Exhibit 10.34
WH HOLDINGS (CAYMAN ISLANDS) LTD.
INDEPENDENT DIRECTORS STOCK OPTION PLAN
1. Purpose of Plan.
The WH Holdings (Cayman Islands) Ltd. Independent Directors Stock Option
Plan (the "Plan") is designed:
(a) to promote the long term financial interests and growth of WH Holdings
(Cayman Islands) Ltd. (the "Company") and its affiliates by attracting and
retaining independent directors with the training, experience and ability to
enable them to make a substantial contribution to the success of the business of
the Company and its affiliates;
(b) to motivate independent directors by means of growth-related incentives
to achieve long range goals; and
(c) to further the alignment of interests of participants with those of the
equityholders of the Company through opportunities for increased ownership in
the Company.
2. Definitions.
As used in the Plan, the following words will have the following meanings:
(a) "Affiliate" means, with respect to the Company, any corporation
directly or indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Committee in which the Company
or an Affiliate has an interest.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" means an Organic Transaction as defined in the
Amended and Restated Memorandum and Articles of Association of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means one or more committees each comprised of not less
than three members of the Board appointed by the Board to administer the Plan or
a specified portion thereof; provided, however, that if, at any time, there
will be only one director serving on the Board, the Committee may be composed of
the sole director. Unless otherwise determined by the Board, if the Common
Shares become registered under Section 12 of the Exchange Act and if the
Committee is authorized to grant Options subject to Section 16 of the Exchange
Act, each member of the Committee will be a "non-employee director" within the
meaning of applicable Rule 16b-3 under the Exchange Act.
(f) "Common Shares" means the common shares, par value $0.001 per share, of
the Company.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Exercise Price" means the price at which a Participant may purchase a
Common Share, as provided in the Option Agreement.
(i) "Fair Market Value" means the fair market value of a Share as of a
particular date. If at any such time such Shares are not listed or admitted for
trading on any national securities exchange or quoted on NASDAQ or a similar
service, the Fair Market Value for such Shares means the fair market value of
such Shares at such time as determined in good faith by the Committee. However,
subsequent to an Initial Public Offering, the Fair Market Value of a Common
Share will be the average of high bid and low asked prices of Common Shares as
reported on the exchange on which it is listed as of such date, or if no such
quotation is made on such date, the immediately preceding day on which there
were quotations as reported in The Wall Street Journal.
(j) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5.
(k) "Incentive Stock Option" means an Option which satisfies all of the
applicable requirements of Code Section 422.
(l) "Independent Director" means an individual who neither is: (i) an
employee of the Company or any of its Affiliates; or (ii) designated as a
Director by the Affiliates of the Company or its distributors.
(m) "Initial Public Offering" means the underwritten public offering by the
Company of its Common Shares pursuant to a registration statement (other than a
registration statement relating solely to an employee benefit plan or
transaction covered by Rule 145 of the Securities Act) that has been filed under
the Securities Act and declared effective by the Securities and Exchange
2
Commission, or any other Federal agency at the time administering the Securities
Act.
(n) "Non-Statutory Stock Option" means an Option which does not satisfy all
of the applicable requirements of Code Section 422 or which by its terms is not
intended to be treated as an Incentive Stock Option.
(o) "Option" means an option to purchase Common Shares.
(p) "Option Agreement" means an agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(q) "Participant" means an Independent Director of the Company or one of
its Affiliates, to whom one or more Grants have been made and such Grants have
not all been forfeited or terminated under the Plan.
(r) "Preferred Shares" means Preferred Shares as defined in the Amended and
Restated Memorandum and Articles of Association of WH Holdings (Cayman Islands)
Ltd. and known as the "12% Series A Cumulative Convertible Preferred Shares".
(s) "Securities Act" means the Securities Act of 1933, as amended.
(t) "Share" means a share of Common Shares.
(u) "Shareholders' Agreement" means the shareholders' agreement, dated as
of July 31, 2002, by and among WH Holdings (Cayman Islands) Ltd., Whitney V,
L.P., Whitney Strategic Partners V, L.P., and WH Investments Ltd., and CCG
Investments (BVI), L.P., CCG Associates-QP, LLC, CCG Associates-AI, LLC, CCG GP
Fund LLC, CCG Investment Fund-AI, LP, and CCG AV, LLC, and certain other persons
who may, from time to time, become party to the agreement.
(v) "Subsidiary" means any entity in an unbroken chain of entities
beginning with the Company if each of the entities, or group of commonly
controlled entities, other than the last entity in the unbroken chain then owns
50% or more of the total combined voting power of the other entities in such
chain.
(w) "Total Exercise Cost" means an amount equal to the Exercise Price
multiplied by the number of Shares being purchased pursuant to the Option.
3. Administration of Plan.
3
(a) The Plan will be administered by the Committee. The Committee may adopt
its own rules of procedure. Action of a majority of the members of the Committee
taken at a meeting, or action taken without a meeting by unanimous written
consent, will constitute action by the Committee. The Committee will have the
power and authority to administer, construe and interpret the Plan, to make
rules for carrying it out and to make changes to such rules.
(b) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company, and the
officers of the Company will be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith will be final and binding
upon all Participants, the Company and all other interested persons. No member
of the Committee will be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Grants, and
all members of the Committee will be fully protected by the Company with respect
to any such action, determination or interpretation.
4. Eligibility.
Subject to Paragraph 5(a), the Committee may from time to time make Grants
under the Plan to such Independent Directors of the Company or any of its
Affiliates, and in such form and having such terms, conditions and limitations
as the Committee may determine. Prior to participation in the Plan, the
Committee may require any Participant to execute a Release and Waiver to Rights
to payments and benefits under certain plans of Herbalife International, Inc.
Grants may be made singly, in combination or in tandem. The terms, conditions
and limitations of each Grant under the Plan will be set forth in an Option
Agreement, in a form or forms approved by the Committee; provided, however, that
such Option Agreement will contain provisions dealing with the treatment of
Grants in the event of the termination, death or disability of a Participant,
and may also include provisions concerning the treatment of Grants in the event
of a Change of Control of the Company.
5. Grants.
(a) The Plan provides for grants only to Independent Directors of
Non-Statutory Stock Options.
(b) At the time of the Grant, the Committee will determine, and will
include in the Option Agreement or other Plan rules, the Option exercise price
and
4
such other conditions and restrictions on the grant or exercise of the Option as
the Committee deems appropriate.
(c) In addition to any other restrictions contained in the Plan, an Option
granted under the Plan may not be exercised more than 10 years after the date it
is granted.
(d) Payment of the Option price will be made in cash or, if subsequent to
an Initial Public Offering, through the delivery of irrevocable instructions to
a broker to deliver promptly to the Company an amount equal to the Option price,
in accordance with the terms of the Plan, the Option Agreement and of any
applicable guidelines of the Committee in effect at the time, and subject to
increase for any applicable withholding requirements.
6. Limitations and Conditions.
(a) The number of Shares available for Grants under the Plan will be
1,000,000, subject to adjustment in accordance with Paragraphs 7 or 8 hereof.
If an Option expires, is canceled, forfeited or otherwise terminated without
being exercised or settled, the Shares allocable to the unexercised portion of
such Option shall remain available for grant under the Plan.
(b) No Grants will be made under the Plan more than 10 years after the date
the Plan is adopted by the Board or is approved by the shareholders of the
Company, whichever is earlier, but the terms of Grants made on or before the
expiration of the Plan may extend beyond such expiration.
(c) Nothing contained herein will affect the right of the Company to
terminate any Participant's employment or services at any time or for any
reason.
(d) Other than as specifically provided with regard to the death of a
Participant or as hereinafter provided, no benefit under the Plan will be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any attempt to do so will be void. No such
benefit will, prior to receipt thereof by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements, or
torts of the Participant. At the time a Grant is made or amended or the terms or
conditions of a Grant are changed, the Committee may provide for limitations or
conditions on such Grant. Notwithstanding the preceding, the Participant may
transfer all or part of the Option by gift to either to any member of the
Participant's Immediate Family, to a trust or partnership or limited liability
company solely for the benefit of the Participant or such Participant's
Immediate Family Members, jointly to the Participant and one or more of the
foregoing, or to any combination thereof, if applicable law permits and the
Option Agreement so provides. "Immediate Family" means the Participant's spouse,
children and grandchildren.
(e) Participants will not be, and will not have any of the rights or
privileges of, equityholders of the Company in respect of any Shares purchasable
in connection with any Grant unless and until certificates representing any such
5
Shares have been issued by the Company to such Participants. Prior to an Initial
Public Offering, each Participant will be required to enter into the
Shareholders' Agreement with the Company, or execute a joinder to the
Shareholders' Agreement in a form provided by the Company, upon the exercise of
any Option under the Plan.
(f) No election as to benefits or exercise of Options, or other rights may
be made during a Participant's lifetime by anyone other than the Participant
except by a legal representative appointed for or by the Participant, unless
such all or a part of such Option has been transferred either to any member of
the Participant's Immediate Family, to a trust or partnership or limited
liability company solely for the benefit of the Participant or such
Participant's Immediate Family members, jointly to the Participant and one or
more of the foregoing, or to any combination thereof, in which case it shall
only be exercisable by such transferee.
(g) Absent express provisions to the contrary, any Grant under the Plan
will not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Company or its Subsidiaries and
will not affect any benefits under any other benefit plan of any kind now or
subsequently in effect under which the availability or amount of benefits is
related to level of compensation. The Plan is not an "employee benefit plan"
under Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended.
(h) Unless the Committee determines otherwise, no benefit or promise under
the Plan will be secured by any specific assets of the Company or any of its
Subsidiaries, nor will any assets of the Company or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of the Company's
obligations under the Plan.
7. Adjustments.
In the event of any change in the outstanding Shares by reason of an
acquisition, spin-off or reclassification, recapitalization or merger,
combination or exchange of Shares or other corporate exchange, Change of Control
or similar event, or as required under any Option Agreement, the Committee may
adjust appropriately the number or kind of Shares or securities subject to the
Plan and available for or covered by Grants and Option prices related to
outstanding Grants and make such other revisions to outstanding Grants as it
deems are equitably required.
8. Merger, Consolidation, Exchange, Acquisition, Liquidation or
Dissolution.
In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Option, the Committee may
provide, with respect to the merger or consolidation of the Company into another
corporation, the exchange of all or substantially all of the assets of the
Company for the securities of
6
another corporation, a Change of Control or the recapitalization,
reclassification, liquidation or dissolution of the Company, either (a) that
such Option cannot be exercised after such event, in which case the Committee
may also provide (but will be under no obligation to provide), either by the
terms of such Option or by a resolution adopted prior to the occurrence of such
event, that for some period of time prior to such event, such Option will be
exercisable as to all Shares subject thereto which are exercisable, or, by
virtue of the event, become exercisable, notwithstanding anything to the
contrary herein (but subject to the provisions of Paragraph 6(b)) or that the
Option will be repurchased by the Company at a specific price and that, upon the
occurrence of such event, such Option will terminate and be of no further force
or effect, or (b) that even if the Option will remain exercisable after such
event, from and after such event, any such Option will be exercisable only for
the kind and amount of securities and/or other property, or the cash equivalent
thereof, receivable as a result of such event by the holder of a number of
Shares for which such Option could have been exercised immediately prior to such
event, or that the Option will be repurchased by the Company at a specific
price.
In addition, in the event of a Change of Control, the Committee may, in its
absolute discretion and on such terms and conditions as it deems appropriate,
provide, either by the terms of such Option or by a resolution adopted prior to
the occurrence of the Change of Control, that such Option will be exercisable as
to all or any portion of the Shares subject thereto, notwithstanding anything to
the contrary herein (but subject to the provisions of Paragraph 6(b)).
9. Securities Law Requirements.
Shares shall not be issued under the Plan unless the issuance and delivery
of the Shares comply with (or are exempt from) all applicable requirements of
law, including (without limitation) the Securities Act, the rules and
regulations promulgated thereunder, state securities laws and regulations and
the regulations of any stock exchange or other securities markets on which the
Company's securities may then be traded.
10. Amendment and Termination.
The Board will have the authority to make such amendments to any terms and
conditions applicable to outstanding Grants as are consistent with the Plan
provided that, except for adjustments under Paragraph 7 or 8, no such action
will modify such Grant in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board may amend, suspend or terminate the Plan except that no such
action, other than an action under Paragraph 7 or 8, may be taken which would,
without
7
shareholder approval (but only if such approval is necessary for exemption under
Section 16(b) of the Exchange Act or to meet the applicable requirements of Code
Section 422), increase the aggregate number of Shares available for Grants under
the Plan, change the eligible class of individuals, decrease the price of
outstanding Options, change the requirements relating to the Committee or extend
the term of the Plan.
11. Withholding Taxes.
The Company will have the right to deduct from any cash payment made under
the Plan any federal, state or local income or other taxes required by law to be
withheld with respect to such payment. The Participant must pay to the Company
such amount as may be requested by the Company for the purpose of satisfying any
liability for such withholding taxes before the obligation of the Company to
deliver certificates for the Shares upon the exercise of an Option arises. Any
Option Agreement may provide that the Participant may elect, in accordance with
any conditions set forth in such Option Agreement, to pay a portion or all of
such withholding taxes in Shares.
12. Governing Law.
The Plan will be governed by and construed and enforced in accordance with
the laws of the state of New York, without regard to the conflicts of laws
principles thereof.
13. Effective Date and Termination Date.
The Plan will be effective on July 31, 2002 and will terminate on July 31,
2012, subject to earlier termination pursuant to Paragraph 10.
8