Document:

EX-4.3 Form of Warrant

Exhibit 4.3

[FORM OF WARRANT]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH
COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

LIBERATOR MEDICAL HOLDINGS, INC.

Warrant To Purchase Common Stock

Warrant No.:                     

Number of Shares of Common Stock:                    

Date of Issuance: May 22, 2008 (“Issuance Date”)

     Liberator Medical Holdings, Inc., a Nevada corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
[                                         ], the registered holder hereof or its permitted assigns (the
"Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement
hereof, the “Warrant”), at any time or times on or after the date hereof but not after 11:59 p.m.,
New York time, on the Expiration Date (as defined below), [                              ] ([                     
]) fully paid nonassessable shares of Common Stock (as defined below) (the “Warrant
Shares”). This Warrant is one of the Warrants to purchase Common Stock (the “SPA Warrants”) issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of May 22, 2008 (the
"Subscription Date”), by and among the Company, as issuer, Liberator Medical Supply, Inc., as
guarantor, and the investors (the “Buyers”) referred to therein (the “Securities Purchase
Agreement”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 15.

 

 

     1. EXERCISE OF WARRANT.

          (a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this Warrant may
be exercised by the Holder on any day on or after the date hereof, in whole or in part, by (i)
delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant and (ii) (A) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in
cash or by wire transfer of immediately available funds or (B) by notifying the Company that
this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)).
The Holder shall not be required to deliver the original Warrant in order to effect an
exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than
all of the Warrant Shares shall have the same effect as cancellation of the original Warrant
and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant
Shares. On or before the second (2nd) Business Day following the date on which the
Company has received each of the Exercise Notice and the Aggregate Exercise Price (or notice
of a Cashless Exercise) (the “Exercise Delivery Documents”), the Company shall transmit by
facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to
the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the fifth
(5th) Trading Day following the date on which the Company has received all of the
Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that
the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such aggregate number of
Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or
its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission
system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and dispatch by overnight courier to the address as specified in the
Exercise Notice, a certificate, registered in the Company’s share register in the name of the
Holder or its designee, for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. Upon delivery of the Exercise Delivery Documents, the
Holder shall be deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the
certificates evidencing such Warrant Shares, as the case may be. If this Warrant is submitted
in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of Warrant
Shares being acquired upon an exercise, then the Company shall as soon as practicable and in
no event later than five (5) Business Days after any exercise and at its own expense, issue a
new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No fractional
            shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the
number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.
The Company shall

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pay any and all taxes which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant.

          (b) Exercise Price. For purposes of this Warrant, “Exercise Price” means One
Dollar ($1.00), subject to adjustment as provided herein.

          (c) Company’s Failure to Timely Deliver Securities. If within five (5) Trading
Days after the Company’s receipt of the Exercise Delivery Documents the Company shall fail to
issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC
for the number of shares of Common Stock to which the Holder is entitled upon such Holder’s
exercise of this Warrant, and if on or after such Trading Day the Holder purchases (in an open
market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the
Holder of Common Stock issuable upon such exercise that the Holder anticipated receiving from
the Company (a “Buy-In”), then the Company shall, within five (5) Business Days after the
Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In
Price"), at which point the Company’s obligation to deliver such certificate (and to issue
such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the Weighted Average Price on the date of
exercise.

          (d) Cashless Exercise. Notwithstanding anything contained herein to the
contrary, at any time and from time to time on or after the six (6) month anniversary of the
Issuance Date, if a registration statement covering the resale of the Warrant Shares that are
the subject of the Exercise Notice by the Holder pursuant to the 1933 Act (the “Unavailable
Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares, the
Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net
Number” of shares of Common Stock determined according to the following formula (a “Cashless
Exercise”):

	 	 	 	 	 	 	 
	 

	 	Net Number =
	 	(A x B) - (A x C)
	 	 
	 

	 	 	 	B
	 	 
	 
	 	 	 	 	 	 
	 	 	For purposes of the foregoing formula:

	 	 	 
	A=

	 	the total number of shares with respect to which
this Warrant is then being exercised.
	 
	 	 
	B=

	 	the Weighted Average Price of the shares of Common
Stock (as reported by Bloomberg) on the date immediately preceding
the date of the Exercise Notice.
	 
	 	 
	C=

	 	the Exercise Price then in effect for
the applicable Warrant Shares at the time of such
exercise. 

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          (e) Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to
the Holder the number of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 13.

          (f) Limitations on Exercises; Beneficial Ownership. The Company shall not effect
the exercise of this Warrant, and the Holder shall not have the right to exercise this
Warrant, to the extent that after giving effect to such exercise, such Person (together with
such Person’s affiliates) would beneficially own in excess of 9.99% (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such exercise.
For purposes of the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by such Person and its affiliates shall include the number of shares of
Common Stock issuable upon exercise of this Warrant with respect to which the determination of
such sentence is being made, but shall exclude shares of Common Stock which would be issuable
upon (x) exercise of the remaining, unexercised portion of this Warrant beneficially owned by
such Person and its affiliates and (y) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by such Person
and its affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent
Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, Current Report on Form 8-K or other public
filing with the Securities and Exchange Commission (“SEC”) as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason
at any time, upon the written or oral request of the Holder, the Company shall within two (2)
Business Days confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company by
the Holder and its affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. By written notice to the Company, the Holder may from time to time
increase or decrease the Maximum Percentage to any other percentage specified in such notice;
provided that any such increase will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company.

          (g) Insufficient Authorized Shares. If at any time while this Warrant remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares
of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this
Warrant at least a number of shares of Common Stock equal to 110% (the

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     “Required Reserve Amount”) of the number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of all of this Warrant then outstanding (an
“Authorized Share Failure”), then the Company shall immediately take all action necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days
after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its
stockholders for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each stockholder with a
proxy statement and shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of directors to recommend
to the stockholders that they approve such proposal.

     2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and
the number of Warrant Shares shall be adjusted from time to time as follows:

          (a) Adjustment upon Issuance of shares of Common Stock. If and whenever the
Company issues or sells, or in accordance with this Section 2 is deemed to have issued or
sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock
owned or held by or for the account of the Company, but excluding shares of Common Stock
issued or sold or deemed to have been issued or sold by the Company in connection with any
Excluded Securities (as defined in the SPA Securities)) for a consideration per share less
than a price (the “Applicable Price”) equal to both the Exercise Price in effect immediately
prior to such issue or sale or deemed issuance or sale and the Closing Sale Price for any of
the ten (10) consecutive Trading Days immediately preceding such issuance or sale or deemed
issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive
Issuance, the Exercise Price in effect immediately prior to such Dilutive Issuance shall be
reduced to an amount equal to the product of (A) the Exercise Price in effect immediately
prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I)
the product derived by multiplying the lower of (x) the volume weighted average Closing Sale
Price for the ten (10) consecutive Trading Days immediately preceding such Dilutive Issuance
and (y) the Exercise Price in effect immediately prior to such Dilutive Issuance (such lower
amount, the “Adjustment Price”), by the number of shares of Common Stock Deemed Outstanding
immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by
the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the
Adjustment Price by (II) the number of shares of Common Stock Deemed Outstanding immediately
after such Dilutive Issuance. Upon each such adjustment of the Exercise Price hereunder, the
number of Warrant Shares shall be adjusted to the number of shares of Common Stock determined
by multiplying the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from such
adjustment. For purposes of determining the adjusted Exercise Price under this Section 2(a),
the following shall be applicable:

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(i) Issuance of Options. If the Company in any manner grants
any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of
any such Option is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the granting or sale of such Option for such
price per share. For purposes of this Section 2(a)(i), the “lowest price
per share for which one share of Common Stock is issuable upon exercise of
such Options or upon conversion, exercise or exchange of such Convertible
Securities issuable upon exercise of any such Option” shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the
granting or sale of the Option, upon exercise of the Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option. No further adjustment of the Exercise Price or
number of Warrant Shares shall be made upon the actual issuance of such
            shares of Common Stock or of such Convertible Securities upon the exercise
of such Options or upon the actual issuance of such shares of Common Stock
upon conversion, exercise or exchange of such Convertible Securities.

(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this
Section 2(a)(ii), the “lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange thereof” shall
be equal to the sum of the lowest amounts of consideration (if any) received
or receivable by the Company with respect to one share of Common Stock upon
the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security. No further adjustment of
the Exercise Price or number of Warrant Shares shall be made upon the actual
issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities, and if any such issue or sale of
such Convertible Securities is made upon exercise of any Options for which
adjustment of this Warrant has been or is to be made pursuant to other
provisions of this Section 2(a), no further adjustment of the Exercise Price
or number of Warrant Shares shall be made by reason of such issue or sale.

(iii) Change in Option Price or Rate of Conversion. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any

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Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for shares of Common Stock
increases or decreases at any time, the Exercise Price and the number of
Warrant Shares in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price and the number of Warrant Shares which would
have been in effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be,
at the time initially granted, issued or sold. For purposes of this Section
2(a)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are increased or
decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock
deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 2(a) shall be made if such adjustment
would result in an increase of the Exercise Price then in effect or a
decrease in the number of Warrant Shares.

(iv) Calculation of Consideration Received. In case any Option
is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for a consideration of $0.01. If
any shares of Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the
Company therefor. If any shares of Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the
amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Company will be the Weighted Average Price of such security on the date of
receipt. If any shares of Common Stock, Options or Convertible Securities
are issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other
than cash or securities will be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the
“Valuation Event”), the fair value of such consideration will be determined
within five (5) Business Days after the tenth (10th) day
following the Valuation Event by an independent,

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reputable appraiser jointly selected by the Company and the Required
Holders. The determination of such appraiser shall be final and binding
upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.

(v) Record Date. If the Company takes a record of the holders
of shares of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock, Options or
in Convertible Securities or (B) to subscribe for or purchase shares of
Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.

          (b) Adjustment upon Subdivision or Combination of Common Stock. If the Company
at any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of Warrant Shares will be
proportionately increased. If the Company at any time on or after the Subscription Date
combines (by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination will be proportionately increased and the number
of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(b)
shall become effective at the close of business on the date the subdivision or combination
becomes effective.

          (c) Other Events. If any event occurs of the type contemplated by the provisions
of this Section 2 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company’s Board of Directors will make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights
of the Holder; provided that no such adjustment pursuant to this Section 2(c) will increase
the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant
to this Section 2.

          (d) De Minimis Adjustments. No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at least $0.01 in
such price; provided, however, that any adjustment which by reason of this Section 7(d) is not
required to be made shall be carried forward and taken into account in any subsequent
adjustments under this Section 7. All calculations under this Section 7 shall be made by the
Company in good faith and shall be made to the nearest cent or to the nearest one hundredth of
a share, as applicable. No adjustment need be made for a change in the par value or no par
value of the Company’s Common Stock.

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     3. RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock (other than in connection with the issuance, exercise, exchange or conversion of
Excluded Securities), by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

          (a) any Exercise Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction of which (i) the numerator
shall be the Weighted Average Price of the shares of Common Stock on the Trading Day
immediately preceding such record date minus the value of the Distribution (as determined in
good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and
(ii) the denominator shall be the Weighted Average Price of the shares of Common Stock on the
Trading Day immediately preceding such record date; and

          (b) the number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock entitled to
receive the Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding paragraph (a); provided that in the event that the Distribution is of
shares of Common Stock (or common stock) (“Other Shares of Common Stock”) of a company whose
common shares are traded on a national securities exchange or a national automated quotation
system, then the Holder may elect to receive a warrant to purchase Other Shares of Common
Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be
identical to those of this Warrant, except that such warrant shall be exercisable into the
number of shares of Other Shares of Common Stock that would have been payable to the Holder
pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such
record date and with an aggregate exercise price equal to the product of the amount by which
the exercise price of this Warrant was decreased with respect to the Distribution pursuant to
the terms of the immediately preceding paragraph (a) and the number of Warrant Shares
calculated in accordance with the first part of this paragraph (b).

     4. FUNDAMENTAL TRANSACTIONS.

          (a) Fundamental Transactions. The Company shall not enter into or be party to a
Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Warrant and the other Transaction Documents (as defined
in the Securities Purchase Agreement) in accordance with the provisions of this Section (4)(a)
pursuant to written agreements in form and substance satisfactory to the Required Holders and
approved by the Required Holders prior to such Fundamental Transaction, including agreements
to deliver to each holder of the SPA

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Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant, including,
without limitation, an adjusted exercise price equal to the value for the shares of Common
Stock reflected by the terms of such Fundamental Transaction, and exercisable for a
corresponding number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and satisfactory to the
Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly
traded corporation whose common stock is quoted on or listed for trading on an Eligible
Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction,
the provisions of this Warrant referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of the Fundamental Transaction, the
Successor Entity shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in
lieu of the shares of the Common Stock (or other securities, cash, assets or other property)
issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares
of the publicly traded Common Stock (or its equivalent) of the Successor Entity (including its
Parent Entity) which the Holder would have been entitled to receive upon the happening of such
Fundamental Transaction had this Warrant been converted immediately prior to such Fundamental
Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to
and not in substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of Common Stock
(a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder
will thereafter have the right to receive upon an exercise of this Warrant at any time after
the consummation of the Fundamental Transaction but prior to the Expiration Date, in lieu of
the shares of the Common Stock (or other securities, cash, assets or other property) issuable
upon the exercise of this Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or other
purchase or subscription rights) which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had this Warrant been exercised immediately prior to
such Fundamental Transaction. Provision made pursuant to the preceding sentence shall be in a
form and substance reasonably satisfactory to the Holder. The provisions of this Section
shall apply similarly and equally to successive Fundamental Transactions and Corporate Events
and shall be applied without regard to any limitations on the exercise of this Warrant.

          (b) Black-Scholes Redemption Offer. Notwithstanding the foregoing the Company
may enter into a Fundamental Transaction where the Successor Entity (including its Parent
Entity) is not a publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market if the Holder shall (i) receive a written offer from the Company
to exchange for cancellation this Warrant for an amount in cash determined in accordance with
the Black-Scholes Option Pricing Method (with

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volatility being determined, for purposes of such pricing method, by reference to the
trading prices of the Common Stock on the Principal Market during the 100 trading days
immediately preceding the date of the first public announcement of the Fundamental
Transaction) (the “Black-Scholes Redemption Amount”), and (ii) execute and deliver its written
acceptance of such offer, with payment of the Black-Scholes Redemption Amount to be made
concurrently with (or prior to) the closing of the Fundamental Transaction.

     5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will
not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon
the exercise of this Warrant and (iii) shall, so long as any of the SPA Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued shares
of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, 110% of the
number of shares of Common Stock as shall from time to time be necessary to effect the exercise of
the SPA Warrants then outstanding (without regard to any limitations on exercise).

     6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise,
prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant
shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices and other information given to the
shareholders of the Company generally, contemporaneously with the giving thereof to the
shareholders.

     7. REISSUANCE OF WARRANTS.

          (a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the Holder may request, representing the right to purchase the

-11-

 

number of Warrant Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 7(d)) to the Holder representing the right to purchase the number of
Warrant Shares not being transferred.

          (b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant
Shares then underlying this Warrant.

          (c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase
the number of Warrant Shares then underlying this Warrant, and each such new Warrant will
represent the right to purchase such portion of such Warrant Shares as is designated by the
Holder at the time of such surrender; provided, however, that no Warrants for fractional
            shares of Common Stock shall be given.

          (d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor
with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the
right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new
Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated
by the Holder which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number of Warrant
Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the
face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

     8. COMPANY CALL. If the Closing Sale Price of the Common Stock shall be above $3.00
for 90 calendar days, then the Company shall have the right, but not the obligation, to call all or
a portion of the Warrant Shares underlying this Warrant (prior to the issuance thereof) at the
Exercise Price for each Warrant Share the Company elects not to have this Warrants exercisable for.
Upon its election to exercise its option pursuant to this Section 8, the Company shall provide
written notice of such election to the Holder not more than sixty (60) days nor less than ten (10)
days before such call setting forth the payment date, the amount of payment to be made and the
portion of this Warrant to be called (if less than all, indicating such number of whole shares to
be called).

     9. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the
Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of
all actions taken pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the foregoing, the

-12-

 

Company will give written notice to the Holder (i) immediately upon any adjustment of the
Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon the shares of Common
Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property to holders of shares of Common
Stock (other than Excluded Securities) or (C) for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation, provided in each case that such information
shall be made known to the public prior to or in conjunction with such notice being provided to the
Holder.

     10. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained the written consent
of the Required Holders; provided that no such action may increase the exercise price of
any SPA Warrant or decrease the number of shares or class of stock obtainable upon exercise of any
SPA Warrant without the written consent of the Holder. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants then outstanding.

     11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.

     12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the
Company and all the Buyers and shall not be construed against any person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not form part of, or affect
the interpretation of, this Warrant.

     13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within five (5) Business Days of
receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If
the Holder and the Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall, within two (2)
Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by the Holder or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the Company and the Holder of
the results no later than ten Business Days from the time it receives the disputed determinations
or calculations. Such investment bank’s or accountant’s determination or calculation, as the case
may be, shall be binding upon all parties absent

-13-

 

demonstrable error. Notwithstanding anything to the contrary set forth in this Section 13,
any dispute arising with respect to the determination of the Black-Scholes Redemption Amount under
Section 4(b) shall not be subject to the provisions of this Section 13.

     14. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant and the other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall limit the right of
the Holder right to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required.

          (a) TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company, except as may otherwise be required by Section 2(f) of the
Securities Purchase Agreement.

     15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have
the following meanings:

          (a) “1933 Act” means the Securities Act of 1933, as amended.

          (b) “Bloomberg” means Bloomberg Financial Markets.

          (c) “Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to remain closed.

          (d) “Closing Sale Price” means, for any security as of any date, the last closing trade
price for such security on the Principal Market, as reported by Bloomberg, or, if the
Principal Market begins to operate on an extended hours basis and does not designate the
closing trade price then the last trade price of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last trade price of such security on the
principal securities exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security
in the over-the-counter market on the electronic bulletin board for such security as reported
by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets”. If the Closing Sale Price cannot be calculated for
a security on a particular date on any of the foregoing bases, the Closing Sale Price of such
security on such date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved

-14-

 

pursuant to Section 13. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.

          (e) “Common Stock” means (i) the Company’s shares of common stock, par value $0.001 per
share, and (ii) any share capital into which such common stock shall have been changed or any
share capital resulting from a reclassification of such common stock.

          (f) “Common Stock Deemed Outstanding” means, at any given time, the number of shares of
Common Stock actually outstanding at such time, plus the number of shares of Common Stock
deemed to be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of
whether the Options or Convertible Securities are actually exercisable at such time, but
excluding any shares of Common Stock owned or held by or for the account of the Company or
issuable upon exercise of the SPA Warrants.

          (g) “Convertible Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

          (h) “Eligible Market” means The New York Stock Exchange, Inc., the American Stock
Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market
or the OTC Bulletin Board.

          (i) “Expiration Date” means the date five (5) years after the Issuance Date or, if such
date falls on a day other than a Business Day or on which trading does not take place on the
Principal Market (a “Holiday”), the next date that is not a Holiday.

          (j) “Fundamental Transaction” means that the Company shall, directly or indirectly, in
one or more related transactions, (i) consolidate or merge with or into (whether or not the
Company is the surviving corporation) another Person or Persons, if the holders of the Voting
Stock (not including any shares of Voting Stock held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party to, such consolidation or
merger) immediately prior to such consolidation or merger shall hold or have the right to
direct the voting of less than 50% of the Voting Stock or such voting securities of such other
surviving Person immediately following such transaction, or (ii) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or assets of the
Company to another Person, or (iii) allow another Person to make a purchase, tender or
exchange offer that is accepted by the holders of more than the 50% of the outstanding shares
of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making
or party to, or associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another Person whereby such other Person acquires more than the
50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held
by the other Person or other Persons

-15-

 

making or party to, or associated or affiliated with the other Persons making or party
to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize
or reclassify its Common Stock or (vi) any “person” or “group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or
shall become the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended), directly or indirectly, of 50% of the aggregate ordinary voting
power represented by issued and outstanding Common Stock.

          (k) “Options” means any rights, warrants or options to subscribe for or purchase shares
of Common Stock or Convertible Securities.

          (l) “Parent Entity” of a Person means an entity that, directly or indirectly, controls
the applicable Person and whose common stock or equivalent equity security is quoted or listed
on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person
or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.

          (m) “Person” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.

          (n) “Principal Market” means Pink OTC Markets Inc. or any Eligible Market the Common
Stock is then listed on.

          (o) “Required Holders” means the holders of the SPA Warrants representing at least
two-thirds of shares of Common Stock underlying the SPA Warrants then outstanding.

          (p) “SPA Securities” means the Notes issued pursuant to the Securities Purchase
Agreement.

          (q) “Successor Entity” means the Person (or, if so elected by the Required Holders, the
Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the
Person (or, if so elected by the Required Holders, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.

          (r) “Trading Day” means any day on which the Common Stock are traded on the Principal
Market, or, if the Principal Market is not the principal trading market for the Common Stock,
then on the principal securities exchange or securities market on which the Common Stock are
then traded; provided that “Trading Day” shall not include any day on which the Common Stock
are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock are suspended from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York
time).

          (s) “Voting Stock” of a Person means capital stock of such Person of the class or classes
pursuant to which the holders thereof have the general voting power

-16-

 

to elect, or the general power to appoint, at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not at the time capital stock
of any other class or classes shall have or might have voting power by reason of the happening
of any contingency).

          (t) “Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during the period
beginning at 9:30:01 a.m., New York City time, and ending at 4:00:00 p.m., New York City time,
as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the “pink sheets”. If
the Weighted Average Price cannot be calculated for such security on such date on any of the
foregoing bases, the Weighted Average Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Required Holders. If the Company
and the Required Holders are unable to agree upon the fair market value of the such security,
then such dispute shall be resolved pursuant to Section 13 with the term “Weighted Average
Price” being substituted for the term “Exercise Price.” All such determinations shall be
appropriately adjusted for any share dividend, share split or other similar transaction during
such period.

[Signature Page Follows.]

-17-

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.

	 	 	 	 	 
	 	LIBERATOR MEDICAL HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Mark A. Libratore 	 
	 	 	Title:  	President 	 

 

 

	 	 	 	 	 

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

LIBERATOR MEDICAL HOLDINGS, INC.

     The undersigned holder hereby exercises the right to purchase                      of the shares
of Common Stock (“Warrant Shares”) of Liberator Medical Holdings, Inc., a Nevada corporation (the
"Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

     1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as:

                               a “Cash Exercise” with respect to                           Warrant
Shares; and/or

                               a “Cashless Exercise” with respect to                           Warrant
Shares.

     2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                               to the Company in accordance with the
terms of the Warrant.

     3. Maximum Exercise Percentage. The Holder represents and warrants to the Company that the
Holder, together with the Holder’s affiliates, will not beneficially own in excess of 9.99% of the
shares of Common Stock of the Company outstanding immediately after giving effect to the exercise
of the Warrant for the number of Warrant Shares to be issued pursuant to this Exercise Notice.

     4. Delivery of Warrant Shares. The Company shall deliver to the holder                      Warrant
Shares in accordance with the terms of the Warrant.

Date:                           ,           

	 	 	 
	 

Name of Registered Holder

	 	 

	 	 	 	 	 
	By:

	 	 
 

Name:
	 	  
	 

	 	Title:	 	 

 

 

ACKNOWLEDGMENT

     The Company hereby acknowledges this Exercise Notice and hereby directs Standard Registrar &
Transfer, Inc. to issue the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated May 22, 2008 from the Company and acknowledged and agreed to by
Standard Registrar & Transfer, Inc.

	 	 	 	 	 
	 	LIBERATOR MEDICAL HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:EX-4.4 Form of Registration Rights Agreement

Exhibit 4.4

[FORM OF REGISTRATION RIGHTS AGREEMENT]

     REGISTRATION RIGHTS AGREEMENT (this “Agreement”), made as of May 22, 2008, between
Liberator Medical Holdings, Inc., a Nevada corporation (the “Company”), and the investors
listed on the Schedule of Purchasers attached hereto (each, a “Purchaser” and collectively,
the “Purchasers”).

WITNESSETH

     WHEREAS, pursuant to the Securities Purchase Agreement, dated as of May 22, 2008, among the
Company, as issuer, Liberator Medical Supply, Inc., a Florida corporation, as guarantor, and the
Purchasers (the “Purchase Agreement”), the Purchasers have agreed to purchase from the
Company $3,500,000 in aggregate principal amount of the Company’s 3% Senior Convertible Notes due
2010 (the “Notes”), and have issued Warrants (the “Warrants” and, together with the
Notes, the “Securities”) to purchase up to an additional 4,375,000 aggregate shares of the
Company’s common stock, par value $0.001 per share;

     WHEREAS, the Securities will be convertible into or exercisable for (all references in this
Agreement to conversion, or corresponding or derivative words such as conversion rights,
convertibility, etc., shall mean, with respect to the Warrants, exercise and its corresponding or
derivative equivalents) fully paid, non-assessable shares of common stock, par value $0.001 per
share, of the Company (the “Conversion Shares”), on the terms and subject to the conditions
set forth in the Purchase Agreement; and

     WHEREAS, to induce the Purchasers to purchase the Securities, the Company has agreed to
provide the registration rights set forth in this Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

     1. Definitions. As used in this Agreement, the following capitalized terms are defined
as follows:

          “Affiliate”: As such term is defined in Rule 405 under the Securities Act.

          “Agreement”: This Registration Rights Agreement, as amended, modified or otherwise
supplemented from time to time in accordance with the terms hereof.

          “Blue Sky Application”: As defined in Section 6(a)(i) hereof.

          “Broker-Dealer”: Any broker or dealer registered under the Exchange Act.

          “Business Day”: A day other than a Saturday or Sunday or any day on which banking
institutions in New York City are authorized or obligated by law or executive order to close.

 

 

          “Closing Date”: The date of this Agreement.

          “Commission”: U.S. Securities and Exchange Commission.

          “Company”: As defined in the preamble hereto.

          “Conversion Shares”: As defined in the preamble hereto.

          “Effectiveness Period”: As defined in Section 2(a)(iv) hereof.

          “Effectiveness Target Date”: As defined in Section 2(a)(iii) hereof.

          “Exchange Act”: Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.

          “Holder”: A Person who owns, beneficially or otherwise, Transfer Restricted
Securities.

          “Indemnified Holder”: As defined in Section 6(a) hereof.

          “Interest Payment Date”: As defined in the Purchase Agreement.

          “Liquidated Damages”: As defined in Section 3(a) hereof.

          “Liquidated Damages Payment Date”: Each Interest Payment Date.

          “Notes”: As defined in the preamble hereto.

          “Person”: An individual, partnership, corporation, unincorporated organization,
limited liability company, trust, joint venture or a government or agency or political subdivision
thereof.

          “Prospectus”: The prospectus included in a Shelf Registration Statement, as amended or
supplemented by any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such Prospectus.

          “Purchase Agreement”: As defined in the preamble hereto.

          “Purchaser”: As defined in the preamble hereto.

          “Purchasers”: As defined in the preamble hereto.

          “Record Holder”: With respect to any Liquidated Damages Payment Date, each Person who
is a Holder of Transfer Restricted Securities on the record date with respect to the Interest
Payment Date on which such Liquidated Damages Payment Date shall occur.

-2-

 

          “Registration Default”: As defined in Section 3(a) hereof.

          “Sale Notice”: As defined in Section 4(d) hereof.

          “Securities”: As defined in the preamble hereto.

          “Securities Act”: Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder.

          “Shelf Filing Deadline”: As defined in Section 2(a)(i).

          “Shelf Registration Statement”: As defined in Section 2(a)(i) hereof.

          “Suspension Notice”: As defined in Section 4(c) hereof.

          “Suspension Period”: As defined in Section 4(b)(i) hereof.

          “Trading Market” means, initially, Pink OTC Markets Inc., the over-the-counter market
on which the Company’s common stock is traded as of the date of this Agreement, and hereafter,
means any over-the-counter market and stock exchange that the Common Stock is then listed or traded
on.

          “Transfer Restricted Securities” Each Security and each Conversion Share issued upon
conversion of the Securities until the earliest to occur of:

          (i) the date on which such Security or such Conversion Share issued upon conversion has been
effectively registered under the Securities Act and disposed of in accordance with a registration
statement (including, in the case of Conversion Shares, the Shelf Registration Statement);

          (ii) the date on which such Security or such Conversion Share (A) has been sold or transferred
pursuant to Rule 144 under the Securities Act such that the purchaser or transferee of such
Security or Conversion Share is not subject to the volume limitations thereof (or of any other
similar provision then in force), or (B) may be sold or transferred pursuant to Rule 144 under the
Securities Act without regard to the volume limitations thereof (or of any other similar provision
then in force);

          (iii) the date upon which such Conversion Share has been sold on the Trading Market; and

          (iv) the date on which such Note or such Conversion Share issued upon conversion ceases to be
outstanding (whether as a result of redemption, repurchase and cancellation, conversion or
otherwise).

          “Underwritten Registration or Underwritten Offering”: A registration in which

-3-

 

Conversion Shares are sold to an underwriter for reoffering to the public.

          “Warrants”: As defined in the preamble hereto.

     2. Shelf Registration. The Company shall:

          (i) not later than July 30, 2008 (the “Shelf Filing Deadline”), cause to be filed a
registration statement on an appropriate form pursuant to Rule 415 (or any successor rule) under
the Securities Act (together with any amendments thereto, and including any documents incorporated
by reference therein if permitted by such form, the “Shelf Registration Statement”), which
Shelf Registration Statement shall provide for resales of all Conversion Shares held by the
Purchasers, as well as additional shares of Common Stock issuable by the Company pursuant to the
Purchase Agreement (for purposes of this Agreement, the term “Conversion Shares” shall be
deemed to include such additional issuable shares of Common Stock);

          (ii) use its commercially reasonable efforts to cause the Shelf Registration Statement to be
filed in advance of the Shelf Filing Deadline;

          (iii) use its commercially reasonable efforts to cause the Shelf Registration Statement to be
declared effective by the Commission as promptly as is practicable after the date it is first filed
with the Commission, but in no event later than 60 days
(90 days if reviewed by the SEC) after the Shelf Filing Deadline (the “Effectiveness Target Date”); and

          (iv) use its commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions of Section 4(b)
hereof to the extent necessary to ensure that: (A) it is available for resales by the Purchasers
and (B) conforms with the requirements of this Agreement and the Securities Act, in each case, for
a period (the “Effectiveness Period”) that will terminate upon the earliest of (x) when all
of the Transfer Restricted Securities may be sold or transferred pursuant to Rule 144 under the
Securities Act (or any other similar provision then in force) within a three-month period, (y) when
all Conversion Shares registered under the Shelf Registration Statement have been sold in
accordance with it or otherwise cease to be Transfer Restricted Securities in accordance with this
Agreement and (z) when all Transfer Restricted Securities have ceased to be outstanding (whether as
a result of redemption, repurchase and cancellation, conversion or otherwise).

     3. Liquidated Damages.

          (a) The Company and the Purchasers agree that the Purchasers will suffer damages if the
Company fails to fulfill its obligations under Section 2 hereof and that it would not be feasible
to ascertain the extent of such damages with precision. Accordingly, if:

               (i) except as provided in Section 4(b)(i) hereof, the Shelf Registration Statement is not
filed with the Commission prior to or on the Shelf Filing Deadline; or

               (ii) except as provided in Section 4(b)(i) hereof, the Shelf Registration Statement has not
been declared effective by the Commission prior to or on the Effectiveness

-4-

 

Target Date;

(each such event referred to in foregoing clauses (i) through (iv), a “Registration
Default”), the Company hereby agrees to pay liquidated damages (“Liquidated Damages”)
with respect to the Securities that are Transfer Restricted Securities from and including the day
following the Registration Default to but excluding the day on which the Registration Default has
been cured, accruing during the period during which a Registration Default shall have occurred and
be continuing, at the rate of 1.0% of the principal amount of the Notes per month, provided that in
no event shall Liquidated Damages accrue at a rate per year exceeding 6.0% of the principal amount
of such Notes.

No Liquidated Damages shall be payable on any Securities that have been converted into Conversion
Shares or that are not Transfer Restricted Securities. Following the cure of all Registration
Defaults relating to any Securities, the accrual of Liquidated Damages with respect to such
Securities shall cease.

          (b) Any amounts of Liquidated Damages due pursuant to clause (a) of this Section 3 will be
payable in shares of the Company’s Common Stock, semi-annually in arrears on each Liquidated
Damages Payment Date, commencing with the first such date occurring after any such Liquidated
Damages commences to accrue, to the Purchasers. The Company agrees to deliver all notices,
certificates and other documents contemplated by the Purchase Agreement in connection with the
payment of Liquidated Damages.

All obligations of the Company set forth in this Section 3 that are outstanding with respect to any
Security that is a Transfer Restricted Security at the time such Security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full; provided, however, that Liquidated
Damages shall cease to accrue on the day such Security ceases to be a Transfer Restricted Security.

The Liquidated Damages set forth above shall be the exclusive remedy available to the Purchasers
for such Registration Default.

     4. Registration Procedures.

          (a) In connection with the Shelf Registration Statement, the Company shall comply with all the
provisions of Section 4(b) hereof and shall use its commercially reasonable best efforts to effect
such registration to permit the sale of the Conversion Shares being sold in accordance with the
intended method or methods of distribution thereof, and pursuant thereto, shall prepare and file
with the Commission a Shelf Registration Statement relating to the registration on any appropriate
form under the Securities Act.

          (b) In connection with the Shelf Registration Statement and any Prospectus required by this
Agreement to permit the sale or resale of Conversion Shares, the Company shall:

               (i) Subject to any notice by the Company in accordance with this Section 4(b) of the existence
of any fact or event of the kind described in Section 4(b)(iii)(D),

-5-

 

use its commercially reasonable best efforts to keep the Shelf Registration Statement continuously
effective during the Effectiveness Period; upon the occurrence of any event that would cause the
Shelf Registration Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not be effective and usable for the resale of Conversion Shares
during the Effectiveness Period, the Company shall file promptly an appropriate amendment to the
Shelf Registration Statement, a supplement to the Prospectus or a report filed with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its
commercially reasonable best efforts to cause any such amendment to be declared effective and the
Shelf Registration Statement and the related Prospectus to become usable for their intended
purposes as soon as practicable thereafter. Notwithstanding anything to the contrary contained
herein, the Company may delay the filing or declaration of effectiveness, and/or suspend the
effectiveness, of the Shelf Registration Statement by written notice to the Purchasers for a period
(each such period, a “Suspension Period”) not to exceed an aggregate of 30 days in any
90-day period, and not to exceed an aggregate of 60 days in any 360-day period, if:

                    (x) an event occurs and is continuing as a result of which the Shelf Registration Statement
would, in the Company’s reasonable judgment, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein
not misleading; and

                    (y) the Company reasonably determines that the disclosure of such event at such time would be
seriously detrimental to the Company or its business;

provided, that in the event the disclosure relates to a previously undisclosed proposed or
pending material business transaction, the disclosure of which would impede the Company’s ability
to consummate such transaction, the Company may extend a Suspension Period from 30 days to 45 days
during any 90-day period

               (ii) Notify the Purchasers in writing of the effectiveness of the Shelf Registration Statement
and prepare and file with the Commission such amendments and post-effective amendments to the Shelf
Registration Statement as may be necessary to keep the Shelf Registration Statement continuously
effective during the Effectiveness Period; cause the Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities
Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities
Act in a timely manner; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the sellers thereof set
forth in the Shelf Registration Statement or supplement to the Prospectus.

               (iii) Advise the underwriter(s), if any, and the Purchasers promptly (but in any event within
two Business Days) and, if requested by such Persons, to confirm such advice in writing:

-6-

 

                    (A) when the Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to the Shelf Registration Statement or any post-effective amendment
thereto, when the same has become effective,

                    (B) of any request by the Commission for amendments to the Shelf Registration Statement or
amendments or supplements to the Prospectus or for additional information relating thereto,

                    (C) of the issuance by the Commission of any stop order suspending the effectiveness of the
Shelf Registration Statement under the Securities Act or of the suspension by any state securities
commission of the qualification of the Conversion Shares for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes,

                    (D) of a pending proceeding against the Company under Section 8A of the Securities Act in
connection with the offering of the Securities and the Conversion Shares, or

                    (E) of the existence of any fact or the happening of any event, during the Effectiveness
Period, that makes any statement of a material fact made in the Shelf Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein,
untrue, or that requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not misleading. The Purchasers
by accepting the same, agree to hold any communication from the Company pursuant to this Section
4(b)(iii) in confidence.

If at any time the Commission shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from qualification of the Conversion
Shares under state securities or “blue sky” laws, the Company shall use its commercially reasonable
best efforts to obtain the withdrawal or lifting of such order at the earliest possible time and
will provide to the Purchasers prompt notice of the withdrawal of any such order.

               (iv) Furnish to the Purchasers and to each of the underwriter(s), if any, and their respective
counsel, if any, before filing with the Commission, a copy of the Shelf Registration Statement and
copies of any Prospectus included therein or any amendments or supplements to the Shelf
Registration Statement or Prospectus (other than documents incorporated by reference after the
initial filing of the Shelf Registration Statement), which documents will be subject to the review
of the Purchasers, underwriter(s) and counsel for a period of at least five Business Days, and the
Company will not file the Shelf Registration Statement or Prospectus or any amendment or supplement
to the Shelf Registration Statement or Prospectus (other than documents incorporated by reference)
to which the Purchasers of Conversion Shares covered by the Shelf Registration Statement or the
Purchasers, underwriter(s), if any, shall reasonably object within five Business Days after the
receipt thereof. The Company shall also furnish to each of the underwriter(s), if any, and their
respective

-7-

 

counsel, if any, before filing with the Commission, if reasonably practicable, or otherwise
promptly after filing with the Commission, copies of any amendments to the Shelf Registration
Statement or supplements to the Prospectus (other than documents incorporated by reference after
the initial filing of the Shelf Registration Statement), and make the Company’s representatives
available for discussion of such amendments or supplements and make such changes in such amendments
or supplements prior to the filing thereof, if reasonably practicable, or prepare and file further
amendments or supplements, as the Purchasers, underwriter(s), if any, or their respective counsel,
if any, may reasonably request subject to the provisos contained in the last sentence of Section
2(b) hereof. An objection by a Purchaser or an underwriter or by counsel to a Purchaser or an
underwriter shall be deemed to be a reasonable objection to such filing if the Shelf Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, would
contain a material misstatement or omission.

               (v) Make available at reasonable times for inspection by one or more representatives of a
Purchaser, any underwriter participating in any distribution pursuant to the Shelf Registration
Statement, and any attorney or accountant retained by a Purchaser or any of the underwriter(s), all
financial and other records, pertinent corporate documents and properties of the Company as shall
be reasonably necessary to enable them to exercise any applicable due diligence responsibilities,
and cause the Company’s officers, directors, managers, employees and independent accountants to
supply all information reasonably requested by any such representative or representatives of a
Purchaser, underwriter, attorney or accountant in connection with the Shelf Registration Statement
after the filing thereof and before its effectiveness, provided, however, that any
information designated by the Company as confidential at the time of delivery of such information
shall be kept confidential by the recipient thereof; and provided, further, that in
no event shall the Company be required to furnish any material nonpublic information pursuant to
this subsection (v).

               (vi) If requested by a Purchaser or the underwriter(s), if any, promptly incorporate in the
Shelf Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as a Purchaser and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation: (A) information relating to the “Plan of
Distribution” of the Conversion Shares, (B) information with respect to the number of Conversion
Shares being sold, (C) the purchase price being paid therefor and (D) any other terms of the
offering of the Conversion Shares to be sold in such offering; provided, however,
that with respect to any information requested for inclusion by a Purchaser, this clause (vi) shall
apply only to such information that relates to the Conversion Shares to be sold by a Purchaser; and
make all required filings of such prospectus supplement or post-effective amendment as soon as
reasonably practicable after the Company is notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment.

               (vii) Furnish to the Purchasers and each of the underwriter(s), if any, without charge, at
least one copy of the Shelf Registration Statement, as first filed with the Commission, and of each
amendment thereto (and any documents incorporated by reference therein or exhibits thereto (or
exhibits incorporated in such exhibits by reference) as such Person may request).

-8-

 

               (viii) Deliver to the Purchasers and each of the underwriter(s), if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; subject to any notice by the Company in
accordance with this Section 4(b) of the existence of any fact or event of the kind described in
Section 4(b)(iii)(D), the Company hereby consents to the use of the Prospectus and any amendment or
supplement thereto by the Purchasers and each of the underwriter(s), if any, in connection with the
offering and the sale of the Conversion Shares covered by the Prospectus or any amendment or
supplement thereto.

               (ix) If an underwriting agreement is entered into in connection with the registration, the
Company shall:

                    (A) upon request, furnish to the Purchasers and each underwriter, in such substance and scope
as they may reasonably request and as are customarily made by issuers to underwriters in primary
underwritten offerings for selling security holders, upon the date of closing of any sale of
Conversion Shares in an Underwritten Registration:

                         (1) opinions, each dated the date of such closing, of counsel to the Company covering such of
the matters as are customarily covered in legal opinions to underwriters in connection with
underwritten offerings of securities; and

                         (2) customary comfort letters, dated the date of such closing, from the Company’s independent
accountants, in the customary form and covering matters of the type customarily covered in comfort
letters to underwriters in connection with primary underwritten offerings of securities;

                    (B) set forth in full in the underwriting agreement, if any, indemnification provisions and
procedures which provide rights no less protective than those set forth in Section 6 hereof with
respect to all parties to be indemnified; and

                    (C) deliver such other documents and certificates as may be reasonably requested by such
parties to evidence compliance with clause (A) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Purchasers pursuant to this
clause (ix).

               (x) Before any public offering of Conversion Shares, use its commercially reasonable best
efforts to register or qualify the Conversion Shares under the securities or Blue Sky laws of such
jurisdictions in the United States as the Purchasers or underwriter(s), if any, may reasonably
request and do any and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Conversion Shares covered by the Shelf Registration Statement;
provided, however, that the Company shall not be required (A) to register or
qualify as a foreign corporation or a dealer of securities where it is not now so qualified or to
take any action that would subject it to the service of process in any jurisdiction where it is not
now so subject or (B) to subject itself to taxation in any such jurisdiction if it is not now so
subject.

-9-

 

               (xi) Cooperate with the Purchasers and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Conversion Shares to be sold and not bearing
any restrictive legends (unless required by applicable securities laws) and enable such Conversion
Shares to be in such denominations and registered in such names as the Purchasers or the
underwriter(s), if any, may request at least two Business Days before any sale of Conversion
Shares.

               (xii) Use its commercially reasonable best efforts to cause the Conversion Shares covered by
the Shelf Registration Statement to be registered with or approved by such other U.S. governmental
agencies or authorities as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Conversion Shares.

               (xiii) Subject to Section 4(b)(i) hereof, if any fact or event contemplated by Section
4(b)(iii)(D) hereof shall exist or have occurred, use its reasonable best efforts to prepare a
supplement or post-effective amendment to the Shelf Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required document so that, as
thereafter delivered to the purchaser of Conversion Shares, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances in which they
were made, not misleading.

               (xiv) Provide a transfer agent and registrar for all such Conversion Shares not later than the
effective date of the Shelf Registration Statement.

               (xv) Enter into such customary agreements (including underwriting agreements in customary
form) and take all such other actions as the Purchasers or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of Conversion Shares (including
effecting a stock split or combination of shares).

               (xvi) Otherwise use its commercially reasonable efforts to comply with all applicable rules
and regulations of the Commission and all reporting requirements of the Exchange Act.

               (xvii) Cause all Conversion Shares covered by the Shelf Registration Statement to be listed or
quoted, as the case may be, on each securities exchange or automated quotation system on which
similar securities issued by the Company are then listed or quoted.

               (xviii) Provide promptly to the Purchasers upon written request each document filed with the
Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act during the
Effectiveness Period.

               (xix) If reasonably requested by the underwriter(s), make appropriate officers of the Company
reasonably available to the underwriter(s) for meetings with prospective purchaser of the
Conversion Shares and prepare and present to potential investors customary “road show” or marketing
material in a manner consistent with other new issuances of other

-10-

 

securities similar to the Conversion Shares.

               (xx) File each Shelf Registration Statement and Prospectus required to be filed in accordance
with this Agreement and any amendments and/or supplements thereto electronically on EDGAR.

          (c) The Purchasers agree by acquisition of a Transfer Restricted Security that, upon receipt
of any notice (a “Suspension Notice”) from the Company of the existence of any fact of the
kind described in Section 4(b)(1)(x) or Section 4(b)(iii)(D) hereof, the Purchasers will, and will
use its reasonable efforts to cause any underwriter(s) in an Underwritten Offering to, forthwith
discontinue disposition of Conversion Shares pursuant to the Shelf Registration Statement until:

                    (i) the Purchasers have received copies of the supplemented or amended Prospectus contemplated
by Section 4(b)(xiii) hereof; or

                    (ii) the Purchasers are advised in writing by the Company that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus.

If so directed by the Company, the Purchasers will deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies then in the Purchasers’ possession, of the
Prospectus covering such Conversion Shares that was current at the time of receipt of such notice
of suspension.

          (d) If any Purchaser is identified in the Shelf Registration Statement as an “underwriter,”
then at the request of the Purchaser the Company shall furnish to such Purchaser, on the date of
the effectiveness of the Shelf Registration Statement and thereafter from time to time on such
dates as the Purchaser may reasonably request, (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten public offering,
addressed to the Purchaser, and (ii) an opinion, dated as of such date, of counsel representing the
Company for purposes of the Shelf Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the Purchaser. Notwithstanding
anything herein to the contrary, the Purchaser shall not be designated as an “underwriter” by the
Company in the Shelf Registration Statement without the consent of the Purchaser unless otherwise
required by law. In connection with the due diligence efforts of the Purchaser, the Company shall
make available for inspection during business hours and upon reasonable advance request by (i) the
Purchaser, (ii) counsel for the Purchaser and (iii) one firm of accountants or other agents
retained by the Purchaser (collectively, the “Inspectors”), all pertinent financial and
other records, and pertinent corporate documents and properties of the Company (collectively, the
“Records”), as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any Inspector may
reasonably request; provided, however, that each Inspector shall agree in writing to hold in strict
confidence and shall not make any disclosure (except to the Purchaser) or use of any Record or
other information which the Company determines in good faith to be

-11-

 

confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in the Shelf
Registration Statement or is otherwise required under the Securities Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government
body of competent jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any other agreement of
which the Inspector has knowledge. The Purchaser agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or in any other confidentiality
agreement between the Company and the Purchaser) shall be deemed to limit the Purchaser’s ability
to sell Transfer Restricted Securities in a manner that is otherwise consistent with applicable
laws and regulations.

     5. Registration Expenses.

          (a) All expenses incident to the Company’s performance of or compliance with this Agreement
shall be borne by the Company regardless of whether a Shelf Registration Statement becomes
effective, including, without limitation:

               (i) all registration and filing fees and expenses;

               (ii) all fees and expenses of compliance with federal securities and state “blue sky” or
securities laws;

               (iii) all expenses of printing (including printing of Prospectuses and certificates for
Conversion Shares to be issued upon conversion of the Securities), and delivery services;

               (iv) all fees and disbursements of counsel to the Company and, subject to Section 5(b) below,
the Purchasers;

               (v) all application and filing fees in connection with listing (or authorizing for quotation)
the Conversion Shares on a national securities exchange or automated quotation system pursuant to
the requirements hereof;

               (vi) all fees and disbursements of underwriters, including, if necessary, a “qualified
independent underwriter” within the meaning of the rules of the National Association of Securities
Dealers, Inc. (in each case excluding discounts and commissions);

               (vii) all fees and disbursements of custodians; and

               (viii) all fees and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or incident to such
performance).

-12-

 

The Company shall bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal, accounting or other duties), the expenses
of any annual audit or quarterly review, the expense of any liability insurance and the fees and
expenses of any Person, including special experts, retained by the Company.

          (b) In connection with the Shelf Registration Statement required by this Agreement, including
any amendment or supplement thereto, and any other documents delivered to the Purchasers, the
Company shall reimburse the Purchasers for the reasonable fees and disbursements of not more than
one counsel (including local counsel), which shall be chosen by the Purchasers. The Company shall
not be required to pay any underwriting discount, commission or similar fee related to the sale of
any securities.

     6. Indemnification and Contribution.

          (a) The Company shall indemnify and hold harmless, to the fullest extent permitted by law, the
Purchasers, the Purchasers’ officers, directors, members, agents, partners and employees and each
person, if any, who controls each Purchaser within the meaning of the Securities Act (each, an
“Indemnified Holder”), from and against any loss, claim, damage, liability or expense,
joint or several, or any action in respect thereof (including, but not limited to, any loss, claim,
damage, liability, expense, or action relating to resales of the Conversion Shares), together with
reasonable costs and expenses (including reasonable attorney’s fees) to which any Purchaser may
become subject, insofar as any such loss, claim, damage, liability, expense or action arises out
of, or is based upon:

               (i) any untrue statement or alleged untrue statement of a material fact contained in (A) the
Shelf Registration Statement or Prospectus or any amendment or supplement thereto or (B) any blue
sky application or other document or any amendment or supplement thereto prepared or executed by
the Company (or based upon written information furnished by or on behalf of the Company expressly
for use in such blue sky application or other document or amendment on supplement) filed in any
jurisdiction specifically for the purpose of qualifying any or all of the Conversion Shares under
the securities law of any state or other jurisdiction (such application or document being
hereinafter called a “Blue Sky Application”); or

               (ii) the omission or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall promptly reimburse each Indemnified Holder promptly
upon demand for any legal or other expenses reasonably incurred by the Purchasers in connection
with investigating or defending or preparing to defend against any such loss, claim, damage,
liability, expense or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any such loss, claim,
damage, liability, expense or action arises out of, or is based upon, (A) any untrue statement or
alleged untrue statement or omission or alleged omission made in the Shelf Registration Statement
or Prospectus or amendment or supplement thereto or Blue Sky Application or other document referred
to in Section 6(a)(i) hereof in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Purchasers

-13-

 

(or its related Indemnified Holder) specifically for use therein or (B) the failure by the
Purchasers or Indemnified Holder to deliver to any purchaser of its Conversion Shares the
Prospectus and any supplement or amendment thereto after the Company has furnished the Purchaser or
Indemnified Holder with a sufficient number of copies of the same. The foregoing indemnity
agreement is in addition to any liability that the Company may otherwise have to any Indemnified
Holder.

          (b) The Purchasers, severally, but not jointly, shall indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its officers, directors, agents and employees and
each person, if any, who controls the Company within the meaning of the Securities Act, from and
against any loss, claim, damage, liability or expense, joint or several, or any action in respect
thereof, to which the Company, the Purchasers or any such officer, director, agent, employee or
controlling person may become subject, insofar as any such loss, claim, damage, liability, expense
or action arises out of, or is based upon:

               (i) any untrue statement or alleged untrue statement of any material fact furnished to the
Company by a Purchaser and contained in the Shelf Registration Statement or Prospectus or any
amendment or supplement thereto or any Blue Sky Application or other document referred to in
Section 6(a)(i) hereof; or

               (ii) the omission or the alleged omission to state therein any material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information prepared and furnished to the Company by or on behalf of any
Purchaser (or its related Indemnified Holder) specifically for use therein, and such Purchaser
shall reimburse the Company and any such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by the Company or any such officer,
employee or controlling person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability, expense or action as such expenses are incurred,
provided that the obligation to indemnify shall be limited to the net amount of proceeds receive by
such Purchaser from the sale of Conversion Shares pursuant to the Shelf Registration Statement.

          (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any claim
or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve the indemnifying party from any
liability which it may have under this Section 6 except to the extent the indemifying party has
been prejudiced by such failure. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to
the indemnified party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party shall not be liable

-14-

 

to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall:

               (i) without the prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld or delayed) settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding, or

               (ii) be liable for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld or delayed), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.

          (d) If the indemnification provided for in this Section 6 shall for any reason be unavailable
or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b) in respect of any
loss, claim, damage, liability or expense (or action in respect thereof) referred to therein, each
indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim, damage or liability (or
action in respect thereof):

               (i) in such proportion as is appropriate to reflect the relative fault of the Company on
the one hand and the Purchasers on the other, or

               (ii) if the allocation provided by clause (6)(d)(i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative fault referred to in clause
6(d)(i) but also the relative benefits received by the Company from the offering and sale of the
Conversion Shares on the one hand and the Purchasers with respect to the sale by the Purchasers of
the Conversion Shares on the other in connection with the statements or omissions or alleged
statements or alleged omissions that resulted in such loss, claim, damage or liability (or action
in respect thereof), as well as any other relevant equitable considerations.

The relative benefits received by the Company on the one hand and the Purchasers on the other with
respect to such offering and such sale shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Securities purchased under the Purchase Agreement (before
deducting expenses) received by the Company, on the one hand, bear to the total proceeds received
by the Purchasers (before deducting expenses) with respect to its sale of Conversion Shares on the
other. The relative fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company on the one hand or
the Purchasers on the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or

-15-

 

omission. The Company and the Purchasers agree that it would not be just and equitable if the
amount of contribution pursuant to this Section 6(d) were determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable considerations
referred to in the first sentence of this paragraph (d). The amount paid or payable by an
indemnified party as a result of the loss, claim, damage, liability or expense, or action in
respect thereof, referred to above in this Section 6 shall be deemed to include, for purposes of
this Section 6 and subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of this Section 6, the
Purchasers shall not be required to contribute any amount in excess of the amount by which net
proceeds received by the Purchasers from the sale of Conversion Shares covered by the Shelf
Registration Statement exceeds the amount of any damages which the Purchasers have otherwise been
required to pay by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers’ obligations to contribute as provided in this Section
6(d) are several and not joint.

     7. Selection of Underwriters. The Purchasers may sell such Conversion Shares in an
Underwritten Offering.

     8. Miscellaneous.

          (a) Remedies. The Company acknowledges and agrees that any failure by the Company to
comply with its obligations under Section 2 hereof may result in material irreparable injury to the
Purchasers for which there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure, the Purchasers may
obtain such relief as may be required to specifically enforce the Company’s obligations under
Section 2 hereof. The Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

          (b) Adjustments Affecting Transfer Restricted Securities. The Company shall not,
directly or indirectly, take any action with respect to the Transfer Restricted Securities as a
class that would adversely affect the ability of the Purchasers of Transfer Restricted Securities
to include Conversion Shares in a registration undertaken pursuant to this Agreement.

          (c) No Inconsistent Agreements. The Company will not, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is inconsistent with the
rights granted to the Purchasers in this Agreement or otherwise conflicts with the provisions
hereof. In addition, the Company shall not grant to any of its security holders (other than the
Purchasers) the right to include any of its securities in the Shelf Registration Statement provided
for in this Agreement other than the Conversion Shares.

          (d) Amendments and Waivers. This Agreement may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the Purchasers.

-16-

 

          (e) Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

	 	 	 
	If to the Company:

	 	Mark A. Libratore, President
	 

	 	Liberator Medical Holdings, Inc.
	 

	 	2979 SE Gran Park Way
	 

	 	Stuart, FL 34997
	 

	 	Tel: (772) 287-2414
	 

	 	Fax: (772) 781-3867
	 
	 	 
	Copy to:

	 	Jonathan L. Shepard, Esquire
	 

	 	Siegel, Lipman, Dunay, Shepard & Miskel, LLP
	 

	 	5355 Town Center Road, Suite 801
	 

	 	Boca Raton, FL 33486
	 

	 	Tel: (561) 368-7700
	 

	 	Fax: (561) 368-9274
	 
	 	 
	If to the Purchasers:

	 	Millennium Partners, L.P.
	 

	 	c/o Millennium Management LLC
	 

	 	666 Fifth Avenue, 8th Floor
	 

	 	New York, NY 10103
	 

	 	Attn: Terry Feeney
	 

	 	Tel: (212) 841-4100
	 

	 	Fax: (212) 841-4141;

and to the other Purchasers at their addresses set forth in the attached Schedule of Purchasers (or
at such other address any Purchaser may provide in writing to the Company).

All such notices and communications shall be deemed to have been duly given at: the time delivered
by hand, if personally delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if transmitted by
facsimile; and on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.

          (f) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including without limitation
subsequent Purchasers of Transfer Restricted Securities; provided, however, that
(i) this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a
Purchaser unless and to the extent such successor or assign acquired Transfer Restricted Securities
from the Purchaser and agreed in writing to be bound by the terms of this Agreement and (ii)
nothing contained herein shall be deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Securities in violation of the terms of the Purchase Agreement. If any
transferee of a Purchaser shall acquire Transfer Restricted Securities, in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be held

-17-

 

subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted
Securities such person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement.

          (g) Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.

          (h) Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

          (i) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

          (j) Severability. If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

          (k) Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.

[Signature Pages Follow.]

-18-

 

     IN WITNESS WHEREOF, the Company and each Purchaser have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	COMPANY:

LIBERATOR MEDICAL HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Mark A. Libratore 	 
	 	 	Title:  	President 	 
	 

Signature Page to Registration Rights Agreement

 

 

     IN WITNESS WHEREOF, the Company and each Purchaser have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	PURCHASER:

[PURCHASER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Registration Rights Agreement

 

 

SCHEDULE OF PURCHASERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)
	 	 	 	 	 	 	Aggregate Principal	 	 	 	 
	 	 	Address and	 	Amount of Notes/	 	Number of	 	Legal Representative’s Address
	Purchaser	 	Facsimile Number	 	Purchase Price	 	Warrant Shares	 	and Facsimile Number
	 
	 
	 
	Total
	 	 	 	 	 	 	$3,500,000	 	 	 	4,375,000

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