As filed with the Securities and Exchange Commission on May 25, 2022.
File No. 001-   
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
Enhabit, Inc.
(Exact name of Registrant as specified in its charter)
Delaware
47-2409192
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
identification number)
6688 N. Central Expressway
Suite 1300
Dallas, TX
75206
(Address of principal executive offices)
(Zip code)
214-239-6500
(Registrant’s telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
to be so Registered
Name of Each Exchange on which
Each Class is to be Registered
Common Stock, par value $0.01 per share
New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

ENHABIT, INC.
INFORMATION REQUIRED IN REGISTRATION STATEMENT CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10
Certain information required to be included herein is incorporated by reference to specifically identified portions of the body of the information statement filed herewith as Exhibit 99.1. None of the information contained in the information statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.
Item 1.
Business.
The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements,” “The Separation and Distribution,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Certain Relationships and Related Party Transactions” and “Where You Can Find More Information.” Those sections are incorporated herein by reference.
Item 1A.
Risk Factors.
The information required by this item is contained under the section of the information statement entitled “Risk Factors.” That section is incorporated herein by reference.
Item 2.
Financial Information.
The information required by this item is contained under the sections of the information statement entitled “Capitalization,” “Unaudited Pro Forma Consolidated Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Index to Financial Statements” and the financial statements referenced therein. Those sections are incorporated herein by reference.
Item 3.
Properties.
The information required by this item is contained under the section of the information statement entitled “Business.” That section is incorporated herein by reference.
Item 4.
Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is contained under the section of the information statement entitled “Security Ownership of Certain Beneficial Owners and Management.” That section is incorporated herein by reference.
Item 5.
Directors and Executive Officers.
The information required by this item is contained under the sections of the information statement entitled “Management” and “Directors.” Those sections are incorporated herein by reference.
Item 6.
Executive Compensation.
The information required by this item is contained under the sections of the information statement entitled “Executive Compensation” and “Enhabit 2022 Omnibus Performance Incentive Plan.” Those sections are incorporated herein by reference.
Item 7.
Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is contained under the sections of the information statement entitled “Management,” “Directors” and “Certain Relationships and Related Party Transactions.” Those sections are incorporated herein by reference.

Item 8.
Legal Proceedings.
The information required by this item is contained under the section of the information statement entitled “Business—Legal Proceedings.” That section is incorporated herein by reference.
Item 9.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
The information required by this item is contained under the sections of the information statement entitled “The Separation and Distribution,” “Dividend Policy,” “Capitalization,” and “Description of Capital Stock.” Those sections are incorporated herein by reference.
Item 10.
Recent Sales of Unregistered Securities.
The information required by this item is contained under the section of the information statement entitled “Description of Capital Stock—Sale of Unregistered Securities.” That section is incorporated herein by reference.
Item 11.
Description of Registrant’s Securities to be Registered.
The information required by this item is contained under the sections of the information statement entitled “The Separation and Distribution” “Dividend Policy,” and “Description of Capital Stock.” Those sections are incorporated herein by reference.
Item 12.
Indemnification of Directors and Officers.
The information required by this item is contained under the section of the information statement entitled “Description of Capital Stock.” That section is incorporated herein by reference.
Item 13.
Financial Statements and Supplementary Data.
The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” and the financial statements referenced therein. That section is incorporated herein by reference.
Item 14.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 15.
Financial Statements and Exhibits.
(a)
Financial Statements and Schedule
The information required by this item is contained under the sections of the information statement entitled “Unaudited Pro Forma Consolidated Financial Information” and “Index to Financial Statements” and the financial statements referenced therein. Those sections are incorporated herein by reference.

(b)
Exhibits
The following documents are filed as exhibits hereto:
Exhibit
Number
Exhibit Description
2.1
Form of Separation and Distribution Agreement by and between Encompass Health Corporation and Enhabit, Inc.*
2.2
Form of Transition Services Agreement by and between Encompass Health Corporation and Enhabit, Inc.*
2.3
Form of Tax Matters Agreement by and between Encompass Health Corporation and Enhabit, Inc.*
2.3
Form of Employee Matters Agreement by and between Encompass Health Corporation and Enhabit, Inc.*
Form of Amended and Restated Certificate of Incorporation of Enhabit, Inc.
Form of Amended and Restated Bylaws of Enhabit, Inc.
Form of Enhabit, Inc. 2022 Omnibus Performance Incentive Plan
Form of Enhabit, Inc. Change in Control Benefits Plan
Form of Enhabit, Inc. Executive Severance Plan
List of Subsidiaries
Information Statement of Enhabit, Inc., preliminary and subject to completion, dated [   ], 2022
*
To be filed by amendment.

SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
 
ENHABIT, INC.
 
 
 
 
 
By:
/s/ Barbara Jacobsmeyer
 
 
Name:
Barbara Jacobsmeyer
 
 
Title:
President and Chief Executive Officer
 
 
 
 
Date: May 25, 2022
 
 
 


Exhibit 3.1

FORM OF AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

ENHABIT, INC.

(a Delaware Corporation)



The undersigned, Barbara A. Jacobsmeyer certifies that she is the President and Chief Executive Officer of Enhabit, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:

1. The name of the Corporation is Enhabit, Inc.

2. The Corporation was originally incorporated under the name HealthSouth Home Health Holdings, Inc. The date of filing its original Certificate of Incorporation (as amended and restated from time to time, the “Certificate of Incorporation”) with the Secretary of State of Delaware was November 20, 2014.

3. The Certificate of Incorporation was previously amended and restated on December 31, 2014.

4. The Article FOURTH of the Certificate of Incorporation was amended effective as of September 12, 2016 pursuant to that certain Certificate of Amendment dated August 29, 2016.

5. The Article FIRST of the Certificate of Incorporation was amended effective as of  January 1, 2018 pursuant to that certain Certificate of Amendment dated October 31, 2017.

6. The Article FIRST of the Certificate of Incorporation was further amended effective as of March 7, 2022 pursuant to that certain Certificate of Amendment dated March 7, 2022.

7.
The Article FOURTH of the Certificate of Incorporation was further amended effective as of [          ], 2022 pursuant to that certain Certificate of Amendment dated [          ], 2022.


8. In accordance with the applicable provisions of Sections 141, 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”), this Amended and Restated Certificate of Incorporation has been duly adopted by the Board of Directors of the Corporation and by the written consent of its sole stockholder.

9. Effective as of [●], 2022, the text of this Amended and Restated Certificate of Incorporation of the Corporation shall read as herein set forth in full:

FIRST:             The name of the Corporation is Enhabit, Inc.

SECOND:   The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

THIRD:              The nature of the business or purposes to be conducted or promoted shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the DGCL.

FOURTH:       The total number of shares of stock which the Corporation shall have the authority to issue is [     ] shares, consisting of [     ] shares of Common Stock, par value One Cent ($0.01) per share, and [     ] shares of Preferred Stock, par value Ten Cents ($0.10) per share.

Shares of Preferred Stock may be issued from time-to-time in one or more series, each such series to have such distinctive designation or title as may be stated and expressed in this Article FOURTH or as may be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and such relative, participating, optional or other special rights (including, without limitation, the right to convert the shares of such Preferred Stock into shares of the Corporation’s Common Stock at such a rate and upon such terms and conditions as may be fixed by the Corporation’s Board of Directors), with such qualifications, limitations or restrictions of such preferences or rights as shall be stated and expressed in this Article FOURTH or in the resolution or resolutions providing for the issue of such series of Preferred Stock as may be adopted from time-to-time by the Board of Directors prior to the issuance of any shares thereof, in accordance with the laws of the State of Delaware.

Except as may be otherwise provided in this Article FOURTH or in the resolution or resolutions providing for the issue of a particular series, the Board of Directors may from time-to-time increase the number of shares of any series already created by providing that any unissued shares of Preferred Stock shall constitute part of such series, or may decrease (but not below the number of shares thereof then outstanding) the number of shares of any series already created by providing that any unissued shares previously assigned to such series shall no longer constitute part thereof.
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FIFTH:        The Board of Directors shall have the power to make, alter or repeal the Bylaws of the Corporation at any meeting of the Board of Directors at which a quorum is present or by written consent by the affirmative vote of a majority of the whole Board of Directors.  Election of Directors need not be by written ballot.

SIXTH:      Special Meetings of the stockholders of the Corporation may be called only by the Board of Directors of the Corporation by resolution adopted by a majority of the whole Board of Directors or in writing by the holders of at least 20% of the outstanding shares of the Corporation entitled to vote in elections of Directors.

SEVENTH:       (a) Unless the conditions set forth in clauses (1) through (4) of this Article SEVENTH, Section (a) are satisfied, the affirmative vote of the holders of Sixty-Six and Two-Thirds Percent (66-2/3%) of all shares of the Corporation entitled to vote in elections of Directors, considered for the purposes of this Article SEVENTH as one class, shall be required for the adoption or authorization of a business combination (as hereinafter defined) with any other entity (as hereinafter defined) if, as of the record date for the determination of stockholders entitled to notice thereof and to vote thereon, the other entity is the beneficial owner, directly or indirectly, of more than Twenty Percent (20%) of the outstanding shares of the Corporation entitled to vote in elections of Directors, considered for the purposes of this Article SEVENTH as one class. The Sixty-Six and Two-Thirds Percent (66-2/3%) voting requirement set forth in the foregoing sentence shall not be applicable if:


(1)
The cash, or fair market value of other consideration, to be received per share by holders of the Corporation’s Common Stock in the business combination, is at least an amount equal to (A) the highest per share price paid by the other entity in acquiring any of its holdings of the Corporation’s Common Stock plus (B) the aggregate amount, if any, by which Five Percent (5%) per annum of that per share price exceeds the aggregate amount of all dividends paid in cash, in each case since the date on which the other entity acquired the Twenty Percent (20%) interest;


(2)
After the other entity has acquired a Twenty Percent (20%) interest and prior to the consummation of the business combination: (A) the other entity shall have taken steps to ensure that the Corporation’s Board of Directors included at all times representation by continuing Director(s) (as hereinafter defined) proportionate to the stockholders of the public holders of the Corporation’s Common Stock not affiliated with the other entity (with a continuing Director to occupy any resulting fractional board position); (B) the other entity shall not have acquired any newly issued shares, directly or indirectly, from the Corporation (except upon conversion of convertible securities acquired by it prior to obtaining a Twenty Percent (20%) interest or as a result of a pro rata share dividend or share split); and (C) the other entity shall not have acquired any additional outstanding shares of the Corporation’s Common Stock or securities convertible into shares of the Corporation’s Common Stock except as a part of the transaction that resulted in the other entity’s acquiring its Twenty Percent (20%) interest;
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(3)
The other entity shall not have (A) received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or tax credits provided by the Corporation or (B) made any major change in the Corporation’s business or equity capital structure without in either case the approval of at least a majority of all the Directors and at least two-thirds of the continuing Directors prior to the consummation of the business combination; and


(4)
A proxy statement responsive to the requirements of the Securities Exchange Act of 1934 shall have been mailed to public stock holders of the Corporation for the purpose of soliciting stockholder approval of the business combination and shall have contained at the front thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the business combination that the continuing Directors, or any of them, may choose to state and, if deemed advisable by a majority of the continuing Directors, an opinion of a reputable investment banking firm as to the fairness of the terms of the business combination, from the point of view of the remaining public stockholders of the Corporation (the investment banking firm to be selected by a majority of the continuing Directors and to be paid a reasonable fee for its services by the Corporation upon receipt of the opinion).

The provisions of this Article SEVENTH shall also apply to a business combination with any other entity that at any time has been the beneficial owner, directly or indirectly, of more than Twenty Percent (20%) of the outstanding shares of the Corporation entitled to vote in elections of Directors, considered for the purposes of this Article SEVENTH as one class, notwithstanding the fact that the other entity has reduced its shareholders below Twenty Percent (20%) if, as of the record date for the determination of stockholders entitled to notice of and to vote on the business combination, the other entity is an “affiliate” (as hereinafter defined) of the Corporation.

(b) As used in this Article SEVENTH, (1) the term “other entity” shall include any corporation, person or other entity and any other entity with which it or its “affiliate” or “associate” (as defined below) has any agreement, arrangement, or understanding, directly or indirectly, for the purpose of acquiring, holding, voting, or disposing of shares of the Corporation, or that is its “affiliate” or “associate” as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on September 1, 1986, together with the successors and assigns of those persons in any transaction or series of transactions not involving a public offering of the Corporation’s shares within the meaning of the Securities Act of 1933; (2) an other entity shall be deemed to be the beneficial owner of any shares of the Corporation that the other entity (as defined above) has the right to acquire pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise; (3) the outstanding shares of any class of the Corporation shall include shares deemed owned through application of clause (2) above but shall not include any other shares that may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise; (4) the term “business combination” shall include (A) the sale, exchange, lease, transfer or other disposition by the Corporation of all, or substantially all, of its assets or business to any other entity, (B) the consolidation of the Corporation with or its merger into any other entity, (C) the merger into the Corporation of any other entity, or (D) a combination or majority share acquisition in which the Corporation is the acquiring corporation and its voting shares are issued or transferred to any other entity or to stockholders of any other entity, and the term “business combination” shall also include any agreement, contract or other arrangement with another entity providing for any of the transactions described in (A) through (D) of this clause (4); (5) the term “continuing Director” shall mean either a person who was a member of the Corporation’s Board of Directors on August 15, 1986, or a person who was elected to the Corporation’s Board of Directors by the public stockholders of the Corporation prior to the time when the other entity acquired in excess of five percent (5%) of the shares of the Corporation entitled to vote in the election of Directors, considered for the purposes of this Article SEVENTH as one class, or a person recommended to succeed a continuing Director by a majority of the continuing Directors; and (6) for the purposes of Article SEVENTH, Section (a), clause (1), the term “other consideration to be received” shall mean shares of the Corporation’s Common Stock retained by its existing public stockholders in the event of a business combination with the other entity in which the Corporation is the surviving corporation.
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(c) A majority of the continuing Directors shall have the power and duty to determine for the purposes of this Article SEVENTH, on the basis of information known to them, whether (1) the other entity beneficially owns more than Twenty Percent (20%) of the outstanding shares of the Corporation entitled to vote in elections of Directors, (2) an other entity is an “affiliate” or “associate” (as defined above) of another, or (3) an other entity has an agreement, arrangement or understanding with another.

(d) Nothing contained in this Article SEVENTH shall be construed to relieve any other entity from any fiduciary obligation imposed by law.

EIGHTH:     Subject to the last sentence of this Article EIGHTH, the Corporation reserves the right to amend and repeal any provision contained in this Amended and Restated Certificate of Incorporation including, without limiting the generality of the foregoing, the addition of a provision requiring a supermajority vote of stockholders to remove Directors. The provisions set forth in Articles SIXTH, SEVENTH and this Article EIGHTH of this Amended and Restated Certificate of Incorporation may not be repealed or amended in any respect, unless such action is approved by the affirmative vote of the holders of Sixty-Six and Two-Thirds Percent (66-2/3%) of all shares of the Corporation entitled to vote in elections of Directors, considered for purposes of this Article EIGHTH as one class.

NINTH:       No Director of this Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director; provided, however, that this Article NINTH shall not eliminate the liability of a Director (a) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL, or (d) for any transaction from which the Director derived an improper personal benefit.

Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification.

[SIGNATURE PAGE FOLLOWS]
5


IN WITNESS WHEREOF, said Enhabit, Inc. has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf by Barbara A. Jacobsmeyer, its President and Chief Executive Officer, and attested by Chad Knight, its General Counsel, as of this [●] day of [●] 2022.

 
Enhabit, Inc.
     
     
 
By:
 
 
Name:
Barbara A. Jacobsmeyer
 
Title:
President and Chief Executive Officer

Attest:
 
     
     
By:
   
Name:
Chad Knight
 
Title:
General Counsel
 




Exhibit 3.2



FORM OF AMENDED AND RESTATED

BYLAWS

OF

ENHABIT, INC.

(a Delaware corporation)













Amended and Restated Bylaws of Enhabit, Inc., _________, 2022

TABLE OF CONTENTS*

Page
     
ARTICLE I
     
OFFICES
     
Section 1.1
Registered Office
1
Section 1.2
Change of Location
1
     
ARTICLE II
     
MEETINGS OF STOCKHOLDERS
     
Section 2.1
Annual Meeting
1
Section 2.2
Special Meetings
1
Section 2.3
List of Stockholders Entitled to Vote
2
Section 2.4
Notice of Meetings
2
Section 2.5
Adjourned Meetings and Notice Thereof
2
Section 2.6
Quorum
3
Section 2.7
Voting
3
Section 2.8
Action by Consent of Stockholders
3
Section 2.9
Nature of Business at Annual Meetings of Stockholders
4
     
ARTICLE III
     
BOARD OF DIRECTORS
     
Section 3.1
General Powers
6
Section 3.2
Number of Directors
6
Section 3.3
Qualification
6
Section 3.4
Election
6
Section 3.5
Term
11
Section 3.6
Resignation and Removal
12
Section 3.7
Vacancies
12
Section 3.8
Quorum and Voting
12
Section 3.9
Regulations
12
Section 3.10
Annual Meeting
13
Section 3.11
Regular Meetings
13
Section 3.12
Special Meetings
13
Section 3.13
Notice of Meetings; Waiver of Notice
13
Section 3.14
Committees of Directors
14
Section 3.15
Powers and Duties of Committees
14
Section 3.16
Compensation of Directors
14
Section 3.17
Action Without Meeting
14
i


ARTICLE IV
     
OFFICERS
     
Section 4.1
Establishment of Offices
15
Section 4.2
Term of Office
15
Section 4.3
Delegation of Duties of Officers
15
Section 4.4
Removal of Officers
15
Section 4.5
Resignations
15
Section 4.6
Chairman and Vice Chairman of the Board
16
Section 4.7
Chief Executive Officer
16
Section 4.8
Chief Financial Officer
16
Section 4.9
President
16
Section 4.10
Chief Operating Officer
16
Section 4.11
Vice Presidents
17
Section 4.12
Secretary
17
Section 4.13
Treasurer
17
Section 4.14
Controller
17
     
ARTICLE V
     
CAPITAL STOCK
     
Section 5.1
Issuance of Certificates of Stock; Uncertificated Stock
17
Section 5.2
Signatures on Stock Certificates
17
Section 5.3
Stock Ledger
18
Section 5.4
Regulations Relating to Transfer
18
Section 5.5
Transfers
18
Section 5.6
Cancellation
18
Section 5.7
Lost, Destroyed, Stolen and Mutilated Certificates
18
Section 5.8
Fixing of Record Dates
19
     
ARTICLE VI
     
INDEMNIFICATION
     
Section 6.1
Indemnification
20
Section 6.2
Indemnification Insurance; Advancement of Expenses
20
     
ARTICLE VII
     
MISCELLANEOUS PROVISIONS
     
Section 7.1
Corporate Seal
21
Section 7.2
Fiscal Year
21
Section 7.3
Waiver of Notice
21
Section 7.4
Execution of Instruments, Contracts, Etc.
21
Section 7.5
Forum for Adjudication of Certain Disputes
22
Section 7.6
Severability
22
     
ARTICLE VIII
     
AMENDMENTS
     
Section 8.1
By Stockholders
23
Section 8.2
By Directors
23

* The Table of Contents appears here for convenience only and should not be considered a part of the Amended and Restated Bylaws.
ii



AMENDED AND RESTATED

BYLAWS

OF

ENHABIT, INC.

ARTICLE I

OFFICES

Section 1.1          Registered Office. The address of the registered office of Enhabit, Inc. (the “Corporation”) in the State of Delaware and the name of the registered agent at such address shall be as specified in the Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), or as specified in the most recent Statement of Change filed pursuant to law. The Corporation may also have other offices at such places within or without the State of Delaware as the Board of Directors may from time to time designate or as the business of the Corporation may require.

Section 1.2          Change of Location. In the manner permitted by law, the Board of Directors or the registered agent may change the address of the Corporation’s registered office in the State of Delaware and the Board of Directors may make, revoke or change the designation of the registered agent.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.1          Annual Meeting. The annual meeting of the stockholders of the Corporation for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held at such place within or without the State of Delaware as the Board of Directors may fix by resolution or as set forth in the notice of the meeting. The annual meeting shall be held on such date and at such time as shall be designated from time to time by the Board of Directors.

Section 2.2          Special Meetings. Special meetings of stockholders, unless otherwise prescribed by law, may be called at any time in accordance with the requirements of the Certificate of Incorporation. Special meetings of stockholders prescribed by law for the election of Directors shall be called by the Board of Directors, the Chairman of the Board, the President, or the Secretary whenever required to do so pursuant to applicable law. Special meetings of stockholders shall be held at such time and such place, within or without the State of Delaware, as shall be designated in the notice of meeting. Only such business as shall have been brought before the meeting by or at the direction of the Board of Directors shall be conducted at a special meeting of stockholders.



Section 2.3          List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the Corporation shall prepare, or cause to be prepared, at least ten days before every meeting of stockholders, a complete list, based upon the record date for such meeting determined pursuant to Section 5.8, of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders entitled to vote at any meeting, or to inspect the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

Section 2.4          Notice of Meetings. Written notice of each annual and special meeting of stockholders, other than any meeting the giving of notice of which is otherwise prescribed by law, stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered or mailed, in writing, at least ten but not more than fifty days before the date of such meeting, to each stockholder entitled to vote thereat. If mailed, such notice shall be deposited in the United States mail, postage prepaid, directed to such stockholder at his address as the same appears on the records of the Corporation. An affidavit of the Secretary, an Assistant Secretary or the transfer or other agent of the Corporation that notice has been duly given shall be evidence of the facts stated therein.

Section 2.5          Adjourned Meetings and Notice Thereof. Any meeting of stockholders may be adjourned to another time or place, if any, and the Corporation may transact at any adjourned meeting any business which might have been transacted at the original meeting. The person presiding over a meeting of stockholders shall have the power to adjourn the meeting at the request of the Board of Directors if the Board of Directors determines that adjournment is necessary or appropriate to enable stockholders to fully consider information which the Board of Directors determines has not been made sufficiently or timely available to stockholders or is otherwise in the best interest of stockholders. Notice need not be given of the adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken, unless (a) any adjournment or series of adjournments caused the original meeting to be adjourned for more than thirty days after the date originally fixed therefor, or (b) a new record date is fixed for the adjourned meeting. If notice of an adjourned meeting is given, such notice shall be given to each stockholder of record entitled to vote at the adjourned meeting in the manner prescribed in Section 2.4 for the giving of notice of meetings.
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Section 2.6          Quorum. At any meeting of stockholders, except as otherwise expressly required by law or by the Certificate of Incorporation, the holders of record of at least a majority of the outstanding shares of capital stock entitled to vote or act at such meeting shall be present or represented by proxy in order to constitute a quorum for the transaction of any business, but less than a quorum shall have power to adjourn any meeting until a quorum shall be present. When a quorum is once present to organize a meeting, the quorum cannot be destroyed by the subsequent withdrawal or revocation of the proxy of any stockholder. Shares of capital stock owned by the Corporation or by another corporation, if a majority of the shares of such other corporation entitled to vote in the election of Directors is held by the Corporation, shall not be counted for quorum purposes or entitled to vote.

Section 2.7          Voting. At any meeting of stockholders, each stockholder holding, as of the record date for determining the stockholders entitled to vote at such meeting, shares of stock entitled to be voted on any matter at such meeting shall have one vote on each such matter submitted to vote at such meeting for each such share of stock held by such stockholder, as of such record date, as shown by the list of stockholders entitled to vote at the meeting, unless the Certificate of Incorporation provides for more or less than one vote for any share, on any matter, in which case every reference in these Bylaws to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock.

Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, provided that no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only so long as, it is coupled with an interest, whether in the stock itself or in the Corporation generally, sufficient in law to support an irrevocable power.

In advance of any meeting of the stockholders, the Board of Directors, the Chairman of the Board, the President or the person presiding at a meeting of stockholders shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.

Section 2.8          Action by Consent of Stockholders. Unless otherwise provided in the Certificate of Incorporation, whenever any action by the stockholders at a meeting thereof is required or permitted by law, the Certificate of Incorporation, or these Bylaws, such action may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by all of the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of such action without a meeting and by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
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Section 2.9          Nature of Business at Annual Meetings of Stockholders.

Only such business that is a proper matter for stockholder action under Delaware law (other than nominations for election to the Board of Directors, which must comply with the provisions of Section 3.4(b)) may be transacted at an annual meeting of stockholders as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.9 and on the record date or dates for the determination of stockholders entitled to notice of and to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.9.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, (a) such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation and (b) such stockholder must have timely updated and supplemented such notice as required by these Bylaws. For avoidance of doubt, this Section 2.9 shall be the exclusive means for a stockholder to propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at an annual meeting of stockholders.

To be timely, a stockholder’s notice must be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not less than ninety days nor more than one hundred twenty days prior to the first anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an annual meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each matter such stockholder proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, and (b) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person, (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of or others acting in concert with such person (collectively, “Affiliates”), (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any Affiliates, and the number of such shares of stock held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person or any Affiliates with respect to a security issued by the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any Affiliates, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of price changes for, such person or any Affiliates or to increase or decrease the voting power or pecuniary or economic interest of such person or any Affiliates with respect to a security issued by the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person or any Affiliates and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any Affiliates, in such business, including any anticipated benefit therefrom to such person or any Affiliates; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the annual meeting to bring such business before the meeting; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the annual meeting pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.
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A stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.9 shall be true and correct as of the record date or dates for determining the stockholders entitled to receive notice of and to vote at the annual meeting and any update and supplement to such information shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than four business days after (i) the record date for determining the stockholders entitled to receive notice of the annual meeting and (ii) a date that is ten days prior to the annual meeting.

No business (other than nominations for election to the Board of Directors) shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.9; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2.9 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Nothing contained in this Section 2.9 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
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ARTICLE III

BOARD OF DIRECTORS

Section 3.1          General Powers. The property, business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and have such authority and do all such lawful acts and things as are permitted by law, the Certificate of Incorporation or these Bylaws.

Section 3.2          Number of Directors. The Board of Directors of the Corporation shall consist of one or more members. The exact number of Directors which shall constitute the whole Board of Directors shall be fixed from time to time by resolution adopted by a majority of the whole Board of Directors. Until the number of Directors has been so fixed by the Board of Directors, the number of Directors constituting the whole Board of Directors shall be three. After fixing the number of Directors constituting the whole Board of Directors, the Board of Directors may, by resolution adopted by a majority of the whole Board of Directors, from time to time change the number of Directors constituting the whole Board of Directors.

Section 3.3          Qualification. Directors must be natural persons but need not be stockholders of the Corporation. Directors who willfully neglect or refuse to produce a list of stockholders entitled to vote at any meeting for the election of Directors shall be ineligible for election to any office at such meeting.

Section 3.4          Election.

(a)           Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, after the first meeting of the Corporation at which Directors are elected, Directors of the Corporation shall be elected in each year at the annual meeting of stockholders, or at a special meeting in lieu of the annual meeting called for such purpose, by the vote of the majority of the votes cast at any meeting for the election of Directors at which a quorum is present; provided, however, that Directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation received a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for Director set forth in Section 3.4(b) of these Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the tenth (10th) day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders. For purposes of this Bylaw, a majority of votes cast shall mean that the number of shares voted “for” a nominee exceeds fifty percent (50%) of the number of votes cast with respect to such nominee. Votes cast with respect to a nominee shall include votes against and to withhold authority and exclude abstentions with respect to such nominee. The voting on Directors at any such meeting shall be by written ballot unless otherwise provided in the Certificate of Incorporation.

(b)          To be eligible to be a candidate for election as a Director of the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in this Section 3.4(b), and the candidate for nomination, whether nominated by the Board of Directors or by a stockholder of record, must have previously delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board of Directors), to the Secretary at the registered office of the Corporation, (a) a completed written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (b) a written representation and agreement (in a form provided by the Corporation) that such candidate for nomination (i) is not and, if elected as a Director during such director’s term of office, will not become a party to any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a Director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”), including any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a Director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (ii) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a Director that has not been disclosed therein and (iii) if elected as a Director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to Directors and in effect during such person’s term in office as a Director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).
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Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of Directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing Directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 3.4(b) and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting or special meeting and (ii) who complies with the notice procedures set forth in this Section 3.4(b).

In addition to any other applicable requirements, for a nomination to be made by a stockholder, (a) such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation and (b) such stockholder must have timely updated and supplemented such notice as required by these Bylaws.
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To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than ninety days nor more than one hundred twenty days prior to the first anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing Directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an annual meeting or a special meeting called for the purpose of electing Directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each person whom the stockholder proposes to nominate for election as a Director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any Affiliates, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any Affiliates and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person or any Affiliates with respect to a security issued by the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person or any Affiliates with the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of price changes for, such person or any Affiliates or to increase or decrease the voting power or pecuniary or economic interest of such person or any Affiliates with respect to a security issued by the Corporation; and (iv) any other information relating to such persons that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for a contested election of Directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (i) the name and record address of such person; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any Affiliates, (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any Affiliates and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person or any Affiliates with respect to a security issued by the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person or any Affiliates with the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of price changes for, such person or any Affiliates or to increase or decrease the voting power or pecuniary or economic interest of such person or any Affiliates with respect to a security issued by the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between such person or any Affiliates and any proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are being made by such person, and any material interest of such person or any Affiliates in such nomination, including any anticipated benefit therefrom to such person or any Affiliates; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the annual meeting or special meeting to nominate the persons named in its notice; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of Directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a Director if elected.
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A stockholder providing notice of any nomination proposed to be made at an annual meeting or special meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 3.4(b) shall be true and correct as of the record date or dates for determining the stockholders entitled to receive notice of and to vote at the annual meeting or special meeting and any update and supplement to such information shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than four business days after (i) the record date for determining the stockholders entitled to receive notice of such meeting and (ii) a date that is ten days prior to such meeting.

No person shall be eligible for election as a Director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.4(b). If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

(c)(i)          Following the annual meeting, the Board of Directors shall cause the Corporation to reimburse the Expenses that a stockholder or group of stockholders (the “Nominating Stockholders”) has incurred in connection with nominating a candidate (the “Nominee”) for election to the Board of Directors (the “Nomination”) if the following conditions are met:

(A)           None of the Nominating Stockholders shall have nominated for election to the Board of Directors at the annual meeting any individual other than the Nominee;

(B)          None of the Nominating Stockholders shall have engaged in a “solicitation” within the meaning of Rule 14a-1(l) of the Exchange Act in support of the election of any individual as a Director at the annual meeting other than the Nominee (or a nominee of the Board of Directors), and shall not have distributed to any stockholder any form of proxy for the annual meeting other than a form including only the Nominee and individuals nominated by the Board of Directors;

(C)           Each Nominating Stockholder and the Nominee shall have otherwise complied with all of the provisions of these Bylaws applicable to the nomination of a candidate for election to the Board of Directors;

(D)          The election of fewer than 30% of the Directors to be elected shall be contested in the election (rounded down to the nearest whole number but not less than one);

(E)          Each Nominating Stockholder shall have been the Beneficial Owner of shares of capital stock of the Corporation entitled to vote in the election of Directors (the “Required Voting Interest”) from the date that is one year prior to the date on which the Corporation receives notice of the Nomination through the conclusion of the annual meeting at which the Nomination was made (such period, the “Holding Period”);
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(F)          None of the Nominating Stockholders shall have received reimbursement of proxy expenses from the Corporation, pursuant to this Bylaw or otherwise, in any of the preceding three calendar years;

(G)          The Nominee shall have received a number of votes cast in favor of his or her election equal to at least 40% of the number of all votes cast, including “for,” “against” and “withheld” votes, for the nominee receiving the most such votes of any nominee in the election of Directors (such number of votes, the “Total Votes Cast”);

(H)          The Nominee shall not have been included on the proxy cards solicited by the Corporation or by any person other than the Nominating Stockholders who nominated the Nominee;

(I)            The Nominee shall be Independent;

(J)          The proxy statement included in the proxy materials solicited by or on behalf of any Nominating Stockholder (the “Proxy Materials”) shall include a statement disclosing each member of the Nominating Stockholders group and the other information required to be delivered to the Secretary pursuant to Section 3.4(b); and

(K)         During the Holding Period, none of the Nominating Stockholders nor the Nominee shall have Beneficially Owned any securities of the Corporation for the purpose, or with the effect, of changing or influencing the control of the Corporation, or in connection with or as a participant in any transaction having that purpose or effect, including any transaction referred to in Rule 13d–3(b) of the Exchange Act, other than solely by reason of seeking the election as a Director of the Nominee.

(ii)          If a Nominating Stockholder is eligible for reimbursement under this Section 3.4(c), then (A) if the Nominee is not elected, the proportion of the Expenses reimbursed shall equal the proportion of votes that the Nominee received in favor of his or her election to the Total Votes Cast, and (B) if the Nominee is elected, all Expenses shall be reimbursed; provided, however, in each case, the other terms and conditions of this Section 3.4(c) are satisfied. In no event shall the amount paid to a Nominating Stockholder pursuant to this Section 3.4(c) exceed the amount of corresponding expenses incurred by the Corporation in soliciting proxies in connection with the election of Directors at the same annual meeting. The Corporation shall pay at the direction of the Nominating Stockholders the amount due under this Section 3.4(c) after receipt of reasonably detailed, written invoices documenting the Expenses, as well as any documentation reasonably requested by the Corporation demonstrating their eligibility for reimbursement. Notwithstanding any other provision hereof, there shall be no reimbursement under this Section 3.4(c) in the event the Board of Directors determines that any such reimbursement is not in the best interests of the Corporation or would result in a breach of the fiduciary duties of the Board of Directors to the Corporation and its stockholders or that making such a payment would render the Corporation insolvent or cause it to breach a material obligation incurred without reference to the obligations imposed by this Section 3.4(c).
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(iii)          For purposes of this Section 3.4(c):

(A)          “Expenses” shall mean the actual costs of printing and mailing the Proxy Materials and the fees and expenses of one law firm for reviewing the Proxy Materials and one proxy solicitor for conducting the related proxy solicitation (in each case, only such costs, fees and expenses that are reasonably incurred by the Nominating Stockholders), so long as: (x) the Nominating Stockholders shall be liable for such amounts regardless of the outcome of the election of Directors or the receipt of reimbursement by the Corporation; and (y) any party to which such amounts are payable is not an Affiliate or Associate (wherever used in this Section 3.4(c), as defined in the Exchange Act) of any of the Nominating Stockholders.

(B)          A person shall be the “Beneficial Owner” of or “Beneficially Own” only those shares of common stock of the Corporation as to which the person possesses both (x) the full voting rights pertaining to the shares and (y) after giving effect to any swap, hedging, derivative or synthetic ownership contract or arrangement with respect to securities of the Corporation or its Affiliates to which the person or any of its Affiliates or Associates is a party or is bound or is the beneficiary, the full economic interest in (including the right to dispose of and the opportunity for profit and risk of loss on) such shares. A person shall Beneficially Own shares held in the name of a nominee or other intermediary so long as the person retains the right to instruct how the shares are voted with respect to the election of Directors and possesses the full economic interest in the shares. A person’s Beneficial Ownership of shares shall be deemed to continue during any period in which the person has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the person or in which any fiduciary, attorney-in-fact or distributee succeeds to or otherwise acts for such person by reason of the death, disability, liquidation or occurrence of a comparable event with respect to such person. The percentage of shares Beneficially Owned by a stockholder in connection with a Nomination shall be based upon the number of outstanding voting securities most recently disclosed, prior to the delivery of the notice of nomination by the Nominating Stockholders to the Corporation in accordance with Section 3.4(b) of these Bylaws, by the Corporation in a filing with the Securities and Exchange Commission (the “Commission”).

(C)          “Independent” with respect to a Nominee shall mean (a) that the Nominee would be considered an independent director in accordance with the listing standards of the principal U.S. securities market in which the common stock of the Corporation trades or, if no such listing standards are applicable at the time, in accordance with the standards used by the Board of Directors or a duly authorized committee thereof in determining and disclosing the independence of the Corporation’s Directors in accordance with the rules of the Commission and (b) the Nominee is not an employee or officer of, or consultant to, and is not party to any agreement providing such Nominee compensation from, the Nominating Stockholders or any of their respective Affiliates or Associates and has no other material association, by agreement, understanding or familial or other relationship, with the Nominating Stockholders or any of their respective Affiliates or Associates.

Section 3.5          Term. Each Director shall hold office until (a) the next annual election of Directors and (b) such Director’s successor is duly elected and qualified, except in the event of the earlier termination of such Director’s term of office by reason of death, resignation, removal or other reason.
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Section 3.6          Resignation and Removal. Any Director may resign at any time upon written notice to the Board of Directors, the Chairman of the Board, the President or the Secretary. The resignation of any Director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice, and unless otherwise specified therein or in the Corporate Governance Guidelines then in effect, the acceptance of such resignation shall not be necessary to make it effective.

Any Director or the entire Board of Directors may be removed, with or without cause, by the affirmative vote of the holders of a majority of the shares of capital stock then entitled to vote at an election of Directors, except as otherwise provided by applicable law.

Section 3.7          Vacancies. Vacancies in the Board of Directors and newly created Directorships resulting from any increase in the authorized number of Directors shall be filled by the vote of a majority of the Directors then in office, though less than a quorum, or by a sole remaining Director, and Directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders and until any such Director’s successor shall have been duly elected and qualified or until any such Director’s earlier death, resignation, removal or other reason.

If one or more Directors shall resign from the Board of Directors effective at a future date, a majority of the Directors then in office, including those who have so resigned at a future date, shall have power to fill such vacancy or vacancies, the vote thereon to take effect and the vacancy to be filled when such resignation or resignations shall become effective, and each Director so chosen shall hold office as provided in this Section 3.7 in the filling of other vacancies.

Section 3.8          Quorum and Voting. Unless the Certificate of Incorporation or these Bylaws provide otherwise, at all meetings of the Board of Directors, a majority of the total number of Directors shall be present to constitute a quorum for the transaction of business. A Director interested in a contract or transaction may be counted in determining the presence of a quorum at a meeting of the Board of Directors which authorizes the contract or transaction. In the absence of a quorum, a majority of the Directors present may adjourn the meeting until a quorum shall be present.

Unless the Certificate of Incorporation provides otherwise, members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications means by which all persons participating in the meeting can hear each other and be heard, and participation in such a meeting shall constitute presence in person at such meeting.

The vote of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation or these Bylaws shall require a vote of a greater number.

Section 3.9          Regulations. The Board of Directors may adopt such rules and regulations for the conduct of the business and management of the Corporation, not inconsistent with law or the Certificate of Incorporation or these Bylaws, as the Board of Directors may deem proper. The Board of Directors may hold its meetings and cause the books and records of the Corporation to be kept at such place or places within or without the State of Delaware as the Board of Directors may from time to time determine. A member of the Board of Directors, or a member of any committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or any committee of the Board of Directors or in relying in good faith upon other records of the Corporation.
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Section 3.10          
Annual Meeting. An annual meeting of the Board of Directors shall be called and held for the purpose of organization, election of officers and transaction of any other business. If such meeting is held promptly after and at the place specified for the annual meeting of stockholders, no notice of the annual meeting of the Board of Directors need be given. Otherwise, such annual meeting shall be held at such time (not more than thirty days after the annual meeting of stockholders) and place as may be specified in a notice of the meeting.

Section 3.11          
Regular Meetings. Regular meetings of the Board of Directors shall be held at the time and place, within or without the State of Delaware, as shall from time to time be determined by the Board of Directors. After there has been such determination and notice thereof has been given to each member of the Board of Directors, no further notice shall be required for any such regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting.

Section 3.12          
Special Meetings. Special meetings of the Board of Directors may, unless otherwise prescribed by law, be called from time to time by the Chairman of the Board of Directors or the President, and shall be called by the Chairman of the Board of Directors, the President or the Secretary upon the written request of a majority of the whole Board of Directors directed to the Chairman of the Board of Directors, the President or the Secretary. Except as provided below, notice of any special meeting of the Board of Directors, stating the time, place and purpose of such special meeting, shall be given to each Director in accordance with Section 3.13 of these Bylaws.

Section 3.13          
Notice of Meetings; Waiver of Notice. Unless otherwise provided in these Bylaws, notice of any meeting of the Board of Directors shall be deemed to be duly given to a Director (i) if mailed to such Director addressed to him or her at his or her address as it appears upon the books of the Corporation, or at the address last made known in writing to the Corporation by such Director as the address to which such notices are to be sent, at least five days before the day on which such meeting is to be held, or (ii) if sent to him or her by electronic mail, facsimile, or other means of electronic transmission not later than the day before the day on which such meeting is to be held, or (iii) if delivered to him or her personally or orally, by telephone or otherwise, not later than the day before the day on which such meeting is to be held. Each such notice shall state the time and place of the meeting and the purposes thereof.

Notice of any meeting of the Board of Directors need not be given to any Director if waived by him or her in writing (or by electronic mail, facsimile, or other means of written electronic transmission) whether before or after the holding of such meeting, or if such Director is present at such meeting. Any meeting of the Board of Directors shall be a duly constituted meeting without any notice thereof having been given if all Directors then in office shall be present thereat or if those not present waive notice of the meeting in accordance with Section 7.3 of these Bylaws.
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Section 3.14          Committees of Directors. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation.

Except as hereinafter provided, vacancies in membership of any committee shall be filled by the vote of a majority of the whole Board of Directors. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee (and his alternate appointed pursuant to the immediately preceding sentence, if any), the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Members of a committee shall hold office for such period as may be fixed by a resolution adopted by a majority of the whole Board of Directors, subject, however, to removal at any time by the vote of a majority of the whole Board of Directors.

Section 3.15          Powers and Duties of Committees. Any committee, to the extent provided in the resolution or resolutions creating such committee and subject to limitations imposed by applicable law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. No such committee shall have the power or authority with regard to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws. The Board of Directors may, in the resolution creating a committee, grant to such committee the power and authority to declare a dividend or authorize the issuance of stock.

Each committee may adopt its own rules of procedure and may meet at stated times or on such notice as such committee may determine. Except as otherwise permitted by these Bylaws, each committee shall keep regular minutes of its proceedings and report the same to the Board of Directors when required.

Section 3.16          Compensation of Directors. Each Director shall be entitled to receive for attendance at each meeting of the Board of Directors or any duly constituted committee thereof which he or she attends, such fee as is fixed by the Board and in connection therewith shall be reimbursed by the Corporation for travel expenses. The fees to such Directors may be fixed in unequal amounts among them, taking into account their respective relationships to the Corporation in other capacities. These provisions shall not be construed to preclude any Director from receiving compensation in serving the Corporation in any other capacity.

Section 3.17          Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, or by electronic transmission (including by e-mail) and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee, as the case may be.
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ARTICLE IV

OFFICERS

Section 4.1          Establishment of Offices. The Board of Directors shall elect the following officers: a Chief Executive Officer, a President, a General Counsel, a Treasurer, and a Secretary and may, at the discretion of the Board of Directors, also elect as an officer a Chairman of the Board, a Vice Chairman of the Board, a Chief Financial Officer, a Chief Operating Officer, a Chief Accounting Officer, and a Controller. The Board or the Chief Executive Officer may also elect, appoint, or provide for the appointment of such other officers, including one or more group or division officers (including division presidents and group financial officers) or one or more vice presidents (including senior vice presidents, executive vice presidents or other classifications of vice presidents), and agents as may from time to time appear necessary or advisable in the conduct of the affairs of the Corporation. One person may hold the offices and perform the duties of any two or more of said offices except the offices and duties of President and Vice President or of Chairman of the Board or President and Secretary. None of the officers need be Directors of the Corporation. The Board of Directors may delegate to any officer the power, from time to time, to appoint officers, except a Chairman of the Board, a Chief Executive Officer, a President, a General Counsel, a Treasurer, a Secretary, a Vice Chairman of the Board, a Chief Financial Officer, a Chief Operating Officer, a Chief Accounting Officer, or a Controller, or agents of the Corporation and to prescribe their respective terms of office, authority and duties.

Section 4.2          Term of Office. The officers of the Corporation shall be elected by the Board of Directors and shall hold office until his successor is duly elected and qualified, or until his earlier death, resignation, removal, or other reason.

Section 4.3          Delegation of Duties of Officers. The Board of Directors may delegate the duties and powers of any officer of the Corporation to any other officer or to any Director for a specified period of time for any reason that the Board of Directors may deem sufficient.

Section 4.4          Removal of Officers. Any officer of the Corporation elected by the Board of Directors may be removed from office, with or without cause, by resolution adopted by a majority of the Directors then in office at any regular or special meeting of the Board of Directors or by a written consent signed by all of the Directors then in office. Any other officer may be removed from such position at any time by the Board (as set forth above), the Chief Executive Officer, or the person making such appointment or his/her successor, either with or without cause. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor, his or her death, or his or her resignation or removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.

Section 4.5          Resignations. Any officer may resign at any time by giving written notice of resignation to the Board of Directors, to the Chairman of the Board, to the President or to the Secretary. Any such resignation shall take effect upon receipt of such notice or at any later time specified therein. Unless otherwise specified in the notice, the acceptance of a resignation shall not be necessary to make the resignation effective.
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Section 4.6          Chairman and Vice Chairman of the Board. The Chairman of the Board shall preside at all meetings of stockholders and of the Board of Directors at which that person is present. The Chairman of the Board shall have such other powers and perform such other duties as may be assigned to him or her from time to time by the Board of Directors. In the absence of the Chairman, a Vice Chairman, if one has been elected, shall preside at all meetings of the Board of Directors and stockholders and exercise and perform such other powers and duties as from time to time may be assigned by the Board of Directors.

Section 4.7          Chief Executive Officer. Subject to the oversight of the Board of Directors, the Chief Executive Officer shall, in the absence of the Chairman and the Vice Chairman (if a Vice Chairman has been elected) of the Board, preside at all meetings of the stockholders and of the Board of Directors at which he or she is present. The Chief Executive Officer shall have general supervision over the business and affairs of the Corporation and shall be responsible for carrying out the policies and objectives established by the Board of Directors. The Chief Executive Officer shall have and perform all powers and duties usually incident to the office of chief executive officer and which may be required by applicable law, except as specifically limited by a resolution of the Board of Directors. The Chief Executive Officer shall have such other powers and perform such other duties as may be assigned to him or her from time to time by the Board of Directors.

Section 4.8          Chief Financial Officer. The Chief Financial Officer shall exercise direction and control of the financial affairs of the Corporation, including the preparation of the Corporation’s financial statements. The Chief Financial Officer shall have the general powers and duties usually vested in the office of the chief financial officer of a corporation and such other powers and duties as may be assigned by the Board of Directors or the Chief Executive Officer.

Section 4.9          President. In the absence or disability of the Chief Executive Officer or if the office of Chief Executive Officer be vacant, the President shall perform all of the duties of the Chief Executive Officer and when so acting shall have all the powers and be subject to all the restrictions upon the Chief Executive Officer, including the power to sign all instruments and to take all actions that the Chief Executive Officer is authorized to perform by the Board of Directors or these Bylaws. A President shall have the general powers and duties usually vested in the office of president of a corporation and such other powers and duties as may be assigned by the Board of Directors or the Chief Executive Officer.

Section 4.10          Chief Operating Officer. Subject to the oversight of the Chief Executive Officer and the President, the Chief Operating Officer shall exercise direction and control over the day-to-day operations of the Corporation. The Chief Operating Officer shall have the general powers and duties of management usually vested in the office of the chief operating officer of a corporation and such other powers and duties as from time to time may be assigned to the Chief Operating Officer by the Board of Directors or the Chief Executive Officer.
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Section 4.11          Vice Presidents. The Vice Presidents shall perform the duties and exercise the powers as shall be assigned to such Vice President by the Board of Directors, the Chief Executive Officer or the President. The Vice Presidents shall generally assist the President in such manner as the President shall direct.

Section 4.12          Secretary. The Secretary shall act as Secretary of all meetings of stockholders and of the Board of Directors at which he or she is present, shall record all the proceedings of all such meetings in a book to be kept for that purpose, shall have supervision over the giving and service of notices of the Corporation, and shall have supervision over the care and custody of the records and seal of the Corporation. The Secretary shall be empowered to affix the corporate seal to documents, the execution of which on behalf of the Corporation under its seal is duly authorized, and when so affixed may attest the same. The Secretary shall have all powers and duties usually incident to the office of Secretary, except as specifically limited by a resolution of the Board of Directors. The Secretary shall have such other powers and perform such other duties as may be assigned to him or her from time to time by the Board of Directors, the Chief Executive Officer or the President.

Section 4.13          Treasurer. The Treasurer shall have general supervision over the care and custody of the funds and over the receipts and disbursements of the Corporation and shall cause the funds of the Corporation to be deposited in the name of the Corporation in such banks or other depositaries as the Board of Directors may designate. The Treasurer shall have supervision over the care and safekeeping of the securities of the Corporation. The Treasurer shall have all powers and duties usually incident to the office of Treasurer, except as specifically limited by a resolution of the Board of Directors. The Treasurer shall have such other powers and perform such other duties as may be assigned to him or her from time to time by the Board of Directors, the Chief Executive Officer or the President.

Section 4.14          Controller. The Controller shall have all powers and duties usually incident to the office of Controller, except as specifically limited by a resolution of the Board of Directors. The Controller shall have such other powers and perform such other duties as may be assigned to him or her from time to time by the Board of Directors, the Chief Executive Officer or the President.

ARTICLE V

CAPITAL STOCK

Section 5.1          Issuance of Certificates of Stock; Uncertificated Stock. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may establish by resolution or resolutions that some or all of any classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock represented by certificates shall be entitled to a certificate or certificates in such form as shall be approved by the Board of Directors, certifying the number of shares of capital stock of the Corporation owned by such stockholder.

Section 5.2          Signatures on Stock Certificates. Shares of capital stock of the Corporation represented by certificates (if any) shall be signed by, or in the name of the Corporation by, the Chairman of the Board, the President or a Vice President and by, or in the name of the Corporation by, the Secretary, the Treasurer, an Assistant Secretary or an Assistant Treasurer. Any of or all the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such signer were such officer at the date of issue.
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Section 5.3          Stock Ledger. A record of all shares of all capital stock issued by the Corporation shall be kept by the Secretary or any other officer or employee of the Corporation designated by the Secretary or by any transfer clerk or transfer agent appointed pursuant to Section 5.4 hereof. Such record shall show the name and address of each person, firm or corporation in which capital stock is registered, and the number of shares owned by such person, firm or corporation.

The Corporation shall be entitled to treat the holder of record of shares of capital stock as shown on the stock ledger as the owner thereof and as the person entitled to receive dividends thereon, to vote such shares and to receive notice of meetings, and for all other purposes. The Corporation shall not be bound to recognize any equitable or other claim to or interest in any share of capital stock on the part of any other person whether or not the Corporation shall have express or other notice thereof.

Section 5.4          Regulations Relating to Transfer.

(a)          The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with law, the Certificate of Incorporation or these Bylaws, concerning issuance, transfer and registration of certificates for shares of capital stock of the Corporation. The Board of Directors may appoint, or authorize any officer to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars and may require all certificates for capital stock to bear the signature or signatures of any of them.

(b)          If the Board of Directors authorizes any class of capital stock of the Corporation to be issued in uncertificated form, it may make such rules and regulations as it may deem expedient, not inconsistent with law, the Certificate of Incorporation or these Bylaws, concerning issuance, transfer and registration of such uncertificated shares of capital stock.

Section 5.5          Transfers. Transfers of certificated shares of capital stock shall be made on the books of the Corporation only upon delivery to the Corporation or its transfer agent of (i) a written direction of the registered holder named in the certificate or such holder’s attorney lawfully constituted in writing, (ii) the certificate for the shares of capital stock being transferred, and (iii) a written assignment of the shares of capital stock evidenced thereby. Transfers of uncertificated shares of capital stock shall be made in accordance with applicable law and the rules and regulations established by the Board of Directors pursuant to Section 5.4(b) of these Bylaws.

Section 5.6          Cancellation. Each certificate for capital stock surrendered to the Corporation for exchange or transfer shall be canceled and no new certificate or certificates (or substitutive uncertificated shares) shall be issued in exchange for any existing certificate (other than pursuant to Section 5.7) until such existing certificate shall have been canceled.

Section 5.7          Lost, Destroyed, Stolen and Mutilated Certificates. In the event that any certificate for shares of capital stock of the Corporation shall be mutilated, the Corporation may issue a new certificate or uncertificated shares in place of such mutilated certificate. In case any such certificate shall be lost, stolen or destroyed, the Corporation may, in the discretion of the Board of Directors or a committee designated thereby with power so to act, issue a new certificate for capital stock or uncertificated shares in the place of any such lost, stolen or destroyed certificate. The applicant for any substituted certificate or certificates (or substitutive uncertificated shares) shall surrender any mutilated certificate or, in the case of any lost, stolen or destroyed certificate, furnish satisfactory proof of such loss, theft or destruction of such certificate and of the ownership thereof. The Board of Directors or such committee may, in its discretion, require the owner of a lost or destroyed certificate, or his representatives, to furnish to the Corporation a bond with an acceptable surety or sureties and in such sum as will be sufficient to indemnify the Corporation against any claim that may be made against it on account of the lost, stolen or destroyed certificate or the issuance of such new certificate. A new certificate or uncertificated shares may be issued without requiring a bond when, in the judgment of the Board of Directors, it is proper to do so.
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Section 5.8          Fixing of Record Dates.

(a)          The Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of any meeting of stockholders, nor more than sixty days prior to any other action, for the purpose of determining stockholders entitled to notice of such meeting of stockholders or any adjournment thereof, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. If the Board of Directors fixes a record date for the purpose of determining stockholders entitled to notice of such meeting of stockholders or any adjournment thereof, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of such meeting shall be the date for making such determination.

(b)          Except as provided in Section 5.8(c), if no record date is fixed by the Board of Directors, (i) the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

(c)          In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary of the Corporation, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded, to the attention of the Secretary of the Corporation. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

(d)          A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided that the Board of Directors may fix a new record date for the adjourned meeting.
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ARTICLE VI

INDEMNIFICATION

Section 6.1          Indemnification. The Corporation shall, to the full extent permitted by applicable law, indemnify any person (and the heirs, executors and administrators of such person) who, by reason of the fact that he or she is or was a Director, officer, employee or agent of the Corporation or of a constituent corporation absorbed by the Corporation in a consolidation or merger or is or was serving at the request of the Corporation or such constituent corporation as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise, was or is a party or is threatened to be a party to:

(a)          any threatened, pending or completed action, suit or proceeding (a “Proceeding”), whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding, or

(b)          any threatened, pending or completed Proceeding by or in the right of the Corporation to procure a judgment in its favor, against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such Proceeding.

Any indemnification by the Corporation pursuant hereto shall be made only in the manner and to the extent authorized by applicable law and the Certificate of Incorporation, and any such indemnification shall not be deemed exclusive of any other rights to which those seeking indemnification may otherwise be entitled.

Section 6.2          Indemnification Insurance; Advancement of Expenses.

(a)          The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under applicable law.

(b)          The Corporation may, to the extent authorized from time to time by the Board of Directors or the Chief Executive Officer, grant rights to advancement of expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former officer, employee or agent of the Corporation to the fullest extent permitted by applicable law.
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ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.1          Corporate Seal. The seal of the Corporation shall be circular in form with the name of the Corporation in the circumference and the words “Corporate Seal, Delaware” in the center. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the designation “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation. Additionally, the seal may be used by causing it to be affixed or impressed, or a facsimile thereof may be reproduced or otherwise used in any other manner as the Board of Directors may determine.

Section 7.2          Fiscal Year. The fiscal year of the Corporation shall be from January 1 to December 31, inclusive, in each year, or such other twelve consecutive months as the Board of Directors may designate.

Section 7.3          Waiver of Notice. Whenever any notice is required to be given under any provision of law, the Certificate of Incorporation, or these Bylaws, a written waiver thereof, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, Directors, or members of a committee of Directors, need be specified in any written waiver of notice unless so required by the Certificate of Incorporation.

Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 7.4          Execution of Instruments, Contracts, Etc.

(a)          All checks, drafts, bills of exchange, notes or other obligations or orders for the payment of money shall be signed in the name of the Corporation by any officers or other persons, as the Board of Directors may from time to time designate.

(b)          Except as otherwise provided by law, the Board of Directors, any committee given specific authority in the premises by the Board of Directors, or any committee given authority to exercise generally the powers of the Board of Directors during the intervals between meetings of the Board of Directors, may authorize any officer, employee or agent, in the name of and on behalf of the Corporation, to enter into or execute and deliver deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.
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(c)          All applications, written instruments and papers required by or filed with any department of the United States Government or any state, county, municipal or other governmental official or authority, may, if permitted by applicable law, be executed in the name of the Corporation by any officer of the Corporation, or, to the extent designated for such purpose from time to time by the Board of Directors, by an employee or agent of the Corporation. Such designation may contain the power to substitute, in the discretion of the person named, one or more other persons.

Section 7.5          Forum for Adjudication of Certain Disputes. Unless the Corporation consents in writing to the selection of an alternative forum (an “Alternative Forum Consent”), to the fullest extent permitted by law:

(a)          the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any director, officer, stockholder, employee or agent of the Corporation arising out of or relating to any provision of the General Corporation Law of Delaware or the Corporation’s Certificate of Incorporation or Bylaws, or (iv) any action asserting a claim against the Corporation or any director, officer, stockholder, employee or agent of the Corporation governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks subject matter jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware, in each such case, unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein.

(b)          the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. This exclusive forum provision does not apply to claims arising under the Securities Exchange Act of 1934, as amended.

Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 7.5. The existence of any prior Alternative Forum Consent shall not act as a waiver of the Corporation’s ongoing consent right as set forth above in this Section 7.5 with respect to any current or future actions or claims.

Section 7.6          Severability. If any provision or provisions of these Bylaws shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (1) the validity, legality and enforceability of the remaining provisions of these Bylaws (including, without limitation, each portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of these Bylaws (including, without limitation, each such portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
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ARTICLE VIII

AMENDMENTS

Section 8.1          By Stockholders. These Bylaws may be amended, altered or repealed, or new Bylaws may be adopted, at any meeting of stockholders by the vote of the holders of not less than a majority of the outstanding shares of stock entitled to vote thereat, provided that, in the case of a special meeting, notice that an amendment is to be considered and acted upon shall be inserted in the notice or waiver of notice of said meeting.

Section 8.2          By Directors. To the extent permitted by the Certificate of Incorporation, these Bylaws may be amended, altered or repealed, or new Bylaws may be adopted, at any regular or special meeting of the Board of Directors by the affirmative vote of a majority of the Board of Directors.

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Exhibit 10.1

FORM OF

ENHABIT, INC.
2022 OMNIBUS PERFORMANCE INCENTIVE PLAN

ARTICLE 1
PURPOSE

1.1.          General.  The purpose of the Enhabit, Inc. 2022 Omnibus Performance Incentive Plan (the “Plan”) is to promote the success, and enhance the value, of Enhabit, Inc. (the “Company”) and its subsidiaries, by linking the personal interests of their employees, officers and directors to those of Company stockholders and by providing such persons with an incentive for outstanding performance.  The Plan is further intended to provide flexibility to the Company by increasing its ability to motivate, attract, and retain the services of employees, officers and directors upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.  Accordingly, the Plan permits the grant of cash and equity incentive awards from time to time to selected employees, officers and directors.

ARTICLE 2
EFFECTIVE DATE

2.1.          Effective Date.  The Plan shall be effective upon the date on which the Spin-Off is completed (the “Effective Date”).  Unless terminated earlier by the Board, the Plan shall have a term of ten (10) years commencing upon the Effective Date; provided, however, termination of the Plan shall not cancel any Awards previously granted thereunder and provided, further, that the applicable provisions of the Plan shall remain in effect according to the terms of such Awards.

ARTICLE 3
DEFINITIONS

3.1.          Definitions.  When a word or phrase appears in the Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section or in Section 1.1 unless a clearly different meaning is required by the context.  The following words and phrases shall have the following meanings:

(a)          “Assumed Spin-Off Award” means any award granted under the EHC Omnibus Plan that is converted into an Award in respect of Stock in connection with the Spin-Off, pursuant to the terms of the Employee Matters Agreement.

(b)          “Award” means any grant or award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Dividend Equivalents, Other Stock-Based Award, Cash Award, or any other right or interest relating to Stock or cash, granted to a Participant under the Plan.  For the avoidance of doubt, the term “Award” includes each Assumed Spin-Off Award.

(c)          “Award Agreement” means an agreement, contract, other instrument or document or other evidence approved by the Committee evidencing an Award.  An Award Agreement may be in an electronic medium, may be solely evidenced by a notation on the Company’s books and records, and need not be signed by a representative of the Company or a Participant.  An Award Agreement may be in the form of individual award agreements or certificates or a document describing the terms and provisions of an Award or series of Awards under the Plan.


(d)          “Board” means the Board of Directors of the Company.

(e)          “Cash Award” means any grant or award that confers the right to receive cash with the amount of such cash subject to achievement of one or more specified Performance Goals and subject to such other restrictions and conditions as may be established by the Committee.

(f)          “Cause” means a conviction or no contest plea to a felony or moral turpitude crime or an act of dishonesty, moral turpitude, an intentional, negligent, or grossly negligent act detrimental to the best interests of the Company or a Subsidiary, failure to perform assigned duties, poor performance of assigned duties, breach of fiduciary duties to the Company, or violations of Company policies or code of conduct as in effect and amended from time to time, all as determined by the Committee; provided that, if a Participant is a participant in an executive severance plan adopted by the Company, then “Cause” for purposes of the Plan shall have the meaning set forth in such executive severance plan.

(g)          “Change in Control” means any of the following events:

(i)          the acquisition (other than from the Company) by any person, entity or “group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act, 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 1934 Act) of 30% or more of either the then-outstanding shares of Common Stock or the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of Directors; or

(ii)          during any period of up to twenty-four (24) consecutive months, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by the Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease to constitute at least a majority of the Board; or

(iii)          the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution; or

(iv)          the consummation of a merger or consolidation of the Company with or into another person or the merger of another person with or into the Company, or the sale of all or substantially all the assets of the Company (determined on a consolidated basis) to another person, other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the combined voting power entitled to vote generally in the election of directors of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the combined voting power entitled to vote generally in the election of directors of the surviving person in such transaction immediately after such transaction and (B) in the case of a sale of assets, each transferee is owned by holders of securities that represented at least a majority of the combined voting power entitled to vote generally in the election of directors of the Company immediately prior to such sale.
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(h)         “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(i)          “Committee” means the Compensation and Human Capital Committee of the Board, or any successor thereto.

(j)          “Company” means Enhabit, Inc., a Delaware corporation, or any successor corporation.

(k)          “Disability” means, except as otherwise provided in an Award Agreement, a physical or mental condition which is expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months and which renders the Participant incapable of performing the work for which he is employed or similar work, as evidenced by eligibility for and actual receipt of benefits payable under a group disability plan or policy maintained by the Company or any of its Subsidiaries that is by its terms applicable to the Participant.

(l)           “Dividend Equivalent” means a right granted to a Participant under Article 11.

(m)         “Effective Date” has the meaning assigned such term in Section 2.1.

(n)          “EHC” means Encompass Health Corporation.

(o)          “EHC Omnibus Plan” means the HealthSouth Corporation 2016 Omnibus Performance Incentive Compensation Plan sponsored by EHC.

(p)          “Employee Matters Agreement” means the Employee Matters Agreement between the Company and EHC.

(q)          “Fair Market Value” means (i) as of any given date, the closing price at which the shares of stock were traded (or if no transactions were reported on such date on the next preceding date on which transactions were reported) on the New York Stock Exchange on such date, or, if different, the principal exchange or automated quotation system on which such stock is traded, or (ii) should the Committee elect, the average selling price or volume-weighted average price (“VWAP”) on a given trading day or the VWAP over a series of pre-established trading days preceding or following such given date.  If the shares are neither listed on the NYSE or another public exchange nor quoted on an inter-dealer quotation system or if the term is being applied to property other than stock, the amount determined by the Committee in its sole discretion to be the fair market value thereof.
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(r)          “Full Value Award” means an Award other than in the form of an Option or SAR which is settled by the issuance of stock.

(s)          “Good Reason” shall mean, when used with reference to any Participant, any of the following actions or failures to act, but in each case only if it occurs while such Participant is employed by the Company and then only if it is not consented to by such Participant in writing:

(i)          assignment of a position that is of a lesser rank than held by the Participant prior to the assignment and that results in a material adverse change in such Participant’s reporting position, duties or responsibilities or title or elected or appointed offices as in effect immediately prior to the effective date of such change;

(ii)          a material reduction in such Participant’s total compensation from that in effect immediately prior to the Change in Control.  For purposes of this clause (ii), “total compensation” shall mean the sum of base salary, target bonus opportunity and the opportunity to receive compensation in the form of equity in the Company.  Notwithstanding the foregoing, a reduction will not be deemed to have occurred hereunder on account of (A) any change to a plan term other than ultimate target bonus opportunity or target equity opportunity, (B) the actual payout of any bonus amount or equity amount, (C) any reduction resulting from changes in the market value of securities or other instruments paid or payable to the Participant, or (D) any reduction in the total compensation of a group of similarly situated Participants that includes such Participant;

(iii)          any change in a Participant’s status as a participant under any Change in Control compensation plan of the Company if such change in status occurs during the period beginning six (6) months prior to a Change in Control and ending twenty-four (24) months after a Change in Control; or

(iv)          any change of more than fifty (50) miles in the location of the principal place of employment of such Participant immediately prior to the effective date of such change.

For purposes of this definition, none of the actions described in clauses (i) through (iv) above shall constitute “Good Reason” if taken for Cause.  Additionally, none of the actions described in clauses (i) through (iv) above shall constitute “Good Reason” with respect to any Participant if remedied by the Company within thirty (30) days after receipt of written notice thereof given by such Participant (or, if the matter is not capable of remedy within thirty (30) days, then within a reasonable period of time following such thirty (30) day period, provided that the Company has commenced such remedy within said thirty (30) day period); provided that “Good Reason” shall cease to exist for any action described in clauses (i) through (iv) above on the sixtieth (60th) day following the later of the occurrence of such action or the Participant’s knowledge thereof, unless such Participant has given the Company written notice thereof prior to such date.
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(t)          “Grant Date” means the date specified by the Committee on which a grant of an Award shall become effective, which shall not be earlier than the date on which the Committee takes action with respect thereto.

(u)         “Incentive Stock Option” means an Option that meets the requirements of Section 422 of the Code or any successor provision thereto.

(v)         “Non-Employee Director” means a director of the Company who is not an employee of the Company or an affiliate.

(w)        “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

(x)         “Option” means a right granted to a Participant under Article 7 of the Plan to purchase Stock at a specified price during specified time periods.  An Option under the Plan shall be a Non-Qualified Stock Option or an Incentive Stock Option.

(y)         “Other Stock-Based Award” means a right, granted to a Participant under Article 13, which relates to or is valued by reference to Stock or other Awards relating to Stock.

(z)         “Parent” means a corporation which owns or beneficially owns a majority of the outstanding voting stock or voting power of the Company.

(aa)       “Participant” means a person who, as an employee, officer or director of the Company or any Subsidiary, has been granted an Award under the Plan.
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(bb)          “Performance Objectives” means the performance goals or objectives, if any, established pursuant to the Plan for Participants who have been granted Awards under the Plan.  Performance Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or the Subsidiary, division, region, department or function within the Company or Subsidiary in which the Participant is employed.  Performance Objectives may be specified in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, as well as measured relative to an established or specially-created index of Company competitors or peers.  Performance Objectives need not be based upon an increase or positive result under a business criterion and could include, for example, the maintenance of the status quo or the limitation of economic losses (measured, in each case, by reference to a specific business criterion).  Performance Objectives may be based on any performance criteria including specified levels of or changes in the following metrics which may or may not, at the Committee’s discretion and as applicable, be calculated in accordance with generally accepted accounting principles in the United States:  (1) earnings (including, but not limited to, earnings per share); (2) profit (including, but not limited to, net profit, gross profit, operating profit, economic profit, profit margins or other profit measures); (3) net or operating income; (4) revenue; (5) stock price or performance; (6) stockholder return; (7) return measures (including, but not limited to, return on assets, capital, equity or revenue); (8) EBITDA; (9) operating or EBITDA margins; (10) market share; (11) expenses (including, but not limited to, expense management, expense efficiency ratios or other expense measures); (12) business expansions or consolidation (including but not limited to, acquisitions and divestitures); (13) internal rate of return; (14) planning accuracy (as measured by comparing planned results to actual results); (15) year-over-year patient volume growth; (16) year-over-year changes in expense line items; (17) cash flow measures (including, but not limited to, free cash flow); (18) prevention of failures of internal controls or compliance; and (19) quality of care metrics (including, but not limited to, PEM Score, functional improvement measures, patient satisfaction and other metrics tracked by Medicare or Medicaid).  Where applicable, those metrics may be measured on the basis of the consolidated Company, a Subsidiary, or a region or other subdivision of the business of the Company.  If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events, circumstances or accounting entries that are unusual, nonrecurring or unrelated to the performance of the Participant render the Performance Objectives unsuitable (including, but not limited to, asset write-downs or impairment charges, litigation or claim judgments or settlements, changes in tax laws, material legislation changes, acquisitions and divestures, accounting principles or other laws or provisions affecting reported results, unusual or infrequently occurring items as described in Accounting Standards Codification Topic 225-20 or Accounting Standards Update (ASU) 2015-01 (or any successor pronouncement thereto) and/or management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, foreign exchange gains and losses, or any other identifiable event of a nonrecurring or extraordinary nature), the Committee may modify or adjust such Performance Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable.  Notwithstanding the foregoing, the calculation of the performance result for any metric may be subject to adjustment for such pre-established items or events if the Committee deems appropriate and equitable.
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(cc)         “Performance Share” means a bookkeeping entry that records the equivalent of one share of Stock awarded pursuant to Article 9.

(dd)         “Performance Unit” means a bookkeeping entry that records a unit equivalent to $1.00 awarded pursuant to Article 9.

(ee)         “Plan” means the Enhabit, Inc. 2022 Omnibus Performance Incentive Plan, as amended from time to time.

(ff)          “Plan Year” means the twelve-month period beginning January 1 and ending December 31.

(gg)         “Restricted Stock” means Stock granted to a Participant under Article 10 that is subject to certain restrictions and to risk of forfeiture.

(hh)         “Restricted Stock Unit” or “RSU” means a bookkeeping entry that records a unit equivalent to one share of Stock awarded pursuant to Article 12.

(ii)           “Retirement” means, except as otherwise provided in an Award Agreement, the voluntary termination of employment by a Participant after attaining (a) age 65 or (b) in the event that the Participant has been employed by the Company for ten (10) or more years on the date of such termination, age 60.

(jj)           “Specified Employee” means a specified employee as defined in Code Section 409A or authoritative guidance thereunder.

(kk)         “Spin-Off” means the distribution of shares of Stock to the shareholders of EHC in 2022 pursuant to the Separation and Distribution Agreement between the Company and EHC entered into in connection with such distribution.

(ll)           “Stock” means the $0.01 par value Common Stock of the Company, and such other securities of the Company as may be substituted for Stock pursuant to Article 16.

(mm)       “Stock Appreciation Right” or “SAR” means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a share of Stock as of the date of exercise of the SAR over the grant price of the SAR, all as determined pursuant to Article 8.

(nn)          “Subsidiary” means a corporation or other entity in which the Company has a direct or indirect ownership or other equity interest.

(oo)          “1933 Act” means the Securities Act of 1933, as amended from time to time.

(pp)          “1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.
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ARTICLE 4
ADMINISTRATION

4.1.          Committee.  The Plan shall be administered by the Committee or, at the discretion of the Board from time to time, by the Board.  The Committee shall consist of three or more members of the Board.  It is intended that the directors appointed to serve on the Committee shall be “non-employee directors” (within the meaning of Rule 16b-3 promulgated under the 1934 Act) to the extent that Rule 16b-3 is applicable.  However, the mere fact that a Committee member shall fail to qualify under the foregoing requirement shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan.  During any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board.

4.2.          Authority of Committee.  The Committee has the exclusive power, authority and discretion to:

(a)          Designate Participants;

(b)          Determine the type or types of Awards to be granted to each Participant;

(c)          Determine the number of Awards to be granted and the number of shares of Stock to which an Award will relate;

(d)          Determine the terms and conditions of any Award granted under the Plan, including but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award (including forfeiture provisions), any schedule or provisions for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers of vesting or forfeiture provisions, based in each case on such considerations as the Committee in its sole discretion determines;

(e)          Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(f)          Prescribe the form of each Award Agreement, which need not be identical for each Participant and which may be in the form of a document evidencing multiple Awards to one or more Participants;

(g)          Decide all other matters that must be determined in connection with an Award;

(h)          Establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(i)          Make all other decisions, determinations and interpretations that may be required or authorized under the Plan or as the Committee deems necessary or advisable to administer the Plan;

(j)          Amend the Plan or any Award Agreement as provided herein; and

(k)          Adopt such modification, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or a Subsidiary may operate, in order to assure the viability of the benefits of Awards granted to Participants located in such other jurisdictions and to meet the objectives of the Plan.

Notwithstanding the above, the Board or the Committee may, by resolution, delegate to officers, employees or directors of the Company or any of its Subsidiaries the authority to determine individuals to be recipients of Awards under the Plan, as well as the authority to determine the number of Shares of Stock to be subject to such Awards and the terms of such Awards; provided, however, that such delegation of duties and responsibilities may not be made with respect to the grant of Awards to individuals who are subject to Section 16(a) of the 1934 Act at the Grant Date.  The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Board and the Committee regarding the delegated duties and responsibilities and any Awards so granted.
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4.3.          Decisions Binding.  The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

4.4.          Award Agreements.  Each Stock-based Award shall be evidenced by an Award Agreement.  Each Award Agreement shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.

ARTICLE 5
SHARES SUBJECT TO THE PLAN

5.1.          Number of Shares.  Subject to adjustment as provided in Sections 5.3(a) and 17.1, the aggregate number of shares of Stock reserved and available for Awards under the Plan shall be [•] million ([•]) shares.  The total number of shares that may be granted as Incentive Stock Options is [•] million ([•]) shares.  For the avoidance of doubt, Assumed Spin-Off Awards will be counted against the limits in this Section 5.1.

5.2.          Share Counting.

(a)          The following shall not reduce, or may be added back to, the number of authorized shares of Stock available for issuance under the Plan:

(1)          Common Stock reserved for issuance upon exercise or settlement, as applicable, of Awards granted under the Plan to the extent the Awards expire or are forfeited, canceled or surrendered;

(2)          Restricted Stock granted under the Plan, to the extent such Restricted Stock is forfeited under Section 16.8 or is otherwise surrendered to the Company before the restricted period expires;

(3)          Awards, to the extent the payment is actually made in cash;

(4)          Shares reserved for issuance upon grant of Performance Share or Performance Unit or Other Stock-Based Award, to the extent the number of reserved shares exceeds the number of shares actually issued upon determination of the satisfaction of the related Performance Objectives;

(5)          Shares reserved for issuance upon grant of RSUs, to the extent the number of reserved shares exceeds the number of shares actually issued upon settlement of RSUs; and

(6)          Shares withheld by, or otherwise remitted to, the Company to satisfy a Participant’s tax withholding obligations upon the lapse of restrictions on Full Value Awards granted under the Plan or upon any other payment or issuance of shares under the Plan not prohibited under Section 5.3(b)(2) below.
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(b)          The following shares of Stock shall not become available for issuance under the Plan:

(1)          Shares withheld by, or otherwise remitted to, the Company as full or partial payment of the exercise price of an Option granted under the Plan;

(2)          Shares withheld by, or otherwise remitted to, the Company to satisfy a Participant’s tax withholding obligations upon the lapse of restrictions on the exercise of Options or SARs granted under the Plan;

(3)          Shares not issued upon the settlement of a SAR that settles in shares of Stock;

(4)          Shares remaining available for issuance (and not associated with previous grants or awards) under any prior plan of the Company after the Effective Date; and

(5)          Shares reacquired by the Company in the open market or otherwise using cash proceeds from the exercise of Options or, after the Effective Date, options under any prior plan.

(c)          Substitute Awards granted pursuant to Section 16.10 of the Plan shall not count against the shares of Stock otherwise available for issuance under the Plan under Section 5.1.

(d)          Shares available under a stockholder approved plan of an entity which is acquired by, or merged with and into, the Company (as such shares are appropriately adjusted to reflect the financial effect of the transaction in accordance with relevant legal requirements), shall (subject to applicable stock exchange requirements) be available for the granting of Awards hereunder, and shall not count against the shares of Stock otherwise available for issuance under Section 5.1.

5.3.          Annual Award Limits.  The following limits (each an “Annual Award Limit,” and collectively, “Annual Award Limits”) shall, subject to adjustment as provided in Section 17.1, apply to grants of Awards under the Plan (except that such limits shall not apply to Assumed Spin-Off Awards):

(a)          Options:  The maximum aggregate number of shares of Stock subject to Options which may be granted in any period consisting of two consecutive Plan Years to any one Participant shall be 1,000,000.

(b)          SARs:  The maximum aggregate number of shares of Stock subject to SARs which may be granted in any period consisting of two consecutive Plan Years to any one Participant shall be 1,000,000.

(c)          Performance Shares:  For Awards of Performance Shares, the maximum aggregate number of shares of Stock subject to Awards of Performance Shares which may be granted in any period consisting of two consecutive Plan Years to any one Participant shall be 1,000,000.
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(d)          Performance Units:  The maximum aggregate amount that may be granted to any one Participant in any period consisting of two consecutive Plan Years shall be $10,000,000 of associated bookkeeping entry value.  If, after an amount has been earned with respect to a Cash Award, the delivery of such amount is deferred, any additional amount attributable to earnings during the deferral period shall be disregarded for purposes of this limitation.

5.4.          Stock Distributed.  Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, Stock held in treasury, or Stock purchased on the open market.

5.5.          Minimum Vesting Requirements.  Except with respect to (a) Full Value Awards accounting for not greater than 5% of the aggregate number of shares of Stock reserved and available for Awards under Section 5.1, (b) Assumed Spin-Off Awards, or (c) as otherwise provided in Section 16.6, Full-Value Awards granted under the Plan to an employee shall either (i) be subject to a minimum vesting period of one year , or (ii) be granted solely in lieu of cash compensation.

ARTICLE 6
ELIGIBILITY

6.1.          General.  Awards may be granted only to individuals who are employees, officers or directors of the Company or employees or officers of a Parent or Subsidiary.

ARTICLE 7
STOCK OPTIONS

7.1.          General.  The Committee is authorized to grant Options to Participants on the following terms and conditions:

(a)          Exercise Price.  The exercise price per share of Stock at which an Option is granted shall be determined by the Committee, provided that the exercise price for any Option (other than an Option issued as a substitute Award pursuant to Section 16.10 or an Option issued as an Assumed Spin-Off Award) shall not be less than the Fair Market Value as of the Grant Date.  Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Options may not be amended to reduce the exercise price or to cancel or replace outstanding underwater Options in exchange for cash, other awards or Options with an exercise price that is less than the exercise price of the corresponding original Options without stockholder approval.

(b)          Time and Conditions of Exercise.  The Award Agreement shall specify the time or times at which an Option may be exercised in whole or in part.  The Award Agreement shall specify the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised.  The Committee may waive any exercise provisions at any time in whole or in part based upon factors as the Committee may determine in its sole discretion so that the Option becomes exercisable at an earlier date.  The Award Agreement may provide that an Option shall automatically exercise by means of a net settlement on a given date in the event that the expiration date occurs at a time that the participant is prohibited by law or Company policy from trading in security of the Company and such Option is in the money.
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(c)          Lapse of Option.  The Option shall lapse ten (10) years after it is granted, unless an earlier option expiration date is set forth in the Award Agreement, and unless an earlier lapse occurs under Section 16.8.  The original term of an Option may not be extended without the prior approval of the Company’s stockholders.

(d)          Payment.  The Award Agreement shall specify the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash, shares of Stock, or other property (including “cashless exercise” arrangements) and the methods by which shares of Stock shall be delivered or deemed to be delivered to Participants.

(e)          Evidence of Grant.  All Options shall be evidenced by an Award Agreement between the Company and the Participant.  The Award Agreement shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.

ARTICLE 8
STOCK APPRECIATION RIGHTS

8.1.          Grant of SARs.  The Committee is authorized to grant SARs to Participants on the following terms and conditions:

(a)          Right to Payment.  Upon the exercise of a SAR, the Participant to whom it is granted has the right to receive the excess, if any, of:

(1)          The Fair Market Value of one share of Stock on the date of exercise; over

(2)          The grant price of the SAR as determined by the Committee, which shall not be less than the Fair Market Value of one share of Stock on the Grant Date except in connection with a SAR issued as a substitute Award pursuant to Section 16.10 or in connection with an Assumed Spin-Off Award.  Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding SARs may not be amended to reduce the exercise price or to cancel or replace outstanding underwater SARs in exchange for cash, other awards or SARs with an exercise price that is less than the exercise price of the corresponding original SARs without stockholder approval.

(b)          Other Terms.  All awards of SARs shall be evidenced by an Award Agreement.  The terms, methods of exercise, methods of settlement, form of consideration payable in settlement, and any other terms and conditions of any SAR shall be determined by the Committee at the time of the grant of the Award and shall be reflected in the Award Agreement.
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(c)          Freestanding SARs.  A SAR which is not granted in tandem with an Option or a similar right granted under any other plan of the Company shall be subject to the following:

(1)          Each grant shall specify in respect of each freestanding SAR the grant price of the SAR;

(2)          Successive grants may be made to the same Participant regardless of whether any freestanding SAR previously granted to such Participant remain unexercised; and

(3)          Each grant shall specify the period or periods of continuous employment of the Participant by the Company or any Subsidiary that are necessary before the freestanding SARs or installments thereof shall become exercisable, and any grant may provide for the earlier exercise of such rights in the event of acceleration under Article 15.

(d)          Payment in Cash or Shares.  Any grant may specify that the amount payable upon the exercise of a SAR may be paid by the Company in cash, shares of Stock or any combination thereof and may (i) either grant to the Participant or reserve to the Committee the right to elect among those alternatives or (ii) preclude the right of the Participant to receive and the Company to issue shares of Stock or other equity securities in lieu of cash.

(e)          Exercise Period.  Any grant may specify (i) a waiting period or periods before SARs shall become exercisable and (ii) permissible dates or periods on or during which SARs shall be exercisable.  No SAR granted under the Plan may be exercised more than ten years from the Grant Date.  The original term of an SAR may not be extended without the prior approval of the Company’s stockholders.

ARTICLE 9
PERFORMANCE SHARES OR PERFORMANCE UNITS

9.1.          Grant of Performance Shares or Performance Units.  The Committee is authorized to grant Performance Shares or Performance Units to Participants on such terms and conditions as may be selected by the Committee.  The grant of a Performance Share to a Participant will entitle the Participant to receive at a specified later time a specified number of shares, or the equivalent cash value if the Committee so provides, if the Performance Objectives established by the Committee are achieved and the other terms and conditions thereof are satisfied.  The grant of a Performance Unit to a Participant will entitle the Participant to receive at a specified later time a specified dollar value in cash or other property (including shares) as determined by the Committee, if the Performance Objectives in the Award are achieved or attained and the other terms and conditions thereof are satisfied.  All Awards of Performance Shares or Performance Units shall be evidenced by an Award Agreement.  The Award Agreement shall specify the number of Performance Shares or Performance Units to which it pertains; provided that such number may be adjusted to reflect changes in compensation or other factors.  Further, the Award Agreement shall state that the Performance Shares or Performance Units are subject to all of the terms and conditions of the Plan and such other terms and provisions as the Committee may determine consistent with the Plan.
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9.2.          Right to Payment.  A grant of Performance Shares or Performance Units gives the Participant rights, valued as determined by the Committee, and payable to, or exercisable by, the Participant to whom the Performance Shares or Performance Units are granted, in whole or in part, as the Committee shall establish at grant or thereafter.  The Committee shall set Performance Objectives and other terms or conditions to payment of the Performance Shares or Performance Units in its discretion which, depending on the extent to which they are met, will determine the number and value of Performance Shares or Performance Units that will be paid to the Participant.

9.3.          Performance Period.  The performance period with respect to each Performance Share or Performance Unit shall commence on the date specified in the Award Agreement and may be subject to earlier termination in the event of an acceleration under Article 15.

9.4.          Threshold Performance Objectives.  Each grant may specify in respect of the specified Performance Objectives a minimum acceptable level of achievement or attainment below which no payment will be made and may set forth a formula for determining the amount of any payment to be made if performance is at or above such minimum acceptable level but falls short of the maximum achievement of the specified Performance Objectives.

9.5.          Payment of Performance Shares and Performance Units.  Awards of Performance Shares or Performance Units may be payable in cash, Stock, Restricted Stock, or Restricted Stock Units in the discretion of the Committee, and have such other terms and conditions as determined by the Committee and reflected in the Award Agreement.  For purposes of determining the number of shares of Stock to be used in payment of a Performance Unit denominated in cash but payable in whole or in part in Stock or Restricted Stock, the number of shares to be so paid will be determined by dividing the cash value of the Award to be so paid by the Fair Market Value of a share of Stock on the date of determination by the Committee of the amount of the payment under the Award.

ARTICLE 10
AWARDS OF RESTRICTED STOCK

10.1.          Grant of Restricted Stock.  The Committee is authorized to make Awards of Restricted Stock to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee.  All Awards of Restricted Stock shall be evidenced by an Award Agreement setting forth the terms, conditions and restrictions applicable to the Award.  Each grant of Restricted Stock shall constitute an immediate transfer of the ownership of Stock to the Participant in consideration of the performance of services, subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.

10.2.          Issuance and Restrictions.  Restricted Stock shall be subject to such restrictions on transferability as the Committee may impose.  Such restrictions may include, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock, and provisions subjecting the Restricted Stock to a continuing risk of forfeiture in the hands of any transferee.  These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of Performance Objectives or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.
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10.3.          Consideration.  Each grant may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Fair Market Value on the Grant Date.

10.4.          Dividends, Voting and Other Ownership Rights.  Unless otherwise provided in an Award Agreement or any special Plan document governing an Award, an Award of Restricted Stock shall entitle the Participant to all of the rights of a stockholder with respect to Restricted Stock (including voting and other ownership rights) throughout the restricted period; provided, dividends (including the proceeds of reinvested dividends) shall be paid with respect to a performance-based Restricted Stock Award only to the extent the underlying Award has vested in accordance with the Plan and the applicable Award Agreement, and all other dividends rights shall be forfeited.  Participants may only be entitled to dividends if permissible under the agreements or instruments governing the Company’s indebtedness.

10.5.          Performance-Based Restricted Stock.  Any Award or the vesting thereof of Restricted Stock may be predicated on or further conditioned upon the achievement or attainment of Performance Objectives established by the Committee.

10.6.          Reinvesting.  Any grant may require that any or all dividends (if permitted under the agreements or instruments governing the Company’s indebtedness) or other distributions paid on the Restricted Stock during the period of such restrictions be automatically sequestered and reinvested in additional shares of Stock, which may be subject to the same restrictions as the underlying Award or such other restrictions as the Committee may determine.

10.7.          Issuance of Restricted Stock.  Restricted Stock issued under the Plan following vesting shall be evidenced in a manner authorized by the General Corporation Law of the State of Delaware and may be evidenced in any such manner as the Committee shall determine.  If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock or otherwise must be subject to reasonable precautions intended to prevent unauthorized transfer.

ARTICLE 11
DIVIDEND EQUIVALENTS

11.1.          Grant of Dividend Equivalents.  The Committee is authorized to grant Dividend Equivalents to Participants with respect to Full Value Awards, and only Full Value Awards, granted hereunder, subject to such terms and conditions as may be selected by the Committee (if permitted under agreements or instruments governing the Company’s indebtedness).  Dividend Equivalents shall entitle the Participant to receive payments equal to dividends with respect to all or a portion of the number of shares of Stock subject to a Full Value Award, as determined by the Committee.  The Committee may provide that Dividend Equivalents be paid or distributed when accrued or be deemed to have been reinvested in additional shares of Stock, or otherwise reinvested; provided, dividends (including the proceeds of reinvested dividends) shall be paid or distributed with respect to a performance-based Award only to the extent the underlying Award has vested in accordance with the Plan and the applicable Award Agreement, and all other dividends rights shall be forfeited.
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ARTICLE 12
RESTRICTED STOCK UNITS

12.1.          Grant of RSUs.  The Committee is authorized to make Awards of RSUs to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee.  All Awards of Restricted Stock shall be evidenced by an Award Agreement setting forth the terms, conditions and restrictions applicable to the Award.

ARTICLE 13
OTHER STOCK-BASED AWARDS

13.1.          Grant of Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law and the provisions of the Plan, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including without limitation shares of Stock awarded purely as a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of Stock, and Awards valued by reference to book value of shares of Stock or the value of securities of or the performance of specified Parents or Subsidiaries.  The Committee shall determine the terms and conditions of such Awards; provided, if dividend equivalent rights are granted, no payment, distribution or reinvestment of an accrued dividend on an Award shall be made unless and until each applicable Performance Objective, if any, has been achieved or satisfied in accordance with the Plan and the applicable Award Agreement.

ARTICLE 14
CASH AWARDS

14.1.          Grant of Cash Awards.  The Committee is authorized to make Cash Awards to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee.  Cash Awards may be evidenced by an Award Agreement setting forth the terms, conditions and restrictions applicable to the Award.  The Committee shall determine the terms and conditions of Cash Awards.
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ARTICLE 15
CODE SECTION 409A

15.1.          Code Section 409A.  Notwithstanding anything in the Plan or in any Award Agreement to the contrary, to the extent that any amount or benefit that would constitute “nonqualified deferred compensation” (as defined in Section 409A of the Code) to a Participant would otherwise be payable or distributable under the Plan or any Award Agreement solely by reason of the occurrence of a Change in Control or on account of the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the description or definition of “change in control event,” “disability” or “separation from service,” as the case may be, in Section 409A of the Code and the regulations promulgated thereunder, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise.  Any payment or distribution of an amount or benefit that would constitute “nonqualified deferred compensation” (as defined in Section 409A of the Code), which is made on account of separation from service to a Participant who is a Specified Employee (as defined in Section 409A of the Code) may not be made before the date which is six (6) months after the date of the Specified Employee’s separation from service if the payment or distribution is not exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise.  This provision does not prohibit the vesting of any Award or the vesting of any right to eventual payment or distribution of any amount or benefit under the Plan or any Award Agreement.  Each payment under any Award shall be treated as a separate payment for purposes of Section 409A of the Code.  The Plan and all Awards made hereunder are intended to be exempt from the provisions of Section 409A of the Code or, to the extent subject to Section 409A of the Code, comply with Section 409A of the Code and any authoritative guidance thereunder.  The Plan and all Awards made hereunder shall be interpreted, construed and administered in accordance with these intentions.  Nothing in the Plan shall provide a basis for any person to take action against the Company or any affiliate based on matters covered by Section 409A of the Code, including the tax treatment of any amount paid or Award made under the Plan, and neither the Company nor any of its affiliates shall under any circumstances have any liability to any Participant or his beneficiary or estate for any taxes, penalties or interest due on amounts paid or payable under the Plan, including taxes, penalties or interest imposed under Section 409A of the Code.

ARTICLE 16
PROVISIONS APPLICABLE TO ALL AWARDS

16.1.          Term of Award.  The term of each Award shall be for the period as determined by the Committee, subject to the terms of the Plan.

16.2.          Limits on Transfer.

(a)          Except as provided in Section 16.2(b) below, during a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant.  No Awards may be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution; no Awards shall be subject, in whole or in part, to attachment, execution or levy of any kind; and any purported transfer in violation hereof shall be null and void.  A Participant may designate a beneficiary in accordance with procedures established by the Committee pursuant to Section 16.3 below.

(b)          The Committee may, in its discretion, determine that notwithstanding Section 16.2(a), any or all Awards shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate; provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8).
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(c)          Notwithstanding Sections 16.2(a) and (b), an Award may be transferred pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan, but only if the tax consequences flowing from the assignment or transfer are specified in said order, the order is accompanied by signed agreement by both or all parties to the domestic relations order, and, if requested by the Committee, an opinion is provided by qualified counsel for the Participant that the order is enforceable by or against the Plan under applicable law, and said opinion further specifies the tax consequences flowing from the order and the appropriate tax reporting procedures for the Plan.

16.3.          Beneficiaries.  Notwithstanding Section 16.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee.  If no beneficiary has been properly designated or survives the Participant, payment shall be made to the Participant’s estate.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Company.

16.4.          Stock Certificates.  All Stock issued under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded.  The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock.

16.5.          Acceleration Following a Change in Control.  Except as otherwise provided in the Award Agreement, upon termination of a Participant’s employment by the Company without Cause or by the Participant for Good Reason within twenty-four (24) months following the occurrence of a Change in Control or to the extent the surviving entity does not assume such Awards or substitute in lieu thereof similar awards relating to the stock of such surviving entity having an equivalent then-current value and remaining term, provided that such stock must be listed, quoted, or traded on a national securities exchange or automated quotation system, all outstanding Options, SARs, and other Awards in the nature of rights that may be exercised automatically shall become fully exercisable and all restrictions (other than Performance Objectives) on all outstanding Awards automatically shall lapse.  With respect to Performance Objectives applicable to any Award for which the performance period is not complete, the Committee shall have the discretionary authority to determine whether, and if so, the extent to which, (1) the performance period or the Performance Objectives shall be deemed to be satisfied or waived following a Change in Control, and (2) the Performance Objectives shall be modified, adjusted or changed on account of the Change in Control.

16.6.          Acceleration for any Other Reason.  Regardless of whether an event has occurred as described in Section 16.5 above, the Committee may in its sole discretion at any time accelerate the vesting provisions and/or waive the forfeiture provisions applicable to any Award or determine that all or a portion of a Participant’s Options, SARs, and other Awards in the nature of rights that may be exercised shall become fully or partially exercisable, and that all or a part of the restrictions on all or a portion of the outstanding Awards shall lapse, and that any Performance Objectives with respect to any Awards held by that Participant shall be deemed to be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole discretion, declare.  The discretion of the Committee in the preceding sentence shall be limited to the death, disability or Retirement of a Participant; provided, however, that the Committee may exercise such discretion for any reason with respect to Awards of up to five percent (5%) of the shares available for Awards under Section 5.1.  The Committee may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 16.6.  Any such determinations by the Committee shall be final and binding on all parties.
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16.7.          Effect of Acceleration.  If an Award is accelerated under Section 16.5 or 16.6, the Committee may, in its sole discretion, provide (i) that the Award will expire after a designated period of time after such acceleration to the extent not then exercised, (ii) that the Award will be settled in cash rather than Stock, (iii) that the Award will be assumed by another party to the transaction giving rise to the acceleration or otherwise be equitably converted in connection with such transaction, (iv) that the Award may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying stock, as of a specified date associated with the transaction, over the exercise price of the Award, (v) that, in the event of a Change in Control, an Award may be cancelled without payment if Fair Market Value of the underlying Stock, as of a specified date associated with such event, does not exceed the exercise price of the Award or (vi) any combination of the foregoing.  The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated.

16.8.          Lapse or Forfeiture at or Following Termination of Employment.  Except as otherwise provided in an Award Agreement or as otherwise determined by the Committee pursuant to the provisions of Section 16.6, the following lapse and forfeiture provisions shall apply upon a Participant’s termination of employment.

(a)          Termination for Cause.  Any outstanding Award, including, without limitation, Awards that are unvested, vested and unexercised, or subject or not subject to restrictions, shall automatically and immediately lapse and be forfeited if the Participant’s employment is terminated by the Company for Cause.
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(b)          Other Termination-Options and SARs.  Upon a Participant’s termination for any reason, the unvested portion of any outstanding Options and SARs shall terminate and be forfeited.  The vested portion of any outstanding Options and SARs at the time of a Participant’s termination for reasons other than for Cause shall continue to be exercisable by the Participant (or the Participant’s estate in the event of the Participant’s death) during the period set forth in the following chart, but in no event later than ten years from the Grant Date.  At the end of such continuing exercise period, the unexercised Options and SARs shall terminate and be forfeited.

 
Reason for
Termination
 
Continuing
Exercise Period
 
 
Disability
 
1 year following termination
 
 
Death (Including death during the applicable continuing exercise period following termination for another reason)
 
1 year following death
 
 
Retirement
 
Lesser of the Original Term of Option or SAR or 3 Years
 
 
Reason Other Than Death, Disability, Retirement or Cause
 
90 days following termination
 

(c)          Other Terminations – Restricted Stock, Performance Shares, Performance Units or other Awards.  The following shall apply with respect to outstanding Awards of Restricted Stock, Performance Shares, Performance Units or other Awards which are unvested, unused or otherwise not immediately distributable at the time of a Participant’s termination of employment for reasons other than Cause:

(i)          If the Participant’s employment is terminated by reason of death or Disability, then all restrictions (other than Performance Objectives) shall lapse, and, subject to the attainment of applicable Performance Objectives (which may be waived or modified by the Committee to the extent set forth below), the unearned or unvested portion of the Award shall become immediately vested, earned and nonforfeitable, and shall be distributed to the Participant (or the Participant’s beneficiary in the event of the Participant’s death) as soon as reasonably practical following such termination, and in any event within 90 days thereof or of the end of the performance period, as applicable.

(ii)          If the Participant’s employment is terminated by reason of Retirement, then the restrictions (other than Performance Objectives) shall lapse, and, subject to the attainment of applicable Performance Objectives (which may be waived or modified by the Committee to the extent set forth below), the unearned or unvested portion of the Award shall become partially vested, earned and nonforfeitable according to the following formula:  The portion that becomes vested, earned and nonforfeitable shall equal the number of shares of Stock granted as of the Grant Date multiplied by the ratio of (i) the number of full months that have elapsed from the Grant Date to the date of the Participant’s Retirement, to (ii), the number of full months contained in the original term of the Award.

(iii)          If the Participant’s employment is terminated for any reason other than by reason of death, Disability, or Retirement then the restricted, unvested or unearned portion of the Award shall automatically and immediately be cancelled and forfeited.
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With respect to any Award subject to Performance Objectives, the Committee shall have the discretion, in the event of a termination described in (i) or (ii) above during the applicable Performance Period, to waive and/or modify the Performance Objectives based on any conditions that the Committee deems reasonable, including but not limited to the formula in (ii) above or the performance status as of the termination date.  Any Restricted Stock resulting from determination of performance pursuant to this paragraph shall vest and all other restrictions thereon shall lapse at the time the performance is determined.

(d)          Determinations upon Leaves of Absence.  Whether military, government or other service or other leave of absence shall constitute a termination of employment shall be determined in each case by the Committee at its discretion, and any determination by the Committee shall be final and conclusive.  The Committee may in its sole discretion take any further action that it deems to be equitable under the circumstances or in the best interests of the Company, including, without limitation, waiving or modifying any limitation or requirement with respect to any Award under the Plan.  The period of any leave of absence shall not be credited for vesting purposes unless otherwise determined by the Committee.

(e)          Cancellation for Violation of Non-Compete.  Without limiting the Committee’s discretion to cancel any Award at any time, the Committee shall have full power and authority to cancel an Award if the Participant, while employed by the Company or a Subsidiary or within a period which begins on the date of termination of employment and ends on the date which is one year later, engages in any activity which is in direct competition with the Company or solicits other employees or customers of the Company or its Subsidiaries in a competitive business venture.  Whether a Participant has engaged in such conduct shall be determined by the Committee in its sole discretion, taking into account any determination by the Company that the Participant has acted in violation of a non-compete or non-solicitation agreement with or obligation to the Company or a Subsidiary.

16.9.          Performance Objectives.  The Committee may determine that any Award granted pursuant to the Plan to a Participant (including, but not limited to, Participants who are Covered Employees) shall be determined solely or partially on the basis of Performance Objectives.  Any payment of an Award granted with Performance Objectives shall be conditioned on the determination of the Committee in each case that the Performance Objectives and any other material conditions have been satisfied.  The Committee’s determination shall be reflected in the Committee’s minutes.

If a Participant is promoted, demoted or transferred to a different business unit or function during a performance period, the Committee may determine that the specified Performance Objectives are no longer appropriate and may (i) modify, adjust, change or eliminate the Performance Objectives or the applicable performance period as it deems appropriate to make such criteria and period comparable to the initial Performance Objectives and period, or (ii) make a cash payment to the Participant in an amount determined by the Committee.
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16.10.          Substitute Awards.  The Committee may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Company or a Subsidiary as a result of a merger or consolidation of the former employing entity with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the former employing entity.  The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.

16.11.          Assumed Spin-Off Awards.  Notwithstanding anything in this Plan to the contrary, each Assumed Spin-Off Award shall be subject to the terms and conditions of the EHC Omnibus Plan and award agreement to which such Assumed Spin-Off Award was subject immediately prior to the Spin-Off, subject to the adjustment of such Assumed Spin-Off Award by the Compensation and Human Capital Committee of the EHC board of directors and the terms of the Employee Matters Agreement, provided that following the date of the Spin-Off, each such Assumed Spin-Off Award shall relate solely to Stock and be administered by the Committee in accordance with the administrative procedures in effect under this Plan.

ARTICLE 17
CHANGES IN CAPITAL STRUCTURE

17.1.          General.  In the event an extraordinary cash dividend, stock dividend, stock-split or a combination or consolidation of the outstanding stock of the Company into a lesser number of shares is declared upon the Stock, the authorization limits under Sections 5.1 and 5.4 shall be increased or decreased proportionately, and the shares of Stock then subject to each Award shall be increased or decreased proportionately without any change in the aggregate purchase price therefore; provided if the Committee elects to grant Dividend Equivalents with respect to an extraordinary cash dividend, the associated Awards shall not be adjusted pursuant to this Section.  In the event the Stock shall be changed into or exchanged for a different number or class of shares of stock or securities of the Company or of another corporation, whether through reorganization, recapitalization, reclassification, share exchange, spin-off, stock split-up, combination or exchange of shares, merger or consolidation, the authorization limits under Sections 5.1 and 5.4 shall be adjusted proportionately, and there shall be substituted for each such share of Stock then subject to each Award the number and class of shares into which each outstanding share of Stock shall be so exchanged, all without any change in the aggregate purchase price for the shares then subject to each Award.

Notwithstanding anything to the contrary, upon the occurrence or in anticipation of such an event, the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iii) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise price of the Award, or (iv) any combination of the foregoing.  The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated.
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ARTICLE 18
AMENDMENT, MODIFICATION AND TERMINATION

18.1.          Amendment, Modification and Termination.  The Committee shall have the power to amend, suspend or terminate the Plan at any time, provided that any such termination of the Plan shall not adversely affect Awards outstanding under the Plan at the time of termination.  Notwithstanding the foregoing, an amendment will be contingent on approval of the Company’s stockholders to the extent required by law or by the rules of any stock exchange or automated quotation system on which the Company’s securities are traded or to the extent it relates to the repricing limitations set forth in Section 7.1(a) or 8.1(a)(2) of the Plan.

18.2.          Awards Previously Granted.  The Committee may amend any outstanding Award in whole or in part from time to time.  Any such amendment which the Committee determines, in its sole discretion, to be necessary or appropriate to conform the Award to, or otherwise satisfy, any legal requirement (including without limitation the provisions of Code Section 409A or the regulations or rulings promulgated thereunder, as well as any securities laws and the rules of any applicable securities exchanges), may be made retroactively or prospectively and without the approval or consent of the Participant.  Additionally, the Committee may, without the approval or consent of the Participant, make adjustments in the terms and conditions of an Award in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company in order to prevent the dilution or enlargement of the benefits intended to be made available pursuant to the Award.  Any materially adverse amendments or adjustments to Awards not expressly contemplated in the two preceding sentences may be made by the Committee with the consent of the affected Participant(s).

ARTICLE 19
GENERAL PROVISIONS

19.1.          Recoupment.  Awards granted hereunder, any Stock and/or cash distributed to a Participant pursuant to the exercise or vesting of an Award, and any proceeds received by a Participant upon the sale of any such Stock, shall be subject to recoupment by the Company pursuant to, and in accordance with, the terms of any applicable compensation recoupment policy of the Company, as it may be amended from time to time, which policy is hereby incorporated in the Plan by reference.

19.2.          No Rights to Awards.  No eligible individual shall have any claim to be granted any Award under the Plan, and neither the Company nor the Committee is obligated to treat eligible individuals uniformly, and determinations made under the Plan may be made by the Committee selectively among eligible individuals who receive, or are eligible to receive, Awards.

19.3.          No Stockholder Rights.  No Award gives the Participant any of the rights of a stockholder of the Company unless and until shares of Stock are in fact issued to such person in connection with such Award.

19.4.          Tax Withholding.  Participants shall be responsible to make appropriate provision for all taxes required to be withheld in connection with any Award or the transfer of shares of Stock pursuant to the Plan.  The Company or any Parent or Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local or foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the Plan.  Accordingly, the Company shall have the right to retain from the payment under an Award the number of shares of Stock or a portion of the value of such Award equal in value to the amount of any required withholdings.  With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit, including at the Participant’s election, that any such withholding requirement be satisfied, in whole or in part, by withholding shares of Stock having a Fair Market Value on the date of withholding equal to the amount required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes.  Additionally, if the Committee so determines, the Participant may deliver to the Company unrestricted shares which have been held by the Participant for at least six (6) months, or any other shorter or longer period as necessary to avoid the recognition of an expense under generally accepted accounting principles, to satisfy any additional tax obligations owed by the Participant.  The Company shall have the authority to require a Participant to remit cash to the Company in lieu of the surrender or withholding of shares of Stock for taxes if the surrender or withholding for such purpose would result in adverse tax or accounting implications for the Company.
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19.5.          No Right to Continued Service.  Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Company or any Parent or Subsidiary to terminate any Participant’s employment or status as an officer or director at any time, nor confer upon any Participant any right to continue as an employee, officer or director of the Company or any Parent or Subsidiary, whether for the duration of the Participant’s Award or otherwise.

19.6.          Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Parent or Subsidiary.  The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974.

19.7.          Indemnification.  To the extent allowable under applicable law, each member of the Committee and the Board and any employee of the Company acting pursuant to delegated authority and any counsel or advisor to the foregoing persons shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such persons in connection with or resulting from any claim, action, suit, or proceeding to which such person may be a party or in which he may be involved by reason of any action or failure to act under the Plan (except for willful misconduct) and against and from any and all amounts paid by such person in satisfaction of judgment in such action, suit, or proceeding against him provided he gives the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

19.8.          Relationship to Other Benefits.  No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Parent or Subsidiary unless provided otherwise in such other plan.

19.9.          Expenses.  The expenses of administering the Plan shall be borne by the Company and its Parents or Subsidiaries.
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19.10.          No Fiduciary Relationship.  Nothing contained in the Plan, and no action taken pursuant to the provisions of the Plan, shall create or shall be construed to create a trust of any kind, or a fiduciary relationship between the Committee, the Company or its affiliates, or their officers or other representatives or the Board, on the one hand, and the Participant, the Company, its Affiliates or any other person or entity, on the other.

19.11.          Fractional Shares.  No fractional shares of Stock shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down.

19.12.          Government and Other Regulations.  The obligation of the Company to make payment of Awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by government agencies as may be required.  The Company shall be under no obligation to register under the 1933 Act, or any state securities act, any of the shares of Stock paid under the Plan.  The shares paid under the Plan may in certain circumstances be exempt from registration under the 1933 Act, and the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption.  Payment of an Award hereunder may be delayed in the sole discretion of the Committee if the Committee reasonably anticipates that payment of the Award would violate Federal securities law or other applicable law; provided that payment shall be made at the earliest date that the Committee reasonably anticipates that making the payment will not cause such violation.

19.13.          Governing Law.  To the extent not governed by federal law, the Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware.

19.14.          Additional Provisions.  Each Award Agreement may contain such other terms and conditions as the Committee may determine; provided that such other terms and conditions are not inconsistent with the provisions of the Plan.

19.15.          Foreign Participants.  In order to facilitate the making of any grant or combination of grants under the Plan, the Committee may provide for such special terms for Awards to Participants who are foreign nationals, or who are employed by or perform services for the Company or any Subsidiary outside of the United States of America, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.  Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose, provided that no such supplements, amendments, restatements or alternative versions shall include any provisions that are inconsistent with the terms of the Plan, as then in effect, unless the Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Company.

19.16.          No Limitations on Rights of Company.  The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.  The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume Awards, other than under the Plan, to or with respect to any person.  If the Committee so directs, the Company may issue or transfer shares of Stock to a Subsidiary or a Parent, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary or Parent will transfer such shares of Stock to a Participant in accordance with the terms of an Award granted to such Participant and specified by the Committee pursuant to the provisions of the Plan.
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19.17.          Limitations on Awards Granted to Non-Employee Directors.  The maximum Grant Date Fair Market Value, as determined by the Committee, of the equity Awards granted to any Non-Employee Director in any Plan Year shall not exceed $300,000.  The maximum aggregate amount, as determined by the Committee, of the Cash Awards granted to any Non-Employee Director in any Plan Year also shall not exceed $300,000.  The equity and cash award limits shall be applied separately, so that the aggregate Grant Date Fair Market Value of all Awards granted to a Non-Employee Director in any Plan Year shall not exceed $600,000; provided, however, such limits shall not apply to any compensation resulting from non-preferential dividends or dividend equivalents associated with outstanding equity awards.

19.18.          Payment Deferrals.  The Committee, either at the time of grant or by subsequent amendment, may require or permit deferral of the payment of Awards under such rules and procedures as it may establish; provided, however, that any Options, SARs, and similar Other Stock-Based Awards that are not otherwise subject to Section 409A of the Code but would be subject to Section 409A of the Code if a deferral were permitted, shall not be subject to any deferral.  The Committee also may provide that deferred settlements include the payment or crediting of interest or other earnings on the deferred amounts, or the payment or crediting of Dividend Equivalents where the deferred amounts are denominated in Stock equivalents.  Any deferral and related terms and conditions shall comply with Section 409A of the Code and any authoritative guidance thereunder.

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Exhibit 10.2
 
FORM OF
 
ENHABIT, INC.
 
CHANGE IN CONTROL
 
BENEFITS PLAN
 
Enhabit, Inc., a Delaware corporation (the “Company”), has adopted the Enhabit, Inc. Change in Control Benefits Plan (the “Plan”), to be as of the date on which the Company becomes a separate publicly traded company in connection with its separation from Encompass Health Corporation for the benefit of certain Participant employees of the Company and its subsidiaries, on the terms and conditions hereinafter stated.
 
The Plan is intended to help retain qualified employees, maintain a stable work environment and provide financial security to certain Participant employees of the Company and its subsidiaries in the event of a Change in Control. The Plan is intended to be a plan that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. To the maximum extent permitted by law, the Plan is not intended to provide for any “deferral of compensation,” as defined in Section 409A of the Code (“Section 409A”) and authoritative Department of Treasury regulations and other interpretive guidance issued thereunder (including the Proposed Treasury Regulations issued June 22, 2016, to the extent the application of such proposed regulations facilitates the administration of this Plan in accordance with the intentions set forth in this paragraph). Instead, payments and benefits under the Plan are intended to fall within the exceptions for “short-term deferrals,” as set forth in Treasury Regulations Section 1.409A-1(b)(4), and “separation pay due to involuntary separation from service or participation in a window program,” as set forth in Treasury Regulations Section 1.409A-1(b)(9)(iii) and it is further intended that each Participant’s benefits shall be payable only upon a Participant’s “separation from service” under Treasury Regulations Section 1.409A-1(h). For purposes of Treasury Regulations Section 1.409A-2(b)(2)(iii), the right to each payment under the Plan shall be treated as the right to a separate payment. The Plan shall be administered and interpreted to the extent possible in a manner consistent with these intentions.
 
ARTICLE I
 
DEFINITIONS AND INTERPRETATIONS
 
Section 1.01      Definitions. Capitalized terms used in the Plan shall have the following respective meanings, except as otherwise provided or as the context shall otherwise require:
 
Annual Salary” shall mean the base salary paid to a Participant immediately prior to his or her Termination Date on an annual basis exclusive of any bonus payments or additional payments under any Benefit Plan.
 

Average Bonus” shall mean the average of the actual bonuses paid to the Participant by the Company and/or Encompass Health Corporation, or their respective subsidiaries, as applicable, for the three (3) years preceding the Termination Date; provided that in the case of a Participant who has not been paid a bonus for any year prior to the Termination Date, the Average Bonus shall be equal to on the Participant’s target bonus in effect immediately prior to the Termination Date.
 
Award” means any grant or award of Options, Stock Appreciation Rights or any other right or interest relating to Common Stock or cash, granted to a Participant pursuant to an equity compensation plan of the Company.
 
Benefit Plan” shall mean any “employee benefit plan” (including any employee benefit plan within the meaning of Section 3(3) of ERISA), program, arrangement or practice maintained, sponsored or provided by the Company or any of its subsidiaries, including those relating to compensation, bonuses, profit sharing, stock option, or other stock-related rights or other forms of incentive or deferred compensation, paid time-off benefits, insurance coverage (including any self-insured arrangements) health or medical benefits, Disability benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including:  compensation, pension, health, medical or life insurance, or other benefits).
 
Board” shall mean the Board of Directors of the Company.
 
Cause” shall have the meaning set forth in any individual employment, severance or similar agreement between the Company (or any of its subsidiaries) and a Participant, or in the event that a Participant is not a party to such an agreement, Cause shall mean:
 
(i)      the Company’s procurement of evidence of the Participant’s act of fraud, misappropriation, or embezzlement with respect to the Company or any of its subsidiaries;
 
(ii)      the Participant’s indictment for, conviction of, or plea of guilty or no contest to, any felony (other than a minor traffic violation);
 
(iii)     the suspension or debarment of the Participant or of the Company or any of its affiliated companies or entities as a direct result of any willful or grossly negligent act or omission of the Participant in connection with his or her employment with the Company or any of its subsidiaries from participation in any Federal or state health care program. For purposes of this clause (iii), the Participant shall not have acted in a “willful” manner if the Participant acted, or failed to act, in a manner that he or she believed in good faith to be in, or not opposed to the best interests of the Company or any of its subsidiaries;
 
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(iv)     the Participant’s admission of liability of, or finding by a court or the SEC (or a similar agency of any applicable state) of liability for, the violation of any “Securities Laws” (as hereinafter defined) (excluding any technical violations of the securities laws which are not criminal in nature). As used herein, the term “securities laws” means any federal or state law, rule or regulation governing the issuance or exchange of securities, including, without limitation, the Securities Act and the Exchange Act;
 
(v)      a formal indication from any agency or instrumentality of any state or the United States of America, including, but not limited to, the United States Department of Justice, the SEC or any committee of the United States Congress that the Participant is a target or the subject of any investigation or proceeding into the actions or inactions of the Participant for a violation of any Securities Laws in connection with his or her employment by the Company or any of its subsidiaries (excluding any technical violations of the securities law which are not criminal in nature);
 
(vi)     the Participant’s failure after reasonable prior written notice from the Company or any of its subsidiaries to comply with any valid and legal directive of the Chief Executive Officer or the Board that is not remedied within thirty (30) days of the Participant being provided written notice thereof from the Company; or
 
(vii)   other than as provided in clauses (i) through (vi) above, the Participant’s breach of any material provision of any employment agreement, if applicable, or the Participant’s breach of the material duties of the Participant’s job that is not remedied within thirty (30) days or repeated breaches of a similar nature, such as the failure to report to work, perform duties, or follow directions, all as provided herein, which shall not require additional notices as provided in clauses (i) through (vi) above.
 
Cause shall be determined by the affirmative vote of at least fifty percent (50%) of the members of the Board (excluding the Participant, if a Board member, and excluding any member of the Board involved in events leading to the Board’s consideration of terminating the Participant for Cause).
 
Change in Control” shall mean
 
(i)      the acquisition (other than from the Company) by any person, entity or “group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, 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 Exchange Act) of thirty percent (30%) or more of either the then-outstanding shares of Common Stock or the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of directors; or
 
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(ii)     during any period of up to twenty-four (24) consecutive months, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by the Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease to constitute at least a majority of the Board; or
 
(iii)     the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution; or
 
(iv)    the merger or consolidation of the Company with or into another person or the merger of another person with or into the Company, or the sale of all or substantially all the assets of the Company (determined on a consolidated basis) to another person, other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented one hundred percent (100%) of the combined voting power entitled to vote generally in the election of directors of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the combined voting power entitled to vote generally in the election of directors of the surviving person in such transaction immediately after such transaction and (B) in the case of a sale of assets, each transferee is owned by holders of securities that represented at least a majority of the combined voting power entitled to vote generally in the election of directors of the Company immediately prior to such sale.
 
Code” shall mean the Internal Revenue Code of 1986, as amended. Reference in the Plan to any Section of the Code shall be deemed to include any amendments or successor provisions to such Section and any regulations under such Section.
 
Common Stock” shall mean $0.01 par value common stock of the Company, and such other securities of the Company as may be substituted for Common Stock.
 
Compensation and Human Capital Committee” shall mean the Compensation and Human Capital Committee of the Board.
 
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Disability” shall mean a physical or mental condition which is expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months and which renders the Participant incapable of performing the work for which he or she is employed or similar work, as evidenced by eligibility for and actual receipt of benefits payable under a group Disability plan or policy maintained by the Company or any of its subsidiaries that is by its terms applicable to the Participant.
 
ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.
 
Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.
 
Fair Market Value” means (i) as of any given date, the closing price at which the shares of Common Stock were traded (or if no transactions were reported on such date on the next preceding date on which transactions were reported) on the New York Stock Exchange on such date, or, if different, the principal exchange or automated quotation system on which such stock is traded, or (ii) should the Compensation and Human Capital Committee elect, the average closing price over a pre-established series of such trading days preceding or following such given date.
 
Good Reason” shall mean, when used with reference to any Participant, any of the following actions or failures to act, but in each case only if it occurs while such Participant is employed by the Company or any of its subsidiaries and then only if it is not consented to by such Participant in writing:
 
(i)      assignment of a position that is of a lesser rank than held by the Participant prior to the assignment and that results in a material adverse change in such Participant’s reporting position, duties or responsibilities or title or elected or appointed offices as in effect immediately prior to the effective date of such change, or in the case of a Tier 1 or Tier 2 Participant who was immediately prior to the Change in Control an executive officer of the Company, such Participant ceasing to be an executive officer of a company with securities registered under the Exchange Act;

(ii)     a material reduction in such Participant’s total compensation from that in effect immediately prior to the Change in Control. For purposes of this clause (ii), “total compensation” shall mean the sum of base salary, target bonus opportunity and the opportunity to receive compensation in the form of equity in the Company. Notwithstanding the foregoing, a reduction will not be deemed to have occurred hereunder on account of (A) any change to a plan term other than ultimate target bonus opportunity or equity opportunity, (B) the actual payout of any bonus amount or equity amount, (C) any reduction resulting from changes in the market value of securities or other instruments paid or payable to the Participant, or (D) any reduction in the total compensation of a group of similarly situated Participants that includes such Participant; or

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(iii)    any change in a Participant’s status as a Tier 1 Participant, Tier 2 Participant or Tier 3 Participant to a status that provides a lower benefit hereunder in the event of a Change in Control if such change in status occurs during the period beginning six (6) months prior to a Change in Control and ending twenty-four (24) months after a Change in Control; or

(iv)    any change of more than fifty (50) miles in the location of the principal place of employment of such Participant immediately prior to the effective date of such change.

For purposes of this definition, none of the actions described in clauses (i) through (iv) above shall constitute “Good Reason” if taken for Cause. Additionally, none of the actions described in clauses (i) through (iv) above shall constitute “Good Reason” with respect to any Participant if remedied by the Company within thirty (30) days after receipt of written notice thereof given by such Participant (or, if the matter is not capable of remedy within thirty (30) days, then within a reasonable period of time following such thirty (30) day period, provided that the Company has commenced such remedy within said thirty (30) day period); provided that “Good Reason” shall cease to exist for any action described in clauses (i) through (iv) above on the sixtieth (60th) day following the later of the occurrence of such action or the Participant’s knowledge thereof, unless such Participant has given the Company written notice thereof prior to such date. Furthermore, any benefits under the Plan resulting from the occurrence described in clause (iii) above shall be based on the status of the Participant as a Tier 1 Participant, Tier 2 Participant or Tier 3 Participant as of the date of such occurrence.
 
Option” means a right granted pursuant to an equity compensation plan of the Company to purchase Common Stock at a specified price during specified time periods.
 
Participant” shall mean each employee of the Company or any of its subsidiaries who are designated in writing as a participant in the Plan by the Board or the Compensation and Human Capital Committee from time to time; provided that the Chief Executive Officer may designate an employee of the Company or any of its subsidiaries (other than an executive officer) as a Tier 3 Participant and shall provide prompt notice to the Compensation and Human Capital Committee of such designation.
 
Plan” shall mean this Enhabit, Inc. Change in Control Benefits Plan, as amended, restated, supplemented or modified from time to time in accordance with its terms.
 
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Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
 
(i)       the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; or
 
(ii)     the Company or any person, entity or “group” (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act, 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) publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; or
 
(iii)   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 Exchange Act, 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 Exchange Act) of fifteen (15%) or more of either the then-outstanding shares of Common Stock or the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of Directors; or
 
(iv)     the Board adopts a resolution to the effect that a Potential Change in Control has occurred;
 
provided, however, that no Potential Change in Control shall be deemed pending for purposes of the Plan if such event or condition is no longer in effect or existence or is otherwise rescinded or terminated (by means of a public filing or announcement in the case of clause (ii) above).
 
Pro-rated Portion” shall mean a fraction (i) whose numerator is the number of months elapsed from the beginning of any not yet completed performance period applicable to any cash incentive award or plan through the effective date of termination of a Participant’s employment in the circumstances described in Section 3.01 below, and (ii) whose denominator is the total number of months in such performance period under the applicable cash incentive award or plan. For purposes of this definition, the months elapsed will include the month in which the effective date of termination occurs if such date is the 16th, or a subsequent, day of that month.
 
Stock Appreciation Right” or “SAR” means a right granted to a Participant pursuant to an equity compensation plan of the Company to receive a payment equal to the difference between the Fair Market Value of a share of Common Stock as of the date of exercise of the SAR over the grant price of the SAR.
 
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SEC” shall mean the United States Securities Exchange Commission.
 
Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
 
Successor” shall mean a successor to all or substantially all of the business, operations or assets of the Company.
 
Termination Date” shall mean, with respect to any Participant, the termination date specified in the Termination Notice delivered by such Participant to the Company in accordance with Section 2.02 or as set forth in any Termination Notice delivered by the Company, or as applicable, the Participant’s date of death.
 
Termination Notice” shall mean, as appropriate, written notice from (a) a Participant to the Company purporting to terminate such Participant’s employment for Good Reason in accordance with Section 2.02 or (b) the Company to any Participant purporting to terminate such Participant’s employment for Cause or Disability in accordance with Section 2.03.
 
Tier 1 Participant” shall mean each Participant designated writing by the  Board or the Compensation and Human Capital Committee as a Tier 1 Participant, as that designation may be amended in accordance with Section 2.01.
 
Tier 2 Participant” shall mean each Participant designated in writing by the Board or the Compensation and Human Capital Committee as a Tier 2 Participant, as that designation may be amended in accordance with Section 2.01.
 
Tier 3 Participant” shall mean each Participant designated in writing by the Board or the Compensation and Human Capital Committee as a Tier 3 Participant, as that designation may be amended in accordance with Section 2.01.
 
Section 1.02         Interpretation. In the Plan, unless a clear contrary intention appears, (a) the words “herein,” “hereof” and “hereunder” refer to the Plan as a whole and not to any particular Article, Section or other subdivision, (b) reference to any Article or Section, means such Article or Section hereof and (c) the words “including” (and with correlative meaning “include”) means including, without limiting the generality of any description preceding such term. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.
 
ARTICLE II
 
ELIGIBILITY AND BENEFITS
 
Section 2.01         Eligible Employees.
 
(a)         Once designated as a “Participant,” by the Board, the Compensation and Human Capital Committee, or the Chief Executive Officer, as applicable, an employee of the Company or any of the subsidiaries shall continue to be a “Participant” in the Plan while he or she remains employed by the Company or any of its subsidiaries, unless such employee is given written notice of the Board’s or the Compensation and Human Capital Committee’s determination that such Participant shall cease to be a Participant as of the date specified in such notice.  Notwithstanding the foregoing, any Participant may not be removed from the Plan, nor placed in a lower tier (with Tier 1 being the highest Tier and Tier 3 being the lowest Tier), during the pendency of a Potential Change in Control or within two years following a Change in Control.
 
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(b)        The Plan is only for the benefit of Participants, and no other employees, personnel, consultants or independent contractors shall be eligible to participate in the Plan or to receive any rights or benefits hereunder.
 
Section 2.02        Termination Notices from Participants. For purposes of the Plan, in order for any Participant to terminate his or her employment for Good Reason, such Participant must give a Termination Notice to the Company in accordance with the requirements specified under the definition of Good Reason in Section 1.01, which notice shall be signed by such Participant, shall be dated the date it is given to the Company, shall specify the Termination Date and shall state that the termination is for Good Reason and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such Good Reason. Any Termination Notice given by a Participant that does not comply in all material respects with the foregoing requirements as well as the “Good Reason” definition provisions set forth in Section 1.01 shall be invalid and ineffective for purposes of the Plan. If the Company receives from any Participant a Termination Notice that states the termination is for Good Reason and which the Company believes is invalid and ineffective as aforesaid, it shall promptly notify such Participant of such belief and the reasons therefor. Any termination of employment by the Participant that either does not constitute Good Reason or fails to meet the Termination Notice requirements set forth above shall be deemed a termination by the Participant without Good Reason.
 
Section 2.03      Termination Notices from Company. For purposes of the Plan, in order for the Company or any of the subsidiaries to terminate any Participant’s employment for Cause, the Company must give a Termination Notice to such Participant, which notice shall be dated the date it is given to such Participant, shall specify the Termination Date and shall state that the termination is for Cause and shall set forth in reasonable detail the particulars thereof. For purposes of the Plan, in order for the Company to terminate any Participant’s employment for Disability, the Company must give a Termination Notice to such Participant, which notice shall be dated the date it is given to such Participant, shall specify the Termination Date and shall state that the termination is for Disability and shall set forth in reasonable detail the particulars thereof. Any Termination Notice given by the Company that does not comply, in all material respects, with the foregoing requirements shall be invalid and ineffective for purposes of the Plan. Any Termination Notice purported to be given by the Company to any Participant after the death or retirement of such Participant shall be invalid and ineffective.
 
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Section 2.04        Accelerated Vesting of Equity Awards.
 
(a)         Upon the occurrence of a Change in Control, notwithstanding the provisions of any Benefit Plan or agreement (except as provided in this Section 2.04):
 
(i)       with respect to outstanding Options and SARs:
 
(1)       If (x) the Company is the surviving entity and the Common Stock remains listed, quoted, or traded on a national securities exchange or automated quotation system or (y) the surviving entity assumes such Awards or substitutes in lieu thereof stock options or stock appreciation right relating to the stock of such surviving entity having an equivalent then-current value and remaining term, provided that such stock must be listed, quoted, or traded on a national securities exchange or automated quotation system (“Substitute Options/SARs”), such Awards or the Substitute Options/SARs, as applicable, shall be governed by their respective terms;
 
(2)     If (x)(i) the Company is the surviving entity and the Common Stock remains listed, quoted, or traded on a national securities exchange or automated quotation system or (ii) the surviving entity assumes such Awards or issues Substitute Options/SARs and (y) the Participant is terminated without Cause or for Good Reason within twenty-four (24) months following the date of the Change in Control, such Awards or Substitute Options/SARs, as applicable, held by the Participant that were not previously vested and exercisable shall become fully vested and exercisable effective as of the date of such termination and remain exercisable until the date that is two (2) years following the date of such termination, or the original expiration date, whichever first occurs;
 
(3)      If (x)(i) the Company is not the surviving entity or (ii) the Common Stock does not remain listed, quoted, or traded on a national securities exchange or automated quotation system and (y) the surviving entity does not assume such Awards or issue Substitute Options/SARs, each such Award shall become fully vested effective as of the date of the Change in Control and promptly cancelled in exchange for a cash payment in an amount equal to (A) the excess of Market Value per share of the Common Stock subject to the Award over the exercise or base price (if any) per share of Common Stock subject to such Award multiplied by (B) the number of shares of Common Stock subject to such Award;
 
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(ii)      with respect to other outstanding Awards not subject to performance-based objectives (other than Options or SARs) (“Time-based Awards”):
 
(1)      if (x) the Company is the surviving entity and the Common Stock remains listed, quoted, or traded on a national securities exchange or automated quotation system or (y) the surviving entity assumes such Awards or substitutes in lieu thereof time-based awards relating to the stock of such surviving entity having an equivalent then-current value and vesting date, provided that such stock must be listed, quoted, or traded on a national securities exchange or automated quotation system (“Substitute Time-based Awards”), such Awards or the Substitute Time-based Awards, as applicable, shall be governed by their respective terms;
 
(2)     if (x)(i) the Company is the surviving entity and the Common Stock remains listed, quoted, or traded on a national securities exchange or automated quotation system or (ii) the surviving entity assumes the such Awards or issues Substitute Time-based Awards and the Participant is terminated without Cause or for Good Reason within twenty-four (24) months following the Change in Control, such Awards or Substitute Time-based Awards, as applicable, held by the Participant that were not previously vested shall become fully vested immediately upon such termination;
 
(3)     If (x)(i) the Company is not the surviving entity or (ii) the Common Stock does not remain listed, quoted, or traded on a national securities exchange or automated quotation system and (y) the surviving entity does not assume the such Awards or issue Substitute Time-based Awards, such Awards shall become fully vested effective as of the date of the Change in Control and promptly cancelled in exchange for a cash payment of an amount equal to the Fair Market Value per share of the Common Stock subject to the Award immediately prior to the Change in Control multiplied by the number of shares of Common Stock subject to the Award;
 
(iii)     with respect to Awards subject to performance-based objectives (including but not limited to performance shares or performance share units), the vesting restrictions based upon achievement of the performance-based objectives shall deemed to have been met to the extent determined by the Compensation and Human Capital Committee as constituted immediately prior to the Change in Control and such achievement shall result in the deemed issuance of Time-based Awards or Substitute Time-based Awards, as applicable, with the same vesting date as provided in the original Award granted by the Company and such Awards will be subject to paragraphs (ii)(2) and (3) above, if applicable.
 
(b)         The Compensation and Human Capital Committee may, in its sole discretion, provide that: (x) an Award shall, upon the occurrence of a Change in Control, be cancelled in exchange for a payment in an amount equal to (i) the Fair Market Value per share of the Common Stock subject to the Award immediately prior to the Change in Control over the exercise or base price (if any) per share of Common Stock subject to such Award multiplied by (ii) the number of shares granted under such Award; and (y) each Award shall, upon the occurrence of a Change in Control, be cancelled without payment therefore if the Fair Market Value per share of the Common Stock subject to such Award immediately prior to the Change in Control is less than the exercise or purchase price (if any) per share of Common Stock subject to such Award.
 
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(c)         Notwithstanding the foregoing, in the event that the terms of any award under a Benefit Plan shall provide for vesting treatment of equity awards to such Participant that are more favorable than the provisions of paragraphs (a) and (b) above, the provisions of such award shall control the vesting treatment with respect to any equity awards to which such provisions are applicable.  Also notwithstanding the foregoing, payments described in this Section generally shall be made immediately following the accelerated vesting date described in this Section, and in no event later than the last day of the “applicable 2½ month period,” as defined in Treasury Regulations Section 1.409A-1(b)(4); provided, however, that payments of amounts described in this Section that are “deferrals of compensation” subject to Section 409A may be accelerated only to the extent such acceleration does not trigger a “plan failure” pursuant to Section 409A.
 
ARTICLE III
 
SEVERANCE AND RELATED TERMINATION BENEFITS

Section 3.01      Termination of Employment. In the event that a Participant’s employment is terminated within twenty-four (24) months following a Change in Control or during the pendency of a Potential Change in Control provided that a related Change in Control occurs, (x) by the Participant for Good Reason (while such Good Reason exists) or (y) by the Company or any of its subsidiaries without Cause (other than for Disability), then in each case, such Participant (or his or her beneficiary) shall be entitled to receive, and the Company shall be obligated to pay to the Participant, subject to Sections 3.02 through 3.04 hereof:
 
(a)          In the case of a Tier 1 Participant:
 
(i)       a lump sum payment within sixty (60) days following the later of such Participant’s Termination Date or the date of the Change in Control in an amount equal to 2.99 times the sum of (A) the Participant’s highest Annual Salary in the three years preceding the Termination Date plus (B) the Participant’s Average Bonus; plus
 
(ii)      a lump sum payment within sixty (60) days following the later of such Participant’s Termination Date or the date of the Change in Control in an amount equal to (A) the Pro-rated Portion of the Participant’s target cash incentive opportunity for any not yet completed incentive performance period in which the termination occurs, plus (B) in the event of termination after a completed incentive performance period but before payment of the award earned, the amount of such cash incentive award based on actual performance; plus
 
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(iii)    a lump sum payment as soon as practicable following the Termination Date in an amount equal to (A) all unused paid time off accrued by such Participant as of the Termination Date under the Company’s (or applicable subsidiary’s) paid time off policy, plus (B) all accrued but unpaid compensation, excluding any nonqualified deferred compensation, earned by such Participant as of the Termination Date to be paid by the Company ((A) and (B) together, the “Accrued Obligations”); and
 
(iv)    In addition, for a period of thirty-six months following the Termination Date, such Participant and his or her dependents shall continue to be covered by all medical, dental and vision insurance plans and programs (excluding disability) maintained by the Company or any of its subsidiaries under which the Participant was covered immediately prior to the Termination Date (collectively, the “Continued Benefits”) at the same cost sharing between the Company (or any of its subsidiaries) and Participant as a similarly situated active employee.
 
(b)         In the case of a Tier 2 Participant:
 
(i)       a lump sum payment within sixty (60) days following the later of such Participant’s Termination Date or the date of the Change in Control in an amount equal to two times the sum of (A) the Participant’s highest Annual Salary in the three years preceding the Termination Date plus (B) the Participant’s Average Bonus; plus
 
(ii)      a lump sum payment within sixty (60) days following the later of such Participant’s Termination Date or the date of the Change in Control in an amount equal to (A) the Pro-rated Portion of the Participant’s target cash incentive opportunity for any not yet completed incentive performance period in which the termination occurs, plus (B) in the event of termination after a completed incentive performance period but before payment of the award earned, the amount of such cash incentive award based on actual performance; plus
 
(iii)     a lump sum payment as soon as practicable following the Termination Date in an amount equal to all Accrued Obligations as soon as practicable following the Termination Date; and
 
(iv)     In addition, for a period of twenty-four months following the Termination Date, such Participant and his or her dependents shall receive Continued Benefits at the same cost sharing between the Company (or any of its subsidiaries) and Participant as a similarly situated active employee.
 
(c)         In the case of a Tier 3 Participant:
 
(i)       a lump sum payment within sixty (60) days following the later of such Participant’s Termination Date or the date of the Change in Control in an amount equal to the sum of (A) the Participant’s highest Annual Salary in the three years preceding the Termination Date plus (B) the Participant’s Average Bonus; plus
 
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(ii)      a lump sum payment within sixty (60) days following the later of such Participant’s Termination Date or the date of the Change in Control in an amount equal to (A) the Pro-rated Portion of the Participant’s target cash incentive opportunity for any not yet completed incentive performance period in which the termination occurs, plus (B) in the event of termination after a completed incentive performance period but before payment of the award earned, the amount of such cash incentive award based on actual performance; plus
 
(iii)     a lump sum payment as soon as practicable following the Termination Date in an amount equal to all Accrued Obligations as soon as practicable following the Termination Date; and
 
(iv)     In addition, for a period of twelve months following the Termination Date, such Participant and his or her dependents shall receive Continued Benefits at the same cost sharing between the Company(or any of its subsidiaries) and Participant as a similarly situated active employee.
 
(d)        Notwithstanding anything herein to the contrary, in the event that a Participant is deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, the lump sum severance payment, together with interest at an annual rate (compounded monthly) equal to the federal short-term rate (as in effect under Section 1274(d) of the Code on the Termination Date) shall be paid, to the extent required to avoid the application of taxes and penalties under Section 409A, to such Participant immediately following the date that is six months after the Termination Date and no later than thirty (30) days following such date. In any event, all Accrued Obligations shall be paid to the Participant no later than sixty (60) days following the Termination Date.
 
(e)        The cost of the Continued Benefits paid by the Company will be imputed as wage income to the Participant to the extent required to comply with Sections 409A and 105(h) of the Code.
 
Section 3.02        Golden Parachute Tax.
 
(a)        Anything in the Plan to the contrary notwithstanding, in the event it shall be determined that any payment or distribution to or for the benefit of any Participant or the acceleration thereof (the “Triggering Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (collectively, such excise tax, together with any such interest or penalties, the “Excise Tax”) (all such payments and benefits, including any cash severance payments payable pursuant to any other plan, arrangement or agreement, hereinafter referred to as the “Total Payments”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the cash severance payments shall first be reduced, and the noncash severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Participant would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). For purposes of determining whether a portion of the Total Payments would be subject to the Excise Tax, the value of the Participant’s non-competition covenant contained in the Release Agreement (defined below in Section 3.03) shall be determined through independent appraisal by the independent accounting firm described in subsection (b), and a corresponding portion of the amount payable pursuant to Section 3.01 shall be allocated as reasonable compensation for the Participant’s non-competition covenant and therefore exempt from the definition of the term “parachute payment” within the meaning of Sections 280G and 4999 of the Code.
 
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(b)         All determinations required to be made under this Section 3.02 with respect to a particular Participant shall be made in writing within ten (10) business days of the receipt of notice from the Participant that there has been a Triggering Payment (or at such earlier time as is requested by the Company and the Participant) by the independent accounting firm then retained by the Company in the ordinary course of business (which firm shall provide detailed supporting calculations to the Company and such Participant) and such determinations shall be final and binding on the Company (including the Compensation and Human Capital Committee) and all Participants. Any fees incurred as a result of work performed by any independent accounting firm pursuant to this Section 3.02 shall be paid by the Company.
 
Section 3.03        Condition to Receipt of Severance Benefits. As a condition to receipt of any payment or benefits under this Article III, such Participant must enter into a restrictive covenant (non-solicitation, non-compete, non-disclosure, non-disparagement) and release agreement (a “Release Agreement”) with the Company and its affiliates substantially in the form attached hereto as Exhibit A. The Participant must execute and deliver a Release Agreement, and such Release Agreement must become effective and irrevocable in accordance with its terms, no later than sixty (60) days following such Participant’s Termination Date. If this requirement is not satisfied, the Participant shall forfeit the right to all benefits, except for the Accrued Obligations and the Continued Benefits as provided, described in this Article III. In the event such Participant’s receipt of any or all of the payment or benefits under this Article III is subject to Section 409A and such 60-day period extends into a new calendar year, the Company shall deliver such portion of the payments and benefits to the Participant on the later of the first business day of that new year or the effective date of such Release Agreement.
 
Section 3.04        Limitation of Benefits.
 
(a)        Anything in the Plan to the contrary notwithstanding, the obligation of the Company or any of its subsidiaries to provide the Continued Benefits shall cease if and when the Participant becomes employed by a third party that provides such Participant with substantially comparable health and welfare benefits.
 
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(b)         Any amounts payable under the Plan shall be in lieu of and not in addition to any other severance or termination payment under any other plan or agreement with the Company or any of its current or former affiliates. Without limiting the generality of the foregoing, in the event that a Participant becomes entitled to any payment under the Plan, such Participant shall not be entitled to receive any payment under the Company’s Executive Severance Plan (as amended, restated, supplemented or modified from time to time). As a condition to receipt of any payment under the Plan, the Participant shall waive any entitlement to any other severance or termination payment by the Company or any of its subsidiaries.
 
Section 3.05        Plan Unfunded; Participant’s Rights Unsecured. The Company shall not be required to establish any special or separate fund or make any other segregation of funds or assets to assure the payment of any benefit hereunder. The right of any Participant to receive the benefits provided for herein shall be an unsecured obligation against the general assets of the Company.
 
ARTICLE IV
 
DISPUTE RESOLUTION

Section 4.01        Claims Procedure.
 
(a)         It shall not be necessary for a Participant who has become entitled to receive a benefit hereunder to file a claim for such benefit with any person as a condition precedent to receiving a distribution of such benefit. However, any Participant or beneficiary who believes that he or she has become entitled to a benefit hereunder and who has not received, or commenced receiving, a distribution of such benefit, or who believes that he or she is entitled to a benefit hereunder in excess of the benefit which he or she has received, or commenced receiving, may file a written claim for such benefit with the Compensation and Human Capital Committee no later than ninety (90) days following the date on which he or she allegedly became entitled to receive a distribution of such benefit. Such written claim shall set forth the Participant’s or beneficiary’s name and address and a statement of the facts and a reference to the pertinent provisions of the Plan upon which such claim is based. The Compensation and Human Capital Committee shall, within ninety (90) days after such written claim is filed, provide the claimant with written notice of its decision with respect to such claim. If such claim is denied in whole or in part, the Compensation and Human Capital Committee shall, in such written notice to the claimant, set forth in a manner calculated to be understood by the claimant the specific reason or reasons for denial; specific references to pertinent provisions of the Plan upon which the denial is based; a description of any additional material or information necessary for the claimant to perfect his or her claim and an explanation of why such material or information is necessary; and an explanation of the provisions for review of claims set forth in Section 4.01(b) below.
 
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(b)        A Participant or beneficiary who has filed a written claim for benefits with the Compensation and Human Capital Committee which has been denied may appeal such denial to the Compensation and Human Capital Committee and receive a full and fair review of his or her claim by filing with the Compensation and Human Capital Committee a written application for review at any time within sixty (60) days after receipt from the Compensation and Human Capital Committee of the written notice of denial of his or her claim provided for in Section 4.01(a) above. A Participant or beneficiary who submits a timely written application for review shall be entitled to review any and all documents pertinent to his or her claim and may submit issues and comments to the Compensation and Human Capital Committee in writing. Not later than sixty (60) days after receipt of a written application for review, the Compensation and Human Capital Committee shall give the claimant written notice of its decision on review, which written notice shall set forth in a manner calculated to be understood by the claimant specific reasons for its decision and specific references to the pertinent provisions of the Plan upon which the decision is based. In the event the claimant disputes the decision of the Compensation and Human Capital Committee, the claimant may not bring suit in court with respect to such dispute under the Plan later than one hundred eighty (180) days after receiving the Compensation and Human Capital Committee’s written notice of its decision.
 
(c)         Any act permitted or required to be taken by a Participant or beneficiary under this Section 4.01 may be taken for and on behalf of such Participant or beneficiary by such Participant’s or beneficiary’s duly authorized representative. Any claim, notice, application or other writing permitted or required to be filed with or given to a party by this Article shall be deemed to have been filed or given when deposited in the U.S. mail, postage prepaid, and properly addressed to the party to whom it is to be given or with whom it is to be filed. Any such claim, notice, application, or other writing deemed filed or given pursuant to the next foregoing sentence shall in the absence of clear and convincing evidence to the contrary, be deemed to have been received on the fifth (5th) business day following the date upon which it was filed or given. Any such notice, application, or other writing directed to a Participant or beneficiary shall be deemed properly addressed if directed to the address set forth in the written claim filed by such Participant or beneficiary.
 
ARTICLE V
 
Miscellaneous Provisions
 
Section 5.01       Cumulative Benefits. Except as provided in Section 3.04, the rights and benefits provided to any Participant under the Plan are in addition to and shall not be a replacement of, all of the other rights and benefits provided to such Participant under any Benefit Plan or any agreement between such Participant and the Company (or any of its subsidiaries) except for any severance or termination benefits.
 
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Section 5.02      
No Mitigation. No Participant shall be required to mitigate the amount of any payment provided for in the Plan by seeking or accepting other employment following a termination of his or her employment with the Company,  any of its subsidiaries or otherwise. Except as otherwise provided in Section 3.04, the amount of any payment provided for in the Plan shall not be reduced by any compensation or benefit earned by a Participant as the result of employment by another employer or by retirement benefits. The Company’s obligations to make payments to any Participant required under the Plan shall not be affected by any set off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against such Participant.
 
Section 5.03     
Amendment or Termination. The Board may amend or terminate the Plan at any time; provided, however, that the Plan may not be amended or terminated during the pendency of a Potential Change in Control or within two (2) years following a Change in Control. Notwithstanding the foregoing, nothing herein shall abridge the authority of the Compensation and Human Capital Committee to designate a new Participant or a new participation Tier for a current Participant or to determine that a Participant shall no longer be entitled to participate in the Plan in accordance with Section 2.01(a) hereof. The Plan shall terminate when all of the obligations to Participants hereunder have been satisfied in full.
 
Section 5.04       
Enforceability. The failure of Participants or the Company to insist upon strict adherence to any term of the Plan on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of the Plan.
 
Section 5.05       
Administration.
 
(a)        
The Compensation and Human Capital Committee shall have full and final authority, subject to the express provisions of the Plan, with respect to designation of Participants and administration of the Plan, including but not limited to, the authority to construe and interpret any provisions of the Plan and to take all other actions deemed necessary or advisable for the proper administration of the Plan.
 
(b)      
The Company shall indemnify and hold harmless each member of the Compensation and Human Capital Committee and any other employee of the Company that acts at the direction of the Compensation and Human Capital Committee against any and all expenses and liabilities arising out of his or her administrative functions or fiduciary responsibilities, including any expenses and liabilities that are caused by or result from an act or omission constituting the negligence of such member in the performance of such functions or responsibilities, but excluding expenses and liabilities that are caused by or result from such member’s or employee’s own gross negligence or willful cause. Expenses against which such member or employee shall be indemnified hereunder shall include, without limitation, the amounts of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted or a proceeding brought or settlement thereof.
 
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Section 5.06       
Consolidations, Mergers, Etc. In the event of a merger, consolidation or other transaction, nothing herein shall relieve the Company from any of the obligations set forth in the Plan; provided, however, that nothing in this Section 5.06 shall prevent an acquirer of or Successor to the Company from assuming the obligations, or any portion thereof, of the Company hereunder pursuant to the terms of the Plan provided that such acquirer or Successor provides adequate assurances of its ability to meet this obligation. In the event that an acquirer of or Successor to the Company agrees to perform the Company’s obligations, or any portion thereof, hereunder, the Company shall require any person, firm or entity which becomes its Successor to expressly assume and agree to perform such obligations in writing, in the same manner and to the same extent that the Company would be required to perform hereunder if no such succession had taken place.
 
Section 5.07       
Successors and Assigns. The Plan shall be binding upon and inure to the benefit of the Company and its Successors and assigns. The Plan and all rights of each Participant shall inure to the benefit of and be enforceable by such Participant and his or her personal or legal representatives, executors, administrators, heirs and permitted assigns. If any Participant should die while any amounts are due and payable to such Participant hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of the Plan to such Participant’s devisees, legatees or other designees or, if there be no such devisees, legatees or other designees, to such Participant’s estate. In the event of the death of any Participant during the applicable period of eligibility for the Continued Benefits set forth in Section 3.01, dependents of such Participant shall be eligible during such period to continue participation in any Continued Benefits in which the Participant was enrolled at the time of death. No payments, benefits or rights arising under the Plan may be assigned or pledged by any Participant, except under the laws of descent and distribution.
 
Section 5.08     
Notices. All notices and other communications provided for in the Plan shall be in writing and shall be sent, delivered or mailed, addressed as follows: (a) if to the Company, at the Company’s principal office address or such other address as the Company may have designated by written notice to all Participants for purposes hereof, directed to the attention of the General Counsel, and (b) if to any Participant, at his or her residence address on the records of the Company or to such other address as he or she may have designated to the Company in writing for purposes hereof. Each such notice or other communication shall be deemed to have been duly given or mailed by United States certified or registered mail, return receipt requested, postage prepaid, except that any change of notice address shall be effective only upon receipt.
 
Section 5.09       
Tax Withholding. The Company and its subsidiaries shall have the right to deduct from any payment hereunder all taxes (federal, state or other) which it is required to be withhold therefrom.
 
Section 5.10      
No Employment Rights Conferred. The Plan shall not be deemed to create a contract of employment between any Participant and the Company and/or its affiliates. Nothing contained in the Plan shall (i) confer upon any Participant any right with respect to continuation of employment with the Company or any of its subsidiaries or (ii) subject to the rights and benefits of any Participant hereunder, interfere in any way with the right of the Company or any of its subsidiaries to terminate such Participant’s employment at any time.
 
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Section 5.11       
Entire Plan. The Plan contains the entire understanding of the Participants and the Company with respect to Change in Control severance arrangements maintained on behalf of the Participants by the Company. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the Participants and the Company with respect to the subject matter herein other than those expressly set forth herein.
 
Section 5.12  
Prior Agreements. The Plan supersedes all prior agreements, programs and understandings (including verbal agreements and understandings) between the Participants and the Company or any of its current or former affiliates regarding the terms and conditions of Participant’s severance arrangements in the event of a Change in Control.
 
Section 5.13      
Severability. If any provision of the Plan is, becomes or is deemed to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of the Plan shall not be affected thereby.
 
Section 5.14      
Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its conflict of laws rules, and applicable federal law.
 
[Remainder of the Page Intentionally Left Blank]

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Exhibit A
 
RESTRICTIVE COVENANT AND RELEASE AGREEMENT
 
This Release Agreement (this “Agreement”) is entered into between [NAME] (“Executive”) and Enhabit, Inc. (together with its subsidiaries, the “Company”), pursuant-to the terms and conditions of the Enhabit, Inc. Change in Control Benefits Plan, which is attached hereto as Exhibit A (the “Plan”).

WITNESSETH
 
WHEREAS, Executive is employed by the Company as [TITLE]  and is a “Participant” in the Plan (as such term is defined in the Plan);
 
WHEREAS, Executive’s last day of employment with the Company will be [DATE], and such date shall be the “Termination Date” for purposes of this Agreement and the Plan;
 
WHEREAS, Executive is eligible to receive benefits under Section 3.01 of the Plan, subject to the terms and conditions of the Plan, including, but not limited to, Executive’s execution and delivery to the Company of this Agreement and it becoming effective;
 
WHEREAS, Executive has agreed to comply with, among other things, certain confidentiality, noncompetition and nonsolicitation provisions, which are provided below, and such provisions shall be fully enforceable by the Company; and
 
WHEREAS, Executive and the Company wish to settle, fully and finally, all matters between them under the terms and conditions exclusively set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, the Company and Executive agree as follows:
 
1.           Benefits under the Plan. Provided that this Agreement becomes effective pursuant to Paragraph 4 of this Agreement:
 
(a)       The Company shall pay the amount listed on Line 1 of Exhibit B attached hereto, subject to all applicable federal, state and local withholdings, in accordance with the terms and conditions of the Plan, paid out in a lump sum within sixty (60) days of the Termination Date. In the event any of such payment is subject to Section 409A and such 60-day period extends into a new calendar year, the Company shall deliver such payment to the Participant on the later of the first business day of that new year or the effective date of this Agreement.

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(b)      Executive will continue to be eligible to participate in the Company sponsored group healthcare benefits, (excluding disability insurance but specifically including medical, dental and vision plans), under which the Executive was covered immediately prior to the Termination Date, for the number of months listed on Line 2 of Exhibit B attached hereto, after the Termination Date (the “Severance Period”), provided that Executive continues to contribute toward the premiums at the level of an active employee of the Company. Thereafter, Executive’s right to continue coverage under the Company sponsored group healthcare plan at Executive’s own expense, pursuant to the statutory scheme commonly known as “COBRA,” shall be governed by applicable law and the terms of the plans and programs, and will be explained to Executive in a packet to be sent to Executive under separate cover.
 
(c)       Executive acknowledges and agrees that the severance payments and benefits provided in subsection (a) and (b) of Section 1 are subject to forfeiture and repayment and any awards relating to Common Stock shall be cancellable and/or forfeitable in the event of a material violation by Executive of Sections 6, 7, and/or 8 of this Agreement
 
2.           Release.
 
(a)      Executive, on behalf of Executive, Executive’s heirs, executors, administrators, successors and assigns, hereby irrevocably and unconditionally releases the Company and its subsidiaries, divisions and affiliates, together with their respective owners, assigns, agents, directors, partners, officers, trustees, members, managers, employees, insurers, employee benefit programs (including, but not limited to, trustees, administrators, fiduciaries, and insurers of such programs), attorneys and representatives and any of their predecessors and successors and each of their estates, heirs and assigns (collectively, the “Company Releasees”) from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, causes of action, rights, costs, losses, debts and expenses of any nature whatsoever, known or unknown, which Executive or Executive’s heirs, executors, administrators, successors or assigns ever had, now have or hereafter can, will or may have (either directly, indirectly, derivatively or in any other representative capacity) by reason of any matter, fact or cause whatsoever against the Company or any of the other Company Releasees from the beginning of time to the date upon which Executive signs this Agreement, including, but not limited to, any claims arising out of or relating to Executive’s employment with the Company and/or termination of employment from the Company. This release includes, without limitation, all claims arising out of, or relating to, Executive’s employment with the Company and the termination of Executive’s employment with the Company, including all claims for severance or termination benefits under Executive’s employment agreement with the Company, if any, and under any plan, policy or agreement (other than those benefits expressly payable hereunder) and all claims arising under any foreign, federal, state and local labor, laws including, without limitation, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Equal Pay Act, the Immigration and Reform Control Act, the Uniform Services Employment and Re-Employment Act, the Rehabilitation Act of 1973, Sarbanes-Oxley Act, Executive Order 11246, the Lilly Ledbetter Fair Pay Act, the False Claims Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Alabama Age Discrimination Statute and the Workers’ Adjustment and Retraining Notification Act (and any similar state or local law), each as amended.

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(b)     Nothing in this Paragraph 2 shall be deemed to release (i) Executive’s right to enforce the terms of this Agreement; (ii) Executive’s rights, if any, to any vested benefits or options under any incentive, bonus, or other benefit plan maintained by the Company; (iii) any right to indemnification under the Company’s Enhabit, Inc. certificate of incorporation or by-laws, in each case as amended and as in effect from time to time; or (iv) any claim that cannot be waived under applicable law. Nothing in this Agreement prevents Executive from initiating a complaint with or participating in any legally authorized investigation or proceeding conducted by the Equal Employment Opportunity Commission or any federal, state, or local law enforcement agency. Notwithstanding the foregoing, Executive agrees that Executive is waiving all rights to damages and all other forms of recovery arising out of any charge, complaint or lawsuit filed on behalf of Executive or any third party as to all claims waived in this Agreement.
 
(c)       Executive acknowledges and agrees that the Company has fully satisfied any and all obligations owed to Executive arising out of Executive’s employment with the Company, and no further sums are owed to Executive by the Company or by any of the other Company Releasees at any time. Executive further acknowledges and agrees that the Company has paid Executive for all earned wages and accrued but unused paid time off through the Termination Date. By entering into this Agreement, Executive explicitly waives any rights to severance or other post-termination benefits under any oral or written plan, policy, employment agreement, contract or arrangement with the Company, other than as provided in this Agreement. Executive acknowledges and agrees that, in the absence of this Agreement, the Company has no obligation to provide any of the consideration set forth in Paragraph 1 of this Agreement. Executive further acknowledges and agrees that Executive has no rights to any unvested benefits or options under any incentive, bonus or other benefit plan, except as otherwise provided in the Plan; and that all such vesting shall cease as of the Termination Date. Executive further acknowledges and agrees that any right to continue to contribute to the Company’s 401(k) plan for employees ended on the Termination Date. Furthermore, Executive acknowledges and agrees that the payments and benefits provided under Paragraph 1 of this Agreement shall not be included in any computation of earnings under the Company’s 401(k) plan or any other plan.
 
(d)     Executive represents that Executive has no lawsuits pending against the Company or any of the other Company Releasees. Executive further covenants and agrees that neither Executive nor Executive’s heirs, executors, administrators, successors or assigns will be entitled to any personal recovery in any
 
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(e)      proceeding of any nature whatsoever against the Company or any of the other Company Releasees arising out of any of the matters released in Paragraph 2.
 
3.        Consultation with Attorney/Voluntary Agreement. Executive acknowledges that (a) the Company is hereby advising Executive of Executive’s right to consult with an attorney of Executive’s own choosing prior to executing this Agreement, (b) Executive has carefully read and fully understands all of the provisions of this Agreement, and (c) Executive is entering into this Agreement, including the releases set forth in Paragraph 2 above, knowingly, freely and voluntarily in exchange for good and valuable consideration, including the obligations of the Company under this Agreement.
 
4.           Consideration & Revocation Period.
 
(a)       Executive acknowledges that Executive has been given at least twenty-one (21) calendar days following receipt of this Agreement to consider the terms of this Agreement, although Executive may execute it sooner.
 
(b)      Executive will have seven (7) calendar days from the date on which Executive signs this Agreement to revoke Executive’s consent to the terms of this Agreement. Such revocation must be in writing and must be addressed and sent via email as follows: Enhabit, Inc., Attention: General Counsel, email address: [●]. Notice of such revocation must be received within the seven (7) calendar days referenced above. In the event of such revocation by Executive, this Agreement shall not become effective and Executive shall not have any rights under this Agreement or the Plan.
 
(c)        Provided that Executive does not revoke this Agreement, this Agreement shall become effective on the eighth calendar day after the date on which Executive signs this Agreement (the “Effective Date”).
 
5.           Acknowledgements.
 
(a)     Executive acknowledges and agrees that: (i) the “Company Business” (as defined in Paragraph 9(a) below) is intensely competitive and that Executive’s employment by the Company required Executive to have access to, and knowledge of, “Confidential Information” (as defined in Paragraph 9(b) below); (ii) the use or disclosure of any Confidential Information could place the Company at a serious competitive disadvantage and could do serious damage, financial and otherwise, to the Company; (iii) Executive was given access to, and developed relationships with, employees, clients, patients, physicians and partners of the Company at the time and expense of the Company; and (iv) by Executive’s training, experience and expertise, Executive’s services to the Company were extraordinary, special and unique, and the Company invested in training and enhancing Executive’s skill and experience in the Company Business.

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(b)       Executive further acknowledges and agrees that (i) Executive’s experience and capabilities are such that the provisions contained in Paragraphs 6, 7, and 8 will not prevent Executive from earning a livelihood; (ii) the Company would be seriously and irreparably injured if Executive were to engage in “Competitive Activities” (as defined below), or to otherwise breach the obligations contained in Paragraphs 6, 7 and 8, no adequate remedy at-law would exist and damages would be difficult to determine; (iii) the provisions contained in Paragraphs 6, 7 and 8 are justified by and reasonably necessary to protect the legitimate business interests of the Company, including the Confidential Information and good will of the Company; and (iv) the provisions in Paragraphs 6, 7 and 8 are fair and reasonable in scope, duration and geographical limitations. Accordingly, Executive agrees to be bound fully by the restrictive covenants in this Agreement to the maximum extent permitted by law, it being the intent and spirit of the parties that the restrictive covenants and the other agreements contained herein shall be valid and enforceable in all respects.
 
6.           Confidentiality.
 
(a)      Executive acknowledges and agrees that, from and after the Termination Date, and at all times thereafter, Executive will not communicate, divulge or disclose to any “Person” (as defined in Paragraph 9(c) below) or use for Executive’s own benefit or purpose any Confidential Information of the Company, except as required by law or court order or expressly authorized in writing by the Company; provided, however, that Executive shall promptly notify the Company prior to making any disclosure required by law or court order so that the Company may seek a protective order or other appropriate remedy.
 
7.           Covenant Not to Compete.
 
From the Termination Date through the end of the Severance Period (the “Noncompetition Period”), Executive shall not, directly or indirectly, participate in the management, operation or control of, or have any financial or ownership interest in, or aid or knowingly assist anyone else in the conduct of, any business or entity that (i) engages in the Company Business in any Restricted Territory (as defined in Paragraph 9(d) below), or (ii) is, to Executive’s knowledge, making preparations for engaging in the Company Business in any Restricted Territory (collectively, “Competitive Activity”); provided, however, that (x) the “beneficial ownership” by Executive, either individually or as a member of a “group” (as such terms are used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended), of not more than one percent (1%) of the voting stock of any publicly held corporation shall not alone constitute a breach of this Paragraph 7 and (y) Executive may enter into, at arm’s length, any bona fide joint venture (or partnership or other business arrangement) with any Person who is not directly engaged in the Company Business but which is an affiliate of another Person engaged in the Company Business.

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8.          Employee Nonsolicitation; Nondisparagement.
 
(a)       Executive shall not, directly or indirectly, within the Noncompetition Period, without the prior written consent of the Company, solicit or direct any other Person to solicit any officer or other employee of the Company to: (i) terminate such officer’s or employee’s employment with the Company; or (ii) seek or accept employment or other affiliation with Executive or any Person engaged in any Competitive Activity in which Executive is directly or indirectly involved (other than, in each case, any solicitation directed at the public in general in publications available to the public in general or any contact which Executive can demonstrate was initiated by such officer, director or employee or any contact after such officer’s or employee’s employment with the Company is terminated). Executive’s obligations. under this Paragraph 8(a) with respect to new Company employees hired after the Termination Date shall be subject to the condition that Executive shall have been notified of such new employees.
 
(b)      Executive shall not, directly or indirectly, within the Noncompetition Period, without the prior written consent of the Company, solicit or direct any other Person to solicit any Person or entity in a business relationship with the Company (whether an independent contractor, joint venture partner or otherwise) to terminated such Person or entity’s business relationship with the Company.
 
(c)      Executive shall not, directly or indirectly, within the Noncompetition Period, make any statements or comments of a defamatory or disparaging nature to third parties regarding the Company or any of their members, principals, officers, managers, directors, personnel, employees, agents, services or products; provided, however, that nothing contained in this Paragraph 8(b) shall preclude Executive from providing truthful testimony in response to a valid subpoena, court order, regulatory request or as may be required by law.
 
9.          Definitions.
 
(a)       For purposes of this Agreement, “Company Business” shall mean (i) any business in competition with the Company or any of its affiliates or engaged in the same or similar business as the Company or any of its affiliates, including, but not limited to, the home health, hospice, private duty, personal care, home care, personal assistance business as well as any business or services associated with or related to the foregoing; (ii) any other business in which the Company or any of its affiliates engages during Executive’s employment and for which Executive performed any services or had any responsibility; and (iii) any business the Company or any of its affiliates seriously contemplated conducting during the last 12 months of Executive’s employment with the Company or any of its affiliates.
 
(b)       For purposes of this Agreement, “Confidential Information” includes, but is not limited to, certain or all of the Company’s and its patients’, physicians’ and third-party managed care providers’ supply agreement arrangements, regulatory packages, registration packages, data compensation packages, methods, information, systems, plans for acquisition or disposition of products, expansion plans, financial status and plans, customer lists, client data, personnel information, consulting reports, investigative reports, Personal Health Information (PHI), strategic plans and trade secrets.

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(c)       For the purposes of this Agreement, “Person” shall mean an individual, corporation, joint venture, partnership, limited liability company, association, joint stock or other company, business trust, trust or other entity or organization, including any national, federal, state, territorial agency, local or foreign judicial, legislative, executive, regulatory or administrative authority, commission, court, tribunal, any political or other subdivision, department or branch of any of the foregoing, and any self-regulatory organization or arbitrator.
 
(d)       For purposes of this Agreement “Restricted Territory” shall mean any geographical area or territory in the United States within a 75-mile radius of where the Company or any of its affiliates operates and for or within which Executive performed any services for the Company or any of its affiliates or for which Executive had any responsibility or about which Executive received Confidential Information during the last twenty-four (24) months of Executive’s employment with the Company or any of its affiliates.
 
10.       
Notice to the Company. In the event that Executive accepts employment with another party at any time during the Severance Period, Executive shall inform the Company in writing on or before the commencement date of such employment and provide the Company with such other information relating to available health and welfare benefits as a result of said employment as required by Section 3.03(a) of the Plan.
 
11.        
Duty to Inform. Executive shall inform in writing any Person, who seeks to employ or engage Executive in any capacity, of Executive’s obligations under Paragraphs 6, 7 and 8 of this Agreement, prior to accepting such employment or engagement.
 
12.      
Company Property. Executive represents that Executive has returned to the Company all property of the Company. Such property includes, but is not limited to, laptop computers, BlackBerry, printers, other computer equipment (including computers, printers and equipment paid-for by the Company for use at Executive’s residence), cellular phones and pagers, keys, security passes, passwords, work files, records, credit cards, building ID’s and all other Company property in Executive’s possession on the last day of Executive’s employment with the Company. Following the Termination Date, the Company shall also have no obligation to continue to make payments under any car loan or corporate membership provided to Executive as an employee of the Company.
 
13.        
No Admission of Wrongdoing. Nothing herein is to be deemed to constitute an admission of wrongdoing by the Company or any of the other Company Releasees.
 
14.        
Assignment. This Agreement is binding on, and will inure to the benefit of, the Company and the other Company Releasees. All rights of Executive under this Agreement shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees.

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15.        Injunctive Relief. Executive agrees that the Company would suffer irreparable harm if Executive were to breach, or threaten to breach, any provision of this Agreement and that the Company would by reason of such breach, or threatened breach, be entitled to injunctive relief in a court of appropriate jurisdiction, without the need to post any bond, and Executive further consents and stipulates to the entry of such injunctive relief in such a court prohibiting Executive from breaching this Agreement. This Paragraph 15 shall not, however, diminish the right of the Company to claim and recover damages and other appropriate relief, including but not limited to repayment of any severance payments or benefits provided to Executive, in addition to injunctive relief.
 
16.         Severability. In the event that any one or more, of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law. Furthermore, a determination in any jurisdiction that this Agreement, in whole or in part, is invalid, illegal or unenforceable shall not in any way affect or impair the validity, legality or enforceability of this Agreement in any other jurisdiction.
 
17.        Waiver. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default.
 
18.        No Oral Modifications. This Agreement may not be changed orally, but may be changed only in a writing signed by Executive and a duly authorized representative of the Company.
 
19.        Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the application of any choice-of-law rules that would result in the application of another state’s laws. With respect to any action, suit or proceeding, each party irrevocably (i) submits to the jurisdiction of the courts of the State of Delaware and the United States District Court of the District of Delaware, and (ii) waives any objection which it may have at any time to the laying of venue of any proceeding brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party.

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20.       
Entire Agreement. This Agreement and any other agreements or obligations signed or undertaken by Executive that provide additional or greater rights to the Company that Executive previously entered into with the Company (including any predecessor or affiliate of the Company), are herein incorporated by reference, remain in full force and effect according to their terms, constitute the entire agreement and understanding between Executive and the Company, and fully supersede all prior and contemporaneous negotiations, understandings, representations, writings, discussions and/or agreements between Executive and the Company, whether written or oral, pertaining to or concerning the subject matter of this Agreement. Executive represents that, in executing this Agreement, Executive has not relied upon any representation or statement made by the Company or any other Company Releasees, other than those set forth herein, with regard to the subject matter, basis or effect of this Agreement or otherwise.
 
21.      
Descriptive Headings. The paragraph headings contained herein are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.
 
22.        
Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be an original, but all of which shall constitute but one and the same agreement.

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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement on the date indicated below.

 
ENHABIT, INC.
     
    
 
By:
 
     
   
 
Date
 

 
EXECUTIVE
     
    
 
Name:
 
     
   
 
Date
 

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[EXHIBIT A to the Form of Restricted Covenant and Release Agreement]

[INSERT PLAN]

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EXHIBIT B

Name:
   
       
1.
Amount Payable:
$
 
       
2.
Months:
   


B-1


Exhibit 10.3

FORM OF

ENHABIT, INC.

EXECUTIVE SEVERANCE PLAN

Enhabit, Inc., a Delaware corporation (the “Company”), has adopted the Enhabit, Inc. Executive Severance Plan (the “Plan”), to be effective as of the date on which the Company becomes a separate publicly traded company in connection with its separation from Encompass Health Corporation, for the benefit of certain employees of the Company and its subsidiaries, on the terms and conditions hereinafter stated.

The Plan is intended to help retain qualified employees and provide financial security to certain employees of the Company and its subsidiaries whose employment with the Company and its subsidiaries may be terminated under circumstances entitling them to severance benefits as provided herein.  The Plan is intended to be a plan that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. To the maximum extent permitted by law, the Plan is not intended to provide for any “deferral of compensation,” as defined in Section 409A of the Code (“Section 409A”) and authoritative Department of Treasury regulations and other interpretive guidance issued thereunder (including the Proposed Treasury Regulations issued June 22, 2016, to the extent the application of such proposed regulations facilitates the administration of this Plan in accordance with the intentions set forth in this paragraph). Instead, payments and benefits under the Plan are intended to fall within the exemptions for “short-term deferrals,” as set forth in Treasury Regulations section 1.409A-1(b)(4), and “separation pay due to involuntary separation from service or participation in a window program,” as set forth in Treasury Regulations section 1.409A-1(b)(9)(iii), and it is further intended that each Participant’s benefits shall be payable only upon a Participant’s “separation from service” under Treasury Regulations section 1.409A-1(h). For purposes of Treasury Regulations section 1.409A-2(b)(2)(iii), the right to each payment under the Plan shall be treated as the right to a separate payment. The Plan shall be administered and interpreted to the extent possible in a manner consistent with these intentions.

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

Section 1.01       Definitions.  Capitalized terms used in the Plan shall have the following respective meanings, except as otherwise provided or as the context shall otherwise require:

Annual Salary” shall mean the base salary paid to a Participant immediately prior to his or her Termination Date on an annual basis exclusive of any bonus payments or additional payments under any Benefit Plan.


Benefit Plan” shall mean any “employee benefit plan” (including any employee benefit plan within the meaning of Section 3(3) of ERISA), program, arrangement or practice maintained, sponsored or provided by the Company and any of its subsidiaries, including those relating to compensation, bonuses, profit-sharing, stock option, or other stock related rights or other forms of incentive or deferred compensation, paid time off benefits, insurance coverage (including any self-insured arrangements) health or medical benefits, disability benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance or other benefits).

Board” shall mean the Board of Directors of the Company.

Cause” shall have the meaning set forth in any individual employment or similar agreement between the Company (or any of its subsidiaries) and a Participant, or in the event that a Participant is not a party to such an agreement, Cause shall mean:

(i)         the Company’s procurement of evidence of the Participant’s act of fraud, misappropriation, or embezzlement with respect to the Company or any of its subsidiaries;

(ii)        the Participant’s indictment for, conviction of, or plea of guilty or no contest to, any felony (other than a minor traffic violation);

(iii)       the suspension or debarment of the Participant or of the Company or any of its affiliated companies or entities as a direct result of any willful or grossly negligent act or omission of the Participant in connection with his employment with the Company or any of its subsidiaries from participation in any Federal or state health care program.  For purposes of this clause (iii), the Participant shall not have acted in a “willful” manner if the Participant acted, or failed to act, in a manner that he believed in good faith to be in, or not opposed to, the best interests of the Company or any of its subsidiaries;

(iv)      the Participant’s admission of liability of, or finding by a court or the SEC (or a similar agency of any applicable state) of liability for, the violation of any “Securities Laws” (as hereinafter defined) (excluding any technical violations of the Securities Laws which are not criminal in nature).  As used herein, the term “Securities Laws” means any Federal of state law, rule or regulation governing the issuance or exchange of securities, including without limitation the Securities Act and the Exchange Act;

(v)        a formal indication from any agency or instrumentality of any state or the United States of America, including but not limited to the United States Department of Justice, the SEC or any committee of the United States Congress that the Participant is a target or the subject of any investigation or proceeding into the actions or inactions of the Participant for a violation of any Securities Laws in connection with his employment by the Company or any of its subsidiaries (excluding any technical violations of the Securities law which are not criminal in nature);

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(vi)       the Participant’s failure after reasonable prior written notice from the Company or any of its subsidiaries to comply with any valid and legal directive of the Chief Executive Officer or the Board that is not remedied within thirty (30) days of the Participant being provided written notice thereof from the Company; or

(vii)      other than as provided in clauses (i) through (vi) above, the Participant’s breach of any material provision of any employment agreement, if applicable, or the Participant’s breach of or failure to perform the material duties and responsibilities of the Participant’s job, that is not remedied within thirty (30) days or repeated breaches of a similar nature, such as the failure to report to work, comply with a Company policy, perform duties when or as directed or otherwise follow directions, all as provided herein, which shall not require additional notices as provided in clauses (i) through (vi) above.

Cause shall be determined by the affirmative vote of at least fifty percent (50%) of the members of the Board (excluding the Participant, if a Board member, and excluding any member of the Board involved in events leading to the Board’s consideration of terminating the Participant for Cause).

Code” shall mean the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

Common Stock” shall mean $.01 par value common stock of the Company, and such other securities of the Company as may be substituted for Common Stock.

Compensation and Human Capital Committee” shall mean the Compensation and Human Capital Committee of the Board.

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 “Good Reason” shall mean, when used with reference to any Participant, any of the following actions or failures to act, but in each case only if it occurs while such Participant is employed by the Company or any of its subsidiaries and then only if it is not consented to by such Participant in writing:

(i)         assignment of a position that is of a lesser rank than held by the Participant prior to the assignment and that results in a material adverse change in such Participant’s reporting position, duties or responsibilities or title or elected or appointed offices as in effect immediately prior to the effective date of such change;

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(ii)       a material reduction in such Participant’s total compensation from that in effect immediately prior to the effective date of such reduction.  For purposes of this clause (ii), “total compensation” shall mean the sum of base salary, target bonus opportunity and the opportunity to receive compensation in the form of equity in the Company.  Notwithstanding the foregoing, a reduction will not be deemed to have occurred hereunder on account of (A) any change to a plan term other than ultimate target bonus opportunity or equity opportunity, (B) the actual payout of any bonus amount or equity amount, (C) any reduction resulting from changes in the market value of securities or other instruments paid or payable to the Participant, or (D) any reduction in the total compensation of a group of similarly situated Participants that includes such Participant;

(iii)      any change of more than fifty (50) miles in the location of the principal place of employment of such Participant immediately prior to the effective date of such change; or

(iv)      the Participant receives a Removal Notice in accordance with Section 2.01(a) hereof or a notice of termination of the Plan in accordance with Section 5.04 hereof.

For purposes of this definition, none of the actions described in clauses (i) through (iv) above shall constitute “Good Reason” if taken for Cause. Additionally, none of the actions described in clauses (i) through (iv) above shall constitute “Good Reason” with respect to any Participant if remedied by the Company within thirty (30) days after receipt of written notice thereof given by such Participant (or, if the matter is not capable of remedy within thirty (30) days, then within a reasonable period of time following such thirty (30) day period, provided that the Company or any of its subsidiaries has commenced such remedy within said thirty (30) day period); provided that “Good Reason” shall cease to exist for any action described in clauses (i) through (iii) above on the sixtieth (60th) day following the later of the occurrence of such action or the Participant’s knowledge thereof, unless such Participant has given the Company written notice thereof prior to such date.  In the case of clause (iv) above, Good Reason shall cease to exist on the sixtieth (60th) day following the delivery of such notice. Furthermore, any benefits under the Plan resulting from the occurrence described in clause (iv) above shall be based on the status of the Participant as a Tier 1 Participant, Tier 2 Participant or Tier 3 Participant as of the date of such occurrence.

Participant” shall mean each employee of the Company or any of its subsidiaries who is designated in writing as a participant in the Plan by the Board or the Compensation and Human Capital Committee from time to time; provided that the Chief Executive Officer may designate an employee of the Company or any of its subsidiaries (other than an executive officer) as a Tier 3 Participant and shall provide prompt notice to the Compensation and Human Capital Committee of such designation.

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Plan” shall mean this Enhabit, Inc. Executive Severance Plan, as amended, supplemented or modified from time to time in accordance with its terms.

Pro-rated Portion” shall mean, with respect to any equity-based grant or award, a fraction (i) whose numerator is the number of months elapsed from the date of grant of such Award through the effective date of termination of a Participant’s employment in the circumstances described in Section 3.01 below, and (ii) whose denominator is the total number of months over which the grant or award would have vested or had its restrictions lapse under the applicable award agreement. For purposes of this definition, the months elapsed will include the month in which the effective date of termination occurs if such date is the 16th, or a subsequent, day of that month.

SEC” shall mean the United States Securities Exchange Commission.

Securities Act” shall mean the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder.

 “Severance Multiplier” shall mean, (i) in the case of a Tier 1 Participant, three times (3x), (ii) in the case of a Tier 2 Participant, two times (2x), and (iii) in the case of a Tier 3 Participant, one times (1x).

Successor” shall mean a successor to all or substantially all of the business, operations or assets of the Company.

Termination Date” shall mean, with respect to any Participant, the termination date specified in the Termination Notice delivered by such Participant to the Company in accordance with Section 2.02 or as set forth in any Termination Notice delivered by the Company.

Termination Notice” shall mean, as appropriate, written notice from (a) a Participant to the Company purporting to terminate such Participant’s employment for Good Reason in accordance with Section 2.02 or (b) the Company to any Participant purporting to terminate such Participant’s employment for Cause or Disability in accordance with Section 2.03.

Tier 1 Participant” shall mean each Participant designated in writing by the Board or the Compensation and Human Capital Committee as a Tier 1 Participant, as that designation may be amended in accordance with Section 2.01.

Tier 2 Participant” shall mean each Participant designated in writing by the Board or the Compensation and Human Capital Committee as a Tier 2 Participant, as that designation may be amended in accordance with Section 2.01.

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Tier 3 Participant” shall mean each Participant designated in writing by the Board or the Compensation and Human Capital Committee as a Tier 3 Participant, as that designation may be amended in accordance with Section 2.01.

Section 1.02         Interpretation.  In the Plan, unless a clear contrary intention appears, (a) the words “herein,” “hereof” and “hereunder” refer to the Plan as a whole and not to any particular Article, Section or other subdivision, (b) reference to any Article or Section, means such Article or Section hereof and (c) the words “including” (and with correlative meaning “include”) means including, without limiting the generality of any description preceding such term. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

ARTICLE II

ELIGIBILITY AND BENEFITS

Section 2.01         Eligible Employees.

(a)         Once designated as a “Participant,” by the Board, the Compensation and Human Capital Committee, or the Chief Executive Officer, as applicable, an employee of the Company or any of its subsidiaries shall continue to be a “Participant” in the Plan while he or she remains employed by the Company or any of its subsidiaries, unless such employee is given written notice of the Board’s or the Compensation and Human Capital Committee’s determination that such Participant shall cease to be a Participant as of the date specified in such notice (a “Removal Notice”).

(b)        The Plan is only for the benefit of Participants, and no other employees, personnel, consultants or independent contractors shall be eligible to participate in the Plan or to receive any rights or benefits hereunder.

Section 2.02       Termination Notices from Participants.  For purposes of the Plan, in order for any Participant to terminate his or her employment for Good Reason, such Participant must give a Termination Notice to the Company in accordance with the requirements specified under the definition of Good Reason in Section 1.01, which notice shall be signed by such Participant, shall be dated the date it is given to the Company, shall specify the Termination Date and shall state that the termination is for Good Reason and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such Good Reason.  Any Termination Notice given by a Participant that does not comply in all material respects with the foregoing requirements as well as the “Good Reason” definition provisions set forth in Section 1.01 shall be invalid and ineffective for purposes of the Plan.  If the Company receives from any Participant a Termination Notice that states that the termination is for Good Reason and which the Company believes is invalid and ineffective as aforesaid, it shall promptly notify such Participant of such belief and the reasons therefor.  Any termination of employment by the Participant that either does not constitute Good Reason or fails to meet the Termination Notice requirements set forth above shall be deemed a termination by the Participant without Good Reason.

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Section 2.03       Termination Notices from Company.  For purposes of the Plan, in order for the Company or any of its subsidiaries to terminate any Participant’s employment for Cause, the Company must give a Termination Notice to such Participant, which notice shall be dated the date it is given to such Participant, shall specify the Termination Date and shall state that the termination is for Cause and shall set forth in reasonable detail the particulars thereof.  Any Termination Notice given by the Company that does not comply, in all material respects, with the foregoing requirements shall be invalid and ineffective for purposes of the Plan.  Any Termination Notice purported to be given by the Company to any Participant after the death or retirement of such Participant shall be invalid and ineffective.

ARTICLE III

SEVERANCE AND RELATED TERMINATION BENEFITS

Section 3.01         Termination of Employment.

(a)          In the event that a Participant’s employment is terminated (i) by the Participant for Good Reason (while such Good Reason exists) or (ii) by the Company or any of its subsidiaries without Cause, then in each case, subject to Sections 3.02 through 3.05 hereof:

(A)        such Participant shall be entitled to receive, and the Company shall be obligated to pay to the Participant, a lump sum payment within sixty (60) days following such Participant’s Termination Date in an amount equal to (i) the Participant’s Annual Salary on the Termination Date multiplied by the Severance Multiplier plus (ii) all unused paid time off time accrued by such Participant as of the Termination Date under the Company’s paid time off policy plus (iii) all accrued but unpaid compensation, excluding any nonqualified deferred compensation, earned by such Participant as of the Termination Date ((ii) and (iii) together, the “Accrued Obligations”);

(B)       for a period of months equal to the Participant’s Severance Multiplier multiplied by twelve (12), such Participant and his or her dependents shall continue to be covered by all medical, dental and vision insurance plans and programs (excluding disability insurance) maintained by the Company or any of its subsidiaries under which the Participant was covered immediately prior to the Termination Date (collectively, the “Continued Benefits”) at the same cost sharing between the Company (or any of its subsidiaries) and Participant as a similarly situated active employee;

(C)         a Pro-rated Portion of any unvested options and stock appreciation rights held by the Participant to purchase Company stock will become automatically vested and exercisable and shall continue to be exercisable for such time as otherwise vested options and stock appreciation rights are exercisable under the related plan and award agreement;

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(D)       the vesting restrictions based upon continued employment on a Pro-rated Portion of all other awards relating to Common Stock (including but not limited to restricted stock, restricted stock units, and awards deemed achieved pursuant to clause (E) below) held by the Participant shall immediately lapse and, in the case of restricted stock units, shall become payable at the time specified in clause (A) above, to the extent permitted by Section 409A; and

(E)        the achievement of performance criteria on any awards related to the Common Stock (including but not limited to performance shares or performance share units) held by a Participant shall deemed to have been met to the extent determined by the Compensation and Human Capital Committee.

Notwithstanding anything herein to the contrary, in the event that a Participant is deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, the lump sum severance payment, together with interest at the an annual rate (compounded monthly) equal to the federal short-term rate (as in effect under Section 1274(d) of the Code on the Termination Date) shall be paid, to the extent required to avoid the application of taxes and penalties under Section 409A, to such Participant immediately following the date that is six months after the Termination Date and no later than thirty (30) days following such date.  In any event, all Accrued Obligations shall be paid to the Participant no later than sixty (60) days following the Termination Date.

(b)        In the event that a Participant’s employment is terminated (i) by the Company or any of its subsidiaries for Cause or (ii) by the Participant other than for Good Reason, then in each case:

(A)       such Participant shall be entitled to receive, and the Company shall be obligated to pay to the Participant a lump sum payment equal to the Accrued Obligations; and

(B)        such Participant shall be entitled to continue to maintain coverage for such Participant under the provisions of Section 4980B of the Code (“COBRA”) until the expiration of eligibility under COBRA.  The Participant shall be required to make any premium payments for such coverage under the provisions of COBRA.

(c)       At the expiration of the period applicable to Continued Benefits as provided in Section 3.01(a)(B), the Participant and his or her dependents shall be entitled to continued coverage under COBRA for a period, if any, equal to the difference between the maximum coverage period applicable to such Participant or a dependent under COBRA and the period under which continued Benefits were provided pursuant to Section 3.01(a)(B).

(d)         Notwithstanding the foregoing, the failure to continue a Participant’s employment with the Company or any of its subsidiaries following the expiration of an employment agreement between the Company and the Participant shall not be treated as termination without Cause by the Company or a termination by the Participant for Good Reason.

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Section 3.02        Condition to Receipt of Severance Benefits.  As a condition to receipt of any payment or benefits under Section 3.01(a), such Participant must enter into a restrictive covenant (non-solicitation, non-compete, non-disclosure, non-disparagement) and release agreement (a “Release Agreement”) with the Company and its affiliates substantially in the form attached hereto as Exhibit A. The Participant must execute and deliver a Release Agreement, and such Release Agreement must become effective and irrevocable in accordance with its terms, no later than sixty (60) days following such Participant’s Termination Date. If this requirement is not satisfied, the Participant shall forfeit the right to receive any benefits under Section 3.01(a) and shall instead be entitled to benefits only under Section 3.01(b). In the event such Participant’s receipt of any or all of the payment or benefits under Section 3.01(a) is subject to Section 409A and such 60-day period extends into a new calendar year, the Company shall deliver such portion of the payments and benefits to the Participant on the later of the first business day of that new year or the effective date of such Release Agreement.

Section 3.03         Limitation of Benefits.

(a)          Anything in the Plan to the contrary notwithstanding, the obligation of the Company or any of its subsidiaries to provide the Continued Benefits as provided in Section 3.01(a)(B) shall cease immediately upon such Participant beginning employment with a third party that provides such Participant with substantially comparable health and welfare benefits.

(b)         Any amounts payable under the Plan shall be in lieu of and not in addition to any other severance or termination payment under any other plan or agreement with the Company or any of its current or former affiliates.  As a condition to receipt of any payment under the Plan, the Participant shall waive any entitlement to any other severance or termination payment by the Company or any of its current or former affiliates, including any severance or termination payment set forth in any employment agreement with the Company or any of its subsidiaries.  In the event a Participant is entitled to benefits under the Company’s Change of Control Plan (as amended, restated, supplemented or modified from time to time), the Participant shall not be entitled to any benefits hereunder.  Notwithstanding the foregoing, nothing in this Section 3.03(b) shall abridge the Participant’s rights with respect to vested benefits under any Benefit Plan.

Section 3.04        Plan Unfunded; Participant’s Rights Unsecured.  The Company shall not be required to establish any special or separate fund or make any other segregation of funds or assets to assure the payment of any benefit hereunder.  The right of any Participant to receive the benefits provided for herein shall be an unsecured obligation against the general assets of the Company.

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ARTICLE IV

CLAIMS PROCEDURE

Section 4.01         Claims Procedure

(a)          It shall not be necessary for a Participant who has become entitled to receive a benefit hereunder to file a claim for such benefit with any person as a condition precedent to receiving a distribution of such benefit.  However, any Participant or beneficiary who believes that he or she has become entitled to a benefit hereunder and who has not received, or commenced receiving, a distribution of such benefit, or who believes that he or she is entitled to a benefit hereunder in excess of the benefit which he or she has received, or commenced receiving, may file a written claim for such benefit with the Compensation and Human Capital Committee no later than ninety (90) days following the date on which he or she allegedly became entitled to receive a distribution of such benefit.  Such written claim shall set forth the Participant’s or beneficiary’s name and address and a statement of the facts and a reference to the pertinent provisions of the Plan upon which such claim is based.  The Compensation and Human Capital Committee shall, within ninety (90) days after such written claim is filed, provide the claimant with written notice of its decision with respect to such claim.  If such claim is denied in whole or in part, the Compensation and Human Capital Committee shall, in such written notice to the claimant, set forth in a manner calculated to be understood by the claimant the specific reason or reasons for denial; specific references to pertinent provisions of the Plan upon which the denial is based; a description of any additional material or information necessary for the claimant to perfect his or her claim and an explanation of why such material or information is necessary; and an explanation of the provisions for review of claims set forth in Section 4.01(b) below.

(b)          A Participant or beneficiary who has filed a written claim for benefits with the Compensation and Human Capital Committee which has been denied may appeal such denial to the Compensation and Human Capital Committee and receive a full and fair review of his or her claim by filing with the Compensation and Human Capital Committee a written application for review at any time within sixty (60) days after receipt from the Compensation and Human Capital Committee of the written notice of denial of his or her claim provided for in Section 4.01(a) above.  A Participant or beneficiary who submits a timely written application for review shall be entitled to review any and all documents pertinent to his or her claim and may submit issues and comments to the Compensation and Human Capital Committee in writing.  Not later than sixty (60) days after receipt of a written application for review, the Compensation and Human Capital Committee shall give the claimant written notice of its decision on review, which written notice shall set forth in a manner calculated to be understood by the claimant specific reasons for its decision and specific references to the pertinent provisions of the Plan upon which the decision is based. In the event the claimant disputes the decision of the Compensation and Human Capital Committee, the claimant may not bring suit in court with respect to such dispute under the Plan later than one hundred eighty (180) days after receiving the Compensation and Human Capital Committee’s written notice of its decision.

(c)          Any act permitted or required to be taken by a Participant or beneficiary under this Section 4.01 may be taken for and on behalf of such Participant or beneficiary by such Participant’s or beneficiary’s duly authorized representative.  Any claim, notice, application or other writing permitted or required to be filed with or given to a party by this Article shall be deemed to have been filed or given when deposited in the U.S. mail, postage prepaid, and properly addressed to the party to whom it is to be given or with whom it is to be filed.  Any such claim, notice, application, or other writing deemed filed or given pursuant to the next foregoing sentence shall in the absence of clear and convincing evidence to the contrary, be deemed to have been received on the fifth (5th) business day following the date upon which it was filed or given.  Any such notice, application, or other writing directed to a Participant or beneficiary shall be deemed properly addressed if directed to the address set forth in the written claim filed by such Participant or beneficiary.

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ARTICLE V

Miscellaneous Provisions

Section 5.01       Recoupment. Nothing in the Plan, including the treatment under the Plan of awards relating to the Common Stock held by the Participant, cash distributed to a Participant pursuant thereto, or proceeds received by a Participant upon the sale of any related Common Stock, should be interpreted to alter or supersede the terms or requirements of the Company’s Compensation Recoupment Policy, as it may be amended from time to time, which policy is hereby incorporated in the Plan by reference.

Section 5.02      Cumulative Benefits.  Except as provided in Section 3.03, the rights and benefits provided to any Participant under the Plan are in addition to and shall not be a replacement of, all of the other rights and benefits provided to such Participant under any Benefit Plan or any agreement between such Participant and the Company (or any of its subsidiaries).

Section 5.03         No Mitigation.  No Participant shall be required to mitigate the amount of any payment provided for in the Plan by seeking or accepting other employment following a termination of his or her employment with the Company, any of its subsidiaries or otherwise.  Except as otherwise provided in Section 3.03, the amount of any payment provided for in the Plan shall not be reduced by any compensation or benefit earned by a Participant as the result of employment by another employer or by retirement benefits. The Company’s obligations to make payments to any Participant required under the Plan shall not be affected by any set off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against such Participant.

Section 5.04         Amendment or Termination.   The Board may amend or terminate the Plan at any time upon not less than seventy-five (75) days’ notice to each then-current Participant; provided that no amendment or termination may adversely affect the rights of any Participant who is receiving benefits under the Plan at such time of amendment or termination. Notwithstanding the foregoing, nothing herein shall abridge the Compensation and Human Capital Committee’s authority to designate new Participants or to determine that a Participant shall no longer be entitled to participate in the Plan in accordance with Section 2.01(a).

Section 5.05        Enforceability.  The failure of Participants or the Company to insist upon strict adherence to any term of the Plan on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of the Plan.

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Section 5.06         Administration.

(a)          The Compensation and Human Capital Committee shall have full and final authority, subject to the express provisions of the Plan, with respect to designation of Participants and administration of the Plan, including but not limited to, the authority to construe and interpret any provisions of the Plan and to take all other actions deemed necessary or advisable for the proper administration of the Plan. The Compensation and Human Capital Committee may delegate any of its duties under the Plan to such individuals or entities from time to time as it may designate. The Compensation and Human Capital Committee shall utilize the records of the Company or any of its subsidiaries with respect to a Participant’s service history with the Company or any of its subsidiaries, compensation, absences, and all other relevant matters and such records shall be conclusive for all purposes under the Plan.

(b)          The Company shall indemnify and hold harmless each member of the Compensation and Human Capital Committee and any other employee of the Company that acts at the direction of the Compensation and Human Capital Committee against any and all expenses and liabilities arising out of his or her administrative functions or fiduciary responsibilities, including any expenses and liabilities that are caused by or result from an act or omission constituting the negligence of such member in the performance of such functions or responsibilities, but excluding expenses and liabilities that are caused by or result from such member’s or employee’s own gross negligence or willful cause.  Expenses against which such member or employee shall be indemnified hereunder shall include, without limitation, the amounts of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted or a proceeding brought or settlement thereof.

Section 5.07        Consolidations, Mergers, Etc.  In the event of a merger, consolidation or other transaction, nothing herein shall relieve the Company from any of the obligations set forth in the Plan; provided, however, that nothing in this Section 5.07 shall prevent an acquirer of or Successor to the Company from assuming the obligations, or any portion thereof, of the Company hereunder pursuant to the terms of the Plan provided that such acquirer or Successor provides adequate assurances of its ability to meet this obligation.  In the event that an acquirer of or Successor to the Company agrees to perform the Company’s obligations, or any portion thereof, hereunder, the Company shall require any person, firm or entity which becomes its Successor to expressly assume and agree to perform such obligations in writing, in the same manner and to the same extent that the Company would be required to perform hereunder if no such succession had taken place.

Section 5.08        Successors and Assigns.  The Plan shall be binding upon and inure to the benefit of the Company and its Successors and assigns.  The Plan and all rights of each Participant shall inure to the benefit of and be enforceable by such Participant and his or her personal or legal representatives, executors, administrators, heirs and permitted assigns.  If any Participant should die while any amounts are due and payable to such Participant hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of the Plan to such Participant’s devisees, legatees or other designees or, if there be no such devisees, legatees or other designees, to such Participant’s estate.  In the event of the death of any Participant during the Severance Period, dependents of such Participant shall be eligible to continue participation in any Continued Benefits in which the Participant was enrolled at the time of death. No payments, benefits or rights arising under the Plan may be assigned or pledged by any Participant, except under the laws of descent and distribution.

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Section 5.09       Notices.  All notices and other communications provided for in the Plan shall be in writing and shall be sent, delivered or mailed, addressed as follows: (a) if to the Company, at the Company’s principal office address or such other address as the Company may have designated by written notice to all Participants for purposes hereof, directed to the attention of the General Counsel, and (b) if to any Participant, at his or her residence address on the records of the Company or to such other address as he or she may have designated to the Company in writing for purposes hereof.  Each such notice or other communication shall be deemed to have been duly given or mailed by United States certified or registered mail, return receipt requested, postage prepaid, except that any change of notice address shall be effective only upon receipt.

Section 5.10        Tax Withholding.  The Company and its subsidiaries shall have the right to deduct from any payment hereunder all taxes (federal, state or other) which it is required to be withhold therefrom.

Section 5.11        No Employment Rights Conferred.  The Plan shall not be deemed to create a contract of employment between any Participant and the Company and/or its affiliates.  Nothing contained in the Plan shall (a) confer upon any Participant any right with respect to continuation of employment with the Company or any of its subsidiaries or (b) subject to the rights and benefits of any Participant hereunder, interfere in any way with the right of the Company or any of its subsidiaries to terminate such Participant’s employment at any time.

Section 5.12         Entire Plan.  The Plan contains the entire understanding of the Participants and the Company with respect to the severance arrangements maintained on behalf of the Participants by the Company or any of its subsidiaries, which are provided for herein.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the Participants and the Company or any of its subsidiaries with respect to the subject matter herein other than those expressly provided for herein.

Section 5.13    Prior Agreements.  The Plan supersedes all prior agreements, programs and understandings (including verbal agreements and understandings) between the Participants and the Company and any of its current or former affiliates regarding the terms and conditions of Participant’s severance arrangements.

Section 5.14       Severability.  If any provision of the Plan is, becomes or is deemed to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of the Plan shall not be affected thereby.

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Section 5.15       Governing Law.  The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its conflict of laws rules, and applicable federal law.

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Exhibit A

RESTRICTIVE COVENANT AND RELEASE AGREEMENT
FOR EXECUTIVE EMPLOYEES ELIGIBLE FOR SEVERANCE

This Release Agreement (this “Agreement”) is entered into between [NAME] (“Executive”) and Enhabit, Inc. (together with its subsidiaries, the “Company”), pursuant-to the terms and conditions of the Enhabit, Inc. Executive Severance Plan, which is attached hereto as Exhibit A (the “Severance Plan”).

WITNESSETH

WHEREAS, Executive is employed by the Company as [TITLE] and is a “Participant” in the Severance Plan (as such term is defined in the Severance Plan);

WHEREAS, Executive’s last day of employment with the Company will be [DATE], and such date shall be the “Termination Date” for purposes of this Agreement and the Severance Plan;

WHEREAS, Executive is eligible to receive the severance and other benefits under Section 3.01(a) of the Severance Plan, subject to the terms and conditions of the Severance Plan, including, but not limited to, Executive’s execution and delivery to the Company of this Agreement and it becoming effective;

WHEREAS, Executive has agreed to comply with, among other things, certain confidentiality, noncompetition and nonsolicitation provisions, which are provided below, and such provisions shall be fully enforceable by the Company; and

WHEREAS, Executive and the Company wish to settle, fully and finally, all matters between them under the terms and conditions exclusively set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, the Company and Executive agree as follows:

1.           Severance. Provided that this Agreement becomes effective pursuant to Paragraph 4 of this Agreement:

(a)         The Company shall pay the severance amount listed on Line 1 of Exhibit B attached hereto, subject to all applicable federal, state and local withholdings, in accordance with the terms and conditions of the Severance Plan, paid out in a lump sum no later than sixty (60) days following the Termination Date. In the event any of such payment is subject to Section 409A and such 60-day period extends into a new calendar year, the Company shall deliver such payment to the Participant on the later of the first business day of that new year or the effective date of this Agreement.

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(b)         Executive will continue to be eligible to participate in the Company sponsored group healthcare benefits, (excluding disability insurance but specifically including medical, dental and vision plans), under which the Executive was covered immediately prior to the Termination Date, for the number of months listed on Line 2 of Exhibit B attached hereto, after the Termination Date (the “Severance Period”), provided that Executive continues to contribute toward the premiums at the level of an active employee of the Company. Thereafter, Executive’s right to continue coverage under the Company sponsored group healthcare plan at Executive’s own expense, pursuant to the statutory scheme commonly known as “COBRA,” shall be governed by applicable law and the terms of the plans and programs, and will be explained to Executive in a packet to be sent to Executive under separate cover.

(c)          Executive acknowledges and agrees that the severance payments and benefits provided in subsection (a) and (b) of Section 1 are subject to forfeiture and repayment and any awards relating to Common Stock shall be cancellable and/or forfeitable in the event of a material violation by Executive of Sections 6, 7, and/or 8 of this Agreement.

2.            Release.

(a)      Executive, on behalf of Executive, Executive’s heirs, executors, administrators, successors and assigns, hereby irrevocably and unconditionally releases the Company and its subsidiaries, divisions and affiliates, together with their respective owners, assigns, agents, directors, partners, officers, trustees, members, managers, employees, insurers, employee benefit programs (including, but not limited to, trustees, administrators, fiduciaries, and insurers of such programs), attorneys and representatives and any of their predecessors and successors and each of their estates, heirs and assigns (collectively, the “Company Releasees”) from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, causes of action, rights, costs, losses, debts and expenses of any nature whatsoever, known or unknown, which Executive or Executive’s heirs, executors, administrators, successors or assigns ever had, now have or hereafter can, will or may have (either directly, indirectly, derivatively or in any other representative capacity) by reason of any matter, fact or cause whatsoever against the Company or any of the other Company Releasees from the beginning of time to the date upon which Executive signs this Agreement, including, but not limited to, any claims arising out of or relating to Executive’s employment with the Company and/or termination of employment from the Company. This release includes, without limitation, all claims arising out of, or relating to, Executive’s employment with the Company and the termination of Executive’s employment with the Company, including all claims for severance or termination benefits under Executive’s employment agreement with the Company, if any, and under any plan, policy or agreement (other than those benefits expressly payable hereunder) and all claims arising under any foreign, federal, state and local labor,  laws including, without limitation, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Equal Pay Act, the Immigration and Reform Control Act, the Uniform Services Employment and Re-Employment Act, the Rehabilitation Act of 1973, Sarbanes-Oxley Act, Executive Order 11246, the Lilly Ledbetter Fair Pay Act, the False Claims Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Alabama Age Discrimination Statute and the Workers’ Adjustment and Retraining Notification Act (and any similar state or local law), each as amended.

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(b)        Nothing in this Paragraph 2 shall be deemed to release (i) Executive’s right to enforce the terms of this Agreement; (ii) Executive’s rights, if any, to any vested benefits or options under any incentive, bonus, or other benefit plan maintained by the Company; (iii) any right to indemnification under the Enhabit, Inc. certificate of incorporation or by-laws, in each case as amended and as in effect from time to time; or (iv) any claim that cannot be waived under applicable law. Nothing in this Agreement prevents Executive from initiating a complaint with or participating in any legally authorized investigation or proceeding conducted by the Equal Employment Opportunity Commission or any federal, state, or local law enforcement agency. Notwithstanding the foregoing, Executive agrees that Executive is waiving all rights to damages and all other forms of recovery arising out of any charge, complaint or lawsuit filed on behalf of Executive or any third party as to all claims waived in this Agreement.

(c)        Executive acknowledges and agrees that the Company has fully satisfied any and all obligations owed to Executive arising out of Executive’s employment with the Company, and no further sums are owed to Executive by the Company or by any of the other Company Releasees at any time. Executive further acknowledges and agrees that the Company has paid Executive for all earned wages and accrued but unused paid time off through the Termination Date.  By entering into this Agreement, Executive explicitly waives any rights to severance or other post-termination benefits under any oral or written plan, policy, employment agreement, contract or arrangement with the Company, other than as provided in this Agreement. Executive acknowledges and agrees that, in the absence of this Agreement, the Company has no obligation to provide any of the consideration set forth in Paragraph 1 of this Agreement.  Executive further acknowledges and agrees that Executive has no rights to any unvested benefits or options under any incentive, bonus or other benefit plan, except as otherwise provided in the Severance Plan; and that all such vesting shall cease as of the Termination Date. Executive further acknowledges and agrees that any right to continue to contribute to the Company’s 401(k) plan for employees ended on the Termination Date. Furthermore, Executive acknowledges and agrees that the payments and benefits provided under Paragraph 1 of this Agreement shall not be included in any computation of earnings under the Company’s 401(k) plan or any other plan.

(d)         Executive represents that Executive has no lawsuits pending against the Company or any of the other Company Releasees. Executive further covenants and agrees that neither Executive nor Executive’s heirs, executors, administrators, successors or assigns will be entitled to any personal recovery in any proceeding of any nature whatsoever against the Company or any of the other Company Releasees arising out of any of the matters released in Paragraph 2.

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3.          Consultation with Attorney/Voluntary Agreement.  Executive acknowledges that (a) the Company is hereby advising Executive of Executive’s right to consult with an attorney of Executive’s own choosing prior to executing this Agreement, (b) Executive has carefully read and fully understands all of the provisions of this Agreement, and (c) Executive is entering into this Agreement, including the releases set forth in Paragraph 2 above, knowingly, freely and voluntarily in exchange for good and valuable consideration, including the obligations of the Company under this Agreement.

4.            Consideration & Revocation Period.

(a)        Executive acknowledges that Executive has been given at least twenty-one (21) calendar days following receipt of this Agreement to consider the terms of this Agreement, although Executive may execute it sooner.

(b)         Executive will have seven (7) calendar days from the date on which Executive signs this Agreement to revoke Executive’s consent to the terms of this Agreement. Such revocation must be in writing and must be addressed and sent via email as follows: Enhabit, Inc., Attention: General Counsel, email address: [●]. Notice of such revocation must be received within the seven (7) calendar days referenced above. In the event of such revocation by Executive, this Agreement shall not become effective and Executive shall not have any rights under this Agreement or the Severance Plan.

(c)         Provided that Executive does not revoke this Agreement, this Agreement shall become effective on the eighth calendar day after the date on which Executive signs this Agreement (the “Effective Date”).

5.            Acknowledgements.

(a)          Executive acknowledges and agrees that: (i) the “Company Business” (as defined in Paragraph 9(a) below) is intensely competitive and that Executive’s employment by the Company required Executive to have access to, and knowledge of, “Confidential Information” (as defined in Paragraph 9(b) below); (ii) the use or disclosure of any Confidential Information could place the Company at a serious competitive disadvantage and could do serious damage, financial and otherwise, to the Company; (iii) Executive was given access to, and developed relationships with, employees, clients, patients, physicians and partners of the Company at the time and expense of the Company; and (iv) by Executive’s training, experience and expertise, Executive’s services to the Company were extraordinary, special and unique, and the Company invested in training and enhancing Executive’s skill and experience in the Company Business.

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(b)        Executive further acknowledges and agrees that (i) Executive’s experience and capabilities are such that the provisions contained in Paragraphs 6, 7, and 8 will not prevent Executive from earning a livelihood; (ii) the Company would be seriously and irreparably injured if Executive were to engage in “Competitive Activities” (as defined below), or to otherwise breach the obligations contained in Paragraphs 6, 7 and 8, no adequate remedy at-law would exist and damages would be difficult to determine; (iii) the provisions contained in Paragraphs 6, 7 and 8 are justified by and reasonably necessary to protect the legitimate business interests of the Company, including the Confidential Information and good will of the Company; and (iv) the provisions in Paragraphs 6, 7 and 8 are fair and reasonable in scope, duration and geographical limitations. Accordingly, Executive agrees to be bound fully by the restrictive covenants in this Agreement to the maximum extent permitted by law, it being the intent and spirit of the parties that the restrictive covenants and the other agreements contained herein shall be valid and enforceable in all respects.

6.            Confidentiality.

(a)       Executive acknowledges and agrees that, from and after the Termination Date, and at all times thereafter, Executive will not communicate, divulge or disclose to any “Person” (as defined in Paragraph 9(c) below) or use for Executive’s own benefit or purpose any Confidential Information of the Company, except as required by law or court order or expressly authorized in writing by the Company; provided, however, that Executive shall promptly notify the Company prior to making any disclosure required by law or court order so that the Company may seek a protective order or other appropriate remedy.

7.            Covenant Not to Compete.

From the Termination Date through the end of the Severance Period (the “Noncompetition Period”), Executive shall not, directly or indirectly, participate in the management, operation or control of, or have any financial or ownership interest in, or aid or knowingly assist anyone else in the conduct of, any business or entity that (i) engages in the Company Business in any Restricted Territory (as defined in Paragraph 9(d) below), or (ii) is, to Executive’s knowledge, making preparations for engaging in the Company Business in any Restricted Territory (collectively, “Competitive Activity”); provided, however, that (x) the “beneficial ownership” by Executive, either individually or as a member of a “group” (as such terms are used in Rule 13d of the General Rules and Regulations under the Exchange Act), of not more than one percent (1%) of the voting stock of any publicly held corporation shall not alone constitute a breach of this Paragraph 7 and (y) Executive may enter into, at arm’s length, any bona fide joint venture (or partnership or other business arrangement) with any Person who is not directly engaged in the Company Business but which is an affiliate of another Person engaged in the Company Business.

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8.            Employee Nonsolicitation; Nondisparagement.

(a)         Executive shall not, directly or indirectly, within the Noncompetition Period, without the prior written consent of the Company, solicit or direct any other Person to solicit any officer or other employee of the Company to: (i) terminate such officer’s or employee’s employment with the Company; or (ii) seek or accept employment or other affiliation with Executive or any Person engaged in any Competitive Activity in which Executive is directly or indirectly involved (other than, in each case, any solicitation directed at the public in general in publications available to the public in general or any contact which Executive can demonstrate was initiated by such officer, director or employee or any contact after such officer’s or employee’s employment with the Company is terminated). Executive’s obligations. under this Paragraph 8(a) with respect to new Company employees hired after the Termination Date shall be subject to the condition that Executive shall have been notified of such new employees.

(b)         Executive shall not, directly or indirectly, within the Noncompetition Period, without the prior written consent of the Company, solicit or direct any other Person to solicit any Person or entity in a business relationship with the Company (whether an independent contractor, joint venture partner or otherwise) to terminated such Person or entity’s business relationship with the Company.

(c)        Executive shall not, directly or indirectly, within the Noncompetition Period, make any statements or comments of a defamatory or disparaging nature to third parties regarding the Company or any of their members, principals, officers, managers, directors, personnel, employees, agents, services or products; provided, however, that nothing contained in this Paragraph 8(b) shall preclude Executive from providing truthful testimony in response to a valid subpoena, court order, regulatory request or as may be required by law.

9.            Definitions.

(a)        For purposes of this Agreement, “Company Business” shall mean (i) any business in competition with the Company or any of its affiliates or engaged in the same or similar business as the Company or any of its affiliates, including, but not limited to, the home health, hospice, private duty, personal care, home care, personal assistance business as well as any business or services associated with or related to the foregoing; (ii) any other business in which the Company or any of its affiliates engages during Executive’s employment and for which Executive performed any services or had any responsibility; and (iii) any business the Company or any of its affiliates seriously contemplated conducting during the last 12 months of Executive’s employment with the Company or any of its affiliates.

(b)        For purposes of this Agreement, “Confidential Information” includes, but is not limited to, certain or all of the Company’s and its patients’, physicians’ and third-party managed care providers’ supply agreement arrangements, regulatory packages, registration packages, data compensation packages, methods, information, systems, plans for acquisition or disposition of products, expansion plans, financial status and plans, customer lists, client data, personnel information, consulting reports, investigative reports, Personal Health Information (PHI), strategic plans and trade secrets.

(c)         For the purposes of this Agreement, “Person” shall mean an individual, corporation, joint venture, partnership, limited liability company, association, joint stock or other company, business trust, trust or other entity or organization, including any national, federal, state, territorial agency, local or foreign judicial, legislative, executive, regulatory or administrative authority, commission, court, tribunal, any political or other subdivision, department or branch of any of the foregoing, and any self-regulatory organization or arbitrator.

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(d)          For purposes of this Agreement “Restricted Territory” shall mean any geographical area or territory in the United States within a 75-mile radius of where the Company or any of its affiliates operates and for or within which Executive performed any services for the Company or any of its affiliates or for which Executive had any responsibility or about which Executive received Confidential Information during the last twenty-four (24) months of Executive’s employment with the Company or any of its affiliates.

10.         Notice to the Company. In the event that Executive accepts employment with another party at any time during the Severance Period, Executive shall inform the Company in writing on or before the commencement date of such employment and provide the Company with such other information relating to available health and welfare benefits as a result of said employment as required by Section 3.03(a) of the Severance Plan.

11.       Duty to Inform. Executive shall inform in writing any Person, who seeks to employ or engage Executive in any capacity, of Executive’s obligations under Paragraphs 6, 7 and 8 of this Agreement, prior to accepting such employment or engagement.

12.         Company Property.  Executive represents that Executive has returned to the Company all property of the Company. Such property includes, but is not limited to, laptop computers, smartphone, printers, other computer equipment (including computers, printers and equipment paid-for by the Company for use at Executive’s residence), cellular phones and pagers, keys, security passes, passwords, work files, records, credit cards, building ID’s and all other Company property in Executive’s possession on the last day of Executive’s employment with the Company. Following the Termination Date, the Company shall also have no obligation to continue to make payments under any car loan or corporate membership provided to Executive as an employee of the Company.

13.        No Admission of Wrongdoing.  Nothing herein is to be deemed to constitute an admission of wrongdoing by the Company or any of the other Company Releasees.

14.        Assignment.  This Agreement is binding on, and will inure to the benefit of, the Company and the other Company Releasees. All rights of Executive under this Agreement shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees.

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14.        Injunctive Relief.  Executive agrees that the Company would suffer irreparable harm if Executive were to breach, or threaten to breach, any provision of this Agreement and that the Company would by reason of such breach, or threatened breach, be entitled to injunctive relief in a court of appropriate jurisdiction, without the need to post any bond, and Executive further consents and stipulates to the entry of such injunctive relief in such a court prohibiting Executive from breaching this Agreement. This Paragraph 14 shall not, however, diminish the right of the Company to claim and recover damages and other appropriate relief, including but not limited to repayment of any severance payments or benefits provided to Executive, in addition to injunctive relief.

15.        Severability.  In the event that any one or more, of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law. Furthermore, a determination in any jurisdiction that this Agreement, in whole or in part, is invalid, illegal or unenforceable shall not in any way affect or impair the validity, legality or enforceability of this Agreement in any other jurisdiction.

16.          Waiver. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default.

17.       No Oral Modifications. This Agreement may not be changed orally, but may be changed only in a writing signed by Executive and a duly authorized representative of the Company.

18.        Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the application of any choice-of-law rules that would result in the application of another state’s laws. With respect to any action, suit or proceeding, each party irrevocably (i) submits to the jurisdiction of the courts of the State of Delaware and the United States District Court of the District of Delaware, and (ii) waives any objection which it may have at any time to the laying of venue of any proceeding brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party.

19.         Entire Agreement.  This Agreement and any other agreements or obligations signed or undertaken by Executive that provide additional or greater rights to the Company that Executive previously entered into with the Company (including any predecessor or affiliate of the Company), are herein incorporated by reference, remain in full force and effect according to their terms, constitute the entire agreement and understanding between Executive and the Company, and fully supersede all prior and contemporaneous negotiations, understandings, representations, writings, discussions and/or agreements between Executive and the Company, whether written or oral, pertaining to or concerning the subject matter of this Agreement. Executive represents that, in executing this Agreement, Executive has not relied upon any representation or statement made by the Company or any other Company Releasees, other than those set forth herein, with regard to the subject matter, basis or effect of this Agreement or otherwise.

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20.        Descriptive Headings. The paragraph headings contained herein are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

21.        Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be an original, but all of which shall constitute but one and the same agreement.

A-9

IN WITNESS WHEREOF, Executive and the Company have executed this Agreement on the date indicated below.

 
ENHABIT, INC.
     
   
 
By:
 
     
   
 
Date
 

 
EXECUTIVE
     
   
 
Name:
 
     
   
 
Date
 

A-10

EXHIBIT A
[INSERT SEVERANCE PLAN]

A-11

EXHIBIT B

Name:
   
       
1.
Severance Amount:
$
 
       
2.
Months:
   


B-1


Exhibit 21.1

SUBSIDIARIES OF ENHABIT, INC.

The following entities are expected to be subsidiaries of Enhabit, Inc. upon completion of the distribution described in the information statement.

Subsidiary Name
Jurisdiction of Incorporation
DBA
A&B Home Health Solutions, LLC
DE
Enhabit Home Health
Abba Home Health, L.P.
TX
Enhabit Home Health
   
Enhabit Hospice
Advanced Homecare Management, LLC
DE
Enhabit Home Health and Hospice
AHM Action Home Health, LP
TX
Enhabit Home Health
AHM Texas GP, LLC
DE
 
AHM Texas LP, Inc.
TX
 
Apex Hospice LLC
TX
Enhabit Hospice
Best Home Care LP
TX
Enhabit Home Health
Camellia Home Health of Alabama, LLC
AL
Enhabit Hospice Huntsville
Camellia Home Health of East Tennessee, LLC
DE
Enhabit Home Health
Camellia Home Health of the Gulf Coast, LLC
MS
Enhabit Home Health of the Gulf Coast
Camellia Hospice of Central Mississippi, LLC
MS
Enhabit Hospice of Central Mississippi
Camellia Hospice of East Louisiana, LLC
DE
Enhabit Hospice of Vidalia
Camellia Hospice of Louisiana, LLC
DE
Enhabit Hospice of the Northshore
Camellia Hospice of North Mississippi, LLC
MS
Enhabit Hospice of North Mississippi
Camellia Hospice of Northeast Alabama LLC
AL
Enhabit Hospice Rainbow City
Camellia Hospice of Northeast Mississippi, LLC
MS
Enhabit Hospice of Northeast Mississippi
Camellia Hospice of South Alabama, LLC
MS
Enhabit Hospice Dothan
   
Enhabit Hospice Prattville
Camellia Hospice of Southwest Mississippi, LLC
MS
Enhabit Hospice of Southwest Mississippi
Camellia Hospice of the Gulf Coast, LLC
MS
Enhabit Hospice of the Gulf Coast
Camellia Medical Systems, Inc.
MS
 
CareServices of Bethesda, LLC
FL
Enhabit Home Health of Bethesda
CareServices of the Treasure Coast, LLC
FL
 
CareSouth Health System, Inc.
DE
 
CareSouth HHA Holdings of Columbus, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Dothan, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Gainesville, LLC
GA
Enhabit Home Health
   
Enhabit Hospice
CareSouth HHA Holdings of Greensboro, LLC
GA
Enhabit Home Health




CareSouth HHA Holdings of Lexington, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Middle Georgia, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of North Florida, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Panama City, LLC
FL
Enhabit Home Health
CareSouth HHA Holdings of Richmond, LLC
DE
Enhabit Home Health
CareSouth HHA Holdings of South Carolina, LLC
GA
Enhabit Home Health
   
Enhabit Home Health Aiken
   
Enhabit Home Health Bluffton
   
Enhabit Home Health Columbia
CareSouth HHA Holdings of Tallahassee, LLC
FL
Enhabit Home Health
CareSouth HHA Holdings of the Bay Area, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of the Treasure Coast, LLC
FL
Enhabit Home Health of Jupiter Medical Center
CareSouth HHA Holdings of Valley, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Virginia, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Washington, LLC
GA
Enhabit Home Health
   
Enhabit Hospice
CareSouth HHA Holdings of Western Carolina, LLC
GA
Enhabit Home Health
CareSouth HHA Holdings of Winchester, LLC
GA
Enhabit Home Health
   
Enhabit Hospice
CareSouth HHA Holdings, LLC
GA
 
CareSouth Hospice, LLC
GA
Enhabit Hospice
Continental Home Care, LLC
DE
Enhabit Home Health of Eastern Oklahoma
CS Health & Wellness, LLC
GA
 
Day-By-Day Staff Relief, LLC
DE
Enhabit Home Health
   
Enhabit Home Health of Northeast Oklahoma
   
Enhabit Hospice
DOSIK, INC.
TX
Enhabit Home Health
DRC Health Systems, L.P.
TX
Enhabit Home Health
   
Enhabit Hospice
EH Health Home Health of Alabama, LLC
DE
Enhabit Home Health
EH Health Home Health of Birmingham, LLC
DE
Enhabit Home Health
EH Health Home Health of Central Virginia, LLC
DE
Enhabit Home Health
EH Health Home Health of Florida, LLC
DE
Enhabit Home Health
EH Health Home Health of Kentucky, LLC
DE
Enhabit Home Health of Kentucky
EH Health Home Health of Miami, LLC
FL
Enhabit Home Health
EH Health Home Health of New England, LLC
DE
Enhabit Home Health
EH Health Home Health of Ohio, LLC
DE
Enhabit Home Health
   
Enhabit Hospice
EH Health Home Health of South Florida, LLC
FL
 
EH Health Home Health of the Northwest, LLC
DE
Enhabit Home Health
EH Health Home Health of the Southwest, LLC
DE
 

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EH Health Hospice of Alabama, LLC
DE
Enhabit  Hospice Montgomery
   
Enhabit Hospice Albertville
   
Enhabit Hospice Alexander City
   
Enhabit Hospice Anniston
   
Enhabit Hospice Birmingham
   
Enhabit Hospice Clanton
   
Enhabit Hospice Cullman
   
Enhabit Hospice Decatur
   
Enhabit Hospice Enterprise
   
Enhabit Hospice Gadsden
   
Enhabit Hospice Greenville
   
Enhabit Hospice Hamilton
   
Enhabit Hospice Jasper
   
Enhabit Hospice Madison County
   
Enhabit Hospice Mobile
   
Enhabit Hospice Muscle Shoals
   
Enhabit Hospice Northport
   
Enhabit Hospice Oneonta
   
Enhabit Hospice Opelika
   
Enhabit Hospice Pell City
   
Enhabit Hospice Rainsville
   
Enhabit Hospice Scottsboro
   
Enhabit Hospice Troy
EH Health Hospice of Pennsylvania, LLC
DE
Enhabit Hospice
EH Health Hospice of the Midwest, LLC
DE
Enhabit Hospice
EH Health Hospice of the Northwest, LLC
DE
Enhabit Hospice
EH Health Hospice of the Southwest, LLC
DE
Enhabit Hospice
EH Health Ventures Boise, LLC
DE
 
EH Health Ventures Bozeman, LLC
DE
 
EH Health Ventures Salida, LLC
DE
 
EH Home Health of Austin, LLC
TX
Enhabit Home Health
   
Enhabit Hospice
EH Home Health of Colorado, LLC
DE
Enhabit Home Health
   
Enhabit Hospice
EH Home Health of DFW, LLC
TX
Enhabit Home Health
EH Home Health of East Texas, LLC
DE
Enhabit Home Health
   
Enhabit Hospice
EH Home Health of New England, LLC
DE
 
EH Home Health of Roanoke, LLC
DE
Enhabit Home Health
EH Home Health of the Mid Atlantic, LLC
DE
Enhabit Home Health
   
Enhabit Hospice
EH Home Health of the Midwest, LLC
DE
Enhabit Home Health
EH Home Health of the Southeast, LLC
FL
Enhabit Home Health
EH Home Health of the West, LLC
ID
Enhabit Home Health
   
Enhabit Home Health of Eastern Idaho
   
Enhabit Home Health of Southern Utah
   
Enhabit Hospice of Southern Utah

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EH Hospice of the West, LLC
ID
Enhabit Hospice
   
Enhabit Hospice of Eastern Idaho
EH of Fort Worth, LP
TX
Enhabit Home Health
EH of West Texas, LP
TX
Enhabit Home Health
   
Enhabit Hospice
EHHH Support Companies, LLC
DE
 
Encompass Cares
TX
 
Encompass Health Home Health of Talladega, LLC
FL
 
Encompass Health Hospice of Talladega, LLC
DE
 
Enhabit Holdings, Inc.
DE
 
EXCELLA ASSOCIATES, L.L.C.
MA
 
EXCELLA HEALTHCARE, INC.
MA
 
EXCELLA HOME HEALTH AGENCY, LLC
MA
Enhabit Home Health
EXCELLA HOMECARE, INC.
MA
Enhabit Home Health
Guardian Home Care, Inc.
ID
Enhabit Home Health
   
Enhabit Home Health of Idaho
   
Enhabit Hospice of Idaho
Hallmark Homecare, L.P.
TX
Enhabit Home Health
   
Enhabit Hospice
HealthCare Innovations of Oklahoma, L.L.C.
TX
Enhabit Home Health of Southeast Oklahoma
   
Enhabit Hospice
HEALTHCARE INNOVATIONS OF WESTERN OKLAHOMA, LLC
TX
Enhabit Home Health of Western Oklahoma
HealthCare Innovations-Travertine Health Services, L.L.C.
TX
Enhabit Home Health of Central Oklahoma
Heart of the Rockies Home Health, LLC
DE
Enhabit Home Health & Hospice
Home Health Care of Bogalusa, Inc.
DE
Enhabit Home Health of the Northshore
Home Health Care Systems, Inc.
MS
Enhabit Home Health & Hospice
Hospice Care of Mississippi, LLC
MS
Enhabit Hospice
Hospice of Southwest Montana, LLC
DE
Enhabit Hospice
Idaho Homecare Holdings, Inc.
ID
 
Orion Homecare, LLC
ID
Enhabit Home Health of Western Idaho
   
Enhabit Hospice
   
Enhabit Home Health
Preferred Home Health, L.P.
TX
Enhabit Home Health
Saad Healthcare of St. Clair County LLC
DE
 
Saint Alphonsus Home Health and Hospice, LLC
DE
Enhabit Home Health & Hospice
Texas Senior Care, L.P.
TX
Enhabit Home Health
TH of San Antonio LLC
TX
Enhabit Hospice
TVG Logic Holdings, LLC
DE
 
WellCare, Inc.
NM
Enhabit Home Health
   
Enhabit Hospice
Wellmark Healthcare Services of El Paso, Inc.
TX
Enhabit Home Health
   
Enhabit Hospice
West Mississippi Home Health Services, Inc.
MS
Enhabit Home Health

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Exhibit 99.1

[•], 2022
Dear Encompass Health Corporation Stockholder:
We previously announced plans to separate our home health and hospice business (the “Enhabit Business”) into an independent, publicly traded company, which we expect to list on the New York Stock Exchange under the trading symbol “EHAB” when the separation is complete. The separation will occur through a distribution by Encompass Health Corporation (“Encompass”) of all of the outstanding shares of Enhabit, Inc. (“Enhabit”), a wholly owned subsidiary that owns and operates the Enhabit Business. Encompass’s existing inpatient rehabilitation business will continue to be a publicly traded company after the distribution. The board of directors of Encompass approved the spin-off of Enhabit following an extensive review of strategic alternatives informed by shareholder engagement and assisted by several independent advisors. The separation is expected to provide a number of benefits to both businesses. These potential benefits include enhancing the strategic and operational flexibility of each company, enhancing the focus of each management team on its business strategy and operations, allowing each company to adopt a capital structure, acquisition strategy, and return of capital policy best suited to its financial profile and business needs, and providing each company with its own equity currency to facilitate acquisitions and to better incentivize management. In addition, once Enhabit is a stand-alone public company, potential investors will be able to invest directly in Enhabit’s common stock.
Upon completion of the distribution, each Encompass stockholder as of [   ], 2022, the record date for the distribution, will receive [   ] shares of Enhabit common stock for every one share of Encompass common stock held as of the close of business on the record date. Enhabit common stock will be issued in book-entry form only, which means that no physical share certificates will be issued. No vote of Encompass stockholders is required for the distribution. You do not need to take any action to receive the shares of Enhabit to which you are entitled as an Encompass stockholder, and you do not need to pay any consideration or surrender or exchange your Encompass common stock, which will continue to trade on the New York Stock Exchange.
We encourage you to read the attached information statement, which describes the planned distribution of Enhabit common stock in detail and contains important business and financial information about Enhabit. The included financial statements of Enhabit are prepared from Encompass’s historical accounting records and contain certain allocations of Encompass’s costs.We encourage you to read them together with the pro forma financial information included in the attached information statement, which gives effect to the separation and reflects Enhabit’s anticipated post-separation capital structure, including the assignment of certain assets and assumption of certain liabilities not included in the historical financial statements.
The Encompass board of directors and management team are confident that the pending separation will create new opportunities for both companies to realize significant growth while maintaining our commitment to our patients, investors, employees and community. We look forward to the potential we expect will be unlocked by the spin-off—for Encompass, for Enhabit and for you, as a stockholder of both companies. On behalf of our board of directors, thank you for your continued support.
 
Sincerely,
 
 
 
Mark Tarr
President and Chief Executive Officer
Encompass Health Corporation

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[•], 2022
Dear Future Enhabit Stockholder:
I’m excited to welcome you as a future stockholder of Enhabit, Inc., which will be an independent public company after its separation from Encompass.
In connection with the separation, we are rebranding to Enhabit Home Health & Hospice. The name Enhabit links us directly to the home. Maintaining the “En” of Encompass connects us to our heritage and communicates our belief that patients can expect the same level of excellence and compassion for which the Encompass brand stands. We believe the name Enhabit is welcoming and conveys that we, as a company, are advancing what it means to provide A Better Way to Care in the home.
For over 20 years, we have provided home health and hospice services where patients prefer it: in their homes. Connecting with compassion, we strive to bring humanity, dignity, and a sense of control to every patient’s journey. We invest in our people, medical treatments, technology and data analytics to deliver the highest quality of care to every home care patient.
Along the way, we have grown into one of the largest providers of home health services and hospice services nationally, measured by 2020 Medicare expenditures. Over 10,000 employees at 351 locations in 34 states, as of March 31, 2022, are part of an award-winning culture that we believe is a key contributor to our continued success. We employ our scale as one of the largest home health providers in the nation to expand the possibilities of home-based care, driving low cost of care, high-quality outcomes and a high standard of care for our patients.
As an independent company, we will continue our strategy of growth and focus on strategic priorities.
We expect to list Enhabit’s common stock on the New York Stock Exchange under the symbol “EHAB” when the separation is complete.
I hope you will learn more about Enhabit and our exciting story by reading the enclosed information statement.
 
Sincerely,
 
 
 
Barbara A. Jacobsmeyer
President and Chief Executive Officer
Enhabit, Inc.

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Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended.
Preliminary and Subject to Completion, Dated [   ], 2022
INFORMATION STATEMENT
ENHABIT, INC.
This information statement is being furnished in connection with the distribution by Encompass Health Corporation (“Encompass”) to its stockholders of the outstanding shares of common stock of Enhabit, Inc., formerly known as Encompass Health Home Health Holdings, Inc. (“Enhabit”), a wholly owned subsidiary of Encompass comprising Encompass’s home health and hospice business. To implement the separation, Encompass currently plans to distribute all of the shares of Enhabit common stock on a pro rata basis to Encompass stockholders.
For every one share of common stock of Encompass held of record by you as of the close of business on [   ], 2022, which is the record date for the distribution, you will receive [   ] shares of Enhabit common stock. As discussed under “The Separation and Distribution—Trading Between the Record Date and the Distribution Date,” if you sell your shares of Encompass common stock in the “regular-way” market after the record date up to the distribution date, you also will be selling your right to receive shares of Enhabit common stock in connection with the distribution. We expect the shares of Enhabit common stock to be distributed by Encompass to you on [   ], 2022. We refer to the date of the distribution of the Enhabit common stock as the “distribution date.”
Until the distribution occurs, Enhabit will be a wholly owned subsidiary of Encompass, and consequently, Encompass will have the sole and absolute discretion to determine and change the terms of the separation (or to terminate the separation), including the establishment of the record date for the distribution and the distribution date.
No vote of Encompass stockholders is required for the distribution. Therefore, you are not being asked for a proxy, and you are requested not to send Encompass a proxy, in connection with the distribution. You do not need to pay any consideration, exchange or surrender your existing shares of Encompass common stock or take any other action to receive your shares of Enhabit common stock.
There is no current trading market for Enhabit common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution, and we expect “regular-way” trading of Enhabit common stock to begin on the distribution date. Enhabit intends to list its common stock on the New York Stock Exchange (the “NYSE”) under the symbol “EHAB.” Following the distribution, Encompass will continue to trade on the NYSE under the symbol “EHC.”
In reviewing this information statement, you should carefully consider the matters described in the section titled “Risk Factors” beginning on page 26.
Neither the U.S. Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The date of this information statement is [   ], 2022.
This information statement was first mailed to Encompass stockholders on or about [   ], 2022.

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Page
Presentation of Information
Unless the context otherwise requires or otherwise specifies:
The information included in this information statement about Enhabit, including the Consolidated Financial Statements of Enhabit, assumes the completion of all of the transactions referred to in this information statement in connection with the separation and distribution.
As used in this information statement, references to “Enhabit,” “we,” “us,” “our,” “our company” and “the company” may, depending on the context, refer to Enhabit, Inc., to the Home Health and Hospice business segment of Encompass as described more particularly under “Certain Relationships and Related Party Transactions—Relationship with Encompass—Historical Relationship with Encompass” or to Enhabit and its consolidated subsidiaries after giving effect to the transactions referred to in this information statement in connection with the separation and distribution.
References in this information statement to “Encompass” refer to Encompass Health Corporation, a Delaware corporation, and its consolidated subsidiaries, including Encompass’s Home Health and Hospice business segment prior to completion of the separation and distribution and excluding Encompass’s Home Health and Hospice business segment following completion of the separation and distribution.
References in this information statement to the “separation” refer to the separation of the Enhabit Business from Encompass’s other businesses and the creation, as a result of the distribution, of an independent, publicly traded company, Enhabit, holding the assets and liabilities associated with the Enhabit Business after the distribution.
References in this information statement to the “distribution” refer to the pro rata distribution of all of Enhabit’s issued and outstanding shares of common stock to Encompass stockholders as of the close of business on the record date for the distribution.
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References in this information statement to Enhabit’s per share data assume a distribution ratio of [   ] shares of Enhabit common stock for every one share of Encompass common stock.
References in this information statement to Enhabit’s historical assets, liabilities, products, businesses or activities generally refer to the historical assets, liabilities, products, businesses or activities of the Enhabit Business as the businesses were conducted as part of Encompass prior to the completion of the separation and distribution.
Industry and Market Information
This information statement includes industry data and forecasts that we obtained from industry publications and surveys, public filings, other third-party sources and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Statements as to our ranking, market position and market estimates are based on independent industry publications, third-party forecasts, our internal research and management’s estimates and assumptions about our markets which we believe to be reasonable. However, such information involves various estimates, assumptions, risks and uncertainties, which are subject to change based on various factors, including those discussed under the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates and assumptions. Accordingly, investors should not place undue reliance on this information.
Trademarks, Trade Names and Service Marks
The Encompass name and mark and other trademarks, trade names and service marks of Enhabit or containing “Encompass” appearing in this information statement are the property of Encompass. Prior to the completion of the distribution, we expect to receive a license from Encompass to use the Encompass name, trademarks, trade names and services marks for a limited period of time, as summarized in “Certain Relationships and Related Party Transactions—Relationship with Encompass—Arrangements between Encompass and Our Company.” This information statement contains many of our trade names, trademarks, and service marks, including “Enhabit Home Health & Hospice,” “Enhabit” and “A Better Way to Care.” This information statement also contains additional trade names, trademarks and service marks belonging to other companies. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties. Any other trademarks, trade names or service marks referred to in this information statement are the property of their respective owners. For convenience, we may not include the SM, ® or ™ symbols, but such omission is not meant to indicate that we would not protect our intellectual property rights to the fullest extent allowed by law.
Non-GAAP Financial Measures
In this information statement, we present certain financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”), referred to herein as “non-GAAP.” You should review the reconciliations and accompanying disclosures carefully in connection with your consideration of such non-GAAP measures and note that the way in which we calculate these measures may not be comparable to similarly titled measures employed by other companies. Specifically, we make use of the non-GAAP financial measure “Adjusted EBITDA.”
Adjusted EBITDA has been presented in this information statement as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We believe Adjusted EBITDA assists investors in comparing our operating performance across operating periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. Adjusted EBITDA is not a measure of financial performance under GAAP and the excluded items are significant components in understanding and assessing financial performance. Therefore, Adjusted EBITDA should not be considered a substitute for Net income. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.
We calculate “Adjusted EBITDA” as Net income, as calculated in accordance with GAAP, adjusted to exclude (1) net income attributable to noncontrolling interest, (2) interest expense, (3) provision for income tax expense, (4) depreciation and amortization, (5) all unusual or nonrecurring items impacting consolidated Net
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income, (6) any losses from discontinued operations or the disposal or impairment of assets, (7) fees, costs and expenses incurred with respect to any non-ordinary course litigation or settlement, (8) stock-based compensation expense, (9) costs and expenses associated with changes in the fair value of marketable securities, (10) costs and expenses associated with the issuance or prepayment of debt and acquisitions, and (11) any restructuring charges.
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INFORMATION STATEMENT SUMMARY
The following is a summary of selected information discussed in this information statement. This summary may not contain all of the details concerning the separation, the distribution or other information that may be important to you. To better understand the separation, the distribution and our business and financial position, you should carefully review this entire information statement. Unless the context otherwise requires, the information included in this information statement about Enhabit, including the Consolidated Financial Statements of Enhabit, assumes the completion of all of the transactions referred to in this information statement in connection with the separation and distribution. As used in this information statement, the terms “Enhabit,” the “Company,” “we,” “us” and “our” may, depending on the context, refer to Enhabit, Inc., to the Home Health and Hospice business segment of Encompass as described more particularly under “Certain Relationships and Related Party Transactions—Relationship with Encompass—Historical Relationship with Encompass” or to Enhabit, Inc. and its consolidated subsidiaries after giving effect to the transactions described in this information statement in connection with the separation and distribution. Unless the context otherwise requires, references in this information statement to “Encompass” refer to Encompass Health Corporation, a Delaware corporation, and its combined subsidiaries, including the Enhabit Business prior to completion of the separation and distribution and excluding the Enhabit Business following the completion of the separation and distribution.
Unless the context otherwise requires, or when otherwise specified, references in this information statement to our historical assets, liabilities, products, businesses or activities of our businesses are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the Enhabit Business as conducted as part of Encompass prior to completion of the separation and distribution.
Our Business
We are a leading provider of home health and hospice services in the United States. We strive to provide superior, cost-effective care where patients prefer it: in their homes. For over twenty years, we have provided care in the low-cost home setting while achieving high-quality clinical outcomes. Over that time, we have grown to become one of the largest providers of home health and a leading provider of hospice services nationally, measured by 2020 Medicare expenditures. As of March 31, 2022, our footprint comprised 252 home health and 99 hospice locations across 34 states.
We believe we are strongly positioned as a leader in the large and growing home health and hospice industries. Our scale and density in targeted markets, our disciplined operating model emphasizing the use of technology, our clinical expertise and our award-winning culture are key factors to our success. These competitive advantages enable us to significantly outperform many of our competitors in both clinical quality and profitability, while positioning us as an attractive partner to health systems, payors and other risk-bearing entities. These advantages have also helped us generate strong financial results. Despite industry disruptions related to COVID-19, over the seven-year period from the beginning of 2015 through the end of 2021, we grew Net service revenue from $507 million to $1,107 million, representing a compound annual growth rate of 14%.
Our continued growth is underpinned by strong industry tailwinds, including an aging U.S. population, an increased focus on shifting care to lower-cost settings, and patients’ preference for home-based care. From 2020 to 2030, the number of individuals over age 65 is expected to grow by approximately 30% to 73 million people, creating a greater need for cost-efficient in-home solutions. Furthermore, 70% of those over 65 had multiple chronic conditions as of 2018 and faced a higher incidence of chronic conditions than those under 65. Patients with multiple chronic conditions accounted for 94% of total Medicare spending and were associated with 99% of hospital readmissions. Home-based care is well-positioned to help manage these conditions for an aging population. Home-based care is also significantly more affordable than other care settings, and 75% of adults age 50 and older prefer to age in their homes. We believe these trends coupled with our competitive advantages strongly position us for the future.
We operate our business in two segments: home health and hospice. Our home health agencies provide a comprehensive range of Medicare-certified skilled home health services, including skilled nursing, physical, occupational and speech therapy, medical social work, and home health aide services. Our patients are typically older adults with three or more chronic conditions and significant functional limitations who require greater than ten medications. Our home health business benefits from a diversity of referral sources, with patients arriving from acute care hospitals, inpatient rehabilitation facilities, surgery centers, assisted living facilities, and skilled nursing facilities, as well as community physicians. We work closely with patients, their families and physicians
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to deliver care plans focused on patient needs and goals. For the year ended December 31, 2021, our home health segment had 200,626 patient admissions and generated $897.3 million in Net service revenue, or 81.1% of Enhabit total Net service revenue.
Our hospice agencies provide high-quality hospice services to terminally ill patients and their families. Hospice care focuses on the quality of life for patients who are experiencing an advanced, life limiting illness while treating the person and symptoms of the disease, rather than treating the disease itself. Our dedicated team of professionals works together to manage symptoms so that a patient’s time may be spent with dignity and in relative comfort, surrounded by their loved ones, typically in their home. For the year ended December 31, 2021, our hospice segment had an average daily census of 3,762 and generated $209.3 million in Net service revenue, or 18.9% of Enhabit total Net service revenue.
Our current footprint is the result of a multi-decade effort to establish scale and density in target markets with attractive demographic and regulatory profiles, which we believe positions us favorably for continued strong growth. In our home health business, we maintain top market share in a majority of our markets. We are a top five home health provider in 18 states and a top two home health provider in 11 of those states, based on 2020 Medicare revenues. These 18 states, centered in the Southern half of the United States, represented over 39% of the approximately $17 billion of total U.S. home health Medicare expenditures in 2020. Our 34-state footprint represented approximately 69% of total U.S. home health Medicare expenditures in 2020. Our strong presence in these markets helps us drive operating efficiency and create brand awareness. We drive operating efficiency by leveraging our market density as our volumes increase, which also enables our clinicians to spend less time on the road and more time providing care. We believe our operating structure is more efficient than our peers and advantageously positions us to grow our home health admissions as the industry continues to expand. Despite our status as the fourth-largest provider of home health services by 2020 Medicare revenues, our market share is only 4.3%. Given the high fragmentation of the industry, we believe there will be significant opportunities for consolidation, allowing us to increase our market share.
Many home health patients will ultimately require hospice services. By offering hospice services in many markets where we operate our home health business, we minimize disruption and gaps in care to patients who transition to hospice. We believe this co-location strategy between our home health and hospice businesses creates a growth opportunity for our hospice business, especially in geographies where we operate home health but not hospice. Although we began offering hospice services more recently than home health services, we have quickly become a leading hospice services provider based on 2020 Medicare expenditures. Since 2015, we have grown our hospice business from 20 locations to 99 locations as of March 31, 2022. We are a top ten hospice provider in ten states based on 2020 Medicare revenue. We believe our hospice segment will continue to have significant growth opportunities as we enhance our scale within the markets we currently serve and expand our hospice offerings into markets where we already have a strong home health history.
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The map below details our national home health and hospice footprint and the states where we maintain a top five home health market position based on 2020 Medicare revenues as of December 31, 2021:

Our operating model, which emphasizes consistency and the disciplined use of technology, has driven our industry leadership in both clinical quality and cost effectiveness. Technology is a core component of our culture and has been important to our success. Our operations are supported by Homecare Homebase, a leading technology platform we initially developed and which helps us manage the entire business continuum from clinical patient workflow to operations, sales and compliance. We believe our history and familiarity with the platform and other proprietary solutions enable us to help deliver superior clinical, operational, and financial outcomes.
We believe our disciplined approach to utilizing technology and our data-driven analytics differentiates us from our peers. We leverage both internally developed tools as well as third party software to reduce our cost per visit to enhance our productivity and optimize our nursing and therapy staff. This approach drives metric-driven decisions across our organization that yield better margins, better quality and better employee satisfaction. We also invest significant time and training resources teaching our operators to utilize these tools to help drive timely decisions in the field, including the development of patient care plans. Our pairing of technology and well-established operating protocols enables a workforce that is dedicated to achieving these superior results. Our company culture emphasizes the use of analytics-based tools to make better informed decisions to provide the highest quality of care, while tightly managing our cost of care.
Through our operating model, which includes leveraging technology, we are able to support our clinicians as they provide industry-leading clinical outcomes as measured by key claims-based metrics such as hospital readmissions. Our 30-day readmission rate of 15.3% was 200 basis points better than the national average on a non-risk adjusted basis in 2021. Our low readmission rate makes us an attractive partner for both payors and our diverse group of referral sources, especially hospitals that are at risk to receive Medicare readmission penalties. As of January 2022, the last publicly reported Star ratings, our Quality of Patient Care (QoPC) Star Rating and HHCAHPS Patient Survey Star Rating both averaged 3.7, higher than the national averages of 3.3 and 3.5, respectively for QoPC and HHCAHPS. Centers for Medicare and Medicaid Services (“CMS”) publishes Star ratings on a scale from 1 to 5 stars based on a number of quality measures, such as timely initiation of care, drug education provided to patients, fall risk assessment, depression assessments, improvements in bed transferring, and bathing, among others. For additional discussion regarding CMS’s Star ratings, see “Risk Factors—Reimbursement Risks.”
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Our scale and density and our disciplined operating model allow us to achieve this high level of quality more efficiently than our publicly traded home health peers. For the year ended December 31, 2021, our average cost per visit of $83 was 15.8% lower than the average of a subset of our public peers. Our lower cost per visit means that we are more efficient than our peers and better positioned to operate profitably in the event of potential unforeseen changes to the reimbursement model in our industry.
 
Home Health Segment
 
Year Ended
December 31,
 
2021
2020
2019
Cost per visit
$83
$84
$80
Public peers* average cost per visit
$99
$96
$87
Cost Per Visit vs. Public Peer* Average
(15.8)%
(12.1)%
(7.8)%
*
Note: Includes Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG).
Our strong operational performance, coupled with an opportunistic acquisition strategy and select de novo openings, has contributed to the strength of our financial performance over the last several years. Since 2015, we have deployed over $760 million of capital on 38 home health and hospice acquisitions, which we have fully integrated into our business and continue to grow. Over that same period, we have opened 29 de novo locations across 15 states, including 17 home health and 12 hospice locations. From 2015 to 2021, despite industry disruptions related to the COVID-19 pandemic, we grew Net service revenue from $507 million to $1,107 million, representing a compound annual growth rate of 14%. For more information and commentary on our history and financial performance, see “Business—Our History” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” elsewhere in this information statement.
Our Industries and Opportunity
We operate in large, growing and highly fragmented industries.
In 2020, approximately $124 billion was spent on broader home health expenditures, according to National Health Expenditures published by CMS. Home health expenditures are expected to grow to approximately $201 billion by 2028, representing a 6.3% compound annual growth rate. Within the home health market, we focus primarily on skilled home health services. Medicare is the dominant payor in the skilled home health sector, with annual payments approximating $17 billion in 2020. Based on our experience and industry knowledge, we believe Medicare represents the majority of expenditures in skilled home health services. However, Medicare Advantage is becoming a more prevalent payor source within skilled home health services, as payors continue to emphasize reimbursement models focused on value-based care. On a national basis, approximately 44% of Medicare beneficiaries chose a Medicare Advantage plan over traditional Medicare in November 2021 on a 12-month rolling basis, resulting in a 12% increase in Medicare Advantage enrollment from 2020. The total number of Medicare beneficiaries choosing Medicare Advantage is expected to grow to 51% by 2030. Given our low cost of care and high-quality outcomes, we believe we are well-positioned to serve this growing population.
The home health industry is primarily comprised of publicly traded and privately owned freestanding agencies, visiting nurse associations and government-owned agencies. The number of Medicare-certified home health agencies is near an all-time high, and in 2020, over 11,300 agencies provided care to approximately 3.1 million Medicare beneficiaries. Approximately 92% of home health agencies generate annual revenue of less than $5.0 million, and the four largest players in the space account for approximately 22% of the Medicare market. While we are the fourth-largest home health provider by 2020 Medicare revenues, our Medicare home health business accounts for only 4.3% of the Medicare home health market. We believe we have an opportunity to continue to gain market share through organic growth and as a leading consolidator in the industry.
The home health reimbursement landscape experienced a fundamental shift when Medicare implemented the Patient-Driven Groupings Model, or “PDGM,” for home health agencies on January 1, 2020. The impact of PDGM, which was expected to put downward pressure on home health revenue per episode and increase administrative burdens, coincided with the beginning of the COVID-19 pandemic. Federal relief funding, including funds distributed under the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES
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Act”), the Paycheck Protection Program and the Medicare Accelerated Advanced Payment Program, as well as the payroll tax deferral permitted by the CARES Act, has temporarily delayed the potentially negative effects of PDGM for those home health agencies that accepted relief funding. We did not accept any Cares Act funds and expect that as COVID-19 abates and federal relief funding concludes, the home health agencies accepting those funds may experience financial pressure as a result of PDGM. We anticipate these factors will drive industry consolidation, particularly of smaller home health agencies. We believe our strong history as a consolidator, our scale and density and our operational efficiency position us well to take advantage of this consolidation opportunity. Please see “Risk Factors” and “Business—Sources of Revenue” for additional detail on PDGM.
According to CMS, Medicare spending for hospice care has increased from $3 billion in 2000 to $22 billion in 2020, reflecting a compound annual growth rate of 10.6%. Based on our experience and industry knowledge, we believe Medicare expenditures represent the vast majority of total expenditures in the hospice market. The hospice industry is fragmented, with approximately 1.7 million Medicare beneficiaries receiving hospice services from over 5,000 providers in 2020. Hospice use among Medicare beneficiaries has grown substantially in recent years, suggesting a greater awareness of and access to hospice services. While we are a leading hospice services provider by 2020 Medicare revenues, our hospice business accounts for only 1.0% of the Medicare hospice market. We believe increasing demand, broader understanding and utilization of hospice care and the fragmented nature of the industry provide an attractive opportunity for our hospice business.
The home health and hospice industries are supported by several industry tailwinds, including a growing senior population, an increasing focus on shifting care to lower cost settings, patient preference for home-based care, emphasis on value-based payment models, significant near-term consolidation opportunities and high costs and underutilization of end-of-life care.
Our Competitive Strengths
We believe we differentiate ourselves from our competitors based on many factors, including the quality of our clinical outcomes, the scale and density of our footprint, our consistent and disciplined operating model, and our people and award-winning culture. We also believe our competitive strengths discussed below give us the ability to adapt and succeed in a healthcare industry facing continuing regulatory changes focused on improving outcomes and reducing costs.
Scale and Density
Our current footprint is the result of our multi-decade effort to establish scale and density in key markets with attractive demographic and regulatory profiles. We are a top five home health provider in 18 states and a top two home health provider in 11 of those states, based on 2020 Medicare revenues. These 18 states, centered in the Southern United States, represented over 39% of the approximately $17 billion of total U.S. home health Medicare expenditures in 2020. Our 34-state footprint represented approximately 69% of the total U.S. home health Medicare expenditures in 2020. Our strong presence in these markets helps us increase operating efficiency and brand awareness. These operating efficiencies have helped result in a 15.8% lower home health cost per visit for the year ended December 31, 2021 compared to a subset of our publicly traded peers. Our scale and density increase brand awareness through additional patient volumes from referral sources and help us attract and retain talent. Additionally, due to the demographic overlap of our patients, we believe many of our home health patients will eventually require the services of our hospice segment. We are a leading national provider of hospice services and have a top ten position in ten states, based on 2020 Medicare revenues. As of March 31, 2022, 85 of our 99 hospice locations were co-located within our home health markets. There is a significant opportunity to expand this co-location strategy by adding hospice services to our other home health locations. Through our co-location strategy, we minimize gaps in care and disruption to the patient. We believe this continuity of care between our home health and hospice businesses creates a growth opportunity for our hospice business. Although we entered hospice more recently than home health, we expect hospice to generate significant growth in the business going forward and to contribute to ongoing efforts to grow scale and density.
Consistent and Disciplined Operating Model
Our operating model, which emphasizes consistency and the disciplined use of technology, has driven our industry leadership in both clinical quality and cost effectiveness. We leverage our comprehensive technology capabilities and centralized administrative functions to define best practices, streamline staffing models, and
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identify supply chain efficiencies across our extensive platform of operations. We invest significant time and training resources teaching our operators to utilize the informatics of our technology to help drive timely decisions in the field. Our pairing of technology with a culture that includes substantial training resources and well-established operating protocols helps enable a disciplined workforce that delivers superior results. Our disciplined approach and commitment to making metric-driven decisions have enabled us to deliver care at an industry-leading cost per visit. Both our home health cost per visit and our hospice cost per patient day are lower than the average of our publicly traded peers. Finally, a consistent, disciplined operating model allows us to be nimble and responsive to change. We have demonstrated the ability to adapt in the face of numerous significant regulatory and legislative changes. In 2020, we rapidly moved to adapt our operations to the unprecedented COVID-19 pandemic while also successfully managing through significant changes in our Medicare reimbursement systems. We believe our tech-enabled operating model enables us to adopt and integrate new technologies faster than our peers and extend our competitive advantage through our operational efficiencies.
Clinical Expertise and High-Quality Outcomes
We have extensive home-based clinical experience from which we have developed standardized best practices and protocols. We believe these clinical best practices and protocols, when combined with our technology and well-trained, mission-motivated clinicians, help ensure the delivery of consistently high-quality healthcare services, reduced inefficiencies, and improved performance across a spectrum of operational areas. These clinical best practices allow us to have quality of patient care Star (“QoPC”) ratings and 30-day readmission rates that are meaningfully better than the national average. As of January 2022, the last publicly reported Star ratings, our QoPC Star Rating and HHCAHPS Patient Survey Star Rating both averaged 3.7, higher than the national averages of 3.3 and 3.5, respectively. For additional discussion of CMS’s Star ratings, see “Risk Factors—Reimbursement Risks.” Additionally, on a non-risk adjusted basis, our 30-day hospital readmission rate was 15.3%, 200 basis points lower than the national average of 17.3% in 2021. We focus on hospital readmission rates as our primary indicator of clinical quality. We believe this focus results in superior clinical outcomes for patients, providers and payors.
People and Award-Winning Culture
We believe our employees, who share our steadfast commitment to providing outstanding care to our patients, are the most valuable asset of our business. Through our employee-first culture, we undertake significant efforts to ensure our clinical and support staff receive the education, training, support and recognition necessary to provide the highest quality care in the most cost-effective manner. We have been recognized for six consecutive years by Fortune as a ‘Top 20 in Healthcare’ in the United States and for nine consecutive years by Modern Healthcare as a ‘Best Place to Work.’ Over the last 11 years, we have received over 144 ‘Best Place to Work’ awards. We believe our award-winning culture is an important component to attracting and retaining talent as demand for our services continues to grow. By promoting employee development and engagement, we believe we can increase our ability to attract and retain nurses, therapists, and other healthcare professionals in a highly competitive environment where staffing shortages are not uncommon. We support the long-term career aspirations of our employees through education and professional development, including an employee scholarship program, clinical license continuing education units, leadership development training, and other development programs. We believe fostering a strong culture that values diversity, equity, inclusion, and belonging (“DEIB”), allows us to be competitive in recruiting and retaining employees. We maintain a DEIB program that is overseen by a committee of diverse individuals committed to our mission of a better way to care and supported by a dedicated DEIB specialist role. The program is further supported by four distinct sub-committees comprised of a broad and cross-functional group, including our leadership and front-line staff. In light of well-publicized, recent challenges to hire and retain qualified personnel in the healthcare industry, we believe our culture will be even more important in contributing to our continued success.
Well-Positioned for Value-Based Care
Value-based contracts are a growing focus for us, and as payors emphasize reimbursement models driven by value, we believe they will continue to seek our clinical outcomes and appreciate our cost-efficient services. We have been partnering with and piloting a variety of new and innovative payment programs since 2014, including our previous participation in Bundled Payments for Care Improvement initiative (“BPCI”) Model 3, where we were one of the largest home health participants. CMS’s voluntary Bundled Payments for Care Improvement
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Advanced (“BPCI Advanced”) initiative began October 1, 2018, runs through December 31, 2023, and covers 29 types of inpatient and three types of outpatient clinical episodes, including stroke and hip fracture. We continue to evaluate, on a case-by-case basis, appropriate BPCI Advanced and accountable care organization (“ACO”) participation opportunities. Our history and participation in these programs have allowed us to collaborate with approximately 175 alternative payment models, including ACOs, Medicare Shared Savings Program ACOs, bundled payments and Direct Contracting Models.
Our Growth Strategy
Our growth strategy comprises several avenues for continued growth, including organic growth through existing operations, adding new locations through execution of our de novo strategy, strategic acquisitions, leveraging our expertise in care transitions, expanding Medicare Advantage and exploring adjacent service offerings.
Drive Organic Growth at Existing Operations
We hold a leading position in a number of markets that will allow us the opportunity to generate long-term, attractive organic growth. We believe there will continue to be strong demand for our services due to significant industry tailwinds, as well as our high-quality clinical outcomes and our cost-effective operating model. The states in which we offer home health services represented approximately 69% of total home health Medicare expenditures in 2020. Despite our market-leading position, we have only 2.4% market share of total Medicare home health and hospice spend, suggesting significant runway for growth in our existing footprint. We seek internal growth in our existing markets by increasing the number of referrals we receive from healthcare providers. To achieve this growth, we (1) educate healthcare providers about the benefits of our services, (2) position our agencies to add value in their communities by avoiding unnecessary hospital readmissions, (3) maintain a hyper focus on high-quality care and related outcomes for our patients, (4) identify related products and services needed by our patients and their communities, and (5) provide a superior work environment for our employees. As we continue to grow organically, our scale and density will increase, further reinforcing our ability to deliver cost-effective care.
Execute on De Novo Strategy in New Markets
We will continue to execute on our de novo strategy to complement our organic growth. Since 2015, we have opened 29 locations across 15 states, 17 of which are home health locations and 12 of which are hospice locations. Because our existing footprint includes states that do not have certificate of need laws requiring review and approval by state regulatory bodies prior to introducing new home health and hospice services, there are significant opportunities for us to open de novo locations. See “Business—Regulation—Certificates of Need” for a summary of state certificate of need laws. We believe there is a significant opportunity for our hospice segment to benefit meaningfully from de novo locations as we open new hospice sites in markets where we already have a home health presence. We believe our ability to leverage our existing home health infrastructure, referral sources and brand enables us to launch new hospice locations in a capital efficient manner.
Pursue Strategic Acquisitions
We will continue to identify and evaluate opportunities for strategic acquisitions in new and existing markets that will enhance our market position and increase our referral base. We plan to continue to focus on building overlap between our home health and hospice locations, as well as identifying attractive new geographies in which we currently do not have a presence. Our home health and hospice agencies operate in highly fragmented markets, and we believe we are well-positioned to be a leading consolidator in the industry. We have historically focused on acquisition opportunities where we believe we can accelerate top-line growth while also expanding profit margins. We have a proven history spanning over 20 years of consummating and fully integrating acquisitions culturally, technologically, and operationally. Since 2015, we have deployed over $760 million of capital on 38 home health and hospice acquisitions, which have contributed significantly to our revenue growth over time. For example, our three largest acquisitions between 2015 and 2019 (of CareSouth in 2015, Camellia Healthcare in 2018 and Alacare Home Health and Hospice in 2019) collectively contributed approximately $340 million to our 2021 consolidated revenues. As an independent home health and hospice company, we believe our enhanced financial flexibility will allow us to be more competitive in future, large-scale acquisition opportunities. We anticipate joint ventures will be a part of our growth strategy moving forward, as demonstrated by our recent joint venture announcements in Boise, Idaho with Saint
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Alphonsus Health System on January 5, 2022 and in Miami, Florida with Baptist Health South Florida on February 1, 2022. These joint ventures will enable Enhabit to grow into new geographies in partnership with large healthcare providers in their respective regions. Saint Alphonsus Health System serves southwestern Idaho, eastern Oregon and northern Nevada through multiple facilities and more than 4,000 employees. Baptist Health South Florida serves southern Florida through multiple facilities and more than 20,000 employees.
Leverage Care Transitions Expertise
We have established a strong track record of performance and quality that enables us to develop strong relationships with additional health systems and facility-based providers. We believe we are an attractive partner for patients transitioning from a facility-based setting to the home due to the quality of our outcomes, data management, scale and market density, and proven ability to safely transition high acuity and/or chronically ill patients to the home. Over 36% of all 30-day hospital readmissions occur within the first seven days, which supports the need for a well-organized transition plan from a facility to the home setting. We view our relationships with and extensive knowledge of inpatient rehabilitation facilities to be an important asset as we continue to expand our operations. Encompass found that, in markets where our home health locations overlapped with their inpatient rehabilitation facilities, overall satisfaction, discharge satisfaction and discharge to community scores were significantly higher than in non-overlap markets. Our deep understanding of care transitions and ability to achieve industry-leading hospital readmission rates make us the partner of choice for many facility-based partners. To help drive these strong partnerships, our Care Transition Coordinators and Transition Navigators serve as representatives in transitional care activities and strategic relationships with acute care hospitals and other healthcare providers and are integral to realizing positive outcomes from transitions of care from one setting to another.
Expand Medicare Advantage Focus
We believe our expertise in delivering high-quality and cost-efficient care positions us favorably to capture future Medicare Advantage volumes. On a national basis, approximately 44% of Medicare beneficiaries chose a Medicare Advantage plan over traditional Medicare in 2021 on a 12-month rolling basis, resulting in a 12% increase in Medicare Advantage enrollment from 2020. The total number of Medicare beneficiaries choosing Medicare Advantage is expected to grow to 51% by 2030. We continue to believe Medicare Advantage payors will be increasingly attracted to our historical track record of providing high-quality outcomes and lower hospital readmission rates, along with our successful participation in risk-based payment models. In 2021, Medicare Advantage accounted for only 10.6% of our revenue, suggesting a significant opportunity to grow this important revenue source.
Explore Adjacent Service Offerings
We have historically focused on the skilled home health and hospice industries. However, evolving alternatives for in-home care may present opportunities for us to develop adjacent service offerings. We will continue to evaluate these opportunities, including:
Skilled nursing facility-at-home, or “SNF-at-home,” care refers to an emerging service area that seeks to provide care to higher acuity patients in the home. According to Lincoln Healthcare Leadership, approximately 25% of short-stay SNF episodes can be cared for in the home setting. We believe SNF-at-home could potentially be an attractive way to leverage our home health operating model. However, SNF-at-home care does not yet have a distinct reimbursement model, state licensure category, or Medicare certification status. A combination of federal and state regulatory action, as well as new reimbursement policies, will likely be needed before SNF-at-home services develop into a potential expansion opportunity.
Palliative care services refer to care that improves the quality of life for patients, making the patient as comfortable as possible by anticipating, preventing, diagnosing and treating their symptoms, but does not seek to cure the patient’s underlying illness. Unlike hospice services, which are also palliative in nature, palliative care services are not limited to patients with terminal illnesses. While the nature of the patient care is substantially similar, palliative care services and hospice services are distinct from a state licensure and Medicare reimbursement perspective. Palliative care services are complementary to our existing business because they are often regarded as a bridge between home health and hospice.
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Care management services refer to the management of patient care outside of home health under contracts with Medicare Advantage payors, ACOs or other risk-bearing entities. We currently receive a small amount of revenue from care management services.
Private duty services refer to the provision of typically non-clinical hourly care to patients with a wide variety of serious or chronic illnesses and conditions or those that need assistance with activities of daily living in their homes. Private duty services typically last 4 to 24 hours a day. We currently provide private duty services through three of our locations, but it is not a material part of our business.
Hospital-at-home care refers to the provision of acute care hospital services in patients’ homes. The concept received significant industry attention following a March 2020 announcement by CMS allowing Medicare-certified hospitals to request waivers to provide acute hospital care services in patients’ homes during the COVID-19 public health emergency. Hospital-at-home care under Medicare still requires the provider to meet all of the Medicare Conditions of Participation applicable to hospitals and involves a much higher intensity of care than home health agencies are equipped to provide. In order to provide hospital-at-home care, we would need to enter into an arrangement with a Medicare-certified hospital that has received an Acute Hospital Care at Home waiver from CMS to provide acute hospital care services at home on behalf of the hospital. Additionally, it is uncertain what CMS’s position on these services will be after the public health emergency ends.
As we evaluate these opportunities, we continue to assess addressable market, regulatory environment, reimbursement landscape, and other factors to determine the degree to which these services could be complementary additions to our core business while offering suitable returns on investment. If the uncertainties around these services are resolved to our satisfaction, these adjacent services present an opportunity to broaden our service offerings and grow our market share in the home health and hospice industry. See “Business—Regulation—Evolving Adjacent Services Opportunities” for further discussion of the regulatory status of these service areas.
Summary of Principal Risk Factors
Investing in our common stock involves a high degree of risk, including risks related to our business. These risks include: government reimbursement of healthcare costs, other governmental regulation, operational and financial aspects of our business and the effects of the COVID-19 pandemic, risks related to the separation and distribution and risks related to our common stock. You should carefully consider these risks before investing in our common stock. Such risks may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our common stock and result in a loss of all or a portion of your investment. Set forth below is a high-level summary of some, but not all, of these risks. The following summary of risk factors is not exhaustive. Please read the information in the section titled “Risk Factors,” beginning on page 26, for a more thorough description of these and other risks.
Reimbursement. The cost of healthcare is funded substantially by government and private insurance programs. If such funding is reduced, limited or no longer available, our business may be adversely impacted. Our primary source of reimbursement is the Medicare program, and Medicare reimbursement is subject to significant changes from time to time. Delays in the administrative appeals process associated with denied Medicare reimbursement claims could delay or reduce our reimbursement for services previously provided. Additionally, reimbursement claims are subject to various audits, which may negatively affect the reimbursement we receive.
Regulation. We conduct business in a heavily regulated industry, and changes in regulations, including alternative payment models and value-based purchasing initiatives, may significantly affect our business and results of operations. Compliance with laws and regulations requires substantial time, effort and expense. Further, the enforcement of these regulations and any violations of these regulations may result in increased costs or sanctions that reduce our revenues and profitability.
Collections. Delays in collection or non-collection of our accounts receivable, including delays associated with the appeals process for Medicare claim denials, could adversely affect our business, financial position, results of operations and liquidity.
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Relationships with Referral Sources. If we are unable to maintain or develop relationships with patient referral sources, including the Encompass rehabilitation hospitals which accounted for approximately 27,000 admissions in 2021, our growth and profitability could be adversely affected. There can be no assurance that individuals will not attempt to steer patients to competing post-acute providers or otherwise limit our access to potential referrals. The establishment of joint ventures or networks between referral sources, such as acute care hospitals, and other post-acute providers may hinder patient referrals to us. The growing emphasis on integrated care delivery across the healthcare continuum increases that risk. Additionally, it is possible that the separation will result in reduced referrals from Encompass’s inpatient rehabilitation facilities.
Payor and Patient Mix. Changes in the mix of our payors, such as a shift from Medicare fee-for-service to Medicare Advantage and to other payors, as well as changes to our patient mix, may adversely affect our profitability.
Staffing. In some markets, the lack of availability of medical personnel is a significant operating issue facing all healthcare providers, including us. Competition for staffing, shortages of qualified personnel, union activity or other factors may increase turnover and otherwise increase our staffing costs and reduce profitability. Our operations are dependent on the efforts, abilities, and experience of our medical personnel, such as physical therapists, occupational therapists, speech pathologists, nurses and other healthcare professionals. We compete with other healthcare providers in recruiting and retaining qualified personnel responsible for the daily operations of each of our locations. Our ability to attract and retain qualified personnel depends on several factors, including our ability to provide competitive wages and benefits.
Cybersecurity and Privacy and Security Laws. The proper function, availability, and security of our and our vendors’ information systems are critical to our business, and failure by us or our vendors to maintain proper function, availability, or security of information systems or protect data against unauthorized access could have a material adverse effect on our business, financial position, results of operations, and cash flows. Our information systems and protection, collection, storage, use, retention, security and processing of confidential, sensitive and personal information, including patient health information, must comply with a number of federal and state privacy and security laws, which are evolving and changing rapidly.
Competition. We face intense competition for patients from other healthcare providers. We compete with a variety of companies in both home health and hospice, some of which, including several large public companies, may have greater financial and other resources and may be more established in their respective communities. In addition, from time to time, there are efforts in states with certificate of need laws to weaken those laws, which could potentially increase competition in those states.
COVID-19. The COVID-19 pandemic has significantly affected and is expected to continue to significantly affect our operations, business and financial condition, and our liquidity could be negatively impacted, particularly if the operations of a significant number of acute care hospitals and physician practices are disrupted for a lengthy period of time. The pandemic has also disrupted our supply chain for equipment, pharmaceuticals and medical supplies and resulted in an increase in staffing shortages. Because of the nature of our business and the types of patients we serve, we may be more vulnerable to the effects of public health catastrophes, including the COVID-19 pandemic.
Failure to Execute on Growth Strategy. Our success depends in large part on organic growth at existing operations through increased referrals from patient referral sources in the communities we serve. We may not be able to maintain our existing referral source relationships or be able to develop and maintain new relationships in existing or new markets. Additionally, we may face limitations on our ability to identify and complete acquisition transactions, which could delay or increase the cost of executing on our growth strategy. If we fail to successfully integrate our acquired businesses, we may not realize the benefits of our acquisition transactions.
Litigation. We operate in a highly regulated industry in which healthcare providers are routinely subject to litigation. As a result, various lawsuits, claims and regulatory proceedings have been and can be asserted against us. Substantial damages, fines or other remedies assessed against us or agreed to in settlements could have a material adverse effect on our business.
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No Existing Market. No market currently exists for our common stock, and there is no assurance that an active trading market for our common stock will develop or be sustained after the distribution and, following the distribution, the price of Enhabit common stock may fluctuate significantly.
Separation. We may not achieve some or all of the expected benefits of the separation. Further, our ability to operate our business effectively may suffer if we are unable to cost-effectively establish our own administrative and other support functions in order to operate as a stand-alone company after the expiration of our shared services and other intercompany agreements with Encompass. Enhabit has no history of operating as an independent, publicly traded company, and its historical and pro forma financial information is not necessarily representative of the results that it would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results. Furthermore, we cannot be certain that we will continue to receive the same level of referrals from Encompass’s inpatient rehabilitation facilities after the separation.
The Separation and Distribution
In January 2022, Encompass announced its intention to separate into two independent, publicly traded companies. The separation will occur through a pro rata distribution to Encompass stockholders of 100% of the shares of common stock of Enhabit, the company consisting of Encompass’s home health and hospice businesses. Encompass will remain a publicly traded company after the separation and distribution, consisting of its existing inpatient rehabilitation business.
On [   ], 2022, the Encompass board of directors approved the distribution of all of Enhabit’s issued and outstanding shares of common stock on the basis of [   ] shares of Enhabit common stock for every one share of Encompass common stock held as of the close of business on [   ], 2022, the record date for the distribution.
Relationship with Encompass
Enhabit’s Post-Separation Relationship with Encompass
Currently, we are, and at all times prior to the completion of the distribution will be, a wholly owned subsidiary of Encompass. After the distribution, Encompass and Enhabit will each be separate companies with separate management teams and separate boards of directors. Prior to the distribution, we expect to enter into agreements with Encompass that will govern the separation of our business from Encompass, including a master separation agreement and various interim arrangements that will provide a framework for our relationship with Encompass after the separation and distribution, such as a transition services agreement, a tax matters agreement and an employee matters agreement. See the section titled “Certain Relationships and Related Party Transactions—Relationship with Encompass” for a more detailed discussion of these agreements.
All of the agreements relating to our separation from Encompass will be made in the context of a parent-subsidiary relationship and will be entered into in the overall context of our separation from Encompass. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See the section titled “Risk Factors—Risks Related to the Separation and Distribution.”
Reasons for the Separation
We believe, and Encompass has advised us that it believes, that the separation and distribution will provide a number of benefits to our business and to Encompass’s business. These potential benefits include improving the strategic and operational flexibility of each company, increasing the focus of each management team on its business strategy and operations, allowing each company to adopt a capital structure, acquisition strategy and return of capital policy best suited to its financial profile and business needs, and providing each company with its own equity currency to facilitate acquisitions and to better incentivize management. In addition, once we are a stand-alone publicly traded company, potential investors will be able to invest directly in our common stock.
Enhanced Management Focus on Core Businesses. The separation will provide each company’s management team with undiluted focus on their unique strategic priorities, target markets and corporate development opportunities. The separation will enable the management teams of each company to set
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their own strategy for long-term growth and profitability, including implementing development and commercialization strategies specific to each business, pursuing business development opportunities, structuring and restructuring its operations, attracting talent, and investing current earnings to generate organic growth.
Separate Capital Structures and Allocation of Financial Resources. Each of Encompass and Enhabit has different cash flow structures and capital requirements. The separation will permit each company to allocate its financial resources to meet the unique needs of its businesses and intensify the focus on its distinct operating and strategic priorities. The separation will also give each business its own capital structure and allow it to manage capital allocation and adopt distinct capital return strategies. Further, the separation will eliminate internal competition for capital between the two businesses and enable each business to implement a capital structure tailored to its strategy and business needs.
Improved Alignment of Management Incentives and Performance. The separation will allow each company to more effectively recruit, retain and motivate employees through the use of equity-based compensation that more closely reflects and aligns management and employee incentives with specific business objectives, financial goals and business attributes. To the extent that the separate equity currencies are more attractively valued, this would further benefit Encompass and Enhabit.
Creation of Independent Equity Currencies and Enhanced Strategic Opportunities. The separation will provide each of Encompass and Enhabit with its own pure-play equity currency that can be used to facilitate capital raising and to pursue accretive M&A opportunities that are more closely aligned with each company’s strategic goals and expected growth opportunities. To the extent that the separate equity currencies are more attractively valued, this would further increase these benefits to Encompass and Enhabit.
Clear-Cut Investment Identities. The separation will allow investors to more clearly understand the separate business models, financial profiles and investment identities of the two companies and to invest in each based on a better appreciation of these characteristics. Each company is expected to appeal to types of investors who may differ from Encompass’s current investors. Following the separation, the separate management teams of each of the two companies are expected to be better positioned to implement goals and evaluate strategic opportunities in light of the expectations of the specific investors in that individual company’s market. To the extent that enhanced investor understanding results in greater investor demand for shares of Encompass stock and/or Enhabit stock, it could cause each company to be valued at multiples higher than Encompass’s current multiple, and higher than its publicly traded peers. Any such increase in the aggregate market value of Encompass and Enhabit following the separation over Encompass’s market value prior to the separation would benefit Encompass, Enhabit, and their respective stakeholders.
The Encompass board of directors also considered a number of potentially negative factors in evaluating the separation, including:
Risk of Failure to Achieve Anticipated Benefits of the Separation. We may not achieve the anticipated benefits of the separation for a variety of reasons, including, among others: the separation will demand significant management resources and require significant amounts of management’s time and effort, which may divert management’s attention from operating our business; following the separation and distribution, we may be more susceptible to market fluctuations, and other events may be more disadvantageous for us than if we were still part of Encompass, because our business would be less diversified than Encompass’s business is prior to the completion of the separation and distribution.
Disruptions and Costs Related to the Separation and Distribution. The actions required to separate the Enhabit Business from Encompass could disrupt our operations. In addition, we will incur substantial costs in connection with the separation and the transition to being a standalone public company, which may include accounting, tax, legal and other professional services costs, recruiting and relocation costs associated with hiring key senior management personnel who are new to Enhabit, tax costs, and costs to separate information systems.
Loss of Scale and Increased Administrative Costs. Prior to the separation, Enhabit is able to take advantage of Encompass’s size and purchasing power in procuring certain goods, services and technologies. After the separation and distribution, as a standalone company, we may be unable to
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obtain these goods, services and technologies at prices or on terms as favorable as those Encompass obtained prior to completion of the separation and distribution. In addition, as part of Encompass, Enhabit benefits from certain functions performed by Encompass, such as accounting, tax, legal, human resources and other general and administrative functions. After the distribution, Encompass will not perform these functions for us, other than certain functions that will be provided for a limited time pursuant to the transition services agreement, and, because of our smaller scale as a standalone company, our cost of performing such functions could be higher than the amounts reflected in our historical financial statements, which would cause our profitability to decrease.
Limitations on Strategic Transactions. Under the terms of the tax matters agreement that we will enter into with Encompass, we will be restricted from taking certain actions that could cause the distribution or certain related transactions (or certain transactions undertaken as part of the internal reorganization), in each case, as set forth in the tax matters agreement, to fail to qualify as tax-free under applicable law. The tax matters agreement will contain specific restrictions applicable until the second anniversary of the distribution that may limit our ability to pursue certain strategic transactions and equity issuances or engage in other transactions that might increase the value of our business.
Uncertainty Regarding Stock Prices. We cannot predict the effect of the separation on the trading prices of Enhabit or Encompass common stock or know with certainty whether the combined market value of [   ] shares of our common stock and one share of Encompass common stock will be less than, equal to or greater than the market value of one share of Encompass common stock prior to the distribution.
In determining whether to pursue the separation, the Encompass board of directors concluded the potential benefits of the separation outweighed the potential negative factors. See the sections titled “The Separation and Distribution—Reasons for the Separation” and “Risk Factors” included elsewhere in this information statement.
Capitalization Summary
In connection with the separation, we intend to enter into a $400 million term loan A facility and a $350 million revolving credit facility. See the section titled “Description of Certain Material Indebtedness.”
For additional information regarding the post-distribution capitalization of Enhabit, see the section titled “Capitalization.”
Corporate Information
Enhabit was incorporated in Delaware in 2014.
On March 7, 2022, we changed our name from “Encompass Health Home Health Holdings, Inc.” to “Enhabit, Inc.” and prior to the completion of the distribution, we intend to implement rebranding initiatives across our operations, including at the Enhabit corporate office which occurred in February 2022 and at our branches beginning in April 2022, to reflect our new Enhabit branding in connection with the separation and distribution. The rebranding is expected to be substantially completed at the time of the distribution. For additional discussion, see “Our Business.”
The address of our principal executive offices will be 6688 N. Central Expressway, Suite 1300, Dallas, Texas, 75206. Our telephone number after the distribution will be (214) 239-6500. We maintain an internet site at www.ehab.com. Our website and the information contained therein or connected thereto are not incorporated into this information statement or the registration statement of which this information statement forms a part, or in any other filings with, or any information furnished or submitted to, the SEC.
Reason for Furnishing This Information Statement
This information statement is being furnished solely to provide information to Encompass stockholders who will receive shares of Enhabit common stock in the distribution. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of Encompass’s or Enhabit’s securities. The information contained in this information statement is believed by Enhabit to be accurate as of the date set forth on its cover. Changes may occur after that date, and neither Encompass nor Enhabit undertakes any obligation to update the information except as may be required in the normal course of their respective disclosure obligations and practices, or as required by applicable law.
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QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION
What is Enhabit and why is Encompass separating the Enhabit Business and distributing Enhabit common stock?
Enhabit is currently a wholly owned subsidiary of Encompass consisting of the Enhabit Business. The separation of Enhabit from Encompass and the distribution of Enhabit common stock is intended, among other things, to improve the strategic and operational flexibility of each company, increase the focus of each management team on its business strategy and operations, allow each company to adopt a capital structure, acquisition strategy and return of capital policy best suited to its financial profile and business needs, and provide each company with its own equity currency to facilitate acquisitions and to better incentivize management. Encompass expects that the separation will result in enhanced long-term performance of each business for the reasons discussed in the section titled “The Separation and Distribution—Reasons for the Separation.”
 
 
 
 
 
Why am I receiving this document?
Encompass is delivering this document to you because you are a holder of shares of Encompass common stock. If you are a holder of shares of Encompass common stock as of the close of business on [  ], 2022, the record date for the distribution, you will be entitled to receive [  ] shares of Enhabit common stock for every one share of Encompass common stock that you hold at the close of business on such date. This document is intended to describe the separation and distribution and help you understand how the separation and distribution will affect your post-separation ownership in Encompass and Enhabit.
 
 
 
 
 
How will the separation of Enhabit from Encompass work?
As part of the separation, and prior to the distribution, Encompass and its subsidiaries expect to complete an internal reorganization (which we refer to as the “internal reorganization”) to separate the businesses currently conducted by Encompass and its subsidiaries (including Enhabit) such that Enhabit will own solely the Enhabit Business following the separation. To complete the separation, Encompass will distribute all of the outstanding shares of Enhabit common stock to Encompass stockholders on a pro rata basis. Following the distribution, the number of shares of Encompass common stock you own will not change as a result of the separation.
 
 
 
 
 
What is the record date for the distribution?
The record date for the distribution will be [  ], 2022.
 
 
 
 
 
When will the distribution occur?
We expect that all of the outstanding shares of Enhabit common stock will be distributed by Encompass, on [  ], 2022, to holders of record of shares of Encompass common stock at the close of business on [  ], 2022, the record date for the distribution.
 
 
 
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What do stockholders need to do to participate in the distribution?
Stockholders of Encompass as of the record date for the distribution will not be required to take any action to receive Enhabit common stock in the distribution, but you are urged to read this entire information statement carefully. No stockholder approval of the distribution is required. You are not being asked for a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of Encompass common stock or take any other action to receive your shares of Enhabit common stock. Please do not send in your Encompass stock certificates. The distribution will not affect the number of outstanding shares of Encompass common stock or any rights of Encompass stockholders, although it will affect the market value of each outstanding share of Encompass common stock.
 
 
 
 
 
How will shares of Enhabit common stock be issued?
You will receive shares of Enhabit common stock through the same channels that you currently use to hold or trade shares of Encompass common stock, whether through a brokerage account, 401(k) plan or other channel. Receipt of Enhabit shares will be documented for you in the same manner that you typically receive stockholder updates, such as monthly broker statements and 401(k) statements.
 
 
 
If you own shares of Encompass common stock as of the close of business on the record date for the distribution, including shares owned in certificate form, Encompass, with the assistance of Computershare Trust Company, N.A., the distribution agent for the distribution (the “distribution agent” or “Computershare”), will electronically distribute shares of Enhabit common stock to you or to your brokerage firm on your behalf in book-entry form. The distribution agent will mail you a book-entry account statement that reflects your shares of Enhabit common stock, or your bank or brokerage firm will credit your account for the shares.
 
 
 
 
 
How many shares of Enhabit common stock will I receive in the distribution?
Encompass will distribute to you [  ] shares of Enhabit common stock for every one share of Encompass common stock held by you as of close of business on the record date for the distribution. Based on approximately [  ] shares of Encompass common stock outstanding as of [  ], 2022, a total of approximately [  ] shares of Enhabit common stock will be distributed to Encompass’s stockholders. For additional information on the distribution, see “The Separation and Distribution.”
 
 
 
 
 
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Will Enhabit issue fractional shares of its common stock in the distribution?
No. Encompass will distribute [  ] shares of our common stock for every one share of Encompass common stock you own as of the close of business on the record date. As a result, no fractional shares will be distributed. Encompass will not issue fractional shares of its common stock in the distribution. Fractional shares that Encompass stockholders would otherwise have been entitled to receive will be aggregated and sold in the open market by the distribution agent. The aggregate net cash proceeds of these sales will be distributed pro rata (based on the fractional share such holder would otherwise have been entitled to receive) to those stockholders who would otherwise have been entitled to receive fractional shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares.
 
 
 
 
 
What will govern my rights as an Enhabit stockholder?
Your rights as an Enhabit stockholder will be governed by Delaware law, as well as our amended and restated certificate of incorporation and our amended and restated bylaws. Except with respect to (i) the requirement that any nominee for director must deliver a questionnaire with respect to the background, qualifications, stock ownership and independence of such nominee and provide a written representation and agreement that such nominee is not and will not, if elected, become party to any voting commitment or any agreement or arrangement with respect to any compensation or reimbursement for service as a director that has not been disclosed to Enhabit, (ii) the ability of Enhabit, to the extent authorized by the board of directors or the chief executive officer, to advance expenses incurred in connection with any legal proceeding in advance of such legal proceeding’s final disposition to any current or former officer, employee or agent of the corporation and (iii) the exclusive forum provision with respect to a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”), at the time of the distribution, we expect that there will be no other material differences in stockholder rights between the existing Encompass common stock and the Enhabit common stock. For additional details regarding the Enhabit stock and Enhabit stockholder rights, see “Description of Capital Stock.”
 
 
What are the conditions to the distribution?
The distribution is subject to final approval by the Encompass board of directors, as well as to the satisfaction (or waiver by Encompass in its sole and absolute discretion) of the following conditions:
 
 
 
 
 
 
the SEC declaring effective the registration statement on Form 10 of which this information
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statement forms a part; there being no order suspending the effectiveness of the registration statement; and no proceedings for such purposes having been instituted or threatened by the SEC;
 
 
 
 
 
 
this information statement having been made available to Encompass stockholders;
 
 
 
 
 
 
the receipt by Encompass and continuing validity of an opinion of its outside counsel, satisfactory to the Encompass board of directors, regarding the qualification of the distribution as a transaction that is generally tax free for U.S. federal income tax purposes under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”);
 
 
 
 
 
 
the receipt by Encompass and continuing validity of a favorable private letter ruling from the U.S. Internal Revenue Service (the “IRS”), satisfactory to the Encompass board of directors, regarding the qualification of the distribution as a transaction that is generally tax free for U.S. federal income tax purposes under Section 355 of the Code and certain other U.S. federal income tax matters relating to the separation and distribution;
 
 
 
 
 
 
an independent valuation or financial advisory firm acceptable to the Encompass board of directors having delivered one or more opinions to the Encompass board of directors regarding solvency and capital adequacy matters with respect to each of Encompass and Enhabit after completion of the distribution, in each case in a form and substance acceptable to the Encompass board of directors in its sole and absolute discretion;
 
 
 
 
 
 
all actions and filings necessary or appropriate under applicable U.S. federal, state or other securities or blue sky laws and the rules and regulations thereunder relating to the separation and distribution having been taken or made and, where applicable, having become effective or been accepted;
 
 
 
 
 
 
the transaction agreements relating to the separation and distribution having been duly executed and delivered by the parties thereto;
 
 
 
 
 
 
no order, injunction or decree issued by any government authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the separation, the distribution or any of the related transactions being in effect;
 
 
 
 
 
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the shares of Enhabit common stock to be distributed having been approved for listing on the NYSE, subject to official notice of distribution;
 
 
 
 
 
 
Encompass having received certain proceeds from the Enhabit financing arrangements described under “Description of Certain Material Indebtedness” and being satisfied in its sole and absolute discretion that, as of or immediately after the effective time of the distribution, it will have no further liability under such arrangements, and Encompass having completed any required refinancing of its existing indebtedness on terms satisfactory to the Encompass board of directors in its sole and absolute discretion; and
 
 
 
 
 
 
no other event or development existing or having occurred that, in the judgment of Encompass’s board of directors, in its sole and absolute discretion, makes it inadvisable to effect the separation, the distribution or the other related transactions.
 
 
 
 
 
 
Encompass and Enhabit cannot assure you that any or all of these conditions will be met, or that the separation or distribution will be consummated even if all of the conditions are met. Encompass can decline at any time to go forward with the separation and distribution. In addition, Encompass may waive any of the conditions to the distribution. For a complete discussion of all of the conditions to the distribution, see “The Separation and Distribution—Conditions to the Distribution.”
 
 
 
 
 
What is the expected date of completion of the separation?
The completion and timing of the separation are dependent upon a number of conditions. We expect that the shares of Enhabit common stock will be distributed by Encompass on [  ], 2022, to the holders of record of shares of Encompass common stock at the close of business on [  ], 2022, the record date for the distribution. However, no assurance can be provided as to the timing of the separation or distribution or that all conditions to the distribution will be met. Alternatively, Encompass may waive any of the conditions to the distribution and proceed with the distribution even if such conditions have not been met. If the distribution is completed and the Encompass board of directors waived any such condition, such waiver could have a material adverse effect on Encompass’s and Enhabit’s respective business, financial condition or results of operations, the trading price of Enhabit’s common stock, or the ability of stockholders to sell their shares after the distribution, including, without limitation, as a result of illiquid trading due to the failure of Enhabit common
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stock to be accepted for listing or litigation relating to any preliminary or permanent injunctions sought to prevent the consummation of the distribution. If Encompass elects to proceed with the distribution notwithstanding that one or more of the conditions to the distribution has not been met, Encompass will evaluate the applicable facts and circumstances at that time and make such additional disclosure and take such other actions as Encompass determines to be necessary and appropriate in accordance with applicable law.
 
 
 
 
 
Can Encompass decide to cancel the distribution of Enhabit common stock even if all of the conditions have been met, or proceed with the distribution of Enhabit common stock even if any of the conditions have not been met?
Yes. Until the distribution has occurred, the Encompass board of directors has the right to terminate the distribution, even if all of the conditions are satisfied. Alternatively, Encompass may waive any of the conditions to the distribution and proceed with the distribution even if such conditions have not been met. If the distribution is completed and the Encompass board of directors waived any such condition, such waiver could have a material adverse effect on Encompass’s and Enhabit’s respective business, financial condition or results of operations, the trading price of Enhabit’s common stock, or the ability of stockholders to sell their shares after the distribution, including, without limitation, as a result of illiquid trading due to the failure of Enhabit common stock to be accepted for listing or litigation relating to any preliminary or permanent injunctions sought to prevent the consummation of the distribution. If Encompass elects to proceed with the distribution notwithstanding that one or more of the conditions to the distribution has not been met, Encompass will evaluate the applicable facts and circumstances at that time and make such additional disclosure and take such other actions as Encompass determines to be necessary and appropriate in accordance with applicable law.
 
 
 
 
 
What if I want to sell my Encompass common stock or my Enhabit common stock?
You should consult with your financial advisors, such as your stock broker, bank or tax advisor. If you sell your shares of Encompass common stock in the “regular-way” market after the record date and before the distribution date, you also will be selling your right to receive shares of Enhabit common stock in connection with the distribution.
 
 
 
 
 
What is “regular-way” and “ex-distribution” trading of Encompass common stock?
Beginning on or shortly before the record date for the distribution and continuing up to the distribution date, we expect that there will be two markets in Encompass common stock: a “regular-way” market and an “ex-distribution” market. Encompass common stock that trades in the “regular-way” market will trade with an entitlement to shares of Enhabit common stock distributed pursuant to the distribution. Shares that trade in the “ex-distribution” market will trade without
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an entitlement to Enhabit common stock distributed pursuant to the distribution. If you decide to sell any shares of Encompass common stock before the distribution date, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your Encompass common stock with or without your entitlement to Enhabit common stock pursuant to the distribution.
 
 
 
 
 
Where will I be able to trade shares of Enhabit common stock?
Enhabit intends to list its common stock on the NYSE under the symbol “EHAB.” Enhabit anticipates that trading in shares of its common stock will begin on a “when-issued” basis on or shortly before the record date for the distribution and will continue up to the distribution date, and that “regular-way” trading in Enhabit common stock will begin on the distribution date. If trading begins on a “when-issued” basis, you may purchase or sell Enhabit common stock up to the distribution date, but your transaction will not settle until after the distribution date. Enhabit cannot predict the trading prices for its common stock before, on or after the distribution date.
 
 
 
 
 
What will happen to the listing of Encompass common stock?
Encompass common stock will continue to trade on the NYSE under the symbol “EHC” after the distribution.
 
 
 
 
 
Will the number of shares of Encompass common stock that I own change as a result of the distribution?
No. The number of shares of Encompass common stock that you own will not change as a result of the distribution.
 
 
 
 
 
Will the distribution affect the market price of my Encompass common stock?
Yes. As a result of the distribution, Encompass expects the trading price of shares of Encompass common stock immediately following the distribution to be different from the “regular-way” trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of the Enhabit Business. There can be no assurance whether the aggregate market value of Encompass common stock and Enhabit common stock following the separation will be higher or lower than the market value of Encompass common stock if the separation did not occur. This means, for example, that the combined trading prices of a share of Encompass common stock and [  ] shares of Enhabit common stock after the distribution may be equal to, greater than or less than the trading price of a share of Encompass common stock before the distribution.