Exhibit 10.38

 

FORM OF CONTINUITY AGREEMENT

 

This Agreement (the “Agreement”) is dated as of October 10, 2003 by and between
Weight Watchers International, Inc., a Virginia corporation (the “Company”), and
                      (the “Executive”).

 

WHEREAS, the Company’s Board of Directors (the “Board”) considers the continued
services of key executives of the Company to be in the best interests of the
Company and its stockholders; and

 

WHEREAS, the Board desires to assure, and has determined that it is appropriate
and in the best interests of the Company and its stockholders to reinforce and
encourage the continued attention and dedication of key executives of the
Company to their duties of employment without personal distraction or conflict
of interest in circumstances which could arise from the occurrence of a change
in control of the Company; and

 

WHEREAS, the Board has authorized the Company to enter into continuity
agreements with certain key executives of the Company, such agreements to set
forth the severance compensation which the Company agrees to pay such executives
under certain circumstances in connection with a change in control of the
Company; and

 

WHEREAS, the Executive is a key executive of the Company and has been designated
by the Compensation Committee of the Board (the “Committee”) as an executive to
be offered such a continuity compensation agreement with the Company.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree as follows:

 

1.                                       Term.  This Agreement shall become
effective on the date hereof and, subject to the Executive’s continued
employment by the Company, remain in effect until the third anniversary thereof;
provided, however, that, on such third anniversary and on each successive
one-year anniversary thereof (each, a “Renewal Date”), this Agreement shall
automatically renew, unless the Company provides to the Executive, in writing,
at least 180 days prior to any Renewal Date, notice that this Agreement shall
not be renewed.  Notwithstanding the foregoing, in the event that a Change in
Control (as hereinafter defined) occurs at any time prior to the termination or
expiration of this Agreement in accordance with the preceding sentence, this
Agreement shall not terminate until the second anniversary of the Change in
Control.

 

2.                                       Change in Control.  No compensation or
other benefit shall be payable pursuant to Section 4 of this Agreement unless
and until either (i) a Change in Control shall have occurred while the Executive
is an employee of the Company and the Executive’s employment by the Company
thereafter shall have terminated in accordance with Section 3(a)(i) or (ii)
hereof or (ii) the Executive’s employment by the Company shall have terminated
in accordance with Section 3(a)(ii) or (iii) hereof prior to the occurrence of a
Change in Control and thereafter a Change in Control actually occurs.  For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred when:

 

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(a)                                  any “Person” or “Group,” in each case
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), (other than the Company or any
company owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
becomes the “Beneficial Owner,” within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 25% or more of the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the election
of members of the Board; excluding, however, any circumstance in which such
beneficial ownership resulted from any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company or by any Person or
Group controlling, controlled by or under common control with, the Company;

 

(b)                                 a change in the composition of the Board
since the date of this Agreement such that the individuals who, as of such date,
constituted the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of such Board; provided, that any individual, who becomes a
member of the Board subsequent to the date of this Agreement, whose election, or
nomination for election by the Company’s stockholders, was approved by the vote
of at least a majority of the directors then comprising the Incumbent Board,
shall be deemed a member of the Incumbent Board; and provided further, that any
individual who was initially elected as a member of the Board as a result of an
actual or threatened election contest, as such terms are used in Rule 14a-12 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person or
Group other than the Board shall not be deemed a member of the Incumbent Board;

 

(c)                                  a reorganization, recapitalization, merger
or consolidation (a “Corporate Transaction”) involving the Company, unless
securities representing 51% or more of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the Company or the entity resulting from such Corporate Transaction
(or the parent of such entity) are held subsequent to such transaction by the
Person or Persons who were the beneficial holders of the outstanding voting
securities entitled to vote generally in the election of directors of the
Company immediately prior to such Corporate Transaction, in substantially the
same proportions as their ownership immediately prior to such Corporate
Transaction; or

 

(d)                                 the sale, transfer or other disposition of
all or substantially all of the assets of the Company or the liquidation or
dissolution of the Company;

 

if and only if, as a result of the occurrence of any of the foregoing events in
subsections (a) through (d) above, any Person or Group other than Artal
Luxembourg S.A. or any of its affiliates is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of its then outstanding securities entitled to vote in
the election of members of the Board.

 

3.                                       Termination of Employment; Definitions.

 

(a)                                  The Executive shall be entitled to the
compensation provided for in Section 4 of this Agreement if:

 

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(i)                                     within two years following a Change in
Control, the Executive’s employment is terminated by the Company for any reason
other than (A) the Executive’s Disability, (B) the Executive’s Retirement, (C)
the Executive’s death, or (D) for Cause (Disability, Retirement and Cause are
hereinafter defined);

 

(ii)                                  in the event that (A) within three months
prior to, but in connection with, the anticipated occurrence of a Change in
Control (and thereafter such Change in Control actually occurs, in which case
Executive’s date of Termination shall be deemed to have occurred immediately
following the Change of Control) or (B) within two years following a Change in
Control, the Executive terminates his or her employment for Good Reason (as
defined in Section 3(e) below) after providing the Company with a Notice of
Termination (as defined below) at least 60 days prior to such termination of
employment; or

 

(iii)                               (A) an agreement is signed which, if
consummated, would result in a Change in Control, (B) between the date on which
such agreement is signed but prior to the actual occurrence of the Change in
Control, in connection with such anticipated Change in Control the Executive’s
employment is terminated by the Company for any reason other than (x) the
Executive’s Disability, (y) the Executive’s Retirement, (z) the Executive’s
death, or (D) for Cause and (C) such Change in Control actually occurs (in which
case Executive’s date of Termination shall be deemed to have occurred
immediately following the Change of Control).

 

(b)                                 Disability.  For purposes of this Agreement,
“Disability” shall mean the Executive’s absence from the full-time performance
of the Executive’s duties (as such duties existed immediately prior to such
absence), during the term of this Agreement, for 180 consecutive business days,
when the Executive is disabled as a result of incapacity due to physical or
mental illness, as determined by a physician selected by the Executive and
approved by the Company for such purpose (such approval not to be unreasonably
withheld).

 

(c)                                  Retirement.  For purposes of this
Agreement, “Retirement” shall mean the Executive’s voluntary termination of
employment, during the term of this Agreement, pursuant to late, normal or early
retirement under a pension plan sponsored by the Company, as defined in such
plan, but only if such retirement occurs prior to a termination by the Company
without Cause (and not in anticipation of a termination for Cause).

 

(d)                                 Cause.  For purposes of this Agreement,
“Cause” shall mean the occurrence, during the term of this Agreement, of any of
the following:

 

(i)                                     the willful and continued failure of the
Executive to perform substantially all of his or her duties with the Company
(other than any such failure resulting from incapacity due to physical or mental
illness) for a period of 10 days following a written demand for substantial
performance that is delivered to such Executive by the Board, which specifically
identifies the manner in which the Board believes the Executive has not
substantially performed his or her duties;

 

(ii)                                  dishonesty in the performance of the
Executive’s duties with the Company;

 

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(iii)                               the Executive’s conviction of, or plea of
guilty or nolo contendere to, a crime under the laws of the United States or any
state thereof constituting (x) a felony or (y) a misdemeanor involving moral
turpitude;

 

(iv)                              the Executive’s willful malfeasance or willful
misconduct in connection with the Executive’s duties with the Company or any act
or omission which is injurious to the financial condition or business reputation
of the Company or its affiliates; or

 

(v)                                 the Executive’s breach of the provisions of
Section 12 of this Agreement.

 

Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the non-employee members of the Board (or, after a
Change in Control, of the ultimate parent of the entity which caused the Change
in Control (if the Company has become a subsidiary) to have occurred), at a
meeting of such members called and held for such purpose, which meeting shall be
held not less than 30 days after the Company has provided prior written notice
to the Executive specifying the basis for such termination and the particulars
thereof and a reasonable opportunity for the Executive to cure or otherwise
resolve the behavior in question prior to such meeting, finding that, in the
reasonable judgment of such members, the conduct or event set forth in any of
clauses (i) through (v) above has occurred and that such occurrence warrants the
Executive’s termination.

 

(e)                                  Good Reason.  For purposes of this
Agreement, “Good Reason” shall mean the occurrence, during the term of this
Agreement, of any of the following, without the Executive’s express written
consent:

 

(i)                                     Any diminution in the Executive’s
duties, titles or responsibilities with the Company from those in effect
immediately prior to a Change in Control (or in the event that the Executive
alleges that Good Reason has occurred prior to but in connection with a Change
in Control, from those in effect prior to the date that is three months prior to
the Change in Control); provided, however, that no such diminution shall be
deemed to exist solely because of changes in the Executive’s duties, titles or
responsibilities as a consequence of the Company ceasing to be a company with
publicly traded securities or becoming a wholly owned subsidiary of another
Person or Group;

 

(ii)                                  Any reduction in the Executive’s annual
base salary and annual cash bonus percentage target established under the
Company’s annual incentive plan (the “Bonus Plan”) (together, the
“Compensation”) from the Executive’s Compensation in effect immediately prior to
a Change in Control (or in the event that the Executive alleges that Good Reason
has occurred prior to but in connection with a Change in Control, from such
Compensation in effect prior to the date that is three months prior to the
Change in Control);

 

(iii)                               any relocation of the Executive’s principal
work place to a location that is East of the Nassau County-Suffolk County
border; or

 

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(iv)                              any failure by the Company to obtain from any
successor to the Company an agreement, reasonably satisfactory to the Executive,
to assume and perform this Agreement, as contemplated by Section 10(a) hereof.

 

Notwithstanding the foregoing, in the event that the Executive provides the
Company with a Notice of Termination (as defined below) referencing this Section
3(e) within 60 days after the occurrence of an event giving rise to Good Reason,
the Company shall have 30 days thereafter in which to cure or resolve the
behavior otherwise constituting Good Reason.

 

(f)                                    Notice of Termination.  Any purported
termination of the Executive’s employment (other than on account of the
Executive’s death) shall be communicated by a Notice of Termination to the
Executive, if such termination is by the Company, or to the Company, if such
termination is by the Executive.  For purposes of this Agreement, “Notice of
Termination” shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provisions so indicated. 
For purposes of this Agreement, no purported termination of Executive’s
employment with the Company shall be effective without such a Notice of
Termination having been given.

 

4.                                       Compensation Upon Termination of
Employment.  If the Executive’s employment by the Company shall be terminated in
accordance with Section 3(a) (the “Termination”), the Executive shall be
entitled to the following payments and benefits:

 

(a)                                  Severance.  The Company shall pay, or cause
to be paid, to the Executive a cash severance payment in an amount equal to the
product of three times the sum of (i) the Executive’s annual base salary on the
date of the Change in Control (or, if higher, the annual base salary in effect
immediately prior to the giving of the Notice of Termination) and (ii) the
Executive’s target annual bonus (“Target Bonus”) in respect of the fiscal year
of the Company (a “Fiscal Year”) in which the Termination occurs (or, if higher,
the average annual bonus actually earned by the Executive in respect of the
three full Fiscal Years prior to the year in which the Notice of Termination is
given) under the Bonus Plan. This cash severance amount shall be payable in a
lump sum, calculated without any present value discount, within 10 business days
after the Executive’s date of Termination.

 

(b)                                 Additional Payments and Benefits.  The
Executive shall also be entitled to:

 

(i)                                     a lump sum cash payment equal to the sum
of (A) the Executive’s accrued but unpaid base salary through the date of
Termination, (B) the unpaid portion, if any, of bonuses previously earned by the
Executive pursuant to the Bonus Plan, (C) in respect of the Fiscal Year in which
the date of Termination occurs, the higher of (x) the pro rata portion of the
Executive’s Target Bonus and (y) if the Company is exceeding the performance
targets established under the Bonus Plan for such Fiscal Year as of the date of
Termination, the Executive’s actual annual bonus payable under the Bonus Plan
based upon such achievement (such pro rata portion in either case calculated
from January 1 of such year through the date of Termination) (such payment, the
“Pro Rata Bonus”), and (D) any other compensation previously deferred (excluding
qualified plan deferrals by the Executive under or into benefit plans of the
Company), and (E) an amount

 

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representing the Executive’s accrued but unused vacation days, if any, in each
case for subsections (A) through (E) above, in full satisfaction of the
Executive’s rights thereto;

 

(ii)                                  continued medical, dental, vision, and
life insurance coverage (excluding accidental death and disability insurance)
(“Welfare Benefit Coverage”) for the Executive and the Executive’s eligible
dependents or, to the extent Welfare Benefit Coverage is not commercially
available, such other Welfare Benefit Coverage reasonably acceptable to the
Executive, on the same basis as in effect prior to the Executive’s Termination,
for a period ending on the earlier of (A) the third anniversary of the date of
Termination (the “Continuation Period”) and (B) the commencement of comparable
Welfare Benefit Coverage by the Executive with a subsequent employer;

 

(iii)                               continued provision of the perquisites the
Executive enjoyed prior to the date of Termination for a period ending on the
earlier of (A) the end of the Continuation Period and (B) the receipt by the
Executive of comparable perquisites from a subsequent employer;

 

(iv)                              immediate 100% vesting of all outstanding
stock options, stock appreciation rights, phantom stock units and restricted
stock granted or issued by the Company prior to, on or upon the Change in
Control (to the extent not previously vested on or following the Change in
Control);

 

(v)                                 additional Company contributions under the
Company’s qualified defined contribution plan and any other retirement plans in
which the Executive participated prior to the date of Termination during the
Continuation Period; provided, however, that where such contributions may not be
provided without adversely affecting the qualified status of such plan or where
such contributions are otherwise prohibited by any such plans, the Executive
shall instead receive an additional lump sum payment equal to the contributions
that would have been made during the Continuation Period if the Executive had
remained employed with the Company during such period; and

 

(vi)                              all other accrued or vested benefits in
accordance with the terms of any applicable Company plan, which vested benefits
shall include the Executive’s otherwise unvested account balances in the
Company’s qualified defined contribution plan, which shall become vested as of
the date of Termination (the “Accrued Benefits”) (with an offset for any amounts
paid under Section 4(b)(i)(D), above).

 

All lump sum payments under this Section 4(b) shall be paid within 10 business
days after the Executive’s date of Termination.

 

(c)                                  Outplacement.  If so requested by the
Executive, outplacement services shall be provided by a professional
outplacement provider selected by the Executive; provided, however, that such
outplacement services shall be provided to the Executive at a cost to the
Company of not more than $30,000.

 

(d)                                 Legal Expenses.  The Company shall pay or
reimburse the Executive for reasonable legal fees (including without limitation,
any and all court costs and attorneys’ fees and expenses) incurred by the
Executive in connection with or as a result of any claim, action or

 

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proceeding brought by the Company or the Executive with respect to or arising
out of this Agreement or any provision hereof; provided, however, that the
Company shall have no obligation to pay or reimburse any such legal fees if (i)
in the case of an action brought by the Executive, the Company is successful in
establishing with the court that the Executive’s action was taken in bad faith
or was frivolous or otherwise without a reasonable legal or factual basis, or
(ii) in the case of any action, the action is materially decided in favor of the
Company.

 

5.                                       Compensation Upon Termination for
Death, Disability, Retirement.  If the Executive’s employment is terminated by
reason of Death, Disability or Retirement prior to any other Termination (other
than in anticipation of a termination for Cause by the Company), the Executive
will receive:

 

(a)                                  the sum of (i) the Executive’s accrued but
unpaid base salary through the date of Termination, (ii) the Pro Rata Bonus, and
(iii) any compensation previously deferred (excluding any qualified plan
deferrals) by the Executive under or into benefit plans of the Company and an
amount representing the Executive’s accrued but unused vacation days, if any, in
each case, in full satisfaction of the Executive’s rights thereto; and

 

(b)                                 the Accrued Benefits (with an offset for any
amounts paid under Section 5(a)(iii), above).

 

6.                                       Compensation Upon Termination by the
Company for Cause.  If the Executive’s employment is terminated by the Company
for Cause, the Executive will receive the sum of the Executive’s accrued but
unpaid salary through the date of Termination and an amount representing the
Executive’s accrued but unused vacation days, if any, in each case, in full
satisfaction of the Executive’s rights thereto.

 

7.                                       Excess Parachute Excise Tax. 
Notwithstanding any other provision of this Agreement,

 

(a)                                  If it is determined (as provided in Section
7(c), below) that the payments and benefits provided under Section 4(a) and
Sections 4(b)(i), (ii) and (iii), in the aggregate (a “Payment”), would be
subject to the excise tax imposed under Section 4999 (or any successor provision
thereto) of the Internal Revenue Code of 1986, as amended (the “Code”) by reason
of being “contingent on a change in ownership or control” of the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the “Excise
Tax”), and the aggregate value of the Payment exceeds 3.0 times the Executive’s
“base amount,” as defined in Section 280G(b)(3) of the Code (the (“Base Amount”)
by five percent (5%) or less, then the Payment shall be reduced to the extent
necessary so that the aggregate value of the Payment is equal to 2.99 times the
Base Amount (the “Reduced Amount”); provided, however, that if the aggregate
value of the Payment exceeds the Base Amount by more than five percent (5%),
then the Executive shall be entitled to receive an additional payment or
payments (a “Gross-Up Payment”) in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.

 

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(b)                                 If the determination made pursuant to
Section 7(a) results in a reduction of the payments that would otherwise be paid
to the Executive except for the application of Section 7(a)(i) hereof, the
Executive may then elect, in his sole discretion, which and how much of any
particular entitlement shall be eliminated or reduced and shall advise the
Company in writing of his election within 10 days of the determination of the
reduction in payments.  If no such election is made by the Executive within such
10-day period, the Company may elect which and how much of any entitlement shall
be eliminated or reduced and shall notify the Executive promptly of such
election.  Within 10 days following such determination and the elections
hereunder, the Company shall pay to or distribute to or for the benefit of the
Executive such amounts as are then due to the Executive under this Agreement and
shall promptly pay to or distribute to or for the benefit of the Executive in
the future such amounts as become due to the Executive under this Agreement.

 

(c)                                  Subject to the provisions of Section 7(a)
hereof, all determinations required to be made under this Section 7, including
whether an Excise Tax is payable by the Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by the nationally recognized firm of certified public
accountants (the “Accounting Firm”) used by the Company prior to the Change in
Control (or, if such Accounting Firm declines to serve, the Accounting Firm
shall be a nationally recognized firm of certified public accountants selected
by the Executive).  The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the date of Termination, if applicable, and any other such time or times as may
be requested by the Company or the Executive.  If the Accounting Firm determines
that the aggregate value of the Payment exceeds the Base Amount by more than 5%
such that an Excise Tax is payable by the Executive, the Company shall pay the
required Gross-Up Payment to, or for the benefit of, the Executive within five
business days after receipt of such determination and calculations.  If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall, at the same time as it makes such determination, furnish the Executive
with an opinion that he has substantial authority not to report any Excise Tax
on his/her federal, state, local income or other tax return.  Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon the Company and the Executive absent a contrary determination by the
Internal Revenue Service or a court of competent jurisdiction; provided,
however, that no such determination shall eliminate or reduce the
Company’s obligation to provide any Gross-Up Payment as a result of such
contrary determination.  As a result of the uncertainty in the application of
Section 4999 of the Code (or any successors provision thereto) and the
possibility of similar uncertainty regarding state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (an “Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company exhausts or fails to pursue its
remedies pursuant to Section 7(e) hereof and the Executive thereafter is
required to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations to both the
Company and the Executive as promptly as possible. Any such Underpayment shall
be promptly paid by the Company to, or for the benefit of, the Executive within
five business days after receipt of such determination and calculations.

 

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(d)                                 The federal, state and local income or other
tax returns filed by the Executive (or any filing made by a consolidated tax
group that includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive.  The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and corresponding state
and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment.  If, prior to the filing of the Executive’s federal
income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within 10 business days pay to the Company the
amount of such reduction.

 

(e)                                  (i) In the event that the Internal Revenue
Service claims that any payment or benefit received under this Agreement
constitutes an “excess parachute payment,” within the meaning of Section
280G(b)(1) of the Code (or any successor provision thereto), the Executive shall
notify the Company in writing of such claim.  Such notification shall be given
as soon as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid.  The
Executive shall not pay such claim prior to the expiration of the 30 day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due).  If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall (i) give the Company any information reasonably requested by the
Company relating to such claim; (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company and
reasonably satisfactory to the Executive; (iii) cooperate with the Company in
good faith in order to effectively contest such claim; and (iv) permit the
Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including, but not limited to, additional interest and penalties and related
legal, consulting or other similar fees) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for and against any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.

 

(ii)                                  The Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or other tax (including interest and penalties with respect

 

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thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided, further, that if the
Executive is required to extend the statute of limitations to enable the Company
to contest such claim, the Executive may limit this extension solely to such
contested amount.  The Company’s control of the contest shall be limited to
issues with respect to which a corporate deduction would be disallowed pursuant
to Section 280G of the Code and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.  In addition, no position may be taken
nor any final resolution be agreed to by the Company without the Executive’s
consent if such position or resolution could reasonably be expected to adversely
affect the Executive (including any other tax position of the Executive
unrelated to matters covered hereby).

 

(iii)                             If, after the receipt by the Executive of an
amount advanced by the Company in connection with the contest of the Excise Tax
claim, the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds the amount
advanced by the Company or it is otherwise determined for any reason that
additional amounts could be paid to the Executive without incurring any Excise
Tax, any such amount will be promptly paid by the Company to the named
Executive.  If, after the receipt by the Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid and shall be deemed to be in consideration for services rendered after
the date of the Termination.

 

(f)                                    The Company and the Executive shall each
provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by Section 7(c) hereof.

 

(g)                                 The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations
contemplated by Section 7(c) hereof shall be borne by the Company.  If such fees
and expenses are initially advanced by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his or her payment thereof.

 

8.                                       Obligations Absolute; Non-Exclusivity
of Rights; Joint and Several Liability.

 

(a)                                  The obligations of the Company to make the
payment to the Executive, and to make the arrangements, provided for herein
shall be absolute and unconditional and shall not be reduced by any
circumstances, including without limitation any set-off, counterclaim,

 

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recoupment, defense or other right which the Company may have against the
Executive or any third party at any time.

 

(b)                                 Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company and for which the
Executive may qualify (other than any change in control or other severance plan
or policy), nor shall anything herein limit or reduce such rights as the
Executive may have under any agreements with the Company.  Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company shall be payable in accordance with such plan
or program, except as explicitly modified by this Agreement.

 

(c)                                  Any successors or assigns of the Company
shall be joint and severally liable with the Company under this Agreement.

 

9.                                       Entire Agreement; Not an Employment
Agreement; No Duplication of Payments or Benefits.

 

(a)                                  This Agreement constitutes the entire
agreement of the parties hereto and supersedes all prior and contemporaneous
agreements and understandings (including term sheets), both written and oral,
between the parties hereto, or either of them, with respect to the subject
matter hereof.  No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.

 

(b)                                 This Agreement is not, and nothing herein
shall be deemed to create, a contract of employment between the Executive and
the Company. The Company may terminate the employment of the Executive by the
Company at any time, subject to the terms of this Agreement and/or any
employment agreement or arrangement between the Company and the Executive that
may then be in effect.

 

(c)                                  To the extent, and only to the extent, a
payment or benefit that is paid or provided under Section 4 would also be paid
or provided under the terms of another Company plan, program or arrangement (a
“Company Plan”), (i) in the event that such payment or benefit is first paid or
provided under the terms of a Company Plan prior to the date such payment or
benefit is paid or provided under Section 4, such payment or benefit shall
offset any corresponding payment or benefit that is paid or provided under
Section 4, and (ii) in the event that such payment or benefit is first paid or
provided under Section 4, such Company Plan will be deemed to have been
satisfied by the corresponding payment or benefit made or provided under Section
4.

 

10.                                 Successors; Binding Agreement, Assignment.

 

(a)                                  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement,

 

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“Company” shall mean (i) the Company as hereinbefore defined, and (ii) any
successor to all the stock of the Company or to all or substantially all of the
Company’s business or assets which executes and delivers an agreement provided
for in this Section 10(a) or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law, including any parent or
subsidiary of such a successor.

 

(b)                                 This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would be payable to the
Executive hereunder if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive’s estate or designated beneficiary.  Neither
this Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.

 

11.                                 Notice.  For purpose of this Agreement,
notices and all other communications provided for in this Agreement or
contemplated hereby shall be in writing and shall be deemed to have been duly
given when personally delivered, delivered by a nationally recognized overnight
delivery service or when mailed United States certified or registered mail,
return receipt requested, postage prepaid, and addressed, in the case of the
Company, to the Company at:

 

Weight Watchers International, Inc.

175 Crossways Park West

Woodbury, New York 11797

Attention:  Board of Directors

 

and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.

 

Either party may designate a different address by giving notice of change of
address in the manner provided above, except that notices of change of address
shall be effective only upon receipt.

 

12.                                 Confidentiality.  The Executive shall retain
in confidence any and all confidential information concerning the Company, its
shareholders, officers, directors and customers and its respective business
which is now known or hereafter becomes known to the Executive, except as
otherwise required by law and except information (i) ascertainable or obtained
from public information, (ii) received by the Executive at any time after the
Executive’s employment by the Company shall have terminated, from a third party
not employed by or otherwise affiliated with the Company or (iii) which is or
becomes known to the public by any means other than a breach of this Section
12.  Upon the Termination of employment, the Executive will not take or keep any
proprietary or confidential information or documentation belonging to the
Company.

 

13.                                 Miscellaneous.

 

(a)                                  Amendments.  No provision of this Agreement
may be amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or

 

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discharge is agreed to in writing signed by the Executive and such officer of
the Company as shall be specifically designated by the Committee or by the
Board.

 

(b)                                 Waivers.  No waiver by either party, at any
time, of any breach by the other party of, or of compliance by the other party
with, any condition or provision of this Agreement to be performed or complied
with by such other party shall be deemed a waiver of any similar or dissimilar
provision or condition of this Agreement or any other breach of or failure to
comply with the same condition or provision at the same time or at any prior or
subsequent time.  No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.

 

14.                                 Severability.  If any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be affected thereby. To the extent
permitted by applicable law, each party hereto waives any provision of law that
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.

 

15.                                 Governing Law; Venue.  The validity,
interpretation, construction and performance of this Agreement shall be governed
on a non-exclusive basis by the laws of the State of New York without giving
effect to its conflict of laws rules.  For purposes of jurisdiction and venue,
the Company hereby consents to jurisdiction and venue in any suit, action or
proceeding with respect to this Agreement in any court of competent jurisdiction
in the state in which the Executive resides at the commencement of such suit,
action or proceeding and waives any objection, challenge or dispute as to such
jurisdiction or venue being proper.

 

16.                                 Counterparts.  This Agreement may be
executed in two or more counterparts, each of which shall be an original and all
of which shall be deemed to constitute one and the same instrument.

 

[Signatures on next page.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

 

 

WEIGHT WATCHERS INTERNATIONAL, INC.:

 

 

 

 

 

 

 

 

By:

 

 

 

 

Raymond Debbane

 

 

Title: Chairman of the Board

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

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