EXHIBIT 10.1
ZIX CORPORATION 2004 STOCK OPTION PLAN
SECTION 1. Purpose
The purpose of the Zix Corporation 2004 Stock Option Plan (hereinafter called
the "Plan") is to advance the interests of Zix Corporation (hereinafter called
the "Company") by strengthening the ability of the Company to attract, on its
behalf and on behalf of its Subsidiaries (as hereinafter defined), and retain
personnel of high caliber through encouraging a sense of proprietorship by means
of stock ownership.
SECTION 2. Definitions
"Board of Directors" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time-to-time.
"Committee" shall mean a committee of the Board of Directors comprised of at
least two directors or the entire Board of Directors, as the case may be.
Members of the Committee shall be selected by the Board of Directors. To the
extent necessary to comply with the requirements of applicable rules and
regulations, the Committee shall consist of two or more "independent" directors.
Also, if the requirements of Section 162(m) of the Code are intended to be met,
the Committee shall consist of two or more "outside directors" within the
meaning of Section 162(m) of the Code.
"Common Stock" shall mean the Common Stock of the Company, par value $.01 per
share.
"Date of Grant" shall mean the date on which an Option is granted pursuant to
this Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Optionee, in a manner determined by the Committee, to receive amounts due the
Optionee in the event of the Optionee's death. In the absence of an effective
designation by the Optionee, Designated Beneficiary shall mean the Optionee's
estate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the closing sale price (or average of the
quoted closing bid and asked prices if there is no closing sale price reported)
of the Common Stock on the date specified as reported by the Nasdaq Stock
Market, or by the principal national stock exchange on which the Common Stock is
then listed. If there is no reported price information for such date, the Fair
Market Value will be determined by the reported price information for Common
Stock on the day nearest preceding such date.
"Incentive Stock Option" shall mean a stock option granted under Section 6
that is intended to meet the requirements of Section 422 of the Code (or any
successor provision).
"Nonqualified Stock Option" shall mean a stock option granted under Section 6
that is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option.
"Optionee" shall mean the person to whom an option is granted under the Plan
or who has obtained the right to exercise an option in accordance with the
provisions of the Plan.
"Subsidiary" shall mean any now existing or hereafter organized or acquired
corporation or other entity of which fifty percent (50%) or more of the issued
and outstanding voting stock or other economic interest is owned or controlled
directly or indirectly by the Company or through one or more Subsidiaries of the
Company.
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SECTION 3. Administration
The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time-to-time deem advisable, and to construe, interpret and administer the
terms and provisions of the Plan and the agreements thereunder. The
determinations and interpretations made by the Committee are final and
conclusive.
SECTION 4. Eligibility
All employees and non-employee consultants and advisors (other than
non-employee directors) who, in the opinion of the Committee, have the capacity
for contributing in a substantial measure to the successful performance of the
Company are eligible to receive Options under the Plan.
SECTION 5. Maximum Amount Available for Options
(a) The maximum number of shares of Common Stock in respect of which Options
may be made under the Plan shall be a total of 2,000,000 shares of Common Stock.
Of that amount, no participant may be granted Options for more than 850,000
shares of Common Stock in the aggregate during the term of the Plan. Shares of
Common Stock may be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company, including shares purchased
in the open market. In the event that an Option is terminated unexercised as to
any shares of Common Stock covered thereby, such shares shall thereafter be
again available for award pursuant to the Plan.
(b) In the event that the Committee shall determine that any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
corporate event affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall adjust appropriately any or
all of (1) the number and kind of shares which thereafter may be optioned under
the Plan and (2) the grant, exercise or conversion price and/or number of shares
with respect to the Options and/or, if deemed appropriate, make provision for
cash payment to an Optionee; provided, however, that the number of shares
subject to any Option shall always be a whole number.
SECTION 6. Stock Options
(a) Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the persons to whom Options shall be granted,
the number of shares to be covered by each Option, the option price therefor and
the conditions and limitations applicable to the exercise of the Option.
(b) The Committee shall have the authority to grant Incentive Stock Options,
or to grant Nonqualified Stock Options, or to grant both types of options. In
the case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with the Code and relevant regulations. Incentive
Stock Options to purchase Common Stock may be granted to such employees of the
Company or its Subsidiaries (including any director who is also an employee of
the Company or one of its Subsidiaries) as shall be determined by the Committee.
Nonqualified Stock Options to purchase Common Stock may be granted to such
eligible participants as shall be determined by the Committee. Neither the
Company nor any of its Subsidiaries or any of their respective directors,
officers or employees, shall be liable to any Optionee or other person if it is
determined for any reason by the Internal Revenue Service or any court having
jurisdiction that any Incentive Stock Option granted hereunder does not qualify
for tax treatment as an Incentive Stock Option under the then-applicable
provisions of the Code.
(c) The Committee shall, in its discretion, establish the exercise price at
the time each Option is granted, which in the case of Nonqualified Stock
Options, shall not be less than 100% of the Fair Market Value of the Common
Stock on the Date of Grant, or in the case of grants of Incentive Stock Options,
shall not be less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant or such greater amount as may be prescribed by the Code.
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(d)Exercise
(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify in
the applicable grant or thereafter; provided, however, that in no event may
any Option granted hereunder be exercisable after the expiration of ten years
from the Date of Grant. The Committee may impose such conditions with respect
to the exercise of Options, including without limitation, any relating to the
application of federal or state securities laws, as it may deem necessary or
advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefore is received by the
Company. Such payment may be made in cash, or its equivalent, or, if and to
the extent permitted by the Committee or under the terms of the applicable
agreement, by exchanging shares of Common Stock owned by the Optionee (which
are not the subject of any pledge or other security interest), or by a
combination of the foregoing, provided that the combined value of all cash
and cash equivalents and the Fair Market Value of any such Common Stock so
tendered to the Company, valued as of the date of such tender, is at least
equal to such option price.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any Option may be
exercised by a broker-dealer acting on behalf of an Optionee if (a) the
broker-dealer has received from the Optionee instructions signed by the
Optionee requesting the Company to deliver the shares of Common Stock subject
to such Option to the broker-dealer on behalf of the Optionee and specifying
the account into which such shares should be deposited, (b) adequate
provision has been made with respect to the payment of any withholding taxes
due upon such exercise, and (c) the broker-dealer and the Optionee have
otherwise complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220,
or any successor provision.
(3) The Company, in its sole discretion, may lend money to an Optionee,
guarantee a loan to an Optionee or otherwise assist an Optionee to obtain the
cash necessary to exercise all or any portion of an Option granted under the
Plan.
(4) The Company shall not be required to issue any fractional shares upon
the exercise of any Options granted under this Plan. No Optionee nor an
Optionee's legal representatives, legatees or distributees, as the case may
be, will be, or will be deemed to be, a holder of any shares subject to an
Option unless and until said Option has been exercised and the purchase price
of the shares in respect of which the Option has been exercised has been
paid. Unless otherwise provided in the agreement applicable thereto, an
Option shall not be exercisable except by the Optionee or by a person who has
obtained the Optionee's rights under the Option by will or under the laws of
descent and distribution or pursuant to a "qualified domestic relations
order" as defined in the Code.
(e) No Incentive Stock Options shall be exercisable (a) more than five years
(or such other period of time as from time-to-time provided in the
then-applicable provisions of the Code governing Incentive Stock Options) after
the Date of Grant with respect to an Optionee who owns ten percent or more of
the outstanding Common Stock (within the meaning of the Code), and (b) more than
ten years after the Date of Grant with respect to all other Optionees. No
Nonqualified Stock Options shall be exercisable more than ten years after the
Date of Grant.
(f) In no event shall any Option granted to any employee who is classified as
"non-exempt" under the Fair Labor Standards Act of 1938 be exercisable less than
six months after the Date of Grant, except in the case of death, disability,
retirement, a change in control or other circumstances permitted by regulations
under the Worker Economic Opportunity Act ("WEOA"). Grants to such non-exempt
employees shall not be based on pre-established performance criteria, except as
specifically permitted under the WEOA. Non- exempt employees shall be notified
of the terms of their Options in accordance with the WEOA, and exercise of such
Options must be voluntary.
SECTION 7. General Provisions
(a) The Company and its Subsidiaries shall have the right to deduct from all
amounts paid to an Optionee in cash (whether under the Plan or otherwise) any
taxes required by law to be withheld in respect of Option exercises under the
Plan. However, if permitted by the Committee or under the terms of the
applicable agreement, the Optionee may
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pay all or any portion of the taxes required to be withheld by the Company or
its Subsidiaries or paid by the Optionee with respect to such Common Stock by
electing to have the Company or its Subsidiaries withhold shares of Common
Stock, or by delivering previously owned shares of Common Stock, having a Fair
Market Value equal to the amount required to be withheld or paid. The Optionee
must make the foregoing election on or before the date that the amount of tax to
be withheld is determined. Any such election is irrevocable and subject to
disapproval by the Committee. If the Optionee is subject to the provisions of
Section 16(b) of the Exchange Act, then any such election shall be subject to
the restrictions imposed by applicable rules and regulations.
(b) Each Option hereunder shall be evidenced in writing, delivered to the
Optionee, and shall specify the terms and conditions thereof and any rules
applicable thereto, including, but not limited to, the effect on such Option of
the death, retirement, disability or other termination of employment of the
Optionee and the effect thereon, if any, of a change in control of the Company.
(c) Unless otherwise provided in the agreement applicable thereto, no Option
shall be assignable or transferable except by will or under the laws of descent
and distribution or pursuant to a "qualified domestic relations order" as
defined in the Code, and no right or interest of any Optionee shall be subject
to any lien, obligation or liability of the Optionee.
(d) No person shall have any claim or right to be granted an Option. Further,
the Company and its Subsidiaries expressly reserve the right at any time to
terminate the employment of an Optionee free from any liability, or any claim
under the Plan, except as provided in any agreement entered into with respect to
an Option. Neither the Plan nor any Option granted hereunder is intended to
confer upon any Optionee any rights with respect to continuance of employment or
other utilization of his or her services by the Company or by a Subsidiary, nor
to interfere in any way with his or her right or that of his or her employer to
terminate his or her employment or other services at any time (subject to the
terms of any applicable contract). The conditions to apply to the exercise of an
Option in the event an Optionee ceases to be employed by the Company or a
Subsidiary for any reason shall be determined by the Committee or specified in
the written agreement evidencing the Option.
(e) Subject to the provisions of the applicable Option, no Optionee or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed under the Plan until he or she has
become the holder thereof.
(f) The validity, construction, interpretation, administration and effect of
the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of the State of Texas
(without giving effect to its conflicts of laws rules) and, to the extent
applicable, federal law.
(g) The Plan shall be effective as of May 6, 2004. No Options may be granted
under the Plan after May 6, 2014; however, all previous Options issued that have
not expired under their original terms or will not then expire at the time the
Plan expires will remain outstanding.
(h)Restrictions on Issuance of Shares
(1) The Company shall not be obligated to sell or issue any Shares upon the
exercise of any Option granted under the Plan unless: (i) the shares
pertaining to such Option have been registered under applicable federal and
state securities laws or are exempt from such registration; (ii) the prior
approval of such sale or issuance has been obtained from any state regulatory
body having jurisdiction; and (iii) in the event the Common Stock has been
listed on any exchange, the shares pertaining to such Option have been duly
listed on such exchange in accordance with the procedure specified therefor.
The Company shall be under no obligation to effect or obtain any listing,
registration, qualification, consent or approval with respect to shares
pertaining to any Option granted under the Plan. If the shares to be issued
upon the exercise of any Option granted under the Plan are intended to be
issued by the Company in reliance upon the exemptions from the registration
requirements of applicable federal and state securities laws, the recipient
of the Option, if so requested by the Company, shall furnish to the Company
such evidence and representations, including an opinion of counsel,
satisfactory to it, as the Company may reasonably request.
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(2) The Company shall not be liable for damages due to a delay in the
delivery or issuance of any stock certificates for any reason whatsoever,
including, but not limited to, a delay caused by listing, registration or
qualification of the shares of Common Stock pertaining to any Option granted
under the Plan upon any securities exchange or under any federal or state law
or the effecting or obtaining of any consent or approval of any governmental
body.
(i) The Board of Directors or Committee may impose such other restrictions on
the ownership and transfer of shares issued pursuant to the Plan as it deems
desirable; any such restrictions shall be set forth in the applicable agreement.
(j) The Board of Directors may amend, abandon, suspend or terminate the Plan
or any portion thereof at any time in such respects as it may deem advisable in
its sole discretion, provided that no amendment shall be made without
stockholder approval (including an increase in the maximum number of shares of
Common Stock in respect of which Options may be made under the Plan) if such
stockholder approval is necessary to comply with any tax or regulatory
requirement or exchange listing rules, including for these purposes any approval
requirement that is a prerequisite for exemptive relief under Section 16(b) of
the Exchange Act.
(k) To preserve an Optionee's rights under an Option in the event of a change
in control of the Company or an Optionee's separation from employment, the
Committee in its discretion may, at the time an Option is made or any time
thereafter, take one or more of the following actions: (i) provide for the
acceleration of any time period relating to the exercise of the Option, (ii)
provide for the purchase of the Option, upon the Optionee's request, for an
amount of cash or other property that could have been received upon the exercise
or realization of the Option had the Option been currently exercisable or
payable, (iii) adjust the terms of the Option in a manner determined by the
Committee to reflect the change in control or to prevent the imposition of an
excise tax under section 280G(b) of the Code, (iv) cause the Option to be
assumed, or new rights substituted therefor, by another entity, or (v) make such
other provision as the Committee may consider equitable and in the best
interests of the Company.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed on its
behalf as of the 6th day of May 2004.
ZIX CORPORATION
By: /s/ Ronald A. Woessner
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Title: SVP
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Date: 5/6/04
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