Document:

EX-10.1

Exhibit
10.1

November 13, 2008

Mr. Richard M. Smith

	 	 	 	 	 
	 

	 	Re:
	 	BioScrip, Inc. and Subsidiaries

Dear Rick:

     BioScrip, Inc., a Delaware corporation (the “Company”), is pleased to offer you employment as
the Company’s President and Chief Operating Officer, according to the terms and subject to the
conditions set forth below. The terms and conditions of your employment would be as follows:

	 	 	 
	1. POSITION AND DUTIES:

	 	President and Chief Operating Officer
(“COO”) based in Elmsford, New York.
	 
	 	 
	 

	 	You would report primarily to, and would
have such duties as assigned to you from
time to time by the Company’s Chief
Executive Officer or as directed by Board of
Directors. You will be provided with full
authority to act as the Company’s COO and
take all actions as are necessary to fulfill
your position, and all employees at the
Company, other than the Chief Executive
Officer, the General Counsel, the Chief
Financial Officer and each of their
respective direct and indirect reports,
shall report directly or indirectly to you.
You acknowledge and understand that you are
an employee at will.
	 
	 	 
	2. BASE COMPENSATION:

	 	Your annual base salary would be $475,000 payable bi-weekly or
at such other times as other employees of the Company are paid. You would be reviewed annually
according to company practice.
	 
	 	 
	3. PARTICIPATION IN HEALTH
	 	 
	    AND OTHER BENEFIT PLANS:

	 	During your employment with the Company, you would be
permitted, if and to the extent eligible, to participate in all employee benefit plans,
policies and practices now or hereafter maintained by or on behalf of the Company and its
subsidiary and affiliate corporations, commensurate with your position and level of
individual contribution, at the Company’s discretion. The Company may terminate or amend
any such plans or coverage so as to eliminate, reduce or otherwise change any benefit
payable there under.
	 
	 	 
	4. BONUS:

	 	You would be eligible to participate in BioScrip’s Management Short-term Cash
Bonus Program as long you remain continuously employed with BioScrip through the last date of
the fiscal year on which a bonus is based.

 

 

Mr. Richard M. Smith

November 13, 2008

Page 2

	 	 	 
	 
	 	 
	 

	 	Your target bonus would be at level of 50% of your base salary in 2009, which would be based on
individual targets recommended by the Chief Executive Officer and approved by the Board of
Directors. Any bonus, if payable, shall be paid as and when bonuses are paid to management
generally, but in any event, no later than 30 days after the completion of the Company’s prior
year audit.
	 
	 	 
	5. EXPENSES:

	 	Subject to such policies as may from time to time be established by the
Company’s management, the Company would pay or reimburse you for all reasonable and necessary
expenses actually incurred or paid by you during your employment upon submission and approval
of expense statements, vouchers or other reasonable supporting information in accordance with
the then customary practices of the Company. If a business expense reimbursement is not exempt
from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any
reimbursement in one calendar year shall not affect the amount that may be reimbursed in any
other calendar year and a reimbursement (or right thereto) may not be exchanged or liquidated
for another benefit or payment. Any business expense reimbursements subject to Section 409A
of the Code shall be made no later than the end of the calendar year following the calendar
year in which such business expense is incurred by the Executive.
	 
	 	 
	6. EQUITY COMPENSATION:

	 	You would be granted (i) 105,000 stock options which would be
awarded at the current market price on the date your employment commenced, and (ii) 120,000
performance shares having the financial performance measurements and time measurements as are
set forth in the performance share certificate accompanying this document. As a consequence
of having received these sign on grants, you will not be eligible to receive ling-term
incentive compensation awards until the management grant in 2010; provided, however, that the
Company’s Board or its Management Development and Compensation Committee (the “Committee”)
may, in its sole and absolute discretion, award a grant to you in 2009.
	 
	 	 
	7. VACATION:

	 	You would initially be entitled to four weeks (20 business days)
vacation per year during the term of your employment.

 

 

Mr. Richard M. Smith

November 13, 2008

Page 3

	 	 	 
	 
	 	 
	8. SEVERANCE:

	 	You would be entitled to two years of severance under the terms of a
Severance Agreement attached hereto.
	 
	 	 
	9. RELOCATION AND LEGAL REVIEW 

	 	Beginning May 15, 2009, the Company will reimburse you
for three months of temporary housing expenses, not to exceed $2,500 per month, exclusive of
meals and transportation. You would also be entitled to reimbursement of up to $30,000
towards the cost of relocating your principal residence to the New York tri-state area. In
order to facilitate your home search, the Company would pay for two round trip coach airfares
for your spouse or partner. The Company would also reimburse you for up to $12,500 towards
legal expenses in connection with the review of these documents.
	 
	 	 
	10. FEDERAL IMMIGRATION LAW:

	 	For purposes of federal immigration law, you would be
required to provide to the Company documentary evidence of your identity and eligibility for
employment in the United States. Such documentation must be provided to us within three (3)
business days of your commencement date, or our employment relationship with you may be
terminated.
	 
	 	 
	11. RESTRICTIVE COVENANT:

	 	As a condition to your employment with the Company, you will
be obligated to enter into a restrictive covenant agreement between you and the Company,
covering, among other things, non-competition provisions, non-solicitation provisions, and the
protection of the Company’s trade secrets. That agreement is attached.
	 
	 	 
	12. OTHER TERMS:

	 	Your employment and restrictive covenants would include customary and
usual terms, provisions, conditions and representations as are found in the Company’s similar
arrangements with its employees.
	 
	 	 
	13. INDEMNITY:

	 	You will be provided indemnity to the fullest extent permitted under the
Company’s certificate of corporation, bylaws or any other organizational document or to the
maximum extent provided by Delaware law. The Company will provide you with usual and
customary directors and officers liability insurance.
	 
	 	 
	14. CORPORATE APPROVAL:

	 	The Company’s Management Development and Compensation Committee
has approved the material terms of this employment offer.

 

 

Mr. Richard M. Smith

November 13, 2008

Page 4

     This offer supersedes all prior offers, both verbal and written. Please call me to discuss any
questions or comments that you may have regarding these terms. Please return your paperwork by
mail or fax to:

BioScrip, Inc.

Attn: Barry A. Posner

100 Clearbrook Road

Elmsford, NY 10523

Fax: 914-460-1670

We are very pleased at the prospect of you joining our team!

	 	 	 	 	 	 	 
	 	 	Sincerely yours,
	 
	 	 	 	 	 	 
	 	 	BIOSCRIP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

RESTRICTIVE COVENANTS

(Attachment to Offer Letter of Richard M. Smith)

     Covenant Against Competition; Other Covenants. You acknowledge that (i) the principal
business of the Company (for purposes of these restrictive covenants, the “Company” shall include
its subsidiaries and affiliates (as that term is defined in Rule 12-b2 of the Securities Exchange
Act of 1934, as amended from time to time)) is the provision of a broad range of prescription
products and services designed to promote the cost-effective delivery of pharmacy benefits,
including pharmacy benefit management services, claims processing, the purchasing of pharmaceutical
products on behalf of pharmacy networks and long term care facilities (including assisted living
facilities and nursing homes), specialty pharmaceutical programs and mail order pharmacy services,
including the dispensing of prescription pharmaceutical products, and the sale and distribution, on
a retail and wholesale basis, of OTC’s, vitamins, supplements, herbals and other goods typically
offered for sale through a retail, mail order or internet on-line pharmacy (such business, and any
and all other businesses that after the date hereof, and from time to time during the Term, become
material with respect to the Company’s then-overall business, herein being collectively referred to
as the “Business”); (ii) the Company is dependent on the efforts of a certain limited number of
persons who have developed, or will be responsible for developing the Company’s Business; (iii) is
national in scope; (iv) your work for the Company will give you access to the confidential affairs
and proprietary information of the Company; (v) your covenants and agreements contained in these
Restrictive Covenants are essential to the business and goodwill of the Company; and (vi) the
Company would not have offered you employment but for the covenants and agreements set forth
herein. Accordingly, you covenant and agree that:

          (a) At any time during your employment with the Company and ending two years following
termination of your employment with the Company(irrespective of the reason for such termination) or
(ii) payment of any severance, whichever occurs last, you shall not engage, directly or indirectly,
in sales or marketing or otherwise assist any company or other business entity (which includes,
without limitation, owning, managing, operating, controlling, being employed by, giving financial
assistance to, participating in or being connected in any material way with any person or entity
other than the Company), engaged in (i) the Business or (ii) any material component of the
Business; provided, however, that the Executive’s ownership as a passive investor of less than two
percent (2%) of the issued and outstanding stock of a publicly held corporation shall not be deemed
to constitute competition. Notwithstanding the foregoing, commencing 18 months after the
termination of your employment, you may elect to forego continued severance at which time you will
be released from your obligations under this Section (a)

          (b) During and after the period during which you are employed, you shall keep secret and
retain in strictest confidence, and shall not use for your benefit or the benefit of others, except
in connection with the Business and affairs of the Company and its affiliates, all confidential
matters relating to the Company’s Business

 

 

and the business of any of its affiliates and to the Company and any of its affiliates, learned by
you heretofore or hereafter directly or indirectly from the Company or any of its affiliates (the
“Confidential Company Information”), including, without limitation, information with respect to (i)
the strategic plans, budgets, forecasts, intended expansions of product, service, or geographic
markets of the Company and its affiliates, (ii) sales figures, contracts, agreements, and
undertakings with or with respect to customers, (iii) profit or loss figures, and (iv) customers,
clients, suppliers, sources of supply and customer lists, and shall not disclose such Confidential
Company Information to anyone outside of the Company except with the Company’s express written
consent and except for Confidential Company Information which is at the time of receipt or
thereafter becomes publicly known through no wrongful act of you or is received from a third party
not under an obligation to keep such information confidential and without breach of these
Restrictive Covenants or the Agreement. Notwithstanding the foregoing, this section (b) shall not
apply to the extent that you are acting to the extent necessary to comply with legal process;
provided that in the event that you are subpoenaed to testify or to produce any information or
documents before any court, administrative agency or other tribunal relating to any aspect
pertaining to the Company, you shall immediately notify the Company thereof.

          (c) During the period commencing on the date hereof and ending twelve months following the
date upon which you shall cease to be an employee of the Company or its affiliates, you shall not,
without the Company’s prior written consent, directly or indirectly, (i) solicit or encourage to
leave the employment or other service of the Company or any of its affiliates, any employee or
independent contractor thereof or hire (on your behalf or any other person or entity) any employee
or independent contractor who has left the employment or other service of the Company or any of its
affiliates within one year of the termination of such employee’s or independent contractor’s
employment or other service with the Company and its affiliates, or (ii) solicit, contact, market
to, work for, or assist others in soliciting any customer or client of the Company with whom the
Company was in contact with or was providing goods and services to at the time of your termination
of employment with the Company. During such period, you will not, whether for your own account or
for the account of any other person, firm, corporation or other business organization,
intentionally interfere with the Company’s or any of its affiliates’ relationship with, or endeavor
to entice away from the Company or any of its affiliates, any person who during the Term is or was
a customer or client of the Company or any of its affiliates.

          (d) All memoranda, notes, lists, records, property and any other tangible product and
documents (and all copies thereof) made, produced or compiled by you or made available to you
concerning the Business of the Company and its affiliates shall be the Company’s property and shall
be delivered to the Company at any time on request. Rights and Remedies upon Breach of
Restrictive Covenants.

 

 

          (a) You acknowledge and agree that any breach by him of any of the provisions of sections (a)
through (d) above (the “Restrictive Covenants”) would result in irreparable injury and damage for
which money damages would not provide an adequate remedy. Therefore, if you breach, or threaten to
commit a breach of, any of the Restrictive Covenants, the Company and its affiliates shall have the
following rights and remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company and its affiliates under law or in
equity (including, without limitation, the recovery of damages):

          (b) The right and remedy to have the Restrictive Covenants specifically enforced (without
posting bond and without the need to prove damages) by any court having equity jurisdiction,
including, without limitation, the right to an entry against you of restraining orders and
injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or
actual, and whether or not then continuing, of such covenants. (c) The right and remedy to require
you to account for and pay over to the Company and its affiliates all compensation, profits,
monies, accruals, increments or other benefits (collectively, “Benefits”) derived or received by
you as the result of any transactions constituting a breach of the Restrictive Covenants, and you
shall account for and pay over such Benefits to the Company and, if applicable, its affected
affiliates.

          (d) You agree that in any action seeking specific performance or other equitable relief, you
will not assert or contend that any of the provisions of these Restrictive Covenants are
unreasonable or otherwise unenforceable. The existence of any claim or cause of action by you,
whether predicated on the Agreement or otherwise, shall not constitute a defense to the enforcement
of the Restrictive Covenants.

Agreed to and accepted by:

	 	 	 
	 

Richard M. SmithEX-10.2

Exhibit
10.2

SEVERANCE AGREEMENT

     SEVERANCE
AGREEMENT (this “Agreement”) dated as of November 13, 2008, by and between
BIOSCRIP, INC., a Delaware corporation, with its principal place of business at 100 Clearbrook
Road, Elmsford, New York 10523 (hereinafter referred to as the “Company”), and Richard M. Smith (hereinafter referred to as the “Executive”).

     WHEREAS, the Executive and the Company are parties to an employment offer letter dated as of
November 13, 2008 (the “Offer Letter”)

     WHEREAS, pursuant to the terms of the Offer Letter the Company agreed to enter into this
Agreement in order to provide Executive with the severance payment protection upon termination of
Executive’s employment with the Company;

     Accordingly, the parties hereto agree as follows:

     1. Severance upon Death or Disability.

     1.1. Termination upon Death. If the Executive dies while employed by the Company: (i)
the Executive’s estate or beneficiaries shall be entitled to receive any salary and other benefits
(including bonuses awarded or declared but not yet paid) earned and accrued prior to the date of
termination and reimbursement for expenses incurred prior to the date of termination; (ii) all
fully vested and exercisable stock options (“Options”) previously or hereafter granted by the
Company to Executive under any bonus program and held by the Executive may be exercised by his
estate for a period of one (1) year from and after the date of the Executive’s death unless such
longer period is set forth in the grant agreement evidencing the Options; (iii) any restricted
stock units (“Restricted Stock Units”) granted under any bonus program or otherwise granted shall
vest and be free from restrictions on transferability (other than restrictions on transfer imposed
under Federal and State securities laws); (iv) any shares of common stock granted (“Stock Grants”)
to Executive under any bonus program that are subject to forfeiture shall become non-forfeitable
and shall be fully vested and transferable; and (v) the Executive’s estate and beneficiaries shall
have no further rights to any other compensation or benefits hereunder on or after the termination
of employment, or any other rights hereunder. Notwithstanding anything to the contrary contained
in this Section 1.1, it is expressly understood and agreed that nothing in the foregoing clause (v)
shall restrict the ability of the Company to amend or terminate any benefits plans and programs
from time to time in its sole and absolute discretion; provided, however, that the Company shall in
no event be required to provide any coverage under such benefit plans and programs after such time
as the Executive becomes entitled to coverage under the benefit plans and programs of another
employer or recipient of the Executive’s services (and provided, further, that such entitlement
shall be determined without regard to any individual waivers or other arrangements).

     1.2. Severance upon Disability. Upon termination of employment by virtue of
Executive’s disability, (i) the Executive shall receive salary and other benefits (including
bonuses awarded or declared but not yet paid) earned and accrued prior to the effective date of the
termination of employment and reimbursement for expenses incurred prior to the effective date of
the termination of
employment; (ii) all fully vested and exercisable Options previously or hereafter granted and
held by

 

 

the Executive may be exercised by the Executive or his estate or beneficiaries for a period
of one (1) year from and after the date of the Executive’s termination due to disability unless
such longer period is set forth in the grant agreement evidencing the Options; (iii) any Restricted
Stock Units granted under any bonus program or otherwise granted shall vest and be free from
restrictions on transferability (other than restrictions on transfer imposed under Federal and
State securities laws); (iv) any Stock Grants made to Executive under any bonus program that are
subject to forfeiture shall become non-forfeitable and shall be fully vested and transferable; (v)
if the Executive’s disability shall continue for a period of six (6) months after his termination,
the Executive shall receive for a period for two (2) years after termination of employment (A) the
annual salary that the Executive was receiving at the time of such termination of employment
(“Annual Salary”), less the gross proceeds paid to the Executive on account of Social Security or
other similar benefits and Company provided long-term disability insurance, payable in accordance
with the customary payroll practices of the Company applicable to senior executives, in
installments not less frequently than monthly; and (B) such continuing coverage under the benefit
plans and programs the Executive would have received in the absence of such termination, including,
without limitation, coverage under any health insurance plans or programs which are available or
provided to senior executives of the Company generally, and at the same cost to Executive, if any,
in each case to the extent that the Executive is eligible under the terms of such plans or
programs; it being expressly understood and agreed that nothing in this clause (v) shall restrict
the ability of the Company to amend or terminate such benefits plans and programs from time to time
in its sole and absolute discretion; provided, however, that the Company shall in no event be
required to provide any coverage under such benefit plans and programs after such time as the
Executive becomes entitled to coverage under the benefit plans and programs of another employer or
recipient of the Executive’s services (and provided, further, that such entitlement shall be
determined without regard to any individual waivers or other arrangements); and (vi) the Executive
shall have no further rights to any other compensation or benefits hereunder on or after the
termination of employment, or any other rights hereunder. Notwithstanding the foregoing, if and
only to the extent that Executive’s disability is a trigger for the payment of deferred
compensation, as defined in Section 409A of the Code, “disability” shall have the meaning set forth
in Section 409A(a)(2)(C) of the Code.

     2. Severance in the Event of Certain Terminations of Employment 

     2.1. Termination for “Cause”; Termination of Employment by the Executive Without Good
Reason.

     2.1.1. For purposes of this Agreement, “Cause” shall mean (i) the Executive’s conviction of a
felony or a crime of moral turpitude; or (ii) the Executive’s commission of unauthorized acts
intended to result in the Executive’s personal enrichment at the material expense of the Company;
or (iii) the Executive’s material violation of the Executive’s duties or responsibilities to the
Company which constitute willful misconduct or dereliction of duty, provided as to any termination
pursuant to Section 2.1.1(iii), a majority of the Compensation Committee of the Board of Directors
(or any successor committee thereto) shall first approve such “Cause” termination before the
Company effectuates such a termination.

     2.1.2. If the Company terminates the Executive for Cause, (i) the Executive shall receive
Annual Salary and other benefits (including bonuses awarded or declared but not yet paid) earned
and

2

 

accrued prior to the effective date of the termination of employment (and reimbursement for
expenses incurred prior to the effective date of the termination of employment); (ii) all unvested
options shall lapse and terminate immediately and may no longer be exercised; (iii) any unvested
Restricted Stock Units shall terminate immediately; (iv) any Stock Grants made to Executive under
any bonus program that are subject to forfeiture shall be immediately forfeited; and (v) the
Executive shall have no further rights to any other compensation or benefits hereunder on or after
the termination of employment, or any other rights hereunder.

     2.1.3. The Executive may terminate his employment upon written notice to the Company which
specifies an effective date of termination not less than 30 days from the date of such notice. If
the Executive terminates his employment and the termination is not covered by Sections 1, 2.2, or
2.3 hereof, (i) the Executive shall receive Annual Salary and other benefits (including bonuses
awarded or declared but not yet paid) earned and accrued prior to the effective date of the
termination of employment (and reimbursement for expenses incurred prior to the effective date of
the termination of employment); (ii) all fully vested and exercisable options granted by the
Company to the Executive under any bonus program or otherwise and held by the Executive may be
exercised by the Executive for a period of 30 days from and after the date of the Executive’s
effective date of termination unless such longer period is set forth in the grant agreement
evidencing the Options; (iii) any unvested Restricted Stock Units hereafter granted shall terminate
immediately; (iv) any Stock Grants made to Executive under any bonus program that are subject to
forfeiture shall be immediately forfeited; and (v) the Executive shall have no further rights to
any compensation or other benefits hereunder on or after the termination of employment, or any
other rights hereunder.

     2.2. Termination Without Cause; Termination for Good Reason.

     2.2.1. For purposes of this Agreement, “Good Reason” shall mean the existence of any one or
more of the following conditions that shall continue for more than 45 days following written notice
thereof by the Executive to the Company: (i) the material change in or reduction of the Executive’s
authority, duties and responsibilities, or the assignment to the Executive of duties materially
inconsistent with the Executive’s position or positions with the Company; (ii) a reduction in the
Executive’s then current Annual Salary without the Executive’s consent; or (iii) the relocation of
the Executive’s principal location of employment more than fifty (50) miles from the Executive’s
current site without the Executive’s consent.

     2.2.2. If the Company terminates the Executive’s employment and the termination is not covered
by Section 1, 2.1 or 2.3 hereof: (i) the Executive shall receive Annual Salary and other benefits
(including bonuses awarded or declared but not yet paid) earned and accrued under this Agreement
prior to the effective date of the termination of employment (and reimbursement for expenses
incurred prior to the effective date of the termination of employment); (ii) the Executive shall
receive for two (2) years after termination of employment, (A) the Annual Salary that the Executive
was receiving at the time of such termination of employment, payable in accordance with the
customary payroll practices of the Company applicable to senior executives, in installments not
less frequently than monthly, and (B) such continuing coverage under the benefit plans and programs
the Executive would have received in the absence of such termination, including, without
limitation,
coverage under any health insurance plans or programs which are available or provided to
senior executives of the Company generally, and at the same cost to Executive, if any, in each case
to the

3

 

extent that the Executive is eligible under the terms of such plans or programs; it being
expressly understood and agreed that nothing in this clause (ii) shall restrict the ability of the
Company to amend or terminate such benefits plans and programs from time to time in its sole and
absolute discretion; provided, however, that the Company shall in no event be required to provide
any coverage under such benefit plans and programs after such time as the Executive becomes
entitled to coverage under the benefit plans and programs of another employer or recipient of the
Executive’s services (and provided, further, that such entitlement shall be determined without
regard to any individual waivers or other arrangements); (iii) outstanding unvested Options
previously or hereafter granted to the Executive and held by the Executive shall vest and become
immediately exercisable and all Options held by the Executive on the effective date of termination
may be exercised by the Executive for a period of 30 days from and after the date of the
Executive’s effective date of termination unless such longer period is set forth in the grant
agreement evidencing the Options; (iv) the Executive shall become vested in any pension or other
deferred compensation other than pension or deferred compensation under a plan intended to be
qualified under Section 401(a) or 403(a) of the Internal Revenue Code of 1986, as amended; (v) any
Restricted Stock Units granted under any bonus program or otherwise granted shall vest and be free
from restrictions on transferability (other than restrictions on transfer imposed under Federal and
State securities laws) as of the date of the Executive’s effective date of termination; (vi) any
Stock Grants made to Executive under any bonus program that are subject to forfeiture shall become
non-forfeitable and shall be fully vested and transferable as of the date of the Executive’s
effective date of termination; and (vii) the Executive shall have no further rights to any other
compensation or benefits hereunder on or after the termination of employment, or any other rights
hereunder.

     2.2.3. If the Executive terminates his employment for Good Reason and such termination is not
covered by Section 2.3 hereof, (i) the Executive shall receive Annual Salary and other benefits
(including bonuses awarded but not yet paid) earned and accrued prior to the effective date of the
termination of employment (and reimbursement for expenses incurred prior to the effective date of
the termination of employment); (ii) the Executive shall receive for a period of two (2) years
after termination of employment (A) the Annual Salary that the Executive was receiving at the time
of such termination of employment, payable in accordance with the customary payroll practices of
the Company applicable to senior executives, in installments not less frequently than monthly, and
(B) such continuing coverage under the benefit plans and programs the Executive would have received
in the absence of such termination, including, without limitation, coverage under any health
insurance plans or programs which are available or provided to senior executives of the Company
generally, and at the same cost to Executive, if any, in each case to the extent that the Executive
is eligible under the terms of such plans or programs; it being expressly understood and agreed
that nothing in this clause (ii) shall restrict the ability of the Company to amend or terminate
such benefits plans and programs from time to time in its sole and absolute discretion; provided,
however, that the Company shall in no event be required to provide any coverage under such benefit
plans and programs after such time as the Executive becomes entitled to coverage under the benefit
plans and programs of another employer or recipient of the Executive’s services (and provided,
further, that such entitlement shall be determined without regard to any individual waivers or
other arrangements); (iii) all outstanding unvested Options previously or hereafter granted to the
Executive under any benefit program shall
vest and become immediately exercisable unless such longer period is set forth in the grant
agreement evidencing the Options; (iv) the Executive shall become vested in any pension or other
deferred compensation other than pension or deferred compensation under a plan intended to be
qualified

4

 

under Section 401(a) or 403(a) of the Internal Revenue Code of 1986, as amended; (v) any
Restricted Stock Units granted under any bonus program or otherwise granted shall vest and be free
from restrictions on transferability (other than restrictions on transfer imposed under Federal and
State securities laws); (vi) any Stock Grants made to Executive under any bonus program that are
subject to forfeiture shall become non-forfeitable and shall be fully vested and transferable; and
(vii) the Executive shall have no further rights to any other compensation or benefits hereunder on
or after the termination of employment, or any other rights hereunder.

     2.3. Severance upon a Termination after Change of Control.

     2.3.1. For purposes of this Agreement, “Change of Control” means the occurrence of one or more
of the following: (i) a “person” or “group” within the means the meaning of sections 13(d) and
14(d) of the Securities and Exchange Act of 1934 (the “Exchange Act”) becomes the “beneficial
owner” (within the meaning of Rule l3d-3 under the Exchange Act) of securities of the Company
(including options, warrants, rights and convertible and exchangeable securities) representing 30%
or more of the combined voting power of the Company’s then outstanding securities in any one or
more transactions unless approved by at least two-thirds of the Board of Directors then serving at
that time; provided, however, that purchases by employee benefit plans of the Company and by the
Company or its affiliates shall be disregarded; or (ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or substantially all, of the
operating assets of the Company; or (iii) a merger or consolidation, or a transaction having a
similar effect, where (A) the Company is not the surviving corporation, (B) the majority of the
common stock of the Company is no longer held by the stockholders of the Company immediately prior
to the transaction, or (C) the Company’s common stock is converted into cash, securities or other
property (other than the common stock of a company into which the Company is merged), unless such
merger, consolidation or similar transaction is with a subsidiary of the Company or with another
company, a majority of whose outstanding capital stock is owned by the same persons or entities who
own a majority of the Company’s common stock at such time; or (iv) at any annual or special meeting
of stockholders of the Company at which a quorum is present (or any adjournments or postponements
thereof), or by written consent in lieu thereof, directors (each a “New Director” and collectively
the “New Directors”) then constituting a majority of the Company’s Board of Directors shall be duly
elected to serve as New Directors and such New Directors shall have been elected by stockholders of
the Company who shall be an (I) “Adverse Person(s)”; or (II) “Acquiring Person(s)” (as each of the
terms set forth in (I) and (II) hereof are defined in that certain Amended and Restated Rights
Agreement, dated as of December 3, 2002, between the Company and American Stock Transfer & Trust
Company, as Rights Agent).

     2.3.2. If within the one (1) year period commencing upon the effective date of any Change of
Control, the Executive is terminated by the Company or a successor entity and the termination is
not covered by Section 1 or 2.1 hereof, or, within such one (1) year period, the Executive elects
to terminate his employment after the Company or a successor entity materially reduces or changes
the Executive’s authority, duties and responsibilities or the Company assigns the Executive duties
materially inconsistent with the Executive’s position or positions with the Company or a successor
entity immediately prior to such Change of Control, (i) the Executive shall receive Annual Salary
and
other benefits (including bonuses awarded or declared but not yet paid) earned and accrued
under this Agreement prior to the effective date of the termination of employment (and
reimbursement for expenses incurred prior to the effective date of the termination of employment);
(ii) the Executive

5

 

shall receive (A) for two (2) years after termination of employment; the Annual
Salary that the Executive was receiving at the time of such termination of employment, payable in
accordance with the customary payroll practices of the Company applicable to senior executives, in
installments not less frequently than monthly, and (B) for two (2) years after termination of
employment, such continuing coverage under the benefit plans and programs the Executive would have
received in the absence of such termination, including, without limitation, coverage under any
health insurance plans or programs which are available or provided to senior executives of the
Company generally, and at the same cost to Executive, if any, in each case to the extent that the
Executive is eligible under the terms of such plans or programs; it being expressly understood and
agreed that nothing in this clause (ii) shall restrict the ability of the Company to amend or
terminate such benefits plans and programs from time to time in its sole and absolute discretion;
provided, however, that the Company shall in no event be required to provide any coverage under
such benefit plans and programs after such time as the Executive becomes entitled to coverage under
the benefit plans and programs of another employer or recipient of the Executive’s services (and
provided, further, that such entitlement shall be determined without regard to any individual
waivers or other arrangements); (iii) all outstanding unvested Options previously or hereafter
granted under any bonus program or otherwise and held by the Executive shall vest and become
immediately exercisable and shall otherwise be exercisable in accordance with their terms; (iv) the
Executive shall become vested in any pension or other deferred compensation other than pension or
deferred compensation under a plan intended to be qualified under Section 401(a) or 403(a) of the
Internal Revenue Code of 1986, as amended; (v) any Restricted Stock Units shall vest and be free
from restrictions on transferability (other than restrictions on transfer imposed under Federal and
State securities laws); (vi) any Stock Grants made to Executive under any bonus program that are
subject to forfeiture shall become non-forfeitable and shall be fully vested and transferable as of
the date of the Executive’s effective date of termination; and (vii) the Executive shall have no
further rights to any other compensation or benefits hereunder on or after the termination of
employment or any other rights hereunder.

     2.3.3. The payments, benefits and vesting, if any, to which Executive is entitled under
Section 2.3.2 (and all other payments, benefits and vesting to which Executive may be entitled)
shall be provided without regard to whether the deductibility of such payments, benefits and
vesting would be limited or precluded by Section 280G of the Internal Revenue Code (“Section 280G”)
and without regard to whether such payments (or any other payment, benefits and vesting) would
subject Executive to the federal excise tax levied on certain “excess parachute payments” under
Section 4999 of the Code (the “Excise Tax”). If any portion of the payments, benefits and vesting
to or for Executive’s benefit (including, but not limited to, payments, benefits and vesting under
this Agreement but determined without regard to this paragraph) constitutes an “excess parachute
payment” within the meaning of Section 280G (the aggregate of such payments being hereinafter
referred to as the “Excess Parachute Payments”), the Company shall promptly pay to Executive an
additional amount (the “gross-up payment”) that after reduction for all taxes (including but not
limited to the Excise Tax) with respect to such gross-up payment equals the Excise Tax with respect
to the Excess Parachute Payments; provided, that to the extent any gross-up payment would be
considered “deferred compensation” for purposes of Section 409A of the Internal Revenue Code
(“Section
409A”), the manner and time of payment, and the provisions of this Section shall be adjusted
to the extent necessary (but only to the extent necessary) to comply with the requirements of
Section 409A with respect to such payment so that the payment does not give rise to the interest or
additional tax amounts described at Section 409A(a)(1)(B) or Section 409A(b)(4) of the Code. The
determination

6

 

as to whether Executive’s payments, benefits and vesting include Excess Parachute
Payments and, if so, the amount of such, the amount of any Excise Tax owed with respect thereto,
and the amount of any gross-up payment shall be made at the Company’s expense by such certified
public accounting firm as the Board of Directors may designate prior to a Change of Control.

     3. Other Provisions

     3.1 To the extent applicable, it is intended that this Agreement comply with the provisions
of Section 409A in accordance with the provisions below:

	 	a)	 	The Agreement will be administered and interpreted in a manner consistent with
this intent, and any provision that would cause the Agreement to fail to satisfy
Section 409A will have no force and effect until amended to comply therewith (which
amendment may be retroactive to the extent permitted by Section 409A). In addition,
the parties shall cooperate fully with one another to ensure compliance with Section
409A, including, without limitation, adopting amendments to arrangements subject to
Section 409A and operating such arrangements in compliance with Section 409A.
	 
	 	b)	 	Notwithstanding any other provision of the Agreement to the contrary, to the
extent any payment or benefit to be paid or provided to Executive pursuant to the
Agreement as a result of the termination of his employment constitutes “non-qualified
deferred compensation” subject to Section 409A, such payment or benefit shall be paid
or provided to the Executive under the Agreement at such time as the Executive would be
considered to have incurred a “separation from service” from the Company within the
meaning of Section 409A (without regard to whether such “separation from service” comes
before, after or coincides with his termination of employment). For purposes of
clarification, this paragraph shall not cause a forfeiture of any payment or benefits
on the part of Executive, but shall only act as a delay until such time as a
“separation from service” occurs.
	 
	 	c)	 	Notwithstanding any other provisions of the Agreement to the contrary, if any
amount (including imputed income) to be paid to Executive pursuant to the Agreement as
a result of Executive’s termination of employment is “deferred compensation” subject to
Section 409A, and if Executive is a “specified employee” (as defined under Section
409A) as of the termination date, then, to the extent necessary to avoid the imposition
of additional tax or other penalties under Section 409A, the payment of benefits, if
any, scheduled to be paid by the Company to Executive hereunder during the first
six-month period following the date of employment termination shall not be paid until
the date which is the first business day which comes six months and a one day after the
date the Executive has incurred a “separation from service” within the meaning of
Section 409A.
Any deferred compensation payments delayed in accordance with the terms of this
Section shall be paid in a lump sum on the first day following such six-month and
one day period.

7

 

	 	d)	 	With respect to items eligible for reimbursement under the terms of the
Agreement, (i) the amount of such expenses eligible for reimbursement in any taxable
year shall not affect the expenses eligible for reimbursement in another taxable year,
(ii) no such reimbursement may be exchanged or liquidated for another payment or
benefit, and (iii) any reimbursements of such expenses shall be made no later than the
end of the calendar year following the calendar in which the related expenses were
incurred, except, in each case, to the extent that the right to reimbursement does not
provide for a “deferral of compensation” within the meaning of Section 409A.
	 
	 	e)	 	It is intended that each installment of payments and benefits provided under
the Agreement shall be treated as a separate identified payment for purposes of Section
409A. Neither the Company nor Executive shall have the right to accelerate or defer
the delivery of any such payments or benefits except to the extent specifically
permitted or required by Section 409A.
	 
	 	f)	 	The Company agrees to act in good faith under this Section 3.1 based on the
guidance available from the Treasury Department and Internal Revenue Service respecting
the proper interpretation of Section 409A, but nothing in this Section 3.1 shall
constitute, or be construed as, a covenant by the Company that no payment will be made
or benefit will be provided which will be subject to taxation under Section 409A or as
a guarantee or indemnity by the Company with respect to the tax consequences to any
such payment or benefit.

     3.2. Severability. If it is determined that any of the provisions of this Agreement,
or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement
shall not thereby be affected and shall be given full effect, without regard to the invalid
portions thereof.

     3.3. Enforceability; Jurisdictions. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement that is not resolved by Executive and
the Company (or its subsidiaries or affiliates, where applicable) shall be submitted to arbitration
in New York, New York in accordance with New York law and the procedures of the American
Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on
the Company (or its subsidiaries or affiliates, where applicable) and Executive and judgment may be
entered on the arbitrator(s)’ award in any court having jurisdiction. The cost of any arbitration
hereunder shall be borne by the Company.

     3.4. Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United States mails as
follows:

8

 

     (i) If to the Company, to:

BioScrip, Inc.

100 Clearbrook Road

Elmsford, New York 10523

Attention: Assistant General Counsel

     with a copy to:

King & Spalding, LLP

1180 Peachtree Street

Atlanta, GA 30309

Attention: Shelly Sharp Blews

     (ii) If to the Executive, to:

Richard M. Smith

               
               
               

               
               
               

     with a copy to:

Jennifer B. Rubin

Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Any such person may by notice given in accordance with this Section 3.4 to the other parties hereto
designate another address or person for receipt by such person of notices hereunder.

     3.5. Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto.

     3.6. Waivers and Amendments. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or further exercise
thereof or the exercise of any other such right, power or privilege.

     3.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPALS OF CONFLICTS OF LAW.

9

 

     3.8. Assignment. This Agreement, and the Executive’s rights and obligations hereunder,
may not be assigned by the Executive; any purported assignment by the Executive in violation hereof
shall be null and void. In the event of any sale, transfer or other disposition of all or
substantially all of the Company’s assets or business, whether by merger, consolidation or
otherwise, the Company (without limiting the Executive’s rights under Section 2.3) may assign this
Agreement and its rights hereunder.

     3.9. Withholding. The Company shall be entitled to withhold from any payments or
deemed payments any amount of tax withholding required by law.

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

     3.11. Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original but all such
counterparts together shall constitute one and the same instrument. Each counterpart may consist of
two copies hereof each signed by one of the parties hereto.

     3.12. Survival. Anything contained in this Agreement to the contrary not withstanding,
the provisions hereof shall survive any termination of the Executive’s employment hereunder.

     3.13. Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.

     3.14. Supersedes Prior Agreements. Upon execution and delivery of this Agreement,
this Agreement shall supersede in its entirety any and all prior agreements with respect to the
Company’s and the Executive’s respective rights and obligations upon the termination of the
Executive’s employment with the Company.

     IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first
above written.

BIOSCRIP, INC.

	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

Barry A. Posner,
	 	 
	 	 

Richard M. Smith
	 	 
	 

	 	Executive Vice President	 	 	 	 	 	 

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