Document:

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                                                                     Exhibit 4.9

                       SELECT MEDICAL HOLDINGS CORPORATION

                                  $175,000,000

                       SENIOR FLOATING RATE NOTES DUE 2015

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                               September 29, 2005

MERRILL LYNCH, PIERCE, FENNER & SMITH
   INCORPORATED
WACHOVIA CAPITAL MARKETS, LLC
J.P. MORGAN SECURITIES INC.
   as Representatives of the several Initial Purchasers
   referred to on Schedule I to the Purchase Agreement
c/o Merrill Lynch & Co.
   Merrill Lynch, Pierce, Fenner & Smith
   Incorporated
4 World Financial Center
New York, New York 10080

          Select Medical Holdings Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Wachovia Capital Markets LLC and J.P. Morgan Securities Inc.
(collectively, the "Initial Purchasers"), upon the terms and subject to the
conditions set forth in a purchase agreement dated September 15, 2005 (the
"Purchase Agreement"), $175,000,000 aggregate principal amount of its Senior
Floating Rate Notes due 2015 (the "Securities"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement.

          As contemplated by the Purchase Agreement, the Company agrees with the
Initial Purchasers, for the benefit of the holders (including the Initial
Purchasers) of the Securities and the Exchange Securities (as defined herein)
(collectively, the "Holders"), as follows:

          1. Registered Exchange Offer. Unless doing so would be prohibited by
applicable law, rules, regulations or policy of the Commission, the Company
shall (i) prepare and, not later than 205 days following the date hereof (the
"Closing Date"), file with the Commission a registration statement (as amended
or supplemented from time to time, the "Exchange Offer Registration Statement")
on an appropriate form under the Securities Act with respect to a proposed offer
to the Holders of the Securities (the "Registered Exchange Offer") who are not
prohibited by any applicable law, rules, regulations or policy of the Commission
from participating in the Registered Exchange Offer to issue and deliver to such
Holders, in exchange for the Securities held by such Holders, a like aggregate
principal amount of debt securities of the Company (the "Exchange Securities")
that are identical in all material respects to the Securities, except for the
transfer restrictions relating to the Securities and the provisions related to
the matters described in Section 3 hereof, (ii) use its commercially reasonable
efforts to cause the Exchange Offer Registration Statement to become effective
under the Securities Act no later than 295 days after the Closing Date and the
Registered Exchange Offer to be consummated no later than 325 days after the
Closing Date and (iii) keep the Exchange Offer Registration Statement effective
for not less than 30 days (or longer, if required by applicable law) after the
date on which notice of the Registered Exchange Offer is mailed to the Holders
(such period being called the

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"Exchange Offer Registration Period"). The Exchange Securities will be issued
under the Indenture or an indenture (the "Exchange Securities Indenture")
between the Company and the Trustee or such other bank or trust company that is
reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange
Securities Trustee"), such indenture to be identical in all material respects to
the Indenture, except for the transfer restrictions relating to the Securities
(as described above) and the provisions related to the matters described in
Section 3 hereof.

          Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Company or an Exchanging Dealer (as defined herein) not
complying with the requirements of the next sentence, (b) is not an Initial
Purchaser holding Securities that have, or that are reasonably likely to have,
the status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities and is not prohibited by applicable law,
rules, regulations or policy of the Commission from participating in the
Registered Exchange Offer) and to trade such Exchange Securities from and after
their receipt without any limitations or restrictions under the Securities Act
(it being understood that the requirement that an Exchanging Dealer or Initial
Purchaser deliver the prospectus contained in the Exchange Offer Registration
Statement in connection with the sale of Exchange Securities shall not result in
such Exchange Securities being not "freely transferable") and without material
restrictions under the securities laws of the several states of the United
States. The Company, the Initial Purchasers and each Exchanging Dealer
acknowledge that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, each Holder that is a broker-dealer electing
to exchange Securities, acquired for its own account as a result of
market-making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing
substantially the information set forth in Annex A hereto on the cover of such
prospectus, in Annex B hereto in the sections of such prospectus that set forth
the details of the exchange offer procedures and in Annex C hereto in the "Plan
of Distribution" section of such prospectus in connection with a sale of any
such Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer.

          In connection with the Registered Exchange Offer, the Company shall:

          (a) mail to each Holder a copy of the prospectus forming part of the
     Exchange Offer Registration Statement, together with an appropriate letter
     of transmittal and related documents; provided, that the Company shall only
     be required to mail such prospectus to Holders of which the Company is
     aware after due inquiry;

          (b) keep the Registered Exchange Offer open for not less than 30 days
     (or longer, if required by applicable law) after the date on which notice
     of the Registered Exchange Offer is mailed to the Holders;

          (c) utilize the services of a depositary for the Registered Exchange
     Offer with an address in the Borough of Manhattan, The City of New York,
     which may be the Trustee or an affiliate of the Trustee;

          (d) permit Holders to withdraw tendered Securities at any time prior
     to the close of business, New York City time, on the last business day on
     which the Registered Exchange Offer shall remain open; and

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          (e) otherwise comply in all material respects with all laws that are
     applicable to the Registered Exchange Offer.

          Promptly after the close of the Registered Exchange Offer the Company
     shall:

          (a) accept for exchange all Securities validly tendered and not
     validly withdrawn pursuant to the Registered Exchange Offer;

          (b) deliver to the Trustee for cancellation all Securities so accepted
     for exchange; and

          (c) cause the Trustee or the Exchange Securities Trustee, as the case
     may be, promptly to authenticate and deliver to each Holder, Exchange
     Securities equal in principal amount to the Securities of such Holder so
     accepted for exchange.

          The Company shall use its commercially reasonable efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all Exchanging Dealers subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided that such
period shall not exceed 180 days. The Company shall make such prospectus and any
amendment or supplement thereto available to any broker-dealer for use in
connection with any resale of any Exchange Securities for a period of not less
than 180 days after the consummation of the Registered Exchange Offer.

          The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities and the Exchange Securities shall vote and
consent together on all matters as one class and that none of the Securities or
the Exchange Securities will have the right to vote or consent as a separate
class from one another on any matter.

          Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the Closing Date.

          Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company in writing that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act, (iii) such Holder is not an affiliate
of the Company or, if it is such an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable, (iv) if such Holder is not a broker-dealer, that it is not
engaged in, and does not intend to engage in, the distribution of the Exchange
Securities and (v) if such Holder is a broker-dealer, that it will receive
Exchange Securities for its own account in exchange for Securities that were
acquired as a result of market-making activities or other trading activities and
that it will be required to acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities.

          Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement

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and any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

          2. Shelf Registration. If (i) the Company is not permitted under
applicable law, rules, regulations or Commission policy to effect the Registered
Exchange Offer as contemplated by Section 1 hereof, or (ii) the Registered
Exchange Offer is not for any other reason consummated prior to the later of (x)
the 60th day following the effectiveness of the Exchange Offer Registration
Statement and (y) the 325th day after the Closing Date, or (iii) prior to the
30th day following completion of the Registered Exchange Offer, any Initial
Purchaser so requests in writing with respect to Securities not eligible to be
exchanged for Exchange Securities in the Registered Exchange Offer and held by
it following the consummation of the Registered Exchange Offer or a
broker-dealer notifies us that it holds Securities acquired directly from the
Company or an Affiliate of the Company, or (iv) prior to the 30th day following
completion of the Registered Exchange Offer, any Holder notifies the Company
that, due to any change or development in law, rules, regulations or Commission
policy, (A) such Holder is not permitted to participate in the Registered
Exchange Offer or (B) such Holder will not receive freely transferable Exchange
Securities in exchange for tendered Securities (it being understood that a
requirement that a Holder deliver the prospectus contained in the Exchange Offer
Registration Statement in connection with the sale of Exchange Securities shall
not result in such Exchange Securities being not "freely transferable"), then
the following provisions shall apply:

          (a) The Company shall use its commercially reasonable efforts to file
     prior to the later of (i) 325th days after the Closing Date and (ii) 120
     days after the obligation to file arises pursuant to this Section 2, and
     thereafter shall use its commercially reasonable efforts to cause to be
     declared effective as promptly as practical on or prior to 210 days after
     such filing, a shelf registration statement on an appropriate form under
     the Securities Act relating to the offer and sale of the Transfer
     Restricted Securities (as defined below) by the Holders thereof from time
     to time in accordance with the methods of distribution set forth in such
     registration statement (as amended or supplemented from time to time,
     hereafter, a "Shelf Registration Statement" and, together with any Exchange
     Offer Registration Statement, a "Registration Statement") provided,
     however, that no Holder (other than an Initial Purchaser) shall be entitled
     to have the Securities or the Exchange Securities held by it covered by the
     Shelf Registration Statement unless such Holder agrees in writing to be
     bound by all the provisions of this Agreement applicable to such Holder (it
     being agreed that each Initial Purchaser's agreement thereto is evidenced
     by the execution of this Agreement by or on its behalf).

          (b) The Company shall use its commercially reasonable efforts to keep
     the Shelf Registration Statement continuously effective and available in
     order to permit the prospectus forming part thereof to be used by Holders
     of Transfer Restricted Securities for a period ending on the earlier of (i)
     two years from the date of issuance of the Securities or such shorter
     period that will terminate when all the Transfer Restricted Securities
     covered by the Shelf Registration Statement have been sold pursuant thereto
     and (ii) the date on which such Securities become eligible for resale
     without restrictions pursuant to clauses (c), (e), (f) and (h) of Rule 144
     under the Securities Act (in any such case, such period being called the
     "Shelf Registration Period").

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          (c) Notwithstanding any other provisions hereof, the Company will
     ensure that (i) any Shelf Registration Statement and any amendment thereto
     and any prospectus forming part thereof and any supplement thereto complies
     in all material respects with the Securities Act and the rules and
     regulations of the Commission thereunder, (ii) any Shelf Registration
     Statement and any amendment thereto (in either case, other than with
     respect to information included therein in reliance upon or in conformity
     with written information furnished to the Company by or on behalf of any
     Holder specifically for use therein (the "Holders' Information")) does not
     contain an untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein not misleading and (iii) any prospectus forming part of any Shelf
     Registration Statement, and any supplement to such prospectus (in either
     case, other than with respect to Holders' Information), does not include an
     untrue statement of a material fact or omit to state a material fact
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading.

          3. Additional Interest.

          (a) The parties hereto agree that the Holders of Transfer Restricted
Securities will suffer damages if the Company fails to fulfill its obligations
under Section 1 or Section 2, as applicable, and that it would not be feasible
to ascertain the extent of such damages. Accordingly, if (i) the Company fails
to file the Exchange Offer Registration Statement on or before the 205th day
after the Closing Date or fail to file the Shelf Registration Statement on or
prior to the later of the 325th day after the Closing Date and 120 days after
the obligation to file the Shelf Registration Statement arises under Section 2,
(ii) the Exchange Offer Registration Statement is not declared effective on or
prior to the 295th day after the Closing Date or the Shelf Registration
Statement is not declared effective on or before the 210th day after the filing
of the Shelf Registration Statement, (iii) the Registered Exchange Offer is not
consummated on or prior to the 325th day after the Closing Date and the Shelf
Registration Statement is not declared effective by the Commission on or prior
to the 210th day after the filing of the Shelf Registration Statement, or (iv)
the Shelf Registration Statement is filed and declared effective within the time
periods required by Section 2 but, thereafter ceases to be effective or
available for the Holders of Transfer Restricted Securities in connection with
the offer and sale of such Transfer Restricted Securities during the period that
the Company is obligated to maintain the effectiveness thereof (unless such
Shelf Registration Statement is succeeded by another Shelf Registration
Statement filed and declared effective within 30 days of the date such Shelf
Registration Statement ceased to be effective or such Shelf Registration
Statement otherwise becomes available again within 30 days (so long as the
aggregate number of days for which a Shelf Registration Statement has not been
effective and available for the Holders of Transfer Restricted Securities to
offer and sell such Transfer Restricted Securities does not exceed 45 days
within any 90 day period or 60 days within any 12-month period) (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the Company
will be obligated to pay, as liquidated damages, additional interest
("Additional Interest") to each Holder of Transfer Restricted Securities as to
which such Registration Default relates, with respect to the first 90-day period
(or portion thereof) while a Registration Default is continuing immediately
following the occurrence of such Registration Default, at a rate equal to 0.25%
per annum of the principal amount of such Transfer Restricted Securities held by
such Holder until (i) the applicable Registration Statement is filed, (ii) the
applicable Registration Statement is declared effective, (iii) the Registered
Exchange Offer is consummated, or (iv) the Shelf Registration Statement again
becomes effective and available, as the case may be. The amount of Additional
Interest payable to each Holder of Transfer Restricted Securities shall increase
by an additional 0.25% per annum of the principal amount of Transfer Restricted
Securities held by such Holder at the end of each subsequent 90-day period (or
portion thereof) while a Registration Default is continuing until all
Registration Defaults with respect

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to such Transfer Restricted Securities have been cured, up to an aggregate
maximum rate of 1.00% per annum of the principal amount of such Transfer
Restricted Securities. Additional Interest shall be computed based on the actual
number of days elapsed during which any such Registration Default exists.
Immediately following the cure of a Registration Default, the accrual of
Additional Interest with respect to such Registration Default will cease and the
interest rate will revert to the original rate. As used herein, the term
"Transfer Restricted Securities" means each Security, until the earliest to
occur of: (i) the date on which such Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer (it being
understood that the requirement that an Exchanging Dealer or Initial Purchaser
deliver the prospectus contained in the Exchange Offer Registration Statement in
connection with the sale of Exchange Securities shall not result in such
Exchange Securities being not "freely transferable"), (ii) the date on which
such Security has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iii) the
date on which such Security is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act. Notwithstanding anything to the contrary in this Section 3(a),
the Company shall not be required to pay Additional Interest to a Holder of
Transfer Restricted Securities if such Holder failed to comply with its
obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n). Notwithstanding any provision
herein to the contrary, Additional Interest shall not accrue on any Security
that is no longer a Transfer Restricted Security and the amount of Additional
Interest shall not increase over the rates set forth above because more than one
Registration Default has occurred and is pending.

          (b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company shall pay the additional interest due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be the
Company for these purposes), in trust, for the benefit of the Holders thereof,
prior to 10:00 a.m., New York City time, on the next interest payment date
specified by the Indenture and the Securities, sums sufficient to pay the
additional interest then due. The additional interest due shall be payable on
each interest payment date specified by the Indenture and the Securities to the
record holder entitled to receive the interest payment to be made on such date.
Each obligation to pay additional interest shall be deemed to accrue from and
including the date of the applicable Registration Default.

          (c) The parties hereto agree that the additional interest provided for
in this Section 3 constitutes a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of any Registration Default.

          4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:

          (a) The Company shall (i) furnish to each Initial Purchaser and
     counsel for the Initial Purchasers, to the extent requested in writing,
     prior to the filing thereof with the Commission, a copy of the Registration
     Statement and each amendment thereof and each supplement, if any, to the
     prospectus included therein and shall use its commercially reasonable
     efforts to reflect in each such document, when so filed with the
     Commission, such comments as any Initial Purchaser may reasonably propose;
     (ii) include the information set forth in Annex A hereto on the cover, in
     Annex B hereto in the sections setting forth the details of the exchange
     offer procedures and in Annex C hereto in the "Plan of Distribution"
     section of the prospectus forming a part of the Exchange Offer Registration
     Statement, and include the

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     information set forth in Annex D hereto in the Letter of Transmittal
     delivered pursuant to the Registered Exchange Offer; and (iii) if requested
     in writing by any Initial Purchaser, include the information required by
     Items 507 or 508 of Regulation S-K, as applicable, in the prospectus
     forming a part of the Exchange Offer Registration Statement.

          (b) The Company shall advise each Initial Purchaser, each Exchanging
     Dealer under any Exchange Offer Registration Statement that has provided in
     writing to the Issuer a telephone or facsimile number and address for
     notices, and the Holders (if applicable) who are named as selling security
     holders in the prospectus forming part of a Shelf Registration Statement
     and, if requested by any such person in writing, confirm such advice in
     writing (which advice pursuant to clauses (ii) - (v) hereof shall be
     accompanied by an instruction to suspend the use of the prospectus until
     the requisite changes have been made):

               (i) when any Registration Statement and any amendment thereto has
          been filed with the Commission and when such Registration Statement or
          any post-effective amendment thereto has become effective;

               (ii) of any request by the Commission for amendments or
          supplements to any Registration Statement or the prospectus included
          therein or for additional information;

               (iii) of the issuance by the Commission of any stop order
          suspending the effectiveness of any Registration Statement or the
          initiation of any proceedings for that purpose;

               (iv) of the receipt by the Company of any notification with
          respect to the suspension of the qualification of the securities
          included therein for sale in any jurisdiction or the initiation or
          threatening of any proceeding for such purpose; and

               (v) of the happening of any event that requires the making of any
          changes in any Registration Statement or the prospectus included
          therein in order that they do not contain any untrue statement of a
          material fact and do not omit to state a material fact required to be
          stated therein or necessary to make the statements therein (in case of
          the prospectus, in light of the circumstances under which they were
          made) not misleading.

          (c) The Company will use commercially reasonable efforts to obtain the
     withdrawal at the earliest possible time of any order suspending the
     effectiveness of any Registration Statement.

          (d) The Company will furnish, upon written request, to each Holder of
     Transfer Restricted Securities included within the coverage of any Shelf
     Registration Statement, without charge, at least one conformed copy of such
     Shelf Registration Statement and any post-effective amendment thereto,
     including financial statements and schedules and, if any such Holder so
     requests in writing, all exhibits thereto (including those, if any,
     incorporated by reference).

          (e) The Company will, during the Shelf Registration Period, promptly
     deliver to each Holder of Transfer Restricted Securities included within
     the coverage of any Shelf Registration Statement, without charge, as many
     copies of the prospectus (including each preliminary prospectus) included
     in such Shelf Registration Statement and any amendment or

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     supplement thereto as such Holder may reasonably request in writing; and
     the Company consents, subject to the provisions of this Agreement to the
     use of such prospectus or any amendment or supplement thereto by each of
     the selling Holders of Transfer Restricted Securities in connection with
     the offer and sale of the Transfer Restricted Securities covered by such
     prospectus or any amendment or supplement thereto.

          (f) The Company will furnish to each Initial Purchaser and each
     Exchanging Dealer, and to any other Holder who so requests in writing,
     without charge, at least one conformed copy of the Exchange Offer
     Registration Statement and any post-effective amendment thereto, including
     financial statements and schedules and, if any Initial Purchaser or
     Exchanging Dealer or any such Holder so requests in writing, all exhibits
     thereto (including those, if any, incorporated by reference).

          (g) The Company will, during the Exchange Offer Registration Period or
     the Shelf Registration Period, as applicable, promptly deliver to each
     Initial Purchaser, each Exchanging Dealer and such other persons that are
     required to deliver a prospectus following the Registered Exchange Offer,
     without charge, as many copies of the final prospectus included in the
     Exchange Offer Registration Statement or the Shelf Registration Statement
     and any amendment or supplement thereto as such Initial Purchaser,
     Exchanging Dealer or other persons may reasonably request in writing; and
     the Company consents to the use of such prospectus or any amendment or
     supplement thereto by any such Initial Purchaser, Exchanging Dealer or
     other persons, as applicable, as aforesaid.

          (h) Prior to the effective date of any Registration Statement, the
     Company will use its commercially reasonable efforts to register or
     qualify, or cooperate with the Holders of Securities or Exchange Securities
     included therein and their respective counsel in connection with the
     registration or qualification of, such Securities or Exchange Securities
     for offer and sale under the securities or blue sky laws of such
     jurisdictions as any such Holder reasonably requests in writing and do any
     and all other acts or things necessary or advisable to enable the offer and
     sale in such jurisdictions of the Securities or Exchange Securities covered
     by such Registration Statement; provided that the Company will not be
     required to qualify generally to do business in any jurisdiction where it
     is not then so qualified or to take any action which would subject it to
     general service of process or to taxation in any such jurisdiction where it
     is not then so subject.

          (i) The Company will cooperate with the Holders of Securities or
     Exchange Securities to facilitate the timely preparation and delivery of
     certificates representing Securities or Exchange Securities to be sold
     pursuant to any Registration Statement free of any restrictive legends and
     in such denominations and registered in such names as the Holders thereof
     may request in writing prior to sales of Securities or Exchange Securities
     pursuant to such Registration Statement.

          (j) If any event contemplated by Section 4(b)(ii) through (v) occurs
     during the period for which the Company is required to maintain an
     effective Registration Statement, the Company will promptly prepare and
     file with the Commission a post-effective amendment to the Registration
     Statement or a supplement to the related prospectus or file any other
     required document so that, as thereafter delivered to purchasers of the
     Securities or Exchange Securities from a Holder, the prospectus will not
     include an untrue statement of a material fact or omit to state a material
     fact necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading.

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          (k) Not later than the effective date of the applicable Registration
     Statement, the Company will provide a CUSIP number for the Securities and
     the Exchange Securities, as the case may be, and provide the applicable
     trustee with printed certificates for the Securities or the Exchange
     Securities, as the case may be, in a form eligible for deposit with The
     Depository Trust Company (it being further agreed that, if requested in
     writing by any Initial Purchaser, subject to applicable legal requirements,
     the Company shall use its commercially reasonable efforts to cause any
     Transferred Restricted Securities having the status of (or reasonably
     likely to have the status of) an unsold allotment that are included in any
     Shelf Registration Statement by any such Initial Purchaser to (i) bear the
     same CUSIP numbers as the Exchange Securities and (ii) be governed by the
     same indenture as the Exchange Securities and to vote as a single class
     with the Exchange Securities on all matters under such indenture).

          (l) The Company will comply in all material respects with all
     applicable rules and regulations of the Commission and will make generally
     available to its security holders as soon as practicable after the
     effective date of the applicable Registration Statement an earning
     statement satisfying the provisions of Section 11(a) of the Securities Act;
     provided that in no event shall such earning statement be delivered later
     than 45 days after the end of a 12-month period (or 90 days, if such period
     is a fiscal year) beginning with the first month of the Company's first
     fiscal quarter commencing after the effective date of the applicable
     Registration Statement, which statement shall cover such 12-month period.

          (m) The Company will cause the Indenture or the Exchange Securities
     Indenture, as the case may be, to be qualified under the Trust Indenture
     Act as required by applicable law in a timely manner.

          (n) The Company may require each Holder of Transfer Restricted
     Securities to be registered pursuant to any Shelf Registration Statement to
     furnish to the Company such information concerning the Holder and the
     distribution of such Transfer Restricted Securities as the Company may from
     time to time reasonably require for inclusion in such Shelf Registration
     Statement, and the Company may exclude from such registration the Transfer
     Restricted Securities of any Holder that fails to furnish such information
     within a reasonable time after receiving such request.

          (o) In the case of a Shelf Registration Statement, each Holder of
     Transfer Restricted Securities to be registered pursuant thereto agrees by
     acquisition of such Transfer Restricted Securities that, upon receipt of
     any notice from the Company pursuant to Section 4(b)(ii) through (v), such
     Holder will discontinue disposition of such Transfer Restricted Securities
     until such Holder's receipt of copies of the supplemental or amended
     prospectus contemplated by Section 4(j) or until advised in writing (the
     "Advice") by the Company that the use of the applicable prospectus may be
     resumed. If the Company shall give any notice under Section 4(b)(ii)
     through (v) during the period that the Company is required to maintain an
     effective Registration Statement (the "Effectiveness Period"), such
     Effectiveness Period shall be extended by the number of days during such
     period from and including the date of the giving of such notice to and
     including the date when each seller of Transfer Restricted Securities
     covered by such Registration Statement shall have received (x) the copies
     of the supplemental or amended prospectus contemplated by Section 4(j) (if
     an amended or supplemental prospectus is required) or (y) the Advice (if no
     amended or supplemental prospectus is required).

          (p) In the case of a Shelf Registration Statement, the Company shall
     enter into such customary agreements (including, if requested, an
     underwriting agreement in customary

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     form) and use commercially reasonable efforts to take all such other
     action, if any, as Holders of a majority in aggregate principal amount of
     the Securities and Exchange Securities being sold or the managing
     underwriters (if any) shall reasonably request in order to facilitate any
     disposition of Securities or Exchange Securities pursuant to such Shelf
     Registration Statement.

          (q) In the case of a Shelf Registration Statement, the Company shall
     (i) make reasonably available for inspection by a representative of, and
     Special Counsel (as defined below) acting for, Holders of a majority in
     aggregate principal amount of the Securities and Exchange Securities being
     sold and any underwriter participating in any disposition of Securities or
     Exchange Securities pursuant to such Shelf Registration Statement, all
     relevant financial and other records, pertinent corporate documents and
     properties of the Company and its subsidiaries and (ii) use its
     commercially reasonable efforts to have its officers, directors, employees,
     accountants and counsel make reasonably available all relevant information
     reasonably requested by such representative, Special Counsel or any such
     underwriter in connection with such Shelf Registration Statement; provided,
     however, that the foregoing inspection and information gathering shall be
     coordinated on behalf of the such persons by the Special Counsel and all
     such information shall be kept confidential by the recipients and their
     representatives pursuant to a customary confidentiality agreement for due
     diligence investigations by selling security holders in offerings
     registered under the Securities Act to be executed by such recipients prior
     to receiving such information.

          (r) In the case of a Shelf Registration Statement, the Company shall,
     if requested by Holders of a majority in aggregate principal amount of the
     Securities and Exchange Securities being sold, their Special Counsel or the
     managing underwriters (if any) in connection with such Shelf Registration
     Statement, use its commercially reasonable efforts to cause (i) its counsel
     to deliver an opinion relating to the Shelf Registration Statement and the
     Securities or Exchange Securities, as applicable, in customary form, (ii)
     its officers to execute and deliver all customary documents and
     certificates reasonably requested by Holders of a majority in aggregate
     principal amount of the Securities and Exchange Securities being sold,
     their Special Counsel or the managing underwriters (if any) and (iii) its
     independent public accountants to provide a comfort letter or letters in
     customary form, subject to receipt of appropriate documentation as
     contemplated, and only if permitted, by Statement of Auditing Standards No.
     72.

          5. Registration Expenses. The Company will bear all expenses incurred
in connection with the performance of its obligations under Sections 1, 2 and 4
and the Company will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Securities and the Exchange Securities to be sold pursuant to each
Registration Statement (the "Special Counsel") acting for the Initial Purchasers
or Holders in connection therewith.

          6. Indemnification.

          (a) In the event of a Shelf Registration Statement or in connection
with any prospectus delivery pursuant to an Exchange Offer Registration
Statement by an Initial Purchaser or Exchanging Dealer, as applicable, the
Company shall indemnify and hold harmless each Holder (including, without
limitation, any such Initial Purchaser or Exchanging Dealer), its affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls such Holder within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 6 and Section 7 as a Holder) from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim,

                                      -10-

<PAGE>

damage, liability or action relating to purchases and sales of Securities or
Exchange Securities), to which that Holder may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Holders' Information; and provided, further, that with respect to any such
untrue statement in or omission from any related preliminary prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Securities or Exchange Securities to the
extent that such loss, claim, damage, liability or action of or with respect to
such Holder results from the fact that both (A) a copy of the final prospectus
was not sent or given to such person at or prior to the written confirmation of
the sale of such Securities or Exchange Securities to such person and (B) the
untrue statement in or omission from the related preliminary prospectus was
corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of non-compliance by the Company with
Section 4(d), 4(e), 4(f) or 4(g).

          (b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless the Company and its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 6(b) and
Section 7 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Securities or Exchange Securities), to which the Company
may become subject, whether commenced or threatened, under the Securities Act,
the Exchange Act, any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Registration Statement
or any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Holders' Information furnished to the Company by
such Holder, and shall reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that no such Holder shall be liable
for any indemnity claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Securities or Exchange Securities
pursuant to such Shelf Registration Statement.

                                      -11-

<PAGE>

          (c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party shall use commercially reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld, conditioned
or delayed), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.

          7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the

                                      -12-

<PAGE>

Company from the offering and sale of the Securities, on the one hand, and a
Holder with respect to the sale by such Holder of Securities or Exchange
Securities, on the other, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and such Holder on the other
with respect to the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and a Holder on the other with respect to such offering and such sale
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) received by or on behalf
of the Company as set forth in the Offering Memorandum, on the one hand, bear to
the total proceeds received by such Holder with respect to its sale of
Securities or Exchange Securities, on the other. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to the information supplied by the Company on the one
hand or to any Holders' Information supplied by such Holder on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 7 were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7 shall be deemed to include, for
purposes of this Section 7, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 7, an indemnifying party that is a Holder of Securities or Exchange
Securities shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities or Exchange Securities
sold by such indemnifying party to any purchaser exceeds the amount of any
damages which such indemnifying party has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

          8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.

          No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

          9. Miscellaneous.

          (a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof

                                      -13-

<PAGE>

may not be given, unless the Company has obtained the written consent of Holders
of a majority in aggregate principal amount of the Securities and the Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities or Exchange
Securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate principal amount of the Securities, the
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.

          (b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:

          (i) if to a Holder, at the most current address given by such Holder
     to the Company in accordance with the provisions of this Section 9(b),
     which address initially is, with respect to each Holder, the address of
     such Holder maintained by the Registrar under the Indenture.

          (ii) if to an Initial Purchaser, to it c/o Merrill Lynch & Co., 4
     World Financial Center, New York, New York 10080, Attention: Sarang Gadkari
     (telecopier no.: (212) 449-7750), with a copy to Cahill Gordon & Reindel
     LLP, 80 Pine Street, New York, New York 10005, Attention: Daniel J.
     Zubkoff, Esq., telecopier: (212) 269-5420.

          (iii) if to the Company, at Select Medical Holdings Corporation, 4718
     Old Gettysburg Road, P.O Box 2034, Mechanicsburg, PA 17055, Attn: Michael
     E. Tarvin, Senior V.P., General Counsel and Secretary, Facsimile: (717)
     975-9981; with a copy to Welsh, Carson, Anderson & Stowe, 320 Park Avenue,
     Suite 2500, New York, New York 10022-6815, Attention: Sean M. Traynor,
     telecopier no.: (212) 893-9559 and a copy to Ropes & Gray LLP, 45
     Rockefeller Plaza, New York, New York, Attention: Steven R. Rutkovsky,
     Esq., telecopier: (212) 841-5725.

          All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.

          The Initial Purchasers, on the one hand, or the Company, on the other
hand by notice to the other may designate additional or different addresses for
subsequent notices or communications.

          (c) Successors And Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, their respective successors and
assigns, including, without the need for an express assignment, subsequent
Holders of Securities and the Exchange Securities, and the indemnified persons
referred to in Section 6 hereof.

          (d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

          (e) Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term

                                      -14-

<PAGE>

"subsidiary" has the meaning set forth in the Indenture and (c) except where
otherwise expressly provided, the term "affiliate" has the meaning set forth in
Rule 405 under the Securities Act.

          (f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          (g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

          (h) Remedies. In the event of a breach by the Company (other than in
respect of a Registration Default for which liquidated damages under Section 3
shall be the exclusive remedy) or by any Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. Except as provided above, the Company and each
Holder agree that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.

          (i) No Inconsistent Agreements. The Company represents, warrants and
agrees that (i) it has not entered into, and shall not, on or after the date of
this Agreement, enter into, any agreement that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, (ii) it has not previously entered into any agreement which
remains in effect granting any registration rights with respect to any of its
debt securities to any person and (iii) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Transfer Restricted Securities, it
shall not grant to any person the right to request the Company to register any
debt securities of the Company under the Securities Act unless the rights so
granted are not in conflict or inconsistent with the provisions of this
Agreement.

          (j) No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders of Transfer Restricted Securities in
such capacity) shall have the right to include any securities of the Company in
any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.

          (k) Severability. Except as otherwise provided in Section 3, the
remedies provided herein are cumulative and not exclusive of any remedies
provided by law. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                                      -15-

<PAGE>

          Please confirm that the foregoing correctly sets forth the agreement
among the parties hereto.

                                        Very truly yours,

                                        SELECT MEDICAL HOLDINGS CORPORATION

                                        By: /s/ Martin F. Jackson
                                            ------------------------------------
                                        Name: Martin F. Jackson
                                              ----------------------------------
                                        Title: Chief Financial Officer
                                               ---------------------------------

<PAGE>

ACCEPTED AND AGREED TO:

MERRILL LYNCH, PIERCE, FENNER & SMITH
   INCORPORATED
WACHOVIA CAPITAL MARKETS, LLC
J.P. MORGAN SECURITIES INC.
   as Representatives of the several Initial Purchasers
   referred to on Schedule I to the Purchase Agreement

By: MERRILL LYNCH, PIERCE, FENNER & SMITH
     INCORPORATED

By: /s/ Illegible
    ---------------------------------
    Authorized Signatory

                                      -2-

<PAGE>

                                     ANNEX A

          Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution".

                                     ANNEX B

          Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution".

                                     ANNEX C

                              PLAN OF DISTRIBUTION

          Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
200__, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.

          The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.

                                      -3-

<PAGE>

          For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

                                     ANNEX D

          CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.

Name: _______________________________

Address: ____________________________

          If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

                                      -4-<PAGE>

                                                                   Exhibit 10.69

THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATED IN THE MANNER
AND TO THE EXTENT SET FORTH IN SECTION 19 HEREOF TO ALL SENIOR DEBT (AS DEFINED
HEREIN) AT ANY TIME OWED BY THE MAKER OF THIS NOTE AND THE HOLDER OF THIS NOTE,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF SECTION 19.

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") AS DEFINED BY SECTION
1273(a)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE FOLLOWING
INFORMATION IS PROVIDED PURSUANT TO THE INFORMATION REPORTING REQUIREMENTS SET
FORTH IN TREASURY REGULATION 1.1275-3.

THE ISSUE PRICE OF THIS NOTE IS $122,883,489.77. THE AMOUNT OF OID ON THIS NOTE
IS $18,116,510.23. THE ISSUE DATE OF THIS NOTE IS FEBRUARY 24, 2005. THE PER
ANNUM YIELD TO MATURITY OF THIS NOTE IS 12.53756% COMPOUNDED SEMI-ANNUALLY.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID LAWS.

                       SELECT MEDICAL HOLDINGS CORPORATION

                          10% Senior Subordinated Note
                              Due December 31, 2015

$141,000,000                                                   February 24, 2005
                                   amended and restated as of September 29, 2005

     Select Medical Holdings Corporation, a Delaware corporation (the "Issuer"),
for value received, hereby promises to pay to WCAS Capital Partners IV, L.P., a
Delaware limited partnership or registered assigns (collectively, the "Holder"),
the principal sum of ONE HUNDRED AND FORTY ONE MILLION DOLLARS ($141,000,000) on
December 31, 2015 (the "Maturity Date"), and to pay interest on the principal
amount hereof as provided in Section 3 of this Note.

     1. Certain Definitions. As used in this Note, the following terms have the
meanings specified below:

     "Business Day" means any day that is not a Saturday, Sunday or other day on
which banks are authorized or required to be closed in New York, New York.

<PAGE>

     "Change of Control" means (a) a "Change of Control", as defined in the
certificate of incorporation of the Issuer or any certificate of designations
relating to any preferred stock of the Issuer or (b) a "Change in Control", as
defined in any of the Senior Debt Documents or under any other indebtedness of
the Issuer or SMC.

     "Credit Agreement" means the Credit Agreement, dated as of February 24,
2005, among the Issuer, SMC, the lenders from time to time parties thereto and
JPMorgan Chase Bank, N.A., and any credit or similar agreement replacing or
refinancing such Agreement, as any of the same may be amended, restated,
extended or otherwise modified from time to time.

     "Designated Senior Debt" means either (a) the Senior Debt under the Credit
Agreement or (b) if the Senior Debt under the Credit Agreement has been paid in
full in cash, the Senior Debt in respect of the Senior Notes.

     "Designated Senior Debt Representative" means the Senior Debt
Representative under the Designated Senior Debt.

     "Permitted Junior Securities" means (1) any equity interests or (2)
unsecured debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt
hereunder; provided, that, Permitted Junior Securities shall not include any
securities distributed pursuant to a plan of reorganization if the Senior Debt
is treated as part of the same class as the Notes for purposes of such plan of
reorganization; provided, further, that to the extent that any Senior Debt
outstanding on the date of consummation of any such plan of reorganization is
not paid in full in cash on such date, the holders representing a majority of
the principal amount of any such Senior Debt not so paid in full in cash (or any
Senior Debt Representative thereof) have consented to the terms of such plan of
reorganization.

     "Required Holders" means, on any date of determination, the holders of a
majority of the aggregate principal amount of the Notes then outstanding.

     "Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of February 24, 2005, among the Issuer, the Initial Holder and the
other purchasers listed therein.

     "Senior Debt" means (a) all principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Issuer whether or not a claim
for post-filing interest is allowed or allowable in any such proceedings), fees,
charges, expenses, indemnification and reimbursement obligations and all other
amounts payable under the Issuer's guarantee of the "Obligations" as defined in
the Credit Agreement and (b) all principal, premium (if any) or interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Issuer whether or not a claim
for post-filing interest is allowed or allowable in any such proceedings)
payable under the Senior Notes.

                                        2

<PAGE>

     "Senior Debt Representatives" means (a) JPMorgan Chase Bank, N.A., or any
successor thereto, in its capacity as administrative agent for the lenders under
the Credit Agreement and (b) U.S. Bank National Association, or any successor
thereto, in its capacity as trustee for the holders of the Senior Notes under
the Senior Notes Indenture.

     "Senior Debt Documents" means the Credit Agreement and the Senior Notes
Indenture.

     "Senior Notes" shall mean the Issuer's Senior Floating Rate Notes due 2015,
issued pursuant to the Senior Notes Indenture.

     "Senior Notes Indenture" shall mean the Indenture, dated as of September
29, 2005, between the Issuer and U.S. Bank National Association, as trustee, as
the same may be amended, restated or otherwise modified from time to time.

     "Significant Subsidiary" means any subsidiary of the Issuer that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act of 1933, as amended.

     "SMC" means Select Medical Corporation, a Delaware corporation.

     2. The Notes. This Note is one of a duly authorized issue of Senior
Subordinated Notes in the aggregate principal amount of $150,000,000
(collectively, the "Notes") issued by the Issuer pursuant to the Securities
Purchase Agreement. All references hereunder to the "Notes" include this Note
and each other Note issued pursuant to the Securities Purchase Agreement.

     3. Interest. (a) Subject to Section 3(b), interest will accrue on the
unpaid principal amount of this Note at the rate of 10% per annum, payable
semiannually in arrears on February 1 and August 1 of each year, commencing on
August 1, 2005 (each such payment date being referred to as an "Interest Payment
Date"). The Issuer shall pay interest on overdue principal at the rate of 12%
per annum and it shall pay interest on overdue installments of interest at the
rate of 12% per annum to the extent lawful. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months.

     (b) If

          (1) the Issuer is prohibited by Section 19 of this Note from paying
     all or any portion of the accrued interest that is due and payable on any
     Interest Payment Date, or

          (2) the Required Holders agree in writing to defer all or a portion of
     the accrued interest that is due and payable on any Interest Payment Date,

then such amount of accrued interest shall be multiplied by 1.2 (such product
being referred to as the "PIK Interest") and the PIK Interest shall be added to
the principal amount of this Note on such Interest Payment Date (with the result
that such interest shall have accrued at an effective rate of 12% instead of 10%
through such Interest Payment Date).

                                        3

<PAGE>

     (c) On any Interest Payment Date on or after February 24, 2010, the Issuer
shall pay an amount of accrued original issue discount on this Note as shall be
necessary to ensure that this Note shall not be considered an "applicable high
yield discount obligation" within the meaning of Section 163(i) of the Internal
Revenue Code of 1986, as amended, or any successor provision. The amount of
principal payable at maturity of this Note shall be reduced by the amount of any
accrued original issue discount that is paid pursuant to this paragraph.

     4. Manner and Time of Payment. All payments of principal and cash interest
on this Note shall be in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts. If any
payment on this Note is due on a day which is not a Business Day, it shall be
due on the next succeeding Business Day. The Issuer will make all payments in
respect of this Note by mailing a check to the registered address of the Holder;
provided, however, that payments on this Note will be made by wire transfer to a
U.S. dollar account maintained by the payee with a bank in the United States if
such Holder elects payment by wire transfer by giving written notice to the
Issuer to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Issuer
may accept in its discretion).

     5. Transfer, Etc. of Notes. (a) The Issuer shall keep at its principal
office a register (the "Register") in which the Issuer shall provide for the
registration of this Note and for the registration of each transfer and/or
exchange of this Note.

     (b) In connection with any transfer of this Note, the Holder may, at its
option, and either in person or by its duly authorized attorney, (1) provide
written notice of such transfer to the Issuer (which transfer shall be recorded
by the Issuer on the Register) which notice shall be accompanied by a copy of
the written instrument of transfer, satisfactory in form to the Issuer and duly
executed by the Holder, or (2) surrender this Note for exchange at the principal
office of the Issuer and, without expense to the Holder (except for taxes or
governmental charges imposed in connection therewith), receive in exchange
therefor a new Note or Notes each in such denomination or denominations as the
Holder may request, dated as of the date to which interest has been paid on the
Note or Notes so surrendered for transfer or exchange, for the same aggregate
principal amount as the then unpaid aggregate principal amount of the Note or
Notes so surrendered for transfer or exchange, and registered in the name of
such person as may be designated by the Holder.

     (c) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or shall be accompanied by a written instrument
of transfer, satisfactory in form to the Issuer and duly executed by the Holder
or its attorney duly authorized in writing. Every Note so made and delivered in
exchange for a Note so surrendered for exchange shall in all other respects be
in the same form and have the same terms as such Note. No transfer or exchange
of a Note shall be valid unless recorded in the Register as set forth in this
Section 5.

     6. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of evidence
satisfactory to the Issuer of the loss, theft, destruction or mutilation of any
Note, and, in the case of any such loss, theft or destruction, upon receipt of
an affidavit of loss and indemnity

                                        4

<PAGE>

from the Holder reasonably satisfactory to the Issuer, or, in the case of any
such mutilation, upon surrender and cancellation of any Note, the Issuer will
make and deliver, in lieu of such Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
such Note.

     7. Prepayments.

     (a) Optional Prepayment. The Issuer may prepay all or any part of the
principal amount of the Notes, at any time and from time to time, without
premium or penalty.

     (b) Mandatory Prepayment on Initial Public Offering. Except as otherwise
agreed by the Required Holders, if the Issuer or any of its subsidiaries
consummates a public offering of equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended, (an
"IPO"), the Issuer shall prepay the Notes, without penalty or premium, in an
aggregate amount equal to the net proceeds of such public offering, less the
portion of such net proceeds that is required to be applied to prepay the Senior
Debt pursuant to the Senior Debt Documents.

     (c) Mandatory Prepayment on Change of Control. Except as otherwise agreed
by the Required Holders, if a Change of Control occurs, the Issuer shall prepay
in full the outstanding principal amount of the Notes, without penalty or
premium. Prior to complying with this Section 7(c), but in any event within 90
days following a Change of Control, the Issuer will either repay all its
outstanding Senior Debt or obtain the requisite consents, if any, under the
Senior Debt Documents to permit the prepayment of the Notes.

     8. Notice of Prepayment and Other Notices. The Issuer shall give written
notice of any prepayment of any of the Notes or any portion thereof pursuant to
Section 7 not less than five Business Days prior to the date fixed for such
prepayment. The Issuer shall give such notice of prepayment and all other
notices to be given to the Holder to the person in whose name this Note is
registered at its address designated on the Register on the date of mailing such
notice of prepayment or other notice. Upon notice of prepayment being given as
aforesaid, the Issuer shall be irrevocably obligated to prepay, on the date
therein fixed for prepayment, this Note or the portion hereof, as the case may
be, so called for prepayment, at the principal amount thereof so called for
prepayment, together with interest accrued thereon to the date fixed for such
prepayment. A prepayment of less than all of the outstanding principal amount of
this Note shall not relieve the Issuer of its obligation to make scheduled
payments of interest payable in respect of the principal remaining outstanding
on any Interest Payment Date.

     9. Allocation of All Payments. In the case of a partial prepayment,
purchase, redemption or retirement of less than all of the Notes then
outstanding, such prepayment, purchase, redemption or retirement shall be made
pro rata among all the Notes then outstanding by principal amount.

     10. Interest After Date Fixed for Prepayment. If this Note or a portion
hereof is called for prepayment as herein provided, this Note or such portion
shall cease to bear interest on and after the date fixed for such prepayment
unless, upon presentation for the

                                        5

<PAGE>

purpose, the Issuer shall fail to pay this Note or such portion, as the case may
be, in which event this Note or such portion, as the case may be, and, so far as
may be lawful, any overdue installment of interest, shall bear interest on and
after the date fixed for such prepayment and until paid at the rate per annum
provided herein for overdue principal.

     11. Surrender of Note; Notation Thereon. Upon any prepayment of a portion
of the principal amount of this Note, the Holder, at its option, may require the
Issuer to execute and deliver at the expense of the Issuer (except for taxes or
governmental charges imposed in connection therewith), upon surrender of this
Note, a new Note registered in the name of the Holder or such other persons as
may be designated by the Holder for the principal amount of this Note then
remaining unpaid, dated as of the date to which interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note to
the Issuer for notation hereon of the payment of the portion of the principal
amount of this Note so prepaid.

     12. Covenants. The Issuer covenants and agrees that, so long as any Note
shall be outstanding:

     (a) Financial Reporting. The Issuer shall furnish to the Holder:

          (1) all of the documents, financial statements, notices and other
     information required to be provided to any Senior Debt Representative
     under, and at the times required by, the Senior Debt Documents
     (notwithstanding any termination of the Senior Debt Documents); and

          (2) such other information as the Required Holders reasonably request.

     (b) Maintenance of Office. The Issuer shall maintain an office or agency in
such place in the United States of America as the Issuer may designate in
writing to the Holder, where the Notes may be presented for registration of
transfer and exchange as herein provided, where notices and demands to or upon
the Issuer in respect of the Notes may be served and where the Notes shall be
presented for payment. Until the Issuer otherwise notifies the Holder, said
office shall be the office of the Issuer at 4718 Old Gettysburg Road, P.O. Box
2034, Mechanicsburg, PA 17055.

     (c) Corporate Existence. The Issuer shall do or cause to be done all things
necessary and lawful to preserve and keep in full force and effect its corporate
existence, rights and franchises and the corporate existence, rights and
franchises of each of its subsidiaries; provided, however, that nothing in this
paragraph (d) shall prevent the abandonment or termination of any rights or
franchises of the Issuer, or the liquidation or dissolution of, or a sale,
transfer or disposition (whether through merger, consolidation, sale or
otherwise) of all or any substantial part of the property and assets of, any
subsidiary or the abandonment or termination of the corporate existence, rights
and franchises of any subsidiary if such abandonment, termination, liquidation,
dissolution, sale, transfer or disposition is, in the good faith business
judgment of the Issuer, in the best interests of the Issuer and is not
disadvantageous in any material respect to the holders of the Notes.

                                        6

<PAGE>

     (d) Maintenance of Property. The Issuer and its subsidiaries will keep and
maintain all property material to the conduct of their business in good working
order and condition, ordinary wear and tear excepted; provided, however, that
nothing in this paragraph (c) shall require (1) the making of any repair or
renewal, (2) the continuance of the operation and maintenance of any property or
(3) the retention of any assets if such action (or inaction) is, in the good
faith business judgment of the Issuer, in the best interests of the Issuer and
is not disadvantageous in any material respect to the holders of the Notes.

     (e) Notice of Default. If any one or more events which constitute, or which
with notice or lapse of time or both would constitute, an Event of Default under
Section 15 of this Note shall occur, or if the Required Holders shall demand
payment or take any other action permitted upon the occurrence of any such Event
of Default, the Issuer shall, immediately after it becomes aware that any such
event has occurred or that such demand has been made or that any such action has
been taken, give notice to all holders of the Notes, specifying the nature of
such event or of such demand or action, as the case may be; provided, however,
that if such event, in the good faith judgment of the Issuer, will be cured
within ten days after the Issuer has knowledge of such event, no such notice
need be given if such Event of Default shall be cured within such ten-day
period.

     13. Merger or Consolidation. If (a) the Issuer merges or is consolidated
with any person, (b) the Issuer is not the surviving corporation and (c) such
transaction is not a Change of Control requiring mandatory prepayment of the
Notes pursuant to Section 7(c), then the Issuer shall take such action as may be
necessary, as a condition to consummating such transaction, to cause the
surviving entity to assume all of the Issuer's obligations under the Notes, as
if such entity had been the original issuer thereof, and such entity shall
acknowledge in writing its obligation to fully and timely honor the Issuer's
obligations under the Notes.

     14. Modification by Holders; Waiver. (a) Any provision of the Notes may be
amended, modified or waived only with the written consent of the Required
Holders and the Issuer; provided that no amendment, modification, waiver or
consent shall, unless in writing and signed by the Holder, do any of the
following: (1) reduce the principal amount of or interest rate on this Note or
(2) amend Section 9 or this Section 14. Any waiver shall be effective only in
the specific instance and for the specific purpose for which it was given.

     (b) Any amendment, modification or waiver effected in accordance with this
Section 14 shall apply equally to each holder of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Issuer, whether or
not such Note shall have been marked to indicate such amendment, modification or
waiver, but any Note issued thereafter shall bear a notation referring to any
such amendment, modification or waiver. Promptly after obtaining the written
consent of the holders of the Notes as herein provided, the Issuer shall
transmit a copy of such amendment, modification or waiver to the holders of the
Notes at the time outstanding.

     15. Events of Default. If any one or more of the following events (each, an
"Event of Default") occurs and is continuing:

                                        7

<PAGE>

     (a) default in the payment of the principal of this Note when and as the
same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise; or

     (b) default in the payment of any interest or any other amount (other than
an amount referred to in (a) above) due under this Note, when and as the same
becomes due and payable, and such default continues for a period of three
Business Days; or

     (c) default in the due observance or performance by the Issuer of any
covenant, condition or agreement contained in Sections 12(c) or 13; or

     (d) default in the due observance or performance by the Issuer of any
covenant, condition or agreement contained in this Note or the Securities
Purchase Agreement (other than those specified in (a), (b) or (c) above) and
such default continues unremedied for a period of 30 days after notice thereof
from the Required Holders to the Issuer; or

     (e) any representation or warranty made or deemed made in or in connection
with the Securities Purchase Agreement or the issuance of the Note, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished pursuant to the
Securities Purchase Agreement or this Note, proves to have been false in any
material respect when so made, deemed made or furnished; or

     (f) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any Significant
Subsidiary in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar laws, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Issuer or any Significant Subsidiary for any substantial part of any of
their respective properties, or ordering the winding-up or liquidation of any of
their affairs and the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or

     (g) the commencement by the Issuer or any Significant Subsidiary of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or the consent by any of them to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Issuer or a
Significant Subsidiary for any substantial part of their respective properties,
or the making by any of them of any assignment for the benefit of creditors, or
the failure of the Issuer or any Significant Subsidiary generally to pay its
debts as such debts become due; or

     (h) default occurs under the terms of any indebtedness of the Issuer or any
Significant Subsidiary in an aggregate principal amount exceeding $25,000,000
and such default (1) consists of the failure to pay any amount of such
indebtedness when due, whether by acceleration or otherwise or (2) results in
the acceleration of the maturity of such indebtedness;

                                        8

<PAGE>

     (i) one or more judgments for the payment of money in an aggregate amount
(in each case to the extent not paid or covered by insurance provided by a
carrier who has acknowledged coverage in writing and has the ability to perform)
in excess of $25,000,000 is rendered against the Issuer, any Significant
Subsidiary, or any combination thereof and the same remains undischarged for a
period of 30 consecutive days during which execution is not effectively stayed,
or any action is legally taken by a judgment creditor to levy upon assets or
properties of the Issuer or any Significant Subsidiary to enforce any such
judgment;

then, the Required Holders may, at their option, by notice to the Issuer,
declare all the Notes to be forthwith due and payable, whereupon the principal
of the Notes, together with accrued interest thereon, shall become forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are expressly waived by the Issuer; provided, however, that in any
event described in paragraph (f) or (g) above, all the Notes, together with
interest accrued thereon, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Issuer.

     At any time after any declaration of acceleration as to this Note has been
made as provided in this Section 15, the Required Holders may, by notice to the
Issuer, rescind such declaration and its consequences, if (1) the Issuer has
paid all overdue installments of interest on this Note and all principal that
has become due otherwise than by such declaration of acceleration and (2) all
other defaults and Events of Default under this Note (other than nonpayments of
principal and interest that have become due solely by reason of acceleration)
have been remedied or cured or have been waived pursuant to this paragraph;
provided, however, that no such rescission will extend to or affect any
subsequent default or Event of Default or impair any right consequent thereon.

     16. Suits for Enforcement. If an Event of Default specified in paragraph
(a) or (b) of Section 15 occurs and is continuing or the Notes become
immediately due and payable in accordance with Section 15, the Holder may
proceed to protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or may proceed to enforce the payment of this
Note or to enforce any other legal or equitable right of the Holder; provided,
however, that the Holder may not pursue any remedy with respect to this Note
other than (i) a suit for the enforcement of payment of the principal of, and
premium, if any, or interest on, the Note on or after the applicable due date or
(ii) any other remedy authorized in writing by the Required Holders. In case of
any default under this Note, the Issuer will pay to the Holder such amounts as
shall be sufficient to cover the costs and expenses of such Holder due to said
default, including, without limitation, collection costs and reasonable
attorneys' fees.

     17. Remedies Cumulative. No remedy herein conferred upon the Holder is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.

                                        9

<PAGE>

     18. Remedies Not Waived. No course of dealing between the Issuer and the
Holder or any delay on the part of the Holder in exercising any rights hereunder
shall operate as a waiver of any right of the Holder.

     19. Subordination. This Note is subordinated in right of payment to all
Senior Debt to the extent and in the manner provided in this Section 19.

     (a) Liquidation, Dissolution, or Bankruptcy. Upon any payment or
distribution to creditors of the Issuer in a liquidation or dissolution of the
Issuer, in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Issuer or its property, in an assignment for the
benefit of the Issuer's creditors, or in any marshaling of the Issuer's assets
and liabilities:

          (1) holders of Senior Debt will be entitled to receive payment in full
     in cash of all Senior Debt before the holders of the Notes are entitled
     directly or indirectly to receive any payment of principal of or interest
     on the Notes, except the holders of the Notes may receive and retain
     Permitted Junior Securities; and

          (2) until payment in full in cash of all Senior Debt, any payment to
     which the holders of the Notes would be entitled but for the foregoing
     clause (1) will be made to holders of Senior Debt as their interests may
     appear.

     (b) Senior Debt Default. The Issuer shall not pay principal of, or interest
(other than PIK Interest) on, the Notes, and shall not repurchase, redeem or
otherwise retire any Notes (collectively, "pay the Notes") if (1) any principal,
premium or interest in respect of any Senior Debt is not paid when due after any
applicable grace period or (2) any other default on Senior Debt occurs and the
maturity of such Senior Debt is accelerated in accordance with its terms unless,
in either case, (A) the default has been cured or waived and any such
acceleration has been rescinded or (B) such Senior Debt has been paid in full in
cash; provided, however, that the Issuer may pay the Notes without regard to the
foregoing if the Issuer receives written notice approving such payment from the
Senior Debt Representatives. During the continuation of any default (other than
a default described in clause (1) or (2) of the preceding sentence) with respect
to the Designated Senior Debt pursuant to which the maturity thereof may be
accelerated immediately without further notice (except any notice required to
effect the acceleration) or the expiration of any applicable grace period, the
Issuer shall not pay the Notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the Issuer of written notice of such default from
the Designated Senior Debt Representative specifying an election to effect a
Payment Blockage Period (a "Payment Blockage Notice") and ending 179 days
thereafter. The Payment Blockage Period will end earlier if the Payment Blockage
Period is terminated (a) by written notice to the Issuer from the Designated
Senior Debt Representative, (b) because such default is no longer continuing, or
(c) because the Designated Senior Debt has been repaid in full in cash. Unless
the holders of the Designated Senior Debt or Designated Senior Debt
Representative have accelerated the maturity of the Designated Senior Debt and
not rescinded such acceleration, the Issuer may (unless otherwise prohibited as
described in the first sentence of this paragraph) resume payments on the Notes
after the end of such Payment Blockage Period. Not more than one Payment
Blockage Notice may be given in any

                                       10

<PAGE>

consecutive 360-day period, irrespective of the number of defaults with respect
to the Designated Senior Debt that have occurred during such period.

     (c) When Distribution Must Be Paid Over. If a distribution or payment is
made to the holders of the Notes that is prohibited by paragraph (a) or (b) of
this Section 19, the holders of the Notes who receive such distribution or
payment shall hold it in trust for holders of the Senior Debt and pay it over to
them as their interests may appear.

     (d) Subrogation. After all Senior Debt is paid in full in cash and until
the Notes are paid in full in cash, the holders of the Notes shall be subrogated
to the rights of the holders of Senior Debt to receive distributions applicable
to Senior Debt. A distribution made under this Section 19 to holders of Senior
Debt that otherwise would have been made to the holders of the Notes is not, as
between the Issuer and the holders of the Notes, a payment by the Issuer on such
Senior Debt.

     (e) Subordination May Not Be Impaired. The holders of Senior Debt may, at
any time and from time to time, without the consent of or notice to the holders
of the Notes, without incurring responsibility to the holders of the Notes and
without impairing or releasing the subordination provided in this Section 19 or
the obligations hereunder of the holders of the Notes to the holders of such
Senior Debt, do any one or more of the following: (1) change the manner, place,
terms or time of payment or extend the time of payment of, or renew or alter,
such Senior Debt or any instrument evidencing the same or any agreement under
which such Senior Debt is outstanding; (2) sell, exchange, impair, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Debt; (3) release any person liable in any manner for the collection or
payment of such Senior Debt; and (4) exercise or refrain from exercising any
rights against the Issuer or any other person.

     (f) Distribution or Notice to Senior Debt Representatives. Whenever a
distribution is to be made or a notice given to holders of Senior Debt, the
distribution may be made and the notice given to the Senior Debt
Representatives.

     (g) Relative Rights; Right To Accelerate. Section 19 defines the relative
rights of the holders of the Notes and holders of Senior Debt. Nothing in this
Note shall (1) impair, as between the Issuer and the holders of the Notes, the
obligation of the Issuer, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms; or (2) prevent any
holder of the Notes from exercising its available remedies upon a an Event of
Default, subject to the rights of holders of Senior Debt to receive
distributions or payments otherwise payable to the holders of the Notes. The
failure to make a payment pursuant to the Notes by reason of any provision in
this Section 19 shall not be construed as preventing the occurrence of an Event
of Default. If payment of the Notes is accelerated when any Senior Debt is
outstanding, the Issuer may not pay the Notes until five Business Days after the
Senior Debt Representatives receive notice of such acceleration and, thereafter,
may pay the Notes only if this Note otherwise permits payment at that time.

     (h) Substantive Consolidation. The Holder acknowledges and agrees, solely
in its, his or her capacity as such, and not as a director, officer or other
agent or representative

                                       11

<PAGE>

of the Issuer or any of its subsidiaries, that, in any proceeding under the U.S.
Bankruptcy Code or any proceeding under any similar law, it will not request,
join in or vote for any request for substantive consolidation of the Issuer with
any one or more of its subsidiaries (other than in connection with a plan of
reorganization that is approved by the requisite majorities of the creditors of
the Issuer and its subsidiaries, excluding the Holders of the Notes in their
capacity as such), and the Holder, by accepting this Note, waives any and all
rights it may have to do so.

     (i) Reliance by Holders of Senior Debt; Reliance by Holders of Senior
Subordinated Notes.

          (1) The Holder acknowledges and agrees that the foregoing
     subordination provisions are, and are intended to be, an inducement and a
     consideration to each holder of any Senior Debt, whether such Senior Debt
     was created or acquired before or after the issuance of the Notes, to
     acquire and continue to hold, or to continue to hold, such Senior Debt and
     such holder of such Senior Debt shall be deemed conclusively to have relied
     on such subordination provisions in acquiring and continuing to hold, or in
     continuing to hold, such Senior Debt.

          (2) The Holder acknowledges and agrees that the foregoing Section
     19(h) is, and is intended to be, an inducement and a consideration to each
     holder of SMC's 7-5/8% Senior Subordinated Notes due 2015 (the "SMC
     Notes"), to acquire and continue to hold, or to continue to hold, such SCM
     Notes and such holders of such SCM Notes shall be deemed conclusively to
     have relied on such Section in acquiring and continuing to hold, or in
     continuing to hold, such SMC Notes.

     20. Notices. Any notice or communication required or permitted hereunder
shall be in writing and shall be delivered personally, delivered by nationally
recognized overnight courier service, sent by certified or registered mail,
postage prepaid, or sent by facsimile (subject to electronic confirmation of
such facsimile transmission). Any such notice or communication shall be deemed
to have been given (a) when delivered, if personally delivered, (b) one Business
Day after it is deposited with a nationally recognized overnight courier
service, if sent by nationally recognized overnight courier service, (c) the day
of sending, if sent by facsimile prior to 5:00 p.m. (New York time) on any
Business Day or the next succeeding Business Day if sent by facsimile after 5:00
p.m. (New York time) on any Business Day or on any day other than a Business Day
or (d) five Business Days after the date of mailing, if mailed by certified or
registered mail, postage prepaid, in each case, to the following address or
facsimile number, or to such other address or addresses or facsimile number or
numbers as such party may subsequently designate to the other parties by notice
given hereunder:

     if to the Issuer, to it at:

          4718 Old Gettysburg Road
          P.O. Box 2034
          Mechanicsburg, PA 17055
          Attention: Martin F. Jackson

                                       12

<PAGE>

          Facsimile: (717) 303-0824

     if to the Holder, to it at:

          WCAS Capital Partners IV, L.P.
          c/o Welsh, Carson, Anderson & Stowe
          320 Park Avenue, Suite 2500
          New York, New York 10022
          Attention: Sean M. Traynor
          Facsimile: (212) 893-9566

     21. Governing Law; Waiver of Right to Trial by Jury; Etc. This Note shall
be governed by, and construed in accordance with, the laws of the State of New
York. The Issuer hereby waives any right to trial by jury in any legal
proceeding related in any way to this Note and agrees that any such proceeding
may, if the Holder so elects, be brought and enforced in the Supreme Court of
the State of New York for New York County or the United States District Court
for the Southern District of New York, and the Issuer hereby waives any
objection to jurisdiction or venue in any such proceeding commenced in such
court. The Issuer further agrees that any process required to be served on it
for purposes of any such proceeding may be served on it, with the same effect as
personal service on it within the State of New York, by registered mail
addressed to it at its office or agency set forth in Section 20 for purposes of
notices hereunder.

     22. Headings. The headings contained in this Note are inserted only as a
matter of convenience and for reference only and in no way define, limit or
describe the scope or intent of this Note.

                                    * * * * *

                                       13

<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Note to be signed in its
corporate name by one of its officers thereunto duly authorized and to be dated
as of the day and year first above written.

                                        SELECT MEDICAL HOLDINGS CORPORATION

                                        By: /s/ Michael E. Tarvin
                                            ------------------------------------
                                        Name: Michael E. Tarvin
                                              ----------------------------------
                                        Title: Senior Vice President, General
                                               Counsel and Secretary
                                               ---------------------------------

                   Signature Page to Amended and Restated Note

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