Document:

Securities Purchase Agreement

 Exhibit 10.41 
 Securities Purchase Agreement 
 HealthSouth Corporation 
 One HealthSouth Parkway 
 Birmingham, Alabama 35243 
 Ladies and Gentlemen: 
 Each of the undersigned (each, an “Investor” and together, the “Investors”) hereby confirms its agreement with you as follows: 
 1. This Securities Purchase Agreement (the “Agreement”) is made as of February 28, 2006, between HealthSouth
Corporation, a Delaware corporation (the “Company”), and the Investors listed on the signature pages hereto. 
 2. The Company has authorized the sale and issuance to the Investors (the “Offering”) of shares of its Convertible Perpetual Preferred Stock, par value $0.10 per share (the “Securities”), which are
convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), and shall have the rights, powers and preferences set forth in the Certificate of Designations (the “Certificate of
Designations”) of Convertible Perpetual Preferred Stock, a copy of which is attached hereto as Exhibit A. The Securities are being offered to qualified institutional buyers (“QIBs”) within the meaning of Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”), pursuant to a private placement exemption from registration under the Securities Act. 
 3. The Company and the Investors agree that each Investor will purchase from the Company and the Company will issue and sell to such
Investor up to the aggregate number of Securities set forth below on such Investor’s signature page for the aggregate purchase price of $1,000 per share; provided that if the Company sells and the Investor buys an amount of Securities less than
the aggregate number of Securities set forth below on such Investor’s signature page, the total aggregate purchase price of such Securities will be reduced proportionately. The Securities shall be purchased pursuant to the Terms and Conditions
for Purchase of Securities attached hereto as Annex I and incorporated herein by reference as if fully set forth herein. The Securities purchased by the Investors will be delivered by electronic book-entry through the facilities of The Depository
Trust Company (“DTC”), to an account specified by each Investor on its signature page and will be released by Mellon Investor Services (the “Escrow Agent”) to such Investor at the Closing (as defined in
Section 3 of Annex I hereto). 

 Maximum Number of Securities: $30,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Advent Capital Management
		
	By:	 	/s/ ROBERT WHITE
	Print Name: Robert White
	Title:  Chief Financial Officer
	Address: 1065 Avenue of the Americas, 31st
Floor
	New York, NY 10018
	Tax ID No.:  13-4168510
	Contact Name: Robert White
	Telephone:  212-479-0675
	Back office contact:  Desmond Singh
	212-479-0636
	  

 Number of Securities Allocated to Investor: 20,000 
 Aggregate Purchase Price: $20,000,000 
 AGREED AND ACCEPTED: 
  

					
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name:	 	John Workman
		 	Title:	 	Executive Vice President and
		 		 	 Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: AM Investment Partners, LLC
		
	By:	 	/s/ MARK FRIEDMAN
	Print Name:  Mark Friedman
	Title:  Principal
	Address:  350 Park Avenue, 4th
Floor
	New York, NY 10022
	Tax ID No.:  74-3006802
	Contact Name:  Mark Friedman
	Telephone:  212-508-8909
	Back office contact:  Craig Cohen
	212-508-8908
	  

 Number of Securities Allocated to Investor: 7,000 
 Aggregate Purchase Price: $7,000,000 
 AGREED AND ACCEPTED: 
  

					
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name:	 	John Workman
		 	Title:	 	Executive Vice President and
		 		 	 Chief Financial Officer

 Maximum Number of Securities: 50,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Amaranth LLC, By Amaranth Advisors, LLC, its Trading Advisor
		
	By:	 	/s/ KARL J. WACHTER
	Print Name:  Karl J. Wachter
	Title:  Authorized Signatory
	Address:  c/o Dundee Leeds Management Services (Cayman) Ltd.
	 Waterfront Centre 28 N. Church Street, Georgetown, Grand Cayman
 Cayman Islands, B.W.I.

	Address for legal notices: c/o Amaranth Advisors LLC
	One America Lane, Greenwich, CT 06831, Attn:  General Counsel
	Tax ID No.:  98-0385841
	Contact Name: General Counsel
	Telephone:  203-422-3340
	 Back office contact:  Sean Foronjy
 203-422-3315

	  

 Number of Securities Allocated to Investor: 20,000 
 Aggregate Purchase Price: $20,000,000 
 AGREED AND ACCEPTED: 
  

					
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name:	 	John Workman
		 	Title:	 	Executive Vice President and
		 		 	 Chief Financial Officer

 Maximum Number of Securities: 30,000 shares/$30,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: AG Offshore Convertibles, Ltd.,

		
	By:	 	Angelo Gordon & Co., L.P. Its: Investment Manager
		
	By:	 	/s/ JOHN M. ANGELO
	Print Name:  John M. Angelo
	Title:  Chief Executive Officer
	Address:  245 Park Avenue, 26th
Floor
	New York, NY 10169
	Tax ID No.:  N/A
	Contact Name:  Gary I. Wolf
	Telephone:  212-692-2058
	Back office contact:  George Fink
	  
	  

 Number of Securities Allocated to Investor: 3,000 
 Aggregate Purchase Price: $3,000,000 
 AGREED AND ACCEPTED: 
  

					
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name:	 	John Workman
		 	Title:	 	Executive Vice President and
		 		 	 Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: CNH CA Master Account, L.P. 

			
		
	 By:
	 	 /s/ BRADLEY ASNESS

	 Print Name: Bradley Asness

	 Title: Secretary, Principal

	 Address: Two Greenwich Plaza

	 Greenwich, CT 06830

	 Tax ID No.: 42-1571441

	 Contact Name: Gildo Niutta

	 Telephone: 203-742-3686

	 Back office contact:
                                        
            

	  
	  

 Number of Securities Allocated to Investor: 12,000 
 Aggregate Purchase Price: $12,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	Name: John Workman
		 	 Title:  Executive Vice President and
            Chief Financial Officer

 Maximum Number of Securities: 30,000 shares/$30,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Argent Funds Group LLC 

			
		
	 By:
	 	 /s/ BOBBY RICHARDSON

	 Print Name: Bobby Richardson

	 Title: Managing Director

	 Address: 55 Vilcom Circle

	 Chapel Hill, NC 27514

	 Tax ID No.: 06-1584984

	 Contact Name: Rich Godfrey

	 Telephone: 919-869-8669

	 Back office contact: Rich Godfrey

	  
	  

 Number of Securities Allocated to Investor: 9,000 
 Aggregate Purchase Price: $9,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	Name: John Workman
		 	 Title:  Executive Vice President and
            Chief Financial Officer

 Maximum Number of Securities: $30,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Aristeia International Limited/Aristeia Partners LP 

			
		
	 By:
	 	 /s/ ANTHONY FRASCELLA

	Print Name: Anthony Frascella
	Title: Principal
	Address: 136 Madison Avenue, 3rd
Floor
	New York, NY 10016
	Tax ID No.: 13-3953126
	Contact Name: Michael Meraldo
	Telephone: 212-842-8888
	Back office contact: David Courtemnache
	212-842-8881
	  

 Number of Securities Allocated to Investor: 10,000 
 Aggregate Purchase Price: $10,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	Name: John Workman
		 	 Title:  Executive Vice President and
            Chief Financial Officer

 Maximum Number of Securities: 30,000 shares, $30,000,000 principal amount 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: BASSO Capital Management, LP on behalf of 3-4 Basso Funds to be determined 

			
		
	 By:
	 	 /s/ JOHN LEPORE

	 Print Name: John Lepore

	 Title: Authorized Signatory

	 Address: 1266 East Main St.

	 Stamford, CT 06902

	 Tax ID No.:
                            

	 Contact Name: Marc Seidenberg/John Lepore

	 Telephone: 203-352-6154

	 Back office contact: Joe Schultz

	 203-352-6157

	  

 Number of Securities Allocated to Investor: 7,500 
 Aggregate Purchase Price: $7,500,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000,000 face 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Camden Asset Management 

			
		
	 By:
	 	 /s/ ALEXANDER A. LACH

	Print Name: Alexander A. Lach
	Title: Partner
	Address: 2049 Century Park East, Suite #330
	Century City, CA 90067
	Tax ID No.: 95-4319164
	Contact Name: Alex Lach
	Telephone: 310-785-1630
	Back office contact: Anthony Reyes
	310-785-9755
	  

 Number of Securities Allocated to Investor: 9,000 
 Aggregate Purchase Price: $9,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 7,500 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: CQS Convertible and Quantitative Strategies Master Fund Limited 

			
		
	 By:
	 	 /s/ MICHAEL HINTZ

	 Print Name: Michael Hintz

	 Title: Director

	 Address: PO Box 309GT, Ugland House, Souith Church Street

	 Georgetown, Grand Cayman, Cayman Islands

	 Tax ID No.:
                                        
        

	 Contact Name: Paul Casey

	 Telephone: 44-207 201 6973

	 Back office contact: Tim Dalgamo

	 44-207-201-6880

	  

 Number of Securities Allocated to Investor: 5,000 
 Aggregate Purchase Price: $5,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Credit Suisse 

			
		
	 By:
	 	/s/ ONU ODIM
	Print Name: Onu Odim
	Title: Managing Director
	Address: 11 Madison Avenue, 7th
Floor
	New York, NY 10010
	Tax ID No.: N/A
	Contact Name: Onu Odim
	Telephone: 212-325-3622
	Back office contact: Ross Jorsky
	212-325-3188

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
             Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: D.E. Shaw Valence Portfolios, L.L.C 

			
		
	 By:
	 	 D.E. Shaw & Co. L.P., as managing member

		
	 By:
	 	/s/ JOE PRIOR
	Print Name: Joe Prior
	Title: Authorized Signatory
	Address: 120 W. 45th St. 39th Floor
	New York, NY 10036
	Tax ID No.: 13-4046559
	Contact Name: Joe Prior
	Telephone: 212-478-0000
	Back office contact: Kara Loe
	212-478-0000
	  

 Number of Securities Allocated to Investor: 18,000 
 Aggregate Purchase Price: $18,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Deerfield Management Company, L.P. 

			
		
	 By:
	 	/s/ DARREN LEVINE
	Print Name: Darren Levine
	Title: Chief Financial Officer
	Address: 780 3rd Avenue, 37th Floor
	New York, NY 10017
	Tax ID No.: 13-3738772
	Contact Name: Darren Levine
	Telephone: 212-551-1600
	Back office contact: Darren Levine
	  
	  

 Number of Securities Allocated to Investor: 9,000 
 Aggregate Purchase Price: $9,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: $20,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: DRW Securities, LLC 

			
		
	 By:
	 	/s/ DONALD WILSON, JR.
	Print Name: Donald Wilson, Jr.
	Title: Manager
	Address: 10 S. Riverside Plaza, 21st
Floor
	Chicago, IL 60606
	Tax ID No.: 36-4202848
	Contact Name: Ilan Huberman
	Telephone: 312-542-1110
	Back office contact: Jim Lange
	312-541-1011
	  

 Number of Securities Allocated to Investor: 5,000 
 Aggregate Purchase Price: $5,000,000 
  

			
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Empyrean Capital Partners, LP
		
	By:	 	/s/ ANTHONY THIMES
	Print Name: Anthony Thimes
	Title: Chief Financial Officer
	Address: 10250 Constellation Blvd, Suite 2950
	Los Angeles, CA 92660
	Tax ID No.:                     
	Contact Name: Tony Hynes
	Telephone: 310-843-3060
	Back office contact:
                                        
            
	  
	  

 Number of Securities Allocated to Investor: 5,000 
 Aggregate Purchase Price: $5,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

	
		
	By:	 	/s/ JOHN WORKMAN
		 	 Name: John Workman
 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Forest Investment Management
		
	By:	 	/s/ JOHN McDONALD
	Print Name: John McDonald
	Title: Partner
	Address: 53 Forest Avenune
	Old Greenwich, CT 06870
	Tax ID No.: 06-1354491
	Contact Name: Jingyan Wang
	Telephone: 203-637-7773
	Back office contact: Larry Diamond
	203-637-6020
	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: $30,000,000 of securities 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: GLG Partners LP
		
	By:	 	/s/ STEVE ROTH
	Print Name: Steve Roth
	Title: Portfolio Manager
	Address: 2 Curzon Street
	London W1J5HB, UK
	Tax ID No.: N/A
	Contact Name: Allistair Ling
	Telephone: 44 2070167057
	Back office contact: Antonio Dos
	44 2070167302
	  

 Number of Securities Allocated to Investor: 9,000 
 Aggregate Purchase Price: $9,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: President and Fellows of Harvard College 

			
		
	By:	 	/s/ CRAIG SZEMAN
	Print Name: Craig Szeman
	Title: Vice President
	Address: 600 Atlantic Avenue
	Boston, MA 02210-2203
	Tax ID No.: 042103580
	Contact Name:
                                        
    
	Telephone:
                                        
            
	Back office contact: Sharon Legge
	617-720-6713
	  

 Number of Securities Allocated to Investor: 5,000 
 Aggregate Purchase Price: $5,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 ($30,000,000) 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: HBK Master Fund L.P. 

			
	By: HBK Investments L.P.
		
	By:	 	/s/ J. BAKER GENTRY, JR.
	Print Name: J. Baker Gentry, Jr.
	Title: Authorized Signatory
	 Address: c/o Ugland House, South Church Street
 P.O. Box 309, Georgetown, Grand Cayman, Cayman Islands
 Notice Address: c/o HBK Investments, LP, 300 Crescent Court
 Suite 700, Dallas Texas 75201
 Tax ID No.: 98-0215929
 Contact Name: Legal Department
 Telephone: 214-758-6107
 Back office contact: Sterling Abbott
 214-758-6421

	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Highbridge International LLC 
  

			
	By: Highbridge Capital Management LLC
		
	By:	 	/s/ RICHARD POTAPCHUK
	Print Name: Richard Potapchuk
	Title: Managing Director
	Address: 9 West 57th Street, 27th Floor
	New York, NY 10019
	Tax ID No.: N/A
	Contact Name:
                                        
                
	Telephone: 212-287-4910
	Back office contact: Chris Edele
	  
	  

 Number of Securities Allocated to Investor: 18,000 
 Aggregate Purchase Price: $18,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 3,965 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Highfields Capital I LP
		
	By:	 	/s/ JENNIFER L. STIER
	Print Name: Jennifer L. Stier
	Title: Chief Operating Officer
	Address: John Hancock Tower, 200 Clarendon St. 51st Floor
	Boston, MA 02116
	Tax ID No.: 04-3419486
	Contact Name: Joseph Mazzellan
	Telephone: 617-850-7500
	Back office contact: Brian Quinn
	617-850-7564
	  

 Number of Securities Allocated to Investor: 1,586 
 Aggregate Purchase Price: $1,586,000 
  

			
	 AGREED AND ACCEPTED:

	
	 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 9,585 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Highfields Capital II LP
		
	By:	 	 /s/ JENNIFER L. STIER

	Print Name: Jennifer L. Stier
	Title: Chief Operating Officer
	Address: John Hancock Tower, 200 Clarendon St. 51st Floor
	Boston, MA 02116
	Tax ID No.: 04-3419488
	Contact Name: Joseph Mazzellan
	Telephone: 617-850-7500
	Back office contact: Brian Quinn
	617-850-7564
	  

 Number of Securities Allocated to Investor: 3,834 
 Aggregate Purchase Price: $3,834,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 36,450 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: Highfields Capital Ltd.
		
	By:	 	/s/ JENNIFER L. STIER
	Print Name: Jennifer L. Stier
	Title: Chief Operating Officer
	Address: c/o Goldman Sachs (Cayman) Trust Ltd., Harbour Centre, 2nd Floor
	P.O. Box 896, Georgetown, Grand Cayman, Cayman Islands, B.W.I.
	Tax ID No.: N/A
	Contact Name:
                                        
                
	Telephone: 345-914-8011
	Back office contact:

 Number of Securities Allocated to Investor: 14,580 
 Aggregate Purchase Price: $14,580,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: JD Capital Management
		
	By:	 	/s/ ANDREW BARNARD
	Print Name: Andrew Barnard
	Title: Portfolio Manager
	 Address: 2 Greenwich Plaza 2nd Floor
 Greenwich, CT 06830
 Tax ID No.:
                                        
                
 Contact Name: Don McCarthy, CFO
 Telephone: 203-485-8820
 Back office contact: Michael Owens
 203-485-8823

	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: JMG Capital Partners LP

		
	 By:
	 	 /s/ JONATHAN GLASS

	 Print Name: Jonathan Glass

	 Title: Manager of the GP

	 Address: 11601 Wilshire Blvd., Suite 2180

	 Los Angeles, CA 90025

	 Tax ID No.: 68-0271606

	 Contact Name: Noelle Newton

	 Telephone: 310-601-2825

	 Back office contact:
                                        
            

	  
	  

 Number of Securities Allocated to Investor: 8,500 
 Aggregate Purchase Price: $8,500,000 
  

			
	 AGREED AND ACCEPTED:

	
	 HealthSouth Corporation,

	 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 ($30 million notional) 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Kamunting Street Master Fund, Ltd. 

			
		
	 By:
	 	 /s/ GREGOR DANNALHER

	 Print Name: Gregor Dannalher

	 Title: Senior Analyst

	 Address: 140 East 45th Street, 15th Floor

	 New York, NY 10017

	 Tax ID No.: 98-0427034

	 Contact Name: Christopher Falsetta

	 Telephone: 212-490-4343

	 Back office contact: Jason Abrams

	 212-490-4355

	  

 Number of Securities Allocated to Investor: 10,000 
 Aggregate Purchase Price: $10,000,000 
  

			
	 AGREED AND ACCEPTED:

	
	HealthSouth Corporation,
	a Delaware corporation
		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: KBC Financial Products Cayman Islands Ltd. 

			
		
	 By:
	 	 /s/ JASON CUEVAS

	 Print Name: Jason Cuevas

	 Title: Managing Director

	 Address: 140 East 45th Street, 42nd Floor

	 New York, NY 10017

	 Tax ID No.: 061556254

	 Contact Name: Ann Difilppo

	 Telephone: 212-845-2833

	 Back office contact: Ben Locascio

	 212-845-2916

	  

 Number of Securities Allocated to Investor: 12,000 
 Aggregate Purchase Price: $12,000,000 
  

			
	 AGREED AND ACCEPTED:

	
	HealthSouth Corporation,
	a Delaware corporation
		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: LibertyView Funds, L.P.

		
	 By:
	 	 /s/ STEVEN S. ROGERS

	 Print Name: Steven S. Rogers

	 Title: Authorized Signatory

	Address: LibertyView Capital Management, Attn: Spencer Kornreich
	 111 River Street – Suite 1000, Hoboken, NJ 07030

	 Tax ID No.:
                                        
                

	 Contact Name: Spencer Kornreich

	 Telephone: 201-595-2992

	 Back office contact: Robert Olsen

	 201-216-8606

	  

 Number of Securities Allocated to Investor: 5,000 
 Aggregate Purchase Price: $5,000,000 
  

			
	 AGREED AND ACCEPTED:

	
	HealthSouth Corporation,
	a Delaware corporation
		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 shares 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: Linden Capital L.P.

		
	 By:
	 	 /s/ CRAIG JARVIS

	 Print Name: Craig Jarvis

	 Title: Authorized Signatory

	 Address: 18 Church Street, Skando House

	 Hamilton, HM11, Bermuda

	 Tax ID No.: 98-0430338

	 Contact Name: Craig Jarvis

	 Telephone: 646-840-3510 or 3500

	 Back office contact: Peter Greenberg

	 646-840-3539

	  

 Number of Securities Allocated to Investor: 8,500 
 Aggregate Purchase Price: $8,500,000 
  

			
	 AGREED AND ACCEPTED:

	
	HealthSouth Corporation,
	a Delaware corporation
		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 20,000 shares ($20 million of notional) 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: Marathon Global Convertible Master Fund, Ltd.

		
	By:	 	/s/ CHRISTOPHE THOMAS
	Print Name: Christophe Thomas
	Title: Managing Director
	Address: 461 Fifth Avenue, 10th
Floor
	New York, NY 10017
	Tax ID No.: N/A
	Contact Name: Christophe Thomas
	Telephone: 212-381-4421
	Back office contact: David Hazan
	212-381-4487
	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	 AGREED AND ACCEPTED:

	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 15,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: OZ Master Fund, Ltd.

		
	By:	 	/s/ JOEL FRANK
	Print Name: Joel Frank
	Title: Chief Financial Officer
	Address: 9 West 57th St., 39th Floor
	New York, NY 10019
	Tax ID No.: 13-3982250
	Contact Name: Joel M. Frank
	Telephone: 212-790-0160
	Back office contact: Sean Rhatigan
	212-790-0166
	  

 Number of Securities Allocated to Investor: 10,000 
 Aggregate Purchase Price: $10,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 shares 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Parabolic Parners Cap. Mgt LLC, as investment advisor of Parabolic Partners Master Fund, Ltd. 

			
		
	By:	 	/s/ A. PAUL BOWYER
	Print Name: A. Paul Bowyer
	Title: Managing Member
	Address: 396 Springfield Ave.
	Summet, NJ 07901
	Tax ID No.: 98-0462853
	Contact Name: Paul Bowyer
	Telephone: 908-918-0118
	Back office contact: Sophie Chen
	908-918-0118
	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 30,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Polygon Global Opportunities Master Fund 

			
		
	By:	 	Polygon Investment Partners LP
		
	By:	 	/s/ WILLIAM W. HOBAN
	Print Name: William W. Hoban
	Title: Portfolio Manager
	Address: 598 Madison Ave. 14th
Floor
	New York, NY 10022
	Tax ID No.: 98-0397839
	Contact Name: William W. Hoban
	Telephone: 212-359-7487
	Back office contact: James Piachard
	212-359-7336
	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Ramius Capital Group for Ramius Master Fund LTD (tax ID: 98-0395643) And RCG Latitude Master Fund LTD (tax ID: 98-0223347) 

			
		
	By:	 	/s/ MORGAN STARK
	Print Name: Morgan Stark
	Title: Managing Partner
	Address: 616 Third Avenue, 26th
Floor
	New York, NY 10017
	Tax ID
No.:                                       
         
	Contact Name: Robert Ryon
	Telephone: 212-845-7924
	Back office contact: James Wilk
	  
	  

 Number of Securities Allocated to Investor: 5,000 
 Aggregate Purchase Price: $5,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Radcliffe SPC Ltd. For and on behalf of the Class A Convertible Crossover Segregated Portfolio, 
 By:
RG Capital Management, L.P., By: RGC Management Company LLC 

			
		
	By:	 	 /s/ GERALD STAHLECKER

	 Print Name: Gerald F. Stahlecker

	 Title: Managing Director

	 Address: 3 Bala Plaza East, Suite 501

	 Bala Cynwyd, PA 19004-3481

	 Tax ID No.: 98-0381209

	 Contact Name: Gerald F. Stahlecker

	 Telephone: 610-617-5900

	 Back office contact: Mike Campbell

	 610-617-5900

	  

 Number of Securities Allocated to Investor: 15,000 
 Aggregate Purchase Price: $15,000,000 
 AGREED AND ACCEPTED: 
  

			
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and

		 	          Chief Financial Officer

 Maximum Number of Securities: 30,000 shares [purchase price = $30 million] 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Funds Managed by Rumson Capital LLC 

			
		
	By:	 	 /s/ JOHN BURKE

	 Print Name: John Burke

	 Title: Managing Partner

 Address: The Galleria, Bldg. Three, 2 Bridge Ave. 
 Red Bank, NJ 07701 
 Tax ID No.: XAVEX: 300245670, ZURICH: 13-4147177, NAVESINK: 98-0346624, ALPHA: 13-4129748, MSS:

 (Cayman Islands) 
 Contact
Name: Bill Brennan 
 Telephone: 732-450-7410 
 Back office contact: Mitch Gordon 
 732-450-7408 
 _____________________________________________ 
 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase
Price: $6,500,000 
 AGREED AND ACCEPTED: 
  

			
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and

		 	          Chief Financial Officer

 Maximum Number of Securities: 30,000 ($30,000,000) 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Sandelman Partners 

			
		
	By:	 	 /s/ MICHAEL J. PASCULTI

	 Print Name: Michael J. Pasculti

	 Title: Partner

	 Address: 500 Park Avenue

	 New York, NY 10022

	 Tax ID No.: 980456839

	 Contact Name: Chris Zabark

	 Telephone: 212-299-7604

	 Back office contact: Eric Roppa

	 212-299-7607

	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
 AGREED AND ACCEPTED: 
  

			
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and

		 	          Chief Financial Officer

 Maximum Number of Securities: 50,000 shares ($50,000,000 liquidation preference) 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Satellite Credit Opportunities Fund, Ltd. 

			
	
	By: Satellite Management, L.P., its Investment Manager
		
	By:	 	 /s/ SIMON RAYKHER

	 Print Name: Simon Raykher

	 Title: General Counsel

	 Address: 623 Fifth Avenue, 19th floor

	 New York, NY 10022

	 Tax ID No.: N/A

	 Contact Name: Gene Gaeta

	 Telephone: 212-209-2045

	 Back office contact: Heather Campbell

	 212-209-2018

	  

 Number of Securities Allocated to Investor: 2,500 
 Aggregate Purchase Price: $2,500,000 
 AGREED AND ACCEPTED: 
  

			
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and

		 	          Chief Financial Officer

 Maximum Number of Securities: 50,000 shares ($50,000,000 liquidation preference) 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Satellite Convertible Arbitrage Master Fund LLC 

			
	
	By: Satellite Management, L.P., its Investment Manager
		
	By:	 	 /s/ SIMON RAYKHER

	 Print Name: Simon Raykher

	 Title: General Counsel

	 Address: 623 Fifth Avenue, 19th floor

	 New York, NY 10022

	 Tax ID No.: 98-0399374

	 Contact Name: Ramin Mozaffarian

	 Telephone: 212-209-2093

	 Back office contact: Heather Campbell

	 212-209-2018

	  

 Number of Securities Allocated to Investor: 2,500 
 Aggregate Purchase Price: $2,500,000 
 AGREED AND ACCEPTED: 
  

			
	 HealthSouth Corporation,
 a Delaware corporation

		
	By:	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and

		 	          Chief Financial Officer

 Maximum Number of Securities: 24,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Shephred Investments International, Ltd. 

			
		
	 By:
	 	 /s/ MICHAEL A. ROTH

	 Print Name: Michael A. Roth

	 Title: Managing Member of its Investment Manager

	 Address: c/o Stark Offshore Management LLC

	 3600 South Lake Drive, St. Francis, WI 53235

	 Tax ID No.: 30-0044149

	 Contact Name: Robert Prellwitz

	 Telephone: 414-294-7000

	 Back office contact: James Rittenhouse

	 414-294-7000

	  

 Number of Securities Allocated to Investor: 8,000 
 Aggregate Purchase Price: $8,000,000 
  

					
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 6,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: Stark Trading

		
	 By:
	 	 /s/ MICHAEL A. ROTH

	 Print Name: Michael A. Roth

	Title: Managing Member of its Managing General Partner
	 Address: 3600 South Lake Drive

	 St. Francis, WI 53235

	 Tax ID No.: 98-0148910

	 Contact Name: Robert Prellwitz

	 Telephone: 414-294-7000

	 Back office contact: James Rittenhouse

	 414-294-7000

	  

 Number of Securities Allocated to Investor: 2,000 
 Aggregate Purchase Price: $2,000,000 
  

					
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: $20,000,000.00 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: Susquehanna Capital Group

		
	 By:
	 	 /s/ JACK GREENBERG

	Print Name: Jack Greenberg
	Title: Managing Director
	Address: 401 City Ave.
	Bala Cynwyd, PA 19004
	Tax ID No.: 23-2795205
	Contact Name: Michael Ferry
	Telephone: 610-617-2802
	Back office contact: John Riccardi
	610-617-2826
	  

 Number of Securities Allocated to Investor: 12,000 
 Aggregate Purchase Price: $12,000,000 
  

					
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 50,000 shares 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: SuttonBrook Capital Portfolio LP

		
	 By:
	 	 /s/ BRETT SPECTOR

	Print Name: Brett Spector
	Title: Authorized Person
	Address: 598 Madison Ave. 6th
Floor
	New York, NY 10022
	Tax ID No.: 98-0367010
	Contact Name: Brett Spector
	Telephone: 212-588-6622
	Back office contact: Brett Spector
	212-588-6622
	  

 Number of Securities Allocated to Investor: 12,000 
 Aggregate Purchase Price: $12,000,000 
  

					
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 440,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	 Name of Investor: TQA Investors LLC

		
	 By:
	 	 /s/ DARREN J. LONGIS

	Print Name: Darren J. Longis
	Title: Principal
	Address: 333 Ludlow St.
	Stamford, CT 06902
	Tax ID No.: 98-0220992
	Contact Name: Bart Tesoriero
	Telephone: 203-653-3020
	Back office contact: Aaron Warun
	  
	  

 Number of Securities Allocated to Investor: 9,000 
 Aggregate Purchase Price: $9,000,000 
  

					
	 AGREED AND ACCEPTED:
  
 HealthSouth Corporation,
 a Delaware corporation

		
	 By:
	 	 /s/ JOHN WORKMAN

		 	 Name: John Workman

		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
  

			
	Name of Investor: UBS A.G. (London Branch)
		
	By:	 	/s/ RICHARD SIMPSON
	Print Name: Richard Simpson
	Title: Managing Director
	Address: 1285 6th Ave., 9th FLoor
	New York, NY 10019
	Tax ID No.: 13-3873456
	Contact Name: _________________________________
	Telephone: 203-719-8581
	Back office contact: Rosmarie Mancuso
	  
	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: $25,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Whitebox Advisors, LLC – investment manager to: Whitebox Convertible Arbitrage Partners LP, Whitebox Diversified Convertible Arbitrage Partners,
L.P., HFR RVA Combined Master Trust, Guggenheim Portfolio XXXI, LLC 
  

			
		
	By:	 	/s/ ANDREW REDLEAF
	Print Name: Andrew Redleaf
	Title: Managing Member of the General Partner
	Address: 3033 Excelsior Blvd, Suite 300
	Minneapolis, MN 55416
	Tax ID No.: N/A
	Contact Name: Rob Vogel
	Telephone: 612-253-6028
	Back office contact: Andrea Schroeder
	612-253-6060
	  

 Number of Securities Allocated to Investor: 6,500 
 Aggregate Purchase Price: $6,500,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 Maximum Number of Securities: 40,000 shares or $40,000,000 
 Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose. 
 Name of Investor: Zazove Associates, LLC, as investment advisor with discretionary authority 
  

			
		
	By:	 	/s/ STEVE KLIEMAN
	Print Name: Steve Klieman
	Title: COO
	Address: 940 Southwood, Suite 200
	Incline Village, NV 89451
	Tax ID No.: 36-3984373
	Contact Name: Steve Klieman
	Telephone: 847-239-7100
	Back office contact: Tami Kuha
	775-832-6250
	  

 Number of Securities Allocated to Investor: 15,000 
 Aggregate Purchase Price: $15,000,000 
  

			
	AGREED AND ACCEPTED:
	
	 HealthSouth Corporation,
 a Delaware
corporation

		
	By:	 	/s/ JOHN WORKMAN
		 	Name: John Workman
		 	 Title: Executive Vice President and
           Chief Financial Officer

 INSTRUCTION SHEET FOR INVESTOR 
 (to be read in conjunction with the entire Agreement) 
 Complete the following items in the Agreement:

 1. Provide the information regarding the Investor requested on page 2. The Agreement must be executed by an individual
authorized to bind the Investor. 
 2. Return the signed Agreement to: 
 Citigroup Global Markets Inc. 
 390 Greenwich
St., 5th Floor 
 New York, NY 10013 
 Attn: Equity Syndicate 
 Phone: 212-723-7300 
 Fax: 646-843-3922 
 An executed original signature page to the Agreement or a facsimile transmission thereof
must be received by 12:00 noon New York time on February 28, 2006. Investors who send a facsimile transmission prior to such deadline must also submit an original via courier as soon thereafter as practicable. 

 ANNEX I TO THE SECURITIES PURCHASE AGREEMENT 
 TERMS AND CONDITIONS FOR PURCHASE OF SECURITIES 
  

	1.	Authorization and Sale of Securities. The Company has authorized the sale of up to 400,000 Securities. The Company reserves the right to increase or decrease this number.

  

	2.	Agreement to Sell and Purchase the Securities; Placement Agents.  

  

	 	2.1. 	Upon the terms and subject to the conditions hereinafter set forth, at the Closing (as defined in Section 3), the Company will sell to each Investor, and each Investor will
purchase from the Company, up to the aggregate number of Securities set forth on each Investor’s signature page hereto at the purchase price of $1,000 per share; provided that, if the Company sells and the Investor buys an amount of
Securities less than the aggregate number of Securities set forth on such Investor’s signature page hereto, the total aggregate purchase price of such Securities will be reduced proportionately. 

  

	 	2.2. 	Each Investor acknowledges that the Company intends to pay Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner and Smith Incorporated,
Deutsche Bank Securities Inc., Goldman Sachs & Co. and Wachovia Capital Markets, LLC (collectively, the “Placement Agents”) a fee in respect of the sale of Securities to the Investors. 

  

	3.	Closings and Delivery of Securities and Funds. 

  

	 	3.1. 	The completion of the purchase and sale of the Securities (the “Closing”) shall occur at the offices of the Company’s counsel on March 7, 2006 (the
“Scheduled Closing Date”), unless the Closing is delayed by the Company pursuant to Section 3.2 hereof (the date on which the Closing occurs being the “Closing Date”). At the Closing, (i) the Company shall
cause the Escrow Agent to deliver to the Investors the Accepted Securities (as defined below) registered in the name of the applicable Investors, and (ii) the aggregate purchase price for the Accepted Securities (as defined below) shall be
delivered by or on behalf of the Investors to the Company. 

  

	 	3.2. 	The Closing shall occur on the Scheduled Closing Date (i) if the aggregate amount of funds deposited by the Investors with the Escrow Agent is at least $150,000,000 on such
date and (ii) the conditions set forth in Section 6 are satisfied. If the aggregate amount of funds deposited by the Investors with the Escrow Agent is less than $150,000,000 on the Schedule Closing Date, the Company may either
(a) proceed with the Closing on such date or (b) delay the Closing until a date that is no later than March 9, 2006 (the “Delayed Closing Date”), at which time the Closing shall occur if, at such time, at least
$150,000,000 in aggregate amount of funds shall have been deposited by the Investors with the Escrow Agent. If the Closing is delayed pursuant to clause (b) above and the aggregate amount of funds deposited by the Investors with the Escrow
Agent remains less than $150,000,000 on the Delayed Closing Date, the Company may either (x) proceed with the Closing on the Delayed Closing Date or (y) terminate this Agreement on the Delayed Closing Date without liability on the part of
the non-defaulting Investors or on the part of the Company, except for the Company’s obligation to pay Investor’s fees and expenses in accordance with Section 5.11. Nothing contained herein shall relieve a defaulting Investor of any
liability it may have to the Company or any non-defaulting Investor for damages caused by its default. 

  

	 	3.3. 	If, (i) on the Scheduled Closing Date or (ii) on the Delayed Closing Date, any Investor defaults on its obligation to purchase the Accepted Securities that it has agreed
to purchase, the Company and the non-defaulting Investors may in their discretion arrange for the purchase of such Accepted Securities by any Investor on the terms contained in this Agreement, which purchase shall occur (a) if the Closing
occurs on the Scheduled Closing Date, on the Scheduled Closing Date or at any time thereafter until the Delayed Closing Date or (b) if the Closing occurs on the Delayed Closing Date, on the Delayed Closing Date, or (c) with respect to
defaults that occur on the Delayed Closing Date, as soon as practicable after the Delayed Closing Date. 

  

	 	3.4. 	 If the Company accepts the Investors’ offer to buy Securities in whole or in part, the Company or its representatives shall notify each Investor at the
telephone number provided on such Investor’s 

	 	 
signature page hereto of the number of Securities (the “Accepted Securities”) that the Company shall sell to such Investor and such Investor
shall buy. Payment by an Investor for the Accepted Securities shall be made by wire transfer of immediately available funds to the Escrow Agent in accordance with Section 3.6 below. If the Escrow Agent determines that the conditions to the
Closing are satisfied (which determination may be made based upon delivery of an officers’ certificate of the Company pursuant to Section 6.2(b) hereof), it shall deliver each Investor’s payment to the Company and the corresponding
Accepted Securities to the DTC account specified in the Investor signature pages hereto. If such conditions to the Closing are not satisfied, the Escrow Agent shall return each Investor’s funds to the applicable Investor.

  

	 	3.5. 	Subject to the provisions of Sections 3.2 and 3.3, the Company’s obligation to issue and sell the Accepted Securities to the Investors shall be subject only to the accuracy of
the representations and warranties made by the Investors and the fulfillment of those undertakings of the Investors to be fulfilled prior to the Closing. The Investors’ respective obligations to purchase the Accepted Securities shall be subject
to the conditions set forth in Section 6 hereof. 

  

	 	3.6. 	Promptly after the Company notifies each Investor of the Accepted Securities that the Company shall sell to such Investor, but in any event no later than one business day prior to
the Closing Date, such Investor shall remit by wire transfer the amount of funds equal to the aggregate purchase price for the Accepted Securities being purchased by such Investor to the following account designated by the Company pursuant to the
terms of the Escrow Agreement (the “Escrow Agreement”) a copy of which is attached hereto as Exhibit B relating to the offering of the Securities and entered into by and among the Company and the Escrow Agent:

  

			
	Bank Name:	  	JP MorganChase New York, NY
	Bank ABA:	  	021-000-021
	BNF Acct.:	  	323-161413
	BNF Acct Name:	  	Mellon Investor Services LLC
	Re:	  	HealthSouth Corporation
	Attn:	  	Vivian Gibson
	Tel. No.:	  	(201) 680-3306

 Such funds shall be held in escrow until the Closing and delivered by the Escrow Agent on behalf
of the Investors to the Company upon the satisfaction of the conditions to the obligations of the Investors set forth in Section 6 hereof. If the Investor does not remit the necessary funds to purchase its Accepted Securities on or prior to the
Closing Date as specified above, the Investor shall as soon as practicable following the Closing Date purchase such Accepted Securities from the Company as required by this Agreement at a price per Accepted Security that shall include accumulated
and unpaid dividends on the Accepted Securities from and including the Closing Date to but excluding the date of payment, computed on the basis of a 360-day year consisting of twelve 30-day months. 
  

	 	3.7. 	Prior to or promptly after the execution of this Agreement by the Investors and the Company, each Investor shall direct the broker-dealer at which the account or accounts to be
credited with its Securities are maintained (which broker/dealer shall be a DTC participant) to set up a Deposit/Withdrawal at Custodian (“DWAC”) instructing the Escrow Agent to credit such account or accounts with the Securities by
means of an electronic book-entry delivery. Such DWAC shall indicate the settlement date for the deposit of the Securities, which date shall be provided to the Investors by the Placement Agents. Simultaneously with the delivery to the Company by the
Escrow Agent of the funds held in escrow pursuant to Section 3.6 above, the Company shall direct the Escrow Agent to credit each Investor’s account or accounts with the Securities pursuant to the information contained in the DWAC.

  

	4.	Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, each Investor, that:

  

	 	4.1. 	 The Company has full right, power, authority and capacity to enter into this Agreement, to issue and sell the Securities and to consummate the other transactions
contemplated hereby, and has taken all 

	 	 
necessary action to authorize the execution, delivery and performance of this Agreement. This Agreement is a legally valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and other laws of general application affecting enforcement of creditors’
rights generally, rules of law governing specific performance, injunctive relief and equitable remedies. The Securities will be, as of the Closing Date, duly authorized by the Company and, when issued, delivered to and paid for by the Investors in
accordance with this Agreement, will be validly issued, fully paid and non-assessable and entitled to the rights, privileges and preferences set forth in the Certificate of Designations and will be free of restrictions on transfer, other than
restrictions of transfer under this Agreement and under applicable state and federal securities laws. Neither the issuance, sale or delivery of the Securities nor, upon the conversion thereof, the issuance or delivery of the Common Stock is subject
to any preemptive right of stockholders of the Company arising under law or the restated certificate of incorporation or by-laws of the Company, or to any contractual right of first refusal or other right in favor of any person.

  

	 	4.2. 	As of December 31, 2005, the Company’s authorized capital stock consisted of 600,000,000 shares of Common Stock, 397,708,468 of which are outstanding, and 1,500,000 shares
of preferred stock, none of which are outstanding. 

  

	 	4.3. 	Neither the Company nor any of its subsidiaries is, or after giving effect to the offering and sale of the Securities and upon application of the proceeds as described in the
private placement memorandum dated February 28, 2006, relating to the offering and sale of the Securities (including any documents incorporated by reference therein and as supplemented or amended prior to the Closing Date, the “Private
Placement Memorandum”) will be, an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 

  

	 	4.4. 	Both the preliminary copy and the final copy of the Private Placement Memorandum, as of their respective dates and (in the case of the final copy of the Private Placement
Memorandum) as of the Closing Date, in each case taken together with the Company’s Exchange Act Filings (as defined below) that are publicly filed on or prior to such date, did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company notes that as of the date hereof, it has not
filed, and does not intend to file, its quarterly reports with the Securities and Exchange Commission (“Commission”) for its fiscal quarters ending March 31, 2005, June 30, 2005 and September 30, 2005, and in
connection with the purchase of the Securities the Investors will not have access to the information that would have been contained therein. 

  

	 	4.5. 	Assuming the accuracy of the representations and warranties made by the Investors contained in this Agreement, the issuance and sale to the Investors of the Securities in the manner
contemplated by this Agreement are exempt from the registration requirements of the Securities Act. No form of general solicitation or general advertising within the meaning of Regulation D was used by the Company or, to the best of the
Company’s knowledge, any of its representatives in connection with the offer and sale of the Securities. 

  

	 	4.6. 	The Company has been duly organized and is validly existing and in good standing under the laws of the State of Delaware and has been duly qualified to do business and is in good
standing as a foreign entity in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification (except such failures to qualify as are not, either individually or in the aggregate, material
to the Company and its subsidiaries taken as a whole and except for jurisdictions not recognizing the legal concept of good standing), and has all power and authority necessary to own or hold its properties and to conduct its business.

  

	 	4.7. 	 As of December 31, 2005, all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and
non-assessable. The shares of Common Stock initially issuable upon conversion of the Securities have been duly authorized and reserved for issuance or delivery out of treasury upon such conversion and, when issued and delivered or delivered 

	 	 
out of treasury in accordance with the provisions of the restated certificate of incorporation of the Company, will be validly issued, fully paid and
non-assessable. All of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and (except (i) for directors’ qualifying shares or foreign
national qualifying capital stock, if applicable, (ii) as otherwise set forth in the Company’s public filings on Forms 10-K, 10-Q and 8-K, including any amendments thereto (collectively, the “Exchange Act Filings”), and
(iii) as pledged to secure indebtedness of the Company and/or its subsidiaries pursuant to credit facilities, indentures and other instruments evidencing indebtedness as contemplated by the Company’s Exchange Act Filings and existing or to
be entered into on the Closing Date) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (except where such failures to own are not, either individually or in the aggregate, material to the
Company and its subsidiaries taken as a whole). 

  

	 	4.8. 	The Certificate of Designations has been duly authorized by the Company. Upon issuance and delivery of the Securities in accordance with this Agreement, the Securities will be
convertible at the option of the holder thereof into the Common Stock in accordance with the terms of the Certificate of Designations. 

  

	 	4.9. 	The Company has all requisite corporate power and authority to enter into the Registration Rights Agreement to be entered into with the Investors on the Closing Date (the
“Registration Rights Agreement”). The Registration Rights Agreement has been duly authorized by the Company and, when executed and delivered by the Company, will be validly executed and delivered and (assuming the due authorization,
execution and delivery thereof by the Investors) will be the legally valid and binding obligation of the Company, enforceable against the Company in accordance with its terms subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and other laws of general application affecting enforcement of creditors’ rights generally, rules of law governing specific performance, injunctive relief and equitable remedies. 

  

	 	4.10. 	(a) The issue and sale of the Securities, the compliance by the Company with all of the provisions of the Securities, the authorization, execution and delivery and compliance by the
Company with all of the provisions of and performance of the Certificate of Designations, the Registration Rights Agreement and this Agreement, the use of the proceeds from the sale of the Securities and the consummation of the other transactions
contemplated hereby and thereby (i) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) will not
result in any violation of the provisions of the restated certificate of incorporation or by-laws of the Company and (iii) will not violate any statute or any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their properties or assets; and (b) no consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets is required for the issue and sale of the Securities, the consummation by the Company of the transactions contemplated by the Registration Rights
Agreement or this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities), except (w) in the cases of clauses (a)(i) and (iii) only, for such conflicts, breaches, defaults and violations as would
not reasonably be expected to have, either individually or in the aggregate, a material adverse change, or any development involving a prospective material adverse change, in or affecting the management, condition (financial or otherwise),
stockholders’ equity, results of operations, business or prospects of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”); (x) for such consent, approvals, authorizations, orders, filings,
registrations or qualifications that have been obtained; and (y) for the filing of a registration statement by the Company with the Commission pursuant to the Securities Act as required by the Registration Rights Agreement.

  

	 	4.11. 	 Except as described in the Company’s Exchange Act Filings, there are no contracts, agreements or understandings between the Company and any person granting
such person the right to require the 

	 	 
Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities registered pursuant to the Registration Rights Agreement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities
Act. 

  

	 	4.12. 	During the six-month period preceding the date of the Private Placement Memorandum and from the date of the Private Placement Memorandum through the Closing Date, none of the
Company or any other person acting on behalf of the Company has offered or sold to any person any Securities, or any securities of the same or a similar class as the Securities, other than Securities offered or sold to the Investors pursuant to this
Agreement. 

  

	 	4.13. 	The Company’s financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 filed with the Commission on December 2,
2005, present fairly the consolidated financial position, results of operations and cash flows of the Company and its subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended; such
financial statements and related schedules and notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) consistently applied throughout the periods involved, except as disclosed therein.

  

	 	4.14. 	Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements of the Company, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Company’s Exchange Act
Filings and, since such date, there has not been any material change in the stockholders’ equity or long-term debt of the Company or any of its subsidiaries or any Material Adverse Effect, either individually or in the aggregate, otherwise than
as set forth in the Company’s Exchange Act Filings. 

  

	 	4.15. 	The Company and each of its subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and defects (“Encumbrances”), except (i) for liens for taxes not yet due or payable, (ii) as are described in the Exchange Act Filings and (iii) as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and all real property and buildings held under lease by the Company or any of its subsidiaries are held by them under valid, subsisting and enforceable
leases, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

  

	 	4.16. 	Each of the Company and its subsidiaries holds and is operating in compliance (in all material respects) with all material franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders of any governmental or self-regulatory body required for the conduct of its business, and all of such are valid and in full force and effect, and each of the Company and its subsidiaries is in compliance
in all material respects with all laws, regulations, orders and decrees applicable to it which have a material effect on its business, properties or assets. 

  

	 	4.17. 	To the best of the Company’s knowledge after reasonable investigation, neither the Company nor any subsidiary, nor any employee or agent thereof, has made any payment of funds
of the Company or any subsidiary or received or retained any funds in violation of any law, rule or regulation, which violation could have, either individually or in the aggregate, a Material Adverse Effect. 

  

	 	4.18. 	The Company and each of its subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is adequate for the conduct of their respective businesses
and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries, except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse
Effect. 

  

	 	4.19. 	 The Company and each of its subsidiaries (i) own or possess adequate rights to use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses and 

	 	 
(ii) have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any written notice of any claim
of conflict with, any such rights of others, except with respect to clauses (i) and (ii) as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. 

  

	 	4.20. 	Except as described in the Company’s Exchange Act Filings, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or
to which any property or assets of the Company or any of its subsidiaries is the subject that, if determined adversely to the Company or any of its subsidiaries, could have, either individually or in the aggregate, a Material Adverse Effect, and to
the best of the Company’s knowledge, no such proceedings are threatened by governmental authorities or threatened by others. 

  

	 	4.21. 	The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company would have
any liability; the Company has not incurred and does not expect to incur liability under Title IV of ERISA with respect to termination of, or withdrawal from, any such “pension plan”; no such “pension plan” for which the Company
would have any liability has incurred an “accumulated funding deficiency” as defined in Section 412 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the
“Code”), as of the last day of the most recent fiscal year of such plan ended before the date hereof, nor does the Company have or expect to incur liability for a tax under Section 4971 of the Code; and each such “pension
plan” for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would
cause the loss of such qualification. 

  

	 	4.22. 	The Company has filed within the time prescribed by law (including extensions of time approved by the appropriate taxing authority) all federal, state and local income and franchise
tax returns required to be filed through the date hereof, except where the failure to file would not, individually or in the aggregate, have a Material Adverse Effect and has paid all taxes shown as due thereon other than those taxes contested in
good faith and where the failure to pay would not, individually or in the aggregate, have a Material Adverse Effect, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries that has had (nor does the Company
have any knowledge of any tax deficiency that, if determined adversely to the Company or any of its subsidiaries, might have) or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

  

	 	4.23. 	Except as disclosed in the Company’s Exchange Act Filings there are not currently, and will not be as a result of the offering of the Securities, any outstanding subscriptions,
rights, warrants, calls, commitments of sales or options to acquire, or instruments convertible into or exchangeable for, any capital stock or equity interest of the Company or any of its subsidiaries. 

  

	 	4.24. 	Except as disclosed in Company’s Exchange Act Filings and except in the case of clause (i), but only with respect to subsidiaries of the Company, and clauses (ii) and
(iii) for such violations and defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, neither the Company nor any of its subsidiaries (i) is in violation of its charter,
by-laws or applicable organizational documents, (ii) is in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant, condition or
other obligation contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation
of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to obtain or maintain any license, permit, certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its business. 

	 	4.25. 	Except as disclosed in Company’s Exchange Act Filings, and except for such matters as would not, individually or in the aggregate, result in a Material Adverse Effect, the
Company and its subsidiaries (1) are conducting and have conducted their businesses, operations and facilities in compliance with Environmental Laws (as defined below); (2) have not received any written notice from a governmental authority
or any other third party alleging any violation of Environmental Law or liability thereunder (including, without limitation, liability as a “potentially responsible party” and/or for costs of investigating or remediating sites containing
Hazardous Substances (as defined below) and/or damages to natural resources); (3) are not subject to any pending or, to the knowledge of the Company or any of its subsidiaries, threatened claim or other legal proceeding under any Environmental
Laws against the Company or its subsidiaries; and (4) do not have any knowledge of any pending Environmental Law or any release of Hazardous Substances that, individually or in the aggregate, would reasonably be expected to form the basis of
any such claim or legal proceeding under any Environmental Law against the Company or its subsidiaries or to require any material capital expenditures to maintain the Company’s or the subsidiaries’ compliance with Environmental Law. As
used in this paragraph, “Environmental Laws” means any and all applicable federal, state, local, and foreign laws, statutes, ordinances, rules, regulations, enforceable requirements and common law, or any enforceable administrative
or judicial interpretation, order, consent, decree or judgment thereof, relating to pollution or the protection of human health or the environment, including, without limitation, those relating to, regulating or imposing liability or standards of
conduct concerning (i) noise or odor; (ii) emissions, discharges, releases or threatened releases of Hazardous Substances into ambient air, surface water, groundwater or land; (iii) the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, release, transport or handling of, or exposure to, Hazardous Substances; or (iv) the investigation, remediation or cleanup of any Hazardous Substances. As used in this paragraph,
“Hazardous Substances” means pollutants, contaminants or hazardous, dangerous, toxic, biohazardous or infectious substances, materials, constituents or wastes or toxins, petroleum, petroleum products and their breakdown
constituents, or any other hazardous or toxic chemical substance regulated under Environmental Laws or exhibiting a hazardous waste characteristic including, but not limited to, corrosivity, ignitability, toxicity or reactivity, whether solid,
gaseous or liquid in nature. 

  

	 	4.26. 	The Securities will satisfy, as of the date of the Private Placement Memorandum and as of the Closing Date, the eligibility requirements of Rule 144A(d)(3) under the Securities Act.

  

	 	4.27. 	The Company shall have obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale
of the Securities. 

  

	 	4.28. 	With respect to Securities that are no longer “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act on a conversion date (as such term is
defined in the Certificate of Designation), either as a result of a resale of the Securities pursuant to a registration statement or otherwise, all shares of Common Stock distributed upon conversion will be freely transferable without restriction
under the Securities Act, other than by affiliates of the Company. 

  

	 	4.29. 	Each significant subsidiary of the Company, as defined in accordance with regulation S-X promulgated under the Securities Act of 1933, (1) has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all power and authority necessary to own or hold its properties and to conduct its business, except those the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (2) has been duly qualified to do business and is in good standing as a foreign entity in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, except for those failures to be so qualified which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and except for
jurisdictions not recognizing the legal concept of good standing. 

  

	5.	Further Agreements of the Company. The Company further covenants with each Investor that: 

  

	 	5.1. 	 For so long as any of the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the
Company will make available at its expense, upon request, to any holder of such Securities and any prospective purchasers thereof the information 

	 	 
specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.

  

	 	5.2. 	The Company shall reserve and keep available at all times, free of preemptive rights, shares of Common Stock for the purpose of enabling the Company to satisfy any obligation to
issue shares of its Common Stock upon conversion of the Securities. 

  

	 	5.3. 	The Company will take such steps as shall be necessary to ensure that neither the Company nor any of its subsidiaries becomes an “investment company” or a company
“controlled” by an “investment company” within the meaning the Investment Company Act of 1940, as amended. 

  

	 	5.4. 	The Company will comply, in all material respects, with all applicable securities and other applicable laws, rules and regulations, including, without limitation, the Sarbanes Oxley
Act, and to use its best efforts to cause the Company’s directors and officers, in their capacities as such, to comply with such laws, rules and regulations, including, without limitation, the provisions of the Sarbanes Oxley Act.

  

	 	5.5. 	For a period of two years (calculated in accordance with paragraph (d) of Rule 144 under the Securities Act) following the date any Securities are acquired by the Company or
any of its affiliates (as defined in Rule 144A under the Securities Act), none of the Company or any of its affiliates will sell any such Securities. 

  

	 	5.6. 	The Company will use all commercially reasonable efforts to (i) cause the Securities to be designated as PORTAL-eligible securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the NASD’s Portal Market and (ii) cause the Securities to be eligible for clearance and settlement through The Depository Trust Company. 

  

	 	5.7. 	The Company has not taken, and will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company. 

  

	 	5.8. 	The Company will take reasonable precautions to ensure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the
Securities Act), of any Securities or any substantially similar security issued by the Company, within six months subsequent to the date on which the distribution of the Securities has been completed, is made under restrictions and other
circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Securities Act,
including any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act. 

  

	 	5.9. 	 Without the prior written consent of Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, for
a period of 90 days from the date of the Private Placement Memorandum, the Company agrees not to (a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any equity securities of the Company or any securities convertible into or exercisable or exchangeable for equity securities of the Company or
(b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the equity securities of the Company, whether any such transaction described in clause (a) or
(b) above is to be settled by delivery of equity securities or such other securities, in cash or otherwise, other than (i) the Securities, (ii) the shares of Common Stock issuable upon conversion of the Securities, (iii) the
issuance by the Company of shares of Common Stock upon the exercise of an option or a warrant or the conversion of a security, in each case outstanding on the date of the Private Placement Memorandum, (iv) the grant by the Company of employee,
officer or director stock options and the issuance by the Company of any shares of Common Stock upon the exercise of any option (regardless of when issued) under any employee, officer or director stock option or similar benefit plan, (v) the
issuance by the Company of shares of Common Stock, stock appreciation rights or common stock equivalents or warrants, rights or options to purchase any of the foregoing, pursuant to any employee, officer or director stock option, stock purchase or
similar benefit plans and (vi) the issuance by the Company of any shares of 

	 	 
Common Stock, warrants or other securities or any securities issuable upon conversion of such warrants or other securities in connection with the
Company’s previously announced preliminary agreement in principle to settle litigation filed against the Company, certain of its former directors and officers and certain other parties in the United States District Court for the Northern
District of Alabama and the Circuit Court in Jefferson County, Alabama. 

  

	 	5.10. 	The Company will cooperate with the Investors and their counsel to qualify the Securities and the Common Stock or any other Securities into which it is Convertible for offer and
sale under the securities or “Blue Sky” laws of such jurisdictions as any Investor shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Securities; provided
that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) take any action that would
subject it to general service of process in any such jurisdiction or (iii) take any action that would subject itself to taxation in any such jurisdiction if it is not otherwise so subject. 

  

	 	5.11. 	The Company agrees to pay the costs and expenses relating to the following matters: (i) the preparation, printing or reproduction of the Private Placement Memorandum and each
amendment or supplement thereto; (ii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Private Placement Memorandum and all amendments or
supplements thereto, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (iii) the preparation, printing, authentication, issuance and delivery of certificates for the Securities,
including any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (iv) the printing (or reproduction) and delivery of this Agreement, the closing documents and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Securities; (vi) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the
Securities; (vi) the fees and expenses of the Company’s accountants and the fees and expenses of counsel (including local and special counsel) for the Company; (vii) the fees and expenses of Debevoise & Plimpton LLP, special
counsel to the Investors; (viii) the fees and disbursements of any transfer agent or registrar for the Securities; and (ix) all other costs and reasonable expenses incident to the performance by the Company of its obligations hereunder.

  

	 	5.12. 	The Company agrees that neither it nor any other person acting on its behalf will provide any Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Investor shall be
relying on the foregoing representations in effecting transactions in securities of the Company. Notwithstanding the requirements in this Section 5.12, in the event of a breach of the foregoing agreement by the Company, any of its subsidiaries,
or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein, any Investor shall have the right to make a public disclosure, in the form of a press release, public advertisement or
otherwise, of such material, non-public information without the prior approval by the Company, its subsidiaries, or any of its or their respective officers, directors, employees or agents. No Investor shall have any liability to the Company, its
subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure. 

  

	6.	Conditions of Investors’ Obligations. The obligation of each Investor to purchase Securities on the Closing Date is subject to the following conditions:

  

	 	6.1. 	On the Closing Date the Company shall have delivered to Debevoise & Plimpton LLP (the “Designated Investor Counsel”), for the benefit of the Investors, the
opinion, dated the Closing Date and addressed to the Investors, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company, substantially in the form set forth in Exhibit C to this Agreement. 

	 	6.2. 	(a) (i) The representations and warranties of the Company contained in this Agreement shall be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, (ii) the statements of the Company’s officers made pursuant to any certificate delivered in accordance with the provisions hereof shall be true and correct on and as of the date made and on
and as of the Closing Date, (iii) the Company shall have performed all covenants and agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, (iv) except as described in
the Company’s Exchange Act Filings (exclusive of any such filings after the date hereof), subsequent to December 31, 2004, there shall have been no event or development, and no information shall have become known, that, individually or in
the aggregate, has or would be reasonably likely to have a Material Adverse Effect, and (v) the sale of the Securities hereunder and the use of the Private Placement Memorandum shall not be enjoined (temporarily or permanently) on the Closing
Date and (b) on the Closing Date the Company shall have delivered to the Designated Investors Counsel, for the benefit of the Investors, a certificate of the Company, dated the Closing Date, signed on behalf of the Company by its Chief
Financial Officer, to the effect that the conditions set forth in clause (a) above have been satisfied in all respects. 

  

	 	6.3. 	The Certificate of Designations shall have been duly executed and acknowledged by the Company and filed with the Secretary of State of the State of Delaware and shall have become
effective in accordance with the provisions of the General Corporation Law of the State of Delaware. 

  

	 	6.4. 	Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated have received the “lockup” agreements
substantially in the form set forth in Exhibit D to this Agreement signed by certain officers and directors of the Company set forth in Schedule A hereto relating to sales and certain other dispositions of shares of the equity securities or certain
other securities of the Company, and such agreements shall be in full force and effect on the Closing Date. 

  

	 	6.5. 	On the Closing Date the Investors shall have received the Registration Rights Agreement executed by the Company, and such agreement shall be in full force and effect.

  

	 	6.6. 	The Company shall have delivered to the Designated Investors Counsel, for the benefit of the Investors, satisfactory evidence of the good standing of the Company in its jurisdiction
of organization and its good standing as a foreign entity in each jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such qualification (except where the failure to so qualify is not material to the
Company and its subsidiaries taken as a whole, and except for jurisdictions not recognizing the legal concept of good standing), in each case in writing or any standard form of telecommunication, from the appropriate governmental authorities of such
jurisdictions. 

 On or before the Closing Date, the Company shall have delivered to the Designated Investors Counsel, for the
benefit of the Investors, such further documents, certificates, letters and schedules or instruments relating to the business, corporate, legal and financial affairs of the Company and its subsidiaries as the Investors shall have reasonably
requested from the Company reasonably in advance of the Closing Date so long as such further documents, certificates, letters and schedules or instruments are reasonable and customary for the transactions contemplated by this Agreement. Delivery of
any such documents, certificates, letters and schedules or instruments to the Designated Investors Counsel shall be deemed to constitute delivery to the applicable Investors for all purposes hereunder. 
 All such documents, opinions, certificates, letters, schedules or instruments delivered pursuant to this Agreement will comply with the provisions hereof
only if they are reasonably satisfactory in all material respects to the Designated Investors Counsel. The Company shall furnish to the Investors such conformed copies of such documents, certificates, letters, schedules and instruments in such
quantities as the Investors shall reasonably request. 

	7.	Representations, Warranties and Covenants of the Investors. Each Investor severally, and not jointly, hereby represents and warrants to, and covenants with, the Company,
that: 

  

	 	7.1. 	The Investor is (a) a QIB, (b) aware that the sale to it is being made in reliance on a private placement exemption from registration under the Securities Act and
(c) acquiring the Securities for its own account or for the account of a QIB and not with a view to the distribution thereof. 

  

	 	7.2. 	The Investor understands that the Securities and the Common Stock issuable upon conversion of the Securities are being offered in a transaction not involving any public offering
within the meaning of the Securities Act, that the Securities and the Common Stock issuable upon conversion of the Securities have not been and, except as described in the Private Placement Memorandum, will not be registered under the Securities Act
and that (a) if prior to the expiration of the applicable holding period specified in Rule 144(k) of the Securities Act it decides to offer, resell, pledge or otherwise transfer any of the Securities or Common Stock issued upon conversion of
the Securities, such Securities and Common Stock may be offered, resold, pledged or otherwise transferred only (i) to a person whom the seller reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A,
(ii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available), (iii) pursuant to an effective registration statement under the Securities Act or (iv) to the Company or one of
its subsidiaries, in each of cases (i) through (iv) in accordance with any applicable securities laws of any state of the United States, and that (b) the Investor will, and each subsequent holder of the Securities is required to,
notify any subsequent purchaser of the Securities or the Common Stock issued upon conversion of the Securities of the resale restrictions referred to in clause (a) above and will provide the Company and the transfer agent such certificates and
other information as they may reasonably require to confirm that the transfer by it complies with the foregoing restrictions, if applicable. 

  

	 	7.3. 	The Investor understands that the Securities and the Common Stock issuable upon conversion of the Securities will, until the expiration of the applicable holding period set forth in
Rule 144(k) of the Securities Act, unless sold pursuant to a registration statement that has been declared effective under the Securities Act or in compliance with Rule 144, bear a legend substantially to the following effect:

 THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS
HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. 
 THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (IV) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE. 
  

	 	7.4. 	The Investor (a) is able to fend for itself in the transactions contemplated by the Private Placement Memorandum, (b) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its prospective investment in the Securities and (c) has the ability to bear the economic risks of its prospective investment in the Securities and can afford the complete
loss of such investment. 

	 	7.5. 	The Investor has received a preliminary copy of the Private Placement Memorandum and upon delivery by the Company prior to Closing of the final copy of the Private Placement
Memorandum will have received a final copy of the Private Placement Memorandum and acknowledges that (a) it has conducted its own investigation of the Company and the terms of the Securities and, in conducting its examination, it has not relied
on, and will not rely on, any Placement Agent, any statements or other information provided by any Placement Agent concerning the Company or the terms of this offering or any due diligence investigation that any of the Placement Agents or their
respective affiliates, or any person acting on behalf of any of them, may conduct or may have conducted with respect to the Securities or the Company, (b) it has had access to the Company’s public filings with the Securities and Exchange
Commission and to such financial and other information as it deems necessary to make its decision to purchase the Securities, acknowledging that the Company has not filed with the Commission certain required quarterly reports and that the Company
cannot assure such Investor that such information would not have been relevant to the Investor’s decision to purchase the Securities, (c) it has been offered the opportunity to ask questions of the Company and, if asked questions, received
answers thereto, as it deemed necessary in connection with the decision to purchase the Securities and (d) it is aware that there may be additional non-public information with respect to the Securities and the Company that the Company has made
itself available to provide to the Investor upon execution by such Investor of a confidentiality agreement, and that the Investor has either executed such confidentiality agreement and received such additional information that it has requested or
has elected in its sole discretion not to request such information. 

  

	 	7.6. 	The Investor, its affiliates and any of its and their directors, officers, employees, agents, advisors and controlling persons are aware that the U.S. securities laws prohibit any
person that has material non-public information about a company from purchasing or selling, directly or indirectly, securities of such company (including entering into hedging transactions involving such securities) or from communicating such
information to any other person under circumstances in which it is reasonably foreseeable that such other person is likely to purchase or sell such securities. 

  

	 	7.7. 	The Investor understands that the Company, each Placement Agent and others will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements
and agrees that if any of the representations and acknowledgements deemed to have been made by it by its purchase of the Securities are no longer accurate, the Investor shall promptly notify the Company and each Placement Agent. The Investor hereby
consents to such reliance. If the Investor is acquiring the Securities as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make
the foregoing representations, acknowledgements and agreements on behalf of such account. 

  

	 	7.8. 	The Investor has not solicited offers for, or offered or sold, and will not solicit offers for, or offer to sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. 

  

	 	7.9. 	The Investor acknowledges that no action has been or will be taken in any jurisdiction outside the United States by the Company or any Placement Agent that would permit an offering
of the Securities, or possession or distribution of offering materials in connection with the issue of the Securities, in any jurisdiction outside the United States where action for that purpose is required. Each Investor outside the United States
will comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers Securities or has in its possession or distributes any offering material, in all cases at its own expense.

  

	 	7.10. 	The Investor further represents and warrants to, and covenants with, the Company that the Investor has full right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. 

  

	 	7.11. 	 The Investor understands that nothing in the Private Placement Memorandum, this Agreement, the Company’s public filings with the Commission or any other
materials presented to the Investor in 

	 	 
connection with the purchase and sale of the Securities constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors and made its own assessments as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Securities. 

  

	8.	Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations
and warranties made by the Company and the Investor herein shall survive the execution of this Agreement, the delivery to the Investor of the Securities being purchased and the payment therefor. 

  

	9.	Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be delivered (A) if within the domestic United States, by
first-class registered or certified mail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, or (B) otherwise by International Federal Express or facsimile, and shall be deemed given (i) if delivered by
first-class registered or certified mail, three business days after so mailed, (ii) if delivered by a nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two
business days after so mailed and (iv) if delivered by facsimile, upon electronic confirmation of receipt and shall be delivered as addressed as follows: 

  

			
	 (a)    if to the Company, to:

	 HealthSouth Corporation

	 One HealthSouth Parkway

	 Birmingham, Alabama 35243

	 Attention: General Counsel

	 Telecopy No.: (205) 970-5913

  

			
	 with a copy to:

	
	 Richard B. Aftanas, Esq.

	 Skadden, Arps, Slate, Meagher & Flom LLP

	 Four Times Square

	 New York NY 10036

	 Telecopy
	  	No.: (917) 777-4112

			
	 (b)    if to an Investor, at its address on the signature page hereto, or at such other address or addresses
as may have been furnished to the Company in writing.

	 with a copy to:

	
	 Steven J. Slutzky, Esq.

	 Debevoise & Plimpton LLP

	 919 Third Avenue

	 New York NY 10022

	 Telecopy No.: (212) 909-6836

  

	10.	Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and any
controlling persons referred to herein, and the directors, officers, employees, advisors, affiliates and agents of each Investor. Nothing in this Agreement is intended, or shall be construed, to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained herein. 

  

	11.	Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investors. 

  

	12.	Headings. The headings of the various sections of this Agreement have been inserted for convenience or reference only and shall not be deemed to be part of this
Agreement. 

	13.	Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or impaired thereby. 

  

	14.	Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed
within the State of New York. 

  

	15.	Counterparts. This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the
same agreement. 

 Schedule A 
 Officers and Directors Who Have Signed the Lockup Agreements 
 Steven R. Berrard 
 Edward A. Blechschmidt 
 Donald L. Correll 
 Yvonne M. Curl 
 Gregory L. Doody 
 Charles M. Elson 
 Jay Grinney 
 Jon F. Hanson 
 Leo I. Higdon, Jr. 
 John Markus 
 John E. Maupin, Jr. 
 L. Edward Shaw, Jr. 
 Michael D. Snow 
 John L. WorkmanCommon Stock Purchase Agreement, dated March 24, 2006

 EXHIBIT 10.1 
 COMMON STOCK PURCHASE AGREEMENT 
 This COMMON STOCK PURCHASE AGREEMENT (this
“Agreement”) is made as of March 24, 2006 by and between EP MedSystems, Inc., a New Jersey corporation with its principal office at 575 Route 73 North, Building D, West Berlin, New Jersey 08091-9293 (the
“Company”), and each of the several purchasers named in Exhibit A attached hereto (each, a “Purchaser” and collectively, the “Purchasers”). 
 WHEREAS, the Company desires to issue and sell to the Purchasers an aggregate of (i) up to 4,444,500 shares (the “Shares”)
of the authorized but unissued shares of the Company’s common stock, no par value, stated value $0.001 per share (the “Common Stock”); and 
 WHEREAS, each Purchaser, severally, wishes to purchase the number of Shares shown next to its name on Exhibit A hereto, all upon the terms and subject to the conditions set forth in this Agreement. 

NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the parties hereto agree as
follows: 
 1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings: 
 “Affiliate” of a party means any other Person controlling, controlled by or under common control with the specified Person. For
the purposes of this definition, “control” means the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations
promulgated thereunder. 
 “GAAP” means United States generally accepted accounting principles.

 “Majority Purchasers” shall mean Purchasers which, at any given time, hold greater than fifty
percent (50%) of the outstanding Shares. 
 “Material Adverse Effect” shall mean a material
adverse effect on the prospects, condition (financial or other), business, operations, assets, liabilities, or results of operations of the Company and its subsidiaries, taken as a whole. 
 “NASD” means the National Association of Securities Dealers, Inc. 
 “Person” shall mean an individual, corporation, company, partnership, firm, association, joint venture, trust,
unincorporated organization, government, governmental body, agency, political subdivision or other entity. 

 “Registration Rights Agreement” shall mean that certain
Registration Rights Agreement, dated as of the Closing Date, among the Company and the Purchasers. 
 “SEC”
shall mean the Securities and Exchange Commission. 
 “Securities Act” shall mean the Securities
Act of 1933, as amended, and all of the rules and regulations promulgated thereunder. 
 2. Purchase and Sale of Shares. 
 2.1 Purchase and Sale. Subject to and upon the terms and conditions set forth in this Agreement, the Company agrees to issue, sell and
deliver to each Purchaser, and each Purchaser, severally, hereby agrees to purchase from the Company, at the Closing, (i) the number of shares of Common Stock set forth opposite the name of such Purchaser under the heading “Number of
Shares to be Purchased” on Exhibit A hereto, at a purchase price of $2.25 per share. The total purchase price payable by each Purchaser for the number of shares of Common Stock that such Purchaser is hereby agreeing to purchase is
set forth opposite the name of such Purchaser under the heading “Purchase Price” on Exhibit A hereto. The Company shall be obligated to register the Shares pursuant to the terms and conditions set forth in the Registration
Rights Agreement. 
 2.2 Closing. The closing of the transactions contemplated under this Agreement (the
“Closing”) shall take place at 10:00 a.m. at the offices of Mayer, Brown, Rowe & Maw LLP in New York, New York on March 27, 2006, or at such other location, date and time as may be agreed upon between the
Majority Purchasers and the Company (the “Closing Date”). At the Closing, the Company shall authorize its transfer agent to issue to each Purchaser, against delivery of payment for the Shares by wire transfer of immediate
available funds in accordance with the Company’s instructions, one or more stock certificates registered in the name of each Purchaser, representing the number of shares set forth opposite the appropriate Purchaser’s name on
Exhibit A hereto, and bearing the legend set forth in Section 6.2 hereof. Closing documents may be delivered by facsimile with original signature pages sent by overnight courier. 
 2.3 Independent Purchasers. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an
arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby and that each Purchaser has separately negotiated the terms of this Agreement. Nothing contained herein or in any agreement or document relating to
this transaction, and no action taken by any Purchaser, shall be deemed to constitute the Purchasers as, or to create any presumption that the Purchasers are in any way acting in concert or as, a group with respect to the obligations or transaction
hereunder. No Purchaser has relied upon any other Purchaser for advice in entering into the transactions contemplated hereby. 
 3.
Representations and Warranties of the Company. The Company hereby represents and warrants to each of the Purchasers as follows: 
 3.1 Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct its business as now conducted. Each subsidiary as referred 

  

 2 

 
to in the SEC Documents (as hereinafter defined) or the Draft 10-KSB (as hereinafter defined) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority, and all necessary licenses and permits, to own and lease its properties and assets and to conduct its business as now conducted. The Company
and its subsidiaries are each qualified to do business as a foreign corporation and are in good standing in all states where the conduct of their respective businesses or their ownership or leasing of property requires such qualification, except
where the failure to so qualify would not have a Material Adverse Effect. The Company does not own or control, directly or indirectly, any interest in any other corporation, partnership, limited liability company, unincorporated business
organization, association, trust or other business entity. 
 3.2 Capitalization. 
 (a) The authorized capital stock of the Company consists of: (i) 5,000,000 shares of preferred stock of the Company, no par value per
share, of which no shares are issued and outstanding; and (ii) 40,000,000 shares of Common Stock, no par value, $.001 stated value per share, of which, immediately prior to the consummation of the transactions contemplated hereby,
(A) 25,970,176 shares are issued and outstanding and all such outstanding shares are validly issued, fully paid and nonassessable; (B) 50,000 shares of Common Stock are held in treasury; (C) 801,708 shares of Common Stock reserved for
issuance pursuant to the Company’s 1995 Long Term Incentive Plan; (D) 180,000 shares of Common Stock reserved for issuance pursuant to the Company’s 1995 Director Option Plan; (E) 990,000 shares of Common Stock reserved for
issuance pursuant to the Company’s 2002 Stock Option Plan; (F) 1,000,000 shares of Common Stock reserved for issuance under the Company’s 2006 Stock Option Plan; (G) 1,000,0000 shares of Common Stock reserved for issuance under
the Company’s 2006 Director Plan; (H) 477,327 shares of Common Stock reserved for issuance upon conversion of the Company’s outstanding Secured Convertible Note issued to Laurus Master Fund, Ltd.; (I) 1,250,050 shares of Common
Stock reserved for issuance upon exercise of outstanding warrants; and (J) 255,000 shares of Common Stock reserved for issuance upon the exercise of outstanding non-plan options. With respect to the 1995 Long Term Incentive Plan, the 1995
Director Option Plan, the 2002 Stock Option Plan, the 2006 Stock Option Plan, the 2006 Director Plan and other non-plan stock options and warrants, an aggregate of 4,016,585 options and warrants have been granted or issued and are outstanding as of
the Closing Date. 
 (b) There are no preemptive or similar rights to purchase or otherwise acquire shares of capital stock of
the Company pursuant to any provision of law or the Amended and Restated Certificate of Incorporation or By-Laws of the Company or by agreement or otherwise. Except as set forth in this Section 3.2 and except as set forth in the SEC
Documents or the Draft 10-KSB, there are no outstanding subscriptions, warrants, options or other rights or commitments of any character to subscribe for or purchase from the Company, or obligating the Company to issue, any shares of capital stock
of the Company or any securities convertible into or exchangeable for such shares. 
 (c) There are no stockholder agreements,
voting agreements, or similar agreements with respect to the Common Stock to which the Company is a party, or to the knowledge of the Company, by or between any stockholders of the Company or any of its Affiliates. 
  

 3 

 3.3 Authorization. The Company has all requisite corporate power to enter into this
Agreement and the Registration Rights Agreement, to issue the Shares and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement (including, without limitation, the issuance of the Shares).
All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein has been taken or will be taken prior to the Closing Date. When executed and delivered by the Company, each of this Agreement and the Registration Rights Agreement shall constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance with their respective terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally and by
general equitable principles. 
 3.4 Valid Issuance of the Shares. The Shares being purchased by the Purchasers hereunder will,
upon issuance pursuant to the terms hereof, be validly issued, fully paid and nonassessable, free from all liens, claims, encumbrances with respect to the issuance of such Shares and will not be subject to any preemptive or similar rights. Except
for blue sky filing fees, if any, there are no state or city taxes, fees or other charges payable in connection with the execution or delivery of this Agreement, the Registration Rights Agreement and the Shares. 
 3.5 Financial Statements. The Company has furnished to each Purchaser its audited Statements of Income, Stockholders’ Equity and Cash
Flows for the fiscal year ended December 31, 2004, its audited Balance Sheet as of December 31, 2004, its unaudited Statements of Income, Stockholders’ Equity and Cash Flows for the period from December 31, 2004 through
September 30, 2005 and its unaudited Balance Sheet as of September 30, 2005. All such financial statements are hereinafter referred to collectively as the “Financial Statements.” The Financial Statements have
been prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis during the periods involved, and fairly present, in all material respects, the financial position of the Company and the results of its
operations as of the date and for the periods indicated thereon, except that the unaudited financial statements may not be in accordance with U.S. generally accepted accounting principles because of the absence of footnotes and are subject to normal
year-end audit adjustments which, individually, and in the aggregate, will not be have a Material Adverse Effect. Since September 30, 2005, to the Company’s knowledge, (i) there has been no development or change (actual or
threatened), individually or in the aggregate, having a Material Adverse Effect, (ii) except as set forth in an SEC Document (as defined below) or the Draft 10-KSB (as defined below), there does not exist any condition reasonably likely to
result in a Material Adverse Effect and (iii) the Company has conducted its business only in the ordinary course consistent with past practice. The Company has no indebtedness, obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due) which were not fully reflected in, reserved against or otherwise described in the Financial Statements or the notes thereto, or incurred in the ordinary course of business consistent with
the Company’s past practices, all of which individually and in the aggregate do not or would not have a Material Adverse Effect. 
 3.6
SEC Documents. The Company has made available to each Purchaser, a true and complete copy of the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2004, the Company’s Quarterly Reports on Form 10-QSB
for the three months 

  

 4 

 
ended March 31, 2005, June 30, 2005 and September 30, 2005 and any other statement, report, registration statement (other than
registration statements on Form S-8) or definitive proxy statement filed by the Company with the SEC during the period commencing on December 31, 2004 and ending on the date hereof. The Company will, promptly upon the filing thereof, also make
available to each Purchaser all statements, reports (including, without limitation, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K), registration statements and definitive proxy statements filed by the Company with the SEC during
the period commencing on the date hereof and ending on the Closing Date (all such materials required to be furnished to each Purchaser pursuant to this sentence or pursuant to the next preceding sentence of this Section 3.6 being called,
collectively, including any amendments thereto, the “SEC Documents”). The Company has made available to each Purchaser a draft (dated March 23, 2006) of the Company’s Annual Report on Form 10-KSB for
the year ended December 31, 2005 (the “Draft 10-KSB”). Since January 1, 2005, the Company has timely made all filings required to be made by it under the Exchange Act and the securities laws of any state, and any
rules and regulations promulgated thereunder. The SEC Documents comply in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, as of their respective filing dates,
except to the extent corrected by a subsequently filed SEC Document filed prior to the date hereof; provided, that, it is hereby acknowledged and agreed that the Company is not making any representation or warranty pursuant to this sentence in
respect of the Draft 10-KSB. The Company is eligible to use a registration statement on Form S-3 with respect to the registration of Registrable Securities (as such term is defined in the Registration Rights Agreement) pursuant to the Registration
Rights Agreement. 
 3.7 Consents. Except for filings under federal and applicable state securities laws and except for Permits
(as defined below), the absence of which either individually or in the aggregate would not have a Material Adverse Effect, all permits, consents, approvals, orders, authorizations of, or declarations to (collectively,
“Permits”) or filings with any federal, state, local or foreign court, governmental or regulatory authority, or other person (including third party consents) required on the part of the Company in connection with the
execution, delivery or performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein have been obtained or will be obtained prior to the Closing Date, and will be
effective as of the Closing Date. 
 3.8 No Conflict. The execution and delivery of this Agreement and the Registration Rights
Agreement by the Company and the consummation of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares) will not (x) conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the Amended and Restated Certificate of Incorporation
or bylaws of the Company or (ii) any agreement or instrument, Permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to the Company, any of its subsidiaries or their respective properties or assets
or (y) result in the creation of any lien, security interest, charge or encumbrance upon the Company’s or any of its subsidiaries’ assets, properties or outstanding capital stock. 
  

 5 

 3.9 Brokers or Finders. Except for C.E. Unterberg, Towbin LLC, a Delaware limited liability
company (the “Placement Agent”), the Company has not dealt with any broker or finder in connection with the transactions contemplated by this Agreement, and, except for certain fees and expenses payable by the Company to the
Placement Agent, the Company has not incurred, and shall not incur, directly or indirectly, any liability for any brokerage or finders’ fees or agents commissions or any similar charges in connection with this Agreement or any transaction
contemplated hereby. 
 3.10 Nasdaq Capital Market. The Common Stock is listed on The Nasdaq Capital Market, and there are no
proceedings to revoke or suspend such listing. The issuance of the Shares will not contravene any NASDAQ Marketplace Rule. The Common Stock is registered pursuant to Section 12(g) of the Exchange Act. The Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, delisting the Common Stock from The Nasdaq Capital Market. The Company has not received any notification
that, and has no knowledge that, the SEC or the NASD is contemplating terminating such listing or registration. The issuance of the Shares does not require stockholder approval, including, without limitation, as may be required pursuant to the
Nasdaq Marketplace Rules. 
 3.11 Absence of Litigation. Except as set forth in the SEC Documents or the Draft 10-KSB, there is
no action, suit or proceeding or, to the Company’s knowledge, any investigation, pending, or to the Company’s knowledge, threatened by or before any governmental body against the Company, its subsidiaries, its activities, properties or
assets or any officer, director, or employee of the Company in connection with such officer’s, director’s or employee’s relationship with, or actions taken on behalf of the Company and in which an unfavorable outcome, ruling or
finding in any said matter, or for all matters taken as a whole, might have a Material Adverse Effect. The foregoing includes, without limitation, any such action, suit, proceeding or investigation that questions this Agreement or the Registration
Rights Agreement or the right of the Company to execute, deliver and perform under same. The Company is not a party to, or subject to the provisions of any order, writ or injunction, judgment or decree of any court or government agency or
instrumentality. 
 3.12 Fiduciary Duties. The Company represents and warrants that, to the best of its knowledge, none of its
directors or officers is or has been the subject of, or a defendant in: (i) an enforcement action or prosecution (or settlement in lieu thereof) brought by a governmental authority relating to a violation of securities, fiduciary or criminal
laws, or (ii) a civil action (or settlement in lieu thereof) brought by stockholders or investors for violation of duties owed to the stockholders or investors. 
 3.13 Title to Property and Assets. Except as disclosed in the SEC Documents or the Draft 10-KSB, each of the Company and its subsidiaries owns its property and assets free and clear of all mortgages,
liens, loans, claims, charges and encumbrances, and except such encumbrances and liens that arise in the ordinary course of business and do not materially impair their respective ownership or use of such property or assets. With respect to property
and assets it leases, the Company is in material compliance with such leases and, to the best of its knowledge, holds a valid leasehold interest free of any liens, charges, claims or encumbrances, 

  

 6 

 
except to the extent any such lien, charge, claim or encumbrance would not have a Material Adverse Effect. 
 3.14 Patents. Trademarks. Proprietary Rights. 
 (a) To the Company’s knowledge, each of the Company and its subsidiaries owns or has the right to use all of the Intellectual Property Rights (as defined below), except where such failure would not have a
Material Adverse Effect on the business, properties or assets of the Company and its subsidiaries, taken as a whole. For purposes of this Agreement, “Intellectual Property Rights” means all patents, copyrights, trademarks,
service marks, trade names, permits, trade secrets, computer programs, software designs and related materials and other intellectual property that are used by the Company or a subsidiary and are material to the conduct of the Company’s or a
subsidiary’s business. 
 (b) To the Company’s knowledge, the Company’s and each subsidiary’s use and
enjoyment of the Intellectual Property Rights do not violate any license or conflict with or infringe the intellectual property rights of others in a manner which would materially and adversely affect the business, assets, properties, operations or
condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole. 
 3.15 Environmental Matters. Except
as set forth in the SEC Documents or the Draft 10-KSB, to the Company’s knowledge, neither the Company nor any of its subsidiaries is in violation of any applicable statute, law or regulation relating to the environment or occupational health
and safety, which violation could reasonably be expected to result in a Material Adverse Effect, and to the best of its knowledge, no expenditures are required in order to comply with any such existing statute, law or regulation, which expenditures
could reasonably be expected to result in a Material Adverse Effect. 
 3.16 Permits. Each of the Company and its subsidiaries
possesses all Permits or similar authority necessary to conduct its business as described in the SEC Documents and the Draft 10-KSB, except where the failure to possess such Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or its subsidiaries (“Material Permits”), and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 3.17 Employees. To the Company’s knowledge, no strike, labor dispute or union organizing activities are pending or
threatened against the Company or any of its subsidiaries by its employees. No employees belong to a union or collective bargaining unit. To the Company’s knowledge, neither the Company nor any of its subsidiaries has any workers’
compensation liabilities. 
 3.18 Tax Matters. The Company has filed all tax returns and reports as required by federal, state,
local, and foreign law and has paid all taxes shown thereon that have become due and payable. Such returns and reports were materially accurate and complete when filed and reflect all taxes and other assessments due thereunder to be paid by the
Company, except those contested by it in good faith. The provision for taxes of the Company included in the provision for accrued liabilities in the Company’s Financial Statements is adequate for taxes due or 

  

 7 

 
accrued as of the dates thereof. The Company has never had any material tax deficiency proposed or assessed against it. 
 3.19 Compliance with Certificate of Incorporation and By-laws; Compliance with Laws. The Company is not in violation or default of any
provisions of its Amended and Restated Certificate of Incorporation or Bylaws. The business and operations of the Company and each of its subsidiaries have been conducted in accordance with all applicable laws, rules and regulations of all
governmental agencies, authorities and instrumentalities (including, without limitation, under the Employee Retirement Income Security Act of 1974, as amended, laws and regulations administered by the Food and Drug Administration, and all laws
relating to the employment of labor), except for such violations which would not, individually or in the aggregate, have a Material Adverse Effect. 
 3.20 Insurance. The Company and each of its subsidiaries maintains insurance of the type and in the amount reasonably adequate for its business, including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of vandalism, and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect. 
 3.21 Investment Company Act. The Company is not an “investment company” within the meaning of the Investment Company Act
of 1940, as amended (the “Investment Company Act”), and the Company is not directly or indirectly controlled by or acting on behalf of any person that is an “investment company” within the meaning of the
Investment Company Act. 
 3.22 Compliance With Securities Laws. Assuming the accuracy of the representations and warranties of
the Purchasers set forth in Section 4 hereof, the offer and sale by the Company of the Shares are exempt from the registration and prospectus delivery requirements of the Securities Act. Other than pursuant to an effective registration
statement under the Securities Act, the Company has not issued, offered or sold any shares of Common Stock (including for this purpose any securities of the same or a similar class as the Common Stock) within the six (6) month period preceding
the date hereof or taken any other action, or failed to take any action, that, in any such case, would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer
and sale of the Shares as contemplated hereby or (ii) cause the offering of the Shares pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of the NASD, as applicable. The Company shall not directly or indirectly take, and shall not permit any of its directors, officers or Affiliates directly or indirectly to
take, any action (including, without limitation, any offering or sale to any Person of the Shares or any Common Stock) that will make unavailable the exemption from registration under the Securities Act being relied upon by the Company for the offer
and sale to the Purchasers of the Shares as contemplated by this Agreement, including, without limitation, the filing of a registration statement under the Securities Act. No form of general solicitation or advertising within the meaning of Rule
502(c) under the Securities Act has been used or authorized by the Company or any of its officers, directors or Affiliates in connection with the 

  

 8 

 
offer or sale of the Shares as contemplated by this Agreement or any other agreement to which the Company is a party. 
 3.23 Registration Rights. Except as set forth in the SEC Documents or the Draft 10-KSB, there are no Persons (except the Purchasers and
their permitted transferors hereunder) with registration or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act which have not been satisfied.

 3.24 Related Party Transactions. Except as set forth in the SEC Documents or the Draft 10-KSB, neither the Company nor any
of its officers, directors or Affiliates nor any family member of any officer, director or Affiliate of the Company has borrowed any moneys from or has outstanding any indebtedness or other similar obligations to the Company. Except as set forth in
the SEC Documents or the Draft 10-KSB, no director or Affiliate nor any family member of any officer, director or Affiliate of the Company (i) owns any direct or indirect interest constituting more than a 1% equity (or similar profit
participation) interest in, or controls or is a director, officer, partner, member or employee of, or consultant or lender to or borrower from, or has the right to participate in the profits of, any person or entity which is a participant in any
transaction to which the Company or any subsidiary is a party or (ii) is a party to any contract, agreement, commitment or other arrangement with the Company or any subsidiary or (iii) has entered into any transaction with the Company or
any subsidiary that would be required to be disclosed under Item 404 of Regulation S-K. 
 3.25 Contracts. All contracts
and agreements filed or required to be filed as exhibits to the SEC Documents filed prior to the date hereof, except such contracts and agreements that have expired by their own terms (collectively, “Contracts”) are in full
force and effect and constitute legal, valid and binding obligations of the Company and, to the best knowledge of the Company, the other parties thereto; the Company and, to the best knowledge of the Company, each other party thereto, have performed
in all material respects all obligations required to be performed by them under the Contracts, and no material violation or default exists in respect thereof, nor any event that with notice or lapse of time, or both, would constitute a default
thereof, on the part of the Company or, to the best knowledge of the Company, any other party thereto; none of the Contracts is currently being renegotiated; and the validity, effectiveness and continuation of all Contracts will not be materially
adversely affected by the transactions contemplated by this Agreement. 
 3.26 Disclosure. Neither this Agreement nor the SEC
Documents nor the Draft 10-KSB taken together contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they
were made, not misleading. To the Company’s knowledge, neither it nor, any Person on its behalf, has provided any of the Purchasers or their agents or counsel with any information that constitutes, or might reasonably be expected to constitute,
material, non-public information except for (x) the existence of this transaction and the terms and conditions hereof, and (y) such material non-public information as is contained in the Draft 10-KSB. The Company intends to file the
Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005 with the SEC on or prior to March 31, 2006, which Annual Report on Form 10-KSB shall be in a form substantially similar to the Draft 10-KSB. The Company

  

 9 

 
understands and confirms that each of such Purchasers will rely on the foregoing representations in effecting transactions in securities of the Company.

 3.27 Sarbanes-Oxley. The Chief Executive Officer and the Chief Financial Officer of the Company have signed, and the Company
has furnished to the SEC, all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn;
and neither the Company nor any of its officers has received notice from any governmental entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications. 
 3.28 Disclosure Controls and Procedures. The Company and its subsidiaries maintain a system of disclosure controls and procedures (as
defined in Rules 13a-15 and 15d-15 of the Exchange Act). To the Company’s knowledge, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files
or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. 
 4.
Representations, Warranties and Agreements of the Purchasers. Each Purchaser severally for itself, and not jointly with the other Purchasers, represents and warrants to, and agrees with, the Company as follows: 
 4.1 Authorization. Such Purchaser has all requisite power under its constituent documents to enter into each of this Agreement and the
Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement. All action on the part of such Purchaser and, if applicable, its officers, directors, stockholders,
managers, members and equityholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken.
When executed and delivered, each of this Agreement and the Registration Rights Agreement will constitute the legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally and by general equitable principles. 
 4.2 Purchase Entirely for Own Account. Such Purchaser is acquiring the Shares being purchased by it hereunder for investment, for its own account, and not for resale or with a view to distribution thereof in violation of the
Securities Act. 
 4.3 Investor Status; Etc. Such Purchaser certifies and represents to the Company that at the time such
Purchaser acquires any of the Shares, such Purchaser will be an “Accredited Investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the purpose of
acquiring the Shares. Such Purchaser’s financial condition is such that it is able to bear the risk of holding the Shares for an indefinite period of time and the risk of loss of its entire investment. Such Purchaser has sufficient knowledge
and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company. Such 

  

 10 

 
Purchaser has received and carefully reviewed descriptive materials relating to the Company and any other materials relating thereto that such Purchaser has
requested. Such Purchaser has had an opportunity to ask questions of and receive answers from the authorized representatives of the Company, and to review any relevant documents and records concerning the business of the Company and the terms and
conditions of this investment, and that any such questions have been answered to such Purchaser’s full satisfaction. No Person other than the Company or its authorized representatives, has offered the securities to the Purchaser. Such Purchaser
is acquiring the Shares in the ordinary course of business for such Purchaser’s own account as principal (and not as a nominee or agent), for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization
thereof, in whole or in part, in any manner in violation of applicable United States federal or state securities laws or the rules or regulations promulgated thereunder. Such Purchaser has made no agreement, direct or indirect, with any other Person
regarding any sale, transfer, assignment or other disposition of any interest in the Shares. Such Purchaser is aware that, in the view of the SEC and certain state securities commissions, a purchase of the Shares now with an intent to resell by
reason of any foreseeable specific contingency or anticipated change in market values or any change in the condition of the Company, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the
Shares and for which the Shares were pledged as security, would represent an intent inconsistent with this representation. Such Purchaser further represents and agrees that if, contrary to the foregoing intentions, such Purchaser should later desire
to dispose of or transfer any of the Shares in any manner, such Purchaser shall not do so without first complying with the provisions of Section 6.1. Such Purchaser understands that no federal or state agency has passed upon or made any
recommendation or endorsement of an investment in the Shares. The foregoing shall in no way limit or modify the representations of the Company set forth in Section 3 hereof. 
 4.4 Shares Not Registered. Such Purchaser understands that the Shares have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration requirements of the Securities Act, and that the Shares must continue to be held by such Purchaser unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration. The Purchaser understands that the exemptions from registration afforded by Rule 144 (the provisions of which are known to it) promulgated under the Securities Act depend on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts. 
 4.5 No Conflict. The
execution and delivery of this Agreement and the Registration Rights Agreement by such Purchaser and the consummation by it of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default by such
Purchaser (with or without notice or lapse of time, or both) under (i) any provision of the organizational documents of such Purchaser or (ii) any judgment, Order, statute, law, ordinance, rule or regulations, applicable to such Purchaser
or its respective properties or assets. 
 4.6 Brokers. Such Purchaser has not retained, utilized or been represented by any
broker or finder in connection with the transactions contemplated by this Agreement. 
 4.7 Consents. All consents, approvals,
orders and authorizations required on the part of such Purchaser in connection with the execution, delivery or performance of this Agreement 

  

 11 

 
and the Registration Rights Agreement and the consummation of the transactions contemplated herein have been obtained and are effective as of the Closing
Date. 
 4.8 Agreement with Respect to Short Sales. Neither the Purchasers nor any of their respective Affiliates nor any
person acting on their behalf has engaged in, or its otherwise subject to, any “short sale” (as such term is defined in Rule 3b-3 under the Securities Exchange Act of 1934, as amended) or any other hedging transaction in respect of the
Common Stock that has established, as of the date hereof, a net short position with respect to the Common Stock. Since the time that the Purchaser was first contacted by the Company or any other person or entity regarding the investment in the
Company contemplated by this Agreement, neither such Purchaser nor any of its Affiliates nor any person acting on their behalf has entered into any “short sale” (as such term is defined in Rule 3b-3 under the Securities Exchange Act of
1934, as amended) in respect of the Company’s Common Stock and none of the Purchaser nor any of its Affiliates nor any person acting on their behalf will enter into any such “short sale” at any time prior to the Closing Date.

 4.9 Material Non-Public Information. Such Purchaser acknowledges that the United States securities laws prohibit any person
who has received any material non-public information from an issuer or any affiliate thereof from purchasing or selling securities of such issuer or from communicating such information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such securities. Such Purchaser shall abide by such prohibitions, and will comply in all respects with all other laws and regulations implicated by the receipt, production or use
of any material non-public information regarding the Company. 
 5. Conditions Precedent. 
 5.1 Conditions to the Obligation of the Purchasers to Consummate the Closing. The obligation of each Purchaser to consummate the Closing
and to purchase and pay for the Shares being purchased by it pursuant to this Agreement is subject to the satisfaction of the following conditions precedent (or waiver by such Purchaser): 
 (a) The representations and warranties contained herein of the Company that are qualified as to “materiality” shall be true and
correct, and the representations and warranties contained herein of the Company that are not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and as of the Closing Date (except for such
representations and warranties which are made expressly as of a specified date or period, which shall be true and correct or true and correct in all material respects, as herein above required, as of such specified date or period). 
 (b) The Company shall have performed all covenants, agreements, obligations and conditions herein required to be performed or observed by
the Company on or prior to the Closing Date. 
 (c) Prior to the Closing Date, no event shall have occurred which has had a
Material Adverse Effect shall have occurred. 
  

 12 

 (d) No suit, action, or other proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. 
 (e) The purchase of and payment for the Shares by such Purchasers shall not be prohibited by any law or governmental order or regulation.
All necessary consents, approvals, licenses, Permits, orders and authorizations of, or registrations, declarations and filings with, any governmental or administrative agency or of any other person with respect to any of the transactions
contemplated hereby (including, without limitation, the issuance of the Shares) shall have been duly obtained or made and shall be in full force and effect. 
 (f) The Company shall have complied with all applicable requirements of federal and state securities or “blue sky” laws
with respect to the issuance of the Shares, and each Purchaser, at such Purchaser’s request, shall have been provided reasonable evidence thereof. 
 (g) The Common Stock of the Company (i) shall be designated for quotation or listed on The Nasdaq Capital Market and (ii) shall not have been suspended from trading on The Nasdaq Capital Market. 

(h) The Registration Rights Agreement shall have been executed and delivered by the Company. 
 (i) A certificate shall have been delivered by the Company, signed by its President, Chief Executive Officer or Chief Financial Officer,
dated as of the Closing Date, certifying as to the fulfillment of the conditions specified in Sections 5.1(a), (b), (c), (d), (e), (f), (g) and (m). 
 (j) The Company shall have delivered to each Purchaser an opinion of counsel for the Company, dated the Closing Date, in substantially the
form of Exhibit B attached hereto. 
 (k) A stock certificate shall have been delivered by the Company, registered in
the name of such Purchaser or nominee as designated by such Purchaser in writing, representing the number of shares of Common Stock purchased by such Purchaser, free of all restrictive and other legends (except as provided in Section 6.2
hereof), against payment of the purchase price therefor by wire transfer of immediately available funds to such account or accounts as the Company shall designate in writing. 
 (l) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the
Closing shall be satisfactory in form and substance to such Purchaser, and such Purchaser shall have received copies (executed or certified, as may be appropriate) of all documents which such Purchaser may have reasonably requested in connection
with such transactions. 
 (m) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to
prohibit, alter, prevent or materially delay the Closing, shall 

  

 13 

 
have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. 
 (n) The Company shall have delivered to the Purchasers a certificate of the Company executed by the Company’s Secretary attaching and
certifying to the truth and correctness of (i) the Company’s Amended and Restated Certificate of Incorporation, (ii) the Company’s Bylaws and (iii) the resolutions adopted by the Company’s Board of Directors in
connection with the transactions contemplated by this Agreement. 
 5.2 Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the Closing, to issue and sell to each Purchaser the Shares to be purchased by it at the Closing is subject to the satisfaction of the following conditions precedent (or waiver by the
Company): 
 (a) The representations and warranties contained herein of such Purchaser shall be true and correct on and as of
the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by the Company that, in the case of any representation and warranty of each Purchaser contained herein which is not
hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set
forth in the foregoing provisions of this Section 5.2(a)). 
 (b) The Registration Rights Agreement shall have
been executed and delivered by each Purchaser. 
 (c) Such Purchaser shall have performed all obligations and conditions
herein required to be performed or observed by it on or prior to the Closing Date. 
 (d) No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending.

 (e) The sale of the Shares by the Company shall not be prohibited by any law or governmental order or regulation. All
necessary consents, approvals, licenses, Permits, orders and authorizations of, or registrations, declarations and filings with, any governmental or administrative agency or of any other person with respect to any of the transactions contemplated
hereby shall have been duly obtained or made and shall be in full force and effect. 
 (f) Such Purchaser shall have executed
and delivered to the Company an executed Investor Questionnaire, in substantially the form attached hereto as Exhibit C, pursuant to which each such Purchaser shall provide information necessary to confirm each such Purchaser’s status as
an “accredited investor” (as such term is defined in Rule 501 promulgated under the Securities Act). 
 (g)
The Company shall have received executed agreements (which may be a counterpart signature to this Agreement) from each of the Purchasers to purchase, in accordance 

  

 14 

 
with this Agreement, the number of shares of Common Stock set forth on Exhibit A opposite its name under the heading “Number of Shares to
be Purchased.” 
 (h) All instruments and corporate proceedings in connection with the transactions contemplated
by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to the Company, and the Company shall have received counterpart originals, or certified or other copies of all documents, including, without limitation,
records of corporate or other proceedings, which it may have reasonably requested in connection therewith. 
 (i) No Purchaser
nor any of its Affiliates nor any person acting on behalf of such Persons will have entered into for a period of five (5) days prior to the Closing Date, any “short sale” (as such term is defined in Rule 3b-3 under the Securities
Exchange Act of 1934, as amended). 
 (j) Purchasers and other investors shall have committed, pursuant to the terms hereof
and pursuant to any other agreement to purchase Shares in connection with the offering contemplated hereby, to purchase an aggregate of at least 4,000,000 Shares. 
 6. Transfer; Legends. 
 6.1 Securities Law Transfer Restrictions. No Purchaser shall sell,
assign, pledge, transfer or otherwise dispose or encumber any of the Shares being purchased by it hereunder, except: (i) pursuant to an effective registration statement under the Securities Act or (ii) pursuant to an available exemption
from registration under the Securities Act and applicable state securities laws and, if reasonably requested by the Company, upon delivery by such Purchaser of an opinion of counsel reasonably satisfactory to the Company to the effect that the
proposed transfer is exempt from registration under the Securities Act and applicable state securities laws. Any transfer or purported transfer of the Shares in violation of this Section 6.1 shall be voidable by the Company; provided,
however, that no opinion will be required in connection with (1) a public sale or transfer of Shares pursuant to an effective registration statement in connection with which such Purchaser represents in writing to the Company that such
Shares have been or are being sold pursuant to such registration statement; (2) a public sale of Shares pursuant to Rule 144 under the Securities Act if such Purchaser has delivered to the Company a customary and accurate Rule 144 broker’s
and seller’s representation letter; or (3) a sale of shares pursuant to Rule 144(k) under the Securities Act if such Purchaser has delivered to the Company a customary and accurate Rule 144 seller’s representation letter. The Company
shall not register any transfer of the Shares in violation of this Section 6.1. The Company may, and may instruct any transfer agent for the Company, to place such stop transfer orders as may be required on the transfer books of the
Company in order to ensure compliance with the provisions of this Section 6.1. 
  

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 6.2 Legends. Each certificate representing any of the Shares shall be endorsed with a
legend in substantially the form set forth below, and each Purchaser covenants that, except to the extent such restrictions are waived by the Company, it shall not transfer the shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends endorsed on such certificate: 
 THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY ONLY BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH LAWS OR (II) AN EXEMPTION FROM REGISTRATION UNDER SAID ACT, AND TO THE EXTENT PERMITTED BY SECTION 6.1 OF THE COMMON STOCK PURCHASE AGREEMENT PURSUANT TO WHICH
THE SHARES REPRESENTED HEREBY WERE ACQUIRED, UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE ACT AND SUCH LAWS. 
 6.3 Removal of Legends. Upon the earlier of (i) the effectiveness of the Registration Statement (as defined in the Registration Rights
Agreement) covering resale of the Shares under the Securities Act or (ii) the Shares becoming eligible for resale under Rule 144(k) promulgated under the Securities Act, the Company shall (A) deliver to the transfer agent for the Common
Stock (the “Transfer Agent”) irrevocable instructions that the Transfer Agent shall reissue a certificate representing the Shares without legends upon receipt by such Transfer Agent of the legended certificates for such
Shares, together with either (1) a customary representation by the applicable Purchaser that Rule 144(k) promulgated under the Securities Act applies to the Shares represented thereby or (2) a statement by the Purchaser that such Purchaser
has sold the Shares represented thereby in accordance with the Plan of Distribution contained in the Registration Statement, and (B) cause its counsel to deliver to the Transfer Agent one or more blanket opinions to the effect that the removal
of such legends in such circumstances may be effected under the Securities Act. From and after the earlier of such dates, upon a Purchaser’s written request, the Company shall promptly cause certificates evidencing the Purchaser’s Shares
to be replaced with certificates which do not bear such restrictive legends. When the Company is required to cause unlegended certificates to replace previously issued legended certificates, if unlegended certificates are not delivered to a
Purchaser within five (5) business days of submission by that Purchaser of legended certificate(s) to the Transfer Agent as provided above, the Company shall be liable to the Purchaser for liquidated damages in an amount equal to 1.0% of the
aggregate purchase price of the Shares evidenced by such certificate(s) for each thirty (30) day period (pro rated for any period of less than 30 days) beyond such five (5) business days that the unlegended certificates have not been so
delivered. 
 7. Termination; Liabilities Consequent Thereon. This Agreement may be terminated and the transactions contemplated
hereunder abandoned at any time prior to the Closing only as follows: 
 (a) with respect to a Purchaser, by such Purchaser,
upon notice to the Company if the conditions set forth in Section 5.1 shall not have been satisfied on or prior to March 27, 2006; or 
  

 16 

 (b) with respect to a Purchaser, by the Company, upon notice to such Purchaser if the
conditions set forth in Section 5.2 to be satisfied by such Purchaser shall not have been satisfied on or prior to March 27, 2006; or 
 (c) at any time by mutual agreement of the Company and Purchasers who represent at least fifty percent (50%) of the Shares being sold hereunder; or 
 (d) with respect to a Purchaser, by such Purchaser, if there has been any breach of any representation or warranty or any material breach
of any covenant of the Company contained herein and the same has not been cured within 15 days after notice thereof (it being understood and agreed by each Purchaser that, in the case of any representation or warranty of the Company contained herein
which is not hereinabove qualified by application thereto of a materiality standard, such representation or warranty will be deemed to have been breached for purposes of this Section 7.1(d) only if such representation or warranty was not
true and correct in all material respects at the time such representation or warranty was made by the Company); or 
 (e) by
the Company with respect to a Purchaser, if there has been any breach of any representation, warranty or any material breach of any covenant of such Purchaser contained herein and the same has not been cured within 15 days after notice thereof (it
being understood and agreed by the Company that, in the case of any representation and warranty of the Purchaser contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation or warranty
will be deemed to have been breached for purposes of this Section 7.1(e) only if such representation or warranty was not true and correct in all material respects at the time such representation or warranty was made by such Purchaser).

 Any termination pursuant to this Section 7 shall be without liability on the part of any party, unless such termination is the
result of a material breach of this Agreement by a party to this Agreement in which case such breaching party shall remain liable for such breach notwithstanding any termination of this Agreement. 
 8. Miscellaneous Provisions. 
 8.1
Use of Proceeds. The Company shall use the net proceeds from the sale of the Shares for general corporate and working capital purposes and may use a portion of such proceeds to retire certain debt obligations of the Company.

 8.2 Filings. The Company shall make all necessary filings with the SEC and “blue sky” filings required to
be made by the Company in connection with the sale of the Shares to the Purchasers as required by all applicable laws, and shall provide a copy thereof to the Purchasers promptly after such filing. 
 8.3 Public Statements or Releases. Each of the parties to this Agreement agrees that it shall not make, issue, or release any announcement,
whether to the public generally, or to any of its suppliers or customers, with respect to this Agreement or the transactions provided for herein, or make any statement or acknowledgment of the existence of, or reveal the status of, this Agreement or
the transactions provided for herein, without the prior consent of the other parties, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, nothing in this Section 8.3 shall prevent any party hereto from
making such public announcements or filings 

  

 17 

 
as it may consider necessary in order to satisfy its legal obligations, or from releasing a public statement acceptable to each of the parties hereto upon
the completion of the offering contemplated hereby. By 8:30 a.m. (New York time) on the first business day following the date hereof, the Company will issue a press release acceptable to each of the parties hereto describing the transactions
contemplated by this Agreement. As soon as possible but not later than the first business day following the Closing Date, the Company will issue a press release acceptable to each of the parties hereto describing the closing of the transactions
contemplated by this Agreement, and promptly thereafter file a Current Report on Form 8-K with the SEC, attaching such press release. 
 8.4
Further Assurances. The parties agree to cooperate fully to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by any party to better evidence and
reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Agreement. 
 8.5 Notification of Effectiveness of Registration Statement. The Company covenants that it will provide written notice to each Purchaser (which notice may be in electronic form) that the Company’s registration statement
on Form S-3 registering the Shares sold hereunder to the Purchasers has been declared effective by the SEC, which notice shall be given promptly after the Company has received notice of such effectiveness from the SEC. 
 8.6 Rights Cumulative. Each and all of the various rights, powers and remedies of the parties hereto shall be considered to be cumulative
with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party. 
 8.7
Pronouns. All pronouns or any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require. 
 8.8 Notices. 
 (a) Any notices, reports or other correspondence (hereinafter collectively referred to as “correspondence”) required or permitted to be given hereunder shall be sent by postage prepaid first class mail, courier or facsimile
or delivered by hand to the party to whom such correspondence is required 
 or permitted to be given hereunder. The date of giving any notice shall be the
date of its actual receipt. 
 (b) All correspondence to the Company shall be addressed as follows: 
 EP MedSystems, Inc. 
 575 Route 73 North 
 Building D 
 West Berlin, New Jersey 08091-9293 
  

 18 

 Attention: President and Chief Executive Officer 
 Facsimile: (856) 753-8544 
 with a copy to: 
 Mayer, Brown, Rowe & Maw LLP 
 1675 Broadway 
 New York, NY 10019 
 Attention: Thomas M. Vitale, Esq. 
 Facsimile: (212) 262-1910 
 (c) All correspondence to any Purchaser shall be sent to such Purchaser at the address set forth in Exhibit A. 
 (d) Any Person may change the address to which correspondence to it is to be addressed by notification as provided for herein. 
 8.9 Captions. The captions and paragraph headings of this Agreement are solely for the convenience of reference and shall not affect its interpretation. 
 8.10 Severability. Should any part or provision of this Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or provisions shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable
manner, and the remainder of this Agreement shall remain binding upon the parties hereto. 
 8.11 Governing Law; Injunctive
Relief. 
 (a) This Agreement shall be governed by and construed and enforced in accordance with the internal and
substantive laws of the State of New York and without regard to any conflicts of laws concepts that would apply the substantive law of any other jurisdiction. 
 (b) Each of the parties hereto acknowledges and agrees that damages will not be an adequate remedy for any material breach or violation
of this Agreement if such material breach or violation would cause immediate and irreparable harm (an “Irreparable Breach”). Accordingly, in the event of a threatened or ongoing Irreparable Breach, each party hereto shall be
entitled to seek, in any state or federal court in the State of New York, equitable relief of a kind appropriate in light of the nature of the ongoing or threatened Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing such action is unsuccessful in obtaining the relief sought, the moving party shall pay the non-moving party’s costs, including actual attorney’s fees, incurred
in connection with defending such action. Such remedies shall not be the parties’ exclusive remedies, but shall be in addition to all other remedies provided in this Agreement. 
 8.12 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or be 

  

 19 

 
construed as, a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this
Agreement. 
 8.13 Fees, Costs and Expenses. All fees, costs and expenses (including attorneys’ fees and expenses)
incurred by any party hereto in connection with the preparation, negotiation and execution of this Agreement and the exhibits hereto and the consummation of the transactions contemplated hereby and thereby (including the costs associated with any
filings with, or compliance with any of the requirements of, any governmental authorities), shall be the sole and exclusive responsibility of such party. 
 8.14 Assignment. The rights and obligations of the parties hereto shall inure to the benefit of and shall be binding upon the authorized successors and permitted assigns of each party. The Company shall
not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Majority Purchasers. Any Purchaser may assign its rights under this Agreement to any person to whom the Purchaser assigns or transfers any
Shares, provided that such transferee agrees in writing to be bound by the terms and provisions of this Agreement, and such transfer is in compliance with the terms and provisions of this Agreement and permitted, with the approval of counsel to the
Company, by federal and state securities laws. 
 8.15 Survival. The respective representations and warranties given by the
parties hereto, and the other covenants and agreements contained herein, shall survive the Closing Date and the consummation of the transactions contemplated herein for a period of two years, without regard to any investigation made by any party.

 8.16 Entire Agreement. This Agreement and exhibits attached hereto and incorporated herewith constitute the entire agreement
between the parties hereto respecting the subject matter hereof and supersedes all prior agreements, negotiations, understandings, representations and statements respecting the subject matter hereof, whether written or oral. 
 8.17 Amendments. No modification, alteration, waiver or change in any of the terms of this Agreement shall be valid or binding upon the
parties hereto unless made in writing and duly executed by the Company and (a) prior to Closing, Purchasers who represent at least 66  2/3% of the Shares being sold hereunder or (b) following Closing, Purchasers holding at least 66  2/3% of the Shares; provided, however, that, in each case, no such amendment shall increase the obligations of any Purchaser without such Purchaser’s written consent. 

8.18 Confidential Information. Each of the Company and each Purchaser agrees to keep confidential, and not to disclose to or use for the
benefit of any third party, the terms of this Agreement or any other information which at any time is communicated by the other party as being confidential, without the prior written approval of the other party; provided, however, that this
provision shall not apply to information which, at the time of disclosure, is already part of the public domain (except by breach of this Agreement) and information which is required to be disclosed by law (including, without limitation, pursuant to
Item 601(b)(10) of Regulation S-K under the Securities Act and the Exchange Act) and provided further the Company will not furnish confidential information to a Purchaser without (i) informing such Purchaser regarding the nature of such
information and (ii) receiving the prior express written agreement of such 

  

 20 

 
Purchaser. Notwithstanding anything herein to the contrary, any party to this Agreement (and any employee, representative, or other agent of any party to
this Agreement) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that
are provided to it relating to such tax treatment and tax structure. However, any such information relating to the tax treatment or tax structure is required to be kept confidential to the extent necessary to comply with any applicable federal or
state securities laws. 
 8.19 Stock Splits, Dividends and other Similar Events. The provisions of this Agreement shall be
appropriately adjusted to reflect any stock split, stock dividend, reorganization or other similar event that may occur with respect to the Company after the date hereof. 
 8.19 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same
instrument. 
 [The remainder of this page has been intentionally left blank; signature page follows.] 
  

 21 

 IN WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement as of the day
and year first above written. 
  

			
	EP MEDSYSTEMS, INC.
		
	By:	 	 /s/ Matthew C. Hill

		 	 Name: Matthew C. Hill

		 	 Title: Chief Financial Officer

 THE PURCHASER’S SIGNATURE TO THE INVESTOR QUESTIONNAIRE DATED EVEN DATE HEREWITH SHALL CONSTITUTE
THE PURCHASER’S SIGNATURE TO THIS COMMON STOCK PURCHASE AGREEMENT. 
  

 22 

 Exhibit A 
  

								
	 PURCHASER
	  	 ADDRESS
	  	 NUMBER
 OF SHARES
TO BE
PURCHASED
	  	AGGREGATE
PURCHASE
PRICE ($)
	SRB Greenway Capital QP, L.P.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	468,000	  	$	1,053,000.00
	SRB Greenway Offshore Operating Fund, L.P.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	28,000	  	$	63,000.00
	SRB Greenway Capital, L.P.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	59,555	  	$	133,998.75
	Walker Smith Capital (Q.P.), L.P.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	171,200	  	$	385,200.00
	Walker Smith Capital, L.P.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	20,000	  	$	45,000.00
	Walker Smith International Fund, Ltd.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	258,055	  	$	580,623.75
	HHMI Investments, L.P.	  	 300 Crescent Court, Suite 1111
 Dallas, Texas
75201
	  	96,300	  	$	216,675.00
	SF Capital Partners Ltd.	  	 3600 South Lake Drive
 St. Francis, WI
53235
	  	1,000,000	  	$	2,250,000.00
	Shea Ventures, LLC	  	 655 Brea Canyon Road
 Walnut, CA 91789
	  	666,667	  	$	1,500,000.75
	Pat L. Gordon	  	 2009 Sharon Lane
 Austin, Texas 78703
	  	466,667	  	$	1,050,000.75
	CE Unterberg Towbin Capital Partners I, L.P.	  	 350 Madison Avenue
 New York, NY 10017
	  	121,112	  	$	272,502.00
	Thomas I. Unterberg Trustee, Ellen U. Celli Family Trust U/A/ 3/25/93	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	22,222	  	$	49,999.50
	Ellen U. Celli	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	22,222	  	$	49,999.50
	Emily U. Satloff	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	22,222	  	$	49,999.50
	NFS/FMTC IRA FBO Thomas I. Unterberg	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	22,222	  	$	49,999.50
	Thomas I. Unterberg	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	66,666	  	$	149,998.50
	Marjorie & Clarence E. Unterberg Foundation Inc.	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	44,444	  	$	99,999.00
	Declaration of Trust by Thomas I. Unterberg U/A 8/7/96	  	 c/o CE Unterberg Towbin
 350 Madison Avenue

New York, NY 10017
	  	22,222	  	$	49,999.50
	2001 Candice N. Pell Trust	  	 40 Ramland Road South, Suite 10
 Orangeburg, NY
10962
	  	100,000	  	$	225,000.00
	2001 Jessica N. Pell Trust	  	 40 Ramland Road South, Suite 10
 Orangeburg, NY
10962
	  	100,000	  	$	225,000.00

 Exhibit B 
 Form of Mayer, Brown, Rowe & Maw LLP Opinion 
 See attached. 

 Exhibit C 
 Form of Investor Questionnaire

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