UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )



 
Filed by the Registrant x
Filed by a Party other than the Registrant o

Check the appropriate box:

x Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12

BioScrip, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:


 
 

[GRAPHIC MISSING]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 2, 2017

To the Stockholders of BioScrip, Inc.:

Notice is hereby given that the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) of BioScrip, Inc., a Delaware corporation (the “Company”), will be held at the Company’s principal executive offices at 1600 Broadway, Suite 700, Denver, Colorado, 80202 on Tuesday, May 2, 2016 at 12:00 p.m., local time, for the following purposes:

1. To elect seven directors named in the accompanying proxy statement, each to hold office for a term of one year or until their respective successors have been duly elected and qualified.

2. To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.

3. To approve the Company’s Tax Asset Protection Plan.

4. To hold a non-binding advisory vote to approve executive compensation.

5. To hold a non-binding advisory vote on the frequency of future non-binding advisory votes on executive compensation.

6. To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on March 15, 2017 as the record date for determining holders of the Company’s Common Stock, Series A Preferred Stock and Series C Preferred Stock entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.

All stockholders are cordially invited to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting in person, however, please mark, sign, date and mail the enclosed proxy card as promptly as possible in the enclosed postage-prepaid envelope to ensure your representation and the presence of a quorum at the Annual Meeting. Alternatively, you may vote by toll-free telephone call or electronically via the Internet by following the instructions on the enclosed proxy card. If you send in your proxy card, vote by telephone or via the Internet and then decide to attend the Annual Meeting to vote your shares in person, you may still do so. Your proxy is revocable as set forth in the Proxy Statement.

By order of the Board of Directors,
 
Kathryn M. Stalmack, Secretary

Denver, Colorado
March [  ], 2017

Important notice regarding availability of proxy materials for the Annual Meeting of Stockholders to be held on May 2, 2017: This Proxy Statement, Proxy Card and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 7, 2017, are also available at www.proxyvote.com.


 
 

BIOSCRIP, INC.
1600 Broadway, Suite 700
Denver, Colorado 80202
(720) 697-5200

PROXY STATEMENT

Meeting Time and Date

This Proxy Statement is being furnished to the stockholders of BioScrip, Inc., a Delaware corporation (the “Company”), in connection with the solicitation by the Company’s Board of Directors (the “Board”) of proxies in the enclosed form for use in voting at the Company’s 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Tuesday, May 2, 2017 at 12:00 p.m., local time, at the Company’s principal executive offices at 1600 Broadway, Suite 700, Denver, Colorado, 80202 and at any adjournments or postponements thereof. The shares of the Company’s common stock, par value $.0001 per share (the “Common Stock”), shares of Series A Convertible Preferred Stock, par value $.0001 per share, on an as-converted into Common Stock basis (the “Series A Preferred Stock”) and shares of Series C Convertible Preferred Stock, par value $.001 per shares, on an as-converted to Common Stock basis (the “Series C Preferred Stock” and collectively with the Series A Preferred Stock, the “Preferred Stock”), represented by the proxies received, properly marked, dated, executed and not revoked will be voted at the Annual Meeting.

The Notice of Annual Meeting, this Proxy Statement and the accompanying proxy card are being mailed and made available electronically to stockholders on or about March [  ], 2017. This Proxy Statement identifies the proposals on which you are being asked to vote at the Annual Meeting, provides information that you may find useful in determining how to vote on each proposal and describes voting procedures.

Record Date and Shares Outstanding

The close of business on March 15, 2017 (the “Record Date”) has been fixed as the record date for determining holders of the Company’s Common Stock and Preferred Stock entitled to notice of and to vote at the Annual Meeting. As of the close of business on the Record Date, the Company had outstanding 117,682,543 shares of Common Stock, 21,645 shares of Series A Preferred Stock (representing 515,239 shares of Common Stock on an as-converted into Common Stock basis, with 10,823 shares of Series A Preferred Stock convertible into 263,310 shares of Common Stock, and another 10,822 shares of Series A Preferred Stock each convertible into 251,929 shares of Common Stock), and 614,177 shares of Series C Preferred Stock (representing 14,942,260 shares of Common Stock on an as-converted into Common Stock basis).

Board Recommendations

The Board recommends that you vote your shares as follows:

FOR the election of the seven nominees for director named in Proposal 1, each to hold office for a term of one year or until their respective successors have been duly elected and qualified;
FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017, as set forth in Proposal 2;
FOR the approval of the Company’s Tax Asset Protection Plan, as set forth in Proposal 3;
FOR the non-binding advisory approval of executive compensation, as set forth in Proposal 4.
FOR EVERY YEAR for the non-binding advisory vote on the frequency of future non-binding advisory votes to approve executive compensation, as set forth in Proposal 5.

Voting Information

Each stockholder entitled to vote at the Annual Meeting may cast one vote in person or by proxy for each share of Common Stock and Preferred Stock (on an as-converted into Common Stock basis) held by such stockholder. Each stockholder may appoint only one proxy holder or representative to attend the meeting on his or her behalf. Holders of shares of Preferred Stock are entitled to vote with the holders of shares of Common Stock on an as-converted basis. Unless specified otherwise, references in this Proxy Statement to a

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“stockholder” or “stockholders” are references to both holders of Common Stock and Preferred Stock (on an as-converted into Common Stock basis). To vote in person, a stockholder should attend the Annual Meeting with a completed proxy card or, alternatively, the Company will give you a ballot to complete upon arrival at the Annual Meeting. To vote by mail using a proxy card, a stockholder should mark, sign, date and mail the enclosed proxy card as promptly as possible in the enclosed postage-prepaid envelope. To vote by telephone, dial toll-free (800) 690-6903 and follow the recorded instructions. To vote via the Internet, a stockholder must go to www.proxyvote.com and complete an electronic proxy card. When voting over the telephone or via the Internet, a stockholder will be asked to provide the company number and account number contained on the enclosed proxy card.

“Street Name” and Broker Non-Votes

If you hold shares through a brokerage firm, bank, dealer or other nominee (which we refer to collectively as “nominees” or “brokers”), then you are a holder of shares in “street name.” If you hold your shares beneficially in “street name,” you must review the voting form and follow the voting instructions you receive from your broker. If you hold shares in street name and do not provide your broker with voting instructions, your shares may constitute broker “non-votes,” which occur when a broker is not permitted to vote on that matter without instructions from the beneficial owner and such instructions are not given. Matters on which brokers are not permitted to vote without instructions from the beneficial owner are referred to as “non-routine” matters.

All of the matters scheduled to be voted on at the Annual Meeting are likely to be considered “non-routine,” except for the proposal to ratify the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017 (Proposal 2). If you do not provide voting instructions to your broker, your shares will not be voted or counted towards any of the proposals other than Proposal 2. Thus, if you hold shares in street name, it is particularly important that you instruct your broker on how you wish to vote your shares.

Quorum Requirements

Votes cast by proxy or in person at the Annual Meeting will be tabulated by the Inspector of Election, who will also determine whether a quorum is present. A quorum requires the presence, in person or by proxy, of the holders of a majority of the aggregate shares of Common Stock (inclusive of the Preferred Stock on an as-converted into Common Stock basis) issued and outstanding and entitled to vote at the Annual Meeting. In accordance with the Certificate of Designations filed by the Company with the Secretary of State of the State of Delaware on March 9, 2015 (the “Series A Certificate of Designations”) and the Certificate of Designations filed by the Company with the Secretary of State of the State of Delaware on June 14, 2016 (the “Series C Certificate of Designations”), the shares of Common Stock into which shares of Series A Preferred Stock and Series C Preferred Stock are convertible will be counted for purposes of establishing a quorum at the Annual Meeting. Abstentions are counted as present and entitled to vote for purposes of determining whether a quorum exists. Broker “non-votes” are counted as present solely for purposes of determining whether a quorum exists. If the stockholders present in person or by proxy at the Annual Meeting constitute holders of less than a majority of the aggregate shares of Common Stock entitled to vote (which includes the Preferred Stock on an as-converted into Common Stock basis), the Annual Meeting may be adjourned to a subsequent date for the purpose of obtaining a quorum.

Votes Required

Proposal 1:  Election of Directors

The seven nominees receiving the greatest number of affirmative votes duly cast at the Annual Meeting will be elected to the Board, assuming a quorum is represented at the Annual Meeting. The shares of Preferred Stock (on an as-converted into Common Stock basis) will, pursuant to the Series A Certificate of Designations and Series C Certificate of Designations, be eligible to vote for the seven nominees. Proxies cannot be voted for a greater number of persons than the number of nominees. Votes to withhold and broker “non-votes” will not affect the outcome of the vote on Proposal 1.

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Proposal 2:  Ratification of the Appointment of the Independent Registered Public Accounting Firm

Approval of the ratification of the appointment of KPMG LLP requires the affirmative vote of the holders of a majority of the aggregate shares of Common Stock (inclusive of the Preferred Stock on an as-converted into Common Stock basis) that have voting power represented in person or by proxy and entitled to vote on the matter at the Annual Meeting. Abstentions will be counted as shares present and entitled to vote and therefore will have the same effect as a vote against Proposal 2. There should not be any broker “non-votes” on Proposal 2 because it will likely be deemed a “routine” matter upon which brokers may vote without specific direction from holders of shares in “street name.”

Proposal 3:  Approval of the Company’s Tax Asset Protection Plan

Approval of the Company’s Tax Asset Protection Plan requires the affirmative vote of the holders of a majority of the aggregate shares of Common Stock (inclusive of the Preferred Stock on an as-converted into Common Stock basis) that have voting power represented in person or by proxy and entitled to vote on the matter at the Annual Meeting. Abstentions will be counted as shares present and entitled to vote and therefore will have the same effect as a vote against Proposal 3. Broker “non-votes” will not be deemed represented at the Annual Meeting for purposes of voting on Proposal 3 and, therefore, will have no effect on Proposal 3.

Proposal 4:  Non-Binding Advisory Approval of Executive Compensation

The affirmative vote of the holders of a majority of the aggregate shares of Common Stock (inclusive of the Preferred Stock on an as-converted into Common Stock basis) having voting power represented in person or by proxy and entitled to vote on the matter at the Annual Meeting will constitute the stockholders’ non-binding approval with respect to executive compensation. Although the results will not be binding on the Board’s Management Development and Compensation Committee (the “Compensation Committee”), the Board will consider the results of the stockholder vote when making future decisions regarding executive compensation. Abstentions will be counted as shares present and entitled to vote and therefore will have the same effect as a vote against Proposal 4. Broker “non-votes” will not be deemed represented at the Annual Meeting for purposes of voting on Proposal 4 and, therefore, will have no effect on Proposal 4.

Proposal 5:  Non-Binding Advisory Vote on the Frequency of Future Advisory Votes to Approve the Compensation Paid to the Company’s Named Executive Officers

The affirmative vote of the holders of a majority of the aggregate shares of Common Stock (inclusive of the Preferred Stock on an as-converted into Common Stock basis) having voting power represented in person or by proxy and entitled to vote on the matter at the Annual Meeting will constitute the stockholders’ non-binding approval with respect to the frequency of future advisory votes on executive compensation. If none of the frequency alternatives receives the vote of such a majority, the Board will consider the frequency option receiving the greatest number of votes cast as the stockholders’ preference with respect to this non-binding proposal. Although the results will not be binding on the Compensation Committee, the Board will consider the results of the stockholder vote when making future decisions regarding the frequency of advisory votes on executive compensation. Abstentions will be counted as shares present and entitled to vote and therefore will have the same effect as a vote against all of the frequency alternatives in Proposal 5. Broker “non-votes” will not be deemed represented at the Annual Meeting for purposes of voting on Proposal 5 and, therefore, will have no effect on Proposal 5.

Proxies in the enclosed form that are properly executed, duly returned to the Company and not revoked, or proxies that are submitted by telephone or via the Internet and not revoked, will be voted in accordance with the instructions contained therein. No proposal is currently expected to be considered at the Annual Meeting other than the proposals set forth in the accompanying Notice of Annual Meeting. If any other proposals are properly brought before the Annual Meeting for action, your proxy, together with the other proxies received, will be voted at the discretion of the proxy holders designated on the enclosed proxy card. It is the intention of the persons named in the enclosed proxy card to vote in accordance with their best judgment on any such matter. If, as a stockholder of record, you execute and duly return your proxy but do not specify how your shares are to be voted, the proxies will vote your shares FOR each of the nominees identified in Proposal 1 and FOR Proposals 2, 3 and 4, and for “Every Year” on the frequency of future advisory votes on executive compensation in Proposal 5.

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Solicitation of Proxies

The solicitation of proxies will be conducted primarily by mail, and the Company will bear all associated costs of the solicitation process. These costs include the expenses of preparing and mailing proxy solicitation materials for the Annual Meeting and reimbursements paid to brokerage firms and others for their expenses incurred in forwarding such materials to beneficial owners of shares of Common Stock and Preferred Stock. The Company may conduct further solicitations personally, telephonically or by facsimile through its officers, directors and employees, none of whom will receive additional compensation for assisting with any such solicitations.

Revocation of Proxies

The presence of a stockholder at the Annual Meeting will not, by itself, revoke such stockholder’s proxy. But a proxy may be revoked at any time before it is voted.

Stockholders of Record.  If you are a stockholder of record, you may revoke your proxy card (i) by delivering to the Secretary of the Company (at the principal executive offices of the Company) a written notice of revocation, (ii) by executing and delivering a later dated proxy or (iii) by attending the Annual Meeting and voting in person. The presence of a stockholder at the Annual Meeting will not, by itself, revoke that stockholder’s proxy; the stockholder must also vote at the Annual Meeting. Stockholders voting by telephone or via the Internet may also revoke their proxy (i) by attending the Annual Meeting and voting in person, (ii) by submitting the proxy in accordance with the instructions thereon, or (iii) by voting again, at a later time, by telephone or via the Internet (a stockholder’s latest telephone or Internet vote, as applicable, will be counted and all earlier votes will be disregarded). A stockholder will not be able to revoke his or her proxy or change his or her vote as to any proposal or proposals on which voting has been completed.

Beneficial Owners.  If you are a beneficial owner, you will need to revoke or resubmit your proxy through your broker and in accordance with its procedures. In order to attend the Annual Meeting and vote in person, you will need to obtain a proxy from your broker, the stockholder of record.

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SECURITY OWNERSHIP BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 15, 2017, certain information concerning the beneficial ownership of Common Stock of (i) each person who is a director of the Company and each director nominee; (ii) each named executive officer of the Company; and (iii) all directors and executive officers of the Company as a group. In addition, the following table sets forth certain information as of the dates indicated concerning persons known by the Company to beneficially own more than five percent of the Common Stock. To the Company’s knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name.

     
Name and Address of Beneficial Owner(1)   Footnote   Number of
Shares
Beneficially
Owned(2)
  Percent of
Class(2)
Holders of 5% or more of our common stock
(excluding Directors and Named Executive Officers)

                          
Coliseum Capital Management, LLC
One Station Place, 7th Floor
South Stamford, CT 06902
    (3 )      24,427,980       17.5 % 
GAMCO Investors, Inc.
One Corporate Center
Rye, NY 10580
    (4 )      14,224,865       11.8 % 
Camber Capital Management LLC
Stephen DuBois
101 Huntington Ave, Suite 2101
Boston, MA 02199
    (5 )      10,180,000       8.4 % 
Venor Capital Management LP
7 Times Square, Suite 4303
New York, NY 10036
    (6 )      9,595,781       7.9 % 
North Tide Capital Master, LP
500 Boylston Street, Suite 1860
Boston, Massachusetts 02116
    (7 )      8,500,000       7.0 % 
Ardsley Advisors Partners
Philip J. Hempleman 262 Harbor Drive,
4th Floor Stamford, CT 06902
    (8 )      6,350,000       5.2 % 
Directors, Nominees and Named Executive Officers
                          
Christopher S. Shackelton     (9 )      24,427,980       17.5 % 
Richard M. Smith     (10 )      1,645,000       1.3 % 
David Evans     (11 )      427,873      
Brian Stiver     (12 )      327,500      
J. Christian Luthin     (13 )      263,802      
Jeffrey M. Kreger     (14 )      155,962      
Michael G. Bronfein     (15 )      107,000      
R. Carter Pate     (16 )      84,000      
David W. Golding     (17 )      69,500      
Michael Goldstein     (18 )      55,500      
Tricia H. Nguyen     (19 )      40,000      
Britt Jeffcoat     (20 )      30,001      
Dan Greenleaf           16,000      
Alex Schott                  
Steven Neumann                  
All Directors and Executive Officers as a group (14 persons)     (21 )      985,836       0.8 % 

* Percentage is less than 1% of class.

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(1) Except as otherwise indicated, all addresses are c/o BioScrip, Inc., 1600 Broadway, Suite 950, Denver, Colorado, 80202.
(2) The inclusion in this table of any shares of Common Stock as “beneficially owned” does not constitute an admission by the holder of beneficial ownership of those shares. Beneficial ownership is determined in accordance with the rules promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”), and generally includes voting or investment power over securities. Shares of Common Stock subject to options, warrants or other securities convertible into Common Stock that are currently exercisable or convertible, or exercisable or convertible within sixty 60 days of March 15, 2017, are deemed outstanding for computing the percentage of the person holding the option, warrant or convertible security but are not deemed outstanding for computing the percentage of any other person.
(3) Based on the Schedule 13D/A filed with the SEC on June 22, 2016 by (i) Coliseum Capital Management, LLC (“Coliseum”), which beneficially owns 5,622,410 shares of Common Stock, 10,823 shares of Series A Preferred Stock, 614,177 shares of Series C Preferred Stock, 1,800,000 Class A Warrants and 1,800,000 Class B Warrants for which it has shared voting and shared dispositive power; (ii) Coliseum Capital, LLC (“CC”), which beneficially owns 4,312,256 shares of Common Stock, 8,338 shares of Series A Preferred Stock, 473,175 shares of Series C Preferred Stock, 1,386,757 Class A Warrants and 1,386,757 Class B Warrants for which it has shared voting and shared dispositive power; (iii) Coliseum Capital Partners, L.P. (“CCP”), which beneficially owns 3,498,690 shares of Common Stock, 6,813 shares of Series A Preferred Stock, 386,655 shares of Series C Preferred Stock, 1,133,188 Class A Warrants and 1,133,188 Class B Warrants for which it has shared voting and shared dispositive power; (iv) Coliseum Capital Partners II, L.P. (“CCP II”), which beneficially owns 813,566 shares of Common Stock, 1,525 shares of Series A Preferred Stock, 86,520 shares of Series C Preferred Stock, 253,569 Class A Warrants and 253,569 Class B Warrants for which it has shared voting and shared dispositive power; (v) Adam Gray, as a manager of Coliseum and CC, who beneficially owns 5,622,410 shares of Common Stock, 10,823 shares of Series A Preferred Stock, 614,177 shares of Series C Preferred Stock, 1,800,000 Class A Warrants and 1,800,000 Class B Warrants for which he has shared voting and shared dispositive power; and (vi) Christopher S. Shackelton, as Managing Partner of Coliseum and CC, who beneficially owns 5,622,410 shares of Common Stock, 10,823 shares of Series A Preferred Stock, 614,177 shares of Series C Preferred Stock, 1,800,000 Class A Warrants and 1,800,000 Class B Warrants for which he has shared voting and shared dispositive power. Assumes full conversion, based on the liquidation value as of March 15, 2017, of 10,823 shares of Series A Preferred Stock into 263,310 shares of Common Stock, 614,177 shares of Series C Preferred Stock into 14,942,260 shares of Common Stock, plus full exercise of 1,800,000 Class A warrants and 1,800,000 Class B warrants to acquire an aggregate of 3,600,000 shares of Common Stock.
(4) Based on a Schedule 13D/A filed with the SEC on March 8, 2017 by (i) Gabelli Funds, LLC (“Gabelli Funds”), which beneficially owns 12,335,314 shares for which it has sole voting power and sole dispositive power; (ii) GAMCO Asset Management Inc., which beneficially owns 937,251 shares for which it has sole voting power over 827,251 shares and sole dispositive power over 937,251 shares; (iii) Teton Advisors, Inc., which beneficially owns 950,000 shares for which it has sole voting power and sole dispositive power; (iv) GAMCO Investors, Inc., which beneficially owns 2,300 shares for which it has sole voting power and sole dispositive power; (v) GGCP, Inc.; (vi) Associated Capital Group, Inc.; and (vii) Mario J. Gabelli (collectively, the “GAMCO Reporting Persons”), who is deemed to have beneficial ownership of the shares owned beneficially by each of the other GAMCO Reporting Persons. Gabelli Funds has sole dispositive and voting power with respect to the shares held by a number of investment funds for which Gabelli Funds serves as an investment adviser (the “Funds”) so long as the aggregate voting interest of all joint filers does not exceed 25% of their total voting interest in the Company and, in that event, the Proxy Voting Committee of each Fund shall respectively vote that Fund’s shares, and at any time, the Proxy Voting Committee of each Fund may take and exercise in its sole discretion the entire voting power with respect to the shares held by such Fund under special circumstances such as regulatory considerations.
(5) Based on a Schedule 13G/A filed with the SEC on February 14, 2017 by Camber Capital Management LLC and Stephen DuBois reporting that they beneficially own 10,810,000 shares for which they have shared voting power and shared dispositive power.
(6) Based on (1) a Schedule 13G filed with the SEC on February 13, 2017 by (i) Venor Capital Management LP, which beneficially owns 6,295,781 shares, for which it has shared voting power and

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shared dispositive power; (ii) Venor Capital Management GP LLC, which beneficially owns 6,295,781 shares, for which it has shared voting power and shared dispositive power; (iii) Jeffrey A. Bersh, who beneficially owns 6,295,781 shares, for which he has shared voting power and shared dispositive power; and (iv) Michael J. Wartell, who beneficially owns 6,295,781 shares, for which he has shared voting power and shared dispositive power; and (2) the Form 8-K disclosing the Company’s entry into a Stock Purchase Agreement between the Company and Venor Capital Management LP and affiliated funds (the “Purchasers”) filed with the SEC on March 2, 2017 pursuant to which the Company sold an aggregate of 3,300,000 shares of its common stock to the Purchasers.
(7) Based on a Schedule 13G/A filed with the SEC on February 14, 2017 by (i) North Tide Capital Master, LP, which beneficially owns 6,750,000 shares, for which it has shared voting power and shared dispositive power; (ii) North Tide Capital, LLC, which beneficially owns 8,500,000 shares, for which it has shared voting power and shared dispositive power; and (iii) Conan Laughlin, who beneficially owns 8,500,000 shares, for which he has shared voting power and shared dispositive power. North Tide Capital, LLC serves as investment manager to both the North Tide Capital Master, LP and a managed account client.
(8) Based on a Schedule 13G/A filed with the SEC on February 14, 2017 by (i) Ardsley Partners Fund II, L.P., which beneficially owns 2,099,400 shares for which it has shared voting power and shared dispositive power; (ii) Ardsley Partners Institutional Fund, L.P., which beneficially owns 2,461,000 shares for which it has shared voting power and shared dispositive power; (iii) Ardsley Duckdive Fund, L.P., which beneficially owns 200,000 shares for which it has shared voting power and shared dispositive power; (iv) Ardsley Partners Advanced Healthcare Fund, L.P., which beneficially owns 1,439,600 shares for which it has shared voting power and shared dispositive power; (v) Ardsley Healthcare Fund, L.P., which beneficially owns 100,000 shares for which it has shared voting power and shared dispositive power; (vi) Ardsley Ridgecrest Partners Fund, L.P., which beneficially owns 50,000 shares for which it has shared voting power and shared dispositive power; (vii) Ardsley Advisory Partners, which beneficially owns 6,350,000 shares for which it has shared voting power and shared dispositive power; (viii) Ardsley Partners I, which beneficially owns 6,050,000 shares for which it has shared voting power and shared dispositive power; and (ix) Philip J. Hempleman, who beneficially owns 6,350,000 shares for which he has shared voting power and shared dispositive power.
(9) Includes 263,310 shares of Common Stock issuable upon conversion of 10,823 shares of Series A Preferred Stock, 14,942,260 shares of Common Stock issuable upon conversion of 614,177 shares of Series C Preferred Stock and the full exercise of 1,800,000 Class A warrants and 1,800,000 Class B warrants owned by Coliseum. Mr. Shackelton, as the Managing Partner of Coliseum, is deemed to beneficially own all 24,427,980 shares of Common Stock, of which he has shared voting and shared dispositive power for such shares.
(10) Includes 1,605,000 shares issuable upon exercise of options held by Mr. Smith.
(11) Includes 423,334 shares issuable upon exercise of options held by Mr. Evans.
(12) Includes 277,500 shares issuable upon exercise of options held by Mr. Stiver.
(13) Includes 250,000 shares issuable upon exercise of options held by Mr. Luthin.
(14) Includes 133,334 shares issuable upon exercise of options held by Mr. Kreger.
(15) Includes 20,000 shares issuable upon vesting of restricted stock held by Mr. Bronfein.
(16) Includes 20,000 shares issuable upon vesting of restricted stock held by Mr. Pate.
(17) Includes 20,000 shares issuable upon vesting of restricted stock held by Mr. Golding.
(18) Includes 20,000 shares issuable upon vesting of restricted stock held by Mr. Goldstein.
(19) Includes 20,000 shares issuable upon vesting of restricted stock held by Dr. Nguyen.
(20) Includes 30,001 shares issuable upon exercise of options held by Mr. Jeffcoat.
(21) Includes 586,669 shares issuable upon exercise of options. The 24,427,980 shares of Common Stock beneficially owned by Mr. Shackelton are not included in this calculation. If the 24,427,980 shares of Common Stock beneficially owned by Mr. Shackelton were to be included in this calculation, the number of shares beneficially owned by the Directors and Officers as a group would equal 25,413,816, representing approximately 18.1% of the class.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and beneficial owners of more than 10% of Common Stock to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of Common Stock and other equity securities of the Company. Based solely on the Company’s review of the copies of such forms received by it, and written representations from certain of such persons, the Company believes that, during the fiscal year 2016, its executive officers, directors and 10% stockholders complied with all Section 16(a) filing requirements applicable to them.

Equity Compensation Plan Information

The following table sets forth information relating to equity securities authorized for issuance under the Company’s equity compensation plans as of December 31, 2016.

     
Plan Category   Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants
and rights
(a)
  Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
  Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(c)
Equity compensation plans approved by security holders(1)     6,046,893     $ 5.40       6,775,475  
Equity compensation plans not approved by security holders                  
Total     6,046,893     $ 5.40       6,775,475  

(1) Columns (a) and (b) include outstanding awards under the BioScrip, Inc. Amended and Restated 2008 Equity Incentive Plan (the “2008 Plan”) and the BioScrip/CHS 2006 Equity Incentive Plan, as Amended and Restated (the “CHS Plan”). Column (c) includes securities remaining available for future issuance under only the 2008 Plan. At the Company’s 2014 Annual Meeting of Stockholders (the “2014 Annual Meeting”), the stockholders approved amendments to the 2008 Plan; as a result, no further awards will be made under the CHS Plan.

The following table sets forth information relating to the number of stock options and shares of restricted stock granted by the Company in fiscal years 2016, 2015 and 2014:

   
Fiscal Year   Stock
Options
Granted
(#)
  Restricted
Stock
Granted
(#)
2016     492,810       535,858  
2015     1,436,500       68,000  
2014     1,906,000       100,000  

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PROPOSAL 1 — ELECTION OF DIRECTORS

General

The Company’s bylaws provide that the Board consists of the number of directors as is designated from time to time by resolution of the Board. Directors hold office until the next annual meeting of stockholders or until their respective successors are duly elected and qualified, or until any such director’s earlier death, resignation or removal. Vacancies on the Board and newly created directorships will generally be filled by the vote of a majority of the directors then in office, and any directors so chosen hold office until the next annual meeting of stockholders. In voting for directors, each stockholder is entitled to cast one vote for each share of Common Stock owned (including holders of Preferred Stock on an as-converted into Common Stock basis) for each nominee. Stockholders are not entitled to cumulative voting in the election of directors. If a quorum is present, the seven nominees who receive the greatest number of votes will be elected to the Board. In the unanticipated event that one or more of the nominees becomes unavailable as a candidate for director, the persons named in the accompanying proxy will vote for another candidate nominated by the Board. Each nominee has agreed to serve on the Board if elected. We have no reason to believe that any nominee will be unable to serve.

Based on the recommendation of the Governance, Compliance and Nominating Committee and approval of the Board, the following seven candidates have been nominated for election to the Board at the Annual Meeting: Michael G. Bronfein, David W. Golding, Michael Goldstein, Daniel E. Greenleaf, Steven Neumann, Tricia H. Nguyen and R. Carter Pate. All of the candidates currently serve as directors and were elected by stockholders at our 2016 Annual Meeting except for Mr. Greenleaf, who was appointed by our Board on September 9, 2016, and Mr. Neumann, who was appointed by our Board on January 20, 2017.

As previously disclosed in the Company’s 2015 and 2016 proxy statements, on February 6, 2015, the Company entered into an Investor Agreement (the “Investor Agreement”) with Cloud Gate Capital LLC and DSC Advisors, LLC, which together and with their respective affiliates beneficially owned approximately seven percent (7%) of the Company’s outstanding Common Stock as of the date of the Investor Agreement. Pursuant to the Investor Agreement, the Company agreed, among other things, to nominate Mr. Golding for election to the Board at the Company’s 2015 Annual Meeting of Stockholders and appoint Mr. Golding as a member of the Governance, Compliance and Nominating Committee of the Board if he were elected.

As also previously disclosed, on March 9, 2015, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with CCP, CCP II and Blackwell Partners, LLC, Series A (collectively, the “Coliseum Investors”), each of which is an affiliate of Coliseum. Pursuant to the terms of the Purchase Agreement, the Company issued and sold to the Coliseum Investors an aggregate of (a) 625,000 shares of Series A Preferred Stock, (b) 1,800,000 Class A warrants, and (c) 1,800,000 Class B warrants. The terms of the Series A Preferred Stock permit the holders of a majority of the Series A Preferred Stock to, without the consent of any other stockholders, elect one member of the Board for so long as shares of the Series A Preferred Stock represent, on an as-converted to Common Stock basis, at least five percent (5%) of the outstanding voting stock of the Company.

On June 10, 2016, the Company entered into an Exchange Agreement (the “Series B Exchange Agreement”) with the Coliseum Investors, whereby the Company exchanged 614,177 shares of the existing Series A Preferred Stock for an identical number of shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock”), which had the same terms as the Series A Preferred Stock, except that the terms of the Series B Preferred Stock included the authority of the holders of the Series B Preferred Stock to waive the requirement that the Company reserve a sufficient number of shares of Common Stock to allow for the conversion of the Series B Preferred Stock. Then, on June 14, 2016, the Company entered into an Exchange Agreement (the “Series C Exchange Agreement”) with the Coliseum Investors, whereby the Company exchanged all 614,177 shares of Series B Preferred Stock for an identical number of shares of Series C Preferred Stock, which had the same terms as the Series B Preferred Stock, except that the terms of the Series C Preferred Stock provide that the 11.5% per annum rate of non-cash dividends payable on the shares of the Series C Preferred Stock will be reduced based on the achievement by the Company of specified financial performance metrics. The terms of the Series C Preferred Stock permit the holders of a majority of the Series C Preferred Stock to, without the consent of any other stockholders, elect one member of the Board

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for so long as shares of the Series C Preferred Stock represent, on an as-converted to Common Stock basis, at least five percent (5%) of the outstanding voting stock of the Company.

As a result of the transactions described above, the Series A Preferred Stock no longer represents, on an as-converted to Common Stock basis, at least five percent (5%) of the outstanding voting stock of the Company and, accordingly, the holders of a majority of the Series A Preferred Stock no longer have the right to elect one member of the Board. The Series C Preferred Stock now represents, on an as-converted to Common Stock basis, at least five percent (5%) of the outstanding voting stock of the Company. As a result, the holders of a majority of the Series C Preferred Stock have the right to elect one member of the Board. The Company expects that Mr. Shackelton will be elected as the Series C Director on or before the date of the Annual Meeting pursuant to a unanimous written consent of the Coliseum Investors, which hold all of the shares of Series C Preferred Stock.

On June 11, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, HomeChoice Partners, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, HS Infusion Holdings, Inc., a Delaware corporation (“Home Solutions”) and each of the subsidiaries of Home Solutions set forth on the signature pages to the Asset Purchase Agreement (collectively, the “Home Solutions Subsidiaries” and together with Home Solutions, the “Sellers”). Pursuant to the Asset Purchase Agreement, the Company agreed to acquire substantially all of the assets and assume certain liabilities of the Sellers (the “Home Solutions Transaction”). The Asset Purchase Agreement also provides that, upon consummation of the Transaction, which occurred on September 9, 2017, (1) for so long as Daniel Greenleaf remains the Chief Executive Officer of the Company, Mr. Greenleaf will be a member of the Company’s Board and (2) the Sellers will be entitled to designate one member to the Board for a period of three years, provided that this designation right will terminate if the Sellers own less than 50% of the equity interests of the Company issued to Home Solutions pursuant to the Asset Purchase Agreement. Mr. Neumann is the Sellers’ designee.

Current Directors and Nominees for Director

Series C Director Designee

Christopher S. Shackelton, 37, has been a director since March 2015, when he was appointed pursuant to the Purchase Agreement that the Company entered into with the Coliseum Investors. Mr. Shackelton is a co-founder at Coliseum Capital Management, LLC and serves as its Managing Partner. Since 2012, he has served as a director of Providence Service Corporation, and he currently serves as Chairman of its board of directors. He has also served as a director and on the Audit Committee and Corporate Development Committee of LHC Group Inc. since 2012, and as a director of Universal Technical Institute, Inc. since 2016. Mr. Shackelton previously served on the board of directors of Advanced Emissions Solutions, Inc. from 2014 to 2016, Rural/Metro Corp. from 2008 to 2011 and Interstate Hotels & Resorts, Inc. from 2009 to 2010. He currently serves as a Trustee for New Haven Community Outreach, Connecticut Open at Yale and the W.S. Johnson Foundation. Earlier in his career, Mr. Shackelton served as an analyst for Morgan Stanley & Co. and Watershed Asset Management LLC. We believe Mr. Shackelton’s experience serving as a director for public companies and his financial and investment background are particularly relevant for his service on the Board.

Director Nominees

Daniel E. Greenleaf, 52, has been a director since September 2016. Mr. Greenleaf served as Chairman and Chief Executive Officer of Home Solutions, a home infusion services provider, from December 2013 through the Company’s acquisition of substantially all of the assets of Home Solutions in September 2016, when Mr. Greenleaf was named President and Chief Executive Officer of the Company and appointed to the Board. Prior to joining Home Solutions, Mr. Greenleaf served as President and Chief Executive Officer of Coram Specialty Infusion Services and as Chief Operating Officer of Apria Healthcare Group. He joined Coram/Apria in April 2008 and led significant revenue and earnings increases before his departure in 2013. Before joining Apria/Coram, Mr. Greenleaf served as President and Chief Operating Officer of VioQuest Pharmaceuticals, a publicly traded pharmaceutical company and as President of U.S. Operations for Celltech Biopharmaceuticals. Mr. Greenleaf holds a Bachelor of Arts in Economics from Dennison University and a Master of Business Administration from the University of Miami. Mr. Greenleaf also served as a Captain and

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Navigator in the United States Air Force. We believe Mr. Greenleaf’s significant experience in the healthcare and home infusion industries, and in particular his experience as Chief Executive Officer of Home Solutions and Coram, are particularly relevant to Mr. Greenleaf’s service on the Board. Further, as the only Board member who is also a member of the Company’s management team, Mr. Greenleaf provides management’s perspective in Board discussions about the operations and strategic direction of the Company.

Michael G. Bronfein, 61, has been a director since April 2016. Mr. Bronfein currently serves as the CEO of Curio Wellness, a position he has held since August 2016. Since 2014, Mr. Bronfein has also served as an independent consultant to and investor in development stage companies within the healthcare industry. Throughout his career, Mr. Bronfein has founded or co-founded and grown a number of companies, with a focus on healthcare services, technologies, software and distribution. From 2010 to 2013, Mr. Bronfein served as Chairman and CEO of Remedi SeniorCare, which grew from a start up to the fifth-largest long term care pharmacy in the United States. Prior to joining Remedi, from 1999 to 2012, Mr. Bronfein was senior managing director of Sterling Partners, a private equity fund with a focus on education, healthcare services and technologies, and business services. Mr. Bronfein led Sterling’s healthcare investing and served as a director of several Sterling portfolio companies, including two companies that eventually completed initial public offerings. From 1991 to 1999, Mr. Bronfein was co-founder, Chairman and CEO of NeighborCare, which grew to the second-largest long term and managed care pharmacy in the United States. We believe Mr. Bronfein’s healthcare industry experience, combined with his finance and business operations background, are relevant to his service on the Board.

David W. Golding, 55, has been a director since May 2015. Since 2011, Mr. Golding has served as an independent consultant to national managed care organizations, specialty pharmacy providers, pharmacy benefit management businesses and other healthcare companies. Mr. Golding currently serves as a director of VirMedica, Inc., a healthcare technology solutions company; Dunn Meadow Pharmacy, a specialized pain management pharmacy; and Global Healthcare Integrators, an international medication therapy management provider. Mr. Golding also served as a director of Salveo Specialty Pharmacy, Inc., an independent specialty pharmacy company, from 2013 to 2015. From 1987 to 2011, Mr. Golding worked at CVS Caremark, beginning his service in various capacities in the home infusion segment and culminating as Executive Vice President of Specialty Pharmacy within the pharmacy benefit management and mail service pharmacy division of CVS Health Corporation. Mr. Golding received his bachelor’s degree in pharmacy from the University of Illinois in 1984 and began his career as a Pharmacist at Cook County Hospital and a Clinical Pharmacist at St Anthony’s Memorial Hospital. We believe Mr. Golding’s clinical training, healthcare industry experience within the home infusion and specialty pharmacy, hospital and retail sectors, and executive pharmacy business skills are relevant to his service on the Board.

Michael Goldstein, 75, has been a director since May 2015. Mr. Goldstein currently serves as a director and a member of the Audit and Nominating and Governance Committees of the board of directors of Teladoc, Inc., a publicly traded provider of telehealth services. Since 2011, Mr. Goldstein has served as a global senior advisor of Jefferies & Company, Inc., an investment banking firm. From 2002 to 2012, he served as a director and Chairman of the Audit Committee of 4Kids Entertainment, Inc., an entertainment merchandise licensing company. From 2005 to 2012, Mr. Goldstein served as a director, Chairman of the Nominating and Governance Committee and as a member of the Audit Committee and the Mergers and Acquisitions Committee of Medco Health Solutions, Inc., a pharmacy benefits management company. Mr. Goldstein also served as a director of Pacific Sunwear of California, Inc., a retail clothing company, from 2006 until 2016. Mr. Goldstein previously held senior management positions in the retail industry, serving as Chief Executive Officer of Toys “R” Us, Inc., a toy retailer (“TOYS”), from 1994 to 1998, and then as TOYS’ Acting Chief Executive Officer from 1999 to 2000. He also served as the Chief Financial Officer of TOYS and as Senior Executive Vice President of Operations and Finance of Lerner Stores Corporation, a chain department store retailer. Mr. Goldstein began his career as an accountant at Ernst & Young, where he served as an audit partner for six years. We believe that Mr. Goldstein’s extensive finance and business operations background, as well as his prior experience serving on the boards of directors of public companies, are relevant to his service on the Board.

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Steven Neumann, 49, has been a director since January 2017. Mr. Neumann is currently a managing partner and co-founder of Latticework Capital Management, a private equity firm that focuses on investing in healthcare companies, and serves as a consultant with KRG Capital Partners, a private equity firm. Before co-founding Latticework, Mr. Neumann was a managing director at KRG until September 2016. Mr. Neumann joined KRG in 1998, where he focused on healthcare investments and served on the boards of a number of KRG portfolio companies, including Home Solutions. We believe that Mr. Neumann’s substantial healthcare and investment experience, including his experience as a director of Home Solutions, are relevant to his service on the Board.

Tricia Nguyen, 44, has been a director since January 2014. Dr. Nguyen has been the Executive Vice President of Texas Health Resources, a nonprofit hospital system, since October 2013. From August 2011 to September 2013, Dr. Nguyen was Chief Medical Officer of Banner Health Network, an accountable care organization with more than 2,500 physicians. From April 2011 to August 2011, she was a consultant for Swope Health Services, a system of federally qualified clinics in Kansas providing primary health care, dental and behavioral health services. From April 2010 to April 2011, Dr. Nguyen was Chief Medical Officer of Blue Cross Blue Shield of Kansas City, a non-profit health insurance company. From April 2008 to April 2010, Dr. Nguyen was the Senior Medical Director of Blue Cross Blue Shield of Florida, a non-profit health insurance company. From August 2005 to April 2008, Dr. Nguyen was Vice President and Market Medical Officer of Humana, Inc., a managed health care company that markets and administers health insurance. Dr. Nguyen is President of Texas Health Population Health, Education, Research and Innovation Center, which focuses on sharing best practices, disseminating information about innovative approaches, leading physician-directed population health initiatives and coordinating community-based well-being collaboration. We believe her experience in the healthcare industry and managerial background, particularly her past managerial experience with health insurance companies, together with her medical experience, are particularly relevant to Dr. Nguyen’s service on the Board.

R. Carter Pate, 62, has been a director since May 2015 and serves as the Chairman of the Board. Since 2014, Mr. Pate has served as an independent strategic advisor to MV Transportation, Inc., the largest privately-owned passenger transportation contracting firm based in the U.S. (“MV”) and a director, since 2016, of Advanced Emissions Solutions, Inc., a publicly traded emissions solutions provider. He previously served as Chief Executive Officer of MV from 2011 to 2014. From 1996 to 2011, Mr. Pate was employed by PricewaterhouseCoopers, LLP (“PwC”). From 2009 to 2011, he was the Global and U.S. Managing Partner of PwC’s Capital Projects and Infrastructure practice, and from 2005 to 2009, he was the U.S. Managing Partner of Government Services. From 2004 to 2005, Mr. Pate was PwC’s Managing Partner of U.S. Markets, and from 2000 to 2004, Mr. Pate was PwC’s Managing Partner of Advisory Services. He served as PwC’s US Leader Restructuring Services from 1998 to 2000, and as a Restructuring Partner from 1996 to 1998. Mr. Pate previously founded his own management consulting firm, served as a director and Interim President and Chief Executive Officer of Sun Television and Appliances, Inc., a television and radio retailer, as a director and Chief Executive Officer of Sun Coast Industries, Inc., and as Director of Finance at William Hudson Chemical Trading. We believe Mr. Pate’s business and financial background, as well as his experience as a senior executive and manager, are relevant to his service on the Board.

There is no family relationship among the Series C Director Designee, any other Director Nominees, any current director or any executive officers of the Company.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE SEVEN DIRECTOR NOMINEES NAMED ABOVE

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PROPOSAL 2 — RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017. The Board is asking that stockholders ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm. While the Company’s bylaws do not require stockholder ratification, the Company is asking its stockholders to ratify this appointment because it believes such a proposal is a matter of good corporate practice. If the stockholders do not ratify the appointment of KPMG LLP, the Audit Committee will reconsider whether to retain KPMG LLP as the Company’s independent registered public accounting firm, but may determine to do so nonetheless. Even if the appointment of KPMG LLP is ratified by the stockholders, the Audit Committee may change the appointment at any time during the year if it determines that a change would be in the best interests of the Company and its stockholders.

KPMG LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2016, 2015 and 2014. A representative of KPMG LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement, if he or she desires to do so, and to be available to respond to appropriate questions from stockholders.

Public Accounting Fees and Services

The following table shows the aggregate fees billed to the Company by KPMG LLP for services rendered during the years ended December 31, 2015 and 2016:

   
  Years Ended December 31,
Description of Fees   2015   2016
Audit Fees   $ 6,100,000     $ 1,300,000  
Audit Related Fees            
Tax Fees            
All Other Fees         $ 208,077  
Total Fees   $ 6,100,000     $ 1,508,077  

Audit Fees

Audit fees consist of the aggregate fees billed by KPMG LLP for professional services rendered for the audit of the Company’s financial statements as of and for the year ended December 31, 2015 and December 31, 2016, the audit of the Company’s internal control over financial reporting as of December 31, 2015 and 2016, and its reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for 2015 and 2016.

Audit-Related Fees

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” The Company did not have any such fees from KPMG LLP during the fiscal years ended December 31, 2015 and 2016, respectively.

Tax Fees

Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning. The Company did not have any such fees from KPMG LLP during the fiscal years ended December 31, 2015 and 2016, respectively.

All Other Fees

All other fees consist of the aggregate fees for professional services rendered by KPMG LLP in connection with the Home Solutions Transaction and related expenses. The Company did not have any such fees from KPMG LLP during the fiscal year ended December 31, 2015.

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Pre-Approval of Audit and Non-Audit Services

In accordance with the provisions of the Audit Committee charter, the Audit Committee must pre-approve all audit and non-audit services, and the related fees, provided to the Company by its independent registered public accounting firm, or subsequently approve non-audit services in those circumstances where a subsequent approval is necessary and permissible under the Exchange Act or the rules of the SEC. Accordingly, the Audit Committee pre-approved all services provided and fees charged by KPMG LLP during the years ended December 31, 2015 and December 31, 2016 and has concluded that the provision of these services is compatible with KPMG’s independence.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017.

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PROPOSAL 3 — APPROVAL OF THE COMPANY’S TAX ASSET PROTECTION PLAN

The Board is asking stockholders to approve the Tax Asset Protection Plan, dated August 11, 2016 (the “TAPP”). If our stockholders do not approve the TAPP by or on August 11, 2017, the TAPP will automatically expire on that date.

Background

We believe that we have valuable tax attributes which are significant assets of the Company. As of December 31, 2016, we had several domestic tax attributes, including federal net operating loss carryforwards (“NOLs”) of approximately $302 million, which expire over a period ranging from five to twenty years (the “Tax Assets”). Under the Internal Revenue Code and regulations promulgated by the U.S. Treasury Department, the Company may carry forward or otherwise utilize these Tax Assets in certain circumstances to offset any current and future taxable income and thus reduce the Company’s federal income tax liability, subject to certain requirements and restrictions. To the extent that the Tax Assets do not otherwise become limited, the Company believes that it will have available a significant amount of Tax Assets in future years, and therefore these Tax Assets could be a substantial asset to the Company.

Our ability to use the Tax Assets could be substantially limited or delayed, however, if we experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code. In general, an ownership change occurs if there is a cumulative change in the ownership of BioScrip by 5% stockholders (as defined for tax purposes) that exceeds 50 percentage points over a rolling three-year period. Accordingly, on August 11, 2016, after consultation with the Company’s legal, tax and investment banking advisors, the Board adopted the TAPP in order to protect the Company’s ability to utilize its Tax Assets.

Calculating whether an “ownership change” has occurred is subject to uncertainty. This uncertainty arises from the complexity and ambiguity inherent in Section 382 of the Internal Revenue Code, as well as limitations on the knowledge that any publicly traded company can have about the ownership of and transactions in its securities. We have analyzed the information available, along with various scenarios of possible future changes in ownership. In light of this analysis, we believe that, in the absence of the TAPP, it is possible that we could undergo a subsequent “ownership change” under Section 382 of the Internal Revenue Code, which would substantially reduce our ability to utilize the Tax Assets. We believe the implementation of the TAPP will serve the interests of all stockholders given the size of the Tax Assets and the potential loss of value should changes in our stock ownership occur that are sufficient to cause a 50 percentage point or greater “ownership change.”

The TAPP is intended to act as a deterrent to any person acquiring beneficial ownership of 4.9% or more of the Company’s outstanding Common Stock without the approval of the Board. Stockholders who beneficially own 4.9% or more of the Company’s outstanding Common Stock upon execution of the TAPP will not trigger the TAPP so long as they do not acquire beneficial ownership of additional shares of Common Stock. The Board may, in its sole discretion, also exempt any person from triggering the TAPP.

If the stockholders do not approve the TAPP, the TAPP will expire on August 11, 2017. If the stockholders approve the TAPP, it will expire on the earlier of (a) August 11, 2019, (b) the time at which the Rights (described below) are redeemed pursuant to the TAPP, (c) the time at which the Rights are exchanged in full pursuant to the TAPP, (d) the effective date of the repeal of both Section 382 and Section 383 of the Internal Revenue Code, or any successor provisions or replacement provisions, if the Board determines that the TAPP is no longer necessary for the preservation of Tax Assets or (e) the beginning of a taxable year of the Company for which the Board determines that the Company has or will have no Tax Assets.

Summary of Terms of the TAPP

The following description of the terms of the TAPP does not purport to be complete and is qualified in its entirety by reference to the TAPP, which is attached as Annex A and is incorporated herein by reference. We urge you to read carefully the TAPP in its entirety, as the discussion below is only a summary. All capitalized terms used in the following description but not otherwise defined herein have the meanings ascribed to such terms in the TAPP.

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The Rights.  On August 11, 2016, the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of Common Stock to stockholders of record as of the close of business on August 25, 2016. One Right will also be issued together with each share of Common Stock issued after August 25, 2016 but before the Distribution Date (as defined below) and, in certain circumstances, after the Distribution Date. Subject to the terms, provisions and conditions of the TAPP, if the Rights become exercisable, each Right would initially represent the right to purchase from the Company one ten-thousandth of a share of the Company’s Series D Junior Participating Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”) for a purchase price of $14.00 (the “Purchase Price”). If issued, each fractional share of Series D Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of Common Stock. However, prior to exercise, a Right does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation rights.

Initial Exercisability.  The Rights will not be exercisable until the earlier of (i) ten business days after a public announcement that a person has become an “Acquiring Person” by acquiring beneficial ownership of 4.9% or more of the Company’s outstanding Common Stock, or, in the case of a person that had beneficial ownership of 4.9% or more of the Company’s outstanding Common Stock upon execution of the TAPP, by obtaining beneficial ownership of additional shares of Common Stock or (ii) ten business days (or such later date as may be specified by the Board prior to such time as any person becomes an Acquiring Person) after the commencement of a tender or exchange offer by or on behalf of a person that, if completed, would result in such person becoming an Acquiring Person.

The date that the Rights become exercisable is referred to as the “Distribution Date.” Until the Distribution Date, Common Stock certificates or the ownership statements issued with respect to uncertificated shares of Common Stock will evidence the Rights. Any transfer of shares of Common Stock prior to the Distribution Date will also constitute a transfer of the associated Rights. After the Distribution Date, separate rights certificates will be issued and the Rights may be transferred other than in connection with the transfer of the underlying shares of Common Stock unless and until the Board has determined to effect an exchange pursuant to the TAPP (as described below).

Flip-In Event.  In the event that a person becomes an Acquiring Person, each holder of a Right, other than Rights that are or, under certain circumstances, were beneficially owned by the Acquiring Person (which will thereupon become null and void), will thereafter have the right to receive upon exercise of a Right and payment of the Purchase Price, a number of shares of Common Stock having a market value of two times the Purchase Price.

Redemption.  At any time until a person becomes an “Acquiring Person”, the Board may redeem the Rights in whole, but not in part, at a price of $0.00001 per Right (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

Exchange.  At any time after a person becomes an Acquiring Person, the Board may exchange the Rights (other than Rights that have become null and void), in whole or in part, at an exchange ratio of one share of Common Stock, or a fractional share of Series D Preferred Stock (or of a share of a similar class or series of the Company’s preferred stock having similar rights, preferences and privileges) of equivalent value, per Right (subject to adjustment). Immediately upon an exchange of any Rights, the right to exercise such Rights will terminate and the only right of the holders of Rights will be to receive the number of shares of Common Stock (or fractional share of Series D Preferred Stock or of a share of a similar class or series of the Company’s preferred stock having similar rights, preferences and privileges) equal to the number of such Rights held by such holder multiplied by the exchange ratio. The Board shall not be empowered to effect such exchange at any time after an Acquiring Person becomes the beneficial owner of 50% or more of the Company’s outstanding Common Stock.

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Expiration.  The Rights and the TAPP will expire on the earlier of (i) the Close of Business on the earlier of (a) August 11, 2019, or (b) August 11, 2017 if stockholder approval of the TAPP has not been received by or on such date, (ii) the time at which the Rights are redeemed pursuant to the TAPP, (iii) the time at which the Rights are exchanged in full pursuant to the TAPP, (iv) the effective date of the repeal of both Section 382 and Section 383 of the Internal Revenue Code, or any successor provisions or replacement provisions, if the Board determines that the TAPP is no longer necessary for the preservation of tax benefits or (v) the beginning of a taxable year of the Company for which the Board determines that the Company has or will have no tax benefits.

Anti-Dilution Provisions.  The Board may adjust the Purchase Price, the number of shares of Series D Preferred Stock or other securities or assets issuable and the number of outstanding Rights to prevent dilution that may occur as a result of certain events, including among others, a stock dividend, a stock split or a reclassification of the Series D Preferred Stock or Common Stock. With certain exceptions, no adjustments to the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price.

Amendments.  For so long as the Rights are redeemable, the Board may supplement or amend any provision of the TAPP in any respect without the approval of the holders of the Rights. From and after the time the Rights are no longer redeemable, the Board may supplement or amend the TAPP only to cure an ambiguity, to alter time period provisions, to correct inconsistent provisions, or to make any additional changes to the TAPP which the Company may deem necessary or desirable, but only to the extent that those changes do not impair or adversely affect any Rights holder (other than an Acquiring Person or any Affiliate or Associate of an Acquiring Person or certain of their transferees) and do not result in the Rights again becoming redeemable or the TAPP again becoming amendable other than in accordance with this sentence.

Certain Considerations Related to the TAPP

Our Board believes that protecting the Tax Assets is in the Company’s and our stockholders’ best interests. Nonetheless, we cannot eliminate the possibility that changes in our stock ownership will occur sufficient to cause an “ownership change” even if the TAPP is approved. You should consider the factors below when making your decision.

Future Use and Amount of the Tax Assets is Uncertain.  Our use of the Tax Assets depends on our ability to generate taxable income in the future. We cannot assure you whether we will have taxable income in any applicable period or, if we do, whether such income will exceed any potential Section 382 limitation and therefore we cannot assure you that we will realize the full value of the Tax Assets.

Potential Challenge to the Tax Assets.  The amount of the Tax Assets has not been audited or otherwise validated by the Internal Revenue Service (the “IRS”). The IRS could challenge the amount of the Tax Assets, which could result in an increase in our liability for income taxes. In addition, determining whether an “ownership change” has occurred is subject to uncertainty, both because of the complexity and ambiguity of the Section 382 provisions and because of limitations on the knowledge that any publicly traded company can have about the ownership of, and transactions in, its securities on a timely basis. Therefore, we cannot assure you that the IRS or other taxing authority will not claim that we experienced an “ownership change” and attempt to reduce the benefit of the Tax Assets even if the TAPP is in place.

Continued Risk of Ownership Change.  Although the TAPP is intended to diminish the likelihood of an “ownership change,” we cannot assure you that it will be effective. The amount by which our ownership may change in the future could, for example, be affected by purchases and sales of stock by stockholders and new issuances or repurchases of stock by us, should we choose to do so.

Potential Effects on Liquidity.  The TAPP is intended to deter persons or groups of persons from acquiring beneficial ownership of shares of our Common Stock in excess of the specified limitation. A stockholder’s ability to dispose of our Common Stock may be limited if the TAPP reduces the number of persons willing to acquire our Common Stock or the amount they are willing to acquire.

Potential Impact on Value.  The TAPP could negatively impact the value of our Common Stock by deterring persons or groups of persons from acquiring shares of our Common Stock, including in acquisitions for which some stockholders might receive a premium above market value.

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Anti-Takeover Effect.  Our Board adopted the TAPP to diminish the risk that our ability to use the Tax Assets to reduce potential federal income tax obligations becomes limited. Nonetheless, the TAPP may have an “anti-takeover effect” because it will deter a person or group of persons from acquiring beneficial ownership of 4.9% or more of our Common Stock or, in the case of persons or persons that already own 4.9% or more of our Common Stock, from acquiring any additional shares of our Common Stock. The TAPP could discourage a merger, tender offer or accumulations of substantial blocks of shares.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
APPROVAL OF THE COMPANY’S TAX ASSET PROTECTION PLAN

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PROPOSAL 4 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

The Company is again providing its stockholders an advisory vote on the compensation of our named executive officers, also known as a “say-on-pay” proposal. At the Company’s 2011 Annual Meeting of Stockholders (the “2011 Annual Meeting”), holding future non-binding advisory votes every year received the most votes from the Company’s stockholders, and the Board subsequently adopted this as its official position. Accordingly, this Proposal 4 is being submitted to you to obtain the non-binding advisory vote of the stockholders in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 14A of the Exchange Act and the SEC’s rules. After the Annual Meeting, unless the Board modifies its position and subject to the outcome of the vote on Proposal 5, the Company expects that the next stockholder advisory vote on the Company’s executive compensation program will occur at the Company’s 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”).

This proposal will give stockholders the opportunity to endorse the Company’s executive compensation programs and policies and the resulting compensation for the named executive officers, as described in this Proxy Statement in the Executive Compensation section, including the Compensation Discussion and Analysis, the tabular disclosure regarding such compensation and the Company’s accompanying narrative disclosure. Because the vote on this Proposal 4 is advisory, the results will not be binding on the Compensation Committee, and the results will not affect, limit or augment any existing compensation or awards. The Compensation Committee will, however, take into account the outcome of the vote when considering future compensation arrangements.

The Compensation Committee believes the following design features are key to the program’s success and promotion of stockholders’ interests:

Paying for performance:  Other than base salaries, all other components of compensation are variable and dependent on achievement of business and/or financial performance;
Encouraging long-term decision-making:  Stock options vest over three years and may normally be exercised over ten years;
Rewarding achievement of the Company’s business and financial performance:  Amounts available for annual incentive awards are based on Company performance compared to its business plan; individual awards take account of business unit and individual executive performance relative to their goals; and
Avoiding incentives that might cause executives to take excessive risk:  The Company makes discretionary rather than formulaic awards and uses Adjusted EBITDA and other strategic measures as a key performance indicator; potential incentive compensation is capped.

At the same time, the Company’s executive compensation programs exclude practices that would be contrary to the Company’s compensation philosophy and contrary to stockholders’ interests. For example, the Company’s executive compensation program:

does not provide executives with guaranteed bonuses;
does not provide contractual change-in-control cash severance pay beyond two times annual compensation, composed of based salary and bonus; and
prohibits the buying or selling of puts, calls, straddles, collars or other similar risk reduction devices, including publicly traded options, designed to hedge or offset any decrease in the market value of the Company’s securities.

The Compensation Committee and the Board believe that the Company’s compensation programs and policies, and the compensation of the named executive officers, as described above and in the Executive Compensation section of this Proxy Statement, promote the Company’s business objectives with appropriate compensation delivered in appropriate forms. The compensation of the named executive officers reflects the Compensation Committee’s independent evaluation of those officers.

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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION AS FOLLOWS:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the U.S. Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

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PROPOSAL 5 — ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION

As described in Proposal 4, our stockholders are being asked to approve the compensation of our named executive officers, as reported in this proxy statement. In accordance with Section 14A of the Exchange Act, Proposal 5 gives stockholders the opportunity to cast a non-binding advisory vote on whether future advisory votes on executive compensation should occur every year, every two years or every three years. The next such advisory vote on the frequency of advisory votes on executive compensation will be in 2023.

After careful consideration, the Board has determined that continuing to hold the advisory vote on executive compensation every year is the most appropriate policy for the Company at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every year. While the Company’s executive compensation programs are designed to promote a long-term connection between pay and performance, the Board recognizes that executive compensation disclosures are made annually. Holding an annual advisory vote on executive compensation provides the Company with more direct and immediate feedback on our compensation programs.

We understand that our stockholders may have different views as to what is an appropriate frequency for advisory votes on executive compensation, and we will carefully review the voting results on this proposal. Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years, or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board of Directors. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR “EVERY YEAR” ON THE FREQUENCY OF FUTURE ADVISORY
VOTES ON EXECUTIVE COMPENSATION.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Director Independence

The Board has determined that, except for Mr. Greenleaf, each of its current directors, each of its directors who served in 2016, except for Richard M. Smith, and Mr. Neumann, a new nominee, is independent within the meaning of Rule 5605(a)(2) of the NASDAQ Stock Market Rules (the “NASDAQ Rules”).

Board Leadership

After careful consideration, in January 2011, the Board determined that the best leadership structure for the Company was to bifurcate the leadership roles of Chairman and Chief Executive Officer. The Board believes this structure is optimal for the Company because it permits the Chairman to provide independent leadership to Company oversight, strategic planning and board management, while permitting the Chief Executive Officer to focus more on the Company’s business, day-to-day planning, operations and execution. The Board believes that the separation of the two roles continues to provide the best balance of these important responsibilities. The Board also believes, however, that retaining the flexibility to unify the two roles is beneficial to the Company. Accordingly, the Board intends to continue to exercise its discretion in combining or separating these positions as it deems appropriate depending on the particular circumstances and needs of the Company at any time.

The Board believes that the independent directors provide effective oversight of the Company’s management. Moreover, in addition to the oversight and feedback provided by the independent directors during the course of the Board meetings, the independent directors have regular executive sessions at both the Board and Committee levels.

On September 9, 2016, contemporaneous with the consummation of the Home Solutions Transaction, the Board determined that it was appropriate to increase the size of the Board from seven members to eight members and appointed Mr. Greenleaf as a director to fill the resulting vacancy. On November 3, 2016, Mr. Smith, the Company’s former Chief Executive Officer, resigned from the Board, and on January 20, 2017, the Board appointed Mr. Neumann to fill the resulting vacancy. The Company expects that Mr. Shackelton will be elected to the Board as the Series C Director designee on or before the date of the Annual Meeting pursuant to a unanimous written consent of Coliseum, which holds all of the Series C Preferred Stock. If the stockholders approve each of the nominees for director identified in Proposal 1, the size of the Board will remain at eight members.

Board Role in Risk Oversight

The Board has risk management oversight responsibility for the Company and administers this responsibility both directly and with assistance from its committees. The Board and its committees regularly review material financial, compensation, compliance and operational risks with senior management. As part of its responsibilities as set forth in its charter, the Audit Committee is responsible for reviewing with management the Company’s major financial and other operational risk exposures and the steps management has taken to monitor, and where appropriate mitigate, risks associated with those exposures, including the Company’s procedures and any related policies with respect to risk assessment and risk management. The Audit Committee also oversees the Company’s independent registered public accounting firm, performs a central oversight role with respect to financial risks and, together with the Governance, Compliance and Nominating Committee, addresses compliance risks and reports on its findings at each regularly scheduled meeting of the Board. In addition to compliance risks and reports, the Governance, Compliance and Nominating Committee annually reviews the Company’s corporate governance guidelines and their implementation. And the Compensation Committee considers risks that may arise as a result of or otherwise in connection with the design of the Company’s compensation programs for our executives. Each committee regularly reports to the Board.

Board Diversity

The Governance, Compliance and Nominating Committee believes that diversity of backgrounds and viewpoints is a key attribute for directors. The Board does not have a formal diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership.

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Board and Committee Self Assessments

The Governance, Compliance and Nominating Committee oversees a periodic evaluation process whereby the directors evaluate both the Board as a whole and each standing committee of the Board on which he or she serves. The Board and each committee discuss the results which are used, if necessary, to develop action plans.

Board Meetings; Annual Meeting Attendance

The Board held a total of 34 meetings during 2016. Each director attended at least 75% of the Board meetings and the meetings of the committees of the Board on which the director served that were held during his or her period of service in 2016. The Company expects each member of the Board to attend its annual meeting of stockholders, either telephonically or in person, absent a valid reason. All of the directors attended the 2016 Annual Meeting.

Executive Sessions

Independent, non-management directors meet regularly in executive sessions. “Non-management” directors are all those directors who are not employees of the Company. The Company’s non-management directors consist of all of its current directors other than Mr. Greenleaf. An executive session of the Board’s non-management directors is generally held in conjunction with each regularly scheduled Board meeting. In addition, regular executive sessions of non-management directors are held generally at the conclusion of each audit committee meeting and certain other committee meetings. Additional executive sessions may be called at the request of the Board or the non-management directors.

Board Committees

The Company’s standing committees are the Audit Committee; Governance, Compliance and Nominating Committee; and Compensation Committee. Each committee is composed solely of independent directors. Membership in each committee is as follows:

   
Audit Committee   Governance, Compliance and
Nominating Committee
  Management Development and
Compensation Committee
Michael GoldsteinΩ*   Michael Bronfein*   David W. Golding*
Christopher S. Shackelton   David W. Golding*   Christopher S. Shackelton
R. Carter Pate   Michael Goldstein   R. Carter Pate
Michael G. BronfeinΩ   Tricia H. Nguyen   Steven Neumann
R. Carter Pate     

Ω Designates Audit Committee Financial Expert.
* Designates committee chairperson.

The Company has adopted a written charter for each of the committees. Stockholders may access the charters for the Audit Committee, Governance, Compliance and Nominating Committee and the Compensation Committee on the Company’s website at www.bioscrip.com under the heading “Investors — Corporate Governance” (the contents of the website are not incorporated into this Proxy Statement).

Audit Committee

Each member of the Audit Committee satisfies the independence requirements of Rule 5605(c)(2) of the NASDAQ Rules and Rule 10A-3(b)(1) under the Exchange Act. The Board has determined that each of Mr. Goldstein and Mr. Bronfein is an “audit committee financial expert” as that term is defined in Item 407(d)(5)(ii) of the SEC’s Regulation S-K. The Audit Committee is responsible, among its other duties, for (i) overseeing the process of accounting and financial reporting of the Company and the audits of the financial statements of the Company; (ii) appointing, retaining and compensating the Company’s independent registered public accounting firm; (iii) pre-approving all audit and non-audit services by the Company’s independent registered public accounting firm; (iv) reviewing the scope of the audit plan and the results of each audit with management and the Company’s independent accountants; (v) reviewing the internal audit function; (vi) reviewing the adequacy of the Company’s system of internal accounting controls and disclosure

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controls and procedures; and (vii) reviewing the financial statements and other financial information included in the Company’s annual and quarterly reports filed with the SEC. During 2016, the Audit Committee held 6 meetings.

Governance, Compliance and Nominating Committee

Each member of the Governance, Compliance and Nominating Committee is “independent” as set forth in Rule 5605(a)(2) of the NASDAQ Rules. The Governance, Compliance and Nominating Committee’s functions include recommending to the Board the number and names of proposed nominees for election to the Board at the Company’s annual meeting of stockholders; identifying and recommending nominees to fill expiring and vacant seats on the Board; and reviewing on an annual basis committee and Board performance and recommending, as necessary, changes to the Board. From time to time, the Governance, Compliance and Nominating Committee engages an executive search firm to assist it in identifying individuals qualified to be Board members. Except as may be required by rules promulgated by the NASDAQ Global Market or the SEC, the Governance, Compliance and Nominating Committee currently believes that there are no specific minimum qualifications that must be met by each candidate for the Board, nor are there specific qualities or skills that are necessary for one or more of the members of the Board to possess. In evaluating the suitability of potential nominees for election as members of the Board, the Governance, Compliance and Nominating Committee will take into consideration the current composition of the Board, including expertise, diversity and balance of inside, outside and independent directors, as well as the general qualifications of the potential nominees, including personal and professional integrity, ability and judgment and such other factors deemed appropriate. The Governance, Compliance and Nominating Committee will evaluate those and other factors, and does not have requirements for any particular weighting or priority of these factors. While the Governance, Compliance and Nominating Committee has not established specific minimum qualifications for director candidates, the Governance, Compliance and Nominating Committee believes that candidates and nominees must reflect a Board that is predominantly independent and is composed of directors who (i) are of high integrity; (ii) have qualifications that will increase the overall effectiveness of the Board, including expertise and knowledge in various disciplines relevant to the Company’s business and/or operations; and (iii) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to Audit Committee members. The Governance, Compliance and Nominating Committee considers recommendations for nominations from any reasonable and credible source, including officers, directors and stockholders of the Company who comply with the procedures set forth in the Company’s bylaws. See the section below titled “Stockholder Proposals.” The Governance, Compliance and Nominating Committee evaluates all reasonable and credible stockholder recommended candidates on the same basis as any other candidate. The Governance, Compliance and Nominating Committee also reviews the Company’s corporate governance, compliance and ethics guidelines, and oversees the annual evaluation of the Board and management of the Company. The Governance, Compliance and Nominating Committee held 5 meetings during 2016.

Management Development and Compensation Committee

The Compensation Committee reviews and approves the overall compensation strategy and policies for the Company as well as material compensation arrangements for senior executives. From time to time, the Compensation Committee utilizes compensation consultants to assist the Compensation Committee. Each member of the Compensation Committee is “independent” as set forth in Rule 5605(a)(2) of the NASDAQ Rules. In addition, the Compensation Committee reviews and approves corporate performance goals and objectives relevant to the compensation of the Company’s executive officers and other senior management; reviews and approves the compensation and other terms of employment of the Company’s Chief Executive Officer and other executive officers; and oversees the 2008 Plan, the 2001 Incentive Stock Plan (the “2001 Plan”) and the 1996 Non-Employee Directors Stock Incentive Plan (the “Directors Plan”). Upon stockholder approval of the 2008 Plan, no further grants are available to be made under the 2001 Plan. But if any shares of Common Stock subject to an award under the 2001 Plan are forfeited or expire, the shares of Common Stock subject to such award will, to the extent of the expiration or forfeiture, again be available for issuance under the 2008 Plan, subject to certain limitations as described in the 2008 Plan. The Compensation Committee also administers the CHS Plan, which was assumed and adopted by the Company in connection with its acquisition of CHS in March 2010. In connection with the assumption and adoption of the CHS Plan,

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certain options issued under the CHS Plan held by the five most senior executives of CHS were converted into the right to purchase 716,086 shares of Common Stock and all other options issued under the CHS Plan were either cashed out or cancelled at the closing of the acquisition of CHS. The Company granted options to purchase 240,000 shares under the CHS Plan in early 2014 and at the 2014 Annual Meeting, the stockholders approved amendments to the 2008 Plan; as a result, no further awards will be made under the CHS Plan.

The Compensation Committee is also responsible for ensuring that adequate management development programs and activities are created and implemented in order to provide a succession plan for senior management and other significant positions within the Company. The Compensation Committee also oversees management succession planning. The Compensation Committee has authority to obtain advice and seek assistance from internal and external accounting and other consultants and advisers, to directly supervise their work and to determine the extent of funding necessary for the payment of any such consultant or advisor retained to advise it. During 2016, the Compensation Committee held 13 meetings.

Code of Ethics

The Company is committed to having sound corporate governance principles and has adopted a Code of Business Conduct and Ethics for Directors, Officers and Employees (the “Code of Business Conduct and Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. The Company’s Code of Business Conduct and Ethics is available on the Company’s website at www.bioscrip.com under the heading “Investors — Corporate Governance” (the contents of the website are not incorporated into this Proxy Statement). If any waivers of the Code of Business Conduct and Ethics are granted to the principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions, or if any material amendment is made to the Code of Business Conduct and Ethics, the Company will disclose the nature of such amendment or waiver on the Company’s website under the heading “Investors — Corporate Governance” and subheading “Governance Documents.” In addition, the Board has adopted a general code of ethics that is applicable to all of the Company’s employees and directors.

The Audit Committee has adopted a whistleblower policy in compliance with Section 806 of the Sarbanes-Oxley Act of 2002. The whistleblower policy allows employees to confidentially submit a good faith complaint regarding accounting or audit matters to the Audit Committee and management without fear of dismissal or retaliation. This policy, as well as a copy of the Company’s general code of ethics, was distributed as part of the Company’s Legal and Ethical Compliance Manual to all employees and evidence of employee acknowledgements of receipt and understanding of the foregoing are on file in the Compliance Department. A summary of the Company’s whistleblower procedures is available on the Company’s website at www.bioscrip.com under the heading “Investors — Corporate Governance” and subheading “Governance Documents” (the contents of the website are not incorporated into this Proxy Statement).

Stockholder Communications with the Board of Directors

The Board provides a process for stockholders and other interested parties to send communications to the Board or any of the directors. Interested parties may communicate with the Board or any of the directors by sending a written communication to BioScrip, Inc., c/o Corporate Secretary at 1600 Broadway, Suite 700, Denver, Colorado 80202. All communications will be compiled by the Secretary of the Company and submitted to the Board or the individual directors to whom such communication is addressed.

Review, Approval or Ratification of Transactions with Related Persons

In accordance with the terms of the Company’s Audit Committee Charter and the Company’s policy on related party transactions, the Audit Committee is required to review and approve all related person transactions on an ongoing basis. A related person transaction, as defined in Item 404(a) of Regulation S-K, is any transaction, arrangement or relationship in which the Company is a participant, the amount involved exceeds $120,000, and one of the Company’s executive officers, directors, director nominees or 5% stockholders (or their immediate family members) has a direct or indirect material interest.

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On June 22, 2016, the Company completed an equity offering of 45,200,000 shares of Common Stock (the “Equity Offering”). Prior to the Equity Offering, a significant number of shares of the Company’s Common Stock were reserved for issuance to the Coliseum Investors, which held shares of the Company’s Series A Convertible Preferred Stock and certain warrants. In order to issue a greater number of shares of Common Stock in the Equity Offering, the Company entered into a series of transactions with the Coliseum Investors in which the Coliseum Investors agreed to waive the requirement that the Company reserve a sufficient number of shares of Common Stock to allow for the conversion of the Series A Preferred Stock and the exercise of outstanding warrants. Specifically, on June 10, 2016, the Company entered into the Series B Exchange Agreement with the Coliseum Investors, whereby the Company exchanged 614,177 shares of the existing Series A Preferred Stock for an identical number of shares of Series B Preferred Stock, which had the same terms as the Series A Preferred Stock, except that the terms of the Series B Preferred Stock included the authority of the holders of the Series B Preferred Stock to waive the requirement that the Company reserve a sufficient number of shares of Common Stock to allow for the conversion of the Series B Preferred Stock. Then, on June 14, 2016, the Company entered into the Series C Exchange Agreement with the Coliseum Investors, whereby the Company exchanged all 614,177 shares of Series B Preferred Stock for an identical number of shares of Series C Preferred Stock, which had the same terms as the Series B Preferred Stock, except that the terms of the Series C Preferred Stock provide that the 11.5% per annum rate of non-cash dividends payable on the shares of the Series C Preferred Stock will be reduced based on the achievement by the Company of specified financial performance metrics. In addition, the Coliseum Investors participated in the Equity Offering through the Company’s underwriter on the same terms as all other participants.

During 2016, there were no related person transactions in conflict with the Company’s policies with respect to related party transactions.

Compensation of Directors

Following is the schedule of directors’ fees for 2016:

 
Position on the Board and Committees   Fee
Non-management director retainer fee   $55,000 annually
Additional retainer fee for Chairman of the Board   $50,000 annually
Fee for each Board committee on which a non-management director serves (other than the Chairman of the Board)   $5,000 annually
Additional fee for serving as Chair of the Audit Committee   $20,000 annually
Additional fee for serving as Chair of the Governance, Compliance and Nominating Committee or the Compensation Committee   $15,000 annually
Additional per meeting fee for Board and each Committee in excess of 10 meetings held by Board/each Committee   $500 telephonic; $1,000 in-person
Per-meeting fee for service on a special committee of the Board (effective August 3, 2016)   Chair: $750 telephonic; $1,500 in-person Member: $500 telephonic; $1,000 in-person

All of the above fees are paid quarterly. In addition to the cash compensation detailed above, each director typically receives an annual restricted stock award of shares of Common Stock, the number of which is determined by the Compensation Committee. As described more fully in the table below, directors received 20,000 restricted shares of Common Stock for their 2016 service, which was determined by dividing a targeted grant value of $50,000 by the market price of the Company’s Common Stock. The $50,000 target was developed in consultation with the Compensation Committee’s compensation consultant and is expected to increase to $75,000 starting in 2017. The grants vest on the business day immediately preceding the date of the Annual Meeting, provided the holder continues to serve as a director of the Company as of that date. All Board members are also reimbursed for expenses incurred in connection with attending Board and annual meetings.

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The table below sets forth all compensation earned by the Company’s non-employee directors in 2016.

Director Compensation Table

     
Name   Fees Earned
or Paid in
Cash ($)(1)
  Stock
Awards
($)(2)(3)
  Total
($)
Michael Bronfein(4)     66,000       71,430       137,430  
David W. Golding(5)     91,000       71,430       162,430  
Michael Goldstein(6)     91,250       80,845       172,095  
Myron Z. Holubiak(7)     50,000             50,000  
Tricia Ngyuen     77,000       52,600       129,600  
R. Carter Pate(8)     125,583       90,260       215,843  
Christopher S. Shackelton(9)     80,250       52,600       132,850  

(1) The fees shown include the annual retainer fee and per-meeting fees paid to each non-employee director, committee member and chairman based upon the above schedule of fees for 2016.
(2) The value of the Stock Awards was determined in accordance with Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“ASC 718”) and represents aggregate grant date fair value. Assumptions used in the calculation of these amounts are included in the footnotes to the Company’s audited financial statements for the fiscal year ended December 31, 2016 included in the 2016 Annual Report.
(3) Each non-employee director received a grant of 20,000 shares of restricted Common Stock for annual service as a director, which vests on May 1, 2017. The following stock awards were outstanding at fiscal year-end:

 
Name   Unvested
Restricted
Stock Awards
Outstanding at
Fiscal Year
End
Michael Bronfein     20,000  
David W. Golding     20,000  
Michael Goldstein     20,000  
Tricia H. Nguyen     20,000  
R. Carter Pate     20,000  
Christopher S. Shackelton(9)     20,000  
(4) Stock awards include the value of 7,000 shares of restricted Common Stock awarded to Mr. Bronfein for his service on a special committee.
(5) Stock awards include the value of 7,000 shares of restricted Common Stock awarded to Mr. Golding for his service on a special committee.
(6) Stock awards include the value of 10,500 shares of restricted Common Stock awarded to Mr. Goldstein for his service on a special committee.
(7) Mr. Holubiak retired from the Board effective June 1, 2016. Accordingly, Mr. Holubiak’s director compensation was pro-rated based on the number of days in 2016 that he served as a director and as the Chairman of the Board.
(8) Mr. Pate was elected Chairman of the Board in May 2016. Accordingly, Mr. Pate’s director compensation was pro-rated based on the number of days in 2016 that he served as Chairman of the Board. Mr. Pate’s stock awards include the value of 14,000 shares of restricted Common Stock awarded to Mr. Pate for his service on a special committee.
(9) Fees due to Mr. Shackelton were paid directly to CCP pursuant to a resolution of the Board by agreement between the Company and CCP. Mr. Shackelton’s stock award took the form of 20,000 shares of Phantom Stock, a market-based cash award that entitles CCP to a cash payment equal to the fair market value of an equivalent number of shares of Common Stock as of the vesting date, which is May 1, 2017, the day immediately preceding the date of the Annual Meeting.

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The Company anticipates that all cash and non-cash compensation Mr. Neumann is entitled to receive in connection with his service on the Board will be paid directly to KRG Capital Management LP, of which Mr. Neumann is a limited partner, pursuant to the terms of its partnership agreement and by agreement between the Company and KRG Capital Management LP.

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee is responsible for overseeing the process of accounting and financial reporting of the Company and the audits and financial statements of the Company. The Audit Committee operates pursuant to a written charter that is reviewed annually by the Audit Committee. As set forth in the Audit Committee charter, management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Company. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States.

In the performance of its oversight function, the Company’s Audit Committee reviewed and discussed with the Company’s management and the Company’s independent registered public accounting firm, KPMG LLP, the audited consolidated financial statements of the Company contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 16, Communications with Audit Committees, as adopted by the PCAOB in Rule 3200T, and as modified or supplemented. In addition, the Audit Committee has received and discussed with the Company’s independent registered public accounting firm the written disclosures and the letter from the Company’s independent registered public accounting firm required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with the independent registered public accounting firm its independence.

Based on the review and discussions described in the preceding paragraph above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.

Submitted by the Audit Committee:
 
Michael Goldstein, Chairman
Michael Bronfein
Christopher S. Shackelton
R. Carter Pate

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EXECUTIVE OFFICERS

The following sets forth certain information with respect to each person currently serving as an executive officer of the Company who is not also a director of the Company. Except as set forth below, none of the corporations or organizations identified below is a parent, subsidiary or other affiliate of the Company.

Jeffrey M. Kreger, 49, Senior Vice President, Chief Financial Officer and Treasurer.  Mr. Kreger joined the Company in April 2015. Prior to joining the Company, Mr. Kreger served as the Executive Vice President, Chief Financial Officer and Treasurer of LHC Group, Inc. (“LHC”), a NASDAQ-listed post-acute care healthcare services company, from January 2014 to January 2015, where he managed all accounting, reporting, finance and treasury functions for the company. Mr. Kreger also served as LHC’s Senior Vice President of Finance from January 2015 to April 2015, a position he also held from February 2013 to December 2013. From December 2006 to January 2013, Mr. Kreger worked as senior vice president and corporate controller for Sun Healthcare Group Inc. in Irvine, Calif. He previously held financial leadership positions with Consolidated Graphics Inc., Philip Services Corp. and American Habilitation Inc., all of Houston, as well as Sava Senior Care of Atlanta. He also worked as a financial auditor with Ernst & Young, LLP. Mr. Kreger is a graduate of the University of Texas at Austin, where he received a bachelor’s degree in business administration with a concentration in accounting. He earned a master’s degree in business administration from the University of Houston. Mr. Kreger is a certified public accountant licensed in the state of Texas.

David Evans, 53, Senior Vice President, Chief Operating Officer.  Mr. Evans joined the Company in February 2009. Mr. Evans was Chief Financial Officer and Secretary of Byram Healthcare Centers, Inc., a provider of medical supplies and pharmacy items to long-term chronic patients, from August 2006 to July 2008. From June 2003 to August 2006, Mr. Evans was the Corporate Vice President, Strategic Operations of Option Care, Inc., a home infusion and specialty pharmaceutical company.

C. Britt Jeffcoat, 44, Vice President, Controller & Chief Accounting Officer.  Mr. Jeffcoat joined the Company in May 2015. From October 2013 to May 2015, Mr. Jeffcoat served as Assistant Corporate Controller of JP Energy Partners LP, a NYSE-listed owner, operator, developer and acquirer of a portfolio of midstream energy assets in the United States. From April 2007 to October 2013, Mr. Jeffcoat served as Vice President and Assistant Corporate Controller of Sun Healthcare Group, Inc., a post-acute healthcare services company. Mr. Jeffcoat holds a bachelor’s degree in business administration from the University of Missouri and a master’s degree in accountancy from the University of Missouri. Mr. Jeffcoat is a certified public accountant.

Alex Schott, 47, Senior Vice President, Strategic Operations,  Mr. Schott joined the Company in September 2016. From 2014 until joining the Company, Mr. Schott was the Chief Financial Officer for Home Solutions from 2013 and was responsible for leading accounting, finance, treasury, reimbursement, and economic strategy and forecasting. From 2010 to 2014, Mr. Schott served as Vice President of Finance for Lanx, Inc., an international medical device company that was acquired in 2013 by Biomet, Inc., a global manufacturer of musculoskeletal and biotechnology products. Mr. Schott served as Vice President and Controller at Coram Specialty Infusion Services from 2000 until 2009. In addition to his healthcare experience, Mr. Schott has experience in finance and accounting in the retail, wholesale, resort, and medical response industries. Mr. Schott holds a Bachelor of Science in Accounting from Metropolitan State University of Denver.

Jody Kepler, 47, Senior Vice President, Chief Compliance Officer and Privacy Officer.  Ms. Kepler joined the Company in December 2016. From 2010 until December 2016, Ms. Kepler served as legal counsel and Privacy Officer for Coram, LLC, an affiliate of CVS Health, Inc., that provides home infusion services. Ms. Kepler’s role included advising Coram on healthcare regulatory matters, including privacy, reimbursement and fraud, waste and abuse regulations. Ms. Kepler holds a bachelor of science degree from the University of Texas Southwestern Medical Center, a juris doctor from Southern Methodist University Dedman School of Law, and an L.L.M. from the University of Denver, Sturm School of Law.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

The Compensation Committee reviews and approves the overall compensation strategy and policies for the Company as well as material compensation arrangements for senior executives. Each member of the Compensation Committee is “independent” as set forth in Rule 5605(a)(2) of the NASDAQ Rules. In addition, the Compensation Committee reviews and approves corporate performance goals and objectives relevant to the compensation of the Company’s executive officers and other senior management; reviews and approves the compensation and other terms of employment of the Company’s Chief Executive Officer and other senior executives; and oversees the 2008 Plan, the 2001 Plan, the Directors Plan and the CHS Plan. Although there are still outstanding and unvested awards from the 2001 Plan, the Directors Plan and the CHS Plan, new awards may only be granted from the 2008 Plan. The Compensation Committee is also responsible for ensuring that adequate management development programs and activities are created and implemented in order to provide a succession plan for executive officers and other significant positions within the Company.

The Compensation Committee, from time to time, utilizes compensation consultants to assist the Committee with:

compensation benchmarking;
incentive plan design and grant levels;
current and anticipated trends in executive compensation; and
compliance with executive compensation regulations.

Objectives of the Company’s Compensation Program

The Compensation Committee adheres to the following three principles in discharging its responsibilities:

Overall compensation programs should be structured to ensure our ability to attract, retain, motivate and reward those individuals who are best suited to achieve the desired performance results, both long-term and short-term, while taking into account the roles, duties and responsibilities of individuals and their respective departments.
There should be a strong link between executive officer compensation and the Company’s short-term and long-term financial performance.
Annual bonuses and long-term incentive compensation for senior management and key employees should be “at risk,” or based upon Company performance and/or the satisfactory achievement of pre-established financial and other performance related goals and objectives.

Role of Benchmarking

In determining compensation, the Compensation Committee considers the compensation levels, programs and practices of certain companies in the healthcare industry to assure that our programs are market competitive. The Compensation Committee reviews and periodically adjusts the peer group it uses in making compensation decisions.

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In 2016, with the assistance of ClearBridge Compensation Group (“ClearBridge”), the Compensation Committee reviewed the composition of the Company’s peer group. Based on ClearBridge’s review and the Company’s size, business, revenue, market capitalization and other factors, in July 2016, the Board approved a peer group of the following companies:

   
Addus HomeCare Corporation   Chemed Corp.   Healthways, Inc.
Alliance Healthcare Services, Inc.   Civitas Solutions, Inc.   LHC Group, Inc.
Almost Family, Inc.   Diplomat Pharmacy, Inc.   National HealthCare Corporation
Amedisys Inc.   The Ensign Group, Inc.   PetMed Express, Inc.
American Renal Assoc. Hldgs, Inc.   Five Star Quality Care Inc.   PharMerica Corporation
Centric Health Corporation   Fred’s, Inc.     

The companies in this peer group reported annual revenues ranging from $4 billion to $170 million per year, with a median of $917 million and EBITDA ranging from $17 million to $217 million with a median of $83 million.

Management’s Role in Compensation Practices

While the Compensation Committee does not delegate to management its authority to determine executive compensation, it considers recommendations from the Chief Executive Officer in making compensation decisions for executive officers, other than himself. In making compensation recommendations to the Compensation Committee, the Chief Executive Officer generally considers individual, business unit, division and Company performance and comparable compensation for a similar position at other competitive companies. Compensation levels and targets, as well as performance targets and compensation ranges, are then proposed by management to the Compensation Committee, which reviews the proposals, discusses them with management and from time to time the Compensation Committee’s outside consultant, and considers the benchmark data. The Compensation Committee makes final decisions on compensation. The Chairman of the Compensation Committee advises the Chief Executive Officer of the Compensation Committee’s decisions and the Chief Executive Officer, in turn, informs other members of senior management of the decisions, as appropriate.

The Compensation Consultant’s Role in Compensation Practices

The Compensation Committee has the sole authority to retain and terminate independent consultants on matters of executive compensation and benefits, including sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee also has the authority to obtain advice and assistance for internal and external legal, accounting, or other advisors. As stated above, the Compensation Committee utilizes ClearBridge as its compensation consultant. ClearBridge reports directly to the Compensation Committee. ClearBridge was not engaged to perform any additional services beyond its support of the Compensation Committee.

In reviewing conflicts of interest, our Compensation Committee considered the following six factors with respect to ClearBridge: (i) the provision of other services to the Company; (ii) the amount of fees received from the Company as a percentage of ClearBridge’s total revenue; (iii) the policies and procedures of ClearBridge that are designed to prevent conflicts of interest; (iv) any business or personal relationship of ClearBridge with a member of the Compensation Committee; (v) any Company stock owned by ClearBridge; and (vi) any business or personal relationship of ClearBridge with any of the Company’s executive officers. Upon consideration of these factors, our Compensation Committee concluded that the engagement of ClearBridge did not present any conflicts of interest.

Stockholders’ Role in Compensation Practices

The Compensation Committee considers stockholder input when setting compensation for executive officers. At the 2016 Annual Meeting, 95.1% of the votes cast on the advisory vote on executive compensation were in favor of our executive compensation policies. The Board and the Compensation Committee reviewed these results and determined that, given the significant level of support, no major re-examination of our

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executive compensation policies was necessary at this time. The Compensation Committee will continue to consider the outcome of the annual advisory vote to approve compensation when making future compensation decisions for the executive officers.

Management Turnover During 2016

In connection with our entry into the Asset Purchase Agreement with Home Solutions, on June 13, 2016, the Company announced that it expected to appoint Daniel Greenleaf as President and Chief Executive Officer effective upon the consummation of the Home Solutions Transaction. On September 9, 2016, the Company consummated the Home Solutions Transaction and the Board appointed Mr. Greenleaf as President and Chief Executive Officer. Also in connection with the consummation of the Home Solutions Transaction, Richard Smith stepped down from the position of President and Chief Executive Officer and Brian Stiver stepped down from the position of Senior Vice President, Sales and Marketing. David Evans, Senior Vice President, Strategic Operations, was appointed Chief Operating Officer, replacing J. Christian Luthin. A description of the agreements entered into between the Company and the incoming and departing officers appears in the compensation tables below.

Elements of the Executive Compensation Program

With the above principles and benchmarking data as a guide, the Compensation Committee embraces a “pay-for-performance” philosophy and has adopted compensation programs that it believes are competitive with compensation paid to executives in similar businesses with persons holding similar positions and having similar duties and responsibilities. The compensation program for executive officers consists of:

base salary,
annual cash incentive compensation, and
long-term incentive compensation.

Base Salary.  Base salary is the only fixed component of the executive compensation program and is the only element of executive compensation not directly based on Company performance. The Compensation Committee reviews base salaries for executives other than the Chief Executive Officer from time to time and approves salary levels after assessing a number of factors, including our performance, the executive’s performance, the executive’s scope of responsibilities, competitive compensation levels coupled with internal equity considerations and our ability to pay. The minimum base salary of the Chief Executive Officer is fixed by the terms of his employment agreement, although may be increased at the discretion of the Compensation Committee.

Base salaries allow us to provide a competitive level of compensation in order to attract and retain superior employees. On an overall basis, base salary is generally targeted at the 50th percentile of the competitive market (as discussed above) for the Chief Executive Officer and his direct reports, subject to individual circumstances and the need to obtain or retain appropriate talent.

Performance-Based Annual Cash Incentive Compensation.  We do not guarantee annual bonuses to our executives or to employees at any level. A broad group of approximately 224 management employees, including the named executive officers, are eligible to participate in a performance-based annual cash incentive plan. The cash incentive plan is designed to motivate employees to continuously improve our business performance and to promote a results-oriented business culture by rewarding an executive officer’s individual performance as well as the overall Company performance for a given year. Annual cash incentive compensation is generally targeted at the 50th percentile of the companies included within the Company’s selected peer group. Executive officers have an opportunity to receive annual incentive compensation under the cash incentive plan if individual, corporate and/or departmental or business unit goals and objectives established annually by the Compensation Committee are achieved for a given year.

Employees eligible to participate in Company-wide cash incentive awards, including those for executives, are recommended to the Compensation Committee for approval based on an assessment by the Chief Executive Officer. If previously identified financial performance thresholds or other objective corporate goals and objectives are achieved, then an incentive award is paid to individuals for that year. The Company did not meet the financial performance target for 2016 of $59.7 million of Adjusted EBITDA (as calculated in

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accordance with our year-end earnings release and Annual Report on Form 10-K), so no cash incentives were paid to any member of management who participated in the cash incentive plan.

In October 2016, the Compensation Committee established certain performance targets for Mr. Greenleaf for the fourth quarter of 2016, which entitled Mr. Greenleaf to a bonus of up to 200% of his fourth quarter salary if he met synergy and cost savings targets of at least $2.25 million, with a maximum target of $3.2 million during the fourth quarter 2016. The Compensation Committee determined that Mr. Greenleaf achieved the maximum target and, accordingly, Mr. Greenleaf received a bonus of $362,500. Below are the bonus targets and performance goals that were set for 2016 for each named executive officer.

Daniel E. Greenleaf.  The target annual cash bonus for the Chief Executive Officer is targeted at 100% of base salary, and may range from 0% (if the minimum performance required to pay out any portion of the annual bonus is not achieved) to a maximum of 200% of base salary. Achievement of the bonus amount for 2016 was prorated based on Mr. Greenleaf’s fourth quarter salary and tied to synergy and cost savings targets of at least $2.25 million, with a maximum target of $3.2 million during the fourth quarter 2016.
Jeffrey M. Kreger.  The annual cash bonus for the Chief Financial Officer was targeted at 80% of base salary. Achievement of the bonus amount was tied to the Company’s achievement of Adjusted EBITDA of $59.7 million and certain days sales outstanding and patient satisfaction targets.
David Evans.  The annual cash bonus for the Senior Vice President, Chief Operating Officer was targeted at 40% of base salary. Achievement of the bonus amount was tied to the Company’s achievement of Adjusted EBITDA of $59.7 million and certain days sales outstanding targets.
Britt Jeffcoat.  The annual cash bonus for the Vice President, Chief Accounting Officer was targeted at 40% of base salary. Achievement of the bonus amount was tied to the Company’s achievement of Adjusted EBITDA of $59.7 million and certain days sales outstanding and patient satisfaction targets.
Alex Schott.  The annual cash bonus for the Senior Vice President, Strategic Operations was targeted at 50% of base salary based on the Company’s assumption of the terms of Mr. Schott’s compensation while Mr. Schott was at Home Solutions. Mr. Schott was eligible for a pro-rated bonus to the extent the Company achieved its Adjusted EBITDA target of $59.7 million and certain days sales outstanding targets.
Richard Smith.  The annual cash bonus for the former Chief Executive Officer was targeted at 100% of base salary. Achievement of the bonus amount was tied to the Company’s achievement of Adjusted EBITDA of $59.7 million and certain days sales outstanding and patient satisfaction targets.
J. Christian Luthin.  The annual cash bonus for the former Chief Operating Officer was targeted at 80% of base salary. Achievement of the bonus amount was tied to the Company’s achievement of Adjusted EBITDA of $59.7 million and certain days sales outstanding and patient satisfaction targets.
Brian Stiver.  The annual cash bonus for the former Senior Vice President, Sales and Marketing was targeted at 40% of base salary. Achievement of the bonus amount was tied to the Company’s achievement of Adjusted EBITDA of $59.7 million and certain days sales outstanding targets.

Long-Term Incentive Compensation.  We have provided long-term incentives to our executive officers through the 2008 Plan, and, prior to the 2014 Annual Meeting, through the CHS Plan. The 2008 Plan permits, and the CHS Plan used to permit, the grant of various equity-based awards, including stock options, stock appreciation rights, restricted stock units, restricted stock grants and performance units. The 2008 Plan does not allow the grant of “reload” options or the repricing of stock options. Long-term incentive compensation is generally targeted at the median of the companies included within the Company’s selected peer group.

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The purpose of the 2008 Plan is to promote the interests of the Company by granting equity awards to key employees in order to (i) attract and retain key employees, (ii) provide an additional incentive to each key employee to work to increase the value of Common Stock, and (iii) provide each key employee with a stake in the future of the Company that corresponds to the stake of each of our stockholders. Historically, stock options were the primary form of long-term incentive granted as the Compensation Committee believed that stock options were the strongest tie to stock price performance and that stock options most closely aligned the interests of the executives with our stockholders. The Compensation Committee made this decision based on a number of factors, including the following: (i) the large number of outstanding stock options previously granted to management and other employees had exercise prices that were originally at market price on the grant date and subsequently exceeded the market price of our stock; (ii) the number of shares of stock remaining available for grant under the 2008 Plan; and (iii) the terms of the 2008 Plan, which provide that any grant of stock, other than options or stock appreciation rights, are counted against the pool of stock reserved for issuance under the 2008 Plan as 1.53 shares of stock for every one share of stock granted. In addition, grants of stock options have allowed the Company to reach more employees while maintaining a lower than average burn rate.

The Company recognizes that equity compensation awards dilute stockholder equity and must be used judiciously. The Company’s equity compensation practices are designed to be in line with industry norms, and we believe our historical share usage has been responsible toward and mindful of the stockholders’ interests. The Company’s average burn rate (total shares used for long term incentive compensation each year divided by the weighted average outstanding shares for each year) for the last three years was 2.19%, which is well below the industry benchmark of 5.38% set by certain proxy advisory firms. The burn rate for fiscal year 2016 was 1.4%. The Company believes that our employees’ and other plan participants’ holdings of these options is positive for our stockholders as it represents a long-term interest of our employees and other plan participants in the value of our Common Stock.

Long-term incentive compensation is generally granted on an annual basis. In addition, awards may be made to new employees upon their joining the Company, and to employees who are promoted or are rewarded for a special achievement during the year. During 2016, following the Company’s consummation of the Home Solutions Transaction, and in light of the actual and anticipated management turnover, the Compensation Committee engaged ClearBridge to review and recommend alternative long-term incentive compensation approaches designed to assist the Company in achieving the objectives of its compensation policies. As a result of that review, going forward, the Compensation Committee expects to shift to a mix of stock options and performance-based restricted stock units as part of its long term incentive compensation for named executive officers.

In March 2016, the Compensation Committee approved the grant of 25,000 stock options to Mr. Jeffcoat in recognition of Mr. Jeffcoat’s work on remediating the Company’s material weaknesses. The stock options have a strike price of the fair market value on the date of the grant and vest in equal amounts, with one third of the shares vesting on the first, second and third anniversaries of the date of the grant. The stock option agreement evidencing the grant has a ten-year term. In December 2016, the Compensation Committee approved the grant of 377,358 restricted stock units and 442,810 stock options to Mr. Greenleaf. The restricted stock units vest on December 31, 2020. The stock options have a strike price of the fair market value on the date of the grant and vest in equal amounts, with one third of the shares vesting on the first, second and third anniversaries of the date of the grant. The stock option agreement evidencing the grant has a seven-year term. The amounts were negotiated between the Company and Mr. Greenleaf as part of the Company’s appointment of Mr. Greenleaf as President and Chief Executive Officer and reflect a targeted award value based on the Company’s stock price. The Compensation Committee did not otherwise make an annual grant of stock options to the named executive officers or other key executives in 2016.

Deductibility of Compensation

In establishing pay levels for our executive officers, the Compensation Committee considers the impact of Section 162(m) of the Code on the amount of compensation deductible by the Company. Under current tax law, Section 162(m) imposes a $1.0 million limit on the amount that a publicly traded company may deduct for compensation paid to its chief executive officer and its next three most highly compensated executives, excluding the chief financial officer. This limitation does not apply to pay that qualifies as “performance-based

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compensation.” In order to qualify as performance-based, compensation must, among other things, be based solely on the attainment of pre-established, objective goals under a stockholder approved plan with no discretion permitted in determining award payouts.

While our annual cash incentive compensation program does not qualify as “performance-based compensation” under Section 162(m) because it provides discretion to the Compensation Committee to adjust awards up or down, the Compensation Committee generally seeks to structure long-term incentive compensation for the executive officers so as to qualify for full tax deductibility under Section 162(m). Although we have made some restricted stock grants to employees that vest over time, with the exception of the sign-on restricted stock units that were granted to Mr. Greenleaf, our outstanding restricted stock grants held by our executive officers are based on our achievement of pre-established performance goals. Any future grants to executive officers are expected to include vesting based on our achievement of pre-established performance goals. In addition, stock options granted under the 2008 Plan are exempt from the deduction limit of 162(m). The Compensation Committee intends to continue to pursue a strategy of maximizing the deductibility of the compensation paid to the executive officers when appropriate. But the Committee reserves the right to make awards outside of these plans or to provide compensation that does not qualify for full tax deductibility under Section 162(m) when deemed appropriate. In addition, the rules and regulations promulgated under Section 162(m) are complicated and are subject to change from time to time, sometimes with retroactive effect. As such, there can be no guarantee that any award intended to qualify will so qualify.

Retirement

We maintain a qualified 401(k) plan in which all eligible employees (including the named executive officers) may participate.

Perquisites

The Company did not provide perquisites to any of the named executive officers in 2016. Mr. Greenleaf’s employment agreement entitles him to payment of up to $25,000 for non-reimbursable expenses that are helpful to the performance of his duties to the Company.

Compensation Committee Report

Management of the Company has prepared the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K, and the Management Development and Compensation Committee has reviewed and discussed it with management. Based on this review and discussion, the Management Development and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated into the 2016 Annual Report.

Submitted by the Management Development and
Compensation Committee:

David W. Golding, Chairman
Steven Neumann
Christopher S. Shackelton
R. Carter Pate

Compensation Committee Interlocks and Insider Participation

David W. Golding, Steven Neumann, Christopher S. Shackelton and R. Carter Pate, who currently compose the Compensation Committee, are each independent, non-employee directors of the Company. No executive officer (current or former) of the Company served as a director or member of (i) the compensation committee of another entity in which one of the executive officers of such entity served on the Company’s Compensation Committee, (ii) the board of directors of another entity in which one of the executive officers of such entity served on the Company’s Compensation Committee, (iii) the compensation committee of any other entity in which one of the executive officers of such entity served as a member of the Board or (iv) were directly or indirectly the beneficiary of any related party transaction required to be disclosed under the applicable regulations under the Exchange Act, during the year ended December 31, 2016.

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Summary Compensation Table

The table below summarizes the total compensation for each of the Company’s named executive officers in 2016, 2015 and 2014 for the years in which they served as named executive officers.

             
Name & Principal Position   Year   Salary
($)
  Stock
Awards
($)(1)
  Option/SAR
Awards
($)(1)
  Non-Equity
Incentive
Plan
Compansation
($)
  All Other
Compensation
($)(2)
  Total
($)
Daniel E. Greenleaf(3) President & Chief Executive Officer     2016       207,635       418,867       621,041       362,500       25,000       1,635,043  
Jeffrey Kreger(4)
Senior Vice President, Chief Financial Officer
& Treasurer
    2016       395,000       47,400                         442,400  
    2015       265,865             653,600             145,652       1,065,117  
Britt Jeffcoat(5)
Vice President, Chief Accounting Officer
    2016       241,315             15,485             116,391       373,191  
David Evans Senior Vice President, Chief Operating Officer     2016       331,500                               331,500  
    2015       325,000             55,278                   380,278  
    2014       325,000             450,460             10,568       786,028  
Alex Schott(6)
Senior Vice President, Strategic Operations
    2016       75,000                               75,000  
Richard M. Smith(7)
Former President & Chief Executive Officer
    2016       607,500                         1,352,641       1,960,141  
    2015       650,000                         102,709       752,709  
    2014       647,115             675,690             113,979       1,436,784  
J. Christian Luthin(8) Former Senior Vice President, Chief Operating Officer     2016       290,173       52,000                   395,000       737,173  
Brian Stiver(9)
Former Senior Vice President, Sales & Marketing
    2016       231,923                         300,000       531,923  
    2015       300,000             55,278                   355,278  
    2014       275,000             450,460             4,594       730,054  

(1) Values reflect the aggregate grant date fair value computed in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in the footnotes to the Company’s audited financial statements for the fiscal year ended December 31, 2016 included in the 2016 Annual Report.
(2) Details regarding the amount shown can be found in the “All Other Compensation” table below and the footnotes thereto.
(3) Mr. Greenleaf joined the Company in September 2016, and was not a named executive officer in 2015 or 2014. Mr. Greenleaf’s base salary for 2016 was $725,000, of which he received a pro-rated amount for the portion of the year that he was with the Company.
(4) Mr. Kreger joined the Company in April 2015, and was not a named executive officer in 2014. Mr. Kreger’s base salary for 2015 was $395,000, of which he received a pro-rated amount for the portion of the year that he was with the Company.
(5) Mr. Jeffcoat joined the Company in May 2015 and was not a named executive officer in 2015 or 2014.
(6) Mr. Schott joined the Company in September 2016 and was not a named executive officer in 2015 or 2014. Mr. Schott’s base salary for 2016 was $220,000, of which he received a pro-rated amount for the portion of the year that he was with the Company.
(7) On September 9, 2016, Mr. Smith stepped down as President and Chief Executive Officer and entered into an Amended and Restated Employment Agreement that provided that Mr. Smith would remain an employee of the Company through November 30, 2016.

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(8) Mr. Luthin joined the Company in June 2015 and was appointed Chief Operating Officer effective August 10, 2015. Mr. Luthin was not a named executive officer in 2015 or 2014. Mr. Luthin served as Chief Operating Officer until August 31, 2016 and left the Company’s employment on September 19, 2016.
(9) Mr. Stiver served as Senior Vice President, Sales and Marketing until September 9, 2016 and left the Company’s employment on October 3, 2016.

All Other Compensation

The table below and related footnote disclosure describe each component of compensation included under the column heading “All Other Compensation” in the Summary Compensation Table above.

         
Name   Year   Insurance
Premiums
($)
  Legal/
Reimbursements
($)
  Severance
($)
  Total
($)
Daniel E. Greenleaf     2016             25,000 (1)            25,000  
Jeffrey M. Kreger     2016                          
    2015             145,652 (2)(3)            145,652  
David Evans     2016                          
    2015                          
    2014       10,568                   10,568  
Britt Jeffcoat     2016             116,391 (2)             
Alex Schott     2016                          
Richard M. Smith     2016                   1,352,641 (4)      1,352,641  
    2015             90,484 (2)            90,484  
    2014       9,010       104,969 (2)            113,979  
J. Christian Luthin     2016                   395,000 (5)      395,000  
Brian Stiver     2016                   300,000 (6)      300,000  
    2015                          
    2014       4,594                   4,594  

(1) Represents legal fees paid on behalf of Mr. Greenleaf in connection with the negotiation of his employment agreement executed in October 2016.
(2) Represents reimbursements of commuting fees.
(3) Includes $32,917 paid to Mr. Kreger for reimbursements of relocation expenses as provided in his Engagement Letter (as defined and further discussed below).
(4) In connection with his separation, Mr. Smith is entitled to receive $1,300,000 of cash severance. Mr. Smith is also entitled to eighteen months of health and welfare benefits in an amount of $52,641, or the cash equivalent.
(5) In connection with his separation, Mr. Luthin received $395,000 of cash severance.
(6) In connection with his separation, Mr. Stiver received $300,000 of cash severance.

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Grants of Plan Based Awards

In 2016, the Compensation Committee approved the grant of the following awards to the named executive officers.

             
Name                           
Grant Date
  Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
  Exercise
or base price
of option
awards
($/Sh)(2)
  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
  Grant Date
Fair Value of
Stock and
Option
Awards(3)
  Target
($)
  Maximum
($)
Daniel E. Greenleaf     10-24-2016       181,250       362,500                          
       12-1-2016 (4)                        442,810       1.11             621,041  
       12-1-2016 (5)                                       377,358       418,867  
Jeffrey M. Kreger     2-3-2016       316,000       316,000                          
       3-8-2016 (6)                              20,000       47,400  
David Evans     2-3-2016       132,600       132,600                          
Britt Jeffcoat     2-3-2016       96,000       96,000                          
       3-8-2016 (4)                  25,000       2.37             15,485  
Alex Schott     9-9-2016       37,500       37,500                          
Richard M. Smith     2-3-2016       650,000       650,000                          
J. Christian Luthin     2-3-2016       316,000       316,000                          
       7-6-2016 (6)                                    20,000       52,000  
Brian Stiver     2-3-2016       120,000       120,000                          

(1) Except for Mr. Greenleaf, these columns represent the estimated amounts of annual cash incentive awards granted under the Company’s performance-based annual cash incentive plan. In February 2017, the Compensation Committee determined that no cash incentive awards with respect to the fiscal year ended December 31, 2016 were earned under the Company’s performance-based annual cash incentive plan because the Company did not meet the financial preconditions to entitlement for payment of the cash incentive awards. The Compensation Committee established a cash incentive award for Mr. Greenleaf based on certain performance targets for the fourth quarter 2016. The Compensation Committee determined that Mr. Greenleaf achieved the maximum target.
(2) Options are granted with an exercise price equal to the closing price per share of Common Stock on the date of grant.
(3) Represents the total fair value, estimated as per ASC 718.
(4) Represents stock options granted under the 2008 Plan. Vesting occurs in one-third increments on the first, second and third anniversary of the grant date.
(5) Represents Restricted Stock Units granted under the 2008 Plan. Vesting occurs on December 31, 2020
(6) Represents restricted stock granted under the 2008 plan with immediate vesting in accordance with the terms of Mr. Kreger’s and Mr. Luthin’s engagement letters.

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Outstanding Equity Awards at Fiscal Year End

The following table provides information on the holdings of equity awards by the named executive officers as of December 31, 2016.

                 
                 
  Option Awards   Stock Awards
Name   Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
  Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
  Option
Exercise
Price
($)
                          
Option
Expiration
Date
  Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
  Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
Daniel E. Greenleaf           442,810 (1)            1.11       1-Dec-23                          
                                                    377,358 (11)      392,452                    
Jeffrey M. Kreger     50,000       100,000 (2)            5.17       27-Apr-25                          
       33,334       66,666 (3)            2.68       9-Aug-25                          
David Evans     40,000                   1.71       20-Feb-19                          
       50,000                   6.65       16-Jun-20                          
       50,000                   4.42       26-Apr-21                          
       100,000                   6.62       8-Mar-22                          
       75,000                   12.71       28-Mar-23                          
       66,667       33,333 (4)            7.71       29-May-24                          
       8,334       16,667 (5)            2.67       23-Sept-25                          
Britt Jeffcoat     21,667       43,333 (6)            3.55       29-May-25                          
             25,000 (7)            2.37       8-Mar-26                          
Alex Schott                                                      
Richard M. Smith(8)     105,000                   2.27       30-Nov-17                          
       250,000                   9.09       30-Nov-17                          
       125,000                   6.65       30-Nov-17                          
       200,000                   5.70       30-Nov-17                          
       150,000                   4.42       30-Nov-17                          
       425,000                   6.62       30-Nov-17                          
       200,000                   12.71       30-Nov-17                          
       150,000                   7.71       30-Nov-17                          
J. Christian Luthin(9)     150,000                   3.43       19-Sept-18                          
       100,000                   2.68       19-Sept-18                          
Brian Stiver(10)     40,000                   2.73       3-Oct-18                          
       7,500                   6.65       3-Oct-18                          
       25,000                   4.42       3-Oct-18                          
       80,000                   6.62       3-Oct-18                          
       100,000                   7.71       3-Oct-18                          
       25,000                   2.67       3-Oct-18                          

(1) Vesting schedule is as follows: one-third will vest December 1, 2017, one-third will vest on December 2, 2018 and one-third will vest on December 1, 2019.
(2) Vesting schedule is as follows: one-third vested April 27, 2016, one-third will vest April 27, 2017 and one-third will vest April 27, 2018.
(3) Vesting schedule is as follows: one-third vested August 9, 2016, one-third will vest August 9, 2017 and one-third will vest August 9, 2018.

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(4) Vesting schedule is as follows: one-third vested May 29, 2015, one-third vested May 29, 2016 and one-third will vest May 29, 2017.
(5) Vesting schedule is as follows: one-third vested September 23, 2016, one-third will vest September 23, 2017 and one-third will vest September 23, 2018.
(6) Vesting schedule is as follows: one-third vested May 29, 2016, one-third will vest May 29, 2017 and one-third will vest May 29, 2018.
(7) Vesting schedule is as follows: one-third vested March 8, 2017, one-third will vest March 8, 2018 and one-third will vest March 8, 2019.
(8) Upon Mr. Smith’s departure from the Company, all of his unvested options became fully vested and the expiration date of his options was accelerated — and the post-termination exercise period extended — to November 30, 2017.
(9) Upon Mr. Luthin’s departure from the Company, all of his unvested options became fully vested and the expiration date of his options was accelerated — and the post-termination exercise period extended — to September 19, 2018.
(10) Upon Mr. Stiver’s departure from the Company, all of his unvested options became fully vested and the expiration date of his options was accelerated — and the post-termination exercise period extended — to October 3, 2018.
(11) Each restricted stock unit represents a contingent right to receive one share of Common Stock. Restricted Stock Units vest on December 31, 2020.

Option Exercises and Stock Vested

During the year ended December 31, 2016, no option awards were exercised by the named executive officers. On March 8, 2016, Mr. Kreger was awarded 20,000 shares of Company stock, which vested immediately, and on July 6, 2016, Mr. Luthin was awarded 20,000 shares of Company stock, which vested immediately. No other stock vested for any of the named executive officers.

Employment and Severance Agreements

The Company maintains employment agreements or letter agreements with certain key executives that provide for severance and other benefits in the event of certain qualifying terminations. The Company believes that such agreements are necessary to attract high caliber employees, help to ensure a smooth transition period when an executive leaves the Company and to align stockholder and executive interests when considering strategic alternatives that may result in a change in control.

Daniel E. Greenleaf — Employment Agreement

On October 31, 2016, the Company and Mr. Greenleaf entered into an employment agreement (the “Employment Agreement”), effective as of October 31, 2016, regarding Mr. Greenleaf’s employment with the Company. The terms of the Employment Agreement provide for the employment of Mr. Greenleaf as the Company’s President and Chief Executive Officer at an initial base salary of $725,000, which may be increased (but not decreased) at the discretion of the Board or the Compensation Committee. Mr. Greenleaf is eligible to receive an annual bonus in accordance with the Company’s then applicable short-term bonus or other cash incentive program at a target bonus level of 100% of the then annual base salary (the “Target Annual Bonus”) contingent on attainment of performance goals to be reasonably established in good faith by the Compensation Committee. Mr. Greenleaf’s annual bonus may range from 0% to 200% of the Target Annual Bonus, with an amount equal to 50% of the Target Annual Bonus payable only if the then applicable minimum performance requirement is achieved. His 2016 bonus will be pro-rated. Mr. Greenleaf will also receive a $25,000 annual reimbursement for non-reimbursable expenses. The Company agreed to reimburse Mr. Greenleaf for up to $25,000 for legal fees incurred in connection with the review and negotiation of the Employment Agreement.

Pursuant to the Employment Agreement, following the Company’s receipt of shareholder approval of an increase in the Company’s authorized shares, on December 1, 2016, Mr. Greenleaf was granted initial equity grants consisting of (i) 377,358 Restricted Stock Units (the “Sign-On RSUs”) and (ii) 442,810 stock options. The Sign-On RSUs vest on December 31, 2020. The stock options vest one-third per year and have a seven-year term.

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In 2017, consistent with the Employment Agreement, Mr. Greenleaf also received 272,370 (at target) performance restricted stock units (“PRSUs”). The PRSUs will vest at the end of a three-year performance period based on achievement of EBITDA and stock price measures that were determined by the Compensation Committee on February 8, 2017, with a payout opportunity of 0 to 200% of target. Beginning in 2018, Mr. Greenleaf will be entitled to annual long-term incentive grants having an anticipated aggregate annualized grant date value of $1,100,000.

Mr. Greenleaf is subject to a non-compete covenant, which provides that during the Restricted Period, Mr. Greenleaf may not, directly or indirectly (i) provide any executive, managerial, supervisory, sales, marketing, research, consulting or customer-related services to assist any competitor in competing against the Company in the United States, (ii) provide such services for certain named companies, (iii) solicit, divert or take away, or attempt to do the foregoing, from the Company the business of any Customer, (iv) cause or attempt to cause any of the Customers to terminate or reduce their existing relationships with the Company, (v) provide any competitive products or services to any Customer in competition with the Company or (vi) solicit or induce, or attempt to do the foregoing, any employee of the Company to work for any competitor of the Company. Mr. Greenleaf is also required to keep confidential during the term of employment and thereafter all confidential and proprietary information concerning the Company and its business.

Unless renewed or extended, the Employment Agreement will terminate on December 31, 2020 (the “Initial Term”) unless earlier terminated by the Company or Mr. Greenleaf. If Mr. Greenleaf’s employment is terminated (i) at the expiration of the Initial Term (other than during a Change of Control Severance Period), (ii) at any time by the Company for Cause, (iii) due to Mr. Greenleaf’s death or disability or (iv) by Mr. Greenleaf in any manner except for Good Reason (other than during a Change in Control Severance Period), then Mr. Greenleaf or his estate will be entitled to his Base Salary through the date of termination. In the event of termination due to death or disability, he will also be entitled to a pro-rated bonus based on actual performance (the “Pro Rata Bonus”) and the annual bonus with respect to any completed year for which he has not yet been paid, based on actual performance (the “Accrued Bonus”). If Mr. Greenleaf’s employment is terminated at or after the expiration of the Initial Term (other than during a Change in Control Severance Period), he will be entitled to the Accrued Bonus with respect to 2020.

If Mr. Greenleaf’s employment is terminated without Cause or if he terminates his employment for Good Reason, in each case other than during a Change in Control Severance Period, he will be entitled to his Base Salary up to the date of such termination and severance pay in an amount equal to: (i) if such termination occurs on or before December 31, 2019, one times Base Salary; (ii) if the Company has not elected to extend the Employment Agreement and such termination occurs after December 31, 2019, the lesser of (A) one times Base Salary and (B) Mr. Greenleaf’s Base Salary for the remainder of the Initial Term or (iii) if the Company has elected to extend the Employment Agreement and such termination occurs after December 31, 2019 and before the expiration of the Initial Term, one times Mr. Greenleaf’s Base Salary plus his Target Annual Bonus for 2019. Mr. Greenleaf will also be entitled certain medical benefits, the Pro Rata Bonus and the Accrued Bonus and Mr. Greenleaf will be deemed to have satisfied a portion of the time-based vesting requirement applicable to any performance-based or time-based equity compensation, as detailed in the Employment Agreement.

If Mr. Greenleaf’s employment is terminated without Cause or if he terminates his employment for Good Reason during a Change in Control Severance Period, Mr. Greenleaf will be entitled to his Base Salary up to the date of such termination and severance pay in an amount equal to two times the sum of his Base Salary and Target Annual Bonus during the year of termination. Mr. Greenleaf will also be entitled certain medical benefits, the Pro Rata Bonus and the Accrued Bonus. Further, in the event of such termination, (i) all performance goals with respect to any outstanding performance-based equity awards will be deemed to have been achieved at target and all time-based vesting requirements will lapse in their entirety, (ii) the vesting of all unvested Sign-On RSUs and all other time-based equity awards that are not subject to performance vesting will accelerate and (iii) all stock options shall remain exercisable until the earlier of two years after the date of termination of employment or the expiration of the scheduled term of such options.

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“Cause” means (i) engaging in misconduct which is materially injurious to the Company, (ii) conviction of, or entry of a plea of nolo contendere with respect to, a felony, (iii) engaging in fraud, theft or embezzlement in connection with the business of the Company, (iv) engaging in any act of moral turpitude reasonably likely to adversely affect the Company or its business or reputation or (v) Mr. Greenleaf’s material breach of this Agreement or of any fiduciary duty to or written agreement with the Company. “Change in Control Severance Period” means the period commencing immediately prior to the consummation of a Change in Control and ending 18 months after the consummation of such Change in Control. “Good Reason” means (i) a material diminution in Mr. Greenleaf’s annual base salary, target bonus opportunity or long-term equity incentive opportunity, (ii) a material diminution in Mr. Greenleaf’s authority, duties, or responsibilities or any diminution in his titles or the assignment to Mr. Greenleaf of duties or responsibilities materially inconsistent with his position with the Company, (iii) a requirement that Mr. Greenleaf report to a corporate officer or employee instead of reporting directly and exclusively to the Board or (iv) any other action or inaction that constitutes a material breach by the Company of this Agreement.

Jeffrey M. Kreger — Engagement Letter

On April 26, 2015, Mr. Kreger and the Company entered into an engagement letter (the “Engagement Letter”) outlining the terms of Mr. Kreger’s employment as the Company’s Senior Vice President, Chief Financial Officer and Treasurer at an initial base annual salary of $395,000. In connection with relocation, Mr. Kreger was eligible for temporary housing reimbursements of $3,000 per month for up to 6 months as well as other reimbursements relating to relocation. Mr. Kreger was eligible to participate in the Company’s Management Incentive Bonus Program with a target bonus of up to 80% of his base salary, subject to satisfaction of certain corporate, departmental and individual objectives.

Under the Engagement Letter, Mr. Kreger was granted options to purchase 150,000 shares of Common Stock pursuant to the terms and conditions set forth in the 2008 Plan. The exercise price of such options was equal to the fair market value of the Common Stock on the date of grant and will vest in three equal installments at the rate of one-third per year over three years commencing on the first anniversary of the grant date. In addition, the Engagement Letter provided that after completion of 100 calendar days of employment with the Company and subject to achievement of certain performance milestones to be mutually agreed to by Mr. Kreger and the Company’s Chief Executive Officer during the first ten days of employment, Mr. Kreger would be considered by the Compensation Committee for an award of 20,000 shares of Common Stock, pursuant to the 2008 Plan.

Under the terms of the Engagement Letter, as a condition to his employment Mr. Kreger was required to enter into a restrictive covenant agreement with the Company which provides that during the term of employment and for one year following his termination, Mr. Kreger may not directly or indirectly participate in any business which is competitive with the Company’s business. Similarly, for two years following his termination, Mr. Kreger may not solicit or otherwise interfere with the Company’s relationship with any present or former employee or customer of the Company. Mr. Kreger is also required to keep confidential during the term of employment and thereafter all confidential information concerning the Company and its business.

If Mr. Kreger’s employment with the Company is terminated for any reason whatsoever, whether by the Company or Mr. Kreger, then (i) he will be entitled to receive his salary and benefits earned and accrued through the date of termination; (ii) the Company will not be liable for or obligated to pay any stock or cash bonus compensation, incentive or otherwise, not already paid or accrued through the date of termination; (iii) all fully vested and exercisable options may be exercised to the extent authorized by the 2008 Plan, and all unvested stock options shall cease to vest and be forfeited as of such date; and (iv) no other benefits shall accrue or vest subsequent to such date. In addition to the foregoing, if the Company terminates Mr. Kreger without “Cause” (as defined below) or if Mr. Kreger resigns for “Good Reason” (as defined below), then, subject to execution of a Waiver and Release Agreement, Mr. Kreger will be entitled to receive severance payments equal to 12 months of salary at his then current base salary level.

“Cause” for purposes of the Engagement Letter means (i) commission of criminal conduct which involves moral turpitude; (ii) acts which constitute fraud or self-dealing against the Company or any of its subsidiaries, including, without limitation, misappropriation or embezzlement; (iii) willful engagement in

43


 
 

conduct which is materially injurious to the Company or any of its subsidiaries; or (iv) gross misconduct in the performance of duties as an employee of the Company.

“Good Reason” for purposes of the Engagement Letter means the existence of any one or more of the following conditions that continue without Mr. Kreger’s consent for more than 45 days following written notice of such conditions by Mr. Kreger to the Chief Executive Officer (“Cure Period”): (i) a material adverse change in or reduction of Mr. Kreger’s title, authority, duties and responsibilities, or Mr. Kreger ceasing to report directly to the Chief Executive Officer; (ii) the assignment to Mr. Kreger of duties materially inconsistent with Mr. Kreger’s position with the Company; (iii) a reduction in Mr. Kreger’s gross bi-weekly salary below his initial gross bi-weekly salary as stated in the Offer Letter; (iv) Mr. Kreger no longer being eligible for a target bonus of 80% of his base salary, provided, however, to the extent that a reduction in bonus eligibility is accompanied by Mr. Kreger’s eligibility for another form of compensation, such as an award of equity compensation, that has a substantially equivalent value to such bonus eligibility reduction, the reduction in bonus eligibility will not constitute Good Reason; or (v) all or substantially all of the assets of the Company are purchased, and within 60 days of the consummation of such transaction the purchaser neither adopts the Offer Letter nor offers Mr. Kreger an employment agreement on substantially equivalent economic terms to the Offer Letter, provided that Mr. Kreger (x) delivers such notice within 30 days following his learning of such condition(s), and (y) ceases employment within 45 days after the end of the Cure Period.

David Evans — Employment Letter Agreement and Severance Agreement

Mr. Evans currently serves as the Company’s Senior Vice President, Chief Operating Officer. On January 30, 2009, Mr. Evans entered into an employment agreement with the Company which provides for his employment until terminated by the Company or Mr. Evans. In 2012, Mr. Evans’s annual base salary was increased to $325,000 from his 2010 base salary of $260,000, and in 2016, Mr. Evans’s annual base salary was increased to $331,500. Under the terms of the employment agreement, Mr. Evans is eligible to participate in all employee benefit plans and policies commensurate with his position and the Company’s cash bonus program, subject to corporate, departmental and individual targets being met. Under the employment agreement and subject to approval of the Board, Mr. Evans will also be eligible to receive stock options and restricted stock commensurate with his position.

In connection with the employment agreement, Mr. Evans also entered into a Restrictive Covenant Agreement effective February 2, 2009, which provides that during the term of employment and for a period of one year following his termination, Mr. Evans may not participate in, supervise or manage any competing activities in the defined territory. Similarly, for two years following the date of his termination, Mr. Evans may not solicit or otherwise interfere with the Company’s relationship with any present employee or any employee whose employment with the Company was terminated within the previous year, or any customer of the Company with whom Mr. Evans dealt in the two years prior to his termination of his employment with the Company. Mr. Evans is also required to keep confidential during the term of employment and thereafter all confidential and proprietary information concerning the Company and its business.

In connection with beginning his employment with the Company, Mr. Evans entered into a Severance Agreement dated February 2, 2009. Pursuant to the terms of such severance agreement, if the Company terminates Mr. Evans’ employment without cause, upon execution of the Company’s standard Waiver and Release, Mr. Evans is entitled to receive (i) severance payments equal to one year of salary at his then current base salary level payable in accordance with the Company’s then applicable payroll practices, and (ii) reimbursement for the cost of continuing health benefits for a period of one year following the date of termination; provided, however, that if Mr. Evans secures new employment during the one year period following his termination, any remaining severance payments will be reduced to an amount equal to the difference between his base salary on the date of termination and his new base salary; and provided further, if his new employer offers health insurance coverage, the Company will no longer be obligated to reimburse Mr. Evans for health insurance coverage effective on the date he starts such new employment.

Britt Jeffcoat — Offer Letter Agreement and Severance Agreement

In connection with the appointment of Mr. Jeffcoat as Vice President, Chief Accounting Officer and Controller, the Company and Mr. Jeffcoat entered into an offer letter (the “Offer Letter”) dated as of May 26, 2015. The terms of the Offer Letter provide for the employment of Mr. Jeffcoat as the Company’s Vice

44


 
 

President, Controller and Chief Accounting Officer at an initial base annual salary of $240,000. Mr. Jeffcoat is eligible to participate in all employee benefit plans and policies commensurate with his position and the Company’s cash bonus program, subject to satisfaction of corporate, departmental and individual objectives. Mr. Jeffcoat is also eligible for temporary housing reimbursements of $3,000 per month as well as other reimbursements relating to relocation. In addition, subject to approval of the Board, Mr. Jeffcoat is also eligible to receive stock options and restricted stock commensurate with his position. Mr. Jeffcoat is also required to keep confidential during the term of employment and thereafter all confidential and proprietary information concerning the Company and its business.

In connection with beginning his employment with the Company, Mr. Jeffcoat entered into a Severance Agreement dated May 26, 2015. The Severance Agreement provides that if the Company terminates Mr. Jeffcoat’s employment without cause or if Mr. Jeffcoat terminates his employment for good reason, subject to the execution of a waiver and release agreement, Mr. Jeffcoat will be entitled to receive severance payments in the amount of his then annual base salary for a period of one year following the date of termination.

Alex Schott — Offer Letter Agreement and Severance Agreement

Mr. Schott currently serves as the Senior Vice President, Strategic Operations. On August 26, 2016, the Company and Mr. Schott entered into an offer letter (the “Offer Letter”), effective as of the closing of the Home Solutions transaction, which occurred September 9, 2016. The Offer Letter provided for Mr. Schott’s employment at the same annual base salary as he received while working at Home Solutions, $220,000. Effective October 16, 2016, Mr. Schott’s based salary was increased to $280,000. Mr. Schott is eligible to participate in all employee benefit plans and policies commensurate with his position and the Company’s cash bonus program, subject to satisfaction of corporate, departmental and individual objectives. Mr. Schott is also eligible, subject to approval of the Board, to receive stock options and restricted stock commensurate with his position.

As a condition of Mr. Schott’s employment, on September 9, 2016, Mr. Schott entered into a Restrictive Covenant Agreement, which provides that during the term of his employment and for a period of one year following his termination, Mr. Schott may not participate in, supervise or manage any competing activities in the defined territory. Similarly, for two years following the date of his termination, Mr. Schott may not solicit or otherwise interfere with the Company’s relationship with any present employee or any employee whose employment with the Company was terminated within the previous year, or any customer of the Company with whom Mr. Schott dealt in the two years prior to his termination of his employment with the Company. Mr. Schott is also required to keep confidential during the term of employment and thereafter all confidential and proprietary information concerning the Company and its business.

Mr. Schott also entered into a Severance Agreement, effective September 9, 2016. The Severance Agreement provides that if the Company terminates Mr. Schott’s employment without cause, subject to the execution of a waiver and release agreement, Mr. Schott will be entitled to receive severance payments in the amount of his then annual base salary for a period of one year following the date of termination.

Potential Change in Control and Severance Payments

The following tables summarize potential change in control payments for Messrs. Greenleaf, Kreger, Evans, Jeffcoat and Schott. Change in control has the meaning assigned to the term in BioScrip’s Amended and Restated 2008 Equity Incentive Plan. The columns below describe the payments that would apply in different termination scenarios — a termination of employment as a result of the named executive officer’s voluntary resignation without good reason, termination of employment by the Company for cause, death, disability, termination of employment by the Company without cause, termination of employment as a result of the named executive officer’s resignation for good reason, or termination of employment as a result of a change in control. The table assumes that the termination or change in control occurred on December 31, 2016. For purposes of estimating the value of amounts of equity compensation to be received in the event of a termination of employment or change in control, the below assumes a price per share of Common Stock of $1.04, which represents the closing market price of the Common Stock as reported on the NASDAQ Global Market on December 30, 2016. All amounts are expressed in dollars.

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Daniel E. Greenleaf

         
Benefit   Voluntary/
For Cause
  Death   Disability   Without
Cause/Good
Reason
  Change in
Control
Cash Severance           362,500       362,500       1,087,500       3,262,500  
Equity
                                            
Unexercisable Options                              
Unvested RSUs                       392,452       392,452  
Total                       392,452       392,452  
Retirement Benefit
                                            
Defined Benefit Plan                              
Defined Contribution Plan                              
Total                              
Other Benefits
                                            
Health & Welfare                       31,689       31,689  
Total                       31,689       31,689  
Total           362,500       362,500       1,511,641       3,686,641  

Cash Severance: Pro rata current bonus and annual bonus with respect to any completed year that has not yet been paid in the event of termination as a result of death or disability; one times base salary in the event of a termination without cause or for good reason plus certain medical benefits and pro rata current bonus and annual bonus with respect to any completed year that has not yet been paid; two times base salary and two times target annual bonus in the event of termination without cause or for good reason during a Change in Control Severance Period, plus certain medical benefits and pro rata current bonus and annual bonus with respect to any completed year that has not yet been paid.

Unexercisable Options and Unvested RSUs: Intrinsic value of accelerated vesting of stock options and Restricted Stock Units based on the December 31, 2016 closing price of $1.04. As of December 31, 2016, Mr. Greenleaf had 442,810 unvested stock options outstanding and 377,358 Restricted Stock Units, which accelerate upon certain termination events, including termination Without Cause or resignation for Good Reason. The exercise price of each unvested option is greater than the December 31, 2016 closing price of $1.04. Value of Restricted Stock Units obtained by multiplying the unvested Restricted Stock Units by the closing price of $1.04.

Health & Welfare:  18 months of health and welfare benefits in the event of a termination without cause or with good reason whether or not during a Change in Control Severance Period.

Jeffrey M. Kreger

         
Benefit   Voluntary/
For Cause
  Death   Disability   Without
Cause/Good
Reason
  Change in
Control
Cash Severance                 395,000       395,000       395,000  
Equity
                                            
Unexercisable Options                              
Total                              
Retirement Benefit
                                            
Defined Benefit Plan                              
Defined Contribution Plan                              
Total                              
Other Benefits
                                            
Health & Welfare                              
Total                              
Total                 395,000       395,000       395,000  

46


 
 

Cash Severance:  One year base salary in the event of termination by the Company other than for cause or in the event of resignation for good reason.

David Evans

         
Benefit   Voluntary/
For Cause
  Death   Disability   Without
Cause/Good
Reason
  Change in
Control
Cash Severance                 331,500       331,500       331,500  
Equity
                                            
Unexercisable Options                              
Total                              
Retirement Benefit
                                            
Defined Benefit Plan                              
Defined Contribution Plan                              
Total                              
Other Benefits
                                            
Health & Welfare                 22,085       22,085       22,085  
Total                 22,085       22,085       22,085  
Total                 353,585       353,585       353,585  

Cash Severance:  One year base salary in the event of termination by the Company other than for cause.

Health & Welfare:  One additional year of health and welfare benefits in the event of termination by the Company other than for cause.

Britt Jeffcoat

         
Benefit   Voluntary/
For Cause
  Death   Disability   Without
Cause/Good
Reason
  Change in
Control
Cash Severance                 240,000       240,000       240,000  
Equity
                                            
Unexercisable Options                              
Total                              
Retirement Benefit
                                            
Defined Benefit Plan                              
Defined Contribution Plan                              
Total                              
Other Benefits
                                            
Health & Welfare                              
Total                              
Total                 240,000       240,000       240,000  

Cash Severance:  One year base salary in the event of termination by the Company other than for cause or in the event of resignation for good reason.

47


 
 

Alex Schott

         
Benefit   Voluntary/
For Cause
  Death   Disability   Without
Cause/Good
Reason
  Change in
Control
Cash Severance                 220,000       220,000       220,000  
Equity
                                            
Unexercisable Options                              
Total                              
Retirement Benefit
                                            
Defined Benefit Plan                              
Defined Contribution Plan                              
Total                              
Other Benefits
                                            
Health & Welfare                              
Total                              
Total                 220,000       220,000       220,000  

Cash Severance: One year base salary in the event of termination by the Company other than for cause.

Richard M. Smith

Mr. Smith served as the Company’s President and Chief Executive Officer until September 9, 2016 and left the Company’s employment on November 30, 2016. In connection with his separation, Mr. Smith and the Company entered into a Separation and Release Agreement under which Mr. Smith will receive $1,300,000 of cash severance. Mr. Smith was also entitled to eighteen months of health and welfare benefits. Upon his departure, all of Mr. Smith’s unvested options became fully vested and the termination date was accelerated — and the post-termination exercise period extended — to November 30, 2017.

J. Christian Luthin

Mr. Luthin served as the Company’s Senior Vice President, Chief Operating Officer until August 31, 2016 and left the Company’s employment on September 19, 2016. In connection with his separation, Mr. Luthin and the Company entered into a Separation and Release Agreement under which Mr. Luthin will receive $395,000 of cash severance. Upon his departure, all of Mr. Luthin’s unvested options became fully vested and the termination date was accelerated — and the post-termination exercise period extended — to September 19, 2018.

Brian Stiver

Mr. Stiver served as the Company’s Senior Vice President, Sales and Marketing until September 9, 2016 and left the Company’s employment on October 3, 2016. In connection with his separation, Mr. Stiver and the Company entered into a Separation and Release Agreement under which Mr. Stiver will receive $300,000 of cash severance. Upon his departure, all of Mr. Stiver’s unvested options became fully vested and the termination date was accelerated — and the post-termination exercise period extended — to October 3, 2018. In addition, Mr. Stiver’s unvested Restricted Stock Awards became fully vested.

48


 
 

STOCKHOLDER PROPOSALS

Rule 14a-8 under the Exchange Act establishes the eligibility requirements and the procedures that must be followed for a stockholder’s proposal to be included in a public company’s proxy materials. Under Rule 14a-8, proposals submitted for inclusion in the Company’s 2018 proxy materials relating to the 2018 Annual Meeting must be received by the Company at its principal executive offices located at 1600 Broadway, Suite 700, Denver, Colorado 80202, Attention: Secretary, no later than the close of business on December [  ], 2017, in order to be included in the Company’s proxy statement and proxy relating to the 2018 Annual Meeting; provided, however, that in the event that the date of such meeting is advanced by more than 30 days or delayed by more than 30 days from the anniversary date of the Annual Meeting, notice by the stockholder to be included in the Company’s proxy statement and proxy relating to the 2018 Annual Meeting must be so delivered a reasonable time before the Company begins to print and send its proxy materials. Proposals must comply with all the requirements of Rule 14a-8 and the Company’s bylaws. The Company will determine whether to include such proposal in accordance with regulations governing the solicitation of proxies.

Stockholder proposals and nominations for directors made outside of Rule 14a-8 under the Exchange Act may be considered at the 2018 Annual Meeting only if timely notice is given to the Company. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Company no later than February 1, 2018 and no earlier than January 2, 2018; provided, however, that in the event that the date of the 2018 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the Annual Meeting, notice by a stockholder to be timely must be so delivered not earlier than the 120th day prior to the 2018 Annual Meeting and not later than the close of business on the later of the 90th day prior to the 2017 Annual Meeting or the tenth day following the day on which public announcement of the date of the 2018 Annual Meeting is first made. Such stockholder notice must comply with all of the requirements of the Company’s bylaws. The Board or the presiding officer at the 2018 Annual Meeting may reject any such proposals that are not made in accordance with these procedures or that are not a proper subject for stockholder action in accordance with applicable law. These requirements are separate from the procedural requirements a stockholder must meet to have a proposal included in the Company’s proxy statement.

ANNUAL REPORT

A copy of the 2016 Annual Report on Form 10-K, including the financial statements and financial statement schedules, as filed with the SEC, is enclosed but is not to be regarded as proxy solicitation materials. You may obtain an additional copy at no charge through our website or by contacting us for a printed set. In addition, the exhibits of the 2016 Annual Report on Form 10-K are available upon payment of charges that approximate our cost of reproduction. You may contact us for these purposes at: BioScrip, Inc., 1600 Broadway, Suite 700, Denver, Colorado 80202, Attention: Corporate Secretary.

INCORPORATION BY REFERENCE

Upon the written or oral request of any stockholder entitled to vote at the Annual Meeting, we will provide, without charge, a copy of any document incorporated by reference into this Proxy Statement by first class mail or other equally prompt means. Requests for such documents should be directed to BioScrip, Inc., 1600 Broadway, Suite 700, Denver, Colorado 80202, Attention: Corporate Secretary, telephone: (720) 697-5200.

49


 
 

HOUSEHOLDING

If you and other residents with the same last name at your mailing address own shares of Common Stock in street name, your broker or bank may have sent you a notice that your household will receive only one annual report and proxy statement for each company in which you hold stock through that broker or bank. This practice of sending only one copy of proxy materials is known as “householding.” If you received a householding communication, your broker will send one copy of this Proxy Statement and one copy of the 2016 Annual Report to your address unless contrary instructions were given by any stockholder at that address. If you received more than one copy of the proxy materials this year and you wish to reduce the number of reports you receive in the future and save the Company the cost of printing and mailing these reports, your broker will discontinue the mailing of reports on the accounts you select if you mark the designated box on your proxy card, or follow the instructions provided when you vote over the Internet.

You may revoke your consent to householding at any time by calling (800) 542-1061. The revocation of your consent to householding will be effective 30 days following its receipt. In any event, if your household received a single set of proxy materials for this year, but you would prefer to receive your own copy, we will send a copy to you if you address your written request to BioScrip, Inc., Secretary, 1600 Broadway, Suite 700, Denver, Colorado 80202, Attention: Corporate Secretary or contact BioScrip, Inc. Secretary at (720) 697-5200.

DIRECTIONS TO THE ANNUAL MEETING

If you require directions to attend the Annual Meeting, please send a written request to the Secretary of BioScrip, Inc., at 1600 Broadway, Suite 700, Denver, Colorado 80202, Attention: Corporate Secretary, telephone: (720) 697-5200.

50


 
 

Annex A

Execution Version

TAX ASSET PROTECTION PLAN
 
between
 
BIOSCRIP, INC.
 
and
 
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
as Rights Agent
 
Dated as of August 11, 2016


 
 

TABLE OF CONTENTS

 
  Page

Section 1

Certain Definitions

    1  

Section 2

Appointment of the Rights Agent

    5  

Section 3

Issuance of Rights Certificates

    5  

Section 4

Form of Rights Certificates

    7  

Section 5

Countersignature and Registration

    7  

Section 6

Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates

    7  

Section 7

Exercise of Rights; Purchase Price; Expiration Date of Rights

    8  

Section 8

Cancellation and Destruction of Rights Certificates

    9  

Section 9

Company Covenants Concerning Securities and Rights

    9  

Section 10

Record Date

    10  

Section 11

Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights

    11  

Section 12

Certificate of Adjusted Purchase Price or Number of Shares

    17  

Section 13

Fractional Rights and Fractional Shares

    17  

Section 14

Rights of Action

    18  

Section 15

Agreement of Rights Holders

    19  

Section 16

Rights Certificate Holder Not Deemed a Stockholder

    19  

Section 17

Concerning the Rights Agent

    19  

Section 18

Merger, Consolidation or Change of Name of the Rights Agent

    20  

Section 19

Duties of the Rights Agent

    20  

Section 20

Change of the Rights Agent

    22  

Section 21

Issuance of New Rights Certificates

    23  

Section 22

Redemption

    23  

Section 23

Exchange

    23  

Section 24

Notice of Certain Events

    24  

Section 25

Notices

    25  

Section 26

Supplements and Amendments

    25  

Section 27

Successors

    26  

Section 28

Determinations and Actions by the Board

    26  

Section 29

Benefits of this Agreement

    26  

Section 30

Severability

    26  

Section 31

Governing Law

    27  

Section 32

Counterparts; Facsimiles and PDFs

    27  

Section 33

Descriptive Headings; Calculation of Time Periods

    27  

Section 34

Force Majeure

    27  

i


 
 

EXHIBITS

 
Exhibit A:   Form of Certificate of Designation, Preferences and Rights of Series D Junior Participating Preferred Stock
Exhibit B:   Form of Rights Certificate
Exhibit C:   Summary of Rights

ii


 
 

TAX ASSET PROTECTION PLAN

TAX ASSET PROTECTION PLAN, dated as of August 11, 2016 (the “Agreement”), between BioScrip, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agent”).

WITNESSETH

WHEREAS, on August 11, 2016 (the “Rights Dividend Declaration Date”), the Board of Directors of the Company authorized and declared a dividend distribution of one right (each, a “Right,” and together with all other such rights distributed or issued pursuant hereto, the “Rights”) for each share of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) outstanding at the Close of Business (as hereinafter defined) on August 25, 2016 (the “Record Date”), each Right initially representing the right to purchase one ten-thousandth of a share of Preferred Stock (as hereinafter defined) of the Company, upon the terms and subject to the conditions hereinafter set forth, and further authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each share of Common Stock issued or delivered by the Company after the Record Date but prior to the earlier of the Distribution Date (as hereinafter defined) or the Expiration Date (as hereinafter defined) or as provided in Section 21 hereof.

NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereby agree as follows:

Section 1 Certain Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated:

(a) “4.9% Stockholder” shall mean a Person (other than the Company, any Related Person or any Exempt Person) who beneficially owns 4.9% or more of the Company’s then-outstanding Common Stock.