exv4w2



 





EXECUTION VERSION




Exhibit 4.2




ZIX CORPORATION




SECURED PROMISSORY NOTE




	 	 	 	 	 
	Principal Amount:
	 	 	 	 
	U. S. $1,600,000

	 	Date: February 22, 2007
	 	 






     Zix Corporation, a Texas corporation (the “Company”), for value received, hereby
promises to pay to sanofi-aventis U.S. Inc., a Delaware corporation and a successor-in-interest to
Aventis Inc., a corporation formed under the laws of the state of Pennsylvania, or its assigns (the
“Holder”), in lawful money of the United States of America, the principal amount of One
Million Six Hundred Thousand U.S. Dollars ($1,600,000), together with, and without necessity for
demand for, interest on the principal amount from time to time outstanding hereunder payable on
each Interest Payment Date (as defined below) in each year from the above date until paid at a rate
of 5 percent (5%) (the “Stated Interest Rate”) per annum.



     As a material inducement to the Holder, this Note is being issued pursuant to the terms of
that certain Agreement of even date herewith (the “Agreement”), and this Note is secured by an
unconditional and irrevocable letter of credit issued for the benefit of the Holder.



     1. Definitions. Unless otherwise defined in this Note, the following capitalized terms shall
have the following respective meanings when used herein:



     “Affiliate” shall have the meaning set forth in Rule 12b-2 of the rules and regulations
promulgated under the Securities Exchange Act of 1934, as amended; provided, however, that for
purposes of this Agreement, the Holder and its Affiliates, on the one hand, and the Company and its
Affiliates, on the other hand, shall not be deemed to be “Affiliates” of each other.



     “Business Day” means any day except a Saturday, Sunday or other day on which the banks in the
State of New York or the State of Texas are required or authorized by law to be closed.



     “Interest Payment Date” means the second Business Day following the end of each calendar
quarter.



     “Note” means this Secured Promissory Note.



     “Person” shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a governmental authority.



 









 





     2. Payments of Principal and Interest



          The Company shall pay on each Interest Payment Date, beginning on April 2, 2008 and on each
successive Interest Payment Date, a principal amount equal to Two Hundred Thousand U.S. Dollars
($200,000).




          All interest shall be due and payable by the Company on each Interest Payment Date on the
principal amount from time to time outstanding at the rate per annum, first noted above. Interest
shall be computed on the basis of a year of 365 days and paid for the actual number of days
elapsed. For purposes of clarity, the first Interest Payment Date shall be April 3, 2007, it being
agreed, however, that interest shall not begin to accrue until from and after March 15, 2007.




          The Company, in its sole option, may elect to prepay this Note in cash in whole or in part in
amounts of not less than $200,000 (and in $100,000 increments thereafter) (and in the event that
the amount outstanding under this Note is less than $200,000, the Company may prepay such lesser
amount) without premium or penalty (the “Prepayment”). To prepay this Note in cash, the
Company shall give to the Holder notice (the “Prepayment Notice”) of the Prepayment. Each
Prepayment Notice shall state (i) the date of the Prepayment (the “Prepayment Date” which
date shall be at least three (3) days following the Prepayment Notice, or if such date is not a
Business Day, the next Business Day thereafter) and (ii) the amount of principal to be prepaid by
the Company on the Prepayment Date (the “Prepayment Amount”). The Company shall pay or
cause to be paid to the Holder the Prepayment Amount in cash on the Prepayment Date along with any
interest due on the Prepayment Amount. The Prepayment Amount shall be applied against the next
immediately succeeding principal payment due and owing.




          All payments hereunder shall be made in immediately available funds as the Holder may
designate from time to time in writing to the Company.




     3. Covenants of the Company.



     (a) The Company shall duly and punctually pay or perform or cause to be paid or performed the
principal of and interest on this Note, at the respective times and in the manner provided for
herein.



     (b) Unless the Company and Holder otherwise agree in writing, the Company shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated herein, whenever
enacted, now or at any time hereinafter in force, or which may affect the covenants of performance
in this Note.



     (c) The Company will give the Holder notice, within ten Business Days of the occurrence
thereof, of any event that, with the giving of notice or passage of time or both, would reasonably
be expected to become an Event of Default.



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     4. Events of Default; Remedies.



     (a) “Event of Default”, wherever used herein, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):



     (1) failure to pay any principal or interest amount due and owing on this Note when due and
continuance of such default or breach for a period of one (1) Business Day after such notice has
been given (in any manner set forth in Section 6(h) hereof) to the Company by the Holder a written
notice specifying such default or breach and stating that such notice is a “Notice of Default”
hereunder; or



     (2) failure to perform, or breach, of any representation, warranty, covenant or agreement of
the Company (other than a default in the performance, or breach, of any representation, warranty,
covenant or agreement of the Company which is specifically dealt with elsewhere in this Section
4(a)) contained in this Note or the Agreement, and continuance of such default or breach for a
period of thirty (30) days after there has been given, by registered or certified mail or overnight
carrier, to the Company by the Holder a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or



     (3) the entry by a court having competent jurisdiction in the premises of (A) a decree or
order for relief in respect of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under any applicable federal or state
law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any material part of its property, or ordering the winding up
or liquidation of its affairs, and the continuance of any such decree or order for relief unstayed
and in effect for a period of sixty consecutive days; or



     (4) the commencement by the Company of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by the
Company to the entry of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against
the Company, or to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of any material part of
the property of the Company, which appointment or possession continues unstayed and in effect for a
period of sixty (60) consecutive days, or the making by the Company of an assignment for the
benefit of creditors, or the admission by the Company in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company in furtherance of
any such action; or



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     (5) the acceleration by the holder thereof of indebtedness of the Company for borrowed money
in the aggregate principal amount in excess of One Million dollars and no cents ($1,000,000.00).



     (b) If an Event of Default (other than an Event of Default specified in Sections 4(a)(4))
occurs and is continuing, then in every such case the Holder may declare the principal amount of
this Note, all interest accrued hereon and all fees and expenses to be due and payable immediately,
by a notice in writing to the Company, and upon any such declaration such principal, all accrued
interest and all fees and expenses thereon shall become immediately due and payable without
presentment, demand or other notice of any kind. If an Event of Default specified in Section
4(a)(4) occurs and is continuing with respect to the Company, the principal, accrued interest and
all fees and expenses thereon, this Note shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, each of which is expressly waived by the
Company.



     (c) Upon and during the continuance of an Event of Default, all amounts due and owing
hereunder shall accrue interest at a rate equal to the Stated Interest Rate plus two percent (2%)
per annum for all principal, interest, fees and expenses for only so long as such Event of Default
is continuing.



     (d) The Company agrees to pay, promptly upon demand all of the reasonable costs and expenses
of the holder of this Note, including (but not limited to) attorneys’ fees and expenses, incurred
in connection with the enforcement of this Note and the obligations of the Company hereunder.



     5. Consolidation, Merger, Etc.



     In the event the Company shall consolidate with or merge into another Person or convey,
transfer, sell or lease all or substantially all of its properties and assets to any Person, the
Person formed by such consolidation or into which the Company is merged or to which such
conveyance, transfer, sale or lease is made shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Holder in form satisfactory to the Holder, the due and
punctual payment of the principal of and any interest on this Note and the performance or
observance of every covenant of this Note on the part of the Company to be performed or observed.



     6. Miscellaneous.



     (a) No provision of this Note shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest, if any, on this Note at the
times, places and rate, as herein prescribed.



     (b) The Company waives presentment, demand, protest and notice of dishonor and all other
demands and notices in connection with the payment and enforcement of this Note, except as
otherwise provided herein. No waiver on the part of any party hereto in exercising any right
hereunder shall operate as a waiver of such right or any other right.



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     (c) This Note may not be reoffered, sold, assigned, transferred, pledged, encumbered or
otherwise disposed of (a “Transfer”), except: (i) by the Holder to an Affiliate which has
agreed in writing to be bound by and subject to the terms and conditions of this Note; or (ii) to
any successor of Holder (whether through merger, sale of stock or assets or otherwise).



     (d) Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Note, and in the case of loss, theft or destruction, receipt of
indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company
of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Note, if
mutilated, the Company will deliver a new Note of like tenor and dated as of such cancellation, in
lieu of such Note.



     (e) Neither this Note nor any term hereof may be amended or waived except in writing executed
by the Company and the Holder.



     (f) Nothing in this Note shall require the Company to pay interest at a rate in excess of the
maximum rate permitted by applicable law. Any interest payable hereunder or under any other
instrument relating to the indebtedness evidenced hereby that is in excess of the maximum rate
permitted by applicable law shall, in the event of acceleration of maturity, late payment,
prepayment, or otherwise, be applied to a reduction of the unrepaid indebtedness evidenced hereby
and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of
such unrepaid indebtedness, such excess shall be refunded to the Company. To the extent not
prohibited by applicable law, determination of the maximum rate permitted by applicable law shall
at all times be made by amortizing, prorating, allocating and spreading in equal parts during the
full term of the indebtedness evidenced hereby, all interest at any time contracted for, charged or
received from the Company in connection with the indebtedness evidenced hereby, so that the actual
rate of interest on account of such indebtedness is uniform throughout the term thereof.



     (g) This Note shall be deemed to have been made in the State of New York and shall be governed
by, and construed in accordance with, the laws of the State of New York.



     (h) All notices and other communications required or permitted hereunder will be in writing
and, unless otherwise provided in this Note, will be deemed to have been duly given (a) when
delivered in person or when dispatched by electronic facsimile transfer (transmission receipt
confirmed and confirmed in writing by mail simultaneously dispatached), (b) three business days
after having been sent by registered or certified mail (return receipt requested), or (c) one
business day after having been dispatched by a nationally recognized overnight courier service each
to the appropriate party at the address specified below:


If to Sanofi-Aventis, to:



sanofi-aventis U.S. Inc.

55 Corporate Drive

Bridgewater, New Jersey 08807

Mail Stop: 55A-320B

Attention: Treasury Department

Facsimile No.: (908) 243-7405




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With a copy to:

General Counsel’s office

Mail Stop: 55A-525A

Facsimile No.: (908) 927-8636



If to Company, to:



Zix Corporation

2711 North Haskell Avenue

Suite 2200, LB 36

Dallas, Texas 75204

Attention: Legal Department

Facsimile No.: (214) 515-7385




     or to such other address or addresses as any such party may from time to time designate as to
itself by like notice.


[Remainder of page intentionally left blank.]




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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.




Dated: February 22, 2007



	 	 	 	 	 
	 	ZIX CORPORATION

 	 
	 	By:  	/s/ Ronald A. Woessner
 	 
	 	 	Name:  	Ronald A. Woessner 	 
	 	 	Title:  	Senior Vice President 	 
	 



	 	 	 	 	 
	 

	 	 	 	 
	ACKNOWLEDGED:	 	 
	SANOFI-AVENTIS U.S., INC.
	 
	 	 	 	 
	By:

	 	/s/ Laurent Gilhodes	 	 
	 

	 	 	 	 
	 

	 	Name: Laurent Gilhodes	 	 
	 

	 	Title: Vice President & Controller	 	 






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