SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
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)
----------
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)
HEALTH IMAGES, INC. NON-QUALIFIED STOCK OPTION PLAN
AMENDED AND RESTATED EMPLOYEE INCENTIVE STOCK OPTION PLAN
HEALTH IMAGES, INC. 1995 FORMULA STOCK OPTION PLAN
1996 EMPLOYEE INCENTIVE STOCK OPTION PLAN
(Full Titles of the Plans)
<TABLE>
<S> <C>
RICHARD M. SCRUSHY Copy to:
Chairman of the Board
and Chief Executive Officer WILLIAM W. HORTON, ESQ.
HEALTHSOUTH Corporation Senior Vice President and Corporate Counsel
One HealthSouth Parkway HEALTHSOUTH Corporation
Birmingham, Alabama 35243 One HealthSouth Parkway
(Name and address of agent for Service) Birmingham, Alabama 35243
(205) 967-7116 (205) 967-7116
(Telephone number, including area code, of
agent for service)
</TABLE>
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>
===============================================================================================================
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
Value $.01 Per Share 943,188 shares N/A $9,386,625.70 $2,844.44
===============================================================================================================
</TABLE>
(1) The amount being registered represents authorized and unissued shares
reserved for issuance upon the exercise of of options issued under the
Plans and outstanding as of March 3, 1997, adjusted to give effect to a
two-for-one split of the Common Stock of HEALTHSOUTH Corporation effected
March 17, 1997.
(2) In accordance with Rule 457(h) promulgated under the Securities Act of
1993, the maximum aggregate offering price and the registration fee are
based on the aggregate exercise price of options outstanding under the
Plans, which individual exercise prices range from $5.61 to $15.13 per
share, after giving effect to the stock split described in footnote 1,
above.
<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 (the "Company" or "HEALTHSOUTH") with the Securities and
Exchange Commission (the "Commission"), pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act"):
1. The Company's Annual Report on Form 10-K, as amended, for the
fiscal year ended December 31, 1996.
2. The Company's Current Report on Form 8-K filed February 19,
1997 (relating to the merger with Horizon/CMS Healthcare Corporation).
3. The Company's Current Report on Form 8-K filed March 13, 1997
(relating to the consummation of the acquisition of Health Images,
Inc.).
4. The description of the Company's capital stock contained in
the Company'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.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-1
<PAGE>
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,
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 SEC 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 Restated Certificate of
Incorporation 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 as a director or executive officer to the fullest extent
allowable under applicable law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit No. Exhibit
----------- -------
4(a) Form of Health Images, Inc. Non-Qualified Stock
Option Plan, filed as Exhibit 10(d)(i) to Health
Images, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, is hereby
incorporated herein by reference.
4(b) Form of Amended and Restated Employee Incentive
Stock Option Plan, as amended, of Health Images,
Inc., filed as Exhibits 10(c)(i), 10(c)(ii),
10(c)(iii) and 10(c)(iv) to Health Images, Inc.'s
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, is hereby incorporated herein by
reference.
4(c) Form of Health Images, Inc. 1995 Formula Stock
Option Plan, filed as Exhibit 10(d)(iv) to Health
Images, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, is hereby
incorporated herein by reference.
4(d) Form of 1996 Employee Incentive Stock Option Plan of
Health Images, Inc.
5 Opinion of Haskell Slaughter & Young, L.L.C.
23 Consent of Ernst & Young L.L.P.
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
(iii) 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 of 1933, 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.
II-3
<PAGE>
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
Securities Exchange Act of 1934 that is incorporated by reference in 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
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 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 April 2, 1997.
HEALTHSOUTH Corporation
By /s/ 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 Aaron Beam, Jr., 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 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 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.
Signature Capacity Date
--------- -------- ----
/s/ RICHARD M. SCRUSHY Chairman of the Board April 2, 1997
- ------------------------- and Chief Executive Officer
(Richard M. Scrushy) and Director
/s/ AARON BEAM, JR. Executive Vice President and April 2, 1997
- ------------------------- Chief Financial Officer
(Aaron Beam, Jr.) (Principal Financial Officer)
/s/ WILLIAM T. OWENS Senior Vice President and Controller April 2, 1997
- ------------------------- (Principal Accounting Officer)
(William T. Owens)
/s/ RICHARD F. CELESTE Director April 2, 1997
- -------------------------
(Richard F. Celeste)
/s/ JOHN S. CHAMBERLIN Director April 2, 1997
- -------------------------
(John S. Chamberlin)
/s/ C. SAGE GIVENS Director April 2, 1997
- -------------------------
(C. Sage Givens)
/s/ CHARLES W. NEWHALL III Director April 2, 1997
- --------------------------
(Charles W. Newhall III)
II-5
<PAGE>
/s/ GEORGE H. STRONG Director April 2, 1997
- --------------------------
(George H. Strong
/s/ PHILLIP C. WATKINS Director April 2, 1997
- --------------------------
(Phillip C. Watkins)
/s/ JAMES P. BENNETT Director April 2, 1997
- --------------------------
(James P. Bennett)
/s/ LARRY R. HOUSE Director April 2, 1997
- --------------------------
(Larry R. House)
/s/ ANTHONEY J. TANNER Director April 2, 1997
- --------------------------
(Anthoney J. Tanner)
/s/ P. DARYL BROWN Director April 2, 1997
- --------------------------
(P. Daryl Brown)
/s/ JOEL C. GORDON Director April 2, 1997
- --------------------------
(Joel C. Gordon)
/s/ RAYMOND J. DUNN, III Director April 2, 1997
- --------------------------
(Raymond J. Dunn, III)
II-6
1996
EMPLOYEE INCENTIVE STOCK OPTION PLAN
HEALTH IMAGES, INC.
1. Purpose. This Employee Incentive Stock Option Plan (the "Plan") is
intended as an incentive and to encourage stock ownership by certain officers
and other key employees of Health Images, Inc., a Delaware corporation (the
"Corporation"), or of its subsidiary corporations as that term is defined in
Section 425(f) of the Internal Revenue Code of 1986, as amended (the
"Subsidiary" or "Subsidiaries"), so that they may acquire or increase their
proprietary interest in the Corporation, and properly reward them for
meritorious or profit producing services to the Corporation or the Subsidiaries.
It is further intended that options issued pursuant to this Plan shall
constitute incentive stock options within the meaning of Sec. 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration. The Plan shall be administered by a committee appointed
by the Board of Directors of the Corporation (the "Committee"). The
Corporation's Compensation Committee shall administer the Plan. The Committee
shall consist of not less than three members. The Board of Directors may from
time to time remove members from or add members to the Committee. Vacancies on
the Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee shall select one of its members as Chairman and shall hold meetings at
such times and places as it may determine. The action of a majority of the
Committee at a meeting 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. Each Director while a member of the Committee shall
meet the definition of "disinterested person" contained in Rule 16b-3 of the
Securities and Exchange Commission. The Committee shall from time to time at its
discretion designate the key employees who shall be granted options and the
number of shares to be optioned to each.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final. No member of the
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
3. Eligibility. The persons who shall be eligible to receive options shall
be such employees (including officers, whether or not they are Directors) of the
Corporation or its Subsidiaries as the Committee shall select from time to time
("Optionee" or "Optionees"). An Optionee may hold more than one option, but only
on the terms and subject to the restrictions hereafter set forth.
<PAGE>
4. Stock. The stock subject to the options shall be shares of the
Corporation's authorized and unissued or reacquired $.01 par value voting common
stock (the term "shares" as used herein shall refer to shares which are
specifically subject to an option granted under the Plan). The aggregate number
of shares which may be issued under options pursuant to the Plan shall not
exceed 500,000 shares. The limitations established by each of the preceding
sentences shall be subject to adjustment as provided in Section 6(i) of the
Plan.
In the event that any outstanding option under the Plan for any reason
expires or is terminated, the Shares allocable to the unexercised portion of
such option may again be subjected to an option under the Plan.
5. Annual Limitation. The maximum number of shares of Common Stock with
respect to which options may be granted during any fiscal year of the Company to
any eligible optionee who is a "covered employee" within the meaning of Section
162(m) of the Internal Revenue Code shall not exceed 100,000 shares.
6. Terms and Conditions of Option. Options granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced by agreements in
such form as the Committee shall from time to time approve, which agreement
shall contain specifically or be subject to the following terms and conditions:
(a) Number of Shares. Each option shall state the number of Shares to which
it pertains.
(b) Option Price. Each option shall state the option price, which shall not
be less than 100% of the fair market value of the Shares subject to the option
on the date of grant. Fair market value shall be determined under the principles
of Treasury Regulations 20.2031-2 or such other regulations or authorities as
the Committee shall deem appropriate at the time. Subject to the foregoing, the
Committee, in fixing the option price, shall have full authority and discretion
and be fully protected in doing so.
(c) Medium and Time of Payment. The option price shall be payable on the
exercise of the option and may be paid (i) in United States Dollars in cash or
by check; (ii) by transferring a number of shares, valued as provided in
Paragraph 6(b) above, as of the date of transfer; having a value equal the
option price; or (iii) by part payment in cash or by check as provided in (i)
above and by payment of the balance by transferring shares to the Corporation as
provided in (ii) above;
(d) Conditions of Exercise of Options.
(1) No option granted pursuant to this Plan shall be exercised in
whole or in part more than ten years after it is
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<PAGE>
granted, and such option shall be subject to such further terms and
conditions as to the time of its exercise as the Committee may prescribe.
(2) In order to exercise an option granted hereunder, in whole or
in part, each of the following conditions must be fulfilled at the time of
exercise:
(i) The Optionee must be in the employ of the Corporation or one
of its Subsidiaries or exercise the Option within the 30 day period
following termination of employment. However, an Optionee who is totally
and permanently disabled at the time-of exercise of an option and who has
ceased to work for the Corporation or one of its Subsidiaries as a result
of such disability shall not be required to satisfy this condition if he
has been employed by the Corporation or one of its subsidiaries within one
year prior to the date of exercise of such option. Permanent and total
disability for purposes of this Paragraph 6 (d) (2) (i) shall mean that
such Optionee, at the time he ceased his employment by the Corporation,
was unable to engage in any substantial gainful activity by reason of a
medically determinable physical or mental impairment which could be
expected to result in death or which at such time could be expected to
last for a continuous period of not less than twelve (12) months. Such
optionee shall furnish proof of such disability in form and substance
satisfactory to the Committee.
Neither the transfer of an employee from employment by one of the
Corporation's Subsidiaries to another Subsidiary, the transfer of an
employee from the employment by one the Subsidiaries to the Corporation or
by the Corporation to one of its Subsidiaries shall be deemed the
termination of the employment of the employee by the Corporation or any of
its Subsidiaries.
(ii) The Optionee shall have met any additional specific
conditions imposed by the Committee at the time of the granting of the
option. Such specific conditions may be in the form of achievement goals
for the individual Optionee based upon predetermined minimum increases
over a specific period or periods time, in sales, gross profits, pre-tax
or after tax earnings, productivity, or other goals or standards for the
Corporation or the Subsidiary for which the Optionee works. The imposition
of such achievement goals and conditions shall be in the sole discretion
of the Committee; and such goals and conditions may differ between
individual employees of the Corporation and/or of its Subsidiaries; and
between classes of employees of the
- 3 -
<PAGE>
Corporation and/or any Subsidiary; and between the employees of the
Corporation, as a class, and the employees of the Subsidiaries as a class.
(iii) Any Optionee of the Corporation or any Subsidiary shall be
entitled to accumulate and carry over any unexercised portion of an option
to any subsequent period, provided that at the time of exercise of such
portion of the option, the Optionee shall meet all conditions herein
required of the Optionee at the time of the exercise.
(e) Termination of Employment Except by Death. Subject to Paragraph 6 (d)
(2) (i), in the event that an Optionee shall cease to be employed by the
Corporation or any of its Subsidiaries for any reason other than his death and
shall be no longer in the employ of any of them, such Optionee shall have thirty
(30) days from the date of termination of employment to exercise the unexercised
portion of the option after which such portion of the absence or absence for
military or governmental service shall constitute termination of employment, for
the purposes of the Plan, shall be determined by the Committee, whose
determination shall be final and conclusive.
(f) Death of Optionee and Transfer of Option. If the Optionee shall die
while in the employ of the Corporation or a Subsidiary and shall not have fully
exercised the option, the option may be exercised, subject to the condition that
no option shall be exercisable after the expiration of ten years from the date
it is granted, to the extent that the Optionee's right to exercise such option
had accrued pursuant to this Section 6 of the Plan at the time of his death and
had not previously been exercised, at any time within twelve months after the
Optionee's death, by the executors or administrators of the Optionee or by any
person or persons who shall have acquired the option directly from the optionee
by bequest or inheritance.
No option shall be transferable by the Optionee otherwise than by will or
under the laws of descent and distribution.
(g) Recapitalization. Subject to any required action by the shareholders,
the number of shares covered by each outstanding option, and the price per Share
thereof in each such option, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of the Corporation resulting from a
subdivision or consolidation of shares or the payment of a stock dividend or
stock split (but only on the shares) or any other increase or decrease in the
number of such shares affected without receipt of consideration by the
Corporation.
- 4 -
<PAGE>
Subject to any required action by the shareholders, if the Corporation
shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares subject to the option would have been entitled. A
dissolution or liquidation of the Corporation or a merger or consolidation in
which the Corporation is not the surviving corporation, shall cause each
outstanding option to terminate.
In the event of a change in the shares of the Corporation as presently
constituted, which is limited to a change of all of its authorized shares
without par value into the same number of shares with a different stated value
or with par value, the shares resulting from any such change shall be deemed to
be the shares within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Corporation, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive, provided
that each option granted pursuant to this Plan shall not be adjusted in a manner
that causes the option to fail to continue to qualify as an incentive stock
option within the meaning of Sec. 422A of the Code.
Subject to any required action by the shareholders, if the Corporation is a
party to any merger, consolidation or other change in control of the
Corporation, each outstanding option shall vest in full at the time of such
merger, consolidation or change in control. Each option shall then pertain to
and apply to the securities of the Corporation, or in a case where the
Corporation is not the surviving corporation, in the successor corporation to
the Corporation to which a holder of the number of shares subject to the option
would have been entitled.
Except as hereinbefore expressly provided in this Section 6, the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spinoff of assets or stock
of another corporation, and any issue by the Corporation of shares of stock or
any class, or securities convertible into shares of stock or any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to the option.
The grant of any option pursuant to the Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets; provided, however, that if any such
- 5 -
<PAGE>
adjustment shall result in a fractional share for any Optionee under any option
hereunder, such fraction shall be completely disregarded and the Optionee shall
only be entitled to the whole number of shares resulting from such adjustment.
(h) Rights as a Shareholder. An Optionee or a transferee of an option shall
have no rights as a shareholder with respect to any shares covered by his option
until the date of the issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
otherwise provided in this Section 6.
(i) Investment Purpose. The Company shall not be obligated to sell or issue
any shares pursuant to any option unless the shares with respect to which the
option is being exercised are at that time effectively registered or exempt from
registration under the Securities Act of 1933, as amended.
Notwithstanding anything in the Plan to the contrary, each option under the
Plan shall be granted on the condition that the purchases of shares thereunder
shall be for investment purposes, and not with a view to resale or distribution
except that in the event the shares subject to such option are registered under
the Securities Act of 1933, as amended, and applicable state securities laws or
in the event a resale of such shares without such registration would otherwise
be permissible, such condition shall be inoperative if in the opinion of counsel
for the Corporation such condition is not required under the Securities Act of
1933 or any other applicable law, regulation, or rule of any governmental
agency.
(j) Other Provisions. Options authorized under the Plan shall contain such
other provisions, including, without limitation, restrictions upon the exercise
of the option, as the Committee or the Board of Directors of the Corporation
shall deem advisable subject to any limitation on the discretion of the Board of
Directors required by Rule 16B-3. Any such option agreement shall contain such
limitations and restrictions upon the exercise of the option as shall be
necessary in order that such option will be an Incentive Stock Option as defined
in Sec. 422A of the Code or to conform to any change in the law and shall not
contain any provisions, restrictions or limitations which shall prevent such
option from being an Incentive Stock Option as aforesaid.
7. Term of Plan. Options may be granted pursuant to the Plan from time to
time within a period of ten years from the date the Plan is adopted or the date
the Plan is approved by the shareholders, whichever is earlier.
- 6 -
<PAGE>
8. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the independent
legal counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, a suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the
Corporation the opportunity, at its own expense, to handle and defend the same.
9. Amendment to the Plan. The Board of Directors of the Corporation may,
insofar as permitted by law, from time to time, with respect to any shares at
the time not subject to options, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever except that, without approval of the
shareholders, no such revision or amendment shall change the number of shares
subject to the Plan, change the designation of the class of employees eligible
to receive options, decrease the price at which options may be granted, remove
the administration of the Plan from the Committee, or render any member of the
Committee eligible to receive an option under the Plan while serving thereon.
Furthermore, the Plan may not, without the approval of the shareholders, be
amended in any manner that will cause options issued under it to fail to meet
the requirements of Incentive Stock Options as defined in Sec. 422A of the Code.
10. Application of Funds. The proceeds received by the Corporation from the
sale of Shares pursuant to options will be used for general corporate purposes.
11. No Obligation to Exercise Option. The granting of an option shall
impose no obligation upon the Optionee to exercise such option.
12. Approval of Shareholders. The Plan shall not take effect until approved
by the holders of a majority of the outstanding shares which approval must occur
within the period beginning twelve months before and ending twelve months after
the date the Plan is adopted by the Board of Directors.
- 7 -
<PAGE>
13. Limitations on Grant of Option. No option may be granted under this
Plan to any person who owns, directly or indirectly under the rules of Section
425(d) of the Code, or who, by reason of the exercise of such option will own
more than ten (10%) percent of the total combined voting power of all classes of
stock of the Corporation, its parent or subsidiary, as provided in Section
422A(b)(6) of the Code, unless such option (i) has an exercise price that equals
at least 110% of the fair market value of the stock on the date the option is
granted, and (ii) shall not be exercisable more than five years from the date
the option is granted.
- 8 -
Exhibit 5
Haskell Slaughter & Young, L.L.C.
1200 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203
April 2, 1997
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, Alabama 35243
Re: Registration Statement on Form S-8 --
Health Images, Inc. Non-Qualified Stock Option Plan
Amended and Restated Employee Incentive Stock Option Plan
Health Images, Inc. 1995 Formula Stock Option Plan
1996 Employee Incentive 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 1933, as amended, of an aggregate of 943,188 shares (the
"Shares") of the Company's authorized Common Stock, par value $.01 per share, to
be issued to participants of Health Images, Inc.'s Non-Qualified Stock Option
Plan, Amended and Restated Employee Incentive Stock Option Plan, 1995 Formula
Stock Option Plan and 1996 Employee Incentive Stock Option Plan (the "Plans"),
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 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.
<PAGE>
HEALTHSOUTH Corporation
April 2, 1997
Page 2
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/ MARK EZELL
----------------------------
Mark Ezell
Consent of Ernst & Young LLP,
Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Health Images, Inc. Non-Qualified Stock Option Plan, the
Health Images, Inc. 1987 Employee Incentive Stock Option Plan, the Health
Images, Inc. 1995 Formula Stock Option Plan and the Health Images, Inc. 1996
Employee Incentive 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) for the year
ended December 31, 1996, filed with the Securitites and Exchange Commission.
ERNST & YOUNG LLP
Birmingham, Alabama
March 28, 1997
