WeightWatchers 2004 Annual Report Download - page 61

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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 2004 and
2003, service fees incurred by Weight Watchers International to WeightWatchers.com were $2.3 million
and $2.0 million, respectively.
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 its
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.
Nellson Co-Pack Agreement
We entered into an agreement with Nellson Nutraceutical, a former subsidiary of Artal
Luxembourg, to purchase snack bar and powder products manufactured by Nellson Nutraceutical for
sale in our meetings. On October 4, 2002, Nellson Nutraceutical was sold by Artal Luxembourg and at
such time, Nellson Nutraceutical was no longer considered a related party. Under our co-pack
agreement, Nellson Nutraceutical agreed to produce sufficient snack bar products to fill our purchase
orders within 30 days of Nellson Nutraceutical’s receipt of these purchase orders, and we are not bound
to purchase a minimum quantity of snack bar products. We purchased $24.4 million of products from
Nellson Nutraceutical during the fiscal year ended December 28, 2002. The term of the agreement
expired on December 31, 2004 and the parties are currently negotiating a renewal.
Item 14. Principal Accounting Fees and Services
The information required by this item will be contained in our definitive proxy statement to be
filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal
year covered by this Annual Report on Form 10-K and is incorporated by reference herein.
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