Exhibit 10.25

HERBALIFE LTD.
AMENDED AND RESTATED
NON-MANAGEMENT DIRECTORS COMPENSATION PLAN

1.

Establishment of Plan; Purpose

The Herbalife Ltd. (the “Company”)  Non-Management Directors Compensation Plan
(the “Directors Plan”) was initially adopted on January 15, 2006.  The Directors
Plan is hereby amended and restated in its entirety effective as of May 6, 2010
(the “Restatement Effective Date”).  Prior to January 1, 2009, the Directors
Plan provided for the award of Stock Units under Section 9 of the Herbalife Ltd.
2005 Stock Incentive Plan (the “Plan”).  From January 1, 2009 until May 6, 2010,
the Directors Plan provides for the award of Stock Appreciation Rights under
Section 8 of the Plan.  From and after May 6, 2010, the Directors Plan provides
for the award of either Stock Units under Section 9 of the Plan or Stock
Appreciation Rights under Section 8 of the Plan, in the sole discretion of the
Committee. The Directors Plan is intended to be a part of the Plan and the terms
of the Plan are incorporated herein by reference.

The purpose of the Plan is to facilitate equity ownership in the Company by its
Nonemployee Directors through the award of equity-based compensation awards
under the Plan.  

2.

Definitions

Unless otherwise specifically provided for herein, all capitalized terms used
herein shall have the same meanings as the meanings ascribed to such terms in
the Plan.  In addition, the following words have the following meanings unless a
different meaning plainly is required by the context:

(a)“Deferral Account” means the accounting entry made with respect to each
Participant for the purpose of maintaining a record of each Participant’s
benefit under the  Directors Plan.

(b)“Effective Date” means January 15, 2006.

(c)“Grant Date” means a date on which Stock Units or Stock Appreciation Rights
are granted pursuant this Directors Plan.

(d)“Independent Director” means a member of the Board who, at all relevant
times, has been determined by the Board to be independent.

(e)“Nonemployee Director” means a member of the Board who, at all relevant
times, is not an employee and/or officer of the Company or any of its
subsidiaries.

(f)“Participant” means a Nonemployee Director who has received an award
hereunder.

 

 

--------------------------------------------------------------------------------

 

(g) “Plan Year” means January 15 of each calendar year to January 14 of the next
following calendar year.  The first Plan Year shall commence on the Effective
Date and end on January 14, 2007.

3.

Administration.

The  Directors Plan shall be administered the Committee.  Consistent with
Section 18 of the Plan, any question concerning the interpretation of
the  Directors Plan, any adjustments required to be made under the  Directors
Plan, and any controversy that may arise under the  Directors Plan or any award
agreement issued hereunder shall be determined by the Committee in its sole and
absolute discretion.  All such decisions by the Committee shall be final and
binding.

4.

Eligibility and Participation.

Prior to the Restatement Effective Date, participation in the Directors Plan was
limited to Independent Directors.  From and after the Restatement Effective
Date, all Nonemployee Directors shall be eligible to participate in
this  Directors Plan and receive awards hereunder from time to time.

5.

Stock Unit Awards.

(a)First Plan Year Grant.  On the Effective Date of the Directors Plan, the
Committee shall grant to each Independent Director, pursuant to Section 9 of the
Plan, a number of Stock Units equal to the quotient of One Hundred Thousand
Dollars ($100,000) divided by the Fair Market Value of one Common Share on such
date, rounded to the nearest whole number.  

(b)Grants Upon Initial Election to Board.  Unless otherwise determined by the
Committee, with respect to each Independent Director who commences service on
the Board after the Effective Date, upon such Independent Director’s
commencement of service as a member of the Board the Committee shall grant to
such Independent Director, pursuant to Section 9 of the Plan, a number of Stock
Units equal to (i) the quotient of One Hundred Thousand Dollars ($100,000)
divided by the Fair Market Value of one Common Share on such date, rounded to
the nearest whole number, multiplied by (ii) a fraction, the numerator of which
equals (A) 365 minus (B) the number of days during the Plan Year that have
elapsed prior to the date on which the Independent Director commenced service as
a member of the Board and the denominator of which equals 365.

(c)Annual Grants.  Unless otherwise determined by the Committee, on January 15
of each Plan Year beginning after Effective Date of the  Directors Plan, the
Committee shall grant, pursuant to Section 9 of the Plan, to each Independent
Director who is serving as a member of the Board as of the Grant Date, a number
of Stock Units equal to the quotient of One Hundred Thousand Dollars ($100,000)
divided by the Fair Market Value of one Common Share on such date, rounded to
the nearest whole number.

(d)Award Agreement.  Each award of Stock Units shall be evidenced by an award
agreement entered into between the Company and the applicable Participant and
shall be subject to all of the terms and conditions set forth herein and in the
Plan.

-2-

--------------------------------------------------------------------------------

 

(e)Terms and Conditions of Stock Units.  Stock Unit awards made pursuant to this
Section 5 shall be subject to the following terms and conditions:

(i)Unless otherwise determined by the Committee at the time of grant the value
of each Stock Unit shall be equal to one Common Share (as adjusted pursuant to
Section 12 of the Plan).  

(ii)Subject to the provisions of this Directors Plan, neither Stock Units
awarded pursuant to this Directors Plan nor the Common Shares subject thereto
may be sold, assigned, transferred, pledged, or otherwise encumbered prior to
the date on which such Common Shares are delivered to the Participant or the
Participant’s beneficiary designated pursuant to Section 6(c)(iii) of
this  Directors Plan.  

(iii)Unless otherwise provided in an award agreement, the recipient of an award
under this Section 5 shall not be entitled to receive dividends or dividend
equivalents with respect to the number of Common Shares represented by the Stock
Unit award until such time as the Common Shares subject to the award have been
issued pursuant to the terms of this Directors Plan.

(iv)Unless determined otherwise by the Committee at the time of grant and set
forth in an award agreement, subject to the applicable Participant’s continuous
service as a member of the Board, awards of Stock Units pursuant to Section 5(a)
or Section 5(c) shall become vested with respect to twenty-five percent (25%) of
the number of Stock Units subject to the award on each of April 15, July 15 and
October 15 of the calendar year in which the award is granted and January 15 of
the calendar year following the year in which the award is granted (each such
date is referred to herein as a “Vesting Date”).

(v)Unless determined otherwise by the Committee at the time of grant and set
forth in an award agreement, subject to the applicable Participant’s continuous
service as a member of the Board, awards of Stock Units pursuant to Section 5(b)
shall become vested in equal installments on each of the Vesting Dates that
occur after the Grant Date and on or prior to the next following January
15th.1  

(vi)In the event that a Participant ceases to serve as a member of the Board for
any reason, all Stock Units held by such Participant at the time of such
cessation that have not yet become vested shall be immediately forfeited;
provided, however, that in the event of the Participant’s disability (as such
term if defined in Section 22(e) of the Code) or death, the Committee may, in
its sole discretion, accelerate the vesting of any unvested Stock Units then
held by such Participant.

(vii)Notwithstanding anything herein to the contrary, in the event of a Change
of Control all unvested Stock Units shall be deemed fully vested immediately
prior to the consummation of the Change of Control.

 

1

For example: with respect to an award of Stock Units pursuant to Section 5(b) on
April 22, 2006, the award would become vested with respect to 33 1/3% of the
Stock Units subject thereto on each of July 15, 2006, October 15, 2006 and
January 15, 2007.

-3-

--------------------------------------------------------------------------------

 

(f)Payment/Deferral of Stock Unit Awards.

(i)On each Grant Date the Stock Units awarded to a Participant pursuant to this
Section 5 shall be credited to the Participant’s Deferral Account.

(ii)Subject to the applicable Participant’s continuous service as a member of
the Board, on the second anniversary of the final Vesting Date of an award of
Stock Units pursuant to this Section 5, there shall be credited to Participant’s
Deferral Account one Common Share in exchange for each such Stock Unit then held
in Participant’s Deferral Account.

(iii)In the event that a Participant ceases to serve as a member of the Board
for any reason prior to the second anniversary of the final Vesting Date of an
award of Stock Units pursuant to this Section 5, the Company shall, within
thirty (30) days following such cessation, subject to Section 16 of the Plan,
issue to the Participant a number of Common Shares equal to the number of vested
Stock Units subject to each such award held in the Participant’s Deferral
Account at the time of such cessation.

(g)Notwithstanding anything herein to the contrary, no Stock Units shall be
awarded under Section 5 of this Directors Plan on or after January 1, 2009.

5A.Stock Appreciation Right Awards.

(a)2009 Plan Year Grant.  On February 27, 2009, the Committee shall grant to
each Independent Director, pursuant to Section 8 of the Plan, a number of Stock
Appreciation Rights equal to the quotient of One Hundred Thousand Dollars
($100,000) divided by the “fair value” (as determined by the Company in
accordance with Financial Accounting Standards Board’s Statement of Financial
Accounting Standards No. 123 (revised 2004), Share-Based Payment or such revised
standard as then applicable (“FAS 123R”)) of one Stock Appreciation Right on
such date, rounded to the nearest whole number.  

(b)Grants Upon Initial Election to Board.  Unless otherwise determined by the
Committee, with respect to each Nonemployee Director who commences service on
the Board after January 1, 2010, upon such Nonemployee Director’s commencement
of service as a member of the Board the Committee shall grant to such
Nonemployee Director, pursuant to Section 8 of the Plan, a number of Stock
Appreciation Rights equal to (i) the quotient of One Hundred Thousand Dollars
($100,000) divided by the “fair value” (as determined by the Company in
accordance with FAS 123R) of one Stock Appreciation Right on such date, rounded
to the nearest whole number, multiplied by (ii) a fraction, the numerator of
which equals (A) 365 minus (B) the number of days that have elapsed since the
most recent Annual General Meeting of Shareholders the prior to the date on
which the Nonemployee Director commenced service as a member of the Board, and
the denominator of which equals 365.

-4-

--------------------------------------------------------------------------------

 

(c)Annual Grants.  Unless otherwise determined by the Committee, for each Plan
Year beginning after January 1, 2010, on the date whereupon annual equity awards
are made to Company employees, the Committee shall grant, pursuant to Section 8
of the Plan, to each Nonemployee Director who is serving as a member of the
Board as of the Grant Date, a number of Stock Appreciation Rights equal to the
quotient of One Hundred Thousand Dollars ($100,000) divided by the “fair value”
(as determined by the Company in accordance with FAS 123R) of one Stock
Appreciation Right on such date, rounded to the nearest whole number.

(d)Base Price.  The Base Price for each award of Stock Appreciation Rights shall
be the closing price of the Common Shares on the Grant Date.

(e)Award Agreement.  Each award of Stock Appreciation Rights shall be evidenced
by an award agreement entered into between the Company and the applicable
Nonemployee Director and shall be subject to all of the terms and conditions set
forth herein and in the Plan.

(f)Terms and Conditions of Stock Appreciation Rights.  Stock Appreciation Right
awards made pursuant to this Section 5A shall be subject to the following terms
and conditions:

(i)Each Stock Appreciation Right shall represent the right to receive, upon
exercise of the Stock Appreciation Right, a payment, paid in Common Shares,
equal to (i) the excess of the Fair Market Value, on the date of exercise, of
one Common Share (as adjusted pursuant to Section 12 of the Plan) over the Base
Price of the Stock Appreciation Right, divided by (ii) the Fair Market Value, on
the date of exercise, of one Common Share.

(ii)Unless determined otherwise by the Committee at the time of grant and set
forth in an award agreement, subject to the applicable Nonemployee Director’s
continuous service as a member of the Board, awards of Stock Appreciation Rights
pursuant to Section 5A(a) or Section 5A(c) shall become vested with respect to
twenty-five percent (25%) of the number of Stock Appreciation Rights subject to
the award on each of July 15 and October 15 of the calendar year in which the
award is granted and January 15 and April 15 of the calendar year following the
year in which the award is granted (each such date is referred to herein as a
“Vesting Date”); provided, however, that no Stock Appreciation Right, whether
vested or unvested, may be exercised prior to the date specified in Section
5A(g) of this  Directors Plan.

(iii)Unless determined otherwise by the Committee at the time of grant and set
forth in an award agreement, subject to the applicable Nonemployee Director’s
continuous service as a member of the Board, awards of Stock Appreciation Rights
pursuant to Section 5A(b) shall become vested in equal installments on each of
the Vesting Dates that occur after the Grant Date and on or prior to the next
following January 15th; provided, however, that no Stock Appreciation Right,
whether vested or unvested, may be exercised prior to the date specified in
Section 5A(g) of this  Directors Plan.

-5-

--------------------------------------------------------------------------------

 

(iv)In the event that an Nonemployee Director ceases to serve as a member of the
Board for any reason, all Stock Appreciation Rights held by such Nonemployee
Director at the time of such cessation that have not yet become vested shall be
immediately forfeited; provided, however, that in the event of the Nonemployee
Director’s disability (as such term if defined in Section 22(e) of the Code) or
death, the Committee may, in its sole discretion, accelerate the vesting of any
unvested Stock Appreciation Rights then held by such Nonemployee Director.

(v)Notwithstanding anything herein to the contrary, in the event of a Change of
Control all unvested Stock Appreciation Rights shall be deemed fully vested and
exercisable immediately prior to the consummation of the Change of Control.

(g)Exercisability of Stock Appreciation Right Awards.

(i)Subject to the applicable Nonemployee Director’s continuous service as a
member of the Board, Stock Appreciation Rights granted under this Section 5A
that become vested pursuant to this Section 5A hereof shall be exercisable by
the Nonemployee Director on and after the second anniversary of the final
Vesting Date of the award pursuant to this Section 5A and shall remain
exercisable until the seventh (7th) anniversary of the Grant Date.

(ii)In the event that an Nonemployee Director ceases to serve as a member of the
Board for any reason prior to the second anniversary of the final Vesting Date
of an award of Stock Appreciation Rights pursuant to this Section 5A, Stock
Appreciation Rights previously granted that vested on or prior to such cessation
of service shall be exercisable by the Nonemployee Director on and after the
date of such cessation of service and shall remain exercisable until the seventh
(7th) anniversary of the Grant Date.

(iii)Notwithstanding anything herein to the contrary, all Stock Appreciation
Rights granted under this Section 5A on and after January 1, 2010 that become
vested pursuant to this Section 5A hereof shall, subject to the applicable
Nonemployee Director’s continuous service as a member of the Board, be
exercisable by the Nonemployee Director to the extent vested from and after the
applicable Vesting Date of the award pursuant to this Section 5A and shall
remain exercisable until the seventh (7th) anniversary of the Grant Date.

(h)Notwithstanding anything herein to the contrary, no Stock Appreciation Rights
shall be awarded under Section 5A of this Directors Plan on or after January 1,
2009.

5B.Equity Awards.  

(a)Form of Equity Awards.  Notwithstanding anything herein to the contrary, from
and after May 6, 2010, the Committee shall have the discretion to grant equity
awards to Nonemployee Directors (including both annual grants and grants upon
initial election to the Board) in the form of either Stock Units and/or Stock
Appreciation Rights.  

-6-

--------------------------------------------------------------------------------

 

(b)Grants Upon Initial Election to Board.  Unless otherwise determined by the
Committee, with respect to each Nonemployee Director who commences service on
the Board after January 1, 2010, upon such Nonemployee Director’s commencement
of service as a member of the Board the Committee shall grant to such
Nonemployee Director an equity award, in the form of Stock Appreciation Rights
granted under Section 8 of the Plan, Stock Units granted under Section 9 of the
Plan or a combination thereof, having a “fair value” (as determined by the
Company in accordance with FAS 123R) on the Grant Date equal to One Hundred
Thousand Dollars ($100,000) multiplied by a fraction, the numerator of which
equals (i) 365 minus (ii) the number of days that have elapsed since the most
recent Annual General Meeting of Shareholders the prior to the date on which the
Nonemployee Director commenced service as a member of the Board, and the
denominator of which equals 365.

(c)Annual Grants.  Unless otherwise determined by the Committee, for each Plan
Year beginning after January 1, 2010, on the date whereupon annual equity awards
are made to Company employees, the Committee shall grant to each Nonemployee
Director who is serving as a member of the Board as of the Grant Date an equity
award, in the form of Stock Appreciation Rights granted under Section 8 of the
Plan, Stock Units granted under Section 9 of the Plan or a combination thereof,
having a “fair value” (as determined by the Company in accordance with FAS 123R)
on the Grant Date equal to One Hundred Thousand Dollars ($100,000).

(d)Base Price.  To the extent the annual or initial equity awards are granted in
the form of Stock Appreciation Rights, the Base Price for each award of Stock
Appreciation Rights shall be the closing price of the Common Shares on the Grant
Date.

(e)Award Agreement.  Each award of equity award granted hereunder shall be
evidenced by an award agreement entered into between the Company and the
applicable Nonemployee Director and shall be subject to all of the terms and
conditions set forth herein and in the Plan.

(f)Terms and Conditions of Equity Awards.  Awards made pursuant to this Section
5B shall be subject to the following terms and conditions:

(i)Each Stock Appreciation Right awarded under this Section 5B, if any, shall
represent the right to receive, upon exercise of the Stock Appreciation Right, a
payment, paid in Common Shares, equal to (i) the excess of the Fair Market
Value, on the date of exercise, of one Common Share (as adjusted pursuant to
Section 12 of the Plan) over the Base Price of the Stock Appreciation Right,
divided by (ii) the Fair Market Value, on the date of exercise, of one Common
Share.

(ii)Unless otherwise determined by the Committee at the time of grant, the value
of each Stock Unit awarded under this Section 5B, if any, shall be equal to one
Common Share (as adjusted pursuant to Section 12 of the Plan).  

-7-

--------------------------------------------------------------------------------

 

(iii)Unless determined otherwise by the Committee at the time of grant and set
forth in an award agreement, subject to the applicable Nonemployee Director’s
continuous service as a member of the Board, awards of Stock Appreciation Rights
and/or Stock Units pursuant to Section 5B(c) shall become vested with respect to
twenty-five percent (25%) of the number of Stock Appreciation Rights and/or
Stock Units, as applicable, subject to the award on each of July 15 and October
15 of the calendar year in which the award is granted and January 15 and April
15 of the calendar year following the year in which the award is granted (each
such date is referred to herein as a “Vesting Date”).

(iii)Unless determined otherwise by the Committee at the time of grant and set
forth in an award agreement, subject to the applicable Nonemployee Director’s
continuous service as a member of the Board, awards of Stock Appreciation Rights
and/or Stock Units pursuant to Section 5A(b) shall become vested in equal
installments on each of the Vesting Dates that occur after the Grant Date and on
or prior to the next following April 15th.

(iv)In the event that an Nonemployee Director ceases to serve as a member of the
Board for any reason, all Stock Appreciation Rights and/or Stock Units held by
such Nonemployee Director at the time of such cessation that have not yet become
vested shall be immediately forfeited; provided, however, that in the event of
the Nonemployee Director’s disability (as such term if defined in Section 22(e)
of the Code) or death, the Committee may, in its sole discretion, accelerate the
vesting of any unvested Stock Appreciation Rights and/or Stock Units then held
by such Nonemployee Director.

(v)Notwithstanding anything herein to the contrary, in the event of a Change of
Control all unvested Stock Appreciation Rights and/or Stock Units shall be
deemed fully vested and exercisable immediately prior to the consummation of the
Change of Control.

(g)Exercisability of Stock Appreciation Right Awards. Subject to the applicable
Nonemployee Director’s continuous service as a member of the Board, any Stock
Appreciation Rights granted under this Section 5B that become vested pursuant to
this Section 5B hereof shall be exercisable by the Nonemployee Director on the
applicable Vesting Date of the award pursuant to this Section 5B and shall
remain exercisable until the seventh (7th) anniversary of the Grant Date.

(h)Settlement of Stock Unit Awards.  Each vested Stock Unit granted under this
Section 5B will be settled by the delivery of one Common Share (subject to
adjustment under Section 12 of the Plan) to the applicable Nonemployee Director
or, in the event of the Nonemployee Director’s death, to the Nonemployee
Director’s estate, heir or beneficiary, within thirty (30) days following the
applicable Vesting Date.  

-8-

--------------------------------------------------------------------------------

 

6.

Deferred Compensation

(a)Contributions to Deferral Accounts.  

(i)Subject to Sections 6(a)(ii) and 6(a)(iii) of this  Directors Plan, an
Independent Director may elect to defer and have credited to his or her Deferral
Account for any calendar year up to one hundred percent (100%) of his or her
Director’s Compensation (as defined below).  In addition, pursuant to
Section 5(f)(i) of this  Directors Plan, on each Grant Date the Stock Units
awarded to an Independent Director pursuant to Section 5 of this  Directors Plan
shall be automatically credited to the applicable Nonemployee Director’s
Deferral Account.  For purposes of this  Directors Plan, the term “Director’s
Compensation” means the amounts payable in cash to an Independent Director for a
calendar year for the Independent Director’s service on the Board for such
calendar year including, without limitation, annual retainer and meeting
fees.  Notwithstanding anything herein to the contrary, no deferrals shall be
made pursuant to this Directors Plan from and after January 1, 2009.

(ii)Independent Directors shall make their elections to defer all or a portion
of their Director’s Compensation for a calendar year by December 1, but no later
than December 31, immediately prior to the beginning of the calendar year in
which the Director’s Compensation is to be earned, or within thirty (30)
calendar days of eligibility to participate for a partial calendar year (with
respect to Director’s Compensation not yet earned).  Any election pursuant to
Section 6(a)(i) of this  Directors Plan shall be made by the Independent
Director by completing and delivering to the Company an election form provided
by the Company (a “Deferral Election Form”) for such calendar year no later than
the last day of the next preceding calendar year, except with respect to a
person who first becomes eligible to participate in this  Directors Plan during
a calendar year, which Independent Director may make such elections within 30
days after first becoming eligible to participate in this  Directors Plan, and
which elections shall apply only to amounts of Director’s Compensation paid for
services to be performed after the date of such election.  

(iii)All deferral elections shall be irrevocable for the calendar year in which
they are in effect.  Once made, an Independent Director’s deferral election
shall remain in effect for all subsequent calendar years for which the
Independent Director is an Independent Director unless and until the Independent
Director increases, decreases, or terminates such election by submitting a new
Deferral Election Form to the Company.  Deferral election changes must be
submitted to the Company no later than the last day of the calendar year next
preceding the calendar year for which the change is to be effective.

-9-

--------------------------------------------------------------------------------

 

(b)Distributions.

(i)Distribution Elections.  Other than with respect to Stock Units awarded on
the Effective Date, no later than the December 31 of each calendar year, each
Independent Director who is then eligible to receive an award of Stock Units
pursuant to Section 5 of this  Directors Plan shall be required to complete and
submit to the Committee an election on a form provided by the Company (a
“Distribution Election Form”) as to the timing and form of distributions from
his or her Deferral Account with respect to amounts attributable to (i) the
Stock Units awarded on the next following Grant Date and (ii) any Director’s
Compensation deferred pursuant to Section 6(a) of this  Directors Plan with
respect to the next following calendar year.  If no valid distribution election
is made with respect to an award of Stock Units, the portion of the
Participant’s Deferral Account that is attributable to such award shall be
distributed, subject to Section 5(e)(iii) of this  Directors Plan, in the form
of a lump sum payment on the second anniversary of the final Vesting Date of
such award.  If no valid distribution election is made with respect to
Director’s Compensation deferred pursuant to Section 6(a) of this  Directors
Plan, the portion of the Participant’s Deferral Account that is attributable to
such amounts shall be distributed in the form of a lump sum payment upon
termination of the Independent Director’s service as a member of the Board.  

(ii)Scheduled In-Service Distributions.  

(1)Lump Sum or Installment Payments.  A Participant may elect on a Distribution
Election Form to receive distributions from the vested portion of his or her
Deferral Account while he or she is still a member of the Board (an “In-Service
Distribution”) in (A) a single lump sum payment, or (B) annual installment
payments over a period of five (5) or ten (10) years, with the amount of each
payment determined as set forth in Section 6(b)(viii) of this  Directors
Plan.  If the amount a Participant elects to receive pursuant to an In-Service
Distribution is less than $100,000, payment shall be made in a single lump
sum.  If a Participant elects to receive installment payments under (B) above,
the amount of each installment payment shall be equal to the balance remaining
in the portion of the Participant’s Deferral Account that is subject to such
installment election (as determined immediately prior to each such payment),
multiplied by a fraction, the numerator of which is one (1), and the denominator
of which is the total number of remaining installment payments.  The installment
amount shall be adjusted annually to reflect gains and losses, if any, allocated
to such Participant’s Deferral Account pursuant to Section 6(c)(ii).  

(2)Time of Distributions.  A Participant’s election under this Section 6(b)(ii)
must specify the future year in which the payment of the deferred amounts shall
commence, provided that the year in which an In-Service Distribution of amounts
attributable to an award of Stock Units is to commence must be at least two (2)
years after the final Vesting Date of such award.  

-10-

--------------------------------------------------------------------------------

 

(3)Separate Annual Elections.  Any desired In-Service Distribution must be
separately elected for each Stock Unit award and for any Director’s Compensation
deferred in any one calendar year.  Thus, to elect a scheduled In-Service
Distribution with respect to a specific year’s Stock Units and Director’s
Compensation, a new Distribution Election Form must be submitted during the
applicable election period.  Once the applicable election period has passed, an
In-Service Distribution may not be elected for that the portion of the
Participant’s Deferral Account attributable to Stock Units awarded and
Director’s Compensation earned in that year.

(4)Amendment of Election.  A Participant may delay the commencement of an
In-Service Distribution or amend his or her election as to the form of the
distribution at any time provided that (A) such amendment must be made in the
manner specified by the Committee at least one (1) calendar year prior to the
date the distribution would otherwise commence, (B) the amendment will not take
effect until at least one (1) calendar year after the amendment is submitted,
and (C) the amendment provides for the deferral of the date of payments commence
for a minimum of five (5) additional years.  For purposes of the limitation set
forth clause (C) of the preceding sentence, distributions that are to be paid in
installments (as opposed to in a lump sum) shall be treated as a single payment
payable on the date the installments are due to commence.  Any change in the
form or timing of payment may not accelerate distributions to the Participant,
except to the extent permitted under Section 409A of the Code without the
imposition of the additional tax set forth in Section 409A(a)(1)(B) of the
Code.  

(5)Termination of Board Service Prior to Completion of In-Service
Distribution.  If a Participant’s Board service with the Company terminates for
any reason prior to receiving full payment of an In-Service Distribution or
while he or she is receiving scheduled installment payments pursuant to this
Section 6(b)(ii), the unpaid portion of the Participant’s elected distribution
shall be paid in accordance with Section 6(b)(iii) below.

(iii)Distributions upon Termination of Board Service for Reasons Other Than
Death.  

(1)Lump Sum or Installment Payments.  As an alternative to electing an
In-Service Distribution under Section 6(b)(ii) of this  Directors Plan, a
Participant may elect on a Distribution Election Form to receive the vested
balance credited to his or her Deferral Account following termination of Board
service for any reason other than death in (A) a single lump sum payment, or
(B) annual installment payments over a period of five (5) or ten (10) years,
with the amount of each payment determined as set forth in Section 6(b)(viii) of
this  Directors Plan.  If the amount a Participant elects to receive pursuant to
an In-Service Distribution is less than $100,000, payment shall be made in a
single lump sum.  If a Participant elects to receive installment payments under
(B) above, the amount of each installment payment shall be equal to the balance
remaining in the portion of the Participant’s Deferral Account that is subject
to such installment election (as determined immediately prior to each such
payment), multiplied by a fraction, the numerator of which is one (1), and the
denominator of which is the total number of remaining installment payments.  The
installment amount shall be adjusted annually to reflect gains and losses, if
any, allocated to such Participant’s Deferral Account pursuant to
Section 6(c)(ii).  

-11-

--------------------------------------------------------------------------------

 

(2)Death of Participant.  If a Participant dies prior to receiving full payment
his or her Deferral Account as elected under this Section 6(b)(iii), the balance
of the vested portion of such Participant’s Deferral Account shall be paid to
the Participant’s designated beneficiary in the form of a lump sum as soon as
administratively practicable following the Participant’s death.  The amount of
any such lump sum payment shall be determined as set forth in
Section 6(b)(viii).

(iv)Stock Units Awarded on Effective Date.  Notwithstanding anything herein to
the contrary, that portion of a Participant’s Deferral Account that is
attributable the award of Stock Units pursuant to Section 5 of this  Directors
Plan on the Effective Date shall be distributed, subject to Section 5(e)(iii) of
this  Directors Plan, in the form of a lump sum payment on the third anniversary
of the Effective Date.

(v)Form of Distribution.  That portion of a Participant’s Deferral Account that
remains notionally invested, at the time of distribution, in Stock Units and/or
Common Shares shall be distributed in the form of Common Shares.  That portion
of a Participant’s Deferral Account that is notionally invested, at the time of
distribution, in any investment alternative other than Stock Units or Common
Shares shall be distributed in cash.

(vi)Financial Hardship.  The Committee shall have the authority to alter the
timing or manner of payment of amounts credited to a Participant’s Deferral
Account in the event that the Participant establishes, to the satisfaction of
the Committee, “severe financial hardship” (as defined herein).  For purposes of
this Section 6(b)(vi), “severe financial hardship” shall mean any financial
hardship resulting from the illness or injury of a Participant or dependent (as
determined by the Committee), the casualty loss of a Participant’s real or
personal property, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.  In any event, payment under this Section 6(b)(vi) may not be made
to the extent such emergency is or may be relieved: (A) through reimbursement or
compensation by insurance or otherwise; or (B) by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship.  Withdrawals of amounts because of a
severe financial hardship may only be permitted to the extent reasonably
necessary to satisfy the hardship, plus to pay taxes on the withdrawal.  The
Participant’s Deferral Account will be credited with earnings in accordance with
this Section 6 up to the date of distribution.

(vii)Incompetence of Distributee.  In the event that it shall be found that a
person entitled to receive payment under the Plan (including a designated
beneficiary) is a minor or is physically or mentally incapable of personally
receiving and giving a valid receipt for any payment due (unless prior claim
therefor shall have been made by a duly qualified committee or other legal
representative), such payment may be made to any person whom the Committee in
its sole discretion determines is entitled to receive it, and any such payment
shall fully discharge the Company, the Company, the Committee and the Plan from
any further liability to the person otherwise entitled to payment hereunder, to
the extent of such payment.  

-12-

--------------------------------------------------------------------------------

 

(viii)Value of Stock Units on Distribution.  In the event of a distribution
hereunder, the amount payable to the Participant receiving such distribution
shall be as follows:  

(A)In the event Participant has selected an investment other than Stock Units or
Common Shares, and such Participant has elected to take payment of the Deferral
Account in a lump sum payout, or a lump sum payout is otherwise required
hereunder, the Company shall pay the Participant an amount in cash equal to the
balance in such Participant’s Deferral Account as of the date elected by the
Participant, or as of the date of the event requiring such lump sum payout, as
the case may be.

(B)In the event Participant has selected investment an investment other than
Stock Units or Common Shares, and such Participant has elected to take payment
of the Deferral Account in installments, the Company shall pay the Participant
annually installment payments, with each payment equal to the balance of the
Deferral Account on the applicable anniversary date selected by Participant,
divided by the number of installments remaining.

(C)In the event Participant has selected investment in Stock Units and/or Common
Shares, and such Participant has elected to take payment of the Deferral Account
in a lump sum payout, or a lump sum payout is otherwise required hereunder, the
Company shall, subject to Section 16 of the Plan, issue to the Participant a
number of Common Shares equal to the number of Stock Units and Common Shares in
such Participant’s Deferral Account.

(D)If Participant has selected investment in Stock Units and/or Common Shares,
and such Participant has elected to take payment of the Deferral Account in
installment payouts, such Participant shall receive on each installment payment
date, subject to Section 16 of the Plan, a number of Common Shares equal to the
total number of Stock Units and Common Shares in such Participant’s Deferral
Account, divided by the number of installments elected.

(E)Any distributions due by the Company under this Section 6 shall be made as
soon as administratively feasible, but, subject to Section 16 of the Plan, in no
event later than the thirtieth (30th) day after the day the amount of such
payment is determined pursuant to this Section 6(b)(viii).

(ix)Section 457A.  Notwithstanding anything herein to the contrary, to the
extent necessary for this  Directors Plan to comply with Section 457A of the
Code, all amounts deferred pursuant to this  Directors Plan and not distributed
in accordance with the terms hereof before December 31, 2017 shall be
distributed in lump sum to the applicable Participant on December 31, 2017.

-13-

--------------------------------------------------------------------------------

 

(c)Deferral Accounts.

(i)Participants’ Accounts.  The Company shall establish and maintain an
individual bookkeeping Deferral Account for each Participant.  Each Deferral
Account shall be credited with Stock Units in accordance with Section 6(a) of
this  Directors Plan, generally within five (5) business days of the applicable
Grant Date, and as provided in Section 6(c)(ii).  Each Deferral Account shall be
credited with the value of any Director’s Compensation deferred in accordance
with Section 6(a) of this  Directors Plan, generally within five (5) business
days of the date on which such amounts would have otherwise been paid to the
applicable Independent Director, and as provided in Section 6(c)(ii).  Except as
set forth in Section 5(e), each Participant shall be fully vested in his or her
Deferral Account at all times.

(ii)Earnings on Deferred Amounts.  

(1)A Participant’s Deferral Account shall be credited with earnings (or losses)
based on a deemed investment of the Participant’s Deferral Account, as directed
by each Participant, which deemed investment shall be Stock Units/Common Shares
or one or more hypothetical investment alternatives made available by the
Committee from time to time; provided, however, that amounts credited to a
Participant’s Deferral Account in respect of an award Stock Units under
this  Directors Plan must remain invested Stock Units and/or Common Shares.  A
Participant shall have no voting rights or any other rights as a holder of
Common Shares with respect to any Stock Units or Common Shares allocated to his
or her Deferral Account; provided, however, that notwithstanding the foregoing,
to the extent a Participant has had Common Shares credited to such Participant’s
Deferral Account and the Company pays cash dividends with respect to the Common
Shares, such Participant’s Deferral Account will be credited with an additional
number of Common Shares equal to (A) the dividend per Common Share multiplied by
(B) the number of Common Shares in such Participant’s Deferral Account divided
by (C) the Fair Market Value of one Common Share on the date such dividend is
paid to the holders of Common Shares.  

(2)Deemed earnings (and losses) on a Participant’s Deferral Account shall be
credited to a Participant’s Deferral Account on a daily basis.  Any portion of a
Participant’s Deferral Account which is subject to distribution in installments
shall continue to be credited with deemed earnings (or losses) until fully paid
out to the Participant.

(3)The Committee reserves the right to change the options available for deemed
investments under the Plan from time to time, or to eliminate any such option at
any time.  A Participant may specify a separate investment allocation with
respect any portion of his or her Deferral Account, subject to limitations
imposed by the Committee.  Participants may modify their deemed investment
instructions each business day with respect to any portion (whole percentages
only) of their Deferral Account; provided they notify the Committee or its
designee within the time and in the manner specified by the
Committee.  Elections and amendments thereto pursuant to this Section 6(c)(ii)
shall be made in the manner prescribed by the Committee.

-14-

--------------------------------------------------------------------------------

 

(iii)Designation of Beneficiary.  Each Participant may designate a beneficiary
or beneficiaries (each a “Beneficiary”) who, upon the Participant’s death, or
physical or mental incapacity will receive the amounts that otherwise would have
been paid to the Participant under this  Directors Plan.  All designations shall
be signed by the Participant, and shall be in such form as prescribed by the
Committee.  Each designation shall be effective as of the date delivered to the
Committee or its designee by the Participant.  Participants may change their
beneficiary designations on such form as prescribed by the Committee.  The
payment of amounts credited to a Participant’s Deferral Account shall be in
accordance with the last unrevoked written beneficiary designation that has been
signed by the Participant and delivered to the Committee or its designee prior
to the Participant’s death.  In the event that all the beneficiaries named by a
Participant pursuant to this Section 6(c)(iii) predecease the Participant, the
deferred amounts that would have been paid to the Participant or the
Participant’s beneficiaries shall be paid to the Participant’s estate.  In the
event a Participant does not designate a beneficiary, or for any reason such
designation is ineffective, in whole or in part, the amounts that otherwise
would have been paid to the Participant or the Participant’s beneficiaries under
the Plan shall be paid to the Participant’s estate.

(d)Trust.  Nothing contained in this  Directors Plan shall create a trust of any
kind or a fiduciary relationship between the Company and any
Participant.  Nevertheless, the Company may establish one or more trusts, with
such trustee(s) as the Committee may approve, for the purpose of providing for
the payment of deferred amounts and earnings thereon.  Such trust or trusts may
be irrevocable, but the assets thereof shall be subject to the claims of the
Company’s general creditors upon the bankruptcy or insolvency of the Company.  

(e)Nontransferability.  Participants’ rights to deferred amounts and earnings
credited thereon under the  Directors Plan may not be sold, transferred,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution, or pursuant to a domestic relations order, nor
shall the Company make any payment under the  Directors Plan to any assignee or
creditor of a Participant.

7.

Rights of Participants.  

(a)Contractual Obligation.  The  Directors Plan shall create an unfunded,
unsecured contractual obligation on the part of the Company to make payments due
under Stock Unit awards, and to make payments from the Participants’ Deferral
Accounts when due.  Payments under the  Directors Plan shall be made out of the
general assets of the Company or from the trust or trusts referred to in
Section 6(d) above.

(b)Unsecured Interest.  No Participant or party claiming an interest in benefits
of a Participant hereunder shall have any interest whatsoever in any specific
asset of the Company. To the extent that any party acquires a right to receive
payments under the  Directors Plan, such right shall be equivalent to that of an
unsecured general creditor of the Company.  Each Participant, by participating
hereunder, agrees to waive any priority creditor status with respect to any
amounts due hereunder.  The Company shall have no duty to set aside or invest
any amounts credited to Participants’ Deferral Accounts or Stock Unit awards
under this  Directors Plan.  Accounts established hereunder are solely for
bookkeeping purposes and the Company shall not be required to segregate any
funds based on such accounts.

-15-

--------------------------------------------------------------------------------

 

8.

Miscellaneous.  

(a)Notice.  Any notice or filing required or permitted to be given to the
Company under the  Directors Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail to the Committee, and if
mailed, shall be addressed to the principal executive offices of the
Company.  Notice mailed to a Participant shall be at such address as is given in
the records of the Company.  Notices to the Company shall be deemed given as of
the date of delivery.  Notice to a Participant or beneficiary shall be deemed
given as of the date of hand delivery, or if delivery is made by mail, three (3)
days following the postmark date.

(b)Costs of the  Directors Plan.  All costs of implementing and administering
the  Directors Plan shall be borne by the Company.

9.

Amendments and Termination

The Company reserves the right to amend, modify, or terminate the  Directors
Plan (in whole or in part) at any time by action of the Board or the Committee,
with or without prior notice.  Except as described below in this Section 9, no
such amendment or termination shall in any material manner adversely affect any
Participant’s rights to any amounts already deferred or credited hereunder or
deemed earnings thereon, up to the point of amendment or termination, without
the consent of the Participant.  Termination of the  Directors Plan shall not be
a permitted distribution event, except to the extent permitted under Section
409A of the Code without the imposition of any additional taxes or other
penalties under Section 409A of the Code.  If payout is commenced pursuant to
the operation of this Section 9, the payment of deferred amounts and earnings
thereon shall be made in the manner selected by each Participant under
Section 6(b)(iii) herein (other than the commencement date).

Subject to the above provisions, the Board shall have broad authority to amend
the  Directors Plan to take in to account changes in applicable securities and
tax laws and accounting rules.

10.

General Provisions

(a)Additional Compensation Arrangements.  Nothing contained in this  Directors
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required, and
such arrangements may be either generally applicable or applicable only in
specific cases.  

(b)No Right to Continued Service.  Neither the adoption of the  Directors Plan
nor the award of Stock Units hereunder shall confer upon any individual any
right to continued service as a member of the Board, nor shall it interfere in
any way with the right of the Company to terminate the service of an individual
at any time.

-16-

--------------------------------------------------------------------------------

 

(c)Arbitration.  Any individual making a claim for benefits under
this  Directors Plan may contest the Committee’s decision to deny such claim or
appeal therefrom only by submitting the matter to binding arbitration before a
single arbitrator.  Any arbitration shall be held in Los Angeles, California,
unless otherwise agreed to by the Committee.  The arbitration shall be conducted
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association.  The arbitrator’s authority shall be limited to the affirmation or
reversal of the Committee’s denial of the claim or appeal, based solely on
whether or not the Committee’s decision was arbitrary or capricious, and the
arbitrator shall have no power to alter, add to, or subtract from any provision
of this  Directors Plan.  Except as otherwise required by applicable law, the
arbitrator’s decision shall be final and binding on all parties, if warranted on
the record and reasonably based on applicable law and the provisions of
this  Directors Plan.  The arbitrator shall have no power to award any punitive,
exemplary, consequential or special damages, and under no circumstances shall an
award contain any amount that in any way reflects any of such types of
damages.  Each party shall bear its own attorney’s fees and costs of
arbitration.  Judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.  

11.

Governing Law.

The  Directors Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the internal laws of the State of
California.

-17-