WeightWatchers 2002 Annual Report Download - page 47

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WeightWatchers.com Service Agreement
Simultaneously with the signing of the amended and restated intellectual property license, we
entered into a service agreement with WeightWatchers.com, under which WeightWatchers.com provides
the following types of services:
•information distribution services, which include the hosting, displaying and distributing on the
Internet of information relating to us and our affiliates and franchisees;
•marketing services, which include the hosting, displaying and distributing on the Internet of
information relating to our products and services such as classroom meetings, the Weight
Watchers Magazine and At Home and similar products and services from our affiliates and
franchisees; and
•customer communication services, which include establishing a means by which customers can
communicate with us on the Internet to ask questions related to our products and services and
the products and services of our affiliates and franchisees.
We are required to pay for all expenses incurred by WeightWatchers.com directly attributable to
the services it performs under this agreement, plus a fee of 10% of those expenses. In fiscal 2002, the
service fees incurred by us to WeightWatchers.com was $1.9 million.
WeightWatchers.com Shareholders’ Agreement
We entered into a shareholders’ agreement with WeightWatchers.com, Inc., Artal Luxembourg and
Heinz that governs our and Artal Luxembourg’s relationship with WeightWatchers.com as holders of
our common stock. Heinz has sold all of its shares in WeightWatchers.com back to
WeightWatchers.com and thus no longer has any rights under this agreement. Subsequent transferees of
ours and of Artal Luxembourg must, except for some limited exceptions, agree to be bound by the
terms and provisions of the agreement.
The shareholders’ agreement imposes on us restrictions on the transfer of common stock of
WeightWatchers.com until the earlier to occur of (1) September 29, 2004 and (2) WeightWatchers.com’s
initial public offering of common stock under the Securities Act, except for certain exceptions. We have
the right to participate pro rata in certain transfers of common stock of WeightWatchers.com by Artal
Luxembourg, and Artal Luxembourg has the right to require us to participate on a pro rata basis in
certain transfers of WeightWatchers.com’s common stock by it.
WeightWatchers.com Registration Rights Agreement
We have entered into a registration rights agreement with WeightWatchers.com, Artal Luxembourg
and Heinz with respect to our shares in WeightWatchers.com. Heinz has resold all of its shares in
WeightWatchers.com back to WeightWatchers.com and thus no longer has any rights under this
agreement. The registration rights agreement grants Artal Luxembourg the right to require
WeightWatchers.com to register its shares of WeightWatchers.com common stock upon demand and
also grants us and Artal Luxembourg rights to register and sell shares of WeightWatchers.com’s
common stock in the event WeightWatchers.com conducts certain types of registered offerings.
WeightWatchers.com Lease Guarantee
The Company has guaranteed the performance of part of WeightWatchers.com’s lease of its office
space at 888 Seventh Avenue, New York, New York. The annual rental rate is $0.5 million plus
increases for operating expenses and real estate taxes. The lease expires in September 2003.
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