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|                                                                                       |   |
| 1.  Definitions                                                                            | 4 |
|      1.1  Certain Matters of Construction                         | 4 |
|      1.2  Certain Definitions                                     | 4 |
|                                                                                       |   |
| 2.  The Transactions                                                                       | 19 |
| 2.1  Purchase and Sale of Interests of Newco by RHP and Sale of   Blocker Shares           | 19 |
|     2.2  Purchase Price                                                | 21 |
|     2.3  The Closing                                                   | 22 |
|     2.4  Closing Deliveries and Payments                               | 22 |
|     2.5  Purchase Price Adjustment                                     | 24 |
|     2.6  Withholding Rights                                            | 28 |
|     2.7  Payment and Surrender; Payment Fund                           | 28 |
|                                                                                       |   |
| 3.  Representations and Warranties Relating to RHC and the Acquired Companies              | 29 |
|      3.1  Power and Authorization                                 | 30 |
|      3.2  Organization                                            | 30 |
|      3.3  Capitalization                                          | 30 |
|      3.4  No Violation or Approval; Consents                      | 31 |
|      3.5  Financial Statements, Etc.                              | 32 |
|      3.6  Ordinary Course of Business; No Material Adverse Effect | 32 |
|      3.7  Taxes                                                   | 33 |
|      3.8  Real Estate                                             | 34 |
|      3.9  Operations in Conformity with Laws                      | 37 |
|      3.10  Benefit Plans                                          | 37 |
|      3.11  Intellectual Property                                  | 39 |
|      3.12  Healthcare Matters                                     | 39 |
|      3.13  Environmental Matters                                  | 42 |
|      3.14  Material Contracts                                     | 42 |
|      3.15  Transactions with Affiliates                           | 45 |
|      3.16  Litigation                                             | 46 |
|      3.17  Insurance                                              | 46 |
|      3.18  Labor Matters                                          | 46 |
|      3.19  Absence of Certain Payments                            | 47 |
|      3.20  Brokers                                                | 47 |
|      3.21  Disclaimer of Other Representations and Warranties     | 47 |
|                                                                                       |   |
| 4.  Representations and Warranties Relating to Newco and the Blocker                       | 48 |
|      4.1  Power and Authorization                                 | 48 |

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|      4.2  Organization                                        | 48 |
|      4.3  Capitalization                                      | 49 |
|      4.4  Assets, Liabilities and Business                    | 50 |
|      4.5  No Violation or Approval; Consents                  | 50 |
|      4.6  Taxes                                               | 51 |
|      4.7  Litigation                                          | 52 |
|      4.8  Brokers                                             | 52 |
|      4.9  Employees                                           | 53 |
|      4.10  Disclaimer of Other Representations and Warranties | 53 |
|                                                                                   |   |
| 5.  Representations and Warranties Relating to the Sellers                             | 53 |
|      5.1  Organization, Power and Standing                    | 53 |
|      5.2  Authorization                                       | 53 |
|      5.3  Title to Securities                                 | 53 |
|      5.4  No Violation or Approval; Consents                  | 54 |
|      5.5  Litigation                                          | 54 |
|      5.6  Brokers                                             | 54 |
|      5.7  Disclaimer of Other Representations and Warranties  | 54 |
|                                                                                   |   |
| 6.  Representations and Warranties Relating to the Buyer and Parent                    | 55 |
|      6.1  Organization                                        | 55 |
|      6.2  Authorization                                       | 55 |
|      6.3  No Violation or Approval; Consents                  | 55 |
|      6.4  Litigation                                          | 56 |
|      6.5  Available Funds                                     | 56 |
|      6.6  Brokers                                             | 56 |
|      6.7  Investment Intent                                   | 56 |
|      6.8  Inspection; No Other Representations                | 56 |
|                                                                                   |   |
| 7.  Conditions Precedent to the Obligations of the Buyer                               | 57 |
|      7.1  Representations and Warranties                      | 57 |
|      7.2  Performance of Obligations                          | 57 |
|      7.3  Compliance Certificate                              | 58 |
|      7.4  Injunctions                                         | 58 |
|      7.5  Governmental Approvals                              | 58 |
|      7.6 Escrow Agreement                                     | 58 |
|      7.7  Indebtedness                                        | 58 |

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|      7.8  No Material Adverse Effect                                                     | 58 |
|      7.9  Resignations                                                                   | 58 |
|      7.10  Contributions                                                                 | 58 |
|      7.11  Reorganization                                                                | 58 |
|      7.12  Certain Other Agreements                                                      | 58 |
|      7.13  Third Party Consents                                                          | 58 |
|      7.14  Transactions with Affiliates                                                  | 58 |
|      7.15  Keepwell Letter                                                               | 59 |
|                                                                                                              |   |
| 8.  Conditions Precedent to the Obligations of the Sellers                                                        | 59 |
|      8.1  Representations and Warranties                                                 | 59 |
|      8.2  Performance of Obligations                                                     | 59 |
|      8.3  Compliance Certificate                                                         | 59 |
|      8.4  Injunctions                                                                    | 59 |
|      8.5  Governmental Approvals                                                         | 59 |
|      8.6  Escrow Agreement                                                               | 59 |
|                                                                                                              |   |
| 9.  Covenants of the Parties                                                                                      | 59 |
|      9.1  Access to Premises and Information                                             | 59 |
|      9.2  Conduct of Business Prior to Closing                                           | 60 |
|      9.3  Confidentiality                                                                | 63 |
|      9.4  Preparation for Closing                                                        | 64 |
|      9.5  Business Records                                                               | 67 |
|      9.6  Directors and Officers Indemnification and Insurance                           | 67 |
|      9.7  Tax Matters                                                                    | 70 |
|      9.8  Employee Matters                                                               | 74 |
|      9.9  Notification                                                                   | 75 |
|      9.10  Further Assurances                                                            | 75 |
|      9.11  Financing                                                                     | 75 |
|      9.12  Contributions; Blocker Reorganization; Acquired Contracts and Other Contracts | 76 |
|      9.13  Consent Solicitation; Purchase of Equity Interests Owned by Minority Holders  | 78 |
|      9.14  Intercompany Agreements                                                       | 78 |
|                                                                                                              |   |
| 10.  Indemnification                                                                                              | 79 |
|      10.1  Survival                                                                      | 79 |
|      10.2  Indemnity by the Sellers and Additional Indemnitors                           | 79 |

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|      10.3  Indemnity by the Buyer                              | 82 |
|      10.4  Calculation of Losses; Materiality                  | 82 |
|      10.5  Matters Involving Third Parties                     | 83 |
|      10.6  Mitigation                                          | 85 |
|      10.7  Tax Treatment                                       | 85 |
|      10.8  Acknowledgement by the Buyer                        | 85 |
|      10.9  Manner of Payment; Seller Reimbursement             | 85 |
|      10.10  Subrogation                                        | 86 |
|                                                                                    |   |
| 11.  Termination                                                                        | 86 |
|      11.1  Termination                                         | 86 |
|      11.2  Effect of Termination                               | 87 |
|      11.3  Parent Termination Fee                              | 87 |
|                                                                                    |   |
| 12.  Miscellaneous                                                                      | 88 |
|      12.1  Notices                                             | 88 |
|      12.2  Provisions Concerning Sellers’ Representative | 89 |
|      12.3  Expenses of Transaction                             | 93 |
|      12.4  Entire Agreement                                    | 93 |
|      12.5  Severability                                        | 93 |
|      12.6  Amendment                                           | 93 |
|      12.7  Parties in Interest                                 | 93 |
|      12.8  Assignment                                          | 93 |
|      12.9  Governing Law                                       | 94 |
|      12.10  Consent to Jurisdiction                            | 94 |
|      12.11  Waiver of Jury Trial                               | 94 |
|      12.12  Reliance                                           | 95 |
|      12.13  Specific Enforcement                               | 95 |
|      12.14  No Waiver                                          | 95 |
|      12.15  Negotiation of Agreement                           | 95 |
|      12.16  Disclosure Letter                                  | 95 |
|      12.17  No Recourse Against Third Parties                  | 96 |
|      12.18  Headings                                           | 96 |
|      12.19  Counterparts; Electronic Signature                 | 96 |
|      12.20  Parent Guarantee                                   | 97 |
|      12.21  Waiver of Conflicts; Privilege                     | 97 |

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| 1. | Definitions. |

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| 2. | The Transactions. |

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| 3. | Representations and Warranties Relating to RHC and the Acquired Companies. |

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|    |                                                                   |
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| 4. | Representations and Warranties Relating to Newco and the Blocker. |

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|    |                                                         |
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| 5. | Representations and Warranties Relating to the Sellers. |

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| 6. | Representations and Warranties Relating to the Buyer and Parent. |

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| 7. | Conditions Precedent to the Obligations of the Buyer. |

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| 8. | Conditions Precedent to Obligations of the Sellers. |

|    |                           |
|----|---------------------------|
| 9. | Covenants of the Parties. |

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|     |                  |
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| 10. | Indemnification. |

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|     |              |
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| 11. | Termination. |

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|     |                |
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| 12. | Miscellaneous. |

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|                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                                                                                                                                                                                                                                                                                   |  |
| If to any Seller to the Sellers’ Representative, to:Nautic Management VI, LLC50 Kennedy Plaza, 12th FloorProvidence, RI  02903Attention: Christopher F. CoreyFacsimile: (401) 278-6387Email: ccorey@nautic.com                                                                                                                                                         | with copies (which will not constitute notice) to:Goodwin Procter LLPExchange PlaceBoston, MA  02109Attention:  John R. LeClaire, Esq.; Adam P. Small, Esq.Facsimile:  (617) 523-1231Email: jleclaire@goodwinprocter.com; asmall@goodwinprocter.com |
| If to the Buyer, or, after the Closing, to any Acquired Company, to:HealthSouth Corporation3660 Grandview Parkway, Suite 200Birmingham, Alabama  35243 Telephone number:  (205) 967-7116Facsimile number:  (205) 262-3948Attention:  Douglas E. Coltharp                 John P. Whittington | with a copy (which will not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP920 North King StreetWilmington, Delaware  19801Telephone number:  (302) 651-3000Facsimile number:  (302) 434-3090Attention:   Robert B. Pincus                  Allison L. Land |

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|                                                  |                                         |
|--------------------------------------------------|-----------------------------------------|
|          | Title:    President |

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