As filed with the Securities and Exchange Commission on December 15, 1997
REGISTRATION NO. 333-______________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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HEALTHSOUTH CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 63-0860407
(State or Other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation or Organization)
ONE HEALTHSOUTH PARKWAY, BIRMINGHAM, ALABAMA 35243
(Address of Principal Executive Offices) (Zip Code)
1997 STOCK OPTION PLAN
(Full Title of the Plan)
RICHARD M. SCRUSHY
Chairman of the Board
and Chief Executive Officer
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, Alabama 35243
(Name and address of agent for service)
(205) 967-7116
(Telephone number, including area code, of agent for service)
Copy to:
WILLIAM W. HORTON, ESQ.
Senior Vice President and Corporate Counsel
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, Alabama 35243
(205) 967-7116
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (1) PER SHARE (2) PRICE (2) FEE (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par 5,000,000 shares N/A $132,812,500 $39,180
Value $.01 Per Share
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</TABLE>
(1) Maximum number of shares of HEALTHSOUTH Corporation Common Stock which
may be issued by HEALTHSOUTH Corporation pursuant to its 1997 Stock
Option Plan.
(2) In accordance with Rule 457(h) promulgated under the Securities Act of
1933, these calculations are based upon a price of $26.5625 per share
of HEALTHSOUTH Common Stock, which represents the average of its high
and low prices as reported on the New York Stock Exchange on December
11, 1997.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
NOTE: THE DOCUMENT(S) CONTAINING THE EMPLOYEE BENEFIT PLAN INFORMATION REQUIRED
BY ITEM 1 OF FORM S-8 AND THE STATEMENT OF AVAILABILITY OF REGISTRANT
INFORMATION AND ANY OTHER INFORMATION REQUIRED BY ITEM 2 OF FORM S-8 WILL BE
SENT OR GIVEN TO EMPLOYEES AS SPECIFIED BY RULE 428 UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). IN ACCORDANCE WITH RULE 428 AND THE
REQUIREMENTS OF PART I OF FORM S-8, SUCH DOCUMENTS ARE NOT BEING FILED WITH THE
REGISTRATION STATEMENT OR AS PROSPECTUSES OR PROSPECTUS SUPPLEMENTS PURSUANT TO
RULE 424 UNDER THE SECURITIES ACT. THE REGISTRANT SHALL MAINTAIN A FILE OF SUCH
DOCUMENTS IN ACCORDANCE WITH THE PROVISIONS OF RULE 428. UPON REQUEST, THE
REGISTRANT SHALL FURNISH TO THE COMMISSION OR ITS STAFF A COPY OR COPIES OF ALL
OF THE DOCUMENTS INCLUDED IN SUCH FILE.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference in this Registration
Statement, and specifically made a part hereof, the following documents
heretofore filed by HEALTHSOUTH Corporation ("HEALTHSOUTH" or the "Company")
(Commission File No. 1-10315) with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"):
1. HEALTHSOUTH's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, as amended.
2. HEALTHSOUTH's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 1997, June 30, 1997 and September 30,
1997, as amended.
3. HEALTHSOUTH's Current Report on Form 8-K filed February 19,
1997 (relating to the acquisition of Horizon/CMS Healthcare
Corporation).
4. HEALTHSOUTH's Current Report on Form 8-K filed March 13,
1997 (reporting the consummation of the acquisition of Health Images,
Inc.).
5. HEALTHSOUTH's Current Report on Form 8-K filed August 26,
1997, as amended (containing audited consolidated financial statements
of HEALTHSOUTH at December 31, 1996 and for the three years then ended
reflecting the combined operations of HEALTHSOUTH and Health Images,
Inc.)
6. HEALTHSOUTH's Current Report on Form 8-K filed November 13,
1997, as amended (containing information relating to the Company's
acquisition of Horizon/CMS Healthcare Corporation).
7. The description of HEALTHSOUTH's capital stock contained in
HEALTH SOUTH's Registration Statement on Form 8-A filed August 26,
1989.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the effective date of this Registration
Statement and prior to the filing of a post-effective amendment indicating that
all the securities offered hereby have been sold, or deregistering all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
II-1
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") grants
corporations the right to limit or eliminate the personal liability of their
directors in certain circumstances in accordance with provisions therein set
forth. Article Nine of the HEALTHSOUTH Restated Certificate of Incorporation
filed in the Office of the Secretary of the State of Delaware on March 13, 1997
(the "HEALTHSOUTH Certificate"), contains a provision eliminating or limiting
director liability to HEALTHSOUTH and its stockholders for monetary damages
arising from acts or omissions in the director's capacity as a director. The
provision does not, however, eliminate or limit the personal liability of a
director (i) for any breach of such director's duty of loyalty to HEALTHSOUTH or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under the Delaware
statutory provision making directors personally liable, under a negligence
standard, for unlawful dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. This provision offers persons who serve on the Board of Directors of
HEALTHSOUTH protection against awards of monetary damages resulting from
breaches of their duty of care (except as indicated above). As a result of this
provision, the ability of HEALTHSOUTH or a stockholder thereof to successfully
prosecute an action against a director for a breach of his duty of care is
limited. However, the provision does not affect the availability of equitable
remedies such as an injunction or rescission based upon a director's breach of
his duty of care. The Commission has taken the position that the provision will
have no effect on claims arising under the Federal securities laws.
Section 145 of the DGCL grants corporations the right to indemnify
their directors, officers, employees and agents in accordance with the
provisions therein set forth. Article Nine of the HEALTHSOUTH Certificate and
Article IX of the HEALTHSOUTH Bylaws provide for mandatory indemnification
rights, subject to limited exceptions, to any director, officer, employee, or
agent of HEALTHSOUTH who, by reason of the fact that he or she is a director,
officer, employee, or agent of HEALTHSOUTH, is involved in a legal proceeding of
any nature. Such indemnification rights include reimbursement for expenses
incurred by such director, officer, employee, or agent in advance of the final
disposition of such proceeding in accordance with the applicable provisions of
the DGCL.
HEALTHSOUTH has entered into agreements with all of its Directors and
its executive officers pursuant to which HEALTHSOUTH has agreed to indemnify
such Directors and executive officers against liability incurred by them by
reason of their services of a Director to the fullest extent allowable under
applicable law.
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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibits are numbered in accordance with Item 601 of Regulation S-K.
Exhibit No. Exhibit
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4 1997 Stock Option Plan.
5 Opinion of Haskell Slaughter & Young, L.L.C.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Haskell Slaughter & Young, L.L.C. (contained
within Opinion of Counsel included as Exhibit 5).
24 Powers of Attorney (See Signature Page).
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act , each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in
II-3
<PAGE>
the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Birmingham, State of Alabama, on December 15, 1997.
HEALTHSOUTH Corporation
By RICHARD M. SCRUSHY
-------------------------------------------------
Richard M. Scrushy
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears
below constitutes and appoints Richard M. Scrushy and Michael D. Martin, and
each of them, his attorney-in-fact, with power of substitution for him or her in
any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this statement
relates, or other instruments he or she deems necessary or appropriate, and to
file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
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<S> <C> <C>
/s/ RICHARD M. SCRUSHY December 15, 1997
- -------------------------------------- Chairman of the Board
(Richard M. Scrushy) and Chief Executive Officer
and Director
/s/ MICHAEL D. MARTIN December 15, 1997
- -------------------------------------- Executive Vice President and
(Michael D. Martin) Chief Financial Officer
(Principal Financial Officer)
/s/ WILLIAM T. OWENS December 15, 1997
- -------------------------------------- Senior Vice President and Controller
(William T. Owens) (Principal Accounting Officer)
/s/ JOHN S. CHAMBERLIN Director December 15, 1997
- --------------------------------------
(John S. Chamberlin)
/s/ C. SAGE GIVENS Director December 15, 1997
- --------------------------------------
(C. Sage Givens)
/s/ CHARLES W. NEWHALL III Director December 15, 1997
- --------------------------------------
(Charles W. Newhall III)
/s/ GEORGE H. STRONG Director December 15, 1997
- --------------------------------------
(George H. Strong)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ PHILLIP C. WATKINS, M.D. Director December 15, 1997
- --------------------------------------
(Phillip C. Watkins, M.D.)
/s/ JAMES P. BENNETT Director December 15, 1997
- --------------------------------------
(James P. Bennett)
/s/ LARRY R. HOUSE Director December 15, 1997
- --------------------------------------
(Larry R. House)
/s/ ANTHONY J. TANNER Director December 15, 1997
- --------------------------------------
(Anthony J. Tanner)
/s/ P. DARYL BROWN Director December 15, 1997
- --------------------------------------
(P. Daryl Brown)
/s/ JOEL C. GORDON Director December 15, 1997
- --------------------------------------
(Joel C. Gordon)
/s/ NEAL M. ELLIOT Director December 15, 1997
- --------------------------------------
(Neal M. Elliot)
</TABLE>
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HEALTHSOUTH CORPORATION
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of the 1997 Stock Option 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
Directors, 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 Directors,
executives and employees as may be needed for the continued improvement of the
Corporation's business, through the grant of options to purchase shares of the
Common Stock. It is intended that certain Options issued under the Plan and so
designated pursuant to Section 6(c) hereof by the Committee (as defined in
Section 5 hereof) shall qualify as "incentive stock options" (hereinafter called
"ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended
from time to time (hereinafter called the "Code"), and, where applicable, the
terms of the Plan shall be interpreted in accordance with such intention. Other
Options may be issued under the Plan and designated by the Committee as
non-qualified stock options (hereinafter called "NQSOs"). Any Option issued
under the Plan and not expressly designated as an ISO shall be conclusively
deemed to be an NQSO.
2. PARTICIPANTS. Options may be granted under the Plan to Directors of
the Corporation and 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
Option 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; and provided further that no ISO
may be granted to any person ineligible to be granted ISOs under Section 422(b)
of the Code.
3. TERM OF THE PLAN. The Plan shall become effective as of May 1, 1997,
subject to the approval by the holders of a majority of the shares of issued and
outstanding Common Stock of the Corporation at the 1997 Annual Meeting of
Stockholders of the Corporation. The Plan shall terminate on the earliest of (a)
April 30, 2007, (b) such time as all shares of Common Stock reserved for
issuance under the Plan have been acquired through the exercise of Options
granted under the Plan, or (c) such earlier time as the Board of Directors of
the Corporation may determine. Any Option 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 Option shall be granted under the Plan
after April 30, 2007.
4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13,
the aggregate number of shares of Common Stock for which Options may be granted
under the Plan shall not exceed 5,000,000 shares, and the maximum number of
shares of Common Stock for which any individual may be granted Options under the
Plan during any calendar year is 1,000,000. If, on or prior to the termination
of the Plan as provided in Section 3, an Option granted under the Plan shall
have expired or terminated for any reason without having been exercised in full,
the unpurchased shares covered thereby shall again become available for the
grant of Options under the Plan. Shares covered by Options surrendered in
connection with the exercise of other Options pursuant to Section 9(e) shall be
deemed, for purposes of this Section 4, to have been exercised, and such shares
shall not again become available for the grant of Options under the Plan.
The shares to be delivered upon exercise of Options 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
<PAGE>
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. With respect to the participation of
executives and key employees of the Corporation and its subsidiaries who are not
also Directors of the Corporation, 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
Options and the number of shares of Common Stock to be subject to each Option.
With respect to the participation of non-employee Directors of the
Corporation, each non-employee Director shall receive, as an annual grant, an
NQSO to purchase 25,000 shares of Common Stock on the date of approval of the
Plan by the stockholders of the Corporation and in each year thereafter, such
Option to be granted as of the first business day in January of each calendar
year, commencing with January 1998. The purchase price of the shares of Common
Stock covered by each such NQSO granted to a non-employee Director shall be 100%
of the fair market value (but in no event less than the par value) of such
shares at the time the Option is granted, determined in accordance with Section
7(c) hereof. Grants to any non-employee Director shall be in lieu of any grants
under other stock option plans of the Corporation.
The interpretation and construction of any provision of the Plan or of
any Option 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 Option granted under it. No member of the
Board of Directors may vote on any Option to be granted to him.
The expenses of administering the Plan shall be borne by the
Corporation.
6. GRANT OF OPTIONS. (a) Options 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 Directors,
executives and key employees to whom Options shall be granted and as to the
number of shares to be covered by such Options, the Committee shall take into
account the duties of the respective Directors, 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 Option granted under the Plan shall be granted
pursuant to and subject to the terms and conditions of a stock option agreement
to be entered into between the Corporation and the optionholder at the time of
such grant. Each such stock option 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 "Stock Option Agreement"). Any such Stock Option 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.
(c) At the time of the grant of each Option under this Plan,
the Committee shall determine whether such Option is to be designated as an ISO.
If an Option is to be designated as an ISO, then the provisions
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of Sections 6(d), 7(b) and 8(b) shall apply to such Options. The Stock Option
Agreement relating to the grant of any option designated as an ISO shall reflect
such designation.
(d) Notwithstanding any contrary provision contained in this
Agreement, the aggregate fair market value (determined as of the time each ISO
is granted) of the shares of Common Stock with respect to which ISOs issued to
any one person hereunder are exercisable for the first time during any calendar
year shall not exceed $100,000.
7. OPTION PRICE. (a) The purchase price of the shares of Common Stock
covered by each Option granted under the Plan shall be at least 100% of the fair
market value (but in no event less than the par value) of such shares at the
time the Option is granted, or such higher purchase price as shall be determined
by the Committee.
(b) Notwithstanding any contrary provision contained in
Section 7(a) hereof, no Option granted to any person who, at the time of such
grant, owns, taking into account the attribution rules of Section 424(d) of the
Code, stock possessing more than 10% of the total combined voting power of all
classes of the Corporation's stock or of the stock of any of its corporate
subsidiaries, may be designated as an ISO unless at the time of such grant the
purchase price of the shares of Common Stock covered by such Option is at least
110% of the fair market value (but in no event less than the par value) of such
shares.
(c) If the Common Stock is not listed upon a national
securities exchange or exchanges, such fair market value shall be as determined
by the Board of Directors of the Corporation (which determination shall be
conclusive and binding for all purposes) or, if applicable, shall be deemed to
be the last reported sale price for the Common Stock as quoted by brokers and
dealers trading in the Common Stock in the over-the-counter market (or if the
Common Stock shall be quoted by the National Association of Securities Dealers
Automated Quotation system, then such NASDAQ quote) immediately prior to the
commencement of the meeting of the Committee at which the Option is granted. If
the Common Stock is listed upon a national securities exchange or exchanges,
such fair market value shall be deemed to be the last reported sale price at
which the shares of Common Stock were traded on such securities exchange or
exchanges immediately prior to the commencement of the meeting of the Committee
at which the Option is granted, or if no sale of the Common Stock was made on
any national securities exchange on such date, then the closing price per share
of the Common Stock on such securities exchange or exchanges on the next
preceding day on which there was a sale of the Common Stock.
(d) The exercise price of any outstanding Options shall not be
reduced during the term of such Options except by reason of an adjustment
pursuant to Section 13 hereof, nor shall the Committee or the Board of Directors
cancel outstanding Options and reissue new Options at a lower exercise price in
substitution for the canceled Options.
8. TERM OF OPTIONS. (a) The expiration date of an Option granted under
the Plan shall be as determined by the Committee at the time of grant, provided
that each such Option shall expire not more than ten years after the date such
Option was granted.
(b) Notwithstanding any contrary provision contained in
Section 8(a) hereof, no Option granted to any person who, at the time of such
grant, owns, taking into account the attribution rules of Section 424(d) of the
Code, stock possessing more than 10% of the total combined voting power of all
classes of the Corporation's stock or of the stock of any of its corporate
subsidiaries, may be designated as an ISO unless by its terms each such Option
shall expire not more than five years after the date such Option was granted.
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9. EXERCISE OF OPTIONS. (a) Each Option shall become exercisable in
whole or in part or in installments at such time or times as the Committee may
prescribe at the time the Option is granted and specify in the Stock Option
Agreement. No Option shall be exercisable after the expiration of ten years from
the date on which it was granted.
(b) Notwithstanding any contrary provision contained herein,
unless otherwise expressly provided in the Stock Option Agreement, any Option
granted hereunder which is, by its terms, exercisable in installments shall
become immediately exercisable in full upon the occurrence of a Change in
Control of the Corporation. For purposes of this Section 9(b), "Change in
Control" shall mean
(i) the acquisition (other than from the Corporation) by any
person, entity or "group" (within the meaning of Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, but excluding, for
this purpose, the Corporation or its subsidiaries, or any employee
benefit plan of the Corporation or its subsidiaries which acquires
beneficial ownership of voting securities of the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 25% or more of either the
then-outstanding shares of Common Stock or the combined voting power of
the Corporation's then-outstanding voting securities entitled to vote
generally in the election of Directors; or
(ii) individuals who, as of May 1, 1997, 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 9(b)(ii), 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.
(c) Options may be exercised by giving written notice to the
Corporation of intention to exercise, specifying the number of shares to be
purchased pursuant to such exercise in accordance with the procedures set forth
in the Stock Option Agreement. All shares purchased upon exercise of any Option
shall be paid for in full at the time of purchase in accordance with the
procedures set forth in the Stock Option Agreement. Except as provided in
Sections 9(d) and 9(e) hereof, such payment shall be made in cash or through
delivery of shares of Common Stock or a combination of cash and Common Stock as
provided in the Stock Option Agreement. Any shares so delivered shall be valued
at their fair market value determined as of the date of exercise of the Option
under the method set forth in Section 7(c) hereof.
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<PAGE>
(d) Payment for shares purchased upon exercise of any such
Option may be made by delivery to the Corporation of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Corporation an amount of sale or loan proceeds sufficient to pay
the exercise price. Additionally, the Corporation will accept, in payment for
shares purchased upon exercise of any such Option, proceeds of a margin loan
obtained by the exercising optionholder from a broker, provided that the
exercising optionholder has, at the same time as delivery to the Corporation of
a properly executed exercise notice, delivered to the Corporation irrevocable
instructions to the Corporation to deliver share certificates directly to such
broker upon payment for such shares.
(e) With respect to Directors and officers of the Corporation
who are subject to reporting requirements under Section 16(a) of the Securities
Exchange Act of 1934, payment for shares purchased upon exercise of any Option
granted hereunder may be made by surrender of outstanding Options issued under
this Plan or any other stock option plan of the Corporation having a Spread (as
defined below) equal to the exercise price of the Options sought to be
exercised. For purposes of this Section 9(e), the "Spread" with respect to any
unexercised Option shall be equal to (i) the average price per share of Common
Stock on the date of exercise, as determined by the Corporation from any
commercially available reporting service reflecting trading of the Common Stock
on a national securities exchange, on the National Association of Securities
Dealers Automated Quotation System, or in the over the counter market, as
applicable, less (ii) the exercise price of the surrender of the Option. All
Options so surrendered will be deemed to have been exercised by the
optionholder. Such surrender shall be evidenced in a form satisfactory to the
Secretary of the Corporation.
10. NONTRANSFERABILITY OF OPTIONS. (a) Options granted under the Plan
shall be assignable or transferable only by will or pursuant to the laws of
descent and distribution and shall be exercisable during the optionholder's
lifetime only by him, except to the extent set forth in the following
paragraphs.
(b) Upon written notice to the Secretary of the Corporation,
an optionholder may, except as otherwise prohibited by applicable law, transfer
options granted under the Plan to one or more members of such optionholder's
immediate family, to a partnership consisting only of members of such
optionholder's immediate family, or to a trust all of whose beneficiaries are
members of the optionholder's immediate family. For purposes of this section, an
optionholder's "immediate family" shall be deemed to include such optionholder's
spouse, children and grandchildren only.
(c) Upon written notice to the Secretary of the Corporation,
an optionholder may transfer options to a charitable, educational or religious
entity which has been determined by the United States Internal Revenue Service
to be exempt from federal income taxation under the provisions of Section 501(c)
of the Internal Revenue Code of 1986, as amended, or any successor statutory
provision.
11. STOCKHOLDER RIGHTS OF OPTIONHOLDER. No holder of any Option shall
have any rights to dividends or other rights of a stockholder with respect to
shares subject to an Option prior to the purchase of such shares upon exercise
of the Option.
12. TERMINATION OF OPTION. With respect to any Option which, by its
terms, is not exercisable for one year from the date on which it is granted, if
an optionholder's employment by, or other relationship with, the Corporation or
any of its subsidiaries terminates within one year after the date an unexercised
Option containing such terms is granted under the Plan for any reason other than
death, the Option shall terminate on the date of termination of such employment
or other relationship. With respect to all Options granted under the Plan, if an
optionholder's employment by, or other relationship with, the Corporation is
terminated by reason
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of his death, the Option shall terminate one year after the date of death,
unless the Option otherwise expires. If an optionholder's employment by, or
other relationship with, the Corporation terminates for any reason other than as
set forth above in this Section 12, the Option shall terminate three months
after the date of termination of such employment or other relationship unless
the Option earlier expires, provided that (a) if the optionholder dies within
such three-month period, the Option shall terminate one year after the date of
his death unless the Option earlier expires; (b) the Board of Directors may, at
any time prior to any termination of such employment or other relationship under
the circumstances covered by this Section 12, determine in its discretion that
the Option shall terminate on the date of termination of such employment or
other relationship with the Corporation; and (c) the exercise of any Option
after termination of such employment or other relationship with the Corporation
shall be subject to satisfaction of the conditions precedent that the
optionholder refrain from engaging, directly or indirectly, in any activity
which is competitive with any activity of the Corporation or any subsidiary
thereof and from otherwise acting, either prior to or after termination of such
employment or other relationship, in any manner inimical or in any way contrary
to the best interests of the Corporation and that the optionholder furnish to
the Corporation such information with respect to the satisfaction of the
foregoing condition precedent as the Board of Directors shall reasonably
request. For purposes of this Section 12, a "relationship with the Corporation"
shall be limited to any relationship that does not cause the Plan to cease to be
an "employee benefit plan" as defined in Rule 405 of Regulation C under the
Securities Act of 1933. The mere ownership of stock in the Corporation shall not
be deemed to be a "relationship with the Corporation".
Nothing in the Plan or in the Stock Option Agreement shall confer upon
any optionholder the right to continue in the employ of the Corporation or any
of its subsidiaries or in any other relationship thereto or interfere in any way
with the right of the Corporation to terminate such employment or other
relationship at any time.
A holder of an Option under the Plan may make written designation of a
beneficiary on forms prescribed by and filed with the Secretary of the
Corporation. Such beneficiary, or if no such designation of any beneficiary has
been made, the legal representative of such optionholder or such other person
entitled thereto as determined by a court of competent jurisdiction, may
exercise, in accordance with and subject to the provisions of this Section 12,
any unterminated and unexpired Option granted to such optionholder to the same
extent that the optionholder himself could have exercised such Option were he
alive or able; provided, however, that no Option granted under the Plan shall be
exercisable for more shares than the optionholder could have purchased
thereunder on the date his employment by, or other relationship with, the
Corporation and its subsidiaries was terminated.
13. 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
purchased through exercise of Options granted under the Plan, both in the
aggregate and as to any individual, and the number and class of shares then
subject to Options theretofore granted and the price per share payable upon
exercise of such Option 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 Option theretofore granted or which may
be granted under the Plan, such adjustment shall be made in accordance with such
determination.
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Notice of any adjustment shall be given by the Corporation to each
holder of an Option 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 Options pursuant to
this Section 13 may be settled in cash or otherwise as the Board of Directors
may determine.
14. SECURITIES ACTS REQUIREMENTS. No Option granted pursuant to the
Plan shall be exercisable in whole or in part, and the Corporation shall not be
obligated to sell any shares of Common Stock subject to any such Option, if such
exercise and sale would, in the opinion of counsel for the Corporation, violate
the Securities Act of 1933 or other Federal or state statutes having similar
requirements, as they may be in effect at that time. Each Option shall be
subject to the further requirement that, at any time that the Board of Directors
or the Committee, as the case may be, shall determine, in their respective
discretion, that the listing, registration or qualification of the shares of
Common Stock subject to such Option under any securities exchange requirements
or under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issuance of shares thereunder, such
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors or the
Committee, as the case may be.
As a condition to the issuance of any shares upon exercise of an Option
under the Plan, the Board of Directors or the Committee, as the case may be, may
require the optionholder 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.
15. AMENDMENT OF THE PLAN. The Plan may, at any time or from time to
time, be terminated, modified or amended by the stockholders of the Corporation
by the affirmative vote of the holders of a majority of the outstanding shares
of the Corporation's Common Stock 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 Options, 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 of shares subject to the Plan,
decrease the price at which the Options may be granted, permit exercise of
Options unless full payment is made at the time of exercise (except as so
provided in Section 9 hereof), extend the period during which Options may be
exercised, or change the provisions relating to adjustment to be made upon
changes in capitalization.
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16. CHANGES IN LAW. Subject to the provisions of Section 15, the Board
of Directors shall have the power to amend the Plan and any outstanding Options
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
Option any new provision or change designed to comply with or take advantage of
requirements or provisions of the Code 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.
17. 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 Options 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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EXHIBIT 5
[LETTERHEAD OF HASKELL SLAUGHTER & YOUNG, L.L.C.]
December 15, 1997
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, Alabama 35243
Re: REGISTRATION STATEMENT ON FORM S-8 REGARDING 1997 STOCK OPTION PLAN
Gentlemen:
We have served as counsel for HEALTHSOUTH Corporation, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1993, as amended, of an aggregate of 5,000,000 shares (the
"Shares") of the Company's authorized Common Stock, par value $.01 per share, to
be issued to participants of the above-referenced plan (the "Plan"), pursuant
to the Company's Registration Statement on Form S-8 relating thereto (the
"Registration Statement"). This opinion is furnished to you pursuant to the
requirements of Form S-8.
In connection with this opinion, we have examined and are familiar
with originals or copies (certified or otherwise identified to our satisfaction)
of such documents, corporate records and
<PAGE>
HEALTHSOUTH Corporation
December 15, 1997
Page 2
other instruments relating to the incorporation of the Company and to the
authorization and issuance of the Shares as we have deemed necessary and
appropriate.
Based upon the foregoing, and having regard for such legal
considerations we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized.
2. Upon issuance, sale and delivery of the Shares as contemplated
in the Registration Statement and the Plans, the Shares will be legally issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement
Very truly yours,
HASKELL SLAUGHTER & YOUNG, L.L.C.
By: /s/ Donald T. Locke
-------------------------
Donald T. Locke
EXHIBIT 23.1
Consent of Ernst & Young LLP,
Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the HEALTHSOUTH Corporation 1997 Stock Option Plan of our
report dated February 24, 1997, except for the first paragraph of Note 15, as to
which the date is March 12, 1997, with respect to the consolidated financial
statements and schedule of HEALTHSOUTH Corporation included in its Annual Report
(Form 10-K/A) for the year ended December 31, 1996 and our report dated August
20, 1997, with respect to the consolidated financial statements of HEALTHSOUTH
Corporation included in its Current Report on Form 8-K/A dated August 26, 1997,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Birmingham, Alabama
December 11, 1997
