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                                                                     EXHIBIT 4.2

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON DECEMBER
15, 1998, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT DATED
AS OF DECEMBER 15,1998 AMONG THE ISSUER AND THE PURCHASERS NAMED THEREIN, AND
THE ISSUER RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF
SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON
WRITTEN REQUEST WITHOUT CHARGE.

                          SELECT MEDICAL CORPORATION

                         10% Senior Subordinated Note
                             Due December 15, 2008

$30,000,000                                     Dated: February 9, 1999

          SELECT MEDICAL CORPORATION, a Delaware corporation (hereinafter called
the "Company"), for value received, hereby promises to pay to WCAS CAPITAL
PARTNERS III, L.P. ("WCAS CF III") or its registered assigns, the principal sum
of THIRTY MILLION DOLLARS ($30,000,000 on December 15, 2008. In addition, the
Company hereby promises to pay to WCAS CP III, or its registered assigns,
interest (computed on the basis of a 360-day year consisting of twelve 30-day
months) from the date hereof on the unpaid principal amount hereof at the rate
of 10% per annum quarterly in arrears on March 15, June 15, September 15, and
December 15 of each year (each such date being an "Interest Payment Date"),
commencing on March 15, 1999, until the principal amount hereof shall have
become due and payable, whether at maturity or by acceleration or otherwise, and
thereafter at the rate of 12% per annum on any overdue principal amount and (to
the extent permitted by applicable law) on any overdue interest until paid.

          All payments of principal and interest on this Note shall be in such
coin or currency of the United States, of America as at (he time of payment and
shall be legal tender for payment of public and private debts.

          On any Interest Payment Date on or after December 15, 2003, the
Company shall also pay such 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 (the Code"), or any successor
provision. In the event that any such payment of accrued original issue discount
occurs, the amount of principal payable on this Note shall be reduced to the
extent necessary to ensure that the yield to maturity on this Note (determined
as provided by Section
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1272 of the Code and the regulations thereunder and computed by taking into
account any such payment of accrued original issue discount pursuant to this
paragraph) shall equal the yield to maturity on this Note (computed as though no
payment of accrued original issue discount had been made under this paragraph).

          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. For purposes of this
Note, "Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday or day on which banks are authorized or required to be closed in Chicago
or New York.

          1.   The Note. This Note is issued pursuant to and is subject to the
terms and provisions of the Securities Purchase Agreement dated as of December
15, 1998 (the "Purchase Agreement"), among the Company, Welsh, Carson, Anderson
& Stowe VII, L.P. ("WCAS VII"), WCAS C? III, Golder, Thoma, Cressey, Rauner Fund
V. L.P., GTCR Associates V and the other several purchasers named on Schedule I
thereto. As used herein, the term "Note" or "Notes" includes the 10% Senior
Subordinated Note due December 15, 2008 of the Company in the principal amount
of $35,000,000 issued on the first closing date under the Purchase Agreement
(the "First Issuance Date"), any 10% Senior Subordinated Notes due December 15,
2008 of the Company in the aggregate principal amount of up to $30,000,000
issued on subsequent closing dates pursuant to the Purchase Agreement and any
10% Senior Subordinated Note or Notes due December 15, 2008 subsequently issued
upon exchange or transfer thereof.

          2.   Transfer, Etc. of Notes. The Company shall keep at its office or
agency maintained as provided in paragraph (a) of Section 7 a register in which
the Company shall provide for the registration of this Note and for the
registration of transfer and exchange of this Note. The holder of this Note may,
at its option, and either in person or by its duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Company maintained as provided in Section 7 and, without expense
to such holder (except for taxes or governmental charges imposed in connection
therewith), receive in exchange therefor a Note or Notes each in such
denomination or denominations (which shall be $100,000 or an integral multiple
thereof) as such 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 principal amount of the Note
or Notes so surrendered for transfer or exchange, and registered in the name of
such person or persons as may be designated by such holder. 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 Company, duly executed by the holder of such Note or its attorney
duly authorized in writing. Every Note so made and delivered in exchange for
such Note shall in all other respects be in the same form and have the same
terms and legends thereon as such Note. No transfer or exchange of any Note
shall be valid (x) unless made in the foregoing manner at such office or agency
and (y) unless registered under the Securities Act of 1933, as amended, or any
applicable state securities laws or unless an exemption from such registration
is available.

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          3.   Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, arid, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and an indemnity reasonably
acceptable in form and substance to the Company from the holder thereof, or, in
the case of any such mutilation, upon surrender and cancellation of this Note,
the Company will make and deliver, in lieu of this Note, a new Note of like
tenor and unpaid principal amount and dated as of the date to which interest has
been paid on this Note.

          4.   Persons Deemed Owners; Holders. The Company may deem and treat
the person in whose name this Note is registered as the owner and holder of this
Note for the purpose of receiving payment of principal of 2nd interest on this
Note and for all other purposes whatsoever, whether or not this Note shall be
overdue. With respect to any Note at any time outstanding, the term "holder," as
used herein, shall be deemed to mean the person in whose name such Note is
registered as aforesaid at such time.

          5.   Prepayments.

          (a)  Optional Prepayment. Subject to any applicable restrictions
               -------------------
contained in the Credit Agreement (as hereinafter defined), upon notice given as
provided in Section 5(b), the Company may, at its option, prepay this Note,
without premium or penalty, as a whole at any time or in part from time to time
in principal amounts which shall be $100,000 or integral multiples thereof,
together with any accrued and unpaid interest thereon through the date of such
prepayment.

          (b)  Notice of Prepayment.  The Company shall give written notice of
               --------------------
any prepayment of this Note or any portion hereof(pursuant to Section 5(a) not
less than 10 nor more than 60 days prior to the date fixed for such prepayment.
Such notice of prepayment and all other notices to be given to the holder of
this Note shall be given by registered or certified mail to the person in whose
name this Note is registered a its address designated on the register maintained
by the Company on the date of mailing such notice of prepayment or other notice.
Upon notice of prepayment being given as aforesaid, the Company covenants and
agrees that it will 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
prepayment price determined in accordance with Section 5(a) hereof A prepayment
of less than all of the outstanding principal amount of this Note shall not
relieve the Company of its obligation to make scheduled payments of interest
payable in respect of the principal remaining outstanding on the Interest
Payment Dates.

          (c)  Allocation of All Payments.  In the event of any partial payment
               --------------------------
of less than all of the interest then due on the Notes then outstanding or any
prepayment, purchase, redemption or retirement of less than all of the
outstanding Notes, the Company will allocate the amount of interest so to be
paid and the principal amount so to be prepaid, purchased, redeemed or retired
to each Note in proportion, as nearly as may be, to the aggregate principal
amount of all Notes then outstanding.

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          (d)  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 such purpose, the Company 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
amounts.

          (e)  Surrender of Note; Notation Thereon.  Upon any prepayment of a
               -----------------------------------
portion of the principal amount of this Note, the holder hereof, at its option,
may require the Company to execute and deliver at the expense of the Company
(other than for transfer taxes, if any), upon surrender of this Note, a new Note
registered in the name of such person or persons as may be designated by such
holder for the principal amount of this Note then remaining unpaid, dated as of
the date to which the interest has been paid on the principal amount of this
Note then remaining unpaid, or may present this Note to the Company for notation
hereon of the payment of the portion of the principal amount of this Note so
prepaid.

          6.   Special Mandatory Prepayments. (a) Subject to any applicable
restrictions contained in, or prior applications of funds required pursuant to,
the Credit Agreement, within 30 days after the consummation of:

               (i)   a Change of Control, or

               (ii)  the issuance (other than by dividend or upon the exercise
          of employee stock options) of any capital stock or other ownership
          interest of the Company pursuant to offerings registered under the
          Securities Act of 1933, as amended (the "Securities Act"),

the Company shall be required to prepay the indebtedness outstanding under the
Notes, without premium or penalty, in an amount equal to 100% of the cash
proceeds received by the Company from such transaction less all legal expenses,
customary commissions, underwriting discounts and other fees and expenses
incurred and all federal, state, local and foreign taxes assessed in connection
therewith ("Net Proceeds"); provided, however, in the case of an initial public
                            --------  -------
offering of the Company's capital stock registered under the Securities Act, the
Company shall instead be required to apply only 25% of the Net Proceeds received
by the Company therefrom to prepay the Notes.  Partial prepayment of the Notes
pursuant to this Section 6 shall be made on a pro rata basis with respect to the
Notes, based on the aggregate principal amount of Notes then outstanding.

          (b)  In the event of a required prepayment of the indebtedness
outstanding under the Notes pursuant to Section 6(a) hereof, the Company will,
promptly but in no event later than 30 days after the consummation of the
transaction requiring such prepayment, in good faith, (i) obtain any required
consent of the holders of any Senior Indebtedness (as defined herein) to permit
the prepayment contemplated by Section 6(a), or (ii) repay some or all of such
Senior Indebtedness to the extent necessary (including, if necessary, payment in
full of such

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Senior Indebtedness and payment of any prepayment premiums, fees, expenses or
penalties) to permit the prepayment contemplated by Section 6(a) without such
consent. Failure to comply with the foregoing shall not relieve the Company from
its obligations pursuant to paragraph (a) above.

          (c)  For purposes of this Note "Change of Control" means (i) the sale,
lease or transfer, whether direct or indirect (other than by way of merger or
consolidation), of all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, in one transaction or a series of related
transactions, to any "person" or "group" (other than any of the Principal
Stockholders (as hereinafter defined)), (ii) the liquidation or dissolution of
the Company or the adoption of a plan of liquidation or dissolution of the
Company, (iii) the acquisition of "beneficial ownership" by any "person" or
"group" (other than any of the Principal Stockholders) of securities of the
Company representing more than 50% of the combined voting power of all then
outstanding securities entitled to vote generally in elections of directors of
the Company or any successor entity ("Voting Stock"), by way of sale, transfer
or issuance of or a series of sales, transfers and/or issuances of Voting Stock
or otherwise, except as a result of such sales or transfers by WCAS CP III or
any of its affiliates in a transaction involving no sale or transfer by any of
the other Principal Stockholders, or (iv) any merger or consolidation to which
the Company is a party, except for a merger or consolidation in which the
holders of the Company's outstanding Voting Stock entitled to elect a majority
of the Company's Board of Directors immediately prior to the merger or
consolidation shall continue to own directly or beneficially the outstanding
Voting Stock of the surviving corporation entitled to elect a majority of the
Board of Directors of the surviving corporation after giving effect to the
merger or consolidation; provided, however, that in no event shall a foreclosure
                         --------  -------
on any collateral pledged in respect of obligations arising under o in
connection with the Credit Agreement constitute a Change of Control.

          For purposes of this Section 6, (i) the terms "person" and "group"
shall have the meaning set forth in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), whether or not applicable, (ii)
the term "beneficial owner" shall have the meaning set forth in Rules 13d-3 and
13d-5 under the Exchange Act, whether or not applicable, except that a person
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time or upon the Occurrence of certain events,
(iii) any "person" or "group" will be deemed to beneficially own any Voting
Stock of the Company so long as such person or group beneficially owns, directly
or indirectly, in the aggregate a majority of the Voting Stock of a registered
holder of the Voting Stock of the Company, and (iv) the term "Principal
Stockholders" shall mean any of WCAS VII, WCAS Healthcare Partners L.P., WCAS CP
III, Golder, Thoma, Cressey, Rauner Fund V, L.P., GTCR Associates V, GTCR Fund
VI, L.P., GTCR Executive Fund, L.P., GTCR Associates, VI, Bryan C. Cressey,
Thoma Cressey Fund VI, L.P., Select Partners, L.P., Select Healthcare Investors
I, L.P., Select Investments H, L.P., Rocco A. Ortenzio or Robert A. Ortenzio
and, as applicable, any general partners thereof (including any of the general
partners or managing members of such general partners) and any

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other investment limited partnerships or other investment entities under common
control therewith.

          7.   Covenants Relating to the Notes. The Company covenants and agrees
that so long as the Notes shall be outstanding and in the case of paragraphs (k)
through (n) below, so long as five million dollars ($5,000,000) of aggregate
principal amount of the Notes is outstanding:

          (a)  Maintenance of Office.  The Company will maintain an office or
               ---------------------
agency in such place in the United States of America as the Company may
designate in writing to the registered holder of this Note, where this Note may
be presented for registration of transfer and for exchange as herein provided,
where notices and demands to or upon the Company in respect of this Note may be
served and where this Note may be presented for payment.  Until the Company
otherwise notifies the holder hereof; said office shall be the principal office
of the Company located at 4718 Old Gettysburg Road, P.O. Box 2034,
Mechanicsburg, Pennsylvania 17055.

          (b)  Payment of Taxes.  The Company will promptly pay and discharge or
               ----------------
cause to be paid and discharged, before the same shall become in default, all
material lawful taxes and assessments imposed upon the Company or any of its
subsidiaries or upon the income and profits of the Company or any of its
subsidiaries, or upon any property, real, personal or mixed, belonging to the
Company or any of its subsidiaries, or upon any part thereof by the United
States or any state thereof, as well as all material lawful claims for labor,
materials and supplies which, if unpaid, would become a lien or charge upon such
property or any part thereof, provided, however, that neither the Company nor
                              --------  -------
any of its subsidiaries shall be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim so long as
both (x) the Company has established adequate reserves for such tax, assessment,
charge, levy or claim and (y)(i) the Company or a subsidiary shall be contesting
the validity thereof in good faith by appropriate proceedings or (ii) the
Company shall, in its good faith judgment, deem the validity thereof to be
questionable and the party to whom such tax, assessment, charge, levy or claim
is allegedly owed shall not have made written demand for the payment thereof.

          (c)  Corporate Existence.  The Company will do or cause to be done all
               -------------------
things necessary and lawful to preserve and keep in full force and effect (i)
its corporate existence and the corporate existence of each of its subsidiaries
and (ii) the material rights and franchises of the Company and each of its
subsidiaries under the laws of the United States or any state thereof, or, in
the case of subsidiaries organized and existing outside the United States, under
the laws of the applicable jurisdiction; provided, however, that nothing in this
                                         --------  -------
paragraph (c) shall prevent (x) a consolidation or merger of, or a sale,
transfer or disposition of all or any substantial part of the property and
assets of, the Company not prohibited by the provisions of Section 7(j) hereof
or (y) the abandonment or termination of any rights or franchises of the
Company, or the abandonment or termination of the corporate existence, rights
and franchises of any subsidiary, if such

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abandonment or termination is, in the good faith business judgment of the
Company, in the best interests of the Company and nit disadvantageous to the
holder of this Note.

          (d)  Maintenance of Property.  The Company will at all times maintain
               -----------------------
and keep, or cause to be maintained and kept, in good repair, working order and
condition (reasonable wear and tear excepted) all significant properties of the
Company and its subsidiaries used in the conduct of the business of the Company
and its subsidiaries, and will from time to time make or cause to be made all
needful and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the business of the Company and its subsidiaries may be
conducted at all times in the ordinary course consistent with past practice;
provided, however, that nothing in this subsection (d) shall require (i) the
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making of any repair or renewal or (ii) the continuance of the operation and
maintenance of any property or (iii) the retention of any assets (the sale or
other disposition of which would not be prohibited by this Section 7), if such
action (or inaction) is, in the good faith business judgment of the Company, in
the best interests of the Company and is not disadvantageous to the holder of
this Note.

          (e)  Insurance.  The Company will, and will cause each of its
               ---------
subsidiaries to, (i) keep adequately insured, by financially sound and reputable
insurers, all property of a character usually insured by corporations engaged in
the same or a similar business similarly situated against loss or damage of the
kinds customarily insured against by such corporations and (ii) carry, with
financially sound and reputable insurers, such other insurance (including
without limitation liability insurance) in such amounts as are available at
reasonable expense and to the extent believed advisable in the good faith
business judgment of the Company.

          (f)  Keeping of Books.  The Company will at all times keep, and cause
               ----------------
each of its subsidiaries to keep, proper books of record and account in which
proper entries will be made of its transactions in accordance with generally
accepted accounting principles consistently applied.

          (g)  Transactions with Affiliates.  The Company shall not enter into,
               ----------------------------
or permit any of its subsidiaries to enter into, any transaction with any of its
or any subsidiary's officers, directors, employees or any person related by
blood or marriage to any such person or any entity in which any such person owns
any beneficial interest, except for (i) normal employment arrangements, benefit
programs and employee incentive option programs on reasonable terms, (ii) any
transaction approved by the Board of Directors of the Company in accordance with
the provisions of Section 144 of the Delaware General Corporation Law, or
otherwise permitted by such Section, (iii) customer transactions in the ordinary
course of business and on arm's length terms and (iv) the transactions
contemplated by the Purchase Agreement, the Ancillary Agreements (as defined
therein) and the Management Agreements.

          (h)  Notice of Certain Events. The Company shall, immediately after it
               ------------------------
becomes aware of the occurrence of (i) any Event of Default (as hereinafter
defined) or any event which, upon notice or lapse of time 'r both, would
constitute such an Event of Default (unless such Event of Default or other event
is reasonably expected to be, and is, cured within five Business Days after the
Company becomes aware of same), or (ii) any action, suit or proceeding

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at law or in equity or by or before any governmental instrumentality or agency
which, if adversely determined, would materially impair the right' of the
Company to carry on its business substantially as now or then conducted, or
would reasonably be expected to have a material adverse effect on the
properties, assets, financial condition, prospects, operating results or
business of the Company and its subsidiaries taken as a whole, give notice to
the holder of this Note, specifying the nature of such event.

          (i)  Payment of Principal and Interest on the Note.  The Company will
               ---------------------------------------------
use its best efforts, subject to the provisions of applicable credit
arrangements (including the Credit Agreement), contractual obligations of the
Company and/or its subsidiaries and any applicable law restricting the same, to
provide funds from its subsidiaries to the Company, by dividend, advance or
otherwise, sufficient to permit payment by the Company of the principal of and
interest on this Note in accordance with its terms.  Subject to any applicable
provisions in the Credit Agreement and documents executed and delivered in
connection therewith, the Company will not, and will not permit any subsidiary
to, directly or indirectly create or otherwise cause to exist any encumbrance or
restriction on the ability of any subsidiary to pay dividends or make any other
distributions to the Company or any wholly owned subsidiary of the Company in
respect of its capital stock, except any encumbrance or restriction existing on
the First Issuance Date.

          (j)  Consolidation, Merger and Sale.  The Company will not consolidate
               ------------------------------
or merge with or into, or sell or otherwise dispose of all or substantially all
of its property in one or more related transactions to, any other corporation or
other entity, unless:

               (i)    the Company is the surviving corporation or the entity
          formed by or surviving any such consolidation or merger (if other than
          the Company) or to which such sale or other disposition shall have
          been made is a corporation organized or existing under the laws of the
          United States of any state thereof or the District of Columbia;

               (ii)   the surviving corporation or other entity (if other than
          the Company) shall expressly and effectively assume in writing the due
          and punctual payment of the principal of and interest on this Note,
          according to its tenor, and the due and punctual performance and
          observance of all the terms, covenants, agreements and conditions of
          this Note to be performed or observed by the Company to the same
          extent as if such surviving corporation had been the original maker of
          this Note;

               (iii)  the Company or such other corporation or other entity
          shall not otherwise be in default in the performance or observance of
          any covenant, agreement or condition of this Note; and

               (iv)   the holder of' his Note, shall have received, in
          connection therewith, an opinion of counsel for the Company (or other
          counsel satisfactory to the holder), in form and substance
          satisfactory to the holder, to the effect that any

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          such consolidation, merger, sale or conveyance and any such assumption
          complies with the provisions of this paragraph (j).

          Notwithstanding anything to the contrary herein, in no event shall a
foreclosure on any collateral pledged in respect of obligations arising under or
in connection with the Credit Agreement be deemed to constitute a violation of
the Company's obligations under this paragraph (j).

          (k)  Limitation on Indebtedness and Disqualified Stock.  The Company
               -------------------------------------------------
will not, and will not permit any of its subsidiaries to (i) incur or permit to
remain outstanding any indebtedness for money borrowed ("Indebtedness"), except
(A) Senior Indebtedness (as defined in Section 13), (B) Indebtedness existing on
the First Issuance Date, (C) Indebtedness permitted to be incurred by or under
the Credit Agreement or the Canadian Credit Agreement, in each case as in effect
from time to time after the First Issuance Date (other than Indebtedness that is
subordinate or junior in right of payment (to any extent) to any Senior
Indebtedness and senior or pan passu in right of payment (to any extent) to the
Notes ("Layered Indebtedness")), (D) in the event that the Credit Agreement or
the Canadian Credit Agreement has terminated, Indebtedness permitted to be
incurred by or under any successor credit agreement with respect to Senior
Indebtedness other than Layered Indebtedness, or if there exists no such credit
agreement, such Indebtedness as may be mutually agreed upon by the Company and
the holders of a majority of the aggregate principal amount of the Notes then
outstanding, (E) Indebtedness incurred after the First Issuance Date for the
sole purpose of financing all or a part of the cost of acquiring any interest in
any business (whether by a purchase or assets, purchase of stock, merger or
otherwise) other than Layered Indebtedness, (F) Indebtedness owing by the
Company or any subsidiary of the Company to any subsidiary of the Company or to
the Company, or (G)'Indebtedness incurred pursuant to the Purchase Agreement, or
(ii) issue any capital stock ("Disqualified Stock") of the Company or any of its
subsidiaries (or her than the Preferred Stock (as hereinafter defined)) which by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures, or is
mandatorily redeemable, whether pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to December 31, 2009, other than a "put" or similar right by a
holder of a minority interest in any subsidiary of the Company approved by
representatives to the Company's Board of Directors designated by WCAS VII or
any of its affiliates in connection with the acquisition of such subsidiary by
the Company (the "Put Securities").

          (l)  Restricted Payments.  The Company will not, and will not permit
               -------------------
any of its subsidiaries to (i) declare or pay any dividends on, or make any
other distribution or payment on account of, or redeem, retire, purchase or
otherwise acquire for value, directly or indirectly, any shares of any class of
stock of the Company, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash,
property or in obligations of the Company or any of its subsidiaries, except for
(A) distributions of shares of the same class or of a different class of stock
pro rata to all holders of shares of a class of stock, (B) the payment of cash
dividends on account of the Company's Class A Preferred Stock, $.01

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par value (the "Preferred Stock"), (C) dividends, distributions or payments by
any subsidiary to the Company or to any wholly owned subsidiary of the Company,
(D) repurchases of Put Securities, (E) distributions pro rata to the
stockholders, members, partners or other equity holders of less than wholly
owned subsidiaries of the Company approved by representatives to the Company's
Board of Directors designated by WCAS Vii or any of its affiliates, or (F)
repurchases of shares of any class of stock of the Company from employees upon
their termination of employment, or (ii) except as permitted under the Credit
Agreement, make any payments of principal, or retire, redeem, purchase or
otherwise acquire any Indebtedness other than any Senior Indebtedness or the
Notes (such declarations, payments, purchases, redemptions, retirements,
acquisitions or distributions being herein called "Restricted Payments").

          (m)  Limitation on Liens.  The Company shall not, and shall not permit
               -------------------
any of its subsidiaries to, directly or indirectly, create, incur, assume or
otherwise cause or suffer to exist any lien, pledge, charge, security interest
or encumbrance (collectively, "Liens") on any asset now owned or hereafter
acquired, or on any income or profits therefrom or assign or convey any right to
receive income therefrom, except for (i) Liens permitted under the Credit
Agreement, (ii) liens for current taxes not yet due, (iii) landlord's liens,
(iv) purchase money liens, (v) workman's, materialman's, warehouseman's and
similar liens arising by law or Statute and (vi) Liens existing on the First
Issuance Date provided that the Indebtedness secured thereby is not increased.

          (n)  Inspection of Property. The Company will permit the holder hereof
               ----------------------
to visit and inspect any of the properties of the Company and any other
subsidiaries and their books and records and to discuss the affairs, finances
and accounts of any of such corporations with the principal officers of the
Company and such subsidiaries and their independent public accountants, all at
such reasonable times and as often as such holders may reasonably request.

          8.   Modification by Holders; Waiver. The Company may, with the
written consent of the holders of not less than a majority in principal amount
of the Notes then outstanding, modify the terms and provisions of this Note or
the rights of the holders of this Note or the obligations of the Company
hereunder, and the observance by the Company of any term or provision of this
Note may be waived with the written consent of the holders of not less than a
majority in principal amount of the Notes then outstanding.

          Any such modification or waiver 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 Company, whether or not such Note shall have been marked to
indicate such modification or waiver, but any Note issued thereafter shall bear
a notation referring to any such modification or waiver.  Promptly after
obtaining the written consent of the holders as herein provided, the Company
shall transmit a copy of such modification or waiver to the holders of the Notes
at the time outstanding.

          9.   Events of Default. If any one or more of the following events,
herein called "Events of Default, "shall occur (for any reason whatsoever, and
whether such occurrence shall, on the part of the Company or any of its
subsidiaries, be voluntary or involuntary or come

                                       10
<PAGE>

about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of a court of competent jurisdiction or any order,
rule or regulation of any administrative or other governmental authority) and
such Event of Default shall be continuing:

               (i)    default shall be made in the payment of the principal of
          this Note when and as the same shall become due and payable, whether
          at maturity or at a date fixed for prepayment or repurchase (including
          default of any optional prepayment in accordance with the requirements
          of Section 5, on any special mandatory prepayment in accordance with
          the requirements of Section 6, as the case may be) or by acceleration
          or otherwise; or

               (ii)   default shall be made in the payment of any installment of
          interest on this Note according to its terms when and as the same
          shall become due and payable, and such default shall continue for 5
          Business Days; or

               (iii)  default shall be made in the due observance or performance
          of any covenant, condition or agreement on me part of the Company
          contained herein in Section 7(j); or

               (iv)   default shall be made in the due observance or performance
          of any other covenant, condition or agreement on the part of the
          Company to be observed or performed pursuant to the terms hereof or of
          the Purchase Agreement, and such default shall continue for 10
          Business Days after written notice thereof from holders of not less
          than 33-1/3% of the aggregate principal amount of the Notes at the
          time outstanding, specifying such default and requesting that the same
          be remedied; or

               (v)    the entry of a decree on order for relief by a court
          having jurisdiction in the premises in respect of the Company or any
          of its subsidiaries in any 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 Company or any of
          its subsidiaries for any substantial part of any of their property 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 30 consecutive days; or

               (vi)   the commencement by the Company or any of its material
          subsidiaries 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 Company or any of its material
          subsidiaries for any substantial part of any of their property, or the
          making by any of them of any general assignment for the benefit of
          creditors, or

                                       11
<PAGE>

          the failure of the Company or of any of its material subsidiaries
          generally to pay its debts as such debts become due, or the taking of
          corporate action by the Company or any of its material subsidiaries in
          furtherance of or which might reasonably be expected to result in any
          of the foregoing; or

               (vii)    a default or an event of default as defined in any
          instrument evidencing or under which the Company or any of its
          material subsidiaries has outstanding at the time any Indebtedness in
          excess of $1,000,000 in aggregate principal amount shall occur and as
          a result thereof the maturity of any such Indebtedness shall have been
          accelerated so that the same shall have become due and payable prior
          to the date on which the same would otherwise have become due and
          payable and such acceleration shall not have been rescinded or
          annulled within 20 days; or

               (viii)   final judgment (not reimbursed by insurance policies of
          the Company or any of its subsidiaries) for the payment of money in
          excess of $1,000,000 shall be rendered against the Company or any of
          its subsidiaries and the same shall remain undischarged for a period
          of 30 days during which execution shall not be effectively stayed;

then the holders of at least 33-1/3% in aggregate principal amount of the Notes
at the time outstanding may, at their option, by a notice in writing to the
Company declare this Note to be, and this Note shall thereupon be and become
immediately due and payable together with interest accrued thereon, without
diligence, presentment, demand, protest or further notice of any kind, all of
which are expressly waived by the Company to the extent permitted by law.  For
purposes of clauses (vi) and (vii), the term "material subsidiary" shall mean
each subsidiary of the Company, other than subsidiaries that are dormant, or
conduct no business other than the holding of assets of insignificant value or
have less than $5 million in annual revenues at such time (collectively "non-
material subsidiaries"); provided, however, for purposes of clauses (vi) and
                         --------  -------
(vii), in the event that an Event of Default shall relate to one or more non-
material subsidiaries which have greater than $5 million in annual revenues in
the aggregate such Event of Default shall be deemed to be an Event of Default
that relates to material subsidiaries.

          At any time after any declaration of acceleration has been made as
provided in this Section 9, the holders of a majority in principal amount of the
Notes then outstanding may, by notice to the Company, rescind such declaration
and its consequences, provided, however, that no such rescission shall extend to
                      --------  -------
or affect any subsequent default or Event of Default or impair any right
consequent thereon.

          Without limiting the foregoing, the Company 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 Company
hereby waives any objection to jurisdiction or venue in any such proceeding
commenced in such court. The Company further agrees that any process required
to

                                       12
<PAGE>

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 paragraph
(a) of Section 7 for purposes of notices hereunder.

          10.  Suits for Enforcement. Subject to the provisions of Section 13 of
this Note, in case any one or more of the Events of Default specified in Section
9 of this Note shall happen and be continuing (subject to any applicable cure
period expressly set forth herein), the holder of this Note 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 of this Note.

          In case of any default under this Note, the Company will pay to the
holder hereof reasonable collection costs and reasonable attorneys' fees, to the
extent actually incurred.

          11.  Remedies Cumulative. No remedy herein conferred upon the holder
of this Note 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.

          12.  Remedies Not Waived. No course of dealing between the Company and
the holder of this Note or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any right of the
holder of this Note.

          13.  Subordination. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by the Notes shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C) and (D), to all Senior Indebtedness of the Company. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest on
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law), and all
reasonable fees, reimbursement and indemnity obligations, and all other
obligations arising in connection with any indebtedness for borrowed money of
the Company, contingent or otherwise (including guarantees of any such
indebtedness of others), now outstanding or created, incurred, issued, assumed
or guaranteed in the future, other than any such indebtedness as to which the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such indebtedness shall be subordinate in
right of payment to one or more categories or issues of indebtedness of the
Company. Without limiting the generality of the foregoing, Senior Indebtedness
shall include all Obligations (under and as defined in the Credit Agreement) and
the Company's guarantee of Obligations (as defined in the Credit Agreement
originally dated as of February 28, 1998, and amended and restated as of June
30, 1998, among the Company, Canadian Back Institute Limited, Canadian Imperial
Bank of Commerce, as agent and the lenders named on the signature page thereof,
as from time to time amended or increased or otherwise modified, 'together with
any agreement entered into in connection with the restatement, increase,
renewal, extension, restructuring, refunding or

                                       13
<PAGE>

refinancing of the obligations under such credit agreement (the "Canadian Credit
Agreement")); notwithstanding the foregoing, Senior Indebtedness shall include
only such Obligations under the Credit Agreement and such guarantee of the
Obligations under the Canadian Credit Agreement until such time as the same have
been indefeasibly paid in full in cash and all obligations to provide financial
accommodations under the Credit Agreement or the Canadian Credit Agreement have
terminated. For purposes of this Note, "Credit Agreement" shall mean the Credit
Agreement dated June 30, 1998 among the Company, the several financial
institutions from time to time party thereto, Bank of America National Trust and
Savings Association, as administrative agent or any successor agent (the "Senior
Lender") and CIBC Inc. as syndication agent, as from time to time amended or
increased or otherwise modified, together with any agreement entered into in
connection with the restatement, increase, renewal, extension, restructuring,
refunding or refinancing of the obligations under such credit agreement.
Notwithstanding anything contained herein to the contrary, the indebtedness
evidenced by the Notes shall not be subordinated and junior in right of payment
to any claims of any trade creditors of the Company.

          (A)  In the event of any insolvency, bankruptcy, liquidation,
     reorganization or other similar proceedings, or any receivership
     proceedings in connection therewith, relative to the Company or its
     creditors or its property, and in the event of any proceedings for
     voluntary liquidation, dissolution or other winding up of the Company,
     whether or not involving insolvency or bankruptcy proceedings, then all
     Senior Indebtedness shall first be paid in full in dash (or such payment is
     duly provided for), before any payment, whether on account of principal,
     interest or otherwise, is made upon the Notes.

          (B)  In any of the proceedings referred to in paragraph (A) above, any
     payment or distribution of any kind or character whether in cash, property,
     stock or obligations which may be payable or deliverable in respect of the
     Notes shall be paid or delivered directly to the holders of Senior
     Indebtedness for application in payment thereof, unless and until all
     Senior Indebtedness shall have been paid in full in cash (or such payment
     is duly provided for).

          (C)  No payment shall be made, directly or indirectly, on account of
     the Notes (i) upon maturity of any Senior Indebtedness obligation, by lapse
     of time, acceleration (unless waived), or otherwise, unless and until all
     principal thereof and interest thereon and all other obligations in respect
     thereof shall first be paid in full in cash (or such payment is duly
     provided for), or (ii) upon the happening of any default in payment of any
     principal, premium, if any, or interest on or any other amounts payable in
     respect of Senior Indebtedness when the same becomes due and payable
     whether at maturity or at a date fixed for prepayment or by declaration or
     otherwise (a "Senior Payment Default"), unless and until such Senior
     Payment Default shall have been cured or waived or shall have ceased to
     exist.

                                       14
<PAGE>

          (D)  Upon the happening of a default (other than one described in
     clause (A), (B) or (C) above) with respect to any Senior Indebtedness
     permitting (after notice or lapse of time or both) one or more holders of
     such Senior Indebtedness (or, in the case of the Credit Agreement, the
     Senior Lender to declare such Senior Indebtedness due and payable prior to
     the date on which it is otherwise due and payable (a "Nonmonetary
     Default"), upon the occurrence of(i) receipt by the holders of the Notes of
     written notice from the holders of said Senior Indebtedness (or, in the
     case of the Credit Agreement, the Senior Lender) of a Nonmonetary Default
     (any such notice, a "Blockage Notice"), or (ii) if such Nonmonetary Default
     results from the acceleration of the Notes, the date of such acceleration;
     then (x) the Company will not make, directly or indirectly, to the holder
     of the Notes any payment of any kind of or on account of all or any part of
     the Notes; (y) the holders of the Notes will not accept from the Company
     any payment of any kind of or on account of all or any part of the Notes
     and (z) the holders of the Notes may not take, demand, receive, sue for,
     accelerate at commence any remedial proceedings with respect to any amount
     payable under the Notes, unless and until in each case described in clauses
     (x), (y) and (z) all such Senior Indebtedness shall have been paid in full
     in cash and all obligations to provide financial accommodations under the
     Credit Agreement have terminated; provided, however, that if such
                                       --------  -------
     Nonmonetary Default shall have occurred and be continuing for a period (a
     "Blockage Period") commencing on the earlier of the date of receipt of such
     Blockage Notice or the date of the acceleration of the Notes and ending 179
     days thereafter (it being understood that not more than one Blockage Period
     may be commenced with respect to the Notes during any period of 360
     consecutive days), and during such Blockage Period i) such Nonmonetary
     Default shall not have been cured or waived, (ii) the holder of such Senior
     Indebtedness (or, in the case of the Credit Agreement, the Senior Lender)
     shall not have made a demand for payment and commenced an action, suit or
     other proceeding against the Company and (iii) none of the events described
     in subsection (A) above shall have occurred, then (to the extent not
     otherwise prohibited by subsections (A), (B) or (C) above) the Company may,
     not less than 10 days after receipt by the holders of such Senior
     Indebtedness or the Senior Lender, as the case may be, of written notice to
     such effect from the holders of at least 33-1/3% of the aggregate principal
     amount of the Notes at the time outstanding, make and the holders of all of
     the Notes may accept from the Company all past due and current payments of
     any kind or on account of the Notes, and such holder may demand, receive,
     retain, sue for or otherwise seek enforcement or collection of all amounts
     payable on account of principal of or interest on the Notes.

          (b)  Subject to the payment in full in cash of all Senior Indebtedness
(or the provision for such payment) as aforesaid, the holders of the Notes shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of any kind or character, whether in cash, property
stock or obligations, which may be payable or deliverable to the holders of
Senior Indebtedness, until the principal of, and interest on, the Notes shall be
paid in full, and, as between the Company, its creditors other than the holders
of Senior Indebtedness, and the holders of the Notes, no such payment or
distribution made to the holders of Senior Indebtedness by virtue of this
Section 13 which otherwise would have been made to the holder of

                                       15
<PAGE>

the Notes shall be deemed a payment by the Company on account of the Senior
Indebtedness, it being understood that the provisions, of this Section 13 are
and are intended solely for the purposes of defining the relative rights of the
holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand. Subject to the rights, if any, under this
Section 13 of holders of Senior Indebtedness to receive cash, property, stock or
obligations otherwise payable or deliverable to the holders of the Notes,
nothing herein shall either impair, as between the Company and the holder of the
Notes, the obligation of the Company, which is unconditional and absolute, to
pay to the holder thereof the principal thereof and interest thereon in
accordance with its terms or prevent (except as otherwise specified therein) the
holders of the Notes from exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder.

          (c)  If any payment or distribution of any character or any security,
whether in cash, securities or other property, shall be received by any holders
of the Notes in contravention of any of the terms hereof or before all the
Senior Indebtedness obligations have been paid in fill in cash (or such payment
is duly provided for), such payment or distribution or security shall be
received in trust for the benefit of, arid shall be paid over or delivered and
transferred to, the holders of the Senior Indebtedness at the time outstanding
in accordance with the priorities then existing among such holders for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all such Senior Indebtedness in full in cash.  In the
event of the failure of any such holder to endorse or assign any such payment,
distribution or security, each holder of any Senior Indebtedness is hereby
irrevocably authorized to endorse or assign the name.

          (d)  The holders of the Notes unconditionally waive (i) all notices
which may be required, whether by statute, rule of law or otherwise, to preserve
intact any rights of any holder of any Senior Indebtedness, including, without
limitation, any demand, presentment and protest, proof of notice of nonpayment
under any Senior Indebtedness or the Credit Agreement, and notice of any failure
on the part of the Company to perform and comply with any covenant, agreement,
term or condition of any Senior Indebtedness, (ii) any right to the enforcement,
assertion or exercise by any holder of any Senior Indebtedness of any right,
power, privilege or remedy conferred in such Senior Indebtedness or otherwise,
(iii) any requirements of diligence on the part of any holder of any of the
Senior Indebtedness, (iv) any requirement on the part of any holder of any
Senior Indebtedness to mitigate damages resulting from any default under such
Senior Indebtedness and (v) any notice of any sale, transfer or other
disposition of any Senior Indebtedness by any holder thereof.

          (e)  The obligation of the holder under these subordination provisions
shall continue to be effective, or be reinstated, as the case may be, if at any
time any payment in respect of any Senior Indebtedness, or any other payment to
any holder of any Senior Indebtedness in its capacity as such, is rescinded or
must otherwise be restored or returned by the holder of such Senior Indebtedness
upon the occurrence of any proceeding referred to in paragraph 13(a)(A) or upon
or as a result of the appointment of a receiver, intervenor or

                                       16
<PAGE>

conservator of, or trustee or similar officer for, the Company or any
substantial part of its property or otherwise, all as though such payment had
not been made.

          (f)  Notwithstanding anything to the contrary herein, the Company
shall not at any time offer (and the holder hereof shall not at any time accept)
(i) any pledge of collateral or (ii) any guaranty by any parent or subsidiary of
the Company, in each case with respect to the obligations of the Company under
this Note.

          14.  Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company shall bind its successors and assigns, whether so expressed or not.

          15.  Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York.

          16.  Headings. The headings of the sections and paragraphs of this
Note are inserted for convenience only and do not constitute a part of this
Note.

          17.  Third Party Beneficiaries. The provisions of Section 13 are
intended to be for the benefit of, and shall be enforceable directly by each
holder of, the Senior Indebtedness.

                                       17
<PAGE>

          IN WITNESS WHEREOF, SELECT MEDICAL CORPORATION 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 specified above.

                                        SELECT MEDICAL CORPORATION

                                        By /s/ Michael E. Tarvin
                                          ---------------------------------
                                          Name:
                                          Title:

                                       18<PAGE>

                                                                    Exhibit 10.1

                            REGISTRATION AGREEMENT
                            ----------------------

          THIS AGREEMENT is made as of February 5, 1997, by and among Select
Medical Corporation, a Delaware corporation (the "Company"), Golder, Thoma,
Cressey, Rauner Fund V, L.P., a Delaware limited partnership ("GTCR"), Welsh,
Carson, Anderson & Stowe VII, L.P., a Delaware limited partnership, and certain
of its partners (collectively, together with GTCR, the "Investors"), Rocco
Ortenzio and Robert Ortenzio (each, an "Executive"), Select Investments H, a
Pennsylvania general partnership (the "Pennsylvania Partnership"), and Select
Partners, L.P., a Delaware limited partnership (the "Delaware Partnership").

          The Company and the Investors are parties to a Purchase Agreement of
even date herewith (the "Purchase Agreement").  In order to induce the Investors
to enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.  The execution and delivery of
this Agreement is a condition to the Closing under the Purchase Agreement.
Unless otherwise provided in this Agreement, capitalized terms used herein shall
have the meanings set forth in Section 7 hereof.

          The parties hereto agree as follows:

          1.   Demand Registrations.
               --------------------

          (a)  Requests for Registration. At any time, the holders of a majority
               -------------------------
of the Registrable Securities may request registration under the Securities Act
of all or any portion of their Registrable Securities on Form S-1 or any similar
long-form registration ("Long-Form Registrations"), and the holders of a
majority of the Registrable Securities may request registration under the
Securities Act of all or any portion of their Registrable Securities on Form S-2
or S-3 or any similar short-form registration ("Short-Form Registrations") if
available. All registrations requested pursuant to this Section 1(a) are
referred to herein as "Demand Registrations". Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering. Within ten days after receipt of any such request, the Company shall
give written notice of such requested registration to all other holders of
Registrable Securities and shall include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice.

          (b)  Long-Form Registrations.  The holders of Registrable Securities
               -----------------------
shall be entitled to request (1) four Long-Form Registrations in which the
Company shall pay all Registration Expenses ("Company-paid Long-Form
Registrations") and (ii) an unlimited number of Long-Form Registrations in which
the holders of Registrable Securities shall pay their share of the Registration
Expenses as set forth in Section 5 hereof.  A registration shall not count as
one of the permitted Company-paid Long-Form Registrations until it has become
effective and no Company-paid Long-Form Registration shall count as one of the
permitted Company-paid Long-Form Registrations unless the holders of Registrable
Securities are able to register and sell at least 90% of the Registrable
Securities requested to be included in such registration; provided
<PAGE>

that in any event the Company shall pay all Registration Expenses in connection
with any registration initiated as a Company-paid Long-Form Registration whether
or not it has become effective and whether or not such registration has counted
as one of the permitted Company-paid Long-Form Registrations.

          (c) Short-Form Registrations.  In addition to the Long-Form
              ------------------------
Registrations provided pursuant to Section 1(b), the holders of Registrable
Securities shall be entitled to request an unlimited number of Short-Form
Registrations in which the Company shall pay all Registration Expenses.  Demand
Registrations shall be Short-Form Registrations whenever the Company is
permitted to use any applicable short form.  After the Company has become
subject to the reporting requirements of the Securities Exchange Act, the
Company shall use its best efforts to make Short-Form Registrations on Form S-3
available for the sale of Registrable Securities.

          (d) Priority on Demand Registrations.  The Company shall not include
              --------------------------------
in any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the
Registrable Securities included in such registration.  If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities to be
included in such registration therein, without adversely affecting the
marketability of the offering, the Company shall include in such registration
prior to the inclusion of any securities which are not Registrable Securities
the number of Registrable Securities requested to be included which in the
opinion of such underwriters can be sold in an orderly manner within the price
range of such offering, pro rata among the respective holders thereof on the
basis of the amount of Registrable Securities owned by each such holder.
Without the consent of the Company and the holders of a majority of the
Registrable Securities included in such registration, any Persons other than
holders of Registrable Securities who participate in Demand Registrations which
are not at the Company's expense must pay their share of the Registration
Expenses as provided in Section 5 hereof.

          (e) Restrictions on Long-Form Registrations.  The Company shall not be
              ---------------------------------------
obligated to effect any Long-Form Registration within 180 days after the
effective date of a previous Long-Form Registration or a previous registration
in which the holders of Registrable Securities were given piggyback rights
pursuant to Section 2 and in which there was no reduction in the number of
Registrable Securities requested to be included.  The Company may postpone for
up to 180 days the filing or the effectiveness of a registration statement for a
Demand Registration if the Company and the holders of a majority of the
Registrable Securities agree that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any acquisition of assets (other
than in the ordinary course of business) or any merger, consolidation, tender
offer, reorganization or similar transaction; provided that in such event, the
holders of

                                      -2-

<PAGE>

Registrable Securities initially requesting such Demand Registration shall be
entitled to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Company shall pay all Registration Expenses in connection with
such registration. The Company may delay a Demand Registration hereunder only
once in any twelve-month period.

          (f) Selection of Underwriters.  The holders of a majority of the
              -------------------------
Registrable Securities included in any Demand Registration/Long-Form
Registration shall have the right to select the investment banker(s) and
manager(s) to administer the offering.

          (g) Other Registration Rights.  Except as provided in this Agreement,
              -------------------------
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the Registrable Securities.

          2.    Piggyback Registrations.
                -----------------------

          (a)   Right to Piggyback.  Whenever the Company proposes to register
                ------------------
any of its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice (in any event within three business days after
its receipt of notice of any exercise of demand registration rights other than
under this Agreement) to all holders of Registrable Securities of its intention
to effect such a registration and shall include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice.

          (b)   Piggyback Expenses.  The Registration Expenses of the holders of
                ------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.

          (c)   Priority on Primary Registrations.  If a Piggyback Registration
                ---------------------------------
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Company, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder, and (iii) third, other securities requested to
be included in such registration.

          (d)   Priority on Secondary Registrations.  If a Piggyback
                -----------------------------------
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in

                                      -3-
<PAGE>

an orderly manner in such offering within a price range acceptable to the
holders of a majority of the Registrable Securities to be included in such
registration, the Company shall include in such registration (1) first, the
securities requested to be included therein by the holders requesting such
registration, (ii) second, the Registrable Securities requested to be included
in such registration, pro rata among the holders of such Registrable Securities
on the basis of the number of shares owned by each such holder, and (iii) third,
other securities requested to be included in such registration.

          (e) Selection of Underwriters.  If any Piggyback Registration is an
              -------------------------
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities included in such Piggyback Registration.  Such approval shall not be
unreasonably withheld.

          (f) Other Registrations.  If the Company has previously filed a
              -------------------
registration statement with respect to Registrable Securities pursuant to
Section 1 or pursuant to this Section 2, and if such previous registration has
not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least 180 days has elapsed from the effective date of such
previous registration.

          3.  Registration Procedures.  Whenever the holders of Registrable
              -----------------------
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:

          (a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which documents
shall be subject to the review and comment of such counsel);

          (b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;

                                      -4-
<PAGE>

          (c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

          (d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);

          (e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;

          (f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule I lAa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;

          (g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;

          (h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including effecting a stock split or a combination of
shares);

          (i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any

                                      -5-
<PAGE>

attorney, accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement;

          (j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

          (k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;

          (l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;

          (m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities; and

          (n) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement).

          4.  Registration Expenses.
              ---------------------

          (a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, except that

                                      -6-
<PAGE>

the Company shall, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or on the NASD
automated quotation system.

          (b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities
included in such registration and for the reasonable fees and disbursements of
each additional counsel retained by any holder of Registrable Securities for the
purpose of rendering a legal opinion on behalf of such holder in connection with
any underwritten Demand Registration or Piggyback Registration.

          (c) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.

          5.  Indemnification.
              ---------------

          (a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same.  In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.

          (b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses

                                      -7-
<PAGE>

resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such holder; provided that the obligation to indemnify shall be individual, not
joint and several, for each holder and shall be limited to the lesser of (1) the
net amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement or (2) such holder's pro rata
share (based on ownership of capital stock) of such indemnifiable losses,
claims, damages, liabilities and/or expenses.

          (c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party.  If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld).  An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.

          (d) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.  The Company
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.

          6.  Participation in Underwritten Registrations.  No Person may
              -------------------------------------------
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to

                                      -8-
<PAGE>

undertake any indemnification obligations to the Company or the underwriters
with respect thereto, except as otherwise provided in Section 6 hereof.

          7.  Definitions.
              -----------

          (a) "Executive Registrable Securities" means any shares of Common
               --------- ----------------------
Stock held as of the date hereof, or acquired hereafter from the Company, by:
(i) the executive employees of the Company and its Subsidiaries who are or
become parties to this Agreement, (ii) the Pennsylvania Partnership, and (iii)
the Delaware Partnership.

          (b) "Investor Registrable Securities" means (i) any Common Stock
               -------------------------------
issued pursuant to the Purchase Agreement (whether issued before or after the
date hereof), (ii) any other Common Stock issued or issuable with respect to the
securities referred to in clause (1) by way of a stock dividend or stock split
or in connection with an exchange or combination of shares, recapitalization,
merger, consolidation or other reorganization, and (iii) any other shares of
Common Stock held by Persons holding securities described in clauses (i) and
(ii), inclusive, above.

          (c) "Registrable Securities" means Investor Registrable Securities and
               ----------------------
Executive Registrable Securities.  As to any particular Registrable Securities,
such securities shall cease to be Executive Registrable Securities or Investor
Registrable Securities when they have been distributed to the public pursuant to
a offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force).  For purposes of this Agreement, a
Person shall be deemed to be a holder of Registrable Securities whenever such
Person has the right to acquire such Registrable Securities (upon conversion or
exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected.

          (d) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Purchase Agreement.

          8.  Miscellaneous.
              -------------

          (a) No Inconsistent Agreements.  The Company shall not hereafter enter
              --------------------------
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.

          (b) Adjustments Affecting Registrable Securities.  The Company shall
              --------------------------------------------
not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).

                                      -9-
<PAGE>

          (c) Remedies.  Any Person having rights under any provision of this
              --------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.  The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.

          (d) Amendments and Waivers.  Except as otherwise provided herein, the
              ----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of at least 66.67% of the Registrable
Securities.

          (e) Successors and Assigns.  All covenants and agreements in this
              ----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.  In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.

          (f) Severability.  Whenever possible, each provision of this Agreement
              ------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

          (g) Counterparts.  This Agreement may be executed simultaneously in
              ------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.

          (h) Descriptive Headings.  The descriptive headings of this Agreement
              --------------------
are inserted for convenience only and do not constitute a part of this
Agreement.

          (i) Governing Law.  The corporate law of the State of Delaware shall
              -------------
govern all issues and questions concerning the relative rights of the Company
and its stockholders.  All other issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Illinois, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Illinois or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.

          (j) Notices.  All notices, demands or other communications to be given
              -------
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or

                                      -10-
<PAGE>

registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Investors and to each
Executive at the addresses indicated on the Schedule of Holders and to the
Company at the address of its corporate headquarters or to such other address or
to the attention of such other person as the recipient party has specified by
prior written notice to the sending party.

                             *    *    *    *    *

                                      -11-
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Registration
Agreement as of the date first written above.

                       SELECT MEDICAL CORPORATION

                       By:  /s/ Rocco A. Ortenzio
                            ---------------------------------
                       Its:
                            ---------------------------------

                       GOLDER, THOMA, CRESSEY, RAUNER
                       FUND V, L.P.

                       By:  GTCR V, L.P.
                       Its: General Partner

                       By:  Golder, Thoma, Cressey, Rauner, Inc.
                       Its: General Partner

                       By:  Illegible
                            ---------------------------------
                       Its: Principal

                       WELSH, CARSON, ANDERSON & STOWE
                       VII, L.P.

                       By:  /s/ Laura Van Buren
                            ---------------------------------
                       Its:
                            ---------------------------------

                       By:
                            ---------------------------------
                       Its:
                            ---------------------------------

                       WELSH, CARSON, ANDERSON & STOWE
                       HEALTHCARE PARTNERS, L.P.

                       By:  /s/ Laura Van Buren
                            ---------------------------------
                       Its:
                            ---------------------------------

                                      -12-
<PAGE>

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Bruce Anderson

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Russell Carson

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Patrick Welsh

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Richard Stowe

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Andrew Paul

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Thomas McInerney

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Laura VanBuren

                       /s/ Laura Van Buren
                       ---------------------------------------
                       James Hoover

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Robert Minicucci

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Anthony De Nicola

                       /s/ Laura Van Buren
                       ---------------------------------------
                       Paul Queally

                                      -13-
<PAGE>

                       /s/ David F. Bellet
                       --------------------------------------
                       David F. Bellet

                       MSTC, custodian FBO the IRA/Rollover of
                       James B. Hoover

                       By:  /s/ James B. Hoover
                            ---------------------------------

                                      -14-
<PAGE>

                       /s/ Rocco A. Ortenzio
                       ---------------------------------------
                       Rocco A. Ortenzio

                       /s/ Robert A. Ortenzio
                       ---------------------------------------
                       Robert A. Ortenzio

                       SELECT INVESTMENTS I

                       By:  /s/ Rocco A. Ortenzio
                            ---------------------------------
                       Its:
                            ---------------------------------

                       SELECT PARTNERS, L.P.

                       By:  /s/ Rocco A. Ortenzio
                            ---------------------------------
                       Its:
                            ---------------------------------

                                      -15-
<PAGE>

                              SCHEDULE OF HOLDERS
                              -------------------

Golder, Thoma, Cressey, Rauner Fund V, L.P.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: Bryan C. Cressey

Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022
Attention: James B. Hoover

Welsh, Carson, Anderson & Stowe
Healthcare Partners, L.P.
320 Park Avenue
New York, New York 10022
Attention: James B. Hoover

Bruce Anderson
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Russell Carson
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Patrick Welsh
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Richard Stowe
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Andrew Paul
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022
<PAGE>

Thomas McInerney
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Laura VanBuren
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

James Hoover
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Robert Minicucci
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Anthony De Nicola
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

Paul Queally
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022

David F. Bellet
c/o Crown Advisors Ltd.
60 East 42nd Street, Suite 3405
New York, New York 10165

MSTC, custodian FBO the IRA/Rollover of
James B. Hoover
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
New York, New York 10022
<PAGE>

Rocco Ortenzio
c/o Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, Pennsylvania 17055

Robert Ortenzio
c/o Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, Pennsylvania 17055

Select Investments II
c/o Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, Pennsylvania 17055

Select Partners, L.P.
c/o Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, Pennsylvania 17055

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