<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ....... to .......
Commission File Number: 0-17995
ZIXIT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Texas 75-2216818
(State of Incorporation) (I.R.S. Employer
Identification Number)
One Galleria Tower
13355 Noel Road
Suite 1555
Dallas, Texas 75240-6604
(Address of Principal Executive Offices)
(972) 702-7055
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1999
- -------------------------------------- -------------------------------
Common Stock, par value $.01 per share 15,308,929
<PAGE>
INDEX
PART I-FINANCIAL INFORMATION
Page
Number
------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 1999
and December 31, 1998 3
Condensed Consolidated Statements of Operations for the
three months and nine months ended September 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II-OTHER INFORMATION
Item 2. Changes in Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
2
<PAGE>
ZIXIT CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,007 $ 54,292
Short-term marketable securities 32,701 26,929
Due from sale of discontinued operations -- 5,304
Other current assets 775 215
--------- ---------
Total current assets 39,483 86,740
Long-term marketable securities 17,000 --
Property and equipment, net 19,059 158
--------- ---------
$ 75,542 $ 86,898
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 7,098 $ 1,574
Liabilities related to discontinued operations 1,360 3,875
--------- ---------
Total current liabilities 8,458 5,449
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value, 10,000,000 shares
authorized; none outstanding -- --
Common stock, $.01 par value, 175,000,000 shares 176 174
authorized; 17,600,829 issued, 15,308,929
outstanding in 1999 and 17,384,437 issued, 15,092,537
outstanding in 1998
Additional capital 100,177 88,449
Treasury stock, at cost (11,314) (11,314)
Retained earnings (deficit) (net of deficit accumulated during
the development stage of $26,095 in 1999) (21,955) 4,140
--------- ---------
Total stockholders' equity 67,084 81,449
--------- ---------
$ 75,542 $ 86,898
========= =========
</TABLE>
See accompanying notes.
3
<PAGE>
ZIXIT CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- ------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Research and development expenses:
Non-employee stock option compensation $ 1,418 $ -- $ (6,387) $ --
Other (6,530) -- (12,790) --
------- ------ ------- ------
(5,112) -- (19,177) --
Operating costs and general corporate expenses (7,310) (523) (10,585) (3,350)
Investment income 837 582 2,874 1,154
------- ------ ------- ------
Income (loss) from continuing operations before income taxes (11,585) 59 (26,888) (2,196)
Income tax (provision) benefit 65 (54) 185 645
------- ------ ------- ------
Income (loss) from continuing operations (11,520) 5 (26,703) (1,551)
Discontinued operations:
Income from discontinued operations, net of
income taxes -- 1,262 -- 4,965
Gain (loss) on sale of discontinued operations 210 -- 608 (1,561)
------- ------ ------- ------
210 1,262 608 3,404
------- ------ ------- ------
Net income (loss) $ (11,310) $ 1,267 $ (26,095) $ 1,853
======= ====== ======= ======
Basic and diluted earnings (loss) per common share:
Continuing operations $ (0.75) $ -- $ (1.75) $ (0.10)
Discontinued operations 0.01 0.08 0.04 0.21
------- ------ ------- ------
Net income (loss) $ (0.74) $ 0.08 $ (1.71) $ 0.11
======= ====== ======= ======
Weighted average shares outstanding 15,282 14,903 15,219 16,134
======= ====== ======= ======
</TABLE>
See accompanying notes.
4
<PAGE>
ZIXIT CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (26,703) $ (1,551)
Adjustments to reconcile loss from continuing operations
to net cash used by operating activities:
Depreciation and amortization 1,446 10
Non-employee stock option compensation 10,202 --
Employee stock option compensation 275 516
Changes in assets and liabilities, excluding divestiture of businesses:
Other current assets (560) (21)
Current liabilities 2,324 321
-------- -------
Net cash used by continuing operations (13,016) (725)
Net cash provided (used) by discontinued operations (1,907) 3,857
-------- -------
Net cash provided (used) by operating activities (14,923) 3,132
Cash flows from investing activities:
Purchases of property and equipment, net (17,147) (100)
Purchases of marketable securities (119,015) (16,053)
Sales and maturities of marketable securities 96,243 1,010
Investing activities of discontinued operations:
Proceeds from sales of businesses, net of cash sold 5,304 23,483
Purchases of property and equipment, net and other -- (2,438)
-------- -------
Net cash provided (used) by investing activities (34,615) 5,902
Cash flows from financing activities:
Proceeds from exercise of stock options 1,264 389
-------- -------
Net cash provided by financing activities 1,264 389
Effect of exchange rate changes on cash and cash equivalents (11) 22
-------- -------
Increase (decrease) in cash and cash equivalents (48,285) 9,445
Cash and cash equivalents, beginning of period 54,292 12,583
-------- -------
Cash and cash equivalents, end of period $ 6,007 $ 22,028
======== =======
</TABLE>
See accompanying notes.
5
<PAGE>
ZIXIT CORPORATION
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying financial statements, which should be read in conjunction
with the audited consolidated financial statements included in the Company's
1998 Annual Report to Shareholders on Form 10-K, are unaudited but have been
prepared in the ordinary course of business for the purpose of providing
information with respect to the interim periods. The Condensed Consolidated
Balance Sheet at December 31, 1998 was derived from the audited Consolidated
Balance Sheet at that date which is not presented herein. Management of the
Company believes that all adjustments necessary for a fair presentation for such
periods have been included and are of a normal recurring nature, except the
accounting for the fair value of stock options granted to non-employees as
explained in Note 3. The results of operations for the nine-month period ended
September 30, 1999 are not necessarily indicative of the results to be expected
for the full year.
During 1998, the Company sold all of its operating businesses and,
accordingly, the assets and liabilities, operating results and cash flows of
these businesses have been reclassified as discontinued operations in the
accompanying financial statements. The results of the discontinued operations
do not include any interest expense or allocation of corporate expenses.
Basic and diluted earnings per common share are both computed based on the
weighted average number of shares of common stock outstanding. The assumed
exercise of outstanding stock options would be antidilutive for all periods
presented.
2. New Business
The Company has no revenue producing businesses. In 1999, the Company has
been developing a digital signature and encryption technology and is planning a
series of products that use this technology. Two products being actively
developed are ZixMail(TM) , a secure Internet messaging system, and
ZixCharge(TM), an Internet transaction authorization system. Successful growth
of a start-up enterprise, like the Company, is costly. Moreover, the Internet
arena is highly competitive. The Company's internal growth depends, in large
measure, on the timely development and market acceptance of its new products,
and its growth involves risks and uncertainties. There are no assurances that
the Company will be successful in its current business endeavors. See Notes 3
and 4, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
3. Non-Employee Stock Options
Director Stock Option Plan
In January 1999, certain non-employee directors were granted
immediately vested options to purchase, in the aggregate, approximately 150,000
shares of the Company's common stock under a plan that was approved by the
Company's shareholders on September 14, 1999. The options have an exercise price
of $10.65 per share, which was 120% of the closing price of the common stock on
the date of grant. In accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," the Company recorded a non-cash
general corporate expense of $3,335,000 in the third quarter of 1999
representing the excess of the closing price of the common stock on September
14, 1999 over the exercise price.
New Business Initiatives
The Company entered into an agreement in February 1999 with Lante
Corporation ("Lante"), a third party software development firm, to assist the
Company in developing software for its new Internet-related businesses. In
exchange for the services provided by Lante, the Company pays cash for work
performed at
6
<PAGE>
discounted rates and has issued options to purchase 500,000 shares of the
Company's common stock to Lante at an exercise price of $7.62 per share, the
closing price of the Company's common stock on the date of the agreement. The
options vest over three years and expire at the end of ten years. On the date of
grant, these options had an estimated fair value of $2,865,000 or $5.73 per
share, using the Black-Scholes option valuation model. Accounting for these
options require that they be revalued on each subsequent reporting date until
performance is complete with a cumulative catch up adjustment recognized for any
changes in their fair value. The Company's common stock price has increased from
$7.62 per share at the date of grant to $29.63 per share at September 30, 1999,
thereby increasing the estimated fair value of these options to $13,525,000 or
$27.05 per share as of September 30, 1999. The revalued amount for these options
is being amortized over the three year vesting period; accordingly, the
Company's results of operations for the three months and nine months ended
September 30, 1999 include a non-cash credit of $1,418,000 (resulting from a
lower common stock price at the end of the third quarter as compared to the
$55.94 common stock price at the end of the second quarter) and a non-cash
charge of $6,387,000, respectively, for amortization of the fair value of these
options. The Company's future results of operations could be materially impacted
by a change in valuation of the stock options issued to Lante as a result of
future increases or decreases in the price of the Company's common stock.
However, the required accounting treatment has no impact on the Company's cash
flows or total stockholders' equity.
4. Subsequent Event
In October 1999, the Company purchased all of the outstanding shares of
Anacom Communications, Inc. ("Anacom"), a privately-held, Dallas-based provider
of Internet transaction processing and real-time credit card processing services
to Internet merchants. Consideration consists of $2,500,000 in cash paid at
closing and common stock, valued at a minimum of $7,500,000, to be delivered in
two annual allotments. The number of shares to be delivered, set at a minimum
of approximately 190,000 shares, may be increased depending on the market value
of the common stock at the time of delivery. The final value of the transaction
for financial accounting purposes will reflect the value of the common stock
when delivered. The purchase price is expected to be amortized to income over
two years. The historical results of operations of Anacom are not significant
compared to the Company's results of operations.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Historically, the Company operated in one industry segment, the provision
of systems and solutions for the intelligent transportation, electronic security
and other markets through the design, manufacturing, installation and support of
hardware and software products utilizing the Company's wireless data and
security technologies. The businesses comprising this industry segment were sold
during 1997 and 1998 and have been reclassified as discontinued operations in
the consolidated financial statements.
In 1999, the Company has been developing a digital signature and encryption
technology (the "ZixIt (TM) technology") and is planning a series of products
that use this technology. Products being actively developed are: ZixMail (TM), a
secure Internet messaging system, and ZixCharge (TM), an Internet transaction
authorization system. ZixMail, which is expected to be released to the public
soon, will enable Internet users to send and receive encrypted and digitally
signed email communications without changing their existing email addresses. The
ZixMail software uses 1024-bit public key and Triple-DES encryption and can be
exported throughout the world except to certain prohibited countries and
territories. ZixCharge is designed to allow consumers to purchase items over the
Internet without divulging personal information to Web merchants.
Successful growth of a start-up enterprise, like the Company, is costly.
Moreover, the Internet arena is highly competitive. The Company's prospects in
the near-term depend on the timely development and market acceptance of its new
products. The Company's future growth involves risks and uncertainties, and
there are no assurances that the Company will be successful in its current
business endeavors.
Results of Operations
Continuing Operations
Research and development expenses
The Company first incurred development expenses for its current
business endeavors in the first quarter of 1999. Non-employee stock option
compensation consists of a non-cash credit of $1,418,000 and a non-cash charge
of $6,387,000 for the three months and nine months ended September 30, 1999,
respectively, for amortization of the fair value of stock options granted to a
third party software development firm that is assisting the Company with its
development efforts. See Note 3 to the Condensed Consolidated Financial
Statements for additional discussion regarding non-employee stock options. Other
research and development expenses of $6,530,000 and $12,790,000 for the three
months and nine months ended September 30, 1999, respectively, primarily consist
of expenditures to third parties for development of software for the Company's
ZixIt technology and related ZixMail and ZixCharge systems.
Operating costs and general corporate expenses
Operating costs and general corporate expenses for the three months and
nine months ended September 30, 1999 increased $6,787,000 and $7,235,000 from
the prior year periods, respectively, primarily due to expenditures for
marketing, expanded lease facilities, personnel and start-up operating costs
relating to establishing the Company's Internet-related businesses. Also
contributing to the increase was a non-recurring, non-cash expense of
$3,335,000, recognized by the Company in 1999's third quarter, relating to stock
options granted in January 1999 to certain of the Company's outside directors
under a plan that was approved by the shareholders in September 1999.
8
<PAGE>
Investment income
Investment income for the three months and nine months ended September
30, 1999 increased from $582,000 to $837,000 and increased from $1,154,000 to
$2,874,000, respectively. The increase for both periods is primarily due to the
increase in invested cash and marketable securities resulting from the sale of
the Company's businesses during 1998.
Income tax (provision) benefit
The income tax benefit on the loss from continuing operations of
$65,000 and $185,000 for the three months and nine months ended September 30,
1999 and the income tax provision of $54,000 and the income tax benefit of
$645,000 for the comparable periods in 1998, respectively, is different from the
U.S. statutory rate of 34%, primarily due to unbenefitted U.S. losses. The
Company fully reserves its deferred tax assets due to the uncertainty of future
taxable income from the Company's new business initiatives.
Income (loss) from continuing operations
As a result of the foregoing, the Company experienced losses from
continuing operations of $11,520,000 and $26,703,000 for the three months and
nine months ended September 30, 1999 as compared to income of $5,000 and a loss
of $1,551,000 for the same periods in 1998.
Discontinued Operations
The Company sold its remaining operating businesses in 1998 and,
accordingly, their net operating income of $1,262,000 and $4,965,000 for the
three months and nine months ended September 30, 1998, respectively, has been
reclassified as discontinued operations. Discontinued operations in 1998 also
included the net loss from the sales of the Company's Transportation Systems
Group and Cotag International. The Company recorded a gain of $210,000 and
$608,000 for the three months and nine months ended September 30, 1999,
respectively, primarily due to a reduction in estimated future costs for various
indemnification issues associated with the disposal of these businesses.
Liquidity and Capital Resources
At September 30, 1999, the Company's principal source of liquidity is its
cash investments and marketable securities totaling $55,708,000. The Company
plans to continue to invest its excess cash in high-grade U.S. corporate debt
securities or U.S. government and agency securities.
The Company's new business initiative to create Internet related businesses
requires significant investment. The Company's purchase of Anacom
Communications, Inc. in October 1999 included a cash payment of $2,500,000. In
addition, the Company currently expects to invest $9,000,000 to $12,000,000
during the fourth quarter of 1999 on ZixCharge and ZixMail for software
development, marketing, expanded lease facilities, communications, computers and
related equipment to expand its computing center and related personnel and
start-up operating costs. Management believes the Company's existing cash
position will be sufficient to meet near-term anticipated needs. The Company
has no existing borrowings or credit facilities. Acquisitions, if any, would be
financed by the most attractive alternative available, which could be the
utilization of cash or the issuance of debt or equity securities.
Non-Employee Stock Options
See Note 3 to the Condensed Consolidated Financial Statements regarding the
accounting for stock options granted to non-employees and their potential impact
on the Company's future operating results.
9
<PAGE>
Impact of the Year 2000
The Year 2000 Issue is primarily the result of computer programs being
written using two digits rather than four to define the applicable year. There
are no material Year 2000 compliance requirements confronting the Company since
it has no existing operating businesses. The Company's current financial and
administrative systems are fully compliant. Accordingly, the Company has no
ongoing remediation plans with respect to its current systems.
Software systems developed for use in connection with the Company's new
Internet related businesses will be designed and tested for Year 2000
compliance. The Company continues to assess the impact, if any, the Year 2000
Issue will have on its key vendors and development partners before the inception
of a relationship. If the Company's assessments of the impact of the Year 2000
Issue prove to be incorrect, the Company's new Internet related businesses may
be materially affected.
Risks and Uncertainties
The Company has no revenue producing businesses. In 1999, the Company has
been developing the ZixIt technology and is planning a series of products that
use this technology. The Company's future success is subject to risks and
uncertainties, including, but not limited to, the following:
Product Development and Market Acceptance
. There are no assurances that the Company will be able to successfully
and timely develop its planned products, that it will be able to
compete effectively against similar or alternative businesses, that
it will gain market acceptance, that it will not be made obsolete by
further technological development, that it will be able to provide or
attract the necessary capital, or that it will not encounter other,
and even unanticipated, risks.
. Use of the Internet by consumers, while growing, is still at an early
stage of development, and market acceptance of the Company's planned
products is subject to a high level of uncertainty.
. The Company may decide, at any time, to delay or discontinue the
development and release of any one or more of its planned products.
Competition and Technological Change
The Company will be competing with larger companies that have access to
greater capital, research and development, marketing, distribution and other
resources than the Company. In addition, the Internet arena is characterized by
extensive research efforts and rapid product development and technological
change that could render the Company's planned products obsolete or
noncompetitive.
Intellectual Property Rights
The Company relies, in part, on patents, trade secrets and proprietary
technology to remain competitive. It may be necessary to defend these rights or
to defend against claims that the Company is infringing the rights of others.
Intellectual property litigation and controversies are disruptive and expensive.
Lack of Standards
There are currently no generally accepted standards for secure Internet
messaging systems or Internet transaction authorization systems. There is no
assurance that any of the Company's planned products will become a generally
accepted standard or that any of them will be compatible with any standards that
become generally accepted.
10
<PAGE>
Sales of Businesses
The Company disposed of its operating businesses in 1998 and 1997. In
connection with those dispositions, the Company agreed to provide customary
indemnifications to the purchasers of those businesses for breaches of
representations and warranties, covenants and other specified matters. Although
the Company believes that it has adequately provided for future costs associated
with these indemnification obligations, indemnifiable claims could exceed the
Company's estimates.
Other Uncertainties.
Other operating, financial or legal risks or uncertainties are discussed
in this Form 10-Q in specific contexts and in the Company's other periodic SEC
filings. The Company is, of course, also subject to general economic risks,
dependence on key personnel and other risks and uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For the period ended September 30, 1999, the Company did not experience any
material changes in market risk exposures that affect the quantitative and
qualitative disclosures presented in the Company's 1998 Annual Report to
Shareholders on Form 10-K.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
See Note 4 to Condensed Consolidated Financial Statements regarding the
Company's acquisition of Anacom Communications, Inc. ("Anacom"). The
transaction is exempt from registration pursuant to section 4(2) of the
Securities Act of 1933 and Regulation D thereunder since the shares of common
stock, valued at a minimum of $7,500,000, are to be delivered to the two owners
of Anacom, who qualify as "accredited investors" under Regulation D.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on September 14, 1999.
At this meeting, the shareholders elected as directors of the Company, David P.
Cook, Michael E. Keane, James S. Marston, Jack L. Martin, Antonio R. Sanchez,
Jr., Dr. Ben G. Streetman and Mark A. Tebbe. The tabulation of votes with
respect to the election of directors is as follows:
<TABLE>
<CAPTION>
Nominee Shares For Shares Withheld
------- ---------- ---------------
<S> <C> <C>
David P. Cook 14,620,052 211,144
Michael E. Keane 14,606,295 224,901
James S. Marston 14,627,095 204,101
Jack L. Martin 14,604,145 227,051
Antonio R. Sanchez, Jr. 14,618,150 213,046
Dr. Ben G. Streetman 14,566,045 265,151
Mark A. Tebbe 14,614,200 216,996
</TABLE>
11
<PAGE>
The shareholders voted to amend the Company's Articles of Incorporation to
change the Company's name from CustomTracks Corporation to ZixIt Corporation.
The tabulation of the votes with respect to the Company's name change is as
follows:
For 14,687,759
Against 112,801
Abstain 30,286
Non-Vote 350
The shareholders voted to amend the Company's Articles of Incorporation to
increase the number of authorized shares of common stock, par value $0.01, from
30,000,000 to 175,000,000 shares. The tabulation of the votes with respect to
the change in the number of authorized shares of common stock is as follows:
For 13,845,891
Against 937,426
Abstain 47,429
Non-Vote 450
The shareholders voted to adopt the 1999 Directors' Stock Option Plan. The
tabulation of votes with respect to adopting the plan is as follows:
For 13,830,121
Against 757,055
Abstain 91,132
Non-Vote 152,888
ITEM 5. OTHER INFORMATION
See Note 4 to Condensed Consolidated Financial Statements regarding the
Company's acquisition of Anacom Communications, Inc.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following is a list of exhibits filed as part of this
Quarterly Report on Form 10-Q.
Description of Exhibits
-----------------------
* 3.1 Articles of Incorporation of Amtech Corporation, dated
January 28, 1988.
* 3.2 Articles of Amendment to the Articles of Incorporation
of CustomTracks Corporation, dated September 14, 1999.
* 3.3 Articles of Amendment to the Articles of Incorporation
of ZixIt Corporation, dated October 12, 1999.
* 10.1 ZixIt Corporation 1990 Stock Option Plan
(Amended and Restated as of September 1999).
* 10.2 ZixIt Corporation 1992 Stock Option Plan
(Amended and Restated as of September 1999).
* 10.3 ZixIt Corporation 1995 Long-Term Incentive Plan
(Amended and Restated as of September 1999).
* 10.4 ZixIt Corporation 1999 Directors' Stock Option Plan.
* 27.1 Financial Data Schedule.
b. The Registrant filed Form 8-K with the Securities and Exchange
Commission on October 13, 1999 to report the October 1, 1999
purchase of Anacom Communications, Inc.
*Filed herewith.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ZIXIT CORPORATION
(Registrant)
Date: November 15, 1999 By: /s/ Steve M. York
--------------------------------------
Steve M. York
Senior Vice President, Chief Financial
Officer, and Treasurer
(Principal Financial Officer and
Duly Authorized Officer)
14
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
AMTECH CORPORATION
------------------
ARTICLE I
The name of the Corporation is Amtech Corporation.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose for which the Corporation is organized is to engage in any act,
activity or business for which corporations may be organized under the Texas
Business Corporation Act, as the same exists or may hereafter be amended;
provided, however, the Corporation shall not be authorized to transact any
business in this State which is prohibited by Article 2.01-B of the Texas
Business Corporation Act.
ARTICLE IV
The total number of shares of capital stock which the Corporation shall
have the authority to issue is Ten Million (10,000,000) shares of Common Stock,
$.0l par value, and Ten Million (10,000,000) shares of Preferred Stock, $1.00
par value. The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article IV, to provide
for the issuance of the Preferred Stock from time to time in one or more series,
to establish the number of shares to be included in each series, and to fix the
designations, powers, relative rights, qualifications, preferences, limitations
and restrictions of the shares of each such series not fixed hereby.
ARTICLE V
No stockholder of the Corporation shall, by reason of his holding shares of
any class of capital stock of the Corporation, have any preferential right to
purchase or subscribe to any shares of any class of capital stock of the
Corporation, or any notes, debentures, bonds, warrants, options or other
securities of the Corporation, now or hereafter to be authorized.
ARTICLE VI
Cumulative voting for the election of directors shall be permitted.
ARTICLE VII
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00), consisting of money, labor done or property actually
received.
<PAGE>
ARTICLE VIII
The address of the initial registered office of the Corporation is 4514
Cole Avenue, Suite 1200, Dallas, Texas 75205, and the name of its initial
registered agent at such address is G. Russell Mortenson.
ARTICLE IX
The number of directors from time to time constituting the Board of
Directors of the Corporation shall be fixed in the manner provided in the Bylaws
of the Corporation. The number of directors constituting the initial Board of
Directors is four (4), and the names of the persons who are to serve as
directors until the first annual meeting of shareholders or until their
successors are duly elected and qualified are as follows:
Name Address
------------------------------ -----------------------------
David P. Cook 4514 Cole Avenue
Suite 1200
Dallas, Texas 75205
Kenneth W. Anderson 4514 Cole Avenue
Suite 1200
Dallas, Texas 75205
Michael P. Corboy 4514 Cole Avenue
Suite 1200
Dallas, Texas 75205
Gary L. Seawright 2530 Camino Entrada
Santa Fe, New Mexico 87505
ARTICLE X
The incorporator is G. Russell Mortenson, whose mailing address is 4514
Cole Avenue, Suite 1200, Dallas, Texas 75205.
ARTICLE XI
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except liability for (i) any breach of the director's duty
of loyalty to the Corporation 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. If the Texas Business Corporation Act or
other applicable law of the State of Texas is amended after the filing of these
Articles of Incorporation to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Texas Business Corporation Act or other applicable law of the
State of Texas, as so amended.
-2-
<PAGE>
Any repeal or modification of the foregoing paragraph by the shareholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XII
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Texas Business Corporation
Act or other applicable law of the State of Texas, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except for a proceeding
brought by an indemnitee to enforce his rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. The right
to indemnification conferred in this Article XII shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Texas Business
Corporation Act or other applicable law of the State of Texas requires, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Article or otherwise.
B. If a claim under this Article XII is not paid in full by the
Corporation within a reasonable time after a written claim has been received by
the Corporation, the indemnitee may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in the Texas
Business Corporation Act or other applicable law of the State of Texas. Neither
the failure of the Corporation (including its Board of Directors, independent
legal counsel or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification met the applicable standard of
conduct set forth in the Texas Business Corporation Act or other applicable law
of the State of Texas, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its shareholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
-3-
<PAGE>
presumption that the indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the indemnitee, be a defense to such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder or by the Corporation
to recover an advancement of expenses pursuant to the terms of an undertaking,
the burden of proving that the indemnitee is not entitled to be indemnified, or
to such advancement of expenses, under this Article XII or otherwise shall be on
the Corporation.
C. The rights to indemnification and to the advancement of expenses
conferred in this Article XII shall not be exclusive of any other right which
any person may have or hereafter acquire under these Articles of Incorporation
or any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise.
D. The Corporation may maintain insurance, at its expense, to protect
itself and any director or officer of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the Texas
Business Corporation Act or other applicable law of the State of Texas.
E. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article XII with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
ARTICLE XIII
The initial Bylaws of the Corporation shall be adopted by the Board of
Directors. The power to alter, amend or repeal the Bylaws or adopt new Bylaws is
vested in the Board of Directors.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 28th day
of January, 1988.
/s/ G. Russell Mortenson
---------------------------------------
G. Russell Mortenson, Incorporator
STATE OF TEXAS (S)
(S)
COUNTY OF DALLAS (S)
Before me, a Notary Public, on this day personally appeared G. Russell
Mortenson, known to me to be the person whose name is subscribed to the
foregoing document, and being by me first duly sworn, declared that the
statements therein contained are true and correct.
Given under my hand and seal of office this 28th day of January, 1988.
/s/ Cheryl M. Smith
------------------------------
Name (Printed)
----------------
Notary Public, State of Texas
My commission expires:
- ----------------------
-4-
<PAGE>
EXHIBIT 3.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CUSTOMTRACKS CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, as amended, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
ARTICLE ONE
The name of the corporation is CustomTracks Corporation.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation on September 14, 1999. The amendment alters
Article I of the current Articles of Incorporation, as last amended on September
1, 1998, and the full text of Article I as amended is as follows:
"ARTICLE I
The name of the corporation is ZixIt Corporation."
ARTICLE THREE
The number of shares of the corporation outstanding at the time of the
adoption of the above amendment was 17,600,829, and the number of shares
entitled to vote on the amendment was 15,267,929.
ARTICLE FOUR
The number of shares of the corporation voted for the above amendment was
14,687,759, and the number of shares voted against the amendment was 112,801.
Dated: September 14, 1999
CUSTOMTRACKS CORPORATION
By: /s/ Ronald A. Woessner
----------------------------------
Ronald A. Woessner, Secretary
<PAGE>
EXHIBIT 3.3
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
ZIXIT CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, as amended, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
ARTICLE ONE
The name of the corporation is ZixIt Corporation.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation on September 14, 1999. The amendment alters
Article IV of the current Articles of Incorporation, as last amended on
September 16, 1999, and the full text of Article IV as amended is as follows:
"ARTICLE IV
The total number of shares of capital stock which the Corporation
shall have the authority to issue is One Hundred Seventy-Five
Million (175,000,000) shares of Common Stock, $.01 par value, and
Ten Million (10,000,000) shares of Preferred Stock, $1.00 par
value. The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and the provisions of
this Article IV, to provide for the issuance of Preferred Stock
from time-to-time in one or more series, to establish the number
of shares to be included in each series, and to fix the
designations, powers, relative rights, qualifications,
preferences, limitations and restrictions of the shares of each
such series not fixed hereby."
ARTICLE THREE
The number of shares of the corporation outstanding at the time of the
adoption of the above amendment was 17,600,829, and the number of shares
entitled to vote on the amendment was 15,267,929.
ARTICLE FOUR
The number of shares of the corporation voted for the above amendment was
13,845,891, and the number of shares voted against the amendment was 937,426.
Dated: October 12, 1999
ZIXIT CORPORATION
By: /s/ Ronald A. Woessner
-----------------------------------
Ronald A. Woessner, Secretary
<PAGE>
EXHIBIT 10.1
--
ZIXIT CORPORATION
1990 STOCK OPTION PLAN
(Amended and Restated as of September 1999)
1. Purpose. The purpose of the Plan is to benefit the Company and its
-------
Subsidiaries by offering certain present and future Employees a favorable
opportunity to acquire shares of Stock of the Company over a period of years,
thereby giving such Employees a permanent stake in the growth and prosperity of
the Company, encouraging such Employees to continue their services with the
Company and its Subsidiaries, and motivating such Employees to devote their best
efforts to the business and profitability of the Company and its Subsidiaries.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) An "Acquiring Person" shall mean any Person (including any "person" as
such term is used in Sections 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) that, together with all Affiliates
and Associates of such Person, is the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 10% or more of the outstanding Common
Stock. The term "Acquiring Person" shall not include the Company, any subsidiary
of the Company, any employee benefit plan of the Company or subsidiary of the
Company, any Person to the extent such Person is holding Common Stock for or
pursuant to the terms of any such plan, or Optionee or any Affiliate or
Associate of Optionee. For the purposes of this Plan, a Person who becomes an
Acquiring Person by acquiring beneficial ownership of 10% or more of the Common
Stock at any time after the date of this Agreement shall continue to be an
Acquiring Person whether or not such Person continues to be the beneficial owner
of 10% or more of the outstanding Common Stock.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act in effect on the date of this Agreement.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Change of Control" shall mean the occurrence, with respect to an
Option held by Employees of a Subsidiary, at any time during the specified term
of such Option, of any of the following events:
(1) The Company is merged or consolidated or reorganized into or with
another Person and as a result of such merger, consolidation or
reorganization less than seventy-five percent (75%) of the
outstanding voting securities or other material capital interests
of the surviving, resulting or acquiring Person are owned in the
aggregate by Persons who were shareholders of the Company
immediately prior to such merger, consolidation or
reorganization;
(2) The Company sells all or substantially all of its business or
assets to any other Person, less than seventy-five percent (75%)
of the outstanding voting securities or other material capital
interests of which are owned in the aggregate by Persons who were
shareholders of the Company, directly or indirectly, immediately
prior to such sale; or
<PAGE>
(3) Any Person (or group of Persons acting in concert), other than
the Company, becomes the beneficial owner, directly or
indirectly, of thirty-five percent (35%) or more of the issued
and outstanding shares of voting securities of the Company.
(e) "Change of Control" shall mean the occurrence, with respect to an
Option held by Employees of the Company, at any time during the specified term
of such Option, of any of the following events:
(1) (a) Any Sale of the Company or (b) any Sale of any Material
Subsidiary for consideration valued at $300 million or more; or
(2) Any Acquiring Person has become the beneficial owner of
securities which, when added to any securities already owned by
such person, would represent in the aggregate 25% or more of the
then-outstanding securities of the Company that are entitled to
vote to elect any class of directors;
(3) If at any time, the Continuing Directors then serving on the
Board of Directors of the Company cease for any reason to
constitute at least a majority thereof; or
(4) Any occurrence that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A or any successor
rule or regulation promulgated under the Exchange Act.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Company" shall mean ZixIt Corporation, a Texas corporation.
(h) A "Continuing Director" shall mean a director of the Company who (i)
is not an Acquiring Person or an Affiliate or Associate thereof, or a
representative of an Acquiring Person or nominated for election by an Acquiring
Person, and (ii) was either a member of the Board of Directors of the Company on
the date of this Agreement or subsequently became a director of the Company and
whose initial election or initial nomination for election by the Company's
shareholders was approved by a majority of the Continuing Directors then on the
Board of Directors of the Company.
(i) "Date of Grant" shall mean, with respect to each Option granted by the
Plan Administrator pursuant to the Plan, the date specified in Section 1 of the
Option Agreement relating to such Option.
(j) "Director" shall mean any duly elected and qualified member of the
Board.
(k) "Disability" shall mean any medically determinable physical or mental
impairment that, in the opinion of the Plan Administrator, based upon medical
reports and other evidence satisfactory to the Plan Administrator, can
reasonably be expected to prevent an Employee from performing substantially all
of his customary duties of employment for a continuous period of not less than
twelve (12) months.
(l) "Employee" shall mean any salaried employee of the Company or any
Subsidiary, except a salaried employee who is serving as a Director.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2
<PAGE>
(n) "Fair Market Value" shall mean the closing price of the Stock as
quoted on NASDAQ/NMS on the last business day immediately preceding the date on
which the Option is granted or the date of exercise, as the case may be.
(o) A "Material Subsidiary" shall mean any majority-owned subsidiary of
the Company that is material to the business of the Company, taken as a whole,
and that is engaged in the digital data distribution business or other business
involving a concept primarily fostered by Mr. David P. Cook.
(p) "NASDAQ/NMS" shall mean the NASDAQ National Market System.
(q) "Non-employee Director" shall have the meaning given such term in Rule
16b-3.
(r) "Option" shall mean any right to purchase Stock that has been granted
pursuant to the Plan.
(s) "Option Agreement" shall mean an agreement executed by an officer of
the Company and an Optionee evidencing the grant of an Option pursuant to the
Plan.
(t) "Optionee" shall mean any Employee who receives an Option or any
Person who acquires an Option by reason of the death of an Employee.
(u) A "Person" shall mean an individual, a corporation, a partnership, an
association, a joint-stock company, a trust, an incorporated organization, or a
government or political subdivision thereof and any other entity. A Person,
together with that Person's Affiliates and Associates, and any Persons acting as
a partnership, limited partnership, joint venture, association, syndicate, or
other group (whether or not formally organized), or otherwise acting jointly or
in concert or in a coordinated or consciously parallel manner (whether or not
pursuant to any express agreement), for the purpose of acquiring, holding,
voting, or disposing of securities of the Company with that Person, shall be
deemed a single "Person."
(v) "Plan" shall mean this ZixIt Corporation 1990 Stock Option Plan.
(w) "Plan Administrator" shall mean a committee of the Board of Directors
comprised of at least two directors. Members of the Committee shall be selected
by the Board of Directors. To the extent necessary to comply with the
requirements of Rule 16b-3, the Committee shall consist of two or more Non-
employee Directors. Also, if the requirements of (S)162(m) of the Code are
intended to be met, the Committee shall consist of two or more "outside
directors" within the meaning of (S)162(m) of the Code.
(x) "Resignation" shall mean the voluntary termination by an Employee of
his or her employment relationship with the Company or its Subsidiaries under
circumstances other than voluntary Retirement.
(y) "Retirement" shall mean the termination of an Employee's employment in
accordance with the requirements of a written retirement plan, policy or rule of
the Company or its Subsidiaries which has been duly adopted by the Board.
(z) "Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under
the Exchange Act as it may be amended from time-to-time and any successor
provision to Rule 16b-3 under the Exchange Act.
(aa) A "Sale" occurs with respect to the Company or a Material Subsidiary,
as applicable, if it engages in a merger, consolidation, recapitalization,
reorganization, or sale, lease, license, transfer, or
3
<PAGE>
other effective disposition of all or substantially all of the Company's or
Material Subsidiary's assets and the Company or its shareholders or Affiliates
immediately before such transaction beneficially own, immediately after or as a
result of such transaction, equity securities of the surviving or acquiring
corporation or such corporation's parent corporation possessing less than fifty
one percent (51%) of the voting power of the surviving or acquiring Person or
such Person's parent corporation, provided that a Sale shall not be deemed to
occur upon any public offering or series of such offerings of securities of the
Company or a Material Subsidiary that results in any such change in beneficial
ownership.
(bb) "Securities Act" shall mean the Securities Act of 1933, as amended.
(cc) "Stock" shall mean the $.01 par value Common Stock of the Company.
(dd) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company in which each of the corporations (other
than the last corporation) in the unbroken chain owns shares of capital stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of capital stock of one of the other corporations in such chain at the
date of grant of an Option.
3. Shares Subject to the Plan. Except as otherwise required by the
--------------------------
provisions of Section 9 hereof, the aggregate number of shares of Stock issuable
upon the exercise of Options granted pursuant to the Plan shall not exceed
345,045 shares. Such shares may either be authorized but unissued shares or
treasury shares.
The exercise price of each Option granted pursuant to the Plan shall be
determined by the Plan Administrator and, subject to the provisions of Section 9
hereof, shall be not less than the Fair Market Value, at the time the Option is
granted, of the shares of Stock subject to the Option.
Subject to the limitations provided above, if an Option should expire or
become unexercisable for any reason without having been exercised in full, the
unpurchased shares of Stock that were subject thereto shall, unless the Plan
shall have terminated, be available for the grant of other Options under the
Plan.
4. Administration of the Plan. The following provisions shall govern the
--------------------------
administration of the Plan:
(a) The Plan shall be administered by the Plan Administrator.
(b) The Plan Administrator is authorized (but only to the extent not
contrary to the express provisions of the Plan) to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan and to
the Options granted under the Plan, to determine the form and content of Options
to be issued under the Plan (including the exercise price, the exercise period
and the exercise increments of each such Option) and to make such other
determinations and exercise such other powers and authority as may be necessary
or advisable for the administration of the Plan. Each Option granted pursuant to
the Plan shall be evidenced by the Option Agreement in such form as may be
determined by the Plan administrator.
(c) A majority of the members of the Plan Administrator eligible to act
shall constitute a quorum for purposes of acting with respect to the Plan, and
the action of a majority of the members present who are eligible to act at any
meeting at which a quorum is present shall be deemed the action of the Plan
Administrator.
4
<PAGE>
(d) All decisions, determinations and interpretations of the Plan
Administrator with respect to the Plan and Option Agreements executed pursuant
thereto shall be final and conclusive on all persons affected thereby.
(e) Neither the Plan Administrator nor any member thereof shall be liable
for any act, omission, interpretation, construction or determination made in
connection with the Plan in good faith, and the members of the Plan
Administrator shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including counsel
fees) arising therefrom to the full extent permitted by law. The members of the
Plan Administrator shall be named as insureds under any directors and officers
liability insurance coverage that may be in effect from time to time.
5. Eligibility. All Employees of the Company and its Subsidiaries are
-----------
eligible to receive Options under the Plan. The Plan Administrator is authorized
to select from the Employees who are eligible to receive Options under the Plan
the particular Employees who will receive Options and to determine the number of
Options and the number of shares of Stock under each Option. In granting
Options, the Plan Administrator shall take into consideration the contribution
an Employee has made or may make to the success of the Company or its
Subsidiaries and such other factors as the Plan Administrator shall determine.
The Plan Administrator shall also have the authority to consult with and receive
recommendations from Directors and Employees of the Company and its Subsidiaries
with regard to these matters. In no event shall any Employee or his legal
representatives, heirs, legatees, distributees or successors have any right to
participate in the Plan except to such extent, if any, as the Plan Administrator
shall determine.
6. Term of the Plan. The Plan shall continue in effect until terminated
----------------
pursuant to Section 15; provided, however, that all Options granted pursuant to
the Plan must be granted within 10 years from the effective date of the Plan.
7. Termination of Employment - Exercise Thereafter. (a) For those
-----------------------------------------------
Optionees who are not subject to the provisions of Subsection 7(b), in the event
of termination of the Optionee's employment due to death, Retirement,
Resignation, Disability or termination by the Company for any reason other than
"cause" (such five events each being a "Qualified Termination"), the Option may
be exercised by the Optionee or his estate, personal representative or
beneficiary to the full extent that the Optionee was entitled to exercise the
same on the day immediately prior to such termination (i) at any time within the
one-year period commencing on the day next following such termination if such
termination is due to death of the Optionee; (ii) at any time within the thirty-
day period commencing on the day next following the effective date of such
termination if such termination is due to the Resignation of the Optionee; or
(iii) at any time within the six-month period commencing on the day next
following such termination in the case of any other Qualified Termination. In
the event that the Optionee's employment is terminated for any reason other than
a Qualified Termination, the Option shall automatically expire simultaneously
with such termination. For purposes of this Section, "cause" shall mean (x) the
failure, in the sole opinion of the Company or the Subsidiary which employs
Optionee, of Optionee to adequately perform the duties assigned to Optionee
(other than any such failure resulting from Optionee's Disability); (y) the
engagement by Optionee in misconduct which, in the sole opinion of the Company
or the Subsidiary which employs Optionee, is or may have the effect of being
materially injurious to the Company or its Subsidiaries; or (z) the conviction
of Optionee of any felony or crime of moral turpitude.
(b) For those Optionees who are senior officers of the Company, in the
event of termination of the Optionee's employment due to death, Retirement,
Resignation, Disability or termination by the Company for any reason other than
"cause" (such five events each being a "Qualified Termination"), the Option may
be exercised by the Optionee or his estate, personal representative or
beneficiary to the full extent that the Optionee was entitled to exercise the
same on the day immediately prior to such
5
<PAGE>
termination (i) at any time within the 18 month period commencing on the day
next following such termination if such termination is due to death of the
Optionee; (ii) at any time within the thirty-day period commencing on the day
next following the effective date of such termination if such termination is due
to the Resignation of the Optionee; or (iii) at any time within the 18 month
period commencing on the day next following such termination in the case of any
other Qualified Termination. In the event that the Optionee's employment is
terminated for any reason other than a Qualified Termination, the Option shall
automatically expire simultaneously with such termination. For purpose of this
Section, "cause" shall have the meaning given such term in the applicable
severance agreement between the Company and Optionee. If the officer and the
Company are not parties to a severance agreement that defines "cause", then
"cause" shall mean (x) the failure, in the sole opinion of the Company or the
Subsidiary which employs Optionee, of Optionee to adequately perform the duties
assigned to Optionee (other than any such failure resulting from Optionee's
Disability); (y) the engagement by Optionee in misconduct which, in the sole
opinion of the Company or the Subsidiary which employs Optionee, is or may have
the effect of being materially injurious to the Company or its Subsidiaries; or
(z) the conviction of Optionee of any felony or crime of moral turpitude.
(c) The determination as to whether the Optionee is subject to the
provisions of Subsection 7(a) or 7(b) will be determined in the sole opinion of
the Company.
8. Transferability. An Option granted pursuant to the Plan shall not be
---------------
transferable by the Optionee otherwise than by will or the laws of descent and
distribution, and the Option shall be exercisable, during the Optionee's
lifetime, only by Optionee or Optionee's legal representative or guardian. More
particularly (but without limiting the generality of the foregoing), an Option
may not be assigned, transferred (except as aforesaid), pledged or hypothecated
in any way (whether by operation of law or otherwise), and shall not be subject
to execution, attachment or similar process, without the prior written consent
of the Company. Any attempted assignment, contrary to the provisions hereof, and
the levy of any attachment or similar process upon the Option, which would
otherwise affect a change in the ownership of the Option, shall terminate the
Option.
9. Adjustment. The number of shares subject to the Plan and to Options
----------
granted pursuant to the Plan shall be adjusted as follows: (a) in the event that
the outstanding Stock is changed by reason of a stock dividend, stock split,
recapitalization or combination of shares, the number of shares of Stock subject
to the Plan and to Options granted pursuant to the Plan shall be proportionately
adjusted; or (b) in the event of any merger, consolidation or reorganization of
the Company with any other corporation or corporations, there shall be
substituted for each share of Stock then subject to the Plan and to Options
granted pursuant to the Plan the number and kind of shares of stock or other
securities to which the holders of shares of Stock will be entitled pursuant to
the transaction. In the event of any such adjustment, the purchase price per
share shall be proportionately adjusted.
10. Change of Control. Any Option previously granted under the Plan to an
------------------
Optionee who is an Employee on the date of a Change in Control shall become
exercisable in full on such date and, except in the case of a termination of
employment for cause in conjunction with or following the Change of Control, may
be exercised by the Optionee at any time during the remainder of the term of the
Option, without regard to any exercise increments established pursuant to any
applicable Option Agreement. In the case of a termination of employment for
cause in conjunction with or following a Change of Control, the Option may be
exercised by the Optionee at any time within a period of not less than six
months nor more than three (3) years (the length of which period shall be within
the discretion of the Plan Administrator and shall be evidenced conclusively by
the giving of appropriate and timely notice to the Optionee in accordance with
the terms of the applicable Option Agreement) after the date of such
termination.
6
<PAGE>
11. Exercise of Option. An Option may be exercised by giving written
------------------
notice to the Company, attention of the Treasurer. The notice shall (i) state
the election to exercise the Option and the number of shares in respect of which
it is being exercised; (ii) be signed by the Optionee; and (iii) be accompanied
by the representation and covenant required under Section 12 hereof and any
other written representations, covenants, and undertakings that the Company may
prescribe to satisfy securities laws and regulations or other requirements. In
addition, the notice shall be accompanied by (a) cash in an amount equal to the
full purchase price of the shares to be purchased, a certified or bank cashier's
check payable to the order of the Company in an amount equal to the full
purchase price of the shares to be purchased, shares of Stock or a combination
of these methods of payment; or (b) if the shares to be purchased are covered by
an effective registration statement under the Securities Act, a written
statement signed by the Optionee that the exercise is a "cashless exercise"
through a brokerage firm in accordance with Section 220.3(e)(4) of Regulation T
issued by the Board of Governors of the Federal Reserve System ("Reg T")
pursuant to the Exchange Act, in which latter event the Company will use its
best efforts to comply with the requirements of Reg T. In the event that shares
of Stock are used as a method of payment, the per share value of Stock shall be
the Fair Market Value on the date of exercise. The certificate or certificates
for the shares as to which the Option shall have been so exercised shall be
registered in the name of the Optionee or his designee and shall be delivered to
or upon the written order of the Optionee. If applicable, the Company shall be
entitled to place the following legend (or a legend which is substantially
similar to the following legend) upon, and to issue appropriate stop transfer
instructions with respect to, the certificate or certificates representing the
shares issued upon exercise of the Option:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS (THE "STATE LAWS"), AND SUCH SHARES MAY
NOT BE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND APPLICABLE STATE LAWS COVERING SUCH TRANSFER IS THEN IN EFFECT; OR
(B) AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER, HAS BEEN FURNISHED
STATING THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE LAWS."
All shares of Stock issued as provided herein shall be duly and validly issued,
fully paid and non-assessable.
12. Securities Law Restrictions. The Company shall not be obligated to
---------------------------
issue any shares purchased upon exercise of an Option until, in the opinion of
the Company and its counsel, such issuance will not involve any violation of
applicable federal and state securities laws, the rules and regulations
promulgated thereunder and the requirements of any stock exchange upon which the
Stock may then be listed. Acceptance of an Option by an Optionee shall
constitute the Optionee's agreement that any shares of Stock purchased upon the
exercise of the Option shall be acquired for the Optionee's own account and not
with a view to distribution and that each notice of the exercise of any portion
of the Option shall be accompanied by a written representation and covenant
signed by the Optionee, in such form as may be specified by the Company,
confirming such agreement and containing such other provisions as may be
prescribed by the Company. The Company may, at its election, release an Optionee
from the Optionee's agreement to take for the Optionee's own account and not
with a view to distribution of the shares of Stock purchased upon exercise of
the Option, if in the opinion of the Company such covenant ceases to be
necessary for compliance with the applicable federal and state securities laws
(including the rules and regulations promulgated thereunder) and the
requirements of any stock exchange upon which the Stock may be then listed.
7
<PAGE>
13. Listing or Registration of Stock. Each Option granted pursuant to the
--------------------------------
Plan is subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification of
the shares of Stock subject to the Option upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting or exercise of the Option or the issue or purchase of shares
under the Option, the Option may not be exercised in whole or in part until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. The
Company shall be under no obligation to effect or obtain any such listing,
registration, qualification, consent or approval if the Board shall determine,
in its discretion, that such action would not be in the best interests of the
Company. The Company shall not be liable for damages due to a delay in the
delivery or issuance of any stock certificates for any reason whatsoever,
including, but not limited to, a delay caused by listing, registration or
qualification of the shares of Stock subject to an Option 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 with respect to the granting or
exercise of the Option or the issue or purchase of shares under the Option.
14. Modification of Options. At any time and from time to time the Plan
-----------------------
Administrator may execute an instrument providing for modification, extension,
or renewal of any outstanding Option, provided that no such modification,
extension or renewal shall (i) impair the Option in any respect without the
consent of the holder of the Option or (ii) conflict with the provisions of Rule
16b-3.
15. Amendment and Termination of the Plan. The Board may alter, suspend
-------------------------------------
or discontinue the Plan, except that no action of the Board may increase the
benefits accruing to Employees under the Plan, increase (other than as provided
in Section 9) the maximum number of shares permitted to be issued upon the
exercise of Options granted pursuant to the Plan or materially modify the
requirements as to eligibility for participation in the Plan unless such action
of the Board shall be subject to approval by the shareholders of the Company.
16. Shareholder Rights. The holder of an Option shall have none of the
------------------
rights of a shareholder with respect to the shares of Stock subject to the
Option until such shares shall have been issued to him upon the due exercise of
the Option.
17. Withholding of Taxes. The Plan Administrator may make such provisions
--------------------
and take such steps as it may deem necessary or appropriate for the withholding
of any taxes which the Company or any Subsidiary is required by any law or
regulation of any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Option, including, but
not limited to, the withholding of the issuance of all or any portion of the
shares of Stock subject to the Option until the Optionee reimburses the Company
or the applicable Subsidiary for the amount the Company or the applicable
Subsidiary is required to withhold with respect to such taxes, canceling any
portion of the issuance in an amount sufficient to reimburse the Company or the
applicable Subsidiary for the amount it is required to so withhold, or taking
any other action reasonably required to satisfy the withholding obligation of
the Company or the applicable Subsidiary.
18. Restrictions on Stock. The Plan Administrator may impose such
---------------------
restrictions on the ownership and transfer of shares of Stock issued upon
exercise of Options granted pursuant to the Plan as it deems desirable and any
such restrictions shall be set forth in the Option Agreement evidencing the
Options; provided, however, that any such restrictions shall not be materially
more burdensome than the restrictions imposed upon the other outstanding,
unregistered shares of Stock.
8
<PAGE>
19. Reservation of Stock. The Company during the term of the Plan will
--------------------
reserve and keep available such number of shares of Stock as shall be sufficient
to satisfy the requirements of the Plan.
20. Continued Employment Not Presumed. Nothing in the Plan or any
---------------------------------
document describing it nor the grant of an Option shall give an Optionee the
right to continue in employment with the Company or any of its Subsidiaries or
affect the right of the Company or a Subsidiary to terminate the employment of
any Optionee with or without cause.
AMENDED AND RESTATED as of September 14, 1999.
ZIXIT CORPORATION
By: /s/ Ronald A. Woessner
----------------------
Ronald A. Woessner
Secretary
9
<PAGE>
EXHIBIT 10.2
ZIXIT CORPORATION
1992 STOCK OPTION PLAN
(Amended and Restated as of September 1999)
1. Purpose
-------
The purpose of the ZixIt Corporation 1992 Stock Option Plan (hereinafter
called the "Plan") is to advance the interests of ZixIt Corporation (hereinafter
called the "Company") by strengthening the ability of the Company to attract and
retain personnel of high caliber through encouraging a sense of proprietorship
by means of stock ownership.
Certain options granted under this Plan are intended to qualify as
"incentive stock options" pursuant to Section 422 of the Internal Revenue Code
of 1986, as amended from time to time (the "Code"), while certain other options
granted under this Plan will constitute nonqualified options.
2. Definitions
-----------
As used in this Plan, and in any Option Agreement, as hereinafter defined,
the following terms shall have the following meanings, unless the context
otherwise requires:
(a) "Common Stock" shall mean the common stock of the Company, par value
$.01 per share, giving effect to the 3 shares for 2 shares stock split on the
record date of January 24, 1992 and the effective issuance date of February 13,
1992.
(b) "Committee" shall mean a committee of the Board of Directors comprised
of at least two directors. Members of the Committee shall be selected by the
Board of Directors. To the extent necessary to comply with the requirements of
Rule 16b-3, the Committee shall consist of two or more Non-employee Directors.
Also, if the requirements of (S)162(m) of the Code are intended to be met, the
Committee shall consist of two or more "outside directors" within the meaning of
(S)162(m) of the Code.
(c) "Date of Grant" shall mean the date on which a stock option is granted
pursuant to this Plan.
(d) "Disinterested Director" shall mean a director who is not, during the
one year prior to service as an administrator of this Plan, granted or awarded
an option pursuant to this Plan or any other plan of the Company or any of its
affiliates (except as provided in Section 4(b) or Section 4(c) of this Plan and
as may be permitted by Rule 16b-3 promulgated under the Exchange Act).
(e) "Effective Date" shall mean the first business day following the date
of the 1993 annual meeting of the shareholders of the Company.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "External Director" shall mean a Director that is not an employee of
the Company.
-1-
<PAGE>
(h) "Fair Market Value" shall mean the closing sale price (or average of
the quoted closing bid and asked prices if there is no closing sale price
reported) of the Common Stock on the date specified as reported by NASDAQ/NMS or
by the principal national stock exchange on which the Common Stock is then
listed. If there is no reported price information for such date, the Fair Market
Value will be determined by the reported price information for Common Stock on
the day nearest preceding such date.
(i) "Non-employee Director" shall have the meaning given such term in Rule
16b-3.
(j) "Optionee" shall mean the person to whom an option is granted under
this Plan or who has obtained the right to exercise an option in accordance with
the provisions of this Plan.
(k) "Plan Adoption Date" means the later of the date on which this Plan is
adopted by the Board of Directors of the Company and by the shareholders of the
Company in accordance with Rule 16b-3.
(l) "Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under
the Exchange Act as it may be amended from time to time and any successor
provision to Rule 16b-3 under the Exchange Act.
(m) "Subsidiary" shall mean any now existing or hereafter organized or
acquired corporation of which more than fifty percent (50%) of the issued and
outstanding voting stock is owned or controlled directly or indirectly by the
Company or through one or more Subsidiaries of the Company.
3. Shares Subject to this Plan
---------------------------
Except as otherwise provided by the provisions of Section 9 hereof, the
aggregate amount of Common Stock for which options may be granted under this
Plan shall not exceed 450,000 shares of Common Stock. Such shares may be
authorized and previously unissued shares or previously issued shares that have
been reacquired by the Company. Any shares of Common Stock subject to
unexercised portions of options granted under this Plan which shall have
terminated, been canceled, or expired may again be subject to the granting of
options under this Plan.
4. Administration
--------------
Notwithstanding herein anything to the contrary, to the extent necessary to
comply with the requirements of Rule 16b-3, this Plan shall be administered by
Committee. Options may be granted under this Section 4(a) only by majority
agreement of the members of the Committee. Stock Option Agreements ("Option
Agreements"), in the form as approved by the Committee, and containing such
terms and conditions not inconsistent with the provisions of this Plan as shall
have been determined by the Committee, may be executed on behalf of the Company
by the President or any Vice President of the Company. The Committee shall have
complete authority to construe, interpret and administer the provisions of this
Plan and the provisions of the Option Agreements granted hereunder; to
prescribe, amend and rescind rules and regulations pertaining to this Plan; and
to make all other determinations necessary or deemed advisable in the
administration of this Plan. The determinations, interpretations and
constructions made by the Committee shall be final and conclusive.
5. Eligibility
-----------
Incentive stock options to purchase Common Stock may be granted under
Section 4(a) of this Plan to such employees of the Company or its Subsidiaries
(including any director who is also an employee of the Company or one of its
Subsidiaries) as shall be determined by the Committee. Nonqualified stock
-2-
<PAGE>
options to purchase Common Stock may be granted under Section 4(a) of this Plan
to such employees or directors of the Company or its Subsidiaries as shall be
determined by the Committee. The Committee shall determine which persons are to
be granted options under Section 4(a) of this Plan, the number of options, the
number of shares subject to each option, the exercise price or prices of each
option, the vesting and exercise period of each option, whether an option may be
exercised as to less than all of the Common Stock subject thereto, and such
other terms and conditions of each option, if any, as are not inconsistent with
the provisions of this Plan. In addition, the Committee may, in its sole
discretion, provide for vesting of stock options to accelerate upon a change in
control of the Company as defined in an applicable Agreement ("Change in
Control") and enable an employee to "put" the excess of the fair market value
over the exercise price of the options to the Company in the event of a Change
in Control. In connection with the granting of incentive stock options, the
aggregate Fair Market Value (determined at the Date of Grant of an incentive
stock option) of the shares with respect to which incentive stock options are
exercisable for the first time by an Optionee during any calendar year (under
all such plans of the Optionee's employer corporation and its parent and
subsidiary corporations as defined in Section 424 of the Code) shall not exceed
$100,000 or such other amount as from time to time provided in (S)422(d) of the
Code or any successor provision.
6. Exercise Price
--------------
The purchase price or prices for Common Stock subject to an option (the
"Exercise Price") granted pursuant to Section 4(a) of this Plan shall be
determined by the Committee at the Date of Grant; provided, however, that (a)
the Exercise Price for any option shall not be less than 100% of the Fair Market
Value of the Common Stock on the Date of Grant, and (b) if the Optionee owns
more than 10 percent of the total combined voting power of all classes of stock
of the Company or its parent or any of its subsidiaries, as more fully described
in (S)422(b)(6) of the Code or any successor provision (such shareholder is
referred to herein as a "10-Percent Stockholder"), the Exercise Price for any
incentive stock option granted to such Optionee shall not be less than 110% of
the Fair Market Value of the Common Stock on the Date of Grant.
7. Term of Stock Options and Limitations on Right to Exercise
----------------------------------------------------------
No incentive stock option granted pursuant to Section 4(a) of this Plan
shall be exercisable (a) more than five years after the Date of Grant with
respect to a 10-Percent Stockholder, and (b) more than ten years after the Date
of Grant with respect to all persons other than 10-Percent Stockholders. No
nonqualified stock option granted pursuant to Section 4(a) of this Plan shall be
exercisable more than ten years after the Date of Grant. The Company shall not
be required to issue any fractional shares upon the exercise of any options
granted under this Plan. No Optionee nor his legal representatives, legatees or
distributees, as the case may be, will be, or will be deemed to be, a holder of
any shares subject to an option unless and until said option has been exercised
and the purchase price of the shares in respect of which the option has been
exercised has been paid. An option shall not be exercisable except by the
Optionee or by a person who has obtained the Optionee's rights under the option
by will or under the laws of descent and distribution.
8. Termination of Employment
-------------------------
The Committee shall determine at the Date of Grant what conditions shall
apply to the exercise of an option granted under Section 4(a) in the event an
Optionee shall cease to be employed by the Company or a Subsidiary for any
reason. In the event of the death of an Optionee while in the employ or while
serving as a director of the Company or a Subsidiary, the option theretofore
granted to him shall be exercisable by the executor or administrator of the
Optionee's estate, or if the Optionee's estate is not in administration, by the
person or persons to whom the Optionee's right shall have passed under the
Optionee's will or under the laws of descent and distribution, within the year
next succeeding the date of
-3-
<PAGE>
death or such other period as may be specified in the Option Agreement, but in
no case later than the expiration date of such option, and then only to the
extent that the Optionee was entitled to exercise such option at the date of his
death. Neither this Plan nor any option granted hereunder is intended to confer
upon any Optionee any rights with respect to continuance of employment or other
utilization of his services by the Company or by a Subsidiary, nor to interfere
in any way with his right or that of his employer to terminate his employment or
other services at any time (subject to the terms of any applicable contract).
9. Dilution or Other Adjustments
-----------------------------
In the event that there is any change in the Common Stock subject to this
Plan or subject to options granted hereunder as the result of any stock dividend
on, dividend of or stock split or stock combination of, or any like change in,
stock of the same class or in the event of any change in the capital structure
of the Company, the Board of Directors or the Committee shall make such
adjustments with respect to options, or any provisions of this Plan, as it deems
appropriate to prevent dilution or enlargement of option rights.
10. Expiration and Termination of this Plan
---------------------------------------
Options may be granted at any time under Section 4(a) of this Plan prior to
ten years from this Plan Adoption Date, as long as the total number of shares
which may be issued pursuant to options granted under this Plan does not (except
as provided in Section 9 above) exceed the limitations of Section 3 above. This
Plan may be abandoned, suspended or terminated at any time by the Board of
Directors of the Company except with respect to any options then outstanding
under this Plan.
11. Restrictions on Issuance of Shares
----------------------------------
(a) The Company shall not be obligated to sell or issue any shares upon
the exercise of any option granted under this Plan unless:
(i) the shares with respect to which such option is being exercised
have been registered under applicable federal securities laws or are exempt
from such registration;
(ii) the prior approval of such sale or issuance has been obtained
from any state regulatory body having jurisdiction; and
(iii) in the event the Common Stock has been listed on any exchange,
the shares with respect to which such option is being exercised have been
duly listed on such exchange in accordance with the procedure specified
therefor.
The Company shall be under no obligation to effect or obtain any listing,
registration, qualification, consent or approval with respect to shares issuable
on any option.
If the shares to be issued upon the exercise of any option granted under
this Plan are intended to be issued by the Company in reliance upon the
exemptions from the registration requirements of applicable federal securities
laws, the Optionee, if so requested by the Company, shall furnish to the Company
such evidence and representations, including an opinion of counsel, satisfactory
to it, as the Company may reasonably request.
The Company shall not be liable for damages due to a delay in the delivery
or issuance of any stock certificates for any reason whatsoever, including, but
not limited to, a delay caused by listing, registration or
-4-
<PAGE>
qualification of the shares of Common Stock subject to an option 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 with respect to
the granting or exercise of the option or the issue or purchase of shares under
the option.
(b) No option granted pursuant to this Plan shall be transferable by the
Optionee other than by will or the laws of descent and distribution or pursuant
to a "qualified domestic relations order" as defined in the Code.
(c) Any Common Stock issued pursuant to the exercise of an option granted
pursuant to this Plan shall not be transferred until at least 6 months have
elapsed from the later of (i) the date of grant of such option or (ii) this Plan
Adoption Date to the date of disposition of the Common Stock underlying such
option.
(d) The Board of Directors or Committee may impose such other restrictions
on the ownership and transfer of shares issued pursuant to this Plan as it deems
desirable; any such restrictions shall be set forth in any Option Agreement
entered into hereunder.
12. Proceeds
--------
The proceeds to be received by the Company upon exercise of any option
granted under this Plan may be used for any proper purposes.
13. Amendment of this Plan
----------------------
The Board of Directors may amend this Plan from time to time in such
respects as it may deem advisable in its sole discretion or in order that the
options granted hereunder shall conform to any change in applicable laws,
including tax laws, or in regulations or rulings of administrative agencies or
in order that options granted or stock acquired upon exercise of such options
may qualify for simplified registration under applicable securities or other
laws; provided, however, that, to the extent required by Rule 16b-3 and the
Securities and Exchange Commission interpretations and releases thereunder, no
amendment may be made without the consent of shareholders which would materially
(a) increase the benefits accruing to participants under this Plan, (b) increase
the number of securities which may be issued under this Plan, other than in
accordance with Section 9 hereof, or (c) modify the requirements as to
eligibility for participation in this Plan.
14. Payment Upon Exercise
---------------------
Upon the exercise of any option granted under this Plan, the Company may
make financing available to the Optionee for the purchase of the Common Stock
that may be acquired pursuant to the exercise of such option on such terms as
the Committee shall specify. An Optionee may pay the Exercise Price of the
shares of Common Stock as to which an option is being exercised by the delivery
of cash, a certified cashier's check or, at the Company's option, by the
delivery of shares of Common Stock having a Fair Market Value on the date
immediately preceding the exercise date equal to the exercise price.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any option granted under
this Plan may be exercised by a broker-dealer acting on behalf of an Optionee if
(a) the broker-dealer has received from the Optionee instructions signed by the
Optionee requesting the Company to deliver the shares of Common Stock subject to
such option to the
-5-
<PAGE>
broker-dealer on behalf of the Optionee and specifying the account into which
such shares should be deposited, (b) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise, and (c)
the broker-dealer and the Optionee have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor provision.
15. Liability of the Company
------------------------
Neither the Company, its directors, officers or employees, nor any
Subsidiary which is in existence or hereafter comes into existence, shall be
liable to any Optionee or other person if it is determined for any reason by the
Internal Revenue Service or any court having jurisdiction that any incentive
stock option granted hereunder does not qualify for tax treatment as an
incentive stock option under Section 422 of the Code.
AMENDED AND RESTATED as of September 14, 1999.
ZIXIT CORPORATION
By: /s/ Ronald A. Woessner
----------------------
Its: Secretary
----------------------
-6-
<PAGE>
EXHIBIT 10.3
ZIXIT CORPORATION
1995 LONG-TERM INCENTIVE PLAN
(Amended and Restated as of September 1999)
Section 1. Purpose
-------
The purpose of the ZixIt Corporation 1995 Long-Term Incentive Plan
(hereinafter called the "Plan") is to advance the interests of ZixIt Corporation
(hereinafter called the "Company") by strengthening the ability of the Company
to attract, on its behalf and on behalf of its Subsidiaries (as hereinafter
defined), and retain personnel of high caliber through encouraging a sense of
proprietorship by means of stock ownership.
Section 2. Definitions
-----------
"Board of Directors" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean a committee of the Board of Directors comprised of at
least two directors. Members of the Committee shall be selected by the Board of
Directors. To the extent necessary to comply with the requirements of Rule 16b-
3, the Committee shall consist of two or more Non-employee Directors. Also, if
the requirements of (S)162(m) of the Code are intended to be met, the Committee
shall consist of two or more "outside directors" within the meaning of (S)162(m)
of the Code.
"Common Stock" shall mean the Common Stock of the Company, par value $.01 per
share.
"Date of Grant" shall mean the date on which an Option is granted pursuant to
this Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive amounts due the
Participant in the event of the Participant's death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant's estate.
"Effective Date" shall mean the first business day following the date of the
1995 annual meeting of the shareholders of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the closing sale price (or average of the quoted
closing bid and asked prices if there is no closing sale price reported) of the
Common Stock on the date specified as reported by the Nasdaq National Market, or
by the principal national stock exchange on which the Common Stock is then
listed. If there is no reported price information for such date, the Fair
Market Value will be determined by the reported price information for Common
Stock on the day nearest preceding such date.
"Incentive Stock Option" shall mean a stock option granted under Section 6 that
is intended to meet the requirements of Section 422 of the Code (or any
successor provision).
-1-
<PAGE>
"Non-employee Director" shall have the meaning given such term in Rule 16b-3.
"Nonqualified Stock Option" shall mean a stock option granted under Section 6
that is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option.
"Optionee" shall mean the person to whom an option is granted under the Plan or
who has obtained the right to exercise an option in accordance with the
provisions of the Plan.
"Plan Adoption Date" means the later of the date on which the Plan is adopted by
the Board of Directors of the Company and by the shareholders of the Company in
accordance with Rule 16b-3.
"Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under the
Exchange Act as it may be amended from time-to-time and any successor provision
to Rule 16b-3 under the Exchange Act.
"Subsidiary" shall mean any now existing or hereafter organized or acquired
corporation or other entity of which more than fifty percent (50%) of the issued
and outstanding voting stock or other economic interest is owned or controlled
directly or indirectly by the Company or through one or more Subsidiaries of the
Company.
Section 3. Administration
--------------
The Plan shall be administered by the Committee. The Committee shall have sole
and complete authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time deem advisable, and to construe, interpret, and administer the
terms and provisions of the Plan and the agreements thereunder. The
determinations and interpretations made by the Committee are final and
conclusive.
Section 4. Eligibility
-----------
All employees and non-employee consultants and advisors (other than members of
the Committee), in each case, who, in the opinion of the Committee, in each
case, have the capacity for contributing in a substantial measure to the
successful performance of the Company are eligible to receive Options under the
Plan.
Section 5. Maximum Amount Available for Options
------------------------------------
(a) The maximum number of shares of Common Stock in respect of which
Options may be made under the Plan shall be a total of 1,000,000 shares of
Common Stock. Of that amount, the maximum number of shares of Common Stock in
respect of which Options may be granted under the Plan shall be 1,000,000
shares. In addition, no Participant may be granted Options for more than 400,000
shares of Common Stock in the aggregate during the term of the Plan. Shares of
Common Stock may be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company, including shares purchased
in the open market. In the event that an Option is terminated unexercised as to
any shares of Common Stock covered thereby such shares shall thereafter be again
available for award pursuant to the Plan.
(b) In the event that the Committee shall determine that any stock
dividend, recapitalization,
-2-
<PAGE>
reorganization, merger, consolidation, split-up, spin-off, combination, exchange
of shares, warrants or rights offering to purchase Common Stock at a price
substantially below fair market value, or other similar corporate event affects
the Common Stock such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall adjust appropriately any or all of (1) the number and
kind of shares which thereafter may be optioned under the Plan and (2) the
grant, exercise or conversion price with respect to the Options and/or, if
deemed appropriate, make provision for cash payment to a Participant; provided,
--------
however, that the number of shares subject to any Option shall always be a
- -------
whole number.
Section 6. Stock Options
-------------
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Participants to whom Options shall be
granted, the number of shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the exercise of the
Option.
(b) The Committee shall have the authority to grant Incentive Stock
Options, or to grant Nonqualified Stock Options, or to grant both types of
options. In the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to and comply with the Code and relevant
regulations. Incentive Stock Options to purchase Common Stock may be granted to
such employees of the Company or its Subsidiaries (including any director who is
also an employee of the Company or one of its Subsidiaries) as shall be
determined by the Committee. Nonqualified Stock Options to purchase Common Stock
may be granted to such Participants as shall be determined by the Committee.
Neither the Company nor any of its Subsidiaries or any of their respective
directors, officers or employees, shall be liable to any Optionee or other
person if it is determined for any reason by the Internal Revenue Service or any
court having jurisdiction that any Incentive Stock Option granted hereunder does
not qualify for tax treatment as an Incentive Stock Option under the then
applicable provisions of the Code.
(c) The Committee shall, in its discretion, establish the exercise price
at the time each Option is granted, which in the case of Nonqualified Stock
Options shall not be less than 100% of the Fair Market Value of the Common Stock
on the Date of Grant, or in the case of grants of Incentive Stock Options, shall
not be less than 100% of the Fair Market Value of the Common Stock on the Date
of Grant or such greater amount as may be prescribed by the Code.
(d) Exercise
(1) Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable grant or thereafter; provided, however, that in
no event may any Option granted hereunder be exercisable after the
expiration of ten years from the date of grant. The Committee may impose
such conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities
laws, as it may deem necessary or advisable.
(2) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefore is received by
the Company. Such payment may be made in cash, or its equivalent, or, if
and to the extent permitted by the Committee, by exchanging shares of
Common Stock owned by the Optionee (which are not the subject of any pledge
or other security interest), or by a combination of the foregoing, provided
that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Common Stock so tendered to the Company, valued as
of the date of such tender, is at least equal to such option price.
-3-
<PAGE>
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any Option may be
exercised by a broker-dealer acting on behalf of an Optionee if (a) the
broker-dealer has received from the Optionee instructions signed by the
Optionee requesting the Company to deliver the shares of Common Stock
subject to such option to the broker-dealer on behalf of the Optionee and
specifying the account into which such shares should be deposited, (b)
adequate provision has been made with respect to the payment of any
withholding taxes due upon such exercise, and (c) the broker-dealer and the
Optionee have otherwise complied with Section 220.3(e)(4) of Regulation T,
12 CFR Part 220, or any successor provision.
(3) The Company, in its sole discretion, may lend money to an
Optionee, guarantee a loan to an Optionee or otherwise assist an Optionee
to obtain the cash necessary to exercise all or any portion of an Option
granted under the Plan.
(4) The Company shall not be required to issue any fractional shares
upon the exercise of any Options granted under this Plan. No Optionee nor
an Optionee's legal representatives, legatees or distributees, as the case
may be, will be, or will be deemed to be, a holder of any shares subject to
an option unless and until said option has been exercised and the purchase
price of the shares in respect of which the option has been exercised has
been paid. Unless otherwise provided in the agreement applicable thereto,
an Option shall not be exercisable except by the Optionee or by a person
who has obtained the Optionee's rights under the Option by will or under
the laws of descent and distribution or pursuant to a "qualified domestic
relations order" as defined in the Code.
(5) Any Common Stock issued to a person subject to the provisions of
Section 16(b) of the Exchange Act, as interpreted by the rules,
regulations, and interpretations of the Securities and Exchange Commission
thereunder, pursuant to the exercise of an Option granted under this Plan
and intended to comply with the requirements of Rule 16b-3 shall not be
transferred until at least 6 months have elapsed from the later of (i) the
date of grant of such Option or (ii) the Plan Adoption Date to the date of
disposition of the Common Stock underlying such option.
(e) No Incentive Stock Options granted pursuant to this Section 6 shall be
exercisable (a) more than five years (or such other period of time as from time-
to-time provided in the-then applicable provisions of the Code governing
Incentive Stock Options) after the Date of Grant with respect to an Optionee who
owns 10-Percent or more of the outstanding Common Stock (within the meaning of
the Code), and (b) more than ten years after the Date of Grant with respect to
all other Optionees. No Nonqualified Stock Options shall be exercisable more
than ten years after the Date of Grant.
Section 7. General Provisions
------------------
(a) The Company and its Subsidiaries shall have the right to deduct from
all amounts paid to a Participant in cash (whether under the Plan or otherwise)
any taxes required by law to be withheld in respect of Option exercises under
the Plan. However, if permitted by the Committee or under the terms of the
applicable agreement, the Participant may pay all or any portion of the taxes
required to be withheld by the Employer or paid by the Participant with respect
to such Common Stock by electing to have the Employer withhold shares of Common
Stock, or by delivering previously owned shares of Common Stock, having a Fair
Market Value equal to the amount required to be withheld or paid. The
Participant must make the foregoing election on or before the date that the
amount of tax to be withheld is determined ("Tax Date"). Any such election is
irrevocable and subject to disapproval by the Committee. If the Participant is
subject
-4-
<PAGE>
to the short-swing profits recapture provisions of Section 16(b) of the Exchange
Act, then the applicable agreement shall not provide the Participant an
election, or, if it does, any such election shall be subject to the restrictions
imposed by Rule 16b-3.
(b) Each Option hereunder shall be evidenced in writing, delivered to the
Participant, and shall specify the terms and conditions thereof and any rules
applicable thereto, including but not limited to the effect on such Option of
the death, retirement, disability or other termination of employment of the
Participant and the effect thereon, if any, of a change in control of the
Company.
(c) Unless otherwise provided in the agreement applicable thereto, no
Option shall be assignable or transferable except by will or under the laws of
descent and distribution or pursuant to a "qualified domestic relations order"
as defined in the Code, and no right or interest of any Participant shall be
subject to any lien, obligation or liability of the Participant.
(d) No person shall have any claim or right to be granted an Option.
Further, the Company and its Subsidiaries expressly reserve the right at any
time to dismiss a Participant free from any liability, or any claim under the
Plan, except as provided herein or in any agreement entered into with respect to
an Option. Neither the Plan nor any Option granted hereunder 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). The conditions to apply to the exercise of an
Option in the event an Participant ceases to be employed by the Company or a
Subsidiary for any reason shall be determined by the Committee, and such
conditions shall be specified in the written agreement evidencing the Option.
(e) Subject to the provisions of the applicable Option, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed under the Plan until he or she has
become the holder thereof.
(f) The validity, construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of the State of Texas
(without giving effect to its conflicts of laws rules) and, to the extent
applicable, federal law.
(g) Subject to the approval of the stockholders of the Company, the Plan
shall be effective on April 21, 1995. No Options may be granted under the Plan
after April 20, 2005; however, all previous Options issued that have not expired
under their original terms or will not then expire at the time the Plan expires
will remain outstanding.
(h) Restrictions on Issuance of Shares
(1) The Company shall not be obligated to sell or issue any Shares
upon the exercise of any Option granted under the Plan unless: (i) the
shares pertaining to such Option have been registered under applicable
federal and state securities laws or are exempt from such registration;
(ii) the prior approval of such sale or issuance has been obtained from any
state regulatory body having jurisdiction; and (iii) in the event the
Common Stock has been listed on any exchange, the shares pertaining to such
Option have been duly listed on such exchange in accordance with the
procedure specified therefor. The Company shall be under no obligation to
effect or obtain any listing, registration, qualification, consent or
approval with respect to shares pertaining to any Option granted
-5-
<PAGE>
under the Plan. If the shares to be issued upon the exercise of any Option
granted under the Plan are intended to be issued by the Company in reliance
upon the exemptions from the registration requirements of applicable
federal and state securities laws, the recipient of the Option, if so
requested by the Company, shall furnish to the Company such evidence and
representations, including an opinion of counsel, satisfactory to it, as
the Company may reasonably request.
(2) The Company shall not be liable for damages due to a delay in the
delivery or issuance of any stock certificates for any reason whatsoever,
including, but not limited to, a delay caused by listing, registration or
qualification of the shares of Common Stock pertaining to any Option
granted under the Plan upon any securities exchange or under any federal or
state law or the effecting or obtaining of any consent or approval of any
governmental body.
(i) The Board of Directors or Committee may impose such other restrictions
on the ownership and transfer of shares issued pursuant to this Plan as it deems
desirable; any such restrictions shall be set forth in the applicable agreement.
(j) The Board of Directors may amend, abandon, suspend or terminate the
Plan or any portion thereof at any time in such respects as it may deem
advisable in its sole discretion, provided that no amendment shall be made
without stockholder approval (including an increase in the maximum number of
shares of Common Stock in respect of which Options may be made under the Plan)
if such stockholder approval is necessary to comply with any tax or regulatory
requirement, including for these purposes any approval requirement that is a
prerequisite for exemptive relief under Section 16(b) of the Act.
(k) In order to preserve a Participant's rights under an Option in the
event of a change in control of the Company, the Committee in its discretion
may, at the time an Option is made or any time thereafter, take one or more of
the following actions: (i) provide for the acceleration of any time period
relating to the exercise of the Option, (ii) provide for the purchase of the
Option upon the Participant's request for an amount of cash or other property
that could have been received upon the exercise or realization of the Option had
the Option been currently exercisable or payable, (iii) adjust the terms of the
Option in a manner determined by the Committee to reflect the change in control,
(iv) cause the Option to be assumed, or new rights substituted therefor, by
another entity, or (v) make such other provision as the Committee may consider
equitable and in the best interests of the Company.
AMENDED AND RESTATED as of September 14, 1999.
ZIXIT CORPORATION
By: Ronald A. Woessner
--------------------
Its: Secretary
-------------------
-6-
<PAGE>
EXHIBIT 10.4
ZIXIT CORPORATION
1999 DIRECTORS' STOCK OPTION PLAN
Section 1. Purpose
-------
The purpose of the ZixIt Corporation 1999 Directors' Stock Option Plan
(hereinafter called the "Plan") is to advance the interests of ZixIt
Corporation, a Texas corporation (hereinafter called the "Company"), by
strengthening the ability of the Company to attract, on its behalf, and retain
External Directors (as defined below) of high caliber through encouraging a
sense of proprietorship by means of stock ownership.
Section 2. Definitions
-----------
"Adoption Date" shall mean January 28, 1999.
"Board" 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 the entire Board of Directors, or if the
administration of the Plan has been delegated to a committee of the Board, a
committee selected by the Board and comprised of at least two directors. To the
extent necessary to comply with the requirements of Rule 16b-3, the Committee
shall consist of two or more Non-Employee Directors.
"Common Stock" shall mean the Common Stock of the Company, par value $.01
per share.
"Date of Grant" shall mean the date on which an Option is granted under the
Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Optionee, in a manner determined by the Committee, to receive amounts due the
Optionee in the event of the Optionee's death. In the absence of an effective
designation by the Optionee, Designated Beneficiary shall mean the Optionee's
estate.
"Eligible Director" shall mean an External Director who has served on the
Board at least 12 consecutive months as of the Date of Grant.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"External Director" shall mean a member of the Board who is not an employee
of the Company or a subsidiary.
"Fair Market Value" shall mean the closing sales price (or average of the
quoted closing bid and asked prices if there is no closing sales price reported)
of the Common Stock on the date specified as reported by the NASDAQ Stock
Market, or by the principal national stock exchange on which the Common Stock is
then listed. If there is no reported price information for such date, the Fair
Market Value will be determined by the reported price information for Common
Stock on the day nearest preceding such date.
1
<PAGE>
"Grant Shares" shall mean, with respect to each Eligible Director for a
particular year, a number of shares calculated according to the following
formula: 1% of the number of the Company's outstanding Common Stock shares as of
the December 31 immediately preceding the Date of Grant divided by the number of
then-Eligible Directors. In no event, may the number of Grant Shares in any
given year to any given Eligible Director exceed one-half of 1% of the Company's
outstanding Common Stock shares.
"Non-Employee Director" shall have the meaning given such term in Rule 16b-
3.
"Option" shall mean a nonqualified option to purchase shares of the
Company's Common Stock.
"Optionee" shall mean the person to whom an Option is granted under the
Plan or who has obtained the right to exercise an Option in accordance with the
provisions of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under the
Exchange Act as it may be amended from time-to-time and any successor provision
to Rule 16b-3 under the Exchange Act.
Section 3. Administration
--------------
The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time-to-time deem advisable, and to construe, interpret and administer the
terms and provisions of the Plan and the agreements thereunder. The
determinations and interpretations made by the Committee are final and
conclusive and binding on all persons.
Section 4. Eligibility
-----------
All External Directors shall be eligible to receive awards of Options under
the Plan.
Section 5. Maximum Amount Available for Awards
-----------------------------------
Subject to the provisions of Section 9, the maximum number of shares of
Common Stock in respect of which Options may be granted under the Plan shall be
750,000 shares of Common Stock. Shares of Common Stock may be made available
from authorized but unissued shares of the Company or from shares reacquired by
the Company, including shares purchased in the open market. In the event that an
Option is terminated unexercised as to any shares of Common Stock covered
thereby, such shares shall thereafter be again available for award pursuant to
the Plan.
Section 6. Stock Options
-------------
(a) During the term of the Plan, on the day that an External Director is
first appointed or elected to the Board, such director shall be granted
nonqualified Options to purchase 25,000 shares of the Company's Common Stock.
Also, during the term of the Plan, on the first business day of January of each
year after the Adoption Date, each Eligible Director shall be granted Options to
purchase the Grant Shares. Each Eligible Director serving on the Board on the
Adoption Date shall be granted Options to purchase the Grant Shares, effective
as of the Adoption Date. Directors that receive the Grant Shares are not
eligible to receive a directors' retainer cash payment, although they are
eligible to be reimbursed for expenses related to Board activities.
(b) All Options granted under the Plan prior to shareholder approval of
the Plan shall be subject to the approval of the Plan by the shareholders of the
Company.
2
<PAGE>
(c) The exercise price of the 25,000 share option grants shall be 100%
of the Fair Market Value of the Common Stock on the Date of Grant. The exercise
price for the Grant Shares shall be 120% of the Fair Market Value of the Common
Stock on the Date of Grant. The exercise price of any outstanding Options may
not be repriced without the approval of the Company's shareholders (obtained in
accordance with applicable law), given in each specific instance.
(d) Each Option hereunder shall be evidenced in writing, delivered to
the Optionee, and shall be exercisable at such times and subject to such terms
and conditions as specified in the applicable grant and agreement, subject to
the following principles:
(1) the 25,000 share option grants shall vest six months from the Date
of Grant, while the Grant Shares option grants shall be 100% vested
as of the Date of Grant;
(2) the Grant Shares are subject to the following transfer restrictions:
100% of the shares may not be transferred for one year from the Date
of Grant, 66% of the shares may not be transferred for two years,
and 33% may not be transferred for three years; and the sale
restrictions will immediately lapse if (a) a change in control of
ZixIt occurs or (b) the director is removed by vote of the
shareholders other than for cause; and
(3) the Options may not be exercised after the tenth anniversary of the
Date of Grant.
The Committee may impose such conditions with respect to the exercise of
Options (that are consistent with the foregoing principles), including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
(e) No shares shall be delivered pursuant to any exercise of an Option
until cash payment in full of the option price therefor is received by the
Company. If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, any Option may be exercised by a
broker-dealer acting on behalf of an Optionee if (a) the broker-dealer has
received from the Optionee instructions signed by the Optionee requesting the
Company to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Optionee and specifying the account into which
such shares should be deposited, (b) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise, and (c)
the broker-dealer and the Optionee have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor provision. The
Company shall have the right to deduct from all amounts paid to an Optionee in
cash (whether under the Plan or otherwise) any taxes the Company withholds in
respect of Options under the Plan.
(f) The Company shall not be required to issue any fractional shares
upon the exercise of any Options granted under the Plan. No Optionee or such
Optionee's legal representatives, legatees or distributees, as the case may be,
will be, or will be deemed to be, a holder of any shares subject to an Option
unless and until said Option has been exercised and the purchase price of the
shares in respect of which the Option has been exercised has been paid. Unless
otherwise provided in the agreement applicable thereto, an Option shall not be
exercisable except by the Optionee or by a person who has obtained the
Optionee's rights under the Option by will or under the laws of descent and
distribution or pursuant to a "qualified domestic relations order" as defined in
the Code, and no right or interest of any Optionee shall be subject to any lien,
obligation or liability of the Optionee.
3
<PAGE>
Section 7. Plan Amendments
---------------
The Board 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 shareholder
approval if such amendment is material or if shareholder approval is necessary
to comply with any tax or regulatory requirement.
Section 8. Restrictions on Issuance of Options and Option Shares
-----------------------------------------------------
The Company shall not be obligated to issue any shares upon the exercise of
any Option granted under the Plan unless: (1) the shares pertaining to such
Option have been registered under applicable securities laws or are exempt from
such registration; (2) if required, the prior approval of such sale or issuance
has been obtained from any state regulatory body having jurisdiction; and (3) in
the event the Common Stock has been listed on any exchange, the shares
pertaining to such Option have been duly listed on such exchange in accordance
with the procedure specified therefor. The Company shall be under no obligation
to effect or obtain any listing, registration, qualification, consent or
approval with respect to shares pertaining to any Option granted under the Plan.
If the shares to be issued upon the exercise of any Option granted under the
Plan are intended to be issued by the Company in reliance upon the exemptions
from the registration requirements of applicable federal and state securities
laws, the recipient of the Option, if so requested by the Company, shall furnish
to the Company such evidence and representations, including an opinion of
counsel satisfactory to it as the Company may reasonably request.
The Company shall not be liable for damages due to a delay in the delivery
or issuance of any stock certificates for any reason whatsoever, including, but
not limited to, a delay caused by listing, registration or qualification of the
shares of Common Stock pertaining to any Option granted under the Plan upon any
securities exchange or under any federal or state law or the effecting or
obtaining of any consent or approval of any governmental body.
The Committee may impose such other restrictions on the ownership and
transfer of shares issued pursuant to the Plan as it deems desirable; any such
restrictions shall be set forth in the agreement applicable thereto.
Section 9. Adjustment to Shares
--------------------
In the event that the Committee shall determine that any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below Fair Market Value or other similar
corporate event affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall adjust appropriately any or
all of (a) the number and kind of shares that thereafter may be optioned under
the Plan, (b) the number and kind of shares subject of Options and (c) the
exercise price with respect to any of the foregoing and/or, if deemed
appropriate, make provision for cash payment to an Optionee or a person who has
an outstanding Option; provided, however, that the number of shares subject to
-------- -------
any Option shall always be a whole number.
Section 10. Effective Date; Term; Effect on 1996 Plan
-----------------------------------------
Subject to the approval of the shareholders of the Company, the Plan shall
be effective as of the Adoption Date. No Options may be granted under the Plan
after January 27, 2009; however, all previously granted Options that have not
expired under their original terms or will not then expire at the time the Plan
4
<PAGE>
expires will remain outstanding. The Plan supersedes the Company's 1996
Directors' Stock Option Plan, effective upon the approval of the Plan by the
Company's shareholders.
Section 11. General Provisions
------------------
(a) Neither the Plan nor any Option granted hereunder is intended to
confer upon any Optionee any rights with respect to continuance of the
utilization of his or her services by the Company, nor to interfere in any way
with his or her right or that of the Company to terminate his or her services at
any time (subject to the terms of any applicable contract, law, regulation, and
the articles and bylaws of the Company).
(b) No Optionee or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she has become the holder thereof.
(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.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its
behalf as of the 28th day of January 1999.
ZIXIT CORPORATION
By: /s/ Ronald A. Woessner
--------------------------
Title: V.P.
-----------------------
Date: 9/17/99
-----------------------
5
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<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 6,007
<SECURITIES> 32,701
<RECEIVABLES> 0
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<CURRENT-ASSETS> 39,483
<PP&E> 20,519
<DEPRECIATION> 1,460
<TOTAL-ASSETS> 75,542
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0
0
<COMMON> 176
<OTHER-SE> 66,908
<TOTAL-LIABILITY-AND-EQUITY> 75,542
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<INCOME-PRETAX> (11,585)
<INCOME-TAX> (65)
<INCOME-CONTINUING> (11,520)
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