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<page> [Letterhead of Continental Medical Systems, Inc.] June 27, 1996 Neal Elliott Chairman/CEO Horizon/Cms Healthcare Corporation 6001 Indian School Road, Ne Suite 530 Albuquerque, Nm 87110 Dear Neal: Next Week Will Mark the One Year Anniversary of the Merger of Horizon and Cms. While Matters of Disagreement in a Merger Such as Ours Are Part of the Process, I Have Become Troubled by the Confrontation That Has Taken Place at the Board Level Over the Last Year. as You Know, I Have Disagreed With You on a Number of Matters That Have Come Before the Board Either for a Vote or General Discussion. This Has Not Been Easy Although I Have Spoken and Voted Consistent With My Good Faith Views of the Best Interest of the Company. at This Point, However, I Believe It Would Be Best if I Resigned From the Board. in Addition, at Your Request I Will Resign My Position of Executive Vice President of Horizon/Cms. I Understand That This Title Was Given to Me at the Merger With the Best of Intentions. However, Inasmuch as I Have No Corporate Responsibilities It May Be Advisable to Vacate That Title as Well. With These Actions, It Is My Hope That Our Professional Relationship Can Be Strengthened. I Will Continue to Serve the Company as Head of the Cms Division. Clearly, Consistency in Our Earnings Will Have to Be a Strength of the Company Going Forward. This Is Where I Can Continue to Make the Strongest Impact. Sincerely, /S/ Robert A. Ortenzio - Robert A. Ortenzio President <page> [Letterhead of Continental Medical Systems, Inc.] June 27, 1996 To: Neal Elliott Chairman/CEO, Horizon/Cms Healthcare Corporation Please Accept This as Notice of My Resignation From the Board of Directors of Horizon/Cms Healthcare Corporation Effective as of the Date Hereof. Sincerely, /S/ Robert A. Ortenzio Robert A. Ortenzio Rao:mlh Robad CC: Frank McCord Ray Novak Roy Zimmerman Jerry Martin Barry Portnoy
