REGISTRATION RIGHTS AGREEMENT
Exhibit 4.2
EXECUTION COPY
This Registration Rights Agreement (this “Agreement”) is made and entered into as of March 30,
2007, by and among Health Benefits Direct Corporation, a Delaware corporation (the “Company”), and
the investors signatory hereto (each a “Investor” and collectively, the “Investors”).
This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof among the Company and the Investors (the “Purchase Agreement”).
In consideration of the mutual covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and
the Investors hereby agree as follows, with the intent to be legally bound hereby:
1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the respective meanings set
forth in this Section 1:
“Common Stock” means the common stock, par value $0.001 per share, of the Company.
“Effective Date” means the date that the Registration Statement filed pursuant to Section
2(a), 2(b) or 2(c) of this Agreement is first declared effective by the Commission.
“Effectiveness Date” means: (a) with respect to the initial Registration Statement required to
be filed to cover the resale by the Holders of the Registrable Securities the 90th calendar day
after the Pricing Date (or the 150th calendar day after the Pricing Date in the event that such
Registration Statement is subject to review by the Commission) and (b) with respect to any
additional Registration Statements that may be required pursuant to Section 2(b) or 2(c) hereof,
the 90th calendar day following the date on which the Company first knows, or reasonably should
have known, that such additional Registration Statement is required under such Section (or the
150th calendar day after such date in the event that such Registration Statement is subject to
review by the Commission).
“Effectiveness Period” shall have the meaning set forth in Section 2(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Filing Date” means, with respect to the initial Registration Statement required to be filed
to cover the resale by the Holders of the Registrable Securities, within 30 days following the
later of (i) the date the Company is initially required to file its Form 10-KSB for the fiscal year
ended December 31, 2006 with the Commission (without any extensions), or (ii) the Pricing
Date.
“Holder” or “Holders” means an Investor or Investors (as the case may be), or any transferee
or assignee of any Registrable Securities, to whom an Investor assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in accordance with the
Purchase Agreement and any transferee or assignee thereof to whom a transferee or assignee of any
Registrable Securities assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with the Purchase Agreement.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Losses” shall have the meaning set forth in Section 5(a).
“Pricing Date” means the date of this Agreement.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
“Prospectus” means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such Registration
Statement, and all other amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
“register,” “registered,” and “registration” refer to a registration effected by preparing and
filing one or more Registration Statements (as defined below) in compliance with the Securities Act
and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by
the Commission.
“Registrable Securities” means (i) the Shares, (ii) the Warrant Shares and (iii) any
securities issued or issuable with respect to the securities referenced in (i) or (ii) above,
including, without limitation, as a result of any stock dividend, stock split or other
distribution, recapitalization, merger, consolidation, reorganization, exchange or similar event or
otherwise (without regard to any limitations on exercises of the Warrants).
“Registration Statement” means the initial registration statement required to be filed under
the Securities Act in accordance with Section 2(a) and any additional registration statement(s)
required to be filed under Sections 2(b) or 2(c), including (in each case) the Prospectus,
amendments and supplements to such registration statements or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statements.
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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means the shares of Common Stock issued or issuable to the Investors by the Company
pursuant to the Purchase Agreement.
“Warrants” means the Common Stock purchase warrants issued or issuable to the Investors
pursuant to the Purchase Agreement.
“Warrant Shares” means the shares of Common Stock issued or issuable upon exercise of the
Warrants.
2. Registration.
(a) As soon as reasonably practicable, but in no event later than the Filing Date, the Company
shall prepare and file with the Commission a Registration Statement on Form SB-2 covering the
resale of all Registrable Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall contain (except if otherwise required pursuant to written comments received from
the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached
hereto as Annex A. The Company shall use its reasonable best efforts to cause the Registration
Statement to be declared effective under the Securities Act as soon as practicable but, in any
event, no later than the Effectiveness Date, and shall use its reasonable best efforts to keep the
Registration Statement effective under the Securities Act until the date which is two years after
the date that the Registration Statement is declared effective by the Commission or such earlier
date when all Registrable Securities covered by the Registration Statement have been sold or may be
sold without volume restrictions pursuant to Rule 144(k) promulgated under the Securities Act (the
“Effectiveness Period”).
(b) If for any reason the Commission does not permit all of the Registrable Securities to be
included in the Registration Statement filed pursuant to Section 2(a), or for any other reason any
Registrable Securities are not permitted by the Commission to be included on a Registration
Statement filed under this Agreement, then the Company shall prepare and file as soon as possible
after the date on which the Commission shall indicate as being the first date or time that such
filing may be made, an additional Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration Statement for an offering
to be made on a continuous basis at the market pursuant to Rule 415 or otherwise as
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may be acceptable to a Holder whose Registrable Securities were not registered for resale.
Each such Registration Statement shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such Registration Statement) the “Plan of
Distribution” attached hereto as Annex A. The Company shall use its reasonable best efforts to
cause each such Registration Statement to be declared effective under the Securities Act as soon as
possible but, in any event, no later than its Effectiveness Date, and shall use its reasonable best
efforts to keep such Registration Statement effective under the Securities Act during the entire
Effectiveness Period.
(c) If at any time during the Effectiveness Period, less than 95% of the then Registrable
Securities are then registered on a Registration Statement(s), then the Company shall file as soon
as reasonably practicable, but in any event not later than 30 days after less than 95% of the
Registrable Securities are then registered on a Registration Statement, subject to any restrictions
imposed by Rule 415, an additional Registration Statement covering the resale by the Holders of not
less than 100% of the number of then Registrable Securities. The calculation set forth in the
foregoing sentence shall be made without regard to any limitation on the exercise of the Warrants
and such calculation shall assume that the Warrants are then exercisable for shares of Common Stock
at the then prevailing applicable Exercise Price (as defined in the Warrants).
(d) If: (i) a Registration Statement covering all of the Registrable Securities required to be
covered thereby is not filed by the Company with the Commission on or prior to the Filing Date (or
the applicable filing date if the Registration Statement is not the initial Registration Statement
required to be filed under Section 2(a)), (ii) a Registration Statement is not declared effective
by the Commission on or prior to its required Effectiveness Date (it being understood that if the
Company shall not have filed a “final” prospectus for the Registration Statement with the SEC under
Rule 424(b) in accordance with Section 2(g) below (whether or not such a prospectus is technically
required by such rule), the Company shall not be deemed to have satisfied this clause (ii)), (iii)
the Company fails to file a request for the acceleration of the Effectiveness Date of the
applicable Registration Statement as required by Section 3(c), (iv) there is a suspension or
delisting of the Company’s Common Stock (or the Company fails to timely list all the Registrable
Securities) on its principal trading market or exchange, (v) after its Effective Date, other than
during an Allowable Grace Period (as defined below), such Registration Statement ceases to be
effective and available for use by the Holders as to any Registrable Securities to which it is
required to cover at any time prior to the expiration of its Effectiveness Period for up to no more
than 3 consecutive Trading Days (or 20 Trading Days in any 12 month period in the aggregate) (any
such failure or breach being referred to as an “Event,” and for purposes of clauses (i)-(iv), on
the date on which such Event occurs, or for purposes of clause (v), the date on which the Allowable
Grace Period or other specified period is exceeded, being referred to as “Event Date”), then, in
addition to any other rights available to the Holders under this Agreement or under applicable law:
(x) on each such Event Date the Company shall pay to each Holder an amount in cash, as partial
damages and not as a penalty, equal to 1.5% of the aggregate Investment Amount paid by such Holder
pursuant to the Purchase Agreement; and (y) on each 30-day anniversary of each such Event Date (if
the applicable Event shall not have been cured by such date) until the applicable Event is cured,
the Company shall pay to each Holder an amount in cash, as partial damages and not as a penalty,
equal to 1.5% of the aggregate Investment Amount paid by such Holder pursuant to the Purchase
Agreement. The partial damages pursuant to the terms hereof shall apply on a pro rata basis for any
portion of a month
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prior to the cure of an Event. Notwithstanding the foregoing, in no event shall the partial
damages under this Section 2(d) exceed an amount equal to 20% of the aggregate Investment Amounts.
(e) Notwithstanding anything to the contrary contained in this Agreement, in the event the
staff of the Commission (the “Staff”) or the Commission seeks to characterize any offering pursuant
to a Registration Statement filed pursuant to this Agreement as constituting an offering of
securities by or on behalf of the Company, or in any other manner, such that the Staff or the
Commission do not permit such Registration Statement to become effective and used for resales in a
manner that does not constitute such an offering and that permits the continuous resale at the
market by the Holders participating therein (or as otherwise may be acceptable to each Holder)
without being named therein as an “underwriter,” then the Company shall reduce the number of shares
to be included in such Registration Statement by all Holders until such time as the Staff and the
Commission shall so permit such Registration Statement to become effective as aforesaid. In
making such reduction, the Company shall reduce the number of shares to be included by all Holders
on a pro rata basis (based upon the number of Registrable Securities otherwise required to be
included for each Holder) unless the inclusion of shares by a particular Holder or a particular set
of Holders are resulting in the Staff or the Commission’s “by or on behalf of the Company” offering
position, in which event the shares held by such Holder or set of Holders shall be the only shares
subject to reduction (and if by a set of Holders on a pro rata basis by such Holders or on such
other basis as would result in the exclusion of the least number of shares by all such Holders).
In addition, in the event that the Staff or the Commission requires any Holder seeking to sell
securities under a Registration Statement filed pursuant to this Agreement to be specifically
identified as an “underwriter” in order to permit such Registration Statement to become effective,
and such Holder does not consent to being so named as an underwriter in such Registration
Statement, then in each such case, the Company shall reduce the total number of Registrable
Securities to be registered on behalf of such Holder, until such time as the Staff or the
Commission does not require such identification or until such Holder accepts such identification
and the manner thereof. Any reduction pursuant to this paragraph will first reduce all Registrable
Securities other than those issued pursuant to the Purchase Agreement and in the event of any
reduction pursuant to this paragraph, no Holder shall have any claim against the Company as a
result of such reduction and any Event or other delay or breach of this Agreement occurring
primarily due to such action by the Staff or the Commission and any such relating reduction shall
not require the Company to pay any partial damages pursuant to Section 2(d) hereof or otherwise
provide the basis for any claim by any Holder against the Company pursuant to the Transaction
Documents (it being understood that the foregoing does not constitute a waiver of Section 3.2(f) of
the Securities Purchase Agreement by any Holder or the obligations of the Company under this
paragraph and elsewhere in relation thereto). In the event of any reduction in Registrable
Securities pursuant to this paragraph, an affected Holder shall have the right to require, upon
delivery of a written request to the Company signed by the Holder, the Company to file a
registration statement within 30 days of such request (subject to any restrictions imposed by Rule
415 or required by the Staff or the Commission) for re-sale by such Holder in a manner acceptable
to such Holder, and the Company shall following such request cause to be and keep effective such
registration statement in the same manner as otherwise contemplated in this Agreement for
registration statements hereunder, in each case until such time as:
(i) all Registrable Securities
held by such Holder have been registered pursuant to an effective Registration Statement in a
manner acceptable to such Holder or (ii) the Registrable Securities may be resold by such Holder
without restriction (including volume limitations) pursuant to Rule
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144(k) of the Securities Act (taking account of any Staff position with respect to “affiliate”
status) or (iii) the Holder agrees to be named as an underwriter in any such Registration Statement
in a manner acceptable to Holder as to all Registrable Securities held by such Holder and that have
not theretofore been included in a Registration Statement under this Agreement (it being understood
that the special demand right under this sentence may be exercised by a Holder multiple times and
with respect to limited amounts of Registrable Securities in order to permit the re-sale thereof by
such Holder as contemplated above).
(f) In the event that Form SB-2 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall use reasonable best efforts to (i) register the
resale of the Registrable Securities on another appropriate form reasonably acceptable to the
Holders and (ii) undertake to register the Registrable Securities on Form SB-2 as soon as such form
is available, provided that the Company shall use reasonable best efforts to maintain the
effectiveness of the Registration Statement then in effect until such time as a Registration
Statement on Form SB-2 covering the Registrable Securities has been declared effective by the
Commission. In the event the Company becomes eligible to register the Registrable Securities on
Form S-3, the Company shall use reasonable best efforts to promptly register the Registrable
Securities on Form S-3, provided that the Company shall use reasonable best efforts to maintain the
effectiveness of the Registration Statement(s) then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared effective by the
Commission.
(g) By 5:30 p.m. on the Trading Day immediately following the Effective Date of each
Registration Statement, the Company shall file with the Commission in accordance with Rule 424
under the Securities Act the final prospectus to be used in connection with sales pursuant to such
Registration Statement.
3. Registration Procedures
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than five (5) Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto (except for any amendment or supplement
thereto related to the filing of an Annual Report on Form 10-K (or 10-KSB), Quarterly Reports on
Form 10-Q (or 10-QSB), Current Reports on Form 8-K, and any similar or successor reports), the
Company shall furnish to the Holders copies of such document, as proposed to be filed in
substantially final form. The Company shall (A) permit each Holder to review and comment upon (i)
each Registration Statement at least five (5) Trading Days prior to its filing with the Commission,
provided that such comments are received by the Company no later than three (3) Trading Days after
providing such Registration Statement for review, and (ii) all amendments and supplements to all
Registration Statements (except for any amendment or supplement thereto related to the filing of an
Annual Report on Form 10-K (or 10-KSB), Quarterly Reports on Form 10-Q (or 10-QSB), Current Reports
on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to
their filing with the Commission, provided that such comments are received by the Company no later
than three (3) Trading Days after providing such amendment or supplement for review, and (B) shall
consider all such
reasonable comments in good faith.
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(b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the Securities Act all of
the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from the Commission with
respect to each Registration Statement or any amendment thereto and, as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from and to the
Commission relating to such Registration Statement that pertain to the Holders as a Selling
Stockholder or to the Plan of Distribution, but would not result in the disclosure to the Holders
of material, non-public information concerning the Company or any of its subsidiaries; and (iv)
comply in all material respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statements and the disposition of all Registrable Securities covered by
each Registration Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b))
by reason of the Company filing a report on Form 10-Q (or Form 10-QSB) or Form 10-K (or Form
10-KSB) or any analogous report under the Exchange Act, the Company shall have incorporated such
report by reference into such Registration Statement, if applicable, or shall file such amendments
or supplements with the Commission on the same day on which the Exchange Act report is filed, if
practicable. The Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the circumstances in
which they were made) not misleading.
(c) Notify the Holders Counsel (which may occur electronically and any other notifications or
documents required to be provided to a Holder or any other party hereunder may be provided
electronically pursuant to the notice provisions contained herein) as promptly as reasonably
possible and (if requested by any such Person) confirm such notice in writing no later than one
three (3) Trading Days following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed or is filed; (B) when
the Commission notifies the Company whether there will be a “review” of a Registration Statement or
post-effective amendment and whenever the Commission comments in writing on such Registration
Statement or post-effective amendment (the Company shall provide true and complete copies thereof
and all written responses thereto to each of the Holders, but not information which the Company
believes in good faith would constitute material, non-public information); and (C) with respect to
each Registration Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or Prospectus or for additional information
that pertains to the Holders as a Selling Stockholder or to the Plan of Distribution; (iii) of the
issuance by the Commission of any stop order or other suspension of the effectiveness of a
Registration Statement covering any or all of
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the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or
the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus, as the case may
be, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall submit to the
Commission, within two (2) Trading Days after the date that the Company learns that no review of a
particular Registration Statement will be made by the Staff or the Commission or that such Staff
has no further comments on a particular Registration Statement (as the case may be); provided that
the financial information included in such Registration Statement meets all applicable SEC
requirements.
(d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any stop order or other suspension of the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment and, if
such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the
earliest practicable moment and each Holder who holds Registrable Securities being sold of the
issuance of such order and the resolution thereof or its receipt of actual notice of the initiation
or threat of any proceeding for such purpose.
(e) Furnish to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by such Person
(including those previously furnished) promptly after the filing of such documents with the
Commission.
(f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request from time to time and such other documents as such Holder may
reasonably request from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Holder. The Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto.
(g) Prior to any resale of Registrable Securities, use its reasonable best efforts to (i)
register or qualify or cooperate with the selling Holders in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of those specific jurisdictions within the
United States which the Holders may reasonably request from time to time in writing to the Company,
(ii) keep each such registration or qualification (or exemption therefrom)
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effective during the Effectiveness Period and (iii) do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statements; provided, that the Company shall not be required
to qualify generally to do business in any jurisdiction where it is not then so qualified or
subject the Company to any material tax in any such jurisdiction where it is not then so subject.
The Company shall promptly notify each Holder of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or Blue Sky laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any proceeding for such
purpose.
(h) Cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to the
Registration Statements, which certificates shall be free, to the extent permitted by the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request.
(i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to
the affected Registration Statements or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(j) Each Holder agrees to furnish to the Company a completed Selling Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder Questionnaire”). The Company shall
not be required to include the Registrable Securities of a Holder in a Registration Statement and
shall not be required to pay any partial or other damages under Section 2(d) hereof to such Holder
who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least five
(5) Trading Days prior to the Filing Date).
(k) If requested by a Holder, the Company shall as soon as practicable after receipt of notice
from such Holder and subject to Section 3(p) hereof, use reasonable best efforts to (i) incorporate
in a prospectus supplement or post-effective amendment such information as a Holder reasonably
requests to be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other terms of the offering
of the Registrable Securities to be sold in such offering; (ii) make all required filings of such
prospectus supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or
make amendments to any Registration Statement if reasonably requested by a Holder holding any
Registrable Securities.
(l) The Company shall use its reasonable best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the disposition of such
Registrable Securities.
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(m) The Company shall otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the Commission in connection with any registration hereunder. Within one
(1) Trading Day after a Registration Statement which covers Registrable Securities is declared
effective by the Commission, the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities (with copies to the
Holders whose Registrable Securities are included in such Registration Statement) confirmation that
such Registration Statement has been declared effective by the Commission in a customary form.
(p) Notwithstanding anything to the contrary herein (but subject to the last sentence of this
Section 3(p), at any time after the Effective Date of the initial Registration Statement required
to be filed hereunder pursuant to Section 2(a), the Company may delay the disclosure of material,
non-public information concerning the Company the disclosure of which at the time is not, in the
good faith determination of the Board of Directors of the Company, in the best interest of the
Company and is not, in the opinion of Board of Directors of the Company, after consultation with
the Company’s counsel, otherwise required (a “Grace Period”); provided, that the Company shall
promptly (i) notify the Holders in writing of the existence of material, non-public information
giving rise to a Grace Period (provided that in each notice the Company will not disclose the
content of such material, non-public information to the Holders) and the date on which the Grace
Period will begin, and (ii) notify the Holders in writing of the date on which the Grace Period
ends; and, provided that no Grace Period shall exceed thirty (30) consecutive days and during any
three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of sixty
(60) days and the first day of any Grace Period must be at least two (2) Trading Days after the
last day of any prior Grace Period (each, an “Allowable Grace Period”); provided further, that no
Allowable Grace Period may exist during the first thirty (30) Trading Days after the Effective Date
of the initial Registration Statement required to be filed hereunder pursuant to Section 2(a). For
purposes of determining the length of a Grace Period above, the Grace Period shall begin on and
include the date the Holders receive the notice referred to in clause (i) and shall end on and
include the later of the date the Holders receive the notice referred to in clause (ii) and the
date referred to in such notice. Notwithstanding anything to the contrary contained in this Section
3(p), the Company shall cause its transfer agent to deliver shares of Common Stock to a transferee
of a Holder in accordance with the terms of the Purchase Agreement in connection with any sale of
Registrable Securities with respect to which such Holder has entered into a contract for sale, and
delivered a copy of the prospectus included as part of the applicable Registration Statement (to
the extent required under applicable securities laws), prior to such Holder’s receipt of the notice
of a Grace Period and for which such Holder has not yet settled.
4. Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect to filings required
to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in
compliance with applicable state securities or Blue Sky laws), (ii) printing expenses
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(including, without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders
of a majority of the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company shall be responsible for all
of its internal expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents, investment advisors, partners, members, employees, agents and representatives of each of
them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and officers, directors, agents, investment advisors,
partners, members, employees, agents and representatives of each such controlling Person (each an
“Indemnified Person”), to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, judgments, fines, penalties, charges, amounts paid in
settlement, costs and expenses, joint or several, (including, without limitation, reasonable
out-of-pocket costs of preparation and reasonable attorneys’ fees and expenses) (collectively,
“Losses”), as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of
a material fact contained in any Registration Statement, any Prospectus or any form of prospectus
or in any amendment or supplement thereto, in any preliminary prospectus or in any filing made in
connection with the qualification of the offering under the securities or other Blue Sky laws of
any jurisdiction in which Registrable Securities are offered, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto,
in light of the circumstances under which they were made) not misleading, except to the extent, but
only to the extent, that (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder expressly for use therein,
or to the extent that such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such
Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A
hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if
and to the extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have been corrected and no
grounds for such Loss would have existed; or (ii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any
-11-
other law, including, without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration
Statement. The Company shall notify the Holders promptly of the institution, threat or assertion of
any Proceeding of which the Company is aware in connection with the transactions contemplated by
this Agreement. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemni
fied Person and shall survive the transfer of any
of the Registrable Securities by any of the Holders.
(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising
solely out of or based solely upon: (x) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act to the extent applicable or (y) any untrue statement of
a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus,
or in any amendment or supplement thereto, or arising solely out of or based solely upon any
omission of a material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent that, (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in the Registration
Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such
Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case
of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an
amended or supplemented Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such
Loss would have been corrected and no grounds for such Loss would have existed. In no event shall
the liability of any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation. The indemnity agreement contained in this Section 5(b) and the
agreement with respect to contribution contained in Section 5(d) shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the prior written consent of the
applicable Holder, which consent shall not be unreasonably withheld or delayed.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be
-12-
finally determined by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party); provided that the Indemnifying Party shall not be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all Indemnified Parties. The
Indemnified Party shall reasonably cooperate with the Indemnifying Party in connection with any
negotiation or defense of any such action or Losses by the Indemnifying Party and shall furnish to
the Indemnifying Party all information reasonably available to the Indemnified Party which relates
to such action or Losses. The Indemnifying Party shall keep the Indemnified Party reasonably
apprised at all times as to the status of the defense or any settlement negotiations with respect
thereto. The Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
All reasonable out-of-pocket fees and expenses of the Indemnified Party (including reasonable
out-of-pocket fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to
the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party
is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to indemnification
hereunder).
No Person involved in the sale of Registrable Securities who is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with
such sale shall be entitled to indemnification from any Person involved in such sale of Registrable
Securities who is not guilty of fraudulent misrepresentation.
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The indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party against the Indemnifying Party or others, and
(ii) any liabilities the Indemnifying Party may be subject to pursuant to the law.
(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable out-of-pocket attorneys’ fees or
expenses or other reasonable out-of-pocket fees or expenses incurred by such party in connection
with any Proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party in accordance with
its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), (i) no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually
received by such Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required to pay, or would
otherwise be required to pay under Section 5(b), by reason of such untrue or alleged untrue
statement or omission or alleged omission; (ii) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault standards set forth
in Section 5 hereof and (iii) no Person involved in the sale of Registrable Securities which Person
is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) in connection with such sale shall be entitled to contribution from any Person involved in
such sale of Registrable Securities who was not guilty of fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Reports Under the Exchange Act. With a view to making available to the Holders the
benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation
of the Commission that may at any time permit the Holders to sell securities of the Company to the
public without registration, the Company agrees to use reasonable best efforts to:
-14-
(a) make and keep public information available, as those terms are understood and defined in
Rule 144;
(b) file with the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the Company’s obligations
under the Purchase Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and
(c) furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company if such reports are not publicly available via XXXXX, and (iii) such other information as
may be reasonably requested to permit the Holders to sell such securities pursuant to Rule 144
without registration.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement (without
the obligation to post a bond or any other type of security). The Company and each Holder agree
that monetary damages would not provide adequate compensation for any losses incurred by reason of
a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) No Piggyback on Registrations. Except as set forth on Schedule 7(b) attached
hereto, neither the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in a Registration Statement
required to be filed hereunder other than the Registrable Securities, provided that no securities
set forth on Schedule 7(b) may be included in a Registration Statement if including any such
securities would adversely affect any of the Holders. The Company shall not after the date hereof
until the initial Effective Date enter into any agreement providing any such right to any of its
security holders.
(c) Compliance. Each Holder covenants and agrees that it will comply with any
prospectus delivery requirements of the Securities Act as applicable to it and otherwise comply
with all applicable securities laws in connection with sales of Registrable Securities pursuant to
the Registration Statement.
(d) Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in clauses (ii) through (v) of Section 3(c), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration Statement until such
-15-
Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce
the provisions of this paragraph. Notwithstanding anything to the contrary in this Section 7(d),
the Company shall cause its transfer agent to deliver shares of Common Stock to a transferee of a
Holder in accordance with the terms of the Purchase Agreement in connection with any sale of
Registrable Securities with respect to which such Holder has entered into a contract for sale, and
delivered a copy of the prospectus included as part of the applicable Registration Statement (to
the extent required under applicable securities laws) prior to such Holder’s receipt of a notice
from the Company of the happening of any event of the kind described in Section 3(c)(ii)-(v).
(e) Amendments and Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed by the Company and the Holders of no less than a majority of
the outstanding Registrable Securities; provided that any party shall have the right to provide a
waiver with regard to itself. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.
(f) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing or via e-mail 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 or e-mail at the facsimile telephone number or e-mail address, as
applicable, specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day,
(ii) the Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile or e-mail at the facsimile telephone number or e-mail address, as applicable,
specified in this Agreement later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (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 address for
such notices and communications shall be as follows:
| If to the Company: | Health Benefits Direct Corporation | |||
| 000 X. Xxxxxx-Xxxxxxx Xxxx, Xxxxxx, XX 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| Attn: Chief Financial Officer | ||||
| With copies to: | Health Benefits Direct Corporation | |||
| 000 X. Xxxxxx-Xxxxxxx Xxxx, Xxxxxx, XX 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| Attn: Vice President and General Counsel |
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| Xxxxxx, Xxxxx & Bockius LLP | ||||
| 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| Attn: Xxxxx X. XxXxxxxx, Xx., Esq. | ||||
| If to an Investor: | To the address, e-mail address or facsimile number set forth under such Investor’s name on the signature pages hereof; | |||
| If to any other Person who is then the registered Holder: | ||||
| To the address, e-mail address or facsimile number of such Holder as it appears in the stock transfer books of the Company | ||||
or such other address, e-mail address or facsimile number as may be designated hereafter, in the
same manner, by such Person.
(g) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. The Company may not assign its rights or obligations hereunder without the
prior written consent of each Holder. Each Holder may assign their respective rights hereunder in
the manner and to the Persons as permitted under the Purchase Agreement.
(h) Execution and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof. Each pronoun herein shall be
deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.
(i) Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement 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 Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement (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
-17-
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 Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any
and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Agreement, 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.
(j) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive
of any remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(m) Entire Agreement. This Agreement, the other Transaction Documents (as defined in
the Purchase Agreement), the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This Agreement, the
other Transaction Documents, the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
(n) Independent Nature of Holders’ Obligations and Rights. The obligations of each
Holder under this Agreement and the other Transaction Documents are several and not joint with the
obligations of any other Holder, and no Holder shall be responsible in any way for the performance
of the obligations of any other Holder under this Agreement or any other Transaction Document.
Nothing contained herein or in any other Transaction Document, and no action taken by any Holder
pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of group or entity, or create a presumption that the
Holders are in any way acting in concert or as a group or entity with respect
-18-
to such obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Holders are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by this Agreement or any of the other
the Transaction Documents. Each Holder shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. The use of a single agreement with respect to
the obligations of the Company contained herein was solely in the control of the Company, not the
action or decision of any Holder, and was done solely for the convenience of the Company and not
because it was required or requested to do so by any Holder.
(o) No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.
(p) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, other than the Persons referred
to in Section 5 hereof.
(q) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.
| HEALTH BENEFITS DIRECT CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF INVESTORS TO FOLLOW]
SIGNATURE PAGES OF INVESTORS TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.
| [INVESTOR] | ||||||
| By: | ||||||
| Title: | ||||||
| Address for Notice: | ||||||
| Facsimile No.: | ||||||
| *E-mail: | ||||||
| Attn: | ||||||
By providing an e-mail address, the party listed above hereby consents to electronic delivery of
the documents and notices required to be delivered pursuant to this Agreement.
-21-
Annex A
Plan of Distribution
We are registering the shares offered by this prospectus on behalf of the selling
stockholders. The selling stockholders, which as used herein includes donees, pledgees, transferees
or other successors-in-interest selling shares of common stock or interests in shares of common
stock received after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests in shares of common stock on any
stock exchange, market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of
sale, at prices related to the prevailing market price, at varying prices determined at the time of
sale, or at negotiated prices. To the extent any of the selling stockholders gift, pledge or
otherwise transfer the shares offered hereby, such transferees may offer and sell the shares from
time to time under this prospectus, provided that this prospectus has been amended under Rule
424(b)(3) or other applicable provision of the Securities Act to include the name of such
transferee in the list of selling stockholders under this prospectus.
The selling stockholders may use any one or more of the following methods when disposing of
shares or interests therein:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | ||
| • | block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; | ||
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | ||
| • | an exchange distribution in accordance with the rules of the applicable exchange; | ||
| • | privately negotiated transactions; | ||
| • | short sales; | ||
| • | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | ||
| • | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; | ||
| • | a combination of any such methods of sale; and | ||
| • | any other method permitted pursuant to applicable law. |
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The selling stockholders may, from time to time, pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock,
from time to time, under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The selling stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered
by them will be the purchase price of the common stock less discounts or commissions, if any. Each
of the selling stockholders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of
the warrants by payment of cash, however, we will receive the exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet
the criteria and conform to the requirements of that rule.
The selling shareholders might be, and any broker-dealers that act in connection with the sale
of securities will be, deemed to be “underwriters” within the meaning of Section 2(11) of the
Securities Act, and any commissions received by such broker-dealers and any profit on the resale of
the securities sold by them while acting as principals will be deemed to be underwriting discounts
or commissions under the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
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In order to comply with the securities laws of some states, if applicable, the common stock
may be sold in these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been registered or
qualified for sale or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M
under the Exchange Act, to the extent applicable, may apply to sales of shares in the market and to
the activities of the selling stockholders and their affiliates. In addition, we will make copies
of this prospectus (as it may be supplemented or amended from time to time) available to the
selling stockholders for the purpose of satisfying the prospectus delivery requirements of the
Securities Act, to the extent applicable. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement that includes
this prospectus effective until the date which is two years after the date that the registration
statement is declared effective by the SEC or such earlier date when all of the shares covered by
this prospectus have been disposed of pursuant to and in accordance with the registration statement
or have been sold or may be sold without volume restrictions pursuant to Rule 144(k) under the
Securities Act.
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Annex B
Selling Stockholder Questionnaire
| To: | Health Benefits Direct Corporation
000 Xxxxx Xxxxxx-Xxxxxxx Xxxx Radnor Financial Center, Suit B101 Xxxxxx, Xxxxxxxxxxxx 00000 Attention: Xx. Xxxx Xxxxxxxxxx |
Pursuant to Section 3 of the Registration Rights Agreement, the undersigned hereby furnishes
to the Company the following information for use by the Company in connection with the preparation
of the Registration Statement contemplated by the Registration Rights Agreement.
(1) Name and Contact Information:
| Full legal name of record holder: | ||||||
| Address of record holder: | ||||||
| Social Security Number or Taxpayer identification number of record holder: | ||||||
| Identity of beneficial owner (if different than record holder): | ||||||
| Name of contact person: | ||||||
| Telephone number of contact person: | ||||||
| Fax number of contact person: | ||||||
| E-mail address of contact person: | ||||||
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| (2) | Beneficial Ownership of Registrable Securities: | ||
| (a) | Number of Registrable Securities owned by Selling Stockholder: |
| (b) | Number of Registrable Securities requested to be registered: |
| (3) | Beneficial Ownership of Other Securities of the Company Owned by the Selling Stockholder: |
Except as set forth below in this Item (3), the undersigned is not the
beneficial or registered owner of any securities of the Company other than
the Registrable Securities listed above in Item (2)(a).
Type and amount of other securities beneficially owned by the Selling
Stockholder:
| (4) | Relationships with the Company: |
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more) has
held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
| (5) | Plan of Distribution: |
Except as set forth below, the undersigned intends to distribute pursuant to
the Registration Statement the Registrable Securities listed above in Item
(2) in accordance with the “Plan of Distribution” section set forth therein:
State any exceptions here:
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| (6) | Selling Stockholder Affiliations: |
(a) Is the Selling Stockholder a registered broker-dealer?
(b) Is the Selling Stockholder an affiliate of a registered
broker-dealer(s)? (For purposes of this response, an “affiliate” of, or
person “affiliated” with, a specified person, is a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the person specified.)
(c) If the answer to Item (6)(b) is yes, identify the registered
broker-dealer(s) and describe the nature of the affiliation(s):
(d) If the answer to Item (6)(b) is yes, did the Selling Stockholder acquire
the Registrable Securities in the ordinary course of business (if not,
please explain)?
(e) If the answer to Item (6)(b) is yes, did the Selling Stockholder, at the
time of purchase of the Registrable Securities, have any agreements, plans
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities (if yes, please explain)?
| (7) | Voting or Investment Control over the Registrable Securities: |
If the Selling Stockholder is not a natural person, please identify the
natural person or persons who have voting or investment control over the
Registrable Securities listed in Item (2) above:
The undersigned hereby acknowledges that the undersigned shall indemnify the Company and each
of its directors and officers against, and hold the Company and each of its directors and officers
harmless from, any losses, claims, damages, expenses or liabilities (including reasonable attorneys
fees) to which the Company or its directors and officers may become subject by reason of any
statement or omission in the Registration Statement made in reliance upon, or in conformity with, a
written statement by the undersigned, including the information furnished in this Questionnaire by
the undersigned.
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By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items (1) through (7) above and the inclusion of such information in the
Registration Statement, any amendments thereto and the related prospectus. The undersigned
understands that such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related prospectus.
The undersigned has reviewed the answers to the above questions and affirms that the same are
true, complete and accurate. THE UNDERSIGNED AGREES TO NOTIFY THE COMPANY IMMEDIATELY OF ANY
CHANGES IN THE FOREGOING INFORMATION.
Dated: , 2007
|
||||
| (Please sign your name in exactly the same manner as the certificate(s) for the shares being registered) |
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Schedule 7(b)
Shares of Common Stock underlying the securities covered by the following registration rights:
Registration Rights Agreement, dated July 17, 2006, by and between the Company and Xxxxxxxxx
Employee Benefits.
Registration Rights Agreement, dated May 31, 2006, by and between the Company and Realtime
Solutions Group, L.L.C.
Registration Rights Agreement, dated July 17, 2006, by and between the Company and Xxxxxxxxx
Employee Benefits.
Registration Rights Agreement, dated July 20, 2006, by and between the Company and Xxxxx X. Xxxxx.
The Placement Agents have piggyback registration rights with respect to the shares of Common Stock
underlying their Placement Agent Warrants.
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