Document:

Executive Compensation Plan

  
 EXHIBIT 4.1 
  
 Beverly Enterprises, Inc. 
  
 Executive
Deferred Compensation Plan 
  
  
 (Effective as of December 31, 2002) 

 

  
 Beverly Enterprises, Inc. 
  

Executive Deferred Compensation Plan 
  
 ARTICLE 1 
 ESTABLISHMENT AND PURPOSE 
  
 1.1    Establishment. Effective as of December 31, 2002, the Company hereby establishes this deferred compensation plan for a select group of employees as described herein,
which shall be known as the “Beverly Enterprises, Inc. Executive Deferred Compensation Plan” (the “Plan”). The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select
group of “management or highly compensated employees” within the meaning of sections 201, 301, and 401 of ERISA, and therefore exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. The Plan is intended to constitute a
“nonqualified deferred compensation plan” for purposes of Code section 3121(v)(2) as well as 4 U.S.C. section 114. 
  
 1.2    Purpose. The primary purposes of the Plan are (i) to provide a select group of management or highly compensated employees with a capital accumulation opportunity by deferring compensation on a
pre-tax basis; (ii) to provide the Company with a method of rewarding and retaining its highly compensated executives; and (iii) to provide a nonqualified retirement program with Company contributions to select individuals. 
  
 ARTICLE 2 
 DEFINITIONS 

 
 Whenever used herein, the following terms shall have the meanings set forth below, and, when the defined meaning is intended,
the term is capitalized: 
  

	 	(a)
	 
	“Account” means the accounting entry made with respect to each Participant for the purpose of maintaining a record of each Participant’s benefit
under the Plan. 
 

  

	 	(b)
	 
	“Affiliate” means any business entity 80% or more directly or indirectly owned or controlled by the Company. 
 

 

	 	(c)
	 
	“Annual Incentive Plan” means the Company’s annual performance bonus plan as constituted from time to time. 
 

 

	 	(d)
	 
	“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 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 
 

 
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 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, entity or group of persons within the meaning of Section 3(a)(9) of the Securities Exchange Act of 1934 and as used in Sections 13(d) and 14(d) thereto, including a “group” as defined in Section 13(d)
(collectively referred to as a “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. 
  
 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. 
  

	 	(e)
	 
	“Code” means the Internal Revenue Code of 1986, as it has been and may be amended from time to time. 
 

  

	 	(f)
	 
	“Committee” means the Nominating and Compensation Committee of the board of directors of the Company as it may exist from time to time. 

  

	 	(g)
	 
	“Company” means Beverly Enterprises, Inc., a Delaware corporation. 
 

  

	 	(h)
	 
	“Compensation” means an Employee’s Salary and Incentive Compensation paid by the Employer for the Plan Year. 
 

 

	 	(i)
	 
	“Discretionary Contributions” means those contributions credited to a Participant’s Account, if any, pursuant to section 5.4. 

 
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	 	(j)
	 
	“Distribution Eligibility Requirement” means the completion of five (5) years of combined participation in this Plan and the SERP. 

  

	 	(k)
	 
	“Eligible Employee” means an Employee who is eligible to participate in the Plan pursuant to Section 4.1. 
 

  

	 	(l)
	 
	“Employee” means any person employed by the Employer whose wages are subject to withholding for purposes of the Federal Insurance Contribution Act.

 

  

	 	(m)
	 
	“Employee Contributions” means those contributions credited to a Participant’s Account in accordance with the Participant’s deferral
election pursuant to Section 5.1. 
 

  

	 	(n)
	 
	“Employer” means the Company and each Affiliate that adopts the Plan with the Company’s permission. 
 

  

	 	(o)
	 
	“ERISA” means the Employee Retirement Income Security Act of 1974, as it has been and may be amended from time to time. 

  

	 	(p)
	 
	“Incentive Compensation” means such bonuses and other non periodic amounts payable to an Employee in addition to his Salary, which may be paid to the
Employee in the current or a subsequent Plan Year as determined by the Employer in accordance with its general policies and procedures and its sole discretion. Whether a payment qualifies as “Incentive Compensation” shall be determined by
the Committee in its sole discretion. 
 

  

	 	(q)
	 
	“Matching Contributions” means those contributions credited to a Participant’s Account, if any, pursuant to Section 5.5. 

  

	 	(r)
	 
	“Participant” means an Eligible Employee who is participating in the Plan pursuant to Section 4.2. 
 

  

	 	(s)
	 
	“Plan” means the Beverly Enterprises, Inc. Executive Deferred Compensation Plan, as set forth herein, and as it may be amended from time to time.

 

  

	 	(t)
	 
	“Plan Year” means January 1 to December 31 of each calendar year. The first Plan Year shall be a short plan year that begins and ends on December 31,
2002. 
 

  

	 	(u)
	 
	“Qualified Plan” means the Beverly Enterprises, Inc. 401(k) SavingsPlus Plan. 
 

  

	 	(v)
	 
	“Rabbi Trust” means the grantor trust that may be established pursuant to Article 8. 
 

  

	 	(w)
	 
	“Rabbi Trustee” means the trustee of the Rabbi Trust. 
 

  

	 	(x)
	 
	“Salary” means the base annual compensation payable to an Employee by the Employer for services rendered during a Plan Year, before reduction for
amounts deferred pursuant to the Plan or to the Qualified Plan or any other deferred 
 

 
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 compensation, 401(k), or cafeteria plan, which is payable in cash to the Employee
for services to be rendered during the Plan Year provided that “Salary” shall exclude Incentive Compensation. 
  

	 	(y)
	 
	“SERP” means the Beverly Enterprises, Inc. Supplemental Executive Retirement Plan. 
 

  

	 	(z)
	 
	“SERP Contributions” means those contributions credited to a Participant’s Account, if any, pursuant to Section 5.6. 

  
 ARTICLE 3 
 ADMINISTRATION 
  
 3.1    Authority of the Committee. Subject to
the provisions herein, the Committee or its designee shall have full power and discretion to select Employees for participation in the Plan; to determine the terms and conditions of each Employee’s participation in the Plan; to construe and
interpret the Plan and any agreement or instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan’s administration; to amend (subject to the provisions of Articles 9 and 12 herein) the terms and
conditions of the Plan and any agreement entered into under the Plan; to adjudicate all claims and appeals; and to make other determinations which may be necessary or advisable for the administration of the Plan. 
  
 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 Committee shall not delegate its authority with regard to the determination of Eligible Employees or contributions pursuant to Article 5. 
  
 3.2    Decisions Binding. Subject to Section 3.4(b), all determinations and decisions of the Committee or its
designee as to any disputed question arising under the Plan, including questions of construction and interpretation, shall be final, conclusive, and binding on all parties and shall be given the maximum possible deference allowed by law.

  
 3.3    Claim Procedures. If a request for Plan benefits is denied in whole or in part,
the Participant or his beneficiary (“claimant”) will be notified in writing within 90 days after receipt of the claim. In some instances, the Committee may require an additional 90 days to consider the claim. When additional time is
needed, the claimant will be notified within 90 days of receipt of the claim of the special circumstances requiring the extension and the date by which the Committee expects to render its benefit determination. The extension may not exceed a total
of 180 days from the date the claim was originally filed. 
  
 If a claimant’s initial request for benefits is
denied, the notice of the denial will include the specific reasons for denial and references to the relevant Plan provisions on which the denial was based, a description of any additional material or information necessary to perfect the claim and an
explanation of why such information is necessary, if applicable, and a description of the Plan’s review procedures and the time limits applicable thereto, including a statement of the claimant’s rights under Section 502(a) of ERISA
following an adverse benefits determination on review. 

 
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 Within 60 days after receiving a denial, the claimant or his authorized
representative may appeal the decision by requesting a review by writing the Committee. On appeal, the claimant may submit in writing any comments or issues with respect to the claim and/or any additional documents or information not considered
during the initial review and, upon request and free of charge, the claimant will be provided access to and copies of all documents, records and other information relevant to the claim. 
  
 A decision on appeal will normally be given within 60 days of the receipt of the appeal. If special circumstances warrant an extension, then the decision will be made no
later than 120 days after receipt of the appeal. If an extension is required, the claimant will be provided a written notice of the extension that shall indicate the special circumstances requiring the extension and the date by which the Committee
expects to render its final decision. Subject to Section 3.4, the Committee’s decision on appeal shall be final and binding on all parties. 
  
 If a claimant’s appeal is denied in whole or in part, the notice of the decision on appeal shall include the specific reasons for the denial and reference to the relevant Plan provisions on which
the denial was based, a statement that, upon request and free of charge, the claimant may review and copy all documents, records and other information relevant to the claim for benefits and a statement describing the Plan’s binding arbitration
procedures (or, on or after a Change in Control, other contest procedures) and the claimant’s rights under Section 502(a) of ERISA. 
  
 3.4    Arbitration.   (a) Pre Change in Control.  The following provisions shall apply before a Change in Control. Any individual making a claim for benefits under this
Plan may contest the Committee’s decision to deny such claim or appeal therefrom only by submitting the matter to binding arbitration before a single arbitrator. Any arbitration shall be held in Fort Smith, Arkansas, unless otherwise agreed to
by the Committee. 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 affirmation or reversal of the Committee’s denial of the claim or appeal, based solely on whether or not the Committee’s decision was arbitrary or capricious,
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, if warranted on the record and
reasonably based on applicable law and the provisions of this Plan. The arbitrator shall have no power to award any punitive, exemplary, consequential, special, or extracontractual 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. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. 
  
 (b)    Post Change in Control.  On and after a Change in Control, the Committee’s decisions
shall be given no special deference, but rather shall be reviewed de novo, and a claimant may contest any Committee decision through arbitration or litigation, at the forum and the venue of his or her choice. The Company shall be liable for all
court or arbitration costs and legal fees if the claimant makes such a challenge. 

 
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 3.5    Indemnification.  Each person who is
or shall have been a member of the Committee or acts pursuant to the Committee’s direction, shall be indemnified and held harmless by the Employer against and from any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party, or in which he or she may be involved by reason of any action taken or failure to act under the Plan, and against and from
any and all amounts paid by him in settlement thereof, with the Employer’s approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him, provided he or she shall give the Employer an opportunity,
at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his own behalf. 
  
 The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Employer’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Employer may have to indemnify them or hold them harmless. 
  
 ARTICLE 4

 ELIGIBILITY AND PARTICIPATION 
  
 4.1    Eligibility.  The Committee shall determine, in its sole and absolute discretion, which such Employees shall be eligible to participate from time to time, and may modify such determinations
at any time, provided that at all times the Plan shall continue to qualify as an unfunded plan maintained primarily to provide deferred compensation benefits to a select group of management or highly compensated employees, within the meaning of
sections 201, 301, and 401 of ERISA. Currently, to be eligible for selection by the Committee, an Employee must (i) be in pay level D or above, (ii) have Salary scheduled to be at least $90,000, and (iii) have Total Compensation for the Plan Year
scheduled to be at least $100,000. For purposes of this Section 4.1, the phrase “Total Compensation” shall mean a Participant’s scheduled Salary and target bonus under the Company’s Annual Incentive Plan for the Plan Year.

  
 4.2    Participation.  Each Eligible Employee shall become a Participant in
the Plan upon contributions being made to his Account pursuant to Article 5, and the completion of all other applicable election and administrative forms required by the Company. 
  
 In the event a Participant ceases to be eligible to participate in the Plan, such Participant shall become an inactive Participant, retaining all the rights described under
the Plan, except the right to make any further deferrals, until such time that the Participant again becomes an active Participant. 
  
 4.3    Partial Year Eligibility.  In the event that an Employee first becomes eligible to participate in the Plan after the beginning of a Plan Year, the Employer shall notify the
Employee of his eligibility to participate, and the Employer shall provide each such Participant with a “Deferral Election Form,” and any additional enrollment forms that must be completed by the Participant; provided, however, that such
Participant must make his election within 30 days thereof and may elect only to defer that portion of his Compensation for such Plan Year which is to be earned after the filing of the deferral election. 

 
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 4.4    Notice.  The Company shall notify an
Employee within a reasonable time of such Employee’s gaining or losing eligibility for active participation in the Plan. 
  
 ARTICLE 5 
 CONTRIBUTIONS TO PARTICIPANTS’ ACCOUNTS 
  
 5.1    Compensation Deferrals.   Effective as of January 1, 2003, and subject to Sections 5.2 and 5.3, an Eligible Employee may elect
to defer and have credited to his Account for any Plan Year (i) up to one hundred percent (100%) of his Incentive Compensation, and (ii) up to seventy-five percent (75%) of his Salary; provided, however, that the amount of deferrals selected by the
Participant shall not reduce his non-deferred Compensation below the amount that is required to be withheld for any state or federal payroll taxes (including FICA/Medicare tax on deferred amounts), income tax, payments to be withheld pursuant to the
Qualified Plan or any other benefit plan of the Employer (other than this Plan), and any other required or elected withholding. Deferrals shall be credited to a Participant’s Account on the business day the Compensation is withheld from the
Participant’s pay check. The minimum amount of Salary that may be deferred in any Plan Year is five percent (5%). The minimum amount of Incentive Compensation that may be deferred in any Plan Year is the greater of: (i) five percent (5%) of the
Participant’s Incentive Compensation for the Plan Year or (ii) $1,000. The minimum deferral amounts will be prorated if a Participant first becomes eligible to participate in the Plan after the beginning of the Plan Year. Eligible Employees
shall not be permitted to defer any portion of their Compensation for the initial short Plan Year that begins and ends on December 31, 2002. At the discretion of the Committee, deferrals may also be permitted for awards under the Beverly
Enterprises, Inc. Long-Term Incentive Plan or other equity compensation. 
  
 5.2    Deferral
Election.  Eligible Employees and Participants shall make their elections to defer all or a portion of their Salary for the Plan Year no later than December 15 prior to the beginning of the Plan Year in which the Salary is to be
earned, or not later than thirty (30) calendar days following notification of eligibility to participate for a partial Plan Year (with respect to Salary not yet earned). Eligible Employees and Participants shall make their elections to defer all or
a portion of their Incentive Compensation for the Plan Year before it is earned and substantially certain of payment, pursuant to rules established by the Committee from time to time. Any deferral election a Participant may have made under the
Beverly Enterprises, Inc. Executive Deferred Compensation Plan, originally established as of January 1, 1997, and as amended and restated as of January 1, 2000, and August 18, 2000, shall not apply for purposes of this Plan. Notwithstanding the
foregoing, if an Eligible Employee wishes to defer a portion of his Salary for the Plan Year beginning on January 1, 2003, such Eligible Employee must elect on or before December 9, 2002, to defer all or a portion of his Salary to be earned for the
pay periods beginning on or after January 1, 2003. All Salary and Incentive Compensation deferral elections under this Plan must be made before the Compensation is earned and before the amount thereof is substantially certain of payment. 

  
 5.3    Length of Deferral and Modification of Elections.  All deferral
elections shall be irrevocable for the Plan Year in which they are in effect, and shall be made on a “Deferral Election Form,” as described herein. Once made, a Participant’s deferral election shall remain in effect for all subsequent
Plan Years for which the Participant is an Eligible Employee unless and until the Participant increases, decreases, or terminates such election by submitting a new 

 
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 Deferral Election Form to the Employer during the annual open enrollment period prior to a Plan Year.
Deferral election changes must be submitted to the Employer no later than December 15 prior to the beginning of the Plan Year for which the change is to be effective. 
  
 On the “Deferral Election Form” and related enrollment forms Participants shall elect (i) the percentage or flat dollar amount of each eligible component of
Compensation to be deferred for the Plan Year; (ii) the deemed investment elections of the amounts to be deferred, in accordance with Section 7.2; and (iii) the time when a distribution of such deferrals and other contributions for the Plan Year
shall begin. Except as provided herein, an election to receive Employee Contributions and deemed investment returns (or losses) thereon with respect to a Plan Year upon termination of employment is irrevocable and cannot be changed by the
Participant. 
  
 5.4    Discretionary Contributions.  The Committee may, within
its sole discretion, direct the Employer to make contributions to a Participant’s Account for the Plan Year based on the Participant’s performance, the Company’s performance, or any other criteria determined by the Employer within its
sole discretion. Such contributions, if any, shall be referred to as “Discretionary Contributions.” 
  
 5.5    Matching Contributions.  The Committee may, within its sole discretion, direct the Employer to make contributions to a Participant’s Account for the Plan Year equal to (i) the matching
contributions that would have been contributed to the Qualified Plan on the Participant’s behalf for the Plan Year if the limitations imposed by Code sections 401(a)(17) and 402(g) had not been in effect, less (ii) the total matching
contributions made to the Qualified Plan on the Participant’s behalf for the Plan Year. In addition to or in the alternative, the Employer may, within its sole discretion, make contributions to a Participant’s Account for the Plan Year
equal to the matching contributions that were not made on the Participant’s behalf under the Qualified Plan for the Plan Year due to his participation in this Plan. Contributions made under this Section 5.5 shall be referred to as
“Matching Contributions.” 

 
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 5.6    SERP Contributions.  The Committee
may, within its sole discretion, direct the Employer to make contributions on behalf of the former SERP participants whose names are set forth on Appendix A, in an amount determined in accordance with the chart set forth below, or as determined by
the Committee in its sole discretion. 
  
 
	
	
	
	 	 	 	 
	 AGE RANGE
 	    	 CONTRIBUTION FOR YEARS (PERCENTAGE
OF SALARY)
 
	
	
	

	 (As of 1/1 for the
 Plan Year)
 	    	 1/1/03 –
 1/1/05
 	  	 1/1/06 –1/1/08
 	    	 1/1/09 –
 forward
 
	
	
	
	
	
	
	

	 
	 <50
 	    	 5.00%
 	  	 7.50%
 	    	 10.00%
 
	
	
	
	
	
	
	

	 
	 50 – 59
 	    	 7.50%
 	  	 11.25%
 	    	 15.00%
 
	
	
	
	
	
	
	

	 
	 60 –64
 	    	 10.00%
 	  	 15.00%
 	    	 20.00%
 
	
	
	
	
	
	
	

 
  
 The Committee, within its sole discretion, may direct the Employer
to make additional contributions to the former SERP participants who are age 65 or older, provided that they are still actively employed by the Employer and meet the eligibility requirements set forth in Section 4.1. 
  
 In addition, for the initial Plan Year that begins and ends on December 31, 2002, the Employer shall make contributions to the
Participant’s Accounts whose names are set forth on Appendix B in an amount equal to the amount set forth in Appendix B, in lieu of such Participant’s accrued benefit under the SERP. Contributions made pursuant to this Section 5.6 shall be
referred to as “SERP Contributions.” 
  
 As a condition to having SERP Contributions credited to his
Account pursuant to this Section 5.6, a Participant whose name is listed on Appendix A or B shall waive his right to any and all benefit he had or may have had under the SERP. 
  
 ARTICLE 6 
 DISTRIBUTIONS 
  

6.1    General.  Each Plan Year’s contributions (and earnings) may have a separate distribution schedule, commencing either
at termination of employment or at a specified future date while still employed, and payable either in a lump sum or installments. The default election is a lump sum payable at termination. Once a Participant elects a distribution form for
termination of employment, his election shall remain in effect for all subsequent Plan Years unless and until the Participant changes his election by submitting a new Deferral Election Form to the Employer. 

 
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 6.2    Scheduled In-Service
Distributions.  A Participant may elect in the manner prescribed by the Committee to receive all or a portion of the vested portion of his Account while he is still employed by the Employer in either (i) a single lump sum payment, or
(ii) annual installment payments over a period of two (2) to five (5) years; provided that the Participant has not previously elected to receive a distribution of such amounts upon termination of employment. If the amount the Participant elects to
receive is less than $25,000 (for all years combined), payment shall be made in a single lump sum. If a Participant elects to receive installment payments under (ii) above, the amount of each installment payment shall be equal to the balance
remaining in the portion of the Participant’s Account that is subject to such installment election (as determined immediately prior to each such payment), multiplied by a fraction, the numerator of which is one (1), and the denominator of which
is the total number of remaining installment payments. The installment amount shall be adjusted annually to reflect gains and losses, if any, allocated to such Participant’s Account pursuant to Article 7. 
  
 A Participant’s election under this Section 6.2 must specify the future year in which the payment of the deferred amounts shall
commence, provided that the year in which distributions are to commence must be at least two (2) years beyond the end of the Plan Year in which the compensation is deferred. Any desired in-service distribution must be separately elected for each
year compensation is deferred. Thus, to elect a scheduled in-service withdrawal for future plan years’ deferrals, a new distribution election form must be submitted during the applicable enrollment period. Once the applicable enrollment period
has passed, a scheduled in-service distribution cannot be elected for that plan year’s deferrals. Distributions under this Section 6.2 shall commence in February of the year specified in the Participant’s election. A Participant may delay
the commencement of in-service payments or amend his election as to the form of the distribution at any time provided that such amendment must be made in the manner specified by the Committee at least one (1) calendar year prior to the date the
distribution is to commence. If the Participant elects to delay his distributions (as opposed to changing the form of distribution), the new distribution date must be either at least one (1) year after the prior distribution date or termination of
employment. A maximum of two (2) changes are permitted with respect to the time of payment and a maximum of two changes are permitted with respect to the form of payment of contributions attributable to each Plan Year; provided, however, the
Committee may, within its sole discretion, allow additional amendments. 
  
 If a Participant terminates employment
not on account of his death or long-term disability after meeting the Distribution Eligibility Requirement but prior to the commencement of a previously elected in-service distribution, the portion of the Participant’s Account subject to the
in-service election will instead be distributed at the time of such termination in the same form of distribution elected for termination. If a Participant terminates employment with the Employer not due to death or long-term disability after meeting
the Distribution Eligibility Requirement and while receiving installment payments pursuant to this Section 6.2, the remaining installment payments will be made to the Participant when they become due pursuant to the in-service distribution election.
If a Participant’s employment terminates due to his death, long-term disability, or prior to the Participant meeting the Distribution Eligibility Requirement while receiving installment payments pursuant to this Section 6.2, the remaining
installment payments will be paid in accordance with Section 6.4. 

 
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 6.3    Distributions upon Meeting the Distribution
Eligibility Requirement.  If a Participant terminates employment with the Employer after meeting the Distribution Eligibility Requirement, the Participant may elect to receive the vested balance credited to his Account in (i) a single
lump sum payment or, (ii) annual installment payments over a period of two (2) to fifteen (15) years. If a Participant fails to make a distribution election or if the vested balance credited to his Account to be distributed is less than $25,000,
payment shall be made in a single lump sum. The amount of each installment payment under (ii) above shall be equal to the balance remaining in the portion of the Participant’s Account that is subject to such installment election (as determined
immediately prior to each such payment), multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the total number of remaining installment payments. The installment amount shall be adjusted annually to reflect
gains and losses, if any, allocated to such Participant’s Account pursuant to Article 7. A Participant may amend his distribution election at any time to change the form of distribution provided that the amendment (a) be made in the manner
specified by the Committee, and (b) be made at least one (1) year prior to termination of employment. A Participant may amend his election up to two times; provided, however, the Committee may, within its sole discretion, allow additional
amendments. 
  
 Distributions under (ii) above shall begin in February of the year following the Participant’s
termination. Lump sum distributions under this Section 6.3 shall commence in the calendar quarter following the Participant’s termination. 
  
 6.4    Termination of Employment Before Meeting the Distribution Eligibility Requirement, Death or Disability.  In the event of a Participant’s death,
long-term disability (as determined by the Committee in its sole discretion) or if a Participant’s employment with the Employer terminates for any reason prior to the date the Participant completes the Distribution Eligibility Requirement, the
unpaid vested portion of such Participant’s Account shall be paid to the Participant or (in the event of his death) the Participant’s designated beneficiary in a single lump sum payment the calendar quarter following the Participant’s
termination of employment, death or long-term disability. At the request of a deceased Participant’s beneficiary, the Committee may, within its sole discretion, change the form of distribution from a lump sum to installment payments.

  
 6.5    Nonscheduled In-Service Withdrawals.  Notwithstanding any provision
of this Plan to the contrary, a Participant may at any time request a lump sum distribution of all or a portion of his vested Account. In the event a Participant requests a distribution under this Section 6.5, such Participant will receive a portion
of his vested Account equal to 90% of the requested distribution, and the remaining 10% of the requested distribution will be forfeited, and (ii) such Participant will be ineligible to participate in the Plan for the remainder of the Plan Year in
which the distribution is received and for the immediately following Plan Year. The minimum amount that can be withdrawn pursuant to this Section is the lesser of: (i) the Participant’s vested Account balance, or (ii) $25,000. Participants who
have terminated employment shall be eligible to request a withdrawal pursuant to this Section. If a Participant is eligible to receive a distribution under this Section 6.5, such distribution will be made within a reasonable time after the
Participant’s request. 

 
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 6.6    Financial Hardship.  The Committee
shall have the authority to alter the timing or manner of payment of deferred amounts in the event that the Participant establishes, to the satisfaction of the Committee, severe financial hardship. In such event, the Committee may, in its sole
discretion, distribute all or a portion of such Participant’s vested Account to the Participant without penalty. Participants who have terminated employment shall be eligible to request a withdrawal pursuant to this Section. 

 
 For purposes of this Section 6.6, “severe financial hardship” shall mean any financial hardship resulting from
extraordinary and unforeseeable circumstances arising as a result of one or more recent events beyond the control of the Participant, including, but not limited to the following: (a) the illness or injury of a Participant or dependent (the term
dependent shall have the meaning set forth in Code section 152(a)), (b) the casualty loss of a Participant’s real or personal property, or (c) other similar and unforeseeable circumstances caused by events beyond the Participant’s control
that the Committee, in its sole discretion, determines constitutes a severe financial hardship. In any event, payment under this Section 6.6 may not be made to the extent such emergency is or may be relieved: (i) through reimbursement or
compensation by insurance or otherwise; (ii) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; and (iii) by cessation of deferrals under the Plan.
Withdrawals of amounts because of a severe financial hardship may only be permitted to the extent reasonably necessary to satisfy the hardship, plus to pay taxes on the withdrawal. Examples of what are not considered to be severe financial hardships
include the need to send a Participant’s child to college or the desire to purchase a home. The Participant’s Account will be credited with earnings (or losses) in accordance with the Plan up to the date of distribution. A Participant
requesting a hardship withdrawal is required to submit proof of his severe financial hardship and proof that it is not compensated by other means. 
  
 The Committee shall judge the severity of the financial hardship based on the information submitted by the Participant. The Committee’s decision with respect to the severity of financial hardship
and the manner in which, if at all, the Participant’s future deferral opportunities shall be ceased, and/or the manner in which, if at all, the payment of deferred amounts to the Participant shall be altered or modified, shall be final,
conclusive, and not subject to appeal. 
  
 6.7    Incompetence of
Distributee.  In the event that it shall be found that a person entitled to receive payment under the Plan (including a designated beneficiary) is a minor or is physically or mentally incapable of personally receiving and giving a
valid receipt for any payment due (unless prior claim therefore shall have been made by a duly qualified committee or other legal representative), such payment may be made to any person whom the Committee in its sole discretion determines is
entitled to receive it, and any such payment shall fully discharge the Employer, the Company, the Committee, the Plan, the Rabbi Trust, and the Rabbi Trust Trustee from any further liability to the person otherwise entitled to payment hereunder, to
the extent of such payment. 
  
 ARTICLE 7 
 DEFERRED COMPENSATION ACCOUNTS 
  
 7.1    Participants’
Accounts.  The Company shall establish and maintain an individual bookkeeping Account for each Participant, and subaccounts for different contribution sources, as 

 
 12 

 determined by the Committee. The Employee Contributions held in each Participant’s Account shall be one hundred percent (100%) vested at
all times. 
  
 A Participant’s Account shall also be credited with (i) Discretionary Contributions, if any, made
pursuant to Section 5.4, (ii) Matching Contributions, if any, made pursuant to Section 5.5, (iii) SERP Contributions, if any, made pursuant to Section 5.6, and (iv) any deemed earnings credit to such amounts pursuant to Section 7.2 below.

  
 A Participant shall vest in Discretionary Contributions and Matching Contributions in accordance with the
schedule determined by the Committee at the time any such contributions are made. A Participant shall vest in SERP Contributions in accordance with the following schedule: 
  
 
	         Years of
Participation        
 
	  	 % Vested
 

	 0-4
 	  	     0%
 
	 5 and more
 	  	 100%
 

 
  
 For purposes of vesting in SERP Contributions, a Participant’s
years of participation shall be the combined total of his years of participation in this Plan and the SERP (without duplication of any years). The Committee, within its sole discretion, may accelerate the vesting of SERP Contributions upon a
Participant’s termination of employment. Notwithstanding anything in this Plan to the contrary, upon the occurrence of a Change in Control, Participants shall become fully vested in all amounts credited to their Accounts as of the date of the
Change in Control. 
  
 7.2    Earnings on Contributions.  A Participant’s
Account shall be credited with earnings (or losses) based on a deemed investment of the Participant’s Account, as directed by each Participant, which deemed investment shall be in one or more benchmark funds among the investment options
selected by the Company from time to time. Until a Participant’s insurance application is processed and approved, his Account shall be credited with a money market rate of return. Deemed earnings (and losses) on a Participant’s Account
shall be based upon the daily unit valuation of the funds selected by such Participant, and shall be credited to a Participant’s Account each business day. Deemed earnings (or losses) shall be paid out to a Participant at the same time as the
rest of his Account, pursuant to Article 6. Any portion of a Participant’s Account which is subject to distribution in installments shall continue to be credited with deemed earnings (or losses) until fully paid out to the Participant.

  
 The Company reserves the right to change the options available for deemed investments under the Plan from time to
time, or to eliminate any such option at any time. A Participant may specify a separate investment allocation with respect to each Deferral Election Form or amended Deferral Election Form. Participants may modify their deemed investment instructions
each business day with respect to any portion (whole percentages only) of their Account, provided they notify the Company or its designee within the time and in the manner specified by the Company. Changes will be effective at the closing price of
the funds the business day following the business day the change is received by the Company’s designee. Elections and amendments thereto pursuant to this Section 7.2 shall be made in the manner prescribed by the Company. 

 
 13 

  
 7.3    Designation of Beneficiary.  Each
Participant may designate a beneficiary or beneficiaries who, upon the Participant’s death, or physical or mental incapacity will receive the amounts that otherwise would have been paid to the Participant under the Plan. All designations shall
be signed by the Participant, and shall be in such form as prescribed by the Committee. Each designation shall be effective as of the date delivered to the Committee or its designee by the Participant. 
  
 Participants may change their beneficiary designations on such form as prescribed by the Committee. The payment of amounts deferred under
the Plan shall be in accordance with the last unrevoked written beneficiary designation that has been signed by the Participant and delivered to the Committee or its designee prior to the Participant’s death.  
  
 In the event that all the beneficiaries named by a Participant pursuant to this Section 7.3 predecease the Participant, the deferred
amounts that would have been paid to the Participant or the Participant’s beneficiaries shall be paid to the Participant’s estate. 
  
 In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or in part, the amounts that otherwise would have been paid to the Participant
or the Participant’s beneficiaries under the Plan shall be paid to the Participant’s estate. 
  
 ARTICLE 8

 TRUST 
  
 Nothing
contained in this Plan shall create a trust of any kind or a fiduciary relationship between the Employer and any Participant. Nevertheless, the Employer may establish one or more trusts, with such trustee(s) as the Committee may approve, for the
purpose of providing for the payment of deferred amounts and earnings thereon (collectively referred to hereinafter as the “Rabbi Trust”). Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of
the Employer’s general creditors upon the bankruptcy or insolvency of the Employer. 
  
 ARTICLE 9 

CHANGE IN CONTROL 
  
 9.1    Trust and Trustees.  Upon the occurrence of a Change in Control, the Rabbi Trust shall become irrevocable (if it is then revocable) and the Employer shall not thereafter be permitted to
remove, terminate, or change the Rabbi Trustee without the prior written consent of the majority of the Participants, with weighted voting as measured by their account balances. 
  
 9.2    Advanced Funding.  No later than 10 days after a Change in Control occurs, the Employer shall make a contribution to the Rabbi
Trust to the extent required to fully fund all benefits that are or may become payable under the Plan, together with all expenses of administering the Plan and Rabbi Trust. No later than December 31 of each Plan Year thereafter, the Employer shall
make such additional contributions to the Rabbi Trust to fully fund the additional benefits that may become payable to Participants or beneficiaries under the Plan and the additional administrative, legal, and other Plan expenses. 

 
 14 

  
 9.3    Amendment and Termination.  After the
occurrence of a Change in Control, neither the Employer nor the Committee may amend the Plan without the prior approval of a majority of the Participants. After a Change in Control, the Employer may not terminate the Plan until either (i) all
benefits have been paid in full, or (ii) the majority of the Participants approve the same. For purposes hereof, Participants’ votes shall be weighted based on their relative Plan account balances. 
  
 ARTICLE 10 
 RIGHTS OF PARTICIPANTS

  
 10.1    Contractual Obligation.  The Plan shall create an unfunded,
unsecured contractual obligation on the part of the Employer to make payments from the Participants’ Accounts when due. Payment of Account balances shall be made out of the general assets of the Employer or from the trust or trusts referred to
in Article 8 above. 
  
 10.2    Unsecured Interest.  No Participant or party
claiming an interest in deferred amounts of a Participant shall have any interest whatsoever in any specific asset of the Employer. To the extent that any party acquires a right to receive payments under the Plan, such right shall be equivalent to
that of an unsecured general creditor of the Employer. Each Participant, by participating hereunder, agrees to waive any priority creditor status for wage payments with respect to any amounts due hereunder. The Employer shall have no duty to set
aside or invest any amounts credited to Participants’ Accounts under this Plan. Accounts established hereunder are solely for bookkeeping purposes and the Employer shall not be required to segregate any funds based on such Accounts.

  
 10.3    Employment.  Nothing in the Plan shall interfere with or limit in
any way the right of the Employer to terminate a Participant’s employment at any time, or confer upon any Participant any right to continue in the employ of the Employer. 
  
 ARTICLE 11 
 WITHHOLDING OF TAXES 
  
 The Employer shall have the right to require Participants to remit to the Employer an amount sufficient to satisfy federal, state, and
local withholding tax requirements, or to deduct from all payments made pursuant to the Plan (or from a Participant’s other Compensation) amounts sufficient to satisfy withholding tax requirements. Employment taxes with respect to amounts
deferred hereunder shall be payable in accordance with Code section 3121(v)(2) and may be withheld from a Participant’s Compensation even if due prior to the time of a distribution hereunder. The Employer makes no representations, warranties,
or assurances and assumes no responsibility as to the tax consequences of this Plan or participation herein. 
  
 ARTICLE
12 
 AMENDMENT AND TERMINATION 
  
 Except as provided herein, the Employer reserves the right to amend, modify, or terminate the Plan (in whole or in part) at any time by action of the Company or the Committee, 

 
 15 

  
 with or without prior notice. Except as described below in this Article 12, no such amendment or
termination shall in any material manner adversely affect any Participant’s rights to any vested amounts already deferred or credited hereunder or deemed earnings thereon, up to the point of amendment or termination, without the consent of the
Participant. 
  
 The Company may terminate the Plan and commence termination payout for all or certain Participants,
or remove certain Employees as Participants, if it is determined by the United States Department of Labor or a court of competent jurisdiction that the Plan constitutes an employee pension benefit plan within the meaning of section 3(2) of ERISA
that is not exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA, or if the IRS or other government agency otherwise taxes or proposes to tax amounts deferred hereunder prior to their scheduled payment date, or if any statute or
regulation otherwise alters the intended effect or benefits under the Plan or Rabbi Trust. If payout is commenced pursuant to the operation of this Article 12, the payment of deferred amounts and earnings thereon shall be made in the manner selected
by each Participant under Section 6.3 herein (other than the commencement date), as if the Participant had met the Distribution Eligibility Requirement. 
  
 ARTICLE 13 
 MISCELLANEOUS 
  
 13.1    Notice.  Any notice or filing required or permitted to be given to the Employer under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail to the Beverly Enterprises, Inc. Executive Deferred Compensation Plan Committee, and if mailed, shall be addressed to the principal executive offices of the Employer. Notice mailed
to a Participant shall be at such address as is given in the records of the Employer. Notices to the Employer shall be deemed given as of the date of delivery. Notice to a Participant or beneficiary shall be deemed given as of the date of hand
delivery, or if delivery is made by mail, three (3) days following the postmark date. 
  
 13.2    Nontransferability.  Except as provided in Section 7.3 and this Section 13.2, Participants’ rights to deferred amounts and earnings credited thereon under the Plan may not be sold,
transferred, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, or pursuant to a domestic relations order, nor shall the Employer make any payment under the Plan to any assignee or
creditor of a Participant. 
  
 13.3    Severability.  In the event any provision
of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

  
 13.4    Gender and Number.  Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall include the singular, and the singular shall include the plural. 
  
 13.5    Costs of the Plan.  All costs of implementing and administering the Plan shall be borne by the Employer. 
  
 13.6    Successors.  All obligations of the Employer under the Plan shall be binding on any successor
to the Employer, whether the existence of such successor is the result of a direct or 

 
 16 

  
 indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Employer. 
  
 13.7    Applicable Law.  Except to the extent
preempted by applicable federal law, the Plan shall be governed by and construed in accordance with the laws of the state of Delaware. 
  
 ARTICLE 14 
 ADMINISTRATIVE INFORMATION 
  
 14.1    Plan Sponsor and Administrator.  The Plan described herein is sponsored by: 
  
 Beverly Enterprises, Inc. 
 One Thousand Beverly Way 
 Fort Smith, Arkansas 72919 
  
 The Committee is the plan administrator and named fiduciary.
Prior to a Change in Control, the Committee has been granted complete fiduciary discretion and authority to administer, operate, and interpret the Plan and make final decisions on such issues as eligibility, payment of benefits, claims, and claims
appeals, unless such decisions have been delegated to another party. However, many day-to-day questions can be answered by the Benefits Department. 
  
 The agent for the service of legal process for the Plan is the Company. 
  
 14.2    Plan Type and Plan Year.  Documents and reports for the Plan are filed with the United States Internal Revenue Service and the Department of Labor under Employer Identification Number:
62-1691861. 
  
 The official Plan name is the Beverly Enterprises, Inc. Executive Deferred Compensation Plan, which,
for government purposes, is intended to be an unfunded pension plan maintained by an employer for a select group of management or highly compensated employees. Plan records are maintained on an annual basis and December 31 is the end of the plan
year. 
  
 14.3    Plan Funding.  The Plan is unfunded and unsecured and benefits
are paid solely from the Employer’s general assets. 
  
 ARTICLE 15 
 ERISA RIGHTS 
  
 Certain rights and protections are provided
to Plan participants under the Employee Retirement Income Security Act of 1974 (ERISA). These ERISA rights include the following: 
  

	 	(a)
	 
	Any Plan participant may contact the Benefits Department to examine all Plan documents without charge. These may include the Plan descriptions and all other
documents filed with the United States Department of Labor. 
 

  

	 	(b)
	 
	Copies of Plan documents and other information may be obtained by writing to the Committee. A reasonable charge may be assessed for these copies. 

  

 
 17 

  

	 	(c)
	 
	Each Plan participant has the right to receive a written summary of the Plan’s annual financial reports, if any. However, this type of plan is not required
to have either an annual financial report or a summary annual report. 
 

  

	 	(d)
	 
	An employee may not be discharged or discriminated against to prevent his obtaining a benefit or exercising his ERISA rights. 
 

 

	 	(e)
	 
	If a claim for a benefit is denied, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision
without charge, and to appeal any denial, all within certain time schedules. 
 

  
 The named
fiduciary for this Plan is the Committee. 
  
 Under certain circumstances, outside assistance may be necessary to
resolve disputes between a Participant and Plan officials. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case,
the court may require the plan administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If a claim for
benefits is denied or ignored, in whole or in part, after a final review, the claim may be submitted to binding arbitration (or, after a Change in Control, to either arbitration or a court, at the Participant’s election). If you are
discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may
order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. 
  
 For further information about this Plan, contact the Benefits Department. Or, if you have any questions about this statement or about your rights under ERISA, you may
contact the nearest area office of the Pension and Welfare Benefits Administration, United States Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquires, Pension and Welfare Benefits
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Pension and Welfare
Benefits Administration. 
  
 IN WITNESS WHEREOF, Beverly Enterprises, Inc. has caused this document to be
executed by its duly authorized officer on                         , 2002, effective as of the date set forth above.

  
 
	 BEVERLY ENTERPRISES, INC.
 
	 
	 By:
 	 	  
 

	 Its:
 	 	  
 

 

 
 18 

  
 APPENDIX A 
  
 PARTICIPANTS ELIGIBLE FOR SERP CONTRIBUTIONS 
  
 
	 
	 1.
 	  	 Partice Acosta
 
	 
	 2.
 	  	 Douglas Babb
 
	 
	 3.
 	  	 Linda Burch
 
	 
	 4.
 	  	 Pamela Daniels
 
	 
	 5.
 	  	 David Devereaux
 
	 
	 6.
 	  	 Jeffrey Friemark
 
	 
	 7.
 	  	 Blaise Mercadante
 
	 
	 8.
 	  	 Chris Roussos
 
	 
	 9.
 	  	 Richard Skelly
 
	 
	 10.
 	  	 Cindy Susienka
 
	 
	 11.
 	  	 Crystal Wright
 

 

 
 19 

  
 APPENDIX B 
  
 PARTICIPANTS’ SERP CONTRIBUTIONS ON 12/31/02 
  
 
	 
	 1.
 	  	 Douglas Babb     =     $40,998
 	  	  
	 
	 2.
 	  	 Crystal Wright    =     $63,058
 	  	  

 

	

 
 20<PAGE>

                                                                   Exhibit 4.10

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITORY") TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.,
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

REGISTERED                                                           REGISTERED

                            THE DOW CHEMICAL COMPANY

                       5.161% NOTES DUE NOVEMBER 30, 2007

CUSIP NO. 260543 BT 9
ISIN NO. US260543BT91
No. R-1                                                          US$110,000,000

     THE DOW CHEMICAL COMPANY, a Delaware corporation (herein called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of ONE HUNDRED TEN MILLION DOLLARS
(US$110,000,000) on November 30, 2007, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest thereon semi-annually
on each May 30 and November 30, commencing May 30, 2003 and at maturity on said
principal sum, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the rate per annum specified in the title of this Security, from the
May 30 or November 30, as the case may be, next preceding the date of this
Security to which interest has been paid, unless the date hereof is a date to
which interest has been paid, in which case from the date of this Security, or
unless no interest has been paid on this Security, in which case from November
20, 2002, until payment of said principal sum has been made or duly provided
for. Payments of such principal and interest shall be made at the office or
agency of the Company in Chicago, Illinois, which, subject to the right of the
Company to vary or terminate the appointment of such agency, shall initially be
at the principal office of Bank One Trust Company, N.A., One Bank One Plaza,
Chicago, Illinois 60670-0126; provided, that payment of interest may be made at
the option of the Company by check mailed to the address of the person entitled
thereto as such address shall appear on the Security register; provided, further
that so long as CEDE & CO. or another nominee of the Depository is the
registered owner of this Security payments of principal and interest

<PAGE>

will be made in immediately available funds through the Depository's Same-Day
Funds Settlement System. Notwithstanding the foregoing, if the date hereof is
after May 15 or November 15, as the case may be, and before the following May 30
or November 30, this Security shall bear interest from such May 30 or November
30; provided, that if the Company shall default in the payment of interest due
on such May 30 or November 30, then this Security shall bear interest from the
next preceding May 30 or November 30, to which interest has been paid or, if no
interest has been paid on this Security, from November 20, 2002. The interest
payable on any May 30 or November 30 will, subject to certain exceptions
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this Security is registered at the close of business on the
May 15 or November 15, as the case may be, next preceding such May 30 or
November 30, and the interest payable at maturity will be payable to the person
to whom the principal hereof shall be payable.

     Reference is made to the further provisions of this Security set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.

     This Security shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.

                        [Signatures appear on next page]

                                       2

<PAGE>

     IN WITNESS WHEREOF, THE DOW CHEMICAL COMPANY has caused this instrument to
be signed by facsimile by its duly authorized representative.

Dated: November 20, 2002

[SEAL]

Attest:                                THE DOW CHEMICAL COMPANY

By: ___________________________        By: ____________________________________
    Name: Thomas E. Moran                  Name:  Fernando Ruiz
    Title:  Assistant Secretary            Title:  Vice President and Treasurer

                                       3

<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

                                                  Bank One Trust Company, N.A.,
                                                   as Trustee

                                                  By:
                                                     --------------------------
                                                     Authorized Signatory

                                       4

<PAGE>

                            THE DOW CHEMICAL COMPANY

                       5.161% NOTES DUE NOVEMBER 30, 2007

     Section 1. General. This Note is one of a duly authorized issue of
securities of the Company (herein called the "Securities"), issued and to be
issued in one or more series under an Indenture, dated as of April 1, 1992, as
supplemented by a supplemental indenture dated as of January 1, 1994, a second
supplemental indenture dated as of October 1, 1999, and a third supplemental
indenture dated as of May 15, 2001 (the "Indenture"), between the Company and
Bank One Trust Company, N.A., as successor in interest to The First National
Bank of Chicago, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the Securities of the series designated on the face hereof.

     Section 2. [Intentionally Omitted]

     Section 3. Redemption; Sinking Fund. (a) Except as provided in paragraph
(b) below, the Securities are not redeemable prior to maturity.

          (b) All or a portion of the Securities will be redeemable at any time
     or from time to time at the option of the Company at a redemption price
     equal to the greater of

              (i) one hundred percent (100%) of the principal amount of the
          Securities to be redeemed on the redemption date; and

              (ii) the sum of the present values of the remaining scheduled
          payments of principal and interest on the Securities being redeemed
          on such redemption date (not including any portion of any payments of
          interest accrued to the redemption date), discounted to the redemption
          date on a semiannual basis at the Treasury Rate (as defined below),
          plus 25 basis points, as determined by the Reference Treasury Dealer
          (as defined below),

     plus, in either case, accrued interest thereon to the redemption date.
     Notwithstanding the foregoing, installments of interest on Securities that
     are due and payable on interest payment dates falling on or prior to a
     redemption date will be payable on the interest payment date to the
     registered holders as of the close of business on the relevant record date
     according to the Securities and the Indenture. The redemption price will be
     calculated on the basis of a 360-day year consisting of twelve 30-day
     months.

     Notice of any redemption will be mailed at least 30 days but not more than
     60 days before

                                       5

<PAGE>

the redemption date to each Holder of the Securities to be redeemed. Once notice
of redemption is mailed, the Securities called for redemption will become due
and payable on the redemption date and at the applicable redemption price, plus
accrued and unpaid interest to the redemption date.

"Treasury Rate" means, with respect to any redemption date, the rate per annum
equal to the semiannual equivalent yield to maturity of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.

"Comparable Treasury Issue" means the United States Treasury security selected
by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Securities.

"Comparable Treasury Price" means, with respect to any redemption date, (i) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, (ii) if the Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such quotations, or (iii) if only one
Reference Treasury Dealer Quotation is received, such Quotation.

"Reference Treasury Dealer" means (i) Banc of America Securities LLC or J.P.
Morgan Securities, Inc. (or their respective affiliates which are Primary
Treasury Dealers) and their respective successors; provided, however, that if
any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer; and (ii) any other Primary
Treasury Dealer(s) selected by the Trustee after consultation with the Company.

"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York
City time) on the third business day preceding such redemption date.

Unless the Company defaults in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the Securities or any portions
thereof called for redemption.

(c) The Securities will not be subject to any sinking fund.

                                        6

<PAGE>

     Section 4. Events of Default. If an Event of Default with respect to
Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.

     Section 5. Modifications and Waivers; Obligation of the Company Absolute.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of at least a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, places and rate, and in the coin or currency, herein
prescribed.

     Section 6. Authorized Denominations. The Securities are issuable in
registered form, without coupons, in denominations of $1,000 and any integral
multiple of $1,000 in excess thereof. As provided in the Indenture, and subject
to certain limitations therein set forth and to the limitations described below,
if applicable, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.

     Section 7. Registration of Transfer. As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registrable in the Security register upon surrender of this Security for
registration of transfer at the office or agency of the Company maintained for
that purpose in the City of Chicago, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
securities registrar (which shall initially be the Trustee, Bank One Trust
Company, N.A., One Bank One Plaza, Chicago, Illinois 60670-0126 (Attention:
Corporate Trust Department) or at such other address as it may designate as its
principal corporate trust office in the City of Chicago), duly executed by the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.

     This Security is exchangeable only if (x) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for this
Security or if at any time the Depository

                                       7

<PAGE>

ceases to be a clearing agency registered under the Securities Exchange Act of
1934, as amended, (y) the Company in its sole discretion determines that this
Security shall be exchangeable for certificated Securities in registered form or
(z) an Event of Default, or an event which with the passage of time or the
giving of notice would become an Event of Default, with respect to the
Securities represented hereby has occurred and is continuing, provided that the
definitive Securities so issued in exchange for this permanent Security shall be
in denominations of $1,000 and any integral multiple of $1,000 in excess thereof
and be of like aggregate principal amount and tenor as the portion of this
permanent Security to be exchanged, and provided further that, unless the
Company agrees otherwise, Securities of this series in certificated registered
form will be issued in exchange for this permanent Security, or any portion
hereof, only if such Securities in certificated registered form were requested
by written notice to the Trustee or the Securities Registrar by or on behalf of
a person who is beneficial owner of an interest hereof given through the Holder
hereof. Except as provided above, owners of beneficial interests in this
permanent Security will not be entitled to receive physical delivery of
Securities in certificated registered form and will not be considered the
Holders thereof for any purpose under the Indenture.

     No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     Section 8. Owners. Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security is overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.

     Section 9. No Recourse Against Certain Persons. No recourse for the payment
of the principal or interest on this Security, or for any claim based hereon or
otherwise in respect hereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in the Indenture or any Supplemental
Indenture thereto or in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation of either of them, either directly or
through the Company or any successor corporation of either of them, whether by
virtue of any constitution, statute or rule or law or by the enforcement of any
assessment or penalty or otherwise, all such liability being by the acceptance
hereof and as a condition of and as part of the consideration for the issue
hereof, expressly waived and released.

     Section 10. Defeasance. The Indenture with respect to any series will be
discharged and cancelled except for certain Sections thereof, subject to the
terms of the Indenture, upon payment of all of the Securities of such series or
upon the irrevocable deposit with the Trustee of cash or U.S. Government
Obligations (or a combination thereof) sufficient for such payment in accordance
with Article Ten of the Indenture.

                                       8

<PAGE>

     Section 11. Governing Law; Jurisdiction. The Indenture and the Securities
shall be governed by and construed in accordance with the laws of the State of
New York.

     Section 12. Notices. Notices to Holders shall be published in authorized
daily newspapers in The City of New York. Notice may be given by publication in
The City of New York in The Wall Street Journal. Any notice given pursuant to
these provisions shall be deemed to have been given on the date of publication
or, if published more than once, on the date first published.

     Section 13. Defined Terms. All terms used in this Security which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.

                                       9

<PAGE>

                                  ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

     TEN COM - as tenants in common

     TEN ENT - as tenants by the entireties

      JT TEN - as joint tenants with right of survivorship and not as tenants in
               common

     UNIF GIFT MIN ACT - ___________________________
                                 (Minor)

             Custodian   ___________________________
                                 (Cust)

     Under Uniform Gifts to Minors Act ____________________________
                                                  (State)

Additional abbreviations may also be used though not in the above list.

                                      10

<PAGE>

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE

----------------------------------------------------------- -------------------

----------------------------------------------------------- -------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

--------------------------------------

--------------------------------------

--------------------------------------

the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ______ _____________________________ attorney to transfer said
Security on the books of the Company, with full power of substitution in the
premises.

Dated:   __________________________

Signature: ____________________________

NOTICE:   THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
          WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY
          PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
          WHATEVER.

                                       11

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