Document:

zixi-ex41_791.htm

 

Exhibit 4.1

 

DESCRIPTION OF SECURITIES 

As of December 31, 2019, Zix Corporation (“we”, or “Zix”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): $0.01 par value common stock.

Our authorized capital stock consists of:

175,000,000 shares of common stock; and

10,000,000 shares of preferred stock, issuable in series.

Each authorized share of common stock has a par value of $0.01.  Each authorized share of preferred stock has a par value of $1.00.  

 

In the discussion that follows, we have summarized the material provisions of our restated articles of incorporation, as amended (our “Articles of Incorporation”), the certificate of designations with respect to the Series A Preferred Stock (the “Series A Certificate of Designations”) and our Bylaws relating to our capital stock.  This discussion is qualified in its entirety by reference to our Articles of Incorporation, the Series A Certificate of Designations and our second amended and restated bylaws (our “Bylaws”).  You should read the provisions of our Articles of Incorporation, the Series A Certificate of Designations and our Bylaws as currently in effect for more details regarding the provisions described below and for other provisions that may be important to you.  

 

Common Stock

Each share of our common stock has one vote in the election of each director and on all other matters voted on generally by our shareholders.  No share of common stock has any cumulative voting rights. Our Board may grant holders of preferred stock, in the resolutions creating the series of preferred stock, the right to vote on the election of directors or any matters or questions affecting us.

The presence at a meeting of our shareholders, in person or by proxy, of holders of a majority of the outstanding shares entitled to vote as of the record date for that meeting will constitute a quorum.  Directors will be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at a meeting of shareholders at which a quorum is present, i.e., the person or persons receiving the greatest number of votes cast will be elected to the directorship or directorships being filled at the meetings. Directors may be removed, with or without cause, by the affirmative vote of the holders of a majority of the issued and outstanding shares entitled to vote in the election of directors.  Otherwise, shareholder approvals generally require the affirmative vote of the holders of at least a majority of the shares entitled to vote on a matter and represented in person or by proxy at the meeting of shareholders at which quorum is present.  Any matter as to which the Texas Business Organizations Code, as amended (“TBOC”), our Articles of Incorporation or our Bylaws specify that approval requires the affirmative vote of holders of greater than a majority of the shares entitled to vote on that matter and represented in person or by proxy at a meeting of shareholders at which quorum is present, at least the portion specified of the shares entitled to vote on that matter and represented in person or by proxy at a meeting of shareholders at which quorum is present will be deemed to be the act of the shareholders on that matter.

Holders of common stock will be entitled to dividends in such amounts and at such times as our Board in its discretion may declare out of funds legally available for the payment of dividends.  We generally do not pay cash dividends, and we intend to retain future earnings to provide funds for use in the operation and expansion of our business. In addition, the payment of dividends on the common stock may be limited by obligations we may have to holders of any preferred stock or by the provisions of the terms of the loan agreements, indentures and other agreements we may enter into from time to time.

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If we liquidate or dissolve our business, the holders of our common stock will share ratably in all assets available for distribution to stockholders after our creditors are paid in full and the holders of all series of our outstanding preferred stock, if any, receive their liquidation preferences in full.

The common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase fund.  All issued and outstanding shares of our common stock are fully paid and nonassessable.  

Our Common Stock is listed on The Nasdaq Stock Market (“Nasdaq”) under the symbol “ZIXI.”  As of March 4, 2020 there were 55,641,885 common shares outstanding.

The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.

Series A Preferred Stock

General

In January 2019, under the terms of our Articles of Incorporation, our Board authorized up to 100,914 shares of preferred stock as our Series A Convertible Preferred Stock, par value $1.00 per share (“Series A Preferred Stock”) and 35,086 shares of preferred stock as our Series B Convertible Preferred Stock, par value $1.00 per share (“Series B Preferred Stock”). On February 20, 2019, we issued to an investment fund managed by True Wind Capital (the “Investor”) 64,914 shares of Series A Preferred Stock and 35,086 shares of Series B Preferred Stock pursuant to an investment agreement (the “Investment Agreement”). On June 5, 2019, we received shareholder approval in accordance with Nasdaq Listing Rule 5635 and our Bylaws for (i) the conversion of our outstanding shares of Series B Preferred Stock into shares of our Series A Preferred Stock and (ii) the issuance of shares of our common stock in connection with any future conversion or redemption of our Series A Preferred Stock into common stock, or any other issuances of common stock to the Investor pursuant to the terms of the Investment Agreement that, absent such approval, would violate Nasdaq Listing Rule 5635.  On June 6, 2019, in connection with the receipt of the approval of shareholders, the 35,086 shares of Series B Preferred Stock held by the Investor automatically converted into 35,292 shares of Series A Preferred Stock based on the accrued value of such share of Series B Preferred Stock at the time of conversion. We currently do not have any shares of Series B Preferred Stock outstanding. As of March 4, 2020, there were 100,914 shares of our Series A Preferred Stock outstanding.

The following description of the terms of the Series A Preferred Stock is qualified in its entirety by reference to the terms of the Series A Certificate of Designations, a copy of which has been included as an exhibit to our Current Report on Form 8-K filed on February 20, 2019 and is incorporated herein by this reference.

Rank

The Series A Preferred Stock ranks: 

	
 
	
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on a parity basis with each other class or series of our capital stock, the terms of which expressly provide that such class or series ranks on a parity with the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding-up of Zix (“Parity Stock”) and Series B Preferred Stock is Parity Stock;

	
 
	
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junior to each other class or series of our capital stock, the terms of which expressly provide that such class or series ranks senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding-up of Zix; and

	
 
	
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senior to all classes of our common stock and each other class or series of our capital stock, the terms of which do not expressly provide that such class or series ranks on a parity basis with or senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding-up of Zix.

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Accretion; Dividends; No Stated Maturity

The Series A Preferred Stock initially had a Stated Value (as defined in the Series A Certificate of Designations) of $1,000 per share. From the Issue Date, the Stated Value per share of Series A Preferred Stock accretes at a fixed rate of 8.0% per annum, compounded quarterly (the “Rate of Accretion”). The Series A Preferred Stock is also entitled to receive any dividends paid in respect of the common stock on an as-converted basis.

The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless converted into common stock or repurchased or redeemed by Zix.

Voting Rights

The holders of the Series A Preferred Stock (the “Series A Holders”) are entitled to vote, together with the holders of common stock, on an as-converted basis on all matters submitted to a vote of the holders of common stock, and as a separate class on all matters relating to the Series A Preferred Stock. 

Liquidation Rights

The Series A Preferred Stock has a liquidation preference equal to the greater of (i) the Stated Value per share as it has accreted as of such date (the “Accreted Value”) and (ii) the amount such holder would have received if the Series A Preferred Stock had converted into common stock immediately prior to such liquidation.

Optional Redemption

At any time after the fourth anniversary of the Issue Date, Zix may redeem the Series A Preferred Stock for an amount per share of Series A Preferred Stock equal to the Accreted Value per share of the Series A Preferred Stock to be redeemed as of the applicable redemption date multiplied by 1.50.

Holder Conversion Right

At any time, each Series A Holder may elect to convert each share of such Series A Holder’s then-outstanding Series A Preferred Stock into the number of shares of common stock equal to the quotient of (A) the Accreted Value with respect to such share on the conversion date divided by (B) the Conversion Rate as of the applicable conversion date plus cash in lieu of fractional shares.

Change of Control

Upon a change of control (as defined in the Series A Certificate of Designations), Zix is required to redeem the Series A Preferred Stock at a price per share of Series A Preferred Stock in cash equal to the greater of (i) the Series A Change of Control Redemption Price (as defined below) of such share of Series A Preferred Stock and (ii) (A) the amount of cash such Series A Holder would have received plus (B) the fair market value of any other assets in each case had such Series A Holder, immediately prior to such change of control, converted such shares of Series A Preferred Stock into shares of common stock. The “Series A Change of Control Redemption Price” per share of Series A Preferred Stock is the product of the Accreted Value of such share as of the date of determination multiplied by (1) 1.30 (if the change of control occurs before the first anniversary of the Issue Date), (2) 1.35 (if the change of control occurs on or after the first anniversary of the Issue Date but before the second anniversary of the Issue Date), (3) 1.40 (if the change of control occurs on or after the second anniversary of the Issue Date but before the third anniversary of the Issue Date), (4) 1.45 (if the change of control occurs on or after the third anniversary of the Issue Date but before the fourth anniversary of the Issue Date) and (5) 1.50 (if the change of control occurs on or after the fourth anniversary of the Issue Date). 

Consent Rights

So long as any shares of Series A Preferred Stock are outstanding, the consent of the holders of a majority of the then-outstanding shares of Series A Preferred Stock will be necessary for Zix to effect (1) any amendment, alteration or 

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repeal to our Articles of Incorporation or the Series A Certificate of Designations in a manner that would adversely affect the rights, preferences, privileges or power of the Series A Preferred Stock; (2) any amendment or alteration to our Articles of Incorporation or any other action to authorize or create, or increase the number of authorized or issued shares of, or any securities convertible into shares of, or reclassify any security into, or issue any parity stock or senior stock as to dividend or liquidation rights, (3) the issuance of shares of Series A Preferred Stock; (4) any action that would cause Zix to cease to be treated as a domestic corporation for U.S. federal income tax purposes; or (5) the incurrence of indebtedness that would cause Zix to exceed a specified leverage ratio.

Additional Investor Consent Rights; Board Designations

Pursuant to the Investment Agreement, for so long as any shares of the Series A Preferred Stock are outstanding, the consent of the Investor will be necessary for Zix to effect, subject to certain exceptions, any issuance by Zix of debt securities convertible into any capital stock. So long as the Investor beneficially owns shares of the Series A Preferred Stock and/or Common Stock issuable upon conversion of the Series A Preferred Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding Common Stock, the consent of the Investor will be necessary for Zix to effect any acquisition by Zix, directly or indirectly, in excess of $10 million where such acquired entity is outside Zix’s principal line of business.

Pursuant to the Investment Agreement, until such time as the Investor no longer beneficially owns shares of Series A Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 10% of the then-outstanding Common Stock, the Investor has the right to appoint two designees (the “Investor Designees”) to the Board.  At such time as the Investor no longer beneficially owns shares of Series A Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 10% of the then-outstanding Common Stock, but continues to beneficially own shares of Series A Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding Common Stock, then the Investor will have the right to appoint one Investor Designee to the Board. At such time as the Investor no longer beneficially owns shares of Series A Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding Common Stock, then the Investor will no longer have a right to appoint an Investor Designee to the Board.

 

 

4Exhibit

Exhibit 4(g)
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Invacare Corporation (the “Company”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: its common shares, without par value (“common shares”).
The Company’s Amended and Restated Articles of Incorporation, as amended (the “Articles”) authorize the issuance of 162,300,000 shares consisting of 300,000 serial preferred shares, without par value (“serial preferred shares”), 150,000,000 common shares and 12,000,000 Class B common shares, without par value (“Class B common shares”). The following is a summary of the terms and provisions of the Company’s common shares. Certain terms of the Company’s Class B common shares and serial preferred shares that may impact the rights of holders of the common shares also are summarized below.
The rights of the holders of the common shares are governed by the Ohio Revised Code, the Company’s Amended and Restated Articles of Incorporation, as amended (the “Articles”) and the Company’s Amended and Restated Code of Regulations, as amended (the “Regulations”), each of which is filed as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part, and each of which may be amended from time to time. The following summary is qualified by reference to the Articles, the Regulations and applicable provisions of Ohio law.
Common Shares
The holders of the common shares are entitled to one vote for each share on all matters upon which shareholders have the right to vote. The common shares do not have any preemptive rights, are not subject to redemption and do not have the benefit of any sinking fund. Holders of the common shares are entitled to receive such dividends as the Company’s Board of Directors from time to time may declare out of funds legally available therefor. In the event of the Company’s liquidation, holders of the common shares are entitled to share in any of the Company’s assets remaining after satisfaction in full of the Company’s liabilities and satisfaction of such dividend and liquidation preferences as may be possessed by the holders of other classes of securities the Company may have outstanding in the future.
The Class B common shares and common shares are identical in all material respects except that: 
		
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	Class B common shares entitle the holders thereof to ten votes per share on all matters,

		
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	Common shares entitle the holders thereof to receive cash dividends, if and when declared by the Directors, at a rate of at least 110% of cash dividends paid on the Class B common shares and 

		
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	the Class B common shares are subject to certain restrictions on transfer. 

The Class B common shares are not transferable except in certain very limited instances to family members and trusts, corporations, charitable foundations for the benefit of or controlled by family members and to employees who are participants in certain employee benefit plans (collectively, “Permitted Transferees”). These restrictions on transfer may be removed by the Board of Directors if the Board determines that the restrictions may have a material adverse effect on the liquidity, marketability or market value of the outstanding common shares. 
The Class B common shares are fully convertible at any time into common shares on a share-for-share basis and will automatically be converted into common shares upon any purported transfer to non-Permitted Transferees and at the election of the Board of Directors in certain specified circumstances. Once a Class B common share has been converted into a common share, such common share cannot thereafter be re-converted into a Class B common share. Because the Class B common shares will at all times be convertible into common shares on a share-for-share basis, holders of Class B common shares will be able to sell the equity interest represented by their Class B common shares to persons who are not Permitted Transferees by converting such shares into common shares. Additional Class B common shares can be issued only in connection with stock dividends on and stock splits of the Class B common shares. 

Except as set forth below (and as provided by law and in the Articles as then in effect), all matters submitted to a vote of shareholders will be voted on by holders of common shares and Class B common shares voting together as a single class. The affirmative votes of the holders of a majority of the outstanding common shares and of the Class B common shares, each voting separately as a class, are required to authorize: 
		
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	additional Class B common shares, 

		
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	modification or repeal of the limitations described above on issuances of Class B common shares, and 

		
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	other amendments to the Articles (other than increases in the number of authorized common shares) that alter or change the designations or powers or the preferences, qualifications, limitations, restrictions or the relative or special rights of either the Class B common shares or the common shares so as to affect them adversely, provided, that an increase in the number of authorized common shares shall not be deemed to affect the holders of common shares.

Except with respect to cash dividends, the common shares and the Class B common shares rank equally and have equal rights per share with respect to all distributions, including distributions upon liquidation and consideration to be received upon a merger or consolidation or a sale of all or substantially all of the Company’s assets. In the case of stock dividends or stock splits, however, only common shares can be distributed in respect of common shares and only Class B common shares can be distributed in respect of Class B common shares. 
Neither the common shares nor the Class B common shares can be split, divided or combined unless all outstanding shares of the other such class of shares are correspondingly split, divided or combined. 
Because of the restrictions on transfer of the Class B common shares, over time Class B common shares having ten votes have been and will continue to be (unless the Directors determine to remove such restrictions) converted into common shares having one vote. Over time, this has substantially diminished the relative voting power of the holders of Class B common shares.
All Directors are elected at each Annual Meeting of Shareholders to hold office for a term of one year. The Articles provide for the elimination of any right of shareholders to cumulate votes for candidates in the election of Directors. 
Serial Preferred Shares 
The Board of Directors has the authority, without action by the shareholders, to designate and issue serial preferred shares and to designate the rights, preferences and privileges of each series of serial preferred shares, which may be greater than the rights attached to the common shares and Class B common shares. It is not possible to state the actual effect of the issuance of any serial preferred shares on the rights of holders of common shares and Class B common shares until the Board of Directors determines the specific rights attached to those serial preferred shares. The effects of issuing serial preferred shares could include one or more of the following: 
		
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	restricting dividends on the common shares and Class B common shares; 

		
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	diluting the voting power of the common shares and Class B common shares; 

		
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	impairing the liquidation rights of the common shares and Class B common shares; or 

		
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	delaying or preventing a change of control of the Company. 

There are currently no serial preferred shares outstanding. The Board of Directors previously established a series of serial preferred shares designated as Series A participating serial preferred shares in connection with a shareholder rights agreement that the Company previously maintained; however, that shareholder rights agreement expired and was terminated in July 2015. 
Anti-Takeover Provisions of Ohio Law 
As an Ohio corporation, the Company is subject to certain provisions of Ohio law which may discourage or render more difficult an unsolicited takeover. Among these are provisions that: 

		
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	prohibit certain mergers, sales of assets, issuances or purchases of securities, liquidation or dissolution, or reclassifications of the then outstanding shares of an Ohio corporation involving certain holders of stock representing 10% or more of the voting power (other than present shareholders), unless such transactions are either approved by the Directors in office prior to the 10% shareholder becoming such or involve a 10% shareholder which has been such for at least three years and certain minimum price and form of consideration requirements are met; and 

		
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	provide Ohio corporations a cause of action to recover profits realized under certain circumstances by persons engaged in “greenmailing” or otherwise engaged in the sale of securities of a corporation within 18 months of proposing to acquire such corporation. 

In addition, pursuant to Section 1701.831 of the Ohio Revised Code, the acquisition of certain levels of the Company’s voting power (one-fifth or more, one-third or more, or a majority) can be made only with the prior authorization of the holders of at least a majority of the Company’s total voting power and the separate prior authorization of the holders of at least a majority of the voting power held by shareholders other than the proposed acquirer, the Company’s officers, and Directors of the Company who are also employees.
Anti-Takeover Provisions of the Articles and Regulations 
Some provisions of the Articles and the Regulations may have the effect of discouraging a change in control that the Company’s shareholders might consider to be in their best interest, including a tender offer or takeover attempt that might result in a premium over the market price for the shares held by the Company’s shareholders. 
Cumulative Voting 
Under cumulative voting, a minority shareholder holding a sufficient percentage of a class of shares may be able to ensure the election of one or more directors. The Articles expressly eliminate any right of shareholders to vote cumulatively in the election of directors. 
Advance Notice Requirements for Shareholder Proposals and Director Nominations 
The Regulations provide that shareholders seeking to bring business before an annual meeting of shareholders, or to nominate candidates for election as directors at an annual meeting of shareholders, must provide timely notice in writing. To be timely, a shareholder’s notice must be delivered to or mailed and received at the Company’s principal executive offices not more than 90 days, and not less than 60 days, prior to the anniversary date of the immediately preceding annual meeting of shareholders. However, in the event that the annual meeting is called for a date that is more than 30 days before, or more than 60 days after, such anniversary date, notice by the shareholder in order to be timely must be received not earlier than the close of business on the later of the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the date on which public announcement of the date of the meeting is first made by the Company. The Regulations also specify requirements as to the form and content of a shareholder’s notice. These provisions may preclude, delay or discourage shareholders from bringing matters before an annual meeting of shareholders or from making nominations for directors at an annual meeting of shareholders. 
Transfer Agent and Registrar 
The transfer agent and registrar for the common shares is EQ Shareowner Services. 
Listing 
The common shares are listed on the New York Stock Exchange under the symbol “IVC.”

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