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                                                                   EXHIBIT 10.26

                                                                           Final

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         This Amended and Restated Employment Agreement (this "Amended
Agreement") is made and entered into as of March 8, 2004 (the "Amendment Date")
by and between Boyd Hendrickson ("Executive") and Skilled Healthcare Group Inc.,
formerly known as Fountain View, Inc., a Delaware corporation (the "Company").

                                    RECITALS

         The Company and Executive are parties to that certain Employment
Agreement dated March 2002 ("Original Agreement"), which sets forth certain
terms of employment including provisions concerning an Alternative Equity Bonus
Program.

         Pursuant to the Original Agreement, the Company may elect to institute
the Alternative Equity Bonus Program, and the Company and Executive desire to
implement an amended Alternative Equity Bonus Program.

         The Company and Executive desire to amend and restate the Original
Agreement to set forth, in full, the understanding of the parties concerning
employment and the amended Alternative Equity Bonus Program to be implemented.

         This Amended Agreement shall govern the employment relationship between
the parties from and after the Amendment Date and supersedes and negates all
previous agreements made between the parties, whether written or oral relating
to the Executive's employment relationship with the Company. The Original
Agreement governs the relationship between the parties prior to the Amendment
Date.

                                    AGREEMENT

         The Executive and the Company agree as follows:

1.       DUTIES.

1.1      RETENTION. The Company shall employ the Executive for the Period of
         Employment and the Executive agrees to such employment on the terms and
         conditions set forth in this Amended Agreement. The "Period of
         Employment" commenced on April 1, 2002 (the "Effective Date") and shall
         continue until March 31, 2007, unless earlier terminated pursuant to
         Section 4.

1.2      DUTIES, REPORTING. During the Period of Employment, the Executive shall
         be employed by the Company as the Company's Chief Executive Officer and
         shall have the duties and responsibilities typical of the position of
         chief executive officer of a corporation, subject to the legal
         directives of the Company's Board of Directors (the "Board"). During
         the Period of Employment, the Executive shall report to the Board and
         also may be employed by one or more of the Affiliated Entities (as
         defined in Section 4.5) as determined by the Board. During the Period
         of Employment, the Executive shall use the Executive's best efforts to
         promote the interests of the Company and the direct and indirect
         subsidiaries of

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         the Company (collectively, the "Companies"), and to maximize the value
         of the Company, and shall devote the Executive's full business time,
         attention and best efforts to their business and affairs. The Company
         acknowledges that, as of the Effective Date, the Executive owns (but
         does not operate) the long-term care facilities identified on Schedule
         1 hereto. The Company agrees that such ownership interests shall not
         constitute a breach of this Section 1.2 or Section 5(vi) of this
         Amended Agreement by the Executive; provided that (1) the Executive
         does not acquire any additional ownership interests in long-term care
         facilities, (2) the Executive is not actively involved in the operation
         of any of such long-term care facilities, and (3) such ownership
         interests do not otherwise materially interfere with the Executive's
         duties to the Company hereunder.

1.3      NO BREACH OF CONTRACT. The Executive hereby represents and warrants
         that the execution and delivery of this Amended Agreement by the
         Executive and the Company and the performance by the Executive of the
         Executive's duties hereunder shall not constitute a breach of, or
         otherwise contravene, the terms of any employment or other agreement or
         policy to which the Executive is a party or otherwise bound.

1.4      LOCATION. The Executive acknowledges that the Company's principal
         executive offices are currently located in Foothill Ranch, California.
         The Executive shall operate principally out of such executive offices,
         as they may be moved from time to time within Southern California. The
         Company expects, and the Executive agrees, that the Executive shall be
         required to travel from time to time to Company facilities, suppliers
         and customers in order to fulfill his duties to the Company.

1.5      BOARD MEMBERSHIP. The Company shall use its reasonable best efforts to
         cause the Executive to be elected to the Board. If Bill Scott is no
         longer Chairman of the Board, the Company shall also use its reasonable
         best efforts to cause Executive to be named the Chairman of the Board.
         The Executive agrees to resign his directorship and positions with the
         Company when his employment by the Company terminates (regardless of
         the reason for such termination).

2.       COMPENSATION.

2.1      BASE SALARY. During the Period of Employment, the Executive will
         receive a salary at the rate of $450,000 annually (the "Base Salary"),
         payable in accordance with the Company's regular payroll practices in
         effect from time to time, but not less frequently than in monthly
         installments.

2.2      ANNUAL PERFORMANCE BONUS. Executive will be eligible to receive an
         annual performance bonus ("Annual Performance Bonus") for each fiscal
         year of the Company that ends during the Period of Employment if he is
         employed by the Company at the end of that fiscal year. The Annual
         Performance Bonus for a fiscal year will be based on a target EBITDA
         and patient care/quality goals determined annually by the Company and
         other factors identified below. Subject to the following paragraphs of
         this Section 2.2, the Executive shall receive an Annual Performance
         Bonus for the Company's 2004 fiscal year of $50,000 for each $1 million
         that the Company's consolidated EBITDA for that

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         fiscal year exceeds $47 million. The Annual Performance Bonus formula,
         EBITDA targets, and other bonus factors for subsequent years shall be
         determined by the Board.

         The Annual Performance Bonus shall not be pro rated for consolidated
         EBITDA increments of less than $1 million. Notwithstanding anything
         else contained herein to the contrary, the Annual Performance Bonus
         shall not exceed $300,000 for any one fiscal year.

         For this purpose, "EBITDA" means, for the applicable fiscal year, net
         income (or loss) of the Company (after eliminating (x) all
         extraordinary items of income or loss and (y) all income or loss
         related to non-cash change in interest rate hedge), as reflected in the
         Company's financial statements for such fiscal year, plus to the extent
         deducted in computing such net income (or loss), without duplication,
         (i) all interest and other similar expense in respect of indebtedness
         for borrowed money and similar expense in respect of capitalized leases
         and preferred stock, plus (ii) all expenses for income taxes (whether
         paid, accrued or deferred), plus (iii) depreciation and amortization
         expenses, less (iv) interest and other similar income in respect of
         money loaned by the Company and deposits of the Company, all of the
         foregoing as determined on a consolidated basis for Company and its
         Affiliated Entities. EBITDA shall be determined after all compensation
         accruals, including all compensation payable to Executive but before
         giving effect to any Annual Performance Bonuses payable to Executive or
         any other executive officers.

         The Annual Performance Bonus for any given year will be paid after the
         Company's annual audit for that year is completed and in no event later
         than the April 15th of the following year. Executive shall have earned
         and will receive the appropriate Annual Performance Bonus if he is
         employed by the Company on December 31st of the applicable fiscal year,
         regardless of whether he is employed between January 1st and the
         payment date in the following year.

         The Executive's Annual Performance Bonus opportunity for each fiscal
         year (including, without limitation, the 2004 fiscal year) shall be
         subject to patient care/quality goals to be established by the Company
         for that year and such other performance goals and targets (which may
         include, without limitation, cash generation goals and targets) as may
         be established by the Company for that year; provided, however, that
         any such goals and targets established with respect to the Executive's
         Annual Performance Bonus opportunity for a year shall be consistent
         with the goals and targets established under the Company's general
         employee incentive program for that year.

         The Company may make reasonable adjustments to performance goals and
         targets (including, without limitation, the EBITDA targets set forth
         above) and the Annual Performance Bonus formula with respect to a year
         to account for any mergers, reorganizations, acquisitions,
         dispositions, recapitalizations, changes in accounting principles or
         practices or similar events.

2.3      SALE BONUS. If during the Period of Employment or, if the Period of
         Employment terminates before March 31, 2007 as a result of a
         termination by the Company without Cause (as defined

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         in Section 4.5) or due to the Executive's death or Disability (as
         defined in Section 4.5), within nine (9) months following such
         termination, either (i) all or substantially all of the Company's
         assets are sold ("Asset Sale"), (ii) the Company closes a public
         offering pursuant to an effective registration statement under the
         Securities Act of 1933, as amended, covering the offer and sale of
         Common Stock for the account of the Company to the public and the
         Common Stock becomes listed or quoted on a national security exchange
         or in the Nasdaq National Market Quotation System (an "IPO"), or (iii)
         at least a majority of the Company's then outstanding common stock is
         sold in a single transaction or series of substantially related
         transactions, and unless otherwise approved by the Company's Board, for
         cash or marketable securities ("Stock Sale")(any of an Asset Sale, IPO
         or Stock Sale is referred to as a "Trigger Event"), and the Terminal
         Equity Value (defined below) of the Company at such Trigger Event is
         less than [the minimum Terminal Equity Value], the Company will pay the
         Executive a $1,000,000 cash bonus (the "Sale Bonus") at the time of the
         consummation of the transaction.

         As used in this Amended Agreement, "Terminal Equity Value" shall mean
         (i) in the case of an IPO, the equity value of the Company's
         outstanding common stock determined based on the public offering price
         of the Company's common stock in the IPO and the number of shares of
         common stock outstanding immediately prior to the IPO; (ii) in the case
         of a Stock Sale, the equity value of the Company's outstanding common
         stock determined based on the net proceeds distributable in respect of
         the common stock of the Company that is sold in the Stock Sale and the
         number of shares of common stock outstanding; and (iii) in the case of
         an Asset Sale, the aggregate net proceeds that are or would be
         distributable in respect of all outstanding common stock of the Company
         assuming that the Company paid off its debt and preferred stock and
         debt securities, and liquidated on the Asset Sale, and assuming that
         any right, warrant or option to acquire any common stock of the Company
         entitled to be exercised is converted immediately prior to the
         distribution.

         Once a Sale Bonus becomes payable pursuant to this Section 2.3,
         Executive shall have no right to any other bonus under this Section 2.3
         with respect to any subsequent event or occurrence and no right with
         respect to the Restricted Shares granted pursuant to Section 2.4, which
         Restricted Shares shall be deemed automatically forfeited and
         cancelled.

2.4      RESTRICTED SHARES. The Executive shall be issued, concurrently with the
         execution of this Amended Agreement, 39,439 shares of Class B
         Non-Voting Common Stock, subject to all of the restrictions set forth
         in the Restricted Stock Agreement attached hereto as Exhibit A
         ("Restricted Stock Agreement"), the terms of which are incorporated
         herein by reference. Executive understands and agrees that the
         Restricted Shares shall not vest and shall have no value unless and
         until certain trigger events occur, including trigger events requiring
         a liquidity transaction wherein the Terminal Equity Value of the
         Company is equal to or in excess of [the minimum Terminal Equity
         Value]. The Restricted Shares are issued in satisfaction of the equity
         incentive program contemplated by Section 2.4 of the Original
         Agreement.

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3.       BENEFITS.

3.1      HEALTH, WELFARE AND FRINGE BENEFITS. During the Period of Employment,
         the Executive shall be entitled to participate in all pension, welfare
         and fringe benefit plans and programs made available by the Company to
         its executive and managerial employees generally, as such plans or
         programs may be in effect from time to time. Without limiting the
         foregoing, the Executive shall be entitled to participate in a
         Company-paid disability plan or program pursuant to which the Executive
         shall be entitled to no less than $225,000 if his employment by the
         Company terminates due to his Disability during the Period of
         Employment.

3.2      EXPENSE REIMBURSEMENT. The Company shall reimburse the Executive for
         the reasonable expenses and disbursements incurred by the Executive in
         the performance of the Executive's duties for the Company during the
         Period of Employment, subject to the Company's employee expense
         reimbursement policies in effect from time to time.

3.3      VACATION. During the Period of Employment, the Executive shall receive
         four (4) weeks paid vacation per year; provided that the maximum unused
         vacation time that the Executive may accrue is eight (8) weeks.

3.4      CAR ALLOWANCE. The Executive shall be entitled to a car allowance of
         $750 per month for the Period of Employment.

4.       TERMINATION.

4.1      TERMINATION BY THE COMPANY. The Executive's employment by the Company
         and the Period of Employment may be terminated at any time by the
         Company with Cause (as defined below) or without Cause or in the event
         of the death or Disability of the Executive.

4.2      TERMINATION BY THE EXECUTIVE. The Executive's employment by the Company
         and the Period of Employment may be terminated at any time by the
         Executive.

4.3      BENEFITS UPON TERMINATION. If the Executive's employment by the Company
         is terminated during the Period of Employment for any reason by the
         Company or by the Executive, the Company shall have no further
         obligation to make any payments or provide any benefits to the
         Executive except (a) the Company shall pay the Executive any Accrued
         Obligations (as defined below), and (b) the Company shall continue for
         three months following the termination (one month following the
         termination if the Executive resigns) (but in no event after Executive
         becomes employed by a new employer) the Executive's medical insurance
         as in effect immediately prior to the termination or similar coverage
         or reimburse the Executive for similar coverage. Those rights that are
         expressly contemplated pursuant to Section 2.3 or pursuant to the
         Restricted Stock Agreement to continue following a termination of
         employment are outside of the scope of the preceding sentence. If the
         Executive resigns on any day other than the last day of a fiscal year
         of the Company or if the Executive's employment is terminated by the
         Company with Cause, the Executive shall not be entitled to any Annual
         Performance Bonus (or pro rated Annual Performance Bonus) for the year
         in which his employment terminates.

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         If, during the Period of Employment, the Executive's employment is
         terminated by the Company without Cause (and other than due to the
         Executive's Disability or death), the Executive shall make himself
         reasonably available to the Company following such termination for such
         transition and other consulting services as the Company may reasonably
         request from time to time. If the termination of the Executive's
         employment by the Company occurs on or after December 31, 2002, the
         Executive's obligation to perform such services, and the Company's
         obligation to retain the Executive to perform such services, shall
         terminate on the earlier of (1) the second anniversary of the date that
         the Executive's employment is terminated by the Company, or (2) March
         31, 2007. Notwithstanding the preceding sentence, the Company shall
         have no obligation to retain or to continue to retain, as the case
         maybe, the Executive as a consultant if the Executive has previously
         breached any provision of Section 1.5 or Section 5 hereof. For the
         period of such consulting services, the Company shall have the
         exclusive right to the Executive's services that relate to any of the
         following businesses in any county in which the Company at such time
         has any operations: stalled nursing facilities, assisted living
         facilities, inpatient or outpatient therapy services, pharmacies,
         urological supplies, enteral feeding supplies, and orthodics. For the
         period of such consulting services, the Company shall pay the Executive
         a monthly consulting fee of $37,500 (pro rated for any partial month of
         service). The Company shall initially deposit the full consulting fee
         for the entire scheduled consulting period with a third-party escrow
         agent reasonably selected by the Company, which escrow agent shall pay
         (on behalf of the Company) the monthly consulting fee to the Executive;
         provided that the escrow agent shall cease paying the Executive and
         shall return any unpaid balance to the Company in the event that the
         Company terminates the consulting services due to a breach of Section
         1.5 of Section 5 by the Executive. The Company shall be entitled to any
         earnings on the escrowed amounts.

         If, during the Period of Employment, the Executive's employment is
         terminated by the Company without Cause (and other than due to the
         Executive's Disability or death), the Company shall, but only as long
         as the Executive remains in compliance with the provisions of Sections
         1.5 and 5:

                  (a)      pay the Executive a pro-rated Annual Performance
                           Bonus (based on the Company's consolidated EBITDA for
                           the fiscal year up until the termination of
                           employment and a pro-rated EBITDA target) for the
                           year in which the termination occurs, and

                  (b)      continue for twelve months (as opposed to three
                           months) following the termination (but in no event
                           after Executive becomes employed by a new employer)
                           the Executive's medical insurance as in effect
                           immediately prior to the termination or similar
                           coverage or reimburse the Executive for similar
                           coverage.

4.4      CHANGE OF CONTROL. The Executive shall be deemed to have been
         terminated by the Company without Cause for purposes of this Section 4
         if the Executive resigns from the Company within six (6) months after a
         Change of Control (as defined below) as a result of a diminution of his
         Base Salary, the Company's termination of his status as an

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         executive officer of the Company, and/or a material diminution in his
         duties and/or responsibilities from their level in effect immediately
         prior to the Change of Control.

4.5      CERTAIN DEFINED TERMS.

         As used herein, "Accrued Obligations" means Base Salary that had
         accrued but had not been paid prior to the date of termination, and any
         Annual Performance Bonus previously earned but unpaid.

         As used herein, "Affiliated Entities" shall mean Skilled Healthcare LLC
         and any entity that is controlled by and consolidated with in the
         financial statements of either the Company or Skilled Healthcare LLC.

         As used herein, "Cause" shall mean the reasonable and good faith
         determination by a majority of the Board, that, during the Period of
         Employment, any of the following events or contingencies exists or has
         occurred:

         -        the Executive has breached a fiduciary duty to the Company or
                  any of its Affiliated Entities or breached of any of the
                  Executive's obligations under Section 5;

         -        the Executive has been convicted of a felony or misdemeanor
                  that involves fraud, dishonesty, theft, embezzlement, and/or
                  an act of violence or moral turpitude, or the Executive has
                  plead guilty or no contest (or a similar plea) to any such
                  felony or misdemeanor; or

         -        the Executed has committed an act or an omission that
                  constitutes fraud, gross negligence, or willful misconduct in
                  connection with Executive's employment by the Company or any
                  of its Affiliated Entities.

         As used herein, "Disability" shall mean an illness (mental or physical)
         or injury that, in the good faith and reasonable determination of a
         majority of the Board, based on the report of a reputable physician
         selected jointly by the parties, renders the Executive unable to
         perform the Executive's duties for six (6) months during any twelve
         (12) month period.

         As used herein, "Change of Control" shall mean (i) any time at which
         the current holders of Company stock (common and preferred) and their
         affiliates do not continue to own, in the aggregate, at least a
         majority of the outstanding shares of the Company's common stock and at
         which Heritage partners and its affiliates do not collectively
         constitute the single largest holder of Company common stock, or (ii)
         any sale of all or substantially all of the assets of the Company.

5.       CONFIDENTIALITY, NON-SOLICITATION, ETC.

         In consideration of the mutual promises contained herein, and to
         preserve the goodwill of the Companies, the Executive agrees as
         follows:

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         (i)      The Executive will not at any time, directly or indirectly,
                  disclose or divulge, except as reasonably required in
                  connection with the performance of the Executive's duties for
                  the Company, any Confidential Information (as hereinafter
                  defined) acquired by the executive during the Executive's
                  affiliation with or employment by the Companies. As used
                  herein, "Confidential Information" means all trade secrets and
                  all other proprietary or non-public information of a business,
                  financial, marketing, technical or other nature pertaining to
                  any of the Companies or their affairs and all information of
                  others that any of the Companies have agreed not to disclose;
                  provided, that Confidential Information shall not include any
                  information which has entered or enters the public domain
                  through no fault of the Executive or which the Executive is
                  required to disclose by law or legal process.

         (ii)     The Executive shall make no use whatsoever, directly or
                  indirectly, of any Confidential Information, except as
                  reasonably required in connection with the performance of the
                  Executive's duties for the Company.

         (iii)    Upon any of the Companies' request at any time and for any
                  reason, the Executive shall immediately deliver to the Company
                  all materials (including all copies) in the Executive's
                  possession which contain or relate to Confidential
                  Information.

         (iv)     All inventions, developments or improvements made by the
                  Executive, either alone or in conjunction with others, at any
                  time or at any place during the term of the Executive's
                  employment by the Company, whether or not reduced to writing
                  or practice during such term, which relate to the Business (as
                  defined below), or which were developed or made in whole or in
                  part using any of the Companies' facilities, shall be the
                  exclusive property of the Companies. The Executive shall
                  promptly disclose any such invention, development or
                  improvement to the Company, and, at the request and expense of
                  any of the Companies, shall assign a all of the Executive's
                  rights to the same to the Companies. The Executive shall sign
                  all instruments necessary for the filing and prosecution of
                  any applications for or extension or renewals of letters
                  patent of the United States or any foreign country which any
                  of the Companies desire to file. "Business" shall mean any
                  long-term care facility business, assisted living facility
                  business, pharmacy business and/or therapy business of any of
                  the Companies.

         (v)      All copyrightable work by the Executive during the term of the
                  Executive's employment by the Company which relates to the
                  Business is intended to be "work made for hire" as defined in
                  Section 101 of the Copyright Act of 1976, and shall be the
                  property of the Companies. If the copyright to any such
                  copyrightable work is not the property of the Companies by
                  operation of law, the Executive will, without further
                  consideration, assign to the Companies all right, title and
                  interest in such copyrightable work and will assist the
                  Companies and their nominees in every way, at the Companies'
                  expense, to secure, maintain and defend for the Companies'
                  benefit copyrights and any extensions and renewals thereof on
                  any and all such work including translations thereof in any
                  and all countries, such

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                  work to be and to remain the property of the Companies whether
                  copyrighted or not.

         (vi)     The Executive will not directly or indirectly, individually or
                  as a consultant to, or executive, officer, director,
                  stockholder, partner or other owner or participant in any
                  business entity, engage in or assist any other person to
                  engage in the businesses of skilled nursing facilities,
                  assisted living facilities, inpatient or outpatient therapy
                  services, pharmacies, urological supplies, enteral feeding
                  supplies and orthodics, in each instance in any county in
                  which the Company at such time has any operations; provided,
                  however, that the Executive may own not more than a 5% equity
                  interest in any publicly-traded company.

         (vii)    The Executive will not directly or indirectly, individually or
                  as a consultant to, or as employee, officer, director,
                  stockholder, partner or other owner or participant in any
                  business entity other than the Companies, (a) solicit or
                  endeavor to entice away from any of the Companies, or
                  otherwise materially interfere with the business relationship
                  of any of the Companies with, any person who is, or was within
                  the six-month period immediately prior to the termination of
                  the Executive's employment with the Company, employed by, a
                  consultant to or associated with any of the Companies, or (b)
                  materially interfere with the business relationship of any of
                  the Companies with any person or entity who is, or was within
                  the two-year period immediately prior to the termination of
                  the Executive's employment with the Company, a supplier to any
                  of the Companies.

         (viii)   The Executive agrees that if the Executive, individually or as
                  a consultant to, or as an employee, officer, director,
                  stockholder, partner or other owner or participant in any
                  business entity other than the Companies, is directly involved
                  in the hiring or employing of any person who is or was
                  employed by, a consultant to or associated with any of the
                  Companies within one year prior to the employ or hiring of
                  such person, then for each such person the Executive shall pay
                  to the Company a lump sum equal to nine (9) months of that
                  person's most recent salary from the Companies, payable on the
                  first date of that person's employ or hiring, whichever is
                  first, plus the Company's reasonable attorneys' fees incurred
                  to enforce this paragraph. Nothing within this paragraph shall
                  be construed to limit or modify in any way the Executive's
                  non-solicitation covenants contained in clause (vii) above.

         (ix)     Without limiting the remedies available to the Companies and
                  notwithstanding Section 2.3, the Executive acknowledges that a
                  breach of any of the covenants contained in this Section 5
                  could result in irreparable injury to the Companies for which
                  there might be no adequate remedy at law, and that, in the
                  event of such a breach or threat thereof, the Companies shall
                  be entitled to obtain a temporary restraining order and/or a
                  preliminary injunction and a permanent injunction restraining
                  the Executive from engaging in any activities prohibited by
                  this Section 5 or such other equitable relief as may be
                  required to enforce specifically any of the covenants of this
                  Section 5.

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         (x)      The Executive shall at no time make any derogatory or
                  disparaging remarks about any of the Companies, or any of
                  their respective officers, directors or principal
                  stockholders.

         (xi)     The provisions of this Section 5 shall continue in full force
                  and effect during the course of the Executive's employment by
                  the Company and shall further continue in full force and
                  effect after the Executive's employment by the Company
                  terminates; provided that (a) the restrictions set forth in
                  Section 5(vi) shall terminate upon the earlier to occur of (i)
                  the date that is two years after the Executive's employment by
                  the Company terminates, or (ii) the last day of the remaining
                  scheduled portion of the Period of Employment, and (b) the
                  provisions set forth in Sections 5(vii) and 5(viii) shall
                  terminate two years after the Executive's employment by the
                  Company terminates.

6.       ASSIGNMENT.

         This Amended Agreement is personal in its nature and neither of the
         parties hereto shall, without the consent of the other, assign or
         transfer this Amended Agreement or any rights or obligations hereunder;
         provided, however, that, in the event of a merger, consolidation, or
         transfer or sale of all or substantially all of the assets of the
         Company with or to any other individual(s) or entity, This Amended
         Agreement shall be binding upon and inure to the benefit of such
         successor and such successor shall discharge and perform all the
         promises, covenants, duties, and obligations of the Company hereunder.

7.       GOVERNING LAW.

         This Amended Agreement and the legal relations hereby created between
         the parties hereto shall be governed by and construed under and in
         accordance with the laws of the State of California, without regard to
         choice of law provisions thereof.

8.       ENTIRE AGREEMENT.

         This Amended Agreement embodies the entire agreement of the parties
         hereto respecting the matters within its scope. Effective as of the
         Amendment Date, this Amended Agreement supersedes and replaces all
         prior agreements of the parties hereto on the subject matter hereof,
         including without limitation the Original Agreement. The Original
         Agreement governs the relationship of the parties prior to the
         Amendment Date. Any prior negotiations, correspondence, agreements,
         proposals or understandings relating to the subject matter hereof shall
         be deemed to be merged into this Amended Agreement and to the extent
         inconsistent herewith, such negotiations, correspondence, agreements,
         proposals, or understandings shall be deemed to be of no force or
         effect. There are no representations, warranties, or agreements,
         whether express or implied, or oral or written, with respect to the
         subject matter hereof, except as set forth herein.

9.       AMENDMENT; WAIVER.

         No amendment or waiver of this Amended Agreement or any term, covenant,
         or condition hereof shall be binding upon the party against whom
         enforcement of such

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         amendment or waiver is sought unless it is made in writing and signed
         by or on behalf of such party. Failure to insist upon strict compliance
         with any of the terms, covenants, or conditions hereof shall not be
         deemed a waiver of such term, covenant, or condition, nor shall any
         waiver or relinquishment of, or failure to insist upon strict
         compliance with, any right or power hereunder at any one or more times
         be deemed a waiver or relinquishment of such right or power at any
         other time or times.

10.      NUMBER AND GENDER.

         Where the context requires, the singular shall include the plural, the
         plural shall include the singular, and any gender shall include all
         other genders.

11.      SECTION HEADINGS.

         The section headings in this Amended Agreement are for the purpose of
         convenience only and shall not limit or otherwise affect any of the
         terms hereof.

12.      SEVERABILITY.

         In the event that a court of competent jurisdiction determines that any
         portion of this Amended Agreement is in violation of any statute or
         public policy, then only the portions of this Amended Agreement which
         violate such statute or public policy shall be stricken, and all
         portions of this Amended Agreement which do not violate any statute or
         public policy shall continue in full force and effect. Furthermore, if
         any one or more of the provisions contained in this Amended Agreement
         are for any reason held to be excessively broad as to duration,
         geographical scope, activity or subject, such provisions shall be
         construed by limiting and reducing them so as to be enforceable to the
         maximum extent permitted under applicable law.

13.      NOTICES.

         Any notice or other communication given pursuant to this Amended
         Agreement shall be in writing and shall be personally delivered, sent
         by overnight courier or express mail, or mailed by first class
         certified or registered mail, postage prepaid, return receipt requested
         as follows:

         (i)      if to the Company:

                  Skilled Healthcare Group, Inc.
                  27442 Portola Parkway,
                  Suite 200
                  Foothill Ranch, California 92610

                  With copies to:

                  Independent Subcommittee of the Board
                  Skilled Healthcare Group, Inc.
                  27442 Portola Parkway,

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                                       11

<PAGE>

                  Suite 200
                  Foothill Ranch, California 92610

                           and

                  Heritage Partners, Inc.
                  30 Rowes Wharf, Suite 300
                  Boston, MA 02110
                  Attn: Mark J. Jrolf

         (ii)     if to Executive:

                  Boyd Hendrickson
                  Most current address of record

         Either party may change its address set forth above by written notice
         given to the other party in accordance with the foregoing. Any notice
         shall be effective when personally delivered, two (2) business days
         after being delivered to overnight courier or express mail, or five (5)
         business days after by first class certified or registered mail,
         postage prepaid, return receipt requested.

14.      COUNTERPARTS.

         This Amended Agreement may be executed in any number of counterparts,
         and with counterpart signature pages, each of which shall be deemed an
         original and all of which together shall constitute one and the same
         instrument.

15.      WITHHOLDING TAXES.

         The Company may withhold from any amounts payable under this Amended
         Agreement such federal, state and local income, employment, or other
         taxes as may be required to be withhold pursuant to any applicable law
         or regulation.

16.      MUTUAL DRAFTING.

         Each party has cooperated in the drafting and preparation of this
         Amended Agreement. Hence, in any construction to be made of this
         Amended Agreement, the same shall not be construed against any party on
         the basis that the party was the drafter.

17.      RETURN OF PROPERTY.

         The Executive agrees to truthfully and faithfully account for and
         deliver to the Company all property belonging to the Company or any of
         its affiliates which the Executive may receive from or on account of
         the Company or its affiliates, and upon the termination of the Period
         of Employment, or the Company's demand, the Executive shall immediately
         deliver to the Company all such property belonging to the Company or
         any of its affiliates.

                                                                           Final

                                       12

<PAGE>

18.      PROVISIONS THAT SURVIVE TERMINATION.

         Except as otherwise provided herein, the provisions of Sections 2.3,
         2.4, 4 through 17, 19, 20 and this Section 18 shall survive any
         termination of the Period of Employment.

19.      INDEMNIFICATION.

         The Company agrees that (a) if the Executive is made a party, or is
         threatened to be made a party, to any threatened or actual action, suit
         or proceeding whether civil, criminal, administrative, investigative,
         appellate or other (a "Proceeding") by reason of the fact that he is or
         was a director, officer, employee, agent, manager, consultant or
         representative of the Company or (b) if any claim, demand, request,
         investigation, controversy, threat, discovery request or request for
         testimony or information (a "Claim") is made, or threatened to be made,
         that arises out of or relates to the Executive's service in any of the
         foregoing capacities, then the Executive shall promptly be indemnified
         and held harmless by the Company to the fullest extent permitted by the
         laws of the state of incorporation of the Company, against any and all
         costs, expenses, liabilities and losses incurred or suffered by the
         Executive in connection therewith, and such indemnification shall
         continue as to the Executive even if he has ceased to be a director,
         member, employee, agent, manager, consultant or representative of the
         Company and shall inure to the benefit of the Executive's heirs,
         executors and administrators.

         Neither the failure of the Company (including its Board of Directors,
         independent legal counsel or stockholders) to have made a determination
         in connection with any request for indemnification that the Executive
         has satisfied any applicable standard of conduct, nor a determination
         by the Company (including its Board of Directors, independent legal
         counsel or stockholders) that the Executive has not met any applicable
         standard of conduct, shall create a presumption that the Executive has
         not met an applicable standard of conduct.

         During the period of Employment and for a period of time thereafter
         determined as provided below, the Company shall keep in place a
         directors and officers' liability insurance policy (or policies)
         providing comprehensive coverage to the Executive to the extent that
         the Company provides such coverage to its directors and such coverage
         shall continue after the termination of the Period of Employment for
         the period of time that such coverage is extended (or to be extended,
         as the case may be) to the Company's former directors.

20.      RESOLUTION OF DISPUTES.

         Any controversy arising out of or relating to this Amended Agreement,
         its enforcement or interpretation, or because of an alleged breach,
         default, or misrepresentation in connection with any of its provisions,
         or any other controversy arising out of the Executive's employment by
         the Company, including, but not limited to, any state or federal
         statutory claims, shall be submitted to arbitration in Los Angeles
         County, California, before a sole neutral arbitrator (the
         "Arbitrator"), mutually selected and agreeable to both parties and
         selected from Judicial Arbitration and Mediation Services,

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                                       13

<PAGE>

         Inc., Los Angeles County, California, or its successor ("JAMS"), or if
         JAMS is no longer able to supply the Arbitrator, such Arbitrator shall
         be selected from the American Arbitration Association, and shall be
         conducted in accordance with the provisions of California Code of Civil
         Procedure Sections 1280 et seq. as the exclusive forum for the
         resolution of such dispute; provided, however, that provisional
         injunctive relief may, but need not, be sought by either party to this
         Amended Agreement in a court of law while arbitration proceedings are
         pending, and any provisional injunctive relief granted by such court
         shall remain effective until the matter is finally determined by the
         Arbitrator.

         Final resolution of any dispute through arbitration may include any
         remedy or relief that the Arbitrator deems just and equitable,
         including any and all remedies provided by applicable state or federal
         statutes. At the conclusion of the arbitration, the Arbitrator shall
         issue a written decision that sets forth the essential findings and
         conclusions upon which the Arbitrator's award or decision is based. Any
         award or relief granted by the Arbitrator hereunder shall be final and
         binding on the parties hereto and may be enforced by any court of
         competent jurisdiction.

         The parties acknowledge and agree that they are hereby waiving any
         rights to trial by jury in any action, proceeding or counterclaim
         brought by either of the parties against the other in connection with
         any matter whatsoever arising out of or in any way connected with this
         Amended Agreement or the services rendered hereunder. The parties agree
         that the Company Shall be responsible for payment of the forum costs of
         any arbitration hereunder, including the Arbitrator's fee. The
         Executive and the Company further agree that in any proceeding to
         enforce the terms of this Amended Agreement, the prevailing party shall
         be entitled to its or her reasonable attorneys' fees and costs (other
         than forum costs associated with the arbitration) incurred by it or him
         in connection with resolution of the dispute up to a maximum of Fifty
         Thousand Dollars ($50,000.00) in addition to any other relief granted.

                  [Remainder of Page Intentionally Left Blank]

                                                                           Final

                                       14

<PAGE>

         IN WITNESS WHEREOF, the Company and the Executive have executed this
Amended Agreement as of the Amendment Date.

                                        THE COMPANY

                                        Skilled Healthcare Group, Inc.,
                                        a Delaware corporation

                                        By: /s/ BOYD HENDRICKSON
                                            ------------------------------------
                                        Print Name: Boyd Hendrickson

                                        Title:
                                               ---------------------------------
                                        THE EXECUTIVE

                                        ----------------------------------------
                                        Boyd Hendrickson

                                                                           Final

                                       15

<PAGE>

                                    EXHIBIT A

                           RESTRICTED STOCK AGREEMENT

                                                                           Final

                                       17<PAGE>

                                                                   EXHIBIT 10.27

                                                                           Final

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         This Amended and Restated Employment Agreement (this "Amended
Agreement") is made and entered into as of March 8, 2004 (the "Amendment Date")
by and between Jose Lynch ("Executive") and Skilled Healthcare Group Inc.,
formerly known as Fountain View, Inc., a Delaware corporation (the "Company").

                                    RECITALS

         The Company and Executive are parties to that certain Employment
Agreement dated January 14, 2002 ("Original Agreement"), which sets forth
certain terms of employment including provisions concerning an Alternative
Equity Bonus Program.

         Pursuant to the Original Agreement, the Company may elect to institute
the Alternative Equity Bonus Program, and the Company and Executive desire to
implement an amended Alternative Equity Bonus Program.

         The Company and Executive desire to amend and restate the Original
Agreement to set forth, in full, the understanding of the parties concerning
employment and the amended Alternative Equity Bonus Program to be implemented.

         This Amended Agreement shall govern the employment relationship between
the parties from and after the Amendment Date and supersedes and negates all
previous agreements made between the parties, whether written or oral relating
to the Executive's employment relationship with the Company. The Original
Agreement governs the relationship between the parties prior to the Amendment
Date.

                                    AGREEMENT

         The Executive and the Company agree as follows:

1.       DUTIES.

1.1      RETENTION. The Company shall employ the Executive for the Period of
         Employment and the Executive agrees to such employment on the terms and
         conditions set forth in this Amended Agreement. The "Period of
         Employment" commenced on February 18, 2002 (the "Effective Date") and
         shall continue until February 17, 2007, unless earlier terminated
         pursuant to Section 4.

1.2      DUTIES, REPORTING. During the Period of Employment, the Executive shall
         be employed by the Company as its President and shall have the duties
         and responsibilities typical of the position of president of a
         corporation, subject to the legal directives of the officer or entity
         of the Company that the Executive reports to (determined in accordance
         with the following sentence). During the Period of Employment, the
         Executive shall report to the Chief Executive Officer ("CEO"), the
         Board of Directors (the "Board") or any independent subcommittee of the
         Board. The Executive also may be employed by one or more of the
         Affiliated Entities (as defined) (as determined by the Board or the
         CEO).

                                                                           Final

<PAGE>

         During the Period of Employment, the Executive shall use the
         Executive's best efforts to promote the interests of the Company and
         the direct and indirect subsidiaries of the Company (collectively, the
         "Companies"), and to maximize the value of the Company, and shall
         devote the Executive's full business time, attention and best efforts
         to their business and affairs.

1.3      NO BREACH OF CONTRACT. The Executive hereby represents and warrants
         that the execution and delivery of this Amended Agreement by the
         Executive and the Company and the performance by the Executive of the
         Executive's duties hereunder shall not constitute a breach of, or
         otherwise contravene, the terms of any employment or other agreement or
         policy to which the Executive is a party or otherwise bound.

1.4      LOCATION. The Executive acknowledges that the Company's principal
         executive offices are currently located in Foothill Ranch, California.
         The Executive shall operate principally out of such executive offices,
         as they may be moved from time to time within Southern California. The
         Company expects, and the Executive agrees, that the Executive shall be
         required to travel from time to time to Company facilities, suppliers
         and customers in order to fulfill his duties to the Company.

2.       COMPENSATION.

2.1      BASE SALARY. During the Period of Employment, the Executive will
         receive a salary at the rate of $350,000 annually (the "Base Salary"),
         payable in accordance with the Company's regular payroll practices in
         effect from time to time, but not less frequently than in monthly
         installments.

         ANNUAL PERFORMANCE BONUS. Executive will be eligible to receive an
         annual performance bonus ("Annual Performance Bonus") for each fiscal
         year of the Company that ends during the Period of Employment if he is
         employed by the Company at the end of that fiscal year. The Annual
         Performance Bonus for a fiscal year will be based on a target EBITDA
         determined annually by the Company. The Executive shall receive an
         Annual Performance Bonus of $33,000 for each $2 million that the
         Company's consolidated EBITDA for that fiscal year exceeds the target
         EBITDA established by the Company for that year (without proration for
         increments of less than $2 million); provided, however, that the Annual
         Performance Bonus shall not exceed $264,000 for any one fiscal year.

         For this purpose, "EBITDA" means, for the applicable fiscal year, the
         net income (or loss) of the Company (after eliminating (x) all
         extraordinary items of income or loss and (y) all income or loss
         related to non-cash change in interest rate hedge), as reflected in the
         Company's financial statements for such fiscal year, plus to the extent
         deducted in computing such net income (or loss), without duplication,
         (i) all interest and other similar expense in respect of indebtedness
         for borrowed money and similar expense in respect of capitalized leases
         and preferred stock, plus (ii) all expenses for income taxes (whether
         paid, accrued or deferred), plus (iii) depreciation and amortization
         expenses, less (iv) interest and other similar income in respect of
         money loaned by the Company and deposits of the Company, all of the
         foregoing as determined on a consolidated basis for Company and its
         Affiliated Entities. EBITDA shall be determined after all compensation

                                                                           Final

                                        2

<PAGE>

         accruals, including all compensation payable to Executive but before
         giving effect to any Annual Performance Bonuses payable to Executive or
         any other executive officers.

         The Annual Performance Bonus for any given year will be paid after the
         Company's annual audit for that year is completed and in no event later
         than the April 15th of the following year. Executive shall have earned
         and will receive the appropriate Annual Performance Bonus if he is
         employed by the Company on December 31st of the applicable fiscal year,
         regardless of whether he is employed between January 1st and the
         payment date in the following year.

         Target EBITDA for 2004 will be $47 million.

         The Company may, however, make reasonable adjustments to the above
         EBITDA targets, any EBITDA targets it establishes and the Annual
         Performance Bonus formula with respect to a year to account for any
         mergers, reorganizations, acquisitions, dispositions,
         recapitalizations, changes in accounting principles or practices or
         similar events.

2.2      SALE BONUS. If during the Period of Employment or, if the Period of
         Employment terminates before February 17, 2007 as a result of a
         termination by the Company without Cause (as defined in Section 5.5) or
         due to the Executive's death or Disability (as defined in Section 5.5),
         within nine (9) months following such termination, either (i) all or
         substantially all of the Company's assets are sold ("Asset Sale"), (ii)
         the Company closes a public offering pursuant to an effective
         registration statement under the Securities Act of 1933, as amended,
         covering the offer and sale of Common Stock for the account of the
         Company to the public and the Common Stock becomes listed or quoted on
         a national security exchange or in the Nasdaq National Market Quotation
         System (an "IPO"), or (iii) at least a majority of the Company's then
         outstanding common stock is sold in a single transaction or series of
         substantially related transactions, and unless otherwise approved by
         the Company's Board, for cash or marketable securities ("Stock Sale")(
         any of an Asset Sale, IPO or Stock Sale is referred to as a "Trigger
         Event"), and the Terminal Equity Value (defined below) of the Company
         at the Trigger Event is less than [the minimum Terminal Equity Value],
         the Company will pay the Executive a $500,000 cash bonus (the "Sale
         Bonus") at the time of the consummation of the transaction.

         As used in this Amended Agreement, "Terminal Equity Value" shall mean
         (i) in the case of an IPO, the equity value of the Company's
         outstanding common stock determined based on the public offering price
         of the Company's common stock in the IPO and the number of shares of
         common stock outstanding immediately prior to the IPO; (ii) in the case
         of a Stock Sale, the equity value of the Company's outstanding common
         stock determined based on the net proceeds distributable in respect of
         the common stock of the Company that is sold in the Stock Sale and the
         number of shares of common stock outstanding; and (iii) in the case of
         an Asset Sale, the aggregate net proceeds that are or would be
         distributable in respect of all outstanding common stock of the Company
         assuming that the Company paid off its debt and preferred stock and
         debt securities, and liquidated on the Asset Sale, and assuming that
         any right, warrant or option to acquire

                                                                           Final

                                        3

<PAGE>

         any common stock of the Company entitled to be exercised is converted
         immediately prior to the distribution.

         Once a Sale Bonus becomes payable pursuant to this Section 2.3,
         Executive shall have no right to any other bonus under this Section 2.3
         with respect to any subsequent event or occurrence and no right with
         respect to the Restricted Shares granted pursuant to Section 2.4, which
         Restricted Shares shall be deemed automatically forfeited and
         cancelled.

2.3      RESTRICTED SHARES. The Executive shall be issued, concurrently with the
         execution of this Amended Agreement, 19,719 shares of Class B
         Non-Voting Common Stock, subject to all of the restrictions set forth
         in the Restricted Stock Agreement attached hereto as Exhibit A
         ("Restricted Stock Agreement"), the terms of which are incorporated
         herein by reference. Executive understands and agrees that the
         Restricted Shares shall not vest and shall have no value unless and
         until certain trigger events occur, including trigger events requiring
         a liquidity transaction wherein the Terminal Equity Value of the
         Company is equal to or in excess of [the minimum Terminal Equity
         Value]. The Restricted Shares are issued in satisfaction of the equity
         incentive program contemplated by Section 2.4 of the Original
         Agreement.

3.       BENEFITS.

3.1      HEALTH, WELFARE AND FRINGE BENEFITS. During the Period of Employment,
         the Executive shall be entitled to participate in all pension, welfare
         and fringe benefit plans and programs made available by the Company to
         its executive and managerial employees generally, as such plans or
         programs may be in effect from time to time.

3.2      EXPENSE REIMBURSEMENT. The Company shall reimburse the Executive for
         the reasonable expenses and disbursements incurred by the Executive in
         the performance of the Executive's duties for the Company during the
         Period of Employment, subject to the Company's employee expense
         reimbursement policies in effect from time to time.

3.3      VACATION. During the Period of Employment, the Executive shall receive
         four (4) weeks paid vacation per year; provided that the maximum unused
         vacation time that the Executive may accrue is eight (8) weeks.

3.4      CAR ALLOWANCE. The Executive shall be entitled to a car allowance of
         $750 per month for the Period of Employment.

4.       ANNUAL REVIEW. Approximately every 12 months during the Period of
Employment, the Executive and either the Company's CEO or the Board shall meet
to discuss the performance and terms of the Executive's employment by the
Company.

5.       TERMINATION.

5.1      TERMINATION BY THE COMPANY. The Executive's employment by the Company
         and the Period of Employment may be terminated at any time by the
         Company with Cause (as defined below) or without Cause or in the event
         of the death or Disability of the Executive.

                                                                           Final

                                        4

<PAGE>

5.2      TERMINATION BY THE EXECUTIVE. The Executive's employment by the Company
         and the Period of Employment may be terminated at any time by the
         Executive.

5.3      BENEFITS UPON TERMINATION. If the Executive's employment by the Company
         is terminated during the Period of Employment for any reason by the
         Company or by the Executive, the Company shall have no further
         obligation to make any payments or provide any benefits to the
         Executive except (a) the Company shall pay the Executive any Accrued
         Obligations (as defined below), and (b) the Company shall continue for
         three months following the termination (one month following the
         termination if the Executive resigns) (but in no event after Executive
         becomes employed by a new employer) the Executive's medical insurance
         as in effect immediately prior to the termination or similar coverage
         or reimburse the Executive for similar coverage. Those rights that are
         expressly contemplated pursuant to Section 2.3 or pursuant to the
         Restricted Stock Agreement to continue following a termination of
         employment are outside of the scope of the preceding sentence. If the
         Executive resigns on any day other than the last day of a fiscal year
         of the Company or if the Executive's employment is terminated by the
         Company with Cause, the Executive shall not be entitled to any Annual
         Performance Bonus (or pro rated Annual Performance Bonus) for the year
         in which his employment terminates.

         If the Executive's employment is terminated by the Company without
         Cause (including termination (other than for Cause) by the Company upon
         or following a Change of Control), or if the Executive's employment by
         the Company terminates due to the Executive's death during the Period
         of Employment, or if the Executive's employment is terminated by the
         Company during the Period of Employment due to the Executive's
         Disability, the Company shall also, but only as long as the Executive
         remains in compliance with the provisions of Section 6:

                  (a)      pay the Executive a lump sum severance payment in an
                           amount equal to 2.0 times Executive's Base Salary;
                           provided, however, that the lump sum severance
                           payment shall equal 2.0 times Executive's Base Salary
                           in the case of any termination (other than for Cause)
                           by the Company upon or following a Change of Control;

                  (b)      pay the Executive a pro-rated bonus under the Annual
                           Performance Bonus Program (based on the Company's
                           performance for the fiscal year up until the
                           termination of employment and prorated performance
                           targets) for the year in which the termination
                           occurs; and

                  (c)      continue for twelve months (as opposed to three
                           months) following the termination (but in no event
                           after Executive becomes employed by a new employer)
                           the Executive's medical insurance as in effect
                           immediately prior to the termination or similar
                           coverage or reimburse the Executive for similar
                           coverage.

5.4      CHANGE OF CONTROL. The Executive shall be deemed to have been
         terminated by the Company without Cause for purposes of this Section 5
         if the Executive resigns from the Company within six (6) months after a
         Change of Control (as defined below) as a result

                                                                           Final

                                        5

<PAGE>

         of a diminution of his Base Salary, the Company's termination of his
         status as an executive officer of the Company, and/or a material
         diminution in his duties and/or responsibilities from their level in
         effect immediately prior to the Change of Control.

5.5      CERTAIN DEFINED TERMS.

         As used herein, "Accrued Obligations" means Base Salary that had
         accrued but had not been paid prior to the date of termination, and any
         Annual Performance Bonus previously earned but unpaid.

         As used herein, "Affiliated Entities" shall mean Skilled Healthcare LLC
         and any entity that is controlled by and consolidated with in the
         financial statements of either the Company or Skilled Healthcare LLC.

         As used herein, "Cause" shall mean the reasonable and good faith
         determination by a majority of the Board, that, during the Period of
         Employment, any of the following events or contingencies exists or has
         occurred:

         -        the Executive has breached a fiduciary duty to the Company or
                  any of its Affiliated Entities or breached of any of the
                  Executive's obligations under Section 6;

         -        the Executive has been convicted of a felony or misdemeanor
                  that involves fraud, dishonesty, theft, embezzlement, and/or
                  an act of violence or moral turpitude, or the Executive has
                  plead guilty or no contest (or a similar plea) to any such
                  felony or misdemeanor; or

         -        the Executed has committed an act or an omission that
                  constitutes fraud, gross negligence, or willful misconduct in
                  connection with Executive's employment by the Company or any
                  of its Affiliated Entities.

         As used herein, "Disability" shall mean an illness (mental or physical)
         or injury that, in the good faith and reasonable determination of a
         majority of the Board, based on the report of a reputable physician
         selected jointly by the parties, renders the Executive unable to
         perform the Executive's duties for six (6) months during any twelve
         (12) month period.

         As used herein, "Change of Control" shall mean (i) any time at which
         the current holders of Company stock (common and preferred) and their
         affiliates do not continue to own, in the aggregate, at least a
         majority of the outstanding shares of the Company's common stock and at
         which Heritage Partners and its affiliates do not collectively
         constitute the single largest holder of Company common stock, or (ii)
         any sale of all or substantially all of the assets of the Company.

6.       CONFIDENTIALITY, NON-SOLICITATION, ETC.

         In consideration of the mutual promises contained herein, and to
         preserve the goodwill of the Companies, the Executive agrees as
         follows:

                                                                           Final

                                        6

<PAGE>

         (i)      The Executive will not at any time, directly or indirectly,
                  disclose or divulge, except as reasonably required in
                  connection with the performance of the Executive's duties for
                  the Company, any Confidential Information (as hereinafter
                  defined) acquired by the executive during the Executive's
                  affiliation with or employment by the Companies. As used
                  herein, "Confidential Information" means all trade secrets and
                  all other proprietary or non-public information of a business,
                  financial, marketing, technical or other nature pertaining to
                  any of the Companies or their affairs and all information of
                  others that any of the Companies have agreed not to disclose;
                  provided, that Confidential Information shall not include any
                  information which has entered or enters the public domain
                  through no fault of the Executive or which the Executive is
                  required to disclose by law or legal process.

         (ii)     The Executive shall make no use whatsoever, directly or
                  indirectly, of any Confidential Information, except as
                  reasonably required in connection with the performance of the
                  Executive's duties for the Company.

         (iii)    Upon any of the Companies' request at any time and for any
                  reason, the Executive shall immediately deliver to the Company
                  all materials (including all copies) in the Executive's
                  possession which contain or relate to Confidential
                  Information.

         (iv)     All inventions, developments or improvements made by the
                  Executive, either alone or in conjunction with others, at any
                  time or at any place during the term of the Executive's
                  employment by the Company, whether or not reduced to writing
                  or practice during such term, which relate to the Business (as
                  defined below), or which were developed or made in whole or in
                  part using any of the Companies' facilities, shall be the
                  exclusive property of the Companies. The Executive shall
                  promptly disclose any such invention, development or
                  improvement to the Company, and, at the request and expense of
                  any of the Companies, shall assign a all of the Executive's
                  rights to the same to the Companies. The Executive shall sign
                  all instruments necessary for the filing and prosecution of
                  any applications for or extension or renewals of letters
                  patent of the United States or any foreign country which any
                  of the Companies desire to file. "Business" shall mean any
                  long-term care facility business, assisted living facility
                  business, pharmacy business and/or therapy business of any of
                  the Companies.

         (v)      All copyrightable work by the Executive during the term of the
                  Executive's employment by the Company which relates to the
                  Business is intended to be "work made for hire" as defined in
                  Section 101 of the Copyright Act of 1976, and shall be the
                  property of the Companies. If the copyright to any such
                  copyrightable work is not the property of the Companies by
                  operation of law, the Executive will, without further
                  consideration, assign to the Companies all right, title and
                  interest in such copyrightable work and will assist the
                  Companies and their nominees in every way, at the Companies'
                  expense, to secure, maintain and defend for the Companies'
                  benefit copyrights and any extensions and renewals thereof on
                  any and all such work including translations thereof in any
                  and all countries, such

                                                                           Final

                                        7

<PAGE>

                  work to be and to remain the property of the Companies whether
                  copyrighted or not.

         (vi)     The Executive will not directly or indirectly, individually or
                  as a consultant to, or executive, officer, director,
                  stockholder, partner or other owner or participant in any
                  business entity, engage in or assist any other person to
                  engage in the businesses of skilled nursing facilities,
                  assisted living facilities, inpatient or outpatient therapy
                  services, pharmacies, urological supplies, enteral feeding
                  supplies and orthodics, in each instance in any county in
                  which the Company at such time has any operations; provided,
                  however, that the Executive may own not more than a 5% equity
                  interest in any publicly-traded company.

         (vii)    The Executive will not directly or indirectly, individually or
                  as a consultant to, or as employee, officer, director,
                  stockholder, partner or other owner or participant in any
                  business entity other than the Companies, (a) solicit or
                  endeavor to entice away from any of the Companies, or
                  otherwise materially interfere with the business relationship
                  of any of the Companies with, any person who is, or was within
                  the one-year period immediately prior to the termination of
                  the Executive's employment with the Company, employed by, a
                  consultant to or associated with any of the Companies, or (b)
                  materially interfere with the business relationship of any of
                  the Companies with any person or entity who is, or was within
                  the two-year period immediately prior to the termination of
                  the Executive's employment with the Company, a supplier to any
                  of the Companies.

         (viii)   The Executive agrees that if the Executive, individually or as
                  a consultant to, or as an employee, officer, director,
                  stockholder, partner or other owner or participant in any
                  business entity other than the Companies, is directly involved
                  in the hiring or employing of any person who is or was
                  employed by, a consultant to or associated with any of the
                  Companies within one year prior to the employ or hiring of
                  such person, then for each such person the Executive shall pay
                  to the Company a lump sum equal to nine (9) months of that
                  person's most recent salary from the Companies, payable on the
                  first date of that person's employ or hiring, whichever is
                  first, plus the Company's reasonable attorneys' fees incurred
                  to enforce this paragraph. Nothing within this paragraph shall
                  be construed to limit or modify in any way the Executive's
                  non-solicitation covenants contained in clause (vii) above.

         (ix)     Without limiting the remedies available to the Companies and
                  notwithstanding Section 2.3, the Executive acknowledges that a
                  breach of any of the covenants contained in this Section 6
                  could result in irreparable injury to the Companies for which
                  there might be no adequate remedy at law, and that, in the
                  event of such a breach or threat thereof, the Companies shall
                  be entitled to obtain a temporary restraining order and/or a
                  preliminary injunction and a permanent injunction restraining
                  the Executive from engaging in any activities prohibited by
                  this Section 6 or such other equitable relief as may be
                  required to enforce specifically any of the covenants of this
                  Section 6.

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                                        8

<PAGE>

         (x)      The Executive shall at no time make any derogatory or
                  disparaging remarks about any of the Companies, or any of
                  their respective officers, directors or principal
                  stockholders.

         (xi)     The provisions of this Section 6 shall continue in full force
                  and effect during the course of the Executive's employment by
                  the Company and shall further continue in full force and
                  effect after the Executive's employment by the Company
                  terminates; provided that the restrictions set forth in
                  Section 6(vi) shall terminate when the Executive's employment
                  by the Company terminates, and the provisions set forth in
                  Sections 6(vii) and 6(viii) shall terminate one year after the
                  Executive's employment by the Company terminates.

7.       ASSIGNMENT.

         This Amended Agreement is personal in its nature and neither of the
         parties hereto shall, without the consent of the other, assign or
         transfer this Amended Agreement or any rights or obligations hereunder;
         provided, however, that, in the event of a merger, consolidation, or
         transfer or sale of all or substantially all of the assets of the
         Company with or to any other individual(s) or entity, This Amended
         Agreement shall be binding upon and inure to the benefit of such
         successor and such successor shall discharge and perform all the
         promises, covenants, duties, and obligations of the Company hereunder.

8.       GOVERNING LAW.

         This Amended Agreement and the legal relations hereby created between
         the parties hereto shall be governed by and construed under and in
         accordance with the laws of the State of California, without regard to
         choice of law provisions thereof.

9.       ENTIRE AGREEMENT.

         This Amended Agreement embodies the entire agreement of the parties
         hereto respecting the matters within its scope. Effective as of the
         Amendment Date, this Amended Agreement supersedes and replaces all
         prior agreements of the parties hereto on the subject matter hereof,
         including without limitation the Original Agreement. The Original
         Agreement governs the relationship of the parties prior to the
         Amendment Date. Any prior negotiations, correspondence, agreements,
         proposals or understandings relating to the subject matter hereof shall
         be deemed to be merged into this Amended Agreement and to the extent
         inconsistent herewith, such negotiations, correspondence, agreements,
         proposals, or understandings shall be deemed to be of no force or
         effect. There are no representations, warranties, or agreements,
         whether express or implied, or oral or written, with respect to the
         subject matter hereof, except as set forth herein.

10.      AMENDMENT; WAIVER.

         No amendment or waiver of this Amended Agreement or any term, covenant,
         or condition hereof shall be binding upon the party against whom
         enforcement of such amendment or waiver is sought unless it is made in
         writing and signed by or on behalf of such party. Failure to insist
         upon strict compliance with any of the terms, covenants, or

                                                                           Final

                                        9

<PAGE>

         conditions hereof shall not be deemed a waiver of such term, covenant,
         or condition, nor shall any waiver or relinquishment of, or failure to
         insist upon strict compliance with, any right or power hereunder at any
         one or more times be deemed a waiver or relinquishment of such right or
         power at any other time or times.

11.      NUMBER AND GENDER.

         Where the context requires, the singular shall include the plural, the
         plural shall include the singular, and any gender shall include all
         other genders.

12.      SECTION HEADINGS.

         The section headings in this Amended Agreement are for the purpose of
         convenience only and shall not limit or otherwise affect any of the
         terms hereof.

13.      SEVERABILITY.

         In the event that a court of competent jurisdiction determines that any
         portion of this Amended Agreement is in violation of any statute or
         public policy, then only the portions of this Amended Agreement which
         violate such statute or public policy shall be stricken, and all
         portions of this Amended Agreement which do not violate any statute or
         public policy shall continue in full force and effect. Furthermore, if
         any one or more of the provisions contained in this Amended Agreement
         are for any reason held to be excessively broad as to duration,
         geographical scope, activity or subject, such provisions shall be
         construed by limiting and reducing them so as to be enforceable to the
         maximum extent permitted under applicable law.

14.      NOTICES.

         Any notice or other communication given pursuant to this Amended
         Agreement shall be in writing and shall be personally delivered, sent
         by overnight courier or express mail, or mailed by first class
         certified or registered mail, postage prepaid, return receipt requested
         as follows:

         (i)      if to the Company:

                  Skilled Healthcare Group, Inc.
                  27442 Portola Parkway,
                  Suite 200
                  Foothill Ranch, California 92610

                  With copies to:

                  Independent Subcommittee of the Board
                  Skilled Healthcare Group, Inc.
                  27442 Portola Parkway,
                  Suite 200
                  Foothill Ranch, California 92610

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                                       10

<PAGE>

                           and

                  Heritage Partners, Inc.
                  30 Rowes Wharf, Suite 300
                  Boston, MA 02110
                  Attn: Mark J. Jrolf

         (ii)     if to Executive:

                  Jose Lynch
                  Most current address of record

         Either party may change its address set forth above by written notice
         given to the other party in accordance with the foregoing. Any notice
         shall be effective when personally delivered, two (2) business days
         after being delivered to overnight courier or express mail, or five (5)
         business days after by first class certified or registered mail,
         postage prepaid, return receipt requested.

15.      COUNTERPARTS.

         This Amended Agreement may be executed in any number of counterparts,
         and with counterpart signature pages, each of which shall be deemed an
         original and all of which together shall constitute one and the same
         instrument.

16.      WITHHOLDING TAXES.

         The Company may withhold from any amounts payable under this Amended
         Agreement such federal, state and local income, employment, or other
         taxes as may be required to be withhold pursuant to any applicable law
         or regulation.

17.      MUTUAL DRAFTING.

         Each party has cooperated in the drafting and preparation of this
         Amended Agreement. Hence, in any construction to be made of this
         Amended Agreement, the same shall not be construed against any party on
         the basis that the party was the drafter.

18.      RETURN OF PROPERTY.

         The Executive agrees to truthfully and faithfully account for and
         deliver to the Company all property belonging to the Company or any of
         its affiliates which the Executive may receive from or on account of
         the Company or its affiliates, and upon the termination of the Period
         of Employment, or the Company's demand, the Executive shall immediately
         deliver to the Company all such property belonging to the Company or
         any of its affiliates.

                                                                           Final

                                       11

<PAGE>

19.      PROVISIONS THAT SURVIVE TERMINATION.

         Except as otherwise provided herein, the provisions of Sections 2.3,
         2.4, 4 through 18, 20, 21 and this Section 19 shall survive any
         termination of the Period of Employment.

20.      INDEMNIFICATION.

         The Company agrees that (a) if the Executive is made a party, or is
         threatened to be made a party, to any threatened or actual action, suit
         or proceeding whether civil, criminal, administrative, investigative,
         appellate or other (a "Proceeding") by reason of the fact that he is or
         was a director, officer, employee, agent, manager, consultant or
         representative of the Company or (b) if any claim, demand, request,
         investigation, controversy, threat, discovery request or request for
         testimony or information (a "Claim") is made, or threatened to be made,
         that arises out of or relates to the Executive's service in any of the
         foregoing capacities, then the Executive shall promptly be indemnified
         and held harmless by the Company to the fullest extent permitted by the
         laws of the state of incorporation of the Company, against any and all
         costs, expenses, liabilities and losses incurred or suffered by the
         Executive in connection therewith, and such indemnification shall
         continue as to the Executive even if he has ceased to be a director,
         member, employee, agent, manager, consultant or representative of the
         Company and shall inure to the benefit of the Executive's heirs,
         executors and administrators.

         Neither the failure of the Company (including its Board of Directors,
         independent legal counsel or stockholders) to have made a determination
         in connection with any request for indemnification that the Executive
         has satisfied any applicable standard of conduct, nor a determination
         by the Company (including its Board of Directors, independent legal
         counsel or stockholders) that the Executive has not met any applicable
         standard of conduct, shall create a presumption that the Executive has
         not met an applicable standard of conduct.

         During the period of Employment and for a period of time thereafter
         determined as provided below, the Company shall keep in place a
         directors and officers' liability insurance policy (or policies)
         providing comprehensive coverage to the Executive to the extent that
         the Company provides such coverage to its directors and such coverage
         shall continue after the termination of the Period of Employment for
         the period of time that such coverage is extended (or to be extended,
         as the case may be) to the Company's former directors.

21.      RESOLUTION OF DISPUTES.

         Any controversy arising out of or relating to this Amended Agreement,
         its enforcement or interpretation, or because of an alleged breach,
         default, or misrepresentation in connection with any of its provisions,
         or any other controversy arising out of the Executive's employment by
         the Company, including, but not limited to, any state or federal
         statutory claims, shall be submitted to arbitration in Los Angeles
         County, California, before a sole neutral arbitrator (the
         "Arbitrator"), mutually selected and agreeable to both parties and
         selected from Judicial Arbitration and Mediation Services,

                                                                           Final

                                       12

<PAGE>

         Inc., Los Angeles County, California, or its successor ("JAMS"), or if
         JAMS is no longer able to supply the Arbitrator, such Arbitrator shall
         be selected from the American Arbitration Association, and shall be
         conducted in accordance with the provisions of California Code of Civil
         Procedure Sections 1280 et seq. as the exclusive forum for the
         resolution of such dispute; provided, however, that provisional
         injunctive relief may, but need not, be sought by either party to this
         Amended Agreement in a court of law while arbitration proceedings are
         pending, and any provisional injunctive relief granted by such court
         shall remain effective until the matter is finally determined by the
         Arbitrator.

         Final resolution of any dispute through arbitration may include any
         remedy or relief that the Arbitrator deems just and equitable,
         including any and all remedies provided by applicable state or federal
         statutes. At the conclusion of the arbitration, the Arbitrator shall
         issue a written decision that sets forth the essential findings and
         conclusions upon which the Arbitrator's award or decision is based. Any
         award or relief granted by the Arbitrator hereunder shall be final and
         binding on the parties hereto and may be enforced by any court of
         competent jurisdiction.

         The parties acknowledge and agree that they are hereby waiving any
         rights to trial by jury in any action, proceeding or counterclaim
         brought by either of the parties against the other in connection with
         any matter whatsoever arising out of or in any way connected with this
         Amended Agreement or the services rendered hereunder. The parties agree
         that the Company Shall be responsible for payment of the forum costs of
         any arbitration hereunder, including the Arbitrator's fee. The
         Executive and the Company further agree that in any proceeding to
         enforce the terms of this Amended Agreement, the prevailing party shall
         be entitled to its or her reasonable attorneys' fees and costs (other
         than forum costs associated with the arbitration) incurred by it or him
         in connection with resolution of the dispute up to a maximum of Fifty
         Thousand Dollars ($50,000.00) in addition to any other relief granted.

                  [Remainder of Page Intentionally Left Blank]

                                                                           Final

                                       13

<PAGE>

         IN WITNESS WHEREOF, the Company and the Executive have executed this
Employment Agreement as of the Amendment Date.

                                          THE COMPANY

                                          Skilled Healthcare Group, Inc.,
                                          a Delaware corporation

                                          By: /s/ JOSE LYNCH
                                              ----------------------------------
                                          Print Name: Jose Lynch

                                          Title:
                                                 -------------------------------
                                          THE EXECUTIVE

                                          --------------------------------------
                                          Jose Lynch

                                                                           Final

                                       14

<PAGE>

                                                                           Final

                                    EXHIBIT A

                           RESTRICTED STOCK AGREEMENT

                                                                           Final

                                       15

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