Exhibit 10.4
Execution Copy
VOTING AGREEMENT
THIS VOTING AGREEMENT (this
“Agreement”) is made and executed as of the 22
nd day of May, 2009 (the
“Effective Date”), by, between and among Nature’s
Sunshine Products, Inc., a Utah corporation organized under
the Utah Revised Business Corporation
Act (“URBCA”) (the “Company”);
Paradigm Capital Management, Inc., a New York corporation (the
“Shareholder”); Kristine F. Hughes, Pauline Hughes
Francis and Eugene L. Hughes (collectively, the “Hughes
Parties”).
RECITALS
A.
As of the date of this Agreement,
the Shareholder Beneficially Owns 1,573,737 shares of common stock
of the Company, representing approximately 10.2% of the issued and
outstanding common stock of the Company.
B.
The Company and the Shareholder have
agreed that, among other things, if the Company’s Board of
Directors (the “Board”) is reconstituted as set forth
herein, the Shareholder will vote its shares for the election of
the members of the reconstituted Board in the next annual meeting
of the Company’s shareholders. The parties desire to
memorialize their arrangement in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing premises and mutual covenants contained herein, and
for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as
follows:
1.
Certain Definitions
. For purposes of this
Agreement:
1.1
“Affiliate” has
the meaning set forth in Rule 12b-2 promulgated by the SEC
under the Exchange Act.
1.2
“Beneficial
Owner,” “Beneficial Ownership” and
“Beneficially Own” have the same meaning as set forth
in Rule 13d-3 promulgated by the SEC under the Exchange
Act.
1.3
“SEC”
means the Securities and Exchange Commission.
1.4
“Voting
Shares” means (i) all equity securities of the
Company Beneficially Owned by the Shareholder or the Hughes
Parties, respectively, as of the date of this Agreement less any
such shares disposed of by the Shareholder or the Hughes Parties,
respectively, after the Effective Date in compliance with
Section 6.9 and (ii) all additional equity
securities of the Company of which the Shareholder or the Hughes
Parties may acquire Beneficial Ownership during the period from the
date of this Agreement through the Voting Agreement Termination
Date (hereinafter defined).
2.
Distribution of
Section 14(f) Statement . Within three
(3) business days following the execution of this Agreement,
the Company will distribute to its shareholders the information
statement (the “Section 14(f) Statement”)
required by Section 14(f) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) and
Rule 14f-1 promulgated pursuant thereto.
3.
Board Changes
. The
following actions shall be effective immediately following the
tenth (10th) day after the Company distributes to its
shareholders the Section 14(f) Statement:
3.1
The number of
directors constituting the Board shall be increased to
eight (8) in accordance with Section 3.2 of the
Bylaws of the Company and one of the newly created vacancies shall
be assigned to Class II and the other newly created vacancy
shall be assigned to Class III in accordance with
Article IX of the Company’s Restated Articles of
Incorporation.
3.2
The resignations
of Robert K. Bowen, Larry K. Deppe, Pauline Hughes
Francis, and Eugene L. Hughes as members of the Board attached
as Exhibits A-1 though A-4 and previously tendered to the
Company shall become effective in accordance with their terms
leaving Kristine F. Hughes as the sole remaining incumbent
director assigned to Class III and creating four vacancies on
the Board in addition to the fifth vacancy previously created by
Franz Cristiani’s prior resignation as a director
effective March 1, 2007 and the sixth and seventh
vacancies created by the increase in the size of the Board of
directors as described in Section 3.1.
3.3
Each of the seven
persons identified on Exhibit B as an “Appointee”
(collectively, the “Appointees”) shall be appointed,
pursuant to Section 3.10 of the Bylaws of the Company and
Section 16-10a-810(1)(c) of the URBCA, to fill the
seven vacancies on the Board and serve as directors until the next
shareholders’ meeting at which directors are elected and
until their respective successors shall be duly elected and
qualified, unless they resign, are removed or are otherwise
disqualified from serving as a director of the Company, and each
such Appointee shall serve in the class set forth next to his or
her name on Exhibit B.
4.
Annual Meetings of the
Shareholders . The Company shall use
commercially reasonable efforts to hold an annual meeting of the
shareholders no later than December 31, 2009 unless
otherwise agreed by the then serving Board of Directors (the
“Next Annual Meeting”).
5.
Voting Agreement
.
5.1
The Shareholder
and the Hughes Parties agree that from the date of this Agreement
and until immediately following the Next Annual Meeting or any
adjournment or postponement thereof or December 31, 2009,
whichever is earlier (the “Voting Agreement Termination
Date”), at the Next Annual Meeting or any other meeting of
shareholders of the Company or any adjournment or postponement
thereof, and on every action or approval by written consent of the
shareholders of the Company, if any, the Shareholder and the Hughes
Parties will take the following actions to effect the intent of
this Agreement:
5.1.1
Vote all of the
Voting Shares in favor of the Director nominees listed in
Exhibit B, in those classes and for the terms listed in
Exhibit B (unless
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they or any of
them prior thereto shall have resigned or been removed as a
director or otherwise shall have refused to stand for
election);
5.1.2
Appear, or cause
the holder of record of any Voting Shares on any applicable record
date to appear at such meeting or otherwise cause the Voting Shares
to be counted as present for purposes of establishing a quorum;
and
5.1.3
None of the
Shareholder or the Hughes Parties shall take any position, make any
statement or take any action inconsistent with the
foregoing.
5.2
In order to
secure the performance of the Shareholder’s and the Hughes
Parties’ obligations under this Agreement, each such party
hereby irrevocably grants a proxy appointing Kristine F. Hughes and
Pauline Hughes Francis each as such party’s attorney-in-fact
and proxy, with full power of substitution, for and in its name,
place and stead, to vote, express consent or dissent, or otherwise
to utilize such party’s Voting Shares SOLELY to vote for
those nominees and in those classes as are specified and listed on
Exhibit B at the Next Annual Meeting or any other meeting of
shareholders of the Company or any adjournment or postponement
thereof prior to the Voting Agreement Termination Date, in each
case in a manner consistent with Section 5.1. Each of
the Shareholder and the Hughes Parties hereby represents and
warrants that any proxies heretofore given in respect of the Voting
Shares are not irrevocable and that any such proxies are hereby
revoked including, without limitation, any proxy granted by the
Shareholder to Prescott Group Aggressive Small Cap Master Fund,
G.P., Phil Frolich or Duminda DeSilva, or any of their
Affiliates. Each such party hereby affirms that THE PROXY AND
POWER OF ATTORNEY SET FORTH IN THIS AGREEMENT IS IRREVOCABLE AND
COUPLED WITH AN INTEREST and SHALL EXPIRE ON THE VOTING AGREEMENT
TERMINATION DATE.
6.
Standstill
. From and
after the Effective Date until the Voting Agreement Termination
Date, the Shareholder and the Hughes Parties and their respective
agents, employees, officers, directors, managers, control persons,
representatives, successors, assigns, parent corporations,
subsidiaries, Affiliates and all other persons acting in concert
with or under the control or direction of any of the Shareholder or
the Hughes Parties shall not, directly or indirectly, in any manner
without the prior consent of the Company:
6.1
advise,
encourage, support or influence any person with respect to the
voting or disposition of any shares of the company contrary to the
terms of this Agreement;
6.2
grant a proxy
with respect to the voting of the shares of the Company to any
person other than as to matters not contemplated in the proxy set
forth in Section 5.2;
6.3
deposit any
shares of the Company in a voting trust or enter into any other
arrangement or agreement with respect to the voting thereof other
than as to matters not contemplated in the proxy set forth in
Section 5.2;
6.4
take any action,
alone or in concert with any other person, advise, finance, assist
or participate in or encourage any person to take any action which
is prohibited to be taken by such party pursuant to this Agreement,
or make any investment in or enter into any
3
arrangement with, any other
person that engages, or offers or proposes to engage in any of the
foregoing;
6.5
pursuant to
the URBCA, directly or indirectly (or assist any other person
or entity directly or indirectly), make a demand or seek a court
order that the Company hold a special meeting of the shareholders,
or in lieu thereof an annual meeting of the shareholders, for any
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