Exhibit G
GOVERNANCE AGREEMENT
This GOVERNANCE AGREEMENT (this "Agreement"), dated as of June
11, 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, Xxxxxxx X.
Xxxxx, Xxxxxxx Xxxxx, and Xxxxx Xxxxxx, 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 June 11, 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. Xxxxxxx X. Xxxxx,
Xxxxxxx Xxxxx, and Xxxxx Xxxxxx 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 to cause the election of such Substitute Director promptly
following his or her nomination pursuant to this Section 2(b).
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(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,
shall require the approval of a majority of the entire Board, and any
transaction with the person entitled to appoint ZGNA Directors or an Affiliate
of such person shall require the approval of a majority of the Continuing
Directors and Independent Directors. The members of the Board shall act only as
the Board and the individual members thereof shall not have any powers as such.
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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 expenses incurred in connection
with the transactions contemplated hereby.
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(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.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
XXXXXX, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: CEO
ZUELLIG GROUP N.A., INC.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: President
ZUELLIG BOTANICALS, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: President
