No. WB — 1 Warrant to Purchase 5,126,538 Shares of Common Stock (subject to adjustment) Warrant Issue Date: April 30, 2009
Exhibit 4.17
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE. PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND
APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
| No. WB — 1 | Warrant to Purchase 5,126,538 Shares of Common Stock (subject to adjustment) |
|
| Warrant Issue Date: April 30, 2009 |
This certifies that, for value received, MHR Capital Partners Master Account LP, an Anguilla, British West Indies limited partnership, or
registered assigns (“Holder”) is entitled, subject to the terms set forth below, to
purchase from NationsHealth, Inc. (the “Company”), a Delaware corporation, 5,126,538 shares
of the Common Stock of the Company, as constituted on the “Warrant Exercisability Date” (as defined
below), upon surrender hereof, at the principal office of the Company referred to below, with the
subscription form attached hereto duly executed, and simultaneous payment therefor in lawful money
of the United States or otherwise as hereinafter provided, at the Exercise Price as set forth in
Section 2 below. The number, character and Exercise Price of such shares of Common Stock are
subject to adjustment as provided below. The term “Warrant” as used herein shall include
this Warrant, which is one of a series of warrants issued for the Common Stock of the Company
(collectively, the “Note Warrants”, and any warrants delivered in substitution or exchange
therefor as provided herein. Capitalized terms used but not otherwise defined herein shall have
the meaning set forth in the Limited Waiver and Consent to the 7 3/4% Convertible Secured Notes,
dated April 30, 2009, by and among the Company, NationsHealth Holdings, L.L.C., a Florida limited
liability company and a wholly-owned subsidiary of the Company, United States Pharmaceutical Group,
L.L.C., a Delaware limited liability company and an indirect wholly-owned subsidiary of the
Company, Diabetes Care & Education, Inc., a South Carolina corporation, National Pharmaceuticals
and Medical Products (USA) LLC, a Florida limited liability company, MHR Capital Partners Master
Account LP (as assignee of MHR Capital Partners (500) LP (f/k/a MHR Capital Partners LP), OTQ LLC,
MHR Capital Partners (100) LP and MHR Capital Partners (500) LP, as collateral agent.
1. Term of Warrant. Subject to the terms and conditions set forth herein, this
Warrant shall become exercisable, in whole or in part, in the event that (i) the Agreement of
Merger, dated as of April 30, 2009, by and among ComVest NationsHealth Holdings, LLC,
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NationsHealth
Acquisition Corp. and the Company (the “Merger Agreement”) is terminated, (ii)
the Issuers do not pay all of the outstanding principal and accrued and unpaid interest that
become due under the Bridge Loan on or before the Maturity Date or the applicable due date and
(iii) Parent shall have exercised its option to convert the outstanding obligations under the
Bridge Loan into shares of Series A-1 Preferred Stock pursuant to the terms of the Merger Agreement
(the “Warrant Exercisability Date”), and shall remain exercisable until 5:00 p.m. Eastern
time on the tenth (10th) anniversary of the Warrant Exercisability Date, and shall be
void thereafter; provided however, this Warrant shall be deemed null and void, and of no further
force and effect on the Effective Time (as such term is defined in the Merger Agreement).
2. Exercise Price. The Exercise Price at which this Warrant may be exercised shall be
$0.05 per share of Common Stock, as adjusted from time to time pursuant to Section 11 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are exercisable by the Holder in whole or
in part, at any time, or from time to time, during the term hereof as described in Section 1 above,
by the surrender of this Warrant and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), upon payment (i) in cash or by check acceptable to the,
Company, (ii) by cancellation by the Holder of indebtedness or other obligations of the Company to
the Holder, or (iii) by a combination of (i) and (ii), of the purchase price of the shares to be
purchased.
(b) This Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the person entitled to
receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As promptly as
practicable on or after such date, and in any event within five (5) days thereafter, the Company
shall, at its expense, issue and deliver to the person or persons entitled to receive the same (i)
a certificate or certificates for the number of shares issuable upon such exercise; (ii) in the
event that this Warrant is exercised in part, a new Warrant of like tenor representing the portion
of the shares of Common Stock, with respect to which this Warrant will not then have been exercised
and exercisable for the number of shares for which this Warrant may then be exercised; and (iii) an
amount in cash in lieu of any fractional shares as provided in Section 4 hereof.
(c) Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if the
fair market value of one share of Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise and notice of such election in which event the Company
shall issue to the Holder a number of shares of Common Stock computed using the following formula
(and the Holder shall receive the rights and benefits of a record holder of such shares of Common
Stock as described in Section 3(b) hereof):
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X =
|
Y (A – B) | |||
| A |
| X = | the number of shares of Common Stock to be issued to the Holder | ||
| Y = | the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation) | ||
| A = | the fair market value of one share of the Company’s Common Stock (at the date of such calculation) | ||
| B = | Exercise Price (as adjusted to the date of such calculation) |
For purposes of the above calculation, fair market value of one share of Common Stock shall be
determined by the Company’s Board of Directors in good faith; provided, however, that where there
exists a public market for the Company’s Common Stock at the time of such exercise, the fair market
value per share shall be the average of the closing bid and asked prices of the Common Stock quoted
in the Over-The-Counter Market Summary or the last reported sale price of the Common Stock or the
closing price quoted on the Nasdaq National Market or on any exchange on which the Common Stock is
listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal
over a five (5) day period ending with the third business day before the date of determination of
fair market value. Notwithstanding the foregoing, in the event the Warrant is exercised in
connection with the Company’s initial public offering of Common Stock, the fair market value per
share shall be the per share offering price to the public of the Company’s initial public offering.
(d) Automatic Exercise. In the event that the Holder does not exercise this Warrant
prior to the tenth anniversary of the Warrant Issue Date, to the extent that this Warrant is then
exercisable and such exercise would result in the issuance of shares of Common Stock to the Holder,
this Warrant shall be deemed automatically exercised for all purposes hereof (including for
purposes of Section 3(b) hereof) through a Net Issue Exercise as described in Section 3(c) hereof
immediately prior to the time at which it would otherwise expire.
(e) Company to Reaffirm Obligations. The Company will, at the time of each exercise
of this Warrant, upon the request of the Holder, acknowledge in writing its continuing obligation
to afford to the Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if the Holder shall fail to
make any such request, such failure shall not affect the continuing obligation of the Company to
afford such rights to the Holder.
4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional
share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal
to the Exercise Price multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate
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issuable upon exercise of this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant or stock certificate, the
Company at its expense shall execute and deliver, in lieu of this Warrant or stock certificate, a
new warrant or stock certificate of like tenor and amount.
6. Rights of Stockholders to Receive Information; Other Investor Rights. So long as
any of the Warrants remain outstanding, the Company shall cause copies of all quarterly and annual
financial reports, information, documents, notices sent or made available by the Company to any of
its stockholders, all regular and periodic reports, registration statements, and prospectuses filed
by the Company with any securities exchanges or with the U.S. Securities and Exchange Commission
(the “SEC”), and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) that the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act in effect on the Warrant Issue Date (“SEC
Reports”), to be mailed or made available, as the case may be, to the Holders promptly upon
their becoming available and at the request of the Holder. The Company shall make all such
information available to investors, securities analysts and broker dealers who request it in
writing.
At such time as the Company is not subject to the requirements of Section 13 or Section 15(d)
of the Exchange Act, the Company shall enter into such agreements with the Holders as would provide
the Holders with rights and benefits substantially similar to those provided under Article 4
(Tag-Along) of the Preferred Right of First Refusal and Co-Sale Agreement, entered into as of April
30, 2009, and Article 2 (Preemptive Rights) of the Preferred Stock Investor Rights Agreement,
entered into as of April 30, 2009, as well as annual and monthly financial statements and other
operating reports and information of the Company on such terms and conditions as such information
is provided by the Company to any stockholder.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register (the “Warrant
Register”) containing the names and addresses of the Holder or Holders. Any Holder of this
Warrant or any portion thereof may change his or her address as shown on the Warrant Register by
written notice to the Company requesting such change. Any notice or written communication required
or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on
the Warrant Register and at the address shown on the Warrant Register. Until this Warrant is
transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any
notice to the contrary.
(b) Closing of Books. The Company will at no time close its transfer books in any
manner which interferes with the timely exercise of the rights represented by this Warrant.
(c) Transferability and Nonnegotiability of Warrant. This Warrant may not be
transferred or assigned in whole or in part without compliance with all applicable federal and
state securities laws by the transferor and the transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the Company, if such are
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requested by the Company). Subject to the provisions of this Warrant with respect to
compliance with the Securities Act of 1933, as amended (the “Act”), title to this Warrant
may be transferred by endorsement (by the Holder executing the Assignment Form annexed hereto) and
delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for exchange,
properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect
to compliance with the Act and with the limitations on assignments and transfers contained in this
Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or
warrants of like tenor, in the name of the Holder or as the Holder may direct, for the number of
shares issuable upon exercise hereof.
(e) Issue Tax. The issuance of certificates for shares of Common Stock upon the total
or partial exercise of this Warrant shall be made without charge to the Holder for any issuance tax
in respect thereof (not including any income or capital tax).
(f) Compliance with Securities Laws. The Holder of this Warrant, by acceptance hereof
acknowledges that this Warrant and the shares of Common Stock or Common Stock to be issued upon
exercise hereof or conversion thereof are being acquired solely for the Holder’s own account and
not as a nominee for any other party, and for investment, and that the Holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Common Stock or Common Stock to be issued
upon exercise hereof or conversion thereof except under circumstances that will not result in a
violation of the Act or any state securities laws.
8. Reservation of Stock. The Company covenants that during the term this Warrant is
exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and,
from time to time, will take all steps necessary to amend its Certificate of Incorporation (the
“Certificate”) to provide sufficient reserves of shares of Common Stock issuable upon
exercise of the Warrant. The Company further covenants that all shares that may be issued upon the
exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth
herein, will be free from all liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously or otherwise specified herein) and will not
be subject to any preemptive rights. The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of Common Stock upon the
exercise of this Warrant.
9. Notices.
(a) Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted
pursuant to Section 11 hereof, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise Price and number
of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of
such certificate to be mailed (by certified or registered mail, postage prepaid) to the Holder of
this Warrant.
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(b) In case:
(i) The Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant) for the purpose of
entitling them to receive any dividend or other distribution, or any right to subscribe for
or purchase any shares of stock of any class or any other securities, or to receive any
other right, or
(ii) of any capital reorganization of the Company, any reclassification of the capital
stock of the Company, any consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the assets of the Company to
another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a
notice specifying, as the case may be, (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (B) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record-of Common Stock (or such stock or
securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed by certified or registered
mail, postage prepaid at least 15 days prior to the date therein specified.
(c) All such notices, advices and communications shall be deemed to have been received (i) in
the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the
third business day following the date of such mailing.
10. Amendments.
(a) Any term of this Warrant may be amended only by an instrument in writing signed by the
Company and the Holder. Any amendment effected in accordance with this Section 10 shall be binding
upon each holder of any of the Warrants, each future Holder of all such Warrants, and the Company.
(b) No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any
one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of
any such term, condition or provision.
11. Adjustments. The Exercise Price and the number of shares purchasable hereunder
are subject to adjustment from time to time as follows:
11.1 Consolidation, Merger, Sale of Assets, etc. If at any time while this Warrant,
or any portion hereof, is outstanding and unexpired, there shall be (i) a reorganization
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(other than a combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (ii) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a reverse triangular merger in
which the Company is the surviving entity but the shares of the Company’s capital stock outstanding
immediately prior to the merger are converted by virtue of the merger into other property, whether
in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company’s
properties and assets as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so
that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise Price then in effect,
the number of shares of stock or other securities or property of the successor corporation
resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 11. The foregoing provisions of this Section 11.1
shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers
and to the stock or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the Holder hereof for shares
in connection with any such transaction is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by the Company’s Board of
Directors. In all events, appropriate adjustment (as determined in good faith by the Company’s
Board of Directors) shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that the provisions of
this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this Warrant. In addition,
if at any time while this Warrant, or any portion hereof, is outstanding and unexpired, (A) there
shall be any transaction (other than the occurrence of conversion of the Bridge Loan as of the
Warrant Exercisability Date) as described in clauses (ii) or (iii) above that constitutes a Sale of
the Company and also constitutes either (x) a Liquidation Event, (y) an Acquisition or (z) an Asset
Transfer (as each such term is defined in the Certificate of Designation for the Series A-1
Preferred Stock) for the Series A-1 Preferred Stock and the Series A-1 Preferred Stock is converted
or redeemed for the Liquidation Amount (as defined in the Certificate of Designation for the Series
A-1 Preferred Stock), and (B) this Warrant has not been exercised prior to the consummation
thereof, this Warrant shall be deemed to be automatically exercised in whole through Net Issue
Exercise as described in Section 3(c) hereof. The Company agrees that such shares to be issued to
the Holder upon Net Issue Exercise as a result of a transaction described in clauses (ii) or (iii)
above shall be deemed to be issued to the Holder as the record owner of such shares as of the close
of business on the date of such transaction.
A “Sale of the Company” shall mean the sale of the Company to an independent third party or
group of independent third parties pursuant to which such party or parties acquire (a) Capital
Stock (as defined in the Preferred Stock Right of First Refusal and Co-Sale Agreement) of the
Company possessing the voting power under normal circumstances to elect a majority of the Company’s
Board of Directors (whether by merger, consolidation or sale or transfer of the Capital Stock) or
(b) all or substantially all of the Company’s assets determined on a consolidated basis. For
purposes of this definition, “independent third party” means any
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Person who, immediately prior to such contemplated transaction, (w) does not own or have any
voting or economic rights with respect to more than five percent (5%) of the Capital Stock on a
fully-diluted and as converted to Common Stock basis, (x) is not an Affiliate of any Person who
owns or has any voting or economic right with respect to more than five percent (5%) of the Capital
Stock on a fully-diluted and as converted to Common Stock basis, (y) is not Parent, and (z) is not
an Affiliate of Parent.
11.2 Intentionally Omitted.
11.3 Reclassification, etc. If the Company, at any time while this Warrant, or any
portion hereof, remains outstanding and unexpired, by reclassification of securities or otherwise,
shall change any of the securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or other change and
the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as
provided in this Section 11.
11.4 Split, Subdivision or Combination of Shares. If the Company at any time while
this Warrant, or any portion hereof, remains outstanding and unexpired, shall split, subdivide or
combine the securities as to which purchase rights under this Warrant exist, into a different
number of securities of the same class, the Exercise Price for such securities shall be
proportionately decreased in the case of a split or subdivision or proportionately increased in the
case of a combination.
11.5 Adjustments for Dividends in Stock or Other Securities or Property. If while
this Warrant, or any portion hereof, remains outstanding and unexpired, the Holders of the
securities as to which purchase rights under this Warrant exist at the time shall have received,
or, on or after the record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock or other securities
or property of the Company by way of dividend, then and in each case, this Warrant shall represent
the right to acquire, in addition to the number of shares of the security receivable upon exercise
of this Warrant, and without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property of the Company that such Holder would
hold on the date of such exercise had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such shares and/or all other additional
stock available by it as aforesaid during such period, giving effect to all adjustments called for
during such period by the provisions of this Section 11.
11.6 Additional Adjustments. In the event the Company issues any Common Stock or
securities exchangeable or convertible into shares of Common Stock after the Warrant Exercisability
Date, the Exercise Price shall be reduced so that the aggregate number of shares of Common Stock
issued upon exercise of the Note Warrants shall be equal to 10.0% of the issued and outstanding
shares of Common Stock immediately following such issuance (determined on a fully diluted and as
converted to Common Stock basis assuming full conversion or exercise of all
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of the Company’s convertible securities and Options, including the Series A-1 Preferred Stock
issuable under the Bridge Loan and the Note Warrants, and, excluding the Notes).
11.7 Other Dilutive Events. In case any event shall occur as to which the provisions
of Section 11 are not strictly applicable but failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance with the essential intent and
principles of such actions, then, in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized national standing (such firm to be subject
to the approval of the Holder), which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in this Section 11, necessary
to preserve, without dilution, the purchase rights represented by this Warrant. Upon receipt of
such opinion, the Company will promptly mail a copy thereof to the Holder and shall make the
adjustments described therein.
11.8 Treatment of Stock Dividends, Stock Splits, Etc. In case the Company at any time
or from time to time after the date hereof shall declare or pay any dividend on the Common Stock
payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock
into a greater number of shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in Common Stock), then, and in each such case, additional shares of Common Stock
issued pursuant to this Section 11 shall be deemed to have been issued (i) in the case of any such
dividend, immediately after the close of business on the record date for the determination of
holders of any class of securities entitled to receive such dividend, or (ii) in the case of any
such subdivision, at the close of business on the day immediately prior to the day upon which such
corporate action becomes effective.
11.9 Certificate as to Adjustments; Issuance of New Warrant. Upon the occurrence of
each adjustment or readjustment pursuant to this Section 11, the Company shall, at its expense,
promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to
each Holder of this Warrant (i) a certificate signed by any senior executive of the Company setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based and (ii) a new Warrant of like tenor representing the number of shares of
Common Stock into which this Warrant is exercisable after giving effect to any and all such
adjustments and readjustments.
11.10 No Dilution or Impairment. The Company will not, by amendment of its
Certificate or through any consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a) will not permit the
par value of any shares of stock receivable upon the exercise of this Warrant to exceed the amount
payable therefor upon such exercise, (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and non-assessable
shares of stock on the exercise of the Warrants from time to time outstanding, and (c) will not
take any action which results in any adjustment of the Exercise Price if the total number of shares
of Common Stock issuable after the action upon the exercise of the Warrant would
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exceed the total number of shares of Common Stock then authorized by the Company’s Certificate
and available for the purpose of issue upon such exercise. The Company shall also give written
notice to the Holder at least ten (10) days prior to the date on which any such voluntary action
described in the first sentence of this Section 11.10 shall take place.
12. Registration Rights and Registration of Common Stock. Upon exercise of this
Warrant, the Holder shall have and be entitled to exercise, together with all other holders of
Registrable Securities possessing registration rights under that certain Registration Rights
Agreement, dated as of February 28, 2005, by and among the Company and the parties who have
executed the counterpart signature pages thereto or are otherwise bound thereby (the
“Registration Rights Agreement”), the rights of registration granted under the Registration
Rights Agreement to Registrable Securities (with respect to the shares of Common Stock issuable
upon exercise of this Warrant). In the event that the Holder provides notice to the Company
requesting that the Company register this Warrant or the shares of Common Stock into which this
Warrant is exercisable, the Company agrees to make such modifications to this Warrant as are
requested by the Holders to facilitate registration, distribution and transfer, of this Warrant
including, among other things, to provide for the appointment of an agent (the “Warrant
Agent”) for the purpose of maintaining the Warrant Register referred to in Section 7(a) hereto,
issuing shares of Common Stock or other securities then issuable upon exercise of this Warrant,
exchanging this Warrant, replacing this Warrant, or any or all of the foregoing. Thereafter, any
such registration, issuance, or replacement, as the case may be, shall be made at the office of the
Warrant Agent. If any shares of Common Stock required to be reserved for purposes of exercise of
this Warrant require registration with or approval of any governmental authority under any federal
or state law (other than the Act) before such shares may be issued upon exercise, the Company will,
at its expense and as expeditiously as possible, use its best efforts to cause such shares to be
duly registered or approved, as the case may be. At any such time as Common Stock is listed on any
national securities exchange, the Company will, at its expense, obtain promptly and maintain the
approval for listing on each such exchange, upon official notice of issuance, the shares of Common
Stock issuable upon exercise of the then outstanding Warrants and maintain the listing of such
shares after their issuance; and the Company will also list on such national securities exchange,
will register under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and will maintain such listing of, any other securities that at any time are issuable upon exercise
of the Warrants, if and at the time that any securities of the same class shall be listed on such
national securities exchange by the Company.
13. Legend. The Company covenants that all shares of Common Stock which may be issued
upon exercise of this Warrant will be, upon payment of the Exercise Price and issuance thereof,
fully paid, non-assessable, free of preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issue thereof, provided that until (i) the shares of Common
Stock into which this Warrant may be exercised have been transferred pursuant to Rule 144 under the
Act, (ii) the shares of Common Stock into which this Warrant may be exercised may be transferred
pursuant to Rule 144 under the Act in a single transaction without being subject to any volume or
holding period limitations, or (iii) a registration statement under the Act is effective relating
to the transfer of such shares of Common Stock into which this Warrant may be exercised,
certificates evidencing the shares of Common Stock into which this Warrant may be exercised may
bear the following or a substantially similar legend:
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“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNLESS (I)
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW WITH RESPECT THERETO, (II) PURSUANT TO RULE 144 OF THE SECURITIES ACT OR ANOTHER
EXEMPTION UNDER THE SECURITIES ACT (III) UPON THE ADVICE OF COUNSEL REASONABLY ACCEPTABLE TO THE
ISSUER, REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED IN CONNECTION WITH SUCH TRANSFER”
The Company agrees that the legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any shares of Common Stock into which this Warrant
may be exercised upon which it is stamped if (a) such shares of Common Stock into which this
Warrant may be exercised may be transferred pursuant to an effective registration statement under
the Securities Act; (b) such holder provides the Company with reasonable assurances that such
shares of Common Stock into which this Warrant may be exercised can be transferred pursuant to Rule
144; or (c) such holder receives advice of counsel reasonably acceptable to the Company to the
effect that a sale or transfer of such shares of Common Stock into which this Warrant may be
exercised may be made without registration under the Securities Act. In the event the above legend
is removed from any shares of Common Stock into which this Warrant may be exercised and thereafter
the effectiveness of a registration statement covering such shares of Common Stock into which this
Warrant may be exercised is suspended or the Company determines that a supplement or amendment
thereto is required by applicable securities laws, then upon reasonable advance written notice to
the holders of shares of Common Stock into which this Warrant may be exercised, the Company may
require that the above legend be placed on any such shares of Common Stock into which this Warrant
may be exercised that cannot then be sold pursuant to an effective registration statement or
pursuant to Rule 144 and the holders thereof shall cooperate in the replacement of such legend.
Such legend shall thereafter be removed when such shares of Common Stock into which this Warrant
may be exercised may again be transferred pursuant to an effective registration statement or
pursuant to Rule 144.
14. Intentionally Omitted.
15. Remedies. In case any one or more of the covenants and agreements contained in
this Warrant is breached, the Holder may proceed to protect and enforce their or its rights either
by suit in equity and/or by action at law, including, but not limited to, an action for damages as
a result of any such breach and/or an action for specific performance of any such covenant or
agreement contained in this Warrant.
16. Severability. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction will not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which will remain in full force and
effect.
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17. Successors and Assigns. The provisions of this Warrant shall be binding upon
and inure to the benefit of the parties hereto and their respective successors, assigns and
transferees.
18. Further Assurances. The Company agrees that it will execute and record such
documents as the Holder shall reasonably request to secure for the Holder any of the rights
represented by this Warrant.
19. Descriptive Headings and Governing Law. The description headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a
part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New York without regard to
conflicts of law provisions.
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IN WITNESS WHEREOF, NationsHealth, Inc. has caused this Warrant to be executed by its officers
thereunto duly authorized by its board of directors, and the undersigned has accepted this Warrant
and the terms and conditions hereof by their execution in the space provided below.
Dated: April 30, 2009
| HOLDER: MHR CAPITAL PARTNERS MASTER ACCOUNT LP |
||||
| By: | MHR Advisors LLC, its General Partner | |||
| By: | /s/ Xxx Xxxxxxxxx | |||
| Name: | Xxx Xxxxxxxxx | |||
| Title: | Vice President | |||
| NationsHealth, Inc. |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Xxxxx Xxxxxx | ||||
| CEO | ||||
