1999 Executive Equity Loan Plan - HealthSouth Corp.


                             HEALTHSOUTH Corporation

                         1999 EXECUTIVE EQUITY LOAN PLAN

     1. PURPOSE OF THE PLAN. The purpose of the 1999 Executive  Equity Loan Plan
(the  'Plan')  of  HEALTHSOUTH   Corporation,   a  Delaware   corporation   (the
'Corporation'),  is to provide  incentive  for future  endeavor and to align the
interests of the  Corporation's  management and its  stockholders by providing a
mechanism  to enhance  ownership of the Common  Stock,  par value $.01 per share
(the  'Common  Stock'),  of the  Corporation  by its  executives  and  other key
employees,  upon whose  judgment,  interest and continuing  special  efforts the
Corporation is largely  dependent for the successful  conduct of its operations,
and to enable the Corporation to compete  effectively with other enterprises for
the  services  of such new  executives  and  employees  as may be needed for the
continued improvement of the Corporation's business, through the making of loans
('Loans') to such  executives  and  employees  to purchase  shares of the Common
Stock.

     2.  PARTICIPANTS.  Loans may be made under the Plan to such  executives and
key employees  ('Participants') of the Corporation and its subsidiaries as shall
be determined by the Committee (as set forth in Section 5 of the Plan).

     3. TERM OF THE PLAN.  The Plan shall  become  effective as of May 20, 1999,
subject to the approval by the holders of a majority of the shares of issued and
outstanding  Common Stock of the  Corporation  present in person or by proxy and
voting at the 1998 Annual Meeting of Stockholders of the  Corporation.  The Plan
shall  terminate  on the earlier of (a) May 19, 2009 or (b) such earlier time as
the Board of Directors of the  Corporation may determine.  Any Loan  outstanding
under  the  Plan at the  time of its  termination  shall  remain  in  effect  in
accordance with its terms and conditions and those of the Plan. No Loan shall be
made under the Plan after May 19, 2009.

     4. LOANS UNDER THE PLAN.  Loans may be made under the Plan in such  amounts
are as approved by the Committee,  provided that the maximum aggregate principal
amount  of  Loans  outstanding  under  the  Plan at any time  shall  not  exceed
$50,000,000.  If,  on or prior to the  termination  of the Plan as  provided  in
Section  3, the  principal  amount of any Loan  under the Plan  shall  have been
repaid in whole or in part,  the  principal  amount so repaid shall again become
available  for the  making of Loans  under the Plan,  subject  to the  foregoing
limitation on the maximum aggregate principal amount outstanding at any time.

     5.  ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Audit
and  Compensation  Committee of the Board of Directors of the  Corporation  (the
'Committee'). The acts of a majority of the Committee, at any meeting thereof at
which a quorum is  present,  or acts  reduced  to or  approved  in  writing by a
majority  of the  members  of the  Committee,  shall  be the  valid  acts of the
Committee. The Committee shall determine the executives and key employees of the
Corporation  and its  subsidiaries  who shall  receive  Loans and the  principal
amount of each such Loan.

     The  interpretation and construction of any provision of the Plan or of any
Loan made under it by the Committee shall be final,  conclusive and binding upon
all parties, including the Corporation,  its stockholders and Directors, and the
executives and employees of the Corporation and its  subsidiaries.  No member of
the Board of Directors or the Committee shall be liable to the Corporation,  any
stockholder  or any  employee of the  Corporation  or its  subsidiaries  for any
action or determination  made in good faith with respect to the Plan or any Loan
made under it.

     The  Committee  may  delegate   responsibility  for  all  or  part  of  the
administration of the Plan to appropriate officers of the Corporation; provided,
however,  that no such officers  shall have the power or authority to make Loans
under the Plan, amend,  waive or modify any provision of the Plan or forgive any
Loans,  in whole or in part,  without the express  approval of the  Committee in
each case.

     The expenses of administering the Plan shall be borne by the Corporation.

     6.  LOANS.  (a)  Loans  may be made  under  the  Plan by the  Committee  in
accordance with the provisions of Section 5 at any time prior to the termination
of the Plan. In making any  determination  as to executives and key employees to
whom  Loans  shall be made and as to the  principal  amount of such  Loans,  the
Committee  shall take into account the duties of the  respective  executives and
key employees,  their present and potential  contribution  to the success of the
Corporation,  and such other  factors as the  Committee  shall deem  relevant in
connection with the accomplishment of the purposes of the Plan.

     (b) Each Loan made under the Plan shall be granted  pursuant to and subject
to the terms and  conditions of a loan  agreement to be entered into between the
Corporation  and the  Participant  at the time of such  grant.  Each  such  loan
agreement shall be in a form from time-to-time adopted for use under the Plan by
the Committee (such form being hereinafter called a 'Loan Agreement').


Any such Loan  Agreement  shall  incorporate  by reference  all of the terms and
provisions  of the Plan as in effect at the time of grant and may  contain  such
other terms and provisions as shall be approved and adopted by the Committee.

     7. CERTAIN CONDITIONS OF LOANS. Loans made under this Plan shall be subject
to the following terms and conditions:

     (a) The  proceeds  of Loans may be used only for  purchases  of the  Common
Stock in open-market transactions, block trades or negotiated transactions. Such
purchases must be effected through a broker approved by the Corporation.

     (b) Loans  shall have a maturity  date of seven  years from the date of the
Loan, subject to acceleration and termination as provided herein.  Such maturity
date may be extended for up to one additional  year by the Committee,  acting in
its discretion. The unpaid principal balance of each Loan shall bear interest at
a rate equal to the effective interest rate on the average  outstanding  balance
under the  Corporation's  principal credit agreement for each calendar  quarter,
adjustable as of the end of each calendar quarter, which effective interest rate
shall be determined  by the  Controller of the  Corporation.  Interest  shall be
compounded  annually.  Subject  to the terms  and  conditions  set forth  below,
repayment of principal and interest may be deferred  until final maturity of the
Loan.

     (c) Each Loan  shall be  secured by a pledge of all of the shares of Common
Stock purchased with the proceeds thereof ('Loan Shares'), pursuant to which the
Participant  shall grant the  Corporation a first  priority lien on and security
interest in the Loan Shares.  The Loan Shares may not be sold for one year after
the date on which  they were  acquired  (the  'Acquisition  Date').  Thereafter,
one-third of the aggregate  number of Loan Shares may be sold during each of the
second,  third and fourth  years  after the  Acquisition  Date,  with any unsold
portion carrying forward from year to year. The proceeds from any such sale must
be used to repay a percentage of the  principal  amount of the Loan equal to the
percentage  of Loan  Shares  sold,  less any  amounts  withheld  for taxes  (the
'Mandatory  Prepayment  Amount').  Any  proceeds  in  excess  of  the  Mandatory
Prepayment Amount shall be retained by the Participant.

     (d)  Notwithstanding  any  contrary  provision  in the  Plan  or  any  Loan
Agreement,  a Loan shall immediately  mature,  and all principal and accrued but
unpaid  interest  thereon  shall be due and  payable,  within 30 days  after the
effective  date  of any  termination  of  the  Participant's  employment  by the
Corporation,  whether voluntary or involuntary,  or upon the death or disability
of the  Participant.  Without  limiting the  generality  of the  foregoing,  the
Corporation  may, but shall not be required to,  repurchase the Loan Shares of a
Participant at such Participant's original acquisition cost if the Participant's
employment is terminated,  voluntarily or involuntarily or by reason of death or
disability,  within the first three years after the Acquisition Date,  according
to the following schedule:

                                                 Percentage of Loan Shares
            Year Beginning On                      Subject to Repurchase
           ---------------------                -------------------------
           Acquisition Date                                  100%
           First Anniversary of
            the Acquisition Date                          66 2/3%
           Second Anniversary of
            the Acquisition Date                          33 1/3%




     The terms of such  repurchase  shall be as set forth in the Loan Agreement.
In the  event of any such  repurchase,  the  purchase  price  of the  shares  so
repurchased  shall be credited  against the  outstanding  principal  balance and
accrued  but  unpaid  interest  on  the  Loan,  and  the  Participant  shall  be
responsible for the payment of any deficiency.

     (e) Each certificate evidencing Loan Shares shall be registered in the name
of the Participant, and shall bear a legend in substantially the following form:

     'The   transferability   of  this  certificate  and  the  shares  of  stock
     represented  hereby  are  subject to the terms and  conditions  of the 1999
     Executive Equity Loan Plan of HEALTHSOUTH  Corporation and a Loan Agreement
     entered  into between the  registered  owner and  HEALTHSOUTH  Corporation.
     Copies of such Plan and Loan  Agreement  are on file in the  offices of the
     Secretary of HEALTHSOUTH Corporation.'

     (f) The Committee may adopt rules which provide that the stock certificates
evidencing Loan Shares may be held in custody by a bank or other institution, or
that  the  Corporation  may  itself  hold  such  shares  in  custody  until  the
restrictions  thereon  shall have lapsed,  and may require as a condition of any
Loan that the  participant  shall have delivered a stock power endorsed in blank
relating to the Loan Shares.

     (g) Loans shall be made with full recourse,  and each Participant  shall be
required  to repay all  principal  and  accrued  but  unpaid  interest  upon the
maturity of the Loan (or its earlier acceleration or termination),  irrespective
of whether the Participant


has sold Loan Shares or whether the proceeds of any such sale were sufficient to
repay all principal and interest with respect to the Loan.  If, at any time, the
Committee  determines in its  reasonable  discretion  that the value of the Loan
Shares pledged as security for the Loan is less than the indebtedness  evidenced
by the Loan,  the Committee  shall require the  Participant  to post  additional
security (which may be shares of Common Stock or other collateral  acceptable to
the Committee,  in its reasonable  discretion) in an amount  sufficient to fully
secure the indebtedness of the Loan.

     8. CERTAIN RIGHTS OF PARTICIPANTS.  Notwithstanding  any contrary provision
of the Plan or any Loan  Agreement,  a participant  holding Loan Shares shall be
entitled to the following rights:

     (a) A participant  shall have with respect to Loan Shares all of the rights
of a stockholder of the Corporation, including the right to vote such shares and
receive dividends and other distributions thereon.

     (b)  Unless  otherwise  expressly  provided  in  the  Loan  Agreement,  any
restrictions on a participant's  ability to sell any of the Loan Shares pursuant
to Section 7(c) shall  terminate  upon the  occurrence of a Change in Control of
the  Corporation.  For purposes of this Section 8(b),  'Change in Control' shall
mean

          (i) the acquisition  (other than from the  Corporation) by any person,
     entity or 'group'  (within the meaning of Sections  13(d)(3) or 14(d)(2) of
     the Securities Exchange Act of 1934, but excluding,  for this purpose,  the
     Corporation  or its  subsidiaries,  or any  employee  benefit  plan  of the
     Corporation  or its  subsidiaries  which acquires  beneficial  ownership of
     voting  securities of the Corporation) of beneficial  ownership (within the
     meaning of Rule 13d-3  promulgated  under the  Securities  Exchange  Act of
     1934) of 25% or more of either the then-outstanding  shares of Common Stock
     or the combined voting power of the Corporation's  then-outstanding  voting
     securities entitled to vote generally in the election of Directors; or

          (ii)  individuals  who, as of May 20,  1999,  constitute  the Board of
     Directors of the Corporation (as of such date, the 'Incumbent Board') cease
     for any reason to constitute at least a majority of the Board of Directors;
     provided,  however,  that any person becoming a Director subsequent to such
     date whose election, or nomination for election,  was approved by a vote of
     at least a majority of the Directors then  constituting the Incumbent Board
     (other  than an election  or  nomination  of an  individual  whose  initial
     assumption of office is in connection with an actual or threatened election
     contest relating to the election of Directors of the Corporation) shall be,
     for purposes of this Section 8(b),  considered as though such person were a
     member of the Incumbent Board; or

          (iii)  approval  by  the   stockholders   of  the   Corporation  of  a
     reorganization,  merger, consolidation or share exchange, in each case with
     respect  to which  persons  who were the  stockholders  of the  Corporation
     immediately prior to such  reorganization,  merger,  consolidation or share
     exchange do not, immediately thereafter,  own more than 75% of the combined
     voting power entitled to vote generally in the election of directors of the
     reorganized,    merged,    consolidated   or   other   surviving   entity's
     then-outstanding voting securities,  or a liquidation or dissolution of the
     Corporation  or the sale of all or  substantially  all of the assets of the
     Corporation.

     Notwithstanding the foregoing, however, the pledge of the Loan Shares shall
continue in full force and effect until such time as all  principal  and accrued
but unpaid interest under the Loan has been repaid.

     9. NO RIGHT OF  CONTINUED  EMPLOYMENT.  Nothing  in the Plan or in the Loan
Agreement  shall confer upon any participant the right to continue in the employ
of the  Corporation  or any of its  subsidiaries  or in any  other  relationship
thereto or interfere in any way with the right of the  Corporation  to terminate
such employment or other relationship at any time.

     10.  AMENDMENT OF THE PLAN. The Plan may, at any time or from time to time,
be terminated, modified or amended by the stockholders of the Corporation by the
affirmative  vote of the holders of a majority of the outstanding  shares of the
Corporation's Common Stock present in person or by proxy and entitled to vote at
a meeting of the  Corporation's  stockholders  duly  called and held (or, to the
extent  permitted by law, by written consent of the holders of a majority of the
outstanding  shares of the  Corporation's  Common Stock  entitled to vote).  The
Board of Directors of the  Corporation  may,  insofar as permitted by law,  from
time to time  suspend  or  discontinue  the  Plan or  revise  or amend it in any
respect   whatsoever;   provided,   however,   that,  without  approval  of  the
stockholders  of the  Corporation,  no such revision or amendment shall increase
the maximum aggregate principal amount of Loans made under the Plan.

     11.  CHANGES IN LAW.  Subject to the provisions of Section 10, the Board of
Directors  shall  have the  power to amend  the Plan and any  outstanding  Loans
granted thereunder in such respects as the Board of Directors shall, in its sole
discretion, deem advisable in order to incorporate in the Plan or any such Award
any new  provision  or change  designed  to  comply  with or take  advantage  of
requirements or provisions of the Internal Revenue Code of 1986, as amended,  or
any other statute,  or Rules or Regulations of the Internal  Revenue  Service or
any other Federal or state governmental  agency enacted or promulgated after the
adoption of the Plan.



     12. LEGAL MATTERS. Every right of action by or on behalf of the Corporation
or by any stockholder against any past, present or future member of the Board of
Directors,  officer  or  employee  of  the  Corporation  arising  out  of  or in
connection with this Plan shall, irrespective of the place where such action may
be brought and  irrespective  of the place of  residence  of any such  Director,
officer or employee,  cease and be barred by the  expiration of three years from
whichever  is the later of (a) the date of the act or  omission  in  respect  of
which such right of action  arises,  or (b) the first date upon which  there has
been  made  generally   available  to  stockholders  an  annual  report  of  the
Corporation  and a  proxy  statement  for the  Annual  Meeting  of  Stockholders
following  the issuance of such annual  report,  which  annual  report and proxy
statement  alone or together set forth,  for the related  period,  the aggregate
number of shares for which Awards were granted;  and any and all right of action
by any  employee  or  executive  of the  Corporation  (past,  present or future)
against the  Corporation  arising out of or in connection  with this Plan shall,
irrespective of the place where such action may be brought,  cease and be barred
by the expiration of three years from the date of the act or omission in respect
of which such right of action arises.

     This Plan and all  determinations  made and actions taken  pursuant  hereto
shall be governed by the law of Delaware,  applied  without giving effect to any
conflicts-of-law principles, and construed accordingly.