Exhibit 10.1

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”), dated as of June 14, 2016 (the
“Effective Date”), is entered into by and among BioScrip, Inc., a Delaware
corporation (the “Company”), and each of the other persons who are signatories
to this Agreement and who are listed on Schedule 1 attached hereto (each of them
is referred to as a “Stockholder” and together they are referred to as
“Stockholders”).

 

recitals

 

WHEREAS, on June 10, 2016, the Company and the Stockholders entered into an
Exchange Agreement (the “Series B Exchange Agreement”), pursuant to which the
Stockholders collectively exchanged 614,177 shares of the Company’s Series A
convertible preferred stock, par value $0.0001 per share (the “Series A
Preferred Stock”) with the Company and were in return issued 614,177 shares of
the Company’s Series B convertible preferred stock, par value $0.0001 per share
(the “Series B Preferred Stock”);

 

WHEREAS, as of the date hereof, the Stockholders collectively beneficially own
and hold (i) 614,177 shares of the Series B Preferred Stock, (ii) 1,800,000
Class A Warrants (the “Class A Warrants”) to purchase the shares of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”) and
(iii) 1,800,000 Class B Warrants (the “Class B Warrants” and, together with the
Class A Warrants, the “Warrants”) to purchase the shares of Common Stock;

 

WHEREAS, the Company launched a public offering of shares of Common Stock on
June 13, 2016 (the “Equity Offering”); and

 

WHEREAS, each Stockholder desires to exchange the number of shares of Series B
Preferred Stock (the “Exchange”) set forth on Schedule 1 for a new series of
convertible preferred stock (the “Series C Preferred Stock”) of the Company, to
be designated “Series C Convertible Preferred Stock,” having the terms set forth
in the form of Certificate of Designations of Series C Convertible Preferred
Stock, par value $0.0001 per share, of the Company set forth on Exhibit A hereto
(the “Certificate of Designations”), and the Company desires to issue the Series
C Preferred Stock in exchange for such Series B Preferred Stock, all on the
terms and conditions set forth in this Agreement in reliance on the exemption
from registration provided by Section 3(a)(9) of the Securities Act of 1933, as
amended (the “Securities Act”).

 

NOW THEREFORE, in order to implement the foregoing and in consideration of the
mutual agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company and each of the Stockholders agree as follows:

 

Section 1. Exchange of Shares.

 

(a) Each of the parties hereto agrees that on the Effective Date the Company
shall issue to each Stockholder, and each such Stockholder shall receive and
accept from the Company, the number of shares of Series C Preferred Stock set
forth on Schedule 1 to this Agreement in exchange (the “Exchange”) for all of
such Stockholder’s rights, interests and claims with respect to the shares of
Series B Preferred Stock set forth on Schedule 1 to the extent such rights,
interests and claims are held by such Stockholder.

 

 

 

 

(b) Assuming the accuracy of the representations and warranties of the Company
and each Stockholder set forth in Sections 2 and 3, respectively, of this
Agreement, the parties acknowledge and agree that the purpose of such
representations and warranties is, among other things, to ensure that the
Exchange qualifies as an exchange of securities under Section 3(a)(9) of the
Securities Act.

 

(c) As part of the Exchange, the Company shall promptly issue to each such
Stockholder a stock certificate evidencing the shares Series C Preferred Stock
as set forth next to such Stockholder’s name on Schedule 1 upon the delivery by
such Stockholder of this Agreement and the surrender by such Stockholder of each
stock certificate or certificates, if any, representing the shares of Series B
Preferred Stock set forth on Schedule 1 hereto (for the avoidance of doubt the
Company and the Stockholders acknowledge and agree that such shares of Series B
Preferred Stock are currently represented by certificates designated as Series A
Preferred Stock). The Company and the Stockholders agree to use their
commercially reasonable efforts to cooperate with each other and the Company’s
stock transfer agent and registrar following the Effective Date to effectuate
the issuance of such new stock certificates representing shares of Series C
Preferred Stock and the surrender of existing stock certificates representing
shares of Series B Preferred Stock.

 

Section 2. Representations and Warranties of the Company. The Company represents
and warrants to each Stockholder as of the date hereof that:

 

(a) Common Stock; Preferred Stock. The authorized capital stock of the Company
consists of 125,000,000 shares of Common Stock, of which 68,680,241 shares are
issued and outstanding, and 5,000,000 shares preferred stock, par value $0.0001
(“Preferred Stock”), of which (X) 825,000 shares of Preferred Stock have been
designated as Series A Preferred Stock, of which 21,645 shares are issued and
outstanding and (Y) 825,000 shares of Preferred Stock have been designated as
Series B Preferred Stock, of which 614,177 shares are issued and outstanding.
The table attached hereto as Schedule 2.2(a) sets forth, as of the date hereof,
the shares of Common Stock currently reserved for issuance with respect to (1)
the Company’s equity incentive plan, (2) the Series A Preferred Stock, (3) the
Series B Preferred Stock, (4) the Warrants and (5) certain other matters. Upon
consummation of the Exchange and the other transactions contemplated by the
Transaction Documents (the “Transactions”), (a) 625,000 shares of Preferred
Stock shall be designated as Series C Preferred Stock pursuant to the terms of
the Certificate of Designations, all of which will be duly authorized, and when
issued pursuant to the Exchange will be validly issued, fully paid and
non-assessable and (b) the shares of Common Stock issuable upon conversion of
the Series C Preferred Stock, when issued, will be validly issued, fully paid
and non-assessable. As of the Effective Date, the Stockholders own all of the
outstanding Series C Preferred Stock, free and clear of all liens, security
interests, mortgages, pledges, charges, equities, claims or restrictions on
transferability or encumbrances of any kind (collectively, “Liens”) and none of
the shares of Series C Preferred Stock, or, after the Stockholder Approval has
been obtained, shares of Common Stock issuable upon conversion of the Series C
Preferred Stock, will have been, or will be, issued in violation of the
preemptive rights of any security holders of the Company arising as a matter of
law or under or pursuant to the Company’s certificate of incorporation, as
amended, the Company’s bylaws, as amended, or any agreement or instrument to
which the Company is a party or by which it is bound. The Stockholders, as the
holders of the Series C Preferred Stock, shall be entitled to all rights
accorded to a holder of Series C Preferred Stock or Common Stock, in accordance
with, and as set forth in, the Certificate of Designations.

 

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(b) Capitalization and Other Capital Stock Matters. All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of, and are not subject to, any preemptive or similar rights.

 

(c) Subsidiaries. Each corporation, partnership or other entity in which the
Company, directly or indirectly through any of its subsidiaries, owns more than
fifty percent (50%) of any class of equity securities or interests is listed on
Schedule 2(c) (the “Subsidiaries”).

 

(d) Organization and Qualification. The Company and each of the Subsidiaries
(i) has been duly organized or formed, as the case may be, is validly existing
and is in good standing under the laws of its jurisdiction of organization,
(ii) has all requisite power and authority to carry on its business and to own,
lease and operate its properties and assets and (iii) is duly qualified or
licensed to do business and is in good standing as a foreign corporation,
partnership or other entity as the case may be, authorized to do business in
each jurisdiction in which the nature of such businesses or the ownership or
leasing of such properties requires such qualification, except where the failure
to be so qualified or, solely with respect to the Subsidiaries, in good standing
would not, individually or in the aggregate, have a material adverse effect on
(A) the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, (B) the ability of the Company or any Subsidiary
to perform its obligations in all material respects under any Transaction
Document, (C) the validity or enforceability of any of the Transaction
Documents, or (D) the consummation of any of the Transactions (each, a “Material
Adverse Effect”)

 

(e) Legal Power and Authority. The Company has all necessary power and authority
to execute, deliver and perform its obligations under the Transaction Documents
and to consummate the Transactions, and no stockholder actions are necessary for
the Company’s execution, delivery and performance of its obligations under the
Transaction Documents and to consummate the Transactions, other than, for the
avoidance of doubt, Stockholder Approval to allow the Company to comply with its
obligations under Section 4(b) of this Agreement.

 

(f) This Agreement. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance,
fraudulent transfer or other similar laws now or hereafter in effect relating to
creditors’ rights generally, (ii) general principles of equity (whether applied
by a court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought and (iii) with respect to the rights to
indemnity or contribution hereunder, federal and state securities laws and
public policy considerations.

 

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(g) Compliance with Existing Instruments. Neither the Company nor any of the
Subsidiaries is (i) in violation of its certificate of incorporation, by-laws or
other organizational documents (the “Charter Documents”); (ii) in violation of
any U.S. or non-U.S. federal, state or local statute, law (including, without
limitation, common law) or ordinance, or any judgment, decree, rule, regulation,
order or injunction (collectively, “Applicable Law”) of any U.S. or
non-U.S. federal, state, local or other governmental or regulatory authority,
governmental or regulatory agency or body, court, arbitrator or self-regulatory
organization (each, a “Governmental Authority”), applicable to any of them or
any of their respective properties, except as would not result in a Material
Adverse Effect; or (iii) in breach of or default under any Applicable Agreement
(defined below), except as set forth in Schedule 2(g). To the Company’s
Knowledge, all Applicable Agreements are in full force and effect and are legal,
valid and binding obligations. For purposes of this Agreement, (A) “Applicable
Agreement” means any agreement or instrument entered into by the Company,
including the Existing Indebtedness Agreements, a breach or default of which
could reasonably be expected to have a Material Adverse Effect, (B) “Knowledge”
means in the case of the Company and its Subsidiaries, the actual knowledge as
of the date of this Agreement of Richard M. Smith, Jeffrey M. Kreger and Kathryn
Stalmack and (C) “Existing Indebtedness Agreements” shall mean (x) that certain
credit agreement, dated July 31, 2013 (as amended, modified or supplemented to
date), by and among the Company, the several banks and other financial
institutions and lenders from time to time party thereto, and SunTrust Bank, in
its capacity as administrative agent (the “Credit Facility”) and (y) the
Company’s 8.875% Senior Notes due 2021 issued pursuant to that indenture, dated
as of February 11, 2014, by and among the Company, the guarantors party thereto
and U.S. Bank National Association, as trustee (the “Senior Notes Indenture”).

 

(h) No Consents. No consent, approval, authorization, order, filing or
registration of or with any Governmental Authority or third party is required
for execution, delivery or performance of the Transaction Documents or the
consummation of the Transactions, except (i) those that have been official or
made, as the case may be, that are in full force and effect and (ii) as may be
required under the securities or “Blue Sky” laws of U.S. state or
non-U.S. jurisdictions.

 

(i) No Material Applicable Laws or Proceedings. (i) No Applicable Law has have
been enacted, adopted or issued, (ii) no stop order suspending the qualification
or exemption from qualification of any of the shares of Common Stock in any
jurisdiction has been issued and no proceeding for that purpose has been
commenced or, to the Company’s Knowledge, is pending or contemplated, and
(iii) there is no legal, administrative, arbitral or other proceeding, action,
claim, suit, demand, hearing, arbitration, mediation, governmental or regulatory
investigation or audit, notice of violation or deficiency, or proceeding
pending, or, to the Knowledge of the Company threatened or contemplated by
Governmental Authorities or threatened by others (collectively, “Proceedings”)
that, with respect to clauses (i), (ii),  and (iii) of this Section 2(i) would
at the date hereof restrain, enjoin, prevent or interfere with the consummation
of the Exchange or any of the Transactions or would, individually or in the
aggregate, have a Material Adverse Effect.

 

(j) Issuance of Series C Preferred Stock. The issuance of the Series C Preferred
Stock is duly authorized and, upon issuance in accordance with the terms hereof,
the shares of Series C Preferred Stock will be validly issued, fully paid and
non-assessable. The shares of Common Stock issued upon conversion or exercise of
the Series C Preferred Stock, when issued and delivered in accordance with the
terms of the Series C Preferred Stock, will be duly and validly issued, fully
paid and non-assessable, free and clear of all Liens, other than restrictions on
transfer under applicable state and federal securities laws. The issuance by the
Company of the Series C Preferred Stock in accordance with this Agreement is
exempt from the registration requirements of the Securities Act under Section
3(a)(9) of the Securities Act.

 

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(k) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a party, the
issuance of the Series C Preferred Stock and the consummation by it of the
Transactions will not conflict with, violate, constitute a breach of or a
default (with the passage of time or otherwise) or a “Debt Repayment Triggering
Event” under, or result in the imposition of a Lien on any assets of the Company
or any of its Subsidiaries, or the imposition of any penalty under or pursuant
to (i) the Charter Documents, (ii) any Applicable Agreement, (iii) any
Applicable Law or (iv) any order, writ, judgment, injunction, decree,
determination or award binding upon the Company and the Subsidiaries. As used
herein, a “Debt Repayment Triggering Event” means any event or condition that
gives, or with the giving of notice or lapse of time would give, the holder of
any note, debenture or other evidence of indebtedness (or any person acting on
such holder’s behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of the
Subsidiaries or any of their respective properties. For purposes of this
Agreement, the “Transaction Documents” means this Agreement, the Registration
Rights Agreement dated as of March 9, 2015, by and among the Company and the
Stockholders, as amended by Amendment 1 thereto on June 10, 2016, and Amendment
No.2 to such Registration Rights Agreement dated as of the date hereof, and any
documents executed in connection with this Agreement or the Transactions.

 

(l) Acknowledgment Regarding the Exchange. The Company acknowledges and agrees
that each Stockholder is acting solely in the capacity of an arm’s length third
party with respect to this Agreement and the transactions contemplated hereby.
The Company further acknowledges that no Stockholder is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby, and the Company has not
relied in any way on any advice given by any Stockholder or any of
representatives or agents of any Stockholder in connection with this Agreement,
any other Transaction Document or any of the Transactions.

 

(m) 3(a)(9) Representation. The Company has not, nor has any person acting on
its behalf, directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause
the Exchange and the issuance of the Series C Preferred Stock pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from delivering the Series C
Preferred Stock to the Stockholders pursuant to Section 3(a)(9) of the
Securities Act, nor will the Company take any action or steps that would cause
the Exchange or the issuance and delivery of the Series C Preferred Stock to be
integrated with other offerings to the effect that the delivery of the Series C
Preferred Stock to the Stockholders would be seen not to be exempt pursuant to
Section 3(a)(9) of the Securities Act.

 

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(n) Company SEC Reports. The Company has timely filed with or furnished to, as
applicable, the Securities and Exchange Commission (the “SEC”) all registration
statements, prospectuses, reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated by
reference) required to be filed or furnished by it with the SEC since January 1,
2015 (the "Company SEC Documents"). As of their respective filing dates (or, if
amended or superseded by a subsequent filing, as of the date of the last such
amendment or superseding filing prior to the date hereof), each of the Company
SEC Documents complied as to form in all material respects with the applicable
requirements of the Securities Act, and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the rules and regulations of the SEC
thereunder applicable to such Company SEC Documents. None of the Company SEC
Documents, including any financial statements, schedules or exhibits included or
incorporated by reference therein at the time they were filed (or, if amended or
superseded by a subsequent filing, as of the date of the last such amendment or
superseding filing prior to the date hereof), contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

Section 3. Representations and Warranties of the Stockholders. Each Stockholder
hereby jointly and severally represents and warrants to the Company that:

 

(a) Ownership of the Series B Preferred Stock. Such Stockholder is the legal and
beneficial owner of the Series B Preferred Stock and the Warrants listed next to
such Stockholder’s name on Schedule 1 to this Agreement. Each Stockholder
acquired its (i) shares of Series B Preferred Stock pursuant to the Series B
Exchange Agreement, and (ii) Warrants pursuant to that certain Warrant Agreement
dated as of March 9, 2015 (the “Warrant Agreement”) and has continuously held
the Securities since issuance. Each Stockholder owns the Securities outright and
free and clear of any options, contracts, agreements, Liens, security interests,
or other encumbrances.

 

(b) No Public Sale or Distribution. Such Stockholder is acquiring the Series C
Preferred Stock in the ordinary course of business for its own account, with the
intention of holding such shares of Series C Preferred Stock for investment
purposes and with no present intention of participating, directly or indirectly,
in a distribution of such shares in violation of applicable securities laws.

 

(c) Accredited Investor. Such Stockholder is an “accredited investor” as that
term is defined in Rule 501 of Regulation D under the Securities Act.

 

(d) Reliance on Exemptions. Such Stockholder understands that the Exchange is
being made in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and the Stockholder’s compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of each Stockholder set forth herein in order to determine the
availability of such exemptions and the eligibility of each Stockholder to
complete the Exchange and to acquire the Series C Preferred Stock .

 

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(e) Information. Such Stockholder has been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the Exchange which have been requested by such Stockholder. Such Stockholder
has been afforded the opportunity to ask questions of the Company. Such
Stockholder acknowledges that all of the documents filed by the Company with the
SEC under Sections 13(a), 14(a) or 15(d) of the Exchange Act, that have been
posted on the EDGAR site maintained by the Securities and Exchange Commission
(“SEC”) are available to such Stockholder, and such Stockholder has not relied
on any statement of the Company not contained in such documents in connection
with such Stockholder’s decision to enter into this Agreement and the Exchange
or any of the other Transaction Documents.

 

(f) No Governmental Review. Such Stockholder understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement in connection with the
Exchange or the fairness or suitability of the investment in the New Preferred
Stock nor have such authorities passed upon or endorsed the merits of the New
Preferred Stock.

 

(g) Organization; Authorization. Such Stockholder is duly organized, validly
existing and in good standing under the laws of its state of formation and has
the requisite organizational power and authority to enter into and perform its
obligations under this Agreement.

 

(h) Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered by such Investor. This Agreement is valid, binding and
enforceable against such Investor in accordance with its terms, subject to
(i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance, fraudulent transfer or other similar laws now or hereafter in effect
relating to creditors’ rights generally, (ii) general principles of equity
(whether applied by a court of law or equity) and the discretion of the court
before which any proceeding therefor may be brought and (iii) with respect to
the rights to indemnity or contribution hereunder, federal and state securities
laws and public policy considerations.

 

(i) Tax Consequences. Such Stockholder acknowledges that the Company has made no
representation regarding the potential or actual tax consequences for such
Stockholder which will result from entering into the Agreement and from
consummation of the Exchange. Such Stockholder acknowledges that it bears
complete responsibility for obtaining adequate tax advice regarding the
Agreement and the Exchange.

 

Section 4. Covenants.

 

(a) Waiver of Reservation Obligation. Subject to the following sentence and the
performance of the Company of the Company’s obligations under this Agreement,
each Stockholder hereby waives (the “Waiver”) (i) the requirement under Section
9 of the Certificate of Designations that the Company reserve shares of Common
Stock in an amount sufficient to satisfy the Stockholders’ right to convert the
shares of Series C Preferred Stock and (ii) the requirement under Section 3.1 of
each of the Warrant Agreements that the Company reserve shares of Common Stock
in an amount sufficient to allow the exercise in full of all
Warrants.Notwithstanding the foregoing, the Company agrees that the upon
consummation or abandonment of the Equity Offering, any shares of Common Stock
not issued and sold by the Company in the Equity Offering shall be reserved and
kept available out of its authorized and unissued shares in order to allow such
shares to be utilized to allow for the conversion of the Series C Preferred
Stock or exercise of the Warrants, as the case may be.

 

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(b) Shareholder Vote. The Company agrees that within four (4) months following
the date hereof, the Board shall submit for approval of the Company’s
stockholders at a special meeting of stockholders a proposal (the “Authorization
Proposal”) to increase the authorized capital stock of the Company in an amount
at least sufficient enough to allow the Company to comply with its obligations
under Section 9 of the Certificate of Designation and Section 3.1 of the Warrant
Agreement as if the Waiver had not been granted (such approval, the “Stockholder
Approval”). If the Stockholder Approval is not obtained at such meeting, the
Board shall submit the Authorization Proposal on an annual basis beginning in
2017 at either the annual meeting of the Company’s stockholders or at a special
meeting of the Company’s stockholders called to consider the Authorization
Proposal until the Stockholder Approval is obtained or a waiver of this Section
4(b) is granted by the Majority-in-Interest (as defined below). Upon the receipt
of Stockholder Approval, the Company agrees that it will promptly file an
amendment to the Certificate of Incorporation of the Company to reflect the
increased in authorized share capital.

 

(c) Prohibited Issuances. Until (1) the Stockholder Approval is obtained and (2)
sufficient shares of Common Stock are reserved for issuance such that the
Company is in compliance with Section 9 of the Certificate of Designations and
Section 3.1 of the Warrant Agreement with respect to each Stockholder, the
Company agrees that it shall not issue or undertake to issue any additional
shares of Common Stock or any equity awards or any securities convertible into
or exchangeable for shares of Common Stock without the consent of the holders of
a majority of the voting power of the shares of Series C Preferred Stock (a
“Majority-in-Interest”); provided, however, that (i) the foregoing shall not
prohibit the Company from issuing shares of Common Stock in connection with the
conversion or exchange or exercise of any securities of the Company outstanding
on the date hereof and (ii) the Company may grant awards with respect to the
1,926,561 shares of Common Stock available for issuance under the Company’s 2008
Equity Incentive Plan (any shares previously granted that have been forfeited
and are made available by the Board under the 2008 Equity Incentive Plan shall
increase the amount available under this proviso).

 

(d) Redemption.

 

(i) If sufficient shares of Common Stock have not been reserved for issuance
such that the Company is in compliance with Section 9 of the Certificate of
Designations and Section 3.1 of the Warrant Agreement with respect to each
Stockholder, prior to the earlier of (X) May 17, 2021, and (Y) the date the that
all of the Company’s obligations under the Indenture (as defined in the
Certificate of Designations) have been satisfied (such earlier date, the
“Trigger Date”), then the Company shall provide notice to each holder of Series
C Preferred Stock setting out the Trigger Date (the “Redemption Notice”), and
the Company agrees that each holder of Series C Preferred Stock may require the
Company to redeem in whole or in part, out of funds legally available therefor,
by irrevocable written notice to the Company (the “Election Notice”), all or a
portion of such holder’s Impaired Shares (as defined below) at a cash redemption
price per share (the “Redemption Price”) equal to the greater of (A) the
Liquidation Preference (as defined in the Certificate of Designations) then in
effect per share of the Series C Preferred Stock and (B) the product of (1) the
Average Price (as defined below) for a share of Common Stock and (2) the number
of shares of Common Stock into which an Impaired Share is convertible. An
Election Notice shall include the date on which the redemption should take
place, which shall be the 10th day following the date of the Election Notice.
Each holder electing to have its Series C Preferred Stock redeemed shall be
entitled to have the Company redeem up to (X) that number of shares of Series C
Preferred Stock owned by such holder multiplied by (Y) the Pro Rata Proportion
(as defined below).

 

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(ii) If the Company does not redeem some or all of the Shares of Series C
Preferred Stock for which holders were entitled to, and requested, redemption
pursuant to Section 4(d)(1), then from the date set forth in the Redemption
Notice for redemption until the date on which the Company pays the Redemption
Price with respect to such shares of Series C Preferred Stock, interest at the
rate of the WSJ Prime Rate plus 3% per annum shall accrue on such aggregate
Redemption Price and the Company shall be in breach of its contractual
obligations under this Agreement. In addition, in such event, the Company shall
be required to pay any dividends required to be paid in respect of such Impaired
Shares under the Certificate of Designations as a “Cash Divided” (as defined in
the Certificate of Designations) pursuant to Section 3(a)(i) of the Certificate
of Designations and shall not be entitled to elect to accrue such dividends
under Section 3(a)(ii) of the Certificate of Designations.

 

(iii) “Average Price” means the VWAP (as defined in the Certificate of
Designations) of the Common Stock for the ten (10) consecutive trading day
period ending two (2) trading days prior to the date of the Redemption Notice.

 

(iv) “Impaired Shares” means shares of Series C Preferred Stock (X) for which
there are not sufficient authorized shares of Common Stock to allow conversion
of such shares of Series C Preferred or (Y) the holder of which cannot exercise
the voting rights of such shares.

 

(v) “Pro Rata Proportion” means as of any date (A) the sum of (1) the aggregate
number of shares of Impaired Shares on an as converted basis, plus (2) the
aggregate number of Uncovered Warrants (as defined below) divided by (B) the sum
of (1) the aggregate number of shares of Series C Preferred Stock outstanding on
an as converted basis, plus (2) the aggregate number of Warrants outstanding.

 

(e) Cash Settlement of Warrants. If (1) the Stockholder Approval has not been
obtained and the (2) sufficient shares of Common Stock have not been reserved
for issuance such that the Company is in compliance with Section 9 of the
Certificate of Designations and Section 3.1 of the Warrant Agreement with
respect to each Stockholder, prior to the Trigger Date, then the Company shall
provide notice to each holder of Warrants setting out the Trigger Date (the
“Warrant Notice”), and the Company agrees that any Stockholder holding Warrants
for which there are not sufficient authorized shares of Common Stock to allow
exercise of such Warrants (the “Uncovered Warrants”) may exercise by irrevocable
written notice (the “Exercise Notice”) such Uncovered Warrants and that the
Company will satisfy (within 10 days of such exercise, a “Warrant Deadline”) its
obligations to the Stockholder holding such Uncovered Warrants pursuant to the
Warrant Agreement in cash in an amount equal to the product of (i) (A) the
Average Price on the Trigger Date minus (B) the exercise price of such Uncovered
Warrant and (ii) (A) the number of shares of Common Stock subject to the
Warrants owned by such holder multiplied by (B) the Pro Rata Proportion (the
“Warrant Settlement Amount”). If the Company does not pay the Warrant Settlement
Amount with respect to any particular Exercise Notice, then from the Warrant
Deadline with respect to such Exercise Notice until the date on which the
Company pays the Warrant Settlement Amount with respect to the Uncovered
Warrants for which an Exercise Notice was provided, interest at the rate of the
WSJ Prime Rate plus 3% per annum shall accrue on such Warrant Settlement Amount
and the Company shall be in breach of its contractual obligations under this
Agreement.

 

-9- 

 

 

(f) Voting Agreement.

 

(i) Each Stockholder hereby agrees that, at any regular or special meeting of
the stockholders of the Company at which the Stockholder Approval is sought,
however called, including any adjournment, recess or postponement thereof, and
in connection with any written consent of the stockholders of the Company, each
Stockholder shall, in each case to the fullest extent that the Covered
Securities (as defined below) are entitled to vote thereon or consent thereto,
(A) appear (in person or by proxy) at each such meeting or otherwise cause all
of the Covered Securities to be counted as present thereat for purposes of
calculating a quorum; and (B) vote (or cause to be voted), in person or by
proxy, or deliver (or cause to be delivered) a written consent covering, all of
the Covered Securities Beneficially Owned (as defined below) by such
Stockholder: (1) in favor of the Authorization Proposal; (2) in favor of the
approval of any proposal to adjourn or postpone any meeting of the stockholders
of the Company to a later date if there are not sufficient votes for adoption of
the Authorization Proposal on the date on which such meeting is held; (3)
against any action, proposal, transaction or agreement that would reasonably be
expected to result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Stockholders contained in this
Agreement; and (4) against any action, proposal, transaction or agreement that
would reasonably be expected to impede, interfere with, discourage, frustrate,
prevent, nullify, adversely affect or inhibit the Authorization Proposal;
provided, however, that nothing in this Section 4(f) shall require the
Stockholders to vote for any proposal at any meeting of Stockholders other than
the Authorization Proposal. For purposes of this Agreement, “Covered Securities”
means the shares of Series C Preferred Stock that are Beneficially Owned by the
Stockholders, together with any other Common Stock, Series A Preferred Stock or
other voting securities of the Company and any securities convertible into or
exercisable or exchangeable for Common Stock or other voting securities of the
Company, in each case that a Stockholder acquires Beneficial Ownership of in
accordance with this Agreement. “Beneficial Ownership” by a person of any
securities includes ownership by any person who, directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise, has or
shares (i) voting power which includes the power to vote, or to direct the
voting of, such security and/or (ii) investment power which includes the power
to dispose, or to direct the disposition, of such security; and shall otherwise
be interpreted in accordance with the term “beneficial ownership” as defined in
Rule 13d-3 adopted under the Exchange Act. The terms “Beneficially Own,”
“Beneficially Owned” and “Beneficial Owner” shall have a correlative meaning.

 

-10- 

 

 

(ii) Each Stockholder hereby represents, covenants and agrees that, except for
this Agreement, such Stockholder (A) has not entered into, and shall not enter
into, any voting agreement, voting trust or similar agreement or understanding,
with respect to any of the Covered Securities, (B) has not granted, and shall
not grant at any time while this Agreement remains in effect, a proxy, consent
or power of attorney with respect to any of the Covered Securities, (C) has not
given, and shall not give, any voting instructions in any manner inconsistent
with this Section 4(f), with respect to any of the Covered Securities and
(D) has not taken and shall not knowingly take any action that would constitute
a breach hereof, make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling the Stockholder from performing any of its obligations under this
Agreement.

 

Section 5. Indemnification.

 

(a) The Company shall indemnify, defend and hold the Stockholders and each
officer, director, member, partner, affiliate, employee, agent and
representative of the Stockholders (collectively, “Stockholder Indemnitees”)
harmless against all liability, loss, and damage (including taxes thereon)
together with all reasonable and properly documented costs and expenses related
thereto (including reasonable and properly documented legal fees and expenses),
relating to or arising from: (i) any breach of any of the representations,
warranties, covenants or agreements of the Company contained in this Agreement,
and (ii) the execution or delivery of any Transaction Document, the performance
by the parties to the Transaction Documents of their respective obligations
thereunder or the consummation of the Exchange and any transaction facilitated
thereby, except to the extent that any such losses, claims, damages, expenses
and liabilities are attributable to the gross negligence, willful misconduct or
fraud of such Stockholder Indemnitee. In the event that any Stockholder
Indemnitee claims any such right of indemnification, such Stockholder Indemnitee
shall provide to the Company prompt written notice thereof, together with
reasonable detail regarding such claims and in the event that such claim
involves third party claims, allow the Company at its expense to defend such
claim(s) on the Stockholder Indemnitee’s behalf. The Company shall promptly
reimburse each Stockholder Indemnitee for any reasonable and properly documented
legal and any other necessary expenses incurred by such Stockholder Indemnitee
in connection with investigating and defending any such expense, loss, judgment,
claim, damage, liability or action, but only to the extent incurred prior to the
assumption by the Company of the defense thereof. Any reimbursement by the
Company under this Section 5(a) shall be within sixty (60) days of the
Stockholder Indemnitee providing reasonable and documented evidence of such
expenses, provided that any individual expense in excess of $10,000 shall
require the Company’s prior approval.  Notwithstanding the foregoing, the
Company reserves the right to withhold approval where in the good faith judgment
of the Company, the expenses are not reasonable or properly documented.  The
Company agrees that it will not, without the Stockholder Indemnitee’s prior
written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof in any pending or threatened action, suit, claim or
proceeding in respect of which indemnification has been sought hereunder unless
such settlement or compromise includes an unconditional release of such
Stockholder Indemnitee from all liability arising out of such action, suit,
claim or proceeding. The obligations of the Company under this Section 5 shall
survive the consummation of the transactions contemplated by this Agreement and
the transfer, conversion, exchange or redemption of any Series C Preferred
Stock. Notwithstanding anything contained in this Agreement to the contrary, the
Company shall not be liable to any Stockholder Indemnitee for any consequential,
incidental, indirect, special, exemplary or punitive damages of such Stockholder
Indemnitee relating to any matters for which indemnification is provided for
under this Section 5, other than any such damages arising from a claim of a
third party. Except for fraud, the provisions of this Section 5 are intended to
and shall provide for the exclusive monetary remedy for any and all Stockholder
Indemnitees for the matters for which a Stockholder Indemnitee may be
indemnified under this Section 5 following the consummation of the transactions
contemplated by this Agreement.

 

-11- 

 

 

(b) The foregoing right to the indemnity and advancement of expenses shall be in
addition to any rights that the Stockholder Indemnities may have at common law,
pursuant to contract or otherwise (both as to action in his or its official
capacity and as to action in another capacity while holding such position or
related to the Company). Each of the parties hereto acknowledges that certain
Stockholder Indemnities have or may have certain rights to indemnification,
advancement of expenses and/or insurance provided by the Company (through an
insurance policy) or the Stockholders or the affiliates of a Stockholder
(collectively, the “Other Indemnitors”) and hereby agrees that the Company and
its affiliates are, collectively, the indemnitor of first resort (it being
understood, for the avoidance of doubt, that the obligations of the Other
Indemnitors, if any, are secondary and any obligation of the Company to advance
expenses or to provide indemnification (including, without limitation, through
director and officer insurance policies) for the same expenses or liabilities
incurred by the Stockholder Indemnitees are primary).

 

(c) Each Stockholder shall, severally, not jointly, indemnify, defend and hold
the Company and each officer, director, member, partner, employee, agent and
representative of the Company (collectively, “Company Indemnitees”) harmless
against all liability, loss, and damage (including taxes thereon) together with
all reasonable and properly documented costs and expenses related thereto
(including reasonable and properly documented legal fees and expenses), relating
to or arising from any breach of any of the representations, warranties,
covenants or agreements of the Stockholders contained in this Agreement. In the
event that any Company Indemnitee claims any such right of indemnification, such
Company Indemnitee shall provide to such Stockholder written notice thereof,
together with reasonable detail regarding such claims and in the event that such
claim involves third party claims, allow such Stockholder at its expense to
defend such claim(s) on the Company Indemnitee’s behalf. Such Stockholder shall
promptly reimburse the Company Indemnitee for any reasonable and properly
documented legal and any other necessary expenses incurred by the Company
Indemnitee in connection with investigating and defending any such expense,
loss, judgment, claim, damage, liability or action, but only to the extent
incurred prior to the assumption by such Stockholder of the defense thereof. Any
reimbursement by the Stockholder under this Section 5(c) shall be within sixty
(60) days of the Company Indemnitee providing reasonable and documented evidence
of such expenses, provided that any individual expense in excess of $10,000
shall require such Stockholder’s prior approval.  Notwithstanding the foregoing,
such Stockholder reserves the right to withhold approval where in the good faith
judgment of such Stockholder, the expenses are not reasonable or properly
documented.  The Company agrees that it will not, without the Company
Indemnitee’s prior written consent, settle or compromise any claim or consent to
entry of any judgment in respect thereof in any pending or threatened action,
suit, claim or proceeding in respect of which indemnification has been sought
hereunder unless such settlement or compromise includes an unconditional release
of such Company Indemnitee from all liability arising out of such action, suit,
claim or proceeding. The obligations of such Stockholder under this Section 5
shall survive the consummation of the transactions contemplated by this
Agreement and the transfer, conversion, exchange or redemption of any Series C
Preferred Stock. Notwithstanding anything contained in this Agreement to the
contrary, such Stockholder shall not be liable to any Company Indemnitee for any
consequential, incidental, indirect, special, exemplary or punitive damages of
such Company Indemnitee relating to any matters for which indemnification is
provided for under this Section 5, other than any such damages arising from a
claim of a third party. Except for fraud, the provisions of this Section 5 are
intended to and shall provide for the exclusive monetary remedy for any and all
Company Indemnitees for the matters for which a Company Indemnitee may be
indemnified under this Section 5 following the consummation of the transactions
contemplated by this Agreement.

 

-12- 

 

 

Section 6. Expenses. The Company shall pay all of the reasonable and documented
fees and expenses of the Company and the Stockholders (including, without
limitation, the reasonable and documented fees of Paul Hastings LLP and Potter
Anderson Corroon LLP) incurred in connection with the preparation, execution and
delivery of the Transaction Documents and the consummation of the transactions
contemplated thereby; provided, however, that such fees and expenses shall not
exceed $100,000 without the prior written consent of the Company, such consent
not to be unreasonably withheld.

 

Section 7. Governing Law; Jurisdiction; Consent to Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflicts of laws principles thereof.
Each party hereto agrees that it shall bring any action, proceeding, suit,
demand, or claim with respect to any matter arising out of or related to this
Agreement or the transactions contained in or contemplated by this Agreement,
exclusively in the Delaware Court of Chancery and any state appellate court
therefrom within the State of Delaware (unless the Delaware Court of Chancery
shall decline to accept jurisdiction over a particular matter, in which case, in
any Delaware state or federal court within the State of Delaware) (such courts,
collectively, the “Delaware Courts”), and solely in connection with claims
arising under this Agreement or the transactions that are the subject of this
Agreement (i) irrevocably submits to the exclusive jurisdiction of the Delaware
Courts, (ii) waives any objection to laying venue in any such action or
proceeding in the Delaware Courts, (iii) waives any objection that the Delaware
Courts are an inconvenient forum or do not have jurisdiction over either party
hereto, (iv) agrees that service of process upon such party in any such action
or proceeding shall be effective if notice is given in accordance with Section
11 of this Agreement, although nothing contained in this Agreement shall affect
the right to serve process in any other manner permitted by law and (v) agrees
not to seek a transfer of venue on the basis that another forum is more
convenient. Notwithstanding anything herein to the contrary, (A) nothing in this
Section 7 shall prohibit any party from seeking or obtaining orders for
conservatory or interim relief from any court of competent jurisdiction and (B)
each party hereto agrees that any judgment issued by a Delaware Court may be
recognized, recorded, registered or enforced in any jurisdiction in the world
and waives any and all objections or defenses to the recognition, recording,
registration or enforcement of such judgment in any such jurisdiction.

 

-13- 

 

 

Section 8. Nature of Obligations; No Waiver. The obligations of the Stockholders
under this Agreement are several and not joint. The Company acknowledges and
agrees that by executing this Agreement the Stockholders are not waiving any
claims they may have under, or releasing the Company from any obligations it may
have under (i) that certain Securities Purchase Agreement dated as of March 9,
2015, or (ii) the Series B Exchange Agreement; provided, however, the Company
and the Stockholders agree that Sections 4(b) through 4(f) of the Series B
Exchange Agreement shall be of no further force or effect.

 

Section 9. Assignment; Binding Effect; Benefits. This Agreement is not
assignable without the written consent of each of the other parties hereto.
Subject to the foregoing, the provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs, legal
representatives, successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended or shall be construed to give any person other
than the parties or their respective successors or assigns any legal or
equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.

 

Section 10. Amendment. This Agreement may be amended only by a written
instrument signed by each of the parties hereto which specifically states that
it is amending this Agreement.

 

Section 11. Counterparts. This Agreement may be executed in counterparts or in
facsimiles, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument. Notwithstanding anything in this
Agreement to the contrary, the failure of one or more Stockholders (for whom
this Agreement sets forth a signature line) to execute or otherwise to become
bound by this Agreement shall not affect the enforceability of this Agreement
against, or otherwise impact the validity of this Agreement with respect to, the
persons who execute and deliver this Agreement.

 

Section 12. Notice. All notices and other communications made under this
Agreement shall be in writing and shall be mailed by registered or certified
U.S. mail or a nationally reputable overnight carrier, postage prepaid, sent by
facsimile or otherwise delivered by hand or courier addressed to each party’s
address or facsimile number set forth on the signature page hereto.

 

(Remainder of Page Intentionally Left Blank)

 

-14- 

 

 

IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the
date first written above.

 

  Bioscrip, inc.           /s/ Richard M. Smith   Name: Richard M. Smith  
Title: President and Chief Executive Officer

 

(Signature page to Exchange Agreement)

 

 

IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the
date first written above.

 

 

STOCKHOLDERS:

 

COLISEUM CAPITAL PARTNERS, L.P.

COLISEUM CAPITAL PARTNERS II, L.P.

BLACKWELL PARTNERS, LLC SERIES A

 

By: Coliseum Capital Management, LLC as Investment Manager

          /s/ Adam Gray   Name:  Adam Gray   Title: Managing Partner      
Address:  
One Station Place, 7th Floor South   Stamford, CT 06902

 

(Signature page to Exchange Agreement)

 

 

SCHEDULE 1

 

Name of Stockholder  Number of shares of Series B Preferred Stock to be
exchanged  Number of shares of Series C Preferred Stock to be Issued in Exchange
for the Series B Preferred Stock COLISEUM CAPITAL PARTNERS, L.P.  386,655 
386,655 COLISEUM CAPITAL PARTNERS II, L.P.  86,520  86,520 BLACKWELL PARTNERS,
LLC SERIES A  141,002  141,002         Total:     614,177

 

 

 

 

Exhibit A

Certificate of Designations