As filed with the Securities and Exchange Commission on July 24, 1998
REGISTRATION NO. 333-______________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------
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)
National Surgery Centers, Inc.
Amended and Restated
1992 Stock Option Plan
National Surgery Centers, Inc.
1997 Non-Employee
Directors Stock Option Plan
(Full Titles of the Plans)
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: Copy to:
WILLIAM W. HORTON, ESQ. F. HAMPTON MCFADDEN, JR.
Senior Vice President and Corporate Counsel DONALD T. LOCKE
HEALTHSOUTH Corporation HASKELL SLAUGHTER & YOUNG, LLC
One HealthSouth Parkway 1200 AmSouth/Harbert Plaza
Birmingham, Alabama 35243 1901 Sixth Avenue North
(205) 967-7116 Birmingham, Alabama 35203
(205) 251-1000
--------------------
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 2,057,199 shares N/A $57,087,272 $16,840.75
Value $.01 Per Share
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</TABLE>
(1) The amount being registered represents 2,057,199 authorized and unissued
shares reserved for issuance upon the exercise of options issued under the
Plans and outstanding as of July 24, 1998.
(2) In accordance with Rule 457(h) promulgated under the Securities Act of
1933, the maximum aggregate offering price and the registration fee are
based on a price of $27.75 per share, which represents the average of the
high and low prices for the shares of HEALTHSOUTH Common Stock as reported
on the New York Stock Exchange on July 23, 1998.
================================================================================
<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 ("HEALTH SOUTH" 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, 1997.
2. HEALTHSOUTH's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
3. HEALTHSOUTH's Current Report on Form 8-K filed January 15, 1998.
4. HEALTHSOUTH's Current Report on Form 8-K filed April 3, 1998.
5. HEALTHSOUTH's Current Report on Form 8-K filed May 28, 1998.
6. The description of HEALTHSOUTH's capital stock contained in
HEALTHSOUTH'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.
II-1
<PAGE>
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 NINTH of the HEALTHSOUTH Restated Certificate of Incorporation
filed in the Office of the Secretary of the State of Delaware on May 21, 1998
(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 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 NINTH 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.
II-2
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibits numbered in accordance with Item 601 of Regulation S-K.
Exhibit No. Exhibit
----------- -------
4.1 National Surgery Centers, Inc. Amended and Restated 1992 Stock
Option Plan.
4.2 National Surgery Centers, Inc. 1997 Non-Employee Directors
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 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.
(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
II-3
<PAGE>
15(d) of the Securities Exchange Act of 1934 (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 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 July 24, 1998.
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
--------- -------- ----
<S> <C> <C>
/s/ RICHARD M. SCRUSHY Chairman of the Board July 24, 1998
- -------------------------------------- and Chief Executive Officer
(Richard M. Scrushy) and Director
(Principal Executive Officer)
/s/ MICHAEL D. MARTIN Executive Vice President, July 24, 1998
- -------------------------------------- Treasurer, Chief Financial Officer
(Michael D. Martin) and Director
(Principal Financial Officer)
/s/ WILLIAM T. OWENS Group Senior Vice President-Finance July 24, 1998
- -------------------------------------- and Controller
(William T. Owens) (Principal Accounting Officer)
/s/ JOHN S. CHAMBERLIN Director July 24, 1998
- --------------------------------------
(John S. Chamberlin)
/s/ C. SAGE GIVENS Director July 24, 1998
- --------------------------------------
(C. Sage Givens)
/s/ CHARLES W. NEWHALL III Director July 24, 1998
- --------------------------------------
(Charles W. Newhall III)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ GEORGE H. STRONG Director July 24, 1998
- --------------------------------------
(George H. Strong)
/s/ PHILLIP C. WATKINS, M.D. Director July 24, 1998
- --------------------------------------
(Phillip C. Watkins, M.D.)
/s/ JAMES P. BENNETT Director July 24, 1998
- --------------------------------------
(James P. Bennett)
/s/ ANTHONY J. TANNER Director July 24, 1998
- --------------------------------------
(Anthony J. Tanner)
/s/ P. DARYL BROWN Director July 24, 1998
- --------------------------------------
(P. Daryl Brown)
/s/ JOEL C. GORDON Director July 24, 1998
- --------------------------------------
(Joel C. Gordon)
/s/ EDWIN M. CRAWFORD Director July 24, 1998
- --------------------------------------
(Edwin M. Crawford)
</TABLE>
II-6
NATIONAL SURGERY CENTERS, INC.
AMENDED AND RESTATED
1992 STOCK OPTION PLAN
This Stock Option Plan, originally adopted and authorized by the Board
of Directors of National Surgery Centers, Inc. (the "Company") on February 13,
1992, is amended and restated as of April 18, 1996, in its entirety as set forth
below:
1. STATEMENT OF PURPOSE. The purpose of this Amended and Restated
Stock Option Plan (the "Plan") is to benefit National Surgery Centers, Inc. (the
"Company") and its subsidiaries through the maintenance and development of the
management by offering certain present and future executives and key personnel a
favorable opportunity to become holders of stock in the Company over a period of
years, thereby giving them a permanent stake in the growth and prosperity of the
Company and encouraging the continuance of their services with the Company or
its subsidiaries.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") of the Board of Directors composed of no fewer than two directors
designated by the Board of Directors, each of whom is (i) a "disinterested
person" (as such term is defined under Rule 16b-3 of the Securities Exchange Act
of 1934 (the "Exchange Act")), and (ii) an "outside director" (as such term is
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). A majority of the Committee shall constitute a quorum, and the
acts of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all of the members, shall be the acts of
the Committee.
Subject to the provisions of the Plan, the Committee shall have full
and final authority, in its absolute discretion, (a) to determine the persons to
be granted options under the Plan, (b) to determine the number of shares subject
to each option, (c) to determine the time or times at which options will be
granted, (d) to determine the option price of the shares subject to each option,
which price shall not be less than the minimum specified in Section 4 of the
Plan, (e) to determine the time or times when each option becomes exercisable
and the duration of the exercise period, (f) to determine whether or not an
option is intended to be treated as an incentive stock option as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
prescribe the form or forms of the agreements evidencing any options granted
under the Plan (which forms shall be consistent with the Plan), (h) to adopt,
amend and rescind such rules and regulations as, in the Committee's opinion, may
be advisable in the administration of the Plan, and (i) to construe and
interpret the Plan, the rules and regulations and the agreements evidencing
options granted under the Plan and to make all other determinations deemed
necessary or advisable for the administration of the Plan. Any decision made or
action taken in good faith by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its rules
and regulations shall, to the extent permitted by law, be conclusive and binding
upon all optionees
1
<PAGE>
under the Plan and upon any person claiming, under or through such an optionee,
and no director of the Company shall be liable for any such decision made or
action taken by the Committee.
3. ELIGIBILITY. Options shall be granted only to key employees of the
Company and its subsidiaries (other than members of the Committee) selected
initially and from time to time thereafter by the Committee on the basis of the
special importance of their services in the management, development and
operations of the Company or its subsidiaries.
4. GRANTING OF OPTIONS. The Committee may grant options under which a
total of not in excess of 1,000,000 shares of the common stock of the Company
may be purchased from the Company, subject to adjustment as provided in
Paragraph 11. The Committee has the authority to designate whether or not an
option is intended to be treated as an incentive stock option as defined in the
Code.
Unless otherwise expressly provided by the Committee in any specific
instance, the action of the Committee in selecting an individual to receive a
grant, determining the number of shares subject to the option and setting the
option price constitutes the granting of the option. The date of the Committee's
action will be considered the date the option is granted. However, under no
circumstances shall the Committee grant an option or options for more than
100,000 shares to any individual in any given calendar year, subject to
adjustment as provided in Paragraph 11.
No options shall be granted under the Plan subsequent to December 31,
2004. In the event that an option expires or is terminated or canceled
unexercised as to any shares, such released shares may again be optioned
(including a grant in substitution for a canceled option). Shares subject to
options may be made available from unissued or reacquired shares of common
stock.
The aggregate fair market value (determined at the time of grant of the
option) of the shares of common stock with respect to which incentive stock
options are exercisable for the first time during any calendar year by an
employee granted incentive stock options under this Plan or any other plan of
the Company or its parent or any subsidiary shall not exceed $100,000; provided,
however, that this limit shall not apply to those options which are not intended
to be treated as incentive stock options as defined in the Code.
Nothing contained in the Plan or in any option granted pursuant thereto
shall confer upon any optionee any right to be continued in the employment of
the Company or any subsidiary of the Company, or interfere in any way with the
right of the Company or its subsidiaries to terminate his employment at any
time.
5. OPTION PRICE. The option price shall be determined by the
Committee and, subject to the provisions of Paragraph 11 hereof, shall be not
less than the fair market value, at the time the option is granted, of the stock
subject to the option, provided however, that in the case of an option granted
to an employee who, at the time the option is granted, owns more than 10% of the
total combined voting power of all classes of stock of the Company or of the
parent or any
2
<PAGE>
subsidiary of the Company (a "10% Holder"), the option price shall not be less
than 110% of the fair market value, at the time the option is granted, of the
stock subject to the option. For purposes of this Plan, the term "fair market
value" shall mean the average of the closing prices per share of the common
stock of the Company as quoted on the New York Stock Exchange (as reported in
The Wall Street Journal, Midwest Edition) on each of the five trading days
preceding the day the option is granted or, in the event that the common stock
is not listed or quoted on the New York Stock Exchange or any other national
stock exchange and is not so quoted, an amount which, in the Committee's
reasonable determination, represents the fair market value of the Common Stock
on that date.
6. DURATION OF OPTIONS, INCREMENTS, AND EXTENSIONS. Subject to the
provisions of Paragraph 9 hereof, each option shall be for such term of not more
than ten years, as shall be determined by the Committee at the date of the
grant, provided, however, that no option granted to an employee who, at the time
the option is granted, is a 10% Holder, shall have a term of more than five
years. Each option shall become exercisable with respect to one-quarter of the
total number of shares subject to the option twelve months after the date of its
grant and with respect to an additional one-quarter at the end of each
twelve-month period thereafter during the succeeding three years (each twelve
month period sometimes referred to herein as a "Vesting Year" and each share
increment sometimes referred to herein as an "Annual Vesting Amount"). Provided
however, that unapproved leaves of absence which continue for more than twelve
months shall be deemed to delay the exercisability of the options for a period
equal in duration to the length of the unapproved absence. In the event that the
number of shares subject to the option is not a whole number, any fractional
shares will vest in the last Vesting Year, provided that the exercise date shall
be deemed to be the date such notice is actually received by the Secretary.
Notwithstanding the foregoing, the Committee may in its discretion (i)
specifically provide at the date of the grant for another time or times of
exercise; (ii) accelerate the exercisability of any option subject to such terms
and conditions as the Committee deems necessary and appropriate to effectuate
the purpose of the Plan including, without limitation, a requirement that the
optionee grant to the Company an option to repurchase all or a portion of the
number of shares acquired upon exercise of the accelerated option for their fair
market value on the date of grant; or (iii) at any time prior to the expiration
or termination of any option previously granted, extend the term of any option
(including such options held by officers or directors) for such additional
period as the Committee, in its discretion shall determine. In no event,
however, shall the aggregate option period with respect to any option, including
the original term of the option and any extensions thereof, exceed ten years (or
five years, in the case of an option granted to any employee who, at the time
the option is granted, is a 10% Holder). Subject to the foregoing, all or any
part of the shares to which the right to purchase has accrued may be purchased
at the time of such accrual or at any time or times thereafter during the option
period; provided, however, that the minimum number of shares purchased shall be
no less than the greater of either (i) 100 shares or (ii) 25% of the Annual
Vesting Amount, unless the total number of shares purchasable shall be less than
100.
7. CHANGE IN CONTROL. Any option previously granted under the Plan to
an optionee who is an employee of the Company or any of its subsidiaries on the
date of a "Change in Con-
3
<PAGE>
trol" shall be immediately exercisable in full on such date, without regard to
any times of exercise established under Paragraph 6 hereof. The term "Change in
Control" shall mean the occurrence, at any time during the specified term of an
option granted under the Plan, of any of the following events:
(a) The Company is merged or consolidated or reorganized into or with
or shares of stock of the Company are exchanged for stock or securities of,
another corporation or other legal person and as a result of such, merger,
consolidation, reorganization or exchange less than 51% of the outstanding
voting securities or other capital interests of the surviving, resulting or
acquiring corporation or other legal person are owned in the aggregate by the
stockholders of the Company immediately prior to such merger, consolidation,
reorganization or exchange;
(b) The Company sells all or substantially all of its business and/or
assets to any other corporation or other legal person, less than 51% of the
outstanding voting securities or other capital interests of which are owned in
the aggregate by the stockholders of the Company, directly or indirectly,
immediately prior to or after such sale;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any
person or group (as the terms "person" and "group" are used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act and the rules and regulations
promulgated thereunder) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more of the issued and outstanding
shares of voting securities of the Company; or
(d) During any period of two consecutive years, individuals who at
the beginning of any such period constitute the directors of the Company cease
for any reason to constitute at least a majority thereof unless the election, or
nomination for election by the Company's stockholders of each new director of
the Company was approved by a vote of at least two-thirds of such directors of
the Company then still in office who were directors of the Company at the
beginning of any such period.
Notwithstanding any other provisions in the Plan, during the period of
30 days after any Change in Control, each optionee (or other person entitled to
exercise an option granted under the Plan) (in either case, the "Optionholder")
shall have the right to require the Company to purchase from him any option
granted under the Plan at a purchase price equal to (1) the excess of the fair
market value per share (as defined in Section 5) over the option price (2)
multiplied by the number of option shares specified by the Optionholder for
purchase in a written notice to the Company, attention of the Secretary. The
amount payable to each Optionholder by the Company shall be in cash or by
certified check and shall be reduced by any taxes required to be withheld.
4
<PAGE>
8. EXERCISE OF OPTION. An option may be exercised by giving written
notice to the Company, attention of the Secretary specifying the number of
shares to be purchased, accompanied by the full purchase price for the shares to
be purchased in cash or by check, provided, however, that in lieu of cash an
optionee may, with the approval of the Committee, exercise his or her option by
(i) tendering to the Company shares of Common Stock owned by him or her and with
the certificates therefor registered in his or her name, having a fair market
value equal to the cash exercise price of the shares being purchased; or (ii)
delivery of an irrevocable written notice instructing the Company to deliver the
shares of Common Stock being purchased to a broker selected by the Company,
subject to the broker's written guarantee to deliver cash to the Company, in
each case equal to the full consideration of the exercise price for the shares
being purchased. For these purposes, the per share value of the Company's common
stock shall be the fair market value at the close of business on the date
preceding the date of exercise (or, if that date is not a trading day, on the
trading day next preceding the date of exercise of the option).
At the time of any exercise of any option, the Committee may, if it
shall determine it necessary or desirable for any reason, require the optionee
(or his heirs, legatees, or legal representative, as the case may be) as a
condition upon the exercise thereof, to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution or resale. In the event such representation is required to
be delivered, an appropriate legend may be placed upon each certificate
delivered to the optionee upon his exercise of part of all of the option and a
stop transfer order may be placed with the transfer agent. Each option shall
also be subject to the requirements that, if at any time the Company determines,
in its discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state or Federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the issue or purchase of
shares thereunder, the 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 Company.
If the Committee shall determine it necessary or desirable for any
reason, an option shall provide that it is contemplated that the shares acquired
through the exercise of the option will not be registered under applicable
federal and state securities laws and that such shares cannot be resold unless
they are registered under such laws or unless an exemption from registration is
available, and the certificate for any such shares issued upon the exercise of
the option shall bear a legend making appropriate reference to such provisions
and a stop transfer order may be placed with the transfer agent.
At the time of the exercise of any option the Company may require, as a
condition of the exercise of such option, the optionee to pay the Company an
amount equal to the amount of the tax the Company may be required to withhold as
a result of the exercise of such option by the optionee.
5
<PAGE>
At any time when an optionee is required to pay to the optionee's
employer an amount required to be withheld under applicable income tax laws in
connection with the exercise of an option, the optionee may satisfy this
obligation in whole or in part by making, an election (the "Election") to (i)
require the recipient of the shares of Common Stock to remit to the Company an
amount in cash sufficient to satisfy all withholding taxes, (ii) have the
Company withhold shares of common stock of the Company having a fair market
value equal to the amount required to be withheld or (iii) deduct from the cash
payment pursuant to a broker-assisted option exercise (net to optionee in cash
or shares of Common Stock) an amount sufficient to satisfy any withholding tax
requirements. The value of the shares to be withheld shall be based on the fair
market value of the common stock of the company on the date that the amount of
tax to be withheld shall be determined (the "Tax Date"). Each Election must be
made on or prior to the Tax Date and shall be irrevocable. The Committee may
disapprove of any Election or may suspend or terminate the right to make
Elections. If an optionee is a person described in Section 16(a) of the Exchange
Act, then an Election is subject to the following additional restrictions: (a)
no election shall be effective for a Tax Date which occurs within six months of
the grant of the option; and (b) the Election must be made either (i) at least
six months prior to the Tax Date or (ii) during a period beginning on the third
business day following the date of release for publication of the Company's
quarterly or annual summary consolidated statements of income and ending on the
twelfth business day following such date.
9. TERMINATION OF EMPLOYMENT--EXERCISE THEREAFTER. In the event the
employment of an optionee with the Company or any of its subsidiaries is
terminated for any reason other than death, permanent disability or a Change in
Control such optionee's option shall expire and all rights to purchase shares
pursuant thereto shall terminate three months after such termination. Temporary
absence from employment because of illness, vacation, approved leaves of
absence, and transfers of employment among the Company and its subsidiaries,
shall not be considered to terminate employment or to interrupt continuous
employment.
In the event of termination of employment because of disability (as
that term is defined in Section 22(e)(3) of the Code, as now in effect or as
shall be subsequently amended) or death, the option may be exercised in full,
without regard to any times of exercise established under Paragraph 6 hereof, by
his heirs, legatees, or legal representative, as the case may be, during its
specified term prior to one year after the date of termination.
10. NON-TRANSFERABILITY OF OPTIONS. No option shall be transferable
by the optionee otherwise than by will or the laws of descent and distribution
and each option shall be exercisable during an optionee's lifetime only by him.
11. ADJUSTMENT. The number of shares subject to the Plan and to
options granted under the Plan shall be adjusted as follows: (a) in the event
that the Company's outstanding common stock is changed by any stock dividend,
stock split or combination of shares, the number of shares subject to the Plan
and to options granted thereunder shall be proportionately adjusted; (b) in the
event of any merger, consolidation or reorganization of the Company with any
other
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<PAGE>
corporation or corporations, there shall be substituted, on an equitable basis
as determined by the Committee, for each share of common stock then subject to
the Plan, whether or not at the time subject to outstanding options, the number
and kind of shares of stock or other securities to which the holders of common
stock of the Company will be entitled pursuant to the transaction; (c) in the
event of any other relevant change in the capitalization of the Company, the
Committee shall provide for an equitable adjustment in the number of shares of
common stock then subject to the Plan, whether or not then subject to
outstanding options; and (d) in the event of any such adjustment the purchase
price per share shall be proportionately adjusted.
12. AMENDMENT OF PLAN. The Committee or the Board of Directors of the
Company may amend or discontinue the Plan at any time. However, no such
amendment or discontinuance shall (a) change or impair any option previously
granted without the consent of the optionee, (b) increase the maximum number of
shares which may be purchased by all employees, (c) change the minimum purchase
price, (d) change the limitations on the option period or increase the time
limitations on the grant of options, or (e) permit the granting of options to
members of the Committee.
13. EFFECTIVE DATE. On February 13, 1992, the Plan was initially
adopted and authorized by the Board of Directors of the Company and subsequently
approved by the shareholders of the Company on August 15, 1995. On April 18,
1996, this Amended and Restated Stock Option Plan was adopted and authorized by
the Board of Directors and, subject to stockholder approval, shall be deemed to
have become effective on April 18, 1996. Options granted under the Plan prior to
the August 1995 approval by stockholders of the Company are valid and the date
of grant shall be determined without reference to the date of approval.
NATIONAL SURGERY CENTERS, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. STATEMENT OF PURPOSE. The purpose of this 1997 Non-Employee
Directors' Stock Option Plan (the "Plan") is to benefit National Surgery
Centers, Inc. (the "Company") through offering its directors who are not
employees or officers of the Company or its subsidiaries, if any, a favorable
opportunity to become holders of the common stock of the Company ("Common
Stock"), thereby giving them a long term stake in the growth and prosperity of
the Company, in order to enable them to represent the viewpoint of other
stockholders of the Company more effectively and to encourage them to continue
serving as directors of the Company.
2. ELIGIBILITY. Options shall be granted under this Plan only to
members of the Board of Directors who are not employees or officers of the
Company or its subsidiaries, if any, ("Eligible Directors").
3. GRANT AND VESTING OF OPTIONS. An option shall automatically be
granted to each Eligible Director on the date on which this Plan is approved,
based upon the year in which his or her term expires, as follows:
<TABLE>
<CAPTION>
YEAR IN WHICH TERM EXPIRES NUMBER AND VESTING OF SHARES
<S> <C> <C>
1997 5,000 shares, all fully vested
1998 7,500 shares, of which 5,000 are fully
vested and 2,500 vest on the date of the
1997 annual meeting of shareholders
1999 10,000 shares, of which 5,000 are fully
vested, 2,500 vest on the date of the
1997 annual meeting of shareholders, and
2,500 vest on the date of the 1998
annual meeting of shareholders
</TABLE>
Thereafter, each Eligible Director shall automatically receive a grant
of option shares upon his or her election or re-election as an Eligible
Director, commencing with the Eligible Directors who are elected or reelected at
the annual meeting of shareholders held in 1997. Each such option shall be for
7,500 shares if the Eligible Director is elected to a full three year term, of
which 2,500 shall be fully vested, 2,500 shall vest on the first anniversary of
the grant and 2,500 shall vest on the second anniversary. If the Eligible
Director is elected to fill a term of less than three years, the number of
shares shall be equal to 2,500 for each full year of his or her term.
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<PAGE>
In addition, the entire Board of Directors of the Company may grant
additional options under which a total of not in excess of 25,000 shares of the
common stock of the Company may be purchased from the Company, subject to
adjustment as provided in Paragraph 9. The aggregate number of shares which
shall be available for such options under this Plan shall be 250,000 shares.
Such number of shares, and the number of shares subject to options outstanding
under the Plan, shall be subject in all cases to adjustment as provided in
Paragraph 9. No option shall be granted under the Plan subsequent to February
11, 2007. Options granted under the Plan are intended not to be treated as
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
Notwithstanding, any of the foregoing to the contrary, in the event an
option expires unexercised as to any shares, such shares may again be optioned.
Shares subject to options may be made available from unissued or reacquired
shares of Common Stock.
Nothing contained in the Plan or in any option granted pursuant thereto
shall in itself confer upon any optionee any right to continue serving as a
director of the Company or interfere in any way with any night of the Board of
Directors or stockholders of the Company pursuant to the certificate of
incorporation or by-laws of the Company or applicable law to remove such
director.
4. OPTION PRICE. Subject to adjustment under Paragraph 9, the option
price shall be the fair market value at the time the option is granted of the
shares of Common Stock subject to the option.
5. DURATION OF OPTIONS, INCREMENTS AND EXTENSIONS. Subject to the
provisions of Paragraph 7, each option shall be for a term of ten years and
shall become exercisable at the end of six months after the option is granted
(or, if later, the date on which such option vests).
6. EXERCISE OF OPTION. An option may be exercised by giving written
notice to the Company, attention of the Secretary, specifying the number of
shares to be purchased, accom panied by the full purchase price for the shares
to be purchased in cash or by check, provided, however, that in lieu of cash an
optionee may, with the approval of the Board of Directors, exer cise his or her
option by (i) tendering to the Company shares of Common Stock owned by him or
her and with the certificates therefor registered in his or her name, having a
fair market value equal to the cash exercise price of the shares being
purchased; or (ii) instructing the Company to withhold from the shares of Common
Stock otherwise issuable upon the exercise of the option that number of shares
having a fair market value equal to the cash exercise price of the shares being
purchased; provided, however, that an election pursuant to clause (ii) must be
made by the optionee during the period beginning on the third business day
following the date of release for publication of the Company's quarterly or
annual financial summary of its results of operations and ending on the twelfth
business day following such date. For these purposes, the per share value of the
Company's common stock shall be the fair market value at the close of business
on
2
<PAGE>
the date preceding the date of exercise (or, if that date is not a trading, day,
on the trading day next preceding the date of exercise of the option).
At the time of any exercise of any option, the Company may, if it shall
determine it necessary or desirable for any reason, require the optionee (or his
heirs, legatees, or legal repre sentative, as the case may be) as a condition
upon the exercise thereof, to deliver to the Company a written representation of
present intention to purchase the shares for investment and not for distribution
or resale. In the event such representation is required to be delivered, an
appropriate legend may be placed upon each certificate delivered to the optionee
upon his exercise of part or all of the option and a stop transfer order may be
placed with the transfer agent. Each option shall also be subject to the
requirements that, if at any time the Company determines, in its discretion,
that the listing, registration or qualification of the shares subject to the
option upon any securities exchange or under any state or Federal law, or the
consent or approval of any governmental regu latory body is necessary or
desirable as a condition of, or in connection with, the issue or purchase of
shares thereunder, the option may not be exercised in whole or in part unless
such listing, regis tration, qualification, consent or approval shall have been
effected or obtained free of any condi tions not acceptable to the Company.
If the Company shall determine it necessary or desirable for any
reason, an option shall provide that it is contemplated that the shares acquired
through the exercise of the option will not be registered under applicable
federal and state securities laws and that such shares cannot be resold unless
they are registered under such laws or unless an exemption from registration is
available, and the certificate for any such shares issued upon the exercise of
the option shall bear a legend making appropriate reference to such provisions
and a stop transfer order may be placed with the transfer agent.
7. TERMINATION--EXERCISE THEREAFTER. In the event an optionee ceases to
be a direc tor of the Company for any reason other than death, permanent
disability or resignation, such optionee's option shall expire and all rights to
purchase shares pursuant thereto shall terminate, except that any then
exercisable option shall be exercisable for a period of 15 days after the date
of such termination (or until the scheduled termination of the option, if
earlier).
In the event of death or permanent disability (as that term is defined
in Section 22(c)(3) of the Code, as now in effect or as it shall be subsequently
amended), an exercisable option may be exercised in full by the optionee or, if
he is not living, by his or her heirs, legatees, or legal repre sentative, as
the case may be, during its specified term prior to one year after the date of
death or permanent disability. In the event of resignation, an exercisable
option may be exercised, to the extent vested at the time of resignation, by the
optionee (or, if he or she dies within three months after such termination, by
his or her heirs, legatees, or legal representative, as the case may be), at any
time during its specified term prior to three months after the date of such
resignation.
8. NON-TRANSFERABILITY OF OPTIONS. An Eligible Director may transfer
options granted under this Plan to his spouse, his descendants or their spouses
(including descendants by
3
<PAGE>
adoption), or a trust for any of the foregoing. Any such transfer shall be made
by written assignment, shall not be effective until written notice thereof is
actually received by the Company, and shall be subject to such conditions as the
Board of Directors may require. If any option is so transferred, the transferee
shall have the night to exercise the option and to purchase the Common Stock,
but all other provisions of this Plan shall be applied as if the optionee still
owned the option. Except as otherwise specifically provided in this Section 8,
an option granted under the Plan shall be exercisable during the life of the
optionee only by the optionee, and shall not be transferable by the optionee (or
any transferee) other than by will or the laws of descend and distribution.
9. ADJUSTMENT. The number of shares subject to the Plan and to options
granted under the Plan shall be adjusted as follows: (a) in the event that the
Company's outstanding com mon stock is changed by any stock dividend, stock
split or combination of shares, the number of shares subject to the Plan and to
options granted thereunder shall be proportionately adjusted; (b) in the event
of any mercer, consolidation or reorganization of the Company with any other
corpo ration or corporations, there shall be substituted, on an equitable basis
as determined by the Board of Directors, for each share of common stock then
subject to the Plan, whether or not at the time subject to outstanding options,
the number and kind of shares of stock or other securities to which the holders
of common stock of the Company will be entitled pursuant to the transaction; (c)
in the event of any other relevant change in the capitalization of the Company,
the Board of Directors shall provide for an equitable adjustment in the number
of shares of common stock then subject to the Plan, whether or not then subject
to outstanding options; and (d) in the event of any such adjustment the purchase
price per share shall be proportionately adjusted.
10. CHANGE IN CONTROL. Any option previously granted under the Plan to
an optionee who is an Eligible Director on the date of a "Change in Control"
shall be immediately exercisable in full on such date, without regard to any
times of exercise established under Paragraph 6 hereof. The term "Change in
Control" shall mean the occurrence, at any time during the specified term of an
option granted under the Plan, of any of the following events:
(a) The Company is merged or consolidated or reorganized into or with
or shares of stock of the Company are exchanged for stock or securities of,
another corporation or other legal person and as a result of such, merger,
consolidation, reorganization or exchange less than 51% of the outstanding
voting securities or other capital interests of the surviving, resulting or
acquir ing corporation or other legal person are owned in the aggregate by the
stockholders of the Com pany immediately prior to such merger, consolidation,
reorganization or exchange;
(b) The Company sells all or substantially all of its business and/or
assets to any other corporation or other legal person, less than 51% of the
outstanding voting securities or other capital interests of which are owned in
the aggregate by the stockholders of the Company, directly or indirectly,
immediately prior to or after such sale;
4
<PAGE>
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any
person or group (as the terms "person" and "group" are used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act and the rules and regulations
promulgated thereunder) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more of the issued and outstanding
shares of voting, securities of the Company; or
(d) During any period of two consecutive years, individuals who at the
beginning of any such period constitute the directors of the Company cease for
any reason to constitute at least a majority thereof unless the election, or
nomination for election by the Company's stockholders of each new director of
the Company was approved by a vote of at least two-thirds of such direc tors of
the Company then still in office who were directors of the Company at the
beginning of any such period.
Notwithstanding any other provisions in the Plan, during the period of
30 days after any Change in Control, each optionee (or other person entitled to
exercise an option granted under the Plan) (in either case, the "Optionholder")
shall have the right to require the Company to purchase from him any option
granted under the Plan at a purchase price equal to (1) the excess of the fair
market value per share (as defined in Section 5) over the option price (2)
multiplied by the number of option shares specified by the Optionholder for
purchase in a written notice to the Company, attention of the Secretary. The
amount payable to each Optionholder by the Company shall be in cash or by
certified check and shall be reduced by any taxes required to be withheld.
11. AMENDMENT OF PLAN. The Board of Directors may amend or discontinue
the Plan at any time; provided, however, that no amendment or discontinuance
shall change or impair any options previously granted without the consent of the
optionee.
12. EFFECTIVE DATE. The Board of Directors adopted and approved the
Plan on February 11, 1997.
13. MISCELLANEOUS.
(a) No shares of Common Stock shall be issued hereunder with respect to
any option unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable federal, state, local and foreign legal,
securities exchange and other applicable requirements.
(b) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be
5
<PAGE>
in compliance with Rule 16b-3, such provision shall be deemed null and void to
the extent required to permit the Plan to comply with Rule 16b-3.
(c) The Company shall have the right to deduct from any payment made
under the Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to issue Com mon Stock, other
securities or property, or other forms of payment, or any combination thereof,
upon exercise, settlement or payment of any option under the Plan, that the
participant (or any beneficiary or person entitled to act) pay to the Company,
upon its demand, such amount as may be required by the Company for the purpose
of satisfying any liability to withhold federal, state, local or foreign income
or other taxes. If the amount requested is not paid, the Company may refuse to
issue Common Stock, other securities or property, or other forms of payment, or
any combination thereof. Notwithstanding anything in the Plan to the contrary,
the Board of Directors may, in its discretion, permit an eligible participant
(or any beneficiary or person entitled to act) to elect to pay a portion or all
of the amount requested by the Company for such taxes with respect to such
option, at such time and in such manner as the Board of Directors shall deem to
be appro priate (including, but not limited to, by authorizing the Company to
withhold, or agreeing to surrender to the Company on or about the date such tax
liability is determinable, Common Stock, other securities or property, or other
forms of payment, or any combination thereof, owned by such person or a portion
of such forms of payment that would otherwise be distributed, or have been
distributed, as the case may be, pursuant to such option to such person, having
a fair market value equal to the amount of such taxes).
(d) The expense of the Plan shall be borne by the Company.
6
[HASKELL SLAUGHTER & YOUNG, L.L.C. LETTERHEAD]
EXHIBIT 5
July 24, 1998
HEALTHSOUTH Corporation
One Healthsouth Parkway
Birmingham, Alabama 35243
Re: Registration Statement on Form S-8 --
National Surgery Centers, Inc. Amended and Restated 1992 Stock Option
Plan; National Surgery Centers, Inc. 1997 Non-Employee Directors Stock
Option Plan.
Gentlemen:
We have served as counsel for HEALTHSOUTH Corporation, a corporation
organized and existing under the laws of the State of Delaware (the "Company"),
in connection with the registration under the Securities Act of 1933, as
amended, of an aggregate of 2,057,199 shares of the Company's authorized common
stock, par value $.01 per share (the "Shares") to be issued to participants in
the above referenced stock option plans (the "Plans") pursuant to the Company's
Registration Statement on Form S-8 (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
and the authorization and adoption of the Plans as we have deemed necessary and
appropriate.
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized.
<PAGE>
HEALTHSOUTH Corporation
July 24, 1998
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 do hereby consent to the filing of this Opinion as an Exhibit to the
Registration Statement.
Very truly yours,
HASKELL SLAUGHTER & YOUNG, L.L.C.
/s/ Donald T. Locke
--------------------------------
Donald T. Locke
Consent of Ernst & Young LLP
Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the National Surgery Centers, Inc. Amended and Restated 1992
Stock Option Plan and the National Surgery Centers, Inc. 1997 Non-Employee
Directors Stock Option Plan of our report dated February 25, 1998, except for
Note 14, as to which the date is March 20, 1998, 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, 1997,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Birmingham, Alabama
July 22, 1998
