SELECT MEDICAL CORPORATION



                                  $175,000,000



                    7 1/2% Senior Subordinated Notes due 2013



                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT



                                                                 August 12, 2003



J.P. MORGAN SECURITIES INC.

MERRILL LYNCH, PIERCE, FENNER & Smith

         INCORPORATED

WACHOVIA CAPITAL MARKETS, LLC

SG COWEN SECURITIES CORPORATION

CIBC WORLD MARKETS CORP.

FLEET SECURITIES, INC.

JEFFERIES & COMPANY, INC.

c/o J.P. MORGAN SECURITIES INC.

270 Park Avenue, 4th floor

New York, New York  10017



Ladies and Gentlemen:



                  Select Medical Escrow, Inc., a Delaware corporation ("Select

Medical Escrow"), proposes to issue and sell to J.P. Morgan Securities Inc. ("JP

Morgan"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wachovia Capital

Markets, LLC, SG Cowen Securities Corporation, CIBC World Markets Corp., Fleet

Securities, Inc. and Jefferies & Company, Inc. (collectively, together with

JPMorgan, the "Initial Purchasers"), upon the terms and subject to the

conditions set forth in a purchase agreement dated July 29, 2003 (the "Purchase

Agreement"), $175,000,000 aggregate principal amount of its 7 1/2% Senior

Subordinated Notes due 2013 (the "Securities") to be assumed by Select Medical

Corporation, a Delaware corporation (the "Company") upon the closing of the

Acquisition (defined below) and to be jointly and severally guaranteed on a

senior subordinated basis by the subsidiaries of the Company listed on Schedule

I and signatories hereto (the "Select Guarantors," and together with any

additional guarantors of the Securities after the date hereof, including,

without limitation, Kessler and its wholly-owned subsidiaries upon the closing

of the Acquisition, the "Guarantors"). Capitalized terms used but not defined

herein shall have the meanings given to such terms in the Purchase Agreement.



{PAGE}



                  The net proceeds of the issuance of the Securities will be

used in part to acquire (such acquisition, the "Acquisition") all of the

outstanding capital stock of Kessler Rehabilitation Corporation ("Kessler")

pursuant to a Stock Purchase Agreement, dated June 30, 2003 (the "Stock Purchase

Agreement") by and among the Company, Kessler and Henry H. Kessler Foundation,

Inc.



                  As an inducement to the Initial Purchasers to enter into the

Purchase Agreement and in satisfaction of a condition to the obligations of the

Initial Purchasers thereunder, the Company, Select Medical Escrow and the Select

Guarantors agree with the Initial Purchasers, for the benefit of the holders

(including the Initial Purchasers) of the Securities, the Exchange Securities

(as defined herein) and the Private Exchange Securities (as defined herein)

(collectively, the "Holders"), as follows:



                  1. Registered Exchange Offer. The Company and the Guarantors

shall (i) prepare and, not later than 45 days following the closing date of the

Acquisition (the "Acquisition Date"), file with the Commission a registration

statement (the "Exchange Offer Registration Statement") on an appropriate form

under the Securities Act with respect to a proposed offer to the Holders of the

Securities (the "Registered Exchange Offer") who are not prohibited by any law

or policy of the Commission from participating in the Registered Exchange Offer

to issue and deliver to such Holders, in exchange for the Securities, a like

aggregate principal amount of debt securities of the Company (the "Exchange

Securities") that are identical in all material respects to the Securities,

except for the transfer restrictions relating to the Securities and the

provisions related to the matters described in Section 3 hereof, (ii) use their

reasonable best efforts to cause the Exchange Offer Registration Statement to

become effective under the Securities Act no later than 105 days after the

Acquisition Date and the Registered Exchange Offer to be consummated no later

than 135 days after the Acquisition Date and (iii) keep the Exchange Offer

Registration Statement effective for not less than 30 days (or longer, if

required by applicable law) after the date on which notice of the Registered

Exchange Offer is mailed to the Holders (such period being called the "Exchange

Offer Registration Period"). The Exchange Securities will be issued under the

Indenture or an indenture (the "Exchange Securities Indenture") between the

Company, the Guarantors and the Trustee or such other bank or trust company that

is reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange

Securities Trustee"), such indenture to be identical in all material respects to

the Indenture, except for the transfer restrictions relating to the Securities

(as described above) and the provisions related to the matters described in

Section 3 hereof.



                  Upon the effectiveness of the Exchange Offer Registration

Statement, the Company and the Guarantors shall promptly commence the Registered

Exchange Offer, it being the objective of such Registered Exchange Offer to

enable each Holder electing to exchange Securities for Exchange Securities

(assuming that such Holder (a) is not an affiliate of the Company or an

Exchanging Dealer (as defined herein) not complying with the requirements of the

next sentence, (b) is not an Initial Purchaser holding Securities that have, or

that are reasonably likely to have, the status of an unsold allotment in an

initial distribution, (c) acquires the Exchange Securities in the ordinary

course of such Holder's business and (d) has no arrangements or understandings

with any person to participate in the distribution of the Exchange



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{PAGE}



Securities and is not prohibited by any law or policy of the Commission from

participating in the Registered Exchange Offer) and to trade such Exchange

Securities from and after their receipt without any limitations or restrictions

under the Securities Act and without material restrictions under the securities

laws of the several states of the United States. The Company, the Select

Guarantors, the Initial Purchasers and each Exchanging Dealer acknowledge that,

pursuant to current interpretations by the Commission's staff of Section 5 of

the Securities Act, each Holder that is a broker-dealer electing to exchange

Securities, acquired for its own account as a result of market-making activities

or other trading activities, for Exchange Securities (an "Exchanging Dealer"),

is required to deliver a prospectus containing substantially the information set

forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer

Procedures" section and the "Purpose of the Exchange Offer" section and in Annex

C hereto in the "Plan of Distribution" section of such prospectus in connection

with a sale of any such Exchange Securities received by such Exchanging Dealer

pursuant to the Registered Exchange Offer.



                  If, prior to the consummation of the Registered Exchange

Offer, any Holder holds any Securities acquired by it that have, or that are

reasonably likely to be determined to have, the status of an unsold allotment in

an initial distribution, or any Holder is not entitled to participate in the

Registered Exchange Offer, the Company shall, upon the request of any such

Holder, simultaneously with the delivery of the Exchange Securities in the

Registered Exchange Offer, issue and deliver to any such Holder, in exchange for

the Securities held by such Holder (the "Private Exchange"), a like aggregate

principal amount of debt securities of the Company (the "Private Exchange

Securities") that are identical in all material respects to the Exchange

Securities, except for the transfer restrictions relating to such Private

Exchange Securities. The Private Exchange Securities will be issued under the

same indenture as the Exchange Securities, and the Company shall use its

reasonable best efforts to cause the Private Exchange Securities to bear the

same CUSIP number as the Exchange Securities.



                  In connection with the Registered Exchange Offer, the Company

shall:



                  (a) mail to each Holder a copy of the prospectus forming part

         of the Exchange Offer Registration Statement, together with an

         appropriate letter of transmittal and related documents;



                  (b) keep the Registered Exchange Offer open for not less than

         30 days (or longer, if required by applicable law) after the date on

         which notice of the Registered Exchange Offer is mailed to the Holders;



                  (c) utilize the services of a depositary for the Registered

         Exchange Offer with an address in the Borough of Manhattan, The City of

         New York, which may be the Trustee or an affiliate of the Trustee;



                  (d) permit Holders to withdraw tendered Securities at any time

         prior to the close of business, New York City time, on the last

         business day on which the Registered Exchange Offer shall remain open;

         and



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{PAGE}



                  (e) otherwise comply in all respects with all laws that are

         applicable to the Registered Exchange Offer.



                  As soon as practicable after the close of the Registered

         Exchange Offer and any Private Exchange, as the case may be, the

         Company shall:



                  (a)      accept for exchange all Securities validly tendered

         and not validly withdrawn pursuant to the Registered Exchange Offer and

         the Private Exchange;



                  (b)      deliver to the Trustee for cancellation all

         Securities so accepted for exchange; and



                  (c)      cause the Trustee or the Exchange Securities Trustee,

         as the case may be, promptly to authenticate and deliver to each

         Holder, Exchange Securities or Private Exchange Securities, as the case

         may be, equal in principal amount to the Securities of such Holder so

         accepted for exchange.



                  The Company and the Guarantors shall use their reasonable best

efforts to keep the Exchange Offer Registration Statement effective and to amend

and supplement the prospectus contained therein in order to permit such

prospectus to be used by all persons subject to the prospectus delivery

requirements of the Securities Act for such period of time as such persons must

comply with such requirements in order to resell the Exchange Securities;

provided that (i) in the case where such prospectus and any amendment or

supplement thereto must be delivered by an Exchanging Dealer or an Initial

Purchaser, such period shall be the lesser of 180 days and the date on which all

Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities

held by them and (ii) the Company shall make such prospectus and any amendment

or supplement thereto available to any broker-dealer for use in connection with

any resale of any Exchange Securities for a period of not less than 90 days

after the consummation of the Registered Exchange Offer.



                  The Indenture or the Exchange Securities Indenture, as the

case may be, shall provide that the Securities, the Exchange Securities and the

Private Exchange Securities shall vote and consent together on all matters as

one class and that none of the Securities, the Exchange Securities or the

Private Exchange Securities will have the right to vote or consent as a separate

class from one another on any matter.



                  Interest on each Exchange Security and Private Exchange

Security issued pursuant to the Registered Exchange Offer and in the Private

Exchange will accrue from the last interest payment date on which interest was

paid on the Securities surrendered in exchange therefor or, if no interest has

been paid on the Securities, from the Issue Date.



                  Each Holder participating in the Registered Exchange Offer

shall be required to represent to the Company in writing that at the time of the

consummation of the Registered Exchange Offer (i) any Exchange Securities

received by such Holder will be acquired in the ordinary course of business,

(ii) such Holder will have no arrangements or understanding with any person to

participate in the distribution of the Securities or the Exchange Securities

within



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{PAGE}



the meaning of the Securities Act, (iii) such Holder is not an affiliate of the

Company or, if it is such an affiliate, such Holder will comply with the

registration and prospectus delivery requirements of the Securities Act to the

extent applicable, (iv) if such Holder is not a broker-dealer, that it is not

engaged in, and does not intend to engage in, the distribution of the Exchange

Securities and (v) if such Holder is a broker-dealer, that it will receive

Exchange Securities for its own account in exchange for Securities that were

acquired as a result of market-making activities or other trading activities and

that it will be required to acknowledge that it will deliver a prospectus in

connection with any resale of such Exchange Securities.



                  Notwithstanding any other provisions hereof, the Company and

the Guarantors will ensure that (i) any Exchange Offer Registration Statement

and any amendment thereto and any prospectus forming part thereof and any

supplement thereto complies in all material respects with the Securities Act and

the rules and regulations of the Commission thereunder, (ii) any Exchange Offer

Registration Statement and any amendment thereto does not, when it becomes

effective, contain an untrue statement of a material fact or omit to state a

material fact required to be stated therein or necessary to make the statements

therein not misleading and (iii) any prospectus forming part of any Exchange

Offer Registration Statement, and any supplement to such prospectus, does not,

as of the consummation of the Registered Exchange Offer, include an untrue

statement of a material fact or omit to state a material fact necessary in order

to make the statements therein, in the light of the circumstances under which

they were made, not misleading.



                  2. Shelf Registration. If (i) because of any change or

development in law or applicable interpretations thereof by the Commission's

staff the Company and the Guarantors are not permitted, or for any other reason

the Commission does not permit the Company and the Guarantors, to effect the

Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) any

Securities validly tendered pursuant to the Registered Exchange Offer are not

exchanged for Exchange Securities within 135 days after the Acquisition Date, or

(iii) any Initial Purchaser so requests with respect to Securities or Private

Exchange Securities not eligible to be exchanged for Exchange Securities in the

Registered Exchange Offer and held by it following the consummation of the

Registered Exchange Offer, or (iv) any applicable law or interpretations do not

permit any Holder to participate in the Registered Exchange Offer, or (v) any

Holder that participates in the Registered Exchange Offer does not receive

freely transferable Exchange Securities in exchange for tendered Securities, or

(vi) the Company so elects, then the following provisions shall apply:



                  (a) The Company and the Guarantors shall use their reasonable

         best efforts to file as promptly as practicable (but in no event more

         than 30 days after so required or requested pursuant to this Section 2)

         with the Commission, and thereafter shall use their reasonable best

         efforts to cause to be declared effective, a shelf registration

         statement on an appropriate form under the Securities Act relating to

         the offer and sale of the Transfer Restricted Securities (as defined

         below) by the Holders thereof from time to time in accordance with the

         methods of distribution set forth in such registration statement

         (hereafter, a "Shelf Registration Statement" and, together with any

         Exchange Offer Registration Statement, a "Registration Statement")

         provided, however, that no Holder (other than an Initial Purchaser)

         shall be entitled to have the Securities, the Exchange



                                        5



{PAGE}



         Securities or the Private Exchange Securities held by it covered by the

         Shelf Registration Statement unless such Holder agrees in writing to be

         bound by all the provisions of this Agreement applicable to such

         Holder.



                  (b) The Company and the Guarantors shall use their reasonable

         best efforts to keep the Shelf Registration Statement continuously

         effective and available in order to permit the prospectus forming part

         thereof to be used by Holders of Transfer Restricted Securities for a

         period ending on the earlier of (i) two years from the Issue Date or

         such shorter period that will terminate when all the Transfer

         Restricted Securities covered by the Shelf Registration Statement have

         been sold pursuant thereto and (ii) the date on which the Securities

         become eligible for resale without volume restrictions pursuant to Rule

         144 under the Securities Act (in any such case, such period being

         called the "Shelf Registration Period"). The Company and the Guarantors

         shall be deemed not to have used their reasonable best efforts to keep

         the Shelf Registration Statement effective during the requisite period

         if they voluntarily take any action that would result in Holders of

         Transfer Restricted Securities covered thereby not being able to offer

         and sell such Transfer Restricted Securities during that period, unless

         such action is required by applicable law.



                  (c) Notwithstanding any other provisions hereof, the Company

         and the Guarantors will ensure that (i) any Shelf Registration

         Statement and any amendment thereto and any prospectus forming part

         thereof and any supplement thereto complies in all material respects

         with the Securities Act and the rules and regulations of the Commission

         thereunder, (ii) any Shelf Registration Statement and any amendment

         thereto (in either case, other than with respect to information

         included therein in reliance upon or in conformity with written

         information furnished to the Company by or on behalf of any Holder

         specifically for use therein (the "Holders' Information")) does not

         contain an untrue statement of a material fact or omit to state a

         material fact required to be stated therein or necessary to make the

         statements therein not misleading and (iii) any prospectus forming part

         of any Shelf Registration Statement, and any supplement to such

         prospectus (in either case, other than with respect to Holders'

         Information), does not include an untrue statement of a material fact

         or omit to state a material fact necessary in order to make the

         statements therein, in the light of the circumstances under which they

         were made, not misleading.



                  3.       Additional Interest.



                  (a) The parties hereto agree that the Holders of Transfer

Restricted Securities will suffer damages if the Company and the Guarantors fail

to fulfill their obligations under Section 1 or Section 2, as applicable, and

that it would not be feasible to ascertain the extent of such damages.

Accordingly, if (i) the Exchange Offer Registration Statement is not filed with

the Commission on or prior to 45 days after the Acquisition Date or the Shelf

Registration Statement is not filed with the Commission on or prior to 30 days

after required to be filed or requested to be filed pursuant to Section 2

hereof, (ii) the Exchange Offer Registration Statement or the Shelf Registration

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