NATIONAL MEDICAL ENTERPRISES, INC.
2700 COLORADO AVENUE
SANTA MONICA, CALIFORNIA 90404
May 26, 1993 Mr. Jeffrey C. Barbakow 559 C San Ysidro Road Santa Barbara, California 93108
The purpose of this letter is to set forth the 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. Your employment as President and Chief Executive Officer of NME will
June 1, 1993.
2. Your initial annual base salary will be $850,000. Your base salary
will be reviewed by the Committee on an annual basis when the base
salaries for other senior executive officers are reviewed.
3. You will be eligible to participate in the annual and long-term cash
incentive plans which are in effect from time to time for the other
senior executive officers of NME. The plans which are currently in
effect are the Annual Incentive Plan ("
AIP") and the Long-Term
Incentive Plan ("LTIP").
4. You will be eligible to participate in pension and welfare plans and
to receive other fringe benefits and perquisites on the same terms as
other senior executive officers of NME.
5. You will receive a grant of a non-qualified stock option for
2,000,000 shares of NME common stock on
June 1, 1993. The grant will
be made under NME's 1991 Stock Incentive Plan and will be in the form
attached hereto as Exhibit "A." The stock option will have the
following principal terms:
(i) The stock option will be granted when you become an
employee of NME on
June 1, 1993.
(ii) The exercise price will be the closing NME market price on
Stock Exchange on New York June 1, 1993.
(iii) The stock option will have a term of ten years.
Mr. Jeffrey C. Barbakow May 26, 1993
(iv) The stock option will vest at the rate of one-third (1/3) per
June 1, 1994, 1995 and 1996, subject to acceleration as
provided in Exhibit "A."
The Committee does not presently anticipate that it will make any
other stock option grants to you before
June 1, 1996.
6. You will devote your full time and attention to the performance of
your duties as President and Chief Executive Officer of NME during
normal working hours.
7. You have not requested and will not have a formal employment
agreement. You will serve at the will of the Board of Directors of
NME. In the event of termination of your employment, the only
severance benefits which you will be entitled to receive are
(i) any additional vesting of your stock option pursuant to the terms
set forth in Exhibit "A," (ii) any other severance benefits which may
be approved by the Committee or Board of Directors of NME in its
discretion, and (iii) any benefits to which you may be entitled under
the terms of NME pension and welfare plans (other than severance plans)
in which you are then participating.
On behalf of the Committee, I want to express our appreciation for the
manner in which you have negotiated the terms of your employment. We are
delighted that you have agreed to serve as President and Chief Executive
Officer of NME.
Peter de Wetter
Chairman of Compensation and
Stock Option Committee
Alan R. Ewalt