Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Senior Credit Facilities
On January 6, 2017,
BioScrip, Inc. (the “Company”) entered into a sixth amendment (the “Sixth Amendment”) to its credit agreement
dated as of July 31, 2013, with SunTrust Bank (“SunTrust”), Jefferies Finance LLC and Morgan Stanley Senior Funding,
Inc., as amended on December 23, 2013, January 31, 2014, March 1, 2015, August 6, 2015 and October 9, 2015 (the “Senior Credit
Facilities”). The Sixth Amendment amended the Senior Credit Facilities to, among other things, (a) permanently reduce the
revolving commitments in accordance with a schedule set forth therein and prohibit further revolving borrowings, (b) require the
cash collateralization of letters of credit issued thereunder, (c) increase the interest rate for loans outstanding under the Senior
Credit Facilities and require a portion of accrued interest at the increased rate to be paid-in-kind, (d) permit the Company and
its subsidiaries to enter into the Priming Credit Agreement (as defined below), which provides the Company with an aggregate borrowing
commitment of $25,000,000, to be fully drawn at closing, and permit the Company to incur the obligations thereunder and to subordinate
the liens securing the Senior Credit Facilities to the liens securing the obligations under the Priming Credit Agreement, and (e)
amend certain covenants, including by (i) increasing the consolidated senior secured net leverage ratio covenant, (ii) adding a
minimum EBITDA covenant, to be tested quarterly, and (iii) otherwise restricting the ability of the Company and its subsidiaries
to incur certain additional indebtedness and make additional significant investments or acquisitions.
A copy of the Sixth
Amendment, including the schedules and other attachments thereto, is filed as Exhibit 10.1 to this Current Report on Form 8-K and
is incorporated herein by reference.
The foregoing description
of the Sixth Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Sixth
Amendment.
Priming Credit Agreement
On January 6, 2017, the Company entered
into a new credit agreement (the “Priming Credit Agreement”) with certain existing lenders under the Senior Credit
Facilities and SunTrust, as administrative agent for itself and the lenders. The Priming Credit Agreement provides an aggregate
borrowing commitment of $25,000,000, which will be fully drawn at closing. The Company intends to use the proceeds of the borrowing
under the Priming Credit Agreement (i) to permanently prepay a portion of the outstanding revolving loan balance under the Senior
Credit Facilities, (ii) to cash collateralize letters of credit issued under the Senior Credit Facilities, (iii) to pay fees and
expenses in connection with the execution and delivery of the Priming Credit Agreement and the Sixth Amendment, and (iv) for working
capital and other general corporate purposes.
The Company will pay
interest on the outstanding loans under the Priming Credit Agreement at a rate of 10% per annum, and accrued interest will be payable
in cash monthly in arrears on the last day of each fiscal month. The obligations under the Priming Credit Agreement are not subject
to scheduled amortization installments, and all outstanding obligations will mature and be due and payable in full in cash on July
31, 2018. The occurrence of certain events of default may increase the applicable rate of interest by 2% and could result in the
acceleration of the Company’s obligations under the Priming Credit Agreement prior to stated maturity.
The Priming Credit
Agreement contains mandatory prepayments, representations and warranties, affirmative and negative covenants, financial covenants
and events of default that are substantially identical to the corresponding provisions of the Senior Credit Facilities. In addition,
the obligations under the Priming Credit Agreement are guaranteed by joint and several guarantees from the Company’s subsidiaries
and secured by a security interest on substantially all of the assets of the Company and its subsidiaries.
The payment obligations
under the Priming Credit Agreement rank pari passu in right of payment with the payment obligations under the Senior Credit Facilities.
Upon the occurrence of certain mandatory prepayment events, the Company is required to apply the net proceeds thereof, first, to
the permanent prepayment of outstanding revolving loans under the Senior Credit Facilities until paid in full, next, to the permanent
prepayment of outstanding term loans under the Senior Credit Facilities until paid in full, and, last, to the permanent prepayment
of outstanding loans under the Priming Credit Agreement.
The liens securing
the obligations under the Priming Credit Agreement rank senior in priority to the liens securing the obligations under the Senior
Credit Facilities. In connection with the Sixth Amendment and the Priming Credit Agreement, the Company, SunTrust, as the administrative
agent for the Senior Credit Facilities, and SunTrust, as the administrative agent under the Priming Credit Agreement, entered into
an intercreditor agreement containing customary provisions to subordinate the lien priority of the liens granted under the Senior
Credit Facilities to the liens granted under the Priming Credit Agreement.
In connection with
entering into the Sixth Amendment and the Priming Credit Agreement, the Company provided disclosure schedules with updated information
on certain assets, properties, operations and other matters, including an update on the breach of contract litigation in the Court
of Chancery between the Company and Walgreens. These updates can be found in the schedules and other attachments to the Priming
Credit Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The foregoing description
of the Priming Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text
of the Priming Credit Agreement.