Joint Venture Agreement

Exhibit 10.1


JOINT VENTURE AGREEMENT

between

DANONE DAIRY ASIA

and

WEIGHT WATCHERS ASIA HOLDINGS LTD.

for

the establishment of

WEIGHT WATCHERS DANONE CHINA LIMITED


Dated as of February 5, 2008


Table of Contents Page

SECTION 1 DEFINITIONS 1

SECTION 2 ESTABLISHMENT OF THE COMPANY AND WFOES 12

SECTION 3 SCOPE OF BUSINESS OPERATIONS 12

SECTION 4 SHARE CAPITAL AND INCREASE OF SHARE CAPITAL 13

SECTION 5 TRANSFER OF INTEREST 15

SECTION 6 CONDITIONS FOR COOPERATION AND RESPONSIBILITIES OF THE PARTIES 20

SECTION 7 CONFIDENTIAL INFORMATION, PUBLICITY AND INTELLECTUAL PROPERTY RIGHTS 23

SECTION 8 CORPORATE GOVERNANCE 25

SECTION 9 MANAGEMENT OF THE COMPANY 33

SECTION 10 FINANCIAL, ACCOUNTING AND AUDITING SYSTEM 35

SECTION 11 PROFIT DISTRIBUTIONS 39

SECTION 12 BUDGETS AND BUSINESS PLAN 39

SECTION 13 TERM, TERMINATION AND LIQUIDATION 41

SECTION 14 TERMINATION PURCHASE RIGHT 42

SECTION 15 MILESTONES 43

SECTION 16 LIABILITY FOR BREACH OF CONTRACT 44

SECTION 17 GOVERNING LAW AND DISPUTE RESOLUTION 44

SECTION 18 REPRESENTATIONS AND WARRANTIES 45

SECTION 19 EFFECTIVENESS OF THE CONTRACT AND MISCELLANEOUS 47

APPENDIX 1 CHARTER DOCUMENTS

APPENDIX 2 FORM OF SERVICES AGREEMENT

APPENDIX 3 DEED OF ADHERENCE

APPENDIX 4 FORM OF LICENSE AGREEMENT


(i)

APPENDIX 5 FORM OF CONFIDENTIALITY AGREEMENT

APPENDIX 6 LIST OF SHANGHAI WFOE APPROVALS


(ii)

THIS JOINT VENTURE AGREEMENT (this " Agreement" ) is made as of the 5th day of February 2008

BETWEEN:

(1) Danone Dairy Asia, a company organized and existing under the laws of France, with its offices at 17 boulevard Haussmann, 75009 Paris, France (" DAP" ); and

(2) Weight Watchers Asia Holdings Ltd., a company organized and existing under the laws of the Cayman Islands, with its offices at Paget-Brown Trust Company Ltd., Boundary Hall, Cricket Square, P.O. Box 1111, Grand Cayman KY1-1102, Cayman Islands (" WTW" ).

Each of DAP and WTW is referred to hereinafter as a " Party" and collectively as the " Parties ."

RECITALS (A) DAP is a wholly-owned subsidiary of Groupe Danone (" GD" ), a company organized and existing under the laws of France and engaged in the business of manufacturing and distributing food and beverage products.

(B) WTW is a wholly-owned subsidiary of Weight Watchers International, Inc. (" WWI" ), a corporation organized and existing under the laws of Virginia, the United States of America, and engaged in the business of weight management.

(C) The Parties intend to combine their strengths by establishing and investing in a joint venture company (the " Company" ) in Hong Kong that will in turn establish various Subsidiaries (as defined below), including one or more wholly foreign-owned enterprises in the People' s Republic of China (each, a " WFOE" , collectively, the " WFOEs" ), the initial one shall be established in Shanghai (the " Shanghai WFOE" ) to engage in the Licensed Business (as defined below).

(D) The Parties wish to provide for certain matters relating to the management and operation of the Company and the WFOEs. AGREEMENT:

SECTION 1 DEFINITIONS

1.1 Definitions . In this Agreement, unless the context otherwise requires, the following terms shall have the following meanings: " Adjusted Group EBITDA" means the greater of (a) 11.5 times Group EBITDA or (b) 0, determined on a consolidated basis for the Applicable Period in accordance with US GAAP.

" Adjusted Group Revenue" means 3.5 times the gross revenue of the Group on a consolidated basis for the Applicable Period and determined in accordance with US GAAP.

" Affiliate" of a Person (the " Subject Person" ) means any other Person directly or indirectly Controlling, Controlled by, or under common Control with, the Subject Person; provided , however , (i) the Company and its Subsidiaries shall not be deemed Affiliates of WWI, WTW, DAP or GD (ii) WTW, WWI, GD and DAP shall not be deemed Affiliates of each other, and (iii) Artal and Artal' s Affiliates, other than WWI or subsidiaries of WWI, shall not be deemed Affiliates of WWI or WTW.

" Applicable Buyout Price" means an amount equal to the product of (a) the Buyout Price and (b) a fraction, the numerator of which shall be the number of Shares held by the Non-Terminating Party and the denominator of which shall be the total number of Shares outstanding.

" Applicable Period" means the 12-month period ending on the last day of the last full calendar month preceding the date of termination of this Agreement. " Approved Lines" has the meaning specified in the License Agreement. " Artal" means Artal Group S.A., a Luxembourg company and the indirect parent of WTW. " Arbitration Rules" means the Arbitration Rules of the United Nations Commission and International Trade Law. " Board" means the board of directors of the Company.

" Books" means the records and books of account of the Company and the WFOEs (on a consolidated basis) (a) in which complete entries have been made in accordance with US GAAP and IFRS, (b) for which all transactions required to be reflected by US GAAP and IFRS have been reflected and (c) for which accurate and complete records of the material properties and assets of the Company and the WFOEs have been kept in accordance with US GAAP and IFRS.

" Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in PRC, the State of New York of the U.S. or Hong Kong are required or authorized by Law or executive order to be closed.

" Business License" means the business license of each WFOE issued by SAIC.

" Buyout Price" means an amount equal to the greater of (a) the amount equal to (i) the quotient of (1) sum of the Adjusted Group Revenue and the Adjusted Group EBITDA and (2) 2 minus (ii) the Net Indebtedness as of the date of termination of this Agreement and (b) the Group Net Asset Value.


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" Charter Documents" of the Company means the memorandum and articles of association of the Company to be adopted by the Company on or prior to the Company Establishment Date, and in the form attached hereto as Appendix 1.

" CEO" of the Company means the Chief Executive Officer of the Company, who shall be the most senior executive manager of the Company.

" Company Establishment Date" means the date in which both DAP and WTW subscribe their Shares of the Company in accordance with Section 4 of this Agreement. " Competitor" means:

(i) with respect to WTW: Ao Quqing, Atkins, Curves, eDiets, Fernwood Women' s Health Clubs, Glaxo Smith Kline (Alli), GNC, Great Impression Brand Weight Reducing Tea, Herbalife, Jenny Craig, Kancura Weight Reducing Tea, Lean Cuisine, Marie France, Mermaid Fitness, NutriSystem, QuMei, Roche Products (Weight Awareness/Xenical), Sanofi-Aventis (Accomplia), Sau San Tong, Scent Hill, Shu Yikang Shake Fat Appliance, Slimfast, South Beach Diet, Slimming World, Sunrana Slimming Compound, Tesco, Tony Ferguson Weight Loss Program and VT, and their respective Affiliates (including, without limitation, any parent organizations such as Nestle in the case of Jenny Craig or Unilever in the case of Slimfast); and

(ii) with respect to GD: PepsiCo Inc., The Coca Cola Company, Nestle SA, Kraft Foods Inc., Unilever and their respective Affiliates. " Confidential Information" means (a) all information disclosed to a Party, its subsidiaries, employees, directors, officers, Affiliates, consultants, subcontractors, representatives or advisors (the " Recipient" ) by the other Party, the Company, or in the case where the Recipient is DAP, WWI (in addition to the other Party and the Company), or in the case where the Recipient is WWI, GD (in addition to the other Party and the Company), or any of their employees, directors, officers, Affiliates, consultants, subcontractors, representatives or advisors (the " Disclosing Party" ), including all information concerning the Disclosing Party' s or any of its Affiliates' businesses, finances, designs, advertising, marketing, sales, plans for future developments and internal processes or systems whether furnished before or after the date hereof, and whether furnished in oral, written, visual, machine readable or any other form, and regardless of the manner in which it is furnished (including by fax and any other form of electronic delivery); and (b) any document or material prepared by the Recipient or its Representatives based on any confidential information and all copies, extracts, reproductions, summaries or analyses of any such information (whether created by the Recipient or any other Person), including all digital and electronic copies.


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" Confidentiality Agreement" means the separate agreement between GD and WWI in relation to the non-competition and non-disclosure obligations and certain rights and obligations of each of GD and WWI, executed on the date hereof in the form attached as Appendix 5 . " Consumer Price Index" means the Consumer Price Index as published by the National Bureau of Statistics of China, or any successor organization.

" Control" with respect to any Person, means (a) holding, whether individually or in concert with one or more other Persons, directly or indirectly, any fraction of the capital of such Person giving the holder the majority of the voting rights of such Person; (b) holding alone the majority of the voting rights of such Person (including pursuant to the provisions of a shareholders' , investors' or other equity holders' agreement, undertaking or arrangement); (c) being able, whether individually or in concert with one or more other Persons, to effectively determine decisions taken at any such Person' s shareholders' or other equity holders' meetings (or pursuant to any written consent or other action in lieu thereof); or (d) being a shareholder or other equity holder of such Person and having, whether individually or in concert with one or more other Persons, the power to appoint a majority of the members of the board of directors, management, supervisory or administrative body of such Person. The terms " Controls" , " Controlled" and " Controlling" shall have corresponding meanings.

" DAP Change of Control" means (a) a Transfer by a Person of all or a portion of the interest or rights that it directly or indirectly holds in, or with respect to, DAP to another Person such that subsequent to such Transfer, GD shall no longer Control DAP or (b) a Transfer by the shareholders of GD or an issuance of new Equity Securities of GD such that subsequent to such Transfer or a new issuance, any Person or its Affiliates, individually or collectively, own, directly or indirectly, more than 50% of the Equity Securities of GD on a fully diluted basis.

" Dispute" means any dispute, controversy or claim arising out of, or relating to, this Agreement or the performance, interpretation, breach, termination or validity hereof other than a dispute with respect to a Deadlocked Matter. " Distributable Profits" means any profits available for distribution in respect of a given Financial Year (a) after making up all accumulated losses of previous years of, and taking into account any statutory reserves required to be made by, the Company, and (b) where the aggregate net income of the WFOEs has been greater than zero for such Financial Year. " Electronic Medium" has the meaning specified in the License Agreement. " Equity Securities" means, with respect to any Person, such Person' s capital stock, membership interests, partnership interests, registered capital, joint venture or other ownership interests (including, in the case of the Company, Shares) or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such capital stock, membership interests, partnership interests, registered capital, joint venture or other ownership interests (whether or not such derivative securities are issued by such Person).

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" Encumbrance" means (a) any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, deed of trust, title retention, security interest or other encumbrance of any kind securing, or conferring any priority of payment in respect of, any obligation of any Person, including any right granted by a transaction that, in legal terms, is not the grant of security but that has an economic or financial effect similar to the creation of a security that is legally enforceable under applicable Law, any proxy, power of attorney, voting trust agreement, interest, option, right of first offer, negotiation or refusal or transfer restriction in favor of any Person and (b) any adverse claim as to title, possession or use. " Examination and Approval Authority" means the Ministry of Commerce of the PRC or its relevant local counterpart that is legally authorized to approve the establishment of the WFOEs pursuant to PRC Laws.

" Financial Quarter" means any of the quarterly accounting periods of the Company, ending March 31, June 30, September 30 and December 31 of each year.

" Financial Year" means the financial year of the Company being January 1 to December 31.

" Five-Year Business Plan" means a five-year business plan for the operation of the Company and the WFOEs, which includes the capital and operating budgets for the Company and the WFOEs for the relevant period as well as KPIs and MPTs for the Group. The initial Five-Year Business Plan, to be mutually agreed by the Parties, shall commence six months after the Soft Launch Date.

" Group" means the Company and its Subsidiaries, and a " member of the Group" means any one of them.

" Group EBITDA" means, for any period with respect to the Group on a consolidated basis and determined in accordance with US GAAP, the sum of: (a) the net income (or loss) of the Group for such period (after eliminating any extraordinary gains and losses determined in accordance with US GAAP), including but not limited to the sale of businesses, and the impairment of goodwill, plus (b) all interest expense (less interest income) of the Group for such period, plus (c) all charges against income of the Group for such period for all income taxes, plus (d) all depreciation expense of the Group for such period, plus (e) all amortization expense of the Group for such period.

" Group Net Asset Value" means the difference between (a) the total value of the assets of the Group (on a consolidated basis) as reflected on the Books as of the date of termination of this Agreement determined in accordance with US GAAP and (b) the total value of the liabilities of Group (on a consolidated basis) as reflected on the Books as of the date of termination of this Agreement determined in accordance with US GAAP.


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" Hong Kong" means Hong Kong Special Administrative Region, PRC. " HK GAAP" means generally accepted accounting principles prescribed in Hong Kong in effect from time to time. " IFRS" means the International Financial Reporting Standards prescribed by the International Accounting Standards Board and its successors.

" Indebtedness" means, at any time with respect to the Group on a consolidated basis and determined in accordance with US GAAP and without duplication: (a) all obligations for borrowed money or advances, (b) all obligations evidenced by bonds, debentures, notes or similar instruments, (c) all obligations upon which interest charges are customarily paid or accrued, (d) all obligations under conditional sale or other title retention agreements relating to property purchased by the Group, (e) all obligations issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith), (f) all capital lease obligations, purchase money obligations and synthetic lease obligations to the extent that such synthetic lease obligations are structured as capital leases, (g) all obligations for reimbursement of any obligor in respect of letters of credit, letters of guaranty, and similar credit transactions, (h) all obligations in respect of Indebtedness of any other Person (including any partnership in which any member of the Group is a general partner) to the extent that any member of the Group is liable therefor as a result of its ownership interest in or other relationship with such Person and that such Indebtedness has been approved by the Board unanimously, except to the extent that the terms of such Indebtedness provide that such member of the Group is not liable therefor and (i) every obligation, contingent or otherwise, guarantying, or having the economic effect of guarantying or otherwise acting as surety for, any obligation of a type described in any of clauses (a) through (j) of another Person, in any manner, whether directly or indirectly.

" Laws" means all applicable laws, regulations, rules and orders of any governmental authority, securities exchange or other self-regulatory body, including any ordinance, statute or other legislative measure and any regulation, rule, treaty, order, decree or judgment. " License Agreement" means the Intellectual Property License Agreement between WWI and the Company, in the agreed form attached hereto as Appendix 4 and executed on the Company Establishment Date pursuant to Section 4.4 , as may be amended from time to time.

" Licensed Business" has the meaning specified in the License Agreement.

" Lock-Up Period" means the period ending on the fifth anniversary of the WFOE Establishment Date of the Shanghai WFOE.

" Long Stop Date" means the date that is twelve months from the date of this Agreement.


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" Macau" means Macau Special Administrative Region of the PRC. " Net Indebtedness" means, at any time with respect to the Group on a consolidated basis and determined in accordance with US GAAP, the Indebtedness after deducting the aggregate amount of cash and cash equivalent investments (being all bonds, notes, certificates of deposit and commercial paper with a maturity of not more than twelve months) held by any member of the Group.

" Other Agreements" means (a) the Confidentiality Agreement, (b) the Services Agreement and (c) any other agreements between the Parties or their respective Affiliates executed on the date hereof.

" Permitted Affiliate" of a Party means a Person with respect to which GD (if such Party is DAP) or WWI (if such Party is WTW), as the case may be, directly or indirectly legally or beneficially owns at least 95% of the Equity Securities. " Person" means any individual, firm, corporation, joint venture, enterprise, partnership, trust, unincorporated association, limited liability company, government (or agency or political subdivision thereof), or other entity of any kind, whether or not having separate legal personality.

" PRC" or " China" means the People' s Republic of China.

" PRC GAAP" means generally accepted accounting principles prescribed in the PRC in effect from time to time.

" PRC Laws" means the Laws of the PRC.

" SAIC" means the State Administration of Industry and Commerce of the PRC or its local branches as appropriate to the context.

" Services Agreement" means the Services Agreement between DAP and the Company, in the agreed form attached hereto as Appendix 2 and executed on the Company Establishment Date pursuant to Section 4.4 , as may be amended from time to time. " Shanghai" means the municipality of Shanghai as defined by the PRC government. " Shanghai WFOE Approvals" means such rights, licenses, permits, approvals, waivers, consents and authorizations that are necessary for the Shanghai WFOE to engage in the business activities contemplated in this Agreement as set forth in Appendix 6 .

" Shareholders" means (i) DAP and WTW and (ii) any other Person who becomes a shareholder of the Company in accordance with the terms of this Agreement and executes a Deed of Adherence substantially in the form attached hereto as Appendix 3 , in each case for so long as such Person remains a shareholder of the Company, and in the case of any Shareholder that is a


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natural person shall be deemed to include the estate of such Shareholder and the executor, conservator, committee or other similar legal representative of such Shareholder or such Shareholder' s estate following the death or incapacitation of such Shareholder.

" Shares" means the ordinary shares, par value HK$1.00, of the Company.

" Soft Launch Date" means the date that is twelve months from the date of this Agreement.

" Subsidiary" means any other Person in which the Company directly or indirectly holds a majority of the ownership interests, or a majority of the voting power, represented by Equity Securities of such Person, including the WFOEs.

" Territory" means the PRC. For the avoidance of doubt, Taiwan, Hong Kong and Macau shall not be considered part of the Territory.

" Transfer" means, whether voluntarily or involuntarily, to give, sell, issue, assign, pledge, encumber, hypothecate, grant a security interest in or otherwise dispose or convey, whether in one transaction or a series of related transactions. The terms " Transferee ," " Transferor ," " Transferred" and other forms of the word " Transfer" shall have the correlative meanings.

" U.S." means the United States of America.

" US GAAP" means generally accepted accounting principles as prescribed by the Financial Accounting Standards Board of the U.S. in effect from time to time. " WFOE Establishment Date" means, with respect to each WFOE, the date the business license for such WFOE is issued by SAIC. " WTW Buyout Price" means the amount equal to the product of (a) the Buyout Price and (b) a fraction, the numerator of which shall be the number of Shares held by DAP and the denominator of which shall be the total number of Shares outstanding.

" WTW Change of Control" means (a) a Transfer by a Person of all or a portion of the interest or rights that it directly or indirectly holds in, or with respect to, WWI to another Person such that subsequent to such Transfer, a Person other than Artal or its Affiliates Controls WWI or (b) receipt by WTW of a written notice from Artal that Artal and its Affiliates intend to relinquish Control of WWI.

1.2 Other Terms . The following terms shall have the meanings defined in the Section indicated:

Term Section

Acceptance Notice 5.4(a)

Agreement Preamble

Annual Plan 12.3(a)


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Term Section

Approved Information 9.2(a)(iii)

Auditor 10.2

Buyout Notice 14.2

CFO 9.1(a)

Chairman 8.1(c)

Company Recitals

DAP Preamble

DAP Change of Control Notice 5.6

DAP Directors 8.1(a)

DAP Interest Value 5.6(a)

DAP Notice 5.6(a)

DAP Shares 4.1(a)

Deadline 12.3(a)

Deadlock Date 8.10(a)

Deadlock Exercise Notice 8.10(e)

Deadlock Notice 8.10(b)

Deadlock Option 8.10(a)

Deadlock WTW Interest Value 8.10(e)

Deadlock WTW Notice 8.10(e)

Deadlocked Matter 8.10(a)

Disclosing Party 1.1

Employer 6.4

Exercise Notice 5.6(a)

Financial and Accounting System 9.3(b)

GD Recitals

HKIAC AC 17.2(b)

Independent Auditor 5.4(a)

Initial Conditions 4.3(b)

Initial Contribution 4.3(a)

Invoking Party 8.10(d)

KPIs 12.1

Milestones 15.1

Milestone Buyout Notice 15.2(a)

Milestone Failure Purchase Right 15.1

MPTs 12.1

Non-Invoking Party 8.10(e)

Non-Terminating Party 14.1

Offer Period 5.4(a)

Offer Price 5.4(a)

Offered Interest 5.4(a)

Party Preamble

Permitted Affiliate Transferee 5.3(a)

Prohibited Payment 9.4(b)

Put-Call Option 5.6(a)

Recipient 1.1

Representatives 7.2(a)

Securities Laws Obligations 10.4(a)

Senior Managers 9.1(a)

Shanghai WFOE Recitals


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Term Section

SOXA 10.4(a)

Submission Notice 17.2(a)

Tag-Along Right 5.5(b)

Terminating Party 13.3(c)

Termination Purchase Right 14.1

Transfer Notice 5.4(a)

Transferring Party 5.3(a)

Trigger Notice 5.6(a)

WFOE Recitals

WFOE Term 13.2(a)

WTW Preamble

WTW Change of Control Notice 5.6

WTW Directors 8.1(a)

WTW Shares 4.1(a)

WWI Recitals

1.3 Interpretation .

(a) All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

(b) Unless a clear contrary intention appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any Person includes such Person' s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

(iii) reference to any gender includes each other gender;

(iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof;

(v) reference to any Law means such Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including all other Laws promulgated thereunder, and reference to any section or other provision of any Law means that provision of such Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;


10 (vi) references to any government ministry, agency, department or authority shall be construed as references to the duly appointed successor ministry, agency, department or authority of such ministry, agency, department or authority where the context permits;

(vii)" hereunder ," " hereof ," " hereto ," and words of similar import shall be deemed references to this Agreement as a whole and not to any particular article, section or other provision hereof;

(viii) headings are included for convenience only and shall not affect the construction of any provision of this Agreement; (ix) numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this Agreement; (x)" including" (and with correlative meaning " include" ) means including without limiting the generality of any description preceding such term;

(xi)" or" is used in the inclusive sense of " and/or" ;

(xii) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; (xiii) any term in any Schedule or Exhibit hereto shall have the meaning ascribed to such term in this Agreement, unless otherwise defined therein; (xiv) reference to dollars or US$ shall be deemed to refer to U.S. Dollars;

(xv) reference to a year or to a quarter means the fiscal year or fiscal quarter of the Company, respectively, and reference to a month means a calendar month;

(xvi) if a period of time is specified and dates from a given day or the day of a given act or event, such period shall be calculated exclusive of that day; if the day on or by which something must be done is not a Business Day, that thing must be done on or by the Business Day immediately following such day;

(xvii) references to writing include any mode of reproducing words in a legible and non-transitory form; and (xviii) references to a " fully diluted basis" mean that the calculation is to be made assuming that all options, warrants and other equity securities convertible into or exercisable or exchangeable for ...