Exhibit 10.21

RIGHT OF FIRST OFFER AGREEMENT

THIS RIGHT OF FIRST OFFER AGREEMENT (the “Agreement”) is made as of the 24th day
of February 2015 by and among Benefitfocus, Inc., a Delaware corporation (the
“Company”), Mercer LLC, a Delaware limited liability company (“Mercer”), GS
Capital Partners VI Parallel, L.P., a Delaware limited partnership (“GS
Parallel”), GS Capital Partners VI GmbH & Co. KG, a German limited partnership
(“GS GmbH”), GS Capital Partners VI Fund, L.P., a Delaware limited partnership
(“GS Main”), GS Capital Partners VI Offshore Fund, L.P., a Cayman Islands
limited partnership (“GS Offshore”, and each of GS Parallel, GS GmbH, GS Main
and GS Offshore, a “GS Fund”), Oak Investment Partners XII, Limited Partnership,
a Delaware limited partnership (the “Oak Fund”), and the Key Holders listed on
Schedule B.

WHEREAS, each Investor and Key Holder is the legal owner of the number of shares
of Capital Stock, or of options to purchase Common Stock, set forth opposite the
name of such Investor on Schedule A or the name of such Key Holder on Schedule
B, as applicable;

WHEREAS, on the date hereof, the Company and Mercer are entering into a
Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to
which the Company has agreed to issue and sell, and Mercer has agreed to
purchase, on the terms and subject to the conditions set forth therein, the
number of shares of Common Stock set forth therein; and

WHEREAS, in connection with the transactions contemplated by the Securities
Purchase Agreement, the parties hereto desire to enter into this Agreement with
respect to the matters set forth herein.

NOW, THEREFORE, the Company, Mercer, the Key Holders and the Investors agree as
follows:

ARTICLE 1

DEFINITIONS

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For the purpose of this definition, the term “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise. For the avoidance of doubt, (i) any
account or any fund that is managed or advised by an Affiliate of a Person shall
be an Affiliate of such Person and (ii) accounts or funds that are managed or
advised by the same Person or by Persons who are Affiliates shall be Affiliates
of each other. Notwithstanding the foregoing, an operating company (or any of
its subsidiaries) that is controlled by a fund or account managed or advised by
a Person, or Affiliates of such Person, shall not be deemed an Affiliate of such
Person.

--------------------------------------------------------------------------------

“Alliance Agreement” means the Mercer Exchange Software as a Service Agreement,
dated as of April 1, 2013, between the Company and Mercer Health & Benefits LLC,
a Delaware limited liability company, and amended through the date hereof,
including all exhibits, schedules and annexes thereto, and as amended and/or
restated from time to time.

“beneficial owner,” “beneficially owns,” “beneficial ownership” and terms of
similar import have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, (i) assuming the full conversion into, and
exchange and exercise for, shares of Common Stock of all shares of Capital Stock
beneficially owned by the applicable Person and (ii) determined without regard
for the number of days in which such Person has the right to acquire such
beneficial ownership.

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

“Capital Stock” means (a) shares of Common Stock, (b) shares of any other class
or series of capital stock of the Company, (c) options, warrants or other
securities of the Company directly or indirectly exercisable or exchangeable
for, or convertible into, shares of Common Stock or any other class or series of
capital stock of the Company and (d) shares of Common Stock or any other class
or series of capital stock of the Company issued or issuable upon exercise,
exchange or conversion, as applicable, of options, warrants or other securities
of the Company, in each case now owned or subsequently acquired by any Key
Holder, any Investor, or their respective successors or permitted transferees or
assigns.

“Common Stock” means shares of common stock of the Company, par value $0.001 per
share.

“Exercise Notice” means written notice from Mercer notifying the applicable Key
Holders or Investors that Mercer intends to exercise its Right of First Offer as
to any or all of the Transfer Stock with respect to any Proposed Transfer.

“Investors” means the Persons named on Schedule A hereto, each Person to whom
the rights of an Investor are assigned pursuant to Section 3.01 and each Person
who hereafter becomes a signatory to this Agreement pursuant to Section 3.02.

“Key Holders” means the persons named on Schedule B hereto, each Person to whom
the rights of a Key Holder are assigned pursuant to Section 3.01 and each Person
who hereafter becomes a signatory to this Agreement pursuant to Section 3.02.

“Person” means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

 

2

--------------------------------------------------------------------------------

“Proposed Registered Transfer” means any sale, offer to sell, disposition of or
any other like transfer of any Transfer Stock of any of the Key Holders or
Investors proposed to be made by means of (a) an underwritten public offering of
such securities pursuant to an effective registration statement under the
Securities Act, (b) with respect to Investors, but not Key Holders, a sale or
other disposition of any Transfer Stock in compliance with the requirements of
Rule 144 or (c) a block trade to a market maker or broker.

“Proposed Transfer” means any Proposed Registered Transfer or Proposed
Unregistered Transfer.

“Proposed Transfer Notice” means written notice from a Key Holder or Investor
setting forth the terms and conditions of a Proposed Transfer (including, in the
case of any Proposed Registered Transfer, the proposed plan of distribution
therefor, and, in the case of any Proposed Unregistered Transfer, the identity
of the proposed purchaser, if there is a proposed purchaser at the time of
delivery of such notice).

“Proposed Unregistered Transfer” means any assignment, sale, offer to sell,
pledge, mortgage, hypothecation, disposition of or any other like transfer of
any Transfer Stock (or any interest therein) of any of the Key Holders or the
Investors that is proposed to be made and is not a Proposed Registered Transfer.

“Right of First Offer” means the right, but not an obligation, of Mercer (or any
Person to whom it is permitted to assign its rights hereunder pursuant to
Section 5.08) to purchase any or all of the Transfer Stock with respect to a
Proposed Transfer, on the terms and conditions specified in the Proposed
Transfer Notice.

“Rule 144” means Rule 144 under the Securities Act, as such Rule 144 may be
amended (or any successor provision thereto).

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

“Transfer Stock” means shares of Capital Stock owned by any Key Holder or any
Investor, or their respective successors or permitted transferees or assigns to
the extent such successors or permitted transferees or assigns are required
under the terms of this Agreement to become a party hereto, whether now owned or
subsequently acquired by any such Person, or issued with respect to, or upon
conversion or exchange of, such shares of Capital Stock (including, without
limitation, in connection with any stock split, stock dividend,
recapitalization, reorganization, or the like).

ARTICLE 2

RIGHTS OF FIRST OFFER

Section 2.01. Rights of First Offer. On the terms and conditions set forth in
this Agreement, except as set forth in Section 3.01, each Key Holder and
Investor hereby unconditionally and irrevocably grants to Mercer a Right of
First Offer to purchase all or any portion of Transfer Stock that such Key
Holder or Investor may propose to transfer in a Proposed Transfer at the same
price and on the same terms and conditions as those contained in the Proposed
Transfer Notice.

 

3

--------------------------------------------------------------------------------

Section 2.02. Right of First Offer Over Proposed Registered Transfers. Subject
to Section 3.01, each Key Holder or Investor proposing to make a Proposed
Registered Transfer must deliver a Proposed Transfer Notice to Mercer not later
than ten (10) Business Days prior to the earlier of (a) the entry into a
definitive agreement providing for such Proposed Registered Transfer and (b) the
consummation of such Proposed Registered Transfer. Such Proposed Transfer Notice
shall offer Mercer the right to purchase any or all of fifty percent (50%) of
the total number of shares of each class or series of Transfer Stock proposed to
be sold, offered for sale, disposed of or otherwise transferred in such Proposed
Registered Transfer at the price per share of Common Stock in cash set forth in
the Proposed Transfer Notice or in the case of Transfer Stock other than Common
Stock, the amount per share implied by such price per share of Common Stock, as
set forth in the Proposed Transfer Notice. To exercise its Right of First Offer
under this Section 2.02, Mercer must deliver an Exercise Notice to the
applicable Key Holder or Investor within ten (10) Business Days after delivery
of the Proposed Transfer Notice, which shall specify the number of shares of
each class or series of Transfer Stock with respect to which Mercer desires to
exercise its Right of First Offer; provided, however, that Mercer shall use its
commercially reasonable efforts to, as soon as practicable after delivery of the
Proposed Transfer Notice, either deliver an Exercise Notice or notify the
applicable Key Holder or Investor in writing that it waives its right to deliver
an Exercise Notice. If the total number of shares of Transfer Stock that Mercer
has agreed to purchase in the Exercise Notice is less than the total number of
shares of Transfer Stock set forth in the Proposed Transfer Notice (or if Mercer
does not timely deliver an Exercise Notice or delivers a waiver of its right to
deliver an Exercise Notice), then the applicable Key Holder or Investor shall be
free to sell any shares of Transfer Stock that Mercer has declined to purchase
(or, if Mercer does not timely deliver an Exercise Notice or delivers a waiver
of its right to deliver an Exercise Notice, all shares of Transfer Stock set
forth in the applicable Proposed Transfer Notice) at a price in cash not less
than the price set forth in the Proposed Transfer Notice by means of (x) an
underwritten public offering of such securities pursuant to an effective
registration statement under the Securities Act, (y) a sale or disposition in
compliance with the requirements of Rule 144 or (z) a block trade, in each case,
on such terms and conditions as the applicable Key Holder or Investor sees fit,
it being understood and agreed that (i) any other or future Proposed Transfer
made or permitted to be made by the Key Holder or Investor shall remain subject
to the terms and conditions of this Agreement, including this Article 2;
(ii) such public offering, sale pursuant to Rule 144 or block trade shall be
consummated within thirty (30) calendar days after Mercer declines to purchase
the total number of shares of Transfer Stock set forth in the Proposed Transfer
Notice (or fails to timely deliver an Exercise Notice or delivers a waiver of
its right to deliver an Exercise Notice), and if such offering is not
consummated within such thirty (30) calendar day period, such Proposed
Registered Transfer shall again become subject to the Right of First Offer on
the terms set forth herein; and (iii) each of the Key Holders and Investors
agrees not to propose to make any Proposed Transfer unless the seller has the
bona fide intention to sell the applicable shares of Transfer Stock at the time
of such proposal.

 

4

--------------------------------------------------------------------------------

Section 2.03. Right of First Offer Over Proposed Unregistered Transfers. Subject
to Section 3.01, each Key Holder or Investor proposing to make a Proposed
Unregistered Transfer must deliver a Proposed Transfer Notice to Mercer not
later than ten (10) Business Days prior to the earlier of (x) the entry into a
definitive agreement providing for such Proposed Unregistered Transfer and
(y) the consummation of such Proposed Unregistered Transfer. Such Proposed
Transfer Notice shall (a) offer Mercer the right to purchase any or all of the
total number of shares of each class or series of Transfer Stock (or any
interest therein) proposed to be assigned, sold, offered for sale, pledged,
mortgaged, hypothecated, encumbered, disposed of or otherwise transferred in
such Proposed Unregistered Transfer, and (b) contain the other material terms
and conditions (including the price in cash) of the Proposed Unregistered
Transfer. To exercise its Right of First Offer under this Section 2.03, Mercer
must deliver an Exercise Notice to the applicable Key Holder or Investor within
ten (10) Business Days after delivery of the Proposed Transfer Notice, which
shall specify the number of shares of each class or series of Transfer Stock
with respect to which Mercer desires to exercise its Right of First Offer. If
the total number of shares of Transfer Stock that Mercer has agreed to purchase
in the Exercise Notice is less than the total number of shares of Transfer Stock
set forth in the Proposed Transfer Notice (or if Mercer does not timely deliver
an Exercise Notice), then the applicable Key Holder or Investor shall be free to
sell any shares of Transfer Stock that Mercer has declined to purchase (or, if
Mercer does not timely deliver an Exercise Notice, all shares of Transfer Stock
set forth in the applicable Proposed Transfer Notice) at a price in cash not
less than the price set forth in the Proposed Transfer Notice and otherwise on
terms and conditions not materially more favorable to the purchasers thereof
than the terms and conditions set forth in the Proposed Transfer Notice, it
being understood and agreed that (i) any other or future Proposed Transfer made
or permitted to be made by the applicable Key Holder or Investor shall remain
subject to the terms and conditions of this Agreement, including this Article 2;
(ii) such sale shall be consummated within sixty (60) calendar days after Mercer
declines to purchase the total number of shares of Transfer Stock set forth in
the Proposed Transfer Notice (or fails to timely deliver an Exercise Notice)
(provided that such sixty (60) calendar day period shall be automatically
extended in the event that the proposed sale is delayed due to regulatory
review, until five (5) calendar days after the completion of such review, but in
no event later than one hundred twenty (120) calendar days after Mercer has
declined to purchase the total number of shares of Transfer Stock set forth in
the Proposed Transfer Notice (or has failed to timely deliver an Exercise
Notice)), and if such sale is not consummated within such sixty (60) or one
hundred twenty (120) calendar day period, as applicable, such Proposed
Unregistered Transfer shall again become subject to the Right of First Offer on
the terms set forth herein; and (iii) each of the Key Holders and Investors
agrees not to propose to make any Proposed Transfer unless the seller has the
bona fide intention to sell the applicable shares of Transfer Stock at the time
of such proposal.

Section 2.04. Consideration; Closing. (a) If Mercer timely delivers an Exercise
Notice, it shall be irrevocably bound to purchase the shares set forth in the
Proposed Transfer Notice on the terms and subject to the conditions set forth
herein and therein. The closing of the purchase of Transfer Stock by Mercer
shall take place, and all

 

5

--------------------------------------------------------------------------------

payments from Mercer shall have been delivered to the applicable Key Holder or
Investor, as the case may be, (i) no later than thirty (30) calendar days after
the delivery of the Exercise Notice with respect to the Proposed Transfer that
is a Proposed Registered Transfer or (ii) no later than sixty (60) calendar days
after delivery of the Exercise Notice with respect to the Proposed Transfer that
is a Proposed Unregistered Transfer (provided that such sixty (60) calendar day
period shall be automatically extended in the event that the proposed purchase
is delayed due to regulatory review, until five (5) calendar days after the
completion of such review, but in no event later than one hundred twenty
(120) calendar days after delivery of the Exercise Notice with respect to the
Proposed Transfer).

(b) Notwithstanding anything to the contrary herein, in connection with any sale
by any Investor or Key Holder to Mercer pursuant to this Agreement, such
Investor or Key Holder shall be required to provide customary representations,
warranties and indemnities to Mercer only concerning such Investor’s or Key
Holder’s power and authority to enter into the sale agreement, its title to the
shares of Common Stock sold in such sale, the absence of any material consents
required in connection with such sale, the absence of any contravention of law
in connection with such sale, and that its holding of the Transfer Stock and
that its receipt of the purchase price does not violate anti-money laundering,
sanctions or similar laws (and shall not include representations, warranties and
indemnities relating to the business of the Company) even if such Investor or
Key Holder proposes to make additional or different representations, warranties
and indemnities to a third party purchaser. In addition, in connection with any
sale by the Investors or Key Holders to Mercer pursuant to this Agreement, the
Company shall be required to use commercially reasonable efforts to assist
Mercer and the applicable Investor or Key Holder to consummate such sale.

Section 2.05. Effect of Failure to Comply. (a) Transfer Void. Any Proposed
Transfer not made in compliance with the requirements of this Agreement shall be
null and void ab initio, shall not be recorded on the books of the Company or
its transfer agent and shall not be recognized by the Company.

(b) Violation of First Offer Right. If any Key Holder or Investor becomes
obligated to sell any Transfer Stock to Mercer under this Agreement and fails to
deliver such Transfer Stock in accordance with the terms of this Agreement,
Mercer, may, at its option, in addition to all other remedies it may have, send
to such Key Holder or Investor the purchase price for such Transfer Stock as is
herein specified and request that the Company transfer to the name of Mercer on
the Company’s books the certificate or certificates representing the Transfer
Stock to be sold.

Section 2.06. Standstill. For the avoidance of doubt, nothing in this Agreement
does or shall be deemed to amend or otherwise modify the restrictions on
Mercer’s acquisition of additional shares of voting stock of the Company set
forth in Section 4.8 of the Securities Purchase Agreement (as amended, the
“Standstill”), and Mercer acknowledges and agrees that it shall not acquire any
shares of Transfer Stock pursuant to any Right of First Offer hereunder to the
extent that any such acquisition would result in a violation of the Standstill.
Notwithstanding anything herein to the contrary, no Investor

 

6

--------------------------------------------------------------------------------

or Key Holder shall be required to offer Mercer shares of Transfer Stock
pursuant to any Right of First Offer hereunder (i) to the extent the acquisition
thereof by Mercer would result in a violation of the Standstill or (ii) if the
Standstill is terminated or suspended pursuant to Section 4.8 of the Securities
Purchase Agreement or otherwise, to the extent that the acquisition thereof by
Mercer would have resulted in a violation of the Standstill in the absence of
such termination or suspension.

ARTICLE 3

EXEMPT TRANSFERS

Section 3.01. Exempted Transfers. Notwithstanding the foregoing or anything to
the contrary herein, the provisions of Sections 2.01, 2.02 and 2.03 shall not
apply: (a) in the case of a Key Holder or Investor that is an entity, upon a
transfer by such Key Holder or Investor to its stockholders, members, limited or
other partners or other equity holders, (b) in the case of an Investor that is
an entity, upon a transfer by such Investor to any fund or other investment
vehicle of which an Affiliate of such Investor serves as the general partner,
managing member, manager or in a similar capacity (each, an “Affiliated Fund”);
provided, however, that such Investor will not be permitted to transfer any
Transfer Stock to an Affiliated Fund without Mercer’s prior written consent
where following such transfer all or a majority of the consolidated assets owned
by and/or held by such Affiliated Fund is Transfer Stock, (c) to a pledge of
Transfer Stock that creates a mere security interest in the pledged Transfer
Stock; provided, however, that, if such pledge is non-recourse, the pledgee
thereof agrees in writing in advance to be bound by and comply with all
applicable provisions of this Agreement to the same extent as if it were the Key
Holder or Investor making such pledge, (d) in the case of a Key Holder or
Investor that is a natural person, upon a transfer of Transfer Stock by such Key
Holder or Investor made for bona fide estate planning purposes, either during
his or her lifetime or on death by will or intestacy to his or her spouse, child
(natural or adopted), or any other direct lineal descendant of such Key Holder
or Investor (or his or her spouse) (all of the foregoing collectively referred
to as “family members”), or any other relative/person approved by Mercer, or any
custodian or trustee of any trust, partnership or limited liability company for
the benefit of, or the ownership interests of which are owned wholly by, such
Key Holder, Investor or any such family members, (e) pursuant to a merger,
tender offer for any and all shares of Common Stock or other similar business
combination transaction involving the Company, or (f) in the case of a Key
Holder, to any sale of Transfer Stock by such Key Holder pursuant to Rule 144;
provided that in the case of clause(s) (a) (other than (x) with respect to the
Oak Fund or (y) with respect to any GS Fund, any transfer that such GS Fund
reasonably determines is necessary or advisable to reduce, eliminate, modify or
mitigate an adverse effect on such GS Fund or any of its Affiliates arising from
any law, regulation or interpretation thereof applicable to such GS Fund or any
of its Affiliates, so long as such GS Fund intends to transfer assets, or has
transferred assets, other than, or in addition to, Transfer Stock in a similar
manner in order to reduce, eliminate, modify or mitigate such adverse effect),
(b), (c) (solely with respect to non-recourse pledges), and (d) only, the
Investor shall deliver prior written notice to Mercer of such transfer or
pledge, and such shares of Transfer Stock of the Investor or the Key Holder, as
applicable, shall at all times remain subject to the

 

7

--------------------------------------------------------------------------------

terms and restrictions set forth in this Agreement and the transferee thereof
shall, as a condition to such transfer or pledge, deliver a counterpart
signature page to this Agreement to the other parties hereto as confirmation
that such transferee shall be bound by all the terms and conditions of this
Agreement as a Key Holder or an Investor, as applicable (but only with respect
to the securities so transferred to the transferee), including the obligations
of a Key Holder or an Investor with respect to Proposed Transfers of such
Transfer Stock pursuant to Article 2; and provided, further, in the case of any
transfer pursuant to clause (a), (b) or (d) only, that such transfer is made
pursuant to a transaction in which there is no consideration actually paid for
such transfer. If, as a result of a transaction described in clause (e) of this
Section 3.01, the holders of the capital stock of the Company receive shares of
capital stock in the surviving entity in such transaction, or the ultimate
parent entity that directly or indirectly owns the outstanding capital stock of
such surviving entity, that represent more than fifty percent (50%) of the
shares of capital stock of such entity, then the Investors and the Key Holders
agree to enter into an agreement substantially similar to this Agreement
providing that the shares of capital stock received by them as a result of such
transaction will be subject to a right of first offer substantially similar to
the terms and conditions set forth herein. For the avoidance of doubt, this
Section 3.01 specifically allows the Oak Fund to make transfers pursuant to
clause (a) above without the consent of Mercer and without the transferee
executing a counterpart signature page hereto or becoming subject to the terms
and provisions hereof.

Section 3.02. Additional Acquisitions by Key Holders and Investors. For so long
as this Agreement remains in effect, each Key Holder agrees to cause any of its
Affiliates, and each Investor agrees to cause any of its Affiliated Funds, that,
in either case, directly or indirectly acquires any shares of Capital Stock
after the date hereof (other than any acquisition pursuant to a transfer in
accordance with Section 3.01, which shall be governed by and subject to the
terms of such Section 3.01 instead of this Section 3.02) to deliver, no later
than the time of such acquisition, a counterpart signature page to this
Agreement as confirmation that such Affiliate or Affiliated Fund, as applicable,
shall be bound by all the terms and conditions of this Agreement as a Key Holder
or Investor, as applicable (but only with respect to the securities so
acquired), including the obligations of a Key Holder or Investor with respect to
Proposed Transfers of such Transfer Stock pursuant to Article 2 (provided that
the obligations of each GS Fund pursuant to this Section 3.02 shall be limited
to the Affiliated Funds thereof that are managed by the Merchant Banking
Division of The Goldman Sachs Group, Inc. (each, an “Affiliated MBD Fund”)).

Section 3.03. Obligation Not to Make or Permit Certain Indirect Transfers. For
so long as this Agreement remains in effect, each of the Key Holders and
Investors agrees not to cause or permit any direct or indirect sale, offer to
sell, disposition of or any other like transfer of any equity interests of any
Affiliate, in the case of any Key Holder, or any Investor or Affiliated Fund
thereof, in the case of any Investor, all or a majority of whose consolidated
assets directly or indirectly consist of Transfer Stock (provided that the
obligations of each GS Fund pursuant to this Section 3.03 shall be limited to
the other GS Funds, any Affiliated Fund thereof to which any GS Fund has made a
transfer pursuant to Section 3.01 and the Affiliated MBD Funds).

 

8

--------------------------------------------------------------------------------

ARTICLE 4

LEGEND

Each certificate or book entry representing shares of Transfer Stock held by the
Key Holders or Investors, issued to any permitted transferee in connection with
a transfer permitted by Section 3.01 hereof, to the extent that such permitted
transferee is required to become a party to this Agreement pursuant to Section
3.01, or acquired by any Person in connection with an acquisition subject to
Section 3.02 shall be endorsed with the following legend:

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY
THIS [CERTIFICATE][BOOK ENTRY] IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED
BY, THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST OFFER AGREEMENT BY AND
AMONG THE STOCKHOLDER, THE CORPORATION AND CERTAIN OTHER HOLDERS OF STOCK OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE CORPORATION.

Each Key Holder and Investor agrees that the Company may instruct its transfer
agent to impose transfer restrictions on the shares represented by certificates
or book entries bearing the legend referred to in this Article 4 above to
enforce the provisions of this Agreement, and the Company agrees to promptly do
so. The legend shall be removed at the request of the holder upon the earliest
to occur of (a) termination of this Agreement, (b) transfer of Transfer Stock
pursuant to Section 2.02 or Section 2.03 or (c) transfer of Transfer Stock
pursuant to Section 3.01 unless such transferee is required to become a party to
this Agreement pursuant to Section 3.01.

ARTICLE 5

MISCELLANEOUS

Section 5.01. Term. (a) This Agreement shall automatically terminate upon any
termination of the Securities Purchase Agreement in accordance with its terms
prior to the Closing (as defined in the Securities Purchase Agreement), it being
understood and agreed that no termination hereof pursuant to this Section
5.01(a) shall affect the validity of or otherwise have any effect on any prior
purchase of Transfer Stock by Mercer pursuant to its Rights of First Offer
hereunder.

(b) After the Closing, this Agreement shall automatically terminate upon the
earlier of (i) the expiration or termination of the Alliance Agreement in
accordance with its terms, (ii) the first date on which Mercer and its
Affiliates beneficially own less than (A) seventy-five percent (75)% of the
shares of Common Stock acquired by Mercer

 

9

--------------------------------------------------------------------------------

pursuant to the Securities Purchase Agreement or (B) five percent (5%) of the
outstanding shares of Common Stock, in each case in this clause (ii), for a
period of at least forty-five (45) consecutive calendar days, (iii) any breach
by Mercer or its Affiliates of the Standstill and (iv) if Mercer delivers an
Exercise Notice, Mercer failing to acquire the shares of Transfer Stock that are
the subject of such Exercise Notice on the terms and conditions set forth in the
Exercise Notice within the time frame set forth in Section 2.04(a); provided
that, notwithstanding the foregoing, (A) this Agreement shall not terminate
pursuant to Section 5.01(b)(iii) or (iv) unless the applicable Investor or Key
Holder has provided Mercer with reasonably detailed written notice of the basis
for such proposed termination and Mercer has not cured the basis for such
proposed termination within fifteen (15) calendar days after receipt of such
notice; and (B) this Agreement shall not terminate pursuant to Section
5.01(b)(iv) if Mercer fails to acquire the shares of Transfer Stock that are the
subject of such Exercise Notice on the terms and conditions set forth in the
Exercise Notice within the time frame set forth in Section 2.04(a) due to the
failure to receive any regulatory approval required for such acquisition or any
action or omission of any Investor, Key Holder or Person other than Mercer and
its Affiliates. In addition, if the Standstill is terminated or suspended
pursuant to Section 4.8 of the Securities Purchase Agreement or otherwise, any
obligation of the Key Holders or the Investors to comply with Section 2.01,
Section 2.02 and Section 2.03 shall terminate with respect to any Transfer Stock
to the extent that, and for so long as, immediately prior to such termination or
suspension, Mercer would have been prohibited from acquiring as a result of the
Standstill.

Section 5.02. Stock Split. All references to numbers of shares in this Agreement
shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization affecting the Capital Stock and occurring
after the date of this Agreement.

Section 5.03. Representations and Warranties. Each Key Holder and Investor
represents and warrants that as of the date hereof such Key Holder or Investor
is the sole legal owner of the shares of Transfer Stock set forth opposite such
Key Holder’s or Investor’s name on Schedule A or Schedule B hereto, as
applicable, and that no other Person has any interest in such shares (other than
a community property interest as to which the holder thereof has acknowledged
and agreed in writing to the restrictions and obligations hereunder and, with
respect to the Investors, other than any Person who is a direct or indirect
investor, manager, investment advisor, managing member or general partner of
such Investor or any direct or indirect owner of such Person). Each of the
Company and Mercer represents and warrants that true and complete copies of the
final form of the Securities Purchase Agreement and the Alliance Agreement have
been made available to each Key Holder and Investor. Each party hereto
represents and warrants that (a) such party has the requisite corporate,
partnership or other entity power and authority or capacity, as applicable, to
enter into this Agreement, (b) the execution and delivery of this Agreement by
such party has been duly authorized by all necessary corporate, partnership or
other entity action on the part of such party, and (c) this Agreement has been
duly executed by such party and is the valid and binding obligation of such
party enforceable against such party in accordance with its terms.

 

10

--------------------------------------------------------------------------------

Section 5.04. Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed effectively
given and received: (a) upon personal delivery to the party to be notified,
(b) when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient, and if not so confirmed, then on the next
Business Day, (c) five (5) calendar days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one
(1) Business Day after deposit with a nationally recognized overnight courier,
specifying next Business Day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at their address as set
forth on Schedule A or Schedule B hereof, as the case may be, or to such email
address, facsimile number or address as subsequently modified by written notice
given in accordance with this Section 5.04. If notice is given to the Company,
it shall be sent to Benefitfocus, Inc., 100 Benefitfocus Way, Charleston, SC
29492, Attention: Paris Cavic and a copy (which shall not constitute notice)
shall also be sent to Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail,
Suite 300, Raleigh, NC 27607, Attn: Donald R. Reynolds; if notice is given to
the Investors, a copy (which shall not constitute notice) shall also be given to
the applicable party set forth on Schedule A or Schedule B.; and if notice is
given to Mercer, it shall be sent to Mercer LLC, 1166 Avenue of the Americas,
New York, NY 10036, Attention: Rian Miller, General Counsel, and copies (which
shall not constitute notice) shall also be sent to Mercer LLC, 1166 Avenue of
the Americas, New York, NY 10036, Attention: Margaret M. O’Brien, Global Chief
Counsel - Health & Benefits, and Davis Polk & Wardwell LLP, 450 Lexington
Avenue, New York, NY 10017, Attn: Phillip R. Mills.

Section 5.05. Entire Agreement. This Agreement (including the Schedules hereto)
constitutes the full and entire understanding and agreement between the parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties are
expressly canceled.

Section 5.06. Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

Section 5.07. Amendment; Waiver and Termination. This Agreement may be amended,
modified or terminated (in addition to pursuant to Section 5.01 above) and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a written instrument
executed by (a)

 

11

--------------------------------------------------------------------------------

Mercer, (b) the Key Holders holding a majority of the shares of Transfer Stock
then held by all of the Key Holders, (c) all of the Investors and (d) the
Company, solely to the extent such amendment, modification, termination or
waiver would enlarge the Company’s obligations hereunder. Any amendment,
modification, termination or waiver so effected shall be binding upon the
Company, the Investors, the Key Holders and Mercer and all of their respective
successors and permitted assigns whether or not such party, assignee or other
shareholder entered into or approved such amendment, modification, termination
or waiver. The Company shall give prompt written notice of any amendment,
modification or termination hereof or waiver hereunder to any party hereto that
did not consent in writing to such amendment, modification, termination or
waiver. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.

Section 5.08. Assignment of Rights. (a) The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

(b) Except as permitted by Section 3.01, the rights and obligations of the Key
Holders, the Investors and the Company hereunder are not assignable, delegable
or otherwise transferable without Mercer’s prior written consent, it being
acknowledged and agreed that Mercer’s consent to any such assignment, delegation
or other transfer may be conditioned upon any such transferee’s delivery to
Mercer and the Company of a counterpart signature page hereto pursuant to which
such transferee shall confirm its agreement to be subject to and bound by all of
the provisions set forth in this Agreement that were applicable to the
transferor of such transferee. For the avoidance of doubt, nothing herein shall
prohibit the Key Holders and the Investors from transferring their Transfer
Stock as permitted herein, including pursuant to Section 3.01, without the
consent of Mercer and without the transferee executing a counterpart signature
page hereto if such consent and such counterpart signature page are not required
herein, including pursuant to Section 3.01.

(c) Except in connection with an assignment, delegation or other transfer by
Mercer by operation of law to the acquirer of Mercer, or by Mercer to an
Affiliate thereof, the rights and obligations of Mercer hereunder are not
assignable, delegable or otherwise transferable without the prior written
consent of (i) the Key Holders holding a majority of the shares of Transfer
Stock then held by all of the Key Holders, (ii) the holders of a majority of the
shares of Transfer Stock then held by all of the Investors and (iii) the
Company, it being acknowledged and agreed that any such assignment, delegation
or other transfer shall be subject to and conditioned upon any such transferee’s
delivery to the Key Holders, the Investors and the Company of a counterpart
signature page hereto pursuant to which such transferee shall confirm its
agreement to be subject to and bound by all of the provisions set forth in this
Agreement that were applicable to the transferor of such transferee.

 

12

--------------------------------------------------------------------------------

Section 5.09. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.

Section 5.10. Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
giving effect to that body of laws pertaining to conflict of laws.

Section 5.11. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

Section 5.12. Counterparts; Facsimile. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed and delivered by facsimile signature (and by .pdfs) and in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

Section 5.13. Aggregation of Stock. All shares of Capital Stock held or acquired
by Affiliated Persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement and the exercise
of any such rights may be allocated among such Affiliated Persons in such manner
as such Affiliated Persons may determine in their discretion.

Section 5.14. Specific Performance. Each party hereto acknowledges and agrees
that any breach of this Agreement would result in substantial harm to the other
parties hereto for which monetary damages alone could not adequately compensate.
Therefore, in addition to any and all other remedies that may be available at
law, in the event of any breach of this Agreement the parties hereto
unconditionally and irrevocably agree that any non-breaching party hereto shall
be entitled to protective orders, injunctive relief and other remedies available
at law or in equity (including, without limitation, specific performance or the
rescission of purchases, sales and other transfers of Transfer Stock not made in
strict compliance with this Agreement).

Section 5.15. Venue; Service of Process; Waiver of Jury Trial. EACH PARTY HEREBY
IRREVOCABLY CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE STATE OF DELAWARE FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED
HEREBY (INCLUDING WITH RESPECT TO THE ENFORCEMENT HEREOF), AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT MAY NOW OR HEREAFTER HAVE THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF ANY SUCH COURT, AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
IN ANY SUCH

 

13

--------------------------------------------------------------------------------

COURT OR THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED
MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE PARTIES HEREBY IRREVOCABLY
WAIVE ALL RIGHTS TO A TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE HEREUNDER OR
ANY TRANSACTION CONTEMPLATED HEREBY.

[Remainder of Page Intentionally Left Blank]

 

14

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Right of First Offer
Agreement as of the date first written above.

 

THE COMPANY:     BENEFITFOCUS, INC.    

By:

 

/s/ Mason R. Holland, Jr.

    Name:  

Mason R. Holland, Jr.

    Title:  

Executive Chairman of the Board

 

[Signature page to Right of First Offer Agreement]

--------------------------------------------------------------------------------

INVESTORS:

    GS CAPITAL PARTNERS VI FUND, L.P.     By:   GSCP VI Advisors, L.L.C.      
its General Partner    

/s/ Joseph P. DiSabato

    Name:   Joseph P. DiSabato     Title:   Vice President     GS CAPITAL
PARTNERS VI OFFSHORE FUND, L.P.     By:   GSCP VI Offshore Advisors, L.L.C.    
  its General Partner    

/s/ Joseph P. DiSabato

    Name:   Joseph P. DiSabato     Title:   Vice President     GS CAPITAL
PARTNERS VI GMBH & CO. KG     By:   GS Advisors VI, L.L.C.       its Managing
Limited Partner    

/s/ Joseph P. DiSabato

    Name:   Joseph P. DiSabato     Title:   Vice President     GS CAPITAL
PARTNERS VI PARALLEL, L.P.     By:   GS Advisors VI, L.L.C.       its General
Partner    

/s/ Joseph P. DiSabato

    Name:   Joseph P. DiSabato     Title:   Vice President

 

[Signature page to Right of First Offer Agreement]

--------------------------------------------------------------------------------

    OAK INVESTMENT PARTNERS XII, LIMITED PARTNERSHIP     By:   Oak Associates
XII, LLC, its General Partner     By:  

/s/ Ann H. Lamont

    Name:   Ann H. Lamont     Title:   Managing Member KEY HOLDERS:    

/s/ Mason R. Holland, Jr.

    Mason R. Holland, Jr.    

/s/ Shawn Jenkins

    Shawn Jenkins

 

[Signature page to Right of First Offer Agreement]

--------------------------------------------------------------------------------

MERCER:     MERCER LLC     By:  

/s/ Julio Portalatin

    Name:   Julio Portalatin     Title:   President and Chief Executive Officer

 

[Signature page to Right of First Offer Agreement]

--------------------------------------------------------------------------------

Schedule A

INVESTORS

 

Name

   Shares of Common Stock Held GS Capital Partners VI Parallel, L.P.   
1,094,398 shares of Common Stock c/o The Goldman Sachs Group, Inc.    Attn: Bill
Eng    200 West Street 28th Flr    New York, NY 10282    GS Capital Partners VI
GmbH & Co. KG    141,445 shares of Common Stock c/o The Goldman Sachs Group,
Inc.    Attn: Bill Eng    200 West Street 28th Flr    New York, NY 10282    GS
Capital Partners VI Fund, L.P.    3,979,876 shares of Common Stock c/o The
Goldman Sachs Group, Inc.    Attn: Bill Eng    200 West Street 28th Flr    New
York, NY 10282    GS Capital Partners VI Offshore Fund, L.P.    3,310,322 shares
of Common Stock

c/o The Goldman Sachs Group, Inc.

Attn: Bill Eng

   200 West Street 28th Flr    New York, NY 10282    Oak Investment Partners
XII, Limited Partnership    2,441,009 shares of Common Stock Attn: Annie Lamont
   901 Main Avenue Suite 600    Norwalk, CT 06851   

--------------------------------------------------------------------------------

Schedule B

KEY HOLDERS

 

Name

   Shares of Common Stock / Options Held Mason R. Holland, Jr.   
2,451,921 shares of Common Stock (held
by Holland Family Trust)    423,729 Options    5,875 Restricted Stock Units
Shawn Jenkins    2,093,404 shares of Common Stock    847,458 Options    35,248
Restricted Stock Units