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Exhibit
2.5
 AGREEMENT AND PLAN OF MERGER
 BY AND AMONG
 PSYCHIATRIC SOLUTIONS, INC.,
 PANTHER ACQUISITION SUB, INC.,
 and
 HORIZON HEALTH CORPORATION
 Dated as of
 December 20, 2006




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TABLE OF CONTENTS
 ARTICLE I DEFINED TERMS AND INTERPRETATION
    
    
    1Section 1.1. Certain Definitions
    
    
    1Section 1.2. Terms Defined Elsewhere
    
    
    7ARTICLE II THE MERGER
    
    
    9Section 2.1. The Merger
    
    
    9Section 2.2. Closing
    
    
    10Section 2.3. Certification Closing
    
    
    10Section 2.4. Effective Time
    
    
    10Section 2.5. Effect of the Merger
    
    
    10Section 2.6. Certificate of Incorporation; Bylaws
    
    
    10Section 2.7. Directors and Officers
    
    
    11ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
    
    
    11Section 3.1. Conversion of Securities
    
    
    11Section 3.2. Exchange of Certificates
    
    
    12Section 3.3. Dissenters Rights
    
    
    14Section 3.4. Stock Transfer Books
    
    
    14Section 3.5. Company Equity Awards
    
    
    14ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    
    
    16Section 4.1. Organization and Qualification; Subsidiaries
    
    
    17Section 4.2. Certificate of Incorporation and Bylaws; Corporate Books
    
    
    17Section 4.3. Capitalization; Subsidiaries
    
    
    17Section 4.4. Authority
    
    
    18Section 4.5. No Conflict; Required Filings and Consents
    
    
    18Section 4.6. Compliance with Laws
    
    
    19Section 4.7. SEC Filings; Financial Statements
    
    
    21Section 4.8. Benefit Plans; Employees and Employment Practices
    
    
    22Section 4.9. Company Material Contracts
    
    
    23Section 4.10. Litigation
    
    
    24Section 4.11. Environmental Matters
    
    
    25Section 4.12. Intellectual Property
    
    
    25Section 4.13. Taxes
    
    
    25Section 4.14. Insurance
    
    
    27Section 4.15. Real Estate
    
    
    27Section 4.16. Board Approval
    
    
    27Section 4.17. Brokers
    
    
    28Section 4.18. Absence of Certain Changes
    
    
    28Section 4.19. Transactions with Affiliates
    
    
    28Section 4.20. Company Information
    
    
    28ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
    
    
    29Section 5.1. Organization and Qualification
    
    
    29Section 5.2. Certificate of Incorporation and Bylaws
    
    
    29Section 5.3. Authority
    
    
    29Section 5.4. Ownership of Merger Sub; No Prior Activities
    
    
    29
 i




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Section 5.5. Financing
    
    
    30Section 5.6. Vote Required
    
    
    30Section 5.7. No Conflict; Required Filings and Consents
    
    
    30Section 5.8. SEC Filings; Financial Statements
    
    
    31Section 5.9. Licensing
    
    
    31Section 5.10. Litigation
    
    
    31Section 5.11. Brokers
    
    
    32Section 5.12. Ownership of Company Common Stock
    
    
    32Section 5.13. Solvency of the Surviving Corporation
    
    
    32Section 5.14. Parent Information
    
    
    32ARTICLE VI ADDITIONAL AGREEMENTS
    
    
    33Section 6.1. Conduct of Business Pending the Closing
    
    
    33Section 6.2. Proxy Statement; Company Stockholders Meeting
    
    
    35Section 6.3. Access to Information; Confidentiality
    
    
    37Section 6.4. No Solicitation of Transactions
    
    
    38Section 6.5.
Reasonable Best Efforts
    
    
    39Section 6.6. Certain Notices
    
    
    41Section 6.7. Public Announcements
    
    
    41Section 6.8. Employee Matters
    
    
    41Section 6.9. Indemnification of Directors and Officers
    
    
    43Section 6.10. State Takeover Statutes
    
    
    44Section 6.11. Company Rights Agreement
    
    
    45Section 6.12. Section 16 Matters
    
    
    45Section 6.13. Confidentiality Agreement
    
    
    45Section 6.14. Investigation and Agreement by Parent and Merger Sub; No Other Representations or Warranties
    
    
    45ARTICLE VII CLOSING CONDITIONSSection 7.1. Conditions to Obligations of Each Party Under This Agreement
    
    
    46Section 7.2. Additional Conditions to Obligations of Parent and Merger Sub
    
    
    47Section 7.3. Additional Conditions to Obligations of the Company
    
    
    47Section 7.4. Frustration of Closing Conditions
    
    
    48ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
    
    
    48Section 8.1. Termination
    
    
    48Section 8.2. Effect of Termination
    
    
    50Section 8.3. Fees and Expenses
    
    
    50Section 8.4. Termination Fee
    
    
    50Section 8.5. Specific Performance
    
    
    51Section 8.6. Extension; Waiver
    
    
    51Section 8.7. Amendment
    
    
    51ARTICLE IX GENERAL PROVISIONS
    
    
    51Section 9.1. Non-Survival of Representations and Warranties
    
    
    51Section 9.2. Notices
    
    
    52Section 9.3. Headings
    
    
    53Section 9.4. Severability
    
    
    53
 ii




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Section 9.5. Entire Agreement
    
    
    53Section 9.6. Third-Party Beneficiaries
    
    
    53Section 9.7. Assignment
    
    
    53Section 9.8. Mutual Drafting
    
    
    53Section 9.9. Governing Law; Consent to Jurisdiction
    
    
    54Section 9.10. Counterparts
    
    
    54
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EXHIBITS AND SCHEDULES
 EXHIBITS
 Exhibit A.1 List of Company ExecutivesExhibit A.2 List of Parent and Merger Sub ExecutivesExhibit B.1 Company Representatives for Access to Information
 SCHEDULES
 Company Disclosure Schedule
 Schedule 3.5.1(a) Equity Compensation PlansSchedule 3.5.1(b) Certain Persons Subject to Certain Tax MattersSchedule 4.1 SubsidiariesSchedule 4.3.2 Company Capitalization MattersSchedule 4.3.3 Company Subsidiary Capitalization MattersSchedule 4.5.1 ConsentsSchedule 4.5.2 Governmental Entity ApprovalsSchedule 4.6.1 Compliance With LawsSchedule 4.6.2 Health Care Program Participation and ComplianceSchedule 4.6.4 Adverse ActionsSchedule 4.7.4 Internal Controls MattersSchedule 4.8.1 Material Company Benefit PlansSchedule 4.8.4 Existing Requirements to Continue Company BenefitsSchedule 4.8.7 Existing Company Payment Requirements as Result of Change of ControlSchedule 4.9 Material ContractsSchedule 4.10 LitigationSchedule 4.13 Tax MattersSchedule 4.14 InsuranceSchedule 4.15 Real EstateSchedule 4.18 Certain Company ChangesSchedule 6.1(f) Certain Permitted Pre-Closing Company TransactionsSchedule 6.1(k) Permitted Changes in Benefits; Severance ArrangementsSchedule 6.1(l) Certain Pending ClaimsSchedule 6.8.1 Certain Actions Relating to Company Benefit PlansSchedule 6.8.5(i) Executive Agreements
 Parent Disclosure Schedule
 Schedule 7.2.6 Consents Required by Parent
 The
exhibits and schedules to this Agreement and Plan of Merger have been
omitted from this filing pursuant to Item 601(b)(2) of Regulation
S-K. The Company agrees to furnish supplementally to the Securities
and Exchange Commission, upon request, a copy of any omitted exhibit
or schedule to the Agreement and Plan of Merger.
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AGREEMENT AND PLAN OF MERGER
 Parent Merger Sub Company
 Merger Agreement DGCL
   ARTICLE I
DEFINED TERMS AND INTERPRETATION
 Certain Definitions
 Affiliate control
 Benefit Plan
 Blue Sky Laws
 1




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Business Day
 Code
 Company Benefit Plan
 Company Health Care Business
 Company Health Care Facility
 Company Material Adverse Effect
 2




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Section 2.3 Section 2.2 Section 6.8.2 Section
6.8.7 Section
6.8.2 Section 6.8.7
 Company Permits
 Continuing Employee
 Contract
 Environmental Laws
 Equity Interest
 Exchange Act
 Expenses
 3




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GAAP
 Governmental Entity
 Group
 HSR Act
 Indemnified Party
 Intellectual Property
 Knowledge Exhibit A.1 Exhibit A.2
 Law
 Lien
 Materials of Environmental Concern
 Medicaid
 4




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Medicare
 Multiemployer Plan
 NASDAQ
 Order
 Parent Health Care Business
 Parent Health Care Facility
 Parent Material Adverse Effect
 5




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Parent Subsidiary
 Party
 Person
 SEC
 Securities Act
 Subsidiary Subsidiaries
 Superior Proposal provided,
however,
 Surviving Corporation Benefit Plan
 Takeover Proposal
 6




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Taxes
 Tax Returns
 Third Party
 Top-Up Amendment
 Terms Defined Elsewhere
 Adverse Action
    
    Section 4.6.2Agreement
    
    RecitalsCertificate of Merger
    
    Section 2.4Certificates
    
    Section 3.2.2Certification Date
    
    Section 2.3Closing
    
    Section 2.2Closing Date
    
    Section 2.2Company
    
    PreambleCompany Adverse Recommendation Change
    
    Section 6.4.2Company Board
    
    Section 3.5.1(a)Company Bylaws
    
    Section 4.2Company Certificate
    
    Section 4.2Company Common Stock
    
    Section 3.1.1
 7




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Company Disclosure Schedule
    
    Article IVCompany Financial Advisor
    
    Section 4.16Company Form 10-K
    
    Section 4.2Company Leased Premises
    
    Section 4.15Company Material Contract
    
    Section 4.9Company Options
    
    Section 3.5.1(a)(i)Company Owned Properties
    
    Section 4.15Company Preferred Stock
    
    Section 4.3.1Company Properties
    
    Section 4.15Company Recommendation
    
    Section 4.16Company Representatives
    
    Section 6.3.1(a)Company Restricted Stock Awards
    
    Section 3.5.1(a)(ii)Company Rights
    
    Section 3.1.1Company Rights Agreement
    
    Section 3.1.1Company SEC Filings
    
    Section 4.7.1Company Stockholders Meeting
    
    Section 6.2.3Company Subsidiary
    
    Section 4.1Confidentiality Agreement
    
    Section 6.3.2D&O Insurance
    
    Section 6.9.2DGCL
    
    RecitalsDissenting Shares
    
    Section 3.1.1Dissenting Stockholders
    
    Section 3.1.1Effective Time
    
    Section 2.4ERISA
    
    Section 4.8.2Exchange Agent
    
    Section 3.2.1Exchange Fund
    
    Section 3.2.1Government Consents
    
    Section 6.5.2Health Care Laws
    
    Section 4.6.3Health Care Programs
    
    Section 4.6.2IRS
    
    Section 4.8.1Merger
    
    RecitalsMerger Consideration
    
    Section 3.1.1Merger Sub
    
    PreambleOption Payments
    
    Section 3.5.1(a)(i)Parent
    
    PreambleParent Bylaws
    
    Section 5.2Parent Certificate
    
    Section 5.2Parent Form 10-K
    
    Section 5.2Parent Representatives
    
    Section 6.3.1(a)Parent SEC Filings
    
    Section 5.8.1Parent Welfare Benefit Plan
    
    Section 6.8.4Permitted Liens
    
    Section 4.15Property Restrictions
    
    Section 4.15Proxy Statement
    
    Section 4.20Restricted Stock Payments
    
    Section 3.5.1(a)(ii)Severance Policy
    
    Section 6.8.7
 8




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Stockholder Approval
    
    Section 4.4.1Surviving Corporation
    
    Section 2.1Termination Date
    
    Section 8.1(b)(ii)Termination Fee
    
    Section 8.4.1
 Interpretation
           ARTICLE II
THE MERGER
 The Merger
 9




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Surviving Corporation
 Closing Closing Article
VII Closing Date Section
2.2 Article VII Certification Date Section 2.3
 Certification Closing Section 2.3 Section 2.2 Section 7.2.1 Section 7.2.2
 Effective Time Article VII Article VIII Certificate of Merger Effective Time
 Effect of the Merger
 Certificate of Incorporation; Bylaws
 10




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Directors and Officers
 ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
 Conversion of Securities
 Company Common Stock Section 3.1.2 Dissenting Stockholders Company Rights Company Rights Agreement Section 3.2.4 Merger Consideration provided, however, Dissenting
Shares Section 3.3 Section 3.1.2 Section 3.1.2 Section 3.1.2 Section 3.2
   11




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Exchange of Certificates
 Exchange Agent Article III Exchange Fund Section
3.1 provided, however,
 Certificates
 12




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Section 3.2 Section 3.3
  Article III
    13




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Dissenters Rights Section 3.3 Section 3.1
 Stock Transfer Books Section 3.2.2
 Company Equity Awards
  Company Board
 14




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Company Options Schedule 3.5.1(a) Option Payments
 Company Restricted Stock Awards Schedule 3.5.1(a) Restricted Stock Payments provided, however,
 Section
3.5.1 Section 3.5.1 Section
3.5.1(a)
 15




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Section 3.5.1(a) Schedule 3.5.1(b)
 Section
3.5.1 Section 3.5.1
 Section 3.5
 ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 Company Disclosure
Schedule
 16




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Organization and Qualification; Subsidiaries Company Subsidiary Schedule 4.1
 Certificate of Incorporation and Bylaws; Corporate Books Company Certificate Company Bylaws Company Form 10-K
 Capitalization; Subsidiaries
 Company Preferred Stock
 Section 4.3.1 Schedule 4.3.2
 17




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Schedule 4.3.3 Schedule 4.3.3
 Authority
 Stockholder Approval
 Section
5.12
 No Conflict; Required Filings and Consents
  18




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Section
4.5.2 Section 4.5.2 Schedule 4.5.1
 Schedule 4.5.2
 Compliance with Laws
 Schedule 4.6.1 Schedule 4.6.1 19
        Schedule 4.6.2 Health Care Programs Schedule 4.6.2 Schedule 4.6.2 Schedule 4.6.2 Adverse Action
 Section 4.6.3 Health Care Laws
 20




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Schedule 4.6.4
  SEC Filings; Financial Statements
 Company SEC Filings
  21
        Schedule 4.7.4
 Benefit Plans; Employees and Employment Practices
 Schedule 4.8.1 IRS
 ERISA
  Schedule 4.8.4 22
          Schedule 4.8.7 Schedule 4.8.7
  Company Material Contracts Schedule 4.9
 23




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Section 4.9 Schedule 4.9 Company Material Contract
 Litigation Schedule 4.10
 24




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Environmental Matters
 Intellectual Property
 Taxes Schedule 4.13
   25
               26




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Insurance Schedule 4.14
 Real Estate Schedule 4.15 Company Owned Properties Company Leased Premises Company Properties Property Restrictions Permitted Liens Schedule 4.15
 Board Approval Company Financial Advisor
 27




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Company Recommendation
 Brokers
 Absence of Certain Changes Schedule 4.18
 Transactions with Affiliates
 Company Information Proxy
Statement
 28




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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
  Organization and Qualification
 Certificate of Incorporation and Bylaws Parent Certificate Parent Bylaws Parent
Form 10-K
 Authority
 Ownership of Merger Sub; No Prior Activities
 29




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Financing Section 3.5.1(a)
 Vote Required
 No Conflict; Required Filings and Consents
 Section 5.7.2 Section 5.7.2
  30




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SEC Filings; Financial Statements
 Parent SEC Filings
   Licensing
 Litigation
 31




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Brokers
 Ownership of Company Common Stock
 Solvency of the Surviving Corporation
 Parent Information
 32




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ARTICLE VI
ADDITIONAL AGREEMENTS
 Conduct of Business Pending the Closing Section 6.1 Section 6.1 Section 6.1
  Section 6.1(k)
   33




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Section
6.1(k)
  Schedule 6.1(f)
     Schedule 6.1(k)
 34




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Schedule 6.1(l)
    Sections
6.1(e) 6.4
 Proxy Statement; Company Stockholders Meeting
 35
        Section 6.4.2
 Section 6.4.2 Company Stockholders Meeting Section 6.4.2 Section 6.2.3
 Section 6.2
 36




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Section 6.4 Section 6.1
 Access to Information; Confidentiality
  Company Representatives Parent Representatives Exhibit
B.1
  Section 6.3.1
 37




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Confidentiality Agreement Section 6.3.1 Section 6.3.1


No Solicitation of Transactions


Section 6.4 provided, however, Section 6.4 Section 6.4


Section 6.4 Company Adverse Recommendation Change Section 6.4.3 38




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Section 8.1(c)(iii)


Section 6.4.1)




Reasonable Best Efforts


Section
6.4 Article VII Section 6.5 39




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Government Consents Section 6.5.2 Section
6.5.2 Section 6.5.2




40




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Certain Notices


Public Announcements provided, however, Section 6.5.2 provided, further,


Employee Matters


Schedule 6.8.1 Schedule 6.1(k)


41




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provided, however,


Parent Welfare Benefit Plan


Schedule 6.8.5(i) Schedule 6.1(k)




42




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Severance Policy Section 6.8.7


Indemnification of Directors and Officers


provided, however,


D&O Insurance provided, however, Section 6.9.2 provided, further, 43




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Section 6.9.2 Section 6.9.2 provided, Section 6.9.2 Section 6.9.2 Section 6.9.2 provided,


Section 6.9


Section 6.9


Section 6.9


State Takeover Statutes


44



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Company Rights Agreement
 Section 16 Matters Section 16(a)
 Confidentiality Agreement
 Investigation and Agreement by Parent and Merger Sub; No Other
Representations or Warranties
  45
          ARTICLE VII
CLOSING CONDITIONS
 Conditions to Obligations of Each Party Under This Agreement Sections 7.1.3 7.1.4
   Section 7.2.6
 46




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provided, however, Section 6.5 provided,
further,
 Additional Conditions to Obligations of Parent and Merger Sub
   Sections 7.2.1 7.2.2
   Schedule 7.2.6
 Additional Conditions to Obligations of the Company
 47




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Sections 7.3.1 7.3.2
 Frustration of Closing Conditions Article VII
 ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
 Termination Section 8.1
    Termination Date provided, however, Section 8.1(b)(ii)
  48




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Section 8.1(b)(iii) Section
6.5 provided, however, Section 8.1(b)(iii)
  Section 7.3.2 Section 7.3.1
  Section 8.4
  Section 7.2.2 Section
7.2.1
  49




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Section 6.2.3 Section 6.4.1 Section
6.4.3 Section
7.2.2 Section 6.2.3 provided, however, Section 8.1(d)(iii)
 Effect of Termination Section
8.2 Section 8.1 provided, however, Sections 8.2, 8.3,
8.4 8.5 Article IX provided, further,
 Fees and Expenses
 Termination Fee
 Section 8.1(c)(ii) Section 8.1(c)(iii)(x) Section 8.1(d)(ii) Section 8.1(d)(iii) Termination Fee
 50




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Section
8.4 Section 8.4.1
 Specific Performance
 Extension; Waiver Section 8.7 provided, however,
 Amendment provided, however,
 ARTICLE IX
GENERAL PROVISIONS
 Non-Survival of Representations and Warranties
 51




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Article IX Section 3.5 Company Equity Awards Section 6.8 Employee Matters Section 6.9 Indemnification of Directors and
Officers Section 8.3 Fees and Expenses
 Notices
 If to Parent or Merger Sub, addressed to it at:
    
    Psychiatric Solutions, Inc.6640 Carothers Parkway, Suite 500Franklin, Tennessee 37067Attention: Christopher L. HowardFacsimile: (615) 312-5711Email: chris.howard@psysolutions.comwith a mandated copy to:
    
    Waller Lansden Dortch & Davis, LLP511 Union Street, Suite 2700Nashville, Tennessee 37219Attention: George W. Bishop IIIFacsimile: (615) 244-6804Email: george.bishop@wallerlaw.comIf to the Company, addressed to it at:
    
    Horizon Health Corporation2941 S. Lake Vista DriveLewisville, Texas 75067Attention: James Ken NewmanFacsimile: (972) 420-8282Email: ken.newman@horizonhealth.comwith mandated copies to:
    
    Strasburger & Price, L.L.P.901 Main Street, Suite 4400Dallas, Texas 75202Attention: Patrick OwensFacsimile: (214) 651-4330Email: patrick.owens@strasburger.comand to:
    
    Vinson & Elkins L.L.P.Trammel Crow Center2001 Ross Avenue, Suite 3700Dallas, Texas 75201
 52




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Attention: Jeffrey A. ChapmanFacsimile: (214) 999-7797Email: jchapman@velaw.com
 Headings
 Severability
 Entire Agreement
 Third-Party Beneficiaries provided, however, Section 3.5 Section 6.8 Section 6.9 Article III
 Assignment
 Mutual Drafting
 53




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Governing Law; Consent to Jurisdiction
  provided, provided, further, Section 9.2
 Counterparts
 (Remainder of Page Intentionally Left Blank)
 54




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PSYCHIATRIC SOLUTIONS, INC.By:
    
    /s/ Christopher L. HowardName: Christopher L. HowardTitle: EVP, General Counsel & SecretaryPANTHER ACQUISITION SUB, INC.By:
    
    /s/ Christopher L. HowardName: Christopher L. HowardTitle: VP & SecretaryHORIZON HEALTH CORPORATIONBy:
    
    /s/ James Ken NewmanName: James Ken NewmanTitle: Chairman, President and CEO