EXHIBIT 4.9
FORM OF
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "AGREEMENT"), dated as of _______
__, 200__ is among ZIX CORPORATION, a Texas corporation ("BORROWER" and together
with its Subsidiaries (as defined in Section 1 below) sometimes hereinafter are
referred to individually as a "LOAN PARTY" and collectively as "LOAN PARTIES"),
________________, a ___________ [entity] ("SUBORDINATED LENDER"), and PROMETHEAN
ASSET MANAGEMENT L.L.C., a Delaware limited liability company, in its capacity
as agent ("AGENT") for the Lenders (as defined in Section 1 below).
RECITALS
A. Borrower and Lenders have entered into a certain Securities Purchase
Agreement dated as of September __, 2002 (as the same has been and hereafter may
be amended, modified, supplemented or restated, the "SECURITIES PURCHASE
AGREEMENT"), pursuant to which Borrower issued and sold the Convertible Notes
(as defined in Section 1 below) to the Lenders.
B. Borrower granted, and may hereafter grant, to Agent, for the benefit
of Agent and the Lenders, a first priority security interest in its assets and
property pursuant to a certain security agreement (as the same may be amended,
modified, supplemented or restated from time to time, the "SECURITY AGREEMENT")
among Borrower and Agent, to secure its indebtedness, liabilities and
obligations under the Loan Documents (as defined in Section 1 below).
C. Subordinated Lender and Borrower have entered, or are about to
enter, into that certain [_____________________] (as the same may be amended,
modified, supplemented or restated in accordance with the terms hereof, the
"SUBORDINATED LOAN AGREEMENT"), pursuant to which [BORROWER IS OBLIGATED TO PAY
TO SUBORDINATED LENDER A CERTAIN AMOUNT OF MONEY] (the "SUBORDINATED LOANS").
The Subordinated Loans shall be evidenced by certain promissory notes issued in
accordance with the terms of the Subordinated Loan Agreement and made by
Borrower payable to the order of Subordinated Lender (such promissory notes,
together with any and all promissory notes issued in replacement or substitution
therefor, in each case as the same may be amended, modified, supplemented or
restated from time to time, hereinafter are referred to as the "SUBORDINATED
NOTES").
D. As an inducement to and as one of the conditions precedent to the
obligation of Agent and Lenders to permit the incurrence of the Subordinated
Indebtedness (as defined in Section 1 below), Agent and Lenders have required
the execution and delivery by Subordinated Lender and Borrower of this
Agreement.
NOW, THEREFORE, in order to induce Agent and Lenders to permit the
incurrence of the Subordinated Indebtedness, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
in this Agreement:
AGENT shall have the meaning ascribed to such term in the
preamble of this Agreement, or shall mean any other person hereafter
appointed by the holders of the Senior Indebtedness as agent for
themselves for the purposes of this Agreement.
CONVERTIBLE NOTES means the secured convertible notes of the
Borrower issued pursuant to the Securities Purchase Agreement, as they
may be amended from time to time, and any secured convertible notes
issued in exchange therefor or replacement thereof, including upon any
transfer of any principal amount of the Convertible Notes.
ENFORCEMENT ACTION is defined in Section 2.7.
JUNIOR COLLATERAL means all of the property and interests in
property, tangible, real or personal, if any, now owned or hereafter
acquired by any Loan Party, in or upon which any Loan Party has granted
or may hereafter grant a Junior Lien, and including, without
limitation, all proceeds and products of such property and interests in
property.
JUNIOR LIENS means all liens, collateral assignments,
mortgages and security interests, if any, previously or hereafter
granted by any Loan Party or any other Person to Subordinated Lender
securing in whole or in part any of the Subordinated Indebtedness.
LENDER OR LENDERS shall mean any "Buyer" or the "Buyers,"
respectively, as such terms are defined in the Securities Purchase
Agreement; provided that upon transfer of any principal amount of the
Convertible Notes, such terms shall refer to any holder or all of the
holders, respectively, of the Senior Indebtedness.
LOAN DOCUMENTS means the Securities Purchase Agreement, the
Convertible Notes, the Security Agreement and each of the other
agreements entered into by the Borrower and/or the Lenders in
connection therewith.
LOAN PARTIES is defined in the preamble of this Agreement.
PROCEEDING is defined in Section 2.3.
SENIOR COLLATERAL means all of the property and interests in
property, tangible, real or personal, now owned or hereafter acquired
by any Loan Party, in or upon which any Loan Party has granted a Senior
Lien, and including, without limitation, all proceeds and products of
such property and interests in property.
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SENIOR INDEBTEDNESS shall mean any and all indebtedness,
obligations and liabilities of every nature incurred by Borrower under
the Loan Documents, including any accrued interest or other payments
from time to time owing the Agent and/or any Lenders under the Loan
Documents, including, without limitation, the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all
fees, costs and expenses, whether primary, secondary, direct,
contingent, fixed or otherwise, heretofore, now and from time to time
hereafter owing, due or payable, whether before or after the filing of
a Proceeding under the Bankruptcy Law (as defined in the Convertible
Notes) together with (a) any amendments, modifications, renewals or
extensions thereof to the extent not prohibited by the terms of this
Agreement and (b) any interest accruing thereon after the commencement
of a Proceeding, without regard to whether or not such interest is an
allowed claim.
SENIOR LIENS means all liens, collateral assignments,
mortgages and security interests previously or hereafter granted by any
Loan Party or any other Person to Agent or the Lenders, for the benefit
of Agent and/or the Lenders, and their respective successors, assigns
and participants, securing in whole or in part any of the Senior
Indebtedness.
SUBORDINATED DEFAULT shall mean a default in the payment of
the Subordinated Indebtedness or in the performance of any term,
covenant or condition contained in the Subordinated Loan Instruments,
or any other occurrence permitting Subordinated Lender to accelerate or
demand payment of all or any portion of the Subordinated Indebtedness.
SUBORDINATED DEFAULT NOTICE shall mean a written notice to
Agent pursuant to which Agent is notified of the existence of a
Subordinated Default.
SUBORDINATED INDEBTEDNESS shall mean all of the Subordinated
Loans and any and all other indebtedness, liabilities and obligations
of Borrower and its Subsidiaries to Subordinated Lender evidenced by
the Subordinated Notes and all other amounts now or hereafter owed by
the Loan Parties, or any of them, to Subordinated Lender pursuant to
the Subordinated Loan Instruments.
SUBORDINATED LOAN INSTRUMENTS shall mean the Subordinated
Notes, the Subordinated Loan Agreement, any guaranty with respect to
the Subordinated Indebtedness and all other agreements, documents and
instruments evidencing or pertaining to any portion of the Subordinated
Indebtedness.
SUBSIDIARIES mean any entity in which the Borrower, directly
or indirectly, owns capital stock or holds an equity or similar
interest, other than entities in which the Borrower (i) has less than
25% of the voting control of such entity, (ii) has less than 25% of the
equity interest in such entity and (iii) has no exposure to any
liability, contingent or
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otherwise, that could result in a Material Adverse Effect (as defined
in the Securities Purchase Agreement).
2. SUBORDINATION OF SUBORDINATED INDEBTEDNESS TO SENIOR INDEBTEDNESS.
2.1 SUBORDINATION. The payment of any and all of the
Subordinated Indebtedness hereby expressly is subordinated, to the
extent and in the manner set forth herein, to the indefeasible payment
in full, in cash and/or through conversion of the Convertible Notes in
accordance with the terms of the Convertible Notes, of the Senior
Indebtedness. Each holder of Senior Indebtedness, whether now
outstanding or hereafter arising, shall be deemed to have acquired
Senior Indebtedness in reliance upon the provisions contained herein.
2.2 RESTRICTION ON PAYMENTS. Notwithstanding any provision of
the Subordinated Loan Instruments to the contrary and in addition to
any other limitations set forth herein or therein, no payment of
principal, interest or any other amount due with respect to the
Subordinated Indebtedness shall be made by Borrower or received by
Subordinated Lender, and Subordinated Lender shall not exercise any
right of set-off or recoupment with respect to the Subordinated
Indebtedness, at any time when any Convertible Notes are outstanding,
when any other amounts are due to Agent or any Lender with respect to
the Senior Indebtedness or when Agent or any Lender has an outstanding
payment claim against Borrower with respect to the Senior Indebtedness;
provided, however, that amounts not in excess of $50,000, individually
or in the aggregate, that are the subject of a bona fide dispute
between Borrower and Agent or any Lender shall not be considered an
"outstanding payment claim" for purposes of this sentence.
2.3 PROCEEDINGS. In the event of any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, assignment
for the benefit of creditors or other proceeding for the liquidation,
dissolution or other winding up of Borrower or any of its Subsidiaries
or any of their respective properties (a "PROCEEDING"), (i) all Senior
Indebtedness first shall be paid in full in cash before any payment of
or with respect to the Subordinated Indebtedness shall be made; (ii)
any payment which, but for the terms hereof, otherwise would be payable
or deliverable in respect of the Subordinated Indebtedness, shall be
paid or delivered directly to Agent (to be held and/or applied by Agent
in accordance with the terms of the Collateral Agency Agreement of even
date herewith by and among Agent and Lenders (the "AGENCY AGREEMENT")
until all Senior Indebtedness is paid in full in cash, and Subordinated
Lender irrevocably authorizes, empowers and directs all receivers,
trustees, debtors-in-possession, liquidators, custodians, conservators
and others having authority in the premises to effect all such payments
and deliveries, and Subordinated Lender also irrevocably authorizes,
empowers and directs Agent to demand, sue for, collect and receive
every such payment or distribution; (iii) Subordinated Lender agrees to
execute and deliver to Agent or its representative all such further
instruments confirming the authorization referred to in the
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foregoing clause (ii); and (iv) Subordinated Lender may execute,
verify, deliver and file any proofs of claim in respect of the
Subordinated Indebtedness and hereby irrevocably authorizes, empowers
and appoints Agent its agent and attorney-in-fact to (A) execute,
verify, deliver and file such proofs of claim upon the failure of
Subordinated Lender promptly to do so within fifteen (15) days prior to
the expiration of the time to file any such proof and (B) vote such
proofs of claim in any such Proceeding; provided Agent shall have no
obligation to execute, verify, deliver, file and/or vote any such proof
of claim. In the event that Agent votes any claim in accordance with
the authority granted hereby, Subordinated Lender shall not be entitled
to change or withdraw such vote. The Senior Indebtedness shall continue
to be treated as Senior Indebtedness and the provisions of this
Agreement shall continue to govern the relative rights and priorities
of Agent, Lenders and Subordinated Lender even if all or part of the
Senior Indebtedness or the security interests securing the Senior
Indebtedness are subordinated, set aside, avoided or disallowed in
connection with any such proceeding and this Agreement shall be
reinstated if at any time any payment of any of the Senior Indebtedness
is rescinded or must otherwise be returned by any holder of the Senior
Indebtedness or any representative of such holder.
2.4 INCORRECT PAYMENTS. If any payment is received by
Subordinated Lender on account of the Subordinated Indebtedness at a
time when such payment is prohibited by Section 2.2, such payment shall
not be commingled with any asset of Subordinated Lender, shall be held
in trust by Subordinated Lender for the benefit of Agent and the
Lenders and shall promptly be paid over to Agent, or its designated
representative, for application (in accordance with the Agency
Agreement) to the payment of the Senior Indebtedness then remaining
unpaid, until all of the Senior Indebtedness is paid in full.
2.5 SALE, TRANSFER. Subordinated Lender shall not sell,
assign, dispose of or otherwise transfer all or any portion of the
Subordinated Indebtedness without the prior written consent of Agent
and the Lenders, which consent may be given or withheld in their sole
and absolute discretion. In the event of a permitted sale, assignment,
disposition or other transfer, Subordinated Lender, prior to the
consummation of any such action, shall cause the transferee thereof to
execute and deliver to Agent an agreement substantially identical to
this Agreement, providing for the continued subordination and
forbearance of the Subordinated Indebtedness to the Senior Indebtedness
as provided herein and for the continued effectiveness of all of the
rights of Lenders and Agent arising under this Agreement.
Notwithstanding the failure to execute or deliver any such agreement,
the subordination effected hereby shall survive any sale, assignment,
disposition or other transfer of all or any portion of the Subordinated
Indebtedness, and the terms of this Agreement shall be binding upon the
successors and assigns of Subordinated Lender, as provided in Section
11 below.
2.6 LEGENDS. Until the Senior Indebtedness is paid in full,
each of the Subordinated Loan Instruments at all times shall contain in
a conspicuous manner the following legend:
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"This Note [or other Subordinated Loan Instrument] and the
indebtedness evidenced hereby are subordinate in the manner
and to the extent set forth in that certain Subordination
Agreement (the "SUBORDINATION AGREEMENT") dated as of
_____________________ ____, 200__ among Zix Corporation
("BORROWER"), _____________ and Promethean Asset Management
L.L.C., a Delaware limited liability company ("AGENT"), to the
indebtedness (including interest) owed by Borrower to the
holders of all of the notes issued pursuant to that certain
Securities Purchase Agreement dated as of September __, 2002
among Borrower and the purchasers thereunder, as such
Securities Purchase Agreement has been and hereafter may be
supplemented and amended from time to time; and each holder of
this Note [or other Subordinated Loan Instrument], by its
acceptance hereof, shall be bound by the provisions of the
Subordination Agreement."
2.7 RESTRICTION ON ACTION BY SUBORDINATED LENDER.
(a) Until the Senior Indebtedness is paid in full and
notwithstanding anything contained in the Subordinated Loan Instruments
or the Loan Documents to the contrary, Subordinated Lender shall not,
without the prior written consent of Agent, which consent may be
granted or withheld in Agent's sole and absolute discretion, agree to
any amendment, modification or supplement to the Subordinated Loan
Instruments the effect of which is to (i) alter the subordination
provisions with respect to the Subordinated Indebtedness, including,
without limitation, subordinating the Subordinated Indebtedness to any
other debt, (ii) shorten the maturity date of any of the Subordinated
Indebtedness or otherwise alter the repayment terms of the Subordinated
Indebtedness in a manner which would cause the Subordinated
Indebtedness to mature or require repayment prior to the Maturity Date
(as defined in the Convertible Notes) or (iii) take any lien or
security interest in any Senior Collateral.
(b) Until the Senior Indebtedness is paid in full, in cash
and/or through conversion of the Convertible Notes in accordance with
the terms of the Convertible Notes, Subordinated Lender shall not,
without the prior written consent of Agent, which consent may be
granted or withheld in Agent's sole and absolute discretion, (i) take
any action to collect or enforce payment of the Subordinated
Indebtedness or (ii) exercise any of the remedies with respect to the
Subordinated Indebtedness and/or the Junior Collateral, as set forth in
any of the Subordinated Loan Instruments or that otherwise may be
available to Subordinated Lender, either at law or in equity by
judicial proceedings or otherwise (an "ENFORCEMENT ACTION"). Any
distributions or other proceeds of any Enforcement Action obtained by
Subordinated Lender in violation of the foregoing prohibition shall in
any event be held in trust by it for the benefit of Agent and Lenders
and promptly paid or delivered to Agent for the benefit of Lenders in
the form received until all Senior Debt is indefeasibly paid in full in
cash and/or through conversion of the Convertible Notes in accordance
with the terms of the Convertible Notes.
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2.8 BANKRUPTCY FINANCING ISSUES. This Agreement shall continue
in full force and effect after the filing of any petition ("PETITION")
by or against any Loan Party under the Bankruptcy Law (as defined in
the Convertible Notes) and all converted or succeeding cases in respect
thereof. All references herein to a Loan Party shall be deemed to apply
to such Loan Party as debtor-in-possession and to a trustee for such
Loan Party. If any Loan Party shall become subject to a Proceeding
under the Bankruptcy Law (as defined in the Convertible Notes), and if
Agent or any Lender shall desire to permit such Loan Party to use cash
collateral or to provide post-Petition financing (or liens to secure
same) from Agent or such Lender to such Loan Party under the Bankruptcy
Law (as defined in the Convertible Notes), Subordinated Lender agrees
as follows: (1) adequate notice to Subordinated Lender shall be deemed
to have been provided for such permission or post-Petition financing if
Subordinated Lender receives notice thereof three (3) Business Days (or
such shorter notice as has been approved by the bankruptcy court for
creditors in general) prior to the hearing in respect of such use of
cash collateral or such financing and (2) no objection will be raised
by Subordinated Lender to any such use by such Loan Party of cash
collateral on the grounds of a failure to provide adequate protection
for any Junior Lien on the Junior Collateral.
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3. COLLATERAL MATTERS.
3.1 VALIDITY OF SENIOR LIENS. Subordinated Lender agrees that
it will not contest the validity, perfection, priority or
enforceability of the Senior Liens and that as between Subordinated
Lender on the one hand and Agent and Lenders on the other hand, the
terms of this Agreement shall govern even if all or part of the Senior
Indebtedness or the Senior Liens are avoided, disallowed, set aside or
otherwise invalidated in any judicial proceeding or otherwise.
3.2 MANAGEMENT OF COLLATERAL. Until such time as all amounts
due or to become due on or in respect of Senior Indebtedness have been
paid in full, Agent and Lenders shall have the exclusive and unfettered
right to manage, perform and enforce the terms of the Loan Documents
with respect to all Senior Collateral and to exercise and enforce all
privileges and rights thereunder according to their discretion and
exercise of their business judgment, including, without limitation, the
exclusive right to take or retake control or possession of the Senior
Collateral and to hold, prepare for sale, process, sell, lease,
foreclose upon, collect, exercise rights or remedies with respect to,
dispose of, or liquidate the Senior Collateral, and Subordinated Lender
shall not take or seek to take any such action. In connection
therewith, Subordinated Lender waives any and all rights to affect the
method or challenge the appropriateness of any action by Agent and/or
the Lenders and hereby consents to Agent and/or the Lenders dealing
with the Senior Collateral as if the Subordinated Lender shall not have
had any security interest therein, irrespective of whether any Senior
Collateral constitutes proceeds of any Junior Collateral.
3.3 NOTICES AND WAIVER OF MARSHALING. Subordinated Lender,
Agent and each Lender each acknowledges that this Agreement shall
constitute notice of their respective interests, if any, in the Senior
Collateral as provided by Section 9-504 of the Uniform Commercial Code
in the applicable jurisdiction and each hereby waives any right to
compel any marshaling of any of the Senior Collateral. To the extent
that Agent or any Lender has possession of any Senior Collateral while
any Subordinated Indebtedness is outstanding, Agent or such Lender in
possession acknowledges notice of the security interest in such Senior
Collateral of the Subordinated Lender for the purposes of Section 9-305
of the Texas Uniform Commercial Code and acknowledges that it is
holding any such Senior Collateral constituting certificated securities
for Subordinated Lender for the purposes of Section 8-301 of the Texas
Uniform Commercial Code.
3.4 INSURANCE PROCEEDS. Proceeds of the Junior Collateral, if
any, and Senior Collateral include insurance proceeds, and therefore,
notwithstanding the terms set forth in the Subordinated Loan Instrument
to the contrary, the priorities set forth in Section 2 hereof govern
the ultimate disposition of casualty insurance proceeds. Identifiable
proceeds of Junior Collateral, if any, shall be maintained in a manner
that segregates them from any Senior Collateral. If and to the extent
any identifiable proceeds from Junior Collateral are commingled or
otherwise deposited into any account representing
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Senior Collateral, such proceeds shall be deemed to be, and Junior
Creditor hereby agrees they are, Senior Collateral.
4. CONTINUED EFFECTIVENESS OF THIS AGREEMENT. The terms of this
Agreement, the subordination effected hereby, and the rights and the obligations
of Subordinated Lender, Agent and Lenders arising hereunder, shall not be
affected, modified or impaired in any manner or to any extent by: (a) any
amendment or modification of or supplement to any Loan Document or any
Subordinated Loan Instrument; (b) the validity or enforceability of any of such
documents; or (c) any exercise or non-exercise of any right, power or remedy
under or in respect of the Senior Indebtedness or the Subordinated Indebtedness
or any of the instruments or documents referred to in clause (a) above.
5. REPRESENTATIONS AND WARRANTIES. Subordinated Lender hereby
represents and warrants to Agent as follows:
5.1 EXISTENCE AND POWER. Subordinated Lender is a [SPECIFY
ENTITY TYPE] duly organized, validly existing and in good standing
under the laws of the State of [_________].
5.2 AUTHORITY. Subordinated Lender has full power and
authority to enter into, execute, deliver and carry out the terms of
this Agreement and to incur the obligations provided for herein, all of
which have been duly authorized by all proper and necessary action and
are not prohibited by the organizational documents of Subordinated
Lender.
5.3 BINDING AGREEMENTS. This Agreement, when executed and
delivered, will constitute the valid and legally binding obligation of
Subordinated Lender enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by equitable principles.
5.4 CONFLICTING AGREEMENTS; LITIGATION. No provisions of any
mortgage, indenture, contract, agreement, statute, rule, regulation,
judgment, decree or order binding on Subordinated Lender or affecting
the property of Subordinated Lender conflicts with, or requires any
consent which has not already been obtained under, or would in any way
prevent the execution, delivery or performance of the terms of this
Agreement. The execution, delivery and carrying out of the terms of
this Agreement will not constitute a default under, or result in the
creation or imposition of, or obligation to create, any lien upon the
property of Subordinated Lender pursuant to the terms of any such
mortgage, indenture, contract or agreement. No pending or, to the best
of Subordinated Lender's knowledge, threatened, litigation, arbitration
or other proceedings if adversely determined would in any way prevent
the performance of the terms of this Agreement.
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5.5 NO DIVESTITURE. Subordinated Lender is the current owner
and holder of the Subordinated Note and all other Subordinated Loan
Instruments.
5.6 SENIOR COLLATERAL. Subordinated Lender has no, and will
not take any, Junior Liens on any of the Senior Collateral.
6. CUMULATIVE RIGHTS, NO WAIVERS. Each and every right, remedy and
power granted to Agent or Lenders hereunder shall be cumulative and in addition
to any other right, remedy or power specifically granted herein, in the Loan
Documents or now or hereafter existing in equity, at law, by virtue of statute
or otherwise, and may be exercised by Agent or Lenders, from time to time,
concurrently or independently and as often and in such order as Agent or Lenders
may deem expedient. Any failure or delay on the part of Agent or Lenders in
exercising any such right, remedy or power, or abandonment or discontinuance of
steps to enforce the same, shall not operate as a waiver thereof or affect
Agent's or Lenders' right thereafter to exercise the same, and any single or
partial exercise of any such right, remedy or power shall not preclude any other
or further exercise thereof or the exercise of any other right, remedy or power,
and no such failure, delay, abandonment or single or partial exercise of Agent's
or Lenders' rights hereunder shall be deemed to establish a custom or course of
dealing or performance among the parties hereto.
7. MODIFICATION. Any modification of any provision of this Agreement
shall not be effective in any event unless the same is in writing and signed by
Agent and Subordinated Lender. Any waiver of any provision of this Agreement, or
any consent to any departure by a party therefrom, shall not be effective in any
event unless the same is in writing and signed by the party against whom
enforcement is sought, and then such modification, waiver or consent shall be
effective only in the specific instance and for the specific instance and for
the specific purpose given. Any notice to or demand on Subordinated Lender in
any event not specifically required of Agent hereunder shall not entitle
Subordinated Lender to any other or further notice or demand in the same,
similar or other circumstances unless specifically required hereunder.
8. ADDITIONAL DOCUMENTS AND ACTIONS. Subordinated Lender at any time,
and from time to time, after the execution and delivery of this Agreement, upon
the request of Agent and at the expense of Borrower, promptly will execute and
deliver such further reasonable documents and do such further reasonable acts
and things as Agent may request in order to effect fully the purposes of this
Agreement.
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9. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
To Subordinated
------------------------------------
Lender:
------------------------------------
------------------------------------
Attention:
--------------------------
Facsimile:
--------------------------
with a copy to:
------------------------------------
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------------------------------------
Attention:
--------------------------
Facsimile:
--------------------------
To Borrower: Zix Corporation
2711 North Haskell Avenue
Suite 2300, LB 36
Dallas, Texas 75204-2960
Attention: General Counsel
Facsimile: (214) 515-7385
with a copy to: Hughes & Luce, LLP
111 Congress Avenue, Suite 900
Austin, Texas 78701
Attention: Bryan C. Wittman, Esq.
Facsimile: (512) 482-6859
To Agent: Promethean Asset Management L.L.C.
750 Lexington Avenue, 22nd Floor
New York, New York 10022
Attention: David M. Kittay
Greg Carney
Facsimile: (212) 758-9334
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With a copy to: Katten Muchin Zavis Rosenman
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Robert J. Brantman, Esq.
Facsimile: (312) 902-1061
If to a Lender, to it at the address and facsimile number set forth on the
Schedule of Buyers to the Securities Purchase Agreement, with copies to such
Lender's representatives as set forth on the Schedule of Buyers to the
Securities Purchase Agreement, or, in the case of a Lender or any other party
named above, at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
10. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
11. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of the successors and assigns of Agent and Lenders and shall be binding upon the
successors and assigns of Subordinated Lender and Borrower.
12. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
13. DEFINES RIGHTS OF CREDITORS. The provisions of this Agreement are
solely for the purpose of defining the relative rights of Subordinated Lender,
Agent and Lenders and shall not be deemed to create any rights or priorities in
favor of any other Person, including, without limitation, Borrower. The failure
of Borrower to make any payment to Subordinated Lender due to the operation of
this Agreement shall not be construed as prohibiting the occurrence of a
Subordinated Default.
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14. CONFLICT. In the event of any conflict between any term, covenant
or condition of this Agreement and any term, covenant or condition of any of the
Subordinated Loan Instruments, the provisions of this Agreement shall control
and govern. For purposes of this Section 14, to the extent that any provisions
of any of the Subordinated Loan Instruments provide rights, remedies and
benefits to Agent or Lenders that exceed the rights, remedies and benefits
provided to Agent or Lenders under this Agreement, such provisions of the
applicable Subordinated Loan Instruments shall be deemed to supplement (and not
to conflict with) the provisions hereof.
15. STATEMENT OF INDEBTEDNESS TO SUBORDINATED LENDER. Borrower will
furnish to Agent upon demand, a statement of the indebtedness owing from
Borrower to Subordinated Lender, and will give Agent access to the books of
Borrower so that Agent can make a full examination of the status of such
indebtedness.
16. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
17. TERMINATION. This Agreement shall terminate upon the indefeasible
payment in full of the Senior Indebtedness.
18. SUBORDINATED DEFAULT NOTICE. Subordinated Lender and Borrower each
shall provide Agent with a Subordinated Default Notice upon the occurrence of
each Subordinated Default, and Subordinated Lender shall notify Agent in the
event such Subordinated Default is cured or waived. Agent shall promptly furnish
to Subordinated Lender notice of the acceleration of any Senior Indebtedness,
provided, that subject to the terms and conditions of this Agreement, the
failure to furnish such notice to the Subordinated Lender shall not be
actionable by any person and shall not have any effect upon any of the rights
and obligations of the parties hereto or any of the rights of the Subordinated
Lender on account of any acceleration of Senior Indebtedness.
19. NO CONTEST OF SUBORDINATED INDEBTEDNESS. Agent and the Lender each
agree that it will not, and will not encourage any other person to, at any time,
contest the validity or enforceability of the Subordinated Indebtedness, except
in connection with the exercise of rights under this Agreement and as a lender
with senior priority to Subordinated Lender.
20. NO CONTEST OF SENIOR INDEBTEDNESS OR SENIOR LIENS. Subordinated
Lender agrees that it will not, and will not encourage any other person to, at
any time, contest the validity, perfection, priority or enforceability of the
Senior Indebtedness or the Senior Liens in the Senior Collateral granted to
Agent pursuant to the Loan Documents.
21. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would
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cause the application of the laws of any jurisdiction other than the State of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, Subordinated Lender, Borrower and Agent have caused
this Subordination Agreement to be executed as of the date first above written.
SUBORDINATED LENDER:
[NAME]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
BORROWER:
ZIX CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
AGENT:
PROMETHEAN ASSET MANAGEMENT L.L.C.,
in its capacity as agent for all Lenders
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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