Re: Cash Collateral Agreement re Standby Letters of Credit

Reference is hereby made to that certain letter agreement, dated as of the date hereof (as amended and in effect from time to time, the “ L/C Agreement ”), between BioScrip, Inc. and Bank of America, N.A. (“ Bank of America ” or “ you ”), pursuant to which Bank of America has agreed to issue, amend and renew Standby Letters of Credit (all such Standby Letters of Credit so issued, amended or renewed thereunder being hereinafter referred to as the “ Credits ”) for the account of BioScrip, Inc. and its subsidiaries (collectively, “ we ” or “ us ”), in an aggregate face amount at any one time not to exceed $5,000,000, and all as more particularly set forth therein.  All of our obligations owing by us to you hereunder or arising under or in respect of the L/C Agreement (including any L/C Application delivered under and as defined in the L/C Agreement) or any Credit, whether now existing or hereafter arising, contingent or otherwise, are hereinafter referred to, collectively, as the “ Obligations ”.  In connection with the Obligations, we hereby agree, and request your agreement, as follows:

The Cash Collateral Account.   In accordance with the requirements of the L/C Agreement, as collateral security for the Obligations, we will from time to time furnish to you cash sums to be deposited into an interest bearing account with you entitled “BioScrip, Inc. Loan Collateral”, Account # 406923 (the “ Cash Collateral Account ”).  We agree that some or all of the funds from time to time in the Cash Collateral Account may be invested by you in time deposits, including, without limitation, certificates of deposit issued by you (such certificates of deposit or other time deposits being hereinafter referred to, collectively, as “ Time Deposits ”), which are satisfactory to you after consultation with us.  Interest earned on the Cash Collateral Account and on the Time Deposits, and the principal of the Time Deposits at maturity which is not invested in new Time Deposits, shall be deposited in the Cash Collateral Account.

Withdrawal Rights Limited.   In the event that the cash sums plus the then fair market value of the Time Deposits maintained in the Cash Collateral Account exceed the sum of (a) the then aggregate undrawn amount of all outstanding Credits, (b) all unreimbursed obligations with respect to any drawings under the Credits and (c) all other Obligations then due and owing by us

(such excess, as determined by Bank of America in its reasonable discretion, being referred t