EXHIBIT 10.36
WH HOLDINGS (CAYMAN ISLANDS) LTD.
EXECUTIVE OFFICER STOCK OPTION PLAN
1. Purpose of Plan.
The WH Holdings (Cayman Islands) Ltd. 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 Senior Employees 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 Senior Employees 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) "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
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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 Commission, or any other Federal agency at the
time administering the Securities Act.
(m) "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.
(n) "Option" means an option to purchase Common Shares.
(o) "Option Agreement" means an agreement between the Company and
a Participant that sets forth the terms, conditions and limitations
applicable to a Grant.
(p) "Participant" means a Senior Employee 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.
(q) "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".
(r) "Securities Act" means the Securities Act of 1933, as
amended.
(s) "Senior Employee" means any executive officer, in the
regular full-time employment of the Company or one of its Affiliates
who, in the opinion of the Committee, is, or is expected to be,
primarily responsible for the management, growth or protection of some
part or all of the business of the Company.
(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.
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3. Administration of Plan.
(a) The Plan will be administered by the Committee (in the
absence of a Committee, the Board shall administer the Plan). 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 Senior Employees of the Company or
any of its Affiliates, and in such form and having such terms,
conditions and limitations as the Committee may determine in its sole
discretion. 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. Notwithstanding the foregoing,
Incentive Stock Options may only be granted to Senior Employees.
5. Grants.
(a) The Committee may grant Incentive Stock Options only to
Senior Employees of the Company or any "subsidiary corporation" within
the meaning
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of Code Section 424(f). The Plan provides for grants only to Senior
Employees for both Incentive Stock Options and 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 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. An Incentive Stock Option may not
have an exercise price of less than 100% of the Fair Market Value of a
Share on the date the Option is granted.
(d) If the aggregate Fair Market Value (determined on the date
the Option is granted) of a Share subject to an Incentive Stock Option
which is exercisable for the first time during any calendar year
exceeds $100,000, then the portion of the Incentive Stock Option in
excess of the $100,000 limitation will be treated as a Non-Statutory
Stock Option. If an Incentive Stock Option is granted to a Participant
who, at the time the Option is granted, is deemed to own more than 10%
of the total combined voting power of all classes of shares of the
Company or any "subsidiary corporation" of the Company (as more fully
described in Code Section 422(b)(6)), then (i) the exercise price of
the Option may not be less than 110% of the Fair Market Value of the
Common Shares on the date the Option is granted, and (ii) such Option
may not be exercisable after the expiration of five years from the
date the Option is granted.
(e) 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 total number of Shares available for Grants under the
Plan will be 18,717,546 reduced by any Shares granted under any future
option plan adopted by the Company (excluding the WH Holdings (Cayman
Islands) Ltd. Independent Directors Stock Option Plan), 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 this Plan.
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(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. 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.
(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.
(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 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.
(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
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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. Any such adjustments for Incentive Stock Options
must meet the requirements of Code Section 424(a).
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 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
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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 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.
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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.
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