UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(AMENDMENT NO. 4)*
Zix Corporation
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
232046102
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(CUSIP Number)
Taylor H. Wilson, Esq.
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
(214) 651-5615
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 18, 2002
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
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CUSIP No. 232046102 Page 2 of 8
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Antonio R. Sanchez, Jr.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF 2,257,055
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 13,593
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING
2,257,055
PERSON -----------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
13,593
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,270,648
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.4% (1)
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14 TYPE OF REPORTING PERSON
IN
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(1) Based on a total of 18,143,201 shares of Common Stock outstanding on July
31, 2002, as disclosed in the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 2002.
This Amendment No. 4 to Schedule 13D amends and supplements the Schedule
13D filed on May 21, 1998 (the "Original Filing"), as amended on February 10,
1999, April 9, 1999, and January 30, 2001, by Antonio R. Sanchez, Jr. by
furnishing the information set forth below. Unless set forth below, all previous
Items are unchanged. Capitalized terms used herein, which are not defined
herein, have the meanings given to them in the Original Filing, as amended.
ITEM 1. SECURITY AND ISSUER.
Item 1 is hereby amended and restated in its entirety to read as follows:
"This statement relates to the common stock, par value $0.01 per share
("Common Stock"), of Zix Corporation, a Texas corporation (the "Company"),
formerly known as ZixIt Corporation. The address of the principal executive
offices of the Company is 2711 North Haskell Avenue, Suite 2300, LB 36, Dallas,
Texas 75204-2960."
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is hereby supplemented as follows:
"On September 18, 2002, (i) Mr. Sanchez purchased 126,136 shares of the
Company's Series A Convertible Preferred Stock, par value $1.00 per share
("Series A Preferred"), for an aggregate purchase price of approximately
$494,453 using personal funds, which shares are convertible into an aggregate of
120,012 shares of Common Stock, of which 51,690 shares may be issued immediately
and 68,322 shares may be issued upon approval by the Company's shareholders, and
(ii) the Partnership purchased 252,273 shares of Series A Preferred for an
aggregate purchase price of approximately $988,910 using working capital, which
shares are convertible into an aggregate of 240,026 shares of Common Stock, of
which 103,380 shares may be issued immediately and 136,646 shares may be issued
upon approval by the Company's shareholders."
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended and restated in its entirety to read as follows:
"(a) Mr. Sanchez may be deemed to be the beneficial owner of 2,270,648
shares of Common Stock, which represents approximately 12.4% of the shares of
Common Stock outstanding on July 31, 2002, as disclosed in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.
Of the 2,270,648 shares of Common Stock reported in this Item 5(a), (i)
1,633,025 shares are owned by Mr. Sanchez directly, (ii) 9,375 shares are held
by family members of Mr. Sanchez, (iii) 91,123 shares are held by trusts for
which Mr. Sanchez serves as trustee or co-trustee, and (iv) 262,100 shares are
held by the Partnership. Of the 2,270,648 shares of Common Stock reported in
this Item 5(a), (i) 119,955 shares may be acquired by Mr. Sanchez within 60 days
of September 18, 2002, upon the exercise of outstanding stock options held by
Mr. Sanchez, (ii) 51,690 shares may be acquired by Mr. Sanchez within 60 days of
September 18, 2002, upon conversion of outstanding shares of Series A Preferred
held by Mr. Sanchez, and (iii) 103,380 shares may be acquired by the Partnership
within 60 days of September 18, 2002, upon conversion of outstanding shares of
Series A Preferred held by the Partnership.
A family trust of which Mr. Sanchez is a beneficiary holds 39,376 shares
of Common Stock and may acquire 51,690 shares of Common Stock within 60 days of
September 18, 2002, upon conversion of outstanding shares of Series A Preferred
held by such trust. Mr. Sanchez has no voting or dispositive power over such
shares and disclaims beneficial ownership of such shares.
(b) Of the 2,270,648 shares of Common Stock that may be deemed to be
beneficially owned by Mr. Sanchez, Mr. Sanchez has (i) sole power to vote or
direct the vote of 2,257,055 shares, (ii) shared power to vote or direct the
vote of 13,593 shares, (iii) sole power to dispose or direct the disposition of
2,257,055 shares, and (iv) shared power to dispose or direct the disposition of
13,593 shares.
With respect to 9,375 of the shares of Common Stock referred to in clauses
(ii) and (iv) of this Item 5(b), Mr. Sanchez shares voting and dispositive power
over such shares with his wife, Maria J. Sanchez. The information concerning Mr.
Sanchez set forth in Items 2(b), (d), (e) and (f) above is applicable to the
same effect to Mrs. Sanchez.
With respect to 4,218 of the shares of Common Stock referred to in clauses
(ii) and (iv) of this Item 5(b), Mr. Sanchez shares voting and dispositive power
over such shares with Richard Stewart. Mr. Stewart's business address is 1100 N.
W. Loop 410, San Antonio, Texas 78213. Mr. Stewart is the president of Sanchez
Investment Properties. During the last five years, Mr. Stewart has not been
convicted in any criminal proceeding, excluding traffic violations or similar
misdemeanors. During the last five years, Mr. Stewart has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
which, as a result of such proceeding, he was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws. Mr. Stewart is a citizen of the United
States of America.
(c) Other than as described herein, no transactions in the Common Stock
were effected by Mr. Sanchez or entities for which Mr. Sanchez exercises voting
and/or investment power during the past 60 days.
(d) Persons other than Mr. Sanchez have the right to receive dividends
from, and the proceeds from the sale of, 465,978 of the 2,270,648 shares of
Common Stock reported in Item 5(a) above.
(e) Not applicable."
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is hereby supplemented as follows:
"On September 16, 2002, Mr. Sanchez, the Partnership and a family trust of
which Mr. Sanchez is a beneficiary (collectively, the "Sanchez Entities")
entered into a Securities Purchase Agreement (the "Securities Purchase
Agreement") with the Company and certain other investors, pursuant to which the
Company issued and sold to the Sanchez Entities an aggregate of 504,545 shares
of Series A Preferred for a purchase price of $3.92 per share (the "Series A
Original Issue Price"), or approximately $1,977,816 in the aggregate. In
addition, the Company issued to the Sanchez Entities warrants to purchase up to
an aggregate of 177,381 shares of Common Stock for a purchase price of $0.125
per warrant share, or approximately $22,173 in the aggregate.
On September 18, 2002, the transactions contemplated by the Securities
Purchase Agreement closed and the Sanchez Entities acquired beneficial ownership
of the shares.
The foregoing is qualified in its entirety by reference to the Securities
Purchase Agreement, attached hereto as EXHIBIT 1.
STATEMENT OF DESIGNATIONS OF THE SERIES A PREFERRED
The Series A Preferred ranks senior to the Common Stock and on parity with
the Company's Series B Convertible Preferred Stock ("Series B Preferred"). The
Series A Preferred accrues per annum dividends of 6.5% and has a preference on
liquidation (or deemed liquidation) equal to $3.92 per share plus the amount of
accumulated but unpaid dividends thereon.
CONVERSION
The Series A Preferred is convertible in whole or in part into shares of
Common Stock at the option of the holder at any time.
The Series A Preferred is convertible in whole or in part into shares of
Common Stock at the option of the Company if, following the effectiveness of the
Registration Rights Agreement (as defined below), the closing price of the
Common Stock on the Nasdaq National Market ("Nasdaq") is above $6.18 per share
for each of the ten consecutive trading days immediately preceding the Company's
notice of conversion. The Company must exercise its conversion rights with
respect to the Series A Preferred simultaneously and in the same proportion as
it exercises its conversion rights with respect to the Series B Preferred.
The number of shares of Common Stock to be issued upon conversion of the
Series A Preferred will be determined by dividing (i) the principal amount being
converted plus the amount of accumulated but unpaid dividends on such shares to
be converted, by (ii) the Series A Conversion Price in effect at the time of
conversion. Initially, the "Series A Conversion Price" is 105% of the Series A
Original Issue Price, or $4.12 per share. The Series A Conversion Price and the
number of shares of Common Stock issuable upon conversion of the Series A
Preferred are subject to proportional adjustment upon the occurrence of certain
events, including stock splits and similar changes affecting the Common Stock,
and are subject to weighted average anti-dilution adjustment in the event the
Company issues, or is deemed to have issued, shares of Common Stock at a price
per share that is less than the Series A Conversion Price then in effect (other
than certain specified exempt issuances). The Series A Conversion Price may not
be adjusted pursuant to the weighted average formula to a price that is less
than $3.92 per share without the prior approval of the Company's shareholders in
accordance with Nasdaq Marketplace Rules.
On the date of issue, the shares of Series A Preferred issued to the
Sanchez Entities were convertible into an aggregate of 480,052 shares of Common
Stock, of which 206,760 shares may be issued immediately and 273,292 shares may
be issued upon approval by the Company's shareholders.
REDEMPTION
The shares of Series A Preferred are subject to mandatory redemption by
the Company, in equal installments of 1/9 of the original aggregate shares
issued, at two-month intervals beginning May 2003 and ending September 2004. The
redemption amount to be paid by the Company will be $3.92 per share to be
redeemed, plus all accrued and unpaid dividends on such redeemed shares.
The redemption amount payable on any interim redemption date will be
payable in shares of Common Stock, valued at $3.92 per share. If, on any such
interim redemption date, $3.92 is higher than the then-current five-day average
closing bid price of the Common Stock on Nasdaq, then each holder has the option
to defer the scheduled interim redemption of such holder's Series A Preferred
until the next succeeding redemption date. If the Company is prohibited from
issuing a sufficient number of shares of Common Stock to effect any interim
redemption because it has not obtained the Shareholder Approval (as defined
below), the shares of Series A Preferred that cannot be redeemed by the issuance
of the Common Stock must be redeemed by the Company in cash (provided that the
convertible notes issued by the Company on September 18, 2002 (the "Convertible
Notes") have been paid in full) or through the issuance of a Subordinated Note,
at the Company's option. Each "Subordinated Note" will have a one-year term, be
unsecured, bear interest at 6.5% per annum and be subordinated to the
Convertible Notes.
The redemption amount payable on the final redemption date (the
twenty-four month anniversary of issuance) will be payable, at the option of the
Company, either in cash or by the issuance of shares of Common Stock, valued at
the lesser of $3.92 per share or the then-current five-day average closing bid
price of the Common Stock on Nasdaq. If the then-current five-day average
closing bid price of the Common Stock on Nasdaq is less than $3.92 per share and
the Company is prohibited from issuing shares of Common Stock at less than $3.92
per share because it has not obtained the Shareholder Approval, then the Company
must pay the redemption amount in cash. If the Company is prohibited from
issuing a sufficient number of shares of Common Stock (because the Company has
already exhausted the total number of shares that may be issued without
Shareholder Approval) to effect the final redemption because it has not obtained
the Shareholder Approval, the shares of Series A Preferred that cannot be
redeemed by the issuance of Common Stock must be redeemed by the Company in
cash.
VOTING
The holder of each share of Series A Preferred will have the right to one
vote for each share of Common Stock into which such share of Series A Preferred
could be converted on the record date and will vote upon all matters upon which
holders of Common Stock have the right to vote. In no event, however, may any
share of Series A Preferred entitle a holder to a number of votes that is
greater than the number of votes the share would represent if it was then
convertible into Common Stock based on a conversion price of $3.92 per share.
The consent of the holders of a majority of the shares of Series A Preferred
outstanding is required for the Company to take certain actions, including the
redemption or the payment of dividends on the Common Stock.
SHAREHOLDER APPROVAL
Unless the Company obtains the approval of its shareholders as required by
the Nasdaq Marketplace Rules (the "Shareholder Approval"), the Company may not
take any of the following actions with respect to the Series A Preferred and the
Series B Preferred: (i) the Company may not issue more than 870,693 shares of
Common Stock upon the conversion or redemption of shares of Series A Preferred
and Series B Preferred, and (ii) the Company may not issue shares of Common
Stock upon the conversion or redemption of shares of Series A Preferred at less
than $3.92 per share. Pursuant to the Securities Purchase Agreement, the Company
is obligated to (i) prepare and file with the Securities and Exchange Commission
a proxy statement relating to the Shareholder Approval on or before October 25,
2002, (ii) use all reasonable efforts to obtain the Shareholder Approval on or
before February 28, 2003, and (iii) in any event, seek Shareholder Approval no
later than the 2003 Annual Meeting of Shareholders of the Company.
The foregoing is qualified in its entirety by reference to the Statement
of Designations of the Series A Preferred, attached hereto as EXHIBIT 2.
WARRANTS
In connection with the sale of the Series A Preferred, the Company issued
warrants (the "Warrants") to the Sanchez Entities to purchase in whole or in
part an aggregate of 177,381 shares of Common Stock at an exercise price of
$4.51 per share, of which (i) Mr. Sanchez is entitled to purchase 44,345 shares,
(ii) the Partnership is entitled to purchase 88,691 shares, and (iii) a family
trust of which Mr. Sanchez is a beneficiary is entitled to purchase 44,345
shares. The Warrants are exercisable at any time after the six-month anniversary
of the issue date and prior to the four-year anniversary of the issue date. The
number of shares of Common Stock for which the Warrants are exercisable and the
exercise price of the Warrants are subject to proportional adjustment for stock
splits and similar changes affecting the Common Stock. The exercise price of the
Warrants is also subject to weighted average anti-dilution adjustment in the
event the Company issues, or is deemed to have issued, shares of Common Stock at
a price per share that is less than the exercise price then in effect (other
than certain specified exempt issuances) except that the exercise price may not
be adjusted pursuant to the weighted average formula to a price that is less
than $3.92 per share.
The foregoing is qualified in its entirety by reference to the Form of
Warrant, attached hereto as EXHIBIT 3.
REGISTRATION RIGHTS AGREEMENT
On September 16, 2002, the Sanchez Entities entered into a Registration
Rights Agreement (the "Registration Rights Agreement") with the Company and
certain other investors, pursuant to which the Company has agreed to prepare and
file within 30 days of the closing date a registration statement covering the
resale of the shares of Common Stock issuable upon the conversion or redemption
of the Series A Preferred and the Series B Preferred and the exercise of the
Warrants. The Company is required to have the Registration Statement declared
effective within 105 days after the closing date. In addition, the Company has
agreed to prepare, file and seek the effectiveness of a registration statement
covering the resale of up to an additional 2,000,000 shares of Common Stock held
by the Sanchez Entities and certain other investors named in the Registration
Rights Agreement upon their request at least nine months after the date of the
Securities Purchase Agreement.
The foregoing is qualified in its entirety by reference to the
Registration Rights Agreement, attached hereto as EXHIBIT 4.
TRADING RESTRICTIONS
So long as any of the Convertible Notes or warrants issued to holders of
Convertible Notes are outstanding, no investor named in the Securities Purchase
Agreement may engage in a short sale or establish an open put equivalent
position with respect to a number of shares of Common Stock that is greater than
(i) the number of shares of Common Stock for which a warrant held by an investor
named in the Securities Purchase Agreement is then exercisable (without regard
to limitations on exercisability) plus (ii) the number of shares of Common Stock
issuable to such investor pursuant to a notice of conversion of shares of Series
A Preferred or Series B Preferred, or a notice of exercise of such warrant,
delivered to the Company no later than the next succeeding business day."
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended and restated in its entirety to read as follows:
"1. Securities Purchase Agreement, dated September 16, 2002, by and
between Zix Corporation, the Series A Investors named therein and
the Series B Investors named therein (including schedules but
excluding exhibits) (Exhibit 4.1 to the Company's Form 8-K filed
with the Securities and Exchange Commission on September 20, 2002
and incorporated by reference herein).
2. Statement of Designations of the Series A Convertible Preferred
Stock of Zix Corporation (Exhibit 3.1 to the Company's Form 8-K
filed with the Securities and Exchange Commission on September 20,
2002 and incorporated by reference herein).
3. Form of Warrant, dated September 18, 2002, to purchase shares of
common stock of Zix Corporation, issued by Zix Corporation (Exhibit
4.2 to the Company's Form 8-K filed with the Securities and Exchange
Commission on September 20, 2002 and incorporated by reference
herein).
4. Registration Rights Agreement, dated September 16, 2002, by and
among Zix Corporation and the Investors named therein (Exhibit 4.3
to the Company's Form 8-K filed with the Securities and Exchange
Commission on September 20, 2002 and incorporated by reference
herein)."
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: September 20, 2002 /s/ ANTONIO R. SANCHEZ, JR.
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Antonio R. Sanchez, Jr.