exv10w2






Execution Version




Exhibit 10.2




SEPARATION PAY AGREEMENT




     THIS SEPARATION PAY AGREEMENT (this “Agreement”), dated November 4, 2008, and effective as of
October 16, 2008, is between Zix Corporation, a Texas corporation (the “Company”), and Susan K.
Conner (“Employee”).



     WHEREAS, Employee is currently employed by the Company;



     WHEREAS, Employee is willing to continue working for the Company 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. Definitions.




     A. Acquiring Person. An “Acquiring Person” shall mean any person (including any
“person” as such term is used in Sections 13(d)(3) or 14(d)(2) of the Exchange Act that, together
with all Affiliates and Associates of such person, is the beneficial owner (as the term “beneficial
owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act)) of 10% or more of the outstanding Common Stock. The term “Acquiring Person” shall
not include the Company, any majority-owned subsidiary of the Company, any employee benefit plan of
the Company or a majority-owned subsidiary of the Company, or any person to the extent such person
is holding Common Stock for or pursuant to the terms of any such plan. For the purposes of this
Agreement, a person who becomes an Acquiring Person by acquiring beneficial ownership of 10% or
more of the Common Stock at any time after the date of this Agreement shall continue to be an
Acquiring Person whether or not such person continues to be the beneficial owner of 10% or more of
the outstanding Common Stock.



     B. Affiliate and Associate. “Affiliate” and “Associate” shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act in effect on the date of this Agreement.



     C. Cause. “Cause” shall mean any of the following shall have occurred: (1) 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’s Board of Directors (hereinafter, referred to as the “Board”) that
specifically identifies the manner in which the Board of Directors believes Employee has not
substantially performed Employee’s duties and that is not cured within five business days after
notice thereof by the Company to Employee; (2) the intentional engaging by Employee in misconduct
that is materially injurious to the Company; (3) 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;



 









 




(4) the commission of acts by Employee of moral turpitude that are injurious to the Company;
(5) a breach by Employee of the “confidentiality and invention” agreement between the Company and
Employee; (6) a breach by Employee of Employee’s obligations under this Agreement; or (7) a breach
by Employee of the Company’s “Code of Ethics for Senior Officers,” as currently in effect or
amended from time-to-time. For purposes of this definition, no act, or failure to act, on
Employee’s part shall be considered “intentional” unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in, or not opposed to, the
best interest of the Company.




     Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause
without (1) reasonable written notice to Employee, setting forth the reasons for the Company’s
intention to terminate for Cause; (2) an opportunity for Employee to be heard before the Board (or
an authorized representative thereof); and (3) delivery to Employee of a written notice of
termination from the Board (or its authorized representative) finding that, in the good faith
opinion of the Board (or its authorized representative), Employee engaged in the conduct set forth
above in clause (1) or (2) of the preceding paragraph or an event specified in clause (3), (4),
(5), (6) or (7) of the preceding paragraph has occurred.



     D. Change in Control. A “Change in Control” of the Company shall have occurred if any
of the following events shall occur during the term of Employee’s employment:




     (1) The Company is merged, consolidated or reorganized into or with another
corporation or other legal person, other than an Affiliate, and as a result of such merger,
consolidation or reorganization, the Company or its shareholders or Affiliates immediately
before such transaction beneficially own, immediately after or as a result of such
transaction, equity securities of the surviving or acquiring corporation or such
corporation’s parent corporation possessing less than 51% of the voting power of the
surviving or acquiring person or such person’s parent corporation;




     (2) The Company sells all or substantially all of its assets to any other corporation
or other legal person, other than an Affiliate, and as a result of such sale, the Company
or its shareholders or Affiliates immediately before such transaction beneficially own,
immediately after or as a result of such transaction, equity securities of the surviving or
acquiring corporation or such corporation’s parent corporation possessing less than 51% of
the voting power of the surviving or acquiring person or such person’s parent corporation
(provided that this provision shall not apply to a registered public offering of securities
of a subsidiary of the Company, which offering is not part of a transaction otherwise a
part of or related to a Change in Control);




     (3) Any Acquiring Person has become the beneficial owner (as the term “beneficial
owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities which, when added



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to any securities already owned by such person, would represent in the aggregate 35%
or more of the then outstanding securities of the Company which are entitled to vote to
elect any class of directors;




     (4) If, at any time, the Continuing Directors then serving on the Board cease for any
reason to constitute at least a majority thereof;




     (5) Any occurrence that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A or any successor rule or regulation promulgated under the
Exchange Act; or




     (6) Such other events that cause a Change in Control of the Company, as determined by
the Board in its sole discretion.



     E. Continuing Director. A “Continuing Director” shall mean a director of the Company
who (1) is not an Acquiring Person or an Affiliate or Associate thereof, or a representative of an
Acquiring Person or nominated for election by an Acquiring Person, and (2) was either (a) a member
of the Board on the date of this Agreement or (b) subsequently became a director of the Company and
whose initial election or initial nomination for election by the Company’s shareholders was
approved by a majority of the Continuing Directors then on the Board.



     F. Company. The “Company” shall mean Zix Corporation, a Texas corporation, or its
successors-in-interest, as the context requires.



     G. Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.


2. Termination Without Cause Payment. If the Company terminates Employee’s employment
other than for Cause, the Company shall pay to Employee an amount equal to nine (9) months
of Employee’s base salary, using Employee’s highest monthly base salary during the term of
Employee’s employment (the “Termination Without Cause Payment”), subject to receiving a release
reasonably satisfactory to the Company relating to employment matters.



3. Change In Control Payment. If Employee resigns from employment with the Company on or
before the 180th day following a Change in Control (with the day immediately following
the occurrence of the Change in Control being day “1”), the Company shall pay to Employee an amount
equal to nine (9) months of Employee’s base salary, using Employee’s highest monthly base salary
during the term of Employee’s employment (the “Change In Control Payment”), subject to receiving a
release reasonably satisfactory to the Company relating to employment matters.



4. Mode of Payment; Acceptance; No Overlapping Payments. The payments provided for in
Sections 2 and 3 shall, in the Company’s discretion, be paid either in nine (9) equal monthly cash
payments beginning within 30 days of the occurrence of the applicable event, or in a lump sum cash
payment paid within 30 days of the occurrence of the applicable


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event. Regardless of the manner in which the applicable payment is made, the Employee shall be
responsible for all applicable withholdings for taxes and other withholdings required by applicable
law and any amounts owed by Employee to Company, and Employee shall pay the same to the Company
promptly upon demand if not otherwise withheld. The Company’s obligation to make the payments
provided for in Sections 2 and 3 is absolute, and such payments shall not be mitigated or offset by
virtue of Employee obtaining new employment or failing to seek new employment. Acceptance by
Employee of the Termination Without Cause Payment (Section 2) or Change In Control Payment (Section
3), as applicable, shall constitute a release by Employee of the Company and its affiliates,
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 and its Affiliates.




     Employee shall be entitled to receive pursuant to this Agreement only one of either (a) one
Termination Without Cause Payment (Section 2) or (b) one Change In Control Payment (Section 3),
i.e., not more than one of any of such payments is payable pursuant to this Agreement.


5. Conflict of Interest. Without limiting the Employee’s obligations to comply with the
Company’s Code of Conduct and Code of Ethics, Employee agrees that during the term of Employee’s
employment, Employee shall not:




     A. Engage, either directly or indirectly, in any activity which may involve a conflict of
interest with the Company or its Affiliates (a “Conflict of Interest”), including ownership in any
supplier, contractor, subcontractor, customer or other entity with which the Company does business
(other than as a shareholder of less than one percent (1%) of a publicly-traded or private class of
equity ownership); and



     B. Employee shall not accept any material payment, service, loan, gift, trip, entertainment or
other favor from a supplier, contractor, subcontractor, customer or other entity with which the
Company does business, and Employee shall promptly inform the Board as to each offer received by
Employee to engage in any such activity.


Employee agrees to disclose to the Company any other facts of which Employee becomes aware that
might involve or give rise to a Conflict of Interest or potential Conflict of Interest.



6. Non-competition. Beginning the date that Employee separates from employment with the
Company and through the nine (9) month anniversary of such separation from employment date,
Employee shall not:




     A. Directly or indirectly, compete with the Company’s Email Encryption business or
e-Prescribing business or any other material line of business being conducted by the Company
(“Other Material Business”), in each case, as the Email Encryption line of business, e-Prescribing
line of business, or Other Material Business line of business is comprised as of the date of the
Employee’s separation from employment. For purposes of this Agreement, “Competition” shall
include, without limitation, engaging, directly or



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indirectly, in any business, whether as proprietor, partner, joint venturer, employee, agent,
officer, director, consultant, advisor, or holder of more than one percent (1%) of any publicly
traded or private class of equity ownership of a business enterprise, that is competitive with the
Company’s Email Encryption business or e-Prescribing business or Other Material Business;



     B. Directly or indirectly, solicit to do, or do, competing business with (i) any person that
is a customer of the Company’s Email Encryption business or e-Prescribing business or Other
Material Business as of the date of the Employee’s separation from employment, or (ii) any person
that has been a customer of the Company’s Email Encryption business or e-Prescribing business or
Other Material Business within the six months preceding such date; or



     C. Directly or indirectly, solicit to hire, or hire, any person that is an employee of the
Company (including its affiliated companies) as of the date of the Employee’s separation from
employment, or was an employee within the 3 month period preceding such date, except by way of
bona-fide general advertising.



     Although the Company and Employee have, in good faith, used their best efforts to make the
covenants of this Section reasonable in all pertinent respects, and it is not anticipated, nor is
it intended, by either party to this Agreement that any arbitrator or court will find it necessary
to reform any of such covenants to make it reasonable in all pertinent respects, the Company and
Employee understand and agree that if an arbitrator or court determines it necessary to reform any
of such covenants to make it reasonable in all pertinent respects, damages, if any, for a breach
of the non-competition covenant, as so reformed, shall be deemed to accrue to the Company as and
from the date of such a breach only and so far as the damages for such breach related to an action
that accrued within the scope of the covenant as so reformed.


7. Miscellaneous.




     A. Pending Litigation; Indemnification. During Employee’s employment and following
Employee’s separation from employment, with respect to any lawsuits currently pending or hereafter
asserted against the Company that pertain to (i) matters reasonably within the purview of
Employee’s job responsibilities while employed with the Company or (ii) matters for which the
Employee has particular knowledge, Employee agrees to cooperate reasonably in the defense of the
litigation thereof, including signing affidavits and making himself or herself available for
interviews, deposition preparation, deposition, and trial. If Employee is requested to assist
with litigation activities following Employee’s separation from employment other than those
litigation activities in which Employee would be required to participate as a named party, the
Company agrees to pay all reasonable documented out-of-pocket costs and lost income up to a maximum
of $1,000 per day incurred in connection with such activities. Without the Company’s prior consent,
Employee agrees not to comment publicly on any such litigation or any of the issues in the
litigation. Without the Company’s prior consent, Employee also agrees not to discuss any such
litigation, or cooperate, with the plaintiffs, their attorneys, or their representatives. The
Company acknowledges that the Employee



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has certain rights to indemnification as an officer of the Company as set forth in the
Company’s Restated Bylaws if the Employee is named as a party in litigation.



     B. Waiver. No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall any waiver
constitute a waiver of any continuing or succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right under this Agreement. No waiver shall be binding unless
executed in writing by the party making the waiver.



     C. Limitation of Rights. Nothing in this Agreement, except as specifically stated in
this Agreement, is intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the parties to it and their respective permitted successors and assigns
and other legal representatives.



     D. Remedies. Employee hereby agrees that a violation of the provisions of Section 5,
Section 6, or Section 7.A. would cause irreparable injury to the Company for which it would have no
adequate remedy at law. Accordingly, in the event of any such violation, the Company shall be
entitled to preliminary and other injunctive relief. Any such injunctive relief shall be in
addition to any other remedies to which the Company may be entitled at law or in equity, or
otherwise.



     E. Notice. Any consent, notice, demand, or other communication regarding any payment
required or permitted hereby must be in writing to be effective and shall be deemed to have been
received on the date delivered, if personally delivered, or the date received, if delivered
otherwise, addressed to the applicable party at the address for such party set forth below or at
such other address as such party may designate by like notice:


The Company:



Zix Corporation

2711 North Haskell Avenue

Suite 2200, LB 36

Dallas, Texas 75204-2960, Attn: General Counsel



If to Employee, to the address on file in the Company’s records.




     F. Entirety and Amendments. This Agreement embodies the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement is the separation pay
agreement referred to in that certain employment offer letter addressed to Employee, dated October
6, 2008.



     G. Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the parties to this Agreement and any successors-in-interest to the Company, but
otherwise, neither this Agreement nor any rights or obligations under this Agreement may be
assigned by Employee.



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     H. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas (excluding its conflict of laws rules) and
applicable federal law.



     I. Cumulative Remedies. No remedy in this Agreement conferred upon any party is
intended to be exclusive of any other benefit or remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other benefit or remedy given under this Agreement or
now or hereafter existing at law or in equity or by statute or otherwise. No single or partial
exercise by any party of any right, power, or remedy under this Agreement shall preclude any other
or further exercise thereof.



     J. Multiple Counterparts. This Agreement may be executed in a number of identical
counterparts, each of which constitute collectively, one agreement; but in making proof of this
Agreement, it shall not be necessary to produce or account for more than one counterpart.



     K. Descriptive Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not be deemed to limit, amplify, or modify the terms
of this Agreement, nor affect the meaning hereof.



     L. Arbitration. The Company and the Employee acknowledge that they have executed that
certain mutual alternate dispute resolution agreement, dated October 24, 2008 (the “Arbitration
Agreement”). The Company and the Employee agree that, except as otherwise provided in the
Arbitration Agreement, all claims, demands, causes of action, disputes, controversies, or other
matters in question (“Claims”), whether sounding in contract, tort, or otherwise and whether
provided by statute or common law, arising under this Agreement or the Employee’s employment (or
its termination) are governed by the Arbitration Agreement.



     IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year
first above written.



	 	 	 	 	 
	 	ZIX CORPORATION

 	 
	 	By:  	     /s/ Richard D. Spurr
 	 
	 	 	Richard D. Spurr 	 
	 	 	Chairman & Chief Executive Officer 	 
	 
	 	EMPLOYEE

 	 
	 	 	     /s/ Susan K. Conner
 	 
	 	 	Susan K. Conner 	 
	 	 	 
	 




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