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EXHIBIT 10.35
HERBALIFE INTERNATIONAL, INC.
1800 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
June 29, 2000
To: Selected management employees of Herbalife International, Inc.
and its Subsidiaries
From: Christopher Pair
Subject: Herbalife International, Inc. Management Employee Change in Control
Plan
Herbalife International, Inc. has adopted the Herbalife International,
Inc. Management Employee Change in Control Plan (the "Plan"). The provisions of
the Plan, as they apply to you, are as follows:
ARTICLE I
DEFINITIONS
I.1 DEFINITIONS
Whenever used in this Plan, the following capitalized terms shall have
the meanings set forth in this Section 1.1, certain other capitalized
terms being defined elsewhere in this Plan:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means any of the following acts or circumstances: (i)
willful destruction by you of property of the Company or a
Subsidiary having a material value to the Company or such
Subsidiary; (ii) fraud, embezzlement, theft, or comparable
dishonest activity committed by you (excluding acts involving a de
minimis dollar value and not related to the Company or a
Subsidiary); (iii) your conviction of or entering a plea of guilty
or nolo contendere to any crime constituting a felony or any
misdemeanor involving fraud, dishonesty or moral turpitude
(excluding acts involving a de minimis dollar value and not
related to the Company or a Subsidiary); (iv) your breach,
neglect, refusal, or failure to materially discharge your duties
(other than due to physical or mental illness) commensurate with
your title and function or your failure to comply with the lawful
directions of the Board or the Chief Executive Officer of the
Company, or of the Board of Directors or the Chief Executive
Officer of the Subsidiary that employs you, in any such case that
is not cured within fifteen (15) days after you have received
written notice thereof from such Board of Directors or Chief
Executive Officer; or (v) a willful and knowing material
misrepresentation to the Board or the Chief Executive Officer of
the Company or to the Board of Directors or the Chief Executive
Officer of the Subsidiary that employs you.
(c) "Change in Control" shall mean the occurrence of any of the
following:
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(i) Any "Person" or "Group" (as such terms are defined in
Section 13(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") and the rules and regulations promulgated
thereunder), excluding any Excluded Stockholder, is or
becomes the "Beneficial Owner" (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company, or of any entity resulting from
a merger or consolidation involving the Company,
representing more than fifty percent (50%) of the combined
voting power of the then outstanding securities of the
Company or such entity.
(ii) The individuals who, as of the time immediately following
the election of directors at the Company's 2000 Annual
Meeting of Stockholders, are members of the Board (the
"Existing Directors"), cease, for any reason, to constitute
more than fifty percent (50%) of the number of authorized
directors of the Company as determined in the manner
prescribed in the Company's Certificate of Incorporation
and Bylaws; provided, however, that if the election, or
nomination for election, by the Company's stockholders of
any new director was approved by a vote of at least fifty
percent (50%) of the Existing Directors, such new director
shall be considered an Existing Director; provided further,
however, that no individual shall be considered an Existing
Director if such individual initially assumed office as a
result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies
by or on behalf of anyone other than the Board (a "Proxy
Contest"), including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest.
(iii) The consummation of (x) a merger, consolidation or
reorganization to which the Company is a party, whether or
not the Company is the Person surviving or resulting
therefrom, or (y) a sale, assignment, lease, conveyance or
other disposition of all or substantially all of the assets
of the Company, in one transaction or a series of related
transactions, to any Person other than the Company, where
any such transaction or series of related transactions as
is referred to in clause (x) or clause (y) above in this
subparagraph (iii) (singly or collectively, a
"Transaction") does not otherwise result in a "Change in
Control" pursuant to subparagraph (i) of this definition of
"Change in Control"; provided, however, that no such
Transaction shall constitute a "Change in Control" under
this subparagraph (iii) if the Persons who were the
stockholders of the Company immediately before the
consummation of such Transaction are the Beneficial Owners,
immediately following the consummation of such Transaction,
of fifty percent (50%) or more of the combined voting power
of the then outstanding voting securities of the Person
surviving or resulting from any merger, consolidation or
reorganization referred to in clause (x) above in this
subparagraph (iii) or the Person to whom the assets of the
Company are sold, assigned, leased, conveyed or disposed of
in any transaction or series of related transactions
referred in clause (y) above in this subparagraph (iii), in
substantially the same proportions in which such Beneficial
Owners held voting stock in the Company immediately before
such Transaction.
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(d) "Company" means Herbalife International, Inc., a Nevada
corporation, and any successor or assignee as provided in Article
IV.
(e) "Compensation" means and includes all of your base annual salary
attributable to your employment with the Company and/or any of its
Subsidiaries (including, but not limited to, any amounts
excludable from your gross income for federal income tax purposes
pursuant to Section 125 or Section 401(k) of the Internal Revenue
Code of 1986, as amended), in effect immediately before the Change
in Control. "Compensation" shall not include your bonus or --- any
non-cash compensations or reimbursements, if any (e.g., the grant
or vesting of restricted stock, the grant, vesting, or exercise of
stock options, automobile allowance and gasoline reimbursement).
(f) "Disability" means a physical or mental infirmity which
substantially impairs your ability to perform your material duties
for a period of at least one hundred eighty (180) consecutive
calendar days, and, as a result of such Disability, you have not
returned to your full-time regular employment prior to
termination.
(g) "Effective Time" means June 29, 2000.
(h) "Eligible Employee" means any employee set forth on Exhibit "A"
hereto, or any other management employee of the Company or any of
its Subsidiaries who is designated by the Board or any committee
thereof to participate in this Plan.
(i) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(j) "Excluded Stockholder" means (i) the estate of Mark Hughes, (ii)
the Mark Hughes Family Trust, a living trust which became
irrevocable upon the death of Mark Hughes on May 21, 2000 and/or
(iii) any persons or entities who receive distributions of
securities of the Company from the foregoing estate or trust
without the payment of any consideration.
(k) "Good Reason" means the occurrence, on or after the occurrence of
a Change in Control, of any of the following:
(i) The Company or any of its Subsidiaries reduces your base
salary.
(ii) The Company discontinues its bonus plan in which you
participate as in effect immediately before the Change in
Control without immediately replacing such bonus plan with
a plan that is the substantial economic equivalent of such
bonus plan, or a successor to the Company fails or refuses
to assume the obligations of the Company under such bonus
plan as in effect immediately before the Change in Control
or under a
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plan that is the substantial economic equivalent of such
bonus plan.
(iii) Without your express written consent, the Company or any of
its Subsidiaries requires you to change the location of
your job or office, so that you will be based at a location
more than 100 miles from the location of your job or
office.
(iv) Without your express written consent, the Company or any of
its Subsidiaries reduces your responsibilities or directs
you to report to a person of lower rank or responsibilities
than the person to whom you reported before the Change in
Control.
(v) A successor to the Company fails or refuses to assume the
obligations of the Company under this Plan.
(l) "Person" shall have the meaning set forth in the definition of
"Change in Control."
(m) "Plan" means this Change in Control Plan.
(n) "Release" means a Separation and General Release Agreement in
substantially the form attached hereto as Exhibit "B".
(o) "Severance Payment" means the payment of severance compensation as
provided in Article II.
(p) "Subsidiary" means any corporation or other Person, a majority of
the voting power, equity securities or equity interest of which is
owned directly or indirectly by the Company.
(q) "WARN" means the Worker Adjustment and Retraining Notification
Act, 29 U.S.C.ss. 2101 et -- seq.
ARTICLE II
SEVERANCE PAYMENTS
II.1 RIGHT TO SEVERANCE PAYMENT; RELEASE
Conditioned on the execution and delivery by you (or your beneficiary or
personal representative, if applicable) of the Release, you shall be entitled to
receive a Severance Payment from the Company in the amount provided in Section
2.2 if (a) you are an Eligible Employee, and (b) within one year after the
occurrence of a Change in Control, your employment is involuntarily terminated
by the Company or any of its Subsidiaries for any reason other than Cause or
your death or Disability, or you voluntarily terminate your employment with the
Company and all Subsidiaries for Good Reason. Notwithstanding the foregoing, the
amount of any Severance Payment which you will be entitled to receive will be
reduced, dollar for dollar, to the extent you receive payments which the Company
or its Subsidiaries are required to make to you under WARN.
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II.2 AMOUNT OF SEVERANCE PAYMENT
If you become entitled to a Severance Payment under this Plan, the amount
of your Severance Payment, when added to any payments which the Company or its
Subsidiaries are required to make to you under WARN, shall equal to the amount
of your Compensation.
II.3 EXCISE TAX LIMITATION.
(a) Notwithstanding anything contained in this Plan to the contrary,
in the event that any payment or benefit (within the meaning of
Section 280G(b)(2) of the Code) to you or for your benefit paid or
payable or distributed or distributable pursuant to the terms of
this Plan or otherwise in connection with, or arising out of, your
employment with the Company or any of its Subsidiaries or a Change
of Control within the meaning of Section 280G of the Code (a
"Payment" or "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then the
Payments shall be reduced (but not below zero) but only to the
extent necessary that no portion thereof shall be subject to the
excise tax imposed by Section 4999 of the Code (the "Section 4999
Limit"). Unless you shall have given prior written notice
specifying a different order to the Company to effectuate the
limitations described in the preceding sentence, the Company shall
reduce or eliminate the Payments by first reducing or eliminating
those Payments or benefits which are not payable in cash and then
by reducing or eliminating cash Payments, in each case in reverse
order beginning with payments or benefits which are to be paid the
farthest in time from the Determination (as hereinafter defined).
Any notice given by you pursuant to the preceding sentence shall
take precedence over the provisions of any other plan, arrangement
or agreement governing your rights and entitlements to any
benefits or compensation.
(b) All determinations required to be made under this Section 2.3
(each, a "Determination") shall be made, at the Company's expense,
by the accounting firm which is the Company's accounting firm
prior to the Change in Control or another nationally recognized
accounting firm designated by the Board (or a committee thereof)
prior to the Change in Control (the "Accounting Firm"). The
Accounting Firm shall provide its calculations, together with
detailed supporting documentation, both to the Company and to you
before payment of your Severance Payment hereunder (if requested
at that time by the Company or you) or such other time as
requested by the Company or you (in either case provided that the
Company or you believe in good faith that any of the Payments may
be subject to the Excise Tax); provided, however, that if the
Accounting Firm determines that no Excise Tax is payable by you
with respect to a Payment or Payments, it shall furnish you with
an opinion reasonably acceptable to you that no Excise Tax will be
imposed with respect to any such Payment or Payments. Within ten
(10) calendar days of the delivery of the Determination to you,
you shall have the right to dispute the
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Determination (the "Dispute"). The existence of any Dispute shall
not in any way affect your right to receive the Payments in
accordance with the Determination. If there is no Dispute, the
Determination by the Accounting Firm shall be final, binding and
conclusive upon the Company and you, subject to the application of
Section 2.3(c).
(c) As a result of the uncertainty in the application of Sections 4999
and 280G of the Code, it is possible that the Payments either will
have been made or will not have been made by the Company, in
either case in a manner inconsistent with the limitations provided
in Section 2.3(a) (an "Excess Payment" or "Underpayment",
respectively). If it is established pursuant to (i) a final
determination of a court for which all appeals have been taken and
finally resolved or the time for all appeals has expired, or (ii)
an Internal Revenue Service (the "IRS") proceeding which has been
finally and conclusively resolved, that an Excess Payment has been
made, such Excess Payment shall be deemed for all purposes to be a
loan to you made on the date you received the Excess Payment and
you shall repay the Excess Payment to the Company on demand,
together with interest on the Excess Payment at one hundred twenty
percent (120%) of the applicable federal rate (as defined in
Section 1274(d) of the Code) compounded semi-annually from the
date of your receipt of such Excess Payment until the date of such
repayment. If it is determined (i) by the Accounting Firm, the
Company (which shall include the position taken by the Company,
together with its consolidated group, on its federal income tax
return) or the IRS, (ii) pursuant to a determination by a court,
or (iii) upon the resolution to your satisfaction of the Dispute,
that an Underpayment has occurred, the Company shall pay an amount
equal to the Underpayment to you within ten (10) calendar days of
such determination or resolution, together with interest on such
amount at one hundred twenty percent (120%) of the applicable
federal rate compounded semi-annually from the date such amount
should have been paid to you pursuant to the terms of this Plan or
otherwise, but for the operation of this Section 2.3(c), until the
date of payment.
II.4 NO MITIGATION
The Company acknowledges and agrees that you shall be entitled to receive
your entire Severance Payment regardless of any income which you may receive
from other sources following your termination on or after the Change in Control.
II.5 PAYMENT OF SEVERANCE PAYMENT
The Severance Payment to which you are entitled shall be paid to you, in
cash and in full, not later than eight (8) calendar days after the Release
becomes effective. If you should die before all amounts payable to you have been
paid, such unpaid amounts shall be paid to your beneficiary under this Agreement
or, if you have not designated such a beneficiary in writing to the Company, to
the personal representative(s) of your estate.
II.6 HEALTH BENEFITS COVERAGE
If you are entitled to receive a Severance Payment under Section 2.1, you
will also be entitled to receive health benefits coverage for you and your
dependents under the same
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plan(s) or arrangement(s) under which you were covered immediately before your
termination of employment or plan(s) established or arrangement(s) provided by
the Company or any of its Subsidiaries thereafter. Such health benefits coverage
shall be paid for by the Company to the same extent as if you were still
employed by the Company, and you will be required to make such payments as you
would be required to make if you were still employed by the Company. The
benefits provided under this Section 2.6 shall continue until the earlier of (a)
the expiration of the one-year period following your termination of employment
with the Company and all of its Subsidiaries, (b) the date you become covered
under any other group health plan not maintained by the Company or any of its
Subsidiaries; provided, however, that if such other group health plan excludes
any pre-existing condition that you or your dependents may have when coverage
under such group health plan would otherwise begin, coverage under this Section
2.6 shall continue (but not beyond the one-year period described in clause (a)
of this sentence) with respect to such pre-existing condition until such
exclusion under such other group health plan lapses or expires. In the event you
are required to make an election under Sections 601 through 607 of ERISA
(commonly known as COBRA) to qualify for the benefits described in this Section
2.6, the obligations of the Company and its Subsidiaries under this Section 2.6
shall be conditioned upon your timely making such an election.
II.7 WITHHOLDING OF TAXES
The Company may withhold from any amounts payable under this Plan all
federal, state, city or other taxes required by applicable law to be withheld by
the Company.
ARTICLE III
OTHER RIGHTS AND BENEFITS NOT AFFECTED
III.1 OTHER BENEFITS
This Plan does not provide a pension for you, nor shall any payment
hereunder be characterized as deferred compensation. Except as set forth in
Section 3.2, neither the provisions of this Plan nor the Severance Payment
provided for hereunder shall reduce any amounts otherwise payable, or in any way
diminish your rights as an employee, whether existing now or hereafter, under
any written benefit, incentive, retirement, stock option, stock bonus or stock
purchase plan or any written employment agreement or other written plan or
arrangement not related to severance (including, without limitation, any
benefits to which you may be entitled pursuant to the Company's Amended and
Restated 1991 Stock Option Plan, 1992 Executive Incentive Compensation Plan,
1994 Performance-Based Annual Incentive Compensation Plan and deferred
compensation plans and arrangements between you and the Company and/or its
Subsidiaries, in each case as in effect on the date of the adoption of this
Plan).
III.2 OTHER SEVERANCE PLANS SUPERSEDED
As of the Effective Time, this Plan will supersede any and all other
severance plans of the Company or its Subsidiaries and severance agreements
between you and the Company
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and its Subsidiaries, and your participation in any other severance plan of the
Company and its Subsidiaries will be hereby terminated.
III.3 EMPLOYMENT STATUS
This Plan does not constitute a contract of employment or impose on you
any obligation to remain in the employ of the Company, nor does it impose on the
Company or any of its Subsidiaries any obligation to retain you in your present
or any other position, nor does it change the status of your employment as an
employee at will. Nothing in this Plan shall in any way affect the right of the
Company or any of its Subsidiaries in its absolute discretion to change or
reduce your compensation at any time, or to change at any time one or more
benefit plans, including but not limited to pension plans, dental plans, health
care plans, savings plans, bonus plans, vacation pay plans, disability plans,
and the like.
ARTICLE IV
SUCCESSOR TO COMPANY
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place. In such
event, the term "Company," as used in this Plan, shall mean (from and after, but
not before, the occurrence of such event) the Company as herein before defined
and any successor or assignee to the business or assets which by reason hereof
becomes bound by the terms and provisions of this Plan.
ARTICLE V
CONFIDENTIALITY
V.1 NONDISCLOSURE OF CONFIDENTIAL MATERIAL
In the performance of your duties, you have previously had, and may in
the future have, access to confidential records and information, including, but
not limited to, development, marketing, purchasing, organizational, strategic,
financial, managerial, administrative, manufacturing, production, distribution
and sales information, data, specifications and processes presently owned or at
any time hereafter developed by the Company or its agents or consultants or used
presently or at any time hereafter in the course of its business, that are not
otherwise part of the public domain (collectively, the "Confidential Material").
All such Confidential Material is considered secret and has been and/or will be
disclosed to you in confidence. By your acceptance of your Severance Payment
under this Plan, you shall be deemed to have acknowledged that the Confidential
Material constitutes proprietary information of the Company which draws
independent economic value, actual or potential, from not being generally known
to the public or to other persons who could obtain economic value from its
disclosure or use, and that the Company has taken efforts reasonable under the
circumstances, of which this Section 5.1 is an example, to maintain its secrecy.
Except in the performance of your duties to the Company, you shall not, directly
or indirectly for any reason whatsoever, disclose or use any such Confidential
Material, except that the foregoing disclosure prohibition shall not apply as to
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Confidential Material that (i) has been publicly disclosed or was within your
possession prior to its being furnished to you by the Company or becomes
available to you on a nonconfidential basis from a third party (in any of such
cases, not due to a breach by you of your obligations to the Company or by
breach of any other person of a confidential, fiduciary or confidential
obligation, the breach of which you know or reasonably should know), (ii) is
required to be disclosed by you pursuant to applicable law, and you provide
notice to the Company of such requirement as promptly as possible, or (iii) was
independently acquired or developed by you without violating any of the
obligations under this Plan and without relying on Confidential Material of the
Company. All records, files, drawings, documents, equipment and other tangible
items, wherever located, relating in any way to the Confidential Material or
otherwise to the Company's business, which you have prepared, used or
encountered or shall in the future prepare, use or encounter, shall be and
remain the Company's sole and exclusive property and shall be included in the
Confidential Material. Upon your termination of employment with the Company, or
whenever requested by the Company, you shall promptly deliver to the Company any
and all of the Confidential Material and copies thereof, not previously
delivered to the Company, that may be, or at any previous time has been, in your
possession or under your control.
V.2 NONSOLICITATION OF EMPLOYEES AND DISTRIBUTORS
By your acceptance of your Severance Payment under this Plan, you agree
that, for a period of two (2) years following your termination of employment
with the Company or its Subsidiaries, neither you nor any Person or entity in
which you have an interest shall solicit any person who was employed on the date
of your termination of employment by the Company or any of its Subsidiaries or a
distributor of the Company or any of its Subsidiaries within the "multi-level
marketing" plan of the Company and its Subsidiaries to leave the employ of the
Company or any of its Subsidiaries or cease to serve to serve as an active
distributor of the Company or any of its Subsidiaries. Nothing in this Section
5.2, however, shall prohibit you or any Person or entity in which you have an
interest from placing advertisements in periodicals of general circulation
soliciting applications for employment, or from employing any person who answers
any such advertisement. For purposes of this Section 5.2, you shall not be
deemed to have an interest in any corporation whose stock is publicly traded
merely because you are the owner of not more than two percent (2%) of the
outstanding shares of any class of stock of such corporation, provided you have
no active participation in the business of such corporation (other than voting
your stock) and you do not provide services to such corporation in any capacity
(whether as an employee, an independent contractor or consultant, a board
member, or otherwise).
V.3 EQUITABLE RELIEF
By your acceptance of your Severance Payment under this Plan, you shall
be deemed to have acknowledged that violation of Sections 5.1 or 5.2 would cause
the Company irreparable damage for which the Company cannot be reasonably
compensated in damages in an action at law, and that therefore in the event of
any breach by you of Sections 5.1 or 5.2, the Company shall be entitled to make
application to a court of competent jurisdiction for equitable relief by way of
injunction or otherwise (without being required to post a
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bond). This provision shall not, however, be construed as a waiver of any of the
rights which the Company may have for damages under this Plan or otherwise, and,
except as limited in Article VI, all of the Company's rights and remedies shall
be unrestricted.
ARTICLE VI
ARBITRATION
Except for equitable relief as provided in Section 5.3, arbitration in
accordance with the then most applicable rules of the American Arbitration
Association shall be the exclusive remedy for resolving any dispute or
controversy between you and the Company or any of its Subsidiaries, including,
but not limited to, any dispute regarding your employment or the termination of
your employment or any dispute regarding the application, interpretation or
validity of this Plan not otherwise resolved through the claims procedure set
forth in Section 7.10. The arbitrator shall be empowered to grant only such
relief as would be available in a court of law. In the event of any conflict
between this Plan and the rules of the American Arbitration Association, the
provisions of this Plan shall be determinative. If the parties are unable to
agree upon an arbitrator, they shall select a single arbitrator from a list
designated by the office of the American Arbitration Association having
responsibility for the city in which you primarily performed services for the
Company or its Subsidiaries immediately before your termination of employment of
seven arbitrators, all of whom shall be retired judges who are actively involved
in hearing private cases or members of the National Academy of Arbitrators, and
who, in either event, are residents of the area in which you primarily performed
services for the Company or its Subsidiaries immediately before your termination
of employment. If the parties are unable to agree upon an arbitrator from such
list, they shall each strike names alternatively from the list, with the first
to strike being determined by lot. After each party has used three strikes, the
remaining name on the list shall be the arbitrator. The Company shall be
responsible for the costs and fees of the arbitrator, unless the employee wishes
to contribute (up to 50%) of the costs and fees of the arbitrator; provided,
however, that each party shall initially be responsible for the fees and
expenses of its own representatives and witnesses. Unless mutually agreed
otherwise by the parties, any arbitration shall be conducted at a location
within fifty (50) miles from the location in which you primarily performed
services for the Company or any of its Subsidiaries immediately before your
termination of employment. If the parties cannot agree upon a location for the
arbitration, the arbitrator shall determine the location within such fifty (50)
mile radius. Judgment may be entered on the award of the arbitrator in any court
having jurisdiction. The prevailing party in the arbitration proceeding, as
determined by the arbitrator, and in any enforcement or other court proceedings,
shall be entitled to the extent provided by law to reimbursement from the other
party for all of the prevailing party's costs (including but not limited to the
arbitrator's compensation), expenses and reasonable attorney's fees.
ARTICLE VII
MISCELLANEOUS
VII.1 APPLICABLE LAW
To the extent not preempted by the laws of the United States, the laws of
the State of California shall be the controlling law in all matters relating to
this Plan, regardless of the choice-of-law rules of the State of California or
any other jurisdiction.
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VII.2 CONSTRUCTION
No term or provision of this Plan shall be construed so as to require the
commission of any act contrary to law, and wherever there is any conflict
between any provision of this Plan and any present or future statute, law,
ordinance, or regulation, the latter shall prevail, but in such event the
affected provision of this Plan shall be curtailed and limited only to the
extent necessary to bring such provision within the requirements of the law.
VII.3 SEVERABILITY
If a provision of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of this Plan and
this Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.
VII.4 HEADINGS
The Section headings in this Plan are inserted only as a matter of
convenience, and in no way define, limit, or extend or interpret the scope of
this Plan or of any particular Section.
VII.5 ASSIGNABILITY
Your rights or interests under this Plan shall not be assignable or
transferrable (whether by pledge, grant of a security interest, or otherwise) by
you, your beneficiaries or legal representatives, except by will or by the laws
of descent and distribution.
VII.6 TERM
If no Change in Control has theretofore occurred, this Plan shall expire
and be of no further force and effect on December 31, 2003; provided that the
Board may, at any time prior to the expiration hereof, extend the term of this
Plan. If a Change in Control occurs on or before December 31, 2003 (or before
the expiration of the extended term if the Board had extended the term of this
Plan), this Plan shall continue in full force and effect until its terms and
provisions are completely carried out.
VII.7 AMENDMENT
This Plan constitutes a contract right and may not be amended in any
respect except by resolution adopted by the Board prior to a Change in Control
occurs and consented to by you in writing. After a Change in Control occurs,
this Plan shall no longer be subject to amendment, change, substitution,
deletion, revocation or termination in any respect whatsoever. No agreement or
representations, written or oral, express or implied, with respect to the
subject matter hereof, have been made by the Company which are not expressly set
forth in this Plan.
VII.8 NOTICES
For purposes of this Plan, notices and all other communications provided
for herein shall be in writing and shall be deemed to have been duly given when
personally delivered,
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telecopied, or sent by certified or overnight mail, return receipt requested,
postage prepaid, addressed to the respective addresses, or sent to the
respective telecopier numbers, last given by each party to the other, provided
that all notices to the Company shall be directed to the attention of the Board
of Directors with a copy to the General Counsel. All notices and communications
shall be deemed to have been received on the date of delivery thereof if
personally delivered, upon return confirmation if telecopied, on the third
business day after the mailing thereof, or on the date after sending by
overnight mail, except that notice of change of address shall be effective only
upon actual receipt. No objection to the method of delivery may be made if the
written notice or other communication is actually received.
VII.9 ADMINISTRATION
This Plan constitutes a welfare benefit plan within the meaning of
Section 3(1) of ERISA. This letter constitutes both the governing document and
the summary plan description of the Plan. The Administrator of the Plan, within
the meaning of Section 3(16) of ERISA, and the Named Fiduciary thereof, within
the meaning of Section 402 of ERISA, is the Company. Attached hereto as Exhibit
"C" is a statement of your rights under ERISA.
VII.10 CLAIMS
If you believe you are entitled to a benefit under this Plan, you may
make a claim for such benefit by filing with the Company a written statement
setting forth the amount and type of payment so claimed. The statement shall
also set forth the facts supporting the claim. The claim may be filed by mailing
or delivering it to the Secretary of the Company.
Within sixty (60) calendar days after receipt of such a claim, the
Company shall notify you in writing of its action on such claim and if such
claim is not allowed in full, shall state the following in a manner calculated
to be understood by you:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent provisions of this Plan on
which the denial is based;
(c) A description of any additional material or information
necessary for you to be entitled to the benefits that have been denied
and an explanation of why such material or information is necessary; and
(d) An explanation of this Plan's claim review procedure.
If you disagree with the action taken by the Company, you or your duly
authorized representative may apply to the Company for a review of such action.
Such application shall be made within one hundred twenty (120) calendar days
after receipt by you of the notice of the Company's action on your claim. The
application for review shall be filed in the same manner as the claim for
benefits. In connection with such review, you may inspect any documents or
records pertinent to the matter and may submit issues and comments in writing to
the Company. A decision by the Company shall be communicated to you within sixty
(60) calendar days after receipt of the application. The decision on review
shall be in writing and shall include specific reasons for the decision, written
in a manner calculated to be understood by you, and specific references to the
pertinent provisions of this Plan on which the decision is based.
Sincerely,
HERBALIFE INTERNATIONAL, INC.By:
--------------------------------
Christopher Pair, President and
Chief Executive Officer
