Shareholders Agreement - Weider Health and Fitness and Hornchurch Investments Ltd.
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AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
Dated December 31, 1996
between
WEIDER HEALTH AND FITNESS
HORNCHURCH INVESTMENTS LIMITED
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AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
Reference is made to the Shareholders Agreement No. 2,
effective June 1, 1994 (the "Shareholders Agreement No. 2"), by and between
WEIDER HEALTH AND FITNESS, a Nevada corporation ("WHF"), and HORNCHURCH
INVESTMENTS LIMITED ("Hornchurch"), which is hereby amended and restated in its
entirety by this Amended and Restated Shareholders Agreement, dated December 31,
1996 (the "Agreement"), by and between WHF and Hornchurch.
WHEREAS, pursuant to the Shareholders Agreement No. 2 and in
consideration of receipt of 21,000,000 shares of Hornchurch junior preferred
shares, par value $1.00 (the "Preferred Shares"), WHF transferred to Hornchurch
10% of its common share interest in each of 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 to
Hornchurch such number of common shares as resulted in Hornchurch holding an
additional common share interest in such entities equal to 10% of the common
share interest held by WHF.
WHEREAS, pursuant to the Shareholders Agreement No. 2, all of
the shares transferred or issued to Hornchurch were in a class distinct from
those held by the controlling shareholder of the subsidiaries concerned to
allow for discriminatory distributions.
WHEREAS, pursuant to the Shareholders Agreement No. 2, the
Preferred Shares transferred as consideration were allocated as follows: 40%
(8,400,000) to Weider Inc.; 40% (8,400,000) to Nutrition; 20% (4,200,000) to
Publications; and a nominal number to Sporting Goods and CANCO.
WHEREAS, pursuant to the Preferred Stock Redemption Agreement,
dated as of July ___, 1996, by and between Hornchurch and WHF (the "Redemption
Agreement"), WHF transferred to Hornchurch, 21,000,000 Preferred Shares in
consideration for 29.88 shares of Class B common stock of Nutrition and 89.63
shares of Class B common stock of Publications.
WHEREAS, it is the intention of the parties hereto to amend
and restate in their entirety the Shareholders Agreement No. 2.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, WHF and Hornchurch 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., all $ or dollars are in
lawful currency of the United States of America. and "private
placement" refers to a sale to a third party.
2. TRANSFER OF ASSETS
2.1 Should WHF decide in the future to transfer one or more assets
it owns at June 1, 1994 to one or more of its subsidiaries
(whether referred to herein or not), with the exception of
Weider Nutrition International, Inc., for purposes of
developing and exploiting same, Hornchurch shall have the
option to acquire for the sum of $1.00 such number of shares
of common stock in such subsidiary(ies) equivalent to 10% of
WHF's common share
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interest therein. This option in favor of Hornchurch shall
lapse upon Hornchurch disposing of all of the Common Shares
(as defined herein) issued or transferred to it pursuant to
the provisions of this Agreement. In the event Hornchurch
exercises the above-mentioned option, the shares issued or
transferred to it pursuant thereto shall, in all respects, be
subject to the provisions of this Agreement as well as to
those of any ancillary agreement between the parties hereto
pertaining to the Common Shares (as defined herein), with the
changes required by the context.
3. SHAREHOLDER RIGHTS AND RESTRICTIONS.
3.1 NO ALIENATION
3.1.1 Except as set out in this Agreement, the shares held
by Hornchurch pursuant to this Agreement (the "Common
Shares") shall not be transferable by Hornchurch in
any circumstances, except to WHF (see below "Option
to Sell"), or to an assignees of WHF.
3.1.2 After an initial public offering of a subsidiary
concerned, (or of subsidiary of a subsidiary
concerned as the case may be), the shares of such
subsidiary (or of such subsidiary of a subsidiary
concerned as the case may be) may be transferred
without restriction except for a first refusal right
(30 day written notice) in favor of WHF.
3.2 OPTION TO SELL ("Put")
3.2.1 Hornchurch may, at any time on or after May 31, 1996
oblige WHF to purchase all (but not less than all) of
the Common Shares that it then holds for their fair
market value as determined by Bear Stearns (the
"Formula Price") (such fair market value to be
determined without any minority discount in order
that the Hornchurch interest be valued as a pro rata
share of the evaluation to be accorded to a 100%
ownership interest in the subsidiaries concerned) by
following the procedure hereinafter set forth:
a) Hornchurch shall send a notice to WHF
informing WHF that it wishes to exercise its
option to sell (the "Notice");
b) WHF shall instruct Bear Stearns to calculate
the Formula Price 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 Hornchurch and
WHF, which shall be no later than thirty (30)
days from the date on which Bear Stearns
issue their calculation of the Formula Price
pursuant to Section 3.2.4 below (the "Closing
Date");
e) Bear Sterns' calculation of the Formula Price
shall be final and binding between the
parties.
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3.2.2 The Formula Price of the Common Shares shall be paid
as follows:
a) the lesser of the Formula Price and the value
on the Closing Date of the Preferred Shares
allocated to the subsidiary(ies) concerned;
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 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.
3.2.3 The amount payable in Section 3.2.2(b) shall be
represented by a promissory note of WHF.
3.2.4 Upon calculation of the Formula Price, Bear Stearns
shall issue a letter setting out the calculation of
the Formula Price (the "Bear Stearns Letter").
3.2.5 This Section 3.2 does not apply to any Common Shares
held by Hornchurch where the common stock of the
subsidiary concerned is publicly traded on a
recognized stock exchange or securities market.
3.3 SUBSEQUENT SHARE ISSUES
3.3.1 Subject to any public offering of its shares, the
subsidiaries concerned shall, before issuing further
shares, offer such additional shares to Hornchurch on
a pro-rata basis at the same price per share to be
paid for the further shares. Hornchurch shall accept
or refuse said offer in whole or in part within
thirty (30) days from the date of the offer.
3.3.2 In the event that a subsidiary concerned conducts one
or more public offerings of its stock, or offers to
issue or transfer 10% or more of its shares in the
course of a private placement, Hornchurch shall be
entitled to include as part of such offering(s) that
percentage of Common Shares of such subsidiary
concerned equal to the percentage of shares held
directly or indirectly by WHF which is included in
the public offering by WHF, or included in such
private placement.
3.3.3 To the extent that any subsidiary of a subsidiary
concerned conducts a public offering of its stock, or
offers to issue or transfer 10% or more of its shares
in the course of a private placement, Hornchurch
shall have the right to exchange a proportionate
number of its Common Shares for shares in the public
company in the same ratio and on the same basis that
WHF, or any successor(s), converts its shares into
shares of that public company, or in the same
proportions and on the same basis as that of the
controlling shareholder(s) or any successor(s) in the
course of a private placement. All shares received
by Hornchurch pursuant to such an exchange shall be
subject to the provisions of this Agreement
concerning the Common Shares, with the changes
required by the context.
3.3.4 The foregoing sections do not apply to the issue or
transfer of up to 1% of the common shares of the
subsidiaries concerned to Bayonne Settlement and 1/3%
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of the common shares of the subsidiaries concerned to
Ronald Corey although such issues or transfers will
be non- dilutive of Hornchurch. In addition, the
foregoing sections do 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. It is recognized,
moreover, that any public offering will be dilutive
of Hornchurch and will not be subject to Section
3.3.2.
3.3.5 In addition, the foregoing sections shall not apply
to the issue or transfer of up to 10% of the Common
Shares of the subsidiaries concerned to other
management of WHF nor to any Common Shares held by
Hornchurch where the common stock of the subsidiary
concerned is, or contemporaneously with the initial
public offering of any subsidiary concerned will be,
publicly traded on a recognized stock exchange or
securities market.
3.4 OPTION TO PURCHASE ("Call")
3.4.1 WHF has an option to purchase from Hornchurch the
Common Shares at the Formula Price on the same terms
and conditions set out in Section 3.2 (subject to
paragraph (a) immediately following), but only in the
following circumstance:
a) any time on or after May 31, 1996 provided
WHF pays the Formula Price in full upon the
purchase.
3.4.2 In addition to its rights under Section 3.4.1, WHF
may, if it wishes to accept an offer from a third
party for 10% or more of its shares in a subsidiary
concerned either:
a) include in such sale that percent of Common
Shares held by Hornchurch in such subsidiary
equal to the percentage of shares held
directly or indirectly by WHF which is
included in such sale (and Hornchurch shall
so sell) at the same price per share and on
the same terms as those offered to WHF; or
b) purchase such percentage of Common Shares
from Hornchurch (and Hornchurch shall sell)
at such price and on such terms
provided in either case that such sale is in fact
concluded within a reasonable time.
3.4.3 This Section 3.4 does not apply to any Common Shares
held by Hornchurch where the common stock of the
subsidiary concerned is publicly traded on a
recognized stock exchange or securities market.
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3.5 CLASS B COMMON STOCK
3.5.1 Hornchurch does not have 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 Hornchurch
any right to acquire such shares.
3.6 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 the transactions contemplated
herein, save that the fees and expenses of Bear Stearns
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.
4. VOTES
4.1 Hornchurch shall exercise its votes on all Common Shares as
directed by WHF.
5. RETRACTION RIGHTS OF HORNCHURCH'S JUNIOR PREFERRED SHARES
5.1 The parties herein covenant and agree that the retraction
rights pertaining to the Preferred Shares shall be exercisable
by WHF and/or the subsidiaries concerned only after June 15,
1999.
5.2 Hornchurch undertakes and warrants that until all Preferred
Shares have been redeemed and their redemption price paid, it
shall not incur any obligations of any nature whatsoever,
which could result in Hornchurch not having sufficient funds
to redeem the Preferred Shares.
6. APPLICABLE LAW
6.1 Nevada law shall govern this Agreement.
7 NO ASSIGNMENT AND NO ALIENATION
7.1 Hornchurch shall not be entitled to assign, in whole or in
part, this Agreement to any other person.
7.2 Except as set out in this Agreement, the Preferred Shares
shall not be transferable by WHF and/or any of the
subsidiaries concerned.
8. SECURITIES LAW FORMALITIES
8.2 The share issue and this Agreement may be subject to
compliance with United States securities law including, but
not limited to Blue Sky legislation, etc.
9. NOTICE
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9.1 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 HORNCHURCH, to:
c/o HORNCHURCH INVESTMENTS LIMITED
Atlantic House
4-8 Circular Road
Douglas, Isle of Man
FAX: 011-44-624-612624
b) If to WHF, to:
c/o WEIDER HEALTH AND FITNESS
21100 Erwin Street
Woodland Hills, Calif.
91367 USA
ATTN.: MR. BERNARD CARTOON, SECRETARY AND
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.
10. ENTIRE AGREEMENT
10.1 This Agreement embodies the entire agreement between the
parties hereto concerning the subject matters mentioned herein
and supersedes all previous discussions, correspondence,
understandings or agreements, whether written or oral, with
respect to such matters, including any discussions,
correspondence, understandings or agreements between the
parties hereto since April 1993 concerning options, transfers
and/or issuance of shares.
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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
By: /s/ BERNARD CARTOON
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Name: Bernard Cartoon
Title: Secretary
HORNCHURCH INVESTMENTS LIMITED
By:_____________________________________
Name:
Title: