AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

between

APRIA HEALTHCARE, INC.

APCO, INC.

and

CORAM, INC.

Dated as of October 13, 2007

TABLE OF CONTENTS

						Page
ARTICLE I DEFINITIONS							1
		Section 1.1		Certain Defined Terms			1
		Section 1.2		Table of Definitions			7
ARTICLE II THE MERGER							10
		Section 2.1		The Merger			10
		Section 2.2		Closing; Effective Time			10
		Section 2.3		Effects of the Merger			10
		Section 2.4		Certificate of Incorporation and Bylaws			10
		Section 2.5		Directors; Officers			11
		Section 2.6		Subsequent Actions			11
		Section 2.7		Conversion of Stock			11
		Section 2.8		Dissenting Shares			12
		Section 2.9		Options			12
		Section 2.10		Payment for Shares.			12
		Section 2.11		Withholding Rights			14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY							14
		Section 3.1		Organization and Qualification			14
		Section 3.2		Authority			15
		Section 3.3		No Conflict; Required Filings and Consents			15
		Section 3.4		Capitalization			16
		Section 3.5		Equity Interests			17
		Section 3.6		Financial Statements; No Undisclosed Liabilities			18
		Section 3.7		Accounts Receivable			19
		Section 3.8		Customers and Suppliers			19
		Section 3.9		Absence of Certain Changes or Events			19
		Section 3.10		Compliance with Law; Permits			20
		Section 3.11		Litigation			20
		Section 3.12		Employee Benefit Plans			21
		Section 3.13		Labor and Employment Matters			23
		Section 3.14		Assets			24
		Section 3.15		Real Property			25
		Section 3.16		Intellectual Property			25
		Section 3.17		Taxes			26
		Section 3.18		Environmental Matters			28
		Section 3.19		Material Contracts			29
		Section 3.20		Affiliate Interests and Transactions			31
		Section 3.21		Insurance.			32
		Section 3.22		Brokers			32
		Section 3.23		Health Care Matters			32
		Section 3.24		Inspections and Investigations			33

TABLE OF CONTENTS
(Continued)

						Page
		Section 3.25		Rates and Reimbursements			34
		Section 3.26		Regulatory Matters.			34
		Section 3.27		Inventory			37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND MERGER SUB							37
		Section 4.1		Organization			37
		Section 4.2		Authority			37
		Section 4.3		No Conflict; Required Filings and Consents			37
		Section 4.4		Financing			38
		Section 4.5		Brokers			38
ARTICLE V COVENANTS							38
		Section 5.1		Conduct of Business Prior to the Closing			38
		Section 5.2		Access to Information			41
		Section 5.3		Exclusivity			41
		Section 5.4		Notification of Certain Matters			42
		Section 5.5		Takeover Statutes			43
		Section 5.6		Stock Option Plans			43
		Section 5.7		Confidentiality			43
		Section 5.8		Reasonable Best Efforts.			43
		Section 5.9		Public Announcements			45
		Section 5.10		Financing.			45
		Section 5.11		Employees.			46
		Section 5.12		Indemnification and Insurance.			48
		Section 5.13		Section 280G Stockholder Approval.			49
ARTICLE VI CONDITIONS TO CLOSING							49
		Section 6.1		General Conditions			49
		Section 6.2		Conditions to Obligations of the Company			50
		Section 6.3		Conditions to Obligations of the Acquiror and Merger Sub			50
ARTICLE VII SURVIVAL							51
		Section 7.1		Survival of Representations, Warranties and Covenants			51
ARTICLE VIII TERMINATION							52
		Section 8.1		Termination			52
		Section 8.2		Effect of Termination			53
ARTICLE IX GENERAL PROVISIONS							53
		Section 9.1		Fees and Expenses			53

TABLE OF CONTENTS
(Continued)

						Page
		Section 9.2		Amendment and Modification			53
		Section 9.3		Extension			53
		Section 9.4		Waiver			53
		Section 9.5		Notices			54
		Section 9.6		Interpretation			55
		Section 9.7		Entire Agreement			55
		Section 9.8		No Third-Party Beneficiaries			55
		Section 9.9		Governing Law			55
		Section 9.10		Enforcement			55
		Section 9.11		Assignment; Successors			55
		Section 9.12		Currency			56
		Section 9.13		Severability			56
		Section 9.14		Waiver of Jury Trial			56
		Section 9.15		Counterparts			56
		Section 9.16		Facsimile Signature			56
		Section 9.17		Time of Essence			56
		Section 9.18		No Presumption Against Drafting Party			56

EXHIBIT INDEX

Exhibit A		Form of Certificate of Merger
Exhibit B		Officers of the Surviving Corporation

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER, dated as of October 13, 2007 (this “ Agreement ”), is between Apria Healthcare, Inc., a Delaware corporation (the “ Acquiror ”), APCO, Inc., a Delaware corporation and a wholly owned subsidiary of the Acquiror (“ Merger Sub ”), and Coram, Inc., a Delaware corporation (the “ Company ”).

RECITALS

     A. The Company is engaged in the business of providing home infusion pharmacy services and specialty pharmacy services to patients with acute or chronic conditions (the “ Business ”).

     B. The Boards of Directors of each of the Acquiror, the Company and Merger Sub have (i) determined that the merger of Merger Sub with and into the Company (the “ Merger ”) would be advisable and fair to, and in the best interests of, their respective stockholders and (ii) approved the Merger upon the terms and subject to the conditions set forth in this Agreement pursuant to the General Corporation Law of the State of Delaware (the “ DGCL ”).

     C. The Stockholders hold all of the outstanding voting power of the Company entitled to vote on the adoption of this Agreement and the approval of the Merger.

     D. Concurrently with the execution and delivery of this Agreement, as an inducement to the Acquiror’s and Merger Sub’s willingness to enter into this Agreement and incur the obligations set forth herein, each of the stockholders of the Company (collectively, the “ Stockholders ”) has executed letter agreements committing to execute and deliver written consents adopting this Agreement and approving the Merger (collectively, such Stockholders’ approvals, the “ Company Stockholder Approval ”).

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
DEFINITIONS

          Section 1.1 Certain Defined Terms . For purposes of this Agreement:

          “ Accounts Receivable ” means all accounts, both billed and unbilled, including retainage and work in progress, owned or acquired by the Company and each of the Company Affiliates including accounts receivable, notes and notes receivable, other receivables and book debts.

          “ Acquisition Proposal ” means any offer or proposal for, or any indication of interest in, any of the following (other than the Merger): (a) any direct or indirect acquisition or purchase of all or any portion of the capital stock of the Company or any of the Company Affiliates or assets of the Company or any of the Company Affiliates (other than inventory to be sold in the ordinary course of business consistent with past practice), (b) any merger, consolidation or other business combination relating to the Company or any of the Company Affiliates or (c) any recapitalization, reorganization or any other extraordinary business transaction involving or otherwise relating to the Company or any of the Company Affiliates.

          “ Action ” means any claim, action, suit, inquiry, proceeding, audit or investigation by or before any Governmental Authority, or any other arbitration, mediation or similar proceeding.

          “ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. Notwithstanding the foregoing, no “portfolio company” of any Stockholder shall be deemed to be an Affiliate of the Company or such Stockholder.

          “ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the State of Delaware and/or the City of New York.

          “ Company Affiliates ” means all Subsidiaries of the Company and the entities set forth on Section 1.1(a) of the Disclosure Letter.

          “ Company Common Stock ” means the common stock, par value $0.01 per share, of the Company.

          “ Company Preferred Stock ” means the Series A Preferred Stock, par value $0.01 per share, of the Company.

          “ Contract ” means any contract, agreement, arrangement or understanding, whether written or oral and whether express or implied.

          “ control ,” including the terms “ controlled by ” and “ under common control with ,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by Contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

          “ Controlled Group Liability ” means any material liability (a) under Title IV of ERISA, (b) under Section 302 of ERISA, (c) under Sections 412 and 4971 of the Code or (d) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, other than such liabilities that arise out of, or relate to, the Plans listed in Section 3.12(a) of the Disclosure Letter.

          “ Encumbrance ” means any charge, claim, limitation, condition, equitable interest, mortgage, lien, option, pledge, security interest, easement, encroachment, right of first refusal, adverse claim or restriction of any kind, including any restriction on or transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership.

          “ Environmental Laws ” means: any Laws of any Governmental Authority relating to (i) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (ii) the presence, production, distribution, testing, discharge, control, cleanup, manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (iii) pollution or protection of the environment, health, safety or natural resources.

          “ Environmental Permits ” means all Permits under any Environmental Law.

          “ ERISA Affiliate ” means any trade or business, whether or not incorporated, under common control with the Company or any of the Company Affiliates and that, together with the Company or any of the Company Affiliates, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.

          “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.

          “ Federal Controlled Substances Act ” means the Federal Controlled Substances Act, 21 U.S.C. §§ 801 et seq.

          “ Federal Food, Drug and Cosmetic Act ” means the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq.

          “ Fully Diluted Shares ” means the aggregate number of Common Shares (other than Shares to be cancelled in accordance with Sections 2.7(c) and 2.7(d)) and Common Share equivalents on an as converted basis (including the Company Preferred Stock, options, warrants and other interests convertible into or exchangeable for Common Shares) outstanding immediately prior to the Effective Time, including for purposes of this computation the aggregate number of Common Shares issuable upon the exercise in full of all Options converted into the right to receive cash pursuant to Section 2.9.

          “ GAAP ” means United States generally accepted accounting principles and practices.

          “ Government Program ” means any Medicare, Medicaid, CHAMPUS, Veterans Administration or TriCare program and such other similar federal, state or local reimbursement or governmental programs for which the Company is eligible and in which the Company participates.

          “ Governmental Authority ” means any United States or Canadian federal, national, state, provincial, local or similar government, governmental, regulatory or administrative

authority, branch, agency or commission or any court, tribunal, or arbitral or judicial body (including any grand jury).

          “ Hazardous Substances ” means: (a) those substances defined in or regulated under the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act (“ CERCLA ”), the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act, and their state counterparts, or any other Environmental Law, as each may be amended from time to time, and all regulations thereunder; (b) petroleum and petroleum products or by-products, including crude oil and any fractions thereof; (c) natural gas, synthetic gas, and any mixtures thereof; (d) radioactive materials, mold, polychlorinated biphenyls, asbestos and radon; (e) any other pollutant or contaminant; and (f) any substance, material or waste regulated by any Governmental Authority pursuant to any Environmental Law.

          “ Health Care Law ” means, all relevant laws of any Governmental Authority regulating health services or payment, including, but not limited to, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. § 1395nn), the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the exclusion laws (42 U.S.C. § 1320a-7), the civil monetary penalty laws (42 U.S.C. § 1320a-7a), the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §§ 1320d-1320d-8), the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act), the Food, Drug and Cosmetic Act (21 C.F.R. §§ 301 et seq.), the Prescription Drug Marketing Act of 1987, the Deficit Reduction Act of 2005, the regulations promulgated pursuant to such laws, and any other law, regulation, guidance document, manual provision, program memorandum, opinion letter, or other issuance of any Governmental Authority which regulates kickbacks, patient or program charges, recordkeeping, claims process, documentation requirements, medical necessity, referrals, the hiring of employees or acquisition of services or supplies from those who have been excluded from government health care programs, quality, safety, privacy, security, pharmacy practice, licensure, accreditation or any other aspect of providing health care.

          “ Health Care Permit ” means any and all licenses, permits, authorizations, approvals, franchises, registrations, accreditations, certificates of need, consents, supplier or provider numbers, qualifications, operating authority, and/or any other permit or permission which are material to or legally required for the operation of the Company’s business as currently conducted or in connection with the Company’s ability to own, lease operate or manage any of its property, in each case that are issued or enforced by a Governmental Authority with jurisdiction over any Health Care Law.

          “ Immediate Family ” with respect to any specified Person, means such Person’s spouse, parents, children and siblings, including adoptive relationships and relationships through marriage, or any other relative of such Person that shares such Person’s home.

          “ Intellectual Property ” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all provisionals, reissuances, continuations, continuations-in-part, divisions, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, brand names, trade names, domain names and corporate names, together with all translations, adaptations, derivations, and combinations thereof, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, any and all website content, and all applications, registrations, and renewals in connection therewith, (d) all trade secrets and confidential business information (including research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, research records, records of inventions, test information, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals and similar information), (e) all source code and object code versions of computer software (including data and related documentation), (f) proprietary clinical outcome tools, reports, and longitudinal databases, and (g) all other proprietary rights.

          “ knowledge ” with respect to the Company means the actual knowledge of any of the individuals set forth in Section 1.1(b) of the Disclosure Letter.

          “ Law ” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any Governmental Authority.

          “ Leased Real Property ” means all real property leased, subleased or licensed to the Company or any of the Company Affiliates or which the Company or any of the Company Affiliates otherwise has a right or option to use or occupy, together with all structures, facilities, fixtures, pharmacy hoods, compounding equipment, systems, improvements and items of property previously or hereafter located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing.

          “ Liquidation Preference ” means $54,000,000.

          “ Liquidation Preference Per Share ” means the amount equal to (a) the Liquidation Preference divided by (b) the aggregate number of shares of Company Preferred Stock outstanding immediately prior to the Effective Time.

          “ Material Adverse Effect ” means any event, change, circumstance, effect or state of facts that is materially adverse to the business, operations, financial condition or results of operations of the Company and the Company Affiliates, taken as a whole; provided , that no event, change, circumstance, effect or state of facts shall be deemed (individually or in the aggregate) to constitute, nor shall any of the foregoing be taken into account in determining whether there has been, a Material Adverse Effect, to the extent that such event, change, circumstance, effect or state of facts results from, arises out of, or relates to (i) a general deterioration in the economy or in the economic conditions prevalent in the industry in which the Company operates (except to the extent that the Company is affected materially disproportionately relative to other Persons in the industry in which the Company operates), (ii) any change in applicable Law, GAAP or accounting requirements or principles, (iii) any

change in the Centers for Medicare and Medicaid Services’ reimbursement rates, (iv) the announcement or the existence of, or compliance with, this Agreement or the announcement of the Merger or any of the other transactions contemplated by this Agreement, (v) the failure of the Company to meet any expected or projected financial or operating performance target (provided that the event, change, circumstance, effect or state of facts giving rise to such failure may be considered in determining whether a Material Adverse Effect has occurred) or (vi) the effect of any matter which is specifically disclosed in the Disclosure Letter.

          “ Merger Consideration ” means $350,000,000.00 minus the Transaction Expenses.

          “ Option ” means each outstanding option to purchase Shares.

          “ ordinary course of business ” or “ ordinary course ” or any similar phrase means the ordinary course of the Business, consistent with past practice of the Company.

          “ Owned Real Property ” means all real property owned by the Company or any of the Company Affiliates, together with all structures, facilities, fixtures, systems, improvements and items of property previously or hereafter located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing.

          “ Per Share Merger Consideration ” means the amount equal to (a) (x) the difference between the Merger Consideration and the Liquidation Preference plus (y) aggregate amount that would be paid to the Company in respect of all Options outstanding immediately prior to the Effective Time if the holders thereof exercised such Options immediately prior to the Effective Time, divided by (b) the number of Fully Diluted Shares.

          “ Permitted Encumbrances ” means (a) liens for current taxes and assessments not yet past due, (b) mechanics’, workmen’s, repairmen’s, warehousemen’s and carriers’ liens arising in the ordinary course of business of the Company or such Company Affiliate consistent with past practice, (c) any such matters of record, Encumbrances and other imperfections of title that do not, individually or in the aggregate, materially impair the continued ownership, use and operation of the assets to which they relate in the business of the Company and the Company Affiliates as currently conducted and (d) any Encumbrances with respect to the Amended and Restated Credit Agreement by and among the Company, the Financial Institutions from time to time party thereto and Goldman Sachs Specialty Lending Group, LP as administrative and collateral agent, dated as of June 7, 2006, as amended from time to time.

          “ Person ” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.

          “ Private Program ” means any non-governmental third party payor with which the Company has a Contract to provide services and to receive payment therefor.

          “ Related Party ” with respect to any specified Person, means: (a) any Affiliate of such specified Person, or any director, executive officer, general partner or managing member of

such Affiliate; (b) any Person who serves or within the past five years has served as a director, executive officer, partner, member or in a similar capacity of such specified Person; (c) any Immediate Family member of a Person described in clause (b); or (d) any other Person who holds, individually or together with any Affiliate of such other Person and any member(s) of such Person’s Immediate Family, more than 5% of the outstanding voting equity or ownership interests of such specified Person.

          “ Release ” has the meaning set forth in Section 101(22) of CERCLA.

          “ Return ” means any federal, state, provincial, district, municipal, county, local and foreign return, declaration, report, statement, information statement and other document required to be filed or filed with respect to Taxes, including any claims for refunds of Taxes and any amendments or supplements of any of the foregoing.

          “ Subsidiary ” means, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries.

          “ Taxes ” means: (a) all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, registration, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto; (b) any liability for payment of amounts described in clause (a) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law; and (c) any liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.

          “ Transaction Expenses ” means all fees and expenses payable by the Company and the Company Affiliates in connection with the transactions contemplated by this Agreement, including fees and expenses payable to all attorneys, accountants, financial advisors and other professionals and bankers’, brokers’ or finders’ fees for persons not engaged by the Acquiror or Merger Sub.

     Section 1.2 Table of Definitions . The following terms have the meanings set forth in the Sections referenced below:

Definition		Location
Accounts Receivable		1.1
Acquiror		Preamble
Acquisition Proposal		1.1
Action		1.1
Affiliate		1.1
Agreement		Preamble
AHG		4.4
Balance Sheet Date		3.6(a)

Definition		Location
Bonus Plan		5.11(d)
Business		Recitals
Business Day		1.1
CCA		3.26(d)
CERCLA		1.1
Certificate of Merger		2.2(b)
Certificates		2.10(b)
CIA		3.26(d)
Closing		2.2(a)
Closing Date		2.2(a)
Code		3.12(b)
Common Shares		2.7
Company		Preamble
Company Common Stock		1.1
Company Preferred Stock		1.1
Company Stockholder Approval		Recitals
Confidentiality Agreement		5.7
Contract		1.1
control		1.1
Controlled Group Liability		1.1
Current Policies		5.12(c)
DGCL		Recitals
Disclosure Letter		Article III
Dissenting Shares		2.8
Effective Time		2.2(b)
Encumbrance		1.1
Environmental Laws		1.1
Environmental Permits		1.1
ERISA		3.12(a)(i)
ERISA Affiliate		1.1
Exchange Act		1.1
Federal Controlled Substances Act		1.1
Federal Food, Drug and Cosmetic Act		1.1
Financial Statements		3.6(a)
Fully Diluted Shares		1.1
GAAP		1.1
Government Program		1.1
Governmental Agreements		3.26(d)
Governmental Authority		1.1
Hazardous Substances		1.1
Health Care Law		1.1
Health Care Permit		1.1
HSR Act		3.3(b)
Immediate Family		1.1
Indemnified Party		5.12(b)

Definition		Location
Intellectual Property		1.1
Interim Financial Statements		3.6(a)
IRS		3.12(b)
knowledge		1.1
Law		1.1
Leased Real Property		1.1
Letter of Transmittal		2.10(b)
Liquidation Preference		1.1
Liquidation Preference Per Share		1.1
Material Adverse Effect		1.1
Material Contracts		3.19(a)
Merger		Recitals
Merger Consideration		1.1
Merger Sub		Preamble
Multiemployer Plan		3.12(c)
Multiple Employer Plan		3.12(c)
Option		1.1
ordinary course of business		1.1
Owned Real Property		1.1
Paying Agent		2.10(a)
Paying Agent Agreement		2.10(a)
Per Share Merger Consideration		1.1
Permits		3.10(b)
Permitted Encumbrances		1.1
Person		1.1
Plans		3.12(a)
Preferred Shares		2.7
Private Program		1.1
Programs		3.23(c)
Related Party		1.1
Release		1.1
Remuneration		3.26(f)
Representatives		5.2
Return		1.1
Rights		3.26(b)
Shares		2.7
Stockholders		Preamble
Subsidiary		1.1
Surviving Corporation		2.1
Taxes		1.1
Termination Date		8.1(d)
Transaction Expenses		1.1

ARTICLE II
THE MERGER

     Section 2.1 The Merger . Upon the terms and subject to the conditions of this Agreement, at the Effective Time and in accordance with the DGCL, Merger Sub shall be merged with and into the Company pursuant to which (i) the separate corporate existence of Merger Sub shall cease, (ii) the Company shall be the surviving corporation in the Merger (the “ Surviving Corporation ”) and shall continue its corporate existence under the laws of the State of Delaware as a wholly owned Subsidiary of the Acquiror and (iii) all of the assets, properties, rights, privileges, powers and franchises of the Company will vest in the Surviving Corporation, and all of the debts, liabilities, obligations and duties of the Company will become the debts, liabilities, obligations and duties of the Surviving Corporation.

     Section 2.2 Closing; Effective Time .

          (a) The closing of the Merger (the “ Closing ”) shall take place at the offices of Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, California 90071, at 10:00 A.M., Pacific time, on the second Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of all conditions to the obligations of the parties set forth in Article VII (other than such conditions as may, by their terms, only be satisfied by action taken at the Closing or on the Closing Date, but subject to the satisfaction or waiver of those conditions), or at such other place or at such other time or on such other date as the parties mutually may agree in writing. The day on which the Closing takes place is referred to as the “ Closing Date .”

          (b) As soon as practicable on the Closing Date, the parties shall cause a certificate of merger substantially in the form attached hereto as Exhibit A to be executed and filed with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”) in accordance with the relevant provisions of Delaware Law. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such other time as the parties shall agree and as shall be specified in the Certificate of Merger. The date and time when the Merger shall become effective is herein referred to as the “ Effective Time .”

     Section 2.3 Effects of the Merger . The Merger shall have the effects provided for herein and in the applicable provisions of Delaware Law.

     Section 2.4 Certificate of Incorporation and Bylaws . From and after the Effective Time, (a) the certificate of incorporation of the Surviving Corporation shall be amended to read the same as the certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time until amended in accordance with the provisions thereof and applicable Law and (b) the bylaws of the Surviving Corporation shall be amended to read the same as the bylaws of Merger Sub, as in effect immediately prior to the Effective Time until amended in accordance with the provisions thereof and applicable Law, in each case revised to take into account the requirements of Section 5.12.

     Section 2.5 Directors; Officers . From and after the Effective Time, (a) the directors of Merger Sub serving immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be, and (b) the individuals set forth on Exhibit B shall serve as officers of the Company in the capacities set forth opposite such individuals’ named until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

     Section 2.6 Subsequent Actions . If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either the Company or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of or in connection with the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name of and on behalf of either the Company or Merger Sub, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out the intent of this Agreement.

     Section 2.7 Conversion of Stock . At the Effective Time, by virtue of the Merger and without any further action on the part of the Acquiror, Merger Sub, the Company or any holder of any shares of Company Common Stock (the “ Common Shares ”), any shares of the Company Preferred Stock (the “ Preferred Shares ” and, collectively with the Common Shares, the “ Shares ”), or any shares of capital stock of Merger Sub:

          (a) Each Common Share issued and outstanding immediately prior to the Effective Time (other than any Common Shares described in Sections 2.7(c) or (d) and any Dissenting Shares) shall be converted into the right to receive the Per Share Merger Consideration, in cash, without interest;

          (b) Each Preferred Share issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive an amount equal to the Liquidation Preference Per Share plus the Per Share Merger Consideration, in cash, without interest;

          (c) Each Share that is owned by Acquiror or Merger Sub immediately prior to the Effective Time shall automatically be cancelled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor;

          (d) Each Share that is held in the treasury of the Company or owned by the Company or any of the Company Affiliates immediately prior to the Effective Time shall automatically be cancelled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor; and

          (e) Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid share of common stock, par value $0.01 per share, of the Surviving Corporation.

     Section 2.8 Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, Shares (other than any Shares to be cancelled pursuant to Sections 2.7(b) and 2.7(c)) outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has properly demanded appraisal for such Shares in accordance with DGCL §262, if such Section provides for appraisal rights for such Shares in the Merger (“ Dissenting Shares ”), shall not be converted into or be exchangeable for the right to receive the Per Share Merger Consideration or the Liquidation Preference Per Share, as applicable, unless and until such holder fails to perfect or withdraws or otherwise loses such holder’s right to appraisal and payment under the DGCL. If, after the Effective Time, any such holder fails to perfect or withdraws or loses such holder’s right to appraisal, such Dissenting Shares shall thereupon be treated as if they had been converted as of the Effective Time into the right to receive the Per Share Merger Consideration or the Liquidation Preference Per Share, if any, to which such holder is entitled, without interest. The Company shall give the Acquiror (i) prompt notice of any demands received by the Company for appraisal of Shares, attempted written withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company relating to Stockholders’ rights to appraisal with respect to the Merger and (ii) the opportunity to direct all negotiations and proceedings with respect to any exercise of such appraisal rights under the DGCL. The Company shall not, except with the prior written consent of the Acquiror, voluntarily make any payment with respect to any demands for payment of fair value for capital stock of the Company, offer to settle or settle any such demands or approve any withdrawal of any such demands.

     Section 2.9 Options . At the Effective Time, unless otherwise agreed to in writing by the Company and any affected Option holder, each Option outstanding immediately prior to the Effective Time, whether vested or unvested, shall be automatically converted into the right to receive an amount in cash equal to the product of (i) the number of Shares for which such Option is exercisable multiplied by (ii) the difference of (A) the Per Share Merger Consideration minus (B) the per share exercise price of such Option, less any applicable withholding taxes.

     Section 2.10 Payment for Shares .

          (a) At least ten Business Days prior to the Effective Time, the Acquiror shall designate a bank or trust company reasonably acceptable to the Company to act as paying agent in connection with the Merger (the “ Paying Agent ”) pursuant to a paying agent agreement (the “ Paying Agent Agreement ”) providing for, among other things, the matters set forth in this Section 2.10 and otherwise reasonably satisfactory to the Company. Immediately prior to the Effective Time, the Acquiror shall deposit or shall cause to be deposited with the Paying Agent for the benefit of any holder of Common Shares, Preferred Shares and Options, as applicable, the consideration to which such parties shall be entitled at the Effective Time pursuant to Sections 2.7(a), 2.7(b) and 2.9. Such funds shall be invested by the Paying Agent as provided for in the Paying Agent Agreement, as the case may be, pending payment therefor by the Paying Agent to Stockholders. Earnings from such investments shall be the sole and exclusive property

of the Acquiror, and no part thereof shall accrue to the benefit of the holders of Common Shares, Preferred Shares or Options.

          (b) At least two Business Days prior to the Closing Date, the Acquiror shall provide to each holder of record of a certificate or certificates that, immediately prior to the Effective Time, evidenced outstanding Shares (the “ Certificates ”) and whose Shares will be converted into the right to receive the consideration described in Section 2.7(a) or Section 2.7(b), (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as the Acquiror may reasonably specify) (the “ Letter of Transmittal ”) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment therefor. Following the Effective Time, upon surrender of a Certificate for cancellation to the Paying Agent or such other agent or agents as may be appointed by the Acquiror, together with a Letter of Transmittal duly executed and completed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive in exchange therefor (as promptly as reasonably practicable on or after the Closing Date), (A) in the case of Certificates representing Common Shares, an amount in cash equal to (1) the Per Share Merger Consideration multiplied by (2) the number of Common Shares formerly represented by such Certificate and (B) in the case of Certificates representing Preferred Shares, an amount in cash equal to (1) the Liquidation Preference Per Share multiplied by the number of Preferred Shares represented by such Certificate (2) plus the Per Share Merger Consideration multiplied by the number of Preferred Shares formerly represented by such Certificate, in each case without interest, and such Certificate shall, upon such surrender, be cancelled. If any Certificate, together with a duly executed and completed Letter of Transmittal, is delivered to the Paying Agent or such other agent prior to the Effective Time, then the holder of such Certificate shall be entitled to receive such payment on the Closing Date. If payment in respect of any Certificate is to be made to a Person other than the Person in whose name such Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer, that the signatures on such Certificate or any related stock power shall be properly guaranteed and that the Person requesting such payment shall have established to the satisfaction of the Acquiror and the Paying Agent that any transfer and other Taxes required by reason of such payment to a Person other than the registered holder of such Certificate have been paid or are not applicable. Until surrendered in accordance with the provisions of this Section 2.10 and the Letter of Transmittal, any Certificate (other than Certificates representing Shares described in Sections 2.7(c) and (d) and any Dissenting Shares) shall be deemed, at any time after the Effective Time, to represent only the right to receive the Per Share Merger Consideration or the Liquidation Preference Per Share payable with respect thereto, in cash, without interest, as contemplated herein. Notwithstanding anything in this Agreement to the contrary, on the Closing Date, the Company shall (and Acquiror shall cause the Company) to pay up to $2,500,000 of the Merger Consideration to employees of the Company as directed by the Company in writing at any time prior to the date that is two Business Days prior to the Closing Date, and the Merger Consideration, for purposes of calculating the Per Share Merger Consideration, shall be deemed to be reduced by such amount.

          (c) At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of any shares of capital stock thereafter on the records of the Company. If, after the Effective Time, a Certificate (other

than representing Shares described in Sections 2.7(c) and (d)) is presented to the Surviving Corporation, it shall be cancelled and exchanged as provided in this Section 2.10.

          (d) All cash paid upon conversion of the Shares in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to such Shares. From and after the Effective Time, the holders of Certificates shall cease to have any rights with respect to Shares represented thereby, except as otherwise provided herein or by applicable Law.

          (e) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder thereof, the Surviving Corporation shall pay or cause to be paid in exchange for such lost, stolen or destroyed Certificate the Per Share Merger Consideration or the Liquidation Preference Per Share, as applicable, payable in respect thereof pursuant to Section 2.10(b) for Shares represented thereby; provided , however , that the Surviving Corporation or the Paying Agent may, in their discretion, require the delivery of a reasonably satisfactory bond or indemnity.

          (f) Notwithstanding anything to the contrary in this Section 2.10, to the fullest extent permitted by law, none of the Paying Agent, the Acquiror or the Surviving Corporation shall be liable to any holder of a Certificate for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

     Section 2.11 Withholding Rights . Each of the Acquiror, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from any consideration otherwise payable to any Person pursuant to this Agreement such amounts as it is required or reasonably believes it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of applicable tax Law. To the extent that such amounts are so withheld or paid over to or deposited with the relevant Governmental Authority by the Acquiror, the Surviving Corporation or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Person in respect to which such deduction and withholding was made.

ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

     Except as set forth in the letter (the “ Disclosure Letter ”) delivered by the Company to the Acquiror and Merger Sub concurrently with the execution of this Agreement (it being agreed that disclosure of any item in any section of the Disclosure Letter shall be deemed disclosure with respect to any other section of the Disclosure Letter to which the relevance of such item is reasonably apparent), the Company hereby represents and warrants to the Acquiror and Merger Sub as follows:

     Section 3.1 Organization and Qualification .

          (a) Each of the Company and the Company Affiliates is (i) duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation as set forth in Section 3.1(a) of the Disclosure Letter, and has full power and authority to own, lease

and operate its properties and to carry on its business as it is now being conducted and (ii) duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for any such failures to be so qualified or licensed and in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.

          (b) The Company has heretofore furnished to the Acquiror a complete and correct copy of the certificate of incorporation and bylaws or equivalent organizational documents, each as amended to date, of the Company and each of the Company Affiliates. Such certificates of incorporation, bylaws or equivalent organizational documents are in full force and effect. Neither the Company nor any of the Company Affiliates is in violation of any of the provisions of its certificate of incorporation, bylaws or equivalent organizational documents. The transfer books and minute books of each of the Company and the Company Affiliates that have been made available for inspection by the Acquiror prior to the date hereof are true and complete in all material respects.

     Section 3.2 Authority .

          (a) The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company. Other than the Company Stockholder Approval, no other corporate proceedings on the part of the Company, the Stockholders, or the holders of Preferred Shares are necessary to authorize the execution, delivery or performance of this Agreement by the Company or for the Company to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company. This Agreement constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms.

          (b) The Board of Directors of the Company, at a meeting thereof duly called and held on October 10, 2007, (i) determined that this Agreement and the Merger are fair to and in the best interests of the Company and its stockholders and (ii) resolved to recommend that the Stockholders approve and adopt this Agreement and the Merger.

          (c) The Company Stockholder Approval constitutes the only approval of the Stockholders necessary for the Company to consummate the transactions contemplated by this Agreement under the Company’s certificate of incorporation and bylaws and the DGCL.

     Section 3.3 No Conflict; Required Filings and Consents .

          (a) Assuming the receipt of the Company Stockholder Approval and the making or receipt of the notices, authorizations, approvals, orders, permits and consents described in clause (b) below, the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby do not and will not:

     (i) conflict with or violate the certificate of incorporation or bylaws or equivalent organizational documents of the Company or any of the Company Affiliates;

     (ii) conflict with or violate any Law applicable to the Company or any of the Company Affiliates or by which any property or asset of the Company or any of the Company Affiliates is bound or affected; or

     (iii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of any Person pursuant to, give to others any right of termination, amendment, modification, acceleration or cancellation of, allow the imposition of any fees or penalties, require the offering or making of any payment or redemption, give rise to any increased, guaranteed, accelerated or additional rights or entitlements of any Person or otherwise adversely affect any rights of the Company or any of the Company Affiliates under, or result in the creation of any Encumbrance on any property, asset or right of the Company or any of the Company Affiliates pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise, instrument, obligation or other Contract to which the Company or any of the Company Affiliates is a party or by which the Company or any of the Company Affiliates or any of their respective properties, assets or rights are bound or affected;

except, in the cases of clauses (ii) and (iii), for such conflicts, violations, breaches, defaults or other occurrences that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.

          (b) Neither the Company nor any of the Company Affiliates is required to file, seek or obtain any material notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Company of this Agreement or the consummation of the transactions contemplated hereby or in order to prevent the termination of any right, privilege, license or qualification of the Company or any of the Company Affiliates, other than (i) the filing and recordation of the Certificate of Merger with the Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy the applicable Laws of states in which the Company and the Company Affiliates are qualified to do business, (ii) such filings and approvals as may be required by any federal or state securities Laws, including compliance with any applicable requirements of the Exchange Act, and (iii) compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and any other applicable foreign Laws, antitrust, competition or merger control Laws of any jurisdiction.

          (c) No “fair price,” “interested shareholder,” “business combination” or similar provision of any state takeover Law is, or at the Effective Time will be, applicable to the transactions contemplated by this Agreement.

     Section 3.4 Capitalization .

          (a) The authorized capital stock of the Company consists of (i) 10,000,000 shares of Company Common Stock,

of which 10,000 shares of Company Common Stock, constituting the Common Shares, are issued and outstanding on the date hereof, and (ii) 1,000,000 shares of preferred stock, of which 9,642 shares of Company Preferred Stock, constituting the Preferred Shares, are issued and outstanding on the date hereof. There are 3,825 options to purchase shares of Company Common Stock, constituting the Options, issued and outstanding on the date hereof. As of the Effective Time, there shall be no Options, warrants, or other securities convertible into or exercisable for any securities of the Company outstanding other than the Options which will be converted into the right to receive cash pursuant to Section 2.9.

          (b) Section 3.4 of the Disclosure Letter sets forth, for each Company Affiliate, the amount of its authorized capital stock, the amount of its outstanding capital stock and the record and beneficial owners of its outstanding capital stock. Except for the Shares and the Options, neither the Company nor any of the Company Affiliates has issued or agreed to issue any: (i) share of capital stock or other equity or ownership interest; (ii) option, warrant or interest convertible into or exchangeable or exercisable for the purchase of shares of capital stock or other equity or ownership interests; (iii) stock appreciation right, phantom stock, interest in the ownership or earnings of the Company or any of the Company Affiliates or other equity equivalent or equity-based award or right; or (iv) bond, debenture or other indebtedness having the right to vote or convertible or exchangeable for securities having the right to vote. Each outstanding share of capital stock or other equity or ownership interest of the Company and each of the Company Affiliates is duly authorized, validly issued, fully paid and non-assessable and, in the case of the Company Affiliates, each such share or other equity or ownership interest is owned by the Company or another Subsidiary of the Company, free and clear of any Encumbrance. All of the aforesaid shares or other equity or ownership interests have been offered, sold and delivered by the Company or the Company Affiliates in material compliance with all applicable federal and state securities laws.

          (c) Except for rights granted to the Acquiror and Merger Sub under this Agreement, there are no outstanding obligations of the Company or any of the Company Affiliates to issue, sell or transfer or repurchase, redeem or otherwise acquire, or that relate to the holding, voting or disposition of, or that restrict the transfer of, the issued or unissued capital stock or other equity or ownership interests of the Company or any of the Company Affiliates. No shares of capital stock or other equity or ownership interests of the Company or any of the Company Affiliates have been issued in violation of any rights, agreements, arrangements or commitments under any provision of applicable Law, the certificate of incorporation or bylaws or equivalent organizational documents of the Company or any of the Company Affiliates or any Contract to which the Company or any of the Company Affiliates is a party or by which the Company or any of the Company Affiliates is bound.

     Section 3.5 Equity Interests . Neither the Company nor any of the Company Affiliates directly or indirectly owns any equity, partnership, membership or similar interest in, or any interest convertible into, exercisable for the purchase of or exchangeable for any such equity, partnership, membership or similar interest, or is under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution or other investment in, or assume any liability or obligation of, any Person.

     Section 3.6 Financial Statements; No Undisclosed Liabilities .

          (a) True and complete copies of the audited consolidated balance sheet of the Company and the Company Affiliates as at December 31, 2004, 2005, 2006, and the related audited consolidated statements of income, retained earnings, stockholders’ equity and statements of cash flows of the Company and the Company Affiliates, together with all related notes and schedules thereto, accompanied by the reports thereon of the Company’s independent auditors (collectively referred to as the “ Financial Statements ”) and the unaudited consolidated balance sheet of the Company and the Company Affiliates as at August 31, 2007 (the “ Balance Sheet Date ”), and the related consolidated statements of income, retained earnings, stockholders’ equity and changes in financial position of the Company and the Company Affiliates, together with all related notes and schedules thereto (collectively referred to as the “ Interim Financial Statements ”) are attached hereto as Section 3.6(a) of the Disclosure Letter. Each of the Financial Statements and the Interim Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto); and (ii) fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and the Company Affiliates as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments that would not reasonably be expected to be, individually or in the aggregate, material.

          (b) Except as and to the extent reflected in the Financial Statements or the Interim Financial Statements, neither the Company nor any of the Company Affiliates has any liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, whether known or unknown, (i) that is required by GAAP to be reflected in a consolidated balance sheet of the Company and the Company Affiliates or disclosed in the notes thereto, except for liabilities and obligations, (1) incurred after the Balance Sheet Date in the ordinary course of business consistent with past practice, (2) that, individually or in the aggregate, have not and would not reasonably be expected to have a Material Adverse Effect or (3) expressly permitted or required by this Agreement, or (ii) arising out of or related to Coram Healthcare Corporation.

          (c) The records, systems, controls, data and information of the Company is recorded, stored, maintained and operated under means (including any electronic, mechanical, scanning/imaging, or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not have a materially adverse effect on the system of internal accounting controls described in the following sentence. The Company has devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the timely preparation and reliability of financial statements in accordance with GAAP. The Company has designed controls and procedures to ensure that material information relating to the Company is made known to the management of the Company by others within the Company.

          (d) There are no significant deficiencies, including material weaknesses, in the design or operation of the Company’s internal controls that materially adversely affect the

Company’s ability to record, process, summarize, and report financial data. To the knowledge of the Company, the officers of the Company have identified for the Company’s auditors any material weaknesses in internal controls and any fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the Company’s internal controls. The Company has made available to Acquiror a summary of any such disclosures that have been made by management to the Company’s auditors since January 1, 2004.

     Section 3.7 Accounts Receivable . As of the date hereof, the Accounts Receivable of the Company and the Company Affiliates reflected in their respective books and records represent in all material respects valid and enforceable obligations arising from bona fide transactions in the ordinary course of business.

     Section 3.8 Customers and Suppliers .

          (a) Section 3.8(a) of the Disclosure Letter sets forth a true and complete list of the top 25 payors of the Company and the Company Affiliates (determined on the basis of revenues) for the twelve month period ending June 30, 2007. As of the date hereof, (i) neither the Company nor any of the Company Affiliates has received any written notice, and the Company has no knowledge, that any of such payors (A) has ceased or substantially reduced, or will cease or substantially reduce, use of products or services of the Company or the Company Affiliates or (B) has sought, or is seeking, to reduce the price it will pay for the services of the Company or the Company Affiliates and (ii) none of such payors has, to the knowledge of the Company, otherwise threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement.

          (b) Section 3.8(b) of the Disclosure Letter sets forth a true and complete list of the top 52 suppliers of the Company and the Company Affiliates (determined on the basis of payables to such suppliers) for the twelve month period ending June 30, 2007. As of the date hereof, (i) neither the Company nor any of the Company Affiliates has received any notice, and the Company has no knowledge, that (A) there has been any material adverse change in the price of such supplies or services provided by any such supplier, or (B) any such supplier will not sell supplies or services to the Surviving Corporation and the Company Affiliates at any time after the Closing Date on terms and conditions substantial the same or better than those used in its current sales to the Company and the Company Affiliates and (ii) no such supplier has, to the knowledge of the Company, otherwise threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement.

     Section 3.9 Absence of Certain Changes or Events . From the Balance Sheet Date through the date of this Agreement: (a) the Company and the Company Affiliates have conducted their businesses only in the ordinary course consistent with past practice; (b) there has not been any event, change, circumstance, effect or state of facts that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect; (c) neither the Company nor any of the Company Affiliates has suffered any material damage, destruction or other material casualty affecting any of its material real and personal properties or assets, whether or not covered by insurance; (d) the Company has not declared, set aside, or made or paid any dividend or other distribution, payable in cash, stock, property or otherwise, or made

any other payment on or with respect to any of its capital stock, except for dividends by any direct or indirect wholly owned Subsidiary of the Company; and (e) none of the Company or any of the Company Affiliates has taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Sections 5.1(a) through (h) and (j) through (t).

     Section 3.10 Compliance with Law; Permits .

          (a) Since January 1, 2005, (i) each of the Company and the Company Affiliates is and has been in compliance with all Laws applicable to it and (ii) none of the Company, any of the Company Affiliates or any of its or their executive officers has received any notice, order, complaint or other communication from any Governmental Authority or any other Person that the Company or any of the Company Affiliates is not in compliance with any Law applicable to it, except where such non-compliance, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.

          (b) Section 3.10(b) of the Disclosure Letter sets forth a true and complete list of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations of any Governmental Authority necessary for it to own, lease and operate its properties and to carry on its business as currently conducted (the “ Permits ”), except where the failure to have such Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Company and the Company Affiliates is and has been in compliance in all material respects with all such Permits. No suspension, cancellation, modification, revocation or non-renewal of any Permit is pending or, to the knowledge of the Company, threatened. The Company and the Company Affiliates will continue to have the use and benefit of all Permits following consummation of the transactions contemplated hereby, except where the failure to have such Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. No Permit is held in the name of any employee, officer, director, stockholder, agent or otherwise on behalf of the Company or any of the Company Affiliates.

     Section 3.11 Litigation . As of the date hereof, there is no Action (except for any Actions commenced by Persons other than Governmental Authorities that would not reasonably be expected to result in a liability or loss to the Company or the Company Affiliates of more than $150,000 individually or more than $500,000 in the aggregate) pending or, to the knowledge of the Company, threatened against the Company or any of the Company Affiliates, or any material property or asset of the Company or any of the Company Affiliates. Since the date hereof through the Closing Date, there is no Action pending or, to the knowledge of the Company, threatened against the Company or any of the Company Affiliates, or any material property or asset of the Company or any of the Company Affiliates, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. As of the date of this Agreement, (i) there is no Action pending or, to the knowledge of the Company, threatened seeking to prevent, hinder, modify, delay or challenge the transactions contemplated by this Agreement and (ii) there is no outstanding order, writ, judgment, injunction, decree, determination or award of, or pending or, to the knowledge of the Company, threatened investigation by, any Governmental Authority relating to the Company, any of the Company

Affiliates, any of their respective properties or assets that, in the case of clause (ii), is (A) material to the business of the Company or (B) arises out of any material violation of any applicable Healthcare Law. As of the date of this Agreement, there are no material Actions by the Company or any of the Company Affiliates pending, or which the Company or any of the Company Affiliates has commenced preparations to initiate, against any other Person.

     Section 3.12 Employee Benefit Plans .

          (a) Section 3.12(a) of the Disclosure Letter sets forth a true and complete list of all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, termination pay, salary continuation, employment, consulting, indemnification, layoff, unemployment, change in control or other benefit plans, programs, policies, practices, arrangements or Contracts, to which the Company or any of its Subsidiaries is a party, with respect to which the Company or any of its Subsidiaries has any liability or obligation or which are maintained, contributed to or sponsored by the Company or any of its Subsidiaries for the benefit of any current or former employee, consultant, officer or director of the Company or any of its Subsidiaries (the “ Plans ”).

          (b) The Company has furnished to the Acquiror a true and complete copy of each Plan (or, with respect to each unwritten Plan, a written summary thereof) and has delivered to the Acquiror a true and complete copy of each material document, if any, prepared in connection with each such Plan, including (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the two most recently filed Internal Revenue Service (“ IRS ”) Form 5500, (iv) the most recently received IRS determination letter for each such Plan and (v) the two most recently prepared actuarial report and financial statement in connection with each such Plan. Neither the Company nor any of its Subsidiaries has any express or implied commitment (A) to create, incur liability with respect to or cause to exist any employee benefit plan, program, policy, practice or arrangement (other than the Plans set forth on Section 3.12(a) of the Disclosure Letter), (B) to enter into any Contract to provide compensation or benefits to any individual or (C) to modify, change or terminate any Plan, other than with respect to a modification, change or termination required by ERISA or the Internal Revenue Code of 1986, as amended (the “ Code ”).

          (c) None of the Plans is (i) subject to Title IV of ERISA, (ii) a multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a “ Multiemployer Plan ”) or (iii) a single employer pension plan within the meaning of Section 4001(a)(15) of ERISA for which the Company or any of the Company Affiliates could incur liability under Section 4063 or 4064 of ERISA (a “ Multiple Employer Plan ”). Neither the Company nor any ERISA Affiliate has ever during the past six years maintained, sponsored, contributed to, or incurred any liability or obligation with respect to any employee benefit plan subject to Title IV of ERISA or Section 412 of the Code. None of the Plans: (i) provides for the payment of separation, severance, termination or similar-type benefits to any person; (ii) obligates the Company or its Subsidiaries to pay separation, severance, termination or similar-type benefits solely or partially as a result of the transactions

contemplated by this Agreement; or (iii) obligates the Company or any of its Subsidiaries to make any payment or provide any benefit as a result of the transactions contemplated by this Agreement. None of such Plans provides for or promises retiree medical, disability or life insurance benefits to any current or former employee, officer or director of the Company or any of the Company Affiliates. Each of the Plans is maintained in the United States.

          (d) Each Plan is now and always has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws, including ERISA and the Code. Each of the Company and the Company Affiliates has performed all material obligations required to be performed by it and is not in any respect in default under or in violation under any Plan, nor does the Company have any knowledge of any such default or violation by any other party to any Plan. No material Action is pending or, to the knowledge of the Company, threatened with respect to any Plan, other than claims for benefits in the ordinary course, and, to the knowledge of the Company, no fact or event exists that would give rise to any such Action.

          (e) Each Plan that is intended to be qualified under Section 401(a) of the Code or Section 401(k) of the Code has received a timely favorable determination or opinion letter from the IRS covering all of the provisions applicable to the Plan for which determination or opinion letters are currently available that the Plan is so qualified. To the knowledge of the Company, no fact or event has occurred since the date of such determination or opinion letter or letters from the IRS that could adversely affect the qualified status of any such Plan.

          (f) There has not been any non-exempt prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, with respect to any Plan that would result in any material liability to the Company or its Subsidiaries. Neither the Company nor any of the Company Affiliates has incurred any material liability under, arising out of or by operation of Title IV of ERISA, other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course, including any liability in connection with (i) the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or event exists that would give rise to any such liability. There does not exist any Controlled Group Liability that would reasonably be expected to be a liability (contingent or otherwise) of the Company or any of its Subsidiaries following the Closing.

          (g) All material contributions, premiums or payments required to be made with respect to any Plan have been made on or before their due dates. There are no suits, actions, disputes, claims (other than routine claims for benefits), arbitrations, administrative or other proceedings pending or, to the knowledge of the Company, threatened, anticipated or expected to be asserted with respect to any Plan or any related trust or other funding medium thereunder or with respect to the Company or any Subsidiary as the sponsor or fiduciary thereof or with respect to any other fiduciary thereof that would result in any material liability to the Company or its Subsidiaries. In accordance with applicable law, each Plan (other than any Plan that is an employment, severance, change of control or similar agreement) can be amended or terminated by the Company at any time, without consent from any other person and without material liability other than for benefits accrued as of the date of such amendment or termination (other than administrative expenses incurred as a result of such termination) or liabilities that arise under applicable Law.

          (h) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in combination with any other event) will (i) result in any payment (including severance, golden parachute, bonus or otherwise), becoming due to any current or former employee, consultant, officer or director of the Company or any of the Company Affiliates, (ii) result in any forgiveness of indebtedness to any current or former employee, consultant, officer or director of the Company or any of the Company Affiliates, (iii) increase any benefits otherwise payable by the Company under any Plan or (iv) result in the acceleration of the time of payment or vesting of any such benefits, except as required under Section 411(d)(3) of the Code. There is no agreement, plan, arrangement or other Contract by which the Company is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.

          (i) Each Plan that is a nonqualified deferred compensation plan (as defined under Section 409A of the Code) satisfies the applicable requirements of Sections 409A(a)(2),(3), and (4) of the Code, and has, since January 1, 2005, been operated in good faith compliance with Sections 409A(a)(2), (3), and (4) of the Code. Each Option, stock appreciation right other similar right to acquire Company Common Stock has an exercise price that has never been and may never be less than the fair market value of the underlying equity as of the date such Option, stock appreciation right or other similar right was granted in accordance with all governing documents and in compliance with all applicable law.

     Section 3.13 Labor and Employment Matters .

          (a) Since January 1, 2004, neither the Company nor any of the Company Affiliates is a party to any labor or collective bargaining Contract that pertains to employees of the Company or any of the Company Affiliates. There are no organizing activities or collective bargaining arrangements that would affect the Company or any of the Company Affiliates pending or under discussion with any labor organization or group of employees of the Company or any of the Company Affiliates. There is, and during the past five years there has been, no material labor dispute, strike, controversy, slowdown, work stoppage or lockout pending or, to the knowledge of the Company, threatened against or affecting the Company or any of the Company Affiliates. There are no pending or, to the knowledge of the