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                                                                   EXHIBIT 10(n)

                AMENDED AND RESTATED SUBSCRIBER SERVICE AGREEMENT


         This Amended and Restated Subscriber Service Agreement (the
"Agreement") is made as of the 1st day of July, 1998 (the "Effective Date") by
and between NovaCare, Inc., a Delaware corporation with its principal place of
business at 1016 W. Ninth Avenue, King of Prussia, Pennsylvania 19406 and its
subsidiaries listed on Exhibit A ("Subscriber"), and NovaCare Employee Services,
Inc. ("NovaCare"), a Delaware corporation with its principal place of business
at 2621 Van Buren Avenue, Norristown, Pennsylvania 19403. This Agreement
modifies and supersedes the Subscriber Service Agreement dated January 25, 1997,
between Subscriber and NovaCare (the "Initial Agreement").

                              W I T N E S S E T H:

         WHEREAS, NovaCare has expertise in employment relations matters,
including payroll and benefits administration, workers' compensation insurance
management (including risk assessment, injury prevention and claims management),
recruiting, human resources policies, procedures and practices (including
consulting and intervention to resolve employment-related issues) and training
and development;

         WHEREAS, since January 25, 1997, Subscriber has outsourced certain
human resource functions to NovaCare pursuant to the Initial Agreement in order
to improve service and reduce costs by taking advantage of the expertise of a
focused human resources business; and

         WHEREAS, Subscriber now wishes to outsource additional human resource
services to NovaCare pursuant to the terms and conditions contained in this
Agreement;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises herein contained, and intending legally to be bound, the
parties have amended and restated the Initial Agreement as follows:

         1.       Parties' Intent

                  Subscriber and NovaCare understand and intend that, under this
Agreement, NovaCare will assume certain rights and duties of a co-employer with
respect to employees located at Subscriber worksites or at worksites at which
Subscriber provides services pursuant to a contract with the business located at
the worksite (an employee at any of such worksites hereinafter being referred to
as a "Worksite Employee").
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         2.       Term and Termination.

                  2.1 Initial Term. The initial term (the "Initial Term") of
this Agreement shall be from July 1, 1998 through June 30, 2002, unless sooner
terminated pursuant to Section 2.3 below.

                  2.1.2 Renewal Term. This Agreement shall automatically renew
for an additional one-year term (a "Renewal Term") upon the expiration of the
Initial Term and each subsequent Renewal Term, unless written notice of
non-renewal is given by either party at least nine (9) months prior to the
expiration of the Initial or any Renewal Term.

                  2.1.3 Termination.

                           2.3.1 By NovaCare. NovaCare may terminate this
Agreement upon notice to Subscriber, in the event that:

                                    (a) Subscriber fails to pay any sums due
hereunder, and such failure continues for three (3) business days after written
notice thereof is sent to Subscriber, certified or registered mail, return
receipt requested;

                                    (b) Subscriber fails at any time to procure
or maintain any insurance coverage required by this Agreement;

                                    (c) Subscriber fails to perform or observe
any duty, obligation or covenant contained in this Agreement other than those
set forth in subparagraph (a) or subparagraph (b) above, and such failure
continues for ten (10) days after written notice thereof is sent to Subscriber,
certified or registered mail, return receipt requested;

                                    (d) Subscriber becomes insolvent (that is,
unable to pay its debts as they mature or in accordance with customary business
practice) or commits an act of bankruptcy, or applies for, consents to, or
acquiesces in the appointment of a trustee or a receiver for it or any of its
property, or, in the absence of such application, consent or acquiescence, a
trustee or receiver is appointed for Subscriber or for a substantial part of its
property and is not discharged within thirty days thereof, or if any bankruptcy
or insolvency proceeding, or any dissolution or liquidation proceeding, is
instituted by or against Subscriber and is consented to or acquiesced in by
Subscriber or remains for thirty (30) days undismissed;

                                    (e) there occurs the termination, cessation
or liquidation of the Subscriber's business;

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                                    (f) any representation, warranty or
statement of material fact made or furnished to NovaCare or NovaCare's
representatives by or on behalf of the Subscriber, or any document, instrument
or other paper submitted to NovaCare or NovaCare's representatives by or on
behalf of Subscriber, is false or misleading in any material respect;

                                    (g) NovaCare determines, and obtains an
opinion of counsel to the effect, that all or a substantial portion of its
receipts hereunder are or will become subject to a sales, value added, gross
receipts or similar tax in a particular jurisdiction as to which it exercises
its right to terminate;

                                    (h) changes in federal, state or local law,
regulation or controlling legal interpretation occur that make it legally
impossible or economically impractical for NovaCare to carry out its obligations
hereunder in the jurisdiction(s) as to which it exercises its right to
terminate;

                                    (i) Subscriber fails to comply with any
reasonable directive regarding health and safety from NovaCare, NovaCare's
workers' compensation carrier, or any government agency with jurisdiction over a
health or safety matter; or

                                    (j) Subscriber misrepresents workers'
compensation or Fair Labor Standards Act classification or inaccurately reports
employee payroll hours, pay rate or salary.

                           2.3.2 By Subscriber. Subscriber may terminate this
Agreement upon notice to NovaCare in the event that:

                                    (a) NovaCare fails to pay any sums required
to be paid hereunder by NovaCare as co-employer of the Worksite Employees (i) to
or on behalf of a Worksite Employee or (ii) to a governmental agency, insurance
carrier, third party administrator or other third party, and such failure
continues for three (3) business days after written notice thereof is sent to
NovaCare, certified or registered mail, return receipt requested;

                                    (b) NovaCare fails at any time to procure or
maintain insurance coverage required by this Agreement;

                                    (c) NovaCare fails to meet the following
service performance standards, and such failure continues for a period of sixty
(60) days after written notice thereof is sent to NovaCare, certified or
registered mail, return receipt requested:

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                                             (i) employee status change
transactions (new hires, wage and salary actions, changes in status from
full-time to part-time or on or off leave and terminations) (hereinafter
referred to as "Status Transactions") received in a form acceptable to NovaCare
by the established payroll cut-cut-off date and time (the "Payroll Cut-off") for
a payroll will be processed for that payroll;

                                             (ii) payroll data received by
NovaCare's designated representative by the Payroll Cut-off will be processed to
deliver payroll on time one hundred percent (100%) of the time, except for
natural disasters or other circumstances beyond NovaCare's control, and
ninety-nine percent (99%) of paychecks will correctly reflect information
transmitted from the Subscriber;

                                             (iii) new hire and status change
benefit forms ("Benefit Forms") will be submitted to the third party
administrator responsible for the applicable benefit plan within one (1) week of
receipt by NovaCare's designated representative. If NovaCare acts as the plan
administrator, it will update its file and provide confirmation;

                                             (iv) ninety percent (90%) of
incoming calls to the employee service center 1-800 phone number, during
established business hours, will be answered immediately and incoming calls
reaching voice mail will be returned by the end of the following business day;
and for open enrollment periods, the calls will be returned within three
business days.

                                             (v) a customer service survey
measuring satisfaction with NovaCare services, in form and substance approved by
Subscriber, whose approval shall not be unreasonably withheld, will be conducted
no later than December 31 each year during the term hereof and the results will
show not greater than a five percent (5%) overall reduction in employee
satisfaction from the baseline established in the first annual survey

                                    (d) NovaCare becomes insolvent (that is,
unable to pay its debts as they mature or in accordance with customary business
practice) or commits an act of bankruptcy, or applies for, consents to, or
acquiesces in the appointment of a trustee or a receiver for it or any of its
property, or, in the absence of such application, consent or acquiescence, a
trustee or receiver is appointed for NovaCare or for a substantial part of its
property and is not discharged within thirty days thereof, or if any bankruptcy
or insolvency proceeding, or any dissolution or liquidation proceeding, is
instituted by or against NovaCare and is consented to or acquiesced in by
NovaCare or remains or thirty (30) days undismissed;

                                    (e) there occurs the termination, cessation
or liquidation of NovaCare's business;

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                                    (f) any representation, warranty or
statement of material fact made or furnished to Subscriber or Subscriber's
representatives by or on behalf of NovaCare, or any document, instrument or
other paper submitted to Subscriber or Subscriber's representatives by or on
behalf of NovaCare, is false or misleading in any material respect; or

                                    (g) NovaCare fails to perform or observe any
material duty, obligation or covenant contained in this Agreement other than
those set forth in subparagraph (a), subparagraph (b) or subparagraph (c) above,
and such failure continues for ten (10) days after written notice thereof is
sent to NovaCare, certified or registered mail, return receipt requested;

         3.       Fees.

                  3.1      Calculation of Fees.

                           3.1.1 Payroll Fees. The following Subscriber payments
will be processed by NovaCare and billed to Subscriber:

                           (a) gross earnings, including salary, wages, bonus,
vacation time, paid time off, sick time, commissions and severance pay (before
deductions, whether before tax or after tax) paid to Worksite Employees;

                           (b) the employer's portion of FICA and FUTA
attributable to gross earnings in accordance with such regulations;

                           (c) the employer's portion of contributions to the
NCES/NovaCare, Inc. 401(k) Retirement Savings Plan ("the 401(k) Plan") and the
NCES/NovaCare, Inc. Supplemental Benefits Plan ("the SBP"); and

                           (d) the net amount of expense reimbursement and any
other cash payment to a Worksite Employee that is included in a paycheck at the
request of Subscriber but is not includable in gross earnings for federal or
state tax purposes.

                           3.1.2 Benefits/Risk Management Fees. For
Benefits/Risk Management Responsibilities assumed hereunder, including
unemployment, workers compensation and health and welfare benefit plans,
Subscriber shall pay Benefits/Risk Management Fees to NovaCare equal to the
costs of handling such responsibilities, plus an annual fixed fee, which
initially shall be $4,000,000 on an annual basis, to be paid in monthly
installments; provided that the foregoing annual fee shall be adjusted annually,
as appropriate, to reflect material deviations in the scope of NovaCare's
responsibility with respect to Benefits/Risk Management.

                           3.1.3 Administrative Fees. For Administrative
Responsibilities assumed hereunder, Subscriber shall pay to NovaCare
Administrative Fees equal to an

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aggregate of $8,424,000 annually, to be paid in equal monthly installments,
provided that the total number of Worksite Employees employed during each
calendar month (derived by adding the number of Worksite Employees who start
employment as new hires during the month and the number of Worksite Employees
terminated during the month, to the number of Worksite Employees actually
employed on the first day of the month) is not less than 15,900 and not more
than 17,900. If the number of Worksite Employees falls beneath 15,900 during any
given calendar month, the Administrative Fees for that month shall be reduced by
an agreed upon amount for each incremental change up to 1,000 Worksite
Employees; and if the number of Worksite Employees exceeds 17,900 during any
given calendar month, the Administrative Fees for that month shall be increased
by an agreed upon amount (currently computed at $150,000 per annum) for each
incremental change up to 1,000 Worksite Employees.

                           3.1.4 Consulting Fees. For Consulting
Responsibilities assumed hereunder, Subscriber shall pay Consulting Fees to
NovaCare as negotiated between Subscriber and NovaCare (and confirmed in a
writing signed by both parties) for all projects requested. Subscriber and
NovaCare agree that the aggregate Consulting Fees for all such projects
requested by Subscriber during the twelve-month period beginning July 1, 1998
and ending June 30, 1999 shall in no event be less than $8,400,000 set forth on
schedule 3.1.4 attached hereto is a list of Consulting Projects identified by
the parties for the period of July 1, 1998 through June 30, 1999.

                           3.1.5 Outplacement Fees. For Outplacement
Responsibilities assumed hereunder, Subscriber shall pay Outplacement Fees to
NovaCare in the amount of $166,667 per calendar month for the period from July
1, 1998 to June 30, 2000.

                           3.1.6 Recruiting Fees. For Recruiting
Responsibilities assumed hereunder, Subscriber shall pay Recruiting Fees to
NovaCare in an aggregate annual amount equal to $12,800,000, to be paid in equal
monthly installments, for recruiting up to 4,300 individuals for the period July
1, 1998 to June 30, 1999. For each Worksite Employee actually commencing
employment annually during the term of this Agreement in excess of 4,300,
Subscriber shall pay NovaCare $2,235 per Worksite Employee as a result of the
recruiting function performed by NovaCare.

                           3.1.7 Additional Fees. Subscriber may request
NovaCare to assume additional responsibilities pursuant to Section 4.7 below
(hereinafter referred to as "Additional Responsibilities"). The fee for such
Additional Responsibilities shall be set forth in an addendum to this Agreement.

                           3.1.8 All fees and services noted in the above
categories will be negotiated annually between the two parties, but shall remain
as set forth herein unless otherwise mutually agreed by the parties. Any such
mutually determined changes will be reflected as contract amendments.

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                  3.2      Payment of Fees.

                           3.2.1 Payroll and Benefits/Risk Management Fees.
Subscriber shall fund an account with the amount of the Payroll Fees and
Benefits/Risk Management Fees (the "Payroll Account") in advance of each payroll
payment date. NovaCare shall have the right to draw against the Payroll Account
an amount equal to the Payroll Fees and Benefits/Management Fees for the
applicable payroll payment date. Subscriber agrees to collect, verify and
transmit to NovaCare's administrative office, no less than seven (7) business
days before each NovaCare payroll date, any information required to determine
correctly and accurately the amount of the payment due NovaCare. If Subscriber
defaults in paying the amounts due NovaCare and NovaCare continues to pay wages
for Worksite Employees at a rate not below the statutory minimum wage,
Subscriber shall fully indemnify and hold NovaCare harmless from any and all
claims made by employees for wages in excess of the amount paid by NovaCare and
any and all legal fees and expenses incurred in defense of such claims.
Additionally, Subscriber must immediately inform NovaCare of any situation in
which payment will not be immediately forthcoming and thereafter, at the request
of NovaCare, Subscriber shall terminate the employment of persons for whom
payment by Subscriber to NovaCare will not be made.

                           3.2.2 Administrative, Consulting, Outplacement and
Recruiting Fees. Administrative Fees, Consulting Fees, Outplacement Fees and
Recruiting Fees shall be invoiced monthly for delivery of services to be
completed during the month by NovaCare. Subscriber shall pay such invoices
within five days after receipt.

                           3.2.3 Additional Fees. Additional fees provided for
under Section 3.1.7 above shall be payable as specified in the applicable
addendum to this Agreement.

                           3.2.4 Subscriber is responsible for all sales,
franchise and use taxes applicable to the states in which business is being
conducted.

         4.       NovaCare's Responsibilities.

                  4.1 Payroll Responsibilities. NovaCare shall be responsible
for and shall perform the following functions ("Payroll Responsibilities") with
respect to Worksite Employees in consideration of the payment of Payroll Fees:

                           (i) Payment of wages based on hours, wage and salary
rates and other information supplied by Subscriber, including application of
set-offs owed to Subscriber and implementation of garnishment orders;

                           (ii) Calculation of Paid Time Off (in accordance with
Subscriber's policies);

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                           (iii) Calculation and payment of sign-on, relocation
and other bonuses;

                           (iv) Collection, reporting and payment of applicable
federal, state and local payroll taxes (exclusive of state unemployment
insurance);

                           (v) Calculation and payment of the employer's portion
of contributions to the 401(k) Plan and the SBP; and

                           (vi) Payment of expense reimbursement and any other
non-wage payments to Worksite Employees, as requested by Subscriber.

                  4.2 Benefits Responsibilities. NovaCare shall be responsible
for and shall perform the following functions with respect to Worksite Employees
in consideration of the payment of Benefits Fees:

                           (i) Collection of employee contributions, payment of
premiums and administration under the Plans;

                           (ii) Funding of Plans that require funding within the
time required by law;

                           (iii) Reporting and payment of applicable state
unemployment insurance;

                           (iv) Administration of unemployment compensation
claims; and

                           (v) Payment of workers' compensation insurance
premiums and administration and management of workers' compensation claims,
including payment of claims not paid by an insurance carrier or other third
party.;

                  4.3 Administrative Responsibilities. NovaCare shall be
responsible for and shall perform the following functions with respect to
Worksite Employees in consideration of the payment of Administrative Fees:

                           (i) Completion, reporting and maintenance of payroll
and Plan records, with the exception of records of hours worked, which shall be
collected, verified and maintained by Subscriber, provided that Subscriber shall
make available to NovaCare copies of such records of hours worked as NovaCare
may require for the purpose of maintaining the Plans;

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                           (ii) Analysis, transfer and integration of payroll
and benefits for Worksite Employees newly employed as a result of Subscriber's
acquisitions of businesses employing those individuals;

                           (iii) Operation of an employee service center
providing Worksite Employees with access for the purpose of making changes and
resolving questions relating to Plans and paychecks;

                           (iv) Administration of Compensation and Incentive
Plans;

                           (v) Development and implementation, not later than
September 30, 1998, of a system designed to report service of payroll "On time
delivery and accuracy" and responsiveness to incoming 1-800 calls to service
centers; and

                           (vi) Provision of reports within fifteen (15) days
after the last day of each calendar month showing its performance compared to
the performance standards established in Section 4.3. (v).

                  4.4 Consulting Responsibilities. Upon request of Subscriber,
NovaCare shall be responsible for the following functions with respect to
Worksite Employees in consideration of the payment of Consulting Fees:

                           (i) Design and communication of compensation,
incentive compensation and benefit programs;

                           (ii) Orientation of Worksite Employees who start
employment as new hires during the term of this Agreement;

                           (iii) Development of human resource policies and
procedures; and

                           (iv) Support of Subscriber's supervisory
representatives with respect to employee relations matters.

                  4.5 Outplacement Responsibilities. NovaCare shall be
responsible for the following function with respect to Worksite Employees in
consideration of the payment of Outplacement Fees:

                           (i) Assistance with resume preparation;

                           (ii) Inventorying of skills relevant to employment
searches;

                           (iii) Assistance with interviewing preparation.

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                  4.6 Recruiting Responsibilities. NovaCare shall be responsible
for the following functions with respect to Worksite Employees in consideration
of the payment of Recruiting Fees:

                           (i) Assist Subscriber in development of
specifications for open job requisitions identified by Subscriber;

                           (ii) Sourcing of candidates against the recruitment
profiles provided by job requisitions;

                           (iii) Conducting of preliminary interviews and
screens of candidates; and

                           (iv) Presentation to Subscriber of qualified
candidates for hiring identified through the sourcing, preliminary interviewing
and screening processes.

                  4.7 Additional Responsibilities. NovaCare may assume
additional responsibilities not covered by Sections 4.1-4.6 above. Any such
additional responsibilities shall be provided pursuant to a written addendum to
this Agreement, executed by both parties, setting forth the services to be
provided and the fee for such services.

         5.       Rights, Duties and Obligations of Subscriber.

                  5.1 Supervision of Employees. Subscriber will be responsible
for supervision and direction of Worksite Employees in carrying out the work of
Subscriber's business, and shall provide all instrumentalities (including
uniforms, tools, equipment and other supplies) necessary to the performance of
job functions.

                  5.2 Reports of Hours Worked. Subscriber shall maintain
accurate records of actual time worked, shall make accurate reports of time
worked by Worksite Employees to NovaCare in accordance with the requirements of
the Fair Labor Standards Act and any applicable similar state law and shall
verify the accuracy of such reports. Subscriber shall maintain the records
required to be kept under this Section 5.2 for seven (7) years.

                  5.3 Employment Decisions. Any common-law employee of
Subscriber shall be deemed a Worksite Employee hereunder. Subscriber shall
determine employment eligibility of all Worksite Employees. If a Worksite
Employee is required to possess or maintain a license, or to be supervised by a
supervisor who is required to possess or maintain a license, Subscriber shall be
responsible for verifying such licensure or providing such required supervision.
In taking any adverse action with respect to the pay, conditions of employment
or employment status of a Worksite Employee (an "Adverse Action"), Subscriber
shall comply with applicable law governing employment. Worksite Employees who
are supervisory employees shall act in that capacity in

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compliance with applicable law. Supervisors' actions alleged to be in violation
of law are outside the scope of their responsibility as NovaCare employees and
supervisory employees acting in violation of law shall be deemed to be acting
solely as agents of Subscriber.

                  5.4 Employee Benefit Plans. Subscriber shall not adopt,
establish, maintain, operate or contribute to any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, without the express written consent of NovaCare.

                  5.5 Financial Controls. Subscriber accepts sole responsibility
for accounting and other financial control policies (and fidelity bonding
requirements) applicable to Worksite Employees or their conduct.

                  5.6 Compliance With Law. Subscriber accepts sole
responsibility for compliance with the following provisions of law applicable to
Worksite Employees:

                           (i) the Occupational Safety and Health Act (OSHA) and
related or similar federal, state or local regulations and the employer's common
law duty to supervise the worksite and provide a safe working environment;

                           (ii) government contracting requirements under a)
Executive Order 11246, b) the Vocational Rehabilitation Act of 1973, c) the
Vietnam Era Veterans' Readjustment Assistance Act of 1974, d) the Walsh-Healy
Public Contracts Act, e) the Davis-Bacon Act, f) the Service Contract Act of
1965, and g) any and all similar, related, or like federal, state, or local
laws, regulations, ordinances, and statutes;

                           (iii) Worker Adjustment and Retraining Notification
Act ("WARN");

                           (iv) laws affecting assignment of and ownership of
intellectual property rights including, but not limited to, inventions, whether
patentable or not, and patents resulting therefrom, copyrights and trade
secrets;

                           (v) the Immigration Reform and Control Act of 1986,
except as otherwise provided in Section 6.1 (iv); and

                           (vi) the Fair Labor Standards Act, Title VII of the
Civil Rights Act of 1964, as amended, the Family and Medical Leave Act, the Age
Discrimination in Employment Act, as amended, the Americans With Disabilities
Act (including provisions thereunder relating to Subscriber's premises), and any
other federal, state, county or local laws, regulations, ordinances, and
statutes which govern the employer/employee relationship.

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                  5.7 Safety. Subscriber shall report all accidents in which
Worksite Employees are injured immediately (by telephone within one working day
of Subscriber's knowledge of an injury, and in writing by fax within forty-eight
(48) hours) to NovaCare or NovaCare's designee. Subscriber shall cooperate in
any safety inspection or investigation of a worksite injury conducted by or on
behalf of NovaCare. Subscriber shall reasonably cooperate with NovaCare in
returning injured Worksite Employees to work in available modified-duty
positions and in making reasonable accommodations under applicable disability
laws, subject to receipt of an appropriate medical release.

                           Where required by applicable state law, NovaCare
shall retain a right of direction and control over the management of safety,
risk and hazard control involving Worksite Employees. However, liability for
employee safety is a responsibility of Subscriber, who controls the worksites
and their business operations. Subscriber acknowledges that it is responsible
for maintaining a safe working environment, providing proper training in
compliance with federal or state law or regulation, and establishing and
maintaining such safety programs, safety policies, and safety committees as may
be required by law. NovaCare, NovaCare's workers' compensation and liability
insurance carriers or their assignees have the right to survey the Subscriber's
worksites to look for unsafe conditions or unsafe acts which may lead to
accidents. However, the retention of such right by NovaCare does not relieve
Subscriber of any obligations that it has pursuant to the federal Occupational
Safety and Health Act (OSHA) or any other federal, state or local law intended
to provide employees at Subscriber's worksites with a safe work environment.

                  5.8 COBRA. NovaCare shall be responsible for providing
continued health care coverage required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA Coverage") to each employee and
former employee (and their dependents) of the Subscriber who is eligible for
such COBRA Coverage on the effective date hereof. Subject to Section 7.1 and
Subscriber's reimbursement obligation (as set forth below), upon termination of
this Agreement, NovaCare shall provide COBRA Coverage to each Worksite Employee,
former Worksite Employee, their dependents and any individual entitled to COBRA
Coverage under the preceding sentence (collectively, the "COBRA Participants")
who are eligible for such coverage under any NovaCare "group health plan" (as
defined in Section 4980B(g)(2) of the Code) on the date of termination of this
Agreement or who become eligible for COBRA Coverage as a result of the
termination of this Agreement.

                  5.9. Provision of Information. Subscriber shall provide to
NovaCare such true and accurate information as NovaCare may request as necessary
to comply with requirements of law with respect to Subscriber's ownership and
organizational structure and compensation packages of its senior executives and
structure and operation of benefit plans offered to Worksite Employees by
Subscriber.

         6. Rights, Duties and Obligations of NovaCare.

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                  6.1 Compliance With Law. Provided that Subscriber has given to
NovaCare all information required hereunder, NovaCare accepts sole
responsibility for compliance with the following provisions of law applicable to
Worksite Employees:

                           (i) all rules and regulations governing the
reporting, collecting and payment of federal and state payroll taxes on wages
paid under this Agreement, including, but not limited to, a) federal income tax
withholding provisions of the Internal Revenue Code, b) state and/or local
income tax withholding provisions, if applicable, c) Federal Insurance
Contributions Act (FICA), d) Federal Unemployment Tax Act (FUTA), and e)
applicable state unemployment tax provisions;

                           (ii) except as provided below, applicable workers'
compensation laws including, but not limited to, a) procuring workers'
compensation insurance, b) completing and filing all required reports, and c)
administering, managing, and otherwise processing claims and related procedures
provided that Subscriber agrees to reimburse NovaCare for any monies found due,
whether by audit or otherwise as a result of any workers' compensation
classification information provided by Subscriber to NovaCare;

                           (iii) Internal Revenue Code Section 4980B, subject to
the provisions of Section 5.8;

                           (iv) Section 1324A(b) of the Immigration Reform and
Control Act of 1986, assuming that Subscriber has provided to NovaCare all
necessary and accurate documentation required by such law;

                           (v) the Consumer Credit Protection Act, Title III;
and

                           (vi) the Fair Labor Standards Act, 29
U.S.C.Section 201 et seq., based solely on information provided by Subscriber
pursuant to Section 5.2 hereof.

                  6.2      Delivery of Services.

                           6.2.1 Information Systems. NovaCare shall make
available to Subscriber the data and reports listed in Exhibit C (the "Operating
Information") through either hard copy or electronic information systems (the
"Systems").the NovaCare shall not change the Systems in a way that deprives
Subscriber of access to the Operating Information in the electronic format used
as of July 1, 1998 without first obtaining Subscriber's written approval.
Subscriber may, as a condition to granting approval of a change in Systems,
require that NovaCare be responsible for costs necessary to create, or that
NovaCare create, any interface or translation required to provide Subscriber
with access to Operating Information comparable to its access on the effective
date hereof. Subscriber hereby confirms its grant to NovaCare of a non-exclusive
license, effective for the term of this Agreement, to use the Systems only as
necessary to provide services to Subscriber under this Agreement. NovaCare shall
not obtain any ownership interest in

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the Systems pursuant to such license. Any changes to the Systems made by
NovaCare shall become the property of Subscriber and NovaCare shall execute at
its own cost such assignments and other documents as may be necessary or
appropriate for transferring and/or confirming ownership to and in Subscriber.

                           6.2.2 Organization. NovaCare shall consult with
Subscriber and shall consider Subscriber's recommendations before making any
material change in the size, structure, span of responsibility or location of
any organizational element providing service to Subscriber under this Agreement.

         7.       Effect of Termination.

                  7.1 COBRA. In the event of termination of this Agreement, the
Subscriber shall immediately provide coverage under a "group health plan" (as
defined in Section 4980B(g)(2) of the Code) to all Worksite Employees, former
Worksite Employees, and their dependents who were eligible for coverage under
any NovaCare group health plan immediately before such event. The Subscriber's
group health plan provided under the preceding sentence shall not contain any
exclusion or limitation with respect to any pre-existing condition applicable to
any Worksite Employee, former Worksite Employee or their dependents.

                  7.2 Accrued Pay. If this Agreement is terminated and if the
affected employees are entitled to the payment of any accrued bonus, vacation,
sick or personal leave, Subscriber shall be liable for the payment thereof and
will make such payments directly to NovaCare. If, however, Subscriber continues
to employ such affected employee(s) after termination of this Agreement, the
Subscriber shall be liable to the employee(s) for same and NovaCare shall have
no obligation therefor.

                  7.3 Survival. The indemnification, contribution and duty to
cooperate provisions of this Agreement shall survive the expiration of this
Agreement or other termination of this Agreement indefinitely.

                  7.4 Duration of Obligations. Upon the termination of this
Agreement for any reason, the parties shall continue to have the following
obligations through and including the termination date:

                           (i) NovaCare shall have the obligation for wages and
benefits payable to the employees through and including the termination date. If
for any reason (whether or not required by applicable law) NovaCare makes any
payment to any of the employees after this Agreement has been terminated,
NovaCare shall be entitled to full reimbursement for such expenditures;

                           (ii) Except as otherwise provided herein, all
obligations of NovaCare under this Agreement to maintain workers' compensation
insurance coverage and health care coverage on behalf of the Worksite Employees
shall cease, effective as of



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<PAGE>   15
the termination date. All such employees shall be immediately informed by
Subscriber that they are no longer covered by NovaCare's workers' compensation
policy. Subscriber shall immediately assume all federal, state and local
obligations of an employer to the employees which are not in conflict with state
or federal law, and shall immediately assume full responsibility for providing
workers' compensation coverage. NovaCare shall immediately be released from such
obligations as are permitted by law, except that NovaCare shall remain
responsible for the cost of claims for workers' compensation incurred prior to
the date of termination. It is the intent of the parties that, to the extent
allowed by law, they be placed in their respective positions immediately before
their entry into this Agreement in the event of a termination or Subscriber's
failure to pay NovaCare; and

                           (iii) Subscriber shall have the obligation to pay all
fees payable in accordance with the provisions of this Agreement, which are
attributable to the period ending on the termination date.

         8.       Indemnification.

                  8.1 Indemnification by Subscriber. Subscriber agrees to
indemnify, hold harmless, protect and defend NovaCare, its subsidiaries and
affiliates and each of their officers, directors, agents, attorneys and
employees from any claims, expenses (including court costs and attorneys' fees),
damages and liabilities (including severance payments to Worksite Employees)
(collectively hereinafter referred to as "Damages"), from claims, actions,
suits, judgments or settlements arising out of negligence, malpractice, tortious
conduct, violation of any statute, law, or regulation, criminal or dishonest
activity by any Worksite Employee, product liability related to products
manufactured or distributed by Subscriber, Subscriber's breach of any of its
obligations or warranties under this Agreement, or any action by Subscriber or
its agents which may result in a violation of any law or regulation, including,
but not limited to, Damages allegedly arising out of an Adverse Action or out of
worksite conditions or actions of any kind. If such indemnification is for any
reason not available or insufficient to hold NovaCare harmless, Subscriber
agrees to contribute to the losses involved in such proportion as is appropriate
to reflect the relative benefits received (or anticipated to be received) by
Subscriber and by NovaCare with respect to the matters contemplated by this
Agreement or, if such allocation is judicially determined to be unavailable, in
such proportion as is appropriate to reflect not only such relative benefits,
but also other equitable considerations such as the relative fault of
Subscriber, on the one hand, and of NovaCare, on the other hand; provided,
however, that Subscriber shall be responsible for all losses which in the
aggregate are in excess of the amount of all fees actually received by NovaCare
from Subscriber in connection with the services to be provided hereunder.
NovaCare shall give Subscriber prompt written notice of any claim for which
indemnification will be sought hereunder, shall cooperate in the investigation
and defense of any such claim and shall not settle or compromise any such claim
without the approval of Subscriber unless Subscriber fails to provide evidence
of ability to pay a judgment in excess of the proposed settlement amount.

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<PAGE>   16
                  8.2 Indemnification by NovaCare. NovaCare assumes
responsibility for the payment of wages to the Worksite Employees without regard
to payments by Subscriber to NovaCare, although in doing so NovaCare does not
waive or limit any claim against Subscriber. NovaCare agrees to indemnify, hold
harmless, protect and defend Subscriber, its subsidiaries and affiliates and
each of their officers, directors, agents, attorneys and employees from and
against any claims, expenses (including attorneys' fees and court costs),
damages and liabilities from claims, actions, suits, judgments or settlements
arising out of NovaCare's breach of its obligations or warranties under this
Agreement or any action by NovaCare or its agents or employees (other than
Worksite Employees) which may result in a violation of any law or regulation,
except violations resulting from conduct of Worksite Employees or worksite
conditions. Subscriber shall give NovaCare prompt written notice of any claim
for which indemnification will be sought hereunder, and shall cooperate in the
investigation and defense of any such claim and shall not settle or compromise
any such claim without the approval of NovaCare. Where Subscriber has followed
or complied with a request or recommendation of NovaCare or otherwise properly
relied on information supplied by NovaCare, it shall be relieved of
responsibility for back pay and damages for such actions (unless Subscriber has
failed to comply with its obligations hereunder to provide accurate information
to NovaCare) and NovaCare shall indemnify and hold Subscriber harmless from and
against any and all liabilities arising therefrom.

                  8.3 Subrogation. Each party hereby waives any claim in its
favor against the other party by way of subrogation or indemnification which may
arise during the term of this Agreement for any and all loss of or damage to any
of its property, or for bodily injury or death, which loss, damage, or bodily
injury or death is covered by insurance to the extent that such loss or damage
is recovered under such policies of insurance as required herein. The
subrogation and indemnification concept set forth in this provision is intended
to apply only to insurance matters, and nothing in this provision is intended to
alter the indemnification rights set forth elsewhere in this Agreement. Each
party shall assure that its insurance policies contain provisions authorizing
waiver of subrogation consistent with this Section 7.3.

         9.       Representations and Warranties.

                  9.1 Fair Labor Standards Act. Subscriber agrees not to
withhold a payment to NovaCare absent NovaCare's express permission, or in any
manner, or by any device, act in violation of, cause, or seek to cause a
violation of any applicable federal, state or local law, ordinance, or
regulation pertaining to the terms, conditions, and services of this Agreement.
Subscriber further warrants that it shall not make any taxable payment of any
kind, except profit-sharing or pension plan distributions pursuant to the terms
of a qualified plan, to any employee covered by this Agreement, and that any
such payment shall be a breach of this Agreement, and at the election of
NovaCare, grounds for immediate termination of this Agreement.

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<PAGE>   17
                  9.2 Employment Matters. Subscriber warrants that there are no
collective bargaining agreements binding upon Subscriber or affecting Worksite
Employees, and that there are no pending governmental investigations or any
lawsuit material in nature related to Worksite Employees, the working conditions
of the Worksite Employees, the products or services produced or provided by
Worksite Employees or any other matters affecting the performance of NovaCare
under this Agreement except as otherwise disclosed to NovaCare. Subscriber
warrants that all hazardous materials, if any, on its premises are maintained,
stored and disposed of in accordance with applicable law. Subscriber agrees to
provide any and all protective safety equipment required for safe performance of
job duties or required under local, state or federal law.

         10. Workers' Compensation. NovaCare shall provide workers' compensation
insurance for Worksite Employees in compliance with applicable law. Workers
performing services for Subscriber not covered by this Agreement and not on
NovaCare's payroll shall not be covered by NovaCare's workers' compensation
insurance. NovaCare will not provide workers' compensation coverage to any
employee for whom Subscriber is not reporting hours of payroll. Subscriber
further agrees to require any independent contractor it utilizes to provide
evidence of workers' compensation coverage before the independent contractor
commences work at the worksite. Subscriber acknowledges that NovaCare's workers'
compensation carrier or NovaCare is entitled to periodically audit the employee
classification lists for each Subscriber location to make sure that employees
are classified properly for workers' compensation purposes. In the event that
during such an audit, or at any other time, NovaCare finds that Worksite
Employees have been misclassified and such misclassification resulted from
information supplied to NovaCare by Subscriber, Subscriber will promptly
reimburse NovaCare, upon invoice, for charges which otherwise would have been
payable by Subscriber had such employee been properly classified. NovaCare
retains the responsibility for the management of workers' compensation claims,
claim filings and related procedures. Subscriber agrees to cooperate with
NovaCare in that regard, including in regard to the notification of injuries
required by this Agreement or by law.

         11. Insurance. During the Initial Term of this Agreement and any
Renewal Term, Subscriber shall obtain and maintain the following types of
insurance:

                  11.1 Automobile. Subscriber shall obtain and maintain
automobile insurance for all owned, non-owned, and hired vehicles used in
connection with the work performed on its premises or in connection with its
business, and will cause its insurance carrier to issue a Certificate of
Insurance evidencing same to NovaCare, naming NovaCare as an additional named
insured and allowing not less than thirty (30) days' notice of cancellation or
material change. The policy shall insure against liability for bodily injury and
property damage, with a minimum combined single limit of Five Hundred Thousand
Dollars ($500,000) and Uninsured Motorist or PIP equivalent coverage of at least
the minimum limits required by the State where a "no fault" law shall apply.

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<PAGE>   18
                  11.2 General Liability. Subscriber shall obtain and maintain
general liability insurance, and cause its insurance carrier to issue a
Certificate of Insurance evidencing same to NovaCare, naming NovaCare as an
additional named insured and allowing not less than thirty (30) days' notice of
cancellation or material change. The minimum requirement shall be One Million
Dollars ($1,000,000) combined single limit, Three Million Dollars ($3,000,000)
aggregate limit, including, but not limited to, where applicable, premises,
operations, products, completed operations, contract and broad form property
damage, independent contractors, personal injury, host liquor, and full liquor
liability. If Subscriber renders professional services, it shall obtain and
maintain throughout the term, and any succeeding terms of this Agreement,
professional liability coverage as applicable, and will cause its insurance
carrier to issue a Certificate of Insurance evidencing same to NovaCare allowing
not less than thirty (30) days' notice of cancellation or material change.
Unless otherwise agreed to, such policy shall have a combined single limit of
not less than One Million Dollars ($1,000,000), Three Million Dollars
($3,000,000) aggregate limit.

                           Subscriber agrees that NovaCare shall not provide any
general liability insurance coverage for products liability, completed
operations or professional liability for any Worksite Employee or the
Subscriber. Subscriber shall further agree that NovaCare shall have no
obligation to provide any form of automobile insurance coverage on behalf of any
Worksite Employee or for Subscriber.

         12.      Miscellaneous.

                  12.1 Third Party Rights. This Agreement is intended solely for
the mutual benefit of the parties hereto and does not create any rights of any
kind in a third party. Each party hereto reserves the right and from time to
time to assign its rights, duties and obligations hereunder to any affiliate,
provided that the assigning party shall guarantee the performance and liability
of any such affiliate. Any such assignment may be limited to a portion of such
party's obligations arising in one or more jurisdictions.

                  12.1.2 Integration. This Agreement constitutes the entire
agreement between the parties with regard to the subject matter hereof and
supersedes any and all agreements (including the Initial Agreement), whether
oral or written, between the parties with respect to its subject matter.

                  12.3 Waiver. Failure by either party at any time to require
performance by the other party or to claim a breach of any provision of this
Agreement will not be construed as a waiver of any subsequent breach nor affect
the effectiveness of this Agreement, nor any part thereof, nor prejudice either
party as regards to any subsequent action.

                  12.1.4 Governing Law. This Agreement shall be subject to the
laws of the Commonwealth of Pennsylvania.

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<PAGE>   19
                  12.5     Dispute Resolution.

                           12.5.1 Arbitration. The parties shall attempt
amicably to resolve disagreements by negotiating with each other. In the event
that the matter is not amicably settled through negotiation, any controversy,
dispute or disagreement arising out of or relating to this Agreement (a
"Controversy") shall be resolved exclusively by binding arbitration, which shall
be conducted by a single arbitrator in the Philadelphia, PA area, in accordance
with the J-A-M-S/ENDISPUTE Streamlined (in the case of a dispute within the
scope of the Streamlined Rules and Procedures) or Comprehensive Arbitration
Rules and Procedures (the "Rules"). The parties agree that notwithstanding
anything to the contrary contained in the Rules, the arbitrator shall not award
consequential, exemplary, incidental, punitive or special damages.

                           12.5.2 Procedure. It is agreed that if any party
shall desire relief of any nature whatsoever from any other party as a result of
any Controversy, such party will initiate such arbitration proceedings within a
reasonable time, but in no event more than twelve (12) months after the facts
underlying said Controversy first arise or become known to the party seeking
relief (whichever is later). The failure of such party to institute such
proceedings within said period shall be deemed a full waiver of any claim for
such relief. The parties shall bear equally all costs of said arbitration (other
than their own attorney's fees and costs). The parties agree that the decision
and award of the Arbitrator shall be final and conclusive upon the parties, in
lieu of all other legal, equitable (except as provided in 12.5.3. below) or
judicial proceedings between them, and that no appeal or judicial review of the
award or decision of the Arbitrator shall be taken, but that such award or
decision may be entered as a judgment and enforced in any court having
jurisdiction over the party against whom enforcement is sought.

                           12.5.3. Equitable Relief. The parties recognize that
irreparable injury may result from a breach of this Agreement and that money
damages may be inadequate to fully remedy the injury. Therefore, either party
may, in any such instance, seek and obtain from a court of competent
jurisdiction one or more preliminary or permanent orders designed to maintain
the status quo ante pending arbitration by (i) restraining and enjoining any act
that would constitute a breach or (ii) compelling the performance of any
obligation that, if not performed, would constitute a breach. Any relief awarded
under this paragraph shall be dissolved upon issuance of the Arbitrator's
decision and order.

                  12.6 Subscriber Intellectual Property Rights. Subscriber shall
own any and all intellectual property rights incident to any and all process,
products, inventions and discoveries that are created or invented by a Worksite
Employee and who was directed by Subscriber to create or develop such process,
product, discovery or invention. Subscriber shall bear any and all costs
associated with any copyrights, trademarks or patents that Subscriber chooses to
obtain to protect Subscriber's intellectual property rights.


                                       19
<PAGE>   20
                  12.7 Duty to Cooperate. In the event that an employee or a
government agency or entity files any type of claim, lawsuit or charge against
NovaCare, Subscriber or both, alleging a violation of any law or failure to do
something which was otherwise required by law, Subscriber and NovaCare mutually
agree to cooperate with each other in the defense of any such claim, lawsuit or
charge. NovaCare and Subscriber will make available to each other upon request
any and all documents that either party has in its possession which relate to
any such claim, lawsuit or charge. However, neither party shall have the duty to
cooperate with the other if the dispute is between the parties themselves, nor
shall this provision preclude the raising of cross claims or third party claims
between Subscriber and NovaCare.

                  12.8 Severability. Should any term, warranty, covenant,
condition, or provision of this Agreement be held to be invalid or
unenforceable, the balance of this Agreement shall remain in force and shall
stand as if the unenforceable part did not exist. The captions in this Agreement
are provided for convenience only and are not part of the terms and conditions
of this Agreement.

                  12.9 Modification and Implementation. Any modifications to
this Agreement must be in writing and executed by NovaCare and Subscriber to be
enforceable.

                  12.10 No Partnership. Nothing set forth herein shall be deemed
to create a partnership or joint venture between Subscriber and NovaCare and no
fiduciary duty shall arise from the relationship created herein.

                  12.11 Notification of Termination to Employees. NovaCare will
notify all Worksite Employees covered by this Agreement of that status after
Subscriber provides the names of such persons to NovaCare. NovaCare will also
provide each Worksite Employee with any required notice pursuant to applicable
state law or such person's status under this Agreement and shall obtain from
such person any required acknowledgment of such status. If for any reason this
Agreement is terminated, NovaCare will notify all Worksite Employees of whom it
is aware of the termination of this Agreement and Subscriber shall also notify
all Worksite Employees of the termination of this Agreement and shall inform
them that they are no longer covered by NovaCare's benefits or workers'
compensation policy.

                  12.12 Counterparts. This Agreement may be signed in one or
more counterparts, each of which when executed shall be deemed an original and
together shall constitute one and the same instrument.


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<PAGE>   21
                  12.13 Intention of the Parties. The intention of the parties
with respect to allocation between them of rights, duties and obligations is as
set forth in this Agreement. To the extent that the law of any state requires a
different form of agreement to effect the intention of the parties, the parties
agree to negotiate in good faith and to execute separate agreements applicable
to such state.

NOVACARE, INC.                            NOVACARE EMPLOYEE
for itself and as Agent for its           SERVICES, INC.
Subsidiaries listed on Exhibit A.

/s/ Timothy E. Foster                     /s/ Thomas D. Schubert    6/30/98
--------------------------------          ---------------------------------
Signature                  Date           Signature                   Date

Timothy E. Foster                         Thomas D. Schubert
--------------------------------          ---------------------------------
Printed or Typed Name                     Printed or Typed Name

Chief Executive Officer                   SVP & CFO
--------------------------------          ---------------------------------
Title                                     Title



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