Exhibit 10.26

HERBALIFE LTD.
2005 STOCK INCENTIVE PLAN

INDEPENDENT DIRECTORS STOCK APPRECIATION RIGHT AGREEMENT

This Independent Directors Stock Appreciation Right Agreement (this “Agreement”)
dated as of January __, 20__ (the “Grant Date”) between Herbalife Ltd., an
entity organized under the laws of the Cayman Islands (the “Company”), and
[DIRECTOR] (“Participant”).

WHEREAS, the Company, by action of the Board established the Herbalife Ltd.
Amended and Restated Independent Directors Deferred Compensation and Stock
Appreciation Right Plan (the “Independent Directors Plan”);

WHEREAS, the Board has determined that Participant is an independent director of
the Company and the Company desires to encourage Participant to own Common
Shares for the purposes stated in Section 1 of the Plan and the Independent
Directors Plan;

WHEREAS, Participant and the Company have entered into this Agreement to govern
the terms of the Stock Appreciation Right Award (as defined below) granted to
Participant by the Company.  

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the Company and Participant, intending to be
legally bound, hereby agree as follows:

1.Grant.

(a)The Company hereby grants to the Participant an Award of ____________ Stock
Appreciation Rights (the “Award”) in accordance with Section 8 of the Plan and
subject to the terms and conditions set forth herein and in the Plan (each as
amended from time to time).  Each Stock Appreciation Right represents the right
to receive, upon exercise of the Stock Appreciation Right pursuant to this
Agreement, from the Company, a payment, paid in Common Shares, par value $.002
per share, of the Company (the “Common Shares”), equal to (i) the excess of the
Fair Market Value, on the date of exercise, of one Common Share (as adjusted
from time to time pursuant to Section 12 of the Plan) over the Base Price (as
defined below) of the Stock Appreciation Right, divided by (ii) the Fair Market
Value, on the date of exercise, of one Common Share, subject to terms and
conditions set forth herein, in the Independent Directors Plan and in the Plan
(each as amended from time to time).

(b)The “Base Price” for the Stock Appreciation Right shall be $_________ per
share (subject to adjustment as set forth in Section 12 of the Plan).

(c)Except as otherwise defined herein, capitalized terms used herein shall have
the meanings set forth in the Plan or the Independent Directors Plan, as
applicable.  

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2.Vesting.  

(a)Participant’s Stock Appreciation Rights shall not be vested as of the Grant
Date and shall be forfeitable unless and until otherwise vested pursuant to the
terms of this Agreement.  Subject to Participant’s continued service as a member
of the Board, the Award shall become vested with respect to 25% of the Stock
Appreciation Rights awarded hereunder on each of April 15, 200__, July 15,
200__, October 15, 200__ and January 15, 200__ (each such date a “Vesting
Date”).  Stock Appreciation Rights awarded hereunder that have vested and are no
longer subject to forfeiture are referred to herein as “Vested SARs.”  Stock
Appreciation Rights awarded hereunder that are not vested and remain subject to
forfeiture are referred to herein as “Unvested SARs.”  

(b)Notwithstanding anything herein or in the Plan to the contrary, upon the
cessation of Participant’s service as a member of the Board by reason of
Participant’s of death or disability (as such term if defined in Section 22(e)
of the Code), all Unvested SARs shall vest as of the date of such termination of
employment.

(c)Notwithstanding anything herein or in the Plan to the contrary, upon the
occurrence of a Change of Control, the Award shall become immediately and fully
vested and exercisable as of the date of the Change of Control.

3.Time for Exercise.

(a)Except as set forth in Paragraph 2(c) or Section 13 of the Plan, the Award
(including both Vested SARs and Unvested SARs) shall not be exercisable on or
before the dates specified in this Paragraph 3.

(b)Subject to Participant’s continued service as a member of the Board, all then
Vested SARs shall become exercisable on the second anniversary of the final
Vesting Date.

(c)Notwithstanding anything herein to the contrary, in the event Participant
ceases to be a member of the Board for any reason prior to the date specified in
Paragraph 3(b), all then Vested SARs shall become exercisable on the date of
such cessation of service.

4.Expiration.  The Award shall expire on the seventh (7th) anniversary of the
Grant Date; provided, however, that the Award may earlier terminate as provided
in Section 13 of the Plan.  

5.Method of Exercise.  The Award may be exercised by delivery to the Company
(attention: Secretary) of a notice of exercise in the form specified by the
Company specifying the number of shares with respect to which the Award is being
exercised.

6.Fractional Shares.  No fractional shares may be purchased upon any exercise.  

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7.Adjustments of Shares and Awards.  Subject to Section 12(a) of the Plan, 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 Common 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 Award and Base Prices related thereto and
make such other revisions to the Award as it deems are equitably required.  Any
adjustments made pursuant to this Paragraph 7 shall be implemented in accordance
with Section 409A of the Internal Revenue Code of 1986, as amended.

8.Compliance With Legal Requirements.  The Award shall not be exercisable and no
Common Shares shall be issued or transferred pursuant to this Agreement or the
Plan unless and until all 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 Award, or
(iv) obtaining the consent or approval of any governmental regulatory body.

9.Shareholder Rights.  Participant shall not be deemed a shareholder of the
Company with respect to any of the Common Shares subject to the Award, except to
the extent that such shares shall have been purchased and transferred to
Participant.  

10.Taxes.  Participant is liable and responsible for all taxes owed in
connection with the Award, regardless of any action the Company takes with
respect to any tax withholding obligations that arise in connection with the
Award.  The Company does not make any representation or undertaking regarding
the treatment of any tax withholding in connection with the grant, vesting or
settlement of the Award or the subsequent sale of Common Shares issuable
pursuant to the Award.  The Company does not commit and is under no obligation
to structure the Award to reduce or eliminate Participant’s tax liability.  

11.Assignment or Transfer Prohibited.  The Award 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 Participant only by Participant or
Participant’s guardian or legal representative; provided, however, Participant
may assign or transfer the Award to the extent permitted under the Independent
Directors Plan, provided that the Award shall be subject to all the terms and
condition of the Independent Directors Plan, the Plan, this Agreement and any
other terms required by the Committee as a condition to such transfer.  Neither
the Award nor any right hereunder shall be subject to attachment, execution or
other similar process.  In the event of any attempt by Participant to alienate,
assign, pledge, hypothecate or otherwise dispose of the Award 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 Award by notice to Participant, and the
Award shall thereupon become null and void.

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12.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.

13.Application of the Plan.  The terms of this Agreement are governed by the
terms of the Independent Directors Plan and the Plan, as both exist on the Grant
Date and as amended from time to time.  In the event of any conflict between the
provisions of this Agreement and the provisions of the Independent Directors
Plan and/or the Plan, the terms of the Independent Directors Plan or the Plan
(as applicable) shall control, except as expressly stated otherwise in this
Agreement.  The term “Section” generally refers to provisions within the
Independent Directors Plan or the Plan; provided, however, the term “Paragraph”
shall refer to a provision of this Agreement.  

14.General Provisions.

(a)No Waiver.  No waiver of any provision of this Agreement will be valid unless
in writing and signed by the person against whom such waiver is sought to be
enforced, nor will failure to enforce any right hereunder constitute a
continuing waiver of the same or a waiver of any other right hereunder.

(b)Undertaking.  Participant hereby agrees to take whatever additional action
and execute whatever additional documents the Company may deem necessary or
advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on either Participant or the Award pursuant to the express
provisions of this Agreement.

(c)Entire Contract.  This Agreement, the Independent Directors Plan and the Plan
constitute the entire contract between the parties hereto with regard to the
subject matter hereof.  This Agreement is made pursuant to the provisions of the
Independent Directors Plan and the Plan and will in all respects be construed in
conformity with the express terms and provisions of the Independent Directors
Plan and the Plan.

(d)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
Participant and Participant’s 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.

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(e)Securities Law Compliance.  Participant understands that the Company is under
no obligation to register for resale the Common Shares issued upon exercise of
the Award.  The Company may impose such restrictions, conditions or limitations
as it determines appropriate as to the timing and manner of any resales by
Participant or other subsequent transfers by Participant of any Common Shares
issued as a result of or under this Award, 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 Award and/or the Common Shares
underlying the Award and (iii) restrictions as to the use of a specified
brokerage firm or other agent for such resales or other transfers.  Any sale of
the Common Shares must also comply with other applicable laws and regulations
governing the sale of such shares.  

(f)Electronic Delivery.  The Company may, in its sole discretion, decide to
deliver any documents related to any awards granted under the Plan by electronic
means or to request Participant’s consent to participate in the Independent
Directors Plan and the Plan by electronic means. Participant hereby consents to
receive such documents by electronic delivery and, if requested, to agree to
participate in the Independent Directors Plan and the Plan through an on-line or
electronic system established and maintained by the Company or another third
party designated by the Company, and such consent shall remain in effect
throughout Participant’s term of service with the Company and thereafter until
withdrawn in writing by Participant.  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

 

HERBALIFE LTD.

 

 

 

 

 

 

By:

 

[DIRECTOR]

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

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