Exhibit 10.1

 

EXECUTION VERSION

 

 

 

SECURITIES PURCHASE AGREEMENT

 

between

 

BIOSCRIP, INC.

 

and

 

THE INVESTORS NAMED HEREIN

 

Dated March 9, 2015

  

 

 

 

 

 

Table of Contents

 

    Page       Article 1 SALE AND PURCHASE; CLOSING 1       1.1 Authorization of
Issuance and Sale 1       1.2 Commitment to Purchase the Purchased Securities 1
      1.3 Payment of the Subscription Price and Purchase Price for the Purchased
Securities 2       1.4 Closing of the Purchased Securities 2       Article 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2       2.1 Reporting Compliance 2
      2.2 Common Stock; Preferred Stock 2       2.3 Capitalization and Other
Capital Stock Matters 3       2.4 No Material Misstatement or Omission 3      
2.5 Preparation of the Financial Statements 4       2.6 Disclosure Controls and
Procedures 4       2.7 Independent Accountants 5       2.8 No Material Adverse
Change 5       2.9 Rating Agencies 5       2.10 Subsidiaries 6       2.11
Incorporation and Good Standing of the Company and its Subsidiaries 6       2.12
Legal Power and Authority 6       2.13 This Agreement 6       2.14 Compliance
with Existing Instruments 7       2.15 No Conflicts 7       2.16 No Consents 7  
    2.17 No Material Applicable Laws or Proceedings 7       2.18 All Necessary
Permits 8       2.19 Title to Properties 8       2.20 Tax Law Compliance 8      
2.21 Intellectual Property Rights 8       2.22 ERISA Matters 9       2.23 Labor
Matters 9

 

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Table of Contents

(continued)

 

    Page       2.24 Compliance with Environmental Laws 10       2.25 Insurance
10       2.26 Accounting System 11       2.27 Use of Proceeds; Solvency; Going
Concern 11       2.28 No Price Stabilization or Manipulation 11       2.29 No
Registration Required Under the Securities Act 12       2.30 No Integration 12  
    2.31 No Applicable Registration or Other Similar Rights 12       2.32
Investment Company Act 12       2.33 No Brokers 12       2.34 No Restrictions on
Payments of Dividends 12       2.35 Sarbanes-Oxley 13       2.36 No Unlawful
Contributions or Other Payments 13       2.37 Foreign Corrupt Practices Act 13  
    2.38 Money Laundering 13       2.39 OFAC 13       2.40 Related Party
Transactions 14       2.41 Stamp Taxes 14       2.42 Compliance with Health Care
Laws 14       2.43 No Contract Terminations 16       2.44 Certificates 17      
Article 3 REPRESENTATIONS OF THE INVESTORS 17       3.1 Existence and Good
Standing; Authority 17       3.2 Authorization of Agreement; Enforceability 17  
    3.3 Accredited Investor 17       3.4 No Disqualification Event 17       3.5
Information; Knowledge of Business 17       3.6 Investment Intent 18       3.7
No Manipulation or Stabilization of Price 18       3.8 Compliance with
Securities Laws 18

 

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Table of Contents

(continued)

 

    Page       3.9 Reliance on Own Investigation 18       3.10 Placement Agent
19       3.11 Share Ownership 19       Article 4 CONDITIONS TO CLOSING 19      
4.1 Conditions to Obligations of the Investors for Closing 19       4.2
Conditions to Obligations of the Company for Closing 20       Article 5
COVENANTS 20       5.1 Access to Records 20       5.2 Financial Reporting 20    
  5.3 Tax Matters 21       5.4 NASDAQ Listing 21       5.5 Use of Proceeds 21  
    5.6 Asset Sales 21       5.7 Stockholder Approvals 21       5.8 Rights
Offering 21       5.9 HSR Filing 22       5.10 Survival 22       Article 6
INDEMNIFICATION 23       Article 7 MISCELLANEOUS 24       7.1 Construction 24  
    7.2 Fees and Expenses 24       7.3 Assignment; Parties in Interest 25      
7.4 Entire Agreement; Severability 25       7.5 No Third-Party Beneficiaries 25
      7.6 Notices 25       7.7 Amendments; Waivers 26       7.8 Counterparts 26
      7.9 Headings 27       7.10 Governing Law; Consent to Jurisdiction and
Venue; Waiver of Jury Trial 27       7.11 No Investor Joint and Several
Liability 27

 

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INDEX OF SCHEDULES & EXHIBITS

 

Exhibits   Exhibit A: Certificate of Designations of Preferences and Rights of
Series A Preferred Stock Exhibit B: Form of Warrant Exhibit C: Form of Opinion
of Counsel to the Company Exhibit D: Registration Rights Agreement     Schedules
  Schedule 1.2: Investor Allocations Schedule 2.3: Capitalization and Other
Capital Stock Matters Schedule 2.4: No Material Misstatement or Omission
Schedule 2.6: Disclosure Controls and Procedures Schedule 2.8: No Material
Adverse Change Schedule 2.10: Subsidiaries Schedule 2.14: Compliance with
Existing Instruments Schedule 2.22: ERISA Matters Schedule 2.23: Labor Matters
Schedule 2.28: No Price Stabilization or Manipulation Schedule 2.33: No Brokers
Schedule 2.34: No Restrictions Schedule 2.42: Compliance with Health Care Laws
Schedule 2.43: No Contract Terminations Schedule 5.6: Asset Sales

 

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THIS SECURITIES PURCHASE AGREEMENT dated as of March 9, 2015 (this “Agreement”),
by and among BioScrip, Inc., a Delaware corporation (the “Company”), Coliseum
Capital Partners, L.P., a Delaware limited partnership, Coliseum Capital
Partners II, L.P., a Delaware limited partnership, and Blackwell Partners, LLC,
Series A, a Georgia limited liability company (each, an “Investor”) and
collectively the “Investors”).

 

RECITALS

 

WHEREAS, the Company desires to sell to the Investors, and the Investors desire
to purchase from the Company (i) 625,000 shares (the “Preferred Shares”) of
Series A Convertible Preferred Stock of the Company, $0.0001 par value per share
(the “Series A Preferred Stock”), with the designations, preferences, and rights
set forth in the Certificate of Designations of Preferences and Rights of Series
A Preferred Stock, dated the date hereof, in the form of Exhibit A hereto (the
“Series A Certificate”) and (ii) warrants (the “Warrants”), in substantially the
form attached the warrant agreement attached hereto as Exhibit B (the “Warrant
Agreement”) and together with this Agreement, the Series A Certificate, the
Registration Rights Agreement (as defined herein) and the Warrants, the
“Transaction Documents”)), to acquire up to that number of shares of common
stock of the Company, par value $0.0001 per share (the, “Common Stock”), equal
to five percent (5%) of the fully diluted outstanding Common Stock on the date
hereof but immediately prior to the issuance of the Preferred Shares (rounded up
to the nearest whole share) (the shares of Common Stock issuable upon exercise
of or otherwise pursuant to the Warrants collectively are referred to herein as
the “Warrant Shares”).

 

WHEREAS, the Company intends to use at least seventy-five percent (75%) of the
net proceeds from the offering of the Purchased Securities Shares pursuant to
the terms of this Agreement (the “Offering”) for the repayment of outstanding
indebtedness, and intends to use the remaining net proceeds for general
corporate purposes (the “Use of Proceeds”);

 

NOW THEREFORE, in consideration of the foregoing and of the agreements set forth
below, the parties agree as follows:

 

Article 1

 

SALE AND PURCHASE; CLOSING

 

1.1           Authorization of Issuance and Sale. Subject to the terms and
conditions hereof, the Company has authorized the issuance and sale of the
Preferred Shares and the Warrants (together, the “Purchased Securities”). The
Conversion Price (as defined in the Series A Certificate) of the Series A
Preferred Stock shall be equal to the consolidated closing bid price of the
Company’s Common Stock on the NASDAQ Global Market (“NASDAQ”) the trading day on
the Closing Date (as defined below), as determined in consultation with NASDAQ.

 

1.2           Commitment to Purchase the Purchased Securities. Subject to the
terms and conditions of this Agreement:

 

 

 

 

(a)          The Investors shall purchase from the Company the Preferred Shares,
and the Company shall issue and deliver to the Investors stock certificates
representing the Preferred Shares. Schedule 1.2 sets forth the number of
Preferred Shares to be purchased by each Investor (each such number of Preferred
Shares, an “Investor’s Allocation”).

 

(b)          The Company shall have issued the Warrants to purchase Warrant
Shares to the Investors.

 

1.3           Payment of the Subscription Price and Purchase Price for the
Purchased Securities. All payments pursuant to this Section 1.3 shall be made by
each Investor by wire transfer of immediately available funds to the Company.
The account for payment shall be designated by the Company to the Investors at
least one business day prior to the Closing Date. On the Closing Date each
Investor shall pay such dollar amount equal to the product of (a) $100.00 (one
hundred dollars) (the “Per Share Purchase Price”) and (b) the Investor’s
Allocation (collectively, for all Investors, the “Preferred Shares Purchase
Price”).

 

1.4           Closing of the Purchased Securities. The closing of the purchase
and sale of the Purchased Securities (the “Closing”) shall take place upon the
execution of this Agreement via e-mail by means of PDF copies of signed
documents (with the original signed documents to be delivered promptly after
Closing), or at such other time and by such other means as shall be agreed to by
the Company and the Investors (such date, the “Closing Date”).

 

Article 2

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to the Investors as of the date
hereof as follows:

 

2.1           Reporting Compliance. The Company is subject to, and is in full
compliance in all material respects with, the reporting requirements of
Section 13 and Section 15(d), as applicable, of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). All reports (including all current,
quarterly and annual reports) filed under the Exchange Act (including filings
incorporated by reference therein) are herein referred to collectively as the
“Company Disclosure Package.”

 

2.2           Common Stock; Preferred Stock. The authorized capital stock of the
Company consists of 125,000,000 shares of Common Stock, of which 68,636,965
shares are issued and outstanding, and 5,000,000 shares preferred stock, par
value $0.0001 (“Preferred Stock”), none of which are issued and outstanding.
Upon consummation of the transactions contemplated by the Transaction Documents
(the “Transactions”), (a) 625,000 shares of Preferred Stock shall be designated
as Series A Preferred Stock pursuant to the terms of the Series A Certificate,
all of which will be duly authorized, are validly issued, fully paid and
non-assessable and (b) the shares of Common Stock issuable upon conversion of
the Series A Preferred Stock will have been duly authorized for issuance, and,
when so issued, will be validly issued, fully paid and non-assessable. As of
Closing, the Investors shall own all of the outstanding 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 A Preferred Stock, or
shares of Common Stock issuable upon conversion of the Series A 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 material agreement or instrument to which the Company is a
party or by which it is bound, and the holders thereof shall be entitled to all
rights accorded to a holder of Series A Preferred Stock or Common Stock, as
applicable.

 

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2.3           Capitalization and Other Capital Stock Matters. All of the issued
and outstanding shares of capital stock of the Company and each of the
Subsidiaries (as defined herein) 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. The table attached hereto as
Schedule 2.3 sets forth, as of the date hereof, the capitalization of the
Company. All of the outstanding shares of capital stock or other equity
interests of each of the Subsidiaries are owned, directly or indirectly, by the
Company, free and clear of all Liens, other than those Liens (i) for taxes or
governmental assessments, charges or claims, in each case the payment of which
is not yet due and for which the Company has established adequate reserves,
(ii) imposed by applicable law such as mechanics’, materialmen’s, landlords’,
warehousemen’s and carriers’ liens and other similar liens securing obligations
incurred in the ordinary course of business, (iii) under workers’ compensation,
unemployment insurance, social security or similar legislation, in each case for
which the Company has established adequate reserves, or (iv) created, suffered,
incurred, assumed, existing, or permitted under the Existing Indebtedness
Agreements (as defined below) (collectively, “Permitted Liens”), and those
imposed by the Securities Act of 1933, as amended (the “Securities Act”), and
the securities or “Blue Sky” laws of certain U.S. state or
non-U.S. jurisdictions. Except as disclosed in the Company Disclosure Package,
there are no outstanding (A) options, warrants or other rights to purchase from
the Company or any of the Subsidiaries, (B) agreements, contracts, arrangements
or other obligations of the Company or any of the Subsidiaries to issue or
(C) other rights to convert any obligation into or exchange any securities for,
in the case of each of clauses (A) through (C), shares of capital stock of or
other ownership or equity interests in the Company or any of the Subsidiaries.
For purposes of this Agreement, the term “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”).

 

2.4           No Material Misstatement or Omission. (i) The Company Disclosure
Package, as of the date hereof did not, and as of the Closing Date will not,
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. No injunction or order has been
issued that either (i) asserts that any of the Transactions is subject to the
registration requirements of the Securities Act or (ii) would prevent or suspend
the issuance or sale of any of the Shares or the use of the Company Disclosure
Package in any jurisdiction, and no proceeding for either such purpose has
commenced or is pending or, to the Knowledge (defined below) of the Company and
the Subsidiaries, is contemplated. For purposes of this Agreement, “Knowledge”
means in the case of the Company and the Subsidiaries, the actual knowledge, as
of the date of this Agreement, of the individuals listed on Schedule 2.4.

 

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2.5           Preparation of the Financial Statements. Each of the consolidated
financial statements (audited and unaudited) and related notes and supporting
schedules of the Company and the Subsidiaries contained in the Company
Disclosure Package present fairly in all material respects the financial
position, results of operations and cash flows of the Company and its
consolidated Subsidiaries as of the respective dates and for the respective
periods to which they apply and have been prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods involved and the requirements of Regulation S-X. All
other financial, statistical and market and industry data and forward-looking
statements (within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act) contained in the Company Disclosure Package are
fairly and accurately presented, are based on or derived from sources that the
Company believes to be reliable and accurate and are presented on a reasonable
basis. The interactive data in extensible Business Reporting Language in the
Company Disclosure Package fairly presents the information called for in all
material respects and has been prepared in accordance with the U.S. Securities
and Exchange Commission’s (the “SEC”) rules and guidelines applicable thereto.

 

2.6           Disclosure Controls and Procedures. Except as set forth on
Schedule 2.6(a), the Company and the Subsidiaries maintain an effective system
of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the
Company’s management as appropriate to allow timely decisions regarding required
disclosure. The Company and the Subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as required by
Rule 13a-15 of the Exchange Act. The statements relating to disclosure controls
and procedures made by the principal executive officers (or their equivalents)
and principal financial officers (or their equivalents) of the Company in the
certifications required by the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith are complete and correct. The
Company Disclosure Package describes all outstanding and identified material
weaknesses, and Schedule 2.6(b) sets forth the Company’s plans to remediate all
outstanding and identified material weaknesses, including the material weakness
related to establishment of accounts receivable related reserves disclosure in
the Company’s Annual Report on Form 10-K for the period ended December 31, 2014
and the material weaknesses related to deferred financing costs and separation
of I.T. in the Company’s Annual Report on Form 10-K for the period ended
December 31, 2014.

 

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2.7           Independent Accountants.

 

(a)          Ernst & Young LLP, who have certified and expressed their opinion
with respect to the audited financial statements of the Company and the
Subsidiaries including the related notes thereto and supporting schedules
contained in the Company Disclosure Package through the Company’s Quarterly
Report on Form 10-Q for the period ended September 30, 2014, were, to the
Company’s Knowledge after due inquiry, at all times prior to their resignation
as disclosed in the Company’s Current Report on Form 8-K, filed with the SEC on
September 8, 2014 (the “Auditor 8-K”): (i) an independent registered public
accounting firm with respect to the Company and the Subsidiaries within the
applicable rules and regulations adopted by the SEC and as required by the
Securities Act, (ii) in compliance with the applicable requirements relating to
the qualification of accountants under Regulation S-X and (iii) a registered
public accounting firm as defined by the Public Company Accounting Oversight
Board (United States) whose registration has not been suspended or revoked and
who has not requested such registration to be withdrawn.

 

(b)          KPMG LLP, who were engaged as auditors as of September 8, 2014,
are, to the Company’s Knowledge after due inquiry, (i) an independent registered
public accounting firm with respect to the Company and the Subsidiaries within
the applicable rules and regulations adopted by the SEC and as required by the
Securities Act, (ii) in compliance with the applicable requirements relating to
the qualification of accountants under Regulation S-X and (iii) a registered
public accounting firm as defined by the Public Company Accounting Oversight
Board (United States) whose registration has not been suspended or revoked and
who has not requested such registration to be withdrawn.

 

(c)          The Company’s disclosure in the Auditor 8-K, including with respect
to the resignation of Ernst & Young LLP and the appointment of KPMG LLP, is true
and accurate in all material respects.

 

2.8           No Material Adverse Change. Subsequent to the respective dates as
of which information is contained in the Company Disclosure Package, except as
disclosed in the Company Disclosure Package, (i) except as incurred in the
ordinary course of business, neither the Company nor any of the Subsidiaries has
incurred any liabilities, direct or contingent, including without limitation any
losses or interference with its business from fire, explosion, flood,
earthquakes, accident or other calamity, whether or not covered by insurance, or
from any strike, labor dispute or court or governmental action, order or decree,
that are material, individually or in the aggregate, to the Company and the
Subsidiaries, taken as a whole, or has entered into any transactions not in the
ordinary course of business, (ii) there has not been any material decrease in
the capital stock or, other than in the ordinary course of business, any
material increase in any short-term or long-term indebtedness of the Company or
the Subsidiaries, or any payment of or declaration to pay any dividends or any
other distribution with respect to the Company, and (iii) there has not been any
material adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole (each of clauses (i),
(ii)  and (iii) , a “Material Adverse Change”).

 

2.9           Rating Agencies. No “nationally recognized statistical rating
organization” (as that term is used in Rule 15c3-1(c)(2)(vi)(F) under the
Exchange Act) (i) has imposed (or has informed the Company that it is
considering imposing) any condition (financial or otherwise) to retain any
rating assigned to the Company or any of the Subsidiaries or to any securities
of the Company or any of the Subsidiaries or (ii) has indicated to the Company
that it is considering (A) the downgrading, suspension, or withdrawal of, or any
review (or of any potential or intended review) for a possible change in, any
rating so assigned (including, without limitation, the placing of any of the
foregoing ratings on credit watch with negative or developing implications or
under review with an uncertain direction) or (B) any change in the outlook for
any rating of the Company or any of the Subsidiaries or any securities of the
Company or any of the Subsidiaries.

 

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2.10         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 2.10 (the “Subsidiaries”).

 

2.11         Incorporation and Good Standing of the Company and its
Subsidiaries. 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 as described in the Company Disclosure Package
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”).

 

2.12         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.

 

2.13         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 a, 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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2.14         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 2.14.
To the Company’s Knowledge, all Applicable Agreements are in full force and
effect and are legal, valid and binding obligations, other than as disclosed in
the Company Disclosure Package. For purposes of this Agreement, “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.

 

2.15         No Conflicts. Neither the execution, delivery or performance of the
Transaction Documents nor the consummation of any of the Transactions (including
the Use of Proceeds from the sale of the Shares as described above) will
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.

 

2.16         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.

 

2.17         No Material Applicable Laws or Proceedings. (i) No Applicable Law
shall have been enacted, adopted or issued, (ii) no stop order suspending the
qualification or exemption from qualification of any of the Shares in any
jurisdiction shall have been issued and no proceeding for that purpose shall
have been commenced or, to the Company’s Knowledge, be pending or contemplated
as of the Closing Date, 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 or any of
the Subsidiaries threatened or contemplated by Governmental Authorities or
threatened by others (collectively, “Proceedings”) that, with respect to
clauses (i), (ii),  and (iii) of this Section 2.17 would at the date hereof
restrain, enjoin, prevent or interfere with the consummation of the Offering or
any of the Transactions or would, individually or in the aggregate, have a
Material Adverse Effect.

 

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2.18         All Necessary Permits. Other than the permits and accreditation
contemplated in Section 2.42(d), each of the Company and the Subsidiaries
possess all material licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all Governmental Authorities, presently required or necessary to
own or lease, as the case may be, and to operate its properties and to carry on
its businesses as now, or proposed to be, conducted as described in the Company
Disclosure Package (“Permits”); each of the Company and the Subsidiaries has
fulfilled and performed in all material respects all of its obligations with
respect to such Permits; to the Knowledge of the Company or any Subsidiary, no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination of any such Permit or has resulted, or after notice or
lapse of time would result, in any other material impairment of the rights of
the holder of any such Permit the result of which would have a Material Adverse
Effect; and none of the Company or the Subsidiaries has received or has any
reason to believe it will receive any notice of any proceeding relating to
revocation or modification of any such Permit, except as described in the
Company Disclosure Package.

 

2.19         Title to Properties. Each of the Company and the Subsidiaries has
good, marketable and valid title to all real property owned by it and good title
to all personal property owned by it and, to the Knowledge of the Company, good
and valid title to all leasehold estates in real and personal property being
leased by it (except where the failure to hold good title or good and valid
title, as applicable, would not materially impair the operations of the Company
or its Subsidiaries) and, as of the date hereof, are free and clear of all Liens
other than Permitted Liens.

 

2.20         Tax Law Compliance. All material Tax (as hereinafter defined)
returns required to be filed by the Company and each of the Subsidiaries have
been filed and all such returns are true, complete and correct in all material
respects. All material Taxes that are due from the Company and the Subsidiaries
have been paid other than those (i) currently payable without penalty or
interest or (ii) being contested in good faith and by appropriate proceedings
and for which adequate accruals have been established in accordance with GAAP,
applied on a consistent basis throughout the periods involved. To the Knowledge
of the Company, there are no actual or proposed Tax assessments against the
Company or any of the Subsidiaries that would, individually or in the aggregate,
have a Material Adverse Effect. The accruals on the books and records of the
Company and the Subsidiaries in respect of any material Tax liability for any
period not finally determined are adequate to meet any assessments of Tax for
any such period. For purposes of this Agreement, the term “Tax” and “Taxes”
shall mean all U.S. and non-U.S. federal, state, local and taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax or penalties applicable
thereto.

 

2.21         Intellectual Property Rights. Each of the Company and the
Subsidiaries owns, or has the right to use, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, domain names and trade names
(collectively, “Intellectual Property”) necessary for the conduct of its
businesses and, as of the date hereof, the Intellectual Property is free and
clear of all Liens, other than Permitted Liens. The Company is not a party to,
or bound by, any options, licenses or agreements with respect to the
intellectual property rights of any other person or entity that are necessary to
be described in the Company Disclosure Package to avoid a material misstatement
or omission and are not described therein. The Company has not received notice
of any claims or notices of any potential claim by any person challenging the
use of any such Intellectual Property by the Company or any of the Subsidiaries
or questioning the validity or effectiveness of any Intellectual Property or any
license or agreement related thereto, other than any claims that, if successful,
would not, individually or in the aggregate, have a Material Adverse Effect.
None of the intellectual property used by the Company or any of the Subsidiaries
has been obtained or is being used by the Company or any of the Subsidiaries in
violation of any contractual obligation binding on the Company or any of the
Subsidiaries or, to the Company or any of the Subsidiaries’ Knowledge, its
officers, directors or employees or otherwise in violation of the rights of any
person.

 

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2.22         ERISA Matters. Each of the Company, the Subsidiaries and each ERISA
Affiliate (as hereinafter defined) has fulfilled, in all material respects, its
obligations, if any, under the minimum funding standards of Section 302 of the
United States Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) with respect to each “pension plan” (as defined in Section 3(2) of
ERISA), subject to Section 302 of ERISA, which the Company, the Subsidiaries or
any ERISA Affiliate sponsors or maintains, or with respect to which it has (or
within the last three years had) any obligation to make contributions, and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended
(the “Code”). None of the Company, the Subsidiaries or any ERISA Affiliate has
incurred any material unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary course) or
to any such plan under Title IV of ERISA. “ERISA Affiliate” means a corporation,
trade or business that is, along with the Company or any Subsidiary, a member of
a controlled group of corporations or a controlled group of trades or
businesses, as described in Section 414 of the Code or Section 4001 of ERISA.

 

2.23         Labor Matters. (i) Neither the Company nor any of the Subsidiaries
is party to or bound by any collective bargaining agreement with any labor
organization; (ii) there is no union representation question existing with
respect to the employees of the Company or the Subsidiaries, and, to the
Knowledge of the Company, no union organizing activities are taking place that,
could, individually or in the aggregate, have a Material Adverse Effect;
(iii) to the Knowledge of the Company, no union organizing or decertification
efforts are underway or threatened against the Company or the Subsidiaries;
(iv) no labor strike, work stoppage, slowdown or other material labor dispute is
pending against the Company or the Subsidiaries, or, to the Company’s Knowledge,
threatened against the Company or the Subsidiaries; (v) to the Knowledge of the
Company and the Subsidiaries, there is no worker’s compensation liability,
experience or matter that could be reasonably expected to have a Material
Adverse Effect; (vi) to the Knowledge of the Company, there is no threatened or
pending liability against the Company or the Subsidiaries pursuant to the Worker
Adjustment Retraining and Notification Act of 1988, as amended, or any similar
state or local law; (vii)  there is no employment-related charge, complaint,
grievance, investigation, unfair labor practice claim or inquiry of any kind,
pending against the Company or the Subsidiaries that could, individually or in
the aggregate, have a Material Adverse Effect; (viii) to the Knowledge of the
Company and the Subsidiaries, no employee or agent of the Company or the
Subsidiaries has committed any act or omission giving rise to liability for any
violation identified in subsection (vi) and (vii) above, other than such acts or
omissions that would not, individually or in the aggregate, have a Material
Adverse Effect; and (viii) no term or condition of employment exists through
arbitration awards, settlement agreements or side agreement that is contrary to
the express terms of any applicable collective bargaining agreement.

 

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2.24         Compliance with Environmental Laws. Each of the Company and the
Subsidiaries (i) is in material compliance with any and all applicable U.S. or
non-U.S. federal, state and local laws and regulations relating to health and
safety, or the pollution or the protection of the environment or hazardous or
toxic substances of wastes, pollutants or contaminants (“Environmental Laws”),
(ii) has received and is in material compliance with all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
its respective businesses and (iii) has not received notice of, and is not aware
of, any actual or potential liability for damages to natural resources or the
investigation or remediation of any disposal, release or existence of hazardous
or toxic substances or wastes, pollutants or contaminants, in each case except
where such non-compliance with Environmental Laws, failure to receive and comply
with required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries has been named as a “potentially responsible
party” under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or any similar U.S. or non-U.S. state or
local Environmental Laws or regulation requiring the Company or any of the
Subsidiaries to investigate or remediate any pollutants or contaminants, except
where such requirements would not, individually or in the aggregate, have a
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business. In the ordinary course of its business, the Company
periodically reviews the effects of Environmental Laws on the business,
operations and properties of the Company and the Subsidiaries, in the course of
which it identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws, or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs would not have a
Material Adverse Effect.

 

2.25         Insurance. Each of the Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged. All policies of insurance insuring the Company or any of the
Subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect. The Company and the Subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects, and there are no claims by the Company or any of the Subsidiaries
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause, except claims that
if finally denied or successfully defended by any insurance company, would not
have a Material Adverse Effect on the Company and its Subsidiaries. Except as to
claims not meeting coverage requirements, neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied for, and
neither the Company nor any such Subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage or obtain such
coverage as may be necessary and appropriate for the continuation of the
Company’s business at a cost that would not, individually or in the aggregate,
have a Material Adverse Effect.

 

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2.26         Accounting System. The Company and each of the Subsidiaries make
and keep accurate books and, except as set forth on Schedule 2.6, records and
maintain a system of internal accounting controls and procedures sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP, and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences. The Company’s independent auditors and
board of directors have been advised of: (i) all “material weaknesses” and
“significant deficiencies” (each, as defined in Rule 12b-2 of the Exchange Act),
if any, in the design or operation of the Company’s internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data and (ii) all fraud, if any, whether or not material, that
involves management or other employees who have a role in the Company’s internal
controls (whether or not remediated); all such material weaknesses and
significant deficiencies, if any, have been disclosed in the Company Disclosure
Package in all material respects; and, except as set forth on Schedule 2.6,
since the date of the most recent evaluation of such disclosure controls and
procedures and internal controls, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

 

2.27         Use of Proceeds; Solvency; Going Concern. As of the date hereof,
after giving pro forma effect to the Offering and the Use of Proceeds, the
Company and the Subsidiaries, on a consolidated basis, will be Solvent (as
hereinafter defined). As used in this paragraph, the term “Solvent” means, with
respect to any particular date, that on such date (a) the fair value of the
property of the Company is greater than the total amount of liabilities,
including subordinated and contingent liabilities, of the Company; (b) the
present fair saleable value of the assets of the Company is not less than the
amount that will be required to pay the probable liability of the Company on its
debts and liabilities, including subordinated and contingent liabilities as they
become absolute and matured; (c) the Company does not intend to, and does not
believe that it will, incur debts or liabilities beyond the Company’s ability to
pay as such debts and liabilities mature; and (d) the Company is not engaged in
a business or transaction, and is not about to engage in a business or
transaction, for which the Company’s property would constitute an unreasonably
small capital. The amount of contingent liabilities (such as litigation,
guaranties and pension plan liabilities) at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time,
represents the amount that would reasonably be expected to become an actual or
matured liability.

 

2.28         No Price Stabilization or Manipulation. Other than actions taken in
the ordinary course with respect the Company’s most recent earnings release
(which actions do not include the disclosure of the existence or pendency of the
Transactions contemplated hereby), neither the Company nor any of its Affiliates
has and, to the Company’s Knowledge, no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company,
whether to facilitate the sale or resale of any of the Purchased Securities or
otherwise, (ii) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, any of the Purchased Securities, (iii) except as
disclosed in the Schedule 2.28, paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company, or (iv) taken, directly or indirectly, any action designed to cause or
to result in, or that has constituted or which might reasonably be expected to
constitute an impact on the price that will be used to set the Conversion Price
(as defined in the Series A Certificate). “Affiliates” has the meaning set forth
in Rule 405 of the Securities Act.

 

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2.29         No Registration Required Under the Securities Act. Without limiting
any provision herein, no registration under the Securities Act is required for
the offer or sale of the Purchased Securities to the Investors as contemplated
hereby.

 

2.30         No Integration. No securities of the Company of the same class as
the Purchased Securities have been offered, issued or sold by the Company or any
of its Affiliates within the six-month period immediately prior to the date
hereof; and the Company does not have any intention of making, and will not
make, an offer or sale of such securities of the Company of the same class as
the Purchased Securities, for a period of six months after the date of this
Agreement, except for the offering of the Purchased Securities as contemplated
by this Agreement and the rights offering contemplated in Section 5.8 of this
Agreement. As used in this paragraph, the terms “offer” and “sale” have the
meanings specified in Section 2(a)(3) of the Securities Act.

 

2.31         No Applicable Registration or Other Similar Rights. Except as
disclosed in the Company Disclosure Package, there are no persons with
registration or other similar rights to have any equity or debt securities of
the Company or any “Affiliate” registered for sale under a registration
statement, except for rights as have been duly waived.

 

2.32         Investment Company Act. The Company has been advised of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
SEC thereunder (collectively, the “Investment Company Act”); as of the date
hereof and, after giving effect to the Offering and the Use of Proceeds of the
Offering, each of the Company and its Subsidiaries is not and will not be,
individually or on a consolidated basis, an “investment company” that is
required to be registered under the Investment Company Act; and following the
Closing, the Company and its Subsidiaries will conduct their businesses in a
manner so as not to be required to register under the Investment Company Act.

 

2.33         No Brokers. Other than as set forth in Schedule 2.33, neither the
Company nor any of its Affiliates has engaged any broker, finder, commission
agent or other person in connection with the Offering or any of the
Transactions, and neither the Company nor any of its Affiliates is under any
obligation to pay any broker’s fee or commission in connection with such
Transactions.

 

2.34         No Restrictions on Payments of Dividends. Except as prohibited or
restricted by applicable law or as disclosed in the Schedule 2.34 or as
otherwise disclosed in the Company Disclosure Package, there is no encumbrance
or restriction on the ability of any Subsidiary of the Company (x) to pay
dividends or make other distributions on such Subsidiary’s capital stock or to
pay any indebtedness to the Company or any other Subsidiary of the Company,
(y) to make loans or advances or pay any indebtedness to, or investments in, the
Company or any other Subsidiary or (z) to transfer any of its property or assets
to the Company or any other Subsidiary of the Company.

 

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2.35         Sarbanes-Oxley. There is and has been no failure on the part of the
Company and the Subsidiaries or any of the officers and directors of the Company
or any of the Subsidiaries, in their capacities as such, to comply in all
material respects with the applicable provisions of the Sarbanes-Oxley Act
of 2002 and the rules and regulations promulgated in connection therewith.

 

2.36         No Unlawful Contributions or Other Payments. Neither the Company
nor any of the Subsidiaries nor, to the best of the Company’s Knowledge, any
employee or agent of the Company or any Subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Company Disclosure Package.

 

2.37         Foreign Corrupt Practices Act. None of the Company or any
Subsidiary or, to the Knowledge of the Company, any director, officer, employee
or any agent or other person acting on behalf of the Company or any Subsidiary
has, in the course of its actions for, or on behalf of, the Company or any
Subsidiary (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any domestic government
official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder (collectively,
the “FCPA”) or employee from corporate funds; (iii) violated or is in violation
of any provision of the FCPA or any applicable non-U.S. anti-bribery statute or
regulation; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any domestic government official, such
foreign official or employee; and the Company and the Subsidiaries, and, to the
Knowledge of the Company and the Subsidiaries, its and their other affiliates
have conducted their businesses in compliance with the FCPA and have instituted
and maintain policies and procedures designed to ensure, and which are
reasonably expected to ensure, continued compliance therewith.

 

2.38         Money Laundering. The operations of the Company and the
Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines issued, administered
or enforced by any governmental agency (collectively, the “Money Laundering
Laws”), and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or the
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
Company’s Knowledge, threatened.

 

2.39         OFAC. Neither the Company nor the Subsidiaries, any director,
officer, nor, to the Knowledge of the Company or the Subsidiaries, any agent,
employee or Affiliate of the Company or any of the Subsidiaries or other person
acting on their behalf is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company will not directly or indirectly use the proceeds of
the Offering, or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity, for the purpose
of financing the activities of or business with any person, or in any country or
territory, that currently is the subject to any U.S. sanctions administered by
OFAC or in any other manner that will result in a violation by any person
(including any person participating in the transaction whether as advisor,
investor or otherwise) of U.S. sanctions administered by OFAC.

 

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2.40         Related Party Transactions. No relationship, direct or indirect,
exists between or among any of the Company or any affiliate of the Company, on
the one hand, and any director, officer, member, stockholder, customer or
supplier of the Company or any affiliate of the Company, on the other hand,
which is required by the Securities Act to be disclosed in a registration
statement on Form S-1 which is not so disclosed in the Company Disclosure
Package. There are no outstanding loans, advances (except advances for business
expenses in the ordinary course of business) or guarantees of indebtedness by
the Company or any affiliate of the Company to or for the benefit of any of the
officers or directors of the Company or any affiliate of the Company or any of
their respective family members.

 

2.41         Stamp Taxes. There are no stamp or other issuance or transfer taxes
or duties or other similar fees or charges required to be paid in connection
with the execution and delivery of this Agreement or the issuance or sale of the
Purchased Securities pursuant to this Agreement.

 

2.42         Compliance with Health Care Laws.

 

(a)          “Health Care Programs” means all third-party private payor programs
and health benefit programs that are sponsored by a Governmental Authority in
which the Company or any of its Subsidiaries participate, whether pursuant to
one or more contracts with the applicable Governmental Authority or otherwise,
including state Medicaid programs, Medicare, the TRICARE program and Medicare
Advantage.

 

(b)          “Health Care Laws” means Applicable Laws relating to: (i) the
licensure, certification, qualification or authority to transact business in
connection with the payment for, or arrangement of durable medical equipment,
respiratory care services, pharmacy-related services, pharmacy management
services, and the administration and coordination of health benefits;
(ii) health care or insurance fraud or abuse, including the following statutes:
the Federal anti-kickback law (42 U.S.C. § 1320a-7b), the Stark laws (42 U.S.C.
§ 1395nn), the Federal False Claims Act (31 U.S.C. §§ 3729, et seq.), the
Federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the Federal Program
Fraud Civil Remedies Act (31 U.S.C. § 3801 et seq.) and the Federal Health Care
Fraud Law (18 U.S.C. § 1347); (iii) the provision of administrative, management
or other services related to any Health Care Programs, (iv) the Consolidated
Omnibus Budget Reconciliation Act of 1985; (v) the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003; (vi) the Medicare Improvements for
Patients and Providers Act of 2008; (vii) the Health Insurance Portability and
Accountability Act of 1996 (Pub. L. No. 104-191), as amended by the Health
Information Technology for Economic and Clinical Health Act (Pub. L. No. 111-5)
and their implementing regulations (collectively, “HIPAA”); and (viii) the
Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152)
(collectively, “ACA”).

 

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(c)          Other than as set forth on Schedule 2.42(c), the Company and each
of its Subsidiaries are and at all times since January 1, 2012 have been in
compliance with all Health Care Laws, other than noncompliance which would not
result in a Material Adverse Effect. Other than as set forth on Schedule
2.42(c), there is no claim or Proceeding, pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries alleging any
failure to comply with Health Care Laws. Sections 2.42(d) through 2.42(m) shall
not limit the generality of this Section 2.42(c).

 

(d)          The Company and its Subsidiaries hold all material permits and
accreditations that are required under applicable Health Care Laws in connection
with the conduct, ownership, use, occupancy or operation of their respective
businesses or assets (the “Health Care Permits”) as currently conducted. The
Company and each of its Subsidiaries are in compliance with all the terms of the
Health Care Permits, except as would not result in a Material Adverse Effect. No
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Governmental Authority or other Person is
required to be obtained or made by or with respect to the Health Care Permits in
connection with the consummation of the transactions contemplated hereby.

 

(e)          With respect to participation in Health Care Programs, the Company
and each of the Subsidiaries of the Company currently meet all the requirements
for participation in, and receipt of payment from, the Government Sponsored
Health Care Programs in which the Company or such Subsidiary currently
participates, other than as would not result in a Material Adverse Effect.

 

(f)          Neither the Company nor any of its Subsidiaries, nor any director,
executive officer or other employee of the Company or any of its Subsidiaries,
(i) has been assessed a civil monetary penalty under Section 1128A of the Social
Security Act, (ii) has been excluded from participation in any Health Care
Programs, (iii) has been convicted of any criminal offense relating to the
delivery of any item or service under any Health Care Program or (iv) has been
or is a party to or subject to any claim or Proceeding concerning any of the
matters described in the foregoing clauses (i) through (iii).

 

(g)          All individuals who are employed by Company or any its Subsidiaries
and currently provide, and, to the Knowledge of the Company, all individuals who
have been employed by the Company since January 1, 2012 have provided, on behalf
of or, to the Company or any of its Subsidiaries, any professional services that
require any certification or license pursuant to applicable Health Care Laws
(each, a “Licensed Professional”) have been duly licensed or certified, as
applicable, to practice his or her profession in each applicable jurisdiction
during the applicable time period such individuals were providing such services
to or on behalf of the Company or any of its Subsidiaries, except as would not
result in a Material Adverse Effect. To the Knowledge of the Company, no event
has occurred and no fact, circumstance, or condition exists that has or would
reasonably be expected to result in the denial, loss, revocation, or rescission
of or to any professional license or specialist certification except as would
not result in a Material Adverse Effect.

 

(h)          To the Knowledge of the Company, no Licensed Professional has been
sanctioned, excluded, or disciplined by any Governmental Authority, professional
society, hospital, or third-party payor except as would not result in a Material
Adverse Effect.

 

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(i)          There is no pending or, to the Knowledge of the Company, threatened
Proceeding alleging that the businesses of the Company or its Subsidiaries has
violated any Applicable Laws regarding (i) the organization or ownership of
persons that employ Licensed Professionals, (ii) the manner in which the
Licensed Professionals may split or share with non-Licensed Professionals fees
generated from the provision of professional services, or (iii) the unlicensed
practice of pharmacy.

 

(j)          The Company and its Subsidiaries are and have at all times since
January 1, 2012 been in compliance with all HIPAA and state laws governing the
privacy and security of health-related medical information or personal
information and any “business associate” agreement entered into by the Company
and/or any of its Subsidiaries, except as would not have a Material Adverse
Effect. The Company and its Subsidiaries have in place plans, policies, and
procedures (collectively, “HIPAA Policies and Procedures”) designed to comply
with HIPAA. The Company and its Subsidiaries have provided Investors with
complete copies of all HIPAA Policies and Procedures currently in place. Neither
the Company nor any of its Subsidiaries has received notice of, and there is no
pending or, to the Knowledge of the Company, threatened, Proceeding with respect
to any alleged “breach” as defined in 45 C.F.R. § 164.402 or any other violation
of HIPAA by the Company or any of its Subsidiaries.

 

(k)          Except as set forth on Schedule 2.42(j), neither the Company nor
any of its Subsidiaries is a party to any agreement or settlement with any
Governmental Authority with respect to any actual or alleged violation of any
Health Care Law. The Company and its Subsidiaries are not a party to, or
otherwise bound by, a corporate integrity agreement with the Office of Inspector
General of the U.S. Department of Health and Human Services or any similar
agreement with any Governmental Authority with respect to any applicable Health
Care Laws. The Company and its Subsidiaries have not been requested to enter
into, and the Company and its Subsidiaries are not in the process of
negotiating, any such agreement.

 

(l)          The Company and its Subsidiaries have not made and are not in the
process of making a voluntary self-disclosure under the Medicare self-referral
disclosure protocol established by the Secretary of the U.S. Department of
Health and Human Services pursuant to Section 6409 of ACA, or under the
self-disclosure protocol established and maintained by the Office of Inspector
General of the U.S. Department of Health and Human Services, or any United
States Attorney or other Governmental Authority with respect to any applicable
Health Care Laws. The Company and its Subsidiaries are not currently considering
any such self-disclosure, and to the Knowledge of the Company, the Company and
its Subsidiaries do not have an obligation to make any such self-disclosure in
lieu of repayment under section 6402(a) of ACA.

 

(m)          The Company and its Subsidiaries have in place plans, policies and
procedures designed to comply with applicable Health Care Laws.

 

2.43         No Contract Terminations. Neither the Company nor any of the
Subsidiaries has sent or received any communication regarding termination of, or
intent not to renew, any of the material contracts or agreements referred to or
described in the Company Disclosure Package, and no such termination or
non-renewal has been threatened by the Company or any of the Subsidiaries or, to
the Company’s Knowledge, any other party to any such contract or agreement,
which threat of termination or non-renewal has not been rescinded as of the date
hereof.

 

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2.44         Certificates. Each certificate signed by any officer of the Company
or any of the Subsidiaries, delivered to the Investors shall be deemed a
representation and warranty by the Company or any such Subsidiary (and not
individually by such officer) to the Investors with respect to the matters
covered thereby.

 

Article 3

 

REPRESENTATIONS OF THE INVESTORS

 

Each Investor, severally and not jointly, represents to the Company as follows:

 

3.1           Existence and Good Standing; Authority. Such Investor is validly
existing and in good standing under the laws of the state of its formation and
has all requisite power and authority to carry on its business as now conducted.

 

3.2           Authorization of Agreement; Enforceability. 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.

 

3.3           Accredited Investor. Such Investor is an “accredited investor” as
that term is defined in Regulation D promulgated under the Securities Act.

 

3.4           No Disqualification Event. Such Investor is not, or to the extent
it has them, any of its shareholders, members, managers, general partners,
directors, or executive officers are not, subject to any Disqualification Event
set forth in Rule 506(d) under the Securities Act. Such Investor confirms that
it has exercised reasonable care to determine whether it or any of the
aforementioned persons are subject to a Disqualification Event. The purchase of
the Purchased Securities by such Investor will not subject the Company to any
Disqualification Event. Such Investor shall notify the Company immediately in
writing of the occurrence of any Disqualification Event that has not previously
been disclosure to the Company.

 

3.5           Information; Knowledge of Business. Such Investor is familiar with
the business in which the Company is engaged. Such Investor has knowledge and
experience in financial and business matters; is familiar with the investments
of the type that it is undertaking to purchase; is fully aware of the problems
and risks involved in making an investment of this type; and is capable of
evaluating the merits and risks of this investment. Such Investor acknowledges
that, prior to executing this Agreement, it (and each of its representatives)
has had the opportunity to ask questions of and receive answers or obtain
additional information from a representative of the Company concerning the
financial and other affairs of the Company.

 

-17-

 

 

3.6           Investment Intent. Such Investor is acquiring the Purchased
Securities in the ordinary course of its business and for its own account, with
the intention of holding such shares 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.

 

3.7           No Manipulation or Stabilization of Price. Such Investor has not
taken and will not take, directly or indirectly, any action designed to, or that
would constitute or that might reasonably be expected to, cause or result in,
under the Exchange Act or otherwise, stabilization or manipulation of the price
of any security of the Company in order to facilitate the sale or resale of any
securities of the Company, and such Investor is not aware of any such action
taken or to be taken by any person.

 

3.8           Compliance with Securities Laws. Such Investor will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Purchased Securities except in compliance with the Securities Act, and the rules
and regulations promulgated thereunder, and such Investor acknowledges that
certificates representing such the Purchased Securities shall bear the following
legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT, AN OPINION OF COUNSEL SATISFACTORY
TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNLESS
SUCH OFFER, SALE, TRANSFER OR HYPOTHECATION IS IN COMPLIANCE WITH THE
REQUIREMENTS OF RULE 144 PROMULGATED UNDER THE ACT.

 

3.9           Reliance on Own Investigation. Such Investor has conducted its own
independent review and analysis of the business, assets, condition, operations
and prospects of the Company. In entering into this Agreement, such Investor has
relied solely upon its own investigation and analysis, and the Investor
acknowledges that, except for the representations and warranties of the Company
expressly set forth in Article 2, none of the Company or its subsidiaries nor
any of their respective representatives makes any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to the Investor or any of its
representatives. Without limiting the generality of the foregoing, none of the
Company or its subsidiaries nor any of their respective representatives or any
other person has made a representation or warranty to such Investor with respect
to (a) projections, estimates or budgets for the Company or its subsidiaries or
(b) except as expressly and specifically covered by a representation or warranty
set forth in Article 2, any material, documents or information relating to the
Company or its subsidiaries made available to such Investor or its
representative in any “data room” (electronic or otherwise), confidential
memorandum or otherwise.

 

-18-

 

 

3.10         Placement Agent. Such Investor understands that the placement agent
(“Placement Agent”) engaged by the Company has acted solely as the agent of the
Company in this placement of the Securities and such Investor has not relied on
the business or legal advice of the Placement Agent or any of its agents,
counsel or affiliates in making its investment decision hereunder, and confirms
that none of such persons has made any representations or warranties to such
Investor in connection with the transactions contemplated by the Transaction
Documents.

 

3.11         Share Ownership. As of the date of this Agreement, neither such
Investor nor any of its “Affiliates” (as defined in Rule 405 of the Securities
Act) owns, directly or indirectly, beneficially (as such term is used in Rule
13d-3 promulgated under the Exchange Act) or of record, any capital stock or
other securities of the Company or any options, warrants or other rights to
acquire capital stock or other securities of, or any other economic interest
(through derivative securities or otherwise) in, the Company except pursuant to
this Agreement.

 

Article 4

 

CONDITIONS TO CLOSING

 

4.1           Conditions to Obligations of the Investors for Closing. The
Investors acknowledge that the following conditions have been satisfied, or have
been waived on or before Closing:

 

(a)          Series A Certificate. The Series A Certificate shall have been
filed with and accepted by the Secretary of State of the State of Delaware and
shall have become effective.

 

(b)          Registration Rights Agreement. The Company shall have executed and
delivered to the Investors the Registration Rights Agreement, in the form
attached hereto as Exhibit D.

 

(c)          Warrant Agreement. The Company shall have executed and delivered to
the Investors the Warrant Agreement and related Warrant Certificates, in the
form attached hereto as Exhibit B.

 

(d)          Required Consents. All consents, approvals and other actions of,
and notices and filings with, all Governmental Authorities and other third
parties, as may be necessary or required under law or any contract to which the
Company is a party with respect to the execution and delivery by the parties of
the Transaction Documents and the consummation by the parties of the
transactions contemplated thereby, shall have been obtained or made, except for
any filings, consents and approvals required under any federal or state
securities laws required to be made following Closing.

 

(e)          Authorizing Actions of the Company. The Investors shall have
received certified copies of all requisite corporate actions taken by the
Company to authorize the Company’s execution and delivery of the Transaction
Documents to which it is a party and its consummation of the transactions
contemplated thereby, and such other documents and other instruments as the
Investors or their counsel may reasonably request.

 

-19-

 

 

(f)          Opinion of Counsel. The Investors shall have received from
Polsinelli PC, counsel to the Company, a legal opinion, dated as of the Closing
Date and in the form attached hereto as Exhibit C.

 

4.2           Conditions to Obligations of the Company for Closing. The Company
acknowledges that the following conditions have been satisfied, or have been
waived on or before Closing:

 

(a)          Compliance with Covenants. The Investors shall have performed and
complied in all material respects with all agreements and covenants contained in
the Transaction Documents as of the Closing Date.

 

(b)          Required Consents. All consents, approvals and other actions of,
and notices and filings with, all Governmental Authorities as may be necessary
or required with respect to the execution and delivery by the parties of the
Transaction Documents and the consummation by the parties of the transactions
contemplated thereby, shall have been obtained or made, including all filings,
consents and approvals required under any state securities laws.

 

Article 5

 

COVENANTS

 

5.1           Access to Records. From the date hereof until the Purchased
Securities are converted, redeemed, exercised or repurchased in full in
accordance with the Series A Certificate, the Warrant, or this Agreement, upon
the prior written request of any Investor, subject to the execution by such
Investor of a confidentiality agreement in form and substance reasonably
acceptable to the Company (it being understood that if the Investor has already
signed a confidentiality agreement with the Company, an agreement on
substantially identical terms shall be acceptable), and during reasonable hours
and in a manner so as not to interfere with normal business operations of the
Company and its subsidiaries, the Company and its subsidiaries shall afford to
such Investor and its authorized employees, counsel, accountants and other
representatives (it being understood that such information shall not be provided
to any Investor other than the Investor requesting such information), (i) full
access at the Company’s and its subsidiaries’ offices and to true and correct
copies of all documents, reports financial data and other information, and
(ii) an opportunity to interview, consult with and advise any officer or
director, representative, accountant, and other advisor of the Company or any of
its subsidiaries regarding the Company’s or such subsidiary’s affairs.

 

5.2           Financial Reporting. The Company agrees and covenants to remain in
full compliance in all material respects with, the reporting requirements of
Section 13 and Section 15(d), as applicable, of the Exchange Act. From the date
hereof until the Purchased Securities are converted, redeemed, exercised or
repurchased in accordance with the Series A Certificate, the Warrant or this
Agreement, if at any time the Company is no longer subject to the reporting
requirements of Section 13 and Section 15(d), as applicable, of the Exchange
Act, the Company shall deliver to the Investors the following: (a) all quarterly
and annual reports that would be required to be filed with the SEC on Forms 10-Q
and 10-K if the Company were required to file such reports; and (b) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports. All such reports will be prepared in
all material respects in accordance with all of the rules and regulations
applicable to such reports. Each annual report on Form 10-K will include a
report on the Company’s consolidated financial statements by the Company’s
independent registered public accounting firm.

 

-20-

 

 

5.3           Tax Matters. For so long as any Preferred Shares remain
outstanding, the Company will not (i) treat dividends in arrears with respect to
Preferred Shares as constructively paid or received for U.S. federal income
purposes if such dividends were not declared or paid or issue a Form 1099 with
respect to such dividends in arrears, or (ii) treat the Preferred Shares as
other than capital stock for U.S. federal income tax purposes; provided that (A)
there shall not have been a change in the Applicable Law that otherwise requires
the treatment contemplated in Section 5.3(i) or 5.3(ii), or (B) the Company
shall not be subject to any action by the Internal Revenue Service (“IRS”)
challenging the treatment of the Preferred Shares contemplated in Section 5.3(i)
or 5.3(ii).  Prior to any change to the treatment of dividends by the Company in
response to an action contemplated in Section 5.3(B), the Company shall make
commercially reasonable efforts to challenge or shall make commercially
reasonably efforts to assist with a challenge by a holder of Preferred Shares or
its affiliates. The IRS action so long as the Investors assume responsibility
for any and all Company cost, fees (including attorney’s fees) and expenses
associated with any such challenge.

 

5.4           NASDAQ Listing. After Closing, the Company shall use its
commercially reasonable efforts to list all of the Common Stock into which the
Series A Preferred Stock is convertible on NASDAQ.

 

5.5           Use of Proceeds. The Company agrees and covenants that it will use
at least seventy-five percent (75%) of the net proceeds from the offering of the
Preferred Shares pursuant to the terms of this Agreement for the repayment of
outstanding indebtedness under the Existing Indebtedness Agreements, and intends
to use the remaining net proceeds for general corporate purposes.

 

5.6           Asset Sales. Unless otherwise agreed to by the Investors in
writing and subject in all respects to the terms of the Existing Indebtedness
Agreements, the Company agrees and covenants that it will use the “Net Proceeds”
from any “Asset Sale” identified on Schedule 5.6 and/or the “Net Cash Proceeds”
from a “Prepayment Event” (each as defined in the Credit Facility) for the
repayment of the Company’s then-outstanding indebtedness.

 

5.7           Stockholder Approvals. The Company shall use its commercially
reasonable efforts to obtain Stockholder Approvals as required by the listing
standards of NASDAQ.

 

5.8           Rights Offering. Within 180 days of the date hereof, the Company
shall have the right to commence and consummate a rights offering to holders of
Common Stock of the Company (without over-allotment options or backstop
purchasers) to purchase up to 200,000 shares of Series A Preferred Stock and
related Warrants as a unit in the same proportions as offered hereby to the
Investors. The Investors shall not have a right to participate in any rights
offering contemplated in this Section 5.8.

 

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5.9           HSR Filing.

 

(a)          If approval of the Transactions under the Hart-Scott Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”) is required to
allow the Investors to exercise any Warrants, then, upon written notice of the
Investors to the Company of any Investor’s intent to exercise such Warrants, the
parties hereto shall (i) prepare and file any notification and report form and
related material required or may be required under the HSR Act as promptly as
practicable following the date the Company receives such written notice from the
Investors (provided that such filing shall be made within fifteen (15) business
days of receipt of such notice) and thereafter to respond as promptly as
practicable to any request for additional information or documentary material
that may be made under the HSR Act and (ii) use their reasonable best efforts to
take such actions as are necessary or advisable to obtain prompt approval of the
consummation of the Transactions or expiration of applicable waiting periods
under the HSR Act.

 

(b)          Any filing fees associated with the filings pursuant to the HSR Act
that are contemplated in this Section 5.9 shall be borne by both the Company and
the Investors, with each of the Company and the Investors responsible for fifty
percent (50%) of such expenses.

 

5.10         Survival. Irrespective of any investigation, inquiry or examination
made by, for or on behalf of the Investors, or the acceptance by the Investors
of any certificate or opinion, the representations and warranties contained
herein shall survive Closing for a period not to exceed 24 months and the
covenants set forth herein shall survive until the earlier of the (1) full
satisfaction of the obligations under the covenant or (2) the date in which all
the Purchased Securities have been converted, redeemed, exercised or repurchased
in full in accordance with the Series A Certificate, the Warrant, or this
Agreement. This Section 5.10 shall not limit any covenant or agreement of the
Parties to this Agreement which, by its terms, expressly contemplates
performance after such 24-month period.

 

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Article 6

 

INDEMNIFICATION

 

6.1           The Company shall indemnify, defend and hold the Investors and
their Affiliates and each officer, director, member, partner, Affiliate,
employee, agent and representative of the Investors (collectively, “Investor
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
the Transaction Documents, and (ii) the execution or delivery of any Transaction
Document or any other agreement or instrument contemplated hereby or thereby,
the performance by the parties to the Transaction Documents of their respective
obligations thereunder or the consummation of the transactions contemplated
hereby or 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 Investor Indemnitee and Affiliates and each officer,
director, member, partner, Affiliate, employee, agent and representative of the
Investor Indemnitee. In the event that any Investor Indemnitee claims any such
right of indemnification, such Investor Indemnitee shall provide to the Company
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 Investor Indemnitee’s behalf. The
Company shall promptly reimburse each Investor Indemnitee for any reasonable and
properly documented legal and any other necessary expenses incurred by such
Investor 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 6.1 shall be within sixty
(60) days, 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 Investor 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 Investor
Indemnitee from all liability arising out of such action, suit, claim or
proceeding. The obligations of the Company under this Article 6 shall survive
Closing and the transfer, conversion, exchange or redemption of any Series A
Preferred Stock. Notwithstanding anything contained in the Transaction Documents
to the contrary, the Company shall not be liable to any Investor Indemnitee for
any consequential, incidental, indirect, special, exemplary or punitive damages
of such Investor Indemnitee relating to any matters for which indemnification is
provided for under this Article 6, other than any such damages arising from a
claim of a third party. Except for fraud, the provisions of this Article 6 are
intended to and shall provide for the exclusive monetary remedy for any and all
Investor Indemnitees for the matters for which an Investor Indemnitee may be
indemnified under this Article 6 following Closing.

 

6.2           Each Investor shall, severally, not jointly, indemnify, defend and
hold the Company and their Affiliates and each officer, director, member,
partner, Affiliate, 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 Investors
contained in the Transaction Documents. In the event that any Company Indemnitee
claims any such right of indemnification, such Company Indemnitee shall provide
to such Investor written notice thereof, together with reasonable detail
regarding such claims and in the event that such claim involves third party
claims, allow such Investor at its expense to defend such claim(s) on the
Company Indemnitee’s behalf. Such Investor 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 Investor of the defense thereof. Any reimbursement by the Investor under
this Section 6.2 shall be within sixty (60) days, provided that any individual
expense in excess of $10,000 shall require such Investor’s prior approval. 
Notwithstanding the foregoing, such Investor reserves the right to withhold
approval where in the good faith judgment of such Investor, 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 Investor
under this Article 6 shall survive Closing and the transfer, conversion,
exchange or redemption of any Series A Preferred Stock. Notwithstanding anything
contained in the Transaction Documents to the contrary, such Investor 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 Article 6,
other than any such damages arising from a claim of a third party. Except for
fraud, the provisions of this Article 6 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 Article 6
following Closing.

 

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Article 7

 

MISCELLANEOUS

 

7.1           Construction. Unless the context of this Agreement otherwise
requires, (a) words of any gender are deemed to include the other gender;
(b) words using the singular or plural number also include the plural or
singular number, respectively; (c) the terms “hereof,” “herein,” “hereby,”
“hereto” and derivative or similar words refer to this Agreement as a whole and
not to any particular provision; (d) the terms “Article,” “Section,” “Schedule”
and “Exhibit” refer to the specified Article or Section of or Schedule or
Exhibit to this Agreement; (f) the term “including” and other forms of such
term, with respect to any matter or thing, mean “including but not limited to”
such matter or thing; (g) the term “control” shall include, without limitation,
the possession, directly or indirectly, of the power to direct the management
and policies of a person, whether through the ownership of voting securities, by
contract or otherwise; (h) all references to “dollars” or “$” refer to currency
of the United States of America; and (i) when calculating the period of time
within or following which any act is to be done, any notice is to be given or
any other action is to be taken, the date which is the reference date in such
period shall be excluded and if the last day of such period is not a business
day, then such period shall end on the next succeeding day that is a business
day.

 

7.2           Fees and Expenses. Each of the Company, on the one hand, and the
Investors, on the other hand, shall pay all of their respective expenses
incurred in connection with the preparation, execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated
thereby; provided, however, that the Company shall pay, and hold the Investors,
their Affiliates and each of their representatives harmless against all
liability for the payment of (i)  the reasonable and properly documented fees
and charges of Paul Hastings LLP, counsel to the Investors, up to a maximum
amount of $125,000 that are incurred in connection with the consummation of the
transactions contemplated thereby, including the preparation, execution and
delivery of the Transaction Documents and (ii) any stamp or similar taxes which
may be determined to be payable in connection with the execution and delivery
and performance of any Transaction Document or any modification, amendment or
alteration of any Transaction Document, and all issue taxes in respect of the
issuance of any Purchased Securities. At Closing, the Company shall pay or
reimburse the Investors pursuant to this Section 7.2 for the reasonable and
properly documented fees and charges of Paul Hastings LLP, which shall be
fulfilled at Closing by permitting the Investors to deduct such fees and charges
from the proceeds payable by the Investors to the Company and to wire such
amounts directly to Paul Hastings LLP at Closing.

 

-24-

 

 

7.3           Assignment; Parties in Interest. This Agreement shall bind and
inure to the benefit of the parties and each of their respective successors and
permitted assigns. The Company may not assign either this Agreement or any of
its rights, interests, or obligations hereunder. Each Investor may assign any of
its rights, interests or obligations hereunder, either prior to or following the
Closing; provided, however, that the transferee agrees to be bound by, and
entitled to the benefits of, this Agreement as an original party hereto. In the
event that such Investor shall assign only a portion of its rights pursuant to
this Agreement, or assign its rights pursuant to this Agreement in connection
with the transfer of less than all of its shares of Series A Preferred Stock,
such Investor shall also retain its rights with respect to its remaining shares
of Series A Preferred Stock.

 

7.4           Entire Agreement; Severability. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties with
respect to such subject matter. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

7.5           No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except the Placement Agent is an intended third party
beneficiary of Article 3 hereof and the Investor Indemnitees and Company
Indemnitees are intended third party beneficiaries of Article 6 hereof.

 

7.6           Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if sent by nationally-recognized
overnight courier, or by registered or certified mail, return receipt requested
and postage prepaid, addressed as follows:

 

if to the Company:

 

BioScrip, Inc.

 

-25-

 

 

100 Clearbrook Road

Elmsford, New York 10523

Attention: Richard M. Smith, President and CEO

  

with a copy to:

 

Polsinelli PC

100 S. Fourth Street, Suite 1000

St. Louis, MO 63102

Attention: Mark H. Goran

 

if to the Investors

 

Coliseum Capital Management, LLC

One Station Place, 7th Floor South

Stamford, CT 06902

Attention: Christopher Shackelton;

 

with a copy to:

 

Paul Hastings LLP

75 East 55th Street

New York, NY 10022

Attention: Barry A. Brooks

 

or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery if a business day or, if not a
business day, the next succeeding business day, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, and (c) in the case of registered or certified mail, return receipt
requested and postage prepaid, on the third business day after the date when
sent.

 

7.7           Amendments; Waivers. The terms and provisions of this Agreement
may only be modified or amended pursuant to an instrument signed by the Company
and the Investors. Any waiver of any term or provision of this Agreement
requested by any party hereto must be granted in advance, in writing, by the
Company (if an Investor is requesting such waiver) or by the holders of at least
a majority of the Preferred Shares outstanding at the time of such waiver (if
the Company is requesting such waiver), as the case may be.

 

7.8           Counterparts. This Agreement may be executed in any number of
original or facsimile counterparts, and each such counterpart shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one agreement. Any such counterpart may be delivered by facsimile, “pdf” or
other form of electronic transmission and such delivery shall be deemed to be
the physical delivery of a manually executed counterpart.

 

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7.9           Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

7.10         Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to any law or rule that
would cause the laws of any jurisdiction other than the State of New York to be
applied. ANY PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS
AGREEMENT SHALL BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT SUBJECT
MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT TO THE
JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH PROCEEDING. EACH OF THE
PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT.

 

7.11         No Investor Joint and Several Liability. No Investor shall have any
Liability or obligation of any nature whatsoever in connection with or under
this Agreement or the Transaction Documents or the transactions contemplated
thereby with respect to Liabilities or obligations of other Investors hereunder,
and there shall be no joint and several liability among the Investors. Without
limiting the generality of the foregoing, the Company’s agreement with each
Investor is a separate agreement, the sale of Purchased Securities to each
Investor is a separate sale, and no Investor shall have any obligation to
purchase any Purchased Securities not purchased by another Investor.

 

[Remainder of page intentionally left blank; signatures on next succeeding
page.]

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Securities
Purchase Agreement on the date first above written.

 

  BIOSCRIP, INC.         By:                                Name:   Title:      
  COLISEUM CAPITAL PARTNERS, L.P.         By:                               
Name:   Title:         COLISEUM CAPITAL PARTNERS II, L.P.         By: 
                              Name:   Title:         BLACKWELL PARTNERS, LLC,
SERIES A   By:  Coliseum Capital Management, LLC,   Attorney-in-fact   By: 
                                Name:     Title: Manager

 

 

 

 

INDEX OF DEFINED TERMS

 

ACA Section 2.42(b) Affiliates Section 2.28 Agreement Preamble Applicable
Agreement Section 2.14 Applicable Law Section 2.14 Auditor 8-K Section 2.7
Charter Documents Section 2.14 Closing Section 1.4 Closing Date Section 1.4 Code
Section 2.22 Common Stock Recitals Company Preamble Company Disclosure Package
Section 2.1 Company Indemnitees Section 6.2 Credit Facility Section 2.3 Debt
Repayment Triggering Event Section 2.15 Environmental Laws Section 2.24 ERISA
Section 2.22 ERISA Affiliate Section 2.22 Exchange Act Section 2.1 Existing
Indebtedness Agreements Section 2.3 FCPA Section 2.37 GAAP Section 2.5
Governmental Authority Section 2.14 Health Care Laws Section 2.42(b) Health Care
Permits Section 2.42(d) Health Care Programs Section 2.42(a) HIPAA Section
2.42(b) HIPAA Policies and Procedures Section 2.42(l) Intellectual Property
Section 2.21 Investment Company Act Section 2.32 Investor Preamble Investor
Indemnitees Section 6.1 Investor’s Allocation Section 1.2 Investors Preamble
Knowledge Section 2.4 Licensed Professional Section 2.42(h) Liens Section 2.2
Material Adverse Change Section 2.8 Material Adverse Effect Section 2.11 Money
Laundering Laws Section 2.38 NASDAQ Section 1.1 OFAC Section 2.39 Offering
Recitals Per Share Purchase Price Section 1.3 Permits Section 2.18 Permitted
Liens Section 2.3 Placement Agent Section 3.10 Preferred Shares Recitals
Preferred Stock Section 2.2 Proceedings Section 2.17 Purchase Price Section 1.3
Purchased Securities Section 1.1 SEC Section 2.5 Securities Act Section 2.4
Senior Notes Indenture Section 2.3 Series A Certificate Recitals Series A
Preferred Stock Recitals Solvent Section 2.27 Subsidiaries Section 2.10 Tax
Section 2.20 Taxes Section 2.20 Transaction Documents Recitals Transactions
Section 2.2 Use of Proceeds Recitals Warrant Agreement Recitals Warrant Shares
Recitals Warrants Recitals