WeightWatchers 2002 Annual Report Download - page 45

Corporate Agreement
We have entered into a corporate agreement with Artal Luxembourg. We have agreed that, so long
as Artal Luxembourg beneficially owns 10% or more, but less than a majority of our then outstanding
voting stock, Artal Luxembourg will have the right to nominate a number of directors approximately
equal to that percentage multiplied by the number of directors on our board. This right to nominate
directors will not restrict Artal Luxembourg from nominating a greater number of directors.
We have agreed with Artal Luxembourg that both we and Artal Luxembourg have the right to:
•engage in the same or similar business activities as the other party;
•do business with any customer or client of the other party; and
•employ or engage any officer or employee of the other party.
Neither Artal Luxembourg nor we, nor our respective related parties, will be liable to each other
as a result of engaging in any of these activities.
Under the corporate agreement, if one of our officers or directors who also serves as an officer,
director or advisor of Artal Luxembourg becomes aware of a potential transaction related primarily to
the group education-based weight-loss business that may represent a corporate opportunity for both
Artal Luxembourg and us, the officer, director or advisor has no duty to present that opportunity to
Artal Luxembourg, and we will have the sole right to pursue the transaction if our board so
determines. If one of our officers or directors who also serves as an officer, director or advisor of Artal
Luxembourg becomes aware of any other potential transaction that may represent a corporate
opportunity for both Artal Luxembourg and us, the officer or director will have a duty to present that
opportunity to Artal Luxembourg, and Artal Luxembourg will have the sole right to pursue the
transaction if Artal Luxembourg’s board so determines. If one of our officers or directors who does not
serve as an officer, director or advisor of Artal Luxembourg becomes aware of a potential transaction
that may represent a corporate opportunity for both Artal Luxembourg and us, neither the officer nor
the director nor we have a duty to present that opportunity to Artal Luxembourg, and we may pursue
the transaction if our board so determines.
If Artal Luxembourg transfers, sells or otherwise disposes of our then outstanding voting stock, the
transferee will generally succeed to the same rights that Artal Luxembourg has under this agreement by
virtue of its ownership of our voting stock, subject to Artal Luxembourg’s option not to transfer those
rights.
WeightWatchers.com Note
On September 10, 2001, we amended and restated our loan agreement with WeightWatchers.com,
increasing the aggregate commitment thereunder to $34.5 million. The note bears interest at 13% per
year, beginning on January 1, 2002, which interest, except as set forth below, is paid semi-annually
starting on March 31, 2002. All principal outstanding under this note is payable in six semi-annual
installments, starting on March 31, 2004. The note may be prepaid at any time in whole or in part,
without penalty. As of December 28, 2002, $34.5 million of principal was outstanding under this note.
As WeightWatchers.com is an equity investee, and we have been the only entity providing funding
through fiscal year 2001, we reduced our loan receivable balances by 100% of WeightWatchers.com’s
losses. Additionally, the remaining loan receivable balances were reviewed for impairment on a
quarterly basis and, accordingly, during fiscal 2001 we recorded a full valuation allowance against the
remaining balances.
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