EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 20th day of January 2004, by and between Zix Corporation, a Texas
corporation (the "Company"), and Xxxxxxx Xxxxx, a resident of the State of Texas
("Employee").
RECITALS
A. The Company desires to provide for the employment of Employee
in such a manner as will reinforce and encourage Employee's highest attention
and dedication to the Company and its shareholders.
B. Employee is willing to serve the Company under the terms and
conditions herein provided.
TERMS AND CONDITIONS
In consideration of the mutual covenants and agreements set forth in
this Agreement, the parties agree as follows:
1. Employment. Subject to the terms and conditions set forth in
this Agreement, the Company employs Employee, and Employee hereby accepts such
employment by the Company.
2. Duties of Employee.
(A) Employee shall serve in the capacities of Chief
Operating Officer and President of the Company. In such capacities,
Employee shall have all necessary powers to discharge his
responsibilities, including general supervision of the affairs of the
organization under his direct control. These organizations shall
initially include Sales, Marketing, Professional Services, Customer
Services and Development & Operations. The following organizations
shall be excluded from Employee's responsibility: Finance, Legal,
Strategy, and the Care Delivery group. For so long as Employee serves
in the foregoing capacities, the Company management shall nominate and
support the election of Employee as a member of the Board of Directors
of the Company.
(B) During the term of this Agreement, and thereafter so
long as Employee is employed by the Company, Employee shall devote his
full business time and effort to the performance of his duties and
responsibilities as an officer of the Company. Notwithstanding the
foregoing, Employee may spend reasonable amounts of time on personal
civic and charitable and investment activities that do not interfere
with the performance of his duties and responsibilities to the Company.
In addition, Employee may, subject to prior approval by the Board,
spend reasonable amounts of time serving as an independent director for
other companies, which are approved, provided that such service does
not, in the sole discretion of the Board, constitute or create a
conflict of interest.
(C) Employee shall observe and comply with the written
rules and regulations of the Company respecting its business and shall
carry out and perform the directives and policies of the Company as the
rules may from time-to-time be stated to Employee by the Board or the
Company's Chief Executive Officer.
(D) Employee agrees not to solicit or receive any income
or other compensation from any third party in connection with his
employment with the Company. Employee agrees, upon
written request by the Company, to render an accounting of all
transactions relating to his business endeavors during the term of this
employment hereunder.
3. Term. The term of this Agreement (the "Term") shall commence
effective as of January 20th, 2004 (the "Effective Date") and continue until the
February 1, 2005, unless Employee's employment is earlier terminated in
accordance with Section 9 of this Agreement or unless the term of this Agreement
is extended by mutual written agreement of the parties. Upon expiration of the
Term, Employee shall remain an "at will" employee of the Company but Employee
and the Company shall still be subject to and bound by the terms of this
Agreement.
4. Salary. Commencing on the Effective Date, the Company will pay
Employee for his services as an officer a minimum base annual salary during the
term of this Agreement of $250,000, which shall be payable in accordance with
the Company's standard payroll practices, but not less than monthly.
5. Bonus Compensation.
(A) During the Term, the Company shall pay Employee (1)
on a quarterly basis a cash bonus in the amount of $50,000, subject to
defined reasonably achievable objectives approved by the Compensation
Committee of the Board.
(B) (1) As a signing bonus, the Company will issue to the
Employee a number of shares of the common stock of the Company, $.01
par value (the "ZixCorp Common Stock"), with an aggregate value of
$50,000, valued at the Average Trading Price per share. "Average
Trading Price" means the per share average closing price of the ZixCorp
Common Stock on the NASDAQ National Market System for the 10
consecutive trading days immediately prior to two business days before
the issuance of the shares. These "Signing Bonus Shares" are subject to
the transfer restrictions set forth in the immediately following
paragraph.
(2) If Employee ceases to be an employee of the
Company prior to February 1, 2005 because his employment terminates for
any reason other than (i) the Company terminates his employment
pursuant to Subsection 9(E) or (ii) Employee resigns employment
pursuant to Subsection 9(D)(1), the Signing Bonus Shares shall be
forfeited to the Company. Furthermore, Employee may not prior to
February 1, 2005 sell, option, pledge, transfer or otherwise dispose of
the Signing Bonus Shares or any interest in the Signing Bonus Shares.
However, these forfeiture provisions and transfer restrictions with
respect to the Signing Bonus Shares shall lapse upon a "Change in
Control" (as defined in the Option Agreement referenced below) and as
set forth in Section 10(D) below.
(3) Unless there is an effective registration
statement and qualification respecting the resale of the Signing Bonus
Shares and the shares covered by the Option Agreement under the
Securities Act or under applicable state securities laws at the time of
resale of the Signing Bonus Shares and the shares covered by the Option
Agreement, any stock certificate evidencing such shares shall bear an
appropriate restrictive legend.
Employee hereby represents and warrants that (1) the Signing
Bonus Shares are being accquired for investment for his own account,
not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in a manner which would violate the
registration provisions of the Securities Act or any applicable state
securities laws; (2) Employee has reviewed the Company's annual report
on Form 10-K for the year ended 2002, the Company's quarterly reports
on Form 10-Q filed since the beginning of 2003 and the Company's proxy
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statement for its annual meeting of shareholders in 2003; and (3)
Employee has had sufficient access to the Company to ask questions
about such filings and its business and operations as Employee has
requested.
6. Stock Options. As additional compensation, the Company shall
also grant Employee nonqualified stock options to purchase 650,000 shares of
ZixCorp Common Stock at an option exercise price approved by the Board of
Directors. The options shall vest in accordance with the vesting schedule set
forth in the stock option agreement. ("Option Agreement") relating thereto. The
stock option agreement (the "Option Agreement") relating to such shares shall
provide that all unvested shares shall vest upon a "Change in Control" (as
defined in the Option Agreement) with respect to the Company.
7. Employee Benefits. During the Term, Employee will be entitled
to participate in the insurance and employee benefit plans and programs
maintained by the Company and its Affiliates applicable to officer employees on
the same basis as other officer employees of the Company or its Affiliates, as
applicable, subject only to the possible substitution by or on behalf of the
Company or its Affiliates of other plans or programs providing substantially
similar or increased benefits for Employee. Employee will also be entitled to
reasonable vacation time with no reduction in compensation, in keeping with the
Employee's duties and responsibilities to the Company.
8. Reimbursement of Expenses. During the Term, the Company shall
reimburse Employee for all expenses actually and reasonably incurred by him in
the business. Such reimbursement shall be made to Employee upon appropriate
documentation of such expenditures in accordance with the Company's written
policies.
9. Early Termination. Employee's employment under this Agreement
may be terminated without any breach of this Agreement as follows:
(A) Employee's employment with the Company shall
terminate automatically upon Employee's death,
(B) If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been absent from his
duties and/or unable to perform the essential functions of his
position, with or without reasonable accommodation, for a total of 30
days during any consecutive 75 day period, and within 5 days after a
written Notice of Termination (as defined in subsection (G) hereof) is
given (which may occur before or after the end of such 75-day period)
shall not have returned to the performance of the essential functions
of his position, with or without reasonable accommodation, the Company
may terminate Employee's employment under this Agreement.
(C) The Company may terminate Employee's employment under
this Agreement for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate Employee's employment under this
Agreement upon (1) the willful and continued failure by Employee to
substantially perform his duties under this Agreement (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 Board that specifically identifies the manner in which
the Board believes Employee has not substantially performed his duties;
or (2) the willful engaging by Employee in misconduct that is
materially injurious to the Company; or (3) the conviction of Employee,
or a plea by Employee of nolo contendere, or the substantial equivalent
to either of the foregoing, of or with respect to, any felony or crime
of moral turpitude. For purposes of this subsection (C), no act, or
failure to act, on Employee's part shall be considered
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"willful" 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 (a) reasonable written notice to Employee, setting forth
the reasons for the Company's intention to terminate for Cause; (b) an
opportunity for Employee, together with his counsel, to be heard before
the Board (or an authorized representative thereof); and (c) delivery
to Employee of a written Notice of Termination from the Board finding
that, in the good faith opinion of the Board, Employee engaged in the
conduct set forth above in clause (1) or (2) or an event specified in
clause (3) has occurred.
(D) Employee may terminate Employee's employment under
this Agreement (1) for Good Reason; or (2) if Employee's health should
become impaired to an extent that makes Employee's continued
performance of Employee's duties under this Agreement hazardous to
Employee's physical or mental health or Employee's life; provided that,
Employee shall have furnished the Company with a written statement from
a qualified doctor to such effect and provided, further, that, at the
Company's request, Employee shall submit to an examination by a doctor
selected by the Company and such doctor shall have concurred in the
conclusion of Employee's doctor.
For purposes of this Agreement, "Good Reason" shall mean (a) a
failure by the Company to comply with any material provision of this
Agreement or the Option Agreement that has not been cured within 10
days after notice of such noncompliance has been given by Employee to
the Company; (b) any material diminution in Employee's title and
duties; (c) any purported termination of Employee's employment that is
not effected pursuant to a Notice of Termination satisfying the
requirements of subsection (G) hereof (and for purposes of this
Agreement, no such purported termination shall be effective); (d) the
assignment of duties or position that would necessitate a change in the
location of Employee's home (presently in North Dallas, Texas); or (e)
the Company fails to maintain directors and officers liability
insurance coverage, including coverage for the Employee, in an amount
equal to at least $10,000,000. Employee's resignation for Good Reason
shall be effected by delivering a notice that shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for Good Reason.
(E) The Company may terminate Employee's employment under
this Agreement without Cause upon 30 days notice to Employee.
(F) Employee may terminate Employee's employment under
this Agreement for a reason other than specified in subsection (D) upon
30 days' notice to Company.
(G) Any termination of Employee's employment by the
Company or by Employee (other than termination pursuant to subsection
(A) above) shall be communicated by written Notice of Termination to
the other party to this Agreement. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and, in
the case of a Notice of Termination given by the Company, shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the
provision so indicated.
(H) "Date of Termination" shall mean (1) if Employee's
employment is terminated by Employee's death, the date of Employee's
death; (2) if Employee's employment is terminated pursuant to
subsection (B) above, five days after Notice of Termination is given
(provided that, Employee shall not have returned to the performance of
the essential functions of his position,
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with or without reasonable accommodation, during such five day period);
and (3) if Employee's employment is terminated for any other reason,
the date specified in the Notice of Termination.
10. Certain Effects of Termination.
(A) If Company terminates Employee's employment pursuant
to Section 9(E) (without "Cause") or the Employee
resigns employment pursuant to Section 9(D)(1)(with
"Good Reason"), then the Company shall pay to
Employee (A) the greater of (i) all remaining base
salary amounts which would have been payable to
Employee during the remaining Term of this Agreement
or (ii) nine months of Employee's base salary and (B)
any bonus amounts that have been earned as of the
Date of Termination but have not yet been paid. The
amounts payable to Employee as provided in the
immediately preceding sentence may be paid, at the
Company's election, either in cash or in registered
shares of the ZixCorp Common Stock and either in a
lump sum or at such times as the applicable salary or
bonus payment would have otherwise been paid to
Employee.
(B) Furthermore, as provided in Paragraph 3.b. of the
Option Agreement, if Company terminates Employee's
employment pursuant to Section 9(E) (without "Cause")
or Employee resigns employment pursuant to Section
9(D)(1) (with "Good Reason"), then the option shares
under the Option Agreement that would have become
vested on the next vesting date (had Employee still
been employed on the next vesting date) shall become
vested as of the Date of Termination. Employee shall
have the period of time specified in Paragraph 5.a.
of the Option Agreement to exercise the vested option
shares.
(C) If Employee separates from employment for any reason
other than pursuant to Section 9(E) (without "Cause")
or Section 9(D)(1) (with "Good Reason"), then Company
shall pay to Employee his base salary through the
Date of Termination and any bonus amounts that have
been earned as of the Date of Termination but have
not yet been paid; and the vesting of the option
shares under the Option Agreement shall cease as of
the Date of Termination and Employee shall have the
period of time specified in the Option Agreement to
exercise the vested option shares. The amounts
payable to Employee as provided in the immediately
preceding sentence may be paid, at the Company's
election, either in cash or in registered shares of
the ZixCorp Common Stock and at such time as the
amounts would have otherwise been paid to Employee.
(D) If the Company terminates Employee's employment
pursuant to Subsection 9(E) (without "Cause") or
Employee resigns employment pursuant to Subsection
9(D)(1) (with "Good Reason"), the transfer and
forfeiture provisions relating to the Signing Bonus
Shares shall lapse.
11. Confidential Information. Employee recognizes and acknowledges
that Employee will have access to confidential information of the Company and
companies controlled by it, controlling it, or under common control with it (an
"Affiliate"), including, without limitation, customer information, lists of
suppliers and costs, information concerning the business and operations of the
Company and its Affiliates, and proprietary data, information, concepts and
ideas (whether or not patentable or copyrightable) relating to the business of
the Company and its Affiliates, as applicable. Employee agrees
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not to disclose such confidential information, except as may be necessary in the
performance of Employee's duties, to any person, nor use such confidential
information in any way, unless Employee has received the written consent of the
Company or unless such confidential information becomes public knowledge through
no wrongful act of Employee. Upon termination of Employee's employment for any
reason, Employee shall promptly deliver to the Company all drawings, manuals,
letters, notebooks, customer lists, documents, records, equipment, files,
computer disks or tapes, reports or any other materials relating to the business
of the Company and its Affiliates, and all copies, that are in Employee's
possession or under Employee's control. Confidential information shall not
include information that constitutes general skills, knowledge, and experience
acquired by Employee before and/or during his employment with the Company.
12. Conflict of Interest. Employee agrees that during the term of
this Agreement without the prior approval of the Board, Employee shall not
engage, either directly or indirectly, in any activity which may involve a
conflict of interest with the Company or its Affiliates (a "Conflict of
Interest"), including ownership in any supplier, contractor, subcontractor,
customer or other entity with which the Company does business (other than as a
shareholder of less than one percent (1%) of a publicly-traded or private class
of securities) or accept any material payment, service, loan, gift, trip,
entertainment or other favor from a supplier, contractor, subcontractor,
customer or other entity with which the Company does business and that Employee
shall promptly inform the Board as to each offer received by Employee to engage
in any such activity. Employee further agrees to disclose to the Company any
other facts of which Employee becomes aware which might involve or give rise to
a Conflict of Interest or potential Conflict of Interest.
13. Waiver. No waiver of any provision of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a waiver of any continuing or
succeeding breach of such provision, a waiver of the provision itself, or a
waiver of any right under this Agreement. No waiver shall be binding unless
executed in writing by the party making the waiver.
14. Limitation of Rights. Nothing in this Agreement, except as
specifically stated in this Agreement, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties to it and their respective permitted successors and assigns and other
legal representatives, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
15. Remedies. Employee hereby agrees that a violation of the
provisions of Section 11 hereof would cause irreparable injury to the Company
for which it would have no adequate remedy at law. Accordingly, in the event of
any such violation, the Company shall be entitled to preliminary and other
injunctive relief. Any such injunctive relief shall be in addition to any other
remedies to which the Company may be entitled at law or in equity, or otherwise.
16. Notice. Any notice, demand or request required or permitted to
be given or made under this Agreement shall be in writing and shall be deemed
given or made when delivered in person, when sent by United States registered or
certified mail, or postage prepaid, or when faxed to a party at its address or
facsimile number specified below:
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If to the Company:
Zix Corporation
0000 X. Xxxxxxx Xxxxxx
Xxxxx 0000, XX 36
Xxxxxx, Xxxxx 00000-0000
Attention: General Counsel
Facsimile number: (000) 000-0000
If to Employee:
Xxxxxxx Xxxxx
__________________
__________________
Facsimile number: (____) ______________
The parties to this Agreement may change its addresses for notice in
the manner provided above.
17. Inconsistent Obligations. Employee represents and warrants
that Employee has not previously assumed any obligations inconsistent with those
of this Agreement.
18. Entirety and Amendments. This Agreement and the Option
Agreement embody the entire agreement between the parties and supersede all
prior agreements and understandings relating to the subject matter hereof, and
may be amended only by an instrument in writing executed by all parties.
19. Successors and Assigns. This Agreement will be binding upon
and inure to the benefit of the parties to this Agreement and any
successors-in-interest to the Company following a Change in Control (as defined
in the Option Agreement), but otherwise, neither this Agreement nor any rights
or obligations under this Agreement may be assigned (a) by Employee, except in
the case of the death of Employee, or (b) by the Company.
20. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
(excluding its conflict of laws rules) and applicable federal law.
21. Cumulative Remedies. No remedy in this Agreement conferred
upon any party is intended to be exclusive of any other benefit or remedy, and
each and every such remedy shall be cumulative and shall be in addition to every
other benefit or remedy given under this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise. No single or partial exercise by
any party of any right, power or remedy under this Agreement shall preclude any
other or further exercise thereof.
22. Descriptive Headings. All headings, section titles, captions
and arrangements used in this Agreement are for convenience only and shall not
be deemed to limit, amplify or modify the terms of this Agreement, nor affect
the meaning hereof.
23. Multiple Originals. This Agreement may be executed in a number
of identical counterparts, all of which together shall constitute one agreement
binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
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24. Severability and Reformation. If any provision of this
Agreement is declared or found to be illegal, unenforceable or void, in whole or
in part, then the parties shall be relieved of all obligations arising under
such provision, but only to the extent that it is illegal, unenforceable or
void, it being the intent and agreement of the parties that this Agreement shall
be deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
25. Amendments. No supplement, modification or amendment of this
Agreement or waiver of any provision of this Agreement shall be binding unless
executed in writing by all parties to this Agreement. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement (regardless of whether similar), nor shall any
such waiver constitute a continuing wavier unless otherwise expressly provided.
26. Arbitration.
The Company and the Employee agree to the resolution by binding
arbitration of all claims, demands, causes of action, disputes, controversies,
or other matters in question ("Claims") arising out of this Agreement or the
Employee's employment (or its termination), whether sounding in contract, tort,
or otherwise and whether provided by statute or common law, that the Company may
have against the Employee or that the Employee may have against the Company or
any Affiliate or any benefit plans of the Company or any Affiliate or any
fiduciaries, administrators, and affiliates of any of such benefit plans, or
their respective officers, directors, employees, or agents in their capacity as
such. This agreement to arbitrate shall not limit the Company's or the
Employee's right to seek equitable relief, including, but not limited to,
injunctive relief and specific performance in a court of competent jurisdiction.
Claims covered by this agreement to arbitrate include, but are not limited to,
claims by the Employee for breach of this Agreement, wrongful termination,
discrimination (based on age, race, sex, disability, national origin or other
factor), and retaliation. The only Claims otherwise within the definition of
Claims that are not covered by this Section 26 are: (1) any administrative
actions that the Employee is permitted to pursue under applicable law that are
not precluded by virtue of the Employee having entered into this Section 26; (2)
any Claim by the Employee for workers' compensation benefits or unemployment
compensation benefits; or (3) any Claim by the Employee for benefits under a
Company or Affiliate pension or benefit plan that provides its own non-judicial
dispute resolution procedure.
Claims shall be submitted to arbitration and finally settled under the
Employment Dispute Resolution Rules of the American Arbitration Association
("AAA") in effect at the time the written notice of the Claim is received. An
arbitrator shall be selected in the manner provided for in the Employment
Dispute Resolution Rules of the AAA, except that the parties agree that the
arbitrator shall be an attorney licensed in the state where the arbitration is
being conducted. If any party refuses to honor its obligations under this
agreement to arbitrate, the other party may compel arbitration in either federal
or state court. The arbitrator will have exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability, or
formation of this agreement to arbitrate, including, but not limited to, any
claim that all or part of this Agreement is void or voidable and any claim that
an issue is not subject to arbitration. The arbitration will be held in Dallas
County, Texas. The arbitrator shall issue a written decision that identifies the
factual findings and principles of law upon which any award is based. The award
and findings of such arbitrator shall be conclusive and binding upon the
parties. Any and all of the arbitrator's orders, decisions, and awards may be
enforceable in, and judgment upon any award rendered by the arbitrator may be
confirmed and entered by, any federal or state court having jurisdiction. The
Company shall pay all costs and expenses of its advisors and expert witnesses,
and Employee shall pay all costs and expenses of his advisors and expert
witnesses. The costs and expenses of the arbitration
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proceedings will be paid by the non-prevailing party or as the arbitrator
otherwise determines. Discovery will be permitted to the extent directed by the
arbitrator. EACH PARTY UNDERSTANDS THAT BY AGREEING TO SUBMIT CLAIMS TO
ARBITRATION, SUCH PARTY GIVES UP THE RIGHT TO SEEK A TRIAL BY COURT OR JURY AND
THE RIGHT TO AN APPEAL A COURT OR JURY DECISION AND FORGOES ANY AND ALL RELATED
RIGHTS SUCH PARTY MAY OTHERWISE HAVE UNDER FEDERAL AND STATE LAWS.
27. Indemnification and Insurance. The Employee will have rights
to indemnification as an officer and/or director of the Company as set forth in
the Company's Restated Bylaws.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Signatures
To evidence the binding effect of the covenants and agreements
described above, the parties to this Agreement have executed this Agreement on
the dates set forth below, to be effective as of the date first above written.
THE COMPANY:
ZIX CORPORATION
/s/ Xxxx X. Xxxx
-------------------------------------
Xxxx X. Xxxx, CEO
Date: 1/19/04
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx Xxxxx
Date: 1/20/04
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