Exhibit 10.2





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).




 


 









 







“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

 


7









 






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.


 


8









 






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.


 


9









 






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


 


10









 






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


 


11









 






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.


 


12









 






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;


 


13









 






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.


 


14









 






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.


 


15









 






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.


 


16









 






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.



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



 


17









 





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 	 




 


18









 







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:







 


A-1









 







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