**Exhibit 10.35****FORM OF SEPARATION PAY AGREEMENT**     THIS SEPARATION PAY AGREEMENT (this “Agreement”), entered into as of February 29, 2008, ismade 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, asapplicable, on an “at-will” basis;     NOW, THEREFORE, in consideration of the foregoing and of the respective covenants andagreements of the parties herein contained, the parties agree as follows:1. Termination Without Cause Payment/COBRA. If the Employee’s employment with the Companyor the employing Company Affiliate, as applicable, is terminated by the Company or the employingCompany Affiliate other than “for cause” (as defined below), then, subject to receiving a releasereasonably satisfactory to the Company relating to employment matters, the Company shall pay toEmployee an amount equal to six (6) months of base salary, using Employee’s highest monthly basesalary 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) amaterial portion of the Company’s e-prescribing line of business, the Company’s email encryptionline of business, or any other material line of business is sold, leased, licensed, or otherwisetransferred for value (the “Transfer”) to a non-Affiliate (“Non-Affiliated Transferee”) and (ii) inconnection 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 atermination of employment or resignation from employment, and (b) the Employee accepts employmentwith the Non-Affiliated Transferee or one of its affiliates, then the Employee shall be entitled toreceive the Termination Without Cause Payment only if the Company agrees in writing that theEmployee is entitled to receive such payment. The Termination Without Cause Payment shall be paidas provided in Section 2 below.     Furthermore, as an additional component of the Termination Without Cause Payment, if Employeeelects to continue health and/or dental insurance coverage pursuant to the “COBRA” rules andregulations, then, subject to receiving a release reasonably satisfactory to the Company relatingto 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 haveoccurred: (a) the conviction of Employee or a plea of *nolo contendere*, or the substantialequivalent to either of the foregoing, of or with respect to, any felony; (b) the intentional andcontinued failure by Employee to substantially perform Employee’s employment duties, suchintentional action involving willful and deliberate malfeasance or gross negligence in theperformance of Employee’s duties (other than any such failure resulting from Employee’s incapacitydue to physical or mental illness), after written demand for substantial performance is deliveredby the Company or employing Company Affiliate, as applicable, that specifically identifies themanner in which the Company or the employing Company Affiliate, as applicable, believes Employeehas not substantially performed Employee’s duties and that is not cured within five business daysafter the notice thereof to Employee; (c) the intentional engaging by Employee in misconduct thatis materially injurious to the Company or the employing Company Affiliate, as applicable; (d) thecommission of acts by Employee of moral turpitude that are injurious to the Company or employingCompany Affiliate,Rev date 02-18-08
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as applicable; (e) a breach by Employee of the “confidentiality and invention” agreementbetween the Employee and the Company or employing Company Affiliate, as applicable; (f) a breach byEmployee of the provisions (typically paragraph 10) of the option agreement(s) between the Companyand Employee (relating to non-solicitation and non-competition); or (g) a breach by Employee of theCompany’s “Code of Conduct,” including the “Code of Ethics for Senior Officers,” as currently ineffect 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 noticeof termination setting forth in reasonable detail the facts and circumstances claimed to provide abasis 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 theEmployee’s base salary shall be paid in cash and in six monthly increments (less applicablewithholdings for taxes and other withholdings required by applicable law and any amounts owed byEmployee to Company or the employing Company Affiliate, as applicable). Alternatively, the Companymay, in the Company’s sole discretion, make the payment by depositing in the Employee’s stockbrokerage account publicly registered shares of the Company’s common stock valued at 104% of theTermination Without Cause Payment, using the closing price of the Company’s common stock on thebusiness day of deposit. The Company’s obligation to pay the Termination Without Cause Paymentshall not be mitigated or offset by virtue of Employee obtaining new employment or failing to seeknew employment, although the Company may offset against the Termination Without Cause Payment ifEmployee 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 byEmployee 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 connectionwith Employee’s employment with, or separation from employment with, the Company or the employingCompany Affiliate.3. Miscellaneous.     3.1 Dispute Resolution. Employee and the Company acknowledge that Employee has, ormay have, previously executed a Mutual Alternate Dispute Resolution Agreement with the Company or aCompany Affiliate. The provisions of such Mutual Alternate Dispute Resolution Agreement shallgovern any disputes arising under this Agreement.     3.2 Successors; Binding Agreement. This Agreement will be binding upon and inure tothe benefit of the parties hereto and any successors in interest to the Company. This Agreementand all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee’spersonal or legal representatives, executors, administrators, successors, heirs, distributes,devisees and legatees.     3.3. Entire Agreement; Modifications. This Agreement represents the entire agreementof the parties relating to the subject matter hereof. Only an instrument in writing executed byboth 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 awaiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequenttime.     3.4 Validity. The invalidity or unenforceability of any provision or provisions ofthis Agreement shall not affect the validity or enforceability of any other provision of thisAgreement, which shall remain in full force and effect.     3.5 Enforcement Fees. In the event of a dispute arising under this Agreement, unlessotherwise agreed by the parties in writing, each party shall pay its own costs and expenses inresolving the dispute.Rev date 02-18-08
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     3.6 Governing Law. This Agreement shall be governed by and construed in accordancewith 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 yearfirst above written.      **ZIX CORPORATION**