Officers' Certificate Pursuant to Sections 2.3 and 11.5 of the Indenture - HealthSouth Corp. and PNC Bank NA


                             HEALTHSOUTH CORPORATION
                        OFFICERS' CERTIFICATE PURSUANT TO
                     SECTIONS 2.3 AND 11.5 OF THE INDENTURE

     Michael D. Martin and William W. Horton do hereby certify that they are the
Executive Vice President,  Chief Financial Officer and Treasurer and Senior Vice
President,   Corporate  Counsel  and  Assistant  Secretary,   respectively,   of
HEALTHSOUTH  Corporation,  a Delaware corporation (the 'Company') and do further
certify,  pursuant  to  resolutions  of the Board of  Directors  of the  Company
adopted on May 21, 1998 and  resolutions of the Pricing  Committee of said Board
of Directors adopted on June 17, 1998 (collectively, the 'Resolutions'),  and in
accordance with Sections 2.3 and 11.5 of the Indenture (the Indenture as amended
and  supplemented by the  Resolutions is herein referred to as the  'Indenture')
dated  as  of  June  22,  1998  between  the  Company  and  PNC  Bank,  National
Association, as trustee (the 'Trustee'), as follows:

     1. Two series of securities to be issued under the Indenture and designated
as the  Company's  6.875%  Senior  Notes due 2005 (the '2005  Notes'),  and 7.0%
Senior Notes due 2008 (the '2008 Notes') have been authorized.  Each of the 2005
Notes and the 2008 Notes are a separate series of securities under the Indenture
and are referred to herein collectively as the 'Securities.'  Attached hereto as
Annex A is a true and  correct  copy of a specimen  2005 Note (the 'Form of 2005
Note') and  attached  hereto as Annex B is a true and correct copy of a specimen
2008 Note (the 'Form of 2008 Note').  The Form of 2005 Note and the Form of 2008
Note are herein collectively referred to as the 'Forms of Securities.'

     2. The 2005 Notes shall be limited to $250,000,000  in aggregate  principal
amount and shall mature on June 15, 2005.  The 2005 Notes shall bear interest at
the rate of 6.875% per annum from June 22, 1998,  payable  semiannually  on each
June 15 and December 15 commencing December 15, 1998. The 2005 Notes were issued
at the initial  offering  price of 99.729% of principal  amount.  The 2005 Notes
shall be  redeemable  as  provided in the Form of 2005 Note  attached  hereto as
Annex A.

     3. The 2008 Notes shall be limited to $250,000,000  in aggregate  principal
amount and shall mature on June 15, 2008.  The 2008 Notes shall bear interest at
the rate of 7.0% per annum from June 22, 1998, payable semiannually on each June
15 and December 15 commencing  December 15, 1998.  The 2008 Notes were issued at
the initial offering price of 99.050% of principal amount.  The 2008 Notes shall
be redeemable as provided in the Form of 2008 Note attached hereto as Annex B.

     4. The following terms shall apply to each of the Securities:


                                       1





          (a) The Securities shall be issued initially in minimum  denominations
     of $1,000 and integral multiples of $1,000;

          (b) The  Securities  shall  be  issued  initially  in  part as  global
     securities in registered  form in the name of the  Depositary  (hereinafter
     defined) or its nominee in such  denominations  as shall be  specified in a
     Company Order  delivered in accordance  with the Indenture and otherwise as
     provided in the Forms of  Securities  with such  changes  thereto as may be
     required in the process of printing or otherwise  producing the  Securities
     and which will not affect the substance thereof;

          (c) The Depositary for the global  Securities  shall be The Depository
     Trust Company;

          (d)  The  global  Securities  shall  be  exchangeable  for  definitive
     Securities  in  registered  form  substantially  the  same  as  the  global
     Securities in denominations of $1,000 or any integral multiple thereof upon
     the terms and in accordance with the provisions of the Indenture;

          (e)  The  Securities  shall  be  payable  (as to  both  principal  and
     interest)  when and as the  same  shall  become  due at the  office  of the
     Trustee, PNC Bank, National Association, provided that, as long as any part
     of the  Securities  are in the  form  of  one or  more  global  Securities,
     payments of interest with respect thereto may be made by wire transfer, and
     provided  further  that,  with respect to  Securities  issued in definitive
     form, the Company may elect to exercise its option to have interest paid by
     check  mailed  to the  registered  owners'  address  as they  appear on the
     Register, as kept by the Trustee on each Record Date; and

          (f) The defeasance and covenant defeasance provisions of Article 10 of
     the Indenture shall be applicable to the Securities.

     5. The Forms of Securities  set forth  certain of the terms  required to be
set forth in this certificate pursuant to Section 2.3 of the Indenture, and said
terms are incorporated herein by reference.

     6. In addition to the  covenants  set forth in Article 3 of the  Indenture,
the Securities shall include the following additional covenants:

     'Section 3.10 Limitation on Liens.


                                       2





     The Company  shall not,  nor will it permit any  Subsidiary  to,  create or
assume any  Indebtedness  for money  borrowed  which is  secured by a  mortgage,
security interest, pledge, charge, lien or other similar encumbrance of any kind
(collectively,  a  'lien')  upon any  assets,  whether  now  owned or  hereafter
acquired,  of the  Company or any such  Subsidiary  without  equally and ratably
securing  the  Securities  by a lien  ranking  ratably  with and equally to such
secured  Indebtedness,  except that the foregoing restriction shall not apply to
(i) liens on assets of any  corporation  existing  at the time such  corporation
becomes a Subsidiary;  (ii) liens on assets  existing at the time of acquisition
thereof,  or to secure the payment of the purchase  price of such assets,  or to
secure  indebtedness  incurred or guaranteed by the Company or a Subsidiary  for
the purpose of financing the purchase  price of such assets or  improvements  or
construction thereon,  which indebtedness is incurred or guaranteed prior to, at
the time of or within 360 days after  such  acquisition  (or in the case of real
property, completion of such improvement or construction or commencement of full
operation  of  such  property,   whichever  is  later);   (iii)  liens  securing
indebtedness  owed by any  Subsidiary  to the  Company or  another  wholly-owned
Subsidiary;  (iv) liens on any assets of a corporation existing at the time such
corporation is merged into or  consolidated  with the Company or a Subsidiary or
at the time of a  purchase,  lease  or  other  acquisition  of the  assets  of a
corporation  or firm as an  entirety  or  substantially  as an  entirety  by the
Company or a Subsidiary;  (v) liens on any assets of the Company or a Subsidiary
in favor of the United  States of America or any state  thereof,  or in favor of
any  other  country,  or in favor  of any  political  subdivision  of any of the
foregoing,  to secure certain payments pursuant to any contract or statute or to
secure any indebtedness  incurred or guaranteed for the purpose of financing all
or any part of the purchase price (or, in the case of real property, the cost of
construction) of the assets subject to such liens (including but not limited to,
liens  incurred  in  connection  with  industrial  revenue or similar  financing
involving  a  political  subdivision,  agency or  authority  thereof);  (vi) any
extension,  renewal  or  replacement  (or  successive  extensions,  renewals  or
replacements)  in whole or in part,  of any lien  referred  to in the  foregoing
clauses (i) to (v),  inclusive;  (vii) certain  statutory liens or other similar
liens arising in the ordinary course of business of the Company or a Subsidiary,
or certain liens arising out of government  contracts;  (viii) certain  pledges,
deposits  or  liens  made or  arising  under  workers  compensation  or  similar
legislation or in certain other circumstances;  (ix) certain liens in connection
with legal  proceedings,  including  certain  liens  arising out of judgments or
awards;  (x) liens for certain taxes or assessments,  landlord's liens and liens
and charges  incidental  to the conduct of the business or the  ownership of the
assets of the Company or of a Subsidiary,  which were not incurred in connection
with the  borrowing  of money and which do not, in the  opinion of the  Company,
materially impair the use of such assets in the operation of the business of the
Company or such Subsidiary or


                                       3





the value of such  assets for the  purposes  thereof or (xi) liens  relating  to
accounts  receivable of the Company or any of its  Subsidiaries  which have been
sold,  assigned or  otherwise  transferred  to another  Person in a  transaction
classified  as a sale  of  accounts  receivable  in  accordance  with  generally
accepted  accounting  principles  (to the extent the sale by the  Company or the
applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser
thereof in such accounts  receivable or the proceeds  thereof).  Notwithstanding
the above,  the Company or any Subsidiary may,  without securing the Securities,
create or assume any Indebtedness which is foregoing restrictions, provided that
after giving effect thereto the Exempted Debt then  outstanding  does not exceed
10%  of  the  total  Consolidated   Tangible  Assets  of  the  Company  and  its
Subsidiaries at such time.

     Section 3.11 Limitations on Sale and Lease-Back Transactions.

     The  Company  shall not,  nor shall it permit any of its  Subsidiaries  to,
enter  into  any sale  and  lease-back  transaction  (except  such  transactions
involving leases for less than three years) for the sale and leasing back of any
property or asset  unless (i) the Company or such  Subsidiary  would be entitled
pursuant to clauses (i) through (xi) of Section 3.10 to create,  incur or permit
to exist a lien on the  assets to be  leased in an amount at least  equal to the
Attributable  Debt in respect of such  transaction  without  equally and ratably
securing  the  Securities,  or (ii) the proceeds of the sale of the assets to be
leased  are at least  equal to their  fair  market  value and the  proceeds  are
applied to the purchase or acquisition  (or, in the case of real  property,  the
construction) of assets or to the retirement of indebtedness.'

     7. In addition to the  definitions set forth in Article 1 of the Indenture,
the following additional  definitions shall apply with respect to the 2005 Notes
and the 2008 Notes and, in the event of a conflict with the  definition of terms
in the Indenture, such additional definitions shall control:

     'Attributable  Debt'  means,  in  connection  with  a sale  and  lease-back
transaction,  the  lesser of (i) the fair  value of the  assets  subject to such
transaction  or (ii) the present value of the  obligations of the lessee for net
rental payments during the term of any lease  discounted at the rate of interest
set forth or  implicit  in the terms of such  lease  or, if not  practicable  to
determine such rate, the weighted  average  interest rate per annum borne by the
Securities of each series outstanding  pursuant to this Indenture and subject to
the  limitation  on sale and  lease-back  transactions  provisions  contained in
Section  3.11,  compounded  semiannually  in either  case as  determined  by the
principal accounting or financial officer of the Company.

     'Consolidated Tangible Assets' of any Person as of any date means the total
assets of such Person and its  Subsidiaries 


                                       4





(excluding  any assets that would be  classified  as  'intangible  assets' under
GAAP) on a  consolidated  basis at such date, as  determined in accordance  with
GAAP,  less all  write-ups  subsequent  to the date of initial  issuance  of the
Securities  in the book  value of any asset  owned by such  Person or any of its
Subsidiaries.

     'Exempted  Debt'  means  the  sum  of  the  following  as of  the  date  of
determination:  (i)  Indebtedness of the Company and its  Subsidiaries  incurred
after the date of issuance of the  Securities and secured by liens not otherwise
permitted by the  limitation  on liens  provisions  of the  Indenture,  and (ii)
Attributable  Debt of the Company and its  Subsidiaries in respect of every sale
and  lease-back  transaction  entered into after the date of the issuance of the
Securities, other than leases permitted by Section 3.11.

     'GAAP' shall mean generally accepted accounting principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession of the United States, as from time to time in effect.

     'Indebtedness'  shall mean all items classified as indebtedness on the most
recently   available   consolidated   balance  sheet  of  the  Company  and  its
Subsidiaries, in accordance with GAAP.

     8. Each of the  undersigned  is authorized  to approve the form,  terms and
conditions of the Securities pursuant to the Resolutions.

     9.  Attached  hereto  as  Annex  D  is a  true  and  correct  copy  of  the
Resolutions.

     10.  Attached  hereto as Annex E are true and correct  copies of the letter
addressed to the Trustee entitling the Trustee to rely on the Opinion of Counsel
attached  thereto,  which Opinion  relates to the  Securities  and complies with
Section 11.5 of the Indenture.

     11. Each of the  undersigned  has reviewed the provisions of the Indenture,
including the covenants and conditions  precedent  pertaining to the issuance of
the Securities.

     12.  In  connection  with  this  certificate  each of the  undersigned  has
examined documents, corporate records and certificates and has spoken with other
officers of the Company.

     13. Each of the undersigned has made such examination and  investigation as
is necessary  to enable him to express an


                                       5





informed opinion as to whether or not the covenants and conditions  precedent of
the Indenture pertaining to the issuance of the Securities have been satisfied.

     14. In our opinion all of the covenants and conditions  precedent  provided
for in the Indenture for the issuance of the Securities have been satisfied.

     15. If and to the extent that any provision of this  certificate  qualifies
or  conflicts  with any  provision  of the  Indenture,  the  provisions  of this
certificate shall control.

     Capitalized terms used herein that are not otherwise defined shall have the
meanings  ascribed  thereto in the Indenture or the Securities,  as the case may
be.

     IN WITNESS  WHEREOF,  each of the  undersigned  officers has executed  this
certificate this 22nd day of June 1998.


                                                     /s/ MICHAEL D. MARTIN
                                                     ---------------------------
                                                     Michael D. Martin
                                                     Executive Vice President,
                                                     Chief Financial Officer and
                                                     Treasurer


                                                     /s/ WILLIAM W. HORTON
                                                     ---------------------------
                                                     William W. Horton
                                                     Senior Vice President,
                                                     Corporate Counsel and
                                                     Assistant Secretary



     THIS  NOTE  IS A  GLOBAL  SECURITY  WITHIN  THE  MEANING  OF THE  INDENTURE
HEREINAFTER  REFERRED  TO AND IS  REGISTERED  IN THE NAME OF A  DEPOSITARY  OR A
NOMINEE OF A DEPOSITARY.  THIS NOTE IS EXCHANGEABLE  FOR NOTES REGISTERED IN THE
NAME OF A PERSON  OTHER THAN THE  DEPOSITARY  OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES  DESCRIBED IN THE  INDENTURE,  AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER  OF THIS NOTE AS A WHOLE BY THE  DEPOSITARY  TO A NOMINEE OF THE
DEPOSITARY  OR BY A NOMINEE  OF THE  DEPOSITARY  TO THE  DEPOSITARY  OR  ANOTHER
NOMINEE  OF  THE   DEPOSITARY)   MAY  BE  REGISTERED   EXCEPT  IN  SUCH  LIMITED
CIRCUMSTANCES.

     UNLESS  THIS  NOTE IS  PRESENTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS  REQUESTED BY AN
AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST  COMPANY  AND ANY  PAYMENT
THEREON  IS MADE TO CEDE & CO.,  ANY  TRANSFER,  PLEDGE OR OTHER USE  HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL  SINCE THE  REGISTERED  OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

                             HEALTHSOUTH CORPORATION

                           6.875% SENIOR NOTE DUE 2005

No.______                                                  CUSIP NO. 421924-AG-6
                                                               $________________



                                        1





THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.  SECURITIES
ACT OF 1933, AS AMENDED (THE 'SECURITIES  ACT'),  AND,  ACCORDINGLY,  MAY NOT BE
OFFERED OR SOLD  WITHIN THE UNITED  STATES OR TO, OR FOR THE  ACCOUNT OR BENEFIT
OF,  U.S.  PERSONS  EXCEPT  AS SET  FORTH  IN  THE  FOLLOWING  SENTENCE.  BY ITS
ACQUISITION  HEREOF,  THE  HOLDER  (1)  REPRESENTS  THAT (A) IT IS A  'QUALIFIED
INSTITUTIONAL  BUYER' (AS DEFINED IN RULE 144A UNDER THE SECURITIES  ACT) OR (B)
IT IS AN INSTITUTIONAL AACCREDITED INVESTOR' (AS DEFINED IN RULE 501(A)(1)(2)(3)
OR (7) UNDER THE SECURITIES ACT) ('INSTITUTIONAL ACCREDITED INVESTOR') OR (C) IT
IS NOT A U.S.  PERSON  AND IS  ACQUIRING  THE  SECURITY  EVIDENCED  HEREBY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED HEREBY UNDER RULE
144(K)  UNDER  THE  SECURITIES  ACT  (OR ANY  SUCCESSOR  PROVISION),  RESELL  OR
OTHERWISE  TRANSFER  THE SECURITY  EVIDENCED  HEREBY  EXCEPT (A) TO  HEALTHSOUTH
CORPORATION  (THE  'COMPANY')  OR ANY  SUBSIDIARY  THEREOF,  (B)  PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL  BUYER IN COMPLIANCE  WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,  FURNISHES
TO THE TRUSTEE FOR THE NOTES A SIGNED LETTER CONTAINING CERTAIN  REPRESENTATIONS
AND  AGREEMENTS  RELATING  TO THE  RESTRICTIONS  ON  TRANSFER  OF  THE  SECURITY
EVIDENCED  HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH  TRUSTEE),
(E) OUTSIDE THE UNITED STATES IN COMPLIANCE  WITH RULE 904 UNDER THE  SECURITIES
ACT OR (F)  PURSUANT TO THE  EXEMPTION  FROM  REGISTRATION  PROVIDED BY RULE 144
UNDER THE  SECURITIES  ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO
EACH  PERSON  TO WHOM THE  SECURITY  EVIDENCED  HEREBY IS  TRANSFERRED  A NOTICE
SUBSTANTIALLY  TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY  EVIDENCED  HEREBY PRIOR TO THE  EXPIRATION  OF THE HOLDING  PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES  ACT  (OR  ANY  SUCCESSOR  PROVISION),  THE  HOLDER  MUST  CHECK  THE
APPROPRIATE  BOX SET FORTH ON THE REVERSE HEREOF  RELATING TO THE MANNER OF SUCH
TRANSFER  AND SUBMIT  THIS  CERTIFICATE  TO THE  TRUSTEE  FOR THE NOTES.  IF THE
PROPOSED  TRANSFEREE IS AN INSTITUTIONAL  ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON,  THE HOLDER MUST,  PRIOR TO SUCH TRANSFER,  FURNISH TO THE
TRUSTEE FOR THE NOTES SUCH  CERTIFICATIONS,  LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY OR THE  TRUSTEE  MAY  REASONABLY  REQUIRE,  TO CONFIRM  THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION  FROM,  OR IN A TRANSACTION  NOT
SUBJECT TO, THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES  ACT. THIS LEGEND
WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING  PERIOD  APPLICABLE TO SALES
OF THE SECURITY  EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS
USED HEREIN, THE TERMS 'OFFSHORE TRANSACTION,' 'UNITED STATES' AND 'U.S. PERSON'
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.


                                        2





THE HOLDER  HEREOF,  BY ITS  ACCEPTANCE  HEREOF,  IS DEEMED TO HAVE AGREED TO BE
BOUND BY THE PROVISIONS OF THE REGISTRATION  RIGHTS AGREEMENT,  DATED AS OF JUNE
22, 1998, BY AND AMONG THE COMPANY,  SALOMON BROTHERS INC, GOLDMAN, SACHS & CO.,
J.P. MORGAN SECURITIES INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
MORGAN STANLEY & CO. INCORPORATED,  NATIONSBANC MONTGOMERY SECURITIES LLC, BEAR,
STEARNS & CO.  INC.,  CREDIT  SUISSE  FIRST BOSTON  CORPORATION,  DEUTSCHE  BANK
SECURITIES INC., PAINEWEBBER INCORPORATED AND SCOTIA CAPITAL MARKETS (USA) INC.

     HEALTHSOUTH CORPORATION,  a Delaware corporation (the 'Company,' which term
includes any successor corporation under the Indenture hereinafter referred to),
for value  received,  hereby promises to pay to Cede & Co., the principal sum of
________________  on June 15, 2005,  and to pay interest on said  principal  sum
from June 22,  1998,  or from the most  recent  interest  payment  date to which
interest has been paid or duly provided for,  semiannually in arrears on June 15
and  December  15 (each  such date,  an  'Interest  Payment  Date') of each year
commencing  on  December  15,  1998,  at the rate of 6.875% per annum  until the
principal hereof shall have become due and payable.

     The  amount of  interest  payable  on any  Interest  Payment  Date shall be
computed on the basis of a 360 day year  comprised of twelve 30 day months.  The
interest  installment so payable,  and punctually  paid or duly provided for, on
any Interest  Payment Date will, as provided in the Indenture (as defined below)
be paid to the person in whose name this Note (or one or more predecessor Notes)
is  registered  at the close of business  on the record  date for such  interest
installment,  which shall be the close of business on the immediately  preceding
June 1 and December 1 prior to such Interest  Payment Date, as  applicable.  The
principal of, premium,  if any, and the interest on this Note will be payable at
the office or agency of the Company  maintained  for that purpose in the Borough
of Manhattan,  The City of New York in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts;  provided,  however,  that payment of interest may be made at the
option of the  Company by check  mailed to the person  entitled  thereto at such
address as shall appear in the registry books of the Company;  provided, further
that for so long as this Note is  represented by a Registered  Global  Security,
payment of principal,  premium,  if any, or interest on this Note may be made by
wire transfer to the account of the Depositary or its nominee. In the event that
any date on which the  principal,  premium,  if any, or interest on this Note is
payable is not a Business Day, then payment of  principal,  premium,  if any, or
interest  payable on such date will be made on the next succeeding day that is a
Business  Day (and  without  any  interest  or other  payment in respect of such
delay).

     Unless the certificate of authentication  hereon has been executed by or on
behalf of the Trustee (as defined below) under the Indenture (as defined below),
by the manual signature of one of its authorized  officers,  this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

     Capitalized  terms  used in this Note which are  defined  in the  Indenture
shall have the respective meanings assigned to them in the Indenture.

     Reference is hereby made to the further provisions of this Note hereinafter
set forth,  which further provisions shall for all purposes have the same effect
as if set forth at this place.


                                        3





     IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be duly
executed, manually or in facsimile, and an imprint or facsimile of its corporate
seal to be imprinted hereon.

                                                   HEALTHSOUTH Corporation

                                                   By
                                                     ---------------------------
                                                          Michael D. Martin
                                                      Executive Vice President,
                                                       Chief Financial Officer
                                                            and Treasurer

ATTEST:
       -----------------------------------------
                   William W. Horton
                Senior Vice President,
       Corporate Counsel and Assistant Secretary


CERTIFICATE  OF  AUTHENTICATION  This is
one of the Securities referred to in the
within-mentioned Indenture.

PNC BANK, NATIONAL ASSOCIATION,
as Trustee

By
  -----------------------------
        Authorized Officer

Dated:
      ------------------------




                                        4




                              REVERSE SIDE OF NOTE

     This  Note  is  one  of  a  duly  authorized   series  of  securities  (the
ASecurities')  of the Company  designated  as its 6.875%  Senior  Notes due 2005
limited  in  aggregate  principal  amount to  $250,000,000  (the  'Notes').  The
Securities  are all issued or to be issued under and  pursuant to an  Indenture,
dated as of June 22, 1998, as supplemented by that certain Officers' Certificate
dated June 22, 1998 (the Indenture as supplemented by the Officers'  Certificate
being herein  collectively  referred to as the  'Indenture'),  duly executed and
delivered between the Company and PNC Bank, National Association (the 'Trustee,'
which term  includes any  successor  Trustee with respect to the Notes under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby  made for a  statement  of the  respective  rights  thereunder  of the
Company,  the Trustee and the holders of the Securities and the terms upon which
the Notes are to be authenticated and delivered.  The terms of individual series
of Securities  may vary with respect to interest rate or interest rate formulas,
issue dates, maturity, redemption, repayment, currency of payment and otherwise.

     Reference is hereby made to the Indenture for a description of the terms of
the Notes,  to all of the provisions of which Indenture the holder of this Note,
by acceptance hereof, assents and agrees.

     Except as set forth below,  this Note is not redeemable and is not entitled
to the benefit of a sinking fund or any analogous provision.

     This  Note is  redeemable  as a whole  or in  part,  at the  option  of the
Company,  at any time at a redemption  price equal to the greater of (i) 100% of
its  principal  amount and (ii) the sum of the present  values of the  remaining
scheduled  payments of principal and interest thereon  discounted to the date of
redemption on a semi-annual  basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury  Yield plus 15 basis points,  plus, in each case,
accrued  interest to the date of redemption.  On and after the redemption  date,
interest  will cease to accrue on the Notes or any  portion  thereof  called for
redemption.  On or before the redemption  date, the Company shall deposit with a
paying agent (or the Trustee) money  sufficient to pay the  redemption  price of
and accrued  interest on the Notes to be redeemed on such date. If less than all
of the Notes are to be redeemed,  the Notes to be redeemed  shall be selected by
the Trustee by such method as the Trustee shall deem fair and  appropriate.  The
Holder of this Note will receive notice thereof by first-class  mail at least 30
and not more than 60 days prior to the date fixed for redemption.


                                       5





     'Treasury  Yield' means,  with respect to any redemption date, the rate per
annum equal to the  semi-annual  equivalent  yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such  redemption  date.  'Comparable  Treasury  Issue'  means the United  States
Treasury  security  selected  by an  Independent  Investment  Banker as having a
maturity comparable to the remaining term of the Note that would be utilized, at
the time of selection and in accordance with customary  financial  practice,  in
pricing new issues of corporate  debt  securities of comparable  maturity to the
remaining  term of the  Note.  'Independent  Investment  Banker'  means  Salomon
Brothers Inc and its successor or, if such firm is unwilling or unable to select
the Comparable Treasury Issue, an independent  investment banking institution of
national standing appointed by the Trustee.  'Comparable  Treasury Price' means,
with respect to any redemption date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal  amount) on the third business day preceding such redemption  date, as
set forth in the daily statistical  release (or any successor release) published
by the Federal  Reserve  Bank of New York and  designated  'Composite  3:30 p.m.
Quotations  for U.S.  Government  Securities'  or (ii) if such  release  (or any
successor  release) is not  published  or does not  contain  such prices on such
business day, (A) the average of the Reference  Treasury  Dealer  Quotations for
such  redemption  date,  after  excluding the highest and lowest such  Reference
Treasury Dealer  Quotations,  or (B) if the Trustee obtains fewer than four such
Reference  Treasury  Dealer  Quotations,  the  average  of all such  quotations.
'Reference  Treasury Dealer  Quotations'  means,  with respect to each Reference
Treasury  Dealer and any  redemption  date,  the average,  as  determined by the
Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed
in each case as a percentage of its principal  amount)  quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date. 'Reference Treasury Dealer' means a primary U.S.
Government  Securities  dealer in New York City  selected by the  Trustee  after
consultation with the Company.

     If an Event of  Default  with  respect  to the  Notes  shall  occur  and be
continuing,  the  principal  of all the Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.



                                       6





     The Indenture contains  provisions  permitting the Company and the Trustee,
with the  consent  of the  holders  of not less  than a  majority  in  aggregate
principal  amount of the  Securities of all series  issued under such  Indenture
then outstanding and affected (voting as one class) to add any provisions to, or
change in any manner or eliminate any of the  provisions  of, such  Indenture or
modify in any manner the rights of the holders of the  Securities of each series
or Coupons so  affected;  provided  that the  Company  and the  Trustee may not,
without the consent of the holder of each Outstanding Note affected thereby, (i)
extend the final  maturity of the principal of any Note, or reduce the principal
amount  thereof,  or premium  thereon,  if any, or reduce the rate or extend the
time of payment of interest thereon,  or reduce any amount payable on redemption
thereof  or make the  principal  thereof  (including  any  amount in  respect of
original issue  discount),  or interest  thereon payable in any coin or currency
other than that provided in the Securities or Coupons or in accordance  with the
terms  thereof,  or reduce the amount of principal of an Original Issue Discount
Security  that would be due and payable  upon an  acceleration  of the  maturity
thereof or the amount thereof provable in bankruptcy or alter certain provisions
of the  Indenture  relating  to  Securities  not  denominated  in Dollars or the
Judgment  Currency  of such  Securities  or impair  or  affect  the right of any
Securityholder to institute suit for the enforcement of any payment thereof when
due or, if the Securities provide therefor, any right of repayment at the option
of the  Securityholder  or (ii) reduce the  aforesaid  percentage  in  principal
amount of Securities of any series issued under such  Indenture,  the consent of
the holders of which is required for any such modification.  It is also provided
in the  Indenture  that,  with respect to certain  defaults or Events of Default
regarding the  Securities of any series,  the holders of a majority in aggregate
principal  amount  Outstanding of the Securities of each such series,  each such
series voting as a separate  class (or, of all  Securities,  as the case may be,
voting as a single  class) may under  certain  circumstances  waive all defaults
with respect to each such series (or with respect to all the Securities,  as the
case  may  be)  and  rescind  and  annul  a  declaration   of  default  and  its
consequences,  but no such waiver or rescission and annulment shall extend to or
affect any subsequent default or shall impair any right  consequent/hereto.  The
preceding sentence shall not, however,  apply to a default in the payment of the
principal of or interest on any of the Securities.

     No reference  herein to the  Indenture  and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the Company,  which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time, place and rate, and in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set
forth,  the transfer of this Note may be registered on the registry books of the
Company,  upon surrender of this Note for registration of transfer at the office
or agency of the  Company  maintained  by the  Company  for such  purpose in the
Borough of Manhattan,  The City of New York, duly endorsed by, or accompanied by
a written  instrument  of transfer in form  satisfactory  to the Company and the
Trustee duly executed by, the holder  hereof or by its attorney duly  authorized
in writing, and thereupon one or more new Notes of authorized  denominations and
for the  same  aggregate  principal  amount  will be  issued  to the  designated
transferee or transferees.

     The Notes are issuable only in registered form in minimum  denominations of
$1,000 and integral  multiples of $1,000 in excess  thereof.  As provided in the
Indenture and subject to certain  limitations  therein set forth,  the Notes are
exchangeable for a like aggregate  principal amount of Notes as requested by the
holder surrendering the same.

     No service  charge shall be made for any such  registration  of transfer or
exchange,  but the Company may require  payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.

     Prior to due  presentment of this Note for  registration  of transfer,  the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
person in whose  name  this  Note is  registered  as the  owner  hereof  for all
purposes,  whether or not this Note be overdue,  and neither  the  Company,  the
Trustee nor any such agent shall be affected by notice to the contrary.

     The  Indenture  contains  provisions  for  defeasance  of  (i)  the  entire
indebtedness  of the Notes or (ii) certain  covenants and Events of Default with
respect to the Notes, in each case upon  compliance with certain  conditions set
forth therein.


                                       7



     The Indenture  contains  covenants which impose certain  limitations on the
Company's and its Subsidiaries'  ability to create or incur certain liens on any
of their  respective  properties  or assets and to enter into  certain  sale and
lease-back  transactions  and on the  Company's  ability to engage in mergers or
consolidations or the conveyance,  transfer or lease of all or substantially all
of its  properties  and  assets.  These  limitations  are subject to a number of
important  qualifications  and exceptions and reference is made to the Indenture
for a description thereof.

     If (i) a  registration  statement  with  respect to an  exchange  offer (an
'Exchange Offer') for the Notes (an 'Exchange Offer Registration  Statement') is
not filed with the  Commission  by August 21, 1998;  or (ii) neither an Exchange
Offer  Registration  Statement is declared  effective by the  Commission,  nor a
shelf registration statement under the Securities Act with respect to resales of
the Notes (a 'Shelf Registration Statement') is filed with the Commission, on or
before  November  19,  1998;  or (iii) an Exchange  Offer  registered  under the
Securities  Act  is  not  consummated  and  the  applicable  Shelf  Registration
Statement  with respect to resales of the Notes is not declared  effective on or
before December 19, 1998, then in accordance with the terms of the  Registration
Rights Agreement,  the Company has agreed to pay Holders of the Notes liquidated
damages  over and  above  the  interest  rate set forth on the face of this Note
accruing from and  including the next day following  each of the periods in each
of clauses (i) through  (iii)  above,  in each case at a rate equal to 0.25% per
annum. The aggregate amount of liquidated  damages payable pursuant to the above
provisions  will in no event exceed 0.25% per annum.  Once the Exchange Offer is
consummated  or a  Shelf  Registration  Statement  is  declared  effective,  the
liquidated  damages will cease to accrue. In the event that a Shelf Registration
Statement is declared effective,  if, due to certain circumstances,  the Company
fails to keep such Shelf  Registration  Statement  continuously (x) effective or
(y)  useable for resales  for the period  required  by the  Registration  Rights
Agreement  and such  failure  continues  for more than 60 days  (whether  or not
consecutive)  in any  12-month  period  (the 61st day being  referred  to as the
'Default Day'), then from the Default Day until the earlier of (i) the date that
the Shelf Registration  Statement is again deemed effective or is useable,  (ii)
June 22, 2000 (or,  if Rule  144(k) is amended to provide a shorter  restrictive
period,  the last day of such shorter  period) or (iii) the date as of which all
of the applicable Notes are sold pursuant to such Shelf Registration  Statement,
the Company,  in accordance with the terms of the Registration Rights Agreement,
has agreed to pay  holders of the Notes  liquidated  damages  accruing at a rate
equal to 0.25% per annum. The Holder of this Note is entitled to the benefits of
the Registration Rights Agreement.

     No  recourse  shall  be had  for the  payment  of the  principal  of or the
interest on this Note or for any claim based  hereon,  or  otherwise  in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto against any  incorporator,  stockholder,  officer or director,  as such,
past or present or future of the Company or of any successor thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise,  all such liability being, by the acceptance
hereof and as part of the consideration  for the issue hereof,  expressly waived
and released.


                                       8





     THE INDENTURE AND THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK,  AND FOR ALL PURPOSES SMALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE,  WITHOUT  REGARD TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF.

                                  ABBREVIATIONS

     The following  abbreviations,  when used in the  inscription on the face of
this Note,  shall be construed as though they were written out in full according
to applicable laws or regulations:



                                          
TEN COM - as tenants in common               UNIF GIFT MIN ACT - ______  CUSTODIAN  ______
TEN ENT - as tenants by the entireties       
JT TEN - as joint tenants with right         
         of  survivorship  and  not  as      (Cust)                                           
         tenants in common                   under Uniform Gifts to Minors Act _______________
                                             (State)                                          
                                                                                              




     Additional abbreviations may also be used though not in the above list.



                                       9





                                   ASSIGNMENT

     FOR  VALUE  RECEIVED,   the  undersigned  hereby  sell(s),   assign(s)  and
transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE



--------------------------------------------------------------------------------
              (Please print or typewrite name and address including
                          postal zip code of assignee)



--------------------------------------------------------------------------------
this  Note  and  all  rights  thereunder  hereby  irrevocably  constituting  and
appointing

_____________________________________________,   Attorney,   to  transfer   this
security on the books of the  Trustee,  with full power of  substitution  in the
premises.

     In connection  with any transfer of this Note  occurring  prior to the date
which is the  earlier  of (i) the  date  the  Shelf  Registration  Statement  is
declared  effective  or (ii) the end of the period  referred  to in Rule  144(k)
under the Securities  Act, the undersigned  confirms that without  utilizing any
general solicitation or general advertising that:

                                   [Check One]

[ ]  (a)  this Note is being  transferred in compliance  with the exemption from
          registration   under  the   Securities   Act  provided  by  Rule  144A
          thereunder.

                                       or

[ ]  (b)  this Note is being transferred other than in accordance with (a) above
          and documents are being  furnished which comply with the conditions of
          transfer set forth in this Note and the Indenture.



                                       10





If neither of the  foregoing  boxes is checked,  the Trustee or other  Registrar
shall not be  obligated  to register  this Note in the name of any Person  other
than the Holder hereof  unless and until the  conditions to any such transfer of
registration  set forth herein and in Section 2.08 of the  Indenture  shall have
been satisfied.

Dated:
      ----------------               -------------------------------------------

                                        ----------------------------------------
                                        Notice:   The   signature(s)   on   this
                                        Assignment   must  correspond  with  the
                                        name(s) as written upon the face of this
                                        Note  in   every   particular,   without
                                        alteration or  enlargement or any change
                                        whatsoever.

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

     The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a Aqualified institutional buyer'
within the meaning of Rule 144A under the  Securities  Act and is aware that the
sale to it is being made in reliance on Rule 144A and  acknowledges  that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the  transferor  is relying  upon the  undersigned's  foregoing
representations  in order to claim the exemption from  registration  provided by
Rule 144A.

Dated:
      ----------------               -------------------------------------------
                                     Notice:  To be executed by an  executive
                                     officer


                                       11





                 SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES
                     TO REFLECT CHANGES IN PRINCIPAL AMOUNT

                                   Schedule A
                Changes to Principal Amount of Global Securities




--------- ------------------------------------------- -------------------------------- -------------------------------
  Date                 Principal Amount                          Remaining                    Notation Made By
                           of Notes                              Principal
                     by which this Global                     Amount of this
                      Security is to be                      Global Security
                    Reduced or Increased,
                        and Reason for
                    Reduction or Increase
--------- ------------------------------------------- -------------------------------- -------------------------------
--------- ------------------------------------------- -------------------------------- -------------------------------
                                                                              


--------- ------------------------------------------- -------------------------------- -------------------------------
--------- ------------------------------------------- -------------------------------- -------------------------------


--------- ------------------------------------------- -------------------------------- -------------------------------






     THIS  NOTE  IS A  GLOBAL  SECURITY  WITHIN  THE  MEANING  OF THE  INDENTURE
HEREINAFTER  REFERRED  TO AND IS  REGISTERED  IN THE NAME OF A  DEPOSITARY  OR A
NOMINEE OF A DEPOSITARY.  THIS NOTE IS EXCHANGEABLE  FOR NOTES REGISTERED IN THE
NAME OF A PERSON  OTHER THAN THE  DEPOSITARY  OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES  DESCRIBED IN THE  INDENTURE,  AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER  OF THIS NOTE AS A WHOLE BY THE  DEPOSITARY  TO A NOMINEE OF THE
DEPOSITARY  OR BY A NOMINEE  OF THE  DEPOSITARY  TO THE  DEPOSITARY  OR  ANOTHER
NOMINEE  OF  THE   DEPOSITARY)   MAY  BE  REGISTERED   EXCEPT  IN  SUCH  LIMITED
CIRCUMSTANCES.

     UNLESS  THIS  NOTE IS  PRESENTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS  REQUESTED BY AN
AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST  COMPANY  AND ANY  PAYMENT
THEREON  IS MADE TO CEDE & CO.,  ANY  TRANSFER,  PLEDGE OR OTHER USE  HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL  SINCE THE  REGISTERED  OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

                             HEALTHSOUTH CORPORATION

                            7.0% SENIOR NOTE DUE 2008

No.______                                                  CUSIP NO. 421924-AK-7
                                                               $________________



                                        1





THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.  SECURITIES
ACT OF 1933, AS AMENDED (THE 'SECURITIES  ACT'),  AND,  ACCORDINGLY,  MAY NOT BE
OFFERED OR SOLD  WITHIN THE UNITED  STATES OR TO, OR FOR THE  ACCOUNT OR BENEFIT
OF,  U.S.  PERSONS  EXCEPT  AS SET  FORTH  IN  THE  FOLLOWING  SENTENCE.  BY ITS
ACQUISITION  HEREOF,  THE  HOLDER  (1)  REPRESENTS  THAT (A) IT IS A  'QUALIFIED
INSTITUTIONAL  BUYER' (AS DEFINED IN RULE 144A UNDER THE SECURITIES  ACT) OR (B)
IT IS AN INSTITUTIONAL AACCREDITED INVESTOR' (AS DEFINED IN RULE 501(A)(1)(2)(3)
OR (7) UNDER THE SECURITIES ACT) ('INSTITUTIONAL ACCREDITED INVESTOR') OR (C) IT
IS NOT A U.S.  PERSON  AND IS  ACQUIRING  THE  SECURITY  EVIDENCED  HEREBY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED HEREBY UNDER RULE
144(K)  UNDER  THE  SECURITIES  ACT  (OR ANY  SUCCESSOR  PROVISION),  RESELL  OR
OTHERWISE  TRANSFER  THE SECURITY  EVIDENCED  HEREBY  EXCEPT (A) TO  HEALTHSOUTH
CORPORATION  (THE  'COMPANY')  OR ANY  SUBSIDIARY  THEREOF,  (B)  PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL  BUYER IN COMPLIANCE  WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,  FURNISHES
TO THE TRUSTEE FOR THE NOTES A SIGNED LETTER CONTAINING CERTAIN  REPRESENTATIONS
AND  AGREEMENTS  RELATING  TO THE  RESTRICTIONS  ON  TRANSFER  OF  THE  SECURITY
EVIDENCED  HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH  TRUSTEE),
(E) OUTSIDE THE UNITED STATES IN COMPLIANCE  WITH RULE 904 UNDER THE  SECURITIES
ACT OR (F)  PURSUANT TO THE  EXEMPTION  FROM  REGISTRATION  PROVIDED BY RULE 144
UNDER THE  SECURITIES  ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO
EACH  PERSON  TO WHOM THE  SECURITY  EVIDENCED  HEREBY IS  TRANSFERRED  A NOTICE
SUBSTANTIALLY  TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY  EVIDENCED  HEREBY PRIOR TO THE  EXPIRATION  OF THE HOLDING  PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES  ACT  (OR  ANY  SUCCESSOR  PROVISION),  THE  HOLDER  MUST  CHECK  THE
APPROPRIATE  BOX SET FORTH ON THE REVERSE HEREOF  RELATING TO THE MANNER OF SUCH
TRANSFER  AND SUBMIT  THIS  CERTIFICATE  TO THE  TRUSTEE  FOR THE NOTES.  IF THE
PROPOSED  TRANSFEREE IS AN INSTITUTIONAL  ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON,  THE HOLDER MUST,  PRIOR TO SUCH TRANSFER,  FURNISH TO THE
TRUSTEE FOR THE NOTES SUCH  CERTIFICATIONS,  LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY OR THE  TRUSTEE  MAY  REASONABLY  REQUIRE,  TO CONFIRM  THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION  FROM,  OR IN A TRANSACTION  NOT
SUBJECT TO, THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES  ACT. THIS LEGEND
WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING  PERIOD  APPLICABLE TO SALES
OF THE SECURITY  EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS
USED HEREIN, THE TERMS 'OFFSHORE TRANSACTION,' 'UNITED STATES' AND 'U.S. PERSON'
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.


                                        2





THE HOLDER  HEREOF,  BY ITS  ACCEPTANCE  HEREOF,  IS DEEMED TO HAVE AGREED TO BE
BOUND BY THE PROVISIONS OF THE REGISTRATION  RIGHTS AGREEMENT,  DATED AS OF JUNE
22, 1998, BY AND AMONG THE COMPANY,  SALOMON BROTHERS INC, GOLDMAN, SACHS & CO.,
J.P. MORGAN SECURITIES INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
MORGAN STANLEY & CO. INCORPORATED,  NATIONSBANC MONTGOMERY SECURITIES LLC, BEAR,
STEARNS & CO.  INC.,  CREDIT  SUISSE  FIRST BOSTON  CORPORATION,  DEUTSCHE  BANK
SECURITIES INC., PAINEWEBBER INCORPORATED AND SCOTIA CAPITAL MARKETS (USA) INC.

     HEALTHSOUTH CORPORATION,  a Delaware corporation (the 'Company,' which term
includes any successor corporation under the Indenture hereinafter referred to),
for value  received,  hereby promises to pay to Cede & Co., the principal sum of
________________  on June 15, 2005,  and to pay interest on said  principal  sum
from June 22,  1998,  or from the most  recent  interest  payment  date to which
interest has been paid or duly provided for,  semiannually in arrears on June 15
and  December  15 (each  such date,  an  'Interest  Payment  Date') of each year
commencing  on  December  15,  1998,  at the rate of 7.0% per  annum  until  the
principal hereof shall have become due and payable.

     The  amount of  interest  payable  on any  Interest  Payment  Date shall be
computed on the basis of a 360 day year  comprised of twelve 30 day months.  The
interest  installment so payable,  and punctually  paid or duly provided for, on
any Interest  Payment Date will, as provided in the Indenture (as defined below)
be paid to the person in whose name this Note (or one or more predecessor Notes)
is  registered  at the close of business  on the record  date for such  interest
installment,  which shall be the close of business on the immediately  preceding
June 1 and December 1 prior to such Interest  Payment Date, as  applicable.  The
principal of, premium,  if any, and the interest on this Note will be payable at
the office or agency of the Company  maintained  for that purpose in the Borough
of Manhattan,  The City of New York in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts;  provided,  however,  that payment of interest may be made at the
option of the  Company by check  mailed to the person  entitled  thereto at such
address as shall appear in the registry books of the Company;  provided, further
that for so long as this Note is  represented by a Registered  Global  Security,
payment of principal,  premium,  if any, or interest on this Note may be made by
wire transfer to the account of the Depositary or its nominee. In the event that
any date on which the  principal,  premium,  if any, or interest on this Note is
payable is not a Business Day, then payment of  principal,  premium,  if any, or
interest  payable on such date will be made on the next succeeding day that is a
Business  Day (and  without  any  interest  or other  payment in respect of such
delay).

     Unless the certificate of authentication  hereon has been executed by or on
behalf of the Trustee (as defined below) under the Indenture (as defined below),
by the manual signature of one of its authorized  officers,  this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

     Capitalized  terms  used in this Note which are  defined  in the  Indenture
shall have the respective meanings assigned to them in the Indenture.

     Reference is hereby made to the further provisions of this Note hereinafter
set forth,  which further provisions shall for all purposes have the same effect
as if set forth at this place.


                                        3





     IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be duly
executed, manually or in facsimile, and an imprint or facsimile of its corporate
seal to be imprinted hereon.

                                                   HEALTHSOUTH Corporation

                                                   By
                                                     ---------------------------
                                                          Michael D. Martin
                                                      Executive Vice President,
                                                       Chief Financial Officer
                                                            and Treasurer

ATTEST:
       -----------------------------------------
                   William W. Horton
                Senior Vice President,
       Corporate Counsel and Assistant Secretary


CERTIFICATE  OF  AUTHENTICATION  This is
one of the Securities referred to in the
within-mentioned Indenture.

PNC BANK, NATIONAL ASSOCIATION,
as Trustee

By
  -----------------------------
        Authorized Officer

Dated:
      ------------------------




                                        4




                              REVERSE SIDE OF NOTE

     This  Note  is  one  of  a  duly  authorized   series  of  securities  (the
ASecurities')  of the  Company  designated  as its 7.0%  Senior  Notes  due 2008
limited  in  aggregate  principal  amount to  $250,000,000  (the  'Notes').  The
Securities  are all issued or to be issued under and  pursuant to an  Indenture,
dated as of June 22, 1998, as supplemented by that certain Officers' Certificate
dated June 22, 1998 (the Indenture as supplemented by the Officers'  Certificate
being herein  collectively  referred to as the  'Indenture'),  duly executed and
delivered between the Company and PNC Bank, National Association (the 'Trustee,'
which term  includes any  successor  Trustee with respect to the Notes under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby  made for a  statement  of the  respective  rights  thereunder  of the
Company,  the Trustee and the holders of the Securities and the terms upon which
the Notes are to be authenticated and delivered.  The terms of individual series
of Securities  may vary with respect to interest rate or interest rate formulas,
issue dates, maturity, redemption, repayment, currency of payment and otherwise.

     Reference is hereby made to the Indenture for a description of the terms of
the Notes,  to all of the provisions of which Indenture the holder of this Note,
by acceptance hereof, assents and agrees.

     Except as set forth below,  this Note is not redeemable and is not entitled
to the benefit of a sinking fund or any analogous provision.

     This  Note is  redeemable  as a whole  or in  part,  at the  option  of the
Company,  at any time at a redemption  price equal to the greater of (i) 100% of
its  principal  amount and (ii) the sum of the present  values of the  remaining
scheduled  payments of principal and interest thereon  discounted to the date of
redemption on a semi-annual  basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury  Yield plus 20 basis points,  plus, in each case,
accrued  interest to the date of redemption.  On and after the redemption  date,
interest  will cease to accrue on the Notes or any  portion  thereof  called for
redemption.  On or before the redemption  date, the Company shall deposit with a
paying agent (or the Trustee) money  sufficient to pay the  redemption  price of
and accrued  interest on the Notes to be redeemed on such date. If less than all
of the Notes are to be redeemed,  the Notes to be redeemed  shall be selected by
the Trustee by such method as the Trustee shall deem fair and  appropriate.  The
Holder of this Note will receive notice thereof by first-class  mail at least 30
and not more than 60 days prior to the date fixed for redemption.


                                       5





     'Treasury  Yield' means,  with respect to any redemption date, the rate per
annum equal to the  semi-annual  equivalent  yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such  redemption  date.  'Comparable  Treasury  Issue'  means the United  States
Treasury  security  selected  by an  Independent  Investment  Banker as having a
maturity comparable to the remaining term of the Note that would be utilized, at
the time of selection and in accordance with customary  financial  practice,  in
pricing new issues of corporate  debt  securities of comparable  maturity to the
remaining  term of the  Note.  'Independent  Investment  Banker'  means  Salomon
Brothers Inc and its successor or, if such firm is unwilling or unable to select
the Comparable Treasury Issue, an independent  investment banking institution of
national standing appointed by the Trustee.  'Comparable  Treasury Price' means,
with respect to any redemption date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal  amount) on the third business day preceding such redemption  date, as
set forth in the daily statistical  release (or any successor release) published
by the Federal  Reserve  Bank of New York and  designated  'Composite  3:30 p.m.
Quotations  for U.S.  Government  Securities'  or (ii) if such  release  (or any
successor  release) is not  published  or does not  contain  such prices on such
business day, (A) the average of the Reference  Treasury  Dealer  Quotations for
such  redemption  date,  after  excluding the highest and lowest such  Reference
Treasury Dealer  Quotations,  or (B) if the Trustee obtains fewer than four such
Reference  Treasury  Dealer  Quotations,  the  average  of all such  quotations.
'Reference  Treasury Dealer  Quotations'  means,  with respect to each Reference
Treasury  Dealer and any  redemption  date,  the average,  as  determined by the
Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed
in each case as a percentage of its principal  amount)  quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date. 'Reference Treasury Dealer' means a primary U.S.
Government  Securities  dealer in New York City  selected by the  Trustee  after
consultation with the Company.

     If an Event of  Default  with  respect  to the  Notes  shall  occur  and be
continuing,  the  principal  of all the Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.



                                       6





     The Indenture contains  provisions  permitting the Company and the Trustee,
with the  consent  of the  holders  of not less  than a  majority  in  aggregate
principal  amount of the  Securities of all series  issued under such  Indenture
then outstanding and affected (voting as one class) to add any provisions to, or
change in any manner or eliminate any of the  provisions  of, such  Indenture or
modify in any manner the rights of the holders of the  Securities of each series
or Coupons so  affected;  provided  that the  Company  and the  Trustee may not,
without the consent of the holder of each Outstanding Note affected thereby, (i)
extend the final  maturity of the principal of any Note, or reduce the principal
amount  thereof,  or premium  thereon,  if any, or reduce the rate or extend the
time of payment of interest thereon,  or reduce any amount payable on redemption
thereof  or make the  principal  thereof  (including  any  amount in  respect of
original issue  discount),  or interest  thereon payable in any coin or currency
other than that provided in the Securities or Coupons or in accordance  with the
terms  thereof,  or reduce the amount of principal of an Original Issue Discount
Security  that would be due and payable  upon an  acceleration  of the  maturity
thereof or the amount thereof provable in bankruptcy or alter certain provisions
of the  Indenture  relating  to  Securities  not  denominated  in Dollars or the
Judgment  Currency  of such  Securities  or impair  or  affect  the right of any
Securityholder to institute suit for the enforcement of any payment thereof when
due or, if the Securities provide therefor, any right of repayment at the option
of the  Securityholder  or (ii) reduce the  aforesaid  percentage  in  principal
amount of Securities of any series issued under such  Indenture,  the consent of
the holders of which is required for any such modification.  It is also provided
in the  Indenture  that,  with respect to certain  defaults or Events of Default
regarding the  Securities of any series,  the holders of a majority in aggregate
principal  amount  Outstanding of the Securities of each such series,  each such
series voting as a separate  class (or, of all  Securities,  as the case may be,
voting as a single  class) may under  certain  circumstances  waive all defaults
with respect to each such series (or with respect to all the Securities,  as the
case  may  be)  and  rescind  and  annul  a  declaration   of  default  and  its
consequences,  but no such waiver or rescission and annulment shall extend to or
affect any subsequent default or shall impair any right  consequent/hereto.  The
preceding sentence shall not, however,  apply to a default in the payment of the
principal of or interest on any of the Securities.

     No reference  herein to the  Indenture  and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the Company,  which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time, place and rate, and in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set
forth,  the transfer of this Note may be registered on the registry books of the
Company,  upon surrender of this Note for registration of transfer at the office
or agency of the  Company  maintained  by the  Company  for such  purpose in the
Borough of Manhattan,  The City of New York, duly endorsed by, or accompanied by
a written  instrument  of transfer in form  satisfactory  to the Company and the
Trustee duly executed by, the holder  hereof or by its attorney duly  authorized
in writing, and thereupon one or more new Notes of authorized  denominations and
for the  same  aggregate  principal  amount  will be  issued  to the  designated
transferee or transferees.

     The Notes are issuable only in registered form in minimum  denominations of
$1,000 and integral  multiples of $1,000 in excess  thereof.  As provided in the
Indenture and subject to certain  limitations  therein set forth,  the Notes are
exchangeable for a like aggregate  principal amount of Notes as requested by the
holder surrendering the same.

     No service  charge shall be made for any such  registration  of transfer or
exchange,  but the Company may require  payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.

     Prior to due  presentment of this Note for  registration  of transfer,  the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
person in whose  name  this  Note is  registered  as the  owner  hereof  for all
purposes,  whether or not this Note be overdue,  and neither  the  Company,  the
Trustee nor any such agent shall be affected by notice to the contrary.

     The  Indenture  contains  provisions  for  defeasance  of  (i)  the  entire
indebtedness  of the Notes or (ii) certain  covenants and Events of Default with
respect to the Notes, in each case upon  compliance with certain  conditions set
forth therein.


                                       7



     The Indenture  contains  covenants which impose certain  limitations on the
Company's and its Subsidiaries'  ability to create or incur certain liens on any
of their  respective  properties  or assets and to enter into  certain  sale and
lease-back  transactions  and on the  Company's  ability to engage in mergers or
consolidations or the conveyance,  transfer or lease of all or substantially all
of its  properties  and  assets.  These  limitations  are subject to a number of
important  qualifications  and exceptions and reference is made to the Indenture
for a description thereof.

     If (i) a  registration  statement  with  respect to an  exchange  offer (an
'Exchange Offer') for the Notes (an 'Exchange Offer Registration  Statement') is
not filed with the  Commission  by August 21, 1998;  or (ii) neither an Exchange
Offer  Registration  Statement is declared  effective by the  Commission,  nor a
shelf registration statement under the Securities Act with respect to resales of
the Notes (a 'Shelf Registration Statement') is filed with the Commission, on or
before  November  19,  1998;  or (iii) an Exchange  Offer  registered  under the
Securities  Act  is  not  consummated  and  the  applicable  Shelf  Registration
Statement  with respect to resales of the Notes is not declared  effective on or
before December 19, 1998, then in accordance with the terms of the  Registration
Rights Agreement,  the Company has agreed to pay Holders of the Notes liquidated
damages  over and  above  the  interest  rate set forth on the face of this Note
accruing from and  including the next day following  each of the periods in each
of clauses (i) through  (iii)  above,  in each case at a rate equal to 0.25% per
annum. The aggregate amount of liquidated  damages payable pursuant to the above
provisions  will in no event exceed 0.25% per annum.  Once the Exchange Offer is
consummated  or a  Shelf  Registration  Statement  is  declared  effective,  the
liquidated  damages will cease to accrue. In the event that a Shelf Registration
Statement is declared effective,  if, due to certain circumstances,  the Company
fails to keep such Shelf  Registration  Statement  continuously (x) effective or
(y)  useable for resales  for the period  required  by the  Registration  Rights
Agreement  and such  failure  continues  for more than 60 days  (whether  or not
consecutive)  in any  12-month  period  (the 61st day being  referred  to as the
'Default Day'), then from the Default Day until the earlier of (i) the date that
the Shelf Registration  Statement is again deemed effective or is useable,  (ii)
June 22, 2000 (or,  if Rule  144(k) is amended to provide a shorter  restrictive
period,  the last day of such shorter  period) or (iii) the date as of which all
of the applicable Notes are sold pursuant to such Shelf Registration  Statement,
the Company,  in accordance with the terms of the Registration Rights Agreement,
has agreed to pay  holders of the Notes  liquidated  damages  accruing at a rate
equal to 0.25% per annum. The Holder of this Note is entitled to the benefits of
the Registration Rights Agreement.

     No  recourse  shall  be had  for the  payment  of the  principal  of or the
interest on this Note or for any claim based  hereon,  or  otherwise  in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto against any  incorporator,  stockholder,  officer or director,  as such,
past or present or future of the Company or of any successor thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise,  all such liability being, by the acceptance
hereof and as part of the consideration  for the issue hereof,  expressly waived
and released.


                                       8





     THE INDENTURE AND THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK,  AND FOR ALL PURPOSES SMALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE,  WITHOUT  REGARD TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF.

                                  ABBREVIATIONS

     The following  abbreviations,  when used in the  inscription on the face of
this Note,  shall be construed as though they were written out in full according
to applicable laws or regulations:



                                          
TEN COM - as tenants in common               UNIF GIFT MIN ACT - ______  CUSTODIAN  ______
TEN ENT - as tenants by the entireties       
JT TEN - as joint tenants with right         
         of  survivorship  and  not  as      (Cust)                                           
         tenants in common                   under Uniform Gifts to Minors Act _______________
                                             (State)                                          
                                                                                              




     Additional abbreviations may also be used though not in the above list.



                                       9





                                   ASSIGNMENT

     FOR  VALUE  RECEIVED,   the  undersigned  hereby  sell(s),   assign(s)  and
transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE



--------------------------------------------------------------------------------
              (Please print or typewrite name and address including
                          postal zip code of assignee)



--------------------------------------------------------------------------------
this  Note  and  all  rights  thereunder  hereby  irrevocably  constituting  and
appointing

_____________________________________________,   Attorney,   to  transfer   this
security on the books of the  Trustee,  with full power of  substitution  in the
premises.

     In connection  with any transfer of this Note  occurring  prior to the date
which is the  earlier  of (i) the  date  the  Shelf  Registration  Statement  is
declared  effective  or (ii) the end of the period  referred  to in Rule  144(k)
under the Securities  Act, the undersigned  confirms that without  utilizing any
general solicitation or general advertising that:

                                   [Check One]

[ ]  (a)  this Note is being  transferred in compliance  with the exemption from
          registration   under  the   Securities   Act  provided  by  Rule  144A
          thereunder.

                                       or

[ ]  (b)  this Note is being transferred other than in accordance with (a) above
          and documents are being  furnished which comply with the conditions of
          transfer set forth in this Note and the Indenture.



                                       10





If neither of the  foregoing  boxes is checked,  the Trustee or other  Registrar
shall not be  obligated  to register  this Note in the name of any Person  other
than the Holder hereof  unless and until the  conditions to any such transfer of
registration  set forth herein and in Section 2.08 of the  Indenture  shall have
been satisfied.

Dated:
      ----------------               -------------------------------------------

                                        ----------------------------------------
                                        Notice:   The   signature(s)   on   this
                                        Assignment   must  correspond  with  the
                                        name(s) as written upon the face of this
                                        Note  in   every   particular,   without
                                        alteration or  enlargement or any change
                                        whatsoever.

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

     The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a Aqualified institutional buyer'
within the meaning of Rule 144A under the  Securities  Act and is aware that the
sale to it is being made in reliance on Rule 144A and  acknowledges  that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the  transferor  is relying  upon the  undersigned's  foregoing
representations  in order to claim the exemption from  registration  provided by
Rule 144A.

Dated:
      ----------------               -------------------------------------------
                                     Notice:  To be executed by an  executive
                                     officer


                                       11





                 SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES
                     TO REFLECT CHANGES IN PRINCIPAL AMOUNT

                                   Schedule A
                Changes to Principal Amount of Global Securities




--------- ------------------------------------------- -------------------------------- -------------------------------
  Date                 Principal Amount                          Remaining                    Notation Made By
                           of Notes                              Principal
                     by which this Global                     Amount of this
                      Security is to be                      Global Security
                    Reduced or Increased,
                        and Reason for
                    Reduction or Increase
--------- ------------------------------------------- -------------------------------- -------------------------------
--------- ------------------------------------------- -------------------------------- -------------------------------
                                                                              


--------- ------------------------------------------- -------------------------------- -------------------------------
--------- ------------------------------------------- -------------------------------- -------------------------------


--------- ------------------------------------------- -------------------------------- -------------------------------