AMENDMENT NO. 2 dated as of December 9, 2005 by and between ZIX CORPORATION and OMICRON MASTER TRUST Relating to AMENDED AND RESTATED CONVERTIBLE NOTE DUE 2005-2008 and AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT
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Exhibit 4.1
dated as of December 9, 2005
by and between
ZIX CORPORATION
and
OMICRON MASTER TRUST
Relating to
AMENDED AND RESTATED
CONVERTIBLE NOTE DUE 2005-2008
and
AMENDED AND RESTATED
COMMON STOCK PURCHASE WARRANT
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ZIX CORPORATION
Relating to
AMENDED AND RESTATED
CONVERTIBLE NOTE DUE 2005-2008
and
AMENDED AND RESTATED
COMMON STOCK PURCHASE WARRANT
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THIS AMENDMENT NO. 2, dated as of December 9, 2005 (this “Agreement”), by and between ZIX
CORPORATION, a Texas corporation (the “Company”), and OMICRON MASTER TRUST, a Bermuda trust (the
“Purchaser”), amends the AMENDED AND RESTATED CONVERTIBLE NOTE DUE 2005-2008 in the original
principal amount of $10,000,000 issued by the Company (the “Note”), the AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT, and the PURCHASE AGREEMENT (such capitalized term and all other
capitalized terms used herein having the respective meanings provided herein).
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser have previously executed and delivered, one to the
other, the Purchase Agreement and the Registration Rights Agreement, and the Company has issued the
Note to the Purchaser;
WHEREAS, the Company and the Purchaser wish to amend certain terms of the Note and to confirm
the meaning of certain provisions of the Registration Rights Agreement, upon the terms and subject
to the conditions of this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants made herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
1.1 As used in this Agreement, the terms “Agreement”, “Company”, “Note”, “Registration Rights
Agreement” and “Purchaser” shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement.
1.2 Capitalized terms used in this Agreement and not defined in this Agreement shall have the
respective meanings provided in the Note or if not defined in the Note, as defined in the
Registration Rights Agreement and if not defined in the Note or the Registration Rights Agreement,
as defined in the Purchase Agreement.
1.3 All the agreements or instruments herein defined shall mean such agreements or instruments as
the same may from time to time be supplemented or amended or the terms thereof waived or modified
to the extent permitted by, and in accordance with, the terms thereof and of this Agreement.
1.4 The following terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
“Amendment No. 1” means Amendment No. 1 to Purchase Agreement, dated as of April 13, 2005, by
and between the Company and the Purchaser.
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“Effective Time” means the date on which and time at which the Company and the Purchaser
execute and deliver this Agreement, one to the other.
“First Registration Statement” means the Company’s Registration Statement on Form S-3,
Registration No. 333-120548, ordered effective by the SEC on February 3, 2005.
“Other Agreement” means the Amendment No. 2, dated as of the date hereof, between the Company
and the holder of the Other Note relating to, among other things, amendment of the Other Note.
“Purchase Agreement” means the Purchase Agreement, dated as of November 1, 2004, by and
between the Company and the Purchaser, as amended by Amendment No. 1.
“Second Registration Statement” means the Company’s Registration Statement on Form S-3,
Registration No. 333-124318, ordered effective by the SEC on July 20, 2005.
2. Amendments and Confirmation. The following amendments in Section 2.1 shall become effective at
the Effective Time.
2.1 Partial Redemption of the Note. (a) As contemplated by Section 2(d)(2) of the Note, on or
before December 9, 2005 the Company shall redeem the remaining $1,950,687.00 outstanding principal
amount of the principal installment of the Note scheduled to be due on November 2, 2008. The
Optional Redemption Notice for such redemption is as follows:
ZIX CORPORATION
OPTIONAL REDEMPTION NOTICE
(Section 2(b) of Amended and Restated
Convertible Note due 2005-2008)
(Section 2(b) of Amended and Restated
Convertible Note due 2005-2008)
TO: Omicron Master Trust
1. Pursuant to the terms of the Amended and Restated Convertible Note due 2005-2008 (the
“Note”), Zix Corporation, a Texas corporation (the “Company”), hereby notifies the above-named
Holder that the Company is exercising its right to redeem the Note in accordance with Section 2(b)
of the Note as set forth below:
(i) The cash portion of Optional Redemption Consideration (based on the principal amount of
the Note outstanding on the date this Notice is given) is $2,063,594.80.
(ii) The Redemption Warrant issuable upon such redemption (based on the principal amount of
the Note outstanding on the date this Notice is given) initially will entitle the holder to
purchase 145,032 shares of Common Stock at a price of $5.38 per share.
(iii) The Optional Redemption Date is December 9, 2005.
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2. All of the conditions of Section 2(b) of the Note for this redemption have been satisfied.
3. Capitalized terms used herein and not otherwise defined herein have the respective meanings
provided in the Note.
| Date: December 9, 2005 | ZIX CORPORATION* | |||
| By: | ||||
| Title: | ||||
*Deemed executed by the signature of the Company that appears at the end of this Agreement.
Notwithstanding the period specified in the Note for the giving of an Optional Redemption Notice,
the Purchaser agrees to accept the foregoing Optional Redemption Notice. Solely for purposes of
permitting the Company to give the foregoing Optional Redemption Notice, and not for purposes of
otherwise relieving the Company of its obligation to comply, or the Purchaser’s rights under, the
following provisions of the Note, the Purchaser hereby also waives the following additional
requirements related to such redemption:
(1) Section 2(c)(1)(C) of the Note regarding the availability of the Registration Statement for use
by the Purchaser;
(2) Section 2(c)(1)(G) regarding the absence of a Maximum Share Amount Deficiency; and
(3) Section (3)(o)(2) of the Note as to reporting the Share Redemption completed on December 1,
2005 so long as the Company reports the information specified in such Section 3(o)(2) in the
Current Report on Form 8-K filed by the Company as required by Section 6.3.
(b) The cash portion of the Optional Redemption Consideration for such redemption shall be
paid by release of cash Collateral from the lien and security interest of the Security Agreement
pursuant to Section 15(e) thereof. The Purchaser hereby consents to such release of Collateral
pursuant to Section 15(e) of the Security Agreement.
2.2 Concerning the Warrant. For purposes of Section 8(f) of the Warrant, the redemption of the
Note provided for in Section 2.1 of this Agreement shall be treated as a Share Redemption but in
lieu of the number of shares of Common Stock determined under Section 8(f) of the Warrant that
would be repriced by reason thereof, the Purchase Price under and as defined in the Warrant shall
be reduced to $1.44 for 119,273 shares of Common Stock issuable upon exercise of the Warrant.
2.3 Concerning the Purchase Agreement and the Security Agreement. On November 23, 2005 the Company
gave the Purchaser a Maximum Share Amount Notice. Notwithstanding the provisions of Section 6.16
of the Purchase Agreement and the provisions of the Security Agreement, the Company and the
Purchaser agree as follows:
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(a) The Company shall seek, and use its best efforts to obtain, the Stockholder Approval by
May 1, 2006, rather than by the date that is 60 days after the Maximum Share Amount Notice Date for
such Maximum Share Amount Notice.
(b) The Purchaser’s right to require redemption of the Note during the 30-day period otherwise
provided for in Section 6.16(b)(2) of the Purchase Agreement in respect of such Maximum Share
Amount Notice shall be tolled until the earlier of (1) May 1, 2006 and (2) the date on which the
Stockholder Meeting is held (the “Redemption Right Date”), with the result that the Purchaser’s
right to require redemption of the Note pursuant to Section 6.16(b)(3) of the Purchase Agreement
shall be a right to require such redemption whether or not the Company obtains Stockholder
Approval, and such right may be exercised commencing on the Redemption Right Date.
(c) Notwithstanding Section 15(c)(6) of the Security Agreement, upon the later of (x) December
30, 2005 and (y) the date on which the Company has by Share Redemption or cash redemption reduced
the aggregate outstanding principal amount of the Notes to $10,000,000 or less, the Company shall
be entitled to release of all cash Collateral in excess of $7,936,405.20 upon the Company’s request
therefor in accordance with Section 15(c) of the Security Agreement and satisfaction of the other
requirements of Section 15(c) of the Security Agreement. Thereafter, until such time as no Maximum
Share Amount Deficiency exists, if the aggregate outstanding principal amount of the Notes is
reduced below $10,000,000 the Company shall be entitled, upon its request and the satisfaction of
the requirements of Section 15(c) of the Security Agreement other than Section 15(c)(6) of the
Security Agreement, to release of cash Collateral in excess of the lesser of (x) $7,936,405.20 and
(y) the aggregate outstanding principal amount of the Notes. If no Maximum Share Amount Deficiency
exists, then the provisions of Section 15(c) of the Security Agreement, without regard to the
foregoing provisions of this Section 2.3(c), shall once again be in effect.
(d) Notwithstanding Section 15(c)(6) of the Security Agreement, until the earlier of (x) the
date no Maximum Share Amount Deficiency exists and (y) April 30, 2006, the Company shall be
entitled, upon its request and the satisfaction of the requirements of Section 15(c) of the
Security Agreement other than Section 15(c)(6) of the Security Agreement, to release of cash
Collateral equal to the funds held in the Collateral Account attributable to interest on the cash
Collateral otherwise required to be maintained and held pursuant to the Security Agreement. If no
Maximum Share Amount Deficiency exists, then the Company’s right to release of cash Collateral
consisting of interest earned on the cash Collateral in the Collateral Account shall revert to the
provisions of Section 15(c) of the Security Agreement, without regard to this Section 2.3(d).
(e) Notwithstanding Section 6.16(a) of the Purchase Agreement, the Purchaser agrees that, of
the portion of the Maximum Share Amount otherwise allocated to the Purchaser, 137,188 shares of
Common Stock included therein shall instead be allocated to the holder of the Other Note to be used
by the Company to make a Share Redemption of the Other Note contemporaneously with the Effective
Time.
(f) The Company represents and warrants that Xxxxxx & Xxxxxxx has amended its agreement with
the Company such that the portion of the Maximum Share Amount
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previously allocated to the warrants to purchase 166,667 shares of Common Stock issued to Xxxxxx &
Xxxxxxx is now available for the issuance of the shares upon conversion of the Note and the Other
Note and exercise of the Warrants, the Redemption Warrants and the warrants issued or issuable by
the Company in connection with the Other Note.
3. Representations, Warranties, Etc. of the Company.
3.1 Affirmation of Certain Representations and Warranties, Etc. The Company hereby affirms to the
Purchaser that all of the representations and warranties to, and covenants and agreements of, the
Company set forth in Section 3 of Amendment No. 1 (other than (1) the representations, warranties,
covenants and agreements set forth in Section 3.5 regarding the Form D, which the Company will not
be filing with regard to the transactions contemplated by this Agreement, and regarding the
Company’s registration obligations, as to which certain additional shares of Common Stock have
previously been registered on the Second Registration Statement, and (2) Section 3.18 of Amendment
No. 1) are true and correct, and are hereby made, as if given and made at the date hereof and as if
each reference therein, directly or indirectly, to (1) the “Amended Note” (as defined in Amendment
No. 1) were a reference to the Note as amended by this Agreement, (2) the “Amendment Transaction
Documents” (as defined in Amendment No. 1) included a reference to this Agreement and (3) the
“Agreement” (as defined in Amendment No. 1) were a reference to this Agreement; provided, however,
that the share numbers in the representations and warranties set forth in Section 3.4 of Amendment
No. 1 are as set forth in Schedule 3.1 hereto.
3.2 Authorization. The Company has full corporate power and authority and has taken all requisite
action on the part of the Company, its officers, directors and stockholders necessary for (i) the
authorization, execution and delivery of this Agreement, (ii) authorization of the performance of
all obligations of the Company under this Agreement, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the shares of Common Stock that may be issued or
delivered upon conversion or redemption of, or in lieu of cash payment of interest on, the Note, as
amended hereby, other than approval by the stockholders of the Company of issuance of shares of
Common Stock in excess of the number permitted by Rule 4350(i) of Nasdaq to the extent such rule
requires such approval. This Agreement, when executed and delivered by the Company, will
constitute the legal, valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’ rights generally.
3.3 Board Resolutions. Contemporaneous with the execution and delivery of this Agreement, the
Company delivered to the Purchaser a certificate, dated the date of this Agreement, of the
Secretary of the Company certifying (A) that there has been no change in the Articles of
Incorporation or By-Laws of the Company from the copies thereof certified to the Purchaser at the
closing under Amendment No. 1 and (B) all resolutions of the Board of Directors (and committees
thereof) of the Company relating to this Agreement and the transactions contemplated hereby, and
such certificate is true, complete and correct.
3.4 Concerning Registration. Upon the filing by the Company with the SEC of a Current Report on
Form 8-K in accordance with Section 6.3, the First Registration Statement and the Second
Registration Statement will be available for use by the Purchaser for
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the resale of the “Underlying Shares” and “Warrant Shares,” as such terms are defined in the
Purchase Agreement, covered by such Registration Statements, subject to the terms of the
Registration Rights Agreement.
4. Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants
to the Company that:
4.1 Authorization. The Purchaser has full corporate power and authority and has taken all
requisite action on the part of the Purchaser, its partners, officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of this Agreement and (ii)
authorization of the performance of all obligations of the Purchaser under this Agreement. This
Agreement, when executed and delivered by the Purchaser, will constitute the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally.
5. Effect of Amendments.
5.1 From and after the Effective Time, the rights and obligations of the Company and the Purchaser
under the Transaction Documents and all other agreements, documents and instruments contemplated
hereby and thereby shall apply with full force and effect to the Purchase Agreement and the
Security Agreement, as amended by this Agreement, and each reference to the Purchase or the
Security Agreement in the Transaction Documents shall be deemed to be a reference to the Purchase
or the Security Agreement, as the case may be, as amended by this Agreement. From and after the
Effective Time, each reference in the Transaction Documents to (1) the Transaction Documents shall
be deemed to include a reference to this Agreement and (2) the Other Note shall be deemed a
reference to the Other Note as amended by the Other Agreement.
5.2 Except as expressly amended by this Agreement, the Transaction Documents shall remain in full
force and effect in accordance with their respective terms.
6. Certain Covenants of the Company and the Purchaser.
6.1 Press Releases. Any press release or other publicity concerning this Agreement or the
transactions contemplated by this Agreement shall be submitted to the Purchaser for comment at
least two Business Days prior to issuance, unless the release is required to be issued within a
shorter period of time by law or pursuant to the rules of the Nasdaq or a national securities
exchange or the Purchaser consents to a shorter period. The Company does not currently plan to
make any such press release.
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6.2 No Conflicting Agreements. The Company will not take any action, enter into any agreement or
make any commitment that would conflict or interfere in any material respect with the obligations
to the Purchaser under this Agreement.
6.3 Form 8-K. Within one Business Day after the Effective Time, the Company will publicly report
the transactions contemplated by this Agreement and the Other Agreement by filing with the SEC a
Current Report on Form 8-K under the 1934 Act which report shall describe the material terms and
include as exhibits to such report copies of the form of this Agreement and the Other Agreement.
6.4 Waiver. Effective at the Effective Time, the Purchaser hereby waives its rights (1) under
Section 6.2 of the Purchase Agreement to the extent and only to the extent the same would prohibit
the amendment of the Other Note under the Other Agreement (2) under Section 6.3 of the Purchase
Agreement to the extent and only to the extent the same would entitle the Purchaser to purchase any
amount of the securities to be issued by the Company pursuant to the Other Note as amended by the
Other Agreement and (3) under Section 2(c)(8) to the extent and only to the extent the same would
prohibit the amendment of the Other Note as provided in the Other Agreement and the share
redemption of the Other Note that the Company is making in accordance with the Other Agreement.
6.5 Prospectus Supplement. The Company shall prepare, and not later than one Business Day after
the date of the Effective Time file with the SEC pursuant to Rule 424 under the 1933 Act, a
prospectus supplement or amended prospectus for the prospectus forming part of the Registration
Statements that includes all information relating to this Agreement and the transactions
contemplated hereby that is required to be disclosed in such prospectus and which otherwise updates
the selling stockholder information in such prospectus that relates to the Purchaser. To the
extent permitted by the 1933 Act and the rules and regulations of the SEC thereunder, the inclusion
of such information and such updating may be made by the Company’s filing of a Current Report on
Form 8-K that is incorporated by reference in such prospectus.
7. Miscellaneous.
7.1 Successors and Assigns. The provisions of Section 8.1 of the Purchase Agreement shall be
applicable to this Agreement as if this Agreement were the “Agreement” referred to in Section 8.1
of the Purchase Agreement.
7.2 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument.
7.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
7.4 Notices. Any notice required or permitted under this Agreement shall be given as provided in
the Purchase Agreement.
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7.5 Expenses. The Company shall pay its own costs and expenses in connection herewith and shall
pay or reimburse the Purchaser on demand, at the Effective Time and thereafter from time to time,
for the Purchaser’s legal and due diligence expenses incurred in connection herewith. The Company
shall pay all fees and expenses of any placement agents or advisers in connection with the
transactions contemplated by this Agreement pursuant to a separate agreement, if any, between such
parties.
7.6 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the Purchaser;
provided, however, that any such amendment or waiver effected in accordance with this paragraph
shall be binding upon the Purchaser’s successors in interest and the Company.
7.7 Severability. If one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
7.8 Entire Agreement. This Agreement constitutes the entire agreement among the parties hereof
with respect to the subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the subject matter
hereof and thereof.
7.9 Further Assurances. The parties shall execute and deliver all such further instruments and
documents and take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the agreements herein
contained.
7.10 Applicable Law. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York without regard to principles of conflicts of laws.
7.11 Remedies.
(a) The Purchaser shall be entitled to specific performance of the Company’s obligations under
this Agreement.
(b) The Company, on the one hand, and the Purchaser, on the other hand, shall indemnify the
other and hold it harmless from any loss, cost, expense or fees (including reasonable attorneys’
fees and expenses) arising out of any breach of any of its representations, warranties, covenants
or agreements in this Agreement, or arising out of the enforcement of this Section 7.11.
7.12 Jurisdiction. The parties hereby agree that all actions or proceedings arising directly or
indirectly from or in connection with this Agreement shall be litigated only in
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the Supreme Court of the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York. The parties consent and submit to the
jurisdiction and venue of the foregoing courts and consent that any process or notice of motion or
other application to either of said courts or a judge thereof may be served inside or outside the
State of New York or the Southern District of New York (but with respect to any party hereto, such
consent shall not be deemed a general consent to jurisdiction and service for any third parties) by
registered mail, return receipt requested, directed to the party being served at its address
provided in or pursuant to this Agreement (and service so made shall be deemed complete three (3)
days after the same has been posted as aforesaid) or by personal service or in such other manner as
may be permissible under the rules of said courts. The Company hereby waives any right to a jury
trial in connection with any litigation pursuant to this Agreement.
7.13 Survival. The respective representations, warranties, covenants and agreements of the Company
and the Purchaser contained in this Agreement and the documents delivered in connection with this
Agreement shall survive the execution and delivery of this Agreement and the Effective Time, and
shall remain in full force and effect regardless of any investigation made by or on behalf of the
Purchaser or any Person controlling or acting on behalf of the Purchaser or by the Company or any
Person controlling or acting on behalf of the Company.
7.14 Construction; Purchaser Status. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction
will be applied against any party. The Purchaser is not acting as part of a “group” (as that term
is used in Section 13(d) of the 0000 Xxx) in negotiating and entering into this Agreement. The
Company hereby confirms that it understands and agrees that the Purchaser is not acting as part of
any such group.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement by their
respective officers or other representatives thereunto duly authorized as of the date first above
written.
| ZIX CORPORATION | ||||||||
| By: /s/ Xxxxxx X. Xxxxxxxx | ||||||||
| Name: | Xxxxxx X. Xxxxxxxx | |||||||
| Title: | SVP | |||||||
| OMICRON MASTER TRUST | ||||||||
| By: | OMICRON CAPITAL, L.P., | |||||||
| as Investment Adviser | ||||||||
| By: | OMICRON CAPITAL, INC., | |||||||
| General Partner | ||||||||
| By: /s/ Xxxxxxx Xxxxxx | ||||||||
| Name: | Xxxxxxx Xxxxxx | |||||||
| Title: | President | |||||||
| Omicron Master Trust | ||||||||
| Xxxxxxxx House | ||||||||
| 20 Xxxx Street | ||||||||
| Xxxxxxxx XX 11 | ||||||||
| Bermuda | ||||||||
The Collateral Agent hereby agrees to the provisions of Section 2.3(c) and (d) of the
foregoing Agreement. By signing below the Collateral Agent does not otherwise become a party to
this Agreement.
LAW OFFICES OF XXXXX X XXXXX,
as Collateral Agent
as Collateral Agent
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
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