Document:

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                                                                    EXHIBIT 10.8

                       DESCRIPTION OF LONG TERM DISABILITY
                            PLAN FOR WILLIAM R. FLOYD

         "Effective August 1, 2002, the Company began providing William R. Floyd
a fully insured disability benefit of $15,000 per month.<PAGE>
                                                                    EXHIBIT 10.9

                               EMPLOYMENT CONTRACT

                  AGREEMENT made as of December 31, 2001 between BEVERLY
ENTERPRISES, INC., a Delaware corporation (the "Company"), and JEFFREY P.
FREIMARK (the "Executive").

                  WHEREAS, Executive is employed by the Company; and

                  WHEREAS, the Company desires to assure itself of the
management services of the Executive by directly engaging the Executive as the
Executive Vice President and Chief Financial Officer of the Company; and

                  WHEREAS, the Company wishes to encourage the Executive to
remain with and devote full time and attention to the business affairs of the
Company and wishes to provide income protection to the Executive for a period of
time in the event of an involuntary Termination of Employment not for Cause or a
voluntary Termination of Employment for Good Reason within the Term of this
Agreement;

                  NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:

                  1.       Definitions.

                           (a) "Base Salary" shall mean the Executive's regular
         annual rate of base pay, as set forth in Paragraph 4(a), as of the date
         in question.

                           (b) The "Benefit Multiplier" shall be equal to 2.0
         except that if Executive's Termination of Employment is pursuant to
         Paragraphs 6(b) or 6(c) it shall be equal to 3.0.

                           (c) The Benefit Period" shall be the period of years
         equal to the Benefit Multiplier which follows the Executive's
         Termination of Employment.

                           (d) "Cause" shall mean the Executive's (i) conviction
         of a crime involving moral turpitude or theft or embezzlement of
         property from the Company or (ii) willful misconduct or willful failure
         substantially to perform the duties of his position, but only if such
         has continued after receipt of notice from the Company's Board of
         Directors and such reasonable cure period as is set forth in such
         notice.

                           (e) A "Change in 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 l3(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
         with, or merge with, any other Person and the Company shall not be the
         continuing or surviving corporation, (b) any Person shall consolidate
         with, or merge with the Company, and the

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         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 50% or more of the assets or earning
         power of the Company and its subsidiaries (taken as a whole) to any
         Person or Persons; provided, however, that notwithstanding anything to
         the contrary herein, a Change in Control shall not include either 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.

                           (f) The "Change in Control Date" shall mean the
         date immediately prior to the effectiveness of the Change in Control.

                           (g) The "Committee" shall mean the Compensation
         Committee of the Company's Board of Directors.

                           (h) The "Competitive Businesses" shall mean any of
         the health care businesses in which the Company is engaged as of the
         date of this Agreement.

                           (i) The Executive shall have "Good Reason" to
         terminate employment if: (i) the Executive is not elected, reelected,
         or otherwise continued in the office of the Company or any of its
         subsidiaries which he held immediately prior to the Change in Control
         Date, or he is removed as a member of the Board of Directors of the
         Company or any of its subsidiaries if the Executive was a director
         immediately prior to the Change in Control Date; (ii) the Executive's
         duties, responsibilities or authority as an employee are materially
         reduced or diminished from those in effect on the Change in Control
         Date without the Executive's consent; (iii) the Executive's duties,
         responsibilities, or authority as an employee are materially reduced or
         diminished from those in effect on the Effective Date without the
         Executive's consent; (iv) the Executive's compensation or benefits are
         reduced without the Executive's consent, unless all Executive-level
         officers have their compensation or benefits reduced in the same
         percentage amount; (v) the Company reduces the potential earnings of
         the Executive under any performance-based bonus or incentive plan of
         the Company in effect immediately prior to the Change in Control Date;
         (vi) the Company requires that the Executive's employment be based
         other than at its location on the Effective Date without his consent;
         (vii) any purchaser, assign, surviving corporation, or successor of the
         Company or its business or assets (whether by acquisition, merger,
         liquidation, consolidation, reorganization, sale or transfer of assets
         or business, or otherwise) fails or refuses to expressly assume in
         writing this Agreement and all of the duties and obligations of the
         Company hereunder pursuant to Section 16 hereof; or (viii) the Company
         breaches any of the provisions of this Agreement.

                           (j) "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).

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                           (k) "Target Bonus" shall mean the target bonus (100%
         level) established for the Executive for the year in question under the
         Company's "Annual Incentive Plan."

                           (l) "Termination of Employment" shall mean the
         termination of the Executive's employment by the Company other than
         such a termination in connection with an offer of immediate
         reemployment by a successor or assign of the Company or purchaser of
         the Company or its assets under terms and conditions which would not
         permit the Executive to terminate his employment for Good Reason.

                  2. Term. The initial term of this Agreement shall be for the
period commencing on the Effective Date and ending on the third anniversary
thereof. The Term shall be automatically extended by one additional day for each
day beyond the Effective Date of this Agreement that the Executive remains
employed by the Company until such time as the Company elects to cease such
extension by giving written notice of such to the Executive. (In such event, the
Agreement shall thus terminate on the third anniversary of the effective date of
such notice).

                  3. Position and Duties. During the Term, the Executive shall
serve, as an employee, as the Executive Vice President and Chief Financial
Officer of the Company and shall have such duties, functions, responsibilities
and authority as are consistent with the Executive's position as the senior
executive officer in charge of all financial functions of the Company.

                  4.       Compensation and Related Matters.

                           (a)      Annual Base Salary. The Executive shall
         receive a Base Salary at a rate of $425,000 per annum through December
         31, 2002 and thereafter at any such greater rate as is determined by
         the Committee.

                           (b)      Benefits. During the Term, the Executive
         shall be entitled to all of the following and any other benefits and
         prerequisites offered by the Company to executives generally:

                                    (i) Annual Incentive Plan. Executive is

                  eligible to participate in the Company's Annual Incentive
                  Plan. Individual bonus targets are determined at the beginning
                  of each year and are calculated as a percentage of Executive's
                  base salary contingent upon meeting specific performance
                  criteria. Executive's 2002 target bonus opportunity is 75% of
                  his base salary of which $150,000 will be guaranteed. In
                  addition, Executive will receive a sign-on bonus of $150,000
                  payable at time of his first paycheck with the Company.

                                    (ii) Stock Options. Contingent upon
                  Nominating and Compensation Committee approval, Executive will
                  receive 150,000 incentive stock options at a grant price equal
                  to the closing market price on his date of hire. SEC rules
                  require that no more than $100,000 in value of ISO's vest in
                  any one year, based on grant price. These options will vest at
                  25% per year. The granting of future options is discretionary
                  and will be determined by the Nominating and Compensation
                  Committee of the Board of Directors at its next regularly
                  scheduled meeting.

                                    (iii) Employee Stock Purchase Plan.
                  Executive will be eligible to participate in the Employee
                  Stock Purchase Plan after one year of full-time employment.

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                  This plan allows Executive to purchase Company stock through
                  payroll deductions with a discretionary Company match.

                                    (iv) Executive SavingsPlus Plan. Executive
                  will be eligible on his date of hire to participate in the
                  Executive SavingsPlus Plan.

                                    (v) Executive Deferred Compensation Plan.
                  Executive will be eligible to defer part of his base pay and
                  bonus into a special account, which will be deemed invested in
                  Company stock.

                                    (vi) Vacation Award. Executive's annual
                  vacation award of four (4) weeks will be effective upon his
                  date of hire. Vacation is awarded January 1 and must be taken
                  by December 31 of each year.

                                    (vii) Executive Physical Exams. The
                  Company's Board of Directors requests that Executive has
                  regular comprehensive physical examinations. If Executive is
                  age 50 or older, this is an annual requirement; if under 50,
                  this exam is required once every two years. The Company will
                  pay up to $1,000 in medical expenses incurred for physicals,
                  and direct payment for physicals by the Company allows you to
                  receive the examinations as a non-taxable benefit.

                                    (viii) Medical/Dental/Vision Plans. These
                  plans offer medical and dental coverage for the Executive and
                  his covered dependants effective on the first day of the month
                  following three months of employment. The Company pays for the
                  majority of Executive's coverage through a pre-tax plan
                  reimbursed to you through a Benefit Allowance.

                                    (ix) Executive Medical Reimbursement Plan.
                  This plan pays 100% of costs not covered by the Company's
                  Medical and Dental Plans up to $5,000 per year for Executive
                  and his eligible dependants. The plan also covers vision
                  exams, contact lenses and glasses. This plan is effective on
                  the first day of the month on or following completion of three
                  continuous months of full-time service.

                                    (x) Accidental Death and Dismemberment.
                  Executive will receive $25,000 of Accidental Death and
                  Dismemberment coverage effective on the first day of the month
                  on or following completion of three continuous months of
                  full-time service. Executive can also enroll for additional
                  voluntary coverage is he so chooses.

                                    (xi) Life, Voluntary Long-Term Disability
                  and Travel Accident Insurance. Executive will receive one
                  times his annual salary in group term life insurance coverage
                  paid by the Company. Executive will be automatically enrolled
                  and responsible for premiums in the voluntary long-term
                  disability plan unless you waive coverage. Both plans are
                  effective on the first day of the month following completion
                  of three continuous months of employment. Business travel
                  coverage of $100,000 is effective on Executive's date of hire.

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                                    (xii) Group Universal Life Program.
                  Executive is eligible to enroll in the Group Universal Life
                  Program immediately upon his date of hire. The earliest
                  Executive's coverage will be effective on the first day of the
                  month on or following completion of three continuous months of
                  full-time service. To obtain the guaranteed issue limits
                  Executive must apply for coverage within 120 days from his
                  date of hire.

                                    (xiii) Relocation. Executive will be
                  provided a copy of the Company's relocation plan. A
                  Reimbursement Agreement will be provided at the time Executive
                  is ready to access this benefit.

                                    (xiv) Executive Life Insurance. Executive is
                  eligible for $300,000 of Split Dollar Life Insurance fully
                  paid for by the Company. Executive will vest in this policy
                  10% per year after age 50 once you have completed ten years of
                  service.

                                    (xv) Loan Repayment. Company will advance
                  Executive a lump sum amount for repayment of the balance due
                  on his loan to his previous employer once supporting
                  documentation has been received. Repayment conditions for the
                  loan from the Company will be tied to retention. The loan will
                  be forgiven ratably annually over a four-year period of time,
                  based on continued employment. Any remaining balance will be
                  immediately forgiven if Executive is terminated as the result
                  of a Change in Control or by the Company without Cause, with
                  gross-up provided for federal and state taxes at Executive's
                  incremental rate. The loan shall be in the form attached as
                  Exhibit 1.

                  5.       Non-Solicitation.

                           (a) Executive shall not at any time during the period
         of his employment with the Company, or during the one (1) year period
         immediately following his Termination of Employment with the Company
         ("Non-Solicitation Period"), without the prior written consent of the
         Company, on behalf of himself or any other person, solicit for
         employment or employ any of the current officers or employees of the
         Company; provided, however, that nothing contained herein shall
         prohibit Executive from hiring employees of the Company when such
         employment results from general solicitations for employment.

                           (b) Executive shall not at any time during the period
         of his employment with the Company, or during the Non-Solicitation
         Period, without the prior written consent of the Company, solicit for
         his own use, or for the use of any company or person by whom he is
         employed, or for whom he may be acting, any of the current customers of
         the Company, nor shall he divulge to any other person any information
         or fact relating to the management, business (including prospective
         business), finances, its customers or the terms of any of the contracts
         of the Company which has heretofore or which may hereafter come to the
         knowledge of Executive which is not freely available to the public.

                           (c) Executive shall not, during the Non-Solicitation
         Period, in any way defame the Company or disparage its business
         capabilities, products, plans or management to any customer, potential
         customer, vendor, supplier, contractor, subcontractor of the Company so
         as to affect adversely the goodwill or business of the Company.

                           (d) Executive covenants and agrees that a breach of
         these subparagraphs (a), (b) or (c) would immediately and irreparably
         harm the Company and that a remedy at law would be

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         inadequate to compensate the Company for its losses by reason of such
         breach and therefore that the Company shall, in addition to any rights
         and remedies available under this Agreement, at law or otherwise, be
         entitled to any injunction to be issued by any court of competent
         jurisdiction enjoining and restraining Executive from committing any
         violation of these subparagraphs (a), (b) or (c), and Executive hereby
         consent to the issuance of such injunction.

                           (e) For purposes of this Section 5 and in
         consideration of this Agreement, this non-solicitation agreement has
         been separately negotiated and bargained for, and constitutes a
         substantial portion of the consideration for this Agreement.

                  6.       Eligibility for Severance Benefits. The Executive
shall be eligible for the benefits described in Paragraph 7 (the "Severance
Benefits") if:

                           (a) during the Term, the Executive has a Termination
         of Employment initiated (i) by the Company without Cause, or (ii) by
         the Executive for Good Reason, and, in either case, subsections (b) or
         (c) do not apply,

                           (b) during the Term there has been a Change in
         Control and during the 31 day period commencing on the first day of the
         13th calendar month following the Change in Control Date (e.g. the
         period April 1, 1999 - May 1, 1999, inclusive, for a Change in Control
         which is effective in the month of March, 1998), the Executive has a
         Termination of Employment initiated by the Executive without Good
         Reason, or

                           (c) during the Term either (i) there has been a
         Change in Control and during the two year period commencing on the
         Change in Control Date the Executive has a Termination of Employment
         which is initiated by the Company without Cause or by the Executive for
         Good Reason, or (ii) the Executive has a Termination of Employment
         initiated by the Company without Cause or by the Executive for Good
         Reason following the commencement of any discussion with a third person
         that ultimately results in a Change in Control with such third person
         within 12 months of the commencement of such discussions (in which
         case, the date of such discussion shall be substituted for the Change
         in Control Date wherever appropriate, including in the definition of
         "Good Reason" and in Paragraph 7 hereof).

                           7.       Severance Benefit. Upon satisfaction of the
                  requirements set forth in Paragraph 6, and subject to
                  Paragraphs 8 and 11, the Executive shall be entitled to the
                  following Severance Benefits(a) Cash Payment. The Executive
                  shall be entitled to receive an amount of cash equal to the
                  Benefit Multiplier times the greater of:

                                    (i)     the sum of the Executive's Base
                  Salary as in effect upon the Termination of Employment, and
                  the greater of

                                            (A) the Executive's Target Bonus
                           as in effect upon the Termination of Employment or,

                                            (B) the Executive's actual bonus
                           under the Company's "Annual Incentive Plan" for the
                           year prior to the year of the Executive's Termination
                           of Employment; or

                                    (ii)    the sum of the Executive's Base
                  Salary as in effect on the Change in Control Date, and the
                  greater of

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                                            (A) the Executive's Target Bonus as
                           in effect upon the Change in Control Date or,

                                            (B) the Executive's actual bonus
                           under the Company's "Annual Incentive Plan" for the
                           year prior to the Change in Control Date.

The payment shall be made in a single lump sum within ten days following the
Executive's Termination of Employment.

                           (b) Long-Term Incentive Award; Equity-Based
         Compensation. The Executive's interest under the Company's long-term
         incentive plans shall be fully vested. Any and all (i) options, phantom
         units, and other awards granted to Executive to purchase Company stock
         or which is measured by the current market value of Company stock and
         (ii) restricted stock of the Company, owned by the Executive shall be
         fully vested.

                           (c) Continuation of Benefits.

                                       (i) For the Benefit Period, the Executive
                               shall be treated as if he had continued to be an
                               employee for all purposes under the Company's
                               Medical Plan, Executive Medical Reimbursement
                               Plan and Dental Plan. Following this period, the
                               Executive shall be entitled to receive
                               continuation coverage under Part Six of Title I
                               of ERISA ("COBRA Benefits") treating the end of
                               this period as a termination of the Executive's
                               employment (other than for gross misconduct). In
                               the event Executive is deceased, but would
                               otherwise have been entitled to these benefits,
                               all of these benefits shall be continued for the
                               applicable period for his spouse and children.

                                       (ii) The Company shall maintain in force,
                               at its own expense, for the remainder of the
                               Executive's life, the vested life insurance in
                               effect under the Company's Executive Split Dollar
                               Life Insurance Plan (as described in Paragraph
                               4(b)) as of the Change in Control Date or as of
                               the date of Termination of Employment, whichever
                               is greater.

                           (d) Relocation Benefit. If, within the Benefit Period
         after the Executive's Termination of Employment, the Executive gives
         the Company written notice that he desires to relocate within the
         continental United States, the Company will reimburse the Executive for
         any reasonable relocation expenses (in accordance with the Company's
         general relocation policy for executives as then in effect, or, at the
         Executive's election, as in effect on the Change in Control Date) in
         connection with such relocation.

                           (e) Executive Savings Plus Plan. For the year of the
         Executive's Termination of Employment, the Company will make the
         contribution to the Executive Savings Plus Plan on behalf of the
         Executive that it would have made if the Executive had not had a
         Termination of Employment, but in no event less than the percentage
         contribution it made for the Executive in the immediately preceding
         year (and increased to take account of the additional year of service),
         in each case taking account of the Executive's annualized rate of
         "Compensation" (as defined in the Executive Savings Plus Plan) and the
         percentage of such Compensation that the Executive is contributing to
         the Executive Savings Plus Plan, as of the date of Termination of
         Employment, and

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         the Company's matching contribution rate for such year (or, if greater,
         the preceding year). The portion of the Company's matching contribution
         which is based on the preceding year's contribution percentage shall be
         contributed to the Executive Savings Plus Plan on behalf of the
         Executive immediately upon the Executive's Termination of Employment
         and any additional contribution required shall be paid as soon as the
         amount is determined.

                           (f) Executive Deferred Compensation Plan. For the
         year of the Executive's Termination of Employment, the Company will
         make the contribution to its Executive Deferred Compensation Plan (the
         "EDC Plan") that it would have made if the Executive had not had a
         Termination of Employment determined based on the Executive's deferral
         for such year. At Executive's election, the Company contribution shall
         be paid to the Executive immediately upon his Termination of
         Employment.

                           (g) Plan Amendments. The Company shall adopt such
         amendments to its employee benefit plans and insurance policies as are
         necessary to effectuate the provisions of this Agreement. If and to the
         extent any benefits under this Paragraph 7 are not paid or payable or
         otherwise provided to the Executive or his dependents or beneficiaries
         under any such plan or policy (whether due to the terms of the plan or
         policy, the termination thereof, applicable law, or otherwise), then
         the Company itself shall pay or provide for such benefits.

                  8. Golden Parachute Gross-Up. If, in the written opinion of a
Big 4 accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal Revenue
Service, the aggregate of the benefit payments under Paragraph 7 would cause the
payment of one or more of such benefits to constitute an "excess parachute
payment" as defined in Section 280G(b) of the Internal Revenue Code ("Code"),
then the Company will pay to the Executive an additional amount in cash (the
"Gross-Up Payment") equal to the amount necessary to cause the net amount
retained by the Executive, after deduction of any (i) excise tax on the payments
under Paragraph 7, (ii) federal, state or local income tax on the Gross-Up
Payment, and (iii) excise tax on the Gross-Up Payment, to be equal to the
aggregate remuneration the Executive would have received under Section 7,
excluding such Gross-Up Payment (net of all federal, state and local excise and
income taxes), as if Sections 280G and 4999 of the Code (and any successor
provisions thereto) had not been enacted into law. The Gross-Up Payment provided
for in this Paragraph shall be made within ten (10) days after the termination
of Executive's employment, provided however that if the amount of the payment
cannot be finally determined at the time, the Company shall pay to Executive an
estimate as determined in good faith by the Company of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the date of termination. Any dispute concerning the application
of this Paragraph shall be resolved pursuant to Paragraph 10, and if Paragraph
11 applies, any reference in this Paragraph and to Paragraph 7 shall also be
deemed to include a reference to Paragraph 11 as well.

                  9. Waiver of Other Severance Benefits. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits which may
otherwise be payable to the Executive upon termination of employment with the
Company, whether or not in connection with a Change in Control (including
without limitation, any benefits to which Executive might otherwise have been
entitled under any employment, change in control, or severance agreement or
other compensation or employee benefit plan to which the Company was a party or
which was assumed by the Company), except those benefits which are to be made
available to the Executive as required by applicable law.

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                  10. Disputes. Any dispute or controversy arising under, out
of, in connection with or in relation to this Agreement shall, at the election
and upon written demand of either party, be finally determined and settled by
binding arbitration in the city of Fort Smith, Arkansas, using a single
arbitrator, in accordance with the Labor Arbitration rules and procedures of the
American Arbitration Association, and judgment upon the award may be entered in
any court having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or equitable
relief to enforce the provisions of this Agreement. The Company shall pay all
costs of the arbitration and all reasonable attorney's and accountant's fees of
the Executive in connection therewith.

                  11. Additional Payments Due to Dispute. Notwithstanding
anything to the contrary herein, and without limiting the Executive's rights at
law or in equity, if the Company fails or refuses to timely pay to the Executive
the benefits due under Paragraphs 7 and/or 8 hereof, then the benefits under
Paragraph 7(a) shall be increased and the benefits under Paragraphs 7(c), 7(d),
and 7(g) shall each be continued by one additional day for each day of any such
failure or refusal of the Company to pay. In addition, any Gross-Up Payment due
under Paragraph 8 shall be increased to take into account any increased benefits
under this Paragraph.

                  12. No Set-Off. There shall be no right of set-off or
counterclaim in respect of any claim, debt, or obligation against any payment to
or benefit for the Executive provided for in this Agreement.

                  13. No Mitigation Obligation. The parties hereto expressly
agree that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages, and that
the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.

                  14. Waiver of Rights. Executive hereby waives any rights
against the Company, including without limitation any rights under any
employment, change in control, or severance agreement; under any stock option or
long-term incentive plan or any other compensation or employee benefit plan.

                  15. Non-disclosure of Proprietary Information, Surrender of
                  Records; Inventions and Patents.

                           (a) Proprietary Information. Executive shall not
         during the term of employment or at any time thereafter (irrespective
         of the circumstances under which Executive's employment terminates),
         directly or indirectly use for his own purpose or for the benefit of
         any person or entity other than Company, nor otherwise disclose, any
         proprietary information, as defined below, to any individual or entity,
         unless such disclosure has been authorized in writing by the Company or
         is otherwise required by law. For purposes of this Agreement, the term
         "proprietary information" shall include, but is not limited to: (a) the
         name or address of any client or affiliate of Company or any
         information concerning the transactions or relations of any client or
         affiliate of Company with Company or any of its shareholders; (b) any
         information concerning any product, service, methodology, analysis,
         presentation, technology or procedure employed by Company but not
         generally known to its clients or competitors, or under development by
         or being tested by Company but not at the time offered generally to
         clients; (c) any information relating to Company's computer software,
         computer systems, pricing or marketing methods, capital structure,
         operating results, borrowing arrangements or business plans; (d) any
         information which is generally regarded as confidential or proprietary
         in any line of business engaged in by Company; (e) any information
         contained in any of Company's written or oral policies and procedures
         or employee manuals; (f) any

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         information belonging to clients or affiliates of Company which Company
         has agreed to hold in confidence; (g) any inventions, innovations or
         improvements covered by subsection 15(c) below; (h) any other
         information which Company has reasonably determined to be confidential
         or proprietary; and (i) all written, graphic, electronic and other
         material relating to any of the foregoing. Information that is not
         novel or copyrighted or patented may nonetheless be proprietary
         information. Proprietary information, however, shall not include any
         information that is or becomes generally known to the industries in
         which Company competes through sources independent of Company or
         Executive or through authorized publication by Company to persons other
         than Company's employees.

                           (b) Confidentiality and Surrender of Records.
         Executive shall not during the term of employment or at any time
         thereafter (irrespective of the circumstances under which Executive's
         employment terminates), except as required by law, directly or
         indirectly give or disclose any "confidential records" (as hereinafter
         defined) to, or permit any inspection or copying of confidential
         records by, any individual or entity other than in the ordinary course
         and scope of such individual's or entity's employment or retention by
         Company, nor shall he use or retain any of the same following
         termination of his employment. Executive shall promptly return to
         Company all "confidential records" upon the termination of Executive's
         employment with Company. For purposes hereof, "confidential records"
         means all correspondence, memoranda, files, analyses, studies, reports,
         notes, documents, manuals, books, lists, financial, operating or
         marketing records, computer software, magnetic tape, or electronic or
         other media or equipment of any kind which may be in Executive's
         possession or under his control or accessible to him which contain any
         proprietary information as defined in subsection 15(a) above. All
         confidential records shall be and remain the sole property of Company
         during the term of employment and thereafter.

                           (c) Inventions, Patents, and Copyrights. All
         inventions, innovations or improvements in Company's method of
         conducting its business (including policies, procedures, products,
         improvements, software, ideas and discoveries, whether or not
         patentable or copyrightable) conceived or made by Executive, either
         alone or jointly with others, during the term of employment belong to
         Company. Executive will promptly disclose in writing such inventions,
         innovations or improvements to Company and perform all actions
         reasonably requested by Company to establish and confirm such ownership
         by Company, including, but not limited to, cooperating with and
         assisting Company in obtaining patents and copyrights for Company in
         the United States and in foreign countries. Any patent or copyright
         application filed by Executive within a year after termination of his
         employment hereunder shall be presumed to relate to an invention or
         work of authorship which was made during the term of employment unless
         Executive can provide conclusive evidence to the contrary.

                  16.      Successors; Binding Agreement.

                           (a) This Agreement shall not be terminated by the
         voluntary or involuntary dissolution of the Company or by any merger or
         consolidation where the Company is not the surviving corporation, or
         upon any transfer of all or substantially all of the Company's assets,
         or any other Change in Control. The Company shall require any
         purchaser, assign, surviving corporation or successor (whether direct
         or indirect, by purchase, merger, consolidation, reorganization or
         otherwise) to all or substantially all of the business and/or assets of
         the Company, by agreement in form and substance satisfactory to the
         Executive, expressly to assume and agree to perform this Agreement in
         the same manner and to the same extent the Company would be required to
         perform

                                       10
<PAGE>

         if no such succession had taken place. This Agreement shall be binding
         upon and inure to the benefit of the Company and any purchaser, assign,
         surviving corporation or successor to the Company, including without
         limitation any persons acquiring directly or indirectly all or
         substantially all of the business and/or assets of the Company whether
         by purchase, merger, consolidation, reorganization, transfer of all or
         substantially all of the business or assets of the Company, or
         otherwise (and such purchaser, assign, surviving corporation or
         successor shall thereafter be deemed the "Company" for the purposes of
         this Agreement), but this Agreement shall not otherwise be assignable,
         transferable or delegable by the Company.

                           (b) This Agreement shall inure to the benefit of and
         be enforceable by the Executive's personal or legal representatives,
         executors, administrators, successors, heirs, distributees and/or
         legatees.

                           (c) This Agreement is personal in nature and neither
         of the parties hereto shall, without the consent of the other, assign,
         transfer or delegate this Agreement or any rights or obligations
         hereunder except as expressly provided in this Section 16. Without
         limiting the generality of the foregoing, the Executive's right to
         receive payments hereunder shall not be assignable, transferable or
         delegable, whether by pledge, creation of a security interest or
         otherwise, or otherwise subject to anticipation, alienation, sale,
         encumbrance, charge, hypothecation, or set-off in respect of any claim,
         debt, or obligation, or to execution, attachment, levy or similar
         process, or assignment by operation of law, other than by a transfer by
         his will or by the laws of descent and distribution. Any attempt,
         voluntarily or involuntarily, to effect any action prohibited by this
         Paragraph shall be null, void, and of no effect.

                  17. Notices. Any notice, request, claim, demand, document and
other communication hereunder to any party shall be effective upon receipt (or
refusal of receipt) and shall be in writing and delivered personally or sent by
telex, telecopy, or certified or registered mail, postage prepaid, or other
similar means of communication, as follows:

                           (a) If to the Company, addressed to its principal
         executive offices to the attention of its Secretary;

                           (b) If to the Executive, to him at the address set
         forth below under the Executive's signature, or at any such other
         address as either party shall have specified by notice in writing to
         the other.

                  18. Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by the
Executive and by a duly authorized representative of the Company. By an
instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was
or is obligated to comply with or perform; provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy, or
power provided herein or by law or in equity.

                  19. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants,

                                       11
<PAGE>

arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto. The
parties further intend that this Agreement shall constitute the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced in any judicial, administrative, or other legal proceeding
involving this Agreement.

                  20. Severability; Enforcement. If any provision of this
Agreement, or the application thereof to any person, place, or circumstance
shall be held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of this Agreement and such provisions as applied to other
persons, places and circumstances shall remain in full force and effect.

                  21. Indemnification. The Company shall indemnify, defend, and
hold the Executive harmless from and against any liability, damages, costs, or
expenses (including attorney's fees) in connection with any claim, cause of
action, investigation, litigation, or proceeding involving him by reason of his
having been an officer, director, employee, or agent of the Company, unless it
is judicially determined, in a final, nonappealable order that the Executive was
guilty of gross negligence or willful misconduct. The Company also agrees to
maintain adequate directors and officers liability insurance for the benefit of
Executive for the term of this Agreement and for at least three years,
thereafter, to the extent such insurance is reasonably available and provided to
all executives of the Company.

                  22. ERISA. This Agreement is pursuant to the Company's
Severance Plan for Executives (the "Plan") which is unfunded and maintained by
the Company primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees. The Plan constitutes
an employee welfare benefit plan ("Welfare Plan") within the meaning of Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Any payments pursuant to this Agreement which could cause the Plan
not to constitute a Welfare Plan shall be deemed instead to be made pursuant to
a separate "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA as to which the applicable portions of the document constituting the Plan
shall be deemed to be incorporated by reference. None of the benefits hereunder
may be assigned in any way.

                  23. Governing Law. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of Arkansas,
except to the extent pre-empted by Federal law.

                  24. Severance Agreement and Release. As a precondition to
obtaining any severance benefits under this Agreement, Executive agrees to
execute the attached form of Severance Agreement and Release of Claims within
twenty-one (21) days of his Termination of Employment unless he agrees to a
shorter period of time for consideration of the Severance Agreement and Release
of Claims.

                  The parties have duly executed this Agreement to be effective
as of the date first written above.

BEVERLY ENTERPRISES, INC.                        EXECUTIVE

By:
   ----------------------------------------      ------------------------------
     William R. Floyd                                Jeffrey P. Freimark
     Chairman, President and Chief
       Executive Officer

By:
   ----------------------------------------
     Douglas J. Babb
     Executive Vice President, Law and
       Government Relations and Secretary

                                       12
<PAGE>
                             DEMAND PROMISSORY NOTE

$194,092.47                                                 Fort Smith, Arkansas
                                                            December 31, 2001

         ON DEMAND, FOR VALUE RECEIVED, the undersigned, JEFFREY P. FREIMARK
("Maker"), promises to pay to BEVERLY ENTERPRISES, INC. ("Holder"), at One
Thousand Beverly Way, Fort Smith, Arkansas 72919, or such other place as Holder
may direct by written notice to Maker, the principal sum of ONE HUNDRED NINETY
FOUR THOUSAND NINETY TWO DOLLARS and 47/100 ($194,092.47), plus interest thereon
at the applicable federal rate as provided in Section 1 below. Principal,
together with all accrued and unpaid interest thereon shall be due and payable
upon demand at the address of Holder set forth above.

         SECTION 1. INTEREST RATE. All unpaid amounts owed pursuant to the terms
of this Note shall bear interest at the lesser of (a) the maximum rate of
interest permitted by applicable law (the "Maximum Rate") or (b) the federal
short-term rate in effect during the periods in which any amount owed pursuant
to the terms of this Note is outstanding, with such federal short-term rate
being (i) compounded semi-annually, for the period beginning on the date of this
Note through January 31, 2002, and (ii) revised for the six-month period
beginning on February 1, 2002, and again revised every six-month period
thereafter, in accordance with the applicable federal short-term rate published
by the Internal Revenue Service that is in effect on the first month of that
semi-annual period (i.e., January or July as the case may be); provided,
however, that for any entire calendar year that the Note remains outstanding,
this Note shall bear interest at the "blended annual rate" which is published
annually by the Internal Revenue Service.

         SECTION 2. DEFAULT BY MAKER. Upon failure of Maker to pay any sums due
hereunder, whether interest or principal, the entire outstanding principal
balance, including any previously accrued but unpaid interest, shall bear
interest at the rate equal to the lesser of (a) five percent (5%) above the
applicable federal rate, or (b) the Maximum Rate.

         SECTION 3.  FORGIVENESS AND REPAYMENT OF LOAN; GROSS UP FORTAXES.

         (a) On December 31 of each year for which Maker has been a full-time
employee of Holder for such year, Holder will forgive one-fourth of the original
stated balance set forth above of the loan evidenced by this Note and accrued,
but unpaid interest. If Maker is employed by the Holder on December 31 of the
fourth year following the date of this Note, Holder will forgive all outstanding
principal, accrued, but unpaid interest, and all other amounts owed pursuant to
this Note. If, prior to December 31 of the fourth year following the date of
this Note, Maker's employment is terminated by Holder, Without Cause (as defined
in the Employment Agreement referenced in Section 7 below (the "Employment
Agreement")) or due to a Change in Control (as defined in the Employment
Agreement), Holder will forgive all outstanding principal, accrued but unpaid
interest, and all other amounts owed pursuant to this Note.

                                       13
<PAGE>
                     (b) If, prior to December 31 of the fourth year following
             the date of this Note, Maker terminates his employment with
             Holder, or Holder terminates Maker's employment For Cause (as
             defined in the Employment Agreement), the entire remaining
             outstanding principal amount together with all remaining accrued
             but unpaid interest on such amount and all other remaining amounts
             owing pursuant to the terms of this Note, shall immediately be due
             and payable effective as of the date of termination of Maker's
             employment. To the fullest extent permitted by applicable law,
             Maker grants to Holder the right to offset, without notice, all or
             a portion of the amounts owed by Maker pursuant to the terms of
             this Note against any amounts owed by Holder to Maker.

         (c) For each year for which all or a portion of the outstanding
principal amount and the accrued, but unpaid, interest is forgiven by Holder
pursuant to the terms of this Note, Holder shall pay to Maker an amount equal to
the sum of (i) the total liability for Taxes (defined below) that Maker owes as
a result of the forgiveness of such amounts for such year, and (ii) the total
liability for Taxes that Maker owes for a year as a result of the payment to
Maker of the amounts set forth in Section 3(c)(i) above (both such amounts being
collectively referred to herein as the "Gross Up Amount"). The Gross Up Amount
will be paid by Holder to Maker on or before the later of (x) the 60th day
following the end of the calendar year to which the Gross Up Amount applies, or
(y) the 15th day following notice from Maker of the Gross Up Amount for the
applicable calendar year. For purposes of this Note, "Taxes" means all federal
and state income taxes, including, without limitation, FICA and state level
equivalents, to which Maker is subject.

         SECTION 4. PREPAYMENT. Maker may prepay this Note, in whole or in part,
at any time or from time to time before demand, without premium or penalty.
Maker hereby waives presentment, notice of dishonor, notice of acceleration,
demand for payment, protest and notice of protest of this Note.

         SECTION 5. BINDING EFFECT. This Note shall be binding upon Maker, his
heirs, executors, administrators, successors and assigns.

         SECTION 6. ALTERATION, AMENDMENT OR WAIVER. No alteration, amendment or
waiver of any provision of this Note shall constitute a waiver of any other term
hereof, or otherwise release or discharge the liability of Maker under this
Note. Maker agrees to pay all costs of collection when incurred, including,
without limitation, reasonable attorneys' fees.

         SECTION 7. EMPLOYMENT AGREEMENT. This Note is subject to the terms and
conditions of the Employment Agreement between Maker and Holder attached hereto
as ADDENDUM A, and incorporated herein for all purposes.

         SECTION 8. GOVERNING LAW. This Note is governed by and shall be
construed in accordance with the laws of the State of Delaware. If any term or
condition of this Note or its application to

                                       14
<PAGE>

either party shall, to any extent, be invalid or unenforceable, the remainder of
the Note, or the application of such term or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term or condition of this Note shall be
valid and shall be enforced to the fullest extent permitted by law.

         SECTION 9. OFFSETS. Maker shall have no right to offset against any
amount owed pursuant to the terms of this Note for any amounts owed by Holder to
Maker.

         SECTION 10. USURY SAVING PROVISION. It is the intent of Maker and
Holder in the execution of this Note to contract in strict compliance with
applicable usury law. In furtherance thereof, Maker and Holder stipulate and
agree that none of the terms and provisions contained in this Note, or in any
other instrument executed in connection herewith, shall ever be construed to
create a contract to pay interest at a rate in excess of the Maximum Rate.
Neither Maker nor any guarantors, endorsers or other parties now or hereafter
becoming liable for payment of this Note shall ever be obligated or required to
pay interest on this Note at a rate in excess of the Maximum Rate, and the
provisions of this paragraph shall control over all other provisions of this
Note and any other documents now or hereafter executed that may be in apparent
conflict herewith. If the principal of this Note is prepaid, and as a result
thereof the interest received for the actual period of existence of the loan
evidenced by this Note exceeds the Maximum Rate, the Holder shall credit the
amount of such excess against the principal balance of this Note then
outstanding and thereby shall render inapplicable any and all penalties of any
kind provided by applicable law as a result of such excess interest; provided,
however, that if the principal hereof has been paid in full, such excess shall
be refunded to Maker. If the Holder shall receive money (or anything else) that
is determined to constitute interest and that would increase the effective
interest rate on this Note to a rate in excess of the Maximum Rate, the amount
determined to constitute interest in excess of the Maximum Rate shall be
credited against the principal balance of this Note then outstanding or, if the
principal balance has been paid in full, refunded to Maker, in which event any
and all penalties of any kind under applicable law as a result of such excess
interest shall be inapplicable. If the Holder shall not actually receive, but
shall contract for, request or demand, a payment of money (or anything else)
that is determined to constitute interest and that would increase the effective
interest rate contracted for or charged on this Note to a rate in excess of the
Maximum Rate, the Holder shall be entitled, following such determination, to
waive or rescind the contractual claim, request or demand for the amount
determined to constitute interest in excess of the Maximum Rate, in which event
any and all penalties of any kind under applicable law as a result of such
excess interest shall be inapplicable. By execution of this Note, Maker
acknowledges that Maker believes the loan evidenced by this Note to be
non-usurious and agrees that if, at any time, Maker should have reason to
believe that such loan is in fact usurious, Maker will give the Holder notice of
such condition. Maker agrees that the Holder shall have sixty (60) days
following receipt of such written notice in which to make appropriate refund or
other adjustment in order to correct such condition if in fact such condition
exists. Additionally, if, from any circumstance whatsoever, fulfillment of any
provision hereof shall, at the time fulfillment of such provision is due,
involve transcending the Maximum Rate then, ipso facto, the obligation to be
fulfilled shall be reduced to the Maximum Rate. The term "APPLICABLE LAW" as
used in this Note shall mean the laws of the State of Delaware or the laws of
the United States, whichever laws allow the

                                       15
<PAGE>

greater rate of interest, as such laws now exist or may be changed or amended or
come into effect in the future.

         SECTION 11. COGNOVIT NOTE. THE UNDERSIGNED HEREBY AUTHORIZES ANY
ATTORNEY AT LAW TO APPEAR FOR THE UNDERSIGNED, IN AN ACTION ON THIS NOTE, AT ANY
TIME AFTER THE SAME BECOMES DUE, AS HEREIN PROVIDED, IN ANY COURT OF RECORD IN
OR OF THE STATE OF ARKANSAS, OR ELSEWHERE, TO WAIVE THE ISSUING AND SERVICE OF
PROCESS AGAINST THE UNDERSIGNED AND TO CONFESS JUDGMENT IN FAVOR OF THE HOLDER
OF THIS NOTE AGAINST THE UNDERSIGNED FOR THE AMOUNT THAT MAY BE DUE, WITH
INTEREST AT THE RATE HEREIN MENTIONED AND COSTS OF SUIT, AND TO WAIVE AND
RELEASE ALL ERRORS IN SAID PROCEEDINGS AND JUDGMENT, AND ALL PETITIONS IN ERROR,
AND RIGHT OF APPEAL FROM THE JUDGMENT RENDERED. THE UNDERSIGNED AGREES THAT THE
HOLDER'S ATTORNEY MAY CONFESS JUDGMENT PURSUANT TO THE FOREGOING WARRANT OF
ATTORNEY. THE UNDERSIGNED FURTHER AGREES THAT THE ATTORNEY CONFESSING JUDGMENT
PURSUANT TO THE FOREGOING WARRANT OF ATTTORNEY MAY RECEIVE A LEGAL FEE OR OTHER
THING OF VALUE FROM THE HOLDER OF THIS NOTE.

         WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.

                                     MAKER:

                                     ------------------------------------------
                                     Jeffrey P. Freimark

                                     HOLDER:

                                     BEVERLY ENTERPRISES, INC.

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

                                       16

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