Document:

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                                                                    Exhibit 10.2

                      SELECT MEDICAL HOLDINGS CORPORATION
                           2005 EQUITY INCENTIVE PLAN
                           FOR NON-EMPLOYEE DIRECTORS

                                   ARTICLE I
                                    GENERAL

     1.1 Purpose. The purpose of the Select Medical Holdings Corporation 2005
Equity Incentive Plan for Non-Employee Directors (the "Plan") is to:

          (a) attract and retain qualified individuals to serve as non-employee
     members of the Board of Directors of the Company and its Subsidiaries;

          (b) motivate participating directors by means of appropriate
     incentives to achieve long-range goals;

          (c) provide incentive compensation opportunities which are competitive
     with those of other major corporations in the Company's peer group; and

          (d) further align participants' interests with those of the Company's
     other stockholders through compensation alternatives based on the Company's
     stock;

and thereby promote the long-term financial interest of the Company and its
Subsidiaries, including the growth in value of the Company's equity and
enhancement of long-term stockholder return.

     1.2 Effective Date. The Plan shall be effective as of August 10, 2005. The
Plan shall terminate on August 9, 2015; provided, that the provisions of Article
III of the Plan shall survive such termination in accordance with the terms
thereof.

     1.3 Definitions. The following definitions are applicable to the Plan.

          (a) "1934 Act" means the Securities Exchange Act of 1934, as amended,
     or any successor statute.

          (b) "Affiliate" means, with respect to any specified Person, a Person
     that directly, or indirectly through one or more intermediaries, Controls,
     is Controlled by or is under common Control with, the specified Person;
     provided, that, for purposes of the definition of Third Party contained in
     Section 3.2(a) of the Plan, no portfolio company of WCAS IX (or of any
     other investment partnership under common control with WCAS IX) shall be
     deemed to be an Affiliate of the Company or WCAS IX unless a majority of
     the outstanding voting securities of such portfolio company are owned by
     WCAS IX and/or such other investment partnership.

          (c) "Board" means the Board of Directors of the Company.
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          (d) "Business Day" means a day other than a day on which commercial
     banks in New York, New York are authorized or required by law to close.

          (e) "Change of Control" has the meaning provided for such term in the
     Company's Amended and Restated Certificate of Incorporation.

          (f) "Code" means the Internal Revenue Code of 1986, as amended.

          (g) "Committee" means the compensation committee of the Board (or, if
     there is no such committee, the Board committee performing equivalent
     functions), which, from and after the date the Company registers any class
     of its equity securities pursuant to Section 12 of the 1934 Act, shall be
     comprised of at least two members of the Board who are (i) "non-employee
     directors" as defined under rules and regulations promulgated under Section
     16(b) of the 1934 Act and (ii) "outside directors" as defined in Section
     162(m) of the Code. The Board shall have the power to fill vacancies on the
     Committee arising by resignation, death, removal or otherwise. The
     Committee may delegate ministerial tasks to such persons as it deems
     appropriate.

          (h) "Company" means Select Medical Holdings Corporation, a Delaware
     corporation.

          (i) "Control" (including the terms "Controlling", "Controlled by" and
     "under common Control with") means the possession, direct or indirect, of
     the power to direct or cause the direction of the management and policies
     of a Person, whether through the ownership of voting securities, by
     contract or otherwise.

          (j) "Disabled" means the person so affected is unable to engage in
     substantial gainful activity by reason of any medically determinable
     physical or mental impairment which can be expected to result in death or
     which has lasted or can be expected to last for a continuous period of not
     less than one hundred eighty (180) days. The Committee shall have sole
     discretion to determine whether a Participant is Disabled for purposes of
     the Plan.

          (k) "Fair Market Value" means, with respect to a share of Stock on any
     date herein specified, (i) if the shares of Stock are listed or admitted
     for trading on a national securities exchange, the reported closing sales
     price regular way, or, in case no such reported sale takes place on such
     day, the average of the reported closing bid and asked prices regular way,
     in either case on the principal national securities exchange on which the
     shares of Stock are listed or admitted for trading, or (ii) if the shares
     of Stock are not listed or admitted for trading on a national securities
     exchange, (A) the closing transaction price of the shares of Stock on the
     National Association of Securities Dealers Automated Quotation System
     ("NASDAQ") or, in the case no such reported transaction takes place on such
     day, the average of the reported closing bid and asked prices thereof
     quoted on NASDAQ, or (B) if the shares of Stock are not quoted on NASDAQ,
     the average of the closing bid and asked prices of the shares of Stock in
     the over-the-counter market, as reported by The National Quotation Bureau,
     Inc., or an equivalent generally accepted reporting service, or (iii) if on
     any such day the shares of Stock are not quoted

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     by any such organization, the fair market value per share of Stock on such
     day, as determined in good faith by the Committee. If the Fair Market Value
     of Stock is to be determined as of a day other than a trading day, the Fair
     Market Value of Stock for such day shall be determined as described above
     on the last trading day ending prior to the date as of which the
     determination is being made. If, in the discretion of the Committee,
     another means of determining Fair Market Value shall be necessary or
     advisable in order to comply with the requirements of Section 162(m) of the
     Code or any other applicable law, governmental regulation, or ruling of any
     governmental entity, then the Committee may provide for another means of
     such determination.

          (l) "Option Date" means, with respect to any Stock Option, the date on
     which the Stock Option is awarded under the Plan.

          (m) "Option Share" means any share of Stock issued upon exercise of a
     Stock Option, regardless of whether the Holder of such share is the
     Participant in respect of which such Stock Option was originally issued
     under the Plan or a transferee thereof.

          (n) "Non-Qualified Stock Option" means a Stock Option not intended to
     qualify as an incentive stock option within the meaning of Section 422 of
     the Code.

          (o) "Participant" means any non-employee member of the Company's Board
     or any Subsidiary who is selected by the Committee to participate in the
     Plan.

          (p) "Permitted Transferees" means a member of a Participant's
     immediate family, trusts for the benefit of the Participant or such
     immediate family members, a foundation in which such immediate family
     members (or the Participant) control the management of assets, and
     partnerships in which the Participant or such immediate family members are
     the only partners, in each case provided that no consideration is provided
     for the transfer. Immediate family members shall include a Participant's
     spouse and descendants (children, grandchildren and more remote
     descendants), and shall include step-children and relationships arising
     from legal adoption.

          (q) "Person" means any natural person, corporation, limited liability
     company, partnership, trust, joint stock company, business trust,
     unincorporated association, joint venture, governmental authority or other
     legal entity of any nature whatsoever.

          (r) "Qualified IPO" has the meaning provided for such term in the
     Company's Amended and Restated Certificate of Incorporation.

          (s) "Select" means Select Medical Corporation, a Delaware corporation.

          (t) "Stock" means the Common Stock of the Company, par value $0.001
     per share.

          (u) "Stock Option" means the right of a Participant to purchase Stock
     pursuant to a Non-Qualified Stock Option awarded pursuant to the provisions
     of the Plan.

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          (v) "Subsidiary" means, during any period, any corporation or other
     entity of which 50% or more of the total combined voting power of all
     classes of stock (or other equity interests in the case of an entity other
     than a corporation) entitled to vote is owned, directly or indirectly, by
     the Company.

          (w) "Transfer" means a transfer, sale, assignment, pledge,
     hypothecation or other disposition (including by operation of law), whether
     directly or indirectly pursuant to the creation of a derivative security,
     the grant of an option or other right or the imposition of a restriction on
     disposition or voting.

          (x) "WCAS IX" shall mean Welsh, Carson, Anderson & Stowe IX, L.P., a
     Delaware limited partnership.

     1.4 Administration. The Plan shall be administered by the Committee. If for
any reason there is no Committee, the duties of the Committee shall be performed
by the Board. Subject to the provisions of the Plan, the Committee shall have
authority to select Participants to receive awards of Stock Options, to
determine the time or times of receipt, to determine the number of shares
covered by the awards, to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such awards, and to amend, modify or
suspend outstanding awards; provided, that, except as expressly provided in the
Plan, the Committee may not, without the Participant's consent, alter the terms
of any award so as to affect adversely the Participant's rights under the award
unless the Committee expressly reserved the right to do so at the time of the
award. Notwithstanding the foregoing proviso, and subject to Section 3.4, the
provisions of Article III of the Plan can be amended, modified, supplemented or
otherwise altered without the consent of any Participant or Holder of Option
Shares so long as all Participants and Holders of Option Shares are treated in
the same manner by such alteration. The Committee is authorized to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any agreements made pursuant to
the Plan, to modify such agreements, and to make all other determinations that
may be necessary or advisable for the administration of the Plan; provided,
that, if any such interpretation, rule, regulation, agreement, modification or
other determination would adversely affect the rights of WCAS IX under Article
III of the Plan, the Committee shall not take such action without the prior
written consent of WCAS IX. Decisions of the Committee (including decisions
regarding the interpretation and application of the Plan) shall be binding on
the Company and on all Participants and other interested parties. From and after
the date the Company registers any class of its equity securities pursuant to
Section 12 of the 1934 Act, with respect to persons subject to Section 16 of the
1934 Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor rule or statute under the 1934 Act. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law. The
Committee shall hold its meetings at such times and places as it deems
advisable. A majority of the Committee shall constitute a quorum for a meeting.
All determinations of the Committee shall be made by a majority of its members
attending the meeting. Furthermore, any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as effective
as if it had been made by a majority vote at a meeting properly called and held.

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     1.5 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, the non-employee
Board members of the Company or any of its Subsidiaries who will participate in
the Plan. In the discretion of the Committee, a Participant may be awarded Stock
Options, and more than one award may be granted to a Participant. Except as
otherwise agreed to by the Company and the Participant, any award under the Plan
shall not affect any previous award to the Participant under the Plan or any
other plan maintained by the Company or any of its Subsidiaries.

     1.6 Shares Subject to the Plan. The shares of Stock with respect to which
awards may be made under the Plan shall be either authorized and unissued shares
or issued shares. Subject to adjustment pursuant to the provisions of Section
1.11, the number of shares of Stock that may be delivered in respect of awards
granted under the Plan for the grant of Stock Options shall not initially exceed
250,000 shares in the aggregate. Upon the exercise of a Stock Option, including
a Stock Option granted under this Section 1.6, the number of shares underlying
that Stock Option shall be added to the total amount of shares with respect to
which Stock Options may be granted under this Section 1.6. For the avoidance of
doubt, if any award under the Plan or any portion of the award, shall expire,
terminate or be forfeited or cancelled, or be settled in cash pursuant to the
terms of the Plan and, therefore, any such shares are no longer distributable
under the award, such shares of Stock shall again be available for award under
the Plan, subject to the foregoing limits.

     1.7 Compliance With Applicable Laws. Notwithstanding any other provision of
the Plan, the Company shall have no liability to issue any shares of Stock under
the Plan unless such issuance would comply with all applicable laws and the
applicable requirements of any securities exchange or similar entity. Prior to
the issuance of any shares of Stock under the Plan, the Company may require a
written statement that the recipient is acquiring the shares for investment and
not for the purpose or with the intention of distributing the shares. The
Committee, in its discretion, may impose such conditions, restrictions and
contingencies with respect to shares of Stock acquired pursuant to the exercise
of a Stock Option as the Committee determines to be desirable in order to comply
with applicable laws and any applicable requirements of any securities exchange
or similar entity.

     1.8 Withholding of Taxes. All awards and payments under the Plan are
subject to withholding of all applicable taxes. The Committee, in its sole
discretion, may permit withholding obligations to be satisfied through the
surrender of shares of Stock that the Participant already owns, or to which a
Participant is otherwise entitled under the Plan. The Company shall have the
right to deduct from all amounts paid in cash in consequence of the exercise of
a Stock Option under the Plan any taxes required by law to be withheld with
respect to such cash payments. Where a person is entitled to receive shares of
Stock pursuant to the exercise of a Stock Option pursuant to the Plan, the
Company shall have the right to require such person to pay to the Company the
amount of any taxes that the Company is required to withhold with respect to
such shares, or, in lieu thereof, and in the sole discretion of the Committee,
to retain, or sell without notice, a sufficient number of such shares to cover
the amount required to be withheld.

     1.9 Transferability. Non-Qualified Stock Options are not transferable
except as designated by the Participant by will or by the laws of descent and
distribution or, if provided by

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the Committee in the option agreement, to Permitted Transferees in compliance
with such option agreement. Non-Qualified Stock Options may be exercised either
by the Participant, his guardian or legal representative and as otherwise
permitted under the laws of descent and distribution, or by a Permitted
Transferee to whom any such Non-Qualified Stock Options are transferred in
compliance with the terms of the option agreement therefor. Stock Options and
shares of Stock issued upon exercise of Stock Options shall also be subject to
the applicable provisions of Article III and any other restrictions on transfer
contained in the option or award agreements relating thereto. Without limiting
the generality of the foregoing, as a condition to the granting of any award of
Stock Options to any Participant not already a party thereto, the Company may
require the Participant to execute and deliver to the Company an instrument of
joinder to the Stockholders Agreement dated as of February 24, 2005 among the
Company and its stockholders, as amended.

     1.10 Status. The Plan does not constitute a contract for services, and
selection as a Participant will not give any non-employee director the right to
continue to provide services as a director to the Company or any Subsidiary. No
award of Stock Options under the Plan shall confer upon the holder thereof any
right as a stockholder of the Company until the issuance of shares of Stock to
the holder thereof upon the exercise of such Stock Option. If the transfer of
shares is restricted pursuant to Section 1.9, certificates representing such
shares may bear a legend referring to such restrictions.

     1.11 Adjustments to Number of Shares Subject to the Plan. In the event of
any change in the outstanding shares of Stock of the Company by reason of any
stock dividend, split, spinoff, recapitalization, merger, consolidation,
combination, extraordinary dividend, exchange of shares or other similar change,
the aggregate number and class of shares of Company capital stock with respect
to which awards may be made under the Plan, and the terms (including exercise
price) and the number and class of shares subject to any outstanding Stock
Options shall be equitably adjusted by the Committee.

     1.12 Change in Stock and Adjustments; Change of Control; Qualified IPO.

          (a) If, while unexercised Stock Options remain outstanding under the
     Plan, the Company is merged into or consolidated with another corporation
     under circumstances where the Company is not the surviving corporation or
     the Company is liquidated or sells or otherwise disposes of substantially
     all its assets to another corporation, the Committee may provide for the
     assumption of some or all outstanding Stock Options, or for the grant of
     new awards in substitution therefor, by the acquirer or survivor or
     Affiliate of the acquirer or survivor, in each case on such terms and
     subject to such conditions as the Committee determines, but in no event on
     terms and conditions less favorable, in the aggregate, than those
     applicable to outstanding Stock Options immediately prior to such merger,
     consolidation, liquidation, sale or disposition, as determined by the
     Committee in its reasonable discretion. In the absence of such an
     assumption or if there is no substitution, (i) subject to the provisions of
     clause (ii) below, upon the effective date of such merger, consolidation,
     liquidation or sale, as the case may be, each holder of an outstanding
     Stock Option shall be entitled, upon exercise of such Stock Option, to
     receive, in lieu of each share of Stock for which such Stock Option is
     exercised, shares of such stock (or other securities or consideration) as
     the holder of one

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     share of Stock received pursuant to the terms of the merger, consolidation,
     liquidation or sale, and (ii) in the case of any such merger,
     consolidation, liquidation, sale or other transaction, all outstanding
     Stock Options may be canceled by the Committee as of a date not earlier
     than the effective date of any such merger, consolidation, liquidation,
     sale or other transaction in exchange for cash or other consideration
     described in clause (i) above, provided that (A) at least ten (10) days'
     notice of such cancellation shall be given to each holder of a Stock
     Option, and (B) following receipt of any such notice each holder of a Stock
     Option shall have the right to exercise such Stock Option in full (without
     regard to any vesting or other limitations on exercise set forth in or
     imposed pursuant to the Plan or the award documentation relating to the
     Stock Option) conditioned on the consummation of such merger,
     consolidation, liquidation or other transaction and may defer delivery of
     the purchase price of any shares of Stock to be purchased upon exercise of
     the Stock Option until not later than five (5) business days after receipt
     from the Committee of written notice of such consummation or occurrence.
     The Committee may also provide that, in connection with the consummation of
     any such merger, consolidation, liquidation, sale or other transaction, all
     Stock Options shall be canceled in exchange for cash based on the value of
     the consideration paid to the Company's stockholders in such transaction.
     In the event that the merger, consolidation, liquidation, sale or other
     transaction does not occur, then on notice from the Committee of such
     failure to occur any exercise of a Stock Option conditioned on such
     occurrence shall be null and void and all limitations on exercise of a
     Stock Option shall remain in effect as if the Committee had never sent any
     notice of cancellation.

          (b) The agreement provided for in Section 1.13 shall set forth the
     effect, if any, of a Change of Control or a Qualified IPO upon any Stock
     Options awarded under the Plan.

     1.13 Agreement With Company. At the time of any awards under the Plan, the
Committee will require a Participant to enter into an agreement with the Company
in a form specified by the Committee, agreeing to the terms and conditions of
the Plan and to such additional terms and conditions, not inconsistent with the
Plan, as the Committee may, in its sole discretion, prescribe. Notwithstanding
anything to the contrary contained above, each such agreement relating to Stock
Options shall contain the provisions set forth in Section 3.3 of this Plan. In
the event of any inconsistency or conflict between the terms of the Plan and the
agreement, the terms of the Plan shall govern.

     1.14 No Funds Established. It is not intended that awards under the Plan be
set aside in a trust which would qualify as an employee's trust within the
meaning of Sections 401 or 402 of the Code, or in any other type of trust, fund,
or separate account. The rights of any Participant and any person claiming under
such Participant shall not rise above or exceed those of an unsecured creditor
of the Company.

     1.15 Assignment. Except as contemplated by Section 1.9, no right or benefit
under the Plan shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to any debts, contracts,
liabilities, or torts of the person entitled to such benefits.

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     1.16 Gender, Tense and Headings. Whenever the context requires such, words
of the masculine gender used herein shall include the feminine and neuter, and
words used in the singular shall include the plural. Headings as used herein are
inserted solely for convenience and reference and constitute no part of the
construction of the Plan.

     1.17 Tax Consequences. Neither the Company nor the Committee makes any
commitment or guarantee that any federal, state or local tax treatment will
apply or be available to any Participant.

     1.18 Severability. In the event that any provision of this Plan shall be
held illegal, invalid or unenforceable for any reason, such provision shall be
fully severable, but shall not affect the remaining provisions of the Plan, and
the Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had never been included herein.

     1.19 Amendment and Termination of Plan. Subject to Section 3.4 hereof, the
Board may at any time and in any way amend the Plan or any outstanding award,
and may at any time terminate the Plan as to any future grants or awards;
provided, that except as otherwise expressly provided, the Board may not alter
adversely or impair the Participant's rights under any Stock Options previously
awarded under the Plan without the consent of the holder thereof.
Notwithstanding the foregoing proviso, and subject to Section 1.12 and Section
3.4, the provisions of Article III of the Plan can be amended, modified,
supplemented or otherwise altered without the consent of any Participant or
Holder of Option Shares so long as all Participants and Holders of Option Shares
are treated in the same manner by such alteration.

     1.20 Application of Funds. The proceeds received by the Company from the
sale of Stock pursuant to Stock Options granted under the Plan shall be used for
general corporate purposes. Any cash received in payment for shares upon
exercise of a Stock Option shall be added to the general funds of the Company
and shall be used for its corporate purposes. Any Stock received in payment for
shares upon exercise of a Stock Option shall become treasury stock.

     1.21 Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of
Delaware shall govern the operation of, and the rights of Participants under the
Plan, and Options granted thereunder.

     1.22 Indemnification of Board and Committee. Without limiting any other
rights of indemnification which they may have from the Company and any
Subsidiary, the members of the Board and the members of the Committee shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any claim, action, suit, or proceeding to which they or
any of them may be a party by reason of any action taken or failure to act
under, or in connection with, the Plan, or any Stock Option granted thereunder,
and against all amounts paid by them in settlement thereof (provided such
settlement is approved by legal counsel selected by the Company) or paid by them
in satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment based upon a finding of willful misconduct or recklessness on their
part. Upon the making or institution of any such claim, action, suit, or
proceeding, the Board or Committee member shall notify the Company in writing,
giving the Company an opportunity, at its own expense, to handle and defend the
same before such Board

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or Committee member undertakes to handle it on his or her own behalf. The
provisions of this Section shall not give members of the Board or the Committee
greater rights than they would have under the Company's by-laws or the Delaware
General Corporation Law.

                                   ARTICLE II
                           NON-QUALIFIED STOCK OPTIONS

     2.1 Definition. The award of any Non-Qualified Stock Option under the Plan
entitles the Participant to purchase shares of Stock at a price fixed at the
time the option is awarded, subject to the following terms of this Article II
and the terms of the award documentation.

     2.2 Eligibility. The Committee shall designate the Participants to whom
Non-Qualified Stock Options are to be awarded under the Plan and shall determine
the number of option shares to be offered to each such Participant under any
Non-Qualified Stock Option awarded.

     2.3 Exercise Price. The purchase price of a share of Stock under each
Non-Qualified Stock Option shall be determined by the Committee in its sole
discretion, but shall not be less than 100% of the Fair Market Value of a share
of Stock at the time of the grant.

     2.4 Exercise.

          (a) Each Non-Qualified Stock Option shall become and be exercisable at
     such time or times and during such period or periods, in full or in such
     installments as may be determined by the Committee at the Option Date. To
     the extent provided by the Committee, the full purchase price of each share
     of Stock provided upon exercise of a Non-Qualified Stock Option shall be
     paid in cash, by delivery of shares of Stock (valued at Fair Market Value
     as of the day of exercise) that have a Fair Market Value equal to the
     exercise price and that have been outstanding for at least six months
     (unless the Committee approves a shorter period), by any other means
     acceptable to the Committee, or in any combination thereof. If payment of
     the purchase price of shares of Stock is paid in cash, payments shall be
     made only with cash, cashier's check, certified check, official bank check
     or postal money order payable to the order of the Company in the amount (in
     United States dollars) of the purchase price. If payment of such purchase
     price is made by shares of Stock, the Participant shall deliver to the
     Company (i) certificates registered in the name of such Participant
     representing a number of shares of Stock legally and beneficially owned by
     such Participant, free of liens, claims and encumbrances of every kind and
     having a Fair Market Value as of the date of delivery of such notice that
     is not greater than the purchase price of the shares of Stock with respect
     to which such Stock Options are to be exercised, such certificates to be
     accompanied by stock powers duly endorsed in blank by the record holder of
     the shares of Stock represented by such certificates, and (ii) if the
     purchase price of the shares of Stock with respect to which such Stock
     Option is to be exercised exceeds such Fair Market Value, cash or a
     cashier's check, certified check, official bank check or postal money order
     payable to the order of the Company in the amount (in United States
     dollars) of such excess. From and after the date of an IPO, the Committee
     may permit a Participant to elect to pay the purchase price upon the
     exercise of a Stock Option by irrevocably authorizing a third party
     acceptable to

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     the Committee or its designee to sell shares of Stock (or a sufficient
     portion of the shares of Stock) acquired upon exercise of the Stock Option
     and remit to the Company a sufficient portion of the sale proceeds to pay
     the entire purchase price and any tax withholding resulting from such
     exercise.

          (b) Stock Options shall be exercised by the delivery of written notice
     to the Company setting forth the number of shares of Stock with respect to
     which the Non-Qualified Stock Option is to be exercised and the address to
     which the certificates representing shares of the Stock issuable upon the
     exercise of such Non-Qualified Stock Option shall be mailed. In order to be
     effective, such written notice shall be accompanied by a form of payment as
     provided in Section 3.4(a). Such notice shall be delivered in person to the
     Secretary of the Company, or shall be sent by registered mail, return
     receipt requested, to the Secretary of the Company, in which case, delivery
     shall be deemed made on the date such notice is deposited in the mail.

          2.5 Option Expiration Date. The "Expiration Date" with respect to a
     Non-Qualified Stock Option or any portion thereof awarded to a Participant
     under the Plan means the earliest of:

          (a) the date established by the Committee at the time of the award;

          (b) unless the Committee provides otherwise at the time of grant, the
     date that is one year after the Participant's service with the Company and
     all Subsidiaries is terminated by reason of the Participant becoming
     Disabled or the Participant's death; or

          (c) unless the Committee provides otherwise at the time of grant, the
     date that is ninety (90) calendar days after the termination of the
     Participant's service with the Company and all Subsidiaries for any reason
     other than the Participant becoming Disabled or the Participant's death.

All rights to purchase shares of Stock pursuant to a Non-Qualified Stock Option
shall cease as of such Stock Option's Expiration Date.

                                  ARTICLE III
                      PROVISIONS FOR THE BENEFIT OF WCAS IX

     The provisions of this Article III shall apply to any holder (each a
"Holder") of Option Shares who is not a party to the Stockholders Agreement,
dated as of February 24, 2005, by and among the Company, WCAS IX, and each of
the other individuals and entities from time to time named on Schedule I
thereto.

     3.1 Restrictions on Transfer of Option Shares.

          (a) Notwithstanding anything to the contrary contained in this Plan or
     in any stock option agreement relating to any Stock Option, no Holder of
     Option Shares may Transfer all or any portion of the Option Shares held by
     such Holder without the prior written consent of WCAS IX other than (i)
     Transfers to Permitted Transferees that are made in accordance with Section
     3.1(b) below and (ii) Transfers made in connection with

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     a Drag-Along Sale pursuant to Section 3.2 below. Any attempted Transfer of
     Option Shares in violation of the provisions of this Article III shall be
     null and void ab initio and of no effect, and the Company shall not record
     any such Transfer on its books. Each certificate representing Option Shares
     shall bear a legend substantially to the following effect with such
     additions thereto or changes therein as the Company (with the approval of
     WCAS IX) may be advised by counsel are required by law or necessary to give
     full effect to the provisions of this Article III (the "Legend"):

          "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
          TRANSFER RESTRICTIONS AND CERTAIN PROVISIONS REQUIRING THE SALE OF
          SUCH SHARES BY THE HOLDER THEREOF UNDER CERTAIN CIRCUMSTANCES, IN EACH
          CASE UNDER ARTICLE III OF THE SELECT MEDICAL HOLDINGS CORPORATION 2005
          EQUITY INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS, AS AMENDED FROM TIME
          TO TIME, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
          NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
          DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
          EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE III OF SUCH PLAN.
          THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
          AGREES TO BE BOUND BY THE PROVISIONS OF ARTICLE III OF SUCH PLAN."

     After the termination of this Article III in accordance with its terms, and
     upon the written request of any Holder of Option Shares, the Legend placed
     on the certificate(s) evidencing such Option Shares will be removed by the
     Company by means of the delivery of substitute certificates without such
     Legend.

          (b) A Participant may, at any time, Transfer any or all of the Option
     Shares of such Participant to a Permitted Transferee thereof if such
     Permitted Transferee duly executes and delivers to the Company and WCAS IX
     an instrument (in a form reasonably acceptable to the Committee and WCAS
     IX) acknowledging that such Permitted Transferee is bound by the provisions
     of this Article III as a Holder of Option Shares hereunder (such Transfer
     to be effective only upon delivery of such instrument to the Company and
     WCAS IX); provided, that (A) if the Company so requests promptly following
     (and, in any event, within five (5) Business Days after) its receipt of
     such instrument, such Transfer shall not be effective unless and until the
     Company has been furnished with an opinion in form and substance reasonably
     satisfactory to the Company of counsel reasonably satisfactory to the
     Company that such Transfer is exempt from or not subject to the provisions
     of Section 5 of the Securities Act of 1933, as amended (the "1933 Act"),
     and any other applicable securities laws and (B) no Transfer under this
     Section 3.1(b) shall be permitted if such Transfer would require the
     Company to register a class of equity securities under Section 12 of the
     1934 Act under circumstances where the Company does not then have
     securities of any class registered under Section 12 of the 1934 Act.
     Notwithstanding the foregoing, no Participant shall avoid the provisions of
     this Article III by making one or more Transfers to one or more Permitted
     Transferees

                                       11
<PAGE>
     and then disposing of all or any portion of such Participant's interest in
     any such Permitted Transferee(s).

          (c) The provisions of this Section 3.1 shall terminate and be of no
     further force or effect from and after the 180th day following the
     consummation of the initial underwritten sale by the Company of shares of
     Stock to the public pursuant to an effective registration statement (other
     than a registration statement on Form S-8 or Form S-4) filed under the 1933
     Act (the "Initial Public Offering").

     3.2 Drag-Along Rights of WCAS IX.

          (a) Drag-Along Sale. If WCAS IX, the Company or Select receives an
     offer from a person who is not an Affiliate of the Company or WCAS IX (a
     "Third Party") to purchase or exchange (by merger, consolidation or
     otherwise) (x) at least a majority of the shares of Stock then outstanding
     or (y) all or substantially all of the assets of the Company and its
     subsidiaries taken as a whole, and WCAS IX wishes to accept such offer (or
     WCAS IX wishes that the Company or Select accept such offer), then each
     Holder of Option Shares (the "Drag-Along Stockholders") shall, if requested
     by WCAS IX, (A) waive any appraisal rights that it would otherwise have in
     respect of such transaction, and/or (B) Transfer to such Third Party,
     subject to the other provisions of this Plan, on the terms of the offer so
     accepted by WCAS IX, including time of payment, form and choice of
     consideration and adjustments to purchase price, the number of Option
     Shares equal to the number of Option Shares owned by the Holder multiplied
     by the percentage of the then outstanding shares of Stock to which the
     Third Party offer is applicable.

          (b) Exercise of Drag-Along Rights; Notices; Certain Conditions of
     Drag-Along Sales.

               (i) WCAS IX will give notice (the "Drag-Along Notice") to the
          Drag-Along Stockholders of any proposed Transfer giving rise to the
          rights of WCAS IX set forth in Section 3.2(a) (a "Drag-Along Sale")
          within five (5) Business Days after WCAS IX's acceptance of the offer
          referred to in Section 3.2(a) and, in any event, not less than ten
          (10) Business Days prior to the proposed closing date for such
          Drag-Along Sale. The Drag-Along Notice will set forth the number of
          shares of Stock proposed to be so Transferred, the name of the
          proposed transferee or acquiring Person, the proposed amount and form
          of consideration and the other terms and conditions of the offer.

               (ii) If any holders of Stock are given an option as to the form
          and amount of consideration to be received, all Holders of Option
          Shares shall be given the same option. Each Drag-Along Stockholder (x)
          shall agree to the same covenants as WCAS IX agrees to in connection
          with the Drag-Along Sale, (y) shall be obligated to join on a pro rata
          basis (based on the proceeds received by each such Drag-Along
          Stockholder in connection with the Drag-Along Sale) in any
          indemnification that WCAS IX agrees to provide in connection with the
          Drag-Along Sale (other than in connection with obligations that relate
          to a

                                       12
<PAGE>
          particular Holder such as representations and warranties concerning
          itself for which each Holder shall agree to be solely responsible) and
          (z) shall make such representations and warranties concerning itself
          and the Option Shares to be sold by it in connection with such
          Drag-Along Sale as WCAS IX makes with respect to itself and its Option
          Shares.

               (iii) Each Drag-Along Stockholder will be responsible for funding
          its proportionate share of any adjustment in purchase price or escrow
          arrangements in connection with the Drag-Along Sale and for its
          proportionate share of any withdrawals from any such escrow, including
          any such withdrawals that are made with respect to claims arising out
          of agreements, covenants, representations, warranties or other
          provisions relating to the Drag-Along Sale.

               (iv) Each Drag-Along Stockholder will be responsible for its
          proportionate share of the fees, commissions and other out-of-pocket
          expenses (collectively, "Costs") of the Drag-Along Sale to the extent
          not paid or reimbursed by the Company, the Third Party or another
          Person (other than WCAS IX); provided, that the liability for such
          Costs shall not exceed the total consideration received by such
          Drag-Along Stockholder for its Option Shares in respect of such
          Drag-Along Sale. WCAS IX shall be entitled to estimate each Drag-Along
          Stockholder's proportionate share of such Costs and to withhold such
          amounts from payments to be made to each Drag-Along Stockholder at the
          time of closing of the Drag-Along Sale; provided that (i) such
          estimate shall not preclude WCAS IX from recovering additional amounts
          from the Drag-Along Stockholders in respect of each Drag-Along
          Stockholder's proportionate share of such Costs and (ii) WCAS IX shall
          reimburse each Drag-Along Stockholder to the extent actual amounts are
          ultimately less than the estimated amounts or any such amounts are
          paid by the Company, the Third Party or another Person (other than
          WCAS IX).

          (c) Closing of Drag-Along Sale.

               (i) At the closing of such Drag-Along Sale, each of the
          Drag-Along Stockholders shall deliver certificates evidencing the
          Option Shares then held by it and to be sold in connection with such
          sale, duly endorsed for transfer or accompanied by stock powers
          executed in blank, against payment of the purchase price therefor by
          wire transfer to the account or accounts specified by such Drag-Along
          Stockholder or by check.

               (ii) If the Drag-Along Sale is not consummated within 180 days
          from the date of the Drag-Along Notice, WCAS IX must deliver another
          Drag-Along Notice in order to exercise its rights under this Plan with
          respect to such Drag-Along Sale.

          (d) Custody Agreement and Power of Attorney. Upon receiving a
     Drag-Along Notice, each Drag-Along Stockholder will, if requested by WCAS
     IX, execute and deliver a custody agreement and power of attorney in form
     and substance reasonably

                                       13
<PAGE>
     satisfactory to WCAS IX with respect to the Option Shares that are to be
     sold by such Drag-Along Stockholder pursuant hereto in respect of such
     Drag-Along Sale (a "Drag-Along Custody Agreement and Power of Attorney").
     The Drag-Along Custody Agreement and Power of Attorney will provide, among
     other things, that each such Drag-Along Stockholder will deliver to and
     deposit in custody with the custodian and attorney-in-fact named therein a
     certificate or certificates representing such Option Shares (each duly
     endorsed in blank by the registered owner or owners thereof) and
     irrevocably appoint said custodian and attorney-in-fact as its agent and
     attorney-in-fact with full power and authority to act under the Drag-Along
     Custody Agreement and Power of Attorney on its behalf with respect to (and
     subject to the terms and conditions of) the matters specified in this Plan.

          (e) The provisions of this Section 3.2 shall terminate and be of no
     further force or effect from and after the consummation of the Company's
     Initial Public Offering.

     3.3 Required Provisions of Stock Option Agreements. Each stock option
agreement relating to Stock Options awarded under this Plan shall contain the
following provisions (and shall not contain any provisions in conflict with the
following provisions):

     "The Participant hereby acknowledges receipt of a copy of the Plan and
     accepts and agrees to be bound by all of the terms and conditions of the
     Plan as if set out verbatim in this Agreement, including, without
     limitation, the provisions of Article III of the Plan which restrict
     transfers of shares of Stock issued upon exercise of the Stock Options
     without the prior written consent of Welsh, Carson, Anderson & Stowe IX,
     L.P. ("WCAS IX") and require the holder of such shares to sell such shares
     at the request of WCAS IX under certain circumstances. The Participant
     hereby further acknowledges and agrees that WCAS IX is an express third
     party beneficiary of the provisions of Article III of the Plan and this
     Agreement and is entitled to enforce such provisions against the
     Participant. In the event of a conflict between the terms of the Plan and
     the terms of this Agreement, the terms of the Plan shall control."

     "This Agreement may be amended only by written agreement of the Participant
     and the Company (and WCAS IX, if such change would affect WCAS IX's rights
     or obligations under Article III of the Plan or this Agreement), and may be
     amended without the consent of any other person. The provisions of this
     Agreement shall be binding upon and inure to the benefit of the parties
     hereto (and WCAS IX as third party beneficiary) and their respective
     successors, representatives, heirs, descendants, distributees and permitted
     assigns."

     3.4 WCAS IX Consent to Certain Amendments; WCAS IX As Third Party
Beneficiary. Notwithstanding anything else to the contrary contained in this
Plan, none of the provisions of Sections 1.4, 1.9, 1.13 and 1.19 hereof or this
Article III shall be amended, modified, terminated or supplemented without the
prior written approval of WCAS IX, which is intended to be a beneficiary of such
provisions entitled to enforce such provisions.

                                       14exv10w1

 

Exhibit 10.1

 

* Material marked “[REDACTED]*” in this document indicates that such portion has been omitted
pursuant to a request for confidential treatment and has been filed with the Securities and
Exchange Commission separately.

HELICOPTER LEASE AGREEMENT

THIS HELICOPTER LEASE AGREEMENT, dated as of November 1, 2005 (this “Lease”), is entered into by
and between U.S. HELICOPTER CORPORATION, with offices at Downtown Manhattan Heliport, 6 East River
Piers, Suite 216, New York, NY 10004 (“Lessee”) and [REDACTED]* with offices [REDACTED]*
(“Lessor”).

	I.	 	LEASING: In consideration of the mutual agreements herein set forth, Lessor leases
to Lessee and Lessee hereby leases from Lessor, one (1) Sikorsky Model S-76 Helicopter,
Manufacturer’s Serial No.760312, Registration No. N14CS, together with two (2) Pratt & Whitney
PT6B-36A engines bearing Engine Serial Numbers PC-E36013 and _PC-E36016 , together with all
parts installed thereon and all records relating thereto (collectively, “Helicopter”) from the
Delivery Date (as herein defined) until the date preceding the third anniversary of the
Delivery Date (“Term”). The Helicopter shall be delivered to Lessee on the Delivery Date at
Belmar, New Jersey (“Delivery Location”) equipped as indicated in Exhibit A and B, which are
attached hereto and made a part hereof. “Delivery Date” shall be the date that Lessor tenders
the Helicopter to Lessee at the Delivery Location in compliance with the terms and conditions
of this Lease

	II.	 	A.
    FIXED RENT: Lessee shall pay to Lessor on the earlier of the Delivery Date or
fourteen days after signing the Lease, and the first day of each following calendar month
during the Term hereof fixed rent (“Fixed Rent”) in the amount of [REDACTED]*. Fixed Rent for
any partial month during the Term hereof shall be prorated based on a 30-day month. Fixed
Rent shall be paid to Lessor without deduction or offset and without notice or demand at
Lessor’s address set forth above.

	 	B.	 	SECURITY: (a) Lessee shall deliver to Lessor, as security for the performance of
Lessee’s obligations under this Lease, the sum of [REDACTED]*, in certified or official bank
check (as increased pursuant to the terms of this Lease, the “Security Deposit”) on execution
hereof. Within one hundred eighty (180) days after the Delivery Date, Lessee shall increase
the Security Deposit by [REDACTED]*. Lessor may draw on the Security Deposit to remedy
defaults by Lessee in the payment or performance of any of Lessor’s obligations under this
Lease. If Lessor shall have so drawn upon the Security Deposit, Lessee shall upon demand
deposit with Lessor a sum equal to the amount so drawn by Lessor.

          (b) Provided Lessee is not in default under this Lease and Lessee has surrendered the
Helicopter to Lessor in accordance with all of the terms and conditions of this Lease, (i)
Lessor shall promptly return to Lessee the Security Deposit then held by Lessor or (ii) if
Lessor shall have drawn upon such Security Deposit to remedy defaults by Lessee in the payment
or performance of any of Lessee’s obligations under this Lease,

 

 

Lessor shall return to Lessee that portion, if any, of such Security Deposit remaining in
Lessor’s possession.

	 	C.	 	NET LEASE TO LESSOR: All Fixed Rent and other payment obligations of Lessee are
net to Lessor. During the Term of the Lease, Lessee agrees to pay all taxes, including
sales, use, and personal property taxes, excise tariffs, charges or assessments (including
landing fees) levied or assessed upon the use or possession of the Helicopter, which may now
or hereafter be imposed by any sovereign or by any City, State, Federal and Local Government
unit by reason of the leasing, use, operation, importation or exportation of the Helicopter,
whether the same be assessed to Lessor or Lessee, except for taxes attributable to Lessor’s
income.
	 
	 	D.	 	DELIVERY CONDITIONS. On the Delivery Date the Helicopter shall be delivered to Lessee at
the Delivery Location in “as-is — where-is” condition, except that the Helicopter shall be
U.S. registered, have a U.S. Certificate of Airworthiness, and shall comply with the
following additional delivery conditions:

Lessor shall have installed on the Helicopter Engine serial numbers PC-E36016 and PC-E36001.
Engine serial number PC-E36013 will be removed prior to Delivery at Lessor’s Cost and sent to
Pratt & Whitney for overhaul prior to Delivery at Lessor’s cost.

Lessor shall provide to Lessee the existing twelve passenger interior as well as the VIP
interior that includes two forward Captain Seats and Credenza..

	 	E.	 	ENGINES. Engine serial number PC-E36001 is on loan from Pratt & Whitney (the
“Loaner Engine”) The Loaner Engine shall continue to be installed on the Helicopter until
such time as PC-E36013 is refurbished by Pratt & Whitney, delivered and installed on the
Helicopter at the expense of Lessor.. Payment of the loaner fee/engine lease daily rent will
be made to Pratt & Whitney by Lessor. Payment of the hourly charge on the Loaner engine will
be paid to Pratt & Whitney by Lessee.

	III.	 	INSURANCE:

	 	A.	 	Lessee, at its sole cost and expense, shall procure and maintain at all times:

(i) all risk, no deductible, aircraft hull insurance for not less than [REDACTED]* insuring the
Helicopter against loss or theft, or damage to the Helicopter, including war risk and
confiscation coverage and extended coverage with respect to any engines or parts while removed
from the Helicopter naming Lessor as an additional insured and Lessor as loss payee; and

(ii) Public liability, passenger liability endorsement, breach of warranty endorsement and
property damage insurance in amounts not less than [REDACTED]* naming Lessor, as additional
insured.

(iii) Lessee shall be permitted to provide ground risk insurance coverage during the period of
from the Delivery Date until the Helicopter enters revenue service. This insurance will cover a
limited number of ferry flights of the Helicopter. The liability limit under this ground risk

-2-

 

only
insurance will be [REDACTED]*. The aircraft hull insurance will be the amount in section
III A (i) above.

(iv) Lessee will be permitted to supply aircraft hull insurance with a deductible of not more
than 5% if the Security Deposit is increased by the amount of the deductible.

	 	B.	 	All such insurance shall be in form and with companies reasonably satisfactory to Lessor and
shall contain a breach of warranty endorsement in favor of Lessor. Each insurer shall agree
by endorsement upon the policy or policies issued by it, or by independent instrument
furnished to Lessor that it will give Lessor thirty (30) days written notice before the policy
in question shall be adversely materially altered or cancelled.
	 
	 	C.	 	The proceeds of such aircraft hull insurance shall be paid to Lessor or at Lessor’s written
direction toward the restoration or repair of the Helicopter. Any policies of insurance
carried in accordance herewith and any policies taken out in substitution or replacement for
any such policies (1) shall name Lessor as additional insured, (2) shall provide that if the
insurers cancel such insurance for any reason whatever, or the same is allowed to lapse for
nonpayment of premium, such cancellation or lapse shall not be effective as to Lessor for
thirty (30) days after receipt of notice by such insurers of such cancellations or lapse and
(3) shall provide that as against Lessor, the insurers shall waive any rights of subrogation,
setoff, counterclaim or any other deduction, whether by attachment or otherwise.
	 
	 	D.	 	Each liability policy (1) shall be primary without right of contribution from any other
insurance which is carried by any other person to the extent that such other insurance
provides it with contingent and/or excess liability insurance with respect to its interest as
such in the Helicopter and (2) shall expressly provide that all of the provisions thereof,
except the limits of liability, shall operate in the same manner as if there were a separate
policy covering each insured. Lessee shall arrange for appropriate certification to be made
to Lessor as soon as practical by each insurer with respect thereto.

	IV.	 	INDEMNITY:

Lessee hereby indemnifies and holds harmless Lessor, its members, officers and assigns from and
against any and all losses, damages injuries, death, liability, claims, demands and expenses
including legal expenses of whatsoever kind and nature arising directly or indirectly from, or
in connection with the Helicopter, including, without limitation, the possession, maintenance,
storage, use or operation thereof.

	V.	 	USE; CHANGES; QUIET ENJOYMENT:

	A.	 	USE: Lessor acknowledges that Lessee intends to use the Helicopter in connection
with its application for certification and operating authority from the U.S. Department of
Transportation (“DOT”) and the Federal Aviation Administration (“FAA”), and, once certified,
in its scheduled and charter operations as a Part 135 Carrier. The responsibility for custody
and control of the Helicopter is vested in Lessee during the term of the Lease. Lessee agrees
to use and operate the Helicopter at all times in accordance with appropriate FAA regulations,
and to comply with all other laws and regulations issued by any authority having sovereignty
in

-3-

 

	 	 	the area in which the Helicopter is operated. In no event shall the Helicopter be operated or
located outside of North America or in any area excluded from coverage by the terms of insurance
without Lessor’s written consent. In addition, Lessee will exercise due care in the operation of
Lessee’s business and will not knowingly use or permit the Helicopter to be used or operated for
any purpose for which the Helicopter is not designed or reasonably suitable. Lessee agrees that
the Helicopter will be operated only on behalf of Lessee by duly licensed pilots.
	 
	B.	 	CHANGES: Lessee may paint the Helicopter and reupholster the interior of the
Helicopter (the “New Interior”), provided that Lessor approves in writing of the paint color
and such changes to the interior, which consent shall not be unreasonably withheld. Lessee
may re-register the Helicopter with the FAA as required.
	 
	C.	 	QUIET ENJOYMENT: Lessor covenants that so long as no default on the part of Lessee
has occurred and is continuing, Lessee shall quietly enjoy the Helicopter and all rents,
revenues, profits and income thereto, without interference by Lessor or any other person
claiming by or through Lessor.

	VI.	 	MAINTENANCE:

	 	A.	 	During the Term of this Lease, Lessee at Lessee’s expense:

	 	1.	 	Shall maintain and keep the Helicopter, its engines, components, appliances,
accessories, instruments and equipment in good order and repair in strict compliance
with FAA requirements (and without limitation of the foregoing), cause to be performed
on all parts of the Helicopter and its engines all mandatory Airworthiness Directive
(“AD’s”), Special Federal Aviation Regulations (“SFAR’s”) and all manufacturer’s
service bulletins the compliance date of which shall fall during the Term of this
Lease, and also in accordance with all manufacturer’s manuals or Lessee’s FAA approved
maintenance programs.
	 
	 	2.	 	Shall replace the Helicopter components, appliances, accessories, instruments
and equipment, any and all engines, parts, applicants, instruments, or accessories
which may become defective, lost, destroyed or otherwise rendered unfit for use during
the lease period in accordance with the terms and conditions of this Lease.
	 
	 	3.	 	Shall perform all overhauls, checks, inspections and maintenance service to all
parts of the helicopter and its engines required to keep them in the condition required
under this Lease.
	 
	 	4.	 	May make such modifications, changes or alterations to the Helicopter or its
engines as Lessee may determine and as Lessor shall first approve in writing. Lessor
shall respond within five days and will not unreasonably withhold such approval.
Lessor shall bear no liability for the cost of any such modification, change or
alteration to the Helicopter or its engines whether in the event of grounding or
suspension of certification or for any other cause. At the end of the Term of this
Lease, at Lessor’s

-4-

 

	 	 	 	option, Lessee shall (i) at its cost remove any equipment or alterations that it
installed and return the Helicopter as was received, except that the New Interior will
be maintained in the Helicopter or (ii) sell such alterations or equipment (provided
that Lessor shall not be obligated to pay any amount for the New Interior) to Lessor at
Lessee’s cost less depreciation calculated monthly over an assumed five year depreciable
life. It is understood that Lessor may exercise the option referred to in the preceding
sentence with respect to one or more of the pieces of equipment or alterations installed
by Lessee.
	 
	 	5.	 	Shall be responsible for all required inspections of the Helicopter and its
engines and licensing or re-licensing the Helicopter in accordance with all applicable
FAA and other applicable governmental requirements. Lessee shall at all times cause the
Helicopter to have on board a current U.S. Certificate of Airworthiness issued by the
FAA.
	 
	 	6.	 	All inspections, maintenance, modifications, repairs and overhauls of the
Helicopter or its engines, components, appliances, accessories, instruments or
equipment shall be performed by personnel authorized to perform such services by the
FAA.
	 
	 	7.	 	Shall at all times have the Helicopter’s engines and transmission on a “Power
By the Hour” program, which is approved by Lessor. Lessee shall use its best efforts to
have the “Power By The Hour” agreement assigned at the end of the Term.
	 
	 	8.	 	Shall inspect and clean the Helicopter on a regular basis.

	VII.	 	RECORDS AND INSPECTION:

Lessor agrees to provide a copy of the Helicopter documents listed on Exhibit D at the
Delivery Date. Lessee shall maintain all log books and historical records in accordance
with industry standards and any applicable governmental regulations. Upon return of the
Helicopter to Lessor, Lessee shall deliver to Lessor all such historical records and
logs (maintained to a current date), together with any or all records pertaining to the
Helicopter, which may have accrued during the term of this Lease, all such logs and
records shall at all times remain the property of the Lessor, and any which shall be
acquired by Lessee during the time that it shall have possession of the Helicopter,
shall become the property of Lessor immediately upon receipt thereof by Lessee. At all
times during the term of this Lease, reasonably consistent with Lessee’s use of the
Helicopter hereunder, Lessee, upon request of Lessor, shall make the Helicopter and any
and all logs and records available to Lessor, or its designee for inspection.

	VIII.	 	DAMAGE BY ACCIDENT:

In the event the Helicopter is damaged by accident, Lessee shall immediately notify the
Lessor thereof. Unless otherwise directed by Lessor, Lessee shall immediately

-5-

 

proceed to repair the damaged Helicopter so as to restore the Helicopter to a condition
equivalent to an FAA approved airworthy condition, unless it reasonably appears that the
damage to the Helicopter may constitute an actual or constructive total loss.

Lessee understands and agrees that Lessor’s Technical Representative will be furnished
by Lessor at Lessee’s expense to offer technical direction in the repair of the
Helicopter necessitated by reason of an accident. The amounts to be charged Lessee for
the Technical Representative’s services will be the cost of transportation to Lessee’s
base and return, plus reasonable subsistence cost. Subject to applicable FAA
regulations, Lessee shall have the final authority with respect to the placement or
repair of critical parts or components which may affect the airworthiness of the
Helicopter, whether damaged by accident or not.

All repairs shall be at Lessee’s own cost and expense; provided, however, that Lessor
shall promptly reimburse Lessee, or the maintenance provider, to the extent of insurance
proceeds received by Lessor.

	IX.	 	TOTAL LOSS:

Lessee shall bear the entire risk of loss, theft, confiscation, damage to or destruction
of the Helicopter from any cause whatsoever, and shall promptly notify Lessor thereof.
Except as otherwise provided below, this Lease shall not terminate and the obligations
of Lessee shall not be affected by reason of damage to or loss of the Helicopter.

In the event that a total loss of the Helicopter is sustained, Lessee shall be obligated
to pay to Lessor the sum of [REDACTED]*. Upon receipt of such proceeds by Lessor, this
Lease shall terminate automatically and all of Lessee’s responsibilities, including
Lessee’s responsibility to pay rent shall terminate; provided, however, that this Lease
shall continue as to indemnities, and all payments and proceeds of insurance or either
of them, payable to Lessor by Lessee under the terms of this Lease shall be paid to
Lessor.

	X.	 	GOVERNING LAWS AND JURISDICTION:

THIS LEASE AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. LESSEE HEREBY CONSENTS TO THE JURISDICTION OF ANY FEDERAL OR
STATE COURT LOCATED IN THE STATE OF NEW YORK IN ANY SUIT, ACTION, OR PROCEEDING ARISING
HEREUNDER AND WAIVES ANY OBJECTION TO THE VENUE IN SUCH COURT.

-6-

 

	XI.	 	ASSIGNMENT:

This Lease shall not be assigned by Lessee nor shall the Helicopter be subleased without
the prior written consent of Lessor, and the Helicopter shall at all times be kept in
the possession of Lessee and operated by its personnel in accordance with all governing
laws and appropriate FAA regulations, as provided elsewhere herein. Any changes in
control of Lessee shall constitute an assignment hereunder.

	XII.	 	WARRANTY:

LESSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, IN CONNECTION WITH THE HELICOPTER EXCEPT
AS SPECIFICALLY PROVIDED IN THIS LEASE AND SAID HELICOPTER IS LEASED IN ITS “AS IS”
CONDITION. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LESSEE SPECIFICALLY
ACKNOWLEDGES AND REPRESENTS THAT IT HAS, OR SHALL HAVE, FULL OPPORTUNITY TO INSPECT THE
HELICOPTER WHEN DELIVERED UNDER THIS LEASE BY PERSONS WHO IT CONSIDERS COMPETENT TO DO
SO, AND UPON LESSEE’S WRITTEN ACCEPTANCE OF THE HELICOPTER IN THE FORM ATTACHED HERETO
AS EXHIBIT C. THEN LESSEE SHALL BE DEEMED TO HAVE ACCEPTED THE HELICOPTER IN ITS
PRESENT CONDITION AND WARRANTS AND REPRESENTS TO LESSOR THAT SUCH CONDITION IS SUCH AS
WILL ALLOW THE USE OF THE HELICOPTER FOR THE PURPOSES INTENDED BY LESSEE.

	XIII.	 	DELIVERY AND RETURN OF THE HELICOPTER:

	 	A.	 	Delivery: On the Delivery Date, Lessee shall execute the
Lease Delivery Affidavit (Exhibit C-1 and C-2), and by such execution Lessee shall
confirm that the Helicopter has been delivered to it fully assembled and in good
working order and condition and in accordance with the terms of this Lease. Lessee
confirms that the Helicopter is of the size, design, capacity, configuration and
manufacture selected by it and irrevocably accepts said Helicopter as-is-where-is
for all the above.
	 
	 	 	 	Immediately prior to the Delivery, a functional test flight of not more than one
hour shall be accomplished in accordance with Lessor’s procedures and at Lessor’s
expense to demonstrate the airworthiness of the Helicopter and proper functioning of
the Helicopter’s systems and components. At all times during the functional test
flight, Lessor’s flight crew shall be in command of the Helicopter. Lessee shall be
entitled to have a qualified pilot and not more than two technical representatives,
compensated by Lessee, on the flight.

-7-

 

	 	B.	 	Return:

A. Upon termination of Lessee’s right to possession of the Helicopter, Lessee shall
return the Helicopter to Lessor and Lessor shall accept it, in accordance with the
following provisions.

(i) The Helicopter will be returned at Lessee’s expense to Lessor at Allaire
Airport, Belmar, New Jersey (“BLM”).

(ii) The Helicopter shall have a currently valid U.S. Certificate of Airworthiness,
and all mandatory AD and other bulletins shall have been complied with in accordance
with the Lessee’s FAA approved maintenance program.

(iii) The Helicopter shall have been maintained by Lessee in accordance with the
provisions of this Lease, and the Helicopter shall be cleaned to industry standards,
suitable for flying operations in accordance with FAA requirements.

(iv) Except as may otherwise be agreed by the parties in writing, the Helicopter
shall be in the same condition as when delivered to Lessee, except for reasonable
and ordinary wear and tear, use and depreciation, and shall be equipped with the
same or similar engines, components, appliances, accessories, instruments and
equipment as when delivered to Lessee. Lessee shall have no obligation as to time
remaining on time-limited components or to make any adjustment in that regard except
as specifically provided in this Lease for the time flown on the engines and other
major components identified in Exhibit B hereto.

(v) All special company markings of Lessee on the Helicopter shall have been removed
and any and all visible corrosion shall have been repaired or removed and the
Helicopter shall be painted white.

(vi) All logs, records, manuals, and historical documents pertaining thereto, in a
current condition and as required by this Lease, shall be delivered to Lessor.

(vii) No later than the date provided for the return of the Helicopter, Lessee will
make the Helicopter available to Lessor at a mutually acceptable location for the
purpose of permitting Lessor to make an inspection. Prior to Lessor’s acceptance,
Lessee will, at its expense, correct any condition making the Helicopter unairworthy
or otherwise not in the condition, as determined by a an unbiased third party,
required for return hereunder, and shall demonstrate the proper correction there of
to Lessor’s satisfaction.

(viii) This Lease and Lessee’s obligation to pay Fixed Rent to Lessor shall
terminate upon Lessee’s return of the Helicopter in the condition required by this
Lease. In the event that an unbiased third party determines that the Helicopter was
not returned in the condition required by this Lease, Lessee shall continue to

-8-

 

pay Fixed Rent until such time as the Helicopter is in compliance with the condition
required by this Lease.

	XIV.	 	MISCELLANEOUS:

(i) Lessee shall not permit any lien, claim or charge inconsistent with Lessor’s ownership
of the Helicopter to accrue or be placed against the Helicopter. Lessee at all times will
give Lessor full and immediate notice of any accident or happening to or about any such
Helicopter involving damage to it, or the property, and cooperate with all reasonable
requirements of Lessor to protect Lessor’s rights and property and Lessee will furnish all
information required by policies of insurance issued in connection with such Helicopter of
which it may have knowledge.

(ii) Each party hereto represents and warrants to the other that it has not dealt with any
broker in the negotiation of the Lease and does hereby agree to indemnify and hold the other
harmless of and from any claim of or liability to any broker, and all expenses related
thereto (including attorney’s fees and disbursements), by reason of breach of the foregoing
representation.

(iii) Any notice, the giving of which is required or permitted to this Lease, shall be in
writing and sent (i) by overnight mail, or (ii) by hand, to the parties’ respective
addresses hereinabove set forth (notices to Lessor to be sent to the attention of Jack
Cayre), or at such other address as either such party shall have provided the other by
written notice similarly given. Any notice shall be deemed given on the date it is
delivered. Notices signed by the counsel of a party shall be binding upon such party
without the signature of that party.

(iv) This Lease shall inure the benefit of the parties’ respective permitted successors
and assigns and may not be modified except by a writing signed by the party to be charged.

(v) The parties hereto do waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other of any matters whatsoever arising
out of in any way connected with the Lease.

(vi) All currency amounts in this Lease are in United States (US) Dollars.

(vii) Each month during the Term Lessee will provide Lessor with the hours flown and
maintenance performed during the prior calendar month.

(vii) Lessor shall have the right to inspect the Helicopter at all reasonable times, which
do not interrupt Lessee’s use of the equipment. The inspections shall be performed at
Lessee’s facility.

-9-

 

	XV.	 	DEFAULT:

Except as specified below, in the event Lessor reasonably deems any undertaking of Lessee
herein to be in default, Lessor shall notify Lessee in writing of such default and it shall
be corrected by Lessee within ten (10) days from the receipt of such notice. If not
corrected to the reasonable satisfaction of Lessor within such time, Lessor may declare the
Lease terminated and may take possession of the Helicopter immediately. Taking possession
shall not relieve Lessee from any undertaking of Lessee, including the obligation to pay
Fixed Rent for the entire unexpired term of the Lease (subject to deduction for Lessor’s
re-letting of the Helicopter, if any, it being understood that Lessor shall have no
obligation to re-let the Helicopter), and the Lessee shall be obligated to pay and reimburse
to Lessor the reasonable expense of taking possession, crating, packing and shipping such
property to Lessor’s designated location. Rents and any other obligations of Lessee
hereunder not paid within ten (10) days of due date shall bear a late charge equal to four
percent (4%) to reimburse Lessor for its additional administrative costs.

Upon failure to pay any installment of Fixed Rent or charge when due Lessor shall at
Lessor’s option terminate the Lease, provided that Lessor shall give Lessee ten (10) days to
correct default by payment of such installment. Failure to continuously maintain insurance
or maintain the Helicopter as required by this Lease shall be an immediate default for which
Lessor may terminate this Lease and may purchase insurance as required, at Lessee’s expense.

	XVI.	 	TRUTH IN LEASING:

LESSEE AND LESSOR EACH ACKNOWLEDGE THAT DURING THE TERM OF THIS LEASE, LESSEE, AND NOT
LESSOR, IS RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE HELICOPTER AND FOR COMPLIANCE WITH
ALL FEDERAL AVIATION REGULATIONS APPLICABLE TO ITS OPERATION.

THE HELICOPTER WILL BE OPERATED, MAINTAINED AND INSPECTED UNDER FEDERAL AVIATION REGULATION
PART 91 OR 135, AND ANY OTHER APPLICABLE REGULATIONS OF THE FEDERAL AVIATION ADMINISTRATION.

AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION
REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE, GENERAL
AVIATION DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.

-10-

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date set forth above.

	 	 	 	 	 	 	 	 	 
	Lessee:

	 	 U.S. HELICOPTER CORPORATION
	 	 	 	Lessor: [REDACTED]*	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ George J. Mehm, Jr.	 	 	 	/s/ [REDACTED]*	 	 
	 

	 	 

Name: George J. Mehm, Jr.
	 	 	 	 

[REDACTED]*
	 	 
	 

	 	Title: Senior Vice President, Chief	 	 	 	 	 	 
	 

	 	          Officer and Treasurer	 	 	 	 	 	 

-11-

 

Exhibit A

Model: Sikorsky S-76, Serial No. 760312, Registration No. N14CS

Helicopter is to be leased to U.S. Helicopter Corporation with the following optional equipment:

     Installed Equipment:

Will be supplied post closing.

-12-

 

Exhibit B

“Exhibit B.” will be a listing of all cycle and or time limited components installed on the
helicopter upon lease delivery.

Will be supplied post closing

-13-

 

Exhibit C-1

LEASE DELIVERY AFFIDAVIT

Delivery of leased helicopter, Model ___Serial No. ___Registration No.
N___to:

by ___is hereby acknowledged. The Helicopter is hereby
accepted as conforming to the requirements of the Lease Agreement dated

___, 2005

Accepted by: ______________________________

Title: ____________________________________

Start Date: ____________ Lease Expiration Date: ____________________________________

A/C Total Hours: _______ A/C Total End Hours: ____________________________________

Contact: ________________ Operator: ______________________________________________

Phone Number: ____________

-14-

 

Exhibit C-2

Serial No. ________ Registration No. N_______________

	 	 	 	 	 	 	 	 	 
	Start Date:

	 	 	 	 	 	Lease Expiration Date:	 	 
	 

	 	 
	 	 	 	 	 	 
	A/C Total Hours:

	 	 	 	 	 	Location of A/C:	 	 
	 

	 	 
	 	 	 	 	 	 
	Time Sentry Hours:

	 	 	 	 	 	A/C Total Hours:	 	 
	 

	 	 
	 	 	 	 	 	 
	Eng. #1 Serial No.:

	 	 	 	 	 	Time Sentry Hours:	 	 
	 

	 	 
	 	 	 	 	 	 
	Eng. # 1 Start Hours:

	 	 	 	 	 	Eng. #1 Start Hours:	 	 
	 

	 	 
	 	 	 	 	 	 
	Eng. #2 Serial No.:

	 	 	 	 	 	Eng. #2 End. Hours:	 	 
	 

	 	 
	 	 	 	 	 	 
	Eng. #2 Start Hours:

	 	 	 	 	 	Eng. #1 Cycles:	 	 
	 

	 	 
	 	 	 	 	 	 
	Eng. #1 Cycles:

	 	 	 	 	 	Eng #2 Cycles:	 	 
	 

	 	 
	 	 	 	 	 	 
	Eng. #2 Cycles:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Eng. #2 Cycles:

	 	 	 	 	 	Total Landings:	 	 
	 

	 	 	 	 	 	 	 	 
	Total Landings:
	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	 	 	 
	 
	Contact:

	 	 	 	 	 	Operator:	 	 
	 

	 	 
	 	 	 	 	 	 
	Phone No.:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

-15-

 

Exhibit D

Helicopter Documents

	A.	 	CERTIFICATES

	 	•	 	FAA Certificate of Airworthiness

	B.	 	HELICOPTER STATUS RECORDS

	 	•	 	Log Books, Maintenance and Flight Logs
	 
	 	•	 	Helicopter Maintenance Status Report due lists
	 
	 	•	 	Manufacturer’s Service Bulletin Status Report
	 
	 	•	 	Airworthiness Directive Compliance Report
	 
	 	•	 	Last Weighing Report
	 
	 	•	 	List of Life Limited Components with remaining hours/cycles

	C.	 	HELICOPTER MAINTENANCE RECORDS

	 	•	 	Complete access to the HELOTRAC account
	 
	 	•	 	All electronic maintenance manuals included in the HELOTRAC subscription

	D.	 	HELICOPTER HISTORY RECORDS

	 	•	 	Helicopter Maintenance History Cards and related documents, including service tags,
work orders, etc.
	 
	 	•	 	Accident or Incident Report (Major Structural Repair) (Including FAA Forms 337 as
applicable
	 
	 	•	 	Component record cards.

	E.	 	ENGINE RECORDS

	 	•	 	Engine time and cycle records
	 
	 	•	 	Last Overhaul and repair documents (including FAA Forms 337 as applicable)
	 
	 	•	 	Airworthiness Directive Compliance Report
	 
	 	•	 	Engineering Order/Service Bulletin Status Report
	 
	 	•	 	List of time Controlled Components with remaining hours and cycles
	 
	 	•	 	Engine Disc sheets
	 
	 	•	 	Engine Build Specifications (most recent)

	F.	 	COMPONENT RECORDS

	 	•	 	Time Controlled Component Historical Records with Installation and Serviceability
Tags.

	G.	 	MANUALS

	 	•	 	Helicopter Flight Manual (Manufacturer Approved, FAA Approved)
	 
	 	•	 	Weight and Balance Manual
	 
	 	•	 	Wiring Diagram Manual
	 
	 	•	 	Illustrated Parts Catalog
	 
	 	•	 	Aircraft Maintenance Manual

-16-

 

	 	•	 	Manufacturer’s Engine Maintenance Manual
	 
	 	•	 	Manufacturer’s Overhaul Manual
	 
	 	•	 	Composite repair manual
	 
	 	•	 	Corrosion repair manual
	 
	 	•	 	Structural repair manual

	H.	 	MISCELLANEOUS TECHNICAL DOCUMENTS

	 	•	 	Interior Configuration Drawings
	 
	 	•	 	Original Delivery Documents
	 
	 	•	 	Loose Equipment Inventory
	 
	 	•	 	Minimum Equipment List

-17-

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