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
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Check the appropriate box:
¨
Preliminary
Proxy Statement
¨
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy
Statement
¨
Definitive
Additional Materials
¨
Soliciting
Material Pursuant to §240.14a-12
BioScrip, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check
the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Tuesday, May 7, 2013
To the Stockholders of BioScrip, Inc.:
Notice is hereby given that the 2013 Annual
Meeting of Stockholders (the “Annual Meeting”) of BioScrip, Inc., a Delaware corporation (the “Company”),
will be held at the Sheraton Tarrytown Hotel, 600 White Plains Road, Tarrytown, New York 10591 on Tuesday, May 7, 2013 at 9:00
a.m., local time, for the following purposes:
1. To
elect eight directors to the Board of Directors of the Company, each to hold office for a term of one year or until their respective
successors shall have been duly elected and shall have qualified.
2. To
vote on a non-binding advisory resolution to approve the Company’s executive compensation.
3. To
ratify the appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2013.
4. To
approve the BioScrip, Inc. Employee Stock Purchase Plan.
5. To
approve an amendment to the BioScrip, Inc. 2008 Equity Incentive Plan.
6. To
transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
The foregoing items of business, including
information regarding the Company’s current directors and those persons nominated for election as directors of the Company,
are more fully described in the Proxy Statement which is attached to and made a part of this notice.
The Board of Directors has fixed the close
of business on March 12, 2013 as the record date for determining stockholders of the Company 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. However, whether or not you plan to attend the Annual Meeting in person,
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,
-s- Kimberlee C. Seah
Kimberlee C. Seah,
Senior Vice President, Secretary and General Counsel
Elmsford, New York
April 2, 2013
Important notice regarding availability
of proxy materials for the Annual Meeting of Stockholders to be held on Tuesday, May 7, 2013 or any adjournments of that meeting:
This Proxy Statement, Proxy Card and the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 are
also available for viewing at www.proxyvote.com.
BIOSCRIP, INC.
100 Clearbrook Road
Elmsford, New York 10523
(914) 460 – 1600
PROXY STATEMENT
Meeting Time and Date
This Proxy Statement is being furnished
to the stockholders of BioScrip, Inc., a Delaware corporation (“BioScrip” or the “Company”), in connection
with the solicitation by the Board of Directors of the Company (the “Board” or the “Board of Directors”)
of proxies in the enclosed form for use in voting at the Company’s 2013 Annual Meeting of Stockholders (the “Annual
Meeting”) to be held on Tuesday, May 7, 2013 at 9:00 a.m., local time, at the Sheraton Tarrytown Hotel, 600 White Plains
Road, Tarrytown, New York 10591 and at any adjournments or postponements thereof. The shares of BioScrip’s common stock,
par value $.0001 per share (the “Common Stock”), represented by the proxies received, properly marked, dated, executed
and not revoked will be voted at the Annual Meeting.
This Proxy Statement and the accompanying
proxy card, which are furnished in connection with the solicitation of proxies by the Company’s Board of Directors, are being
mailed and made available electronically to stockholders on or about April 2, 2013. This Proxy Statement contains information on
matters to be voted upon at the annual meeting or any adjournments of that meeting.
Instead of submitting your proxy with the
paper proxy card, you may vote by telephone or electronically via the Internet. If you vote by telephone or via the Internet it
is not necessary to return your proxy card. Please note that there are separate telephone and Internet voting arrangements depending
upon whether your shares of Common Stock are registered in your name or in the name of a broker or bank. You should follow the
instructions on the proxy card you receive.
Record Date and Shares Outstanding
The close of business on March 12, 2013
has been fixed by the Board of Directors as the record date (the “Record Date”) for determining stockholders of the
Company entitled to notice of and to vote at the Annual Meeting. The only outstanding voting securities of the Company are shares
of Common Stock. As of the close of business on the Record Date, the Company had 57,038,458 shares of Common Stock issued and outstanding
and held of record by approximately 208 holders (in addition to approximately 8,132 stockholders whose shares were held in nominee
name).
Matters to be Voted on at the Annual Meeting
The following matters will be presented
for stockholder consideration and voting at the 2013 Annual Meeting:
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Proposal 1: Election of Directors
— the election of the eight directors nominated to serve on the Board of Directors
of the Company, each to hold office until their respective successors shall have been duly elected and shall have qualified.
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Proposal 2:
Vote on a Resolution to Approve
the Compensation Paid to the Company’s
Executive Officers
— a non-binding vote on a resolution to approve the compensation paid to the Company’s 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.
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Proposal 3: Ratification of the Appointment of Independent Auditors
— the ratification of the appointment of Ernst
& Young LLP as BioScrip’s independent auditor for the year ending December 31, 2013.
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Proposal 4: Approval of the BioScrip, Inc. Employee Stock Purchase Plan (the “ESPP”)
— the
approval
of the Employee Stock Purchase Plan, which is attached as
Exhibit A
to the Proxy Statement and which has been adopted by
the Board of Directors, subject to the approval of the stockholders.
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Proposal 5: Approval of an amendment to the BioScrip, Inc. 2008 Equity Incentive Plan (the “2008 Plan”)
–
the
approval of an amendment to the 2008 Plan to increase the number of shares of common stock in the
aggregate that may be subject to awards granted to directors by 300,000 shares, from 500,000 to 800,000 shares, which amendment
is attached as
Exhibit B
to the Proxy Statement and has been adopted by the Board of Directors, subject to the approval
of the stockholders
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The Board of Directors recommends that you vote FOR each
of the directors nominated under Proposal 1 and FOR Proposals 2, 3, 4 and 5.
The Board is not aware of any matters to
be presented for a vote at the 2013 Annual Meeting other than those described in this Proxy Statement. If any other matters properly
arise at the meeting, your proxy, together with the other proxies received, will be voted at the discretion of the proxy holders
designated on the proxy card.
Voting and Solicitation
Each stockholder entitled to vote at the
Annual Meeting may cast one vote in person or by proxy for each share of Common Stock held by such stockholder. To vote in person,
a stockholder should attend the Annual Meeting with a completed proxy 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 Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717. To vote by telephone, dial toll-free (800) 690-6903 using a touch-tone phone 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.
If on the Record Date a stockholder’s
shares of Common Stock were held in an account maintained at a brokerage firm, bank, dealer, or other similar organization, then
that stockholder is considered to be the beneficial owner of shares held in “street name” and these proxy materials
are being forwarded by that organization, which is considered the stockholder of record for purposes of voting at the Annual Meeting.
A stockholder who is a beneficial owner has the right to direct his or her broker or other agent on how to vote the shares of Common
Stock in his or her account. Beneficial owners of the Company’s Common Stock are also invited to attend the Annual Meeting.
However, since a beneficial owner is not the stockholder of record, he or she may not vote in person at the Annual Meeting unless
he or she requests and obtains a valid proxy from his or her broker or other agent.
Votes cast by proxy or in person at the
Annual Meeting will be tabulated by the Inspector of Election at the Annual Meeting. The Inspector of Election will also determine
whether or not a quorum is present. The holders of a majority of the shares of Common Stock issued and outstanding as of the Record
Date are required to be present at the Annual Meeting, either in person or by proxy, in order to constitute a quorum. Shares of
Common Stock represented at the Annual Meeting in person or by proxy but not voted will be counted for purposes of determining
a quorum. Accordingly, abstentions and broker “non-votes” (generally shares as to which a broker or nominee has indicated
that it has not received voting instructions from the beneficial owner and lacks discretionary authority to vote) on a particular
matter, including the election of directors, will be treated as shares that are present and entitled to vote at the Annual Meeting
for purposes of determining the presence of a quorum.
Pursuant to the rules of the U.S. Securities
and Exchange Commission and the NASDAQ Global Market broker-dealers are prohibited from voting on the election of directors, executive
compensation, or any other significant matter, all of which are considered “non-routine”, unless instructed by the
beneficial owner of the shares. Certain matters submitted to a vote of stockholders are considered to be “routine”
items upon which brokerage firms may vote in their discretion on behalf of their customers if such customers have not furnished
voting instructions within a specified period of time prior to the Annual Meeting. On those matters determined to be “non-routine,”
brokerage firms that have not received instructions from their customers would not have discretion to vote. Proposals 1, 2, 4 and
5 are likely to be considered “non-routine” matters, and Proposal 3 is likely to be considered a “routine”
matter. Accordingly, if your broker holds shares that you own in “street name,” the broker may not vote your shares
on either Proposal 1, 2, 4 or 5 without receiving instructions from you, and your shares will not be voted (i.e., broker “non-vote”).
If you do not vote in person or vote via the Internet or by telephone, or sign and return a proxy, your shares will not be counted
as “FOR” votes or “AGAINST” votes and will not affect the outcome of any of the Proposals.
In the election of directors, Proposal 1,
the eight nominees who receive the greatest number of affirmative votes will be elected to the Board of Directors. Votes to withhold
and broker non-votes will not affect the outcome of the vote on Proposal 1.
The vote on Proposal 2 to approve on a non-binding,
advisory basis, the compensation paid to the Company’s executive officers is advisory and so the results will not be binding
on the Compensation Committee. The Compensation Committee will, however, take into account the outcome of the vote when considering
future compensation arrangements. Abstentions and broker non-votes will not affect the outcome of the vote on Proposal 2.
In order to approve Proposal 3, the proposal
to ratify the appointment of Ernst & Young LLP, requires the affirmative “FOR” vote of the holders of a majority
of the shares of Common Stock represented in person or by proxy at the Annual Meeting. Abstentions will have the same effect as
a vote “AGAINST” on Proposal 3. Broker non-votes will likely not affect the outcome of the vote on Proposal 3 because
they will likely be deemed a “routine” matter upon which brokers may vote without specific direction.
In order to approve Proposal 4, the proposal
to approve the BioScrip, Inc. Employee Stock Purchase Plan; and Proposal 5, the proposal to amend the BioScrip, Inc. 2008 Equity
Incentive Plan, requires the affirmative “FOR” vote of the holders of a majority of the shares of Common Stock represented
in person or by proxy at the Annual Meeting. Abstentions and broker non-votes will have the same effect as a vote “AGAINST”
on Proposals 4 and 5.
Proxies in the accompanying 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. If, as a stockholder of record, you do not
specify how your shares are to be voted, the proxies will vote your shares FOR Proposals 1, 2, 3, 4 and 5. 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 it is intended that the persons named in the proxy
and acting thereunder will vote in accordance with their discretion on such proposals.
The solicitation of proxies will be conducted
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. 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 revoke such stockholder’s proxy. However, a proxy may be revoked at any time before it is voted.
Shareholders of Record.
If you are
a shareholder 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. Stockholders voting by telephone or via the Internet may also revoke their proxy by attending
the Annual Meeting and voting in person, by submitting the proxy in accordance with the instructions thereon or 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). However, once voting on a particular proposal is completed at the Annual
Meeting, 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 nominee 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 nominee, the shareholder of record
Adjournments and Postponements
Adjournments or postponements of the Annual
Meeting may be made for the purpose of, among other things, soliciting additional proxies. Any adjournment or postponement may
be made from time to time by approval of the holders of a majority of the shares of Common Stock present in person or by proxy
at the Annual Meeting (whether or not a quorum exists) without further notice other than by an announcement made at the Annual
Meeting. The Company does not currently intend to seek an adjournment or postponement of the Annual Meeting, but no assurance can
be given that one will not be sought at that time.
COMMON STOCK OWNERSHIP BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March
12, 2013, certain information concerning the beneficial shareholdings of (i) each person who is a director of the Company and each
director nominee; (ii) each of the Company’s executive officers named in the Summary Compensation Table set forth below;
(iii) all directors and executive officers of the Company as a group; and (iv) each person who is known by the Company to beneficially
own more than five percent of the Company’s Common Stock (based on 57,038,458 shares of common stock outstanding as of March
12, 2013). To our 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)
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Number of Shares
Beneficially Owned
(2)(3)
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Percent of
Class (3)
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Holders of 5% or more of our common stock
(excluding Directors and NEOs)
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Footnote #
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Kohlberg Management V, L.L.C.
111 Radio Circle
Mt. Kisco, New York 10549
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(4)
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15,686,149
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26.12
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%
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FMR LLC
82 Devonshire Street
Boston, MA 02109
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(5)
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4,096,771
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7.18
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%
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2012 Directors and Named Executive Officers
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Footnote #
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Richard M. Smith
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(6)
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810,001
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1.40
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%
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Charlotte W. Collins
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(7)
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78,800
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*
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Samuel P. Frieder
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(8)
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30,000
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*
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Myron Z. Holubiak
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(9)
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56,200
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*
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David R. Hubers
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(10)
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188,100
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*
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Richard L. Robbins
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(11)
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118,500
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*
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Stuart A. Samuels
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(12)
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82,700
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*
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Gordon H. Woodward
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(8)
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30,000
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*
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Hai Tran
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(13)
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—
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Mary Jane Graves
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(14)
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86,425
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*
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David Evans
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(15)
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144,540
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*
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Vito Ponzio, Jr.
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(16)
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133,334
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*
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Russel J. Corvese
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(17)
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402,422
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*
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Patricia Bogusz
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(18)
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134,470
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*
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All Directors and Executive Officers as a group
(17 persons)
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2,536,299
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(19)
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4.3
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%
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Percentage less than 1% of class.
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(1)
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Except as otherwise indicated, all addresses are c/o BioScrip,
Inc., 100 Clearbrook Road, Elmsford, NY 10523.
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(2)
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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. Except
as otherwise indicated, each person has sole voting power and sole investment power with respect to all such shares beneficially
owned by such person.
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(3)
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Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission (“SEC”) and generally includes voting or investment power over securities.
The table above includes the number of shares underlying options and warrants that are currently exercisable or are exercisable
within 60 days of March 12, 2013. With respect to each person, beneficial ownership is therefore based on 57,038,458 shares of
common stock outstanding as of March 12, 2013, plus the number of options or warrants held by such person which are currently
exercisable or are exercisable within 60 days of March 12, 2013. Shares of Common Stock subject to options and warrants that are
currently exercisable or are exercisable within 60 days of March 12, 2013 are considered outstanding and beneficially owned by
the person holding the options or warrants for the purposes of computing beneficial ownership of that person and of the directors
and executive officers as a group, but are not treated as outstanding for the purpose of computing the percentage ownership of
any other person.
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(4)
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Based on information contained in Schedule 13D filed with
the Securities and Exchange Commission on October 24, 2011 on behalf of the following: (i) Kohlberg Management V, L.L.C., a Delaware
limited liability company (“Fund V”) beneficially owns 15,686,149 shares of which it has shared voting power with
respect to 15,686,149 shares and shared dispositive power with respect to 14,889,510 shares; (ii) Kohlberg Investors V, L.P.,
a Delaware limited partnership (“Investors”) beneficially owns 8,654,951 shares of which it has shared voting power
with respect to 8,654,951 shares and shared dispositive power with respect to 7,858,312; (iii) Kohlberg Partners V, L.P., a Delaware
limited partnership (“Partners”) beneficially owns 442,499 shares for which it has shared voting power and shared
dispositive power; (iv) Kohlberg Offshore Investors V, L.P., a Delaware limited partnership (“Offshore”) beneficially
owns 526,390 shares for which it has shared voting power and shared dispositive power, (v) Kohlberg TE Investors V, L.P., a Delaware
limited partnership (“TE”) beneficially owns 5,715,246 shares for which is has shared voting power and shared dispositive
power, and (vi) KOCO Investors V, L.P., a Delaware limited partnership (“KOCO” and collectively with Investors, Partners,
Offshore and TE, the “Funds”) beneficially owns 347,063 for which it has shared voting power and shared dispositive
power. Fund V is the general partner of the Funds. Includes warrants to acquire up to an aggregate of 3,004,887 shares of the
Company’s common stock and 796,639 shares of common stock held in escrow to satisfy the indemnification obligations of the
Funds in connection with the acquisition of Critical Homecare Solutions Holdings, Inc. (“CHS”) by the Company in March
2010. Each reporting person expressly disclaims beneficial ownership of any of these securities except to the extent such reporting
person actually exercises voting or dispositive power with respect to such securities.
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(5)
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Based on information contained in Schedule 13G filed with
the Commission on February 14, 2013 by FMR, LLC, referred to herein as “FMR.” FMR advises that it is a parent holding
company. FMR reports that of the 4,096,771 shares that it beneficially owns, it has the sole power to vote or direct 308,141.
FMR indicates that various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the Common Stock of BioScrip, Inc. and no one person’s interest in the Common Stock of BioScrip, Inc.
is more than five percent (5%) of the total outstanding Common Stock.
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(6)
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Includes 680,001 shares issuable upon exercise of options
held by Mr. Smith. Excludes 374,999 shares subject to options held by Mr. Smith that will not be vested within 60 days of March
12, 2013.
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(7)
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Includes 35,000 shares issuable upon exercise of options
to purchase Common Stock held by Ms. Collins.
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(8)
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In connection with the acquisition of CHS in March 2010,
the Company entered into a stockholders’ agreement with Kohlberg Investors V, L.P., as stockholders’ representative,
the stockholders of CHS and an optionholder of CHS. Among other things, the stockholders’ agreement grants to the stockholder
representative the right to designate up to two directors (based on specified ownership percentages of the Company’s common
stock) to be nominated for election to the Company’s board of directors. The stockholders’ representative designated
Messrs. Samuel P. Frieder and Gordon H. Woodward as its representatives for nomination to the Board in accordance with the stockholders’
agreement and they were appointed to the Company’s Board upon the closing of the acquisition of CHS. Pursuant to the terms
of an Assignment and Transfer Agreement entered into on July 7, 2010, Messrs. Samuel P. Frieder and Gordon H. Woodward transferred
his pecuniary interest in their shares to Kohlberg & Co., LLC, but have retained all voting and dispositive power with respect
to such shares. Messrs. Samuel P. Frieder and Gordon H. Woodward disclaim beneficial ownership of such shares except to the extent
of his pecuniary interest therein.
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(9)
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Includes 36,200 shares issuable upon exercise of options
held by Mr. Holubiak.
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(10)
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Includes 36,200 shares issuable upon exercise of the vested
portion of options held by Mr. Hubers. Also includes 15,762 shares of Common Stock held by the David R. Hubers Revocable Trust;
11,200 shares of Common Stock held by the David R. Hubers Grantor Retained Annuity Trust; 36,978 shares of Common Stock held by
the Hubers Grandchildren’s Trust; and 26,600 shares of Common Stock held by the David R. Hubers 2010 GRAT no. 1 U/A/D 07/29/2010.
Mr. Hubers is a trustee of these trusts, other than the Hubers Grandchildren’s Trust, of which Mr. Hubers’ spouse
is the trustee.
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(11)
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Includes 25,000 shares issuable upon exercise of options
held by Mr. Robbins.
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(12)
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Includes 36,200 shares issuable upon exercise of options
held by Mr. Samuels.
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(13)
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Excludes 200,000 shares subject to options held by Mr.
Tran that will not be vested within 60 days of March 12, 2013.
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(14)
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Includes warrants to acquire up to 66,446 shares of the Company’s common stock and
1,214 shares of common stock held in escrow to satisfy the indemnification obligations in connection with the acquisition of
Critical Homecare Solutions Holdings, Inc. by the Company in March 2010.
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(15)
|
Includes 140,001 shares issuable upon exercise of options held by Mr. Evans. Excludes 99,999
shares subject to options held by Mr. Evans that will not be vested within 60 days of March 12, 2013.
|
|
(16)
|
Includes 133,334 shares issuable upon exercise of options held by Mr. Ponzio. Excludes
91,666 shares subject to options held by Mr. Ponzio that will not be vested within 60 days of March 12, 2013.
|
|
(17)
|
Includes 366,976 shares issuable upon exercise of options
held by Mr. Corvese. Excludes 93,332 shares subject to options held by Mr. Corvese that will not be vested within 60 days of March
12, 2013.
|
|
(18)
|
Includes 126,354 shares issuable upon exercise of options
held by Ms. Bogusz. Excludes 93,333 shares subject to options held by Ms. Bogusz that will not be vested within 60 days of March
12, 2013.
|
|
(19)
|
Includes 1,841,247 shares issuable upon exercise of options
and 66,446 shares issuable upon exercise of warrants. Excludes 1,060,995 shares subject to options that will not be vested within
60 days of March 12, 2013.
|
* * * * *
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, 2012.
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
securities
|
|
|
|
|
|
|
|
|
|
remaining
|
|
|
|
|
|
|
|
|
|
available for
|
|
|
|
|
|
|
|
|
|
future
|
|
|
|
Number of
|
|
|
Weighted-
|
|
|
issuance under
|
|
|
|
securities
|
|
|
average
|
|
|
equity
|
|
|
|
to be issued upon
|
|
|
exercise price
|
|
|
compensation
|
|
|
|
exercise of
|
|
|
of
|
|
|
plans
|
|
|
|
outstanding
|
|
|
outstanding
|
|
|
(excluding
|
|
|
|
options,
|
|
|
options,
|
|
|
securities
|
|
|
|
warrants and
|
|
|
warrants and
|
|
|
reflected in
|
|
|
|
rights
|
|
|
rights
|
|
|
column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders (1)
|
|
|
4,955,215
|
|
|
$
|
5.88
|
|
|
3,748,254
|
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,955,215
|
|
|
$
|
5.88
|
|
|
3,748,254
|
|
|
(1)
|
This includes the BioScrip, Inc. 2008 Plan and the CHS
Plan. In connection with the Company’s acquisition of CHS in March 2010, the Company assumed and adopted the BioScrip/CHS
2006 Equity Incentive Plan (the “CHS Plan”) and certain options issued under the under CHS Plan were converted into
the right to purchase 716,086 shares of the Company’s Common Stock and all other options issued under the CHS Plan were
either cashed out or cancelled. There are 1,719,528 shares of common stock remaining available under the CHS Plan for grant to
current employees of the Company who are former employees of CHS and to employees of the Company hired after the date of the acquisition
of CHS.
|
* * * * *
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 2012, 2011 and 2010:
Fiscal Year
|
|
|
Stock Options
Granted (#)
|
|
|
Restricted Stock
Granted (#)
|
|
2012
|
|
|
2,106,500
|
|
|
70,000
|
|
2011
|
|
|
1,523,500
|
|
|
90,000
|
|
2010
|
|
|
1,722,250
|
|
|
80,000
|
|
* * * * *
PROPOSAL 1.
ELECTION OF DIRECTORS
General
In accordance with the Company’s By-Laws,
the Board of Directors shall be comprised of such number of directors as is designated from time to time by resolution of the Board
of Directors. Directors shall 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 of
Directors 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 will 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 held by such stockholder for each nominee. Stockholders are not entitled
to cumulative voting in the election of directors. If a quorum is present, the eight nominees who receive the greatest number of
votes will be elected to the Board of Directors. In the unanticipated event that one or more of such 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 person nominated for election has agreed to serve if elected. We have no reason to believe that any nominee will be unable
to serve.
In connection with the acquisition of CHS
in March 2010, the Company entered into a stockholders’ agreement with Kohlberg Investors V, L.P., as stockholders’
representative, the stockholders of CHS and an optionholder of CHS. Among other things, the stockholders’ agreement grants
to the stockholders’ representative the right to designate up to two directors (based on specified ownership percentages
of the Company’s common stock) to be nominated for election to the Company’s board of directors. The stockholders’
representative designated Messrs. Samuel P. Frieder and Gordon H. Woodward as its representatives for nomination to the Board in
accordance with the stockholders’ agreement and they were appointed to the Company’s Board upon the closing of the
acquisition of CHS. For as long as the stockholders’ representative has the right to designate one or more directors to the
Board, at least one of those directors will be entitled to representation on the Audit, Management Development and Compensation
and Corporate Strategy committees, so long as such designee meets the requirements of the NASDAQ listing standards for such committee.
Based on the recommendation of the Governance
and Nominating Committee, the following eight persons have been nominated for election to the Board of Directors at the 2013 Annual
Meeting: Charlotte W. Collins, Samuel P. Frieder, Myron Z. Holubiak, David R. Hubers, Richard L. Robbins, Stuart A. Samuels, Richard
M. Smith, and Gordon H. Woodward. All of the nominees for election to the Board of Directors currently serve as directors of the
Company.
The following table and narrative description
sets forth, as of March 7, 2013, the age, principal occupation and employment, position with us, directorships in other public
corporations, and year first elected as one of our directors, of each of the eight individuals nominated for election as director.
Unless otherwise indicated, each nominee has been engaged in the principal occupation or occupations described below for more than
the past five years.
Name
|
|
Age
|
|
Director Since
|
|
Present Position with BioScrip
|
|
|
|
|
|
|
|
Myron Z. Holubiak
|
|
66
|
|
2005
|
|
Chairman of the Board
|
Richard M. Smith
|
|
53
|
|
2009
|
|
Director, President and CEO
|
Charlotte W. Collins
|
|
60
|
|
2003
|
|
Director
|
Samuel P. Frieder
|
|
48
|
|
2010
|
|
Director
|
David R. Hubers
|
|
70
|
|
2005
|
|
Director
|
Richard L. Robbins
|
|
72
|
|
2005
|
|
Director
|
Stuart A. Samuels
|
|
71
|
|
2005
|
|
Director
|
Gordon H. Woodward
|
|
44
|
|
2010
|
|
Director
|
The Company’s directors have backgrounds
that, when combined, provide a portfolio of experience and knowledge that serve the Company’s governance and strategic needs.
Director nominees are considered on the basis of a range of criteria including broad-based business knowledge and relationships,
prominence and reputations in their primary fields of endeavor, as well as a commitment to good corporate citizenship. They must
have demonstrated experience and ability that is relevant to the board’s oversight role with respect to the Company’s
business and affairs and have expertise and knowledge in various disciplines relevant to the Company’s business and/or operations.
Each director’s biography set forth below includes the particular experience and qualifications that led the Board to conclude
that the director should serve on the Board of Directors.
Current Directors and Nominees for Director
The following biographies set forth certain
information with respect to each current director and each nominee for election as a director, including biographical data for
at least the last five years:
Richard M. Smith, 53, President and Chief
Executive Officer.
Mr. Smith joined the Company as its President and Chief Operating Officer in January 2009 and was appointed
a director of the Company in September 2009. On January 1, 2011, Mr. Smith became the Company’s Chief Executive Officer.
Prior to joining the Company, from June 2006 to December 2008, Mr. Smith was Chief Executive Officer and a director of Byram Healthcare
Centers, Inc., a provider of medical supplies and pharmacy items to long-term chronic patients. From May 2003 to May 2006, Mr.
Smith was the President and Chief Operating Officer of Option Care, Inc., a home infusion and specialty pharmaceutical company.
Charlotte W. Collins, Esq., 60
, has
been a director of the Company since April 2003. Since January 2008, she has been a senior executive for the Asthma and Allergy
Foundation of America. From 2003 to 2007, she was Associate Professor of Health Services Management and Leadership, and Health
Policy at the George Washington University School of Public Health and Health Services. From January 2002 to June 2003, she was
an Associate Research Professor of Health Policy at the same university. She served a four year term on the National Allergy and
Infectious Diseases Advisory Council of the National Institutes of Health beginning in 2001. From September 1996 to November 2004,
Ms. Collins was Of Counsel in the health policy practice of the law firm of Powell, Goldstein LLP in its Washington DC office.
She served as General Counsel of the Regional Medical Center at Memphis for ten years until 1996 and served as interim General
Counsel for the District of Columbia Health and Hospitals Public Benefit Corporation in 1998. In 1993, Ms. Collins co-founded a
managed care plan and served on its board of directors through 1996. She has also served on the boards of two primary care centers,
a Medicare Part A intermediary company, and as a leadership coach for the Robert Wood Johnson Foundation’s Health Policy
Fellows program. In 2006, Modern Healthcare magazine named her one of the top 25 most influential minority healthcare executives.
Samuel P. Frieder, 48
, was appointed
a director of the Company in connection with the Company’s acquisition of CHS in March 2010. Mr. Frieder is the Managing
Partner of Kohlberg & Co., L.L.C. (“Kohlberg”) and a member of Kohlberg’s Investment Committee. Mr. Frieder
joined Kohlberg in 1989, became a principal in 1995 and named Managing Partner in 2006. He is a member of the board of directors
of AGY Holdings Corporation, Aurora Casket Company, Bauer Performance Sports, Chronos Life Group, Concrete Technologies Worldwide,
e+CancerCare, Katy Industries, Kellermeyer Bergensons Services, Nielsen & Bainbridge, Packaging Dynamics Corporation, Pittsburgh
Glass Works, Phillips-Medisize Corporation, Sabre Industries, Inc., SouthernCare, Stanadyne Corporation, SVP Holdings and Trico
Products. Mr. Frieder received an A.B. from Harvard College.
Myron Z. Holubiak, 66,
has been a
director of the Company since March 2005 and was appointed Chairman of the Board of the Company on April 18, 2012. Prior to being
appointed a director of the Company he had served as a director of Chronimed since September 2002. Mr. Holubiak is the former President
of Roche Laboratories, Inc. He held this position from December 1998 to August 2001. Currently, Mr. Holubiak is the President and
a member of the board of directors of 1-800-Doctors, Inc., a medical referral company that provides consumers access to physicians
and hospitals. Mr. Holubiak has been serving as a member of the board of directors of IntelliCell Biosciences, Inc. since October
2012 and as a member the board of Ventrus Biosciences, Inc. since July 2010.
David R. Hubers, 70
, has been a director
of the Company since March 2005. Prior to being appointed a director of the Company he had served as a director of Chronimed since
November 2000. Mr. Hubers was Chairman of American Express Financial Advisors, Inc. prior to his retirement. He joined American
Express Financial Advisors Inc. in 1965 and held various positions, including Senior Vice President of Finance and Chief Financial
Officer until being appointed President and Chief Executive Officer in August 1993. He served in that capacity until June 2001.
Mr. Hubers served on the boards of directors of the Carlson School of Management at the University of Minnesota and Lawson Software.
Richard L. Robbins, 72
, has been
a director of the Company since March 2005. From October 2003 through March 2006, Mr. Robbins was Senior Vice President, Financial
Reporting and Control and Principal Financial Officer of Footstar, Inc., a nationwide retailer of footwear. From July 2002 to October
2003, Mr. Robbins was a partner of Robbins Consulting LLP, a financial, strategic and management consulting firm. From 1978 to
2002, Mr. Robbins was a partner of Arthur Andersen LLP. From December 2002 to March 2003, Mr. Robbins served on the board of directors
of Bionx Corp., a medical products company. From May 2003 to October 2008, Mr. Robbins served on the board of directors of Vital
Signs, Inc., a medical products company. From August 2007 to February 2008, Mr. Robbins served on the board of directors of American
Banknote Holographics, Inc. From August 2007 to April 2009, Mr. Robbins served on the board of directors of Empire Resorts, Inc.
Since January 2012, Mr. Robbins has served on the audit committee of Resorts Casino Hotel.
Stuart A. Samuels, 71,
has been a
director of the Company since March 2005. Prior to being appointed a director of the Company he had served as a director of Chronimed
since November 2000. Since 1990, Mr. Samuels has been a management consultant, specializing in business management, strategic sales
and marketing and business development for several companies, specifically in the pharmaceutical and healthcare industries. Mr.
Samuels served on the board of directors of Target Rx, Inc. from 2000-2011, and the board of Infomedics, Inc. from 2005-2012. He
currently serves as a Business Monitor for the Federal Trade Commission.
Gordon H. Woodward, 44
, was appointed
a director of the Company in connection with the Company’s acquisition of CHS in March 2010. Mr. Woodward is a Partner and
Chief Investment Officer of Kohlberg & Co, L.L.C. (“Kohlberg”) and a member of Kohlberg’s Investment Committee.
Mr. Woodward joined Kohlberg in 1996, became a Partner in 2001 and Chief Investment Officer in 2010. He is a member of the board
of directors of Aurora Casket Company, Bauer Performance Sports, Chronos Life Group, e+CancerCare, Kellermeyer Bergensons Services,
Nielsen & Bainbridge, Packaging Dynamics Corporation, Pittsburgh Glass Works, Phillips-Medisize Corporation, Sabre Industries,
SouthernCare, Stanadyne Corporation and Standard Parking Corporation. Prior to joining Kohlberg, Mr. Woodward was with James D.
Wolfensohn Incorporated. Mr. Woodward received an A.B. from Harvard College.
Additional Director Information
From 1998 to 2007, Mr. Frieder served as
a director of Holley Performance Products, Inc. (“Holley”), a leading designer, manufacturer and distributor of high
performance automotive products headquartered in Bowling Green, Kentucky. In February 2008, Holley filed a voluntary petition for
reorganization under Chapter 11 of the federal bankruptcy laws in the U.S. Bankruptcy Court and emerged from bankruptcy in June
2010.
From October 2003 through March 2006, Mr.
Robbins was Senior Vice President, Financial Reporting and Control and Principal Financial Officer of Footstar, Inc., a nationwide
retailer of footwear. Footstar, Inc. filed for bankruptcy protection in March 2004 and emerged from bankruptcy in February 2006.
During the past ten years none of the persons
currently serving as executive officers and/or directors of the Company has been the subject matter of any of the following legal
proceedings that are required to be disclosed pursuant to Item 401(f) of Regulation S-K including: (a) any bankruptcy petition
filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
(d) any finding by a court, the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies,
or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any self-regulatory organization or registered
entity or equivalent exchange, association or entity. Further, no such legal proceedings are believed to be contemplated by governmental
authorities against any director or executive officer.
There is no family relationship among any
of the directors or executive officers of the Company.
Vote Required and Recommendation of the Board of Directors
If a quorum is present and voting, the eight
nominees receiving the highest number of votes duly cast at the Annual Meeting will be elected to the Board of Directors. Proxies
cannot be voted for a greater number of persons than the number of nominees.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE “FOR” EACH
OF THE ABOVE-NAMED NOMINEES.
PROPOSAL 2.
APPROVAL, BY ADVISORY VOTE, OF THE COMPENSATION
PAID TO THE
COMPANY’S EXECUTIVE OFFICERS
The Board of Directors recommends that you vote FOR this
proposal:
“RESOLVED, that the compensation
paid to the Company’s 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.”
This proposal will give stockholders the
opportunity to endorse the Company’s executive compensation programs and policies and the resulting compensation for the
executive officers, as described in this Proxy Statement on pages 33-49. The Company is providing this vote as required pursuant
to section 14A of the Securities Exchange Act. Because the vote on this Proposal is advisory, the results will not be binding on
the Management Development and Compensation Committee (“Compensation Committee”) and it 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 of the Board
of Directors of the Company believes that 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;
|
|
·
|
Aligning executives’ interests with those of stockholders:
Most incentive compensation is equity-based, and executives
are encouraged to meet stock ownership guidelines;
|
|
·
|
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 as a key performance indicator. As an example, the Company also incentivizes management
to achieve revenues at appropriate gross profit percentage levels and not simply revenues at any gross profit percentage level.
|
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; and
|
|
·
|
does not provide contractual change-in-control cash severance pay beyond two times base salary for triggering acceleration
upon a change of control under the Company’s equity plans.
|
The compensation of the executive officers
reflects the Compensation Committee’s independent evaluation of these accomplishments, as well as their individual accomplishments.
The Compensation Committee and Board of
Directors believes that the Company’s compensation programs and policies, and the compensation of the executive officers,
as described above and on pages 33-49 of this Proxy Statement, promote the Company’s business objectives with appropriate
compensation delivered in appropriate forms.
At the 2011 annual meeting of shareholders,
the Company’s shareholders voted in favor of holding future advisory votes every year, and the Company’s Board of Directors
subsequently adopted this as its official position. Accordingly, this Proposal 2 is being submitted to you to obtain the advisory
vote of the shareholders in accordance with the Dodd-Frank Act, Section 14A of the Securities Exchange Act and the SEC’s
rules. After this annual meeting the Company expects that the next shareholder advisory vote on the Company’s executive compensation
program will occur at the 2014 annual meeting of shareholders.
Vote Required and Recommendation of the
Board of Directors
Because the vote on this Proposal is advisory,
the results will not be binding on the Compensation Committee and it 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 as it deems appropriate.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE APPROVAL, BY ADVISORY VOTE, OF THE COMPENSATION PAID TO THE COMPANY’S EXECUTIVE OFFICERS.
PROPOSAL 3.
RATIFICATION OF ERNST & YOUNG LLP
AS THE COMPANY’S INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2013.
Ernst & Young LLP served as the Company’s
independent auditors for the year ended December 31, 2012 and the Audit Committee has appointed Ernst & Young LLP as the Company’s
independent auditors for the year ending December 31, 2013. The Board of Directors is asking that stockholders ratify the appointment
of Ernst & Young LLP as the Company’s independent auditors. While the Company’s By-Laws 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 Ernst & Young LLP, the Audit Committee will
reconsider whether or not to retain Ernst & Young LLP as the Company’s independent auditors, but may determine to do
so nonetheless. Even if the appointment of Ernst & Young 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.
A representative of Ernst & Young 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.
Independent Auditors Fees
The following table shows the aggregate
fees billed to the Company by Ernst & Young LLP for services rendered during the years ended December 31, 2011 and 2012:
|
|
Years Ended December 31,
|
|
Description of Fees
|
|
2011
|
|
2012
|
|
Audit Fees
|
|
1,277,586
|
|
1,076,179
|
|
Audit Related Fees
|
|
—
|
|
156,272
|
|
Tax Fees (1)
|
|
—
|
|
20,000
|
|
All Other Fees
|
|
1,995
|
|
—
|
|
|
|
|
|
|
|
Total Fees
|
|
1,279,581
|
|
1,252,451
|
|
|
(1)
|
In 2012, Ernst & Young LLP provided tax planning
services in connection with corporate structure. All other 2012 tax compliance, tax advice, or tax planning services were provided
by PriceWaterhouseCoopers LLP and Grant Thornton. In 2011 Ernst & Young LLP did not provide any tax compliance, tax advice
or tax planning services, all of which services were provided by PriceWaterhouseCoopers LLP.
|
Audit Fees
Audit fees consist of the aggregate fees
billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s financial statements as
of and for the years ended December 31, 2011 and 2012, its audit of our internal control over financial reporting as of December
31, 2011 and 2012, 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 2011 and 2012.
Audit Related Fees
Audit-related fees consist of the aggregate
fees for professional services rendered by Ernst & Young LLP for transaction due diligence in connection with the Company’s
acquisition of InfuScience, Inc. in 2012.
Tax Fees
Tax fees consist of the aggregate fees billed
for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
All other fees consist of the aggregate
fees for professional services rendered by Ernst & Young LLP for permitted advisory services.
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 auditors, 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 Commission. Accordingly, the Audit Committee pre-approved
all services and fees provided by Ernst & Young LLP during the year ended December 31, 2012 and has concluded that the provision
of these services is compatible with the accountant’s independence.
During the year ended December 31, 2012,
none of the total hours expended on the audit of the Company’s financial statements by Ernst & Young LLP were provided
by persons other than full time employees of Ernst & Young LLP.
Vote Required and Recommendation of the Board of Directors
Approval of the ratification of the appointment
of Ernst & Young LLP, requires the affirmative “FOR” vote of the holders of a majority of the shares of Common
Stock represented in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE
RATIFICATION OF ERNST & YOUNG LLP
AS THE COMPANY’S INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2013.
*
* * * *
PROPOSAL 4.
APPROVAL OF BIOSCRIP, INC. EMPLOYEE
STOCK PURCHASE PLAN
.
The Board of Directors has approved and
unanimously recommends that the stockholders approve the Company’s Employee Stock Purchase Place (the “ESPP”),
covering the issuance of 750,000 shares of Common Stock. The primary purpose of the ESPP is to provide all employees of the
Company and its subsidiaries with the opportunity to acquire a proprietary interest in the Company, thereby increasing their interest
in their employer’s welfare, and encouraging them to remain in the employ of their employer.
The following discussion summarizes the
material terms of the ESPP. This discussion is not intended to be complete and is qualified in its entirety by reference to the
full text of the ESPP, a copy of which is attached to this proxy statement as
Exhibit A
.
Administration
The ESPP will be administered by the Management
Development & Compensation Committee (the “Compensation Committee”), or such other committee appointed by
the Board of Directors, which shall consist of at least two or more members of the Company’s Board of Directors. Each director,
while serving as a member of the Compensation Committee, must satisfy the requirements for a “non-employee director”
under Rule 16b-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) and an “outside director”
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent not inconsistent
with applicable law, including Section 162(m) of the Code, or the rules and regulations of the principal securities exchange
on which the Common Stock is traded or listed, the Compensation Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it determines.
Each participating subsidiary of the Company
that intends to participate in the plan will adopt the ESPP as its own ESPP, effective upon the adoption by (1) official action
of its board of directors, or by other similar action, (2) execution of an instrument making such subsidiary a signatory to the
ESPP, and (3) by obtaining the consent of the Board of Directors of the Company.
Coverage Eligibility and Offering Period
The ESPP is to be provided to all eligible
employees of the Company. An eligible employee will be each employee of the Company or any subsidiary (if the subsidiary has adopted
the ESPP) except that the Compensation Committee in its sole discretion may exclude:
(a) any employee
who has accrued less than a minimum period of continuous service established by the Compensation Committee (but not to exceed two
(2) years).
(b) any employee
whose customary employment is twenty (20) hours or less per week;
(c) any employee
whose customary employment is for not more than five (5) months in any calendar year;
(d) any employee
who would directly or indirectly owns or holds (applying the rules of Section 424(d) of the Code to determine stock ownership)
immediately following of a grant an aggregate of five percent (5%) or more of the total combined voting power or value of all outstanding
shares of all classes of stock of the Company or any subsidiary; and
(e) any employee
who is a highly compensated employee of the Company or subsidiary within the meaning of Section 414(q) of the Code.
Any period of service described
in the preceding sentence may be decreased in the discretion of the Compensation Committee.
In addition, to be eligible
to participate, a person will be an employee of the Company or subsidiary on the first business day of the offering period. An
offering period will be the period determined by the Compensation Committee as the period employees are offered the opportunity
to purchase stock under the ESPP, generally the twelve (12) calendar months beginning on January 1 and ending on December 31 of
each year (the “Plan Year”), unless and until changed by the Compensation Committee in its sole and absolute discretion.
Participation, Payroll Deduction Authorization, Change and
Carry Forward/Withdrawal
An eligible employee may become a participant
by filing a written election to participate with the Compensation Committee that authorizes payroll deductions during the offering
period (a “Participant Election Form”). An eligible employee may elect to participate for less than the maximum number
of shares which he has been offered the opportunity to purchase, by authorizing a payroll deduction of a percentage of compensation
less than the percentage determined by the Board of Directors of the Company. Compensation will not include commissions based on
sales, bonuses or overtime pay.
An eligible employee may waive the right
to participate for any offering period by declining to authorize a payroll deduction. Such declination must be filed in writing
with the Compensation Committee. The filing of a written declination will apply for only the applicable offering period and not
any future offering period and will be irrevocable. Failure to timely authorize payroll deductions for an offering period will
not be treated as if the participant declined to authorize deductions, but instead will be treated as a zero percent (0%) election.
Each eligible employee who elects to participate
in the ESPP will authorize the making of payroll deductions to fund the purchase of the stock by completing and returning a Participant
Election Form. Deductions will be made pro rata for the applicable payroll periods. A participant may authorize payroll deductions
in an amount of either (i) zero percent (0%) or (ii) not less than one percent (1%) nor more than ten percent (10%) (in multiples
of one percent (1%)) of the employee’s compensation for the Plan Year. A participant who authorizes a payroll deduction of
zero percent (0%) will not be deemed to have waived participation.
Unless a participant’s employment
is terminated, a participant may not vary the amount of the participant’s payroll deduction during any offering period. However,
a participant may (i) elect to stop the payroll deductions effective with the first payroll occurring
thirty (30) days after the Compensation Committee’s receipt of the participant’s written election to stop the payroll
deductions, and (ii) with at least thirty (30) days advance written notice to the Compensation Committee, elect to decrease
the participant’s payroll deduction rate, within the limits specified above. Such notice to stop or decrease deductions will
be effective on the first day of the calendar quarter next following the date of the notice. A participant’s election to
stop the payroll deductions will be treated as a waiver of participation for the remainder of the offering period in which the
cessation occurs. A participant’s election to decrease the payroll deduction rate to zero percent (0%) will not be deemed
to be a waiver of participation.
Any amounts remaining credited to a participant’s
payroll deduction account on the last day of the Plan Year, after taking into account the amount of stock purchased by the participant,
will be carried forward to the subsequent offering period, or, may be refunded to the participant upon the Compensation Committee’s
receipt of waiver of participation by the participant.
Shares Reserved for Issuance Under the ESPP
Subject to adjustment as described below,
there shall be 750,000 shares of Common Stock authorized for issuance under the ESPP. Any shares issued under the ESPP may
consist, in whole or in part, of authorized and unissued shares of Common Stock, treasury shares of Common Stock or shares of Common
Stock purchased in the open market or otherwise.
Stock Grants and Limits
For each offering period during the term
of the ESPP, unless the Board determines otherwise, an offering will be made under which all eligible employees are granted the
opportunity to purchase stock. All grants will be deemed to have been made on the same date, which date will be the first day of
the offering period, on which date the maximum amount of stock that can be purchased under the grant and the minimum purchase price
for the stock will be fixed or determinable. Each eligible employee will be granted an opportunity to purchase up to that number
of whole shares of stock which could be purchased at the price, with an amount equal to such percentage, not to exceed ten percent
(10%), as the Board determines, of an eligible employee’s compensation.
Limitations on Stock.
Unless otherwise
amended by the Board of Directors of the Company and approved by the stockholders of the Company to the extent required by law,
a maximum number of 750,000 shares of Stock of the Company (or such number as may result following any adjustment) shall be reserved
and available for grant under the ESPP. The maximum number of shares of stock that may be granted to any participant during an
offering period will not exceed a maximum annual accrual of $25,000 provided that:
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(a)
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the maximum number of shares of stock that may be purchased
during any offering period may be increased or decreased as determined by the Compensation Committee prior to the first day of
any such offering period; and
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(b)
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notwithstanding the directly preceding or any other provision
in the ESPP to the contrary, if during an offering period more than fifty percent (50%) of the shares of stock which are available
for issuance will otherwise be purchased under the ESPP by participants during the offering period, the Compensation Committee
may further limit the number of shares of Stock that can be purchased by all participants during such offering period by establishing
a lower fixed number of shares of stock that can be purchased during such offering period by all participants but only to the
extent necessary to ensure that such fifty percent (50%) limit is not exceeded.
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Either authorized and unissued shares or
issued shares heretofore or hereafter reacquired by the employer of the employee may be made subject to purchase under the ESPP,
in the sole and absolute discretion of the Compensation Committee. Further, except if the participant purchases more than the maximum
number of shares of stock permitted, if for any reason any purchase of stock under the ESPP is not consummated, shares subject
to such purchase agreement may be subjected to a new purchase agreement under the ESPP.
Limitations on Grants.
No eligible
employee will be given the opportunity to purchase stock under the ESPP if, immediately following the grant of the right to purchase
stock, such eligible employee owns stock, including the stock he has been granted the opportunity to purchase under the ESPP, possessing
five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any parent or subsidiary
thereof, computed in accordance with section 423(b)(3) of the Code.
No eligible employee will be granted the
opportunity to purchase stock which permits the employee’s rights to purchase stock under this ESPP and under all other employee
stock purchase plans of the employer or any corporation which is the parent or a subsidiary company of the employer to accrue at
a rate which exceeds $25,000 (or such other rate as may be prescribed from time to time by the Code) of the fair market value of
stock (determined as of the first day of the offering period) for each calendar year in which such eligible employee is participating
under the ESPP, in accordance with the provisions of section 423(b)(8) of the Code.
Stock Purchase
Stock Price.
A participant may acquire
stock under the ESPP at a cost of eighty five percent (85%) of the lower of (i) the fair market value of the stock on the first
day of the Plan Year in which the stock is purchased, or (ii) the fair market value of the stock on the last day of the Plan Year
in which the stock is purchased. For these purposes, the fair market value of the stock on any given date shall be the closing
price of the stock on the relevant date, as reported on the composite tape or by NASDAQ or the most recent preceding day for which
such quotations are reported, as the case may be.
Purchase of Stock by Participant While
Employed.
At any time during the Plan Year, a participant, only if allowed by the Compensation Committee in its sole discretion
and subject to such terms and conditions as it may in its sole discretion impose, may elect to purchase that amount of stock that
the participant has been given the opportunity to purchase under the ESPP, by delivering written notice of election to purchase
such stock and a payroll deduction authorization to the Compensation Committee. If a participant elects to purchase only a part
of the stock that the participant has been given the opportunity to purchase, the remainder of that grant shall continue to the
end of the Plan Year and may be exercised as provided in the next paragraph. If a participant files a written notice of election
not to purchase with the Compensation Committee, the balance credited to the participant’s payroll deduction account will
be paid to the participant in cash, and the participant will not be entitled to participate again in the ESPP for the remainder
of the Plan Year.
If, on the last day of the Plan Year, a
participant has not made an election to purchase, in whole or in part, and has not filed a written notice of election not to purchase
with the Compensation Committee, such participant will be deemed to have elected to purchase the amount of stock which the participant
can purchase with the money in the participant’s payroll deduction account on such last date.
The balance credited to a participant payroll
deduction account, after paying for the participant’s stock, shall be paid to the participant in cash; provided, however,
that if such a balance occurs during an offering period, it shall be carried over during the offering period and be credited to
the participant’s payroll deduction account as if contributed during that offering period.
Purchase of Stock by Participant After
Termination of Employment.
If a participant’s employment terminates for any reason other than death, disability, or retirement,
the participant’s right to purchase stock under the ESPP will immediately terminate and become void, and the amount credited
to such participant’s payroll deduction account will be paid to such participant in cash.
Purchase of Stock by a Retired or Disabled
Participant.
If a participant’s employment terminates on account of the participant’s disability or retirement,
such participant will have the right to complete paying for the stock agreed to purchase by making a cash contribution to the participant’s
payroll deduction account during the period beginning on the date such employee’s employment terminates and ending ninety
(90) days following such date. In the event that such a contribution is not made, the participant’s right to purchase the
stock will immediately terminate and become void, and the amount credited to such participant’s payroll deduction account
will be paid to him in cash. A participant will be considered to have retired if its employment terminates by reason of his retirement
after attaining age sixty-five (65) and with the consent of the employer.
Purchase of Stock by a Participant’s
Representative.
In the event a participant’s employment terminates on account of the death of the participant, his heirs,
legatees, distributees or personal representatives will have the right to complete paying for the stock agreed to purchase by making
a cash contribution to his payroll deduction account during the period beginning on the date of his death and ending ninety (90)
days following date of death. In the event that such a contribution is not made, the right to purchase stock will immediately terminate
and become void, and the amount credited to such participant’s payroll deduction account will be paid to his heirs, legatees,
distributees or personal representatives in cash.
Notwithstanding anything to the contrary
in the ESPP, in no event will stock be purchasable under the ESPP after the expiration of 27 months from the date such stock first
become purchasable under the terms of the ESPP.
Payment.
Upon the election to participate,
and agreement to purchase shares, the shares of stock will be paid for in full by the making of payroll deductions and, at the
end of the Plan Year, the transfer of the purchase price from the amount credited to the participant to an account of the employer
of the employee. Any balance credited to such participant in excess of the purchase price at the end of the Plan Year will be paid
to the participant in cash. If for any reason, the balance credited to the participant at the end of the Plan Year is not sufficient
to pay for the stock purchased, the participant, his legatees, or distributees may, at such time and in such manner as the Compensation
Committee shall prescribe, contribute cash, which will be credited to the participant’s payroll deduction account in order
to pay for the full number of shares for which the participant has elected to participate, or the participant, his personal representative
heirs, legatees or distributes may purchase that part of the number of full shares which the balance credited to the participant’s
payroll deduction account is sufficient to purchase and shall receive the balance credited to such account and not used to purchase
stock in cash. Notwithstanding the foregoing, a participant will not be permitted, except in the event of retirement, disability
or death, to contribute additional cash to the participant’s payroll deduction account in excess of amounts withheld from
the participant’s compensation.
Stock Certificate.
The shares of
the stock purchased by a participant will be issued or transferred to the participant on the books of the Company as of the last
day of the Plan Year in which the purchase was made. Stock certificates will be delivered to the participant as soon as practicable
after such time, and the participant will receive and be the transferee of substantially all the rights of ownership of such stock,
in accordance with Treasury Regulations Section 1.421-1(f) as currently in effect or any successor to such Treasury Regulations.
Such rights of ownership shall include the right to vote, the right to receive declared dividends, the right to share in the assets
of the Company in the event of liquidation, the right to inspect the Company’s books, and the right to pledge or sell such
stock, subject to the restrictions on such rights in this ESPP and the restrictions on such rights imposed by applicable law. Until
delivery of certificates for the stock to the participant, the participant will have none of the rights and privileges of a stockholder
in the Company with respect to shares of stock purchased. Notwithstanding anything to the contrary herein, the Company will not
be obligated to issue stock under the ESPP if, in the opinion of counsel for the Company, such issuance would constitute a violation
of Federal or state securities laws.
Adjustment for Change in Capitalization or Merger
Notwithstanding the foregoing provision,
if the shares of stock subject to purchase under the ESPP are increased, decreased, changed into, or exchanged for a different
number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock
split up or similar event, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which
purchases are or may be made under the ESPP. A corresponding adjustment changing the number or kind of shares allocated to unpurchased
stock shall likewise be made. Any such adjustment, however, in the stock shall be made without change in the total price applicable
to the portion of the stock purchased under the ESPP which has not been fully paid for, but with a corresponding adjustment, if
appropriate, in the price for each share of stock.
Further, if the Company is reorganized,
merged or consolidated with another corporation while stock is subject to a purchase agreement under the ESPP, or, solely for purposes
of (ii) below, if the Company is dissolved or liquidated, the Company shall either (i) substitute for such shares an appropriate
number of shares of each class of stock or other securities of the reorganized or merged or consolidated corporation which were
distributed to the shareholders of the Company with respect to such shares, or (ii) permit each participant to immediately complete
making payment for the stock such participant agreed to purchase, without regard to the payroll deduction provisions, by making
a cash contribution to the participant’s payroll deduction account during the thirty (30) day period next preceding the effective
date of any such reorganization, merger or consolidation or of any dissolution or liquidation of the Company.
Transferability and Satisfaction of All Claims
No rights granted under the ESPP, including,
but not limited to, payroll deductions credited to a participant and rights with regard to the exercise of an opportunity to purchase
stock granted, may be transferred except by will or the laws of descent and distribution and, during the lifetime of the participant
to whom granted, may be exercised only by such participant.
Any payment or any issuance or transfer
of shares of stock to any participant, or to a participant’s legal representative, heir, legatee or distributee, in accordance
with the provisions of the ESPP, will to the extent thereof be in full satisfaction of all claims thereunder against the ESPP.
The Compensation Committee may require such participant, legal representative, heir, legatee or distributee, as a condition precedent
to such payment, to execute a receipt and release in such form as it will determine.
Amendments to the ESPP
The Company will have the right to amend
the ESPP in any manner it deems necessary or advisable to qualify the ESPP under the provisions of section 423 of the Code and
to amend the ESPP in any other manner, however, no amendment to the ESPP which either (i) increases the aggregate number of shares
of stock which may be sold thereunder or (ii) changes the designation of corporations whose employees are eligible to participate
will become effective unless such amendment is approved by the shareholders of the Company within twelve (12) months before or
after the date such amendment is adopted by the Board of Directors of the Company. Such shareholder approval will not be required
to designate corporations that have become the Company’s parent or subsidiary corporations after the adoption and approval
date of the ESPP.
The Company will have the right to terminate
the ESPP at any time. Further, no offering will be made after any day upon which participants elect to participate for a number
of shares equal to or greater than the number of shares remaining available for purchase. If the number of shares for which participants
elect to participate are greater than the shares remaining available, the shares available shall at the end of the offering period
will be allocated among such participants pro rata on the basis of the number of shares for which each has elected to participate.
Notwithstanding the above, the Company
will not amend or terminate the ESPP in any manner which shall retroactively impair any participant’s rights granted under
the ESPP.
Vote Required and Recommendation of the Board of Directors
Approval of the BioScrip, Inc. Employee
Stock Purchase Plan requires the affirmative “FOR” vote of the holders of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE
APPROVAL OF THE BIOSCRIP, INC. EMPLOYEE
STOCK PURCHASE PLAN.
* * * * *
PROPOSAL 5.
APPROVAL OF AN AMENDMENT TO THE
BIOSCRIP, INC.
2008
Equity Incentive Plan
TO INCREASE THE NUMBER OF SHARES THAT
MAY BE SUBJECT TO
AWARDS GRANTED TO DIRECTORS
.
Proposed Amendment
On March 27, 2013, the Company’s
Board approved, subject to stockholder approval, an amendment to the BioScrip, Inc. 2008 Equity Incentive Plan (as amended and
restated, the “2008 Plan”) and the performance goals which are a part of the 2008 Plan (each a “Performance Goal”).
The amendment proposes to increase the number of shares of Common Stock in the aggregate that may be subject to Awards granted
to directors by 300,000 shares, from 500,000 to 800,000. As of March 7, 2013 there were options to purchase 3,808,530 shares of
Common Stock outstanding under the 2008 Plan at exercise prices ranging from $1.71 to $9.16 per share and 70,000 shares of Common
Stock issued and unvested under the 2008 Plan pursuant to restricted stock grants. As of March 7, 2013, there were 2,030,960 shares
remaining available for grant under the 2008 Plan.
Background
In April 2008, the Company’s stockholders
approved and adopted the 2008 Plan and the Performance Goals. At that time 3,580,000 shares of Common Stock were reserved for issuance
thereunder and the aggregate number of shares subject to Awards granted to directors was 500,000. In June 2010 the Company’s
stockholders approved an amendment to the 2008 Plan to increase the number of authorized shares of Common Stock available for issuance
thereunder by 3,275,000 shares, from 3,580,000 shares to 6,855,000 shares.
The primary purpose of the 2008 Plan is
to (i) attract and retain key employees and directors, (ii) provide additional incentives to key employees and directors to increase
the value of the Company’s common stock; and (iii) provide key employees and directors with a stake in the future of the
Company aligning management with the Company’s stockholders. The Board of Directors relies upon the 2008 Plan as one of the
benefits necessary to attract and retain highly qualified and motivated employees. Equity is a significant component of total compensation
for employees. If fewer equity awards were granted to employees and directors, the Company would need to provide compensation in
other forms to provide a total compensation package that is competitive with other companies without appropriate consideration
given to the management of the business. Moreover, the Compensation Committee and Board believe that fewer grants would not sufficiently
align management with the Company’s stockholders. Based upon management’s estimates of the number of shares expected
to be issued under the 2008 Plan, the Board of Directors believes it is in the Company’s best interests to amend the 2008
Plan to provide for the increase in shares available for purchase thereunder so that the Company may continue to attract and retain
the services of qualified key employees by providing employees an opportunity to purchase shares of the Company’s Common
Stock through the 2008 Plan, to motivate them to increase stockholder value, and to align management with the Company’s stockholders
generally.
In order to address potential concerns
regarding the number of options or stock awards the Company intended to grant in a given year, the Board of Directors committed
to the Company’s stockholders that for fiscal years 2010 through 2012 the Company would not grant during such three fiscal
years a number of shares subject to options or stock awards to employees or non-employee directors, such that the average number
of shares granted in each of such fiscal years over such three-year period was greater than 4.02% of the average number of shares
of the Company’s common stock that were outstanding at the end of each of such three fiscal years. The burn rate was calculated
by averaging the permissible burn rates for 2009 and 2010, which was 4.39% and 3.65%, respectively. This limitation did not apply
to awards settled in cash as opposed to the delivery of shares of the Company’s common stock and awards under plans assumed
in acquisitions. For purposes of calculating the number of shares granted in a fiscal year with respect to this commitment, stock
awards counted as equivalent to 1.53 option shares. The Company calculated its burn rate by dividing its awards granted by the
weighted average basic common shares outstanding.
The following discussion summarizes the
material terms of the 2008 Plan. This discussion does not comport to be complete and is qualified in its entirety by reference
to the 2008 Plan, a copy of which is attached to this Proxy Statement as
Exhibit B
.
Administration
The 2008 Plan is administered by the Management
Development & Compensation Committee (the “Compensation Committee”), or such other committee appointed by the Board
of Directors, which shall consist of at least two or more members of the Company’s Board of Directors. Each director, while
serving as a member of the Compensation Committee, must satisfy the requirements for a “non-employee director” under
Rule 16b-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) and an “outside director” under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent not inconsistent with applicable
law, including Section 162(m) of the Code, or the rules and regulations of the principal securities exchange on which the Common
Stock is traded or listed, the Compensation Committee may delegate, by means of an express resolution that sets forth the requirements
and limitations relating to the delegation and the procedure to be followed to grant any awards under the 2008 Plan, to (1) a committee
of one or more directors of the Company any of the authority of the Compensation Committee under the 2008 Plan, including the right
to grant, cancel or suspend awards made under the 2008 Plan and (2) to the extent permitted by law, to one or more executive officers
or a committee of executive officers the right to grant awards under the 2008 Plan to key employees who are not directors or executive
officers of the Company and the authority to take action on behalf of the Compensation Committee pursuant to the 2008 Plan to cancel
or suspend awards under the 2008 Plan to key employees who are not directors or executive officers of the Company.
All grants under the 2008 Plan will be
evidenced by a certificate (an “Award Agreement”) that will incorporate such terms and conditions as the Compensation
Committee deems necessary or appropriate.
Coverage Eligibility and Annual Grant Limits
The 2008 Plan provides for the issuance
to key employees and directors of awards (each, an “Award”) consisting of stock options (“Options”), stock
appreciation rights (“SARs”), restricted stock units (“Restricted Units”), stock grants (“Stock Grants”)
and, solely to key employees, performance units (“Performance Units”). A key employee is any employee of the Company
or any subsidiary, parent or affiliate of the Company designated by the Compensation Committee who, in the judgment of the Compensation
Committee, acting in its absolute discretion, is key directly or indirectly to the success of the Company. While all employees
are highly valued, for purposes of the Plan, the Company estimates that there are currently approximately 50 key employees. No
key employee in any calendar year may be granted an Option to purchase more than 500,000 shares of Common Stock, SARs with respect
to more than 500,000 shares of Common Stock, and Stock Grants and Restricted Units that are intended to comply with the requirements
of Section 162(m) of the Code representing more than 350,000 shares of Common Stock.
Shares Reserved for Issuance Under the 2008 Plan
Subject to adjustment as described under
“Adjustment for Change in Capitalization” and “Mergers” below, there are 6,855,000 shares of Common Stock
authorized for issuance under the 2008 Plan, all of which may be subject to ISOs (as defined herein), less one share of Common
Stock for every one share of Stock that was subject to an option or stock appreciation right granted after December 31, 2007 under
the Company’s 2001 Incentive Stock Plan (the “2001 Plan”) and one and one-half shares of Common Stock for every
one share of Common Stock that was subject to an award other than an option or stock appreciation right granted after December
31, 2007 under the 2001 Plan. Any shares issued under the 2008 Plan may consist, in whole or in part, of authorized and unissued
shares of Common Stock, treasury shares of Common Stock or shares of Common Stock purchased in the open market or otherwise. Currently,
no more than 500,000 shares of Common Stock in the aggregate may be subject to Awards granted to directors. If the stockholders
approval Proposal 5 at the 2013 Annual Meeting, the aggregate number of shares of Common Stock that may be subject to Awards granted
to directors will be 800,000. Any shares of Common Stock that are issued subject to Awards of Options or SARs will be counted against
this limit as one share of Common Stock for every one share of Common Stock granted. Any shares of Common Stock that are issued
subject to Awards other than Options or SARs will be counted against this limit as 1.5 shares of Common Stock for every one share
of Common Stock granted. Upon stockholder approval in 2010, no further awards were made under the 2001 Plan.
If any shares of Common Stock subject to
an Award, or after December 31, 2007 an award under the 2001 Plan, are forfeited or expire or any Award, or after December 31,
2007 an award under the 2001 Plan, is settled for cash (in whole or in part), the shares of Common Stock subject to such Award
or award under the 2001 Plan become, to the extent of the forfeiture, expiration or cash settlement, available for issuance under
the 2008 Plan as described in the next paragraph. The following shares of Common Stock are not be added to the shares of Common
Stock authorized for grant as described above: (1) shares of Common Stock tendered by a key employee or director or withheld by
the Company in payment of the purchase price of an Option, (2) shares of Common Stock tendered by a key employee or withheld by
the Company to satisfy any tax withholding obligation with respect to an Award or an award under the 2001 Plan, and (3) shares
of Common Stock subject to a SAR that are not issued in connection with the stock settlement of the SAR on exercise thereof.
Any shares of Common Stock that again become
available for grant pursuant to the 2008 Plan are added back as one share of Common Stock for every one share of Common Stock granted
if such shares of Common Stock were subject to Options or SARs granted under the 2008 Plan or options or stock appreciation rights
granted under the 2001 Plan, and as one and one-half shares of Common Stock for every one share of Common Stock granted if such
shares of Common Stock were subject to Awards other than Options or SARs granted under the 2008 Plan or awards other than options
or stock appreciation rights granted under the 2001 Plan.
Shares of Common Stock under Awards made
in substitution or exchange for awards granted by a company acquired by the Company or any affiliate or subsidiary, or with which
the Company or any affiliate or subsidiary combines, do not reduce the shares of Common Stock authorized for grant under the 2008
Plan. Additionally, in the event that a company acquired by the Company or any affiliate or subsidiary or with which the Company
or any affiliate or subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted
in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of that pre-existing
plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to
such acquisition or combination) may be used for Awards under the 2008 Plan and will not reduce the shares of Common Stock authorized
for grant under the 2008 Plan; provided that Awards using such available shares will not be made after the date awards or grants
could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and will only be made to
individuals who were not employees or directors of the Company, an affiliate or a subsidiary prior to such acquisition or combination.
Options
The Compensation Committee acting in its
absolute discretion has the right to grant Options to key employees and directors to purchase shares of Common Stock. Each grant
shall be evidenced by an option certificate setting forth whether the Option is an incentive stock option (“ISO”),
which is intended to qualify for special tax treatment under Section 422 of the Code, or a non-qualified incentive stock option
(“Non-ISO”). Each Option granted under the 2008 Plan entitles the holder thereof to purchase the number of shares of
Common Stock specified in the grant at the exercise price specified in the related option certificate. At the discretion of the
Compensation Committee, the option certificate can provide for payment of the exercise price either in cash, by check, or in Common
Stock and which is acceptable to the Compensation Committee or in any combination of cash, check and such Common Stock. The exercise
price may also be paid (1) through any cashless exercise procedure which is acceptable to the Compensation Committee or its delegate
and which is facilitated through a sale of Common Stock, (2) with the consent of the Compensation Committee, by withholding Common
Stock otherwise issuable in connection with the exercise of the Option, and (3) through any other method specified in an Award
Agreement.
The terms and conditions of each Option
granted under the 2008 Plan will be determined by the Compensation Committee, but no Option will be granted at an exercise price
which is less than the fair market value of the Common Stock on the grant date (generally, the closing price for the Common Stock
on the principal securities exchange on which the Common Stock is traded or listed on the date the Option is granted or, if there
was no closing price on that date, on the last preceding date on which a closing price was reported). In addition, if the Option
is an ISO that is granted to a 10% stockholder of the Company, the Option exercise price will be no less than 110% of the fair
market value of the shares of Common Stock on the grant date. Except for adjustments as described under “Adjustment for Change
in Capitalization” and “Mergers” below, without the approval of the Company’s stockholders, the option
price shall not be reduced after the Option is granted, an Option may not be cancelled in exchange for cash or another Award, and
no other action may be made with respect to an Option that would be treated as a repricing under the rules and regulations of the
principal securities exchange on which the Common Stock is traded.
No Option granted to an employee of the
Company or any subsidiary of the Company may be exercisable before the expiration of one year from the Option grant date (but it
may become exercisable pro rata over such time), except in accordance with the 2008 Plan or as set forth in the Award Agreement
with respect to the retirement, death or disability of a participant or under special circumstances determined by the Compensation
Committee. No Option may be exercisable more than 10 years from the grant date, or, if the Option is an ISO granted to a 10% stockholder
of the Company, it may not be exercisable more than five years from the grant date. Moreover, no Option will be treated as an ISO
to the extent that the aggregate fair market value of the Common Stock subject to the Option (determined as of the date the ISO
was granted) which would first become exercisable in any calendar year exceeds $100,000. The Compensation Committee may not, as
part of an Option grant, provide for an Option reload feature whereby an additional Option is automatically granted to pay all
or a part of the Option exercise price or a part of any related tax withholding requirement.
Stock Appreciation Rights
SARs may be granted by the Compensation
Committee to key employees and directors under the 2008 Plan, either as part of an Option or as stand-alone SARs. The terms and
conditions for a SAR granted as part of an Option will be set forth in the related option certificate while the terms and conditions
of a stand-alone SAR will be set forth in a related SAR certificate. SARs entitle the holder to receive an amount (in cash, Common
Stock, or a combination of cash and Common Stock as determined by the Compensation Committee) equal to the excess of the fair market
value of one share of Common Stock as of the date such right is exercised over the initial stock price specified in the option
certificate or SAR certificate (the “SAR Value”), multiplied by the number of shares of Common Stock in respect of
which the SAR is being exercised. The SAR Value for a SAR will be no less than the fair market value of a share of Common Stock
as determined on the grant date in accordance with the 2008 Plan. Except for adjustments as described under “Adjustment for
Change in Capitalization” and “Mergers” below, without the approval of the Company’s stockholders, the
SAR Value will not be reduced after the SAR is granted, a SAR may not be cancelled in exchange for cash or another Award, and no
other action may be made with respect to a SAR that would be treated as a repricing under the rules and regulations of the principal
securities exchange on which the Common Stock is traded. In no event may a SAR granted to an employee of the Company or a subsidiary
of the Company be exercisable before the expiration of one year from the SAR grant date (but it may become exercisable pro rata
over such time), except in accordance with the 2008 Plan or as set forth in the Award Agreement with respect to the retirement,
death or disability of a participant or under special circumstances determined by the Compensation Committee. No SAR may be exercisable
more than 10 years from the grant date.
Restricted Stock Units
The Compensation Committee acting in its
absolute discretion shall have the right to grant Restricted Units to key employees and directors and may prescribe that vesting
of any or all of the Restricted Units shall be subject to the achievement of one or more performance objectives, including the
Performance Goals set forth in the 2008 Plan. The value of each Restricted Unit corresponds to the fair market value of a share
of Common Stock. The terms and conditions will be set forth in the related restricted unit certificate. Grants of Restricted Units
subject solely to continued service with the Company or a subsidiary will not become vested less than (a) three years from the
date of grant (but permitting pro rata vesting over that period) for grants to key employees and (b) one year from the date of
grant (but permitting pro rata vesting over that period) for grants to directors; provided that the minimum vesting requirements
do not apply to grants not in excess of 10% of the initial number of shares available for grants of Restricted Units under the
2008 Plan. Restricted Units subject to the achievement of performance objectives will not become vested less than one year from
the date of grant. There will be no adjustment to Restricted Units for dividends paid by the Company, except for adjustments made
by the Compensation Committee as described under “Adjustment for Change in Capitalization” below.
Unless a key employee or director has made
a deferral election in accordance with the 2008 Plan, upon vesting of a Restricted Unit, the key employee or director will receive
payment from the Company in shares of Common Stock issued under the 2008 Plan equal to the number of vested Restricted Units and
the Restricted Units will then be automatically cancelled. The Compensation Committee in its absolute discretion may permit a key
employee or director to elect to defer the receipt of the delivery of shares of Common Stock that would otherwise be due upon the
vesting of Restricted Units; provided that such election is made in accordance with Section 409A of the Code.
Stock Grants
A Stock Grant may be made by the Compensation
Committee to key employees and directors under the 2008 Plan. The terms and conditions for a Stock Grant made will be set forth
in the related stock grant certificate and will be determined by the Compensation Committee acting in its sole discretion. The
Compensation Committee may make the issuance of Common Stock under a Stock Grant subject to the satisfaction of one or more employment,
performance, purchase or other conditions and may make the forfeiture of Common Stock issued pursuant to such a grant subject to
similar conditions. The Compensation Committee may, at the time a Stock Grant is made, prescribe corporate, divisional, and/or
individual Performance Goals to all or any portion of the shares subject to the Stock Grant. Performance Goals may be based on
achieving a certain level of total revenue, earnings, earnings per share or return on equity of the Company and its subsidiaries
and affiliates, or on the extent of changes in such criteria. Upon the satisfaction of any applicable forfeiture conditions and
Performance Goals, the shares underlying the Stock Grant will be transferred to the key employee or director. Stock Grants subject
solely to continued service with the Company or a subsidiary will not become vested less than (a) three years from the date of
grant (but permitting pro rata vesting over that period) for grants to key employees and (b) one year from the date of grant (but
permitting pro rata vesting over that period) for grants to directors; provided that the minimum vesting requirements do not apply
to grants not in excess of 10% of the initial number of shares available for Stock Grants under the 2008 Plan. Stock Grants subject
to the achievement of performance conditions will not become vested less than one year from the date of grant. Unless otherwise
provided in the Award Agreement, cash dividends paid on the Common Stock will be distributed to the holder of a Stock Grant, and
any stock dividends on the Common Stock will be subject to the same forfeiture conditions as the shares subject to the Stock Grant.
Performance Units
Performance Units may be granted to key
employees under the 2008 Plan. The terms and conditions for the Performance Units, including the Performance Goals, the performance
period and a value for each Performance Unit (or a formula for determining such value), shall be established by the Compensation
Committee acting in its sole discretion and shall be set forth in a written agreement covering such Performance Units. The Compensation
Committee shall specify corporate, division and/or individual Performance Goals which the key employee must satisfy in order to
receive payment for such Performance Unit. If the Performance Goals are satisfied, the Company shall pay the key employee an amount
in cash equal to the value of each Performance Unit at the time of payment. In no event shall a key employee receive an amount
in excess of $1,000,000 in respect of Performance Units for any given year.
Performance Goals
Performance Goals for an award of Performance
Units or a Stock Grant that is intended to satisfy the requirements of Section 162(m) of the Code shall be based on achieving specified
levels of one or any combination of the Performance Goals (with respect to the Company on a consolidated basis, by division, segment
and/or business unit) set forth in the 2008 Plan, including net sales; revenue; revenue growth or product revenue growth; operating
income; pre- or after-tax income; earnings per share; net income; return on equity; total stockholder return; return on assets
or net assets; appreciation in and/or maintenance of the price of the Common Stock or any other publicly-traded securities of the
Company; market share; gross profits; earnings; economic value-added models or equivalent metrics; enterprise value metrics; comparisons
with various stock market indices; reductions in costs; cash flow or cash flow per share; return on capital; cash flow return on
investment; improvement in or attainment of expense levels or working capital levels; operating margins, gross margins or cash
margin; year-end cash; debt reductions; stockholder equity; market share; specific and objectively determinable regulatory achievements;
and implementation, completion or attainment of specific and objectively determinable objectives with respect to research, development,
products or projects, production volume levels, acquisitions and divestitures and recruiting and maintaining personnel. The Performance
Goals also may be based solely by reference to the Company’s performance or the performance of a subsidiary. The Compensation
Committee may express any goal in alternatives, such as including or excluding (a) any acquisitions, dispositions, restructurings,
discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) any event either not directly related
to the operations of the Company or not within the reasonable control of the Company’s management, or (c) the cumulative
effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles.
Non-Transferability
No Award will be transferable by a key
employee or director other than by will or the laws of descent and distribution, and any Option or SAR will (absent the Compensation
Committee’s consent) be exercisable during a key employee’s or director’s lifetime only by the key employee or
director, except that the Compensation Committee may provide in an Award Agreement that a key employee or director may transfer
an award to certain family members, family trusts, or other family-owned entities, or for charitable donations under such terms
and conditions determined by the Compensation Committee.
Amendments to the 2008 Plan
The 2008 Plan may be amended by the Board
to the extent that it deems necessary or appropriate (but any amendment relating to ISOs will be made subject to the limitations
of Code Section 422), except that no amendment will be made without stockholder approval to the extent required under applicable
law or exchange rule and no amendment may be made to the change in control provisions of the 2008 Plan described below under “Change
in Control” on or after the change in control date if it would adversely affect any rights that would otherwise vest on that
date. The Board may suspend granting Awards or may terminate the 2008 Plan at any time. The Board may not unilaterally modify,
amend or cancel any Award previously granted without the consent of the holder of such Award, unless there is a dissolution or
liquidation of the Company or in connection with certain corporate transactions.
Adjustment for Change in Capitalization
The number, kind, or class of shares of
Common Stock reserved for issuance under the 2008 Plan, the annual grant limits, the number, kind or class of shares of Common
Stock subject to Options, Stock Grants or SARs granted under the 2008 Plan and the exercise price of Options and the SAR Value
of SARs granted shall be adjusted by the Compensation Committee in an equitable manner to reflect any change in the capitalization
of the Company (including stock dividends or stock splits).
Mergers
The Compensation Committee as part of any
transaction described in Code Section 424(a) shall have the right to adjust (in any manner which the Compensation Committee in
its discretion deems consistent with Code Section 424(a)) the number, kind or class of shares of Common Stock reserved for issuance
under the 2008 Plan, the annual grant limits, and the number, kind or class of shares of Common Stock subject to Option and SAR
grants and Stock Grants previously made under the 2008 Plan and the related exercise price of the Options and the SAR Values and,
further, shall have the right to make (in any manner which the Compensation Committee in its discretion deems consistent with Code
Section 424(a)) Option and SAR grants and Stock Grants to effect the assumption of, or the substitution for, option, stock appreciation
right and stock grants previously made by any other corporation to the extent that such transaction calls for the substitution
or assumption of such grants.
Change in Control
Assumption or Substitution of Certain
Awards.
Unless otherwise provided in an Award Agreement, in the event of a Change in Control (as defined in the 2008 Plan)
in which the successor company assumes or substitutes for an Option, Restricted Unit, SAR, or Stock Grant, if a key employee’s
employment with the successor company (or a subsidiary thereof) terminates under the circumstances specified in the Award Agreement
within 24 months following the Change in Control: (1) Options and SARs outstanding as of the date of such termination of employment
will immediately vest, become fully exercisable, and may thereafter be exercised for 24 months (or the period of time set forth
in the Award Agreement), and (2) restrictions, limitations and other conditions applicable to Restricted Units and Stock Grants
shall lapse and the Restricted Units and Stock Grants will become free of all restrictions and limitations and become fully vested.
Non-Assumption or Substitution of Certain
Awards.
Unless otherwise provided in an Award Agreement, in the event of a Change in Control in which the successor company
does not assume or substitute for an Option, Restricted Unit, SAR, or Stock Grant: (1) those Options and SARs outstanding
as of the date of the Change in Control that are not assumed or substituted for will immediately vest and become fully exercisable,
and (2) restrictions and deferral limitations on Restricted Units and Stock Grants that are not assumed or substituted for will
lapse and the Restricted Units and Stock Grants will become free of all restrictions and limitations and become fully vested.
Impact on Certain Awards.
Award
Agreements may provide that in the event of a Change in Control: (1) Options and SARs outstanding as of the date of the Change
in Control will be cancelled and terminated without payment if the fair market value of one share of Common Stock as of the date
of the Change in Control is less than the Option Price or SAR Value, and (2) all Performance Units will be considered to be earned
and payable (either in full or pro rata based on the portion of performance period completed as of the date of the Change in Control),
and any limitations or other restriction will lapse and the Performance Units will be immediately settled or distributed.
Termination of Certain Awards.
The
Compensation Committee, in its discretion, may determine that, upon the occurrence of a Change in Control, each Option and SAR
outstanding will terminate within a specified number of days after notice to the key employee or director, and/or that each key
employee or director will receive, with respect to each share of Common Stock subject to an Option or SAR, an amount equal to the
excess of the fair market value of such share immediately prior to the occurrence of the Change in Control over the Option Price
or the SAR Value, as applicable, payable in cash, in one or more kinds of stock or property (including the stock or property, if
any, payable in the transaction) or in a combination thereof, as the Compensation Committee, in its discretion, shall determine.
Federal Income Tax Consequences
The rules concerning the federal income
tax consequences with respect to Awards under the 2008 Plan are technical, and reasonable persons may differ on the proper interpretation
of such rules. Moreover, the applicable statutory and regulatory provisions are subject to change, as are their interpretations
and applications, which may vary in individual circumstances. Therefore, the following discussion is designed to provide only a
brief, general summary description of the federal income tax consequences associated with such grants, based on a good faith interpretation
of the current federal income tax laws, regulations (including certain proposed regulations) and judicial and administrative interpretations.
The following discussion does not set forth (1) any federal tax consequences other than income tax consequences or (2) any state,
local or foreign tax consequences that may apply.
ISOs.
In general, a key employee
will not recognize taxable income upon the grant or the exercise of an ISO. For purposes of the alternative minimum tax, however,
the key employee will be required to treat an amount equal to the difference between the fair market value of the Common Stock
on the date of exercise over the option exercise price as an item of adjustment in computing the key employee’s alternative
minimum taxable income. If the key employee does not dispose of the Common Stock received pursuant to the exercise of the ISO within
either (1) two years after the date of the grant of the ISO or (2) one year after the date of the exercise of the ISO, a subsequent
disposition of the Common Stock generally will result in long-term capital gain or loss to such individual with respect to the
difference between the amount realized on the disposition and exercise price. The Company will not be entitled to any federal income
tax deduction as a result of such disposition. In addition, the Company normally will not be entitled to take a federal income
tax deduction at either the grant or the exercise of an ISO.
If the key employee disposes of the Common
Stock acquired upon exercise of the ISO within either of the above-mentioned time periods, then in the year of such disposition,
such individual generally will recognize ordinary income, and the Company will be entitled to a federal income tax deduction (provided
the Company satisfies applicable federal income tax reporting requirements), in an amount equal to the lesser of (1) the excess
of the fair market value of the Common Stock on the date of exercise over the option exercise price or (2) the amount realized
upon disposition of the Common Stock over the exercise price. Any gain in excess of such amount recognized by the key employee
as ordinary income would be taxed to such individual as short-term or long-term capital gain (depending on the applicable holding
period).
Non-ISOs.
A key employee or director
will not recognize any taxable income upon the grant of a Non-ISO, and the Company will not be entitled to take an income tax deduction
at the time of such grant. Upon the exercise of a Non-ISO, the key employee or director generally will recognize ordinary income
and the Company will be entitled to a federal income tax deduction (provided the Company satisfies applicable federal income tax
reporting requirements) in an amount equal to the excess of the fair market value of the Common Stock on the date of exercise over
the option exercise price. Upon a subsequent sale of the Common Stock by the key employee or director, such individual will recognize
short-term or long-term capital gain or loss (depending on the applicable holding period).
SARs.
A key employee or director
will not recognize any taxable income upon the grant of a SAR, and the Company will not be entitled to take an income tax deduction
at the time of such grant. A key employee or director will recognize ordinary income for federal income tax purposes upon the exercise
of a SAR under the 2008 Plan for cash, Common Stock or a combination of cash and Common Stock, and the amount of income that the
key employee or director will recognize will depend on the amount of cash, if any, and the fair market value of the Common Stock,
if any, that the key employee or director receives as a result of such exercise. The Company generally will be entitled to a federal
income tax deduction in an amount equal to the ordinary income recognized by the key employee or director in the same taxable year
in which the key employee or director recognizes such income, if the Company satisfies applicable federal income tax reporting
requirements.
Restricted Units.
A key employee
or director generally will not recognize income for federal income tax purposes upon the grant of a Restricted Unit. If the terms
of a Restricted Unit satisfy the requirements under Code Section 409A, the key employee or director generally will recognize as
ordinary income an amount equal to the amount of cash paid at the time of payment. However, if the terms of a Restricted Unit fail
to satisfy the requirements under Code Section 409A, the key employee or director generally will recognize as ordinary income an
amount equal to the value of his or her Restricted Unit at the time of his or her interest in the unit is no longer subject to
a substantial risk of forfeiture. The Company generally will be entitled to a federal income tax deduction in an amount equal to
the ordinary income recognized by the key employee or director in the same taxable year in which the key employee or director recognizes
such income.
Stock Grants.
A key employee or
director generally will recognize ordinary income for federal income tax purposes when such individual’s interest in a Stock
Grant is no longer subject to a substantial risk of forfeiture. Such income will equal the excess of the then fair market value
of the Common Stock subject to such Stock Grant over the purchase price, if any, paid for such stock. The Company generally will
be entitled to a federal income tax deduction. n an amount equal to the ordinary income recognized by the key employee or director
in the same taxable year in which the key employee or director recognizes such income, if the Company satisfies the applicable
federal income tax reporting requirements.
Performance Units.
A key employee
or director generally will not recognize income for federal income tax purposes upon the grant of a Performance Unit. If the terms
of a Performance Unit satisfy the requirements under Code Section 409A, the key employee or director generally will recognize as
ordinary income an amount equal to the amount of cash paid at the time of payment. However, if the terms of a Performance Unit
fail to satisfy the requirements under Code Section 409A, the key employee or director generally will recognize as ordinary income
an amount equal to the value of his or her Performance Unit at the time of his or her interest in the unit is no longer subject
to a substantial risk of forfeiture. The Company generally will be entitled to a federal income tax deduction in an amount equal
to the ordinary income recognized by the key employee or director in the same taxable year in which the key employee or director
recognizes such income.
Code Section 162(m).
Code Section
162(m) imposes a $1 million deduction limitation on the compensation paid to a public company’s most senior executives unless
the compensation meets one of the exceptions to this limitation. One exception is for option grants made at fair market value.
Another exception is for grants which are made subject to the satisfaction of one or more Performance Goals which are set in accordance
with Code Section 162(m) and which are forfeited if there is a failure to satisfy those Performance Goals. The 2008 Plan has been
designed so that the Compensation Committee can make grants which can satisfy the requirements for these exceptions.
Vote Required and Recommendation of the Board of Directors
Approval of the amendment to the 2008 Plan
requires the affirmative “FOR” vote of the holders of a majority of the shares of Common Stock represented in person
or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE
APPROVAL OF THE AMENDMENT TO THE 2008
PLAN.
* * * * *
CORPORATE GOVERNANCE AND BOARD MATTERS
Director Independence
The Board of Directors has determined that,
except for Richard M. Smith, each of its current directors is independent within the meaning of Rule 4200(a)(15) of the NASDAQ
listing standards.
Board Leadership
After careful consideration, in January
2011, the Board of Directors determined that the best leadership structure for the Company was to separate the leadership roles
of Chairman and Chief Executive Officer. The Board of Directors believes that this structure is optimal for the Company because
it permits the Chairman to deal with the Company’s various stockholders while permitting the CEO to focus more on the Company’s
business. The Governance and Nominating Committee and the Board continue to review the issue of the separation of the office of
Chairman and CEO periodically to determine whether, based on the relevant facts and circumstances at such future times, such separation
serves the best interests of the Company and its stockholders. Given the separation of these roles, we do not have a lead independent
director.
The Board of Directors 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 our Board of Directors’ meetings, our independent directors
have regular executive sessions at both the Board and Committee levels. Following an executive session of independent directors,
a presiding director acts as a liaison between the independent directors and the Chairman of the Board regarding any specific feedback
or issues, provides the Chairman of the Board with input regarding agenda items for Board of Directors and Committee meetings,
and coordinates with the Chairman of the Board regarding information to be provided to the independent directors in performing
their duties.
On March 5, 2012, Louis T. DiFazio resigned
as a director for personal reasons, and on the same date, upon the acceptance of his resignation, the Board of Directors reduced
the number of directors from ten to nine. Upon accepting Mr. Friedman’s resignation, which became effective April 18, 2012,
the Board of Directors reduced the number of directors from nine to eight.
Board Role in Risk Oversight
The Board of Directors has risk management
oversight responsibility for the Company and administers this responsibility both directly and with assistance from its committees.
The Board of Directors and its committees regularly review material financial, compensation, compliance and, to a lesser degree
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. For example, our Senior Vice President
and General Counsel reports to the Audit Committee with respect to compliance with our risk management policies. The Audit Committee
also performs a central oversight role with respect to financial risks and together with the Governance and Nominating Committee
addresses compliance risks, and reports on its findings at each regularly scheduled meeting of the Board. The Management Development
and Compensation Committee considers risk that may arise as a result of or otherwise in connection with the design of the Company’s
compensation programs for our executives. The Governance and Nominating Committee annually reviews the Company’s corporate
governance guidelines and their implementation. Each committee regularly reports to the Board.
Board Diversity
The Nominating and Corporate Governance
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.
Board and Committee Self-Assessments
The Governance and Nominating Committee
oversees an annual evaluation process, whereby each director evaluates the Board as a whole and each member of the standing committees
of the Board evaluates the committees on which he or she serves. After these evaluations are complete, the results are compiled,
analyzed and discussed by the Board and each committee and with each individual director, as applicable, and, if necessary, action
plans are developed.
Board Meetings; Annual Meeting Attendance
The Board of Directors held a total of fifteen
meetings during 2012. During such period, each director attended at least 75% of the meetings of the Board of Directors and the
committees of the Board of Directors on which the director served that were held during the applicable period of service. The Company
expects each member of the Board of Directors to attend its annual meeting absent a valid reason, such as a schedule conflict.
Typically, the Board holds a meeting directly following each annual meeting of stockholders. However, in 2012, the Company changed
the date of its Board meeting to a time not directly adjacent to the annual meeting. As a result of the change in itineraries,
all but three of the directors attended the annual meeting of stockholders held on May 1, 2012.
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. Smith. An executive session
of the Board of the Company’s non-management directors is generally held in conjunction with each regularly scheduled Board
of Directors meeting. In addition, regular executive sessions of non-management directors are held generally at the conclusion
of each audit committee meeting. Additional executive sessions may be called at the request of the Board of Directors or the non-management
directors.
Board Committees
The Company has standing Audit, Governance
and Nominating, Management Development and Compensation, and Corporate Strategy Committees. Each committee is comprised solely
of independent directors. Membership in each committee is as follows:
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Management
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Governance and
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Development and
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Corporate
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Audit Committee
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Nominating Committee
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Compensation
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Strategy Committee
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Myron Z. Holubiak
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Charlotte W. Collins*
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Charlotte W. Collins
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Myron Z. Holubiak
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David R. Hubers
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Samuel P. Frieder
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Samuel P. Frieder
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David R. Hubers*
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Richard L. Robbins Ω *
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Myron Z. Holubiak
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Myron Z. Holubiak
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Stuart A. Samuels
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Gordon H. Woodward
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David R. Hubers
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Stuart A. Samuels*
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Gordon H. Woodward
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Richard L. Robbins
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Designates Audit Committee Financial Expert.
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Designates committee chairperson.
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The Company has adopted a written charter
for each of the committees. Stockholders may access a copy of the charter for each of the Audit Committee, the Governance and Nominating
Committee and the Management Development and Compensation Committee on the Company’s website at
www.bioscrip.com
under the heading “Investors — Corporate Governance.”
Audit Committee
Each member of the Audit Committee satisfies
the independence requirements of Rule 4200(a)(15) of the National Association of Securities Dealers listing standards and Rule
10A-3(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”). The Company’s Board of Directors has
determined that Richard L. Robbins is an “audit committee financial expert” as that term is defined in Item 407(d)(5)(ii)
of Regulation S-K of the Exchange Act. The Audit Committee is responsible, among its other duties, for overseeing the process of
accounting and financial reporting of the Company and the audits of the financial statements of the Company; appointing, retaining
and compensating the Company’s independent auditors; pre-approving all audit and non-audit services by the Company’s
independent auditors; reviewing the scope of the audit plan and the results of each audit with management and the Company’s
independent accountants; reviewing the internal audit function; reviewing the adequacy of the Company’s system of internal
accounting controls and disclosure controls and procedures; and reviewing the financial statements and other financial information
included in the Company’s annual and quarterly reports filed with the Commission. During 2012, the Audit Committee held four
meetings.
Governance and Nominating Committee
Each member of the Governance and Nominating
Committee is “independent” as set forth in Rule 4200(a)(15) of the NASDAQ listing standards. The Governance and Nominating
Committee’s functions include recommending to the Board of Directors the number and names of proposed nominees for election
to the Board of Directors at the Company’s Annual Meeting of Stockholders; identifying and recommending nominees to fill
expiring and vacant seats on the Board of Directors; reviewing on an annual basis committee and Board of Directors performance
and recommending changes to the Board of Directors. Except as may be required by rules promulgated by the NASDAQ Global Market
or the Commission, it is the current sense of the Governance and Nominating Committee that there are no specific, minimum qualifications
that must be met by each candidate for the Board of Directors, nor are there specific qualities or skills that are necessary for
one or more of the members of the Board of Directors to possess. In evaluating the suitability of potential nominees for election
as members of the Board of Directors, the Governance and Nominating Committee will take into consideration the current composition
of the Board of Directors, including expertise, diversity, and balance of inside, outside and independent directors, as well as
the general qualifications of the potential nominees, by the committee including personal and professional integrity, ability and
judgment and such other factors deemed appropriate. The Governance and Nominating Committee will evaluate such factors, among others,
and does have requirements as to any particular weighting or priority of these factors. While the Governance and Nominating Committee
has not established specific minimum qualifications for director candidates, the Committee believes that candidates and nominees
must reflect a Board of Directors that is predominantly independent and is comprised of directors who (i) are of high integrity,
(ii) have qualifications that will increase the overall effectiveness of the Board of Directors, 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
and Nominating Committee considers recommendations for nominations from any reasonable and credible source, including officers
and directors as well as from stockholders of the Company who comply with the procedures set forth in the Company’s By-Laws.
See the section below entitled “Stockholder Proposals.” The Governance and Nominating Committee evaluates all reasonable
and credible stockholder recommended candidates on the same basis as any other candidate. When appropriate, the Governance and
Nominating Committee may retain executive recruitment firms to assist in identifying suitable candidates. The Governance and Nominating
Committee also reviews the Company’s corporate governance, compliance and ethics guidelines, and oversees the annual evaluation
of the Board of Directors and management of the Company. The Governance and Nominating Committee held eight meetings during 2012.
Management Development and Compensation Committee
The 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 Committee. Each member of the Compensation Committee is “independent” as set
forth in Rule 4200(a)(15) of the NASDAQ listing standards. 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 Incentive Stock Plan (the “2001 Plan”) the 1996 Incentive Stock Plan
(the “1996 Plan”) and the 1996 Non-Employee Directors Stock Incentive Plan (the “Directors Plan”). Upon
stockholder approval of the 2008 Plan no further grants were made under the 2001 Plan; however, 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 Chronimed Stock Options Plans, which were assumed by the
Company in connection with its merger with Chronimed Inc. in 2005, and the BioScrip/CHS 2006 Equity Incentive Plan, as amended
(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, certain options issued under the under CHS Plan held by the five
most senior executives of CHS were converted into the right to purchase 716,086 shares of the Company’s 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. As of
March 7, 2013, there were 1,720,528 shares of common stock remaining available under the CHS Plan for grant to current employees
of the Company who are former employees of CHS and to employees of Company hired after the date of the acquisition of CHS. 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 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
2012, the Compensation Committee held nine meetings.
Corporate Strategy Committee
The Company also has a Corporate Strategy
Committee. The Chief Executive Officer generally participates in each meeting of the Corporate Strategy Committee. The Corporate
Strategy Committee currently consists of the following Board members: Messrs. Holubiak, Hubers, Samuels and Woodward. Members of
the Corporate Strategy Committee are not required to be independent directors. The purpose of the Corporate Strategy Committee
is to oversee the development and implementation of the Company’s corporate strategy and to assess strategic opportunities,
including acquisitions and divestitures as they arise from time to time. During 2012 the Corporate Strategy Committee held ten
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 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 for its directors and officers is available on the Company’s website at
www.bioscrip.com
under the heading “Investors — Corporate Governance” (the contents of such 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, the Company will disclose the nature of such amendment or waiver on the Company’s website
under the heading “Investors – Corporate Governance.” 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. 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 code of ethics, was distributed as part of the Company’s
Legal and Ethical Compliance Manual to all employees for signature and signed copies are on file in the Compliance Department.
Stockholder Communications with the Board of Directors
The Board provides a process for shareholders
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 100 Clearbrook
Road, Elmsford, NY 10523. 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, 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. During 2012
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 2012:
Position on the Board and Committees
|
|
Fee
|
Non-management director retainer fee
|
|
$50,000 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
|
|
$15,000 annually
|
Additional fee for serving as Chair of the Governance and Nominating Committee, the Compensation Committee or the Corporate Strategy Committee
|
|
$10,000 annually
|
Fee for service on a special committees of the Board
|
|
On a case by cases basis, as determined by the Board
|
All of the above fees are paid quarterly.
In addition to the cash compensation detailed above, each Director is to receive an annual restricted stock award of 10,000 shares
of Common Stock. All Board members are also reimbursed for expenses incurred in connection with attending such meetings.
The table below sets forth all compensation
earned by the Company’s non-employee directors in 2012.
Director Compensation Table
Name
|
|
Fees Earned
or Paid
in Cash
($)(1)
|
|
|
Stock
Awards
($)(2)(4)
|
|
|
Total
($)
|
|
Charlotte W. Collins
|
|
|
70,000
|
|
|
|
75,200
|
|
|
|
145,200
|
|
Samuel P. Frieder (3)
|
|
|
57,500
|
|
|
|
75,200
|
|
|
|
132,700
|
|
Myron Z. Holubiak
|
|
|
87,500
|
|
|
|
75,200
|
|
|
|
162,700
|
|
David R. Hubers
|
|
|
67,500
|
|
|
|
75,200
|
|
|
|
142,700
|
|
Richard L. Robbins
|
|
|
72,500
|
|
|
|
75,200
|
|
|
|
147,700
|
|
Stuart A. Samuels
|
|
|
70,000
|
|
|
|
75,200
|
|
|
|
145,200
|
|
Gordon H. Woodward (3)
|
|
|
60,000
|
|
|
|
75,200
|
|
|
|
135,200
|
|
|
(1)
|
The fees shown include the annual retainer fee paid to
each non-employee director, committee member and chairman based upon the above schedule of fees for 2012.
|
|
(2)
|
Value of stock and option awards determined in accordance
with FASB ASC Topic 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, 2012 included
in the Company’s Annual Report on Form 10-K filed with the Commission on March 15, 2013.
|
|
(3)
|
Fees due to Messrs. Frieder and Woodward are paid directly
to Kohlberg & Co. by the Company. Kohlberg & Co. received $117,500 for board services as part of services provided under
a stockholders’ agreement, dated as of January 24, 2010, by and among BioScrip, Inc., Kohlberg Investors V, L.P., Kohlberg
Partners V, L.P., Kohlberg Offshore Investors V, L.P., Kohlberg TE Investors V, L.P., KOCO Investors V, L.P., Robert Cucuel, Mary
Jane Graves, Nitin Patel, Joey Ryan, Colleen Lederer, Blackstone Mezzanine Partners II L.P., Blackstone Mezzanine Holdings II
L.P., and S.A.C. Domestic Capital Funding, Ltd.
|
|
(4)
|
Each continuing director received a grant of 10,000 shares
of restricted Common Stock on May 7, 2012 for annual service as a director.
The following stock and
option awards were outstanding at fiscal year end. The 2012 restricted Common Stock awards vest on May 7, 2013 for each non-employee
director:
|
|
|
Unvested
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
Awards
|
|
Option Awards
|
|
|
|
Outstanding at
|
|
Outstanding at
|
|
|
|
Fiscal
|
|
Fiscal
|
|
Name
|
|
Year End
|
|
Year End
|
|
Charlotte W. Collins
|
|
10,000
|
|
35,000
|
|
Samuel P. Frieder
|
|
10,000
|
|
—
|
|
Myron Z. Holubiak
|
|
10,000
|
|
36,200
|
|
David R. Hubers
|
|
10,000
|
|
36,200
|
|
Richard L. Robbins
|
|
10,000
|
|
25,000
|
|
Stuart A. Samuels
|
|
10,000
|
|
36,200
|
|
Gordon H. Woodward
|
|
10,000
|
|
—
|
|
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 which 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
auditors are 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
auditors 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, 2012. The Audit Committee also discussed with our independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees
, as amended (AICPA, Professional
Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. 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 applicable requirements of the
Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with
the audit committee concerning independence and have 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, 2012
filed with the Commission.
Submitted by the Audit Committee:
Richard L. Robbins, Chairman
Myron Z. Holubiak
David R. Hubers
Gordon H. Woodward
* * * * *
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 4200(a)(15) of the NASDAQ listing standards.
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 1996 Plan and the Directors Plan, the Chronimed Stock Options Plans, and 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 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 achieving 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 the satisfactory achievement of pre-established financial or other performance related goals and objectives.
|
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. 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. In the second
half of 2008, a peer group review was undertaken with the assistance of Frederick W. Cook, which also used national surveys to
provide the Compensation Committee with additional benchmark information. In early 2009, the peer group was reviewed, and no changes
were made to the companies that comprised the peer group for 2010. The peer group companies used for determining 2012 compensation
were as follows:
Almost Family
|
|
Gentiva Health Services, Inc.
|
|
Pharmerica Corporation
|
Amedisys
|
|
LHC Group
|
|
PSS World Medical, Inc.
|
Catalyst Health
|
|
Lincare Holdings, Inc.
|
|
SXC Health
|
Centene Corporation
|
|
|
|
|
In 2012, with the assistance of Frederick
W. Cook, the Compensation Committee reviewed the composition of the Company’s peer group, particularly in light of the Company’s
sale of its traditional and specialty pharmacy mail operations and community retail pharmacy stores. Based on Frederick W. Cook’s
review and the Company’s current size, business, revenue and market capitalization, in December 2012, the Board approved
a new peer group of the following companies:
Air Methods Corporation
|
|
Chemed Corporation
|
|
Healthways, Inc.
|
Almost Family, Inc.
|
|
Exam Works Group, Inc.
|
|
LHC Group, Inc.
|
Amedisys
, Inc.
|
|
Gentiva Health Services, Inc.
|
|
National Healthcare Corporation
|
Bio-Reference Laboratories, Inc.
|
|
Hanger, Inc.
|
|
PharMerica Corporation
|
Catalyst Health
Solutions, Inc.
|
|
Invacare Corporation
|
|
Skilled Healthcare Group, Inc.
|
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 and Senior Vice President Human Resources in making compensation decisions for executive officers, other than themselves.
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 and Senior Vice President Human Resources of the Compensation
Committee’s decisions and the Chief Executive Officer or Senior Vice President Human Resources, as applicable, and they in
turn, inform other members of senior management of the decisions, as appropriate.
Stockholders’ Role in Compensation Practices
The Compensation Committee considers stockholder
input when setting compensation for executive officers. At our 2012 annual meeting of stockholders, 97% of the votes cast on the
advisory vote on executive compensation were in favor of our executive compensation policies. The Board of Directors and the Compensation
Committee reviewed these results and determined that, given the significant level of support, no major re-examination of our executive
compensation policies was necessary at this time based on the vote results. 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.
Based on the results of the advisory vote on the frequency of advisory votes on executive compensation which was held at our 2011
annual meeting, we intend to next solicit input from our stockholders on our executive compensation at our 2014 annual meeting
of stockholders.
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:
o
base
salary,
o
annual
cash incentive compensation, and
o
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 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 base salary of the Chief Executive Officer is fixed pursuant to the terms of his employment agreement after
benchmarking total compensation of our peer group for CEO compensation data as discussed more fully above.
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 targeted at the 50th
percentile of the competitive market (as discussed above) for the Chief Executive Officer and his direct reports. The average base
salary increase for all salaried employees was approximately 3.0%.
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
210 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 median of the companies
included within its selected peer group. Executive officers have an opportunity to receive annual incentive compensation under
the cash incentive plan if individual, corporate and 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. Because we did not meet our financial precondition
to entitlement for any cash incentive being paid in 2012, no incentive awards were earned by the Named Executive Officers for 2012.
Below are the bonus targets and performance goals that were set for 2012. Note, as Interim CFO,
Ms. Graves was not eligible
for the Company’s employee bonus plan.
|
·
|
Richard M. Smith.
The annual cash bonus for the Chief Executive Officer was targeted at 100% of base salary. Achievement
of the bonus amount was tied to the Company’s achievement of certain Adjusted EBITDA targets, with 50% of the targeted bonus
amount to be paid if the Company achieved Adjusted EBITDA of $48 million, and opportunity for 100% and 200% of the targeted
bonus amount to be paid if certain higher Adjusted EBITDA targets were achieved.
|
|
·
|
Hai Tran.
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 certain Adjusted EBITDA targets, with 50% of the targeted bonus amount
to be paid if the Company achieved Adjusted EBITDA of $48 million, and opportunity for 100% and 200% of the targeted bonus amount
to be paid if certain higher Adjusted EBITDA targets were achieved.
|
|
·
|
Vito Ponzio, Jr.
The annual cash bonus for the Senior Vice President was targeted at 40% of base salary. Achievement
of the bonus amount was tied to the Company’s achievement of certain Adjusted EBITDA targets, with 50% of the targeted bonus
amount to be paid if the Company achieved Adjusted EBITDA of $48 million, and opportunity for 100% and 200% of the targeted bonus
amount to be paid if certain higher Adjusted EBITDA targets were achieved.
|
|
·
|
Russel J. Corvese.
The annual cash bonus for the Senior Vice President was targeted at 40% of base salary. Achievement
of the bonus amount was tied to the Company’s achievement of certain Adjusted EBITDA targets, with 50% of the targeted bonus
amount to be paid if the Company achieved Adjusted EBITDA of $48 million, and opportunity for 100% and 200% of the targeted bonus
amount to be paid if certain higher Adjusted EBITDA targets were achieved.
|
|
·
|
David Evans.
The annual cash bonus for the Senior Vice President was targeted at 40% of base salary. Achievement of
the bonus amount was tied to the Company’s achievement of certain Adjusted EBITDA targets, with 50% of the targeted bonus
amount to be paid if the Company achieved 80 Adjusted EBITDA of $48 million, and opportunity for 100% and 200% of the targeted
bonus amount to be paid if certain higher Adjusted EBITDA targets were achieved.
|
|
·
|
Patricia Bogusz.
The annual cash bonus for the Vice President of Finance was targeted at 30% of base salary. Achievement
of the bonus amount was tied to the Company’s achievement of certain Adjusted EBITDA targets, with 50% of the targeted bonus
amount to be paid if the Company achieved Adjusted EBITDA of $48 million, and opportunity for 100% and 200% of the targeted bonus
amount to be paid if certain higher Adjusted EBITDA targets were achieved.
|
On March 8, 2012, the Compensation Committee
approved contingent cash awards in the aggregate amount of $930,000 to a total of seventeen of the Company’s executives.
The awards were made in recognition of the efforts and leadership of those individuals toward accomplishing the Company’s
strategic assessment to shift its primary business focus to the Infusion/Home Health Services segment of the Company’s business.
Payment of the awards was subject to and made upon completion of the transaction contemplated by the Community Pharmacy and Mail
Business Purchase Agreement dated as of February 1, 2012 (the “Pharmacy Services Asset Sale”) by and among Walgreen
Co. (and certain subsidiaries) and the Company (and certain subsidiaries). Rick Smith and Mary Jane Graves, the Company’s
interim Chief Financial Officer and Treasurer at the time, received $325,000 and $200,000, respectively, of the total amount awarded,
subject to and upon the closing of the Pharmacy Services Asset Sale.
Long-Term Incentive Compensation
.
We have provided long-term incentives to our executive officers through the 2008 Plan and the CHS Plan, which permit the grant
of various equity based awards including stock options, stock appreciation rights, restricted stock units, 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.
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 the Company’s 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 only 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.
Since 2009, the Compensation Committee’s
long-term incentive grants to key executives and employees have consisted largely of long-term incentive value in stock options.
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 that were out of the money; (ii) the limited number of shares
of stock remaining available for grant under the 2008 Plan; (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; and (iv) the lack of vesting of certain 2008 and 2009 performance
based restricted stock grants which the Compensation Committee still determined to provide an appropriate level of incentive to
management. As the Company experienced high growth, grants of stock options have allowed the Company to reach more employees while
maintaining the Company’s burn rate that it had committed to maintaining through the end of 2012.
On March 8, 2012 the Compensation Committee
approved the grant of stock options to, among other employees, five of the Named Executive Officers. The number of stock options
granted to the Named Executive Officers was as follows: (i) 425,000 options to Richard M. Smith; (ii) 100,000 options to Russel
J. Corvese; (iii) 100,000 options to David Evans; (iv) 100,000 options to Vito Ponzio, Jr.; (v) 100,000 options to Patricia Bogusz.
Each stock option and SAR granted had a
strike price of the fair market value on the date of grant. The options vest in equal amounts, one third of the shares on the first,
second and third anniversaries of the date of grant. The stock option agreements evidencing the grants each have a ten year term.
The SARs vest in three equal annual installments beginning on the first anniversary of the date of grant and are exercisable, in
whole or in part, to the extent the SAR has been vested, for cash in the amount, if any, by which the closing stock price on the
exercise date exceeds the grant price. Upon the exercise of any SARs, the officers may be required to use the net after-tax proceeds
of such exercise to purchase shares of the Common Stock in the open market and hold such shares of Common Stock for a period of
not less than one year from the date of purchase, subject to the terms of the grant agreement underlying the SAR. The Compensation
Committee included this requirement in order to promote long-term decision making by key executives as well as promoting stock
ownership by them. The right to exercise a SAR expires on the earliest of (1) the tenth anniversary of the date of grant, (2) the
date that the officer forfeits the executive’s right to exercise the SAR as a result of termination of employment, or (3)
the date that the SAR is exercised in full.
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 during the year. In 2012, we granted long-term incentive compensation at the Board meeting held in the first quarter.
Generally, executives receive only one grant per cycle or year. During fiscal years 2010 through 2012 we committed to not grant
shares subject to options or stock awards under the 2008 Plan, such that the average number of shares granted in each of such fiscal
years over such three-year period was greater than 4.03% of the average number of shares of our common stock that was outstanding
at the end of each of such three fiscal years.
Deductibility of Compensation
In establishing pay levels for our executive
officers, the Compensation Committee considers the impact of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”) on the amount of compensation deductible by the Company. Under current tax law, Section 162(m) imposes a $1.0
million limit that a publicly traded company may deduct for compensation paid to its chief executive officer and its next four
most highly compensated executives. This limitation does not apply to pay that qualifies as “performance-based 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). Our outstanding restricted
stock grants are based on, and any future grants are expected to be 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. However, 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.
Retirement
We maintain a qualified 401(k) plan in which
all employees (including the Named Executive Officers) may participate.
Perquisites
The Company did not provide perquisites
to any of its Named Executive Officers in 2012.
Stock Ownership Policy
The Company encourages stock ownership through
stock ownership guidelines in place for directors and executives and, if approved by the Company’s stockholders at the 2013
Annual Meeting, the Employee Stock Purchase Plan.
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 of the Board of Directors has reviewed and discussed it with management. Based on this review and discussion, the Management
Development and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included
in the proxy statement for the Company’s 2013 Annual Meeting of Stockholders.
Submitted by the Management Development and
Compensation Committee:
Stuart A. Samuels, Chairman
Charlotte W. Collins
Samuel P. Frieder
Myron Z. Holubiak
Compensation Committee Interlocks and Insider Participation
Charlotte W. Collins, Samuel P. Frieder,
Myron Z. Holubiak and Stuart A. Samuels, who currently comprise the Management Development and Compensation Committee, are each
independent, non-employee directors of the Company. No member of the Management Development and Compensation Committee is or has
been one of our officers or employees or has had any relationship with us requiring disclosure under the Commission’s rules
and regulations. 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 our Compensation Committee, (ii) the
board of directors of another entity in which one of the executive officers of such entity served on our 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
our Board, or (iv) were directly or indirectly the beneficiary of any related transaction required to be disclosed under the applicable
regulations of the Exchange Act, during the year ended December 31, 2012.
Summary Compensation Table
The table below summarizes the total compensation
earned by each of the Company’s Named Executive Officers in 2012, 2011 and 2010 for the years in which they served as Named
Executive Officers.
Name & Principal Position
|
|
Year
|
|
Salary
$
|
|
|
Stock
Awards
($)
|
|
|
Option/SAR
Awards
($)(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
|
All
Other
Compensation
($)(2)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard M. Smith
|
|
2012
|
|
|
650,000
|
|
|
|
—
|
|
|
|
1,703,315
|
|
|
|
—
|
|
|
|
433,206
|
|
|
|
2,786,521
|
|
President & Chief
|
|
2011
|
|
|
650,000
|
|
|
|
—
|
|
|
|
406,740
|
|
|
|
—
|
|
|
|
90,791
|
|
|
|
1,147,531
|
|
Executive Officer (4)
|
|
2010
|
|
|
530,385
|
|
|
|
—
|
|
|
|
2,521,185
|
|
|
|
—
|
|
|
|
23,788
|
|
|
|
3,075,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hai Tran
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer (5)
|
|
2012
|
|
|
238,462
|
|
|
|
—
|
|
|
|
901,840
|
|
|
|
—
|
|
|
|
27,411
|
|
|
|
1,167,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Jane Graves
|
|
2012
|
|
|
210,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
410,000
|
|
Interim CFO (6)
|
|
2011
|
|
|
444,375
|
|
|
|
—
|
|
|
|
418,986
|
|
|
|
—
|
|
|
|
—
|
|
|
|
863,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vito Ponzio, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President Human
|
|
2012
|
|
|
308,654
|
|
|
|
—
|
|
|
|
400,780
|
|
|
|
—
|
|
|
|
118,785
|
|
|
|
828,219
|
|
Resources (7)
|
|
2011
|
|
|
240,000
|
|
|
|
—
|
|
|
|
201,335
|
|
|
|
—
|
|
|
|
61,475
|
|
|
|
502,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russel J. Corvese
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Senior Vice President
|
|
2012
|
|
|
290,000
|
|
|
|
—
|
|
|
|
400,780
|
|
|
|
—
|
|
|
|
85,270
|
|
|
|
776,050
|
|
Mail Order Operations (8)
|
|
2011
|
|
|
290,000
|
|
|
|
—
|
|
|
|
81,348
|
|
|
|
—
|
|
|
|
—
|
|
|
|
371,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Evans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President Strategic
|
|
2012
|
|
|
312,500
|
|
|
|
—
|
|
|
|
400,780
|
|
|
|
—
|
|
|
|
40,270
|
|
|
|
753,550
|
|
Operations (9)
|
|
2011
|
|
|
260,000
|
|
|
|
—
|
|
|
|
135,580
|
|
|
|
—
|
|
|
|
—
|
|
|
|
395,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Bogusz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President Finance (10)
|
|
2012
|
|
|
228,830
|
|
|
|
—
|
|
|
|
385,260
|
|
|
|
—
|
|
|
|
34,680
|
|
|
|
648,770
|
|
|
(1)
|
Values reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 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, 2012 included in the Company’s Annual Report on Form 10-K filed with the Commission on March 15, 2013.
|
|
(2)
|
Details regarding the amount shown can be found in the “All Other Compensation” table below and the footnotes thereto.
|
|
(3)
|
Includes bonus awards under the Company’s Short-term Incentive Plan.
|
|
(4)
|
Mr. Smith joined the Company in 2009. He served as President and Chief Operating Officer through December 31, 2010. On January
1, 2011, he assumed the role of Chief Executive Officer.
|
|
(5)
|
Mr. Tran joined the Company in May 2012, and so was not a named executive officer in 2011 or 2010.
|
|
(6)
|
Ms. Graves joined the Company in January 2011, and so was not named executive officer in 2010.
|
|
(7)
|
Mr. Ponzio joined the Company in January 2010, and was not a named executive officer in 2010.
|
|
(8)
|
Mr. Corvese was not a named executive officer in 2010.
|
|
(9)
|
Mr. Evans was not a named executive officer in 2010.
|
|
(10)
|
Ms. Bogusz was not a named executive officer in either 2011 or 2010.
|
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/
Outplacement/
Reimbursements
($)
|
|
|
Contingent
Cash
Award(4)
($)
|
|
|
Registrant
Contributions
to Defined
Contribution
Plans ($)(1)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
M. Smith
|
|
2012
|
|
|
10,270
|
|
|
|
97,936
|
(2)
|
|
|
325,000
|
|
|
|
—
|
|
|
|
433,206
|
|
|
|
2011
|
|
|
—
|
|
|
|
90,791
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
90,791
|
|
|
|
2010
|
|
|
1,365
|
|
|
|
13,848
|
(3)
|
|
|
—
|
|
|
|
8,575
|
|
|
|
23,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hai Tran
|
|
2012
|
|
|
4,740
|
|
|
|
22,671
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
27,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Jane
Graves
|
|
2012
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
2011
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vito Ponzio,
Jr.
|
|
2012
|
|
|
6,760
|
|
|
|
82,025
|
(2)
|
|
|
30,000
|
|
|
|
—
|
|
|
|
118,785
|
|
|
|
2011
|
|
|
—
|
|
|
|
61,475
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
61,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell
J. Corvese
|
|
2012
|
|
|
10,270
|
|
|
|
—
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
85,270
|
|
|
|
2011
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Evans
|
|
2012
|
|
|
10,270
|
|
|
|
—
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
40,270
|
|
|
|
2011
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia
Bogusz
|
|
2012
|
|
|
4,680
|
|
|
|
—
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
34,680
|
|
|
(1)
|
Value of matching contributions allocated by the Company to each of the named executive officers pursuant to the Company’s
401(k) Plan. In 2011, the Company suspended its 401(k) matching contributions.
|
|
(2)
|
Represents commuting fees paid.
|
|
(3)
|
Represents legal fees paid on behalf of Mr. Smith in connection with the negotiation of his employment agreement executed in
December 2010.
|
|
(4)
|
Cash award paid upon completion of sale of the Company’s Community Pharmacy and Mail Order business.
|
Grants of Plan Based Awards
In 2012, the Compensation Committee approved
the grant of the following stock options to named executive officers.
Name
|
|
Grant Date
|
|
|
All Other Option
Awards: Number
of Securities
Underlying Options
(#)
|
|
|
Exercise or Base
Price of Option
Awards
($/Sh)(1)
|
|
|
Grant Date Fair
Value of Stock &
Option Awards
($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard M. Smith
|
|
03-08-2012
|
(3)
|
|
|
425,000
|
|
|
|
6.62
|
|
|
|
1,703,315
|
|
Hai Tran
|
|
05-14-2012
|
(4)
|
|
|
200,000
|
|
|
|
7.73
|
|
|
|
901,840
|
|
Vito Ponzio, Jr.
|
|
03-08-2012
|
(3)
|
|
|
100,000
|
|
|
|
6.62
|
|
|
|
400,780
|
|
Russel J. Corvese
|
|
03-08-2012
|
(3)
|
|
|
100,000
|
|
|
|
6.62
|
|
|
|
400,780
|
|
David Evans
|
|
03-08-2012
|
(3)
|
|
|
100,000
|
|
|
|
6.62
|
|
|
|
400,780
|
|
Patricia Bogusz
|
|
03-08-2012
|
(3)
|
|
|
100,000
|
|
|
|
6.62
|
|
|
|
385,260
|
|
|
(1)
|
Options are granted with an exercise price equal to the closing price per share of common stock on the date of grant.
|
|
(2)
|
Represents the total fair value, estimated as per FASB ASC Topic 718.
|
|
(3)
|
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.
|
|
(4)
|
Represents stock options granted under the CHS Plan. Vesting occurs in one-third increments on the first, second and third
anniversary of the grant date.
|
Outstanding Equity Awards at Fiscal Year End
The following table provides information
on the holdings of stock options, stock appreciation rights and restricted stock by the named executive officers at December 31,
2012.
|
|
Option/SAR
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options/
SAR (#)
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
($)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard M. Smith
|
|
|
105,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.27
|
|
|
2-Jan-19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
166,667
|
|
|
|
83,333
|
(2)
|
|
|
—
|
|
|
|
9.09
|
|
|
27-Apr-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
83,334
|
|
|
|
41,666
|
(3)
|
|
|
—
|
|
|
|
6.65
|
|
|
16-Jun-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
133,333
|
|
|
|
66,667
|
(1)
|
|
|
—
|
|
|
|
5.70
|
|
|
31-Dec-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
50,000
|
|
|
|
100,000
|
(4)
|
|
|
—
|
|
|
|
4.42
|
|
|
26-Apr-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
425,000
|
(9)
|
|
|
—
|
|
|
|
6.62
|
|
|
8-
Mar
-22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hai Tran
|
|
|
—
|
|
|
|
200,000
|
(10)
|
|
|
—
|
|
|
|
7.73
|
|
|
14-May-22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vito Ponzio, Jr.
|
|
|
33,334
|
|
|
|
16,666
|
(5)
|
|
|
—
|
|
|
|
7.09
|
|
|
23-Feb-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8,334
|
|
|
|
16,666
|
(6)
|
|
|
—
|
|
|
|
4.24
|
|
|
1-Mar-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
16,667
|
|
|
|
33,333
|
(4)
|
|
|
—
|
|
|
|
4.42
|
|
|
26-Apr-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
100,000
|
(9)
|
|
|
—
|
|
|
|
6.62
|
|
|
8-Mar-22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russel J. Corvese
|
|
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.95
|
|
|
24-Sep-13
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
9,200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.00
|
|
|
1-Jul-15
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
104,858
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.47
|
|
|
1-Nov-16
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
56,250
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.52
|
|
|
29-Apr-18
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.73
|
|
|
28-Apr-19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
33,334
|
|
|
|
16,666
|
(3)
|
|
|
—
|
|
|
|
6.65
|
|
|
16-Jun-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10,000
|
|
|
|
20,000
|
(4)
|
|
|
—
|
|
|
|
4.42
|
|
|
26-Apr-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
100,000
|
(9)
|
|
|
—
|
|
|
|
6.62
|
|
|
8-Mar-22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Evans
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.71
|
|
|
20-Feb-19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
33,334
|
|
|
|
16,666
|
(3)
|
|
|
—
|
|
|
|
6.65
|
|
|
16-Jun-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
16,667
|
|
|
|
33,333
|
(4)
|
|
|
—
|
|
|
|
4.42
|
|
|
26-Apr-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
100,000
|
(9)
|
|
|
—
|
|
|
|
6.62
|
|
|
8-Mar-22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Bogusz
|
|
|
19,687
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.52
|
|
|
29-Apr-18
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.73
|
|
|
28-Apr-19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,667
|
|
|
|
3,333
|
(7)
|
|
|
—
|
|
|
|
6.46
|
|
|
27-Jul-20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,667
|
|
|
|
13,333
|
(8)
|
|
|
—
|
|
|
|
4.24
|
|
|
1-Mar-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
16,667
|
|
|
|
33,333
|
(4)
|
|
|
—
|
|
|
|
4.42
|
|
|
26-Apr-21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
100,000
|
(9)
|
|
|
—
|
|
|
|
6.62
|
|
|
8-Mar-22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Vesting schedule is one-third vesting on December 31, 2011, one-third vesting on December 31, 2012, one-third vesting on December
31, 2013.
|
|
(2)
|
Vesting schedule is one-third vesting on April 27, 2011, one-third vesting on April 27, 2012, one-third vesting on April 27,
2013.
|
|
(3)
|
Vesting schedule is one-third vesting on June 16, 2011, one-third vesting on June 16, 2012, one-third vesting on June 16, 2013.
|
|
(4)
|
Vesting schedule is one-third vesting on April 26, 2012, one-third vesting on April 26, 2013 and one-third vesting on April
26, 2014.
|
|
(5)
|
Vesting schedule is one-third vesting on February 23, 2011, one-third vesting on February 23, 2012 and one-third vesting on
February 23, 2013.
|
|
(6)
|
Vesting schedule is one-third vesting on March 1, 2012, one-third vesting on March 1, 2013 and one-third vesting on March 1,
2014.
|
|
(7)
|
Vesting schedule is one-third vesting on July 27, 2011, one-third vesting on July 27, 2012 and one-third vesting on July 27,
2013.
|
|
(8)
|
Vesting schedule is one-third vesting on March 1, 2012, one-third vesting on March 1, 2013 and one-third vesting on March 1,
2014.
|
|
(9)
|
Vesting schedule is one-third vesting on March 8, 2013, one-third vesting on March 8, 2014 and one-third vesting on March 8,
2015.
|
|
(10)
|
Vesting schedule is one-third vesting on May 14, 2013, one-third vesting on May 14, 2014 and one-third vesting on May 14, 2015.
|
Option Exercises and Stock Vested
The following table sets forth certain information
with respect to stock options exercised and vested stock awards by the Company’s executive officers during the year ended
December 31, 2012.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value Realized
on
Exercise ($)
|
|
|
Number of
Shares
Acquired
on Vesting
|
|
|
Value Realized
on
Vesting ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard M. Smith
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
268,400
|
|
Hai Tran
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Mary Jane Graves
|
|
|
—
|
|
|
|
—
|
|
|
|
66,667
|
|
|
|
336,668
|
|
Vito Ponzio, Jr
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Russel J. Corvese
|
|
|
—
|
|
|
|
—
|
|
|
|
22,500
|
|
|
|
150,975
|
|
David Evans
|
|
|
—
|
|
|
|
—
|
|
|
|
6,666
|
|
|
|
44,729
|
|
Patricia Bogusz
|
|
|
14,000
|
|
|
|
50,572
|
|
|
|
7,875
|
|
|
|
52,841
|
|
Employment and Severance Agreements
Richard M. Smith — Employment Agreement
On December 23, 2010, the Company and Mr.
Smith entered into a new employment agreement which replaced his prior severance agreement with the Company. The terms of the employment
agreement provide for the employment of Mr. Smith as the Chief Executive Officer at an initial base annual salary of $650,000,
which may be increased (but not decreased) at the discretion of our Board of Directors. Under that agreement, Mr. Smith is eligible
to participate in 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 and contingent on attainment of performance goals to be reasonably established in good faith
by the Compensation Committee no later than 90 days after the commencement of each calendar year. Mr. Smith is also entitled under
that agreement to vacation of up to 23 business days per calendar year, to be accrued and available in accordance with the Company’s
policies for its senior executives. The Company has agreed to reimburse Mr. Smith for up to $15,000 for legal fees incurred in
connection with review and negotiation of the employment agreement.
On December 31, 2010, pursuant to the employment
agreement, Mr. Smith was granted a cash denominated SAR, which is outside of the 2008 Plan, with respect to 200,000 shares of the
Common Stock at a grant price equal to $5.70. The SAR will vest in three equal annual installments and will fully vest in connection
with a Change of Control (as defined in the agreement). Mr. Smith may exercise this SAR, in whole or in part, to the extent the
SAR has been vested and will receive in cash the amount, if any, by which the closing stock price on the exercise date exceeds
the grant price. Upon the exercise of any SARs, as soon as practicable under the applicable Federal and state securities laws,
Mr. Smith will be required to use the net after-tax proceeds of such exercise to purchase shares of the Common Stock from the Company
at the closing stock price of the Common Stock on that date and hold such shares of Common Stock for a period of not less than
one year from the date of purchase, except that he will not be required to purchase any shares of Common Stock if he exercises
the SAR on or after a Change of Control of the Company. Mr. Smith’s right to exercise the SAR will expire on the earliest
of (1) the tenth anniversary of the grant date, (2) the date that he forfeits his right to exercise the SAR as a result of termination
of his employment, as more fully described below, or (3) the date that the SAR is exercised in full.
Under the employment agreement, Mr. Smith
is subject to the provisions of a non-compete covenant, which provides that during the term of employment and for a period of one
year following his termination, Mr. Smith may not directly or indirectly participate in any business that is competitive with the
Company’s business. Similarly, for two years following the later of the date of his termination or the date upon which he
ceases to be an affiliate of the Company, Mr. Smith may not solicit or otherwise interfere with the Company’s relationship
with any present or former employee or customer of the Company. Mr. Smith is also required to keep confidential during the term
of employment and thereafter all confidential and proprietary information concerning the Company and its business.
If Mr. Smith’s employment is terminated
due to his death, (i) his estate or beneficiaries are entitled to receive his salary, bonus and other benefits earned and accrued
prior to the date of his death, (ii) all unvested stock options and SARs outstanding immediately prior to his death may be exercised
by his estate for a period equal to the earlier of one year from and after the date of his death and the original expiration date
of each option and SAR (unless a longer period is set forth in the underlying grant agreements), (iii) any restricted stock units
granted under any bonus program or otherwise granted will vest as of the date of his death and such shares issued upon vesting
will be free from restrictions on transferability and (iv) any stock grants that are subject to forfeiture will become non-forfeitable
and will be fully vested and transferable. If Mr. Smith’s employment is terminated due to his disability, (i) he will be
entitled to receive his salary, bonus and other benefits earned and accrued prior to the date of his disability, (ii) all unvested
stock options and SARs outstanding immediately prior to his disability date will vest in full and, together with all options and
SARs outstanding immediately prior to his disability date, may be exercised by him for a period equal to the earlier of one year
from and after his disability date and the original expiration date of each option and SAR (unless a longer period is set forth
in the underlying grant agreements), (iii) any restricted stock units granted under any bonus program or otherwise granted will
vest as of his disability date and such shares issued upon vesting will be free from restrictions on transferability and (iv) any
stock grants that are subject to forfeiture will become non-forfeitable and will be fully vested and transferable. In addition,
if Mr. Smith should remain disabled for six months following his disability date, he will also be entitled to receive for a period
of two years following termination, his annual salary at the time of termination of his employment (less the gross proceeds paid
to him on account of Social Security or other similar benefits and Company provided short-term and long-term disability plans)
and continuing coverage under all benefit plans and programs to which he was previously entitled.
If the Company terminates Mr. Smith for
“Cause” (as defined below), (i) he will be entitled to receive his salary, bonus and other benefits earned and accrued
prior to the date of termination, (ii) all unvested stock options and SARs will be terminated in accordance with the terms of the
governing documents, (iii) any unvested restricted stock units will terminate in accordance with the terms of the governing documents
and (iv) any stock grants made to him that are subject to forfeiture will be immediately forfeited.
If Mr. Smith terminates his employment without
Good Reason (as defined below), (i) he will be entitled to receive his salary, bonus and other benefits earned and accrued prior
to the date of termination, (ii) all stock options and SARs that are vested and exercisable may be exercised for a period of the
earlier of 30 days from and after the effective date of his termination and the original expiration date of each option and SAR
(unless a longer period is set forth in the underlying grant agreements), (iii) any unvested restricted stock units will terminate
immediately and (iv) any stock grants made to him that are subject to forfeiture will be immediately forfeited.
If the Company terminates Mr. Smith’s
employment without Cause or Mr. Smith terminates his employment for Good Reason, (i) he is entitled to receive his salary, bonus
and other benefits earned and accrued through the date of termination, (ii) for a period of two years following his date of termination
or, if such date is on or after January 1, 2014, for the one year period which starts on the date his employment terminates (A)
the annual salary that he was receiving at the time of such termination of employment and (B) a monthly payment in an amount sufficient
to cover his premiums associated with continuing coverage under the benefit plans and programs he would have received, (iii) all
unvested options and SARs which are outstanding immediately prior to his termination will immediately vest in full and, together
with all options and SARs then outstanding, may be exercised by him for a period equal to the earlier of 30 days from and after
the effective date of the termination of his employment and the original expiration date of each option and SAR (unless a longer
period is set forth in the underlying grant agreements), (iv) he will become vested in any deferred compensation plan in which
he is a participant, (v) any restricted stock units granted will vest and be free from restrictions on transferability and (vi)
any stock grants that are subject to forfeiture will become non-forfeitable and will become fully vested and transferable.
“Cause” means (i) conviction
of a felony or a crime of moral turpitude; (ii) commission of unauthorized acts intended to result in Mr. Smith’s personal
enrichment at the material expense of the Company; or (iii) material violation of duties or responsibilities to the Company which
constitute willful misconduct or dereliction of duty, provided that as to any termination pursuant to this clause, a majority of
the members of the Compensation Committee must first approve such “Cause” termination before the Company effectuates
such a termination. “Good Reason” means the existence of any one or more of the following conditions that continue
for more than 45 days following written notice of such conditions by Mr. Smith to the Compensation Committee: (i) a material change
in or reduction of Mr. Smith’s authority, duties and responsibilities, or the assignment to Mr. Smith of duties materially
inconsistent with Mr. Smith’s position with the Company; or (ii) a reduction in Mr. Smith’s then current annual salary
without his consent.
If within the one year period commencing
on the effective date of a Change of Control of the Company, (i) Mr. Smith is terminated by the Company or a successor entity within
such one year period and the termination is not due to death, disability, termination for Cause or termination by Mr. Smith without
Good Reason or (ii) Mr. Smith elects to resign effective within the 180 day period following the date that the Company or a successor
entity has taken action to materially reduce or change Mr. Smith’s authority, duties or responsibilities or the Company assigns
duties to him that are materially inconsistent with his position immediately prior to the Change of Control, the following will
occur: (i) Mr. Smith will be entitled to receive his salary, bonus and other benefits earned and accrued through the date of termination;
(ii) for a period of two years following his date of termination, Mr. Smith will be entitled to the annual salary that he was receiving
at the time of such termination of employment and a monthly payment in an amount sufficient to cover his premiums associated with
continuing coverage under the benefit plans an programs he would have received; (iii) all unvested options and SARs which are outstanding
immediately prior to Mr. Smith’s termination will immediately vest and become exercisable on his date of termination and
for the period set forth in the underlying grant agreements; (iv) Mr. Smith will become vested in any deferred compensation plan
in which he is a participant; (v) any restricted stock units will vest and be free from restrictions on transferability; and (vi)
any stock grants that are subject to forfeiture will become non-forfeitable and will become fully vested and transferable.
Under the terms of Mr. Smith’s employment
agreement, if there is a Change in Control and the Company reasonably determines that any payment or distribution by the Company
to or for the benefit of Mr. Smith would be subject to the excise tax imposed by § 4999 of the Code, then the Company will
determine the safe harbor amount under the Code that would not result in such excise tax and will pay to Mr. Smith the higher of
the safe harbor amount or the payments otherwise due to Mr. Smith in the absence of such provision, net of all applicable taxes,
including the tax under § 4999 of the Code.
Hai Tran — Engagement Letter
On April 19, 2012, Mr. Tran
and the Company entered into an engagement letter (the “Engagement Letter”). The terms of the Engagement Letter provide
for the employment of Mr. Tran as the Company’s Senior Vice President, Chief Financial Officer for a term of two years at
an initial base salary of $400,000 per annum, and eligibility to participate in the Company’s cash bonus program with a target
bonus of up to 80% of his base salary. Subject to Board approval, Mr. Tran was granted options to purchase 200,0000 shares of the
Company’s common stock par value $0.0001 per share, subject to the terms and conditions set forth in the BioScrip/CHS 2006
Equity Incentive Plan (the “Option Plan”). The exercise price of such options is equal to the fair market value of
a share of the Company’s common stock on the date of grant and the options 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, subject to Mr. Tran being employed by
the Company on such anniversary date or as otherwise expressly provided in the Option Plan.
Under the terms of the Engagement
Letter, as a condition to his employment Mr. Tran entered into a restrictive covenant agreement with the Company which provides
that during the term of employment and for one year following his termination, Mr. Tran 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.
Tran may not solicit or otherwise interfere with the Company’s relationship with any present or former employee or customer
of the Company. Mr. Tran is also required to keep confidential during the term of employment and thereafter all confidential information
concerning the Company and its business.
If Mr. Tran’s employment
is terminated by the Company for “Cause” (as defined below) or due to death or disability, or if Mr. Tran resigns without
“Good Reason” (as defined below), then (i) he will be entitled to receive his salary and benefits earned and accrued
through the date of termination, (ii) all fully vested and exercisable options may be exercised to the extent authorized by the
Option Plan, and all unvested stock options shall cease to vest and be forfeited as of such date, and (iii) no other benefits shall
accrue or vest subsequent to such date.
If the Company terminates
Mr. Tran without Cause or if Mr. Tran resigns for Good Reason, then, subject to execution of a Waiver and Release Agreement, Mr.
Tran will be entitled to receive: (1) the salary he earned through the date of termination, (2) for a period of two years following
his date of termination (reduced by the number of months from the first day of employment to the last day of employment) or, if
such date is on or after the second anniversary of his start date, for the one year period which starts on the date his employment
terminates, the annual salary that he was receiving at the time of such termination of employment, and (3) all fully vested and
exercisable options may be exercised in accordance with the Option Plan, and all unvested stock options shall cease to vest and
be forfeited as of such date. If Mr. Tran is terminated by the Company without Cause, he will also be eligible to receive a pro-rated
bonus for the year.
“Cause” means
(i) commission of criminal conduct which involves moral turpitude; (ii) conviction of, or plea of nolo contendre to, a criminal
offense that (a) is a felony, or (b) results in imprisonment; (iii) acts which constitute fraud or self-dealing against the Company
or any of its subsidiaries, including, without limitation, misappropriation or embezzlement; (iv) violation of federal securities
laws or state securities law applicable to the Company; (v) willful engagement in conduct which is materially injurious to the
Company or any of its subsidiaries; or (vi) gross misconduct in the performance of duties as an employee of the Company.
“Good Reason”
means the existence of any one or more of the following conditions that continue without Mr. Tran’s consent for more than
45 days following written notice of such conditions by Mr. Tran to the Chief Executive Officer: (i) a material change in or reduction
of Mr. Tran’s authority, duties and responsibilities, or the assignment to Mr. Tran of duties materially inconsistent with
Mr. Tran’s position with the Company; or (ii) a reduction in Mr. Tran’s gross bi-weekly salary below his initial gross
bi-weekly salary as stated in the Engagement Letter; provided that Mr. Tran delivers such notice within 30 days following his learning
of such condition.
If a change of control event
(as defined in the Option Plan) occurs prior to May 1, 2014, and either the Company or a successor entity terminates Mr. Tran’s
employment without Cause within one year of the change in control event or Mr. Tran resigns for Good Reason within 180 days of
the change in control event, then, subject to execution of a Waiver and Release Agreement, Mr. Tran will be entitled to receive
(1) the salary, bonus, and other benefits earned and accrued through the date of termination, and (2) for a period of two years
following his date of termination, the base salary that Mr. Tran was receiving at the time of such termination of employment.
Mary Jane Graves — Engagement Letter
On January 31, 2011, the Company announced
that Mary Jane “MJ” Graves, the former Chief Financial Officer of CHS, which was acquired by the Company in 2010, was
appointed interim Chief Financial Officer and Treasurer of the Company by the Board. In connection with the appointment of Ms.
Graves, the Company entered into an engagement letter (the “Engagement Letter”) with Ms. Graves dated January 31, 2011.
The terms of the Engagement Letter provided for Ms. Graves to serve as the Company’s Chief Financial Officer on an interim
basis. Ms. Graves was compensated for her services at a rate of $250 per hour. The Company was responsible for Ms. Graves’
out-of-pocket expenses related to her services. Ms. Graves’ consulting services under the agreement ceased effective November
2012.
David Evans — Employment Letter Agreement and
Severance Agreement
On January 30, 2009, Mr. Evans, Senior Vice
President, Strategic Operations, 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 from his 2010 base salary of
$260,000 to $325,000 per year. 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 of Directors, 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 within one year following any employee’s
termination with the Company, 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 the 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.
Vito Ponzio, Jr. — Employment Letter Agreement
On January 13, 2010, Mr. Ponzio, Senior
Vice President, Human Resources, entered into an employment agreement with the Company which provides for his employment until
terminated by the Company or Mr. Ponzio. Under the terms of the employment agreement, Mr. Ponzio receives annual reviews of his
salary and reimbursement for reasonable and necessary expenses incurred. In 2012, Mr. Ponzio’s annual base salary was increased
from his 2010 base salary of $245,000 to $325,000 per year. Mr. Ponzio is also eligible to participate in all employee benefit
plans and policies commensurate with his position. Pursuant to the employment agreement, Mr. Ponzio received a signing grant of
50,000 stock options to purchase the Company’s common stock, par value $0.0001 per share of the Company, awarded at the current
market price. In addition, Mr. Ponzio is eligible to participate in the Company’s cash bonus program, with his target bonus
being 40% of his base salary in 2012 and based on individual targets recommended by the President and Chief Executive Officer and
approved by the Board of Directors. Beginning in 2011, Mr. Ponzio also became eligible for a long-term incentive compensation award.
Under the employment agreement, Mr. Ponzio
is subject to the provisions of a non-compete covenant, which provides that during the term of employment and for a period of one
year following his termination, Mr. Ponzio may not participate in, supervise or manage any competing activities in the defined
territory that would displace one or more of the Company’s business opportunities. Similarly, for two years following the
date of his termination, Mr. Ponzio may not solicit or otherwise interfere with the Company’s relationship with any present
or former employee or customer of the Company. Mr. Ponzio is also required to keep confidential during the term of employment and
thereafter all confidential and proprietary information concerning the Company and its business.
If the Company terminates Mr. Ponzio’s
employment without Cause, (i) he is entitled to receive his salary, bonus and other benefits earned and accrued through the date
of termination, and (ii) severance payments equal to one year of salary at his then current base salary level; provided, however,
that if Mr. Ponzio 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 based salary on the date of termination and his new base salary.
Russel J. Corvese — Employment Letter Agreement
October 15, 2001, Mr. Corvese, Senior Vice
President Mail Order Operations, entered into an employment agreement with the Company which provides for his employment until
terminated by the Company or Mr. Corvese, and which was subsequently amended September 19, 2003 and December 1, 2004. Mr. Corvese
receives an annual base salary of $290,000 per year. The terms of the employment agreement provide Mr. Corvese reimbursement for
all reasonable and necessary expenses incurred. In addition, Mr. Corvese is permitted to participate in all employee health and
other related benefit plans and policies available to members of senior management generally and shall be eligible to participate
in the Company’s cash bonus program. The employment agreement provides that Mr. Corvese shall not be required to relocate
but will need to travel as necessary in accordance with his responsibilities and duties.
Under the employment agreement, Mr. Corvese
is subject to the provisions of a non-compete covenant, which provides that during the term of employment and for a period of one
year following his termination or six months following payment of any severance, whichever occurs last, Mr. Corvese may not directly
or indirectly participate in work relating to information systems, telecommunications, computer systems or other work related to
information technology that is competitive with the Company’s business. Similarly, for two years following the date of his
termination, Mr. Corvese may not solicit or otherwise interfere with the Company’s relationship with any present or former
employee or customer of the Company. Mr. Corvese is also required to keep confidential during the term of employment and thereafter
all confidential and proprietary information concerning the Company and its business.
If the Company terminates Mr. Corvese’s
employment without Cause or Mr. Corvese terminates his employment for Good Reason, he is entitled to receive (i) his salary, bonus
and other benefits earned and accrued through the date of termination, (ii) severance payments equal to one year of salary at his
then current base salary level, (iii) all unvested options which are outstanding immediately prior to his termination will immediately
vest in full and, all options then outstanding may be exercised in accordance with their terms, and (iv) all performance shares
shall vest and become immediately transferable free of any restrictions on transferability (other than those imposed under federal
and state securities laws) other than those set forth in the grant document that expressly survive termination of employment.
Patricia Bogusz — Employment Letter Agreement
Ms. Bogusz entered into an employment agreement
with the Company on June 21, 2007, and an amendment to such agreement as of May 26, 2011. The employment agreement provides for
Ms. Bogusz’ employment until terminated by the Company or Ms. Bogusz. Ms. Bogusz receives an annual base salary of $223,080
per year and eligibility to participate in the Company’s cash bonus program subject to corporate, departmental and individual
targets being met
with a target bonus of up to 30% of her base salary. Subject to Board approval, Ms. Bogusz was granted
options to purchase 50,000 shares of the Company’s Common Stock.
Under the terms of the employment agreement,
Ms. Bogusz is eligible to participate in all employee benefit plans and policies commensurate with her position. Under the employment
agreement and subject to approval of the Board, Ms. Bogusz will also be eligible to receive stock options and restricted stock
commensurate with her position.
In connection with the employment agreement,
Ms. Bogusz also entered into a Restrictive Covenant Agreement, which provides that during the term of employment and for a period
of two years following the date of her termination, Ms. Bogusz may not solicit or otherwise interfere with the Company’s
relationship with any present employee or within one year following any employee’s termination with the Company, or any customer
of the Company with whom Ms. Bogusz dealt in the two years prior to her termination of her employment with the Company. Ms. Bogusz
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 her beginning employment
with the Company, Ms. Bogusz entered into a Severance Agreement dated July 11, 2007. Pursuant to the terms of the severance agreement,
if the Company terminates Ms. Bogusz’ employment without Cause or if Ms. Bogusz terminates her employment for Good Reason,
upon execution of the Company’s standard Waiver and Release, Ms. Bogusz is entitled to receive (i) severance payments equal
to one year of salary at her then current base salary level payable in accordance with the Company’s then applicable payroll
practices, (ii) all outstanding securities to be issued under the Company’s stock options plans and held by Ms. Bogusz shall
vest and become immediately exercisable; provided, however, that if Ms. Bogusz secures new employment during the one year period
following her termination, any remaining severance payments will be reduced to an amount equal to the difference between her base
salary on the date of termination and her new base salary. If Ms. Bogusz’ employment is terminated for by the Company for
cause or by Ms. Bogusz without good reason, the Company would not be liable for, or obligated to pay any stock or cash bonus compensation,
incentive or otherwise, or any other compensation contemplated not already paid or not already accrued as of the date of such termination
and no other benefits shall accrue or vest subsequent to such date.
Potential Change in Control and Severance Payments
The following tables summarize potential
change in control payments. 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, his termination
by us for cause, death, disability, termination of employment 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, 2012. 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, we have assumed a price
per share of our common stock of $10.77, which represents the closing market price of our common stock as reported on the NASDAQ
Global Market on December 31, 2012. All amounts are expressed in dollars. As Interim CFO, Ms. Graves was not subject to any severance
or change in control payments.
Richard M. Smith
Benefit
|
|
Voluntary/
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Without Cause/
Good Reason
|
|
|
Change in
Control
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
—
|
|
|
|
3,048,415
|
|
|
|
3,048,415
|
|
|
|
3,048,415
|
|
|
|
3,048,415
|
|
Total
|
|
|
—
|
|
|
|
3,048,415
|
|
|
|
3,048,415
|
|
|
|
3,048,415
|
|
|
|
3,048,415
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Defined Contribution Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
—
|
|
|
|
—
|
|
|
|
29,958
|
|
|
|
29,958
|
|
|
|
29,958
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
29,958
|
|
|
|
29,958
|
|
|
|
29,958
|
|
Total
|
|
|
—
|
|
|
|
3,048,415
|
|
|
|
4,378,373
|
|
|
|
4,378,373
|
|
|
|
4,378,373
|
|
Cash Severance: Current bonus in the event
of voluntary termination, for cause or upon death; two times base salary and current bonus in the event of termination as a result
of disability, without cause, for good reason, or change in control.
Unexercisable Options: Intrinsic value of
accelerated vesting of stock options which carry a positive return upon exercise based on December 31, 2012 closing price of $10.77.
Health & Welfare: two additional years
of health and welfare benefits as a result of disability, without cause, for good reason, or change in control.
Russel J. Corvese
Benefit
|
|
Voluntary/
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Without
Cause/
Good Reason
|
|
|
Change in
Control
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
290,000
|
|
|
|
290,000
|
|
|
|
290,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
—
|
|
|
|
610,664
|
|
|
|
610,664
|
|
|
|
610,664
|
|
|
|
610,664
|
|
Total
|
|
|
—
|
|
|
|
610,664
|
|
|
|
610,664
|
|
|
|
610,664
|
|
|
|
610,664
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Defined Contribution Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
610,664
|
|
|
|
900,664
|
|
|
|
900,664
|
|
|
|
900,664
|
|
Cash Severance: One year base salary in
the event of termination as a result of disability, without cause, for good reason, or change in control.
Unexercisable Options: Intrinsic value of
accelerated vesting of stock options which carry a positive return upon exercise based on December 31, 2012 closing price of $10.77.
David Evans
Benefit
|
|
Voluntary/
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Without
Cause/
Good Reason
|
|
|
Change in
Control
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
325,000
|
|
|
|
325,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Defined Contribution Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
—
|
|
|
|
—
|
|
|
|
14,976
|
|
|
|
14,976
|
|
|
|
14,976
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
14,976
|
|
|
|
14,976
|
|
|
|
14,976
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
339,976
|
|
|
|
339,976
|
|
|
|
339,976
|
|
Cash Severance: One year base salary in
the event of termination as a result of disability, without cause, for good reason, or change in control.
Health & Welfare: One additional year
of health and welfare benefits as a result of disability, without cause, for good reason, or change in control.
Vito Ponzio, Jr.
Benefit
|
|
Voluntary/
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Without Cause/
Good Reason
|
|
|
Change in
Control
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
325,000
|
|
|
|
325,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Defined Contribution Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
325,000
|
|
|
|
325,000
|
|
Cash Severance: One year base salary in
the event of termination as a result of disability, without cause, for good reason, or change in control.
Patricia Bogusz
Benefit
|
|
Voluntary/
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Without Cause/
Good Reason
|
|
|
Change in
Control
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
223,080
|
|
|
|
223,080
|
|
|
|
223,080
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
—
|
|
|
|
728,094
|
|
|
|
728,094
|
|
|
|
728,094
|
|
|
|
728,094
|
|
Total
|
|
|
—
|
|
|
|
728,094
|
|
|
|
728,094
|
|
|
|
728,094
|
|
|
|
728,094
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Defined Contribution Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
—
|
|
|
|
6,267
|
|
|
|
6,267
|
|
|
|
6,267
|
|
|
|
6,267
|
|
Total
|
|
|
—
|
|
|
|
6,267
|
|
|
|
6,267
|
|
|
|
6,267
|
|
|
|
6,267
|
|
Total
|
|
|
—
|
|
|
|
734,361
|
|
|
|
957,441
|
|
|
|
957,441
|
|
|
|
957,441
|
|
Cash Severance: One year base salary in
the event of termination as a result of disability, without cause, for good reason, or change in control.
Unexercisable Options: Intrinsic value of
accelerated vesting of stock options which carry a positive return upon exercise based on December 31, 2012 closing price of $10.77.
Health & Welfare: One additional year
of health and welfare benefits as a result of disability, without cause, for good reason, or change in control.
Hai Tran
Benefit
|
|
Voluntary/
For Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Without Cause/
Good Reason
|
|
|
Change in
Control
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
800,000
|
|
|
|
566,667
|
*
|
|
|
800,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Defined Contribution Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
800,000
|
|
|
|
566,667
|
|
|
|
800,000
|
|
Cash Severance: Two years base salary in
the event of termination as a result of disability, or change in control. In the event of termination without cause or for good
reason, then for a period of two years following Mr. Tran’s date of termination (reduced by the number of months from the
first day of employment to the last day of employment) or, if such date is on or after the second anniversary of his start date,
for the one year period which starts on the date his employment terminates, the annual salary that he was receiving at the time
of such termination of employment.
*If Mr. Tran is terminated by the Company
without cause, he will also be eligible to receive a pro-rated bonus for the year.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires
our directors, executive officers and beneficial owners of more than 10% of the Company’s Common Stock to file with the Commission
initial reports of ownership and reports of changes in beneficial ownership of the Company’s Common Stock and other equity
securities of the Company. Based solely on our review of the copies of such forms received by us, and or written representations
from certain of such persons, we believe that, during the fiscal year 2012, our executive officers, directors and 10% stockholders
complied with all Section 16(a) filing requirements applicable to them, except for one Form 4 for each of Patricia Bogusz, David
Evans, Samuel Frieder and Gordon Woodward, covering one transaction each and three Form 4s for Daniel Colucci covering three transactions,
which were filed late.
STOCKHOLDER PROPOSALS
Rule 14a-8 of the Securities Exchange Act
of 1934, as amended (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 the Rule, proposals
submitted for inclusion in the Company’s 2014 proxy materials must be received by the Company at 100 Clearbrook Road, Elmsford,
NY 10523, Attention: Secretary. To be timely, a stockholder’s notice shall be delivered to the secretary at the principal
executive offices of the Corporation not less than 90 days and not more than 120 days prior to the first anniversary of the preceding
year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than
30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day
prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first
made. Proposals must comply with all the requirements of Rule 14a-8 and the Company’s By-Laws.
A stockholder who wishes to present a matter
for action at the Company’s 2014 Annual Meeting must deliver a notice to the Company on or after January 7, 2014 but no later
than the close of business February 6, 2014, in order to be included in the Company’s proxy statement and proxy relating
to that meeting. The Company will determine whether to include such proposal in accordance with regulations governing the solicitation
of proxies.
The Company’s By-Laws require that
such written notice set forth (i) as to each person whom the stockholder proposes to nominate for election or re-election to the
Board of Directors: (a) the name, age, business address and residence address of the person, (b) the principal occupation or employment
of the person, (c) the class or series and number of shares of capital stock of the Company which are directly or indirectly owned
beneficially or of record by the person, (d) the date such shares were acquired and the investment intent of such acquisition,
and (e) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for a contested election of directors (even if an election contest
or proxy solicitation is not involved), or is otherwise required, pursuant to Section 14 of the Exchange Act, and the rules and
regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee
and to serving if elected); and (ii) as to the stockholder giving the notice: (u) the name and address of such stockholder, as
they appear on the Company’s books, the residence name and address (if different from the Company’s books) of such
proposing stockholder and any Stockholder Associated Person (defined as (x) any person controlling, directly or indirectly, or
acting in concert with, such stockholder, (y) any beneficial owner of shares of stock of the Company owned of record or beneficially
by such stockholder or (z) any person directly or indirectly controlling, controlled by or under common control with such Stockholder
Associated Person) covered by clauses (v), (w), (y) and (z) below, (v) the class and number of shares of stock of the Company which
are directly or indirectly held of record or beneficially owned by such stockholder and by any Stockholder Associated Person with
respect to the Company’s securities, a description of any derivative positions held or beneficially held by the stockholder
and any Stockholder Associated Person and whether and the extent to which a hedging transaction has been entered into by or on
behalf of such stockholder or any Stockholder Associated Person, (w) a description of all arrangements or understandings between
such stockholder or any Stockholder Associated Person and each proposed nominee and any other person or persons (including their
names) pursuant to which the nomination(s) are to be made by such stockholder, (x) a representation that such stockholder intends
to appear in person or by proxy at the meeting to nominate the persons named in its notice, (y) any other information relating
to such stockholder or any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for a contested election of directors (even if an election contest
or proxy solicitation is not involved), or is otherwise required, pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder, and (z) a representation as to whether such stockholder or any Stockholder Associated Person
intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding
capital stock required to approve the nomination and/or otherwise to solicit proxies from stockholders in support of the nomination.
In addition, any stockholder who submits a notice is required to update and supplement the information disclosed in such notice,
if necessary, in accordance with the By-Laws.
In the case of other proposals by stockholders
at an annual meeting, the By-Laws require that such written notice set forth as to each matter such stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting; (ii) the name
and address, as they appear on the Company’s books, of the stockholder proposing such business, the residence name and address
(if different from the Company’s books) of such proposing stockholder and any Stockholder Associated Person; (iii) the class
and number of shares of stock of the Company which are directly or indirectly held of record or beneficially owned by such stockholder
and by any Stockholder Associated Person with respect to the Company’s securities, a description of any derivative positions
held or beneficially held by the stockholder and any Stockholder Associated Person and whether and the extent to which a hedging
transaction has been entered into by or on behalf of such stockholder or any Stockholder Associated Person, (iv) a description
of all arrangements or understandings between such stockholder or any Stockholder Associated Person and any other person or entity
in connection with the proposal of such business by such stockholder and any material interest of such stockholder or any Stockholder
Associated Person or such other person or entity in such business, (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the meeting, and (vi) a representation as to whether
such stockholder or any Stockholder Associated Person intends to deliver a proxy statement and/or form of proxy to holders of at
least the percentage of the Company’s outstanding shares required to approve the proposal and/or otherwise to solicit proxies
from stockholders in support of the proposal. In addition, any stockholder who submits a notice is required to update and supplement
the information disclosed in such notice, if necessary, in accordance with the By-Laws.
Upon receipt of any proposal, the Company
will determine whether to include such proposal in accordance with regulations governing the solicitation of proxies.
ANNUAL REPORT
A copy of the Company’s 2012 Annual
Report on Form 10-K, including the financial statements and financial statement schedules, as filed with the Commission, is enclosed
but is not to be regarded as proxy solicitation materials.
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 Company’s 2012 Annual Report to
Stockholders 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, 100 Clearbrook Road, Elmsford,
NY 10523 or contact BioScrip, Inc. Secretary at 914-460-1600.
BIOSCRIP, INC.
100 CLEARBROOK RD.
ELMSFORD, NY 0523
|
|
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
|
|
|
|
|
|
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
|
|
|
|
|
|
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
|
|
|
|
|
|
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
OTHER MATTERS
As of the date of this proxy statement, management is unaware
of any matter for action by shareholders at the meeting other than those described in the accompanying notice. The enclosed proxy,
however, will confer discretionary authority with respect to any other matter that may properly come before the annual meeting,
or any adjournment thereof. It is the intention of the persons named in the enclosed proxy to vote in accordance with their best
judgment on any such matter.
Exhibit A
To BioScrip Proxy Statement
BioScrip, Inc. Employee Stock Purchase
Plan
See attached.
BIOSCRIP,
INC.
EMPLOYEE
STOCK PURCHASE PLAN
Effective [_______]
BIOSCRIP,
INC.
EMPLOYEE
STOCK PURCHASE PLAN
Table of Contents
|
|
Page
|
ARTICLE I - NATURE OF
PLAN
|
1
|
ARTICLE II - DEFINITIONS
AND CONSTRUCTION
|
1
|
2.1
|
DEFINITIONS
|
1
|
2.2
|
WORD USAGE
|
4
|
2.3
|
CONSTRUCTION
|
4
|
ARTICLE III - PARTICIPATION
|
4
|
3.1
|
ELIGIBILITY
|
4
|
3.2
|
ELECTION TO PARTICIPATE
|
4
|
3.3
|
WAIVER OF PARTICIPATION
|
4
|
ARTICLE IV - PAYROLL
DEDUCTION AUTHORIZATION
|
5
|
4.1
|
PAYROLL DEDUCTIONS
|
5
|
4.2
|
WITHDRAWAL OF PAYROLL DEDUCTION ACCOUNT
|
5
|
ARTICLE V - PURCHASE
OF STOCK
|
5
|
5.1
|
GRANT OF OPPORTUNITY TO PURCHASE
STOCK
|
5
|
5.2
|
LIMITATION ON STOCK
|
6
|
5.3
|
LIMITATIONS ON GRANTS
|
7
|
5.4
|
STOCK PRICE
|
7
|
5.5
|
PURCHASE OF STOCK
|
8
|
5.6
|
PAYMENT
|
9
|
5.7
|
TRANSFER OF SHARES
|
10
|
5.8
|
TRANSFER OF RIGHTS
|
10
|
ARTICLE VI – ADMINISTRATION
|
10
|
6.1
|
COMMITTEE AUTHORITY
|
10
|
6.2
|
AUTHORIZED REPRESENTATIVE
|
11
|
6.3
|
NONDISCRIMINATION
|
11
|
6.4
|
BOOKS AND RECORDS
|
11
|
ARTICLE VII - AMENDMENT
AND TERMINATION
|
12
|
7.1
|
AMENDMENT
|
12
|
7.2
|
TERMINATION
|
12
|
7.3
|
NO ALTERATION OF RIGHTS
|
12
|
ARTICLE VIII - MISCELLANEOUS
|
12
|
8.1
|
EXECUTION OF RECEIPTS AND RELEASES
|
12
|
8.2
|
PLAN FUNDS
|
12
|
8.3
|
NO GUARANTEE OF INTERESTS
|
12
|
8.4
|
PAYMENT OF EXPENSES
|
13
|
8.5
|
EMPLOYER RECORDS
|
13
|
8.6
|
INTERPRETATIONS AND ADJUSTMENTS
|
13
|
8.7
|
UNIFORM RULES
|
13
|
8.8
|
NO RIGHTS IMPLIED
|
13
|
8.9
|
INFORMATION
|
13
|
8.10
|
NO LIABILITY OF EMPLOYER
|
13
|
8.11
|
EMPLOYER ACTION
|
13
|
8.12
|
SEVERABILITY
|
13
|
8.13
|
NOTICE
|
14
|
8.14
|
WAIVER OF NOTICE
|
14
|
8.15
|
SUCCESSORS
|
14
|
8.16
|
HEADINGS
|
14
|
8.17
|
LAW
|
14
|
8.18
|
NO LIABILITY FOR GOOD FAITH DETERMINATIONS
|
14
|
ARTICLE IX - ADOPTION
OF PLAN BY PARTICIPATING EMPLOYERS
|
14
|
9.1
|
PARTICIPATING EMPLOYERS
|
14
|
9.2
|
APPLICATION OF PLAN PROVISIONS
|
15
|
9.3
|
POWERS EXERCISABLE ONLY BY BIOSCRIP,
INC.
|
15
|
BIOSCRIP,
INC.
EMPLOYEE
STOCK PURCHASE PLAN
ARTICLE I - NATURE OF PLAN
This employee stock
purchase plan is hereby established for the purpose of providing all employees of BioScrip, Inc., a Delaware corporation, and its
adopting Subsidiary or Subsidiaries, if any, with the opportunity to acquire a proprietary interest in the Company, thereby increasing
their interest in their Employer’s welfare, and encouraging them to remain in the employ of their Employer.
ARTICLE II - DEFINITIONS AND CONSTRUCTION
|
2.1
|
DEFINITIONS
. For the purpose of this Plan, the following definitions shall
apply unless the context requires otherwise:
|
|
(a)
|
BOARD OF DIRECTORS
shall mean the Board of Directors of the Company unless otherwise indicated
or the context otherwise requires.
|
|
(b)
|
CODE
shall mean the Internal Revenue Code of 1986, as amended.
|
|
(c)
|
Committee
shall mean the Management Development & Compensation Committee of the Board of Directors, or such other person or persons appointed
by Board of Directors to administer the Plan, as further described in the Plan, or their respective delegates.
|
|
(d)
|
COMPANY
shall mean BioScrip, Inc., and includes any successor or assignee corporation or
corporations into which the Company may be merged, changed or consolidated; any corporation for whose securities the securities
of the Company shall be exchanged; and any assignee of or successor to substantially all of the assets of the Company.
|
|
(e)
|
COMPENSATION
shall mean an Employee’s base salary or wages received for personal services
rendered to the Employer as an Employee which are actually paid during the Plan Year and which are subject to withholding for Federal
income tax purposes, plus amounts excluded from the gross income of an Employee under sections 125, 402(a)(8), 402(h)(1)(B), or
403(b) of the Code. Compensation shall not include commissions based on sales, bonuses, or overtime pay.
|
|
(f)
|
CONTINUOUS SERVICE
shall mean, subject to modification by the Committee, an Eligible Employee’s
number of full years and completed months of continuous employment with the Company or a Subsidiary from his last hiring date to
his date of Termination of Employment for any reason. The Committee may provide rules from time to time regarding the calculation
of Continuous Service and the method for crediting such service.
|
|
(g)
|
Disability
shall means a mental or physical illness that entitles the Participant to receive benefits under the long-term disability plan
of the Company or a Subsidiary, or if the Participant is not covered by such plan, a mental or physical illness that renders a
Participant permanently and totally incapable of performing his duties as an employee of the Company or a Subsidiary. Notwithstanding
the foregoing, a Disability shall not qualify under this Plan if it is the result of (a) a willfully self-inflicted injury or willfully
self-induced sickness; or (b) an injury or disease contracted, suffered, or incurred, while participating in a criminal offense.
The determination of Disability shall be made by the Committee. The determination of Disability for purposes of this Plan shall
not be construed to be an admission of disability for any other purpose.
|
|
(h)
|
EFFECTIVE DATE
shall mean, with respect to the Plan, [________].
|
|
(i)
|
ELIGIBLE EMPLOYEE
shall mean each employee of the Company or a Subsidiary (if the Subsidiary
has adopted the Plan) as of the first business day of a given Offering Period except that the Committee in its sole discretion
may exclude:
|
(a)
any employee who has accrued less than a minimum period of Continuous Service established by the Committee (but not to exceed
two (2) years).
(b)
any employee whose customary employment is twenty (20) hours or less per week;
(c
) any employee whose customary employment is for not more than five (5) months in any calendar year;
(d)
any employee who would directly or indirectly own or hold (applying the rules of Section 424(d) of the Code to determine stock
ownership) immediately following the grant of an Option hereunder an aggregate of five percent (5%) or more of the total combined
voting power or value of all outstanding shares of all classes of stock of the Company or any Subsidiary; and
(e)
any employee who is a highly compensated employee of the Company or Subsidiary within the meaning of Section 414(q) of the Code.
Any period of service described
in the preceding sentence may be decreased in the discretion of the Committee.
|
(j)
|
EMPLOYER
shall mean the Company and each Participating Employer, if any.
|
|
(k)
|
OFFERING PERIOD
shall mean that period to be determined by the Committee beginning on the
date the Employees are offered the opportunity to purchase Stock hereunder, during which each eligible Employee shall determine
whether and to what extent he desires to participate by authorizing payroll deductions. Until changed by the Committee
in its sole and absolute discretion, a new Offering Period shall begin on the first day of each Plan Year and shall end on the
last day of such Plan Year.
|
|
(l)
|
PARENT
shall mean a domestic or foreign corporation of which not less than 50% of the total
combined voting power of all classes of stock is held either any corporation other than the Company in an unbroken chain of corporations
(ending with the Company, and in which not less than 50% of the total combined voting power of all classes of stock is held by
each corporation in the chain), without regard to whether such corporation now exists or is hereafter organized or acquired.
|
|
(m)
|
PARTICIPANT
shall mean an Eligible Employee or former Eligible Employer who has been offered
the opportunity to purchase Stock hereunder and who has elected to participate herein by authorizing payroll deductions.
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|
(n)
|
PARTICIPATING EMPLOYER
shall mean a corporation, partnership or other trade or business
which has adopted this Plan pursuant to Article IX for its own Employees.
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|
(o)
|
PAYROLL DEDUCTION ACCOUNT
shall mean the bookkeeping account established on behalf of a
Participant to which shall be credited all contributions withheld from a Participant’s Compensation for the purpose of purchasing
Stock under the Plan, and to which shall be charged all purchases of Stock pursuant to the Plan. The Company shall have custody
of such account.
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|
(p)
|
PAYROLL DEDUCTION PERIOD
shall mean that period beginning on the first day of each Plan
Year and ending on the earlier of:
|
|
(i)
|
The latest date for which a Participant receives his last paycheck from the Employer after his
employment with the Employer terminates; or
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|
(ii)
|
The last day of the Plan Year.
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|
(q)
|
PLAN
shall mean the BioScrip, Inc. Employee Stock Purchase Plan, as embodied herein and
as amended from time to time.
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|
(r)
|
PLAN YEAR
shall mean the twelve (12) calendar months, beginning on January 1 and ending
on December 31 of each year.
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|
(s)
|
STOCK
shall mean the common stock, par value $.01 per share, of the Company.
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|
(t)
|
SUBSIDIARY
shall mean any company, as currently defined in Section 424(f) of the Code, including
a foreign subsidiary. Unless otherwise indicated, the term “Company” shall hereinafter be deemed to include all Subsidiaries
of the Company which have adopted the Plan.
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|
2.2
|
WORD USAGE
. Except when otherwise indicated by the context, any masculine
terminology used herein also includes the feminine and neuter, and vice versa, and the singular shall also include the plural,
and vice versa. The words “hereof,” “herein” and “hereunder,” and other similar
compounds of the word “here” shall mean and refer to the entire Plan and not to any particular provision or section. All
references to Sections or Articles shall mean and refer to Sections and Articles contained in this Plan unless otherwise indicated.
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|
2.3
|
CONSTRUCTION
. It is the intention of the Company that the Plan be qualified
as an employee stock purchase plan under the provisions of section 423 of the Code, and all provisions shall be construed to that
result. Moreover, the provisions of the Plan shall apply only to an Eligible Employee who is in the employ of
the Employer on or after the Effective Date.
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ARTICLE III - PARTICIPATION
|
3.1
|
ELIGIBILITY
. Except as herein provided, the persons who shall be eligible
to participate in the Plan as of the first day of any Offering Period shall be those persons (and only those persons) who are Eligible
Employees of the Company (including a Subsidiary that has adopted the Plan) on the first day of the Offering Period.
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|
3.2
|
ELECTION TO PARTICIPATE.
An Eligible Employee may become a Participant
only by filing a written election to participate with the Committee that authorizes payroll deductions during the Offering Period,
as set forth under Section 4.1. An Eligible Employee may elect to participate for less than the maximum number of shares which
he has been offered the opportunity to purchase by authorizing a payroll deduction under Section 4.1 of a percentage of Compensation
less than the percentage determined by the Board of Directors under Section 5.1(b).
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|
3.3
|
WAIVER OF PARTICIPATION
. An Eligible Employee may waive his right to participate
for any Offering Period by declining to authorize a payroll deduction. Such declination must be filed in writing
with the Committee in the time and manner specified thereby. The filing of a written declination shall result
in the Eligible Employee’s waiver of participation for only the Offering Period to which it relates and shall be irrevocable
with respect to such Offering Period. Except as otherwise provided in this Section, an Eligible Employee’s
waiver of participation for a specified Offering Period shall not, in and of itself, adversely impact the right of such Eligible
Employee to participate in the Plan during any subsequent Offering Periods except those Offering Periods with respect to which
he files additional written declinations with the Committee in accordance with the provisions of this Section. Failure to timely
authorize payroll deductions for an Offering Period shall not be treated as if the Participant declined in writing to authorize
such deductions, but shall instead be treated as a zero percent (0%) election under Section 4.1.
|
ARTICLE IV - PAYROLL DEDUCTION AUTHORIZATION
|
4.1
|
PAYROLL DEDUCTIONS
. Each Eligible Employee who elects, pursuant to Article
III, prior to the beginning of a Payroll Deduction Period to participate herein shall authorize the making of payroll deductions
to fund the purchase of the Stock he has agreed to purchase hereunder by completing and returning a Participant Election Form. Deductions
shall be made pro-rata for the regular payroll periods applicable to the Participant during the Payroll Deduction Period and shall
be credited to the Participant’s Payroll Deduction Account.
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|
(a)
|
Amount of Payroll Deductions
. A Participant may authorize payroll deductions
in an amount of either (i) zero percent (0%) or (ii) not less than one percent (1%) nor more than ten percent (10%) (in multiples
of one percent (1%)) of his Compensation for the Plan Year. A Participant who authorizes a payroll deduction of
zero percent (0%) shall not be deemed to have waived participation pursuant to Section 3.3.
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|
(b)
|
Change in Authorization
. A Participant may not vary the amount of his payroll
deduction for any Payroll Deduction Period. Notwithstanding the foregoing, he may (i) elect to stop his payroll deductions effective
with the first payroll occurring thirty (30) days after the Committee’s receipt of his written election to stop his payroll
deductions, and (ii) with at least thirty (30) days advance written notice to the Committee, elect to decrease his payroll deduction
rate, within the limits specified in subsection (a) of this Section, effective on the first day of the calendar quarter next following
the date of his notice. A Participant’s election to stop his payroll deductions shall be treated as a waiver of participation
under Section 3.3 for the remainder of the Offering Period in which the cessation occurs. A Participant’s
election to decrease his payroll deduction rate to zero percent (0%) shall not be deemed to be a waiver of participation pursuant
to Section 3.3.
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|
4.2
|
CARRY FORWARD/WITHDRAWAL OF PAYROLL DEDUCTION ACCOUNT
. Notwithstanding
anything contained herein to the contrary, any amounts remaining credited to a Participant’s Payroll Deduction Account on
the last day of the Plan Year, after taking into account the amount of Stock purchased by the Participant, shall be carried forward
to the subsequent Offering Period
;
provided, however, that amounts
credited to a Participant’s Payroll Deduction Account may be refunded to the Participant upon a waiver of participation under
Section 3.3 by a Participant, and, subject to Section 6.3, such amount shall be refunded to the Participant within a reasonable
time after the Compensation Committee receives the waiver of participation.
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ARTICLE V - PURCHASE OF STOCK
|
5.1
|
GRANT OF OPPORTUNITY TO PURCHASE STOCK
. For each Offering Period during
the term of the Plan, unless the Board of Directors determines otherwise, an offering shall be made under which all Eligible Employees
are granted the opportunity to purchase Stock.
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|
(a)
|
Date of Grant
. Subject to Sections 5.2 and 5.3, all grants made hereunder
shall be deemed to have been made on the same date, which date shall be the first day of the Offering Period, on which date the
maximum amount of Stock that can be purchased under the grant and the minimum purchase price for the Stock will be fixed or determinable.
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|
(b)
|
Amount of Grant
. Each Eligible Employee shall be granted an opportunity
to purchase up to that number of whole shares of Stock which could be purchased at the price determined in accordance with Section
5.4, with an amount equal to such percentage, not to exceed ten percent (10%), as the Board of Directors determines, of an Eligible
Employee’s Compensation which Participant has chosen to add to his Payroll Deduction Account for the Plan Year beginning
coincident with the Offering Period.
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|
5.2
|
LIMITATION ON STOCK
Unless otherwise amended by the Board and approved by the stockholders
of the Company to the extent required by law, a maximum number of 750,000
shares of Stock of the Company (or such number
as may result following any adjustment pursuant to this Section 5.2) shall be reserved and available for grant under the Plan. The
maximum number of shares of Stock that may be granted to any Participant during an Offering Period shall not exceed the amount
determined under Section 5.3(b) as of the first day of the Offering Period for such Participant; provided, however, that:
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|
(a)
|
the maximum number of shares of Stock that may be purchased during any Offering Period may be increased
or decreased as determined by the Compensation Committee prior to the first day of any such Offering Period; and
|
|
(b)
|
notwithstanding the directly preceding or any other provision in the Plan to the contrary, if during
an Offering Period more than fifty percent (50%) of the shares of Stock (which are available for issuance under the first sentence
of this Section 5.2) will otherwise be purchased under the Plan by Participants during the Offering Period, the Compensation Committee
may subject to Section 6.3 further limit the number of shares of Stock that can be purchased by all Participants during such Offering
Period by establishing a lower fixed number of shares of Stock that can be purchased during such Offering Period by all Participants
but only to the extent necessary to ensure that such fifty percent (50%) limit is not exceeded.
|
Either authorized and unissued
shares or issued shares heretofore or hereafter reacquired by the Employer may be made subject to purchase under the Plan, in the
sole and absolute discretion of the Committee. Further, except if the Participant purchases more than the maximum
number of shares of Stock permitted under this Section 5.2, if for any reason any purchase of Stock under the Plan is not consummated,
shares subject to such purchase agreement may be subjected to a new purchase agreement under the Plan.
Notwithstanding the foregoing
provision, if the shares of Stock subject to purchase hereunder are increased, decreased, changed into, or exchanged for a different
number or kind of shares or securities of the Company through reorganization, merger, recapitalization, reclassification, stock
split-up or similar event, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which
purchases are or may be made hereunder. A corresponding adjustment changing the number or kind of shares allocated
to unpurchased Stock shall likewise be made. Any such adjustment, however, in the Stock shall be made without
change in the total price applicable to the portion of the Stock purchased hereunder which has not been fully paid for, but with
a corresponding adjustment, if appropriate, in the price for each share of Stock.
Further, if the Company is reorganized,
merged or consolidated with another corporation while Stock is subject to a purchase agreement under the Plan, or, solely for purposes
of (ii) below, if the Company is dissolved or liquidated, the Company shall either (i) substitute for such shares an appropriate
number of shares of each class of stock or other securities of the reorganized or merged or consolidated corporation which were
distributed to the shareholders of the Company with respect to such shares, or (ii) permit each Participant to immediately complete
making payment for the Stock he agreed to purchase, without regard to the payroll deduction provisions provided for in Article
IV, by making a cash contribution to his Payroll Deduction Account during the thirty (30) day period next preceding the effective
date of any such reorganization, merger or consolidation or of any dissolution or liquidation of the Company.
|
5.3
|
LIMITATIONS ON GRANTS
. Notwithstanding any provision contained herein to
the contrary,
|
|
(a)
|
No Eligible Employee shall be given the opportunity to purchase Stock hereunder if, immediately
following the grant of the right to purchase Stock hereunder, such Eligible Employee owns Stock, including, for the purposes of
this Section 5.3(a), the Stock he has been granted the opportunity to purchase under the Plan, possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary thereof, computed
in accordance with section 423(b)(3) of the Code, and
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|
(b)
|
No Eligible Employee shall be granted the opportunity to purchase Stock hereunder which permits
his rights to purchase Stock under this Plan and under all other employee stock purchase plans of the Employer or any corporation
which is the Parent or a Subsidiary company of the Employer to accrue at a rate which exceeds $25,000 (or such other rate as may
be prescribed from time to time by the Code) of the fair market value of Stock (determined as of the first day of the Offering
Period) for each calendar year in which such Eligible Employee is participating hereunder, in accordance with the provisions of
section 423(b)(8) of the Code.
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|
5.4
|
STOCK PRICE
. A Participant may acquire Stock hereunder at a cost of eighty-five
percent (85%) of the lower of (i) the fair market value of the Stock on the first day of the Plan Year in which the Stock is purchased,
or (ii) the fair market value of the Stock on the last day of the Plan Year in which the Stock is purchased.
|
For the purposes of this Section,
the fair market value of the Stock on any given date shall be:
|
(a)
|
if the Stock is listed on a national securities exchange or quoted on the NASDAQ National Market
(“NASDAQ”), the closing price of the Stock on the relevant date, as reported on the composite tape or by NASDAQ or
the most recent preceding day for which such quotations are reported, as the case may be;
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|
(b)
|
if the Stock is not listed on a national securities exchange or quoted on NASDAQ, but is publicly
traded in the over-the-counter market, the average of the closing bid and asked prices for the Stock on the relevant date, or the
most recent preceding day for which such quotations are reported; or
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|
(c)
|
if, on the relevant date, the Stock is not publicly traded or reported as described in (a) or (b),
on the basis of the good faith determination of the Committee; provided, however, that no method of determining fair market value
will be used if such method would cause the grant to constitute a form of nonqualified deferred compensation subject to Section
409A of the Code.
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|
5.5
|
PURCHASE OF STOCK
. The purchase of Stock hereunder by a Participant may
be accomplished in accordance with the following:
|
|
(a)
|
By Participant While Employed
. At any time during the Plan Year, a Participant,
only if allowed by the Compensation Committee in its sole discretion and subject to such terms and conditions as it may in its
sole discretion impose, may elect to purchase that amount of Stock that he has been given the opportunity to purchase hereunder,
by delivering written notice of his election to purchase such Stock hereunder and his payroll deduction authorization to the Compensation
Committee or its agent, in such form and in such manner as the Compensation Committee shall prescribe, as described in Section
4.1. If a Participant elects to purchase only a part of the Stock that he has been given the opportunity to purchase, the remainder
of his grant shall continue to the end of the Plan Year and be exercised as provided in the next paragraph. If
a Participant files a written notice of election not to purchase with the Compensation Committee or its agent, the balance credited
to his Payroll Deduction Account shall be paid to him in cash, and he shall not be entitled to participate again in the Plan for
the remainder of the Plan Year.
|
If, on the last day of the Plan
Year, a Participant has not made his election to purchase, in whole or in part, and has not filed a written notice of election
not to purchase with the Compensation Committee or its agent, such Participant shall be deemed to have elected to purchase the
amount of Stock which he can purchase with the money in his Payroll Deduction Account on such last date.
The balance credited to a Participant
Payroll Deduction Account, after paying for his Stock, shall be paid to him in cash; provided, however, that if such a balance
occurs during an Offering Period, it shall be carried over during the Offering Period and be credited to the Participant’s
Payroll Deduction Account as if contributed during that Offering Period.
|
(b)
|
By Participant After Termination of Employment
. If a Participant’s
employment with the Employer terminates for any reason other than death, Disability, or retirement, his right to purchase Stock
hereunder shall immediately terminate and become void, and the amount credited to such Participant’s Payroll Deduction Account
shall be paid to him in cash.
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|
(c)
|
By a Retired or Disabled Participant
. If a Participant’s employment
with the Employer terminates on account of the Participant’s Disability or retirement, such Participant shall have the right
to complete paying for the Stock he agreed to purchase by making a cash contribution to his Payroll Deduction Account during the
period beginning on the date his employment terminates and ending ninety (90) days following such date. In the
event that such a contribution is not made, the Participant’s right to purchase Stock hereunder shall immediately terminate
and become void, and the amount credited to such Participant’s Payroll Deduction Account shall be paid to him in cash.
|
For purposes of this Section, a
Participant shall be considered to have retired if his employment with the Employer terminates by reason of his retirement after
he has attained age sixty-five (65) and with the consent of the Employer.
|
(d)
|
By a Participant’s Representative
. In the event a Participant’s
employment with the Employer terminates on account of the death of the Participant, his heirs, legatees, distributees or personal
representatives shall have the right to complete paying for the Stock he agreed to purchase by making a cash contribution to his
Payroll Deduction Account during the period beginning on the date of his death and ending ninety (90) days following his date of
death. In the event that such a contribution is not made, the right to purchase Stock hereunder shall immediately
terminate and become void, and the amount credited to such Participant’s Payroll Deduction Account shall be paid to his heirs,
legatees, distributees or personal representatives in cash.
|
Notwithstanding anything to the
contrary herein, in no event shall Stock be purchasable hereunder after the expiration of 27 months from the date such Stock first
become purchasable under the terms of this Plan.
|
5.6
|
PAYMENT
. Upon the election to participate herein, and agreement to purchase
shares hereunder, the shares of Stock shall be paid for in full by the making of payroll deductions and, at the end of the Plan
Year, the transfer of the purchase price from the amount credited to the Participant’s Payroll Deduction Account to an account
of the Employer. Any balance credited to such Participant’s Payroll Deduction Account in excess of the purchase
price at the end of the Plan Year shall be paid to him in cash. If for any reason, the balance credited to the
Participant’s Payroll Deduction Account at the end of the Plan Year is not sufficient to pay for the Stock purchased, the
Participant, his legatees, or distributees may, at such time and in such manner as the Committee shall prescribe, contribute cash
hereunder, which shall be credited to his Payroll Deduction Account in order to pay for the full number of shares for which the
Participant has elected to participate, or the Participant, his personal representative heirs, legatees or distributees may purchase
that part of the number of full shares which the balance credited to the Participant’s Payroll Deduction Account is sufficient
to purchase and shall receive the balance credited to such account and not used to purchase Stock in cash. Notwithstanding
the foregoing, a Participant shall not be permitted, except in the event of retirement, Disability or death, to contribute additional
cash to his Payroll Deduction Account in excess of amounts withheld from his Compensation.
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|
5.7
|
TRANSFER OF SHARES
. The shares of the Stock purchased by a Participant
hereunder shall be issued or transferred to him on the books of the Company as of the last day of the Plan Year in which he made
the purchase. Stock certificates shall be delivered to the Participant as soon as practicable after such time,
and the Participant shall receive and be the transferee of substantially all the rights of ownership of such Stock, in accordance
with Treasury Regulations Section 1.421-1(f) as currently in effect or any successor to such Treasury Regulations. Such
rights of ownership shall include the right to vote, the right to receive declared dividends, the right to share in the assets
of the Company in the event of liquidation, the right to inspect the Company’s books, and the right to pledge or sell such
Stock, subject to the restrictions on such rights in this Plan and the restrictions on such rights imposed by applicable law. Until
delivery of certificates for the Stock to the Participant, the Participant shall have none of the rights and privileges of a stockholder
in the Company with respect to shares of Stock purchased hereunder. Notwithstanding anything to the contrary herein,
the Employer shall not be obligated to issue Stock hereunder if, in the opinion of counsel for the Company, such issuance would
constitute a violation of Federal or state securities laws.
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|
5.8
|
TRANSFER OF RIGHTS
. No rights granted under the Plan, including, but not
limited to, payroll deductions credited to a Participant’s Payroll Deduction Account and rights with regard to the exercise
of an opportunity to purchase Stock granted hereunder, may be transferred except by will or the laws of descent and distribution
and, during the lifetime of the Participant to whom granted, may be exercised only by such Participant.
|
ARTICLE VI - ADMINISTRATION
|
6.1
|
COMMITTEE AUTHORITY
. The Plan shall be administered by the Committee. Unless
otherwise provided by its charter, a majority of the Committee shall constitute a quorum at any meeting thereof (including telephone
conference) and the acts of a majority of the members present, or acts unanimously approved in writing by the entire Committee
without a meeting, shall be the acts of the Committee. The Committee may allocate among one or more of its members, or may delegate
to one or more of its agents, such duties and responsibilities as it determines. A member of the Committee shall not exercise any
discretion respecting himself under the Plan. Subject to the provisions of this Plan, the Committee shall have full and final authority
in its discretion to:
|
|
(a)
|
direct the administration of the Plan in accordance with the provisions herein set forth;
|
|
(b)
|
adopt rules of procedure and regulations necessary for the administration of the Plan provided
the rules are not inconsistent with the terms of the Plan;
|
|
(c)
|
determine all questions with regard to rights of Eligible Employees and Participants under the
Plan, including, but not limited to, rights of eligibility of an employee to participate in the Plan and the amount of Stock that
a Participant is offered the opportunity to purchase;
|
|
(d)
|
enforce the terms of the Plan and the rules and regulations it adopts;
|
|
(e)
|
direct the distribution of the shares of Stock purchased hereunder;
|
|
(f)
|
furnish the Employer with information which the Employer may require for tax or other purposes;
|
|
(g)
|
engage the service of counsel (who may, if appropriate, be counsel for the Employer) and agents
whom it may deem advisable to assist it with the performance of its duties;
|
|
(h)
|
prescribe procedures to be followed by Participants in electing to participate herein;
|
|
(i)
|
receive from each Employer and from Employees such information as shall be necessary for the proper
administration of the Plan;
|
|
(j)
|
maintain, or cause to be maintained, separate Accounts in the name of each Participant to reflect
the Participant’s Payroll Deduction Account under the Plan;
|
|
(k)
|
impose a holding period before sale or other disposition of Stock by a Participant in connection
with this Plan
|
|
(l)
|
correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any
related document, in such manner and to the extent the Committee shall determine in order to carry out the purposes of the Plan;
and
|
|
(m)
|
interpret and construe the Plan.
|
Any action on matters within the
discretion of the Committee shall be final and conclusive as to all persons affected.
|
6.2
|
AUTHORIZED REPRESENTATIVE
. The Committee may authorize any one of its members,
or its secretary, to sign on its behalf any notices, directions, applications, certificates, consents, approvals, waivers, letters,
or other documents.
|
|
6.3
|
NONDISCRIMINATION
. The Committee shall administer the Plan in a uniform,
nondiscriminatory manner.
|
|
6.4
|
BOOKS AND RECORDS
. The Committee shall maintain, or cause to be maintained,
records which will adequately disclose at all times the number of shares that are subject to a purchase agreement hereunder, and
the Employees who are purchasing such Stock. The books, forms, and methods of accounting shall be the responsibility
of the Committee.
|
ARTICLE VII - AMENDMENT AND TERMINATION
|
7.1
|
AMENDMENT
. The Company shall have the right at any time to amend the Plan
in any manner it deems necessary or advisable to qualify the Plan under the provisions of section 423 of the Code and to amend
the Plan in any other manner; provided, however, that no amendment to the Plan which either (i) increases the aggregate number
of shares of Stock which may be sold hereunder or (ii) changes the designation of corporations whose employees are eligible to
participate hereunder shall become effective unless such amendment is approved by the shareholders of the Company within twelve
(12) months before or after the date such amendment is adopted by the Board of Directors. Such shareholder approval
shall not be required to designate corporations that have become the Company’s Parent or Subsidiary corporations after the
adoption and approval date of the Plan.
|
|
7.2
|
TERMINATION
. The Company shall have the right to terminate the Plan at
any time. Further, no offering shall be made hereunder after any day upon which Participants elect to participate
herein for a number of shares equal to or greater than the number of shares remaining available for purchase. If
the number of shares for which Participants elect to participate shall be greater than the shares remaining available, the shares
available shall at the end of the Offering Period be allocated among such Participants pro-rata on the basis of the number of shares
for which each has elected to participate.
|
|
7.3
|
NO ALTERATION OF RIGHTS
. Notwithstanding the foregoing provisions of this
Article, the Company shall not amend or terminate the Plan in any manner which shall retroactively impair any Participant’s
rights heretofore granted under the Plan.
|
ARTICLE VIII - MISCELLANEOUS
|
8.1
|
EXECUTION OF RECEIPTS AND RELEASES
. Any
payment or any issuance or transfer of shares of Stock to any Participant, or to his legal representative, heir, legatee or distributee,
in accordance with the provisions of the Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against
the Plan. The Committee may require such Participant, legal representative, heir, legatee or distributee, as
a condition precedent to such payment, to execute a receipt and release therefor in such form as it shall determine.
|
|
8.2
|
PLAN FUNDS
. All amounts held by the Employer in Payroll Deduction Accounts
under the Plan may be used for any corporate purpose of the Employer, and shall be considered part of the general assets of the
Employer.
|
|
8.3
|
NO GUARANTEE OF INTERESTS
. Neither the Committee nor the Employer guarantee
the Stock from loss or depreciation.
|
|
8.4
|
PAYMENT OF EXPENSES
. All expenses incident to the administration, termination,
or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Employer.
|
|
8.5
|
EMPLOYER RECORDS
. Records of the Employer as to an Employee’s or
Participant’s period of employment, termination of employment and the reason therefor, leaves of absence, reemployment, and
Compensation will be conclusive on all persons, unless determined to be incorrect.
|
|
8.6
|
INTERPRETATIONS AND ADJUSTMENTS
. To the extent permitted by law, an interpretation
of the Plan and a decision on any matter within the Committee’s discretion made in good faith is binding on all persons. All
decisions of the Compensation Committee for which the Compensation Committee has discretion under the Plan are made in the Compensation
Committee’s sole and absolute discretion. A misstatement or other mistake of fact shall be corrected when it becomes known
and the person responsible shall make such adjustment on account thereof as he considers equitable and practicable, and such determination
of the Committee shall be final and conclusive.
|
|
8.7
|
UNIFORM RULES
. In the administration of the Plan, uniform rules will be
applied to all Participants similarly situated.
|
|
8.8
|
NO RIGHTS IMPLIED
. Nothing contained in this Plan or any modification or
amendment to the Plan or in the creation of any Account, or the execution of any participation election form, or the issuance of
any shares of Stock, shall give any Employee or Participant any right to continue employment, any legal or equitable right against
the Employer or any officer, director, or Employee of the Employer, except as expressly provided by the Plan.
|
|
8.9
|
INFORMATION
. The Employer shall, upon request or as may be specifically
required hereunder, furnish or cause to be furnished, all of the information or documentation which is necessary or required by
the Committee to perform its duties and functions under the Plan. The Employer’s records as to the current
information the Employer furnishes to the Committee shall be conclusive as to all persons.
|
|
8.10
|
NO LIABILITY OF EMPLOYER
. The Employer assumes no obligation or responsibility
to any of the Employees, Participants, or personal representatives, heirs, legatees or distributees for any act of, or failure
to act, on the part of the Committee.
|
|
8.11
|
EMPLOYER ACTION
. Any action required of the Employer shall be by resolution
of its board of directors or by a person authorized to act by Board resolution.
|
|
8.12
|
SEVERABILITY
. In the event any provision of the Plan shall be held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan, but shall
be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included
herein.
|
|
8.13
|
NOTICE.
Any notice required to be given herein by the Employer or the Committee
shall be deemed delivered, when (a) personally delivered, or (b) placed in the United States mails, in an envelope addressed to
the last known address of the person to whom the notice is given.
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8.14
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WAIVER OF NOTICE
. Any person entitled to notice under the Plan may waive
the notice.
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8.15
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SUCCESSORS
. The Plan shall be binding upon all persons entitled to purchase Stock under
the Plan, their respective heirs, legatees, and legal representatives, and upon the Employer, its successors and assigns, and upon
the Committee, and their successors.
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8.16
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HEADINGS
. The titles and headings of Articles and Sections are included for convenience
of reference only and are not to be considered in construction of the provisions hereof.
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8.17
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LAW
. All questions arising with respect to the provisions of this Agreement
shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by Federal
statute. The obligation of the Employer to sell and deliver Stock under the Plan is subject to applicable laws
and to the approval of any governmental authority required in connection with the authorization, issuance, sale or delivery of
such Stock.
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8.18
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NO LIABILITY FOR GOOD FAITH DETERMINATIONS
. Neither the members of the
Board of Directors nor any member of the Committee (nor their delegates) shall be liable for any act, omission, or determination
taken or made in good faith with respect to the Plan or any right to purchase shares of Stock granted under it, and members of
the Board of Directors and the Committee (and their delegatees) shall be entitled to indemnification and reimbursement by the Employer
in respect of any claim, loss, damage, or expense (including attorneys’ fees, the costs of settling any suit, provided such
settlement is approved by independent legal counsel selected by the Company, and amounts paid in satisfaction of a judgment, except
a judgment based on a finding of bad faith) arising therefrom
to
the full extent permitted by law, under any directors and officers liability or similar insurance coverage that may from time to
time be in effect, and/or any indemnification agreement he or she may have with the Employer..
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ARTICLE IX - ADOPTION OF PLAN BY PARTICIPATING
EMPLOYERS
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9.1
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PARTICIPATING EMPLOYERS
. This Plan shall constitute the employee stock
purchase plan of each Participating Employer which shall adopt this Plan as its own employees’ employee stock purchase plan,
effective with respect to each such Participating Employer upon the adoption thereof by (1) official action of its board of directors,
or by other similar action, (2) execution of an instrument making such Participating Employer a signatory to this Plan, and (3)
by obtaining the consent of the Board of Directors; provided, however, that the granting or withholding of consent to the Participating
Employer’s participation by the Company shall be within the sole discretion of the Board of Directors.
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9.2
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APPLICATION OF PLAN PROVISIONS
. Except as provided in Section 9.3, the
provisions of this Plan shall be applied separately to each Participating Employer and its employees exactly as if each such Participating
Employer adopting the Plan was the sole and only employer which is a party hereto. Except in Section 9.1
and as provided in Section 9.3, the word “Employer,” wherever used herein, shall be deemed to refer only to the particular
employer separately insofar as that employer and its employees are concerned, and likewise the words “Employee,” “Employees,”
“Participant” and “Participants” shall be deemed to refer solely to the employees of that particular employer,
or such of them as may become Participants, as if their employer were the sole and only employer which is a party hereto.
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9.3
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POWERS EXERCISABLE ONLY BY BIOSCRIP, INC.
Only the Board of Directors shall
be authorized to appoint the members of the Committee, which shall perform the functions set forth in this Plan as the Committee
for the entire Plan, including portions attributable to Participants employed by Participating Employers.
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IN WITNESS WHEREOF
,
this Agreement has been executed effective the _____ day of ____________, 2013.
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BIOSCRIP, INC.
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By:
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Name:
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ATTEST:
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Title:
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Secretary
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BIOSCRIP, INC.
Employee Stock Purchase Plan
(ESPP)
PARTICIPATION ELECTION FORM
Being a full-time employee of BioScrip,
Inc. or one of its subsidiaries (collectively, the “Company”) as of [DATE], I am eligible to participate in the Company’s
Employee Stock Purchase Plan (the Plan”). I elect as follows:
__________________
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TO PARTICIPATE:
I wish to purchase that amount of stock that can be purchased with ____ % of my annual base salary
(in increments of 1%, up to a maximum of 10% of annual base salary)
by payroll deduction. I hereby authorize my employer to deduct the percentage of my annual base salary that I specified above from my payroll check each pay period effective [DATE] and continuing while this election is in effect.
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__________________
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I understand and acknowledge that I may only
decrease
my percentage contribution during the Plan Year.
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(Initial)
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__________________
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TO NOT PARTICIPATE:
I do not wish to participate in the
Plan Year beginning January 1, 2013 and ending December 31, 2013. I understand that I will not be able to elect
to participate in the Plan until the Plan Year beginning January 1, 2014 and ending December 31, 2014.
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__________________
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TO CHANGE PERCENTAGE:
I wish to change my current payroll
deduction to _____ % of my annual base salary
(in increments of 1%, and can only be
decreased
from the maximum of 10%)
.
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__________________
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TO TERMINATE:
I wish to terminate my participation in the Plan for the Plan Year beginning January 1, 2013 and ending December 31, 2013, and have all previous deductions withdrawn from the Plan and paid to me.
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Date
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Employee Signature
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Print Name
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Received by Human Resources on the ____ day of ____________, 2013.
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(Initial)
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Exhibit B
To BioScrip Proxy Statement
AMENDMENT TO BIOSCRIP, INC.
2008 EQUITY INCENTIVE PLAN
This
AMENDMENT TO
THE
BIOSCRIP, INC. 2008 EQUITY INCENTIVE PLAN
(the
“Amendment”
), is made on the date last
below written by
BIOSCRIP, INC.
, a corporation organized and existing under the laws of the State of Delaware (the
“Company”
).
WHEREAS
, the
Company adopted the BioScrip, Inc. 2008 Equity Incentive Plan effective April 28, 2008, as amended on June 10, 2010 (the
“Plan”
);
and
WHEREAS
, Section
15 of the Plan provides that the Company may amend the Plan from time to time; and
WHEREAS
, the
Company wishes to amend the Plan to increase the number of shares of Common Stock in the aggregate that may be subject to Awards
granted to directors.
NOW, THEREFORE,
the Plan is amended as follows:
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1.
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Section 3.1 of the Plan shall be amended and restated to read as follows:
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3.1
Number of
Shares
(a) Subject to adjustment as provided in Section 15, a total of
6,855,000
shares of
Stock shall be authorized for issuance under the Plan (which number shall include the 6,855,000 shares of Stock previously authorized
for issuance under the Plan), all of which may be subject to ISOs, less one (1) share of Stock for every one (1) share of Stock
that was subject to an Option or Stock Appreciation Right granted after December 31, 2007 under the Prior Plan and one and one-half
(1.5) shares of Stock for every one (1) share of Stock that was subject to an Award other than an Option or Stock Appreciation
Right granted after December 31, 2007 under the Prior Plan. In no event may more than 800,000 shares of Stock in the aggregate
be subject to Awards granted to Directors. Any shares of Stock that are subject to Awards of Options or Stock Appreciation Rights
shall be counted against this limit as one (1) share of Stock for everyone one (1) share of Stock issued. Any shares of Stock that
are subject to Awards other than Options or Stock Appreciation Rights shall be counted against this limit as one and one-half (1.5)
shares of Stock for every one (1) share of Stock issued.
2. Except as provided in this Amendment,
no other changes or amendments shall be made to the Plan as previously stated (including all prior amendments) and the remainder
thereof shall remain in full force and effect.
IN WITNESS WHEREOF
, the Company
has executed this Amendment on this _____ day of ____________, 2013.
COMPANY:
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BIOSCRIP, INC.
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By:
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