Page 10 of 16 – SEC Filing
| Item 6. | Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. |
The information set forth or incorporated in Item 3 and Item 4 is hereby incorporated by reference in its entirety into
this Item 6.
Series A Certificate of Designation
On February 20, 2019 (the Closing Date), the Issuer established the rights and preferences of the shares of the Series A Preferred Stock
pursuant to a Certificate of Designations (the Series A Certificate of Designations), which is in addition to any rights and preferences of Zixs preferred stock provided for in Zixs Restated Articles of Incorporation (the
Articles of Incorporation). The Series A Preferred Stock ranks senior to Zixs Common Stock, and on a parity basis with the Series B Preferred Stock with respect to the payment of dividends and distribution of assets upon
liquidation, dissolution and winding up.
Accretion; Dividends; No Stated Maturity
The Series A Preferred Stock initially has a Stated Value (as defined in the Series A Certificate of Designations) of $1,000 per share. From the Closing Date,
the Stated Value per share of Series A Preferred Stock accretes at a fixed rate of 8.0% per annum, compounded quarterly (the Rate of Accretion). The Series A Preferred Stock is also entitled to receive any dividends paid in respect of
the Common Stock on an as-converted basis.
The Series A Preferred Stock has no stated maturity and will remain
outstanding indefinitely unless converted into Common Stock or repurchased or redeemed by Zix.
Voting Rights
The holders of the Series A Preferred Stock (the Series A Holders) are entitled to vote, together with the holders of Common Stock, on an as-converted basis (subject to the Share Maximum until the Stockholder Approval is obtained) on all matters submitted to a vote of the holders of Common Stock, and as a separate class on all matters relating to the
Series A Preferred Stock.
Liquidation Rights
The
Series A Preferred Stock has a liquidation preference equal to the greater of (i) the Stated Value per share as it has accreted as of such date (the Accreted Value) and (ii) the amount such holder would have received if the
Series A Preferred Stock had converted into Common Stock immediately prior to such liquidation.
Optional Redemption
At any time after the fourth anniversary of the Closing Date, Zix may redeem the Series A Preferred Stock for an amount per share of Series A Preferred Stock
equal to the Accreted Value per share of the Series A Preferred Stock to be redeemed as of the applicable redemption date multiplied by 1.50.
Holder Conversion Right
At any time, each Series A
Holder may, subject to the Share Maximum until Stockholder Approval is obtained, elect to convert each share of such Series A Holders then-outstanding Series A Preferred Stock into (i) the number of shares of Common Stock equal to the
product of (A) the Accreted Value with respect to such share on the conversion date multiplied by (B) the Conversion Rate as of the applicable conversion date divided by (C) 1,000 plus (ii) cash in lieu of
fractional shares. Prior to obtaining Stockholder Approval, Zix will be required to pay an amount in cash upon conversion in lieu of delivering shares that are otherwise restricted from being delivered upon conversion prior to obtaining Stockholder
Approval. The initial Conversion Rate is equal to 166.11 shares, and is subject to adjustment from time to time upon the occurrence of certain customary events in accordance with the terms of the Series A Certificate of Designations.
