AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of the first day of July, 1996 by and
between NOVACARE, INC., a Delaware corporation (the "Company"), and TIMOTHY E. FOSTER (the
W I T N E S S E T H:
WHEREAS, the Executive has served as President and Chief Operating Officer of the Company since October
WHEREAS, the Company and the Executive entered into an Employment Agreement dated as of December 2,
WHEREAS, the Company and the Executive wish to amend and restate said agreement to set forth the terms
and conditions on which the Executive will continue to serve in his current positions.
NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the
parties hereto 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 positions 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 commence on the date hereof and
shall terminate on the third anniversary of the date hereof, unless extended or sooner terminated in accordance
with this Agreement.
1.3 Automatic Extension. As of June 30, 1998, and as of each subsequent June 30 (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 be 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.
The Executive shall serve in the positions of Preside