AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This Amended and
Restated Employment Agreement (the “AGREEMENT”), dated
effective as of April 17, 2006, is made and entered into by Paul
Noack (“EXECUTIVE”) and HERBALIFE INTERNATIONAL OF
AMERICA, INC., a Nevada corporation (“COMPANY”). The
parties to this Agreement agree as follows:
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1.
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Employment Term.
The Company shall employ
Executive and Executive shall continue in the employ of the Company
through December 31, 2006.
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2.
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Duties. Executive shall serve in the Los
Angeles, California area as Chief Strategic Officer, with all of
the authority, duties and responsibilities commensurate with such
positions. Executive shall report the Company’s Chief
Executive Officer.
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3.
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Compensation and Related
Matters.
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(a)
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Salary. Effective April 1, 2006,
Executive shall receive a salary at the per annum rate of four
hundred fifty thousand dollars ($450,000), payable in accordance
with the Company’s payroll practices for senior
executives.
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Subject to board approval, Executive
will be granted: (i) 130,000 SARS immediately and
(ii) 20,000 Restricted Stock Units immediately.
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(b)
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Employment Benefits.
Executive and
Executive’s qualified dependents shall be entitled to
participate in or receive benefits under each benefit plan or
arrangement made available by the Company to its senior executives
(including, without limitation, those relating to group medical,
dental, vision, long-term disability, D&O, accidental death and
dismemberment, and life insurance), subject to and on a basis
consistent with the terms, conditions and overall administration of
such plans and subject to the Company’s right to modify, and
amend or terminate any such plan or arrangement with or without
prior notice. Executive is eligible to participate in the
Company’s 401K program, and Executive is eligible to
participate in the Company’s Deferred
Compensation.
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(c)
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Bonus. Executive will be eligible for a
target bonus of 50% of his end-of-year salary calculated in
accordance with the senior executive bonus plan. Bonuses if any,
will be paid following the completion of the relevant calendar year
at such time bonuses are paid to the Company’s other senior
executives.
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(d)
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Vacation. Executive shall be entitled to three
(3) weeks of vacation during each year, accrued at the rate of
4.62 hours per pay period.
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4.
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Termination Payment.
If Executive is
terminated by the Company without Cause or resigns for Good Reason
before December 31, 2006, Executive will receive then current
salary for the remainder of the contract. As a precondition to the
Company’s obligation to pay out this contract, Executive
agrees to execute and deliver to the Company a fully
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Page 1 of 12
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effective
general release in the form attached to this Agreement as
Attachment A. The Company will commence paying Executive’s
salary in accordance with the Company’s payroll practices for
senior executive’s through the remainder of the Employment
Term through December 31, 2006, subject to Executive’s
duty to mitigate, and such payments shall cease if Executive
obtains employment or if Executive fails to document to the Company
on a monthly basis that Executive is making reasonable efforts to
seek employment. For purposes of this Agreement, the Company shall
have “Cause” to terminate the Executive’s
services in the event of any of the following acts or
circumstances: (i) Executive’s conviction of a felony or
entering a plea of guilty or nolo contendere to any crime
constituting a felony (other than a traffic violation or by reason
of vicarious liability); (ii) Executive’s substantial
and repeated failure to attempt to perform Executive’s lawful
duties as contemplated in Section 2 of this Agreement, except
during periods of physical or mental incapacity;
(iii) Executive’s gross negligence or willful misconduct
with respect to any material aspect of the business of the Company
or any of its affiliates, which negligence or misconduct has a
material and demonstrable adverse effect n the Company; or
(iv) any material breach of this Agreement or any material
breach of any other written agreement between Executive and the
Company’s affiliates governing Executive’s equity
compensation arrangements (i.e., any agreement with respect to
Executive’s stock and/or stock options of any of the
Company’s affiliates); provided, however, that Executive
shall not be deemed to have been terminated for Cause in the case
of clause (iv) above, unless any such breach is not fully
corrected prior to the expiration of the fifteen (15) calendar
day period following delivery to Executive of the Company’s
written notice of its intention to terminate his employment for
Cause describing the basis therefore in reasonable
detail.
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For
purposes of this agreement, “Good Reason” will be
deemed to have occurred if Executive terminates his employment
because of (i) a material diminution of Executive’s
duties as Chief Strategic Officer of the Company, (ii) the
breach by the Company in any respect of any of its obligations
under this Agreement, and, in any such case (but only if correction
or cure is possible), the failure by the Company to correct or cure
the circumstance or breach on which such resignation is based
within 30 days after receiving notice from Executive
describing such circumstance or breach in reasonable detail or
(iii) the relocation of Executive’s primary office
location to a location more than 75 miles outside the Los Angeles,
California area.
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5.
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Confidential and Proprietary
Information.
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(a)
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The
parties agree and acknowledge that during the course of
Executive’s employment, Executive will be given and will have
access to and be exposed to trade secrets and confidential
information in written, oral, electronic and other forms regarding
the Company and its affiliates (which includes but is not limited
to all of its business units, divisions and affiliates) and their
business, equipment, products and employees, including, without
limitation: the identities of the Company’s and its
affiliates’ distributors and customers and potential
distributors and customers (hereinafter referred to collectively as
“DISTRIBUTORS”), including, without limitation, the
identity of Distributors that Executive cultivates
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or maintains
while provided services at the Company or any of its affiliates
using the Company’s or any of its affiliates’ products,
name and infrastructure, and the identities of contact persons with
respect to those Distributors and contact persons with respect to
product types, pricing, sales calls, timing, sales terms, rental
terms, lease terms, service plans, and other marketing terms and
techniques; the Company’s and its affiliates’ business
methods, practices, strategies, forecasts, pricing, ad marketing
techniques; the identities of the Company’s and its
affiliates’ licensors, vendors and other suppliers and the
identities of the Company’s and its affiliates’ contact
persons at such licensors, vendors and other suppliers; the
identities of the Company’s and its affiliates’ key
sales representatives and personnel and other employees;
advertising and sales materials; research, computer software and
related materials; and other facts and financial and other business
information concerning or relating to the Company or any of its
affiliates and their business, operations, financial condition,
results of operations and prospects. Executive expressly agrees to
use such trade secrets and confidential information only for
purposes of carrying out his duties for the Company and its
affiliates as he deems appropriate in his good faith judgment, and
not for any other purpose, including, without limitation, not any
way or for any purpose detrimental to the Company or any of its
affiliates. Executive shall not at any time, either during the
course of his employment hereunder or after the termination of such
employment, use for himself or others, directly or indirectly, any
such trade secrets or confidential information, and, except as
required by law, Executive shall not disclose such trade secrets or
confidential information, directly or indirectly, to any other
person or entity. Trade secret and confidential information
hereunder shall not include any information which (i) is
already in or subsequently enters the public domain, other than as
a result of any direct or indirect disclosure by Executive,
(ii) becomes available to Executive on a non-confidential
basis from a source other than the Company or any of its
affiliates, provided that Executive has no knowledge that such
source is subject to a confidentiality agreement or other
obligation of secrecy or confidentiality (whether pursuant to a
contract, legal or fiduciary obligation or duty or otherwise) to
the Company or any of its affiliates or any other person or entity
or (iii) is approved for release by the board of directors of
the Company or any of its affiliates or which the board of
directors of the Company or any of its affiliates makes available
to third parties without an obligation of
confidentiality.
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(b)
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All
physical property and all notes, memoranda, files, records,
writings, documents and other materials of any and every nature,
written or electronic, which Executive shall prepare or receive in
the course of his employment with the Company and which relate to
or are useful in any manner to the business now or hereafter
conducted by the Company or any of its affiliates are and shall
remain the sole and exclusive property of the Company and its
affiliates, as applicable. Executive shall not remove from the
Company’s premises any such physical property, the original
or any reproduction of any such materials nor the information
contained therein except for the purposes of carrying out his
duties to the Company or any of its affiliates and all such
property (except for any items of
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Page 3 of 12
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personal property not owned by the
Company or any of its affiliates), materials and information in his
possession or under his custody or control upon the termination of
his employment (other than such materials received by executive
solely in his capacity as a shareholder) or at any other time upon
request by the Company shall be immediately turned over to the
Company and its affiliates, as applicable.
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(c)
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All
inventions, improvements, trade secrets, reports, manuals computer
programs, tapes and other ideas and materials developed or invented
by Executive during the period of his employment, either solely or
in collaboration with others, which relate to the actual or
anticipated business or research of the Company or any of its
affiliates which result from or are suggested by any work Executive
may do for the Company or any of its affiliates or which result
from the use of the Company’s or any of its affiliates’
premises or property (collectively, the “DEVELOPMENTS”)
shall be the sole and exclusive property the Company and its
affiliates, as applicable. Executive assigns and transfers to the
Company his entire right and interest in any such development, and
Executive shall execute and deliver any and all documents and shall
do and perform any and all other acts and things necessary or
desirable in connection therewith that the Company or any of its
affiliates may reasonably request, it being agreed that the
preparation of any such documents shall be at the Company’s
expense. Nothing in this paragraph applies to an invention which
qualifies fully under the provisions of California Labor Code
Section 2870.
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(d)
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Following the termination of
Executive’s employment, Executive will reasonably cooperate
with the Company (at the Company’s expense, if Executive
reasonably incurs any out-of-pocket costs with respect thereto) in
any defense of any legal, administrative or other action in which
the Company or any of its affiliates or any of their distributors
or other business relations are a party or are otherwise involved,
so long as any such matter was related to Executive’s duties
and activities conducted on behalf of the Company or its
Subsidiaries.
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(e)
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The
provisions of this Section 5 and Section 6 shall survive
any termination of this Agreement and termination of
Executive’s employment with the Company.
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6.
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Non-Solicitation.
Executive acknowledges
that in the course of his employment for the Company he will become
familiar with the Company’s and its affiliates’ trade
secrets and other confidential information concerning the Company
and its affiliates. Accordingly, Executive agrees that, during
Executive’s employment and for a period of twenty-four
(24) months immediately thereafter (the “NONSOLICITATION
PERIOD”), he will not directly or indirectly through another
entity (i) induce or attempt to induce any employee or
Distributor of the Company or any of its affiliates to leave the
employment of, or cease to maintain its distributor relationship
with, the Company or such affiliate, or in any way interfere with
the r
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