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Employee’s employment duties such intentional actions involving willful and deliberate malfeasanceor gross negligence in the performance of Employee’s duties (other than any such failure resultingfrom Employee’s incapacity due to physical or mental illness), after written demand for substantialperformance is delivered by the Company or an Affiliate, as applicable, that specificallyidentifies the manner (such demand not to be unreasonable) in which the Company or the Affiliate,as applicable, believes Employee has not substantially performed Employee’s duties; or (2) thewillful engaging by Employee in misconduct that is materially injurious to the Company or employingAffiliate, as applicable; or (3) the conviction of Employee of any felony or crime of moralturpitude that is injurious to the Company; or (4) Employee attains the mandatory retirement agespecified in any applicable retirement plan of the Company or any successor-in-interest (but forpurposes of this clause (4), any such mandatory retirement age shall not be less than age 65). Forpurposes of this definition no act, or failure to act, on Employee’s part shall be considered“willful” unless done, or omitted to be done, by Employee not in good faith and without reasonablebelief that Employee’s action or omission was in the best interest of the Company or the applicableAffiliate(s), or both, as applicable. Notwithstanding the foregoing, Employee shall not be deemedto have been terminated for Cause without the following procedures having been adhered to: (a)reasonable written notice to Employee, setting forth the reasons for the Company’s or theAffiliate’s intention to terminate for Cause; (b) an opportunity for Employee, together withEmployee’s counsel, to be heard before the Zix Corporation Board of Directors; and (c) delivery toEmployee of a written Notice of Termination finding that, in the good faith opinion of the ZixCorporation Board of Directors, Employee was guilty of conduct set forth above in clause (1), (2)or (3) above, and specifying the particulars thereof in detail.     1.4 “Change in Control” shall mean the occurrence of any of the following events:     (i) The Company is merged, consolidated or reorganized into or with another corporationor other legal person, other than an Affiliate, and as a result of such merger,consolidation or reorganization less than 51% of the combined voting power to elect eachclass of directors of the then outstanding securities of the remaining corporation or legalperson or its ultimate parent immediately after such transaction is owned, directly orindirectly, in the aggregate by persons who were shareholders, directly or indirectly, ofthe Company immediately prior to such merger, consolidation, or reorganization;     (ii) The Company sells all or substantially all of its assets to any other corporationor other legal person, other than an Affiliate, and as a result of such sale less than 51%of the combined voting power to elect each class of directors of the then outstandingsecurities of such corporation or legal person or its ultimate parent immediately after suchtransaction is owned, directly or indirectly, in the aggregate by persons who wereshareholders, directly or indirectly, of the Company immediately prior to such sale;     (iii) Any Acquiring Person has become the beneficial owner (as the term “beneficialowner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under theExchange Act) of securities which when added to any securities already owned by such personwould represent in the aggregate 35% or more of the then outstanding securities of theCompany which are entitled to vote to elect any class of directors;
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     (iv) If at any time, the Continuing Directors then serving on the Board of Directors ofthe Company cease for any reason to constitute at least a majority thereof;     (v) Any occurrence that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A or any successor rule or regulation promulgated under theExchange Act; or     (vi) Such other events that cause a change in control of the Company, as determined bythe Zix Corporation Board of Directors in its sole discretion.     1.5 “Change in Control Payment” shall mean two times the higher of (i) Employee’s annual basesalary in effect on the date of the Change in Control or (ii) Employee’s highest annual base salaryduring the term of Employee’s employment with the Company.     1.6 A “Continuing Director” shall mean a director of the Company who (i) is not an AcquiringPerson or an Affiliate or Associate thereof, or a representative of an Acquiring Person ornominated for election by an Acquiring Person, and (ii) was either a member of the Board ofDirectors of the Company on the date of this Agreement or subsequently became a director of theCompany and whose initial election or initial nomination for election by the Company’s shareholderswas approved by a majority of the Continuing Directors then on the Board of Directors of theCompany.     1.7 “Disability” shall mean that the Employee is unable to engage in any substantial gainfulactivity by reason of any medically determinable physical or mental impairment that can be expectedto result in death or can be expected to last for a continuous period of not less than 12 months.     1.8 “Good Reason” shall mean the occurrence of any of the following events:     (a) any material diminution in Employee’s duties that has not been cured within thirtydays after notice of such noncompliance has been given (within 30 days of the allegedmaterial diminution) by Employee to the Company or the employing Affiliate, as applicable. Achange in title or duties will not be considered to be a “material diminution” in duties if,after such change, Employee is an officer of the Company; Employee’s reporting relationshipdoes not change or Employee reports to the Company’s Chief Executive Officer or ChiefOperating Officer; and a substantial portion of Employee’s duties are in Employee’s field ofprofessional training or experience.     (b) a reduction of more than 10% in Employee’s base salary (with the 10% beingcumulative over the term of Employee’s employment), but any percentage reduction that isactually made is made against the Employee’s then current base salary).EXAMPLE: assume Employee’s base salary is $100,000. The Company or Affiliate, as applicable,is permitted to reduce Employee’s base salary by up to 10% ($10,000) without giving Employee“Good Reason” to terminate employment. Any further salary reductions
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would constitute “GoodReason” to terminate employment.     (c) any purported termination for Cause of Employee’s employment that is not effectedpursuant to the procedural requirements of Subsection 1.3.     (d) the location of Employee’s place of employment is moved more than 50 miles from itscurrent location.     1.9 “Notice of Termination” shall mean a notice that indicates the specific reasons fortermination and shall set forth in reasonable detail the facts and circumstances claimed to providea basis for termination of Employee’s employment.     1.10 “Person” shall mean an individual, a corporation, a partnership, an association, ajoint-stock company, a trust, an incorporated organization or a government or political subdivisionthereof.     1.11 “Severance Payment” shall mean an amount equal to 150% of Employee’s highest annual basesalary during the term of Employee’s employment with the Company; provided that, if theevent giving rise to the Severance Payment occurs on or before the 180th day following a Change inControl (with the day immediately following the day of the occurrence of the Change in Controlbeing day “1”), then the amount of the Severance Payment shall be the greater of (i) the amountprovided for in this sentence or (ii) the amount provided for in Section 3 (as if Employee hadresigned from employment pursuant to Section 3).2. Severance Payment. From and after the date hereof, upon the occurrence of any of thefollowing events the Company will pay to Employee the Severance Payment (in accordance with Section4) and Employee’s options to acquire the Company’s stock shall become vested in full (regardless ofwhether the options were granted before or are granted after the date of this Agreement): (a) Employee’s employment with the Company and its Affiliates is terminated by theCompany or the employing Affiliate, as applicable, other than for Cause;  (b) Employee terminates his employment for Good Reason, subject to the notice andcure provisions noted below; or  (c) Employee incurs a Disability.     To terminate Employee’s employment other than for Cause pursuant to 2(a), the Company or theemploying Affiliate, as applicable, shall give Employee written notice of such termination. Suchnotice shall be effective 90 days following the Employee’s receipt thereof.     Notwithstanding the preceding provisions, Employee shall not be permitted to resignemployment for a Good Reason event until (i) Employee has provided to the Company notice of theexistence of the good reason condition within 90 days of its initial existence and (ii) the Companyhas not remedied the good reason condition within a period of 30 days from the
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Company’s receipt ofsuch notice. Following the satisfaction of (i) and (ii), Employee mustexercise his right to resign for Good Reason within 30 days (i.e., such Good Reasonresignation must occur within 150 days of the occurrence of the good reason event), with the dayimmediately following the existence of the good reason condition being day “1.”     Employee shall not be entitled to more than one Severance Payment pursuant to this Agreement.3. Change in Control Payment. If Employee resigns from employment (subject to the noticeand cure provisions noted below) with the Company and its Affiliates following a Change in Controlfor a “Change in Control Good Reason,” as such term is defined below, the Company shall pay toEmployee the Change in Control Payment (in accordance with Section 4) and Employee’s options toacquire the Company’s stock shall become vested in full (regardless of whether the options weregranted before or are granted after the date of this Agreement).     A “Change in Control Good Reason” shall mean (i) a material diminution in the Employee’sauthority, duties or responsibilities, (ii) a material diminution in the Employee’s base salary,(iii) a material change in the geographic location at which the Employee must perform services,(iv) a material diminution in the authority, duties, or responsibilities of the supervisor to whomthe Employee is required to report, including a requirement that the Employee report to a corporateofficer or employee instead of the board of directors (or similar governing body), (v) a materialdiminution in the budget over which the Employee retains authority, or (vi) any other event thatconstitutes a material breach by the Company of the agreement under which the Employee providesservices.     Notwithstanding the preceding provisions, Employee shall not be permitted to resignemployment for a “Change in Control Good Reason” until (a) Employee has provided to the Companynotice of the existence of the good reason condition within 90 days of its initial existence and(b) the Company has not remedied the good reason condition within a period of 30 days from theCompany’s receipt of such notice. Following the satisfaction of (a) and (b), Employee mustexercise his right to resign for a Change in Control Good Reason within 60 days (i.e., such Changein Control Good Reason resignation must occur within 180 days of the occurrence of the good reasonevent), with the day immediately following the existence of the good reason condition being day“1.”4. Mode of Payment. The Severance Payment or Change in Control Payment, as applicable,shall be paid in a lump sum (less applicable withholdings for taxes and other withholdings requiredby applicable law) as soon as practicable but no later than 60 days of the occurrence of theapplicable event, subject to the Company’s receipt of a release in a form reasonably satisfactoryto the Company relating to employment matters. The Company will provide the form release toEmployee within 5 days of the date of the event giving rise to the payment. In the event thatEmployee fails to execute a release within this 60 day period, he shall forfeit the SeverancePayment or Change in Control Payment, as applicable. The Company’s obligation to pay the SeverancePayment and the Change in Control Payment is absolute, and such payments shall not be mitigated oroffset by virtue of Employee obtaining new employment or failing to seek new employment.
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     Employee shall be entitled to receive pursuant to this Agreement only one of the followingpayments (a) the Severance Payment (Section 2), or (b) the Change in Control Payment (Section 3)(i.e., not more than one of any such payments is payable pursuant to this Agreement).5. General.     5.1 Dispute Resolution. The provisions of Exhibit A attached hereto shallgovern any disputes arising under this Agreement. Without limiting the generality of theforegoing, if a dispute arises between the parties as to whether or not Employee has “Good Reason”or “Change in Control Good Reason” to terminate employment, Employee is not required to resign fromemployment with the Company or an Affiliate, as applicable, to “perfect” Employee’s right to make aclaim for the Severance Payment or Change In Control Payment, as applicable, although Employee mayresign from employment if Employee chooses. Such disputes shall be resolved in accordance with theprovisions of Exhibit A attached hereto. If the dispute is resolved in Employee’s favor(regardless of whether pursuant to a legally binding settlement of such dispute, the Company’sconcession that the amount is payable or the Company being required to make such payment pursuantto a final and nonappealable judgment or other binding decision) and it is determined that Employeehas “Good Reason” or “Change in Control Good Reason” to terminate employment, then Employee will berequired to terminate employment within 30 days thereof. Payment of the Severance Payment orChange In Control Payment shall be made as soon as practicable following Employee’s termination ofemployment but no later than 60 days thereafter, subject to the Company’s receipt of a release in aform reasonably satisfactory to the Company relating to employment matters. In the event thatEmployee fails to execute a release within this 60 day period, he shall forfeit the SeverancePayment or Change in Control Payment, as applicable.     5.2 Confidential Information. Employee and the Company acknowledge that Employee has,or may have, previously executed a Confidentiality and Invention Agreement which is incorporatedherein by reference and shall survive Employee’s separation from employment in accordance with itsterms.     5.3 Notice. All notices and other communications provided for in this Agreement shallbe in writing and shall be deemed to have been received on the date delivered, if personallydelivered, or the date received after being mailed by United States registered or certified mail,return receipt requested, postage prepaid, addressed to the applicable party at the address forsuch party set forth below or at such other address as such party may designate by like notice:
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     Employee:Ronald A. Woessner