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Employment Agreement - National Medical Enterprises Inc. and Jeffrey C. Barbakow

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(LOGO OF NATIONAL MEDICAL ENTERPRISES INCORPORATED APPEARS HERE)

(LETTERHEAD OF NATIONAL MEDICAL ENTERPRISES, INCORPORATED APPEARS HERE)

June 1, 1993


Mr. Jeffrey C. Barbakow
559 C San Ysidro Road
Santa Barbara, California 93108

Dear Jeff:

The purpose of this letter is to set forth additional terms of your
compensation as President and Chief Executive Officer of National Medical
Enterprises ("NME") which have been approved by the Compensation and
Stock Option Committee (the "Committee").

1.  NME will pay you a minimum guaranteed annual bonus under the NME
    Annual Incentive Plan (or any successor annual bonus plan) ("AIP") of
    $500,000 for the fiscal year ending in 1994, if the average closing price
    of NME common stock on the New York Stock Exchange during the months of
    April and May in 1994 exceeds $12.00 per share.

2.  NME will pay you a minimum guaranteed annual bonus under the AIP of
    $500,000 for the fiscal year ending in 1995, if the average closing price
    of NME common stock on the New York Stock Exchange during the months of
    April and May in 1995 exceeds $13.25 per share.

3.  NME will pay you a minimum guaranteed annual bonus under the AIP of
    $500,000 for the fiscal year ending in 1996, if the average closing price
    of NME common stock on the New York Stock Exchange during the months of
    April and May in 1996 exceeds $14.50 per share.

4.  The average closing prices of NME common stock set forth in
    Paragraphs 1, 2 and 3 above will be subject to appropriate adjustment by
    the Committee upon any event which results in an adjustment of the terms
    of the Non-Qualified Stock Option granted to you on June 1, 1993.

5.  Any guaranteed annual bonuses which you are entitled to received
    under Paragraphs 1, 2 and 3 above will be paid to you at the same time
    when annual bonuses are or would be paid to senior executive officers
    under the AIP (or any successor annual bonus plan) and will be offset
    against (and will not be in addition to) any annual bonus which you are
    entitled to receive under the AIP and any other annual bonus plan of NME
    for NME's fiscal years ending in 1994, 1995 and 1996, respectively.

6.  If the average closing market price of NME common stock on the New
    York Stock Exchange during the months of April and May in 1996 exceeds
    $14.50 per share, NME will pay you the difference between $1,500,000 and
    the cumulative annual bonuses paid

<PAGE>

Mr. Jeffrey C. Barbakow
June 2, 1993
Page 2


    to you for NME's fiscal years ending in 1994, 1995 and 1996 under the
    AIP and any other bonus plan of NME. This payment will be made after
    annual bonuses are or would be paid to senior executive officers of NME
    for the fiscal year ending in 1996.

7.  In the event of involuntary termination without cause or constructive
    termination of your employment with NME (as these terms are defined in
    the non-qualified stock option for 2,000,000 shares granted to you on
    June 1, 1993 ("Option")), payment of the foregoing aggregate guaranteed
    bonus amounts will be accelerated to the extent of the lessor of (i) the
    product of $1,500,000 multiplied by the fraction of which the numerator
    is (A) the cumulative number of shares which are vested pursuant to the
    terms of the Option, and the denominator is (B) 2,000,000 shares, or (ii)
    $500,000, $1,000,000, $1,500,000 if the average closing price of NME
    common stock on the New York Stock Exchange during the sixty days
    preceding your termination of employment exceeds $12.00, $13.25 or $14.50
    per share, respectively. Payment of any guaranteed bonus amounts under
    this Paragraph 7 will be reduced by the cumulative bonuses previously
    paid to you.

Sincerely,

PETER DE WETTER

Chairman of Compensation and
Stock Option Committee

c:  Alan Ewalt