Document:

Exhibit 10.2

 

HEALTHAXIS /
PREFERRED CONVERSION

AND
TERMINATION AGREEMENT

 

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

 

Recitals

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

3.               Representations and
Agreements.

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

	
   

  	
  LB I Group Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Devir

  
	
   

  	
  Name: John M. Devir

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  HealthAxis Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Carradine

  
	
   

  	
  Name: John M. Carradine

  
	
   

  	
  Title: CEO

  
	
   

  	
  Dated: September 5, 2008

  

 

4Exhibit 10.3

 

LEWIS WARRANT
TERMINATION AGREEMENT

 

This Lewis Warrant
Termination Agreement (this “Agreement”), dated as of the 25th day of July,
2008, is entered into by and between HealthAxis Inc., a Pennsylvania
corporation (“Company”), and Lewis Opportunity Fund, LP, a Delaware (“Warrant
Holder”).

 

Recitals

 

WHEREAS, on June 30, 2004, Company issued Warrant No. 2004-01
to Brown Simpson Partners I, Ltd. (“Brown Simpson”) to purchase 490,306 shares
of Company’s common stock (the “Warrant”);

 

WHEREAS, pursuant to that certain Warrant Purchase Agreement dated as
of July 31, 2006, by and between Brown Simpson and Warrant Holder, Brown
Simpson sold to Warrant Holder all of its rights and interests in the Warrant;

 

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

 

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

 

WHEREAS, subject to and in the event of the consummation of the Merger,
Company and Warrant Holder desire to provide for the cancellation and
termination of the Warrant in consideration of the anticipated benefits to be
received by Company and Warrant Holder as a result of the consummation of the
Merger.

 

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

 

1.               Cancellation and
Termination of Warrant.  Warrant
Holder and Company do hereby agree that the Warrant shall automatically be
cancelled and terminated without any further action by any party thereto
effective as of the date of consummation of the Merger.

 

2.               Representations and
Agreements.

 

(a)                                  Each
of Company and Warrant Holder represents and warrants to the other that (i) it
is an entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, (ii) it has all requisite power
and authority to enter into this Agreement and to perform its obligations
hereunder, (iii) the execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly authorized by all
necessary actions on its part, and (iv) this Agreement has been duly
executed and delivered by it, 

 

 

and assuming due authorization, execution and delivery by the other,
constitutes a valid and binding agreement of it, enforceable against it in
accordance with the terms of this Agreement, except as enforcement may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect affecting creditors’ rights generally and
the effect of general principles of equity.

 

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

 

(c)                                  Warrant
Holder hereby represents and warrants to Company that it has complete ownership
and good title to the Warrant, free and clear of all liens or any encumbrances,
and that it has not transferred or attempted to transfer the Warrant to any
other party.  Warrant Holder further
hereby represents and warrants to Company that it has reviewed and evaluated
all statements, reports and other documents filed by Company with the
Securities and Exchange Commission, that it has reviewed and evaluated the
terms of the Merger Agreement and all documents, agreements, schedules and
exhibits contemplated thereby, and that it has had the opportunity to request
and has received any and all further information relating to Company, the
Merger and any other relevant matters that it has requested.

 

(d)                                 Warrant
Holder agrees that during the term of this Agreement it shall not sell, pledge,
assign or otherwise transfer or attempt to transfer the Warrant to any other
party.

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

[signature page is attached]

 

3

 

IN WITNESS WHEREOF, the undersigned have executed this Lewis Warrant
Termination Agreement as of the date written above.

 

	
   

  	
  Lewis Opportunity Fund, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Austin Lewis

  
	
   

  	
   

  	
  Name: W. Austin Lewis

  
	
   

  	
   

  	
  Title: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HealthAxis Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  John M. Carradine

  
	
   

  	
   

  	
  Name: John M. Carradine

  
	
   

  	
   

  	
  Title: CEO and President

  
	
   

  	
   

  	
  Dated: September 5, 2008

  

 

4

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