AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 2003.
REGISTRATION NO. 333-105060
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ZIX CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-2216818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2711 N. HASKELL AVENUE, SUITE 2300, LB 36, DALLAS, TEXAS 75204-2960
(214) 370-2000
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
STEVE M. YORK
CHIEF FINANCIAL OFFICER
2711 N. HASKELL AVENUE, SUITE 2300, LB 36, DALLAS, TEXAS 75204-2960
(214) 370-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time-to-time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT (2) OFFERING PRICE (2) FEE(3)
----------------- -------------- ------------------ ------------------ ------------
Common Stock,
$.01 par value 500,519 $ 4.86 $2,432,522 $196.79
(1) This registration statement covers 500,519 shares of the registrant's common
stock, representing 110% of the shares of common stock issuable upon exercise of
warrants owned by the selling shareholders.
(2) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(c) under the Securities Act, based on the average of the
high and low prices of the common stock on The Nasdaq Stock Market on April 30,
2003.
(3) Previously paid on May 7, 2003 with the initial filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and we are not soliciting an
offer to buy these securities in any state where the offer or sale in not
permitted.
Subject to completion, dated June 2, 2003
ZIX CORPORATION
500,519 SHARES
COMMON STOCK
This prospectus relates to an offering of up to 500,519 shares of our
common stock, par value $.01 per share, that are issuable upon the exercise of
warrants. The warrants were originally issued in a private placement in April
2003. The selling shareholders under this prospectus are HFTP Investment L.L.C.,
Gaia Offshore Master Fund, Ltd., and Caerus Fund Ltd. who, for convenience, are
generally referred to as the selling shareholders.
The common stock being registered is being offered for the account of
the selling shareholders. We will not receive any proceeds from the sale of the
shares of common stock offered under this prospectus.
The shares may be offered in transactions on The Nasdaq Stock Market,
in negotiated transactions or through a combination of methods of distribution,
at prices relating to the prevailing market prices, at negotiated prices or at
fixed prices that may be changed. Please see below under the heading "Plan of
Distribution."
Our common stock is quoted on The Nasdaq Stock Market under the symbol
"ZIXI." On May 5, 2003, the last sale price of our common stock, as reported on
The Nasdaq Stock Market, was $5.30 per share.
---------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A LOSS OF ALL
OR A PORTION OF YOUR INVESTMENT.
PLEASE SEE BELOW UNDER THE HEADING "RISK FACTORS" ON PAGE 1.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ________, 2003.
TABLE OF CONTENTS
PAGE
----
ZIX CORPORATION............................................................................1
THE TRANSACTION............................................................................1
RISK FACTORS........................................... ...................................1
NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS........................................6
DOCUMENTS INCORPORATED BY REFERENCE........................................................6
WHERE YOU CAN FIND MORE INFORMATION........................................................7
SELLING SHAREHOLDERS.......................................................................7
PLAN OF DISTRIBUTION.......................................................................8
DESCRIPTION OF SECURITIES..................................................................9
REGISTRATION REQUIREMENTS..................................................................10
USE OF PROCEEDS............................................................................10
LEGAL MATTERS..............................................................................10
EXPERTS....................................................................................10
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND NOT ON
ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. NEITHER ZIX CORPORATION NOR ANY
OF ITS REPRESENTATIVES HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS
WITH ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS. FURTHERMORE, NO DEALER, SALESPERSON OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT
CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SHARES OFFERED BY THIS PROSPECTUS, BUT ONLY UNDER THE
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE, REGARDLESS OF THE
TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
i
ZIX CORPORATION
We are a development-stage company and currently have no significant
revenues. Since January 1999, we have been developing and marketing products and
services that bring privacy, security and convenience to Internet users. We were
incorporated in Texas in 1988. Our executive offices are located at 2711 North
Haskell Avenue, Suite 2300, LB 36, Dallas, Texas 75204-2960, and our telephone
number is (214) 370-2000. Our Web site address is www.zixcorp.com. Information
contained on our Web site is not a part of this prospectus. In this prospectus,
"we," "us," "ZixCorp," "our" and "Zix" refer to Zix Corporation and its
subsidiaries unless the context otherwise requires.
THE TRANSACTION
We entered into an Agreement Regarding Exercise and Issuance of
Warrants with the selling shareholders on March 3, 2003. This agreement is
referred to in this prospectus as the "Exchange Agreement." The selling
shareholders were holders of warrants to purchase an aggregate of 386,473 shares
of our common stock at an exercise price of $4.14 per share. These warrants,
referred to as the "existing warrants," were originally issued to the selling
shareholders on September 18, 2002, in connection with the purchase by the
selling shareholders of an aggregate of $8 million of 6.5% Secured Convertible
Notes issued by us.
Under the Exchange Agreement, the selling shareholders were obligated,
subject to certain conditions, to exercise all or any portion of the existing
warrants held by them on each business day following a trading day on which the
weighted average market price of the common stock was at least $4.50 per share,
referred to as a "trigger day." The extent to which a selling shareholder was
required to exercise an existing warrant on any such business day was based on
the daily trading volume of our common stock on the corresponding trigger day.
The selling shareholders exercised the existing warrants in March and
April of 2003. Once the existing warrants were fully exercised, we were required
to (and did) issue new warrants to the selling shareholders as replacements for
the existing warrants. The replacement warrants were structured to have
substantially the same economic value to the holders as the existing warrants
that have been exercised. The number of shares of common stock covered by the
replacement warrants (455,017) was calculated based on the Black-Scholes formula
applied at the time of each exercise of existing warrants. The replacement
warrants have an exercise price of $5.00 per share of common stock, subject to
adjustment in certain events.
In connection with the Exchange Agreement, we entered into a
Registration Rights Agreement, dated March 3, 2003, with the selling
shareholders. Under the Registration Rights Agreement, we agreed to prepare and
file, within fifteen days of the date of issuance of the replacement warrants,
the registration statement which includes this prospectus for the resale of 110%
of the shares of common stock issuable upon the exercise of the replacement
warrants.
The terms of the replacement warrants are described in this prospectus
under the heading "Description of Securities." For a description of the Exchange
Agreement, the Registration Rights Agreement and the terms of the issuance of
the replacement warrants, please see our Current Report on Form 8-K, dated March
4, 2003, which is incorporated by reference in this prospectus.
RISK FACTORS
Before investing in our common stock offered by this prospectus, you
should carefully consider the following risks and uncertainties, in addition to
the other information contained or incorporated by reference in this prospectus.
Also, you should be aware that the risks and uncertainties described below are
not the only ones facing us. Additional risks and uncertainties that we do not
yet know of or that we currently think are immaterial may also impair our
business operations. If any of those risks or uncertainties or any of the risks
and uncertainties described below actually occur, our business, financial
condition, prospects or results of operations could be materially and adversely
affected. In that case, the trading price of the common stock offered in this
prospectus could decline, and you may lose all or part of your investment.
AS A DEVELOPMENT STAGE COMPANY, WE HAVE NO SIGNIFICANT REVENUES, AND WE CONTINUE
TO USE SIGNIFICANT AMOUNTS OF CASH.
Since 1999 we have been developing and marketing products and services that
bring privacy, security and convenience to Internet users. Successful
development of a development stage enterprise is costly and highly competitive.
A development stage enterprise involves risks and uncertainties, and there are
no assurances that we will be successful in our efforts. We currently have no
significant revenues and utilization of cash resources continues at a
substantial level. The Company anticipates further losses in 2003.
1
THE MARKET MAY NOT BROADLY ACCEPT OUR PRODUCTS AND SERVICES, WHICH WOULD PREVENT
US FROM OPERATING PROFITABLY.
We must be able to achieve broad market acceptance for our products and
services in order to operate profitably. We have not yet been able to do this.
To our knowledge, there are currently no secure e-messaging management and
protection businesses similar to ours, that currently operate at the scale that
we would require, at our current expenditure levels and proposed pricing, to
become profitable. There is no assurance that our products and services will
become generally accepted or that they will be compatible with any standards
that become generally accepted, nor is there any assurance that enough paying
users will ultimately be obtained to enable us to operate profitably.
COMPETITION IN THE SECURE E-MESSAGING BUSINESS IS EXPECTED TO INCREASE, WHICH
COULD CAUSE OUR BUSINESS TO FAIL.
Our solutions are targeted to the secure e-messaging management and
protection services market. Although there are many large, well-funded
participants in the information technology security industry, few currently
participate in the secure e-messaging management and protection services market.
Our primary competitors in this market are Tumbleweed Communications, Sigaba
Corporation, Authentica, PostX, Critical Path, ClearSwift, BrightMail,
FrontBridge and MessageLabs. We believe that the secure e-messaging management
and protection services market is immature, and, for the most part,
unpenetrated, unlike many segments of the information technology security
industry -- which are saturated. After several years of infrastructure
development and product development, we believe that we are the only provider
that has made the investments necessary to successfully penetrate the relatively
untapped secure e-messaging management and protection services market. We do not
believe that our primary competitors have made the infrastructure and
development investments required to match our service offerings. Nevertheless,
others may, over time, make the necessary investments in infrastructure and
service offerings. These competitors may develop new technologies that are
perceived as being more secure, effective or cost efficient than our own. If we
are not successful in exploiting the technology advantage we believe we
currently hold, these competitors could successfully garner a significant share
of the market, to the exclusion of ZixCorp. Furthermore, increased competition
could result in pricing pressures, reduced margins or the failure of our
business to achieve or maintain market acceptance, any of which could harm our
business.
OUR INABILITY TO DEVELOP AND INTRODUCE NEW PRODUCTS AND RELATED SERVICES AND TO
IMPLEMENT TECHNOLOGICAL CHANGES COULD HARM OUR BUSINESS.
The emerging nature of the secure e-messaging management and protection
services business and its rapid evolution, require us continually to develop and
introduce new products and services and to improve the performance, features and
reliability of our existing products and services, particularly in response to
competitive offerings. To date, we have achieved no significant revenues from
the sale of any of our products and related services.
We also have under development new feature sets for our current product
line and are considering new secure e-messaging products. The success of new or
enhanced products and services depends on several factors -- primarily, market
acceptance. We may not succeed in developing and marketing new or enhanced
products and services that respond to competitive and technological developments
and changing customer needs. This could harm our business.
IF THE MARKET FOR SECURE E-MESSAGING MANAGEMENT AND PROTECTION SERVICES DOES NOT
CONTINUE TO GROW, DEMAND FOR OUR PRODUCTS AND SERVICES WILL BE ADVERSELY
AFFECTED.
The market for secure Internet e-messaging is at an early stage of
development. Continued growth of the secure e-messaging management and
protection services market will depend to a large extent on the market
recognizing the need for secure e-messaging communications. Failure of this
market to grow could reduce demand for our products and services, which would
harm our business.
CAPACITY LIMITS ON OUR TECHNOLOGY AND NETWORK HARDWARE AND SOFTWARE MAY BE
DIFFICULT TO PROJECT, AND WE MAY NOT BE ABLE TO EXPAND AND UPGRADE OUR SYSTEMS
TO MEET INCREASED USE, WHICH WOULD RESULT IN REDUCED REVENUES.
While we have ample through-put capacity to handle our customers'
requirements for the medium term, at some point we may be required to expand and
upgrade our technology and network hardware and software. We may not be able to
accurately project the rate of increase in usage on our network. In addition, we
may not be able to expand and upgrade, in a timely manner, our systems and
network hardware and software capabilities to accommodate increased traffic on
our network. If we do not timely and appropriately expand and upgrade our
systems and network hardware and software, we may lose customers and revenues.
2
SECURITY INTERRUPTIONS TO OUR SECURE DATA CENTER COULD DISRUPT OUR BUSINESS, AND
ANY SECURITY BREACHES COULD EXPOSE US TO LIABILITY AND NEGATIVELY IMPACT
CUSTOMER DEMAND FOR OUR PRODUCTS AND SERVICES.
Our business depends on the uninterrupted operation of our secure data
center. We must protect this center from loss, damage or interruption caused by
fire, power loss, telecommunications failure or other events beyond our control.
Any damage or failure that causes interruptions in our secure data center
operations could materially harm our business, financial condition and results
of operations.
In addition, our ability to issue digitally-signed certified
time-stamps and public encryption codes in connection with our products and
services depends on the efficient operation of the Internet connections between
customers and our data center. We depend on Internet service providers
efficiently operating these connections. These providers have experienced
periodic operational problems or outages in the past. Any of these problems or
outages could adversely affect customer satisfaction.
Furthermore, it is critical that our facilities and infrastructure
remain secure and the market perceives them to be secure. Despite our
implementation of network security measures, our infrastructure may be
vulnerable to physical break-ins, computer viruses, attacks by hackers and
similar disruptions from unauthorized tampering with our computer systems. In
addition, we are vulnerable to coordinated attempts to overload our systems with
data, resulting in denial or reduction of service to some or all of our users
for a period of time. We do not carry insurance to compensate us for losses that
may occur as a result of any of these events; therefore, it is possible that we
may have to use additional resources to address these problems.
Messages sent through our ZixPort and ZixMessage Center messaging
portals will reside, for a user-specified period of time, in our secure data
center network. Any physical or electronic break-ins or other security breaches
or compromises of this information could expose us to significant liability, and
customers could be reluctant to use our Internet-related products and services.
We determined in June 2001 that credit card databases at our
independently operated subsidiary, Anacom Communications, Inc. ("Anacom"), had
been improperly accessed. As a result of this improper access, we shut down the
Anacom operations and Anacom ceased doing business. The ZixMail, ZixPort, and
ZixMessage Center systems and our secure data center operations were entirely
separate from the systems operated by Anacom. No ZixCorp technologies or
operations were involved in the incident, nor are the Anacom technologies
involved being used in our Zix family of secure e-messaging products and
services. Accordingly, this breach has not had, and will not have, any effect on
the development and deployment of our secure e-messaging products and related
services. No claims have been asserted against us with respect to this incident.
We are unable to assess the amount of liability, if any, to Anacom or us, which
may result from any claims that may be asserted.
WE MAY HAVE TO DEFEND OUR RIGHTS IN INTELLECTUAL PROPERTY THAT WE USE IN OUR
PRODUCTS AND SERVICES, WHICH COULD BE DISRUPTIVE AND EXPENSIVE TO OUR BUSINESS.
We may have to defend our intellectual property rights or defend
against claims that we are infringing the rights of others. Intellectual
property litigation and controversies are disruptive and expensive. Infringement
claims could require us to develop non-infringing products or enter into royalty
or licensing arrangements. Royalty or licensing arrangements, if required, may
not be obtainable on terms acceptable to us. Our business could be significantly
harmed if we are not able to develop or license the necessary technology.
Furthermore, it is possible that others may independently develop substantially
equivalent intellectual property, thus enabling them to effectively compete
against us.
OUR PRODUCTS AND SERVICES COULD CONTAIN UNKNOWN DEFECTS OR ERRORS.
We subject our products and services to quality assurance testing prior
to product release. To date, we have not become aware after product release of
any defect or error that materially affects their functionality. Nevertheless,
our products and services could contain undetected defects or errors. This could
result in loss of or delay in revenues, failure to achieve market acceptance,
diversion of development resources, injury to our reputation, litigation claims,
increased insurance costs or increased service and warranty costs. Any of these
could prevent us from implementing our business model and achieving the revenues
we need to operate profitably.
PUBLIC KEY CRYPTOGRAPHY TECHNOLOGY IS SUBJECT TO RISKS.
Our products and services employ, and future products and services may
employ, public key cryptography technology. With public key cryptography
technology, a public key and a private key are used to encrypt and decrypt
messages. The security afforded by this technology depends, in large measure, on
the integrity of the private key, which is dependent, in part, on the
application of certain mathematical principles. The integrity of the private key
is predicated on the assumption that it is difficult to mathematically derive
the private key from the related public key. Should methods be developed that
make it easier to derive the private key, the security of encryption products
using public key cryptography technology would be reduced or eliminated and such
products could become unmarketable. This could require us to make significant
changes to our products, which could damage our reputation and otherwise hurt
our business. Moreover, there have been public reports of the successful
description of
3
certain encrypted messages. This, or related, publicity could adversely affect
public perception of the security afforded by public key cryptography
technology, which could harm our business.
WE DEPEND ON KEY PERSONNEL.
We depend on the performance of our senior management team -- including
our chairman, president and chief executive officer, John A. Ryan, and his
direct reports and other key employees, particularly highly skilled technical
personnel. Our success depends on our ability to attract, retain and motivate
these individuals. There are no binding agreements with any of our employees
which prevent them from leaving ZixCorp at any time. There is competition for
these personnel. In addition, we do not maintain key person life insurance on
any of our personnel. The loss of the services of any of our key employees or
our failure to attract, retain and motivate key employees could harm our
business.
WE COULD BE AFFECTED BY GOVERNMENT REGULATION.
Exports of software products using encryption technology are generally
restricted by the U.S. government. Although we have obtained U.S. government
approval to export our products to almost all countries in the world, the list
of countries to which our products cannot be exported could be revised in the
future. Furthermore, some foreign countries impose restrictions on the use of
encryption products, such as our products. Failure to obtain the required
governmental approvals would preclude the sale or use of our products in
international markets.
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has fluctuated significantly in
the past and is likely to fluctuate in the future. Also, the market prices of
securities of other Internet-related companies have been highly volatile and, as
is well known, have generally declined substantially and broadly.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUBSTANTIAL PERCENTAGE OF OUR
SECURITIES. THEIR OWNERSHIP COULD ALLOW THEM TO EXERCISE SIGNIFICANT CONTROL
OVER CORPORATE DECISIONS AND TO IMPLEMENT CORPORATE ACTS THAT ARE NOT IN THE
BEST INTERESTS OF OUR SHAREHOLDERS AS A GROUP.
Our directors and executive officers beneficially own shares of our
securities that represent approximately 21.3% of the combined voting power
eligible to vote on matters brought before our shareholders, including
securities and associated warrants beneficially owned by Antonio R. Sanchez,
Jr., a former director and current beneficial owner of approximately 12.6% of
our outstanding common stock, and John A. Ryan, our chairman, president and
chief executive officer. Also, Mr. Sanchez and Mr. Ryan collectively
beneficially own approximately 81.8% of the Series A Convertible Preferred
Stock. The consent of the holders of the Series A Convertible Preferred Stock,
voting separately as a class, is required before we may enter into mergers or
other business combination transactions. Therefore, our directors and executive
officers, if they acted together, could exert substantial influence over matters
requiring approval by our shareholders. These matters would include the election
of directors and, as noted above, the approval of mergers or other business
combination transactions. This concentration of ownership and voting power may
discourage or prevent someone from acquiring our business.
A PRIVATE INVESTOR OWNS A LARGE PERCENTAGE OF OUR OUTSTANDING STOCK AND COULD
SIGNIFICANTLY INFLUENCE THE OUTCOME OF ACTIONS.
George W. Haywood, a private investor, beneficially owns approximately
25.3% of our outstanding common stock. Furthermore, Mr. Haywood and an IRA for
the benefit of Mr. Haywood beneficially own approximately 81.2% of our Series B
Convertible Preferred Stock. The consent of the holders of the Series B
Convertible Preferred Stock, voting separately as a class, is required before we
may enter into mergers or other business combination transactions. Therefore,
Mr. Haywood could exert substantial influence over all matters requiring
approval by our shareholders, including the election of directors and, as noted
above, the approval of mergers or other business combination transactions. Mr.
Haywood's interests may not be aligned with the interests of our other
shareholders.
OUR RECENT PRIVATE PLACEMENTS OF EQUITY SECURITIES COULD FURTHER DILUTE THE
INTERESTS OF OUR SHAREHOLDERS.
In September 2002, we completed a capital funding for $16,000,000
through the issuance of $8,000,000 of Convertible Notes and associated warrants,
$3,250,000 of Series A Convertible Preferred Stock and associated warrants and
$4,750,000 of Series B Convertible Preferred Stock and associated warrants. In
the fourth quarter of 2002, the Convertible Notes were converted into 2,141,811
shares of our common stock and $422,000 in convertible preferred stock was
converted into shares of our common stock. At March 31, 2003, the remaining
securities were convertible and exercisable, in the aggregate, into
approximately 2,850,000 shares of our common stock.
4
One-ninth of the shares of our Series A Convertible Preferred Stock and
our Series B Convertible Preferred Stock are to be redeemed at two-month
intervals beginning in May 2003. The redemption amounts payable to the holders
of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
are paid in shares of our common stock.
The value of the common stock used to determine the number of shares of
common stock to be issued upon redemption of shares of Series A Convertible
Preferred Stock at the final redemption date (that is, September 2004) will be
the lesser of $3.92 per share and the market value of the common stock at the
time of redemption, based on a closing bid price average formula. If the market
price of the common stock declines, the number of shares of common stock
issuable to the holders of Series A Convertible Preferred Stock upon such final
redemption will increase, perhaps substantially. There is no "floor" on the
market value calculation and, therefore, there is no "ceiling" on the number of
shares of common stock that may be issuable by us upon the final Series A
Convertible Preferred Stock redemption. A substantial decline in the market
price of the common stock would result in significant dilution to the existing
holders of common stock if the Series A Convertible Preferred Stock shares are
redeemed at a substantially lower price.
The value of the common stock used to determine the number of shares of
common stock to be issued upon redemption of shares of Series B Convertible
Preferred Stock will be the lesser of the Series B Conversion Price (currently
$3.78 per share) and 90% of the market value of the common stock at the time of
redemption, based on a volume-weighted average formula. If the market price of
the common stock declines, the number of shares of common stock issuable to the
holders of Series B Convertible Preferred Stock upon such automatic redemptions
will increase, perhaps substantially. There is no "floor" on the market value
calculation and, therefore, there is no "ceiling" on the number of shares of
common stock that may be issuable by us upon a Series B Convertible Preferred
Stock redemption. A substantial decline in the market price of the common stock
would result in significant dilution to the existing holders of common stock if
the Series B Convertible Preferred Stock shares are redeemed at a substantially
lower price.
The Series A Convertible Preferred Stock and the Series B Convertible
Preferred Stock are convertible by the holders into shares of common stock at
any time. The Series A Conversion Price is initially $4.12 per share and the
Series B Conversion Price is initially $3.78 per share. The conversion prices
could be lowered, perhaps substantially, in a variety of circumstances. In the
event we issue, or are deemed to have issued, shares of common stock at a price
per share that is less than the conversion prices then in effect (other than
certain specified exempt issuances), the conversion prices and the number of
shares issuable upon conversion of the Series A Convertible Preferred Stock and
the Series B Convertible Preferred Stock are subject to weighted average
anti-dilution adjustment. These anti-dilution adjustments do not have a "floor"
that would limit reductions in the conversion price of such shares.
Correspondingly, there is no "ceiling" on the number of shares of common stock
that may be issuable following such anti-dilution adjustments.
We issued four-year warrants (first exercisable in March 2003) to the
purchasers of Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock entitling the warrant holders to purchase an aggregate of
709,528 shares of common stock at an exercise price of $4.51 per share. The
exercise price of these warrants is subject to weighted average anti-dilution
adjustment in the event we issue, or are deemed to have issued, shares of common
stock at a price per share that is less than the exercise price then in effect
(other than certain specified exempt issuances). The "floor" on such
anti-dilution adjustments is set at $3.92 per share.
In April 2003 we issued the warrants to the selling shareholders (the
"Selling Shareholder Warrants") that are the subject of this prospectus and
related registration statement. The number of shares of common stock for which
these warrants are exercisable and the exercise price of these warrants are
subject to full anti-dilution adjustment in the event we issue, or are deemed to
have issued, shares of common stock at a price per share that is less than the
exercise price then in effect (other than certain specified exempt issuances).
These anti-dilution adjustments do not have a "floor" that would limit
reductions in the exercise price and there is no "ceiling" on the number of
shares of common stock that may be issuable following such anti-dilution
adjustments.
FURTHER ISSUANCES OF EQUITY SECURITIES MAY BE DILUTIVE TO CURRENT SHAREHOLDERS.
At some point in the foreseeable future we may determine to seek
additional capital funding. This capital funding could involve one or more types
of equity securities, including convertible debt, common or convertible
preferred stock and warrants to acquire common or preferred stock. Such equity
securities could be issued at or below the then-prevailing market price for our
common stock. In addition, we incentivize employees and attract new employees by
issuing options to purchase our shares of common stock. Therefore, the interest
of our existing shareholders could be diluted by future stock option grants to
employees and any equity securities issued in capital funding financings.
STOCK SALES AND HEDGING ACTIVITIES COULD AFFECT OUR STOCK PRICE.
To the extent the holders convert, redeem and exercise, as applicable,
the Series A Convertible Preferred Stock and/or the Series B Convertible
Preferred Stock and related warrants and then sell the shares of our common
stock they receive, our stock price may decrease due to the additional amount of
shares available in the market. The subsequent sales of these shares could
5
encourage short-sales that could place further downward pressure on our stock
price. This could lead to further increases in the already large short position
in our common stock (6,596,905 shares as of April 15, 2003). Moreover, subject
to applicable law, the holders of the Series A Convertible Preferred Stock and
the Series B Convertible Preferred Stock may hedge their positions in our stock
by shorting our stock, which could further adversely affect the stock price.
Furthermore, the perception that the holders of the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock may sell our common
stock "short" may cause others to sell their shares as well. An increase in the
volume of sales of our common stock, whether short sales or not and whether the
sales are by the holders of Series A Convertible Preferred Stock and the Series
B Convertible Preferred Stock or others, could cause the market price of our
common stock to decline. The effect of these activities on our stock price could
increase the number of shares required to be issued on the next applicable
conversion or redemption of the Series A Convertible Preferred Stock and the
Series B Convertible Preferred Stock.
WE MAY HAVE LIABILITY FOR INDEMNIFICATION CLAIMS ARISING FROM THE SALE OF OUR
PREVIOUS BUSINESSES IN 1998 AND 1997.
We disposed of our previous operating businesses in 1998 and 1997. In
selling those businesses, we agreed to provide customary indemnification to the
purchasers of those businesses for breaches of representations and warranties,
covenants and other specified matters. Although we believe that we have
adequately provided for future costs associated with these indemnification
obligations, indemnifiable claims could exceed our estimates.
WE MAY ENCOUNTER OTHER UNANTICIPATED RISKS AND UNCERTAINTIES IN THE SECURE
E-MESSAGING MANAGEMENT AND PROTECTION SERVICES MARKET OR IN DEVELOPING NEW
PRODUCTS AND SERVICES, AND WE CANNOT ASSURE YOU THAT WE WILL BE SUCCESSFUL IN
RESPONDING TO ANY UNANTICIPATED RISKS OR UNCERTAINTIES.
There are no assurances that we will be successful or that we will not
encounter other, and even unanticipated, risks. We discuss other operating,
financial or legal risks or uncertainties in our periodic filings with the
Securities and Exchange Commission. We are, of course, also subject to general
economic risks.
NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS
This document contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (we refer to it as the "Exchange
Act"). All statements other than statements of historical fact are "forward-
looking statements" for purposes of federal and state securities laws,
including: any projections of future business, market share, earnings, revenues
or other financial items; any statements of the plans, strategies and objectives
of management for future operations; any statements concerning proposed new
products, services or developments; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. Forward-looking statements may
include the words "may," "will," "predict," "plan," "should," "goal,"
"estimate," "intend," "continue," "believe," "expect" or "anticipate" and other
similar words. Such forward-looking statements may be contained in the "Risk
Factors" section above, among other places.
Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to inherent risks and
uncertainties, such as those disclosed in this document. We do not intend, and
undertake no obligation, to update any forward-looking statement.
DOCUMENTS INCORPORATED BY REFERENCE
We furnish our shareholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and special reports, proxy statements and other information with the
SEC. Instead of repeating information that we have already filed with the SEC,
we are allowed to "incorporate by reference" in this prospectus information
contained in those documents we have filed with the SEC. These documents are
considered to be part of this prospectus.
We incorporate by reference in this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until the selling shareholders sell all of the
shares of common stock offered by this prospectus:
o our Annual Report on Form 10-K, including audited financial
statements, for our fiscal year ended December 31, 2002;
o our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2003;
o our Current Reports on Form 8-K dated January 16, 2003 and
March 4, 2003;
o all other reports we have filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of our fiscal year
covered by the Annual Report referred to above; and
6
o the description of our common stock contained in our
Registration Statement on Form 8-A, dated September 25, 1989,
including any amendment or report filed for the purpose of
updating such description.
Any documents that we file with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering, will also be considered to be part of this prospectus and will
automatically update and supersede the information contained in this prospectus.
At your request, we will provide you, without charge, a copy of any of
the documents we have incorporated by reference into this prospectus but not
delivered with the prospectus (other than exhibits to such documents, unless
those exhibits are specifically incorporated by reference into the documents
that this prospectus incorporates). If you want more information, write or call:
Steve M. York
Senior Vice President and Chief Financial Officer
Zix Corporation, 2711 North Haskell Avenue, Suite 2300, LB 36
Dallas, Texas 75204-2960
Telephone: (214) 370-2000
WHERE YOU CAN FIND MORE INFORMATION
We are delivering this prospectus to you in accordance with the U.S.
securities laws. We have filed a registration statement with the SEC to register
the common stock that the selling shareholders are offering to you. This
prospectus is part of that registration statement. As allowed by the SEC's
rules, this prospectus does not contain all of the information that is included
in the registration statement.
You may obtain a copy of the registration statement, or a copy of any
other filing we have made with the SEC, directly from the SEC. You may either:
o read and copy any materials we have filed with the SEC at the
SEC's Public Reference Room maintained at 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following
regional offices: 233 Broadway, New York, New York 10279; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; or
o visit the SEC's Internet site at http://www.sec.gov, which
contains reports, proxy statements, and other information
regarding us and other issuers that file electronically.
You can obtain more information about the SEC's Public Reference Room
by calling the SEC at 1-800-SEC-0330.
SELLING SHAREHOLDERS
On March 3, 2003, we entered into the Exchange Agreement with the
selling shareholders listed in the table below. Under this agreement we issued
and sold to the selling shareholders the replacement warrants. The common stock
issuable upon exercise of the replacement warrants is being offered under this
prospectus. We are registering the shares in order to permit the selling
shareholders to offer the shares of common stock for resale from time-to-time.
We issued the existing warrants (as defined under "The Transaction"),
originally covering 386,473 of our common stock shares, and an aggregate of $8
million of 6.5% Secured Convertible Notes to the selling shareholders in
September 2002. In the fourth quarter of 2002, the selling shareholders
converted the 6.5% Secured Convertible Notes and accrued interest into 2,141,811
shares of our common stock. Other than for the ownership of the existing
warrants, the replacement warrants, and the convertible notes, the selling
shareholders have not had any material relationship with us within the past
three years.
The table below lists the selling shareholders and other information
regarding the ownership of our common stock by the selling shareholders. The
second column lists the number of shares of common stock held, plus the number
of shares of common stock that would have been issuable to the selling
shareholders as of May 5, 2003, based on its ownership of the replacement
warrants, assuming conversion of all of the replacement warrants held by the
selling shareholders on that date, without regard to any limitations on
exercise. The third column lists the shares of common stock being offered by
this prospectus by the selling shareholders.
In accordance with the terms of the registration rights agreement with
the selling shareholders, this prospectus generally covers the resale of at
least that number of shares of common stock equal to 110% of the number of
shares of common stock issuable upon exercise of the replacement warrants,
determined as if the replacement warrants were exercised in full as of the
second trading day immediately preceding the filing of this registration
statement. The fourth column assumes the sale of all of the shares offered by
the selling shareholders pursuant to this prospectus.
7
Under the terms of the replacement warrants, the selling shareholders
may not exercise the replacement warrants, to the extent such exercise would
cause the selling shareholder, together with its affiliates, to have acquired a
number of shares of common stock which would exceed 4.99% of our
then-outstanding common stock, excluding for purposes of such determination
shares of common stock issuable upon exercise of replacement warrants that have
not been exercised. The number of shares in the second column does not reflect
this limitation. The selling shareholders may sell all, some or none of their
shares in this offering. See "Plan of Distribution."
OWNERSHIP PRIOR TO OFFERING OWNERSHIP AFTER OFFERING
--------------------------- ------------------------
NAME OF OWNER NUMBER OF SHARES SHARES TO BE SOLD NUMBER OF SHARES PERCENTAGE
------------- ---------------- ----------------- ---------------- ----------
HFTP Investment L.L.C.(1) 240,077 234,618 26,788 *
Gaia Offshore Master Fund, Ltd.(1) 237,077 234,618 23,788 *
Caerus Fund Ltd.(1) 32,011 31,283 3,572 *
* Less than 1%
(1) Promethean Asset Management, LLC, a New York limited liability company,
serves as investment manager to HFTP Investment L.L.C., Gaia Offshore Master
Fund, Ltd. and Caerus Fund Ltd. and may be deemed to share beneficial ownership
of the shares beneficially owned by HFTP, Gaia and Caerus. The ownership
information for each of these three selling shareholders does not include the
ownership information for the others. Promethean disclaims beneficial ownership
of the shares beneficially owned by HFTP, Gaia and Caerus, and each of HFTP,
Gaia and Caerus disclaims beneficial ownership of the shares beneficially owned
by the others. James F. O'Brien, Jr. indirectly controls Promethean. Mr. O'Brien
disclaims beneficial ownership of the shares beneficially owned by Promethean,
HFTP, Gaia and Caerus.
PLAN OF DISTRIBUTION
We are registering the shares of common stock issuable upon exercise of
the replacement warrants to permit the resale of the shares of common stock by
the holders of the replacement warrants from time-to-time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
shareholders of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock.
The selling shareholders may sell all or a portion of the common stock
beneficially owned by them and offered hereby from time-to-time directly or
through one or more underwriters, broker-dealers or agents. If the common stock
is sold through underwriters or broker-dealers, the selling shareholders will be
responsible for underwriting discounts or commissions or agent's commissions.
The common stock may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of the sale, at varying prices determined
at the time of sale, or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions,
(1) on any national securities exchange or quotation service on
which the securities may be listed or quoted at the time of
sale,
(2) in the over-the-counter market,
(3) in transactions otherwise than on these exchanges or systems
or in the over-the-counter market,
(4) through the writing of options, whether such options are
listed on an options exchange or otherwise, or
(5) through the settlement of short sales.
If the selling shareholders effect such transactions by selling shares
of common stock to or through underwriters, broker-dealers or agents, such
underwriters, brokers-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling shareholders or
commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, brokers-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the common stock or otherwise, the selling shareholders may enter
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the common stock in the course of hedging in positions they assume. The
selling shareholders may also sell shares of common stock short and deliver
shares of common stock covered by this prospectus to close out short positions,
provided that the short sale is made after the registration statement is
declared effective and a copy of this prospectus is delivered in connection with
the short sale.
The selling shareholders may pledge or grant a security interest in
some or all of the shares of common stock owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time-to-time pursuant to this
prospectus. The selling shareholders also may transfer and donate the
8
shares of common stock in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus.
The selling shareholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions paid, or any
discounts or concessions allowed to any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
shareholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock
may be sold in such states only through registered or licensed brokers or
dealers. In addition, in some states the shares of common stock may not be sold
unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling shareholder will sell any or
all of the shares of common stock registered pursuant to the shelf registration
statement, of which this prospectus forms a part.
The selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any
of the shares of common stock by the selling shareholders and any other
participating person. Regulation M may also restrict the ability of any person
engaged in the distribution of the shares of common stock to engage in
market-making activities with respect to the shares of common stock. All of the
foregoing may affect the marketability of the shares of common stock and the
ability of any person or entity to engage in market-making activities with
respect to the shares of common stock.
We will pay all expenses of the registration of the shares of common
stock pursuant to the registration rights agreement estimated to be $7,500 in
total, including, without limitation, SEC filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the selling
shareholders will pay all underwriting discounts and selling commissions, if
any. In connection with sales made pursuant to this prospectus, we will
indemnify the selling shareholders against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreement, or the selling shareholders will be entitled to contribution. We will
be indemnified by the selling shareholders against civil liabilities, including
liabilities under the Securities Act that may arise from any written information
furnished to us by the selling shareholders for use in this prospectus, in
accordance with the related registration rights agreement, or we will be
entitled to contribution.
Once sold under the shelf registration statement, of which this
prospectus forms a part, the shares of common stock will be freely tradable in
the hands of persons other than our affiliates.
DESCRIPTION OF SECURITIES
COMMON STOCK
The holders of our common stock are entitled to one vote per share on
all matters to be voted on by shareholders and are entitled to receive dividends
when declared by our board of directors, at their discretion, from legally
available funds. The holders of our common stock are not entitled to preemptive,
subscription or conversion rights, and there are no redemption or sinking fund
provisions applicable to our common stock.
Upon liquidation or dissolution, the holders of our common stock are
entitled to receive all assets available for distribution to the shareholders,
subject to the preferential rights of the holders of the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock and any other
series of preferred stock that may be outstanding.
The foregoing summary is qualified by reference to the description of
our common stock that is filed with our Registration Statement on Form 8-A,
dated September 25, 1989, including any amendment or report updating such
description.
PREFERRED STOCK
Shares of preferred stock are issuable in one or more series at the
time and for the consideration as our board of directors may determine.
Authority is expressly granted to our board of directors to fix, from
time-to-time, by resolution or resolutions providing for:
o the establishment and/or issuance of any series of preferred
stock,
9
o the designation of any series of preferred stock,
o the powers, preferences and rights of the shares of that
series, and
o the qualifications, limitations or restrictions of the
preferred stock.
We currently have designated a Series A Convertible Preferred Stock and
a Series B Convertible Preferred Stock. See our Current Report on Form 8-K,
dated September 20, 2002, and related exhibits which are incorporated by
reference in this prospectus, for a description of our Series A Convertible
Preferred Stock and our Series B Convertible Preferred Stock.
REPLACEMENT WARRANTS
The replacement warrants cover an aggregate of 455,017 shares of our
common stock at an exercise price of $5.00 per share. These warrants are
exercisable at any time after the issue date and prior to September 18, 2005.
The number of shares of common stock for which these warrants are exercisable
and the exercise price of these warrants are subject to proportional adjustment
for stock splits and similar changes affecting the common stock. The exercise
price of these warrants is also subject to full anti-dilution adjustment in the
event we issue, or are deemed to have issued, shares of common stock at a price
per share that is less than the exercise price then in effect (other than
certain specified exempt issuances).
Notwithstanding the foregoing, no selling shareholder may exercise a
replacement warrant to the extent such exercise would cause the selling
shareholder, together with its affiliates, to have acquired a number of shares
of common stock which would exceed 4.99% of our then-outstanding common stock,
excluding for purposes of such determination shares of common stock issuable
upon exercise of replacement warrants that have not been exercised. This
restriction does not prohibit a selling shareholder from exercising up to 4.99%
of the shares then outstanding, then selling those shares and later exercising
up to 4.99% again.
REGISTRATION REQUIREMENTS
We and the holders of the replacement warrants entered into a
registration rights agreement, under which we agreed to prepare and file within
15 days of the issuance of the replacement warrants a registration statement
covering the resale of 110% of the shares of common stock issuable upon the
exercise of the replacement warrants. We are required to have this registration
statement declared effective within 90 days of the issuance of the replacement
warrants.
The holders of the replacement warrants are entitled to receive from us
substantial cash damages in the event we fail to file the registration
statement, or have the registration statement declared effective, within the
time limits set forth above or, thereafter, to keep the registration statement
effective for certain periods of time.
The foregoing description of the replacement warrants is qualified by
reference to our Current Report on Form 8-K, dated March 4, 2003, and related
exhibits which are incorporated by reference in this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common
stock by the selling shareholders, rather, the selling shareholders will receive
those proceeds directly.
LEGAL MATTERS
The validity of the stock offered hereby will be passed upon for us by
Ronald A. Woessner, our Senior Vice President, General Counsel and Secretary.
EXPERTS
The consolidated financial statements appearing in the Annual Report on
Form 10-K for our fiscal year ended December 31, 2002, referred to above under
the heading "Documents Incorporated by Reference" have been audited by Ernst &
Young LLP, our independent auditors, as set forth in their report thereon,
included therein, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
10
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee $ 196.79*
Accounting fees and expenses $5,000.00**
Legal fees and expenses of registrant $2,000.00**
Miscellaneous expenses $2,800.00**
---------
Total $9,996.79
=========
----------
*Previously paid on May 7, 2003 with the initial filing.
**Estimated.
All of the noted expenses are borne by the registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Texas Business Corporation Act, the registrant's
Restated Articles of Incorporation provide that its directors shall not be
personally liable to the registrant or its shareholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the registrant or its shareholders, (ii)
any act or omission not in good faith or which involves intentional misconduct
or a knowing violation of law, (iii) any transaction from which the director
derived any improper personal benefit, (iv) any act or omission where the
liability of the director is expressly provided for by statute, or (v) any act
related to an unlawful stock repurchase or payment of a dividend. In addition,
the registrant's Restated Articles of Incorporation and Restated Bylaws include
certain provisions permitted by the Texas Business Corporation Act whereby its
directors, officers, employees and agents generally are to be indemnified
against certain liabilities to the fullest extent authorized by the Texas
Business Corporation Act. Furthermore, the employment agreement between John A.
Ryan and us, dated November 14, 2001, provides Mr. Ryan, our chairman, president
and chief executive officer, with a contractual right to indemnification as an
officer and/or director of us as set forth in Article VII of our Restated
Bylaws, dated September 14, 1999. The registrant maintains insurance on behalf
of its directors and executive officers insuring them against any liability
asserted against them in their capacities as directors or officers or arising
out of such status.
ITEM 16. EXHIBITS.
The exhibits to this registration statement are listed in the Index to
Exhibits on page II-4 of this registration statement, which Index is
incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(1) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(2) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than 20 percent
change in the maximum aggregate offering
price set forth in the "Calculation of
Registration Fee" table in the effective
registration statement.
(3) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
II-1
information in the registration statement;
provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form
S-8 or Form F-3, and the information
required to be included in a post-effective
amendment by those paragraphs is contained
in periodic reports filed with or furnished
to the Commission by the registrant pursuant
to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are
incorporated by reference in the
registration statement.
(ii) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(iii) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 15 or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on June 2, 2003.
ZIX CORPORATION
By: /s/ Steve M. York
--------------------------------------------
Steve M. York
Senior Vice President, Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 2, 2003.
Signature Title
--------- -----
/*/ Chairman, President, Chief Executive Officer and Director
----------------------------------- (Principal Executive Officer)
John A. Ryan
/s/ Steve M. York Senior Vice President, Chief Financial Officer and Treasurer
----------------------------------- (Principal Financial and Accounting Officer)
Steve M. York
/*/ Director
-----------------------------------
Michael E. Keane
/*/ Director
-----------------------------------
James S. Marston
/*/ Director
-----------------------------------
Antonio R. Sanchez III
/*/ Director
-----------------------------------
Dr. Ben G. Streetman
*By: /s/ Steve M. York
------------------------------
Steve M. York
Attorney-in-Fact
II-3
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.1 Agreement Regarding Exercise and Issuance of Warrants, dated March 3,
2003, by and between Zix Corporation and the Investors named therein
(including schedules but excluding exhibits). (1)
4.2 Form of Warrant to purchase shares of common stock of Zix Corporation,
issued by Zix Corporation. (1)
4.3 Registration Rights Agreement, dated March 3, 2003, by and among Zix
Corporation and the Investors named therein. (1)
5.1 Opinion of Ronald A. Woessner. (2)
23.1 Consent of Ronald A. Woessner (included in his opinion filed as Exhibit
5.1).
23.2 Consent of Ernst & Young LLP. (3)
24.1 Power of Attorney. (2)
(1) Incorporated by reference from Zix Corporation's Current Report on Form
8-K, dated March 4, 2003.
(2) Previously filed with this registration statement.
(3) Filed electronically herewith.
II-4