AGREEMENT CONCERNING SHARE ALLOCATION PLAN
FOR
SPECIFIC DIRECTORS
OF
HERBALIFE OF JAPAN K.K.
THIS AGREEMENT made and entered into, as of the 30th day of December, 1996,
by and among those persons, named on Exhibit A attached hereto and made an
integral part hereof, and currently serving as directors of Herbalife of Japan
K.K. (hereinafter the "Participating HJKK Directors"),
WITNESSETH:
WHEREAS, Herbalife of Japan K.K. (hereinafter "HJKK") was established, as
of November 25, 1992, and has since continued to exist, as a wholly-owned
Japanese subsidiary of Herbalife International, Inc. (hereinafter "HII"); and
WHEREAS, HII currently holds two hundred (200) shares of the stock of HJKK;
and
WHEREAS, HII has decided that a certain number of the HJKK shares currently
held by HII be allocated to each person who currently is serving as a director
of HJKK and that ten (10) shares of HJKK be allocated to Mr. Xxxx Xxxxxx, the
founder of the Herbalife business and a director of HJKK, and that four (4)
shares of HJKK be allocated to the Participating HJKK Directors, in such manner
as specified in Exhibit A attached hereto and made an integral part hereof
(hereinafter "Exhibit A"); and
WHEREAS, inasmuch as Japanese law does not permit any person to hold any
fractional share (less than one (1) share) of any Japanese corporation, such as
HJKK, it has been agreed among the Participating HJKK Directors that an
appropriate entity be established for purposes of holding the four (4) shares
allocated by HII for and on behalf of the Participating HJKK Directors,
NOW THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements contained herein, it is agreed as follows:
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ARTICLE 1. (Establishment of Entity)
1.1 Promptly upon the execution of this Agreement, an entity shall be
established, as an unincorporated association, with such initial and additional
cash contributions by each Participating HJKK Director as specified in Article
2, below, for the purposes of acquiring from HII and holding, for and on behalf
of all Participating HJKK Directors, four (4) shares of HJKK. For purposes of
this Agreement, the Entity shall be deemed to be established as of the date
first above written.
1.2 The entity established pursuant to Paragraph 1.1, above (hereinafter
the "Entity") shall be called "Herbalife of Japan K.K. Directors Share
Allocation Plan," in English, and "HERBALIFE OF JAPAN KABUSHIKI KAISHA YAKUIN
MOCHIKABUKAI," in Japanese, and shall be located at the registered head office
of HJKK.
1.3 Mr. Xxxx Xxxxx, who is a Participating HJKK Director and is currently
serving as a Representative Director of HJKK, shall be the representative of the
Entity and, as such, shall be authorized and empowered to conduct and manage all
affairs pertaining to the operation of the Entity, in accordance with the
provisions of this Agreement. In the event that Xx. Xxxxx is not able to act as
the representative of the Entity for any reasons whatsoever, such other
Participating HJKK Director as may be designated, by agreement among Messrs.
Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxxx and Xxxxxxxxxxx Pair, shall act as such in Xx.
Xxxxx'x place.
ARTICLE 2. (Cash Contributions)
2.1 Immediately upon establishment of the Entity, pursuant to Paragraph
1.1, above, Mr. Xxxx Xxxxx, as the representative of the Entity, shall take all
steps necessary to open a bank account in the name of the Entity, and shall
notify all other Participating HJKK Directors of the details of such bank
account, in writing.
2.2 Within seven (7) days after receipt of the details of the Entity's
bank account, pursuant to Paragraph 2.1, above, each Participating HJKK Director
shall pay his or her initial cash
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contribution to the Entity, in the amount specified opposite to his or her name
in Exhibit A, by wire transfer to the Entity's bank account.
2.3 Within seven (7) days from each anniversary of the establishment of
the Entity, as specified in Exhibit B attached hereto and made an integral part
hereof (hereinafter "Exhibit B"), each Participating HJKK Director shall pay his
or her additional cash contributions to the Entity, in the respective amounts as
specified opposite to his or her name in Exhibit B, by wire transfer to the
Entity's bank account.
2.4 Any amount specified either in Exhibit A or in Exhibit B shall be a
net amount. All expenses and bank charges that may be incurred in connection
with remittances of the cash contributions shall be borne by the respective
Participating HJKK Directors.
ARTICLE 3. (Share Acquisition)
3.1 Promptly after the initial cash contributions have been made to the
Entity by all Participating HJKK Directors, Mr. Xxxx Xxxxx, as the
representative of the Entity, shall take all steps to purchase and acquire, in
the name of the Entity and for the benefit of all Participating HJKK Directors,
perfect and complete title to and ownership of four (4) shares of stock of HJKK
from HII, at a price equal to the aggregate of all initial and additional cash
contributions made or to be made by the Participating HJKK Directors; provided,
however, that the price for the four (4) shares shall be paid to HII by the
Entity, in the manner specified immediately below:.
3.1.1 At the time of the acquisition of the four (4) shares, the
sum equal to the initial cash contributions; and
3.1.2 Within fourteen (14) days of each anniversary of the
establishment of the Entity, as specified in Exhibit B, the
sum equal to all additional cash contributions made by each
Participating HJKK Director, at such anniversary, pursuant
to Paragraph 2.3, above.
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3.2 The four (4) shares of stock of HJKK (hereinafter the "Subject HJKK
Shares") acquired in the name of the Entity, pursuant to Paragraph 3.1, above,
shall be held in the name of the Entity, but for the benefit of all
Participating HJKK Directors, in accordance with the provisions of this
Agreement. Each Participating HJKK Director shall have a joint and several,
but undivided, interest in the Subject HJKK Shares with other Participating HJKK
Directors, according to the percentage that his or her cash contribution bears
to the aggregate of all cash contributions made by the Participating HJKK
Directors, as is specified in Exhibit A (hereinafter the "Interest Percentage").
ARTICLE 4. (Entitlement on Subject HJKK Shares)
4.1 Mr. Xxxx Xxxxx, as the representative of the Entity, shall act as
proxy for the Entity, in order that the Entity may exercise voting and other
rights, as a shareholder of HJKK, at or in connection with any general meetings
of shareholders of HJKK.
4.2 In the event that any shares to be newly issued by HJKK for any
purposes are allotted to the Entity, as a shareholder of HJKK, on the account of
the Subject HJKK Shares, the Entity shall subscribe to such new shares so
allotted. In the event that the Entity is required to make cash payment to HJKK
for subscription to and acquisition of such new shares, each Participating HJKK
Director shall make an additional cash contribution to the Entity, in the amount
equal to his or her Interest Percentage of the total amount of cash payment to
be made to HJKK by the Entity for such new shares so subscribed. Any such new
shares allotted to and acquired by the Entity, with or without cash payment
therefor, shall be deemed to constitute a part of the Subject HJKK Shares, for
purposes of this Agreement, and shall be held in the name of the Entity, but for
the benefit of all Participating HJKK Directors, in accordance with the
provisions of this Agreement.
4.3 In the event that the Entity receives any cash distribution on the
Subject HJKK Shares, the Entity shall immediately distribute the same to all
Participating HJKK
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Directors, according to their respective Interest Percentages.
ARTICLE 5. (Dissolution of Entity)
5.1 In the event that the number of the Subject HJKK Shares is increased,
through the acquisition of additional HJKK shares by the Entity or by reason of
a splitting, by HJKK, of the issued and outstanding HJKK shares into a greater
number or otherwise, so that the Subject HJKK Shares may be distributed to all
Participating HJKK Directors, without necessitating the distribution of any
fractional share (less than one (1) share), according to their respective
Interest Percentages, then and in such event the Subject HJKK Shares shall be
distributed to the Participating HJKK Directors according to their respective
Interest Percentages and, upon such distribution, the Entity shall be dissolved.
5.2 In the event that the Entity is dissolved, prior to the completion of
all additional cash contributions by the Participating HJKK Directors, pursuant
to Paragraph 2.3, above, then and in such event, notwithstanding the provisions
of Paragraphs 2.3 and 3.1, above, each Participating HJKK Director shall be
obligated to pay his or her remaining additional cash contributions to HII,
directly, not later than the respective dates specified in Subparagraph 3.1.2,
above, for the respective payments to HII by the Entity.
ARTICLE 6. (Governing Law)
This Agreement shall be governed by and interpreted in accordance with the
laws of Japan.
ARTICLE 7. (Jurisdiction)
Any disputes or controversies shall be submitted to the exclusive
jurisdiction of the Tokyo District Court.
ARTICLE 8. (Language)
This Agreement is executed in the English language only. No translation of
this Agreement into any other language, including the Japanese language, shall
have any effect whatsoev-
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er.
IN WITNESS WHEREOF, this Agreement has been executed by all Participating
HJKK Directors, in a single original, which shall be kept at the registered head
office of HJKK, where the Entity is to be located.
Xxxxxxx X. Xxxxx
00000 Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
U. S. A.
---------------------------
Xxxxxxx Xxxxxxx
000 Xxxxx Xxxxxxx
Xxxxxxx Xxxxxxxxx, XX 00000
U. S. A.
/s/ Xxxxxxx Xxxxxxx
---------------------------
Xxxxxxxxxxx Pair
00000 Xxxxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
U. S. A.
---------------------------
Xxxx Xxxxx
00000 Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
U. S. A.
---------------------------
Xxxx Xxxxx
4-1-12-2082, Minami-Azabu
Minato-ku Tokyo 000
Xxxxx
/s/ Xxxx Xxxxx 12/30/96
---------------------------
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Xxxxxxxx Xxxxxxx
00000 Xxxxxxxx Xxx, Xxxx 00
Xxxxxx xxx Xxx, XX 00000
U. S. A.
/s/ Xxxxxxxx Xxxxxxx 12/30/96
-----------------------------
Xxxxxx Xxxxxx
0-00-0, Xxxxx
Xxxx-xx, Xxxxx 000
Xxxxx
/s/ Xxxxxx Xxxxxx 12/30/96
-----------------------------
Hirofumi Naka
1-3-20-202, Kugenuma-Kaigan
Fujisawa-shi, Xxxxxxxx 000
Xxxxx
/s/ Hirofumi Naka 12/30/96
-----------------------------
Xxxxxxxx Xxxxx
0000-0, Xxxxxxx
Xxxxxxx-xxx, Xxxxx 000
Xxxxx
/s/ Xxxxxxxx Xxxxx 12/30/96
-----------------------------
EXHIBIT A
Interest Percentage
HJKK Directors Initial Contribution (Initial Allocation)
-------------- -------------------- --------------------
Xxxxxxx X. Xxxxx Y12,765,000 28.75% (1.15 shrs)
Xxxxxxx Xxxxxxx Y12,765,000 28.75% (1.15 shrs)
Xxxxxxxxxxx Pair Y12,765,000 28.75% (1.15 shrs)
Xxxxx Xxxxx Y4,440,000 10.00% (0.40 shr)
Xxxx Xxxxx Y666,000 1.50% (0.06 shr)
Xxxxxxxx Xxxxxxx Y333,000 0.75% (0.03 shr)
Xxxxxx Xxxxxx Y222,000 0.50% (0.02 shr)
Hirofumi Naka Y222,000 0.50% (0.02 shr)
Xxxxxxxx Xxxxx Y222,000 0.50% (0.02 shr)
----------- ------------------
Total Y44,400,000 100.00% (4.00 shrs)
ADDITIONAL CONTRIBUTIONS
1st. 2nd 3rd. 4th. 5th.
HJKK Directors Anniv. Anniv. Anniv. Anniv. Anniv. Total
-------------- ------ ------ ------ ------ ------ ------
Xxxxxxx Xxxxx Y6,072,000 Y6,072,000 Y6,072,000 Y6,072,000 Y6,072,000 Y30,360,000
Xxxxxxx Xxxxxxx 6,072,000 6,072,000 6,072,000 6,072,000 6,072,000 30,360,000
Xxxxxxxxxxx Pair 6,072,000 6,072,000 6,072,000 6,072,000 6,072,000 30,360,000
Xxxx Xxxxx 2,112,000 2,112,000 2,112,000 2,112,000 2,112,000 10,560,000
Xxxx Xxxxx 316,800 316,800 316,800 316,800 316,800 1,584,000
Xxxxxxxx Xxxxxxx 158,400 158,400 158,400 158,400 158,400 792,000
Xxxxxx Xxxxxx 105,600 105,600 105,600 105,600 105,600 528,000
Hirofumi Naka 105,600 105,600 105,600 105,600 105,600 528,000
Macahiro Igata 105,600 105,600 105,600 105,600 105,600 528,000
---------- ---------- --------- ---------- --------- ----------
Total Y21,120,000 Y21,120,000 Y21,120,000 Y21,12O,000 Y21,120,000 Y105,600,000
------------
------------
Each sum payable for each anniversary, specified above, shall bear interest
at the rate of two point one hundred and twenty-five percent (2.125%) per
annum from the date of the establishment of the Entity until full payment of
the said sum.
