Document:

Exhibit 10.2

 

RSU No. _______

 

BAXANO SURGICAL, INC.

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

 

This Restricted Stock Unit Award Agreement
(the “Agreement”) is entered into as of __________, 20__, (the “Grant Date”) by and between
Baxano Surgical, Inc., a Delaware corporation (the “Company”), and _____________________ (the “Participant”)
pursuant to the Company’s 2007 Stock Incentive Plan (the “Plan”). Any capitalized term not defined herein
shall have the same meaning ascribed to it in the Plan.

 

1.Grant of RSUs. The Company hereby
grants to the Participant ____________________ (________) Restricted Stock Units (“RSUs”) that will settle in
shares of the Common Stock of the Company (“Shares”) when and as they vest, subject to the terms and conditions
set forth herein and the provisions of the Plan.

 

2.Vesting of RSUs. Approximately
seventy-five percent (75%) of the total RSUs granted in Section 1 above or _______________ (________) RSUs shall be subject to
the time-based vesting provisions set forth in subsection 2(a) below and the remaining approximately twenty-five percent (25%)
of the total RSUs granted in Section 1 above or _________________ (_______) RSUs shall be subject to the performance-based vesting
provisions set forth in subsection 2(b) below.

 

(a)Time-Base Vesting: Provided that the Participant
renders Continuous Service through the applicable vesting dates, twenty-five percent (25%) of the RSUs subject to time-based vesting
shall vest on the first anniversary of the Grant Date, an additional thirty-seven and one-half percent (37.5%) shall vest on the
second anniversary of the Grant Date, and the final thirty-seven and one-half percent (37.5%) shall vest on the third anniversary
of the Grant Date. No additional RSUs shall vest after the date of termination of the Participant’s Continuous Service with
the Company.

 

(b)Performance-Based Vesting: Provided that the
Participant renders Continuous Service through the applicable vesting date, the entire portion of the RSUs subject to performance-based
vesting shall vest upon the written certification of the Company’s attainment of a thirty percent (30%) or greater increase
in Company revenue as measured on a year-over-year basis for two successive quarters; provided, however, that such performance
criteria must be achieved by the last quarter of the 2016 fiscal year. For the avoidance of doubt, if the Company does not achieve
a thirty percent (30%) or greater increase in revenue as measured on a year-over-year basis for two successive quarters by the
last quarter of the 2016 fiscal year, the entire portion of RSUs subject to performance-based vesting shall be forfeited and the
Company shall have no further obligation to the Participant with respect to any RSUs granted hereunder subject to performance-based
vesting.

 

3.Termination of Service Relationship.
Except as otherwise provided herein, any RSUs that are not vested at the time of the termination of the Participant’s Continuous
Service with the Company shall be automatically forfeited by the Participant.

 

4.Settlement in Shares. Vested RSUs will
settle in Shares within forty-five (45) days of when the RSUs vest. In connection with such settlement, the Company shall have
the right to require that the Participant make such provision, or furnish the Company such authorization, as may be necessary or
desirable so that the Company may satisfy its obligation under applicable income tax laws to withhold for income or other taxes
due upon or incident to such settlement. Specifically, the Company may require the Participant to provide a check or cash in the
amount reasonably requested by the Company to satisfy the Company’s withholding obligations under federal, state or other
applicable tax laws with respect to the taxable income recognized by the Participant in connection with the settlement of Shares
following vesting of the RSUs (unless the Company and Participant shall have made other arrangements for deductions or withholding
from Participant’s wages, bonus, or other compensation payable to the Participant, or by the withholding of Shares issuable
upon settlement of the vested RSUs or delivery of Shares owned by the Participant in accordance with Section 12.1 of the Plan,
provided such arrangements satisfy the requirements of applicable tax laws).

 

    	 

    	 

    

 

5.Death of Participant; No Assignment.
The rights of the Participant under this Agreement may not be assigned or transferred except by will or by the laws of descent
and distribution. Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of the RSUs in contravention of this Agreement
or the Plan shall be void and shall have no effect. If the Participant’s Continuous Service terminates as a result of his
or her death, and provided Participant’s rights hereunder shall have vested pursuant to Section 2 hereof, Participant’s
legal representative, his or her legatee, or the person who acquired the right to any Shares by reason of the death of the Participant
(individually, a “Successor”) shall succeed to the Participant’s rights and obligations under this Agreement.

 

6.Representation of Participant. Participant
acknowledges receipt of a copy of the Plan and understands that all rights and obligations connected with the RSUs are set forth
in this Agreement and the Plan.

 

7.Adjustments Upon Changes in Capital Structure.
In the event that the outstanding shares of Common Stock of the Company are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split,
reverse stock split, reclassification, stock dividend or other change in the capital structure of the Company, then appropriate
adjustment shall be made by the Administrator to the aggregate number and kind of shares subject to this Agreement, in order to
preserve, as nearly as practical, but not to increase, the benefits of the Participant under this Agreement, in accordance with
the provisions of Section 4.2 of the Plan.

 

8.Change in Control. In the event of a Change
in Control:

 

(a)All Repurchase Rights, if applicable, shall automatically
terminate immediately prior to the consummation of such Change in Control and any unvested RSUs shall immediately vest in full,
except to the extent that in connection with such Change in Control, the acquiring or successor entity (or parent thereof) provides
for the continuance or assumption of this Agreement or the substitution of a new agreement of comparable value covering shares
of a successor corporation, with appropriate adjustments as to the number and kind of shares (a “Substitute Agreement”)
in accordance with Section 10.2(a) of the Plan.

 

(b)If, upon a Change in Control, the acquiring or successor
entity (or parent thereof) assumes this Agreement or provides a Substitute Agreement, then any Repurchase Right provided for in
this Agreement or the Substitute Agreement, if applicable, shall terminate, and the RSUs provided for under this Agreement and
the awards provided for under the Substitute Agreement shall immediately vest in full, if the Participant’s service as an
employee, director, officer, consultant or other service provider to the acquiring or successor entity (or a parent or subsidiary
thereof) is Terminated Without Cause within twelve (12) months following consummation of a Change in Control in accordance with
Section 10.2(b) of the Plan.

 

9.No Employment Contract Created. The
granting of these RSUs shall not be construed as granting to the Participant any right with respect to continuance of employment
by the Company or any of its subsidiaries. The right of the Company or any of its subsidiaries to terminate at will the Participant’s
employment at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved.

 

10.Rights as Stockholder. The Participant
shall have no rights as a stockholder with respect to any Shares covered by the RSUs until such person has become the owner of
the Shares pursuant to the terms of this Agreement.

 

11.“Market Stand-Off” Agreement.
Participant agrees that, if requested by the Company or the managing underwriter of any proposed public offering of the Company’s
securities, Participant will not sell or otherwise transfer or dispose of any Shares held by Participant without the prior written
consent of the Company or such underwriter, as the case may be, during such period of time, not to exceed 180 days following the
effective date of the registration statement filed by the Company with respect to such offering, as the Company or the underwriter
may specify.

 

12.Interpretation. The RSUs are granted
pursuant to the terms of the Plan, and shall in all respects be interpreted in accordance therewith. The Administrator shall interpret
and construe this Agreement and the Plan, and any action, decision, interpretation or determination made in good faith by the Administrator
shall be final and binding on the Company and the Participant.

 

    	 

    	 

    

 

13.Limitation of Liability for Nonissuance.
During the term of the Plan, the Company agrees at all times to reserve and keep available, and to use its reasonable best efforts
to obtain from any regulatory body having jurisdiction any requisite authority in order to issue and sell, such number of Shares
as shall be sufficient to satisfy its obligations hereunder and the requirements of the Plan. Inability of the Company to obtain,
from any regulatory body having jurisdiction, authority deemed by the Company’s counsel to be necessary for the lawful issuance
and sale of any Shares hereunder and under the Plan shall relieve the Company of any liability in respect of the nonissuance or
sale of such Shares as to which such requisite authority shall not have been obtained.

 

14.Notices. Any notice, demand or request
required or permitted to be given under this Agreement shall be in writing and shall be deemed given when delivered personally
or three (3) days after being deposited in the United States mail, as certified or registered mail, with postage prepaid, (or by
such other method as the Administrator may from time to time deem appropriate), and addressed, if to the Company, at its principal
place of business, Attention: the Chief Financial Officer, and if to the Participant, at his or her most recent address as shown
in the employment or stock records of the Company.

 

15.Governing Law. The validity, construction,
interpretation, and effect of this Agreement shall be governed by and determined in accordance with the laws of the State of Delaware.

 

16.Severability. Should any provision
or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining provisions and portions of this
Agreement shall be unaffected by such holding.

 

17.Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed one instrument.

 

 

[The balance of this page intentionally
left blank]

 

    	 

    	 

    

 

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

 

 

	BAXANO SURGICAL, INC.,	 	PARTICIPANT
	a Delaware corporation	 	 
	 	 	 
	 	 	 
	 	 	 
	By:___________________________________	 	______________________________
	 (Signature)	 	
	 	 	 
	Name:________________________________	 	______________________________
	 	 	(Type or print name)
	Its:___________________________________	 	 
	 	 	 
	 	 	Address:
	 	 	 
	 	 	______________________________
	 	 	 
	 	 	______________________________EXHIBIT 10.1

 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK

 

		X	 
	UNITED STATES OF AMERICA	:	11 Civ. 8196 (CM)
	 	:	 
	 	Plaintiff-Intervenor,	:	Stipulation and Order of
	v.	 	:	Settlement and Dismissal
	 	:	As to BioScrip, Inc.
	NOVARTIS PHARMACEUTICALS CORP., and  	:	 
	BIOSCRIP, INC.,	:	 
	 	:	 
	 	Defendants.	:	 
	 	 	X	 

 

WHEREAS, this Stipulation and Order of Settlement
and Dismissal (the “Stipulation”) is entered into by and among plaintiff the United States of America (the “United
States”), by its attorney Preet Bharara, United States Attorney for the Southern District of New York, and defendant BioScrip,
Inc. (“BioScrip”), through their respective authorized representatives;

 

WHEREAS, in November 2011, David Kester
(“Relator,” and, together with the United States and BioScrip, the “Settling Parties”) filed a sealed qui
tam action (the “Action”) in the United States District Court for the Southern District of New York (the “Court”)
pursuant to 31 U.S.C. § 3730(b), the qui tam provision of the False Claims Act, 31 U.S.C. § 3729 et seq. (the
“FCA”), alleging, inter alia, that defendants Novartis Pharmaceuticals Corp. (“Novartis”) and BioScrip
violated the FCA and the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (the “AKS”), in connection with distributing
the iron chelation drug Exjade;

 

WHEREAS, in October 2012, and in connection
with its investigation of the Relator’s allegations, the United States served a civil investigative demand on BioScrip;

 

WHEREAS, on September 11, 2013, the United
States first notified BioScrip that the United States was contemplating civil claims against BioScrip under the FCA relating to
BioScrip’s distribution of Exjade (but did not at that time reveal the existence of the Action under seal or the fact that
BioScrip was named as a defendant therein by the Relator);

 

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WHEREAS, commencing in late September 2013,
the United States and BioScrip have pursued extensive discussions concerning the claims against BioScrip that the United States
was contemplating;

 

WHEREAS, in connection with its discussions
with the United States, BioScrip has submitted records and information regarding its financial circumstances, and has demonstrated
to the United States that BioScrip lacks the financial wherewithal to pay certain damages and penalties sought by the United States
in connection with its claims against BioScrip;

 

WHEREAS, on October 30, 2013, the United
States further intervened in the Action against Novartis based on Novartis’s alleged participation in a kickback scheme with
BioScrip;

 

WHEREAS, on January 6, 2014, the United
States intervened against BioScrip and submitted an Amended Complaint-in-Intervention;

 

WHEREAS, the United States’s Amended
Complaint alleges — as relevant to this settlement — that from February 2007 to May 2012, Novartis and BioScrip engaged
in a kickback scheme in connection with the distribution of Exjade (as set forth in paragraphs 1-44, 142-232, and 252-273 of the
Amended Complaint, the “Covered Conduct”), resulting in violations of the FCA and the AKS and the payments of Exjade
claims by Medicare and Medicaid that should not have been reimbursed by those federal healthcare programs;

 

WHEREAS, to avoid the delay, uncertainty,
and expense of protracted litigation of the above claims, the United States and BioScrip have reached a full and final mutually
agreeable resolution of these claims;

 

NOW, THEREFORE, IT IS HEREBY ORDERED that:

 

1. BioScrip consents to this
Court’s exercise of personal jurisdiction over BioScrip.

 

2. BioScrip
admits and acknowledges the following facts:

 

    	Page 2 of 18

    	 

    

 

		a.	From November 2005 to May 2012, BioScrip contracted with Novartis to dispense Exjade as part of Novartis’s “Exjade
Patient Assistance and Support Services” network (“EPASS”). During this period, BioScrip was one of three specialty
pharmacies permitted to dispense Exjade as part of EPASS (the “EPASS pharmacies”).
	 	 	 

		b.	To prescribe Exjade through EPASS, physicians wrote patient prescriptions on EPASS enrollment forms and submitted those forms
to EPASS. Patient prescriptions submitted to EPASS were distributed among the three EPASS pharmacies. EPASS was required (by insurance
companies and/or physicians) to refer certain patient prescriptions to specific EPASS pharmacies. Approximately half of the patient
prescriptions received by EPASS were not designated for a particular pharmacy by insurers or physicians. The distribution of those
patients (the “undesignated patient referrals”) among the three EPASS pharmacies was made at the direction of Novartis.
	 	 	 

		c.	Upon receiving a patient referral from EPASS, BioScrip would dispense the initial order of Exjade and, if the patient agreed,
any refills of Exjade. For refills, BioScrip understood that, even if a physician had prescribed such a refill, third-party payors
required patient consent before BioScrip could ship a refill to an Exjade patient.
	 	 	 

		d.	Exjade patient referrals had economic value to BioScrip because having more Exjade patients resulted in higher sales revenue,
additional dispensing fees, and additional rebates.
	 	 	 

		e.	Pursuant to its contract with Novartis, BioScrip collected data on the reasons that patients stopped ordering Exjade refills
and provided such data to Novartis on a monthly basis. Based on this data, BioScrip knew that side effects and doctors’ orders
to discontinue therapy were among the most common reasons that Exjade patients stopped ordering refills.
	 	 	 

		f.	In February 2007, Novartis informed BioScrip that the level of refill orders among BioScrip’s Exjade patients was below
the refill levels achieved by the other two EPASS pharmacies.

  

    	Page 3 of 18

    	 

    

 

		g.	In February 2007, Novartis demanded that BioScrip implement a Performance Improvement Plan (“PIP”) due to its low
refill levels relative to the other EPASS pharmacies. Specifically, Novartis informed BioScrip that it had to increase its refill
levels or Novartis would cut off the flow of undesignated patient referrals to BioScrip and, potentially, remove BioScrip from
EPASS.
	 	 	 

		h.	In response, and to avoid losing access to patient referrals, BioScrip launched an intensive effort to (i) increase overall
patient orders for Exjade refills, and (ii) “restart” many patients who had stopped ordering Exjade. To achieve that
goal, BioScrip hired or reassigned a group of staff — including a licensed practical nurse (“LPN”), two or three
medical assistants, and several customer service representatives — to work exclusively on Exjade (collectively, the “Exjade
Team”). BioScrip directed the Exjade Team to call many patients to encourage them to order refills and to encourage many
patients who had stopped ordering refills to “restart” Exjade.
	 	 	 

		i.	The efforts of the Exjade Team resulted in significant increases in Exjade refill levels at BioScrip — by September 2007,
the refill levels at BioScrip were higher than at the other two EPASS pharmacies. Recognizing the improvement in refill levels
at BioScrip, Novartis did not cut off the flow of undesignated patient referrals or remove BioScrip from EPASS, but continued to
direct patient referrals, including undesignated patient referrals, to BioScrip.
	 	 	 

		j.	BioScrip developed a protocol for the Exjade Team to call patients to encourage many patients to order refills and to encourage
many patients who had stopped ordering refills to restart Exjade, which BioScrip named “ScripCare” (or “BioScripCare”).
Under that protocol, the Exjade Team made the following kinds of calls: (i) “assessment calls” or “survey calls,”
during which patients were told that they were receiving clinical counseling and education about Exjade, (ii) calls to patients
to encourage many of them to order refills, and (iii) “recovery” calls to encourage many patients who had stopped ordering
Exjade to “restart.”

 

    	Page 4 of 18

    	 

    

 

		k.	In mid-2007, the LPN and the medical assistants on the Exjade Team were given scripts for making calls to new patients to discuss
Exjade therapy (the “Call Scripts”). With regard to side effects, the Call Scripts indicated that Exjade therapy could
“cause some discomfort initially,” but that such discomfort “usually resolves over time.”
	 	 	 

		l.	In developing ScripCare, BioScrip shared key elements of the protocol with Novartis, including (i) how to discuss Exjade and
its side effects with patients, (ii) the sequence of the calls, and (iii) which team members would make the calls. The Exjade marketing
team at Novartis provided input on aspects of the ScripCare protocol, including how to discuss potential side effects with Exjade
patients. At a January 2008 meeting at Novartis’s offices in New Jersey, BioScrip discussed the Call Scripts with Novartis,
and Novartis approved those scripts.
	 	 	 

		m.	BioScrip continued to use the Exjade Call Scripts that Novartis had approved in January 2008 until in or about November 2010.
From 2007 to 2010, the activities of the Exjade Team were discussed frequently in the monthly calls and quarterly meetings that
representatives from Novartis’s Exjade marketing and managed markets teams held with BioScrip. During those discussions,
Novartis did not ask BioScrip or recommend for BioScrip to update the Call Scripts; and BioScrip did not advise Novartis that it
had made updates to these scripts, since none were made.
	 	 	 

		n.	In or about July 2007, Novartis began issuing monthly “Exjade Scorecards” to BioScrip that measured, among other
things, BioScrip’s “adherence” scores. Based on discussions with Novartis, BioScrip knew that the “adherence”
scores in the Exjade Scorecards were designed to show how long BioScrip’s Exjade patients continued to order refills. BioScrip
also knew that, in calculating the adherence scores, Novartis did not exclude patients who stopped ordering refills due to side
effects or patients who were directed to stop therapy by their doctors.

 

    	Page 5 of 18

    	 

    

 

		o.	In October 2007, Novartis began discussions with BioScrip about a plan to allocate more undesignated patient referrals to BioScrip
if, according to the adherence scores in the Exjade Scorecards, it remained the highest performer in terms of obtaining refill
orders.
	 	 	 

		p.	As of January 2008, Novartis increased the rebates that BioScrip earned for each Exjade shipment from $13 to $20 in recognition
of BioScrip’s performance and, as BioScrip understood, in order to encourage BioScrip to continue the efforts of its Exjade
Team.
	 	 	 

		q.	In 2008, Novartis actively pursued discussions with BioScrip regarding the plan to provide additional undesignated patient
referrals in return for BioScrip’s achieving higher adherence scores relative to the other EPASS pharmacies, and BioScrip
committed to Novartis to “maintain[] a leadership position in Exjade scorecard performance.”
	 	 	 

		r.	Prior to November 2008, BioScrip agreed to a new patient allocation plan proposed by Novartis, which linked the percentage
of undesignated patient referrals for BioScrip to its refill rates as measured by the Exjade Scorecard.
	 	 	 

		s.	Under that plan, Novartis allocated 60% of all undesignated patients to BioScrip for the first half of 2009 because, according
to the September 2008 Exjade Scorecard, BioScrip had generated the highest refill rates among the three EPASS pharmacies. For the
second half of 2009, Novartis allocated 40% of undesignated patients to BioScrip based on its high refill rates in early 2009.
	 	 	 

		t.	In 2008, Novartis also began to offer BioScrip “performance rebates” for Exjade. From 2008 to 2010, the “performance
rebates” were conditioned on BioScrip meeting or exceeding quarterly shipment goals set by Novartis. Novartis provided documents
to BioScrip indicating that Novartis set these thresholds based on its national marketing objectives.
	 	 	 

		u.	In March 2011, BioScrip was placed under a “corrective action” plan by Novartis due to its low refill rates relative
to the other EPASS pharmacies and other issues, and stopped receiving undesignated patient referrals.

 

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		v.	In response to Novartis’s placing it under a corrective action plan, and to regain access to patient referrals and improve
its performance, BioScrip launched an intensive effort, including changing its Exjade Team’s protocol, to “restart”
many patients and to encourage many patients to order refills.
	 	 	 

		w.	By late 2011, BioScrip’s refill rates had increased significantly; and, starting in January 2012, Novartis allocated
60% of the undesignated patients referrals to BioScrip based on its higher refill rates relative to the other EPASS pharmacies
in late 2011.

 

3. In settlement of the United States’ claims against BioScrip in this action, BioScrip shall pay to the United States
the sum of eleven million six hundred eighty-five thousand and seven hundred and five dollars and forty-three cent ($11,685,705.43)
(the “Settlement Amount”). BioScrip shall pay the Settlement Amount pursuant to the following schedule: (i) on
or before January 15, 2014, BioScrip shall make an initial payment in the amount of two million three hundred thirty-seven thousand
and one hundred forty-one dollars ($2,337,141.00) plus interest, compounded annually at the rate of 3.25%, accruing from the Effective
Date of this Stipulation (as defined in paragraph 24 below) to the date of the initial payment; (ii) on or before January
15, 2015, BioScrip shall make a second payment in the principal amount of four million six hundred seventy-four thousand and two
hundred eighty-two dollars ($4,674,282.00), plus interest, compounded annually at the rate of 3.25%, accruing from the Effective
Date to the date of the second payment; and (iii) on or before January 15, 2016, BioScrip shall make a final payment in
the principal amount of four million six hundred seventy-four thousand and two hundred eighty-two dollars and forty-three ce
($4,674,282.43), plus interest, compounded annually at the rate of 3.25%, accruing from the Effective Date to the date of the third
payment. Further, in connection with the entry of this Stipulation, BioScrip consents to the entry of a judgment

 

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against BioScrip
and for the United States in the Settlement Amount (a proposed Consent Judgment is attached hereto as Exhibit A).

 

4. Subject
to the exceptions in Paragraph 5 below (concerning excluded claims), conditioned upon BioScrip’s timely payments of the
full Settlement Amount pursuant to paragraph 3, the United States, on behalf of itself, its officers, agencies and
departments, releases BioScrip, and all of its current and former officers, directors, employees, servants, assigns,
attorneys and agents from any civil or administrative monetary claim the United States has under the FCA; the Civil Monetary
Penalties Law, 42 U.S.C. § 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; and the
common law or equitable theories of payment by mistake, unjust enrichment, negligence, and fraud, related to the Covered
Conduct.

 

5. Notwithstanding the release given
in Paragraph 4 of this Stipulation, or any other term of this Stipulation, the following claims of the United States are
specifically reserved and are not released by this Stipulation:

 

		a.	Any liability arising under Title 26, U.S. Code (Internal Revenue Code);
	 	 	 

		b.	Any criminal liability;
	 	 	 

		c.	Except as expressly stated in this Stipulation, any administrative liability, including mandatory and permissive exclusion
from Federal health care programs;
	 	 	 

		d.	Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct; and
	 	 	 

		e.	Any liability based on obligations created by this Stipulation.

 

6. BioScrip waives and shall not
assert any defenses it may have to any federal criminal prosecution or federal administrative action relating to the Covered
Conduct that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment
of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment

 

    	Page 8 of 18

    	 

    

 

of the Constitution, this
Stipulation bars a remedy sought in such federal criminal prosecution or federal administrative action. Nothing in this paragraph
or any other provision of this Stipulation constitutes an agreement by the United States concerning the characterization of the
Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code.

 

7. BioScrip fully and finally releases the United States, and its agencies, officers, employees, servants, and agents from
any claims (including attorneys’ fees, costs, and expenses of every kind and however denominated) that BioScrip has asserted,
could have asserted, or may assert in the future against the United States, and its agencies, officers, employees, servants, and
agents, related to the Covered Conduct and the United States’ investigation and prosecution thereof.

 

8. In consideration of (i) execution of this Stipulation by the Relator and (ii) the Relator’s releases as set forth
in paragraph 9 below, BioScrip and all of its current and former officers, directors, employees, assigns, attorneys, and agents,
on behalf of themselves and their heirs, attorneys, agents, successors, and assigns, release the Relator, his heirs, attorneys,
agents, successors, and assigns, from any and all claims for any action, event, or conduct related to the Relator’s allegations
in this Action.

 

9. Conditioned upon BioScrip’s full
payment of the Settlement Amount, the Relator, for himself and his heirs, successors, attorneys, agents, and assigns, releases
BioScrip and all of its current and former officers, directors, employees, assigns, attorneys, and agents, from any and all manner
of claims, proceedings, liens, and causes of action of any kind or description that the Relator has against BioScrip related to
the Relator’s allegations in this Action; provided, however, that nothing in this Stipulation shall preclude Relator from
seeking to recover his reasonable expenses and attorneys’ fees and costs from BioScrip pursuant to 31 U.S.C. §

 

    	Page 9 of 18

    	 

    

 

3730(d) or be deemed to have released his claims under 31 U.S.C. § 3730(d) for such reasonable expenses
and attorneys’ fees and costs.

 

10. The
Relator shall not object to this Stipulation but agrees and confirms, pursuant to 31 U.S.C. § 3730(c)(2)(B), that the
terms of this Stipulation are fair, adequate, and reasonable under all the circumstances.

 

11. The
Settlement Amount shall not be decreased as a result of the denial of claims for payment now being withheld from payment by
any Medicare carrier or intermediary, or any federal or state payer, related to the Covered Conduct; and BioScrip agrees not
to resubmit to any Medicare carrier or intermediary or any federal or state payer any previously denied claims related to the
Covered Conduct, and agrees not to appeal any such denials of claims.

 

12. BioScrip agrees to cooperate fully and truthfully with the United States’ investigation of individuals and entities
not released in this Stipulation. Specifically, BioScrip shall provide truthful and complete disclosure of all non-privileged documents
and information requested by the United States relating to the allegations in the United States’s Amended Complaint-in-Intervention.
Further, BioScrip agrees to furnish to the United States, upon request, complete and un-redacted copies of all non-privileged documents,
reports, memoranda of interviews, and records in its possession, custody, or control concerning any investigation of the Covered
Conduct that it has undertaken, or that has been performed by another on its behalf. Additionally, BioScrip shall encourage, and
agrees not to impair, the cooperation of its directors, officers, and employees, and shall use its best efforts to make available,
and encourage, the cooperation of former directors, officers, and employees for interviews and testimony, consistent with the rights
and privileges of such individuals.

 

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13. Subject
to the exceptions in Paragraph 5, in consideration of BioScrip’s obligations under this Stipulation, the United States
shall promptly file appropriate papers to dismiss without prejudice the claims against BioScrip in the United States’s
Amended Complaint-in-Intervention after the Court enters this Stipulation and the Consent Judgment attached as Exhibit A.
Further, promptly after BioScrip pays the Settlement Amount pursuant to Paragraph 3, the United States shall file a
satisfaction of judgment as to the Consent Judgment and the appropriate papers to dismiss with prejudice the claims against
BioScrip in the United States’s Amended Complaint-in-Intervention. Provider, however, that the Court shall retain
jurisdiction over this Stipulation and the Settling Parties until such time as BioScrip has paid the Settlement Amount
pursuant to Paragraph 3 and completed its obligations under Paragraph 12 and until the Court has decided or the Settling
Parties have resolved the Relator’s claims against Bioscrip for reasonable expenses, attorneys’ fees and costs
and against the United States for a share of the proceeds of this Settlement.

 

14. BioScrip
shall be in default of this Stipulation if it fails to make any of the three payments set forth in Paragraph 3, in whole or
in part, on or before the due date for such payment. The United States will provide written notice of any default, to be sent
by e-mail and first-class mail to one or more of the counsel for BioScrip identified in Paragraph 23. In the event
of default, the entire remaining unpaid balance of the Settlement Amount shall be immediately due and payable by BioScrip,
and interest shall accrue at the rate of 12% per annum compounded daily on the remaining unpaid principal balance, beginning
seven (7) business days after delivery of the notice of default. If the Settlement Amount, with all accrued interest, is not
paid in full within seven (7) business days following delivery of the notice of default, BioScrip shall agree to entry of a
Consent Judgment in favor of the United States against BioScrip in the

 

    	Page 11 of 18

    	 

    

 

amount of the unpaid balance, and the United States, at its option, may (a) rescind this
Stipulation and reinstate the claims asserted against BioScrip in its Amended Complaint-in-Intervention in this Action; (b) seek
specific performance of the Stipulation; (c) offset the remaining unpaid balance from any amounts due and owing BioScrip at the
time of default by any department, agency, or agent of the United States; or (d) exercise any other rights granted by law, or under
the terms of this Stipulation, or recognizable at common law or in equity. BioScrip shall not contest any offset imposed or any
collection action undertaken by the United States pursuant to this paragraph, either administratively or in any Federal or State
court. In addition, BioScrip shall pay the United States all reasonable costs of collection and enforcement under this paragraph,
including attorneys’ fees and expenses. In the event that the United States opts to rescind this Stipulation, BioScrip shall
not plead, argue, or otherwise raise any defense under the theories of statute of limitations, laches, estoppel, or similar theories,
to any civil or administrative claims that relate to the Covered Conduct.

 

15. BioScrip
agrees to the following:

 

		a.	Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47;
and in Titles XVIII and XIX of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-1 and 1396-1396w-5; and the regulations
and official program directives promulgated thereunder) incurred by or on behalf of BioScrip, its present or former officers, employees,
and agents in connection with:
	 	 	 

		(1)	the matters covered by this Stipulation;
	 	 	 

		(2)	the United States’s civil investigation of the Covered Conduct;
	 	 	 

		(3)	the investigation, defense, and corrective actions undertaken by BioScrip in response to the United
States’s civil investigation of the Covered Conduct (including attorney’s fees);
	 	 	 

		(4)	the negotiation and performance of this Stipulation;

 

    	Page 12 of 18

    	 

    

  

		(5)	the payments BioScrip makes to the United States pursuant to this Stipulation and any payments
that BioScrip may make to Relator, including costs and attorneys fees; and
	 	 	 

		(6)	the negotiation of, and obligations undertaken pursuant to any integrity agreement relating to
the Covered Conduct with HHS-OIG to (i) retain an independent review organization to perform annual reviews of required by any
such integrity agreement, and (ii) prepare and submit reports to the OIG-HHS, are unallowable costs for government contracting
purposes and under the Medicare Program, Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program (FEHBP)
(hereinafter referred to as Unallowable Costs). However, nothing in this Paragraph (i.e., Paragraph 15(a)(6)) that may apply
to the obligations undertaken pursuant to any such integrity agreement affects the status of costs that are not allowable based
on any other authority applicable to BioScrip.
	 	 	 

		b.	Future Treatment of Unallowable Costs: Unallowable Costs shall be separately determined and accounted for by BioScrip,
and BioScrip shall not charge such Unallowable Costs directly or indirectly to any contracts with the United States or any State
Medicaid program, or seek payment for such Unallowable Costs through any cost report, cost statement, information statement, or
payment request submitted by BioScrip or any of its agencies or departments to the Medicare, Medicaid, TRICARE, or FEHBP Programs.
	 	 	 

		c.	Treatment of Unallowable Costs Previously Submitted
for Payment: BioScrip further agrees that within 90 days of the Effective Date of this Agreement it shall identify to applicable
Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and FEHBP fiscal agents, any Unallowable
Costs (as defined in this Paragraph) included in payments previously sought from the United States, or any State Medicaid program,
including, but not limited to, payments sought in

  

    	Page 13 of 18

    	 

    

 

			any cost reports, cost statements, information reports, or payment requests already
                                                                               submitted by BioScrip or any of its agencies or departments, and shall request, and agree, that such cost reports, cost
                                                                               statements, information reports, or payment requests, even if already settled, be adjusted to account for the effect of the
                                                                               inclusion of the unallowable costs. BioScrip agrees that the United States, at a minimum, shall be entitled to recoup from
                                                                               BioScrip any overpayment plus applicable interest and penalties as a result of the inclusion of such Unallowable Costs
                                                                               on previously-submitted cost reports, information reports, cost statements, or requests for payment. The United States
                                                                               reserves its rights to disagree with any calculations submitted by BioScrip or any of its rights to audit, examine, or
                                                                               re-examine BioScrip’s books and records to determine that no Unallowable Costs have been claimed in accordance with the
                                                                               provisions of this Paragraph, and to disagree with any calculations submitted by BioScrip or any of its agencies or
                                                                               departments concerning any Unallowable Costs included in payments previously sought by BioScrip, or the effect of any such
                                                                               Unallowable Costs on the amount of such payments.

 

16. Except as expressly provided to
the contrary in this Stipulation, this Stipulation is intended to be for the benefit of the Settling Parties only. The
Settling Parties do not release any claims against any other person or entity.

 

17. If within 91 days of the Effective Date or of any payment made under this Stipulation, BioScrip commences any case, proceeding,
or other action under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors (a) seeking to have any
order for relief of BioScrip’s debts, or seeking to adjudicate BioScrip as bankrupt or insolvent; or (b) seeking appointment
of a receiver, trustee, custodian, or other similar official for BioScrip or for all or any substantial part of its assets, BioScrip
agrees as follows:

 

    	Page 14 of 18

    	 

    

 

		a.	BioScrip’s obligations under this Stipulation may not be avoided pursuant to 11 U.S.C. § 547, and BioScrip shall
not argue or otherwise take the position in any such case, proceeding, or action that: (i) BioScrip’s obligations
under this Stipulation may be avoided under 11 U.S.C. § 547; (ii) BioScrip was insolvent at the time this Stipulation
was entered into, or became insolvent as a result of the payments made to the United States; or (iii) the mutual promises,
covenants, and obligations set forth in this Stipulation do not constitute a contemporaneous exchange for new value given to BioScrip.
	 	 	 

		b.	If BioScrip’s obligations under this Stipulation
are avoided for any reason, including, but not limited to, through the exercise of a trustee’s avoidance powers under the
Bankruptcy Code, the United States, at its sole option, may rescind the releases in this Stipulation and bring any civil and/or
administrative claim, action, or proceeding against BioScrip for the claims that would otherwise be covered by the releases provided
in Paragraph 5 above. BioScrip agree that (i) any such claims, actions, or proceedings brought by the United States are
not subject to an “automatic stay” pursuant to 11 U.S.C. § 362(a) as a result of the action, case, or proceedings
described in the first clause of this paragraph, and BioScrip shall not argue or otherwise contend that the United States’
claims, actions, or proceedings are subject to an automatic stay; (ii) BioScrip shall not plead, argue, or otherwise raise
any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any such civil or administrative
claims, actions, or proceeding that are brought by the United States within 60 calendar days of written notification to BioScrip
that the releases have been rescinded pursuant to this paragraph; and (iii) the United States has a valid claim against
BioScrip in the amount of eleven million six hundred eighty-five thousand and seven hundred and five dollars and forty-three cents
($11,685,705.43), and the United States may pursue its claim in the case, action, or proceeding referenced in the

 

    	Page 15 of 18

    	 

    

 

			first clause of this paragraph, as well as in any other
case, action, or proceeding.
	 	 	 

		c.	BioScrip acknowledges that its agreements in this paragraph are provided in exchange for valuable consideration provided in
this Stipulation.

 

18. BioScrip agrees that it waives and
shall not seek payment of any of the health care billings covered by this Stipulation from any health care beneficiaries or
their parents, sponsors, legally responsible individuals, or third-party payors based upon the claims submitted in connection
with the Covered Conduct.

 

19. This Stipulation is governed by
the laws of the United States. The exclusive jurisdiction and venue for any dispute relating to this Stipulation is the
United States District Court for the Southern District of New York. For purposes of construing this Stipulation, it shall be
deemed to have been drafted by the Settling Parties, and shall not, therefore, be construed against any Settling Party for
that reason in any subsequent dispute.

 

20. Each of the Settling Parties shall
bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this
Stipulation; provided, however, nothing in this Stipulation shall preclude Relator from seeking to recover his/her expenses
or attorney’s fees and costs from BioScrip, pursuant to 31 U.S.C. § 3730(d), or BioScrip from opposing such a
request by the Relator.

 

21. The
undersigned counsel and other signatories represent and warrant that they are fully authorized to execute this Stipulation on
behalf of the persons and entities indicated below.

 

22. This
Stipulation may be executed in counterparts, each of which constitutes an original and all of which constitute one and the
same Stipulation. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this
Stipulation.

 

    	Page 16 of 18

    	 

    

 

23. Any
notice pursuant to this Stipulation shall be in writing and shall, unless expressly provided otherwise herein, be delivered by
express courier and by e-mail transmission, followed by postage-prepaid mail, to the following representatives:

 

	TO THE UNITED STATES:	 
	 	 
	Li Yu, Rebecca C. Martin, and Ellen M. London	 
	Assistant United States Attorneys	 
	Southern District of New York	 
	86 Chambers Street, 3rd Floor	 
	New York, NY 10007	 
	E-mail:  	 Li.Yu@usdoj.gov	 
	 	Rebecca.Martin@usdoj.gov	 
	 	Ellen.London@usdoj.gov	 

 

	TO THE RELATOR: 	 
	 	 
	Shelley Slade, Esq. 	 
	Vogel, Slade & Goldstein, LLP 	 
	1718 Connecticut Ave., N.W., 7th Floor 	 
	Washington, D.C. 20017 	 
	E-mail:	SSlade@vsg-law.com 	 

  

	TO BIOSCRIP: 	 
	 	 
	Mary Clare Bonaccorsi 	 
	Polsinelli PC, 	 
	161 N. Clark Street, Suite 4200 	 
	Chicago, IL 60601 	 
	Email:	MBonaccorsi@polsinelli.com 	 

 

	James R. DeVita 	 
	Day Pitney LLP 	 
	7 Times Square 	 
	New York, New York 10036 	 
	Email:	JDevita@daypitney.com 	 

  

24. The
effective date of this Stipulation is the date upon which this Stipulation is entered by the Court (the
“Effective Date).

 

    	Page 17 of 18

    	 

    

 

25. This
Stipulation constitutes the complete agreement between the Settling Parties. This Stipulation may not be amended except by
written consent of the Settling Parties.

  

	For the United States:	 	For BioScrip:
	 	 	 
	Dated:  	January 6, 2014	 	Dated:  	January 6, 2014
	 	 	 	 	 
	 	Preet Bharara	 	 	Polsinelli PC
	 	United States Attorney	 	 	 
	 	 	 	 	 
	By:	/s/ Li Yu	 	By:	/s/ Mary Clare Bonaccorsi
	 	LI YU	 	 	MARY CLARE BONACCORSI, Esq.
	 	REBECCA C. MARTIN	 	 	MARK GORAN, Esq.
	 	ELLEN M. LONDON	 	 	161 N. Clark Street, Suite 4200
	 	Assistant United States Attorneys	 	 	Chicago, IL 60601
	 	86 Chambers Street, 3rd Floor	 	 	 
	 	New York, New York 10007	 	 	 
	 	 	 	 	 
	Dated:	January 3, 2014	 	 	Day Pitney LLP
	 	 	 	 	 
	 	Department of Health and Human 	 	By:	/s/ James R. DeVita
	 	Services	 	 	JAMES R. DEVITA, Esq.
	 	 	 	 	7 Times Square
	By:	/s/ Robert K. DeConti	 	 	New York, New York 10036
	 	ROBERT K. DECONTI	 	 	 
	 	Assistant Inspector General for Legal Affairs	 	 	Bioscrip, Inc.
	 	Office of Counsel to the Inspector General	 	 	 
	 	Office of the Inspector General	 	By:	/s/ Kimberlee C. Seah
	 	 	 	 	Kimberlee C. Seah
	For the Relator:	 	 	General Counsel
	 	 	 	 
	Dated:	December 23, 2013	 	By:	/s/ Russell Corvese
	 	 	 	 	RUSSELL CORVESE
	 	Vogel, Slade & Goldstein, LLP	 	 	Senior Vice President
	 	 	 	 	 
	By:	/s/ Shelly R. Slade	 	 	 
	 	SHELLY R. SLADE, Esq.	 	 	 
	 	 	 	 	 
	 	/s/ David Kester	 	 	 
	 	DAVID KESTER	 	 	 

   

	 	SO ORDERED:
	 	January 8, 2014
	 	 
	 	/s/ Colleen McMahon
	 	HON. COLLEEN MCMAHON
	 	UNITED STATES DISTRICT JUDGE

 

    	Page 18 of 18

    	 

    

 

Exhibit A

 

    	 

    	 

    

 

	PREET BHARARA
	United States Attorney for the
	Southern District of New York
	By:	LI YU
	 	REBECCA C. MARTIN
	 	ELLEN M. LONDON
	Assistant United States Attorneys
	86 Chambers Street, 3rd Floor
	New York, New York 10007
	Tel: (212) 637-2734/2714/2737 

 

	 	X	 
	UNITED STATES OF AMERICA,	:	11 Civ. 8196 (CM)
	 	:	 
	 	Plaintiff-Intervenor,	:	
	v.	 	:	
	 	:	ECF Case
	NOVARTIS PHARMACEUTICALS CORP., and  	:	 
	BIOSCRIP, INC.,	:	 
	 	:	CONSENT JUDGMENT
	 	Defendants.	:	 
	 	 	X	 

  

Upon the consent of plaintiff-intervenor
the United States of America and defendant BioScrip, Inc., following the entry of a Stipulation and Order of Settlement by this
Court, which is hereby incorporated by reference;

 

IT IS HEREBY ORDERED, ADJUDGED AND DECREED:

 

That plaintiff-intervenor the United
States of America shall have judgment in the sum of $11,685,705.43 as of January 8, 2014, as against defendant BioScrip, Inc.,
plus interest, compounded annually at the rate of 3.25%, accruing from January 8, 2014.

 

Consented to by:

 

	 	 	PREET BHARARA
	 	 	United States Attorney
	 	 	 
	 	By:	/s/ Li Yu
	 	 	LI YU
	 	 	REBECCA C. MARTIN
	 	 	ELLEN M. LONDON
	 	 	Assistant United States Attorneys
	 	 	86 Chambers Street, 3rd Floor
	 	 	New York, New York 10007
	 	 	Counsel for the United States

   

    	 

    	 

    

  

	 	 	Polsinelli PC
	 		 
	 	By:	/s/ Mary Clare Bonaccorsi
	 	 	MARY CLARE BONACCORSI, Esq. 
	 	 	MARK GORAN, Esq.
	 	 	161 N. Clark Street, Suite 4200
	 	 	Chicago, IL 60601

 

	 	 	Day Pitney LLP
	 	 	 
	 	By: 	/s/ James R. DeVita
	 	 	JAMES R. DEVITA, Esq.
	 	 	7 Times Square
	 	 	New York, New York 10036
	 	 	Counsel for Defendant BioScrip, Inc.

 

	SO ORDERED:	 
	 	 
	/s/ Colleen McMahon	 
	HON. COLLEEN MCMAHON	 
	UNITED STATES DISTRICT JUDGE	 
	 	 
	For Clerk of the Court:	 
	 	 
	By: 	 	 
	Deputy Clerk

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