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                                                                   EXHIBIT 10.25

                         SKILLED HEALTHCARE GROUP, INC.

                           2004 EQUITY INCENTIVE PLAN
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                                TABLE OF CONTENTS

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1.   PURPOSES OF THE PLAN................................................      1
2.   DEFINITIONS.........................................................      1
3.   STOCK SUBJECT TO THE PLAN...........................................      4
4.   ADMINISTRATION OF THE PLAN..........................................      4
5.   ELIGIBILITY.........................................................      6
6.   LIMITATIONS.........................................................      6
7.   TERM OF PLAN........................................................      7
8.   TERM OF OPTION......................................................      7
9.   OPTION EXERCISE PRICE AND CONSIDERATION.............................      7
10.  EXERCISE OF OPTION..................................................      8
11.  NON-TRANSFERABILITY OF OPTIONS AND RESTRICTED STOCK.................     11
12.  RESTRICTED STOCK....................................................     11
13.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR
       ASSET SALE........................................................     11
14.  TIME OF GRANTING OPTIONS............................................     13
15.  AMENDMENT AND TERMINATION OF THE PLAN...............................     14
16.  STOCKHOLDER APPROVAL................................................     14
17.  INABILITY TO OBTAIN AUTHORITY.......................................     14
18.  RESERVATION OF SHARES...............................................     14
19.  INFORMATION TO HOLDERS AND PURCHASERS...............................     14
20.  REPURCHASE PROVISIONS...............................................     15
21.  INVESTMENT INTENT...................................................     15
22.  GOVERNING LAW.......................................................     16
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                         SKILLED HEALTHCARE GROUP, INC.

                           2004 EQUITY INCENTIVE PLAN

      1. Purposes of the Plan. The purposes of the Skilled Healthcare Group,
Inc. 2004 Equity Incentive Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees, Consultants and Directors, and to promote the success of
the Company's business. Options granted under the Plan may be Incentive Stock
Options or Non-Qualified Stock Options, as determined by the Administrator at
the time of grant. Restricted Stock may also be granted under the Plan.

      2. Definitions. As used herein, the following definitions shall apply:

            (a) "Acquisition" means (1) a dissolution, liquidation or sale of
all or substantially all of the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation; or (3) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise.

            (b) "Administrator" means the Board or the Committee responsible for
conducting the general administration of the Plan, as applicable, in accordance
with Section 4 hereof.

            (c) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Restricted Stock are
granted under the Plan.

            (d) "Board" means the Board of Directors of the Company, as
constituted from time to time.

            (e) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute or statutes thereto. Reference to any particular Code
section shall include any successor section.

            (f) "Committee" means a committee appointed by the Board in
accordance with Section 4 hereof.

            (g) "Common Stock" means the Class A Common Stock of the Company,
par value $0.01 per share.

            (h) "Company" means Skilled Healthcare Group, Inc., a Delaware
corporation.

            (i) "Consultant" means any consultant or adviser if: (i) the
consultant or adviser renders bona fide services to the Company or any Parent or
Subsidiary of the Company;
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(ii) the services rendered by the consultant or adviser are not in connection
with the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company's
securities; and (iii) the consultant or adviser is a natural person who has
contracted directly with the Company or any Parent or Subsidiary of the Company
to render such services.

            (j) "Director" means a member of the Board.

            (k) "Employee" means any person, including an Officer or Director,
who is an employee (as defined in accordance with Section 3401(c) of the Code)
of the Company or any Parent or Subsidiary of the Company. A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient, by itself, to constitute "employment" by the Company.

            (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto. Reference to any
particular Exchange Act section shall include any successor section.

             (m) "Fair Market Value" means, as of any date, the value of a share
of Common Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for a share of such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system
on the date of such determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

                  (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for a share of the
Common Stock on the last market trading day on the day of determination; or

                  (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

            (n) "Holder" means a person who has been granted or awarded an
Option or Restricted Stock or who holds Shares acquired pursuant to the exercise
of an Option.

            (o) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and
which is designated as an Incentive Stock Option by the Administrator.


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            (p) "Independent Director" means a Director who is not an Employee
of the Company.

            (q) "Non-Qualified Stock Option" means an Option (or portion
thereof) that is not designated as an Incentive Stock Option by the
Administrator, or which is designated as an Incentive Stock Option by the
Administrator but fails to qualify as an incentive stock option within the
meaning of Section 422 of the Code.

            (r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

            (s) "Option" means a stock option granted pursuant to the Plan.

            (t) "Option Agreement" means a written agreement between the Company
and a Holder evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.

            (u) "Parent" means any corporation, whether now or hereafter
existing (other than the Company), in an unbroken chain of corporations ending
with the Company if each of the corporations other than the last corporation in
the unbroken chain owns stock possessing more than fifty percent of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

            (v) "Plan" means the Skilled Healthcare Group, Inc. 2004 Equity
Incentive Plan, as amended and restated from time to time.

            (w) "Public Trading Date" means the first date upon which Common
Stock of the Company is listed (or approved for listing) upon notice of issuance
on any securities exchange or designated (or approved for designation) upon
notice of issuance as a national market security on an interdealer quotation
system.

            (x) "Restricted Stock" means Shares acquired pursuant to the
exercise of an unvested Option in accordance with Section 10(g) below or awarded
pursuant to Section 12 below.

            (y) "Rule 16b-3" means that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended from time to time.

            (z) "Securities Act" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto. Reference to any particular
Securities Act section shall include any successor section.

            (aa) "Service Provider" means an Employee, Consultant or Director.

            (bb) "Share" means a share of Common Stock, as adjusted in
accordance with Section 13 below.


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            (cc) "Subsidiary" means any corporation, whether now or hereafter
existing (other than the Company), in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing more than fifty percent
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

      3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the shares of stock subject to Options or Restricted Stock shall be
Class A Common Stock, initially shares of the Company's Class A Common Stock,
par value $0.01 per share. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares which may be issued upon exercise of
Options and awarded as Restricted Stock is 20,000 Shares. Shares issued upon
exercise of Options or awarded as Restricted Stock may be authorized but
unissued, or reacquired Common Stock. If an Option expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares
which were subject thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated). Shares which are delivered by the
Holder or withheld by the Company upon the exercise of an Option under the Plan,
in payment of the exercise price thereof or tax withholding thereon, may again
be optioned, granted or awarded hereunder, subject to the limitations of this
Section 3. If shares of Restricted Stock are repurchased by the Company at their
original purchase price, such Shares shall become available for future grant
under the Plan. Notwithstanding the provisions of this Section 3, no Shares may
again be optioned, granted or awarded if such action would cause an Incentive
Stock Option to fail to qualify as an Incentive Stock Option under Section 422
of the Code.

      4. Administration of the Plan.

            (a) Administrator. Unless and until the Board delegates
administration to a Committee as set forth below, the Plan shall be administered
by the Board. The Board may delegate administration of the Plan to a Committee
or Committees of one or more members of the Board, and the term "Committee"
shall apply to any person or persons to whom such authority has been delegated.
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. Notwithstanding the
foregoing, however, from and after the Public Trading Date, with respect to
participation by individuals other than Directors, a Committee of the Board
shall administer the Plan and the Committee shall consist solely of two or more
Independent Directors each of whom is both an "outside director," within the
meaning of Section 162(m) of the Code, and a "non-employee director" within the
meaning of Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Independent Directors the authority to grant awards under the Plan
to eligible persons who are either (1) not then "covered employees," within the
meaning of Section 162(m) of the Code and are not expected to be "covered
employees" at the time of recognition of income resulting from such award or (2)
not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (ii) delegate to a committee of one or more members of
the Board who are not "non-employee directors," within the meaning of Rule
16b-3, the authority to grant


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awards under the Plan to eligible persons who are not then subject to Section 16
of the Exchange Act. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan. Appointment of Committee members
shall be effective upon acceptance of appointment. Committee members may resign
at any time by delivering written notice to the Board. Vacancies in the
Committee may only be filled by the Board.

            (b) Powers of the Administrator. Subject to the provisions of the
Plan and the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, the Administrator shall
have the authority in its sole discretion:

                  (i) to determine the Fair Market Value;

                  (ii) to select the Service Providers to whom Options and
Restricted Stock may from time to time be granted hereunder;

                  (iii) to determine the number of Shares to be covered by each
such award granted hereunder;

                  (iv) to approve forms of agreement for use under the Plan;

                  (v) to determine the terms and conditions of any Option or
Restricted Stock granted hereunder (such terms and conditions include, but are
not limited to, the exercise price, the time or times when Options or Restricted
Stock may vest or be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or Restricted Stock or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine);

                  (vi) to determine whether to offer to buyout a previously
granted Option as provided in subsection 10(h) and to determine the terms and
conditions of such offer and buyout (including whether payment is to be made in
cash or Shares);

                  (vii) to allow Holders to satisfy withholding tax obligations
by having the Company withhold from the Shares to be issued upon exercise of an
Option that number of Shares having a Fair Market Value equal to the minimum
amount required to be withheld based on the statutory withholding rates for
federal and state tax purposes that apply to supplemental taxable income. The
Fair Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined;

                  (viii) to amend the Plan or any Option or Restricted Stock
granted under the Plan as provided in Section 15; and

                  (ix) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan and to exercise such powers and perform such
acts as the Administrator deems necessary or desirable to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.


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            (c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Holders.

      5. Eligibility. Non-Qualified Stock Options and Restricted Stock may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Restricted Stock may be granted additional Options or Restricted
Stock.

      6. Limitations.

            (a) Each Option shall be designated by the Administrator as either
an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of Shares subject to a Holder's Incentive Stock Options and other
incentive stock options granted by the Company, any Parent or Subsidiary, which
become exercisable for the first time during any calendar year (under all plans
of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options or other options shall be treated as Non-Qualified Stock Options.

            For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.

            (b) Neither the Plan, any Option nor any Restricted Stock awarded
hereunder shall confer upon a Holder any right with respect to continuing the
Holder's employment or consulting relationship with the Company, nor shall they
interfere in any way with the Holder's right or the Company's right to terminate
such employment or consulting relationship at any time, with or without cause.

            (c) No Service Provider shall be granted, in any calendar year,
Options to purchase more than and/or awarded Restricted Stock in amount greater
than, 20,000 Shares in the aggregate; provided, however, that the foregoing
limitation shall not apply prior to the Public Trading Date and, following the
Public Trading Date, the foregoing limitation shall not apply until the earliest
of: (i) the first material modification of the Plan (including any increase in
the number of shares reserved for issuance under the Plan in accordance with
Section 3); (ii) the issuance of all of the shares of Common Stock reserved for
issuance under the Plan; (iii) the expiration of the Plan; (iv) the first
meeting of stockholders at which Directors of the Company are to be elected that
occurs after the close of the third calendar year following the calendar year in
which occurred the first registration of an equity security of the Company under
Section 12 of the Exchange Act; or (v) such other date required by Section
162(m) of the Code and the rules and regulations promulgated thereunder. The
foregoing limitation shall be adjusted proportionately in connection with any
change in the Company's capitalization as described in Section 13. For purposes
of this Section 6(c), if an Option is canceled in the same calendar year it was
granted (other than in connection with a transaction described in Section 13),
the canceled Option will be counted against the limit set forth in this Section
6(c). For this purpose, if the exercise price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option.


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<PAGE>
      7. Term of Plan. The Plan shall become effective upon its initial adoption
by the Board and shall continue in effect until it is terminated under Section
15 of the Plan; provided, however, no Options or Restricted Stock may be issued
under the Plan after the tenth (10th) anniversary of the earlier of (i) the date
upon which the Plan is adopted by the Board or (ii) the date the Plan is
approved by the stockholders.

      8. Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to a Holder who, at the time the Option is granted, owns (or is treated as
owning under Code Section 424) stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.

      9. Option Exercise Price and Consideration.

            (a) Except as provided in Section 13, the per share exercise price
for the Shares to be issued upon exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:

                  (i) In the case of an Incentive Stock Option

                        (A) granted to an Employee who, at the time of grant of
such Option, owns (or is treated as owning under Code Section 424) stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of grant.

                        (B) granted to any other Employee, the per Share
exercise price shall be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.

                  (ii) In the case of a Non-Qualified Stock Option

                        (A) granted to a Service Provider who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than one hundred ten percent (110%) of the
Fair Market Value per Share on the date of the grant.

                        (B) granted to any other Service Provider, the per Share
exercise price shall be no less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant.

                  (iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.


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<PAGE>
            (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, other Shares which (x) in
the case of Shares acquired from the Company, have been owned by the Holder for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option shall be exercised, (4) with the consent of the
Administrator, surrendered Shares then issuable upon exercise of the Option
having a Fair Market Value on the date of exercise equal to the aggregate
exercise price of the Option or exercised portion thereof, (5) property of any
kind which constitutes good and valuable consideration, (6) with the consent of
the Administrator, through the delivery of a notice that the Holder has placed a
market sell order with a broker with respect to Shares then issuable upon
exercise of the Option, and the broker pays a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise
price, or (7) with the consent of the Administrator, any combination of the
foregoing methods of payment; provided, however, that the payment in any manner
prescribed in this paragraph shall not be permitted to the extent that the
Administrator determines that payment in such manner is prohibited by law.

      10. Exercise of Option.

            (a) Vesting; Fractional Exercises. Except as provided in Section 13,
Options granted hereunder shall be vested and exercisable according to the terms
hereof at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement; provided, however, that,
except with regard to Options granted to Officers, Directors or Consultants, in
no event shall an Option granted hereunder become vested and exercisable at a
rate of less than twenty percent (20%) per year over five (5) years from the
date the Option is granted, subject to reasonable conditions, such as continuing
to be a Service Provider. An Option may not be exercised for a fraction of a
Share.

            (b) Deliveries upon Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his or her office:

                  (i) A written or electronic notice complying with the
applicable rules established by the Administrator stating that the Option, or a
portion thereof, is exercised. The notice shall be signed by the Holder or other
person then entitled to exercise the Option or such portion of the Option;

                  (ii) Such representations and documents as the Administrator,
in its sole discretion, deems necessary or advisable to effect compliance with
Applicable Laws. The Administrator may, in its sole discretion, also take
whatever additional actions it deems appropriate to effect such compliance,
including, without limitation, placing legends on share certificates and issuing
stop transfer notices to agents and registrars;

                  (iii) Upon the exercise of all or a portion of an unvested
Option pursuant to Section 10(g), a Restricted Stock agreement in a form
determined by the


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<PAGE>
Administrator and signed by the Holder or other person then entitled to exercise
the Option or such portion of the Option; and

                  (iv) In the event that the Option shall be exercised pursuant
to Section 10(f) by any person or persons other than the Holder, appropriate
proof of the right of such person or persons to exercise the Option.

            (c) Conditions to Delivery of Share Certificates. The Company shall
not be required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

                  (i) The admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed;

                  (ii) The completion of any registration or other qualification
of such Shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Administrator shall, in its sole discretion, deem
necessary or advisable;

                  (iii) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Administrator shall, in its
sole discretion, determine to be necessary or advisable;

                  (iv) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and

                  (v) The receipt by the Company of full payment for such
Shares, including payment of any applicable withholding tax, which in the sole
discretion of the Administrator may be in the form of consideration used by the
Holder to pay for such Shares under Section 9(b).

            (d) Termination of Relationship as a Service Provider. If a Holder
ceases to be a Service Provider other than by reason of the Holder's disability
or death, such Holder may exercise his or her Option within such period of time
as is specified in the Option Agreement to the extent that the Option is vested
on the date of termination; provided, however, that prior to the Public Trading
Date, such period of time shall not be less than thirty (30) days (but in no
event later than the expiration of the term of the Option as set forth in the
Option Agreement). In the absence of a specified time in the Option Agreement,
the Option shall remain exercisable for three (3) months following the Holder's
termination. If, on the date of termination, the Holder is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option
immediately cease to be issuable under the Option. If, after termination, the
Holder does not exercise his or her Option within the time period specified
herein, the Option shall terminate.

            (e) Disability of Holder. If a Holder ceases to be a Service
Provider as a result of the Holder's disability, the Holder may exercise his or
her Option within such period of time as is specified in the Option Agreement to
the extent the Option is vested on the date of termination; provided, however,
that prior to the Public Trading Date, such period of time shall


                                       9
<PAGE>
not be less than six (6) months (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for twelve (12) months following the Holder's termination. If such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Non-Qualified Stock Option from and after the day
which is three (3) months and one (1) day following such termination. If, on the
date of termination, the Holder is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately cease
to be issuable under the Option. If, after termination, the Holder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

            (f) Death of Holder. If a Holder dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement; provided, however, that prior to the Public Trading Date, such period
of time shall not be less than six (6) months (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant), by
the Holder's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance, but only to the extent that the Option is vested on
the date of death. In the absence of a specified time in the Option Agreement,
the Option shall remain exercisable for twelve (12) months following the
Holder's termination. If, at the time of death, the Holder is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall immediately cease to be issuable under the Option. The Option may
be exercised by the executor or administrator of the Holder's estate or, if
none, by the person(s) entitled to exercise the Option under the Holder's will
or the laws of descent or distribution. If the Option is not so exercised within
the time specified herein, the Option shall terminate.

            (g) Early Exercisability. The Administrator may provide in the terms
of a Holder's Option Agreement that the Holder may, at any time before the
Holder's status as a Service Provider terminates, exercise the Option in whole
or in part prior to the full vesting of the Option; provided, however, that
subject to Section 20, Shares acquired upon exercise of an Option which has not
fully vested may be subject to any forfeiture, transfer or other restrictions as
the Administrator may determine in its sole discretion.

            (h) Buyout Provisions. The Administrator may at any time offer to
buyout for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Holder at the time that such offer is made.

            (i) Acceleration; Extension. Notwithstanding anything in the Plan to
the contrary, at any time after grant of an Option to a Service Provider but
prior to the termination of the Holder's relationship as a Service Provider, the
Committee may, in its sole and absolute discretion and subject to whatever terms
and conditions it selects, (1) accelerate the period during which such Option
vests and (2) subject to Section 8 of the Plan, extend the period of
exercisability of such Option following the termination of the Holder's
relationship as a Service Provider.


                                       10
<PAGE>
      11. Non-Transferability of Options and Restricted Stock. Options and
Restricted Stock may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Holder, only by
the Holder.

      12. Restricted Stock.

            (a) Grants. After the Administrator determines that it will grant
Restricted Stock to a Service Provider, it shall provide the Service Provider a
Restricted Stock agreement setting forth the terms, conditions and restrictions
related to the Restricted Stock, including the number of shares of Restricted
Stock granted and the purchase price to be paid, if any; provided, however, that
to the extent required to comply with applicable securities laws, the purchase
price of such Restricted Stock shall not be less than the purchase price
requirements set forth in Section 260.140.42 of Title 10 of the California Code
of Regulations.

            (b) Repurchase Right. Unless the Administrator determines otherwise,
the Restricted Stock agreement shall grant the Company the right to repurchase
the shares of Restricted Stock upon the termination of the purchaser's status as
a Service Provider for any reason. Subject to Section 20, the purchase price for
shares of Restricted Stock repurchased by the Company pursuant to such
repurchase right and the rate at which such repurchase right shall lapse shall
be determined by the Administrator in its sole discretion, and shall be set
forth in the Restricted Stock agreement.

            (c) Other Provisions. The Restricted Stock agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion.

            (d) Rights as a Stockholder. Upon the grant of Restricted Stock, the
Holder shall have, unless otherwise provided by the Committee, all the rights of
a stockholder with respect to said Shares, subject to the restrictions in his or
her Restricted Stock agreement, including the right to receive all dividends and
other distributions paid or made with respect to the Shares; provided, however,
that in the discretion of the Administrator, any extraordinary distributions
with respect to the Common Stock shall be subject to the restrictions set forth
in subsection (b) above.

      13. Adjustments upon Changes in Capitalization, Merger or Asset Sale.

            (a) In the event that the Administrator determines that any dividend
or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended by the Company to be
made available


                                       11
<PAGE>
under the Plan or with respect to any Option or Restricted Stock granted under
the Plan, then the Administrator shall, in such manner as it may deem equitable,
proportionately adjust any or all of:

                  (i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Restricted Stock may be
granted or awarded (including, but not limited to, adjustments of the
limitations in Section 3 on the maximum number and kind of shares which may be
issued and adjustments of the maximum number of Shares that may be purchased by
any Holder in any calendar year pursuant to Section 6(c));

                  (ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options or Restricted Stock; and

                  (iii) the exercise price or purchase with respect to any
Option or Restricted Stock.

            (b) In the event of any transaction or event described in Section
13(a), the Administrator, in its sole discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Option or
Restricted Stock or by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Holder's request, is hereby
authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Option or
Restricted Stock granted or issued under the Plan or to facilitate such
transaction or event:

                  (i) To provide for either the purchase of any such Option for
an amount of cash equal to the amount that could have been obtained upon the
exercise of such Option or realization of the Holder's rights had such Option
been currently exercisable or payable or fully vested or the replacement of such
Option with other rights or property selected by the Administrator in its sole
discretion;

                  (ii) To provide that such Option shall be exercisable as to
all shares covered thereby, notwithstanding anything to the contrary in the Plan
or the provisions of such Option;

                  (iii) To provide that such Option be assumed by the successor
or survivor corporation or entity, or a parent or subsidiary thereof, or shall
be substituted for by similar options, rights or awards covering the stock of
the successor or survivor corporation or entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
prices;

                  (iv) To make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding Options
and Restricted Stock, and/or in the terms and conditions of (including the
exercise price or purchase price), and the criteria included in, outstanding
Options or Restricted Stock or Options or Restricted Stock which may be granted
in the future; and


                                       12
<PAGE>
                  (v) To provide that immediately upon the consummation of such
event, such Option shall not be exercisable and shall terminate; provided, that
for a specified period of time prior to such event, such Option shall be
exercisable as to all Shares covered thereby, and the restrictions imposed under
an Option Agreement upon some or all Shares may be terminated and, in the case
of Restricted Stock, some or all shares of such Restricted Stock may cease to be
subject to repurchase, notwithstanding anything to the contrary in the Plan or
the provisions of such Option Agreement or Restricted Stock agreement.

            (c) Subject to Section 3, the Administrator may, in its sole
discretion, include such further provisions and limitations in any Option
Agreement or Restricted Stock agreement, or any certificate, as it may deem
equitable and in the best interests of the Company.

            (d) If the Company undergoes an Acquisition, then any surviving
corporation or entity or acquiring corporation or entity, or affiliate of such
corporation or entity, may assume any Options outstanding under the Plan or may
substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 13(d)) for those outstanding under the Plan. In the event any
surviving corporation or entity or acquiring corporation or entity in an
Acquisition, or affiliate of such corporation or entity, does not assume such
Options or does not substitute similar stock awards for those outstanding under
the Plan, then with respect to (i) Options held by participants in the Plan
whose status as a Service Provider has not terminated prior to such event, the
vesting of such Options (and, if applicable, the time during which such awards
may be exercised) shall be accelerated and made fully exercisable and all
restrictions thereon shall lapse at least ten (10) days prior to the closing of
the Acquisition (and the Options terminated if not exercised prior to the
closing of such Acquisition), and (ii) any other Options outstanding under the
Plan, such Options shall be terminated if not exercised prior to the closing of
the Acquisition.

            (e) The existence of the Plan, any Option Agreement or Restricted
Stock agreement and the Options or Restricted Stock granted hereunder shall not
affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

      14. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option is so granted within a reasonable time after the date of such grant.


                                       13
<PAGE>
      15. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time wholly or
partially amend, alter, suspend or terminate the Plan. However, without approval
of the Company's stockholders given within twelve (12) months before or after
the action by the Board, no action of the Board may, except as provided in
Section 13, increase the limits imposed in Section 3 on the maximum number of
Shares which may be issued under the Plan or extend the term of the Plan under
Section 7.

            (b) Stockholder Approval. The Board shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

            (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Holder,
unless mutually agreed otherwise between the Holder and the Administrator, which
agreement must be in writing and signed by the Holder and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options, Restricted Stock or
Restricted Stock granted or awarded under the Plan prior to the date of such
termination.

      16. Stockholder Approval. The Plan will be submitted for the approval of
the Company's stockholders within twelve (12) months after the date of the
Board's initial adoption of the Plan. Options or Restricted Stock may be granted
or awarded prior to such stockholder approval, provided that such Options and
Restricted Stock shall not be exercisable, shall not vest and the restrictions
thereon shall not lapse prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Options and Restricted Stock
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void.

      17. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

      18. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

      19. Information to Holders and Purchasers. Prior to the Public Trading
Date and to the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall provide to each Holder and to
each individual who acquires Shares pursuant to the Plan, not less frequently
than annually during the period such Holder or purchaser has one or more Options
or Restricted Stock outstanding, and, in the case of an individual who acquires
Shares pursuant to the Plan, during the period such individual owns such Shares,
copies of annual financial statements. Notwithstanding the preceding sentence,
the Company shall not be


                                       14
<PAGE>
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.

      20. Repurchase Provisions. The Administrator in its sole discretion may
provide that the Company may repurchase shares of Restricted Stock or Shares
acquired upon exercise of an Option upon the occurrence of certain specified
events, including, without limitation, a Holder's termination as a Service
Provider, divorce, bankruptcy or insolvency; provided, however, that any such
repurchase right shall be set forth in the applicable Option Agreement or
Restricted Stock agreement or in another agreement referred to in such agreement
and, provided further, that to the extent required by Section 260.140.41 and
Section 260.140.42 of Title 10 of the California Code of Regulations, any such
repurchase right set forth in an Option or Restricted Stock agreement granted
prior to the Public Trading Date to a person who is not an Officer, Director or
Consultant shall be upon the following terms: (i) if the repurchase option gives
the Company the right to repurchase the shares upon termination as a Service
Provider at not less than the Fair Market Value of the shares to be purchased on
the date of termination of status as a Service Provider, then (A) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within ninety (90) days of termination of status as
a Service Provider (or in the case of shares issued upon exercise of Options
after such date of termination, within ninety (90) days after the date of the
exercise) or such longer period as may be agreed to by the Administrator and the
Plan participant and (B) the right terminates when the shares become publicly
traded; and (ii) if the repurchase option gives the Company the right to
repurchase the Shares upon termination as a Service Provider at the original
purchase price for such Shares, then (A) the right to repurchase at the original
purchase price shall lapse at the rate of at least twenty percent (20%) of the
shares per year over five (5) years from the date the Option or Restricted Stock
is granted (without respect to the date the Option was exercised or became
exercisable) and (B) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of status as a Service Provider (or, in the case of shares
issued upon exercise of Options after such date of termination, within ninety
(90) days after the date of the exercise) or such longer period as may be agreed
to by the Company and the Plan participant.

      21. Investment Intent. The Company may require a Plan participant, as a
condition of exercising or acquiring stock under any Option or prior to the
grant of any Restricted Stock, (i) to give written assurances satisfactory to
the Company as to the participant's knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of acquiring
the Shares; and (ii) to give written assurances satisfactory to the Company
stating that the participant is acquiring the Shares subject to the Option or
the Restricted Stock for the participant's own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of stock under the applicable Option or the shares of Restricted Stock have been
registered under a then currently effective registration statement under the
Securities Act or (B) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company,


                                       15
<PAGE>
place legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

      22. Governing Law. The validity and enforceability of this Plan shall be
governed by and construed in accordance with the laws of the State of California
without regard to otherwise governing principles of conflicts of law.

                                  * * * * * * *

            I hereby certify that the Plan was duly adopted by the Board of
Directors of Skilled Healthcare Group, Inc. on March 4, 2004.

            Executed at Foothill Ranch, California on this 5th day of March,
2004.

                                       /s/ Roland Rapp
                                       ----------------------------------------
                                       Roland Rapp
                                       General Counsel and Secretary

                                  * * * * * * *

            I hereby certify that the foregoing Plan was approved by the
stockholders of Skilled Healthcare Group, Inc. on March 4, 2004.

            Executed at Foothill Ranch, California on this 5th day of March,
2004.

                                       /s/ Roland Rapp
                                       ----------------------------------------
                                       Roland Rapp
                                       General Counsel and Secretary


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