Document:

exv10w1

 

Exhibit 10.1

FOURTH AMENDMENT TO CREDIT AGREEMENT

     THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered into
effective as of July 12, 2005 (the “Effective Date”), by and among HELMERICH & PAYNE
INTERNATIONAL DRILLING CO., a Delaware corporation (the “Borrower”), HELMERICH & PAYNE,
INC., a Delaware corporation (the “Parent”), and BANK OF OKLAHOMA, NATIONAL ASSOCIATION, as
Lender (in such capacity, the “Lender”) and as Administrative Agent (in such capacity, the
“Administrative Agent”), with reference to the following:

RECITALS

     A. The Borrower, the Parent, the Lender and the Administrative Agent are parties to that
certain Credit Agreement dated July 16, 2002, as amended by (i) that certain First Amendment to
Credit Agreement dated July 15, 2003, (ii) that certain Second Amendment to Credit Agreement dated
May 4, 2004, and (iii) that certain Third Amendment to Credit Agreement dated as of July 13, 2004
(the Credit Agreement, as amended by the First, Second and Third Amendments thereto, is hereinafter
referred to as the “Credit Agreement”). Capitalized terms used in this Amendment and not
otherwise defined herein have the respective meanings assigned to them in the Credit Agreement, and
the rules of construction set forth in the Credit Agreement shall also govern the construction and
interpretation of this Amendment.

     B. Pursuant to the Credit Agreement, the Lender established the Facility in favor of the
Borrower.

     C. The Borrower has requested that the Lender (i) extend the Revolving Commitment Termination
Date from July 12, 2005, to July 11, 2006, and (ii) extend the Facility Maturity Date from June 30,
2007, to June 30, 2008.

     D. The Lender has agreed to the foregoing requests, subject to the terms and conditions set
forth in this Amendment.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereby amend the Credit Agreement as follows:

     1. EXTENSION OF THE FACILITY. As of the Effective Date:

          (i) the Revolving Commitment Termination Date is extended from July 12, 2005, to July
11, 2006, and the definition of “Revolving Commitment Termination Date” appearing in Section
1.1 of the Credit Agreement is amended in its entirety to read as follows:

 

 

               “Revolving Commitment Termination Date” means July 11, 2006, or
such later date to which the Revolving Commitment Termination Date may be
extended from time to time pursuant to Section 2.5(c).

          (ii) the Facility Maturity Date is extended from June 30, 2007, to June 30, 2008, and
the definition of “Facility Maturity Date” appearing in Section 1.1 of the Credit Agreement
is amended in its entirety to read as follows:

               “Facility Maturity Date” means June 30, 2008, or such later
date to which the Facility Maturity Date may be extended from time to time
pursuant to Section 2.5(c).

     2. WAIVER. For as long as the Credit Parties maintain in the Investment Portfolio,
free and clear of any and all Liens, liquid assets (i.e., cash, cash equivalents and Marketable
Securities) having a fair market value, calculated on a pre-tax basis, of not less than
$100,000,000, the Lender and the Administrative Agent hereby waive the Borrower’s compliance with
the requirements of Section 7.1(c) of the Credit Agreement (relating to delivery of compliance
certificates); provided, however, that the Lender reserves the right to require the Borrower to
submit compliance certificates, each in substantially the form of Exhibit “G” to the Credit
Agreement, upon request by the Lender (such requests by the Lender shall not be made, however, more
frequently than semi-annually).

     3. CONDITIONS PRECEDENT. The modifications to the Credit Agreement set forth in this
Amendment shall be effective from and after the Effective Date, but only when each of the following
conditions precedent shall have been satisfied:

     A. Execution of Documents. This Amendment and such other documents or instruments as may be
contemplated by this Amendment or as may be reasonably necessary to effectuate the intent and
purposes of this Amendment shall have been duly and validly authorized and executed by the parties
thereto and delivered to the Administrative Agent, all in form and substance satisfactory to the
Lender.

     B. No Defaults. There shall not have occurred or be continuing any Default or Event of
Default.

     C. Legal Matters. All legal matters incident to this Amendment and the transactions
contemplated hereby shall be satisfactory to the Administrative Agent and the Lender.

     4. REPRESENTATIONS AND WARRANTIES. The Borrower and the Parent confirm that, to the
best of their knowledge, all representations and warranties made by each of the Borrower and the
Parent for themselves or on behalf of a Credit Party in Article VI of the Credit Agreement are and
will be true and correct in all material respects on the Effective Date (with the dates appearing
in the first sentence of Section 6.5 thereof being changed to read September 30, 2002, September
30, 2003, September 30, 2004, and March 31, 2005, respectively, and the date appearing in the final
sentence of Section 6.5 thereof being changed to read September 30, 2004), except that:

2

 

          (i) the representations and warranties set forth in Sections 2.6(a), 6.12(ii), 6.14 and
7.6, respectively, of the Credit Agreement are subject to the matters set forth in Schedules
2.6(a), 6.12(ii), 6.14 and 7.6, respectively, attached hereto;

          (ii) the representation and warranty set forth in the final sentence of Section 6.5 of
the Credit Agreement, as updated hereby (with respect to the audited financial statements of
the Borrower as of September 30, 2004), are subject to the matters set forth in Schedule 6.5
attached hereto; and

          (iii) all of the representations and warranties set forth in the Credit Agreement are
subject to the fact that the spin-off of Cimarex Energy Co. and related entities was
consummated on September 30, 2002.

As used in this Paragraph 4, the phrase “to the best of their knowledge” means the current, actual
personal knowledge of the Executive Officers of the Borrower and the Parent, without any
undertaking by any of such Executive Officers to conduct any inquiry for purposes of this
Amendment.

     5. GENERAL.

     A. Effect of Amendment. The terms of this Amendment shall be incorporated into and form a
part of the Credit Agreement. Except as amended, modified and supplemented by this Amendment, the
Credit Agreement shall continue in full force and effect in accordance with its original stated
terms, all of which are hereby reaffirmed in every respect as of the date hereof. In the event of
any irreconcilable inconsistency between the terms of this Amendment and the terms of the Credit
Agreement or any other Credit Document, the terms of this Amendment shall control and govern, and
the agreements shall be interpreted so as to carry out and give full effect to the intent of this
Amendment. All references to the “Credit Agreement” appearing in any of the Credit Documents shall
hereafter be deemed references to the Credit Agreement as amended, modified and supplemented by
this Amendment. The Borrower and the Parent each hereby reaffirm all Credit Documents to which it
is a party, and acknowledge that such Credit Documents will continue in full force and effect,
unabated and uninterrupted, and will remain its valid and binding obligations, enforceable in
accordance with their terms.

     B. Schedules. Schedules 2.6(a), 6.12(ii), 6.14 and 7.6 attached hereto are hereby substituted
for the corresponding schedules to the Credit Agreement, and Schedule 6.5 attached hereto is hereby
added to the Credit Agreement insofar as the matters set forth therein relate to events occurring
subsequent to September 30, 2004.

     C. No Course of Dealing. This Amendment shall not establish a course of dealing or be
construed as evidence of any willingness on the Lender’s part to grant other or future extensions
or modifications, should any be requested.

     D. Descriptive Headings. The descriptive headings of the several sections of this Amendment
are inserted for convenience only and shall not be used in the construction of the content of this
Amendment.

3

 

     E. Governing Law. This Amendment shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Oklahoma.

     F. Reimbursement of Expenses. The Borrower and the Parent agree, jointly and severally, to pay
the reasonable fees and out-of-pocket expenses of Crowe & Dunlevy, counsel to the Administrative
Agent, incurred in connection with the preparation of this Amendment and the consummation of the
transactions contemplated hereby and thereby.

     G. Counterpart Execution. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original hereof and all of which shall be but one and the same original
instrument.

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to
be duly executed and delivered as of the date first above written, effective as of the Effective
Date.

	 	 	 	 
	BORROWER:

	 	HELMERICH & PAYNE INTERNATIONAL DRILLING CO.,
	 

	 	a Delaware corporation
	 
	 	 	 
	 

	 	By:
	 

	 	 	 
	 

	 	Name: Douglas E. Fears
	 

	 	Title: Vice President
	 
	 	 
	PARENT:

	 	HELMERICH & PAYNE, INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	By:
	 

	 	 	 
	 

	 	Name: Douglas E. Fears
	 

	 	Title: Vice President
	 
	 	 
	ADMINISTRATIVE AGENT:

	 	BANK OF OKLAHOMA, NATIONAL ASSOCIATION
	 
	 	 
	 

	 	By:
	 

	 	 	 
	 

	 	Name:
	 

	 	 	 
	 

	 	Title:
	 

	 	 	 

4

 

	 	 	 	 
	LENDER:

	 	BANK OF OKLAHOMA, NATIONAL ASSOCIATION
	 
	 	 
	 

	 	By:
	 

	 	 	 
	 

	 	Name:
	 

	 	 	 
	 

	 	Title:
	 

	 	 	 
	 
	 	 
	Revolving Commitment:

$50,000,000
	 	 

List of Additional and Replacement Schedules

	 	 	 	 	 
	Schedule 2.6(a)

	 	-
	 	Existing Letters of Credit
	Schedule 6.5

	 	-
	 	Subsequent Events
	Schedule 6.12(ii)

	 	-
	 	ERISA Matters
	Schedule 6.14

	 	-
	 	Subsidiaries
	Schedule 7.6

	 	-
	 	Insurance

5

 

SCHEDULE 2.6(a)

EXISTING LETTERS OF CREDIT

Letters of Credit:

	 	 	 
	BOK00SDF06739
	 	 
	Amount:

	 	$13,250,000.00
	Expiry:

	 	03/09/06
	Beneficiary:

	 	National Union Fire (AIG)

	 
	 	 
	BOK04SDF02122
	 	 
	Amount:

	 	$494,915.00
	Expiry:

	 	10/04/2005
	Beneficiary:

	 	National Union Fire (AIG)

	 
	 	 
	BOK00SIF05082
	 	 
	Amount:

	 	$100,000.00
	Expiry:

	 	06/01/06
	Beneficiary:

	 	Banco Bisa Lapaz Bolivia

6

 

SCHEDULE 6.5

SUBSEQUENT EVENTS

	1.	 	Sale of approximately $63 million of stock from Borrower’s investment portfolio during the
fourth quarter of fiscal 2004 and the first quarter of fiscal 2005.
	 
	2.	 	FAS 121 Impairment charge of $51.5 million in the fourth quarter of fiscal 2004.

	3.	 	For fiscal year 2004 through the second quarter of 2005, the Parent recorded approximately $4
million in exchange losses resulting from Venezuelan operations.

7

 

SCHEDULE 6.12(ii)

ERISA Matters

As of September 30, 2004, Helmerich & Payne, Inc. Employees Retirement Plan benefit obligations
totaled $82,222,000 and the value of plan assets totaled $56,650,000.

8

 

SCHEDULE 6.14

SUBSIDIARIES

Other Wholly-Owned Subsidiary of Parent

White Eagle Assurance Company1

Wholly-Owned Subsidiaries of Borrower

Helmerich & Payne Properties, Inc.2

The Space Center, Inc.2

Utica Square Shopping Center, Inc.2

Wholly-Owned Subsidiary of Utica Square Shopping Center, Inc.

Fishercorp, Inc.2

Helmerich & Payne (Africa) Drilling Co.3

Helmerich & Payne (Colombia) Drilling Co.2

Helmerich & Payne (Gabon) Drilling Co.3

Helmerich & Payne (Argentina) Drilling Co.2

Helmerich & Payne (Boulder) Drilling Co.2

Subsidiary of Helmerich & Payne (Boulder) Drilling Co.

Helmerich and Payne Mexico Drilling, S. de R.L. de C.V.4

Helmerich & Payne (Australia) Drilling Co.2

Helmerich & Payne del Ecuador, Inc.2

Helmerich & Payne de Venezuela, C.A.5

Helmerich & Payne Rasco, Inc.2

H&P Finco3

H&P Invest Ltd.3

 

1Incorporated in Vermont

2Incorporated in Oklahoma

3Incorporated in Cayman Islands, British West Indies

4Incorporated in Mexico

5Incorporated
in Venezuela

9

 

Schedule 7.6

Insurance

	 	 	 	 	 	 	 	 	 
	Policy	 	Policy Number	 	Coverage	 	Limits of Liability	 	Carrier
	09/30/04-05

	 	80-0266769
	 	Foreign General/Auto Liability
	 	GL:

$4,000,000 Master Control Limit 

$2,000,000 General Aggregate Including Products and Completed
Ops/$1,000,000 Per Occurrence & Personal Injury, $25,000 Medical

Auto:

$1,000,000
	 	AIG
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	83-48327
	 	Foreign Workers Compensation
	 	WC — Statutory 

Employers’ Liability: 

$1,000,000 Each Employee/Accident for Disease

$1,000,000 Per Occurrence 

$100,000 Excess Repatriation
	 	AIG
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	MT-2103
	 	Rig Physical Damage

Contingent OEE

Excess Liability

Cargo
	 	1) As per scheduled values — $30,000,000 Equipment

2) $25,000,000 

3) $100,000,000 Each Accident 

4) $25,000,000 Any one conveyance any one location
	 	Lloyd’s Underwriters (Various)
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	MT-2203
	 	Excess Liability
	 	$50,000,000 Each Accident 

$50,000,000 Products Liability and Completed Operations/Aggregate
	 	Lloyd’s Underwriters (Various)
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	MT2403
	 	Liability – Repsol
	 	$5,000,000
	 	Mapfre La Seguridad
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	DF130604
	 	Political Risk
	 	$25,000,000
	 	London
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	9020086
	 	Political Risk
	 	$50,000,000 excess of $25,000,000
	 	Zurich
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	CA 720-29-34
	 	Auto – All Other States
	 	$2,000,000 Each Accident
	 	American Home Assurance Co.
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	CA 720-29-33
	 	Auto – TX
	 	$2,000,000 Each Accident
	 	American Home Assurance Co.
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	GL 544-10-81 RA
	 	General Liability
	 	$5,000,000 General Aggregate 

$2,000,000 Products Completed Operations/Aggregate 

$2,000,000 Personal & Advertising Injury

$2,000,000 Each Occurrence

$250,000 Fire Damage 

$5,000 Medical Expenses

Defense costs within policy limits
	 	American Home Assurance Co.
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	WC7205801
	 	Workers Compensation-CA
	 	$2,000,000 Each Accident

$2,000,000 Bodily Injury by Disease – Policy Limit

$2,000,000 Bodily Injury by Disease – Each Employee
	 	American Home Assurance Co.
	 
	 	 	 	 	 	 	 	 
	09/30/04-05

	 	WC7205878
	 	Workers Compensation-All Other States
	 	$2,000,000 Each Accident 

$2,000,000 Bodily Injury by Disease – Policy Limit 

$2,000,000 Bodily Injury by Disease – Each Employee
	 	New Hampshire Insurance Co.

					
	MARSH INC.
	 	Page 1
	 	 

 

 

Schedule 7.6

Insurance

	 	 	 	 	 	 	 	 	 
	Policy	 	Policy Number	 	Coverage	 	Limits of Liability	 	Carrier
	09/30/04-05

	 	BE 2978218
	 	Commercial Umbrella
	 	$25,000,000 Each Occurrence 

$25,000,000 General Aggregate 

$25,000,000 Products-Completed Operations Aggregate
	 	National Union Fire Insurance Company
	 
	 	 	 	 	 	 	 	 
	06/22/05-06

	 	MC2-191-417208-025
	 	Property
	 	Values as per schedule on file
	 	Liberty Mutual
	 
	 	 	 	 	 	 	 	 
	03/20/05-06

	 	GM 5393065 12
	 	Aircraft Hull/Liability
	 	$100,000,000 CSL per occurrence
	 	National Union Fire Insurance
Company of Pittsburgh, PA
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	4920902
	 	Directors & Officers
	 	$25,000,000
	 	National Union Fire Insurance Company
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	4920969
	 	Employee Benefit Plan Fiduciary
Liability
	 	$25,000,000
	 	Naitonal Union Fire Insurance Company
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	4920977
	 	Employment Practices Liability
	 	$25,000,000
	 	National Union Fire Insurance Company
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	68028576
	 	Side A Excess DIC
	 	$25,000,000 xs $65,000,000
	 	Federal Insurance
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	RCN505800-00
	 	Excess Directors & Officers Liability
	 	$10,000,000 xs $55,000,000
	 	Axis
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	DOC5896062-00
	 	Excess Directors & Officers Liability
	 	$15,000,000 xs $40,000,000
	 	Zurich
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	00 DA 0137749-05
	 	Excess Directors & Officers Liability
	 	$15,000,000 xs $25,000,000
	 	Twin City Fire Insurance Company
	 
	 	 	 	 	 	 	 	 
	06/13/05-06

	 	202010015
	 	Special Risk
	 	$20,000,000
	 	Liberty Insurance Underwriters
	 
	 	 	 	 	 	 	 	 
	06/13/03-06

	 	104150365
	 	ERISA Bond
	 	$1,000,000
	 	Travelers
	 
	 	 	 	 	 	 	 	 
	05/12/05-06

	 	38SBMBM5494
	 	Bus. Liab. – Utica Square Merchants
	 	$500,000/$1,000,000
	 	Hartford

					
	MARSH INC.
	 	Page 2exv10w1

 

EXHIBIT 10.1

ZIX CORPORATION 2005 STOCK COMPENSATION PLAN

(Adopted Effective as of May 25, 2005)

Section 1. Purpose

     The purpose of the Zix Corporation 2005 Stock Compensation Plan (the “Plan”) is to enable Zix
Corporation (the “Company”) to (i) attract and retain personnel of high caliber by offering
stock-based compensation incentives and (ii) provide employees who receive awards under the Plan a
sense of proprietorship through stock ownership, thus closely aligning their interests with those
of stockholders. The Plan will provide the flexibility to allow the Company to use the Company’s
common stock to (i) pay salaries, bonuses, commission compensation, and severance payments payable
to Participants (defined below) in the Plan and (ii) to grant restricted stock awards under the
Plan.

Section 2. Definitions

     “Award” shall mean any Stock Grant or Restricted Stock Award, whether grated singly, in
combination or in tandem, granted to a Participant pursuant to any applicable terms, conditions and
limitations as the Committee may establish in order to fulfill the objectives of this Plan.

     “Award Agreement” shall mean a written agreement between the Company and a Participant that
sets forth the terms, conditions and limitations applicable to an Award.

     “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 desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the Plan shall be administered by a Committee of two or more Non-employee
Directors. To the extent desirable to qualify Stock Grants or Restricted Stock Awards, as
hereinafter defined, granted hereunder as “performance based compensation” within the meaning of §
162(m) of the Code, the Plan shall be administered by a Committee 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.

     “Effective Date” shall mean May 25, 2005, subject to Section 7(c).

     “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 shares of Common Stock on the date
specified as reported by the Nasdaq National Market, or by the principal national stock exchange on
which the shares of Common Stock are 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 shares of
Common Stock on the day nearest preceding such date.

     “Non-employee Director” shall have the meaning given such term in Rule 16b-3(b)(3).

     “Objectively Determinable Performance Condition” shall mean a performance condition (i) that
is established (A) at the time an Award is granted or (B) no later than the earlier of (1) 90 days
after the beginning of the period of service to which it relates, or (2) before the elapse of 25%
of the period of service to which it relates, (ii) that is uncertain of achievement at the time it
is established, and (iii) the achievement of which is determinable by a third party with knowledge
of the relevant facts.

1

 

     “Participant” shall mean the person to whom a Stock Grant or a Restricted Stock Award is made
under the Plan.

     “Restricted Stock” shall mean shares of Common Stock that are restricted or subject to
forfeiture provisions.

     “Stock Grant” shall mean grants of shares of Common Stock under 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.

     “Withheld Amounts” means all medical premiums, insurance premiums, 401(k) contributions,
taxes, and other amounts that but for the Participant participating in the Plan would customarily
be deducted from the cash salary, bonus, severance or commission compensation payable to the
Participant.

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 Committee
may, in its discretion, modify or amend any Award. The determinations and interpretations made by
the Committee are final and conclusive.

Section 4. Eligibility

     All employees (including officers) and former employees of the Company or any Subsidiary and
non-employee consultants and advisors to the Company or any Subsidiary that may be designated from
time-to-time by the Committee are eligible to participate in the Plan. However, participation in
the Plan is voluntary and only those persons who agree to participate in the Plan will actually
participate.

Section 5. Maximum Amount Available for Stock Grants

     The maximum number of shares of Common Stock in respect of which Stock Grants and Restricted
Stock Awards may be made under the Plan shall be a total of 500,000 shares of Common Stock. 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 our shares of Common Stock are changed by a stock dividend, split or combination of shares, or
other similar change in our capitalization, a proportionate or equitable adjustment will be made in
the number or kind of shares available for grant.

Section 6. Stock Grants and Restricted Stock Awards

Stock Payments in Lieu of Cash Compensation

     Subject to the provisions of the Plan and subject to compliance with applicable securities and
other laws, on the day that a salary, bonus, commission compensation or severance payment is to be
paid to the Participant, the Committee, in its discretion, may grant to the Participant a number of
shares of Common Stock having a Fair Market Value, measured as of the business day immediately
preceding the day of the grant of the Common Stock, equal to 100% of the salary, bonus, commission
compensation or severance payment payable to the Participant for the relevant period or situation.
The Committee may also, in its discretion, determine to grant an additional number of shares of
Common Stock to mitigate the market risk Plan Participants will be subject to and to cover
brokerage commissions and other incidental expenses that Plan Participants might incur in
connection with the sale of the Stock Grant shares. The Company shall not be required to issue any
fractional shares. Stock Grants under the Plan will be rounded up to the nearest whole number.

     The Committee, in its discretion, may establish such terms and conditions with respect to any
Stock Grant as it deems appropriate as set forth in Section 7(a).

2

 

     The Company will deposit the Stock Grant shares in a brokerage account in the name of the
Participant. The Participant will control the decision of whether or not to sell the shares and the
timing of such sales. The Participant will promptly pay to the Company or a Subsidiary, as
applicable, all Withheld Amounts.

Restricted Stock Awards

     The Committee may grant Restricted Stock awards under the Plan in the form of a grant of
shares of Restricted Stock for which the only consideration furnished by the Participant is
services to the Company (collectively, “Restricted Stock Awards”). In addition to the terms and
conditions of an Award pursuant to Section 7(a), the Committee may establish in connection with the
grant of shares of Restricted Stock pursuant to a Restricted Stock Award, such terms and conditions
on the shares of Restricted Stock as it deems appropriate, including (i) vesting conditions based
on service or performance criteria, (ii) restrictions on transferability, (iii) forfeiture
provisions, (iv) voting rights and rights to receive dividends, and (v) vesting upon the
dissolution or liquidation of the Company or upon the sale of substantially all of the assets,
merger or other consolidation of the Company. Any such terms and conditions on shares of Restricted
Stock shall be set forth in the Award Agreement.

     Any Restricted Stock Award that is intended as “qualified performance-based compensation”
within the meaning of §162(m) of the Code must vest or become exercisable contingent on the
achievement of one of more Objectively Determinable Performance Conditions. The Committee shall
have the discretion to determine the time and manner of compliance with §162(m) of the Code.
Subject to appropriate adjustment in the event of any change in the capital structure of the
Company, no employee may be granted in any fiscal year of the Company Restricted Stock Awards
representing more than 200,000 shares of Common Stock on which the restrictions are based on
Objectively Determinable Performance Conditions.

Section 7. General Provisions

     (a) Each Award granted hereunder shall be described in an Award Agreement, which shall be
subject to the terms and conditions of this Plan and shall be signed by the Participant and by an
appropriate officer for and on behalf of the Company. The Committee may establish in connection
with the grant of an Award pursuant to the an Award Agreement, such terms and conditions as it
deems appropriate, including (i) vesting conditions based on service or performance criteria, (ii)
restrictions on transferability, (iii) forfeiture provisions, (iv) voting rights and rights to
receive dividends, and (v) vesting upon the dissolution or liquidation of the Company or upon the
sale of substantially all of the assets, merger or other consolidation of the Company. If so
provided in an Award Agreement, shares of Common Stock and/or Restricted Stock, as applicable,
acquired pursuant to an Award may be subject to repurchase by the Company or an affiliate if not
vested in accordance with the Award Agreement.

     (b) The Company and its Subsidiaries expressly reserve the right at any time to terminate the
employment of any Participant free from any liability, or any claim under the Plan. Neither the
Plan, any Stock Grant nor any Restricted Stock Award is intended to confer upon any Participant 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).

     (c) 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.

     (d) The adoption of the Plan was authorized on March 1, 2005 by the Board of Directors and
shall be effective as of the Effective Date, subject to the approval of the Plan by the
stockholders of the Company. Unless earlier terminated by the Board of Directors, the Plan shall
terminate as of the tenth anniversary of the Effective Date and no further Stock Grants or
Restricted Stock Awards shall be made after such date. Termination of the Plan shall not affect
Stock Grants or Restricted Stock Awards made prior to the termination date.

     (e) The Company shall not be liable for damages due to a delay in the delivery or issuance of
any stock for any reason whatsoever, including, but not limited to, a delay caused by listing,
registration or qualification of the shares

3

 

of Common Stock pertaining to any Stock Grant or any Restricted Stock Award 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.

     (f) 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 Stock Grants and Restricted Stock Awards may
be made under the Plan) if such stockholder approval is necessary to comply with any tax or
regulatory requirement or self regulatory organization rules (e.g., NYSE, NASD), including for
these purposes any approval requirement that is a prerequisite for exemptive relief under Section
16(b) of the Exchange Act.

     IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its behalf as of May
25, 2005.

	 	 	 	 	 
	 	 	Zix Corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Ronald A. Woessner
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	SVP
	 
	 	 	 	 
	 

	 	Date:
	 	5/25/05

4

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