the terms of the Plan becomes payable on, after or
         as a result of the Participant's death. At any time, and from time to
         time, any such designation may be changed or canceled by the
         Participant without the consent of any such beneficiary. Any such
         designation, change or cancellation must be on a form provided for that
         purpose by the Committee and shall not be effective until received by
         the Committee. If no beneficiary has been designated by a deceased
         Participant, the beneficiary shall be the Participant's estate. If the
         Participant designates more than one beneficiary, any payments under
         the Plan to such beneficiaries shall be made in equal shares unless the
         Participant has expressly designated otherwise, in which case the
         payments shall be made in the shares designated by the Participant.

                  SECTION 19. SEVERABILITY OF PROVISIONS. In the event any
         provision of the Plan would serve to invalidate the Plan, that
         provision shall be deemed to be null and void, and the Plan shall be
         construed as if it did not contain the particular provision that would
         make it invalid. the Plan shall be binding upon and inure to the
         benefit of (a) the Company and its respective successors and assigns,
         and (b) each Participant, his or her designees and estate. Nothing in
         the Plan shall preclude the Company from consolidating or merging into
         or with, or transferring all or substantially all of its assets to,
         another corporation, or engaging in any other corporate transaction.

                  SECTION 20. GOVERNING LAW AND INTERPRETATION. The Plan shall
         be construed and enforced in accordance with, and the rights of the
         parties hereto shall be governed by, the laws of

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<PAGE>   18

         the State of Delaware. This Plan shall not be interpreted as either an
         employment or trust agreement.

                  SECTION 21. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS.
         Payments and other benefits received by a Participant under the Plan
         shall not be deemed a part of a Participant's compensation for purposes
         of the determination of benefits under any other employee benefit plans
         or arrangements, if any, provided by the Company or any affiliate of
         the Company. The existence of the Plan notwithstanding, the Company may
         adopt such other compensation plans or programs and additional
         compensation arrangements as it deems necessary to attract, retain and
         motivate employees. The Committee is authorized to cause to be
         established a trust agreement or several trust agreements or similar
         arrangements from which the Committee may make payments of amounts due
         or to become due to any Participants under the Plan.

                  SECTION 22. ARBITRATION. Except as otherwise provided in this
         Plan, any controversy between the parties arising out of this Plan
         shall be submitted to the American Arbitration Association under its
         Commercial Arbitration Rules for binding arbitration. The arbitration
         shall be held in Fort Smith, Arkansas or such other location where the
         Company may have its corporate headquarters, using a single arbitrator.
         The costs of the arbitration, including any American Arbitration
         Association administration fee, the arbitrator's fee, and costs for the
         use of facilities during the hearings, shall be borne equally by the
         parties to the arbitration. Each side shall bear its own attorney's
         fees. The arbitrator shall not have any power to alter, amend, modify
         or change any of the terms of this Plan nor to grant punitive, special,
         extracontractual, on consequential damages or any other remedy which is
         either prohibited by the terms of this Plan,

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<PAGE>   19

         or not available in a court of law. Judgment on the award rendered by
         the arbitrator may be entered in any court having jurisdiction thereof.

                  SECTION 23. EFFECTIVE DATE OF THE PLAN. The Plan shall be
         effective as of January 1, 1997 upon its adoption by the Company.

                  IN WITNESS WHEREOF, the Plan is hereby adopted by the Company
         on this ____ day of _______________, 199___.

                                                   BEVERLY ENTERPRISES, INC.

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

        Beverly Enterprises, Inc. Executive Deferred Compensation Plan
                 AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2000
                                    Page 19

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