EX-4.23






Exhibit 4.23




INVESTOR RIGHTS AGREEMENT




     This Investor Rights Agreement (this “Agreement”), dated as of April 30, 2009, is made
by and among ComVest NationsHealth Holdings, LLC, a Delaware limited liability company
(“Parent”), NationsHealth, Inc., a Delaware corporation (the “Company”), MHR
Capital Partners Master Account, LP, MHR Capital Partners (100) LP, OTQ, LLC, and Mark H. Rachesky
M.D., as a holder of record and as authorized signatory for certain other entities, (collectively,
with their respective Affiliates and any successor to any of the foregoing, “MHR,”
provided, that any representations and covenants made by any of the foregoing signatories hereto
shall be made severally and not jointly), Glenn Parker, Lewis Stone, Timothy Fairbanks, Mark Lama,
and RGGPLS, LLC, a Delaware limited liability company, (each, individually, a “Key Holder”
and, collectively, the “Key Holders” and together with MHR, individually, a
“Stockholder” and, collectively, the “Stockholders”). Certain defined terms used
in this Agreement are defined in Article 4 and capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement (as defined below).



RECITALS




     WHEREAS, concurrently with the execution of this Agreement, Parent, NationsHealth Acquisition
Corp., a Delaware corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), and
the Company have entered into that certain Agreement and Plan of Merger (the “Merger
Agreement”);



     WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and into the Company
(the “Merger”) and the separate corporate existence of Merger Sub shall thereupon cease,
and the Company shall be the surviving corporation in the Merger (the “Surviving
Corporation”);



     WHEREAS, in connection with the Merger and immediately prior to the Effective Time, each of
the Stockholders shall contribute all issued and outstanding shares of Company Common Stock and
Company Restricted Stock owned, beneficially and of record, by each of them (or their respective
Affiliates) (the “Rollover Shares”) in exchange for the same number of shares of the Merger
Sub Non-Voting Common Stock at a price per share equal to $0.12 (the “Exchange”) in
accordance with the terms and conditions of the Exchange and Rollover Agreement;



     WHEREAS, in connection with the Merger and at the Effective Time, (a) each share of issued and
outstanding Company Common Stock, including shares of Company Restricted Stock (other than shares
to be canceled in accordance with Section 2.1(c) of the Merger Agreement, the Dissenting Shares,
and the shares of Preferred Stock issued at or immediately prior to the Effective Time in
connection with the Preferred Stock Investment and the Preferred Stock Investment Option (if
exercised)) shall be converted into the right to receive from the Surviving Corporation a cash
amount equal to $0.12 per share, (b) each share of Merger Sub Non-Voting Common Stock owned,
beneficially or of record, by each of the Stockholders (or its Affiliates) shall be converted into
and become one share of Surviving Corporation Common Stock in accordance with Section 2.1(a) of the
Merger Agreement, and (c) each share of Merger Sub Voting Common Stock owned, beneficially or of
record, by Parent shall be converted into and
become one share of Surviving Corporation Common Stock in accordance with the terms and
conditions of Section 2.1(a) of the Merger Agreement;



 









 





     WHEREAS, concurrently with the execution of this Agreement, the Company and Parent have
entered into the Bridge Loan Documents pursuant to which Parent has agreed to provide the Bridge
Loan which Bridge Loan shall be converted into shares of Preferred Stock at the Effective Time;



     WHEREAS, all of the outstanding obligations under the Bridge Loan may be converted into shares
of Preferred Stock in accordance with the Bridge Loan Documents and/or the Merger Agreement;



     WHEREAS, concurrently with the execution of this Agreement, the Company, Parent, the Key
Holders and MHR have entered into the other Preferred Stock Investment Documents to which each is a
party, including Series A Preferred Stock Purchase Agreement, dated as of the date hereof (the
“Series A Stock Purchase Agreement”), by and between Parent and the Company, pursuant to
which Parent shall purchase, and the Company shall sell, shares of Preferred Stock and the Company
shall grant to Parent the Preferred Stock Investment Option;



     WHEREAS, the execution and delivery of this Agreement is a condition to Parent’s purchase of
the Preferred Stock pursuant to the Series A Stock Purchase Agreement and Parent’s execution and
delivery of the Series A Stock Purchase Agreement;



     WHEREAS, at the Effective Time, each of the Stockholders shall own, beneficially or of record,
in such Stockholder’s name (or in the name of its Affiliates, permitted assigns or transferees) the
number of shares of Surviving Corporation Common Stock and/or Preferred Stock set forth opposite
such Stockholder’s or Parent’s name on Schedule A attached hereto; and



     WHEREAS, the Company, Parent and each of the Stockholders desire to enter into this Agreement
for the purposes, among others, of providing certain rights and restrictions with respect to the
Common Stock and the Preferred Stock owned by the Key Holders, MHR and Parent, as the case may be.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto do hereby mutually covenant and agree as follows:



ARTICLE 1

REGISTRATION RIGHTS




     1.1 Demand Registration.



          (a) Subject to the conditions of this Section 1.1, after the Effective Time, if at any
time after the first (1st) anniversary of the date a registration statement for an IPO is declared
effective by the SEC, the Company receives a written request from MHR that the Company file a
registration statement on Form S-1 with the SEC with respect to all of the Registrable Securities
owned by MHR, then the Company shall, subject to the limitations of Section 1.1(b),
Section 1.1(c), and Section 1.4, (i) as soon as practicable, and in any event
within sixty (60) days after
the date such request is given, file a registration statement on Form S-1 under the Securities
Act covering all Registrable Securities that MHR requested to be registered, and (ii) use its
commercially reasonable efforts to cause such registration statement to be declared effective by
the SEC as soon as practicable.



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          (b) Notwithstanding the foregoing obligations, if the Company furnishes to MHR a certificate
signed by the Company’s Chief Executive Officer stating that in the good faith judgment of the
Company’s Board of Directors it would be detrimental to the Company and its stockholders for such
registration statement to be filed, become effective, remain filed or remain effective for as long
as such registration statement otherwise would be required to remain filed or effective, because
such action would (i) interfere with a significant acquisition, corporate reorganization, or other
similar transaction involving or then being actively pursued by the Company; (ii) require premature
disclosure of material information that the Company has a bona fide business purpose for preserving
as confidential; or (iii) render the Company unable to comply with requirements under the
Securities Act or Exchange Act, then the Company shall have the right to defer taking action with
respect to such filing or effectiveness of such registration statement, for one period of not more
than one hundred eighty (180) consecutive days after the request of MHR is provided to Company;
provided, however, that the Company shall not be prohibited or restricted by the terms
and conditions of this Section 1.1 from registering any securities in connection with an
Excluded Registration.



          (c) The Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to this Section 1.1:



               (i) after the Company has effected (which for purposes of this Agreement shall mean a
registration statement that has been declared effective by the SEC and has satisfied the
requirements of Section 1.14) two (2) registrations pursuant to this Section 1.1;
provided, however, that the Company shall grant to MHR an additional demand
registration pursuant to Section 1.1 for each year the Company is not in compliance with
the rules and regulations of the Securities Act or Exchange Act and, as a result, is not eligible
to use a Form S-3, which additional demand registrations shall not exceed two (2) in the aggregate;



               (ii) if MHR proposes to dispose of its shares of Registrable Securities that may be
immediately registered on a Form S-3 pursuant to a request made pursuant to Section 1.3; or



               (iii) if MHR has the right to dispose of its shares of Registrable Securities pursuant to Rule
144 in a single transaction without being subject to any volume or holding period limitations.



     1.2 Company Registration. After the Effective Time, if at any time after the date a
registration statement for an IPO is declared effective by the SEC or at such earlier time to the
extent other stockholders are granted the right to registration before such time, the Company
proposes to register (including, for this purpose, a registration effected by the Company for
stockholders) any of the Company’s equity or debt securities under the Securities Act in connection
with the public offering of such securities solely for cash (other than an Excluded Registration),
the Company shall, at such time, promptly give Parent, MHR and each of the Key
Holders notice of such registration (a “Piggyback Notice”). Upon the request of
Parent, MHR and/or any of the Key Holders given within twenty (20) days after such Piggyback Notice
is given by the Company, the Company shall, subject to the provisions of Section 1.4, cause
to be registered all of the Registrable Securities that Parent, MHR and/or any of the Key Holders
has requested to be included in such registration. The Company shall have the right to terminate
or withdraw any registration initiated by it under this Section 1.2 before the effective
date of such registration, whether or not Parent, MHR and/or any of the Key Holders has elected to
include any shares in such registration.



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     1.3 Form S-3 Registration.



          (a) Subject to the conditions of this Section 1.3, if at any time when it is eligible
to use a Form S-3, the Company receives a written request from MHR that the Company file a Form S-3
with respect to all or a part of MHR’s Registrable Securities, then the Company shall (i) as soon
as practicable, and in any event within forty-five (45) days after the date such request is given,
file a registration statement on Form S-3 under the Securities Act covering all Registrable
Securities that MHR requested to be registered, and (ii) use its commercially reasonable efforts to
cause such registration statement to be declared effective by the SEC as soon as practicable,
subject to the limitations of Section 1.3(b), Section 1.3(c), and Section
1.4.



          (b) Notwithstanding the foregoing obligation, if the Company furnishes to MHR a certificate
signed by the Company’s Chief Executive Officer stating that in the good faith judgment of the
Company’s Board of Directors it would be detrimental to the Company and its stockholders for such
Form S-3 to be filed, become effective, remain filed or remain effective for as long as such
registration statement otherwise would be required to remain filed or effective, because such
action would (i) interfere with a significant acquisition, corporate reorganization, or other
similar transaction then being actively pursued by the Company; (ii) require premature disclosure
of material information that the Company has a bona fide business purpose for preserving as
confidential; or (iii) render the Company unable to comply with requirements under the Securities
Act or Exchange Act, then the Company shall have the right to defer taking action with respect to
such filing or effectiveness of such registration statement, for a period of not more than one
hundred eighty (180) days after the request of MHR is provided to the Company;
provided, however, that the Company shall not be prohibited or restricted by the terms
and conditions of this Section 1.1 from registering any securities in connection with an
Excluded Registration.



          (c) The Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to this Section 1.3:



               (i) if a Form S-3 is not then available with respect to such offering; or



               (ii) if the Company has, within the twelve (12) month period preceding the date of such
request, already effected three (3) registrations on Form S-3 for MHR pursuant to this Section
1.3.



          (d) Registrations initiated or effected pursuant to this Section 1.3 shall not be
counted as a demand for registration effected pursuant to Section 1.1.



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     1.4 Underwriting Requirements. If MHR intends to distribute the Registrable
Securities covered by its request pursuant to Section 1.1 or Section 1.3 by means
of an underwriting, MHR shall so advise the Company as a part of its request made pursuant to
Section 1.1 or Section 1.3, and if the Company intends to distribute shares of its
capital stock pursuant to Section 1.2 by means of an underwriting, the Company shall
include such information in the Piggyback Notice. The underwriter will be an investment banking
firm of national standing selected by the Company, subject to the consent of MHR in connection with
a registration pursuant to Section 1.1 or Section 1.3 (which consent shall not be
unreasonably withheld, conditioned or delayed). In such event, the right of MHR to include
Registrable Securities in such registration shall be conditioned upon MHR’s participation in such
underwriting and the inclusion of MHR’s Registrable Securities in the underwriting to the extent
provided herein. MHR and the Company (as provided in Section 1.5(e)) shall enter into an
underwriting agreement in customary form with the underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Section 1.4, if the underwriter(s) determine(s)
that marketing factors require a limitation on the number of shares to be underwritten, then the
underwriter(s) may exclude shares (including Registrable Securities) from the registration and
underwriting, and the number of shares that may be included in the registration and the
underwriting shall be allocated, (a) in the case of (x) a primary registration by the Company under
Section 1.2, (i) first, to the Company, (ii) second, to MHR, Parent and each of the Key
Holders, with such registrable securities and shares of capital stock requested by any of them
pursuant to piggy back registration rights held by any of them to be allocated pro rata based upon
the number of shares of the Company’s Common Stock (determined on a fully diluted and as converted
to Common Stock basis assuming full conversion or exercise of all of the Company’s convertible
securities and Options) owned by such holder, and (iii) third, to each of the other holders of
shares of capital stock of the Company requesting inclusion of their securities in such
registration statement pursuant to piggyback registration rights granted to such holders to be
allocated among such holders thereof pro rata based on the number of shares of Company Common Stock
(determined on a fully diluted and as converted to Common Stock basis assuming full conversion or
exercise of all of the Company’s convertible securities and Options) owned by each such holder, and
(y) a secondary registration by the Company under Section 1.2, (i) first, to the
stockholder having the right to require such secondary registration, (ii) second, to MHR, Parent
and each of the Key Holders, with such registrable securities and shares of capital stock requested
by any of them pursuant to piggy back registration rights held by any of them to be allocated pro
rata based upon the number of shares of the Company’s Common Stock (determined on a fully diluted
and as converted to Common Stock basis assuming full conversion or exercise of all of the Company’s
convertible securities and Options) owned by such holder, and (iii) third, to each of the other
holders of shares of capital stock of the Company requesting inclusion of their securities in such
registration statement pursuant to piggyback registration rights granted to such holders to be
allocated among such holders thereof pro rata based on the number of shares of Company Common Stock
(determined on a fully diluted and as converted to Common Stock basis assuming full conversion or
exercise of all of the Company’s convertible securities and Options) owned by each such holder, and
(b) in the case of a registration pursuant to MHR’s rights under Section 1.1 or Section
1.3, (i) first, to MHR, and (ii) second, to each of the other holders of shares of capital
stock of the Company requesting inclusion of their securities in such registration statement
pursuant to piggyback registration rights granted to such holders to be allocated among such
holders thereof pro rata
based on the number of shares of Company Common Stock (determined on a fully diluted and as
converted to Common Stock basis assuming full conversion or exercise of all of the Company’s
convertible securities and Options) owned by each such holder.



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     1.5 Obligations of the Company. Whenever required under this Article 1 to
effect the registration of any Registrable Securities, the Company shall (in addition to, and not
in limitation of, any other requirements set forth in this Article 1), as expeditiously as
reasonably possible:



          (a) prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such registration statement to
become effective and, upon the request of MHR, keep such registration statement effective for a
period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated
in the registration statement has been completed; provided, however, that (i) such
one hundred twenty (120) day period shall be extended for a period of time equal to the period MHR
refrains, at the request of an underwriter of securities of the Company, from selling any
securities included in such registration, and (ii) in the case of any registration of Registrable
Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to
compliance with applicable SEC rules, such 120 day period shall be extended to a period of two
years, or if earlier, until all such Registrable Securities are sold; provided,
further, that at any time, upon written notice to MHR and for a period not to exceed sixty
(60) days thereafter (the “Suspension Period”), the Company may delay the filing or
effectiveness of any registration statement or suspend the use or effectiveness of any registration
statement (and MHR hereby agrees not to offer or sell any Registrable Securities pursuant to such
registration statement during the Suspension Period) if the Company reasonably believes that there
is or may be in existence material nonpublic information or events involving the Company, the
failure of which to be disclosed in the prospectus included in the registration statement could
result in a Violation;



          (b) prepare and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration statement, as may be
necessary to comply with the Securities Act in order to enable the disposition of all securities
covered by such registration statement;



          (c) furnish to MHR such numbers of copies of a prospectus, including a preliminary prospectus,
as required by (and in conformity with) the Securities Act, and such other documents as MHR may
reasonably request in order to facilitate their disposition of their Registrable Securities;



          (d) use its commercially reasonable efforts to register and qualify the securities covered by
such registration statement under such other securities or blue-sky laws of such jurisdictions as
shall be reasonably requested by MHR; provided that the Company shall not be required in connection
therewith to qualify to do business or to file a general consent to service of process in any such
states or jurisdictions, unless the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act;



          (e) in the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the
underwriter(s) of such offering; provided, that MHR shall also enter into and perform its
obligations under such agreement;



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          (f) use its commercially reasonable efforts to cause all such Registrable Securities covered
by such registration statement to be listed on a national securities exchange or trading system and
each securities exchange and trading system (if any) on which similar securities issued by the
Company are then listed;



          (g) provide a transfer agent and registrar for all Registrable Securities registered pursuant
to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not
later than the effective date of such registration;



          (h) use its commercially reasonable efforts to furnish, at the request of MHR, on the date on
which such Registrable Securities are sold to the underwriter, (i) an opinion, dated such date, of
the counsel representing the Company for the purposes of such registration, in form and substance
as is customarily given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and (ii) a “comfort” letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any;



          (i) notify MHR, promptly after the Company receives notice thereof, of the time when such
registration statement has been declared effective or a supplement to any prospectus forming a part
of such registration statement has been filed; and



          (j) after such registration statement becomes effective, notify MHR of any request by the SEC
that the Company amend or supplement such registration statement or prospectus, or discontinue or
cease and desist from selling securities pursuant thereto.



     1.6 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Article 1 that MHR shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as is reasonably required to effect timely the registration of
such Registrable Securities.



     1.7 Expenses of Registration. All expenses (other than Selling Expenses) incurred in
connection with registrations, filings, or qualifications pursuant to this Article 1,
including all registration, filing, and qualification fees; printers’ and accounting fees; and fees
and disbursements of counsel for the Company shall be borne and paid by the Company;
provided, however, that the Company shall not be required to pay for any expenses
of any registration proceeding begun pursuant to Section 1.1 or Section 1.3 if the
registration request is subsequently withdrawn at the request of MHR (in which case MHR shall bear
all such expenses) other than a request in accordance with Section 1.15 hereof. All Selling
Expenses relating to Registrable Securities registered pursuant to this Article 1 shall be
borne and paid by MHR, Parent, or the Key Holders, as the case may be.



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     1.8 Delay of Registration. MHR shall have no right to obtain or seek an injunction
restraining or otherwise delaying any registration pursuant to this Agreement as the result of any
controversy that might arise with respect to the interpretation or implementation of this
Article 1.



     1.9 Indemnification. If any Registrable Securities are included in a registration
statement under this Article 1:



          (a) To the full extent permitted by law, the Company will indemnify and hold harmless MHR and
its Affiliates, and each of their partners, members, officers, directors, managers, partners,
employees, advisors, agents and stockholders, and each of their respective successors and assigns,
and each person who “controls” any of the foregoing within the meaning of the Securities Act and
the Exchange Act and any underwriter (as defined in the Securities Act) for MHR, against any
Damages, and the Company will pay to each such Person any legal or other expenses reasonably
incurred thereby in connection with investigating any matter or defending any claim, investigation
or proceeding or appeal taken from the foregoing by or before any court or governmental,
administrative, or regulatory agency, body or the SEC, whether pending or threatened, whether or
not such Person is or may be a party thereto, from which Damages may result; provided,
however, that the indemnity agreement contained in this Section 1.9(a) shall not
apply to amounts paid in settlement of any such claim, investigation or proceeding if such
settlement is effected without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or
are based upon an untrue statement or alleged untrue statement or omission or alleged omission made
in such registration statement, or preliminary, final or free writing prospectus, or amendment or
supplement thereto, in reliance upon and in full conformity with written information furnished to
the Company by MHR expressly for use therein. Such indemnity obligation shall remain in full force
and effect regardless of any investigation made by or on behalf of MHR and shall survive the
transfer or disposal of the Registrable Securities by MHR.



          (b) To the full extent permitted by law, MHR will indemnify and hold harmless the Company, and
each of its Affiliates, directors, officers, stockholders, any underwriter (as defined in the
Securities Act), and any of such Persons’ respective Affiliates, against any Damages, in each case
to the extent that such Damages arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such registration statement, or any preliminary,
final or free writing prospectus contained therein or furnished by the Company to MHR, or any
amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that (i) such untrue
statement or alleged untrue statement or omission or alleged omission was made in reliance upon and
in full conformity with written information furnished to the Company by MHR expressly for use
therein and (ii) MHR had a reasonable opportunity to review the relevant registration statement or
preliminary, final or free writing prospectus contained therein or amendment or supplement thereto
prior to its filing and failed to correct such statement or omission; and MHR will pay to the
Company and each such Person any legal or other expenses reasonably incurred thereby in connection
with investigating any matter or defending any claim, investigation or proceeding from which
Damages may result, as such expenses are incurred; provided, however, that the
indemnity agreement contained in this Section 
1.9(b) shall not apply to amounts paid in settlement of any such claim, investigation
or proceeding if such settlement is effected without the consent of MHR, which consent shall not be
unreasonably withheld; provided, further, that MHR’s liability under this
Section 1.9(b) shall not exceed the dollar amount of the net proceeds actually received by
MHR from the sale of such Registrable Securities pursuant to such registration.



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          (c) Promptly after receipt by an indemnified party under this Section 1.9 of notice of
the commencement of any action (including any governmental action) for which a party may be
entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, give the indemnifying
party notice of the commencement thereof. The indemnifying party shall have the right to
participate in such action and, to the extent the indemnifying party so desires, participate
jointly with any other indemnifying party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties that may be represented without conflict by one
counsel) shall have the right to retain one separate counsel (and one local counsel), with the fees
and expenses to be paid by the indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party represented by such counsel
in such action. The failure to give notice to the indemnifying party within a reasonable time of
the commencement of any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.9, but only if and to the extent that such failure
materially prejudices the indemnifying party’s ability to defend such action. The failure to give
notice to the indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.



          (d) The foregoing indemnity agreements of the Company and MHR are subject to the condition
that, insofar as they relate to any Damages arising from any untrue statement or alleged untrue
statement of a material fact contained in, or omission or alleged omission of a material fact from,
a preliminary prospectus (or necessary to make the statements therein not misleading) that has been
corrected in the form of prospectus included in the registration statement at the time it becomes
effective, or any amendment or supplement thereto filed with the SEC pursuant to Rule 424(b) under
the Securities Act (the “Final Prospectus”), such indemnity agreement shall not inure to
the benefit of any Person if a copy of the Final Prospectus was furnished to the indemnified party
and such indemnified party failed to convey, at or before the confirmation of the sale of the
shares registered in such offering, a copy of the Final Prospectus to the Person asserting the
loss, liability, claim, or damage in any case in which such delivery was required by the Securities
Act.



          (e) Unless otherwise superseded by an underwriting agreement entered into in connection with
the underwritten public offering, the obligations of the Company and MHR under this Section
1.9 shall survive the completion of any offering of Registrable Securities in a registration
under this Article 1, and otherwise shall survive the termination of this Agreement.



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     1.10 Reports Under Exchange Act. With a view to making available to MHR the benefits
of Rule 144 and any other rule or regulation of the SEC that may at any time permit
MHR to sell Company Common Stock to the public without registration or pursuant to a
registration on Form S-3, the Company shall use its commercially reasonable efforts to:



          (a) make and keep public information available, as those terms are understood and defined in
Rule 144, at all times after the effective date of the registration statement filed by the Company
for the IPO;



          (b) use its commercially reasonable efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and the Exchange Act
(at any time after the Company has become subject to such reporting requirements);



          (c) furnish to MHR, so long as MHR owns any Registrable Securities, forthwith upon written
request (i) a written statement by the Company that it has complied with the reporting requirements
of Rule 144 (at any time after ninety (90) days after the effective date of the registration
statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time
after the Company has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so
qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such other information as may be
reasonably requested in availing MHR of any rule or regulation of the SEC that permits the selling
of any such securities without registration (at any time after the Company has become subject to
the reporting requirements under the Exchange Act) or pursuant to such Form S-3 (at any time after
the Company so qualifies to use such form); and



          (d) upon request of MHR, if MHR wishes to transfer securities pursuant to Rule 144, promptly
retain qualified securities counsel, including paying the fees and expenses thereof, to analyze the
proposed sale by MHR under Rule 144 and issue an opinion to the Company’s transfer agent as to
whether or not (i) such proposed transfer satisfies the provisions of Rule 144, (ii) the securities
proposed to be transferred may be transferred without restriction under Rule 144, and (iii)
restrictive legends on such securities may be removed in connection with such transfer pursuant to
Rule 144.



     1.11 “Market Stand off” Agreement. MHR hereby agrees that it will not, without the
prior written consent of the managing underwriter, during the period commencing on the effective
date of the registration statement relating to an IPO and continuing for one hundred eighty (180)
days (or such longer period, not to exceed 18 days after the expiration of the 180-day period, as
the underwriters or the Company shall reasonably request), (a) lend; offer; pledge; sell; contract
to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant
any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or
indirectly, any shares of Company Common Stock or any securities convertible into or exercisable or
exchangeable for Company Common Stock held immediately before the effective date of the
registration statement for such offering, or (b) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of ownership of the
Company Common Stock, whether any such transaction described in clause (a) or (b) above is to be
settled by delivery of Company Common Stock or other securities, in cash,
or otherwise. The foregoing provisions of this Section 1.11 shall apply only to an
IPO and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting
agreement. The underwriters in connection with an IPO are intended third party beneficiaries of
this Section 1.11 and shall have the right, power, and authority to enforce the provisions
hereof as though they were a party hereto. MHR further agrees to execute such agreements as may be
reasonably requested by the underwriters in the IPO that are consistent with this Section
1.11 or that are necessary to give further effect thereto. Any discretionary waiver or
termination of the restrictions of any or all of such agreements by the Company or the underwriters
shall apply to MHR. Notwithstanding the foregoing, any transactions in which MHR lends or borrows
any Registrable Securities to brokers, banks or other financial institutions for the purpose of
effecting any margin transactions, including any transactions effecting or resulting in any pledge
or other encumbrance (in existence or hereinafter created) over such Registrable Securities in the
ordinary course of business shall not, under any circumstances be deemed to constitute a transfer
of such Registrable Securities for purposes of this Section 1.11. The foregoing
provisions of this Section 1.11 shall not apply to MHR unless any other holders of capital
stock of the Company are bound by the same restrictions.



10









 





     1.12 Assignment of Registration Rights. The rights to cause the Company to register
Registrable Securities pursuant to this Article 1 may be assigned (but only with all
related obligations) by MHR to a transferee of such Registrable Securities (for so long as such
shares remain Registrable Securities) that is an Affiliate, partner, member, limited partner, or
stockholder of MHR; provided, however, that (x) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address of such transferee
and the Registrable Securities with respect to which such registration rights are being transferred
and (y) such transferee agrees in writing to be bound by and subject to the terms and conditions of
this Agreement, including the provisions of Section 1.11.



     1.13 Termination of Registration Rights. The right of MHR to request registration or
inclusion of Registrable Securities in any registration pursuant to Section 1.1,
Section 1.2, or Section 1.3 shall terminate as soon as all of MHR’s Registrable
Securities can be sold under Rule 144 in a single transaction without being subject to any volume
or holding period limitations.



     1.14 Effective Registration. A registration shall not count as a registration
pursuant to Section 1.1 or Section 1.3 (i) unless the related registration statement has been
declared effective and has remained effective until such time as all of such Registrable Securities
covered thereby have been disposed of by MHR in accordance with the intended methods of disposition
set forth in such registration statement (but in no event for a period of more than one hundred
twenty (120) calendar days after such Registration Statement becomes effective excluding any
Suspension Period (or in the case of any registration of Registrable Securities on Form S-3 that
are intended to be offered on a continuous or delayed basis, a period of two years excluding any
Suspension Period)) or cease to be Registrable Securities, (ii) if pursuant to Section 1.4 hereof,
MHR is cut back by more than twenty five percent (25%) of the Registrable Securities requested to
be registered, and (iii) unless the Company has complied with all of its material obligations under
this Agreement; it being understood that if, after such Registration Statement has become
effective, an offering of Registrable Securities pursuant to Section 1.1 or Section 1.3 is
interfered with by any stop order, injunction, or other order of the Commission or other
governmental agency or court of competent jurisdiction, such registration statement with respect to
such
registration pursuant to Section 1.1 or Section 1.3 will be deemed not to have been effected
(and will not count as a registration under Section 1.1 or Section 1.3, as applicable), unless and
until such stop order or injunction is removed, rescinded or otherwise terminated.



11









 





     1.15 Withdrawal and Cancellation of Registration. If (a) MHR disapproves of the terms
of any registration pursuant to Section 1.1, whether in the form of an underwritten
Offering or a non-underwritten Offering, (b) MHR is not entitled to include all of its Registrable
Securities specified in the request for a registration pursuant to Section 1.1 or
Section 1.3 in any offering, (c) a suspension period occurs after a request for a
registration pursuant to Section 1.1 or Section 1.3 but before the Registrable
Securities covered by such registration pursuant to Section 1.1 or Section 1.3 are
sold, transferred, exchanged or disposed in accordance with such registration pursuant to
Section 1.1 or Section 1.3, or (d) if the Company has breached any material
obligations hereunder, then in any of such cases MHR may elect to withdraw from such offering by
giving written notice to the Company and the underwriter, to the extent applicable, of its request
to withdraw prior to the effectiveness of the Registration Statement filed with the Commission with
respect to such registration pursuant to Section 1.1 or Section 1.3. If MHR
withdraws from the proposed offering relating to a registration pursuant to Section 1.1 or
Section 1.3 in accordance with the previous sentence, then (x) the Company shall, and cause
its Affiliates to, cease all efforts to secure registration if MHR is the only selling stockholder,
and (y) the Company shall be responsible for the expenses of the MHR incurred in connection with
such cancelled registration through the date of the written notice of withdrawal notwithstanding
the proviso in Section 1.7.



     1.16 Withdrawals. Parent, MHR and any Key Holder shall have the right to withdraw its
request for inclusion of all or any of its Registrable Securities in any Registration Statement
pursuant to this Article 1 by giving written notice to the Company of its request to
withdraw; provided, however, that (a) such request must be made in writing prior to
the earlier of the execution of the underwriting agreement or the execution of the custody
agreement with respect to such registration and (ii) such withdrawal shall be irrevocable.



     1.17 Company Standstill Period. In the event of an underwritten offering of
Registrable Securities on a firm commitment basis pursuant to Section 1.1 or Section
1.3, the Company agrees not to, without the prior written consent of the managing underwriter
and MHR, or in the event of a non-underwritten offering pursuant to Section 1.1 or
Section 1.3, the Company agrees not to, without the prior written consent of MHR, offer,
pledge, sell, contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any securities that are the same as, or similar to,
the Registrable Securities, or any securities convertible into, or exchangeable or exercisable for,
any securities of the Company that are the same as, or similar to, the Registrable Securities
(except pursuant to an Excluded Registration), during the period commencing fifteen (15) calendar
days prior to the effective date of the Registration Statement relating to such Registrable
Securities (to the extent timely notified in writing by the MHR or the managing underwriter of such
distribution) and ending on the ninetieth (90th) calendar day after such effective date. The
Company agrees (i) not to effect any public sale or distribution of any securities similar to those
being registered in accordance with Section 1.1 or Section 1.3 hereof, or any
securities convertible into or exchangeable or exercisable for such securities, from the date the
Company receives the written demand for any registration pursuant to Section 1.1 or
Section 1.3 until permitted under any “lock-up” agreement
with the underwriter, but not more than ninety (90) calendar days from the effective date of
any registration statement filed pursuant to Section 1.1 or Section 1.3 hereof, and
(ii) that any agreement entered into after the date hereof pursuant to which the Company issues or
agrees to issue any privately placed securities shall contain a provision under which holders of
such securities agree not to effect any sale or distribution of any such securities during the
periods described in clause (i) above, in each case including a sale pursuant to Rule 144 under the
Securities Act (except as part of any such registration, if permitted) during such period;
provided, however, that the provisions of this Section 1.17 shall not
prevent the conversion or exchange of any securities pursuant to their terms into or for other
securities and shall not prevent the issuance of securities by the Company under any employee
benefit, stock option or stock subscription plans.



12









 





ARTICLE 2

PREEMPTIVE RIGHTS




     2.1 Preemptive Rights. Subject to the terms and conditions of this Article 2
and to compliance with applicable securities Laws, after the Effective Time, each time the Company
proposes to sell New Securities (each a “New Offering”), the Company shall also make an
offering of such New Securities to the Stockholders and Parent (collectively, the “Preemptive
Stockholders”) in accordance with the following provisions:



          (a) In connection with the New Offering, the Company shall deliver written notice to each
Preemptive Stockholder stating the amount and description of the New Securities to be offered and
the price and the terms with respect to the New Securities (the “Preemptive Rights
Notice”). Each Preemptive Rights Notice shall be sent to the addresses set forth in the
records of the Company.



          (b) Each Preemptive Stockholder may elect to purchase, at the price and on the terms specified
in the Preemptive Rights Notice, up to such Preemptive Stockholder’s pro rata portion of such New
Securities in connection with the New Offering by delivering written notice of such election to the
Company of the amount of New Securities it elects to purchase within thirty (30) days after receipt
of the Preemptive Rights Notice. Each Preemptive Stockholder’s pro rata portion shall be based upon
a fraction the numerator of which shall be the number of shares of Company Common Stock (determined
on a fully diluted and as converted to Common Stock basis assuming full conversion or exercise of
all of the Company’s convertible securities and Options, other than the Notes) which such
Preemptive Stockholder owns immediately prior to the issuance of such New Securities and the
denominator of which shall be the number of shares of Company Common Stock (determined on a fully
diluted and as converted to Common Stock basis assuming full conversion or exercise of all of the
Company’s convertible securities and Options, other than the Notes) held by all the Preemptive
Stockholders immediately prior to the issuance of the New Securities. Any securities referred to
in the Preemptive Rights Notice that are not elected to be purchased as provided in Section
2.1(b) may, during the one hundred twenty (120) day period after the expiration of the thirty
day (30) day period set forth in Section 2.1(b), be offered by the Company to any other
Person or Persons at a
price not less than, and on material terms no more favorable to the offeree than, those
specified in the Preemptive Rights Notice.



13









 





          (c) The preemptive rights set forth in this Article 2 shall not be applicable to the
issuance of any New Securities (i) issued to employees, officers or directors of, or consultants or
advisors to the Company or any Subsidiary of Company in their capacity as such pursuant to the
Company’s stock option plans, stock purchase plans, benefit plans, employment agreements or other
similar arrangements, (ii) issued or issuable pursuant to the exercise of any securities
outstanding as of the Effective Time and convertible or exercisable into shares of the Company’s
capital stock, (iii) issued pursuant to any rights or agreements granted after the Effective Time
after compliance with or waiver of this Article 2, (iv) issued as consideration to a seller
in connection with a bona fide acquisition of assets, whether by merger, acquisition, plan of
exchange or consolidation of another company, strategic relationship or similar business
combination and approved by the Board of Directors, (v) issued pursuant to any equipment loan or
leasing arrangement, or real property leasing arrangement, (vi) issued in connection with any stock
split, stock dividend or recapitalization, (vii) issued upon conversion of the Preferred Stock (or
issued upon conversion of the Preferred Stock issued upon exercise of the Preferred Stock
Investment Option), and (viii) issued upon conversion of any other series of Preferred Stock, any
warrant or Option or any other securities convertible or exchange for shares of the Company’s
capital stock, in each case in connection with this clause (viii), which such securities were
issued in compliance with Section 2.1.



          (d) Notwithstanding the foregoing, the Company shall not be required to offer or sell such New
Securities to any Preemptive Stockholder if such sale would cause the Company to be in Violation of
applicable federal or state securities Laws by virtue of such offer or sale.



          (e) In the event the Parent or any of its Affiliates proposes to make or participate as a
lender in making a loan to or purchasing debt securities from the Company and/or any of its
subsidiaries (a “Debt Transaction”), each other Preemptive Stockholder shall have the right
to participate in such Debt Transaction on the same terms and conditions as Parent or any of its
Affiliates, and such Debt Transaction shall be subject to the provisions of this Article 2
as if such loan or debt security was a New Security. For the avoidance of doubt, each Preemptive
Stockholder’s right to participate in such Debt Transaction shall be limited to such Preemptive
Stockholder’s pro rata share calculated in accordance with Section 2.1(b).



          (f) The rights under this Article 2 shall not apply to, and shall terminate upon the date the
registration statement for the IPO is declared effective by the SEC; provided,
however, that after such IPO each Preemptive Stockholder shall have the right to
participate in any equity or debt offering by the Company in which Parent or its Affiliates
participates on a pro rata basis (determined on a fully diluted and as converted to Common Stock
basis assuming full conversion or exercise of all of the Company’s convertible securities and
Options, other than the Notes).



14









 





ARTICLE 3

MISCELLANEOUS




     3.1 Term. This Agreement shall automatically terminate upon the earlier of (a) the
consummation of an Approved Drag-Along Sale (as defined in that certain Right of First Refusal and
Co-sale Agreement, dated the date hereof, by and among the Company and the Stockholders), (b)
termination of the Merger Agreement in accordance with its terms, or (c) the date the parties
hereto consent in writing to the termination of this Agreement.



     3.2 Effective Date. The effectiveness of this Agreement is conditioned upon the
occurrence of the Effective Time pursuant to the Merger Agreement in effect on the date hereof,
provided that in the event the Merger Agreement is terminated in accordance with its terms, this
Agreement shall be null and void and have no force or effect.



     3.3 Legend. Each certificate representing shares of the Company’s capital stock now
or hereafter owned by the Stockholders or issued to any person in connection with a transfer
pursuant to this Agreement shall be endorsed with the following legend:



“THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
INVESTOR RIGHTS AGREEMENT BY AND AMONG THE STOCKHOLDER, THE COMPANY AND
CERTAIN HOLDERS OF STOCK OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.”



          The parties hereto agree that the Company may instruct its transfer agent to impose transfer
restrictions on the shares represented by certificates bearing the legend referred to above to
enforce the provisions of this Agreement and the Company agrees to promptly do so. The legend
shall be removed at the request of any holder of the Company’s capital stock following termination
of this Agreement.



     3.4 Notices. All notices, requests and other communications to any party hereunder
shall be in writing and shall be deemed given if delivered personally, sent by facsimile (which is
confirmed by an acknowledgement or transmission report generated by the machine from which the
facsimile was sent indicating that the facsimile was sent in its entirety to the addressee’s
facsimile number) or sent by overnight courier (providing proof of delivery) to the parties at the
following addresses:




			
	               	 	If to Parent, to:


ComVest Investment Partners III, L.P.

One North Clematis

Suite 300

West Palm Beach, Florida 33401

Attention: Cecilio Rodriguez

Facsimile: (561) 671-3225





15









 









			
	               	 	with a copy (which shall not constitute notice) to:


Foley & Lardner LLP

100 North Tampa Street

Suite 2700

Tampa, FL 33602

Attention: Steven W. Vazquez

Facsimile: (813) 221-4217


If to the Company, to:


NationsHealth, Inc.

13630 NW 8th Street

Suite 210

Sunrise, Florida 33325

Attention: Chief Executive Officer

Facsimile: (954) 903-5005


with a copy (which shall not constitute notice) to:


McDermott Will & Emery LLP

201 South Biscayne Boulevard

22nd Floor

Miami, Florida 33131

Phone: 305.358.3500

Fax: 305.347.6500

Attention: Ira J. Coleman, Esq.

               Frederic L. Levenson, Esq.

               Harris Siskind, Esq.


If to the Key Holders, to:


Glenn Parker

530 Carrotwood Terrace

Plantation, Florida 33324


and


Timothy Fairbanks

6605 NW 122nd Avenue

Parkland, Florida 33076


and


Lewis Stone

6618 NW 103rd Lane

Parkland, Florida 33076





16









 









			
	               	 	and


Mark Lama

225 Potter Road

West Palm Beach, Florida 33405


and


RGGPLS, LLC

13630 NW 8th Street

Suite 210

Sunrise, Florida 33325


If to the MHR, to:


c/o MHR Fund Management LLC

40 West 57th Street, 24th Floor

New York, New York 10019

Attn: Hal Goldstein

               Emily Fine

               Janet Yeung

Telephone: (212) 262-0005

Facsimile: (212) 262-9356


with a copy (which shall not constitute notice) to:


O’Melveny & Myers LLP

Times Square Tower

7 Times Square

New York, New York 10036

Attention: Doron Lipshitz, Esq.

               Patricia Perez, Esq.

Telephone: (212) 326-2000

Facsimile: (212) 326-2061





          or such other address or facsimile number as such party may hereafter specify by like notice
to the other parties hereto. All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5 P.M. in the place
of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the next succeeding
Business Day in the place of receipt. In the event that an addressee of a notice or communication
rejects or otherwise refuses to accept a notice or other communication delivered or sent in
accordance with this Section 3.4, or if the notice or other communication cannot be
delivered because of a change in address for which no notice was given, then such notice or other
communication is deemed to have been received upon such rejection, refusal or inability to
deliver.



17









 





     3.5 Amendments; Waivers. Any amendment or modification of or to any provision of this
Agreement, and any consent to any departure of any party from the terms of any provision of this
Agreement, shall be effective only if it is made or given in writing and signed by each party.
Notwithstanding the foregoing sentence, any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by any party entitled to the
benefits thereof only by a written instrument signed by such party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. The failure of any party to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.



     3.6 Counterparts and Fax Signatures. This Agreement may be executed in two or more
counterparts (including by means of facsimile or electronically transmitted portable document
format (PDF) signature pages), each of which shall be deemed to be an original, but all of which
together shall constitute and be one and the same instrument; provided, that fax or
electronically transmitted signatures of this Agreement shall be deemed to be originals.
Counterpart signatures need not be on the same page and shall be deemed effective upon receipt.



     3.7 Stock Split. All references to numbers of shares in this Agreement shall be
appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization
affecting the Company’s capital stock occurring after the Effective Date.



     3.8 Ownership. Except as set forth on Schedule 3.8, each Stockholder represents and
warrants that such Stockholder is the sole legal and beneficial owner of the shares of the
Company’s capital stock subject to this Agreement and that no other person or entity has any
interest in such shares (other than a community property interest as to which the holder thereof
has acknowledged and agreed in writing to the restrictions and obligations hereunder).



     3.9 Headings and Sections. All headings set forth in this Agreement are intended for
convenience only and shall not control or affect the meaning, construction or effect of this
Agreement or of any of its provisions. All references in this Agreement to an article or section
shall mean an article or section of this Agreement (unless otherwise indicated).



     3.10 Entire Agreement. This Agreement (including the exhibits and schedules hereto
and any other documents and instruments referred to herein or contemplated hereby), constitute the
entire agreement, and supersede all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter hereof and thereof
(including that certain Letter of Intent).



     3.11 No Third Party Beneficiary. Except as set forth in Section 1.11, nothing
expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give
any person other than the parties hereto and their respective heirs, personal representatives,
legal representatives, successors and assigns, any rights or remedies under or by reason of this
Agreement, except as expressly provided in this Agreement.



18









 





     3.12 Severability. If any term or other provision of this Agreement is determined by
a non-appealable court of competent jurisdiction to be invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other terms, provisions and conditions of this
Agreement shall nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.



     3.13 Schedules, Exhibits. All exhibits or schedules attached to this Agreement shall
be deemed part of this Agreement and incorporated into this Agreement, as if fully contained in it.
All references in this Agreement to this Agreement shall include all of the exhibits or schedules
attached to this Agreement.



     3.14 Governing Law; Jurisdiction. 



          (a) The laws of the State of Delaware (without giving effect to its conflicts of law
principles) govern this Agreement and all matters arising out of or relating to this Agreement and
any of the transactions contemplated hereby, including its negotiation, execution, validity,
interpretation, construction, performance and enforcement.



          (b) The parties hereto hereby irrevocably submit to the jurisdiction of the federal and state
courts located in the State of Delaware over any action or proceeding arising out of or relating to
this Agreement or any of the transactions contemplated hereby and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may be heard and
determined in such courts. The parties hereto hereby irrevocably waive any objection which they
may now or hereafter have to the laying of venue of any action or proceeding brought in such court
or any claim that such action or proceeding brought in such court has been brought in an
inconvenient forum. Each of the parties hereto agrees that a judgment in such action or proceeding
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
Law. Each of the parties hereto hereby irrevocably consents to process being served by any party
to this Agreement in any action or proceeding by delivery of a copy thereof in accordance with the
provisions of Section 3.4.



     3.15 Further Assurances. Each Stockholder, the Company, and Parent, at the closing of
the transactions contemplated hereby, or at any time or times thereafter, upon request of any party
hereto, will execute such additional instruments, documents or certificates as either party deems
reasonably necessary and to take all such further action in order to effect the transactions
contemplated hereby.



     3.16 Efforts. Each party hereto hereby agrees to take, or cause to be taken, all
commercially reasonable actions, and to do, or cause to be done, and to assist and cooperate with
the other parties hereto in doing all commercially reasonable things necessary, proper or advisable
under applicable laws, to consummate and make effective the other transactions contemplated
hereunder.



19









 





     3.17 Successors and Assigns. This Agreement shall apply to, be binding in all
respects upon and inure to the benefit of the parties and their respective successors and permitted
assigns. No party may assign any of its rights under this Agreement without the prior written
consent of each of the other parties or except as permitted in compliance with the terms and
conditions set forth herein; provided, that in the event MHR transfers or assigns in one or a
series of transactions at least fifty percent (50%) of the number of shares of the Company’s
capital stock or any equity or debt securities convertible, exercisable or exchangeable into shares
of the Company’s Common Stock (determined on a fully diluted and as converted to Common Stock basis
assuming full conversion or exercise of all of the Company’s convertible securities and Options,
other than the Notes) owned by MHR at the Effective Time in compliance with the terms and
conditions of that certain Right of First Refusal and Co-Sale Agreement, dated the date hereof, by
and among the Company and the signatories thereto (the “Right of First Refusal and Co-Sale
Agreement”), any and all of MHR’s rights under Article 1 and/or Article 2 may,
at the option of MHR be transferred or assigned to the applicable transferee or assignee; provided
that such transferee or assignee agrees in writing to be bound by and subject to the applicable
terms and conditions of this Agreement and (ii) in the event Glenn Parker transfers or assigns in
one or a series of transactions at least fifty percent (50%) of the number of shares of the
Company’s capital stock or any equity or debt securities convertible, exercisable or exchangeable
into shares of the Company’s Common Stock (determined on a fully diluted and as converted to Common
Stock basis assuming full conversion or exercise of all of the Company’s convertible securities and
Options, other than the Notes) owned by Glenn Parker at the Effective Time in compliance with the
terms and conditions of the Right of First Refusal and Co-Sale Agreement, any and all of Glenn
Parker’s rights under Article 1 and/or Article 2 may, at the option of Glenn Parker
be transferred or assigned to the applicable transferee or assignee; provided that such transferee
or assignee agrees in writing to be bound by and subject to the applicable terms and conditions of
this Agreement.



     3.18 Transaction Costs. Except as set forth in the Merger Agreement or expressly
stated in this Agreement, each party hereto shall pay its own fees, costs and expenses incurred in
connection herewith and the transactions contemplated hereby, including the fees, costs and
expenses of its financial advisors, accountants and counsel.



     3.19
Joint Negotiation and Drafting. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provision of this Agreement.



ARTICLE 4

CERTAIN DEFINITIONS




     4.1 “Company Common Stock” means the common stock of the Company, par value $0.0001
par value per share.



     4.2 “Damages” means losses, claims, damages, or liabilities (joint or several) to
which an indemnified person under this Agreement may become subject under the Securities
Act, the Exchange Act or other federal or state Law, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon any Violation.



20









 





     4.3 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.



     4.4 “Excluded Registration” means (i) a registration relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock purchase, or similar plan
or a Rule 145 transaction, (ii) a registration on any form that does not include substantially the
same information as would be required to be included in a registration statement covering the sale
of the Registrable Securities, or (iii) a registration in which the only Company Common Stock being
registered is Company Common Stock issuable upon conversion of debt securities that are also being
registered.



     4.5 “Form S-1” means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.



     4.6 “Form S-3” means such form under the Securities Act as in effect on the date of
this Agreement or any registration form under the Securities Act subsequently adopted by the SEC
that permits inclusion or incorporation of substantial information by reference to other documents
filed by the Company with the SEC.



     4.7 “IPO” means the Company’s first public offering of its Company Common Stock under
the Securities Act, other than an Excluded Registration.



     4.8 “Notes” means the (a) Second Amended and Restated 7 3/4% Convertible Secured Note
issued by NationsHealth, Inc., NationsHealth Holdings, L.L.C., United States Pharmaceutical Group,
L.L.C., Diabetes Care & Education, Inc., and National Pharmaceuticals and Medical Products (USA),
LLC in favor of OTQ LLC, dated as of the Effective Time; (b) Second Amended and Restated 7 3/4%
Convertible Secured Note issued by NationsHealth, Inc., NationsHealth Holdings, L.L.C., United
States Pharmaceutical Group, L.L.C., Diabetes Care & Education, Inc., and National Pharmaceuticals
and Medical Products (USA), LLC in favor of MHR Capital Partners Master Account LP, dated as of
the Effective Time; and (c) Second Amended and Restated 7 3/4% Convertible Secured Note issued by
NationsHealth, Inc., NationsHealth Holdings, L.L.C., United States Pharmaceutical Group, L.L.C.,
Diabetes Care & Education, Inc., and National Pharmaceuticals and Medical Products (USA), LLC in
favor of MHR Capital Partners (100) LP, dated as of the Effective Time, as each may be amended,
modified, replaced or refinanced from time to time.



     4.9 “New Securities” or “New Security” means any equity securities of the
Company and/or its subsidiaries whether or not currently authorized, as well as any rights,
options, or warrants to purchase equity of the Company and/or its subsidiaries, or securities of
any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for
equity securities of the Company and/or its subsidiaries.



     4.10 “Person” means any individual, corporation, partnership, trust, limited liability
company, association or other entity.



21









 





     4.11 “Register,” “registered,” and “registration” refer to a
registration effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.



     4.12 “Registrable Securities” means (a) any Company Common Stock held or otherwise
owned or acquired by MHR (including any of its Affiliates and its permitted transferees or assigns)
on or after the date hereof, including Company Common Stock issuable upon conversion of the Notes
or conversion of any other convertible securities of the Company held or otherwise owned or
acquired on or after the date hereof or exercise of warrants or options to acquire Company Common
Stock held or otherwise owned or acquired on or after the date hereof, (b) any warrants to acquire
Company Stock held or otherwise owned or acquired by MHR (including any of its Affiliates and its
permitted transferees or assigns) on or after the date hereof, (c) any other publicly traded
securities that are held or otherwise owned or acquired by MHR on or after the date hereof solely
if MHR is an Affiliate of the Company, and (d) any securities that may be issued as a dividend or
other distribution with respect to or in exchange for or in replacement of the securities of the
Company described in clauses (a) and (c), including by way of stock dividend, stock split or other
similar distribution, payment in kind with respect to any interest payment, merger, consolidation,
exchange offer, recapitalization or reclassification or similar transaction or exercise or
conversion of any of the foregoing. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities on the date (w) a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act and such
securities shall have been sold, transferred, disposed of or exchanged in accordance with such
registration statement; (x) such securities shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been delivered by the Company
and subsequent distribution of them shall not require registration under the Securities Act; (y)
such securities shall have ceased to be outstanding; and (z) such securities (together with all
securities of the Company held by MHR) may be sold or transferred by MHR in a single transaction
under Rule 144 without being subject to any volume or holding period limitations.



     4.13 “Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.



     4.14 “Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.



     4.15 “SEC” means the United States Securities and Exchange Commission.



     4.16 “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



     4.17 “Selling Expenses” means all underwriting discounts, selling commissions, and
stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements
of counsel for MHR, Parent or Key Holders, as the case may be, except as provided in Section
1.7.



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     4.18 “Violation” means (a) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, (b) any omission
or alleged omission to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (c) any violation or alleged violation by any other
party to this Agreement, of the Securities Act, the Exchange Act, any state or other Federal
securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act, or
any state or other Federal securities law.



[signature page follows]




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     IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights Agreement to be duly
executed, as of the date first written above.



	 	 	 	 	 
	 	COMVEST NATIONSHEALTH HOLDINGS, LLC

 	 
	 	By:  	/s/ Jose Gordo
 	 
	 	 	Name:  	Jose Gordo 	 
	 	 	Title:  	President 	 
	 
	 	NATIONSHEALTH, INC.

 	 
	 	By:  	/s/ Glenn Parker 	 
	 	 	Name:  	Glenn Parker 	 
	 	 	Title:  	CEO 	 
	 
	 	STOCKHOLDERS:





GLENN PARKER

 	 
	 	/s/ Glenn Parker
 	 
	 	 	 
	 	 	 
	 
	 	TIMOTHY FAIRBANKS

 	 
	 	/s/ Timothy Fairbanks
 	 
	 	 	 
	 	 	 
	 
	 	LEWIS STONE

 	 
	 	/s/ Lewis Stone
 	 
	 	 	 
	 	 	 
	 
	 	MARK LAMA

 	 
	 	/s/ Mark Lama
 	 
	 	 	 
	 	 	 
	 
	 	RGGPLS, LLC

 	 
	 	By:  	/s/ Glenn Parker
 	 
	 	 	Name:  	Glenn Parker 	 
	 	 	Title:  	CEO 	 



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	 	MHR CAPITAL PARTNERS MASTER ACCOUNT LP

 	 
	 	By:  	MHR Advisors LLC, its General Partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                                              /s/ Hal Goldstein
 	 
	 	 	Name:  	Hal Goldstein 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	MHR CAPITAL PARTNERS (100) LP

 	 
	 	By:  	MHR Advisors LLC, its General Partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	

/s/ Hal Goldstein
 	 
	 	 	Name:  	Hal Goldstein 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	OTQ LLC

 	 
	 	By:  	/s/ Hal Goldstein
 	 
	 	 	Name:  	Hal Goldstein 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	MARK H. RACHESKY, M.D.

(as a record holder and as an authorized signatory

for certain other entities)

 	 
	 	/s/ Mark H. Rachesky, M.D.
 	 
	 	 	 
	 	 	 
	 




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