Document:

OCR Ex. 10.40 2012

EXHIBIT 10.40
GOLDMAN, SACHS & CO. | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL:  212-902-1000
Opening Transaction
	
		
	To:
	

Omnicare, Inc.
900 Omnicare Center 
201 E. Fourth Street 
Cincinnati, OH 45202

	A/C:
	42736389

	From:
	Goldman, Sachs & Co.

	Re:
	Accelerated Stock Buyback

	Ref. No:
	SDB4166216076

	Date:
	November 29, 2012

	 
	 

This confirmation (this “Confirmation”), dated as of November 29, 2012 is intended to set forth certain terms and provisions of the Transaction (the “Transaction”) entered into between Goldman, Sachs & Co. (“GS&Co.”) and Omnicare, Inc. (“Counterparty”).  This Confirmation shall constitute a “Confirmation” as referred to in the Agreement specified below.
The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation.  This Confirmation evidences a complete binding agreement between Counterparty and GS&Co. as to the subject matter and terms of the Transaction to which this Confirmation relates and shall supersede all prior or contemporaneous written or oral communications with respect thereto.
This Confirmation supplements, forms a part of, and is subject to an agreement in the form of the ISDA 2002 Master Agreement (the “Agreement”) as if GS&Co. and Counterparty had executed the Agreement on the date of this Confirmation (but without any Schedule except for (A) the election of New York law (without reference to its choice of laws doctrine other than Title 14 of Article 5 of the New York General Obligations Law) as the governing law and US Dollars (“USD”) as the Termination Currency, (B) the election that subparagraph (ii) of Section 2(c) will not apply to the Transaction, (C) the election that the “Cross Default” provisions of Section 5(a)(vi) shall apply to Counterparty and GS&Co. with a “Threshold Amount”, in each case, of USD 50 million; provided that Section 5(a)(vi) is amended by (x) deleting the phrase “, or becoming capable at such time of being declared,” from the seventh line thereof and (y) adding the following language at the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”, (D) the designation of the General Guarantee Agreement dated January 30, 2006 made by The Goldman Sachs Group, Inc. (“GS Group”) in favor of each person to whom GS&Co. may owe any Obligations (as defined in the General Guarantee Agreement) and filed as Exhibit 10.45 to GS Group’s Form 10-K for the fiscal year ended November 25, 2005 and any successor guarantee by GS Group in favor of each person to whom GS&Co. may owe any Obligations (as defined in the General Guarantee Agreement) as a Credit Support Document under the Agreement and (E) the designation of GS Group as a Credit Support Provider in relation to GS&Co. under the Agreement).
The Transaction shall be the sole Transaction under the Agreement. If there exists any ISDA Master Agreement between GS&Co. and Counterparty or any confirmation or other agreement between GS&Co. and Counterparty pursuant 

to which an ISDA Master Agreement is deemed to exist between GS&Co. and Counterparty, then notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which GS&Co. and Counterparty are parties, the Transaction shall not be considered a Transaction under, or otherwise governed by, such existing or deemed ISDA Master Agreement.
All provisions contained or incorporated by reference in the Agreement shall govern this Confirmation except as expressly modified herein.  
If, in relation to the Transaction to which this Confirmation relates, there is any inconsistency between the Agreement, this Confirmation and the Equity Definitions, the following will prevail in the order of precedence indicated: (i) this Confirmation; (ii) the Equity Definitions; and (iii) the Agreement.
1.The Transaction constitutes a Share Forward Transaction for the purposes of the Equity Definitions.  Set forth below are the terms and conditions that shall govern the Transaction.
General Terms:
		
	Trade Date:
	As set forth in Schedule 1 to this Confirmation.

		
	Buyer:
	Counterparty

		
	Seller:
	GS&Co.

		
	Shares:
	Common stock, par value $1.00 per share, of Counterparty (Ticker: OCR)

		
	Exchange:
	New York Stock Exchange

		
	Related Exchange(s):
	All Exchanges.

Prepayment\Variable
		
	Obligation:
	Applicable

		
	Prepayment Amount:
	As set forth in Schedule 1 to this Confirmation.

		
	Prepayment Date:
	As set forth in Schedule 1 to this Confirmation.

Valuation:
		
	VWAP Price:
	For any Exchange Business Day, as determined by the Calculation Agent based on the “New York” 10b-18 volume weighted average price per Share for the regular trading session (including any extensions thereof) of the Exchange on such Exchange Business Day (without regard to pre-open or after hours trading outside of such regular trading session for such Exchange Business Day), as published by Bloomberg at 4:15 p.m. New York time (or 15 minutes following the end of any extension of the regular trading session) on such Exchange Business Day, on Bloomberg page “OCR.N <Equity> AQR_SEC” (or any successor thereto), or if such price is not so reported on such Exchange Business Day for any reason or is, in the Calculation Agent’s commercially reasonable judgment, manifestly incorrect, such VWAP Price shall be as reasonably determined by the Calculation Agent using a volume weighted average method.  For purposes of calculating the VWAP Price, the Calculation Agent will include only those trades that are reported during the period of time during which Counterparty could purchase its own shares under Rule 10b-18(b)(2) and are effected pursuant to the conditions of Rule 10b-18

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(b)(3), each under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (such trades, “Rule 10b-18 eligible transactions”).
		
	Forward Price:
	The average of the VWAP Prices for the Exchange Business Days in the Calculation Period, subject to “Valuation Disruption” below.

Forward Price
		
	Adjustment Amount:
	As set forth in Schedule 1 to this Confirmation.

		
	Calculation Period:
	The period from and including the Calculation Period Start Date to and including the Termination Date, but excluding the period from and including February 11, 2013 to and including March 11, 2013.

		
	Calculation Period Start Date:
	As set forth in Schedule 1 to this Confirmation.

		
	Termination Date:
	The Scheduled Termination Date; provided that GS&Co. shall have the right to designate any Exchange Business Day on or after the First Acceleration Date to be the Termination Date (the “Accelerated Termination Date”) by delivering notice to Counterparty of any such designation prior to 11:59 p.m. New York City time on the Exchange Business Day immediately following the designated Accelerated Termination Date. 

		
	Scheduled Termination Date:
	As set forth in Schedule 1 to this Confirmation, subject to postponement as provided in “Valuation Disruption” below.

		
	First Acceleration Date:
	As set forth in Schedule 1 to this Confirmation.

		
	Valuation Disruption:
	The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and inserting the words “at any time on any Scheduled Trading Day during the Calculation Period or Settlement Valuation Period” after the word “material,” in the third line thereof.

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
Notwithstanding anything to the contrary in the Equity Definitions, to the extent that a Disrupted Day occurs (i) in the Calculation Period, the Calculation Agent may, in its good faith and commercially reasonable discretion, postpone the Scheduled Termination Date by a number of Exchange Business Days up to the number of Disrupted Days that occur during such period, or (ii) in the Settlement Valuation Period, the Calculation Agent may extend the Settlement Valuation Period by a number of Exchange Business Days up to the number of Disrupted Days that occur during such period.  If any such Disrupted Day is a Disrupted Day because of a Market Disruption Event (or a deemed Market Disruption Event as provided herein), the Calculation Agent shall reasonably determine whether (i) such Disrupted Day is a Disrupted Day in full, in which case the VWAP Price for such Disrupted Day shall not be included for purposes of determining the Forward Price or the Settlement Price, as the case may be, or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day taking into account the nature 

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and duration of the relevant Market Disruption Event, and the weighting of the VWAP Price for the relevant Exchange Business Days during the Calculation Period or the Settlement Valuation Period, as the case may be, shall be adjusted in a commercially reasonable manner by the Calculation Agent for purposes of determining the Forward Price or the Settlement Price, as the case may be, with such adjustments based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares.  Any Scheduled Trading Day on which the Exchange is scheduled to close prior to its normal close of trading shall be deemed to be a Disrupted Day in full.
If a Disrupted Day occurs during the Calculation Period or the Settlement Valuation Period, as the case may be, and each of the nine immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its good faith and commercially reasonable discretion, may deem such ninth Scheduled Trading Day to be an Exchange Business Day that is not a Disrupted Day and determine the VWAP Price for such ninth Scheduled Trading Day using its good faith estimate of the value of the Shares on such ninth Scheduled Trading Day based on the volume, historical trading patterns and price of the Shares and such other factors as it deems appropriate.
Settlement Terms:    
		
	Settlement Procedures:
	If the Number of Shares to be Delivered is positive, Physical Settlement shall be applicable; provided that GS&Co. does not, and shall not, make the agreement or the representations set forth in Section 9.11 of the Equity Definitions related to the restrictions imposed by applicable securities laws with respect to any Shares delivered by GS&Co. to Counterparty under the Transaction.  If the Number of Shares to be Delivered is negative, then the Counterparty Settlement Provisions in Annex A shall apply.

Number of Shares
		
	to be Delivered:
	A number of Shares equal to (x)(a) the Prepayment Amount divided by (b) the Divisor Amount minus (y) the number of Initial Shares. 

		
	Divisor Amount:
	The greater of (i) the Forward Price minus the Forward Price Adjustment Amount and (ii) $1.00.

		
	Excess Dividend Amount:
	For the avoidance of doubt, all references to the Excess Dividend Amount shall be deleted from Section 9.2(a)(iii) of the Equity Definitions.

		
	Settlement Date:
	If the Number of Shares to be Delivered is positive, the date that is one Settlement Cycle immediately following the Termination Date.

		
	Settlement Currency:
	USD

		
	Initial Share Delivery:
	GS&Co. shall deliver a number of Shares equal to the Initial Shares to Counterparty on the Initial Share Delivery Date in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.

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	Initial Share Delivery Date:
	As set forth in Schedule 1 to this Confirmation.

		
	Initial Shares:
	As set forth in Schedule 1 to this Confirmation.

Share Adjustments:
		
	Potential Adjustment Event:
	Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.

It shall constitute an additional Potential Adjustment Event if the Scheduled Termination Date for the Transaction is postponed pursuant to “Valuation Disruption” above, in which case the Calculation Agent may, in good faith and in its commercially reasonable discretion, adjust any relevant terms of the Transaction to the extent necessary to account for the economic effect on the Transaction of such postponement.
		
	Extraordinary Dividend:
	For any calendar quarter, any dividend or distribution on the Shares with an ex-dividend date occurring during such calendar quarter (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions) (a “Dividend”) the amount or value of which (as determined by the Calculation Agent), when aggregated with the amount or value (as determined by the Calculation Agent) of any and all previous Dividends with ex-dividend dates occurring in the same calendar quarter, exceeds the Ordinary Dividend Amount.

		
	Ordinary Dividend Amount:
	As set forth in Schedule 1 to this Confirmation.

		
	Method of Adjustment:
	Calculation Agent Adjustment

Early Ordinary Dividend 
		
	Payment:
	If an ex-dividend date for any Dividend that is not an Extraordinary Dividend occurs during any calendar quarter occurring (in whole or in part) during the Relevant Period (as defined below) and is prior to the Scheduled Ex-Dividend Date for such calendar quarter, the Calculation Agent shall make such adjustment to the exercise, settlement, payment or any other terms of the Transaction as the Calculation Agent in good faith and in a commercially reasonable manner determines appropriate to account for the economic effect on the Transaction of such event.

Scheduled Ex-Dividend
		
	Dates:
	As set forth in Schedule 1 to this Confirmation.

Extraordinary Events:
Consequences of 
Merger Events:    

		
	(a)
	Share-for-Share:        Modified Calculation Agent Adjustment

		
	(b)
	Share-for-Other:        Cancellation and Payment

		
	(c)
	Share-for-Combined:    Component Adjustment

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	Tender Offer:
	Applicable; provided that (i) Section 12.1(l) of the Equity Definitions shall be amended (x) by deleting the parenthetical in the fifth line thereof, (y) by replacing “that” in the fifth line thereof with “whether or not such announcement” and (z) by adding immediately after the words “Tender Offer” in the fifth line thereof “, and any publicly announced change or amendment to such an announcement (including the announcement of an abandonment of such intention)” and (ii) Sections 12.3(a) and 12.3(d) of the Equity Definitions shall each be amended by replacing each occurrence of the words “Tender Offer Date” by “Announcement Date.”

Consequences of 
Tender Offers:    

		
	(a)
	Share-for-Share:    Modified Calculation Agent Adjustment or Cancellation and Payment, at the election of GS&Co.

		
	(b)
	Share-for-Other:    Modified Calculation Agent Adjustment or Cancellation and Payment, at the election of GS&Co.

		
	(c)
	Share-for-Combined:    Modified Calculation Agent Adjustment or Cancellation and Payment, at the election of GS&Co.

Nationalization, 
		
	Insolvency or Delisting:
	Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange.

Additional Disruption Events:
		
	(a)
	Change in Law:    Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “, or public announcement of, the formal or informal interpretation”, (ii) by replacing the word “Shares” where it appears in clause (X) thereof with the words “Hedge Position” and (iii) by immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date”; provided further that (i) any determination as to whether (A) the adoption of or any change in any applicable law or regulation (including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute) or (B) the promulgation of or any change in the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law or regulation (including any action taken by a taxing authority), in each case, constitutes a “Change in Law” shall be made without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, and (ii) Section 12.9(a)(ii) of the Equity Definitions is hereby amended by replacing the parenthetical beginning after the word “regulation” in the second line thereof the words 

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“(including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute)”.
		
	(b)
	Failure to Deliver:    Applicable

		
	(c)
	Insolvency Filing:    Applicable

		
	(d)
	Loss of Stock Borrow:    Applicable

Maximum Stock Loan Rate:    100 basis points per annum
Hedging Party:            GS&Co.
		
	(e)
	Increased Cost of Stock Borrow:    Applicable

Initial Stock Loan Rate:    25 basis points per annum
Hedging Party:    GS&Co.
Determining Party:    For all Extraordinary Events, GS&Co.; provided that, upon receipt of written request from Counterparty, Determining Party shall promptly (but in no event later than within five (5) Exchange Business Days from the receipt of such request) provide Counterparty with a written explanation describing in reasonable detail any determination made by Determining Party (including any quotations, market data or information from internal sources used in making such calculations, but without requiring any disclosure of confidential information or GS&Co.’s proprietary models or any information that GS&Co. determines, based on the advice of counsel, is subject to a duty, whether arising by contract, regulation or operation of law, of confidentiality GS&Co. owes to any third party).  Whenever Determining Party is required to act or to exercise judgment in any way, it will do so in good faith and in a commercially reasonable manner.

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	Additional Termination Event(s):
	The declaration by the Issuer of any Extraordinary Dividend, the ex-dividend date for which occurs or is scheduled to occur during the Relevant Dividend Period, will constitute an Additional Termination Event, with Counterparty as the sole Affected Party and the Transaction as the Affected Transaction.

		
	Relevant Dividend Period:
	The period from and including the Calculation Period Start Date to and including the Relevant Dividend Period End Date.

Relevant Dividend Period 
		
	End Date:
	If the Number of Shares to be Delivered is negative, the last day of the Settlement Valuation Period; otherwise, the Termination Date.

Non-Reliance/Agreements and
Acknowledgements Regarding 
Hedging Activities/Additional 
		
	Acknowledgements:
	Applicable

		
	Transfer:
	Notwithstanding anything to the contrary in the Agreement, GS&Co. may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of GS&Co. under the Transaction, in whole or in part, to an affiliate of GS&Co. whose obligations are guaranteed by The Goldman Sachs Group, Inc. without the consent of Counterparty, so long as:

    
(i)    if the transferee is not a U.S. entity, the transferee makes appropriate payee tax representations to Counterparty to support the result stated in clause (iii) below;
(ii)    no Event of Default or Termination Event shall then have occurred and be continuing or arise solely as a result of such transfer; and
(iii)    (A) Counterparty will not, as a result of such transfer, be required to pay to the transferee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement greater than the amount which Counterparty would have been required to pay to GS&Co. in the absence of such transfer and (B) the transferee will not, as a result of such transfer as of the date of such transfer, be required to withhold or deduct on account of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement amounts in excess of those which GS&Co. would have been required to so withhold or deduct.

		
	GS&Co. Payment Instructions:
	Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.
A/C #930-1-011483
ABA: 021-000021

Counterparty’s Contact Details
		
	for Purpose of Giving Notice:
	To be provided by Counterparty

    
GS&Co.’s Contact Details for
		
	Purpose of Giving Notice:
	Goldman, Sachs & Co.

200 West Street
New York, NY 10282-2198
Attention: Michael Voris, Equity Capital Markets
Telephone: +1-212-902-4895
Facsimile: +1-212-291-5027

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Email: michael.voris@gs.com

With a copy to:

Attention: Bryan Goldstein, Equity Capital Markets
Telephone: +1-212-855-9696
Facsimile: +1-212-256-5456
Email: bryan.goldstein@gs.com

And email notification to the following address:
Eq-derivs-notifications@am.ibd.gs.com

		
	Calculation Agent:
	GS&Co.; provided that, following the occurrence of an Event of Default of the type specified in Section 5(a)(vii) of the Agreement with respect to which GS&Co. is the Defaulting Party, Counterparty shall have the right to designate a nationally recognized third-party dealer in over-the-counter corporate equity derivatives to act, during the period commencing on the date such Event of Default occurred and ending on the Early Termination Date with respect to such Event of Default, as the Calculation Agent. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent will, as promptly as practicable (but in any event no later than five (5) Exchange Business Days following the later of (i) the date of such written request and (ii) the date of such determination or calculation), provide to Counterparty by e-mail, to the e-mail address provided by Counterparty in such written request, a report (in a commonly used file format for the storage and manipulation of financial data without disclosing any proprietary models of the Calculation Agent or any information that GS&Co. determines, based on the advice of counsel, is subject to a duty, whether arising by contract, regulation or operation of law, of confidentiality GS&Co. owes to any third party) displaying in reasonable detail the basis for such determination or calculation.

2.    Additional Mutual Representations of Each Party.  In addition to the representations in the Agreement, each party represents to the other party that:
(a)    Eligible Contract Participant.  It is an “eligible contract participant”, as defined in the U.S. Commodity Exchange Act (as amended), and is entering into the Transaction hereunder as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not for the benefit of any third party.
(b)    Accredited Investor.  Each party acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof.  Accordingly, each party represents to the other that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D under the Securities Act and (iii) the disposition of the Transaction is restricted under this Confirmation, the Securities Act and state securities laws.
3.    Additional Representations and Covenants of Counterparty.  In addition to the representations and covenants in the Agreement, Counterparty represents and covenants to GS&Co. that:
(a)    The purchase or writing of the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(b)    It is not entering into, nor making any election with respect to, the Transaction (i) on the basis of, and is not aware of, any material non-public information with respect to the Shares (ii) in anticipation of, in connection with, or to facilitate, a distribution of its securities, a self tender offer or a third-party tender offer or (iii) to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise 

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or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares).
(c)    The Transaction is being entered into pursuant to a publicly disclosed Share buy-back program and its Board of Directors has approved the use of derivatives to effect the Share buy-back program. 
(d)    Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that neither GS&Co. nor any of its affiliates is making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity.
(e)    As of (i) the date hereof and (ii) the Trade Date for the Transaction hereunder, Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as amended and supplemented to the date of this representation, do not, as of their respective filing dates, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(f)    Counterparty shall report the Transaction as required under the Exchange Act and the rules and regulations thereunder.
(g)    The Shares are not, and Counterparty will not cause the Shares to be, subject to a “restricted period” (as defined in Regulation M promulgated under the Exchange Act) at any time during any Regulation M Period (as defined below) for the Transaction unless Counterparty has provided written notice to GS&Co. of such restricted period not later than the end of the Scheduled Trading Day immediately preceding the first day of such “restricted period”; Counterparty acknowledges that any such notice may cause a Disrupted Day to occur pursuant to Section 4 below; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 5 below.
“Regulation M Period” means (i) the Relevant Period (as defined below) and (ii) the Settlement Valuation Period, if any, for the Transaction.
“Relevant Period” means the period commencing on the Calculation Period Start Date and ending on the earlier of (i) the Scheduled Termination Date and (ii) the last Additional Relevant Day (as specified in Schedule 1 to this Confirmation), or such earlier day as elected by GS&Co. and communicated to Counterparty on such day (or, if later, the First Acceleration Date without regard to any acceleration thereof pursuant to “Special Provisions for Acquisition Transaction Announcements” below), but excluding the period from and including February 11, 2013 to and including March 11, 2013.

(h)    As of the Trade Date, the Prepayment Date, the Initial Share Delivery Date and the Settlement Date for the Transaction, Counterparty is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase a number of Shares with a value equal to the Prepayment Amount in compliance with the laws of the jurisdiction of Counterparty’s incorporation.

(i)    Counterparty is not and, after giving effect to the Transaction, will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended. 
(j)    Counterparty has not and will not enter into agreements similar to the Transaction described herein where any initial hedge period, calculation period, relevant period or settlement valuation period (each however defined) in such other transaction will overlap at any time (including as a result of extensions in such initial hedge period, calculation period, relevant period or settlement valuation period as provided in the relevant agreements) with any Relevant Period or, if applicable, any Settlement Valuation Period under this Confirmation.  In the event that the initial hedge period, relevant period, calculation period or settlement valuation period in any other similar transaction overlaps with any Relevant Period or, if applicable, Settlement Valuation Period under this Confirmation as a result of any 

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postponement of the Scheduled Termination Date or extension of the Settlement Valuation Period pursuant to “Valuation Disruption” above, Counterparty shall promptly amend such transaction to avoid any such overlap.  In the event that the initial hedge period, relevant period, calculation period or settlement valuation period in any other similar transaction overlaps with any Relevant Period or, if applicable, Settlement Valuation Period under this Confirmation as a result of any postponement or extension of such initial hedge period, relevant period, calculation period or settlement valuation period pursuant to the terms of such other transaction, Counterparty shall promptly (and in any event prior to 8:00 a.m. New York City time on the first Exchange Business Day of such overlap) so notify GS&Co.  Counterparty acknowledges that any such overlap may cause a deemed Market Disruption Event under the Transaction pursuant to Section 4 below; accordingly, Counterparty acknowledges that if it takes any action that causes such an overlap, it will do so in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5.
3A.    Additional Representations and Covenants of GS&Co.  In addition to the representations and covenants in the Agreement, GS&Co. represents and covenants to Counterparty that:
(a)    GS&Co. has implemented and will at all relevant times maintain reasonable policies and procedures, taking into consideration the nature of its business, to ensure that individuals making investment decisions on behalf of GS&Co. related to the Transaction do not have access to material non-public information regarding Counterparty that may be in possession of other individuals at GS&Co.
(b)    GS&Co. is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares), in each case in violation of the Exchange Act.
4.    Regulatory Disruption.  In the event that GS&Co. concludes, in its good faith and reasonable discretion and based on the advice of counsel, that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by GS&Co., but provided that such requirements, policies or procedures relate to legal or regulatory issues and are generally applicable in similar situations and applied to the Transaction in a non-discriminatory manner), for it to refrain from or decrease any market activity on any Scheduled Trading Day or Days during the Calculation Period or, if applicable, the Settlement Valuation Period, GS&Co. may by written notice to Counterparty elect to deem that a Market Disruption Event has occurred and will be continuing on such Scheduled Trading Day or Days, and shall subsequently promptly notify (and without limiting the generality of the foregoing, shall use reasonable efforts to do so within one Exchange Business Day) Counterparty in writing of any determination by GS&Co. that it may resume market activity in connection with the Transaction.
5.    10b5-1 Plan.
(a)    Counterparty represents and covenants to GS&Co. that it is entering into this Confirmation and the Transaction hereunder in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) or any other antifraud or anti-manipulation provisions of the federal or applicable state securities laws and that it has not entered into or altered and will not enter into or alter any corresponding or hedging transaction or position with respect to the Shares.  Counterparty acknowledges that it is the intent of the parties that the Transaction entered into under this Confirmation comply with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5-1 and the Transaction entered into under this Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c).
(b)    Counterparty covenants to GS&Co. that it will not seek to control or influence GS&Co.’s decision to make any “purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under the Transaction entered into under this Confirmation, including, without limitation, GS&Co.’s decision to enter into any hedging transactions.  Counterparty represents that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Confirmation under Rule 10b5-1.

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(c)    Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c).  Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer, director, manager or similar person of Counterparty is aware of any material non-public information regarding Counterparty or the Shares.
6.    Counterparty Purchases.  Counterparty (or any “affiliated purchaser” as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall not, without the prior written consent of GS&Co., directly or indirectly purchase any Shares (including by means of a derivative instrument), listed contracts on the Shares or securities that are convertible into, or exchangeable or exercisable for Shares (including, without limitation, any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18)) during any Relevant Period or, if applicable, Settlement Valuation Period, except (a) direct or indirect purchases of Shares through GS&Co.; (b) receipt of Shares in settlement of the capped call transactions entered into on March 29, 2012 pursuant to the terms of those transactions (it being understood, for the avoidance of doubt, that the prohibitions set forth in this Section 6 shall not apply to market activity by Counterparty’s counterparties to the capped call transactions that is, to the knowledge of Counterparty based on the terms of the agreement governing the capped call transactions, for such counterparties’ own account in connection with the capped call transactions); and (c) direct or indirect purchases of Shares that are not solicited by or on behalf of Counterparty, its affiliate or affiliated purchasers and not executed in the open market or expected to result in market purchases; provided that this Section 6 shall not (i) limit Counterparty’s ability, pursuant to its employee incentive plan or dividend reinvestment program, to re-acquire Shares from employees in connection with such plan or program, (ii) limit Counterparty’s ability to withhold shares to cover tax liabilities associated with such a plan, (iii) prohibit any purchases effected by or for an issuer “plan” by an “agent independent of the issuer” (each as defined in Rule 10b-18), (iv) otherwise restrict Counterparty’s or any of its affiliates’ ability to repurchase Shares under privately negotiated transactions with any of its employees, officers, directors or affiliates that are not expected to result in market transactions or (v) limit Counterparty’s ability to grant stock and options to “affiliated purchasers” (as defined in Rule 10b-18) or the ability of such affiliated purchasers to acquire such stock or options, in connection with Counterparty’s compensation policies for directors, officers and employees or any agreements with respect to the compensation of directors, officers or employees of any entities that are acquisition targets of Counterparty, and in connection with any such purchase Counterparty will be deemed to represent to GS&Co. that such purchase does not constitute a “Rule 10b-18 purchase” (as defined in Rule 10b-18).
7.    Special Provisions for Merger Transactions.  Notwithstanding anything to the contrary herein or in the Equity Definitions: 
(a)    Counterparty agrees that it:
(i)    shall, during the period commencing on the Trade Date through the end of the Relevant Period or, if applicable, the Settlement Valuation Period for the Transaction, notify GS&Co. (A) prior to the opening of the regular trading session on the Exchange on any day on which Counterparty makes, or permits to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction (a “Public Announcement”), if such Public Announcement will be made during such regular trading session on the Exchange on such day; or (B) prior to making such Public Announcement, if such Public Announcement will be made outside of a regular trading session on the Exchange on any day;
(ii)    shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify GS&Co. following any such Public Announcement that such Public Announcement has been made; provided that failure to provide such notice, notwithstanding Section 5(a)(ii)(1) of the Agreement, will not be an Event of Default; and
(iii)    shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide GS&Co. with written notice specifying (i) Counterparty’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the 

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announcement date that were not effected through GS&Co. or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act that were not effected through GS&Co. or its affiliates for the three full calendar months preceding the date of such Public Announcement.  In addition, Counterparty shall promptly notify GS&Co. of the earlier to occur of the completion of the relevant Merger Transaction and the completion of the vote by target shareholders; provided that failure to provide such notice, notwithstanding Section 5(a)(ii)(1) of the Agreement, will not be an Event of Default.
(b)    Counterparty acknowledges that a Public Announcement may cause the terms of the Transaction to be adjusted or the Transaction to be terminated; accordingly, Counterparty acknowledges that in making any Public Announcement, it must comply with the standards set forth in Section 5 above.
(c)    Upon the occurrence of any Public Announcement (whether made by Counterparty or a third party) GS&Co. in its sole discretion may (i) make commercially reasonable adjustments to the terms of the Transaction to account for the economic effect on the Transaction of such Public Announcement, including, without limitation, the Scheduled Termination Date or the Forward Price Adjustment Amount, and/or suspend the Calculation Period and/or any Settlement Valuation Period or (ii) treat the occurrence of such Public Announcement as an Additional Termination Event with Counterparty as the sole Affected Party and the Transaction as the Affected Transaction and with the amount under Section 6(e) of the Agreement determined taking into account the fact that the Calculation Period or Settlement Valuation Period, as the case may be, had fewer Scheduled Trading Days than originally anticipated.
“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.
8.    Special Provisions for Acquisition Transaction Announcements.  (a) If an Acquisition Transaction Announcement occurs on or prior to the Settlement Date for the Transaction, then the Calculation Agent shall make such adjustments to the exercise, settlement, payment or any other terms of the Transaction as the Calculation Agent determines appropriate, at such time or at multiple times as the Calculation Agent determines appropriate, to account for the economic effect on the Transaction of such Acquisition Transaction Announcement (including adjustments to account for changes in volatility, expected dividends, stock loan rate and liquidity relevant to the Shares or to the Transaction)  If an Acquisition Transaction Announcement occurs after the Trade Date, but prior to the First Acceleration Date of the Transaction, the First Acceleration Date shall be the date of such Acquisition Transaction Announcement.
(b)     “Acquisition Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, (iv) any other announcement that in the good faith and commercially reasonable judgment of the Calculation Agent may result in an Acquisition Transaction or (v) any announcement of any material change or amendment to any previous Acquisition Transaction Announcement (including any announcement of the abandonment of any such previously announced Acquisition Transaction, agreement, letter of intent, understanding or intention). For the avoidance of doubt, announcements as used in the definition of Acquisition Transaction Announcement refer to any public announcement whether made by the Issuer or a third party.
(c)    “Acquisition Transaction” means (i) any Merger Event (for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “25%” and to “50%” by “75%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition), Tender Offer or Merger Transaction or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 25% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or its board of directors has a legal 

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obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).
		
	9.
	Acknowledgments.  (a) The parties hereto intend for:

(i)    the Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code, a “swap agreement” as defined in Section 101(53B) of the Bankruptcy Code and a “forward contract” as defined in Section 101(25) of the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 555, 556, 560 and 561 of the Bankruptcy Code;
(ii)    the Agreement to be a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code;
(iii)    a party’s right to liquidate, terminate or accelerate the Transaction, net out or offset termination values or payment amounts, and to exercise any other remedies upon the occurrence of any Event of Default or Termination Event under the Agreement with respect to the other party or any Extraordinary Event that results in the termination or cancellation of the Transaction to constitute a “contractual right” (as defined in the Bankruptcy Code); and
(iv)    all payments for, under or in connection with the Transaction, all payments for the Shares (including, for the avoidance of doubt, payment of the Prepayment Amount) and the transfer of such Shares to constitute “settlement payments” and “transfers” (as defined in the Bankruptcy Code).
(b)    Counterparty acknowledges that:
(i)    during the term of the Transaction, GS&Co. and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to establish, adjust or unwind its hedge position with respect to the Transaction;
(ii)    GS&Co. and its affiliates may also be active in the market for the Shares and derivatives linked to the Shares other than in connection with hedging activities in relation to the Transaction, including acting as agent or as principal and for its own account or on behalf of customers;
(iii)    GS&Co. shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Forward Price and the VWAP Price;
(iv)    any market activities of GS&Co. and its affiliates with respect to the Shares may affect the market price and volatility of the Shares, as well as the Forward Price and VWAP Price, each in a manner that may be adverse to Counterparty; and
(v)    the Transaction is a derivatives transaction in which it has granted GS&Co. an option;  GS&Co. may purchase shares for its own account at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of the Transaction.
(c)    Counterparty:
(i)    is an “institutional account” as defined in FINRA Rule 4512(c);
(ii)    is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating the recommendations of GS&Co. or its associated persons; and

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(iii)    will notify GS&Co. if any of the statements contained in clause (i) or (ii) of this Section 9(c) ceases to be true.
10.    Credit Support Documents.  The parties hereto acknowledge that the Transaction hereunder is not secured by any collateral that would otherwise secure the obligations of Counterparty herein or pursuant to the Agreement.
11.    No Set-off.  Obligations under the Agreement shall not be set off by either party against any other obligations of the other party or that other party’s affiliates, whether arising under the Agreement or any other agreement between the parties by operation of law or otherwise.
12.    Delivery of Shares.  Notwithstanding anything to the contrary herein, GS&Co. may, by prior notice to Counterparty, satisfy its obligation to deliver any Shares or other securities on any date due (an “Original Delivery Date”) by making separate deliveries of Shares or such securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of Shares and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.
13.    Early Termination.  In the event that an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction (except as a result of a Merger Event in which the consideration or proceeds to be paid to holders of Shares consists solely of cash), if either party would owe any amount to the other party pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “Payment Amount”), then, in lieu of any payment of such Payment Amount, Counterparty may, no later than the Early Termination Date or the date on which the Transaction is terminated, elect to deliver or for GS&Co. to deliver, as the case may be, to the other party a number of Shares (or, in the case of a Merger Event, a number of units, each comprising the number or amount of the securities or property that a hypothetical holder of one Share would receive in such Merger Event (each such unit, an “Alternative Delivery Unit” and, the securities or property comprising such unit, “Alternative Delivery Property”)) with a value equal to the Payment Amount, as determined by the Calculation Agent (and the parties agree that, in making such determination of value, the Calculation Agent may take into account a number of factors, including the market price of the Shares or Alternative Delivery Property on the date of early termination and, if such delivery is made by GS&Co., the prices at which GS&Co. purchases Shares or Alternative Delivery Property to fulfill its delivery obligations under this Section 13); provided that in determining the composition of any Alternative Delivery Unit, if the relevant Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash. If such delivery is made by Counterparty, paragraphs 2 through 7 of Annex A shall apply as if such delivery were a settlement of the Transaction to which Net Share Settlement applied, the Cash Settlement Payment Date were the Early Termination Date and the Forward Cash Settlement Amount were zero (0) minus the Payment Amount owed by Counterparty.
14.    Calculations and Payment Date upon Early Termination.  Notwithstanding anything to the contrary herein or in Section 6 of the Agreement or the Equity Definitions, if Counterparty elects to receive Shares or Alternative Delivery Property in accordance with Section 13, such Shares or Alternative Delivery Property shall be delivered by GS&Co as promptly as commercially reasonably practicable on or following the relevant Early Termination Date.
15.    Automatic Termination Provisions.  Notwithstanding anything to the contrary in Section 6 of the Agreement, an Additional Termination Event with Counterparty as the sole Affected Party and the Transaction as the Affected Transaction will automatically occur without any notice or action by GS&Co. or Counterparty if the price of the Shares on the Exchange at any time falls below such Termination Price, and the Exchange Business Day that the price of the Shares on the Exchange at any time falls below the Termination Price will be the “Early Termination Date” for purposes of the Agreement.
16.    Delivery of Cash.  For the avoidance of doubt, nothing in this Confirmation shall be interpreted as requiring Counterparty to deliver cash in respect of the settlement of the Transaction contemplated by this Confirmation following payment by Counterparty of the relevant Prepayment Amount, except in circumstances where the required cash settlement thereof is permitted for classification of the contract as equity by ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, as in effect on the relevant Trade Date (including, without limitation, where 

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Counterparty so elects to deliver cash or fails timely to elect to deliver Shares or Alternative Delivery Property in respect of the settlement of the Transaction).
17.    Claim in Bankruptcy.  GS&Co. acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy.
18.    Governing Law.  The Agreement, this Confirmation and all matters arising in connection with the Agreement and this Confirmation shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (without reference to its choice of laws doctrine other than Title 14 of Article 5 of the New York General Obligations Law).
19.    Illegality.  The parties agree that, for the avoidance of doubt, for purposes of Section 5(b)(i) of the Agreement, “any applicable law” shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any similar law or regulation, without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, and the consequences specified in the Agreement, including without limitation, the consequences specified in Section 6 of the Agreement, shall apply to any Illegality arising from any such act, rule or regulation.
		
	20.
	Offices.

(a)    The Office of GS&Co. for the Transaction is: 200 West Street, New York, New York 10282-2198.    
(b)    The Office of Counterparty for the Transaction is: 900 Omnicare Center, 201 E. Fourth Street, Cincinnati, Ohio 45202.
21.    Waiver of Jury Trial.  Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction hereunder by, among other things, the mutual waivers and certifications provided herein.
22.    Submission to Jurisdiction.  Section 13(b) of the Agreement is deleted in its entirety and replaced by the following:
“Each party hereby irrevocably and unconditionally submits for itself and its property in any suit, legal action or proceeding relating to this Agreement and/or the Transaction, or for recognition and enforcement of any judgment in respect thereof, (each, “Proceedings”) to the exclusive jurisdiction of the Supreme Court of the State of New York, sitting in New York County, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof.  Nothing in this Confirmation or this Agreement precludes either party from bringing Proceedings in any other jurisdiction if (A) the courts of the State of New York or the United States of America for the Southern District of New York lack jurisdiction over the parties or the subject matter of the Proceedings or declines to accept the Proceedings on the grounds of lacking such jurisdiction; (B) the Proceedings are commenced by a party for the purpose of enforcing against the other party’s property, assets or estate any decision or judgment rendered by any court in which Proceedings may be brought as provided hereunder; (C) the Proceedings are commenced to appeal any such court’s decision or judgment to any higher court with competent appellate jurisdiction over that court’s decisions or judgments if that higher court is located outside the State of New York or Borough of Manhattan, such as a federal court of appeals or the U.S. Supreme Court; or (D) any suit, action or proceeding has been commenced in another jurisdiction by or against the other party or against its property, assets or estate and, in order to exercise or protect its rights, interests or remedies under this Agreement or this Confirmation, the party (1) joins, 

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files a claim, or takes any other action, in any such suit, action or proceeding, or (2) otherwise commences any Proceeding in that other jurisdiction as the result of that other suit, action or proceeding having commenced in that other jurisdiction.”
23.    Counterparts.  This Confirmation may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Confirmation by signing and delivering one or more counterparts.
(i)    

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this Confirmation and returning it to us by facsimile to the Equity Derivatives Documentation Department, Facsimile No. 212-428-1980/83.

Yours faithfully,
GOLDMAN, SACHS & CO.
By:                          
    Authorized Signatory
Agreed and Accepted By:
OMNICARE, INC.
By:        
 
Name:
 
Title:

    

ANNEX A
COUNTERPARTY SETTLEMENT PROVISIONS
1.    The following Counterparty Settlement Provisions shall apply to the extent indicated under the Confirmation:
		
	Settlement Currency:
	USD

		
	Settlement Method Election:
	Applicable; provided that (i) Section 7.1 of the Equity Definitions is hereby amended by deleting the word “Physical” in the sixth line thereof and replacing it with the words “Net Share” and (ii) the Electing Party may make a settlement method election only if the Electing Party represents and warrants to GS&Co. in writing on the date it notifies GS&Co. of its election that, as of such date, the Electing Party is not aware of any material non-public information concerning Counterparty or the Shares and is electing the settlement method in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws.

		
	Electing Party:
	Counterparty

Settlement Method 
		
	Election Date:
	The earlier of (i) the Scheduled Termination Date and (ii) the second Exchange Business Day immediately following the Accelerated Termination Date (in which case the election under Section 7.1 of the Equity Definitions shall be made no later than 10 minutes prior to the open of trading on the Exchange on such second Exchange Business Day), as the case may be.

		
	Default Settlement Method:
	Cash Settlement

Forward Cash Settlement 
		
	Amount:
	The Number of Shares to be Delivered multiplied by the Settlement Price.

		
	Settlement Price:
	The average of the VWAP Prices for the Exchange Business Days in the Settlement Valuation Period, subject to Valuation Disruption as specified in the Confirmation.

		
	Settlement Valuation Period:
	A number of Scheduled Trading Days selected by GS&Co. in good faith and its commercially reasonable discretion, beginning on the Scheduled Trading Day immediately following the earlier of (i) the Scheduled Termination Date or (ii) the Exchange Business Day immediately following the Termination Date. 

		
	Cash Settlement:
	If Cash Settlement is applicable, then Buyer shall pay to Seller the absolute value of the Forward Cash Settlement Amount on the Cash Settlement Payment Date. 

    

    

Cash Settlement 
		
	Payment Date:
	The date one Settlement Cycle following the last day of the Settlement Valuation Period.

Net Share Settlement
		
	Procedures:
	If Net Share Settlement is applicable, Net Share Settlement shall be made in accordance with paragraphs 2 through 7 below.  

2.    Net Share Settlement shall be made by delivery on the Cash Settlement Payment Date of a number of Shares satisfying the conditions set forth in paragraph 3 below (the “Registered Settlement Shares”), or a number of Shares not satisfying such conditions (the “Unregistered Settlement Shares”), in either case with a value equal to the absolute value of the Forward Cash Settlement Amount, with such Shares’ value based on the realizable market value thereof to GS&Co. (which value shall, in the case of Unregistered Settlement Shares, take into account a commercially reasonable illiquidity discount), in each case as determined by the Calculation Agent.

3.    Counterparty may only deliver Registered Settlement Shares pursuant to paragraph 2 above if:
(a)    (1) a registration statement (which may be a shelf registration statement filed pursuant to Rule 415 under the Securities Act) covering public resale of the Registered Settlement Shares by GS&Co. (the “Registration Statement”) shall have been filed with the Securities and Exchange Commission under the Securities Act and been declared or otherwise become effective on or prior to the date of delivery, and no stop order shall be in effect with respect to the Registration Statement; and (2) a prospectus relating to the Registered Settlement Shares (including any prospectus supplement thereto, the “Prospectus”) shall have been delivered to GS&Co. on or prior to the date of delivery;
(b)    the form and content of the Registration Statement and the Prospectus (including, without limitation, any sections describing the plan of distribution) shall be commercially reasonably satisfactory to GS&Co.;
(c)    as of or prior to the date of delivery, GS&Co. and its agents shall have been afforded a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities and the results of such investigation are satisfactory to GS&Co., in its discretion; provided that, prior to receiving or being granted access to any such information, GS&Co. and its agents may be required by Counterparty to enter into a customary nondisclosure agreement with Counterparty in respect of any such due diligence investigation; and
(d)    as of the date of delivery, an agreement (the “Underwriting Agreement”) shall have been entered into with GS&Co. in connection with the public resale of the Registered Settlement Shares by GS&Co. substantially similar to underwriting agreements customary for underwritten offerings of equity securities, in form and substance commercially reasonably satisfactory to GS&Co., which Underwriting Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating, without limitation, to the indemnification of, and contribution in connection with the liability of, GS&Co. and its affiliates and the provision of customary opinions, accountants’ comfort letters and lawyers’ negative assurance letters.
4.    If Counterparty delivers Unregistered Settlement Shares pursuant to paragraph 2 above:
(a)    all Unregistered Settlement Shares shall be delivered to GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereof;
(b)    as of or prior to the date of delivery, GS&Co. and any potential purchaser of any such shares from GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) identified by GS&Co. shall be afforded a 

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commercially reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for private placements, of similar size, of equity securities (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them); provided that, prior to receiving or being granted access to any such information, GS&Co. and any potential purchaser may be required by Counterparty to enter into a customary nondisclosure agreement with Counterparty in respect of any such due diligence investigation.
(c)    as of the date of delivery, Counterparty shall enter into an agreement (a “Private Placement Agreement”) with GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) in connection with the private placement of such shares by Counterparty to GS&Co. (or any such affiliate) and the private resale of such shares by GS&Co. (or any such affiliate), substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to GS&Co., which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating, without limitation, to the indemnification of, and contribution in connection with the liability of, GS&Co. and its affiliates and the provision of customary opinions and lawyers’ negative assurance letters, and shall provide for the payment by Counterparty of all reasonable and documented out-of-pocket fees and expenses in connection with such resale, including all reasonable and documented out-of-pocket fees and expenses of counsel for GS&Co., and shall contain representations, warranties, covenants and agreements of Counterparty reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales; and
(d)    in connection with the private placement of such shares by Counterparty to GS&Co. (or any such affiliate) and the private resale of such shares by GS&Co. (or any such affiliate), Counterparty shall, if reasonably requested by GS&Co., prepare, in cooperation with GS&Co., a private placement memorandum in form and substance reasonably satisfactory to GS&Co.
5.    GS&Co., itself or through an affiliate (the “Selling Agent”) or any underwriter(s), will sell all, or such lesser portion as may be required hereunder, of the Registered Settlement Shares or Unregistered Settlement Shares and any Makewhole Shares (as defined below) (together, the “Settlement Shares”) in a commercially reasonable manner delivered by Counterparty to GS&Co. pursuant to paragraph 6 below commencing on the Cash Settlement Payment Date and continuing until the date on which the aggregate Net Proceeds (as such term is defined below) of such sales, as determined by GS&Co., is equal to the absolute value of the Forward Cash Settlement Amount (such date, the “Final Resale Date”).  If the proceeds of any sale(s) made by GS&Co., the Selling Agent or any underwriter(s), net of any fees and commissions (including, without limitation, underwriting or placement fees) customary and commercially reasonable for similar transactions under the circumstances at the time of the offering, together with carrying charges and expenses incurred in connection with the offer and sale of the Shares (including, but without limitation to, the covering of any over-allotment or short position (syndicate or otherwise)) (the “Net Proceeds”) exceed the absolute value of the Forward Cash Settlement Amount, GS&Co. will refund, in USD, such excess to Counterparty on the date that is three (3) Currency Business Days following the Final Resale Date, and, if any portion of the Settlement Shares remains unsold, GS&Co. shall return to Counterparty on that date such unsold Shares.
6.    If the Calculation Agent determines that the Net Proceeds received from the sale of the Registered Settlement Shares or Unregistered Settlement Shares or any Makewhole Shares, if any, pursuant to this paragraph 6 are less than the absolute value of the Forward Cash Settlement Amount (the amount in USD by which the Net Proceeds are less than the absolute value of the Forward Cash Settlement Amount being the “Shortfall” and the date on which such determination is made, the “Deficiency Determination Date”), Counterparty shall on the Exchange Business Day next succeeding the Deficiency Determination Date (the “Makewhole Notice Date”) deliver to GS&Co., through the Selling Agent, a notice of Counterparty’s election that Counterparty shall either (i) pay an amount in cash equal to the Shortfall on the day that is one (1) Currency Business Day after the Makewhole Notice Date, or (ii) deliver additional Shares.  If Counterparty elects to deliver to GS&Co. additional Shares, then Counterparty shall deliver additional Shares in compliance with the terms and conditions of paragraph 3 or paragraph 4 above, as the case may be (the “Makewhole Shares”), on the first Clearance System Business Day which is also an Exchange Business Day following the Makewhole Notice Date in such number as the Calculation Agent reasonably believes would have a market value on that Exchange Business Day equal to the Shortfall.  Such Makewhole Shares shall be 

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sold by GS&Co. in accordance with the provisions above; provided that if the sum of the Net Proceeds from the sale of the originally delivered Shares and the Net Proceeds from the sale of any Makewhole Shares is less than the absolute value of the Forward Cash Settlement Amount then Counterparty shall, at its election, either make such cash payment or deliver to GS&Co. further Makewhole Shares until such Shortfall has been reduced to zero. 
7.    Notwithstanding the foregoing, in no event shall the aggregate number of Settlement Shares and Makewhole Shares be greater than the Reserved Shares (the result of such calculation, the “Capped Number”).  Counterparty represents and warrants (which shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Shares determined according to the following formula:
A – B
		
	Where
	A = the number of authorized but unissued shares of Counterparty that are not reserved for future issuance on the date of the determination of the Capped Number; and

B = the maximum number of Shares required to be delivered to third parties if Counterparty elected Net Share Settlement of all transactions in the Shares (other than the Transaction in the Shares under this Confirmation) with all third parties that are then currently outstanding and unexercised.
“Reserved Shares” means 14,577,259 Shares.

4HLS 10-K 12/31/12 EX10.15

Exhibit 10.15

HEALTHSOUTH CORPORATION
DIRECTORS' DEFERRED STOCK INVESTMENT PLAN

Amended and Restated as of October 16, 2012

WHEREAS, HealthSouth Corporation (“HealthSouth” or the “Company”) has previously adopted the HealthSouth Corporation Directors' Deferred Stock Investment Plan (the “Plan”), effective as of November 1, 2007 (the “Effective Date”), to enable HealthSouth to provide to its directors a convenient means of deferring compensation through the purchase of Common Stock of HealthSouth, and thereby encourage stock ownership and promote interest in HealthSouth's success, growth, and development;
WHEREAS, HealthSouth continues to recognizes the value to its Directors of a plan of deferred compensation; and
WHEREAS, the Plan allows such Directors to defer receipt of certain income through the purchase of HealthSouth Common Stock; and
WHEREAS, HealthSouth desires to make certain administrative changes through an amendment and restatement of this Plan; and
NOW, THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the Plan shall be amended and restated to contain the following terms and conditions, and only the following terms and conditions.

ARTICLE I
DEFINITIONS
When used herein, the following words and phrases shall have the meanings set forth below, unless a different meaning is clearly required by the context of the Plan.
1.    Authorization for Participation shall mean the form that an individual must submit to the Secretary of the Company, in accordance with Article II, in order to participate in the Plan.  Such form shall contain the individual's election to defer receipt of compensation, the percentage of deferred Director's Fees, and the Participant's beneficiaries designated to receive any benefits to which the Participant may be entitled in the event of the Participant's death.

2.    Board shall mean the Board of Directors of the Company.
3.    Change in Control shall mean a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as defined under Treasury Regulation Section 1.409A-3(i)(5) (as it may be amended, or such other regulation or ruling that replaces such section).
4.    Compensation Committee shall mean the Compensation Committee of the Board of Directors of the Company.
5.    Common Stock shall mean the shares of common stock, par value $.01 per share, of HealthSouth and any shares that may, at any time prior to the date on which such term is applicable, be issued in exchange for shares of such Common Stock, whether in subdivision or in combination thereof and whether as part of a classification or reclassification thereof, or otherwise.  
6.    Company or Companies shall include HealthSouth and each affiliate, subsidiary, or local division thereof, and shall mean any one or more of such entities as the context requires.
7.    Deferred Account shall mean a separate bookkeeping account with respect to each Participant for the purpose of accounting for Participant deferrals and any other amounts attributable to the Participant's Deferred Account in accordance with the provisions of the Plan.
8.    Director shall mean any non-employee member of the Board.
9.    Director's Fees shall mean the total amount to be paid by HealthSouth to a Participant as retainer for services as a Director, including any fees for attending meetings of any committee of the Board, any fees for serving as chairperson of the Board or any of its committees, and any regular retainers.  Director's Fees, however, shall not include any equity awards or grants to Directors under any equity incentive plan of the Company.
10.    Fractional Share Account shall mean the amount to be paid, as provided herein, for a Participant's deferred fractional share interest in Common Stock attributable to such Participant's Stock Account.  The Fractional Share Account may be a sub-account of the Deferred Account.
11.    Participant shall mean a person who is participating in the Plan pursuant to the provisions of Article II and whose participation in the Plan has not terminated.
12.    Plan shall mean “ HealthSouth Corporation Directors' Deferred Stock Investment Plan,” as set forth herein, together with any amendments thereto.

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13.    Plan Year shall mean the period commencing on the Effective Date of the Plan and, thereafter, commencing January 1st of each year and ending on December 31 of such year.
14.    Purchasing Agent shall mean the person, or persons, or entity appointed by HealthSouth from time to time to serve as Purchasing Agent for this Plan to assist HealthSouth with its obligations under the Plan.  The Purchasing Agent shall not be an affiliate of HealthSouth.
15.    Separation from Service shall have the meaning set forth in Treasury Regulation Section 1.409A-1(h) (as it may be amended, or such other regulation or ruling that replaces such section).
16.    Stock Account shall mean the separate account maintained with respect to each Participant for the purpose of accounting for Common Stock purchased on behalf of the Participant under the Plan.  The Stock Account may be a sub-account of the Deferred Account.
17.    Trust shall mean any trust established by the Company to provide a source to hold assets related to the Plan and to pay amounts deferred under the Plan, such as a trust commonly referred to as a rabbi trust.
18.    Trustee shall mean Wilmington Trust Retirement and Institutional Services Company or such other independent third party, as selected by the Compensation Committee, that may be granted corporate trust powers under state law, such as a bank trust department or other similar party.    

    

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ARTICLE II
PARTICIPATION
Any Director as of the Effective Date of this Plan shall become eligible to participate in the Plan as of the date that the next “trading window,” as defined in the Insider Trading Policy of the Company, opens following the Effective Date of this Plan.  Authorizations for Participation may be submitted only during a period in which a trading window is open.  Any Authorization for Participation that is submitted at any other time shall be ineffective and will be returned to the Participant by the Company.  Such person's participation in the Plan shall commence on the first day of the calendar year next following the date on which he or she has submitted an Authorization for Participation to the Secretary of the Company. 
Any individual who becomes a Director subsequent to the Effective Date of this Plan shall become eligible to participate in the Plan as of the date of opening of the first trading window following his or her becoming a Director.  Provided that he or she submits an Authorization for Participation within such first trading window and within 30 days after his or her eligibility commences, the Director may specify that his or her participation shall commence on the first day of the calendar quarter following the submission of such Authorization for Participation, even if such participation date is not the first day of a calendar year.  If the Director submits the initial Authorization for Participation during a trading window but more 30 days after his or her eligibility commences, then his or her participation shall commence on the first day of the next calendar year.

ARTICLE III
PARTICIPANT DEFERRALS
A Participant may defer Director's Fees under the Plan in amounts equal to 25%, 50%, 75% or 100% of such Fees.  A Participant's Authorization for Participation shall specify the percentage of Director's Fees that are to be deferred on behalf of such Participant (according to the basis of payment).  The amount each Participant defers under the Plan shall be deducted, on a quarterly basis, from the Director's Fees such Participant would otherwise have received in cash as compensation for services to be performed after the date of the deferral election.  

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Participant deferrals may be initially authorized or the percentage thereof altered during any trading window preceding the first day of the calendar year for which the authorization or alteration is to become effective and only by the Participant's submission of an original or revised Authorization for Participation under the terms of this Article III.  Participants may cease deferrals pursuant to Article XI.  
The Trustee will keep a separate accounting for each Participant of the amount of the Participant's deferred Director's Fees by crediting the Deferred Account.  Deferred amounts shall be invested by the Trustee in Common Stock, and each Participant's Stock Account shall be credited to reflect the number of shares of Common Stock and each Participant's Fractional Share Account shall be credited to reflect the fractional share interests of such Participant.

ARTICLE IV
ADMINISTRATION OF PLAN
The Compensation Committee shall be responsible for the management and administration of the Plan.  The Compensation Committee has the exclusive authority to interpret and apply the Plan.  The Compensation Committee's interpretation of the Plan and all decisions and determinations by the Compensation Committee relating to the Plan shall be final and binding on all parties.  The Compensation Committee has the authority to delegate the day-to-day management and administrative responsibilities of the Plan to the Company's Human Resources Division.  The Compensation Committee shall have all powers necessary or appropriate to enable it properly to carry out its duties in connection with the operation and administration of the Plan, including, but not limited to, the following powers and duties:
		
	(A)
	To construe and interpret the provisions of the Plan;

		
	(B)
	To amend the Plan, if the Compensation Committee determines in its reasonable judgment that such amendment is necessary or advisable to maintain compliance with Internal Revenue Code Section 409A and the regulations and guidance thereunder (as such may be amended, or such other regulation or ruling that replaces such section);

		
	(C)
	To authorize the execution on behalf of the Company of any documents required in the administration of the Plan;

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	(D)
	To establish rules for the administration of the Plan;

		
	(E)
	To supervise the maintenance of records, including those with respect to Participant deferrals and stock purchased and distributed to Participants;

		
	(F)
	To file with the appropriate government agencies any and all reports and notifications required of the Plan and to provide all Participants and designated beneficiaries with any and all reports and notifications to which they are entitled by law; and

		
	(G)
	To perform any and all other functions reasonably necessary to administer the Plan.

The Compensation Committee may appoint a delegate to assume any one or more of the responsibilities set out above, except those set forth in subsection (B).  

ARTICLE V
PURCHASING AGENT; STOCK PURCHASES
The purchase of Common Stock, as provided herein, shall be the responsibility of the Purchasing Agent, which shall not be an affiliate of any Company.  At each time that Director's Fees (or any portion thereof) are paid, the Trustee shall notify the Purchasing Agent of the amount attributed to the Participants' Deferred Accounts to be invested as soon as practicable after the amounts are determined.  The Purchasing Agent shall exercise reasonable care in applying said amount to the purchase of shares of Common Stock and shall apply said amount promptly after such notification and, in any event, within thirty (30) days after such notification, unless a longer period is necessary to comply with federal securities laws.  Common Stock may be purchased by the Purchasing Agent on the open market, in privately negotiated transactions, or upon exercise of any conversion privileges or other options with respect to any and all Common Stock held in the Trust.  Immediately upon the purchase of Common Stock, the Purchasing Agent shall notify the Trustee of the amount of funds invested in such Common Stock and the Trustee shall promptly remit said amount to the Purchasing Agent.
Except as provided in the preceding paragraph, the Purchasing Agent shall have no authority over, or responsibility for, the management of the assets of the Plan or any Trust.  The Purchasing Agent shall have all powers necessary or appropriate to enable it to properly carry out 

6

its duties in connection with the purchase of Common Stock pursuant to this Plan, including, but not limited to, the following powers and duties:
		
	(A)
	To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments as may be necessary or appropriate to enable the Purchasing Agent to carry out the powers herein granted;

		
	(B)
	To employ suitable agents and counsel (who may be counsel for the Company), subject to the approval of the Trustee, and to pay the reasonable expenses and compensation of such agents and counsel; and

		
	(C)
	To exercise any conversion privileges or other options with respect to Common Stock held as a part of the Trust and to make any payments incidental thereto, subject to the approval of the Trustee.

Neither the Compensation Committee nor any Company shall have any direct or indirect control or influence over the times when, or the prices at which, the Purchasing Agent may purchase Common Stock, the amounts of such Common Stock to be purchased, the manner in which such Common Stock is to be purchased, or the selection of a broker or dealer through which purchases may be executed.
Neither the Purchasing Agent, the Compensation Committee, the Trustee, nor any Company shall have any responsibility as to the value of Company Stock acquired by the Trust and attributable to any Participant's Stock Account.  

ARTICLE VI
STOCK ACCOUNTS AND FRACTIONAL SHARE ACCOUNTS
After each purchase of Common Stock for the Plan by the Purchasing Agent, the Purchasing Agent will advise the Trustee of the number of shares purchased and of the average cost per share of such Common Stock.  The Trustee will then make a bookkeeping charge against each Participant's Deferred Account in the amount of the average cost of the Common Stock to be allocated to the Participant's Stock Account.  The accounting for the Stock Accounts shall include full shares and any fractional share interest in a share (to four decimal places) which shall be accounted for in the Fractional Share Account.  

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ARTICLE VII
ASSIGNMENTS
No claim, right, or interest of any Participant under the Plan may be transferred or assigned by voluntary or involuntary act of the Participant or beneficiary hereunder, nor shall they be subject to anticipation, alienation, assignment, garnishment, attachment, receivership, execution, sale, transfer, pledge, encumbrance, or levy by creditors of the Participant or the Participant's beneficiary hereunder.

ARTICLE VIII
DIVIDENDS AND DISTRIBUTIONS
Cash dividends, if any, payable on the Common Stock attributable to a Participant's Stock Account will be accounted for in such Participant's Deferred Account for reinvestment in Common Stock.  Stock dividends and stock splits payable on the Common Stock attributable to a Participant's Stock Account will be accounted for in such Participant's Stock Account.

ARTICLE IX
VOTING RIGHTS
A Participant shall have no rights to vote any stock purchased by the Purchasing Agent and held in his/her Stock Account under the Plan. 
    
ARTICLE X
REPORTS TO PARTICIPANTS
As soon as is practicable following the end of each quarter, or more often at the direction of the Trustee, the Purchasing Agent or the Trustee will send to each Participant a written report of any transactions attributable to such Participant's Deferred Account, including the Stock Account and Fractional Share Account, and of the balance to the credit of such accounts as of the date of the report. 

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ARTICLE XI
WITHDRAWAL FROM PLAN
A Participant may stop deferring Director's Fees to the Plan by giving written notice of withdrawal to the Secretary of the Company. Such withdrawal will be effective on the first day of the calendar year following the date such notice is actually given to the Secretary. Such withdrawal will not affect the date of payment of any amount deferred prior to the effective date of such withdrawal. A Participant who has withdrawn may re-enter the Plan by submitting a revised Authorization for Participation to the Secretary in accordance with Article II of the Plan, provided such revised Authorization for Participation shall be effective as of the first day of the calendar year following the date the revised Authorization for Participation is actually delivered to the Secretary.

ARTICLE XII
WITHHOLDING
The Company, the Trustee, or the Purchasing Agent shall make required reporting and withholding of any applicable federal, state or local taxes with respect to benefit distributions under the Plan and shall pay such amounts to the appropriate taxing authorities.  Notwithstanding the preceding, to the extent that withholding of such taxes is not required for distributions of stock under the Plan, no such withholding shall be made.  

ARTICLE XIII
TIME OF PAYMENT
Except as provided in Article XVII, the payment of deferred balance under the Plan will be made within thirty (30) days after the date the Participant has a Separation from Service as a Director of HealthSouth; provided, that the Director may not designate the taxable year of the payment. 

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ARTICLE XIV
SEPARATION FROM SERVICE
Participation in the Plan by a Participant shall automatically terminate, without notice, upon the Participant's Separation from Service as a Director, whether such Separation from Service is by reason of resignation, replacement or death.  If such Separation from Service is other than by reason of death, the former Participant shall receive, at the time specified in Article XIII, a certificate for any number of full shares attributable to said Participant's Stock Account and not previously distributed together with a check for any amount held in the Fractional Share Account and any other remaining amounts to the balance of his or her Deferred Account.  If Separation from Service is by reason of death, payment will be made at the same time and in the same manner but will be made to the Participant's beneficiary or contingent beneficiary designated on such Participant's Authorization for Participation.  If the Participant has not so designated a beneficiary or contingent beneficiary, or if the designated beneficiary or contingent beneficiary does not survive the Participant, payment will be made to the Participant's estate.  

ARTICLE XV
MISCELLANEOUS
The provisions of this Plan shall be interpreted in accordance with, and governed by, the laws of the State of Delaware.

ARTICLE XVI
EXPENSES
HealthSouth will bear the cost of administering the Plan, including any transfer taxes incurred in transferring Common Stock held for payment under the Plan to Participants.  However, expenses that an individual would normally pay upon the purchase of stock from a broker, including any broker's fees, commissions, postage or other transaction costs actually incurred, will be included in the amount charged against the Participant's Deferred Account for the purchase of the Common Stock.  

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ARTICLE XVII
CHANGE IN CONTROL
Upon a Change in Control, the Common Stock attributable to a Participant's Stock Account, any amounts attributable to the Participant's Deferred Account, and any amounts attributable to the Participant's Fractional Share Account shall be immediately distributed to the Participant or to his beneficiary.  
    
ARTICLE XVIII
AMENDMENT, TERMINATION, AND SUSPENSION OF THE PLAN
HealthSouth reserves the right, by action of the Board or pursuant to Article IV hereof, to amend the Plan at any time; provided (i) that no amendment shall affect or diminish any Participant's right to the deferrals made by such Participant or contributions by the Company prior to the date of such amendment, and (ii) that no amendment shall affect a Participant's deferral election at any time before January 1 of the calendar year following the year in which such amendment is adopted.
HealthSouth reserves the right, by action of the Board, to terminate the Plan as of any December 31 on or after the date of such Board action. In the event of such termination, there will be no further Participant deferrals to the Plan. Upon termination of the Plan, the Board may further specify that accounts under the Plan shall be paid to the Participants, provided that: (i) no such payment is made before the earlier of the date that is 12 months after the date of Plan termination or the date the payment would otherwise have been made; (ii) no such payment is made later than the date that is 24 months after the date of Plan termination; and (iii) all other requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(C) (as it may be amended, or such other regulation or ruling that replaces such section) are met.

ARTICLE XIX
EFFECT OF ILLEGALITY OF PURCHASES OF COMMON STOCK OF HEALTHSOUTH

In the event it is determined by the Board, after obtaining the advice of legal counsel, that purchases of the Common Stock by the Trust would be prohibited under any federal or state law, 

11

then the Compensation Committee shall direct that Participant deferrals shall be invested as necessary in such other investments as the Compensation Committee determines to be most appropriate under the circumstances, and the accounts of the Participants will be credited with investment earnings in accordance with such investments (and amounts so invested shall not be credited with the returns applicable to amounts invested in HealthSouth Common Stock). At such time as the Board determines that purchases of Common Stock may again be made legally, such alternate investments shall be liquidated and the proceeds used to purchase Common Stock, and the accounts of the affected Participants shall be credited with appropriate returns thereafter.

ARTICLE XX
NATURE OF COMPANY'S OBLIGATION
The Company's obligations under this Plan shall be an unfunded and unsecured promise to pay benefits in the future.  It is the intention of the Company that the Plan shall be unfunded for purposes of federal and state income tax and, if applicable, for purposes of the Employee Retirement Income Security Act.  The Company shall not be obligated under any circumstances to fund its obligations under this Plan. If the Company does not deposit funds with the Trustee as provided under this Plan, the Trustee and the Purchasing Agent shall account for stock units, in lieu of shares of Common Stock purchased, as if such shares were purchased in accordance with Article V hereof. The Company may, however, as its sole and exclusive option, elect to fund this Plan, in whole or in part.  If the Company shall elect to fund the Plan, in whole or in part, the manner of such funding, and the continuance or discontinuance of such funding shall be the sole and exclusive decision of the Company. Any payments to Participant from such a funding source shall be made from the Trust and shall fully discharge, to the extent thereof, the Company's obligations under the Plan.
Any assets which the Company may acquire or set aside to help cover its financial liabilities under the Plan are and must remain general assets of the Company subject to the claims of its creditors.  Neither the Company nor this Plan gives a Participant any beneficial ownership interest in any assets of the Company.  All rights of ownership in any such assets are and remain in the Company.  Participants in the Plan therefore have the status of general unsecured creditors of the Company.

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ARTICLE XXI
CODE SECTION 409A
    
This Plan shall be administered and interpreted in accordance with the requirements under Internal Revenue Code Section 409A and the regulations and guidance thereunder.  The terms used under this Plan shall specifically be interpreted to comply with such requirements.        
    
    

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