Class Action Settlement Agreement




 Exhibit 10.34 
  
 IN THE UNITED STATES DISTRICT COURT 
 FOR THE NORTHERN DISTRICT OF ALABAMA 
  

					
	 	 	 X
	  	 
	 	 	   :
	  	 
	 	 	   :
	  	 
	 IN RE HEALTHSOUTH CORP. ERISA LITIGATION
	 	   :
	  	             CV-03-BE-1700

	 	 	   :
	  
	 	 	 X
	  	 

  
 CLASS ACTION SETTLEMENT
AGREEMENT 
  
 This CLASS ACTION SETTLEMENT AGREEMENT
(“Settlement Agreement”) is entered into by and among Settlement Class Representatives for themselves and on behalf of the Settlement Class, the Settling Defendants and the Underwriters. Italicized and
capitalized terms and phrases have the meanings provided in Section 1 below. 
  
 RECITALS 
  
 WHEREAS,
Settlement Class Representatives have commenced actions comprising the ERISA Action asserting various Claims for relief against the Settling Defendants and others, all of which Claims are disputed by the
Settling Defendants; 
  
 WHEREAS, a dispute exists with
respect to the existence and/or extent of insurance coverage available or exclusions or policy defenses applicable to certain Defendants under the Insurance Policies; 
  
 WHEREAS, the parties have engaged in mediation before Eric Green (the “Mediator”) to explore settlement
possibilities, and the Mediator has conducted a series of mediation sessions in which the Settling Parties have participated; 
  
 WHEREAS, the Settling Parties are desirous of promptly and fully resolving and settling with finality all of the Released Claims asserted by
Settlement Class Representatives, for themselves and on behalf of the Settlement Class, against the Settling Defendants, and the Settling Defendants and Underwriters are desirous of promptly and fully resolving and
settling with finality any Claims against each other relating to the Insurance Policies; 








 WHEREAS, to accomplish that goal, the Settling Parties have reached a settlement by and through
their respective undersigned counsel on the terms and conditions set forth in this Settlement Agreement; 
  
 WHEREAS, on June 3, 2005, the Settling Parties executed a term sheet setting forth their settlement agreement in principle, and pursuant
thereto, on June 17, 2005, the Settling Defendants and the Underwriters deposited the Settlement Amount into the Settlement Fund; 
  
 NOW, THEREFORE, the Settling Parties, in consideration of the promises, covenants and agreements herein described and
for other good and valuable consideration acknowledged by each of them to be satisfactory and adequate, and intending to be legally bound, do hereby mutually agree as follows: 
  
 1. As used in this Settlement Agreement, italicized and capitalized terms and phrases not otherwise defined have the
meanings provided below: 
  
 1.1 “Affiliate”
shall mean: any entity which owns or controls, is owned or controlled by, or is under common ownership or control with, a Person. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise. 
  
 1.2 “Agreement Execution Date” shall mean: the date on which this Settlement Agreement is fully
executed, as provided in Section 20.12 below. 
  
 1.3
“Approval Order” shall have the meaning set forth in Section 2.2. 
  
 1.4 “Bar Order” shall have the meaning set forth in Section 2.2 below. 
  
 1.5 “Bar Order Notice” shall mean: the form of notice appended as Exhibit C to the form of Preliminary Approval Order
attached hereto as Exhibit     . 
  
 1.6 “Barred Persons” shall have the meaning set forth in Section 9.1. 
  

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 1.7 “Claims” shall mean: any and all claims of any nature whatsoever (including claims
for any and all losses, damages, unjust enrichment, attorneys’ fees, disgorgement of fees, litigation costs, injunction, declaration, contribution, indemnification or any other type or nature of legal or equitable relief), whether accrued or
not, whether already acquired or acquired in the future, whether known or unknown, in law or equity, brought by way of demand, complaint, cross-claim, counterclaim, third-party claim or otherwise. 
  
 1.8 “Class Exemption “ shall mean: Prohibited Transaction
Exemption 2003- 39, “Release of Claims and Extensions of Credit in Connection with Litigation” issued December 31, 2003, by the United States Department of Labor, 68 Fed. Reg. 75,632. 
  
 1.9 “Class Notice” shall mean: the form of notice appended
as Exhibit A to the form of Preliminary Approval Order attached hereto as Exhibit 1. 
  
 1.10 “Class Period” shall mean: the period from January 1, 1996 to the date of the Fairness Hearing. 
  
 1.11 The “Company” shall mean: HEALTHSOUTH Corporation, a Delaware corporation, each of its Affiliates, as well as each of its
predecessors and Successors-In-Interest. 
  
 1.12 The
“Court” shall mean: the United States District Court for the Northern District of Alabama. 
  
 1.13 “Custodian” shall mean: Wells Fargo Bank, N.A., as custodian of the Settlement Fund. 
  
 1.14 “Derivative Actions” shall mean all derivative actions
filed by shareholder plaintiffs in the name of the Company, including but not limited to Tucker v. Scrushy, No. CV-02-5212 (Ala. Cir. Ct). 
  

1.15 “DOL “ shall mean: the United States Department of Labor. 
  
 1.16 “ERISA “ shall mean: the Employee Retirement Income Security Act of 1974, as amended, including all
regulations promulgated and case law thereunder. 
  
 1.17
“ERISA Action” shall mean: In re HealthSouth Corp. ERISA Litigation, CV-03-BE-1700, a consolidated action pending in the Court, and any and all cases now or hereafter consolidated therewith. 
  
 1.18 “Fairness Hearing “ shall have the meaning set forth in
Section 2.2. 
  

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 1.19 “Final” shall mean: with respect to the Approval Order, that such order
shall have been entered by the Court and the time for appeal or writ of certiorari shall have expired without the initiation of an appeal or petition for writ of certiorari, or, if an appeal or petition for writ of certiorari has been timely
initiated, that there has occurred a full and final disposition of any such appeal or writ of certiorari without a reversal or modification, including the exhaustion of proceedings in any remand and/or subsequent appeal after remand. Notwithstanding
any other provision hereof, the Approval Order shall be deemed Final regardless of whether the Court has entered an order regarding the Plan of Allocation or the award of legal fees and expenses and regardless of whether
any such order, if entered, has become Final. 
  
 1.20
“Independent Fiduciary” shall mean: a Plan fiduciary retained at the Company’s expense that has no “relationship to” or “interest in” (as those terms are used in the Class Exemption) any
of the Settling Parties. 
  
 1.21 “Insurance
Policies” shall mean: (a) Federal Insurance Company Excess Policies Nos. 5152-84-82 and 8152-84-82A-BHM; and (b) Travelers Casualty & Surety Company of America Policy No. 076 FF 103027063 BCM. 
  
 1.22 “Judgment Reduction Amount” shall have the meaning set
forth in Section 10. 
  
 1.23 “Lead Counsel”
shall mean: Keller Rohrback, L.L.P., as lead counsel for the Settlement Class Representatives in the ERISA Action. 
  
 1.24 “Mediator” shall mean: Eric Green. 
  
 1.25 “Named Settling Defendants” shall mean: the Company, Brandon Hale, Dennis Wade, Kimberly McCracken, Marca Pearson, Barbara
Roper, Philip Watkins, James P. Bennett, P. Daryl Brown, John S. Chamberlin, Larry D. Striplin, Jr., Charles W. Newhall, III, George H. Strong, Richard F. Celeste, C. Sage Givens, Joel C. Gordon, Larry R. House, Anthony J. Tanner, Raymond J. Dunn,
III, Allan R. Goldstein, Robert P. May, Jan L. Jones, Jon F. Hanson and Lee S. Hillman. 
  
 1.26 “Net Settlement Amount” shall have the meaning set forth in Section 5. 
  
 1.27 “Non-Settling Defendants” shall mean: Richard Scrushy, Aaron Beam, Jr., Michael D. Martin, and William T. Owens. 
  
 1.28 “Person” shall mean: an individual, partnership,
corporation, governmental entity or any other form of entity or organization. 
  

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 1.29 “Plan” shall mean: the HealthSouth Corporation Employee Stock Benefit Plan,
including all amendments thereto in effect at any point between January 1, 1991 and the present. 
  
 1.30 “Plan of Allocation” shall mean: the plan of allocation approved by the Court as contemplated by Section 13. 

 
 1.31 “Preliminary Approval Order” shall have the meaning
set forth in Section 2. 
  
 1.32 “Preliminary
Motion” shall have the meaning set forth in Section 2. 
  
 1.33 “Released Claims” shall have the meaning set forth in Section 7. 
  
 1.34 “Releasees” shall mean: the Settling Defendants, the Plan, the Underwriters, and the present and former
Representatives of each of them; provided, however, that Releasees shall not include the Non-Settling Defendants. 
  
 1.35 “Representatives” shall mean: representatives, attorneys, agents, directors, officers, employees, insurers and reinsurers.

  
 1.36 “RICO” shall mean: the Racketeer
Influenced and Corrupt Organizations Act of 1970, as amended, including all regulations promulgated and case law thereunder. 
  
 1.37 “Securities Actions” shall mean: all securities actions pertaining to the Company, including but not limited to the action
proceeding as a consolidated class action captioned In re HealthSouth Corp. Securities Litig., No. CV-03-BE-1500-S (N.D. Ala.), and all actions that are or will be consolidated therein. 
  
 1.38 “Settlement” shall mean: the settlement to be
consummated under this Settlement Agreement pursuant to the Approval Order. 
  
 1.39 “Settlement Agreement” means this Class Action Settlement Agreement. 
  
 1.40 “Settlement Amount” shall mean: $25,000,000. 
  
 1.41 “Settlement Class” shall have the meaning set forth in Section 12. 
  
 1.42 “Settlement Class Representatives” shall mean: the
following Persons, as plaintiffs on behalf of themselves and on behalf of all members of the Settlement Class: Kim Coggins, Kim French, and Robert J. Lancaster and each of their Successors-In-Interest. Settlement Class
Representatives intend that all rights and obligations that are binding on Settlement Class Representatives under this 

  

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Settlement Agreement, including each and every covenant, agreement, and warranty, also shall be binding on all members of the Settlement Class.

  
 1.43 “Settlement Fund” shall mean: an
account established by Lead Counsel at Wells Fargo Bank, N.A., denominated Healthsouth ERISA Litigation Settlement Fund. 
  
 1.44 “Settling Defendants” shall mean: the Named Settling Defendants, each of their respective Affiliates, predecessors,
and Successors-in-Interest, and, except for the individuals identified as Non-Settling Defendants, any directors, officers or employees of the Company. 
  
 1.45 “Settling Defendant’s Counsel” or “Underwriter’s Counsel” shall mean, for
each Settling Defendant or Underwriter, as the case may be, the counsel identified as such Settling Defendant’s or Underwriter’s counsel in Section 20.9. 
  
 1.46 “Settling Parties” shall mean: the Settlement Class
Representatives, the Settling Defendants, and the Underwriters. 
  
 1.47 “Successor-In-Interest” shall mean: a Person’s estate, legal representatives, heirs, successors or assigns. 
  
 1.47 “Underwriters” shall mean: Travelers Casualty & Surety Company of America and Federal
Insurance Company and each of their respective Affiliates, predecessors, and Successors-ln-Interest. 
  
 2. As soon as practicable following the complete execution of this Settlement Agreement by all Settling Parties, Settlement Class
Representatives will file a motion (“Preliminary Motion”) with the Court for an order substantially in the form annexed hereto as Exhibit 1, including the exhibits thereto (the “Preliminary Approval Order”).
The Settlement Class Representatives and the Settling Defendants shall request that a preliminary hearing to consider the compromise and settlement before the Court be held as soon as practicable thereafter. 
  
 2.1 On the date and in the manner set by the Court in
its Preliminary Approval Order, the Settlement Class Representatives shall cause the Class Notice and the Bar Order Notice to be (a) transmitted in the form and manner approved by the Court to the Persons
as directed by the Court in the Preliminary Approval Order, and (b) published as directed by the Court in the Preliminary Approval Order. Costs associated with the publication and service of notice, establishment
of the Settlement Fund, and tax payments relating to the Settlement Fund shall be paid from the 
  

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Settlement Amount. Lead Counsel agrees to be responsible for arranging publication and distribution of the Class Notice and Bar Order Notice
to the proposed Settlement Class and other Persons as required by the Preliminary Approval Order. The Settling Defendants and the Underwriters shall have no responsibility for providing publication or
distribution of the Settlement or the notice of the Settlement to the Settlement Class, but Settling Defendants reserve the right to approve the contents of the Class Notice and the Bar Order Notice. The
Settlement Class Representatives and the Settling Defendants shall request that a hearing before the Court to consider final approval of the Settlement be held as soon as possible following preliminary approval and due
and proper notice being served or published. 
  
 2.2 On or after the date set by the Court for the hearing to consider final approval of the Settlement (the “Fairness Hearing”) the Settlement Class Representatives and the Settling Defendants
shall request that the Court determine: (i) whether to enter judgment finally approving the Settlement and entering a bar order satisfying all of the terms of Section 9 below (the “Bar Order”), all
substantially in the form attached hereto as Exhibit 2 (which judgment is referred to herein as the “Approval Order”); (ii) whether the distribution of the Settlement Amount as provided in the Plan of Allocation
should be approved; and (iii) what legal fees, compensation and further expenses should be awarded or reserved for award to Lead Counsel and other counsel for Settlement Class Representatives as contemplated by Section 4
of this Settlement Agreement. 
  
 3. Settlement Class
Representatives, on behalf of the Settlement Class and the Plan, agree to settle and fully resolve the Claims asserted in the ERISA Action against the Settling Defendants for the Settlement Amount.

  
 3.1 In consideration of all the promises and
agreements set forth in this Settlement Agreement, the Underwriters and the Company have caused the Settlement Amount to be deposited into the Settlement Fund. Interest earned on the Settlement Amount shall
be applied to the expenses of settlement administration, if any, or otherwise shall accrue for the benefit of the Settlement Class. The Settlement Fund shall be invested only in United States Treasury securities, and/or securities
issued by government entities backed by the full faith and credit of the United States Treasury, and/or securities of United States Government Sponsored Enterprises that carry a 

  

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rating of Aaa, and money market mutual funds that invest exclusively in the foregoing securities. 
  
 3.2 The Settlement Fund shall be structured and
managed to qualify as a Qualified Settlement Fund under Section 468B of the Internal Revenue Code and Treasury regulations promulgated thereunder and shall make tax filings and provide reports to Lead Counsel for tax purposes. The
Settling Parties shall not take a position in any filing or before any tax authority inconsistent with such treatment. 
  
 3.3 The Settlement Amount shall be the full and sole monetary payments made by or on behalf of the Settling Defendants and
the Underwriters to the Settlement Class in connection with the Settlement. Nothing herein or in the Settlement Agreement shall bar, or otherwise affect, any claims between or among the Named Settling Defendants.

  
 4. Upon the entry by the Court of the Approval Order
and an order granting Lead Counsel’s request for attorneys’ fees and costs as contemplated by Section 2.2(iii), Lead Counsel shall be entitled to withdraw from the Settlement Fund attorneys’ fees and
costs as approved by the Court based on the common fund doctrine. Settling Defendants shall take no position with respect to the amount of the costs or attorneys’ fees sought by Lead Counsel in this matter, and shall leave
the amount to the sound discretion of the Court. Upon the entry by the Court of the Approval Order, the three Settlement Class Representatives may apply to the Court for compensation in an amount not to exceed five
thousand dollars ($5,000) for each of the three Settlement Class Representatives, payable solely from the Settlement Fund to the extent awarded by the Court. The Court’s consideration of Lead Counsel’s
request for attorneys’ fees and costs and the Settlement Class Representatives’ application for compensation are matters separate and apart from the Settlement between the Settling Parties, and no decision by the
Court concerning the Lead Counsel’s attorneys’ fees and costs or the Settlement Class Representatives’ compensation shall affect the validity of the Settlement Agreement or finality of the Settlement
in any manner. 
  
 5. The Settlement Amount plus
interest earned, less costs of administration pursuant to Section 2.1, Lead Counsel’s reasonable expenses, costs, and attorneys’ fees, and Settlement Class Representatives’ compensation as approved by the
Court (“Net Settlement Amount”), shall be released from escrow and paid to the Plan, subject to the procedures set forth in Section 6, upon written notification to the Custodian that the Approval Order
is Final. The Net Settlement Amount will be 

  

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paid to the Plan in order to preserve to the fullest extent possible its tax protected status under ERISA. 
  
 5.1 Within 180 days after the Approval Order becomes
Final, the Company shall take any action that it deems necessary or appropriate, as determined in its sole discretion, including but not limited to amending, terminating, or in any way changing the Plan, with the intent that the
Net Settlement Amount is not invested or paid from the Plan as benefits in the form of the Company’s common stock, and is not invested in cash except as necessary to administer the Plan. Such amendments or changes may
include, but are not limited to, any amendments or changes to the Plan that permit all or a portion of the Net Settlement Amount allocated to Class members who are then current participants in the HealthSouth Retirement Investment Plan
to be invested by them in the same or similar investment options available under the HealthSouth Retirement Investment Plan or successors thereto. 
  
 6. In the event the Approval Order is not approved by the Court or does not become Final, the Settling Parties shall negotiate
in good faith in order to modify the terms of the Settlement Agreement in order to revive the Settlement. In the event that such efforts are not successful: 
  
 (i) the Settlement Amount, plus any interest at the rate of the escrow account, minus the amount
already reasonably applied to costs of Settlement as permitted in Section 2.1, shall be immediately returned to the Company and the Underwriters in proportion to the parties’ contributions thereto, less a reserve
sufficient to meet the income tax liability of the Settlement Fund with respect to its earnings, with Lead Counsel being jointly and severally liable for any failure to return this amount; 
  
 (ii) the Settling Defendants will not be deemed to
have consented to the certification of any class, and the agreements and stipulations in this Settlement Agreement concerning class definition or class certification shall not be used as evidence or argument to support class certification or
class definition, and the Settling Defendants will retain all rights to oppose class certification, including certification of a class identical to that provided for in this Settlement Agreement for any other purpose; and 

 
 (iii) the Settlement and this Settlement
Agreement, including but not limited to the releases and orders therein, shall become null and void and of no further force and effect, the parties shall be deemed to have reverted to 

  

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their respective status and positions as of the date immediately before the date of the execution hereof, and the parties shall proceed in all respects as if
this Settlement Agreement had not been executed. 
  
 7.
Upon the entry of the Approval Order by the Court, Settlement Class Representatives, on behalf of the Settlement Class and the Plan, will absolutely and unconditionally release and discharge the Releases from:

  
 (i) any and all ERISA-based and
RICO-based Claims related to the acquisition, disposition, or retention of stock by the Plan and/or its fiduciaries during the Class Period; 
  
 (ii) any and all Claims related to the appointment, removal, or monitoring of any fiduciary for the
Plan; 
  
 (iii) any and all Claims
related to the preparation or dissemination, directly or indirectly, to Plan participants and beneficiaries of information relating to Company stock; 
  
 (iv) any and all Claims related to the Insurance Policies; 
  
 (v) any and all ERISA-based Claims asserted,
or that could have been asserted, in the ERISA Action and ERISA-based Claims, known or unknown, arising from or related to the acts, omissions, facts or events alleged in the ERISA Action; 
  
 (vi) any and all Claims in connection with, based
upon, arising out of, or relating to the Settlement, but excluding Claims to enforce the terms of the Settlement; and 
  
 (vii) any and all Claims based upon, arising out of, or relating to any Person’s liability to the Settlement Class
or the Plan for Claims set forth in any of the preceding subsections (i) through (vi), 
  
 and any fees, costs, judgments, and/or settlement amounts arising out of such Claims. The Claims described above in this paragraph shall be referred to collectively as the Released Claims. Released
Claims do not include and Settlement Class Representatives cannot release any securities Claims brought or that could have been brought in the Securities Actions, or insurance for such Claims, if any. Released
Claims do not include and Settlement Class Representatives and the Company cannot 

  

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release any Claims brought or that could have been brought in the Derivative Actions, or insurance for such Claims, if any. Released
Claims do not include and Settlement Class Representatives cannot release any benefit Claims or other ERISA-based Claims that any individual Plan participant or beneficiary has now or may have in the future with
respect to the Plan or any other Company benefit plan, to the extent that such Claims do not relate to or arise out of the Released Claims and/or the ERISA Action. 
  
 8. This Settlement Agreement will not release or in any way bar,
preclude, or compromise the Claims in the ERISA Action that the Settlement Class Representatives and the Settlement Class have asserted against the Non-Settling Defendants. Nor will this Settlement Agreement
release or in any way bar, preclude, or compromise any Claims, demands, interests, rights or obligations that the Settling Parties may have with respect to insurance other than the Insurance Policies. 
  
 9. It is an essential element to the Settling Defendants’ and the
Underwriters’ participation in the Settlement that they obtain the fullest possible release from further liability to anyone relating to the Released Claims, as set forth below, and it is the intention of the Settling
Parties that the Settlement eliminate all further risk and liability of the Settling Defendants and the Underwriters relating to the Released Claims, as set forth below. Accordingly, the Settling Parties agree
that the Court shall include in the Approval Order a Bar Order that meets all of the following requirements, or such lesser requirements as are acceptable to the Settling Defendants and the Underwriters:

  
 9.1. All Released Claims brought by
any Person (except any Named Settling Defendant, the Underwriters, or the DOL) against the Settling Defendants or the Underwriters shall be permanently barred, including but not limited to any Claim
for contribution or indemnification (whether contractual or otherwise), and any Person receiving notice of the Class Notice or the Bar Order Notice, or having actual knowledge of the Class Notice or the Bar Order
Notice, or having actual knowledge of sufficient facts that would cause such Person to be charged with constructive notice of the Class Notice or the Bar Order Notice (except any Named Settling Defendant, the
Underwriters, or the DOL) shall be permanently enjoined from bringing, either derivatively or on behalf of themselves, or through any Person purporting to act on their behalf or purporting to assert a Claim under or
through them, any Released Claims against the Settling Defendants or the Underwriters in any forum, action or 

  

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proceeding of any kind. For purposes of the Settlement Agreement and Bar Order, Barred Persons shall be defined as any Person who is
barred and/or enjoined by this Section 9.1; including, but not limited to, Settlement Class Representatives, the Settlement Class, the Plan, and the Non-Settling Defendants, but not including any Named Settling
Defendant, Underwriter or the DOL; 
  
 9.2. From and after the date of its entry, the Bar Order shall permanently bar and enjoin all Claims by any Barred Person or any Settling Party against the Underwriters, and each of them, (i) under or
in any way involving the Insurance Policies, or (ii) upon any Released Claim or for coverage under the Insurance Policies for any Released Claim; provided, however, that nothing in the Settlement Agreement or
Bar Order in any way bars or enjoins the Settling Defendants from asserting any rights they may have under any insurance policies other than the Insurance Policies, or from bringing or maintaining any Claims, whether
direct or indirect, to the extent that such Claims are not based on the Insurance Policies and are based upon, arise from, are in consequence of or relate to litigation other than the ERISA Action, including, but not limited to,
the Securities Actions and the Derivative Actions, irrespective of the extent, if any, to which such rights and Claims may be related to the Released Claims and/or the ERISA Action; 
  
 9.3. The Settling Defendants shall be permanently
barred and enjoined from bringing against the Barred Persons, either derivatively or on behalf of themselves, or through any Person purporting to act on their behalf or purporting to assert a Claim under or through them, any of
the Released Claims in any forum, action or proceeding of any kind; provided, however, that a Settling Defendant shall not be barred or enjoined from bringing Released Claims against a Barred Person if for any reason such
Barred Person asserts, or is legally not barred by the Bar Order from bringing Released Claims against such Settling Defendant; and further provided that nothing in the Settlement Agreement or Bar Order in
any way bars or enjoins the Settling Defendants from asserting any rights they may have under any insurance policies other than the Insurance Policies, or from bringing or maintaining any Claims, whether direct or indirect, to
the extent that such Claims are not based on the Insurance Policies and are based upon, arise from, are in consequence of or relate to 
  

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litigation other than the ERISA Action, including, but not limited to, the Securities Actions and the Derivative Actions, irrespective
of the extent, if any, to which such rights and Claims may be related to the Released Claims and/or the ERISA Action; 
  
 9.4. The Underwriters shall be permanently barred and enjoined from bringing any Released Claim against any Settling
Party or Barred Person, either derivatively or on behalf of themselves, or through any Person purporting to act on their behalf or purporting to assert a Released Claim under or through them, in any forum, action or
proceeding of any kind; provided, however, that an Underwriter shall not be barred or enjoined from bringing Released Claims against a Barred Person if for any reason such Barred Person asserts, or is legally not barred
by the Bar Order from bringing Released Claims against such Underwriter; and further provided that nothing in this Settlement Agreement or Bar Order in any way bars or enjoins the Underwriters from asserting
any rights they may have under any insurance policies other than the Insurance Policies, or from bringing or maintaining any Claims, whether direct or indirect, to the extent that such Claims are not based on the Insurance
Policies and are based upon, arise from, are in consequence of or relate to litigation other than the ERISA Action, including, but not limited to, the Securities Actions and the Derivative Actions, irrespective of the
extent, if any, to which such rights and Claims may be related to the Released Claims and/or the ERISA Action; 
  
 9.5. Because the Barred Persons are barred from asserting any Released Claims against the Releasees, any judgments
entered against Barred Persons in the ERISA Action will be reduced by the Judgment Reduction Amount as that term is defined in Section 10; 
  
 9.6. Nothing in the Settlement Agreement or in the Bar Order shall in any manner limit any
joint and several liability applicable to any Non-Settling Defendant under ERISA as to the portion of any judgment against such Non-Settling Defendant in the ERISA Action remaining after application of
any Judgment Reduction Amount provided for in this Settlement Agreement; 
  
 9.7. Nothing in the Settlement Agreement or Bar Order shall be deemed to create or acknowledge the existence or validity of


  

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any Claim of the Barred Persons or limit any defense to any such Claim; 
  
 10. The Court shall include a Judgment Credit with respect to the Barred Persons that shall provide as
follows: 
  
 10.1. “Judgment Reduction
Amount” shall mean, with respect to any Barred Person, an amount determined by the Court at the time of entry of any judgment against such Barred Person, equal to the greatest of (a) the “Settlement
Credit,” and (b) the “Contribution Credit” with such terms having the following meanings: 
  
 10.2. The “Settlement Credit” shall mean (a) $25 million – constituting the aggregate of the Settlement
Amount, unless the Court shall determine when assessing liability against the Barred Person that some portion of the damages claimed which were settled by the Settlement, are different from those for which the Barred
Person is liable, then (b) $25 million minus the portion of the Settlement Amount determined by the Court to have been paid with respect to such different damages claimed; provided that the Settlement Credit shall not
reduce the total amount of the Settlement Class’ recovery against all Barred Persons by more than the Settlement Amount; and further provided that nothing in this paragraph shall permit the Settlement Class to
recover more than their total amount of damages for the Claims asserted in the ERISA Action; 
  
 10.3. To the extent the Court finds that a right of contribution or equitable indemnity exists under ERISA, the
“Contribution Credit” shall mean an amount equal to the value of the contribution or equitable indemnification Claim, if any, that the Court determines such Barred Person would be entitled to assert against one
or more Settling Defendants but for operation of the Bar Order, which shall be equal to the aggregate proportionate shares of liability, if any, of the Settling Defendants as determined by the Court at the time of entry
of any judgment against any Barred Person, adjusted to reflect any limitation on the financial capability of any Settling Defendants to pay their respective proportionate shares of liability to the Barred Person had the
Barred Person obtained a contribution or equitable 

  

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indemnification judgment against them in such amount, or in the absence of the Settlement, had a judgment been entered against any or all Settling
Defendants in this case; 
  
 10.4 Nothing
herein shall be construed as indicating that ERISA provides contribution or indemnity rights among fiduciaries, and Settlement Class Representatives expressly dispute that any such right or entitlement exists under ERISA. In
addition, nothing herein or in the Settlement Agreement shall be deemed to create or acknowledge the existence or validity of any Claim of the Barred Persons or limit any defense to any such Claim. 
  
 11. Upon entry of the Approval Order by the Court, the
Settling Defendants will absolutely and unconditionally release and discharge any and all past, present, or future Claims or causes of action (including bad faith Claims), whether known or unknown, under or relating to
the Insurance Policies and against the Underwriters. Subject to Section 9.4, the Underwriters shall release any and all past, present, or future Claims or causes of action (including without limitation any
subrogation or fraud Claims against any Person), whether known or unknown, under or relating to the Insurance Policies and against the Settling Defendants. Nothing in this Settlement Agreement or Bar
Order in any way bars or enjoins the Settling Defendants or the Underwriters from asserting any rights they may have under any insurance policies other than the Insurance Policies, or from bringing or maintaining against any
Person any Claims, whether direct or indirect, to the extent that such Claims are not based on the Insurance Policies and are based upon, arise from, in consequence of or relate to litigation other than the ERISA
Action, including, but not limited to, the Securities Actions and the Derivative Actions, notwithstanding that such rights and Claims may be related to the Released Claims. 
  
 12. The Settlement Class Representatives and the Settling
Defendants agree to jointly petition the Court for certification, pursuant to Rule 23(b)(l) and/or 23(b)(2), of a non-opt-out class for settlement purposes only consisting of: (a) all Persons who held any Company stock
in their Plan accounts at any time during the Class Period, and (b) all beneficiaries, successors-in-interest, and any other payees of any Plan participant with respect to the Plan participant’s Claim in
the ERISA Action, except specifically excluding from the Settlement Class Brandon Hale, Philip Watkins, James P. Bennett, P. Daryl Brown, John S. Chamberlin, Larry D. Striplin, Jr., Charles W. Newhall, III, George H. Strong, C. Sage
Givens, Joel C. Gordon, Larry R. House, Anthony J. Tanner, Raymond J. Dunn, III, Allan R. Goldstein, Robert P. May, Jan L. Jones, Jon F. Hanson, Lee S. Hillman, Richard M. Scrushy, 

  

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Aaron Beam, Jr., Michael D. Martin, and William T. Owens. For purposes of this Settlement Agreement, the term “Settlement Class”
shall refer both to each Person described in (a) and (b), and all of them collectively. This petition will be included in the joint motion(s) for Preliminary and Final Approval of the Settlement. A non-opt-out class is an
essential condition of the Settlement. 
  
 13. Prior to the
Fairness Hearing, Settlement Class Representatives shall propose a Plan of Allocation with respect to the Net Settlement Amount, which shall be submitted to the Court for approval. The costs (but not including Lead
Counsel’s attorneys’ fees) of allocating the Settlement Amount pursuant to the Plan of Allocation shall be split evenly by the Company and the Settlement Class, with the Settlement Class’s 50%
portion paid by the Plan. Lead Counsel shall administer the allocation and distribution of the Settlement Amount. Settling Defendants shall in good faith facilitate the allocation process by providing Plan and participant and
beneficiary information that is necessary for the allocation process. To the extent that the Plan record keeper or other agents of the Plan are required under existing contracts to perform services pertaining to the allocation of the
Settlement Amount, any additional charges for such services shall not be included in the costs of allocating the Settlement Amount, and shall be paid by the Company. Neither the Settling Defendants nor the Underwriters
shall have responsibility for the allocation and distribution of the Settlement Amount, and neither the Settling Defendants nor the Underwriters shall have liability to the Settlement Class Representatives or
Settlement Class for such allocation and distribution. Neither the Settling Defendants nor the Underwriters shall take any position with respect to the Plan of Allocation, and, instead, will leave the matter to the sound
discretion of the Court. Lead Counsel shall furnish the Plan of Allocation to the Independent Fiduciary prior to submission thereof to the Court, and shall consider in good faith any comments of the Independent
Fiduciary on the proposed Plan of Allocation. If Lead Counsel and the Independent Fiduciary are unable to reach agreement with respect to the proposed Plan of Allocation, the Independent Fiduciary shall have
the right to comment on or object to the proposed Plan of Allocation submitted to the Court by Lead Counsel. The Plan of Allocation is a matter separate and apart from the Settlement between the Settling
Parties, and no decision by the Court concerning the Plan of Allocation shall affect the validity of the Settlement Agreement or finality of the Settlement in any manner. 
  
 14. The Settling Parties agree that the Court shall retain
exclusive jurisdiction to resolve any disputes or challenges that may arise as to the performance of the Settlement Agreement or any challenges as to the performance, validity, interpretation, administration, enforcement or enforceability of
the Class 

  

 16 









 
Notice, the Bar Order or this Settlement Agreement or the termination of this Settlement Agreement; except as otherwise directed
by the Court or by separate agreement of the Settling Parties. 
  
 15. The Settling Parties agree that the Settlement Agreement is a compromise of disputed Claims, and that nothing in this Settlement Agreement shall be an admission of, or constitute a
finding of: (i) fiduciary status under ERISA or wrongdoing by or liability of any of the Settling Defendants in the ERISA Action or any other proceeding; or (ii) coverage under the Insurance Policies or
wrongdoing or liability of the Underwriters. This Settlement Agreement shall not be offered or received in evidence in the ERISA Action or any other action for any purpose other than enforcement of the Settlement
Agreement. 
  
 16. Each Settling Party shall have the
right, in his, her or its sole discretion, to terminate this Settlement Agreement at any time up until the Court issues its Approval Order if: (a) the Plan, acting through an Independent Fiduciary, does not
approve the Settlement Agreement and does not grant a release, effective upon the Court’s entry of the Approval Order, containing the same terms and conditions of the Settlement Agreement, or if different, terms
mutually agreeable to the Settling Parties, and that meets the requirements of the Class Exemption, or (b) the DOL files any objection to the Settlement Agreement in the Court, brings a Claim against
any Settling Defendant relating to the Released Claims, or notifies any Settling Defendant that it intends to file such a Claim; and, with respect to subsections (a) and/or (b), the Settling Parties have been
unable in good faith to negotiate a resolution, despite their best efforts. In the event of such termination, this Settlement Agreement shall be null and void in toto. The costs of retaining an Independent Fiduciary shall be borne by
the Company and the Underwriters, in whatever proportion they so desire. Under no circumstances shall the Plan, the Settlement Class, Settlement Class Representatives, or Lead Counsel have any obligation to pay in
any manner the costs of retaining an Independent Fiduciary. 
  
 17. Except for attorney notes, pleadings, other court submissions and transcripts of depositions and exhibits thereto, Settlement Class Representatives agree to return to the Settling Defendants, at the Settling
Defendants’ option, all discovery obtained from the Settling Defendants within thirty (30) days after all the Claims in the ERISA Action against all Non-Settling Defendants have been settled, tried to
Final judgment or otherwise resolved by a Final judgment; provided that the Settling Defendants requesting the return of such materials shall reimburse Settlement Class Representatives for the costs of shipping such
materials. 
  

 17 









 18. Lead Counsel shall be responsible for filing tax returns for the Settlement Fund and
for paying any taxes owed with respect to the Settlement Fund. All taxes on the income of the Settlement Fund and all expenses incurred in connection with the taxation of the Settlement Fund (including, but not limited to, the
expenses of tax attorneys and accountants) shall be paid out of the Settlement Fund. 
  
 19. The Settling Parties, and each of them, represent and warrant: 
  
 19.1 That they are voluntarily entering into this Settlement Agreement as a result of arm’s-length negotiations among their
counsel, with the assistance and recommendation of the Mediator, that in executing this Settlement Agreement they are relying solely upon their own judgment, belief and knowledge, and the advice and recommendations of their own
independently selected counsel, concerning the nature, extent and duration of their rights and Claims hereunder and regarding all matters which relate in any way to the subject matter hereof, and that, except as provided herein, they have not
been influenced to any extent whatsoever in executing this Settlement Agreement by any representations, statements or omissions pertaining to any of the foregoing matters by any party or by any Person representing any party to this
Settlement Agreement. Each Settling Party assumes the risk of mistake as to facts or law; and 
  
 19.2 That they have carefully read the contents of this Settlement Agreement, and this Settlement Agreement is signed freely
by each Person executing this Settlement Agreement on behalf of each of the Settling Parties. The Settling Parties, and each of them, further represent and warrant to each other that he, she or it has made such
investigation of the facts pertaining to the Settlement, this Settlement Agreement and all of the matters pertaining thereto, as he, she or it deems necessary. 
  
 19.3 Each individual executing this Settlement Agreement on behalf of any other Person does
hereby personally represent and warrant to the other Settling Parties that he or she has the authority to execute this Settlement Agreement on behalf of, and fully bind, each principal which such individual represents or purports to
represent. 
  
 20. Miscellaneous Provisions. 
  
 20.1 This Settlement Agreement shall be governed by
the laws of the United States, including federal common law, except to 
  

 18 









 
the extent that, as a matter of federal law, State law controls, in which case Alabama law shall apply. 
  
 20.2 The Settling Parties intend and agree that the
releases provided or granted in the Settlement Agreement shall be effective as a bar to any and all currently unsuspected, unknown or partially known claims within the scope of their express terms and provisions. Accordingly, subject to
paragraphs 7 and 8 above, the Settlement Class Representatives hereby expressly waive, on their own behalf, on behalf of all members of the Settlement Class, and the Settling Defendants and Underwriters hereby expressly
waive on their own behalf, any and all rights and benefits (if any) respectively conferred upon them by the provisions of Section 1542 of the California Civil Code and all similar provisions of the statutory or common laws of any other State,
Territory or other jurisdiction. Section 1542 reads in pertinent part: 
  
 “A general release does not extend to claims that the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his
settlement with the debtor.” 
  
 20.3 The
provisions of this Settlement Agreement are not severable. 
  
 20.4 Before entry of the Approval Order, the Settlement Agreement may be modified or amended only by written agreement signed by or on behalf of all Settling Parties. Following entry of the
Approval Order, the Settlement Agreement may be modified or amended only by written agreement signed on behalf of all Settling Parties, and approved by the Court. 
  
 20.5 The provisions of this Settlement Agreement may
be waived only by an instrument in writing executed by the waiving party. The waiver by any party of any breach of this Settlement Agreement shall not be deemed to be or construed as a waiver of any other breach, whether prior, subsequent, or
contemporaneous, of this Settlement Agreement. 
  

 19 









 20.6 The following principles of interpretation apply to this Settlement
Agreement: 
  
 20.6.1 The headings of
this Settlement Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Settlement Agreement. 
  
 20.6.2 Definitions apply to the singular and plural forms of each term defined. 
  
 20.6.3 Definitions apply to the masculine, feminine, and
neuter genders of each term defined. 
  
 20.6.4
Whenever the words “include,” “includes” or “including” are used in this Settlement Agreement, they shall not be limiting but rather shall be deemed to be followed by the words “without limitation.”

  
 20.6.5 None of the Settling Parties
hereto shall be considered to be the drafter of this Settlement Agreement or any provision hereof for the purpose of any statute, case law or rule of interpretation or construction that would or might cause any provision to be construed
against the drafter hereof. 
  
 20.7 Each of the
Settling Parties agrees, without further consideration, and as part of finalizing the Settlement hereunder, that they will in good faith execute and deliver such other documents and take such other actions as may be necessary to
consummate and effectuate the subject matter and purpose of this Settlement Agreement. 
  
 20.8 All representations, warranties and covenants set forth in this Settlement Agreement shall be deemed continuing and shall
survive the expiration of this Settlement Agreement, except in the event the Settlement Agreement is terminated pursuant to Sections 6 or 16, in which case those provisions shall govern. 
  

 20 









 20.9 Any notice, demand or other communication under this Settlement Agreement
(other than the Class Notice, the Bar Order Notice, or other notices given at the direction of the Court) shall be in writing and shall be deemed duly given upon mailing if it is addressed to each of the intended recipients
as set forth below and personally delivered, sent by registered or certified mail (postage prepaid), sent by confirmed facsimile, or delivered by reputable express overnight courier: 
  
 IF TO PLAINTIFFS: 
  
 Lynn Lincoln Sarko, Esq. 
 Derek W. Loeser,
Esq. 
 Gary A. Gotto, Esq. 
 KELLER ROHRBACK, LLP 
 1201 Third Avenue, Suite 3200 
 Seattle, WA 98101-3052 
 Phone (206) 623-1900 
 Fax: (206) 623-3384 
 Email:
Isarko@kellerrohrback.com 
  
 Richard R. Rosenthal, Esq.

 Law Offices of Richard R. Rosenthal, PC 
 200 Title Building 
 300 North Richard Arrington Jr. Blvd. 
 Birmingham, Alabama 35203 
 Phone:
205-252-4907 
 Fax: 205.252-1146 
 Email: rosenthallaw@bellsouth.net 
  
 IF TO
SETTLING DEFENDANTS: 
  
 Edward P. Welch, Esq.

 Robert S. Saunders, Esq. 
 Stephen D. Dargitz, Esq. 
 SKADDEN, ARPS, SLATE, 
     MEAGHER & FLOM LLP 
 One Rodney Square 
 P.O. Box 636 
 Wilmington, Delaware 19801

 Fax: (302) 651-3001 
  
 Counsel for HEALTHSOUTH Corporation 
  
 Michael K.K. Choy, Esq. 
 Peyton D. Bibb, Esq.

 Robert E. Lee Garner, Esq. 
 HASKELL SLAUGHTER YOUNG & REDIKER, LLC 
 1400 Park Place Tower 
 2001 Park Place North 
 Birmingham, Alabama
35203 
 Fax: (205) 324-1133 
  

 21 









 Counsel for HEALTHSOUTH Corporation 
  
 N. Lee Cooper, Esq. 
 Patrick C. Cooper, Esq. 
 James L. Goyer, III, Esq. 
 MAYNARD COOPER & GALE PC 
 2400 AmSouth/Harbert Plaza 
 190 16th Avenue North

 Birmingham, Alabama 35203 
 Fax: (205) 254-1999 
  
 Counsel to P. Daryl
Brown, Richard F. Celeste, Raymond J. Dunn, III, Allan R. Goldstein, Brandon O. Hale, Larry House, Jan L. Jones, Kimberly S. McCracken, Marca Pearson, Barbara Roper, Dennis Wade and Phillip C. Watkins 
  
 Gregory C. Braden, Esq. 
 ALSTON & BIRD LLP 
 One Atlantic
Center 
 1201 West Peachtree Street 
 Atlanta, Georgia 30309-3424 
 Fax: (404) 881-7777 
  
 Counsel to P. Daryl Brown, Richard F. Celeste, Allan R. Goldstein, Brandon O. Hale, Jan L. Jones, Kimberly S. McCracken,
Marca Pearson, Barbara Roper, Dennis Wade and Phillip C. Watkins 
  
 Martin L. Seidel, Esq. 
 Kathryn Fleury Shreeves, Esq. 
 CADWALADER, WICKERSHAM & TAFT LLP 
 100 Maiden Lane 
 New York, New York 10038 
 Fax:
(212) 504-6666 
  

 22 









 Counsel to Jon F. Hanson, Lee S. Hillman and Robert P. May 
  
 Michael J. Chepiga, Esq. 
 Paul C. Gluckow, Esq. 
 SIMPSON
THACHER & BARTLETT LLP 
 425 Lexington Avenue 
 New York, New York 10017 
 Fax: (212) 455-2502 
  
 Counsel to John S. Chamberlin, C. Sage Givens, Joel C. Gordon, Charles W.
Newhall, III, Larry D. Striplin, Jr., and George H. Strong 
  
 Don B. Long, Jr., Esq. 
 James F. Henry, Esq. 
 JOHNSTON BARTON PROCTOR & POWELL LLP 
 2900 AmSouth/Harbert Plaza 
 1901 Sixth Avenue North 
 Birmingham, Alabama
35203-2618 
 Fax: (205) 458-9500 
  
 Counsel to James P. Bennett 
  
 Jackson R. Sharman III, Esq. 
 James F.
Hughey, III, Esq. 
 LIGHTFOOT, FRANKLIN & WHITE LLC 
 The Clark Building 
 400 North 20th Street 
 Birmingham, Alabama 35203 
 Fax: (205) 581-0799 
  
 Counsel to Anthony J. Tanner  
  

 23 









 IF TO UNDERWRITERS 
  
 Thomas A. Doyle, Esq. 
 Matthew G. Allison, Esq. 
 BAKER & MCKENZIE 
 One Prudential Plaza 
 130 East Randolph Drive, Suite 3500 
 Chicago, Illinois 60601 
 Fax:
(312) 861-2899 
  
 Counsel to Travelers
Casualty & Surety Company of America 
  
 Peter R.
Bisio, Esq. 
 Christopher R. Zaetta, Esq. 
 HOGAN & HARTSON LLP 
 Columbia Square 
 555 Thirteenth Street, NW 
 Washington, DC
20004-1109 
 Fax: (202) 637-5910 
  
 Counsel to Federal Insurance Company 
  
 Any Settling Party may change the address at which it is to receive notice by written notice delivered to the other Settling Parties in the manner described
above. 
  
 20.10 This Settlement Agreement
contains the entire agreement among the Settling Parties relating to this Settlement. It specifically supersedes any settlement terms or settlement agreements relating to the Settling Defendants that were previously agreed
upon orally or in writing by any of the Settling Parties. 
  
 20.11 This Settlement Agreement may be executed by exchange of faxed executed signature pages, and any signature transmitted by facsimile for the purpose of executing this Settlement Agreement shall be
deemed an original signature for purposes of this Settlement Agreement. This Settlement Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. 
  
 20.12
This Settlement Agreement binds and inures to the benefit of the parties hereto, their assigns, heirs, administrators, executors and successors. 
  

 24 









 20.13 The date on which the final signature is affixed below shall be the Agreement
Execution Date. 
  
 IN WITNESS WHEREOF, the Settling Parties have
executed this Settlement Agreement on the dates set forth below. 
  

	
	SETTLEMENT CLASS REPRESENTATIVES:
	
	/s/    LYNN LINCOLN
SARKO        
	 Lynn Lincoln Sarko
 Derek W. Loeser
 Gary A. Gotto

	
	 KELLER, ROHRBACK, LLP
 1201 Third Avenue, Suite 3200
 Seattle, WA 98101-3052
 Phone (206) 623-1900
 Fax: (206) 623-3384

	
	Lead Counsel for ERISA Plaintiffs


  

 25 










			
	 THE SETTLING DEFENDANTS:
	 	 
		
	/s/    N. LEE COOPER        	 	July 25, 2005
	 N. Lee Cooper
 Patrick C. Cooper
 James L. Goyer, III
	 	 
		
	 MAYNARD COOPER & GALE PC
 2400 AmSouth/Harbert Plaza
 190 16th Avenue North
 Birmingham, Alabama 35203
	 	 
		
	Counsel to P. Daryl Brown, Richard F. Celeste, Raymond J. Dunn, III, Allan R. Goldstein, Brandon O. Hale, Larry House, Jan L. Jones, Kimberly S. McCracken, Marca Pearson, Barbara Roper,
Dennis Wade and Phillip C. Watkins	 	 
		
	/s/    GREGORY C. BRADEN        	 	 
	Gregory C. Braden	 	 
		
	 ALSTON & BIRD LLP
 One Atlantic
Center
 1201 West Peachtree Street
 Atlanta, Georgia
30309-3424
	 	 
		
	Counsel to P. Daryl Brown, Richard F. Celeste, Allan R. Goldstein, Brandon O. Hale, Jan L. Jones, Kimberly S. McCracken, Marca Pearson, Barbara Roper, Dennis Wade and Phillip C.
Watkins	 	 


  

 26 










			
		
	/s/    MARTIN L. SEIDEL        	 	 
	 Martin L. Seidel
 Kathryn Fleury Shreeves
	 	 
		
	 CADWALADER, WICKERSHAM & TAFT LLP
 100 Maiden Lane
 New York, New York 10038
	 	 
		
	Counsel to Jon F. Hanson, Lee S. Hillman and Robert P. May	 	 
		
	/s/    PAUL C. GLUCKOW        	 	 
	 Michael J. Chepiga
 Paul C. Gluckow
	 	 
		
	 SIMPSON THACHER & BARTLETT LLP
 425 Lexington Avenue
 New York, New York 10017
	 	 
		
	Counsel to John S. Chamberlin, C. Sage Givens, Joel C. Gordon, Charles W. Newhall, III, Larry D. Striplin, Jr., and George H. Strong	 	 
		
	/s/    DON B. LONG, JR.
        	 	7/1/2005
	 Don B. Long, Jr.
 James F. Henry
	 	 
		
	 JOHNSTON BARTON PROCTOR & POWELL LLP
 2900 AmSouth/Harbert Plaza
 1901 Sixth Avenue North
 Birmingham, Alabama 35203-2618
	 	 
		
	Counsel to James P. Bennett	 	 


  

 27 










			
		
	/s/    JAMES F. HUGHEY, III        	 	7/6/05
	 Jackson R. Sharman III
 James F. Hughey, III
	 	 
		
	 LIGHTFOOT, FRANKLIN & WHITE LLC
 The Clark Building
 400 North 20th Street
 Birmingham, Alabama 35203
	 	 
		
	Counsel to Anthony J. Tanner	 	 
		
	/s/    EDWARD P. WELCH        	 	 
	 Edward P. Welch
 Robert S. Saunders
 Stephen D. Dargitz
	 	 
		
	 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
 One Rodney Square
 P.O. Box 636
 Wilmington, Delaware 19801
	 	 
		
	Counsel to HEALTHSOUTH Corporation	 	 
		
	/s/    ROBERT E. LEE
GARNER        	 	 
	 Michael K.K. Choy
 Peyton D. Bibb
 Robert E. Lee Garner
	 	 
		
	 HASKELL SLAUGHTER YOUNG & REDIKER, LLC
 1400 Park Place Tower
 2001 Park Place North
 Birmingham, Alabama 35203
	 	 
		
	Counsel to HEALTHSOUTH Corporation	 	 


  

 28 










	
	 THE UNDERWRITERS

	
	/s/    MATTHEW G.
ALLISON        
	 Thomas A. Doyle
 Matthew G. Allison

	
	 BAKER & MCKENZIE
 One Prudential Plaza
 130 East Randolph Drive, Suite 3500
 Chicago, Illinois 60601

	
	Counsel to Travelers Casualty & Surety Company of America
	
	/s/    CHRISTOPHER R.
ZAETTA        
	 Peter R. Bisio
 Christopher R. Zaetta

	
	 HOGAN & HARTSON LLP
 Columbia Square
 555 Thirteenth Street, NW
 Washington, DC 20004-1109

	
	Counsel to Federal Insurance Company


  

 29