10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2005

or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number: 0-24260

AMEDISYS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 11-3131700
(I.R.S. Employer Identification No.)

11100 Mead Road, Suite 300, Baton Rouge, LA 70816
(Address of principal executive offices including zip code)

(225) 292-2031
(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

Number of shares of common stock, par value $.001, outstanding as of April 29, 2005: 15,468,880 shares

PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004	1
Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004	2
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004	3
Notes to Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3. Quantitative and Qualitative Disclosures about Market Risks	15
Item 4. Controls and Procedures	15
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings	15
Item 2. Changes in Securities and Use of Proceeds	15
Item 3. Defaults Upon Senior Securities	15
Item 4. Submission of Matters to a Vote of Security Holders	15
Item 5. Other Information	15
Item 6. Exhibits and Reports on Form 8-K	15
Asset Purchase Agreement
Amendment No. 2 to Credit Agreement
Amendment No. 3 to Credit Agreement
Agreement to Purchase Real Estate
Act of Cash Sale of Real Estate
Employment Agreement
Certification of William F. Borne, CEO
Certification of Gregory H. Browne, CFO
Certification of William F. Borne, CEO
Certification of Gregory H. Browne, CFO

Item 1. FINANCIAL STATEMENTS

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
As of March 31, 2005 and December 31, 2004
(Amounts in thousands, except share data)

	(Unaudited)
	March 31,			December 31,
	2005			2004
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents	$	78,917		$	89,679
Patient accounts receivable, net of allowance for doubtful accounts of $4,216 at March 31, 2005 and $3,751 at December 31, 2004		24,848			24,478
Prepaid expenses		3,572			1,356
Inventory and other current assets		2,838			3,377
Total current assets		110,175			118,890
Property and equipment, net		14,677			10,003
Goodwill		80,065			62,537
Intangible assets, net of accumulated amortization of $1,549 at March 31, 2005 and $1,177 at December 31, 2004		6,621			4,447
Other assets		6,188			3,856
Total assets	$	217,726		$	199,733
LIABILITIES AND STOCKHOLDERS’ EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	4,419		$	6,681
Accrued expenses:
Payroll and payroll taxes		14,920			11,914
Insurance		5,438			4,663
Income taxes		2,619			271
Legal settlements		2,013			1,833
Other		4,955			3,822
Current portion of long-term debt		3,396			1,689
Current portion of obligations under capital leases		250			423
Medicare liabilities		9,263			9,327
Current portion of deferred income taxes		863			1,353
Total current liabilities		48,136			41,976
Long-term debt		2,066			1,380
Obligations under capital leases		189			329
Deferred income taxes		7,711			6,749
Other long-term liabilities		826			826
Total liabilities		58,928			51,260
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $.001 par value, 30,000,000 shares authorized; 15,449,454 and 15,310,547 shares issued and 15,445,287 and 15,306,380 shares outstanding at March 31, 2005 and December 31, 2004, respectively		15			15
Additional paid-in capital		135,696			132,032
Treasury stock at cost, 4,167 shares of common stock at March 31, 2005 and December 31, 2004, respectively		(25	)		(25	)
Unearned compensation		(449	)		—
Retained earnings		23,561			16,451
Total stockholders’ equity		158,798			148,473
Total liabilities and stockholders’ equity	$	217,726		$	199,733

See accompanying notes to consolidated financial statements.

1

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 2005 and 2004
(Amounts in thousands, except per share data)

	(Unaudited)
	For the three months
	ended March 31
	2005			2004
Income:
Net service revenue	$	70,437		$	47,339
Cost of service revenue (excluding depreciation and amortization)		28,461			19,480
Gross margin		41,976			27,859
General and administrative expenses:
Salaries and benefits		18,005			12,557
Other		12,459			8,397
Total general and administrative expenses		30,464			20,954
Operating income		11,512			6,905
Other income (expense):
Interest income		381			52
Interest expense		(145	)		(124	)
Miscellaneous, net		(15	)		(4	)
Total other income (expense), net		221			(76	)
Income before income taxes		11,733			6,829
Income tax expense		4,623			2,608
Net income	$	7,110		$	4,221
Earnings per common share:
Basic	$	0.46		$	0.35
Diluted	$	0.45		$	0.34
Weighted average common shares outstanding
Basic		15,390			12,006
Diluted		15,740			12,536

See accompanying notes to consolidated financial statements.

2

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2005 and 2004
(Amounts in thousands)

	(Unaudited)
	Three months ended
	March 31
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,110		$	4,221
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,332			894
Provision for bad debts		648			743
Deferred income taxes		472			1,327
Tax benefit from stock option exercises		341			880
Compensation expense		69			20
Loss on disposals of property and equipment		38			6
Changes in assets and liabilities:
(Increase) in accounts receivable		(1,018	)		(451	)
(Increase) in inventory and other current assets		(1,588	)		(369	)
(Increase) in other assets		(2,363	)		(470	)
(Decrease) increase in accounts payable		(2,262	)		1,670
Increase in accrued expenses		7,913			1,614
(Decrease) increase in Medicare liabilities		(64	)		4
Net cash provided by operating activities		10,628			10,089
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		115			3
Purchase of property and equipment		(5,518	)		(625	)
Cash used in purchase acquisitions, net		(15,743	)		(14,151	)
Net cash used in investing activities		(21,146	)		(14,773	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		—			417
Payments on notes payable and capital leases		(820	)		(1,773	)
Costs associated with equity offerings		(21	)		(23	)
Proceeds from issuance of stock from Employee Stock Purchase Plan		291			153
Proceeds from issuance of stock upon exercise of stock options and warrants		306			819
Net cash used in financing activities		(244	)		(407	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(10,762	)		(5,091	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		89,679			29,229
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	78,917		$	24,138
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	68		$	109
Income taxes, net of refunds received	$	1,546		$	300
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND INVESTING ACTIVITIES
Stock issued as contributions to the Company’s 401(k) Plan	$	729		$	110
Stock issued for acquisitions	$	1,500		$	—
Notes payable issued for acquisitions	$	2,900		$	—
Capital leases entered into	$	—		$	105

See accompanying notes to consolidated financial statements.

3

AMEDISYS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

1. Organization and Nature of Operations

     Amedisys, Inc. and subsidiaries (“Amedisys” or the “Company”) is a provider of home health care and hospice services. At March 31, 2005, the Company operated 122 home care nursing and two hospice offices and two corporate offices in the southern and southeastern United States. The Company operates in one reporting segment.

     In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the Company’s financial position at March 31, 2005, the results of operations for the three months ended March 31, 2005 and 2004, and cash flows for the three months ended March 31, 2005 and 2004. The results of operations for the interim periods presented are not necessarily indicative of results of operations for the entire year. These interim consolidated financial statements should be read in conjunction with the Company’s annual financial statements and related notes in the Company’s Form 10-K/A for the year ended December 31, 2004.

2. Revenue Recognition

     The Company provides home health care services and hospice services. For the three months ended March 31, 2005 and 2004, home health care revenues comprised approximately 98% and 100%, respectively, of total net service revenue. The Company began providing hospice services in the second quarter of fiscal 2004 with the acquisition of two hospice agencies from Tenet Healthcare Corporation (see Note 6 to the consolidated financial statements for further information).

     The Company derived 93% and 92% of its net service revenue from Medicare for the three months ended March 31, 2005 and 2004, respectively.

     Described below are the Company’s revenue recognition policies related to Medicare and non-Medicare home health care and hospice services.

  Medicare Revenue Recognition

     Since October 2000, with the implementation of the Medicare Prospective Payment System (“PPS”), the Company has been paid by Medicare based on episodes of care. An episode of care is defined as a length of care up to 60 days with multiple continuous episodes allowed. A base episode payment is established by the Medicare Program through federal legislation for all episodes of care ended on or after the applicable time periods detailed below:

Period Beginning	Base episode payment
October 1, 2000 through March 31, 2001	$2,115 per episode
April 1, 2001 through September 30, 2001	$2,264 per episode
October 1, 2001 through September 30, 2002	$2,274 per episode
October 1, 2002 through September 30, 2003	$2,159 per episode
October 1, 2003 through March 31, 2004	$2,231 per episode
April 1, 2004 through December 31, 2004	$2,213 per episode
January 1, 2005 through December 31, 2005	$2,264 per episode

     The provision in the Benefits Improvement and Protection Act whereby home health providers received a 10% increase in reimbursement that began April 2001 for serving patients in rural areas expired March 31, 2003; however, in April 2004, a 5% increase in reimbursement was reinstated for a one-year period through March 31, 2005. Effective for episodes ending on or after April 1, 2005, the 5% increase in reimbursement for serving patients in rural areas is no longer applicable. Patients in rural areas account for approximately 29.5% of the Company’s patient population as of March 31, 2005.

     Medicare reimbursement rates are subject to change. The applicability of a reimbursement rate change depends upon the completion date of the episode and generally applies to all episodes ending after the effective date of the change. Therefore, any change in Medicare reimbursement, positive or negative, will impact the financial results of the Company up to 60 days in advance of the effective date of such change, and the impact of a change could be material.

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     The base episode payment as shown above is adjusted by a number of factors including, but not limited to, the following: a case mix adjuster consisting of 80 home health resource groups (“HHRG”), the applicable geographic wage index (to give effect to geographic differences in wage levels), low utilization (either expected or unexpected), intervening events, such as a significant change in the patient’s condition and other factors. Patients are assigned to HHRG’s that are designed to reflect the patient’s case severity level based on a patient’s clinical, functional and service utilization characteristics. The episode payment is also adjusted if a patient is either readmitted by the Company, or admitted to another home health agency, prior to the expiration of 60 days from the original admission date—these reimbursement adjustments are known as partial episode payments. As a result, the actual payment to the Company is different from the base episode payments listed above, but generally a decrease in a base episode payment will result in a decrease in actual episode payments. The episode payment will be made to providers regardless of the cost to provide care. The services covered by the episode payment include all disciplines of care, in addition to medical supplies, within the scope of the home health benefit.

     A portion of the cash reimbursement from each Medicare episode is typically received before all services are rendered. The estimated episodic payment is billed at the commencement of the episode. Medicare reimburses 60% of the estimated reimbursement at the initial billing for the initial episode of care per patient and the remaining reimbursement is received upon completion of the episode and upon final billing. Medicare reimburses 50% at initial billing for any subsequent episodes of care for a previously admitted patient immediately following the first episode of care for a patient. The remaining 50% reimbursement is received upon completion of the episode and upon final billing.

     Revenue is recorded as services are provided to a patient. Amounts billed and/or received in advance of services performed are recorded as deferred revenue. The amount of deferred revenue at March 31, 2005 and December 31, 2004 was $19.0 million and $14.9 million, respectively. These deferred revenue amounts have been recorded as a reduction to accounts receivable in the accompanying Consolidated Balance Sheets since only a nominal amount of deferred revenue represents cash collected in advance of providing services. For episodes of care that are completed, all of the revenue expected to be received for that episode is recognized. The amount of revenue recognized for episodes of care which are incomplete at period end is based on an estimate of the portion of the episode which applies to the period, and is calculated based upon total visits performed to date as a percentage of total expected visits for a particular episode. Management believes that this is a reasonable estimate for revenue with respect to services provided for incomplete episodes, and for which reimbursement will be ultimately received. Because of the potential for changes in base episode payments referred to above and the complexity of the regulations noted above, the estimated amounts originally recorded as net patient revenue and accounts receivable may be subject to revision as additional information becomes known.

     During 2003, the Centers for Medicare and Medicaid Services, or CMS, informed home health care providers that it intended to make certain recoveries of amounts overpaid to providers for the periods dating from the implementation of PPS on October 1, 2000 through particular dates in 2003 and 2004. The first of these amounts related to partial episode payments (“PEPs”), whereby a patient was readmitted to a home health care agency prior to the passing of 60 days from the previous admission date at another home health agency. In such instances, reimbursement for the first agency is reduced. CMS advised the industry that CMS had implemented changes to its computer system such that the proper adjustment would be made at the time of claim submission on an ongoing basis, and that recovery for prior overpayments would commence in the summer of 2003 and extend over a two-year period. The Company reserved, based on information supplied by CMS, approximately $1.0 million in 2003 for all claims dating from October 1, 2000. Through March 31, 2005, CMS has recouped approximately $115,000 of the above estimated overpayments. The Company cannot predict the actual timing of future collections initiated by CMS. Secondly, CMS advised the industry that it would seek recovery of overpayments that were made for patients who had, within 14 days of such admission, been discharged from inpatient facilities, including hospitals, rehabilitation and skilled nursing units, and that these recoveries would commence in April 2004. This date was subsequently extended to 2005. CMS will provide at least five weeks notice of any impending recovery. To date no notice has been received by the Company. The Company conducted an analysis of a sample of claims where and when these events had occurred, and estimated that, for all periods dating from October 1, 2000 through December 31, 2003, a reserve in the amount of approximately $1.5 million was appropriate. These reserves are recorded in current portion of Medicare liabilities in the accompanying Consolidated Balance Sheets.

     Prior to the implementation of PPS on October 1, 2000, reimbursement for home health care services to patients covered by the Medicare program was based on reimbursement of allowable costs subject to certain limits. Final reimbursement was determined after submission of annual cost reports and audits thereof by the fiscal intermediaries. Retroactive adjustments have been accrued on an estimated basis in the period the related services were rendered and will be adjusted in future periods, as final settlements are determined. Estimated settlements for cost report years ended 1997 and subsequent years, which are still subject to audit by the intermediary and the Department of Health and Human Services, are recorded in current Medicare liabilities in the accompanying Consolidated Balance Sheets. Under the new PPS rules, annual cost reports are still required as a condition of participation in the Medicare program. However, there are no final settlements or retroactive adjustments based on the submitted annual cost reports.

5

  Non-Medicare Revenue Recognition

     The Company has agreements with third party payors that provide payments for services rendered to the Company at amounts different from established rates. Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the Company’s established rates or estimated reimbursement rates, as applicable. Allowances and contractual adjustments are recorded for the difference between the established rates and the amounts estimated to be payable by third parties and are deducted from gross revenue to determine net service revenue. Net service revenue is the estimated net amounts realizable from patients, third party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements. Reimbursement from all sources (except Medicare as noted above) is typically billed and revenue is recorded as services are rendered and is based upon discounts from established rates.

  Hospice Revenue Recognition

     Services are billed to Medicare, Medicaid and private payors generally on a daily basis. The hospice locations are subject to limits for payments. For inpatient services the limit is based on inpatient care days. If inpatient care days provided to patients at a hospice exceed 20% of the total days of hospice care provided for the year, then payment for days in excess of this limit are paid at the routine home care rate.

     Overall payments made by Medicare are also subject to a cap amount calculated by the Medicare fiscal intermediary at the end of the hospice cap period. The hospice cap period runs from November 1st of each year through October 31st of the following year. Total Medicare payments during this period are compared to the cap amount for this period. Payments in excess of the cap amount must be returned to Medicare. The cap amount is calculated by multiplying the number of beneficiaries electing hospice care during the period by a statutory amount that is indexed for inflation. The per beneficiary cap amount was $19,636 for the twelve month period ending October 31, 2004. The hospice cap amount is computed on a hospice-by-hospice basis. Any amounts received in excess of this per beneficiary cap must be refunded to Medicare. The Company did not receive any amounts in excess of this per beneficiary cap for the twelve month period ending October 31, 2004. The per beneficiary cap for the twelve month period ending October 31, 2005 has not yet been published.

3. Use of Estimates

     The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States. In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

4. New Accounting Pronouncements

     In December 2004, the FASB issued Statement of Financial Accounting Standard No. 123(R), or SFAS 123(R), Share-Based Payment. This standard will require companies to recognize compensation cost for stock options and other stock-based awards based on their value as measured on the grant date. The new standard prohibits companies from accounting for stock-based compensation under the provisions of APB 25. Under the provisions of SFAS 123(R), the Company is required to adopt SFAS 123(R) on July 1, 2005, although earlier adoption is permitted. However, On April 14, 2005, the Securities and Exchange Commission (the “Commission”) announced the adoption of a new rule that amends the compliance dates for SFAS 123(R). The Commission’s new rule allows companies to implement SFAS 123(R) at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. This means that the consolidated financial statements of Amedisys do not need to reflect the adoption of SFAS 123(R) until the interim consolidated financial statements for the first quarter of 2006 are filed with the Commission, although earlier adoption is permitted.

     Upon adoption, two transition methods are available. Under the modified-prospective method, companies will be required to apply the provisions of SFAS 123(R) to all share-based payments that are granted, modified or settled after the date of adoption. Under the modified-retrospective transition method, companies may restate prior periods by recognizing compensation cost in the amounts previously reported in the pro-forma footnote disclosures required by SFAS 123. New awards and unvested awards would be accounted for in the same manner as the modified-prospective method.

6

     The Company is in the process of reviewing the provisions of SFAS 123(R), and currently has made no definitive decisions regarding the possibility of early adoption. The Company is also in the process of evaluating the transition methods and option valuation models available.

5. Earnings Per Share

     Earnings per common share are based on the weighted average number of shares outstanding during the period. The following table sets forth the computation of basic and diluted net income per common share for the three month periods ended March 31, 2005 and 2004 (amounts in thousands, except per share amounts):

	Three months ended
	March 31
	2005		2004
Basic Net Income per Share:
Net Income	$	7,110	$	4,221
Weighted Average Number of Shares Outstanding		15,390		12,006
Net Income per Common Share – Basic	$	0.46	$	0.35
Diluted Net Income per Share:
Net Income	$	7,110	$	4,221
Weighted Average Number of Shares Outstanding		15,390		12,006
Effect of Dilutive Securities:
Stock Options		330		387
Warrants		20		143
Weighted Average Number of Shares Outstanding – Diluted		15,740		12,536
Net Income per Common Share – Diluted	$	0.45	$	0.34

     For the three months ended March 31, 2005, there were 51,036 additional potentially dilutive securities that were anti-dilutive. There were no potentially dilutive securities for the same three month period in 2004.

6. Acquisitions

     Each of the following acquisitions was completed pursuant to the Company’s strategy of achieving market dominance in the southern and southeastern United States through expansion of its service base and the enhancement of its position in certain geographic areas as a leading provider of home health nursing services. The purchase price of each acquisition was determined based on the Company’s analysis of comparable acquisitions and the acquisition target’s expected cash flows. Each purchase agreement with the seller is typically executed with separate non-compete agreements of at least two years in duration. Goodwill generated from the acquisitions was recognized given the expected contributions of each acquisition to the overall corporate strategy and is expected to be fully tax deductible. Each of the acquisitions completed was accounted for as a purchase and is included in the Company’s financial statements based on its respective acquisition date.

     2005 Acquisitions

     1. Effective February 1, 2005, the Company entered into an agreement to purchase certain assets and certain liabilities of 10 home health agencies from several affiliated companies operating as Winyah Health Care Group in South Carolina for $13.0 million in cash, 50,744 shares of Amedisys restricted stock valued at $1.5 million, and the issuance of a $2.0 note payable to the seller. In connection with the acquisition, the Company recorded substantially all of the purchase price as goodwill ($13.9 million) and other intangibles ($2.2 million) in the first quarter of 2005. This allocation of purchase price is preliminary as the Company is awaiting a valuation analysis of the intangible assets acquired.

     2. Effective March 1, 2005, the Company entered into an agreement to purchase certain assets and certain liabilities of a single home health agency from the North Arundel Hopital Association in Maryland for $3.0 million in cash and the issuance of a $0.9 note payable to the seller. The acquisition represents Amedisys’ initial entry into Maryland, which is a Certificate of Need state. In connection with the acquisition, the Company recorded substantially all of the purchase price as goodwill ($3.5 million) and other intangibles ($0.4 million) in the first quarter of 2005.

7

     2004 Acquisitions

     1. On January 5, 2004, the Company entered into an agreement to purchase certain assets and certain liabilities of 11 home health agencies and two hospice agencies (the “Acquired Entities”) that operated as departments of individual hospitals (the “Sellers”) owned by Tenet Healthcare Corporation. Subsequent to January 5, 2004, the Company and the Sellers agreed to exclude one of the home health agencies from the Acquired Entities. The Acquired Entities are Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Broward County, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc. The Company had no material relationship with the Sellers or any of their affiliates prior to this transaction.

     The transaction closed in three stages. Control over the first four agencies was transferred effective March 1, 2004. The second group was transferred effective April 1, 2004, with the final transfer effective May 1, 2004. The purchase price of approximately $19.1 million was comprised of $14.2 million in cash at initial closing, with the balance paid in two equal installments on April 1, 2004 and May 1, 2004. Total transaction costs capitalized as part of the purchase price of $0.5 million.

     Tangible assets acquired and liabilities assumed are immaterial to the purchase price. The Company has allocated approximately $18.9 million of the purchase price to goodwill ($16.7 million) and other intangibles ($2.2 million).

     2. Effective April 1, 2004, the Company acquired certain assets and liabilities of Hillcrest Medical Center (“Hillcrest”) associated with its home health care operations in Tulsa, Oklahoma, for which the Company paid $375,000 cash at closing with a deferred payment of $75,000 made on June 25, 2004. In connection with this acquisition, the Company recorded substantially the entire purchase price as goodwill ($413,000) and other intangibles ($27,000) in the second quarter of 2004.

     3. Effective June 1, 2004, the Company acquired a single home health agency in Vicksburg, Mississippi, from River Region Health System (“River Region”) for $1.65 million in cash. In connection with the acquisition, the Company recorded substantially the entire purchase price as goodwill ($1.4 million) and other intangibles ($0.2 million) in the second quarter of 2004.

     4. Effective September 1, 2004, the Company acquired a home health agency with three locations in Richmond, Virginia, from Freedom Home Health (“Freedom”) for $6.6 million. Of the $6.6 million purchase price, $4.6 million was paid in cash; the Company issued a $1.3 million note payable and issued $0.7 million of Amedisys restricted stock. In connection with the acquisition, the Company recorded substantially the entire purchase price as goodwill ($5.9 million) and other intangibles ($0.6 million) in the third quarter of 2004.

     5. Effective October 1, 2004, the Company acquired two home health agencies from Winyah Health Care Group for approximately $3.5 million in cash. The agencies are located in Augusta, Georgia and Clinton, South Carolina. In connection with the acquisition, the Company recorded substantially all of the purchase price as goodwill ($2.8 million) and other intangibles ($0.6 million) in the fourth quarter of 2004.

     6. Effective December 1, 2004, the Company acquired a single home health agency in Winston-Salem, North Carolina from In Home Care for approximately $1 million in cash. Substantially all of the purchase price was recorded as goodwill ($0.7 million) and other intangibles ($0.2 million) in the fourth quarter of 2004.

7. Goodwill and Other Intangible Assets:

     The following table summarizes the activity related to goodwill and other intangible assets for the three months ended March 31, 2005 (amounts in thousands).

					Acquired
			Certificates		Name of		Non-Compete
	Goodwill		of Need		Business		Agreements (1)
Balances at December 31, 2004	$	62,537	$	2,525	$	200	$	1,722
Additions		17,528		1,400		—		1,146
Amortization		—		—		—		(372	)
Balances at March 31, 2005	$	80,065	$	3,925	$	200	$	2,496

(1) The weighted-average amortization period of non-compete agreements is 2.1 years.

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The estimated aggregate amortization expense for each of the following periods is as follows (amounts in thousands):

Nine months ending December 31, 2005	$	1,250
Year ending December 31, 2006		1,110
Year ending December 31, 2007		112
Year ending December 31, 2008		24
Total	$	2,496

8. Stockholders’ Equity

     The following table summarizes the activity in Stockholders’ Equity for the three months ended March 31, 2005 (amounts in thousands, except share information):

			Common		Additional											Total
	Common		Stock		Paid-in			Treasury			Unearned			Retained		Stockholders’
	Stock Shares		Amount		Capital			Stock			Compensation			Earnings		Equity
Balance, December 31, 2004		15,310,547	$	15	$	132,032		$	(25	)	$	—		$	16,451	$	148,473
Issuance of stock for Employee Stock Purchase Plan		11,052		—		291			—			—			—		291
Issuance of stock for 401(k) match		22,513		—		729			—			—			—		729
Exercise of stock options		37,547		—		306			—			—			—		306
Issuance of stock as compensation		384		—		14			—			—			—		14
Tax benefit from stock option exercises		—		—		341			—			—					341
Issuance of stock in conjunction with acquisitions		50,744		—		1,500			—			—					1,500
Issuance of restricted stock		16,667		—		504			—			(449	)		—		55
Costs associated with equity offering		—		—		(21	)		—			—			—		(21	)
Net income		—		—		—			—			—			7,110		7,110
Balance, March 31, 2005		15,449,454	$	15	$	135,696		$	(25	)	$	(449	)	$	23,561	$	158,798

9. Stock-Based Compensation

     The Company has two stock option plans, the Amedisys, Inc. 1998 Stock Option Plan and the Amedisys, Inc. Directors Stock Option Plan (collectively, “the Plans”). The Company accounts for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), and Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“SFAS 148”) permit the continued use of the intrinsic value-based method prescribed by APB 25, but require additional disclosures, including pro-forma calculations of earnings and net earnings per share as if the fair value method of accounting prescribed by SFAS 123 had been applied (see also Note 4, “New Accounting Pronouncements”). The following table illustrates the effect on net income and earnings per share if the Company had recognized compensation expense for the Plans using the fair-value recognition method in SFAS 123 (amounts in thousands, except per share amounts):

	Three months ended March 31
	2005			2004
Net income:
As reported	$	7,110		$	4,221
Add: Stock-based employee compensation expense included in reported net income, net of taxes		42			12
Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of taxes(1)		(3,043	)		(389	)
Pro forma		4,109			3,844
Basic earnings per share:
As reported		0.46			0.35
Pro forma		0.27			0.32
Diluted earnings per share:
As reported		0.45			0.34
Pro forma		0.26			0.31

(1) Options to purchase 402,554 shares were issued during the three month period ended March 31, 2005, compared to options to purchase 221,598 shares were issued in last year’s first quarter. Of the options issued during this year’s first quarter, options to purchase 351,518 shares were issued with immediate vesting compared to options to purchase 41,165 shares were issued with immediate vesting in the prior year first quarter. All other option grants were issued with ratable vesting periods over an 18-month to three-year period.

9

	Three months ended March 31
	2005			2004
Black-Scholes option pricing model assumptions:
Risk free interest rate		3.53-5.16	%		3.55-5.16	%
Expected life (years)		5-10			10
Volatility		42.30-105.71	%		48.38-110.35	%
Expected annual dividend yield		—			—

10. Guarantees

     At March 31, 2005, the Company has issued guarantees totaling $1,450,000 related to office leases of subsidiaries compared to $1,645,000 at December 31, 2004. Approximately $86,000 of these amounts at March 31, 2005 and December 31, 2004, respectively, are related to guarantees on locations that have been sold, and the Company has the right to recover amounts under the sale agreements from the buyers, if payments are requested. The Company has not received any requests to make payments under these guarantees. Approximately $89,000 at both March 31, 2005 and December 31, 2004, is related to locations that have been closed and the landlords have obtained judgments against the Company for unpaid rent. The Company has reserved these amounts in “Legal settlements” on the Consolidated Balance Sheets at March 31, 2005 and December 31, 2004.

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included herein, the consolidated financial statements and notes and the related Management’s Discussion and Analysis and the Company’s Risk Factors in the Company’s Form 10-K/A for the year ended December 31, 2004.

     The Company’s Annual Report on Form 10-K/A for the year ended December 31, 2004 describes the accounting policies that management believes are most critical to our financial position and operating results and that require management’s most difficult, subjective or complex judgments and estimates. Actual results could differ materially from these judgments and estimates. The significant accounting policies include: revenue recognition; collectibility of accounts receivable; insurance and litigation reserves; goodwill and other intangible assets; and income taxes. This quarterly report should be read in conjunction with the discussion of Critical Accounting Policies contained in the Company’s Form 10-K/A for the year ended December 31, 2004.

FORWARD LOOKING STATEMENTS

     When included in this Quarterly Report on Form 10-Q or in documents incorporated herein by reference, the words “expects”, “intends”, “anticipates”, “believes”, “estimates”, and analogous expressions are intended to identify forward-looking statements. Such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, general economic and business conditions, current cash flows and operating deficits, debt service needs, adverse changes in federal and state laws relating to the health care industry, competition, regulatory initiatives and compliance with governmental regulations, patient preferences and various other matters, many of which are beyond the Company’s control. These forward-looking statements speak only as of the date of the Quarterly Report on Form 10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or any changes in the Company’s expectations with regard thereto or any changes in events, conditions or circumstances on which any statement is based.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

  Net Service Revenue.

     Approximately 93% of the Company’s net service revenue for the three months ended March 31, 2005 was derived from Medicare, compared to 92% for the same period last year. Included in the net service revenue derived from Medicare for the three months ended March 31, 2005 is $1,109,000, or 1.7% of total Medicare net service revenue, for services provided by the Company’s hospice business. The Company acquired two hospice agencies from Tenet Healthcare Corporation on April 1, 2004.

10

     Net service revenue increased $23.1 million, or 48.8%, for the three months ended March 31, 2005, compared to the same period in 2004. This increase is due to a 50.3% increase in Medicare revenue of $22.0 million, and a 31.0% increase in revenue from non-Medicare payors of $1.1 million. Of the 50.3% increase in Medicare revenue, $1.1 million is attributable to the hospice business. Of the remaining $20.9 million balance of this increase, $8.5 million is attributable to acquisitions completed after April 1, 2004 with the exception of the hospice revenue mentioned above (See Note 6 to the consolidated financial statements for a discussion of Company acquisitions). The remaining $12.4 million reflects increases in Medicare patient admissions and a 1.3% improvement in revenue per episode. The 1.3% improvement in revenue per episode is due primarily to the increase in the episodic reimbursement amount effective January 1, 2005, and the 5% rural add-on that was in effect for the first quarter of 2005 compared to the first quarter of 2004, when there was no applicable rural add-on reimbursement. This increase was partially offset by a change in the case mix adjustment on our patient population. As noted in Note 2 to the consolidated financial statements, the base episodic reimbursement rate increased on January 1, 2005 to $2,264 per episode from $2,213 per episode for calendar year 2004.

     Total patient admissions for the three months ended March 31, 2005 totaled 19,941 and increased from the prior year admissions by 46.0%. Medicare patient admissions increased to 16,506, representing an increase of approximately 44.2% over the three months ended March 31, 2004.

     The 44.2% increase in Medicare admissions for the most recent quarterly comparative period is comprised of internal growth in admissions of 20.7% with acquisitions contributing growth of approximately 23.5%. The Company defines internal growth to include growth from operating locations owned by the Company for more than twelve months, any start up locations initiated by the Company, and from those acquisitions where the monthly Medicare admissions at the acquired locations does not exceed 1% of total Company admissions in the month of acquisition. Internal growth of 20.7%, including growth from start up locations, arises from a combination of enhanced effectiveness of the sales force, increased size of the sales force, the introduction of additional disease management programs, and ongoing referral source education efforts. The Company has opened five home health startup locations since April 1, 2004. Admissions from non-Medicare payors increased by 55.2% from 2,213 in the three months ended March 31, 2004 to 3,435 in the same period in 2005, primarily as a result of acquisitions.

  Cost of Service Revenue

     Cost of service revenue for the three months ended March 31, 2005 increased by $9.0 million, or 46.1%, as compared to the same period in 2004. Of this increase, $1.1 million is attributable to the hospice business. The balance of the increase, or $7.9 million, is attributable to a 34.4% increase in the total number of home health visits performed to 447,000 visits, combined with a 4.4% increase in the cost per visit. The number of visits increased by 34.4% as a result of a 13.6% increase in visits for non-Medicare patients and a 37.2% increase in the number of visits to Medicare patients. This increase in the number of visits to Medicare patients is due to an increase in the average number of patients on service at month end during the most recent quarter of approximately 14,069 when compared with approximately 9,293 in the comparable period of 2004. The 4.4% increase in the cost per visit is attributable to higher rates of pay and benefits for visiting staff at acquired locations and an increase in travel costs reimbursed to Company caregivers as a result of higher gas prices.

     Excluding the hospice business, cost of service revenue as a percent of net service revenue, decreased 1.5% as a result of a 8.3% increase in Net Service revenue per visit. This increase is due primarily to a 1.3% improvement in revenue per episode combined with a 6.1% decrease in visits per episode. The reduction in visits per episode is primarily the result of efficiencies realized by the Company's recent acquisitions, particularly the Tenet home healthcare acquisition of 2004 and the 2003 acquisition of Metro Preferred Home Health. The improved margins related to these acquisitions is more in line with the margins of the Company's mature locations. Typically, acquired locations take up to 12 months before realizing margins consistent with the Company's mature locations.

  General and Administrative Expenses (“G&A”)

     General and administrative expenses increased by $9.5 million, or 45.4%, in the three months ended March 31, 2005, as compared to 2004. This increase is primarily attributable to $3.6 million of general and administrative expenses incurred by the Company’s acquisitions finalized since April 1, 2004 (see Note 6 to the consolidated financial statements). The remaining balance of $5.9 million includes: increased personnel costs of $3.2 million related to additional operational and corporate staff necessitated by the Company’s internal growth and acquisitions; other increases of $1.3 million, including increases with respect to supplies, rent, and professional fees; a $0.4 million increase in depreciation and amortization, primarily as a result of higher amortization associated with intangible assets attributable to the acquisitions; and an increase in travel and related costs of $1.0 million, particularly with respect to operational and corporate training meetings and new employee orientation sessions undertaken for all employees.

     As a percentage of net service revenue, general and administrative expenses decreased 1.1% to 43.2% in 2005 from 44.3% in 2004.

     The Company expects to realize as a reduction in benefit expenses $0.8 million of participant employer match forfeitures from calendar year 2004, which represents unvested employer matching contributions for former employees no longer participating in the Company’s 401(k) plan. It is the Company’s accounting policy to recognize the benefit cost reduction upon completion of the Company’s 401(k) plan annual audit, which is expected to be completed in the third quarter of 2005. During the quarter ended September 30, 2004, the Company realized $0.5 million of participant employer match forfeitures from calendar year 2003.

  Operating Income

     The Company had operating income of $11.5 million for the three months ended March 31, 2005 as compared with $6.9 million in the same period of 2004. This increase is attributable to the changes described above.

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  Other Income and Expense, net.

     Net other income (expense) increased from expense of $76,000 for the three months ended March 31, 2004 to income of $220,000 for the three months ended March 31, 2005, an increase of $296,000. The increase is primarily due to a $329,000 increase in interest income as a result of increased levels of cash and cash equivalents resulting from the 2004 secondary equity offering.

  Income Tax Expense.

     Income tax expense of $4,623,000 and $2,608,000 was recorded for the three months ended March 31, 2005 and 2004, respectively. An effective income tax rate of approximately 39.4% and 38.2% was recorded on income before taxes for the three months ended March 31, 2005 and 2004, respectively. The increase in the effective tax rate is due to a 1.0 percentage point increase in the federal effective tax rate from higher estimated taxable income in 2005, resulting in an increase in the Company’s statutory effective tax rate, combined with the exhaustion of the federal net operating loss carryforward. The remaining increase in the effective tax rate is due to an additional 0.4 percentage point increase in the Company’s state effective tax rate from higher estimated taxable income in 2005, combined with the exhaustion of multiple state net operating loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

     The Company’s principal source of liquidity is the collection of its accounts receivable, in particular under the Medicare program.

     The Company’s operating activities provided $10.6 million in cash during the quarter ended March 31, 2005, whereas such activities provided $10.1 million in cash during the quarter ended March 31, 2004. Cash provided by operating activities in 2005 is primarily attributable to net income of $7.1 million, non-cash items such as depreciation and amortization of $1.3 million, provision for bad debts of $0.6 million, an increase in accrued expenses of $7.9 million, which was driven by an increase in current income taxes payable and an increase in accrued payroll and related taxes payable, deferred income tax change of $0.5 million, offset by an increase in accounts receivable of $1.0 million, an increase in inventory and other assets of $1.6 million, an increase of $2.4 million in other assets, and a decrease of $2.3 million in accounts payable.

     Investing activities used $21.2 million cash for the three months ended March 31, 2005, whereas such activities used $14.8 million for the three months ended March 31, 2004. Cash used in investing activities in 2005 is primarily attributed to purchases of property and equipment of $5.5 million, which includes the $3.5 million purchase of a corporate aircraft and cash used in acquisitions of $15.7 million (see Note 6 to the consolidated financial statements).

     Financing activities used $0.2 million cash during the three months ended March 31, 2005, whereas such activities used $0.4 million during the same quarterly period last year. Payment on capital lease obligations used $0.8 million in the current year first quarter, which was offset by proceeds from stock issuances and stock option exercised of $0.6 million.

     At March 31, 2005, the Company had working capital of $62.0 million. This includes short-term Medicare liabilities of $9.3 million, which the Company may not fully liquidate in cash during the next twelve months. These Medicare liabilities include $3.1 million owed by a subsidiary currently in bankruptcy, and $3.7 million of anticipated cost report settlements yet to be finalized. The final cost report settlements may not all occur during the next twelve months. In addition, when the cost reports are settled, the Company is entitled to apply for a payment plan for up to five years in length. There can be no assurance that such a payment plan would be granted if sought.

     During the quarter ended March 31, 2005, the Company purchased a corporate aircraft for $3.5 million for the purposes of enabling Company employees to visit and conduct business at the operating locations in thirteen states. Additionally, on April 13, 2005, the Company purchased for $4.2 million, land and a building in Baton Rouge, Louisiana, which will be used to consolidate the Company’s corporate offices. The combined cost of this purchase and the related refurbishment is not precisely quantifiable at this time, but could be approximately $10 to $12 million. The Company expects to be completed with the refurbishment of the property by the end of 2006.

     Apart from expenditures related to the corporate aircraft and the corporate office mentioned above, the Company expects that routine capital expenditures in fiscal 2005 will be approximately $7.6 million, as compared to $5.8 million in 2004.

     Effective April 28, 2004, the Company entered into a financing arrangement with GE Healthcare Financial Services (“GE”) for a $15 million working capital facility (the “GE Facility”), under which the Company may request, under certain conditions, that the borrowing capacity be increased in two separate increments of $5 million each, for a total borrowing capacity of $25 million. The Company believes that it meets at March 31, 2005, all conditions necessary for increasing the borrowing capacity of the GE Facility to $25 million. To date, no amounts have been drawn under this facility.

     The Company has certain other contingencies and reserves, including litigation reserves, recorded as current liabilities in the accompanying Consolidated Balance Sheets (in accordance with Statement of Financial Accounting Standard No. 5) that management may not be required to liquidate in cash during the next twelve months. However, in the event that all current liabilities become due within twelve months, the Company may be required to limit its acquisition activities, utilize its GE Facility and/or sell securities on unfavorable terms. There can be no absolute assurance that such action may not be necessary to ensure appropriate liquidity for the operations of the Company. However, the Company believes that its cash flows from operations combined with borrowing availability under its GE Facility will be sufficient to meet its working capital needs for the next 12 months.

12

Contractual Obligations and Medicare Liabilities

     The following table summarizes the Company’s contractual obligations at March 31, 2005:

Payments Due by Period
(Amounts in thousands)

			Less
			than		1-3		4-5
Contractual Obligations	Total		1 year		years		years
Long-Term Debt	$	5,462	$	3,396	$	2,066	$	—
Capital Lease Obligations		439		250		177		12
Medicare Liabilities		9,263		9,263		—		—
Total Contractual Cash Obligations	$	15,164	$	12,909	$	2,243	$	12

     At March 31, 2005, the Company was indebted under various promissory notes for $5.5 million, including notes issued for various acquisition purchases of $5.2 million.

     The Company’s principal and interest requirements due under all promissory notes for the remainder of 2005 are approximately $1.6 million. At March 31, 2005, the Company also had obligations under capital leases of $0.4 million. During the quarter ended March 31, 2005, the Company paid $0.3 million to buyout equipment under various capital leases.

     As of March 31, 2005, the Company estimates an aggregate payable to Medicare of $9.3 million, all of which is reflected as a current liability in the accompanying Consolidate Balance Sheets. This amount includes $2.5 million reserved during 2003 as noted above—see Revenue Recognition discussion in Note 2 to the consolidated financial statements.

     The recorded $9.3 million also includes a $3.1 million obligation of a subsidiary of the Company, which is currently in bankruptcy, and it is not clear whether the Company will have any responsibility for that amount if the debt of the subsidiary is discharged in bankruptcy.

     Prior to the implementation of PPS on October 1, 2000, the Company recorded Medicare revenue at the lower of actual costs, the per visit cost limit, or a per beneficiary cost limit on an individual provider basis. Under the previous Medicare cost-based reimbursement system, ultimate reimbursement under the Medicare program was determined upon final settlement of the annual cost reports.

     The $3.7 million remaining balance due Medicare reflects the Company’s estimate of amounts likely to be assessed by Medicare as overpayments in respect of prior years when Medicare audits of the Company’s cost reports from 1997 through October, 2000 are completed. At the time these audits are completed and final assessments are issued, the Company may apply to Medicare for repayment over a thirty-six month or longer period, although there is no assurance that such applications will be agreed to if sought. These amounts relate to the Medicare payment system in effect until October 2000, under which Medicare provided periodic interim payments to the Company, subject to audit of cost reports submitted by the Company and repayment of any overpayments by Medicare to the Company. The fiscal intermediary, acting on behalf of Medicare, is entitled to reopen settled cost reports for up to three years after issuing final assessments.

     During the third and fourth quarters of 2002, the Company received cash settlements of $2.1 million from Medicare related to tentative settlements of the FY fiscal 2000 cost reports. This receivable was netted against the amounts due to Medicare on the balance sheet in the current-portion of Medicare liabilities, therefore, receipts of these settlements had no statement of operations impact.

     In October 2002 the Company received notice from CMS that the FY fiscal 1997 Amedisys cost reports were being re-opened. In response to this notification from the intermediary, the Company established a liability of $1.0 million for amounts that may be assessed during the re-opening of the 1997 cost reports, due to the potential for different interpretations of reimbursement regulations between the intermediary and the Company. The increase in liability resulted in a charge against revenue in the fourth quarter of 2002. CMS has yet to complete the audit on these cost reports.

     During the third and fourth quarters of 2003, the Company received cash settlements of $2.1 million from Medicare related to the settlements of the FY fiscal 1999 cost reports. This receivable was netted against the amounts due to Medicare on the balance sheet in the current-portion of Medicare liabilities, therefore, receipts of these settlements had no impact on the statement of operations.

13

     During the second quarter of 2003, the Company recognized $402,000 as a decrease against revenue to offset settlements received in excess of amounts previously recorded.

     In November 2002, the Company elected to terminate its asset financing facility with NPF VI, Inc. (“NPF VI”) and advised its payors that remittances should be directed to the bank accounts of the Company rather than bank accounts controlled by NPF VI under collateral arrangements for the facility. The decision to terminate the above facility was made in response to the failure of NPF VI to provide $3.3 million on October 31, 2002 as requested by the Company on October 29, 2002 in accordance with the terms of the facility. At that date, Amedisys, Inc. determined that an amount of approximately $7.1 million was being held on behalf of the Company by NPF VI, and engaged in correspondence with representatives of NPF VI in an effort to have these funds returned to the Company. On November 18, 2002, NPF VI filed bankruptcy petitions, and accordingly, the Company elected to reserve the amount of $7.1 million in the fourth quarter of fiscal 2002. The Company is taking legal action to recover the funds that have not been released to the Company. As of March 31, 2005, the Company had incurred total legal fees related to this matter of approximately $2.1 million, and the Company may incur substantial additional legal expenses in the future with this matter. There can be no assurance that the Company will ultimately be successful in its efforts to recover the funds held on behalf of the Company by NPF VI.

     Although the Company’s financial position has improved over the last twelve months, there can be no absolute assurance that the Company will not be required to obtain debt financing, and/or sell equity securities on unfavorable terms, which could impact the Company’s earnings by either increasing interest costs or by dilution to existing shareholders to ensure appropriate liquidity for the operations of the Company. However, the Company believes that available cash balances together with cash flow generated from operations and the Company’s borrowing capabilities are sufficient to meet its debt service and capital expenditure requirements, including targeted acquisitions, for the foreseeable future.

Recent Developments

     As noted in Note 2 to the consolidated financial statements, on January 1, 2005, the Medicare base episode reimbursement rate increased from $2,213 per episode to $2,264 per episode. However, this increase will be partially offset by the March 31, 2005 expiration of the 5% rural add-on reimbursement for serving patients in rural areas. Patients in rural areas account for approximately 29.5% of the Company’s patient population as of March 31, 2005. The Company expects the episodic rate increase, net of the elimination of the rural add-on reimbursement, to result in an approximately 1.95% increase in its weighted average reimbursement for the remainder of the fiscal year.

     The passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 on December 6, 2003, has resulted in two changes in Medicare reimbursement. First, for episodes ended on or after April 1, 2004 through December 31, 2006, the base episode rate (see Note 2 to the consolidated financial statements) increase has been reduced by 0.8%. Secondly, a 5.0% payment increase is provided for services furnished in a rural setting for episodes ending on or after April 1, 2004 and before April 1, 2005.

     Effective January 1, 2005, the Company received the “market basket adjustment”, currently estimated to be an increase of approximately 2.3% (net of the 0.8% reduction referred to above). The market basket adjustment is based on an index, which is intended by CMS to reflect cost inflation in the delivery of home health services.

     The Medicare Payment Advisory Commission (“MedPAC”) has made a preliminary recommendation to Congress that the market basket adjustment increase for 2006 be eliminated. MedPAC is an independent federal body established by the Balanced Budget Act of 1997 to advise the U.S. Congress on issues affecting the Medicare program. Our industry trade association, the National Association for Home Care and Hospice, does not believe that Congress will address reimbursement issues this year. The Company cannot predict the timing or the magnitude of such changes, if any.

     The Centers for Medicare and Medicaid Services, or CMS, administers the Medicare program and works in partnership with the states to administer Medicaid. CMS is responsible for the administrative simplification standards from HIPAA and quality standards in health care facilities through its survey and certification activity. In its administrative capacity, CMS has the regulatory means to impact reimbursement. CMS is expected in either 2005 or 2006 to review the case mix adjustments index (see Note 2 to the consolidated financial statements) as part of a previously scheduled process. The Company is unable to predict the timing or outcome of such a review.

14

     The Office of Inspector General (“OIG”) of the Department of Health and Human Services (“DHHS”) has a responsibility to report both to the Secretary of DHHS and to the Congress program and management problems related to programs such as Medicare and Medicaid. The OIG’s duties are carried out through a nationwide network of audits, investigations and inspections. The OIG has recently undertaken a study with respect to Medicare reimbursement rates. No estimate can be made at this time regarding the impact, if any, of the OIG’s findings.

     The Company does not believe that inflation has had a material effect on its results of operations during the three month periods ended March 31, 2005 or 2004.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     There have been no changes from the disclosures contained in the Company’s Form 10-K/A for the year ended December 31, 2004.

Item 4. CONTROLS AND PROCEDURES

  Evaluation of Disclosure Controls And Procedures

     As of the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision of and with the participation of the Company’s management, including the Company’s principal executive and financial officers, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Company’s principal executive and financial officers concluded that the Company’s disclosure and controls procedures were effective in timely alerting officers of the Company to material information relating to the Company that is required to be included in the Company’s periodic Securities and Exchange Commission filings.

  Changes In Internal Controls

     There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2005, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

     No significant changes from the disclosures contained in the Company’s Form 10-K/A for the year ended December 31, 2004.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

     None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

Item 5. OTHER INFORMATION

     None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

15

2.2	Asset Purchase Agreement between Amedisys SC, L.L.C. and Winyah Health Care Group, LLC, Winyah Home Health Care-Midlands, Inc., Winyah Home Health Care of the Lowcountry, LLC, Winyah Home Health Care of the Grand Strand, LLC, Winyah Home Health Care, Inc. (filed herewith)
3.1	Certificate of Incorporation (previously filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q for the period ended March 31, 2002)
3.2	By-Laws (previously filed as Exhibit 3.2 to the Annual Report on Form 10-K for the period ended December 31, 2004)
4.1.1	Credit Agreement with General Electric Capital Corporation (previously filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q for the period ended March 31, 2004)
4.1.2	Amendment No. 1 to Credit Agreement with General Electric Capital Corporation (previously filed as Exhibit 4.1.2 to the Annual Report on Form 10-K for the period ended December 31, 2004)
4.1.3	Amendment No. 2 to Credit Agreement with General Electric Capital Corporation (filed herewith)
4.1.4	Amendment No. 3 to Credit Agreement with General Electric Capital Corporation (filed herewith)
4.2	Common Stock Specimen (previously filed as an exhibit to the Annual Report on Form 10-KSB for the year ended December 31, 1994)
4.3	Shareholder Rights Agreement (previously filed as Exhibit 4 to the Current Report on Form 8-K filed June 16, 2000, and as Exhibit 4 to the Registration Statement on Form 8-A12G filed June 16, 2000)
4.4	Form of Warrants issued by Amedisys, Inc. to Raymond James & Associates, Inc. (previously filed as Exhibit 10.3 to the Current Report on Form 8-K filed December 10, 2003)
4.5	Form of Purchase Agreement among Amedisys, Inc. and the purchasers set forth on the signature pages thereto (previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed December 10, 2003)
4.6	Registration Rights Agreement between Amedisys, Inc. and the person whose name and address appears on the signature page thereto (previously filed as Exhibit 10.5 to the Registration Statement on Form S-3 filed March 11, 1998)
10.1.1	Agreement to Purchase Real Estate between Amedisys, Inc. and Sherwood Investment Partners, LLC (filed herewith)
10.1.2	Act of Cash Sale of Real Estate between Amedisys, Inc. and Sherwood Investment Partners, LLC (filed herewith)
10.8	Employment Agreement between Amedisys, Inc. and William F. Borne (filed herewith)
31.1	Certification of William F. Borne, Chief Executive Officer (filed herewith)
31.2	Certification of Gregory H. Browne, Chief Financial Officer (filed herewith)
32.1	Certification of William F. Borne, Chief Executive Officer (filed herewith)
32.2	Certification of Gregory H. Browne, Chief Financial Officer (filed herewith)

16

     (b) Reports on Form 8-K

On January 31, 2005, Amedisys, Inc., issued a press release announcing the acquisition of the home health operations from several affiliated companies operating as Winyah Health Care Group in South Carolina, effective February 1, 2005.

On February 22, 2005, the Registrant’s Board of Directors approved a new director compensation package for non-management directors. The compensation package is effective March 1, 2005.

On March 1, 2005, Amedisys, Inc., issued a press release announcing the acquisition of a home health agency from North Arundel Hospital, effective March 1, 2005.

     SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AMEDISYS, INC.
	By:	/s/ Gregory H. Browne
	Gregory H. Browne
	Chief Financial Officer
DATE: May 5, 2005

17

EX-2.2

Exhibit 2.2

THIS AGREEMENT IS SUBJECT TO ARBITRATION
PURSUANT TO SECTION 15-48-10, ET SEQ., OF THE SOUTH
CAROLINA CODE OF LAWS (THE SOUTH CAROLINA UNIFORM
ARBITRATION ACT), AS MODIFIED HEREIN.

ASSET PURCHASE AGREEMENT

between

AMEDISYS SC, L.L.C.

“BUYER”

AND

WINYAH HEALTH CARE GROUP, LLC

WINYAH HOME HEALTH CARE-MIDLANDS, INC.

WINYAH HOME HEALTH CARE OF THE LOWCOUNTRY, LLC

WINYAH HOME HEALTH CARE OF THE GRAND STRAND, LLC

WINYAH HOME HEALTH CARE, INC.

“SELLERS”

Dated as of February 1, 2005

TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS	1
1.1 Definitions	1
1.2 Singular/Plural; Gender	8
ARTICLE 2. PURCHASE AND SALE	8
2.1 Purchase and Sale	8
2.2 Payments on Closing	9
2.3 Closing Date Deliveries	11
2.4 Non-Assumption of Liabilities	12
2.5 Taxes	12
2.6 Risk of Loss	12
2.7 Allocation of Purchase Price	12
ARTICLE 3. GOVERNMENTAL APPROVALS	12
3.1 Governmental Approvals	12
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS	13
4.1 Organization	13
4.2 Authorization; Enforceability	13
4.3 Absence of Conflicting Agreements	13
4.4 Title to Purchased Assets; Liens and Encumbrances	14
4.5 Equipment	14
4.6 Contracts	14
4.7 Real Property	15
4.8 Leases	15
4.9 Financial Statements	16
4.10 Absence of Undisclosed Liabilities	16
4.11 No Material Adverse Change	16
4.12 No Litigation; Labor Disputes; Compliance with Law	18
4.13 Taxes	19
4.14 Insurance	19
4.15 Brokers	19
4.16 Banks; Powers of Attorney	19
4.17 Employees	19
4.18 Employee Benefit Plans	20
4.19 Environmental Compliance	21
4.20 Health Care Matters	22
4.21 Affiliated Transactions	23
4.22 Disputes with Customers and Vendors	23
4.23 Relations with Suppliers and Customers	23
4.24 Intangibles	23
4.25 Representation as to Branch Office Status of Mt. Pleasant	24
4.26 Representation as of the Closing Date	24
4.27 Disclosure	24

i

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER	24
5.1 Organization	24
5.2 Authorization; Enforceability	24
5.3 Absence of Conflicting Laws and Agreements	24
5.4 Brokers	25
5.5 Representation as of the Closing Date	25
5.6 Disclosure	25
5.7 No Litigation	25
ARTICLE 6. CERTAIN MATTERS PENDING THE CLOSING	25
6.1 Access	25
6.2 Notice of Adverse Changes	25
6.3 Operations Pending Closing	26
6.4 Consents	28
6.5 Cooperation	28
6.6 Release of Liens	28
6.7 Tax Returns and Payments	28
6.8 Public Announcement	28
6.9 Best Efforts	28
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER	29
7.1 Compliance with Agreement	29
7.2 Proceedings and Instruments Satisfactory	29
7.3 Representations and Warranties	29
7.4 No Material Adverse Change	29
7.5 Event of Loss	29
7.6 Deliveries at Closing	30
7.7 Other Documents	30
7.8 Possession; Instruments of Conveyance and Transfer	30
7.9 Approvals and Consents	30
7.10 Governmental Consents	30
7.11 Absence of Investigations and Proceedings	30
7.12 No Liens	30
7.13 Provider Numbers	30
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS	31
8.1 Compliance with Agreement	31
8.2 Proceedings and Instruments Satisfactory	31
8.3 Representations and Warranties	31
8.4 Deliveries at Closing	31
8.5 Other Documents	31
8.6 Absence of Investigations and Proceedings	31
8.7 Governmental Consents	31
8.8 Due Diligence Not Related to the Business	32
ARTICLE 9. INDEMNIFICATION	32
9.1 Indemnification by Sellers	32

ii

9.2 Indemnification by Buyer	33
9.3 Method of Asserting Claims	33
9.4 Setoff Rights of Buyer	34
9.5 Survival of Representations	35
9.6 Limitation on Aggregate Claims	35
9.7 Remedies	35
ARTICLE 10. FURTHER AGREEMENTS	36
10.1 Assignment or Transfer of Note and Stock	36
10.2 Employee Matters	36
10.3 Employment Agreements	37
10.4 Confidentiality	37
10.5 Maintenance of Patient Files and Records	38
10.6 Storage Facilities Leases	38
ARTICLE 11. TERMINATION, MISCELLANEOUS	38
11.1 Termination	38
11.2 Rights of Termination	39
11.3 Further Assurances	39
11.4 Survival	39
11.5 Entire Agreement; Amendment; and Waivers	39
11.6 Expenses	40
11.7 Benefit; Assignment	40
11.8 Notices	40
11.9 Counterparts; Headings	41
11.10 Severability	41
11.11 No Reliance	41
11.12 Judicial Interpretation	41
11.13 Saturdays, Sundays and Legal Holidays; Time is of the Essence	41
11.14 Governing Law	41
11.15 Arbitration	42

iii

EXHIBITS

EXHIBIT A	Form Assumption Agreement
EXHIBIT B	Form Bill of Sale and Assignment
EXHIBIT C	Form Buyer’s Closing Certificate
EXHIBIT D	Form Buyer’s Performance Certificate
EXHIBIT E	Form Employment Agreements
EXHIBIT F	Form Assignment and Assumption of Contracts
EXHIBIT G	Form Stock Escrow Agreement
EXHIBIT H	Form Assignment and Assumption of Lease
EXHIBIT I	Form Landlord Consent and Estoppel Certificate
EXHIBIT J	Copy of Letter Agreement
EXHIBIT K	Form License Agreement
EXHIBIT L	Form Noncompetition Agreement
EXHIBIT M	Form Promissory Note
EXHIBIT N	Form Security Agreement
EXHIBIT O	Form Sellers’ Closing Certificate
EXHIBIT P	Form Sellers’ Performance Certificate
EXHIBIT Q	Form Cash Escrow Agreement

iv

SCHEDULES

Schedule 1.1	Certificates of Need
Schedule 1.2(a)	Assigned Contracts
Schedule 1.2(b)	Contracts
Schedule 1.3	Assumed Liabilities
Schedule 1.4	Equipment
Schedule 1.5	Leases
Schedule 1.6	Licenses
Schedule 1.7	Medicare Assets
Schedule 1.8	Permitted Liens
Schedule 1.9	Real Property
Schedule 1.10	Retained Assets
Schedule 2.7	Allocation of Purchase Price
Schedule 4.1	Foreign Qualifications
Schedule 4.3	Conflicting Agreements and Laws
Schedule 4.4	Title to Purchased Assets
Schedule 4.5	Equipment Exceptions
Schedule 4.6	Contract Exceptions
Schedule 4.7	Real Property Exceptions
Schedule 4.8	Lease Exceptions
Schedule 4.9(a)	Financial Statements
Schedule 4.9(b)	Interim Financial Statements
Schedule 4.10	Undisclosed Liabilities
Schedule 4.11	Material Adverse Changes
Schedule 4.12	Litigation; Labor Disputes; Compliance with Law
Schedule 4.13	Taxes
Schedule 4.14	Insurance
Schedule 4.15	Sellers’ Brokers
Schedule 4.16	Banks; Powers of Attorney
Schedule 4.17(a)	Sellers’ Employees
Schedule 4.17(b)	Assumed Employees
Schedule 4.18	Employee Benefit Plans
Schedule 4.19	Environmental Compliance
Schedule 4.20	Health Care Matters
Schedule 4.21	Affiliated Transactions
Schedule 4.22	Disputes with Customers and Vendors
Schedule 5.3	Conflicting Laws and Agreements
Schedule 6.5	Consents
Schedule 7.9	Required Approvals and Consents
Schedule 10.6	Storage Facilities Leases

v

THIS AGREEMENT IS SUBJECT TO ARBITRATION

PURSUANT TO SECTION 15-48-10, ET SEQ., OF THE SOUTH

CAROLINA CODE OF LAWS (THE SOUTH CAROLINA UNIFORM

ARBITRATION ACT), AS MODIFIED HEREIN.

ASSET PURCHASE AGREEMENT

     THIS IS AN ASSET PURCHASE AGREEMENT (this “Agreement”), made as of this 1st day of February, 2005, by and among WINYAH HEALTH CARE GROUP, LLC, a Delaware limited liability company, WINYAH HOME HEALTH CARE-MIDLANDS, INC., a South Carolina corporation, WINYAH HOME HEALTH CARE OF THE LOWCOUNTRY, LLC, a South Carolina limited liability company, WINYAH HOME HEALTH CARE OF THE GRAND STRAND, LLC, a South Carolina limited liability company, and WINYAH HOME HEALTH CARE, INC., a South Carolina corporation (collectively, “Sellers”), and AMEDISYS SC, L.L.C., a South Carolina limited liability company (“Buyer”).

R E C I T A L S:

     A. Sellers own and operate a home health care business in various locations in South Carolina (collectively, the “Business”).

     B. Sellers are willing to sell to Buyer, and Buyer is willing to purchase from Sellers, right, title and interest in and to Sellers’ assets and properties related to the Business, on the terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the Recitals and the mutual covenants, conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

ARTICLE 1.

DEFINITIONS

     1.1 Definitions. Except as specified otherwise, when used in this Agreement and any Exhibits or Schedules, the following terms shall have these meanings:

          “Affiliate” shall mean with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Person;

          “Agreement” shall mean this Asset Purchase Agreement, together with the Recitals, Schedules and Exhibits, each of which are incorporated into this Agreement by this reference, as the same shall be amended from time to time in accordance with the terms hereof;

          “Assigned Contracts” shall mean the Contracts which Sellers are assigning to Buyer pursuant to this Agreement, all of which are set forth on Schedule 1.2(a);

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          “Assumed Employee” shall mean a Sellers’ Employee who becomes an employee of Buyer, as contemplated by Section 4.17(b);

          “Assumed Liabilities” shall mean only (i) the obligations of Sellers listed on Schedule 1.3; (ii) the obligations of Sellers for Accrued PTO associated with the Assumed Employees as of the Closing Date, as limited by the Maximum PTO Obligation, as set forth in Section 10.2 of this Agreement; and (iii) the Assigned Contracts and the Leases, in each case arising from and accruing with respect to the operation of the Business after the Closing Date;

          “Assumption Agreement” shall mean an instrument in the form of EXHIBIT “A” attached hereto;

          “Benefit Arrangement” shall mean a benefit program or practice providing for bonuses, incentive compensation, vacation pay, severance pay, insurance, restricted stock, stock options, employee discounts, tuition reimbursement or any other perquisite or benefit (including, without limitation, any fringe benefit under Section 132 of the Code) to employees, officers or independent contractors of Sellers that is not a Plan;

          “Bill of Sale and Assignment” shall mean an instrument in the form of EXHIBIT “B” attached hereto;

          “Buyer” shall mean Amedisys SC, L.L.C., a South Carolina limited liability company;

          “Buyer’s Closing Certificate” shall mean the certificate of the Secretary of Buyer in the form of EXHIBIT “C” attached hereto;

          “Buyer’s Performance Certificate” shall mean the certificate of an authorized officer of Buyer in the form of EXHIBIT “D” attached hereto;

          “Cash” shall mean all moneys of Sellers, whether in the form of cash, cash equivalents, marketable securities, short term investments or deposits in bank or other financial institution accounts of any kind;

          “Cash Escrow Agreement” shall mean the Cash Escrow Agreement in the form of EXHIBIT “Q” attached hereto;

          “Certificates of Need” shall mean those certificates of need associated with the Business and described on Schedule 1.1;

          “Closing” shall mean the consummation of the transactions contemplated by this Agreement to be conducted on the Closing Date at such time and place as may be mutually agreed by the parties, and which may be perfected by the exchange of executed signature pages via facsimile or Adobe Portable Document Format followed by delivery of the original executed signature pages via overnight mail carrier thereafter;

          “Closing Date” shall mean (i) on or before February 1, 2005, after all of the conditions set forth in Articles 7 and 8 hereof have been satisfied or waived; or (ii) such other

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date as the parties may mutually agree in writing. The Closing shall be deemed effective as of 12:01 a.m. on the Closing Date;

          “Code” shall mean the Internal Revenue Code of 1986, as amended;

          “Contract Assignment” shall mean the Assignment and Assumption of Contracts, in the form of EXHIBIT “F” attached hereto;

          “Contracts” shall mean those agreements entered into by Sellers (other than those included in the Retained Assets and other than the Leases) under which Sellers conduct the Business and which are listed on Schedule 1.2(b);

          “Customer Lists” shall mean all lists, documents, written information and computer tapes and programs and other computer readable media used by or in the possession of Sellers concerning past, present and potential purchasers of services from the Business;

          “Employee Benefit Plans” shall mean any Plan or Benefit Arrangement in which any current, former or retired employee of Sellers participates;

          “Employment Agreements” shall mean the Employment Agreements of Gary Cooper and Roddy Urquhart in the form of EXHIBIT “E-1” and “E-2” attached hereto;

          “Environmental Laws” shall mean the rules and regulations of the Environmental Protection Agency and all applicable rules and regulations of federal, state and local laws, including statutes, regulations, ordinances, codes, and rules, as amended, relating to the discharge of air pollutants, water pollutants or process waste water or Hazardous Materials or toxic substances including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, each as amended, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency now in effect;

          “Equipment” shall mean the machinery, equipment, furniture, fixtures, furnishings, toolings, leasehold improvements, parts, vehicles and other items of tangible personal property which are listed on Schedule 1.4;

          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended;

          “Event of Loss” shall mean any loss, taking, condemnation, damage or destruction of or to any of the Purchased Assets;

          “Financial Statements” shall mean the unaudited financial statements of Sellers described in Section 4.9(a);

          “Hazardous Materials” shall mean any wastes, substances, or materials (whether solids, liquids or gases) that are deemed hazardous, toxic, pollutants, or contaminants, including, without limitation, substances defined as “hazardous wastes,” “hazardous substances,”

3

“toxic substances,” “radioactive materials,” or other similar designations in, or otherwise subject to regulation under, any Environmental Laws. “Hazardous Materials” includes, but is not limited to, polychlorinated biphenyls (PCB’s), asbestos, lead-based paints, infectious wastes, radioactive materials and wastes and petroleum and petroleum products (including, without limitation, crude oil or any fraction thereof);

          “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended;

          “Interim Financial Statements” shall mean the financial statements of Sellers described in Section 4.9(b);

          “Knowledge of Sellers” shall mean the actual knowledge of Gary Cooper or such knowledge he should have based upon a reasonable investigation of Sellers and the Business;

          “Leases” shall mean those leases of Real Property listed on Schedule 1.5;

          “Lease Assignment” shall mean the Assignment and Assumption of Lease in the form of EXHIBIT “H” attached hereto;

          “Lease Estoppel Letters” shall mean letters from Persons who have leased Real Property to Sellers in the form of EXHIBIT “I” attached hereto or in such other form as is acceptable to Buyer’s lenders;

          “Letter Agreement” shall mean that certain letter of intent between Sellers and Buyer’s affiliates, as amended, a copy of which is attached hereto as EXHIBIT “J”;

          “License Agreement” shall mean the Agreement entered into between Sellers and Buyer which allows Buyer to utilize the “Winyah” trade name for a period of two (2) years after Closing, in the form of EXHIBIT “K” attached hereto;

          “Licenses” shall mean those licenses, permits, orders, approvals, accreditations and authorizations issued by any governmental authority which are used by the Business, including the Certificates of Need, true copies of which are attached to Schedule 1.6;

          “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, security interest, encumbrance, claim, lien, lease (including any capitalized lease) or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any of the Purchased Assets, including any agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement and the filing of or agreement to give any financing statement with respect to any of the Purchased Assets under the Uniform Commercial Code of the State of South Carolina or comparable law of any jurisdiction;

          “Medicare Assets” shall mean all Medicare, Medicaid and other governmental program provider agreements and related provider numbers, supporting documentation, related correspondence, and all rights of Sellers with respect to the Business to receive income in connection therewith, as set forth on Schedule 1.7;

4

          “Noncompetition Agreement” shall mean the Noncompetition Agreement between Sellers and Buyer in the form of EXHIBIT “L” attached hereto;

          “Note” shall mean the Promissory Note to be executed by Buyer’s parent corporation, Amedisys, Inc., a Delaware corporation, in favor of Winyah Health Care Group, LLC, for a portion of the Purchase Price in the form of EXHIBIT “M” attached hereto;

          “Patient Medical Records” shall mean all medical files and records of patients of the Business located on the Real Property.

          “Permitted Liens” shall mean the following Liens: (i) Liens existing on the Closing Date to remain on the Purchased Assets after the Closing as listed on Schedule 1.8; (ii) Liens for Taxes, assessments or other governmental charges or levies not yet due; (iii) statutory Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law created in the ordinary course of business of Sellers consistent with past practices for amounts not yet due; (iv) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business of Sellers consistent with past practices in connection with worker’s compensation, unemployment insurance or other types of social security; (v) with respect to interests in real property, minor defects of title, easements, rights-of-way, restrictions and other similar charges or encumbrances not materially detracting from the value of such real property or interfering with the ordinary conduct of the Business; and (vi) Liens created by or through Buyer or any of its Affiliates;

          “Person” shall mean any natural person, general or limited partnership, corporation, association, limited liability company or other entity;

          “Plan” shall mean any plan, program or arrangement, whether or not written, that is or was: (a) an “employee benefit plan” as such term is defined in Section 3(3) of ERISA (i) which was or is established or maintained by Sellers, (ii) to which Sellers contributed or were obligated to contribute or to fund or provide benefits, or (iii) which provides or promises benefits to any person who performs or who has performed services for Sellers and because of those services is or has been (A) a participant therein or (B) entitled to benefits thereunder; (b) an “employee pension benefit plan” as such term is defined in Section 3(2) of ERISA, including, without limitation, any such plan that satisfies, or is intended by Sellers to satisfy, the requirements for tax qualification described in Section 401 of the Code; (c) a “multi-employer plan” as such term is defined in Section 3(37) of ERISA; or (d) an “employee welfare benefit plan” as such term is defined in Section 3(1) of ERISA;

          “Purchase Price” shall mean that amount set forth in Section 2.2 hereof;

          “Purchased Assets” shall mean (i) the Assigned Contracts; (ii) the Customer Lists; (iii) the Equipment; (iv) the leasehold interests created by the Leases; (v) the Licenses (to the extent transferable); (vi) the Medicare Assets (to the extent transferable); (vii) the Records; (viii) all inventory (if any) owned by Sellers and used by Sellers in the operation of the Business; (ix) all telephone numbers and listings used by Sellers in the operation of the Business, if transferable; (x) goodwill and going concern value associated with the Business; (xi) the License Agreement (xii) and the Patient Medical Records;

5

          “Real Property” shall mean with respect to the Business, Sellers’, or Sellers’ affiliates’, leasehold interest in the real property as more particularly described on Schedule 1.9 and all buildings, improvements and fixtures thereon, together with all rights of way, easements, strips and gores, privileges and appurtenances pertaining thereto, including any right, title and interest of Sellers in and to any street adjoining any portion of the Real Property;

          “Records” shall mean with respect to the Business, to the extent permitted under applicable law or regulation, including but not limited to HIPAA, all existing data, data bases, books, records, correspondence, business plans and projections, records of sales, vendor records, lists, marketing and advertising files and materials, administrative and other files, papers, and copies of historical personnel payroll and personnel medical records, if any, of each of the Assumed Employees in the possession of Sellers, including, without limitation, employment applications, corrective action reports, disciplinary reports, notices of transfer, notices of rate changes, other similar documents, and any summaries of such documents regularly prepared by Sellers; all reported medical claims made for each Assumed Employee; all manuals and printed instructions of Sellers relating to the Purchased Assets and to the operation of the Business; and copies (electronic or otherwise) of all confidential and nonconfidential, personally identifiable or aggregated, patient data, records and other such information used in, or connection with, the Business solely for patients on service as of the Closing Date, it being expressly understood and agreed that all such records for patients not on service as of the Closing Date shall be deemed Retained Assets;

          “Retained Assets” shall mean those assets of Sellers which are not to be sold and transferred to Buyer pursuant to this Agreement, to include the following: (a) any Cash, including, but not limited to, cash on hand, cash in Sellers’ depositary accounts, and any loan proceeds pursuant to agreements between Sellers and Sellers’ bank(s); (b) Sellers’ minute book and stock records and other organizational documents of Sellers; (c) any and all claims of Sellers with respect to transactions prior to the Closing Date including, without limitation, claims for Tax refunds and refunds of License fees and deposits of all kinds, except to the extent that such claims relate to Assumed Liabilities or the Purchased Assets; (d) all contracts of insurance entered into by Sellers; (e) rights under any agreement or Lease not listed on Schedule 1.2(a) or Schedule 1.5; (f) all assets related to the Employee Benefit Plans; (g) all of Sellers’ accounts receivable and all other indebtedness owing to Sellers; (h) any payables from any Affiliate of Sellers; (i) Sellers’ tax identification number(s); (j) cost report receivables (if applicable); (k) any automobiles leased or owned by Sellers; (l) those other assets, if any, specifically described on Schedule 1.10; and (m) any other asset or right of Sellers that is not a Purchased Asset;

          “Retained Liabilities” shall mean all obligations and liabilities of Sellers, whether now existing or previously or hereafter incurred, other than the Assumed Liabilities, which Retained Liabilities shall include, but not be limited to: (a) all Taxes that result from or have accrued in connection with the operation of the Business prior to the Closing Date; (b) all liabilities and obligations accruing with respect to the operation of the Business prior to the Closing; (c) all liabilities related to the Employee Benefit Plans; (d) all claims by any federal and/or state governmental agency for excess payments to Sellers under Medicare, Medicaid or similar government reimbursement programs for services or goods provided to Sellers prior to the Closing Date, including, but not limited to, Medicare or Medicaid audits, cost report liabilities, partial episode payment (“PEP”) recoupment and/or any other retroactive take-back

6

liability related to the provision of care by Sellers prior to the Closing; (e) all liabilities and obligations of Sellers under any Contracts and Leases transferred to Buyer in accordance with this Agreement, to the extent that such liabilities and obligations relate to any period or have accrued prior to the Closing; and (f) all liabilities and obligations of Sellers pursuant to the terms of this Agreement and any other agreement entered into in connection herewith;

          “Schedules” shall mean those schedules referred to in this Agreement which have been delivered concurrently with the execution of this Agreement, and which are hereby incorporated herein and made a part hereof;

          “Security Agreement” shall mean the Security Agreement in the form of EXHIBIT “N” attached hereto;

          “Sellers” shall mean WINYAH HEALTH CARE GROUP, LLC, a Delaware limited liability company, WINYAH HOME HEALTH CARE-MIDLANDS, INC., a South Carolina corporation, WINYAH HOME HEALTH CARE OF THE LOWCOUNTRY, LLC, a South Carolina limited liability company, WINYAH HOME HEALTH CARE OF THE GRAND STRAND, LLC, a South Carolina limited liability company, and WINYAH HOME HEALTH CARE, INC., a South Carolina corporation;

          “Sellers’ Closing Certificate” shall mean the certificate of each Seller in the form of EXHIBIT “O” attached hereto;

          “Sellers’ Employee” shall mean an employee of any Seller performing services related to the Business immediately prior to the Closing;

          “Sellers’ Performance Certificate” shall mean the certificate of an authorized officer of each Seller in the form of EXHIBIT “P” attached hereto;

          “Stock Escrow Agreement” shall mean the Stock Escrow Agreement in the form of EXHIBIT “G” attached hereto;

          “Subsidiary” shall mean, with respect to Sellers or any other Person, any corporation, partnership, limited liability company, joint venture or other legal entity of which Sellers or such other Person, as the case may be (either alone or through or together with any other Subsidiary) owns, directly or indirectly, stock or other equity or membership interests the holders of which are generally entitled to more than fifty percent (50%) of the vote for the election of the board of directors or other governing body of such corporation, limited liability company or other legal entity; and

          “Tax” shall mean any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

7

     1.2 Singular/Plural; Gender. Where the context so requires or permits, the use of the singular form includes the plural, and the use of the plural form includes the singular, and the use of any gender includes any and all genders.

ARTICLE 2.

PURCHASE AND SALE

     2.1 Purchase and Sale. At the Closing on the Closing Date, and upon all of the terms and subject to all of the conditions of this Agreement, Sellers shall sell, assign, convey, transfer and deliver to Buyer, and Buyer shall purchase all of Sellers’ right, title and interest, legal and equitable, in and to the Purchased Assets. Sellers shall not transfer, convey or assign to Buyer, but shall retain, all of their right, title and interest in and to the Retained Assets at the following site locations:

Winyah Home Health Care Midlands, Inc.

172 McSwain Blvd., Suite B-1

West Columbia, SC 29169

2521 Evans Street
Newberry, SC 29108

1704 Village Park Drive
Orangeburg, SC 29118

2555 Lindo Court, Suite B
Sumter, SC 29142

101 Ridge Medical Plaza
Edgefield, SC 29824

Winyah Home Health Care of the Lowcountry, LLC

7301 Rivers Ave., Suite 100

North Charleston, SC 29406

402 Robertson Blvd.
Walterboro, SC 29488

21 Cardinal Road
Hilton Head, SC 29926

950 Houston Northcutt Blvd., Suite 105
Mt. Pleasant, SC 29464

8

Winyah Home Health Care of the Grand Strand, LLC

1551 21st Ave. North, Suite 13

Myrtle Beach, SC 29572

Winyah Home Health Care, Inc.

1105 Church Street

Georgetown, SC 29440

127 East Mill Road
Kingstree, SC 29556

     2.2 Payments.

          (a) At Closing. At the Closing, Buyer shall pay to Sellers the following amounts (collectively, the “Purchase Price”):

(1)	Twelve Million Seven Hundred Sixty Thousand and No/100 ($12,760,000.00) Dollars, by wire transfer of immediately available U.S. funds to such account as shall be designated by Sellers to Buyer;
(2)	One Hundred and Forty Thousand and No/100 ($140,000) Dollars, to be retained in escrow by Buyer and distributed pursuant to the Accured PTO Reconciliation, as set forth in Section 2.2(b)(4) of this Agreement;
(3)	One Hundred Thousand and No/100 ($100,000) Dollars, by wire transfer of immediately available US funds, to be placed and held in escrow pursuant to the terms of the Cash Escrow Agreement;
(4)	Two Million and No/100 ($2,000,000.00) Dollars in the form of the Note and Security Agreement; and
(5)	Restricted stock of Buyer’s parent corporation, Amedisys, Inc., a Delaware corporation (the “Stock”) with a value of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00), such value determined by the average closing price of the Stock for the thirty (30) days preceding the Closing Date, to be placed and held in escrow pursuant to the terms of the Stock Escrow Agreement.

          (b) After Closing.

(1)   Episodic Medicare Billings. Buyer and Sellers each acknowledge and agree that, as to episodes of Medicare home health care services of the Business in progress as of the Closing Date and continuing following the Closing Date (“Straddle Episodes”), any billing or claims submissions to occur after the Closing Date will be performed by Buyer. The revenue from each such Straddle

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	Episode will be divided pro rata based on the total number of visits per episode, between Buyer and Sellers. (For the purpose of this paragraph, visits made before the Closing Date shall be credited to the Sellers and visits made after the Closing Date shall be credited to the Buyer.) Within thirty (30) days after receipt of payment by Sellers with respect to any Straddle Episode, Sellers shall pay to Buyer the Straddle Episode Payment, as defined below. “Straddle Episode Payment” shall mean an amount, for each Straddle Episode, equal to the Medicare payment for said episode, divided by the total number of visits made by Sellers and Buyer in said episode, multiplied by the number of visits provided by Buyer in said Straddle Episode. For example, if on the day prior to the Closing, a patient has been on service with Seller for five visits, and Buyer, after the Closing Date, provides fifteen visits, and said episode has a payment of Two Thousand Dollars ($2,000.00), Sellers shall pay Buyer One Thousand, Five Hundred Dollars ($1,500) for said Straddle Episode (2,000 ÷ 20 × 15). Sellers shall be entitled to the full Medicare payment for all Straddle Episodes, whether said payment is made to Sellers or Buyer by Medicare.
(2)	Other Billings. Sellers are responsible for the billing and collection of pre-Closing services and revenue earned through Medicaid, Managed Care, Private Insurance, Self-Pay, and Private Pay, and all costs associated therewith. Buyer is responsible for the billing and collection of post-Closing services and revenue earned through Medicaid, Managed Care, Private Insurance, Self-Pay, and Private Pay, and all costs associated therewith.
(3)	Misdirected Payments; Cooperation. Sellers and Buyer hereby agree to conduct a monthly reconciliation (the “Monthly Reconciliation”), to occur on the last day of each calendar month after the Closing Date for a period of twelve (12) months, of the following amounts: (i) any amounts received by either party from patients or third-party payors that relate to services rendered by the other party, (ii) any amounts received by Buyer from the Medicare program for reimbursement associated with the operations of Sellers’ Business relating to services performed during periods prior to Closing, and (iii) any amounts received by Seller from the Medicare program for reimbursement associated with the operations of Sellers’ Business relating to services performed during periods subsequent to Closing. Sellers shall, within thirty (30) days after each Monthly Reconciliation, remit to Buyer any and all amounts due to Buyer as a result of such Monthly Reconciliation. Buyer shall, within thirty (30) days after each Monthly Reconciliation, remit to Sellers any and all amounts due to Sellers as a result of such Monthly Reconciliation. Each party agrees to provide access to such books and records as the other

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party may reasonably request in connection with the Monthly Reconciliation.

(4)

Accrued PTO Reconciliation. As set forth in Section 10.2 of this Agreement, at Closing, Buyer shall assume Sellers’ obligations for Accrued PTO (as defined in Section 10.2 hereof) as of the Closing Date, up to the Maximum PTO Obligation (as defined in Section 10.2 hereof). In concert therewith, as set forth in Section 2.2 above, Buyer shall retain in escrow $140,000.00 of the Purchase Price at Closing. On the first date after the Closing that the actual amount of the Accrued PTO obligation as of the Closing Date (the “Actual PTO Obligation”) is readily ascertainable to the satisfaction of both Buyer and Sellers, the parties shall reconcile the actual Accrued PTO obligation amount with the Maximum PTO Obligation (the “Accrued PTO Reconciliation”). In the event the Accrued PTO Reconciliation provides that the Actual PTO Obligation is greater than the Maximum PTO Obligation, Buyer be entitled to the $140,000.00 of retained Purchase Price and Sellers’ shall pay to Buyer an amount equal to the excess of the Actual PTO Obligation over the Maximum PTO Obligation. In the event the Accrued PTO Reconciliation provides that the Actual PTO Obligation is less than the Maximum PTO Obligation, Buyer shall pay to Sellers’ that portion of the $140,000.00 of retained Purchase Price that is equal to the excess of the Maximum PTO Obligation over the Actual PTO Obligation. Any payments due to Sellers or Buyer as a result of the Accrued PTO Reconciliation shall be made within thirty (30) days after the date of the Accrued PTO Reconciliation. For example, if the Accrued PTO Obligation provides that the Actual PTO Obligation is $150,000.00, Buyer shall retain the entire $140,000.00 of retained Purchase Price and Sellers shall pay $10,000 to Buyer within 30 days after the Accrued PTO Reconciliation. On the other hand if the Accrued PTO Reconciliation provides that the Actual PTO Obligation is $100,000.00, Buyer shall retain $100,000.00 of the $140,000.00 retained Purchase Price and shall pay the remaining $40,000 to Sellers within 30 days of the Accrued PTO Reconciliation.

     2.3 Closing Date Deliveries. At the Closing on the Closing Date:

          (a) By Sellers. Sellers shall deliver, or cause to be delivered, to Buyer, properly executed and dated as of the Closing Date: (i) the Assumption Agreement; (ii) the Bill of Sale and Assignment; (iii) the Contract Assignment; (iv) the Lease Assignments; (v) the Lease Estoppel Letters; (vi) Sellers’ Closing Certificate; (vii) Sellers’ Performance Certificate; (viii) the Stock and Cash Escrow Agreements; (ix) the Noncompete Agreement; (x) the License Agreement (xi) the Employment Agreements; and (xii) such other documents as provided in Article 7 hereof or as Buyer shall reasonably request.

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          (b) By Buyer. In addition to the payments described in Section 2.2, Buyer shall deliver, or cause to be delivered, to Sellers, properly executed and dated as of the Closing Date: (i) the Assumption Agreement; (ii) the Bill of Sale and Assignment; (iii) Buyer’s Closing Certificate; (iv) Buyer’s Performance Certificate; (v) the Contract Assignment; (vi) the Lease Assignments; (vii) the Stock and Cash Escrow Agreements; (viii) the Noncompete Agreement; (ix) the License Agreement; (x) the Note; (xi) the Security Agreement (xii) the Employment Agreements; and (xiii) such other documents as provided in Article 8 hereof or as Sellers shall reasonably request.

     2.4 Non-Assumption of Liabilities. Buyer does not and shall not assume or become obligated to pay any debt, obligation or liability of any kind or nature of Sellers or the Business, whether or not incurred or accrued in connection with the operation of the Business, except the Assumed Liabilities or such other charges as are specifically allocated to Buyer elsewhere in this Agreement. Without limiting the foregoing, Buyer is not assuming: (i) any expenses, liabilities, or obligations of Sellers arising out of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby which are unpaid at the Closing (nor may Sellers pay any such expenses out of the Assets); (ii) any liabilities or obligations of Sellers relating to federal, state, or local income Taxes for the period through the Closing or other taxes attributable to the transactions contemplated hereby or the conduct of Sellers’ Business; (iii) any obligation of Sellers to pay a fee to any agent, broker, finder, or attorney relating to this transaction; or (iv) any liabilities that may accrue to Sellers as a result of any present or future Medicare and/or Medicaid audit and/or cost report liability and/or PEP recoupment liability and/or any other retroactive take-back liability related to the provision of care by Sellers prior to and up to the Closing, and/or any liabilities that may accrue to Sellers as a result of the provision of care or services provided by Sellers prior to the Closing Date.

     2.5 Taxes. All federal, state, local and other transfer, sales and use Taxes applicable to, imposed upon or arising out of the transfer to Buyer of the Purchased Assets as contemplated by this Agreement shall be paid by Sellers.

     2.6 Risk of Loss. The risk of all Events of Loss prior to the Closing shall be upon Sellers and the risk of all Events of Loss at or subsequent to the Closing shall be upon Buyer.

     2.7 Allocation of Purchase Price. The Purchase Price will be allocated among the Purchased Assets pursuant to Schedule 2.7. Buyer and Sellers each agree to file all Tax returns and other reports in a manner consistent with such allocation.

ARTICLE 3.

GOVERNMENTAL APPROVALS

     3.1 Governmental Approvals. Promptly following the execution of this Agreement, the parties shall proceed to prepare and file with the appropriate governmental authorities any other requests for approvals or waivers that are required from other governmental authorities in connection with the Closing, and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such requests for approvals or waivers and all proceedings necessary to secure such approvals and waivers.

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ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Each of Sellers individually represents and warrants to Buyer as follows; provided, however, that any representations and/or warranties of Sellers made hereunder relate only to the Business and expressly are not being made with regard to any of Sellers’ operations not related to the Business:

     4.1 Organization. Each Seller is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the State of South Carolina. Each Seller has the power to own, lease and operate its respective Purchased Assets and to conduct its respective Business as it is now being conducted. Each Seller is duly qualified and licensed and in good standing in each jurisdiction set forth on Schedule 4.1. Copies of the certificate or articles of incorporation or organization of Sellers and all amendments thereto, and the bylaws or operating agreements of Sellers as amended and currently in force, have been delivered to Buyer, and are true, complete and correct as of the date hereof.

     4.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement and all of the documents and instruments delivered in connection herewith by each Seller are within the corporate or limited liability company power of each Seller. The execution, delivery and performance by Sellers of this Agreement and the agreements and documents contemplated hereby to which Sellers are a party have been duly and validly authorized and approved by all necessary action on the part of Sellers. This Agreement is, and the other documents and instruments required hereby will be, when executed and delivered by each Seller, the valid and binding obligations of each Seller, enforceable against each Seller in accordance with their respective terms, subject only to bankruptcy, insolvency, reorganization, moratoriums or similar laws at the time in effect affecting the enforceability or right of creditors generally and by general equitable principles which may limit the right to obtain equitable remedies.

     4.3 Absence of Conflicting Agreements. Except as set forth on Schedule 4.3, or as specifically disclosed on any other Schedule attached hereto, neither the execution, delivery or performance of this Agreement by each Seller in accordance with its terms does or will, after the giving of notice, or the lapse of time or both, or otherwise:

          (a) conflict with, result in a breach of, or constitute a default under the certificate/articles of incorporation or organization, bylaws, operating agreement or similar governing document of any Seller, or any federal, state or local law, statute, ordinance, rule or regulation, or any court or administrative order or process or any material contract, agreement, arrangement, commitment or plan to which any Seller is a party or by which such Person or the Purchased Assets is bound;

          (b) result in the creation of any Lien upon any of the Purchased Assets;

          (c) terminate, amend or modify, or give any party the right to terminate, amend, modify, abandon or refuse to perform, any material contract, agreement, arrangement, commitment or plan to which a Seller is a party;

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          (d) accelerate or modify, or give any party the right to accelerate or modify, the time within which, or the terms under which, any duties or obligations are to be performed, or any rights or benefits are to be received, under any material contract, agreement, arrangement, commitment or plan to which a Seller is a party;

          (e) require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration or filing with, any court or public agency or other authority; or

          (f) require the consent of any Person under any material agreement, arrangement, or commitment of any nature.

     4.4 Title to Purchased Assets; Liens and Encumbrances. Except as set forth on Schedule 4.4, each Seller owns good and marketable title to or has valid and enforceable license or leasehold interests in all of the Purchased Assets (other than the Real Property, as to which Section 4.7 shall apply) free and clear of any and all Liens except for Permitted Liens. Except as set forth on Schedule 4.4, none of the Purchased Assets is used in any business of Sellers or their Affiliates other than the Business. There are no copyrights, trademarks or patents owned, licensed or used by Sellers in connection with the Business that are material to the Business other than the name “Winyah.”

     4.5 Equipment. Except as set forth on Schedule 4.5:

          (a) each of the material items of Equipment currently used in the Business is in good condition and repair, ordinary wear and tear excepted, and none is in need of maintenance or repair except for ordinary routine maintenance and repairs the cost of which would not vary materially from past history;

          (b) the Equipment includes all material items of tangible personal property currently utilized by Sellers in the Business; and

          (c) the list of Equipment on Schedule 1.4 is a true and correct list of all items of tangible personal property having a book value in excess of Two Thousand Five Hundred and No/100 ($2,500.00) Dollars, necessary for or used in the operation of the Business in the manner in which the Business has been and is now operated.

     4.6 Contracts. Except as set forth on Schedule 4.6:

          (a) Schedule 1.2(b) lists all Contracts except for Contracts which are cancelable by a Seller or its assignee without breach or penalty on not more than sixty (60) days’ notice and which involve average annual payments or receipts by a Seller of less than Ten Thousand and No/100 ($10,000.00) Dollars in the case of any single Contract and Twenty-Five Thousand and No/100 ($25,000.00) Dollars in the aggregate;

          (b) each Seller has performed each material term, covenant and condition of each of the Contracts required to be listed on Schedule 1.2(b), and no default on the part of a Seller or, to the Knowledge of Sellers, any other party thereto, or any event which with the passing of time or giving of notice would constitute a default on the part of a Seller or, to the Knowledge of Sellers, any other party thereto, exists under any of the Contracts required to be listed on Schedule 1.2(b);

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          (c) each of the Contracts required to be listed on Schedule 1.2(b) is in full force and effect and constitutes the legal and binding obligation of each Seller which is a party thereto and, to the Knowledge of Sellers, the other parties thereto in accordance with its terms;

          (d) there exists no actual or, to the Knowledge of Sellers, threatened termination, cancellation or limitation of, or any amendment, modification or change to any Contract which would have a material adverse effect on the business or condition, financial or otherwise, of the Business, including, without limitation: (i) the business relationship of any Seller with any supplier, customer, or managed care organization or insurer; (ii) the requirements of any customer, supplier or managed care organization; or (iii) the business relationship of any Seller with any customer, patient or managed care organization;

          (e) consummation of the transactions contemplated hereby will not require the consent, approval or authorization of third parties under any Contract; and

          (f) Sellers have furnished true and complete copies of all Contracts listed on Schedule 1.2(b), including all amendments, modifications and supplements thereto.

     4.7 Real Property. Except as set forth on Schedule 4.7:

          (a) Sellers do not own any Real Property used in the Business;

          (b) there are no parties in possession of any portion of the Real Property other than Sellers, or Sellers’ affiliates, whether as lessees, tenants at will, trespassers or otherwise;

          (c) the Real Property and the present use thereof does not violate any zoning, building, land-use or other federal, state or municipal law, ordinance, regulation or restriction applicable to the Real Property and, except for such violations which would not have a material adverse affect on the operation of the Business and the current use of the Real Property and all parts thereof as aforesaid, does not violate any restrictive covenants affecting the Real Property;

          (d) there is no law, ordinance, order, regulation or requirement now in existence, including, without limitation, any Environmental Law which would require any expenditure to modify or improve any of the Real Property in order to bring it into substantial compliance therewith; and

          (e) there are no material structural, electrical, mechanical, plumbing, air conditioning, heating or other defects in the buildings located on the Real Property and the roofs of the buildings located on the Real Property are free from leaks and in good condition.

     4.8 Leases. Except as set forth on Schedule 4.8 with respect to the Business:

          (a) the Leases described on Schedule 1.5 constitute all of the lease agreements between any Seller and third parties with respect to the Business;

          (b) each Seller, or Sellers’ affiliate, as applicable, has performed each material term, covenant and condition of each of the Leases which is required to be performed by it at or before the date hereof, and no default on the part of a Seller or, to the Knowledge of Sellers, any

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other party thereto, or event which with the passing of time or giving of notice or both would constitute a default on the part of Sellers or, to the Knowledge of Sellers, any other party thereto, exists under any Lease;

          (c) each of the Leases is in full force and effect and constitutes the legal and binding obligation of a Seller, or Sellers’ affiliate, as applicable, and, to the Knowledge of Sellers, each other party thereto in accordance with its terms;

          (d) Sellers have furnished true and complete copies of the Leases to Buyer, including any and all amendments thereto;

          (e) consummation of the transactions contemplated hereby will not require the consent, approval or authorization of any third party under any Lease; and

          (f) there are no leasing commissions or similar payments due, arising out of, resulting from or with respect to any Lease which are owed by a Seller, or Sellers’ affiliates.

     4.9 Financial Statements.

          (a) Attached as Schedule 4.9(a) are true and complete copies of the unaudited balance sheets of Sellers as of December 31, 2003 and 2004, and the related statements of operations and accumulated deficit and statement of cash flows, for the fiscal years then ended (the “Financial Statements”). The Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the period covered thereby and present fairly in all material respects the financial condition of Sellers as of the date indicated and the results of its operations and changes in cash flow for the periods then ended; and

          (b) Attached as Schedule 4.9(b) are true and complete copies of the unaudited consolidated balance sheets of Sellers as of December 31, 2004, and the related operating statements for the period then ended (the “Interim Financial Statements”). The Interim Financial Statements have been prepared on a basis consistent with past practices and present fairly in all material respects the financial condition of Sellers as of the date indicated and the results of its operations for the period then ended; subject, however, to year-end adjustments which, in the aggregate, will not be materially adverse and provided, that the Interim Financial Statements do not contain footnotes and lack other presentation items.

     4.10 Absence of Undisclosed Liabilities. With respect to the Business, no Seller has any debt, liability or obligation of any kind, whether accrued, absolute, contingent or otherwise, including, without limitation, any liability or obligation on account of Taxes or any governmental charges or penalty, interest or fines, except: (i) those liabilities reflected in the Financial Statements and Interim Financial Statements; (ii) liabilities disclosed on Schedule 4.10 or described with reasonable particularity in any other Schedule hereto; (iii) liabilities incurred in the ordinary course of business (other than contingent liabilities) since December 31, 2004; and (iv) liabilities incurred in connection with the transactions provided for in this Agreement.

     4.11 No Material Adverse Change. Except as set forth on Schedule 4.11 or as otherwise contemplated under this Agreement, since December 31, 2004, when considered either individually or in the aggregate, there has been no:

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          (a) material adverse change in the current assets, liabilities, or results of operations of the Business;

          (b) default under any indebtedness of any Seller or any event which, with the lapse of time or the giving of notice or both, would constitute such a default;

          (c) damage, destruction or loss, whether or not covered by insurance, adversely affecting the business or properties or Purchased Assets of the Business;

          (d) increase in compensation payable or to become payable to any of the employees of a Seller with respect to the Business or in any bonus payment or arrangement made with any such Person, or any material change in personnel policies or benefits except in the ordinary course of business;

          (e) contract, commitment or transaction entered into or consummated by any Seller with respect to the Business except in the ordinary course of business;

          (f) amendment or termination of any Contract, Lease or License to which a Seller is a party with respect to the Business, except in the ordinary course of business;

          (g) extraordinary loss (whether or not covered by insurance) or waiver by a Seller with respect to the Business of any material rights of value, either individually or in the aggregate;

          (h) sale, assignment, lease, mortgage, pledge, or encumbrance or other transfer or disposition of any of the Purchased Assets, except in the ordinary course of business or in connection with the acquisition of similar property or assets in the ordinary course of business;

          (i) commitment to or liability to any labor organization which represents, or proposes to represent, employees of a Seller with respect to the Business, or any labor union organizing activity, any actual or threatened employee strikes, work stoppages or lockouts or any material change in any Seller’s relations with its employees, agents, patients, managed care organizations, customers or suppliers or receipt of any complaint or other notice by any of its employees or by any Federal, state or local government regulator or agency with respect to any alleged violation of any policies or any laws or regulations governing labor standards, including, but not limited to, wages, safety standards, discrimination of any nature or sexual harassment;

          (j) lowering of the rates or prices charged by a Seller with respect to the Business in a manner not consistent with past practices or reflective of current market conditions;

          (k) notice from any material customer or vendor as to its intention not to conduct business with a Seller with respect to the Business;

          (l) write-down of the value of any Purchased Assets or write off as uncollectible any accounts receivable except in the ordinary course of business, none of which individually or in the aggregate is material;

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          (m) change in a Seller’s accounting principles, methods, practices or policies with respect to the Business, including, without limitation, any change in depreciation or amortization policies or rates;

          (n) by any Seller, failure to replenish its inventories and supplies in a normal and customary manner consistent with its prior practice, or purchase commitment of a material amount in excess of the normal, ordinary and usual requirements of its business or at any price materially in excess of the then current market price available to a Seller with respect to the Business, or any material change in its selling, pricing, advertising or personnel practices inconsistent with its prior practice;

          (o) litigation, action or proceeding before any governmental entity relating to the Business;

          (p) agreement by a Seller to any of the foregoing; or

          (q) other event or condition of any character that has resulted or might reasonably be expected to result in a material adverse effect on the Business.

     4.12 No Litigation; Labor Disputes; Compliance with Law. Except as set forth on Schedule 4.12:

          (a) there is no claim, charge, arbitration, action, decree, judgment, order, investigation or litigation at law or in equity, no arbitration proceeding, and no proceeding before or by any commission, agency or other administrative or regulatory body or authority, or pending, to the Knowledge of Sellers, to which a Seller is a party or otherwise relating to the Business or the Purchased Assets;

          (b) no Seller is subject to or bound by any labor agreement or collective bargaining agreement and there is no labor dispute, grievance, controversy, strike or request for union representation pending, to the Knowledge of Sellers, against Seller and, to the Knowledge of Sellers, there has been no occurrence of any event which would give rise to any such labor dispute, controversy, strike or request for representation; none of Sellers, within the last three (3) years, has experienced any organized slowdown, work interruption, strike or work stoppage by employees of Sellers with respect to the Business;

          (c) Sellers own and operate, and have owned and operated, the Business and the Purchased Assets and carry on and conduct, and have carried on and conducted, the Business in compliance with all federal, foreign, state and local laws, statutes, ordinances, rules and regulations, and all court or administrative orders or processes, including, but not limited to, Occupational Safety and Health Administration, Equal Employment Opportunity Commission (“EEOC”), National Labor Relations Board and Environmental Protection Agency, and federal and state health care fraud and abuse laws, a violation of which may reasonably be expected to have a material adverse effect on the Business, and Sellers comply with all applicable statutes, rules and regulations pertaining to government health care programs and equal employment opportunity, including, without limitation, those of the EEOC; and

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          (d) Sellers possess all Licenses material to the operation of the Business as presently conducted and are in material compliance with all applicable laws, regulations and orders issued by any governmental entity.

     4.13 Taxes. Except as set forth on Schedule 4.13:

          (a) Sellers have duly and timely filed all required federal, state and local Tax returns, reports and estimates for all years and periods (and portions thereof) for which any such returns, reports and estimates were due, and any and all amounts shown on such returns and reports to be due and payable have been paid in full except as may be contested in good faith. All of such Tax returns, reports and estimates are true and complete in all respects. Sellers have withheld all Tax required to be withheld under applicable law and regulations (including, but not limited to, Tax required to be withheld in connection with any amounts paid or owing to any employee, independent contractor, creditor, partner, stockholder or other third party), and such withholdings have either been paid to the proper governmental agency or set aside in accounts for such purpose, or accrued, reserved against and entered upon the books of Sellers; and

          (b) There are no Tax deficiencies (including penalties and interest) or claims of any kind assessed against or relating to Sellers or the Purchased Assets with respect to any taxable periods ending on or before, or including, the Closing Date of a character or nature that would result in Liens or claims on any of the Purchased Assets or on Buyer’s title or use of the Purchased Assets or that would result in any claim against, or liability or obligation of, Buyer;

     4.14 Insurance. Schedule 4.14 is a true and complete list of all liability and casualty insurance and errors and omissions insurance policies insuring the business, properties and assets of Sellers with respect to the Business. All of such policies are in full force and effect and are for such coverage and Sellers are not in default with respect to such insurance policies.

     4.15 Brokers. Neither this Agreement nor the sale and purchase of the Purchased Assets was induced or procured through any Person other than the Persons listed on Schedule 4.15 acting on behalf of, working for or representing Sellers as broker, finder, investment banker, financial advisor or in any similar capacity.

     4.16 Banks; Powers of Attorney. Schedule 4.16 lists the names of each bank in which Sellers with respect to the Business have an account or safe deposit box and the names of all Persons authorized to draw thereon or to have access thereto and the names of all Persons holding powers of attorney from Sellers, and a summary statement of the terms thereof.

     4.17 Employees.

          (a) Current Employees. Schedule 4.17(a) is a true and complete list of all employees of Sellers as of the Closing Date with respect to the Business, which list identifies the name and position of such employees, and the following compensation information as of January 31, 2005: (i) annual base salary, (ii) annual bonus, (iii) commissions, (iv) perquisites, (v) severance, and (vi) all other items of compensation. Except as set forth on Schedule 4.17(a) hereto, or as specifically disclosed on any other Schedule attached hereto, there are no employment agreements, consulting agreements or independent contractor agreements to which a Seller is a party with respect to the Business that are not terminable at will. The consummation

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of the transactions contemplated under this Agreement will not cause Buyer or Sellers to incur or suffer any liability relating to, or obligation to pay, severance, termination, or other payments to any Person or entity. Schedule 4.17(a) includes all employees of Sellers with respect to the Business who are on unpaid leave pursuant to the Family and Medical Leave Act of 1993. Complete and correct copies of all material written agreements with or concerning employees, including, without limitation, all employment policies and amendments and supplements thereto, have previously been delivered to Buyer, and a list of all such agreements and policies is set forth on Schedule 4.17(a). Except as set forth on Schedule 4.17(a), none of Sellers’ employees with respect to the Business has, to the Knowledge of Sellers, indicated a desire or intention to terminate his or her employment other than at normal retirement age or as a consequence of the transactions contemplated by this Agreement.

          (b) Assumed Employees. Schedule 4.17(b) is a list of employees of Sellers which Buyer shall employ effective as of the Closing Date, in accordance with Section 10.2 hereof (each employee listed on Schedule 4.17(b) shall be referred to individually as an “Assumed Employee” and collectively as “Assumed Employees”).

          (c) No Violation of Employee Contracts. To the Knowledge of Sellers, each Seller is not, nor is any employee of any Seller, in violation of any material term of any employment contract, non-competition agreement, or any other material contract or agreement or any restrictive covenant with, or any other common law obligation to, a former employer of such employee relating to the right of any such employee to be employed by Sellers because of the nature of the business conducted by Sellers’ Business or of the use of trade secrets or proprietary information of others. There are no pending or, to the Knowledge of Sellers, threatened, actions, suits, proceedings, or claims with respect to any contract, agreement, covenant, or obligation of the type referred to in the preceding sentence.

     4.18 Employee Benefit Plans. Except as set forth on Schedule 4.18:

          (a) All Employee Benefit Plans maintained by a Seller or to which a Seller is obligated to contribute are, and have in the past been, in all material respects maintained, funded and administered in compliance with ERISA and the Code, and other applicable law; no Plan subject to Title IV of ERISA has been terminated; no proceedings to terminate any Plan have been instituted under Subtitle C of Title IV of ERISA; no reportable event within the meaning of Section 4043 of Subtitle C of ERISA has occurred for any Plan maintained by a Seller; no Seller has withdrawn from a multi-employer plan (as defined in Section 4001(a) of ERISA); the consummation of the transactions contemplated hereby will not result in any withdrawal liability on the part of a Seller under a multi-employer plan; no Plan or Benefit Arrangement established or maintained by a Seller or to which a Seller is obligated to contribute has any “accumulated funding deficiency,” as defined in ERISA; and no Seller has incurred any liability to the Pension Benefit Guaranty Corporation with respect to any Plan. No Seller has engaged in any “prohibited transaction,” as defined in Section 406 of ERISA or in Section 4975 of the Code, with respect to any Plan.

          (b) Sellers have (i) filed or caused to be filed all returns and reports on the Plans that they are required to file, and (ii) paid or made adequate provision for all fees, interest, penalties, assessments or deficiencies that have become due pursuant to those returns or reports

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or pursuant to any assessment or adjustment that has been made relating to those returns or reports. All other fees, interest, penalties and assessments that are payable by or for Sellers with respect to the Plans have been timely reported, fully paid and discharged. There are no unpaid fees, penalties, interest or assessments due from Sellers or from any other Person with respect to the Plans that are or could become a Lien on any Purchased Asset or could otherwise adversely affect the Business or the Purchased Assets. Sellers have collected or withheld all amounts that are required to be collected or withheld by them to discharge their obligations with respect to the Plans, and all of those amounts have been paid to the appropriate governmental authority or set aside in appropriate accounts for future payment when due. Sellers have furnished to Buyer true and complete copies of all documents setting forth the terms and funding of each Plan.

     4.19 Environmental Compliance. Except as set forth on Schedule 4.19:

          (a) Sellers have complied and are in material compliance with, and the Real Property is in material compliance with, all Environmental Laws with respect to the Business and no action of Sellers with respect to their other businesses has resulted or reasonably could be expected to result in a Lien on the Purchased Assets.

          (b) No Seller is a party to any litigation or administrative proceeding and, to the Knowledge of Sellers, no litigation or administrative proceeding is threatened against any Seller, which in either case: (i) asserts or alleges that Sellers violated any Environmental Laws with respect to the Business; (ii) asserts or alleges that Sellers with respect to the Business are required to clean up, remove or take remedial or other response action due to the disposal, depositing, discharge, leaking or other release of any Hazardous Materials with respect to the Business; or (iii) asserts or alleges that Sellers are required to pay all or a portion of the cost of any past, present or future cleanup, removal or remedial or other response action which arises out of or is related to the disposal, depositing, discharge, leaking or other release of any Hazardous Materials by Sellers with respect to the Business;

          (c) with respect to the period during which Sellers occupied any Real Property, and, to the Knowledge of Sellers with respect to the time before Sellers occupied any Real Property, no Person has caused or permitted Hazardous Materials to be stored, deposited, treated, recycled or disposed of on, under or at any Real Property owned, leased, used or occupied by Sellers which materials, if known to be present, would require cleanup, removal or some other remedial action under any Environmental Laws;

          (d) to the Knowledge of Sellers, there are not now, nor have there previously been, tanks or other facilities on, under, or at any Real Property owned, leased, used or occupied by Sellers with respect to the Business which contained Hazardous Materials which, if known to be present in soils or ground water, would require cleanup, removal or some other remedial action under Environmental Laws;

          (e) to the Knowledge of Sellers, there are no conditions existing currently which would subject Sellers with respect to the Business to damages, penalties, injunctive relief or cleanup costs under any Environmental Laws or which require or are likely to require cleanup, removal, remedial action or other response pursuant to Environmental Laws;

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          (f) Sellers, with respect to the Business, are not subject to any judgment, order or citation related to or arising out of any Environmental Laws and have not been named or listed as a potentially responsible party by any governmental body or agency in a matter related to or arising out of any Environmental Laws; and

          (g) Sellers with respect to the Business have been duly issued, and currently have and will maintain through the Closing Date, all permits, licenses, certificates and approvals required under any Environmental Law.

     4.20 Health Care Matters.

          (a) As of the close of business on the Closing Date, Sellers, with respect to the Business, are certified for the participation in the Medicare and Medicaid programs in all relevant locations in South Carolina, and have the Medicare and Medicaid provider numbers listed on Schedule 1.7. Except as listed on Schedule 4.20, there are no claims, charges, arbitrations, grievances, actions, suits, proceedings, audits or investigations pending or threatened against any of the Medicare Assets.

          (b) Sellers hold all material permits and approvals of all governmental entities necessary to own, lease or operate all of the Purchased Assets, as appropriate, and to carry on the Business as now conducted. Sellers are in material compliance with: (i) all applicable laws, ordinances and regulations (including but not limited to those related to Medicare and Medicaid “fraud and abuse”); (ii) any court or administrative order or process, including, without limitation, those of the Centers for Medicare and Medicaid Services, Occupational Safety and Health Administration, EEOC, and National Labor Relations Board, and (iii) the terms of any permits. Except as set forth on Schedule 4.20, to the Knowledge of Sellers, no permits will be adversely impacted or affected by or as a result of the transactions contemplated hereby. True and complete copies of all permits have previously been provided to Buyer.

          (c) Sellers and their respective employees, agents, and contractors have not engaged in any activities which are prohibited under the federal anti-kickback statute or the Stark Law, 42 U.S.C. §§ 1320a-7b and 1395nn, respectively, or the regulations promulgated thereunder, or related or similar state or local statutes or regulations, or which are prohibited by rules of professional conduct, including, but not limited to, the following: (i) knowing and willfully making or causing to be made any false statement or representation of a fact in any application for any benefit or payment; (ii) any failure by a claimant to disclose knowledge of the occurrence of any event affecting the initial or continued right to any benefit or payment on its own behalf or on behalf of another, with the intent to fraudulently secure such benefit or payment; (iii) knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, or offering to any to receive such remuneration (1) in return for referring an individual to a Person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part by the Medicare or Medicaid programs, or (2) in return for purchasing, leasing or ordering or arranging for, or recommending, purchasing, a lease or ordering any good, facility service, or item for which payment may be made in whole or in part by the Medicare or Medicaid programs; and (iv) billing for, accepting or making a referral prohibited under the Stark Law or the regulations promulgated thereunder, or related or similar state or local statutes

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or regulations. Sellers and, to the Knowledge of Sellers, Sellers’ employees and agents have conducted the Business in material compliance with the requirements of the Medicare and Medicaid programs, insofar as applicable, and of the applicable state laws, rules and regulations.

          (d) Each Seller is a participant in good standing with the Medicare and Medicaid programs, as applicable. Each Seller has timely filed all requisite claims and other reports required to be filed in connection with all state and federal Medicare and Medicaid programs, as applicable, due on or before the date hereof, which are complete and correct. No validation review, program integrity review or other investigation related to Sellers or their operations has been conducted by any commission, board or agency, including, without limitation, the HHS Office of Inspector General, the U.S. Department of Justice, the South Carolina Attorney General, or any other applicable state’s Attorney General, in connection with any federal or state Medicare or Medicaid program, and, to the Knowledge of Sellers, no such reviews or investigations are scheduled, pending or threatened against or affecting Sellers or their operations or the consummation of the transactions contemplated hereby.

          (e) Sellers are in compliance with all applicable federal, state and local clinical standards, quality assurance program standards and records maintenance requirements, including, but not limited to, HIPAA.

     4.21 Affiliate Transactions. Except as provided on Schedule 4.21 hereto, no officer, director, partner or employee of Sellers, and no family member of any of the foregoing, has any contractual relationship with Sellers (other than as an employee) or any direct or indirect interest in any customer, supplier or competitor of Sellers, or in any other Person with whom Sellers are doing business or otherwise has an agreement, arrangement or understanding, written or oral, with Sellers, whether in existence as of the date hereof or proposed, other than the ownership of stock of publicly traded corporations that does not exceed one percent (1%) of the issued and outstanding stock of such corporation.

     4.22 Disputes with Customers and Vendors. Schedule 4.22 identifies with specificity all material unresolved disputes that Sellers have with any customers or vendors relating to the Business and the manner in which Sellers propose to resolve such disputes.

     4.23 Relations with Suppliers and Customers. To the Knowledge of Sellers, there is no fact, condition or event that would adversely affect Sellers’ relationship with any supplier or customer and, to the Knowledge of Sellers, no supplier or customer intends to terminate or materially reduce its relationship with the Business in the future or as a result of the consummation of the transactions contemplated hereby.

     4.24 Intangibles. No royalties, commissions, or fees are payable by Sellers to any Person by reason of the ownership or use of any intangible property now in effect, except as set forth in the Schedules attached hereto, and Sellers have no knowledge that any intangible property is being infringed by others. No claim that will have a material adverse effect on the business of Sellers is pending or, to the Knowledge of Sellers, threatened that the operation of Sellers’ Business or any method, process, part, or material that Sellers employ in the conduct of Sellers’ Business conflicts in any material way with, or infringes in any material way upon, any rights of the type enumerated hereinabove that are owned by others.

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     4.25 Representation as to Branch Office Status of Mt. Pleasant. Sellers warrant and represent that Monica Entzminger at PGBA represented to them that PGBA used 9/1/04 as the effective date for the addition of the Mt. Pleasant branch in the information she is forwarding to the CMS Regional Office for issuance of the branch identification number.

     4.26 Representation as of the Closing Date. Sellers’ representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the Closing Date, as though such representations and warranties were made on and as of such time.

     4.27 Disclosure. No statement of fact by Sellers contained in this Agreement and no written statement of fact furnished or to be furnished by Sellers to Buyer pursuant to or in connection with this Agreement contains or will contain any untrue statement of a material fact or omits or will omit a material fact necessary in order to make the statements herein or therein not misleading.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Sellers as follows:

     5.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of South Carolina. On the Closing Date, Buyer will be duly qualified to do business as a foreign corporation in each jurisdiction where the failure to so qualify would have a material adverse effect on the Business. Buyer has full corporate power to purchase the Purchased Assets pursuant to this Agreement.

     5.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement and all of the documents and instruments required hereby from Buyer are within the corporate power of Buyer and have been duly authorized by all necessary corporate action by Buyer. This Agreement is, and the other documents and instruments required hereby will be, when executed and delivered by Buyer, the valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, subject only to bankruptcy, insolvency, reorganization, moratoriums or similar laws at the time in effect affecting the enforceability or right of creditors generally and by general equitable principles which may limit the right to obtain equitable remedies.

     5.3 Absence of Conflicting Laws and Agreements. Except as set forth on Schedule 5.3, neither the execution, delivery or performance of this Agreement by Buyer in accordance with its terms, nor the consummation of the sale and purchase of the Purchased Assets or any other transaction contemplated by this Agreement, does or will, after the giving of notice or the lapse of time or both, or otherwise:

          (a) conflict with, result in a breach of, or constitute a default under, the certificate of incorporation or bylaws of Buyer, or any federal, state or local law, statute, ordinance, rule or regulation, or any court or administrative order or process, or any material contract,

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agreement, arrangement, commitment or plan to which Buyer is a party or by which Buyer or its assets is bound;

          (b) require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration or filing with, any court or governmental or public agency; or

          (c) require the consent of any Person under any material agreement, arrangement or commitment of any nature to which Buyer is a party to or by which it is bound.

     5.4 Brokers. Neither this Agreement nor the sale and purchase of the Purchased Assets or any other transaction contemplated by this Agreement was induced or procured through any Person acting on behalf of, working for or representing Buyer as broker, finder, investment banker, financial advisor or in any similar capacity.

     5.5 Representation as of the Closing Date. Buyer’s representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the Closing Date, as though such representations and warranties were made on and as of such time.

     5.6 Disclosure. No statement of fact by Buyer contained in this Agreement and no written statement of fact furnished or to be furnished by Buyer to Sellers pursuant to or in connection with this Agreement contains or will contain any untrue statement of a material fact or omits or will omit a material fact necessary in order to make the statements herein or therein not misleading.

     5.7 No Litigation. No action, proceeding, investigation, regulation or legislation is pending or, to the knowledge of Buyer, threatened which seeks to enjoin, restrain or prohibit Buyer with respect to the consummation of the transactions contemplated hereby.

ARTICLE 6.

CERTAIN MATTERS PENDING THE CLOSING

     From and after the date of this Agreement and until the Closing (unless otherwise provided herein):

     6.1 Access. Buyer and its authorized agents, officers and representatives shall have reasonable access to the Purchased Assets to conduct such examination and investigation of the Business and the Purchased Assets as it deems reasonably necessary, provided that such examinations shall be during the Business’ normal business hours and shall not unreasonably interfere with the Business’ normal operations and activities.

     6.2 Notice of Adverse Changes. Pending the Closing, Sellers shall give Buyer prompt written notice of the occurrence of any of the following with respect to Sellers as it relates to the Business:

          (a) an Event of Loss involving individually or in the aggregate more than Fifty Thousand and No/100 ($50,000.00) Dollars;

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          (b) the commencement or filing of any decree, judgment, order, proceeding or litigation at law or in equity, arbitration or other proceeding before any commission, agency or administrative or regulatory body or authority which involves any License or which could have a material adverse effect on the Business or the Purchased Assets, other than proceedings or litigation of general applicability to the home health care industry;

          (c) any material labor grievance, strike, request for union representation, controversy or dispute affecting the business or operations of the Business;

          (d) any violation or written notice of any alleged violation of any federal, state or local law, statute, ordinance, rule or regulation, or License;

          (e) any notice of breach, default, claimed default or termination of any material Contract or material Lease other than pursuant to its terms; or

          (f) any other actual or threatened material adverse developments with respect to the business or operations of the Business.

     6.3 Operations Pending Closing. From and after the date hereof and prior to the Closing, Sellers shall, with respect to the Business:

          (a) operate the Business in the ordinary course of business in accordance with past practices; and use commercially reasonable best efforts to preserve the present business organization intact, keep available the services of present officers and employees and preserve present business relationships with patients, governmental agencies, insurers, managed care organizations, suppliers, providers and others having business dealings with each Seller with respect to the Business;

          (b) operate the Business in accordance with the Licenses and applicable governmental requirements, laws, rules and regulations;

          (c) maintain the Equipment in good working order, ordinary wear and tear and usage excepted, and replace any of the Equipment which shall be worn out, broken, lost, stolen or destroyed, which Equipment would have been replaced in the ordinary course of business in accordance with past practices;

          (d) not sell, lease, mortgage, pledge, encumber, transfer, or otherwise dispose of any of the Purchased Assets, except for transactions in the ordinary and regular course of the operation of the Business;

          (e) not increase or otherwise change the rate or nature of the compensation (including wages, salaries and bonuses) which is paid or payable to any Person with respect to the Business, except pursuant to existing compensation and fringe benefit plans, practices and arrangements which have been disclosed to Buyer and not enter into, renew or allow the renewal of, any employment or consulting agreement or other contract or arrangement with respect to the performance of personal services;

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          (f) except with Buyer’s prior written consent, not enter into, or become obligated under, any agreement or commitment on behalf of Sellers with respect to the Business, except for (i) agreements entered into in the ordinary and regular course of the operation of the Business, and (ii) those other agreements or commitments otherwise permitted under this Section 6.3; or change, amend, terminate or otherwise modify any material Contract, Lease, agreement or commitment except for those which terminate or expire by their own terms;

          (g) maintain in full force and effect policies of liability and casualty insurance of substantially the same type, character and coverage as the policies currently carried with respect to the Business;

          (h) not adopt, or commit to adopt, any Plan, Benefit Arrangement or other pension, profit sharing, deferred compensation or similar plan, program or trust on behalf of personnel of Sellers with respect to the Business, other than Sellers Employee Benefit Plans or any other such plan, program or trust currently maintained by Sellers with respect to the Business; or modify the existing Employee Benefit Plans;

          (i) promptly notify Buyer of any attempt or actual collective bargaining organizing activity with respect to any employees, and not enter into any collective bargaining agreement applicable to any employees of the Business;

          (j) follow Sellers’ usual and customary policy with respect to extending credit for sales of products or services and with respect to collecting accounts receivable arising from such extension of credit;

          (k) make reasonable commercial efforts to promote and advertise the Business and make expenditures therefore consistent with past practices and protect the business, business prospects and market share of the Business;

          (l) not compromise or settle any litigation to which any Seller is a party with respect to the Business;

          (m) perform in all material respects all Contracts and Leases in accordance with their terms and pay all accounts payable, liabilities and all other obligations of Sellers with respect to the Business when due unless being contested in good faith;

          (n) except as required by law or generally accepted accounting principles and disclosed to Buyer, maintain the books, records and accounts of Sellers with respect to the Business in the ordinary course of business consistent with past practice;

          (o) not enter into any transaction with an Affiliate with respect to the Business without the prior written consent of Buyer; and

          (p) not take or agree to take any action inconsistent with the representations and warranties of Sellers contained herein being true and correct as of the Closing Date in all material respects, or consummation of the Closing as contemplated by this Agreement.

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     6.4 Consents. Sellers will use their good faith best efforts to obtain all consents and approvals from third Persons whose consent or approval is required pursuant to any Contract or Lease prior to the Closing Date, including the Lease Estoppel Letters and Certificate of Need and regulatory licensure approvals. All such consents and estoppels shall be in writing and in form and substance reasonably satisfactory to Buyer, and executed counterparts thereof will be delivered to Buyer promptly after receipt thereof, but in no event later than the Closing. In any case in which a necessary consent or approval has not been obtained at or prior to the Closing and in which Buyer has agreed to waive all conditions precedent to Buyer’s obligations in connection therewith, Sellers shall assist Buyer, at Buyer’s request, after Closing in every reasonable effort to obtain such consent or approval.

     6.5 Cooperation. Buyer and Sellers will cooperate in all respects in connection with:

          (a) securing any nongovernmental approvals, consents, and waivers of third parties listed on Schedule 6.5; and

          (b) giving notices to any governmental authority, or securing the permission, approval, determination, consent or waiver of any governmental authority, required by law in connection with the sale of the Purchased Assets, as set forth on Schedule 6.5.

     6.6 Release of Liens. Except for the Permitted Liens disclosed on Schedule 1.8, at or prior to the Closing, Sellers shall obtain the release of all Liens disclosed in the Schedules hereto and any other Liens on the Purchased Assets and shall duly file releases or terminations of all such Liens with each governmental agency or office in which any such Lien or evidence thereof shall have been previously filed.

     6.7 Tax Returns and Payments.

          (a) All Tax returns, estimates and reports required to be filed by Sellers with respect to the Business prior to the Closing Date or relating to periods prior to the Closing Date will be timely filed when due with the appropriate governmental agencies or extensions will have been granted; and

          (b) all Taxes (except property taxes not yet due and payable) pertaining to ownership of the Purchased Assets or operation of the Business prior to the Closing Date will be paid when due and payable unless protested in good faith.

     6.8 Public Announcement. No party hereto shall issue any press release or public announcement or otherwise divulge the existence of this Agreement or the transactions contemplated hereby without prior approval of the other parties hereto, which shall not be unreasonably withheld, except as and to the extent that such party shall be obligated by law or regulation or, in the opinion of counsel to such party, disclosure to the public markets shall be required, in which case the other party shall be so advised and the parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued.

     6.9 Best Efforts. Without limiting the specific obligations of any party hereto under any agreement or covenant hereunder, each party hereto shall use reasonable best efforts to take all action and do all things necessary in order to consummate the transactions contemplated by this

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Agreement, including, without limitation, satisfaction, but not waiver, of the closing conditions set forth in Article 7 and Article 8.

ARTICLE 7.

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

     Each and every obligation of Buyer to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent:

     7.1 Compliance with Agreement. Sellers shall have performed and complied in all material respects with each of their obligations under this Agreement which are to be performed or complied with by them prior to or at the Closing.

     7.2 Proceedings and Instruments Satisfactory. All proceedings, corporate or other, required to be taken by Sellers in connection with the performance of this Agreement, and all documents incident thereto, shall be complete in all material respects to the reasonable satisfaction of Buyer and Buyer’s counsel, and Sellers shall have made available to Buyer for examination the originals or true and correct copies of all documents which Buyer may reasonably request in connection with the transactions contemplated by this Agreement.

     7.3 Representations and Warranties. The representations and warranties made by Sellers which are qualified in any respect as to materiality shall be true and correct as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date, except for changes permitted or contemplated by this Agreement; all other representations and warranties made by Sellers in this Agreement shall be true and correct in all material respects as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date, except for changes permitted or contemplated by this Agreement.

     7.4 No Material Adverse Change. Between the date of this Agreement and the Closing, there shall have been no material adverse change in the financial condition or results of operation of Sellers with respect to the Business, nor any material adverse change in the condition of the Purchased Assets.

     7.5 Event of Loss. Between the date of this Agreement and the Closing, Sellers with respect to the Business shall not have sustained an Event of Loss which individually or in the aggregate would cost in excess of Fifty Thousand and No/100 ($50,000.00) Dollars to repair and which repair shall not have been completed on or prior to the Closing Date to Buyer’s reasonable satisfaction; provided, however, that Sellers may elect to extend the Closing for a reasonable period of time not to exceed sixty (60) days if necessary to complete such repairs. Notwithstanding the foregoing, if Buyer elects in its sole discretion to waive the condition precedent to Buyer’s obligations set forth in this Section 7.5 and proceed with the consummation of the transactions contemplated hereby, as permitted by this Article 7, Sellers shall have no further obligation to make any repairs due to such Event of Loss and shall have no further right to elect to extend the Closing due to such Event of Loss.

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     7.6 Deliveries at Closing. Sellers shall have delivered or caused to be delivered to Buyer the documents, each properly executed and dated as of the Closing Date, required pursuant to Section 2.3(a).

     7.7 Other Documents. Sellers shall have delivered to Buyer such certificates and documents of Sellers and public officials as shall be reasonably requested by Buyer’s counsel to establish the existence and good standing of Sellers, and the due authorization of this Agreement and the transactions contemplated hereby by Sellers.

     7.8 Possession; Instruments of Conveyance and Transfer. Sellers shall have delivered to Buyer at the Closing such other documents as shall be effective to vest in Buyer good title to the Purchased Assets as contemplated by this Agreement.

     7.9 Approvals and Consents. There shall have been secured such permissions, approvals, determinations, consents and waivers as listed on Schedule 7.9, including the Lease Estoppel Letters.

     7.10 Governmental Consents. All authorizations, consents or approvals of any and all governmental regulatory authorities necessary in connection with the consummation of the transactions contemplated by this Agreement, specifically including, but not limited to, approvals from state Certificate of Need agencies and, to the extent applicable, licensure departments, shall have been obtained and be in full force and effect.

     7.11 Absence of Investigations and Proceedings. There shall be no decree, judgment, order, or litigation at law or in equity, no arbitration proceedings, and no proceeding before or by any commission, agency or other administrative or regulatory body or authority that is pending to which any Seller is a party with respect to the Business or to which the Business or the Purchased Assets are subject, including any with respect to condemnation, zoning, use or occupancy, which would materially adversely affect the ability of Buyer to operate the Business or to use the Purchased Assets in the same manner as operated and used by Sellers or would, in the reasonable judgment of Buyer, make it inadvisable to consummate the transactions contemplated hereby. Without limiting the generality of the foregoing, no action or proceeding or formal investigation by any Person or governmental agency shall be pending with the object of challenging or preventing the Closing and no other proceedings shall be pending with such object or to collect damages from Buyer on account thereof and for which Buyer is not indemnified hereunder. No action or proceeding shall be pending before any governmental body to revoke, modify in any material respect or refuse to renew any of the Licenses. No suit, action or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the consummation of the transactions contemplated hereby.

     7.12 No Liens. On the Closing Date and simultaneously with the Closing, there shall not be any Liens on the Purchased Assets except Permitted Liens.

     7.13 Provider Numbers. Sellers shall have delivered to Buyer all agreements, contracts, filings authorizations and other documents or requirements of whatever nature which are necessary in order to enable Buyer to effectively receive necessary licenses, permits, exceptions to

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Certificates of Need, and all Medicare and Medicaid licenses and provider numbers with respect to the Business.

Notwithstanding the above, if any of the conditions set forth in this Article 7 has not been satisfied, Buyer may in its sole discretion elect to proceed with the consummation of the transactions contemplated hereby.

ARTICLE 8.

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS

     Each and every obligation of Sellers to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent:

     8.1 Compliance with Agreement. Buyer shall have performed and complied in all material respects with all of its obligations under this Agreement which are to be performed or complied with by it prior to or at the Closing.

     8.2 Proceedings and Instruments Satisfactory. All proceedings, corporate or other, to be taken by Buyer in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be complete to the reasonable satisfaction of Sellers and Sellers’ counsel, and Buyer shall have made available to Sellers for examination the originals or true and correct copies of all documents which Sellers may reasonably request in connection with the transactions contemplated by this Agreement.

     8.3 Representations and Warranties. The representations and warranties made by Buyer shall be true and correct in all material respects as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date, except for changes permitted or contemplated by this Agreement.

     8.4 Deliveries at Closing. Buyer shall have delivered or caused to be delivered to Sellers the documents, each properly executed and dated as of the Closing Date, required pursuant to Section 2.3(b). Buyer shall also have made the payments described in Section 2.2.

     8.5 Other Documents. Buyer shall have delivered to Sellers such certificates and documents of officers of Buyer and of public officials as shall be reasonably requested by Sellers’ counsel to establish the existence and good standing of Buyer and the due authorization of this Agreement and the transactions contemplated hereby by Buyer, including necessary and appropriate board of director resolutions of Buyer.

     8.6 Absence of Investigations and Proceedings. No action or proceeding or formal investigation by any Person or governmental agency shall be pending with the object of challenging or preventing the Closing, and no other proceedings shall be pending with such object or to collect damages from Sellers on account thereof.

     8.7 Governmental Consents. All material authorizations, consents or approvals of any and all governmental regulatory authorities shall have been obtained and be in full force and effect.

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     8.8 Due Diligence Not Related to the Business. Buyer shall have delivered to Sellers all materials, documents, data of any kind, and all copies thereof (without regard to form of copy) in Buyer’s or its Affiliates’ possession related to Sellers or Affiliates of Sellers which do not relate specifically to the Business.

     Notwithstanding the above, if any of the conditions set forth in this Article 8 has not been satisfied, Sellers may nevertheless elect to proceed with the consummation of the transactions contemplated hereby.

ARTICLE 9.

INDEMNIFICATION

     From and after the Closing, the parties shall be indemnified as set forth below:

     9.1 Indemnification by Sellers. The Sellers shall each individually exculpate, indemnify and hold Buyer, Buyer’s employees, officers, directors and stockholders (collectively, “Buyer Indemnified Parties”) harmless from and against, and agree promptly to defend Buyer from and reimburse Buyer Indemnified Parties for, any and all losses, damages, costs, expenses, liabilities, obligations and claims of any kind, including, without limitation, reasonable attorney fees and other legal costs and expenses incurred in connection herewith or in the investigation of any claims made hereunder (“Claims”), incurred by any of Buyer Indemnified Parties that result from:

          (a) any breach or inaccuracy of any of the representations and warranties made by the Sellers in or pursuant to this Agreement, or in any instrument, certificate or affidavit delivered by the Sellers at the Closing in accordance with the provisions of any Section hereof provided, Buyer makes a claim for indemnification within the applicable survival period set forth in Section 9.5 hereof;

          (b) any failure by the Sellers to carry out, perform, satisfy and discharge any of their respective covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the documents and materials delivered by the Sellers pursuant to this Agreement;

          (c) any Taxes (except property taxes not yet due and payable) accrued with respect to the periods prior to the Closing Date;

          (d) any liabilities (other than the Assumed Liabilities) claims or litigation matters which relate or are due to the conduct of the Business on or prior to the Closing Date or any Retained Liability; or

          (e) any suit, action or other proceeding brought by any governmental authority or Person arising out of, or in any way related to, any of the matters referred to in Sections 9.1(a)-(d).

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     The amounts for which the Sellers shall be liable under Section 9.1 of this Agreement shall be net of any insurance proceeds paid to Buyer Indemnified Parties in connection with the facts giving rise to the right of indemnification.

     9.2 Indemnification by Buyer. Buyer shall exculpate, indemnify and hold Sellers and their employees, officers, directors and stockholders (collectively, “Seller Indemnified Parties”) harmless from and against, and agrees to promptly defend Seller Indemnified Parties from and reimburse Seller Indemnified Parties for, any and all Claims incurred by Seller Indemnified Parties that result from:

          (a) any breach or inaccuracy of any representations and warranties made by Buyer in or pursuant to this Agreement, or in any certificate or affidavit delivered by Buyer at the Closing in accordance with the provisions of any Section hereof; provided that Sellers make a claim for indemnification within the applicable survival period set forth in Section 9.5;

          (b) any failure by Buyer to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the documents and materials delivered by Buyer pursuant to this Agreement;

          (c) the operation or ownership of the Business from and after the Closing Date; or

          (d) any suit, action or other proceeding brought by any governmental authority or Person arising out of, or in any way related to, any of the matters referred to in Sections 9.2(a)-(c).

     The amounts for which Buyer shall be liable under this Section 9.2 shall be net of any insurance proceeds paid to Sellers from its own insurance policies in connection with the facts giving rise to the right of indemnification.

9.3 Method of Asserting Claims.

          (a) The party seeking indemnification (the “Indemnitee”) will give prompt written notice to the other party or parties (the “Indemnitor”) of any Claim which it discovers or of which it receives notice after the Closing and which might give rise to a claim by it against Indemnitor under this Article 9, stating the nature, basis and (to the extent known) amount thereof; provided that failure to give prompt notice shall not jeopardize the right of any Indemnitee to indemnification, except to the extent that such failure shall have materially prejudiced the ability of the Indemnitor to defend such Claim. Subject to Indemnitor’s right to defend in good faith third party claims as hereinafter provided, the Indemnitor shall satisfy its obligations under this Article 9 within thirty (30) days after receipt of written notice thereof from the Indemnitee.

          (b) In case of any Claim or suit by a third party or by any governmental body, or any legal, administrative or arbitration proceeding with respect to which Indemnitor may have liability under the indemnity agreement contained in this Article 9, and which Indemnitor

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acknowledges is a Claim or demand for which it must indemnify or hold harmless Indemnitee under Section 9.1 or 9.2, or which may give rise to Buyer’s setoff rights under Section 9.4, Indemnitor shall be entitled to participate therein and, to the extent desired by it, to assume the defense thereof and to employ counsel reasonably acceptable to Indemnitee to defend any such Claim or demand asserted against the Indemnitee. After notice from Indemnitor to Indemnitee of the election so to assume the defense thereof, Indemnitor will not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation, unless Indemnitor does not actually assume the defense thereof following notice of such election. Indemnitee and Indemnitor will render to each other such assistance as may reasonably be required of each other in order to insure proper and adequate defense of any such suit, Claim or proceeding. If Indemnitor actually assumes the defense of Indemnitee, Indemnitee will not make any settlement of any Claim which might give rise to liability of Indemnitor under the indemnity agreements contained in this Section without the written consent of Indemnitor, which consent shall not be unreasonably withheld, if such settlement includes the unconditional release of Indemnitor, and Indemnitor shall not agree to make any settlement of any Claim which would not include the unconditional release of Indemnitee without the written consent of Indemnitee, which consent shall not be unreasonably withheld.

     9.4 Setoff Rights of Buyer. The Buyer shall have the following setoff rights for Claims otherwise allowed under Section 9.1, but only to the extent and on the terms set forth below in this Section 9.4:

          (a) Setoff Rights.

(1)

Note Setoff. The outstanding principal and interest due under the Note shall be subject to setoff by Buyer (the “Note Setoff”) in the amount of any actual damages incurred by Buyer within two (2) years after the Closing Date (the “Note Setoff Period”) as a direct result of any breach of any of the representations and warranties made by Sellers in or pursuant to this Agreement; provided, however, that should Buyer receive, and promptly provide evidence to Sellers of, a written and verifiable Claim from a third party within two (2) years after the Closing Date which if ultimately proven successful would directly result in a breach of any representation or warranty made by Sellers in or pursuant to this Agreement, the Note Setoff Period shall be extended from the date of Buyer’s receipt of such third party Claim until such time as the amount of any actual damages incurred by Buyer as a result of such breach shall be readily ascertainable.

(2)

Stock Setoff. The value of the Stock shall be subject to setoff by Buyer (the “Stock Setoff”) in the amount of any and all actual payments made to complainants within one (1) year after the Closing Date (the “Stock Setoff Period”) which occur as a direct result of: (i) any actual payment made to third party complainants from a Claim arising out of Sellers’ breach of the warranties or representations

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contained in Sections 4.12(a) of this Agreement; or (ii) any actual payments made to a governmental entity from a Claim arising from Sellers’ breach of the warranties or representations contained in Sections 4.13 or 4.20(d) of this Agreement; provided, that Buyer shall have first exhausted its rights under the Note Setoff before asserting its rights under the Stock Setoff.

          (b) Limitation on Claims for Asserting Setoff Rights. No setoff rights may be pursued by Buyer under (a)(1) or (a)(2) above unless the actual damages or third party payments upon which such right to setoff are based alone or in the aggregate total in excess of One Hundred Thousand and No/100 ($100,000.00) Dollars.

          (c) Method of Asserting Setoff Rights. In addition to the required procedures for asserting Claims set forth in 9.3 of this Agreement, in order for Buyer to exercise any right of setoff described in this Section 9.4, Buyer must first provide written notice to Sellers of such intent providing the nature, basis and amount thereof. In addition to such notice, Buyer shall simultaneously supply to Sellers all supporting documentation which evidences the actual damages incurred, or actual third party payments made, by Buyer, which Buyer seeks to setoff (such documentation may include, but not be limited to, any and all receipts, cancelled checks, banking statements or similar proof of payment) (such notice and accompanying documentation collectively referred to as, the “Setoff Notice”). Sellers shall have thirty (30) days after receipt of the Setoff Notice to notify Buyer that (1) the setoff is not permitted under the terms of this Agreement, and/or (2) the supporting documentation is insufficient to determine Buyer’s right to setoff (the “Dispute Notice”). Any dispute remaining between Buyer and Seller regarding Buyer’s right to setoff after a period of thirty (30) days from Buyer’s receipt of the Dispute Notice shall be resolved in accordance with the provisions of Section 11.15 of this Agreement.

     9.5 Survival of Representations. The representations and warranties made by Sellers and Buyer under this Agreement shall survive until the date that is two (2) years from the Closing Date, except that the representations and warranties set forth in Sections 4.12 (a), 4.13 and 4.20 (d) shall survive the Closing until the expiration of the relevant applicable statute of limitations.

     9.6 Limitation on Aggregate Claims. Except as otherwise provided in Section 9.4(b), no Claims may be asserted by Buyer pursuant to Section 9.1 until the aggregate amount of all such Claims of Buyer shall exceed Three Hundred Fifty Thousand and No/100 ($350,000.00) Dollars (the “Threshold Amount”), at which time Buyer shall be entitled to recover all amounts of Claims in excess of the Threshold Amount up to a maximum amount of Ten Million and No/100 ($10,000,000.00) Dollars.

     9.7 Remedies. Except as otherwise specifically provided in this Agreement, the foregoing indemnification provisions, absent fraud, are the sole and exclusive remedy any party may have for a breach of any representation or warranty hereunder.

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ARTICLE 10.

FURTHER AGREEMENTS

     10.1 Assignment or Transfer of Note and Stock. At any time after the Closing, Sellers, without notice to, or the consent of, Buyer, may transfer or assign its right, title and interest in and to the Note and/or Stock to any third party; provided, however, that such transfer or assignment by Sellers shall in no manner affect the rights or obligations of Sellers and Buyer under the terms of this Agreement and upon any such transfer or assignment shall at all times be subject to the terms and provisions of this Agreement.

     10.2 Employee Matters.

          (a) As of the Closing Date, Buyer shall (i) offer employment to the Assumed Employees and continue the employment of all Assumed Employees at substantially equivalent rates of pay and working conditions as in effect at Closing, with the understanding that such employment shall be at will, and (ii) assume the obligation for accrued Paid Time Off associated with the Assumed Employees as of the Closing Date (“Accrued PTO”); provided, however, that the maximum obligation for the Accrued PTO assumed by Buyer hereunder shall not exceed the estimated Accrued PTO obligation as of the Closing Date of $140,000.00 (the “Maximum PTO Obligation”).

          (b) As soon as practicable after commencement of employment, Buyer shall make available to Assumed Employees all employee benefit plans, policies, and programs which Buyer otherwise makes available to its employees, on the same terms and conditions as generally apply to new employees hired by Buyer, except as otherwise provided in Section 10.2(c) below.

          (c) Buyer agrees with respect to the Assumed Employees to use commercially reasonable efforts: (i) to give such Assumed Employees full credit under Buyer’s employee benefit plans and Benefit Arrangements for periods of service with Sellers prior to Closing for all purposes for which such service was recognized under the Benefit Arrangements; (ii) to secure the consent of the insurers of welfare benefit plans to waive eligibility waiting periods and to allow Assumed Employees to immediately enroll in such welfare benefit plans if they so choose, subject to all otherwise applicable terms and conditions of coverage as generally applicable to new employees hired by Buyer; and (iii) to have insurers of welfare benefit plans waive any pre-existing condition requirement under such Plans.

          (d) Buyer does not and shall not assume any obligations or liability under any collective bargaining agreement currently in existence or which may come into existence prior to Closing.

          (e) Any notification required by any federal, state or local law governing mass layoffs or terminations, including, without limitation, the federal Worker Adjustment and Retraining Notification Act of 1988, shall be given by Sellers. Compliance with all such laws shall be Sellers’ sole responsibility and liability. Sellers shall indemnify, defend and hold Buyer harmless from and against all liabilities, claims and causes of action (including, without

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limitation, reasonable attorney fees and other legal costs and expenses) arising out of the violation, or alleged violation, of any such laws.

     10.3 Employment Agreements. At the Closing, Buyer shall enter into employment agreements with Gary Cooper and Roddy Urquhart in the form of the Employment Agreements attached hereto as EXHIBIT “E-1” and “E-2” respectively.

     10.4 Confidentiality.

          (a) Buyer agrees that prior to Closing, Buyer and its agents and representatives shall not use for its or their own benefit (except when required by law and except for use in connection with Buyer’s financing of the transaction and Buyer’s investigation of Sellers and the Purchased Assets in connection with this Agreement) and shall hold in strict confidence and not disclose: (i) any data or information relating to Sellers or the Business obtained from Sellers or any of their directors, officers, employees, agents or representatives in connection with this Agreement; or (ii) any data or information relating to the business, customers, financial statements, conditions or operations of the Business which is confidential in nature and not generally known to the public (clauses (i) and (ii) together, “Sellers’ Information”). If the transactions contemplated in this Agreement are not consummated for any reason, Buyer shall promptly return to Sellers all data, information and any other written material obtained by Buyer in connection with this transaction and any copies, summaries or extracts thereof, and shall refrain from disclosing any of Sellers’ Information to any third party or using any of Sellers’ Information for its own benefit or that of any other Person.

          (b) Sellers agree that Sellers and their agents and representatives shall not use for their own benefit (except when required by law and except for use in connection with their respective investigations and reviews of Buyer in connection with this Agreement), and shall hold in strict confidence and not disclose: (i) any data or information relating to Buyer or its Affiliates obtained from Buyer, or from any of its directors, officers, employees, agents or representatives, in connection with this Agreement; or (ii) any data and information relating to the business, customers, financial statements, conditions or operations of Buyer which is confidential in nature and not generally known to the public (clauses (i) and (ii) together, “Buyer’s Information”). If the transactions contemplated in this Agreement are not consummated for any reason, Sellers shall promptly return to Buyer all data, information and any other written material obtained by Sellers from Buyer in connection with this transaction and any copies, summaries or extracts, thereof and shall refrain from disclosing, and shall cause Sellers to refrain from disclosing, any of Buyer’s Information to any third party or using any of Buyer’s Information for its own benefit or that of any other Person.

          (c) Notwithstanding any other provision to the contrary herein, the provisions of this Section 10.4 shall survive the termination of this Agreement

          (d) Sellers shall retain ownership of all records for patients and operations of Sellers’ Business prior to the Closing Date. Subject to applicable law, Buyer and Sellers shall afford one another reasonable access to records of the Business as may be subsequently required for the purposes of audits, preparation of Tax returns, and compliance with court orders and subpoenas. Such reasonable access shall be afforded during regular business hours and upon reasonable notice

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at the other party’s principal places of business or at any location where such records are stored, and the party requesting access to records and information shall have the right, at its own expense, to make copies of any such records and files; provided, however, that any such access or copying shall be had or done in such a manner so as not to unreasonably interfere with the normal conduct of the other party’s business and operations.

     10.5 Maintenance of Patient Files and Records. As Sellers are ceasing operation of the Business and transferring ownership of all Patient Medical Records (as defined below in this Section 10.5) to Buyer as part of the Purchased Assets, the Patient Medical Records have no value to Sellers. Buyer hereby agrees to except the sole responsibility for maintaining all Patient Medical Records in accordance with state and federal laws regarding the maintenance and confidentiality of medical records, including, but not limited to, the Physicians’ Patient Records Act, § 44-115-10 et seq. of the South Carolina Code of Laws, as amended, (the “Physicians’ Patient Records Act”) and the Health Insurance Portability and Accountability Act (“HIPAA”). Buyer agrees to maintain the Patient Medical Records in good condition, in a safe environment, reasonably free from risk of fire, flood or other disasters. In accordance with the Physicians’ Patient Records Act, the Buyer, with Sellers’ cooperation as needed, agrees to comply with the notice requirements set forth in § 44-115-130 of the South Carolina Code of Laws, as amended.

     10.6 Storage Facilities Leases. Sellers currently lease certain storage facilities in the State of South Carolina for use in the Business (collectively, the “Storage Facilities”) pursuant to those certain Storage Facilities leases, copies of which are attached hereto as Schedule 10.6, which each are expressly non-assignable by its terms (collectively, the “Storage Facilities Leases”). Buyer and Sellers each acknowledge that certain portions of the Patient Medical Records to be transferred to Buyer hereunder are located at the Storage Facilities. In concert therewith, Buyer and Sellers each agree that, at or as soon after Closing as is reasonably practicable, Sellers shall terminate the Storage Facilities Leases and Buyer shall enter into similar leases for the Storage Facilities on its own behalf. Sellers and Buyer each agree to use its best efforts to work in conjunction with the other to coordinate and facilitate the termination and execution of the Storage Facilities Leases as provided in this Section 10.6.

ARTICLE 11.

TERMINATION; MISCELLANEOUS

     11.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date, as follows:

          (a) by mutual written agreement of Sellers and Buyer;

          (b) by Buyer if any of the conditions set forth in Article 7 of this Agreement shall not have been fulfilled by the Closing Date;

          (c) by Sellers if any of the conditions set forth in Article 8 of this Agreement shall not have been fulfilled by the Closing Date;

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          (d) by Buyer or Sellers if the Closing has not occurred on or before March 1, 2005, or such other Closing Date as the parties may mutually agree in writing;

          (e) by Buyer, if Buyer is not then in material breach of this Agreement and Sellers are then in material breach of this Agreement, and such breach remains uncured within ten (10) days after receipt of written notice thereof from Buyer; or

          (f) by Sellers, if Sellers are not then in material breach of this Agreement and Buyer is then in material breach of this Agreement, and such breach remains uncured within ten (10) days after receipt of written notice thereof from Sellers.

     11.2 Rights on Termination. If this Agreement is terminated pursuant to Section 11.1 above then, except as otherwise provided herein, all further obligations of the parties under or pursuant to this Agreement shall immediately terminate without further liability of any party to the other; provided, however, that nothing in this Section 11.2 shall relieve liability or obligations hereunder of any party (the “Defaulting Party”) to the other party or parties on account of a breach of a covenant or agreement contained herein, or any misrepresentation or warranty contained herein by the Defaulting Party. In the case of such a breach or misrepresentation, in addition to any damages for which the Defaulting Party may be liable, the Defaulting Party shall reimburse the other party or parties for any expenses incurred by such party or parties in order to enforce its or their rights under this Agreement (including reasonable attorney fees and expenses). In addition, Buyer shall be entitled to pursue specific performance against Sellers (Sellers hereby acknowledging that the Purchased Assets are unique and that Buyer has no adequate remedy at law if Sellers breach this Agreement).

     11.3 Further Assurances. From time to time after the Closing Date, upon the reasonable request of any party hereto, the other party or parties hereto shall execute and deliver or cause to be executed and delivered such further instruments of conveyance, assignment and transfer and take such further action as the requesting party may reasonably request in order to effectuate fully the purposes, terms and conditions of this Agreement.

     11.4 Survival. The obligations to indemnify contained in Article 9 hereof, the agreements contained herein and, as limited by Section 9.5, the representations and warranties made in this Agreement or made pursuant hereto shall survive the Closing and the consummation of the transactions contemplated by this Agreement, and shall survive any independent investigation by Buyer or Sellers, and any dissolution, merger or consolidation of Buyer or Sellers and shall bind the legal representatives, assigns and successors of Buyer and Sellers.

     11.5 Entire Agreement; Amendment; and Waivers. This Agreement and the agreements required to be delivered pursuant hereto constitute the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be

39

deemed to or shall constitute a waiver of any other provision of this Agreement, whether or not similar, unless otherwise expressly provided.

     11.6 Expenses. Except as otherwise specifically provided herein, whether or not the transactions contemplated by this Agreement are consummated, each of the parties shall pay the fees and expenses of its respective counsel, accountants and other experts incident to the negotiation, drafting and execution of this Agreement and consummation of the transactions contemplated hereby.

     11.7 Benefit; Assignment. This Agreement shall be binding upon and shall inure to the benefit of and shall be enforceable by Buyer and Sellers and their respective proper successors and assigns. This Agreement (and any rights, obligation or liabilities hereunder) may not be assigned or delegated in whole or in part by Buyer without the prior written consent of Sellers; provided, however, that Buyer may assign in whole or in part its rights, obligations or liabilities hereunder to an Affiliate of Buyer or may make a collateral assignment thereof to any lender providing financing to Buyer in connection with the transactions contemplated hereby. Any such assignee of Buyer (other than a lender taking a collateral assignment) shall fully assume the obligation of Buyer hereunder.

     11.8 Notices. All communications or notices required or permitted by this Agreement shall be in writing and shall be deemed to have been given: (i) on the date of personal delivery to the other party; (ii) when sent by telecopy or facsimile machine to the number shown below on the date of such confirmed facsimile or telecopy transmission; or (iii) when properly deposited for delivery by a nationally-recognized commercial overnight delivery service, prepaid, or by deposit in the United States mail, certified or registered mail, postage prepaid, return receipt requested on the date that is two (2) days after the date set forth in the records of such delivery service or on the return receipt, and addressed as follows, unless and until any party notifies the others in accordance with this Section of a change of address or change of telecopy number:

If to Buyer:	Amedisys, Inc.
	11100 Mead Road
	Baton Rouge, Louisiana 70816
	Attn: Mr. Gregory H. Browne, CFO
	Telecopy No.: (225) 292-8163
With a copy to:	McKay, Lutgring & Cochran, LLC
	732 North Boulevard
	Baton Rouge, Louisiana 70802
	Attn: Mr. Michael D. Lutgring, Esq.
	Telecopy No.: (225) 214-1771
If to Sellers:	Winyah Health Care Group, LLC
	1101 Church Street
	Georgetown, South Carolina 29440
	Attention: Mr. Gary Cooper
	Telecopy No.: (843) 545-9614

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With a copy to:	Nelsons Mullins Riley & Scarborough, LLP
	Founders Centre, Suite 301
	2411 North Oak Street
	Myrtle Beach, South Carolina 29577
	Attention: Thomas F. Moran, Esq.
	email:tom.moran@nelsonmullins.com
	Telecopy No.: (843) 448-3437

     11.9 Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed original, but such counterparts shall together constitute but one and the same Agreement. This Agreement may be executed and delivered in counterpart signature pages executed and delivered via facsimile transmission, and any such counterpart executed and delivered via facsimile transmission shall be deemed an original for all intents and purposes. The Table of Contents and Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

     11.10 Severability. If any provision, clause or part of this Agreement or the application thereof under certain circumstances is held invalid or unenforceable, the remainder of this Agreement, or the application of such provision, clause or part under other circumstances, shall not be affected thereby.

     11.11 No Reliance. Except for (i) any assignees permitted by Section 11.7 of this Agreement, and (ii) lenders providing financing for the consummation of the transactions contemplated by this Agreement:

          (a) no third party is entitled to rely on any of the representations, warranties and agreements of Buyer or Sellers contained in this Agreement; and

          (b) Buyer and Sellers assume no liability to any third party because of any reliance on the representations, warranties and agreements of Buyer or Sellers contained in this Agreement.

     11.12 Judicial Interpretation. Should any provision of this Agreement require judicial interpretation, the parties hereto agree that the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party which itself or through its agent prepared the same, it being agreed that the agents of each party have participated in the preparation hereof.

     11.13 Saturdays, Sundays and Legal Holidays; Time is of the Essence. If the time period by which any acts or payments required hereunder must be performed or paid expires on a Saturday, Sunday or legal holiday, then such time period shall be automatically extended to the close of business on the next regularly scheduled business day. Time is of the essence with respect to all matters in this Agreement.

     11.14 Governing Law. This Agreement shall be construed and interpreted according to the laws of the State of South Carolina, without regard to the conflict of law principles thereof.

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     11.15 Arbitration. Any controversy, dispute or disagreement arising out of or relating to this Agreement, the breach thereof, or the subject matter thereof, shall be settled exclusively by binding arbitration, which shall be conducted in Georgetown, South Carolina in accordance with the AHLA Alternative Dispute Resolution Service Rules of Procedure for Arbitration, and which, to the extent of the subject matter of the arbitration, shall be binding not only on all parties to the Agreement, but on any Affiliate of such party to the extent that such Affiliate joins in the arbitration, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement under seal as of the day and year first above written.

“BUYER” AMEDISYS SC, L.L.C.
By:
Name:
Title:		(SEAL)
“SELLERS” WINYAH HEALTH CARE GROUP, LLC
By:
Name:	Gary C. Cooper
Title:	Manager	(SEAL)
WINYAH HOME HEALTH CARE-MIDLANDS, INC.
By:
Name:	Gary C. Cooper
Title:	President	(SEAL)
WINYAH HOME HEALTH OF THE LOWCOUNTRY, LLC
By:
Name:	Gary C. Cooper
Title:	Manager	(SEAL)

S-1

WINYAH HOME HEALTH CARE OF THE GRAND STRAND, LLC
By:
Name:	Gary C. Cooper
Title:	Manager	(SEAL)
WINYAH HOME HEALTH CARE, INC.
Name:	Gary C. Cooper
Title:	President	(SEAL)

S-2

EX-4.1.3

Exhibit 4.1.3

AMENDMENT NO. 2 TO CREDIT AGREEMENT

     This AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “Amendment”) is dated as of January 28, 2005 and is by and among GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, individually as a Lender and as Agent for the Lenders (“Agent”), AMEDISYS, INC., a Delaware corporation (“Holdings”), and each of the other Borrowers under the Credit Agreement (described below) named on the signature pages hereto (collectively with Holdings, the “Borrowers” and, individually, a “Borrower”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement dated as of April 28, 2004, by and among Agent, the Lenders from time to time party thereto (“Lenders”), Borrowers and the other Credit Parties signatory from time to time thereto (as amended or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement), Agent and Lenders agreed, subject to the terms and provisions thereof, to provide certain loans and other financial accommodations to Borrowers;

     WHEREAS, Borrowers desire that Agent and Lenders amend the Credit Agreement in certain respects;

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Amendments to Credit Agreement. Subject to the satisfaction of the conditions set forth in Section 2 below, and in reliance on the representations and warranties set forth in Section 4 below, the Credit Agreement is amended as follows:

     (a) The first sentence of Section 2.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

     “No Lender shall be obligated to make any Loan or incur any Letter of Credit Obligations on the Closing Date, or to take, fulfill, or perform any other action hereunder, until the following conditions have been satisfied or provided for in a manner satisfactory to Agent, or waived in writing by Agent and Lenders and only so long as such conditions have been satisfied or waived prior to February 4, 2005:”

     (b) The defined term “Commitment Termination Date” set forth in Annex A of the Credit Agreement is hereby amended and restated in its entirety as follows:

     “Commitment Termination Date” means the earliest of (a) April 28, 2008, (b) the date of termination of Lenders’ obligations to make Advances and to incur Letter of Credit Obligations or permit existing Loans to remain outstanding pursuant to Section 8.2(b), (c) the date of indefeasible prepayment in full by Borrowers of the Loans and the cancellation and return (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations pursuant to Annex B, and the permanent reduction of all Commitments to zero dollars ($0), and (d) February 4, 2005 if the Closing Date has not occurred on or prior to such date.”

     2. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent or concurrent:

     (a) Agent shall have received this Amendment executed by Borrowers and the Requisite Lenders;

     (b) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Agent, Lenders and their respective legal counsel; and

     (c) No Default or Event of Default shall have occurred and be continuing, both before and after giving effect to the provisions of this Amendment.

     3. References; Effectiveness. Agent, Lenders and Borrowers hereby agree that, upon the effectiveness of this Amendment, all references to the Credit Agreement which are contained in any of the other Loan Documents shall refer to the Credit Agreement as modified by this Amendment.

     4. Representations and Warranties. To induce Lenders to enter into this Amendment, each Borrower hereby represents and warrants to Lenders that:

     (a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties remain true and accurate on and as of such earlier date);

     (b) This Amendment constitutes the legal, valid and binding obligation of such Borrower and is enforceable against such Borrower in accordance with its terms;

     (c) There is no Default or Event Default in existence and none would result from the consummation of the transactions described in, and the subject of, this Amendment; and

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     (d) The execution and delivery by each Borrower of this Amendment does not require the consent or approval of any person or entity, except such consents and approvals as have been obtained.

     5. Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment.

     6. Continued Effectiveness. Except as modified hereby, the Credit Agreement and each of the Loan Documents shall continue in full force and effect according to its terms.

     7. Costs and Expenses. Each Borrower, jointly and severally, shall be responsible for payment of all costs and expenses (which shall include reasonable fees and actual expenses of Agent’s counsel, including any in-house counsel employed for this purpose) of Agent in connection with the preparation of this Amendment, which costs and expenses shall be deemed to be Obligations secured by the Credit Agreement and the other Loan Documents.

[Signature page follows]

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     IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first written above.

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and a Lender
By:	/s/ Jeffrey P. Hoffman
Name:	Jeffrey P. Hoffman
Title:	Duly Authorized Signatory

BORROWERS:

AMEDISYS, INC.

AMEDISYS HOME HEALTH, INC. OF ALABAMA

AMEDISYS HOME HEALTH, INC. OF FLORIDA

AMEDISYS HOME HEALTH, INC. OF SOUTH CAROLINA

AMEDISYS HOME HEALTH, INC. OF VIRGINIA

HOME HEALTH OF ALEXANDRIA, INC.

AMEDISYS LOUISIANA, L.L.C.

AMEDISYS LA ACQUISITIONS, L.L.C.

AMEDISYS PRIVATE DUTY OF GEORGIA, INC.

AMEDISYS, INC.

AMEDISYS GEORGIA, L.L.C.

AMEDISYS NORTHWEST, L.L.C.

AMEDISYS NORTH CAROLINA, L.L.C.

AMEDISYS OKLAHOMA, L.L.C.

AMEDISYS TENNESSEE, L.L.C.

AMEDISYS SPECIALIZED MEDICAL SERVICES, INC.

AMEDISYS QUALITY OKLAHOMA, L.L.C.

AMEDISYS EQUITY GROUP, L.L.C.

AMEDISYS HEALTH MANAGEMENT, L.L.C.

AMEDISYS TEXAS, LTD

AMEDISYS ARKANSAS, LLC

AMEDISYS DIABETIC SUPPLY, L.L.C.

AMEDISYS HOSPICE, L.L.C.

AMEDISYS MISSISSIPPI, L.L.C.

AMEDISYS SOUTH FLORIDA, L.L.C.

By	/s/ Gregory H. Browne
Name	Gregory H. Browne
Title	Chief Financial Officer

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EX-4.1.4

Exhibit 4.1.4

AMENDMENT NO. 3 TO CREDIT AGREEMENT

          This AMENDMENT NO. 3 TO CREDIT AGREEMENT (this “Amendment”) is dated as of February 4, 2005, and is by and among GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, individually as a Lender and as Agent for the Lenders (“Agent”), AMEDISYS, INC., a Delaware corporation (“Holdings”), each of the other Borrowers under the Credit Agreement (described below) named on the signature pages hereto (collectively with Holdings, the “Borrowers” and, individually, a “Borrower”) and AMEDISYS SC, L.L.C., a South Carolina limited liability company (“Amedisys SC”).

W I T N E S S E T H:

          WHEREAS, pursuant to that certain Credit Agreement dated as of April 28, 2004, by and among Agent, the Lenders from time to time party thereto (“Lenders”), Borrowers and the other Credit Parties signatory from time to time thereto (as amended or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement), Agent and Lenders agreed, subject to the terms and provisions thereof, to provide certain loans and other financial accommodations to Borrowers;

          WHEREAS, the currently existing Borrowers and Amedisys SC, a wholly-owned Subsidiary of Holdings, desire that Amedisys SC become a Borrower under the Credit Agreement; and

          WHEREAS, Borrowers desire that Agent and Lenders amend the Credit Agreement in certain other respects;

          NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

          1. Amendments to Credit Agreement. Subject to the satisfaction of the conditions set forth in Section 3 below, and in reliance on the representations and warranties set forth in Section 5 below, the Credit Agreement is amended as follows:

          (a) Section 6.3(a) of the Credit Agreement is hereby amended to (i) delete the word “and” set forth at the end of clause (x) thereof, (ii) replace the period at the end of clause (xi) thereof with “, and” and (iii) add the following as clause (xii) thereto:

          ”(xii) Permitted Secured Seller Indebtedness.”

          (b) The defined term “Acquisition Limit” contained in Annex A of the Credit Agreement shall be amended and restated to read as follows:

     “Acquisition Limit” means, initially $35,000,000 and, if as of the end of any Fiscal Quarter ending after the date hereof, EBITDA for the twelve-month period then ended exceeds $40,000,000 (“Limit Increase Event”), $40,000,000; provided, that if at the end of any Fiscal Quarter ending after a Limit Increase Event has occurred, EBITDA for the twelve-month period then ended is less than $40,000,000, the Acquisition Limit shall reduce until the occurrence of a subsequent Limit Increase Event to the greater of (x) the lesser of $40,000,000 and the Acquisition Consideration incurred prior to such date and (y) $35,000,000.

          (c) The defined term “Aggregate Availability” contained in Annex A of the Credit Agreement shall be amended and restated to read as follows:

     “Aggregate Availability” means, as of any date of determination, (A) the product of (i) EBITDA (calculated in the manner set forth in Exhibit 4.1 and based on the Availability Certificate most recently delivered pursuant to Section 4.1) and (ii) 1.75; provided, that, EBITDA, for purposes of determining Aggregate Availability, shall exclude any EBITDA attributable to the business or assets acquired by Amedisys SC, LLC and attributable to any other businesses or assets acquired by any other Borrower after April 28, 2004 and prior to February 4, 2005, in each case until Agent has received evidence, in form and substance satisfactory to Agent, that such acquired assets and businesses were acquired free and clear of Liens other than Permitted Encumbrances.

          (d) The defined term “Capital Expenditures” contained in Annex A of the Credit Agreement shall be amended and restated to read as follows:

     “Capital Expenditures” means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring period for any fixed assets or improvements or for replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under GAAP, excluding in each instance, any such expenditures made to consummate a Permitted Acquisition; provided, that expenditures made by Holdings in connection with its purchase of 2002 Cessna 525 CJ1, bearing United States Aircraft Registration Number N111GJ, and Serial Number 525-0500, on January 21, 2005 shall not be deemed to be Capital Expenditures for purposes of determining Borrowers’ compliance with the Maximum Capital Expenditures covenant set forth in Annex G.

          (e) The defined term “Funded Debt” contained in Annex A of the Credit Agreement shall be amended and restated to read as follows:

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     “Funded Debt” means, with respect to any Person, without duplication, all Medicare liabilities and all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capital Lease Obligations, current maturities of long-term debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons, and, in the case of any Credit Party, Permitted Secured Seller Indebtedness.

          (f) The defined term “Permitted Encumbrances” contained in Annex A of the Credit Agreement is hereby amended to (i) delete the word “and” set forth at the end of clause (i) contained therein, (ii) replace the period at the end of clause (j) contained therein with “; and” and (iii) add the following as clause (k) thereto:

          “(k) first priority Liens securing Permitted Secured Seller Indebtedness incurred in connection with a Permitted Acquisition; provided that such Liens attach solely to the assets (excluding accounts receivable) acquired in connection with such Permitted Acquisition.”

          (g) The defined term “Reserves” contained in Annex A of the Credit Agreement shall be amended and restated to read as follows:

     “Reserves” means (a) reserves established pursuant to Section 5.4(c), (b) reserves against Borrowing Availability in the outstanding amount of Permitted Secured Seller Indebtedness and (c) such other reserves against Borrowing Availability that Agent may, in its reasonable credit judgment, establish from time to time: (i) to reflect events, conditions, contingencies or risks which, as determined by Agent, in its reasonable credit judgment, do or may affect the security interests and other rights of Agent in the Collateral (including the enforceability, perfection and priority thereof), (ii) pertaining to amounts necessary to protect the value of Collateral, (iii) in respect of any sums that any Borrower is required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay under any Section of this Agreement or any other Loan Document, or (iv) pertaining to required payments of existing Indebtedness or other obligations of any Credit Party. Without limiting the generality of the foregoing, Reserves established to ensure the payment of accrued Interest Expenses or Indebtedness shall be deemed to be a reasonable exercise of Agent’s credit judgment.

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          (h) Annex A of the Credit Agreement is hereby amended to add the following defined term thereto:

     “Permitted Secured Seller Indebtedness” means Indebtedness of a Credit Party incurred in connection with a Permitted Acquisition incurred on or prior to June 30, 2005; provided, that, (i) both immediately before and after giving effect to the incurrence of such Permitted Secured Seller Indebtedness and the consummation of the applicable Permitted Acquisition there are no Revolving Loans or Swing Line Loans outstanding and (ii) the Permitted Secured Seller Indebtedness with respect to all Credit Parties shall not exceed $10,000,000 in the aggregate at any time.

          (i) Annex G of the Credit Agreement is hereby amended to amend and restate paragraph (a) thereof to read as follows:

     “(a) Maximum Capital Expenditures. Holdings and its Subsidiaries on a consolidated basis shall not make Capital Expenditures during any of the following periods that exceed in the aggregate the amount set forth opposite such period:

	Maximum Capital
Period	Expenditures per Period
Twelve month period ending December 31, 2004 and each March 31, June 30, September 30 and December 31 thereafter	$	7,500,000

; provided, however, that the amount of permitted Capital Expenditures referenced above will be increased in any period by the positive amount equal to the lesser of (i) ten percent (10%) of the amount of permitted Capital Expenditures for the immediately prior period, and (ii) the amount (if any), equal to the difference obtained by taking the Capital Expenditures limit specified above for the immediately prior period minus the actual amount of any Capital Expenditures expended during such prior period (the “Carry Over Amount”), and for purposes of measuring compliance herewith, the Carry Over Amount shall be deemed to be the last amount spent on Capital Expenditures in that succeeding year.”

          (j) The Disclosure Schedules are hereby amended and restated in their entirety as set forth on the corresponding schedules attached hereto.

          2. Joinder.

          (a) By its execution of this Agreement, Amedisys SC agrees, from and after the date hereof, to be a “Borrower” under the Credit Agreement, to assume all of the Obligations of a Borrower thereunder and to make and be bound by all of the representations and warranties, covenants, terms and conditions thereof, in each case as if it were a direct signatory to such Credit Agreement, all of which representations and warranties, covenants, terms and conditions are acknowledged

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and are incorporated herein by this reference. Each Borrower acknowledges and agrees that Amedisys SC shall hereafter be a “Borrower” under the Credit Agreement and shall be bound by the terms and conditions of the Credit Agreement as if it were a direct signatory thereto.

          (b) Amedisys SC hereby agrees that it is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to Agent and Lenders and their successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by each other Borrower.

          3. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent or concurrent:

          (a) Agent shall have received this Amendment executed by Borrowers, Amedisys SC and the Requisite Lenders;

          (b) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Agent, Lenders and their respective legal counsel; and

          (c) No Default or Event of Default shall have occurred and be continuing, both before and after giving effect to the provisions of this Amendment.

          4. References; Effectiveness. Agent, Lenders, Borrowers and Amedisys SC hereby agree that, upon the effectiveness of this Amendment, all references to the Credit Agreement which are contained in any of the other Loan Documents shall refer to the Credit Agreement as modified by this Amendment.

          5. Representations and Warranties. To induce Lenders to enter into this Amendment, each Borrower and Amedisys SC hereby represents and warrants to Lenders that:

          (a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties remain true and accurate on and as of such earlier date);

          (b) This Amendment constitutes the legal, valid and binding obligation of such Borrower or Amedisys SC, as applicable, and is enforceable against such Borrower or Amedisys SC, as applicable, in accordance with its terms;

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          (c) There is no Default or Event of Default in existence and none would result from the consummation of the transactions described in, and the subject of, this Amendment; and

          (d) The execution and delivery by each Borrower or Amedisys SC, as applicable, of this Amendment does not require the consent or approval of any person or entity, except such consents and approvals as have been obtained.

          6. Covenants.

          (a) Within 30 days of the date hereof, Borrowers and Amedisys SC shall deliver to Agent tri-party blocked account agreements, in form and substance satisfactory to Agent, with respect to each of Borrowers’ and Amedisys SC’s bank accounts in which cash, checks, drafts or other similar items of payment delivered to a Lock Box are deposited.

          (b) Within 30 days of the date hereof, Borrowers and Amedisys SC shall deliver to Agent a landlord waiver, in form and substance satisfactory to Agent, executed by the applicable landlord with respect to the leased properties located at 11100 Mead Road, Baton Rouge, Louisiana 70816 and 3029 S. Sherwood Forest, Baton Rouge, Louisiana 70816.

          (c) Within 30 days of the date hereof, Borrowers and Amedisys SC shall deliver to Agent evidence, in form and substance satisfactory to Agent, of the release of all Liens in favor of Chase Bank of Texas, N.A.

          (d) Any breach of the covenants contained in this Section 6 shall constitute an Event of Default.

          7. Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment.

          8. Continued Effectiveness. Except as modified hereby, the Credit Agreement and each of the Loan Documents shall continue in full force and effect according to its terms.

          9. Costs and Expenses. Each Borrower and Amedisys SC, jointly and severally, shall be responsible for payment of all costs and expenses (which shall include reasonable fees and actual expenses of Agent’s counsel, including any in-house counsel employed for this purpose) of Agent in connection with the preparation of this Amendment, which costs and expenses shall be deemed to be Obligations secured by the Credit Agreement and the other Loan Documents.

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[Signature page follows]

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          IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first written above.

AMEDISYS SC, L.L.C.
By:	/s/ Gregory H. Browne
Name:	Gregory H. Browne
Title:	Vice President

BORROWERS:

AMEDISYS, INC.

AMEDISYS HOME HEALTH, INC. OF ALABAMA

AMEDISYS HOME HEALTH, INC. OF FLORIDA

AMEDISYS HOME HEALTH, INC. OF SOUTH CAROLINA

AMEDISYS HOME HEALTH, INC. OF VIRGINIA

HOME HEALTH OF ALEXANDRIA, INC.

AMEDISYS LOUISIANA, L.L.C.

AMEDISYS LA ACQUISITIONS, L.L.C.

AMEDISYS PRIVATE DUTY OF GEORGIA, INC.

AMEDISYS, INC.

AMEDISYS GEORGIA, L.L.C.

AMEDISYS NORTHWEST, L.L.C.

AMEDISYS NORTH CAROLINA, L.L.C.

AMEDISYS OKLAHOMA, L.L.C.

AMEDISYS TENNESSEE, L.L.C.

AMEDISYS SPECIALIZED MEDICAL SERVICES, INC.

AMEDISYS QUALITY OKLAHOMA, L.L.C.

AMEDISYS EQUITY GROUP, L.L.C.

AMEDISYS HEALTH MANAGEMENT, L.L.C.

AMEDISYS TEXAS, LTD

AMEDISYS ARKANSAS, LLC

AMEDISYS DIABETIC SUPPLY, L.L.C.

AMEDISYS HOSPICE, L.L.C.

AMEDISYS MISSISSIPPI, L.L.C.

AMEDISYS SOUTH FLORIDA, L.L.C.

By:	/s/ Gregory H. Browne
Name:	Gregory H. Browne
Title:	Chief Financial Officer

Signature Page to Ammendment No. 3

GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and a Lender
By:	/s/ Jeffrey P. Hoffman
Name:	Jeffrey P. Hoffman
Title:	Duly Authorized Signatory

Signature Page to Ammendment No. 3

EX-10.1

Exhibit 10.1.1

AGREEMENT TO PURCHASE

Date: January 19, 2005

Subject to all of the terms and provision herein below set forth, I/we offer to purchase the following property.

5959 South Sherwood Forest, East Baton Rouge Parish,
Tracts F1 and F2 in Section 58, T7S, R2E, fronting on the southeast corner of
South Sherwood Forest Boulevard and Wentling Drive, less and except the selloff of Tract F-1-B.

I/We offer and agree to purchase the property described above for the sum of Four Million Three Hundred Thousand and NO/100’s Dollars ($4,300,000.00) subject to any valid restrictions and to servitude’s of record and to any zoning ordinances affecting this property. Sales price includes all building thereon, together with fences, and other improvements including all permanently installed and built-in appliances and fixtures, air conditioning window units and bathroom mirrors, provided that any or all of these items are in place at the time this agreement is executed and unless otherwise stated herein. It is understood by Purchaser that Seller makes no warranty respecting the soil or sub-soil conditions of the property conveyed, or its suitability for construction.

TERMS OF SALE:

•   Cash at Act of Sale.

•   Sale to be made “As-Is, Where Is, without warranty”, and attached as Exhibit “A” is the language that shall be included in the cash sale.

•   At the sole expense of Purchaser, Purchaser shall have until March 7, 2005 as a “Contingency Period”, within which to make a thorough inspection of the property to include Amedisys Board Approval, Structure, Environmental, Phase I audit, Soil Conditions, and other aspects of the property as it relates to the Purchaser’s intended use. Purchaser, in Purchaser’s sole discretion, reserves the right to cancel this Agreement for any reason whatsoever during the Contingency Period by providing Seller or Seller’s agent with written notice of such cancellation during this period. If Purchaser so elects to cancel this Agreement, Seller agrees to instruct realtor in writing to promptly return the deposit to the Purchaser. At the end of the “Contingency Period” the Purchaser will be deemed to have accepted the Structure, Environmental, Phase I, Soil Conditions, and other aspects of the property, and Purchaser will provide Seller evidence of Amediysis Board Approval.

•   Purchaser and Arkel Constructors, Inc. agree to enter into a construction/construction management contract to recondition and build out the subject premises, for a fee of four percent (4%) of the costs incurred, plus reimbursement by the Purchaser to Arkel Constructors, Inc. of all costs, including but not limited to, direct overhead, taxes and insurance, attributable to the job. This fee shall be not less than $125,00.00, nor more than $250,000.00. The minimum fee shall be earned at the time Purchaser acquires title to the property and will be paid regardless of whether the recondition and buildout is undertaken, said agreement to be approved as to form prior to March 7, 2005.

x If seller owns any mineral rights they are to be conveyed without warranty.

o Mineral rights owned by Seller, if any, are to be reserved by Seller. If mineral rights are to be reserved by the Seller, Seller agrees to release the surface from any mineral activity or use.

Taxes for the year the sale is closed shall be prorated to date of sale.

Act of Sale to be passed, at expense to Purchaser and before Purchaser’s Notary, unless otherwise provided herein, on April 4, 2005, or before with mutual agreement by both parties in
writing. Any extension shall be agreed upon in writing and signed by Seller and Purchaser. However, if bona fide curative work in connection with title is required the parties hereto agree to and do extend the time for passing Act of Sale by thirty (30) days. Seller’s title shall be merchantable. In the event the title is not valid or merchantable and cannot within 30 days from the date set for the passage of this sale be made valid or merchantable at a reasonable expense, this contract shall be null and void at the option of the Purchaser and the deposit shall be returned to Purchaser. The Purchaser agrees that objections to the merchantability of the Seller’s title may be cured by the Seller providing, at Seller’s expense, an owner’s title insurance policy, at the option of the Seller.

Occupancy to be given:     x     At Act of Sale.      o     Days after Act of Sale.

Upon mutual acceptance of thie contract, I/we make herewith a deposit to REALTOR, as part of the sales price, in the sum of: Twenty Five Thousand and no/100’s DOLLARS, ($25,000.00) which is to be deposited in listing broker’s non-interest bearing escrow account. This deposit shall not be considered as earnest money. In the event that the contingencies contained herein are not satisfied and/or Buyer’s due diligence proves unsatisfactory, in the sole discretion of Buyer, all funds held in deposit shall be promptly returned to Buyer. If, at the end of the “Contingency Period”, the Purchaser has not withdrawn from this Purchase Agreement, the deposit shall be non-refundable and shall become the property of the Seller and the Purchaser hereby agrees that the broker is authorized to pay the deposit to the Seller, upon the Seller demand to broker in writing to so act, without further action by the Purchaser.

Time is of the essence in this contract. In the event of default by either party, the non-defaulting party shall have the right to demand and sue for specific performance and/or damages. The defaulting party under this contract shall also be liable for the REALTOR’S fees and all attorneys’ fees and other costs incurred in the enforcement of any and all rights under this contract.

REALTOR and his agents have acted only as real estate broker to bring the parties together and will in no case be liable to either party for performance or non-performance of any part of this agreement or for any warranty of any nature, unless specifically set forth herein in writing, and REALTOR specifically makes no warranty whatsoever as to whether or not the property by this agreement is situated within or without the Government’s hundred year flood plan.

This offer remains binding and irrevocable until: January 21, 2005, at 12:00 p.m. Central Standard Time.

Upon consummation of the Act of Sale, Purchaser agrees to pay Beau Box, Latter & Blum, Inc. & Realtors for professional services rendered, the sum of three-percent (3%) at the Act of Sale at closing of sale. There shall be no real estate commission owed by the Seller to any broker, including Latter & Blum.

SELLER:		PURCHASER:
Sherwood Investment Partners, LLC		Amedisys, Inc.
By:	/s/ John H. Fife	By:	/s/ William F. Borne
	John H. Fife		William F. Borne
	Member		Chief Executive Officer
Date:	1/19/05	Date:

EXHIBIT “A” TO PURCHASE AGREEMENT BETWEEN SHERWOOD INVESTMENT
PARTNERS, LLC, AS SELLER AND AMEDISYS, INC., AS PURCHASER, FOR
PROPERTY LOCATED AT 5959 SOUTH SHERWOOD FOREST, EAST BATON ROUGE
PARISH, TRACTS F1 AND F2 IN SECTION 58, T7S, R2E.

Buyer and Seller understand, agree, and stipulate that the hereinabove described property, including all the improvements located thereon, are sold in their “as is, where is” present condition, and Buyer hereby accepts the hereinabove described property in an “as is, where is” condition. This sale is made without any warranty whatsoever, express or implied, as to the condition thereof, and without any warranty whatsoever, against redhibitory or hidden or latent vices and defects (not fit for the uses intended), not even for a return of the purchase price, and without any representations of warranty, express or implied, whatsoever of any kind as to any matter, including without limitation (i) the workmanship, structure, stability and quality of the improvements, (ii) the watertightness of the improvements, including without limitation roofs, walls, doors and windows, (iii) the status, stability and quality of soil conditions, equipment, stairways, appliances, fixtures and furniture (iv) any defects, termite infestation or damage and any other condition, whether latent or discoverable by reasonable inspection, and (v) merchantability or fitness for any particular use or purpose. The Buyer acknowledges that they have fully inspected the property and all improvements thereon and is fully satisfied with the condition thereof and accepts them in their present condition, and the Buyer hereby waives all of their rights in redhibition and recission and otherwise in connection therewith. Seller does sell and Buyer does purchase the property with limited warranty, by, through and under Seller, but not otherwise, the warranty herein warranting title to the property from date Seller acquired title to the property to the date of this sale, with full substitution and subrogation in and to all the rights and actions of warranty which it has against preceding owners. The Buyer further acknowledges that without the acceptance of the terms hereof, Seller would not have made this sale. Accordingly, Buyer hereby relieves Seller from any and all responsibility for vices and defects of said property, whether apparent, non-apparent or latent, and from any obligation to take the property back or to reduce the price. Buyer further acknowledges that the provisions of this paragraph have been fully explained to them, and they declared that they fully understand and accept the same.

It is specifically agreed and understood that Seller makes no warranty as to the condition of the soil, suitability of the property for construction thereon or the health of any trees and/or vegetation existing and/or suited on this property. It is further understood and agreed that the above-described property may be subject to drainage, utility and other servitudes, and, if applicable, Buyer accepts title to the above-described property subject to any and all governmental regulations, procedures, and/or guidelines applicable to same. During the construction of subdivision improvements, some trees were removed and the Property was filled with soil. Consequently, the Buyer shall have the responsibility to take any remedial action necessary, which actions include, but are not limited to house foundation modification.

EX-10.2

Exhibit 10.1.2

ACT OF CASH SALE

STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE

     BE IT KNOWN, that on this 13th day of April, 2005, before me, the undersigned Notary Public, duly commissioned and qualified in and for the Parish and State aforesaid, and in the presence of the undersigned witnesses, personally came and appeared:

SHERWOOD INVESTMENT PARTNERS, LLC (TIN: 81-0646971), a Louisiana Limited Liability Company, domiciled in the Parish of East Baton Rouge, State of Louisiana, represented herein by John H. Fife, its duly authorized Member, appearing by virtue of a Certificate of Authority, on file and of record in the office of the Clerk and Recorder for the Parish of East Baton Rouge, State of Louisiana as Original 954, Bundle 11592, and whose permanent mailing address is declared to be 1048 Florida Street, Baton Rouge, LA 70802;

hereafter referred to as “SELLER”;

who declared that for the price of FOUR MILLION TWO HUNDRED THOUSAND AND NO/100 ($4,200,000.00) DOLLARS cash, receipt of which is acknowledged, SELLER hereby sells and delivers with full warranty of title and subrogation to all rights and actions of warranty SELLER may have, unto:

AMEDISYS PROPERTY, LLC (TIN: 20-2596963), a Louisiana Limited Liability Company, domiciled in the Parish of East Baton Rouge, State of Louisiana, represented herein by its sole member, Amedisys, Inc., appearing by virtue of a Certificate of Authority, the original of which is attached hereto and made a part hereof, with the said Amedisys, Inc. being represented herein by William F. Borne, its duly authorized Chief Executive Officer, appearing by virtue of a Corporate Resolution, the original of which is attached hereto and made a part hereof, and whose permanent mailing address is declared to be 11100 Mead Road, Suite 300, Baton Rouge, Louisiana 70816;

hereafter referred to as “PURCHASER”;

     the following described property, with all its component parts, including all rights, ways, privileges, servitudes and appurtenances thereto belonging, the possession of which PURCHASER acknowledges:

ONE CERTAIN TRACT OR PARCEL OF GROUND, together with all the buildings and improvements thereon and all the rights, ways, servitudes, appurtenances thereunto belonging or in anywise appertaining, located in Section 58, T7S, R2E, Greensburg Land District, Parish of East Baton Rouge, State of Louisiana and being designated as TRACT “F-1-A”, being a portion of the Robert T. Skerrett and the T.P. Singletary Property, said Tract containing 16.283 acres and being more fully described on that certain map entitled Map Showing Subdivision of Tracts F-1 & F-2 into Tracts F-1-A & F-1-B being a portion of the Robert T. Skerrett and The T.P. Singletary Property located in Section 58, T7S-R2E, Greensburg Land District, East Baton Rouge Parish, Louisiana for Sherwood Investment Partners, made by Robert H. Brooks, R.P.L.S., dated August 9, 2004 and recorded as Original 345, Bundle 11640 on August 12, 2004, in the office of the Clerk and Recorder for the Parish of East Baton Rouge, State of Louisiana, said Tract

having such measurements and dimensions as shown on said map and being subject to all restrictions, servitudes and mineral reservations of record. Municipal Address: 5959 South Sherwood Forest Boulevard, Baton Rouge, LA 70816.

     Taxes for the current year have been PRORATED between PURCHASER and SELLER and will be paid by PURCHASER when due. All future tax notices should be mailed to Amedisys Property, LLC, Attention: Chief Financial Officer at 11100 Mead Road, Suite 300, Baton Rouge, Louisiana 70816.

     PURCHASER(s) hereby acknowledge and recognize that this sale is an “AS IS” condition, and accordingly, hereby relieve and release SELLER and all previous owners thereof from any and all claims for any vices or defects in said property, whether obvious or latent, known or unknown, easily discoverable or hidden, and particularly for any claim or cause of action for redhibition pursuant to Louisiana Civil Code Articles 2520, et seq., or for diminution of the purchase price pursuant to Louisiana Civil Code Articles 2541, et seq. PURCHASER(s) acknowledge they understand that Louisiana redhibition law enables them to hold SELLER responsible for any obvious or hidden defects in the property existing on the act of sale date, and that they are waiving that right.

     All parties signing the within instrument have declared themselves to be of full legal capacity and have declared that the name, marital status, domicile and address of each is correct as set forth above.

     All agreements and stipulations herein and all the obligations assumed herein shall inure to the benefit of and be binding upon the heirs, successors and assigns of the respective parties, and the PURCHASER, PURCHASER’s heirs and assigns shall have and hold the described property in full ownership forever.

     THUS DONE AND PASSED at Baton Rouge, Louisiana, in the presence of the undersigned competent witnesses, who sign with appearers and me, Notary, after due reading of the whole.

WITNESSES:	SHERWOOD INVESTMENT PARTNERS, LLC
	BY:
(Print Name) __________________________________________		John H. Fife, Member
	AMEDISYS PROPERTY, LLC
	BY:
(Print Name) __________________________________________		Amedisys, Inc., Sole Member,
		by: William F. Borne, CEO

PHILIP G. CAIRE
LA BAR ROLL NO. 14124

EX-10.8

Exhibit 10.8

EMPLOYMENT AGREEMENT

between

AMEDISYS, INC.

and

William F. Borne

April 1, 2005

TABLE OF CONTENTS

	Page
Section 1. Recitations	1
Section 2. Performance of Duties	1
2.1 Board Membership	1
2.2 Devotion of Time	1
Section 3. Term of Employment; Termination; Extension	2
3.1 Term of Employment	2
3.2 Termination of Employment by the Company for Cause	2
3.3 Termination Without Cause	2
3.4 Termination by BORNE	2
3.5 Termination After a Change of Control	2
3.6 Death or Disability of BORNE	3
3.7 Termination for Good Reason by BORNE	3
3.8 Automatic Extension	4
3.9 Cessation of Power	4
Section 4. Compensation	4
4.1 Base Salary	4
4.2 Bonus	4
4.3 Annual Long-Term Equity Incentive Awards	5
(a) Annual Awards	5
(b) Vesting, Etc.	5
(c) Adjustments, Etc.	5
4.4 Severance Compensation	5
(a) Expiration; Termination Without Cause; Termination for Good Reason	5
(b) Change of Control	6
4.5 Additional Benefits	6
(a) Paid Time Off	6
(b) Automobile Expenses	6
(c) Reimbursement of Expenses	6
(d) Participation in Employee Benefit Plans	7
(e) Life Insurance Benefits	7
(f) Whole Life Assignee	7
(g) Tax Preparation	7
(h) Disability	7
4.6 Limitation on Payments and Benefits	8
4.7 Compliance with Sections 6 and 7	8
Section 5. Representations by BORNE	8
Section 6. Confidentiality and Non-Disclosure of Information	9
6.1 Confidentiality	9

	Page
6.2 Ownership of Information	9
6.3 Material Breach	9
Section 7. Restrictive Covenants	9
Section 8. Remedies	10
Section 9. Severability	10
Section 10. Successors and Assigns	10
10.1 Successors	10
10.2 Assignment	10
Section 11. Miscellaneous	10
11.1 Amendment	10
11.2 Binding Agreement	11
11.3 Waiver	11
11.4 Captions	11
11.5 Intentionally omitted	11
11.6 Prior Agreements	11
11.7 Governing Law	11
11.8 Notices	11
11.9 Disputes	11

Attachments

A – Restricted Areas

LIST OF DEFINED TERMS

Act – Section 4.3(a)
Agreement – Introductory paragraph
Base Salary – Section 4.1
Board – Section 2
BORNE – Introductory paragraph
Business – Clause A of Recitals
Cause – Section 3.2
Change of Control – Section 3.5
COBRA – Section 4.5(d)
Code – Section 4.6
Commencement Date – Section 3.1
Company – Introductory paragraph
Confidential Information – Section 6.1
Disability – Section 4.5(h)
Disabled – Section 4.5(h)
Excess Parachute Payment – Section 4.6
Exchange Act – Section 3.5(a)
Good Reason – Section 3.7
Incumbent Board – Section 3.5(b)
Initial Term – Section 3.1
NASDAQ – Section 4.3(a)
NMS/NASDAQ – Section 4.3(a)
Restricted Areas – Section 7
Strategic Transaction – Section 3.5(c)
successor – Section 10.1
Term – Section 3.8

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 1st day of April, 2005, by and between AMEDISYS, INC., a Delaware corporation (the “Company”) and William F. Borne (“BORNE”).

R E C I T A L S:

          A. The Company owns, manages and/or operates agencies and facilities for the provision of home health nursing care services (the “Business”).

          B. BORNE is employed by the Company as its Chief Executive Officer.

          C. The Company and BORNE enter into this Agreement to set forth the terms and conditions for BORNE’s continued employment by the Company.

          NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties agree as follows:

     1. Recitations. The above recitations are incorporated herein by this reference.

     2. Performance of Duties. BORNE shall serve as the Chief Executive Officer of the Company and shall perform such duties as are usually performed by the chief executive officer of health care companies of a business similar in size and scope as the Company and such other additional duties as may be assigned to him from time to time by the Company’s Board of Directors (the “Board”) which are reasonable and consistent with the expectations of the Company and the Company’s operations, taking into account BORNE’s expertise and job responsibilities, including but not limited to, adherence to internal compliance and governmental and regulatory rules, regulations and applicable laws. BORNE shall report directly to the Board.

          2.1 Board Membership. Until the expiration of the Term or earlier termination of this Agreement, the Company shall use its reasonable best efforts, to the extent not inconsistent with applicable laws, rule, regulations, and good governance standards, to nominate and cause the election of BORNE to the Board and to the Board’s Executive Committee, if one is constituted. If BORNE is not elected to the Board at any time prior to the expiration of the Term or earlier termination hereof, BORNE shall be entitled to terminate this Agreement by notice pursuant to Section 11.8 hereof and receive the severance compensation as determined in Section 4.4(a) hereof.

          2.2 Devotion of Time.

               (a) BORNE agrees to devote full time and attention to the business and affairs of the Company to the extent necessary to discharge his duties and responsibilities hereunder and to use reasonable best efforts to perform faithfully and efficiently such duties and responsibilities.

               (b) BORNE shall not serve on the board of directors of any other company whose securities are registered the Securities Exchange Act of 1934 without the prior written approval of the Board.

               (c) BORNE shall report periodically to the Board (no less frequently than on an annual basis) on his other business activities, if any.

     3. Term of Employment; Termination; Extension.

          3.1 Term of Employment. This Agreement shall begin on April 1, 2005 (the “Commencement Date”) and expire on March 31, 2008 (the “Initial Term”), subject to extension pursuant to Section 3.8 or earlier termination as otherwise set forth in this Agreement.

          3.2 Termination of Employment by the Company for Cause. The Company may terminate BORNE’s employment hereunder for Cause (as defined herein) without any obligation to pay severance compensation under Section 4.4 to BORNE. For purposes of this Agreement, “Cause” shall be defined as follows:

               (a) a material default or breach by BORNE of any of the provisions of this Agreement materially detrimental to the Company which, if capable of cure, is not cured within thirty (30) days following written notice thereof;

               (b) actions by BORNE constituting fraud, embezzlement or dishonesty which result in a conviction of a criminal offense not overturned on appeal;

               (c) intentionally furnishing materially false, misleading, or omissive information to the Board or any committee of the Board, that is materially detrimental to the Company;

               (d) actions constituting a breach of the confidentiality of the Business and/or trade secrets of the Company which is materially detrimental to the Company; or

               (e) willful failure to follow reasonable and lawful directives of the Board which are consistent with BORNE’s job responsibilities and performance which, if capable of cure, is not cured within thirty (30) days following written notice thereof.

          3.3 Termination Without Cause. The Company shall have the right to terminate BORNE’s employment hereunder without Cause at any time upon thirty (30) days prior written notice to BORNE, in which event the Company shall be obligated to pay the severance compensation in accordance with Section 4.4(a).

          3.4 Termination by BORNE. BORNE may terminate his employment hereunder upon thirty (30) days prior written notice to the Company pursuant to Section 11.8. Such notice shall set forth in sufficient detail for the Company to understand the nature of the facts underlying said termination by BORNE.

          3.5 Termination After a Change of Control. (x) Upon the occurrence of a Change of Control (as defined herein) if such Change of Control occurs prior to (i) BORNE’s receiving a written notice of termination by the Company for Cause or (ii) the Company’s receiving a written notice of termination from BORNE pursuant to Section 3.4 or Section 3.7, and (y) prior to the second anniversary of the date on which the Change of Control occurs, either (A) BORNE’s employment hereunder (or by the acquiring or surviving entity) is terminated without Cause by the Company (or by the acquiring or surviving entity) or (B) (i) there has been

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a material reduction in BORNE’s compensation, or (ii) other than as a result of his Disability (as defined herein), there has been a material reduction in BORNE’s duties and authority, which in the case of (i) or (ii) of this clause (y)(B) is not resolved within thirty (30) days after BORNE provides notice thereof and BORNE thereafter elects to terminate his employment hereunder, BORNE shall be entitled to receive the severance compensation in accordance with Section 4.4(b). “Change of Control” is defined as the date on which any of the following occurs:

               (a) The acquisition by any person, entity or “group” within the meaning of § 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty-one (51%) percent or more of either the then outstanding shares of the Company’s common stock or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; provided however, purchase by underwriters in a firm commitment public offering of the Company’s securities or any securities purchased for investment only by professional investors shall not constitute a Change of Control;

               (b) The individuals who serve on the Board as of the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, any person who becomes a director subsequent to the Commencement Date, whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall for purposes of this Agreement be considered as if such person was a member of the Incumbent Board; or

               (c) The requisite approval by the Company’s shareholders of: (i) a merger, reorganization or consolidation (a “Strategic Transaction”) whereby the Company’s shareholders immediately prior to such approval will not, pursuant to the terms of the definitive agreement providing for the Strategic Transaction, own immediately after consummation of the Strategic Transaction more than 50% of the combined voting power of the surviving entity’s then outstanding voting securities entitled to vote generally in the election of directors; or (ii) the liquidation or dissolution of the Company; or (iii) the sale of all or substantially all of the assets of the Company.

Provided, however, there can be no Change of Control for purposes of this Agreement resulting from a filing for relief under the federal bankruptcy laws, whether the filing seeks a reorganization under Chapter 11 of the Bankruptcy Act or otherwise.

        3.6 Death or Disability of BORNE. BORNE’s employment hereunder shall terminate on the date of his death or the date on which the Company terminates his employment pursuant to Section 4.5(h) as a result of his Disability.

        3.7 Termination for Good Reason by BORNE. Borne may terminate his employment hereunder by written notice to the Company for Good Reason. For purposes hereof, “Good Reason” shall mean (a) the Company reduces Borne’s Base Salary without his consent (it being understood and agreed that the reduction in his monthly Base Salary paid by the Company by the amount received by Borne under any disability insurance paid for by the Company as provided in Section 4.5(h) shall not be considered a reduction of his Base Salary for purposes hereof); (b) the Company materially defaults in any of its obligations under this Agreement and such default is not cured within thirty (30) days following the Company’s written notice thereof

3

from Borne, which notice specifies in detail the material default alleged by Borne; (c) the Company requires Borne to relocate on a permanent basis to a location more than fifty (50) miles away from his present place of employment; or (d) the Company substantially reduces Borne’s job responsibilities.

     3.8 Automatic Extension. This Agreement shall be automatically extended for a one year period at the end of the Initial Term (the Initial Term and such extension pursuant to this Section 3.8, the “Term”), unless either party provides written notice of termination to the other party at least six (6) months prior to the expiration of the Initial Term.

     3.9 Cessation of Power. In the event of the expiration of the Term or earlier termination hereof, BORNE will cease to have any power of his position as of the effective date of the termination.

     4. Compensation.

          4.1 Base Salary. The Company shall pay to BORNE a base salary at the annual rate of $400,000.00 (the “Base Salary”). Notwithstanding anything herein to the contrary, the Board shall have the sole discretion at any time and from time to time to increase the Base Salary, which increase shall be reflected in a written amendment to this Agreement. The Base Salary shall be payable in installments consistent with the Company’s normal payroll schedule, in effect from time to time, subject to applicable withholding and other taxes.

          4.2 Bonus.

               (a) At the end of each fiscal year of the Company until the expiration of the Term or earlier termination of this Agreement, BORNE shall be entitled to receive a bonus equal to a percentage of BORNE’s then current Base Salary, payable on terms which shall be at the discretion of the Board, and only if certain performance based criteria established by the Board in its discretion for the related fiscal year of the Company and made known to BORNE are met. BORNE shall be entitled to a bonus under this Section 4.2 equal to (i) one hundred (100%) percent of his then current Base Salary if the target established by the Board for the performance based criteria for the related fiscal year of the Company is met, (ii) a percentage of his then current Base Salary less than one hundred (100%) percent if the threshold (less than the target) established by the Board, but not the target, for the performance based criteria for the related fiscal year of the Company is met, and (iii) a percentage of his then current Base Salary greater than one hundred (100%) percent if the target established by the Board for the performance based criteria for the related fiscal year of the Company is exceeded (the percentages or range of percentages for clauses (ii) and (iii) to be established by the Board for the related fiscal year). Notwithstanding anything herein to the contrary, the Board may, in its discretion, pay a bonus to BORNE in excess of the amount that may be earned pursuant to this Section 4.2.

               (b) If BORNE’s employment hereunder is terminated pursuant to Section 3.2 or Section 3.4 prior to the end of a fiscal year of the Company, BORNE shall not be entitled to receive any bonus under this Section 4.2 for such fiscal year. If BORNE’s employment hereunder is terminated for any other reason prior to the end of a fiscal year of the Company and if BORNE is entitled to receive a bonus under this Section 4.2 for such fiscal year based on the performance criteria, and the threshold, target and percentages, established by the

4

Board for such fiscal year, the amount of such bonus shall be equal to the applicable percentage times the portion of the then current Base Salary paid to BORNE for such fiscal year through the date on which his employment terminated. Such bonus shall be paid on the date that payment thereof would otherwise have been made to BORNE had his employment not been terminated.

          4.3 Annual Long-Term Equity Incentive Awards.

               (a) Annual Awards. Annually until the expiration of the Term or earlier termination of this Agreement, the Board shall, in its discretion, make long-term equity incentive awards to BORNE having a target level based on the median market for comparable awards to chief executive officers of other companies determined by the Board to have similar attributes for purposes hereof. The Board may retain one or more third party consultants on a periodic basis to advise it regarding the median market for purposes hereof. All long-term equity incentive awards pursuant to this Section 4.3(a), to the extent they constitute securities, shall be “restricted securities” as that term is defined under the Securities Act of 1933, as amended (the “Act”) and the rules and regulations promulgated thereunder. BORNE hereby represents that all long-term equity incentive awards pursuant to this Section 4.3(a) will be acquired for investment purposes and not with a view to any resale, redistributions except in accordance with the Act.

               (b) Vesting, Etc. All such long-term equity incentive awards made pursuant to this Section 4.3 shall vest and be eligible for distribution to BORNE in equal amounts of one-third of the total award on each of the first, second and third anniversary dates of any such award if BORNE remains employed by the Company on the applicable anniversary date. In the event the long-term equity incentive award is an option to acquire securities of the Company, such option shall be exercisable within ten (10) years after the date of the award, but in no event more than one (1) year after the date on which BORNE’s employment by the Company terminates, upon satisfaction of the conditions applicable to the exercise of such option. In the event BORNE’s employment hereunder is terminated pursuant to Section 3.3, Section 3.5, Section 3.6, or Section 3.7, all of the then unvested awards made pursuant to this Section 4.3 shall vest and be eligible for distribution to BORNE immediately and, if such award is an option to acquire securities of the Company, shall be exercisable within the one (1) year period thereafter upon satisfaction of the conditions applicable to the exercise of such option.

               (c) Adjustments, Etc. The Board, in its discretion, may adjust an award made pursuant to this Section 4.3 to address the dilutive or accretive effect on such award from a subsequent stock dividend, stock split or issuance of additional securities by the Company, from a reverse stock split or stock redemption by the Company, or from another event or transaction.

          4.4 Severance Compensation.

               (a) Expiration; Termination Without Cause; Termination for Good Reason. Should BORNE’s employment hereunder be terminated by (i) expiration of the Term (other than as a result of BORNE’s notice of non-extension pursuant to Section 3.8) and BORNE and the Company do not enter into a new employment agreement, (ii) the Company without Cause prior to a Change of Control, or (iii) by BORNE pursuant to Section 3.7, BORNE shall be entitled to severance compensation in an amount equal to two (2) times the average for the prior three (3) fiscal years of the Company of the sum of BORNE’s Base Salary (pursuant to Section 4.1) and bonus (pursuant to Section 4.2) for each such fiscal year. All severance compensation

5

payable pursuant to this Section 4.4(a) shall be payable by the Company via regularly scheduled payroll in equal payments less applicable withholding and other taxes over a two (2) year period until the entire amount of severance compensation due BORNE is paid in full. In the event BORNE’s employment with the Company is terminated pursuant to clauses (i), (ii) or (iii) of this Section 4.4(a), the severance period with respect to continuing benefits provided in Sections 4.5(e) and (g) shall be two (2) years.

               (b) Change of Control. Should BORNE be entitled to severance compensation pursuant to Section 3.5, the amount thereof shall be equal to (x) two and ninety-nine hundredths (2.99) times the average for the prior three (3) fiscal years of the Company of the sum of BORNE’s Base Salary (pursuant to Section 4.1) and bonus (pursuant to Section 4.2) for each such fiscal year less (y) the amount of the Base Salary and bonus that BORNE received from the date of the Change of Control until the date on which BORNE’s employment is terminated. All severance compensation payable pursuant to this Section 4.4(b) shall be payable by the Company (or by the acquiring or surviving entity) via regularly scheduled payroll in equal payments less applicable withholding and other taxes over a period equal to 2.99 years minus the period from the date on which the Change of Control occurred and the date thereafter on which BORNE’s employment terminated until the entire amount of severance compensation due BORNE is paid in full. In the event a Change of Control should occur during BORNE’s employment with the Company, the severance period with respect to continuing benefits provided in Sections 4.5(e) and (g) shall be two and ninety-nine hundredths (2.99) years.

          4.5 Additional Benefits.

               (a) Paid Time Off. BORNE shall be entitled to five (5) weeks paid time off during each calendar year of his employment hereunder. In addition, BORNE shall be entitled to paid time off for the same holidays as other employees of the Company as established by the Board. BORNE’s paid time off shall be subject to the Company’s policy for paid time off applicable generally to its other employees, e.g., carry over rights, partial days, etc.

               (b) Automobile Expenses. Until the expiration of the Term or earlier termination of this Agreement, the Company shall (i) provide BORNE with the full and exclusive use of an automobile equivalent to the automobile used by BORNE as of the Commencement Date, or the Company shall provide BORNE with an equivalent automobile allowance to be utilized by BORNE at his sole discretion, and (ii) also pay all maintenance, insurance, and gasoline expenses incidental to such automobile whether or not business related. BORNE shall have the right to receive a new automobile on or about the second anniversary of the date on which he took possession of the then current automobile. Upon termination of this Agreement pursuant to which BORNE is entitled to severance compensation under either Section 4.4(a) or Section 4.4(b), the Company shall transfer title to BORNE, without payment therefor, of the Company’s automobile that BORNE is then utilizing (and the value thereof will be reported as additional compensation to BORNE).

               (c) Reimbursement of Expenses. BORNE is authorized to incur reasonable travel and other expenses in connection with the Business and in performance of his duties under this Agreement. BORNE shall be reimbursed by the Company for all Business expenses which are reasonably incurred by BORNE. All reimbursable travel expenses shall be in accordance with Company policy.

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               (d) Participation in Employee Benefit Plans. Until the expiration of the Term or earlier termination of this Agreement, BORNE shall be entitled to participate, and subject to eligibility and other terms generally established by the Board, in any employee benefit plan (including but not limited to life insurance plans, long-and short-term disability, stock option plans, group hospitalization, health, dental care plans (which health insurance plans shall also cover BORNE’s dependents), profit sharing and pension plans, and other benefit plans), as may be adopted or amended by the Company from time to time. Upon termination of this Agreement pursuant to which BORNE is entitled to receive severance compensation under Section 4.4(a) or Section 4.4(b), should BORNE elect coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall pay the cost of such coverage for the period that it is required to provide COBRA coverage under applicable law (not to exceed the applicable period in Section 4.4(a) or Section 4.4(b), as the case may be).

               (e) Life Insurance Benefits. The Company shall pay the premium directly, or shall reimburse BORNE, in his discretion, on a whole life insurance policy on the life of BORNE with a face value to be determined in the sole discretion of BORNE, which premium shall not exceed $25,000 per year. Such obligation to pay the premium shall continue until the expiration of the Term or earlier termination of this Agreement and any applicable severance period. BORNE shall have the right to designate the beneficiaries of such policy and shall be the owner thereof. If BORNE notifies the Company that he has elected for the Company to pay the premiums directly, the Company shall pay all premiums on such life insurance policy at least five (5) days before the end of any grace period, and on demand provide BORNE due proof of such payment. The insurance company issuing such policy shall be authorized to give BORNE, upon his request, any information regarding the status of any such policy. Any dividend declared upon such policy shall be applied to the premium. The company issuing the insurance policy must be at least “AA” in the “Best” ratings and be duly licensed to issue such policy.

               (f) Whole Life Assignee. The Company and/or BORNE, shall, at the direction of BORNE, instruct New York Life Insurance Company to designate a person of BORNE’s choosing as assignee of the cash value of Policy Number 43900679. BORNE, shall be entitled to exercise his right to the cash redemption value of said policy upon the expiration or earlier termination of this Agreement or upon his election, either at the sole discretion of BORNE.

               (g) Tax Preparation. Until the expiration of the Term or earlier termination of this Agreement and any applicable severance period, the Company will reimburse BORNE for the cost of tax and financial preparation and planning, including services that may be requested by BORNE from time to time pertaining to this Agreement, which shall be limited to $2,500 per year.

               (h) Disability. In the event that BORNE shall become mentally or physically Disabled (“Disability” shall be defined herein as any condition which prohibits BORNE from performing the duties required of him herein, and the term “Disabled” shall mean the suffering of BORNE of any Disability), BORNE shall continue to receive his monthly Base Salary as then in effect for each of the first six (6) months or any part thereof of any continuous Disability, less any amounts received by him under any disability insurance paid for by Company. If upon the expiration of six (6) months of continuous Disability, BORNE remains Disabled, the Company shall have the right to immediately terminate his employment hereunder. Upon such termination, BORNE shall continue to receive his monthly Base Salary for an

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additional six (6) month period and thereafter BORNE shall be entitled to receive the severance compensation as provided in Section 4.4(a) herein, reduced by any amounts received by him under any disability insurance paid for by Company. Thereafter, BORNE will only be entitled to receive disability insurance proceeds for the term of such Disability. BORNE’s Disability shall be determined by a physician designated by the Company and a physician designated by BORNE shall concur in such determination. In the event such two physicians are in disagreement regarding BORNE’s condition, they shall seek an opinion from a third physician designated by both such physicians whose determination shall be binding for purposes of this Agreement.

          4.6 Limitation on Payments and Benefits. Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision thereto, but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment. The determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence shall be made at the expense of the Company, if requested by BORNE or the Company, by the Company’s independent accountants. The fact that BORNE’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 4.6 shall not of itself limit or otherwise affect any other rights of BORNE other than pursuant to this Agreement. In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 4.6, BORNE shall be entitled to designate the payments and/or benefits to be so reduced in order to give effect to this Section 4.6. The Company shall provide BORNE with all information reasonably requested by BORNE to permit BORNE to make such designation. In the event that BORNE fails to make such designation within ten (10) business days of the effective date of his termination of employment, the Company may effect such reduction in any manner it deems appropriate.

          4.7 Compliance with Sections 6 and 7. To the extent that BORNE is entitled to receive any payments or benefits under this Section 4 after the date on which his employment hereunder terminates, his right thereto and the Company’s obligation to make payment thereof is subject to BORNE’s compliance after such date of termination with his obligations under Section 6 and Section 7 hereof. Should BORNE fail to comply with such obligations and such failure is agreed to by the parties or determined pursuant to Section 11.9, the Company may terminate entirely its obligation to make any further payments and seek recoupment of prior payments made.

     5. Representations by BORNE. BORNE hereby represents to the Company that he is physically and mentally capable of performing his duties hereunder and he has no knowledge of any present or past physical or mental conditions which would cause him not to be able to perform his duties hereunder. BORNE agrees that, at least annually, he will undergo a complete physical examination, at the sole expense of the Company, to be performed by a duly licensed and qualified medical professional of BORNE’s choosing.

     6. Confidentiality and Non-Disclosure of Information.

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          6.1 Confidentiality. BORNE shall not, during his employment with the Company or at any time thereafter, divulge, furnish or make accessible to anyone, without the Company’s prior written consent, any knowledge or information with respect to any confidential, non-public or secret aspect of the Business which, if disclosed, could reasonably be expected to have a material adverse effect on the Business (“Confidential Information”).

          6.2 Ownership of Information. BORNE recognizes that all Confidential Information and copies or reproductions thereof, relating to the Company’s operations and activities made or received by BORNE in the course of his employment are the exclusive property of the Company, as the case may be, and BORNE holds and uses same as trustee for the Company and subject to the Company’s sole control and will deliver same to the Company at the termination of his employment, or earlier if so requested by the Company in writing. All of such Confidential Information, which if lost or used by BORNE outside the scope of his employment, could cause irreparable and continuing injury to the Company’s Business for which there may not be an adequate remedy at law.

          6.3 Material Breach. Any material breach of the terms of this Section 6 shall be deemed a material breach of this Agreement. BORNE acknowledges that compliance with the provisions of this Section 6 is necessary to protect the goodwill and other proprietary interests of the Company and is a material condition of employment.

     7. Restrictive Covenants.

          (a) In light of the special and unique services that will be furnished to the Company by BORNE and the Confidential Information that has been and will be disclosed to him during his employment, BORNE agrees that during his employment hereunder, and for a period of two (2) years thereafter, he will refrain from, without the written consent of the Company, directly or indirectly, whether as principal, agent, officer, director, consultant, employee, partner, member, stockholder or owner of or in any capacity with any corporation, partnership, business, firm, individual, company or any other entity, (i) carrying on or engaging in, or assisting another to carry on or engage in, in the parishes of the State of Louisiana and counties of the other states specified on Attachment A hereto (the “Restricted Areas”) in which the Company or any of its affiliates are then engaged in business, any business, work or activity similar to the business of the Company or its affiliates and (ii) soliciting customers of the Company or its affiliates in the Restricted Area. BORNE specifically agrees that because of his special expertise and the special and unique services that he will be furnishing to the Company, and because of the Confidential Information that has been acquired by him or has been or will be disclosed to him during his employment with the Company, the Restricted Area and above-stated time period, in and during which he will refrain from the activities described above, are reasonable in scope and duration and are necessary to afford the Company just and adequate protection against the irreparable damage which would result to the Company from any activities prohibited by this Section.

          (b) BORNE agrees that, during the term of his employment and for a period of two (2) years thereafter, he will not, directly or indirectly, solicit for employment, advise or recommend to any other person that they solicit for employment, any employee of the Company.

          (c) It is the desire and intent of the parties that the provisions of this Section 7 shall be enforced to the fullest extent permissible under the laws and public policies applied in

9

each jurisdiction in which enforcement is sought. Accordingly, if any particular portion of this Section 7 shall be adjudicated to be invalid or unenforceable, this Section 7 shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of this Section in the particular jurisdiction in which such adjudication is made.

     8. Remedies. BORNE agrees that, in the event of a breach or threatened breach by BORNE of any of the provisions of Sections 6 or 7 hereof, the Company shall be entitled to an injunction restraining BORNE from such breach or threatened breach without posting any bond or other security. Nothing contained herein, however, shall be construed as prohibiting the Company from pursuing, in conjunction with an injunction or otherwise, any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from BORNE.

     9. Severability. The invalidity of any one or more of the words, phrases, sentences, clauses, sections, subdivisions, or subparagraphs contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being legally valid. If any court of proper jurisdiction finds that this Agreement is overly broad or unenforceable for any reason whatsoever, then it is hereby agreed that this Agreement will be reduced or amended to be enforceable to the extent allowable under applicable law, and that any court of competent jurisdiction shall have the power to alter the scope of any provision herein in order that said provision would be made legal and enforceable upon the effectiveness of said alteration.

     10. Successors and Assigns.

          10.1 Successors. This Agreement shall be binding upon the parties hereto and their successors and assigns. For purposes of this Agreement, the term “successor” of the Company shall include any person or entity, whether direct or indirect, whether by purchase, merger, consolidation, operation of law, assignment, or otherwise acquires or controls: (i) all or substantially all of the assets of Company (ii) fifty-one percent (51%) or more of the total voting capital stock, and was not affiliated with or in common control of the Company as of the Commencement Date; or (iii) any other business combination with or without the consent of the Company’s shareholders.

          10.2 Assignment. This Agreement shall be non-assignable by either the Company or BORNE without the written consent of the other party, it being understood that the obligations and performance of this Agreement are personal in nature.

     11. Miscellaneous.

          11.1 Amendment. No amendment, waiver or modification of this Agreement or any provisions of this Agreement shall be valid unless in writing and duly executed by both parties.

          11.2 Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, successors and permitted assigns.

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          11.3 Waiver. Any waiver by any party of any breach of any provision of this Agreement shall not be considered as or constitute a continuing waiver or waiver of any other breach of any provision of this Agreement.

          11.4 Captions. Captions contained in this Agreement are inserted only as a matter of convenience or for reference and in no way define, limit, extend, or describe the scope of this Agreement or the intent of any provisions of this Agreement.

          11.5 Intentionally Omitted.

          11.6 Prior Agreements. This Agreement supersedes and replaces all prior agreements between the parties hereto dealing with the subject matter hereof.

          11.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Louisiana, without regard to its conflicts of laws principles.

          11.8 Notices. All notices required under this Agreement shall be deemed to have been properly served if delivered in writing personally, by a recognized overnight delivery service (such as Federal Express), by facsimile (confirmed by telephone) or by U.S. registered or certified mail, postage prepaid, return receipt requested, as follows:

If to the Company:	AMEDISYS, INC.
	11100 Mead Road, Suite 300
	Baton Rouge, Louisiana 70816
	Telephone:
	Facsimile:
	Attention:
If to BORNE:	William F. Borne
	Telephone:
	Facsimile:

or such other place or places as either party, by notice given in accordance with this Section, may designate in writing from time to time. All notices shall be effective upon receipt by the party to be notified.

          11.9 Disputes. In the event that either party to this Agreement has any claim, right or cause of action against the other party to this Agreement, which the parties are unable to settle by agreement between themselves, such claim, right or cause of action, to the extent that the relief sought by such party is for monetary damages or awards, will be determined by arbitration in accordance with the provisions of this Section 11.9.

               (a) The party requesting arbitration will serve upon the other a demand therefor, in writing, specifying the matter to be submitted to arbitration, and nominating a competent disinterested person to act as an arbitrator. Within 15 days after receipt of such written demand and nomination, the other party will, in writing, nominate a competent disinterested person, and the two arbitrators so designated will, within 15 days thereafter, select a

11

third arbitrator. The three arbitrators will give immediate written notice of such selection to the parties and will fix in said notice a time and place of the meeting of the arbitrators which will be in Baton Rouge, Louisiana, where all proceedings will be conducted, and will be held as soon as conveniently possible (but in no event later than 45 days after the appointment of the third arbitrator), at which time and place the parties to the controversy will appear and be heard with respect to the right, claim or cause of action. In case the notified party or parties will fail to make a selection upon notice within the time period specified, the party asserting such claim will appoint an arbitrator on behalf of the notified party. In the event that the first two arbitrators selected will fail to agree upon a third arbitrator within 15 days after their selection, then such arbitrator may, upon application made by either of the parties to the controversy, be appointed by any judge of the United States District Court for the Middle District of Louisiana.

               (b) Each party will present such testimony, examinations and investigations in accordance with such procedures and regulations as may be determined by the arbitrators and will also recommend to the arbitrators a monetary award to be adopted by the arbitrators as the complete disposition of such claim, right or cause of action. After hearing the parties in regard to the matter in dispute, the arbitrators will make their determination with respect to such claim, right or cause of action, within 30 days of the completion of the examination, by majority decision signed in writing (together with a brief written statement of the reasons for adopting such recommendation), and will deliver such written determination to each of the parties. The decision of said arbitrators, absent fraud, duress or manifest error, will be final and binding upon the parties to such controversy and may be enforced in any court of competent jurisdiction. The arbitrators may consult with and engage disinterested third parties to advise the arbitrators. The arbitrators shall not award any punitive damages. If any of the arbitrators selected hereunder should die, resign or be unable to perform his or her duties hereunder, the remaining arbitrators or any judge of the United States District Court for the Middle District of Louisiana shall select a replacement arbitrator. The procedure set forth in this Section 11.9 for selecting the arbitrators shall be followed from time to time as necessary. As to any claim, controversy, dispute or disagreement that under the terms hereof is made subject to arbitration, no lawsuit based on such matters shall be instituted by any of the parties, other than to compel arbitration proceedings or enforce the award of a majority of the arbitrators. All privileges under Louisiana and federal law, including attorney-client and work-product privileges, shall be preserved and protected to the same extent that such privileges would be protected in a federal court proceeding applying Louisiana law.

               (c) The Company shall be responsible for advancing the cost of the arbitrators as well as the other costs of the arbitration. Each party will pay the fees and expenses of its own counsel.

               (d) Notwithstanding any other provisions of this Section 11.9, in the event that a party against whom any claim, right or cause of action is asserted commences, or has commenced against it, bankruptcy, insolvency or similar proceedings, the party or parties asserting such claim, right or cause of action will have no obligations under this Section 11.9 and may assert such claim, right or cause of action in the manner and forum it deems appropriate, subject to applicable laws. No determination or decision by the arbitrators pursuant to this Section 11.9 will limit or restrict the ability of any party hereto to obtain or seek in any appropriate forum, any relief or remedy that is not a monetary award or money damages.

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               (e) Any court proceedings relating to this Agreement shall be filed exclusively in the federal and state courts domiciled in Baton Rouge, Louisiana, and the parties hereto consent to the venue and jurisdiction of such courts.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

AMEDISYS, INC.
By:
	Name:
	Title:
WILLIAM F. BORNE

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Attachment A

Restricted Areas

[To be completed]

EX-31.1

Exhibit 31.1

CERTIFICATION

I, William F. Borne, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Amedisys, Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’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 registrant’s internal control over financial reporting.

Date: May 5, 2005

/s/ William F. Borne

William F. Borne

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Gregory H. Browne, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Amedisys, Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’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 registrant’s internal control over financial reporting.

Date: May 5, 2005

/s/ Gregory H. Browne

Gregory H. Browne

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amedisys, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2005 (the “Report”), I, William F. Borne, Chief Executive Officer of the Company, certify that:

     (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ William F. Borne

William F. Borne

Chief Executive Officer

May 5, 2005

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amedisys, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2005 (the “Report”), I, Gregory H. Browne, Chief Financial Officer of the Company, certify that:

     (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gregory H. Browne

Gregory H. Browne

Chief Financial Officer

May 5, 2005