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                                                                     Exhibit 10


                              EMPLOYMENT AGREEMENT

     AGREEMENT made as of December 8, 1998 by and between NovaCare Employee
Services, Inc., a Delaware corporation (the "Company") and Andrew W. Stith,
(the "Executive").

                                    RECITALS

     The Company wishes to retain the services of the Executive in the capacity
of Senior Vice President, Marketing and Sales, and the Executive wishes to serve
in the employ of the Company in that capacity, upon the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.   Employment, Term, Automatic Extension.

          1.1 Employment. The Company agrees to employ the Executive, and the
Executive agrees to serve in the employ of the Company, for the term set forth
in Section 1.2 in the position and with the responsibilities, duties and
authority set forth in Section 2 and on the other terms and conditions set forth
in this Agreement.

          1.2 Term. The term of the Executive's employment under this Agreement
shall be the period commencing on December 8, 1998 and ending on December 7,
2000, unless sooner terminated in accordance with this Agreement.

          1.3 Automatic Extension. As of December 7, 1999, and as of each
subsequent December 7 (each an "Automatic Renewal Date"), unless either party
shall have given a notice of non-extension prior to such Automatic Renewal
Date, the term of this Agreement shall extended automatically for a period of
one year to the anniversary of the expiration date of the then-current term of
this Agreement. Once a notice of non-extension shall have been given by either
party, there shall be no further automatic extension of this Agreement.

     2.   Position Duties.

          Executive shall serve in the positions of Senior Vice President,
Marketing and Sales of the Company. The Executive shall perform, faithfully and
diligently, such duties, and shall have such responsibilities appropriate to
said positions, as shall be assigned to him from time to time by the Chief
Executive Officer and the Board of Directors of the Company. The Executive
shall report to the Chief Executive Officer of the Company. The Executive shall
devote his full business time and attention to the performance of his duties
and responsibilities hereunder.

     3.   Compensation.

          3.1 Salary. In consideration of the performance by the Executive of
the services set forth in Section 2 and the Executive's observance of the other
covenants set forth herein, the Company shall pay the Executive, and the
Executive shall accept, an annualized base salary of $180,000, payable on a
bi-weekly schedule in accordance with the Company's regular payroll practices.
The Executive shall be entitled to such increases in base salary during the
term hereof as shall be determined by the Chief Executive Officer of the
Company and approved by the Compensation Committee of the Board of Directors of
the Company in their sole discretion.

          3.2 Bonus. In addition to the base salary provided for in 
Section 3.1, the Executive shall be eligible for an incentive bonus target of
35% of base salary with respect to each fiscal year of the Company ending
during the term of this Agreement, payable in accordance with the terms of the
Company's Executive Incentive Compensation Plan based on attainment of stated
objectives.
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          3.3 Stock Options.

          The Executive shall be eligible to receive options to purchase the
Company's common stock, $.01 par value, and the common stock of subsidiaries of
the Company (such options with respect to the stock of the Company and its
subsidiaries, together with such options heretofore granted to the Executive,
being hereinafter referred to as the "Options") in accordance with the
Company's policies and procedures relating to the grant of options, subject to
the authority of the Board of Directors of the Company and the board of
directors of any subsidiary to make such awards in their sole discretion. The
Options shall have such terms and conditions as the cognizant board of
directors shall determine, provided that all Options shall become exercisable in
full upon a Change in Control of the Company (as defined in Section 6.6),
whether or not the employment of the Executive shall be terminated, and, in
such case, shall remain exercisable for the balance of their stated term.

          3.4 Supplemental Benefits Plan. The Executive shall be entitled to
participate in the Company's Supplemental Benefits Plan (the "Plan") as a Level
1 Executive with full vesting in the Company's match under the Plan after five
(5) years of participation in the Plan.

     4.   Expense Reimbursement.

          During the term of this Agreement, consistent with the Company's
policies and procedures as in effect from time to time, the Company shall
reimburse the Executive for all reasonable and necessary out-of-pocket expenses
incurred by the Executive in connection with the performance of the Executive's
duties and responsibilities hereunder, upon the presentation of proper accounts 
therefor in accordance with the Company's policies.

     5.   Other Benefits.

          During the term of this Agreement, the Executive shall be entitled to
receive such benefits as are from time to time made available to other
similarly situated Executives of the Company on the same terms as are available
to such similarly situated Executives in accordance with the provisions of the
Company's benefit plans in effect from time to time, it being understood that
the Executive shall be required to make the same contributions and payments in
order to receive any of such benefits as may be required of such similarly
situated Executives.

     6.   Termination of Employment.

          6.1 Death. In the event of the death of the Executive during the term
of this Agreement the Company shall pay to the estate or other legal
representative of the Executive (a) the base salary provided for in Section 3.1
accrued to the Executive's date of death and not previously paid and (b) any
bonus which shall be or become payable pursuant to Section 3.2 Rights and
benefits of the estate or other legal representative or transferee of the
Executive (a) with respect to the Options shall be determined in accordance
with Section 3.3 and (b) under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs. Neither the estate or other legal representative of the Executive nor
the Company shall have any further rights or obligations under this Agreement,
except as provided in Section 15.

          6.2 Disability. If the Executive becomes incapacitated by reason of
sickness, accident or other physical or mental disability and is for a period
of six (6) consecutive months unable to perform the essential functions of his
position hereunder, the employment of the Executive may be terminated by the
Company upon thirty (30) days prior to written notice to the Executive.
Promptly after such termination, the Company shall (a) pay to the Executive the
base salary provided for in Section 3.1 accrued to the date of such termination
and not previously paid and (b) pay to the Executive any bonus which shall be or
become payable under Sections 3.2. Rights and benefits of the Executive or his
transferee (a) with respect to the Options shall be determined in accordance
with Section 3.3 and (b) under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs. Neither the Executive nor the Company shall have any further rights
or obligations under this Agreement, except as provided in Sections 7, 8, 9 and
15.
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          6.3  Due Cause. The employment of the Executive may be terminated by
the Company at any time during the term of this Agreement for Due Cause
(defined below). In the event of such termination, the Company shall pay to the
Executive the base salary provided for in Section 3.1 accrued to the date of
such termination and not previously paid to the Executive. The Company shall
also pay to the Executive any bonus which shall be or become payable to the
Executive under Section 3.2 with respect to any fiscal year of the Company
ended prior to the date of such termination. For purposes hereof, "Due Cause"
means (a) a material breach of any of the Executive's obligations hereunder (it
being understood that any breach of the provisions of Sections 2, 7 or 8 hereof
shall be considered material); (b) willful failure to carry out his duties
hereunder, or gross misconduct; or (c) that the Executive has been charged with
any felony or with any lesser crime or offense involving moral turpitude, or
has been banned from participation in the Medicare/Medicaid program. Before
terminating Executive for Due Cause, Company shall notify Executive of the
grounds for such termination and, if such grounds are susceptible to cure,
shall provide Executive Thirty (30) days during which to cure any such grounds.
If Executive shall fail during such period to cure the grounds, Executive's
termination shall be effective as of the date of the notice provided hereunder.
Rights and benefits of the Executive or his transferee (a) with respect to the
Options shall be determined in accordance with Section 3.3 and (b) under the
benefit plans and programs of the Company shall be determined in accordance
with due provisions of such plans and programs. After the satisfaction of any
claim of the Company against the Executive arising as a result of such Due
Cause, neither the Executive nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Sections 7, 8 and 9.

          6.4  Termination by the Company Without Cause. The Company may
terminate the Executive's employment prior to the expiration of the term of this
Agreement for whatever reason it deems appropriate; provided, however, that in
the event that such termination is not pursuant to Sections 6.1, 6.2 or 6.3, 
then:

               (a)  the Company shall continue to pay to the Executive (or his
          estate or other legal representative in the case of the death of the
          Executive subsequent to such termination), in the same periodic
          installments as his base salary was paid, the base salary provided for
          in Section 3.1 (at the annual rate then in effect), until the first to
          occur of (a) the then scheduled expiration of the term hereof or (b)
          the expiration of a period of one (1) year following such termination
          (the applicable period hereinafter being referred to as the "Severance
          Period"); provided further, that such periodic installment payments by
          the Company shall cease as of the date Executive obtains alternative
          employment which does not conflict with Section 8.1(a) of this
          Agreement, except that, if such employment is at a rate of total
          annual compensation less than that required hereunder, Company shall
          continue to pay the difference between the compensation payable under
          this section 6.4(i) and the compensation Executive actually receives
          in his non-conflicting position for the remainder of the Severance
          Period; and

               (b)  the Executive shall be eligible for a pro rata bonus for the
          number of months actually worked, to be paid out concurrent with the
          Company's annual bonus process, to the extent such bonus is achieved
          based on the Company's established performance factor process.

          6.5  Rights to Benefits. Upon termination of employment under any
provision contained in this Section 6, except section 6.4, rights and benefits
of the Executive, his estate or other legal representative under the Executive
benefit plans and programs of the Company, if any, will be determined in
accordance with the terms and provisions of such plans and programs. Neither
the Executive nor the Company shall have any further rights or obligations
under this Agreement, except as provided in Sections 7, 8 and 9.

          6.6  Termination of Employment Following a Change in Control.
Anything herein to the contrary notwithstanding, if the Executive during the
one (1) year period following a Change in Control is terminated or subjected to
a material change in the conditions of employment, including demotion, salary
reduction, reduction in job responsibilities, or change in job location of more
than 50 miles, then such termination or material change in conditions of
employment shall constitute a termination of the Executive's employment by the
Company pursuant to Section 6.4 (Termination by the Company Without Cause) and
the severance amount referred to in paragraph (i) of Section 6.4 and a bonus
equal to the lesser of the current fiscal year's target bonus


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or the prior fiscal year's actual bonus shall be paid to the Executive in a
lump sum on the date of termination. For purposes of this Agreement, a Change
in Control of the Company shall be deemed to have occurred if:

               (i)  a " person" (meaning an individual, a partnership, or other
          group or association as defined in Sections 13(d) and 14(d) of the
          Securities Exchange Act of 1934, other than the Executive or a group
          including the Executive), either (x) acquires twenty percent (20%) or
          more of the combined voting power of the outstanding securities of the
          Company having a right to vote in elections of directors and such
          acquisition shall not have been approved within sixty (60) days
          following such acquisition by a majority of the Continuing Directors
          (as hereinafter defined) then in office or (y) acquires fifty percent
          (50%) or more of the combined voting power of the outstanding
          securities of the Company having a right to vote in elections of
          directors; or

               (ii)  Continuing Directors shall for any reason cease to
          constitute a majority of the Board of Directors of the Company; or

               (iii)  all or substantially all of the business and/or assets of
          the Company are disposed of by the Company to a party or parties other
          than a subsidiary or other affiliate of the Company, pursuant to a
          partial or complete liquidation of the Company, sale of assets
          (including stock of a subsidiary of the Company) or otherwise.

     For purposes of this Agreement, the term "Continuing Director" shall mean
a member of the Board of Directors of the Company who either was a member of
the Board of Directors on the date hereof or who subsequently became a Director
and whose election, or nomination for election, was approved by a vote of at
least two-thirds of the Continuing Directors then in office.

     7.   Confidential Information.

          7.1  (a)  The Executive shall, during the Executive's employment with
the Company and at all times thereafter, treat all confidential material (as
hereinafter defined) of the Company or any other member of the Company Group
(as hereinafter defined) confidentially. The Executive shall not, without the
prior written consent of the Chairman of the Company, disclose such
confidential material, directly or indirectly, to any party, who at the time of
such disclosure is not an employee or agent of any member of the Company Group,
or remove from the premises of the Company or any other member of the Company
Group any notes or records relating thereto, copies or facsimiles thereof
(whether made by electronic, electrical, magnetic, optical, laser, acoustic or
other means), or any other property of any member of the Company Group. The
Executive agrees that all confidential material, together with all notes and
records of the Executive relating thereto, and all copies or facsimiles thereof
in the possession of the Executive (whether made by the foregoing or other
means), are the exclusive property of the Company Group. The Executive shall
not in any manner use any confidential material of the Company Group, or any
other property of any  member of the Company Group, outside of the scope of the
Executive's duties and responsibilities under this Agreement or in any way that
is detrimental to any member of the Company Group.

               (b)  For the purposes hereof, the term "confidential material"
means all information in any way concerning the activities, business or affairs
of any member of the Company Group or any of the customers or clients of any
member of the Company Group, including, without limitation, information
concerning trade secrets, together with all sales and financial information
concerning any member of the Company Group and any and all information
concerning projects in research and development or marketing plans for any
products or projects of the Company Group, and all information in any way
concerning the activities, business or affairs of any of such customers or
clients, which is furnished to the Executive by any member of the Company
Group or any of its agents, customers or clients, or otherwise acquired by the
Executive in the course of the Executive's employment with the Company;
provided, however, that the term "confidential material" shall not include
information which (i) becomes generally available to the public other than as a
result of a disclosure by the Executive, (ii) was available to the Executive on
a non-confidential basis prior to his employment with any member of the Company
Group or (iii) becomes available to the Executive on a non-confidential basis
from a source other than any member of the Company Group or any of its agents,
customers or clients, provided that 


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such source is not bound by a confidentiality agreement with any member of 
the Company Group or any of such agents, customers or clients.

               (c)  For purposes hereof, the "Company Group" means,
collectively, the Company and its subsidiaries.

          7.2  Promptly upon the request of the Company, the Executive shall
deliver to the Company all confidential material in tangible form relating to
any member of the Company Group in the possession of the Executive, without
retaining a copy thereof, unless, in the opinion of counsel for the Company,
either returning such confidential material or failing to retain a copy thereof
would violate any applicable federal, state, local or foreign law, in which
event such confidential material shall be returned without retaining any copies
thereof as soon as practicable after such counsel advises that the same may be
lawfully done.

          7.3  If Executive is required, by deposition, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process, to disclose any confidential material relating to any member
of the Company Group, the Executive shall provide the Company with prompt
notice thereof so that the Company may seek an appropriate protective order
and/or waive compliance by the Executive with the provisions hereof; provided,
however, that if in the absence of a protective order or the receipt of such a
waiver, the Executive is, in the opinion of counsel for the Company, compelled
to disclose confidential material not otherwise disclosable hereunder to any
legislative, judicial or regulatory body, agency or authority, or else be
exposed to liability for contempt, fine or penalty or to other censure, such
confidential material may be so disclosed.

     8.   Non-Competition.

          8.1  The Executive acknowledges that the services to be rendered by
the Executive to the Company are of a special and unique character. The
Executive agrees that, in consideration of (a) his employment hereunder, (b)
the Company's agreement to pay severance hereunder in the event of termination
pursuant to Section 6.4 hereof and (c) the Company's agreement to vest matching
contributions in the Plan after five (5) years of participation in the Plan by
the Executive pursuant to Section 3.4 hereof, Executive shall not, (aa) prior
to one year following the date of termination of the Executive's employment by
the Company or any other member of the Company Group (i) engage, whether as
principal, agent, investor, distributor, representative, stockholder (other
than as the holder of not more than five percent (5%) of the stock or equity of
any corporation the capital stock of which is publicly traded), employee,
consultant, volunteer or otherwise, with or without pay, in any activity or
business venture, anywhere within the United States, which is competitive with
the business of the Company Group on the date of termination, (ii) solicit or
entice or endeavor to solicit or entice away from any member of the Company
Group any person who was a director, officer, employee, agent or consultant of
such member of the Company Group, either on such Executive's own account or for
any person, firm, corporation or other organization, whether or not such person
would commit any breach of such person's contract of employment by reason of
leaving the service of such member of the Company Group, (iii) solicit or
entice or endeavor to solicit or entice away any of the clients or customers of
any member of the Company Group, either on such Executive's own account or for
any other person, firm, corporation or organization, or (iv) employ any person
who was a director, officer or employee of any member of the Company Group or
any person who is or may be likely to be in possession of any confidential
information or trade secrets relating to the business of any member of the
Company Group, or (bb) at any time, take any action or make any statement the
effect of which would be, directly or indirectly, to impair the good will of
any member of the Company Group or the business reputation or good name of any
member of the Company Group, or be otherwise detrimental to the Company,
including any action or statement intended, directly or indirectly, to benefit
a competitor of any member of the Company Group.

          8.2  The parties hereto agree that if, in any proceeding, the court
or other authority shall refuse to enforce the covenants herein set forth
because such covenants cover too extensive a geographic area or too long a
period of time, any such covenants shall be deemed appropriately amended and
modified in keeping with the intention of the parties to the maximum extent
permitted by law.


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          8.3  The Executive expressly acknowledges and agrees that the 
covenants and agreements set forth in this Section 8 are reasonable in all
respects, and necessary in order to protect, maintain and preserve the value
and goodwill of the businesses of the Company Group, as well as the proprietary
and other legitimate business interests of the members of the Company Group.
The Executive acknowledges and agrees that the covenants and agreements of the
Executive set forth in this Section 8 are a material reason for the payment of
the compensation and benefits provided for in this Agreement.

     9.   Equitable Relief.  In the event of a breach or threatened breach by
the Executive of any of the provisions of Section 7 or 8 of this Agreement, the
Executive hereby consents and agrees that the Company shall be entitled to
pre-judgment injunctive relief or similar equitable relief, designed to
maintain the status quo and pending arbitration under Section 19 of this
Agreement, by restraining the Executive from committing or continuing any such
breach or threatened breach or granting specific performance of any act
required to be performed by the Executive under any of such provisions, without
the necessity of showing any actual damage or that only damages would not
afford an adequate remedy and without the necessity of posting any bond or
other security. The parties hereby consent to the jurisdiction of the federal
courts located in the Eastern District of Pennsylvania and the state courts
operating within the geographical area included in such District for any
proceedings under this Section 9.

     10.  Successors and Assigns:

          10.1 Assignment by the Company. The Company may assign this Agreement
to any affiliate of the Company.

          10.2 Assignment by the Executive. The Executive may not assign this
Agreement or any part thereof without the prior written consent of the Chairman
of the Company, and any attempted or purported assignment in the absence of
such consent shall be null and void.

     11.  Governing Law. This Agreement shall be deemed a contract made under,
and for all purposes shall be construed in accordance with, the laws of the
Commonwealth of Pennsylvania applicable to contracts to be performed entirely
within such Commonwealth.

     12.  Entire Agreement. This Agreement contains all the understandings and
representations between the parties hereto pertaining to the subject matter
hereof and supersede all undertakings and agreements, whether oral or in
writing, previously entered into by them with respect thereto.

     13.  Modification and Amendment Waiver. The provisions of this Agreement
may be modified, amended or waived, but only upon the written consent of the
party against whom enforcement of such modification, amendment or waiver is
sought and then such modification, amendment or waiver shall be effective only
to the extent set forth in such writing. No delay or failure on the part of any
party hereto in exercising any right, power or remedy hereunder shall effect or
operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy.

     14.  Notices. All notices, requests or instructions hereunder shall be in
writing and delivered personally, sent by telecopier or sent by registered or
certified mail, postage prepaid, as follows:

          If to the Executive:

               Andrew W. Stith
               546 Hilaire Road
               St. Davids, Pa. 19087
               Telephone: 941-388-1454



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          If to the Company:

               NovaCare Employee Services, Inc.
               2621 Van Buren Avenue
               Norristown, Pennsylvania 19403
               Attention: Chief Executive Officer
               Telephone:  (610) 650-4700
               Telecopy:   (610) 650-4708

          With a copy to:

               NovaCare, Inc.
               1016 W. Ninth Avenue
               King of Prussia, Pennsylvania 19406
               Attention:  General Counsel
               Telephone:  (610) 922-7404
               Telecopy:   (610) 922-3396

Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and two business days after the date of
mailing, if mailed.

     15.  Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

     16.  Expenses. Each of the parties hereto shall bear his or its own costs
and expenses, including attorneys' fees and disbursements, incurred in
connection with this Agreement and the transactions contemplated hereby.

     17.  Titles. Titles of the sections of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.

     18.  Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

     19.  Arbitration. The parties shall attempt amicably to resolve
disagreements and disputes hereunder by negotiation. If the matter is not
amicably resolved through negotiation, within thirty (30) days after written
notice from either party, any controversy, dispute or disagreement arising out
of or relating to this Agreement, or the breach thereof, shall be subject to
exclusive, final and binding arbitration, which shall be conducted in
Philadelphia, PA, in accordance with the J.A.M.S./Endispute rules for
employment arbitration. Any party may bring a court action to compel
arbitration under this Agreement or to enforce an arbitration award.



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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.


COMPANY:                                /s/ ANDREW W. STITH
                                        ----------------------------------------
                                            Andrew W. Stith


                                        By /s/ LOREN J. HULBER
                                        ----------------------------------------
                                           Name:  Loren J. Hulber
                                           Title: President and CEO


EXECUTIVE:
                                        ----------------------------------------



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