<PAGE>

                                                                Exhibit 10.4



                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, made as of the 15th day of November, 1995, by
and between Northstar Health Services, Inc., a Delaware corporation (the
"Company"), and Lisa S. Guarino ("Employee").

                                  WITNESSETH:
                                  -----------



     WHEREAS, prior to and upon, the consummation of the Merger, the Company
has been, and will be, respectively, engaged in the business of providing
rehabilitation services;

    WHEREAS, the Company entered into that certain Merger Agreement, dated the
date hereof (the "Merger Agreement"), by and among Keystone Rehabilitation
Systems, Inc., a Pennsylvania corporation ("KRS"), the Company and NSK Merger
Corp., a Pennsylvania corporation and a wholly-owned subsidiary of the Company
("Newco"); and

    WHEREAS, pursuant to the Merger Agreement, Newco will be merged with
and into KRS, and KRS will become a wholly-owned subsidiary of the Company
(the "Merger"); and

    WHEREAS, prior to the consummation of the Merger, Employee was the Executive
Vice President and Chief Financial Officer of KRS, and as a result possesses
valuable knowledge and skills that will contribute to the successful operation
of the Company's business; and

    WHEREAS, the Company and Employee have agreed to execute and deliver this
Employment Agreement in consideration, among other things, of (i) Company
entering into the Merger, (ii) the access Employee will have to confidential or
proprietary information of the Company, (iii) the access Employee will have to
confidential or proprietary information to be acquired hereafter by the Company,
(iv) the willingness of the Company to make valuable benefits available
hereafter to Employee, (v) the Company's willingness to obligate itself to give
Employee adequate prior written notice of any termination of Employee's
employment without cause or make a severance payment to Employee in lieu thereof
and (vi) Employee's receipt of compensation from time to time by the Company;
and

    WHEREAS, the Company desires to procure the services of Employee, and
Employee is willing to enter the employment of the Company, upon the terms and
subject to the conditions hereinafter set forth;
<PAGE>

     NOW, THEREFORE, intending to be legally bound, the Company agrees to employ
Employee, and Employee hereby agrees to be employed by the Company, upon the
following terms and conditions:

                                   ARTICLE I
                                  EMPLOYMENT
                                  ----------

     1.1. Office and Scope of Duties:
          --------------------------

     (a) Employee is hereby employed as the Executive Vice President and Chief
Financial Officer of the Company and shall report to the Chief Executive Officer
or his designee and in such capacity shall use best energies or abilities in the
performance of the duties customarily attributed to the office of Chief
Financial Officer (other than as limited by this Agreement) and as may be
prescribed in the By-Laws of the Company and such other duties as may be
assigned from time to time by the Board of Directors; provided, however, that
                                                      -----------------
Employee shall have no authority to alter, amend, terminate or otherwise modify
existing employment or consulting agreements between the Company and each of
Richard Andrasic, Gayle Davis, Mark A. De Simone, Michael J. Kulmoski, Jr.,
James Shields, Brian Strong or Nancy White or any employment or consulting
agreements that may be entered into in connection with the Penn Vascular Lab,
P.C., transaction; and provided further, that Employee's duties shall not
                       ----------------
include primary responsibility for the following matters:


     (i)  arranging and negotiating the Company's debt and equity financing,
          including all acquisition financing; and

    (ii)  arranging and managing the Company's cash management program.

     (b)  As Executive Vice President and Chief Financial Officer of the
Company, Employee shall not have the authority, directly or indirectly, to do
any of the following on behalf of the Company, KRS, or any other direct or
indirect subsidiary of the Company without the approval of the Board of
Directors of the Company or Mark A. DeSimone:

     (i)  Issue any one check, or series of related checks, in an an amount, or
          amounts, in excess of $25,000, other than in the ordinary course of
          business;

    (ii)  Borrow money from existing credit sources in excess of $50,000, or
          from new credit sources in excess of $25,000, at any one time or in a
          series of related actions, or incur any other indebtedness,
          liabilities or obligations of any nature except liabilities in the
          ordinary course of business;

   (iii)  Receive perquisites or employee benefits except as provided in this
          Employment Agreement or as are available generally to employees of
          comparable status and title;

    (iv)  Agree to enter into, or enter into, any material business combination
          (such as a merger, consolidation, sale of stock or sale of assets);

                                      -2-
<PAGE>

     (v)  Agree to acquire, sell, transfer or otherwise dispose of, or acquire,
          sell, transfer or otherwise dispose of, any assets of the Company,
          otherwise the ordinary course of business and provided that the market
          value thereof does not exceed $25,000;
                                        --------

    (vi)  Establish new, or amend, alter or make any change to the existing
          banking relationships of the Company;

    (vi)  Establish new, or materially amend, materially alter or make any
          material change to the existing method of accounting, accounting
          principles, accounting practices or policies, accounting systems or
          accounting controls of the Company unless the changes are consistent
          with Generally Accepted Accounting Principles;

   (vii)  Make any material bids or proposals or enter into any lease, license,
          permit, contract or other commitment or agreement, except in the
          ordinary course of business and not involving an increase in
          liability or a reduction in revenue in excess of $25,000;

  (viii)  Terminate, materially modify or materially amend any lease, license,
          permit contract or other commitment or agreement, except in the
          ordinary course of business and not involving an increase in liability
          or a reduction in revenue in excess of $25,000;


    (xi)  Adjust in any way, grant or agree to grant, directly or indirectly,
          any increase in the wages, salary, bonus or other compensation,
          remuneration or benefits of any officer, consultant or agent except as
          required under existing collective bargaining agreements or in other
          agreements or arrangements existing as of the date hereof;

     (x)  Become a party to any new contract or arrangement providing for the
          payment of wages, salary, bonus, profits, shares, stock benefits,
          severance payments, retirement benefits or other compensation,
          remuneration or benefits in excess of $25,000 per year with any
          officer, consultant or agent other than Thomas W. Zaucha or the Zaucha
          Family Limited Partnership;

    (xi)  Make any capital expenditure in excess of $25,000;

   (xii)  Mortgage, pledge or subject to any lien, charge or encumbrance, or
          take or permit any action which would result therein on, any assets,
          tangible or intangible in excess of $10,000; or

  (xiii)  Institute any litigation other than collection matters.

                                      -3-





<PAGE>

     1.2 Term. The initial term of this Agreement shall be for a period of two
         ----
(2) years commencing on the date of this Employment Agreement. Unless earlier
terminated, on the first anniversary of the date of this Employment Agreement.
Unless earlier terminated, on the anniversary thereof, the expiration date of
this Employment Agreement shall be automatically extended for an additional one
(1) year period, provided that neither you nor the Company give the other party
written notice at least sixty (60) days prior to such annual anniversary date of
that party's intention not to have this Employment Agreement so extended.
Provided, however, upon the occurrence of a Change of Control, as hereinafter
defined, the then remaining term of the Employment Agreement shall be
automatically extended for an additional twelve (12) month period, and
thereafter the expiration date of the Employment Agreement shall be
automatically extended on subsequent annual anniversary dates of the Employment
Agreement to the extent and in accordance with the procedure set forth in the
prior sentence. In the event that either party hereto shall give such notice to
the other party of their intention not to extend the then existing term of this
Employment Agreement, which the Company may do by delivery of a resolution
adopted by the unanimous vote of the Company's Compensation Committee so stating
the Company's intention not to extend the Employment Agreement, this Employment
Agreement shall expire at the end of the then existing term. In the event that,
during the term of this Employment Agreement, your employment is terminated
hereunder either by the Company other than for "Cause" (as defined herein), or
by you as the result of the Company's breach of this Agreement, which breach the
Company fails to cure within thirty (30) days after the Company's receipt of
written notice from you specifying the specific nature of the Company's breach,
you shall be entitled to continued salary and benefits coverage (which shall be
deemed to include medical and dental insurance, if any, and automobile
allowance) under this Employment Agreement when and as due under this Employment
Agreement during the term of this Employment Agreement remaining as of such
date, plus payment of any other amounts, if any, otherwise due to Employee.

     For purposes of this Agreement, a "Change of Control" shall be deemed to
have occurred if (i) there shall be consummated (x) any consolidation or merger
of the Company in which the Company's common stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's common stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (ii) the shareholders of the
Company approved any plan or proposal for the liquidation or dissolution of the
Company, or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than Thomas W. Zaucha or the Zaucha Family Limited Partnership or
any group in which any such person is a member, shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) or 30% or more
of the Company's outstanding common stock. Provided, however, the proposed
transaction between the Company or its affiliate and Keystone Rehabilitation
Systems Inc. shall in no event be deemed to involve or result in a Change of
Control.


                                      -4-
<PAGE>

     1.3 Base Salary. During the term of Employee's employment hereunder,
         -----------
compensation shall be paid to Employee by the Company at the rate of One Hundred
Six Thousand Dollars ($106,000) per annum (the "Base Salary"), payable in
accordance with the Company's regular policy in effect from time to time. The
rate of compensation to be paid to Employee may be adjusted upward but not,
without Employee's consent, downward by the Board of Directors of the Company at
any time based upon Employee's contribution to the success of the Company and on
such other factors as the Board of Directors of the Company shall deem
appropriate. Employee shall also be reimbursed by the Company for reasonable
out-of-pocket expenses incurred by her on behalf of the Company and supported by
appropriate documentation, or are otherwise pre-approved by the Board of
Directors of the Company, and shall be entitled to such vacations as in
Employee's opinion, subject only to reasonable review by the Board of Directors
of the Company, will not interfere with the conduct of the business and the
operations of the Company, except that under no circumstance shall Employee be
entitled to more than six (6) weeks vacation and not less than four (4) weeks.

     1.4 Employee Benefits. At all times during the term of Employee's
         -----------------
employment hereunder, Employee shall (a) be covered by such major medical or
health benefit plans and pensions as are available generally to employees of the
Company, (b) be eligible to participate in, and receive grants under, any stock
option, stock bonus or profit sharing or similar plans of the Company under the
terms of any such plans, and (c) receive the benefits listed on Schedule I
attached hereto (to the extent such benefits can be obtained by the Company
without violation of law and on commercially reasonable terms).

                                  ARTICLE II
                                  TERMINATION

     2.1 Illness, Incapacity. If during the term of Employee's employment
         -------------------
hereunder Employee shall be prevented, in the Board of Director's reasonable
judgment, from effectively performing all of her duties hereunder by reason of
illness or disability, then the Company may, by written notice to Employee,
terminate Employee's employment hereunder. In the event that Employee's
employment is terminated by reason of illness or disability, Employee shall
continue to receive all payments when due under this Agreement. The obligations
of Employee under Article IV hereof shall continue notwithstanding termination
of Employee's employment pursuant to this Section 2.1.

     2.2 Death. If Employee dies during the term of her employment hereunder,
         -----
Employee's employment hereunder shall be deemed to have ceased, and Employee
shall receive all payments when due hereunder during the term of this Agreement.
Except as provided in the preceding sentence, payment of compensation to
Employee hereunder shall cease effective as of the date of any such termination.

     2.3 Company Termination. If the Company determines that Employee has
         -------------------
intentionally failed to perform her duties hereunder or under law, has
materially violated any of the agreements, covenants, terms or conditions
hereunder or has engaged in conduct which has injured the business or reputation
of the Company or otherwise materially adversely affect its


                                      -5-

<PAGE>

interests, then, and in such event, the Company may, by written notice to
Employee, terminate Employee's employment hereunder. Upon delivery to Employee
of such notice, together with payment of any accrued and unpaid salary under
Section 1.3 hereof, Employee's employment and all obligations of the Company
under Article I hereof shall forthwith terminate. The obligations of Employee
under Article IV hereof shall continue notwithstanding termination of Employee's
employment pursuant to this Section 2.3.

                                  ARTICLE III
                          EMPLOYEE'S ACKNOWLEDGEMENTS

     Employee recognizes and acknowledges that: (a) in the course of Employee's
employment by the Company it will be necessary for Employee to acquire
information which could include, in whole or in part, information concerning the
Company's sales, sales volume, sales methods, sales proposals, customers and
prospective customers, identity of customers and prospective customers, identity
of key purchasing personnel in the employ of customers and prospective
customers, amount or kind of customer's purchases from the Company, the
Company's sources of supply, the Company's computer programs, system
documentation, special hardware, product hardware, related software development,
the Company's manuals, formulae, processes, methods, machines, compositions,
ideas, improvements, inventions or other confidential or proprietary information
belonging to the Company or relating to the Company's affairs, excluding,
however, such information as is publicly available or was known by Employee
prior to her employment hereunder and was not subject to a confidentiality
agreement (collectively referred to herein as the "Confidential Information");
(b) the Confidential Information is the property of the Company; (c) the use,
misappropriation or disclosure of the Confidential Information would constitute
a breach of trust and could cause irreparable injury to the Company; and (d) it
is essential to the protection of the Company's goodwill and to the maintenance
of the Company's competitive position that the Confidential Information be kept
secretary and that Employee not disclose the Confidential Information to others
or use the Confidential Information to Employee's own advantage or the advantage
of others.

     Employee further recognizes and understands that her duties at the Company
may include the preparation of materials, including written or graphic
materials, and that any such materials conceived or written by him shall be done
as "work made for hire" as defined and used in the Copyright Act of 1976, 17
U.S.C. (s) 1 et seq. In the event of publication of such materials, Employee
             -- ---
understands that since the work is a "work made for hire", the Company will
solely retain and own all rights in said materials, including right of
copyright, and that the Company shall grant Employee by-line credit on such
materials unless Employee otherwise consents.


                                      -6-
<PAGE>

                                  ARTICLE IV
                      EMPLOYEE'S COVENANTS AND AGREEMENTS
                      -----------------------------------

     4.1 Non-Disclosure of Confidential Information. Employee agrees to hold and
         ------------------------------------------
safeguard the Confidential Information in trust for the Company, its successors
and assigns and agrees that she shall not, without the prior written consent of
the Company, misappropriate or disclosure or make available to anyone for use
outside the Company's organization at any time, either during her employment
with the Company or subsequent to the termination of her employment with the
Company for any reason, including, without limitation, termination by the
Company for cause or without cause, any of the Confidential Information, whether
or not developed by Employee, except as required in the performance of
Employee's duties to the Company.


     4.2 Duties. Employee agrees to devote her best efforts full time to the
         ------
performance of her duties for the Company, to give proper time and attention to
furthering the Company's business, and to comply with all rules, regulations and
instruments established or issued by the Company. Employee further agrees that
during the term of this Employment Agreement, Employee shall not, directly or
indirectly, engage in any business which would detract from Employee's ability
to apply her reasonable best efforts to the performance of her duties hereunder.
Employee also agrees that she shall not usurp any corporate opportunities of the
Company.

     4.3. Return of Materials. Upon the termination of Employee's employment
          -------------------
with the Company for any reason, including without limitation termination by the
Company for cause or without cause, Employee shall promptly deliver to the
Company all correspondence, drawings, blueprints, manuals, letters, notes,
notebooks, reports, flow-charts, programs, proposals and any documents
concerning the Company's customers or concerning products or processes used by
the Company and, without limiting the foregoing, will promptly deliver to the
Company any and all other documents or materials containing or constituting
Confidential Information.

     4.4 Work Made for Hire.  Employee agrees that in the event of publication
         ------------------
by Employee of written or graphic materials the Company will retain and own all
rights in said materials, including right of copyright.


                                   ARTICLE V
                   EMPLOYEE'S REPRESENTATIONS AND WARRANTIES

     5.1 No Prior Agreements. Employee represents and warrants that she is not a
party to or otherwise subject to or bound by the terms of any contract,
agreement or understanding which in any manner would limit or otherwise affect
her ability to perform her obligations hereunder, including, without limitation,
any contract, agreement or understanding containing terms and provisions similar
in any manner to those contained in Article IV hereof. Employee further
represents and warrants that her employment with the Company will not


                                      -7-
<PAGE>

require Employer to disclose or use any confidential information belonging to
prior employers or other persons or entities.

     5.2 Employee's Abilities. Employee represents that her experience and
         --------------------
capabilities are such that the provisions of Article IV will not prevent
Employee from earning her livelihood, and acknowledges that it would cause the
Company serious and irreparable injury and cost if Employee were to use her
ability and knowledge in competition with the Company or to otherwise breach the
obligations contained in Article IV.


     5.3 Review by Counsel. Employee represents and warrants that counsel for
         -----------------
Employee has reviewed this Employment Agreement and that such counsel has
advised Employee in connection with its execution and delivery.

                                  ARTICLE VI
                                 MISCELLANEOUS

     6.1 Authorization to Modify Restrictions. It is the intention of the
         ------------------------------------
parties that the provisions of Article IV hereof shall be enforceable to the
fullest extent permissible under applicable law, but that the unenforceability
(or modification to conform to such law) of any provision or provisions hereof
shall not render unenforceable, to impair, the remainder thereof. If any
provision or provisions hereof shall be deemed invalid or unenforceable, either
in whole or in part, this Employment Agreement shall be deemed amended to delete
or modify, as necessary, the offending provision or provisions and to alter the
bounds thereof in order to render it valid and enforceable.

     6.2 Entire Agreement. This Employee Agreement represents the entire
         ----------------
agreement of the parties and may be amended only by a writing signed by each of
them.

     6.3 Governing Law. This Employment Agreement shall be governed by and
         -------------
construed in accordance with the laws of the Commonwealth of Pennsylvania.

     6.4 Consent to Jurisdiction. Employee hereby irrevocably submits to the
         -----------------------
personal jurisdiction of the United States District Court for the Western
District of Pennsylvania or the Court of Common Pleas of Allegheny or Indiana
County, Pennsylvania in any action or proceeding arising out of or relating to
this Employment Agreement, and Employee hereby irrevocably agrees that all
claims in respect of any such action or proceeding may be heard and determined
in either such court.

     6.5 Service of Process. Employee hereby irrevocably consents to the service
         ------------------
of any summons and complaint and any other process which may be served in any
action or proceeding arising out of or related to this Employment Agreement
brought in the United States District Court for the Western District of
Pennsylvania or the Court of Common Pleas of Allegheny or Indiana County by the
mailing by certified or registered mail of copies of such process to Employee at
her address as set forth on the signature page hereof.

                                      -8-
<PAGE>

     6.6 Venue. Employee hereby irrevocably waives any objection which she now
         -----
or hereafter may have to the laying of venue of any action or proceeding arising
out of or relating to this Employment Agreement brought in the United States
District Court for the Western District of Pennsylvania or the Court of Common
Pleas of Allegheny or Indiana County, Pennsylvania and any objection on the
ground that any such action or proceeding in either of such Courts has been
brought in any inconvenient forum.

     6.7 Remedies. If either party to this Agreement prevails in a proceeding
         --------
for damages or injunctive relief, the parties hereto agree that the prevailing
party, in addition to other relief, shall be entitled to reasonable attorneys'
fees, costs and the expenses of litigation incurred by the prevailing party
in securing the relief granted by the Court.

     6.8 Agreement Binding. The obligations of Employee under this Employment
         -----------------
Agreement shall continue after the termination of her employment with the
Company for any reason, with or without cause, and shall be binding on and inure
to the benefit of her heirs, executors, legal representatives and assigns. The
obligations of the Company hereunder shall continue until discharged in
accordance with the terms hereof and shall be binding upon and shall inure to
the benefit of any successors and assigns of the Company. Employee may not
assign this Agreement, in whole or in part, or any of her rights or obligations
hereunder.

     6.9 Counterparts; Section Headings. This Employment Agreement may be
         ------------------------------
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. The section headings of this Employment Agreement are for
convenience of reference only and shall not affect the construction or
interpretation of any of the provisions hereof.






                                      -9-
<PAGE>

     EMPLOYEE ACKNOWLEDGES THAT SHE HAS READ AND UNDERSTANDS THE FOREGOING
PROVISIONS AND THAT SUCH PROVISIONS ARE REASONABLE.

     IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement or caused this Employment Agreement to be executed on date first above
written.



Witness:
/s/ David D. Watson                         /s/ Lisa S. Guarino
-----------------------------------         ------------------------------------
                                                      Lisa S. Guarino

                                            Address:  72 Shady Dr.
                                                    ----------------------------
                                                      Indiana, PA 15701
                                                    ----------------------------

                                                    ----------------------------


Attest:                                     NORTHSTAR HEALTH SERVICES, INC.



                                            By: /s/ Mark A. DeSimone
------------------------------------           ---------------------------------
                                               Authorized Officer


                                     -10-

<PAGE>

                                  SCHEDULE I
                                      TO
                             EMPLOYMENT AGREEMENT

                                   BENEFITS
                                   --------


     All of the benefits as defined in the Keystone Rehabilitation Systems, Inc.
Personnel Policy and Procedures Manual as of November 15, 1995, including but
not limited to:

-   6 Holidays (New Year's Day, Memorial Day, July 4th, Labor Day,
                Thanksgiving Day, Christmas Day)

-   3 Personal Days

-   1 Sick Day per month accruing up to 60 days

-   Group Health Insurance - BC/BS/MM/Drug/Vision/Dental

-   Group Life Insurance/Dependent/AD&D

-   Disability Insurance

-   Jury Duty

-   Leave of Absence

-   Education Assistance - $1,500, 7 Days

-   Professional Dues

-   Funeral Leave

-   401(k) Plan


                                     -11-
<PAGE>
    And the following additional benefits:

-   Company Car


-   In the event Employee's employment is terminated either by the Company other
than for "Cause," or by Employee as the result of the Company's breach of this
Agreement, which breach the Company fails to cure in accordance with Section 1.2
of the Agreement, Employee shall be entitled to continued salary and benefits
coverage (which shall be deemed to include medical and dental insurance, if any,
and automobile allowance) under this Agreement when and as due under this
Agreement during the term of this Agreement remaining as of such date, plus
payment of any other amounts, if any, otherwise due to Employee.

                                     -12-