<PAGE> 1
As filed with the Securities and
Exchange Commission on March 31, 2000. Registration No. 333-_________.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ZIXIT CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-2216818
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE GALLERIA TOWER
13355 NOEL ROAD, SUITE 1555
DALLAS, TEXAS 75240-6604
(972) 702-7055
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------
DAVID P. COOK
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ONE GALLERIA TOWER
13355 NOEL ROAD, SUITE 1555
DALLAS, TEXAS 75240-6604
(972) 702-7055
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
Approximate date of commencement of proposed sale to the public: From
time-to-time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================= ====================== ======================= ====================== ======================
TITLE OF SHARES AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 25,000 $73.75 (2) $1,843,750 (2) $486.75
========================= ====================== ======================= ====================== ======================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(c) of the Securities Act of 1933, as
amended, based upon the average of the high and low prices per share of
ZixIt Corporation common stock on March 24, 2000, as reported on the
NASDAQ Stock Market.
<PAGE> 2
ZIXIT CORPORATION
25,000 SHARES
COMMON STOCK
----------------------
This prospectus relates to an offering of up to 25,000 shares of our
common stock, par value $.01 per share, acquired pursuant to a Representation
Agreement and Stock Option Agreement, effective as of November 1, 1999, by and
between Henry Kuehne and us.
The common stock being registered is being offered for the account of
Mr. Kuehne as further described under "Selling Shareholder" on page 6. We will
not receive any proceeds from the sale of the shares of common stock offered
under this prospectus.
The shares may be offered in transactions on the NASDAQ Stock Market,
in negotiated transactions, or through a combination of methods of distribution,
at prices relating to the prevailing market prices or at negotiated prices.
Please see "Plan of Distribution" on page 7.
Our common stock is quoted on NASDAQ under the symbol "ZIXI". On March
29, 2000, the last sale price of our common stock, as reported on NASDAQ, was
$89.50 per share.
----------------------
THIS INVESTMENT INVOLVES RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU
CAN AFFORD A LOSS OF ALL OR A PORTION OF YOUR INVESTMENT. PLEASE SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this prospectus is March 31, 2000.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
ZixIt Corporation.................................................................................................1
Risk Factors......................................................................................................2
Documents Incorporated by Reference...............................................................................5
Where You Can Get More Information................................................................................6
Selling Shareholder...............................................................................................6
Plan of Distribution..............................................................................................7
Use of Proceeds...................................................................................................8
Legal Matters ....................................................................................................8
Experts...........................................................................................................8
</TABLE>
<PAGE> 4
ZIXIT CORPORATION
Historically, we operated in one industry segment, the provision of
systems and solutions for the intelligent transportation, electronic security,
and other markets. Our operations included the design, manufacturing,
installation, and support of hardware and software products utilizing our
wireless data and security technologies. We sold the businesses comprising this
industry segment during 1997 and 1998.
In 1999, we began developing a digital signature and encryption
technology and have been planning a series of products that enhance privacy,
security, and convenience over the Internet. ZixMail(TM), which was commercially
released in March 2000, is a secure document delivery, private email, and
messaging tracking service that enables Internet users worldwide to easily send
and receive encrypted and digitally signed communications using their existing
email systems and addresses. ZixMail uses 1024-bit public key and Triple-DES
encryption and can be exported throughout the world except to Cuba, Iran, Iraq,
Libya, North Korea, Serbia, Sudan, and Syria.
ZixCharge(TM), which has not been commercially released, is a shopping
portal and payment authorization system that enables consumers to purchase goods
and services over the Internet without being required to provide personal and
charge card information to Internet merchants.
Successful growth of a development stage enterprise, like ours, is
costly. In addition, the Internet arena is highly competitive. Our growth
depends, in large measure, on the timely development and market acceptance of
our new products. Our future growth involves risks and uncertainties, and there
are no assurances that we will be successful in our current business endeavors.
We were incorporated in Texas in 1988. Our executive offices are
located at One Galleria Tower, 13355 Noel Road, Suite 1555, Dallas, Texas
75240-6604, and our telephone number is (972) 702-7055. Our Web site address is
www.zixit.com. In this prospectus, "we", "us", "our", and "ZixIt" refer to ZixIt
Corporation and its subsidiaries unless the context otherwise requires.
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RISK FACTORS
The following is a "safe harbor" statement under the Private Securities
Litigation Reform Act of 1995: Certain matters discussed in this prospectus
contain statements that constitute forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934 (we refer to it as the
"Exchange Act"). The words "expect," "estimate," "anticipate," "predict,"
"believe," and similar expressions and variations thereof are intended to
identify forward-looking statements. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors.
Before investing in our common stock offered by this prospectus, you
should carefully consider the following risks and uncertainties, in addition to
the other information contained or incorporated by reference in this prospectus.
Also, you should be aware that the risks and uncertainties described below are
not the only ones facing us. Additional risks and uncertainties that we do not
yet know of or that we currently think are immaterial may also impair our
business operations. If any of those risks or uncertainties or any of the risks
and uncertainties described below actually occur, our business, financial
condition, prospects, or results of operations could be materially and adversely
affected. In that case, the trading price of the common stock offered in this
prospectus could decline, and you may lose all or part of your investment.
WE HAVE A LIMITED OPERATING HISTORY AND THE MARKET MAY NOT BROADLY
ACCEPT OUR NEW PRODUCTS, WHICH COULD ADVERSELY EFFECT OUR GROWTH PROSPECTS.
We have only a limited operating history in the Internet arena on which
to base an evaluation of our business and prospects. We currently have no
significant revenues. Our prospects must be considered in light of the risks and
uncertainties encountered by other companies in the early stages of development.
These risks and uncertainties are often worse for companies in new and rapidly
evolving markets, particularly Internet-related businesses. The ZixMail and
ZixCharge products are targeted at the new and rapidly evolving market for
secure Internet communications and e-commerce. Although the competitive
environment in this market has yet to fully develop, we anticipate that it will
be intensely competitive, subject to rapid change and significantly affected by
new products and service introductions and other market activities of industry
participants. Our success will depend on many factors, including, but not
limited to, the following:
o We must be able to successfully and timely develop our
products. The commercial version of ZixMail was released in
March 2000. ZixCharge has not been commercially released,
however.
o We must be able to achieve broad market acceptance for our
products. There is currently no known Internet secure document
delivery and private messaging system that currently operates
at the scale required for us, at our current
2
<PAGE> 6
expenditure levels and proposed pricing, to become profitable
from our ZixMail operations. There is no assurance that enough
paying users of ZixMail will be ultimately obtained to enable
us to operate profitably.
o Since the commercial version of ZixCharge has not yet been
released, there are currently no consumers or merchants using
ZixCharge. However, once released, the success of ZixCharge
will depend on our ability to obtain, as users, large numbers
of consumers that desire to shop privately over the Internet
and our ability to obtain large numbers of merchants that will
permit them to do so using ZixCharge. One strategy we have
been pursuing for obtaining access to large numbers of
consumers is entering into strategic relationships with
financial institutions or other companies that have existing
business relationships with large numbers of people. There is
no assurance that we will be successful in obtaining these
consumers, merchants, and/or strategic relationships.
WE FACE STRONG COMPETITION FROM NUMEROUS AND SOMETIMES LARGER COMPANIES
THAT MAY BE ABLE TO DEVELOP AND INTRODUCE NEW PRODUCTS THAT COULD RENDER OUR
PRODUCTS OBSOLETE OR NONCOMPETITIVE.
We are a new entrant into the rapidly evolving secure Internet
communications and e-commerce markets. We will be competing with larger
companies that have access to greater capital, research and development,
marketing, distribution, and other resources than us. In addition, the Internet
arena is characterized by extensive research efforts and rapid product
development and technological change that could render our products obsolete or
noncompetitive. Our failure to develop and introduce new products and services
successfully on a timely basis and to achieve market acceptance for such
products and services could have a significant adverse effect on our business,
financial condition, and results of operations.
SECURITY INTERRUPTIONS TO OUR SECURE DATA CENTER COULD DISRUPT OUR
BUSINESS, AND ANY SECURITY BREACHES COULD EXPOSE US TO LIABILITY AND NEGATIVELY
IMPACT CUSTOMER DEMAND FOR OUR PRODUCTS.
Our business depends on the uninterrupted operation of our secure data
center. We must protect this center from loss, damage, or interruption caused by
fire, power loss, telecommunications failure, or other events beyond our
control. Any damage or failure that causes interruptions in our secure data
center operations could materially harm our business, financial condition, and
results of operations.
In addition, our ability to issue digitally-signed certified
time-stamps and public encryption codes in connection with our ZixMail service
depends on the efficient operation of the Internet connections between customers
and our data center. These connections depend on the efficient operation by
Internet service providers, which have experienced periodic operational problems
or outages in the past. Any of these problems or outages could adversely affect
customer satisfaction.
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<PAGE> 7
Furthermore, it is critical that our facilities and infrastructure
remain secure and are perceived by the market to be secure. Despite our security
measures, our infrastructure may be vulnerable to physical break-ins, computer
viruses, attacks by hackers, or similar disruptive problems. It is possible that
we may have to use additional resources to address these problems. Our ZixCharge
business will retain certain confidential customer information in our secure
data center. Any physical or electronic break-ins or other security breaches or
compromises of this information could expose us to significant liability, and
customers could be reluctant to use our Internet-related products.
OUR PRODUCTS MAY NOT BECOME GENERALLY ACCEPTED STANDARDS OR BE
COMPATIBLE WITH GENERALLY ACCEPTED STANDARDS, WHICH COULD ADVERSELY EFFECT OUR
REVENUE GROWTH AND PROFITABILITY.
There is no assurance that ZixCharge or ZixMail will become a generally
accepted standard or that they will be compatible with any standards that become
generally accepted.
WE MAY HAVE TO DEFEND OUR RIGHTS IN INTELLECTUAL PROPERTY THAT WE USE
IN OUR PRODUCTS, WHICH COULD BE DISRUPTIVE AND EXPENSIVE TO OUR BUSINESS.
We rely, 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 we are infringing the rights of others. Intellectual
property litigation and controversies are disruptive and expensive.
WE MAY HAVE LIABILITY FOR INDEMNIFICATION CLAIMS ARISING FROM THE SALE
OF OUR PREVIOUS BUSINESSES IN 1998 AND 1997.
We disposed of our remaining operating businesses in 1998 and 1997. In
connection with those dispositions, we agreed to provide customary
indemnification to the purchasers of those businesses for breaches of
representations and warranties, covenants, and other specified matters. Although
we believe that we have adequately provided for future costs associated with
these indemnification obligations, indemnifiable claims could exceed our
estimates.
WE MAY ENCOUNTER OTHER UNANTICIPATED RISKS AND UNCERTAINTIES IN THE
INTERNET MARKET OR IN DEVELOPING NEW PRODUCTS, AND THERE CAN BE NO ASSURANCES
THAT WE WILL BE SUCCESSFUL IN RESPONDING TO ANY UNANTICIPATED RISKS OR
UNCERTAINTIES.
There are no assurances that we will be successful or that we will not
encounter other, and even unanticipated, risks. Other operating, financial, or
legal risks or uncertainties are discussed in our other periodic SEC filings. We
are, of course, also subject to general economic risks, dependence on key
personnel, and other risks and uncertainties. We may decide, at any time, to
delay or discontinue the development and release of any one or more of our
planned products.
4
<PAGE> 8
DOCUMENTS INCORPORATED BY REFERENCE
We furnish our shareholders with annual reports containing audited
financial statements and other appropriate reports. We also file annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission (we refer to it as the "SEC"). Instead of
repeating information that we have already filed with the SEC, we are allowed to
"incorporate by reference" in this prospectus information contained in those
documents we have filed with them. These documents are considered to be part of
this prospectus.
We incorporate by reference in this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act until the selling shareholder sells all of the
shares of common stock offered by this prospectus:
o our Annual Report on Form 10-K, including audited financial
statements, for our fiscal year ended December 31, 1999;
o all other reports we have filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of our fiscal year
covered by the Annual Report referred to above; and
o the description of our common stock contained in our
Registration Statement on Form 8-A, dated September 25, 1989,
including any amendment or report filed for the purpose of
updating such description.
Any documents that we file with the SEC pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act, prior to the termination of the
offering, will also be considered to be part of this prospectus and will
automatically update and supersede the information contained in this prospectus.
At your request, we will provide you, without charge, a copy of any of
the documents we have incorporated by reference into this prospectus but not
delivered with the prospectus (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates). If you want more information, write or call:
Steve M. York
Senior Vice President and Chief Financial Officer
ZixIt Corporation
One Galleria Tower
13355 Noel Road, Suite 1555
Dallas, Texas 75240-6604
Telephone: (972) 702-7055
5
<PAGE> 9
WHERE YOU CAN GET MORE INFORMATION
We are delivering this prospectus to you in accordance with the United
States securities laws. We have filed a registration statement with the SEC to
register the common stock that the selling shareholder is offering to you. This
prospectus is part of that registration statement. As allowed by the SEC's
rules, this prospectus does not contain all of the information that is included
in the registration statement.
You may obtain a copy of the registration statement, or a copy of any
other filing we have made with the SEC, directly from the SEC. You may either:
o read and copy any materials we have filed with the SEC at the
SEC's Public Reference Room maintained at 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following
regional offices: 7 World Trade Center, 13th Floor, New York,
New York 10048; and Northwest Atrium Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661; or
o visit the SEC's Internet site at http://www.sec.gov, which
contains reports, proxy statements, and other information
regarding issuers that file electronically.
You can obtain more information about the SEC's Public Reference Room
by calling the SEC at 1-800-SEC-0330.
SELLING SHAREHOLDER
The shares of common stock being offered were acquired by the selling
shareholder pursuant to a Representation Agreement and Stock Option Agreement,
effective as of November 1, 1999. This agreement provides for the selling
shareholder, a professional golfer, to wear "information" designated by us on
his golf hat at tournaments at which he plays or during television interviews in
which he participates.
The table below sets forth information with respect to the beneficial
ownership of our common stock by the selling shareholder immediately prior to
this offering and as adjusted to reflect the sale of shares of common stock
pursuant to the offering. All information with respect to the beneficial
ownership has been furnished by the selling shareholder.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
------------------------------------------ ---------------------------
Number of Shares to Number of
Name of Beneficial Owner Shares be Sold Shares
- ------------------------ ---------- ---------- --------
<S> <C> <C> <C>
Henry Kuehne 100,000 25,000 75,000
</TABLE>
Mr. Kuehne's beneficial ownership prior to and after the offering is less than
1% of our common stock, based on the 15,344,329 shares of our common stock
outstanding on February 29, 2000. Beneficial ownership after the offering
assumes all the shares that may be offered are sold.
6
<PAGE> 10
PLAN OF DISTRIBUTION
The sale of shares offered in this prospectus may be effected from
time-to-time directly, or by one or more broker-dealers or agents, in one or
more transactions on the NASDAQ Stock Market, in negotiated transactions, or
through a combination of such methods of distribution, at prices related to
prevailing market prices or at negotiated prices. The registration statement
covering these shares will remain effective until the earliest of (a) 90 days
(unless extended by us) following the date the registration statement is
declared effective by the SEC or (b) all of the shares registered have been
sold.
In the event one or more broker-dealers or agents agree to sell the
shares, they may do so by purchasing the shares as principals or by selling the
shares as agents for the selling shareholder. Any broker-dealer that does this
may receive compensation in the form of discounts, concessions, or commissions
from the selling shareholder or the purchasers of the shares for which the
broker-dealer may act as agent or to whom they sell as principal, or both, which
compensation as to a particular broker-dealer may be in excess of customary
compensation.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of the
distribution. In addition, the selling shareholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M. These provisions may limit the
timing of purchases and sales of the shares by the selling shareholder. All of
the foregoing may affect the marketability of the shares.
In order to comply with some states' securities laws, if applicable,
our common stock will be sold in jurisdictions only through registered or
licensed brokers or dealers. In some states, our common stock may not be sold
unless it has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
No dealer, salesperson, or other person is authorized to give any
information or to represent anything not contained or incorporated by reference
in this prospectus. You must not rely on any unauthorized information or
representations. This prospectus is an offer to sell only the shares offered by
this prospectus, but only under the circumstances and in jurisdictions where it
is lawful to do so. The information contained in this prospectus is current only
as of its date.
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<PAGE> 11
USE OF PROCEEDS
We will not receive any proceeds from the offering.
LEGAL MATTERS
The validity of the stock offered hereby will be passed upon for us by
Ronald A. Woessner, our Vice President, General Counsel, and Secretary.
EXPERTS
The consolidated financial statements appearing in the Annual Report
referred to under "Documents Incorporated by Reference" on page 5 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, included therein, and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
8
<PAGE> 12
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee $ 486.75
Accounting fees and expenses 1,000.00*
Legal fees and expenses 5,000.00*
Blue Sky fees and expenses (including counsel fees) 1,000.00*
Miscellaneous expenses 2,513.25*
----------
Total: $10,000.00
==========
</TABLE>
- ---------------
* Estimated
All of the above expenses will be split 50-50 between Mr. Kuehne and the
registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Texas Business Corporation Act, the registrant's
Articles of Incorporation provide that its directors shall not be personally
liable to the registrant or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the registrant or its shareholders, (ii) any act
or omission not in good faith or which involves intentional misconduct or a
knowing violation of law, (iii) any transaction from which the director derived
any improper personal benefit, (iv) any act or omission where the liability of
the director is expressly provided for by statute, or (v) any act related to an
unlawful stock repurchase or payment of a dividend. In addition, the
registrant's Articles of Incorporation and Bylaws include certain provisions
permitted by the Texas Business Corporation Act whereby its directors, officers,
employees, and agents generally are to be indemnified against certain
liabilities to the fullest extent authorized by the Texas Business Corporation
Act, and the registrant maintains insurance on behalf of its directors and
executive officers insuring them against any liability asserted against them in
their capacities as directors or officers or arising out of such status.
ITEM 16. EXHIBITS.
The exhibits to this registration statement are listed in the Index to
Exhibits on page II-5 of this registration statement, which Index is
incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement.
II-1
<PAGE> 13
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8, or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) and 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the
II-2
<PAGE> 14
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on March 31, 2000.
ZIXIT CORPORATION
By: /s/ Steve M. York
--------------------------------------------
Steve M. York,
Senior Vice President, Chief Financial
Officer and Treasurer
II-3
<PAGE> 15
POWER OF ATTORNEY
Each of the undersigned hereby appoints David P. Cook and Steve M.
York, and each of them acting individually, as his true and lawful
attorneys-in-fact and agents, with full power of substitution, for and in the
name, place and stead of the undersigned, in any and all capacities, to sign and
file with the Securities and Exchange Commission under the Securities Act of
1933, any and all amendments and exhibits to this registration statement and any
and all applications, instruments and other documents to be filed with the
Securities and Exchange Commission pertaining to the registration of the
securities covered hereby or the transactions contemplated herein.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ -------
<S> <C> <C>
/s/ David P. Cook President, Chief March 31, 2000
- -------------------------------- Executive Officer and
David P. Cook Director (Principal Executive
Officer)
/s/ Steve M. York Senior Vice President, Chief March 31, 2000
- -------------------------------- Financial Officer and
Steve M. York Treasurer (Principal Financial
and Accounting Officer)
/s/ Michael E. Keane Director March 31, 2000
- --------------------------------
Michael E. Keane
/s/ James S. Marston Director March 31, 2000
- --------------------------------
James S. Marston
/s/ Antonio R. Sanchez, Jr. Director March 31, 2000
- --------------------------------
Antonio R. Sanchez, Jr.
/s/ Ben G. Streetman Director March 31, 2000
- --------------------------------
Dr. Ben G. Streetman
/s/ Mark A. Tebbe Director March 31, 2000
- --------------------------------
Mark A. Tebbe
</TABLE>
II-4
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- --------- -----------------------
<S> <C>
*4.1 Representation Agreement and ZixIt Corporation Stock Option
Agreement, effective as of November 1, 1999, between ZixIt
Corporation and Henry Kuehne.
*5.1 Opinion of Ronald A. Woessner.
*23.1 Consent of Ronald A. Woessner (contained in Exhibit 5.1).
*23.2 Consent of Ernst & Young LLP.
*24.1 Power of Attorney (found on page II-4 of this registration statement).
</TABLE>
- --------------------
*Filed electronically herewith.
II-5
<PAGE> 1
EXHIBIT 4.1
Execution Copy
THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION
REPRESENTATION AGREEMENT
AND
ZIXIT CORPORATION
STOCK OPTION AGREEMENT
This Representation Agreement and ZixIt Corporation Stock Option
Agreement (the "Agreement"), effective as of November 1, 1999, is made and
entered into by and between ZixIt Corporation, a Texas corporation ("ZixIt" or
"Company"), and Henry Kuehne, an individual ("Kuehne"). Certain defined terms
used in this Agreement are set forth in Section 9.
WITNESSETH:
WHEREAS, ZixIt and Kuehne desire to enter into a representation
engagement, and in connection therewith, ZixIt has agreed to issue this Option
(as defined in Section 2); and
WHEREAS, the parties hereto desire to evidence in writing the terms
and conditions of the representation engagement and the Option, which carries
the registration rights set forth in Exhibit A.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, and as an inducement to Kuehne to
promote the success of the business of ZixIt, the parties hereby agree as
follows:
1. Representation Engagement.
(a) Unless this Agreement is earlier terminated as provided
below, until August 31, 2004 (the "Representation Expiration Date"), Kuehne
will exclusively wear "information" designated by ZixIt on the front, a side of
the hat of ZixIt's choosing, and rear of his hat at (a) golf tournaments in
which he plays within North America and at all golf tournaments outside North
America that are televised in any part of the United States or (b) during any
television interviews in which he participates, if practical. ZixIt agrees that
the Woolrich name may be displayed on the other side of his hat so long as
Kuehne's current contractual obligations with Woolrich require him to do so. In
any event, the Woolrich name will be subordinate in size (approximately 1/3) to
the size of the Company "information." If Kuehne reasonably determines that any
of said "information" is offensive or is harmful, Kuehne may decline to wear
that information on his hat.
(b) To the extent that Kuehne does not play professional golf for
more than six months due to injury or disability, the term of this Agreement
will be suspended for the period of
1
<PAGE> 2
the injury or disability that exceeds six months. Upon resumption of play, the
term of this Agreement will resume and the Representation Expiration Date, the
dates the Transfer restrictions lapse, and the Scheduled Option Expiration Date
(as defined below) will be appropriately adjusted to account for the period of
the injury or disability that exceeds six months.
2. Grant of Option; Expiration of Option. Effective as of the date first
set forth above (the "Award Date"), ZixIt hereby grants to Kuehne, upon the
terms set forth in this Agreement, a nonqualified option (the "Option"), to
acquire 100,000 shares of ZixIt Common Stock, $.01 par value per share (the
"Common Stock"). The exercise price of the Option is $ 32.55 per share, which
exercise price is subject to adjustment as provided in the next sentence. If as
of August 24, 2000, the Average Fair Market Value is less than $42.55, then the
exercise price for the Option will be adjusted to the Average Fair Market Value
minus $10, but in no event will the exercise price be adjusted to lower than $7
per share. The Option may be exercised from time-to-time with respect to any
shares of Common Stock as to which the Option has not been exercised until the
eighth anniversary of the Award Date (the "Scheduled Option Expiration Date"),
except as otherwise provided in this Agreement. Unless earlier terminated as
provided in this Agreement, the Option will expire with respect to all vested
shares as to which the Option has not been exercised on the eighth anniversary
of the Award Date. The Common Stock shares issuable or issued upon the exercise
of the Option are referred to herein as the "Option Shares."
3. Vesting and Sale of Option Shares. Subject to Section 4, the Option is
fully vested on the date hereof, and the Option may be exercised. The Option
Shares may not be Transferred by Kuehne until the dates specified below:
<TABLE>
<CAPTION>
Option Shares Date
----------------------------------------------
<S> <C>
25,000 No Transfer Restrictions
----------------------------------------------
25,000 2/24/2001
----------------------------------------------
25,000 2/24/2002
----------------------------------------------
25,000 2/24/2003
----------------------------------------------
</TABLE>
The Transfer restrictions will lapse upon the occurrence of a Change of
Control. Each of February 24, 2001, February 24, 2002, and February 24, 2003 is
hereinafter referred to as an "Installment Date" and the three dates
collectively are the "Installment Dates."
4. Termination.
(a) This Agreement may be terminated by ZixIt if Kuehne breaches
his obligations under Section 1 of this Agreement and such breach is not cured
within 10 days of receipt of written notice from ZixIt. Upon termination, the
Option Shares that are not yet freely Transferable are automatically cancelled.
(b) ZixIt may terminate this Agreement by giving written notice
to Kuehne between November 30, 2001 and January 1, 2002, if Kuehne has not
secured his first U.S. PGA card by
2
<PAGE> 3
November 30, 2001. Upon termination, the Option Shares that would have become
freely Transferable on February 24, 2002 and February 24, 2003 are
automatically cancelled, unless Kuehne has played in at least 14, in the
aggregate, official U.S. PGA events during 2000 and 2001, in which case only
the Option Shares that would have become freely Transferable on February 24,
2003, are automatically cancelled.
(c) Kuehne may terminate his obligations under Section 1 of this
Agreement by giving written notice to ZixIt during the periods August 24, 2001
through September 3, 2001, August 24, 2002 through September 3, 2002, and
August 24, 2003 through September 3, 2003, if the "cumulative profit" is not at
least $2 Million, $3 Million and $5 Million, respectively, under the Option.
The "cumulative profit" is calculated by multiplying 100,000 times (the Average
Fair Market Value of one Common Stock share minus the option exercise price).
In the event that a Sale of ZixIt occurs, the "cumulative profit" will be
"fixed," and will be calculated by multiplying 100,000 times (the Sale price
per Common Stock share minus the option exercise price). The "fixed" cumulative
profit will be used thereafter for purposes of determining Kuehne's termination
rights as stated in this Subsection 4(c). Upon termination of his obligations
under Section 1 of this Agreement as provided in this Subsection 4(c), the
Option Shares set forth in the table below are automatically cancelled:
<TABLE>
<CAPTION>
-----------------------------------------------------
Termination Year Option Shares Cancelled
-----------------------------------------------------
<S> <C>
2001 February 2002 and 2003 tranche
-----------------------------------------------------
2002 February 2003 tranche
-----------------------------------------------------
2003 None
-----------------------------------------------------
</TABLE>
(d) If Kuehne dies prior to February 24, 2003, the Option Shares
set forth in the table below are automatically cancelled:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Date of Death Option Shares Cancelled
-------------------------------------------------------------------
<S> <C>
Before 2/24/2001 February 2001, 2002, and 2003 tranches
-------------------------------------------------------------------
2/24/2001 to 2/24/2002 February 2002 and 2003 tranches
-------------------------------------------------------------------
2/24/2002 to 2/24/2003 February 2003 tranche
-------------------------------------------------------------------
</TABLE>
In the event of Kuehne's death, Kuehne's estate, heirs, or beneficiaries, as
the case may be, will have one year from the date of death to exercise this
Option as to the un-cancelled, and theretofore, unexercised Option Shares.
(e) At ZixIt's election, this Agreement will terminate if Kuehne
(i) voluntarily seeks, consents to, or acquiesces in the benefit or benefits of
the Bankruptcy Code of the United States of America or any other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief law from time-to-time in effect affecting the rights of creditors
generally ("Debtor Relief Law") or (ii) becomes a party to (or is made the
subject of) any proceeding provided for by any Debtor Relief Law, other than as
a creditor or claimant (unless, in the event such proceeding is
3
<PAGE> 4
involuntary, the petition instituting same is dismissed within 60 days of the
filing of same). Upon termination as provided in this Subsection 4(e), those
Option Shares set forth in the table below are automatically cancelled:
<TABLE>
<CAPTION>
------------------------------------------------------------------
Date of Termination Option Shares Cancelled
------------------------------------------------------------------
<S> <C>
Before 2/24/2001 February 2001, 2002, and 2003 tranches
------------------------------------------------------------------
2/24/2001 to 2/24/2002 February 2002 and 2003 tranches
------------------------------------------------------------------
2/24/2002 to 2/24/2003 February 2003 tranche
------------------------------------------------------------------
</TABLE>
(f) If Kuehne has already exercised the Option with respect to
Option Shares that are thereafter cancelled as permitted in this Agreement,
then Kuehne (and his estate, heirs, or beneficiaries, as the case may be) shall
surrender the stock certificate(s) covering the cancelled Option Shares to
ZixIt so that the stock certificate(s) can be cancelled, and, if appropriate, a
new certificate re-issued for any un-cancelled Option Shares represented by the
cancelled certificate(s). When Kuehne surrenders the stock certificate(s) as
aforesaid, ZixIt will return to Kuehne the exercise price he paid to ZixIt with
respect to the Option Shares that have been cancelled.
5. Exercise; Payment of Exercise Price.
(a) To exercise the Option, Kuehne shall provide written notice
(the "ZixIt Exercise Notice") to ZixIt at its principal executive office to the
attention of ZixIt's chief financial officer. The notice must: (i) state the
number of shares of Common Stock being purchased; (ii) be signed by Kuehne; and
(iii) be accompanied by payment of the aggregate exercise price for all shares
of Common Stock being purchased (unless Kuehne has provided for payment through
a broker-dealer or other means as permitted under this Agreement). The Option
may be exercised with respect to vested and exercisable shares of Common Stock
from time-to-time (i.e., there is no obligation to exercise all vested and
exercisable shares at one time, but the Option may not be exercised at any one
time with respect to less than 1,000 shares).
(b) Payment of Exercise Price. At the time of exercise, Kuehne
shall pay to ZixIt the exercise price per share of Common Stock times the
number of shares of Common Stock as to which the Option is being exercised.
Kuehne shall make such payment by delivering cash, certified check, or wire
transfer, or other payment mechanism mutually agreeable to ZixIt and Kuehne. If
the Option is exercised in full, Kuehne shall surrender this Agreement to ZixIt
for cancellation. If the Option is exercised in part, Kuehne shall surrender
this Agreement to ZixIt so that ZixIt may make appropriate notation hereon.
(c) Subject to Section 8, ZixIt shall promptly issue and deliver
a certificate representing the number of shares of Common Stock as to which the
Option has been exercised after ZixIt receives a notice of exercise and upon
receipt by ZixIt of the aggregate exercise price; provided, that, ZixIt shall
have no obligation to deliver a certificate for any shares for which the
Transfer restrictions have not lapsed. If the shares of Common Stock to be
issued upon the exercise of the Option are covered by an effective registration
statement (see Exhibit A attached
4
<PAGE> 5
hereto) under the Securities Act of 1933, as amended (the "Act"), the Option
may be exercised by a broker-dealer acting on behalf of Kuehne in accordance
with ZixIt's customary procedures and applicable law for a "cashless" option
exercise.
6. Preservation of Rights. The number of shares of Common Stock subject
to the Option and the exercise price therefor set forth in Section 2 shall be
subject to appropriate adjustment, reasonably satisfactory to Kuehne and ZixIt,
to preserve the relative rights of Kuehne and ZixIt under this Agreement in the
event of any change or exchange of Common Stock for a different number or kind
of securities, any of which results from one or more stock splits, reverse
stock splits, or stock dividends. If a Change of Control with respect to ZixIt
occurs, and, as a part of such Change of Control, shares of stock, other
securities, cash or property shall be issuable or deliverable in exchange for
Common Stock, then Kuehne shall be entitled to purchase or receive (in lieu of
the shares of Common Stock that Kuehne would otherwise be entitled to purchase
or receive hereunder), the number of shares of stock, other securities, cash or
property to which that number of shares of Common Stock would have been
entitled in connection with such Change of Control (and, at an aggregate
exercise price equal to the aggregate exercise price hereunder that would have
been payable if that number of shares of Common Stock had been purchased on the
exercise of the Option immediately before the consummation of the Change of
Control).
7. Who May Exercise. Without ZixIt's consent, the Option shall be
exercisable only by Kuehne (or, in the event of Kuehne's death, his heirs,
estate, or beneficiaries, as applicable), and Kuehne may not Transfer the
Option or the rights and privileges pertaining thereto. The Option is not
liable for or subject to, in whole or in part, the debts, contracts,
liabilities or torts of Kuehne, nor shall it be subject to garnishment,
attachment, execution, levy or other legal or equitable process.
8. Certain Legal Restrictions; Legend. Except as provided in Exhibit A,
ZixIt shall not have any obligation to Kuehne, express or implied, to list,
register or otherwise qualify any of Kuehne's shares of Common Stock. ZixIt
shall not be obligated to sell or issue any shares of Common Stock upon the
exercise of the Option unless, in the opinion of counsel for ZixIt, the
issuance and delivery of such shares shall comply with all relevant provisions
of law and other legal requirements including, without limitation, any
applicable federal or state securities laws and the requirements of any stock
exchange or inter-dealer quotation system on which shares of the Common Stock
may then be listed or quoted. If Kuehne desires to exercise the Option with
respect to shares that have not been registered under the Act and applicable
state securities laws, Kuehne shall notify ZixIt of its desire to do so, thus
affording ZixIt the opportunity to analyze the securities laws implications of
such exercise. As a condition to the exercise of the Option or the issuance by
ZixIt of any shares of Common Stock to Kuehne, ZixIt may require Kuehne to make
such reasonable representations and warranties, covenants and agreements as may
be necessary to assure compliance with applicable federal and state securities
laws. The shares of Common Stock issued upon the exercise of the Option may not
be transferred except in accordance with applicable federal or state securities
laws. At ZixIt's election, if the shares of stock issuable upon the exercise of
the Option have not been registered under the Act and applicable state
securities laws, the certificate evidencing the Option Shares issued to Kuehne
may be legended, as appropriate, as follows:
5
<PAGE> 6
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY
NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF
SUCH ACT AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION.
Furthermore, if any Option Shares are issued prior to the time that they are
freely Transferable, at ZixIt's election, the certificate evidencing these
Option Shares may be legended, as appropriate, to reflect the transfer
restrictions set forth herein and stock surrender obligation (set forth in
Subsection 4(f)).
9. Definitions.
The following terms as used in this Agreement shall have the stated
meanings:
(a) Acquiring Person. 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
ZixIt, any subsidiary of ZixIt, any employee benefit plan of ZixIt or
subsidiary of ZixIt, any Person to the extent such Person is holding Common
Stock for or pursuant to the terms of any such plan, or Kuehne, David P. Cook
(current Company officer and director), Antonio R. Sanchez, Jr. (current
Company director) or any Affiliate or Associate or spouse, sibling or parent
("family member") of Messrs. Kuehne, Cook, or Sanchez. For the purposes of this
Agreement, 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. "Affiliate" shall mean a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
(c) Associate. "Associate" when used to indicate a relationship
with any person shall mean:
(i) a corporation or organization (other than ZixIt or a
majority-owned subsidiary of ZixIt) of which such person is an officer
or partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities;
6
<PAGE> 7
(ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as
trustee or in a similar capacity; and
(iii) any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person.
(d) Average Fair Market Value. "Average Fair Market Value" shall
mean the Fair Market Value for the 15 trading days immediately prior to the
date in question.
(e) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Any Sale of ZixIt; or
(ii) 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 ZixIt that are entitled to vote to elect any
class of directors;
(iii) If at any time, the Continuing Directors then serving
on the Board of Directors of ZixIt cease for any reason to constitute
at least a majority thereof; or
(iv) 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) Continuing Director. A "Continuing Director" shall mean a
director of ZixIt 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 ZixIt on the date of this Agreement or subsequently became a
director of ZixIt and whose initial election or initial nomination for election
by ZixIt's shareholders was approved by a majority of the Continuing Directors
then on the Board of Directors of ZixIt.
(g) Fair Market Value. "Fair Market Value" shall mean, at any
date of determination, 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 as reported by The Nasdaq Stock Market or by the principal national stock
exchange on which the Common Stock is then listed on such date.
(h) Person. "Person" shall mean an individual, corporation,
partnership, association, joint-stock company, trust, incorporated organization
or 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),
7
<PAGE> 8
for the purpose of acquiring, holding, voting or disposing of securities of
ZixIt with that Person, shall be deemed a single "Person."
(i) Sale. A "Sale" occurs with respect to ZixIt if it engages in
a merger, consolidation, recapitalization, reorganization, or sale, lease,
license, transfer, or other effective disposition of all or substantially all
of ZixIt's assets and ZixIt 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 ZixIt that results
in any such change in beneficial ownership.
(j) Transfer. "Transfer" (or any derivative thereof) means a
direct or indirect sale, transfer, pledge, encumbrance or hypothecation.
10. Registration Rights. Kuehne shall have the registration rights set
forth in Exhibit A attached hereto.
11. Arbitration. The parties agree to the resolution by binding
arbitration of all claims, demands, causes of action, disputes, controversies,
or other matters in question ("claims") arising under this Agreement, whether
sounding in contract, tort, or otherwise and whether provided by statute or
common law, other than claims seeking injunctive or other equitable relief. The
claims shall be submitted to arbitration and finally settled under the
applicable rules of the American Arbitration Association ("AAA") in effect at
the time the written notice of the claim is received. An arbitrator shall be
selected in the manner provided for in such rules of the AAA, except that the
parties agree that the arbitrator shall be an attorney licensed in the State of
Texas. If any party refuses to honor its obligations under this agreement to
arbitrate, the other party may compel arbitration in either federal or state
court. The arbitrator will have exclusive authority to resolve any dispute
relating to the interpretation, applicability, enforceability, or formation of
this agreement to arbitrate, including, but not limited to, any claim that all
or part of this Agreement is void or voidable and any claim that an issue is
not subject to arbitration. The arbitration will be held in Dallas County,
Texas. The arbitrator shall issue a written decision that identifies the
factual findings and principles of law upon which any award is based. The award
and findings of such arbitrator shall be conclusive and binding upon the
parties, and judgment upon such award may be entered in any court of competent
jurisdiction. Any and all of the arbitrator's orders, decisions, and awards may
be enforceable in, and judgment upon any award rendered by the arbitrator may
be confirmed and entered by, any federal or state court having jurisdiction.
Each party shall pay all costs and expenses of its advisors. The costs and
expenses of the arbitration proceedings will be paid by the non-prevailing
party or as the arbitrator otherwise determines. Discovery will be permitted to
the extent directed by the arbitrator. EACH PARTY UNDERSTANDS THAT BY AGREEING
TO SUBMIT CLAIMS TO ARBITRATION IT GIVES UP THE RIGHT TO SEEK A TRIAL BY COURT
OR JURY AND THE RIGHT TO AN APPEAL FROM ANY ERRORS OF THE COURT AND FORGOES ANY
AND ALL RELATED RIGHTS IT MAY OTHERWISE HAVE UNDER FEDERAL AND STATE LAWS.
8
<PAGE> 9
12. Miscellaneous.
(a) The granting of the Option herein shall impose no obligation
upon Kuehne to exercise the Option or any part thereof.
(b) Neither Kuehne nor any person claiming under or through
Kuehne shall be or shall have any of the rights or privileges of a shareholder
of ZixIt in respect of any of the shares issuable upon the exercise of the
Option unless and until certificates representing such shares shall have been
issued.
(c) Any notice to be given to ZixIt under the terms of this
Agreement or any delivery of the Option herein to ZixIt shall be in writing,
addressed to ZixIt at its principal executive offices, Attn: Chief Financial
Officer; and any notice to be given to Kuehne shall be addressed to Kuehne at
the address set forth below. A party may specify a different address for
receiving notice by giving written notice thereof to the other party. Any such
notice shall be deemed to have been duly given upon receipt.
(d) Subject to Section 7, this Agreement shall be binding upon
and inure to the benefit of the assignees, representatives, executors,
successors or beneficiaries of the parties hereto.
(e) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
(f) If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, in whole or in part, then the parties shall be
relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
(g) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions
of this Agreement.
(h) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be necessary or
appropriate to achieve the purposes of this Agreement.
(i) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
written and prior or contemporaneous oral agreements and understandings
pertaining hereto, including without limitation, the "Agreement" between the
parties, executed on August 24, 1999.
9
<PAGE> 10
(j) No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or any other covenant, duty, agreement or condition.
(k) This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates set forth below, to be effective as of the date first above written.
COMPANY:
ZIXIT CORPORATION
By: /s/ RONALD A. WOESSNER
--------------------------------
Its: Vice President
--------------------------------
Date: 10-29-99
--------------------------------
KUEHNE:
/s/ HENRY KUEHNE
--------------------------------------
Henry Kuehne
Address: c/o Roscoe D. Hambric, Jr.
President, Cornerstone Sports
2515 McKinney Avenue
Suite 940
Dallas, Texas 75201
Date: 10-29-99
------------------------------
10
<PAGE> 11
EXHIBIT A
REGISTRATION RIGHTS
1. Certain Definitions. As used herein, the term "Shares" shall
mean the shares of Common Stock issuable upon the exercise of the Option.
2. Registration.
(a) Upon its receipt of a written notice from Henry Kuehne ("Kuehne"),
ZixIt shall prepare and file with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (or such successor or other form as
the SEC may stipulate or require) under the Securities Act of 1933, as amended
(the "Act") covering any Shares that have become Transferable prior to the date
of the notice and have not been previously registered.
(b) Furthermore, upon its receipt of a written notice from Kuehne
(given no earlier than 30 days prior to the upcoming Installment Date), ZixIt
shall prepare and file with the SEC a registration statement on Form S-3 (or
such successor or other form as the SEC may stipulate or require) under the Act
covering the 25,000 Shares that become Transferable under the Option as of the
upcoming Installment Date in question and, if applicable, Shares that
previously became Transferable and that have not previously been registered.
(c) ZixIt shall use its commercially reasonable efforts to cause such
registration statement to become effective as promptly as practicable after
receipt of the written notice. ZixIt shall also file such post-effective
amendments to such registration statement in order for it to remain effective
without lapse until the earliest of (i) 90 days following the date the
registration statement is declared effective, (ii) all the Shares so registered
have been sold, or (iii) the first date on which Kuehne is permitted to sell
all Shares then held by him (and that are sought to be sold) without
restriction within 90 days pursuant to Rule 144 under the Act. If, during the
effectiveness of the registration statement, Kuehne determines that he no
longer desires to sell any (or further) Shares at that time, Kuehne will so
advise ZixIt so that ZixIt can withdraw the registration statement. Kuehne
shall be entitled to make four registration requests under this Section 2.
(d) ZixIt may defer the filing (but not the preparation) of the
registration statement for a period of up to 120 days if (a) at the time ZixIt
or any of its subsidiaries is engaged in material confidential negotiations or
other material confidential business activities, disclosure of which would be
required in such registration statement (but would not be required if such
registration statement were not filed), and the Board of Directors of ZixIt
determines in good faith that such disclosure would be materially detrimental
to ZixIt and its shareholders or would have a material adverse effect on any
such confidential negotiations or other confidential business activities; or
(b) at the time ZixIt is engaged in business activities pertaining to an
underwritten public offering of ZixIt's securities and the underwriters have
advised ZixIt that the filing of the registration statement would have a
material adverse effect on its ability to consummate such offering. A deferral
of the filing of the registration statement will be lifted, and the
registration statement shall be filed as soon
A-1
<PAGE> 12
as practicable thereafter forthwith, if the negotiations or other activities
are completed, disclosed or terminated or the underwritten public offering is
completed, terminated or postponed. In order to defer the filing of a
registration statement, ZixIt will deliver to Kuehne a certificate signed by a
senior executive officer of ZixIt setting forth a statement of the reason for
such deferral and an approximation of the anticipated delay, which information
Kuehne shall treat as confidential. Moreover, ZixIt shall have no obligation to
register any Shares under this Section 2 if Kuehne is permitted to sell all
Shares sought by him to be registered without restriction within 90 days
pursuant to Rule 144 under the Act.
3. Registration Procedures. If, and whenever, ZixIt is required
by Section 2 to effect the registration of Shares under the Securities Act,
ZixIt will as expeditiously as possible:
(a) prepare and file with the SEC a registration statement
with respect to such securities, and use commercially reasonable efforts to
cause such registration statement to become and remain effective for the period
set forth in Section 2 (the "Effective Period"), and subject to the proviso in
Subsection 3(d), use commercially reasonable efforts to obtain all other
approvals, covenants, exemptions or authorizations from such governmental
agencies or authorities as may be necessary to enable Kuehne to consummate the
disposition of such Shares;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for the
Effective Period as may be reasonably necessary to effect the sale of such
securities;
(c) furnish to Kuehne and his agents, such reasonable number
of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as Kuehne and such agents may reasonably
request in order to facilitate the public offering of such securities;
(d) use commercially reasonable efforts to register or
qualify the Shares covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as Kuehne may reasonably
request in writing within 20 days following the original filing of such
registration statement; provided that, ZixIt shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified or subject itself to taxation in a jurisdiction where it had not
previously been subject to taxation, or take any other action that would
subject ZixIt to service of process in a lawsuit other than one arising out of
the registration of the Shares;
(e) notify Kuehne, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) notify Kuehne promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information;
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(g) prepare and file with the SEC, promptly upon the request
of Kuehne, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for Kuehne (and concurred in by
counsel for ZixIt), is required under the Act or the rules and regulations
thereunder in connection with the distribution of Shares by Kuehne;
(h) prepare and promptly file with the SEC and promptly
notify Kuehne of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading;
(i) advise Kuehne, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for that purpose and promptly use its
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
(j) cause all such Shares to be listed on each securities
exchange on which similar securities issued by ZixIt are then listed not later
than the date required by such securities exchange, or, if similar securities
are reported on The Nasdaq Stock Market or quoted in the over-the-counter
market, cause all such Shares to be reported on The Nasdaq Stock Market or
quoted in the over-the-counter market;
(k) provide a transfer agent and registrar for all such
Shares not later than the effective date of such registration statement; and
(l) make available for reasonable inspection by Kuehne and
any accountant or other agent retained by Kuehne all financial and other
records of ZixIt reasonably requested, and cause ZixIt's officers, directors,
employees and independent accountants to supply information reasonably
requested by Kuehne or any such accountant or other agent in connection with
such registration statement; provided that, ZixIt shall be under no obligation
to disclose proprietary or privileged non-public information that, in the
opinion of ZixIt's counsel, is not required to be disclosed in such
registration statement or in any prospectus in connection therewith.
4. Expenses. All fees, costs and expenses incidental to such
registration and public offering of the Shares in connection therewith shall be
shared equally by the parties; provided that, Kuehne's share of such expenses
shall not exceed $5,000 per registration statement, and futher provided that
Kuehne shall be fully responsible for any commissions and transfer taxes in
respect of the sale of the Shares.
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5. Indemnification.
(a) ZixIt will indemnify and hold harmless Kuehne and his
agents and any person controlling Kuehne from and against, and will reimburse
such persons with respect to, any and all loss, damage, liability, cost and
expense to which such persons may become subject under the Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
ZixIt will not be liable in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by or on behalf of Kuehne in writing
specifically for use in the preparation thereof. ZixIt will not be subject to
any liability for any settlement made without its consent, which consent shall
not be unreasonably withheld.
(b) Kuehne will indemnify and hold harmless ZixIt, its
directors, officers, employees, and other agents and any person controlling
ZixIt from and against, and will reimburse such persons with respect to, any
and all loss, damage, liability, cost and expense to which such persons may
become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was so made in reliance upon and in conformity with written information
furnished by or on behalf of Kuehne specifically for use in the preparation
thereof. Kuehne will not be subject to any liability for any settlement made
without his consent, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party, pursuant
to the provisions of Subsection (a) or (b) of this Section 5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
Subsection (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability that it may have to any indemnified party,
except to the extent that such omission materially and adversely affects the
indemnifying party's ability to defend against or compromise such claim. In
case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided,
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however, that if the defendants in any action include both the indemnified
party and the indemnifying party and there is a conflict of interest that would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the right to
select separate counsel to participate in the defense of such action on behalf
of such indemnified party or parties. After notice from the indemnifying party
to an indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said Subsection (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than out-of-pocket costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
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EXHIBITS 5.1 and 23.1
OPINION OF RONALD A. WOESSNER
CONSENT OF RONALD A. WOESSNER
March 30, 2000
ZixIt Corporation
One Galleria Tower
13355 Noel Road, Suite 1555
Dallas, Texas 75240-6604
Re: Registration Statement on Form S-3 for the Representation
Agreement and ZixIt Corporation Stock Option Agreement
Ladies and Gentlemen:
I have acted as General Counsel to ZixIt Corporation, a Texas
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of the resale of
25,000 shares (the "Shares") of the Company's common stock, $.01 par value per
share. The Shares are issuable pursuant to that certain Representation Agreement
and ZixIt Corporation Stock Option Agreement, effective as of November 1, 1999,
between the Company and Henry Kuehne (the "Stock Option Agreement"). The Shares
are being registered pursuant to a registration statement on Form S-3 to be
filed with the Securities and Exchange Commission on or about March 31, 2000
(the "Registration Statement").
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act. In connection with this
opinion, I have examined such documents and records of the Company and such
statutes, regulations, and other instruments and certificates as I have deemed
necessary or advisable for the purposes of this opinion. I have assumed that all
signatures on all documents presented to me are genuine, that all documents
submitted to me as originals are accurate and complete, and that all documents
submitted to me as copies are true and correct copies of the originals thereof.
I have also relied upon such other certifications of public officials, corporate
agents and officers of the Company, and such other certifications with respect
to the accuracy of material factual matters contained therein which were not
independently established.
Based on the foregoing, I am of the opinion that such Shares issuable
pursuant to the Stock Option Agreement, if and when such Shares are issued, will
be validly issued, fully paid and nonassessable upon issuance, assuming the
Company maintains an adequate number of authorized but unissued shares of common
stock available for such issuance, and further
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assuming that the consideration actually received by the Company for the Shares
exceeds the par value thereof.
I consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Ronald A. Woessner
Ronald A. Woessner
Vice President, General Counsel,
and Secretary for ZixIt Corporation
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of ZixIt Corporation
and to the incorporation by reference therein of our report dated February 29,
2000, except for the third paragraph of Note 10, as to which the date is March
23, 2000, with respect to the consolidated financial statements of ZixIt
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Dallas, Texas
March 29, 2000
