Exhibit 10.1
March 31, 2008
The Co-Investment Fund II, L.P.
Five Radnor Corporate Center, Suite 555
Radnor, PA 19087
Re: Health Benefits Direct Board Representative and Related Matters
Dear Sirs:
     This Letter Agreement is being executed and delivered in connection with
the Initial Closing under the Securities Purchase Agreement, dated as of the
date hereof (the “Purchase Agreement”), by and between the Company and The
Co-Investment Fund II, L.P. (“Co-Investment”) and to induce Co-Investment to
purchase the Units thereunder. Capitalized terms used in this Letter Agreement
and not otherwise defined herein shall have the respective meanings ascribed to
such terms in the Purchase Agreement.
     The Company hereby agrees, intending to be legally bound, that during the
Term, it will take all actions, do all things, and execute and deliver all
documents and instruments within in its power as may be necessary to accomplish
the following results:
     1. Two directors designated by Co-Investment (the “Co-Investment
Directors”) shall be nominated by the Company for election to the Company’s
Board of Directors (the “Board”) at each meeting of shareholders or solicitation
of consents for the election of directors and, in the event of an increase in
the number of members of the Company’s Board, such greater number of directors
designated by Co-Investment shall be so nominated for election to the Board as
is necessary to have no less than the same percentage of the members of the
Board so nominated as is currently represented by two directors;
     2. In the event of a vacancy in the Board seat previously held by a
Co-Investment Director, a successor director designated by Co-Investment shall
be appointed to fill such vacancy;
     3. Each director designated by Co-Investment to be a Co-Investment Director
under Paragraphs 1 and 2 must meet the qualifications to serve as a member of
the Board as reasonably determined in good faith by either the Board or the
Nominating and Governance Committee of the Board (the “Nominating and Governance
Committee”). The Nominating Committee has determined that Frederick Tecce and
Donald Caldwell are so qualified.
     4. Without limiting the general nature of the foregoing:
          (a) Donald Caldwell shall be appointed as a member of the Board to
fill the vacancy created by the resignation of C. James Jensen, and to serve as
a director until the expiration of the term ending at the Company’s 2008 annual
meeting of stockholders and until

 

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The Co-Investment Fund II, L.P.
March 31, 2008
his successor has been duly elected and qualified or his earlier death,
resignation or removal, such appointment to be effective on the later of
April 1, 2008 or the business day immediately following the date on which the
Company is required to file with the Securities and Exchange Commission its Form
10-KSB for the fiscal year ended December 31, 2007;
          (b) There shall be two Co-Chairman of the Board with the same power
and authority and with the requirement that any action taken by either of them
must be approved by both of them;
          (c) On the effective date of his appointment to the Board pursuant to
Paragraph 4(a), Donald Caldwell shall be appointed as a Co-Chairman of the
Board. On that date, he will also be appointed to serve as a member and the
Chairman of the Audit Committee, to serve as such until such time as the Company
has obtained a replacement for him as the Chairman and member of the Audit
Committee acceptable to Co-Investment who satisfies the independence
requirements of Rule 10A-3 of the Securities Exchange Act of 1934: and
          (d) Donald Caldwell and Fred Tecce shall be nominated by the Company,
and recommended by the Company, for election to the Company’s Board, at the 2008
annual meeting of the Company’s stockholders.
     5. The Company shall include the Co-Investment Directors in the Board’s
slate of nominees for election as directors of the Company and use its best
efforts to cause the election of the Co-Investment Directors at each annual
meeting of shareholders (and in any consent for the election of directors
solicited by the Company) including, without limitation, recommending that the
Company’s shareholders vote in favor of the election of the Co-Investment
Directors at such annual meeting (or in such consent) and voting the shares of
Company Common Stock represented by all proxies granted by shareholders in
connection with the solicitation of proxies by the Board in connection with such
meeting in favor of the Co-Investment Directors, except for such proxies that
specifically indicate a vote to withhold authority with respect to the
Co-Investment Directors. Neither the Board nor the Company shall take any
position, make any statements or take any action inconsistent with such
recommendations; and
     6. Non-employee directors shall only be compensated under the terms of the
Directors Compensation Plan currently in effect and shall not receive any
additional fees for their services to the Company.
     The Company further agrees, intending to be legally bound, that it would be
impossible to measure in money the damages which will accrue to Co-Investment or
to its successors or assigns by reason of the failure of the Company to perform
its obligations under this Letter Agreement and the parties agree that the terms
of this Letter Agreement shall be specifically enforceable. If Co-Investment or
any of its successors or assigns institutes any action or proceeding to
specifically enforce the provisions hereof, any person against whom such action
or proceeding is brought hereby waives the claim or defense therein that such
instituting party has an adequate remedy at law, and such person shall not offer
in any such action or proceeding the

 

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The Co-Investment Fund II, L.P.
March 31, 2008
claim or defense that such remedy at law exists. Nothing contained in this
paragraph shall limit the remedies herein, legal or equitable, otherwise
available and all such remedies herein are in addition to any remedies available
at law or otherwise.
     The provisions of this Letter Agreement shall remain in effect for so long
as Co-Investment or its affiliates continue to hold shares of the Company’s
Common Stock in an amount equal to fifty percent (50%) or more of the number of
shares of the Company’s Common Stock purchased under the Purchase Agreement.
     The Company hereby represents and warrants to the Co-Investment that
(a) the Board has approved the actions to be taken by the Company under this
Letter Agreement and (b) this Letter Agreement is a valid and binding obligation
of the Company.
     If the foregoing correctly sets forth our agreement, please so confirm by
executing the enclosed copy of this Letter Agreement in the space provided below
and returning it to me.
[Signature Page Follows]

 

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The Co-Investment Fund II, L.P.
March 31, 2008

     
Very truly yours,
 
   
HEALTH BENEFITS DIRECT CORPORATION
 
   
By:
  /s/ ANTHONY R. VERDI 
 
   
 
  Anthony R. Verdi
Chief Financial Officer
 
   
Confirmed and Agreed to:
 
   
THE CO-INVESTMENT FUND II, L.P.
 
   
By:
  /s/ RICHARD M. FOX 
 
   

  Richard M. Fox

  Vice President

[Signature Page to Board Representative Letter]