Exhibit 10.35
FORM OF SEPARATION PAY AGREEMENT
     THIS SEPARATION PAY AGREEMENT (this “Agreement”), entered into as of
February 29, 2008, is made and entered into between Zix Corporation, a Texas
corporation (the “Company”), and                      (“Employee”).
     WHEREAS, Employee is currently employed by the Company or a company
controlled by, controlling, or under common control with, the Company (“Company
Affiliate”);
     WHEREAS, Employee is willing to continue working for the Company or Company
Affiliate, as applicable, on an “at-will” basis;
     NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties agree as
follows:
1. Termination Without Cause Payment/COBRA. If the Employee’s employment with
the Company or the employing Company Affiliate, as applicable, is terminated by
the Company or the employing Company Affiliate other than “for cause” (as
defined below), then, subject to receiving a release reasonably satisfactory to
the Company relating to employment matters, the Company shall pay to Employee an
amount equal to six (6) months of base salary, using Employee’s highest monthly
base salary during the term of Employee’s employment (the “Termination Without
Cause Payment”). Notwithstanding the preceding sentence, however, the parties
acknowledge and agree that if (i) a material portion of the Company’s
e-prescribing line of business, the Company’s email encryption line of business,
or any other material line of business is sold, leased, licensed, or otherwise
transferred for value (the “Transfer”) to a non-Affiliate (“Non-Affiliated
Transferee”) and (ii) in connection with such Transfer (a) the Employee
separates from employment with the Company, regardless of whether or not the
Employee’s separation from employment actually results from a termination of
employment or resignation from employment, and (b) the Employee accepts
employment with the Non-Affiliated Transferee or one of its affiliates, then the
Employee shall be entitled to receive the Termination Without Cause Payment only
if the Company agrees in writing that the Employee is entitled to receive such
payment. The Termination Without Cause Payment shall be paid as provided in
Section 2 below.
     Furthermore, as an additional component of the Termination Without Cause
Payment, if Employee elects to continue health and/or dental insurance coverage
pursuant to the “COBRA” rules and regulations, then, subject to receiving a
release reasonably satisfactory to the Company relating to employment matters,
the Company shall pay the insurance premiums for a period of six months.
          For purposes of this Agreement, “for cause” shall mean any of the
following shall have occurred: (a) the conviction of Employee or a plea of nolo
contendere, or the substantial equivalent to either of the foregoing, of or with
respect to, any felony; (b) the intentional and continued failure by Employee to
substantially perform Employee’s employment duties, such intentional action
involving willful and deliberate malfeasance or gross negligence in the
performance of Employee’s duties (other than any such failure resulting from
Employee’s incapacity due to physical or mental illness), after written demand
for substantial performance is delivered by the Company or employing Company
Affiliate, as applicable, that specifically identifies the manner in which the
Company or the employing Company Affiliate, as applicable, believes Employee has
not substantially performed Employee’s duties and that is not cured within five
business days after the notice thereof to Employee; (c) the intentional engaging
by Employee in misconduct that is materially injurious to the Company or the
employing Company Affiliate, as applicable; (d) the commission of acts by
Employee of moral turpitude that are injurious to the Company or employing
Company Affiliate,
Rev date 02-18-08

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as applicable; (e) a breach by Employee of the “confidentiality and invention”
agreement between the Employee and the Company or employing Company Affiliate,
as applicable; (f) a breach by Employee of the provisions (typically paragraph
10) of the option agreement(s) between the Company and Employee (relating to
non-solicitation and non-competition); or (g) a breach by Employee of the
Company’s “Code of Conduct,” including the “Code of Ethics for Senior Officers,”
as currently in effect or as amended from time-to-time. To terminate Employee’s
employment other than “for cause,” the Company or the employing Company
Affiliate, as applicable, shall give Employee a written notice of termination
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee’s employment. Such notice shall be
effective upon receipt.
2. Mode of Payment; Acceptance. The Termination Without Cause Payment consisting
of the Employee’s base salary shall be paid in cash and in six monthly
increments (less applicable withholdings for taxes and other withholdings
required by applicable law and any amounts owed by Employee to Company or the
employing Company Affiliate, as applicable). Alternatively, the Company may, in
the Company’s sole discretion, make the payment by depositing in the Employee’s
stock brokerage account publicly registered shares of the Company’s common stock
valued at 104% of the Termination Without Cause Payment, using the closing price
of the Company’s common stock on the business day of deposit. The Company’s
obligation to pay the Termination Without Cause Payment shall not be mitigated
or offset by virtue of Employee obtaining new employment or failing to seek new
employment, although the Company may offset against the Termination Without
Cause Payment if Employee violates any post-employment covenants or legal
obligations binding on the Employee. Acceptance by Employee of the Termination
Without Cause Payment shall constitute a release by Employee of the Company and
all Company Affiliates and their respective shareholders, officers, employees,
directors and other agents from all claims arising out of, relating to, or in
connection with Employee’s employment with, or separation from employment with,
the Company or the employing Company Affiliate.
3. Miscellaneous.
     3.1 Dispute Resolution. Employee and the Company acknowledge that Employee
has, or may have, previously executed a Mutual Alternate Dispute Resolution
Agreement with the Company or a Company Affiliate. The provisions of such Mutual
Alternate Dispute Resolution Agreement shall govern any disputes arising under
this Agreement.
     3.2 Successors; Binding Agreement. This Agreement will be binding upon and
inure to the benefit of the parties hereto and any successors in interest to the
Company. This Agreement and all rights of Employee hereunder shall inure to the
benefit of and be enforceable by Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributes, devisees and
legatees.
     3.3. Entire Agreement; Modifications. This Agreement represents the entire
agreement of the parties relating to the subject matter hereof. Only an
instrument in writing executed by both parties may amend this Agreement. No
waiver by either party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
     3.4 Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
     3.5 Enforcement Fees. In the event of a dispute arising under this
Agreement, unless otherwise agreed by the parties in writing, each party shall
pay its own costs and expenses in resolving the dispute.
Rev date 02-18-08

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     3.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (excluding its conflict of laws
rules).
     IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.

            ZIX CORPORATION
      By:           Richard D. Spurr        Chairman and Chief Executive
Officer     

         
 
  EMPLOYEE    
 
       
 
 
 
   

Rev date 02-18-08

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