WeightWatchers 2015 Annual Report Download - page 11

In connection with Ms. Winfrey’s purchase of our common stock and the grant of the Winfrey Option
described above, Artal Luxembourg entered into a Voting Agreement with Ms. Winfrey on October 18, 2015, or
the Voting Agreement, pursuant to which Ms. Winfrey agreed to vote all of her common stock or preferred stock
of the Company and other securities convertible into or exercisable or exchangeable for any common stock or
preferred stock of the Company so as to elect such individuals designated by Artal. The Voting Agreement
terminates on the date that any of the following occurs: (i) Artal (and certain permitted transferees) and
Ms. Winfrey (and certain permitted transferees) collectively own less than 50% of our issued and outstanding
common stock, (ii) Ms. Winfrey then has the right to be nominated as a director and has met certain eligibility
requirements under the Winfrey Purchase Agreement, but is not elected as a director of the Company,
(iii) Ms. Winfrey (and certain permitted transferees) collectively own less than 1% of our issued and outstanding
common stock, (iv) the voting and related arrangements in the Voting Agreement, in our reasonable
determination, constitutes a “change of control” in any of our debt agreements or (v) the parties to the Voting
Agreement terminate such agreement by written consent.
As a result of entering into the Voting Agreement, Artal and Ms. Winfrey are acting as a “group” within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act. As a result, we continue to qualify as a “controlled company” under the applicable rules of The
New York Stock Exchange, or the NYSE.
The transactions contemplated by the Strategic Collaboration Agreement, Winfrey Purchase Agreement and
Winfrey Option Agreement are collectively referred to herein as the Winfrey Transaction.
Regulation
A number of laws and regulations govern our advertising, services, products, operations and relations with
consumers, licensees, franchisees, employees and other service providers and government authorities in the
countries in which we operate. Certain federal, state and foreign agencies, such as the Federal Trade
Commission, or FTC, and the Food and Drug Administration, or FDA, regulate and enforce such laws and
regulations relating to advertising, promotions, packaging, privacy, consumer pricing and billing arrangements
and other consumer protection matters. We are subject to many distinct employment, labor, commercial, benefits
and tax laws and regulations in each country in which we operate, including regulations affecting our
employment and wage and hour practices and our relations with our employees and service providers. Laws and
regulations directly applicable to communications, operations or commerce over the Internet such as those
governing intellectual property, privacy and taxation, are more prevalent and continue to evolve. Our operations
are subject to these laws and regulations and we continue to monitor their development and our compliance. In
addition, we are subject to other laws and regulations in the United States and internationally.
During the mid-1990s, the FTC filed complaints against a number of commercial weight management
providers alleging violations of federal law in connection with the use of advertisements that featured
testimonials, claims for program success and program costs. In 1997, we entered into a consent order with the
FTC settling all contested issues raised in the complaint filed against us. The consent order requires us to comply
with certain procedures and disclosures in connection with our advertisements of services and products. From
time to time, we have been in discussions with the FTC regarding such consent order.
Employees and Service Providers
As of January 2, 2016, we had approximately 19,000 employees, a majority of whom were part-time
employees. In addition, in certain of our markets, our service providers are self-employed and are not included in
this total. We consider our relations with our employees and service providers to be satisfactory.
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