Document:

exv4w18

Exhibit 4.18

FORM OF SUBSCRIPTION RIGHTS CERTIFICATE

	 	 	 
	Rights Certificate No.:                     
	 	Number of Rights:                     

THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE HEALTH BENEFITS DIRECT
CORPORATION (THE “COMPANY”) PROSPECTUS, DATED ___, 2009 (THE “PROSPECTUS”) AND ARE
INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE
COMPANY.

HEALTH BENEFITS DIRECT CORPORATION

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

CUSIP NO.: 42220V107

SUBSCRIPTION RIGHTS CERTIFICATE

EVIDENCING SUBSCRIPTION RIGHTS TO PURCHASE

______ UNITS

SUBSCRIPTION PRICE: $1,000 PER UNIT

THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
FEBRUARY 15, 2010, UNLESS EXTENDED OR THE RIGHTS OFFERING IS TERMINATED BY HEALTH BENEFITS DIRECT
CORPORATION.

REGISTERED OWNER:                                         

     THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the
number of subscription rights (“Rights”) set forth above. Each whole Right entitles the holder
thereof, to subscribe for and purchase, at the subscription price of $1,000 (the “Subscription
Price”), one “Unit”, consisting of 250 shares of Series A preferred stock, par value $0.001 per
share, and a five-year warrant to purchase 5,000 additional shares of common stock, par value
$0.001 per share, of the Company at an exercise price of $0.20 per share, pursuant to a rights
offering (the “Rights Offering”), on the terms and subject to the conditions set forth in the
Prospectus and the “Instructions for Use of Health Benefits Direct Corporation Subscription Rights
Certificates” accompanying this Subscription Rights Certificate (the “Basic Subscription Right”).

     If any of the Units available for purchase in the Rights Offering are not purchased by other
holders of Rights pursuant to the exercise of their Basic Subscription Right (the “Excess Units”),
any Rights holder that exercises its Basic Subscription Right in full may subscribe for

 

 

Excess Units pursuant to the terms and conditions of the Rights Offering, subject to proration, as
described in the Prospectus (the “Over-Subscription Privilege”). The Rights represented by this
Subscription Rights Certificate may be exercised by completing Form 1 and any other appropriate
forms on the reverse side hereof and by returning the full payment of the Subscription Price for
each Right subscribed for pursuant to the Over-Subscription Privilege, in addition to the payment
due for Units purchased through your Basic Subscription Right, in accordance with the “Instructions
for Use of Health Benefits Direct Corporation Subscription Rights Certificates” that accompany this
Subscription Rights Certificate.

     Rights evidenced by this Subscription Rights Certificate may not be transferred or sold. The
subscription rights will not be listed for trading on any stock exchange or on the OTC Bulletin
Board.

     IN WITNESS WHEREOF, the Company has caused this Subscription Rights Certificate to be duly
executed under their corporate seals.

Dated: December ___, 2009

	 	 	 	 	 	 	 
	 	 	HEALTH BENEFITS DIRECT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Anthony R. Verdi
	 	 
	 

	 	Title:
	 	Chief Financial Officer and

Chief Operating Officer	 	 

 

 

DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS CERTIFICATE

FOR DELIVERY BY HAND DELIVERY, FIRST CLASS MAIL OR COURIER SERVICE:

Health Benefits Direct Corporation

150 N. Radnor-Chester Road

Suite B-101

Radnor, Pennsylvania 19087

Attention: Francis L. Gillan III

DELIVERY OTHER THAN IN THE MANNER OR TO THE ADDRESSES LISTED

ABOVE WILL NOT CONSTITUTE VALID DELIVERY

PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY

 

 

FORM 1 — EXERCISE OF SUBSCRIPTION RIGHTS

     To subscribe for Units pursuant to your Basic Subscription Right, please complete lines (a)
and (c) and sign under Form 3 below. To subscribe for Units pursuant to your Over-Subscription
Privilege, please also complete line (b) and sign under Form 3 below.

If you have exercised your Basic Subscription Right in full and wish to subscribe for additional
Units pursuant to your Over-Subscription Right:

(c)      Total Amount of Payment Enclosed  = $___

METHOD OF PAYMENT (CHECK ONE):

o Check or bank draft drawn on a U.S. bank, or postal, telegraphic or express money order payable
to “Health Benefits Direct Corporation.” Funds paid by an uncertified check may take at least five
business days to clear.

o Wire transfer of immediately available funds directly to the account maintained by Health
Benefits Direct Corporation for purposes of accepting subscriptions in this Rights Offering (the
“Subscription Account”):

	 	 	 	 	 
	Account Holder:

	 	 	Health Benefits Direct Corporation

	Bank:

	 	 	PNC Bank

	ABA #:

	 	 	031000053	 
	Account No.:

	 	 	862187984	 

 

 

FORM 2 — DELIVERY TO DIFFERENT ADDRESS

     If you wish for the shares of our preferred stock, as well as the warrants, underlying your
subscription rights to be delivered to an address different from that shown on the face of this
Subscription Rights Certificate, please enter the alternate address below, sign under Form 3 and
have your signature guaranteed under Form 4.

 

 

FORM 3 — SIGNATURE

     I acknowledge that I have received the Prospectus for this Rights Offering and I hereby
irrevocably subscribe for the number of Units indicated above on the terms and conditions specified
in the Prospectus.

	 	 	 
	Signature(s)
	 	 
	 

	 	 

IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this
Subscription Rights Certificate in every particular, without alteration or enlargement, or any
other change whatsoever.

 

 

FORM 4 — SIGNATURE GUARANTEE

This form must be completed if you have completed Form 2.

Signature Guaranteed:

	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	(Name of Bank or Firm)	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	(Signature of Officer)	 	 

IMPORTANT: The signature(s) should be guaranteed by an eligible guarantor institution (bank, stock
broker, savings & loan association or credit union) with membership in an approved signature
guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.exv4w19

Exhibit 4.19

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.                      Date of Original Issuance:                     , 20___

     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 $0.20 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)                     , 2014 (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. 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.

     2. 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.

     3. 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
11, the portion of this Warrant not exercised (or called) prior thereto shall be and become void
and of no value.

     4. 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 the registration statement on Form S-1 (Reg. No. 333-162712) relating to the
rights offering (the “Registration Statement”) 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 in accordance with the prospectus included
in the Registration Statement.

          (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 the
Registration Statement becomes effective or it is otherwise not required under state and federal
securities laws:

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.

     5. 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

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Warrant or receiving Warrant Shares upon exercise hereof.

     6. 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.

     7. 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 8). 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 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.

     8. 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
8.

          (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

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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.

          (c) Adjustment upon Issuance of shares of Common Stock. If and whenever on or after
the date of original issuance of this Warrant (the “Original Issue Date”) but prior to the date
that is two years after the Original Issue Date, the Company issues or sells, or in accordance with
this Section 8 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 8(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

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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 8(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 8(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 8(c), except as contemplated below, no further adjustment of the Exercise
Price shall be made by reason of such issue or sale.

     (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 8(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

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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 8(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).

          (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

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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 8 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 8, 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.

     9. 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

8

 

                    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.

     10. 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 10, 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.

     11. 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 two times (2x) 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 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 11. 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, (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 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

9

 

without any liability under Section 16(b) of the Exchange Act. For purposes of Section 9
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 two times (2x) 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
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).

     12. 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.

     13. 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:
 Chief Financial Officer, 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.

     14. 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.

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

     (a) “Bloomberg” means Bloomberg Financial Markets.

10

 

     (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 8(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 NYSE Euronext, the Nasdaq Global Select
Market, the Nasdaq Global Market or the Nasdaq Capital Market.

     (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.

     (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

11

 

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 19. All such determinations shall be appropriately adjusted for any share
dividend, share split or other similar transaction during such period.

     16. 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 (without regard to any limitations on exercise
contained herein) 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.

     17. Purchase Rights. In addition to any adjustments pursuant to Section 8 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 (without regard to any limitations on exercise contained herein)
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.

     18. 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

12

 

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).

     19. 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.

          (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

13

 

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:  	 	Chief Financial Officer and
 Chief Operating
Officer 	 
	 

 

 

HEALTH BENEFITS DIRECT CORPORATION

WARRANT ORIGINALLY ISSUED [                    ], 20__

WARRANT NO. [    ]

EXERCISE NOTICE

TO HEALTH BENEFITS DIRECT CORPORATION:

     The undersigned holder hereby exercises the right to purchase                      of the
shares of Common Stock (“Warrant Shares”) of Health Benefits Direct Corporation, Inc., a Delaware
corporation (the “Company”). Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.

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

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

                               a “Cashless Exercise” with respect to                     
Warrant
Shares.

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

     3. Delivery of Warrant Shares. The Company shall deliver to holder, or its designee or agent
as specified below,                      Warrant Shares in accordance with the terms of the Warrant.
Delivery shall be made to holder, or for its benefit, to the following address:

 

 

 

 

Date:                           ,      

  Name of Registered Holder

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

Warrant Shares Exercise Log

	 	 	 	 	 	 	 
	Date

	 	Number of Warrant
Shares Available to be
Exercised
	 	Number of Warrant
Shares
Exercised
	 	Number of
Warrant Shares
Remaining to
be Exercised

 

 

HEALTH BENEFITS DIRECT CORPORATION

WARRANT ORIGINALLY ISSUED [                    ], 20__

WARRANT NO. [    ]

FORM OF ASSIGNMENT

     [To be completed and signed only upon transfer of Warrant]

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                                             the right represented by the above-captioned Warrant to purchase
                    
shares of Common Stock to which such Warrant relates and appoints                     
attorney to transfer said right on the books of the Company with full power of substitution in the
premises.

Dated:                     , ___

	 	 	 
	 

	 	 
	 

	 	(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
	 
	 	 
	 

	 	 
	 

	 	Address of Transferee
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	In the presence of:

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