Exhibit 10.31
FORM OF AMENDED AND RESTATED SEPARATION PAY AGREEMENT
     THIS AMENDED AND RESTATED SEPARATION PAY AGREEMENT (this “Agreement”),
entered into as of                     , is made and entered into between Zix
Corporation, a Texas corporation (the “Company”), and
                    (“Employee”) and amends, restates, and supersedes that
certain separation pay agreement between the parties, dated
                    .
     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 within 60 days of the employment
separation date as described in Section 2, 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 Company
involuntarily terminates the Employee’s employment with the Company or the
employing Company Affiliate, and (b) the Employee accepts employment with the
Non-Affiliated Transferee or one of its affiliates, then the Employee shall
forfeit the Termination Without Cause Payment unless the Company agrees in
writing as of the date of the acceptance of such employment 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
within 60 days of the employment separation date as described in Section 2, the
Company shall pay the insurance premiums directly to the insurer on Employee’s
behalf for a period of six months.

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          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, 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) with payments commencing no later
than 60 days following such termination, subject to the Company’s receipt of a
release in a form reasonably satisfactory to the Company relating to employment
matters. The Company will provide the form release to Employee within 5 days of
the date of the event giving rise to the payment. If the Company does not
receive such release within this 60 day period, the Employee shall forfeit the
Termination Without Cause Payment and COBRA premium payments described in
Section 1. 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.

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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.
     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).
     3.7 409A Compliance. This Agreement, as amended, is intended to be exempt
from and/or comply with the requirements (and not otherwise be subject to the
interest and penalty taxes of) section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and the regulations and other guidance issued
thereunder, and shall be interpreted in a manner consistent with that intent.
Notwithstanding the foregoing, in the event there is a failure under this
Agreement to comply with section 409A of the Code, the Company shall have the
discretion to accelerate any payment hereunder of “nonqualified deferred
compensation” (within the meaning of section 409A of the Code), but only to the
extent of the amount required to be included in income as a result of such
failure.

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     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 & CEO   

             
 
  Date:        
 
           
 
                EMPLOYEE    
 
           
 
                     
 
           
 
  Date:        
 
           

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