EXHIBIT 10
RESTRICTED STOCK AGREEMENT
RESTRICTED STOCK AGREEMENT (the "Agreement"), dated as of March 1, 2005 (the
"Grant Date"), between HEALTHSOUTH CORPORATION, a Delaware corporation (the
"Corporation"), and the other party signatory hereto (the "Director").
WHEREAS, upon the terms and subject to the conditions hereinafter set forth,
the Corporation desires to compensate the Director in recognition of the
outstanding service to the Corporation of such Director through the granting to
the Director of restricted shares of common stock of the Corporation, par value
$0.01 per share (the "Restricted Stock").
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:
1. Grant of Restricted Stock. Subject to the terms, conditions and
restrictions set forth in this Agreement, the Corporation hereby
grants to the Director, effective as of the Grant Date, 26,270 shares
of Restricted Stock having a value of $150,000. The Restricted Stock
shall be fully paid and nonassessable and shall be represented by a
certificate or certificates registered in the name of the Director or
an appropriate entry in the stock records of the Corporation
maintained by its transfer agent. Any such certificate(s) registered
in the name of the Director and any such stock book entry account
shall bear a legend or other appropriate designation referring to the
restrictions hereinafter set forth.
2. Restrictions on Transfer of Restricted Stock. In addition to such
other terms, conditions and restrictions on Restricted Stock contained
herein, all Restricted Stock shall be subject to the following
restrictions:
(a) No shares of Restricted Stock shall be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of until they
become vested pursuant to Section 3 below and the holding period set
forth in Section 3(c) below has expired. The period during which such
restrictions are applicable is referred to as the "Restricted Period."
(b) Except as set forth in Section 3 below, if a recipient
ceases to be a director of the Corporation within the Restricted
Period for any reason, the shares of Restricted Stock that have not
become fully vested shall be forfeited by the holder and cancelled by
the Corporation.
(c) Notwithstanding subparagraphs (a) and (b) above, the
Board may, in its discretion, either at the time that shares of
Restricted Stock are awarded or at any time thereafter, waive the
restrictions on transfer and forfeiture provisions of any Restricted
Stock upon the occurrence of any of the events described in this
Section 2 or remove or modify any part or all of the restrictions.
3. Vesting of Restricted Stock; Holding Period. (a) On March 1 of each
year following the Grant Date, one-third of the number of shares of
Restricted Stock specified in this Agreement shall become
nonforfeitable on a cumulative basis until all of the shares of
Restricted Stock have become nonforfeitable, subject to the Director's
remaining in the continuous service as a director of the Corporation
as determined by the Board.
(b) Notwithstanding the provisions of Section 3(a), all of
the shares of Restricted Stock shall immediately become nonforfeitable
in the event of (i) a Change in Control (as defined below), or (ii)
the Director's death, Director Retirement, or Director Disability
(each as defined below) while in the continued service as a director
of the Corporation. Notwithstanding the provisions of this Section
3(b), if any Director ceases to serve as a director by reason of
Director Misconduct (as defined below) during the course of such
Director's term, the Director's rights to any shares of Restricted
Stock shall be forfeited as of such date.
(c) Except as set forth below, the restrictions on transfers
of the Restricted Stock shall apply during the course of the
Director's term and for a period of twelve months thereafter.
Notwithstanding the foregoing, the restrictions on transfers of the
Restricted Stock granted hereunder cease automatically (in the event
(i) a Change in Control of the Corporation occurs, or (ii) the
recipient ceases to serve as a director of the Corporation due to his
or her death, Director Disability, or Director Retirement.
(d) A "Change in Control" shall be deemed to have occurred
if:
(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 January 1, 2004,
constitute the Board of Directors (as of such date, the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board, 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 3(d), considered as
though such person were a member of the Incumbent Board; or
(iii) consummation 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 approval by
the stockholders of the Corporation of a liquidation or
dissolution of the Corporation or consummation of the sale of
all or substantially all of the assets of the Corporation.
(e) As used herein, "Director Disability" means that the
Director (i) has established to the satisfaction of the Board that the
Director is unable to perform his or her duties as a member of the
Board by reason of any medically determinable physical or mental
impairment which can be expected to last for a continuous period of
not less than twelve (12) months and (ii) has satisfied any
requirement imposed by the Committee in regard to evidence of such
disability.
(f) As used herein, "Director Misconduct" means the
occurrence of any one or more of the following (i) the willful and
continued failure by a Director to substantially perform his or her
duties (other than any such failure resulting from Director
Disability, death or Director Retirement), after a written demand for
substantial performance is delivered by the Board to the Director that
specifically identifies the manner in which the board believes that
the Director has not substantially performed his or her duties, and
the Director has failed to remedy the situation within thirty (30)
calendar days of receiving such notice or (ii) an Director's
conviction for committing an act of fraud, embezzlement, theft or
another act constituting a felony or a crime involving moral turpitude
or (iii) substantial dependence or addiction to any drug illegally
taken or to alcohol that is in either event materially and
demonstrably injurious to the Corporation or (iv) the engaging by a
Director in gross misconduct materially and demonstrably injurious to
the Corporation. No act or failure to act, on a Director's part shall
be considered "willful:" unless done, or omitted to be done, by the
Director not in good faith and without reasonably belief that his
action or omission was in the best interest of the Corporation.
Director Misconduct shall be determined by the Board in exercise of
good faith and reasonably judgment.
(g) As used herein, "Director Retirement" means mandatory
retirement from service as a member of the Board pursuant to the
Corporation's policies.
4. Forfeiture of Restricted Stock. Subject to Section 3, and except as
the Board may determine on a case-by-case basis, any shares of
Restricted Stock that have not theretofore become nonforfeitable shall
be forfeited if the Director ceases continuous service as a director
of the Corporation at any time prior to the applicable vesting date.
In the event of a forfeiture, the certificate(s) or stock book entry
account representing the shares of Restricted Stock shall be
cancelled.
5. Voting and Dividend Rights. Except as otherwise provided herein, the
Director shall have all of the rights of a stockholder with respect to
the shares of Restricted Stock, including the right to vote such
shares and receive any dividends that may be paid thereon.
6. Retention of Stock Certificate(s) by the Corporation. Any
certificate(s) representing the Restricted Stock shall be held in
custody by the Treasurer of the Corporation for the account of the
Director, together with a stock power endorsed in blank by the
Director with respect thereto, until those shares have become
nonforfeitable in accordance with Section 3. The Director shall
deliver to the attention of the Treasurer at the Corporation's home
office such stock power, endorsed in blank, relating to any
certificated Restricted Stock simultaneously with the execution of
this Agreement or as requested hereafter. Any certificate(s) for
shares of unrestricted stock shall be delivered to the Director as
soon as reasonably practicable after the period of forfeiture has
expired without forfeiture in respect of such shares of Restricted
Stock.
7. No Rights to Grants or Continued Employment. Nothing contained in this
Agreement shall confer upon the Director any right to be retained in
the service as a director of the Corporation, nor limit or affect in
any manner the right of the Corporation to remove the Director as
permitted by the Corporation's governing documents and applicable law.
8. Taxes and Withholding. (a) The Corporation shall have the right to
deduct from payments of any kind otherwise due to the recipient of
Restricted Stock any federal, state or local taxes of any kind
required or permitted by law to be withheld or paid with respect to
any shares issued hereunder or upon the expiration or termination of
the Restricted Period relating to the Restricted Stock. Subject to the
prior approval of the Corporation, the Director may elect to satisfy
such obligations, in whole or in part, (i) by causing the Corporation
to withhold shares of Common Stock otherwise issuable pursuant to the
expiration or termination of the Restricted Period relating to the
Restricted Stock or (ii) by delivering to the Corporation shares of
Common Stock already owned by the Director. The shares so delivered or
withheld shall have a fair market value equal to such withholding
obligation. The fair market value of the shares used to satisfy such
withholding obligation shall be determined by the Corporation as of
the date of such deduction. If the Director has made an election
pursuant to this Section 8, his withholding obligation may only be
satisfied with shares of Common Stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) If the Director elects, in accordance with Section 83(b)
of the Code, to recognize ordinary income in the year of acquisition
of any shares awarded hereunder, the Corporation will require at the
time of such election an additional payment for withholding tax
purposes based on the difference, if any, between the purchase price
of such shares and the fair market value of such shares as of the date
immediately preceding the date on which the Restricted Stock is
awarded.
9. Securities Compliance. The Corporation shall make reasonable efforts
to comply with all applicable federal and state securities laws;
provided, however, notwithstanding any other provision of this
Agreement, the Corporation shall not be obligated to issue any
restricted or unrestricted common stock or other securities pursuant
to this Agreement if the issuance thereof would result in a violation
of any such law.
(a) Exemption from Registration. The Restricted Stock has not
been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and is being issued to the Director in reliance upon the
exemption from such registration provided by Section 4(2) of the 1933
Act.
(b) Restricted Securities. The Director hereby confirms that
he or she has been informed that the shares of Restricted Stock are
restricted securities under the 1933 Act and may not be resold or
transferred unless such shares are first registered under the federal
securities laws or unless an exemption from such registration is
available. Accordingly, the Director hereby acknowledges that he or
she is prepared to hold the Restricted Stock for an indefinite period
and that the Director is aware that Rule 144 promulgated by the
Securities and Exchange Commission is not presently available to
exempt the resale of the Restricted Stock from the registration
requirements of the 1933 Act. The Director is aware of the adoption of
Rule 144 by the Commission, promulgated under the 1933 Act, which
permits limited public resales of securities acquired in a nonpublic
offering, subject to the satisfaction of certain conditions. The
Director understands that under Rule 144, the conditions include,
among other things: the availability of certain current public
information about the issuer, the resale occurring not less than one
year after the party has purchased and paid for the securities to be
sold, the sale being through a broker in an unsolicited "broker's
transaction" and the amount of securities being sold during any
three-month period not exceeding specified limitations. The Director
acknowledges and understands that the Corporation may not be
satisfying the current public information requirement of Rule 144 at
the time the Director wishes to sell the Restricted Stock or other
conditions under Rule 144 which are required of the Corporation. If
so, the Director understands that Director will be precluded from
selling the securities under Rule 144 even if the one-year holding
period of said Rule has been satisfied. Prior to the Director's
acquisition of the Restricted Stock, the Director acquired sufficient
information about the Corporation to reach an informed knowledgeable
decision to acquire the Restricted Stock. The Director has such
knowledge and experience in financial and business matters as to make
the Director capable of utilizing said information to evaluate the
risks of the prospective investment and to make an informed investment
decision. The Director is able to bear the economic risk of his or her
investment in the Restricted Stock. The Director agrees not to make,
without the prior written consent of the Corporation, any public
offering or sale of the Restricted Stock although permitted to do so
pursuant to Rule 144(k) promulgated under the 1933 Act, until all
applicable conditions and requirements of the Rule (or registration of
the Restricted Stock under the 0000 Xxx) and this Agreement have been
satisfied.
(c) Restrictive Legends. In order to reflect the restrictions
on disposition of the Restricted Stock, the stock certificates for the
Restricted Stock will be endorsed with a restrictive legend, in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE
ACT. THEY MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
EXCEPT (1) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE ACT, OR EVIDENCE SATISFACTORY TO THE
CORPORATION OF AN EXEMPTION THEREFROM, AND (2) IN COMPLIANCE WITH THE
DISPOSITION PROVISIONS OF A WRITTEN AGREEMENT BETWEEN THE CORPORATION
AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN
INTEREST TO THE SHARES). SUCH AGREEMENT IMPOSES CERTAIN RESTRICTIONS
IN CONNECTION WITH THE DISPOSITION OF THE SHARES. THE SECRETARY OF THE
CORPORATION WILL, UPON WRITTEN REQUEST, FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.
If required by the authorities of any state in connection with the
issuance of the shares, the legend or legends required by such state
authorities will also be endorsed on all such certificates.
10. Waiver. The waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be construed as
a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
11. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be
separable from the other provisions hereof, and the remaining
provisions hereof shall continue to be valid and fully enforceable.
12. Headings. The headings of sections and subsections herein are included
solely for convenience of reference and shall not affect the meaning
of any of the provisions of this Agreement.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same
Agreement.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by
two of its duly authorized officers and the Director has executed this
Agreement, both as of the Grant Date.
HEALTHSOUTH CORPORATION
By:_____________________________________
Name:
Title:
DIRECTOR
By:_____________________________________
Director Name:
Address:
