Exhibit 2.4
EXHIBIT E
FORM OF GOVERNANCE AGREEMENT
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EXHIBIT E
GOVERNANCE AGREEMENT
This GOVERNANCE AGREEMENT (this "AGREEMENT"), dated as of _________,
1999, is by and between Xxxxxx, Inc., a Colorado corporation (the "COMPANY"),
Zuellig Group N.A., Inc. a Delaware corporation ("ZGNA") and Zuellig Botanicals,
Inc., a Delaware corporation ("ZBI").
R E C I T A L S :
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger,
dated as of December 8, 1998, between ZGNA and the Company (the "MERGER
AGREEMENT"), ZGNA and ZBI have simultaneously herewith acquired from the
Company, and the Company has issued to ZGNA and ZBI, shares of its Common Stock,
par value $.001 per share (the "COMMON STOCK"); and
WHEREAS, the parties wish to set forth certain arrangements regarding
ZGNA's and ZBI's ownership in the Company.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained,
ZGNA, ZBI and the Company hereby agree as follows:
SECTION 1. DEFINITIONS.
The terms defined in this Section 1, whenever used herein, shall have
the following meanings for all purposes of this Agreement.
"AFFILIATE" means any Person or entity, directly or indirectly,
controlling, controlled by or under common control with such Person or entity.
"AGREEMENT" shall have the meaning set forth in the preamble hereto.
"BOARD" shall mean the board of directors of the Company.
"COMMON STOCK" shall have the meaning set forth in the recitals
hereto.
"COMPANY" shall have the meaning set forth in the preamble hereto.
"CONTINUING DIRECTORS" shall mean at any date a member of the Board
(i) who was a member of the Board on the day preceding the Closing Date of the
Mergers or (ii) who was nominated or elected by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, an
amended.
"INDEPENDENT DIRECTOR" shall mean at any date a member of the Board
(i) who at any time in the preceding five (5) years has not been an Affiliate of
or employed by, or retained as a consultant to, the Company or ZGNA or any
Affiliate of the Company or ZGNA (except to the extent such member is deemed to
be an Affiliate solely in his or her capacity as a director of the Company) and
(ii) who was nominated or elected by at least a majority of the directors who
were Independent Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Independent Directors at the time of such nomination or
election.
"MERGERS" shall mean the mergers pursuant to the Merger Agreement.
"MERGER AGREEMENT" shall have the meaning set forth in the recitals
hereto.
"PERSON" shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization, or
a government, agency, regulatory authority or political subdivision thereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, an amended.
"SUBSTITUTE DIRECTOR" shall have the meaning set forth in Section
2(b).
"WITHDRAWING DIRECTOR" shall have the meaning set forth in Section
2(b).
"ZBI" shall have the meaning set forth in the preamble hereto.
"ZGNA" shall have the meaning set forth in the preamble hereto.
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"ZGNA DIRECTOR" shall have the meaning set forth in Section 2(a).
SECTION 2. BOARD OF DIRECTORS.
(a) ELECTION OF DIRECTORS. As of the date hereof, the Board consists
of the following nine directors: Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxxxxx X. Xxxxxx, _________, _________,
and _________, all of whom were elected to serve as directors pursuant to the
Merger Agreement and the approval thereof at the Special Meeting of the
Company's shareholders held on _________, 1999. From and after the effective
date of the Mergers, ZGNA, ZBI and the Company shall take all action within
their respective power, including in the case of ZGNA and ZBI, the voting of all
shares of capital stock of the Company owned by them, required to cause the
Board to consist of nine (9) members, and at all times throughout the term of
this Agreement to include (i) as long as ZGNA and ZBI together own beneficially
(within the meaning of Rule 13d-3 under the Exchange Act) at least twenty
percent (20%) of the Common Stock, three (3) representatives designated by ZGNA
(each, a "ZGNA DIRECTOR"), (ii) three (3) representatives designated by the
Continuing Directors and (iii) three (3) Independent Directors. The parties
acknowledge that Messrs. Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx and Xxxxxx X. Xxxxxx are
the initial ZGNA Directors, Messrs. Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxx
X. Xxxxxx are the initial Continuing Directors and Messrs. _______, _______ and
_________ are the initial Independent Directors.
(b) REPLACEMENT DIRECTORS.
(i) In the event that any ZGNA Director, Continuing
Director or Independent Director (a "WITHDRAWING DIRECTOR") designated in the
manner set forth in Section 2(a) hereof is unable to serve, or once having
commenced to serve, is removed or withdraws from the Board, such Withdrawing
Director's replacement (the "SUBSTITUTE DIRECTOR") will be designated by ZGNA,
if the Withdrawing Director is a ZGNA Director, by a vote of the remaining
Continuing Directors, if the Withdrawing Director is a Continuing Director or by
a vote of the remaining Independent Directors, if the Withdrawing Director is an
Independent Director, as the case may be. ZGNA, ZBI and the Company agree to
take all action within their respective power, including in the case of ZGNA and
ZBI, the voting of capital stock of the Company owned by them (i) to cause the
election of such Substitute Director promptly following his or her nomination
pursuant to this Section 2(b) or (ii) upon the written request of ZGNA, the
Continuing Directors or the Independent Directors, to
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remove, with or without cause, ZGNA Director, the Continuing Director or
the Independent Director, as the case may be.
(ii) In the event there are no Continuing Directors
remaining to appoint Substitute Directors pursuant to Section 2(b)(i), then
ZGNA, ZBI and the Company shall take all action within their respective power,
including in the case of ZGNA and ZBI, the voting of all shares of capital stock
of the Company owned by them, required to cause the Board to consist of three
(3) ZGNA Directors and six (6) Independent Directors.
(iii) In the event there are no Independent Directors
remaining to appoint Substitute Directors pursuant to Section 2(b)(i) or (ii),
then ZGNA, ZBI and the Company shall take all action within their respective
power, including in the case of ZGNA and ZBI, the voting of all shares of
capital stock of the Company owned by them, to appoint three or six, as the case
may be, additional Independent Directors to the Board.
SECTION 3. NOTICE OF MEETINGS; QUORUM.
(a) Notice of any regular or special meeting of the Board shall be
mailed to each director addressed to him at his residence or usual place of
business at least three days before the day on which the meeting is to be held,
or if sent to him at such place by telecopy, telegraph or cable, or delivered
personally or by telephone, not later than the day before the day on which the
meeting is to be held. No notice of the annual meeting of the Board of
Directors shall be required if it is held immediately after the annual meeting
of the stockholders and if a quorum is present. Members of the Board, or any
committee designated by the Board, shall, except as otherwise provided by law or
the Articles of Incorporation of the Company, have the power to participate in a
meeting of the Board, or any committee, by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at the meeting.
(b) A majority of the Board at any time in office shall constitute a
quorum. At any meeting at which a quorum is present, the vote of a majority of
the members present shall be the act of the Board unless the act of a greater
number is specifically required by law or by the Articles of Incorporation or
the By-laws of the Company; provided, however, that any proposed change to the
Articles of Incorporation or By-laws of the Company, or any transaction with the
person entitled to appoint ZGNA Directors, shall require the approval of a
majority of the entire Board. The members of the Board shall act only as
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the Board and the individual members thereof shall not have any powers
as such.
SECTION 4. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado applicable to
contracts made and to be performed entirely within such State.
(b) PARAGRAPH AND SECTION HEADINGS. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
(c) NOTICES.
(i) All communications under this Agreement shall be in writing and
shall be delivered by hand, by facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(1) if to ZGNA or ZBI, at 0000 Xx Xxxxxxxx Xxxxxx, Xxxx Xxxxx,
Xxxxxxxxxx 00000-0000 (facsimile: (000) 000-0000),marked for attention
of President, or at such other address as ZGNA or ZBI may have
furnished the Company in writing (with a copy to Xxxxxxx Xxxx &
Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention:
Xxxxxx X. Xxxxxx, Esq. (facsimile: 212-728-8111), or at such other
address it may have furnished the Company in writing), or
(2) if to the Company, at 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx
00000 (facsimile: (000) 000-0000), marked for the attention of Xxxx
Xxxxx, or at such other address as the Company may have furnished
Investor in writing (with a copy to Xxxxxxxx, Xxxxx & Xxxxxxx, P.C.,
0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx
Xxxxxxxxx, Esq. (facsimile: 303-449-5426) or at such other address as
it may have furnished in writing to ZGNA).
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand or by facsimile, on the date of such delivery; if delivered by
courier, on the first Business Day following the date of the delivery to the
courier; and if mailed by registered or certified mail, on the third Business
Day after the date of such mailing.
(d) EXPENSES AND TAXES. Whether or not the Closing shall have
occurred, each party shall pay its own fees and
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expenses incurred in connection with the transactions contemplated
hereby.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties; provided, however, that ZGNA may only assign its rights hereunder to a
transferee of a majority of the Common Stock acquired by ZGNA and ZBI pursuant
to the Mergers and securities issued in respect thereof.
(f) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement and the
agreements attached as Exhibits hereto constitute the entire understandings of
the parties hereto and supersede all prior agreements or understandings with
respect to the subject matter hereof among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of the Company and ZGNA. No course of
dealing between the Company and ZGNA nor any delay in exercising any rights
hereunder shall operate as a waiver of any rights of either party hereto.
(g) SEVERABILITY. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(h) TERMINATION. This Agreement shall terminate and shall be of no
further force or effect on or after the earlier of (i) the fifth anniversary of
the date hereof or (ii) the date on which ZGNA and ZBI together own less than
twenty percent (20%) of the outstanding shares of Common Stock.
(i) LOSS OF ZGNA DIRECTORSHIPS. If a court of competent jurisdiction
shall determine that ZGNA or ZBI has breached Section 6.9 of the Merger
Agreement (Standstill), ZGNA and ZBI shall automatically lose their right to
designate three (3) representatives as set forth in Section 2(a) hereof. In
such event, ZGNA and ZBI shall cause ZGNA Directors to immediately resign as
directors of the Board and shall take all action within their power to elect
three (3) nominees of the Continuing Directors to the Board. If such court's
determination shall be reversed on appeal, ZGNA's and ZBI's right to designate
three (3) representatives as set forth in Section 2(a) hereof shall be
immediately restored and the Company shall cause three (3) Continuing Directors
to immediately resign as directors of the Board and shall take all action within
its power to elect three (3) nominees of ZGNA and ZBI to the Board.
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(j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
XXXXXX, INC.
By:
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Name:
Title:
ZUELLIG GROUP N.A., INC.
By:
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Name:
Title:
ZUELLIG BOTANICALS, INC.
By:
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Name:
Title:
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