Document:

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                                                                    EXHIBIT 10.1

                              CONSULTING AGREEMENT

      THIS CONSULTING AGREEMENT is made as of the 1st day of January, 2004, by
and between SELECT MEDICAL CORPORATION, a Delaware corporation (the "Company"),
and THOMAS SCULLY, an individual ("Consultant").

                                   WITNESSETH:

      WHEREAS, the Company desires the services of Consultant, and Consultant is
willing to be engaged by the Company in a consulting capacity as an independent
contractor, upon and subject to the terms and conditions set forth herein.

      NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto, intending to be legally bound hereby, agree as follows:

      1.    Engagement. The Company hereby engages Consultant, and Consultant
hereby accepts such engagement, on and subject to the terms and conditions set
forth herein, to serve the Company in a consulting capacity.

      2.    Term. The period of service of Consultant to the Company will be for
a term of one year commencing on January 1, 2004 and terminating on December 31,
2004 (the "Consulting Period"). Either party hereto may terminate this Agreement
at any time, without cause, after giving the other party hereto thirty (30)
days' prior written notice of such decision. The Company will also be entitled
to immediately terminate this Agreement, for cause, if any of the following
events shall occur:

            (a)   Consultant dies or becomes disabled to such an extent that
Consultant cannot perform his duties hereunder;

            (b)   Consultant engages in criminal, unethical, immoral or
fraudulent conduct, in the good faith opinion of the Company, or Consultant is
found guilty of such conduct by any court or governmental agency of competent
jurisdiction;

            (c)   The observed use of illegal drugs by Consultant at any time or
place or the abuse of alcohol or the appearance, in the good faith determination
of the Company, of Consultant being under the influence of drugs and/or alcohol
on the premises of the Company or any client of the Company, during any time
during which Consultant is performing services for the Company, or the good
faith determination of the Company that Consultant is addicted to drugs or
alcohol;

            (d)   Consultant's gross negligence or willful misconduct in the
performance of the duties and services required of Consultant; or

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            (e)   Intentional refusal by Consultant to perform any duty
reasonably required of Consultant hereunder for a continuous period of three (3)
calendar days after delivery of written notice thereof to Consultant by the
Company.

Upon termination of this Agreement, Consultant shall be entitled only to the
compensation payable under Section 4 of this Agreement accruing through the date
of termination.

      3.    Duties.

            (a)   Subject to the terms and conditions hereinafter provided, the
Company engages Consultant to provide regulatory advice and government relations
services as such services are from time to time identified by the Company's
Chief Executive Officer ("CEO") with the concurrence of Consultant. During the
term of this Agreement, Consultant shall report to the CEO. If agreed upon
between the CEO and Consultant, Consultant will perform such additional or
different duties and services appropriate to Consultant's abilities. Consultant
shall at all times comply with, and be subject to, such reasonable policies,
procedures, rules and regulations as the Company may establish from time to
time.

            (b)   During the Consulting Period, Consultant shall use his best
efforts to preserve and promote the name, reputation and business of the
Company. Consultant agrees that at all times during and after the Consulting
Period he shall take no action which would adversely affect the name, reputation
or business of the Company.

      4.    Compensation. As total and exclusive compensation for consulting
services rendered hereunder, the Company agrees to pay Consultant compensation
under this Agreement at an annual rate of $75,000, payable in monthly
installments of $6,250 during the Consulting Period on the first day of each
month.

      5.    Expenses. All reasonable and customary expenses incurred by
Consultant in performance of the services required by this Agreement, including,
but not by way of limitation, all related out-of-pocket expenses, shall be
reimbursed promptly by the Company upon appropriate documentation by Consultant;
provided that each expenditure in excess of $1,000 must be approved in advance
by the CEO or Chief Financial Officer of Company.

      6.    Confidentiality. Consultant covenants and agrees that he will not,
to the detriment of the Company, at any time during or after the termination of
the Consulting Period, reveal, divulge or make known to any person (other than
the Company or its officers, employees or agents who need to know such
information, or as a result of legal process) or use for his own account or the
account of any other person any confidential or proprietary records, data, trade
secrets, customer lists or any other confidential or proprietary information
whatsoever (the "Confidential Information") used by the Company and made known
(whether or not with the knowledge and permission of the Company, and whether or
not developed, devised or otherwise created in whole or in part by the efforts
of Consultant) to Consultant by reason of his association with the Company.
Consultant further covenants and agrees that he shall retain all

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such knowledge and information which he shall acquire or develop respecting such
Confidential Information in trust for the sole benefit of the Company and its
successors and assigns.

      7.    Independent Contractor; Limitations on Authority. In the performance
of the duties and obligations imposed under this Agreement, it is mutually
understood and agreed that Consultant is at all times acting and performing as
an independent contractor. It is agreed by the parties hereto that no act or
inaction of Consultant shall be construed to make or render Consultant the
agent, employee or servant of the Company. Consultant shall have no authority to
bind the Company by or to any obligation, agreement, promise or representation
without first obtaining the Company's prior written approval.

      8.    Taxes. Consultant will assume full responsibility for payment of
federal, state and local taxes, contributions required under Social Security and
any other taxes imposed with respect to his receipt of compensation hereunder.
Consultant agrees to fully indemnify and hold the Company harmless with respect
to any claims, assessments, suits, expenses (including, but not limited to
reasonable attorneys' fees) damages, settlements or losses incurred by or
threatened against the Company which arise as a result of any taxing authority
alleging liability on the part of the Company for any such taxes.

      9.    Entire Agreement. This instrument contains the entire agreement of
the parties with respect to the subject matter hereof. Any other oral or written
agreements entered into with respect hereto are hereby revoked and superseded by
this Agreement.

      10.   Existing Agreements. Consultant represents to the Company that he is
not subject or a party to any employment or consulting agreement,
non-competition covenant or other agreement, covenant or understanding or any
other obligation which might prohibit him from executing this Agreement or limit
his ability to fulfill his responsibilities hereunder.

      11.   Paragraph Headings. The paragraph headings of this Agreement are for
convenience of reference only and shall not limit or define the text thereof.

      12.   Severability. In the event that any one or more of the provisions of
this Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected thereby.

      13.   Notices. All notices and other communications which are required or
permitted hereunder shall be in writing and shall be sufficient if mailed by
registered or certified mail, postage prepaid to the following addresses:

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            If to Consultant:

            Thomas Scully
            c/o Welsh Carson Anderson & Stowe
            320 Park Avenue, 25th Floor
            New York, NY 10022-6815

            If to the Company:

            Select Medical Corporation
            P.O. Box 2034
            4716 Old Gettysburg Road
            Mechanicsburg, PA 17055
            Attention: Mr. Robert A. Ortenzio

            with a copy to:

            Select Medical Corporation
            P.O. Box 2034
            4718 Old Gettysburg Road
            Mechanicsburg, PA 17055
            Attention: General Counsel

or such other address as any party hereto shall have specified by notice in
writing to the other party hereto. All such notices and communications shall be
deemed to have been received on the date of delivery thereof or the third
business day after the mailing thereof, whichever is earlier.

      14.   Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement or any such modification or amendment is sought. Either
party hereto may, by an instrument in writing, waive compliance by the other
party with any term or provision of this Agreement on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent or other breach, whether or not similar to the breach
waived.

      15.   Counterparts. This Agreement may be executed in one or more
counterparts and all such counterparts so executed shall constitute an original
agreement binding on all the parties but together shall constitute but one
instrument.

      16.   Successors. This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective successors, assigns,
heirs and legal representatives. Consultant may not assign Consultant's rights
or interest in this Agreement, and any purported assignment by Consultant in
violation hereof shall be null and void. This Agreement shall not be assignable
by the Company unless there shall occur (i) a sale of all or substantially all
of the

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assets of the Company, (ii) a dissolution or liquidation of the Company or (iii)
a merger of the Company into another entity in which the Company is not the
surviving corporation.

      17.   Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof.

      IN WITNESS WHEREOF, Consultant and the Company have executed this
Agreement on the date first above set forth.

                                             The Company:

                                             SELECT MEDICAL CORPORATION, a
                                             Delaware corporation

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

                                             Consultant:

                                             /s/ Thomas Scully
                                             -----------------------------------
                                                        THOMAS SCULLY

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                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

                  SEVENTH AMENDMENT dated as of February 20, 2004 (this
            "Amendment") to the Credit Agreement dated as of September 22, 2000
            (the "Credit Agreement") as heretofore amended, among Select Medical
            Corporation, a Delaware corporation (the "Company"), Canadian Back
            Institute Limited, an Ontario corporation and a wholly owned
            subsidiary of the Company ("CBIL" and, together with the Company,
            the "Borrowers"), the Lenders party thereto, JPMorgan Chase Bank
            (formerly The Chase Manhattan Bank), as US Agent and US Collateral
            Agent, JPMorgan Chase Bank, Toronto Branch (as successor to J.P.
            Morgan Bank Canada (f/k/a The Chase Manhattan Bank of Canada)), as
            Canadian Agent and Canadian Collateral Agent, Banc of America
            Securities, LLC, as Syndication Agent, and CIBC, Inc., as
            Documentation Agent.

            WHEREAS, the Borrowers have requested that the Lenders (such term
and each other capitalized term used but not otherwise defined herein having the
meaning assigned to it in the Credit Agreement) approve the amendment of certain
provisions of the Credit Agreement;

            WHEREAS, the undersigned Lenders are willing, on the terms and
subject to the conditions set forth herein, to approve such amendment;

            NOW, THEREFORE, in consideration of these premises, the Borrowers
and the undersigned Lenders hereby agree as follows:

            SECTION 1. Amendment. Effective as of the Amendment Effective Date
(as defined in Section 3 hereof), Section 6.11(g) of the Credit Agreement is
hereby amended to read as follows:

            "(g) so long as no Default shall have occurred and be continuing or
      would result therefrom, purchase, redeem or otherwise acquire shares of
      its common stock with available cash on-hand only, provided that all such
      purchases, redemptions or acquisitions shall not (i) in an aggregate
      amount exceed US$80,000,000 and (ii) utilize proceeds from Indebtedness;
      and"

            SECTION 2. Representations and Warranties. Each of the Borrowers
represents and warrants to each of the Lenders that, after giving effect to the
amendments contemplated hereby, (a) the representations and warranties of such
Borrower set forth in the Credit Agreement are true and correct in all material
respects on and as of the date of this Amendment, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct in all
material respects as of the earlier date) and (b) no Default has occurred and is
continuing.

            SECTION 3. Effectiveness. This Amendment shall become effective as
of the date (the "Amendment Effective Date") when the Administrative Agent (or
its

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                                                                               2

counsel) shall have received copies hereof that, when taken together, bear the
signatures of the Borrowers and the Required Lenders.

            SECTION 4. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

            SECTION 5. No Other Amendments. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of any party
under, the Credit Agreement, nor alter, modify, amend or in any way affect any
of the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement, all of which are ratified and affirmed in all respects and
shall continue in full force and effect. This Amendment shall apply and be
effective only with respect to the provision of the Credit Agreement
specifically referred to herein. This Amendment shall constitute a "Loan
Document" for all purposes of the Credit Agreement and the other Loan Documents.

            SECTION 6. Counterparts. This Amendment may be executed in two or
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract. Delivery of an executed
counterpart of a signature page of this Amendment by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Amendment.

            SECTION 7. Headings. Section headings used herein are for
convenience of reference only, are not part of this Amendment and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Amendment.

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                                                                               3

            IN WITNESS WHEREOF, the Borrower and the undersigned Lenders have
caused this Amendment to be duly executed by their duly authorized officers, all
as of the date first above written.

                                      SELECT MEDICAL CORPORATION,

                                         by /s/ Michael E. Tarvin
                                            -----------------------------------
                                            Name:  Michael E. Tarvin
                                            Title: Senior Vice President

                                      CANADIAN BACK INSTITUTE LIMITED,

                                         by /s/ Michael E. Tarvin
                                            -----------------------------------
                                            Name:  Michael E. Tarvin
                                            Title: Vice President

                                      JPMORGAN CHASE BANK, individually
                                      and as US Agent and US Collateral Agent,

                                         by /s/ J S ELY
                                            -----------------------------------
                                            Name: J S ELY
                                            Title:

                                      JPMORGAN CHASE BANK, TORONTO
                                      BRANCH, individually and as Canadian Agent
                                      and Canadian Collateral Agent,

                                         by /s/ Christine Chan
                                            -----------------------------------
                                            Name:  Christine Chan
                                            Title: Vice President

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                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical
                                 Corporation Credit Agreement dated as of
                                 September 22, 2000:

                                 Name of Institution:

                                 CIBC INC.

                                    by /s/ George Knight
                                       -----------------------------------
                                       Name:  George Knight
                                       Title: Managing Director
                                              CIBC World Markets Corp. As Agent

                                    by
                                       -----------------------------------
                                       Name:
                                       Title:

<PAGE>

                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of
                                 September 22, 2000:

                                 Credit Lyonnais New York Branch

                                 By: /s/ Charles Heidsieck
                                     -----------------------------------
                                     Name:  Charles Heidsieck
                                     Title: Senior Vice President

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                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of
                                 September 22, 2000:

                                 Name of Institution:

                                    CREDIT SUISSE FIRST BOSTON

                                    by /s/ Paul L. Colon
                                       -----------------------------------
                                       Name:  PAUL L. COLON
                                       Title: DIRECTOR

                                    by /s/ Jennifer A. Pieza
                                       -----------------------------------
                                       Name:  JENNIFER A. PIEZA
                                       Title: ASSOCIATE

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                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of
                                 September 22, 2000:

                                 Name of Institution:

                                    FLEET NATIONAL BANK

                                    by /s/ Maryann S. Smith
                                       -----------------------------------
                                       Name:  MARYANN S. SMITH
                                       Title: Director

                                    by
                                       -----------------------------------
                                       Name:
                                       Title:

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                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of
                                 September 22, 2000:

                                 Name of Institution:

                                    General Electric Capital Corporation

                                    by /s/ Brian Schwinn
                                       -----------------------------------
                                       Name:  Brian Schwinn
                                       Title: Duly Authorized Signatory

                                    by
                                       -----------------------------------
                                       Name:
                                       Title:

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                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of
                                 September 22, 2000:

                                 Name of Institution:

                                    PNC BANK, NA

                                    by /s/ Jeffrey S. Delay
                                       ------------------------------------
                                       Name:  Jeffrey S. Delay
                                       Title: Assistant Vice President

                                    by
                                       -----------------------------------
                                       Name:
                                       Title:

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                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of September 22,
                                 2000:

                                 Name of Institution:

                                 SOCIETE GENERALE

                                    by /s/ David A. Grant
                                       -----------------------------------
                                       Name:  David A. Grant
                                       Title: Managing Director

<PAGE>

                                 To approve the Seventh Amendment (the
                                 "Amendment") to the Select Medical Corporation
                                 Credit Agreement dated as of
                                 September 22, 2000:

                                 Name of Institution:

                                 WACHOVIA BANK, NATIONAL ASSOCIATION

                                    by /s/ Jeanette A. Griffin
                                       -----------------------------------
                                       NAME:  JEANETTE A. GRIFFIN
                                       TITLE: DIRECTOR

                                    by
                                       -----------------------------------
                                       Name:
                                       Title:

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