AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

KIMBERLY-CLARK CORPORATION,

BOXER ACQUISITION, INC.

and

I-FLOW CORPORATION

Dated as of October 8, 2009

TABLE OF CONTENTS

TABLE OF CONTENTS
(Continued)

TABLE OF CONTENTS
(Continued)

INDEX OF DEFINED TERMS

INDEX OF DEFINED TERMS
(Continued)

INDEX OF DEFINED TERMS
(Continued)

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of October 8, 2009, is by and among KIMBERLY-CLARK CORPORATION, a Delaware corporation (“ Parent ”), BOXER ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary of Parent (“ Merger Sub ”) and I-FLOW CORPORATION, a Delaware corporation (the “ Company ”).

RECITALS

     WHEREAS, it is proposed that Merger Sub shall commence an offer to purchase all of the outstanding shares of common stock, par value $0.001 per share, of the Company (“ Shares ”), together with the associated purchase rights (the “ Rights ”) issued pursuant to the Rights Agreement, dated as of March 8, 2002, between the Company and American Stock Transfer & Trust Company, a New York corporation, as Rights Agent (the “ Rights Agreement ”), for the Offer Price (as defined in Section 3.1(a) hereof) (as may be amended from time to time in accordance with this Agreement, the “ Offer ”), on the terms and subject to the conditions set forth herein;

     WHEREAS, it is also proposed that, following the consummation of the Offer, Merger Sub will be merged with and into the Company with the Company surviving as a wholly owned Subsidiary (as defined in Section 9.3(g) hereof) of Parent, on the terms and subject to the conditions set forth herein (the “ Merger ”);

     WHEREAS, the Boards of Directors of Parent and Merger Sub have each approved this Agreement and declared it advisable for Parent and Merger Sub, respectively, to enter into this Agreement;

     WHEREAS, the Board of Directors of the Company (the “ Company Board ”) has, subject to the terms and conditions of this Agreement, unanimously (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, including the Offer and the Merger and (iii) resolved and agreed to recommend that the Company’s stockholders accept the Offer, tender their Shares pursuant to the Offer and adopt this Agreement;

     WHEREAS, as an inducement to and condition to Parent’s and Merger Sub’s willingness to enter into this Agreement, certain stockholders of the Company are entering into a Tender and Support Agreement (each, a “ Support Agreement ”) with Parent and Merger Sub simultaneously with the execution and delivery of this Agreement; and

     WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Offer and the Merger and also to prescribe certain conditions to the Offer and the Merger as specified herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I
THE OFFER

     Section 1.1 The Offer .

          (a) Provided that this Agreement shall not have been terminated in accordance with Article VIII and subject to the conditions set forth in this Agreement and Exhibit A hereto, as promptly as reasonably practicable after the date hereof, and in any event within seven (7) Business Days (as defined in Section 9.3(b) hereof) after such date, Merger Sub shall, and Parent shall cause Merger Sub to, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “ Exchange Act ”)) the Offer. The obligations of Merger Sub, and of Parent to cause Merger Sub, to accept for payment and pay for any Shares tendered pursuant to the Offer and not validly withdrawn pursuant to the Offer shall be subject to the satisfaction or waiver by Merger Sub of the conditions set forth in Exhibit A hereto and the terms and conditions hereof (collectively, the “ Offer Conditions ”). Merger Sub may, in its sole discretion, waive any Offer Condition or modify the terms or conditions of the Offer consistent with the terms of this Agreement, except that, without the prior written consent of the Company, Merger Sub shall not (i) reduce the Offer Price, (ii) change the form of consideration payable in the Offer (other than by adding consideration), (iii) reduce the number of Shares to be purchased in the Offer, (iv) waive or change the Minimum Condition or the Termination Condition (as such terms are defined in Exhibit A ), (v) add to the Offer Conditions or modify them in a manner adverse to the holders of Shares, (vi) extend the expiration of the Offer except as required or permitted by Section 1.1(b) or (vii) modify any term of the Offer set forth in this Agreement in a manner adverse to the holders of Shares.

          (b) The Offer shall initially expire at midnight, New York City time, on the date that is twenty (20) business days (for purposes of this Section 1.1(b) , business days shall be calculated in accordance with Rule 14d-1(g)(3) under the Exchange Act) after the commencement of the Offer, except as may otherwise be required by applicable Law (as defined in Section 4.4(a) hereof); provided , however , that if at any scheduled expiration date of the Offer, the Offer Conditions shall not have been satisfied or waived, and if this Agreement shall not have been terminated in accordance with Article VIII , Merger Sub may (in its sole discretion, without consent of the Company), and, to the extent requested in writing by the Company prior to such scheduled expiration date, shall, extend the Offer for one or (as needed) more additional consecutive periods of up to twenty (20) business days per extension but at least ten (10) business days per extension (with the length of such periods within such range to be determined in the sole discretion of Parent consistent with applicable Law); provided , further , that Merger Sub shall not be obligated to extend the Offer past the Outside Date (as defined in Section 9.3(e) hereof); provided , further , that if this Agreement shall not have been terminated in accordance with Article VIII , Merger Sub shall also extend the Offer for any additional period required by

any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “ SEC ”) or the staff thereof or the rules of the Nasdaq Stock Market applicable to the Offer; provided , further , that Merger Sub may, until the Outside Date, in its sole discretion, provide one or more subsequent offering periods (each, a “ Subsequent Offering Period ”) after the expiration of the Offer, in accordance with Rule 14d-11 under the Exchange Act, if, as of the commencement of each such Subsequent Offering Period, there shall not have been validly tendered and not withdrawn pursuant to the Offer and any prior Subsequent Offering Period that number of Shares necessary to permit the Merger to be effected without a meeting of stockholders of the Company, in accordance with Section 253(a) of the General Corporation Law of the State of Delaware (the “ DGCL ”).

          (c) Subject to the terms of the Offer and this Agreement and the satisfaction of all of the Offer Conditions, Merger Sub shall accept for payment and pay for all Shares validly tendered and not validly withdrawn pursuant to the Offer as soon as practicable after the expiration date thereof (as the same may be extended or required to be extended) or (in the case of any Shares tendered during any Subsequent Offering Period) as soon as practicable following the valid tender thereof. For the avoidance of doubt, if, at any scheduled expiration date of the Offer, all of the Offer Conditions have been satisfied or waived and this Agreement has not otherwise been terminated in accordance with its terms, Merger Sub shall on such date accept for payment and pay for all Shares validly tendered and not validly withdrawn pursuant to the Offer in accordance with this Agreement (the time at which such acceptance occurs on such date, the “ Acceptance Time ”). For the further avoidance of doubt, the Acceptance Time shall not be extended by any Subsequent Offering Period.

          (d) In the event this Agreement is terminated pursuant to Article VIII prior to the acceptance of Shares tendered pursuant to the Offer, Parent and Merger Sub shall promptly terminate the Offer without accepting any Shares previously tendered.

     Section 1.2 Offer Documents . As promptly as reasonably practicable on the date of commencement of the Offer, Parent and Merger Sub shall (a) file a Tender Offer Statement on Schedule TO (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”) with respect to the Offer, which shall contain or shall incorporate by reference an offer to purchase (the “ Offer to Purchase ”) and forms of the related letter of transmittal and form of summary advertisement (the Schedule TO and the Offer to Purchase, together with all amendments, supplements and exhibits thereto, the “ Offer Documents ”) and (b) cause the Offer Documents to be disseminated to the Company’s stockholders, in each case as and to the extent required by the Exchange Act. The Company shall promptly provide Parent and Merger Sub in writing, for inclusion in the Offer Documents, all information concerning the Company that is required under the Exchange Act to be included in the Offer Documents. Each of Parent, Merger Sub and the Company agrees promptly to correct any information provided by it for use in the Offer Documents if and to the extent that such information becomes false or misleading in any material respect, and each of Parent and Merger Sub further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to the Company’s stockholders, in each case as and to the extent required by the Exchange Act. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents and any amendments and supplements thereto prior to the filing thereof with the SEC, and Parent shall give reasonable consideration to all additions, deletions, changes and

other comments suggested by the Company and its counsel. In addition, Parent and Merger Sub shall provide to the Company and its counsel any comments, whether written or oral, that Parent or Merger Sub may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments, and any written or oral responses thereto. The Company and its counsel shall be given a reasonable opportunity to review and comment upon such responses and Parent shall give reasonable consideration to all additions, deletions, changes or other comments suggested by the Company and its counsel.

     Section 1.3 Company Actions .

          (a) Subject to Section 6.3 , the Company hereby consents to the Offer and, so long as no Adverse Recommendation Change (as defined in Section 6.3(d) hereof) has occurred in accordance with Section 6.3 , to the inclusion in the Offer Documents of the recommendation of the Company Board recommending that the holders of Shares accept the Offer, tender their Shares to Merger Sub pursuant to the Offer and, if necessary under applicable Law, adopt this Agreement and approve the Merger and the other transactions contemplated hereby in accordance with the provisions of the DGCL (the “ Company Recommendation ”).

          (b) As promptly as reasonably practicable on or after the date of filing by Parent and Merger Sub of the Offer Documents, the Company shall file with the SEC and disseminate to the Company’s stockholders, in each case as and to the extent required by the Exchange Act, a Solicitation/Recommendation Statement on Schedule 14D-9 (such Solicitation/Recommendation Statement on Schedule 14D-9, together with any amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) containing the Company Recommendation (subject to Section 6.3 ), and the Company shall cause the Schedule 14D-9 to be disseminated to the Company’s stockholders ( provided that Merger Sub shall use commercially reasonable efforts to cause the Schedule 14D-9 to be disseminated concurrently with and in the same mailing envelope as the Offer Documents, if requested by the Company) as required by Rule 14d-9 under the Exchange Act. Each of Parent and Merger Sub shall, as promptly as practicable, furnish to the Company in writing all information concerning Parent and Merger Sub that is required by the Exchange Act to be included in the Schedule 14D-9. Each of the Company, Parent and Merger Sub agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information becomes false or misleading in any material respect, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to the Company’s stockholders, in each case, as and to the extent required by applicable Law. Parent, Merger Sub and their counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 and any amendments and supplements thereto prior to the filing thereof with the SEC and the Company shall give reasonable consideration to all additions, deletions, changes or other comments suggested by Parent, Merger Sub and their counsel. In addition, the Company agrees to provide Parent, Merger Sub and their counsel any comments, whether written or oral, that the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments, and any written or oral responses thereto. Parent, Merger Sub and their counsel shall be given a reasonable opportunity to review and comment upon such responses, and the Company shall give reasonable consideration to all additions, deletions, changes or other comments suggested by Parent, Merger Sub and their counsel.

          (c) In connection with the Offer, the Company shall request its transfer agent promptly to furnish Parent and Merger Sub with mailing labels, security position listings, any non-objecting beneficial owner lists and any available listings or computer files containing the names and addresses of the record holders of Shares as of the most recent practicable date and shall promptly furnish Parent and Merger Sub with such additional available stockholder information (including, but not limited to, periodic updates of such information) as Parent, Merger Sub or their agents or Representatives (as defined in Section 6.3(b) hereof) may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of Shares.

     Section 1.4 Directors .

          (a) Subject to compliance with applicable Law and the Company Constituent Documents (as defined in Section 4.1(b) hereof), as of the Acceptance Time, and at all times thereafter, Parent shall be entitled to elect or designate such number of directors on the Company Board (“ Directors ”), rounded up to the next whole number, as is equal to the product of the total number of Directors (determined after giving effect to the Directors elected or appointed pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent and Merger Sub or their respective Affiliates (as defined in Section 9.3(a) hereof) at such time (including Shares so accepted for payment pursuant to the Offer and any Top-Up Shares (as defined in Section 1.5(a) hereof) actually acquired by Merger Sub) bears to the total number of Shares then outstanding. In furtherance thereof, the Company shall, upon request of Parent, subject to compliance with applicable Law and the Company Constituent Documents, promptly use commercially reasonable efforts to cause Parent’s designees to be so elected or designated, including increasing the size of the Company Board and/or seeking the resignations of one or more incumbent Directors. At such time, the Company shall, upon request of Parent, subject to compliance with applicable Law and the Company Constituent Documents, also promptly use commercially reasonable efforts to cause individuals designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as is on the Company Board of (i) each committee of the Company Board, (ii) each board of directors (or similar body) of each Subsidiary of the Company and (iii) each committee (or similar body) of each such board.

          (b) The Company’s obligations to elect or designate Parent’s designees to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Subject to Parent’s compliance with the immediately following sentence in this Section 1.4(b) , the Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 in order to fulfill its obligations under this Section 1.4 , including mailing to stockholders together with the Schedule 14D-9 the information required under Section 14(f) and Rule 14f-1 as is necessary to enable Parent’s designees to be elected or designated to the Company Board. Parent shall supply to the Company any information with respect to itself and its officers, Directors and Affiliates to the extent required for the Company to comply with Section 14(f) of the Exchange Act and Rule 14f-1. The provisions of Sections 1.4(a) and (b) are in addition to and shall not limit any rights that any of Parent, Merger Sub or any of their respective Affiliates may have as a record holder or beneficial owner of Shares or a matter of applicable Law with respect to the election of directors or otherwise. In addition, in connection with the Offer, the Company shall, and shall cause its Subsidiaries to, and shall use commercially

reasonable efforts to cause their respective Representatives to, cooperate with Parent and Merger Sub to disseminate the Offer Documents to holders of Shares held in or subject to any Company Plan (as defined in Section 4.11(a) hereof) and to permit such holder of Shares to tender their Shares in the Offer.

          (c) In the event that Parent’s designees are elected or designated to the Company Board pursuant to this Section 1.4 , then, until the Effective Time (as defined in Section 2.3 hereof), the Company shall use commercially reasonable efforts to cause the Company Board to maintain at least three (3) Directors who are members of the Company Board on the date of this Agreement and who are independent for purposes of Rule 10A-3 under the Exchange Act (the “ Independent Directors ”); provided , however , that if the number of Independent Directors is reduced below three (3) for any reason, the remaining Independent Director(s) shall be entitled to nominate an individual or individuals to fill such vacancy who shall be deemed to be Independent Directors for purposes of this Agreement or, if no Independent Directors then remain, the other Directors shall designate three (3) individuals to fill such vacancies who are independent for purposes of Rule 10A-3 under the Exchange Act, and such individuals shall be deemed to be Independent Directors for purposes of this Agreement. The Company and the Company Board shall promptly take all action as may be necessary to comply with their obligations under this Section 1.4(c) . Notwithstanding anything in this Agreement to the contrary, from and after the time, if any, that Parent’s designees pursuant to this Section 1.4 constitute a majority of the Company Board and prior to the Effective Time, subject to the terms hereof, any amendment or termination of this Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Merger Sub or waiver of any of the Company’s rights hereunder, shall require the concurrence of a majority of the Independent Directors if such amendment, termination, extension or waiver would reasonably be expected to have an adverse effect on any holders of Shares other than Parent or Merger Sub.

     Section 1.5 The Top-Up Option .

          (a) The Company hereby irrevocably grants to Merger Sub an option (the “ Top-Up Option ”), exercisable only upon the terms and conditions set forth in this Section 1.5 , to purchase, following the Acceptance Time, that number of Shares (the “ Top-Up Shares ”) equal to the lowest number of Shares that, when added to the number of Shares held by Parent and Merger Sub at the time of exercise, would constitute one share more than ninety percent (90%) of the total Shares then outstanding (determined on a fully diluted basis and including the issuance of the Top-Up Shares), at a price per Share equal to the Offer Price.

          (b) The Top-Up Option shall be exercisable once in whole and not in part during the twenty (20) Business Day period immediately following the Acceptance Time or, if any Subsequent Offering Period is provided, during the twenty (20) Business Day period following the expiration date of such Subsequent Offering Period; provided , however , that in no event shall the Top-Up Option be exercisable (i) for a number of Shares in excess of the Company’s then authorized and unissued shares of common stock (giving effect to Shares reserved for issuance under the Company Equity Plans (as defined in Section 3.2(a) hereof) and pursuant to the exercise of any other securities convertible into or exchangeable into Shares, if any, as if such Shares were outstanding but not giving effect to Shares reserved for issuance

pursuant to the Rights, but including as authorized and unissued shares of common stock, for purposes of this Section 1.5 , any shares held in the treasury of the Company), (ii) if the issuance of Shares upon exercise of the Top-Up Option would require approval of the Company’s stockholders under the rules and regulations of the Nasdaq Stock Market or (iii) if, after the exercise of the Top-Up Option, Parent and Merger Sub would not hold a sufficient number of Shares to cause a short-form merger of the Company pursuant to Section 253 of the DGCL; provided , further , that the Top-Up Option shall automatically terminate upon the earlier to occur of (i) the Effective Time and (ii) the termination of this Agreement in accordance with its terms.

          (c) In the event that Merger Sub wishes to exercise the Top-Up Option, Merger Sub shall so notify the Company in writing, and shall set forth in such notice (i) the number of Shares that will be owned by Parent and Merger Sub immediately preceding the purchase of the Top-Up Shares and (ii) the place and time for the closing of the purchase of the Top-Up Shares (the “ Top-Up Closing ”). The Company shall, as soon as practicable following receipt of such notice, notify Parent and Merger Sub in writing of the number of Shares then outstanding and the number of Top-Up Shares. At the Top-Up Closing, Merger Sub shall pay to the Company in cash the aggregate purchase price required to be paid for the Top-Up Shares (calculated by multiplying the number of such Top-Up Shares by the Offer Price) and the Company shall cause to be issued to Merger Sub a certificate representing the Top-Up Shares, which certificate may include any legends required by applicable securities Laws; provided , however , at Parent’s election, instead of in cash the aggregate purchase price for the Top-Up Shares may be paid through the issuance of a full-recourse promissory note by Parent and Merger Sub, bearing simple interest at five percent (5%) per annum and due on the first anniversary of the Top-Up Closing, which promissory note may be prepaid, in whole or in part, without premium or penalty.

          (d) Merger Sub acknowledges that the Shares that Merger Sub may acquire upon exercise of the Top-Up Option will not be registered under the Securities Act and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Merger Sub represents and warrants to the Company that Merger Sub is, and will be upon the purchase of the Top-Up Shares, an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “ Securities Act ”). Merger Sub agrees that the Top-Up Option and the Top-Up Shares to be acquired upon exercise of the Top-Up Option are being and will be acquired by Merger Sub for its own account, for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

     Section 1.6 Short-Form Merger . If, after the consummation of the Offer and any exercise of the Top-Up Option, the number of Shares beneficially owned by Parent, Merger Sub and any other Affiliates of Parent collectively represent at least ninety percent (90%) of the then-outstanding Shares, Parent shall cause Merger Sub to, and the Company shall execute and deliver such documents and instruments and take such other actions as Parent or Merger Sub may reasonably request, in order to cause the Merger to be completed as promptly as reasonably practicable without a meeting of the stockholders of the Company as provided in Section 253 of the DGCL, and otherwise as provided in Articles II and III below.

ARTICLE II
THE MERGER

     Section 2.1 The Merger . Upon the terms and subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company. Following the Merger, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation in the Merger (the “ Surviving Corporation ”) and a wholly owned Subsidiary of Parent.

     Section 2.2 Closing . The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m. local time, as soon as practicable but in no event later than the second Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted by applicable Law, waiver of those conditions), at the offices of Gibson, Dunn & Crutcher LLP, 3161 Michelson Drive, Irvine, California 92612, unless another date, time or place is agreed to in writing by Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”

     Section 2.3 Effective Time . Upon the terms and subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file a certificate of merger or, if applicable, a certificate of ownership and merger (as applicable, the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, executed in accordance with the relevant provisions of the DGCL, and, as soon as practicable on or after the Closing Date, shall make any and all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such other date or time as Parent and the Company may agree and specify in the Certificate of Merger (the time the Merger becomes effective being the “ Effective Time ”).

     Section 2.4 Effects of the Merger . The Merger shall have the effects set forth in this Agreement and in the relevant provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     Section 2.5 Certificate of Incorporation; Bylaws .

          (a) At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended to be identical to the certificate of incorporation of Merger Sub (as in effect immediately prior to the Effective Time), except that Article I thereof shall read in its entirety as follows: “The name of the Corporation is I-Flow Corporation.” Such certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the provisions thereof and applicable Law.

          (b) At the Effective Time, the bylaws of the Surviving Corporation shall be amended to be identical to the bylaws of Merger Sub (as in effect immediately prior to the Effective Time), except that such bylaws shall reflect that the name of Surviving Corporation is I-Flow Corporation. Such bylaws shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the provisions thereof and applicable Law.

     Section 2.6 Directors . The directors of Merger Sub 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.

     Section 2.7 Officers . The officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified.

ARTICLE III
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

     Section 3.1 Conversion of Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of any shares of capital stock of the Company, Parent or Merger Sub:

          (a) Each Share issued and outstanding immediately prior to the Effective Time (other than Shares to be canceled in accordance with Section 3.1(b) and other than any Dissenting Shares as defined in Section 3.5 hereof), together with the associated Rights, shall thereupon be converted automatically into and shall thereafter represent the right to receive $12.65 net in cash (the “ Offer Price ”), without interest, and subject to deduction for any required withholding Tax (as defined in Section 4.14(l)(i) hereof) (the “ Merger Consideration ”). From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a Share shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such Share in accordance with Section 3.3.

          (b) Each Share held in the treasury of the Company or owned, directly or indirectly, by Parent or Merger Sub immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.

          (c) Each share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid and non-assessable share of common stock, par value $0.001 per share, of the Surviving Corporation.

     Section 3.2 Treatment of Options, Restricted Stock Units and Restricted Stock .

          (a) Except as set forth in Section 3.2 of the Company Disclosure Letter, at the Effective Time, each option (each, a “ Company Stock Option ”) to purchase Shares granted under any employee, consultant, representative or Director stock option, stock purchase or equity

compensation plan, arrangement or agreement of the Company or its Subsidiaries (collectively, the “ Company Equity Plans ”), whether vested or unvested, that is outstanding immediately prior to the Effective Time shall be canceled and, in exchange therefor (and full satisfaction thereof), the Surviving Corporation shall pay, and Parent shall cause the Surviving Corporation to pay, to each Person who, at the time of such cancellation, was holding any such canceled Company Stock Option as soon as practicable following the Effective Time an amount in cash (without interest, and subject to deduction for any required withholding Taxes) equal to the product of (i) the excess (if any) of the Merger Consideration over the exercise price per Share under such Company Stock Option and (ii) the number of Shares subject to such Company Stock Option; provided , that if the exercise price per Share under any such Company Stock Option is equal to or greater than the Merger Consideration, then such Company Stock Option shall be canceled without any cash payment being made in respect thereof.

          (b) At the Effective Time, each restricted stock unit (each, a “ Company RSU ”) granted under any Company Equity Plan that is outstanding immediately prior to the Effective Time shall be canceled and, in exchange therefor (and full satisfaction thereof), the Surviving Corporation shall pay, and Parent shall cause the Surviving Corporation to pay, to each Person who, at the time of such cancellation, was holding any such canceled Company RSU as soon as practicable following the Effective Time an amount in cash (without interest, and subject to deduction for any required withholding Taxes) equal to the product of (i) the Merger Consideration and (ii) the number of such canceled Company RSUs formerly held by such Person.

          (c) Immediately prior to the Effective Time, all unvested restricted stock (“ Unvested Restricted Stock ”) granted under the Company Equity Plans outstanding immediately prior to the Effective Time shall vest ( i.e. , all restrictions on the restricted stock shall lapse) and, along with all other vested restricted stock, shall be treated in accordance with Section 3.1(a) .

          (d) Prior to the Effective Time, the Company shall adopt such resolutions and take such appropriate action as may be reasonably required to effectuate the provisions of this Section 3.2 . For the avoidance of doubt, to the extent any Company Stock Option, Company RSU or Unvested Restricted Stock will become vested pursuant to its terms (as in effect on the date hereof), including by virtue of any vesting acceleration provision included in such terms, prior to the Effective Time, then nothing in this Section 3.2(d) shall be construed as requiring such vesting to be delayed until the Effective Time.

          (e) Prior to the Effective Time, upon the request of Parent, the Company shall use commercially reasonable efforts to cause the termination of the Company Stock Option set forth in Section 3.2(a) of the Company Disclosure Letter; provided , however , that any action to be taken by the Company pursuant to this Section 3.2(e) shall require the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed).

     Section 3.3 Exchange and Payment .

          (a) Prior to the Effective Time, Merger Sub shall enter into an agreement with the Company’s transfer agent or other exchange agent selected by Parent and reasonably

acceptable to the Company (the “ Exchange Agent ”) to receive the Merger Consideration to which stockholders of the Company shall become entitled pursuant to this Article III . At or prior to the Effective Time, Parent shall deliver or cause to be delivered to the Exchange Agent cash in an amount sufficient to pay the aggregate Merger Consideration in accordance with Section 3.1(a) (the “ Exchange Fund ”). The Exchange Fund shall not be used for any purpose other than to fund payments due pursuant to Section 3.1(a) , except as provided in this Agreement. Parent and the Surviving Corporation shall pay all charges and expenses, including those of the Exchange Agent, incurred by them in connection with the exchange of Shares for the Merger Consideration and other amounts contemplated by this Article III .

          (b) As soon as reasonably practicable after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of record of (i) a certificate or certificates (“ Certificates ”) that immediately prior to the Effective Time represented outstanding Shares or (ii) uncertificated Shares represented by book-entry (“ Book-Entry Shares ”) which, in each case, were converted into the right to receive the Merger Consideration with respect thereto pursuant to Section 3.1(a) , (A) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book-Entry Shares held by such Person (as defined in Section 9.3(f) hereof) shall pass, only upon proper delivery of the Certificates to the Exchange Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of transmittal, as applicable, and shall be in customary form and contain such other provisions as Parent or the Exchange Agent may reasonably specify) and (B) customary instructions for use in effecting the surrender of Certificates or Book-Entry Shares in exchange for the Merger Consideration payable with respect thereto pursuant to Section 3.1(a) and customary instructions consistent with Section 3.3(e) for use in effecting payment for lost, stolen or destroyed Certificates. Upon surrender of a Certificate or Book-Entry Share to the Exchange Agent, together with such letter of transmittal, properly completed and duly executed, and such other documents as the Exchange Agent may reasonably require, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate or Book-Entry Share (in each case, subject to deduction for any required withholding Taxes), and such Certificate or Book-Entry Share shall forthwith be canceled. No interest shall be paid or shall accrue on any cash payable upon surrender of any Certificate or Book-Entry Share. In the event that the Merger Consideration is to be paid to a Person other than the Person in whose name any Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise 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 pay any transfer or other Taxes required by reason of such payment to a Person other than the registered holder of such Certificate or establish to the satisfaction of the Surviving Corporation that such Taxes have been paid or are not applicable. Until surrendered as contemplated by this Section 3.3 , each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender or transfer the Merger Consideration pursuant to Section 3.1(a) payable in respect of Shares theretofore represented by such Certificate or Book-Entry Shares, as applicable, without any interest thereon.

          (c) The payment of the applicable Merger Consideration upon the surrender for exchange of Certificates or Book-Entry Shares in accordance with the terms of this Article III

shall be deemed to have been delivered and paid in full satisfaction of all rights pertaining to the Shares (including the associated Rights) formerly represented by such Certificates or Book-Entry Shares. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for transfer or transfer is sought for Book-Entry Shares, such Certificates or Book-Entry Shares shall be canceled and exchanged as provided in this Article III , subject to applicable Law in the case of Dissenting Shares (as defined in Section 3.5 hereof). The Exchange Agent shall invest the cash included in the Exchange Fund as directed by Parent; provided , however , that no such investment income or gain or loss thereon shall affect the amounts payable to holders of Shares. Any interest and other income resulting from such investments shall be the sole and exclusive property of Parent payable to Parent upon its request, and no part of such earnings shall accrue to the benefit of holders of Shares.

          (d) Any portion of the Exchange Fund (and any interest or other income earned thereon) that remains undistributed to the holders of Certificates or Book-Entry Shares nine (9) months after the Effective Time shall be delivered to the Surviving Corporation or one of its Affiliates upon demand, and any holders of Certificates or Book-Entry Shares who have not theretofore complied with this Article III shall thereafter look only to the Surviving Corporation, as general creditors thereof, for payment of the Merger Consideration with respect to Shares formerly represented by such Certificate or Book-Entry Share, without interest. Notwithstanding the foregoing, neither the Surviving Corporation nor any of its Affiliates shall be liable to any holder of Shares for any amount paid to a public official pursuant to applicable abandoned property, escheat or similar Laws. Any amounts remaining unclaimed by holders of Shares two (2) years after the Effective Time (or such earlier date immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Entity (as defined in Section 4.4(b) hereof)) shall become, to the extent permitted by applicable Law, the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto.

          (e) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit, in form and substance reasonably acceptable to Parent, of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Exchange Agent, the posting by such Person of a bond in such amount as Parent or the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable in respect thereof pursuant to this Agreement.

          (f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 3.3(a) to pay for Dissenting Shares for which appraisal rights have been perfected shall be returned to the Surviving Corporation or one of its Affiliates, upon demand.

     Section 3.4 Withholding Rights . Parent, the Surviving Corporation or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any

holder of Shares, Company Stock Options, Company RSUs, or restricted stock or otherwise pursuant to this Agreement such amounts as Parent, the Surviving Corporation or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign tax Law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Parent, the Surviving Corporation or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

     Section 3.5 Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, Shares issued and outstanding immediately prior to the Effective Time that are held by any holder who has not voted in favor of the Merger and who is entitled to demand and properly demands appraisal of such Shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (“ Dissenting Shares ”) shall not be converted into the right to receive the Merger Consideration, unless and until such holder shall have failed to perfect, or shall have effectively withdrawn or lost, such holder’s right to appraisal under the DGCL. Dissenting Shares shall be treated in accordance with Section 262 of the DGCL. If any such holder fails to perfect or withdraws or loses any such right to appraisal, then each such Share of such holder shall thereupon be converted into and become exchangeable only for the right to receive, as of the later of the Effective Time and the time that such right to appraisal has been irrevocably lost, withdrawn or expired, the Merger Consideration in accordance with Section 3.1(a) . Prior to the Effective Time, the Company shall promptly notify Parent of any demands for appraisal of any Shares, attempted withdrawals of such notices or demands and any other instruments received by the Company relating to rights to appraisal, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to, settle or offer to settle, or approve any withdrawal of any such demands.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as disclosed or reflected in the Company SEC Documents (as defined in Section 4.5(a) hereof) filed or furnished by the Company and publicly available prior to the date of this Agreement (without giving effect to any amendment to any such Company SEC Documents filed on or after the date hereof and excluding any disclosures therein that constitute forward-looking statements or other statements that are cautionary, predictive or forward-looking in nature (but, for the purpose of clarification, including and giving effect to any factual or historical statements included in any such forward-looking statements or other statements that are cautionary, predictive or forward-looking in nature)) and except as set forth in the disclosure letter delivered by the Company to Parent prior to the execution and delivery of this Agreement (the “ Company Disclosure Letter ”) (it being agreed that disclosure of any information in a particular section or subsection of the Company Disclosure Letter shall be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such information is reasonably apparent), the Company represents and warrants to Parent and Merger Sub as follows:

     Section 4.1 Organization, Standing and Power .

          (a) Section 4.1 of the Company Disclosure Letter contains a complete and accurate list, for the Company and each of its Subsidiaries, of its name, its jurisdiction of organization, the Company’s percentage ownership for any Subsidiary that is not a wholly owned Subsidiary and the jurisdictions in which such entity is qualified to conduct business. Each of the Company and its Subsidiaries (each of the Company and its Subsidiaries is referred to herein as an “ Acquired Company ” and, collectively, as the “ Acquired Companies ”) (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for any such failures that individually or in the aggregate do not have, and would not reasonably be expected to have, a Material Adverse Effect.

For purposes of this Agreement, “ Material Adverse Effect ” means any event, change, circumstance, effect or state of facts that, either individually or in the aggregate: (A) is materially adverse to the business, assets, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, other than the effects of any event, change, circumstance, effect or state of facts arising out of or attributable to any of the following, either alone or in combination: (1) general changes, trends or developments in any of the industries in which the Company or any of its Subsidiaries operates, (2) changes in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in general economic, business, regulatory, political or market conditions or in national or global financial markets, (3) international calamity directly or indirectly involving the United States, national calamity, an act of war (whether or not declared), sabotage, terrorism, military actions or the escalation thereof, an act of God or other force majeure events, (4) any actions required under this Agreement to obtain any approval or authorization under applicable Laws for the consummation of the Merger, (5) changes in any applicable Laws or applicable accounting regulations or principles or interpretations thereof, (6) changes in the price or trading volume of the Company’s stock (provided that the events, changes, circumstances, effects or state of facts underlying any such changes shall not be excluded in determining whether there has been a Material Adverse Effect, unless otherwise excluded by any one or more of clauses (1) through (5), inclusive, or (7) through (15), inclusive, of this paragraph), (7) any failure by the Company or any Subsidiary to meet any estimates or expectations of the Company’s or such Subsidiary’s revenue, earnings or other financial performance or results of operations for any period, or any failure by the Company or any of its Subsidiaries to meet its own internal or published projections, budgets, plans or forecasts of its revenues, earnings, cash flows or other financial performance or results of operations (provided that the events, changes, circumstances, effects or state of facts underlying any such failures shall not be excluded in determining whether there has been a Material Adverse Effect, unless otherwise excluded by any one or more of clauses (1) through (6), inclusive, or (8) through (15), inclusive, of this paragraph), (8) the announcement or pendency of this Agreement and the transactions contemplated hereby, or the performance of this Agreement and the transactions contemplated hereby, including the initiation of litigation, or the

failure to give any consent, by any Person with respect to this Agreement, and including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, licensors, distributors, partners, consultants or employees of the Company and its Subsidiaries due to the announcement and performance of this Agreement or the identity of the parties to this Agreement, or the performance of this Agreement and the transactions contemplated hereby, (9) the termination or resignation of any director, executive officer, other employee or consultant of the Company or any of its Subsidiaries, (10) any action taken (or omitted to be taken) by the Company, or which the Company causes to be taken (or omitted to be taken) by any of its Subsidiaries, in each case which is required by or resulting from or arising in connection with this Agreement, (11) any actions taken (or omitted to be taken) at the written request of or consented to in writing by Parent, Merger Sub or their Affiliates or Representatives, (12) any increase in the cost or availability of financing to Parent or Merger Sub, (13) any legal, regulatory or other action or development (including the establishment of accounting reserves) relating to or arising out of chondrolysis or any of the matters set forth in Section 4.9 of the Company Disclosure Letter, including new claims based on the same or similar subject matter, the outcome of existing claims and any amendment to any existing complaint, (14) government favoritism of products or changes in reimbursement procedures (including in connection with comparative effectiveness research conducted by or on behalf of the United States Department of Health and Human Services, including the results thereof) or (15) the business of InfuSystem Holdings, Inc. or its Affiliates, including its results of operations and financial liquidity (in the case of each of clauses (1), (2) and (3), so long as such effects do not disproportionately impact the Company and its Subsidiaries relative to other participants in the industry or industries in which the Company and its Subsidiaries conduct their business) or (B) prevents, materially impedes or materially interferes with the ability of the Company to perform its material obligations under this Agreement or the ability of the Company to consummate the transactions contemplated hereby. For the avoidance of doubt, references to the defined term “Material Adverse Effect” herein shall always include the exceptions described in clauses (1) through (15) above, inclusive.

          (b) The Company has delivered or made available to Parent true, correct and complete copies of (i) the certificate of incorporation, bylaws and other charter or organizational documents of each of the Acquired Companies, including all amendments thereto and (ii) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the equity holders of each of the Acquired Companies, the board of directors or managers of each of the Acquired Companies and all committees of the board of directors or managers of each of the Acquired Companies, in each case since January 1, 2005, except for such portions of the minutes of the boards of directors of the Acquired Companies that relate to the consideration by such directors of the transactions contemplated hereby and as set forth in Section 4.1(b) of the Company Disclosure Letter (the items described in clauses (i) and (ii) above, collectively, the “ Company Constituent Documents ”). The Company Constituent Documents are in full force and effect on the date hereof. The Company has no Subsidiaries, except for the entities identified in Section 4.1 of the Company Disclosure Letter. None of the Acquired Companies has any equity interest in, or any interest convertible into or exchangeable or exercisable for any equity interest in, any other entity, other than those set forth in Section 4.1 of the Company Disclosure Letter.

     Section 4.2 Capital Stock .

          (a) The authorized capital stock of each Acquired Company and the issued and outstanding capital stock of each Acquired Company as of the date hereof are set forth in Section 4.2(a) of the Company Disclosure Letter. Each of the outstanding shares of capital stock or other equity interests of each Acquired Company is, and the shares of capital stock that may be issued pursuant to Company Stock Options and Company RSUs will be (when issued in accordance with the terms thereof), duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Section 4.2(a) of the Company Disclosure Letter, all shares or other equity interests of the Subsidiaries of the Company are owned by the Company or another wholly owned Subsidiary of the Company free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting rights, charges, mortgages or other encumbrances (collectively, “ Liens ”) of any nature whatsoever, except for Permitted Liens (as defined in Section 4.17 hereof).

          (b) Except as set forth in Section 4.2(b) of the Company Disclosure Letter, as of the date of this Agreement, (i) there are not outstanding or authorized (A) any securities of any Acquired Company convertible into or exchangeable for shares of capital stock or voting securities of any Acquired Company or (B) options, calls, warrants, pre-emptive rights, anti-dilution rights or other rights, rights agreements, stockholder rights plans, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any Acquired Company (except for the Support Agreements), (ii) there are no outstanding obligations of any Acquired Company to repurchase, redeem or otherwise acquire any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any Acquired Company or to provide a material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary, (iii) no Acquired Company has issued phantom stock or other contractual rights the value of which is determined in whole or in part by the value of any capital stock of any Acquired Company and there are no outstanding stock appreciation rights issued by any Acquired Company with respect to the capital stock of any Acquired Company, (iv) except for the Support Agreements, there are no voting trusts or other agreements or understandings to which any of the Acquired Companies or, to the knowledge of the Company, any of their respective officers and directors is a party with respect to the voting of capital stock of any Acquired Company, and (v) there are no outstanding bonds, debentures, notes or other indebtedness of any Acquired Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which the stockholders or other equity holders of the Acquired Companies may vote.

          (c) As of the date hereof, 1,301,039 Shares are subject to issuance pursuant to Company Stock Options granted and outstanding under the Company Equity Plans. Section 4.2(c) of the Company Disclosure Letter sets forth the following information with respect to each Company Stock Option outstanding as of the date of this Agreement: (i) the Company Equity Plan pursuant to which such Company Stock Option was granted; (ii) the name of the holder of such Company Stock Option; (iii) the number of shares of Company common stock subject to such Company Stock Option; (iv) the exercise price of such Company Stock Option; (v) the date on which such Company Stock Option was granted; (vi) the extent to which such Company Stock Option is vested and exercisable as of the date of this Agreement and the times and extent to which such Company Stock Option is scheduled to become vested and

exercisable after the date of this Agreement; and (vii) the date on which such Company Stock Option expires. Except as set forth in Section 4.2(c) of the Company Disclosure Letter, the exercise price of each Company Stock Option is equal to or greater than the fair market value of the Shares subject to such Company Stock Option (determined as of the date such Company Stock Option was granted).

          (d) As of the date hereof, 711,430 Shares are subject to issuance pursuant to Company RSUs granted and outstanding under the Company Equity Plans. Section 4.2(d) of the Company Disclosure Letter sets forth the following information with respect to each Company RSU outstanding as of the date of this Agreement: (i) the Company Equity Plan pursuant to which such Company RSU was granted; (ii) the name of the holder of such Company RSU; (iii) the number of shares of Company common stock subject to such Company RSU; (iv) the date on which such Company RSU was granted; and (v) the extent to which such Company RSU is vested as of the date of this Agreement and the times and extent to which such Company RSU is scheduled to become vested after the date of this Agreement.

          (e) As of the date hereof, there are 248,052 Shares that constitute Unvested Restricted Stock, which are reflected in the outstanding capital stock of the Company set forth in Section 4.2(a) of the Company Disclosure Letter. Section 4.2(e) of the Company Disclosure Letter sets forth the following information with respect to each share of Unvested Restricted Stock outstanding as of the date of this Agreement: (i) the Company Equity Plan pursuant to which such Unvested Restricted Stock was granted; (ii) the name of the holder of such Unvested Restricted Stock; (iii) the number of shares of Company common stock subject to such Unvested Restricted Stock; (iv) the date on which such Unvested Restricted Stock was granted; and (v) the dates on which such Unvested Restricted Stock is scheduled to vest.

          (f) The Company has made available to Parent accurate and complete copies of all stock equity plans pursuant to which the Company has granted Company Stock Options, Company RSUs and Unvested Restricted Stock and the forms of all award agreements evidencing such Company Stock Options, Company RSUs and Unvested Restricted Stock. There are no outstanding options to purchase Shares, restricted Shares or restricted stock units associated with Shares that were issued other than pursuant to any Company Plan and set forth in Sections 4.2(c), (d) and (e) of the Company Disclosure Letter.

     Section 4.3 Authority . The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject, in the case of the Merger, to the adoption and approval of this Agreement and the Merger by the holders of at least a majority of the outstanding stock of the Company entitled to vote thereon (the “ Company Stockholder Approval ”), to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to approve this Agreement or to consummate the transactions contemplated hereby, subject, in the case of the consummation of the Merger, to obtaining the Company Stockholder Approval and to the filing of the Certificate of Merger with the Secretary of State of the State of Delaware as required by the DGCL. This Agreement has been duly executed and delivered by the Company and, assuming the due

authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). As of the date hereof, the Company Board, at a meeting duly called and held, has unanimously approved and declared advisable this Agreement and the transactions contemplated hereby and, subject to Section 6.3 , has resolved to recommend that the Company’s stockholders accept the Offer, tender their Shares to Merger Sub pursuant to the Offer and, if necessary under applicable Law, adopt this Agreement and approve the Merger and the other transactions contemplated hereby in accordance with the provisions of the DGCL, which resolutions have not been rescinded, modified or withdrawn in any way except, if applicable, to the extent permitted by Section 6.3 .

     Section 4.4 No Conflict; Consents and Approvals .

          (a) The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, do not and will not (i) conflict with or violate the Company Constituent Documents, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iv) of subsection (b) below have been obtained and all filings described in such clauses have been made, conflict with or violate any statute, law, ordinance, rule, regulation, order, judgment or decree (collectively, “ Law ”) or any settlement, injunction or award of any Governmental Entity, in each case that is applicable to the Company or any of its Subsidiaries or by which any of their respective properties are bound, (iii) except as set forth in Section 4.4(a) of the Company Disclosure Letter, result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default), or result in a right of guaranteed payment or loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any Material Contract (as defined in Section 4.15 hereof) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective properties are bound, (iv) result in any breach or violation of any Company Plan, including any award agreement thereunder (it being understood that any rights arising under and pursuant to the terms of any Company Plan in connection with the transactions contemplated by this Agreement shall not be considered a breach or violation of such Company Plan), or (v) result in the creation of any Lien upon any of the properties or assets of the Acquired Companies, except, in the case of clauses (ii), (iii), (iv) and (v), for any such conflict, breach, violation, default, loss, right or other occurrence that individually or in the aggregate does not have, and would not reasonably be expected to have, a Material Adverse Effect.

          (b) The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, do not and will not require any consent, approval, order, license, authorization or permit of, action by, filing, registration or declaration with or notification to, any governmental or regulatory (including stock exchange) authority, agency, court, commission or other governmental body (each, a “ Governmental Entity ”), except for (i) such filings as required under applicable requirements of the Exchange Act (and the rules and regulations promulgated thereunder) and under state securities and “blue sky” Laws, (ii) the filings required under the Hart-Scott-Rodino

Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) and any filings required under the applicable requirements of antitrust or other competition Laws of jurisdictions other than the United States or investment Laws relating to foreign ownership (“ Foreign Antitrust Laws ”), (iii) such filings as are necessary to comply with the applicable requirements of the Nasdaq Stock Market, (iv) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL and (v) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain individually or in the aggregate does not have, and would not reasonably be expected to have, a Material Adverse Effect. 3

     Section 4.5 SEC Reports; Financial Statements .

          (a) Except as set forth in Section 4.5(a) of the Company Disclosure Letter, the Company has filed or furnished all forms, reports, statements, schedules, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the SEC since January 1, 2006 (all such forms, reports, statements, schedules, certificates and other documents filed or furnished since January 1, 2006, collectively, the “ Company SEC Documents ”). Except as set forth in Section 4.5(a) of the Company Disclosure Letter, as of their respective dates, or, if amended, as of the date of the last such amendment, each of the Company SEC Documents complied as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act and SOX (as defined in Section 4.5(d) hereof), and the applicable rules and regulations promulgated thereunder, as the case may be, each as in effect on the date so filed. Except as set forth in Section 4.5(a) of the Company Disclosure Letter, and except to the extent that information in any Company SEC Document has been revised or superseded by a subsequently filed Company SEC Document prior to the date hereof, none of the Company SEC Documents contains any untrue statement of a material fact or omits to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of the Company is subject to the periodic reporting requirements of the Exchange Act or is or has been otherwise required to file any form, report, statement, schedule, certificate or other document with the SEC, any foreign Governmental Entity that performs a similar function to that of the SEC or any securities exchange or quotation system.

          (b) Except as set forth in Section 4.5(b) of the Company Disclosure Letter, the audited consolidated financial statements of the Company (including any related notes thereto) that are included in the Company SEC Documents (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto, (ii) have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and (iii) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries at the respective dates thereof and the results of their operations and cash flows for the periods indicated. Except as set forth in Section 4.5(b) of the Company Disclosure Letter, the unaudited consolidated financial statements of the Company (including any related notes thereto) that are included in the Company SEC Documents (x) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto, (y) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or may be permitted by the SEC under

the Exchange Act) and (z) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates thereof and the results of their operations and cash flows for the periods indicated (subject to normal period-end adjustments).

          (c) The Company (i) maintains “disclosure controls and procedures” and “internal control over financial reporting” (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act, and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Company Board (A) any significant deficiencies and material weaknesses in the design or operation of such internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company’s “disclosure controls and procedures” are reasonably designed to ensure that all material information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act and SOX with respect to such reports. The Company’s management has completed an assessment of the effectiveness of the Company’s internal control over financial reporting in compliance with the requirements of Section 404 of SOX for the year ended December 31, 2008, and such assessment concluded that such controls were effective.

          (d) The then-acting Chief Executive Officer and the Chief Financial Officer of the Company have signed, and the Company has furnished to the SEC, all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (“ SOX ”) and the statements contained in such certifications are accurate; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither the Company nor any of its officers has received notice from any Governmental Entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

     Section 4.6 No Undisclosed Liabilities . Except as set forth in Section 4.6 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet (or the notes thereto) of the Company and its Subsidiaries, except for liabilities and obligations (a) reflected or reserved against in the Company’s consolidated balance sheet as of June 30, 2009 (or the notes thereto) included in the Company SEC Documents, (b) incurred in the ordinary course of business since June 30, 2009, (c) which have been discharged or paid in full prior to the date of this Agreement, (d) incurred pursuant to or in connection with the transactions contemplated by this Agreement or (e) that individually or in the aggregate do not have, and would not reasonably be expected to have, a Material Adverse Effect.

     Section 4.7 Certain Information .

     (a) None of the documents required to be filed by the Company with the SEC or required to be distributed or otherwise disseminated to the Company’s stockholders by the Company in connection with the transactions contemplated by this Agreement (the “ Company Disclosure Documents ”), including the Schedule 14D-9, the proxy or information statement of the Company (the “ Proxy Statement ”), if any, to be filed with the SEC for use in connection with the solicitation of proxies from the Company’s stockholders in connection with the Merger and the Company Stockholders Meeting (as defined in Section 6.4(b) hereof), if any, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading (i) in the case of the Proxy Statement, as supplemented or amended, if applicable, at the time such Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time such stockholders vote on adoption and approval of this Agreement, and (ii) in the case of any Company Disclosure Document other than the Proxy Statement, at the time of the filing of such Company Disclosure Document or any supplement or amendment thereto and at the time of any distribution or dissemination thereof and at the Acceptance Time. The Company Disclosure Documents will comply in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Merger Sub or any of their respective Representatives for inclusion or incorporation by reference in the Company Disclosure Documents.

          (b) The information with respect to the Company or any of its Subsidiaries that the Company furnishes to Parent in writing specifically for use in the Offer Documents, at the time of the filing of the Schedule TO, at the time of any distribution or dissemination of the Offer Documents, and at the Acceptance Time, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

     Section 4.8 Absence of Certain Changes or Events . Since June 30, 2009, except as otherwise required by this Agreement, and except as set forth in Section 4.8 of the Company Disclosure Letter, (i) the businesses of the Company and its Subsidiaries have been conducted in the ordinary course of business consistent with past practice, and (ii) there has not been any event, development, change or state of circumstances that individually or in the aggregate had, or would reasonably be expected to have, a Material Adverse Effect.

     Section 4.9 Litigation . Except as set forth in Section 4.9 of the Company Disclosure Letter, (a) there is no material suit, claim, action, proceeding, arbitration, mediation, conciliation, consent decree, audit, or investigation (each, an “ Action ”) pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective properties, (b) neither the Company nor any of its Subsidiaries nor any of their respective properties is or are subject to any material judgment, order, injunction, ruling or decree of any Governmental Entity, and (c) to the knowledge of the Company, there is no Action pending or

threatened against any officer or director of the Company that is reasonably likely to result in any material liability on the part of any Acquired Company, whether or not such liability is insured.

     Section 4.10 Compliance with Laws .

          (a) Except with respect to SEC Documents (as defined in Section 4.5(a) hereof), ERISA (as defined in Section 4.11(a) hereof), Environmental Laws (as defined in Section 4.13(c)(i) hereof) and Taxes, which are the subject of Sections 4.5 , 4.11 , 4.13 and 4.14 , respectively, and except as set forth in Section 4.10(a) of the Company Disclosure Letter, the Company and each of its Subsidiaries are in, and at all times since January 1, 2006 have been in, compliance with all Laws applicable to them or by which any of their respective properties are bound, except where any non-compliance individually or in the aggregate does not have, and would not reasonably be expected to have, a Material Adverse Effect.

          (b) Except as set forth in Section 4.10(b) of the Company Disclosure Letter, and except with respect to Environmental Laws (which are the subject of Section 4.13 ), the Company and its Subsidiaries have in effect all permits, licenses, grants, easements, clearances, variances, exceptions, consents, certificates, exemptions, registrations, authorizations, franchises, orders and approvals of all Governmental Entities (collectively, “ Permits ”) necessary for them to own, lease, operate or use their properties and to carry on their businesses as now conducted, except for any Permits the absence of which individually or in the aggregate does not have, and would not reasonably be expected to have, a Material Adverse Effect. Except as set forth in Section 4.10(b) of the Company Disclosure Letter, all Permits of the Company and its Subsidiaries are in full force and effect, except where the failure to be in full force and effect individually or in the aggregate does not have, and would not reasonably be expected to have, a Material Adverse Effect.

          (c) Except as set forth in Section 4.10(c) of the Company Disclosure Letter, since January 1, 2006, none of the Acquired Companies has received any written notice or other written communication (or, to the knowledge of the Company, any oral communication) from any Governmental Entity regarding any actual or threatened revocation, withdrawal, suspension, cancellation, termination, deficiency, dispute or modification with respect to any material Permit.

          (d) Except as set forth in Section 4.10(d) of the Company Disclosure Letter, all products developed, manufactured, tested, distributed or marketed by the Company and its Subsidiaries that are subject to the jurisdiction of the United States Food and Drug Administration (the “ FDA ”) or any other medical product regulatory authority have been and are being developed, tested, manufactured, distributed and marketed by the Company or its Subsidiaries, as applicable, in compliance with applicable regulatory requirements in all material respects, including pre-market notification, good manufacturing practices, labeling, advertising, record-keeping, installation, service and adverse event reporting, and have been and are being tested, investigated, distributed, marketed, and sold by the Company or its Subsidiaries, as applicable, in compliance with regulatory requirements in all material respects. Except as set forth in Section 4.10(d) of the Company Disclosure Letter, the products of the Company and its Subsidiaries, where required, have been and are being marketed by the Company or its Subsidiaries, as applicable, under valid 510(k) clearances or pre-market approval applications, and, to the knowledge of the Company, neither the FDA nor any other medical product

regulatory authority is limiting, suspending or revoking any such clearances or approvals or changing the marketing classification or labeling of any such products. There has been no material false or misleading information or material omission in any product application, product-related submission or report made by the Company or its Subsidiaries, as applicable, to or with the FDA. Except as set forth in Section 4.10(d) of the Company Disclosure Letter, the Company and its Subsidiaries are in compliance in all material respects with all legal and regulatory requirements applicable to the sponsorship or conduct of clinical trials, including the clinical trial reporting and disclosure requirements of 42 U.S.C. § 282(j).

          (e) To the knowledge of the Company, and except as set forth in Section 4.10(e) of the Company Disclosure Letter, (i) there are no facts that furnish any reasonable basis for any materially adverse (A) Form FDA-483 inspectional observations, (B) warning or untitled letters from the FDA, (C) Section 305 notices or (D) other similar communications from the FDA or any other applicable medical product regulatory authority, and (ii) there have been no warning or untitled letters or similar enforcement communications by the FDA to the Company relating to the products of the Company since January 1, 2006. Except as set forth in Section 4.10(e) of the Company Disclosure Letter, the Company’s products have not been recalled, withdrawn, subject to correction or removal or injunction, seized, or suspended (whether voluntarily or otherwise) since January 1, 2006.

          (f) The Company and its Subsidiaries do not bill any commercial insurance plan or any health care program administered or funded, in whole or in part, by the government of the United States, including Medicare, Medicaid, and TRICARE programs (described in Title XVIII of the United States Social Security Act (the “ SSA ”), Title XIX of the SSA, and Title 10, Chapter 55 of the U.S.C., respectively (collectively, “ Federal Health Care Programs ”) for any item or service. Neither the Company nor any of its Subsidiaries, nor any officer, director, managing employee or agent (as those terms are defined in 42 C.F.R. § 1001.1001) of the Company or its Subsidiaries has, at any time been excluded from participation in a Federal Health Care Program or, to the knowledge of the Company, engaged in any activity that is in violation of the federal Medicare or federal or state Medicaid statutes, §§ 1128, 1128A, 1128B, 1128C, or 1877 of the SSA (42 U.S.C. §§ 1320a-7, 1320a-7a, 1320a-7b, 1320a-7c, and 1395nn), the federal TRICARE statute (10 U.S.C. § 1071 et seq.), the civil False Claims Act (31 U.S.C. § 3729 et seq.), criminal false claims statutes (e.g., 18 U.S.C. §§ 287 and 1001), the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. § 3801 et seq.), the anti-fraud and related provisions of the Health Insurance Portability and Accountability Act of 1996 (e.g., 18 U.S.C. §§ 1035 and 1347) or similar foreign, federal or state Laws. Except as set forth in Section 4.10(f) of the Company Disclosure Letter, to the knowledge of the Company, the Company and its Subsidiaries are not currently, nor have they been in the past, under investigation by the Department of Justice (the “ DOJ ”), the Office of the Inspector General of the U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services, any state Attorney General, state Medicaid Agency or the FDA for promotional or other fraud and abuse or related issues. No Person has filed or, to the knowledge of the Company, has threatened to file against the Company or any of its Subsidiaries a claim or action relating to any of the Company’s or its Subsidiaries’ respective assets or businesses under any foreign, federal or state whistleblower statute, including under the False Claims Act (31 U.S.C. § 3729 et seq.).

          (g) To the knowledge of the Company, the Company and its Subsidiaries have at all times complied in a timely manner in all material respects with the Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1 et seq.) and any other applicable Laws regarding the use of funds for political activity or commercial bribery.  To the knowledge of the Company, there are no situations with respect to the business of the Company or any of its Subsidiaries which involved or involves (i) the use of any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity; (ii) the making of any direct or indirect unlawful payments to government officials or others from corporate funds or the establishment or maintenance of any unlawful or unrecorded funds; or (iii) the receipt of any illegal discounts, rebates or kick-backs in violation of Law.

     Section 4.11 Benefit Plans.

          (a) Section 4.11(a) of the Company Disclosure Letter sets forth a complete and accurate list of each Company Plan. For purposes of this Agreement, “Company Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), including any “multiemployer plan” (within the meaning of ERISA Section 3(37)), and any stock purchase, stock option, severance, change-in-control, fringe benefit (if material), bonus, incentive, deferred compensation, employment or other material employee benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, written, legally binding or not, under which any current or former employee, director or independent contractor of the Company or its Subsidiaries has any present or future right to benefits or the Company or its Subsidiaries has had or has any current or future liability for benefits to or on behalf of any current or former employee director or independent contractor of the Company or its Subsidiaries (including an obligation to make contributions). With respect to each Company Plan, the Company has furnished or made available to Parent a current, accurate and complete copy thereof and, to the extent applicable: (i) all related trust agreements or other funding instruments, (ii) the most recent determination letter of the U.S. Internal Revenue Service (the “ IRS ”), if applicable, (iii) the current summary plan description and other equivalent written communications by the Company or its Subsidiaries to their respective employees concerning the extent of the benefits provided under a Company Plan, (iv) audited financial reports a