HEALTHSOUTH CORPORATION
1998 RESTRICTED STOCK PLAN
1. PURPOSE OF THE PLAN. The purpose of the 1998 Restricted Stock Plan
(hereinafter called the 'Plan') of HEALTHSOUTH Corporation, a Delaware
corporation (hereinafter called the 'Corporation'), is to provide incentive for
future endeavor and to advance the interests of the Corporation and its
stockholders by encouraging ownership of the Common Stock, par value $.01 per
share (hereinafter called 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 grant of restricted stock awards ('Awards') covering shares of the Common
Stock.
2. PARTICIPANTS. Awards may be granted under the Plan to such executives
and key employees of the Corporation and its subsidiaries as shall be determined
by the Committee appointed by the Board of Directors as set forth in Section 5
of the Plan; provided, however, that no Award may be granted to any person if
such grant would cause the Plan to cease to be an 'employee benefit plan' as
defined in Rule 405 of Regulation C promulgated under the Securities Act of
1933.
3. TERM OF THE PLAN. The Plan shall become effective as of May 21, 1998,
subject to the approval by the holders of a majority of the shares of issued and
outstanding Common Stock of the Corporation present and voting at the 1998
Annual Meeting of Stockholders of the Corporation. The Plan shall terminate on
the earliest of (a) April 30, 2008, (b) such time as all shares of Common Stock
reserved for issuance under the Plan have been issued and are fully vested, or
(c) such earlier time as the Board of Directors of the Corporation may
determine. Any Award 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 Award shall be granted under the Plan after April 30, 2008.
4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11, the
aggregate number of shares of Common Stock for which Awards may be granted under
the Plan shall not exceed 3,000,000 shares, and the maximum number of shares of
Common Stock for which any individual may be granted Awards under the Plan
during any calendar year is 100,000. If, on or prior to the termination of the
Plan as provided in Section 3, an Award granted under the Plan shall have
expired or terminated for any reason without having vested in full, the unvested
shares covered thereby shall again become available for the grant of Awards
under the Plan.
The shares to be delivered upon exercise of Awards under the Plan shall be
made available, at the discretion of the Board of Directors, either from
authorized but previously unissued shares as permitted by the Certificate of
Incorporation of the Corporation or from shares re-acquired by the Corporation,
including shares of Common Stock purchased in the open market, and shares held
in the treasury of the Corporation.
5. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Audit
and Compensation Committee of the Board of Directors of the Corporation
(hereinafter called 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 be granted
Awards and the number of shares of Common Stock to be subject to each Award.
The interpretation and construction of any provision of the Plan or of any
Award granted 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, any optionholder 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 Award granted under it.
The expenses of administering the Plan shall be borne by the Corporation.
6. GRANT OF AWARDS. (a) Awards may be granted 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 Awards shall be granted and as to the number of shares to
be covered by such Awards, 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 Award granted under the Plan shall be granted pursuant to and
subject to the terms and conditions of a restricted stock agreement to be
entered into between the Corporation and the participant at the time of such
grant. Each such restricted stock 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 'Restricted Stock Agreement'). Any such Restricted Stock 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 AWARDS. Awards granted under this Plan shall be
subject to the following terms and conditions:
(a) The prospective recipient of an Award shall not, with respect to
such Award, be deemed to have become a participant or to have any rights with
respect to such Award unless and until such recipient shall have executed a
Restricted Stock Agreement or other agreement evidencing the Award and its terms
and conditions and delivered a fully-executed copy thereof to the Corporation
and otherwise complied with the then-applicable terms and conditions under the
Plan.
(b) Each participant shall be issued a certificate in respect of
shares of Common Stock awarded under the Plan. Such certificate shall be
registered in the name of the participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such Award
substantially in the following form:
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'The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the 1998 Restricted Stock Plan of
HEALTHSOUTH Corporation and a Restricted Stock Agreement entered
into between the registered owner and HEALTHSOUTH Corporation.
Copies of such Plan and Restricted Stock Agreement are on file in
the offices of the Secretary of HEALTHSOUTH Corporation.'
(c) The Committee may adopt rules which provide that the stock
certificates evidencing shares covered by Awards might 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 Award that the participant shall have delivered a stock power
endorsed in blank relating to the stock covered by such Award.
(d) Recipients of Awards under the Plan are not required to make any
payment or provide consideration therefor other than the rendering of services
to the Corporation.
8. RESTRICTIONS AND FORFEITURES. The shares of Common Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(a) During a period set by the Committee of not less than one year nor
more than 10 years commencing with the date of an Award (the 'Restriction
Period'), a participant will not be permitted to sell, transfer, pledge, assign
or otherwise dispose of shares of Common Stock awarded pursuant to said Award.
Within these limits, the Committee may provide for the vesting of Awards and the
lapse of such restrictions in installments based upon the passage of time, the
achievement by the Corporation of certain identified performance goals, or the
occurrence of other events, or any combination thereof, all as the Committee
deems appropriate.
(b) Except as provided in Section 8(a), a participant shall have with
respect to the shares of Common Stock covered by an Award all of the rights of a
stockholder of the Corporation, including the right to vote such shares and
receive dividends and other distributions thereon.
(c) Subject to the provisions of Section 8(d), unless otherwise
provided in the applicable Restricted Stock Agreement, upon termination of a
participant's employment for any reason during the Restriction Period, all
shares awarded to such participant and still subject to restriction shall be
forfeited by the participant and be reacquired by the Corporation, without
consideration or payment therefor.
(d) In the event of a participant's retirement, disability or death,
all restrictions with respect to such participant's Award shall lapse (subject
to Section 8(e)) and such participant or his beneficiary shall be entitled to
receive (if held in custody by the Corporation or a bank or other institution)
and retain all of the stock subject to the Award; provided, however, that in the
case of retirement, the Committee in its sole discretion may determine that such
restrictions shall not lapse as to all or a portion of an Award or that all or
any of the shares subject to restriction shall be forfeited.
(e) The Committee may impose any conditions on an Award it deems
advisable to ensure the participant's payment to the Corporation of any federal,
state or local taxes required to be withheld with respect to such award.
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(f) Notwithstanding any contrary provision contained herein, unless
otherwise expressly provided in the Restricted Stock Agreement, any Award
granted hereunder shall become immediately vested in full upon the occurrence of
a Change in Control of the Corporation. For purposes of this Section 8(f),
'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 21, 1998, 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(f), 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.
9. NONTRANSFERABILITY OF AWARDS. (a) Except to the extent that such Awards
are vested, Awards granted under the Plan shall be assignable or transferable
only by will or pursuant to the laws of descent and distribution, except to the
extent set forth in the following paragraph.
(b) Upon written notice to the Secretary of the Corporation, a
participant may, except as otherwise prohibited by applicable law, transfer
shares granted under the Plan to one or more members of such participant's
immediate family, to a partnership consisting only of members of such
participant's immediate family, or to a trust all of whose beneficiaries are
members of the participant's immediate family. For purposes of this section, a
participant's 'immediate family' shall be deemed to include such holder's
spouse, children and grandchildren only.
10. NO RIGHT OF CONTINUED EMPLOYMENT. Nothing in the Plan or in the
Restricted Stock Agreement shall confer upon any participant the right to
continue in the employ of the Corporation or
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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.
11. ADJUSTMENT OF AND CHANGES IN CAPITALIZATION. In the event that the
outstanding shares of Common Stock shall be changed in number or class by reason
of split-ups, combinations, mergers, consolidations or recapitalizations, or by
reason of stock dividends, the number or class of shares which thereafter may be
acquired through Awards granted under the Plan, both in the aggregate and as to
any individual, and the number and class of shares then subject to Awards
theretofore granted shall be adjusted so as to reflect such change, all as
determined by the Board of Directors of the Corporation. In the event there
shall be any other change in the number or kind of the outstanding shares of
Common Stock, or of any stock or other securities into which such Common Stock
shall have been changed, or for which it shall have been exchanged, then if the
Board of Directors shall, in its sole discretion, determine that such change
equitably requires an adjustment in any Award theretofore granted or which may
be granted under the Plan, such adjustment shall be made in accordance with such
determination.
Notice of any adjustment shall be given by the Corporation to each holder
of an Award which shall have been so adjusted and such adjustment (whether or
not such notice is given) shall be effective and binding for all purposes of the
Plan.
Fractional shares resulting from any adjustment in Awards pursuant to this
Section 11 may be settled in cash or otherwise as the Board of Directors may
determine.
12. SECURITIES ACTS REQUIREMENTS. As a condition to the issuance of any
shares pursuant to an Award under the Plan, the Board of Directors or the
Committee, as the case may be, may require a participant to furnish a written
representation that he is acquiring the shares for investment and not with a
view to distribution of the shares to the public and a written agreement
restricting the transferability of the shares solely to the Corporation, and may
affix a restrictive legend or legends on the face of the certificate
representing such shares. Such representation, agreement and/or legend shall be
required only in cases where in the opinion of the Board of Directors or the
Committee, as the case may be, and counsel for the Corporation, it is necessary
to enable the Corporation to comply with the provisions of the Securities Act of
1933 or other Federal or state statutes having similar requirements, and any
stockholder who gives such representation and agreement shall be released from
it and the legend removed at such time as the shares to which they applied are
registered or qualified pursuant to the Securities Act of 1933 or other Federal
or state statutes having similar requirements, or at such other time as, in the
opinion of the Board of Directors or the Committee, as the case may be, and
counsel for the Corporation, the representation and agreement and legend cease
to be necessary to enable the Corporation to comply with the provisions of the
Securities Act of 1933 or other Federal or state statutes having similar
requirements.
13. AMENDMENT OF THE PLAN. The Plan may, at any time or from time to time,
be termi nated, 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 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 with respect
to any shares of Common Stock at the time not subject to Awards, 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 number
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of shares subject to the Plan, extend the period during which Awards may be
vested, or change the provisions relating to adjustment to be made upon changes
in capitalization.
14. CHANGES IN LAW. Subject to the provisions of Section 13, the Board of
Directors shall have the power to amend the Plan and any outstanding Awards
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.
15. LEGAL MATTERS. Every right of action by or on behalf of the Corporation
or by any stock holder 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.
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1998 Restricted Stock Plan - HealthSouth Corp.
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