##### 



AGREEMENT AND PLAN OF MERGER
 between
 APRIA HEALTHCARE, INC.
 APCO, INC.
  CORAM, INC.
 Dated as of October 13, 2007




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



Exhibit A
    
    Form of Certificate of MergerExhibit B
    
    Officers of the Surviving Corporation
 iv




---



##### 



AGREEMENT AND PLAN OF MERGER
 Agreement Acquiror Merger Sub Company
 RECITALS
 Business
 Merger DGCL
  Stockholders Company
Stockholder Approval
 AGREEMENT
  ARTICLE I
DEFINITIONS
 Certain Defined Terms
 Accounts Receivable
 1




---



##### 



Acquisition Proposal
 Action
 Affiliate
 Business Day
 Company Affiliates
 Company Common Stock
 Company Preferred Stock
 Contract
 control controlled by under common control
with
 Controlled Group Liability
 2




---



##### 



Encumbrance
 Environmental Laws
 Environmental Permits
 ERISA Affiliate
 Exchange Act
 Federal Controlled Substances Act
 Federal Food, Drug and Cosmetic Act
 Fully Diluted Shares
 GAAP
 Government Program
 Governmental Authority
 3




---



##### 



Hazardous Substances CERCLA
 Health Care Law
 Health Care Permit
 Immediate Family
 4




---



##### 



Intellectual Property
 knowledge
 Law
 Leased Real Property
 Liquidation Preference
 Liquidation Preference Per Share
 Material Adverse Effect provided that
 5




---



##### 



Merger Consideration
 Option
 ordinary course of business ordinary course
 Owned Real Property
 Per Share Merger Consideration
 Permitted Encumbrances
 Person
 Private Program
 Related Party
 6




---



##### 



Release
 Return
 Subsidiary
 Taxes
 Transaction Expenses
 Table of Definitions
 Definition
    
    LocationAccounts Receivable
    
    1.1Acquiror
    
    PreambleAcquisition Proposal
    
    1.1Action
    
    1.1Affiliate
    
    1.1Agreement
    
    PreambleAHG
    
    4.4Balance Sheet Date
    
    3.6(a)
 7




---



##### 



Definition
    
    LocationBonus Plan
    
    5.11(d)Business
    
    RecitalsBusiness Day
    
    1.1CCA
    
    3.26(d)CERCLA
    
    1.1Certificate of Merger
    
    2.2(b)Certificates
    
    2.10(b)CIA
    
    3.26(d)Closing
    
    2.2(a)Closing Date
    
    2.2(a)Code
    
    3.12(b)Common Shares
    
    2.7Company
    
    PreambleCompany Common Stock
    
    1.1Company Preferred Stock
    
    1.1Company Stockholder Approval
    
    RecitalsConfidentiality Agreement
    
    5.7Contract
    
    1.1control
    
    1.1Controlled Group Liability
    
    1.1Current Policies
    
    5.12(c)DGCL
    
    RecitalsDisclosure Letter
    
    Article IIIDissenting Shares
    
    2.8Effective Time
    
    2.2(b)Encumbrance
    
    1.1Environmental Laws
    
    1.1Environmental Permits
    
    1.1ERISA
    
    3.12(a)(i)ERISA Affiliate
    
    1.1Exchange Act
    
    1.1Federal Controlled Substances Act
    
    1.1Federal Food, Drug and Cosmetic Act
    
    1.1Financial Statements
    
    3.6(a)Fully Diluted Shares
    
    1.1GAAP
    
    1.1Government Program
    
    1.1Governmental Agreements
    
    3.26(d)Governmental Authority
    
    1.1Hazardous Substances
    
    1.1Health Care Law
    
    1.1Health Care Permit
    
    1.1HSR Act
    
    3.3(b)Immediate Family
    
    1.1Indemnified Party
    
    5.12(b)
 8




---



##### 



Definition
    
    LocationIntellectual Property
    
    1.1Interim Financial Statements
    
    3.6(a)IRS
    
    3.12(b)knowledge
    
    1.1Law
    
    1.1Leased Real Property
    
    1.1Letter of Transmittal
    
    2.10(b)Liquidation Preference
    
    1.1Liquidation Preference Per Share
    
    1.1Material Adverse Effect
    
    1.1Material Contracts
    
    3.19(a)Merger
    
    RecitalsMerger Consideration
    
    1.1Merger Sub
    
    PreambleMultiemployer Plan
    
    3.12(c)Multiple Employer Plan
    
    3.12(c)Option
    
    1.1ordinary course of business
    
    1.1Owned Real Property
    
    1.1Paying Agent
    
    2.10(a)Paying Agent Agreement
    
    2.10(a)Per Share Merger Consideration
    
    1.1Permits
    
    3.10(b)Permitted Encumbrances
    
    1.1Person
    
    1.1Plans
    
    3.12(a)Preferred Shares
    
    2.7Private Program
    
    1.1Programs
    
    3.23(c)Related Party
    
    1.1Release
    
    1.1Remuneration
    
    3.26(f)Representatives
    
    5.2Return
    
    1.1Rights
    
    3.26(b)Shares
    
    2.7Stockholders
    
    PreambleSubsidiary
    
    1.1Surviving Corporation
    
    2.1Taxes
    
    1.1Termination Date
    
    8.1(d)Transaction Expenses
    
    1.1
 9




---



##### 



ARTICLE II
THE MERGER
 The Merger Surviving Corporation
 Closing; Effective Time
 Closing Closing Date
 Exhibit A Certificate of Merger Effective
Time
 Effects of the Merger
 Certificate of Incorporation and Bylaws
 10




---



##### 



Directors; Officers Exhibit B
 Subsequent Actions
 Conversion of Stock Common Shares Preferred Shares Shares
     11




---



##### 



Dissenting Shares Dissenting
Shares
 Options
 Payment for Shares
 Paying Agent Paying
Agent Agreement
 12




---



##### 



Certificates Letter of Transmittal
  13




---



##### 



provided however
  Withholding Rights
 ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
 Disclosure Letter
 Organization and Qualification
  14




---



##### 



Authority
    No Conflict; Required Filings and Consents
  15




---



##### 



HSR Act
  Capitalization
  16




---



##### 



Equity Interests
 17




---



##### 



Financial Statements; No Undisclosed Liabilities
 Financial Statements Balance Sheet Date Interim Financial Statements
    18




---



##### 



Accounts Receivable
 Customers and Suppliers
   Absence of Certain Changes or Events
 19




---



##### 



Compliance with Law; Permits
  Permits
 Litigation
 20




---



##### 



Employee Benefit Plans
 ERISA Plans
 IRS Code
 Multiemployer Plan Multiple Employer Plan
 21




---



##### 



22




---



##### 



Labor and Employment Matters
   23




---



##### 



Assets
  24




---



##### 



Real Property
   Intellectual Property
   25




---



##### 



Taxes
    26




---



##### 



27




---



##### 



Environmental Matters
   28




---



##### 



Material Contracts
 Material
Contracts
      29




---



##### 





























30



---



##### 



Affiliate Interests and Transactions
  31




---



##### 



Insurance
 Brokers
 Health Care Matters
  32




---



##### 



Programs
  Inspections and Investigations
 33




---



##### 



Rates and Reimbursements
 Regulatory Matters
  Rights
  34




---



##### 



CIA CCA Governmental Agreements
 Remuneration
 35




---



##### 



36




---



##### 



Inventory
 ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND MERGER SUB
  Organization
 Authority
 No Conflict; Required Filings and Consents
     37




---



##### 



Financing AHG
 Brokers
 ARTICLE V
COVENANTS
 Conduct of Business Prior to the Closing
 38




---



##### 



provided however
        39




---



##### 



provided
    provided
     40




---



##### 



Access to Information Representatives
 Exclusivity
 41




---



##### 



Notification of Certain Matters
   42




---



##### 



Takeover Statutes
 Stock Option Plans
 Confidentiality Confidentiality Agreement
 Reasonable Best Efforts
  43




---



##### 



44




---



##### 



Public Announcements
 Financing
  45




---



##### 



Employees
 provided provided further
  46




---



##### 



Bonus Plan
  47




---



##### 



Indemnification and Insurance
 provided however
 Indemnified Party provided however
 48




---



##### 



Current Policies provided
    Section 280G Stockholder Approval
 ARTICLE VI
CONDITIONS TO CLOSING
 General Conditions
 49




---



##### 



provided
 No Injunction or Prohibition
 Regulatory Approvals
 Conditions to Obligations of the Company
 Representations, Warranties and Covenants
 Conditions to Obligations of the Acquiror and Merger Sub
 Representations, Warranties and Covenants de minimis
 50




---



##### 



Stockholder Approval ultra vires
 No Material Adverse Effect
 Consents and Approvals Schedule 2
 Election Filed and Certification Schedule 3
 ARTICLE VII
SURVIVAL
 Survival of Representations, Warranties and Covenants provided however
 51




---



##### 



ARTICLE VIII
TERMINATION
 Termination
   provided
 Termination Date provided however
 provided
  52




---



##### 



Effect of Termination provided
 ARTICLE IX
GENERAL PROVISIONS
 Fees and Expenses provided however provided further
 Amendment and Modification provided however
 Extension
 Waiver
 53




---



##### 



Notices
 (a)
    
    if to the Acquiror, Merger Sub or the Surviving Corporation, to:
Apria Healthcare, Inc.
26220 Enterprise Court
Lake Forest, California 92630
Attention: General Counsel
Facsimile: (949) 639-4332
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: Jeffrey Le Sage
Facsimile: (213) 229-6504(b)
    
    if to Company, to:
Coram, Inc.
1675 Broadway, Suite 900
Denver, Colorado 80202
Attention: Michael Dell
Facsimile: (303) 298-0043
with a copy (which shall not constitute notice) to:
Wachtell, Lipton Rosen & Katz
51 W. 52nd Street
New York, New York 10019
Attention: Mark Gordon
Facsimile: (212) 403-2343
 54




---



##### 



Interpretation
 Entire Agreement
  No Third-Party Beneficiaries
 Governing Law
 Enforcement
 Assignment; Successors
 55




---



##### 



provided however provided further
 Currency
 Severability
 Waiver of Jury Trial
 Counterparts
 Facsimile Signature
 Time of Essence
 No Presumption Against Drafting Party
 The remainder of this page is intentionally left blank.
 56




---



##### 



APRIA HEALTHCARE, INC.By:
    /s/ Lawrence M. HigbyName:
    Lawrence M. HigbyTitle:
    President and Chief Executive Officer APCO, INC.By:
    /s/ Lawrence M. HigbyName:
    Lawrence M. HigbyTitle:
    President and Chief Executive Officer CORAM, INC.By:

/s/
John J. ArlottaName:
    John J. ArlottaTitle:
    Chairman, President & CEO Signature Page to Merger Agreement