Shareholders Agreement - Weider Health and Fitness, Bayonne Settlement and Ronald Corey
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AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
Dated December 31, 1996
among
WEIDER HEALTH AND FITNESS
BAYONNE SETTLEMENT
RONALD COREY
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AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
Reference is made to the Shareholders Agreement, effective
June 1, 1994 (the "Bayonne Shareholders Agreement"), by and between WEIDER
HEALTH AND FITNESS, a Nevada corporation ("WHF"), and BAYONNE SETTLEMENT
("Bayonne"), and to the Shareholders Agreement, effective June 1, 1994 (the
"Corey Shareholders Agreement" and, together with the Bayonne Shareholders
Agreement, the "Shareholders Agreements"), by and between WHF and RONALD COREY
("Corey"), both of which are hereby combined, amended and restated in their
entirety by this Amended and Restated Shareholders Agreement, dated December 31,
1996 (the "Agreement"), by and between WHF, Bayonne and Corey.
WHEREAS, pursuant to the Bayonne Shareholders Agreement and in
consideration of receipt of the sum of $873,330, WHF transferred to Bayonne 1%
of its interest in Weslo, Inc. ("Weslo") and Proform Fitness Products Inc.
("Proform") and caused each of Weider Publications, Inc. ("Publications"),
Weider Nutrition Group, Inc. ("Nutrition"), Weider Sporting Goods Inc.
("Sporting Goods") and 3002993 Canada Inc. ("CANCO") to issue 1% of their
respective common stock to Bayonne.
WHEREAS, pursuant to the Bayonne Shareholders Agreement,
payment of the consideration was entirely in the form of the transfer of the
Weider Europe B.V. indebtedness in the amount of $873,330 in favor of
Northbrock Capital Inc.
WHEREAS, pursuant to the Bayonne Shareholders Agreement, the
price was allocated as follows: 40% ($349,332) to Weider Inc. shares; 40%
($349,332) to Nutrition shares; 20% ($174,666) to Publications shares; and
$1.00 to Sporting Goods and CANCO shares.
WHEREAS, pursuant to the Bayonne Shareholders Agreement, the
basis of the price was calculated on the unaudited quarterly internal financial
statements of WHF which showed a book value of $86,168,654 as of February 28,
1994.
WHEREAS, pursuant to the Corey Shareholders Agreement and in
consideration of receipt of the sum of $291,110, WHF transferred to Corey 1/3
of 1% of its interest in Weslo and Proform and caused Publications, Nutrition,
Sporting Goods and CANCO to issue 1/3 of 1% of their respective common stock to
Corey.
WHEREAS, pursuant to the Corey Shareholders Agreement, payment
of the consideration was partly in the form of the transfer without liability
to Corey of the Weider Europe B.V. indebtedness in the amount of $126,670 in
favor of Northbrock Capital Inc. and the balance of $164,440 was in cash.
WHEREAS, pursuant to the Corey Shareholders Agreement, the
price was allocated: 40% ($116,444.) to Weider Inc. shares; 40% ($116,444.) to
Nutrition shares; 20% ($58,222.) to Publications shares; and $1.00 to Sporting
Goods and CANCO shares.
WHEREAS, pursuant to the Corey Shareholders Agreement, the
basis of the price was calculated on the unaudited quarterly internal financial
statements of WHF, which showed a book value of $86,168,654 as of February 28,
1994.
WHEREAS, it is the intention of the parties hereto to combine,
amend and restate in their entirety the Shareholders Agreements.
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NOW THEREFORE, in consideration of the mutual covenants
contained herein, WHF, Bayonne and Corey hereby agree as follows:
1. DEFINITIONS
1.1 For all purposes of this Agreement, the "subsidiaries
concerned" means Publications, Nutrition, Sporting Goods and
Weider Nutrition International, Inc. and all $ or dollars are
in lawful currency of the United States of America.
2. SHAREHOLDER RIGHTS AND RESTRICTIONS
2.1 NO ALIENATION
2.1.1 The shares to be held by Bayonne and/or Corey (the
"Common Shares") shall not be transferable by Bayonne
or Corey in any circumstances, except to WHF (see
below "Option to Sell"), or to an assignee of WHF.
2.1.2 Pledging of the shares is permitted to secure the
financing of the acquisition of such shares but such
pledge is subject to this Agreement and the right of
WHF to pay with subrogation. The text of any such
pledge is subject to prior approval by WHF.
2.1.3 After an initial public offering of a subsidiary
concerned, the shares of such subsidiary may be
transferred without restriction except for a first
refusal right (30 days written notice) in favor of
WHF.
2.2 OPTION TO SELL ("Put")
2.2.1 Bayonne and/or Corey may, at any time, oblige WHF to
purchase all (but not less than all) of the Common
Shares for the Formula Price defined below by
following the procedure hereinafter set forth:
a) Bayonne and/or Corey, as applicable,
shall send a notice to WHF informing
WHF that it wishes to exercise its
option to sell (the "Notice");
b) WHF shall instruct its then current
independent auditors (the
"Auditors") to calculate the Formula
Price according to the formula
hereinafter set out, within 60 days
from the date of the Notice;
c) the Formula Price shall be
determined as at the date of the
Notice, which date shall also be the
effective date of the purchase (the
"Notice Date");
d) the closing of such purchase shall
be on a date fixed by the agreement
of Bayonne and/or Corey, as
applicable, and WHF, which shall be
no later than thirty (30) days from
the date on
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which the Auditors issue their
calculation of the Formula Price
pursuant to Section 2.2.8 below (the
"Closing Date");
e) the Auditors' calculation of the
Formula Price shall be final and
binding between the parties.
2.2.2 The Formula Price for the Common Shares equals the
book value of the Common Shares of each subsidiary
concerned divided by the total number of common
shares and multiplied by the number held by Bayonne
or Corey, as applicable.
2.2.3 Book value is the sum of:
A) the consolidated Shareholders'
Equity as stated in the most recent
audited annual financial statements
for the most recently completed
financial year as examined by the
Auditors of WHF and prepared in
accordance with U.S. Generally
Accepted Accounting Principles
("U.S. GAAP") on a basis consistent
with prior years. (the "Audited
Financial Statements"). For greater
certainty, this amount shall include
any amount recorded as stated
capital; and
B) the increase, if any, in the
consolidated Shareholders' Equity as
stated in the internally
preparedconsolidated financial
statements for the latest fiscal
quarter ended prior to the Notice
Date (the "Interim Financial
Statements") as reviewed by the
Auditors in accordance with
procedures normally followed by them
in conducting a review of Interim
Financial Statements; and
C) the amount of any dividends or other
non-dividend shareholder
distributions made from the date
hereof, not shared (or less than
rateably shared), by Bayonne and/or
Corey, as applicable, as reported in
the Audited Financial Statements and
the latest Interim Financial
Statements; less
D) the amount of any dividends or other
non-dividend distributions paid to
Bayonne and/or Corey, as applicable,
since the later of the date in (A)
or the date in (B) and before the
Closing Date; less
E) the stated capital attributed to an
issue after June 1, 1994 of shares
which rank in priority to the Common
Shares; less
F) the decrease, if any, in the
consolidated Shareholders' Equity as
stated in the Interim Financial
Statements as reviewed by the
Auditors in accordance with
procedures normally followed by them
in conducting a review of Interim
Financial Statements.
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2.2.4 If a subsidiary concerned or any of its subsidiaries,
whether consolidated or unconsolidated, has any
shares listed on a recognized stock exchange or in
any organized securities market ("Listed Shares"),
the book value shall be adjusted as of the Notice
Date to reflect the Trading Value (defined below) and
the book value of the Listed Shares as reflected in
Sections 2.2.3 (A), as adjusted by (B) or (F).
2.2.4.1 "Traded Shares" shall be the number of shares
issued and outstanding of the Listed Shares,
whether or not registered, plus the number of
Equivalent Shares (defined below).
2.2.4.2 "Equivalent Shares" shall be the number of
shares of Listed Shares into which holders of
convertible debt or another class of
convertible equity shares and holders of
options and warrants may convert their debt,
equity shares, option and warrant holdings
determined in accordance with U.S. GAAP.
2.2.4.3 "Trading Price" shall be the weighted average
price of the Listed Shares for the thirty
(30) business days immediately preceding the
Notice Date.
2.2.4.4 "Trading Value" shall be the Trading Price
multiplied by the Traded Shares reduced, in
the case of a subsidiary's Traded Shares, by
the Trading Value associated with such Traded
Shares not held directly or indirectly by
WHF.
2.2.4.5 The Auditors shall clerically check the
calculations required by this Section 2.2.4.
For greater certainty, the Auditors shall
follow the principles applied in the same
calculations annexed as Schedule 1.
2.2.5 If a subsidiary concerned or any of its subsidiaries
has an initial public share issue within twenty-four
(24) months of the Notice Date, Section 2.2.4 shall
apply to adjust the Formula Price to reflect the
excess of such initial public share issue price over
the book value determined immediately prior to such
initial public share issue with payment of such
adjustment within thirty (30) days of the initial
public share issue. The Auditors shall clerically
check the calculation. This provision also applies
to a private placement of 20% or more of the equity
shares of a subsidiary concerned or any of its
subsidiaries.
2.2.6 The Formula Price of the Common Shares shall be paid
as follows:
a) the lesser of the Formula Price and
the amount invested by Bayonne or
Corey (as listed in the recitals to
this Agreement), as applicable, on
the Closing Date;
b) the excess, if any, of the Formula
Price over the amount determined in
the immediately preceding
subparagraph (a) in four (4) equal
annual installments of principal
plus interest on the
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reducing balance at the rate of
9% per year; the four (4) annual
installments shall be paid on the
first through fourth anniversaries
of the Closing Date.
2.2.7 The amount payable in Section 2.2.6(b) shall be
represented by a promissory note of WHF subordinate
in payment and priority to the obligations of WHF to
non-shareholder creditors of WHF.
2.2.8 Upon calculation of the Formula Price, the Auditors
shall issue a letter setting out the calculation of
the Formula Price (the "Auditors' Letter").
2.3 SUBSEQUENT SHARE ISSUES
2.3.1 In the event that a subsidiary concerned conducts one
or more public offerings of its stock, or offers to
issue or transfer shares in the course of a private
placement, Bayonne and/or Corey shall be entitled to
include as part of such offering(s) that percentage
of Common Shares equal to the percentage of shares
held directly or indirectly by WHF which is included
in the public offering by the controlling shareholder
of WHF, or included in such private placement.
2.3.2 To the extent that any subsidiary of a subsidiary
concerned conducts a public offering of its stock, or
offers to issue or transfer shares in the course of a
private placement, Bayonne and/or Corey shall have
the right to exchange a proportionate number of its
or his, respectively, Common Shares for shares in the
public company in the same ratio and on the same
basis that the controlling shareholder of WHF, or any
successor(s), converts its shares into shares of that
public company, or in the same proportion and on the
same basis as that of the controlling shareholder(s)
or any successor(s) in the course of a private
placement.
2.3.3 The foregoing does not apply to the initial public
offering of shares of common stock or contemporary
transactions effected in connection therewith of
Weider Nutrition International, Inc. or any of its
subsidiaries including Nutrition.
2.4 OPTION TO PURCHASE ("Call")
2.4.1 WHF has an option, exercisable any time after two (2)
years from the date hereof, to purchase from Bayonne
and/or Corey the Common Shares at the Formula Price
on the same terms and conditions set out in Sections
2.2 and 2.3; provided WHF pays the Formula Price in
full upon the purchase, subject to an additional
later payment (if any) under Section 2.2.5.
2.4.2 In addition to its rights under Section 2.4.1, WHF
may, if it wishes to accept an offer from a third
party for substantially all of its shares in a
subsidiary concerned either:
a) include in such sale the Common
Shares held by Bayonne and/or Corey
in such subsidiary (and Bayonne
and/or Corey, as
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applicable, shall so sell) at the
same price and on the same terms as
those offered to WHF; or
b) purchase Common Shares from Bayonne
and/or Corey (and Bayonne and/or
Corey, as applicable, shall sell) at
such price and on such terms;
provided in either case that such sale is in
fact concluded within a reasonable time.
2.4.3 This Section 2.4 does not apply where the Common
Shares held by Bayonne and/or Corey are publicly
traded on a recognized stock exchange or securities
market.
2.5 CLASS B COMMON STOCK
2.5.1 Neither Bayonne nor Corey has a right to acquire, now
or in the future, shares of Class B common stock of
Weider Nutrition International, Inc. and nothing in
this Agreement should be construed to give Bayonne
and/or Corey any right to acquire such shares.
2.6 COSTS AND EXPENSES
Each party covenants and agrees that it shall be
responsible for and bear its respective costs and
expenses of legal counsel, accountants, brokers and
other representatives incurred in connection with any
transactions contemplated herein, provided that the
fees and expenses of the Auditors and any brokers
incurred in determining the Formula Price hereunder
shall be borne by the party who first sends out the
Notice to exercise the option to purchase or the
option to sell.
3. VOTES
3.1 Bayonne and Corey shall exercise their votes on all Common
Shares as directed by WHF.
4. APPLICABLE LAW
4.1 Nevada law shall govern this Agreement.
5. NO ASSIGNMENT
5.1 Bayonne and Corey shall not be entitled to assign, in whole or
part, this undertaking to any other person except to a
personal holding company controlled entirely by it or him,
respectively, which agrees to be bound by this Agreement.
6. SECURITIES LAW FORMALITIES
6.1 The share issue and Shareholders Agreement may be subject to
compliance with United States securities law including, but
not limited to Blue Sky legislation, etc.
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7. NOTICE
7.1 All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in
writing and either delivered by hand or sent by telefax, or by
prepaid registered mail, and shall be presumed given and
received when so delivered by hand or by telefax, or four (4)
business days following the sending thereof by prepaid
registered mail, and when addressed as follows:
a) If to BAYONNE, to:
24 Union Street
St. Helier, Jersey (U.K.)
b) If to COREY, to:
c/o MR. RONALD COREY
621 Lansdowne
Westmount, Quebec
H3Y 2V7
FAX: 514-932-8736
c) If to WHF, to:
c/o WEIDER HEALTH AND FITNESS
21100 Erwin Street
Woodland Hills, California 91367
ATTENTION: MR. BERNARD CARTOON, SECRETARY
& GENERAL COUNSEL
(FAX: 818-999-6598)
or to such other person or address as any party shall designate by notice in
writing to the others in accordance herewith. In the event of postal strike or
other mail service interruption, existing or threatened, all notices and other
communications shall be hand-delivered or sent by telefax.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Shareholders Agreement to be executed on the day and year
first above written.
WEIDER HEALTH AND FITNESS
/s/ BERNARD CARTOON
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Name: Bernard Cartoon
Title: Secretary
BAYONNE SETTLEMENT
/s/
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Name:
Title:
RONALD COREY
/s/ RONALD COREY
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Name:
Title: