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Sample Business Contracts

Employment Agreement - HealthSouth Corp. and P. Daryl Brown

Employment Forms

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                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT, dated as of April 1, 1998 (this "Agreement"), between
HEALTHSOUTH  Corporation,  a Delaware corporation (the "Company"),  and P. DARYL
BROWN, a resident of Birmingham, Alabama (the "Executive").

                              W I T N E S S E T H:

     WHEREAS,  the  Company  provides  comprehensive  rehabilitative,  clinical,
diagnostic and surgical healthcare services;

     WHEREAS,  the Executive  serves as President and Chief  Operating  Officer,
Outpatient  Division of the  Company and as a member of its Board of  Directors;
and

     WHEREAS,  the Company wishes to assure itself of the continued  services of
the  Executive  so that it will  have  the  continued  benefit  of his  ability,
experience and services, and the Executive is willing to enter into an agreement
to that end, upon the terms and conditions hereinafter set forth.

     NOW,  THEREFORE,  in consideration of good and valuable  consideration  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereby
covenant and agree as follows:

     1.   EMPLOYMENT

     The Company  hereby  agrees to continue  to employ the  Executive,  and the
Executive  hereby agrees to remain in the employ of the Company,  on and subject
to the terms and conditions of this Agreement.

     2.   TERM

     (a) The period of this Agreement (the  "Agreement  Term") shall commence as
of the date  hereof  (the  "Effective  Date")  and  shall  expire  on the  third
anniversary of the Effective  Date.  The Agreement  Term shall be  automatically
extended for an  additional  year on each  anniversary  of the  Effective  Date,
unless written notice of  non-extension is provided by either party to the other
party at least 90 days prior to such anniversary.

     (b) The period of the  Executive's  employment  under this  Agreement  (the
"Employment Period") shall commence as of the Effective Date and shall expire at
the end of the Agreement Term,  unless sooner  terminated in accordance with the
terms and conditions of this Agreement.

     3.   POSITION, DUTIES AND RESPONSIBILITIES

     (a) The Executive shall serve as, and with the title,  office and authority
of, President and Chief Operating  Officer,  Outpatient  Division of the Company
and as a member of the Board of Directors of the Company (the "Board") and shall
report directly to the Chief Operating Officer of the Company. The Company shall
use its best  efforts to cause the  Executive  to be  nominated  and elected (or
renominated and reelected, as the case may be) during the Employment Period as a
director of the Company an its subsidiaries or their successors.


<PAGE>


     (b) The  Executive  shall  have all of the  powers,  authority,  duties and
responsibilities  usually incident to the positions and offices of President and
Chief Operating Officer, Outpatient Division of the Company.

     (c) The Executive agrees to devote  substantially all of his business time,
efforts and skills to the performance of his duties and  responsibilities  under
this Agreement; provided, however, that nothing in this Agreement shall preclude
the Executive from devoting reasonable periods required for (i) participating in
professional, educational, philanthropic, public interest, charitable, social or
community  activities,  (ii)  serving  as a  director  or member of an  advisory
committee of any corporation or other entity that the Executive is serving on as
of the Effective  Date or any other  corporation or entity that is not in direct
competition  with  the  Company  or (iii)  managing  his  personal  investments,
provided that such  activities do not materially  interfere with the Executive's
regular performance of his duties and responsibilities hereunder.

     4.   PLACE OF PERFORMANCE

     The  Executive  shall  perform his duties at the  principal  offices of the
Company located at One HealthSouth Parkway,  Birmingham,  Alabama, but from time
to time the Executive may be required to travel to other locations in the proper
conduct of his responsibilities under this Agreement.

     5.   COMPENSATION AND BENEFITS

     In  consideration  of the  services  rendered by the  Executive  during the
Employment  Period,  the Company  shall pay or provide the Executive the amounts
and benefits set forth below.

     (a) Salary.  The Company shall pay the Executive an annual base salary (the
"Base Salary") of at least $370,000.  The Executive's  Base Salary shall be paid
in arrears  in  substantially  equal  installments  at monthly or more  frequent
intervals,  in accordance with the normal payroll practices of the Company.  The
Executive's  Base Salary shall be reviewed at least annually by the Compensation
Committee  of the Board (the  "Compensation  Committee")  for  consideration  of
appropriate merit increases and, once established,  the Base Salary shall not be
decreased during the Employment Period.

     (b) Incentive  Plans.  The Executive  shall  participate  in all annual and
long-term  bonus or  incentive  plans or  arrangements  in  which  other  senior
executives of the Company of a comparable level are eligible to participate from
time  to  time,  including,   without  limitation,  any  management  bonus  pool
arrangement.  The Executive's  incentive  compensation  opportunities under such
plans and arrangements shall be determined from time to time by the Compensation
Committee.

     (c) Equity Incentives. The Executive shall be given consideration, at least
annually,  by the Compensation  Committee,  for the grant of options to purchase
shares of the common stock of the Company.  In addition,  the Executive shall be
entitled  to  receive   awards  under  any  stock  option,   stock  purchase  or
equity-based  incentive  compensation plan or arrangement adopted by the Company
from  time to time  for  which  other  senior  executives  of the  Company  of a
comparable level are eligible to participate.  The Executive's awards under such
plans and arrangements shall be determined from time to time by the Compensation
Committee.

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<PAGE>

     (d) Employee  Benefits.  The Executive  shall be entitled to participate in
all employee benefit plans,  programs,  practices or arrangements of the Company
in which  other  senior  executives  of the  Company of a  comparable  level are
eligible to participate from time to time,  including,  without limitation,  any
qualified or non-qualified pension,  profit sharing and savings plans, any death
benefit and  disability  benefit  plans,  and any  medical,  dental,  health and
welfare plans.  Without  limiting the  generality of the foregoing,  the Company
shall provide the Executive with long-term  disability insurance coverage paying
benefits equal to at least 60% of the  Executive's  Base Salary for the duration
of any permanent and total disability of the Executive.

     (e) Fringe  Benefits and  Perquisites.  The Executive  shall be entitled to
continuation of all fringe benefits and perquisites provided to the Executive on
the  Effective  Date,  and to all  fringe  benefits  and  perquisites  which are
generally  made  available  to  other  senior  executives  of the  Company  of a
comparable  level from time to time.  Without  limiting  the  generality  of the
foregoing, the Company shall provide the Executive with the following:

          (i)  vacation in  accordance  with  Company's  policy for other senior
     executives of a comparable level;

          (ii) provision of a non-accountable  automobile  allowance of $500 per
     month;

          (iii)  reimbursement  of all  reasonable  travel  and  other  business
     expenses and disbursements  incurred by the Executive in the performance of
     his duties under this Agreement,  upon proper accounting in accordance with
     the Company's normal practices and procedures for reimbursement of business
     expenses.

     6.   TERMINATION OF EMPLOYMENT

     The Employment  Period will be terminated  upon the happening of any of the
following events:

     (a)  Resignation.  The Executive may  voluntarily  terminate his employment
hereunder for any reason at any time.

     (b)  Termination  for Cause.  The Company  may  terminate  the  Executive's
employment  hereunder for Cause.  For purposes of this Agreement,  the Executive
shall be considered  to be  terminated  for "Cause" only if (i) the Executive is
found, by a  non-appealable  order of a court of competent  jurisdiction,  to be
guilty of a felony  under the laws of the  United  States or any state  thereof,
(ii) the Executive is found, by a  non-appealable  order of a court of competent
jurisdiction,  to have committed a fraud, which has a material adverse effect on
the  Company,  or (iii) the  Executive  is found to have  committed a deliberate
violation of Company  policy.  The  determinations  required by clauses (ii) and
(iii) above are to be made by the Chief Executive Officer of the Company.

     (c) Termination  other than for Cause.  The Company shall have the right to
terminate  the  Executive's  employment  hereunder  for any  reason at any time,
including  for any  reason  that  does  not  constitute  Cause,  subject  to the
consequences of such termination as set forth in this Agreement.


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<PAGE>


     (d) Disability.  The Executive's  employment hereunder shall terminate upon
his  Disability.  For purposes of this  Agreement,  "Disability"  shall mean the
inability  of the  Executive  to perform his duties to the Company on account of
physical or mental illness for a period of six consecutive full months, or for a
period  of eight  full  months  during  any  12-month  period.  The  Executive's
employment  shall  terminate  in such a case on the last  day of the  applicable
period;  provided,  however,  in no event shall the  Executive be  terminated by
reason of  Disability  unless (i) the  Executive is eligible  for the  long-term
disability  benefits  set forth in Section  5(d)  hereof and (ii) the  Executive
receives  written  notice from the Company,  at least 30 days in advance of such
termination,  stating its  intention to terminate  the  Executive  for reason of
Disability  and setting forth in reasonable  detail the facts and  circumstances
claimed to provide a basis for such termination.

     (e) Death.  The Executive's  employment  hereunder shall terminate upon his
death.

     7.   COMPENSATION UPON TERMINATION OF EMPLOYMENT

     In the event the Executive's employment by the Company is terminated during
the Agreement  Term, the Executive  shall be entitled to the severance  benefits
set forth below:

     (a)  Resignation.  In the event the Executive  voluntarily  terminates  his
employment  hereunder  for any reason,  the Company shall pay and provide to the
Executive any Accrued Rights (as defined in paragraph (c) below).

     (b)  Termination  for  Cause.  In  the  event  the  Executive's  employment
hereunder  is  terminated  by the Company for Cause,  the Company  shall pay and
provide to the Executive any Accrued Rights (as defined in paragraph (c) below).

     (c) Termination other than for Cause, Disability or Death. In the event the
Executive's  employment  hereunder is  terminated  by the Company for any reason
other than for Cause,  Disability or death,  the Company shall pay the Executive
and provide him with the following:

          (i) Accrued  Rights.  The Company  shall pay the  Executive a lump-sum
     amount  equal to the sum of (A) his earned but unpaid Base  Salary  through
     the date of termination,  (B) any earned but unpaid bonus for any completed
     calendar  year,  (C)  a  pro-rata  payment  of  any  bonus  (based  on  the
     then-current target amount of such bonus) for any partial year or period of
     service through the date of termination and (D) any  unreimbursed  business
     expenses or other amounts due to the  Executive  from the Company as of the
     date  of  termination.  In  addition,  the  Company  shall  provide  to the
     Executive  all  payments,  rights  and  benefits  due  as of  the  date  of
     termination  under the terms of the Company's  employee and fringe  benefit
     plans,  practices,  programs and arrangements  referred to in Sections 5(d)
     and 5(e) hereof (together with the lump-sum payment, the "Accrued Rights").

          (ii) Severance  Payment.  The Company shall provide the Executive with
     continued  payment of the Executive's Base Salary, as in effect on the date
     of  termination,  for a  period  of  one  year  following  the  Executive's
     termination,  payable at the times and in the manner such Base Salary would
     have been paid if the  Executive  had  continued in the  employment  of the
     Company.

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<PAGE>


     (d)  Disability.  In the  event the  Executive's  employment  hereunder  is
terminated by reason of the  Executive's  Disability,  the Company shall pay and
provide to the Executive any Accrued Rights,  including all disability insurance
coverage.

     (e) Death. In the event the Executive's  employment hereunder is terminated
by reason of the  Executive's  death,  the Company  shall pay and provide to the
Executive's  representative  or estate any Accrued  Rights,  including  all life
insurance coverage.

     8.   CHANGE IN CONTROL

     (a)  Supplemental   Termination   Rights.  In  the  event  of  a  voluntary
termination of employment by the Executive  pursuant to Section 6(a) hereof that
occurs  within six months  following a Change in Control,  the Company shall pay
the Executive and provide him with the benefits and rights  described in Section
7(c) hereof.

     (b) Definition. For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred by reason of:

          (i) the  acquisition  (other  than from the  Company)  by any  person,
     entity or "group"  (within the meaning of Sections  13(d)(3) or 14(d)(2) of
     the Securities Exchange Act of 1934, but excluding,  for this purpose,  the
     Company or its subsidiaries, or any employee benefit plan of the Company or
     its subsidiaries which acquires  beneficial  ownership of voting securities
     of the Company) of beneficial  ownership  (within the meaning of Rule 13d-3
     promulgated  under the  Securities  Exchange Act of 1934) of 25% or more of
     either the  then-outstanding  shares of the common  stock of the Company or
     the  combined  voting  power  of  the  Company's   then-outstanding  voting
     securities entitled to vote generally in the election of directors; or

          (ii) individuals  who, as of date hereof,  constitute the Board (as of
     such date,  the  "Incumbent  Board")  cease for any reason to constitute at
     least a majority of the Board; provided,  however, that any person becoming
     a  director  subsequent  to such date whose  election,  or  nomination  for
     election,  was  approved by a vote of at least a majority of the  directors
     then constituting the Incumbent Board (other than an election or nomination
     of an individual  whose initial  assumption of office is in connection with
     an actual or  threatened  election  contest  relating  to the  election  of
     directors of the Company) shall be, for purposes of this Section  8(b)(ii),
     considered as though such person were a member of the Incumbent Board; or

          (iii) approval by the stockholders of the Company of a reorganization,
     merger, consolidation or share exchange, in each case with respect to which
     persons who were the stockholders of the Company  immediately prior to such
     reorganization, merger, consolidation or share exchange do not, immediately
     thereafter, own more than 75% of the combined voting power entitled to vote
     generally  in  the  election  of  directors  of  the  reorganized,  merged,
     consolidated   or  other   surviving   entity's   then-outstanding   voting
     securities,  or a liquidation  or dissolution of the Company or the sale of
     all or substantially all of the assets of the Company.


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<PAGE>


     9.   NO MITIGATION OR OFFSET

     The Executive  shall not be required to seek other  employment or to reduce
any severance  benefit payable to him under Sections 7 or 8 hereof,  and no such
severance  benefit shall be reduced on account of any  compensation  received by
the Executive from other employment.  The Company's  obligation to pay severance
benefits  under this  Agreement  shall not be reduced by any amount  owed by the
Executive to the Company.

     10.  TAX WITHHOLDING; METHOD OF PAYMENT

     All compensation  payable  pursuant to this Agreement,  shall be subject to
reduction by all  applicable  withholding,  social  security and other  federal,
state and local taxes and  deductions.  Any  lump-sum  payments  provided for in
Sections 7 or 8 hereof shall be made in a cash payment,  net of any required tax
withholding, no later than the fifth business day following the Executive's date
of  termination.  Any payment  required to be made to the  Executive  under this
Agreement that is not made in a timely manner shall bear interest until the date
of payment at a rate equal to 100% of the monthly compounded  applicable federal
rate, as in effect under Section  1274(d) of the Internal  Revenue Code of 1986,
as amended, for the month in which payment was required to be made.

     11.  RESTRICTIVE COVENANTS

     (a)  Confidential Information

     thereafter,  the Executive agrees that he will not divulge to anyone (other
than the  Company or any persons  employed or  designated  by the  Company)  any
knowledge or information of a  confidential  nature  relating to the business of
the  Company  or any of  its  subsidiaries  or  affiliates,  including,  without
limitation, all types of trade secrets (unless readily ascertainable from public
or  published   information  or  trade  sources)  and  confidential   commercial
information,  and the Executive further agrees not to disclose,  publish or make
use of any such knowledge or information without the consent of the Company.

     (b)  Noncompetition.  During the Employment  Period and, for any applicable
period that the Executive is entitled to receive severance  payments pursuant to
Section 7(c) hereof,  the Executive shall not, without the prior written consent
of  the  Company,  engage  in  the  comprehensive   rehabilitative  and  related
healthcare services business on behalf of any person, firm or corporation within
any  geographical  area in which the Company  transacts such  business,  and the
Executive  shall  not  acquire  any  financial  interest  (except  for an equity
interest in  publicly-held  companies  that do not exceed 5% of any  outstanding
class  of  equity  of  that  company),  in  any  business  that  engages  in the
comprehensive rehabilitative and related healthcare services business within any
geographical area in which the Company transacts such business.  Notwithstanding
the  foregoing,  upon the occurrence of a Change in Control  (whether  before or
after the  termination  of the  Employment  Period),  the  restrictions  of this
Section 11(b) shall cease to apply to the Executive for any period following his
termination of employment hereunder.

     (c) Enforcement.  The Company shall be entitled to seek a restraining order
or injunction in any court of competent jurisdiction to prevent any continuation
of any violation of the provisions of this Section 11.


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<PAGE>


     12.  SUCCESSORS

     This Agreement  shall be binding upon and shall inure to the benefit of the
Company, its successors and assigns and any person,  firm,  corporation or other
entity which  succeeds to all or  substantially  all of the business,  assets or
property of the Company.  The Company will require any successor (whether direct
or  indirect,  by  purchase,  merger,  consolidation  or  otherwise)  to  all or
substantially  all of the  business,  assets  or  property  of the  Company,  to
expressly  assume and agree to perform this  Agreement in the same manner and to
the same  extent  that the  Company  would be  required to perform it if no such
succession had taken place. As used in this Agreement,  the "Company" shall mean
the Company as hereinbefore defined and any successor to its business, assets or
property as aforesaid  which executes and delivers an agreement  provided for in
this Section 12 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.

     This Agreement and all rights of the Executive hereunder shall inure to the
benefit  of  and  be   enforceable   by  the   Executive's   personal  or  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are due and
payable to him hereunder,  all such amounts,  unless otherwise  provided herein,
shall be paid to the Executive's  designated beneficiary or, if there be no such
designated beneficiary, to the legal representatives of the Executive's estate.

     13.  NO ASSIGNMENT

     Except as to  withholding of any tax under the laws of the United States or
any other  country,  state or locality,  neither this Agreement nor any right or
interest hereunder nor any amount payable at any time hereunder shall be subject
in any manner to alienation, sale, transfer,  assignment, pledge, attachment, or
other  legal  process,  or  encumbrance  of any  kind  by the  Executive  or the
beneficiaries  of the  Executive  or by his legal  representatives  without  the
Company's  prior  written  consent,  nor shall  there be any right of set-off or
counterclaim  in  respect  of any debts or  liabilities  of the  Executive,  his
beneficiaries or legal representatives;  provided, however, that nothing in this
Section shall preclude the Executive  from  designating a beneficiary to receive
any benefit payable on his death, or the legal  representatives of the Executive
from assigning any rights  hereunder to the person or persons  entitled  thereto
under his will or, in case of  intestacy,  to the  person  or  persons  entitled
thereto under the laws of intestacy applicable to his estate.

     14.  ENTIRE AGREEMENT

     This  Agreement  contains  the entire  understanding  of the  parties  with
respect to the  subject  matter  hereof  and,  except as  specifically  provided
herein,  cancels and supersedes any and all other agreements between the parties
with respect to the subject matter hereof. Any amendment or modification of this
Agreement  shall not be binding  unless in writing and signed by the Company and
the Executive.

     15.  SEVERABILITY

     In the event that any  provision  of this  Agreement  is  determined  to be
invalid or  unenforceable,  the remaining terms and conditions of this Agreement
shall be  unaffected  and shall




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<PAGE>


remain in full force and effect,  and any such  determination  of  invalidity or
unenforceability  shall not affect the validity or  enforceability  of any other
provision of this Agreement.

     16.  NOTICES

     All notices  which may be necessary or proper for either the Company or the
Executive  to give to the other  shall be in writing and shall be  delivered  by
hand or sent by registered or certified mail,  return receipt  requested,  or by
air courier, to the Executive at:

                       Mr. P. Daryl Brown
                       2604 Caldwell Mill Lane
                       Birmingham, Alabama 35243

with a copy to:

                       Frederick W. Kanner, Esq.
                       Dewey Ballantine LLP
                       1301 Avenue of the Americas
                       New York,  New York 10019

and shall be sent in the manner  described above to the Secretary of the Company
at the  Company's  principal  executives  offices  at One  HealthSouth  Parkway,
Birmingham, Alabama 35243, or delivered by hand to the Secretary of the Company,
and shall be deemed given when sent,  provided  that any notice  required  under
Section 6 hereof or notice  given  pursuant to Section 2 hereof  shall be deemed
given only when received. Any party may by like notice to the other party change
the address at which he or they are to receive notices hereunder.

     17.  GOVERNING LAW

     This Agreement  shall be governed by and enforceable in accordance with the
laws of the  State of  Alabama,  without  giving  effect  to the  principles  of
conflict of laws thereof.

     18.  ARBITRATION

     Any controversy or claim arising out of, or related to, this Agreement,  or
the breach  thereof,  shall be settled  by  binding  arbitration  in the City of
Birmingham, Alabama, in accordance with the rules then obtaining of the American
Arbitration  Association,  and the  arbitrator's  decision  shall be binding and
final,  and judgment upon the award  rendered may be entered in any court having
jurisdiction thereof.

     19.  LEGAL FEES AND EXPENSES

     To induce  the  Executive  to execute  this  Agreement  and to provide  the
Executive with reasonable assurance that the purposes of this Agreement will not
be frustrated by the cost of its


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<PAGE>



enforcement  should the  Company  fail to  perform  its  obligations  under this
Agreement or should the Company or any  subsidiary,  affiliate or stockholder of
the  Company  contest the  validity or  enforceability  of this  Agreement,  the
Company shall pay and be solely responsible for any attorneys' fees and expenses
and court  costs  incurred  by the  Executive  as a result  of a claim  that the
Company has  breached  or  otherwise  failed to perform  this  Agreement  or any
provision hereof to be performed by the Company or as a result of the Company or
any subsidiary,  affiliate or stockholder of the Company contesting the validity
or  enforceability  of this Agreement or any provision hereof to be performed by
the Company,  in each case  regardless of which party,  if any,  prevails in the
contest.



                                        9


<PAGE>



          IN WITNESS  WHEREOF,  the Company and the Executive have executed this
Agreement as of the date first above written.

                                    EXECUTIVE

                                    /s/ P. Daryl Brown
                                    --------------------------------
                                    P. Daryl Brown


                                    HEALTHSOUTH CORPORATION

                                    By /s/ Richard M. Scrushy
                                      ------------------------------
                                      Richard M. Scrushy
                                      Chairman of the Board and
                                      Chief Executive Officer



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