EXHIBIT 10.43
EXECUTION COPY
NON-STATUTORY STOCK OPTION AGREEMENT
AGREEMENT (this "Agreement") entered into as of April 3, 2003,
by and between WH Holdings (Cayman Islands) Ltd., a Cayman Islands company (the
"Company"), and the undersigned employee (the "Employee") of the Company or its
Subsidiaries.
WHEREAS, pursuant to the WH Holdings (Cayman Islands) Ltd.
Stock Option Plan (the "Plan"), the Committee designated under the Plan desires
to grant to the Employee an option to acquire Common Shares, par value $0.001
per share, of the Company; and
WHEREAS, the Employee desires to accept such option subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the Company and the Employee,
intending to be legally bound, hereby agree as follows:
1. Grant of Option. On the terms and conditions
hereinafter set forth, the Company hereby grants to the Employee an option to
purchase all (or any part) of (i) 1,182,369 Shares at an exercise price of $0.44
per share (the "44 Cent Tranche"), (ii) 1,182,369 Shares at an exercise price of
$1.76 per share (the "$1.76 Tranche"), (iii) 1,182,369 Shares at an exercise
price of $5.28 per share (the "$5.28 Tranche"), (iv) 1,182,369 Shares at an
exercise price of $8.80 per share (the "$8.80 Tranche"), and (v) 1,182,369
Shares at an exercise price of $12.32 per share (the "$12.32 Tranche", and
together with the 44 Cent Tranche, the $1.76 Tranche, the $5.28 Tranche and the
$8.80 Tranche, the "Option"). This Option is granted as of the date hereof. The
Option is a Non-Statutory Stock Option. This Option is granted pursuant to the
Plan, and except as otherwise set forth in this Agreement, is governed by each
of the terms and conditions of the Plan. All defined terms used herein, unless
specifically defined in this Agreement, have the meanings assigned to them in
the Plan. The Employee has previously been provided with a copy of that certain
Private Placement Memorandum dated July 15, 2002 regarding the offering of the
Company's 12% Series A Cumulative Convertible Preferred Shares, as supplemented
by Supplements Nos. 1, 2 and 3 thereto (collectively, the "PPM"). To the
Company's knowledge, the disclosure of the Company's share ownership set forth
in the PPM beneath the caption "Share Ownership" therein accurately sets forth,
in all material respects, the share ownership of the Company as of the dates
indicated therein. The numbers of Shares reflected in clauses (i), (ii), (iii),
(iv) and (v) above are based on 112,325,066 Shares, which was the number of
Shares of the Company that were outstanding on fully diluted basis as of March
31, 2003.
2. Time of Exercise of Option.
(a) The 44 Cent Tranche of the Option will become vested
and exercisable in 50% increments on the first and second anniversaries of the
"Effective Date", as such term is defined in that certain Employment Agreement
dated as of the date hereof, by and among the Employee, Herbalife International,
Inc. and Herbalife International of America, Inc. (as amended or modified from
time to time, the "Employment Agreement").
(b) The $1.76 Tranche, the $5.28 Tranche, the $8.80
Tranche and the $12.32 Tranche are collectively referred to herein as the
"Long-Term Tranche". Twenty percent (20%) of the Long-Term Tranche of the Option
will become vested and exercisable (pro rata according to the number of Shares
exercisable at the relevant exercise prices specified above for each of the
individual tranches within the Long-Term Tranche) on the first anniversary of
the Effective Date, and the remainder of the Long-Term Tranche of the Option
will become vested and exercisable (pro rata according to the number of Shares
exercisable at the relevant exercise prices specified above for each of the
individual tranches within the Long-Term Tranche) in quarterly 5% increments
commencing September 30, 2004 and on each subsequent last day of each following
calendar quarter until the Long-Term Tranche of the Option becomes fully vested
and exercisable as of June 30, 2008.
(c) Notwithstanding the preceding or any other provision
in this Agreement or the Plan to the contrary, (i) simultaneously with the
consummation of any Change of Control, 50% of the Shares granted pursuant to the
Option (pro rata according to the number of Shares exercisable at the relevant
exercise prices specified above for each of the individual tranches within the
Option) will become immediately vested and exercisable (including any previously
vested and exercisable Shares), (ii) if, following the consummation of any
Change of Control, all or any portion of the Option described in this Agreement
remains outstanding and the Employee's employment with the Company and its
Subsidiaries (or their respective successors-in-interest) is terminated (other
than by reason of the Employee's resignation without Good Reason or termination
for Cause) at any time following the consummation of such Change of Control,
100% of the Shares granted pursuant to the Option will immediately vest and
become exercisable, and (iii) in the event the Employee's employment with the
Company and its Subsidiaries is terminated by reason of the Employee's death or
Disability or during the 90 day period immediately preceding the consummation of
any Change of Control (other than by reason of Employee's resignation without
Good Reason or termination for Cause), 100% of the Shares granted pursuant to
the Option will immediately vest and become exercisable. For purposes hereof,
the terms "Cause", "Disability" and "Good Reason" shall have the meanings
ascribed thereto in the Employment Agreement.
(d) In the event Employee exercises all or any portion of
the Option prior to the consummation of an Initial Public Offering, the
Committee shall make a determination of the Fair Market Value (as defined in the
Plan) of the Shares acquired pursuant to such exercise of the Option.
3. Term of Options and Repurchase Rights.
(a) The Option will expire 10 years from the date hereof,
but will be subject to earlier termination as provided below.
(b) Upon the Employee's termination of employment with
the Company or any of its Subsidiaries for whatever reason (x) the unexercisable
portion of the Option hereby granted will terminate on the date of such
termination and (y) the exercisable portion of the Option hereby granted will be
treated as set forth in this Section 3(b). Subject to the repurchase rights
described in (c) below and the Shareholders' Agreement, in the event of a
termination of the Employee's employment:
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(i) by reason of death or Disability, the
exercisable portion of the Option hereby granted will be exercisable for 180
days following any such termination;
(ii) without Cause or due to the Employee's
resignation for Good Reason, the exercisable portion of the Option hereby
granted will be exercisable until the first to occur of (A) six months following
the expiration of any lock-up period following the consummation of an Initial
Public Offering and (B) the second anniversary of Employee's termination of
employment with the Company and its Subsidiaries, but in the case of either (A)
or (B) above, no earlier than the expiration of the Standard Exercise Period (as
defined below);
(iii) by reason of Employee's resignation without
Good Reason, the exercisable portion of the Option hereby granted will be
exercisable until the expiration of the Standard Exercise Period; and
(iv) for Cause, the exercisable portion of the
Option hereby granted will terminate on the date of such termination.
The "Standard Exercise Period" shall be the 30 day period
immediately following Employee's termination of employment with the Company and
its Subsidiaries for any reason, but if at the time of such termination the
Company is in a "black-out" period or subject to a lock-up period other than the
lock-up period resulting from an Initial Public Offering, or the Employee is
otherwise prohibited from selling his stock due to material non-public
information or applicable regulation, then in either such case, the Standard
Exercise Period shall be the period that expires 30 days immediately following
the expiration of any such restriction. For purposes of this Section 3
(including, without limitation, Section 3(c)), if the Employee continues to
provide services as a director or consultant to the Company or its Subsidiaries
after the Employee's termination of employment, such employment termination
shall not be deemed to have occurred until the Employee's termination of service
in all capacities.
(c) The Company has the right to repurchase the Shares
acquired upon the exercise of Options for a period of 181 days after the
Employee terminates employment or 181 days after the Shares for which the Option
is exercised are acquired, whichever is later (the "Repurchase Period").
Notwithstanding anything to the contrary in the Shareholders' Agreement, the
purchase price per Share payable under Section 6(a) or (b) of the Shareholder's
Agreement where such Termination (as defined in the Shareholders' Agreement):
(i) was due to the Employee's resignation
without Good Reason or for Cause shall be the amount equal to the lesser of: (A)
the Fair Market Value at the time of such termination; or (B) the relevant
exercise price for such Shares; provided, however, that after the earlier to
occur of the fifth anniversary of the Effective Date or the consummation of a
Change of Control, Section 3(c)(ii) shall apply in lieu of this Section 3(c)(i);
and
(ii) was without Cause, because of death or
Disability, due to the Employee's resignation for Good Reason or as provided in
the proviso of Section 3(c)(i), shall be the amount equal to the Fair Market
Value at the time of such termination.
(d) The Company's repurchase option set forth in Section
3(c) above shall terminate upon the consummation of an Initial Public Offering.
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4. Manner of Exercise of Option. The Option may be
exercised by delivery, via first class mail, fax or electronic mail of a Notice
of Option Exercise and related forms to the Company stating the number of Shares
with respect to which the Option is being exercised and accompanied by payment
of the Total Exercise Cost in cash or by check, bank draft or money order
payable to the order of the Company. To the extent permitted by law and
applicable stock exchange regulations, the Employee may pay the exercise price
of the options using stock of the Company held by the Employee for at least six
months and with a Fair Market Value equal to the portion of the exercise price
which Employee elects to pay through delivery of such stock. Prior to the
consummation of the Company's Initial Public Offering and to the extent
permitted by law and applicable stock exchange regulations, (a) subject to the
following sentence, during the 20 business day period immediately prior to the
expiration of the exercise period set forth in Section 3(b) above or any
extension thereof pursuant to this Section 4, the Employee may elect (on not
less than ten business days' prior written notice to the Company) to have the
number of shares issued upon exercise of the options reduced (such reduction
equal to a number of Shares with a Fair Market Value equal to the required tax
withholding) to cover minimum required tax withholding (i.e., the minimum
federal and state statutory tax withholding amount, including payroll taxes) and
(b) subject to the following sentence, during the 20 business day period
immediately prior to the expiration of the exercise period set forth in Section
3(b) above or any extension thereof pursuant to this Section 4, the Employee may
elect (on not less than ten business days' prior written notice to the Company)
to pay the exercise price of the Shares subject to the Option by reduction (such
reduction equal to a number of Shares with a Fair Market Value equal to the
portion of the exercise price to be satisfied by such cashless exercise) of the
number of Shares otherwise issuable upon such exercise of the Option. Upon
receipt of Employee's written notice to the Company pursuant to clause (a) or
clause (b) of the preceding sentence, the Committee may, in its sole discretion,
elect to extend the period of time during which the exercisable portion of the
Option may be exercised for one or more Extension Periods (as defined below), in
which case Employee's election to exercise all or any portion of such Options
pursuant to clause (a) or clause (b) of the preceding sentence shall be
rescinded and of no further force and effect, subject to subsequent revesting of
Employee's right to make either such election during the 20 business day period
immediately prior to the expiration of any Extension Period (and subject to the
Committee's right, in its sole discretion, to grant one or more additional
Extension Periods). For purposes hereof, "Extension Period" means the 30 day
period (or such longer period as the Committee may determine in its sole
discretion) immediately following the expiration of the relevant exercise period
specified in Section 3(b) above (or, in the case of any prior Extension Period,
immediately following the expiration thereof).
5. Non-Transferability. The right of the Employee to
exercise the Option (as and when exercisable) may not be assigned or transferred
by the Employee other than (i) by will or the laws of descent and distribution
or (ii) with the prior written approval of the Committee (not to be unreasonably
withheld), for estate planning purposes. The Option may be exercised and the
Shares may be purchased during the lifetime of the Employee only by the Employee
(or the Employee's legal representative in the event that the Employee's
employment is terminated due to Disability or any other permitted transferee of
the Option). Any attempted assignment or transfer, except as hereinabove
provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition
contrary to the provisions hereof, or any levy of execution, attachment, trustee
process or similar process, whether legal or equitable, upon the Option, will in
each instance be null and void.
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6. Representation Letter and Investment Legend.
(a) In the event that for any reason the issuance of the
Shares to be issued upon exercise of an exercisable Option will not be
effectively registered under the Securities Act upon any date on which the
Option is exercised, the Employee (or the person exercising the Option pursuant
to Paragraph 5) will give a written representation to the Company in the form of
paragraph 1 of Exhibit A attached hereto, and the Company will place the
Securities Act legend described in paragraph 2 of Exhibit A upon any certificate
for the Shares issued by reason of such exercise.
(b) Except as set forth in any separate written agreement
between the Company and Employee, the Company will be under no obligation to
qualify Shares or to cause a registration statement or a post-effective
amendment to any registration statement to be prepared for the purpose of
covering the issuance of Shares.
7. Adjustments of Shares and Options.
(a) 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, the Committee shall adjust appropriately the number or
kind of Shares or securities subject to the Option and exercise prices related
thereto and make such other revisions to the Option as it deems are equitably
required.
(b) With respect to any merger or consolidation of the
Company into another corporation, the sale or exchange of all or substantially
all of the assets of the Company, a Change of Control or the recapitalization,
reclassification, liquidation or dissolution of the Company or any other similar
fundamental transaction involving the Company or any of its Subsidiaries (any of
the foregoing, a "Qualifying Event"), the Committee shall provide either: (i)
that the Option cannot be exercised after such Qualifying Event, provided that
the Option shall be immediately and fully vested immediately prior to the
consummation of any such Qualifying Event, and provided further that nothing in
this Section 7(b) shall prohibit the Employee from exercising any then
exercisable portion of the Option (including any portion thereof which will
become exercisable by virtue of such Qualifying Event) prior to, or
simultaneously with, the occurrence of such Qualifying Event and that, upon the
occurrence of such Qualifying Event, the Option will terminate and be of no
further force or effect and no longer be outstanding; (ii) that the Option will
remain outstanding after such Qualifying Event, and from and after the
consummation of such Qualifying Event, the Option will be exercisable for the
kind and amount of securities and/or other property receivable as a result of
such Qualifying Event by the holder of a number of Shares for which the Option
could have been exercised immediately prior to such Qualifying Event; or (iii)
the Option (including both the exercisable and unexercisable portions thereof)
will be cancelled in its entirety and repurchased by the Company at a specific
price equal to the excess, if any, of the Fair Market Value of the relevant
underlying Shares less the applicable Exercise Price and that, upon the
occurrence of such Qualifying Event, the Option will terminate and be of no
further force or effect and no longer be outstanding. In the event of any
conflict or inconsistency between the terms and conditions of this Section 7(b)
and the terms and conditions of Section 8 of the Plan, the terms and condition
of this Section 7(b) shall control.
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The Committee's election pursuant to this Section 7(b) will be applied in the
same manner to all other holders of the Company's stock options. The Committee
may only elect the alternatives specified in clauses (i) or (iii) of the first
sentence of this Section 7(b) in connection with any Qualifying Event described
in clauses (w) or (x) of the definition of "Organic Transaction" (as such term
is defined in the Company's Articles of Association as of the date hereof).
8. No Special Employment Rights. Nothing contained in
this Agreement will be construed or deemed by any person under any circumstances
to bind the Company or any of its Subsidiaries to continue the employment of the
Employee for the period within which this Option may vest or for any other
period.
9. Rights as a Shareholder. The Employee will have no
rights as a shareholder with respect to any Shares which may be purchased upon
the exercise of this Option unless and until a certificate or certificates
representing such Shares are duly issued and delivered to the Employee.
10. Withholding Taxes. The Employee hereby agrees, as a
condition to any exercise of the Option, to provide to the Company an amount
sufficient to satisfy its obligation to withhold certain federal, state and
local taxes arising by reason of such exercise (the "Withholding Amount"), if
any, by (a) authorizing the Company to withhold the Withholding Amount from the
Employee's cash compensation, or (b) remitting the Withholding Amount to the
Company in cash; provided that, to the extent that the Withholding Amount is not
provided by one or a combination of such methods, the Company may at its
election withhold from the Shares delivered upon exercise of the Option that
number of Shares having a Fair Market Value as of the date immediately prior to
the issuance of such Shares equal to the Withholding Amount.
11. Execution of Shareholders' Agreement. The Employee
acknowledges that, in connection with his prior or future purchase of Shares of
the Company, unless such Shareholders' Agreement is no longer in effect, he will
execute and deliver the Shareholders' Agreement or a joinder or counterpart
signature page thereto. The Employee further agrees that all Shares acquired by
such Employee upon exercise of the Option will be subject to the terms and
conditions of the Shareholders' Agreement, if then in effect, as modified hereby
or pursuant to any separate written agreement between the Company and Employee.
12. Lock-Up Agreements. The Employee agrees that
notwithstanding anything to the contrary contained in this Agreement, in the
event of an Initial Public Offering or any other public offering of securities
of the Company, except to the extent that: (a) the Employee sells his Shares
obtained upon the exercise of the Option to the underwriters of the Company's
securities in connection with such offering or (b) the underwriters do not
require the following restrictions of all of the Company's directors and
officers, such Employee shall not (i) offer, hedge, pledge, sell or contract to
sell any such Shares, (ii) sell any option or contract to purchase any Shares,
(iii) purchase any option or contract to sell any Shares, (iv) grant any option,
right or warrant for the sale of any Shares, or (v) lend or otherwise dispose of
or transfer any Shares during any black-out period requested by underwriters
conducting any such public offering of securities on behalf of the Company;
provided, however, that such Employee shall, in any event, be entitled to sell
his Shares commencing on the expiration of the black-out period described above
and provided, further, that such time period shall not be longer for the
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Employee than for Whitney & Co., L.L.C., Golden Gate Private Equity, Inc. or any
investment fund managed by either of them.
*********
[Signatures on Following Page]
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OPTION AGREEMENT
Counterpart Signature Page
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed, by its officer thereunto duly authorized, and the Employee has
executed this Agreement, all as of the day and year first above written.
WH HOLDINGS EMPLOYEE
(CAYMAN ISLANDS) LTD.
By: /s/ XXXXX XXXXXX /s/ XXXXXXX X. XXXXXXX
---------------- ----------------------
Title: Director XXXXXXX X. XXXXXXX
Xxxxx Xxxxxx Address:
---------------------------
(print name)
c/o Herbalife International, Inc.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
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EXHIBIT A
TO: WH HOLDINGS (CAYMAN ISLANDS) LTD.
The undersigned hereby irrevocably exercises the right to
purchase ______________ of the Common Shares, par value $0.001 per share
("Common Shares") of WH Holdings (Cayman Islands) Ltd., a Cayman Islands company
(the "Company"), evidenced by the attached Option, and herewith makes payment of
the relevant exercise price with respect to such shares in full, all in
accordance with the conditions and provisions of said Option.
1. The undersigned hereby represents and warrants to and
agrees with the Company as follows:
(a) The undersigned understands and acknowledges that an
investment in the Common Shares issuable upon exercise of this Option involves a
high degree of risk and that there are limitations on the liquidity of the
Common Shares issuable upon exercise of this Option. The undersigned is able to
bear the economic risk of an investment in the Common Shares issuable upon
exercise of this Option. The undersigned has adequate means of providing for the
undersigned's current needs and contingencies; is able to afford to hold the
Common Shares issuable upon exercise of this Option for an indefinite period;
and has such knowledge and experience in financial and business matters such
that the undersigned is capable of evaluating the merits and risks of the
investment in the Common Shares issuable upon exercise of this Option;
(b) The undersigned is acquiring the Common Shares
issuable upon exercise of this Option for its own account for investment and not
as a nominee and not with a present view to the distribution thereof in
violation of the Securities Act of 1933, as amended (the "1933 Act"). The
undersigned understands that the undersigned must bear the economic risk of this
investment indefinitely unless such shares are registered pursuant to the 1933
Act and any applicable state securities laws, or an exemption from such
registration is available. The undersigned has no plan or intention to sell the
Common Shares issuable upon exercise of this Option at any predetermined time,
and has made no predetermined arrangements to sell such shares;
(c) The undersigned will not make any sale, transfer or
other disposition of the Common Shares issuable upon exercise of this Option in
violation of (1) the 1933 Act, the Securities Exchange Act of 1934, as amended,
any other applicable Federal or state securities laws or the rules and
regulations of the Securities and Exchange Commission or of any state securities
commissions or similar state authorities promulgated under any of the foregoing,
or (2) any applicable securities laws of jurisdictions outside the United States
and the rules and regulations thereunder.
2. The undersigned agrees not to offer, sell, transfer
or otherwise dispose of any of the Common Shares obtained on exercise of the
Option, except in accordance with the provisions of the Option, and consents
that the following legend may be affixed to the stock certificates for the
Common Shares hereby subscribed for, if such legend is applicable:
"THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS' AGREEMENT, DATED AS OF JULY 31, 2002 AMONG WH HOLDINGS
(CAYMAN ISLANDS) LTD. AND CERTAIN HOLDERS OF ITS OUTSTANDING SHARE
CAPITAL, AS SUCH AGREEMENT MAY BE AMENDED. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF WH HOLDINGS (CAYMAN ISLANDS)
LTD.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY PROVINCIAL
OR STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT
UNDER THE 1933 ACT AND APPLICABLE PROVINCIAL OR STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT OR APPLICABLE PROVINCIAL OR STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR
TRANSFER."
3. The undersigned requests that stock certificates for
such shares be issued, and a new option agreement representing any unexercised
portion hereof be issued in the name of the registered holder and delivered to
the undersigned at the address set forth below:
Dated:
______________________________
Signature of Registered Holder
_________________________________
Name of Registered Holder (Print)
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