AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 2003.
REGISTRATION NO. 333-107191
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ZIX CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-2216818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2711 N. HASKELL AVENUE, SUITE 2300, LB 36, DALLAS, TEXAS 75204-2960
(214) 370-2000
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
STEVE M. YORK
CHIEF FINANCIAL OFFICER
2711 N. HASKELL AVENUE, SUITE 2300, LB 36, DALLAS, TEXAS 75204-2960
(214) 370-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time-to-time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
TITLE OF EACH
CLASS OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER UNIT (2) OFFERING PRICE (2) FEE (3)
- ---------------- -------------- ---------------- ------------------ ------------
Common Stock,
$.01 par value 1,798,613 $3.76 $6,762,785 $547
</Table>
(1) This registration statement covers 1,798,613 shares of the registrant's
common stock, including 231,855 of the shares of common stock issuable upon
exercise of warrants owned by the selling shareholders.
(2) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(c) under the Securities Act, based on the average of the
high and low prices of the common stock on The Nasdaq Stock Market on July 16,
2003.
(3) Previously paid on July 21, 2003 with the initial filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and we are not soliciting
an offer to buy these securities in any state where the offer or sale in not
permitted.
SUBJECT TO COMPLETION, DATED AUGUST 6, 2003
ZIX CORPORATION
1,798,613 SHARES
COMMON STOCK
This prospectus relates to an offering of up to 1,798,613 shares of our
common stock, par value $.01 per share, including 231,855 shares issuable upon
the exercise of warrants. These shares and warrants were originally issued in a
private placement in June 2003 to a number of institutional investors, who, for
convenience, are generally referred to as the selling shareholders. See below
under the heading "Selling Shareholders."
The common stock being registered is being offered for the account of
the selling shareholders. We will not receive any proceeds from the sale of the
shares of common stock offered under this prospectus.
The shares may be offered in transactions on The Nasdaq Stock Market,
in negotiated transactions or through a combination of methods of distribution,
at prices relating to the prevailing market prices, at negotiated prices or at
fixed prices that may be changed. Please see below under the heading "Plan of
Distribution."
Our common stock is quoted on The Nasdaq Stock Market under the symbol
"ZIXI." On July 16, 2003, the last sale price of our common stock, as reported
on The Nasdaq Stock Market, was $3.69 per share.
---------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD PURCHASE SHARES ONLY IF YOU CAN
AFFORD A LOSS OF ALL OR A PORTION OF
YOUR INVESTMENT.
PLEASE SEE BELOW UNDER THE HEADING "RISK FACTORS" ON PAGE 1.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is __________, 2003.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
ZIX CORPORATION..........................................................1
THE TRANSACTION..........................................................1
RISK FACTORS.............................................................1
NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS......................6
DOCUMENTS INCORPORATED BY REFERENCE......................................7
WHERE YOU CAN FIND MORE INFORMATION......................................7
SELLING SHAREHOLDERS.....................................................8
PLAN OF DISTRIBUTION.....................................................9
DESCRIPTION OF SECURITIES................................................11
REGISTRATION REQUIREMENTS................................................12
USE OF PROCEEDS..........................................................12
LEGAL MATTERS............................................................12
EXPERTS..................................................................12
</Table>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND NOT ON
ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. NEITHER ZIX CORPORATION NOR ANY
OF ITS REPRESENTATIVES HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS
WITH ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS. FURTHERMORE, NO DEALER, SALESPERSON OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT
CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SHARES OFFERED BY THIS PROSPECTUS, BUT ONLY UNDER THE
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE, REGARDLESS OF THE
TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
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ZIX CORPORATION
We are a development-stage company and currently have no significant
revenues. Since January 1999, we have been developing and marketing products and
services that bring privacy, security and convenience to Internet users. We were
incorporated in Texas in 1988. Our executive offices are located at 2711 North
Haskell Avenue, Suite 2300, LB 36, Dallas, Texas 75204-2960, and our telephone
number is (214) 370-2000. Our Web site address is www.zixcorp.com. Information
contained on our Web site is not a part of this prospectus. In this prospectus,
"we," "us," "ZixCorp," "our" and "Zix" refer to Zix Corporation and its
subsidiaries unless the context otherwise requires.
THE TRANSACTION
We entered into a Securities Purchase Agreement with the selling
shareholders on June 24, 2003. This agreement is referred to in this prospectus
as the "Purchase Agreement." Pursuant to the Purchase Agreement, the selling
shareholders collectively invested $5,750,000 in ZixCorp in return for 1,566,758
shares of our common stock and warrants to acquire 231,855 shares of our common
stock at an exercise price of $4.96 per share. This transaction is referred to
in this prospectus as the "June 2003 Financing". These common stock shares and
the warrants were issued in a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended.
In connection with the Purchase Agreement, we entered into a
Registration Rights Agreement, dated June 24, 2003, with the selling
shareholders. Under the Registration Rights Agreement, we agreed to prepare and
file, within thirty days of the date of the closing of the sale of shares of
common stock and related warrants, the registration statement (of which this
prospectus is a part), for the resale of the shares of common stock and the
shares of common stock issuable upon the exercise of the warrants.
The terms of the common stock and warrants are described in this
prospectus under the heading "Description of Securities." For a description of
the Purchase Agreement, the Registration Rights Agreement and the warrants,
please see our Current Report on Form 8-K, dated June 25, 2003, which is
incorporated by reference in this prospectus.
RISK FACTORS
Before investing in our common stock offered by this prospectus, you
should carefully consider the following risks and uncertainties, in addition to
the other information contained or incorporated by reference in this prospectus.
Also, you should be aware that the risks and uncertainties described below are
not the only ones facing us. Additional risks and uncertainties that we do not
yet know of or that we currently think are immaterial may also impair our
business operations. If any of those risks or uncertainties or any of the risks
and uncertainties described below actually occur, our business, financial
condition, prospects or results of operations could be materially and adversely
affected. In that case, the trading price of the common stock offered in this
prospectus could decline, and you may lose all or part of your investment.
AS A DEVELOPMENT-STAGE COMPANY, WE HAVE NO SIGNIFICANT REVENUES, AND WE CONTINUE
TO USE SIGNIFICANT AMOUNTS OF CASH.
Since 1999, we have been developing and marketing products and services
that bring privacy, security and convenience to Internet users. Successful
development of a development-stage enterprise is costly and highly competitive.
A development-stage enterprise involves risks and uncertainties, and there are
no assurances that we will be successful in our efforts. We currently have no
significant revenues and utilization of cash resources continues at a
substantial level. ZixCorp anticipates further losses in 2003.
THE MARKET MAY NOT BROADLY ACCEPT OUR PRODUCTS AND SERVICES, WHICH WOULD PREVENT
US FROM OPERATING PROFITABLY.
We must be able to achieve broad market acceptance for our products and
services in order to operate profitably. We have not yet been able to do this.
To our knowledge, there are currently no secure e-messaging management and
protection businesses similar to ours that currently operate at the scale that
we would require, at our current expenditure levels and proposed pricing, to
become profitable. There is no assurance that our products and services will
become generally accepted or that they will be compatible with any standards
that become generally accepted, nor is there any assurance that enough paying
users will ultimately be obtained to enable us to operate profitably.
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COMPETITION IN THE SECURE E-MESSAGING BUSINESS IS EXPECTED TO INCREASE, WHICH
COULD CAUSE OUR BUSINESS TO FAIL.
Our solutions are targeted to the secure e-messaging management and
protection services market. Although there are many large, well-funded
participants in the information technology security industry, few currently
participate in the secure e-messaging management and protection services market.
Our primary competitors in this market are Authentica, BrightMail, ClearSwift,
Critical Path, FrontBridge, MessageLabs, PostX, Sigaba Corporation, and
Tumbleweed Communications Corp. We believe that the secure e-messaging
management and protection services market is immature, and, for the most part,
unpenetrated, unlike many segments of the information technology security
industry -- which are saturated. After several years of infrastructure
development and product development, we believe that we are the only provider
that has made the investments necessary to successfully penetrate the relatively
untapped secure e-messaging management and protection services market. We do not
believe that our primary competitors have made the infrastructure and
development investments required to match our service offerings. Nevertheless,
others may, over time, make the necessary investments in infrastructure and
service offerings. These competitors may develop new technologies that are
perceived as being more secure, effective or cost efficient than our own. If we
are not successful in exploiting the technology advantage we believe we
currently hold, these competitors could successfully garner a significant share
of the market, to the exclusion of our company. Furthermore, increased
competition could result in pricing pressures, reduced margins or the failure of
our business to achieve or maintain market acceptance, any of which could harm
our business.
OUR INABILITY TO DEVELOP AND INTRODUCE NEW PRODUCTS AND RELATED SERVICES AND TO
IMPLEMENT TECHNOLOGICAL CHANGES COULD HARM OUR BUSINESS.
The emerging nature of the secure e-messaging management and protection
services business and its rapid evolution, require us continually to develop and
introduce new products and services and to improve the performance, features and
reliability of our existing products and services, particularly in response to
competitive offerings. To date, we have achieved no significant revenues from
the sale of any of our products and related services.
We also have under development new feature sets for our current product
line and are considering new secure e-messaging products. The success of new or
enhanced products and services depends on several factors -- primarily, market
acceptance. We may not succeed in developing and marketing new or enhanced
products and services that respond to competitive and technological developments
and changing customer needs. This could harm our business.
IF THE MARKET FOR SECURE E-MESSAGING MANAGEMENT AND PROTECTION SERVICES DOES NOT
CONTINUE TO GROW, DEMAND FOR OUR PRODUCTS AND SERVICES WILL BE ADVERSELY
AFFECTED.
The market for secure Internet e-messaging is at an early stage of
development. Continued growth of the secure e-messaging management and
protection services market will depend to a large extent on the market
recognizing the need for secure e-messaging communications. Failure of this
market to grow could reduce demand for our products and services, which would
harm our business.
CAPACITY LIMITS ON OUR TECHNOLOGY AND NETWORK HARDWARE AND SOFTWARE MAY BE
DIFFICULT TO PROJECT, AND WE MAY NOT BE ABLE TO EXPAND AND UPGRADE OUR SYSTEMS
TO MEET INCREASED USE, WHICH WOULD RESULT IN REDUCED REVENUES.
While we have ample through-put capacity to handle our customers'
requirements for the medium term, at some point we may be required to expand and
upgrade our technology and network hardware and software. We may not be able to
accurately project the rate of increase in usage on our network. In addition, we
may not be able to expand and upgrade, in a timely manner, our systems and
network hardware and software capabilities to accommodate increased traffic on
our network. If we do not timely and appropriately expand and upgrade our
systems and network hardware and software, we may lose customers and revenues.
SECURITY INTERRUPTIONS TO OUR SECURE DATA CENTER COULD DISRUPT OUR BUSINESS, AND
ANY SECURITY BREACHES COULD EXPOSE US TO LIABILITY AND NEGATIVELY IMPACT
CUSTOMER DEMAND FOR OUR PRODUCTS AND SERVICES.
Our business depends on the uninterrupted operation of our secure data
center. We must protect this center from loss, damage or interruption caused by
fire, power loss, telecommunications failure or other events beyond our control.
Any damage or failure that causes interruptions in our secure data center
operations could materially harm our business, financial condition and results
of operations.
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In addition, our ability to issue digitally-signed certified
time-stamps and public encryption codes in connection with our products and
services depends on the efficient operation of the Internet connections between
customers and our data center. We depend on Internet service providers
efficiently operating these connections. These providers have experienced
periodic operational problems or outages in the past. Any of these problems or
outages could adversely affect customer satisfaction.
Furthermore, it is critical that our facilities and infrastructure
remain secure and the market perceives them to be secure. Despite our
implementation of network security measures, our infrastructure may be
vulnerable to physical break-ins, computer viruses, attacks by hackers and
similar disruptions from unauthorized tampering with our computer systems. In
addition, we are vulnerable to coordinated attempts to overload our systems with
data, resulting in denial or reduction of service to some or all of our users
for a period of time. We do not carry insurance to compensate us for losses that
may occur as a result of any of these events; therefore, it is possible that we
may have to use additional resources to address these problems.
Messages sent through our ZixPort(TM) and ZixMessage Center(TM)
messaging portals will reside, for a user-specified period of time, in our
secure data center network. Any physical or electronic break-ins or other
security breaches or compromises of this information could expose us to
significant liability, and customers could be reluctant to use our
Internet-related products and services.
We determined in June 2001 that credit card databases at our
independently operated subsidiary, Anacom Communications, Inc. ("Anacom"), had
been improperly accessed. As a result of this improper access, we shut down the
Anacom operations and Anacom ceased doing business. The ZixMail(TM), ZixPort,
and ZixMessage Center systems and our secure data center operations were
entirely separate from the systems operated by Anacom. No ZixCorp technologies
or operations were involved in the incident, nor are the Anacom technologies
involved being used in our Zix family of secure e-messaging products and
services. Accordingly, this breach has not had, and will not have, any effect on
the development and deployment of our secure e-messaging products and related
services. No claims have been asserted against us with respect to this incident.
We are unable to assess the amount of liability, if any, to Anacom or us, which
may result from any claims that may be asserted.
WE MAY HAVE TO DEFEND OUR RIGHTS IN INTELLECTUAL PROPERTY THAT WE USE IN OUR
PRODUCTS AND SERVICES, WHICH COULD BE DISRUPTIVE AND EXPENSIVE TO OUR
BUSINESS.
We may have to defend our intellectual property rights or defend
against claims that we are infringing the rights of others. Intellectual
property litigation and controversies are disruptive and expensive. Infringement
claims could require us to develop non-infringing products or enter into royalty
or licensing arrangements. Royalty or licensing arrangements, if required, may
not be obtainable on terms acceptable to us. Our business could be significantly
harmed if we are not able to develop or license the necessary technology.
Furthermore, it is possible that others may independently develop substantially
equivalent intellectual property, thus enabling them to effectively compete
against us.
OUR PRODUCTS AND SERVICES COULD CONTAIN UNKNOWN DEFECTS OR ERRORS.
We subject our products and services to quality assurance testing prior
to product release. To date, we have not become aware after product release of
any defect or error that materially affects their functionality. Nevertheless,
our products and services could contain undetected defects or errors. This could
result in loss of or delay in revenues, failure to achieve market acceptance,
diversion of development resources, injury to our reputation, litigation claims,
increased insurance costs or increased service and warranty costs. Any of these
could prevent us from implementing our business model and achieving the revenues
we need to operate profitably.
PUBLIC KEY CRYPTOGRAPHY TECHNOLOGY IS SUBJECT TO RISKS.
Our products and services employ, and future products and services may
employ, public key cryptography technology. With public key cryptography
technology, a public key and a private key are used to encrypt and decrypt
messages. The security afforded by this technology depends, in large measure, on
the integrity of the private key, which is dependent, in part, on the
application of certain mathematical principles. The integrity of the private key
is predicated on the assumption that it is difficult to mathematically derive
the private key from the related public key. Should methods be developed that
make it easier to derive the private key, the security of encryption products
using public key cryptography technology would be reduced or eliminated and such
products could become unmarketable. This could require us to make significant
changes to our products, which could damage our reputation and otherwise hurt
our business. Moreover, there have been public reports of the successful
decryption of
3
certain encrypted messages. This, or related, publicity could adversely affect
public perception of the security afforded by public key cryptography
technology, which could harm our business.
WE DEPEND ON KEY PERSONNEL.
We depend on the performance of our senior management team -- including
our chairman, president and chief executive officer, John A. Ryan, and his
direct reports and other key employees, particularly highly skilled technical
personnel. Our success depends on our ability to attract, retain and motivate
these individuals. There are no binding agreements with any of our employees
which prevent them from leaving our company at any time. There is competition
for these personnel. In addition, we do not maintain key person life insurance
on any of our personnel. The loss of the services of any of our key employees or
our failure to attract, retain and motivate key employees could harm our
business.
WE COULD BE AFFECTED BY GOVERNMENT REGULATION.
Exports of software products using encryption technology are generally
restricted by the U.S. government. Although we have obtained U.S. government
approval to export our products to almost all countries in the world, the list
of countries to which our products cannot be exported could be revised in the
future. Furthermore, some foreign countries impose restrictions on the use of
encryption products, such as our products. Failure to obtain the required
governmental approvals would preclude the sale or use of our products in
international markets.
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has fluctuated significantly in
the past and is likely to fluctuate in the future. Also, the market prices of
securities of other Internet-related companies have been highly volatile and, as
is well known, have generally declined substantially and broadly.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUBSTANTIAL PERCENTAGE OF OUR
SECURITIES. THEIR OWNERSHIP COULD ALLOW THEM TO EXERCISE SIGNIFICANT CONTROL
OVER CORPORATE DECISIONS AND TO IMPLEMENT CORPORATE ACTS THAT ARE NOT IN THE
BEST INTERESTS OF OUR SHAREHOLDERS AS A GROUP.
Our directors and executive officers beneficially own shares of our
securities that represent approximately 22.0% of the combined voting power
eligible to vote on matters brought before our shareholders, including
securities and associated warrants beneficially owned by Antonio R. Sanchez,
Jr., a former director and father of a current director (Antonio R. Sanchez
III), and current beneficial owner of approximately 11.5% of our outstanding
common stock, and John A. Ryan, our chairman, president and chief executive
officer. Also, Mr. Sanchez and Mr. Ryan collectively beneficially own
approximately 81.8% of the Series A Convertible Preferred Stock. The consent of
the holders of the Series A Convertible Preferred Stock, voting separately as a
class, is required before we may enter into mergers or other business
combination transactions. Therefore, our directors and executive officers, if
they acted together, could exert substantial influence over matters requiring
approval by our shareholders. These matters would include the election of
directors and, as noted above, the approval of mergers or other business
combination transactions. This concentration of ownership and voting power may
discourage or prevent someone from acquiring our business.
A PRIVATE INVESTOR OWNS A LARGE PERCENTAGE OF OUR OUTSTANDING STOCK AND COULD
SIGNIFICANTLY INFLUENCE THE OUTCOME OF ACTIONS.
George W. Haywood, a private investor, beneficially owns approximately
23.3% of our outstanding common stock. Furthermore, Mr. Haywood and an IRA for
the benefit of Mr. Haywood beneficially own approximately 81.2% of our Series B
Convertible Preferred Stock. The consent of the holders of the Series B
Convertible Preferred Stock, voting separately as a class, is required before we
may enter into mergers or other business combination transactions. Therefore,
Mr. Haywood could exert substantial influence over all matters requiring
approval by our shareholders, including the election of directors and, as noted
above, the approval of mergers or other business combination transactions. Mr.
Haywood's interests may not be aligned with the interests of our other
shareholders.
OUR RECENT PRIVATE PLACEMENTS OF EQUITY SECURITIES COULD FURTHER DILUTE THE
INTERESTS OF OUR SHAREHOLDERS.
In September 2002, we completed a capital funding for $16,000,000
through the issuance of $8,000,000 of convertible notes and associated warrants,
$3,250,000 of Series A Convertible Preferred Stock and associated warrants and
$4,750,000 of Series B Convertible Preferred Stock and associated warrants. The
convertible notes were converted into 2,141,811 shares of our
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common stock in 2002, and through June 30, 2003, $1,800,000 in convertible
preferred stock and related dividends has been converted into 462,532 shares of
our common stock. At June 30, 2003, the remaining convertible preferred stock
and the related warrants and the warrants currently held by the former holders
of the convertible notes was convertible and exercisable, in the aggregate, into
approximately 2,900,000 shares of our common stock.
One-ninth of the shares of our Series A Convertible Preferred Stock and
our Series B Convertible Preferred Stock are to be redeemed at two-month
intervals, beginning May 2003. The periodic redemption amounts payable to the
holders of Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock are paid in shares of our common stock.
Unless earlier converted or redeemed, the value of the common stock
used to determine the number of shares of common stock to be issued upon
redemption of shares of Series A Convertible Preferred Stock at the final
redemption date (that is, September 2004) will be the lesser of $3.92 per share
and the market value of the common stock at the time of redemption, based on a
closing bid price average formula. If the market price of the common stock
declines, the number of shares of common stock issuable to the holders of Series
A Convertible Preferred Stock upon such final redemption will increase, perhaps
substantially. There is no "floor" on the market value calculation and,
therefore, there is no "ceiling" on the number of shares of common stock that
may be issuable by us upon the final Series A Convertible Preferred Stock
redemption. A substantial decline in the market price of the common stock would
result in significant dilution to the existing holders of common stock if the
Series A Convertible Preferred Stock shares are redeemed at a substantially
lower price or cause us to redeem the Series A Convertible Preferred Stock for
cash.
The value of the common stock used to determine the number of shares of
common stock to be issued upon redemption of shares of Series B Convertible
Preferred Stock will be the lesser of the Series B conversion price (currently
$3.78 per share) and 90% of the market value of the common stock at the time of
redemption, based on a volume-weighted average formula. If the market price of
the common stock declines, the number of shares of common stock issuable to the
holders of Series B Convertible Preferred Stock upon such automatic redemptions
will increase, perhaps substantially. There is no "floor" on the market value
calculation and, therefore, there is no "ceiling" on the number of shares of
common stock that may be issuable by us upon a Series B Convertible Preferred
Stock redemption. A substantial decline in the market price of the common stock
would result in significant dilution to the existing holders of common stock if
the Series B Convertible Preferred Stock shares are redeemed at a substantially
lower price.
The Series A and Series B Convertible Preferred Stocks are convertible
by the holders into shares of common stock at any time. The Series A Conversion
Price is currently $4.10 per share and the Series B conversion price is
currently $3.78 per share. The conversion prices could be lowered, perhaps
substantially, in a variety of circumstances. In the event we issue, or are
deemed to have issued, shares of common stock at a price per share that is less
than the conversion prices then in effect (other than certain specified exempt
issuances), the conversion prices and the number of shares issuable upon
conversion of the Series A and Series B Convertible Preferred Stocks are subject
to weighted average anti-dilution adjustment. These anti-dilution adjustments do
not have a "floor" that would limit reductions in the conversion price of such
shares. Correspondingly, there is no "ceiling" on the number of shares of common
stock that may be issuable following such anti-dilution adjustments. The June
2003 Financing resulted in a minor adjustment to the Series A Conversion Price.
We issued four-year warrants (first exercisable in March 2003) to the
purchasers of Series A and Series B Convertible Preferred Stocks entitling the
warrant holders to purchase an aggregate of 709,528 shares of common stock at a
current exercise price of $4.47 per share. The exercise price of these warrants
is subject to weighted average anti-dilution adjustment in the event we issue,
or are deemed to have issued, shares of common stock at a price per share that
is less than the exercise price then in effect (other than certain specified
exempt issuances). The "floor" on such anti-dilution adjustments is set at $3.92
per share. The June 2003 Financing resulted in a minor adjustment to the
exercise price of these warrants.
In April 2003, we issued warrants covering 455,017 shares of our stock
to the purchasers of the convertible notes in connection with them exercising
the warrants issued to them in September 2002, pursuant to which we received
$1.6 million. The number of shares of common stock for which these warrants are
exercisable and the exercise price of these warrants are subject to full
anti-dilution adjustment in the event we issue, or are deemed to have issued,
shares of common stock at a price per share that is less than the exercise price
then in effect (other than certain specified exempt issuances). These
anti-dilution adjustments do not have a "floor" that would limit reductions in
the exercise price and there is no "ceiling" on the number of shares of common
stock that may be issuable following such anti-dilution adjustments. The June
2003 Financing resulted in a decrease to the exercise price of these warrants,
from $5.00 to $3.61 per share, and an increase in the number of shares issuable
upon exercise of the warrants from 455,017 to 630,217 shares.
5
FURTHER ISSUANCES OF EQUITY SECURITIES MAY BE DILUTIVE TO CURRENT SHAREHOLDERS.
In June 2003, we issued the securities that are the subject of the
registration statement of which this prospectus forms a part. At some point in
the foreseeable future we may determine to seek additional capital funding. This
capital funding could involve one or more types of equity securities, including
convertible debt, common or convertible preferred stock and warrants to acquire
common or preferred stock. Such equity securities could be issued at or below
the then-prevailing market price for our common stock. In addition, we
incentivize employees and attract new employees by issuing options to purchase
our shares of common stock. Therefore, the interest of our existing shareholders
could be diluted by future stock option grants to employees and any equity
securities issued in capital funding financings.
STOCK SALES AND HEDGING ACTIVITIES COULD AFFECT OUR STOCK PRICE.
Our stock price may decrease as a result of the additional number of
shares that will become available in the market due to the issuances of our
common stock in connection with the capital funding transactions we recently
completed. Such stock price decrease could encourage short-sales that could
place further downward pressure on our stock price. This could lead to further
increases in the already large short position in our common stock (6,247,656
shares as of June 13, 2003). An increase in the volume of sales of our common
stock, whether short sales or not, could cause the market price of our common
stock to decline. The effect of these activities on our stock price could
increase the number of shares required to be issued on the next applicable
redemption of the Series A Convertible Preferred Stock and the Series B
Convertible Preferred Stock.
WE MAY HAVE LIABILITY FOR INDEMNIFICATION CLAIMS ARISING FROM THE SALE OF OUR
PREVIOUS BUSINESSES IN 1998 AND 1997.
We disposed of our previous operating businesses in 1998 and 1997. In
selling those businesses, we agreed to provide customary indemnification to the
purchasers of those businesses for breaches of representations and warranties,
covenants and other specified matters. Although we believe that we have
adequately provided for future costs associated with these indemnification
obligations, indemnifiable claims could exceed our estimates.
WE MAY ENCOUNTER OTHER UNANTICIPATED RISKS AND UNCERTAINTIES IN THE SECURE
E-MESSAGING MANAGEMENT AND PROTECTION SERVICES MARKET OR IN DEVELOPING NEW
PRODUCTS AND SERVICES, AND WE CANNOT ASSURE YOU THAT WE WILL BE SUCCESSFUL IN
RESPONDING TO ANY UNANTICIPATED RISKS OR UNCERTAINTIES.
There are no assurances that we will be successful or that we will not
encounter other, and even unanticipated, risks. We discuss other operating,
financial or legal risks or uncertainties in our periodic filings with the
Securities and Exchange Commission (we refer to it as the "SEC"). We are, of
course, also subject to general economic risks.
NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS
This document contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (we refer to it as the "Exchange
Act"). All statements other than statements of historical fact are "forward-
looking statements" for purposes of federal and state securities laws,
including: any projections of future business, market share, earnings, revenues
or other financial items; any statements of the plans, strategies and objectives
of management for future operations; any statements concerning proposed new
products, services or developments; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. Forward-looking statements may
include the words "may," "will," "predict," "plan," "should," "goal,"
"estimate," "intend," "continue," "believe," "expect" or "anticipate" and other
similar words. Such forward-looking statements may be contained in the "Risk
Factors" section above, among other places.
Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to inherent risks and
uncertainties, such as those disclosed in this document. We do not intend, and
undertake no obligation, to update any forward-looking statement.
6
DOCUMENTS INCORPORATED BY REFERENCE
We furnish our shareholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and special reports, proxy statements and other information with the
SEC. Instead of repeating information that we have already filed with the SEC,
we are allowed to "incorporate by reference" in this prospectus information
contained in those documents we have filed with the SEC. These documents are
considered to be part of this prospectus.
We incorporate by reference in this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until the selling shareholders sell all of the
shares of common stock offered by this prospectus:
o our Annual Report on Form 10-K, including audited financial
statements, for our fiscal year ended December 31, 2002;
o our Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2003;
o our Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2003;
o all filings we have made pursuant to the Exchange Act after the date
of the registration statement of which this prospectus forms a part
and prior to the effectiveness of the registration statement;
o our Current Report on Form 8-K, dated June 25, 2003;
o our Current Report on Form 8-K, dated July 7, 2003;
o all other reports we have filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of our fiscal year covered by the
Annual Report referred to above; and
o the description of our common stock contained in our Registration
Statement on Form 8-A, dated September 25, 1989, including any
amendment or report filed for the purpose of updating such
description.
Any documents that we file with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering, will also be considered to be part of this prospectus and will
automatically update and supersede the information contained in this prospectus.
At your request, we will provide you, without charge, a copy of any of
the documents we have incorporated by reference into this prospectus but not
delivered with the prospectus (other than exhibits to such documents, unless
those exhibits are specifically incorporated by reference into the documents
that this prospectus incorporates). If you want more information, write or call:
Steve M. York
Senior Vice President and Chief Financial Officer
Zix Corporation, 2711 North Haskell Avenue, Suite 2300, LB 36
Dallas, Texas 75204-2960
Telephone: (214) 370-2000
WHERE YOU CAN FIND MORE INFORMATION
We are delivering this prospectus to you in accordance with the U.S.
securities laws. We have filed a registration statement with the SEC to register
the common stock that the selling shareholders are offering to you. This
prospectus is part of that registration statement. As allowed by the SEC's
rules, this prospectus does not contain all of the information that is included
in the registration statement.
You may obtain a copy of the registration statement, or a copy of any
other filing we have made with the SEC, directly from the SEC. You may either:
o read and copy any materials we have filed with the SEC at the SEC's
Public Reference Room maintained at 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the following regional offices: 233
Broadway, New York, New York 10279; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; or
7
o visit the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy statements, and other information regarding us and
other issuers that file electronically.
You can obtain more information about the SEC's Public Reference Room
by calling the SEC at 1-800-SEC-0330.
SELLING SHAREHOLDERS
On June 24, 2003, we entered into the Securities Purchase Agreement
with the selling shareholders listed in the table below. Under this agreement,
we issued and sold to the selling shareholders 1,566,758 shares of our common
stock and warrants to acquire 231,855 shares of our common stock. The common
stock shares issued to the selling shareholders and the shares issuable upon
exercise of the warrants are being offered under this prospectus. We are
registering the shares in order to permit the selling shareholders to offer the
shares of common stock for resale from time-to-time.
The selling shareholders have not had any material relationship with us
within the past three years.
The table below lists the selling shareholders and other information
regarding the ownership of our common stock by the selling shareholders. The
second column lists the number of shares of common stock held, plus the number
of shares of common stock that would have been issuable to the selling
shareholders as of July 18, 2003, based on their ownership of the warrants,
assuming conversion of all of the warrants held by the selling shareholders on
that date, without regard to any limitations on exercise. The third column lists
the shares of common stock being offered by this prospectus by the selling
shareholders.
In accordance with the terms of the registration rights agreement with
the selling shareholders, this prospectus generally covers the resale of the
common stock shares acquired by the selling shareholders in June 2003, and that
number of shares of common stock equal to 100% of the number of shares of common
stock issuable upon exercise of the related warrants, determined as if the
warrants were exercised in full as of the second trading day immediately
preceding the filing of this registration statement. The fourth column assumes
the sale of all of the shares offered by the selling shareholders pursuant to
this prospectus.
Under the terms of the warrants, the selling shareholders may not
exercise the warrants, to the extent such exercise would cause the selling
shareholder, together with its affiliates, to have beneficially acquired a
number of shares of common stock which would exceed 4.99% of our
then-outstanding common stock, as determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder. This
restriction may not be waived by the selling shareholders. The number of shares
in the second column does not reflect this limitation. The selling shareholders
may sell all, some or none of their shares in this offering. See below under
"Plan of Distribution."
<Table>
<Caption>
OWNERSHIP PRIOR TO OFFERING OWNERSHIP AFTER OFFERING
----------------------------------- ----------------------------
NAME OF OWNER NUMBER OF SHARES SHARES TO BE SOLD NUMBER OF SHARES PERCENTAGE
------------- ---------------- ----------------- ---------------- ----------
Gryphon Master Fund, L.P.(1) 469,203 469,203 0 *
500 Crescent Court, Suite 270
Dallas, Texas 75201
Deephaven Small Cap Growth Fund, LLC(2) 156,401 156,401 0 *
130 Cheshire Lane
Minnetonka, Minnesota 55305
</Table>
- ----------
(1) Gryphon Master Fund, L.P. is controlled by Edwin B. Lyon, III and Edwin B.
Lyon, IV. They disclaim beneficial ownership of the securities owned by Gryphon
Master Fund, L.P.
(2) Deephaven Small Cap Growth Fund LLC is a private investment fund that is
owned by all of its investors and managed by Deephaven Capital Management LLC.
Mr. Colin Smith is the Chief. Executive Officer of Deephaven Capital Management
LLC and has voting and investment control over the shares that are owned by
Deephaven Small Cap Growth Fund LLC.
8
<Table>
Vertical Ventures Investments, LLC(3) 156,401 156,401 0 *
650 Fifth Avenue, 6th Floor
New York, New York 10019
Bonanza Master Fund Ltd.(4) 156,401 156,401 0 *
8235 Douglas, Suite 423
Dallas, Texas 75225
Langley Partners L.P.(5) 156,401 156,401 0 *
535 Madison Avenue, 7th Floor
New York, New York 10022
Alpha Capital A.G.(6) 78,201 78,201 0 *
Pradafant 7
Furstentums 9490
Vaduz Liechtenstein
Superius Securities Group, Inc. Money 625,605 625,605 0 *
Purchase Plan(7)
94 Grand Avenue
Englewood, New Jersey 07631
</Table>
* Less than 1%
PLAN OF DISTRIBUTION
We are registering the shares of common stock acquired by the selling
shareholders and the shares of common stock issuable upon exercise of the
warrants to permit the resale of these shares of common stock by the selling
shareholders from time-to-time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling shareholders of the
shares of common stock. We will bear all fees and expenses incident to our
obligation to register the shares of common stock.
The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time-to-time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- ----------
(3) Mr. Joshua Silverman may be deemed to control Vertical Ventures Investments,
LLC. Mr. Silverman disclaims beneficial ownership of the securities beneficially
owned by Vertical Ventures Investments, LLC.
(4) Mr. Bernay Box may be deemed to control Bonanza Master Fund Ltd. Mr.Box
disclaims beneficial ownership of the securities beneficially owned by Bonanza
Master Fund Ltd.
(5) Langley Capital, LLC serves as the general partner of Langley Partners, L.P.
Mr. Jeffrey Thorp is the Managing Member of Langley Capital, L.L.C. Mr. Thorp
disclaims beneficial ownership of the securities beneficially owned by Langley
Partners, L.P.
(6) Mr. Konrad Ackerman may be deemed to control Alpha Capital A.G. Mr. Ackerman
disclaims beneficial ownership of the securities beneficially owned by Alpha
Capital A.G.
(7) James Hudgins and A.C. Hudgins, Trustees, control the Superius Securities
Group, Inc. Money Purchase Plan. They disclaim beneficial ownership of the
securities owned by the Superius Securities Group, Inc. Money Purchase Plan.
9
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling shareholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling shareholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling shareholders may from time-to-time pledge or grant a
security interest in some or all of the common stock shares or common stock
shares issuable upon exercise of the warrants owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell shares of common stock from time-to-time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling shareholders to include the pledgee, transferee or other successors in
interest as selling shareholders under this prospectus.
The selling shareholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors-in-interest will be the selling beneficial owners for purposes of
this prospectus.
The selling shareholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling shareholders have
informed us that they do not have any agreement or understanding, directly or
indirectly, with any person to distribute the common stock.
Under the securities laws of some states, the shares of common stock
may be sold in such states only through registered or licensed brokers or
dealers. In addition, in some states the shares of common stock may not be sold
unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling shareholder will sell any or
all of the shares of common stock registered pursuant to the registration
statement, of which this prospectus forms a part.
The selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any
of the shares of common stock by the selling shareholders and any other
participating person. Regulation M may also restrict the ability of any person
engaged in the distribution of the shares of common stock to engage in
market-making activities with respect to the shares of common stock. All of the
foregoing may affect the marketability of the shares of common stock and the
ability of any person or entity to engage in market-making activities with
respect to the shares of common stock.
10
We will pay all expenses of the registration of the shares of common
stock pursuant to the registration rights agreement estimated to be $10,600 in
total, including, without limitation, legal fees of the selling shareholders in
connection with the registration statement of which this prospectus forms a
part, SEC filing fees and expenses of compliance with state securities or "blue
sky" laws; provided, however, that the selling shareholders will pay all
underwriting discounts and selling commissions, if any. In connection with sales
made pursuant to this prospectus, we will indemnify the selling shareholders
against liabilities, including some liabilities under the Securities Act, in
accordance with the registration rights agreement, or the selling shareholders
will be entitled to contribution. We will be indemnified by the selling
shareholders against civil liabilities, including liabilities under the
Securities Act that may arise from any written information furnished to us by
the selling shareholders for use in this prospectus, in accordance with the
related registration rights agreement, or we will be entitled to contribution.
Once sold under the registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.
DESCRIPTION OF SECURITIES
COMMON STOCK
The holders of our common stock are entitled to one vote per share on
all matters to be voted on by shareholders and are entitled to receive dividends
when declared by our board of directors, at their discretion, from legally
available funds. The holders of our common stock are not entitled to preemptive,
subscription or conversion rights, and there are no redemption or sinking fund
provisions applicable to our common stock.
Upon liquidation or dissolution, the holders of our common stock are
entitled to receive all assets available for distribution to the shareholders,
subject to the preferential rights of the holders of the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock and any other
series of preferred stock that may be outstanding.
The foregoing summary is qualified by reference to the description of
our common stock that is filed with our Registration Statement on Form 8-A,
dated September 25, 1989, including any amendment or report updating such
description.
PREFERRED STOCK
Shares of preferred stock are issuable in one or more series at the
time and for the consideration as our board of directors may determine.
Authority is expressly granted to our board of directors to fix, from
time-to-time, by resolution or resolutions providing for:
o the establishment and/or issuance of any series of preferred stock,
o the designation of any series of preferred stock,
o the powers, preferences and rights of the shares of that series, and
o the qualifications, limitations or restrictions of the preferred
stock.
We currently have designated a Series A Convertible Preferred Stock and
a Series B Convertible Preferred Stock. See our Current Report on Form 8-K,
dated September 20, 2002, and Annual Report on Form 10-K, including audited
financial statements, for the fiscal year ended December 31, 2002, and related
exhibits which are incorporated by reference in this prospectus, for a
description of our Series A Convertible Preferred Stock and our Series B
Convertible Preferred Stock.
WARRANTS ISSUED TO THE SELLING SHAREHOLDERS
The warrants issued to the selling shareholders cover an aggregate of
231,855 shares of our common stock at an exercise price of $4.96 per share.
These warrants are exercisable at any time after the issue date and on or prior
to June 24, 2007. The number of shares of common stock for which these warrants
are exercisable and the exercise price of these warrants are subject to
proportional adjustment for stock splits and similar changes affecting the
common stock.
11
Notwithstanding the foregoing, under the terms of the warrants, the
selling shareholders may not exercise the warrants, to the extent such exercise
would cause the selling shareholder, together with its affiliates, to have
beneficially acquired a number of shares of common stock which would exceed
4.99% of our then-outstanding common stock, as determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. The selling shareholders may not waive this restriction. This
restriction does not prohibit a selling shareholder from exercising its warrant
to the extent that such exercise would not result in it beneficially owning more
than 4.99% of the shares then outstanding, then selling those shares and later
exercising up to 4.99% again.
REGISTRATION REQUIREMENTS
We and the selling shareholders entered into a registration rights
agreement, under which we agreed to prepare and file within 30 days of the
closing under the Purchase Agreement a registration statement covering the
common stock shares and shares issuable upon exercise of the warrants acquired
under the Purchase Agreement. We are required to have this registration
statement declared effective by the earlier of (i) 90 days of the issuance of
the closing under the Purchase Agreement or (ii) five trading days following the
date that we are notified by the SEC that the registration statement of which
this prospectus is a part will not be reviewed or is no longer subject to
further review and comments.
The selling shareholders are entitled to receive from us substantial
cash damages in the event we fail to file the registration statement, or have
the registration statement declared effective, within the time limits set forth
above or, thereafter, to keep the registration statement effective for certain
periods of time.
The foregoing description of the registration requirements is qualified
by reference to our Current Report on Form 8-K, dated June 25, 2003, and related
exhibits which are incorporated by reference in this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common
stock by the selling shareholders, rather, the selling shareholders will receive
those proceeds directly.
LEGAL MATTERS
The validity of the stock offered hereby will be passed upon for us by
Ronald A. Woessner, our Senior Vice President, General Counsel and Secretary.
EXPERTS
The consolidated financial statements appearing in the Annual Report on
Form 10-K for our fiscal year ended December 31, 2002, referred to above under
the heading "Documents Incorporated by Reference" have been audited by Ernst &
Young LLP, our independent auditors, as set forth in their report thereon,
included therein, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
12
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee .......................... $ 547*
Accounting fees and expenses .................. $ 2,500**
Legal fees and expenses of registrant ......... $ 5,000**
Miscellaneous expenses ........................ $ 2,500**
Total $10,547
=======
- ----------
* Previously paid on July 21, 2003 with the initial filing.
**Estimated. All of the noted expenses are borne by the registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Texas Business Corporation Act, the registrant's
Restated Articles of Incorporation provide that its directors shall not be
personally liable to the registrant or its shareholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the registrant or its shareholders, (ii)
any act or omission not in good faith or which involves intentional misconduct
or a knowing violation of law, (iii) any transaction from which the director
derived any improper personal benefit, (iv) any act or omission where the
liability of the director is expressly provided for by statute, or (v) any act
related to an unlawful stock repurchase or payment of a dividend. In addition,
the registrant's Restated Articles of Incorporation and Restated Bylaws include
certain provisions permitted by the Texas Business Corporation Act whereby its
directors, officers, employees and agents generally are to be indemnified
against certain liabilities to the fullest extent authorized by the Texas
Business Corporation Act. Furthermore, the employment agreement between John A.
Ryan and us, dated November 14, 2001, provides Mr. Ryan, our chairman, president
and chief executive officer, with a contractual right to indemnification as an
officer and/or director of us as set forth in Article VII of our Restated
Bylaws, dated September 14, 1999. The registrant maintains insurance on behalf
of its directors and executive officers insuring them against any liability
asserted against them in their capacities as directors or officers or arising
out of such status.
ITEM 16. EXHIBITS.
The exhibits to this registration statement are listed in the Index to
Exhibits on page II-4 of this registration statement, which Index is
incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 15 or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, unless the
information required to be included in such
post-effective amendment is contained in periodic
reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of
1934 and incorporated herein by reference;
II-1
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement,
unless the information required to be included in
such post-effective amendment is contained in
periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 and incorporated herein by
reference. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered
would not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent
change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
4. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on August 6, 2003.
ZIX CORPORATION
By: /s/ Steve M. York
----------------------------------
Steve M. York
Senior Vice President,
Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on August 6, 2003.
<Table>
<Caption>
Signature Title
--------- -----
/*/ Chairman, President, Chief Executive
- ---------------------------------- Officer and Director
John A. Ryan (Principal Executive Officer)
/s/ Steve M. York Senior Vice President, Chief
- ---------------------------------- Financial Officer and Treasurer
Steve M. York (Principal Financial and Accounting Officer)
/*/ Director
- ----------------------------------
Michael E. Keane
/*/ Director
- ----------------------------------
James S. Marston
/*/ Director
- ----------------------------------
Antonio R. Sanchez III
/*/ Director
- ----------------------------------
Dr. Ben G. Streetman
</Table>
*By: /s/ Steve M. York
-----------------------------
Steve M. York
Attorney-in-fact
II-3
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Securities Purchase Agreement, dated June 24, 2003, by and between Zix
Corporation and the Investors named therein (including schedules but
excluding exhibits).(1)
4.2 Form of Warrant to purchase shares of common stock of Zix Corporation,
issued by Zix Corporation.(1)
4.3 Registration Rights Agreement, dated June 24, 2003, by and among Zix
Corporation and the Investors named therein.(1)
5.1 Opinion of Ronald A. Woessner.(2)
23.1 Consent of Ronald A. Woessner (included in his opinion filed as Exhibit
5.1).
23.2 Consent of Ernst & Young LLP.(3)
24.1 Power of Attorney.(2)
</Table>
(1) Incorporated by reference from Zix Corporation's Current Report on Form 8-K,
dated June 25, 2003.
(2) Previously filed with this registration statement on July 21, 2003.
(3) Filed Herewith.
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