Document:

FORM
OF WARRANT

     

    NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) (A)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY OR (II) RULE 144 OR RULE 144A UNDER THE SECURITIES ACT. NOTWITHSTANDING
THE FOREGOING, THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
SECURED BY SUCH SECURITIES.

     

    HEALTH
BENEFITS DIRECT CORPORATION

    

    WARRANT

     

    
      
        	
                Warrant
      No. HBDC-[___]

              	
                Date
      of Original Issuance: September 30,
2010

              

      

    

    

    Health Benefits Direct
Corporation, a Delaware corporation (the “Company”), hereby certifies
that, for value received, [__________] or its registered assigns (the “Holder”), is entitled to
purchase from the Company up to a total of [__________] shares of common stock,
$0.001 par value per share (the “Common Stock”), of the
Company (each such share, a “Warrant Share” and all such
shares, the “Warrant
Shares”) at an exercise price equal to $0.15 per share (as adjusted from
time to time as provided herein, the “Exercise Price”), at any time
and from time to time on or after the date hereof and to and including the
earlier to occur of (a) the Call Event Expiration Date (as defined below) and
(b) September 30, 2015 (the earlier to occur of (a) and (b), the “Expiration Date”), and
subject to the terms and conditions set forth herein. This warrant and any
warrants issued in exchange, transfer or replacement hereof, are referred to
herein as the “Warrant.”

     

    1.           Definitions.  In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined herein shall have the meanings given to such terms in
the Securities Purchase Agreement dated as of September 30, 2010 by and among
the Company and the investors thereto (the “Securities Purchase
Agreement”).

     

    2.           Registration of
Warrant.  The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder hereof from time to time.  The Company may
deem and treat the registered Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.           Registration of
Transfers.  The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed, to the
Company at its address specified herein.  Upon any such registration
or transfer, a new Warrant to purchase Common Stock, in substantially the form
of this Warrant (any such new Warrant, a “New Warrant”), evidencing the
portion of this Warrant so transferred shall be issued to the transferee and a
New Warrant evidencing the remaining portion of this Warrant not so transferred,
if any, shall be issued to the transferring Holder. The acceptance of the New
Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.

     

    4.           Exercise and Duration of
Warrants.  This Warrant shall be exercisable by the registered
Holder at any time and from time to time on or after the date hereof to and
including the Expiration Date.  At 11:59 p.m., New York City time on
the Expiration Date, subject to Section 12, the portion of this Warrant not
exercised (or called) prior thereto shall be and become void and of no
value.

     

    5.           Delivery of Warrant Shares;
Disposition of Warrants and Warrant Shares.

     

    (a)           To
effect exercises hereunder, the Holder shall not be required to physically
surrender this Warrant. Execution and delivery via facsimile 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.
Execution and delivery via facsimile of the Exercise Notice for all of the
Warrant Shares shall have the same effect as cancellation of the original
Warrant after delivery of the Warrant Shares. Upon such delivery of the attached
Exercise Notice to the Company (with the attached Warrant Shares Exercise Log)
at its address for notice set forth herein and upon (1) payment of the
then-applicable Exercise Price multiplied by the number of Warrant Shares that
the Holder intends to purchase hereunder or (2) notifying the Company that this
Warrant is being exercised pursuant to a Cashless Exercise (as defined below),
the Company shall on or before the third (3rd)
Trading Day after receipt thereof issue and deliver to the Holder, a certificate
for the Warrant Shares issuable upon such exercise. The Company shall, upon
request of the Holder and subsequent to the date on which a registration
statement covering the resale of the Warrant Shares has been declared effective
by the Securities and Exchange Commission, use commercially reasonable efforts
to deliver Warrant Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions (“DTC”), if
available, provided, that, the Company may, but will not, be required to change
its transfer agent if its current transfer agent cannot deliver Warrant Shares
electronically through the DTC. A “Date of Exercise” means the
date on which the Holder shall have delivered to the Company: (i) the Exercise
Notice (with the Warrant Exercise Log attached to it) via facsimile,
appropriately completed and duly signed and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the Holder to be purchased (or
notice of a Cashless Exercise) as provided above. On the Date of Exercise, 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).

     

    
      
         

      

      
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    (b)           The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock upon
exercise of this Warrant or to credit such shares to the Holder’s DTC account
(as the case may be) as required pursuant to the terms hereof.

     

    (c)           The
Warrants and Warrant Shares (collectively, the “Securities”) may only be
disposed of in compliance with state and federal securities laws and the
provisions related to transfer and other provisions related to the Securities
set forth in the Securities Purchase Agreement, including without limitation,
Sections 4.2 and 4.14 thereof.

     

    (d)           The
Warrants shall contain the legend set forth above and the stock certificates
evidencing the Warrant Shares will contain the following legend, until such time
as they are not required under the conditions described in the Securities
Purchase Agreement:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) (A)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY OR (II) RULE 144 OR RULE 144A UNDER THE SECURITIES ACT. NOTWITHSTANDING
THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

     

    
      
         

      

      
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    6.           Charges, Taxes and
Expenses.  Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, transfer agent fee or other similar
incidental tax or expense in respect of the issuance of such certificates, all
of which such taxes and expenses shall be paid by the Company; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder or any of its affiliates. The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring this Warrant
or receiving Warrant Shares upon exercise hereof.

     

    7.           Replacement of
Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and a customary
and reasonable indemnity (which shall not include a surety bond), if
requested.  Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable procedures and pay such other
reasonable third-party costs as the Company may prescribe. If a New Warrant is
requested as a result of a mutilation of this Warrant, then the Holder shall
deliver such mutilated Warrant to the Company as a condition precedent to the
Company’s obligation to issue the New Warrant.

     

    8.           Reservation of Warrant
Shares.  The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued
and otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of Persons other than the Holder (taking into account
the adjustments and restrictions of Section 9). The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price (or notice of a
Cashless Exercise) in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable. If, notwithstanding the
foregoing, and not in limitation thereof, at any time while any of the Warrants
(as defined in the Securities Purchase Agreement) 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 the
Warrants at least a number of shares of Common Stock equal to the maximum number
of shares of Common Stock as shall from time to time be necessary to effect the
exercise of all of the Warrants then outstanding (the “Required Reserve Amount”) (an
“Authorized Share
Failure”), then the Company shall as promptly as practicable thereafter
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 the Warrants then outstanding.  Without limiting
the generality of the foregoing sentence, as promptly as practicable after the
date of the occurrence of an 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
reasonable 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.

     

    9.           Certain
Adjustments.  The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.

     

    
      
         

      

      
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    (a)           Stock Dividends and
Splits.  If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, or (iii) combines outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such
event.  Any adjustment made pursuant to clause (i) of this paragraph
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

     

    (b)           Fundamental
Transactions.  If, at any time while this Warrant is
outstanding, (1) the Company effects any merger or consolidation of the Company
with or into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (4) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate
Consideration”).  For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration.  If holders
of Common Stock are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon any exercise of
this Warrant following such Fundamental Transaction.  The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such surviving entity to comply with the provisions of this
paragraph (b) and insuring that the Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.

     

    
      
         

      

      
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    (c)           Adjustment upon Issuance of
shares of Common Stock. If and whenever on or after the date of the
Securities Purchase Agreement but prior to the date that is two years after the
date of the Securities Purchase Agreement, the Company issues or sells, or in
accordance with this Section 9 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 any Excluded
Securities) for a consideration per share (the “New Issuance Price”) less than
a price (the “Applicable
Price”) equal to the Exercise Price in effect immediately prior to such
issue or sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then
immediately after such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to a price equal to the New Issuance Price.  For
purposes of determining the adjusted Exercise Price under this Section 9(c) the
following shall be applicable:

     

    (i)           Issuance of
Options.  If the Company in any manner grants or sells 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 9(c)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any 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. Except as contemplated below, no
further adjustment of the Exercise Price 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 9(c)(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.  Except as contemplated below, no further adjustment of the
Exercise Price 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 9(c), except as contemplated below,
no further adjustment of the Exercise Price shall be made by reason of such
issue or sale.

     

    
      
         

      

      
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    (iii)           Change in Option Price or
Rate of Conversion. If the purchase or exercise price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exercise or exchange of any 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 in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price 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 9(c)(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 9(c) shall be made if such
adjustment would result in an increase of the Exercise Price then in
effect.

     

    (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
for each such security will be the VWAP of such security for the five (5)
Trading Day Period immediately preceding 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 Holder. 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) Trading Days
after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder. 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).

     

    
      
         

      

      
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    (d)           Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant
to paragraphs (a) or (c) of this Section, unless waived in writing by the Holder
with respect to a particular adjustment, the number of Warrant Shares that may
be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such
adjustment.

     

    (e)           Calculations. All
calculations under this Section 9 shall be made to the nearest cent or the
nearest 1/100th of a
share, as applicable.  The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

     

    (f)           Notice of
Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly compute such adjustment in
accordance with the terms of this Warrant and promptly prepare a certificate
setting forth such adjustment, including a statement of the adjusted Exercise
Price and adjusted number or type of Warrant Shares or other securities issuable
upon exercise of this Warrant (as applicable), describing the transactions
giving rise to such adjustments and showing in detail the facts upon which such
adjustment is based. Upon written request of a Holder, the Company will promptly
deliver a copy of each such certificate to the Holder and to the Company’s
transfer agent.

     

    (g)           Notice of Corporate
Events.  If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common
Stock, including, without limitation, any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating or solicits
stockholder approval for any Fundamental Transaction or (iii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall deliver to the Holder a notice describing the material
terms and conditions of such transaction, at least 10 calendar days prior to the
applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and
the Company will take all steps reasonably necessary in order to insure that the
Holder is given the practical opportunity to exercise this Warrant prior to such
time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall not
affect the validity of the corporate action required to be described in such
notice. To the extent that any notice provided hereunder constitutes, or
contains, material, non-public information, the Company shall simultaneously
file such notice pursuant to a Current Report on Form 8-K.

     

    
      
         

      

      
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    10.          Payment of Exercise
Price. The
Holder shall pay the Exercise Price by delivery to the Company of immediately
available funds. Notwithstanding anything contained herein to the
contrary, the Holder may, in its sole discretion, unless a Preliminary Call
Event has occurred prior to such Exercise Date (and only for so long as such
Preliminary Call Event is continuing) or the Company has timely delivered an
effective notice of a Call Event to the Holder prior to the Exercise Date,
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
VWAP of the shares of Common Stock for the 5 Trading Day period 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.

    

    11.          No Rights as
Stockholder.  Until the exercise of this Warrant, the Holder
shall not have or exercise any rights by virtue hereof as a stockholder of the
Company. 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 stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 11, the Company shall provide the Holder with
copies of the same notices and other information given to the stockholders of
the Company generally, contemporaneously with the giving thereof to the
stockholders.

     

    
      
         

      

      
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    12.           Call Event. At any
point after which the VWAP of the Common Stock for a minimum of 20 consecutive
Trading Days shall have been equal to at least eight times (8x) the Exercise
Price (a “Call Event”),
the Company may, at its option, provide written notice of such Call Event to
all, but not less than all, holders of Warrants (as defined in the Securities
Purchase Agreement) within 10 Trading Days after the occurrence of the Call
Event, in which case, the  date that is ten business days after the
Company has provided such written notice to all such holders of a Call Event
shall be the “Call Event
Expiration Date.” For the avoidance of doubt, at 11:59 p.m., New York
City time on the Call Event Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value as further set
forth below in this Section 12. Notwithstanding the foregoing, a notice of a
Call Event shall not be effective  with respect to the Holder unless
(i) one or more Registration Statement(s) covering all of the shares issuable
upon exercise of the Warrants held by the Holder is (or are, as the case may be)
effective and
is (or are, as the case may be) not then suspended and no stop order is in
effect with respect thereto, and the Holder is able to sell all such shares
pursuant to such Registration Statement(s) through the Call Event Expiration
Date, (ii) on each Trading Day during the thirty (30) Trading Day period
immediately preceding the Call Event Expiration Date (the “Requisite Period”), all of the
shares of Common Stock issuable upon exercise of the Warrants held by the Holder
are freely tradable, without restriction (subject to compliance with prospectus
delivery requirements to the extent applicable), on an Eligible Market (other
than such shares which are properly excluded from one or more Registration
Statements pursuant to the terms of the Registration Rights Agreement), (iii) on
each day during the Requisite Period, the shares of Common Stock issuable upon
exercise of the Warrants held by the Holder are designated for listing on an
Eligible Market and shall not have been suspended from trading on such exchange,
(iv) the Company shall have, at all times during the Requisite Period, delivered
shares of Common Stock upon exercise of the Warrants held by a Holder on a
timely basis in accordance with the provisions of the Securities Purchase
Agreement and this Warrant, and (v) the Holder is able to sell all shares
issuable upon exercise of the Warrants held by the Holder at all times through
the Call Event Expiration Date without any liability under Section 16(b) of the
Exchange Act. For purposes of Section 10 hereof, “Preliminary Call Event” shall occur at any
point after which the VWAP of the Common Stock for a minimum of 10 consecutive
Trading Days shall have been equal to at least eight times (8x) the Exercise
Price and the other conditions of a Call Event set forth above capable of being
satisfied prior to such point are satisfied (including, without limitation, that
one or more Registration Statement(s) covering all of the shares issuable upon
exercise of the Warrants held by the Holder (other than such shares which are
properly excluded therefrom pursuant to the terms of the Registration Rights
Agreement) is (or are, as the case may be) effective and is (or are, as
the case may be) not then suspended and no stop order is in effect with respect
thereto).

     

    13.           No Fractional Shares.
No fractional shares of Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares which would,
otherwise be issuable, the Company shall pay cash equal to the product of such
fraction multiplied by the VWAP of the shares of Common Stock for the 5 Trading
Day period immediately preceding the Date of Exercise.

     

    14.           Notices. Any and all
notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section on
a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on
any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service with next day delivery
specified, or (iv) upon actual receipt by the party to whom such notice is
required to be given.  The addresses for such communications shall be:
(i) if to the Company, to Health Benefits Direct Corporation, Health Benefits
Direct Corporation, 150 N. Radnor-Chester Road, Radnor, PA 19087, Facsimile:
(484) 654-2212, Attention: Vice President and Controller, or such other address
as the Company shall so notify the Holder, or (ii) if to the Holder, to the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    15.           Warrant
Agent.  The Company shall serve as warrant agent under this
Warrant.  Upon 10 days’ notice to the Holder, the Company may appoint
a new warrant agent.  Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.

     

    16.           Additional
Definitions.  For purposes of this Warrant, the following terms
shall have the following meanings:

     

    (a)           “Bloomberg” means Bloomberg
Financial Markets.

     

    (b)           “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 9(c))(i) and (ii) hereof
regardless of whether the Options or Convertible Securities are actually
exercisable at such time.

     

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

     

    (d)           “Eligible Market” means the
Principal Market, The New York Stock Exchange, Inc., the Nasdaq Global Select
Market, the Nasdaq Global Market, the Nasdaq Capital Market or the American
Stock Exchange.

     

    (e)           “Excluded Securities” means
Options, Convertible Securities or Common Stock issued or issuable: (i) upon
exercise of the Warrants, (ii) upon conversion of any Options or Convertible
Securities which are outstanding on the date hereof, (iii) pursuant to any
equity compensation plan or arrangement, or (iv) in connection with mergers,
acquisitions, strategic business partnerships or alliances, joint ventures, bank
financings (or similar financings), vendor, supplier and consulting
arrangements, equipment or other leases or other transactions, the primary
purpose of which, in the reasonable judgment of the Company's Board of
Directors, is not to raise additional equity capital or convertible
debt.

     

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

     

    (g)           “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.

     

    (h)           “Principal Market” means the
National Association of Securities Dealers, Inc. OTC Bulletin
Board.

     

    (i)           
“Successor Entity” means
the Person formed by, resulting from or surviving any Fundamental
Transaction.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (j)           “Trading Day” means any day on
which the Common Stock is 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 is
then traded; provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is 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).

     

    (k)           “VWAP” means, for any security
as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading
market for such security, then on the principal securities exchange or
securities market on which such security is then traded) 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” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If VWAP cannot be calculated for such security on such
date on any of the foregoing bases, the VWAP 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 in accordance with the
procedures in Section 20. All such determinations shall be appropriately
adjusted for any share dividend, share split or other similar transaction during
such period.

     

    17.           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, 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, the Holder will be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant immediately
before the date on which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the participation in such
Distribution.

     

    18.           Purchase
Rights.  In addition to any adjustments pursuant to Section 9
above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    19.          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 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
Warrants, the maximum number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of the Warrants then outstanding
(without regard to any limit on exercise contained therein).

     

    20.          Miscellaneous.

     

    (a)           This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective permitted successors and assigns.  Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant.  This Warrant may be
amended only in writing signed by the Company and the Holder and their
successors and assigns.

     

    (b)           All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”) (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of Wilmington, State of Delaware (the “Delaware Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the Delaware
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any Delaware Court, or that
such Proceeding has been commenced in an improper or inconvenient forum. Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such 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 Warrant 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.  Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Warrant, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (c)           The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.

     

    (d)           In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

     

    [SIGNATURE
PAGE FOLLOWS]

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.

     

    
      
        
          
            
              
                	
                        HEALTH
      BENEFITS DIRECT CORPORATION

                      
	 
      	 
      
	
                        By:

                      	 
      
	
                        Name: 

                      	
                        Anthony
      R. Verdi

                      
	
                        Title:   Acting
      Chief Executive Officer, Chief 

                        Operating
      Officer and Chief Financial
OfficeSeptember
30, 2010

     

    Independence
Blue Cross

    1901
Market Street

    Philadelphia,
PA 19103

     

    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, by
and among the Health Benefits Direct Corporation (the “Company”),
Independence Blue Cross (“IBC”) and
the other investors signatory thereto (the “Purchase
Agreement”), and to induce IBC 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.           One
director designated by IBC (the “IBC
Director”) 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, except for the Company’s 2010 annual meeting of shareholders, and, in
the event of an increase in the number of members of the Company’s Board, such
greater number of directors designated by IBC 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 one
director;

    

    2.           In
the event of a vacancy in the Board seat previously held by an IBC Director, a
successor director designated by IBC shall be appointed to fill such
vacancy;

    

    3.           Each
director designated by IBC to be an IBC 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.

    

    4.           Without
limiting the general nature of the foregoing, (a) on or prior to the earlier of
the Subsequent Closing Date or the Subsequent Closing Deadline, the number of
members of the Company’s Board shall be increased to eleven (11), and (b) as
soon as reasonably practicable but in any event within five (5) days following
the designation by IBC of the IBC Director and the qualification of such
individual pursuant to Paragraph 3, the IBC Director shall be appointed as a
member of the Board to fill the vacancy created by the increase in the
number of members of the Company’s Board, and to serve as a director until the
expiration of the term ending at the Company’s 2010 annual meeting of
shareholders and until his or her successor has been duly elected and qualified
or his or her earlier death, resignation or removal.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Independence
Blue Cross

    September
30, 2010

    

    5.           The
Company shall include the IBC Director 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 IBC Director at each annual meeting of shareholders (and in any
consent for the election of directors solicited by the Company), except for the
Company’s 2010 annual meeting of shareholders, including, without limitation,
recommending that the Company’s shareholders vote in favor of the election of
the IBC Director 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 IBC Director, except for such
proxies that specifically indicate a vote to withhold authority with respect to
the IBC Director.  Neither the Board nor the Company shall take any
position, make any statements or take any action inconsistent with such
recommendations;

    

    6.           The
Company shall cause The Co-Investment Fund II, L.P. to enter into a voting
agreement with IBC, substantially in the form attached hereto as Exhibit A within five
(5) days of the date hereof; and

    

    7.           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 IBC 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 IBC 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 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 IBC or
its affiliates continue to hold either (i) shares of the Preferred Stock in an
amount equal to fifty percent (50%) or more of the number of shares of the
Preferred Stock purchased under the Purchase Agreement or (ii) 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 that IBC is entitled to
receive upon conversion of the Preferred Stock acquired under the Purchase
Agreement (the “Term”).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Independence
Blue Cross

    September
30, 2010

    

    The
Company hereby represents and warrants to IBC 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]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Independence
Blue Cross

    September
30, 2010

    

    Very
truly yours,

     

    HEALTH
BENEFITS DIRECT CORPORATION

     

    
      
        
          	
                  By:

                	
                  /s/ Anthony R. Verdi

                
	 
      	
                  Name: 

                	
                  Anthony
      R. Verdi

                
	 
      	
                  Title:

                	
                  Acting
      Chief Executive Officer, Chief

                
	 
      	 
      	
                  Operating
      Officer and Chief Financial

                
	 
      	 
      	
                  Officer

                

        

      

    

     

    Confirmed
and Agreed to:

     

    INDEPENDENCE
BLUE CROSS

     

    
      
        
          
            	
                    By:

                  	
                    /s/ Joseph A. Frick

                  
	 
      	
                    Name: 

                  	
                    Joseph
      A. Frick

                  
	 
      	
                    Title:

                  	
                    President
      & Chief Executive
Officer

                  

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Exhibit
A

     

    VOTING
AGREEMENT

     

    See
attached.

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