Document:

exv10w56

EXHIBIT 10.56

DAWSON JAMES SECURITIES, INC.

925 South Federal Highway, Suite No. 600

Boca Raton, Florida 33432

July 2, 2009

Mr. Robert E. Miller

Chief Financial Officer

Oculus Innovative Sciences, Inc.

1129 North McDowell Blvd.

Petaluma, CA 94954

     Re: Amendment and Clarification of Engagement Letter

Dear Mr. Miller,

     This letter amends and clarifies the letter agreement between Oculus Innovative Sciences, Inc.
(“Oculus”) and Dawson James Securities, Inc. (“DJSI”) dated April 10, 2009 (the “Engagement
Letter”) as follows:

     1. The last sentence of Section 8 of the Engagement Letter is hereby deleted in its
entirety so that DJSI does not have a right of first refusal on future financings of Oculus.

     2. We agree that Section 8 of the Engagement Letter shall mean that if the Registered
Placement (as defined in the Engagement Letter) is not completed,
then DJSI’s only compensation for
services under the Engagement Letter shall be reimbursement of out of pocket expense actually
incurred by DJSI, subject to the dollar limits and other terms of Section 8.

     3. The form of Warrant to be issues to DJSI under Section 8 of the Engagement Letter is
attached to this letter as Exhibit A.

     In
connection with the application DJSI has submitted to FINRA related to DJSI’s compensation,
Oculus represents to DJSI that other than the following, no FINRA member(s) have provided or will
provide any investment banking, financial advisory and/or consulting services to Oculus during the
180-days preceding filing of the Registered Placement or during the 90-day period following
effectiveness of the Registered Placement: Merriman Curhan Ford & Co. acted as exclusive placement
agent for Oculus until April 26, 2009 but they did not participate in the distribution contemplated
by the Registered Placement and they will not receive any compensation related to the Registered
Placement.

 

 

Oculus Innovative Sciences, Inc.

July 2, 2009

Page 2 of 2

     Except as set forth above, the Engagement Letter shall remain in full force and effect. If you
agree with the above please sign below and return an executed copy of this letter to my attention.

	 	 	 	 	 
	 	Very truly yours,

DAWSON JAMES SECURITIES, INC.

 	 
	 	/s/
Joseph E. Balagot
 	 
	 	Joseph E. Balagot 	 
	 	Senior Managing Director 	 
	 

	 	 	 
	AGREED AND ACCEPTED:
	 	 
	 
	 	 
	OCULUS INNOVATIVE SCIENCES, INC.
	 	 
	 
	 	 
	/s/ Robert E. Miller
 

Robert E. Miller

	 	 
	Chief Financial Officer
	 	 

     Attachment: Exhibit A Form of Warrant

 

 

Exhibit A

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COMPANY COUNSEL THAT THIS WARRANT OR
SUCH SECURITIES, AS APPLICABLE, MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED
IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS.

OCULUS INNOVATIVE SCIENCES, INC.

Form of Warrant for the Purchase of

Shares of Common Stock, Par Value $0.0001 per Share

No.                     

Issue Date:                     

     THIS CERTIFIES that, for consideration, the receipt and sufficiency of which are hereby
acknowledged, and other value received,                      (the
“Holder”) is entitled to subscribe for, and purchase from, OCULUS INNOVATIVE SCIENCES, INC., a
Delaware corporation (the “Company”), upon the terms and conditions set forth herein, at any time
or from time to time six months after the date this warrant is issued (the “Initial Exercise Date”)
until five years after the Issue Date (the “Exercise Period”), up to an aggregate of                     
shares of common stock, par value $0.0001 per share (the “Common Stock”), of the
Company. This Warrant is initially exercisable at a price of $                     per
share, subject to adjustment as described in this Warrant. The term “Exercise Price” shall mean,
depending on the context, the initial exercise price (as set forth above) or the adjusted exercise
price per share. The Company may, in its sole discretion, reduce the then current Exercise Price to
any amount or extend the Exercise Period, at any time. Such modifications to the Exercise Price or
Exercise Period may be temporary or permanent.

     As used herein, the term “this Warrant” shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this Warrant in whole or
in part. Each share of Common Stock issuable upon the exercise hereof shall be hereinafter referred
to as a “Warrant Share.”

          1. (a) Subject to the terms of this Warrant, this Warrant may be exercised at any time in
whole and from time to time in part, at the option of the Holder, on or after the Initial Exercise
Date and on or prior to the end of the Exercise Period. This Warrant shall initially be exercisable
in whole or in part for that number of fully paid and nonassessable shares of Common Stock as
indicated on the first page of this Warrant, for an exercise price per share equal to the Exercise
Price, by delivery to the Company at its office at 1129 North McDowell Blvd., Petaluma, California
94954, or at such other place as is designated in writing by the Company, of:

     (i) a completed Election to Purchase, in the form set forth in Exhibit A, executed by
the Holder exercising all or part of the purchase rights represented by this Warrant;

     (ii) this Warrant; and

     (iii) subject to Section 1(c) below, payment of an amount equal to the product of the Exercise
Price multiplied by the number of shares of Common Stock being purchased upon such exercise in the
form of, at the Holder’s option, (A) a certified or bank cashier’s check payable to the Company, or
(B) a wire transfer of funds to an account designated by the Company.

     (b) As used herein:

     (i) “Fair Market Value” of a security shall mean, on any given day, the average of the last
reported sale prices for the last ten (10) trading days as officially reported by the principal
securities exchange or “over the counter” (including on the pink sheets or bulletin board) exchange
on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed
or admitted to trading on any national securities exchange or sold “over the counter,” the average
closing sale price as furnished by the NASD through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Common Stock is not quoted on Nasdaq, as determined in
good faith by resolution of the Board of

 

 

Directors of the Company, the “Fair Market Value” shall be as determined by the Board of Directors
of the Company in good faith, absent manifest error.

     (c) Cashless Exercise. This Warrant may also be exercised at any time by means of a
“cashless exercise” in which the Holder shall be entitled to receive, without the payment by the
Holder of any additional consideration, a certificate for the number of Warrant Shares equal to the
number as is computed using the following formula:

where

X = the number of Warrant Shares to be issued to the Holder pursuant to this Warrant.

Y = the number of Warrant Shares covered by this Warrant with respect to which the cashless
exercise election is made pursuant to this Section 1(c).

A = the Fair Market Value (as defined above) of one Warrant Share.

B = the Exercise Price in effect at the time the cashless exercise election is made pursuant to
this Section 1(c).

     (d) Upon the exercise of this Warrant, the Company shall issue and cause promptly to be
delivered upon such exercise to, or upon the written order of, the Holder a certificate or
certificates for the number of full Warrant Shares to which such Holder shall be entitled, together
with cash in lieu of any fraction of a Warrant Share otherwise issuable upon such exercise.

     (e) If this Warrant is exercised in respect of less than all of the Warrant Shares evidenced
by this Warrant at any time prior to the end of the Exercise Period, a new Warrant evidencing the
remaining Warrant Shares shall be issued to the Holder, or its nominee(s), without charge therefor.

     (f) In the event that this Warrant is not exercised in full on the last business day of the
Exercise Period, the remaining portion of the Warrant will automatically be exercised as described
in Section 1(c) above.

     2. The Exercise Price for the Warrants in effect from time to time shall be subject to
adjustment as follows:

     (a) If the Company, at any time while this Warrant is outstanding: (i) subdivides outstanding
shares of Common Stock into a larger number of shares, (ii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iii) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 2(a) shall become
effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.

     (b) If the Company, at any time while this Warrant is outstanding, shall distribute to all or
substantially all holders of Common Stock (and not to the Holder) evidence of its indebtedness or
assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock, then in each such case the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a fraction of which (i) the
denominator shall be the Fair Market Value per share of Common Stock determined as of the record
date mentioned above and (ii) the numerator shall be such Fair Market Value per share of Common
Stock on such record date less the then per share fair market value at such record date of the
portion of such evidence of indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Stock so distributed
applicable to one outstanding share of the Common Stock, which fair market value shall be reduced
by the fair market value of consideration, if any, paid to the Company by holders of Common Stock
in exchange for such evidence of indebtedness or assets or rights or warrants so distributed, in
each case as such Fair Market Value is determined by the Board of Directors of the Company in good
faith. In either case, the adjustments shall be described in a statement provided to the Holder of
the portion of evidences of indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Stock so distributed or
such subscription rights applicable to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately after the record date
mentioned above.

     (c) All calculations under this Section 2 shall be made to the nearest cent.

 

 

     (d) The Company shall not be required upon the exercise of this Warrant to issue any
fractional shares, but may pay the value thereof to the Holder in cash on the basis of the Fair
Market Value per Warrant Share.

     3. Unless registered, the Warrant Shares issued on exercise of the Warrants shall be subject
to a stop transfer order and the certificate or certificates representing the Warrant Shares shall
bear the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED,
ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY
RECEIVES AN OPINION OF COUNSEL WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT THE SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED IN
THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS.

     4. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of
any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate, without charge, of like date,
tenor and denomination, in lieu of such Warrant or stock certificate.

     5. The Company shall not be obligated to issue any shares of Common Stock upon exercise of
this Warrant if the issuance of such shares of Common Stock would cause a breach or violation of
the Company’s obligations under any applicable rules or regulations of any market on which the
Company’s securities trade.

     6. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, to the extent that after giving effect to such
issuance after exercise, such Holder (together with such Holder’s affiliates, and any other person
or entity acting as a group together with such Holder or any of such Holder’s affiliates), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder
and its affiliates shall include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which such determination is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by such Holder or any of its affiliates and (B) exercise
or conversion of the unexercised or nonconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by such Holder or any of its Affiliates. Except as set forth in the preceding
sentence, beneficial ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. The
“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Beneficial Ownership Limitation provisions of this section may be
waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior notice to
the Company to change the Beneficial Ownership Limitation to 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
upon exercise of this Warrant, and the provisions of this section shall continue to apply. Upon
such a change by a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such
9.99% limitation, the Beneficial Ownership Limitation may not be further waived by such Holder. The
provisions of this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this section to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a successor holder of this
Warrant.

 

 

     7. (a) The Holder shall not have, solely on account of its status as a holder of a Warrant,
any rights of a stockholder of the Company, either at law or in equity, or to any notice of
meetings of stockholders or of any other proceedings of the Company, except as provided in this
Warrant.

          (b) No provision hereof, in the absence of affirmative action by the Holder to receive Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise
to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of
Company, whether such liability is asserted by Company or by creditors of Company.

     8. All notices that are required or permitted hereunder shall be in writing and shall be
sufficient if personally delivered, sent by facsimile, or sent by registered or certified mail or
Federal Express or other nationally recognized overnight delivery service. Any notices shall be
deemed given upon the earlier of the date when received at, the day when delivered via facsimile or
the third day after the date when sent by registered or certified mail or the day after the date
when sent by Federal Express to, the address set forth below, unless such address is changed by
notice to the other party hereto:

if to the Company:

Oculus Innovative Sciences, Inc.

1129 North McDowell Blvd.

Petaluma, California 94954

Attention: Jim Schutz, Vice President Corporate Development and General Counsel

Fax: (707) 283-0551

if to the Holder: As set forth in the Warrant Register of the Company.

          The Company or the Holder by notice to the other party may designate additional or different
addresses as shall be furnished in writing by such party.

     9. The provisions of this Warrant may not be amended, modified or changed except by an
instrument in writing signed by each of the Company and the Holder.

     10. All the covenants and provisions of this Warrant by or for the benefit of the Company or
the Holder shall be binding upon and shall inure to the benefit of their respective permitted
successors and assigns hereunder.

     11. The validity, interpretation and performance of this Warrant shall be governed by the laws
of the State of California, as applied to contracts made and performed within such State, without
regard to principles of conflicts of law.

     12. The provisions hereof have been and are made solely for the benefit of the Company and the
Holder, and their respective successors and assigns, and no other person shall acquire or have any
right hereunder or by virtue hereof.

     13. The headings in this Warrant are for convenience only and shall not limit or otherwise
affect the meaning hereof.

     14. If any term, provision, covenant or restriction of this Warrant is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties shall use their best efforts
to find and employ an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may be hereafter
declared invalid, illegal, void or unenforceable.

     15. This Warrant is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to herein and therein.
This Warrant supersedes all prior agreements and understandings between the parties with respect to
such subject matter.

     16. The Company agrees to take such further action and to deliver or cause to be delivered to
each other after the date hereof such additional agreements or instruments as any of them may
reasonably request for the purpose of carrying out this Warrant and the agreements and transactions
contemplated hereby and thereby.

     17. Each party hereto acknowledges and agrees that irreparable harm, for which there may be no
adequate remedy at law and for which the ascertainment of damages would be difficult, would occur
in the event any of the provisions of this Warrant were not performed in accordance with its
specific terms or were otherwise breached. Each party hereto accordingly agrees that each other
party hereto shall be entitled

 

 

to an injunction or injunctions to prevent breaches of the provisions of this Warrant, or any
agreement contemplated hereunder, and to enforce specifically the terms and provisions hereof or
thereof in any court of the United States or any state thereof having jurisdiction, in each
instance without being required to post bond or other security and in addition to, and without
having to prove the inadequacy of, other remedies at law.

	 	 	 	 	 	 	 
	 	 	Dated as of:	 	 
	 
	 	 	 	 	 	 
	 	 	OCULUS INNOVATIVE
SCIENCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

EXHIBIT A

ELECTION TO PURCHASE

     The undersigned hereby irrevocably elects to exercise Warrants represented by this Warrant and
to purchase the shares of Common Stock or other securities issuable upon the exercise of said
Warrants, and requests that Certificates for such shares be issued and delivered as follows:

PORTION OF WARRANT BEING EXERCISED: (check applicable box or fill in number of Warrant Shares):

	 	 	 	 	 
	 

	 	Entire Warrant o	 	 
	 
	 	 	 	 
	 

	 	 	 	Warrant Shares
	 

	 	 	 	 
	 
	 	 	 	 
	ISSUE TO:
	 	 	 	 
	 
	 	 	 	 
	 

	 	(Name)	 	 
	 
	 	 	 	 
	 	 	(Address, Including Zip Code)
	 
	 	 	 	 
	 	 	(Social Security or Tax Identification Number)
	 
	 	 	 	 
	DELIVER TO:
	 	 	 	 
	 
	 	 	 	 
	 

	 	(Name)	 	 
	 
	 	 	 	 
	 	 	(Address, Including Zip Code)

     In payment of the purchase price with respect to this Warrant exercised, the undersigned
hereby either (A) tenders payment of $      by (i) certified or bank cashiers check payable to the
order of the Company o; or (ii) a wire transfer of such funds to an account designated by the
Company o (check applicable box) or (B) hereby provides notice to the Company that the
undersigned is exercising this Warrant pursuant to the Cashless Exercise set forth in Section 1(c)
of the Warrant. If the number of Warrant Shares hereby exercised is fewer than all the Warrant
Shares represented by this Warrant, the undersigned requests that a new Warrant representing the
number of full Warrant Shares not exercised to be issued and delivered as set forth below:

	 	 	 
	Name of Holder or Assignee:
	 	 
	 

	 	(Please Print)

	 	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Signature:                          DATED:                     , 20      
	(Signature must conform in all respects to name of holder as specified on the fact of this Warrant)
	Signature Guaranteed:lcagreement.htm

    
      

      

    

     

    

 

    [EXECUTION
COPY]

    Bank
of America, N.A.

    100
Federal Street

    Boston,
Massachusetts  02110

    

    July 8,
2009

     

    BioScrip,
Inc.

    10050
Crosstown Circle

    Eden
Prairie, Minnesota  55344

    Attn:  Stanley
G. Rosenbaum

    

    Re:           Letter of Credit
Facility

     

    Ladies
and Gentlemen:

     

    BANK OF
AMERICA, N.A. (the “Lender”) is pleased
to make available to BIOSCRIP, INC., a Delaware corporation (the “Borrower”), a letter
of credit facility on the terms and subject to the conditions set forth
below.  Capitalized terms not defined herein have the meanings
assigned to them in Exhibit A attached to
this letter agreement (this “Agreement”).

     

    1.           The
Facility.

     

    (a)           The Letter of Credit
Commitment.

     

    (i)           Subject
to the satisfaction of the requirements of subsection (g) below and the other
terms and conditions set forth herein, the Lender agrees (A) from time to time
on any Business Day during the period from July 8, 2009 until the Commitment
Termination Date, to issue Letters of Credit for the account of the Borrower and
its Subsidiaries, and to amend or renew Letters of Credit previously issued by
it, in accordance with subsection (b) below, and (B) to honor drafts under
Letters of Credit; provided that the
Lender shall not be obligated to make any L/C Credit Extension with respect to
any Letter of Credit if as of the date of such L/C Credit Extension (after
giving effect to any requested L/C Credit Extension), (x) the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of
all unreimbursed drawings under all Letters of Credit would exceed the
Commitment or (z) the aggregate undrawn amount of all outstanding Letters of
Credit plus the
aggregate of all unreimbursed drawings under all Letters of Credit would exceed
the amount of Pledged Collateral maintained in the Cash Collateral Account (as
defined in the Cash Collateral Agreement).  Within the foregoing
limits, and subject to the terms and conditions hereof, the Borrower’s ability
to obtain Letters of Credit shall be fully revolving, and accordingly the
Borrower may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit that have expired or that have been drawn upon and
reimbursed.

     

    (ii)           The
Lender shall be under no obligation to issue any Letter of Credit
if:

     

    (A)           any
order, judgment or decree of any governmental authority or arbitrator shall by
its terms purport to enjoin or restrain the Lender from issuing such Letter of
Credit, or any law applicable to the Lender or any request or directive (whether
or not having the force of law) from any governmental authority with
jurisdiction over the Lender shall prohibit, or request that the

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          BioScrip,
Inc.

          July
8, 2009

          Page
2

          

          

        

      

    

    Lender
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Lender with respect to such Letter
of Credit any restriction, reserve or capital requirement (for which the Lender
is not otherwise compensated) not in effect on the date hereof, or shall impose
upon the Lender any unreimbursed loss, cost or expense which was not applicable
on the date hereof and which the Lender in good faith deems material to
it;

     

    (B)           subject
to Section 1(b)(iii), the expiry date of such requested Letter of Credit would
occur more than 364 days after the Commitment Termination Date; provided, that the
issuance of any such Letter of Credit with an expiry date that would occur more
than twelve months after the date of issuance or last renewal shall be subject
to the approval of the Lender; provided, further, that the
Lender shall be under no obligation to issue any Letter of Credit if the expiry
date of such requested Letter of Credit would occur more than three years after
the date of issuance; or

     

    (C)           the
issuance of such Letter of Credit would violate one or more policies of the
Lender.

     

    (iii)           The
Lender shall be under no obligation to amend any Letter of Credit if (A) the
Lender would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms hereof, or (B) the beneficiary of such Letter
of Credit does not accept the proposed amendment to such Letter of
Credit.

     

    (b)           Procedures for Issuance and
Amendment of Letters of Credit; Auto-Renewal Letters of
Credit.

     

    (i)           Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the Lender in the form of a Letter of
Credit Application in substantially the form attached hereto as Exhibit B hereto (an
“L/C
Application”), appropriately completed and signed by an authorized
officer of the Borrower.  Such L/C Application must be received by the
Lender not later than 1:00 p.m. (Boston, Massachusetts time), at least five
Business Days (or such sooner date and time as the Lender may agree in a
particular instance in its sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be.  In the case of a request
for an initial issuance of a Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to the Lender: (A) the proposed issuance
date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the Lender may require.  In the case of a request for
an amendment of any outstanding Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to the Lender (A) the Letter of Credit
to be amended; (B) the proposed date of amendment thereof (which shall be a
Business Day);

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          BioScrip,
Inc.

          July
8, 2009

          Page
3

          

          

        

      

    

    (C) the
nature of the proposed amendment; and (D) such other matters as the Lender may
require.

     

    (ii)           Upon
the Lender’s determination that the requested issuance or amendment is permitted
in accordance with the terms hereof, then, subject to satisfaction of the
requirements set forth in subsection (g) below and the other applicable terms
and conditions hereof, the Lender shall, on the requested date, issue a Letter
of Credit for the account of the Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the Lender's
usual and customary business practices.

     

    (iii)           If
the Borrower so requests in any applicable L/C Application, the Lender may, in
its sole and absolute discretion, agree to issue a Letter of Credit that has
automatic renewal provisions (each, an “Auto-Renewal Letter of
Credit”); provided that any
such Auto-Renewal Letter of Credit must permit (but not require) the Lender to
prevent any such renewal at least once in each twelve-month period (commencing
with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day in each such twelve-month period to
be agreed upon by Lender and Borrower at the time such Letter of Credit is
issued and which date shall be set forth in the Letter of
Credit.  Unless otherwise directed by the Lender, the Borrower shall
not be required to make a specific request to the Lender for any such
renewal.  Once an Auto-Renewal Letter of Credit has been issued, the
Lender shall, subject to the terms and conditions set forth herein, permit the
renewal of such Letter of Credit to an expiry date not later than twelve months
after the date of such renewal; provided, however, that the
Lender shall have no obligation to permit the renewal of any Auto-Renewal Letter
of Credit at any time if it has determined that it would have no obligation at
such time to issue such Letter of Credit in its renewed form under the terms
hereof (by reason of the provisions of Section 1(a)(ii) or
otherwise).

     

    (iv)           Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to an advising bank with respect thereto or to the beneficiary thereof,
the Lender will also deliver to the Borrower a true and complete copy of such
Letter of Credit or amendment.

     

    (c)           Drawings and
Reimbursements.  Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such Letter of Credit, the
Lender shall notify the Borrower thereof.  Not later than 1:00 p.m. on
the date of any payment by the Lender under a Letter of Credit (each such date,
an “Honor
Date”), the Borrower shall reimburse the Lender in an amount equal to the
amount of such drawing at the Lender’s office in Boston, Massachusetts in
immediately available funds.  If the Borrower fails to so reimburse
the Lender, the Lender shall be entitled to, without notice to or demand upon
the Borrower, debit the Cash Collateral Account in an amount equal to the amount
of such unreimbursed drawing.

     

    (d)           Obligations
Absolute.  The obligation of the Borrower to reimburse the
Lender for each drawing under each Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including the
following:

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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    (i)           any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other agreement or instrument relating thereto;

     

    (ii)           the
existence of any claim, counterclaim, set-off, defense or other right that the
Borrower or any of its Subsidiaries may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Lender or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;

     

    (iii)           any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

     

    (iv)           any
payment by the Lender under such Letter of Credit against presentation of a
draft or certificate that does not strictly comply with the terms of such Letter
of Credit; or any payment made by the Lender under such Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors;
or

     

    (v)           any
other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or any of its
Subsidiaries.

     

    The
Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will promptly, but in any event within one (1) Business Day thereof,
notify the Lender.  The Borrower shall be conclusively deemed to have
waived any such claim against the Lender and its correspondents unless such
notice is given as aforesaid.

     

    (e)           Role of
Lender.  The Borrower agrees that, in paying any drawing under
a Letter of Credit, the Lender shall not have any responsibility to obtain any
document (other than any sight draft, certificates and other documents, if any,
expressly required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.  The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the Borrower from
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement.  None of the Lender,
any of its affiliates, any of the respective officers, directors, employees,
agents or attorneys-in-fact of the Lender and its affiliates, nor any of the
respective correspondents, participants or assignees of the Lender shall be
liable or responsible for any of the matters described in clauses
(i)

     

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

        
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    through
(v) of Section 1(d); provided, however, that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against the Lender, and the Lender may be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrower which the Borrower proves were
caused by the Lender's willful misconduct or gross negligence or the Lender's
willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft, certificate(s) and other document(s), if
any, strictly complying with the terms and conditions of a Letter of
Credit.  In furtherance and not in limitation of the foregoing, the
Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the Lender shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

     

    (f)           Letter of Credit
Fees.

     

    (i)           The
Borrower shall pay to the Lender an annual Letter of Credit fee for each Letter
of Credit equal to two percent (2.00%) times the daily maximum amount available
to be drawn under such Letter of Credit (whether or not such maximum amount is
then in effect under such Letter of Credit).  Such letter of credit
fee shall be due and payable annually in advance on the date of the applicable
L/C Credit Extension and on each anniversary thereof.

     

    (ii)           The
Borrower shall pay to the Lender a commitment fee equal to one half of one
percent (0.50%) times the actual daily amount by which the Commitment exceeds
the aggregate maximum amount available to be drawn under all Letters of
Credit.  The commitment fee shall accrue at all times during the term
of this Agreement, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the
first such date to occur after the date hereof, and on the Commitment
Termination Date.

     

    The
foregoing fees shall be fully earned when paid and shall not be refundable for
any reason whatsoever.

     

    (g)           Cash
Collateral.

     

    (i)           As
a condition to the issuance of any Letter of Credit or any amendment to any
Letter of Credit which shall increase the maximum amount available to be drawn
under such Letter of Credit, the Borrower shall, prior to the issuance or
amendment thereof, deposit in the Cash Collateral Account, cash balances in an
amount equal to the maximum amount available to be drawn under such Letter of
Credit (in addition to the aggregate amount of cash collateral, if any, required
pursuant to clause (ii) below).

     

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

        
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    (ii)           The
Borrower hereby covenants and agrees that the Pledged Collateral shall at all
times be equal to or greater than the sum of the aggregate undrawn amount of all
outstanding Letters of Credit plus the aggregate
amount of all unreimbursed drawings under all Letters of Credit.  If
at any time the aggregate amount of Pledged Collateral in the Cash Collateral
Account is less than the sum of the aggregate undrawn amount of all outstanding
Letters of Credit plus the aggregate of
all unreimbursed drawings under all Letters of Credit, then the Borrower shall
immediately deposit in the Cash Collateral Account such additional cash
collateral as may be necessary to meet any shortfall in the Pledged
Collateral.  Failure to do so immediately shall constitute an
immediate and automatic Event of Default under the terms and conditions of this
Agreement.

     

    (h)           Documentary and Processing
Charges Payable to Lender.  The Borrower shall pay to the
Lender the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the Lender relating to letters of
credit as from time to time in effect.  Such customary fees and
standard costs and charges are due and payable on demand and are
nonrefundable.

     

    (i)           Letters of Credit Issued for
Subsidiaries.  Notwithstanding that a Letter of Credit issued
or outstanding hereunder is in support of any obligations of, or is for the
account of, a Subsidiary of the Borrower, the Borrower shall be named as an
account party in such Letter of Credit and shall be obligated to reimburse the
Lender hereunder for any and all drawings under such Letter of Credit and all
fees and any other costs and expenses associated therewith.  The
Borrower hereby acknowledges that the issuance of Letters of Credit for the
account of its Subsidiaries inures to the benefit of the Borrower, and that the
Borrower’s business derives substantial benefits from the businesses of such
Subsidiaries.

     

    (j)           Letter of Credit
Amounts.  All references herein to the amount of a Letter of
Credit at any time shall be deemed to mean the maximum face amount of such
Letter of Credit after giving effect to all increases thereof contemplated by
such Letter of Credit or the Letter of Credit Application therefor, whether or
not such maximum face amount is in effect at such time.

     

    (k)           Conflict with L/C
Application.  The Borrower hereby agrees that the terms and
conditions set forth in the each L/C Application are in addition to, not in
derogation of, the terms and conditions set forth in this
Agreement.  In the event of any direct conflict between the terms
hereof and the terms of any L/C Application, the terms hereof, to the extent of
any such conflict, shall control.

     

    2.           Conditions
to Effectiveness.  The effectiveness of this Agreements shall be
subject to the satisfaction on or before the date hereof of each of the
following conditions precedent:

     

    (a)           Delivery.  The
Lender shall have received all of the following, in form and substance
reasonably satisfactory to Lender:

     

    (i)           a
fully-executed and effective Agreement by the Borrower and the
Lender;

     

    (ii)           a
fully-executed and effective copy of each other Loan Document, duly executed by
the parties thereto;

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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    (iii)           a
secretary’s certificate of the Borrower, attaching and certifying as to such its
constitutive, organizational or governing documents and the resolutions adopted
by the Board of Directors of the Borrower (which resolutions shall be in form
and substance reasonably satisfactory to the Lender) approving the Loan
Documents to which the Borrower is a party, the incumbency and signatures of the
officers executing any documents or instruments in connection with the Loan
Documents to which the Borrower is a party and as to all other corporate
proceedings relating to the authorization, execution, delivery and performance
of the Loan Documents to which the Borrower is a party; and

     

    (iv)           such
other assurances, certificates, documents, consents or opinions as the Lender
reasonably may require.

     

    (b)           Fees and
Expenses.  The Borrower shall have paid to the Lender all fees
(including without limitation the Upfront Fee referred to below) and expenses
(including, without limitation, the reasonable attorneys' fees of outside
counsel to the Lender) incurred by the Lender in connection with this Agreement,
the other Loan Documents and all other documents which may be executed and or
delivered in connection the foregoing on or prior to the date
hereof.

     

    (c)           Upfront
Fee.  The Borrowers shall have paid to the Lender a fee in an
amount equal to $25,000 (the “Upfront Fee”), which
Upfront Fee shall be fully earned, payable in cash on the effective date of this
Agreement, and shall be non-refundable.

     

    
      	
              3.

            	
              Events
      of Default.  The following are “Events of
      Default:”

            

    

     

    (a)           The
Borrower fails to pay any Letter of Credit fee, any commitment fee, or any
charges, fees or expenses of the Lender due hereunder within five days after the
date when due; or

     

    (b)           The
Lender’s security interest in any Pledged Collateral shall cease to be a first
priority perfected security interest; or this Agreement or any other Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or the satisfaction in full
of all the obligations of the Borrower hereunder and thereunder, ceases to be in
full force and effect; or the Borrower or any other Person contests in any
manner the validity or enforceability of this Agreement or any other Loan
Document; or the Borrower denies that it has any or further liability or
obligation under this Agreement or any other Loan Document, or purports to
revoke, terminate or rescind this Agreement or any other Loan Document;
or

     

    (c)           The
Borrower generally discontinues its business operations or sells or otherwise
disposes of all or substantially all of its assets; or

     

    (d)           The
Borrower admits in writing that it is generally unable to pay debts as they
mature or become due; or

     

    (e)           The
Borrower makes a general assignment for the benefit of creditors;
or

     

    (f)           The
commencement of a proceeding by or against the Borrower under the federal
bankruptcy code, or any other federal or state laws seeking to adjudicate the
Borrower as bankrupt or insolvent, or

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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    seeking
the liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of the Borrower or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, debtor in possession,
examiner or other similar official for the Borrower, the Pledged Collateral or
any substantial part of the Borrower's property, with or without consent, for
any purpose whatsoever and, in the case of any such proceeding instituted
against the Borrower (but not instituted by it), such proceeding shall remain
unstayed and undismissed for a period of sixty (60) days; or any of the
following actions sought in such proceeding shall occur: the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, the Borrower, the Pledged Collateral or for any
substantial part of its property; or

     

    (g)           Any
of the Pledged Collateral is taken by attachment, execution or any other form of
legal process; or

     

    (h)           The
Borrower’s failure to comply with the covenants set forth in Section 1(g)(ii) of
this Agreement.

     

    Upon the
occurrence of an Event of Default, the Lender may declare its commitment to
issue, amend or renew Letters of Credit to be terminated, whereupon such
commitment shall be terminated, and/or declare all sums outstanding hereunder to
be immediately due and payable, whereupon the same shall become and be
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character, all of which are hereby expressly waived;
provided, however, that upon
the occurrence of an actual or deemed entry of an order for relief with respect
to the Borrower under the Bankruptcy Code of the United States of America, the
commitment of the Lender hereunder shall automatically terminate, and all sums
outstanding hereunder shall become and be immediately due and payable, without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind or character,
all of which are hereby expressly waived.

     

    
      	
              4.

            	
              Extension
      of Commitment Termination Date.

            

    

     

    (a)           Not
earlier than 60 days prior to, nor later than 45 days prior to, each anniversary
of the date hereof, the Borrower may, upon notice to the Lender, request a
one-year extension of the Commitment Termination Date then in
effect.  Within 30 days of delivery of such notice, the Lender shall
notify the Borrower whether or not it consents to such extension (which consent
may be given or withheld in the Lender’s sole and absolute
discretion).  If the Lender fails to respond within the above time
period, it shall be deemed not to have consented to such extension.

     

    (b)           If
the Lender consents to such extension, the Commitment Termination Date shall be
extended to the same date in the following year, effective as of the Commitment
Termination Date then in effect (such existing Commitment Termination Date being
the “Extension
Effective Date”).  As a condition precedent to such extension,
the Borrower shall deliver to the Lender a certificate of the Borrower dated as
of the Extension Effective Date signed by an authorized officer of the Borrower
(i) certifying and attaching the resolutions adopted by the Borrower approving
or consenting to such extension and (ii) certifying that, before and after
giving effect to such extension, no Event of Default exists.

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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              5.

            	
              Payments;
      Overdue Amounts.

            

    

     

    (a)           Payments.  All
reimbursements of drawings under any Letter of Credit and payments of interest,
fees, expenses and any other amounts due hereunder or under any of the other
Loan Documents shall be made on the due date thereof to the Lender in U.S.
Dollars, at the Lender’s office in Boston, Massachusetts or at such other place
that the Lender may from time to time designate, in each case at or about 1:00
p.m. (Boston, Massachusetts, time or other local time at the place of payment)
and in immediately available funds. The Lender may, without notice to or demand
upon the Borrower, debit the Cash Collateral Account in payment of all amounts
not paid when due hereunder.

     

    (b)           No Offset,
Counterclaims.  All payments by the Borrower hereunder and
under any of the other Loan Documents shall be made without recoupment, setoff
or counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, compulsory
loans, restrictions or conditions of any nature now or hereafter imposed or
levied by any jurisdiction or any political subdivision thereof or taxing or
other authority therein unless the Borrower is compelled by law to make such
deduction or withholding.  If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any of the
other Loan Documents, the Borrower will pay to the Lender, on the date on which
such amount is due and payable hereunder or under such other Loan Document, such
additional amount in U.S. Dollars as shall be necessary to enable the Lender to
receive the same net amount which the Lender would have received on such due
date had no such obligation been imposed upon the Borrower.  The
Borrower will deliver promptly to the Lender certificates  or other
valid vouchers for all taxes or other charges deducted from or paid with respect
to payments made by the Borrower hereunder or under such other Loan
Document.

     

    (c)           Overdue
Amounts.  All overdue amounts payable hereunder or under any of
the other Loan Documents, including, without limitation, overdue fees, shall
bear interest compounded monthly and payable on demand at the rate per annum
equal to the Lender’s prime rate as in effect from time to time plus four percent
(4.00%).

     

    6.           Increased
Costs; Capital Adequacy.  If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by the
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the date hereof, from any central bank or other
governmental authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by Lender
and thereby reducing the rate of return on Lender’s capital as a consequence of
its obligations hereunder, then the Borrower shall from time to time upon demand
by the Lender pay to the Lender additional amounts sufficient to compensate the
Lender for such reduction.  A certificate as to the amount of that
reduction and showing the basis of the computation thereof submitted by the
Lender to the Borrower shall be presumptive evidence of the matters set forth
therein.  The agreements in this Section 6 shall survive the
termination of the Commitment and repayment, satisfaction or discharge of all
other obligations under the Loan Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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    7.           Miscellaneous.

     

    (a)           Except
as otherwise expressly provided in this Agreement or the other Loan Documents,
all notices and other communications made or required to be given pursuant to
this Agreement or the other Loan Documents shall be in writing and shall be
delivered by hand, mailed by registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by facsimile and confirmed by
delivery via courier or postal service, addressed as follows:

     

    (i)           if
to the Borrower, at 10050 Cross Town Circle, Eden Prairie,
Minnesota  55344, Attention:  Stanley G. Rosenbaum,
Telecopier No.  __________; with a copy to BioScrip, Inc.
at 100 Clearbrook Road, Elmsford, New York  10523, Attention: General
Counsel, Telecopier No. 914-460-1670, or, in each case, at such other addresses
for notice as the Borrower shall have furnished in writing to the
Lender;

     

    (ii)           if
to the Lender, at Bank of America, N.A., 100 Federal Street,
MA5-100-07-08,Boston, Massachusetts 02110, Attention:  Linda E.C.
Alto, Telecopier No.  617-434-3552; with a copy to Bingham
McCutchen LLP, One Federal Street, Boston, Massachusetts 02110, Attention: Linda
J. Groves, Telecopier No:  617-951-8736, or, in each case, such other
address for notice as the Lender shall have last furnished in writing to the
Borrower.

     

    Any such
notice or demand shall be deemed to have been duly given or made and to have
become effective (i) if delivered by hand, overnight courier or facsimile to a
responsible officer of the party to which it is directed, at the time of receipt
thereof by such officer or the sending of such facsimile and (ii) if sent by
registered or certified first-class mail, postage prepaid, on the third Business
Day following the mailing thereof.

     

    (b)           This
Agreement shall inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign its rights and
obligations hereunder.  The Lender may at any time (i) assign all or
any part of its rights and obligations hereunder to any other Person with the
consent of the Borrower, such consent not to be unreasonably withheld, provided that no such
consent shall be required if the assignment is to an affiliate of the Lender or
if an Event of Default exists, and (ii) grant to any other Person participating
interests in all or part of its rights and obligations hereunder without notice
to the Borrower.  The Borrower agrees to execute any documents
reasonably requested by the Lender in connection with any such
assignment.  All information provided by or on behalf of the Borrower
to the Lender or its affiliates may be furnished by the Lender to its affiliates
and to any actual or proposed assignee or participant.

     

    (c)           The
Borrower shall pay the Lender, on demand, all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees of outside counsel or the
allocated costs of in-house counsel) incurred or paid in connection with the
preparation, interpretation or enforcement of this Agreement or any instruments
or agreements executed in connection herewith.  The agreements in this
Section 7(c) shall survive the termination of the Commitment and repayment,
satisfaction or discharge of all other obligations under the Loan
Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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    (d)           Whether
or not the transactions contemplated hereby are consummated, the Borrower shall
indemnify and hold harmless the Lender, its affiliates, and their respective
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from
and against any and all liabilities, obligations, losses, damages, penalties,
claims, demands, actions, judgments, suits, costs, expenses and disbursements of
any kind or nature whatsoever which may at any time be imposed on, incurred by
or asserted against any such Indemnitee in any way relating to or arising out of
or in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) the Commitment, any
Letter of Credit or the use or proposed use of the proceeds therefrom (including
any refusal by the Lender to honor a demand for payment under a Letter of Credit
if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), or (c) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any investigation
of, preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.  No
Indemnitee shall have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the date
hereof).  All amounts due under this Section 7(d) shall be payable
within ten Business Days after demand therefor.  The agreements in
this Section shall survive the termination of the Commitment and the repayment,
satisfaction or discharge of all the other obligations under the Loan
Documents.

     

    (e)           If
any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (i) the legality, validity and enforceability
of the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby and (ii) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     

    (f)           The
Borrower will cooperate with the Lender and execute such further instruments and
documents as the Lender shall reasonably request to carry out to the
transactions contemplated by this Agreement and the other Loan
Documents.

     

    (g)           This
Agreement may be executed in one or more counterparts, and each counterpart,
when so executed, shall be deemed an original but all such counterparts shall
constitute but one and the same instrument.  Delivery of a signature
page to this Agreement by telecopy or other electronic means shall be effective
as delivery of a manually executed counterpart of such signature
page.

     

    
      
         

      

      
         

        
          

        

      

      
         

        
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    (h)           This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.

     

    (i)           The
Lender hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)) (the
“Act”), the
Lender is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow the Lender to identify the Borrower in
accordance with the Act.

     

    Please
indicate your acceptance of the Commitment on the foregoing terms and conditions
by returning an executed copy of this Agreement to the undersigned not later
than July 8, 2009.

     

     

    BANK OF
AMERICA, N.A.

     

    

     

    By:
____________________________________

    Name:

    Title:

     

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          BioScrip,
Inc.

          July
8, 2009

          Page
13

          

          

        

      

    

    Accepted
and Agreed to as of the date first written above:

     

    BIOSCRIP,
INC.

     

     

    By:
____________________________________

          
Name

          
Title:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    DEFINITIONS

     

    
      
        
          	
                  Business
      Day:

                	
                  Any
      day other than a Saturday, Sunday, or other day on which commercial banks
      are authorized to close under the laws of, or are in fact closed in, the
      Commonwealth of Massachusetts.

                
	
                  Cash
      Collateral Agreement:

                	
                  That
      certain Cash Collateral Agreement re Standby Letters of Credit, in
      substantially the form attached hereto as Exhibit C.

                
	
                  Commitment:

                	
                  The
      obligation of the Lender to make L/C Credit Extensions hereunder in an
      aggregate principal amount at any one time not to exceed
      $5,000,000.

                
	
                  Commitment
      Termination Date:

                	
                  The
      later of (a) July 8, 2010 and (b) if the commitment is extended pursuant
      to Section 4, such extended commitment termination date as determined
      pursuant to such Section.

                
	
                  HFG
      Waiver:

                	
                  That
      certain Waiver of Security Interests, in substantially the form attached
      hereto as Exhibit
  D.

                
	
                  L/C
      Credit Extension

                	
                  With
      respect to any Letter of Credit, the issuance thereof or extension of the
      expiry date thereof, or the renewal or increase of the amount
      thereof.

                
	
                  Letter
      of Credit:

                	
                  Any
      standby letter of credit issued hereunder.

                
	
                  Loan
      Documents:

                	
                  This
      Agreement, the Cash Collateral Agreement, the HFG Waiver, each L/C
      Application and each other document executed and or delivered in
      connection herewith or therewith.

                
	
                  Person:

                	
                  Any
      natural person, corporation, limited liability company, trust, joint
      venture, association, company, partnership, governmental authority or
      other entity.

                
	
                  Pledged
      Collateral:

                	
                  All
      amounts and other property from time to time credited to the Cash
      Collateral Account or on deposit or held therein (including, without
      limitation, all cash, and all money market and similar instruments on
      deposit therein), and all dividends, distributions, income, interest and
      all proceeds of the foregoing whether now existing or hereafter
      arising

                
	
                  Subsidiary:

                	
                  With
      respect to the Borrower, a corporation, partnership, joint venture,
      limited liability company or other business entity of which all of the
      shares of securities or other interests having ordinary voting power for
      the election of directors or other governing body (other than securities
      or interests having such power only by reason of the happening of a
      contingency) are at the time beneficially owned, and the management of
      which is otherwise controlled, directly, or indirectly through one or more
      intermediaries, or both, by the
Borrower.

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