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
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).
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 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.
3
“ 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.
4
“ 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.
5
“ 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.
6
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 o
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