Exhibit 10.9


 


SEPARATION AGREEMENT AND GENERAL RELEASE


 


This Separation Agreement and General
Release is entered into by and between Robert A. Sandler (“Sandler”), and
Herbalife International of America, Inc./Herbalife International, Inc., and/or
any affiliate, subsidiary, parent or any other associated entity of Herbalife
International of America, Inc./Herbalife International, Inc. (collectively,
“Herbalife” or “the Company”). Sandler and Herbalife are referred to herein
collectively as “the Parties.”


 


R E C I T A L S


 


A.            Whereas
Sandler is employed as Executive Vice President, Corporate Secretary and
General Counsel of Herbalife.


 


B.            Whereas
Sandler and Herbalife have agreed that Sandler will resign his employment with
Herbalife.


 


C.            Whereas
Sandler and Herbalife wish their relationship to end amicably.


 


D.            Whereas
Sandler and Herbalife are parties to an Employment Agreement dated August 20,
2000 (“Employment Agreement”).


 


E.             Whereas
Sandler is an “Eligible Employee” pursuant to the Herbalife Senior Executive
Change in Control Plan (“Plan”).


 


F.             Whereas
the parties have agreed that any of Herbalife’s obligations to pay or provide
to Sandler compensation, benefits or any other consideration under the
Employment Agreement and/or the Plan will be satisfied by a lump sum payment to
Sandler pursuant to this Agreement.


 


NOW, THEREFORE, Sandler and Herbalife
incorporate the foregoing recitals as part of this Agreement, and further agree
and promise as follows:


 


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A.            Consideration.


 


1.             Sandler’s
employment with Herbalife will terminate effective May 19, 2002 (“the
Termination Date”). Sandler’s compensation, benefits and perquisites of
employment will cease as of the Termination Date.


 


2.             Sandler
shall be paid severance in the amount of Two Million, Six-Hundred and
Twenty-Two Thousand and Five Hundred Dollars ($2,622,500.00) (“Severance”) in a
lump sum, less applicable withholdings, within ten days after execution of this
Agreement without prior revocation of the Agreement by Sandler pursuant to
paragraph 26 of this Agreement.


 


3.             (a)
Notwithstanding anything to the contrary contained in the Plan, Sandler’s Stock
Options will vest and be exercisable in accordance with Sandler’s August 20,
2000 Employment Agreement (attached hereto as Exhibit “A”). Sandler and the
Company represent and agree that the number and strike price of vested and
unvested stock options Sandler holds are currently set forth in the attached
schedule, which is made a part of this Agreement as Exhibit “B.”


 


(b) Herbalife will provide safe
transport of artwork, and other personal property owned by Sandler currently
located at Herbalife, to be delivered to Sandler’s personal residence or an
alternative local location designated by Sandler, at no expense to Sandler.


 


4.             The
release set forth at paragraph 24(a) herein is not a waiver of Sandler’s rights
to payments of monies to which he is entitled by virtue of the Company’s Senior
Executive Reimbursement Plan (“SERP”), Deferred Compensation Plan, 401K Plan or
paid vacation policy. These monies will be paid to Sandler in accordance with
the Company’s SERP, Deferred Compensation and 401K plan documents, Company
policy, and the law.


 


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5.             Sandler
has been relieved of his obligations and duties as General Counsel, Corporate
Secretary and Executive Vice President and Sandler agrees that he has no
authority to act as an officer or employee of Herbalife.


 


6.             Sandler
agrees that after his departure, he will fully cooperate with Herbalife in an
orderly transfer of his work to others, and that he will be available to
respond to inquiries about his work. Sandler further agrees, on behalf of
himself and his legal successors and assigns, to execute such additional
documents and instruments and to take such additional actions as Herbalife may
request from time to time after the date hereof, in order to complete,
effectuate, perfect and better evidence the agreements of the parties set forth
in this Agreement. Sandler will also reasonably cooperate with Herbalife in the
defense of any legal, administrative or other action brought by any third party
against Herbalife after his departure, in which event, Herbalife will pay the
reasonable cost of legal representation for Sandler in connection therewith.


 


7.             Sandler’s
entitlement to the consideration described herein is expressly contingent upon
his execution and delivery of this Agreement to Herbalife. The consideration
set forth in this Agreement fully satisfies and extinguishes any and all rights
Sandler may have pursuant to any other Herbalife plan, agreement or policy,
including, but not limited to all agreements, plans, policies and other
arrangements provided by Herbalife or any of its subsidiaries or trusts
sponsored, established or maintained by any of such entities, including,
without limitation, the Employment Agreement dated August 20, 2000, the Senior
Executive Change of Control Plan, the 1994 Performance-Based Annual Incentive
Compensation Plan, the 1992 Executive Incentive Compensation Plan, the 1991
Stock Option Plan, the Management Deferred Compensation Plan and related
trust(s), the Senior Executive Compensation Plan and related trust(s), the
Supplemental Executive Retirement Plan and related trust(s), the Executive Medical
Plan and all other health insurance and benefit plans, the Executive Long-Term
Disability Plan, the Executive Life Insurance Plan, Herbalife’s expense


 


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reimbursement
plans and policies, and Herbalife’s vacation plan. Although Sandler expressly
waives all rights or claims with respect to compensation, remuneration,
payments or consideration due to him now or in the future under his Employment
Agreement, Sandler’s obligations under the Employment Agreement shall remain in
full force and effect, including, but not limited to Sandler’s obligations
pursuant to paragraph 6, subparts (a) - (c) of the Employment Agreement, which
provisions are incorporated herein by reference.


 


B.            Confidentiality.


 


8.             Sandler
agrees not to disclose or misappropriate any and all trade secrets or
confidential or proprietary information of Herbalife (collectively “Protected
Information”). Protected Information means all information pertaining in any
manner to the business of Herbalife and its employees, distributors, suppliers,
vendors, customers, manufacturers, sales representatives, consultants, lawyers,
accountants, and business associates. This definition includes, but is not
limited to: (i) information about costs, profits, markets, sales, financial and
marketing data and bids; (ii) plans for business, marketing, future development
and new product concepts; (iii) employee personnel files and information about
employee compensation and benefits; (iv) identity of and other business
information relating to Herbalife’s customers and/or distributors, past,
present or future, together with each such customer’s or distributor’s habits
or needs; (v) identity of and other business information relating to
Herbalife’s past, present or future vendors, manufacturers and suppliers; and
(vi) design drawings and computer programs.


 


9.             Sandler
agrees to return to Herbalife by the Termination Date, any and all Company
documents, books, manuals, drawings, lists, writings, computer records and other
tangible Company property in his possession or control, including, but not
limited to the Herbalife pass key in his possession (including all copies
thereof) which he procured during or in connection with his employment with
Herbalife.


 


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10.           For
and in consideration for Herbalife’s commitments, Sandler agrees and promises
not to disclose the substance, contents, amounts or terms of this Agreement,
except to Sandler’s legal, tax or financial advisors, or pursuant to legal
court process or federal or state tax authorities or other agencies. In the
event Sandler reveals any terms of this Agreement as permitted in this
Paragraph 10, said person or persons to whom such information is disclosed
shall be instructed and must agree that this is a private Agreement and that
the terms of this Agreement may not be revealed to any other person for any
reason whatsoever. Sandler acknowledges that his promises of confidentiality,
as set forth herein, are material and essential consideration for Herbalife’s
promises and agreements herein.


 


11.           Sandler
agrees not to disparage Herbalife, its officers, directors, distributors, or
its products.


 


12.           Herbalife
agrees not to disparage Sandler.


 


13.           Nothing
in this Agreement shall prevent the Parties from: (a) disclosing information or
documents in response to legal process, including but not limited to production
in response to any subpoena or in response to a discovery request issued in any
administrative or legal proceeding in which one of the Parties is a party; (b)
responding truthfully to any inquiry initiated by a government agency or
entity; (c) disclosing information in proceedings to enforce the terms of this
Agreement; (d) disclosing information necessary to prosecute or defend actions
in which one of the Parties is a named party; or (e) testifying truthfully or
providing truthful information under oath in any legal, administrative or other
proceeding.


 


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14.           Sandler’s
obligations set forth in paragraphs 8 through 13 of this Agreement are in
addition to, and in no way change, reduce or otherwise limit Sandler’s
obligations under the Employment Agreement, including, but not limited to,
Sandler’s obligations under paragraph 5, subparts (a) through (d) of the
Employment Agreement, which provisions are incorporated herein by reference.


 


C.            Further
Agreements and Representations.


 


15.           Sandler
represents and warrants that he has not filed or initiated any claim, action,
charge, complaint or suit of any kind against Herbalife or any Employer
Released Party (as that term is defined in Paragraph 24 herein), and Sandler
further agrees that he will not file or initiate any claim, action, charge,
complaint or suit of any kind against any Employer Released Party. Sandler
agrees that he will not assist, encourage, or cooperate with any other person
or entity in instituting, prosecuting or obtaining any subpoena, document
request, inquiry or investigation regarding Herbalife, or in making or asserting
any claim or action against Herbalife, and Sandler further agrees that he will
not assist, encourage, permit or authorize any other person or entity to
institute a claim or action on his behalf or as part of a class action against
Herbalife, or any Employer Released Party.


 


16.           Any
dispute regarding any aspect of this Agreement (“arbitrable dispute”), shall be
submitted to arbitration in Los Angeles, California, before an experienced
arbitrator licensed to practice law in California and selected in accordance
with the rules of the American Arbitration Association. This shall be the
exclusive remedy for any such claim or dispute, and Herbalife shall pay all
administrative and arbitrator’s costs and fees associated with any such
arbitration proceeding. Any such arbitration shall be conducted in accordance
with California law regarding arbitration of employment claims. All substantive
and procedural law will apply in the arbitration as if the parties were in
Court. The arbitrator will provide a written decision, sufficiently detailed to
be reviewed by a Court of law. This provision is an explicit waiver of any
right to a trial by jury.


 


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17.           This
Agreement shall be governed by and construed in accordance with the laws of the
State of California.


 


18.           Should
any provision of this Agreement or any portion thereof, be declared or be
determined by any court to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby and said illegal or
invalid part, term or provision shall be automatically conformed to the law, if
possible, or deemed not to be part of the Agreement.


 


19.           The
Parties to this Agreement acknowledge that they have entered into this
Agreement voluntarily, without coercion and based upon their judgment and not
in reliance upon any representation or promises made by the other party other
than those contained therein. This Agreement constitutes the entire agreement
among the Parties regarding the subject matter hereof and shall be deemed a
fully integrated agreement, which recites the sole consideration for the
promises exchanged herein. The Parties have read this Agreement, and any
provisions incorporated herein by reference, and are fully aware of their
contents and their legal effect and acknowledge that all promises, waivers and
agreements herein are knowing and voluntary. The Parties also acknowledge that
they have had the opportunity to consult and have consulted with counsel with
regard to the Agreement.


 


20.           If
any action is brought to enforce or interpret any provision of the Agreement or
the rights or obligations of any party hereunder, to the extent not prohibited
by California law, the prevailing party shall be entitled to recover, as an element
of such party’s costs of suit, and not as damages, all attorneys’, accountants
and other expert fees and costs incurred or sustained by such prevailing party
in connection with such action, including, without limitation, legal fees and
costs. The “prevailing party” shall be defined as the party who is entitled to
recover his/its costs of suit.


 


21.           The
Parties hereby agree to make, execute and deliver such other instruments or
documents, and to do or cause to be done such further or additional acts,


 


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as
reasonably may be necessary to effectuate the purposes or to implement the
terms of this Agreement. This Agreement may not be modified or cancelled, nor
may any provision with respect to it be waived, except in a writing signed by
the Parties.


 


22.           This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective heirs, legal representatives, successors and assigns.


 


23.           If
Sandler materially breaches this Agreement, to the extent that consideration or
monies otherwise payable to Sandler pursuant to this Agreement have not yet
been paid to Sandler, Sandler forfeits his rights to such payments.


 


24.           (a)
For and in consideration of the promises and commitments set forth herein,
Sandler on behalf of himself, his descendants, ancestors, dependents, heirs,
executors, administrators, assigns and successors, covenants not to sue, and
fully and forever releases and discharges Herbalife and its and their
parent(s), affiliates, successors, divisions, assigns, distributors,
subsidiaries, and the estate of Mark Hughes and/or the Mark Hughes Family
Trust, together with its or their past and present directors, officers, agents,
representatives, consultants, insurers, attorneys, current and previous
employees, and stockholders (collectively, “Employer Released Parties”), from
all claims, liabilities, demands, rights, liens, agreements, contracts,
covenants, actions, suits, obligations, debts, costs, expenses, attorneys’
fees, damages, judgments, orders, liabilities and causes of action known or
unknown, which he may have or claim to have against the Employer Released
Parties prior to the date of execution of this Release Agreement, including but
not limited to any and all rights and claims arising out of Sandler’s
employment or termination of employment with Herbalife, or any other
transactions, occurrences, acts or omissions or any loss, damage or injury
whatsoever, known or unknown, suspected or unsuspected, resulting from any act
or omission by or on the part of the Employer Released Parties, committed or
omitted prior to the date of the Agreement, including, but not limited to, any
and all rights and claims whether based on tort, contract (implied or express)
or any federal, state or local law, statute or regulation (collectively, the


 


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 “Released Claims”). By way of example, and not
in limitation of the foregoing, the Released Claims shall include any claims
based upon or related to the Civil Rights Act of 1964, Title VII, as amended,
the California Fair Employment and Housing Act, the Americans with Disabilities
Act, the Age Discrimination in Employment Act, the Family and Medical Leave
Act, the California Family Rights Act, the Worker Adjustment and Retraining
Notification Act (“WARN”), the Employee Retirement Income Security Act
(“ERISA”), the California State or United States Constitutions, the California
Labor, and Civil or Business and Professions Codes, any and all tort claims,
including, but not limited to, negligence, retaliation, violation of public
policy, intentional or negligent infliction of emotional distress,
discrimination, harassment, wrongful termination, invasion of privacy or
defamation. Except to the extent expressly incorporated within this Agreement,
Sandler also explicitly acknowledges and agrees that this Agreement releases
and waives any rights or claims he may have pursuant to any other Herbalife
plan, agreement or policy, including, but not limited to, all agreements,
plans, policies and other arrangements provided by Herbalife or any of its
subsidiaries or trusts sponsored, established or maintained by any of such
entities, including, without limitation, the Employment Agreement dated August
20, 2000, the Senior Executive Change of Control Plan, the 1994
Performance-Based Annual Incentive Compensation Plan, the 1992 Executive
Incentive Compensation Plan, the 1991 Stock Option Plan, the Management
Deferred Compensation Plan and related trust(s), the Senior Executive Compensation
Plan and related trust(s), the Supplemental Executive Retirement Plan and
related trust(s), the Executive Medical Plan and all other health insurance and
benefit plans, the Executive Long-Term Disability Plan, the Executive Life
Insurance Plan, Herbalife’s expense reimbursement plans and policies, and
Herbalife’s vacation plan. Although Sandler expressly waives all rights or
claims with respect to compensation, remuneration, payments or consideration
under his August 20, 2002 Employment Agreement, in all other respects that
agreement shall remain in effect.


 


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(b)           For and in consideration of Sandler’s
commitments and promises, Herbalife, on behalf of itself, its parent and
subsidiary corporations, and its affiliates, shareholders, officers, employees,
successors and assigns (collectively, Herbalife), covenants not to sue as to
any claims released by this Agreement and fully and forever releases and
discharges Sandler and his heirs, successors, assigns, representatives and
estate (collectively, the “Sandler Releasees”), from any and all claims,
liabilities, demands, rights, liens, agreements, contracts, covenants, actions,
suits, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments,
orders, liabilities, and causes of action, known or unknown, which Herbalife
may have or claim to have against the Sandler Releasees prior to the date of
the execution of this Agreement, including but not limited to any and all
rights and claims arising out of Sandler’s employment or termination of
employment with Herbalife, or any other transactions, occurrences, acts or
omissions or any loss, damage or injury whatsoever, known or unknown, suspected
or unsuspected, resulting from any act or omission by or on the part of the
Sandler Releasees, committed or omitted prior to the date of the Agreement,
including, but not limited to, any and all rights and claims whether based on
tort, contract (implied or express) or any federal, state or local law, statute
or regulation (collectively, the “Released Claims”).


 


25.           Except
for the obligations created by or arising from this Agreement, the Parties
understand that this is a full and final release covering all unknown and
unanticipated injuries, debts, claims, or damages to either party, which may
have arisen or may arise in connection with any act or omission by either party
released herein prior to the date of execution of this Agreement. For that
reason, the parties waive any and all rights or benefits which they may have
pursuant to Section 1542 of the California Civil Code, which provides as
follows:


 


A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT


 


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KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.


 


26.           Age
Discrimination Claims. Sandler understands and agrees that: (i) certain terms
of this Agreement constitute a waiver of any rights or claims he might have
under the Age Discrimination in Employment Act, as amended by the Older Workers
Benefit Protection Act, 29 U.S.C. Sections 612-634; (ii) he has received
consideration beyond that to which he was previously entitled; (iii) he has
been advised to consult with an attorney regarding the terms of this Agreement
which constitute a waiver of Age Discrimination in Employment Act claims; (iv)
he has been offered the opportunity to evaluate the terms of his waiver of
claims under the Age Discrimination in Employment Act for not less than
twenty-one (21) days; and (v) he may revoke this Agreement by written notice to
Herbalife’s Chief Executive Officer for a period of seven (7) days after his
execution of this Agreement. This Agreement shall become enforceable only upon
the expiration of this revocation period without prior revocation by Sandler.


 


27.           This
Agreement shall be construed as a whole, according to its fair


 


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meaning,
and not in favor of or against any party. By way of example and not in
limitation, this Agreement shall not be construed in favor of the party
receiving a benefit nor against the party responsible for any particular
language in this Agreement.


 


	
  DATED:

  	
   

  	
   

  	
  By:

  	
  /s/
  ROBERT A. SANDLER

  	
   

  
	
   

  	
   

  	
  Robert
  A. Sandler

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  HERBALIFE
  INTERNATIONAL OF

  
	
   

  	
  AMERICA,
  INC./HERBALIFE

  INTERNATIONAL, INC. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  

  	
   

  



 


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CLARIFICATION RE PARAGRAPH 3(a) OF
SEPARATION AND GENERAL RELEASE AGREEMENT


 


This will clarify the intention of
the parties regarding paragraph 3(a) of the Separation and General Release
Agreement, and shall be attached to and become a part of that Agreement.
Herbalife’s 1991 Stock Option Plan allowed for the exercise of vested options
for a period of thirty (30) days following employment termination. Herbalife’s
Amended and Restated 1991 Stock Option Plan extended the period for exercising
vested options from thirty (30) to ninety (90) days following termination of
employment. The Agreement between the parties is silent on this issue, and will
therefore be clarified as follows:


 


3(a)         (i)
Vested Options. The Parties acknowledge that, pursuant to the existing terms of
Herbalife’s stock option plan and the stock option agreements between Sandler
and Herbalife (collectively, the “Stock Option Materials”), Sandler was/is
permitted to exercise stock options that were vested (“Vested Options”) as of
May 19, 2002 (the “Termination Date”) not later than ninety (90) days following
the Termination Date, subject to applicable law and any additional requirements
set forth in the Stock Option Materials. Nothing in the Separation Agreement
and General Release was or is intended to, or does, change or modify such
provision(s).


 


(ii) Unvested Options. Herbalife
agrees that stock options held by Sandler that were not vested as of the
Termination Date (“Unvested Options”) shall continue to be outstanding through
and including September 19, 2003 (the “Option Termination Date”). To the extent
that the vesting of stock options granted by Herbalife to its employees is
accelerated for employees generally in connection with a change of control
transaction that occurs on or before the Option Termination Date, then the
Unvested Options will be afforded the same acceleration treatment as is
provided to stock options held by employees generally.


 


	
  DATED:

  	
   

  	
   

  	
  By:

  	
  /s/
  ROBERT A. SANDLER 

  	
   

  
	
   

  	
   

  	
  Robert
  A. Sandler

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  HERBALIFE
  INTERNATIONAL OF 

  
	
   

  	
  AMERICA,
  INC./HERBALIFE

  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/