Form of Stock Appreciation Right Agreement



 






Exhibit 10.7









NationsHealth, Inc.

2005 Long-Term Incentive Plan




Stock Appreciation Right Agreement




     NATIONSHEALTH, INC., a Delaware corporation (the “Company”), hereby grants a Stock
Appreciation Right to the Participant named below. The terms and conditions of the Stock
Appreciation Right are set forth in this Stock Appreciation Right Agreement (the “Agreement”), and
in the NationsHealth, Inc. 2005 Long-Term Incentive Plan (the “Plan”).



 





	 	 	 
	Date of Grant

	 	_________
, 20 _________                Expiration
Date _________ , 20 _________
	 
	 	 
	Participant’s Name

	 	____________ SSN ____________
	 
	 	 
	Number of Shares

	 	_________ Shares, with a Base Amount of $_________ Share.
	 
	 	 
	 

	 	 
	 
	 	 
	Vesting

(Check applicable

box(es))

	 	The right to receive the excess of
the Fair Market Value of _________ Shares over the Base Amount will vest upon
achievement of the Performance Objectives listed below.


The right to receive the excess of the Fair Market Value of
_________ Shares over the Base Amount will vest according to the
Vesting Schedule below.
	Performance

Objectives

(Subject to Section 4.3

of the Plan)

	 	_________________________________________________________________________________


_________________________________________________________________________________


_________________________________________________________________________________


_________________________________________________________________________________.






	 	 	 	 	 	 	 	 	 
	Vesting Schedule

	 	Date
	 	Percent

Vested*
	 	Date
	 	Percent

Vested*
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	__________________


	 	__________________%


	 	__________________


	 	__________________%


	 

	 	__________________


	 	__________________%


	 	__________________


	 	__________________%


	 

	 	__________________


	 	__________________%


	 	_____________________


	 	__________________%








* “Percent Vested” refers to the percentage of Shares with respect to which the award may be exercised.




 





	 	 	 
	Termination of

Service Prior to

Expiration Date

(Subject to

Section 5.5(b)

of the Plan)

	 	If the Participant has a Termination of Service (not for Cause) prior to the Expiration Date, the time to exercise this Stock
Appreciation Right shall be limited, as follows:


• Unless the Termination of Service is the result of the Participant’s death or Disability, the Participant may exercise this
Stock Appreciation Right up to three (3) months after the Termination of Service.


• If the Termination of Service is the result of the Participant’s Disability, the Participant may exercise this Stock
Appreciation Right up to twelve (12) months after the Termination of Service.


• If the Termination of Service is the result of the Participant’s death, the Participant’s Beneficiary may exercise this Stock
Appreciation Right up to twelve (12) months after the Termination of Service.






 





     My signature at the end of this Agreement indicates that I understand and agree to the terms
and conditions set forth in this Agreement and the Plan.
Initials: _________ Date: __________________



 









 





NationsHealth, Inc.

2005 Long-Term Incentive Plan

Stock Appreciation Right Agreement




Stock Appreciation Right Agreement




     This Agreement evidences the grant of a Stock Appreciation Right under the NationsHealth,
Inc. 2005 Long-Term Incentive Plan. The name of the recipient, the number of Shares covered by the
Stock Appreciation Right, and other variable terms are set forth in the cover page, which is part
of this Agreement. The words “you,” “your,” and similar terms refer to the Participant to whom
this Stock Appreciation Right is granted.



The Stock Appreciation Right is subject to the following terms and conditions:




 





	 	 	 
	Definitions and the

Plan

	 	All capitalized terms that are not otherwise defined in this
Agreement have the meanings set forth in the Plan, the text of
which is incorporated into this Agreement by reference. In case of
any conflict between this Agreement and the Plan, the terms of the
Plan shall control.
	 
	 	 
	 

	 	 
	 
	 	 
	Term

	 	Subject to the Termination of Service provisions set forth in the
cover page and the provisions that apply in case of Termination of
Service for Cause, this Stock Appreciation Right shall expire at
5:00 p.m. Eastern Time on the Expiration Date set forth in the
cover page.
	 
	 	 
	 

	 	 
	 
	 	 
	Number of Shares

and Base Amount

	 	To the extent vested (and prior to the end of the Term described
above), this Stock Appreciation Right gives you the right to
receive the excess (if any) of the Fair Market Value (as of the
date of exercise) of the number of Shares set forth in the cover
page over the Base Amount set forth in the cover page.
	 
	 	 
	 

	 	• You may exercise this Stock Appreciation Right at one time
or in stages. Each time you exercise all or part of this Stock
Appreciation Right, the Fair Market Value of the Shares will be
recalculated as of the applicable exercise date.
	 
	 	 
	 

	 	• The number of Shares and/or Base Amount may be adjusted to
reflect a stock split or other corporate transaction or event, in
the sole discretion of the Committee.
	 
	 	 
	 

	 	 
	 
	 	 
	Settlement Medium

	 	This Stock Appreciation Right shall be settled in Shares. Upon
exercise, you will receive Shares with a Fair Market Value equal to
the excess of the Fair Market Value of the Shares with respect to
which the Stock Appreciation Right is being exercised over the Base
Amount (adjusted for withholding, as described below). Fractional
Shares shall be rounded down to the nearest whole number of Shares.
	 
	 	 
	 

	 	 
	 
	 	 
	Vesting

	 	The cover page indicates whether the criteria for vesting are (i)
achievement of the Performance Objectives set forth in the cover
page and/or (ii) continued service in accordance with the Vesting
Schedule set forth in the cover page.
	 
	 	 
	 

	 	• With respect to any unvested portion of this Stock
Appreciation Right that vests according to the Vesting Schedule set
forth in the cover page, the vesting dates shown on the Vesting
Schedule shall be delayed by the number of days of any leave of
absence, except as otherwise required by law.
	 
	 	 
	 

	 	• Any portion of this Stock Appreciation Right that vests
upon achievement of Performance Objectives shall not be deemed to
have vested until the Committee certifies in writing that the
applicable Performance Objectives and other material terms of the
Agreement have been satisfied.
	 
	 	 
	 

	 	In addition, this Stock Appreciation Right shall vest upon the
occurrence of any vesting event (for example, onset of disability
or a change in control) set forth in a separate written agreement
between you and the Company.






 





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NationsHealth, Inc.

2005 Long-Term Incentive Plan

Stock Appreciation Right Agreement




 





	 	 	 
	Exercise

	 	To exercise this Stock Appreciation Right, you (or your
Beneficiary, in the case of exercise after your death) must
complete a Notice of Exercise, which may be written or electronic,
and file it at the address shown on the form. Your Notice of
Exercise must indicate the number of Shares with respect to which
you are exercising the Stock Appreciation Right and will not be
accepted if it is incomplete. You may not exercise your Stock
Appreciation Right with respect to fractional Shares: any request
for fractional Shares will be rounded down to the next lowest whole
number of Shares.
	 
	 

	 	A sample Notice of Exercise appears as Appendix A to this Agreement.

	 
	 

	 	You will not have any of the rights of a stockholder until (1) you
exercise the Stock Appreciation Right, and (2) the Shares are
transferred to you.
	 
	 	 
	 

	 	 
	 
	 	 
	Withholding

	 	If you received the Stock Appreciation Right as an employee, the
Company must withhold income and employment taxes when you (or your
Beneficiary) exercise this Stock Appreciation Right. The Company
may either (i) require you (or your Beneficiary) to remit to the
Company cash and/or Shares in an amount sufficient to satisfy all
federal, state, and local withholding obligations or (ii) upon your
request and with approval from the Committee, withhold Shares that
would otherwise be delivered.
As set forth in Section 10.7(a) of the Plan, you remain responsible
at all times for paying any federal, state, and local income and
employment taxes with respect to this Award. NationsHealth is not
responsible for any liability or penalty that you incur by failing
to make timely payments of tax.
	 
	 	 
	 

	 	 
	 
	 	 
	Nontransferability

	 	Unless the Committee determines otherwise, you may not transfer
this Stock Appreciation Right, except will or the laws of descent
or distribution. (The person(s) to whom the Stock Appreciation
Right is passed by will or the laws of descent or distribution is
your Beneficiary.)
	 
	 	 
	 

	 	 
	 
	 	 
	Restrictions on

Exercise, Delivery,

and Resale

	 	• You may not exercise this Stock Appreciation Right or sell
any Shares acquired under this Stock Appreciation Right at a time
when the exercise or sale would be prohibited under Applicable
Laws.
	 
	 	 
	 

	 	• You may not exercise this Stock Appreciation Right after an
event constituting “Cause” (as defined in the following section)
occurs, unless you are notified by the Committee your right to
exercise has been reinstated.
	 
	 	 
	 

	 	• As set forth in Section 10.5 of the Plan, Shares shall not
be delivered until (i) all conditions of the Award have been met to
the satisfaction of the Committee, (ii) all other legal matters in
connection with the issuance and delivery of the Shares have been
satisfied, and (iii) you have executed and delivered all
representations and agreements as are necessary and appropriate to
satisfy the requirements of any Applicable Laws.
	 
	 	 
	 

	 	• As set forth in Section 10.6 of the Plan, the Company shall
not be liable for any delay in obtaining regulatory authority that
it deems necessary to issue Shares.
	 
	 	 
	 

	 	 
	 
	 	 
	Forfeiture Upon

Termination of

Service for Cause

	 	If you experience a Termination of Service that is initiated by the
Company for “Cause” (as defined below), this Stock Appreciation
Right (whether vested or not vested) shall immediately expire and
shall be null and void.
	 
	 	 
	 

	 	If you are covered by an employment agreement or consulting
agreement at the time of your Termination of Service, and if the
employment agreement or consulting agreement includes provisions
relating to termination for cause, your termination for cause
within the meaning of the employment agreement or consulting
agreement shall constitute a Termination of Service for “Cause”
within the meaning of this Agreement.






 






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NationsHealth, Inc.

2005 Long-Term Incentive Plan

Stock Appreciation Right Agreement




 





	 	 	 
	 

	 	If you are not covered by an employment agreement or consulting
agreement that includes provisions relating to termination for
cause, “Cause” shall mean (i) any breach or violation by you of any
agreement between you and the Company or an Affiliate; (ii) any act
or omission to act by you that would be reasonably likely to have
the effect of injuring the reputation, business, or business
relationships of the Company, or of impairing your ability to
perform services for the Company or an Affiliate; (iii) your
conviction (including without limitation a plea of guilty or nolo
contendere) of any crime other than an ordinary traffic violation;
(iv) any material misconduct or willful and deliberate
non-performance of duties by you in connection with the Company’s
or an Affiliate’s business or affairs; (v) your theft, dishonesty,
misrepresentation, or falsification of the Company’s or an
Affiliate’s documents or records; (vi) your improper use or
disclosure of the Company’s or an Affiliate’s confidential or
proprietary information; or (vii) your use of the Company’s or an
Affiliate’s facilities, premises, or property to conduct unlawful
or unauthorized activities or transactions.
	 
	 	 
	 

	 	 
	 
	 	 
	Lock-up Provision

	 	If the Company proposes to make a public offering of Shares, the
Company or an underwriter might request that you not sell or
otherwise dispose (directly or indirectly) of Shares delivered
under this Agreement for a reasonable period (not to exceed 180
days) after the offering. Your right to any Shares received under
this Agreement is contingent on your agreeing to comply with such a
request.
	 
	 	 
	 

	 	 
	 
	 	 
	Notices

	 	• Any notice from you to the Company must be in writing and
shall be deemed effective when it is received by the Secretary of
the Company at the Company’s principal office.
	 
	 	 
	 

	 	• Any notice from the Company to you must be in writing and
shall be deemed effective when it is personally delivered to you or
when it is deposited in the U.S. Mail, with postage and fees
prepaid.
	 
	 	 
	 

	 	 
	 
	 	 
	Not an Employment

Contract

	 	This Agreement is not an employment agreement and does not give you
any right to continued employment (or other service relationship)
with the Company or an Affiliate. Unless provided otherwise in a
written agreement between you and the Company or an Affiliate, your
employment (or other service relationship) is “at-will” and may be
terminated at any time and for any reason.
	 
	 	 
	 

	 	 
	 
	 	 
	Amendment and

Termination

	 	This Agreement may be amended or terminated by mutual agreement, in
writing, signed by you and the Company. To the extent required to
comply with an Applicable Law or accounting principle, this
Agreement may be amended by the Company without your consent. In
addition, as set forth in Section 11.5 of the Plan, the Committee
reserves the right to adjust the terms of this Agreement in
connection with any unusual or nonrecurring events affecting the
Company or an Affiliate. By way of example, the Company may
respond to an unusual or nonrecurring event by temporarily
suspending your right to exercise this Stock Appreciation Right.
	 
	 	 
	 

	 	 
	 
	 	 
	Governing Law

	 	As set forth in Section 12.2 of the Plan, this Agreement shall be
governed by and interpreted in accordance with Delaware law
(without regard to any principles of Delaware law that might direct
resolution to the laws of a different jurisdiction).






 





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NationsHealth, Inc.

2005 Long-Term Incentive Plan

Stock Appreciation Right Agreement




 





	 	 	 
	Severability

	 	As set forth in Section 12.5 of the
Plan, any provision in this
Agreement that is determined to be
unenforceable shall be construed or
deemed to be amended to resolve the
applicable infirmity, unless the
Committee determines that the
infirmity cannot be resolved without
materially changing the Agreement,
in which case the provision shall be
stricken (as it applies in the
jurisdiction where it is invalid)
and the remainder of Agreement shall
remain in effect.
	 
	 	 
	 

	 	 
	 
	 	 
	Waiver

	 	The waiver by you or the Company of
any provision of this Agreement at
any time or for any purpose shall
not operate as or be construed to be
a waiver of the same or any other
provision of this Agreement at any
subsequent time or for any other
purpose.
	 
	 	 
	 

	 	 
	 
	 	 
	Interpretation and

Construction

	 	This Agreement shall be construed
and interpreted by the Committee, in
its sole discretion. Any
interpretation or other
determination by the Committee
(including without limitation
correction of any defect or omission
and reconciliation of any
inconsistency in the Agreement or
the Plan) shall be binding and
conclusive.
	 
	 	 
	 

	 	 
	 
	 	 
	Headings

	 	The headings in this Agreement are
provided solely as a convenience to
facilitate reference. The headings
shall not be relevant for purposes
of construing or interpreting any
part of this Agreement.
	 
	 	 
	 

	 	 
	 
	 	 
	Entire
Understanding

	 	This Agreement and the Plan
constitute the entire understanding
between you and the Company
regarding this Stock Appreciation
Right. Any prior agreements,
commitments, or negotiations
concerning this Stock Appreciation
Right are superseded.







 





	 	 	 	 	 
	 	NationsHealth, Inc.

 	 
	 	By: ________________________________	
 	 
	 
	 	Title: ________________________________ 		 
	 	 	 	 
	 




     I have read this Agreement and the Plan, and I understand and agree to their terms and conditions.



	 	 	 	 	 
	 	______________________________

Participant’s Signature





______________________________

Participant’s Name (please print)

 	 
	 	 	 
	 	 	 
	 	 	 




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NationsHealth, Inc.

2005 Long-Term Incentive Plan





Appendix A:

Sample Notice of Exercise




	 	 	 	 	 
	 	Name _________________________________





Address: _________________________________



_________________________________


_________________________________

 	 



Date: ______________________, 20____




NationsHealth, Inc.

13650 NW 8th Street

Sunrise, FL 33325

Attention: Corporate Secretary





     By
a Stock Appreciation Right Agreement dated
______, 20 ______ (the “SAR
Agreement”), I have a Stock Appreciation Right, granted under the NationsHealth, Inc. 2005
Long-Term Incentive Plan (the “Plan”), with respect to
_________ shares of NationsHealth common
stock (the “Shares”) that have a base amount of
$_________ per Share.



     I
hereby exercise my Stock Appreciation Right with respect to _________ Shares, for which the
total base amount is $_________. I understand that my Stock Appreciation Right may be exercised
only to the extent it is vested.



     I understand that if I received my Stock Appreciation Right as an employee of NationsHealth,
exercise of my Stock Appreciation Right will trigger certain federal, state, and local tax
withholding obligations. I have arranged to satisfy the withholding obligations in the following
manner:



	 	 	 
	___

	 	I am enclosing with this notice a check for $_________, which
NationsHealth has determined to be sufficient to satisfy all
withholding obligations.
	 
	 	 
	___

	 	With approval from the Compensation Committee of NationsHealth’s
Board of Directors (the “Committee”), I authorize NationsHealth to
withhold Shares with a Fair Market Value equal to the amount that
must be withheld. I understand that only whole Shares will be
withheld and that any fractional Shares required to be withheld will
be rounded up to the next whole Share.






Notwithstanding the provisions for withholding, I understand that I remain responsible at all times
for paying any federal, state, and local income and employment taxes with respect to my Stock
Appreciation Right and that NationsHealth is not responsible for any liability or penalty that I
incur by failing to make timely payments of tax.




 









 






NationsHealth,
Inc.

Page 2



     Please register my stock certificate as follows:




	 	 	 
	Name:

	 	___________________________________
	 
	Address:

	 	___________________________________
	 
	

	 	___________________________________
	 
	Tax I.D. #:

	 	___________________________________







     I further understand and acknowledge that my exercise of this Stock Appreciation Right and
receipt of the Shares are subject to the terms and conditions of the Plan and the SAR Agreement,
which I have received and carefully reviewed. I understand the terms and conditions and agree to
be bound by them.



	 	 	 	 	 
	 	Sincerely,





________________________________

Signature

 	 
	 	 	 
	 	 	 
	 	 	 
	 



	 	 	 	 	 
	 	Received by NationsHealth, Inc.:
__________________ , 20___



Approved

 	 
	 	By: ___________________________	
 	 
	 
	 	Title: ___________________________