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                                                                     EXHIBIT 4.1

                          BEVERLY ENTERPRISES, INC.
                   NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
                        (EFFECTIVE AS OF JUNE 1, 1994)

                                   ARTICLE I.

                           ESTABLISHMENT AND PURPOSE

         1.1.    Establishment of the Plan. Beverly Enterprises, Inc., a
Delaware corporation ("Company") hereby establishes a stock option plan as set
forth in this document, which plan as amended from time to time shall be known
as the "Beverly Enterprises, Inc.  Nonemployee Directors' Stock Option Plan"
("Plan").

         1.2     Purpose. The purpose of the Plan is to build a proprietary
interest among the Company's Nonemployee Directors and thereby secure for the
Company's shareholders the benefits associated with common stock ownership by
those who will oversee the Company's future growth and success.

         1.3     Applicability of the Plan. The provisions of this Plan are
applicable only to individuals who, on or after June 1, 1994, are Nonemployee
Directors.

         1.4     Effective Date. This Plan shall be effective as of June 1,
1994, subject to the approval of this Plan by the Board of Directors and the
Company's shareholders, as provided in this Section 1.4. To become effective,
this Plan must be approved by the Board of Directors and by the affirmative
vote of the holders of a majority of shares of Common Stock present, or
represented, and entitled to vote at a meeting of the Company's stockholders
called for such purpose. Absent such approvals prior to January 1, 1995, this
Plan shall terminate and cease to be of any further force or effect and all
grants of Options hereunder shall be null and void.

                                  ARTICLE II.

                          DEFINITIONS AND CONSTRUCTION

         2.1     Definitions. Whenever used as a capitalized term in the Plan,
the following terms shall have the respective meanings set forth below, unless
otherwise expressly provided:

                 (a)      "Affiliate" means "affiliate" as defined in Rule
         12b-2 under the Exchange Act.

                 (b)      "Beneficial Owner" shall have the meaning ascribed to
         such term in Rule 13d-3 under the Exchange Act.

                 (c)      "Board" or "Board of Directors" means the Board of
         Directors of the Company.

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

                          (1)     Any Person, corporation or other entity or
                 group 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 members of the Board; or

                          (2)     As the result of, or in connection with, any
                 tender or exchange offer, merger or other business
                 combination, sale of assets or contested election, or any
                 combination of the foregoing (a "Transaction"), the persons
                 who were members of the Board 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

                          (3)     If at any time (A) the Company shall
                 consolidate with, or merge with, any other Person and the
                 Company shall not be the continuing or surviving corporation,
                 (B) any Person shall consolidate with, or merge with, the
                 Company, and the Company shall be the continuing or surviving
                 corporation and in connection therewith, all or part of the
                 outstanding Common Stock shall be changed into or exchanged
                 for stock or other securities of any other Person or cash or
                 any other





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                 property, (C) the Company shall be a party to a statutory
                 share exchange with any other Person after which the Company
                 is a Subsidiary of any other Person, or (D) the Company shall
                 sell or otherwise transfer 50 percent or more of the assets or
                 earning power of the Company and its Subsidiaries (taken as a
                 whole) to any Person or Persons.

                 (e)      "Code" means the Internal Revenue Code of 1986, as
         amended, and the regulations issued thereunder, as the same may be
         amended from time to time.

                 (f)      "Common Stock" means the common stock of the Company.

                 (g)      "Company" means Beverly Enterprises, Inc., or any
         successor thereto.

                 (h)      "Effective Date" means June 1, 1994, subject to the
         approvals as described in Section 1.4.

                 (i)      "Exchange Act" means the Securities Exchange Act of
         1934, as amended from time to time.

                 (j)      "Fair Market Value" means, on any given date, the
         closing price of Common Stock as reported on the New York Stock
         Exchange composite tape on such day or, if no shares of Common Stock
         were traded on the New York StoCk Exchange on such day, then on the
         next preceding day that Common Stock was traded on such Exchange, all
         as reported by such source as the Board may select.

                 (k)      "Grant Date" means June 1 of each calendar year
         during the period this Plan remains in effect. The first "Grant Date"
         under the Plan is June 1, 1994.

                 (l)      "Nonemployee Director" means an individual who is a
         member of the Board and who is not an employee of the Company or any
         Subsidiary or Affiliate thereof.

                 (m)      "Option" means an option granted under this Plan to
         purchase a share or shares of Common Stock.

                 (n)      "Participant" means a Nonemployee Director to whom an
         Option has been granted under this Plan.

                 (o)      "Person" means "person" as defined in Section 3(a)
         (9) of the Exchange Act and as used in Sections 13(d) and 14(d)
         thereof, including a "group" as defined in Section 13(d)(3) of the
         Exchange Act.

                 (p)      "Plan" means the "Beverly Enterprises, Inc.
         Nonemployee Directors' Stock Option Plan" as set forth in this
         document, and as the same may be amended from time to time.

                 (q)      "Subsidiary" means a corporation at least 50 percent
         of the combined voting power of all classes of stock of which is owned
         by the Company, either directly or through one or more of its
         Subsidiaries.

                 (r)      "Vesting Date" means, with respect to any Options
         granted as of a particular Grant Date, the next June 1 following such
         Grant Date. The first Vesting Date under the Plan is June 1, 1995.

         2.2     Gender and Number; Headings. Except when otherwise indicated
by the context, any masculine terminology when used in this Plan shall also
include the feminine gender, and the definition of any term in the singular
shall also include the plural.  Headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.

                                  ARTICLE III.

                         ELIGIBILITY AND PARTICIPATION

         3.1     Eligibility; Participation. Each Nonemployee Director shall be
eligible to participate under this Plan and to receive a grant of an Option in
accordance with the provisions of this Plan.

         3.2     Initial Grant of Stock Options. Each Nonemployee Director as
of the Effective Date shall automatically be granted an Option to purchase
2,500 shares of Common Stock, effective as of the Effective





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Date. Each individual who first becomes a Nonemployee Director after the
Effective Date shall automatically be granted an Option to purchase 2,500
shares of Common Stock, effective as of the Grant Date which is coincident with
or next following the date on which such individual becomes a Nonemployee
Director. All Options granted under this Section 3.2 shall be subject to the
Common Stock availability provisions of Section 4.1.

         3.3     Subsequent Grants of Stock Options. Each Nonemployee Director
who has received an initial grant of an Option, as described in Section 3.2,
shall automatically be granted an Option to purchase an additional 2,500 shares
of Common Stock as of each Grant Date subsequent to the initial Grant Date
applicable to such Nonemployee Director and during the term of this Plan, with
each such subsequent grant being effective as of the applicable Grant Date. To
be eligible to receive such an Option grant with respect to any such Grant
Date, the Nonemployee Director must be a Nonemployee Director on such Grant
Date. All Options granted under this Section 3.3 shall be subject to the Common
Stock availability provisions of Section 4.1.

                                  ARTICLE IV.

                             COMMON STOCK AVAILABLE

         4.1     In General. Subject to adjustment as provided in Section 4.2,
an aggregate of 200,000 shares of Common Stock shall be available for grant and
issuance pursuant to the provisions of this Plan. Such shares may be authorized
and unissued shares or may be shares issued and thereafter acquired by the
Company. If an Option shall expire or terminate for any reason without having
been exercised in whole or in part, the unpurchased shares of Common Stock
subject to such Option shall again be available for subsequent Option grants
under the Plan.

         4.2     Adjustment in Event of Changes in Capitalization. In the event
of a stock dividend, stock split, or combination of shares, recapitalization or
other change in the Company's capitalization, or other distribution with
respect to holders of the Company's Common Stock other than normal cash
dividends, an automatic adjustment shall be made in the number and kind of
shares as to which outstanding Options or portions thereof then unexercised
shall be exercisable and in the available shares set forth in Section 4.1, to
the end that the proportionate interest of the Participant or eligible
Nonemployee Director shall be maintained as before the occurrence of such
event. Such adjustment in outstanding Options shall be made without change in
the total price applicable to the unexercised portion of such Options and with
a corresponding adjustment in the Option price per share. Automatic adjustment
shall also be made in the number and kind of shares subject to Options
subsequently granted under Article III of the Plan.

                                   ARTICLE V.

                     TERMS AND CONDITIONS OF STOCK OPTIONS

         5.1     Exercise of Stock Options.

                 (a)      Option Exercisability. Each Option granted as of a
         particular Grant Date shall be exercisable on or after the Vesting
         Date with respect to such Grant Date, subject to the provisions of
         Section 5.1 (b) and (c).

                 (b)      Immediate Vesting For Death, Disability, and Change
         of Control. Notwithstanding the provisions of Section 5.1(a), an
         Option granted to any Participant shall become immediately exercisable
         in full upon the first to occur of --

                          (1)     The death of the Participant, in which case
                 the Option may be exercised by the Participant's executor or
                 administrator, or if not so exercised, by the legatees or
                 distributees of his or her estate or by such other person or
                 persons to whom the Participant's rights under the Option
                 shall pass by will or by the applicable laws of descent and
                 distribution;

                          (2)     Such time as the Participant ceases to be a
                 member of the Board by reason of his or her disability and





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                          (3)     Change in Control.

                 (c)      Holding Periods. Any Option may not be exercised for
         at least six months after the grant thereof. Should this Section
         5.1(c) require modification or be unnecessary to comply with the
         requirements of Section 16 of and Rule 16b-3 under the Exchange Act,
         the Board may waive such provision and/or amend this Plan to add to or
         modify the provisions hereof accordingly.

                 (d)      Termination Other Than Death or Disability. In the
         event the Participant ceases to be a Nonemployee Director of the
         Company for any reason other than death or disability when no Change
         of Control has occurred, and such termination occurs prior to the time
         an Option granted to such Participant has become exercisable, such
         Option shall terminate with respect to the shares as to which the
         Option is not then exercisable and all rights of the Participant to
         such shares shall terminate without further obligation on the part of
         the Company. As regards any Option which is exercisable by the
         Participant at such time, such Participant must exercise such Option
         within 90 days following the date the Participant so ceased to be a
         Nonemployee Director, and, any such Option remaining unexercised as of
         the close of such period shall expire.

         5.2     Exercise Price. The exercise price of an Option for a share of
Common Stock shall be 100 percent of the Fair Market Value of such Common Stock
on the Grant Date relating to such Option.

         5.3     Expiration of Options.

                 (a)      In General. An Option shall expire ten years from the
         Grant Date relating to such Option, unless terminated earlier in
         accordance with the Plan.

                 (b)      Death of Participant. In the event a Participant
         ceases to be a Nonemployee Director of the Company by reason of death,
         including without limitation in the event that a Participant dies
         after ceasing to be a member of the Board by reason of disability, any
         Option granted to such Participant hereunder that has not been fully
         exercised at the time of the Participant's death may be exercised at
         any time within the greater of

                          (1)     one year after the date of death, or --

                          (2)     the remainder of the period in which such
                 Participant could have exercised the Option had the
                 Participant not died. In the event any Option is exercised by
                 the executors, administrators, legatees, or distributees of
                 the estate of a deceased Participant, the Company shall be
                 under no obligation to issue Common Stock thereunder unless
                 and until the Company is satisfied that the person or persons
                 exercising the Option are the duly appointed legal
                 representatives of the deceased optionee's estate or the
                 proper legatees or distributees thereof.

         5.4     Exercise and Payment of Exercise Price.

                 (a)      Number of Shares. Subject to the terms and conditions
         of the Plan, an Option shall, to the extent then exercisable, be
         exercisable in whole or in part by giving written notice to the
         Company stating the number of shares with respect to which the Option
         is being exercised, accompanied by payment in full for such shares;
         provided, however, that there shall be no such exercise at any one
         time as to fewer than 100 shares or all of the remaining shares then
         purchasable by the person or persons exercising the Option, if fewer
         than 100 shares.

                 (b)      Payment Methods. An Option may be paid for by --

                          (1)     delivery of cash or a check payable to the
                 order of the Company in an amount equal to the exercise price
                 of such Option, or

                          (2)     by delivery to the Company of shares of
                 Common Stock of the Company already owned by the Participant
                 for more than six months and having a Fair Market Value equal
                 in amount to the exercise price of the Option being exercised,
                 provided that such method is consistent with applicable tax
                 laws, or

                          (3)     by any combination of such methods of payment.





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         5.5     Rights as a Shareholder. Except as specifically provided by
the Plan, the grant of an Option shall not give a Participant rights as a
shareholder; and the Participant will obtain such rights only upon actual
receipt of Common Stock.

         5.6     Documentation of Option Grants. Option grants shall be
evidenced by written instruments prescribed by the Board from time to time. The
instruments may be in the form of agreements to be executed by both the
Participant and the Company or certificates, letters or similar instruments,
which need not be executed by the Participant, but acceptance of which will
evidence agreement to the terms of the grant.

         5.7     Nontransferability of Options. No Option granted under the
Plan shall be assignable or transferable by the Participant to whom it is
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution or pursuant to a "qualified domestic relations
order" as defined under Section 414(p) of the Code. Any such attempted
assignment or transfer in violation of this Section 5.7 shall be null and void.
During the life of the Participant, the Option shall be exercisable only by
such person or, in the event of incapacity, by the person or person properly
appointed to act on his or her behalf.

                                  ARTICLE VI.

                             REGULATORY COMPLIANCE

         6.1     Issuance or Delivery of Shares. The issuance or delivery of
any shares of Common Stock subject to exercisable Options may be postponed by
the Board for such period as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable listing
requirements of any national securities exchange, or any requirements under any
law or regulation applicable to the issuance or delivery of such shares. The
Company shall not be obligated to issue or deliver any such shares if the
issuance or delivery thereof would constitute a violation of any provision of
any law or of any regulation of any governmental authority or any national
securities exchange.

         6.2     Amendments for Compliance. Sections 2.1(l), 2.1(n), 3.1, 3.2
and 3.3 shall not be amended more than once every six months, other than to
comport with changes in the Code or other applicable Federal or state law.
Should any provision of this Section 6.2 require modification or be unnecessary
to comply with the requirements of Section 16 of and Rule 16b-3 under the
Exchange Act, the Board may waive such provision and/or amend this Plan to add
to or modify the provision hereof accordingly.

                                  ARTICLE VII.

                                 ADMINISTRATION

         7.1     Plan Administration. The Plan shall be administered by the
Board. The Board shall have all the powers vested in it by the terms of the
Plan, such powers to include authority within the limitations described herein
to prescribe the form of the agreement embodying grants of Options. The Board
shall have the power to construe the Plan, to determine all questions arising
thereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. Any decision of the Board
in the administration of the Plan, as described herein, shall be final and
conclusive. The Board may from time to time delegate certain of its
administrative responsibilities under the Plan to Company personnel or to a
committee. The Board may act only by a majority of its members in office,
except that the members thereof may authorize any one or more of their number
or any officer of the Company to execute and deliver documents on behalf of the
Board. No member of the Board shall be liable for anything done or omitted to
be done other than by such member's own willful misconduct or as expressly
provided by statute.

         7.2     Indemnification and Exculpation. The members of the Board, its
agents, and officers and employees of the Company shall be indemnified and held
harmless by the Company against and from any and all loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by them in connection
with or resulting from any claim, action, suit, or proceeding to which they may
be a party or in which they may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
them in settlement (with the Company's written approval) or paid by them in
satisfaction of





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a judgment in any such action, suit, or proceeding. The foregoing provision
shall not be applicable to any person if the loss, cost, liability, or expense
is due to such person's gross negligence or willful misconduct.

                                 ARTICLE VIII.

                           AMENDMENT AND TERMINATION

         8.1     Amendment. Except as provided in Section 6.2, the Board shall
have the right to amend or modify the Plan in full or in part at any time and
from time to time; provided, however, that unless required by law, no such
amendment or modification shall --

                 (a)      affect any right or obligation with respect to any
         Option grant theretofore made,

                 (b)      in any manner affect the restrictions set forth in
         Section 6.2, or

                 (c)      unless previously approved by the shareholders of the
         Company, where such approval is necessary to satisfy then applicable
         requirements of Federal securities laws, the Code, or rules of any
         stock exchange on which the Company's Common Stock is listed --

                          (1)     in any manner materially affect the
                 eligibility requirements set forth in Sections 3.1, 3.2 and
                 3.3,

                          (2)     materially increase the number of shares of
                 Common Stock available for or subject to Options, or

                          (3)     materially increase the benefits to
                 Participants under the Plan.

         8.2     Termination.

                 (a)      In General. The Board shall have the right to
         terminate the Plan at any time; provided, however, that Options which
         are granted on or before the termination date shall remain exercisable
         in accordance with their respective terms after the termination of the
         Plan.

                 (b)      Termination Date. Unless terminated earlier by the
         Board, the Plan shall terminate on May 31, 2004; provided, however,
         that Options which are granted on or before such date shall remain
         exercisable in accordance with their respective terms after the
         termination of the Plan.

                                  ARTICLE IX.

                                 MISCELLANEOUS

         9.1     Shareholder Approval. The effectiveness of the Plan and of the
grant of all Options under the Plan are subject to shareholder approval as
provided in Section 1.4. The Company's obligation to issue and deliver shares
of Common Stock under the Plan is subject to the approval of any governmental
authority required in connection with the authorization, issuance, or delivery
of Common Stock.

         9.2     No Right to Reelection. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any Nonemployee
Director for reelection by the Company's shareholders, nor confer upon any
Nonemployee Director the right to remain a member of the Board for any period
of time, or at any particular rate of compensation.

         9.3     Withholding. It shall be a condition to the obligation of the
Company to issue shares of Common Stock upon exercise of an Option, that the
optionee (or any beneficiary or person entitled to act under Section 5.1(b))
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold Federal, state,
local, or foreign income or other taxes. Such amount may be paid by the
Participant by cash or check or by authorizing the Company to withhold shares
of Common Stock with a Fair Market Value equal to such Participant's
withholding obligation. If the amount requested is not paid, the Company may
refuse to issue shares of Common Stock.





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         9.4     Severability. In the event any provision of this Plan shall be
held invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of this Plan, but this Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and
the Company shall have the privilege and opportunity to correct and remedy such
questions of illegality or invalidity by amendment as provided in this Plan.

         9.5     Status Under ERISA. This Plan is not maintained as and is not
intended to be an "employee benefit plan" under the Employee Retirement Income
Security Act of 1974, as amended.

         9.6     Applicable Law. The Plan shall be governed by, construed, and
administered in accordance with the laws of the State of Arkansas, except to
the extent such laws are preempted by the laws of the United States.





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