Exhibit 10.5
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT made as of this ____ day _____________ 2005,
between Health Benefits Direct Corporation, a Delaware corporation, with offices
at 0000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000 (the "Company") and the
undersigned (the "Subscriber").
WHEREAS, pursuant to a Confidential Memorandum dated November 21,
2005, (the "PPM"), the Company is offering in a private placement (the
"Offering") to accredited investors up to 150 Units for a purchase price of
$50,000 per Unit to a maximum of $7,500,000. Each Unit consists of 50,000 shares
of the Company's common stock, par value $0.001 per share (the "Common Stock"),
and a three-year warrant to purchase 25,000 shares of Common Stock at $1.50 per
share; and
WHEREAS, the Subscriber desires to subscribe for the number of Units
set forth on the signature page hereof, on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS AND COVENANTS OF SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units as is set forth upon the signature page hereof, at a price equal
to $50,000 per Unit, and the Company agrees to sell such Units to the Subscriber
for said purchase price, subject to the Company's right to sell to the
Subscriber such lesser number of Units (or no Units) as the Company may, in its
sole discretion, deem necessary or desirable. The purchase price is payable by
wire transfer of immediately available funds to the account of the Company,
pursuant to the wire instructions attached hereto as EXHIBIT A.
1.2 The Subscriber recognizes that the purchase of Units involves a
high degree of risk in that (i) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Units; (ii) the
Units are not registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities law; (iii) there is no trading market for the
Units, none is likely ever to develop, and the Subscriber may not be able to
liquidate his, her or its investment; (iv) transferability of the Units is
extremely limited; and (v) an investor could suffer the loss of his, her or its
entire investment.
1.3 The Subscriber is an "accredited investor" as such term in defined
in Rule 501 of Regulation D promulgated under the Act, and that the Subscriber
is able to bear the economic risk of an investment in the Units.
1.4 The Subscriber has prior investment experience (including
investment in non listed and non registered securities), and has read and
evaluated, or has employed the services of an investment advisor, attorney or
accountant to read and evaluate, all of the documents furnished or made
available by the Company to the Subscriber and to all other prospective
investors in the Units, including the PPM, as well as the merits and risks of
such an investment by the Subscriber. The Subscriber's overall commitment to
investments which are not readily marketable is not disproportionate to the
Subscriber's net worth, and the Subscriber's investment in the Units will not
cause such overall commitment to become excessive. The Subscriber, if an
individual, has adequate means of providing for his or her current needs and
personal and family contingencies and has no need for liquidity in his or her
investment in the Units. The Subscriber is financially able to bear the economic
risk of this investment, including the ability to afford holding the Units for
an indefinite period or a complete loss of this investment.
1.5 The Subscriber acknowledges receipt and careful review of the PPM,
the draft Current Report on Form 8-K with regard to the Company's merger with a
publicly-traded company, all supplements to the PPM, and all other documents
furnished in connection with this transaction (collectively, the "Offering
Documents") and has been furnished by the Company during the course of this
transaction with all information regarding the Company which the Subscriber has
requested or desires to know; and the Subscriber has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering, and any additional information which the Subscriber
has requested.
1.6 The Subscriber acknowledges that the purchase of Units may involve
tax consequences to the Subscriber and that the contents of the Offering
Documents do not contain tax advice. The Subscriber acknowledges that the
Subscriber must retain his, her or its own professional advisors to evaluate the
tax and other consequences to the Subscriber of an investment in the Units. The
Subscriber acknowledges that it is the responsibility of the Subscriber to
determine the appropriateness and the merits of a corporate entity to own the
Subscriber's Units and the corporate structure of such entity.
1.7 The Subscriber acknowledges that this Offering has not been
reviewed by the Securities and Exchange Commission (the "SEC") or any state
securities commission, and that no federal or state agency has made any finding
or determination regarding the fairness or merits of the Offering. The
Subscriber represents that the Units are being purchased for his, her or its own
account, for investment only, and not with a view toward distribution or resale
to others. The Subscriber agrees that he, she or it will not sell or otherwise
transfer the Units unless they are registered under the Act or unless an
exemption from such registration is available, as the same may be amended from
time to time.
1.8 The Subscriber understands that the provisions of Rule 144 under
the Act are not available for at least one (1) year to permit resales of the
Units, and there can be no assurance that the conditions necessary to permit
such sales under Rule 144 will ever be satisfied. The Subscriber understands
that the Company is under no obligation to comply with the conditions of Rule
144 or take any other action necessary in order to make any exemption for the
sale of the Units without registration available.
1.9 The Subscriber agrees to hold the Company and its directors,
officers and controlling persons and their respective heirs, representatives,
successors and assigns harmless and to indemnify them against all liabilities,
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costs and expenses incurred by them as a result of any misrepresentation made by
the Subscriber contained herein or any sale or distribution by the Subscriber in
violation of the Act (including without limitation the rules promulgated
thereunder), any state securities laws, or the Company's certificate of
incorporation or by-laws, as amended from time to time.
1.10 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Units stating that they have not
been registered under the Act and setting forth or referring to the restrictions
on transferability and sale thereof.
1.11 The Subscriber understands that the Company will review and rely
on this Subscription Agreement without making any independent investigation; and
it is agreed that the Company reserves the unrestricted right to reject or limit
any subscription and to withdraw the Offering at any time.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished at the end of this Subscription Agreement is the
undersigned's principal residence if the Subscriber is an individual or its
principal business address if it is a corporation or other entity.
1.13 The Subscriber acknowledges that if the Subscriber is a
Registered Representative of an NASD member firm, the Subscriber must give such
firm the notice required by the NASD's Conduct Rules, receipt of which must be
acknowledged by such firm on the signature page hereof.
1.14 The Subscriber hereby represents that, except as expressly set
forth in the Offering Documents, no representations or warranties have been made
to the Subscriber by the Company or any agent, employee or affiliate of the
Company and in entering into this transaction, the Subscriber is not relying on
any information, other than that contained in the Offering Documents and the
results of independent investigation by the Subscriber.
1.15 All information provided by the Subscriber in the Investor
Questionnaire attached hereto as EXHIBIT B is true and accurate in all respects,
and the Subscriber acknowledges that the Company will be relying on such
information to its possible detriment in deciding whether the Company can sell
these securities to the Subscriber without giving rise to the loss of an
exemption from registration under the applicable securities laws.
1.16 The Subscriber is aware that the Company has not entered into any
agreement or understanding providing for the purchase of any business or assets
other than those referred to in the PPM and no such agreements have been made,
or are being negotiated, and that by execution of this Subscription Agreement,
the Subscriber consents to any and all resulting terms of such purchases which
will be in the sole discretion of the Company over which the Subscriber will
have no effective influence.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that as of the
date of the closing of this Offering (the "Closing Date"):
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(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to conduct the business which it conducts and proposes to
conduct.
(b) The execution, delivery and performance of this Subscription
Agreement by the Company have been duly authorized by the Company and all other
corporate action required to authorize and consummate the offer and sale of the
Units have been duly taken and approved.
(c) The Units have been duly and validly authorized and issued.
(d) The Company has obtained, or is in the process of obtaining, all
licenses, permits and other governmental authorizations necessary to the conduct
of its business, except where the failure to so obtain such licenses, permits
and authorizations would not have a material adverse effect on the Company. Such
licenses, permits and other governmental authorizations obtained are in full
force and effect, except where the failure to be so would not have a material
adverse effect on the Company, and the Company is in all material respects
complying therewith.
(e) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which would materially
adversely affect the business, financial condition or operations of the Company.
(f) The Company is not in violation of or default under, nor will the
execution and delivery of this Subscription Agreement or the issuance of the
Units, or the consummation of the transactions herein contemplated, result in a
violation of, or constitute a default under, the Company's certificate of
incorporation or by-laws, any material obligations, agreements, covenants or
conditions contained in any bond, debenture, note or other evidence of
indebtedness or in any material contract, indenture, mortgage, loan agreement,
lease, joint venture or other agreement or instrument to which the Company is a
party or by which it or any of its properties may be bound or any material
order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality or court, domestic or foreign.
III. COVENANTS BY THE COMPANY
The Company agrees Subscribers shall have the certain registration
rights with respect to the shares of Common Stock underlying the Units issued to
Subscribers pursuant to the terms of the Registration Rights Agreement annexed
hereto as EXHIBIT C.
IV. TERMS OF SUBSCRIPTION
4.1 Subject to Section 4.2 hereof, the subscription period will begin
as of November 21, 2005 and will terminate at 11:59 PM Eastern Time, on December
31, 2005, unless sooner terminated by the Company, or extended by the Company.
4.2 The Subscriber has effected a wire transfer in the full amount of
the purchase price for the Units to the Company's account in accordance with the
wire instructions set forth on EXHIBIT A hereto.
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4.3 The Subscriber hereby authorizes and directs the Company to
deliver any certificates or other written instruments representing the Units to
be issued to such Subscriber pursuant to this Subscription Agreement to the
address indicated on the signature page hereof.
4.4 The Subscriber hereby authorizes and directs the Company to return
any funds, without interest, for unaccepted subscriptions to the same account
from which the funds were drawn.
4.5 If the Subscriber is not a United States person, such Subscriber
shall immediately notify the Company and the Subscriber hereby represents that
the Subscriber is satisfied as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Units or any
use of this Subscription Agreement, including (i) the legal requirements within
its jurisdiction for the purchase of the Units, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Units or the securities comprising the Units. Such
Subscriber's subscription and payment for, and continued beneficial ownership
of, the Units and the securities comprising the Units will not violate any
applicable securities or other laws of the Subscriber's jurisdiction.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by reputable overnight courier, facsimile
(with receipt of confirmation) or registered or certified mail, return receipt
requested, addressed to the Company, at the address set forth in the first
paragraph hereof, Attention Xxxxxx Xxxxxxx, facsimile (000) 000-0000 and to the
Subscriber at the address indicated on the signature page hereof. Notices shall
be deemed to have been given on the date of mailing or fax, except notices of
change of address, which shall be deemed to have been given when received.
5.2 This Subscription Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Subscription Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
5.4 Notwithstanding the place where this Subscription Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of Delaware. The parties hereby agree that any dispute
which may arise between them arising out of or in connection with this
Subscription Agreement shall be adjudicated before a court located in Broward
County, Florida and they hereby submit to the exclusive jurisdiction of the
federal and state courts of the State of Florida located in Broward County with
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respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, relating to or arising out of
this Subscription Agreement or any acts or omissions relating to the sale of the
securities hereunder, and consent to the service of process in any such action
or legal proceeding by means of registered or certified mail, return receipt
requested, in care of the address set forth below or such other address as the
undersigned shall furnish in writing to the other.
5.5 This Subscription Agreement may be executed in counterparts. Upon
the execution and delivery of this Subscription Agreement by the Subscriber,
this Subscription Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided; subject, however, to
the right hereby reserved to the Company to (i) enter into the same agreements
with other subscribers, (ii) add and/or to delete other persons as subscribers
and (iii) cut back or reject any subscription.
5.6 The holding of any provision of this Subscription Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Subscription Agreement, which shall remain in full
force and effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate, or be construed, as
a waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
______________________________ X $50,000 for each Unit = $___________________.
Number of Units subscribed for Aggregate Purchase Price
MANNER IN WHICH TITLE IS TO BE HELD (PLEASE CHECK ONE):
1. ___ Individual 7. ___ Trust/Estate/Pension or Profit sharing
Plan
Date Opened:______________
2. ___ Joint Tenants with Right of 8. ___ As a Custodian for
Survivorship ________________________________
Under the Uniform Gift to Minors Act
of the State of
________________________________
3. ___ Community Property 9. ___ Married with Separate Property
4. ___ Tenants in Common 10. ___ Xxxxx
5. ___ Corporation/Partnership/ Limited 11. ___ Tenants by the Entirety
Liability Company
6. ___ XXX 12. ___ Foundation described in Section
501(c)(3) of the Internal Revenue Code
of 1986, as amended.
IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 8
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 9.
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EXECUTION BY NATURAL PERSONS
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Exact Name in Which Title is to be Held
------------------------------- ------------------------------------
Name (Please Print) Name of Additional Subscriber
------------------------------- ------------------------------------
Residence: Number and Street Address of Additional Subscriber
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City, State and Zip Code City, State and Zip Code
------------------------------- ------------------------------------
Social Security Number Social Security Number
------------------------------- ------------------------------------
Telephone Number Telephone Number
------------------------------- ------------------------------------
Fax Number (if available) Fax Number (if available)
------------------------------- ------------------------------------
E-Mail (if available) E-Mail (if available)
------------------------------- ------------------------------------
(Signature) (Signature of Additional Subscriber)
ACCEPTED this ___ day of _________ 2005,
on behalf Health Benefits Direct Corporation
By: ________________________________________
Name:
Title:
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EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation, Partnership, Trust, Etc.)
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Name of Entity (Please Print)
Date of Incorporation or Organization:
-----------------------------------------
State of Principal Office:
-----------------------------------------------------
Federal Taxpayer Identification Number:
----------------------------------------
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Office Address
--------------------------------------------
City, State and Zip Code
--------------------------------------------
Telephone Number
--------------------------------------------
Fax Number (if available)
--------------------------------------------
E-Mail (if available)
[seal] By:
------------------------------
Name:
Attest: Title:
-----------------------
(If Entity is a Corporation)
*IF SUBSCRIBER IS A REGISTERED
REPRESENTATIVE WITH AN NASD MEMBER FIRM,
HAVE THE FOLLOWING ACKNOWLEDGEMENT SIGNED
BY THE APPROPRIATE PARTY:
The undersigned NASD member firm
acknowledges receipt of the notice
required by Rule 3050 of the NASD
Conduct Rules
ACCEPTED this ____ day of __________
2005, on behalf of Health Benefits Direct
Corporation
By:
------------------------------
Name:
Title:
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EXHIBIT A
WIRE INSTRUCTIONS
WIRE INSTRUCTIONS:
Bank Routing # 000000000
Account # 7760105689
Account Name: Keystone: Health Benefits Escrow Account
Bank: Commerce Bank
Bank address: 000 0xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: 000-000-0000
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EXHIBIT B
INVESTOR QUESTIONNAIRE
INSTRUCTIONS
This Questionnaire is being given to each person or entity expressing an
interest in participating in the Offering. The purpose of this Questionnaire is
to obtain certain information regarding your status, so the Company can comply
with various laws and regulations governing this investment.
Your answers will be kept confidential. However, you hereby agree that the
Company may present this Questionnaire to such parties as it deems appropriate
in order to ascertain that the offer and the sale of the securities to you will
not result in violations of federal or state securities laws which are being
relied upon by the Company in connection with the offer and sale thereof.
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INVESTOR QUESTIONNAIRE
INSTRUCTIONS: CHECK ALL BOXES BELOW WHICH CORRECTLY DESCRIBE YOU.
|_| You are (I) a bank, as defined in Section 3(a)(2) of the Securities
Act of 1933, as amended - (the "Securities Act"), (II) a savings and
loan association or other institution, as defined in Section
3(a)(5)(A) of the Securities Act, whether acting in an individual or
fiduciary capacity, (III) a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (IV) an insurance company as defined in Section 2(13)
of the Securities Act, (V) an investment company registered under the
Investment Company - Act of 1940, as amended (the "Investment Company
Act"), (VI) a business development company as defined in Section
2(a)(48) of the Investment Company Act, (VII) a Small Business
Investment Company licensed by the U.S. Small Business Administration
under Section 301 (c) or (d) of the Small Business Investment Act of
1958, as amended, (VIII) a plan established and maintained by a state,
its political subdivisions, or an agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees and
you have total assets in excess of $5,000,000, or (IX) an employee
benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and (1) the decision that
you shall subscribe for and purchase Units offered by Health Benefits
Direct Corporation (the "Units"), is made by a plan fiduciary, as
defined in Section 3(21) of ERISA, which is either a bank, savings and
loan association, insurance company, or registered investment adviser,
(2) you have total assets in excess of $5,000,000 and the decision
that you shall subscribe for and purchase the Units is made solely by
persons or entities that are accredited investors, as defined in Rule
501 of Regulation D promulgated under the Securities Act ("Regulation
D") or (3) you are a self-directed plan and the decision that you
shall subscribe for and purchase the Units is made solely by persons
or entities that are accredited investors.
|_| You are a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as amended.
|_| You are an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), a corporation,
Massachusetts or similar business trust or a partnership, in each case
not formed for the specific purpose of making an investment in the
Units and with total assets in excess of $5,000,000.
|_| You are a director or executive officer of Health Benefits Direct
Corporation.
|_| You are a natural person whose individual net worth, or joint net
worth with your spouse, exceeds $1,000,000 at the time of your
subscription for and purchase of the Units.
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|_| You are a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with
your spouse in excess of $300,000 in each of the two most recent
years, and who has a reasonable expectation of reaching the same
income level in the current year.
|_| You are a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Units, whose subscription
for and purchase of the Units is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) of Regulation D.
|_| You are an entity in which all of the equity owners are persons or
entities described in one of the preceding paragraphs.
The undersigned hereby represents and warrants that all of its answers to
this Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased Units, each Unit
consisting of (i) 50,000 shares of common stock, and (ii) a three-year warrant
to purchase 25,000 shares of the common stock of Health Benefits Direct
Corporation.
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Name of Purchaser [please print] Name of Co-Purchaser [please print]
--------------------------------------- ------------------------------------
Signature of Purchaser (Entities please Signature of Co-Purchaser
provide signature of Purchaser's duly
authorized signatory.)
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Name of Signatory (Entities only)
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Title of Signatory (Entities only)
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SPECIAL NOTICE TO FLORIDA RESIDENTS
THE UNITS REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE
HOLDER IN A TRANSACTION EXEMPT UNDER ss. 517.061 OF THE FLORIDA
SECURITIES ACT. THE UNITS HAVE NOT BEEN REGISTERED UNDER SAID ACT IN
THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST
TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN
AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE
AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
WHICHEVER OCCURS LATER.
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EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
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