EXHIBIT 10.2

AMENDED AND RESTATED CERTIFICATE OF DESIGNATION

OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
HEALTHAXIS INC.

      Healthaxis Inc. (hereafter called the “Company”), a corporation organized
and existing under the laws of the Commonwealth of Pennsylvania, does hereby
certify that, pursuant to the authority conferred upon the Company’s Board of
Directors (the “Board”) by the Company’s Amended and Restated Articles of
Incorporation (the “Articles of Incorporation”), the Board, by actions duly
taken on May 26, 2004, duly adopted a resolution providing for the amendment and
restatement of the Certificate of Designation setting forth the rights and
preferences of the Series A Convertible Preferred Stock, which resolution is as
follows:

        RESOLVED, that, pursuant to the authority vested in the Board by the
Articles of Incorporation, the Board hereby amends and restates the Certificate
of Designation which sets forth the designation, preferences, rights and
limitations of the Series A Convertible Preferred Stock, par value $1.00 per
share and which shall state as follows, and which Amended and Restated
Certificate of Designation supercedes the original Certificate of Designation
and all amendments thereto.

      Following the Board’s adoption of the above resolution, the holders of the
Company’s Series A Convertible Preferred Stock and the holders of the Company’s
Common Stock also approved the Amended and Restated Certificate of Designation,
as follows:

      1. Designation, Amount, Par Value, Rank, Stock Split and Certain Defined
Terms.

      a. The preferred stock authorized under this Certificate of Designation
shall be designated as the Series A Convertible Preferred Stock, par value
$1.00 per share (the “Series A Preferred Stock”), and the number of shares so
designated shall be 3,850,000, subject to adjustment for any stock splits, stock
dividends or similar transactions affecting the Series A Preferred Stock.

      b. The Series A Preferred Stock shall rank pari passu with all classes of
the Company’s common stock, par value $.10 per share (the “Common Stock”), and
each other series of preferred stock or class of other capital stock or
instruments of the Company convertible into Common Stock with respect to
dividend distributions, redemptions and distributions upon Liquidation that are
not, expressly by their terms, made senior to the Series A Preferred Stock.

      c. As of the effective date of the filing of the Amended and Restated
Certificate of Designation with the Pennsylvania Secretary of State, every
1 share of Series A Preferred Stock issued and outstanding shall without further
action by this Corporation or the holder thereof be split into and automatically
become 174.3975 shares of Series A Preferred Stock. No fractional shares shall
be issued in connection with the foregoing stock split; all shares of Series A
Preferred Stock so split that are held by a shareholder will be aggregated and
each fractional share resulting from such aggregation shall be rounded down to
the nearest whole share.

      d. Certain terms used herein are defined in Section 9 hereof.

      2. Dividends.

      a. The Holders shall be entitled to receive, out of funds legally
available therefor, and the Company shall pay, when and as declared by the
Board, cumulative dividends at the rate of $0.0001 per share of Series A
Preferred Stock, payable semi-annually, on January 15 and July 15 of each year
(each a “Dividend Payment Date”) commencing on January 15, 2005, in cash, as
accrued for the six-month period preceding the Record Date relating to such
Dividend Payment Date (or on a pro rata basis for such other period of time
following the filing of this Amended and Restated Certificate with the
Department of State of the Commonwealth of Pennsylvania). The record date for
any dividend payment pursuant to this Section 2(a) (the “Record Date”)

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is the close of business on January 1 or July 1 of each year, as the case may
be, whether or not a Business Day, immediately preceding the Dividend Payment
Date on which such dividend is payable. Dividends on the Series A Preferred
Stock shall be calculated on the basis of a 365-day year (or 366-day year for
any leap year), shall accrue daily commencing on the date of the filing of this
Amended and Restated Certificate and shall be deemed to accrue from such date
and be cumulative whether or not earned or declared and whether or not there are
profits, surplus or other funds of the Company legally available for the payment
of dividends. Accrued and unpaid dividends on the Series A Preferred Stock for
any shares that are being converted into shares of Common Stock shall be
forfeited. Except as otherwise provided herein, if at any time the Company pays
less than the total amount of dividends then accrued on account of the Series A
Preferred Stock, such payment shall be distributed ratably among the Holders
based upon the number of shares of Series A Preferred Stock held by each Holder.

      b. In addition, if the Company declares a dividend or other distribution
on its Common Stock, each Holder shall be entitled to receive, out of funds
legally available therefor, and the Company shall pay, when and as declared by
the Board, dividends or distributions as though the Holder were a holder of the
number of shares of Common Stock into which its shares of Series A Preferred
Stock are convertible as of the record date fixed for the determination of the
holders of Common Stock entitled to receive the dividend or distribution.

      3. Liquidation.

      a. In the event of any Liquidation, whether voluntary or involuntary, each
Holder is entitled to receive, as though the Holder were a holder of the number
of shares of Common Stock into which its Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock entitled to receive a distribution upon Liquidation, an amount per
share equal to the amount per share distributed to the holders of Common Stock.

      b. The Company shall mail to each Holder written notice of any such
Liquidation not less than fifteen (15) days prior to the payment date stated
therein.

      4. Voting Rights.

      Except as otherwise required by law (taking into consideration the
limitations contained in Section 8 hereof), the Holders of the Series A
Preferred Stock shall not have voting rights.

      5. Conversion.

      a. Conversion at Holder’s Option. Each share of Series A Preferred Stock
shall be convertible, at the option of the Holder thereof, in the event of any
of the following:

        (i) at any time, provided that the Holder will not hold, as a result of
the conversion, more than 750,000 shares of Common Stock;           (ii) at any
time, if and only if the Common Stock is then trading on the National Market and
has had a closing price in the National Market of $8.00 or more for 20 out of
the previous 30 Trading Days immediately prior to the effective date of the
conversion; or           (iii) at any time on or after June 30, 2005.

      b. Conversion at Company’s Option. Subject to Section 8 hereof, each share
of Series A Preferred Stock shall be convertible, at the option of the Company,
if:

        (i) the Common Stock has had a per share closing price in the National
Market of $8.00 or more for 20 out of the previous 30 Trading Days immediately
prior to the date of delivery to the Holders of the Conversion Notice specified
in Section 5(d) below; and           (ii) a registration statement under the
Securities Act of 1933 that registers the resale of all shares of Common Stock
that constitute Registrable Securities (as defined in the Registration Rights
Agreement) is then in effect as and to the extent provided in the Registration
Rights Agreement.

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      c. Automatic Conversion. If, at any time, any Holder transfers its shares
of Series A Preferred Stock, which transfer shall be in compliance with the
terms of the Investor Rights Agreement (applicable through the first anniversary
of the Closing Date), all such transferred shares of Series A Preferred Stock
shall, by virtue of such transfer (and without any action on the part of the
Holder) be automatically converted into fully paid and non-assessable shares of
Common Stock.

      d. Mechanics of Conversion. When converted in accordance with the terms
set forth in this Certificate of Designation, each share of Series A Preferred
Stock initially shall be convertible into one fully paid and non-assessable
share of Common Stock. A Holder shall effect a conversion by surrendering to the
Company the certificate or certificates representing the shares of Series A
Preferred Stock to be converted, together with a written notice of such
conversion in the form of Exhibit A annexed hereto, and the Company shall effect
a conversion by sending to the Holder a notice of such conversion in the form of
Exhibit B annexed hereto (each of Exhibit A and Exhibit B is a “Conversion
Notice”), provided that notwithstanding the provisions of Section 10 that may
permit delivery of the certificate(s) by various means, it shall be necessary
for the Holder to hand deliver or deliver via nationally recognized overnight
courier the certificate(s) in order for the Holder to be deemed to have
effectively delivered a Conversion Notice. Each Conversion Notice shall specify
the Holder, the name or names in which the certificate or certificates for
shares of Common Stock are to be issued (if applicable), the number of shares of
Series A Preferred Stock to be converted and the date on which such conversion
is to be effected, which date may not be prior to the date such Conversion
Notice is delivered to the Company or the Holder, as the case may be (the
“Conversion Date”). In the event that the Company effects the conversion
pursuant to Section 5(b), such Holder agrees to deliver the certificate or
certificates representing the shares of Series A Preferred Stock to be converted
as promptly as practicable thereafter. Upon delivery of the Conversion Notice,
the Holder shall have no rights as a holder of the shares of Series A Preferred
Stock to be converted other than the right to receive Conversion Shares. If no
Conversion Date is specified in the Conversion Notice, the Conversion Date shall
be the date that the Conversion Notice is deemed delivered pursuant to
Section 10 hereof. The Company shall, within three (3) Trading Days after
delivery or receipt of a Conversion Notice, cause to be delivered to the Holder,
or to such Holder’s nominee or nominees (i) a certificate or certificates which
shall be free of restrictive legends and trading restrictions (other than those
required pursuant to the Investor Rights Agreement or otherwise required by law)
representing the number of shares of Common Stock being acquired upon the
conversion of shares of Series A Preferred Stock and (ii) if the Holder is
converting less than all the shares of Series A Preferred Stock represented by
the certificate or certificates tendered by the Holder with the Conversion
Notice, one or more certificates representing the number of shares of Series A
Preferred Stock not converted. The Person or Persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as of
the Conversion Date. Upon request of the Holder, and in compliance with the
provisions hereof (but subject to any limitations arising out of the Investor
Rights Agreement or applicable law), in lieu of physical delivery of the shares
of Common Stock, provided the Company’s transfer agent is participating in the
Depositary Trust Company (“DTC”) Fast Automated Securities Transfer program, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit any certificate or certificates required to be delivered to the Holder
(or the Holder’s nominee) under this Section 5 by crediting the account of the
Holder’s (or the Holder’s nominee’s) Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system. The time period for delivery described
herein shall apply to any such electronic transmittals. If, in the case of any
attempted conversion, such certificate or certificates are not delivered to or
as directed by the applicable Holder by the fifth (5th) Trading Day after the
Conversion Date, the Holder shall be entitled at any time on or before its
receipt of such certificate or certificates to rescind such conversion by
written notice to the Company, in which event the Company shall immediately
return the certificates representing the shares of Series A Preferred Stock for
which Common Stock was not delivered pursuant to such conversion and the rights
of the Holder as a holder of such shares of Series A Preferred Stock shall
immediately be restored.

      6. Reservation of Shares. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of issuance upon conversion of the Series A
Preferred Stock and free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holders, not less than 100% of such
number of shares of Common Stock as shall be

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issuable (taking into account the adjustments of Section 7 hereof) upon the
conversion of all outstanding shares of Series A Preferred Stock (without regard
to any limitations on conversion). The Company shall, from time to time, take
all steps necessary to increase the authorized number of shares of its Common
Stock if at any time the authorized number of shares of Common Stock remaining
unissued is insufficient to permit the conversion of all of the shares of the
Series A Preferred Stock. The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.

      7. Adjustment of Number of Conversion Shares.

      a. Common Stock Splits; Reclassification. If the Company, at any time
after the Closing Date: (i) subdivides outstanding shares of Common Stock into a
larger number of shares, (ii) issues any shares of Common Stock by
reclassification of shares of Common Stock, or (iii) effects a reverse stock
split, then each share of Series A Preferred Stock shall thereafter be
convertible into that number of Conversion Shares that would have derived had
the share of Series A Preferred Stock been converted into Common Stock
immediately prior to the events listed in (i), (ii) or (iii) above. In the case
of a subdivision or re-classification, any adjustment made pursuant to this
Section 7(a) shall become effective immediately after the effective date of such
subdivision or re-classification.

      b. Adjustment for Recapitalization, Reclassification, Exchange and
Substitution. If at any time after the Closing Date, the Common Stock issuable
upon the conversion of the Series A Preferred Stock is changed into the same or
a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification, exchange, substitution or otherwise, and
other than a capital reorganization, merger or consolidation (the adjustment for
which is provided for in Section 7(c)), in any such event each Holder shall have
the right thereafter to convert such stock into the kind and amount of stock and
other securities and property receivable in connection with such
recapitalization, reclassification or other change that it would have been
entitled to receive had it converted its shares of Series A Preferred Stock
immediately prior to such recapitalization, reclassification exchange,
substitution or other event (without taking into account any limitations or
restrictions on the convertibility of the Series A Preferred Stock), all subject
to further adjustments as provided herein or with respect to such other
securities or property by the terms thereof.

      c. Reorganizations, Mergers or Consolidations. If at any time after the
Closing Date, the Common Stock is converted into other securities or property,
whether pursuant to a capital reorganization, merger, consolidation or otherwise
(other than a recapitalization, reclassification, subdivision, exchange or
substitution of shares provided for in Section 7(b)), as a part of such
transaction, provision shall be made so that the Holders of the Series A
Preferred Stock shall thereafter be entitled to receive upon conversion thereof
the number of shares of stock or other securities or property to which a holder
of the number of shares of Common Stock deliverable upon conversion would have
been entitled to receive in connection with such transaction (without taking
into account any limitations or restrictions on the convertibility of the
Series A Preferred Stock), subject to adjustment in respect of such stock or
securities by the terms thereof. To the extent applicable, appropriate
adjustment shall be made in the application of the provisions of this Section 7
with respect to the rights of the Holders of the Series A Preferred Stock after
such transaction to the end that the provisions of this Section 7 (including
adjustment to the number of shares issuable upon conversion of the Series A
Preferred Stock) shall be applicable after that event and be as nearly
equivalent as practicable.

      d. Notice of Certain Events. If:

        (i) the Company declares a dividend (or any other distribution) on the
Common Stock;           (ii) the Company declares a special nonrecurring cash
dividend on or a redemption of the Common Stock;           (iii) the Company
authorizes the granting to the holders of the Common Stock of rights, Options or
warrants to subscribe for or purchase any shares of capital stock of any class
or of any rights;           (iv) the approval of the Company’s shareholders is
sought or required in connection with any reclassification of the Common Stock
or any Change of Control; or

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        (v) the Company authorizes a Liquidation;

      then, the Company shall cause to be delivered to the Holders, at least
fifteen (15) calendar days prior to the applicable record or effective date
hereinafter specified, a notice (provided such notice shall not include any
material non-public information) stating: (a) the date on which a record is to
be taken for the purpose of such dividend, distribution, redemption, or granting
of Options, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, redemption, rights, Options or warrants are to be determined or
(b) the date, if applicable, on which such reclassification, Liquidation or
Change of Control is expected to become effective or close, and the date as of
which it is expected that holders of record of Common Stock shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable in connection with such reclassification or Change of Control.
Nothing herein shall prohibit the Holders from converting shares of Series A
Preferred Stock held by such Holder during the fifteen (15) day period
commencing on the date of such notice to the effective date of the event
triggering such notice.

      e. Notice of Adjustment. Whenever the number of Conversion Shares is
adjusted pursuant to this Section 7, the Company shall deliver to the Holders a
notice setting forth the number of Conversion Shares after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
notice shall be signed by the Company’s chairman, president or chief financial
officer and shall be delivered to the Holders within three (3) Business Days of
the date the events occur which require such adjustment.

      f. Adjustment in the Number of Conversion Shares. For the avoidance of
doubt, upon each adjustment in the number of Conversion Shares pursuant to any
provision of this Section 7, the number of Conversion Shares issuable hereunder
shall be adjusted to the nearest 1/100th of a whole share. Upon each adjustment,
other references herein to the number of shares of Common Stock or the market
price of shares of Common Stock shall be similarly adjusted.

      g. Rounding. All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.

      h. Other Events. If any event shall occur as to which the provisions of
this Section 7 are not strictly applicable but the failure to make any
adjustment would not fairly protect the rights of the Holders in accordance with
the intent and principles of this Section 7 (whether by grant of the Company of
any stock appreciation rights, phantom stock rights or other rights with equity
features or otherwise), the Board will make an appropriate adjustment in the
number of Conversion Shares so as to protect the rights of the Holders.

      i. Treasury Shares. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the Company’s
account, if any, and the disposition of any shares so owned or held shall be
considered an issue or sale of Common Stock by the Company.

      j. Failure to Adjust Number of Conversion Shares. If (i) the Company fails
to adjust the number of Conversion Shares upon the occurrence of an event
requiring such adjustment in accordance with the terms of this Section 7 and
(ii) a court of competent jurisdiction determines that the Company is or was
required to adjust the number of Conversion Shares, in addition to making the
adjustment to the greatest number of Conversion Shares which would have resulted
if the Company had made the adjustment upon the occurrence of such event (in
accordance with this Section 7), as further adjusted upon the occurrence of any
subsequent events which would require such further adjustment, the Company shall
be required to pay the reasonable legal fees of one counsel selected by the
Majority Holders in connection with any such dispute.

      8. Restriction on Conversion. Notwithstanding anything herein to the
contrary, in no event shall a holder of Series A Preferred Stock be entitled to
convert any portion of the Series A Preferred Stock so held by such holder, nor
shall the Company have the right to force the conversion of any portion of the
Series A Preferred Stock so held by such holder, in excess of that portion upon
conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by such holder and its Affiliates (other than shares of
Common Stock which may be deemed beneficially owned through ownership of the
unconverted shares of Series A Preferred Stock or the unexercised or unconverted
portion of any other security of the holder subject to a limitation on
conversion analogous to the limitations contained herein) and (2) the number of
shares of

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Common Stock issuable upon the conversion of that portion of the Series A
Preferred Stock with respect to which the determination of this proviso is being
made, would result in beneficial ownership by such holder and its Affiliates of
more than 4.99% of the then outstanding shares of Common Stock. The waiver by a
holder of Series A Preferred Stock of any limitation contained in an option or
convertible security now or hereafter held by such holder that is similar or
analogous to the limitations set forth in this Section 8 shall not be deemed a
waiver or otherwise effect the limitation set forth in this Section 8, unless
such waiver expressly states it is a waiver of the provisions of this Section 8.
For purposes of this Section 8, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulations 13D-G thereunder, except as otherwise provided in
clause (1) of such proviso. Any holder of Series A Preferred Stock may waive the
limitations set forth herein by at least sixty-one (61) days written notice to
the Company.

      9. Definitions. For the purposes hereof, the following terms shall have
the following meanings:

      “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly (i) has a 5% or more equity interest in that Person,
(ii) has 5% or more common ownership with that Person or (iii) controls, or is
under common control with, or is controlled by, such Person. When used in this
definition, “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) shall mean, with respect to any Person, the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies (whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise) of such
Person.

      “Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.

      “Business Day” means any day except Saturday, Sunday and any day that is a
legal holiday or a day on which banking institutions in the State of New York
generally are authorized or required by law or other government action to close.

      “Change of Control” means the occurrence of any of the following: (i) an
acquisition or series of related acquisitions by any Person or “group” (as
described in Section 13(d)(3) of the Exchange Act) of in excess of thirty-three
and one third percent (33 1/3%) of the voting power of the Company, (ii) the
merger or consolidation of the Company with or into another Person, unless the
holders of the Company’s securities immediately prior to such transaction or
series of related transactions continue to hold at least fifty percent (50%) of
such securities following such transaction or series of related transactions,
(iii) the sale, conveyance, lease, transfer, exclusive license or disposition of
all or substantially all of the Company’s assets in one or a series of related
transactions, (iv) during any period of twelve (12) consecutive months after the
Closing Date, individuals who at the beginning of any such twelve (12) month
period constituted the Board cease for any reason to constitute a majority of
the Board then in office or (v) the Company’s execution of an agreement to which
the Company is a party or by which it is bound, providing for any of the events
set forth above in clauses (i), (ii), (iii) or (iv).

      “Closing Date” means June 30, 2004.

      “Common Stock” has the meaning set forth in Section 1(b).

      “Company” means Healthaxis Inc., a Pennsylvania corporation.

      “Conversion Date” has the meaning set forth in Section 5(d).

      “Conversion Notice” has the meaning set forth in Section 5(d).

      “Conversion Shares” means that number of shares of Common Stock issuable
upon conversion of one share of Preferred Stock into Common Stock.

      “Dividend Payment Date” has the meaning set forth in Section 2.

      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

      “Holder” or “Holders” means the holder or holders of the Series A
Preferred Stock.

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      “Investor Rights Agreement” means the Investor Rights Agreement, dated as
of                     , 2004, by and among the Company and the original
Holders.

      “Liquidation” means any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary.

      “Majority Holder(s)” means the holder(s) of 60% or more of the then
outstanding shares of Series A Preferred Stock.

      “National Market” means the NASDAQ National Market, the NASDAQ SmallCap
Market, the New York Stock Exchange, the American Stock Exchange and the OTCBB.

      “Options” means any rights, options or warrants to subscribe for or to
purchase Common Stock or any other stock.

      “OTCBB” means the Over-the-Counter Bulletin Board of the National
Association of Securities Dealers, Inc.

      “Per Share Market Value” means on any particular date: (a) the closing bid
price per share of the Common Stock on such date on: (i) the National Market on
which the Common Stock is then listed or quoted, or, if there is no such price
on such date, then the closing bid price on such exchange or quotation system on
the date nearest preceding such date or (ii) the OTCBB, as reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its function of reporting prices) or (b) if the Common Stock is
not then listed or quoted on any National Market or the OTCBB, the fair market
value of a share of Common Stock as determined by an Appraiser selected in good
faith by the Holders of a majority in interest of the shares of the Series A
Preferred Stock; provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select, in good faith,
an additional Appraiser, in which case the fair market value shall be equal to
the average of the determinations by each such Appraiser; and provided, further
that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions
during such period of calculation.

      “Person” means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

      “Preferred Stock Agreement” means the Preferred Stock Modification
Agreement, dated as of May 12, 2004, among the Company and the Original Holders.

      “Record Date” has the meaning set forth in Section 2.

      “Registration Rights Agreement” means the Registration Rights Agreement,
dated as of June 30, 2004, by and among the Company and the original Holders.

      “Series A Preferred Stock” has the meaning set forth in Section 1(a).

      “Trading Day” means any day on which the OTCBB or any National Market on
which the Common Stock is then quoted or listed is open for trading.

      “Transaction Documents” means this Certificate of Designation, the
Preferred Stock Agreement, the Investor Rights Agreement and the Registration
Rights Agreement.

      10. Notices. Any notices, consents, waivers or other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been received: (a) upon hand delivery (receipt acknowledged) or
delivery by telecopy or facsimile (with transmission confirmation report) at the
address or number designated in the Preferred Stock Agreement (if received by
5:00 p.m. eastern time where such notice is to be received), or the first
Business Day following such delivery (if received after 5:00 p.m. eastern time
where such notice is to be received) or (b) one (1) Business Day following the
date of deposit with a nationally recognized overnight courier, fully prepaid,
addressed to such address or upon actual receipt of such mailing, whichever
shall first occur. Each party shall provide written notice to the other party of
any change in

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address or facsimile number from that set forth in the Preferred Stock Agreement
in accordance with the provisions hereof.

      11. Lost or Stolen Certificates. Any Holder claiming a stock certificate
representing the shares of Series A Preferred Stock to be lost, destroyed or
wrongfully taken shall receive a replacement certificate if such Holder:
(a) requests such replacement certificate before the Company has notice that the
shares have been acquired by a bona fide purchaser; (b) executes an affidavit of
loss, whereby such Holder agrees to indemnify the Company as it relates to such
stock certificate; and (c) satisfies any other reasonable requirements fixed by
the Company’s Board of Directors, provided, however, that the Company shall not
be obligated to re-issue stock certificates if the Holder contemporaneously
requests the Company to convert such Series A Preferred Stock into Common Stock.

      12. Remedies Characterized; Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Certificate of Designation shall be
cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity, including a decree of specific
performance and/or other injunctive relief. No remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a Holder’s right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holders of the Series A Preferred
Stock for which there is no adequate remedy at law. The Company therefore agrees
that, in the event of any such breach or threatened breach, the Holders of the
Series A Preferred Stock shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

      13. Construction. This Certificate of Designation shall be deemed to be
jointly drafted by the Company and all Holders and shall not be construed
against any Person as the drafter hereof. In the event of any inconsistency or
ambiguity between the terms of this Certificate of Designation and the terms of
any other Transaction Document, the terms of this Certificate of Designation
shall control and govern any construction hereof or thereof.

      14. Failure or Indulgence Not Waiver. No failure or delay on the part of a
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

      15. Fractional Shares. Upon a conversion of Series A Preferred Stock
hereunder, the Company shall not be required to issue stock certificates
representing fractions of shares of Common Stock, but may if otherwise
permitted, make a cash payment in respect of any final fraction of a share based
on the Per Share Market Value at such time. If the Company elects not to, or is
unable to, make such a cash payment, the Holder of a share of Series A Preferred
Stock shall be entitled to receive, in lieu of the final fraction of a share,
one whole share of Common Stock.

      16. Payment of Tax Upon Issue of Transfer. The issuance of certificates
for shares of the Common Stock upon conversion of the Series A Preferred Stock
shall be made without charge to the Holders thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon conversion in a name other than that of the Holders
so converted, and the Company shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the issuance
thereof has paid to the Company the amount of such tax or has established to the
Company’s satisfaction that such tax has been paid or is not payable.

      17. Shares Owned by Company Deemed Not Outstanding. In determining whether
the Holders of the outstanding shares of Series A Preferred Stock have concurred
in any direction, consent or waiver under this

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Certificate of Designation, shares of Series A Preferred Stock which are owned
by the Company or any other Affiliate or obligor thereof shall be disregarded
and deemed not to be outstanding for the purpose of any such determination.
Shares of the Series A Preferred Stock so owned which have been pledged in good
faith may be regarded as outstanding if: (i) the pledgee establishes to the
satisfaction of the Holders and the Company the pledgee’s right so to act with
respect to such shares and (ii) the pledgee is not the Company or any other
Affiliate or obligor of the Company. For purposes of this Section 17, none of
Brown Simpson Partners I, Ltd., OTAPE LLC, LBI Group Inc. or The Pennsylvania
State University shall be deemed to be Affiliates of the Company.

      18. Communications. The Holders shall be entitled to receive, and the
Company shall deliver pursuant to Section 10 hereof, all communications sent by
the Company to the holders of the Common Stock. Such communications shall be
provided to the Holders at the same times and in the same manner as furnished to
the Company’s shareholders generally.

      19. Reacquired Shares. Any shares of Series A Preferred Stock redeemed,
purchased, converted or otherwise acquired by the Company in any manner
whatsoever shall not be reissued as part of the Company’s Series A Preferred
Stock and shall be retired promptly after the acquisition thereof. All such
shares shall become, upon their retirement (and the filing of any certificate
required in connection therewith pursuant to the Pennsylvania Business
Corporation Law), authorized but unissued shares of the Company’s preferred
stock.

      20. Registration of Transfer. The Company shall keep a register for the
registration of the transfers of shares of Series A Preferred Stock at its
principal office. Upon the surrender of any certificate representing shares of
Series A Preferred Stock at such place, the Company shall, at the request of the
record Holder of such certificate, execute and deliver (at the Company’s
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares represented by the surrendered certificate.
Each such new certificate shall be registered in such name and shall represent
such number of shares as is requested by the Holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate.

      21. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.

[Remainder of Page Intentionally Left Blank]

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      IN WITNESS WHEREOF, Healthaxis Inc. has caused this Certificate of
Designation to be signed by its Chief Executive Officer on this 30th day of
June, 2004.

  HEALTHAXIS INC.

  By:  /s/ JAMES W. MCLANE

 

--------------------------------------------------------------------------------

  Name: James W. McLane

  Title: Chief Executive Officer

Attest:

By:  /s/ J. BRENT WEBB  

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  Name: J. Brent Webb  

Title: Secretary  

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EXHIBIT A

NOTICE OF CONVERSION

AT THE ELECTION OF HOLDER

(To be Executed by the Registered Holder in order to convert shares of Series A
Convertible Preferred Stock)

      The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock (“Series A Preferred Stock”) indicated below, into
shares of common stock, par value $0.10 per share (the “Common Stock”), of
Healthaxis Inc. (the “Company”) according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any.

      The undersigned hereby certifies that the Common Stock issuable pursuant
to this Conversion Notice has been sold pursuant to a registration statement
under the Securities Act of 1933, as amended, which identifies the Holder as a
selling security holder. This must be checked for shares free of restrictive
legends to be issued.

Conversion calculations:

 

--------------------------------------------------------------------------------

  Date to effect conversion    

--------------------------------------------------------------------------------

  No. of shares of Series A Preferred Stock being converted    

--------------------------------------------------------------------------------

  Number of shares of Common Stock to be issued    

--------------------------------------------------------------------------------

  Name(s) in which Common Stock to be issued    

--------------------------------------------------------------------------------

  Signature of Holder    

--------------------------------------------------------------------------------

  Name    

--------------------------------------------------------------------------------

  Address    

--------------------------------------------------------------------------------

 

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EXHIBIT B

NOTICE OF CONVERSION

AT THE ELECTION OF THE COMPANY

(To be Delivered to the Registered Holder in order to convert shares of Series A
Convertible Preferred Stock)

      Healthaxis Inc. (the “Company”) hereby notifies you that it is exercising
its option to require the conversion of the shares of Series A Convertible
Preferred Stock (“Series A Preferred Stock”) indicated below, into shares of
common stock, par value $0.10 per share (the “Common Stock”), of Healthaxis Inc.
(the “Company”) according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than the Holder,
the Holder will pay all transfer taxes payable with respect thereto and will
deliver such certificates and opinions as are reasonably requested by the
Company in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.

Conversion calculations:

 

--------------------------------------------------------------------------------

  Date to effect conversion    

--------------------------------------------------------------------------------

  No. of shares of Series A Preferred Stock being converted    

--------------------------------------------------------------------------------

  Number of shares of Common Stock to be issued     HEALTHAXIS INC.

  By: 

 

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