Exhibit 10.1

July 9, 2012

Dear [Participant]:

LifeCare has decided to institute a Key Employee Retention Program (KERP). The
KERP has been designed to incentivize certain key employees whose efforts have
been and will continue to be critical in enabling the Company to address its
current challenges and help it to become even stronger. You have been selected
as one of those key employees.

As a participant in the KERP, you are entitled to a Retention Bonus payment of
[$x] (subject to customary withholdings), paid on or about [date], subject to
your execution of this letter agreement and otherwise on the terms described
below. You hereby agree that you will be obligated to repay the entire amount of
the Retention Bonus, should you resign or be terminated for cause prior to
June 30, 2013.

This Retention Bonus is separate from the annual Management Incentive Plan (MIP)
that was recently revised to more closely align the Company's business goals
with achievable targets for the remaining months of 2012. However, you
acknowledge and agree that the amount of any Transaction Bonus to which you
might otherwise be entitled in connection with a change of control transaction
also will be reduced by 25% of the amount of your Retention Bonus (i.e.,
$        ).

If you wish to participate in the KERP on the terms outlined above, please
acknowledge your acceptance and agreement by providing your countersignature
below in the space provided, and returning the signed letter to Erik Pahl for
our files and retain the additional copy provided for your personal files.
Should you have any questions or concerns, I ask that you contact only Erik
Pahl.

Upon receipt of your signed letter, we will process your KERP payment of
$[        ], as set forth above.

 

      Very truly yours,       Phillip B. Douglas

Agreed to and Accepted:

     

 

     

 

Name

      Date