SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the quarterly period ended January 31, 1998
                                     ----------------

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from  _____________ to __________________


                         Commission file number 0-12927
                                                -------


                         NATIONAL HOME HEALTH CARE CORP.
             ------------------------------------------------------
             (Exact name of Registrant as Specified in Its Charter)


        Delaware                                           22-2981141
-------------------------------                --------------------------------
(State or Other Jurisdiction of               (IRS Employer Identification No.)
 Incorporation or Organization)

                700 White Plains Road, Scarsdale, New York 10583
             ------------------------------------------------------
             (Address of Principal Executive Offices with Zip Code)


         Registrant's Telephone Number Including Area Code: 914-722-9000
                                                            ------------

-------------------------------------------------------------------------------
Former Name,Former Address and Former Fiscal Year, if Changed Since Last Report.


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required by Section 12, 13 or 15(d) of the  Securities  Exchange Act of
1934 subsequent to the  distribution  of securities  under a plan confirmed by a
court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

The  number  of  shares of common  stock  outstanding  as of March 13,  1998 was
5,223,164

                                       -1-

<PAGE>



                         NATIONAL HOME HEALTH CARE CORP.

                                    FORM 10-Q

                     FOR THE QUARTER ENDED JANUARY 31, 1998



PART I.    FINANCIAL INFORMATION                                           Page
                                                                           ----
Item 1.    Financial Statements


           Consolidated Balance Sheets as of January 31, 1998
           and July 31, 1997(unaudited)                                     3-4

           Consolidated  Statements  of  Operations  for the three
           months ended January 31, 1998 and January 31, 1997 and
           six months ended  January 31, 1998 and January 31, 1997
           (unaudited)                                                        5

           Consolidated  Statements of Cash Flows for the six months
           ended January 31, 1998 and January 31, 1997 (unaudited)            6

           Notes to Consolidated Financial Statements                       7-8

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                             9-12

PART II.   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K                               13-14

SIGNATURES                                                                   15




                                       -2-

<PAGE>



                NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                    UNAUDITED



                                                January 31, 1998   July 31, 1997
                                                ----------------   -------------

ASSETS

Current assets:
  Cash and cash equivalents                          $  9,341,000   $  9,324,000
  Investments                                             498,000        508,000
  Accounts receivable-less allowance for doubtful
      accounts of $293,000 at January 31, 1998 and
      $327,000 at July 31, 1997                         9,174,000      8,176,000
  Income taxes receivable                                 150,000            ---
  Prepaid expenses and other assets                       151,000        163,000
  Deferred taxes                                          230,000        230,000
                                                          -------        -------

      Total current assets                             19,544,000     18,401,000

Furniture, equipment and leasehold improvements, net      377,000        378,000
Excess of cost over fair value of net assets of
  businesses acquired, net                              3,265,000      3,350,000
Other intangible assets, net                              846,000        947,000
Deposits and other assets                                 138,000        138,000
Investment in unconsolidated investee                   1,099,000      2,010,000
                                                        ---------      ---------
                                                      $25,269,000    $25,224,000
                                                      ===========    ===========
         TOTAL


  (Continued)


                                       -3-

<PAGE>



                NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                    UNAUDITED



                                               January 31, 1998   July 31, 1997
                                               ----------------   -------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses         $  1,069,000   $  1,331,000
     Estimated third-party payor settlements            434,000        195,000
     Income taxes payable                               -------         22,000
                                                        -------         ------

         Total current liabilities                    1,503,000      1,548,000

Deferred tax liability                                    6,000        316,000
                                                          -----        -------

         Total liabilities                            1,509,000      1,864,000

Stockholders' equity:
     Common stock, $.001 par value; authorized
         20,000,000 shares, issued 6,228,746 and
         6,208,646 shares                                 6,000          6,000
     Additional paid-in capital                      18,525,000     18,476,000
     Retained earnings                                6,391,000      5,842,000
                                                      ---------      ---------
                                                     24,922,000     24,324,000

Less treasury stock (997,000 and 957,500 shares)
         at cost                                     (1,162,000)      (964,000)
                                                     ----------       -------- 

         Total stockholders' equity                  23,760,000     23,360,000
                                                     ----------     ----------

                   TOTAL                            $25,269,000    $25,224,000
                                                    ===========    ===========




          See accompanying notes to consolidated financial statements.


                                       -4-

<PAGE>



                NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    UNAUDITED

<TABLE>
<CAPTION>

                                        For the three months ended     For the six months ended
                                               January 31,                   January 31,
                                               -----------                   -----------
                                           1998          1997           1998           1997
                                           ----          ----           ----           ----
<S>                                        <C>           <C>            <C>            <C> 


Net patient revenue                    $ 8,802,000   $ 8,692,000     $17,903,000   $ 17,378,000
                                       -----------   -----------     -----------   ------------

Operating expenses:
     Cost of revenue                     5,683,000     5,633,000      11,574,000     11,324,000
     General and administrative          2,290,000     2,119,000       4,512,000      4,188,000
     Amortization of intangibles            94,000        49,000         187,000         97,000
                                            ------        ------         -------         ------

         Total operating expenses        8,067,000     7,801,000      16,273,000     15,609,000
                                         ---------     ---------      ----------     ----------

Income from operations                     735,000       891,000       1,630,000      1,769,000

Other income (loss):
     Interest income                       134,000       103,000         274,000        208,000
     (Loss) from equity investee          (564,000)     (148,000)       (911,000)      (178,000)
                                          --------      --------        --------       -------- 

Income from operations before taxes        305,000       846,000         993,000      1,799,000

Provision for income taxes                 135,000       353,000         444,000        768,000
                                           -------       -------         -------        -------

NET INCOME                             $   170,000   $   493,000     $   549,000   $  1,031,000
                                       ===========   ===========     ===========   ============

Other data, including per share
information:
Net income available to common
stockholders                           $   170,000   $   493,000     $   549,000   $  1,031,000

Basic earnings per share                    $ 0.03        $ 0.09          $ 0.10         $ 0.20
                                            ======        ======          ======         ======

Basic weighted average shares
outstanding                              5,244,543     5,248,285       5,248,184      5,248,285

Diluted net income available to
common stockholders                    $   170,000   $   493,000     $   549,000   $  1,031,000

Diluted earnings per share                  $ 0.03        $ 0.09          $ 0.10         $ 0.19
                                            ======        ======          ======         ======

Diluted weighted average shares          5,335,166     5,362,565       5,339,232      5,367,151
outstanding

          See accompanying notes to consolidated financial statements.
</TABLE>


                                       -5-

<PAGE>



                NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS AND CASH FLOWS
                                    UNAUDITED
<TABLE>
<CAPTION>



                                                                            For the six months ended
                                                                                   January 31,
                                                                      -------------------------------------
                                                                              1998             1997
                                                                              ----             ----
<S>                                                                           <C>              <C> 


Cash flows from operating activities:
     Net income                                                         $  549,000       $1,031,000
     Adjustments to reconcile net income to net cash provided by
     operating activities:
         Depreciation and amortization                                     237,000          151,000
         Provision for doubtful accounts                                    25,000             ----
         Loss from equity investee                                         911,000          178,000
         Deferred tax                                                     (310,000)          (4,000)
         Changes in:
              Accounts receivable                                       (1,023,000)         265,000
              Prepaid expenses and other assets                             12,000          (79,000)
              Accounts payable, accrued expenses and other liabilities    (262,000)        (312,000)
              Income taxes receivable/payable                             (172,000)        (114,000)
              Estimated third party payor settlements                      239,000         (353,000)
                                                                           -------         -------- 
                  Net cash provided by operating activities                206,000          763,000
                                                                           -------          -------

Cash flows from investing activities:
     Proceeds of investments                                                10,000           10,000
     Purchase of furniture, equipment and leasehold improvements           (50,000)         (86,000)
                                                                           -------          ------- 
                  Net cash (used in) investing activities                  (40,000)         (76,000)
                                                                           -------          ------- 

Cash flows from financing activities:
     Proceeds from exercise of stock options                                49,000             ----
     Purchase of treasury shares                                          (198,000)            ----
                                                                          --------             ----
                  Net cash (used in) financing activities                 (149,000)            ----
                                                                          --------             ----

NET INCREASE IN CASH AND CASH EQUIVALENTS                                   17,000          687,000

Cash and cash equivalents-beginning of period                            9,324,000        8,929,000
                                                                         ---------        ---------

CASH AND CASH EQUIVALENTS-END OF PERIOD                                 $9,341,000       $9,616,000
                                                                        ==========       ==========

Supplemental  disclosures of cash flow information:
  Cash paid during the period for:
         Taxes                                                          $  946,000       $  957,000
         Interest                                                            1,000            1,000


          See accompanying notes to consolidated financial statements.

</TABLE>

                                       -6-

<PAGE>




                NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of Management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been  included.  Operating  results  for the three and six month  periods  ended
January  31, 1998 are not  necessarily  indicative  of the  results  that may be
expected for the year ended July 31, 1998. For further information, refer to the
consolidated   financial  statements  and  footnotes  thereto  included  in  the
Company's annual report on Form 10-K for the year ended July 31, 1997.

NOTE 2 - INITIAL PUBLIC OFFERING OF SUNSTAR HEALTHCARE, INC.

         On May 21, 1996, the initial public offering of common stock of SunStar
Healthcare, Inc. ("SunStar") was consummated. Prior to the offering, SunStar had
been  a  wholly-owned  subsidiary  of the  Company,  consisting  of its  Florida
outpatient medical center operations.  As a result of the offering,  the Company
currently owns 900,000 shares, or approximately 37.6% of SunStar. The Company is
accounting for its investment in SunStar using the equity method of accounting.

NOTE 3 - ACQUISITIONS

         On March 25, 1997,  the Company,  through its  wholly-owned  subsidiary
Health Acquisition Corp.,  acquired, for $672,000 in cash, including acquisition
costs of $22,000,  certain assets of C.J. Home Care, Inc. d/b/a Garden City Home
Care, a New York  licensed  home health care company  which  provides  home care
services in Nassau County, New York.

         On May 29,  1997,  the  Company,  through its  wholly-owned  subsidiary
Health  Acquisition  Corp.,   acquired,   for  $1,213,000  in  cash,   including
acquisition costs of approximately $77,000, certain assets of Home Health Aides,
Inc. and H.H.A.  Aides,  Inc.,  two licensed  home health care  companies  which
provide home care services in both Nassau and Suffolk Counties, New York.

NOTE 4 - PER SHARE DATA

          The Company adopted Statement of Financial Accounting Standard No. 128
("SFAS 128"),  "Earnings Per Share," during the fiscal quarter ended January 31,
1998.  The adoption of SFAS 128 did not have a material  effect on the Company's
earnings per share. Earnings per share and shares


                                       -7-

<PAGE>



of Common Stock  outstanding for the three and six months ended January 31, 1997
have been restated for comparative purposes.

         Basic  earnings per share.  Basic  earnings per share is  calculated by
dividing  income  available to holders of Common Stock (the basic  numerator) by
the  weighted-average  number of shares of Common Stock  outstanding  (the basic
denominator) during the period.

         Diluted earnings per share. Diluted earnings per share is calculated by
adjusting the basic numerator to add back potentially  issuable shares of Common
Stock and for any other  changes  in income or loss that would  result  from the
assumed conversion or exercise of potentially issuable shares. Additionally, the
basic  denominator  is increased to include the  additional  number of shares of
Common Stock that would have been outstanding if the potentially issuable shares
of Common Stock had been issued, if dilutive.  The treasury stock method is used
to reflect the dilutive effect of outstanding options and warrants.

         Under SFAS 128,  the  computation  of  diluted  EPS does not assume the
conversion  or  exercise  of  securities  that  have an  antidilutive  effect on
earnings per share (i.e., increase the earnings per share amount or decrease the
loss per share amount).

NOTE 5 - MEDICARE REIMBURSEMENT REDUCTIONS

         The  Balanced  Budget Act of 1997 (the  "Act")  was signed  into law on
August 5, 1997. Under the Act, for cost reports beginning on or after October 1,
1997,  Medicare-reimbursed  home health  agencies  will be  reimbursed  under an
interim payment system ("IPS") for a two-year period prior to the implementation
of a prospective  payment system.  Under the interim payment system, home health
care providers  will be reimbursed the lower of (i) the actual costs,  (ii) cost
limits based on 105% of median costs of freestanding  home health  agencies,  or
(iii) an  agency-specific  per-patient  cost limits,  based on 98% of 1994 costs
adjusted for  inflation.  The  prospective  payment system calls for payments to
Medicare  providers  for cost  reporting  periods on or after October 1, 1999 in
accordance with a prospective  payment system to be established by the Secretary
of the Department of Health and Human Services.

         The new IPS cost limits will apply to the Company's  Medicare-certified
nursing agency for the cost reporting period beginning July 1, 1998. The Company
is currently  analyzing the impact of the Act on its  operations,  liquidity and
cash flows and  formulating  plans to minimize the Act's  negative  impact.  The
Company's  future  operating   results  could  differ  materially  from  results
previously achieved or previously  projected in forward-looking  statements made
by or on behalf of the Company.



                                       -8-

<PAGE>



ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Results of Operations and Effects of Inflation
----------------------------------------------

         For the three  months  ended  January 31,  1998,  net  patient  revenue
increased  $110,000 or 1.3% to $8,802,000  from  $8,692,000 for the three months
ended  January 31,  1997.  Over the  periods,  net patient  revenue  from Health
Acquisition Corp., the subsidiary providing home health care services in the New
York metropolitan area, increased $847,000 or 17% to $5,823,000 from $4,976,000.
This increase is primarily  attributable to acquisitions that Health Acquisition
Corp.  completed in March and May of 1997. Over the periods, net patient revenue
from New England Home Care, Inc., the subsidiary that is Medicare  certified and
licensed  in  the  State  of  Connecticut,  decreased  $(785,000)  or  (26%)  to
$2,245,000 from $3,030,000. This decrease is primarily attributable to a decline
of (49%) in Medicare visits from the  corresponding  three month period of 1997.
The  Company's  increasing  internal  audit  and  compliance  with the rules and
regulations governing Medicare reimbursement resulted in the decline in both the
Company's  Medicare  patient base as well as its services to existing  patients.
Over the periods,  net patient revenue from Nurse Care,  Inc., the licensed home
health care subsidiary in the State of Connecticut,  increased  $48,000 or 7% to
$734,000 from $686,000.

         Cost of  revenue  as a  percentage  of net  patient  revenue  decreased
slightly to 64.5% for the three months ended January 31, 1998 from 64.8% for the
three months ended January 31, 1997.

         For the three months ended January 31, 1998, general and administrative
expenses  increased  $171,000 or 8% to $2,290,000  from $2,119,000 for the three
months  ended  January 31, 1997.  This  increase is  primarily  attributable  to
additional  administrative  salaries and expenses incurred by Health Acquisition
Corp. as a result of it's  acquisitions  in 1997. As a percentage of net patient
revenue,  general and  administrative  expenses  increased  to 26% for the three
months ended  January 31, 1998 from 24% for the three  months ended  January 31,
1997. This increase is attributable to the decline in net patient revenue of New
England  Home Care,  Inc.,  which was not offset by a  corresponding  decline in
general and administrative expenses.

         Amortization  of intangibles  increased to $94,000 for the three months
ended January 31, 1998 from $49,000 for the three months ended January 31, 1997.
This increase is attributable  to the  acquisitions  made by Health  Acquisition
Corp.

         Interest  income  increased  $31,000 or 30% to  $134,000  for the three
months ended  January 31, 1998 from  $103,000 for the three months ended January
31, 1997.  This  increase is  attributable  to increased  short-term  investment
yields obtained by the Company and better cash management.

         The loss from equity  investee  increased to  $(564,000)  for the three
months  ended  January 31,  1998 as  compared to a loss from equity  investee of
$(148,000) for the three months ended January


                                       -9-

<PAGE>



31, 1997. The loss from equity  investee  represents the Company's  share of the
SunStar net loss for the respective periods.

         The Company's effective tax rate increased to approximately 44% for the
three months ended  January 31, 1998 from 42% for the three months ended January
31, 1997 as the result of the increased loss from equity investee in the current
three month period.

         As a result of the  foregoing,  net income for the three  months  ended
January 31, 1998 was $170,000,  or $.03 per diluted share,  as compared to a net
income of  $353,000,  or $.09 per  diluted  share,  for the three  months  ended
January 31, 1997.  Excluding the loss from equity  investee,  net income for the
three months ended January 31, 1998 was $542,000 or $.10 per diluted  share,  as
compared  to  $591,000  or $.11 per  diluted  share for the three  months  ended
January 31, 1997.

         For  the six  months  ended  January  31,  1998,  net  patient  revenue
increased  $525,999 or 3% to  $17,903,000  from  $17,378,000  for the six months
ended  January 31,  1997.  Over the  periods,  net patient  revenue  from Health
Acquisition  Corp.  increased  $1,832,000 or 19% to $11,731,000 from $9,899,000.
This  increase  is  explained  in the  above  three-month  discussion.  Over the
periods,  net  patient  revenue  from New  England  Home  Care,  Inc.  decreased
($1,385,000) or (23%) to $4,637,000 from $6,022,000.  This decrease is primarily
attributable to a decline of (47%) in Medicare visits from the corresponding six
month  period of 1997.  This  decrease  is  explained  in the above  three-month
discussion.  Over the  periods,  net  patient  revenue  from  Nurse  Care,  Inc.
increased $75,000 or 5% to $1,524,000 from $1,449,000.

         Cost of revenue as a  percentage  of net patient  revenue  decreased to
64.6% for the six months  ended  January  31, 1998 from 65.2% for the six months
ended January 31, 1997.

         For the six months ended January 31, 1998,  general and  administrative
expenses  increased  $324,000 or 8% to $4,512,000  from  $4,188,000  for the six
months ended January 31, 1997. Approximately $292,000 or 90% of this increase is
attributable  to  additional  administrative  salaries and expenses  incurred by
Health  Acquisition  Corp.  as a  result  of it's  acquisitions  in  1997.  As a
percentage of net patient revenue, general and administrative expenses increased
to 25% for the six months  ended  January  31,  1998 from 24% for the six months
ended  January 31, 1997.  This  increase is  attributable  to the decline in net
patient  revenue  of New  England  Home  Care,  Inc.,  which was not offset by a
corresponding decline in general and administrative expenses.

         Amortization  of  intangibles  increased to $90,000 to $187,000 for the
six months ended  January 31, 1998 from $97,000 for the six months ended January
31, 1997.  This  increase is  attributable  to the  acquisitions  made by Health
Acquisition Corp.

         Interest income increased $66,000 or 32% to $274,000 for the six months
ended  January 31, 1998 from $208,000 for the six months ended January 31, 1997.
This increase is attributable to increased short-term investment yields obtained
by the Company and better cash management.



                                      -10-

<PAGE>



         The loss from  equity  investee  increased  to  $(911,000)  for the six
months  ended  January 31,  1998 as  compared to a loss from equity  investee of
$(178,000)  for the six months  ended  January  31,  1997.  The loss from equity
investee  represents  the  Company's  share  of the  SunStar  net  loss  for the
respective periods.

         The Company's effective tax rate increased to approximately 45% for the
six months ended  January 31, 1998 from 43% for the six months ended January 31,
1997 as the result of the increased loss from equity investee in the current six
month period.

         As a result of the  foregoing,  net  income  for the six  months  ended
January 31, 1998 was  $549,000 or $.10 per diluted  share,  as compared to a net
income of $.19 per diluted  share for the six months  ended  January  31,  1997.
Excluding  the loss from equity  investee,  net income for the six months  ended
January  31,  1998 was  $1,150,000  or $.22 per  diluted  share,  as compared to
$1,149,000 or $.21 per diluted share for the six months ended January 31, 1997.

         The rate of inflation had no material  effect on operations for the six
months ended January 31, 1998.

Financial Condition and Capital Resources
-----------------------------------------

         Current  assets  increased  to  approximately  $19,544,000  and current
liabilities  decreased to $1,503,000,  respectively,  at January 31, 1998. These
results  increased  working capital by $1,188,000  from  $16,853,000 at July 31,
1997 to  $18,041,000 at January 31, 1998.  Cash and cash  equivalents at January
31, 1997 was $9,341,000 as compared with $9,324,000 at July 31, 1997.

         The Company provided net cash from operating activities of $206,000 for
the six months  ended  January  31,  1998 as  compared  to net cash  provided by
operating  activities of $763,000 for the six months ended January 31, 1997. The
decrease in  operating  cash flow is primarily  attributable  to the increase in
accounts  receivable  of  $1,023,000  for the six months ended January 31, 1997,
offset by the increase in estimated  third-party  payor  settlements of $239,000
for the six months  ended  January  31,  1998 as  compared  to the  decrease  of
$353,000  for the six months ended  January 31,  1997.  The increase in accounts
receivable is the result of the Company's  current Medicare  reimbursement  rate
not reflecting actual costs of services being provided by New England Home Care,
Inc. and a delay in  reimbursement  for certain  Medicaid  services  provided by
Health  Acquisition  Corp. The Company expects to have these matters resolved in
the third  fiscal  quarter of 1998.  Historically,  the Company has financed its
working capital  requirements through cash flow from operating  activities.  Net
cash used in investing  activities for the six months ended January 31, 1998 and
1997 reflects the purchase of equipment, reduced by the proceeds of investments.
Net cash used in financing  activities for the six months ended January 31, 1998
reflects  the  purchase  of  treasury  shares  offset by the  proceeds  from the
exercise of stock options. For the six months ended January 31, 1997 the Company
had no financing cash flow activities.



                                      -11-

<PAGE>



         The Company has available a $2,000,000  secured line of credit with its
bank. In addition, a subsidiary of the Company has a secured line of credit. The
maximum amount that can be borrowed under the secured advised line of credit may
not exceed the lesser of eligible accounts receivable or $2,000,000. Both credit
facilities  bear interest at the alternate base  commercial  lending rate of the
bank and expire January 31, 1999. At January 31, 1998, there were no outstanding
balances under either line of credit.

         The  Company  intends  to meet both its  short and long term  liquidity
needs with its current cash  balances,  cash flow from  operations and available
lines of credit.  The Company  believes that its current cash balances will also
allow it to continue to make  acquisitions in the home health care field without
affecting its liquidity needs.

         In July 1997, the Board of Directors authorized a stock repurchase plan
authorizing the Company to repurchase up to $1,000,000 of its Common Stock.  The
buyback  program will be financed out of existing cash  balances.  To date,  the
Company has repurchased approximately $246,000 under the stock repurchase plan.




                                      -12-

<PAGE>



PART II.  OTHER INFORMATION

Item 1.    Acquisitions

           On February  25,  1998,  the Company  entered  into an  agreement  to
acquire  certain assets of a New York State  licensed  agency that provides home
health care services in Westchester  County,  New York. The consummation of this
proposed   acquisition  is  subject  to  regulatory  and  other   approvals  and
conditions.  The agency has annual  revenues of  approximately  $5,700,000.  The
acquisition is expected to be completed by July of 1998.

Item 4.    Submission of Matters to a Vote of Security Holders.

           The annual meeting of shareholders of the Company (the "Meeting") was
held on December 8, 1997.  Proxies for the Meeting  were  solicited  pursuant to
Rule 14A of the  Securities  Exchange Act of 1934, as amended,  and there was no
solicitation in opposition.

           At  the Meeting,  Frederick H. Fialkow,  Bernard Levine, M.D., Steven
Fialkow,  Ira Greifer,  M.D. and Robert C. Pordy, M.D. were elected as directors
of the Company to serve until the Company's next annual meeting of  shareholders
and until their respective  successors are elected and qualified.  The votes for
each director were as follows:

                                              For               Withheld
                                              ---               --------
                  Frederick H. Fialkow     4,559,172               9,083
                  Bernard Levine, M.D.     4,559,172               9,083
                  Steven Fialkow           4,559,172               9,083
                  Ira Greifer, M.D.        4,559,172               9,083
                  Robert C. Pordy, M.D.    4,559,172               9,083


Item 6.    Exhibits and reports on Form 8-K

           (a)    Exhibits:

                  10.1     Letter  Agreement dated February 20, 1998 providing a
                           Secured  Advised  Line of Credit from The Bank of New
                           York to National Home Health Care Corp.

                  10.2     Letter  Agreement dated February 20, 1998 providing a
                           Secured  Advised  Line of Credit from The Bank of New
                           York to New England Home Care, Inc.

                  10.3     Employment  Agreement dated as of November 1, 1997
                           between the Company and Frederick H. Fialkow.

                  10.4     Employment Agreement dated as of November 1, 1997
                           between the Company and Steven Fialkow.



                                      -13-

<PAGE>



                  10.5     Employment  Agreement dated as of November 1, 1997
                           between the Company and Richard Garafolo.

                  10.6     Employment  Agreement dated as of November 1, 1997
                           between the Company and Robert P. Heller.

           (b)    Reports on Form 8-K

                  None


                                      -14-

<PAGE>



                                   SIGNATURES
                                   ----------


           Pursuant to the requirements of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                National Home Health Care Corp.



Date:  March 13, 1998                           /s/ Robert P. Heller
                                                --------------------
                                                Robert P. Heller
                                                Vice President of Finance,
                                                Chief Financial and 
                                                Accounting Officer



                                      -15-

<PAGE>



                                                    Commission File No. 0-12927







                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    EXHIBITS

                                       to

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
                          PERIOD ENDED JANUARY 31, 1998

                         NATIONAL HOME HEALTH CARE CORP.





                                      -16-

<PAGE>



Exhibit
Number                Document
------                --------

10.1  Letter  Agreement  dated  February  20,  1998  providing a
      Secured  Advised  Line of Credit from The Bank of New York
      to National Home Health Care Corp.

10.2  Letter Agreement dated February 20, 1998 providing a Secured Advised Line
      of Credit from The Bank of New York to New England Home Care, Inc.

10.3  Employment Agreement dated as of November 1, 1997 between the Company
      and Frederick H. Fialkow.

10.4  Employment Agreement dated as of November 1, 1997 between the Company
      and Steven Fialkow.

10.5  Employment Agreement dated as of November 1, 1997 between the Company
      and Richard Garafolo.

10.6  Employment Agreement dated as of November 1, 1997 between the Company
      and Robert P. Heller.

27    Financial Data Schedule.





                                      -17-

<PAGE>



                                                                   Exhibit 10.1







                              THE BANK OF NEW YORK
            NEW YORK'S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON
                    8 EAST PARKWAY, SCARSDALE, NEW YORK 10583


February 20, 1998


Mr. Robert P. Heller, Vice President &
Chief Financial Officer
National Home Health Care Corp.
700 White Plains Road, Suite 363
Scarsdale, New York 10583

Dear Bob:

This letter  confirms that The Bank of New York (the "Bank")  holds  available a
$2,000,000  secured  advised  line of credit to National  Home Health Care Corp.
(the "Borrower").

Advances  under the line of credit shall be payable on demand and bear  interest
at a rate per annum equal to the alternate base  commercial  lending rate of the
Bank as publicly  announced  to be in effect  from time to time (the  "Alternate
Base  Rate"),  such rate to change on the  effective  date of any  change in the
Alternate Base Rate.

                      "Alternate  Base Rate" shall mean, for any day, a rate per
                      annum  equal to the higher of (i) the Prime Rate in effect
                      on such day and (ii) the  Federal  Funds Rate in effect on
                      such day plus 1/2 of 1%.

For purposes of this definition:

                      "Prime Rate" shall mean, for any day, the weighted average
                      of the rates on overnight Federal funds  transactions with
                      members of the Federal  Reserve System arranged by Federal
                      funds  brokers,  as published for such day (or if such day
                      is not a business  day,  for the next  preceding  business
                      day,  the  average  of  quotations  for  such  day on such
                      transactions received by the Bank from three Federal funds
                      brokers of recognized standing selected by the Bank.

All advances and all principal  payments hereunder shall be endorsed by the Bank
on the sheet  attached to the  Promissory  Grid Note and shall be secured by all
assets of the borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a duly authorized representative
of the Borrower,  as indicated by the latest  Corporate  Resolution on file with
the Bank, to make an advance or receive a repayment hereunder and to endorse the
sheet  attached to this  Promissory  Grid Note  accordingly.  All advances  made
hereunder shall be credited



<PAGE>



to the  Borrower's  deposit  account  referred to above,  which credits shall be
confirmed to the borrower by standard advice of credit. The Borrower agrees that
the actual  crediting of the sum of money so borrowed to the Borrower's  deposit
account shall constitute  conclusive evidence that the advance was made, and the
failure of the Bank to endorse the amount of any  advance on the sheet  attached
to this note or to forward to the  borrower an advice of credit shall not affect
the obligation of the borrower to repay such advance.

In  addition,  all  advances  under  the line of  credit  shall be  jointly  and
severally  guaranteed by Health  Acquisition  Corp., New England Home Care, Inc.
and Nurse  Care,  Inc.  Each  guarantee  shall be  secured  by all assets of the
respective  guarantors  pursuant  to a  security  agreement.  The  form of note,
security  agreement  and  guarantee to be furnished to the Bank shall be in form
and substance acceptable to the Bank and its counsel.

Advances  under the line of credit are subject to the Bank's  satisfaction  with
(i) the  specific  purpose and  expected  time and source of  repayment  of each
advance,  and (ii)  the  Borrower's  and the  guarantors'  financial  condition,
business  prospects and  operations  at the time of each  advance.  As you know,
lines of credit may be cancelled by either  party at any time,  however,  unless
cancelled earlier,  the line of credit shall be held available until January 31,
1999.

Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30  consecutive  days  during  each  twelve  (12)  month
calendar period in which the line of credit is held available.


Very truly yours,

THE BANK OF NEW YORK

/s/ Vito Caraccio
-----------------
Vito Caraccio
Assistant Vice President




<PAGE>



                                                                   Exhibit 10.2





                              THE BANK OF NEW YORK
            NEW YORK'S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON
                   8 EAST PARKWAY, SCARSDALE, NEW YORK 10583



February 20, 1998


Mr. Robert P. Heller, Vice President &
Chief Financial Officer
New England Home Care, Inc.
700 White Plains Road, Suite 363
Scarsdale, New York 10583

Dear Bob:

This letter  confirms that The Bank of New York (the "Bank")  holds  available a
$2,000,000  secured  advised line of credit to New England Home Care,  Inc. (the
"Borrower").

Advances  under the line of credit shall be payable on demand and bear  interest
at a rate per annum equal to the alternate base  commercial  lending rate of the
Bank as publicly  announced  to be in effect  from time to time (the  "Alternate
Base  Rate"),  such rate to change on the  effective  date of any  change in the
Alternate Base Rate.

                      "Alternate  Base Rate" shall mean, for any day, a rate per
                      annum  equal to the higher of (i) the Prime Rate in effect
                      on such day and (ii) the  Federal  Funds Rate in effect on
                      such day plus 1/2 of 1%.

For purposes of this definition:

                      "Prime Rate" shall mean, for any day, the weighted average
                      of the rates on overnight Federal funds  transactions with
                      members of the Federal  Reserve System arranged by Federal
                      funds  brokers,  as published for such day (or if such day
                      is not a business  day,  for the next  preceding  business
                      day,  the  average  of  quotations  for  such  day on such
                      transactions received by the Bank from three Federal funds
                      brokers of recognized standing selected by the Bank.

All advances and all principal  payments hereunder shall be endorsed by the Bank
on the sheet  attached to the  Promissory  Grid Note and shall be secured by all
assets of the borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a



<PAGE>




duly  authorized  representative  of the  Borrower,  as  indicated by the latest
Corporate  Resolution  on file with the Bank,  to make an  advance  or receive a
repayment  hereunder and to endorse the sheet attached to this  Promissory  Grid
Note  accordingly.  All  advances  made  hereunder  shall  be  credited  to  the
Borrower's  deposit account referred to above,  which credits shall be confirmed
to the  borrower  by standard  advice of credit.  The  Borrower  agrees that the
actual  crediting  of the sum of money so  borrowed  to the  Borrower's  deposit
account shall constitute  conclusive evidence that the advance was made, and the
failure of the Bank to endorse the amount of any  advance on the sheet  attached
to this note or to forward to the  borrower an advice of credit shall not affect
the obligation of the borrower to repay such advance.

In  addition,  all  advances  under  the line of  credit  shall be  jointly  and
severally  guaranteed by National Home Health Care,  Inc., Nurse Care, Inc., and
Health  Acquisition  Corp.  Each guarantee shall be secured by all assets of the
respective  guarantors  pursuant  to a  security  agreement.  The  form of note,
security  agreement  and  guarantee to be furnished to the Bank shall be in form
and substance acceptable to the Bank and its counsel.

Advances  under the line of credit are subject to the Bank's  satisfaction  with
(i) the  specific  purpose and  expected  time and source of  repayment  of each
advance,  and (ii)  the  Borrower's  and the  guarantors'  financial  condition,
business  prospects and  operations  at the time of each  advance.  As you know,
lines of credit may be cancelled by either  party at any time,  however,  unless
cancelled earlier,  the line of credit shall be held available until January 31,
1999.

Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30  consecutive  days  during  each  twelve  (12)  month
calendar period in which the line of credit is held available.


Very truly yours,

THE BANK OF NEW YORK

/s/ Vito Caraccio
-----------------
Vito Caraccio
Assistant Vice President



<PAGE>




                                                                   Exhibit 10.3





                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                    -----------------------------------------

                    This  Employment  Agreement  dated as of  November  1, 1997,
between  National  Home  Health  Care Corp.,  a Delaware  corporation  having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Frederick H. Fialkow,  an individual having an address at 700 White Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").

                              W I T N E S S E T H :
                              ---------------------

                    WHEREAS, the Company desires that Employee be employed by it
and render  services to it, and  Employee  is willing to be so  employed  and to
render  such  services  to the  Company,  all upon the terms and  subject to the
conditions contained herein.

                    NOW, THEREFORE, in consideration of the mutual covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency of which is hereby  acknowledged,  the parties agree as
follows:

                    1. EMPLOYMENT.  Subject to and upon the terms and conditions
contained in this  Agreement,  the Company hereby agrees to employ  Employee and
Employee agrees to enter the employ of the Company,  for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.

                    2. TERM.  Employee's term of employment under this Agreement
shall commence on the date hereof (the  "Commencement  Date") and shall continue
for a period  through and including the fifth  anniversary  of the  Commencement
Date (the  "Employment  Term")  unless  extended  in writing by both  parties or
earlier terminated pursuant to the terms and conditions set forth herein.

                    3. DUTIES.  (a) Employee  shall be employed as the Company's
Chairman of the Board and Chief  Executive  Officer.  It is agreed that Employee
shall  perform  his  services  in any  of  the  Company's  Scarsdale,  New  York
facilities, facilities maintained by the Company in Boca Raton, Florida for such
purposes (which  facilities the Company agrees to maintain  consistent with past
practice) or any other facilities mutually agreeable to the parties.  The rights
and duties of Employee shall not in any way be curtailed by the Company  without
his consent nor shall he be deprived of the dignity  ordinarily  associated with
his offices.

                                (b) Employee agrees to abide by all By-laws  and
applicable policies of the  Company promulgated  from  time to time by the Board
of Directors of the Company, including without limitation the Business  Policies
of the Company annexed hereto as Annex A.



                                       -1-

<PAGE>




                    4.  EXCLUSIVE  SERVICES  AND BEST  EFFORTS.  Employee  shall
devote all of his working  time,  attention,  best  efforts  and ability  during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.

                    5.  COMPENSATION.  As  compensation  for  his  services  and
covenants hereunder, the Company shall pay Employee the following:

          (a) BASE SALARY.  The Company shall pay Employee a minimum base salary
("Salary")  of  $285,000  per year.  The  Salary  shall be subject to review and
adjustment on an annual basis  beginning  November 1, 1998, (if this contract is
then in effect) or, at the  Company's  discretion,  on such  earlier date as the
Company may  designate;  provided,  however,  that in no event shall  Employee's
Salary be adjusted below the Salary designated herein.

          (b)  BONUS  COMPENSATION.  The  Company  shall  pay  Employee   annual
bonus  compensation  equal to five  percent of the  amount by which the  Pre-Tax
Income in any fiscal year during the  Employment  Term  exceeds  $3,000,000.  As
additional  annual  bonus  compensation,  in  order to  effect a  cost-of-living
adjustment to the Salary,  the Company shall pay Employee an amount equal to the
cumulative  annual Consumer Price Index percentage  increase on the Salary since
1992, the year in which such Salary was first  established.  The foregoing bonus
compensation  shall  be  paid by the  Company  within  thirty  (30)  days  after
completion of the audited  financial  results of the Company for the  applicable
fiscal year.

          (c) For purposes of this  Agreement,  "Pre-Tax  Income" shall mean for
each fiscal year the net income of Company and its consolidated subsidiaries for
such fiscal year before any charges for federal,  state or other taxes  relating
to  income,   determined  in  accordance  with  generally  accepted   accounting
principles,  consistently  applied;  and  "Consumer  Price Index" shall mean the
Consumer Price Index for Urban Wage Earners and Clerical Workers prepared by the
Bureau of Labor Statistics of the U.S. Department of Labor, or, if that index is
not then being published,  the most nearly  comparable  successor index that the
parties  may  agree  upon or,  if they fail to  agree,  an index  designated  by
Company's  independent  certified public accountants shall make such adjustments
to the index as may be  appropriate to carry out the intention of this Paragraph
5 and the accountants' determination shall be final and binding on the parties.

                    6. BUSINESS EXPENSES.  Employee shall be reimbursed for, and
entitled  to  advances  (subject to  repayment  to the  Company if not  actually
incurred by Employee) with respect to, those business  expenses  incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement  in  accordance  with  policies  established  from time to time by the
Company.

                    7.  EMPLOYEE  BENEFITS.  (a)  During  the  Employment  Term,
Employee shall be entitled to such insurance,  disability and health and medical
benefits and be entitled to participate in such retirement  plans or programs as
generally made available to executive officers of the Company


                                       -2-

<PAGE>




pursuant  to the  policies  of the  Company;  provided  that  Employee  shall be
required to comply with the  conditions  attendant to coverage by such plans and
shall comply with and be entitled to benefits only in accordance  with the terms
and  conditions  of such plans.  Employee  shall be entitled to three weeks paid
vacation each year during the Employment  Term at such times as does not, in the
reasonable  opinion  of  the  Board  of  Directors,  interfere  with  Employee's
performance of his duties hereunder.  The Company may withhold from any benefits
payable to Employee  all  federal,  state,  local and other taxes and amounts as
shall be permitted or required pursuant to law, rule or regulation.  In addition
to the  foregoing,  the  Company  shall  pay to  Employee  the  full  amount  of
Employee's  annual  contribution  under the Company's  Premium  Conversion Plan,
payable in accordance with the Company's normal payment practices.

         (b) Employee shall be entitled to receive the sum of [$1,100] per month
as an  automobile  allowance  provided at the  expense of the  Company  from the
Commencement  Date and during the  Employment  Term,  which  allowance  shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile,  which  expenses  also shall be the  responsibility  of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years.  Notwithstanding  the foregoing,  the Company may, at its
option,  elect to provide  Employee an  automobile  of the make,  model and year
mutually  agreeable to the Company and Employee,  all costs of which  associated
with   insurance,   repairs,   maintenance  and  other  expenses  shall  be  the
responsibility  of the  Company,  in  lieu  of the  above  described  automobile
allowances,  all as may be mutually  agreed  between  Employee  and the Company.
Employee  acknowledges  that  some  or  all  of  the  foregoing  may  be  deemed
compensation to him.

                    8.  DEATH AND  DISABILITY.  (a) The  Employment  Term  shall
terminate on the date of Employee's  death,  in which event  Employee's  Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
Employee's  death  shall be paid to his  estate.  Employee's  estate will not be
entitled to any other  compensation upon termination of this Agreement  pursuant
to this  Paragraph  8(a). The Company  shall,  at its expense,  maintain for the
benefit of Employee  during the Employment  Term a life insurance  policy on the
life of Employee, payable to such beneficiaries of Employee as Employee may from
time to time designate, in an amount equal to three times Employee's Salary.

          (b) If, during the Employment  Term, in the opinion of a duly licensed
physician  selected  by  Employee  and  reasonably  acceptable  to the  Company,
Employee,  because of physical or mental  illness or  incapacity,  shall  become
substantially  unable to perform the duties and  services  required of him under
this Agreement for a period of twelve  consecutive  months the Company may, upon
at least  twenty (20) days'  prior  written  notice  given at any time after the
expiration  of such twelve month  period to Employee of its  intention to do so,
terminate this  Agreement as of such date as may be set forth in the notice.  In
case of such  termination,  Employee  shall be  entitled  to receive his Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
termination.  Employee  will not be  entitled  to any  other  compensation  upon
termination of this Agreement pursuant to this Paragraph 8(b). The Company shall
pay the premiums for a


                                       -3-

<PAGE>




disability insurance policy which will provide Employee with disability payments
after  termination  of this  Agreement  pursuant to this Paragraph 8(b) equal to
one-half of Employee's  Salary during the period of disability or until Employee
becomes 70 years old, whichever is sooner.

                    9.  TERMINATION FOR CAUSE. (a) The Company may terminate the
employment  of  Employee  for  Cause  (as   hereinafter   defined).   Upon  such
termination,  the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
his Salary, reimbursable expenses and benefits owing to Employee through the day
on which  Employee  is  terminated.  Employee  will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).

          (b) As used  herein,  the term  "Cause"  shall  mean:  (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof,  which
failure is not cured by Employee  within thirty days  following  written  notice
thereof from the Company; or (ii) the commission by Employee of an act involving
moral turpitude,  dishonesty,  theft,  unethical business conduct,  or any other
conduct which  significantly  impairs the reputation of, or harms,  the Company,
its  subsidiaries  or  affiliates.  [One year prior  notice for  termination  by
Employee?]

                    10.  CHANGE  IN  CONTROL.  [Parachute  of any  kind?;  Other
Severance?;  Expiration  Payment?  - must  discuss]  In the event of a Change in
Control,  as defined below, of the Company,  the Company shall pay to Employee a
lump-sum  amount  equal to  one-half  of  Employee's  Salary  at the time of the
occurrence of such Change in Control, which amount shall be paid within ten days
after such occurrence.  The foregoing  payment shall be in addition to and shall
not reduce or in any way  affect  the terms of  payment of any  amounts to which
Employee  shall be entitled  hereunder.  The Company  hereby agrees to obtain an
agreement  from any  successor  to assume  and agree to honor and  perform  this
Agreement.  For  purposes of this  Agreement,  a "Change in Control"  shall have
occurred if:

          (i) any "person",  as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in  substantially  the same proportions as their
ownership of stock of the  Company),  is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3  under the  Exchange  Act),  directly  or  indirectly,  of
securities of the Company  representing 30% or more of the combined voting power
of the Company's then outstanding securities;

          (ii)  during  any period of not more than two  consecutive  years (not
including any period prior to the execution of this Agreement),  individuals who
at the  beginning  of such period  constitute  the Board,  and any new  director
(other than a director  designated by a person who has entered into an agreement
with the Company to effect a transaction  described in clause (a), (c) or (d) of
this  Section)  whose  election by the Board or  nomination  for election by the
Company's


                                       -4-

<PAGE>




shareholders was approved by a vote of at least two-thirds of the directors then
still in office who either  were  directors  at the  beginning  of the period or
whose election or nomination for election was previously so approved,  cease for
any reason to constitute at least a majority thereof;

          (iii)  the   shareholders   of  the   Company   approve  a  merger  or
consolidation of the Company with any other corporation, other than (A) a merger
or  consolidation  which would  result in the voting  securities  of the Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  voting  securities  of the
surviving  entity)  more than 80% of the  combined  voting  power of the  voting
securities of the Company or such surviving entity outstanding immediately after
such  merger or  consolidation  or (B) a merger  or  consolidation  effected  to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove  defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or

          (iv)  the  shareholders  of the  Company  approve  a plan of  complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company of all or substantially all of the Company's assets.

                    11.  DISCLOSURE OF  INFORMATION  AND  RESTRICTIVE  COVENANT.
Employee  acknowledges  that,  by his  employment,  he has been and will be in a
confidential  relationship with the Company and will have access to confidential
information and trade secrets of the Company,  its  subsidiaries and affiliates.
Confidential  information  and trade  secrets  include,  but are not limited to,
customer,  supplier and client lists, price lists,  marketing,  distribution and
sales strategies and procedures,  operational and equipment techniques, business
plans and systems,  quality control procedures and systems, special projects and
technological research,  including projects, research and reports for any entity
or client or any  project,  research,  report  or the like  concerning  sales or
manufacturing  or new  technology,  employee  compensation  plans  and any other
information   relating  thereto,  and  any  other  records,   files,   drawings,
inventions,   discoveries,   applications,   processes,   data  and  information
concerning  the  business  of the  Company  which are not in the public  domain.
Employee agrees that in  consideration of the execution of this Agreement by the
Company,  except in any way with respect to foreign affiliates of the Company as
of the date hereof:

          (a)  Employee  will not,  during the term of this  Agreement or at any
time  thereafter,  use,  or  disclose  to any  third  party,  trade  secrets  or
confidential  information  of  the  Company,  including,  but  not  limited  to,
confidential  information or trade secrets belonging or relating to the Company,
its subsidiaries,  affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries,  affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information  which is known or intended to be known only to employees of the
Company, its respective  subsidiaries and affiliates or others in a confidential
relationship  with the Company or its  respective  subsidiaries  and  affiliates
which relates to business matters.



                                       -5-

<PAGE>




          (b) Employee will not,  during the term of this Agreement and,  unless
Employee's  employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter,  directly or
indirectly,  under any  circumstance  other  than at the  direction  and for the
benefit of the  Company,  engage in or  participate  in any  business  activity,
including, but not limited to, acting as a director,  officer,  employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee,  proprietor,  syndicate  member,  shareholder  or creditor or with a
person having any other  relationship  with any other  business,  company,  firm
occupation or business activity, in any geographic area within the United States
that is, directly or indirectly,  competitive with any business conducted by the
Company  or any of its  subsidiaries  or  affiliates  during  the  term  of this
Agreement  or  thereafter.  Should  Employee  own 5% or less of the  issued  and
outstanding  shares of a class of securities of a corporation  the securities of
which are traded on a national  securities  exchange or in the  over-the-counter
market, such ownership shall not cause Employee to be deemed a shareholder under
this Paragraph 11(b).

          (c) Employee  will not,  during the term of this  Agreement  and for a
period  of one (1) year  thereafter,  on his  behalf  or on  behalf of any other
business enterprise,  directly or indirectly,  under any circumstance other than
at the  direction  and for the  benefit  of the  Company,  solicit or induce any
creditor,  customer,  supplier, officer, employee or agent of the Company or any
of its  subsidiaries or affiliates to sever its  relationship  with or leave the
employ of any of such entities.

          (d)  If  Employee's   employment  is  terminated   (constructively  or
otherwise)  by the  Company  for  any  reason  then,  in  consideration  for his
covenants  contained in this  paragraph 11 and not as  severance  pay,  Employee
shall be entitled to receive,  for the year following the date his employment so
terminates,  an amount equal to  Employee's  annual salary at the rate in effect
immediately  prior to his  cessation  of  employment  with the  Company  (or, if
greater,  at the  highest  annual  salary  rate in effect at any time during the
one-year period preceding the date of such  termination).  Such amounts shall be
in addition to any amount  otherwise  payable under this  Agreement and shall be
paid in equal monthly installments,  with the first such installment  commencing
on the last day of the month in which Employee's employment so terminates.

          (e) This  Paragraph  11 and  Paragraphs  12,  13 and 14  hereof  shall
survive the expiration or termination of this Agreement for any reason.

          (f) It is  expressly  agreed by Employee  that the nature and scope of
each of the  provisions  set forth above in this Paragraph 11 are reasonable and
necessary.  If, for any reason, any aspect of the above provisions as it applies
to  Employee  is  determined  by  a  court  of  competent   jurisdiction  to  be
unreasonable  or  unenforceable,  the  provisions  shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be.  Employee  acknowledges  and agrees that his  services are of a
unique  character  and  expressly  grants  to the  Company  or  any  subsidiary,
successor or assignee of the Company,  the right to enforce the provisions above
through the use of all remedies  available at law or in equity,  including,  but
not limited to, injunctive relief.


                                       -6-

<PAGE>




                    12.   COMPANY   PROPERTY.   (a)  Any  patents,   inventions,
discoveries,  applications or processes,  designs,  devised,  planned,  applied,
created,  discovered  or  invented  by  Employee  in the  course  of  Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective  subsidiaries'  or affiliates'  business shall be the sole and
absolute property of the Company,  and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents  reasonably  requested
to assure the Company the full and complete ownership thereof.

          (b) All records,  files,  lists,  including  computer generated lists,
drawings,  documents,  equipment  and similar  items  relating to the  Company's
business  which  Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive  property.  Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession.  Employee  further  represents  that he will not copy or cause to be
copied,  print out or cause to be printed out any  software,  documents or other
materials  originating with or belonging to the Company.  Employee  additionally
represents  that, upon  termination of his employment with the Company,  he will
not retain in his possession any such software, documents or other materials.

                    13.  REMEDY.  It is  mutually  understood  and  agreed  that
Employee's  services  are  special,  unique,  unusual,  extraordinary  and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably  or  adequately   compensated   in  damages  in  an  action  at  law.
Accordingly,  in  the  event  of any  breach  of  this  Agreement  by  Employee,
including,   but  not   limited   to,   the   breach   of  the   non-disclosure,
non-solicitation  and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to  equitable  relief by way of  injunction  or  otherwise  in
addition to damages the Company  may be entitled to recover.  In  addition,  the
Company shall be entitled to reimbursement from Employee,  upon request,  of any
and all reasonable  attorneys' fees and expenses incurred by it in enforcing any
term or provision of this Agreement.

                    14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement,  Employee hereby  represents
and warrants to the Company as follows:  (i) Employee has the legal capacity and
unrestricted  right to execute and deliver this  Agreement and to perform all of
his obligations hereunder;  (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument,  agreement,  document,
arrangement or other  understanding  to which Employee is a party or by which he
is or may be  bound  or  subject;  and  (iii)  Employee  is not a  party  to any
instrument,  agreement,  document,  arrangement or other  understanding with any
person (other than the Company)  requiring or restricting  the use or disclosure
of any confidential  information or the provision of any employment,  consulting
or other services.

          (b) Employee  hereby agrees to indemnify and hold harmless the Company
from and against any and all losses,  costs,  damages and  expenses  (including,
without limitation, its


                                       -7-

<PAGE>




reasonable  attorneys' fees) incurred or suffered by the Company  resulting from
any breach by Employee of any of his  representations or warranties set forth in
Paragraph 14(a) hereof.

                    15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed  effectively  given when mailed,  if sent by  registered  or
certified mail, return receipt  requested,  addressed to Employee at his address
set forth on the first page of this  Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention:  Gary J. Simon, Esq., or at such address as
such party  shall have  designated  by a notice  given in  accordance  with this
Paragraph 15, or when actually received by the party for whom intended,  if sent
by any other means.

                    16. ENTIRE AGREEMENT.  This Agreement constitutes the entire
understanding  of the parties with respect to its subject  matter and no change,
alteration or  modification  hereof may be made except in writing  signed by the
parties  hereto.  Any  prior  or other  agreements,  promises,  negotiations  or
representations  not  expressly  set forth in this  Agreement are of no force or
effect.

                    17.  SEVERABILITY.  If any provision of this Agreement shall
be   unenforceable   under  any  applicable  law,  then   notwithstanding   such
unenforceability,  the remainder of this Agreement  shall continue in full force
and effect.

                    18. WAIVERS, MODIFICATIONS,  ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective  unless the same
shall be in writing  and  signed by each of the  parties  hereto,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

                    19.   ASSIGNMENT.   Neither  this  Agreement,   nor  any  of
Employee's rights, powers, duties or obligations  hereunder,  may be assigned by
Employee.  This  Agreement  shall be  binding  upon and inure to the  benefit of
Employee  and his  heirs  and  legal  representatives  and the  Company  and its
successors  and  assigns.  Successors  of the  Company  shall  include,  without
limitation,  any corporation or corporations acquiring,  directly or indirectly,
all or  substantially  all of the  assets of the  Company,  whether  by  merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.

                    20.  APPLICABLE  LAW. This Agreement shall be deemed to have
been  made,  drafted,   negotiated  and  the  transactions  contemplated  hereby
consummated  and fully  performed in the State of New York and shall be governed
by and construed in accordance  with the laws of the State of New York,  without
regard  to the  conflicts  of law  rules  thereof.  Nothing  contained  in  this
Agreement shall be construed so as to require the commission of any act contrary
to law,  and  whenever  there is any  conflict  between  any  provision  of this
Agreement and any statute,  law,  ordinance,  order or  regulation,  contrary to
which the parties hereto have no legal right to contract,


                                       -8-

<PAGE>




the latter shall  prevail,  but in such event any provision of this Agreement so
affected shall be curtailed and limited only to the extent necessary to bring it
within the legal requirements.

                    21.  JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies  between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's  award by any court having  jurisdiction  thereof
and the parties consent to the  jurisdiction of any court located in the City of
New York, County of New York, for this purpose.

                    22. FULL UNDERSTANDING.  Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this  right,  that he has  carefully  read and fully  understands  all of the
provisions of this  Agreement,  that he is competent to execute this  Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely  and  voluntarily  enters  into it, and that he has read this
document  in  its  entirety  and  fully  understands  the  meaning,  intent  and
consequences  of this  document  which is that it  constitutes  an  agreement of
employment.

                    23.  COUNTERPARTS.  This  Agreement  may be  executed in any
number of  counterparts,  each of which shall be deemed an  original  and all of
which taken together shall constitute one and the same agreement.

                    IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

NATIONAL HOME HEALTH CARE CORP.


By: ___________________________________
      Name:
      Title:

    -----------------------------------
      Frederick H. Fialkow


                                       -9-

<PAGE>





                        ADDENDUM TO EMPLOYMENT AGREEMENT:
                        ---------------------------------

              Business Policies of National Home Health Care Corp.
              ----------------------------------------------------


                  This addendum  supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this  addendum  basic  principles  and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal  responsibility to abide by each of the standards.
Each person,  alone, is responsible for his actions. No one will be permitted to
justify  an  illegal  act by  claiming  it was  ordered  by  someone  higher  in
management.  No one,  regardless  of level of position,  is ever  authorized  to
direct an employee to commit an illegal or unethical act.

                  As a  summary  of basic  principles,  this  addendum  does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction  covering a particular  situation does not
relieve an employee from exercising the highest ethical standards  applicable to
the circumstances.  If an employee has questions as to what the proper course of
conduct should be in any given  situation,  consult the Chairman of the Board of
the Company and the Company's legal counsel.

                  Violations  of the  guidelines  set forth  below can result in
disciplinary action, including dismissal, and possible criminal prosecution.

                  Any reprisal  against an employee who is good faith  reports a
violation  or  suspected  violation  of  law or  company  policies  is  strictly
forbidden.

                  1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.

          Since the Company is a medical services company,  there are many state
and federal law and regulation which affect and define the  responsibilities  of
each employee.  These laws and  regulations  must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation  the employee must check with corporate  counsel or special  counsel.
The employee is responsible for designing,  implementing and monitoring  quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance.  In connection with any compliance  program,  it is
vital that the employee be sure that no  falsification of records be allowed and
the employee must undertake to have programs  developed to assure that this does
not happen.



                                      -10-

<PAGE>




                  2. The  Company  shall not  tolerate  any unfair  competition.
Additional guidelines relating to this general policy are:


  -        do not interfere with contracts made between a prospective customer
           and a competitor.

  -        never engage in commercial bribery.

  -        do not disparage a competitor's services.

  -        be accurate  and  truthful  in all  dealings
           with   customers   and  be  careful  not  to
           misrepresent the state and qualify, features
           or availability of our services.

                  3. The Company awards  business to suppliers  solely on merit.
No employee  should have any  relationship,  financial  or  otherwise,  with any
supplier or competitor that might be construed as a conflict of interest or that
might even  appear to impair his or her  independent  judgment  on behalf of the
Company.  Gifts,  loans or any other thing of  significant  value  should not be
accepted or solicited, even indirectly.

                  4. Each employee's primary obligation is to the Company,  and,
therefore,  any form of outside  activity  must be kept  totally  separate  from
employment  with the  Company.  no outside  activity  should  involve the use of
Company assets, materials or facilities.

                  5. No employee  may use his or her position in the Company for
outside  gain or  benefit,  nor  should  any  employee  use  property  or  other
confidential or private confidential information in any outside activity.

                  6. The law  requires  that the  Company's  books  and  records
accurately and fairly reflect  transactions in reasonable  detail,  and that the
Company's internal accounting controls provide reasonable assurances that:

 -        transactions are carried out in an authorized matter.

 -        transactions have been reported and recorded
          to permit  correct  preparation of financial
          statements and to maintain  accurate records
          of assets. Access to assets is in accordance
          with management's authorization.

 -        inventories of assets are taken periodically and appropriate action is
          taken to correct discrepancies.


                                      -11-

<PAGE>




                  7.  Every  employee  who has  control  over  Company  funds is
personally accountable for such funds. There are no exceptions to this rule.

          When spending Company money or personal money that will be reimbursed,
or requesting  services that will cause Company money to be spent,  the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.

          Anyone  responsible  for the  handling  of  Company  revenue,  and the
associated records and materials, is accountable for their safe keeping.

                  8. The  Company  categorically  forbids  the use of  corporate
funds for the  support  of  political  parties or  candidates.  No  employee  is
authorized to make or approve such a contribution.

                  9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.

                  10.  Records  containing  personal  data on  patients  and the
Company's  employees  are  confidential.  As  such,  they  are  to be  carefully
safeguarded  and kept current and  accurate.  They should be  disclosed  only to
authorized  personnel  having a "need to know" or pursuant to lawful  processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.

                  11. When a  dishonest  act by an  employee  is  discovered  it
should be reported  immediately and directly to the Chairman of the Board of the
Company.

                  12. The Company  encourages  employees to  participate  in its
future by investing in its securities. However, in trading in Company securities
each  employee  should be aware that it may be illegal (and  possible  result in
civil  or  criminal  penalties)  to buy or  sell  Company  securities  while  in
possession of material non-public information about the Company.

          Material   information   can  be  anything   that  could  have  actual
significance  in an investors  decision such as  acquisition  plans,  dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major  management  changes or other business plans.  Employees aware of such
information  prior to its being  made  public,  should  not buy or sell  Company
securities until the information has been made public.

          Employees  should not trade in the securities of other  companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract


                                      -12-

<PAGE>




or any other information  which could have actual  significance in an investor's
decision about the securities of the other company.

          Employees  should keep any such  information  about the Company or any
other  company  secret  and use it only  for  Company  purposes,  because  it is
unlawful to "tip"  others who may buy or sell such  securities,  even though the
tipper does not.

          Some  types of  trading  -- even if  innocent  -- could  appear to the
public and to public  officials to be based on the misuse of inside  information
concerning the Company.  To avoid even an appearance of  impropriety,  employees
are not to engage in short term speculation in company  securities (that is, the
purchase and sale on the open market within a six month  period).  Nor should an
employee  engage in any  transaction  when he stands to profit  due to the short
term savings in the value of the Company's  securities.  An example of this type
of trading includes "short sales" (selling borrowed  securities which the seller
hopes can be purchased at a lower price when they are due for deliver.


                                      -13-

<PAGE>




                                                                    Exhibit 10.4


                                      -14-

<PAGE>




                              EMPLOYMENT AGREEMENT
                              --------------------

                    This  Employment  Agreement  dated as of  November  1, 1997,
between  National  Home  Health  Care Corp.,  a Delaware  corporation  having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Steven  Fialkow,  an  individual  having an  address at 700 White  Plains  Road,
Scarsdale, New York 10583 ("EMPLOYEE").

                              W I T N E S S E T H :
                              ---------------------

                    WHEREAS, the Company desires that Employee be employed by it
and render  services to it, and  Employee  is willing to be so  employed  and to
render  such  services  to the  Company,  all upon the terms and  subject to the
conditions contained herein.

                    NOW, THEREFORE, in consideration of the mutual covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency of which is hereby  acknowledged,  the parties agree as
follows:

                    1. EMPLOYMENT.  Subject to and upon the terms and conditions
contained in this  Agreement,  the Company hereby agrees to employ  Employee and
Employee agrees to enter the employ of the Company,  for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.

                    2. TERM.  Employee's term of employment under this Agreement
shall commence on the date hereof (the  "Commencement  Date") and shall continue
for a period through and including the fourth  anniversary  of the  Commencement
Date (the  "Employment  Term")  unless  extended  in writing by both  parties or
earlier terminated pursuant to the terms and conditions set forth herein.

                    3. DUTIES.  (a) Employee  shall be employed as the Company's
President,  Chief  Operating  Officer and Secretary.  It is agreed that Employee
shall perform his services in the Company's Scarsdale,  New York facilities,  or
any other facilities mutually agreeable to the parties. The rights and duties of
Employee  shall not in any way be curtailed  by the Company  without his consent
nor shall he be deprived of the dignity ordinarily associated with his offices.

          (b) Employee agrees to abide by all By-laws and applicable policies of
the  Company  promulgated  from  time to time by the Board of  Directors  of the
Company,  including  without  limitation  the  Business  Policies of the Company
annexed hereto as Annex A..

                    4.  EXCLUSIVE  SERVICES  AND BEST  EFFORTS.  Employee  shall
devote all of his working  time,  attention,  best  efforts  and ability  during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.



                                       -1-

<PAGE>




                    5.  COMPENSATION.  As  compensation  for  his  services  and
covenants hereunder, the Company shall pay Employee the following:

          (a) BASE SALARY.  The Company shall pay Employee a minimum base salary
("Salary")  of  $157,500  per year.  The  Salary  shall be subject to review and
adjustment on an annual basis  beginning  November 1, 1998, (if this contract is
then in effect) or, at the  Company's  discretion,  on such  earlier date as the
Company may  designate;  provided,  however,  that in no event shall  Employee's
Salary be adjusted below the Salary designated herein.

          (b) BONUS  COMPENSATION.  The Company shall pay Employee  annual bonus
compensation  ("Bonus  Compensation")  equal to three  percent  of the amount by
which the income from  operations in any fiscal year during the Employment  Term
(determined  in  accordance   with  general   accepted   accounting   principles
consistently applied) exceeds $3,300,000. The foregoing Bonus Compensation shall
be paid by the Company  within thirty (30) days after  completion of the audited
financial results of the Company for the applicable fiscal year.

          (c)  OPTIONS.   The  Company  shall  grant  to  Employee  as  soon  as
practicable  following  the date  hereof an option to purchase  thirty  thousand
(30,000) shares of the Company's common stock for a period of ten years from the
date of grant and having an  exercise  price per share  equal to the fair market
value of such  common  stock on the date of grant,  pursuant to the terms of the
Company's  1992 Stock  Option  Plan,  as amended to date (the  "Plan"),  and any
related stock option agreement required to be executed in connection  therewith.
Such  option  shall be  immediately  exercisable  as to all the  shares  covered
thereby  and  shall  be, to the  extent  permitted  by the terms of the Plan and
applicable  laws,   rules  and   regulations,   an  incentive  stock  option  as
contemplated by the Internal Revenue Code of 1986, as amended.

                    6. BUSINESS EXPENSES.  Employee shall be reimbursed for, and
entitled  to  advances  (subject to  repayment  to the  Company if not  actually
incurred by Employee) with respect to, those business  expenses  incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement  in  accordance  with  policies  established  from time to time by the
Company.

                    7.  EMPLOYEE  BENEFITS.  (a)  During  the  Employment  Term,
Employee shall be entitled to such insurance,  disability and health and medical
benefits and be entitled to participate in such retirement  plans or programs as
generally  made available to executive  officers of the Company  pursuant to the
policies of the Company; provided that Employee shall be required to comply with
the conditions  attendant to coverage by such plans and shall comply with and be
entitled to benefits  only in accordance  with the terms and  conditions of such
plans.  Employee shall be entitled to three weeks paid vacation each year during
the Employment Term at such times as does not, in the reasonable  opinion of the
Board  of  Directors,  interfere  with  Employee's  performance  of  his  duties
hereunder.  The Company may withhold  from any benefits  payable to Employee all
federal,  state,  local and other  taxes and  amounts as shall be  permitted  or
required pursuant to law, rule or


                                       -2-

<PAGE>




regulation.  In addition to the foregoing, the Company shall pay to Employee the
full  amount of  Employee's  annual  contribution  under the  Company's  Premium
Conversion  Plan,  payable  in  accordance  with the  Company's  normal  payment
practices.

          (b) Employee shall be entitled to receive the sum of $550 per month as
an  automobile  allowance  provided  at the  expense  of the  Company  from  the
Commencement  Date and during the  Employment  Term,  which  allowance  shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile,  which  expenses  also shall be the  responsibility  of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years.  Notwithstanding  the foregoing,  the Company may, at its
option,  elect to provide  Employee an  automobile  of the make,  model and year
mutually  agreeable to the Company and Employee,  all costs of which  associated
with   insurance,   repairs,   maintenance  and  other  expenses  shall  be  the
responsibility  of the  Company,  in  lieu  of the  above  described  automobile
allowances,  all as may be mutually  agreed  between  Employee  and the Company.
Employee  acknowledges  that  some  or  all  of  the  foregoing  may  be  deemed
compensation to him.

                    8.  DEATH AND  DISABILITy.  (a) The  Employment  Term  shall
terminate on the date of Employee's  death,  in which event  Employee's  Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
Employee's  death  shall be paid to his  estate.  Employee's  estate will not be
entitled to any other  compensation upon termination of this Agreement  pursuant
to this Paragraph 8(a).

          (b) If, during the Employment  Term, in the opinion of a duly licensed
physician  selected  by  Employee  and  reasonably  acceptable  to the  Company,
Employee,  because of physical or mental  illness or  incapacity,  shall  become
substantially  unable to perform the duties and  services  required of him under
this Agreement for a period of six  consecutive  months the Company may, upon at
least  twenty  (20)  days'  prior  written  notice  given at any time  after the
expiration  of such  six-month  period to  Employee of its  intention  to do so,
terminate this  Agreement as of such date as may be set forth in the notice.  In
case of such  termination,  Employee  shall be  entitled  to receive his Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
termination.  Employee  will not be  entitled  to any  other  compensation  upon
termination of this Agreement pursuant to this Paragraph 8(b).

                    9.  TERMINATION FOR CAUSE. (a) The Company may terminate the
employment  of  Employee  for  Cause  (as   hereinafter   defined).   Upon  such
termination,  the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
his Salary, reimbursable expenses and benefits owing to Employee through the day
on which  Employee  is  terminated.  Employee  will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).

          (b) As used  herein,  the term  "Cause"  shall  mean:  (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof,  which
failure is not cured by


                                       -3-

<PAGE>




Employee  within thirty days following  written notice thereof from the Company;
(ii) any other material  breach of this Agreement by Employee,  including any of
the material  representations or warranties made by Employee;  (iii) any act, or
failure to act, by Employee in bad faith or  intentionally  to the  detriment of
the  Company;  (iv)  the  commission  by  Employee  of an  act  involving  moral
turpitude,  dishonesty,  theft, unethical business conduct, or any other conduct
which  significantly  impairs the  reputation  of, or harms,  the  Company,  its
subsidiaries  or  affiliates;  or  (v)  any  misrepresentation,  concealment  or
omission by Employee of any material fact in seeking employment hereunder.

                    10. CHANGE IN CONTROL.  In the event of a Change in Control,
as defined below,  of the Company,  the Company shall pay to Employee a lump-sum
amount equal to one-half of Employee's  Salary at the time of the  occurrence of
such Change in Control,  which  amount  shall be paid within ten days after such
occurrence.  The foregoing  payment shall be in addition to and shall not reduce
or in any way affect the terms of payment of any amounts to which Employee shall
be entitled hereunder. The Company hereby agrees to obtain an agreement from any
successor to assume and agree to honor and perform this Agreement.  For purposes
of this Agreement, a "Change in Control" shall have occurred if:

          (i) any "person",  as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in  substantially  the same proportions as their
ownership of stock of the  Company),  is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3  under the  Exchange  Act),  directly  or  indirectly,  of
securities of the Company  representing 30% or more of the combined voting power
of the Company's then outstanding securities;

          (ii)  during  any period of not more than two  consecutive  years (not
including any period prior to the execution of this Agreement),  individuals who
at the  beginning  of such period  constitute  the Board,  and any new  director
(other than a director  designated by a person who has entered into an agreement
with the Company to effect a transaction  described in clause (a), (c) or (d) of
this  Section)  whose  election by the Board or  nomination  for election by the
Company's  shareholders  was  approved by a vote of at least  two-thirds  of the
directors then still in office who either were directors at the beginning of the
period or whose  election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;

          (iii)  the   shareholders   of  the   Company   approve  a  merger  or
consolidation of the Company with any other corporation, other than (A) a merger
or  consolidation  which would  result in the voting  securities  of the Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  voting  securities  of the
surviving  entity)  more than 80% of the  combined  voting  power of the  voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B)


                                       -4-

<PAGE>




a merger or  consolidation  effected  to  implement  a  recapitalization  of the
Company (or similar  transaction) in which no "person" (as hereinabove  defined)
acquires  more  than 30% of the  combined  voting  power of the  Company's  then
outstanding securities; or

          (iv)  the  shareholders  of the  Company  approve  a plan of  complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company of all or substantially all of the Company's assets.

                    11.  DISCLOSURE OF  INFORMATION  AND  RESTRICTIVE  COVENANT.
Employee  acknowledges  that,  by his  employment,  he has been and will be in a
confidential  relationship with the Company and will have access to confidential
information and trade secrets of the Company,  its  subsidiaries and affiliates.
Confidential  information  and trade  secrets  include,  but are not limited to,
customer,  supplier and client lists, price lists,  marketing,  distribution and
sales strategies and procedures,  operational and equipment techniques, business
plans and systems,  quality control procedures and systems, special projects and
technological research,  including projects, research and reports for any entity
or client or any  project,  research,  report  or the like  concerning  sales or
manufacturing  or new  technology,  employee  compensation  plans  and any other
information   relating  thereto,  and  any  other  records,   files,   drawings,
inventions,   discoveries,   applications,   processes,   data  and  information
concerning  the  business  of the  Company  which are not in the public  domain.
Employee agrees that in  consideration of the execution of this Agreement by the
Company,  except in any way with respect to foreign affiliates of the Company as
of the date hereof:

          (a)  Employee  will not,  during the term of this  Agreement or at any
time  thereafter,  use,  or  disclose  to any  third  party,  trade  secrets  or
confidential  information  of  the  Company,  including,  but  not  limited  to,
confidential  information or trade secrets belonging or relating to the Company,
its subsidiaries,  affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries,  affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information  which is known or intended to be known only to employees of the
Company, its respective  subsidiaries and affiliates or others in a confidential
relationship  with the Company or its  respective  subsidiaries  and  affiliates
which relates to business matters.

          (b) Employee will not,  during the term of this Agreement and,  unless
Employee's  employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter,  directly or
indirectly,  under any  circumstance  other  than at the  direction  and for the
benefit of the  Company,  engage in or  participate  in any  business  activity,
including, but not limited to, acting as a director,  officer,  employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee,  proprietor,  syndicate  member,  shareholder  or creditor or with a
person having any other  relationship  with any other  business,  company,  firm
occupation or business activity, in any geographic area within the United States
that is, directly or indirectly,  competitive with any business conducted by the
Company  or any of its  subsidiaries  or  affiliates  during  the  term  of this
Agreement or thereafter. Should Employee own


                                       -5-

<PAGE>




5% or less of the issued and  outstanding  shares of a class of  securities of a
corporation the securities of which are traded on a national securities exchange
or in the over-the-counter market, such ownership shall not cause Employee to be
deemed a shareholder under this Paragraph 11(b).

          (c) Employee  will not,  during the term of this  Agreement  and for a
period  of one (1) year  thereafter,  on his  behalf  or on  behalf of any other
business enterprise,  directly or indirectly,  under any circumstance other than
at the  direction  and for the  benefit  of the  Company,  solicit or induce any
creditor,  customer,  supplier, officer, employee or agent of the Company or any
of its  subsidiaries or affiliates to sever its  relationship  with or leave the
employ of any of such entities.

          (d)  If  Employee's   employment  is  terminated   (constructively  or
otherwise)  by the  Company  for  any  reason  then,  in  consideration  for his
covenants  contained in this  paragraph 11 and not as  severance  pay,  Employee
shall be entitled to receive,  for the year following the date his employment so
terminates,  an amount equal to  Employee's  annual salary at the rate in effect
immediately  prior to his  cessation  of  employment  with the  Company  (or, if
greater,  at the  highest  annual  salary  rate in effect at any time during the
one-year period preceding the date of such  termination).  Such amounts shall be
in addition to any amount  otherwise  payable under this  Agreement and shall be
paid in equal monthly installments,  with the first such installment  commencing
on the last day of the month in which Employee's employment so terminates.

          (e) This  Paragraph  11 and  Paragraphs  12,  13 and 14  hereof  shall
survive the expiration or termination of this Agreement for any reason.

          (f) It is  expressly  agreed by Employee  that the nature and scope of
each of the  provisions  set forth above in this Paragraph 11 are reasonable and
necessary.  If, for any reason, any aspect of the above provisions as it applies
to  Employee  is  determined  by  a  court  of  competent   jurisdiction  to  be
unreasonable  or  unenforceable,  the  provisions  shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be.  Employee  acknowledges  and agrees that his  services are of a
unique  character  and  expressly  grants  to the  Company  or  any  subsidiary,
successor or assignee of the Company,  the right to enforce the provisions above
through the use of all remedies  available at law or in equity,  including,  but
not limited to, injunctive relief.

                    12.   COMPANY   PROPERTY.   (a)  Any  patents,   inventions,
discoveries,  applications or processes,  designs,  devised,  planned,  applied,
created,  discovered  or  invented  by  Employee  in the  course  of  Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective  subsidiaries'  or affiliates'  business shall be the sole and
absolute property of the Company,  and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents  reasonably  requested
to assure the Company the full and complete ownership thereof.



                                       -6-

<PAGE>




          (b) All records,  files,  lists,  including  computer generated lists,
drawings,  documents,  equipment  and similar  items  relating to the  Company's
business  which  Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive  property.  Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession.  Employee  further  represents  that he will not copy or cause to be
copied,  print out or cause to be printed out any  software,  documents or other
materials  originating with or belonging to the Company.  Employee  additionally
represents  that, upon  termination of his employment with the Company,  he will
not retain in his possession any such software, documents or other materials.

                    13.  REMEDY.  It is  mutually  understood  and  agreed  that
Employee's  services  are  special,  unique,  unusual,  extraordinary  and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably  or  adequately   compensated   in  damages  in  an  action  at  law.
Accordingly,  in  the  event  of any  breach  of  this  Agreement  by  Employee,
including,   but  not   limited   to,   the   breach   of  the   non-disclosure,
non-solicitation  and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to  equitable  relief by way of  injunction  or  otherwise  in
addition to damages the Company  may be entitled to recover.  In  addition,  the
Company shall be entitled to reimbursement from Employee,  upon request,  of any
and all reasonable  attorneys' fees and expenses incurred by it in enforcing any
term or provision of this Agreement.

                    14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement,  Employee hereby  represents
and warrants to the Company as follows:  (i) Employee has the legal capacity and
unrestricted  right to execute and deliver this  Agreement and to perform all of
his obligations hereunder;  (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument,  agreement,  document,
arrangement or other  understanding  to which Employee is a party or by which he
is or may be  bound  or  subject;  and  (iii)  Employee  is not a  party  to any
instrument,  agreement,  document,  arrangement or other  understanding with any
person (other than the Company)  requiring or restricting  the use or disclosure
of any confidential  information or the provision of any employment,  consulting
or other services.

          (b) Employee  hereby agrees to indemnify and hold harmless the Company
from and against any and all losses,  costs,  damages and  expenses  (including,
without limitation,  its reasonable attorneys' fees) incurred or suffered by the
Company resulting from any breach by Employee of any of his  representations  or
warranties set forth in Paragraph 14(a) hereof.

                    15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed  effectively  given when mailed,  if sent by  registered  or
certified mail, return receipt  requested,  addressed to Employee at his address
set forth on the first page of this  Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention:  Gary J. Simon, Esq., or at such address as
such party shall have


                                       -7-

<PAGE>




designated  by a notice  given in  accordance  with this  Paragraph  15, or when
actually received by the party for whom intended, if sent by any other means.

                    16. ENTIRE AGREEMENT.  This Agreement constitutes the entire
understanding  of the parties with respect to its subject  matter and no change,
alteration or  modification  hereof may be made except in writing  signed by the
parties  hereto.  Any  prior  or other  agreements,  promises,  negotiations  or
representations  not  expressly  set forth in this  Agreement are of no force or
effect.

                    17.  SEVERABILITY.  If any provision of this Agreement shall
be   unenforceable   under  any  applicable  law,  then   notwithstanding   such
unenforceability,  the remainder of this Agreement  shall continue in full force
and effect.

                    18. WAIVERS, MODIFICATIONS,  ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective  unless the same
shall be in writing  and  signed by each of the  parties  hereto,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

                    19.   ASSIGNMENT.   Neither  this  Agreement,   nor  any  of
Employee's rights, powers, duties or obligations  hereunder,  may be assigned by
Employee.  This  Agreement  shall be  binding  upon and inure to the  benefit of
Employee  and his  heirs  and  legal  representatives  and the  Company  and its
successors  and  assigns.  Successors  of the  Company  shall  include,  without
limitation,  any corporation or corporations acquiring,  directly or indirectly,
all or  substantially  all of the  assets of the  Company,  whether  by  merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.

                    20.  APPLICABLE  LAW. This Agreement shall be deemed to have
been  made,  drafted,   negotiated  and  the  transactions  contemplated  hereby
consummated  and fully  performed in the State of New York and shall be governed
by and construed in accordance  with the laws of the State of New York,  without
regard  to the  conflicts  of law  rules  thereof.  Nothing  contained  in  this
Agreement shall be construed so as to require the commission of any act contrary
to law,  and  whenever  there is any  conflict  between  any  provision  of this
Agreement and any statute,  law,  ordinance,  order or  regulation,  contrary to
which the  parties  hereto  have no legal right to  contract,  the latter  shall
prevail,  but in such event any provision of this Agreement so affected shall be
curtailed and limited only to the extent  necessary to bring it within the legal
requirements.

                    21.  JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies  between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's  award by any court having  jurisdiction  thereof
and the parties consent to the  jurisdiction of any court located in the City of
New York, County of New York, for this purpose.


                                       -8-

<PAGE>




                    22. FULL UNDERSTANDING.  Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this  right,  that he has  carefully  read and fully  understands  all of the
provisions of this  Agreement,  that he is competent to execute this  Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely  and  voluntarily  enters  into it, and that he has read this
document  in  its  entirety  and  fully  understands  the  meaning,  intent  and
consequences  of this  document  which is that it  constitutes  an  agreement of
employment.

                    23.  COUNTERPARTS.  This  Agreement  may be  executed in any
number of  counterparts,  each of which shall be deemed an  original  and all of
which taken together shall constitute one and the same agreement.

                    IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

NATIONAL HOME HEALTH CARE CORP.


By: ___________________________________
      Name:
      Title:

    -----------------------------------
      Steven Fialkow


                                       -9-

<PAGE>





                        ADDENDUM TO EMPLOYMENT AGREEMENT:
                        ---------------------------------

              Business Policies of National Home Health Care Corp.
              ----------------------------------------------------


                  This addendum  supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this  addendum  basic  principles  and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal  responsibility to abide by each of the standards.
Each person,  alone, is responsible for his actions. No one will be permitted to
justify  an  illegal  act by  claiming  it was  ordered  by  someone  higher  in
management.  No one,  regardless  of level of position,  is ever  authorized  to
direct an employee to commit an illegal or unethical act.

                  As a  summary  of basic  principles,  this  addendum  does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction  covering a particular  situation does not
relieve an employee from exercising the highest ethical standards  applicable to
the circumstances.  If an employee has questions as to what the proper course of
conduct should be in any given  situation,  consult the Chairman of the Board of
the Company and the Company's legal counsel.

                  Violations  of the  guidelines  set forth  below can result in
disciplinary action, including dismissal, and possible criminal prosecution.

                  Any reprisal  against an employee who is good faith  reports a
violation  or  suspected  violation  of  law or  company  policies  is  strictly
forbidden.

                  1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.

          Since the Company is a home health care company,  there are many state
and federal law and regulation which affect and define the  responsibilities  of
each employee.  These laws and  regulations  must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation  the employee must check with corporate  counsel or special  counsel.
The employee is responsible for designing,  implementing and monitoring  quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance.  In connection with any compliance  program,  it is
vital that the employee be sure that no  falsification of records be allowed and
the employee must undertake to have programs  developed to assure that this does
not happen.



                                      -10-

<PAGE>




                  2. The  Company  shall not  tolerate  any unfair  competition.
Additional guidelines relating to this general policy are:


  -        do not interfere with contracts made between a prospective customer
           and a competitor.

  -        never engage in commercial bribery.

  -        do not disparage a competitor's services.

  -        be accurate  and  truthful  in all  dealings
           with   customers   and  be  careful  not  to
           misrepresent the state and qualify, features
           or availability of our services.

                  3. The Company awards  business to suppliers  solely on merit.
No employee  should have any  relationship,  financial  or  otherwise,  with any
supplier or competitor that might be construed as a conflict of interest or that
might even  appear to impair his or her  independent  judgment  on behalf of the
Company.  Gifts,  loans or any other thing of  significant  value  should not be
accepted or solicited, even indirectly.

                  4. Each employee's primary obligation is to the Company,  and,
therefore,  any form of outside  activity  must be kept  totally  separate  from
employment  with the  Company.  no outside  activity  should  involve the use of
Company assets, materials or facilities.

                  5. No employee  may use his or her position in the Company for
outside  gain or  benefit,  nor  should  any  employee  use  property  or  other
confidential or private confidential information in any outside activity.

                  6. The law  requires  that the  Company's  books  and  records
accurately and fairly reflect  transactions in reasonable  detail,  and that the
Company's internal accounting controls provide reasonable assurances that:

 -        transactions are carried out in an authorized matter.

 -        transactions have been reported and recorded
          to permit  correct  preparation of financial
          statements and to maintain  accurate records
          of assets. Access to assets is in accordance
          with management's authorization.

 -        inventories of assets are taken periodically and appropriate action is
          taken to correct discrepancies.


                                      -11-

<PAGE>





                  7.  Every  employee  who has  control  over  Company  funds is
personally accountable for such funds. There are no exceptions to this rule.

          When spending Company money or personal money that will be reimbursed,
or requesting  services that will cause Company money to be spent,  the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.

          Anyone  responsible  for the  handling  of  Company  revenue,  and the
associated records and materials, is accountable for their safe keeping.

                  8. The  Company  categorically  forbids  the use of  corporate
funds for the  support  of  political  parties or  candidates.  No  employee  is
authorized to make or approve such a contribution.

                  9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.

                  10.  Records  containing  personal  data on  patients  and the
Company's  employees  are  confidential.  As  such,  they  are  to be  carefully
safeguarded  and kept current and  accurate.  They should be  disclosed  only to
authorized  personnel  having a "need to know" or pursuant to lawful  processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.

                  11. When a  dishonest  act by an  employee  is  discovered  it
should be reported  immediately and directly to the Chairman of the Board of the
Company.

                  12. The Company  encourages  employees to  participate  in its
future by investing in its securities. However, in trading in Company securities
each  employee  should be aware that it may be illegal (and  possible  result in
civil  or  criminal  penalties)  to buy or  sell  Company  securities  while  in
possession of material non-public information about the Company.

          Material   information   can  be  anything   that  could  have  actual
significance  in an investors  decision such as  acquisition  plans,  dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major  management  changes or other business plans.  Employees aware of such
information  prior to its being  made  public,  should  not buy or sell  Company
securities until the information has been made public.

          Employees  should not trade in the securities of other  companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract or any other  information which could have
actual  significance in an investor's decision about the securities of the other
company.


                                      -12-

<PAGE>





          Employees  should keep any such  information  about the Company or any
other  company  secret  and use it only  for  Company  purposes,  because  it is
unlawful to "tip"  others who may buy or sell such  securities,  even though the
tipper does not.

          Some  types of  trading  -- even if  innocent  -- could  appear to the
public and to public  officials to be based on the misuse of inside  information
concerning the Company.  To avoid even an appearance of  impropriety,  employees
are not to engage in short term speculation in company  securities (that is, the
purchase and sale on the open market within a six month  period).  Nor should an
employee  engage in any  transaction  when he stands to profit  due to the short
term savings in the value of the Company's  securities.  An example of this type
of trading includes "short sales" (selling borrowed  securities which the seller
hopes can be purchased at a lower price when they are due for deliver.


                                      -13-

<PAGE>




                                                                   Exhibit 10.5


                                      -14-

<PAGE>




                              EMPLOYMENT AGREEMENT
                              --------------------

                    This  Employment  Agreement  dated as of  November  1, 1997,
between  National  Home  Health  Care Corp.,  a Delaware  corporation  having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Richard  Garofalo,  an  individual  having an address at 700 White  Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").

                              W I T N E S S E T H :
                              ---------------------

                    WHEREAS, the Company desires that Employee be employed by it
and render  services to it, and  Employee  is willing to be so  employed  and to
render  such  services  to the  Company,  all upon the terms and  subject to the
conditions contained herein.

                    NOW, THEREFORE, in consideration of the mutual covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency of which is hereby  acknowledged,  the parties agree as
follows:

                    1. EMPLOYMENT.  Subject to and upon the terms and conditions
contained in this  Agreement,  the Company hereby agrees to employ  Employee and
Employee agrees to enter the employ of the Company,  for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.

                    2. TERM.  Employee's term of employment under this Agreement
shall commence on the date hereof (the  "Commencement  Date") and shall continue
for a period through and including the fourth  anniversary  of the  Commencement
Date (the  "Employment  Term")  unless  extended  in writing by both  parties or
earlier terminated pursuant to the terms and conditions set forth herein.

                    3. DUTIES.  (a) Employee  shall be employed as the President
of Health  Acquisition  Corporation  ("HAC"),  a wholly owned  subsidiary of the
Company.  It is agreed that Employee shall perform his services in HAC's Queens,
New York facilities,  or any other facilities mutually agreeable to the parties.
The rights  and  duties of  Employee  shall not in any way be  curtailed  by the
Company  without his consent nor shall he be deprived of the dignity  ordinarily
associated with his offices.

          (b) Employee agrees to abide by all By-laws and applicable policies of
the  Company  promulgated  from  time to time by the Board of  Directors  of the
Company,  including  without  limitation  the  Business  Policies of the Company
annexed hereto as Annex A..

                    4.  EXCLUSIVE  SERVICES  AND BEST  EFFORTS.  Employee  shall
devote all of his working  time,  attention,  best  efforts  and ability  during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.


                                       -1-

<PAGE>




                    5.  COMPENSATION.  As  compensation  for  his  services  and
covenants hereunder, the Company shall pay Employee the following:

          (a) BASE SALARY.  The Company shall pay Employee a minimum base salary
("Salary")  of  $157,500  per year.  The  Salary  shall be subject to review and
adjustment on an annual basis  beginning  November 1, 1998, (if this contract is
then in effect) or, at the  Company's  discretion,  on such  earlier date as the
Company may  designate;  provided,  however,  that in no event shall  Employee's
Salary be adjusted below the Salary designated herein.

          (b)  BONUS   COMPENSATION.   The  Company  may  pay   Employee   bonus
compensation  in such amounts and at such times as the Board of Directors or the
Chairman of the Board of the Company shall determine.

          (c)  OPTIONS.   The  Company  shall  grant  to  Employee  as  soon  as
practicable  following  the date  hereof an option to purchase  twenty  thousand
(20,000) shares of the Company's common stock for a period of ten years from the
date of grant and having an  exercise  price per share  equal to the fair market
value of such  common  stock on the date of grant,  pursuant to the terms of the
Company's  1992 Stock  Option  Plan,  as amended to date (the  "Plan"),  and any
related stock option agreement required to be executed in connection  therewith.
Such  option  shall be  immediately  exercisable  as to all the  shares  covered
thereby  and  shall  be, to the  extent  permitted  by the terms of the Plan and
applicable  laws,   rules  and   regulations,   an  incentive  stock  option  as
contemplated by the Internal Revenue Code of 1986, as amended.

                    6. BUSINESS EXPENSES.  Employee shall be reimbursed for, and
entitled  to  advances  (subject to  repayment  to the  Company if not  actually
incurred by Employee) with respect to, those business  expenses  incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement  in  accordance  with  policies  established  from time to time by the
Company.

                    7.  EMPLOYEE  BENEFITS.  (a)  During  the  Employment  Term,
Employee shall be entitled to such insurance,  disability and health and medical
benefits and be entitled to participate in such retirement  plans or programs as
generally  made available to executive  officers of the Company  pursuant to the
policies of the Company; provided that Employee shall be required to comply with
the conditions  attendant to coverage by such plans and shall comply with and be
entitled to benefits  only in accordance  with the terms and  conditions of such
plans.  Employee shall be entitled to three weeks paid vacation each year during
the Employment Term at such times as does not, in the reasonable  opinion of the
Board  of  Directors,  interfere  with  Employee's  performance  of  his  duties
hereunder.  The Company may withhold  from any benefits  payable to Employee all
federal,  state,  local and other  taxes and  amounts as shall be  permitted  or
required pursuant to law, rule or regulation.  In addition to the foregoing, the
Company shall pay to Employee the full amount of Employee's annual  contribution
under the Company's  Premium  Conversion  Plan,  payable in accordance  with the
Company's normal payment practices.

                                       -2-

<PAGE>




          (b) Employee shall be entitled to receive the sum of $550 per month as
an  automobile  allowance  provided  at the  expense  of the  Company  from  the
Commencement  Date and during the  Employment  Term,  which  allowance  shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile,  which  expenses  also shall be the  responsibility  of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years.  Notwithstanding  the foregoing,  the Company may, at its
option,  elect to provide  Employee an  automobile  of the make,  model and year
mutually  agreeable to the Company and Employee,  all costs of which  associated
with   insurance,   repairs,   maintenance  and  other  expenses  shall  be  the
responsibility  of the  Company,  in  lieu  of the  above  described  automobile
allowances,  all as may be mutually  agreed  between  Employee  and the Company.
Employee  acknowledges  that  some  or  all  of  the  foregoing  may  be  deemed
compensation to him.

                    8.  DEATH AND  DISABILITY.  (a) The  Employment  Term  shall
terminate on the date of Employee's  death,  in which event  Employee's  Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
Employee's  death  shall be paid to his  estate.  Employee's  estate will not be
entitled to any other  compensation upon termination of this Agreement  pursuant
to this Paragraph 8(a).

          (b) If, during the Employment  Term, in the opinion of a duly licensed
physician  selected  by  Employee  and  reasonably  acceptable  to the  Company,
Employee,  because of physical or mental  illness or  incapacity,  shall  become
substantially  unable to perform the duties and  services  required of him under
this Agreement for a period of six  consecutive  months the Company may, upon at
least  twenty  (20)  days'  prior  written  notice  given at any time  after the
expiration  of such  six-month  period to  Employee of its  intention  to do so,
terminate this  Agreement as of such date as may be set forth in the notice.  In
case of such  termination,  Employee  shall be  entitled  to receive his Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
termination.  Employee  will not be  entitled  to any  other  compensation  upon
termination of this Agreement pursuant to this Paragraph 8(b).

                    9.  TERMINATION FOR CAUSE. (a) The Company may terminate the
employment  of  Employee  for  Cause  (as   hereinafter   defined).   Upon  such
termination,  the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
his Salary, reimbursable expenses and benefits owing to Employee through the day
on which  Employee  is  terminated.  Employee  will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).

          (b) As used  herein,  the term  "Cause"  shall  mean:  (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof,  which
failure is not cured by Employee  within thirty days  following  written  notice
thereof from the Company;  (ii) any other  material  breach of this Agreement by
Employee,  including any of the material  representations  or warranties made by
Employee;  (iii)  any act,  or  failure  to act,  by  Employee  in bad  faith or
intentionally  to the detriment of the Company;  (iv) the commission by Employee
of an act involving moral

                                       -3-

<PAGE>




turpitude,  dishonesty,  theft, unethical business conduct, or any other conduct
which  significantly  impairs the  reputation  of, or harms,  the  Company,  its
subsidiaries  or  affiliates;  or  (v)  any  misrepresentation,  concealment  or
omission by Employee of any material fact in seeking employment hereunder.

                    10. CHANGE IN CONTROL.  In the event of a Change in Control,
as defined below,  of the Company,  the Company shall pay to Employee a lump-sum
amount equal to one-half of Employee's  Salary at the time of the  occurrence of
such Change in Control,  which  amount  shall be paid within ten days after such
occurrence.  The foregoing  payment shall be in addition to and shall not reduce
or in any way affect the terms of payment of any amounts to which Employee shall
be entitled hereunder. The Company hereby agrees to obtain an agreement from any
successor to assume and agree to honor and perform this Agreement.  For purposes
of this Agreement, a "Change in Control" shall have occurred if:

          (i) any "person",  as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in  substantially  the same proportions as their
ownership of stock of the  Company),  is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3  under the  Exchange  Act),  directly  or  indirectly,  of
securities of the Company  representing 30% or more of the combined voting power
of the Company's then outstanding securities;

          (ii)  during  any period of not more than two  consecutive  years (not
including any period prior to the execution of this Agreement),  individuals who
at the  beginning  of such period  constitute  the Board,  and any new  director
(other than a director  designated by a person who has entered into an agreement
with the Company to effect a transaction  described in clause (a), (c) or (d) of
this  Section)  whose  election by the Board or  nomination  for election by the
Company's  shareholders  was  approved by a vote of at least  two-thirds  of the
directors then still in office who either were directors at the beginning of the
period or whose  election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;

          (iii)  the   shareholders   of  the   Company   approve  a  merger  or
consolidation of the Company with any other corporation, other than (A) a merger
or  consolidation  which would  result in the voting  securities  of the Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  voting  securities  of the
surviving  entity)  more than 80% of the  combined  voting  power of the  voting
securities of the Company or such surviving entity outstanding immediately after
such  merger or  consolidation  or (B) a merger  or  consolidation  effected  to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove  defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or


                                       -4-

<PAGE>




          (iv)  the  shareholders  of the  Company  approve  a plan of  complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company of all or substantially all of the Company's assets.

                    11.  DISCLOSURE OF  INFORMATION  AND  RESTRICTIVE  COVENANT.
Employee  acknowledges  that,  by his  employment,  he has been and will be in a
confidential  relationship with the Company and will have access to confidential
information and trade secrets of the Company,  its  subsidiaries and affiliates.
Confidential  information  and trade  secrets  include,  but are not limited to,
customer,  supplier and client lists, price lists,  marketing,  distribution and
sales strategies and procedures,  operational and equipment techniques, business
plans and systems,  quality control procedures and systems, special projects and
technological research,  including projects, research and reports for any entity
or client or any  project,  research,  report  or the like  concerning  sales or
manufacturing  or new  technology,  employee  compensation  plans  and any other
information   relating  thereto,  and  any  other  records,   files,   drawings,
inventions,   discoveries,   applications,   processes,   data  and  information
concerning  the  business  of the  Company  which are not in the public  domain.
Employee agrees that in  consideration of the execution of this Agreement by the
Company,  except in any way with respect to foreign affiliates of the Company as
of the date hereof:

          (a)  Employee  will not,  during the term of this  Agreement or at any
time  thereafter,  use,  or  disclose  to any  third  party,  trade  secrets  or
confidential  information  of  the  Company,  including,  but  not  limited  to,
confidential  information or trade secrets belonging or relating to the Company,
its subsidiaries,  affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries,  affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information  which is known or intended to be known only to employees of the
Company, its respective  subsidiaries and affiliates or others in a confidential
relationship  with the Company or its  respective  subsidiaries  and  affiliates
which relates to business matters.

          (b) Employee will not,  during the term of this Agreement and,  unless
Employee's  employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter,  directly or
indirectly,  under any  circumstance  other  than at the  direction  and for the
benefit of the  Company,  engage in or  participate  in any  business  activity,
including, but not limited to, acting as a director,  officer,  employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee,  proprietor,  syndicate  member,  shareholder  or creditor or with a
person having any other  relationship  with any other  business,  company,  firm
occupation or business activity, in any geographic area within the United States
that is, directly or indirectly,  competitive with any business conducted by the
Company  or any of its  subsidiaries  or  affiliates  during  the  term  of this
Agreement  or  thereafter.  Should  Employee  own 5% or less of the  issued  and
outstanding  shares of a class of securities of a corporation  the securities of
which are traded on a national  securities  exchange or in the  over-the-counter
market, such ownership shall not cause Employee to be deemed a shareholder under
this Paragraph 11(b).


                                       -5-

<PAGE>




          (c) Employee  will not,  during the term of this  Agreement  and for a
period  of one (1) year  thereafter,  on his  behalf  or on  behalf of any other
business enterprise,  directly or indirectly,  under any circumstance other than
at the  direction  and for the  benefit  of the  Company,  solicit or induce any
creditor,  customer,  supplier, officer, employee or agent of the Company or any
of its  subsidiaries or affiliates to sever its  relationship  with or leave the
employ of any of such entities.

          (d) This  Paragraph  11 and  Paragraphs  12,  13 and 14  hereof  shall
survive the expiration or termination of this Agreement for any reason.

          (e) It is  expressly  agreed by Employee  that the nature and scope of
each of the  provisions  set forth above in this Paragraph 11 are reasonable and
necessary.  If, for any reason, any aspect of the above provisions as it applies
to  Employee  is  determined  by  a  court  of  competent   jurisdiction  to  be
unreasonable  or  unenforceable,  the  provisions  shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be.  Employee  acknowledges  and agrees that his  services are of a
unique  character  and  expressly  grants  to the  Company  or  any  subsidiary,
successor or assignee of the Company,  the right to enforce the provisions above
through the use of all remedies  available at law or in equity,  including,  but
not limited to, injunctive relief.

                    12.   COMPANY   PROPERTY.   (a)  Any  patents,   inventions,
discoveries,  applications or processes,  designs,  devised,  planned,  applied,
created,  discovered  or  invented  by  Employee  in the  course  of  Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective  subsidiaries'  or affiliates'  business shall be the sole and
absolute property of the Company,  and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents  reasonably  requested
to assure the Company the full and complete ownership thereof.

          (b) All records,  files,  lists,  including  computer generated lists,
drawings,  documents,  equipment  and similar  items  relating to the  Company's
business  which  Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive  property.  Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession.  Employee  further  represents  that he will not copy or cause to be
copied,  print out or cause to be printed out any  software,  documents or other
materials  originating with or belonging to the Company.  Employee  additionally
represents  that, upon  termination of his employment with the Company,  he will
not retain in his possession any such software, documents or other materials.

                    13.  REMEDY.  It is  mutually  understood  and  agreed  that
Employee's  services  are  special,  unique,  unusual,  extraordinary  and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably  or  adequately   compensated   in  damages  in  an  action  at  law.
Accordingly,  in  the  event  of any  breach  of  this  Agreement  by  Employee,
including,   but  not   limited   to,   the   breach   of  the   non-disclosure,
non-solicitation and non-compete clauses under Paragraph 11

                                       -6-

<PAGE>




hereof,  the Company shall be entitled to equitable  relief by way of injunction
or otherwise  in addition to damages the Company may be entitled to recover.  In
addition,  the Company shall be entitled to  reimbursement  from Employee,  upon
request,  of any and all reasonable  attorneys' fees and expenses incurred by it
in enforcing any term or provision of this Agreement.

                    14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement,  Employee hereby  represents
and warrants to the Company as follows:  (i) Employee has the legal capacity and
unrestricted  right to execute and deliver this  Agreement and to perform all of
his obligations hereunder;  (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument,  agreement,  document,
arrangement or other  understanding  to which Employee is a party or by which he
is or may be  bound  or  subject;  and  (iii)  Employee  is not a  party  to any
instrument,  agreement,  document,  arrangement or other  understanding with any
person (other than the Company)  requiring or restricting  the use or disclosure
of any confidential  information or the provision of any employment,  consulting
or other services.

          (b) Employee  hereby agrees to indemnify and hold harmless the Company
from and against any and all losses,  costs,  damages and  expenses  (including,
without limitation,  its reasonable attorneys' fees) incurred or suffered by the
Company resulting from any breach by Employee of any of his  representations  or
warranties set forth in Paragraph 14(a) hereof.

                    15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed  effectively  given when mailed,  if sent by  registered  or
certified mail, return receipt  requested,  addressed to Employee at his address
set forth on the first page of this  Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention:  Gary J. Simon, Esq., or at such address as
such party  shall have  designated  by a notice  given in  accordance  with this
Paragraph 15, or when actually received by the party for whom intended,  if sent
by any other means.

                    16. ENTIRE AGREEMENT.  This Agreement constitutes the entire
understanding  of the parties with respect to its subject  matter and no change,
alteration or  modification  hereof may be made except in writing  signed by the
parties  hereto.  Any  prior  or other  agreements,  promises,  negotiations  or
representations  not  expressly  set forth in this  Agreement are of no force or
effect.

                    17.  SEVERABILITY.  If any provision of this Agreement shall
be   unenforceable   under  any  applicable  law,  then   notwithstanding   such
unenforceability,  the remainder of this Agreement  shall continue in full force
and effect.

                    18. WAIVERS, MODIFICATIONS,  ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective  unless the same
shall be in writing and signed by each

                                       -7-

<PAGE>




of the parties  hereto,  and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

                    19.   ASSIGNMENT.   Neither  this  Agreement,   nor  any  of
Employee's rights, powers, duties or obligations  hereunder,  may be assigned by
Employee.  This  Agreement  shall be  binding  upon and inure to the  benefit of
Employee  and his  heirs  and  legal  representatives  and the  Company  and its
successors  and  assigns.  Successors  of the  Company  shall  include,  without
limitation,  any corporation or corporations acquiring,  directly or indirectly,
all or  substantially  all of the  assets of the  Company,  whether  by  merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.

                    20.  APPLICABLE  LAW. This Agreement shall be deemed to have
been  made,  drafted,   negotiated  and  the  transactions  contemplated  hereby
consummated  and fully  performed in the State of New York and shall be governed
by and construed in accordance  with the laws of the State of New York,  without
regard  to the  conflicts  of law  rules  thereof.  Nothing  contained  in  this
Agreement shall be construed so as to require the commission of any act contrary
to law,  and  whenever  there is any  conflict  between  any  provision  of this
Agreement and any statute,  law,  ordinance,  order or  regulation,  contrary to
which the  parties  hereto  have no legal right to  contract,  the latter  shall
prevail,  but in such event any provision of this Agreement so affected shall be
curtailed and limited only to the extent  necessary to bring it within the legal
requirements.

                    21.  JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies  between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's  award by any court having  jurisdiction  thereof
and the parties consent to the  jurisdiction of any court located in the City of
New York, County of New York, for this purpose.

                    22. FULL UNDERSTANDING.  Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this  right,  that he has  carefully  read and fully  understands  all of the
provisions of this  Agreement,  that he is competent to execute this  Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely  and  voluntarily  enters  into it, and that he has read this
document  in  its  entirety  and  fully  understands  the  meaning,  intent  and
consequences  of this  document  which is that it  constitutes  an  agreement of
employment.






                                       -8-

<PAGE>






                    23.  COUNTERPARTS.  This  Agreement  may be  executed in any
number of  counterparts,  each of which shall be deemed an  original  and all of
which taken together shall constitute one and the same agreement.

                    IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

NATIONAL HOME HEALTH CARE CORP.


By: ___________________________________
      Name:
      Title:

    -----------------------------------
      Richard Garofalo

                                       -9-

<PAGE>





                        ADDENDUM TO EMPLOYMENT AGREEMENT:
                        ---------------------------------

              Business Policies of National Home Health Care Corp.
              ----------------------------------------------------


                  This addendum  supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this  addendum  basic  principles  and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal  responsibility to abide by each of the standards.
Each person,  alone, is responsible for his actions. No one will be permitted to
justify  an  illegal  act by  claiming  it was  ordered  by  someone  higher  in
management.  No one,  regardless  of level of position,  is ever  authorized  to
direct an employee to commit an illegal or unethical act.

                  As a  summary  of basic  principles,  this  addendum  does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction  covering a particular  situation does not
relieve an employee from exercising the highest ethical standards  applicable to
the circumstances.  If an employee has questions as to what the proper course of
conduct should be in any given  situation,  consult the Chairman of the Board of
the Company and the Company's legal counsel.

                  Violations  of the  guidelines  set forth  below can result in
disciplinary action, including dismissal, and possible criminal prosecution.

                  Any reprisal  against an employee who is good faith  reports a
violation  or  suspected  violation  of  law or  company  policies  is  strictly
forbidden.

                  1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.

          Since the Company is a home health care company,  there are many state
and federal law and regulation which affect and define the  responsibilities  of
each employee.  These laws and  regulations  must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation  the employee must check with corporate  counsel or special  counsel.
The employee is responsible for designing,  implementing and monitoring  quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance.  In connection with any compliance  program,  it is
vital that the employee be sure that no  falsification of records be allowed and
the employee must undertake to have programs  developed to assure that this does
not happen.


                                      -10-

<PAGE>




                  2. The  Company  shall not  tolerate  any unfair  competition.
Additional guidelines relating to this general policy are:


-        do not interfere with contracts made between a prospective customer
         and a competitor.

-        never engage in commercial bribery.

-        do not disparage a competitor's services.

-        be accurate  and  truthful  in all  dealings
         with   customers   and  be  careful  not  to
         misrepresent the state and qualify, features
         or availability of our services.

                  3. The Company awards  business to suppliers  solely on merit.
No employee  should have any  relationship,  financial  or  otherwise,  with any
supplier or competitor that might be construed as a conflict of interest or that
might even  appear to impair his or her  independent  judgment  on behalf of the
Company.  Gifts,  loans or any other thing of  significant  value  should not be
accepted or solicited, even indirectly.

                  4. Each employee's primary obligation is to the Company,  and,
therefore,  any form of outside  activity  must be kept  totally  separate  from
employment  with the  Company.  no outside  activity  should  involve the use of
Company assets, materials or facilities.

                  5. No employee  may use his or her position in the Company for
outside  gain or  benefit,  nor  should  any  employee  use  property  or  other
confidential or private confidential information in any outside activity.

                  6. The law  requires  that the  Company's  books  and  records
accurately and fairly reflect  transactions in reasonable  detail,  and that the
Company's internal accounting controls provide reasonable assurances that:

-        transactions are carried out in an authorized matter.

-        transactions have been reported and recorded
         to permit  correct  preparation of financial
         statements and to maintain  accurate records
         of assets. Access to assets is in accordance
         with management's authorization.

-        inventories of assets are taken periodically and appropriate action is
         taken to correct discrepancies.

                                      -11-

<PAGE>





                  7.  Every  employee  who has  control  over  Company  funds is
personally accountable for such funds. There are no exceptions to this rule.

          When spending Company money or personal money that will be reimbursed,
or requesting  services that will cause Company money to be spent,  the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.

          Anyone  responsible  for the  handling  of  Company  revenue,  and the
associated records and materials, is accountable for their safe keeping.

                  8. The  Company  categorically  forbids  the use of  corporate
funds for the  support  of  political  parties or  candidates.  No  employee  is
authorized to make or approve such a contribution.

                  9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.

                  10.  Records  containing  personal  data on  patients  and the
Company's  employees  are  confidential.  As  such,  they  are  to be  carefully
safeguarded  and kept current and  accurate.  They should be  disclosed  only to
authorized  personnel  having a "need to know" or pursuant to lawful  processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.

                  11. When a  dishonest  act by an  employee  is  discovered  it
should be reported  immediately and directly to the Chairman of the Board of the
Company.

                  12. The Company  encourages  employees to  participate  in its
future by investing in its securities. However, in trading in Company securities
each  employee  should be aware that it may be illegal (and  possible  result in
civil  or  criminal  penalties)  to buy or  sell  Company  securities  while  in
possession of material non-public information about the Company.

          Material   information   can  be  anything   that  could  have  actual
significance  in an investors  decision such as  acquisition  plans,  dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major  management  changes or other business plans.  Employees aware of such
information  prior to its being  made  public,  should  not buy or sell  Company
securities until the information has been made public.

          Employees  should not trade in the securities of other  companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract or any other  information which could have
actual  significance in an investor's decision about the securities of the other
company.

                                      -12-

<PAGE>





          Employees  should keep any such  information  about the Company or any
other  company  secret  and use it only  for  Company  purposes,  because  it is
unlawful to "tip"  others who may buy or sell such  securities,  even though the
tipper does not.

          Some  types of  trading  -- even if  innocent  -- could  appear to the
public and to public  officials to be based on the misuse of inside  information
concerning the Company.  To avoid even an appearance of  impropriety,  employees
are not to engage in short term speculation in company  securities (that is, the
purchase and sale on the open market within a six month  period).  Nor should an
employee  engage in any  transaction  when he stands to profit  due to the short
term savings in the value of the Company's  securities.  An example of this type
of trading includes "short sales" (selling borrowed  securities which the seller
hopes can be purchased at a lower price when they are due for deliver.

                                      -13-

<PAGE>




                                                                   Exhibit 10.6

                                      -14-

<PAGE>




                              EMPLOYMENT AGREEMENT
                              --------------------

                    This  Employment  Agreement  dated as of  November  1, 1997,
between  National  Home  Health  Care Corp.,  a Delaware  corporation  having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Robert P.  Heller,  an  individual  having an address at 700 White  Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").

                              W I T N E S S E T H :
                              ---------------------

                    WHEREAS, the Company desires that Employee be employed by it
and render  services to it, and  Employee  is willing to be so  employed  and to
render  such  services  to the  Company,  all upon the terms and  subject to the
conditions contained herein.

                    NOW, THEREFORE, in consideration of the mutual covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency of which is hereby  acknowledged,  the parties agree as
follows:

                    1. EMPLOYMENT.  Subject to and upon the terms and conditions
contained in this  Agreement,  the Company hereby agrees to employ  Employee and
Employee agrees to enter the employ of the Company,  for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.

                    2. TERM.  Employee's term of employment under this Agreement
shall commence on the date hereof (the  "Commencement  Date") and shall continue
for a period through and including the fourth  anniversary  of the  Commencement
Date (the  "Employment  Term")  unless  extended  in writing by both  parties or
earlier terminated pursuant to the terms and conditions set forth herein.

                    3. DUTIES.  (a) Employee  shall be employed as the Company's
Executive Vice President of Finance,  Chief Financial Officer and Treasurer.  It
is agreed that Employee  shall perform his services in the Company's  Scarsdale,
New York facilities,  or any other facilities mutually agreeable to the parties.
The rights  and  duties of  Employee  shall not in any way be  curtailed  by the
Company  without his consent nor shall he be deprived of the dignity  ordinarily
associated with his offices.

          (b) Employee agrees to abide by all By-laws and applicable policies of
the  Company  promulgated  from  time to time by the Board of  Directors  of the
Company,  including  without  limitation  the  Business  Policies of the Company
annexed hereto as Annex A.

                    4.  EXCLUSIVE  SERVICES  AND BEST  EFFORTS.  Employee  shall
devote all of his working  time,  attention,  best  efforts  and ability  during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.


                                       -1-

<PAGE>




                    5.  COMPENSATION.  As  compensation  for  his  services  and
covenants hereunder, the Company shall pay Employee the following:

          (a) BASE SALARY.  The Company shall pay Employee a minimum base salary
("Salary")  of  $122,500  per year.  The  Salary  shall be subject to review and
adjustment on an annual basis  beginning  November 1, 1998, (if this contract is
then in effect) or, at the  Company's  discretion,  on such  earlier date as the
Company may  designate;  provided,  however,  that in no event shall  Employee's
Salary be adjusted below the Salary designated herein.

          (b)  BONUS   COMPENSATION.   The  Company  may  pay   Employee   bonus
compensation  in such amounts and at such times as the Board of Directors or the
Chairman of the Board shall determine.

          (c)  OPTIONS.   The  Company  shall  grant  to  Employee  as  soon  as
practicable  following  the date  hereof  an  option to  purchase  ten  thousand
(10,000) shares of the Company's common stock for a period of ten years from the
date of grant and having an  exercise  price per share  equal to the fair market
value of such  common  stock on the date of grant,  pursuant to the terms of the
Company's  1992 Stock  Option  Plan,  as amended to date (the  "Plan"),  and any
related stock option agreement required to be executed in connection  therewith.
Such  option  shall be  immediately  exercisable  as to all the  shares  covered
thereby  and  shall  be, to the  extent  permitted  by the terms of the Plan and
applicable  laws,   rules  and   regulations,   an  incentive  stock  option  as
contemplated by the Internal Revenue Code of 1986, as amended.

                    6. BUSINESS EXPENSES.  Employee shall be reimbursed for, and
entitled  to  advances  (subject to  repayment  to the  Company if not  actually
incurred by Employee) with respect to, those business  expenses  incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement  in  accordance  with  policies  established  from time to time by the
Company.

                    7.  EMPLOYEE  BENEFITS.  (a)  During  the  Employment  Term,
Employee shall be entitled to such insurance,  disability and health and medical
benefits and be entitled to participate in such retirement  plans or programs as
generally  made available to executive  officers of the Company  pursuant to the
policies of the Company; provided that Employee shall be required to comply with
the conditions  attendant to coverage by such plans and shall comply with and be
entitled to benefits  only in accordance  with the terms and  conditions of such
plans.  Employee shall be entitled to three weeks paid vacation each year during
the Employment Term at such times as does not, in the reasonable  opinion of the
Board  of  Directors,  interfere  with  Employee's  performance  of  his  duties
hereunder.  The Company may withhold  from any benefits  payable to Employee all
federal,  state,  local and other  taxes and  amounts as shall be  permitted  or
required pursuant to law, rule or regulation.  In addition to the foregoing, the
Company shall pay to Employee the full amount of Employee's annual  contribution
under the Company's  Premium  Conversion  Plan,  payable in accordance  with the
Company's normal payment practices.

                                       -2-

<PAGE>




          (b) Employee shall be entitled to receive the sum of $550 per month as
an  automobile  allowance  provided  at the  expense  of the  Company  from  the
Commencement  Date and during the  Employment  Term,  which  allowance  shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile,  which  expenses  also shall be the  responsibility  of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years.  Notwithstanding  the foregoing,  the Company may, at its
option,  elect to provide  Employee an  automobile  of the make,  model and year
mutually  agreeable to the Company and Employee,  all costs of which  associated
with   insurance,   repairs,   maintenance  and  other  expenses  shall  be  the
responsibility  of the  Company,  in  lieu  of the  above  described  automobile
allowances,  all as may be mutually  agreed  between  Employee  and the Company.
Employee  acknowledges  that  some  or  all  of  the  foregoing  may  be  deemed
compensation to him.

                    8.  DEATH AND  DISABILITY.  (a) The  Employment  Term  shall
terminate on the date of Employee's  death,  in which event  Employee's  Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
Employee's  death  shall be paid to his  estate.  Employee's  estate will not be
entitled to any other  compensation upon termination of this Agreement  pursuant
to this Paragraph 8(a).

          (b) If, during the Employment  Term, in the opinion of a duly licensed
physician  selected  by  Employee  and  reasonably  acceptable  to the  Company,
Employee,  because of physical or mental  illness or  incapacity,  shall  become
substantially  unable to perform the duties and  services  required of him under
this Agreement for a period of six  consecutive  months the Company may, upon at
least  twenty  (20)  days'  prior  written  notice  given at any time  after the
expiration  of such  six-month  period to  Employee of its  intention  to do so,
terminate this  Agreement as of such date as may be set forth in the notice.  In
case of such  termination,  Employee  shall be  entitled  to receive his Salary,
reimbursable  expenses  and  benefits  owing  to  Employee  through  the date of
termination.  Employee  will not be  entitled  to any  other  compensation  upon
termination of this Agreement pursuant to this Paragraph 8(b).

                    9. TERMINATION. (a) The Company may terminate the employment
of Employee  for Cause (as  hereinafter  defined).  Upon such  termination,  the
Company  shall be  released  from any and all  further  obligations  under  this
Agreement,  except that the  Company  shall be  obligated  to pay  Employee  his
Salary,  reimbursable expenses and benefits owing to Employee through the day on
which  Employee  is  terminated.  Employee  will not be  entitled  to any  other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).

          (b) As used  herein,  the term  "Cause"  shall  mean:  (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof,  which
failure is not cured by Employee  within thirty days  following  written  notice
thereof from the Company;  (ii) any other  material  breach of this Agreement by
Employee,  including any of the material  representations  or warranties made by
Employee;  (iii)  any act,  or  failure  to act,  by  Employee  in bad  faith or
intentionally  to the detriment of the Company;  (iv) the commission by Employee
of an act involving moral

                                       -3-

<PAGE>




turpitude,  dishonesty,  theft, unethical business conduct, or any other conduct
which  significantly  impairs the  reputation  of, or harms,  the  Company,  its
subsidiaries  or  affiliates;  or  (v)  any  misrepresentation,  concealment  or
omission by Employee of any material fact in seeking employment hereunder.

          (c) Notwithstanding anything to the contrary herein, including without
limitation  Paragraph 2 hereof,  the Company may  terminate  the  employment  of
Employee  without Cause.  Upon such  termination,  the Company shall be released
from any and all  further  obligations  under this  Agreement,  except  that the
Company  shall be  obligated  to pay  Employee  his Salary,  any amount  payable
pursuant to Paragraph  10 hereof,  reimbursable  expenses and benefits  owing to
Employee  through the six-month  anniversary  of the day on which Employee is so
terminated.  Employee  will  not be  entitled  to any  other  compensation  upon
termination of this Agreement.

                    10. CHANGE IN CONTROL.  In the event of a Change in Control,
as defined below,  of the Company during the Employment  Term, the Company shall
pay to Employee a lump-sum amount equal to one-half of Employee's  Salary at the
time of the  occurrence  of such Change in Control,  which  amount shall be paid
within  ten days  after  such  occurrence.  The  foregoing  payment  shall be in
addition  to and shall not  reduce or in any way  affect the terms of payment of
any amounts to which  Employee shall be entitled  hereunder.  The Company hereby
agrees to obtain an  agreement  from any  successor to assume and agree to honor
and  perform  this  Agreement.  For  purposes  of this  Agreement,  a "Change in
Control" shall have occurred if:

          (i) any "person",  as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in  substantially  the same proportions as their
ownership of stock of the  Company),  is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3  under the  Exchange  Act),  directly  or  indirectly,  of
securities of the Company  representing 30% or more of the combined voting power
of the Company's then outstanding securities;

          (ii)  during  any period of not more than two  consecutive  years (not
including any period prior to the execution of this Agreement),  individuals who
at the  beginning  of such period  constitute  the Board,  and any new  director
(other than a director  designated by a person who has entered into an agreement
with the Company to effect a transaction  described in clause (a), (c) or (d) of
this  Section)  whose  election by the Board or  nomination  for election by the
Company's  shareholders  was  approved by a vote of at least  two-thirds  of the
directors then still in office who either were directors at the beginning of the
period or whose  election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;

          (iii)  the   shareholders   of  the   Company   approve  a  merger  or
consolidation of the Company with any other corporation, other than (A) a merger
or  consolidation  which would  result in the voting  securities  of the Company
outstanding immediately prior thereto

                                       -4-

<PAGE>




continuing to represent  (either by remaining  outstanding or by being converted
into voting  securities of the  surviving  entity) more than 80% of the combined
voting power of the voting  securities of the Company or such  surviving  entity
outstanding  immediately  after such merger or  consolidation or (B) a merger or
consolidation  effected  to  implement  a  recapitalization  of the  Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than  30%  of the  combined  voting  power  of the  Company's  then  outstanding
securities; or

          (iv)  the  shareholders  of the  Company  approve  a plan of  complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company of all or substantially all of the Company's assets.

                    11.  DISCLOSURE OF  INFORMATION  AND  RESTRICTIVE  COVENANT.
Employee  acknowledges  that,  by his  employment,  he has been and will be in a
confidential  relationship with the Company and will have access to confidential
information and trade secrets of the Company,  its  subsidiaries and affiliates.
Confidential  information  and trade  secrets  include,  but are not limited to,
customer,  supplier and client lists, price lists,  marketing,  distribution and
sales strategies and procedures,  operational and equipment techniques, business
plans and systems,  quality control procedures and systems, special projects and
technological research,  including projects, research and reports for any entity
or client or any  project,  research,  report  or the like  concerning  sales or
manufacturing  or new  technology,  employee  compensation  plans  and any other
information   relating  thereto,  and  any  other  records,   files,   drawings,
inventions,   discoveries,   applications,   processes,   data  and  information
concerning  the  business  of the  Company  which are not in the public  domain.
Employee agrees that in  consideration of the execution of this Agreement by the
Company,  except in any way with respect to foreign affiliates of the Company as
of the date hereof:

          (a)  Employee  will not,  during the term of this  Agreement or at any
time  thereafter,  use,  or  disclose  to any  third  party,  trade  secrets  or
confidential  information  of  the  Company,  including,  but  not  limited  to,
confidential  information or trade secrets belonging or relating to the Company,
its subsidiaries,  affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries,  affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information  which is known or intended to be known only to employees of the
Company, its respective  subsidiaries and affiliates or others in a confidential
relationship  with the Company or its  respective  subsidiaries  and  affiliates
which relates to business matters.

          (b) Employee will not,  during the term of this Agreement and,  unless
Employee's  employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter,  directly or
indirectly,  under any  circumstance  other  than at the  direction  and for the
benefit of the  Company,  engage in or  participate  in any  business  activity,
including, but not limited to, acting as a director,  officer,  employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee,  proprietor,  syndicate  member,  shareholder  or creditor or with a
person having any other relationship with any other

                                       -5-

<PAGE>




business,  company, firm occupation or business activity, in any geographic area
within the United States that is, directly or indirectly,  competitive  with any
business  conducted  by the  Company or any of its  subsidiaries  or  affiliates
during the term of this Agreement or thereafter.  Should Employee own 5% or less
of the issued and  outstanding  shares of a class of securities of a corporation
the securities of which are traded on a national  securities  exchange or in the
over-the-counter  market, such ownership shall not cause Employee to be deemed a
shareholder under this Paragraph 11(b).

          (c) Employee  will not,  during the term of this  Agreement  and for a
period  of one (1) year  thereafter,  on his  behalf  or on  behalf of any other
business enterprise,  directly or indirectly,  under any circumstance other than
at the  direction  and for the  benefit  of the  Company,  solicit or induce any
creditor,  customer,  supplier, officer, employee or agent of the Company or any
of its  subsidiaries or affiliates to sever its  relationship  with or leave the
employ of any of such entities.

          (d) This  Paragraph  11 and  Paragraphs  12,  13 and 14  hereof  shall
survive the expiration or termination of this Agreement for any reason.

          (e) It is  expressly  agreed by Employee  that the nature and scope of
each of the  provisions  set forth above in this Paragraph 11 are reasonable and
necessary.  If, for any reason, any aspect of the above provisions as it applies
to  Employee  is  determined  by  a  court  of  competent   jurisdiction  to  be
unreasonable  or  unenforceable,  the  provisions  shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be.  Employee  acknowledges  and agrees that his  services are of a
unique  character  and  expressly  grants  to the  Company  or  any  subsidiary,
successor or assignee of the Company,  the right to enforce the provisions above
through the use of all remedies  available at law or in equity,  including,  but
not limited to, injunctive relief.

                    12.   COMPANY   PROPERTY.   (a)  Any  patents,   inventions,
discoveries,  applications or processes,  designs,  devised,  planned,  applied,
created,  discovered  or  invented  by  Employee  in the  course  of  Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective  subsidiaries'  or affiliates'  business shall be the sole and
absolute property of the Company,  and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents  reasonably  requested
to assure the Company the full and complete ownership thereof.

          (b) All records,  files,  lists,  including  computer generated lists,
drawings,  documents,  equipment  and similar  items  relating to the  Company's
business  which  Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive  property.  Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession.  Employee  further  represents  that he will not copy or cause to be
copied,  print out or cause to be printed out any  software,  documents or other
materials  originating with or belonging to the Company.  Employee  additionally
represents that, upon termination of his

                                       -6-

<PAGE>




employment  with the  Company,  he will not  retain in his  possession  any such
software, documents or other materials.

                    13.  REMEDY.  It is  mutually  understood  and  agreed  that
Employee's  services  are  special,  unique,  unusual,  extraordinary  and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably  or  adequately   compensated   in  damages  in  an  action  at  law.
Accordingly,  in  the  event  of any  breach  of  this  Agreement  by  Employee,
including,   but  not   limited   to,   the   breach   of  the   non-disclosure,
non-solicitation  and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to  equitable  relief by way of  injunction  or  otherwise  in
addition to damages the Company  may be entitled to recover.  In  addition,  the
Company shall be entitled to reimbursement from Employee,  upon request,  of any
and all reasonable  attorneys' fees and expenses incurred by it in enforcing any
term or provision of this Agreement.

                    14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement,  Employee hereby  represents
and warrants to the Company as follows:  (i) Employee has the legal capacity and
unrestricted  right to execute and deliver this  Agreement and to perform all of
his obligations hereunder;  (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument,  agreement,  document,
arrangement or other  understanding  to which Employee is a party or by which he
is or may be  bound  or  subject;  and  (iii)  Employee  is not a  party  to any
instrument,  agreement,  document,  arrangement or other  understanding with any
person (other than the Company)  requiring or restricting  the use or disclosure
of any confidential  information or the provision of any employment,  consulting
or other services.

          (b) Employee  hereby agrees to indemnify and hold harmless the Company
from and against any and all losses,  costs,  damages and  expenses  (including,
without limitation,  its reasonable attorneys' fees) incurred or suffered by the
Company resulting from any breach by Employee of any of his  representations  or
warranties set forth in Paragraph 14(a) hereof.

                    15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed  effectively  given when mailed,  if sent by  registered  or
certified mail, return receipt  requested,  addressed to Employee at his address
set forth on the first page of this  Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention:  Gary J. Simon, Esq., or at such address as
such party  shall have  designated  by a notice  given in  accordance  with this
Paragraph 15, or when actually received by the party for whom intended,  if sent
by any other means.

                    16. ENTIRE AGREEMENT.  This Agreement constitutes the entire
understanding  of the parties with respect to its subject  matter and no change,
alteration or  modification  hereof may be made except in writing  signed by the
parties  hereto.  Any  prior  or other  agreements,  promises,  negotiations  or
representations  not  expressly  set forth in this  Agreement are of no force or
effect.

                                       -7-

<PAGE>




                    17.  SEVERABILITY.  If any provision of this Agreement shall
be   unenforceable   under  any  applicable  law,  then   notwithstanding   such
unenforceability,  the remainder of this Agreement  shall continue in full force
and effect.

                    18. WAIVERS, MODIFICATIONS,  ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective  unless the same
shall be in writing  and  signed by each of the  parties  hereto,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

                    19.   ASSIGNMENT.   Neither  this  Agreement,   nor  any  of
Employee's rights, powers, duties or obligations  hereunder,  may be assigned by
Employee.  This  Agreement  shall be  binding  upon and inure to the  benefit of
Employee  and his  heirs  and  legal  representatives  and the  Company  and its
successors  and  assigns.  Successors  of the  Company  shall  include,  without
limitation,  any corporation or corporations acquiring,  directly or indirectly,
all or  substantially  all of the  assets of the  Company,  whether  by  merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.

                    20.  APPLICABLE  LAW. This Agreement shall be deemed to have
been  made,  drafted,   negotiated  and  the  transactions  contemplated  hereby
consummated  and fully  performed in the State of New York and shall be governed
by and construed in accordance  with the laws of the State of New York,  without
regard  to the  conflicts  of law  rules  thereof.  Nothing  contained  in  this
Agreement shall be construed so as to require the commission of any act contrary
to law,  and  whenever  there is any  conflict  between  any  provision  of this
Agreement and any statute,  law,  ordinance,  order or  regulation,  contrary to
which the  parties  hereto  have no legal right to  contract,  the latter  shall
prevail,  but in such event any provision of this Agreement so affected shall be
curtailed and limited only to the extent  necessary to bring it within the legal
requirements.

                    21.  JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies  between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's  award by any court having  jurisdiction  thereof
and the parties consent to the  jurisdiction of any court located in the City of
New York, County of New York, for this purpose.

                    22. FULL UNDERSTANDING.  Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this  right,  that he has  carefully  read and fully  understands  all of the
provisions of this  Agreement,  that he is competent to execute this  Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely  and  voluntarily  enters  into it, and that he has read this
document in its entirety and fully understands

                                       -8-

<PAGE>




the  meaning,  intent  and  consequences  of  this  document  which  is  that it
constitutes an agreement of employment.


                    23.  COUNTERPARTS.  This  Agreement  may be  executed in any
number of  counterparts,  each of which shall be deemed an  original  and all of
which taken together shall constitute one and the same agreement.

                    IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

NATIONAL HOME HEALTH CARE CORP.


By: ___________________________________
      Name:
      Title:

    -----------------------------------
      Robert P. Heller

                                       -9-

<PAGE>





                        ADDENDUM TO EMPLOYMENT AGREEMENT:
                        ---------------------------------

              Business Policies of National Home Health Care Corp.
              ----------------------------------------------------


                  This addendum  supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this  addendum  basic  principles  and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal  responsibility to abide by each of the standards.
Each person,  alone, is responsible for his actions. No one will be permitted to
justify  an  illegal  act by  claiming  it was  ordered  by  someone  higher  in
management.  No one,  regardless  of level of position,  is ever  authorized  to
direct an employee to commit an illegal or unethical act.

                  As a  summary  of basic  principles,  this  addendum  does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction  covering a particular  situation does not
relieve an employee from exercising the highest ethical standards  applicable to
the circumstances.  If an employee has questions as to what the proper course of
conduct should be in any given  situation,  consult the Chairman of the Board of
the Company and the Company's legal counsel.

                  Violations  of the  guidelines  set forth  below can result in
disciplinary action, including dismissal, and possible criminal prosecution.

                  Any reprisal  against an employee who is good faith  reports a
violation  or  suspected  violation  of  law or  company  policies  is  strictly
forbidden.

                  1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.

          Since the Company is a home health care company,  there are many state
and federal law and regulation which affect and define the  responsibilities  of
each employee.  These laws and  regulations  must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation  the employee must check with corporate  counsel or special  counsel.
The employee is responsible for designing,  implementing and monitoring  quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance.  In connection with any compliance  program,  it is
vital that the employee be sure that no  falsification of records be allowed and
the employee must undertake to have programs  developed to assure that this does
not happen.


                                      -10-

<PAGE>




                  2. The  Company  shall not  tolerate  any unfair  competition.
Additional guidelines relating to this general policy are:


  -        do not interfere with contracts made between a prospective customer
           and a competitor.

  -        never engage in commercial bribery.

  -        do not disparage a competitor's services.

  -        be accurate  and  truthful  in all  dealings
           with   customers   and  be  careful  not  to
           misrepresent the state and qualify, features
           or availability of our services.

                  3. The Company awards  business to suppliers  solely on merit.
No employee  should have any  relationship,  financial  or  otherwise,  with any
supplier or competitor that might be construed as a conflict of interest or that
might even  appear to impair his or her  independent  judgment  on behalf of the
Company.  Gifts,  loans or any other thing of  significant  value  should not be
accepted or solicited, even indirectly.

                  4. Each employee's primary obligation is to the Company,  and,
therefore,  any form of outside  activity  must be kept  totally  separate  from
employment  with the  Company.  no outside  activity  should  involve the use of
Company assets, materials or facilities.

                  5. No employee  may use his or her position in the Company for
outside  gain or  benefit,  nor  should  any  employee  use  property  or  other
confidential or private confidential information in any outside activity.

                  6. The law  requires  that the  Company's  books  and  records
accurately and fairly reflect  transactions in reasonable  detail,  and that the
Company's internal accounting controls provide reasonable assurances that:

 -        transactions are carried out in an authorized matter.

 -        transactions have been reported and recorded
          to permit  correct  preparation of financial
          statements and to maintain  accurate records
          of assets. Access to assets is in accordance
          with management's authorization.

 -        inventories of assets are taken periodically and appropriate action is
          taken to correct discrepancies.

                                      -11-

<PAGE>





                  7.  Every  employee  who has  control  over  Company  funds is
personally accountable for such funds. There are no exceptions to this rule.

          When spending Company money or personal money that will be reimbursed,
or requesting  services that will cause Company money to be spent,  the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.

          Anyone  responsible  for the  handling  of  Company  revenue,  and the
associated records and materials, is accountable for their safe keeping.

                  8. The  Company  categorically  forbids  the use of  corporate
funds for the  support  of  political  parties or  candidates.  No  employee  is
authorized to make or approve such a contribution.

                  9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.

                  10.  Records  containing  personal  data on  patients  and the
Company's  employees  are  confidential.  As  such,  they  are  to be  carefully
safeguarded  and kept current and  accurate.  They should be  disclosed  only to
authorized  personnel  having a "need to know" or pursuant to lawful  processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.

                  11. When a  dishonest  act by an  employee  is  discovered  it
should be reported  immediately and directly to the Chairman of the Board of the
Company.

                  12. The Company  encourages  employees to  participate  in its
future by investing in its securities. However, in trading in Company securities
each  employee  should be aware that it may be illegal (and  possible  result in
civil  or  criminal  penalties)  to buy or  sell  Company  securities  while  in
possession of material non-public information about the Company.

          Material   information   can  be  anything   that  could  have  actual
significance  in an investors  decision such as  acquisition  plans,  dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major  management  changes or other business plans.  Employees aware of such
information  prior to its being  made  public,  should  not buy or sell  Company
securities until the information has been made public.

          Employees  should not trade in the securities of other  companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract or any other  information which could have
actual  significance in an investor's decision about the securities of the other
company.

                                      -12-

<PAGE>





          Employees  should keep any such  information  about the Company or any
other  company  secret  and use it only  for  Company  purposes,  because  it is
unlawful to "tip"  others who may buy or sell such  securities,  even though the
tipper does not.

          Some  types of  trading  -- even if  innocent  -- could  appear to the
public and to public  officials to be based on the misuse of inside  information
concerning the Company.  To avoid even an appearance of  impropriety,  employees
are not to engage in short term speculation in company  securities (that is, the
purchase and sale on the open market within a six month  period).  Nor should an
employee  engage in any  transaction  when he stands to profit  due to the short
term savings in the value of the Company's  securities.  An example of this type
of trading includes "short sales" (selling borrowed  securities which the seller
hopes can be purchased at a lower price when they are due for deliver.


                                      -13-