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                                                                   EXHIBIT 10.12

                            MARINER HEALTH CARE, INC.
                    2002 OUTSIDE DIRECTORS' STOCK OPTION PLAN
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                            MARINER HEALTH CARE, INC.
                    2002 OUTSIDE DIRECTORS' STOCK OPTION PLAN

                                TABLE OF CONTENTS

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SECTION 1  INTRODUCTION...........................................................................................1

SECTION 2  DEFINITIONS............................................................................................1

SECTION 3  ADMINISTRATION.........................................................................................3

SECTION 4  SHARES SUBJECT TO PLAN.................................................................................4

SECTION 5  OPTION AWARDS..........................................................................................4

SECTION 6  TERM OF PLAN...........................................................................................4

SECTION 7  INDEMNIFICATION OF BOARD OF DIRECTORS..................................................................4

SECTION 8  AMENDMENT AND TERMINATION OF THE PLAN..................................................................5

SECTION 9  ADJUSTMENT IN OPTION SHARES AND EXERCISE PRICE.........................................................5

SECTION 10 WITHHOLDING TAXES......................................................................................5

SECTION 11 RIGHTS AS A STOCKHOLDER................................................................................6

SECTION 12 GOVERNING LAW..........................................................................................6
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                            MARINER HEALTH CARE, INC.
                    2002 OUTSIDE DIRECTORS' STOCK OPTION PLAN

                             SECTION 1. INTRODUCTION

         The Mariner Health Care, Inc. 2002 Outside Directors' Stock Option Plan
(the "Plan") provides the Company with the ability to grant each non-employee
director nonqualified stock options ("Options") to purchase shares ("Option
Shares") of common stock of Mariner Health Care, Inc. (the "Company").

                             SECTION 2. DEFINITIONS

         2.1      Definitions. The following words and phrases shall, when used
herein, have the meanings set forth below:

                  (a)      "Act" means the Securities Exchange Act of 1934, as
         amended.

                  (b)      "Affiliate" means

                           (1)      Any Subsidiary or Parent,

                           (2)      An entity that directly or through one or
         more intermediaries controls, is controlled by, or is under common
         control with the Company, as determined by the Company, or

                           (3)      Any entity in which the Company has such a
         significant interest that the Company determines it should be deemed an
         "Affiliate", as determined in the sole discretion of the Company.

                  (c)      "Agreement" means a stock option agreement, which is
         an agreement subject to the terms of the Plan.

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

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

                  (f)      "Company" means Mariner Health Care, Inc., a Delaware
         corporation.

                  (g)      "Common Stock" means the Company's common stock.

                  (h)      "Eligible Director" means a Director who meets the
         requirements of Section 3.3 of the Plan.

                  (i)      "Director" means a director of the Company.

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                  (j)      "Disability" has the same meaning as provided in the
long-term disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any Affiliate of the Company for
Director. If no long-term disability plan or policy was ever maintained on
behalf of the Director or, the determination of Disability relates to an Option,
Disability means that condition described in Code Section 22(e)(3), as amended
from time to time. In the event of a dispute, the determination of Disability
will be made by the Compensation Committee of the Board of Directors and will be
supported by advice of a physician competent in the area to which such
Disability relates.

                  (k)      "Employee" means any person who is employed by the
Company or an Affiliate for purposes of the Federal Insurance Contributions Act.

                  (l)      "Fair Market Value" with regard to a date means:

                           (1)      the price at which Common Stock shall have
         been sold on that date or the last trading date prior to that date as
         reported by the national securities exchange selected by the
         Compensation Committee of the Board of Directors on which the shares of
         Common Stock are then actively traded or, if applicable, as reported by
         the NASDAQ Stock Market.

                           (2)      if such market information is not published
         on a regular basis, the price of Common Stock in the over-the-counter
         market on that date or the last business day prior to that date as
         reported by the NASDAQ Stock Market or, if not so reported, by a
         generally accepted reporting service.

                           (3)      if Common Stock is not publicly traded, as
         determined in good faith by the Compensation Committee of the Board of
         Directors with due consideration being given to (i) the most recent
         independent appraisal of the Company, if such appraisal is not more
         than twelve months old and (ii) the valuation methodology used in any
         such appraisal.

         For purposes of Paragraphs (1), (2), or (3) above, the Compensation
         Committee of the Board of Directors may use the closing price as of the
         applicable date, the average of the high and low prices as of the
         applicable date or for a period certain ending on such date, the price
         determined at the time the transaction is processed, the tender offer
         price for shares of Common Stock, or any other method which the
         Compensation Committee of the Board of Directors determines is
         reasonably indicative of the fair market value.

                  (m)      "Option" means an option to purchase Common Stock of
the Company granted pursuant to and in accordance with the provisions of the
Plan.

                  (n)      "Optionee" means a Director who is granted an Option
pursuant to and in accordance with the provisions of the Plan.

                  (o)      "Option Shares" means Shares subject to and issued
pursuant to an exercise of an Option granted under the Plan.

                  (p)      "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if at the
time of the granting of the Option, each of the corporations other than the
Company owns stock possessing 50% of more of the total combined


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voting power of all classes of stock in one of the other corporations in such
chain. A Parent shall include any entity other than a corporation to the extent
permissible under Section 424(f) or regulations and rulings thereunder.

                  (q)      "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain. A Subsidiary shall include any entity other than a
corporation to the extent permissible under Section 424(f) or regulations or
rulings thereunder.

                  (r)      "Share" means a share of Common Stock of the Company.

                            SECTION 3. ADMINISTRATION

         3.1      Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors.

         3.2      Finality. The Compensation Committee of the Board of Directors
shall have the authority in its sole discretion to interpret the Plan, to grant
Options under and in accordance with the provisions of the Plan, and to make all
other determinations and to take all other actions it deems necessary or
advisable for the implementation and administration of the Plan or Agreements
thereunder. All actions of the Compensation Committee of the Board of Directors
shall be final, conclusive and binding upon the Optionees. No member of the
Compensation Committee of the Board of Directors shall be liable for any action
taken or decision made in good faith relating to the Plan or any grant of an
Option thereunder. All Options granted pursuant to this Plan shall be evidenced
by an Agreement and shall be subject to the terms of the Plan and such
additional terms are as set forth in the Agreement.

         3.3      Eligibility. Directors who are not Employees of the Company or
an Affiliate shall be eligible to receive Options under the Plan on the terms
and subject to the restrictions hereinafter set forth.

         3.4      Exercise and Payment of Option Awards. All Options may be
exercised to the extent vested. All Options may be exercised only by written
notice to the Company. Payment for all Shares purchased pursuant to exercise of
an Option shall be made (a) in cash; (b) by delivery to the Company of a number
of Shares which have been beneficially owned by the Eligible Director for at
least six (6) months prior to the date of exercise having an aggregate Fair
Market Value of not less than the product of the exercise price multiplied by
the number of shares the Eligible Director intends to purchase upon exercise of
the Option on the date of delivery; or (c) to the extent available, in a
cashless exercise through a broker. Payment shall be made at the time that the
Option or any part thereof is exercised, and no shares shall be issued or
delivered upon exercise of an Option until full payment has been made. The
holder of an Option, as such, shall have none of the rights of a shareholder of
the Company.

         3.5      Non-Transferability. Unless otherwise permitted by the
Compensation Committee of the Board of Directors, an Option shall not be
transferable or assignable except by will or by the laws of descent and
distribution and shall be exercisable during the Optionee's lifetime only by the


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Optionee, except in the case of the Optionee's Disability, in which case an
Option shall be exercisable by the Optionee's legal representative.

                        SECTION 4. SHARES SUBJECT TO PLAN

         The aggregate number of Option Shares which may be issued under the
Plan shall at no time exceed one hundred seventy-five thousand (175,000). The
limitation established by this Section shall be subject to adjustment in
accordance with the provisions of the Plan. In the event that an Option expires
or is terminated for any reason, the Option Shares allocable to the unexercised
portion of such Option may again be subject to an Option under the Plan. In the
event that an Optionee delivers Shares as payment of the exercise price for an
Option, such Shares may be subject to Options under this Plan.

                            SECTION 5. OPTION AWARDS

         Each Option contemplated by this Section 5 shall be evidenced by an
Agreement which shall incorporate the applicable terms of the Plan. The terms of
each Agreement shall provide: (a) that the per share purchase price for each
Share subject to the Option shall be the Fair Market Value as of the date of
grant; provided, however, that within the first ninety (90) days following the
consummation of the Plan of Reorganization of the Company, Options may be
granted within an exercise price equal to the reorganization price of the
Company's common stock determined in connection with the Plan of Reorganization,
even if such price is less than Fair Market Value; and (b) that the Option shall
expire upon the earlier of the tenth (10th) anniversary following the date of
grant or, subject to the condition that an Option may not be exercised past the
expiration of its term, within one year after the date the Director ceases to
serve upon the Board of Directors for any reason.

                             SECTION 6. TERM OF PLAN

         The Plan shall be effective on the date of its approval by the Board of
Directors and shall continue to be effective until ten (10) years following the
effective date of the Plan, unless sooner terminated by the Board of Directors
pursuant to Section 10 hereof.

                SECTION 7. INDEMNIFICATION OF BOARD OF DIRECTORS

         In addition to such other rights of indemnification that the members of
the Board of Directors may have, each member of the Board of Directors shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
it may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted thereunder, and against all
amounts paid by it in settlement thereof (provided the settlement has received
the prior approval of the Company) or paid by it in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in the action, suit or proceeding that the Board
member is liable for negligence or misconduct in the performance of its duties;
provided that promptly after institution of the action, suit or proceeding the
Board member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend such matter. Upon the delivery to the Board member
of written notice of assumption by the Company of the defense of such matter,
the Company will not be responsible to the Board member for any further fees and
disbursements relating to the defense of such matter, including fees and
disbursements of counsel.


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                SECTION 8. AMENDMENT AND TERMINATION OF THE PLAN

         The Board of Directors at any time may amend or terminate the Plan
without the approval of the shareholders of the Company; provided, however, that
the Board of Directors may condition any amendment on the approval of the
shareholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws to which the Company, this
Plan, Optionees or Eligible Directors are subject. No amendment or termination
of the Plan shall adversely affect the rights of an Optionee with regard to his
Options without his consent.

            SECTION 9. ADJUSTMENT IN OPTION SHARES AND EXERCISE PRICE

         If (i) the number of Shares shall be increased or reduced by a change
in par value, split-up, stock split, reverse stock split, reclassification,
merger, consolidation, distribution of stock dividends or similar capital
adjustments, or (ii) the Company engages in a transaction for which the
Compensation Committee of the Board of Directors determines an adjustment is
appropriate, then the Compensation Committee of the Board of Directors may make
an adjustment in the number and kind of Shares available for the granting of
Options under the Plan. In addition, the Compensation Committee of the Board of
Directors may, in its sole and absolute discretion, make an adjustment in the
number, kind and price of Shares as to which outstanding Options, or the
portions thereof then unexercised, shall be exercisable, to the end that the
Optionee's proportionate interest is maintained as before the occurrence of the
event. The adjustment in outstanding Options will be made without change in the
total price applicable to the unexercised portion of the Option and, if
necessary, with a corresponding adjustment in the exercise price per share. Any
fractional Shares resulting from such adjustments shall be eliminated. All
adjustments made by the Compensation Committee of the Board of Directors under
this Section shall be conclusive.

         In the event of a merger, consolidation or other reorganization of the
Company or tender offer for Shares, the Compensation Committee of the Board of
Directors may make such adjustments with respect to Options and take such other
action as it deems necessary or appropriate to reflect such merger,
consolidation, reorganization or tender offer, including, without limitation,
the substitution of new Options, or the adjustment of outstanding Options, the
acceleration of Options, the removal of restrictions on outstanding Options, or
the termination of outstanding Options in exchange for the cash value determined
in good faith by the Compensation Committee of the Board of Directors. Any
adjustment pursuant to this Section may provide, in the Compensation Committee's
discretion, for the elimination without payment therefor of any fractional
Shares that might otherwise become subject to any Options, but except as set
forth in this Section may not otherwise diminish the then value of the Options.

                          SECTION 10. WITHHOLDING TAXES

         To the extent required by law, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirement, if any, prior to the
delivery of any certificate or certificates for such Shares. An optionee must
pay the withholding tax in cash or by certified check or by the Company
deducting a sufficient number of Shares from the Option Shares issued to satisfy
withholding taxes, in accordance with the Agreement.


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                      SECTION 11. RIGHTS AS A SHAREHOLDER

         An Optionee or a transferee of an Optionee shall have no rights as a
shareholder of the Company with respect to any Option or Option Shares until the
date of the issuance of a stock certificate to him for the Option Shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date the stock certificate is issued, except as
otherwise provided in the Plan.

                            SECTION 12. GOVERNING LAW

         The laws of the State of Delaware shall govern this Plan, to the extent
not preempted by federal law, without reference to the principles of conflict of
laws.


                                             MARINER HEALTH CARE, INC.



                                             By:
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                                             Title:
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