Page 13 of 16 – SEC Filing
Investment Agreement
On January 14, 2019, the Issuer entered into the Investment Agreement with True Wind Capital pursuant to which Zephyr Holdco purchased the Preferred Stock
on February 20, 2019.
Consent Rights
For so
long as any Preferred Stock is outstanding, the consent of True Wind will be necessary for Zix to effect any issuance by Zix of debt securities convertible into any capital stock, subject to certain exceptions. So long as True Wind beneficially owns
shares of Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding Common Stock, (i) the consent of True Wind will be
necessary for Zix to effect any acquisition, directly or indirectly, of any entity, entities or assets in one or a series of related transactions for consideration in excess of $10 million where such acquired entity is outside Zixs
principal line of business, (ii) the Company and its subsidiaries shall not adopt a stockholder rights agreement, poison pill or similar anti-takeover agreement or plan and shall take such actions as may be necessary to render
inapplicable any anti-takeover provision in the Texas Business Organizations Code and/or the Companys articles of incorporations and bylaws, in each case, that is or could become applicable to True Wind as a result of the transactions
described herein. So long as True Wind beneficially owns any shares of Preferred Stock, the consent of True Wind will be necessary for Zix to (a) enter into any material transaction with a related party (as defined in Item 404 of Regulation S-K promulgated under the Exchange Act) that does not comply with the Companys related party transaction policy or (b) repurchase or redeem any outstanding Common Stock from a related party
(as such term is defined in Item 404 of Regulation S-K promulgated under the Exchange Act) in a privately negotiated transaction at a price that is more than the Current Market Price (as defined in the Series
A Certificate of Designations and Series B Certificate of Designations) as of the date of repurchase or redemption.
Board Designations
Pursuant to the Investment Agreement, at the Closing Date, Zix (i) increased the number of directors comprising Zixs Board of Directors from six to
eight and (ii) appointed two designees of True Wind, James H. Greene, Jr. and Brandon Van Buren, to the Board. At such time as True Wind no longer beneficially owns shares of Preferred Stock and/or Common Stock that represent, in the aggregate
and on an as-converted basis, at least 10% of the then-outstanding Common Stock, but continues to beneficially own shares of Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding Common Stock, then True Wind will have the right to appoint one director to the Board. At such time as True Wind no longer beneficially owns shares of
Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding Common Stock, then True Wind will no longer have a right to appoint a
director to the Board. So long as True Wind beneficially owns shares of Preferred Stock and/or Common Stock that represent, in the aggregate and on an as-converted basis, at least 5% of the then-outstanding
Common Stock, without True Winds consent, the Company shall not (a) increase the size of the Board to more than a total of 8 director seats or (b) decrease the size of the Board if such decrease would require the resignation of
either or both of True Winds designees.
Standstill
Until the earlier of (i) a Change of Control (as defined in the Certificates of Designations) and (ii) the later of (A) the first day on which
no True Wind designee serves on the Board and True Wind has no rights to appoint a director and (B) the two-year anniversary of the Closing Date (the later of such dates, the Standstill Expiration Date), without the prior
written approval of the Board, True Wind will not, among other things,: (a) acquire additional securities of the Company (other than as contemplated by the transactions described herein); provided that True Wind and its affiliates may acquire up to,
(X) for each of 2019, 2020 and 2021, 2.5% in the aggregate in any such calendar year of the then outstanding Common Stock (with any unused amounts in any calendar year being carried over to succeeding calendar years) and (Y) for 2022 and
thereafter, any unused amount referred to in the preceding clause (X); (b) make or participate in any solicitation of proxies (as defined in the rules of the SEC), to vote any voting
