Exhibit 10.2
NEITHER THIS SECURITY NOR THE
SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO A SECURED CONVERTIBLE NOTE PURCHASE
AGREEMENT, DATED AS OF DECEMBER 18, 2007, BY AND BETWEEN THE
COMPANY AND THE INVESTOR REFERRED TO THEREIN (THE “PURCHASE
AGREEMENT”), AND BOTH THE COMPANY AND THE HOLDER OF THE NOTE,
BY ACCEPTANCE OF THIS NOTE, AGREE TO BE BOUND BY ALL APPLICABLE
PROVISIONS OF THE PURCHASE AGREEMENT. THE SECURITIES
REPRESENTED HEREBY ARE ALSO SUBJECT TO THE REGISTRATION
REQUIREMENTS SET FORTH IN THE PURCHASE AGREEMENT AND BOTH THE
COMPANY AND THE HOLDER OF THE NOTE, BY ACCEPTANCE OF THIS NOTE,
AGREE TO BE BOUND BY THE REGISTRATION REQUIREMENTS SET FORTH IN THE
PURCHASE AGREEMENT.
Original Issue Date:
December 18, 2007
Original Conversion
Price (subject to adjustment herein): $63.84
$20,000,000
2.5%
SECURED CONVERTIBLE PROMISSORY NOTE
DUE
DECEMBER 18, 2009
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 TWENTY MILLION AND NO/100 DOLLARS
($20,000,000) on December 18, 2009 (the “ Maturity
Date ”), which Maturity Date may be extended at the
option of the Holder until December 18, 2011 if and only if
the closing price of the Company’s Common Stock on its
Trading Market shall not exceed $75 per share (as adjusted for any
cash or stock dividends or stock splits in the manner described in
Section 5 below) for any 30 consecutive Trading Days prior to
December 18, 2009; provided , that the Holder shall
give ten (10) days’ written notice prior to the initial
Maturity Date of its intent to extend the Maturity Date for an
additional two (2) years; and (2) interest to the Holder
on the aggregate unconverted and then-outstanding principal amount
of this Note in accordance with the provisions hereof. This
Note is being issued in connection with that certain Secured
Convertible Note Purchase Agreement, dated as of the date hereof,
between the Company and the Holder (the “ Purchase
Agreement ”). This Note is subject to the following
additional provisions:
Section 1.
Definitions . For the purposes hereof, in addition to
the terms defined elsewhere in this Note, (a) capitalized
terms not otherwise defined herein shall have the meanings set
forth in the Purchase Agreement and (b) the following terms
shall have the following meanings:
“ Alternate Consideration ”
shall have the meaning set forth in Section 5(c).
“ Bankruptcy Event ” means
any of the following events: (a) the Company or any
Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) thereof commences a case
or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Significant Subsidiary thereof;
(b) there is commenced against the Company or any Significant
Subsidiary thereof any such case or proceeding that is not
dismissed within 60 days after commencement; (c) the Company
or any Significant Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered; (d) the Company or any
Significant Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its
property that is not discharged or stayed within 60 calendar days
after such appointment; (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of
creditors; (f) the Company or any Significant Subsidiary
thereof calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or
(g) the Company or any Significant Subsidiary thereof, by any
act or failure to act, expressly indicates its consent to, approval
of or acquiescence in any of the foregoing or takes any corporate
or other action for the purpose of effecting any of the
foregoing.
2
“ 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).
“ Common Stock ” means the
common stock, par value $.10 per share, of the Company and stock of
any other class of securities into which such securities may
hereafter be reclassified or changed into.
“ Common Stock Equivalents ”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“ Conversion Date ” shall
have the meaning set forth in Section 4(a).
“ Conversion Price ” shall
have the meaning set forth in Section 4(b).
“ Conversion Shares ” means,
collectively, the shares of Common Stock issuable upon conversion
of this Note in accordance with the terms hereof.
“ Delaware Courts ” shall
have the meaning set forth in Section 9(d).
“ Effective Date ” shall
mean the effective date of any registration statement filed with
the SEC covering all or such portion of the Conversion Shares as
may be specified in such registration statement.
“Event of Default” shall have the
meaning set forth in Section 8.
3
“ 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.
“ Fundamental Transaction ”
shall have the meaning set forth in Section 5(c).
“ GAAP ” means United States
generally accepted accounting principles applied on a consistent
basis during the periods involved.
“ Interest Payment Date ” shall have the meaning
set forth in Section 2(a).
“ Liens ” means a lien,
charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
“ Mandatory Default Amount ”
means an amount designed to compensate the Holder for the loss of
the value of the conversion feature of this Note, which shall equal
the sum of (i) the greater of (A) 110% of the outstanding
principal amount of this Note, plus all accrued and unpaid interest
hereon, or (B) the outstanding principal amount of this Note,
plus all accrued and unpaid interest hereon, divided by the
Conversion Price on the date the Mandatory Default Amount is either
(a) demanded (if demand or notice is required to create an
Event of Default) or otherwise due or (b) paid in full,
whichever has a lower Conversion Price, multiplied by the VWAP on
the date the Mandatory Default Amount is either (x) demanded
or otherwise due or (y) paid in full, whichever has a higher
VWAP, and (ii) all other amounts, costs, expenses and
liquidated damages due in respect of this Note.
4
“ 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.
“ Person ” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“ Purchase Agreement ” means
the Secured Convertible Note Purchase Agreement, dated as of
December 18, 2007, between the Company and the original
Holder, as the same may be amended, modified or supplemented from
time to time in accordance with its terms.
“ Registrable Securities ”
means (i) all of the shares of Common Stock issuable upon
conversion in full of the Notes, (ii) any additional shares of
Common Stock issuable
5
in connection with any
adjustment mechanisms contained herein and (iii) any
securities issued or issuable upon any stock split, stock dividend,
subsequent rights offering or other distribution, recapitalization
or other transaction set forth in Section 5.
“ Registration Statement ”
means a registration statement that registers the resale of the
Conversion Shares required under the terms set forth in
Section 6.12 of the Purchase Agreement, names the Holder as a
“selling stockholder” therein and meets all other
requirements set forth in the Purchase Agreement.
“ SEC ” shall mean the
United States Securities and Exchange Commission.
“ SEC Reports ” means all
reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) and
15(d) thereof.
“ Securities Act ” means the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“ Share Delivery Date ”
shall have the meaning set forth in Section 4(d).
“ Subsidiary ” shall have
the meaning set forth in the Purchase Agreement.
“ Trading Day ” means a day
on which the Nasdaq Stock Market (or any Trading Market on which
the Company’s Common Stock is then traded) is open for
trading.
“ Trading Market ” means the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.
“ Transaction Documents ”
shall have the meaning set forth in the Purchase
Agreement.
“ VWAP ” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
for trading as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time); (b) if the OTC Bulletin Board is not a
Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board; (c) if the Common Stock is not then quoted for
trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published
by Pink Sheets, LLC (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price
per share of the Common Stock so reported; or (d) in
all
6
other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holder and
reasonably acceptable to the Company.
Section 2.
Interest.
a)
Payment of Interest in Cash . The Company shall pay interest
to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture at the rate of 2.5% per annum,
payable annually on each December 18, on each Conversion Date
(as to that principal amount then being converted), and on the
Maturity Date (each such date, an “ Interest Payment
Date ”) (if any Interest Payment Date is not a Business
Day, then the applicable payment shall be due on the next
succeeding Business Day), in cash. All overdue accrued and
unpaid interest to be paid hereunder shall entail a late fee at an
interest rate equal to 14% per annum until such amount is paid in
full.
b)
Interest Calculations . Interest shall be calculated on the
basis of a 365-day year, and shall accrue daily commencing on the
Original Issue Date until payment in full of the principal sum,
together with all accrued and unpaid interest, liquidated damages
and other amounts which may become due hereunder, has been
made. Interest shall cease to accrue with respect to any
principal amount converted, provided that the Company actually
delivers the Conversion Shares within the time period required by
Section 4(d)(ii) herein. Interest hereunder will be
paid to the Person in whose name this Note is registered on the
records of the Company regarding registration and transfers of this
Note (the “ Note Register ”).
c)
Prepayment . The Company may not prepay any portion of
the principal amount of this Note without the prior written consent
of the Holder.
Section 3.
Registration of Transfers and Exchanges .
a)
Different Denominations . This Note is exchangeable for an
equal aggregate principal amount of Notes of different authorized
denominations, as requested by the Holder surrendering the
same. No service charge will be payable for such registration
of transfer or exchange.
b)
Investment Representations . This Note has been issued
subject to certain investment representations of the original
Holder set forth in the Purchase Agreement and may be transferred
or exchanged only in compliance with the Purchase Agreement and
applicable federal and state securities laws and
regulations.
c)
Reliance on Note Register . Prior to due presentment for
transfer to the Company of this Note, the Company and any agent of
the Company may treat the Person in whose name this Note is duly
registered on the Note Register as the owner hereof for the purpose
of receiving payment as herein provided and for all other purposes,
whether or not this Note is overdue, and neither the Company nor
any such agent shall be affected by notice to the
contrary.
7
Section 4.
Conversion .
a)
Voluntary Conversion . At any time after the Original Issue
Date until this Note is no longer outstanding, this Note shall be
convertible, in whole or in part, into shares of Common Stock at
the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in
Section 4(c) hereof). The Holder shall effect
conversions by delivering to the Company a Notice of Conversion,
the form of which is attached hereto as Annex A (a “
Notice of Conversion ”), specifying therein the
principal amount of this Note to be converted and the date on which
such conversion shall be effected (such date, the “
Conversion Date ”). If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be
the date that such Notice of Conversion is deemed delivered
hereunder. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Note to the Company
unless the entire principal amount of this Note, plus all accrued
and unpaid interest thereon, has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to the applicable
conversion. The Holder and the Company shall maintain records
showing the principal amount(s) converted and the date of such
conversion(s). The Company may deliver an objection to 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 $63.84 , subject to
adjustment as described herein (the “ Conversion Price
”).
c)
Conversion Limitations . The Company shall not effect
any conversion of this Note, and a Holder shall not have the right
to convert any portion of this Note, to the extent that after
giving effect to the conversion set forth on the applicable Notice
of Conversion, such Holder (together with such Holder’s
Affiliates, and any other person or entity acting as a group
together with such Holder or any of such Holder’s Affiliates)
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon conversion of this Note with
respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which are issuable
upon (A) conversion of the remaining, unconverted principal
amount of this Note beneficially owned by such Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised
or unconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, any
other Notes) beneficially owned by such Holder or any of its
Affiliates. Except as set forth in the preceding sentence,
for purposes of this Section 4(c), beneficial ownership shall
be calculated in accordance with
8
Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. To the
extent that the limitation contained in this
Section 4(c) applies, the determination of whether this
Note is convertible (in relation to other securities owned by such
Holder together with any Affiliates) and of which principal amount
of this Note is convertible shall be in the sole discretion of such
Holder, and the submission of a Notice of Conversion shall be
deemed to be such Holder’s determination of whether this Note
may be converted (in relation to other securities owned by such
Holder together with any Affiliates) and which principal amount of
this Note is convertible, in each case subject to such aggregate
percentage limitations. To ensure compliance with this restriction,
each Holder will be deemed to represent to the Company each time it
delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set
| 
