EXHIBIT 10.1
[EXECUTION VERSION]
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made and entered into
as
of March 1, 2005 (the "Effective Date"), is by and between
HealthSouth
Corporation, a Delaware corporation ("Corporation"), and Joseph t.
clark, an
individual resident of Tennessee (the "Executive").
RECITALS
The Corporation desires to employ the Executive as its President
of
the Surgery Center Division effective as of the Effective Date, and
the
Executive desires to accept such employment effective as of the
Effective Date,
on the terms and conditions set forth herein.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
Section 1. Employment. The Corporation hereby employs the
Executive,
and the Executive hereby accepts employment, all on the terms and
conditions
herein.
Section 2. Services; Extent of Services.
(a) Duties and Responsibilities. The Executive is hereby employed
as
President of the Surgery Center Division, the authority, duties
and
responsibilities of which will be as follows: the Executive will
(i) manage,
review and supervise the Surgery Center Division of the
Corporation; (ii)
report to Michael D. Snow, Chief Operating Officer of the
Corporation; (iii)
have the powers and duties determined or directed by the Board of
Directors,
the Chief Executive Officer, and the Chief Operating Officer; and
(iv) comply
with the various policies, procedures and codes of conduct of the
Corporation
in effect from time to time which apply to other employees and
executive
officers.
(b) Full Business Attention. The Executive will devote his full
business attention and energies to the business of the Corporation
during the
Term (as defined below) and will physically report and will render
all the
Executive's services contemplated hereunder to the Corporation at
its offices
in Birmingham, Alabama or at any other location in which the
Corporation is
headquartered; provided, however, that the foregoing requirement to
render
services in Birmingham shall not apply when the Executive is
traveling on
company business.
(c) Other Activities. Notwithstanding anything to the contrary
contained in Section 2(b), the Executive will be permitted to
engage in the
following activities, provided that such activities do not
materially interfere
or conflict with the Executive's duties and responsibilities to
the
Corporation:
(i) the Executive may serve on the governing boards of, or
otherwise participate in, a reasonable number of trade
associations
and charitable organizations whose purposes are not inconsistent
with
the activities and the image of the Corporation;
(ii) the Executive may engage in a reasonable amount of
charitable activities and community affairs; and
(iii) subject to the prior approval of the Nominating /
Corporate Governance Committee of the Board of Directors of the
Corporation, the Executive may serve on the board of directors of
up
to one (1) business corporations or other for-profit entities,
provided that they do not compete, directly or indirectly, with
the
Corporation.
Section 3. Compensation.
(a) Base Salary. In consideration of the services provided
hereunder,
the Corporation shall pay the Executive during the Term a salary of
Three
Hundred Twenty-Five Thousand and No/100 Dollars ($325,000.00) per
year (the
"Base Salary"). The Corporation shall pay the Base Salary in
arrears in equal
installments in accordance with the Corporation's payroll policy in
effect from
time to time for other similarly-situated officers of the
Corporation.
(b) Bonus. During the Term, the Executive will be entitled to
receive
cash bonus payments in an amount per year targeted at 60% of the
amount of the
Base Salary in accordance with the senior management bonus plan,
which is
currently being developed for the year ended December 31, 2005.
(c) Benefits. During the Term, the Executive will be entitled to
the
following benefits:
(i) Employee Benefit Plans. The Executive will be entitled to
participate in all employee benefit plans of the Corporation
(including incentive or equity compensation plans) on such terms
as
are offered for the general benefit of other similarly-situated
officers of the Corporation, subject to the provisions of such
plans
as may be in effect from time to time.
(ii) Vacation; Sick Leave. The Executive will be entitled to
vacation and sick leave on such terms as are offered for the
benefit
of other similarly-situated officers of the Corporation.
(d) Expense Reimbursement. The Corporation shall reimburse the
Executive, in accordance with the Corporation's policies, for all
reasonable
business expenses incurred by the Executive in connection with the
performance
of the Executive's obligations hereunder.
(e) Taxes. All payments made by the Corporation under this
Agreement
will be subject to withholding of such amounts as is required
pursuant to any
applicable law or regulation.
(f) Equity Incentives. The Corporation agrees to provide the
Executive with equity incentives commensurate with the
incentives
provided to similarly-situated officers of the Corporation, upon
terms
no less favorable than those applicable to such
similarly-situated
officers. The Corporation agrees that under the Corporation's
existing
equity incentive program the Executive is targeted to receive
an
annual grant of 30,000 shares of restricted stock and an annual
option
to purchase 55,000 shares of the Corporation's common stock, par
value
$0.01.
(g) Relocation Expenses. The Corporation shall reimburse the
Executive
for the following expenses (to the extent they are reasonable and
appropriately
documented) incurred by the Executive in connection with such
relocation:
(i) two (2) house hunting trips for the purpose of searching
for a new primary residence;
(ii) temporary living and weekly commuting expenses for a
period of six (6) months from the Effective Date ;
(iii) transportation of household goods and vehicles to a new
primary residence;
(iv) storage of household goods for a period of six (6)
months from the Effective Date;
(v) closing costs, including legal fees, incurred in
connection with the purchase of the primary residence in
Birmingham,
Alabama or surrounding communities; and
(vi) closing costs, including real estate agency commissions
relating to the sale of the Executive's primary residence in
Tennessee.
Section 4. Term. The term of this Agreement will commence on
the
Effective Date and will continue for a term of two (2) year
following the
Effective Date (the "Term"), unless earlier terminated pursuant to
the
provisions of Section 5 below.
Section 5. Termination of Employment.
(a) Termination by Corporation for Cause. The Executive's
employment
by the Corporation will terminate immediately upon written notice
to the
Executive if the Corporation elects to discharge the Executive for
Cause (as
hereinafter defined). For purposes hereof, "Cause" means:
(i) the Executive's act of fraud, misappropriation, or
embezzlement with respect to the Corporation;
(ii) the Executive's indictment for, conviction of, or plea
of guilt or no contest to, any felony;
(iii) the suspension or debarment of the Executive or of the
Corporation or any of its affiliated companies or entities as a
direct
result of any act or omission of the Executive in connection with
his
employment with the Corporation from participation in any Federal
or
state health care program;
(iv) the Executive's admission of liability of, or finding of
liability for, the violation of any "Securities Laws" (as
hereinafter
defined). As used herein, the term "Securities Laws" means any
Federal
or state law, rule or regulation governing the issuance or exchange
of
securities, including without limitation the Securities Act of
1933,
the Securities Exchange Act of 1934 and the rules and
regulations
promulgated thereunder;
(v) an indication any
agency or instrumentality of any state
or the United States of America, including but not limited to
the
United States Department of Justice, the United States Securities
and
Exchange Commission or any committee of the United States
Congress
that the Executive is a target or subject of any investigation
or
proceeding into the actions or inactions of the Executive
(collectively, the "Investigations");
(vi) the Executive's failure after reasonable prior written
notice to comply with any valid and legal directive of the
Chief
Executive Officer, the Chief Operating Officer or the Board of
Directors of the Corporation; or
(vii) Other than as provided in Sections 5(a)(i) - (vi)
above, the Executive's material breach of any material provision
of
this Agreement that is not remedied within fifteen (15) days of
the
Executive being provided written notice thereof from the
Corporation.
Repeated breaches of a similar nature, such as the failure to
report
to work, perform duties, or follow directions, all as provided
herein,
shall not require additional notices as provided Section 5(a)(vi)
or
(vii).
(b) Termination by Corporation Without Cause. The Corporation
may
terminate this Agreement Without Cause upon at least thirty (30)
days prior
written notice to the Executive. Any termination of this Agreement
by the
Corporation for a reason other than for Cause shall be considered a
termination
Without Cause.
(c) Death or Disability. The Executive's employment by the
Corporation
will immediately terminate upon the Executive's death and, at the
option of
either the Executive or the Corporation, exercisable upon written
notice to the
other party, may terminate upon the Executive's Disability (as
hereinafter
defined). For purposes of this Agreement, "Disability" will occur
if (i) the
Executive becomes eligible for full benefits under a long-term
disability
policy provided by the Corporation, if any, or (ii) the Executive
has been
unable, due to physical or mental illness or incapacity, to perform
the
essential duties of his employment with reasonable accommodation
for a
continuous period of ninety (90) days or an aggregate of
one-hundred eighty
(180) days during the Term.
(d) Termination by the Executive for Good Reason. The Executive
may
terminate this Agreement at any time upon thirty (30) days' prior
written
notice to the Corporation and the Corporation fails to cure such
event within
such thirty-day period (any such termination referenced in clauses
(i) - (iii)
below, constituting termination for "Good Reason"):
(i) if the Corporation fails to make all or any portion of
any payment, or offer all or any portion any benefits, required
by
Section 3 hereof when such payments or benefits are due;
(ii) if the Corporation materially modifies the senior
management bonus plan or equity incentive plan such that the
targeted
cash bonus levels and targeted incentive compensation levels
applicable to the Executive are materially lower than those levels
of
other similarly-situated executive officers of the Corporation;
and
(ii) except as otherwise set forth in clause (i) above, if
the Corporation materially breaches any of its other duties or
obligations hereunder.
(e) Termination by the Executive without Good Reason. The
Executive
may terminate this Agreement without Good Reason upon at least
thirty (30) days
prior written notice to the Corporation.
(f) Change in Control. The Executive may terminate this
Agreement
within sixty (60) days following a "Change in Control" (as
hereinafter
defined). For purposes of this Agreement, a "Change in Control"
will be deemed
to have taken place if, whether in a single transaction or a series
of
transactions:
(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended,
other than the Corporation, or any employee benefit plan of the
Corporation or any of its subsidiaries, becomes the beneficial
owner,
directly or indirectly, of the Corporation's securities having
fifty
percent (50%) or more of the combined voting power of the then
outstanding securities of the Corporation that may be cast for
the
election
of directors of the Corporation or otherwise has the ability
to elect the directors of the Corporation (other than as a result
of
the issuance of securities initiated by the Corporation in the
ordinary course of business);
(ii) as the result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, or any
combination of the foregoing transactions, the holders of all
the
Corporation's securities entitled to vote generally in the election
of
directors of the Corporation immediately prior to such
transaction
constitute, following such transaction, less than a majority of
the
combined voting power of the then-outstanding securities of the
surviving entity (or in the event each entity survives, the
surviving
entity that is the parent entity) entitled to vote generally in
the
election of the directors of such surviving entity (or in the
event
each entity survives, the surviving entity that is the parent
entity)
after such transactions; or
(iii) the Corporation sells, transfers or leases all or
substantially all of the assets or business or of the Corporation
and
its subsidiaries, collectively, or of the Surgery Center Division
of
the Corporation.
Notwithstanding the foregoing, the occurrence of any of the
following
even
