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                                                                   EXHIBIT 10.16

                                                               Execution Version

                THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of December 1, 2003 by and between Zix Corporation, a Texas
corporation (the "Company"), and Dan S. Nutkis ("Employee").

                                    RECITALS

         A.       The Company desires to provide for the continuing employment
                  by Employee with the Company.

         B.       Employee is willing to continue to serve the Company on the
                  terms and conditions provided in this Agreement.

         C.       The Company and the Employee are parties to that certain
                  Severance Agreement, dated as of July 1, 2003, between the
                  Company and the Employee (the "Severance Agreement"), which is
                  intended to remain in effect following the execution of this
                  Agreement.

         THEREFORE, in consideration of the covenants and agreements contained
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
agree as follows:

         1.       Employment. The Company shall employ Employee, and Employee
accepts such employment, on the terms and conditions set forth in this
Agreement.

         2.       Term. Subject to Section 8 and the other terms and conditions
in this Agreement, the employment of Employee by the Company as provided in
Section 1 will be for a term commencing December 1, 2003 and expiring the close
of business on December 31, 2003.

         3.       Position and Duties. Employee shall serve as Vice President,
Strategy and Healthcare Services or in such other executive officer positions of
the Company with such duties as may be assigned to him from time-to-time by the
Company's President and Chief Executive Officer; provided, however, Employee
shall not be assigned any duty or position which will necessitate a change in
the location of his home (presently in Dallas, Texas). Employee shall devote
substantially all his working time and efforts to the business and affairs of
the Company.

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         4.A.     Compensation.

         Base. As compensation for Employee's employment under this Agreement,
through the month of December 2003, Company shall pay Employee his current
monthly salary of $16,666.67, and Employee shall be eligible for a calendar year
2003 bonus in accordance with the Company's current bonus plan for senior
executives. Beginning January 1, 2004, during the term of Employee's employment
under this Agreement the Company shall pay Employee a salary of $16,666.67 per
month, payable semi-monthly.

         Commission. For calendar year 2004, as additional compensation, the
Company shall pay Employee a commission on contracted billings attributable to
services provided to end-user customers by the Company's care delivery services
business as follows: 2% on billings up to $5 Million; 3% on billings between $5
Million and up to $10 Million; and 2% on billings over $10 Million; provided
that, the commissions will only be paid if the expenses of the Company's care
delivery services business do not exceed the budgeted amounts agreed to in
advance by the Employee and the Company. For calendar year 2004, the Company
will pay Employee a draw against commissions of $25,000 per quarter during the
term of Employee's employment with the Company on each of February 28, May 31,
August 31, and November 30, 2004 as long as the Company's care delivery services
business is on or under its year-to-date expense budget. Commissions earned in
excess of "draws" will be paid on the last day of the month following each
calendar quarter for the calendar quarter in question.

         For these purposes, the term "billings" means the right of the Company
to issue an invoice attributable to any of the following (a), (b), or (c)
situations:

                  (a)      The hardware, connectivity charges, or service fees
                           for up to one year of service for use of
                           e-prescribing devices that have actually been
                           deployed;

                  (b)      The hardware, connectivity charges, or service fees
                           for up to one year of service for use of
                           e-prescribing devices for which a customer has
                           executed a license and services agreement and the
                           device is about to be deployed;

                  (c)      Transaction or other fees, such as for compliance or
                           educational programs, that have been earned relating
                           to the use of e-prescribing devices that have
                           actually been deployed.

         The event that gives rise to the Company's right to issue an invoice is
referred to herein as a "billing event." Commissions will be payable with
respect to billing events that occur after December 1, 2003 and during the term
of Employee's employment under this Agreement, regardless of when the invoice is
actually issued by the Company. Draws against commissions, once paid, are
"non-recoverable," and Employee may retain these commissions regardless of the
actual amount of billings and expenses, except as provided in Section 4.B.

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         Stock Options. As additional compensation, the Company shall grant to
Employee an option to purchase 100,000 shares of the common stock of the
Company, with vesting to occur pro-rata and quarterly over a three year period.

         Nashville Home Loss Allowance Reimbursement. Company has paid to
Employee a home loss reimbursement allowance as set forth in the Company's
employment offer letter dated June 19, 2003. Employee shall be entitled to
retain this allowance except as provided in Section 4.B.

         4.B. Reimbusement of Certain Amounts.

         If Employee resigns employment from the Company for any reason other
than "Good Reason" (as such term is defined in the Severance Agreement) or the
Company terminates Employee's employment for "Cause" (as such term is defined in
the Severance Agreement), then Employee shall within 20 days of the effective
date of the employment termination pay to the Company in cash (a) the amount of
any non-recoverable draw commissions previously paid to Employee but not earned
and (b) $75,000, $50,000, and $25,000, respectively, of the home loss
reimbursement allowance if the effective date of the employment separation is
before January 31, 2004, April 30, 2004, and July 31, 2004, respectively.

         5.       Expenses and Services. During the term of Employee's
employment under this Agreement, Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by Employee by reason of his
employment, provided that such expenses are incurred and accounted for in
accordance with reasonable policies and procedures established by the Company
and in effect when the expenses are incurred. The Company shall furnish Employee
with office space, secretarial assistance, office supplies, office equipment,
and such other facilities and services as are suitable to Employee's position
and adequate for the performance of his duties.

         6.       Confidential Information. Employee recognizes and acknowledges
that Employee will have access to confidential information of the Company and
its affiliated companies, including, without limitation, customer information,
lists of suppliers and costs, information concerning the business and operations
of the Company and its affiliated companies, and proprietary data, information,
concepts and ideas (whether or not patentable or copyrightable) relating to the
business of the Company and its affiliated companies, as applicable. Employee
agrees not to disclose such confidential information, except as may be necessary
in the performance of Employee's duties, to any person, nor use such
confidential information in any way, unless Employee has received the written
consent of the Company or unless such confidential information becomes public
knowledge through no wrongful act of Employee. Upon termination of Employee's
employment for any reason, Employee shall promptly deliver to the Company all
drawings, manuals, letters, notebooks, customer lists, documents, records,
equipment, files, computer disks or tapes, reports or any other materials
relating to the business of the Company and its affiliated companies, and all
copies, that are in Employee's possession or under Employee's control.
"Confidential information" shall not include information that constitutes
general skills, knowledge, and experience acquired by Employee before and/or
during

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his employment with the Company. All intellectual property that is created,
conceived, developed, and the like by Employee during the term of Employee's
employment with the Company shall be owned by the Company. Employee will render
to the Company such assistance as may be reasonably necessary to evidence and
protect the ownership of its intellectual property. If such assistance is
required after Employee's separation from employment with the Company,
reasonable compensation will be paid to Employee for such assistance.

         7.       Rights under Certain Plans. During the term of Employee's
employment under this Agreement, Employee will be entitled to participate in the
insurance and employee benefit plans and programs maintained by the Company and
its affiliated companies applicable to officer employees on the same basis as
other officer employees of the Company or its affiliated companies, as
applicable, subject only to the possible substitution by or on behalf of the
Company or its affiliated companies of other plans or programs providing
substantially similar or increased benefits for Employee. Employee will also be
entitled to reasonable vacation time, with no reduction in compensation, in
keeping with Employee's duties and responsibilities to the Company.

         8.       Early Termination. Subject to Section 9, either Employee or
Company may terminate Employee's employment under this Agreement with or without
cause upon 20 days' written notice to the other.

         9.       Effects of Termination. If the Company terminates Employee's
employment for any reason other than "Cause" (as such term is defined in the
Severance Agreement) or if Employee terminates his employment for "Good Reason"
(as such term is defined in the Severance Agreement), then Employee shall be
entitled to receive (a) the severance payments provided for in the Severance
Agreement, payable in cash or the Company's common stock, in the Company's
discretion, and (b) any commission payments he has earned pursuant to the
provisions of Section 4 hereof that have not yet been paid.

         10.      Non-competition. Employee agrees and covenants that Employee
will not, during the term hereof and for a period of 12 months after Employee
ceases to be employed by the Company:

                  (A) compete, directly or indirectly, with the Company's
         e-prescribing or care delivery services business, which is currently
         being conducted by the Company's affiliated company PocketScript, Inc.
         For purposes of this Agreement, "Competition" shall include, without
         limitation, engaging in any business, whether as proprietor, partner,
         joint venturer, employee, agent, officer, or holder of more than five
         percent (5%) of any class of equity ownership of a business enterprise,
         that is competitive with the Company's e-prescribing or care delivery
         services business.

                  (B) solicit to do, or do, competing business with any
         then-current customer of the Company's e-prescribing or care delivery
         services business or any person that has

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         been a customer within the six months preceding the date of Employee's
         separation from employment with the Company.

                  (C) solicit to hire, or hire, any then-current employee of the
         Company (including its affiliated companies), except by way of general
         advertising.

         Although the Company and Employee have, in good faith, used their best
efforts to make the non-competition covenants 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
non-competition covenant 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 non-competition covenant in order to make
it reasonable in all pertinent respects, damages, if any, for a breach of the
non-competition covenant, as so reformed, will 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 which accrued within the scope of the
non-competition covenant as so reformed.

         11.      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.

         12.      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.

         13.      Remedies. Employee hereby agrees that a violation of the
provisions of Section 6 or 10 hereof 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.

         14.      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 2850, LB 36

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                                Dallas, Texas 75204-2911, Attn:  General Counsel

                                Employee:

                                Daniel S. Nutkis
                                2711 North Haskell Avenue
                                Suite 2850, LB 36
                                Dallas, Texas 75204-2911

         15.      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. The parties have also entered into the Severance Agreement and
option agreements, dated January 22, 2003 and January 30, 2002, which shall
continue to be effective in accordance with their terms.

         16.      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.

         17.      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.

         18.      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.

         19.      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.

         20.      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.

         21.      Arbitration. The Company and the Employee agree to the
resolution by binding arbitration of all claims, demands, causes of action,
disputes, controversies, or other matters in question ("Claims") arising out of
this Agreement or the Employee's employment (or its termination), whether
sounding in contract, tort, or otherwise and whether provided by statute or
common law, that the Company or its affiliated companies may have against the
Employee or that the Employee may have against the Company or any and its
affiliated companies, or any

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benefit plans of the Company or any of its affiliated companies, or any
fiduciaries, administrators, and affiliates of any of such benefit plans, or
their respective officers, directors, employees, or agents in their capacity as
such. This agreement to arbitrate shall not limit the Company's or the
Employee's right to seek equitable relief, including, but not limited to,
injunctive relief and specific performance in a court of competent jurisdiction.
Claims covered by this agreement to arbitrate include, but are not limited to,
claims by the Employee for breach of this Agreement, wrongful termination,
discrimination (based on age, race, sex, disability, national origin, or other
factor), and retaliation. The only Claims otherwise within the definition of
Claims that are not covered by this Section 21 are: (1) any administrative
actions that the Employee is permitted to pursue under applicable law that are
not precluded by virtue of the Employee having entered into this Section 21; (2)
any Claim by the Employee for workers' compensation benefits or unemployment
compensation benefits; or (3) any Claim by the Employee for benefits under a
Company or affiliated company pension or benefit plan that provides its own
non-judicial dispute resolution procedure.

         Claims shall be submitted to arbitration and finally settled under the
Employment Dispute Resolution Rules of the American Arbitration Association
("AAA") in effect at the time the written notice of the Claim is received. An
arbitrator shall be selected in the manner provided for in the Employment
Dispute Resolution Rules of the AAA, except that the parties agree that the
arbitrator shall be an attorney licensed in the state where the arbitration is
being conducted. If any party refuses to honor its obligations under this
agreement to arbitrate, the other party may compel arbitration in either federal
or state court. The arbitrator will have exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability, or
formation of this agreement to arbitrate, including, but not limited to, any
claim that all or part of this Agreement is void or voidable and any claim that
an issue is not subject to arbitration. The arbitration will be held in Dallas
County, Texas. The arbitrator shall issue a written decision that identifies the
factual findings and principles of law upon which any award is based. The award
and findings of such arbitrator shall be conclusive and binding upon the
parties. Any and all of the arbitrator's orders, decisions, and awards may be
enforceable in, and judgment upon any award rendered by the arbitrator may be
confirmed and entered by, any federal or state court having jurisdiction. The
Company shall pay all costs and expenses of its advisors and expert witnesses,
and Employee shall pay all costs and expenses of his advisors and expert
witnesses. The costs and expenses of the arbitration proceedings will be paid by
the non-prevailing party or as the arbitrator otherwise determines. Discovery
will be permitted to the extent directed by the arbitrator. EMPLOYEE UNDERSTANDS
THAT BY AGREEING TO SUBMIT CLAIMS TO ARBITRATION, HE GIVES UP THE RIGHT TO SEEK
A TRIAL BY COURT OR JURY AND THE RIGHT TO APPEAL A COURT OR JURY DECISION AND
FORGOES ANY AND ALL RELATED RIGHTS HE MAY OTHERWISE HAVE UNDER FEDERAL AND STATE
LAWS.

                                   Signatures

         To evidence the binding effect of the covenants and agreements
described above, the parties to this Agreement have executed this Agreement on
the dates set forth below, to be effective as of the date first above written.

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                                    THE COMPANY:

                                    ZIX CORPORATION

                                    /s/ John A. Ryan
                                    ---------------------------------------
                                    John A. Ryan
                                    President and Chief Executive Officer

                                    Date: 12-10-03

                                    EMPLOYEE:

                                    /s/ Daniel S. Nutkis
                                    --------------------------------------
                                    Daniel S. Nutkis

                                    Date: 12-10-03

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