EXHIBIT 10.15


 


NOTICE TO DISTRIBUTORS


 


Dated As Of July 18, 2002


 


Regarding


 


Amendment To
The Agreements Of Distributorship


 


Between


 


HERBALIFE INTERNATIONAL, INC.


 


And


 


EACH HERBALIFE DISTRIBUTOR


 
















 


AMENDMENT TO AGREEMENTS OF
DISTRIBUTORSHIP


 


THIS AMENDMENT TO THE AGREEMENTS OF
DISTRIBUTORSHIP (“Amendment”) is made and entered into as of July 18, 2002
by HERBALIFE INTERNATIONAL, INC., a Nevada corporation (the “Company”), for the
benefit of all of the Company’s existing and future independent distributors
that meet (and continue to meet) the requirements to become (or remain) a
distributor according to Company policy (“Distributors”).


 


RECITALS


 


A.                                   Whereas the
Company distributes its products through individuals acting as independent
distributors.


 


B.                                     Whereas the
Company acknowledges the importance of its Distributors to the ongoing success
and growth of the Company.


 


C.                                     Whereas the
Company has operated for years based on paying its Distributors under the
Company Sales and Marketing Plan and utilizing its Distributors as its
exclusive means of distribution for the sale of Herbalife products.


 


D.                                    Whereas the
Distributors, to continue as Herbalife Distributors, desire assurances that no
material changes adverse to the Distributors will be made to the existing
Company Sales and Marketing Plan or the use of Distributors as the exclusive
means of distribution of Herbalife products.


 


E.                                      Whereas in
consideration for the Company giving assurances that no material changes
adverse to the Distributors will be made to the existing Company Marketing Plan
or to its use of Distributors as the exclusive means of distribution of
Herbalife products, the Distributors will continue to distribute Herbalife
products following the consummation of the proposed merger pursuant to the
Agreement and Plan of Merger by and among the Company, WH Acquisition Corp. and
WH Holdings (Cayman Islands) Ltd. dated as of April 10, 2002.


 


NOW, THEREFORE, in consideration of the
foregoing, the receipt and adequacy of which is hereby acknowledged, the
Company agrees as follows:


 


1.                                       Distribution
of Company Products by Independent Distributors. The Company agrees to continue
to distribute its products exclusively through individuals acting as
independent Distributors. Such Distributors will be encouraged both to sell
products directly to customers and (subject to compliance with any applicable
law) to develop their own networks of individuals acting as independent
Distributors. Subject to compliance with any applicable law (United States
federal, state or local, and the laws of any other governmental authority with
jurisdiction over the Company), the Company also agrees not to materially
change the existing requirements for becoming a Distributor, which will
continue to be minimal and non-burdensome.


 


In connection with the distribution of the
Company’s products, the Company shall therefore not (i) adopt any strategy
which would entail multiple distribution channels, (ii) enter into any
exclusive sales agreement, or (iii) enter into any exclusive license agreement
with respect to any geographic area or territory.


 


2.                                       Establishment
and Maintenance of Distributor Networks. The Company agrees to continue to
permit the development of Distributor networks without any geographic or
exclusive territory restrictions, subject to limitations on activities in
countries which have not been cleared by the Company for product sales and
subject to restrictions imposed on the development of such Distributor


 


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networks by any
governmental authority, including but not limited to any applicable laws or
regulations. The Company will continue to develop and maintain rules and
regulations and other Company policies and procedures to assist the
Distributors in establishing networks and maintain and protect the integrity of
Distributor networks once established.


 


3.                                       Marketing
Plan. The Company may increase but not decrease the current discount
percentages available to Distributors for the purchase of products from the
Company and may increase but not decrease the applicable royalty override
percentages (including roll-ups) and production and other bonus percentages
available to Distributors at various qualification levels below the percentage
levels currently provided for in the Company’s Sales and Marketing Plan,
including the Rules of Conduct & Distributor Policies (the “Rules of
Conduct”), the Company’s Career Book and other Company promotional material and
literature regarding Distributors (collectively, “Company Distributor Material”),
in effect as of the date hereof.


 


The Company further agrees not to modify
the criteria for eligibility for such discounts and/or the qualification
criteria for royalty overrides and production and other bonuses, unless it does
so in a manner to make eligibility and/or qualification easier but not more
difficult than under the applicable criteria currently provided for in Company
Distributor Material in effect as of the date hereof.


 


The Company also agrees not to vary the
criteria for qualification for each distributor tier (including, without
limitation, the Chairman’s Club, 50K President, 30K President, 20K President,
President’s Team, Millionaire Team, Global Expansion Team, World Team,
Supervisor and Senior Consultant tiers) unless it does so in such a way so as
to make qualification easier but not more difficult.


 


Without limiting the foregoing, (i) the
Company may decrease but may not increase the royalty override qualification
thresholds of 1,000, 4,000, 10,000, 20,000, 30,000, and 50,000 royalty override
points for 2%, 4%, 6% 6.5%, 6.75% and 7% production bonuses, respectively, paid
to TAB Team Distributors and may increase but may not decrease such
percentages, (ii) the Company may increase but not decrease the aggregate
President’s Council bonus below its current level of 1% of retail product sales
and (iii) the Company may not, in countries where the Company is currently
operating, materially change the relative relationship between the volume
points, the adjusted retail price and/or the retail price of all products sold
by the Company in the markets in which such products are being sold, unless
such changes are made to convert adjusted retail prices up to a full retail
price basis (i.e., one volume point per US $1.00 in the United States) or unless
such changes are required by applicable law or are necessary in the Company’s
reasonable business judgment to account for specific local market conditions or
local currency conditions to achieve a reasonable profit on operations in such
respective market or markets.


 


4.                                       Herbalife
Products. The Company will continue to endeavor to provide Distributors with
high quality products for distribution, and will use reasonable commercial
efforts to meet the demand of Distributors for the Company’s products.


 


5.                                       Termination
of Distributors. The Company maintains the right to terminate any Distributor
of the Company who violates the Company Rules of Conduct and Distributor
Policies or other rules and regulations of the Company as adopted or amended,
consistent with Company policies and procedures as


 


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published in the
Career Manual or other Company literature (the “Company Rules”). The Company
however does not have the right to terminate a Distributor who does not violate
the Company Rules.


 


A terminated Distributor must however be
provided an opportunity to appeal such decision in accordance with the Rules of
Conduct and Distributor policies and must be given an opportunity to present
evidence relevant to the termination decision.


 


Upon receipt of the appeal and other
evidence, the Company must review the terminated Distributor’s file and prepare
a summary of the evidence for and against such termination and submit such
summary without identifying the complaining party or parties, the terminated
Distributor or his or her upline or downline to a committee comprised of an
appointed representative from each of the Sales Department, the Distributor
Relations Department and the Legal Department (the “Review Committee”). If a
majority of the Review Committee determines that the terminated Distributor
should not have been terminated, the Distributor shall be reinstated, but the
Review Committee shall recommend an alternative penalty, if any, for the
alleged violations. In making a termination decision, however, the Review
Committee must consider whether the alleged violation was material.


 


6.                                       Death of A Distributor. Subject to applicable laws, a Distributorship
may, upon the death of the Distributor, be transferred to a spouse or heir who
is, or upon the transfer becomes, an active participant in the business,
subject to the prior written approval of Herbalife, which approval shall not be
unreasonably withheld, and subject to reasonable terms and conditions of
transfer (including, without limitation, demonstration to Herbalife’s
satisfaction that the proposed transferee has the ability to actively promote
the business and provide services as a distributor).


 


In the event of such a transfer, the
transferee shall succeed to the qualification level and earning status
generated by the Distributorship without any reduction based solely as a result
of the death of the decedent.


 


7.                                       Privacy.
The Company agrees that all Distributor records are confidential and will not
disclose any such information except (i) in the ordinary course of business,
(ii) as determined by the Board of Directors or senior management of the
Company to be necessary or appropriate so long as the recipient of any such
information is bound by a confidentiality agreement and as may be required by
law, legal process, regulation or other reasonable governmental or governmental
agency request.


 


8.                                       Term. The
term of this Amendment shall commence from the Effective Date hereof as set
forth in Section 11 of this Amendment and shall continue until terminated
or amended by the approval of (a) not less than fifty-one percent (51%) of the
Distributors then at the level of Presidents Team earning at the production
bonus level of 6% of the Company who respond to ballots sent to 100% of such
Distributors, provided however that at least 50% of those Distributors entitled
to vote return their ballots to the Company; and (b) a majority of the Board of
Directors of the Company.


 


9.                                       Future
Distributors.  The Company makes this
Amendment for the benefit of all future Distributors and agrees to include this
Amendment in the terms of the Agreement of Distributorship of each future
Distributor.


 


10.                                 Controlling
Effect. In the event of any inconsistency between this


 


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Amendment, any Company Distributor Material
and any other document, instrument or agreement to which the Company is now or
hereafter becomes a party, the provisions of this Amendment, as amended (or
terminated) in accordance with Section 8 of this Amendment, shall prevail
and be given effect.


 


11.                                 Effective
Date. This Amendment is expressly conditioned upon and shall be effective only
upon the date of consummation of the proposed merger pursuant to the Agreement
and Plan of Merger by and among the Company, WH Acquisition Corp and WH
Holdings (Cayman Islands) Ltd. dated as of April 10, 2002.


 


12.                                 Governing
Law. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of California, without regard to
conflicts of law principles.


 


13.                                 Successors
and Assigns. All covenants and other agreements contained in this Amendment by
or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors (including, without limitation, any successor in
any merger, consolidation or other business combination in which the Company is
not the surviving entity) and assigns whether so expressed or not. This
Amendment may not be assigned by the Company; provided, however, that in the
event substantially all of the assets or substantially all of the business of
the Company or the Herbalife trade names or trademarks are to be disposed of by
the Company in one or a series of transactions, the Company shall assign this
Amendment to the Acquiror(s) of substantially all of the assets or
substantially all of the business of the Company or the Herbalife trade names
or trademarks in such transaction or transactions and such Acquiror(s) will
agree to assume the Company’s obligations hereunder. This Section 13 will
apply to successive successors (including, without limitation, any successor in
any merger, consolidation or other business combination in which the Company is
not the surviving entity) of the parties hereto and successive assigns of this
Amendment. In consideration of the provisions of this Section 13, each
Distributor accepting the benefits of this amendment agrees not to employ or
recruit any present, former or future employee or Distributor of the Company or
any of its subsidiaries to serve in any type of management capacity, as an
employee, consultant, advisor, distributor, member or otherwise, for any person
or entity, other than the Company or any of its subsidiaries, that engages in
the business of selling products through a multi-level or network marketing
system or the sale of weight management products, nutritional supplements or
personal care products anywhere in the United States or any other country in
which the Company or one of its subsidiaries operates.


 


14.                                 Severability
of Provisions. The provisions of this Amendment are severable, and the
invalidity or unenforceability of any provision or provisions of this Amendment
or portions thereof shall not affect the validity or enforceability of any
other provision, or portion of this Amendment, which shall remain in full force
and effect as if executed with the unenforceable or invalid provisions or
portion thereof eliminated.


 


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


 


	
   

  	
  HERBALIFE INTERNATIONAL, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis X. Tirelli 

  
	
   

  	
  Name: 

  	
  Francis X. Tirelli

  
	
   

  	
  Title:

  	
  President & CEO

  



 


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