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EXHIBIT 4.1
BEVERLY ENTERPRISES, INC.
NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
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EXHIBIT A
BEVERLY ENTERPRISES, INC.
NON-EMPLOYEE DIRECTOR
DEFERRED
COMPENSATION PLAN
(Effective May 29, 1997)
* * * * *
SECTION 1. Purpose. The purpose of the Plan is for the Company to
provide Directors of the Company with an opportunity to receive awards
equivalent to Company Stock (referred to as "Deferred Share Units") and defer
receipt of compensation for services rendered to the Company in the form of
annual retainer and meeting fees. It is intended that the Plan shall aid the
Company in retaining and attracting Directors whose abilities, experience and
judgment can contribute to the continued progress of the Company.
SECTION 2. Definitions. (a) "Beneficiary" means the person or
persons (including legal entities) who have been designated in accordance with
Section 18 hereof to receive benefits under this Plan following a Director's
death.
(b) "Board" means the Board of Directors of the Company.
(c) "Company Matching Contribution" means the Deferred Share Units
credited to the Deferred Share Unit Account pursuant to Section 8(b).
(d) "Company" means Beverly Enterprises, Inc.
(e) "Compensation" means a Director's Meeting Fees and Retainer.
(f) "Date of Crediting" means, with respect to any compensation
deferred pursuant to the Plan, the first business day of the month following
the date when such compensation would otherwise be paid to a Director.
(g) "Deferred Compensation" means all or any part of any cash, or
other consideration to be paid to a Director by the Company as Director's fees
or retainers that are subject to an elective deferral under Section 7.
(h) "Deferral Account" means the bookkeeping account established
for a Director under the Plan and to which Deferred Compensation amounts,
Company Matching Contributions and annual grants of Deferred Share Units with
respect to such Director are credited from time to time, as adjusted from time
to time as provided in the Plan. The Deferral Account may be credited with
Deferred Share Units (a "Deferred Share Unit Account") as defined in Section 8
or may be credited with the Variable Interest Option (a "Deferred Cash
Account") as defined in Section 9.
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(i) "Deferred Compensation Election Form" means the form pursuant
to which Directors elect to become participants in the Plan and defer
Compensation thereunder, in such form as the Board determines from time to time
in its sole discretion.
(j) "Deferred Share Unit" means a bookkeeping entry having a unit
of value equal to one (1) share of Stock as set forth in Section 8 of the Plan.
(k) "Director" means any non-employee member of the Board of
Directors of the Company.
(1) "Disability" means the inability of a Director, as determined
by the Board in its sole discretion, substantially to perform such Director's
regular duties and responsibilities due to a medically determinable physical or
mental illness which has lasted (or can reasonably be expected to last) for a
period of three (3) consecutive months.
(m) "Fair Market Value" means the closing sales price of the Stock
for such day, or if no such sale is made on such day, the average of the
closing bid and asked prices of the Stock for such day, in each case as
officially reported on the New York Stock Exchange (or, if the Stock is not
then listed or admitted to trading on the New York Stock Exchange, the
principal national stock exchange or stock market on which the Stock is then
listed or admitted to trading.)
(n) "Meeting Fees" means Compensation paid by the Company to
Directors for attendance at Board and committee meetings as well as fees paid
for a telephonic Board or committee meeting.
(o) "Plan" means the Beverly Enterprises. Inc. Non-Employee
Director Deferred Compensation Plan, as set forth herein and as amended from
time to time.
(p) "Plan Year" means the calendar year.
(q) "Retainer" means the annual fixed payment awarded by the
Company to a Director for services on the Board.
(r) "Stock" means the common stock of the Company, par value $.10
per share.
(s) "Unforeseeable Emergency" means a severe financial hardship to
the Director resulting from a sudden and unexpected illness or accident of the
Director, loss of the Director's property due to casualty, or other similar
extraordinary unforeseeable circumstances arising as a result of events beyond
the control of the Director. The circumstances that will constitute an
"Unforeseeable Emergency" would depend on the facts of each case, but, in any
case, payment may not be made in the event that such hardship is or may be
relieved:
(1) through reimbursement or compensation by insurance or
otherwise, or
(2) by liquidation of the Director's assets, to the extent that
liquidation of such assets would not itself cause severe financial hardship.
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SECTION 3. Eligibility. Individuals eligible to participate in the
Plan shall be limited solely to the Directors of the Company.
SECTION 4. Administration. (a) The Plan shall be administered by
the Board. The Board has complete fiduciary discretion and authority to
construe and interpret the Plan; promulgate. amend and rescind rules and
regulations relating to the implementation, administration and maintenance of
the Plan; decide all questions of eligibility and benefits (including
underlying factual determinations); and adjudicate all claims and appeals. The
Board may designate persons other than members of the Board to carry out the
day-to-day ministerial administration of the Plan under such conditions and
limitations as it may prescribe; provided, however, the Board shall not
delegate its authority to the extent that actual Board action may be required
under Section 16 of the Securities Exchange Act of 1934 or other applicable
law. Any action by the Board in connection with the construction,
interpretation, administration, implementation or maintenance of the Plan shall
be final, conclusive and binding upon all Directors and any person(s) claiming
under or through any Directors.
(b) The Company will indemnify and hold harmless the Board and
each member thereof against any cost or expense (including, without limitation,
attorney's fees) or liability (including, without limitation, any sum paid in
settlement of a claim with the approval of the Company) arising out of any act
in connection with administration of the Plan, or omission to so act, except in
the case of willful gross misconduct or gross negligence.
SECTION 5. Annual Deferred Share Unit Grants. 500 Deferred Share
Units shall be credited by the Company to each Director as of May 29, 1997.
Beginning with the year 1998 and each year thereafter, each Director will
receive a grant of 500 Deferred Share Units, credited as of the last day of the
Stock's active trading in the month of January of the respective Plan Year. The
awards will be credited to the Director's Deferred Share Unit Account.
SECTION 6. Payment of Deferral Accounts. The balance in the Deferral
Accounts shall be paid to a Director, or, in the case of any Director's death
prior to retirement from the Board, the Director's designated Beneficiary(ies),
in stock (or, with Board approval, in cash) in either a) one (1) lump sum or,
b) over a period of two (2) to ten (10) years commencing as soon as it is
administratively feasible the month after the Director's retirement, death or
disability pursuant to the Director's advanced written election received at
least twenty four (24) months prior to said retirement, death or disability.
Such election of distribution method shall be made at the time of deferral and
may be changed at any time with Board approval prior to the Director's.
retirement, death or disability as long as it is made at least twenty four (24)
months prior to the Director's retirement, death or disability.
SECTION 7. Participation: Elective Deferrals. (a) To elect to
participate in the Plan for a particular Plan Year, a Director must execute a
Deferred Compensation Election Form and file such form with the Board (or its
designee) before the commencement of such Plan Year. To participate in the
Plan during the year in which the Plan is first implemented, the Director must
make an election to defer Compensation for services to be performed subsequent
to the election within 30 days after the effective date of the Plan. To
participate in the Plan during the first year in which a Director becomes
eligible to participate in the Plan, the new Director must make an
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election to defer Compensation for services to be performed subsequent to the
election within 30 days after the date the new Director becomes eligible. Such
election shall:
(i) contain a statement that the Director elects to defer
a portion of the Director's Compensation (up to 100% thereof, in
increments of 25%) for a specified Plan Year that becomes payable to
the Director after the filing of such election;
(ii) apply only to the Compensation otherwise payable to
the Director during the Plan Year for which such election is made; and
(iii) be irrevocable with respect to the Plan Year to which
it applies. The Director may elect to have the Deferred Compensation
credited to the Deferred Share Unit Account, the Deferred Cash Account
or any combination thereof. Any such investment election shall be
irrevocable for the Deferred Compensation or other contribution to
which it relates. Upon receipt of a Director's Deferred Compensation
Election Form, the Company shall establish as an accounting entry an
individual Deferral Account for such Director and such Director shall
become a participant under the Plan.
SECTION 8. Deferred Share Unit Account; Matching Contributions. (a)
"Deferred Share Unit" - Upon initial participation in the Plan, a "Deferred
Share Unit Account" shall be established in the Director's name. Deferred Share
Units and fractions thereof shall be credited to such Deferred Share Unit
Account in an amount determined by dividing the amount of Compensation to be
deferred into such account by the Fair Market Value on the Date of Crediting.
Upon the occurrence of any stock split, stock dividend, combination or
reclassification with respect to any outstanding series or class of stock, or
consolidation, merger or sale of all or substantially all of the assets of the
Company, the number of Deferred Share Units in each Deferred Share Unit Account
shall, to the extent deemed appropriate by the Board, be adjusted accordingly.
(b) "Company Matching Contributions" -- Upon a deferral of
Deferred Compensation into the Deferred Share Unit Account (but not the
Deferred Cash Account) and the associated crediting of Deferred Share Units,
the Company shall credit each such Deferred Share Unit Account, as of the same
Date of Crediting, with an additional number of Deferred Share Units equal to
25% of the number of Deferred Share Units credited by virtue of such Deferred
Compensation. Such additionally credited Deferred Share Units, and all dividend
equivalents associated therewith, are hereinafter referred to as "Company
Matching Deferrals". No Company Matching Contributions shall be made with
respect to the Annual Deferred Share Unit grant described in Section 5.
(c) "Dividend Equivalents" -- To the extent dividends on any
outstanding Stock are paid, dividend equivalents and fractions thereof shall be
calculated with respect to balances of such Deferred Share Units in any
Deferred Share Unit Account, converted to additional equivalents of such Stock
and credited to the appropriate Deferred Share Unit Account as of the dividend
payment dates. The number of Deferred Share Units to be credited as of each
such date shall be determined by dividing the amount of the dividend equivalent
by the Fair Market Value on the dividend payment date. The Director's Deferred
Share Unit Account shall continue to earn such dividend equivalents until fully
distributed.
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SECTION 9. Deferred Cash Account. (a) "Interest Equivalents" -- Upon
approval of a deferral under the variable interest option, a "Deferred Cash
Account" shall be established in the Director's name. The amount of
Compensation being deferred under this option will be credited to this account
as of the Date of Crediting. Interest equivalents on amounts deferred under
this option shall be calculated annually as of December 31 of each year. Such
equivalents shall be based on the prime rate, as established by a major New
York bank, in effect on the first business day of the year (and shall be
calculated, with respect to amounts credited prior to such year. for the entire
year, or with respect to amounts credited during such year, for the number of
days from the Date of Crediting). At distribution, interest equivalents shall
be similarly calculated on amounts in the Deferred Cash Account based on prime
rates from the preceding January 1, or, if later, the Date of Crediting,
through the date prior to the date of distribution, and added to the total to
be distributed. The crediting of interest equivalents to the Director's
Deferred Cash Account shall continue until the balance in such account is fully
distributed. Notwithstanding anything to the contrary in this Section 9(a),
all payments will be made in accordance with Section 6.
(b) "Time of Crediting" -- The interest equivalents calculated
each December 31 shall be credited to a Director's Deferred Cash Account as of
January 1 of the next year.
SECTION 10. Transfer of Liabilities of Retirement Plan for Directors.
Effective May 29, 1997, The Retirement Plan for Non-Employee Directors
("Retirement Plan") shall be terminated and Directors shall be credited with an
amount equal to the present value of retirement benefits accrued by them as of
that date under the Retirement Plan, with such present value to be determined
based on the assumptions that each Director will retire on his or her 70th
birthday or, if greater, at the age attained as of May 29, 1997. Amounts shall
be converted, as of May 29, 1997, into Deferred Share Units and credited on
that date to each Director's Deferred Share Unit Account. No Company Matching
Contributions shall be credited in connection with these amounts.
SECTION 11. Distribution in Cases of Hardship. The Board in its sole
discretion may make distributions to a Director from the balances in such
Director's Deferral Account upon a showing by such Director that an
Unforeseeable Emergency has occurred. Such distributions shall be limited to
the amount shown to be necessary to meet the Unforeseeable Emergency.
SECTION 12. Amendment. The Plan may be amended, modified or
terminated at any time, for any reason, without notice, by the Board except
that no such amendment, modification or termination shall have a material
adverse effect on the accrued balance of any Director's Deferral Account as of
the effective date of any such amendment, modification or termination (without
the consent of the Director (or, if the Director is deceased, his or her
beneficiary(ies))).
SECTION 13. Company's Obligations Unfunded. All benefits due a
Director or a Beneficiary under this Plan are unfunded and unsecured and are
payable solely out of the general funds of the Company. The Company, in its
sole and absolute discretion, may establish a "grantor trust" for the payment
of benefits and obligations hereunder, the assets of which shall be at all
times subject to the claims of creditors of the Company as provided for in such
trust, provided that such trust does not alter the characterization of the Plan
as an "unfunded plan" for purposes
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of the Internal Revenue Code. Such trust shall make distributions in
accordance with the terms of the Plan.
SECTION 14. Stock Subject to the Plan. Pursuant to the payment
option available under the Plan as specified in Section 6, the Company has the
right to reserve the appropriate number of shares as may be necessary to fund
distributions hereunder. The shares to be delivered under the Plan may consist
of authorized but unissued Stock or Stock reacquired by the Company, including
shares purchased in the open market.
SECTION 15. Restrictions on Alienation. No amount deferred or
credited to any account under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, levy
or charge. Any attempt to so anticipate, alienate, sell, transfer, assign,
pledge, encumber, levy or charge the same shall be void; nor shall any amount
be in any manner subject to any claims for the debts, contracts, liabilities,
engagements or torts of the Director (or the Director's beneficiary or personal
representative) entitled to such benefit. No Director shall be entitled to
borrow at any time any portion of the Director's account balances under the
Plan.
SECTION 16. Withholding. There shall be deducted from all payments
under the Plan the amount of any taxes required to be withheld by any Federal,
state or local taxing authority. The Directors, their beneficiaries and
personal representatives shall bear any and all Federal, foreign, state or
local income or any other tax imposed on amounts paid under the Plan.
SECTION 17. Directors Bound by Terms of the Plan. By electing to
become a Director, each Director shall be deemed conclusively to have accepted
and consented to all terms of the Plan and all actions or decisions made by the
Company with regard to the Plan. Such terms and consent shall also apply to
and be binding upon the beneficiaries, personal representatives and other
successors in interest of each Director. Each Director shall receive a copy of
the Plan.
SECTION 18. Designation of Beneficiary(ies). Each Director under the
Plan may designate a beneficiary or beneficiaries to receive any payment which
under the terms of the Plan becomes payable on, after or as a result of the
Director's death. At any time, and from time to time, any such designation may
be changed or canceled by the Director without the consent of any such
beneficiary. Any such designation, change or cancellation must be on a form
provided for that purpose by the Board and shall not be effective until
received by the Board. If no beneficiary has been designated by a deceased
Director, the beneficiary shall be the Director's estate. If the Director
designates more than one beneficiary, any payments under the Plan to such
beneficiaries shall be made in equal allocations unless the Director has
expressly designated otherwise, in which case the payments shall be made in the
allocations designated by the Director.
SECTION 19. Severability of Provisions. In the event any provision
of the Plan would serve to invalidate the Plan, that provision shall be deemed
to be null and void, and the Plan shall be construed as if it did not contain
the particular provision that would make it invalid. The Plan shall be binding
upon and inure to the benefit of (a) the Company and its respective successors
and assigns, and (b) each Director, his or her designees and estate. Nothing
in the Plan shall preclude the Company from consolidating or merging into or
with, or transferring all or
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substantially all of its assets to, another corporation, or engaging in any
other corporate transaction.
SECTION 20. Governing Laws and Interpretation. The Plan shall be
construed and enforced in accordance with, and the rights of the parties hereto
shall be governed by, the laws of the State of Delaware. This Plan shall not
be interpreted as either an employment or trust agreement.
SECTION 21. ARBITRATION. Except as otherwise provided in this Plan,
any controversy between the parties arising out of this Plan shall be submitted
to the American Arbitration Association under its Commercial Arbitration Rules
for binding arbitration. The arbitration shall be held in Fort Smith, Arkansas
or such other location where the Company may have its corporate headquarters,
using a single arbitrator. The costs of the arbitration, including any
American Arbitration Association administration fee, the arbitrator's fee, and
costs for the use of facilities during the hearings, shall be borne equally by
the parties to the arbitration. Each side shall bear its own attorney fees.
The arbitrator shall not have any power to alter, amend, modify or change any
of the terms of this Plan nor to grant punitive, special, extracontractual or
consequential damages or any other remedy which is either prohibited by the
terms of this Plan, or not available in a court of law. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
SECTION 22. Effective Date of the Plan. The Plan shall be effective
as of May 29, 1997 upon its adoption by the Company and approval by the
stockholders of the Company.
IN WITNESS WHEREOF, the Plan is hereby adopted by the Company on this
____ day of _________________, 1997
BEVERLY ENTERPRISES, INC.
By:
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Title:
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