exv10w3



 





Exhibit 10.3




ZIX CORPORATION 2004 STOCK OPTION PLAN

(Amended and Restated as of June 7, 2007)




Section 1. Purpose




     The purpose of the Zix Corporation 2004 Stock Option Plan (hereinafter called the
“Plan”) is to advance the interests of Zix Corporation (hereinafter called the “Company”)
by strengthening the ability of the Company to attract, on its behalf and on behalf of its
Subsidiaries (as hereinafter defined), and retain personnel of high caliber through
encouraging a sense of proprietorship by means of stock ownership.



Section 2. Definitions




     “Board of Directors” shall mean the Board of Directors of the Company.



     “Code” shall mean the Internal Revenue Code of 1986, as amended from time-to-time.



     “Committee” shall mean a committee of the Board of Directors comprised of at least two
directors or the entire Board of Directors, as the case may be. Members of the Committee
shall be selected by the Board of Directors. To the extent necessary to comply with the
requirements of applicable rules and regulations, the Committee shall consist of two or
more “independent” directors. Also, if the requirements of §162(m) of the Code are intended
to be met, the Committee shall consist of two or more “outside directors” within the
meaning of § 162(m) of the Code.



     “Common Stock” shall mean the common stock of the Company, par value $.01 per share.



     “Date of Grant” shall mean the date on which an Option is granted pursuant to this
Plan.



     “Designated Beneficiary” shall mean the beneficiary designated by the Optionee, in a
manner determined by the Committee, to receive amounts due the Optionee in the event of the
Optionee’s death. In the absence of an effective designation by the Optionee, Designated
Beneficiary shall mean the Optionee’s estate.



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



     “Fair Market Value” shall mean the closing sale price (or average of the quoted
closing bid and asked prices if there is no closing sale price reported) of the Common
Stock on the date specified as reported by the Nasdaq Stock Market, or by the principal
national stock exchange on which the Common Stock is then listed. If there is no reported
price information for such date, the Fair Market Value will be determined by the reported
price information for Common Stock on the day nearest preceding such date.



     “Incentive Stock Option” shall mean a stock option granted under Section 6 that is
intended to meet the requirements of Section 422 of the Code (or any successor provision).



     “Nonqualified Stock Option” shall mean a stock option granted under Section 6 that is
not intended to be an Incentive Stock Option.



     “Option” shall mean an Incentive Stock Option or a Nonqualified Stock Option.



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     “Optionee” shall mean the person to whom an option is granted under the Plan or who
has obtained the right to exercise an option in accordance with the provisions of the Plan.



     “Subsidiary” shall mean any now existing or hereafter organized or acquired
corporation or other entity of which fifty percent (50%) or more of the issued and
outstanding voting stock or other economic interest is owned or controlled directly or
indirectly by the Company or through one or more Subsidiaries of the Company.



Section 3. Administration




     The Plan shall be administered by the Committee. The Committee shall have sole and
complete authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time-to-time deem advisable,
and to construe, interpret and administer the terms and provisions of the Plan and the
agreements thereunder. The determinations and interpretations made by the Committee are
final and conclusive.



Section 4. Eligibility




     All employees and non-employee consultants and advisors (other than non-employee
directors) of the Company or any Subsidiary who, in the opinion of the Committee, have the
capacity for contributing in a substantial measure to the successful performance of the
Company are eligible to receive Options under the Plan.



Section 5. Maximum Amount Available for Options




     (a) The maximum number of shares of Common Stock in respect of which Options may be
made under the Plan shall be a total of 5.0 million shares of Common Stock. Of that amount,
no participant may be granted Options for more than 2.4 million shares of Common Stock in
the aggregate during the term of the Plan. No more than 2.4 million shares of Common Stock
in the aggregate during the term of the Plan may be issued pursuant to Incentive Stock
Options. Shares of Common Stock may be made available from the authorized but unissued
shares of the Company or from shares reacquired by the Company, including shares purchased
in the open market. In the event that an Option is terminated unexercised as to any shares
of Common Stock covered thereby, such shares shall thereafter be again available for award
pursuant to the Plan.



     (b) In the event that the Committee shall determine that any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares, warrants or rights offering to purchase Common Stock at a price
substantially below fair market value, or other similar corporate event affects the Common
Stock such that an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under the Plan, then the Committee shall adjust
appropriately any or all of (1) the number and kind of shares which thereafter may be
optioned under the Plan and (2) the grant, exercise or conversion price and/or number of
shares with respect to the Options and/or, if deemed appropriate, make provision for cash
payment to an Optionee; provided, however, that the number of shares subject to any Option
shall always be a whole number.



Section 6. Stock Options




     (a) Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the persons to whom Options shall be granted, the number of shares
to be covered by each Option, the option price therefor and the conditions and limitations
applicable to the exercise of the Option.



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     (b) The Committee shall have the authority to grant Incentive Stock Options, or to
grant Nonqualified Stock Options, or to grant both types of options. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be subject to and
comply with the Code and relevant regulations. Incentive Stock Options to purchase Common
Stock may be granted to such employees of the Company or its Subsidiaries (including any
director who is also an employee of the Company or one of its Subsidiaries) as shall be
determined by the Committee. Nonqualified Stock Options to purchase Common Stock may be
granted to such eligible participants as shall be determined by the Committee. Neither the
Company nor any of its Subsidiaries or any of their respective directors, officers or
employees, shall be liable to any Optionee or other person if it is determined for any
reason by the Internal Revenue Service or any court having jurisdiction that any Incentive
Stock Option granted hereunder does not qualify for tax treatment as an Incentive Stock
Option under the then-applicable provisions of the Code.



     (c) The Committee shall, in its discretion, establish the exercise price at the time
each Option is granted, which in the case of Nonqualified Stock Options, shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant, or in the case
of grants of Incentive Stock Options, shall not be less than 100% of the Fair Market Value
of the Common Stock on the Date of Grant or such greater amount as may be prescribed by the
Code.



     (d) Exercise




     (1) Each Option shall be exercisable at such times and subject to such terms
and conditions as the Committee may, in its sole discretion, specify in the
applicable grant or thereafter; provided, however, that in no event may any Option
granted hereunder be exercisable after the expiration of ten years from the Date of
Grant. The Committee may impose such conditions with respect to the exercise of
Options, including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.




     (2) No shares shall be delivered pursuant to any exercise of an Option until
payment in full of the option price therefore is received by the Company. Such
payment may be made in cash, or its equivalent, or, if and to the extent permitted
by the Committee or under the terms of the applicable agreement, by exchanging shares of Common Stock owned by the Optionee (which are not the subject of any
pledge or other security interest), or by a combination of the foregoing, provided
that the combined value of all cash and cash equivalents and the Fair Market Value
of any such Common Stock so tendered to the Company, valued as of the date of such
tender, is at least equal to such option price.



     If the shares to be purchased are covered by an effective registration statement under
the Securities Act of 1933, as amended, any Option may be exercised by a broker-dealer
acting on behalf of an Optionee if (a) the broker-dealer has received from the Optionee
instructions signed by the Optionee requesting the Company to deliver the shares of Common
Stock subject to such Option to the broker-dealer on behalf of the Optionee and specifying
the account into which such shares should be deposited, (b) adequate provision has been
made with respect to the payment of any withholding taxes due upon such exercise, and (c)
the broker-dealer and the Optionee have otherwise complied with Section 220.3(e)(4) of
Regulation T, 12 CFR Part 220, or any successor provision.




     (3) The Company, in its sole discretion, may lend money to an Optionee,
guarantee a loan to an Optionee or otherwise assist an Optionee to obtain the cash
necessary to exercise all or any portion of an Option granted under the Plan.



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     (4) The Company shall not be required to issue any fractional shares upon the
exercise of any Options granted under this Plan. No Optionee nor an Optionee’s legal
representatives, legatees or distributees, as the case may be, will be, or will be
deemed to be, a holder of any shares subject to an Option unless and until said
Option has been exercised and the purchase price of the shares in respect of which
the Option has been exercised has been paid. Unless otherwise provided in the
agreement applicable thereto, an Option shall not be exercisable except by the
Optionee or by a person who has obtained the Optionee’s rights under the Option by
will or under the laws of descent and distribution or pursuant to a “qualified
domestic relations order” as defined in the Code.



     (e) No Incentive Stock Options shall be exercisable (a) more than five years (or such
other period of time as from time-to-time provided in the then-applicable provisions of the
Code governing Incentive Stock Options) after the Date of Grant with respect to an Optionee
who owns ten percent or more of the outstanding Common Stock (within the meaning of the
Code), and (b) more than ten years after the Date of Grant with respect to all other
Optionees. No Nonqualified Stock Options shall be exercisable more than ten years after the
Date of Grant.



     (f) In no event shall any Option granted to any employee who is classified as
“non-exempt” under the Fair Labor Standards Act of 1938 be exercisable less than six months
after the Date of Grant, except in the case of death, disability, retirement, a change in
control or other circumstances permitted by regulations under the Worker Economic
Opportunity Act (“WEOA”). Grants to such non-exempt employees shall not be based on
pre-established performance criteria, except as specifically permitted under the WEOA. Non-exempt employees shall be notified of the terms of their Options in accordance with the
WEOA, and exercise of such Options must be voluntary.



Section 7. General Provisions




     (a) The Company and its Subsidiaries shall have the right to deduct from all amounts
paid to an Optionee in cash (whether under the Plan or otherwise) any taxes required by law
to be withheld in respect of Option exercises under the Plan. However, if permitted by the
Committee or under the terms of the applicable agreement, the Optionee may pay all or any
portion of the taxes required to be withheld by the Company or its Subsidiaries or paid by
the Optionee with respect to such Common Stock by electing to have the Company or its
Subsidiaries withhold shares of Common Stock, or by delivering previously owned shares of
Common Stock, having a Fair Market Value equal to the amount required to be withheld or
paid. The Optionee must make the foregoing election on or before the date that the amount
of tax to be withheld is determined. Any such election is irrevocable and subject to
disapproval by the Committee. If the Optionee is subject to the provisions of Section 16(b)
of the Exchange Act, then any such election shall be subject to the restrictions imposed by
applicable rules and regulations.



     (b) Each Option hereunder shall be evidenced in writing, delivered to the Optionee,
and shall specify the terms and conditions thereof and any rules applicable thereto,
including, but not limited to, the effect on such Option of the death, retirement,
disability or other termination of employment of the Optionee and the effect thereon, if
any, of a change in control of the Company.



     (c) Unless otherwise provided in the agreement applicable thereto, no Option shall be
assignable or transferable except by will or under the laws of descent and distribution or
pursuant to a “qualified domestic relations order” as defined in the Code, and no right or
interest of any Optionee shall be subject to any lien, obligation or liability of the
Optionee.



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     (d) No person shall have any claim or right to be granted an Option. Further, the
Company and its Subsidiaries expressly reserve the right at any time to terminate the
employment of an Optionee free from any liability, or any claim under the Plan, except as
provided in any agreement entered into with respect to an Option. Neither the Plan nor any
Option granted hereunder is intended to confer upon any Optionee any rights with respect to
continuance of employment or other utilization of his or her services by the Company or by
a Subsidiary, nor to interfere in any way with his or her right or that of his or her
employer to terminate his or her employment or other services at any time (subject to the
terms of any applicable contract). The conditions to apply to the exercise of an Option in
the event an Optionee ceases to be employed by the Company or a Subsidiary for any reason
shall be determined by the Committee or specified in the written agreement evidencing the
Option.



     (e) Subject to the provisions of the applicable Option, no Optionee or Designated
Beneficiary shall have any rights as a stockholder with respect to any shares of Common
Stock to be distributed under the Plan until he or she has become the holder thereof.



     (f) The validity, construction, interpretation, administration and effect of the Plan
and of its rules and regulations, and rights relating to the Plan, shall be determined
solely in accordance with the laws of the State of Texas (without giving effect to its
conflicts of laws rules) and, to the extent applicable, federal law.



     (g) The Plan was originally effective on May 6, 2004. No Options may be granted under
the Plan after May 6, 2014; however, all previous Options issued that have not expired
under their original terms or will not then expire at the time the Plan expires will remain
outstanding.



     (h) Restrictions on Issuance of Shares




     (1) The Company shall not be obligated to sell or issue any Shares upon the
exercise of any Option granted under the Plan unless: (i) the shares pertaining to
such Option have been registered under applicable federal and state securities laws
or are exempt from such registration; (ii) the prior approval of such sale or
issuance has been obtained from any state regulatory body having jurisdiction; and
(iii) in the event the Common Stock has been listed on any exchange, the shares
pertaining to such Option have been duly listed on such exchange in accordance with
the procedure specified therefor. The Company shall be under no obligation to effect
or obtain any listing, registration, qualification, consent or approval with respect
to shares pertaining to any Option granted under the Plan. If the shares to be
issued upon the exercise of any Option granted under the Plan are intended to be
issued by the Company in reliance upon the exemptions from the registration
requirements of applicable federal and state securities laws, the recipient of the
Option, if so requested by the Company, shall furnish to the Company such evidence
and representations, including an opinion of counsel, satisfactory to it, as the
Company may reasonably request.




     (2) The Company shall not be liable for damages due to a delay in the delivery
or issuance of any stock certificates for any reason whatsoever, including, but not
limited to, a delay caused by listing, registration or qualification of the shares
of Common Stock pertaining to any Option granted under the Plan upon any securities
exchange or under any federal or state law or the effecting or obtaining of any
consent or approval of any governmental body.



     (i) The Board of Directors or Committee may impose such other restrictions on the
ownership and transfer of shares issued pursuant to the Plan as it deems desirable; any
such restrictions shall be set forth in the applicable agreement.



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     (j) The Board of Directors may amend, abandon, suspend or terminate the Plan or any
portion thereof at any time in such respects as it may deem advisable in its sole
discretion, provided that no amendment shall be made without stockholder approval
(including an increase in the maximum number of shares of Common Stock in respect of which
Options may be made under the Plan) if such stockholder approval is necessary to comply
with any tax or regulatory requirement or exchange listing rules, including for these
purposes any approval requirement that is a prerequisite for exemptive relief under Section
16(b) of the Exchange Act.



     (k) To preserve an Optionee’s rights under an Option in the event of a change in
control of the Company or an Optionee’s separation from employment, the Committee in its
discretion may, at the time an Option is made or any time thereafter, take one or more of
the following actions: (i) provide for the acceleration of any time period relating to the
exercise of the Option, (ii) provide for the purchase of the Option, upon the Optionee’s
request, for an amount of cash or other property that could have been received upon the
exercise or realization of the Option had the Option been currently exercisable or payable,
(iii) adjust the terms of the Option in a manner determined by the Committee to reflect the
change in control or to prevent the imposition of an excise tax under section 280G(b) of
the Code, (iv) cause the Option to be assumed, or new rights substituted therefor, by
another entity, or (v) make such other provision as the Committee may consider equitable
and in the best interests of the Company.



     (l) Without limiting the generality of the authority given the Committee elsewhere in the
Plan, the Committee in its discretion has the authority to amend an outstanding option from
time-to-time, as follows:




	 	(i)	 	to provide for the acceleration of the vesting of the Option in the event of a
change in control of the Company or in connection with an Optionee’s separation from
employment with the Company or other separation from service with the Company;
	 
	 	(ii)	 	to provide for one or more stated periods of time to exercise vested options
following the Optionee’s separation from employment with the Company or other
separation from service with the Company; or
	 
	 	(iii)	 	to provide for such other changes as the Committee may, in its discretion,
determine to be appropriate.





     IN WITNESS WHEREOF, the Company has caused this Plan to be amended and restated and
executed on its behalf as of the 7th day of June 2007.



	 	 	 	 	 
	 	 	Zix Corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Ronald A. Woessner
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	SVP
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:
	 	6/7/07
	 

	 	 	 	 






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