ESCROW AGREEMENT



                  ESCROW AGREEMENT, dated as of August 12, 2003 (the

"Agreement"), among Select Medical Corporation, a Delaware corporation (the

"Company"), Select Medical Escrow, Inc. ("Select Medical Escrow"), U.S. Bank

Trust National Association, as escrow agent (in such capacity, the "Escrow

Agent") and U.S. Bank Trust National Association, as Trustee (in such capacity,

the "Trustee") under the Indenture (the "Indenture"), dated as of August 12,

2003, between Select Medical Escrow and the Trustee.



                  This Agreement is being entered into in connection with the

Purchase Agreement, dated July 29, 2003 (the "Purchase Agreement") among the

Company and J.P. Morgan Securities Inc. ("JP Morgan"), Merrill Lynch, Pierce,

Fenner & Smith Incorporated ("Merrill Lynch"), Wachovia Capital Markets, LLC, SG

Cowen Securities Corporation, CIBC World Markets Corp., Fleet Securities, Inc.

and Jefferies & Company, Inc. (collectively, the "Initial Purchasers"), and the

Indenture. Capitalized terms used but not defined herein have the respective

meanings specified in the Indenture.



                  Pursuant to the Purchase Agreement, Select Medical Escrow is

selling $175,000,000 aggregate principal amount of its 7 1/2% Senior

Subordinated Notes due 2013 (the "Securities"). Concurrently with the closing of

such sale, Select Medical Escrow will deposit with the Escrow Agent, as

hereinafter provided, the net proceeds thereof, together with other funds (in

both cases, in the form of cash and/or Permitted Investments (as defined below))

in an amount sufficient to pay when due the Special Redemption Price (as defined

below), assuming redemption of the Securities occurs on December 11, 2003. Such

funds will be used (i) to fund, in part, the acquisition (the "Kessler

Acquisition") of Kessler Rehabilitation Corporation, a Delaware corporation

("Kessler"), pursuant to the Stock Purchase Agreement, dated as of June 30, 2003

(the "Stock Purchase Agreement") by and among the Company, Kessler and the Henry

H. Kessler Foundation, a New Jersey non-profit organization, or (ii) to fund the

Special Redemption Price.



                  In connection with the consummation of the Kessler

Acquisition, (i) the Company will assume all of Select Medical Escrow's

obligations under the Securities, the Indenture, this Agreement and the Purchase

Agreement pursuant to the assumption documentation referred to in clauses (i)

and (ii) of Section 2(a) (the "Assumption"), (ii) Select Medical Escrow will

merge with and into the Company (the "Select Medical Escrow Merger") and in

connection therewith Select Medical Escrow will be released from any further

liability with respect thereto by operation of law.



                  If the conditions to the closing of the Kessler Acquisition

have been satisfied or waived and the consummation of the Kessler Acquisition

and the Assumption are proposed to occur on or prior to November 27, 2003 (the

"Deadline Date"), Select



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Medical Escrow will so notify the Escrow Agent in writing and all Escrowed

Property (as defined below) will be released to Select Medical Escrow and/or the

Company immediately prior to such closing as set forth herein. If, for any

reason, (a) the Kessler Acquisition and the Assumption are not consummated on or

prior to the Deadline Date or (b) the Stock Purchase Agreement is terminated on

or prior to the Deadline Date, Select Medical Escrow will so notify the Escrow

Agent in writing and the Escrow Agent will transfer to the Paying Agent an

amount of Escrowed Property sufficient to pay the Special Redemption Price for

the Special Redemption pursuant to paragraph 5(c) of the Securities and Section

1001(c) of the Indenture (the "Special Redemption"), and any excess Escrowed

Property will be released to Select Medical Escrow.



                  Accordingly, the Company, Select Medical Escrow and the Escrow

Agent agree as follows:



                  1.       Delivery and Acceptance of Escrowed Property.



                  (a)      (i) Concurrently with the execution and delivery

hereof, the Escrow Agent shall establish a trust account in the name of "Escrow

Account by Select Medical Escrow, Inc. to U.S. Bank Trust National Association,

as Trustee" Account No. 743324001 Select Medical Corp. (the "Escrow Account")

and Select Medical Escrow shall deposit the Initial Deposit with the Escrow

Agent to be deposited into the Escrow Account by the Escrow Agent. The Escrow

Account shall be maintained by the Escrow Agent as a Securities Account. The

Escrow Agent, the Trustee, the Company and Select Medical Escrow shall execute

and deliver, on the date hereof, a Securities Account Control Agreement in the

form attached hereto as Exhibit D (the "Securities Account Control Agreement")

which, when so executed and delivered, shall be deemed to have been made a part

of this Agreement. Until the release of all Escrowed Property pursuant to this

Section 1 or Section 2, all funds, including, without limitation, the Initial

Deposit and any other cash and/or Permitted Investments accepted by the Escrow

Agent pursuant to this Agreement, shall be held by the Escrow Agent for the

exclusive benefit of the Trustee, any predecessor Trustee under the Indenture

and holders of the Securities, as secured parties hereunder (collectively, the

"Beneficiaries") and shall be treated as Financial Assets. All such funds shall

be held in the Escrow Account until disbursed or paid in accordance with the

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