Document:

<PAGE>

                                                                   Exhibit 10.10

                          SELECT MEDICAL CORPORATION

                    4716 Old Gettysburg Road P.O. Box 2034
                       Mechanicsburg, Pennsylvania 17055

                                 March 1, 2000

Mr. S. Frank Fritsch
Select Medical Corporation
4716 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, PA 17055

     Re:  Agreement in the Event of a Change of Control of SMC
          ----------------------------------------------------

Dear Mr. Fritsch:

          The following will confirm the agreement of Select Medical
Corporation, a Delaware corporation (the "Company"), with you concerning the
consequences upon certain terminations of your employment in connection with a
change in control of the Company.

          In consideration of your past and continued service to the Company and
in consideration of the mutual covenants and agreements contained in this letter
(this "Letter Agreement"), the Company and you hereby agree, intending to be
legally bound hereby, as follows:

          1.   Covered Termination. A "Covered Termination" shall be deemed to
               -------------------
occur if your employment with the Company terminates under any one of the
following circumstances: (i) within the two-year period immediately following a
Change of Control (as defined below), your employment with the Company (a) is
terminated by the Company without Cause (as defined below), (ii) within the six-
month period immediately following a Change of Control, you terminate your
employment with the Company for Good Reason (as defined below), or (iii) within
the six-month period preceding a Change of Control, your employment is
terminated by the Company other than for Cause, and you reasonably demonstrate
that such termination of employment was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control.

          2.   Payments Upon a Covered Termination. If a Covered Termination
               -----------------------------------
occurs, then (i) the Company agrees that such termination is not a voluntary
termination or a termination "for cause" as contemplated by any of the Company's
stock option or other incentive plans and
<PAGE>

any stock option or other award agreements entered into between you and the
Company (including agreements that may be entered into in the future in
connection with additional awards granted pursuant to any Company plan, the
"Award Agreements") and the Company agrees that all unvested, unexercised stock
options held by you which were granted to you by the Company shall become fully
vested and exercisable as of the date of the Covered Termination and you will
have the right to exercise, at any time prior to the earlier of three months
after the date of termination or the expiration date of such option, all such
options to purchase the Company's stock notwithstanding any contrary vesting
schedule that may be contained in the applicable plan or Award Agreement, and
(ii) the Company will, on or before your last day as an employee of the Company,
pay to you, in lieu of any other rights to cash compensation other than the
payment of your salary for services performed before the date of termination and
as a severance benefit, a lump sum cash payment equal to your total base salary
plus bonus compensation from the Company for the preceding three years (or, if
you shall have been employed for less than three years, an amount equal to three
times your average total annual cash compensation for base salary and bonus for
your years of service to the Company).

          3.   Definitions.
               -----------

               (a)   Change of Control.
                     -----------------

                     (i)   Prior to a Public Offering (as defined below), a
"Change of Control" shall be deemed to have occurred, subject to Section
3(a)(iii) below, upon (i) any sale, lease, exchange or other transfer of all or
substantially all of the property and assets of the Company (on a consolidated
basis) to an entity, other than an entity at least 75% of the combined voting
power of the voting securities of which are owned by persons in substantially
the same proportion as their ownership of the Company immediately prior to such
sale or other transfer, (ii) any merger or consolidation to which the Company is
a party and as a result of which the holders of the voting securities of the
Company immediately prior thereto own less than a majority of the outstanding
voting securities of the surviving entity immediately following such
transaction, or (iii) any person's (excluding WCAS, GTCR and Thoma Cressey
Partners, the financial sponsors of the Company as of the date hereof),
including a group's, becoming the beneficial owner of securities representing
more than 50% of the voting securities of the Company then outstanding.

                     (ii)  Following a Public Offering, a "Change of Control"
shall be deemed to have occurred if, subject to Section 3(a)(iii) below, (i) any
person including a group, but excluding any stockholder of the Company who
immediately prior to the Public Offering beneficially owned 12% or more of the
Company's outstanding shares, becomes the beneficial owner of shares of the
Company having more than 50% of the total number of votes that may be cast for
the election of directors of the Company, (ii) any person including a group,
other than you or any group of which you are a party, increases its beneficial
ownership of shares of the Company beyond such person's ownership immediately
after the Public Offering by a number of shares equal to or greater than 33% of
the total number of votes that may be cast for the election of directors; (iii)
the individuals who serve on the Board of Directors of the

                                      -2-
<PAGE>

Company as of the effective date hereof (the "Incumbent Directors") cease for
any reason to constitute at least a majority of the Board of Directors of the
Company; provided, however, any person who becomes a director subsequent to the
effective date hereof, whose election or nomination for election was approved by
a vote of at least a majority of the directors then constituting the Incumbent
Directors, shall for purposes of this clause (iii) be considered an Incumbent
Director; (iv) the consummation of a merger or consolidation of the Company in
which the stockholders of the Company immediately prior to such merger or
consolidation, would not, immediately after the merger or consolidation,
beneficially own, directly or indirectly, shares representing in the aggregate
more than 50% of the combined voting power of the voting securities of the
corporation issuing cash or securities in the merger or consolidation (or of its
ultimate parent corporation, if any); or (v) there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets (on a consolidated basis), other than a sale or disposition by
the Company of all or substantially all of the Company's assets to an entity, at
least 50% of the combined voting power of the voting securities of which are
owned by persons in substantially the same proportion as their ownership of the
Company immediately prior to such sale.

                    (iii)  Notwithstanding the foregoing, in no event shall a
"Change of Control" be deemed to occur for purposes of this Letter Agreement,
whether prior to or following a Public Offering, unless the total consideration
for the transaction or transactions which would, absent this clause (iii),
constitute a Change of Control, has a value that is equal to or greater than
$3.75 per share of common stock of the Company (the "Minimum Value"); provided
that such Minimum Value shall be adjusted to reflect changes to such common
stock in the event of a stock dividend, stock split, reverse stock split, stock
combination, reclassification, recapitalization, or other similar change in the
structure or capitalization of the Company, or any other event which in the
discretion of the Board of Directors of the Company necessitates such an
adjustment.

                    (iv)   For purposes of this Section 3(a), (A) the terms
"person," "group," "beneficial owner," and "beneficially own" have the same
meanings as such terms under Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, (B) the
term "Public Offering" shall mean the consummation of the first public offering
of shares of common stock of the Company in a firm commitment underwritten
offering registered under the Securities Act of 1933, as amended, on Form S-1 or
its successor forms, and (C) the term "voting securities" shall mean securities,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect the corporate directors (or persons performing similar functions).

       (b)   Cause. For purposes of this Letter Agreement, "Cause" shall mean
             -----
(i) your willful and continued failure to substantially perform your duties
hereunder (other than any such failure resulting from incapacity due to physical
or mental illness); (ii) your engaging in willful or reckless misconduct which
is demonstrably and materially injurious to the Company, monetarily or
otherwise; or (iii) your conviction of a felony involving moral turpitude;
provided that an act, or failure to act, on your part shall be considered
"willful" or "reckless" only if done,

                                      -3-
<PAGE>

or omitted to be done, by you not in good faith and without a reasonable belief
that his action or omission was in the best interest of the Company. Your
employment shall not be deemed to have been terminated for Cause unless the
Company shall have given or delivered to you (i) reasonable notice setting forth
the reasons for the Company's intention to terminate your employment for Cause;
(ii) an opportunity to cure any such breach during the 30-day period after your
receipt of such notice; (iii) a reasonable opportunity, at any time during the
30-day period after your receipt of such notice, together with your counsel, to
be heard before the Board of Directors; and (iv) a notice of termination stating
that, in the good faith opinion of not less than a majority of the entire
membership of the Board of Directors of the Company, you are guilty of the
conduct set forth in any of clauses (i), (ii) or (iii) of the definition of
Cause above.

          (c)  Good Reason. For purposes of this Letter Agreement, you shall
               -----------
have "Good Reason" to terminate your employment after a Change of Control if you
make good faith determination that, as a result of such Change of Control, (x)
you are unable to perform your services effectively or there is any significant
adverse change in your authority or responsibilities, as performed immediately
prior to such Change of Control, (y) there is a reduction by the Company in your
compensation from that in effect prior to such Change of Control, or (z) you are
required to be based anywhere other than the Company's principal executive
offices in (or within 25 miles of) Mechanicsburg, Pennsylvania (except for
required travel on the Company's business to an extent substantially consistent
with your business travel obligations prior to the Change of Control).

          4.   Additional Payments.
               -------------------

          (a)  If all, or any portion, of the payments or other benefits
provided under any section of this Agreement, either alone or together with
other payments and benefits that you receive or are entitled to receive from the
Company or its affiliates, (whether or not under an existing plan, arrangement
or other agreement) (collectively the "Payments") would constitute an excess
"parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and would result in the imposition on you
of an excise tax under Section 4999 of the Code, (such excise tax, together with
any interest and penalties related thereto, are hereinafter collectively
referred to as the "Excise Tax") then, in addition to any other benefits to
which you are entitled under this Agreement, you will be entitled to receive an
additional payment (a "Gross-Up Payment") in cash, in an amount such that after
you pay all taxes including, without limitation, (i) any income taxes (and any
interest and penalties imposed with respect thereto) and (ii) any Excise Tax,
imposed upon the Gross-Up Payment, you will retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Unless you and the
Company otherwise agree in writing, any determination required under this
Section 4, including without limitation, the amount of payments under this
Article 6 (the "Parachute Gross-up") shall be computed and made in writing by
the Employer's then independent public accountants (the "Accountants"), whose
determination shall be, subject to the Employee's reasonable approval of the
calculations required under this Article 6, conclusive and binding upon the
Employee and the Employer for all purposes. For purposes of making the
calculations required by this Section 4, the Accountants may rely on reasonable,
good faith

                                      -4-
<PAGE>

interpretations concerning the application of Section 280G and 4999 of the Code.
You and the Company shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section 4. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.

          (b)  As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that (i) Gross-Up Payments which will not have been
made by the Company should have been made (an "Underpayment"), consistent with
the calculations required to be made hereunder or that (ii) Gross-Up Payments
that have been made will be determined to have been in excess of the Gross-Up
Payments actually required (an "Overpayment"). In the event that you are
required to make a payment of any Excise Tax, the Accountants shall determine
the amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for your benefit. In the event that it is
finally determined that an Overpayment has occurred, you will promptly, and in
any event within 30 days of such determination, refund the amount of the
Overpayment, plus any interest actually paid to you with respect to the
Overpayment, to the Company. The Company shall have the right with respect to
the determination of either an Underpayment or an Overpayment to you to appeal
the assertion of any Underpayment or to claim, and sue for, a refund of any
Excise Tax paid by you upon any Payment or Gross-Up Payment, provided that the
Company shall promptly reimburse you for all expenses, including counsel and
accounting fees, incurred in connection with any such proceeding. Alternatively,
the Company may undertake any such proceeding, and you shall cooperate with the
Company in any such proceeding.

          5.   Miscellaneous.
               -------------

               (a)  The Company will require any purchaser of all or
substantially all of the assets of the Company, by agreement in form and
substance reasonably satisfactory to you, to expressly assume and agree to
perform this Letter Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such purchase had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Letter Agreement and shall entitle
you to compensation from the Company in the same amount and on the same terms as
you would be entitled hereunder if a Covered Termination had occurred. As used
in this Letter Agreement, "Company" shall mean the Company as hereinbefore
defined and any purchaser of its assets as aforesaid which executed and delivers
the agreement provided for herein.

               (b)  This Letter Agreement shall remain in effect for so long as
you are employed by the Company. This Letter Agreement may not be modified or
waived except in writing and agreed to by the Company and you. This Letter
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania and
shall inure to the benefit of your heirs.

               (c)  The Company represents that this Letter Agreement has been
duly

                                      -5-
<PAGE>

authorized and is binding on and enforceable against the Company. The invalidity
or unenforceability of any provision of this Letter Agreement shall not affect
the validity or enforceability of any other provision, which shall remain in
full force and effect.

               (d)  Upon payment of the amount required under paragraph 1
hereof, you shall deliver to the Company a general release of liability of the
Company and its officers and directors in a form reasonably satisfactory to the
Company.

               (e)  All payments made pursuant to this Letter Agreement shall be
subject to withholding of applicable deductions and income and employment taxes.

               (f)  Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered personally or
sent by facsimile transmission or, if mailed, five days after the date of
deposit in the United States mails to the following addresses:

                    If to Employee:

                    S. Frank Fritsch
                    14 Southwatch Drive
                    Mechanicsburg, PA 17055

                    If to the Company:

                    Select Medical Corporation
                    4716 Old Gettysburg Road
                    Mechanicsburg, PA 17055
                    Attention: General Counsel

               6. Entire Agreement. This writing represents the entire agreement
                  ----------------
and understanding of the parties with respect to the subject matter hereof, and
supersedes all prior agreements, written or oral, with respect thereto. This
Agreement may not be altered or amended except by an agreement in writing.

                                      -6-
<PAGE>

          Please indicate your acceptance of the above agreement by signing
below in the space indicated.

                                        Very truly yours,

                                        SELECT MEDICAL CORPORATION, a
                                        Delaware corporation

                                        By: /s/ Robert A. Ortenzio
                                           -----------------------
                                             Robert A. Ortenzio,
                                             President

Agreed to and accepted:

/s/ Frank Fritsch
----------------------------
S. Frank Fritsch

                                      -7-<PAGE>

                                                                   EXHIBIT 10.11

                          SELECT MEDICAL CORPORATION

                    4716 Old Gettysburg Road P.O. Box 2034
                       Mechanicsburg, Pennsylvania 17055

                                 March 1, 2000

Mr. Martin F. Jackson
Select Medical Corporation
4716 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, PA 17055

     Re:  Agreement in the Event of a Change of Control of SMC:
          ----------------------------------------------------

Dear Mr. Jackson:

          The following will confirm the agreement of Select Medical
Corporation, a Delaware corporation (the "Company"), with you concerning the
consequences upon certain terminations of your employment in connection with a
change in control of the Company.

          In consideration of your past and continued service to the Company and
in consideration of the mutual covenants and agreements contained in this letter
(this "Letter Agreement"), the Company and you hereby agree, intending to be
legally bound hereby, as follows:

          1. Covered Termination. A "Covered Termination" shall be deemed to
             -------------------
occur if your employment with the Company terminates under any one of the
following circumstances: (i) within the two-year period immediately following a
Change of Control (as defined below), your employment with the Company (a) is
terminated by the Company without Cause (as defined below), (ii) within the six-
month period immediately following a Change of Control, you terminate your
employment with the Company for Good Reason (as defined below), or (iii) within
the six-month period preceding a Change of Control, your employment is
terminated by the Company other than for Cause, and you reasonably demonstrate
that such termination of employment was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control.

          2. Payments Upon a Covered Termination. If a Covered Termination
             -----------------------------------
occurs, then (i) the Company agrees that such termination is not a voluntary
termination or a termination "for cause" as contemplated by any of the Company's
stock option or other incentive plans and any stock option or other award
agreements entered into between you and the Company (including agreements that
may be entered into in the future in connection with additional awards
<PAGE>

granted pursuant to any Company plan, the "Award Agreements") and the Company
agrees that all unvested, unexercised stock options held by you which were
granted to you by the Company shall become fully vested and exercisable as of
the date of the Covered Termination and you will have the right to exercise, at
any time prior to the earlier of three months after the date of termination or
the expiration date of such option, all such options to purchase the Company's
stock notwithstanding any contrary vesting schedule that may be contained in the
applicable plan or Award Agreement, and (ii) the Company will, on or before your
last day as an employee of the Company, pay to you, in lieu of any other rights
to cash compensation other than the payment of your salary for services
performed before the date of termination and as a severance benefit, a lump sum
cash payment equal to your total base salary plus bonus compensation from the
Company for the preceding three years (or, if you shall have been employed for
less than three years, an amount equal to three times your average total annual
cash compensation for base salary and bonus for your years of service to the
Company).

          3.   Definitions.
               -----------

          (a)  Change of Control.
               -----------------

               (i)  Prior to a Public Offering(as defined below), a "Change of
Control" shall be deemed to have occurred, subject to Section 3(a)(iii) below,
upon (i) any sale, lease, exchange or other transfer of all or substantially all
of the property and assets of the Company (on a consolidated basis) to an
entity, other than an entity at least 75% of the combined voting power of the
voting securities of which are owned by persons in substantially the same
proportion as their ownership of the Company immediately prior to such sale or
other transfer, (ii) any merger or consolidation to which the Company is a party
and as a result of which the holders of the voting securities of the Company
immediately prior thereto own less than a majority of the outstanding voting
securities of the surviving entity immediately following such transaction, or
(iii) any person's (excluding WCAS, GTCR and Thoma Cressey Partners, the
financial sponsors of the Company as of the date hereof), including a group's,
becoming the beneficial owner of securities representing more than 50% of the
voting securities of the Company then outstanding.

               (ii) Following a Public Offering, a "Change of Control" shall be
deemed to have occurred if, subject to Section 3(a)(iii) below, (i) any person
including a group, but excluding any stockholder of the Company who immediately
prior to the Public Offering beneficially owned 12% or more of the Company's
outstanding shares, becomes the beneficial owner of shares of the Company having
more than 50% of the total number of votes that may be cast for the election of
directors of the Company, (ii) any person including a group, other than you or
any group of which you are a party, increases its beneficial ownership of shares
of the Company beyond such person's ownership immediately after the Public
Offering by a number of shares equal to or greater than 33% of the total number
of votes that may be cast for the election of directors; (iii) the individuals
who serve on the Board of Directors of the Company as of the effective date
hereof (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board of Directors of the Company; provided, however, any person
who becomes

                                      -2-
<PAGE>

a director subsequent to the effective date hereof, whose election or nomination
for election was approved by a vote of at least a majority of the directors then
constituting the Incumbent Directors, shall for purposes of this clause (iii) be
considered an Incumbent Director; (iv) the consummation of a merger or
consolidation of the Company in which the stockholders of the Company
immediately prior to such merger or consolidation, would not, immediately after
the merger or consolidation, beneficially own, directly or indirectly, shares
representing in the aggregate more than 50% of the combined voting power of the
voting securities of the corporation issuing cash or securities in the merger or
consolidation (or of its ultimate parent corporation, if any); or (v) there is
consummated an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (on a consolidated basis), other than
a sale or disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by persons in substantially the same
proportion as their ownership of the Company immediately prior to such sale.

          (iii) Notwithstanding the foregoing, in no event shall a "Change of
Control" be deemed to occur for purposes of this Letter Agreement, whether prior
to or following a Public Offering, unless the total consideration for the
transaction or transactions which would, absent this clause (iii), constitute a
Change of Control, has a value that is equal to or greater than $3.75 per share
of common stock of the Company (the "Minimum Value"); provided that such Minimum
Value shall be adjusted to reflect changes to such common stock in the event of
a stock dividend, stock split, reverse stock split, stock combination,
reclassification, recapitalization, or other similar change in the structure or
capitalization of the Company, or any other event which in the discretion of the
Board of Directors of the Company necessitates such an adjustment.

          (iv)  For purposes of this Section 3(a), (A) the terms "person,"
"group," "beneficial owner," and "beneficially own" have the same meanings as
such terms under Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, (B) the term
"Public Offering" shall mean the consummation of the first public offering of
shares of common stock of the Company in a firm commitment underwritten offering
registered under the Securities Act of 1933, as amended, on Form S-l or its
successor forms, and (C) the term "voting securities" shall mean securities, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect the corporate directors (or persons performing similar functions).

     (b)  Cause. For purposes of this Letter Agreement, "Cause" shall mean (i)
          -----
your willful and continued failure to substantially perform your duties
hereunder (other than any such failure resulting from incapacity due to physical
or mental illness); (ii) your engaging in willful or reckless misconduct which
is demonstrably and materially injurious to the Company, monetarily or
otherwise; or (iii) your conviction of a felony involving moral turpitude;
provided that an act, or failure to act, on your part shall be considered
"willful" or "reckless" only if done, or omitted to be done, by you not in good
faith and without a reasonable belief that his action or omission was in the
best interest of the Company. Your employment shall not be deemed to

                                      -3-
<PAGE>

have been terminated for Cause unless the Company shall have given or delivered
to you (i) reasonable notice setting forth the reasons for the Company's
intention to terminate your employment for Cause; (ii) an opportunity to cure
any such breach during the 30-day period after your receipt of such notice;
(iii) a reasonable opportunity, at any time during the 30-day period after your
receipt of such notice, together with your counsel, to be heard before the Board
of Directors; and (iv) a notice of termination stating that, in the good faith
opinion of not less than a majority of the entire membership of the Board of
Directors of the Company, you are guilty of the conduct set forth in any of
clauses (i), (ii) or (iii) of the definition of Cause above.

          (c) Good Reason. For purposes of this Letter Agreement, you shall have
              -----------
"Good Reason" to terminate your employment after a Change of Control if you make
good faith determination that, as a result of such Change of Control, (x) you
are unable to perform your services effectively or there is any significant
adverse change in your authority or responsibilities, as performed immediately
prior to such Change of Control, (y) there is a reduction by the Company in your
compensation from that in effect prior to such Change of Control, or (z) you are
required to be based anywhere other than the Company's principal executive
offices in (or within 25 miles of) Mechanicsburg, Pennsylvania (except for
required travel on the Company's business to an extent substantially consistent
with your business travel obligations prior to the Change of Control).

          4.  Additional Payments.
              -------------------

          (a) If all, or any portion, of the payments or other benefits provided
under any section of this Agreement, either alone or together with other
payments and benefits that you receive or are entitled to receive from the
Company or its affiliates, (whether or not under an existing plan, arrangement
or other agreement) (collectively the "Payments") would constitute an excess
"parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and would result in the imposition on you
of an excise tax under Section 4999 of the Code, (such excise tax, together with
any interest and penalties related thereto, are hereinafter collectively
referred to as the "Excise Tax") then, in addition to any other benefits to
which you are entitled under this Agreement, you will be entitled to receive an
additional payment (a "Gross-Up Payment") in cash, in an amount such that after
you pay all taxes including, without limitation, (i) any income taxes (and any
interest and penalties imposed with respect thereto) and (ii) any Excise Tax,
imposed upon the Gross-Up Payment, you will retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Unless you and the
Company otherwise agree in writing, any determination required under this
Section 4, including without limitation, the amount of payments under this
Article 6 (the "Parachute Gross-up") shall be computed and made in writing by
the Employer's then independent public accountants (the "Accountants"), whose
determination shall be, subject to the Employee's reasonable approval of the
calculations required under this Article 6, conclusive and binding upon the
Employee and the Employer for all purposes. For purposes of making the
calculations required by this Section 4, the Accountants may rely on reasonable,
good faith interpretations concerning the application of Section 280G and 4999
of the Code.  You and the Company shall furnish to the Accountants such
information and documents as the Accountants

                                      -4-
<PAGE>

may reasonably request in order to make a determination under this Section 4.
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section 4.

          (b) As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that (i) Gross-Up Payments which will not have been
made by the Company should have been made (an "Underpayment"), consistent with
the calculations required to be made hereunder or that (ii) Gross-Up Payments
that have been made will be determined to have been in excess of the Gross-Up
Payments actually required (an "Overpayment"). In the event that you are
required to make a payment of any Excise Tax, the Accountants shall determine
the amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for your benefit. In the event that it is
finally determined that an Overpayment has occurred, you will promptly, and in
any event within 30 days of such determination, refund the amount of the
Overpayment, plus any interest actually paid to you with respect to the
Overpayment, to the Company. The Company shall have the right with respect to
the determination of either an Underpayment or an Overpayment to you to appeal
the assertion of any Underpayment or to claim, and sue for, a refund of any
Excise Tax paid by you upon any Payment or Gross-Up Payment, provided that the
Company shall promptly reimburse you for all expenses, including counsel and
accounting fees, incurred in connection with any such proceeding. Alternatively,
the Company may undertake any such proceeding, and you shall cooperate with the
Company in any such proceeding.

          5.  Miscellaneous.
              -------------

          (a) The Company will require any purchaser of all or substantially all
of the assets of the Company, by agreement in form and substance reasonably
satisfactory to you, to expressly assume and agree to perform this Letter
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such purchase had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Letter Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if a Covered Termination had occurred. As used in
this Letter Agreement, "Company" shall mean the Company as hereinbefore defined
and any purchaser of its assets as aforesaid which executed and delivers the
agreement provided for herein.

          (b) This Letter Agreement shall remain in effect for so long as you
are employed by the Company. This Letter Agreement may not be modified or waived
except in writing and agreed to by the Company and you. This Letter Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania and shall
inure to the benefit of your heirs.

          (c) The Company represents that this Letter Agreement has been duly
authorized and is binding on and enforceable against the Company. The invalidity
or unenforceability of any provision of this Letter Agreement shall not affect
the validity or enforceability of any other provision, which shall remain in
full force and effect.

                                      -5-
<PAGE>

          (d) Upon payment of the amount required under paragraph 1 hereof, you
shall deliver to the Company a general release of liability of the Company and
its officers and directors in a form reasonably satisfactory to the Company.

          (e) All payments made pursuant to this Letter Agreement shall be
subject to withholding of applicable deductions and income and employment taxes.

          (f) Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally or sent by
facsimile transmission or, if mailed, five days after the date of deposit in the
United States mails to the following addresses:

          If to Employee:

          Martin F. Jackson
          3 Spartan Circle
          Camp Hill, PA 17011

          If to the Company:

          Select Medical Corporation
          4716 Old Gettysburg Road
          Mecbanicsburg, PA 17055
          Attention: General Counsel

                                      -6-
<PAGE>

          6. Entire Agreement. This writing represents the entire agreement and
             ----------------
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior agreements, written or oral, with respect thereto. This
Agreement may not be altered or amended except by an agreement in writing.

          Please indicate your acceptance of the above agreement by signing
below in the space indicated.

                                        Very truly yours,

                                        SELECT MEDICAL CORPORATION, a
                                        Delaware corporation

                                        By: /s/ Robert A. Ortenzio
                                           --------------------------
                                             Robert A. Ortenzio,
                                             President

Agreed to and accepted:

/s/ Martin F. Jackson
-----------------------------
Martin F. Jackson

                                      -7-

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