EXHIBIT 10.28

THE HILLHAVEN CORPORATION

DEFERRED COMPENSATION PLAN

(AMENDED AND RESTATED, EFFECTIVE OCTOBER 1, 1994)

TABLE OF CONTENTS

PAGE

ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.1 Selection by Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Enrollment Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Eligibility; Commencement of Participation . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 3 DEFERRAL COMMITMENTS/INTEREST CREDITING . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.1 Minimum and Maximum Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Company Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Election to Defer; Effect of Election Form . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Withholding of Deferral Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Interest Crediting Prior to Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Installment Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 FICA and Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL
EMERGENCIES; WITHDRAWAL ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4.1 Short-Term Payout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies . . . . . . . . . . 12
4.3 Withdrawal Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE 5 RETIREMENT BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5.1 Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Payment of Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Death Prior to Completion of Retirement Benefits . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

6.1 Pre-Retirement Survivor Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Payment of Pre-Retirement Survivor Benefits . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 7 TERMINATION BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7.1 Termination Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.2 Payment of Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE 8 DISABILITY WAIVER AND BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

8.1 Disability Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Disability Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 9 BENEFICIARY DESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

9.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 Beneficiary Designation; Change; Spousal Consent . . . . . . . . . . . . . . . . . . . . . 16
9.3 Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.4 No Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.5 Doubt as to Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.6 Discharge of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 10 LEAVE OF ABSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

10.1 Paid Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.2 Unpaid Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 17

11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.3 Effect of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE 12 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

12.1 Committee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.3 Binding Effect of Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.4 Indemnity of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.5 Employer Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE 13 OTHER BENEFITS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 14 CLAIMS PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

14.1 Presentation of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

14.2 Notification of Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.3 Review of a Denied Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.4 Decision on Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.5 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 15 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

15.1 Establishment of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.2 Interrelationship of the Plan and the Trust . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 16 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

16.1 Unsecured General Creditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.2 Employer's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.3 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.4 Not a Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.5 Furnishing Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.6 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16.11 Spouse's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16.12 Incompetent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16.13 Court Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16.14 Distribution in the Event of Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16.15 Legal Fees to Enforce Rights After a Change of Control Event . . . . . . . . . . . . . . . 24
16.16 Taxes and Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

iii

THE HILLHAVEN CORPORATION

DEFERRED COMPENSATION PLAN

AMENDED AND RESTATED, EFFECTIVE OCTOBER 1, 1994

PURPOSE

The purpose of this Plan is to provide specified benefits to a select
group of management or highly compensated Employees who contribute materially
to the continued growth, development and future business success of The
Hillhaven Corporation, a Nevada corporation, and its subsidiaries, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.

This Plan represents a combination and continuation of The Hillhaven
Corporation Deferred Compensation Master Plan, Third Restatement and The
Hillhaven Corporation Senior Management Deferred Compensation Plan (either a
"Predecessor Plan"). All amounts previously deferred under and account
balances maintained under either of such plans shall, as of October 1, 1994,
become subject to the terms and conditions of The Hillhaven Corporation
Deferred Compensation Plan as set forth herein, and as this instrument may be
amended from time to time.

Notwithstanding the foregoing sentence, any Participant in pay status
shall receive payment of his or her deferred compensation pursuant to the terms
of the Predecessor Plan and any short-term payout election made pursuant to the
Predecessor Plan shall be paid out pursuant to the election made thereunder.

ARTICLE 1.
DEFINITIONS

For purposes hereof, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:

1.1 "Account Balance" shall mean with respect to a Participant the sum of
(i) his or her Deferral Amount, plus (ii) his or her company
contributions, contributed under Section 3.2 hereof plus (iii)
interest credited in accordance with all the applicable interest
crediting provisions of this Plan, less (iv) all distributions. This
account shall be a bookkeeping entry only and shall be utilized solely
as a device for the measurement and determination of the amounts to be
paid to a Participant pursuant to this Plan.

1.2 "Annual Bonus" shall mean any compensation, in addition to Base Annual
Salary, paid annually to a Participant as an Employee under any
Employer's annual bonus plan or plans.

1.3 "Annual Deferral Amount" shall mean that portion of a Participant's
Base Annual Salary and/or Annual Bonus to be paid during a Plan Year
that a Participant elects to have and is deferred in accordance with
Article 3, for any one Plan Year. In the event of a Participant's
Retirement, Disability (if deferrals cease in accordance with Section
8.1), death or a Termination of Employment prior to the end of a Plan
Year, such year's Annual Deferral Amount shall be the actual amount
deferred and withheld prior to such event.

1.4 "Base Annual Salary" shall mean the annual compensation, including
commissions, overtime, and incentive payments (other than amounts
considered part of the Annual Bonus), but excluding severance pay,
compensation received as a result of deferral, any equity-based
compensation and fringe benefits (including but not limited to
relocation expenses, non-monetary awards, directors fees and other
fees, automobile, educational, uniform, professional dues, and
employee expense allowances), paid to a Participant for employment
services rendered to any Employer before reduction for compensation
deferred pursuant to all qualified, non-qualified and Code Section 125
plans of any Employer. Notwithstanding the foregoing, the Company may
elect to permit directors fees to be included in the definition of
Base Annual Salary by written notice to affected Participants.

1.5 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled
to receive benefits under this Plan upon the death of a Participant.

1.6 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.

1.7 "Board" shall mean the board of directors of the Company.

1.8 A "Change of Control Event" shall be deemed to occur if any of the
following events has occurred:

(i) A Person, alone or together with its
Affiliates and Associates, or "group", within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes, after the date hereof, the beneficial owner of 20% or
more of the general voting power of the Company.
Notwithstanding the preceding sentence, a Change of Control
Event shall not be deemed to occur if the "Person" described
in the preceding sentence has acquired 20% or more of the
general voting power of the Company as consideration in a
transaction or series of related transactions involving the
Company's acquisition (by stock acquisition, merger, asset
purchase or otherwise) of one or more businesses approved
prior to such transactions or series of transactions by the
Incumbent

Board (as defined in (ii) below), and provided that, if such
transaction or series of transactions results in the merger,
consolidation or reorganization of the Company and such
Person, the Company is the surviving entity following such
merger, consolidation or reorganization.

(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934) shall be considered as though such
person were a member of the Incumbent Board.

(iii) Consummation or effectiveness of:

a. a merger, consolidation or reorganization
involving the Company (a "Business Combination"),
unless

1. the stockholders of the
Company, immediately before the Business
Combination, own, directly or indirectly
immediately following the Business
Combination, at least fifty-one percent (51%)
of the combined voting power of the
outstanding voting securities of the
corporation resulting from the Business
Combination (the "Surviving Corporation") in
substantially the same proportion as their
ownership of the voting securities
immediately and before the Business
Combination, and

2. the individuals who were
members of the Incumbent Board immediately
prior to the execution of the agreement
providing for the Business Combination
constitute at least a majority of the members
of the Board of Directors of the Surviving
Corporation, and

3. no Person (other than any
Person who, immediately prior to the Business
Combination, had beneficial ownership of
twenty percent (20%) or more of the then
outstanding Voting Securities) has Beneficial
Ownership of twenty percent (20%) or more of
the combined voting power of the Surviving
Corporation's then outstanding voting
securities;

b. a complete liquidation or dissolution of
the Company; or

c. the sale or other disposition of all or
substantially all of the assets of the Company to any Person.

For purposes of determining whether a Change of Control Event
has occurred, the following additional definitions apply:

"Affiliate or Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934.

"Person," means an individual, firm, corporation or other
entity or any successor to such entity, but "Person" shall not
include the Company, any subsidiary of the Company, any
employee benefit plan or employee stock plan (including a
trust relating thereto) of the Company or any subsidiary of
the Company, or any Person organized, appointed, established
or holding Voting Stock by, for or pursuant to the terms of
such a plan. "Person" shall also not include National Medical
Enterprises, Inc. ("NME"), any subsidiary of NME, any
Affiliate or Associate of NME, any employee benefit plan or
employee stock plan of NME or any subsidiary of NME to the
extent that such entities, individually or collectively, own
any or all of (x) 8,878,147 shares of the Company's common
stock (approximately 31% of the general voting power of the
Company as of December 6, 1994) registered in the name of NME
or any subsidiary of NME as of the date of this Agreement, or
(y) such additional number of shares of the Company's common
stock issued to NME or any subsidiary of NME in exchange for
shares of the Company's Series C Preferred Stock or Series D
Preferred Stock so long as such exchange has been approved in
advance by the Incumbent Board.

"Voting Stock" means shares of the Company's capital stock
having general voting power, with "voting power" meaning the
power under ordinary circumstances (and not merely upon the
happening of a contingency) to vote in the election of
directors.

1.9 "Claimant" shall have the meaning set forth in Section 14.1.

1.10 "Code" shall mean the Internal Revenue Code of 1986, as may be amended
from time to time.

1.11 "Committee" shall mean the committee described in Article 12.

1.12 "Company" shall mean The Hillhaven Corporation, a Nevada corporation.

1.13 "Crediting Rate" shall mean, starting October 1, 1994 and for each
Plan Year starting thereafter, an interest rate determined and
announced by the Committee before the Plan Year for which it is to be
used that is equal to 110% of the Moody's Rate. The Moody's Rate for
a Plan Year shall be an interest rate that (i) is published in Moody's
Bond Record under the heading of "Moody's Corporate Bond Yield
Averages -- Av. Corp," and (ii) is equal to the average corporate bond
yield published for the month which precedes the enrollment date for
the Plan Year for which the rate is to be used. The Crediting Rate
for the last quarter of 1994 shall equal 9.46%.

1.14 "Deferral Amount" shall mean the sum of all of a Participant's Annual
Deferral Amounts.

1.15 "Deduction Limitation" shall mean the following described limitation
on the annual benefit that may be distributed pursuant to the
provisions of this Plan. The limitation shall be applied to
distributions under this Plan as set forth in this Plan. If the
Company determines in good faith prior to a Change of Control Event
that there is a reasonable likelihood that any compensation paid to a
Participant for a taxable year of the Company would not be deductible
by the Company solely by reason of the limitation under Code Section
162(m), then to the extent deemed necessary by the Company to ensure
that the entire amount of any distribution to the Participant pursuant
to this Plan prior to the Change of Control Event is deductible, the
Company may defer all or any portion of the distribution. Any amounts
deferred pursuant to this limitation shall continue to be credited
with interest in accordance with Section 3.5 below. The amounts so
deferred and interest thereon shall be distributed to the Participant
or his or her Beneficiary (in the event of the Participant's death)
at the earliest possible date, as determined by the Company in good
faith, on which the deductibility of compensation paid or payable to
the Participant for the taxable year of the Company during which the
distribution is made will not be limited by Section 162(m), or if
earlier, the effective date of a Change of Control Event.

1.16 "Disability" shall mean a period of disability during which a
Participant qualifies for benefits under the Participant's Employer's
long-term disability plan.

1.17 "Disability Benefit" shall mean the benefit set forth in Article 8.

1.18 "Election Form" shall mean the form established from time to time by
the Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.

1.19 "Employee" shall mean a person who is an employee of any Employer.

1.20 "Employer(s)" shall mean the (i) the Company, (ii) its wholly-owned
subsidiaries, (iii) partnerships in which the Company or a wholly-
owned subsidiary owns in excess of

50% and (iv) any Employer that has entered into a contract with the
Company or a subsidiary for the receipt of management services at one
or more facilities owned by such Employer if the Employer has been
selected by the Committee to participate in the Plan. Obligations of
each Employer hereunder shall be separate except where The Hillhaven
Corporation has by specific action of its Board of Directors or other
written agreement executed by a duly authorized officer agreed that it
and/or its wholly-owned subsidiaries will undertake joint and several
liability.

1.21 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as may be amended from time to time.

1.22 "Participant" shall mean any Employee who was a Participant in either
of the Predecessor Plans before October 1, 1994 and still has an
Account Balance maintained hereunder or an Employee (i) who is
selected to participate in the Plan, (ii) who elects to participate in
the Plan, (iii) who signs a Plan Agreement, an Election Form and a
Beneficiary Designation Form, (iv) whose signed Plan Agreement,
Election Form and Beneficiary Designation Form are accepted by the
Committee, (v) who commences participation in the Plan, and (vi) a)
whose Plan Agreement has not terminated. By addendum to this Plan,
the Board or the Committee may permit directors of any of the
Employers to become Participants hereunder regardless of whether they
are Employees.

1.23 "Plan" shall mean the Company's Deferred Compensation Plan, which
shall be evidenced by this instrument and, with respect to each
Participant, by his or her one or more Plan Agreements, as may be
amended from time to time.

1.24 "Plan Agreement" shall mean a written agreement, as may be amended
from time to time, which is entered into by and between the Company
and a Participant. A Participant may be required to enter into more
than one Agreement depending on the entity employing him or her any
time and the manner in which the Company and another Employer have
agreed to allocate and assume responsibility for liabilities accrued
hereunder.

1.25 "Years of Plan Participation" shall mean the total number of full Plan
Years a Participant has been a Participant in the Plan. For purposes
of a Participant's first Plan Year of participation only, any partial
Plan Year of participation shall be treated as a full Plan Year.

1.26 "Plan Year" shall be the calendar year.

1.27 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.

1.28 "Retirement", "Retires" or "Retired" shall mean, with respect to an
Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after the
attainment of age 60.

1.29 "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.30 "Short-Term Payout" shall mean the payout set forth in Section 4.1.

1.31 "Termination Benefit" shall mean the benefit set forth in Article 7.

1.32 "Termination of Employment" shall mean the ceasing of employment with
all Employers voluntarily or involuntarily, for any reason other than
death.

1.33 "Trust" shall mean the grantor, or "rabbi" trust, within the meaning
of Code Section 671, known as The Hillhaven Corporation Master
Executive Deferred Compensation Trust established pursuant to The
Hillhaven Corporation Master Trust Agreement for Executive Deferral
Plans, dated as of October 1, 1994, between the Company and the
trustee named therein, as amended from time to time.

1.34 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) such
other extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, all as
determined in the sole discretion of the Committee.

1.35 "Years of Service" shall mean the total number of full 12 month
periods of service in which a Participant has been employed by one or
more Employers. Any partial year of employment or service shall not
be counted. Except as may be determined by the Committee, service
with an entity prior to its becoming an Employer or a unit thereof
shall not be taken into account.

ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY

2.1 Selection by Committee. Participation in the Plan shall be limited to
a select group of management or highly compensated Employees. From
that group, the Committee shall select, in its sole discretion,
Employees to participate in the Plan.

2.2 Enrollment Requirements. Individuals participating in either
Predecessor Plan as of October 1, 1994 need not complete any initial
enrollment materials except as may be necessary to defer compensation
in Plan Years starting on or after January 1, 1995.

Individuals initially selected to participate in this Plan after
October 1, 1994 may commence participation as soon as they complete,
execute and return to the Committee a Plan Agreement, Election Form
and Beneficiary Designation Form, provided such documents are returned
within 30 days of selection. In addition, the Committee shall
establish from time to time such other enrollment requirements as it
determines, in its sole discretion, are necessary.

2.3 Eligibility; Commencement of Participation. In the case of Employees
selected for participation in this Plan after October 1, 1994,
participation in this Plan shall commence on the first day of the
month following the month in which the Employee completes all
enrollment requirements. If an Employee fails to meet in a timely
fashion all such requirements that he or she shall not be eligible
toparticipate in the Plan until the first day of the Plan Year
following the delivery to and acceptance by the Committee of the
required documents.

ARTICLE III.
DEFERRAL COMMITMENTS/INTEREST CREDITING

3.1 Minimum and Maximum Deferral.

(a) Minimum. For each Plan Year, a Participant may elect to defer
Base Annual Salary and/or Annual Bonus that would otherwise be
received during a Plan Year in the following minimum and
maximum amounts for each type of deferral elected.

Minimum Maximum
Deferral Amount Amount
-------- ------- -------

Base Annual Salary 1% 100%
Annual Bonus 1% 100%

If no election is made, the amount deferred for each type of
compensation shall be zero. All amounts deferred under this
Section 3.1(a) shall at all times be fully vested and
nonforfeitable.

(b) Short Plan Year. If a Participant first becomes a Participant
after the first day of a Plan Year, or in the case of the
first Plan Year of the Plan itself, the minimum Base Annual
Salary deferral shall be an amount equal to the minimum set
forth above, multiplied by a fraction, the numerator of which
is the number of complete months remaining in the Plan Year
and the denominator of which is 12.

3.2 Company Contribution.

(a) Subject to amendment or termination of the Plan and applicable
limitations herein, as of the last day of each pay period,
each Employer shall credit to the account of each Participant
in its employ as of the last day of such period an amount
equal to a percentage of the Participant's Annual Deferral
Amount for the period, not in excess of the first 4% of the
Participant's Base Annual Salary and Annual Bonus received
during such period based on the Participant's Years of Service
as of the last day of the pay period, as follows:

Years of Service Percentage of Compensation
---------------- --------------------------
(up to first 4%)

Less than 1 25%
At least 1 but less than 2 50%
At least 2 but less than 3 75%
3 or more 100%

(b) A Participant shall be vested in amounts attributable to
Employer contributions (and earnings) credited to his or her
Account Balance, as follows:

Years of Service Percentage Vested
---------------- -----------------

Less than 3 0%
3 30%
4 40%
5 60%
6 80%
7 or more 100%

Notwithstanding the foregoing, a Participant shall become
fully vested in Employer contributions and earnings credited
to his or her Account Balance if and when the Participant,
while employed by an Employer, attains age 60, dies or incurs
a Disability, or upon the occurrence of a Change of Control
Event.

(c) Notwithstanding any other provision of this Plan including
Section 3.2(b), the Committee shall have the right in its sole
discretion to cause any or all of the Employer contributions
credited to an Account Balance, including earnings, to be
forfeited if the Committee at any time determines that:

(i) The Participant has consciously and
intentionally divulged Employer confidential information to
the competitors of the Employer which is clearly and

unequivocally detrimental to the Employer, and such action has
been fully and completely documented under oath;

(ii) The Participant has engaged in criminal conduct
which is clearly and unequivocally detrimental to the
Employer, and such conduct has been fully and completely
documented under oath; or

(iii) Within the two years immediately following his
or her Termination of Employment date, the Participant engages
in any capacity in a business, other than National Medical
Enterprises or one of its subsidiaries, that is in
substantial, direct competition with the business of, and in
the geographical areas served by, any of the operating units,
including the corporate office of the Company for which the
Employee worked during the 3 years immediately preceding his
or her Termination of Employment date.

3.3 Election to Defer; Effect of Election Form. In connection with a
Participant's commencement of participation in the Plan, the
Participant shall make a deferral election by delivering to the
Committee a completed and signed Election Form, which election and
form must be accepted by the Committee for valid election to exist.
For each succeeding Plan Year, a new Election Form must be delivered
to the Committee, in accordance with its rules and procedures, before
the end of the Plan Year preceding the Plan Year for which the
election is made. If no Election Form is timely delivered for a Plan
Year, no Annual Deferral Amount shall be withheld for that Plan Year.

3.4 Withholding of Deferral Amounts. For each Plan Year, the Base Annual
Salary portion of the Annual Deferral Amount shall be withheld each
payroll period in accordance with the Participant's election as a
percentage of Base Annual Salary. The Annual Bonus portion of the
Annual Deferral Amount shall be withheld at the time the Annual Bonus
is or otherwise would be paid to the Participant.

3.5 Interest Crediting Prior to Distribution. Prior to any distribution
of benefits under Articles 4, 5, 6, 7 or 8, interest shall be credited
and compounded quarterly on a Participant's Account Balance as though
the quarterly portion of the Participant's Annual Deferral Amount and
Employer contributions were made in two installments, half at the
beginning of the quarter and half at quarter-end. Provided, that
portion of the Annual Deferral Amount deferred from an annual bonus
(and Employer contribution attributable thereto) shall be treated as
credited at the beginning of the quarter in which the bonus is paid.
The rate of interest for crediting shall be the Crediting Rate.

3.6 Installment Distributions. In the event a benefit is paid in
installments under Articles 5, 6, 7, 8 or 11, installment payment
amounts shall be determined in the following manner:

(a) Interest Rate. The interest rate to be used to calculate
installment payment amounts shall be a fixed interest rate
that is determined by averaging the Crediting Rates for the
Plan Year in which installment payments commence and the four
(4) preceding Plan Years. If a Participant has completed fewer
than five (5) Plan Years, or if the Plan has been in existence
fewer than five (5) Plan Years, this average shall be
determined using the Crediting Rates for the Plan Years during
which the Participant participated in the Plan.

(b) "Deemed" Installment Payments. For purposes of calculating
installment payment amounts only (and notwithstanding the fact
that installment payments shall be paid monthly), installment
payments for each 3 month period, starting with the date that
the Participant became eligible to receive a benefit under
this Plan (the "Eligibility Date") and continuing thereafter
for each additional 3 month period until the Participant's
Account Balance is paid in full, shall be deemed to have been
paid in one sum as of the first day of each such 3 month
period.

(c) Amortization. Based on the interest rate determined in
accordance with Section 3.6(a) above and the "deemed" form of
installment payments determined in accordance with Section
3.6(b) above, the Participant's Account Balance shall be
amortized in equal quarterly installment payments over the
term of the specified payment period (starting as of the
Eligibility Date and stated in quarters rather than months).

(d) Monthly Payments. The quarterly installment payment
determined in Section 3.6(c) above shall be divided by 3, and
the resulting number shall be the monthly installment payment
that is to be paid each month during the specified monthly
installment payment period in accordance with the other terms
and conditions of this Plan.

3.7 FICA and Other Taxes. For each Plan Year in which an Annual Deferral
Amount is being withheld, the Participant's Employer(s) shall ratably
withhold from that portion of the Participant's Base Annual Salary
that is not being deferred, the Participant's share of FICA and other
employment taxes. If necessary, the Committee shall reduce the Annual
Deferral Amount in order to comply with this Section 3.7.

ARTICLE 4
SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL
EMERGENCIES; WITHDRAWAL ELECTION

4.1 Short-Term Payout. Subject to the Deduction Limitation, in connection
with each annual election to defer compensation, a Participant may,
but need not, elect to receive a future "Short-Term Payout" from the
Plan with respect to the Annual Deferral

Amount for such Plan Year. The Short-Term Payout shall be a lump sum
payment in an amount that is equal to the Annual Deferral Amount plus
interest credited in the manner provided in Section 3.5 above on that
amount. Subject to the other terms and conditions of this Plan, each
Short-Term payout elected shall be paid within 60 days of the first
day of the Plan Year that is a number of years, not less than three,
elected by the Participant, beginning on the first day of the Plan
Year following the Plan Year in which the Annual Deferral Amount is
actually deferred.

4.2 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies.
If the Participant experiences an Unforeseeable Financial Emergency,
the Participant may petition the Committee to (i) suspend any
deferrals required to be made by a Participant and/or (ii) receive a
partial or full payout from the Plan. The payout shall not exceed the
lesser of the Participant's Account Balance, calculated as if such
Participant were receiving a Termination Benefit, or the amount
reasonably needed to satisfy the Unforeseeable Financial Emergency.
If, subject to the sole discretion of the Committee, the petition for
a suspension and/or payout is approved, suspension shall take effect
upon the date of approval and any payout shall be made within 60 days
of the date of approval.

4.3 Withdrawal Election. A Participant may elect, at any time, to
withdraw all of his or her vested Account Balance prior to the time
such Account Balance is otherwise due and payable in whole or in part,
subject to a 10% withdrawal penalty (the net amount shall be referred
to as the "Withdrawal Amount"). No partial withdrawals of that
balance shall be allowed. The Participant shall make this election by
giving the Committee advance written notice of the election in a form
determined from time to time by the Committee. The penalty shall be
equal to 10% of the Participant's vested Account Balance determined
immediately prior to the withdrawal. Provided, the penalty shall not
apply to any portion of the vested Account Balance that is otherwise
payable to the Participant during the year of the withdrawal. The
Participant shall be paid the Withdrawal Amount within 60 days of his
or her election. Once the Withdrawal Amount is paid, the
Participant's participation in the Plan shall terminate and the
Participant shall not be eligible to participate in the Plan in the
future. The payment of this Withdrawal Amount shall not be subject to
the Deduction Limitation.

ARTICLE 5
RETIREMENT BENEFIT

5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement Benefit, his or
her Account Balance.

5.2 Payment of Retirement Benefits. A Participant, in connection with his
or her commencement of participation in the Plan, or, if later, during
the enrollment period for the Plan Year beginning in January 1995,
shall elect on an Election Form to receive

the Retirement Benefit in a lump sum or in equal monthly payments (the
latter determined in accordance with Section 3.6 above) over a period,
stated in an even number of years, of not less than two but not more
than fifteen years. The Participant may change his or her election to
an allowable alternative payout period by submitting a new Election
Form to the Committee, provided that any such Election Form is
submitted at least 3 years prior to the Participant's Retirement and
is accepted by the Committee in its sole discretion. The Election
Form most recently accepted by the Committee shall govern the payout
of the Retirement Benefit. The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days after the
date the Participant Retires.

5.3 Death Prior to Completion of Retirement Benefits. If a Participant
dies after Retirement but before the Retirement Benefit is paid in
full, the Participant's unpaid Retirement Benefit payments shall
continue and shall be paid to the Participant's Beneficiary (a) over
the remaining number of months and in the same amounts as that benefit
would have been paid to the Participant had the Participant survived,
or (b) in a lump sum, if requested by the Beneficiary and allowed in
the sole discretion of the Committee, that is equal to the
Participant's unpaid remaining Account Balance.

ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT

6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation,
if a Participant dies before he or she Retires, experiences a
Termination of Employment or suffers a Disability, the Participant's
Beneficiary shall receive a Pre-Retirement Survivor Benefit equal to
the Participant's Account Balance.

6.2 Payment of Pre-Retirement Survivor Benefits. A Participant, in
connection with his or her commencement of participation in the Plan
or, if later, during the enrollment period for the Plan Year starting
in January 1995, shall elect on an Election Form whether the Pre-
Retirement Survivor Benefit shall be received by his or her
Beneficiary in a lump sum or in equal monthly payments (the latter
determined in accordance with Section 3.6 above) over a period of 60,
120 or 180 months. The Participant may change this election to an
allowable alternative payout period by submitting a new Election Form
to the Committee, which form must be accepted by the Committee in its
sole discretion. The Election Form most recently accepted by the
Committee prior to the Participant's death shall govern the payout of
the Participant's Pre-Retirement Survivor Benefit. Despite the
foregoing, if the Participant's Account Balance at the time of his or
her death is less than $50,000, payment of the Pre-Retirement Survivor
Benefit may be made, in the sole discretion of the Committee, in a
lump sum or in installment payments that do no exceed five years in
duration. The lump sum payment shall be made, or installment payments
shall commence, no later than 60 days after the date the Committee is
provided with proof that is satisfactory to the Committee of the

Participant's death. In no event may the Beneficiary select the
manner of payment either before or after the Participant's death.

ARTICLE 7
TERMINATION BENEFIT

7.1 Termination Benefits. Subject to the Deduction Limitation, if a
Participant experiences a Termination of Employment prior to his or
her Retirement, death or Disability, the Participant shall receive a
Termination Benefit, which shall be equal to the Participant's vested
Account Balance, with interest credited in the manner provided in
Section 3.5 above.

7.2 Payment of Termination Benefit. The Termination Benefit shall be paid
commencing within 60 days of the Termination of Employment as follows:

(a) A Termination Benefit of $50,000 or less shall be paid in a
lump sum.

(b) A Termination Benefit in excess of $50,000 shall be paid in 60
approximately equal monthly installments.

(c) Notwithstanding (b), the Committee in its sole discretion may
authorize a lump sum payment or installments over a period of
less than five years.

If payment is made in installments, the interest rate to be credited
to the Account Balance during the installment payout shall be the
otherwise applicable rate determined in accordance with Section 3.6.

ARTICLE 8
DISABILITY WAIVER AND BENEFIT

8.1 Disability Waiver.

(a) Eligibility. By participating in the Plan, all Participants
are eligible for this waiver.

(b) Waiver of Deferral. A Participant who is determined by the
Committee to be suffering from a Disability shall, if the
Disability originated while the Participant was employed by an
Employer, become fully vested in his or her Account Balance
and shall be excused from fulfilling that portion of the
Annual Deferral Amount commitment that would otherwise have
been withheld from a Participant's Base Annual Salary or
Annual Bonus for the Plan Year during which the Participant
first suffers a Disability. During the period of Disability,
the Participant shall not be allowed to make any additional
deferral elections.

(c) Return to Work. If a Participant returns to employment with
an Employer after a Disability ceases, the Participant may
elect to defer an Annual Deferral Amount for the Plan Year of
his or her return to employment or service and for every Plan
Year thereafter while a Participant in the Plan; provided such
deferral elections are otherwise allowed and an Election Form
is delivered to and accepted by the Committee for each such
election in accordance with Section 3.3 above.

8.2 Disability Benefit. A Participant suffering a Disability shall, for
all purposes under this Plan, continue to be considered to be employed
by an Employer and shall be eligible for the benefits provided for in
Articles 4, 5, 6 or 7 in accordance with the provisions of those
Articles. Notwithstanding the above, the Committee shall have the
right, in its sole and absolute discretion and for purposes of this
Plan only, to terminate a Participant's employment at any time after
such Participant is determined to be permanently disabled under the
Participant Employer's long-term disability plan.

ARTICLE 9
BENEFICIARY DESIGNATION

9.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary
designated under this Plan may be the same as or different from the
Beneficiary designation under any other plan of an Employer in which
the Participant participates.

9.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing, and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules
and procedures, as in effect from time to time. If the Participant
names someone other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by
that Participant's spouse and returned to the Committee. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled. The
Committee shall be entitled to rely on the last Beneficiary
Designation Form filed by the Participant and accepted by the
Committee prior to his or her death.

9.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Committee or its designated agent.

9.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the
Participant's estate.

9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to
cause the Participant's Employer to withhold such payments until this
matter is resolved to the Committee's satisfaction.

9.6 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.

ARTICLE 10
LEAVE OF ABSENCE

10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Article 3.

10.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of
absence from the employment of the Employer, the Participant shall
continue to be considered employed by the Employer and the Participant
shall be excused from making deferrals until the earlier of the date
the leave of absence expires or the Participant returns to a paid
employment status. Upon such expiration or return, deferrals shall
resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any,
made for that Plan Year. If no election was made for that Plan Year,
no deferral shall be withheld.

ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION

11.1 Termination. Any Employer reserves the right to terminate the Plan at
any time with respect to its participating Employees by the action of
its board of directors. Upon the termination of the Plan, all Plan
Agreements of a Participant shall terminate and his or

her Account Balance, determined as if he or she had experienced a
Termination of Employment on the date of Plan termination or, if Plan
termination occurs after the date upon which the Participant was
eligible to Retire, the Participant had Retired on the date of Plan
termination, shall be paid to the Participant as follows. Prior to a
Change of Control Event, an Employer shall have the right, in its sole
discretion, and notwithstanding any elections made by the Participant,
to pay such benefits in a lump sum or in monthly installments for up
to 15 years, with interest credited during the installment period as
provided in Section 3.6. After a Change of Control Event, the
Employer shall be required to pay such benefits in a lump sum. The
termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits
under the Plan as of the date of termination; provided however, that
the Employer shall have the right to accelerate installment payments
by paying the Participant's remaining Account Balance in one lump sum
amount.

11.2 Amendment. Any Employer may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer by the action of its
board of directors; provided, however, that no amendment or
modification shall be effective to decrease or restrict the value of a
Participant's Account Balance in existence at the time the amendment
or modification is made, calculated as if the Participant had
experienced a Termination of Employment as of the effective date of
the amendment or modification, or, if the amendment or modification
occurs after the date upon which the Participant was eligible to
Retire, the Participant had Retired as of the effective date of the
amendment or modification. The amendment or modification of the Plan
shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of
the amendment or modification; provided, however, that the Employer
shall have the right to accelerate installment payments by paying
Participant's remaining Account Balance in one lump sum amount.

11.3 Effect of Payment. The full payment of the applicable benefit under
Articles 5, 6, or 7 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.

ARTICLE 12
ADMINISTRATION

12.1 Committee Duties. This Plan shall be administered by a Committee
which shall consist of the Compensation Committee of the Board.
Members of the Committee may be Participants under this Plan. The
Committee shall have the authority in its sole and unfettered
discretion to (i) make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan and (ii)
decide or resolve any and all questions including claims for benefits
and interpretations of this Plan, as may arise in connection with the
Plan.

12.2 Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may
be counsel to any Employer.

12.3 Binding Effect of Decisions. The decision or action of the Committee
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the
Plan.

12.4 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee against any and all claims,
losses, damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case of
willful misconduct by the Committee or any of its members.

12.5 Employer Information. To enable the Committee to perform its
functions, each Employer shall supply full and timely information to
the Committee on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement,
Disability, death or Termination of Employment of its Participants,
and such other pertinent information as the Committee may reasonably
require.

ARTICLE 13
OTHER BENEFITS AND AGREEMENTS

The benefits provided for a Participant and Participant's Beneficiary
under the Plan are in addition to any other benefits available to such
Participant under any other plan or program for employees of the Participant's
Employer. The Plan shall supplement and shall not supersede, modify or amend
any other such plan or program except as may otherwise be expressly provided.

ARTICLE 14
CLAIMS PROCEDURES

14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below
as a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within 60 days
after such notice was received by the Claimant. The claim must state
with particularity the determination desired by the Claimant. All
other claims must be made within 180 days of the date on which the
event that caused the claim to arise occurred. The claim must state
with particularity the determination desired by the Claimant.

14.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:

(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or

(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be
understood by the Claimant:

(i) the specific reason(s) for the denial of the claim,
or any part of it;

(ii) specific reference(s) to pertinent provisions of the
Plan upon which such denial was based;

(iii) a description of any additional material or
information necessary for the Claimant to perfect the
claim, and an explanation of why such material or
information is necessary; and

(iv) an explanation of the claim review procedure set
forth in Section 14.3 below.

14.3 Review of a Denied Claim. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part,
a Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):

(a) may review pertinent documents;

(b) may submit written comments or other documents; and/or

14.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood
by the Claimant, and it must contain:

(a) specific reasons for the decision;

(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and

14.5 Legal Action. A Claimant's compliance with the foregoing provisions
of this Article 14 is a mandatory prerequisite to a Claimant's right
to commence any legal action with respect to any claim for benefits
under this Plan.

ARTICLE 15
TRUST

15.1 Establishment of the Trust. The Company shall establish the Trust,
and the Employers shall transfer over to the Trust such assets as the
Employers determine, in their sole discretion, are necessary to assist
in providing funds to meet the Employers' liabilities created
hereunder.

15.2 Interrelationship of the Plan and the Trust. The provisions of the
Plan and the Plan Agreement shall govern the rights of a Participant
to receive distributions pursuant to the Plan. The provisions of the
Trust shall govern the rights of the Employers, Participants and the
creditors of the Employers to the assets transferred to the Trust.
Each Employer shall at all times remain liable to carry out its
obligations under the Plan. Each Employer's obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust, and any such distribution shall reduce the
Employer's obligations under this Agreement.

ARTICLE 16
MISCELLANEOUS

16.1 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of any Employer. Any
and all of all Employers' assets shall be, and remain, the general,
unpledged unrestricted assets of the Employers. An Employer's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future and a Participant shall
have only an unsecured contractual right to the amounts, if any,
payable hereunder, against the Company or a particular Employer, as
reflected in the Participant's one or more Plan Agreements.

16.2 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer
shall have no obligation to a Participant under the Plan except as
expressly provided in the Plan and his or her Plan Agreement.

16.3 Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt, the amounts, if any, payable hereunder, or
any part thereof, which are, and all rights to which are expressly
declared to be, unassignable and non-transferable, except that the
foregoing shall not apply to any family support obligations set forth
in a court order. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment
of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, nor be transferable by operation of
law in the event of a Participant's or any other person's bankruptcy
or insolvency.

16.4 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged
to be an "at will" employment relationship that can be terminated at
any time for any reason, with or without cause, unless expressly
provided in a written employment agreement. Nothing in this Plan
shall be deemed to give a Participant the right to be retained in the
service of any Employer, either as an Employee or a Director, or to
interfere with the right of any Employer to discipline or discharge
the Participant at any time.

16.5 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and
the payments of benefits hereunder, including but not limited to
taking such physical examinations as the Committee may deem necessary.

16.6 Terms. Whenever any words are used herein in the masculine, they
shall be construed as though they were also in the feminine in all
cases where they would so apply; and whenever any words are used
herein in the singular or in the plural, they shall be construed as
though they were used in the plural or the singular, as the case may
be, in all cases where they would so apply.

16.7 Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.

16.8 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the laws of the State of
Washington without regard to its conflicts of laws principles.

16.9 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the
address below:

Plan Administrator of the Deferred Compensation Plan
The Hillhaven Corporation
The Cornerstone Building
1148 Broadway Plaza
Caller Service 2264
Tacoma, Washington 98402
Attn: Senior Vice President,
Human Resources and Administration
cc: General Counsel

Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.

Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand- delivered, or sent by mail, to the last known address of the
Participant.

16.10 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns
and the Participant and the Participant's designated Beneficiaries.

16.11 Spouse's Interest. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.

16.12 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of
that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the
care and custody of such minor, incompetent or incapable person. The
Committee may require proof of minority, incompetency, incapacity or
guardianship, as it may deem appropriate prior to distribution of the
benefit. Any payment of a benefit shall be a payment for the account
of the Participant and the Participant's Beneficiary, as the case may
be, and shall be a complete discharge of any liability under the Plan
for such payment amount.

16.13 Court Order. The Committee is authorized to make any payments
directed by court order in any action in which the Plan or the
Committee has been named as a party.

16.4 Distribution in the Event of Taxation.

(a) General. If, for any reason, all or any portion of a
Participant's benefit under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee for a distribution of that portion of his or her
benefit that has become taxable. Upon the grant of such a
petition, which grant shall not be unreasonably withheld, a
Participant's Employer shall distribute to the Participant
immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a
Participant's unpaid vested Account Balance under the Plan).
If the petition is granted, the tax liability distribution
shall be made within 90 days of the date when the
Participant's petition is granted. Such a distribution shall
affect and reduce the benefits to be paid under this Plan.

(b) Trust. If the Trust terminates and benefits are distributed
from the Trust to a Participant, the Participant's benefits
under this Plan shall be reduced to the extent of such
distributions.

16.15 Legal Fees to Enforce Rights After a Change of Control Event. The
Company is aware that upon the occurrence of a Change of Control
Event, the Board (which might then be composed of new members) or a
shareholder of the Company, or of any successor corporation might then
cause or attempt to cause the Company or such successor to refuse to
comply with its obligations under the Plan and might cause or attempt
to cause the Company to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In
these circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change of Control Event, it should appear
to any Participant that the Company or the Trustee has failed to
comply with any of its obligations under the Plan or any agreement
thereunder or, if the Company or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation or
other legal action designed to deny, diminish or to recover from any
Participant the benefits intended to be provided, then the Company
irrevocably authorizes such Participant to retain counsel of his or
her choice at the expense of the Company to represent such Participant
in connection with the initiation or defense of any litigation or
other legal action, whether by or against the Company or any director,
officer, shareholder or other person affiliated with the Company or
any successor thereto in any jurisdiction.

16.16 Taxes and Withholding. The Participant's Employer(s), or the trustee
of the Trust, may withhold from any distribution under this Plan any
and all employment and income taxes that are required to be withheld
under applicable law.

16.17 Severability. If and to the extent any provision hereof is held to be
void or unenforceable, the Plan shall remain in full-force and effect
with such provision severed as though such provision had not been
included in the original Plan.

IN WITNESS WHEREOF, the Company has executed this Plan document as of
October 1, 1994.

THE HILLHAVEN CORPORATION, a Nevada corporation

By:____________________________________________

Title:_________________________________________