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Exhibit 10.11
 
 
 
 
 
 
 
 
 
HEALTHSOUTH CORPORATION
NONQUALIFIED 401(K) PLAN
 
 
 
 
 
As Amended and Restated December 31, 2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 

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Table of Contents
Exhibit 10.11

TABLE OF CONTENTS
 

 

    Page  ARTICLE I PURPOSE AND NATURE OF PLAN    2  1.1  Purpose of Plan    2
 1.2
 Nature of Plan   2          ARTICLE II DEFINITIONS AND CONSTRUCTION       2.1
 Definitions   3  2.2  Construction    8
 2.3
 409A Compliance    8          ARTICLE III PARTICIPATION AND VESTING     9  3.1
 Eligibility and Participation    9  3.2  Continued Eligibility and
Participation    9  3.3  Cessation of Participation    9          ARTICLE IV
CONTRIBUTIONS AND ACCOUNTING     10  4.1   Deferral Elections    10 4.2  Company
Contributions    10 4.3  Vesting    11 4.4  Plan Benefits    11 4.5  Accounting
for Deferred Compensation   11          ARTICLE V DISTRIBUTION OF BENEFITS    14
 5.1  General Rule Regarding Payment of Account    14  5.2  Subsequent Deferral
of Scheduled In-Service Withdrawals    14  5.3  Distributions on Death    15
 5.4  Distributions on Disability    15  5.5  Unforeseeable Emergency    15  5.6
 Time and Form of Payment    15          ARTICLE VI PAYMENT LIMITATIONS     17
 6.1  Payment Due an Incompetent    17 6.2  Nonalienation of Benefits    17    
     ARTICLE VII FUNDING     18  7.1  Funding    18  7.2  Creditor Status    18
         ARTICLE VIII ADMINISTRATION     19  8.1  Appointment of Benefits
Committee    19  8.2  Committee Powers and Duties    19  8.3  Appointment of
Daily Administrator    20  8.4  Daily Administrator Powers and Duties    20 8.5
 Claim Procedures    21 8.6   Benefits Committee Procedures    23        
 ARTICLE IX OTHER BENEFIT PLANS OF THE COMPANY     24  9.1  Other Plans    24  
       ARTICLE X MISCELLANEOUS     25  10.1  Amendment    25  10.2  Termination
   25  10.3  Nonguarantee of Employment    26  10.4  Indemnification    26  10.5
 Withholding    26  10.6  Expenses    26

 

 
 
 

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Table of Contents
Exhibit 10.11

HEALTHSOUTH CORPORATION NON-QUALIFIED 401(K) PLAN
 

 
PREAMBLE
 
HealthSouth Corporation (the "Company") adopted the HealthSouth Corporation
Nonqualified 401(k) Plan (the "Plan") effective March 1, 2008, to benefit
certain senior executives of the Company.  The Plan is intended to operate both
in connection with and independent from the Company’s qualified section 401(k)
plan and will be administered accordingly.  However, although participation in
the two plans may be coordinated, an election to participate or not participate
in the qualified 401(k) plan will satisfy the requirements of section 409A of
the Code and the regulations issued thereunder since such a decision will not
result in the increase or decrease in elective deferrals to this Plan in excess
of the limitations set forth by section 402(g) of the Code and will not create a
corresponding increase or reduction in employer matching contributions in excess
of such limitation or in excess of the amount of employer matching contributions
the participant would have received under the qualified 401(k) plan determined
without regard to the limits on such contributions under the Internal Revenue
Code.
 
By this instrument, the Benefits Committee desires to amend and restate the
Plan, generally effective December 31, 2008, except as otherwise stated below,
to (i) make certain clarifying amendments to reflect current administrative
practices with respect to the benefit election and distribution provisions of
the Plan and any changes required to ensure compliance with section 409A of the
Code and (ii) expand the Plan’s eligibility provisions to include Chief
Executive Officers and Chief Financial Officers of each of the Company's
hospitals, provided that such officers earn more than the compensation limit set
forth in section 414(q) of the Code, effective January 1, 2009.  The provisions
of this amended and restated Plan will be effective December 31, 2008, except as
specifically provided herein in order to comply with applicable law or prior
design decisions adopted by the Company.
 
The Company may adopt one or more domestic trusts to serve as a possible source
of funds for the payment of benefits under this Plan.
 

 

         

End of Preamble

 
 
 

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Exhibit 10.11

ARTICLE I
 

 
PURPOSE AND NATURE OF PLAN
 
1.1  
Purpose of Plan.  The objective and purpose of this Plan is to attract and
retain competent officers and key executives by providing flexible compensation
opportunities to officers and key executives of the Company and its affiliates
to offer them an opportunity to build an estate or supplement income for use
after retirement.  In addition to this Plan, the Company sponsors certain
broad-based employee benefit plans covering its employees.

 
1.2  
Nature of Plan.  Through this Plan, the Company intends to permit the deferral
of compensation and to provide additional benefits to a select group of
management or highly compensated employees.  Accordingly, it is intended that
this Plan will not constitute a "qualified plan" subject to the limitations of
section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
nor will it constitute a "funded plan", for purposes of such requirements.  It
is also intended that this Plan will be exempt from the participation and
vesting requirements of Part 2 of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the funding requirements of Part 3
of Title I of ERISA, and the fiduciary requirements of Part 4 of Title I of
ERISA by reason of the exclusions afforded plans which are unfunded and
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.

 

 

         

End of Article I
 

 
 
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Exhibit 10.11

ARTICLE II
 

 
DEFINITIONS AND CONSTRUCTION
 
2.1  
Definitions.  When a word or phrase will appear in this Plan with the initial
letter capitalized, and the word or phrase does not commence a sentence, the
word or phrase will generally be a term defined in this Section 2.1.  The
following words and phrases with the initial letter capitalized will have the
meaning set forth in this Section 2.1, unless a different meaning is required by
the context in which the word or phrase is used.

 
(a)  
"Account" means one or more of the bookkeeping accounts maintained by the
Company or its agent on behalf of a Participant, as described in more detail in
Section 4.5.

 
(b)  
"Affiliate" means a corporation that is (i) a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes the
Company, (ii) any trade or business (whether or not incorporated) which is in
common control (as defined in section 414(c) of the Code) with the Company, or
(iii) any entity that is a member of the same affiliated service group (as
defined in section 414(m) of the Code) as the Company.  In addition, the term
Affiliate will also include any related entity (regardless of whether in the
Company's controlled group of corporations, as defined above) that the Company
has designated for participation in the Plan.

 
(c)  
"Beneficiary" means the person designated by the Participant to receive a
distribution of his benefits under the Plan upon the death of the
Participant.  In the event that a Participant fails to designate a Beneficiary,
or if the Participant's Beneficiary does not survive the Participant, the
Participant's Beneficiary will be his surviving spouse, if any, or if the
Participant does not have a surviving spouse, his estate.  The term
"Beneficiary" also will mean a Participant's spouse or former spouse who is
entitled to all or a portion of a Participant's benefit pursuant to Section 6.2.

 
(d)  
"Benefits Committee" means the administrative committee responsible for the
administration of the Plan in accordance with Article VIII.

 
(e)  
"Board" means the Board of Directors of the Company.

 
(f)  
"Claimant" means a Participant or Beneficiary who files a claim for benefits
pursuant to Section 8.5.

 
(g)  
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and any regulations or rulings issued thereunder.

 
(h)  
"Company" means HealthSouth Corporation or any successor thereto.

 
(i)  
"Compensation" means the total of all amounts paid by the Employer to or for the
benefit of an Employee for services rendered or labor performed for the Employer
while a Participant and while an Employee, which are required to be reported on
the Employee's Federal Wage and Tax Statement, Form W-2 or its successor;
provided, however, that Compensation will not include: (i) mileage
reimbursements; (ii) severance pay; (iii) termination vacation payouts; (iv)
termination paid time-off payouts; (v) relocation reimbursements; (vi) income
from the exercise or award of any stock options or stock grants; (vii) imputed
income from life insurance; (viii) car allowances; (ix) club dues; (x) housing
allowances; and (xi) any stock purchase plan match monies.  Further,
Compensation excludes:

 
 
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(i)  
elective contributions made on the Employee's behalf by the Employer that are
not includible in income under sections 125, 132(f)(4), 402(e)(3), 402(h), or
403(b) of the Code;

 
(ii)  
compensation deferred under an eligible deferred compensation plan within the
meaning of section 457(b) of the Code; and

 
(iii)  
employee contributions described in section 414(h) of the Code that are picked
up by the employing unit and treated as employer contributions.

 
Compensation will include all of the Employee's Form W-2 earnings defined in the
preceding sentences accrued and paid by the last day of the Plan Year.
 
(j)  
"Compensation Committee" means the Compensation Committee of the Board of
Directors of the Company.

 
(k)  
"Compensation Deferral" means the deferral described in Section 4.1 made by a
Participant who has elected to defer all or a portion of his Compensation under
the Plan including a deferral of Compensation classified as a bonus that is
subject to a separate and distinct deferral election.

 
(l)  
“Daily Administrator” means the individuals, entity or department designated by
the Compensation Committee or the Benefits Committee to handle the day to day
administration of the Plan and to make initial claim determinations pursuant to
Section 8.5.  In the event the Compensation Committee or the Benefits Committee
fails to appoint a Daily Administrator, the Benefits Committee will be the Daily
Administrator.

 
(m)  
"Disability" means that due to a physical or mental condition, the Participant
has been determined to be totally and permanently disabled by the Social
Security Administration and is eligible to receive Social Security disability
benefits.

 
(n)  
"Effective Date" means December 31, 2008, except as expressly provided otherwise
herein.

 
(o)  
"Election Process" means the written forms or on-line processes provided by the
Daily Administrator, or delegate thereof, pursuant to which the Participant
consents to participation in the Plan, elects to defer Compensation as a
Compensation Deferral and specifies the time and form in which such Compensation
Deferrals will be paid as provided in Article V.  Such Participant consent and
elections may be done either in writing or on-line through an electronic
signature as determine by the Daily Administrator.

 
 
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(p)  
"Eligible Employee" means each Employee who holds the position of an Executive
Officer, Senior Vice President, Vice President or Director and, effective
January 1, 2009, the Chief Executive Officer and Chief Financial Officer of each
of the Company's hospitals; provided, however, that each such individual must
earn more than the compensation limit set forth in section 414(q) of the Code
(i.e., one hundred five thousand dollars ($105,000) for 2008 and one hundred ten
thousand dollars ($110,000) for 2009).

 
(q)  
"Employee" means any person employed by the Employer in the capacity of a common
law employee.  Each such Employee who is currently employed by the Employer or
an Affiliate will be referred to herein as an "Active Employee" and each such
Employee who is no longer employed by the Employer or an Affiliate but has an
Account balance under the Plan will be referred to herein as an "Inactive
Employee."

 
(r)  
"Employer" means the Company and any other Affiliate which adopts the Plan.  An
Affiliate may evidence its adoption of the Plan either by a formal action of its
governing body or by commencing deferrals and taking other administrative
actions with respect to this Plan on behalf of its employees.

 
(s)  
"Employer Discretionary Contribution" means discretionary profit sharing
contributions made to the Plan on behalf of a Participant.

 
(t)  
"Employer Matching Contribution" means the matching contributions made to the
Plan on behalf of a Participant.

 
(u)  
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any regulations or rulings issued thereunder.

 
(v)  
"Hour of Service" means each hour for which an Employee is directly or
indirectly paid, or is entitled to payment, by the Employer (including any
predecessor business of an Employer conducted as a corporation, partnership or
proprietorship) or Affiliate for the performance of duties or reasons other than
the performance of duties, including but not limited to vacation, holidays,
sickness, disability, paid layoff, jury duty, military duty, leave of absence
and similar paid periods of nonworking time.  An Hour of Service also includes
each hour, not credited above, for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Employer or an
Affiliate.  For all purposes of the Plan, Hours of Service will be credited for
any individual considered to be a Leased Employee and for any individual
considered an Employee under section 414(o) of the Code and the final
regulations thereunder.

 
(i)  
Acquired Entities.  Service or employment completed by an Employee of an
acquired facility or an acquired employee group before such facility became an
Affiliate or before the employees of such employee group become Employees will
not be credited except to the extent provided in the acquisition agreement, a
resolution by the Board of Directors or other governing body of the
Employer.  Any such prior vesting service credit will be described in Appendix A
attached hereto.  Appendix A may be revised from time-to-time by the Daily
Administrator without the need for a formal amendment to the Plan.

 
 
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Exhibit 10.11
 
(ii)  
Licensed Professionals.  Service or employment completed by licensed
professionals on behalf of professional corporations for which the Company
provides payroll services who become Employees will be taken into account for
purposes of determining Hours of Service under this Plan.

 
(w)  
"Investment Options" means the investment options used under the Plan to measure
the investment returns attributable to each Participant's Account.  As of the
Effective Date, any investment fund offered through the Charles Schwab Trust
Company may be selected as an Investment Option under the Plan.  The Benefits
Committee may revise the Investment Options provided under the Plan from time to
time without the need for a formal Plan amendment, in which case the new
Investment Options will be communicated to Participants.

 
(x)  
"Key Employee" means a key employee within the meaning of section 416(i) of the
Code.  Specifically, an individual who is:

 
(i)  
an officer of the Company or an Affiliate having compensation of greater than
one hundred thirty thousand dollars ($130,000) (as adjusted under section
416(i)(1) of the Code) (i.e., one hundred fifty thousand dollars ($150,000) for
2008);

 
(ii)  
a five percent (5%) owner of the Company or an Affiliate as defined in section
416 of the Code; or

 
(iii)  
a one percent (1%) owner of the Company or an Affiliate as defined in section
416 of the Code having compensation of more than one hundred fifty thousand
dollars ($150,000).

 
For purposes of the preceding paragraphs, the Company has elected to determine
the compensation of an officer or one percent owner in accordance with section
1.415(c)-2(d)(4) of the Treasury Regulations (i.e., W-2 wages plus amounts that
would be includible in wages except for an election under section 125(a) of the
Code (regarding cafeteria plan elections), section 132(f) of the Code (regarding
qualified transportation fringe benefits), or section 402(e)(3) of the Code
(regarding section 401(k) plan deferrals)) without regard to the special timing
rules and special rules set forth, respectively, in sections 1.415(c)-2(e) and
2(g) of the Treasury Regulations.
 
The determination of Key Employees will be based upon a twelve (12) month period
ending on December 31 of each year (i.e., the identification date).  Employees
who are Key Employees during such twelve (12) month period will be treated as
Key Employees for the twelve (12) month period beginning on the first day of the
fourth month following the end of the twelve (12) month period (i.e., since the
identification date is December 31, then the twelve (12) month period to which
it applies begins on the next following April 1).
 
The determination of who is a Key Employee will be made in accordance with
section 416(i)(1) of the Code and other guidance of general applicability issued
thereunder.  For purposes of determining whether an employee or former employee
is an officer, a five percent owner or a one percent owner, the
 
 
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Exhibit 10.11
 
Company and each Affiliate will be treated as a separate employer (i.e., the
controlled group rules of sections 414(b), (c), (m) and (o) of the Code will not
apply).  Conversely, for purposes of determining whether the one hundred thirty
thousand dollar ($130,000) adjusted limit on compensation is met under the
officer test described in Section 2.1(x)(i), compensation from the Company and
all Affiliates will be taken into account (i.e., the controlled group rules of
sections 414(b), (c), (m) and (o) of the Code will apply).  Further, in
determining who is an officer under the officer test described in Section
2.1(x)(i), no more than fifty (50) employees of the Company or its Affiliates
(i.e., the controlled group rules of sections 414(b), (c), (m) and (o) of the
Code will apply) will be treated as officers.  If the number of officers exceeds
fifty (50), the determination of which employees or former employees are
officers will be determined based on who had the largest annual compensation
from the Company and Affiliates for the Plan Year.
 
(y)  
"Normal Retirement Age" means the date the Participant reaches age sixty-five
(65).

 
(z)  
"Participant" means each Eligible Employee who has elected to participate in the
Plan by timely completing the Election Process and whose participation in this
Plan has not terminated.  Each such Participant who is currently employed by the
Employer will be referred to herein as an "Active Participant" and each such
Employee who is no longer employed by the Employer or is employed by an
Affiliate who has not adopted the Plan but has an Account balance under the Plan
will be referred to herein as an "Inactive Participant."

 
(aa)  
"Plan" means the HealthSouth Corporation Nonqualified 401(k) Plan, as described
in this document, and as it may hereafter be amended.

 
(bb)  
"Plan Year" means the fiscal year of this Plan, which will commence on January 1
each year and end on December 31 of such year, except that the initial Plan Year
will commence on March 1 and end on December 31.

 
(cc)  
"Rabbi Trust" means the grantor trust established by the Company to assist with
the payment of benefits under the Plan.  The Rabbi Trust will be unfunded within
the meaning of ERISA and its assets will be subject to the claims of the
Employer's and Affiliate's general creditors.  Such Rabbi Trust and its assets
will conform to the terms of the model trust, as described in Revenue Procedure
92-64.

 
(dd)  
"Scheduled In-Service Withdrawal" means a distribution elected by the
Participant pursuant to Section 5.1 for an in-service withdrawal of amounts of
Compensation Deferrals made in a given Plan Year, and earnings or losses
attributable thereto, as set forth in the Election Process for such Plan Year.

 
(ee)  
"Scheduled In-Service Withdrawal Date" means the distribution date elected by
the Participant for a Scheduled In-Service Withdrawal.

 
(ff)  
"Termination of Employment" means the date that such Employee ceases performing
services for the Employer and its Affiliates in the capacity of an
Employee.  For this purpose an Employee who is on a leave of absence that
exceeds six (6) months and who does not have statutory or contractual
reemployment rights with respect to such leave, will be deemed to have incurred
a Termination of Employment on the first day of the seventh (7th) month of such
leave.  An Employee who transfers employment from an Employer to an Affiliate,
regardless of whether such Affiliate has adopted the Plan as a participating
employer, will not incur a Termination of Employment.

 
 
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(gg)  
"Trustee" means the individual or entity appointed to serve as trustee of any
trust established as a possible source of funds for the payment of benefits
under the Plan as provided in Section 7.1.

 
(hh)  
"Unforeseeable Emergency" means a severe financial hardship to the Participant
resulting from (i) an illness or accident of the Participant, his spouse, his
beneficiary, or his dependent (as defined under section 152(a) of the Code),
(ii) a loss of the Participant's property due to casualty, or (iii) any other
similar extraordinary and unforeseeable loss arising from events beyond the
control of the Participant, as determined by the Daily Administrator in its sole
and absolute discretion in accordance with the requirements of section 409A of
the Code.

 
A distribution on account of Unforeseeable Emergency may only be made to the
extent that the Participant's need cannot be relieved through reimbursement or
compensation from insurance or otherwise, by liquidation of the Participant's
assets, to the extent that liquidation of such assets would not cause a severe
financial hardship or by cessation of Compensation Deferrals under the
Plan.  The amount of the distribution cannot exceed the amount necessary to meet
the need (plus any taxes resulting from the distribution).
 
(ii)  
“Year of Vesting Service” means a Plan year in which an Employee is credited
with no less than one thousand (1,000) Hours of Service.

 
2.2  
Construction.  If any provision of this Plan is determined to be for any reason
invalid or unenforceable, the remaining provisions of this Plan will continue in
full force and effect.  All of the provisions of this Plan will be construed and
enforced in accordance with the laws of the State of Alabama and will be
administered according to the laws of such state, except as otherwise required
by ERISA, the Code or other applicable federal law.  Headings and subheadings
are for the purpose of reference only and are not to be considered in the
construction of the Plan.  The masculine gender, where appearing in this Plan,
will include the feminine gender, the singular may include the plural; and vice
versa, unless the context clearly indicates to the contrary.

 
2.3  
409A Compliance.  The provisions of the Plan will be construed and administered
in a manner that enables the Plan to comply with the provisions of section 409A
of the Code.

 

 

         

End of Article II
 

 
 
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Exhibit 10.11

ARTICLE III
 

 
PARTICIPATION AND VESTING
 
3.1  
Eligibility and Participation.  An Employee who is an Eligible Employee as of
March 1, 2008, will become a Participant as of such date if such Eligible
Employee has timely completed the required Election Process pursuant to Section
4.1.  An Employee who becomes an Eligible Employee during a Plan Year, or an
Employee hired during a Plan Year who is an Eligible Employee as of his hire
date, will become a Participant as of the January 1st of the Plan Year following
his initial eligibility to participate in the Plan if such Eligible Employee has
timely completed the required Election Process prior to the beginning of such
Plan Year.  Prior to the beginning of each subsequent Plan Year, each Eligible
Employee may elect to defer portions of his Compensation by completing the
required Election Process prior to the beginning of the Plan Year.

 
3.2  
Continued Eligibility and Participation.  Any Eligible Employee who does not
elect to make Compensation Deferrals when he is first eligible, may elect to do
so in a subsequent Plan Year by completing the required Election Process prior
to the beginning of the Plan Year.  Such Eligible Employee will become a
Participant as of January 1st of the Plan Year for which he first elects to make
Compensation Deferrals.  Eligibility to become a Participant for any Plan Year
will not entitle an Eligible Person to continue as an Active Participant for any
subsequent Plan Year.

 
3.3  
Cessation of Participation.  A Participant will cease to be a Participant as of
the earlier of:

 
(a)  
the date on which the Plan terminates, or

 
(b)  
the date on which he receives a distribution of all amounts credited to his
Account.

 
A Participant under this Plan who incurs a Termination of Employment or who
continues employment with the Employer but ceases to be eligible to participate
in the Plan, will continue as an Inactive Participant under this Plan until the
Participant has received a distribution of all amounts credited to his Plan
Account; provided, however, that if a Participant ceases active participation in
the Plan because he ceases to be an Eligible Employee, his Compensation
Deferrals will continue for the remainder of the Plan Year in which such loss of
eligilibty occurs, but such Participant will not be eligible to make future
Compensation Deferrals until he again qualifies as an Eligible Employee.
 

 

         

End of Article III
 

 
 
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ARTICLE IV
 

 
CONTRIBUTIONS AND ACCOUNTING
 
4.1  
Deferral Elections.  An Eligible Employee may become a Participant by electing
to defer Compensation pursuant to the required Election Process.  Such Election
Process will be completed prior to the first day of the Plan Year for which the
election is effective.  A Participant's deferral election will only be effective
with respect to a single Plan Year and will be irrevocable for the duration of
such Plan Year, except as provided in Article V regarding Unforeseeable
Emergency distributions.  Deferral elections for each subsequent Plan Year of
participation will be made pursuant to a new election for such Plan Year.

 
An Eligible Employee who is an Active Employee may elect to have a sum equal to
at least one percent (1%) but not more than one hundred percent (100%) of his
Compensation which otherwise would have been paid to him by the Employer
deferred under the Plan as a Compensation Deferral.  The Daily Administrator may
allow such Employee to make a separate and distinct deferral election with
regard to any amounts of Compensation classified by the Employer as a bonus if
such election is completed prior to the first day of the Plan Year during which
the services are performed that give rise to the bonus, regardless of when the
bonus would otherwise be paid but for such deferral election.  An Eligible
Employee's deferral election (including his separate and distinct deferral
election with respect to his bonus, if any) must specify, in the format adopted
by the Company as part of its Election Process, the time and manner in which his
Compensation Deferral for each Plan Year will be paid, in accordance with the
benefit distribution options set forth in Article V.  An Eligible Employee may
make a separate and distinct distribution election with respect to each Plan
Year in which he elects to make a Compensation Deferral to the Plan.  The
Eligible Employee may not modify his election as to the manner in which a
Compensation Deferral will be paid.
 
Compensation Deferrals will be made pursuant to administrative procedures
established by the Plan Administrator.  Such procedures will provide that
Compensation Deferrals will be subject to a "withholding hierarchy" for purposes
of determining the amount of such contributions that may be contributed on
behalf of a Participant.  The Plan Administrator (or its delegatee) will
determine the order of withholdings taken from a Participant's Compensation
(e.g., for federal, state and local taxes, social security, wage garnishments,
welfare plan contributions, 401(k) deferrals, and similar withholdings) and
Compensation Deferrals will be subject to such withholding hierarchy.  As a
result, Compensation Deferrals may be effectively limited to Compensation
available after the application of such withholding hierarchy (i.e., the
Participant may not be able to defer one hundred percent (100% of his
Compensation).
 
4.2  
Company Contributions.

 
(a)  
Employer Matching Contribution.  Each Plan Year, the Employer will make an
Employer Matching Contribution to the Plan for each Participant who makes
Compensation Deferrals pursuant to Section 4.1 above.  Such Employer Matching
Contribution will equal fifty percent (50%) of the first six percent (6%) of the
Participant's Compensation contributed to the Plan as a Compensation Deferral
offset by any Employer Matching Contributions made to the HealthSouth
Corporation Retirement Investment Plan (the “Retirement Plan”) on behalf of such
Participant (i.e., the total of Employer Matching Contributions that a
Participant may receive between this Plan and the Retirement Plan will equal
fifty percent (50%) of the first six percent (6%) of the Participant’s
Compensation contributed to both this Plan as Compensation Deferrals and the
Retirement Plan as Salary Deferral Contributions (as defined in the Retirement
Plan).

 
 
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Exhibit 10.11
 
(b)  
Employer Discretionary Contribution.  The Employer may elect to make an Employer
Discretionary Contribution to the Plan at such time and in such amount as may be
determined by the Compensation Committee.

 
4.3  
Vesting.

 
(a)  
Participant Deferrals.  A Participant will be one hundred percent (100%) vested
in the Compensation Deferrals credited to his Account, including the earnings
and losses thereon.

 
(b)  
Employer Matching Contributions.  A Participant will become vested in Employer
Matching Contributions made on his behalf to the Plan in accordance with the
following schedule:

 
Years of Vesting Service
Percentage Vested
2 or fewer years
0%
3 or more years
100%

 
Notwithstanding the foregoing, a Participant will become fully vested in his
Employer Matching Contributions when he reaches his Normal Retirement Age, dies
or incurs a Disability (in each such case while an Employee), without regard to
his Years of Vesting Service.  Any portion of a Participant’s Account that has
not become vested, as herein provided, will be forfeited.
 
(c)  
Employer Discretionary Contributions.  Each Employer Discretionary Contribution
may be subject to a vesting schedule, as determined by the Compensation
Committee, in its sole discretion, at the time such Employer Discretionary
Compensation is elected to be made to the Plan.

 
Notwithstanding the foregoing, as provided in Section 7.2, each Participant will
be only a general creditor of the Company and/or Employer with respect to the
payment of any benefit under this Plan.
 
4.4  
Plan Benefits.  The benefits to which a Participant and, if applicable, his
Beneficiary are entitled under the Plan will consist of the Compensation
Deferrals, Employer Matching Contributions and Employer Discretionary
Contributions credited to such Participant's Account, plus earnings thereon and
less losses allocable thereto, if any, attributable to the investment of such
amounts pursuant to Section 4.5(c) hereof.  Distribution of benefits
attributable to a Participant's Account(s) will be made pursuant to the
provisions of Article V.

 
4.5  
Accounting for Deferred Compensation.

 
 
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Exhibit 10.11
 
(a)  
Establishment of Accounts.  The Daily Administrator will establish and maintain
an individual Account under the name of each Participant under the
Plan.  Further, in the sole discretion of the Daily Administrator, additional
Accounts may be established for each Participant to facilitate record keeping
convenience and accuracy.  Each such Account will be credited and adjusted as
provided in this Plan.  Such Account will be maintained until all amounts
credited to such Account have been distributed in accordance with the terms and
provisions of this Plan.  The establishment and maintenance of a separate
Account or Accounts for each Participant will not be construed as giving any
person any interest in assets of the Company or an Affiliate, or a right to
payment other than as provided hereunder.  Amounts credited to such Accounts
will be held with the general assets of the Employer.

 
(b)  
Crediting Accounts.  All amounts deferred under the Plan as Compensation
Deferrals will be credited to the Participant's Account at the end of the pay
period during which such Compensation would have otherwise been paid to the
Participant.  The amount of Employer Matching Contributions to be contributed to
the Plan on the Participant’s behalf will be computed on the last day of each
month and will be contributed as soon as administratively practicable after such
computation.  Any Employer Discretionary Contributions made to the Plan will be
credited to the Participant’s Account at the time such contributions are made.

 
(c)  
Adjustment of Accounts.  Each Account will be adjusted on each business day that
the New York Stock Exchange is open to reflect the Compensation Deferrals,
Employer Matching Contributions or Employer Discretionary Contributions made to
the Plan, any earnings credited on such Compensation Deferrals, Employer
Matching Contributions or Employer Discretionary Contributions pursuant to this
Section 4.5(c), and any payment of such Compensation Deferrals, Employer
Matching Contributions and Employer Discretionary Contributions under the Plan.

 
(i)  
Participant Investment Recommendations.  For purposes of measuring the
investment returns of the Participant's Account(s), the Participant may select
the Investment Options in which all or part of his Account(s) will be deemed to
be invested.  The Participant will make his initial investment designation in
the Enrollment Process and such an investment designation will remain effective
until it is subsequently changed by the Participant pursuant to this Section
4.5(c).  The Participant may change his investment designation each Plan Year at
the time and manner specified by the Daily Administrator.  The Participant may
change the investment allocation of his existing Account(s) at the time and
manner specified by the Daily Administrator.  During the Plan Year, a
Participant may elect to make transfers of his Account(s) among the Investment
Options by written, telephonic or electronic means at the time and manner
specified by the Daily Administrator.

 
 
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Exhibit 10.11
 
(ii)  
Benefits Committee Investment Designation.  Notwithstanding the foregoing, the
Benefits Committee in its sole and absolute discretion may direct the Daily
Administrator to disregard the Participant's investment designation and
determine that all interests in the Account(s) will be deemed to be invested in
one particular or a mixture of the Investment Options.  Likewise, if a
Participant fails to make any investment recommendations, the Daily
Administrator will invest the Participant’s Account(s) in any default investment
fund established under the Plan by the Benefits Committee or in such other
manner as the Benefits Committee deems appropriate in its sole and absolute
discretion.

 

 

         

End of Article IV
 

 
 
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Exhibit 10.11

ARTICLE V
 

 
DISTRIBUTION OF BENEFITS
 
5.1  
General Rule Regarding Payment of Account.  Subject to Section 5.6, Compensation
Deferrals made in accordance with Section 4.1 will be distributed to a
Participant (i) upon the Participant's Termination of Employment or (ii) in a
future year in which the Participant is still employed by the Employer and that
is at least three (3) calendar years after the end of the Plan Year in which the
Compensation would have otherwise been paid, but within forty (40) calendar
years of the first day of the Plan Year in which such Compensation would have
otherwise been paid (i.e., as a Scheduled In-Service Withdrawal, subject to the
provisions of Section 5.2).  Employer Matching Contributions and Employer
Discretionary Contributions will be distributed upon the Participant's
Termination of Employment in accordance with Section 5.6.  Amounts paid by
reason of a Termination of Employment will be subject to the six (6) month delay
applicable to Key Employees under Section 5.6.

 
In the event that the Participant elects a Scheduled In-Service Withdrawal and
incurs a Termination of Employment before his Scheduled In-Service Withdrawal
date, his Scheduled In-Service Withdrawal election will be cancelled and of no
effect and such amounts will be paid according to the Participant's distribution
election with respect to his Employer Matching Contributions and Employer
Discretionary Contributions, if any, for the Plan Year in which his related
Compensation Deferrals were made (i.e., in accordance with the Participant's
Termination of Employment distribution election with respect to such Employer
Matching Contributions and Employer Discretionary Contributions), subject to the
six (6) month delay applicable to Key Employees under Section 5.6.
 
5.2  
Subsequent Deferral of Scheduled In-Service Withdrawals.  A Participant who
elects a Scheduled In-Service Withdrawal pursuant to Section 5.1 may
subsequently elect to delay such distribution beyond the date specified in his
initial deferral election, provided that:

 
(a)  
such distribution is deferred for a period of at least five (5) years from the
date such amounts would otherwise be paid,

 
(b)  
such distribution election does not defer such distribution more than forty (40)
calendar years from the first day of the Plan Year in which such Compensation
would have otherwise been paid, and

 
(c)  
the Participant makes such subsequent deferral election at least twelve (12)
months before the date such amounts would otherwise be paid (i.e., before the
date certain and not more than thirty-five (35) years after the first day of the
Plan Year in which such Compensation would have otherwise been paid).

 
A Participant may elect to postpone his Scheduled in-Service Withdrawal date up
to two (2) times pursuant to this Section 5.2.  A Participant may not elect
pursuant to this Section 5.2 to delay a distribution that will be made upon his
Termination of Employment.
 
 
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Exhibit 10.11
 
If a Participant makes a subsequent deferral election within twelve (12) months
from the date such amounts would otherwise be paid (i.e., within twelve (12)
months of the date certain on which such distribution would otherwise be made),
such subsequent deferral election will be of no effect and the Participant's
Compensation Deferrals subject to such election will be paid according to the
Participant's initial deferral election.
 
5.3  
Distributions on Death.  In the event of a Participant's death prior to the
distribution of all amounts credited to his Account, the Participant's Account
balance will be paid in a single lump sum to his Beneficiary within ninety (90)
days following the date of the Participant's death.  If the Participant had been
receiving annual installments from amounts credited to his Account under the
Plan, the remainder of such annual installments will continue to be paid to the
Participant's Beneficiary.  This six (6) month restriction applicable to Key
Employees under Section 5.6 will not apply, or will cease to apply, with respect
to a distribution to a Participant’s Beneficiary by reason of the death of the
Participant.

 
5.4  
Distributions on Disability.  In the event of the Participant's Disability prior
to the receipt of his entire Account, he will receive amounts credited to such
Account in accordance with the terms of Section 5.1 (i.e., at Termination of
Employment or as a Scheduled In-Service Withdrawal).  Alternatively, if the
Participant elects, he may apply to the Daily Administrator for an Unforeseeable
Emergency distribution pursuant to Section 5.5 of the Plan.

 
5.5  
Unforeseeable Emergency.  A Participant who is an Active Employee or who has
incurred a Disability may submit a written application to the Daily
Administrator for an earlier distribution of amounts credited to his Account on
account of an Unforeseeable Emergency.  The existence of an Unforeseeable
Emergency will be determined by the Daily Administrator in its sole and absolute
discretion.  In the event that the Daily Administrator determines an
Unforeseeable Emergency exists, it may permit the Participant to receive a
distribution of all or a portion of his Account as necessary to satisfy such
Unforeseeable Emergency as provided under the final regulations issued under
section 409A.  Specifically, the amount distributable on account of an
Unforeseeable Emergency must be limited to the amount reasonably necessary to
satisfy the emergency need (which may include amounts necessary to pay any
Federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution).  The determination of an Unforeseeable Emergency
must take into account any additional compensation that is available by reason
of the cessation of the Participant's Compensation Deferrals to the Plan
pursuant to this Section 5.5.  However, such determination is not required to
take into account additional compensation that could be paid to the Participant,
but which has not actually been paid, under any other nonqualified deferred
compensation plan in which the Participant is a member or pursuant to the
provisions of Article V of this Plan.  An Unforeseeable Emergency distribution
to an Active Employee will result in the suspension of his Compensation
Deferrals to the Plan for the remainder of the Plan Year in which the
Unforeseeable Emergency distribution occurs.

 
5.6  
Time and Form of Payment.  Any Scheduled In-Service Withdrawal distribution will
be paid in the form of a single lump sum in March of the year specified by the
Participant in accordance with Section 5.1.  Upon Termination of Employment, the
Participant's entire Account balance will be distributed in the form of either
(i) a single lump sum or (ii) in a series of between two (2) and fifteen (15)
equal annual installments with the final payment being a distribution of one
hundred percent (100%) of the Account balance, as elected by the Participant in
accordance with Section 4.1 and Section 5.1.  The Participant may not modify his
election as to the form of distribution upon Termination of Employment.

 
 
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To the extent that a Participant has elected to receive installment
distributions upon his Termination of Employment, such installment distributions
will only be paid if the value of the Participant’s Accounts upon Termination of
Employment exceeds Ten Thousand Dollars ($10,000).  If such Accounts equal Ten
Thousand Dollars ($10,000) or less, such Accounts will be paid in the form of a
lump sum payment.  Further, in the event that the Participant elects a Scheduled
In-Service Withdrawal and incurs a Termination of Employment prior to the
Scheduled In-Service Withdrawal Date, the Participant's Scheduled In-Service
Withdrawal election will be cancelled and the Participant's entire Account
balance will be paid according to the Participant's termination distribution
election made with respect to his Employer Matching Contributions and Employer
Discretionary Contributions, subject to the six (6) month delay applicable to
Key Employees described in Section 5.6.
 
A lump sum payment of amounts credited to a Participant's Account will be made
as soon as administratively possible following the date the Participant is
entitled to a distribution under this Article V but in no event more than sixty
(60) days following the date entitling the Participant to such
distribution.  The first annual installment payment of amounts credited to a
Participant's Account will be made as soon as administratively possible
following the date the Participant is entitled to a distribution under this
Article V but in no event more than (60) days following the date entitling the
Participant to such distribution.  Subsequent installment payments of the
Participant's Account will be made in March of each year thereafter.
 
If the Participant does not specify the time and form of payment with respect to
his Account under the Plan, such Account balance will be distributed to the
Participant upon his Termination of Employment in a single lump sum.
 
Notwithstanding the foregoing, distributions under this Plan that are payable to
a Key Employee on account of a Termination of Employment will be delayed for a
period of six (6) months and one (1) day following such Participant’s
Termination of Employment.  This six (6) month restriction will not apply, or
will cease to apply, with respect to a distribution to a Participant’s
Beneficiary by reason of the death of the Participant.
 

 

         

End of Article V
 

 
 
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Exhibit 10.11

ARTICLE VI
 

 
PAYMENT LIMITATIONS
 
6.1  
Payment Due an Incompetent.  If a person entitled to any payment under this Plan
is, in the sole judgment of the Daily Administrator, under a legal disability,
or is otherwise unable to apply such payment to his own interest and advantage,
the Daily Administrator, in the exercise of its discretion, may direct the
Employer or payor of the benefit to make any such payment in any one (1) or more
of the following ways:

 
(a)  
Directly to such person;

 
(b)  
To his legal guardian or conservator; or

 
(c)  
To his spouse or to any person charged with the duty of his support, to be
expended for his benefit and/or that of his dependents.

 
The decision of the Daily Administrator will in each case be final and binding
upon all persons in interest.
 
6.2  
Nonalienation of Benefits.  To the extent permitted by law, benefits payable
under this Plan will not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution,
or levy of any kind, either voluntary or involuntary except that the Plan will
recognize the division of benefits between the Participant and his spouse in
connection with a divorce.  However, no benefit awarded to the spouse pursuant
to such divorce will be payable to such spouse until the time the Participant is
entitled to receive a distribution of benefits from the Plan.  The benefit
payable to the spouse will be paid in the form of a lump sum cash payment as
soon as practicable following the event entitling the Participant to a
distribution but in no event more than ninety (90) days after such distribution
event.

 
Any unauthorized attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to benefits payable
hereunder will be void.  No part of the assets of the Employer will be subject
to seizure by legal process resulting from any attempt by creditors of or
claimants against any Participant (or beneficiary), or any person claiming under
or through the foregoing, to attach his interest under the Plan.
 

 

         

End of Article VI
 

 
 
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Exhibit 10.11

ARTICLE VII
 

 
FUNDING
 
7.1  
Funding.  Benefits under the Plan will constitute general unfunded obligations
of the Employer in accordance with the terms of the Plan.  No amounts in respect
of such benefits will be set aside or held in trust, and no recipient of any
benefit under this Plan will have any right to have the benefit paid out of any
particular assets of the Employer; provided, however, that the Company may
establish a Rabbi Trust to assist with the payment of benefits under the
Plan.  The assets of any such Rabbi Trust will be subject to the claims of the
Employer's and the Affiliate's general creditors.  Such Rabbi Trust and its
assets will conform to the terms of the model trust, as described in Revenue
Procedure 92-64.

 
7.2  
Creditor Status.  Participants have the status of general unsecured creditors of
the Employer and this Plan constitutes the Employer's promise to make benefit
payments as described herein.  It is the intention of the parties to this Plan
and any companion Rabbi Trust that benefits under this Plan be unfunded for tax
purposes and for purposes of Title I of ERISA.

 

 

         

End of Article VII
 

 
 
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Exhibit 10.11

ARTICLE VIII
 

 
ADMINISTRATION
 
8.1  
Appointment of Benefits Committee.  Responsibility for administration of this
Plan will be with the Benefits Committee who will be the named Plan
Administrator.  The Benefits Committee will be appointed by the Compensation
Committee.  If the Compensation Committee fails to appoint a Benefits Committee,
it will serve as the Benefits Committee.  The members of the Benefits Committee
will not receive compensation with respect to their services for the Benefits
Committee.  The members of the Benefits Committee will serve without bond or
security for the performance of their duties under the Plan unless the
applicable law makes the furnishing of such bond or security mandatory or unless
required by the Compensation Committee.

 
8.2  
Committee Powers and Duties.  The Benefits Committee will have sole and absolute
discretion regarding the exercise of its powers and duties under this
Plan.  Such powers and duties will include, but not be limited to, the following
powers and duties as may be necessary to discharge its responsibilities under
the Plan:

 
(a)  
to appoint a Daily Administrator to handle the day-to-day administration of the
Plan pursuant to Section 8.3, and, if applicable, to appoint the Trustee of the
Rabbi Trust;

 
(b)  
to construe and interpret the Plan, decide all questions of eligibility,
determine the amount, manner and time of payment of any benefits under the Plan
and make final determinations regarding all benefit claims;

 
(c)  
to prescribe rules for the operation of the Plan;

 
(d)  
to receive from the Employer and from Employees such information as will be
necessary for the proper administration of the Plan;

 
(e)  
to make any necessary filings with the appropriate government agency;

 
(f)  
to furnish any Employee or Beneficiary, who requests in writing, statements
indicating such Employee's or Beneficiary's total Account balances;

 
(g)  
to maintain all records necessary for the administration of the Plan;

 
(h)  
to select the Investment Options under the Plan;

 
(i)  
to report to the Trustee of the Rabbi Trust all available information regarding
the amount of benefits payable to each Employee, the computations with respect
to the allocation of assets, and any other information which the Trustee may
require;

 
(j)  
to delegate to one or more of the members of the Benefits Committee the right to
act in its behalf in all matters connected with the administration of the Plan
and Rabbi Trust;

 
 
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Exhibit 10.11
 
(k)  
to delegate to any individual such of the powers and duties as the Benefits
Committee deems appropriate; and

 
(l)  
to appoint or employ for the Plan any agents it deems advisable, including, but
not limited to, legal counsel.

 
Except as provided in Section 10.1, the Benefits Committee will have no power to
add to, subtract from or modify any of the terms of the Plan, nor to change or
add to any benefits provided by the Plan, nor to waive or fail to apply any
requirements of eligibility for benefits under the Plan.  All rules and
decisions of the Benefits Committee will be uniformly and consistently applied
to all Employees in similar circumstances.
 
A majority of the members of the Benefits Committee will constitute a quorum for
the transaction of business.  No action will be taken except upon a majority
vote of the Benefits Committee members.  An individual will not vote or decide
upon any matter relating solely to himself or vote in any case in which his
individual right or claim to any benefit under the Plan is particularly
involved.
 
8.3  
Appointment of Daily Administrator

 
The Compensation Committee or the Benefits Committee will appoint the Daily
Administrator who will have the responsibility and duty to administer the Plan
on a daily basis in a nondiscretionary manner.  The Compensation Committee or
the Benefits Committee may remove the Daily Administrator with or without cause
at any time.  The Daily Administrator may resign upon written notice to the
Benefits Committee.
 
8.4  
Daily Administrator Powers and Duties

 
The Daily Administrator will have the following duties:
 
(a)  
to direct the administration of the Plan in accordance with its terms;

 
(b)  
to adopt rules of procedure and regulations necessary for the administration of
the Plan, provided such rules are not inconsistent with the terms of the Plan;

 
(c)  
to determine all questions with regard to rights of Employees, Participants, and
Beneficiaries under the Plan including, but not limited to, questions involving
eligibility of an Employee to participate in the Plan and the value of the
Participant’s vested Account;

 
(d)  
to enforce the terms of the Plan and any rules and regulations adopted by the
Benefits Committee;

 
(e)  
to review and render decisions respecting an initial claim for a benefit under
the Plan;

 
(f)  
to furnish the Employer with information which the Employer may require for tax
or other purposes;

 
 
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Exhibit 10.11
 
(g)  
to engage the service of counsel (who may, if appropriate, be counsel for the
Employer), actuaries, and agents whom it may deem advisable to assist it with
the performance of its duties;

 
(h)  
to prescribe procedures to be followed by distributees in obtaining benefits;

 
(i)  
to receive from the Employer and from Employees such information as is necessary
for the proper administration of the Plan;

 
(j)  
to receive and review reports from the Trustee of the financial condition and
receipts of disbursements from the Rabbi Trust;

 
(k)  
to establish and maintain, or cause to be maintained, the individual Account(s)
described in Section 2.1(a);

 
(l)  
to create and maintain such records and forms as are required for the efficient
administration of the Plan;

 
(m)  
to make all determinations and computations concerning the benefits, credits and
debits to which any Participant, or other Beneficiary, is entitled under the
Plan;

 
(n)  
to give the Trustee specific directions in writing with respect to:

 
(i)  
the making of distribution payments, giving the names of the payees, the amounts
to be paid and the time or times when payments will be made; and

 
(ii)  
the making of any other payments which the Trustee is not by the terms of the
Trustee Agreement authorized to make without a direction in writing by the Daily
Administrator;

 
(o)  
to prepare, or cause to be prepared, an annual report for the Employer, as of
the last day of each Plan Year, in such form as may be required by the Employer;

 
(p)  
to determine and maintain records of the age and amount of Compensation, Hours
of Service, and Service of each Employee;

 
(q)  
to comply (or transfer responsibility for compliance to the Trustee) with all
applicable Federal income tax withholding requirements for benefit
distributions; and

 
(r)  
to construe the Plan, in its sole and absolute discretion, and make equitable
adjustments for any mistakes and errors made in the administration of the Plan.

 
The foregoing list of express duties is not intended to be either complete or
conclusive, and the Daily Administrator will, in addition, exercise such other
powers and perform such other duties as it may deem necessary, desirable,
advisable or proper for the supervision and administration of the Plan.
 
8.5  
Claim Procedures.

 
 
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Exhibit 10.11
 
(a)  
Initial Claim.  In the event that an Employee, Eligible Employee, Participant or
his Beneficiary claims to be eligible for benefits, or claims any rights under
this Plan, such Claimant must complete and submit such claim forms and
supporting documentation as will be required by the Daily Administrator, in its
sole and absolute discretion.  Likewise, any Participant or Beneficiary who
feels unfairly treated as a result of the administration of the Plan must file a
written claim, setting forth the basis of the claim, with the Daily
Administrator.  In connection with the determination of a claim, or in
connection with review of a denied claim, the Claimant may examine this Plan,
and any other pertinent documents generally available to Participants that are
specifically related to the claim.

 
A written or electronic notice of the disposition of any such claim will be
furnished to the Claimant within ninety (90) days after the claim is filed with
the Daily Administrator.  Such notice will refer, if appropriate, to pertinent
provisions of this Plan, will set forth in writing the reasons for denial of the
claim if a claim is denied (including references to any pertinent provisions of
this Plan) and, where appropriate, will describe any additional material or
information necessary for the Claimant to perfect the claim and an explanation
of why such material or information is necessary.  If the claim is denied, in
whole or in part, the Claimant will also be notified of the Plan's claim review
procedure, including the Claimant’s right to file an action under section 502(a)
of ERISA, and the time limits applicable to such procedures following an adverse
decision regarding his claim on review as provided below.  All benefits provided
in this Plan as a result of the disposition of a claim will be paid as soon as
practicable following receipt of proof of entitlement, if requested.
 
(b)  
Request for Review.  Within ninety (90) days after receiving the notice of the
Daily Administrator’s disposition of the claim, the Claimant may file with the
Benefits Committee a written request for review of his claim.  In connection
with the request for review, the Claimant will be entitled to be represented by
counsel and will be given, upon request and free of charge, reasonable access to
all pertinent documents for the preparation of his claim.  If the Claimant does
not file a written request for review within ninety (90) days after receiving
notice of the Daily Administrator’s disposition of the claim, the Claimant will
be deemed to have accepted the Daily Administrator’s written or electronic
disposition, unless the Claimant was physically or mentally incapacitated so as
to be unable to request review within the ninety (90) day period.

 
(c)  
Decision on Review.  After receipt by the Benefits Committee of a written
application for review of his claim, the Benefits Committee will review the
claim taking into account all comments, documents, records and other information
submitted by the Claimant regarding the claim without regard to whether such
information was considered in the initial benefit determination.  The Benefits
Committee will notify the Claimant of its decision by delivery or by certified
or registered mail to his last known address.  A decision on review of the claim
will be made by the Benefits Committee within sixty (60) days following receipt
of the written application for review.  If special circumstances require an
extension of the sixty (60) day period, the Benefits Committee will so notify
the Claimant and a decision will be rendered within one hundred-twenty (120)
days of receipt of the request for review.  In any event, if a claim is not
determined by the Benefits Committee within one hundred-twenty (120) days of
receipt of written submission for review, it will be deemed to be denied.

 
 
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Exhibit 10.11
 
The decision of the Benefits Committee will be provided to the Claimant as soon
as possible but no later than five (5) days after the benefit determination is
made.  The decision will be in writing or electronic and will include the
specific reasons for the decision presented in a manner calculated to be
understood by the Claimant and will contain references to all relevant Plan
provisions on which the decision was based.  Such decision will also advise the
Claimant that he may receive upon request, and free of charge, reasonable access
to and copies of all documents, records and other information relevant to his
claim and that he may file an action under section 502(a) of ERISA in the case
of an adverse decision regarding his claim on review.  The decision of the
Benefits Committee will be final and conclusive.
 
8.6  
Benefits Committee Procedures.  The Benefits Committee may adopt such bylaws as
it deems desirable.  The Benefits Committee will elect one of its members as
chairman and will elect a secretary who may, but need not, be a member of the
Benefits Committee.

 

 

         

End of Article VIII
 

 
 
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Exhibit 10.11

ARTICLE IX
 

 
OTHER BENEFIT PLANS OF THE COMPANY
 
9.1  
Other Plans.  Nothing contained in this Plan will prevent a Participant prior to
his death, or his spouse or other Beneficiary after his death, from receiving,
in addition to any payments provided for under this Plan, any payments provided
for under any other plan or benefit program of the Company or an Affiliate, or
which would otherwise be payable or distributable to him, his surviving spouse
or Beneficiary under any plan or policy of the Company or an Affiliate or
otherwise.  Nothing in this Plan will be construed as preventing the Company or
any of its Affiliates from establishing any other or different plans providing
for current or deferred compensation for employees.  Unless specifically
provided otherwise in any plan of the Company intended to "qualify" under
section 401 of the Code, Compensation deferrals made under this Plan will not
constitute earnings or compensation for purposes of determining contributions or
benefits under such qualified plan.

 

 

         

End of Article IX
 

 
 
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Exhibit 10.11

ARTICLE X
 

 
MISCELLANEOUS
 
10.1  
Amendment.  The Compensation Committee may, by resolution, in its absolute
discretion, from time to time, amend, any or all of the provisions of the
Plan.  In addition, the Benefits Committee may amend the Plan to comply with
changes in the law or to implement administrative or design changes that will
not materially increase the cost of the Plan to the Company. No such amendment
may adversely impact the amount of benefits a Participant has accrued under the
Plan at such time except to the extent required by applicable law.

 
10.2  
Termination.  The Compensation Committee may, by resolution, in its absolute
discretion, terminate the Plan in whole or part at any time; provided, that no
such termination may adversely impact the amount of benefits a Participant has
accrued under the Plan at such time except to the extent required by applicable
law.  Any termination of the Plan will comply with the provisions of section
409A of the Code as set forth in this Section 10.2.

 
The Plan may be terminated and liquidated under the following circumstances:
 
(a)  
Corporate Dissolution or Bankruptcy.  The Compensation Committee may terminate
and liquidate the Plan within twelve (12) months of a corporate dissolution
taxed under section 331 of the Code or with the approval of a bankruptcy court
pursuant to 11 U.S.C. § 503(b)(1)(A), provided that the amounts deferred under
the Plan are included in Participants; gross incomes in the latest of the
following years (or if earlier, the taxable year in which the amount is actually
or constructively received):

 
(i)  
The calendar year in which the Plan termination and liquidation occurs.

 
(ii)  
The first calendar year in which the amount is no longer subject to a
substantial risk of forfeiture.

 
(iii)  
The first calendar year in which the payment is administratively practicable.

 
(b)  
Change in Control.  The Compensation Committee may terminate and liquidate the
Plan within the thirty (30) days preceding or the twelve (12) months following a
change in control event, as defined in Treasury Regulation section
1.409A-3(i)(5)), provided that all plans or arrangements that would be
aggregated with the Plan under section 409A of the Code are also terminated and
liquidated with respect to each Participant that experienced the change in
control event so that under the terms of the Plan and all such arrangements the
Participant is required to receive all amounts of compensation deferred under
such arrangements within twelve (12) months of the termination of the Plan or
arrangement, as applicable.  In the case of a change of control event which
constitutes a sale of assets, the termination of the Plan pursuant to this
Section 10.2(b) may be made with respect to the Employer that is primarily
liable immediately after the change of control transaction for the payment of
benefits under the Plan.

 
(c)  
Termination of Plan.  The Compensation Committee may terminate and liquidate the
Plan provided that (i) the termination and liquidation does not occur by reason
of a downturn of the financial health of the Company or an Employer, (ii) all
plans or arrangements that would be aggregated with the Plan under section 409A
of the Code are also terminated and liquidated, (iii) no payments in liquidation
of the Plan are made within twelve (12) months of the date of termination of the
Plan other than payments that would be made in the ordinary course operation of
the Plan, (iv) all payments are made within twenty-four (24) months of the date
the Plan is terminated and (v) the Company or the Employer, as applicable
depending on whether the Plan is terminated with respect to such entity, do not
adopt a new plan that would be aggregated with the Plan within three (3) years
of the date of the termination of the Plan.

 
 
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Exhibit 10.11
 
10.3  
Nonguarantee of Employment.  Nothing contained in this Plan will be construed as
a contract of employment between the Employer and any Employee, or as a right of
any Employee to be continued in the employment of the Employer, or as a
limitation of the right of the Employer to discharge any of its Employees, with
or without cause.

 
10.4  
Indemnification.  The Company will indemnify each of its Compensation Committee
members and Benefits Committee members against any and all claims, loss,
damages, expense (including reasonable counsel fees), and liability arising from
any action, failure to act, or other conduct in the member's official capacity,
except when due to such Compensation Committee or Benefits Committee's member's
own gross negligence or willful misconduct.

 
10.5  
Withholding.  The Employer or its designee will withhold from any benefit
payments made under this Plan, the required amounts of federal, state or local
income or other applicable taxes.

 
10.6  
Expenses.  The Employer will pay all costs and expenses incurred in operating
and administering the Plan. Such costs and expenses will be paid by the Employer
from its general assets or the Rabbi Trust.

 

 

         

End of Article X
 

 
 
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Exhibit 10.11

IN WITNESS WHEREOF, the Company has executed this Plan as of this _______ day of
_______________, 2008.
 
 
HEALTHSOUTH CORPORATION

 
By:
   

 
Its:
   

 

 
 
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Exhibit 10.11

APPENDIX A
 
SERVICE CREDITING
 
Participant Vesting for Certain Acquisitions or Business Transactions
 
An individual who becomes an Employee of the Employer or an Affiliate and a
Participant in the Plan in connection with an acquisition (either stock,
partnership interest or assets) or a similar business transaction (such as an
outsourcing or employee leasing arrangement) will be given credit for his prior
service with the seller, outsourcing entity or leasing company, as applicable,
for vesting purposes under the Plan if the terms of the acquisition agreement,
business transaction documents or an action of the Employer or an Affiliate so
provides.  This prior vesting service credit applies with respect to the
following acquisitions and business transactions:
 
ACQUISITION OR TRANSACTION
EFFECTIVE DATE
                       

No further action except amending this schedule under Appendix A by the Daily
Administrator will be necessary to reflect prior service granted to employees of
acquired entities or groups by the Company.
 
This Appendix A may be updated from time to time without the need for formal
amendment to the Plan in which case an updated appendix A will be attached
hereto.
 

 

A-1