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 DECEMBER 18, 2007, 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.  THE SECURITIES REPRESENTED
HEREBY ARE ALSO SUBJECT TO THE REGISTRATION REQUIREMENTS SET FORTH IN THE
PURCHASE AGREEMENT AND BOTH THE COMPANY AND THE HOLDER OF THE NOTE, BY
ACCEPTANCE OF THIS NOTE, AGREE TO BE BOUND BY THE REGISTRATION REQUIREMENTS SET
FORTH IN THE PURCHASE AGREEMENT.


 


Original Issue Date: July 11,
2008


Original Conversion Price (subject to
adjustment herein): $84.00


 


$15,000,000


 


2.5%
SECURED CONVERTIBLE PROMISSORY NOTE


DUE
JULY 11, 2010


 


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


 


1

















 


time designate
in writing, (1) the principal sum of FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000)  on July 11,
2010 (the “Maturity Date”), which Maturity Date may be extended at the
option of the Holder until July 11, 2012 if and only if the closing price
of the Company’s Common Stock on its Trading Market shall not exceed $98.70 per
share (as adjusted for any cash or stock dividends or stock splits in the
manner described in Section 5 below) for any 30 consecutive Trading Days
prior to July 11, 2010; provided, that the Holder shall give ten (10) days’
written notice prior to the initial Maturity Date of its intent to extend the
Maturity Date for an additional two (2) years; and (2) interest
to the Holder on the aggregate unconverted and then-outstanding principal
amount of this Note in accordance with the provisions hereof.  This Note is being issued in connection with
that certain Secured 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).


 


“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.


 


2

















 


“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 9(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 8.


 


“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 


 


3

















 


Company and in which the
Company receives benefits in addition to the investment of funds.


 


“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.


 


“Interest Payment Date”
shall have the meaning set forth in Section 2(a).


 


“Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.


 


“Mandatory
Default Amount” means an amount designed to compensate the Holder for the
loss of the value of the conversion feature of this Note, which shall equal the
sum of (i) the greater of (A) 110% of the outstanding principal
amount of this Note, plus all accrued and unpaid interest hereon, or (B) the
outstanding principal amount of this Note, plus all accrued and unpaid interest
hereon, divided by the Conversion Price on the date the Mandatory Default
Amount is either (a) demanded (if demand or notice is required to create
an Event of Default) or otherwise due or (b) paid in full, whichever has a
lower Conversion Price, multiplied by the VWAP on the date the Mandatory
Default Amount is either (x) demanded or otherwise due or (y) paid in
full, whichever has a higher VWAP, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of this Note.


 


“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).


 


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.


 


“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 Secured Convertible Note Purchase Agreement, dated as
of July     , 2008, 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, (ii) any additional shares of Common
Stock issuable in connection with any adjustment mechanisms contained herein
and (iii) 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).


 


5

















 


“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.


 


“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.               Interest.


 


a)             Payment of Interest in Cash. The Company shall pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Debenture at the rate of 2.5% per annum, payable annually on each July     ,
on each Conversion Date (as to that principal amount then being converted), and
on the Maturity Date (each such date, an “Interest Payment Date”) (if
any Interest Payment Date is not a Business Day, then the applicable payment
shall be due on the next succeeding Business Day), in cash.  All overdue accrued and unpaid interest to be
paid hereunder shall entail a late fee at an interest rate equal to 14% per
annum until such amount is paid in full.


 


b)            Interest Calculations. Interest shall be calculated on the
basis of a 365-day year, and shall accrue daily commencing on the Original
Issue Date until payment in full of the principal sum, together with all
accrued and unpaid interest, liquidated damages and other amounts which may
become due hereunder, has been made. 
Interest shall 


 


6

















 


cease to accrue
with respect to any principal amount converted, provided that the Company
actually delivers the Conversion Shares within the time period required by Section 4(d)(ii) herein.  Interest hereunder will be paid to the Person
in whose name this Note is registered on the records of the Company regarding
registration and transfers of this Note (the “Note Register”).


 


c)             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.


 


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, into shares of Common Stock at the option of the Holder,
at any time and from time to time (subject to the conversion limitations set
forth in Section 4(c) hereof). 
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, plus
all accrued and unpaid interest thereon, 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 


 


7

















 


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
$84, 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 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 


 


8

















 


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 any 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.  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; provided,
that the amount of principal to be converted pursuant to clause (x) shall
include any accrued but unpaid interest through the date of such conversion
(based on the number of days in such interest period up to and including the
date of such conversion).


 


ii.             Delivery of Certificate Upon Conversion. Not later than three Trading Days after
each Conversion Date (the “Share Delivery Date”), the Company 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.


 


iii.            Failure to Deliver Certificates. 
If in the case of any Notice of Conversion such certificate or
certificates are not delivered to or as directed by 


 


9

















 


the applicable
Holder by the third 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 the Conversion Shares
upon conversion of this Note in accordance with the terms hereof are 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 in
connection with the issuance of such Conversion Shares.  Failure to 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. 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 the Registration Statement is then effective under
the Securities Act, shall be registered for public sale in accordance with such
Registration Statement.


 


vi.            Fractional Shares. Upon a conversion 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 VWAP at such time.  If the Company elects not, or is unable, to
make such a cash payment, the Holder shall be entitled to receive, in lieu of
the final fraction of a share, 1 whole share of Common Stock.


 


10
















 


vii.           Transfer Taxes. 
The issuance of certificates for shares of the Common Stock on
conversion of this Note shall be made without charge to the Holder hereof for
any documentary, stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificates, 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 Holder of this Note 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 shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.


 


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 


 


11

















 


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 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 


 


12

















 


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 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.               Negative Covenants. As long as
any portion of this Note remains outstanding, unless the Holder shall have
otherwise given prior written consent, the Company shall not, and shall not
permit any of its subsidiaries (whether or not a Subsidiary on the Original
Issue Date) to, directly or indirectly:


 


a)             other than Permitted Indebtedness, enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness for
borrowed money of any kind, including but not limited to, a guarantee, on or
with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom; provided, however,
that any consent by Holder pursuant to this subsection 7(a) shall not be
unreasonably withheld if such indebtedness for borrowed money relates to
acquisitions of a business whether through merger, asset purchase, stock
purchase or similar purchase agreement;


 


b)            other than Permitted Liens, enter into,
create, incur, assume or suffer to exist any Liens of any kind, on or with
respect to any of its property or assets now owned or hereafter acquired or any
interest therein or any income or profits therefrom; provided, however,
that any consent by Holder pursuant to this subsection 7(b) shall not be 


 


13

















 


unreasonably
withheld if such Liens relate to acquisitions of a business whether through
merger, asset purchase, stock purchase or similar purchase agreement;


 


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;


 


d)            pay cash dividends or distributions on
any equity securities of the Company;


 


e)             enter into any agreement with respect to
any of the foregoing.


 


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) interest, 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 an interest payment or other default
under clause (B) above, is not cured within 3 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 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 


 


14

















 


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;


 


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 five 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
deliver certificates to a Holder prior to the third 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;


 


15

















 


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.          the Company shall fail to enter into the
Security Agreement, Guaranty and any intercreditor arrangements described in
the Purchase Agreement within thirty (30) days of the date of this Note.


 


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, plus accrued but unpaid interest, 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
5 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 18% 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 pursuant to this Section 8(b).  No such rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon.


 


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 9(a).  Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in 


 


16

















 


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 9(a) prior to 5:30 p.m. (New York City 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 9(a) between 5:30 p.m. (New York City time) and
11:59 p.m. (New York City 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.


 


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 of, liquidated
damages and accrued interest, 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 


 


17

















 


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.


 


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 


 


18

















 


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 9(i) shall apply similarly and
equally to successive Fundamental Transactions and shall be applied without
regard to any limitations of this Note.


 


*********************


 


19

















 


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:

  	
  

  
	
   

  	
   

  	
  Name: 
  Robin Raina

  
	
   

  	
   

  	
  Title:

  



 


20

















 


ANNEX
A


 


NOTICE
OF CONVERSION


 


The undersigned hereby elects
to convert principal under the 2.5% Secured Convertible Note due July 11,
2010 of Ebix, Inc., a Delaware corporation (the “Company”), into shares of common stock, par
value $.10 per share (the “Common
Stock”), of the Company according to the conditions hereof, as of the date
written below.  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:

  
	
   

  	
   

  
	
   

  	
  Payment of Interest in Common Stock
       yes      no

  
	
   

  	
  If yes, $            of
  Interest Accrued on Account of Conversion at Issue.

  
	
   

  	
   

  
	
   

  	
  Number of shares of Common Stock
  to be issued:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Address:

  



 


A-1

















 


Schedule
1


 


CONVERSION
SCHEDULE


 


The 2.5% Secured Convertible Notes due on July 11, 2010 in the
aggregate principal amount of $15,000,000 are issued by Ebix, Inc.  This
Conversion Schedule reflects conversions made under Section 4 of the above
referenced Note.


 


Dated:


 


	
  Date of
  Conversion

  (or for first entry,

  Original Issue Date)

  	
   

  	
  Amount of

  Conversion

  	
   

  	
  Aggregate

  Principal

  Amount

  Remaining

  Subsequent to

  Conversion

  (or original

  Principal

  Amount)

  	
   

  	
  Company Attest