Exhibit 10.22
AMENDED AND RESTATED EXECUTIVE SEVERANCE
PLAN
HealthSouth Corporation, a Delaware corporation (the
"Company"), has adopted the HealthSouth Corporation Executive
Severance Plan, as amended and restated herein (the "Plan"), for
the benefit of certain Participant employees of the Company and its
subsidiaries, on the terms and conditions hereinafter stated. The
Plan is intended to help retain qualified employees and provide
financial security to certain employees of the Company whose
employment with the Company and its Affiliates may be terminated
under circumstances entitling them to severance benefits as
provided herein. The Plan, as a "severance pay arrangement" within
the meaning of Section 3(2)(B)(i) of ERISA, is intended to be
excepted from the definitions of "employee pension benefit plan"
and "pension plan" set forth under Section 3(2) of ERISA, and is
intended to meet the descriptive requirements of a plan
constituting a "severance pay plan" within the meaning of
regulations published by the Secretary of Labor at Title 29, Code
of Federal Regulations § 2510.3-2(b).
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.01 Definitions . Capitalized terms used
in this Plan shall have the following respective meanings, except
as otherwise provided or as the context shall otherwise
require:
" Annual
Salary " shall mean the base salary
paid to a Participant immediately prior to his or her Termination
Date on an annual basis exclusive of any bonus payments or
additional payments under any Benefit Plan.
" Benefit
Plan " shall mean any "employee
benefit plan" (including any employee benefit plan within the
meaning of Section 3(3) of ERISA), program, arrangement or practice
maintained, sponsored or provided by the Company, including those
relating to compensation, bonuses, profit-sharing, stock option, or
other stock related rights or other forms of incentive or deferred
compensation, paid time off benefits, insurance coverage (including
any self-insured arrangements) health or medical benefits,
disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health,
medical or life insurance or other benefits).
“ Board " means the Board of
Directors of the Company.
" Cause
" means
(i) the
Company's procurement of evidence of the Participant's act of
fraud, misappropriation, or embezzlement with respect to the
Company;
(ii) the
Participant's indictment for, conviction of, or plea of guilty or
no contest to, any felony (other than a minor traffic
violation);
(iii) the
suspension or debarment of the Participant or of the Company or any
of its affiliated companies or entities as a direct result of any
willful or grossly negligent act or omission of the Participant in
connection with his employment with the Company from participation
in any Federal or state health care program. For purposes of this
clause (iii), the Participant shall not have acted in a "willful"
manner if the Participant acted, or failed to act, in a manner that
he or she believed in good faith to be in, or not opposed to, the
best interests of the Company;
(iv) the
Participant's admission of liability of, or finding by a court or
the SEC (or a similar agency of any applicable state) of liability
for, the violation of any "Securities Laws" (as hereinafter
defined) (excluding any technical violations of the Securities Laws
which are not criminal in nature). As used herein, the term
"Securities Laws" means any Federal of 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) a
formal indication from 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 SEC or any committee of
the United States Congress that the Participant is a target or the
subject of any investigation or proceeding into the actions or
inactions of the Participant for a violation of any Securities Laws
in connection with his or her employment by the Company (excluding
any technical violations of the Securities law which are not
criminal in nature);
(vi) the
Participant's failure after reasonable prior written notice from
the Company to comply with any valid and legal directive of the
Chief Executive Officer or the Board that is not remedied within
thirty (30) days of the Participant being provided written notice
thereof from the Company; or
(vii) other than as
provided in clauses (i) through (vi) above, the Participant's
material breach of any material provision of any employment
agreement, if applicable, or the Participant’s material
breach of the material duties and responsibilities of the
Participant’s job, that is not remedied within thirty (30)
days of the Participant being provided written notice thereof from
the Company.
Cause shall be determined by the affirmative vote of
at least fifty percent (50%) of the members of the Board (excluding
the Participant, if a Board member, and excluding any member of the
Board involved in events leading to the Board's consideration of
terminating the Participant for Cause).
" Code
" shall mean the Internal Revenue Code of 1986, as
amended. Reference in this Plan to any section of the Code shall be
deemed to include any
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amendments or successor provisions to such section
and any regulations under such section.
" Compensation
Committee " shall mean the
Compensation Committee of the Board.
" Disability " shall mean, when
used with reference to any Participant, long term disability under
the applicable long term disability plan maintained by the Company
under which the Participant is covered.
" Effective
Date " shall mean February 21, 2008,
the date as of which this Amendment and Restatement of the Plan was
approved by the Board.
" ERISA
" shall mean the Employee Retirement Income Security
Act of 1974, as amended and the rules and regulations promulgated
thereunder.
" Good
Reason " shall mean, when used with
reference to any Participant, any of the following actions or
failures to act, but in each case only if it occurs while such
Participant is employed by the Company and then only if it is not
consented to by such Participant in writing:
(i) assignment
of a position that is of a lesser rank than held by the Participant
prior to the assignment and that results in a material adverse
change in such Participant's reporting position, duties or
responsibilities or title or elected or appointed offices as in
effect immediately prior to the effective date of such
change;
(ii) a
material reduction in such Participant's base salary and target
bonus opportunity (notwithstanding any change to any plan term
other than ultimate target bonus opportunity and irrespective of
actual payout of any bonus amount) in effect immediately prior to
the Effective Date, not including any reduction resulting from
changes in the market value of securities or other instruments paid
or payable to Participant;
(iii) any change
of more than fifty (50) miles in the location of the principal
place of employment of such Participant immediately prior to the
effective date of such change; or
(iv) the
Participant receives a Removal Notice in accordance with Section
2.01(a) hereof.
For purposes of this definition, none of the actions
described in clauses (i) and (ii) above shall constitute "Good
Reason" with respect to any Participant if it was an isolated and
inadvertent action not taken in bad faith by the Company and if it
is remedied by the Company within thirty (30) days after receipt of
written notice thereof given by such Participant (or, if the matter
is not capable of remedy within thirty (30) days, then
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within a reasonable period of time following such
thirty (30) day period, provided that the Company has commenced
such remedy within said thirty (30) day period); provided that
"Good Reason" shall cease to exist for any action described in
clauses (i) through (iii) above on the sixtieth (60 th )
day following the later of the occurrence of such action or the
Participant's knowledge thereof, unless such Participant has given
the Company written notice thereof prior to such date. In the case
of clause (iv), Good Reason shall cease to exist on the sixtieth
(60 th ) day following the delivery of such Removal
Notice.
" Participant " shall mean an
employee of the Company who has become a Participant in accordance
with Section 2.01(a).
" Plan
" shall mean this HealthSouth Corporation Executive
Severance Plan, as amended, supplemented or modified from time to
time in accordance with its terms.
“ Pro-rated
Portion ” shall mean, with
respect to any equity-based grant or award, a fraction (i) whose
numerator is the number of months elapsed from the date of grant of
such Award through the effective date of termination of a
Participant’s employment in the circumstances described in
Section 3.01 below, and (ii) whose denominator is the total number
of months over which the grant or award would have vested or had
its restrictions lapse under the applicable award
agreement.
" SEC
" shall mean the United States Securities Exchange
Commission.
" Severance
Multiplier " shall have the meaning
set forth in Article III.
" Successor " shall mean a
successor to all or substantially all of the business, operations
or assets of the Company.
" Termination
Date " shall mean, with respect to
any Participant, the termination date specified in the Termination
Notice delivered by such Participant to the Company in accordance
with Section 2.02 or as set forth in any Termination Notice
delivered by the Company, or as applicable, the Participant's date
of death.
" Termination
Notice " shall mean, as appropriate,
written notice from (a) a Participant to the Company purporting to
terminate such Participant's employment for Good Reason in
accordance with Section 2.02 or (b) the Company to any Participant
purporting to terminate such Participant's employment for Cause or
Disability in accordance with Section 2.03.
Section
1.02 Interpretation . In this Plan, unless
a clear contrary intention appears, (a) the words "herein,"
"hereof" and "hereunder" refer to this Plan as a whole and not to
any particular Article, Section or other subdivision, (b) reference
to any Article or Section, means such Article or Section hereof and
(c) the words "including" (and with
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correlative meaning "include") means including,
without limiting the generality of any description preceding such
term. The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.
ARTICLE II
ELIGIBILITY AND BENEFITS
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Section 2.01
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Eligible Employees .
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(a) An
employee of the Company shall be a "Participant" in the Plan during
each calendar year (or partial calendar year) for which he or she
is employed as the Chief Executive Officer of the Company, an
Executive Vice President of the Company, or a Senior Vice President
of the Company, unless the Participant is given written notice by
October 31 of the preceding year of the Compensation Committee's
determination that such Participant shall cease to be a Participant
for such succeeding calendar year (a "Removal Notice").
(b) This
Plan is only for the benefit of Participants, and no other
employees, personnel, consultants or independent contractors shall
be eligible to participate in this Plan or to receive any rights or
benefits hereunder.
Section
2.02 Termination Notices from Participants . For purposes of this Plan, in order for any Participant to
terminate his or her employment for Good Reason, such Participant
must give a Termination Notice to the Company, which notice shall
be signed by such Participant, shall be dated the date it is given
to the Company, shall specify the Termination Date and shall state
that the termination is for Good Reason and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for such Good Reason. Any Termination Notice given by a
Participant that does not comply in all material respects with the
foregoing requirements as well as the "Good Reason" definition
provisions set forth in Section 1.01 shall be invalid and
ineffective for purposes of this Plan. If the Company receives from
any Participant a Termination Notice that it believes is invalid
and ineffective as aforesaid, it shall promptly notify such
Participant of such belief and the reasons therefor. Any
termination of employment by the Participant that either does not
constitute Good Reason or fails to meet the Termination Notice
requirements set forth above shall be deemed a termination by the
Participant without Good Reason.
Section
2.03 Termination Notices from Company .
For purposes of this Plan, in order for the Company to terminate
any Participant's employment for Cause, the Company must give a
Termination Notice to such Participant, which notice shall be dated
the date it is given to such Participant, shall specify the
Termination Date and shall state that the termination is for Cause
and shall set forth in reasonable detail the particulars thereof.
For purposes of this Plan, in order for the Company to terminate
any Participant's employment for Disability, the Company must give
a Termination Notice to such Participant, which notice shall be
dated the date it is given to such Participant, shall specify the
Termination Date and shall state that the termination is for
Disability and
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shall set forth in reasonable detail the particulars
thereof. Any Termination Notice given by the Company that does not
comply, in all material respects, with the foregoing requirements
shall be invalid and ineffective for purposes of this Plan. Any
Termination Notice purported to be given by the Company to any
Participant after the death or retirement of such Participant shall
be invalid and ineffective.
ARTICLE III
SEVERANCE AND RELATED TERMINATION
BENEFITS
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Section 3.01
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Termination of Employment .
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(a) In the
event that a Participant's employment is terminated (i) by the
Participant for Good Reason, (ii) by the Company without Cause, or
(iii) by the Company by reason of the Participant's Disability or
(iv) as a result of the Participant's death, then in each
case:
(A) such
Participant (or his or her beneficiary) shall be entitled to
receive, and the Company shall be obligated to pay to the
Participant, subject to Sections 3.02 and 3.03 hereof a lump sum
payment within sixty (60) days following such Participant's
Termination Date in an amount equal to (i) the Participant's Annual
Salary on the Termination Date multiplied by the severance
multiplier applicable for such Participant as set forth on
Exhibit A (the
"Severance Multiplier") plus
(ii) all unused paid time off time accrued by such
Participant as of the Termination Date under the Company's paid
time off policy plus
(iii) all accrued but unpaid compensation earned by
such Participant as of the Termination Date;
(B) for a period
of months equal to the Participant's Severance Multiplier
multiplied by twelve (12), such Participant and his or her
dependents shall continue to be covered by all medical and dental
insurance plans and programs (excluding disability insurance)
maintained by the Company under which the Participant was covered
immediately prior to the Termination Date (collectively the
"Continued Benefits") at the same cost sharing between the Company
and Participant as a similarly situated active employee;
(C) a Pro-rated
Portion of any unvested non-performance based options or stock
awards awarded to the Participant will become automatically vested
and exercisable;
(D) a Pro-rated
Portion of any unvested performance based stock awards awarded to
the Participant will become vested and exercisable, so long as the
performance conditions required as defined in such stock grant or
award were met on or before the time expiration of such award;
and
(E) the
vesting restrictions on a Pro-rated Portion of all other awards
relating to common stock of the Company (including but not limited
to restricted stock, restricted stock units and stock appreciation
rights) held by the Participant shall
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immediately lapse and, in the case of restricted
stock units and stock appreciation rights, shall become payable at
the time specified in (A) above.
(b) In the
event that a Participant’s employment is terminated (i) by
the Company for Cause or (ii) by the Participant other than for
Good Reason, then in each case:
(a) such
Participant shall be entitled to receive, and the Company shall be
obligated to pay to the Participant a lump sum payment equal to (i)
all unused paid time off accrued by such Participant under the
Company’s paid time off policy plus (ii) all accrued but unpaid
compensation earned by such Participant as of the Termination Date;
and
(b) such
Participant shall be entitled to continue to maintain coverage for
such Participant under the provisions of Section 4980B of the Code
(“COBRA”) until the expiration of eligibility under
COBRA. The Participant shall be required to make any premium
payments for such coverage under the provisions of
COBRA.
(c) At the
expiration of the period applicable to Continued Benefits as
provided in Section 3.01(a)(B), the Participant and his or her
dependents shall be entitled to continued coverage under COBRA for
a period, if any, equal to the difference between the maximum
coverage period applicable to such Participant or a dependent under
COBRA and the period under which Continued Benefits were provided
pursuant to Section 3.01(a)(B).
Section
3.02 Condition to Receipt of Severance Benefits
. As a condition to receipt of any payment or
benefits under Section 3.01(a), such Participant must enter into a
Non-Solicitation, Non-Compete, Non-Disclosure, Non-Disparagement
and Release Agreement with the Company and its affiliates
substantially in the form attached hereto as Exhibit B .
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Section 3.03
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Limitation of Benefits .
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(a) Anything in this
Plan to the contrary notwithstanding, the Company's obligation to
provide the Continued Benefits shall cease if and when the
Participant becomes employed by a third party that provides such
Participant with health and welfare benefits.
(b) Any
amounts payable under this Plan shall be in lieu of and not in
addition to any other severance or termination payment under any
other plan or agreement with the Company. As a condition to receipt
of any payment under this Plan, the Participant shall waive any
entitlement to any other severance or termination payment by the
Company, including any severance or termination payment set forth
in any employment agreement with the Company. In the event a
Participant is entitled to benefits under a Change of Control Plan
maintained by the Company, a Participant shall not be entitled to
any benefits hereunder. Notwithstanding the foregoing, nothing in
this Section 3.03(b) shall abridge the Participant's rights with
respect to vested benefits under any Benefit Plan.
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Section
3.04 Plan Unfunded; Participant's Rights Unsecured
. The Company shall not be required to establish any
special or separate fund or make any other segregation of funds or
assets to assure the payment of any benefit hereunder. The right of
any Participant to receive the benefits provided for herein shall
be an unsecured obligation against the general assets of the
Company.
ARTICLE IV
CLAIMS PROCEDURE
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Section 4.01
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Claims Procedure
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(a) It
shall not be necessary for a Participant or beneficiary who has
become entitled to receive a benefit hereunder to file a claim for
such benefit with any person as a condition precedent to receiving
a distribution of such benefit. However, any Participant or
beneficiary who believes that he or she has become entitled to a
benefit hereunder and who has not received, or commenced receiving,
a distribution of such benefit, or who believes that he or she is
entitled to a benefit hereunder in excess of the benefit which he
or she has received, or commenced receiving, may file a written
claim for such benefit with the Compensation Committee or its
designee. The Compensation Committee may delegate the investigation
of and response to such claim to the Senior Vice President of Human
Resources of the Company, except where the filing Participant is
the Senior Vice President of Human Resources in which event the
Compensation Committee may delegate the claim to the General
Counsel of the Company. Such written claim must be filed on or
prior to the end of the next fiscal year following the fiscal year
in which he or she allegedly became entitled to receive a
distribution of such benefit. Such written claim shall set forth
the Participant’s or beneficiary’s name and address and
a statement of the facts and a reference to the pertinent
provisions of the Plan upon which such claim is based. The
Compensation Committee (or its designee as set forth herein) shall,
within ninety (90) days (45 days for a claim for benefits on
account of disability) after such written claim is filed, provide
the claimant with written notice of its decision with respect to
such claim. If such claim is denied in whole or in part, the
Compensation Committee (or its designee as set forth herein) shall,
in such written notice to the claimant, set forth in a manner
calculated to be understood by the claimant the specific reason or
reasons for denial; specific references to pertinent provisions of
the Plan upon which the denial is based; a description of any
additional material or information necessary for the claimant to
perfect his or her claim and an explanation of why such material or
information is necessary; and an explanation of the provisions for
review of claims set forth in Section 4.01(b) below.
(b) A
Participant or beneficiary who has filed a written claim for
benefits with the Compensation Committee or its designee which has
been denied may appeal such denial to the Compensation Committee.
Such appeal for a full and fair review of his or her claim shall be
perfected by filing with the Compensation Committee a written
application for review at any time within sixty (60) days (180 days
for a claim for
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benefits on account of disability) after receipt
from the Compensation Committee (or its designee as set forth in
Section 4.01(a)) of the written notice of denial of his or her
claim provided for in Section 4.01(a) above. A Participant or
beneficiary who submits a timely written application for review
shall be entitled to review any and all documents pertinent to his
or her claim and may submit issues and comments to the Compensation
Committee in writing. Not later than sixty (60) days (45 days for a
claim for benefits on account of disability) after receipt of a
written application for review, the Compensation Committee shall
give the claimant written notice of its decision on review, which
written notice shall set forth in a manner calculated to be
understood by the claimant specific reasons for its decision and
specific references to the pertinent provisions of the Plan upon
which the decision is based.
(c)
