|
Item
1.01
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Entry
into a Material Definitive Agreement
|
Agreement and Plan of Merger
On March 14, 2019, BioScrip, Inc. (“
Beta
”),
Beta Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Beta (“
Merger Sub Inc.
”), Beta
Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Beta (“
Merger Sub LLC
”),
HC Group Holdings I, LLC, a Delaware limited liability company (“
Omega Parent
”), HC Group Holdings II, Inc.,
a Delaware corporation (“
Omega
”) and HC Group Holdings III, Inc., a Delaware corporation (“
Omega III
,”
solely for purposes of Section 7.3(b) of the Merger Agreement), entered into an Agreement and Plan of Merger (the “
Merger
Agreement
”). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified
therein, Merger Sub Inc. will be merged with and into Omega (the “
First Merger
”), with Omega surviving (the
“
Surviving Corporation
”) as a direct wholly-owned subsidiary of Beta and, immediately following the First Merger,
the Surviving Corporation will merge (together with the First Merger, the “
Mergers
”) with and into Merger Sub
LLC, with Merger Sub LLC surviving as a direct wholly-owned subsidiary of Beta.
At the effective time of the First
Merger (the “
First Merger Effective Time
”), all of the shares of common stock, par value $0.01 per share,
of Omega issued and outstanding immediately prior to the First Merger Effective Time (other than the shares that are held in
the treasury of Omega or owned, directly or indirectly, by Beta, Merger Sub Inc. or Merger Sub LLC immediately prior to the
First Merger Effective Time) shall thereupon be cancelled and converted into the right of Omega Parent to receive 542,261,567
shares (as may be adjusted for any stock split, reverse stock split, recapitalization, reclassification, reorganization,
exchange, subdivision or combination) of common stock, par value $0.0001 per share (“
Beta Common Stock
”)
of Beta. In accordance with the Merger Agreement, at the First Merger Effective Time, Beta shall issue 7,270,095 shares (the
“
Beta Escrowed Shares
”) of Beta Common Stock to Omega Parent in respect of certain unvested restricted
stock units (the “
Contingent RSUs
”) that may vest upon the Beta Common Stock trading above a certain price
in the future (such issuance, together with the issuance of Beta Common Stock pursuant to the immediately preceding sentence,
the “Beta Share Issuance”). To the extent the Contingent RSUs in respect of which Beta Escrowed Shares were
issued expire, such Beta Escrowed Shares will be transferred back to Beta and retired for no consideration. The Merger
Agreement also provides that Beta shall be entitled to designate two directors to the Board of Directors of Beta (the
“
Beta Board
”), while Omega shall designate the remaining eight directors, in each case effective as of the
First Merger Effective Time.
The consummation of the Mergers is subject
to customary closing conditions set forth in the Merger Agreement, including, but not limited to, (i) the approval by the Beta
stockholders of the Beta Share Issuance (ii) the approval by the Beta stockholders of the Second Amended and Restated Certificate
of Incorporation of Beta (the “
Amended and Restated Beta Charter
”), (iii) the approval by the Beta stockholders
of an amendment to the Certificate of Designations of Series A Convertible Preferred Stock of Beta (the “
Series A COD
Amendment
”), (iv) the absence of any order, judgment, order, injunction, rule or decree or other action restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by the Merger Agreement, (v) the expiration or termination
of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and (vi) subject to certain materiality exceptions,
the accuracy of certain representations and warranties of the parties contained in the Merger Agreement and the compliance by the
parties with the covenants contained in the Merger Agreement in all material respects. In addition, Omega’s obligation to
complete the Mergers is subject to (a) its receipt of a tax opinion to the effect that the Mergers qualify as a “reorganization”
within the meaning of Section 368(a) of the Internal Revenue Code and (b) the expiration of certain waiting periods under agreements
with governmental entities and the receipt of certain licenses or consents from certain governmental entities (as more fully described
in the Merger Agreement). A form of the Amended and Restated Beta Charter and a form of the Series A COD Amendment are attached
as exhibits to the Merger Agreement which is attached hereto as Exhibit 2.1.
Concurrently with the execution of the
Merger Agreement, entities affiliated with Coliseum Capital Management, LLC entered into a voting agreement (the “
Voting
Agreement
”) in which they have agreed, among other things and subject to the terms and conditions of the Voting Agreement,
to vote the shares of Beta Common Stock and other securities of Beta, they beneficially own, in favor of the Beta Share Issuance,
the Amended and Restated Beta Charter and the Beta Series A COD Amendment.
Pursuant to the terms of the Merger Agreement,
Beta shall not, and shall cause its subsidiaries not to, solicit, propose, initiate or knowingly encourage or facilitate any alternative
transaction proposals from third parties or to engage in discussions or negotiations with third parties regarding any alternative
transaction proposals or enter into any definitive agreement relating to any alternative transaction proposal, in each case subject
to certain exceptions. The Beta Board may change its recommendation to its stockholders in response to a superior proposal or an
intervening event if the Beta Board determines in good faith (after consultation with outside counsel) that the failure to change
its recommendation would reasonably be expected to be inconsistent with the fiduciary duties of the Beta Board under applicable
law.
The Merger Agreement provides for certain
termination rights for both Beta and Omega that will result in a termination fee being payable by one party to the other. Beta
may be required to pay Omega a termination fee of $15,000,000 upon termination of the Merger Agreement under certain specified
circumstances, including (i) the acceptance of a superior proposal by the Beta Board and (ii) a change in recommendation by the
Beta Board to its stockholders and (iii) following certain terminations if Beta enters into a definitive agreement with respect
to, or consummates, an alternative transaction within 12 months of the date of such termination.
In addition, Omega may be required to pay
to Beta a termination fee of $30,000,000 if the Merger Agreement is terminated (i) by Beta as a result of Omega’s failure
to obtain and deliver its debt financing in accordance with the terms of the Merger Agreement and the debt commitment letters attached
to the Merger Agreement, (ii) by Beta as a result of a material breach of Omega’s representations or covenants which would
result in the failure of any of the mutual closing conditions or Beta’s closing conditions that could not be cured or (iii)
by Beta or Omega following December 13, 2019, if Beta could have terminated the Merger Agreement as a result of a material breach
of Omega’s representations or covenants which would result in the failure of any of the mutual closing conditions or Beta’s
closing conditions that could not be cured at the time of such termination.
Beta may be required to reimburse certain
transaction expenses of Omega or Omega Parent up to $5,000,000 in the event the Merger Agreement is terminated as a result of Beta’s
failure to obtain the consent of its stockholders for the Beta Share Issuance, the Amended and Restated Beta Charter and the Series
A COD Amendment.
The foregoing summary does not purport
to be a complete description and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached
hereto as Exhibit 2.1 and is incorporated herein by reference.
Preferred Stock Arrangements
On March 14, 2019, in connection
with the Mergers, Beta entered into a Preferred Stock Repurchase Agreement (the “
Preferred Repurchase
Agreement
”), pursuant to which Beta has agreed to repurchase from certain of its stockholders all 614,177 of the
issued and outstanding Series C Convertible Preferred Stock, par value $0.0001 per share, of Beta (the “
Series C
Preferred Stock
”), immediately following, and conditioned upon, the consummation of the Mergers (the
“
Repurchase Closing
”). Pursuant to the Preferred Repurchase Agreement, each holder of Series C Preferred
Stock has agreed to sell each share of Series C Preferred Stock held by it to Beta for (i) an amount in cash equal to 120% of
the Liquidation Preference (as defined in the Certificate of Designations of Series C Convertible Preferred Stock of Beta)
per preferred share, determined as of the date of the Repurchase Closing (including any dividends accrued through such date)
and (ii) 2.5226 fully paid, validly issued and non-assessable shares of Beta Common Stock, per preferred share (such
Common Stock, the “
Repurchase Shares
”). If the Merger Agreement is terminated in accordance with its
terms, the Preferred Repurchase Agreement shall terminate automatically.
In connection with the Mergers, the
Board has approved the Series A COD Amendment which is subject to the approval of the Beta stockholders. Pursuant to the
Series A COD Amendment, immediately following the effectiveness of the Mergers without any further action on the part of the
Corporation or any stockholder thereof, (i) (A) four one-hundredths (4/100) of each share of Series A Preferred Stock issued
by the Corporation on March 9, 2015 then issued and outstanding shall automatically be converted into 2.5226 shares of Common
Stock and (B) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by the Corporation on July 29,
2015 then issued and outstanding shall automatically be converted into 2.4138 shares of Common Stock and (ii) the remaining
portion of all Series A Preferred Stock (constituting ninety-six one-hundredths (96/100) of each share of Series A Preferred
Stock subject to conversion pursuant to the immediately preceding clause (i)) shall be redeemed, to the extent of funds
lawfully available therefor, for an amount in cash equal to 120% of the Liquidation Preference of such share of Series A
Preferred Stock as of the Redemption Date (including any dividends accrued through such date).
The foregoing summary does not purport
to be a complete description and is qualified in its entirety by reference to the full text of the Preferred Repurchase Agreement,
which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Amended and Restated Warrant Agreement
and Letter Agreements
On March 14, 2019, in connection with the Mergers, Beta entered
into an Amended and Restated Warrant Agreement (the “
Warrant Amendment
”) with certain holders of warrants to
purchase Beta Common Stock signatory thereto (the “
Holders
”) for the purpose of amending and restating that
certain Warrant Agreement (the “
Original Warrant Agreement
”), dated June 29, 2017, by and among Beta and the
Holders, so as to fix the maximum number of shares of Beta Common Stock issuable upon exercise of the warrants (the “
Warrants
”)
that have been issued to the Holders under the Original Warrant Agreement at 8,287,317 shares in the aggregate (the “
Warrant
Shares
”). The effectiveness of the Warrant Amendment is conditioned upon the consummation of the First Merger.
In consideration of the
Holders’ execution and delivery of the Warrant Amendment, Beta entered into a letter agreement with each of the Holders
(the “
Warrant Letter Agreements
”) pursuant to which Beta agreed to issue to the Holders an aggregate of
1,855,747 shares of Beta Common Stock (the “
Amendment Shares
”), promptly following, and
conditioned upon, the consummation of the First Merger, pro rata in accordance with their ownership of the Warrants.
The Warrant Letter Agreements and the Warrant
Amendment shall automatically terminate and be null and void
ab initio
with no effect whatsoever on Beta or the Holders
in the event that the Merger Agreement is terminated in accordance with its terms.
The foregoing summary does not purport
to be a complete description and is qualified in its entirety by reference to the full text of the Warrant Amendment, which is
attached hereto as Exhibit 10.2 and is incorporated herein by reference and the Warrant Letter Agreements, the form of which is
attached hereto as Exhibit 10.3, which is incorporated herein by reference.
Amendment to Registration Rights
Agreement
On March 14, 2019, in connection with the Mergers and the Warrant
Amendment, Beta entered into Amendment No. 1 to the Registration Rights Agreement (the “
RRA Amendment
”) with
the Holders, pursuant to which Beta and the Holders agreed to amend that certain Registration Rights Agreement, dated June 29,
2017, by and among Beta and the Holders, to provide the Holders with registration rights for the Amendment Shares.
The effectiveness of the RRA Amendment
is conditioned upon the consummation of the First Merger. The RRA Amendment shall automatically terminate and be null and void
ab initio
with no effect whatsoever on Beta or the Holders in the event that the Merger Agreement is terminated in accordance
with its terms.
The foregoing summary does not purport
to be a complete description and is qualified in its entirety by reference to the full text of the RRA Amendment, which is attached
hereto as Exhibit 10.4 and is incorporated herein by reference.
The Merger Agreement, the Preferred Repurchase
Agreement, the RRA Amendment, the Warrant Amendment and the form of Warrant Letter Agreement (collectively, the “
Transaction
Documents
”) have each been attached as an exhibit to this report to provide investors and security holders with information
regarding their respective terms. The Transaction Documents are not intended to provide any other factual information about Beta
or Omega or to modify or supplement any factual disclosures about Beta in its public reports filed with the U.S. Securities and
Exchange Commission (the “
SEC
”). Each of the Transaction Documents includes representations, warranties and
covenants of Beta and the other parties thereto made solely for the purposes of the Merger Agreement and which may be subject to
important qualifications and limitations agreed to by Beta and the other parties thereto in connection with the negotiated terms
of the Transaction Documents. Moreover, some of those representations and warranties may not be accurate or complete as of any
specified date, may be subject to certain disclosures between the parties and a contractual standard of materiality different from
those generally applicable to Beta’s SEC filings. In addition, the representations and warranties were made for purposes
of allocating risk among the parties to the Transaction Documents and should not be relied upon as establishing factual matters.