Document:

NationsHealth, Inc. Exhibit 10.5

 

Exhibit 10.5

AMENDMENT TO THE EMPLOYMENT AGREEMENT

BETWEEN NATIONSHEALTH, INC. AND ROBERT E. TREMAIN

WHEREAS, NationsHealth, Inc., a Delaware corporation (the “Company”) entered into an agreement
with Robert E. Tremain (the “Executive”) as of February 3, 2006, as amended on March 8, 2006 and
June 14, 2006, to employ the Executive as Chief Operating Officer (the “Agreement”); and

WHEREAS, the Agreement provides that the Executive shall receive a temporary housing allowance
in connection with commencement of his employment with the Company; and

WHEREAS, the Company and the Executive wish to amend the terms of the Agreement with respect
to the temporary housing allowance as provided herein;

NOW, THEREFORE, the parties agree to amend Section 3(a)(ii) of the Agreement to provide in its
entirety as follows:

a temporary housing allowance of up to $7,000 per month for a
period of ten months following the Effective Date of this
Agreement or until such time as the Executive obtains permanent
housing, whichever is earlier;

IN WITNESS WHEREOF, the parties have duly executed this amendment as of October 5, 2006.

	 	 	 	 	 	 	 	 	 
	WITNESS:	 	 	 	NATIONSHEALTH INC.
	 
	 	 	 	 	 	 	 	 
	  Timothy Fairbanks	 	 	 	By:	 	/s/ Glenn M. Parker
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Glenn M. Parker, M.D.
	 

	 	 	 	 	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	  Adelaida Savard	 	 	 	By:	 	/s/ Robert E. Tremain
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Robert E. TremainNationsHealth, Inc. Exhibit 10.6

 

Exhibit 10.6

Description of NationsHealth, Inc. Director Compensation

Director Fees

On May 22, 2006, our Compensation Committee adopted a new compensation package for our Board of Directors,
effective July 1, 2006. Under the new compensation package, our independent directors receive compensation for their
services as directors in the form of an annual retainer of $25,000, payable in quarterly installments, a fee of $1,500
for each Board meeting attended ($750 for attendance by conference call), and a fee of $1,500 for each committee
meeting attended ($750 for attendance by conference call), plus reimbursement for travel expenses. We pay the chairman
of the Audit Committee of the Board of Directors an additional $15,000 per year and the chairman of the Compensation
Committee an additional $10,000 per year to serve. We pay other Audit Committee Members an additional $7,500 annually
and other Compensation Committee Members an additional $5,000 annually to serve. Our directors who are not deemed to
be independent and are not employees of NationsHealth receive compensation for their services as directors in the form
of an annual retainer of $7,500, payable in quarterly installments, and a fee of $1,000 for each Board meeting attended
($500 for attendance by conference call), plus reimbursement for travel expenses. Our Chairman of the Board of
Directors receives an annual salary of $250,000, paid bi-monthly, and is eligible for bonuses. Our Chairman received
bonuses of $ 50,000 for 2004 and $80,000, plus common stock valued at $20,000 for 2005. Directors who are also our
employees receive no additional compensation for serving as directors.

Deferred Stock Units and Stock Options

Under the new compensation package, deferred stock units are to be granted each November. All non-employee
directors are to receive 5,000 deferred stock units annually and any newly elected independent directors are to receive
30,000 stock options. For each deferred stock unit, a director is entitled to receive one share of common stock one
year after the date of grant. Each director individually may elect to defer the common stock share payment date until
a future date. Upon a change in control of the Company (as defined in IRS regulations) all deferred stock units would
be accelerated and paid immediately.

Stock options granted to non-employee directors during 2005 and 2004 are listed in the following table.

	 	 	 	 	 	 	 	 	 
	 	 	Options Granted in
	Director	 	2005	 	 	2004	 
	Elliot F. Hahn, Ph.D. (Independent Director)
	 	 	6,500	 	 	 	34,500	 
	George F. Raymond (Independent Director)
	 	 	7,000	 	 	 	33,000	 
	Richard R. Howard (Independent Director)
	 	 	8,000	 	 	 	33,000	 
	Don K. Rice (Independent Director)
	 	 	8,500	 	 	 	30,000	 
	Michael D. Tabris
	 	 	—	 	 	 	5,000	 
	Gary D. Small, D.P.M.
	 	 	—	 	 	 	5,000	 
	Raymond N. Steinman
	 	 	—	 	 	 	5,000	 
	Mark H. Rachesky
	 	 	—	 	 	 	—NationsHealth, Inc. Exhibit 10.7

 

Exhibit 10.7

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED 

REVOLVING CREDIT AND SECURITY AGREEMENT

This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT
(the “First Amendment”) is made as of this 11th day of August, 2006 by and between
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company, with its chief executive office
located at 4445 Willard Avenue, Chevy Chase, Maryland 20815 (“Lender”) and UNITED STATES
PHARMACEUTICAL GROUP, L.L.C. d/b/a NATIONSHEALTH, a Delaware limited liability company (“USPG”),
NATIONSHEALTH HOLDINGS, L.L.C., a Florida limited liability company (“NHH”), and NATIONSHEALTH,
INC., a Delaware corporation (“NationsHealth”) (jointly and severally, the “Borrower").

W I T N E S S E T H:

WHEREAS, Lender and Borrower (other than Nationshealth) entered into a certain Revolving
Credit and Security Agreement dated as of the 30th day of April, 2004 (the “Original
Credit Agreement") whereby Lender agreed to make loans, advances and other extensions of credit to
Borrower thereunder; and

WHEREAS, Lender and Borrower (other than Nationshealth) entered into a certain Amended and
Restated Revolving Credit and Security Agreement dated as of the 29th of June, 2004 (as
amended by the Prior Amendments (defined below), the “First Amended and Restated Agreement")
whereby Lender made available to Borrower (other than Nationshealth) a separate Overadvance
Facility and permitted Borrower (other than Nationshealth.) to include its inventory within the
Borrowing Base for the Revolving Facility; and

WHEREAS, Lender and Borrower (other than Nationshealth) amended the First Amended and Restated
Agreement in certain respects pursuant to a certain First Amendment to Amended and Restated
Revolving Credit and Security Agreement dated as of the 10th day of August, 2004 (the
“First Amendment"); and

WHEREAS, on August 31, 2004, Millstream Acquisition Corporation (“MAC”) changed its name to
Nationshealth, Inc.; and

WHEREAS, on August 31, 2004, N Merger, LLC, a wholly owned subsidiary of MAC, was merged with
and into NationsHealth Holdings, L.L.C. and as a result of the merger, NationsHealth Holdings,
L.L.C. continued as the surviving limited liability company; and

WHEREAS, Lender and Borrower amended the First Amended and Restated Agreement in certain
respects pursuant to a certain Joinder and Second Amendment to Amended and Restated Revolving
Credit and Security Agreement dated as of the 14th day of September, 2004 in order to
join Nationshealth, Inc. as a party to the Agreement (the “Second Amendment"); and

WHEREAS, Lender and Borrower amended the First Amended and Restated Agreement in certain
respects pursuant to a certain Third Amendment to Amended and Restated Revolving Credit and
Security Agreement dated as of the 3rd day of November, 2004 (the “Third Amendment”), a certain
Fourth Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of the
10th day of February, 2005 (the “Fourth Amendment”), a certain Fifth Amendment to Amended and
Restated Revolving Credit and Security Agreement dated as of the 28th day of February
2005 (the “Fifth Amendment”), certain Sixth Amendment to Amended and Restated Revolving Credit and
Security Agreement dated as of the 13th day of May, 2005 (the “Sixth Amendment”),
certain Seventh

 

 

 

Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of the
29th day of July, 2005 (the “Seventh Amendment”), and a certain Eighth Amendment to
Amended and Restated Revolving Credit and Security Agreement dated as of the 23rd day of
August, 2005 (the “Eighth Amendment”) and together with the First Amendment, the Second Amendment,
the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, and the
Seventh Amendment, collectively, the “Prior Amendments"); and

WHEREAS, Lender and Borrower entered into a certain Second Amended and Restated Revolving
Credit and Security Agreement dated as of the 21st of March, 2006 (as amended hereby,
and as amended, restated, supplemented or otherwise modified from time to time, the “Agreement");

WHEREAS, Borrower has requested and Lender has agreed to the modification of certain
provisions of the Agreement upon the terms and subject to the conditions set forth herein; and

WHEREAS, Section 12.8 of the Agreement provides that no modification or amendment of the
Agreement shall be effective unless the same shall be in writing and signed by the parties thereto.

NOW, THEREFORE, in consideration of the promises and other mutual covenants contained herein,
the receipt and sufficiency of which is hereby acknowledged, Lender and Borrower agree as follows:

1. Amendment of Agreement. As of the Effective Date (defined below),
Lender and Borrower hereby agree to amend the Agreement as of May 31, 2006 as follows:

(a) Section 1 of Annex I of the Agreement, entitled “Minimum EBITDA,” is hereby
amended as follows for the Test Periods commencing May 31, 2006 and ending June 30, 2006:

1) Minimum EBITDA

At no time shall Borrower permit EBITDA to be less than the amounts set forth across from such
month or month(s) for the Test Period most recently ended:

	 	 	 
	Test Period Ending	 	Minimum EBITDA
	May 31, 2006
	 	($3,900,000)
	June 30, 2006
	 	($1,200,000)

(b) Section 2 of Annex I of the Agreement, entitled “Fixed Charge Coverage Ratio
(EBITDA/Fixed Charge),” is hereby amended by deleting such covenant for the Test Period ending
June 30, 2006.

2. Intentionally Omitted.

3. Conditions to Effectiveness. This Amendment shall be effective on the date (the
“Effective Date") upon which the following conditions precedent are satisfied:

 

 

 

(a) Borrower shall have delivered to Lender an executed copy of this Amendment duly executed
by an authorized officer of Borrower and each other agreement, document or instrument reasonably
requested by the Lender in connection with this Amendment, each in form and substance reasonably
satisfactory to Lender;

(b) the representations and warranties contained herein and in all other Loan Documents shall
be true and correct;

(c) no Default or Event of Default shall be in existence (except to the extent cured by this
Amendment); and

(d) Lender shall have received all fees, charges and expenses payable to in connection with
this Amendment and the documentation related hereto, including, but not limited to, legal fees and
out-of-pocket costs (including in-house counsel fees and expenses).

4. Representations and Warranties.

(a) Notwithstanding any other provision of this Amendment, Borrower hereby confirms and makes
all of the representations and warranties set forth in the Agreement and other Loan Documents with
respect to such Borrower and this Amendment as of the date hereof and as of the Effective Date and
confirms that they are true and correct and no Default or Event of Default has occurred and is
continuing as of the date hereof.

(b) Borrower hereby represents and warrants as of the date of this Amendment and as of the
Effective Date as follows: (i) it is duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of organization; (ii) the execution, delivery and
performance by it of this Amendment, as applicable, are within its powers, have been duly
authorized, and do not contravene (A) its articles of organization, operating agreement, or other
organizational documents, or (B) any applicable law; (iii) no consent, license, permit, approval or
authorization of, or registration, filing or declaration with any Governmental Authority or other
Person, is required in connection with the execution, delivery, performance, validity or
enforceability of this Amendment, as applicable, by or against it; (iv) this Amendment has been
duly executed and delivered by it; (v) this Amendment constitutes its legal, valid and binding
obligations enforceable against it in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally or by general principles of equity; and (vi) after
giving effect to this Amendment, it is not in default under the Agreement and no Default or Event
of Default exists, has occurred or is continuing.

5. Expenses. Borrower shall pay all costs and expenses incurred by Lender or any of
its Affiliates, including, without limitation, documentation and diligence fees and expenses, all
search, audit, appraisal, recording, professional and filing fees and expenses and all other
out-of-pocket charges and expenses and reasonable attorneys’ fees and expenses, in connection with
entering into, negotiating, preparing, reviewing and executing this Amendment contemplated hereby
and all related agreements, documents and instruments, and all of the same, to the extent incurred
and not promptly reimbursed by Borrower, may be charged to Borrower’s account and shall be part of
the Obligations. If Lender or any of its Affiliates uses in-house counsel for any of the purposes
set forth above Borrower expressly agrees that its Obligations include reasonable charges for such
work commensurate with the fees that would otherwise be charged by outside legal counsel selected
by Lender or such Affiliate in its sole discretion for the work performed.

 

 

 

6. Effect of Amendment. Lender and Borrower hereby acknowledge and agree that except
as provided in this Amendment, the Agreement, the Note and the other Loan Documents remain in full
force and effect and have not been modified or amended in any respect, it being the intention of
Lender and Borrower that this Amendment and the Agreement be read, construed and interpreted as one
and the same instrument. The foregoing amendments are subject to Borrower executing and delivering
this Amendment and all additional documents required to be executed and delivered herein. In
addition, the foregoing does not constitute a waiver by Lender of any Default or Event of Default.

7. Confirmation of Agreements. Lender and Borrower hereby acknowledge and agree that,
except as provided in this Amendment, the Agreement, the Note and the other Loan Documents, and the
grant of the liens, security interests and other encumbrances thereunder, and their agreements,
covenants, obligations, representations and warranties thereunder and therein, are hereby expressly
ratified, confirmed and restated as of the date hereof.

8. References to Loan Documents. Each of the other Loan Documents are hereby modified
in such a manner as to be consistent with all modifications and agreements contained herein and to
the extent that all references therein to and descriptions therein of the Agreement and the Note
shall be deemed to refer to and describe the Agreement.

9. Capitalized Terms. All capitalized terms not otherwise defined in this Amendment
shall have the meanings ascribed to such terms in the Agreement.

10. Benefit. This Amendment shall inure to the benefit of and bind the parties hereto
and their respective successors and assigns.

11. Amendments. This Amendment may not be changed, modified, amended, restated,
waived, supplemented, discharged, canceled or terminated orally or by any course of dealing or in
any other manner other than by the written agreement of Lender and Borrower. This Amendment shall
be considered part of the Agreement for all purposes under the Agreement.

12. Headings and Counterparts. The captions in this Amendment are intended for
convenience and reference only and do not constitute and shall not be interpreted as part of this
Amendment and shall not affect the meaning or interpretation of this Amendment. This Amendment may
be executed in one or more counterparts, all of which taken together shall constitute but one and
the same instrument. This Amendment may be executed by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts for all purposes, and each party to
this Amendment agrees that it will be bound by its own facsimile signature and that it accepts the
facsimile signature of each other party to this Amendment.

13. Governing Law; JURY TRIAL WAIVER. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE AGREEMENT AND SHALL BE SUBJECT TO THE
WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE AGREEMENT.

14. RELEASE BY BORROWER. By execution of this Amendment, Borrower acknowledges and
confirms that Borrower does not have any offsets, defenses or claims against Lender, or any of its
present or former subsidiaries, affiliates, officers, directors, shareholders, employees, agents,
representatives, attorneys, predecessors, successors or assigns whether asserted or unasserted. To
the extent that Borrower may have such offsets, defenses or claims, Borrower and each of its
successors,

 

 

 

assigns, parents, subsidiaries, affiliates, predecessors, employees, agents, heirs, executors,
as applicable, jointly and severally, knowingly, voluntarily and intentionally waive, release and
forever discharge Lender, its subsidiaries, affiliates, officers, directors, shareholders,
employees, agents, attorneys, predecessors, successors and assigns, both present and former
(collectively the “Lender Affiliates”) of and from any and all actual or potential claims,
demands, damages, actions, requests for sanctions and causes of action, torts, obligations, suits,
debts, controversies, damages, judgments, executions, claims and demands whatsoever, all other
liabilities whether known or unknown, matured or unmatured, contingent or absolute, of any kind or
description whatsoever, either in law or in equity, asserted or unasserted which against Lender
and/or Lender Affiliates they ever had, now have, claim to have or may later have or which any of
any Borrower’s successors, assigns, parents, subsidiaries, affiliates, predecessors, employees,
agents, heirs, executors, as applicable, both present and former ever had, now has, claim to have
or may later have, upon or by reason of any manner, cause, causes or thing whatsoever, including,
without limitation, any presently existing claim or defense whether or not presently suspected,
contemplated or anticipated, and Borrower hereby agrees that Borrower is collaterally estopped from
asserting any claims against Lender or any of the Lender Affiliates relating to the foregoing.

15. Entire Agreement. This Amendment, the Agreement, and the other Loan Documents
constitute the entire agreement between the parties with respect to the subject matter hereof and
thereof and supersedes all prior agreements and understandings, if any, relating to the subject
matter hereof and thereof and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements between the parties. There are no unwritten oral agreements between the
parties.

16. Miscellaneous. Whenever the context and construction so require, all words used
in the singular number herein shall be deemed to have been used in the plural, and vice versa, and
the masculine gender shall include the feminine and neuter and the neuter shall include the
masculine and feminine. This Amendment shall inure to the benefit of Lender, all future holders of
any Note, any of the Obligations or any of the Collateral and all Transferees, and each of their
respective successors and permitted assigns. No Borrower may assign, delegate or transfer this
Amendment or any of its rights or obligations under this Amendment without the prior written
consent of Lender. No rights are intended to be created under this Amendment for the benefit of
any third party donee, creditor or incidental beneficiary of Borrower or any Guarantor. Nothing
contained in this Amendment shall be construed as a delegation to Lender of any Borrower’s or any
Guarantor’s duty of performance, including, without limitation, any duties under any account or
contract in which Lender has a security interest or Lien. This Amendment shall be binding upon
Borrowers and their respective successors and assigns.

IN WITNESS WHEREOF, Lender and Borrower have executed this Amendment as of the date first
above written.

LENDER:

	 	 	 	 	 
	 	CAPITALSOURCE FINANCE LLC

 	 
	 	By:  	/s/ Keith D. Reuben
 	 
	 	 	Name:  	Keith D. Reuben 	 
	 	 	Title:  	President — Healthcare & Specialty Finance 	 

 

 

 

	 	 	 	 	 

BORROWER:

	 	 	 	 	 
	 	UNITED STATES PHARMACEUTICAL GROUP, L.L.C. d/b/a NATIONSHEALTH

 	 
	 	By:  	      Timothy Fairbanks
 	 
	 	 	Name:  	Timothy Fairbanks 	 
	 	 	Title:  	CFO 	 
	 
	 	NATIONSHEALTH HOLDINGS, L.L.C.

 	 
	 	By:  	Timothy Fairbanks
 	 
	 	 	Name:  	Timothy Fairbanks 	 
	 	 	Title:  	CFO 	 
	 
	 	NATIONSHEALTH, INC.

 	 
	 	By:  	Timothy Fairbanks
 	 
	 	 	Name:  	Timothy Fairbanks 	 
	 	 	Title:  	CFO

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