2004 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this Agreement) dated as of , 2005
(the Grant Date) between HERBALIFE LTD. (the Company), and [OPTIONEE] (the
WHEREAS, pursuant to the Herbalife Ltd. 2004 Stock Incentive Plan (the Plan), the
Committee designated under the Plan (or an officer of the Company to who the authority to grant
Awards has been delegated), desires to grant to the Optionee an option to acquire Common Shares,
par value $0.002 per share, of the Company; and
WHEREAS, the Optionee desires to accept such option subject to the terms and conditions of
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
contained herein, the Company and the Optionee, intending to be legally bound, hereby agree as
(a) The Company hereby grants to the Optionee an option (the Option) to purchase,
subject to the terms and conditions set forth herein and in the Plan, all or any part of
Common Shares, par value $.002 per share, of the Company (subject to adjustment as set
forth in Section 10 of the Plan) at a price of
$ per share (subject to adjustment as
set forth in Section 10 of the Plan).
(b) The Option [is] [is not] intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended (the Code).
(c) Except as otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Plan.
2. Time for Exercise.
(a) The Option will become vested and exercisable in quarterly 5% increments beginning on the
last day of the calendar quarter during which the Grant Date occurs and on the last day of each
subsequent calendar quarter until the Option becomes fully exercisable on the last day of the
calendar quarter immediately preceding the fifth anniversary of the Grant Date.
(b) In the event of a Change in Control, the Committee as constituted immediately before such
Change in Control may, in its sole discretion, accelerate the vesting and exercisability of this
Option upon such Change in Control or take such other actions as provided in Section 11 of the
3. Expiration. The Option shall expire on the tenth (10th) anniversary of the date hereof;
provided, however, that the Option may earlier terminate as provided in this Paragraph 3 and/or in
Section 11 of the Plan.
(a) Upon termination of the Optionees employment with the Company, that portion of the Option
that is not vested and exercisable will terminate on the date of such termination of employment.
(b) Upon termination of the Optionees employment with the Company, that portion of the Option
that is vested and exercisable will terminate in accordance with the following:
(i) if the Optionees employment with the Company is terminated for Cause (as defined
below), the vested and exercisable portion of the Option will terminate on the date of such
(ii) if the Optionees employment with the Company is terminated by reason of the
Optionees death or disability (as such term is defined in Section 22(e) of the Code), the
vested and exercisable portion of the Option will terminate on the date that is ninety (90)
days immediately following the date of such termination;
(iii) if the Optionees employment with the Company is terminated for any reason other
than death, disability or Cause, the vested and exercisable portion of the Option will
terminate on the date that is thirty (30) days immediately following the date of such
(c) For purposes of this Agreement, the term Cause shall have the meaning ascribed
to such term in any written employment agreement between the Optionee and the Company or one or
more of its Subsidiaries, as the same may be amended or modified from time to time, or if the
Optionee is not party to any such written employment agreement, then the term Cause shall
mean the occurrence of any of the following acts or circumstances: (i) commission of a felony, a
crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime
involving the Company or any of its Subsidiaries; (ii) willful misconduct, willful or gross
neglect, fraud, misappropriation or embezzlement; (iii) performance of the Optionees duties in a
manner that is detrimental to the Company or any of its Subsidiaries, including, but not limited to
that which results in, the severe deterioration of the financial performance of the Company or any
of its Subsidiaries; (iv) failure to adhere to the directions of the Chief Executive Officer of the
Company or the Board, to adhere to the Companys or any Subsidiarys policies or practices or to
devote substantially all of the Optionees business time and efforts to the business of the Company
and its Subsidiaries; (v) breach of any provision of any agreement, including an employment
agreement, between the Optionee and the Company or any of its Subsidiaries, which covers
confidentiality or proprietary information or contains nonsolicitation or non-competition
provisions; or (vi) breach in any material respect of the terms and provisions of the Optionees
employment agreement, if any, or any agreement between the Optionee and the Company or any of its
4. Method of Exercise. The Option may be exercised by delivery to the Company (attention:
Secretary) of a written notice of exercise specifying the number of shares being purchased,
accompanied by payment therefor as follows:
(a) in cash or by check, bank draft or money order payable to the order of the Company;
(b) through the delivery (either actually or by attestation) of unencumbered Common Shares of
the Company held by the Optionee for at least six months having a total Fair Market Value on the
date of delivery equal to the purchase price,
(c) through a combination of cash and shares as provided in clauses (a) and (b) of this
Paragraph 4; or
(d) on such other terms and conditions as may be acceptable to the Committee in its sole
5. Fractional Shares. No fractional shares may be purchased upon any exercise.
6. Compliance With Legal Requirements.
(a) The Option shall not be exercisable and no Common Shares shall be issued or transferred
pursuant to this Agreement or the Plan unless and until all tax withholding, if any, and legal
requirements applicable to such issuance or transfer have, in the opinion of counsel to the
Company, been satisfied. Such legal requirements may include, but are not limited to, (i)
registering or qualifying such Common Shares under any state or federal law or under the rules of
any stock exchange or trading system, (ii) satisfying any applicable law or rule relating to the
transfer of unregistered securities or demonstrating the availability of an exemption from
applicable laws, (iii) placing a restricted legend on the Common Shares issued pursuant to the
exercise of the Option, or (iv) obtaining the consent or approval of any governmental regulatory
(b) The Optionee understands that the Company is under no obligation to register for resale
the Common Shares issued upon exercise of the Option. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing and manner of any exercise
of the Option and/or any resales by the Optionee or other subsequent transfers by the Optionee of
any Common Shares issued as a result of the exercise of the Option, including without limitation
(i) restrictions under an insider trading policy, (ii) restrictions that may be necessary in the
absence of an effective registration statement under the Securities Act of 1933, as amended,
covering the Option and/or the Common Shares underlying the Option and (iii) restrictions as to the
use of a specified brokerage firm or other agent for exercising the Option and/or for such resales
or other transfers. The sale of the shares underlying the Option must also comply with other
applicable laws and regulations governing the sale of such shares.
||Shareholder Rights. The Optionee shall not be deemed a shareholder of the Company
with respect to any of the Common Shares subject to the Option, except to the extent that such
shares shall have been purchased and transferred to the Optionee.
8. Assignment or Transfer Prohibited. The Option may not be assigned or transferred
otherwise than by will or by the laws of descent and distribution, and may be exercised during the
life of the Optionee only by the Optionee or the Optionees guardian or legal representative.
Neither the Option
nor any right hereunder shall be subject to attachment, execution or other similar process. In the
event of any attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose
of the Option or any right hereunder, except as provided for herein, or in the event of the levy or
any attachment, execution or similar process upon the rights or interests hereby conferred, the
Company may terminate the Option by notice to the Optionee, and the Option shall thereupon become
null and void.
9. Committee Authority. Any question concerning the interpretation of this Agreement or
the Plan, any adjustments required to be made under this Agreement or the Plan, and any controversy
that may arise under this Agreement or the Plan shall be determined by the Committee in its sole
and absolute discretion. All decisions by the Committee shall be final and binding.
10. Application of the Plan. The terms of this Agreement are governed by the terms of the
Plan, as it exists on the date of hereof and as the Plan is amended from time to time. In the
event of any conflict between the provisions of this Agreement and the provisions of the Plan, the
terms of the Plan shall control, except as expressly stated otherwise herein. As used herein, the
term Section generally refers to provisions within the Plan, and the term Paragraph refers to
provisions of this Agreement.
11. No Right to Continued Employment. Nothing in the Plan, in this Agreement or any other
instrument executed pursuant thereto or hereto shall confer upon the Optionee any right to
continued employment with the Company or any of its subsidiaries or affiliates.
12. Further Assurances. Each party hereto shall cooperate with each other party, shall do
and perform or cause to be done and performed all further acts and things, and shall execute and
deliver all other agreements, certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the intent and accomplish the purposes of this
Agreement and the Plan.
13. Entire Agreement. This Agreement and the Plan together set forth the entire agreement
and understanding between the parties as to the subject matter hereof and supersede all prior oral
and written and all contemporaneous or subsequent oral discussions, agreements and understandings
of any kind or nature.
14. Successors and Assigns. The provisions of this Agreement will inure to the benefit of,
and be binding on, the Company and its successors and assigns and the Optionee and Optionees legal
representatives, heirs, legatees, distributees, assigns and transferees by operation of law,
whether or not any such person will have become a party to this Agreement and agreed in writing to
join herein and be bound by the terms and conditions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above