Exhibit 10.2

 

HEALTHAXIS / PREFERRED CONVERSION

AND TERMINATION AGREEMENT

 

This HealthAxis / Preferred Conversion and Termination Agreement (this
“Agreement”), dated as of the 11 day of August, 2008, is entered into by and
between HealthAxis Inc., a Pennsylvania corporation (“Company”), and LB I Group
Inc., a                            corporation (“Lehman”).

 

Recitals

 

WHEREAS, on May 12, 2004, Company, Lehman and other holders of Company’s
Series A Convertible Preferred Stock, par value $1.00 per share (the “Preferred
Stock”), entered into that certain Preferred Stock Modification Agreement (the
“Preferred Stock Modification Agreement”), pursuant to which the parties thereto
agreed to modify the terms of the Preferred Stock and for Company to issue to
Lehman and the other holders of Preferred Stock warrants to purchase shares of
Company’s common stock;

 

WHEREAS, on June 30, 2004, the transactions contemplated by the Preferred Stock
Modification Agreement were closed and, as a result, the shares of Preferred
Stock then held by Lehman were modified and Company issued to Lehman Warrant
No. 2004-03 providing for the right to purchase up to 387,117 shares of
Company’s common stock (the “Warrant”);

 

WHEREAS, on June 30, 2004, Company, Lehman and the other holders of Preferred
Stock entered into that certain Investor Rights Agreement and that certain
Registration Rights Agreement (the “Registration Rights Agreement” and,
collectively with the Preferred Stock Modification Agreement and the Investor
Rights Agreement, the “Preferred Investment Agreements”);

 

WHEREAS, each of the Preferred Stock Modification Agreement and the Investor
Rights Agreement provides that such agreement can be amended only with the
approval of Company and the holders of not less than 60% of the shares of
Preferred Stock then outstanding and, as of the date of this Agreement, Lehman
holds 740,401 shares of Preferred Stock (the “Outstanding Preferred Stock”),
constituting 100% of the currently outstanding shares of Preferred Stock;

 

WHEREAS, the Registration Rights Agreement provides that such agreement can be
amended only with the approval of Company and the holders of not less than 60%
of the “registrable securities” (as defined in the Registration Rights
Agreement) then outstanding and, as of the date of this Agreement, Lehman holds
in excess of 60% of the currently outstanding “registrable securities;”

 

WHEREAS, Company, BPO Management Services, Inc., a Delaware corporation
(“BPOMS”), and Outsourcing Merger Sub, Inc., a Delaware corporation (“Merger
Sub”), are parties to that certain Agreement and Plan of Merger dated of even
date herewith (the “Merger Agreement”), pursuant to which it is expected that
BPOMS and Merger Sub will merge, BPOMS will become a wholly-owned subsidiary of
Company, and Company will issue shares of its capital stock to the stockholders
of BPOMS, all as more particularly described in the Merger Agreement (the
“Merger”);

 

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WHEREAS, it is a condition to BPOMS’ execution of the Merger Agreement that
Company and Lehman enter into this Agreement; and

 

WHEREAS, subject to and in the event of the consummation of the Merger, Company
and Lehman desire to provide for the conversion of the Outstanding Preferred
Stock into shares of Company’s common stock and the cancellation and termination
of the Warrant and the Preferred Investment Agreements in consideration of the
anticipated benefits to be received by Company and Lehman as a result of the
consummation of the Merger.

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto do hereby
agree as follows:

 

1.               Conversion of Outstanding Preferred Stock.  Lehman does hereby
agree with Company that, effective as of the date of consummation of the Merger,
all shares of Outstanding Preferred Stock shall be converted into shares of
Company’s common stock in accordance with the terms of Company’s Amended and
Restated Certificate of Designation of Series A Convertible Preferred Stock
dated as of June 30, 2004 (the “Certificate of Designation”).

 

2.               Cancellation and Termination of Warrant and Related Agreements.
 Lehman and Company do hereby agree that, effective as of the date of
consummation of the Merger, the Warrant and the Preferred Investment Agreements
shall automatically be cancelled and terminated without any further action by
any party thereto.

 

3.               Representations and Agreements.

 

(a)                                  Each of Company and Lehman represents and
warrants to the other that (i) it is an entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, (ii) it
has all requisite power and authority to enter into this Agreement and to
perform its obligations hereunder, (iii) the execution and delivery of this
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary actions on its part, and (iv) this Agreement has
been duly executed and delivered by it, and assuming due authorization,
execution and delivery by the other, constitutes a valid and binding agreement
of it, enforceable against it in accordance with the terms of this Agreement,
except as enforcement may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect affecting
creditors’ rights generally and the effect of general principles of equity.

 

(b)                                 Each of Company and Lehman represents and
warrants to the other that (i) neither the execution and delivery of this
Agreement nor the performance by it of its obligations hereunder will result in
a violation of, or a default under, or conflict with, its governing documents or
any contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which it is a party or by which it is bound, except
as would not prevent, delay or otherwise materially impair its ability to
perform its obligations hereunder.

 

(c)                                  Lehman hereby represents and warrants to
Company that it has complete ownership and good title to the Outstanding
Preferred Stock and the Warrant, free and clear of all liens or any
encumbrances, and that it has not transferred or attempted to transfer the
Outstanding Preferred Stock or the Warrant to any other party.  Each of Company
and Lehman

 

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represents and warrants to the other that it retains its respective rights and
obligations under the Preferred Investment Agreements, and that it has not
transferred or attempted to transfer any of such rights and obligations to
another party.

 

(d)                                 Lehman represents and warrants to Company
that it has reviewed and evaluated all statements, reports and other documents
filed by Company with the Securities and Exchange Commission, that it has
reviewed and evaluated the terms of the Merger Agreement and all documents,
agreements, schedules and exhibits contemplated thereby, and that it has had the
opportunity to request and has received any and all further information relating
to Company, the Merger and any other relevant matters that it has requested.

 

(d)                                 Lehman agrees that during the term of this
Agreement it shall not sell, pledge, assign or otherwise transfer or attempt to
transfer the Outstanding Preferred Stock or the Warrant or its rights or
obligations under the Preferred Investment Agreements to any other party.

 

4.               Release of Claims. For the purposes and consideration set forth
herein, and subject to and effective with the conversion of the Outstanding
Preferred Stock and the cancellation and termination of the Warrant and the
Preferred Investment Agreements, each of Lehman and Company hereby releases and
discharges the other and its respective affiliates, shareholders, subsidiaries,
owners, directors, officers, agents, attorneys, employees, trustees, independent
contractors, successors and assigns of and from any and all charges, complaints,
liabilities, obligations, restrictions, debts, promises, agreements,
controversies, damages, actions, losses, expenses (including attorneys’ fees and
costs), claims, rights, demands, causes of action or suits in equity, of any and
every kind or character, in contract or tort, whether known or unknown, arising
under, relating to or in connection with the Outstanding Preferred Stock, the
Warrant or the Preferred Investment Agreements.

 

5.               Agreement Subject to Consummation of Merger. Notwithstanding
anything contained herein, this Agreement shall terminate and shall be null and
void and of no further legal effect upon the termination of the Merger Agreement
in accordance with its terms.

 

6.               Governing Law. This Agreement shall be governed, construed and
interpreted in accordance with the internal substantive laws of the Commonwealth
of Pennsylvania, without giving effect to the principles of conflicts of law of
such jurisdiction.

 

7.               Binding Effect. This Agreement shall be binding on and inure to
the benefit of the parties and their respective successors and assigns.

 

8.               Entire Agreement. The Certificate of Designation, the Warrant,
the Preferred Investment Agreements and this Agreement represent the entire
agreement between the parties with respect to the subject matter thereof and
hereof and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten agreements
between the parties as to the subject matter hereof.

 

9.               Modification.  This Agreement may be modified only by a written
agreement signed by both parties hereto.

 

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10.         Multiple Counterparts. This Agreement may be executed in any number
of counterparts, each of which for all purposes is to be deemed an original, but
all of which shall constitute, collectively, one agreement.

 

IN WITNESS WHEREOF, the undersigned have executed this HealthAxis / Preferred
Conversion and Termination Agreement as of the date written above.

 

 

LB I Group Inc.

 

 

 

 

By:

/s/ John M. Devir

 

Name: John M. Devir

 

Title: Managing Director

 

 

 

HealthAxis Inc.

 

 

 

By:

/s/ John M. Carradine

 

Name: John M. Carradine

 

Title: CEO

 

Dated: September 5, 2008

 

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