
<PAGE>   1
                                                                 EXHIBIT 10.39



                              ASSUMPTION AGREEMENT

         THIS ASSUMPTION AGREEMENT (this "Agreement"), dated as of __________,
1994, between Beverly Enterprises, Inc., a Delaware corporation (the "Company")
and American Transitional Hospitals, Inc., a Delaware corporation ("ATH").

                              W I T N E S S E T H:

         WHEREAS, ATH Acquisition, Inc., previously a Delaware corporation and
wholly-owned subsidiary of the Company ("Acquisition") was merged with and into
ATH on the date hereof (the "Merger"), with ATH being the surviving corporation
and becoming a wholly-owned subsidiary of the Company pursuant to an Agreement
and Plan of Merger dated June 22, 1994 (the "Merger Agreement");

         WHEREAS, the Company agreed to assume the ATH 1993 Non Qualified Stock
Option Plan (the "Plan") attached hereto and any options (the "Options") that
had been granted by ATH thereto pursuant to the Merger Agreement following the
Merger;

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company hereby assumes all of the obligations of ATH pursuant to the Plan and
the Options, except that (i) the Plan shall be administered by the Company's
Compensation Committee; (ii) the Options shall be solely exercisable for common
stock of the Company; (iii) the number of shares issuable upon exercise of the
of the Options shall be modified in accordance with the Merger Agreement; (iv)
the exercise price for the Options shall be modified in accordance with the
Merger Agreement; and (v) stock option agreements reflecting items (i) through
(iv) herein will be delivered to holders of the Options on or after the date
hereof, with option agreements that were issued by ATH to holders of the
Options prior to consummation of the Merger Agreement, being canceled
concurrently herewith.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
exercised as of the date first above written.

                                        BEVERLY ENTERPRISES, INC., a Delaware
                                        corporation


                                        By:____________________________________
                                        Title:


                                        AMERICAN TRANSITIONAL HOSPITALS, INC.,
                                        a Delaware corporation


                                        By:____________________________________
                                        Title:
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                       AMERICAN TRANSITIONAL HOSPITALS
                     1993 NON QUALIFIED STOCK OPTION PLAN


     1.   The Purpose of the Plan. This Plan is intended to provide an
opportunity for Key Employees and directors performing services to the
Corporation and its Subsidiaries to acquire shares of the Corporation's Common
Stock, providing an equity interest in the Corporation and additional
compensation based on appreciation of the value of such stock. The Plan
provides for the grant of stock options that do not qualify as "incentive stock
options", as defined in Section 422A of the Code, (a) as an incentive to
service or continued service to the Corporation in order to aid the Corporation
in obtaining and retaining key personnel and directors of outstanding ability,
and (b) in substitution for stock options of entities which may be acquired by
the Corporation.

     2.   Definitions. For purposes of this Plan, the following terms will be
defined as indicated:

          (a)   "Board" means the Board of Directors of the Corporation.

          (b)   "Cause" means habitual drug use or drunkenness, embezzlement of
Corporation funds, conduct which is demonstrably injurious to the Corporation,
or conviction of a felony, all as determined in good faith by the Board or
Committee.

          (c)   "Code" means the Internal Revenue Code of 1986, as amended.

          (d)   "Committee" has the meaning prescribed in paragraph 4 hereof.

          (e)   "Common Stock" means the common stock of the Corporation, $.01
par value.

          (f)   "Corporation" means American Transitional Hospitals, a Delaware
corporation.

          (g)   "Disinterested" has the meaning prescribed by Rule 16b-3 from
time to time.

          (h)   "Fair Market Value" means the closing price of the Common
Stock, as reported by NASDAQ/NMS or by any national securities exchange upon
which the Common Stock is traded. In the event the Common Stock is not listed
on an exchange or traded in the over-the-counter market, then the Board or
Committee will determine Fair Market Value, which determination will be made in
good faith and will be binding.

          (i)   "Key Employee" means a full-time salaried employee who, in the
judgment of the Board of Committee, is instrumental to the success of the
Corporation or one of its Subsidiaries; including officers.
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          (j)   "NASDAQ/NMS" means the National Association of Securities
Dealers, Inc. Automated Quotation System, National Market System.

          (k)   "Option" means an option granted pursuant to the Plan.

          (l)   "Plan" means the Corporation's 1993 non qualified stock option
plan described herein.

          (m)   "Rule 16b-3" means Rule 16b-3 as promulgated under the
Securities Exchange Act of 1934, as amended, as the rule may be amended from
time to time, or any successor rule or other comparable regualtory
requirements.

          (n)   "Subsidiary" means any person or entity that is controlled by
the Corporation.

          (o)   "Substitute Option" means an Option granted in substitution for
options to purchase equity securities of an entity acquired by the Corporation.

     3.   Stock Subject to the Plan. There will be reserved for issuance upon
the exercise of Options 2,000,000 shares of Common Stock, which will be
authorized and unissued Common Stock. If an Option expires or terminates for
any reason without being exercised in full, the shares subject thereto which
have not been purchased will again be available for purposes of the Plan. The
number of shares as to which Options may be granted under the Plan will be
proportionately adjusted, to the nearest whole share, in the event of any stock
dividend, stock split, share combination or similar recapitalization involving
the Common Stock or any spin-off, spin-out or other significant distribution or
assets to stockholders for which the Corporation receives no consideration. In
the event that there is an insufficient number of authorized shares of Common
Stock available to allow exercise of the Options on the date of any grant
hereunder, such Options will not be exercisable until there are sufficient
shares of Common Stock authorized for issuance.

     4.   Administration of the Plan.

          (a)   Granting of Options in General. The Board may administer this
Plan itself or may appoint a Committee of the Board to administer the Plan. The
Committee will be constitued as to permit the Plan to comply with Rule 16b-3.
Subject to the provisions of the Plan, the Committee will have full authority
and discretion to determine the Key Employees and directors of the Corporation
and its Subsidiaries to whom Options will be granted, the number shares to be
subject to each Option, the Option prices, and the exercise period for the
Options. In making such determinations, the Committee may take into account the
nature of the services rendered or to be rendered by such individuals, their
past, present or potential contributions to the Corporation, and any other
factors which the Committee deems relevant. Subject to the provisions of the
Plan, the Committee will have full and conclusive authority to interpret the
Plan; to prescribe,
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amend and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the respective Option agreements (which need not be
identical); and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Board may at any time remove members
from or add members to the Committee, or may abolish the Committee and revest in
the Board the administration of the Plan. Vacancies on the Committee, howsoever
caused, will be filled by the Board.

          (b)   Granting of Options to Directors and Officers. Administrative
discretion regarding the selection of any director of the Corporation to whom
Options may be granted pursuant to this Plan, or the determination of the
number of shares of Common Stock which may be allocated under such Options,
will be exercised by a Committee of two or more directors having full authority
to act in the matter, all of whom are Disinterested. Administrative discretion
regarding the selection of any officer of the Corporation (who is not a
director) to whom Options may be granted pursuant to this Plan, or the
determination of the number of shares of Common Stock which may be allocated
under such Options, will be exercised by (i) the Board, if each of its members
is Disinterested, or (ii) a Committee of two or more directors, all of whom are
Disinterested.

     5.   Option Agreement. Each grant of an Option will be evidenced by an
Option agreement, executed by the holder of the Option and the Corporation, and
such other instruments in such form as the Board or Committee approves from
time to time, which instruments will (i) comply with and include expressly or
by reference the terms and conditions set forth in this Plan, and (ii) may
include such other provisions not inconsistent with the provisions of the Plan
as the Board or Committee deems advisable, including provisions granting the
holder the right to receive property at the time of exercise of the Option
(provided that Section 83 of the Code applies to any such property other than
cash). The terms and conditions of the Option agreements need not contain
similar provisions. The granting of any Option under the Plan will not be
deemed either to entitle the holder of the Option to, or to disqualify such
holder from, participation in any other grant of Options under the Plan.

     6.   Eligibility. Options may be granted to Key Employees and directors of
the Corporation and its present or future Subsidiaries, provided, however, that
Options granted to directors and officers of the Corporation will comply with
the provisions of paragraph 4(b) of the Plan. Substitute Options may be granted
to Key Employees and directors of any entity acquired by the Corporation (or
any subsidiary of such acquired entity).

     7.   Terms and Conditions of Options. Subject to the following provisions,
all Options will be in such form and upon such terms and conditions as the
Board or Committee, in its discretion, may from time to time determine.

          (a)   Option Price. Except in the case of Substitute Options, the
Option price per share will be an amount determined by the Committee or the
Board at the time the Option is granted, taking into account the market price
of the Common Stock on such
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date, the value of services provided or to be provided by the recipient of the
Options, and the overall value of the compensation of the recipient by the
Corporation and its Subsidiaries. The Option price pr share will in no event be
less than the Fair Market Value of the Common Stock on the trading day next
preceding the date the Option is granted. In the case of Substitute Options, the
Option price per share will be determined by multiplying the market price of
the Common Stock immediately prior to acquisition by the exchange ratio
applicable to the class of equity securities of the acquired entity subject to
the acquired entity's options immediately prior to acquisition, if any, or if
no such exchange ratio is applicable, by a factor determined by the Board. The
Corporation will not be required to issue Options or Substitute Options for
fractional shares, but may, in the discretion of the Board of Committee, round
to the nearest whole share.

          (b)   Option Term. No Option will be exercisable after the expiration
of ten (10) years from the date the Option is granted. The date of grant will
be the date on which the Board of Committee has approved the terms and
conditions of the Option agreement evidencing the Option, has determined the
recipient of the Option the number of shares covered by the Option and the
Option price per share, and has taken all other action necessary to complete
the grant of the Option. An Option may, but need not, be subject to vesting.

          (c)   Payment and Withholding. Payment for all shares purchased
pursuant to exercise of an Option will be made in cash, or by delivery of
unrestricted shares of Common Stock at Fair Market Value on the date of
exercise, or a combination thereof. The payment will be made at the time the
Option or any part thereof is exercised, and no shares will be issued until
full payment therefore has been made. Payment in currency or by check, bank
draft, cashier's check of postal money order will be considered payment in
cash. In addition to the Option price, the Corporation will have the right, if
applicable, to require the holder of an Option to remit to the Corporation an
amount sufficient to satisfy any federal, state or local withholding tax
liability prior to the delivery of any certificate or certificates for shares
issuable upon exercise of the Option.

          (d)   Conditions to Exercise of an Option. Except in the case of a
Substitute Option, no Option may be exercised to any extent until the holder
will have been employed by the Corporation or one of its Subsidiaries
continuously for at least three (3) months from the date of grant. Except as
provided in subparagraph (f) below, an Option may not be exercised by the
holder unless he is then, and continuously after the grant of the Option has
been, a director or Key Employee of the Corporation or one of its Subsidiaries.
No Option may be exercised by a holder with respect to fractional shares unless
approved by the Board or Committee.

          (e)   Non transferability of Options. An Option will not be
transferable or assignable except by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined by
the Code, Title I of the Employee Retirement Income Security Act or the rules
thereunder, and will be exercisable, during the holder's lifetime, only by him.

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          (f)   Termination of Employment or Death. In the event that a holder
ceases to serve as a director or be employed by the Corporation or any of its
Subsidiaries for any reason other than his death, disability or termination for
Cause and will no longer so serve or be employed by any of them, such holder
will have the right to exercise the Option under the Plan at any time within
three (3) months after his termination of service or employment to the extent
his right to exercise the Option has accrued pursuant to the grant and had not
previously been exercised at the date of termination. In the event of
termination of service or employment or the holder by reason of disability, the
holder may not exercise an Option later than twelve (12) months after the date
of such termination. If the holder of an Option dies while he is serving as a
director or employed by the Corporation or one of its Subsidiaries, his Option
may be exercised (to the extent that the holder will have been entitled to do
so at the date of his death) by a legatee or legatees of the holder under his
last will, or by his personal representatives or distributes, at any time
during the twelve-month period following his death. In all of the cases cited
above, the Corporation's Board of Directors or the Committee may, in its
discretion, extend the exercise period of the Option in question; provided,
however, that notwithstanding this subparagraph (f), no Option may be exercised
more than then (10) years after the date on which such Option was granted. For
purposes of this subparagraph (f), employment of a holder will not be deemed
terminated so long as the holder is employed by the Corporation, a Subsidiary
or another entity (or an affiliate of another entity) which has assumed this
Option in a transaction to which Section 425(a) of the Code is applicable. If a
holder is terminated as a director or employee for Cause, all Options held by
such holder will automatically cease as of the date of termination.

          (g)   Corporation's Purchase of Common Stock. If a holder's 
employment by the Corporation or any of its Subsidiaries terminates for Cause,
the Corporation, at its discretion, may elect to purchase from the holder or his
legal representative any or all Common Stock held by the holder as of the date
of termination for a price per share equal to the Fair Market Value of a share
of Common Stock at the time the Corporation exercises its option. The
Corporation's right to purchase the Common Stock will continue for a period of
one year from the date of the holder's termination. The payment for shares
acquired by the Corporation pursuant hereto will be made, in cash or by check,
at the address of the holder as set forth in the stock records of the
Corporation, or at such other location as the parties to the purchase may
mutually agree. Upon payment by the Corporation in compliance with the
provisions of this subparagraph (g), the holder or his legal representative
will deliver to the Corporation for cancellation the certificate(s) evidencing
the Common Stock purchased by the Corporation. The failure of the holder or his
legal representative to so deliver the certificate(s) will not impinge the
validity of the Corporation's purchase.

          (h)   Changes in Capitalization; Merger; Liquidation. The number of 
shares of Common Stock covered by each outstanding Option will be 
proportionately adjusted, to the nearest whole share (i) for any increase or 
decrease in the number of issued shares of Common Stock resulting from a 
subdivision or combination of shares or 









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the payment of a stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Corporation, or (ii) for any spin-off or spin-out of
assets to the Corporation's stockholders or any other significant distribution
of assets by the Corporation to its stockholders without receipt of
consideration by the Corporation. Any such adjustment to an outstanding Option
will be made without changing the total price applicable to the unexercised
portion of the Option, but with a corresponding adjustment in the price for
each share covered by the Option. If the Corporation is the surviving
corporation in any merger or consolidation, each outstanding Option will
pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled to
receive in such merger or consolidation. A dissolution or liquidation of the
Corporation or a merger or consolidation in which the Corporation is not the
surviving corporation will cause each outstanding Option to terminate, except
for Options as to which another entity assumes or substitutes another option
in a transaction to which Section 425(a) of the Code is applicable; provided,
however, that, as to any Options which so terminate, each holder will have the
right immediately prior to such dissolution, liquidation, merger or
consolidation, to exercise his Option in whole or in part without regard to any
provisions deferring exercise contained herein. To the extent that the
foregoing adjustments relate to stock or securities of the Corporation, whose
determination will be conclusive. Except at expressly provided in this
subgaragraph (h), the holder of an Option will have no rights by reason of any
subdivision or combination of shares of stock of any class, or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, or by reason of any spin-off, spin-out or comparable
distribution of assets to the Corporation's stockholders, or by reason of any
dissolution, liquidation, merger or consolidation or distribution to the
Corportation's stockholders, of assets or securities of another entitiy, and
any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, will not affect, and no
adjustment by reason thereof will be made with respect to, the number or price
of shares of Common Stock subject to the Option. The existence of the Plan and
the Options granted pursuant to the Plan will not affect in any way the right
or power of the Corporation to make or authorize any adjustment,
reclassification, reorganization or other change in its captial or business
structure, any merger or consolidation of the Corporation, any issue of debt or
equity securities having preferences or priorities as to the Common Stock or
the rights thereof, the dissolution or liquidation of the Corporation, any sale
or transfer of all or any part of the Corporation's business or assets, or any
other corporate act or proceeding.

          (i)   Each Option will be subject to the requirement that if at any
time the Board or Committee determines that the listing, registration or
qualification of the shares subject to the Options upon any securities exchange
or under any state or federal securities or other law or regulation, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to or in connection with the granting of the Option or
the issue or purchase of Common Stock thereunder, the Option may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval will have been effected or obtained free of
any conditions not
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acceptable to the Board or Committee. The holder of the Option will supply the
Corporation with such certificates, representations, opinions of counsel and
information as the Corporation may request, including, without limitation, an
investment letter certifying that all shares being purchased under an Option
are being acquired for investment and not for the purpose of resale or
distribution, and will otherwise cooperate with the Corporation in obtaining
such listing, registration, qualification, consent or approval.

     8.   Termination and Amendment of the Plan. The Plan shall terminate at
midnight on April 27, 2003, ten (10) years after the date of its initial
adoption by the Board. No Option will be granted under the Plan after that
date, but Options granted before termination of the Plan will remain
exercisable thereafter until they expire or lapse according to their terms. The
Plan may be terminated, modified or amended by the Corporation's stockholders
or Board, so long as such modification or amendment does not result in the Plan
no longer being in compliance with Rule 16b-3. The Corporation will use its
best efforts to maintain this Plan in accordance with Rule 16b-3, including,
without limitation, the seeking of any appropriate modifications or amendments
to this Plan and all requisite approvals and consents of the same.

     9.   Holding Period. The grant of an Option under the Plan will be exempt
from Section 16(b) of the Securities Exchange Act of 1934, as amended, so long
as at least six (6) months elapse from the date of grant of the Option until
the date of its disposition (other than upon exercise or conversion) or the
disposition of the underlying Common Stock.

     10.  No Rights as Stockholder. A holder of an Option will have no rights
as a stockholder with respect to any Common Stock covered by his Option until
the date of issuance of a stock certificate to him by the Corporation following
exercise, in whole or in part, of the Option.

     11.  Indemnification of Board or Committee. In addition to other rights of
indemnification as they may have as members of the Board, each member of the
Board or Committee will be indemnified by the Corporation against all costs and
expenses reasonably incurred by him in connection with any action, suit or
proceeding to which he may be party by reason of any action taken or failure to
act under or in connection with the Plan, or any Option granted thereunder, and
against all amounts paid by him in settlement thereof (provided the settlement
is approved by legal counsel selected by the Corporation) or paid by him in
satisfaction of a judgment in any such action, suit or proceeding, except a
judgment based upon a finding of a breach of the duty of loyalty or acts or
omissions either not in good faith or which involve intentional misconduct or a
knowing violation of law. Upon the institution of any such action, suit or
proceeding, each Board or Committee member affected will notify the Corporation
in writing of the same, giving the Corporation an opportunity, at its own
expense, to defend the same before the member undertakes to defend it on his
own behalf.






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     12.   Stockholder Approval. This Plan, as amended, is subject to the
approval of the holders of a majority of the outstanding shares of Common Stock
of the Corporation.

Date adopted by Board of Directors:  April 27, 1993

Date adopted by Stockholders:  July 30, 1993





