UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2016
 
 
U.S. PHYSICAL THERAPY, INC.
(Exact name of registrant as specified in its charter)
 
 
 
         
Nevada
 
1-11151
 
76-0364866
(State or other jurisdiction
of incorporation or organization)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
     
1300 West Sam Houston Parkway South,
Suite 300, Houston, Texas
 
77042
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant's telephone number, including area code: (713) 297-7000
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 
Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Compensatory Arrangements of Executive Officers.

On March 10, 2016, the Compensation Committee approved and adopted the following incentive plans for the Senior Management which includes Mr. Reading, Chief Executive Officer ("CEO"), Mr. McAfee, Chief Financial Officer ("CFO"), and Mr. McDowell, Chief Operating Officer ("COO").
·
Objective Long-Term Incentive Plan for Senior Management for 2016
·
Discretionary Long-Term Incentive Plan for Senior Management for 2016
·
Objective Cash Bonus Plan for Senior Management for 2016
·
Discretionary Cash Bonus Plan for Senior Management for 2016
The above plans are included as Exhibits 10.1, 10.2, 10.3 and 10.4 to this report. The discussions set forth below are qualified in their entirety by reference to such exhibits.
Objective Long- Term Incentive Plan for Senior Management for 2016 ("Objective LTIP"). Under the Objective LTIP, Executives have an opportunity to receive restricted stock awards ("RSAs") under the Amended and Restated 2003 Stock Incentive Plan, as further amended effective April 1, 2013 ("2003 Plan"), to be granted by the Compensation Committee (as the term "Committee" is defined in Section 1.8 of the 2003 Plan) in the first quarter of 2017. The following maximum amounts of RSAs may be granted under this Objective LTIP based upon the achievement of the performance goals relating to earnings per share:  CEO = 15,000 shares; CFO = 7,500 shares; COO = 7,500 shares.  For a complete description of the Objective LTIP refer to Exhibit 10.1, which plan is incorporated herein by reference.

Discretionary Long-Term Incentive Plan for Senior Management for 2016 ("Discretionary LTIP").  The Committee may, in its judgment and at its sole discretion, grant RSAs under the 2003 Plan, based on its evaluation of an Executive's performance and the collective corporate performance for 2016.  The following shall be the maximum amount of shares that may be awarded under this program to each specified participant:  CEO = up to 15,000 shares; CFO = up to 7,500 shares; COO = up to 7,500 shares.  For a complete description of the Discretionary LTIP refer to Exhibit 10.2, which plan is incorporated herein by reference.

Objective Cash Bonus Plan for Senior Management for 2016 ("Objective Cash Bonus Plan") .   Under the Objective Cash Bonus Plan, Executives have an opportunity to receive a cash bonus of up to 75% of the Executive's annual base salary for 2016 ("Base") based on 2016 fully diluted earnings per share (before the impact of earnings per shares of revaluation of non-controlling interests and any extraordinary items and after consideration of the compensation expense required to be reported in 2016 related to the Objective Bonus Plan and all other management incentive plans).  The Base for Mr. Reading is $606,900, Mr. McAfee $438,6000 and Mr. McDowell $408,000. For a complete description of the Objective Cash Bonus Plan refer to Exhibit 10.3, which plan is incorporated herein by reference.

Discretionary Cash Bonus Plan for Senior Management for 2016 ("Discretionary Cash Bonus Plan") . Under the Discretionary Cash Bonus Plan, each Executive has the potential to be awarded a cash bonus of up to 50% of his Base.  This Discretionary Cash Bonus Plan shall be administered by the Committee and the Compensation Committee shall have the sole authority to grant awards and establish the amounts payable under this plan, make all determinations and interpret and construe all of the terms of this plan.  For a complete description of the Discretionary Cash Bonus Plan refer to Exhibit 10.4, which plan is incorporated herein by reference.



 
ITEM 9.01   FINANCIAL STATEMENTS AND EXHIBITS
Exhibits                                                           Description of Exhibits

 10.1
 U. S. Physical Therapy, Inc. Objective Long-Term Incentive Plan for Senior Management for 2016, effective March 10, 2016.*
 10.2
 U. S. Physical Therapy, Inc. Discretionary Long-Term Incentive Plan for Senior Management for 2016, effective March 10, 2016.*
 10.3
 U. S. Physical Therapy, Inc. Objective Cash Bonus Plan for Senior Management for 2016, effective March 10, 2016.*
 10.4  U. S. Physical Therapy, Inc. Discretionay Cash Bonus Plan for Senior Management for 2016, effective March 10, 2016.*
 10.5  Form of Restricted Stock Agreement. *


* Filed herewith.
 
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
               
 
 
 
 
U.S. PHYSICAL THERAPY, INC.
 
         
Dated: March 16, 2016
 
 
 
By:
 
/s/ LAWRANCE W. MCAFEE
 
 
 
 
 
 
 
Lawrance W. McAfee
 
 
 
 
 
 
 
Chief Financial Officer
 
 
 
 
 
 
 
(duly authorized officer and principal
        financial and accounting officer)
 


















EXHIBIT 10.1
 
U.S. PHYSICAL THERAPY, INC. ("USPH")
OBJECTIVE LONG-TERM INCENTIVE PLAN FOR SENIOR MANAGEMENT
FOR 2016 ("Objective LTIP")

Purpose :  To incentivize and retain Executives eligible for this Objective LTIP to achieve certain corporate earnings criteria and reward Executives when such criteria are achieved, and to align the long-term interests of Executives and shareholders of USPH by compensating the Executives in shares of USPH stock that vest over time, thereby increasing the Executives' equity interest in USPH.

Effective Date :  The effective date of this Objective LTIP and the establishment of performance goals and formula for the amount payable hereunder is March 10, 2016.

Eligibility :  The Executives of USPH eligible for this Objective LTIP are the Chief Executive Officer ("CEO"), the Chief Financial Officer ("CEO") and the Chief Operating Officer ("COO").

Vesting and Other Terms and Provisions :  Under this Objective LTIP, Executives have an opportunity to receive Restricted Stock Awards ("RSAs") under the U. S. Physical Therapy, Inc. 2003 Stock Incentive Plan (as amended and restated) (the "2003 Plan"), to be granted by the Compensation Committee of the Board of Directors of USPH (as the term "Committee" is defined in Section 1.8 of the 2003 Plan) in the first quarter of 2017. Before any RSAs are granted, the Compensation Committee shall certify in writing that the performance goals have been obtained in accordance with Code Section 162(m), and any RSAs to be granted hereunder shall be made no later than March 15, 2017. The Executive must be employed by USPH or its affiliates from the Effective Date through the date of the grant to receive a RSA. All RSAs shall be granted subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion. RSAs that are granted under this Objective LTIP will vest evenly over 16 quarters, beginning April 1, 2017 and ending January 1, 2021. To vest, Executive must be a full-time employee/officer of USPH at vesting date, except in the event that an acceleration of vesting is triggered pursuant to Executive's employment agreement.  The terms set forth above and all other terms of any RSA grant shall be set forth in a Restricted Stock Agreement between the Executive and USPH, to be signed by the Executive and by the Chairman of the Compensation Committee (on behalf of USPH).

Administration : The Compensation Committee has established this Objective LTIP under Article VII of the 2003 Plan and the RSAs, if any, granted hereunder are intended to meet the performance-based exception under Code Section 162(m). The Compensation Committee has authority to administer this Objective LTIP, grant awards and decide all questions of interpretation; provided, however, that the Compensation Committee shall have no discretion to increase the maximum award amounts that are payable as provided below and/or otherwise increase or modify an award which would disqualify the award for the performance-based exception under Code Section 162(m). There will be no acceleration of the grant of an award hereunder due to the Executive's termination for cause or without good reason or Executive's voluntary retirement that would violate Code Section 162(m) as provided under Revenue Ruling 2008-13. The Compensation Committee's determinations and interpretations under this Objective LTIP shall be final and binding on all persons.

Objective Goals And Amounts That May Be Awarded :  The maximum amount of RSAs that may be granted under this Objective LTIP based upon the achievement of the performance goals relating to fully diluted earnings per share ("EPS") for 2016 (before the impact of EPS of revaluation of non-controlling interests and any extraordinary items and after consideration of the compensation expense required to be reported in 2016 related to this and all other management incentive plans) are as follows: CEO =  up to 15,000 shares; CFO = up to 7,500 shares; COO = up to 7,500 shares.

Objective Performance Goals Amount of Maximum Shares
2016 EPS That Shall Be Awarded
$1.86   30.0%
$1.87   34.0%
$1.88   38.0%
$1.89   42.0%
$1.90   46.0%
$1.91   50.0%
$1.92   56.0%
$1.93   62.0%
$1.94   68.0%
$1.95   76.0%
$1.96   84.0%
$1.97   92.0%
$1.98 and over 100.0%

                                                                                                                                                                                                                                                                                               
 
 
 
      EXHIBIT 10.2
U.S. PHYSICAL THERAPY, INC. ("USPH")
DISCRETIONARY LONG-TERM INCENTIVE PLAN FOR SENIOR MANAGEMENT
FOR 2016 ("Discretionary LTIP")

Purpose :  To incentivize Executives eligible for this Discretionary LTIP to achieve certain strategic, operational, business growth & development and other criteria and reward Executives when such criteria are achieved, and to align the long-term interests of Executives and shareholders of USPH by compensating the Executives in shares of USPH stock that vest over time, thereby increasing the Executives' equity interest in USPH.

Effective Date :  This Discretionary LTIP is established effective March 10, 2016.

Description of Discretionary Awards Criteria :  In addition to any other awards under the U.S. Physical Therapy, Inc. 2003 Stock Incentive Plan (as amended and restated) (the "2003 Plan") or any other long term incentive plan or bonus plan, policy or program of USPH, and not in lieu of any other such award or payment, the Compensation Committee of the Board of Directors of USPH (as the term "Committee" is defined in Section 1.8 of the 2003 Plan) may, in its judgment and at its sole discretion, grant Restricted Stock Awards ("RSAs") under the 2003 Plan, based on its evaluation of an Executive's performance and the collective corporate performance for 2016. Factors to be considered will include, but shall not be limited to:

1.
General operational management effectiveness relative to external environment
2.
Growth in earnings power and cash flow from operations
3.
Accretive acquisitions
4.
Clinic productivity and efficiency improvements
5.
Initiatives to enhance the overall quality of patient care
6.
Manage organic growth in our existing business segments
7.
Development of add-ons and/or new services that compliment or enhance existing business.
8.
Creative and effective sales and marketing
9.
Same store growth
10.
Regulatory compliance
11.
Maintaining adequate internal controls
12.
Management development and succession planning
13.
Corporate productivity and efficiency improvements
14.
Dividends, share repurchases and other effective means to deploy capital
15.
Investor relations and communication
16.
Cash flow, including management of accounts receivables
17.
Stock price performance


Participants :  Executives who will have an opportunity to be granted RSAs under this Discretionary LTIP shall be the Chief Executive Officer ("CEO"), the Chief Financial Officer ("CFO") and the Chief Operation Officer ("COO"). The following shall be the maximum amount of shares that may be awarded under this program to each specified participant: CEO = up to 15,000 shares; CFO = up to 7,500 shares; COO = up to 7,500 shares.

Administration :  The Compensation Committee shall administer this Discretionary LTIP. The Compensation Committee shall have the exclusive authority to interpret and construe the terms of this Discretionary LTIP and make all determinations under this plan, and its decisions shall be final and binding in all persons.

Award Grant Date :  Any RSAs granted under this program shall be granted under the 2003 Plan in the first quarter of 2017 after the Compensation Committee determines the amount, if any, of the RSAs to be granted to each participant but in all events on or before March 15, 2017. In addition, RSAs shall be granted only if the participant remains employed by USPH (or its affiliates) continuously from the Effective Date through the date of the grant of the RSA. All RSAs shall be granted in writing and subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion. RSAs that are granted under this Objective LTIP will vest evenly over 16 quarters, beginning April 1, 2017 and ending January 1, 2021. To vest, Executive must be a full-time employee/officer of USPH at vesting date, except in the event that an acceleration of vesting is triggered pursuant to Executive's employment agreement. The terms set forth above and all other terms of any RSA grant shall be set forth in a Restricted Stock Agreement between the Executive and USPH, to be signed by the Executive and by the Chairman of the Compensation Committee (on behalf of USPH).

Certain Tax Considerations :  The Compensation Committee in its discretion has determined that this program is not intended to meet the performance-based exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Any awards actually granted under this program shall be subject to Code Section 83(b).

                                                                                                                                                                                                                                                                                                           
 
 
EXHIBIT 10.3
U.S. PHYSICAL THERAPY, INC. ("USPH")
OBJECTIVE CASH BONUS PLAN FOR SENIOR MANAGEMENT
FOR 2016 ("OBJECTIVE BONUS PLAN")

Purpose :  To incentivize and retain Executives eligible for this Objective Bonus Plan to achieve certain corporate earnings criteria and reward Executive Officers of USPH when such criteria are achieved, and to align the long-term interests of Executives and shareholders of USPH.

Effective Date :  The effective date of this Objective Bonus Plan and the establishment of performance goals and formula for the amount payable hereunder is March 10, 2016.

Eligibility :  The Executives of USPH eligible for this Objective Bonus Plan are the Chief Executive Officer ("CEO"), the Chief Financial Officer ("CFO") and the Chief Operating Officer ("COO").

Description, Conditions and Payment Date :  Under this Objective Bonus Plan, Executives have an opportunity to receive a "Cash Bonus" of up to 75% of the Executive's annual base salary for 2016 ("Base") as performance awards under the U. S. Physical Therapy, Inc. 2003 Stock Incentive Plan (as amended and restated). All amounts earned will be awarded by the Compensation Committee of the Board of Directors of USPH (the "Compensation Committee") in the first quarter of 2017. Before any Cash Bonus is paid, the Compensation Committee shall certify in writing that the performance goals have been obtained in accordance with Code Section 162(m), and any Cash Bonus paid hereunder shall be made in a lump-sum amount no later than March 15, 2017. The Executive must be continuously employed by USPH or its affiliates from the Effective Date through December 31, 2016 to receive the Cash Bonus.

Administration :  The Compensation Committee has authority to administer this Objective Bonus Plan, grant awards and decide all questions of interpretation; provided, however, that the Compensation Committee shall have no discretion to increase the maximum award amounts that are payable as provided below and/or otherwise increase or modify an award which would disqualify the award for the performance-based exception under Code Section 162(m). The Compensation Committee's determinations and interpretations under this Objective Bonus Plan shall be final and binding on all persons.




Objective Bonus Calculation :  Based on 2016 fully diluted earnings per share ("EPS") ) (before the impact of EPS of revaluation of non-controlling interests and any extraordinary items and after consideration of the compensation expense required to be reported in 2016 related to this and all other management incentive plans), the goals and amounts payable are as follows:


2016                                          Cash Bonus
 EPS                                          (Compared to Base)
$1.86 15.0%
$1.87                                                        17.0%
$1.88 19.0%
$1.89 21.0%
$1.90 23.0%
$1.91 25.0%
$1.92 28.0%
$1.93 31.0%
$1.94 34.0%
$1.95 38.0%
$1.96 42.0%
$1.97 46.0%
$1.98 50.0%
$1.99 54.0%
$2.00 58.0%
$2.01 62.0%
$2.02 66.0%
$2.03 70.0%
$2.04 and over 75.0%

No Trust or Fund :  There shall be no separate trust or fund for this Objective Bonus Plan. Any amount payable hereunder shall be an unfunded obligation of USPH and shall be payable out of the general assets of USPH and no amount payable shall be assignable by the participant.

Exhibit 10.4
 
U.S. PHYSICAL THERAPY, INC. ("USPH")
DISCRETIONARY CASH BONUS PLAN FOR SENIOR MANAGEMENT
FOR 2016 ("DISCRETIONARY BONUS PLAN")

Purpose :  The purpose of this Discretionary Bonus Plan is to retain and incentivize the Executive Officers of USPH by providing an annual cash bonus opportunity to the Executives to reward them when certain individual and corporate subjective performance measures are achieved.

Participants :  Executives of USPH who shall be "Participants" in this Discretionary Bonus Plan are the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO") and Chief Operating Officer ("COO"). In addition to awards under any other plan or program at USPH for which such Executives are eligible and not in lieu thereof, each Participant in this Discretionary Bonus Plan has the potential to be awarded a "Subjective Bonus" of up to 50% of the Participant's annual base salary for 2016 ("Base") pursuant to the subjective criteria as set forth below.

Effective Date :  This Discretionary Bonus Plan is established effective March 10, 2016.

Administration :  The Compensation Committee of the Board of Directors of USPH (the "Compensation Committee") shall administer this Discretionary Bonus Plan, and the Compensation Committee shall have the sole authority to interpret and construe all of the terms of this Discretionary Bonus Plan, establish the criteria for awards, determine the amounts payable under this plan, and grant awards. The amount, if any, of the Subjective Bonus payable to each participant in this Discretionary Bonus Plan shall be determined by the Compensation Committee in its sole discretion based upon subjective criteria described below. All decisions of the Compensation Committee shall be final and binding on all persons.

Payment Date :  All amounts payable hereunder shall be paid in cash in a lump sum amount after the Compensation Committee has determined that goals have been met and has calculated the amounts payable hereunder, in the first quarter of 2017 but no later than March 15, 2017. A Subjective Bonus shall be payable only if the Participant remains continuously employed from the Effective Date through the date of the determination of the amount payable by the Compensation Committee.

Subjective Bonus Calculation :  The Subjective Bonus criteria that have been established by the Compensation Committee and shall be used in the Compensation Committee's sole discretion to award up to 50% of Base for each participant are as follows :

1.
General operational management effectiveness relative to external environment
2.
Growth in earnings power and cash flow from operations
3.
Accretive acquisitions
4.
Clinic productivity and efficiency improvements
5.
Initiatives to enhance the overall quality of patient care
6.
Manage organic growth in our existing business segments
7.
Development of add-ons and/or new services that compliment or enhance existing business.
8.
Creative and effective sales and marketing
9.
Same store growth
10.
Regulatory compliance
11.
Maintaining adequate internal controls
12.
Management development and succession planning
13.
Corporate productivity and efficiency improvements
14.
Dividends, share repurchases and other effective means to deploy capital
15.
Investor relations and communication
16.
Cash flow, including management of accounts receivables
17.
Stock price performance

No Trust or Fund :  There shall be no separate trust or fund for this Discretionary Bonus Plan. Any amount payable hereunder shall be an unfunded obligation of USPH and shall be payable out of the general assets of USPH and no amount payable shall be assignable by the participant.

Certain Tax Considerations :  The Compensation Committee in its discretion has determined that this program is not intended to meet the performance-based exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Exhibit 10.5
 
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this " Agreement" ) is made and entered into by and between U.S. Physical Therapy, Inc., a corporation organized under the laws of the State of Nevada (the " Company" ) and ___________, an employee of the Company (" Grantee" ), on the 29th day of February, 2016 (the " Grant Date" ), pursuant to the U.S. Physical Therapy, Inc. 2003 Stock Incentive Plan (the " Plan" ).  The Plan is incorporated by reference herein in its entirety.  Capitalized terms not otherwise defined in this agreement shall have the meaning given to such terms in the Plan.
WHEREAS, Grantee is an employee of the Company, and in connection therewith, the Company desires to grant to Grantee _____ shares of the Company's common stock, par value $.01 per share (the " Common Stock" ), subject to the terms and conditions of this Agreement and the Plan, with a view to increasing Grantee's interest in the Company's welfare and growth; and
WHEREAS, Grantee desires to have the opportunity to be a holder of shares of the Common Stock subject to the terms and conditions of this Agreement and the Plan.
NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Grant of Common Stock and Administration.  Subject to the restrictions, forfeiture provisions and other terms and conditions set forth herein (i) the Company grants to Grantee _____ shares of Common Stock ( "Restricted Shares" ) (granted per the lapsing schedule described in 2(a) below), and (ii) Grantee shall have and may exercise all rights and privileges of ownership of such shares, including, without limitation, the voting rights of such shares and the right to receive any dividends declared in respect thereof.  This Agreement and its grant of Restricted Shares is subject to the terms and conditions of the Plan, and the terms and conditions of the Plan shall control except to the extent otherwise permitted or authorized in the Plan and specifically addressed in this Agreement.  The Plan and this Agreement shall be administered by the Committee pursuant to the Plan.
2. Transfer Restrictions.
(a)              Generally .  Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, " Transfer" ) any Restricted Shares. The Transfer restrictions of this Section 2 shall lapse with respect to the ______ Restricted Shares as follows: the Transfer restrictions shall lapse as to _______ shares of the total Restricted Shares on the 1st day of April, 2016 and thereafter as to _____ shares of the Restricted Shares on the first calendar day of each consecutive quarter (July 1, October 1, January 1, April 1) with the all Transfer restrictions lapsing as of January 1, 2020. The Restricted Shares as to which such Transfer restrictions do not apply or so lapse are referred to as " Vested Shares." Notwithstanding the foregoing, any and all Restricted Shares shall immediately become Vested Shares upon any of the following: (i) a Change of Control, (ii) termination of employment based on a Disability (in accordance with Section 9(a) of Grantee's Employment Agreement with the Company, as amended (the "Employment Agreement")), (iii) death of Grantee, (iv) termination of Grantee's employment without "cause" (as defined in Section 9(c) of the Employment Agreement), or (v) resignation of employment by Grantee "for good reason" (as defined in Section 10.F. of Grantee's Employment Agreement).
(b)              Dividends, etc.   If the Company (i) declares a dividend or makes a distribution on Common Stock in shares of Common Stock, (ii) subdivides or reclassifies outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combines or reclassifies outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of shares of Grantee's Common Stock subject to the transfer restrictions of this Section 2 will be proportionately increased or reduced so as to prevent the enlargement or dilution of Grantee's rights and duties hereunder.
3. Forfeiture. 
If Grantee's employment with the Company is terminated by the Company for "cause" (as defined in Section 9(c) of Grantee's Employment Agreement) or terminated by Employee other than as described in Section 2(a) herein, then Grantee shall immediately forfeit all Restricted Shares which are not Vested Shares.  Any Restricted Shares forfeited under this Agreement shall automatically revert to the Company and become canceled and such shares shall be again subject to the Plan.  Any certificate(s) representing Restricted Shares which include forfeited shares shall only represent that number of Restricted Shares which have not been forfeited hereunder.  Upon the Company's request, Grantee agrees for itself and any other holder(s) to tender to the Company any certificate(s) representing Restricted Shares which include forfeited shares for a new certificate representing the unforfeited number of Restricted Shares.
4. Issuance of Certificate.
(a)              The Restricted Shares may not be Transferred until they become Vested Shares.  Further, the Restricted Shares may not be transferred and the Vested Shares may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, any rules of the New York Stock Exchange, or violation of Company policy.  The Company shall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly endorsed in blank with respect to such shares.  Each such stock certificate shall bear the following legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE U.S. PHYSICAL THERAPY, INC. 2003 STOCK INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND U.S. PHYSICAL THERAPY, INC.  A COPY OF THE PLAN AND THE AWARD AGREEMENT ARE ON FILE IN THE CORPORATE OFFICES OF U.S. PHYSICAL THERAPY, INC.
Such legend shall not be removed from the certificate evidencing Restricted Shares until such time as the restrictions imposed by Section 2 hereof have lapsed.
(b)              The certificate issued pursuant to this Section 4 , together with the stock powers relating to the Restricted Shares evidenced by such certificate, shall be held by the Company.  The Company shall issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee.
5. Tax Requirements.
(a)              Tax Withholding .  This grant of Restricted Shares is subject  to and the Company shall have the power and the right to deduct or withhold from other amounts payable to Grantee from the Company, or require the Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan and this Agreement.
6. Miscellaneous.
(a)              Certain Transfers Void .  Any purported Transfer of shares of Common Stock or Restricted Shares in breach of any provision of this Agreement shall be void and ineffectual, and shall not operate to Transfer any interest or title in the purported transferee.
(b)              No Fractional Shares .  All provisions of this Agreement concern whole shares of Common Stock.  If the application of any provision hereunder would yield a fractional share, such fractional share shall be rounded down to the next whole share if it is less than 0.5 and rounded up to the next whole share if it is 0.5 or more.
(c)              Not an Employment or Service Agreement .  This Agreement is not an employment agreement, and this Agreement shall not be, and no provision of this Agreement shall be construed or interpreted to create any right of Grantee to continue employment with or provide services to the Company or any of its Affiliates.
(d)              Notices .  Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the address indicated beneath its signature on the execution page of this Agreement, and to Grantee at his/her address indicated on the Company's stock records, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth.  Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered and receipted for (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested.
(e)              Amendment and Waiver .  This Agreement may be amended, modified or superseded only by written instrument executed by the Company and Grantee.  Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance.  Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee.  The failure of any party at any time or times to require performance of any provisions hereof, shall in no manner effect the right to enforce the same.  No waiver by any party of any term or condition, or the breach of any term or condition contained in this Agreement in one or more instances shall be deemed to be, or construed as, a further or continuing waiver of any such condition or breach or a waiver of any other condition or the breach of any other term or condition.
(f)              Governing Law and Severability .  This Agreement shall be governed by the internal laws, and not the laws of conflict, of the State of Nevada.  The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect.
(g)              Successors and Assigns .  Subject to the limitations which this Agreement imposes upon transferability of shares of Common Stock, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and Grantee's permitted assigns and upon death, estate and beneficiaries thereof (whether by will or the laws of descent and distribution), executors, administrators, agents, legal and personal representatives.
(h)              Community Property .  Each spouse individually is bound by, and such spouse's interest, if any, in any Shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists.
(i)              Entire Agreement .  This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.
(j)              Compliance with Other Laws and Regulations .  This Agreement, the grant of Restricted Shares and issuance of Common Stock shall be subject to all applicable federal and state laws, rules, regulations and applicable rules and regulations of any exchanges on which such securities are traded or listed, and Company rules or policies.  Any determination in which connection by the Committee shall be final, binding and conclusive on the parties hereto and on any third parties, including any individual or entity.
(k)              Independent Legal and Tax Advice .  The Grantee has been advised and Grantee hereby acknowledges that he/she has been advised to obtain independent legal and tax advice regarding this Agreement, grant of the Restricted Shares and the disposition of such shares, including, without limitation, the election available under Section 83(b) of the Internal Revenue Code.
7. Counterparts. This Agreement may be executed in multiple original counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.
8. Grantee's Acknowledgments. The Grantee acknowledges receipt of a copy of the Plan and represents that he/she is familiar with the terms and provisions thereof, and hereby accepts this Agreement subject to all the terms and provisions of the Plan and this Agreement. The Grantee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written.
COMPANY :


By:                      _____________________________
    Lawrance W. McAfee
Title:                            Chief Financial Officer
Address:                      1300 W Sam Houston Parkway South
    Suite 300
    Houston, Texas 77042
Telecopy No.:  713-297-6339
Attention:  Chief Financial Officer

GRANTEE :
__________________________________________