Exhibit 10.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SECURED CONVERTIBLE NOTE
PURCHASE AGREEMENT, DATED AS OF AUGUST 26, 2009, BY AND BETWEEN THE COMPANY AND
THE INVESTOR REFERRED TO THEREIN (THE “PURCHASE AGREEMENT”), AND BOTH THE
COMPANY AND THE HOLDER OF THE NOTE, BY ACCEPTANCE OF THIS NOTE, AGREE TO BE
BOUND BY ALL APPLICABLE PROVISIONS OF THE PURCHASE AGREEMENT.
Original Issue Date: August 26, 2009
Original Conversion Price (subject to adjustment herein): $48.00
$19,000,000
0% CONVERTIBLE PROMISSORY NOTE
DUE AUGUST 26, 2011
FOR VALUE RECEIVED, Ebix, Inc., a Delaware corporation with its principal place
of business at 5 Concourse Parkway, Suite 3200, Atlanta, Georgia 30328 (the
“Company”), hereby promises to pay in lawful money of the United States to the
order of Whitebox VSC Ltd., a limited partnership organized under the laws of
the British Virgin Islands or its registered successors or assigns (the
“Holder”), at the office of the Holder at 3033 Excelsior Boulevard, Suite 300,
Minneapolis, Minnesota 55416, or at such other place as the Holder may from time
to time designate in writing, (1) the principal sum of NINETEEN MILLION AND
NO/100 DOLLARS ($19,000,000) on August 26, 2011 (the “Maturity Date”). This Note
is being issued in connection with that Convertible Note Purchase Agreement,
dated as of the date hereof, between the Company and the Holder (the “Purchase
Agreement”). This Note is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Note, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the
following terms shall have the following meanings:
“Alternate Consideration” shall have the meaning set forth in Section 5(c).

 

 

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“Bankruptcy Event” means any of the following events: (a) the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Significant Subsidiary thereof; (b) there is
commenced against the Company or any Significant Subsidiary thereof any such
case or proceeding that is not dismissed within 60 days after commencement;
(c) the Company or any Significant Subsidiary thereof is adjudicated insolvent
or bankrupt or any order of relief or other order approving any such case or
proceeding is entered; (d) the Company or any Significant Subsidiary thereof
suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days
after such appointment; (e) the Company or any Significant Subsidiary thereof
makes a general assignment for the benefit of creditors; (f) the Company or any
Significant Subsidiary thereof calls a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts; or (g) the
Company or any Significant Subsidiary thereof, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of effecting
any of the foregoing.
“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
“Change in Control Date” shall mean the date on which a Change of Control
Transaction shall occur.
“Change in Control Optional Redemption” shall have the meaning set forth in
Section 6(c).
“Change in Control Put” shall have the meaning set forth in Section 6(a).
“Change of Control Transaction” means the occurrence after the date hereof of
any of (i) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50% of the
voting securities or 50% of the assets of the Company (other than by means of
conversion or exercise of the Notes and the Securities issued together with the
Notes).

 

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“Common Stock” means the common stock, par value $.10 per share, of the Company
and stock of any other class of securities into which such securities may
hereafter be reclassified or changed into.
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
“Conversion Date” shall have the meaning set forth in Section 4(a).
“Conversion Price” shall have the meaning set forth in Section 4(b).
“Conversion Shares” means, collectively, the shares of Common Stock issuable
upon conversion of this Note in accordance with the terms hereof.
“Delaware Courts” shall have the meaning set forth in Section 8(d).
“Effective Date” shall mean the effective date of any registration statement
filed with the SEC covering all or such portion of the Conversion Shares as may
be specified in such registration statement.
“Event of Default” shall have the meaning set forth in Section 7.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Exempt Issuance” means (a) the vesting of shares of Common Stock or options to
employees, officers, consultants or directors of the Company pursuant to the
Company’s 1996 Stock Incentive Plan, as amended (provided that any such vesting
shall not exceed 10% of the Company’s outstanding shares and/or options, in the
aggregate, in any twelve-month period), (b) the issuance of securities upon the
exercise or exchange of or conversion of any securities issued pursuant to the
Purchase Agreement and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities, and (c) the
issuance of securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided
any such issuance shall only be to a person which is, itself or through its
subsidiaries, an operating company in a business synergistic with or
complementary to the business of the Company and in which the Company receives
benefits in addition to the investment of funds.

 

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“Fundamental Transaction” shall have the meaning set forth in Section 5(c).
“GAAP” means United States generally accepted accounting principles applied on a
consistent basis during the periods involved.
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
“Note Register” shall have the meaning set forth in Section 2(c).
“Notice of Conversion” shall have the meaning set forth in Section 4(a).
“Original Issue Date” means the date of the first issuance of the Notes,
regardless of any transfers of any Note and regardless of the number of
instruments which may be issued to evidence such Notes.
“Permitted Indebtedness” means, except as otherwise approved by the Holder, an
amount such that the sum of the interest on all indebtedness of the Company is
less than 40% of the Company’s operating cash flows for any fiscal year, as
calculated on a quarterly basis. For purposes of this definition, the Company’s
operating cash flows shall be calculated by taking the product of (x) the sum of
(i) the prior quarter’s reported operating cash flows (as reported on the
Company’s Form 10-K or Form 10-Q, as applicable) multiplied by four, plus
(ii) the last quarterly operating cash flow of any entity acquired by the
Company (as reported on the Company’s Form 10-K or Form 10-Q, as applicable, or
the acquired entity’s audited financial statements, as the case may be),
multiplied by (y) four (4).
“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established in accordance with GAAP; (b) Liens imposed by law which were
incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and
which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of the Company and its consolidated Subsidiaries or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable future the
forfeiture or sale of the property or asset subject to such Lien; (c) Liens
incurred in connection with Permitted Indebtedness.

 

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“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Purchase Agreement” means the Convertible Note Purchase Agreement, dated as of
August 26, 2009, between the Company and the original Holder, as the same may be
amended, modified or supplemented from time to time in accordance with its
terms.
“Registrable Securities” means (i) all of the shares of Common Stock issuable
upon conversion in full of the Notes, and (ii) any securities issued or issuable
upon any stock split, stock dividend, subsequent rights offering or other
distribution, recapitalization or other transaction set forth in Section 5.
“Registration Statement” means a registration statement that registers the
resale of the Conversion Shares required under the terms set forth in
Section 6.12 of the Purchase Agreement, names the Holder as a “selling
stockholder” therein and meets all other requirements set forth in the Purchase
Agreement. “SEC” shall mean the United States Securities and Exchange
Commission.
“SEC Reports” means all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) and 15(d) thereof.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Share Delivery Date” shall have the meaning set forth in Section 4(d)(ii).
“Subsidiary” shall have the meaning set forth in the Purchase Agreement.
“Trading Day” means a day on which the Nasdaq Stock Market (or any Trading
Market on which the Company’s Common Stock is then traded) is open for trading.
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.
“Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

 

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“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted for trading as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time); (b) if the OTC Bulletin Board is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company.
Section 2. Prepayment. The Company may not prepay any portion of the principal
amount of this Note without the prior written consent of the Holder.
Section 3. Registration of Transfers and Exchanges.
a) Different Denominations. This Note is exchangeable for an equal aggregate
principal amount of Notes of different authorized denominations, as requested by
the Holder surrendering the same. No service charge will be payable for such
registration of transfer or exchange.
b) Investment Representations. This Note has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations.
c) Reliance on Note Register. Prior to due presentment for transfer to the
Company of this Note, the Company and any agent of the Company may treat the
Person in whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Note is overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.

 

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Section 4. Conversion.
a) Voluntary Conversion. At any time after the Original Issue Date until this
Note is no longer outstanding, this Note shall be convertible, in whole or in
part, either into shares of Common Stock or a cash payment equivalent to a
multiple of (i) the closing price of the shares of Common Stock on the day that
the Holder notifies the Company of its intent to convert this Note (or a portion
thereof) and (ii) the number of shares of Common Stock that would otherwise have
been issued if the Company had chosen the option to convert into Common Stock;
provided, however, that although the decision to convert is solely within the
discretion of the Holder, the form of payment is solely within the discretion of
the Company. The Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice
of Conversion”), specifying therein the principal amount of this Note to be
converted and the date on which such conversion shall be effected (such date,
the “Conversion Date”). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Note to the Company unless the
entire principal amount of this Note, has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of
this Note in an amount equal to the applicable conversion. The Holder and the
Company shall maintain records showing the principal amount(s) converted and the
date of such conversion(s). The Company may deliver an objection to any Notice
of Conversion within 1 Business Day of delivery of such Notice of Conversion.
The Holder, and any assignee by acceptance of this Note, acknowledges and agrees
that, by reason of the provisions of this paragraph, following conversion of a
portion of this Note, the unpaid and unconverted principal amount of this Note
may be less than the amount stated on the face hereof.
b) Conversion Price. The conversion price in effect on any Conversion Date shall
be equal to $48.00, subject to adjustment as described herein (the “Conversion
Price”).
c) Conversion Limitations. The Company shall not effect any conversion of this
Note, and a Holder shall not have the right to convert any portion of this Note,
to the extent that after giving effect to the conversion set forth on the
applicable Notice of Conversion, such Holder (together with such Holder’s
Affiliates, and any other person or entity acting as a group together with such
Holder or any of such Holder’s Affiliates) would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
such Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon conversion of this Note with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which are issuable upon (A) conversion of the remaining, unconverted
principal amount of this Note beneficially owned by such Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein (including,
without limitation, any other Notes) beneficially owned by such Holder or any of
its Affiliates. Except as set forth in the preceding sentence, for purposes of
this Section 4(c), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this Section 4(c)
applies, the determination of whether this Note is convertible (in relation to
other securities owned by such Holder together with any Affiliates) and of which
principal amount of this Note is convertible shall be in the sole discretion of
such Holder, and the submission of a Notice of Conversion shall be deemed to be
such Holder’s determination of whether this Note may be converted (in relation
to other securities owned by such Holder

 

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together with any Affiliates) and which principal amount of this Note is
convertible, in each case subject to such aggregate percentage limitations. To
ensure compliance with this restriction, each Holder will be deemed to represent
to the Company each time it delivers a Notice of Conversion that such Notice of
Conversion has not violated the restrictions set forth in this paragraph, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any “group” status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 4(c), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
stated in the most recent of the following: (A) the Company’s most recent
Quarterly Report on Form10-Q or Annual Report on Form 10-K, as the case may be;
(B) a more recent public announcement by the Company; or (C) a more recent
notice by the Company or the Company’s transfer agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of a
Holder, the Company shall within two Trading Days confirm orally and in writing
to such Holder the number of shares of Common Stock then outstanding, in case
the Company decides to choose the option of converting the note into shares of
Common stock. In that case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Note, by such Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this Note held by
the Holder. The Beneficial Ownership Limitation provisions of this Section 4(c)
may be waived by such Holder, at the election of such Holder, upon not less than
61 days’ prior notice to the Company, to change or eliminate the Beneficial
Ownership Limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Note.
d) Mechanics of Conversion.
i. Conversion Shares Issuable Upon Conversion of Principal Amount. In case the
Company decides to choose the option of converting the note into shares of
Common Stock, once it has received a notification from the Holder to convert
this Note, then the number of shares of Common Stock issuable upon a conversion
hereunder shall be determined by the quotient obtained by dividing (x) the
outstanding principal amount of this Note to be converted by (y) the Conversion
Price.
ii. Delivery of Certificate Upon Conversion. Not later than seven Trading Days
after each Conversion Date (the “Share Delivery Date”), the Company at its
discretion shall either wire payment to the Holder or shall deliver, or cause to
be delivered, to the Holder a certificate or certificates representing the
Conversion Shares which (A) prior to the Effective Date with respect to such
Conversion Shares, shall contain such restrictive legends as may be required
pursuant to the Securities Act and (B) on or after the Effective Date with
respect to such Conversion Shares, shall be free of restrictive legends and
trading restrictions (other than those which may then be required pursuant to
the Purchase Agreement). Such certificate or certificates shall represent the
number of shares of Common Stock being acquired upon the conversion of this
Note. On or after the Effective Date with respect to such Conversion Shares, the
Company shall use its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section 4 electronically
through the Depository Trust Company or another established clearing corporation
performing similar functions.

 

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iii. Failure to Deliver Certificates or Wire Cash. If in the case of any Notice
of Conversion, neither payment nor such certificate or certificates are
delivered to or as directed by the applicable Holder by the seventh Trading Day
after the Conversion Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate
or certificates, to rescind such Conversion, in which event the Company shall
promptly return to the Holder any original Note delivered to the Company and the
Holder shall promptly return the Common Stock certificates representing the
principal amount of this Note tendered for conversion to the Company.
iv. Obligation Absolute. The Company’s obligations to issue and deliver payment
or Conversion Shares, at its discretion, upon conversion of this Note in
accordance with the terms hereof is absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder. Failure to wire payment or deliver the Conversion Shares
upon conversion of this Note in accordance with the terms hereof shall
constitute an Event of Default hereunder.
v. Reservation of Shares Issuable Upon Conversion. If and to the extent that the
Company is required to issue shares of Common Stock hereunder, the Company
covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance
upon conversion of this Note and payment of interest on this Note, each as
herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder (and the other holders of the
Notes), not less than such aggregate number of shares of the Common Stock as
shall (subject to the terms and conditions set forth in the Purchase Agreement)
be issuable (taking into account the adjustments and restrictions of Section 5)
upon the conversion of the outstanding principal amount of this Note and payment
of interest hereunder. The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable and, if a Registration Statement is then
effective under the Securities Act, shall be registered for public sale in
accordance with such Registration Statement.

 

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Section 5. Certain Adjustments.
a) Stock Dividends and Stock Splits. If the Company, at any time while this Note
is outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock or any
Common Stock Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of, or payment of
interest on, the Notes); (B) subdivides outstanding shares of Common Stock into
a larger number of shares; (C) combines (including by way of a reverse stock
split) outstanding shares of Common Stock into a smaller number of shares; or
(D) issues, in the event of a reclassification of shares of the Common Stock,
any shares of capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding any treasury shares of the Company) outstanding
immediately prior to such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. If the Company, at any time while the Note is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock, such issuance will also be granted to Holders on an as-converted basis
without the Holder having to convert in order to be entitled to such issuance.
c) Fundamental Transaction. If, at any time while this Note is outstanding, (A)
the Company effects any merger or consolidation of the Company with or into
another Person, (B) the Company effects any sale of all or substantially all of
its assets in one transaction or a series of related transactions, (C) any
tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then, upon any subsequent conversion of this Note,
the Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had

 

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been, immediately prior to such Fundamental Transaction, the holder of one
(1) share of Common Stock (the “Alternate Consideration”). For purposes of any
such conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1) share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Note following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new Note consistent with the foregoing provisions
and evidencing the Holder’s right to convert such Note into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 5(c) and ensuring
that this Note (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
d) Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Company) issued and
outstanding.
e) Notice to the Holder.
i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 5, the Company shall promptly mail to
each Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Conversion by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock,
(B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or

 

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winding up of the affairs of the Company, then, in each case, the Company shall
cause to be filed at each office or agency maintained for the purpose of
conversion of this Note, and shall cause to be delivered to the Holder at its
last address as it shall appear upon the Note Register, at least 20 calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in the
delivery thereof shall not affect the validity of the corporate action required
to be specified in such notice. The Holder is entitled to convert this Note
during the 20-day period commencing on the date of such notice through the
effective date of the event triggering such notice.
Section 6. Redemption Upon a Change of Control.
a) Redemption Upon a Change in Control. At any time after the date hereof, in
the event of a Change of Control Transaction, in addition to any other rights
hereunder, the Holder shall have the right (the “Change in Control Optional
Redemption”) to put the then-outstanding principal amount of the Note to the
Company (the “Change in Control Put”). The Holder shall notify the Company of
its exercise of the Change in Control Put not less than three (3) days prior to
such Change in Control Date. Upon the exercise of the Change of Control Put, the
Company shall be required to pay to the Holder an amount in cash equal to the
then-current Principal Amount.
b) Redemption Procedure. Any amounts required to be paid pursuant to Section
6(a) above shall be payable by the Company in cash on the date of such optional
redemption or put set forth in the foregoing sections. If any portion of the
payment(s) required to be paid pursuant to Section 6(a) shall not be paid by the
Company by the applicable due date, such payment failure shall constitute an
Event of Default hereunder, and interest shall accrue thereon at an interest
rate equal to the lesser of 18% per annum or the maximum rate permitted by
applicable law until such amount is paid in full.

 

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Section 7. Events of Default.
a) “Event of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):
i. any default in the payment of (A) the principal amount of any Note or (B)
liquidated damages and other amounts owing to a Holder on any Note, as and when
the same shall become due and payable (whether on a Conversion Date or the
Maturity Date or by acceleration or otherwise) which default, in the case of a
principal payment or other default under (A) above or other default under clause
(B) above, is not cured within 7 Trading Days;
ii. the Company shall fail to observe or perform any other covenant or agreement
contained in the Notes (other than a breach by the Company of its obligations to
wire payment or deliver shares of Common Stock to the Holder upon conversion,
which breach is addressed in clause (x) below) which failure is not cured, if
possible to cure, within the earlier to occur of (A) 10 Trading Days after
notice of such failure sent by the Holder or by any other Holder and (B) 15
Trading Days after the Company has become or should have become aware of such
failure;
iii. a default or event of default by the Company shall occur under (A) any of
the Transaction Documents or (B) any other material agreement, lease, document
or instrument to which the Company or any Subsidiary is obligated (and not
covered by clause (vi) below), which default is not cured, if possible to cure,
within the lesser of (a) thirty days from such default or event of default or
(b) such lesser period as may be provided in the applicable agreement, document
or instrument);
iv. any representation or warranty made in this Note, any other Transaction
Documents, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder or any other
Holder shall be untrue or incorrect in any material respect as of the date when
made or deemed made;
v. the Company or any Subsidiary shall be subject to a Bankruptcy Event;
vi. the Company or any Subsidiary shall default on any of its obligations under
any mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement that (a) involves an
obligation greater than $100,000, whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;

 

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vii. the Common Stock shall not be eligible for listing or quotation for trading
on a Trading Market and shall not be eligible to resume listing or quotation for
trading thereon within sixty Trading Days;
viii. a Registration Statement shall not have been declared effective within the
applicable period(s) specified in Section 6.12 of the Purchase Agreement;
ix. if, after the Registration Statement has been declared effective and any
Registrable Securities are still outstanding, either (a) the effectiveness of
the Registration Statement lapses for any reason or (b) the Holder shall not be
permitted to resell Registrable Securities under the Registration Statement in
accordance with the terms set forth in Section 6.12 of the Purchase Agreement;
provided, however, that if the Company is negotiating a merger, consolidation,
acquisition or sale of all or substantially all of its assets or a similar
transaction and, in the written opinion of counsel to the Company, the
Registration Statement would be required to be amended to include information
concerning such pending transaction(s) or the parties thereto which information
is not available or may not be publicly disclosed at the time, the Company shall
be permitted an additional 10 consecutive Trading Days during any 12-month
period pursuant to this Section 8(a)(ix);
x. the Company shall fail for any reason to wire payment or deliver certificates
to a Holder prior to the seventh Trading Day after a Conversion Date or the
Company shall provide at any time notice to the Holder, including by way of
public announcement, of the Company’s intention to not honor requests for
conversions of any Notes in accordance with the terms hereof;
xi. any monetary judgment, writ or similar final process shall be entered or
filed against the Company, any Subsidiary or any of their respective property or
other assets for more than $100,000, and such judgment, writ or similar final
process shall remain unvacated, unbonded or unstayed for a period of 45 calendar
days;
xii. the Company shall have failed to file any of its SEC Reports on a timely
basis; provided, however, that such SEC Reports shall be deemed to be filed on a
timely basis if the Company has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of such
extension; or
xiii. any amounts payable upon the exercise of a Change in Control Put shall not
have been paid in accordance with the terms set forth in Section 6.

 

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b) Remedies Upon Event of Default. If any Event of Default shall have occurred,
at the Holder’s election, (i) the outstanding principal amount of this Note,
liquidated damages and other amounts owing in respect thereof through the date
of acceleration, shall become immediately due and payable in cash at the
Mandatory Default Amount or (ii) commencing 15 days after the occurrence of any
Event of Default that results in the eventual acceleration of this Note, the
interest rate on this Note shall accrue at an interest rate equal to the lesser
of 8% per annum or the maximum rate permitted under applicable law. Upon the
payment in full of the Mandatory Default Amount, the Holder shall promptly
surrender this Note to or as directed by the Company. In connection with such
acceleration described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a holder of the Note until such time, if any, as the Holder
receives full payment. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.
c) amend its charter documents, including, without limitation, its Certificate
of Incorporation and Bylaws, in any manner that materially and adversely affects
any rights of the Holder, with the exception of enacting a poison pill or a
shareholder rights plan;
d) pay cash dividends or distributions on any equity securities of the Company;
Section 8. Miscellaneous.
a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service, addressed to the Company,
at the address set forth above, facsimile number (678) 281-2019, Attention:
Robin Raina or such other facsimile number or address as the Company may specify
for such purpose by notice to the Holder delivered in accordance with this
Section 8(a). Any and all notices or other communications or deliveries to be
provided by the Company hereunder shall be in writing and delivered personally,
by facsimile, or sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile number or address of such Holder
appearing on the books of the Company, or if no such facsimile number or address
appears, at the principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section prior
to 5:30 p.m. (Atlanta time), (ii) the date immediately following the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section between 5:30 p.m. (Atlanta time) and
11:59 p.m. (Atlanta time) on any date, (iii) the second Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given.

 

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b) Absolute Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal as applicable, on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed. This Note is a
direct debt obligation of the Company.
c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, reasonably satisfactory to the Company.
d) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note 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 conflict of laws thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in Dover, 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 (including with
respect to the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such Delaware
Courts, or such Delaware Courts are improper or inconvenient venue for such
proceeding. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Note or the transactions
contemplated hereby. If either party shall commence an action or proceeding to
enforce any provisions of this Note, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.
e) Waiver. Any waiver by the Company or the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note.
The failure of the Company or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note. Any waiver by the Company or the
Holder must be in writing.

 

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f) Severability. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this indenture, and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefits or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impeded the execution of any power herein granted to the
Holder, but will suffer and permit the execution of every such as though no such
law has been enacted.
g) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
h) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof.
i) Assumption. Any successor to the Company or any surviving entity in a
Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction,
all of the obligations of the Company under this Note and the other Transaction
Documents pursuant to written agreements in form and substance satisfactory to
the Holder (such approval not to be unreasonably withheld or delayed) and
(ii) issue to the Holder a new Note of such successor entity evidenced by a
written instrument substantially similar in form and substance to this Note,
including, without limitation, having a principal amount and interest rate equal
to the principal amount and the interest rate of this Note and having similar
ranking to this Note, which shall be satisfactory to the Holder (any such
approval not to be unreasonably withheld or delayed). The provisions of this
Section 8(i) shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations of this
Note.
*********************

 

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.

            EBIX, INC.
      By:   /s/ Robin Raina         Name:   Robin Raina        Title:  
President & Chief Executive Officer   

 

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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 0% Convertible Note
due August 26, 2011 of Ebix, Inc., a Delaware corporation (the “Company”), and
the Company at its discretion shall either issue shares of its Common Stock, par
value $.10 per share (the “Common Stock”), or make a cash payment equivalent to
a multiple of (i) the closing price of the shares of Common Stock on the day
that the Holder notifies the Company of its intent to convert this Note (or a
portion thereof) and (ii) the number of shares of Common Stock that would
otherwise have been issued if the Company had chosen the option to convert into
Common Stock; provided, however, that although the decision to convert is solely
within the discretion of the Holder, the form of payment is solely within the
discretion of the Company. If shares of Common Stock are to be issued in the
name of a person other than the 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.
By the delivery of this Notice of Conversion the undersigned represents and
warrants to the Company that its ownership of the Common Stock does not exceed
the amounts specified under Section 4 of this Note, as determined in accordance
with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.
Conversion calculations:

     
 
  Date to Effect Conversion:                                        
 
   
 
  Principal Amount of Note
to be Converted:                                        
 
   
 
  Number of shares of Common Stock to be issued:
 
   
 
  OR
 
   
 
  Amount to be paid by Company to Holder                      (calculated based
on the closing price of the Common Stock on the day of notice)
 
   
 
  Signature:
 
   
 
  Name:
 
   
 
  Address:

 

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SCHEDULE 1
CONVERSION SCHEDULE
The 0% Convertible Notes due on August 26, 2009 in the aggregate principal
amount of $20,000,000 are issued by Ebix, Inc. This Conversion Schedule reflects
conversions made under Section 4 of the above referenced Note.
Dated:

                      Aggregate             Principal             Amount        
    Remaining             Subsequent to             Conversion     Date of
Conversion       (or original     (or for first entry,   Amount of   Principal  
  Original Issue Date)   Conversion   Amount)   Company Attest