AMENDED AND RESTATED SEPARATION PAY
AGREEMENT
THIS AMENDED AND
RESTATED SEPARATION PAY AGREEMENT (this “Agreement”),
dated December 18, 2008, is between Zix Corporation, a Texas
corporation (the “Company”), and Susan K. Conner
(“Employee”) and hereby amends and restates that
certain Separation Pay Agreement, dated November 4, 2008, and
effective as of October 16, 2008 between the
parties.
WHEREAS, Employee
is currently employed by the Company;
WHEREAS, Employee
is willing to continue working for the Company on an “at
will” basis;
NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and
agreements of the parties herein contained, the parties agree as
follows:
A.
Acquiring Person . An “Acquiring Person” shall
mean any person (including any “person” as such term is
used in Sections 13(d)(3) or 14(d)(2) of the Exchange Act
that, together with all Affiliates and Associates of such person,
is the beneficial owner (as the term “beneficial owner”
is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act)) of 10% or more of
the outstanding Common Stock. The term “Acquiring
Person” shall not include the Company, any majority-owned
subsidiary of the Company, any employee benefit plan of the Company
or a majority—owned subsidiary of the Company, or any person
to the extent such person is holding Common Stock for or pursuant
to the terms of any such plan. For the purposes of this Agreement,
a person who becomes an Acquiring Person by acquiring beneficial
ownership of 10% or more of the Common Stock at any time after the
date of this Agreement shall continue to be an Acquiring Person
whether or not such person continues to be the beneficial owner of
10% or more of the outstanding Common Stock.
B.
Affiliate and Associate . “Affiliate” and
“Associate” shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act in effect on the date of this
Agreement.
C. Cause .
“Cause” shall mean any of the following shall have
occurred: (1) the intentional and continued failure by
Employee to substantially perform Employee’s employment
duties, such intentional action involving willful and deliberate
malfeasance or gross negligence in the performance of
Employee’s duties (other than any such failure resulting from
Employee’s incapacity due to physical or mental illness),
after written demand for substantial performance is delivered by
the Company’s Board of Directors (hereinafter, referred to as
the “Board”) that specifically identifies the manner in
which the Board of Directors believes Employee has not
substantially performed Employee’s duties and that is not
cured within five business days after notice thereof by the Company
to Employee; (2) the intentional engaging by Employee in
misconduct that is materially injurious to the Company;
(3) the conviction of Employee or a plea of nolo contendere,
or the substantial equivalent to either of the foregoing, of or
with respect to,
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any felony;
(4) the commission of acts by Employee of moral turpitude that
are injurious to the Company; (5) a breach by Employee of the
“confidentiality and invention” agreement between the
Company and Employee; (6) a breach by Employee of
Employee’s obligations under this Agreement; or (7) a
breach by Employee of the Company’s “Code of Ethics for
Senior Officers,” as currently in effect or amended from
time-to-time. For purposes of this definition, no act, or failure
to act, on Employee’s part shall be considered
“intentional” unless done, or omitted to be done, by
him not in good faith and without reasonable belief that his action
or omission was in, or not opposed to, the best interest of the
Company.
Notwithstanding
the foregoing, Employee shall not be deemed to have been terminated
for Cause without (1) reasonable written notice to Employee,
setting forth the reasons for the Company’s intention to
terminate for Cause; (2) an opportunity for Employee to be
heard before the Board (or an authorized representative thereof;
and (3) delivery to Employee of a written notice of
termination from the Board (or its authorized representative)
finding that, in the good faith opinion of the Board (or its
authorized representative), Employee engaged in the conduct set
forth above in clause (1) or (2) of the preceding
paragraph or an event specified in clause (3), (4), (5),
(6) or (7) of the preceding paragraph has
occurred.
D. Change
in Control . A “Change in Control” of the Company
shall have occurred if any of the following events shall occur
during the term of Employee’s employment:
(1) The Company is
merged, consolidated or reorganized into or with another
corporation or other legal person, other than an Affiliate, and as
a result of such merger, consolidation or reorganization, the
Company or its shareholders or Affiliates immediately before such
transaction beneficially own, immediately after or as a result of
such transaction, equity securities of the surviving or acquiring
corporation or such corporation’s parent corporation
possessing less than 51% of the voting power of the surviving or
acquiring person or such person’s parent
corporation;
(2) The Company
sells all or substantially all of its assets to any other
corporation or other legal person, other than an Affiliate, and as
a result of such sale, the Company or its shareholders or
Affiliates immediately before such transaction beneficially own,
immediately after or as a result of such transaction, equity
securities of the surviving or acquiring corporation or such
corporation’s parent corporation possessing less than 51% of
the voting power of the surviving or acquiring person or such
person’s parent corporation (provided that this provision
shall not apply to a registered public offering of securities of a
subsidiary of the Company, which offering is not part of a
transaction otherwise a part of or related to a Change in
Control);
(3) Any Acquiring
Person has become the beneficial owner (as the term
“beneficial owner” is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange
Act) of securities which, when added to any securities already
owned by such person, would represent in the aggregate 35% or more
of the then outstanding securities of the Company which are
entitled to vote to elect any class of directors;
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(4) If, at any
time, the Continuing Directors then serving on the Board cease for
any reason to constitute at least a majority thereof;
(5) Any occurrence
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A or any successor rule or
regulation promulgated under the Exchange Act; or
(6) Such other
events that cause a Change in Control of the Company, as determined
by the Board in its sole discretion.
E.
Continuing Director . A “Continuing Director”
shall mean a director of the Company who (1) is not an
Acquiring Person or an Affiliate or Associate thereof, or a
representative of an Acquiring Person or nominated for election by
an Acquiring Person, and (2) was either (a) a member of
the Board on the date of this Agreement or (b) subsequently
became a director of the Company and whose initial election or
initial nomination for election by the Company’s shareholders
was approved by a majority of the Continuing Directors then on the
Board.
F.
Company . The “Company” shall mean Zix
Corporation, a Texas corporation, or its successors in interest, as
the context requires.
G.
Exchange Act . “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
2.
Termination Without Cause Payment . If the Company
terminates Employee’s employment other than for Cause,
the Company shall pay to Employee an amount equal to nine
(9) months of Employee’s base salary, using
Employee’s highest monthly base salary during the term of
Employee’s employment (the “Termination Without Cause
Payment”) pursuant to Section 4.
3. Change In
Control Payment . If Employee resigns from employment (subject
to the notice and cure provisions noted below) with the Company and
its Affiliates following a Change in Control for a “Change In
Control Good Reason,” as such term is defined below, the
Company shall pay to Employee an amount equal to nine
(9) months of Employee’s base salary, using
Employee’s highest monthly base salary during the term of
Employee’s employment (the “Change In Control
Payment”) pursuant to Section 4.
A “Change In
Control Good Reason” shall mean (i) a material
diminution in the Employee’s authority, duties or
responsibilities, (ii) a material diminution in the
Employee’s base salary, (iii) a material change in the
geographic location at which the Employee must perform services,
(iv) a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Employee is required
to report, including a requirement that the Employee report to a
corporate officer or employee instead of the board of directors (or
similar governing body), (v) a material diminution in the
budget over which the Employee retains authority, or (vi) any
other event that constitutes a material breach by the Company of
the agreement under which the Employee provides
services.
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