ZIX CORPORATION 2001 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF MAY 6, 2003)
SECTION 1. Purpose. The purpose of the Zix Corporation 2001 Stock
Option Plan (hereinafter called the "2001 Plan") is to advance the interests of
Zix Corporation (hereinafter called the "Company") by strengthening the ability
of the Company to attract, on its behalf and on behalf of its Subsidiaries (as
hereinafter defined), and retain personnel of high caliber through encouraging a
sense of proprietorship by means of stock ownership.
SECTION 2. Definitions.
"Board of Directors" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
"Committee" shall mean a committee of the Board of Directors comprised
of at least two directors or the entire Board of Directors, as the case may be.
Members of the Committee shall be selected by the Board of Directors. To the
extent necessary to comply with the requirements of Rule 16b-3, the Committee
shall consist of two or more Non-employee Directors. Also, if the requirements
of Section 162(m) of the Code are intended to be met, the Committee shall
consist of two or more "outside directors" within the meaning of Section 162(m)
of the Code.
"Common Stock" shall mean the Common Stock of the Company, par value
$.01 per share.
"Date of Grant" shall mean the date on which an Option is granted
pursuant to this 2001 Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Optionee, in a manner determined by the Committee, to receive amounts due the
Optionee in the event of the Optionee's death. In the absence of an effective
designation by the Optionee, Designated Beneficiary shall mean the Optionee's
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
"Fair Market Value" shall mean the closing sale price (or average of
the quoted closing bid and asked prices if there is no closing sale price
reported) of the Common Stock on the date specified as reported by The Nasdaq
Stock Market, or by the principal national stock exchange on which the Common
Stock is then listed. If there is no reported price information for such date,
the Fair Market Value will be determined by the reported price information for
Common Stock on the day nearest preceding such date.
"Incentive Stock Option" shall mean a stock option granted under
Section 6 that is intended to meet the requirements of Section 422 of the Code
(or any successor provision).
"Non-employee Director" shall have the meaning given such term in
"Nonqualified Stock Option" shall mean a stock option granted under
Section 6 that is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
"Optionee" shall mean the person to whom an option is granted under the
2001 Plan or who has obtained the right to exercise an option in accordance with
the provisions of the 2001 Plan.
"Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under
the Exchange Act as it may be amended from time-to-time and any successor
provision to Rule 16b-3 under the Exchange Act.
"Subsidiary" shall mean any now existing or hereafter organized or
acquired corporation or other entity of which fifty percent (50%) or more of the
issued and outstanding voting stock or other economic interest is owned or
controlled directly or indirectly by the Company or through one or more
Subsidiaries of the Company.
SECTION 3. Administration. The 2001 Plan shall be administered by the
Committee. The Committee shall have sole and complete authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the 2001 Plan as it shall from time-to-time deem advisable, and to
construe, interpret and administer the terms and provisions of the 2001 Plan and
the agreements thereunder. The determinations and interpretations made by the
Committee are final and conclusive.
SECTION 4. Eligibility. All employees and non-employee consultants and
advisors (other than Non-employee Directors) who, in the opinion of the
Committee, have the capacity for contributing in a substantial measure to the
successful performance of the Company are eligible to receive Options under the
SECTION 5. Maximum Amount Available for Options.
(a) The maximum number of shares of Common Stock in respect of which
Options may be made under the 2001 Plan shall be a total of 2,525,000 shares of
Common Stock. Of that amount, no participant may be granted Options for more
than 1,000,000 shares of Common Stock in the aggregate during the term of the
2001 Plan. Options that expire, lapse or are cancelled or forfeited do not count
against theses share limits. Shares of Common Stock may be made available from
the authorized but unissued shares of the Company or from shares reacquired by
the Company, including shares purchased in the open market. In the event that an
Option is terminated unexercised as to any shares of Common Stock covered
thereby, such shares shall thereafter be again available for award pursuant to
the 2001 Plan.
(b) In the event that the Committee shall determine that any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value, or other
similar corporate event affects the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits intended to be
made available under the 2001 Plan, then the Committee shall adjust
appropriately any or all of (1) the number and kind of shares which thereafter
may be optioned under the 2001 Plan and (2) the grant, exercise or conversion
price and/or number of shares with respect to the Options and/or, if deemed
appropriate, make provision for cash payment to an Optionee; provided, however,
that the number of shares subject to any Option shall always be a whole number.
SECTION 6. Stock Options.
(a) Subject to the provisions of the 2001 Plan, the Committee shall
have sole and complete authority to determine the persons to whom Options shall
be granted, the number of shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the exercise of the
(b) The Committee shall have the authority to grant Incentive Stock
Options, or to grant Nonqualified Stock Options, or to grant both types of
options. In the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to and comply with the Code and relevant
regulations. Incentive Stock Options to purchase Common Stock may be granted to
such employees of the Company or its Subsidiaries (including any director who is
also an employee of the Company or one of its Subsidiaries) as shall be
determined by the Committee. Nonqualified Stock Options to purchase Common Stock
may be granted to such eligible participants as shall be determined by the
Committee. Neither the Company nor any of its Subsidiaries or any of their
respective directors, officers or employees, shall be liable to any Optionee or
other person if it is determined for any reason by the Internal Revenue Service
or any court having jurisdiction that any Incentive Stock Option granted
hereunder does not qualify for tax treatment as an Incentive Stock Option under
the then-applicable provisions of the Code.
(c) The Committee shall, in its discretion, establish the exercise
price at the time each Option is granted, which in the case of Nonqualified
Stock Options, shall not be less than 100% of the Fair Market Value of the
Common Stock on the Date of Grant, or in the case of grants of Incentive Stock
Options, shall not be less than 100% of the Fair Market Value of the Common
Stock on the Date of Grant or such greater amount as may be prescribed by the
(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify
in the applicable grant or thereafter; provided, however, that in no event
may any Option granted hereunder be exercisable after the expiration of ten
years from the Date of Grant. The Committee may impose such conditions with
respect to the exercise of Options, including without limitation, any
relating to the application of federal or state securities laws, as it may
deem necessary or advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefore is received by the
Company. Such payment may be made in cash, or its equivalent, or, if and to
the extent permitted by the Committee or under the terms of the applicable
agreement, by exchanging shares of Common Stock owned by the Optionee
(which are not the subject of any pledge or other security interest), or by
a combination of the foregoing, provided that the combined value of all
cash and cash equivalents and the Fair Market Value of any such Common
Stock so tendered to the Company, valued as of the date of such tender, is
at least equal to such option price.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any Option may be
exercised by a broker-dealer acting on behalf of an Optionee if (a) the
broker-dealer has received from the Optionee instructions signed by the
Optionee requesting the Company to deliver the shares of Common Stock
subject to such Option to the broker-dealer on behalf of the Optionee and
specifying the account into which such shares should be deposited, (b)
adequate provision has been made with respect to the payment of any
withholding taxes due upon such exercise, and (c) the broker-dealer and the
Optionee have otherwise complied with Section 220.3(e)(4) of Regulation T,
12 CFR Part 220, or any successor provision.
(3) The Company, in its sole discretion, may lend money to an Optionee,
guarantee a loan to an Optionee or otherwise assist an Optionee to obtain
the cash necessary to exercise all or any portion of an Option granted
under the 2001 Plan.
(4) The Company shall not be required to issue any fractional shares
upon the exercise of any Options granted under this 2001 Plan. No Optionee
nor an Optionee's legal representatives, legatees or distributees, as the
case may be, will be, or will be deemed to be, a holder of any shares
subject to an Option unless and until said Option has been exercised and
the purchase price of the shares in respect of which the Option has been
exercised has been paid. Unless otherwise provided in the agreement
applicable thereto, an Option shall not be exercisable except by the
Optionee or by a person who has obtained the Optionee's rights under the
Option by will or under the laws of descent and distribution or pursuant to
a "qualified domestic relations order" as defined in the Code.
(e) No Incentive Stock Options shall be exercisable (a) more than five
years (or such other period of time as from time-to-time provided in the
then-applicable provisions of the Code governing Incentive Stock Options)
after the Date of Grant with respect to an Optionee who owns ten percent or
more of the outstanding Common Stock (within the meaning of the Code), and
(b) more than ten years after the Date of Grant with respect to all other
Optionees. No Nonqualified Stock Options shall be exercisable more than ten
years after the Date of Grant.
(f) In no event shall any Option granted to any employee who is
classified as "non-exempt" under the Fair Labor Standards Act of 1938 be
exercisable less than six months after the Date of Grant, except in the
case of death, disability, retirement, a change in control or other
circumstances permitted by regulations under the Worker Economic
Opportunity Act ("WEOA"). Grants to such non-exempt employees shall not be
based on pre-established performance criteria, except as specifically
permitted under the WEOA. Non- exempt employees shall be notified of the
terms of their Options in accordance with the WEOA, and exercise of such
Options must be voluntary.
SECTION 7. General Provisions.
(a) The Company and its Subsidiaries shall have the right to deduct
from all amounts paid to an Optionee in cash (whether under the 2001 Plan
or otherwise) any taxes required by law to be withheld in respect of Option
exercises under the 2001 Plan. However, if permitted by the Committee or
under the terms of the applicable agreement, the Optionee may pay all or
any portion of the taxes required to be withheld by the Company or its
Subsidiaries or paid by the Optionee with respect to such Common Stock by
electing to have the Company or its Subsidiaries withhold shares of Common
Stock, or by delivering previously owned shares of Common Stock, having a
Fair Market Value equal to the amount required to be withheld or paid. The
Optionee must make the foregoing election on or before the date that the
amount of tax to be withheld is determined. Any such election is
irrevocable and subject to disapproval by the Committee. If the Optionee is
subject to the provisions of Section 16(b) of the Exchange Act, then any
such election shall be subject to the restrictions imposed by Rule 16b-3.
(b) Each Option hereunder shall be evidenced in writing, delivered to
the Optionee, and shall specify the terms and conditions thereof and any
rules applicable thereto, including, but not limited to, the effect on such
Option of the death, retirement, disability or other termination of
employment of the Optionee and the effect thereon, if any, of a change in
control of the Company.
(c) Unless otherwise provided in the agreement applicable thereto, no
Option shall be assignable or transferable except by will or under the laws
of descent and distribution or pursuant to a "qualified domestic relations
order" as defined in the Code, and no right or interest of any Optionee
shall be subject to any lien, obligation or liability of the Optionee.
(d) No person shall have any claim or right to be granted an Option.
Further, the Company and its Subsidiaries expressly reserve the right at
any time to terminate the employment of an Optionee free from any
liability, or any claim under the 2001 Plan, except as provided in any
agreement entered into with
respect to an Option. Neither the 2001 Plan nor any Option granted
hereunder is intended to confer upon any Optionee any rights with respect
to continuance of employment or other utilization of his or her services by
the Company or by a Subsidiary, nor to interfere in any way with his or her
right or that of his or her employer to terminate his or her employment or
other services at any time (subject to the terms of any applicable
contract). The conditions to apply to the exercise of an Option in the
event an Optionee ceases to be employed by the Company or a Subsidiary for
any reason shall be determined by the Committee or specified in the written
agreement evidencing the Option.
(e) Subject to the provisions of the applicable Option, no Optionee or
Designated Beneficiary shall have any rights as a stockholder with respect
to any shares of Common Stock to be distributed under the 2001 Plan until
he or she has become the holder thereof.
(f) The validity, construction, interpretation, administration and
effect of the 2001 Plan and of its rules and regulations, and rights
relating to the 2001 Plan, shall be determined solely in accordance with
the laws of the State of Texas
(without giving effect to its conflicts of
laws rules) and, to the extent applicable, federal law.
(g) The 2001 Plan was originally effective on May 15, 2001. No Options
may be granted under the 2001 Plan after May 14, 2011; however, all
previous Options issued that have not expired under their original terms or
will not then expire at the time the 2001 Plan expires will remain
(h) Restrictions on Issuance of Shares
(1) The Company shall not be obligated to sell or issue any
Shares upon the exercise of any Option granted under the 2001 Plan
unless: (i) the shares pertaining to such Option have been registered
under applicable federal and state securities laws or are exempt from
such registration; (ii) the prior approval of such sale or issuance has
been obtained from any state regulatory body having jurisdiction; and
(iii) in the event the Common Stock has been listed on any exchange,
the shares pertaining to such Option have been duly listed on such
exchange in accordance with the procedure specified therefor. The
Company shall be under no obligation to effect or obtain any listing,
registration, qualification, consent or approval with respect to shares
pertaining to any Option granted under the 2001 Plan. If the shares to
be issued upon the exercise of any Option granted under the 2001 Plan
are intended to be issued by the Company in reliance upon the
exemptions from the registration requirements of applicable federal and
state securities laws, the recipient of the Option, if so requested by
the Company, shall furnish to the Company such evidence and
representations, including an opinion of counsel, satisfactory to it,
as the Company may reasonably request.
(2) The Company shall not be liable for damages due to a delay
in the delivery or issuance of any stock certificates for any reason
whatsoever, including, but not limited to, a delay caused by listing,
registration or qualification of the shares of Common Stock pertaining
to any Option granted under the 2001 Plan upon any securities exchange
or under any federal or state law or the effecting or obtaining of any
consent or approval of any governmental body.
(i) The Board of Directors or Committee may impose such other
restrictions on the ownership and transfer of shares issued pursuant to the
2001 Plan as it deems desirable; any such restrictions shall be set forth
in the applicable agreement.
(j) The Board of Directors may amend, abandon, suspend or terminate
the 2001 Plan or any portion thereof at any time in such respects as it may
deem advisable in its sole discretion, provided that no amendment shall be
made without stockholder approval (including an increase in the maximum
number of shares of Common Stock in respect of which Options may be made
under the 2001 Plan) if such
stockholder approval is necessary to comply with any tax or regulatory
requirement or exchange listing rules, including for these purposes any
approval requirement that is a prerequisite for exemptive relief under
Section 16(b) of the Exchange Act.
(k) To preserve an Optionee's rights under an Option in the event of a
change in control of the Company or an Optionee's separation from
employment, the Committee in its discretion may, at the time an Option is
made or any time thereafter, take one or more of the following actions: (i)
provide for the acceleration of any time period relating to the exercise of
the Option, (ii) provide for the purchase of the Option, upon the
Optionee's request, for an amount of cash or other property that could have
been received upon the exercise or realization of the Option had the Option
been currently exercisable or payable, (iii) adjust the terms of the Option
in a manner determined by the Committee to reflect the change in control or
to prevent the imposition of an excise tax under section 280G(b) of the
Code, (iv) cause the Option to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.
AMENDED AND RESTATED as of May 6, 2003.
By: /s/ Ronald A. Woessner