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                                                                    EXHIBIT 10.4

                      NATIONWIDE HEALTH PROPERTIES, INC.
                            1989 STOCK OPTION PLAN
                    AS AMENDED AND RESTATED APRIL 20, 2001

          1.   Purpose
               -------

               The purpose of the Nationwide Health Properties, Inc. 1989 Stock
Option Plan (the "Plan") is to strengthen Nationwide Health Properties, Inc.
(the "Corporation") and those corporations which are or hereafter become
subsidiary corporations (the "Subsidiary" or "Subsidiaries") by providing
additional means of attracting and retaining competent managerial personnel and
by providing to participating directors, officers and employees added incentives
for high levels of performance and for unusual efforts to increase the earnings,
value and distributions of the Corporation and any subsidiaries.  The Plan seeks
to accomplish these purposes and achieve these results by providing a means
whereby such directors, officers and employees may receive shares of Restricted
Stock, and/or Stock Options and/or Stock Appreciation Rights in accordance with
this Plan.

               Stock Options granted pursuant to this Plan are intended to be
Incentive Stock Options or Non-Qualified Stock Options, as shall be determined
and designated by the Plan Committee upon the grant of each Stock Option
hereunder.

          2.   Definitions
               -----------

               For purposes of this Plan, the following terms shall have the
following meanings:

               (a)   Common Stock. This term shall mean shares of the
                     ------------
Corporation's common stock, $.10 par value, subject to adjustment pursuant to
Section 18 (Adjustment Upon Changes in Capitalization) hereunder.

               (b)   Corporation.  This term shall mean Nationwide Health
                     -----------
Properties, Inc., a Maryland Corporation.

               (c)   Eligible Participants. This term shall mean all directors
                     ---------------------
of the Corporation or any Subsidiary, and all officers or employees (whether or
not they are also directors) of the Corporation or any Subsidiary.

               (d)   Fair Market Value. This term shall mean the fair market
                     -----------------
value of the Common Stock as determined in accordance with any reasonable
valuation method selected by the Plan Committee, including the valuation methods
described in Treasury Regulations Section 20.2031-1. Unless determined otherwise
by the Plan Committee, "fair market value" shall be as applied to any date
specified in the Plan, the closing price of a share of Common Stock on the New
York Stock Exchange's composite tape on such date, or, if no such sales were
made on such date, the closing price of such share on the New York Stock
Exchange's composite tape on the next preceding date on which there were such
sales.

               (e)   Grantee. This term shall mean any Eligible Participant to
                     -------
whom Restricted Stock or Stock Appreciation Rights have been granted pursuant to
this Plan.

               (f)   Incentive Stock Option. This term shall mean a Stock Option
                     ----------------------
which is an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.

               (g)   Non-Qualified Stock Option.  This term shall mean a Stock
                     --------------------------
Option which is not an Incentive Stock Option.

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               (h)   Option Shares. This term shall mean Common Stock covered by
                     -------------
and subject to any outstanding unexercised Stock Option granted pursuant to this
Plan.

               (i)   Optionee. This term shall mean any Eligible Participant to
                     --------
whom a Stock Option has been granted pursuant to this Plan, provided that at
least part of the Stock Option is outstanding and unexercised.

               (j)   Plan. This term shall mean the Nationwide Health
                     ----
Properties, Inc. 1989 Stock Option Plan, as amended and restated October 14,
1999, and as embodied herein and as may be further amended from time to time in
accordance with the terms hereof and applicable law.

               (k)   Plan Committee. The Compensation Committee of the Board of
                     --------------
Directors of the Corporation shall constitute the Plan Committee and have full
authority to act in the matter. The Plan Committee shall consist at all times of
a committee of two or more non-employee directors. All references in the Plan to
the "Plan Committee" shall be deemed to refer to the Compensation Committee of
the Board of Directors. The Board of Directors of the Corporation shall have the
right, in its sole and absolute discretion, to remove or replace any person from
or on the Compensation Committee at any time for any reason whatsoever.

               (l)   Restricted Stock. This term shall mean shares of Common
                     ----------------
Stock of the Company granted without cost to the Participant pursuant to either
Section 6 or 7, and subject to the terms of Section 8.

               (m)   Stock Appreciation Right.   This term shall mean a stock
                     ------------------------
appreciation right as described in Section 12 of this Plan.

               (n)   Stock Option. This term shall mean the right to purchase
                     ------------
Common Stock under this Plan in a specified number of shares, at a price and
upon the terms and conditions as specified in this Plan or as determined by the
Plan Committee.

               (o)   Subsidiary. This term shall mean each "subsidiary
                     ----------
corporation" (treating the Corporation as the employer corporation) as defined
in Section 425(f) of the Internal Revenue Code of 1986, as amended.

          3.   Administration.
               --------------

               (a)   Administration of the Plan. This Plan shall be administered
                     --------------------------
by the Plan Committee. Any action of the Plan Committee with respect to the
administration of the Plan shall be taken pursuant to a majority vote, or
pursuant to the unanimous written consent, of its members. Any such action taken
by the Plan Committee in the administration of this Plan shall be valid and
binding, so long as the same is not inconsistent with the terms and conditions
of this Plan. To the extent consistent with the availability to the Plan of Rule
16b-3 under the Securities Exchange Act of 1934 as amended, and subject to
compliance with the terms, conditions and restrictions set forth in this Plan,
the Plan Committee shall have the exclusive right, in its sole and absolute
discretion, to establish the terms and conditions of all Restricted Stock, Stock
Options and Stock Appreciation Rights granted under the Plan, including, without
limitation, the power to determine the duration and purposes, if any, of leaves
of absence which may be permitted to holders of unexercised, unexpired Stock
Options without such constituting a termination under the Plan, and to prescribe
and amend the terms, provisions ad form of each instrument and agreement setting
forth the terms and conditions of Restricted Stock, Stock Options and Stock
Appreciation Rights granted hereunder.

               (b)   Decisions and Determinations. To the extent consistent with
                     ----------------------------
the availability to the Plan of Rule 16b-3 under the Securities Exchange Act of
1934 as amended, and subject to the express provisions of this Plan, the Plan
Committee shall have the authority to construe and interpret this Plan, to
define the terms used herein, to prescribe, amend, and rescind rules and
regulations relating to the administration of the rules and regulations relating
to the administration of the Plan, and to make all other determinations
necessary or

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advisable for administration of the Plan. Determinations of the Plan Committee
on matters referred to in this Section 3 shall be final and conclusive so long
as the same are not inconsistent with the terms of this Plan.

          4.   Shares subject to the Plan
               --------------------------

               Subject to adjustments as provided in Section 18 hereof, the
maximum number of shares of Common Stock which may be issued as Restricted Stock
or upon exercise of all Stock Options or pursuant to Stock Appreciation Rights
granted under this Plan is limited to One Million Six Hundred Thousand
(1,600,000) shares in the aggregate.

               If for any reason, unreleased shares of Restricted Stock do not
vest, said shares shall again be available for grants of Restricted Stock, Stock
Options or Stock Appreciation Rights under this Plan. If any Stock Option and/or
Stock Appreciation Rights shall be canceled, surrendered, or expire for any
reason without having been exercised in full, the Shares represented thereby
shall again be available for grants of Restricted Stock, Stock Options or Stock
Appreciation Rights under this Plan.

          5.   Eligibility
               -----------

               Only Eligible Participants shall be eligible to receive grants of
Restricted Stock, Stock Options or Stock Appreciation Rights under this Plan.

          6.   Formula Awards of Restricted Stock and Stock Options to Non-
               -----------------------------------------------------------
Employee Directors
------------------

               Initial grants of Restricted Stock made to non-employee directors
who first become eligible after January 1, 1996 shall be in the amount of 2,000
shares. Additional grants of 2,000 shares shall be made to each non-employee
director on or after each anniversary of the initial grant made heretofore under
the Plan, commencing January 1, 1996.

               Initial grants of Stock Options covering 30,000 shares each were
made to non-employee directors on November 13, 1989.

               Non-employee directors are not eligible for further grants of
Stock Options nor for any grants of Stock Appreciation Rights.

          7.   Discretionary Awards of Restricted Stock, Stock Options and Stock
               -----------------------------------------------------------------
Appreciation Rights
-------------------

               The Plan Committee, in its sole and absolute discretion, subject
to the provisions of the Plan, may grant Restricted Stock, Stock Options and/or
Stock Appreciation Rights to any Eligible Participant other than a non-employee
director (whose Awards of Restricted Stock and Stock Options are specifically
provided in Section 6 hereof) at such times and in such amounts and on such
terms and conditions as it deems advisable and specifies in the respective
grants.

          8.   Restricted Stock and Forfeiture Restrictions
               --------------------------------------------

               (a)   Certain Terms. The shares of Restricted Stock granted to a
                     -------------
Participant shall be released to him in accordance with such schedule as the
Plan Committee, in its sole discretion, shall determine at the time of grant;
except for non-employee directors whose shares shall be released three years
after the date of grant, provided that any such shares shall be fully released
upon normal retirement from the Board of Directors. All shares of Restricted
Stock shall be fully released not later than ten years from the date of grant.
Except for normal retirement, or pursuant to the terms of the written agreement
with an officer and/or employee of the Company, the Grantee shall have no vested
interest in the unreleased stock of any grant in the event of his termination
with the Corporation for any reason (including failure of re-election, unless
the Plan Committee in its sole discretion decides to terminate the forfeiture
restrictions following the termination of such Grantee) and the unreleased stock

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certificates shall be canceled. During the Grantee's continued employment or
affiliation, however, he shall have the right to vote all shares and to receive
all dividends as though all shares granted were his without restrictions.

               (b)   Written Agreement. The details of each grant regarding
                     -----------------
shares of Restricted Stock shall be evidenced by a written agreement covering
terms and conditions, not inconsistent with the Plan, as the Plan Committee
shall approve. Such agreement shall be promptly delivered by Management of the
Corporation to each Grantee.

          9.   Stock Options
               -------------

               (a)   Designation as Incentive or Nonqualified Options.  The Plan
                     ------------------------------------------------
Committee shall designate in each grant of a Stock Option whether the Stock
Option is an Incentive Stock Option or a Non-Qualified Stock Option.  The terms
upon which and the times at which, or the periods within which, the Option
Shares subject to such Stock Option may become acquired or such Stock Options
may be acquired and exercised shall be as set forth in the Plan and the related
Stock Option Agreements.

               (b)   Date of Grant and Rights of Optionee. The determination of
                     ------------------------------------
the Plan Committee to grant a Stock Option shall not in any way constitute or be
deemed to constitute an obligation of the Corporation, or a right of the
Eligible Participant who is the proposed subject of the grant, and shall not
constitute the grant of a Stock Option hereunder unless and until both the
Corporation and the Eligible Participant have executed and delivered to the
other a Stock Option Agreement in the form then required by the Plan Committee
as evidencing the grant of the Stock Option, together with such other instrument
or instruments as may be required by the Plan Committee pursuant to this Plan;
provided, however, that the Plan Committee may fix the date of grant as any date
on or after the date of its final determination to grant the Stock Option (or if
no such date is fixed, then the date of grant shall be the date on which the
determination was finally made by the Plan Committee to grant the Stock Option),
and such date shall be set forth in the Stock Option Agreement. The date of
grant as so determined shall be deemed the date of grant of the Stock Option for
purposes of this plan.

               (c)   10% Shareholder. A Stock Option granted hereunder to an
                     ---------------
Eligible Participant who owns, directly or indirectly, at the date of the grant
of the Stock Option, more than ten percent (10%) of the total combined voting
power of all classes of capital stock of the Corporation or a Subsidiary shall
not qualify as an Incentive Stock Option unless: (i) the purchase price of the
Option Shares subject to said Stock Option is at least one hundred and ten
percent (110%) of the Fair Market Value of the Option Shares, determined as of
the date said Stock Option is granted; and (ii) the Stock Option by its terms is
not exercisable after five (5) years from the date that it is granted. The
attribution rules of Section 425(d) of the Internal Revenue Code of 1996, as
amended, shall apply in the determination of indirect ownership of stock.

               (d)   Maximum Value of Stock Options. No grant of Incentive Stock
                     ------------------------------
Options hereunder may be made when the aggregate fair market value of Option
Shares with respect to which Incentive Stock Options (pursuant to this Plan or
any other Incentive Stock Option Plan of the Corporation or any Subsidiary) are
exercisable for the first time by the Eligible Participant during any calendar
year exceeds $100,000.

               (e)   Non-Qualified Stock Options. Stock Options granted by the
                     ---------------------------
Plan Committee shall be deemed Non-Qualified Stock Options under this Plan if
they: (i) are designated at the time of grant as Incentive Stock Options but do
not so qualify under the provisions of Section 422 of the Code or any
regulations or rulings issued by the Internal Revenue Service for any reason;
(ii) are not granted in accordance with the provisions of Section 9(c); (iii)
are in excess of the fair market value limitations set forth in Section 9(d);
(iv) are granted to an Eligible Participant who is not an employee of the
Corporation or any subsidiary; or (v) are designated at the time of grant as
Non-Qualified Stock Options. Non-Qualified Stock Options granted hereunder shall
be so designated in the Stock Option Agreement entered into between the
Corporation and the Optionee.

               (f)   Dividend Equivalents. In addition to Stock Options granted
                     ---------------------
under this Plan, "Dividend Equivalents" may be granted under this Plan. The
Dividend Equivalents shall be based on the dividends

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declared on the Common Stock and shall be credited as of dividend payment dates,
during the period between the date of grant and the date the Stock Option is
exercised or expires, as determined by the Plan Committee. Such Dividend
Equivalents shall be payable in cash or additional shares of Common Stock by
such formula and at such time and subject to such conditions as may be
determined by the Plan Committee. Sections 13 through 21, Sections 24 through 26
and Section 29 of the Plan, as such sections apply to stock options, also shall
apply to Dividend Equivalents.

          10.  Stock Option Exercise Price
               ---------------------------

               The exercise price of Option Shares shall be determined by the
Committee at the date of grant, except that the exercise price of any Option
Shares designated as Incentive Stock Options shall be one hundred percent (100%)
of the Fair Market value of the Common Stock represented by the Option Shares on
the date of grant of the related Incentive Stock Option

          11.  Exercise of Stock Options
               -------------------------

               (a)   Exercise. Except as otherwise provided elsewhere herein, if
                     --------
an Optionee shall not in any given period exercise any part of a Stock Option
which has become exercisable during that period, the Optionee's right to
exercise such part of the Stock Option shall continue until expiration of the
Stock Option or any part thereof as may be provided in the related Stock Option
Agreement. No Stock Option shall, except as provided in Section 11(g) hereof,
become exercisable until one (1) year following the date of grant, and (i) as to
non-employee directors, a Stock Option first becomes exercisable as to one-third
(1/3) of the Option Shares called for thereby during the second year following
the date of the grant, as to an additional one-third (1/3) during the third year
and as to the remaining one-third (1/3) during the fourth year, and (ii) as to
all other Eligible Participants, Stock Options shall be exercisable as set forth
by the Committee. No Stock Option or part thereof shall be exercisable except
with respect to whole shares of Common Stock, and fractional share interests
shall be disregarded except that they may be accumulated.

               (b)   Prior Outstanding Incentive Stock Options.  Incentive Stock
                     -----------------------------------------
Options granted to an Optionee under the Plan shall be exercisable even while
such Optionee has outstanding and unexercised any Incentive Stock Option
previously granted to him or her pursuant to this Plan or any other Incentive
Stock Option Plan of the Corporation or any Subsidiary.  An Incentive Stock
Option shall be treated as outstanding until it is exercised in full or expires
by reason of lapse of time, or is otherwise canceled by mutual action of the
Optionee and the Corporation.

               (c)   Notice of Payment. Stock Options granted hereunder shall be
                     -----------------
exercised by written notice delivered to the Corporation specifying the number
of Option Shares with respect to which the Stock Option is being exercised,
together with concurrent payment in full of the exercise price as hereinafter
provided. If the Stock Option is being exercised by any person or persons other
than the Optionee, said notice shall be accompanied by proof, satisfactory to
the counsel for the Corporation, of the right of such person or persons to
exercise the Stock Option.

               (d)   Payment of Exercise Price. The exercise price of any Option
                     -------------------------
Shares purchased upon the proper exercise of a Stock Option shall be paid in
full at the time of each exercise of a Stock Option in cash or check and/or in
Common Stock of the Corporation which, when added to the cash payment, if any,
has an aggregate Fair Market Value equal to the full amount of the exercise
price of the Stock Option, or part thereof, then being exercised. Payment by an
Optionee as provided herein shall be made in full concurrently with the
Optionee's notification to the Corporation of his intention to exercise all or
part of a Stock Option. If all or any part of a payment is made in shares of
Common Stock as heretofore provided, such payment shall be deemed to have been
made only upon receipt by the Corporation of all required share certificates,
and all stock powers and all other required transfer documents necessary to
transfer the shares of Common Stock to the Corporation. In addition, Options may
be exercised and payment made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker or bank to promptly deliver
to the Corporation the amount of sale proceeds

                                       5
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necessary to pay the exercise price and any applicable tax withholding. The date
of exercise shall be deemed to be the date the Corporation receives the notice.

               (e)   Minimum Exercise. Not less than ten (10) Option Shares may
                     ----------------
be purchased at any one time upon exercise of a Stock Option unless the number
of shares purchased is the total number which remains to be purchased under the
Stock Option.

          12.  Stock Appreciation Rights
               -------------------------

               (a)   Grant of Stock Appreciation Rights. A Stock Appreciation
                     ----------------------------------
Right may be granted to any Class II or Class III Participant selected by the
Plan Committee to whom Option Shares may be granted under this Plan. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of an Option, (b) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with this Plan as
the Plan Committee shall impose and shall be evidenced by a written Stock
Appreciation Right Agreement, which shall be executed by the Grantee and an
authorized officer of the Corporation.

               (b)   Coupled Stock Appreciation Rights.
                     ---------------------------------

                     (i)    A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extend the related Option is exercisable.

                     (ii)   A CSAR may be granted to the Grantee for not more
than the number of shares subject to the simultaneously granted Option to which
it is coupled.

                     (iii)  A CSAR shall entitle the Grantee to surrender to the
Company unexercised a portion of the Option to which the CSAR relates and to
receive from the Company in exchange therefor an amount determined by
multiplying the difference obtained by subtracting the Option exercise price of
the Option from the Fair Market Value of a share of Common Stock on the date of
exercise of the CSAR by the number of shares of Common Stock with respect to
which the CSAR shall have been exercised, subject to any limitations the
Committee may impose.

               (c)   Independent Stock Appreciation Rights.
                     -------------------------------------

                     (i)    An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Option and shall have a term set by the Committee.
Except as otherwise set forth in this Plan, an ISAR shall be exercisable at such
times and in such installments as the Committee may determine, and shall cover
such number of shares of Common Stock as the Committee may determine. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Committee.

                     (ii)   An ISAR shall entitle the Grantee to exercise all or
a specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.

               (d)   Payment and Limitations on Exercise.
                     -----------------------------------

                     (i)    Payment of the amount determined under this Section
12 shall be in cash, in Common Stock or a combination of both, as determined by
the Committee.

                     (ii)   So long as Rule 16b-3 under the Exchange Act, or any
successor thereto, so provides, no CSAR shall be exercisable during the first
six months after it is granted with respect to an outstanding

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Option, except to the extent that the Committee in its discretion permits such
exercise in the event of the Grantee's death or disability within the meaning of
Section 105(d)(4) of the Code.

                     (iii)  So long as Rule 16b-3 under the Exchange Act, or any
successor thereto, so provides, cash payment upon exercise of a Stock
Appreciation Right may only be made if such Stock Appreciation Right is
exercised during the period beginning on the third business day following the
date of the Company's release of its quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day following such date.

          13.  Nontransferability
               ------------------

               Except as otherwise provided herein each Stock Option and Stock
Appreciation Right and all unreleased shares of Restricted Stock shall, by their
terms, be nontransferable by the Options or Grantee other than by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title I of
the Employee Retirement Income Security Act, or the rules thereunder.  Stock
Options and Stock Appreciation Rights shall be exercisable during the lifetime
of the Optionee or Grantee only by the Optionee or Grantee.

          14.  Affiliation
               -----------

               Nothing contained in this Plan (or in any Stock Option, Stock
Appreciation Rights or Restricted Stock Agreement) shall obligate the
Corporation or any Subsidiary to employ or continue to employ or remain
affiliated with any Participant for any period of time or interfere in any way
with the right of the Corporation or a Subsidiary to reduce or increase the
Participant's compensation.

               Except as provided in Section 15 hereof, if, for any reason other
than disability or death, an Optionee ceases to be affiliated with the
Corporation or a Subsidiary, the Stock Options and/or Stock Appreciation Rights
granted to such Optionee shall expire on the expiration dates specified for said
Stock Options and or Stock Appreciation Rights at the time of their grant, or
three (3) months after the Optionee ceases to be so affiliated, whichever is
earlier. During such period after cessation of affiliation, such Stock Options
and/or Stock Appreciation Rights shall be exercisable only as to those
increments, if any, which had become exercisable as of the date on which such
Optionee ceased to be affiliated with the Corporation or the Subsidiary, and any
Stock Options and/or Stock Appreciation Rights or increments which had not
become exercisable as of such date shall expire automatically on such date.

          15.  Termination for Cause
               ---------------------

               If the Stock option and/or Stock Appreciation Rights Agreement so
provides and if an Optionee's or Grantee's employment by or affiliation with the
Corporation or a Subsidiary is terminated for cause, the Stock Option and/or
Stock Appreciation Rights granted to such Optionee or Grantee shall
automatically expire and terminate in their entirety immediately upon such
termination; provided, however, that the Plan Committee may, in its sole
discretion, within thirty (30) days of such termination, reinstate such Stock
Options and/or Stock Appreciation Rights by giving written notice of such
reinstatement to the Optionee or Grantee.  In the event of such reinstatement,
the Optionee or Grantee may exercise the Stock Options and/or Stock Appreciation
Rights only to such extent, for such time, and upon such terms and conditions as
if the Optionee or Grantee had ceased to be employed by or affiliated with the
Corporation or a Subsidiary upon the date of such termination for a reason other
than cause, disability or death.  Termination for cause shall include, but shall
not be limited to, termination for malfeasance or gross misfeasance in the
performance of duties or conviction of illegal activity in connection therewith
and, in any event, the termination of the Plan Committee with respect thereto
shall be final and conclusive.

          16.  Death of Optionee or Grantee
               ----------------------------

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               If an Optionee or Grantee dies while employed by or affiliated
with the Corporation or a Subsidiary, or during the three-month period referred
to in Section 14 hereof, the Stock Options and/or Stock Appreciation Rights
granted to such Optionee or Grantee shall expire on the expiration dates
specified for said Stock Options and/or Stock Appreciation Rights at the time of
their grant, or one (1) year after the date of such death, whichever is earlier.
After such death, but before such expiration, subject to the terms and
provisions of the Plan and the related Stock Option and/or Stock Appreciation
Rights Agreements, the person or persons to whom such Optionee's or Grantee's
rights under the Stock Options and/or Stock Appreciation Rights shall have
passed by will or by the applicable laws of descent and distribution, or the
executor or administrator of the Optionee's or Grantee's estate, shall have the
right to exercise such Stock Options and/or Stock Appreciation Rights to the
extent that increments, if any, had become exercisable as of the date on which
the Optionee or Grantee died.

          17.  Disability Optionee or Grantee
               ------------------------------

               If any Optionee or Grantee is disabled while employed by or
affiliated with the Corporation or a Subsidiary or during the three-month period
referred to in Section 14 hereof, the Stock Options and/or Stock Appreciation
Rights granted to such Optionee or Grantee shall expire on the expiration dates
specified for said Stock Options and/or Stock Appreciation Rights at the time of
their grant, or one (1) year after the date such disability occurred, whichever
is earlier. After such disability occurs, but before such expiration, the
Optionee or Grantee or the guardian or conservator or the Optionee's or
Grantee's estate, as duly appointed by a court of competent jurisdiction, shall
have the right to exercise such Stock Options and/or Stock Appreciation Rights
to the extent that increments, if any, had become exercisable as of the date on
which the Optionee or Grantee became disabled or cased to be employed by or
affiliated with the Corporation or a Subsidiary as a result of the disability.
An Optionee or Grantee shall be deemed to be "disabled" if it shall appear to
the Plan Committee, upon written certification delivered to the Corporation of a
qualified licensed physician, that the Optionee or Grantee has become
permanently and totally unable to engage in any substantial gainful activity by
reason of a medically determinable physical or mental impairment which can be
expected to result in the Optionee's or Grantee's death, or which has lasted or
can be expected to last for a continuous period of not less than 12 months.

          18.  Adjustment Upon Changes in Capitalization
               -----------------------------------------

               If the outstanding shares of Common Stock of the Corporation and
increased, decreased, or changed into or exchanged for a different number or
kind of shares or securities of the Corporation, through a reorganization,
merger, recapitalization, reclassification, stock split, stock dividend, stock
consolidation, or otherwise, without consideration to the Corporation, or if
there is a spin-off or other distribution of stock or property with respect to
the holders of the Common Stock other than normal cash dividends, an appropriate
and proportionate adjustment shall be made in the number and kind of shares as
to which Stock Options and Stock Appreciation Rights may be granted.  A
corresponding adjustment changing the number or kind of Option Shares and the
exercise prices per share allocated to unexercised Stock Options, or portions
thereof, and/or with respect to Stock Appreciation Rights which shall have been
granted prior to any such change, shall likewise be made.  Such adjustments
shall be made without change in the total price applicable to the unexercised
portion of the Stock Option and/or Stock Appreciation Rights, but with a
corresponding adjustment in the price for each share subject to the Stock Option
and/or Stock Appreciation Rights.  Adjustments under this Section shall be made
by the Plan Committee, whose determination as to what adjustments shall be made,
and the extent thereof, shall be final and conclusive.  No fractional shares of
stock shall be issued or made available under the Plan on account of such
adjustments, and fractional share interests shall be disregarded, except that
they may be accumulated.

          19.  Terminating Events
               ------------------

               Upon consummation of a plan of dissolution or liquidation of the
Corporation, or upon consummation of a plan of reorganization, merger or
consolidation of the Corporation with one or more corporations, as a result of
which the Corporation is not the surviving entity, or upon the sale of all or
substantially all the assets of the Corporation to another corporation, the Plan
shall automatically terminate and all unreleased shares of Restricted Stock
shall be released under such circumstances, and all Stock Options and/or Stock
Appreciation Rights theretofore granted shall be terminated, subject to
provisions of the immediately following

                                       8
<PAGE>

paragraph in this Section 19, unless provision is made in connection with such
transaction for assumption of Stock Options and/or Stock Appreciation Rights
theretofore granted, or substitution for such Stock Option and/or Stock
Appreciation Rights with new options covering stock of a successor employer
corporation, or a parent or subsidiary corporation thereof, solely at the
discretion of such successor corporation, or parent or subsidiary corporation,
with appropriate adjustments as to number and kind of shares and prices.

               Notwithstanding the immediately preceding paragraph and/or any
provision in any Stock Option or Stock Appreciation Right Agreement pertaining
to the time of exercise of a Stock Option or Stock Appreciation Right, or part
thereof, upon adoption by the requisite holders of the outstanding shares of
Common Stock of any plan of dissolution, liquidation, reorganization, merger,
consolidation or sale of all or substantially all of the assets of the
Corporation to another corporation which would, upon consummation, result in
termination of a Stock Option or Stock Appreciation Right, all Stock Options or
Stock Appreciation Rights previously granted shall become immediately
exercisable as to all unexercised Shares for such period of time as may be
determined by the Plan Committee, but in any event not less than 30 days, on the
condition that the terminating event is consummated.  If such terminating event
is not consummated, Stock Options or Stock Appreciation Rights granted pursuant
to the Plan shall be exercisable in accordance with the terms of their
respective Stock Option or Stock Appreciation Right Agreements.

               Notwithstanding any other provision of this Plan, in the event of
a Change of Control as hereinafter defined, all shares of Restricted Stock shall
immediately vest and all outstanding Stock Options shall be immediately
exercisable in full. Change of Control shall mean a change in control of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A, Regulation 240.14a-101, promulgated under the Securities
Exchange Act of 1934, or, if Item 6(e) is no longer in effect, any regulation
issued by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 which serves similar purposes; provided that, without
limitation, a Change of Control shall be deemed to have occurred if and when (a)
any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities,
or (b) individuals who are members of the Board immediately prior to a meeting
of the shareholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board following such election.

          20.  Amendment and Termination
               -------------------------

               The Board of Directors of the Corporation may at any time and
from time to time suspend, amend, or terminate the Plan; provided that, except
as permitted under the provisions of Section 18 hereof, no amendment or
modification may be adopted without the Corporation having first obtained the
approval of the holders of a majority of the Corporation's outstanding shares of
Common Stock present, or represented, and entitled to vote at a duly held
meeting of shareholders of the Corporation, or by written consent, if the
amendment or modification would:

               (a)   increase the number of securities which may be issued under
the Plan;

               (b)   materially modify the requirements as to eligibility for
participation in the Plan;

               (c)   increase or decrease the exercise price of any Incentive
Stock Option granted under the Plan;

               (d)   increase the maximum term of Stock Options or Stock
Appreciation Rights provided for herein or increase the maximum period during
which shares of Restricted Stock may be released;

               (e)   permit Stock Options or Stock Appreciation Rights or
Restricted Stock to be granted to any person who is not an Eligible Participant;
or

               (f)   change any provision of the Plan which would affect the
qualification as an Incentive Stock Option under the internal revenue laws then
applicable of any Stock Option granted as an Incentive Stock Option under the
Plan.

                                       9
<PAGE>

               The provisions of this Plan shall not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder.

               No Stock Option or Stock Appreciation Right and no shares of
Restricted Stock may be granted during any suspension of the Plan or after
termination of the Plan.  Amendment, suspension, or termination of the Plan
shall not (except as otherwise provided in Section 19 hereof), without the
consent of the Participant, alter or impair any rights or obligations
theretofore granted.

          21.  Rights of Eligible Participants
               -------------------------------

               No Eligible Participant or other person shall have any claim or
right to be granted Restricted Stock or Stock Options or Stock Appreciation
Rights under this Plan, and neither this Plan nor any action taken hereunder
shall be deemed to give or be construed as giving any Eligible Participant or
other person any right to be retained in the employ of the Corporation or any
Subsidiary. Without limiting the generality of the foregoing, no person shall
have any rights as a result of his or her classification as an Eligible
Participant, such classification being made solely to describe, define and limit
those persons who are eligible for consideration for privileges under the Plan.

          22.  Privileges of Stock Ownership; Regulatory Law Compliance; Notice
               ----------------------------------------------------------------
of Sale
-------

               No Optionee or Grantee shall be entitled to the privileges of
stock ownership as to any shares not actually issued and delivered. No shares
may be purchased upon the exercise of a Stock Option or Stock Appreciation Right
unless and until all then applicable requirements of all regulatory agencies
having jurisdiction and all applicable requirements of the securities exchanges
upon which securities of the Corporation are listed (if any) shall have been
fully complied with.

          23.  Effective Date of the Plan
               --------------------------

               The Plan, prior to any amendments, was adopted by the Board of
Directors on November 13, 1989, and was approved by the shareholders on April
27, 1990.  Amendments to the Plan have been adopted on January 24, 1992, January
19, 1996, and October 14, 1999.

          24.  Termination
               -----------

               Unless previously terminated as aforesaid, the Plan shall
terminate on January 18, 2006. No Stock Options or Stock Appreciation Rights or
shares of Restricted Stock shall be granted under the Plan thereafter, but such
termination shall not affect any Stock Option or Appreciation Right or grant of
Restricted Stock theretofore granted.

          25.  Stock Option and Stock Appreciation Right Period
               ------------------------------------------------

               Each Stock Option and Stock Appreciation Right and all rights and
obligations thereunder shall expire on such date as the Plan Committee may
determine, but not later than ten (10) years from the date such Stock Option is
granted in the case of Incentive Stock Options and eleven (11) years from the
date of grant in the case of Non-Qualified Stock Options and Stock Appreciation
Rights, and each Stock Option and Stock Appreciation Right shall be subject to
earlier termination as provided elsewhere in this Plan.

          26.  Exculpation and Indemnification of Plan Committee
               -------------------------------------------------

               The present, former and future members of the Plan Committee, and
each of them, who is or was a director, officer or employee of the Corporation
shall be indemnified by the Corporation to the extent authorized in and
permitted by the Corporation's Certificate of Incorporation, and/or Bylaws in
connection with all

                                       10
<PAGE>

actions, suits and proceedings to which they or any of them may be a party by
reason of any act or omission of any member of the Plan Committee under or in
connection with the Plan or any Stock Option or Stock Appreciation Right granted
thereunder.

          27.  Compliance with Law and Representations of Participant
               ------------------------------------------------------

               No shares of Common Stock shall be issued upon exercise of any
Stock Option or Stock Appreciation Rights, and an Optionee or Grantee shall have
no right or claim to such shares, unless and until: (i) payment in full has been
received by the Corporation with respect to the exercise of any Stock Option;
(ii) in the opinion of the counsel for the Corporation, all applicable
requirements of law and of regulatory bodies having jurisdiction over such
issuance and delivery have been fully complied with; and (iii) if required by
federal or state law or regulation, the Optionee or Grantee shall have paid to
the Corporation the amount, if any, required to be withheld on the amount deemed
to be compensation to the Optionee or Grantee as a result of the exercise of his
or her Stock Option or Stock Appreciation Rights, or made other arrangements
satisfactory to the Corporation, in its sole discretion, to satisfy applicable
income tax withholding requirements.

               Unless the shares of Common Stock covered by this Plan have been
registered with the Securities and Exchange Commission pursuant to the
registration requirements under the Securities Act of 1933, each participant
shall: (i) by and upon accepting shares of Restricted Stock or a Stock Option or
a Stock Appreciation Right, represent and agree in writing, that the Stock
Option or Stock Appreciation Right will be acquired for investment purposes and
not for resale or distribution; and (ii) by and upon the exercise of a Stock
Option or Stock Appreciation Right, or a part thereof, furnish evidence
satisfactory to counsel for the Corporation, including written and signed
representations to the effect that the Shares are being acquired for investment
purposes and not for resale or distribution, and that the Shares being acquired
shall not be sold or otherwise transferred by the Participant except in
compliance with the registration provisions under the Securities Act of 1933, as
amended, or an applicable exemption therefrom. Further- more, the Corporation,
at its sole discretion, to assure itself that any sale or distribution by the
Participant complies with this Plan and any applicable federal or state
securities laws, may take all reasonable steps, including placing stop transfer
instructions with the Corporation's transfer agent prohibiting transfers in
violation of the Plan and affixing the following legend (and/or such other
legend or legends as the Plan Committee shall require) on certificates
evidencing the shares:

               "THE SHARES REPRESENTED BY THIS CERTIFICATE
               HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
               ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
               PLEDGED, HYPOTHECATED, OR OTHERWISE TRANS-
               FERRED OR OFFERED FOR SALE IN THE ABSENCE OF
               AN EFFECTIVE REGISTRATION STATEMENT WITH
               RESPECT TO THEM UNDER THE ACT OR A WRITTEN
               OPINION OF COUNSEL FOR THE HOLDER THEREOF,
               WHICH OPINION SHALL BE ACCEPTABLE TO NATION-
               WIDE HEALTH PROPERTIES, INC., THAT REGISTRATION
               IS NOT REQUIRED."

          28.  Notices
               -------

               All notices and demands of any kind which the Plan Committee, or
any Participant, or other person may be required or desires to give under the
terms of this Plan shall be in writing and shall be delivered in hand to the
person or persons to whom addressed (in the case of the Plan Committee, with the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
Treasurer, any Vice President, or Secretary or any Assistant Secretary of the
Corporation), by leaving a copy of such notice or demand at the address of such
person or persons as may be reflected in the records of the Corporation, or by
mailing a copy thereof, properly addressed as above, by certified or registered
mail, postage prepaid, with return receipt requested. Delivery by mail shall be
deemed made upon receipt by the notifying party of the return receipt request
acknowledging receipt of the notice or demand.

                                       11
<PAGE>

          29.  Limitation on Obligations of the Corporation
               --------------------------------------------

               All obligations of the Corporation arising under or as a result
of this Plan or Stock Options, Restricted Stock or Stock Appreciation Rights
granted hereunder shall constitute the general unsecured obligations of the
Corporation, and not of the Board of Directors of the Corporation, any member
thereof, the Plan Committee, any member thereof, any officer of the Corporation,
or any other person or any Subsidiary, and none of the foregoing, except the
Corporation, shall be liable for any debt, obligation, cost or expense
hereunder.

          30.  Limitation of Rights
               --------------------

               Except as otherwise provided by the terms of the Plan, the Plan
Committee, in its sole and absolute discretion, is entitled to determine who, if
anyone, is an Eligible Participant under this Plan and which, if any, Eligible
Participant shall receive any grant.  No oral or written agreement by any other
person not acting on the behalf of the Plan Committee relating to this Plan is
authorized, and such may not bind the Corporation or the Plan Committee to make
any grant to any person.

          31.  Severability
               ------------

               If any provision of this Plan as applied to any person or to any
circum- stance shall be adjudged by a court of competent jurisdiction to be
void, invalid, or unenforceable, the same shall in no way affect any other
provision hereof, the application of any such provision in any other
circumstances, or the validity or enforceability hereof.

          32.  Construction
               ------------

               Where the context or construction requires, all words applied in
the plural herein shall be deemed to have been used in the singular and vice
versa, and the masculine gender shall include the feminine and the neuter and
vice versa.

          33.  Headings
               --------

               The headings of the several paragraphs herein are inserted solely
for convenience of reference and are not intended to form a part of and are not
intended to govern, limit or aid in the construction of any term or provision
hereof.

          34.  Successors
               ----------

               This Plan shall be binding upon the respective successors,
assigns, heirs, executors, administrators, guardians and personal
representatives of the Corporation and Participants.

                                       12