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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ______
Commission File Number: 0-17995
ZIXIT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Texas 75-2216818
(State of Incorporation) (I.R.S. Employer Identification Number)
2711 N. Haskell Avenue
Suite 2300, LB 36
Dallas, Texas 75204-2960
(Address of Principal Executive Offices)
(214) 370-2000
(Registrant's Telephone Number, Including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None Not Applicable
(Title of Class) (Name of Exchange on Which Registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock
$0.01 Par Value
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
As of January 31, 2002, there were 17,557,854 shares of ZixIt Corporation
$0.01 par value common stock outstanding, 15,149,274 of which having an
aggregate market value of $75,746,370 were held by non-affiliates. For purposes
of the above statement, all directors and officers of the Registrant are
presumed to be affiliates.
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PART III
ITEM 10. Directors and Executive Officers of the Registrant.
There is no family relationship among any of our directors, executive
officers or significant employees. The following table sets forth, as of March
31, 2002, the names of our directors, executive officers and other significant
employees and their respective ages and positions:
Name Age Position
---- --- --------
David P. Cook (1)(3) 50 Director, Founder
Donald D. Druckenbrodt 48 Vice President, Technology Planning
Dennis F. Heathcote 45 Vice President, North American Sales and Services
H. Wayne Huizenga 64 Director, Co-Vice Chairman
Michael E. Keane (2)(4) 46 Director
Dr. G. Gary Liu 47 Vice President and Chief Technical Officer
James S. Marston (2)(4) 68 Director
Wael Mohamed 34 Vice President, Global Distribution
Dan Nutkis 36 Vice President, Strategy and Products
Jeffrey P. Papows (1) 48 Director, Co-Vice Chairman
David J. Robertson 43 Vice President, Engineering
John A. Ryan 45 Director, Chairman, President and Chief Executive Officer
Antonio R. Sanchez, Jr. (1)(3) 59 Director
Dr. Ben G. Streetman (2)(3)(4) 62 Director
Ronald A. Woessner 44 Senior Vice President, General Counsel and Secretary
Steve M. York 51 Senior Vice President, Chief Financial Officer and Treasurer
-------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
(4) Member of the Compensation and Stock Option Committee.
DAVID P. COOK was elected to our Board in December 1995 and currently holds
the position of Founder of ZixIt. He served as President and Chief Executive
Officer from April 1998 until November 2001 and as Chairman from April 1998
until October 2000. He previously served as Chairman and Chief Executive Officer
of ARBImetrics Corporation, a Dallas-based investment company that he founded.
Mr. Cook founded ZixIt (formerly known as Amtech Corporation) and served as a
director from 1984 until 1990, serving as Chairman of the Executive Committee
until 1990. Mr. Cook founded Blockbuster Entertainment Corporation and was its
Chief Executive Officer from its inception until 1987. Prior to that, he was
Chairman of Cook Data Services, Inc., a software company that he also founded.
DONALD D. DRUCKENBRODT, Vice President, Technology Planning, rejoined our
company in January 1999. Mr. Druckenbrodt previously served as Vice President of
Amtech Systems Corporation, a former wholly-owned subsidiary of ZixIt
Corporation, from 1987 until 1990. Prior to rejoining ZixIt Corporation, Mr.
Druckenbrodt served as Vice President of OGRE
1
Partners, Ltd., an oil and gas economic modeling software firm, from 1992 until
1999. Mr. Druckenbrodt also served as President of Blockbuster Computer Systems,
Inc., a wholly-owned subsidiary of Blockbuster Entertainment Corporation, from
its inception until 1987.
DENNIS F. HEATHCOTE joined our company in December 2001 as Vice President,
North American Sales and Services. From May 1998 until June 2001, Mr. Heathcote
worked at Entrust, Inc. ("Entrust"), where he held a variety of senior sales and
management positions, including Vice President and General Manager of
Entrust.net, Inc., Entrust's business unit focused on providing e-business trust
solutions for wired and wireless networks, from October 1999 until June 2001. In
addition, Mr. Heathcote, a Chartered Accountant, has more than 20 years of
experience in senior sales, finance and business administration roles in the
software and technology industry, including more than 10 years with IBM and IBM
Global Services.
H. WAYNE HUIZENGA was elected director and Vice Chairman of our Board in
May 2000 and has served as Co-Vice Chairman since November 2001. Mr. Huizenga
has been Chairman of AutoNation, Inc. since August 1995 and served as its Chief
Executive Officer from August 1995 until October 1996 and Co-Chief Executive
Officer from October 1996 until September 1999. Mr. Huizenga has also been
Chairman of Extended Stay America, Inc. since January 1995. Since May 1998, he
has been Chairman of Republic Services, Inc. and Chief Executive Officer from
May 1998 until December 1998. Since September 1996, he has been Chairman of Boca
Resorts, Inc. He owns the Miami Dolphins professional sports franchise, as well
as Pro Player Stadium, and is a director of NationsRent, Inc. and ANC Rental
Corporation. Mr. Huizenga was Chairman and Chief Executive Officer of
Blockbuster Entertainment Corporation from April 1987 until its merger with
Viacom, Inc. in September 1994. From September 1994 until October 1995, he
served as Vice Chairman of Viacom, Inc. and Chairman of Blockbuster
Entertainment Group, a division of Viacom, Inc. In January 1971, Mr. Huizenga
co-founded Waste Management, Inc. and served in various capacities, including
President, Chief Operating Officer and director, from its inception until 1984.
MICHAEL E. KEANE was elected to our Board in November 1997. Mr. Keane has
been Senior Vice President and Chief Financial Officer of UNOVA, Inc. since
November 1997. UNOVA, Inc. comprises the former industrial technology businesses
spun off from Western Atlas, Inc. in October 1997, where Mr. Keane was also
Senior Vice President and Chief Financial Officer from October 1996 until
October 1997 and Vice President and Treasurer from March 1994 until October
1996. Prior to that, he was Corporate Director, Pensions and Insurance, for
Litton Industries, Inc. from February 1991 until March 1994.
DR. G. GARY LIU became an employee of our company in January 1999 and was
subsequently appointed Vice President and Chief Technical Officer. From 1997
until beginning employment with ZixIt Corporation, Dr. Liu was President of
Securisys Corporation, an encryption, start-up enterprise that he founded. Dr.
Liu was also President of American Advanced Technology, Inc., a privately-held
telecommunications design consulting company, from its founding in January 1993
until its dissolution in January 1997. Dr. Liu has a doctorate degree in physics
from the California Institute of Technology (Caltech).
JAMES S. MARSTON was elected to our Board in September 1991. From September
1987 through February 1998, Mr. Marston served as a Senior, or Executive, Vice
President and the Chief Information Officer of APL Limited, a U.S.-based
intermodal shipping company. Between 1986 and 1987, Mr. Marston served as
President of AMR Technical Training Division, AMR Corporation. From 1982 until
1986, he was Vice President of Data Processing and Communications for American
Airlines, in which position he was in charge of the Sabre reservations system
and related technologies.
2
WAEL MOHAMED joined our company in February 2002 and serves as Vice
President, Global Distribution. Mr. Mohamed brings over 14 years of high-tech
sales and management experience, most recently serving as Senior Vice President,
Global Sales and Marketing of KLOCwork Solutions Inc. since July 2001. From
October 1997 until July 2001, he worked for Entrust, where he held several sales
management positions, including Vice President of Sales, Entrust Global Services
and Vice President, Worldwide Sales of Entrust.net, Inc. As a Vice President of
Worldwide Sales, he was responsible for building an extensive network of
Entrust.net affiliate partners operating in 32 countries around the world.
Before joining Entrust, Mr. Mohamed held several key executive and management
positions at IBM Global Services from July 1996 until October 1997. While at IBM
Global Services, Mr. Mohamed managed a staff of over 100 employees and over $200
Million in service revenue.
DAN NUTKIS joined our company in February 2002 as Vice President, Strategy
and Products. Prior to that, he was a consultant to PricewaterhouseCoopers LLP
in 2001, serving as head of health care for the firm's subsidiary, beTRUSTed.
Before working for PricewaterhouseCoopers, in January 2000 he founded (and
served as Chief Executive Officer of) Medtegrity Inc., a leading provider of
health care industry-accepted identification, authentication, security and
privacy services. Prior to founding Medtegrity, during 1999 Mr. Nutkis was
Chairman of the Odin Group, the leading health care information technology
research firm. Prior to that, Mr. Nutkis worked at Ernst & Young for over 10
years where he held many positions, including National Director of the firm's
Health Care Emerging Technology practice, and Chief Executive Officer of
ConnectedHealth.Net, one of the firm's knowledge management subsidiaries.
JEFFREY P. PAPOWS was elected to our Board in March 2000 and currently
serves as Co-Vice Chairman. He served as Chairman from October 2000 until
November 2001, and during that time, he had direct responsibility for the sales
and marketing management of our products and services. Mr. Papows is currently
President and Chief Executive Officer of Maptuit Corporation and served as
Chairman of IT Factory, Inc. until December 2001. Prior to joining Maptuit
Corporation, Mr. Papows held a seven-year tenure with Lotus Development
Corporation, an IBM company, where he served as its President and Chief
Executive Officer from 1998 until 2000, President and Chief Operating Officer
from 1996 until 1998 and Senior Vice President Notes Product Division from 1993
until 1996. In 1998, Mr. Papows published Enterprise.com, a book on the effects
and global promise of the Internet on large companies, which has since been
reprinted in nine editions and six languages. Mr. Papows has also been a keynote
speaker at Fall Comdex, Comdex Japan and Comdex Mexico.
DAVID J. ROBERTSON joined our company in March 2002 as Vice President,
Engineering. Mr. Robertson has over 20 years of experience in the
telecommunications and Internet industries, with specific expertise in network
architecture, security and protocols, PBX and Key System design in circuit and
packet environments and broadband and cellular access systems. He has also
worked extensively in product areas involving 802.11, DECT and other unlicensed
wireless access standards. Mr. Robertson has contributed to the early stages of
Telecommunications Standards' definition for the Unlicensed Wireless Industry in
the United States and Canada and to the finalization of the ADSI standard for
enhanced telecommunications carrier service deployment. He participated in
pioneering efforts toward end-to-end voice quality standards for Quality of
Service in many wireline and wireless domains. He is a member of multiple
company advisory boards and serves with the City of Richardson Chamber of
Commerce.
JOHN A. RYAN joined our company as President and Chief Executive Officer
and was elected director and Chairman of our Board in November 2001. From
January 1997 through January 2001, he served as President, Chief Executive
Officer, and director of Entrust, a company for which he led the private
placement in 1996 and which he took public in August 1998. Prior to that, Mr.
Ryan held a number of senior management positions in general management,
marketing and sales, and finance with Nortel Networks, with his most recent
position being Vice President and General Manager of Nortel's
3
global multimedia and Internet projects unit. Before joining Nortel, Mr. Ryan
worked for Deloitte Touche LLP and was awarded his Canadian Chartered Accountant
designation in 1981. He has also served as an advisory board member to Scopus
Technologies. Prior to joining ZixIt, Mr. Ryan formed ARM Technologies, a
privately-held Internet consulting and services company that he founded in
February 2001. He also currently serves as a director of Tilion Inc., a
privately-held Massachusetts-based company that focuses on "in-the-Net"
analytics services based on XML for supply chain transactions, and RIPTECH Inc.,
a privately-held, managed security services company based in Washington, D.C. He
is an advisory board member to Mobelium, a privately-held Internet wireless
services company based in California, and is on the Board of Trustees for the
Hart eCenter at Southern Methodist University.
ANTONIO R. SANCHEZ, JR. was one of our early investors and was elected to
our Board in February 1993. Mr. Sanchez is Chairman and Chief Executive Officer
of Sanchez Oil & Gas Corporation. He also holds interests in banking, real
estate development, venture capital and various other investments. Mr. Sanchez
serves as a director of International Bank of Commerce ("IBC") and as a director
and stockholder of IBC's publicly traded holding company, International
Bancshares Corporation. Mr. Sanchez is also a member of the University of Texas
System Board of Regents and is a director of Conoco, Inc.
DR. BEN G. STREETMAN became a director in July 1998. Dr. Streetman is Dean
of the College of Engineering at The University of Texas at Austin and holds the
Dula D. Cockrell Centennial Chair in Engineering. He is a Professor of
Electrical and Computer Engineering and was the founding director of the
Microelectronics Research Center, The University of Texas at Austin, from 1984
until 1996. Dr. Streetman also serves as a director of National Instruments
Corporation and Global Marine, Inc.
RONALD A. WOESSNER joined our company in April 1992 as General Counsel and
was subsequently appointed Secretary and Senior Vice President. He was
previously a corporate and securities attorney with the Dallas-based law firm of
Johnson & Gibbs, P.C.
STEVE M. YORK joined our company in April 1990 as Vice President, Chief
Financial Officer and Treasurer and was subsequently appointed Senior Vice
President. Mr. York, a Certified Public Accountant, previously held various
financial management positions with commercial operating companies and was
employed by Arthur Young & Co. (now Ernst & Young).
Following the meeting, our Board of Directors will adopt a resolution
fixing the number of seats on our Board at six. This resolution will supercede
all prior resolutions regarding the number of seats on our Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, our directors, officers and
any beneficial owner of more than 10% of our outstanding common stock
(collectively, "insiders") are required to report their initial ownership of our
common stock and any subsequent changes in their ownership to the Securities and
Exchange Commission ("SEC"). The SEC's rules require insiders to provide us with
copies of all Section 16(a) reports that the insiders file with the SEC.
Specific due dates have been established by the SEC, and we are required to
disclose any failure to file by those dates. Based solely upon our review of
copies of Section 16(a) reports that we received from insiders for their 2001
transactions and written representations that no such additional reports were
required to be filed with the SEC, we believe that our insiders have complied
with all Section 16(a) filing requirements applicable to them during 2001.
4
ITEM 11. Executive Compensation.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the compensation paid to our named
executive officers for services rendered to ZixIt Corporation for the periods
indicated.
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
--------------------------------- --------------------- -------
Base Number of
Salary Bonus Restricted Securities All Other
(Cash and (Cash and Other Annual Stock Underlying LTIP Compensation
Year Non-cash) Non-cash) Compensation Award Options Payouts (1)
Name and Principal Position ---- --------- ---------- ------------ ---------- ---------- ------- ------------
David P. Cook (2) 2001 $500,000 $ - $ - $ - - - $ -
Founder 2000 - - - - 500,000 - -
1999 - - - - - - -
Donald D. Druckenbrodt 2001 180,000 - - - - - -
Vice President, 2000 144,000 - - - 109,500 - -
Technology Planning 1999 142,546 - - - 50,000 - 2,403
Steven M. Gersten (3) 2001 274,560 - - - 200,000 - -
Senior Vice President, 2000 - - - - - - -
Sales & Marketing 1999 - - - - - - -
Jeffrey P. Papows (4) 2001 150,000 - - - - - -
Co-Vice Chairman 2000 31,250 - - - 275,000 - -
1999 - - - - - - -
J. Michael Poss (5) 2001 204,000 - - - 40,000 - -
Vice President, Sales Operations 2000 127,500 - - - 144,000 - -
1999 - - - - - - -
John A. Ryan (6) 2001 37,500 1,000,000 - - 1,050,000 - -
Chairman, President and 2000 - - - - - - -
Chief Executive Officer 1999 - - - - - - -
Ronald A. Woessner 2001 216,000 - - - - - 8,123
Senior Vice President, 2000 150,000 - - - 52,500 - 4,960
General Counsel and Secretary 1999 150,000 - - - - - 11,688
Steve M. York 2001 216,000 - - - 50,000 - 2,975
Senior Vice President, 2000 193,000 - - - - - 2,975
Chief Financial Officer and Treasurer 1999 193,000 - - 112,970 - - 5,093
---------------
(1) Represents our contributions to our 401(k) Retirement Plan or Employee
Stock Purchase Plan.
5
(2) Served as our President and Chief Executive Officer from April 1998 until
November 2001, at which time he was appointed "Founder."
(3) Separated from employment with ZixIt Corporation in November 2001.
(4) Served as our salaried Chairman from October 2000 until November 2001.
(5) Separated from employment with ZixIt Corporation in February 2002.
(6) Appointed Chairman, President and Chief Executive Officer in November 2001.
The bonus to Mr. Ryan consisted of 152,672 shares of our common stock
valued at $1,000,000. In the event Mr. Ryan is terminated for "cause" or he
resigns other than for "good reason," as such terms are defined in his
employment agreement, prior to the first or second year anniversaries of
employment, he must return to us shares of our common stock equal to 100%
and 50% of the 152,672 signing bonus shares, respectively, or cash in the
amount of $1,000,000 and $500,000, respectively. Notwithstanding the
foregoing, upon the occurrence of an "accelerated vesting event" (as
defined in his stock option agreement), any obligation of Mr. Ryan to
return such shares to us shall no longer be in force.
Option Grants in 2001 to Named Executive Officers
We made the following stock option grants to our named executive officers
during the year ended December 31, 2001.
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term
-------------------------------------------- ----------------------------------
% of Total
Number of Options
Securities Granted
Underlying to Exercise
Options Employees Price Per Expiration
Name Granted in 2001 Share Date 0% 5% 10%
---- ---------- ---------- --------- ---------- -------- ---------- ----------
David P. Cook - - $ - - $ - $ - $ -
Donald D. Druckenbrodt - - - - - - -
Steven M. Gersten 200,000(1) 8.67 7.94 01/08/2011 - 998,000 2,530,000
Jeffrey P. Papows - - - - - - -
J. Michael Poss (2) 40,000(2) 1.73 7.00 08/16/2006 107,600 214,800 344,400
John A. Ryan 50,000(3) 2.17 7.19 03/19/2006 - 99,500 219,500
1,000,000(4) 43.35 5.24 11/13/2011 - 3,000,000 7,880,000
Ronald A. Woessner - - - - - - -
Steve M. York 50,000(5) 2.17 5.25 12/11/2011 - 165,000 418,500
--------------
(1) The options were cancelled upon Mr. Gersten's separation from employment
with ZixIt Corporation in November 2001.
(2) Mr. Poss separated from employment with ZixIt Corporation in February 2002.
The options became fully vested in November 2001 due to the occurrence of
certain events.
(3) The options vest and become exercisable six months from the date of grant.
(4) The options become 50% vested on the first year anniversary of employment
and the balance vests pro-rata every three months during the second year of
employment. In the event of a "change in control" (as defined) of ZixIt
Corporation or the occurrence of other specified events, the options become
immediately exercisable.
6
(5) The options vest and become exercisable over three years. In the event of
termination under certain circumstances or a "change in control" (as
defined) of ZixIt Corporation or a material subsidiary of ZixIt Corporation
under specified circumstances, the options become immediately exercisable.
Aggregated Option Exercises in 2001 and Year-end Option Values
The following table sets forth information relating to the exercises of
stock options during the year ended December 31, 2001, and the value of
unexercised stock options held as of December 31, 2001 by each of our named
executive officers.
Option Exercises
During 2001 Number of Securities
------------------------- Underlying Unexercised Value of Unexercised
Number of Options at In-the-Money Options at
Shares December 31, 2001 December 31, 2001
Acquired Value ----------------- -----------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
David P. Cook - - 2,170,244 333,333 $ - $ -
Donald D. Druckenbrodt - - 83,333 76,167 - -
Steven M. Gersten (1) - - - - - -
Jeffrey P. Papows - - 225,000 50,000 - -
J. Michael Poss (2) - - 101,667 82,333 - -
John A. Ryan - - 50,000 1,000,000 - -
Ronald A. Woessner - - 127,500 25,000 79,060 -
Steve M. York - - 56,500 50,000 - -
-----------------
(1) Separated from employment with ZixIt Corporation in November 2001.
(2) Separated from employment with ZixIt Corporation in February 2002.
Employment and Severance Agreements with Certain Executive Officers
We entered into a two-year employment agreement with Mr. Ryan, effective
November 16, 2001, which provides for a $300,000 annual salary, plus $200,000
cash bonus payable at the end of the first year of employment, and a cash bonus
opportunity of at least $200,000 payable at the end of the second year of
employment that is tied to the achievement of defined objectives. Mr. Ryan also
received a signing bonus of 152,672 shares of our common stock (valued at
$1,000,000). If Mr. Ryan's employment with us is terminated for "cause" or he
resigns other than for "good reason," as such terms are defined in his
employment agreement, prior to the first or second year anniversaries of
employment, he must return to us shares of our common stock equal to 100% and
50% of the 152,672 signing bonus shares, respectively, or cash in the amount of
$1,000,000 and $500,000, respectively. Notwithstanding the foregoing, upon the
occurrence of an "accelerated vesting event" (as defined in his stock option
agreement), any obligation of Mr. Ryan to return such shares to us shall no
longer be in force.
We entered into a three-year employment agreement with Mr. Cook, effective
as of December 26, 2000, which provided for a $500,000 annual salary. Effective
February 1, 2002, Mr. Cook waived the $500,000 annual salary under his
employment arrangement, and his current salary is a nominal $1.00 per year.
We are a party to severance agreements with Messrs. Druckenbrodt, Woessner
and York which provide for the payment to each of them of 12 months, 18 months
and 18 months, respectively, of each of their base salaries in the event each
has "good reason" (as defined) to resign his employment or if his
7
employment is terminated other than for "cause" (as defined). The severance
agreements also provide for the payment to Messrs. Druckenbrodt, Woessner and
York of one and a half times, two times and three times, respectively, each of
their annual base salaries in the event his employment terminates after a
"change in control" (as defined) of ZixIt Corporation. The severance agreements
also contain confidentiality and stock option acceleration provisions.
Compensation of Directors
On the day an outside director is first appointed or elected to our Board
of Directors, such director is granted nonqualified options to purchase 25,000
shares of our common stock, which vest six months from the grant date with an
exercise price equal to 100% of our common stock price on the grant date. Also,
in January of each year, each director that has served on our Board at least 12
consecutive months will receive a further grant of options determined according
to a specified formula, which provides that the eligible directors collectively
receive options for 1% of our outstanding common stock. The exercise price for
these options will be 120% of our common stock price on the grant date. These
annual options vest over three years. We pay a $15,000 retainer fee to outside
directors until they are eligible to receive the annual option grants. We
reimburse our directors for expenses they incur attending our Board or committee
meetings.
Compensation Committee Interlocks and Insider Participation
The Compensation and Stock Option Committee is comprised of three
directors. Michael E. Keane, James S. Marston, Jeffrey P. Papows and Dr. Ben G.
Streetman served on our Compensation and Stock Option Committee at various times
during the year ended December 31, 2001. None of Messrs. Keane, Marston or Dr.
Streetman is or was a current officer or employee of ZixIt Corporation. Mr.
Papows served as the salaried Chairman of our Board from October 2000 until
November 2001. Also, as noted below under "Certain Relationships and Related
Transactions," Mr. Papows is President and Chief Executive Officer of Maptuit
Corporation ("Maptuit") and served as Chairman of IT Factory, Inc. ("IT
Factory"). The committee met on four occasions during the year ended December
31, 2001. Other than Mr. Woessner, who serves as our representative on the Board
of Directors of Maptuit, we have no executive officers who serve as a member of
a board of directors or compensation committee of any other entity that has one
or more executive officers serving as a member of our Board or Compensation and
Stock Option Committee.
8
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
Set forth below is information as of March 31, 2002 concerning:
o each stockholder known by us to beneficially own more than 5% of our
outstanding shares of common stock;
o the shareholdings of each of our directors and named executive
officers; and
o the shareholdings of all directors and executive officers as a group.
Security Ownership of Certain Beneficial Owners and Management Table
Amount and Nature
of Beneficial Ownership (1)(2)
------------------------------
Number of Shares Percentage of Total
Beneficial Owner Beneficially Owned Shares Outstanding (3)
---------------- ------------------ ----------------------
David P. Cook (4) 1,347,577 7.12%
Donald D. Druckenbrodt (5) 159,675 *
George W. Haywood (6) 3,460,697 19.58%
642 Second Street
Brooklyn, New York 11215
Dennis F. Heathcote (7) 31,250 *
H. Wayne Huizenga (8) 178,481 1.0%
Michael E. Keane (7) 112,455 *
James S. Marston (7) 122,455 *
Jeffrey P. Papows (7) 250,000 1.39%
John A. Ryan (9) 202,672 1.14%
Antonio R. Sanchez, Jr. (10) 2,154,954 12.11%
Dr. Ben G. Streetman (7) 62,147 *
Ronald A. Woessner (11) 164,024 *
Steve M. York (12) 196,191 1.1%
All directors and executive officers as a group
(12 persons) 4,981,881 24.60%
------------------
* Denotes ownership of less than 1%.
(1) Reported in accordance with the beneficial ownership rules of the SEC.
Unless otherwise noted, each stockholder listed in the table has both sole
voting and sole investment power over the common stock shown as
beneficially owned, subject to community property laws where applicable.
(2) Unless otherwise noted, the address for each beneficial owner is c/o ZixIt
Corporation, 2711 North Haskell Avenue, Suite 2300, LB 36, Dallas, Texas
75204-2960.
(3) Percentages are based on the total number of shares of our common stock
outstanding at March 31, 2002. Shares of our common stock that were not
outstanding but could be acquired upon exercise of an option or other
convertible security within 60 days of March 31, 2002 are deemed
outstanding for the purpose of computing the percentage of outstanding
shares beneficially owned by a
9
particular person. However, such shares are not deemed to be outstanding
for the purpose of computing the percentage of outstanding shares
beneficially owned by any other person.
(4) Includes 1,253,577 shares that Mr. Cook has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of March 31, 2002.
(5) Includes 159,500 shares that Mr. Druckenbrodt has the right to acquire
under outstanding stock options that are currently exercisable or that
become exercisable within 60 days of March 31, 2002.
(6) Includes 106,500 shares that are owned by family members of Mr. Haywood.
(7) This individual has the right to acquire these shares under outstanding
stock options that are currently exercisable or that become exercisable
within 60 days of March 31, 2002.
(8) Includes 143,062 shares that Mr. Huizenga has the right to acquire under
outstanding stock options and warrants that are currently exercisable or
that become exercisable within 60 days of March 31, 2002. Mr. Huizenga
disclaims beneficial ownership with respect to 54,166 shares.
(9) Includes 50,000 shares that Mr. Ryan has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of March 31, 2002 and 152,672 shares that are
subject to forfeiture under certain circumstances.
(10) Of the 2,154,954 shares reported, (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, over which Mr. Sanchez exercises voting,
investment and disposition power, are held in trusts for which Mr. Sanchez
serves as trustee or co-trustee for the benefit of other persons, (iv)
262,100 shares, over which Mr. Sanchez exercises voting, investment and
disposition power, are held by a family limited partnership for which Mr.
Sanchez serves as managing general partner and (v) 39,376 shares are held
by a family trust of which Mr. Sanchez is a beneficiary. Also, includes
119,955 shares that Mr. Sanchez has the right to acquire under outstanding
stock options that are currently exercisable or that become exercisable
within 60 days of March 31, 2002.
(11) Includes 127,500 shares that Mr. Woessner has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of March 31, 2002. Mr. Woessner disclaims
beneficial ownership with respect to 27,611 shares.
(12) Includes 141,500 shares that Mr. York has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of March 31, 2002.
ITEM 13. Certain Relationships and Related Transactions.
In January 2001, we entered into a two-year agreement with IT Factory
whereby IT Factory agreed to market our products and services to their customers
in return for our agreement to pay a specified portion of revenues earned by us,
which are associated with IT Factory's customers. In February 2001, we paid IT
Factory $300,000 and committed to pay an additional $250,000 in February 2002 to
support IT Factory's marketing efforts. Additionally, we granted IT Factory a
performance-based stock option whereby IT Factory had the right to purchase up
to 109,529 shares of our common stock. We subsequently cancelled the agreement,
including the options and the payment commitment. Separately, we paid IT Factory
$420,000 in 2001 for certain software development projects. Mr. Papows, a
director of ZixIt Corporation since March 2000 and our Chairman from October
2000 until November 2001, served as Chairman of IT Factory until December 2001.
In December 2000, we purchased approximately 9% of the equity ownership of
Maptuit for $3,000,000 in cash and committed to a follow-on investment of
$2,000,000. Accordingly, in July 2001, we made an additional $2,000,000 cash
investment in Maptuit and received a promissory note convertible into
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Maptuit equity securities. The note bears interest at prime plus 1%, is due in
July 2006 and automatically converts into Maptuit equity securities at the same
price per share obtained if a third-party equity financing arrangement is
completed, as defined. There is no readily determinable market value for our
investments in Maptuit since Maptuit is privately-held. Investments of this
nature are subject to significant fluctuations in fair market value due to the
volatility of the equity markets and the significant business and investment
risks inherent in early-stage enterprises. We record impairment losses when, in
our judgment, events and circumstances indicate our investment has been
impaired. Maptuit has been seeking third-party debt or equity financing to
sustain its operations. To date, Maptuit has not secured additional financing,
and it is uncertain whether Maptuit will be able to raise the necessary funds
required to execute its business plan such that we will recover our investment.
Therefore, in the third and fourth quarters of 2001, we wrote off the $5,000,000
investment. Maptuit, an early-stage company, is an Internet application service
provider that supplies wireline and wireless Internet location-based services.
Mr. Papows serves as the President and Chief Executive Officer of Maptuit and
holds a minority equity interest in Maptuit.
Mr. York, our Senior Vice President, Chief Financial Officer and Treasurer,
was indebted to us at December 31, 2001 in the principal amount of $90,000. This
amount represents money loaned by us to fund the exercise of retention incentive
options related to certain of our shares held by Mr. York. Mr. York's
indebtedness is represented by a promissory note that bears interest at the rate
of 4.66% per annum. The note is secured by the shares issued upon exercise of
the retention incentive options and is due September 2002 (unless becoming due
earlier under certain circumstances described in the note).
In the fourth quarter of 2000, we entered into certain technology and
marketing agreements with Entrust. Mr. Ryan, our Chairman, President and Chief
Executive Officer, was Chief Executive Officer of Entrust when such agreements
were executed and currently holds a minority equity interest in Entrust.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, on April 30, 2002.
ZIXIT CORPORATION
By: /S/ STEVE M. YORK
-------------------------------------
Steve M. York
Senior Vice President,
Chief Financial Officer and Treasurer
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
amended report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated on April 30, 2002.
Signature Title
--------- -----
* Chairman, President, Chief Executive Officer and Director
---------------------------------------------------- (Principal Executive Officer)
(John A. Ryan)
/S/ STEVE M. YORK Senior Vice President, Chief Financial Officer and Treasurer
---------------------------------------------------- (Principal Financial and Accounting Officer)
(Steve M. York)
* Founder and Director
----------------------------------------------------
(David P. Cook)
* Co-Vice Chairman and Director
----------------------------------------------------
(H. Wayne Huizenga)
* Director
----------------------------------------------------
(Michael E. Keane)
* Director
----------------------------------------------------
(James S. Marston)
* Co-Vice Chairman and Director
----------------------------------------------------
(Jeffrey P. Papows)
* Director
----------------------------------------------------
(Antonio R. Sanchez, Jr.)
* Director
----------------------------------------------------
(Dr. Ben G. Streetman)
*By: /S/ STEVE M. YORK
----------------------------------------------
(Steve M. York)
Attorney-in-Fact
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