Document:

Exhibit 10.4

 

HERBALIFE
INTERNATIONAL OF AMERICA, INC.

MANAGEMENT
DEFERRED COMPENSATION PLAN

EFFECTIVE
JANUARY 1, 1996

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  Selection, Enrollment, Eligibility

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Selection by Committee

  	
   

  
	
   

  	
  2.2

  	
  Enrollment Requirements

  	
   

  
	
   

  	
  2.3

  	
  Eligibility; Commencement of Participation

  	
   

  
	
   

  	
  2.4

  	
  Termination
  of Participation and/or Deferrals

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  Deferral Commitments/Interest Crediting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Minimum Deferral

  	
   

  
	
   

  	
  3.2

  	
  Maximum Deferral

  	
   

  
	
   

  	
  3.3

  	
  Election to Defer; Effect of
  Election Form

  	
   

  
	
   

  	
  3.4

  	
  Withholding of Deferral
  Amounts

  	
   

  
	
   

  	
  3.5

  	
  Interest
  Crediting Prior to Distribution

  	
   

  
	
   

  	
  3.6

  	
  Interest
  Crediting for Installment Distributions

  	
   

  
	
   

  	
  3.7

  	
  FICA Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  Short-Term Payout; Unforeseeable Financial
  Emergencies; Withdrawal Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Short-Term Payout

  	
   

  
	
   

  	
  4.2

  	
  Withdrawal Payout/Suspensions for
  Unforeseeable Financial Emergencies

  	
   

  
	
   

  	
  4.3

  	
  Withdrawal Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  Retirement Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Retirement Benefit

  	
   

  
	
   

  	
  5.2

  	
  Payment of Retirement
  Benefits

  	
   

  
	
   

  	
  5.3

  	
  Death
  Prior to Completion of Retirement Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  Pre-Retirement Survivor Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Pre-Retirement Survivor
  Benefit

  	
   

  
	
   

  	
  6.2

  	
  Payment of
  Pre-Retirement Survivor Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  Termination Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Termination Benefits

  	
   

  
	
   

  	
  7.2

  	
  Payment of Termination
  Benefit

  	
   

  
	
   

  	
  7.3

  	
  Death
  Prior to Completion of Termination Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  Disability Waiver and Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Disability Waiver

  	
   

  
	
   

  	
  8.2

  	
  Benefit Eligibility

  	
   

  

 

i

 

	
  ARTICLE 9

  	
  Beneficiary Designation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Beneficiary

  	
   

  
	
   

  	
  9.2

  	
  Beneficiary
  Designation; Change; Spousal Consent

  	
   

  
	
   

  	
  9.3

  	
  Acknowledgment

  	
   

  
	
   

  	
  9.4

  	
  No Beneficiary Designation

  	
   

  
	
   

  	
  9.5

  	
  Doubt as to Beneficiary

  	
   

  
	
   

  	
  9.6

  	
  Discharge of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  Leave of Absence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Paid Leave of Absence

  	
   

  
	
   

  	
  10.2

  	
  Unpaid Leave of Absence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  Termination, Amendment or Modification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Termination

  	
   

  
	
   

  	
  11.2

  	
  Amendment

  	
   

  
	
   

  	
  11.3

  	
  Effect of Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  Administration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Committee Duties

  	
   

  
	
   

  	
  12.2

  	
  Agents

  	
   

  
	
   

  	
  12.3

  	
  Binding Effect of Decisions

  	
   

  
	
   

  	
  12.4

  	
  Indemnity of Committee

  	
   

  
	
   

  	
  12.5

  	
  Employer Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  Claims Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Presentation of Claim

  	
   

  
	
   

  	
  13.2

  	
  Notification of Decision

  	
   

  
	
   

  	
  13.3

  	
  Review of a Denied Claim

  	
   

  
	
   

  	
  13.4

  	
  Decision on Review

  	
   

  
	
   

  	
  13.5

  	
  Legal Action

  	
   

  
	
   

  	
  13.6

  	
  Arbitration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Establishment of Trust

  	
   

  
	
   

  	
  14.2

  	
  Interrelationship
  of the Plan and the Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Unsecured General Creditor

  	
   

  
	
   

  	
  15.2

  	
  Employer’s Liability

  	
   

  
	
   

  	
  15.3

  	
  Nonassignability

  	
   

  
	
   

  	
  15.4

  	
  Coordination with
  Other Benefits

  	
   

  
	
   

  	
  15.5

  	
  Not a Contract of Employment

  	
   

  
	
   

  	
  15.6

  	
  Furnishing Information

  	
   

  

 

ii

 

	
   

  	
  15.7

  	
  Terms

  	
   

  
	
   

  	
  15.8

  	
  Captions

  	
   

  
	
   

  	
  15.9

  	
  Governing Law

  	
   

  
	
   

  	
  15.10

  	
  Notice

  	
   

  
	
   

  	
  15.11

  	
  Successors

  	
   

  
	
   

  	
  15.12

  	
  Spouse’s Interest

  	
   

  
	
   

  	
  15.13

  	
  Validity

  	
   

  
	
   

  	
  15.14

  	
  Incompetent

  	
   

  
	
   

  	
  15.15

  	
  Distribution in
  the Event of Taxation

  	
   

  
	
   

  	
  15.16

  	
  Legal
  Fees to Enforce Rights After Change in Control

  	
   

  

 

iii

 

PURPOSE

 

The purpose of this Plan is to provide
specified benefits to a select group of management or highly compensated
employees who contribute materially to the continued growth, development and
future business success of HERBALIFE INTERNATIONAL OF AMERICA, INC., a
California corporation, and its subsidiaries.

 

ARTICLE 1

DEFINITIONS

 

For purposes hereof, unless otherwise
clearly apparent from the context, the following phrases or terms shall have
the following indicated meanings:

 

1.1                                 “Account
Balance” shall mean, with respect to a Participant, his or her Elective
Deferral Account.

 

1.2                                 “ANNUAL
Bonus” shall mean any compensation, in addition to Base Annual Salary, paid annually
in respect of a Plan Year to a Participant as an employee under the Company’s
Management Incentive Plan. An annual Bonus for a Plan Year may, but need not,
be paid during such Plan Year.

 

1.3                                 “Annual
Deferral Amount” shall mean that portion of a Participant’s Base Annual Salary
and/or Annual Bonus that a Participant elects to have and is deferred, in
accordance with Article 3), for any one Plan Year.

 

1.4                                 “Base
Annual Salary” shall mean the annual compensation (excluding bonuses,
commissions, overtime, incentive payments, non-monetary awards, Directors Fees
and other fees, stock options and grants, and car allowances) paid to a
Participant for services rendered to any Employer, before reduction for
compensation deferred pursuant to all qualified, non-qualified and Code
Section 125 plans (other than compensation deferred under individual
employment contracts) of any Employer. The Committee may, in its discretion,
with respect to any one or more Participants establish for any Plan Year a
limit on the amount of Base Annual Salary to be taken into account under this
Plan. Such limitation shall be reflected in the Participant’s Plan Agreement,
as it may be amended from time to time.

 

1

 

 

1.5                                 “Beneficiary”
shall mean one or more persons, trusts, estates or other entities, designated
in accordance with Article 9, that are entitled to receive benefits under
the Plan upon the death of a Participant.

 

1.6                                 “Beneficiary
Designation Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
designate one or more Beneficiaries.

 

1.7                                 “Board”
shall mean the board of directors of the Company.

 

1.8                                 “Change in
Control” shall mean the first to occur of any of the following events:

 

(a)                                  Any
“person” (as that term is used in Section 13 and 14(d)(2) of the
Securities Exchange Act of 1934 (“Exchange Act”)), other than Mark Hughes, the
Hughes Family Trust or any entity with respect to which Mark Hughes has
investment or dispositive power or authority, after the date hereof becomes the
beneficial owner (as that term is used in Section 13(d) of the Exchange
Act), directly or indirectly, of 50 percent or more of the Company’s capital
stock entitled to vote in the election of directors;

 

(b)                                 During, any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by the
Company’s shareholders of each new director was approved by a vote of at least
three-quarters of the directors still in office who were directors at the
beginning of the period;

 

(c)                                  Any
consolidation or merger of the Company, other than a consolidation or merger of
the Company in which the holders of the common stock of the Company immediately
prior to the consolidation or merger hold more than 50 percent of the common
stock of the surviving corporation immediately after the consolidation or
merger;

 

(d)                                 The
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or

 

(e)                                  Substantially
all of the assets of the Company are sold or otherwise transferred to parties
that are not within a “controlled group of corporations” (as defined in
Section 1563 of the Code) in which the Company is a member.

 

1.9                                 “Claimant”
shall have the meaning set forth in Section 13.1.

 

2

 

1.10                           “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

1.11                           “Committee”
shall mean the administrative committee appointed to manage and administer the
Plan in accordance with its provisions pursuant to Article 12.

 

1.12                           “Company”
shall mean HERBALIFE INTERNATIONAL OF AMERICA, INC., a California corporation.

 

1.13                           “Crediting
Rate” shall mean, for each plan year, an interest rate equal to 120 percent of
the “Moody’s Corporate Bond Rate” in effect for September (and published
in the immediately following October) of the prior year. The “Moody’s Corporate
Bond Rate” is an arithmetic average of yields of representative bonds,
including industrials, public utilities, Aaa, Aa, A and Baa bonds, published by
Moody’s Investors Service, Inc. or any successor to that service.

 

1.14                           “Deduction
Limitation” shall mean the following described limitation on the annual benefit
that may be distributed pursuant to the provisions of this Plan. The limitation
shall be applied to distributions under this Plan as expressly set forth in
this Plan. If the Company determines in good faith prior to a Change in Control
that there is a reasonable likelihood that any compensation paid to a
Participant for a taxable year of the Company would not be deductible by the
Company solely by reason of the limitation under Code Section 162(m), then
to the extent deemed necessary by the Company to ensure that the entire amount
of any distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Company may defer all or any portion of
the distribution. Any amounts deferred pursuant to this limitation shall
continue to be credited with interest in accordance with Section 3.5
below. The amounts so deferred and interest thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the Participant’s death)
at the earliest possible date, as determined by the Company in good faith, on
which the deductibility of compensation paid or payable to the Participant for
the taxable year of the Company during which the distribution is made will not
be limited by Section 162(m), or if earlier, the effective date of a
Change in Control.

 

1.15                           “Deferral
Amount” shall mean the sum of all of a Participant’s Annual Deferral Amounts.

 

1.16                           “Directors
Fees” shall mean the annual cash fees paid by any Employer, including retainer
fees and meetings fees, as compensation for serving on the board of directors
of an Employer.

 

1.17                           “Disability”
shall mean where. because of injury or sickness, the Participant cannot perform
each of the material duties of his or her regular occupation.

 

3

 

1.18                           “Election
Form” shall mean the form established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to make an election
under the Plan.

 

1.19                           “Elective
Deferral Account” shall mean the sum of (a) a Participant’s Deferral Amount,
plus (b) interest thereon credited in accordance with all the applicable
interest crediting provisions of the Plan, net of all distributions from such
Account. This account shall be a bookkeeping entry only and shall be utilized
solely as a device for the measurement and determination of the amounts to be
paid to the Participant pursuant to the Plan.

 

1.20                           “Employer”
shall mean the Company and/or any of its subsidiaries that have been selected
by the Board to participate in the Plan.

 

1.21                           “Participant”
shall mean any employee (a) who is selected to participate in the Plan, (b) who
elects to participate in the Plan, (c) who signs a Plan Agreement, an Election
Form and a Beneficiary Designation Form, (d) whose signed Plan Agreement,
Election Form and Beneficiary Designation Form are accepted by the Committee,
(e) who commences participation in the Plan, and (f) whose Plan Agreement has
not terminated.

 

1.22         “Plan” shall mean the Company’s
Management Deferred Compensation Plan, which shall be evidenced by this
instrument and, with respect to each Participant, by his or her Plan Agreement,
as each may be amended from time to time.

 

1.23                           “Plan
Agreement” shall mean a written agreement, as may be amended from time to time,
which is entered into by and between one or more Employers and a Participant.
Each Plan Agreement executed by a Participant shall provide for the entire
benefit to which such Participant is entitled to under the Plan, and shall
specify the Employer or Employers liable for the Participant’s benefits
hereunder and the magnitude or extent of such liability. The Plan Agreement
bearing the latest date of acceptance by the Committee shall govern such
entitlement and each Employer’s liability. Upon the complete payment of a
Participant’s Account Balance, each individual’s Plan Agreement and his or her
status as a Participant shall terminate.

 

1.24                           “Plan Year”
shall be the calendar year, starting with 1996.

 

1.25                           “Pre-Retirement
Survivor Benefit” shall mean the benefit set forth in Article 6.

 

1.26                           “Retirement,”
“Retire,” “Retires,” or “Retired” shall mean severance from employment or
service with all Employers for any reason other than a leave of absence on or
after the attainment of (a) age fifty (50) and the completion of ten (1O) Years
of Service, (b) age fifty-five (55) and the completion of five (5) Years of
Service, (c) age sixty-five (65), whichever is earliest.

 

4

 

1.27                           “Retirement
Benefit” shall mean the benefit set forth in Article 5.

 

1.28                           “Short-Term
Payout” shall mean the payout set forth in Section 4. 1.

 

1.29                           “Termination
Benefit” shall mean the benefit set forth in Article 7.

 

1.30                           “Termination
of Employment” shall mean the ceasing of employment with all Employers,
voluntarily or involuntarily, for any reason other than Retirement, death or an
authorized leave of absence.

 

1.31                           “Trust”
shall mean the trust established pursuant to that certain Trust Agreement,
dated as of January 1, 1996, between the Company and the trustee named
therein, as amended from time to time.

 

1.32                           “Unforeseeable
Financial Emergency” shall mean an unanticipated emergency that is caused by an
event beyond the control of the Participant that would result in severe
financial hardship to the Participant resulting from (a) a sudden and
unexpected illness or accident of the Participant or a dependent of the
Participant, (b) a loss of the Participant’s property due to casualty, or (c)
such other extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the sole and
absolute discretion of the Committee.

 

1.33                           “Years of
Service” shall mean the total number of years in which a Participant has been
employed by or in the service of an Employer. For purposes of this definition
only, a year of employment or service shall be a 365 day period (or 366 day
period in the case of a leap year) that, for the first year of employment,
commences on the Participant’s date of hire (or engagement) and that, for any
subsequent year, commences on an anniversary of that hiring date.

 

ARTICLE 2

SELECTION, ENROLLMENT. ELIGIBILITY

 

2.1                                 SELECTION BY COMMITTEE. Participation in the Plan Shall be
limited to employees of an Employer who are (a) part of a select group of
management or highly compensated employees and (b) at the rank of either Vice
President or Director. From the foregoing, the Committee shall select, in its
sole and absolute discretion, employees to participate in the Plan.

 

2.2                                 ENROLLMENT REQUIREMENTS. As a condition to participation.
each selected employee shall complete. execute and return to the Committee a
Plan Agreement, an Election Form and a Beneficiary Designation Form. In
addition, the Committee shall establish from time to time such other enrollment
requirements as it determines in its sole and absolute discretion are
necessary.

 

5

 

2.3                                 ELIGIBILITY: COMMENCEMENT OF PARTICIPATION. An
employee selected to participate herein may commence participation upon the
January 1 or July 1 immediately following or coinciding with the date
he or she has completed all enrollment requirements set forth herein and
required by the Committee, including returning all required documents to the
Committee and the Committee’s acceptance of all submitted documents.

 

2.4                                 TERMINATION OF PARTICIPATION AND/OR
DEFERRALS.
If the Committee determines in good faith that a Participant no longer meets
the requirements of Sections 2.1(a) and (b) hereof, the Committee shall have
the right, in its sole discretion, to (i)terminate any deferral election the
Participant has made for the Plan Year in which the Participant’s membership
status changes, (ii)prevent the Participant from making future deferral
elections and/or (iii) immediately distribute the Participant’s then Account
Balance as a Termination Benefit and terminate the Participant’s participation
in the Plan. If the Committee chooses not to terminate the Participant’s
participation in the Plan, the Committee may, in its sole discretion, reinstate
the Participant to full Plan participation at such time in the future as the
Participant again meets the requirements of Sections 2.1(a)and(b).

 

ARTICLE 3

DEFERRAL COMMITMENTS/INTEREST CREDITING

 

3.1                                 MINIMUM
DEFERRAL.

 

(a)                                  MINIMUM.
For each Plan Year, a Participant may elect to defer Base Annual Salary and/or
Annual Bonus paid in respect of such Plan Year in the following minimum amounts
for each deferral elected:

 

	
  Deferral

  	
   

  	
  Minimum

  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Base
  Annual Salary

  	
   

  	
  $

  	
  2,000 

  	
   

  
	
  Annual
  Bonus

  	
   

  	
  $

  	
  2.000

  	
   

  

 

If no election is made, the amount deferred
shall be zero.

 

(b)                                 SHORT PLAN
YEAR. If a Participant first becomes a Participant after the first day of a
Plan Year, the minimum Base Annual Salary and/or Annual Bonus deferral shall be
an amount equal to the minimum set forth above, multiplied by a fraction, the
numerator of which is the number of complete months remaining in the Plan Year
and the denominator of which is 12.

 

6

 

3.2                                 MAXIMUM DEFERRAL. For each Plan Year, a Participant may
elect to defer Base Annual Salary and/or Annual Bonus up to the following
maximum amounts for each deferral elected:

 

	
  Deferral

  	
   

  	
  Maximum

  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Base
  Annual Salary

  	
   

  	
  50

  	
  %

  
	
  Annual
  Bonus

  	
   

  	
  100

  	
  %

  

 

3.3                                 ELECTION TO DEFER: EFFECT OF ELECTION FORM. In connection with
a Participant s commencement of participation in the Plan, the Participant
shall make a deferral election by delivering to the Committee a completed and
signed Election Form, which election and form must be accepted by the Committee
for a valid election to exist. For each succeeding Plan Year, a new Election
Form must be delivered to the Committee, in accordance with its rules and
procedures, before the end of the Plan Year preceding the Plan Year for which
the election is made. If no Election Form is timely delivered for a Plan Year,
no Annual Deferral Amount shall be withheld for that Plan Year.

 

3.4                                 WITHHOLDING OF DEFERRAL AMOUNTS, For each
Plan Year, the Base Annual Salary portion of the Annual Deferral Amount shall
be withheld each payroll period in equal amounts from the Participant’s Base
Annual Salary. The Annual Bonus portion of the Annual Deferral Amount shall be
withheld at the time the Annual Bonus is or otherwise would be paid to the
Participant. The Annual Deferral Amount shall be credited to the Participant’s
Elective Deferral Account. A Participant shall at all times have a fully vested
and nonforfeitable interest in his or her Elective Deferral Account.

 

3.5                                 INTEREST CREDITING PRIOR TO
DISTRIBUTION. Prior to any distributions of benefits under Articles 4, 5, 6
or 7, interest shall be credited and compounded annually on a Participant’s
Account Balance as though the Annual Deferral Amount for that Plan Year was
withheld at the beginning of the Plan Year or, in the case of the first year of
Plan participation, was withheld on the date that the Participant commenced
participation in the Plan; provided that interest shall be credited on the
portion of the Annual Deferral Amount attributable to the Annual Bonus as of
the last day of the pay period ending closest to the date the Annual Bonus is
actually paid. The rate of interest for crediting shall be the Crediting Rate.
In the event of Retirement. death or a Termination of Employment prior to the
end of a Plan Year. the basis for that year’s interest crediting will be a
fraction of the full year’s interest, based on the number of full months that
the Participant was employed with the Employer during the Plan Year prior to
the occurrence of such event. If a distribution is made under this Plan, for
purposes of crediting interest, the Account Balance shall be reduced as of the
first day of the month in which the distribution is made.

 

7

 

3.6                                 INTEREST CREDITING FOR INSTALLMENT
DISTRIBUTIONS. In the event a benefit is paid in installments under
Article 5 or 6, interest shall be credited and compounded on the
undistributed portion of the Participant’s Account Balance commencing on the
first day of the month in which the Participant terminates employment, using a
fixed interest rate that is determined by using the average of the Crediting
Rates for the Plan Year in which installment payments commence and the four
preceding Plan Years. If a Participant has participated in the Plan for less
than five Plan Years, this average shall be determined using the Crediting
Rates for the Plan Years during which the Participant actually participated in
the Plan.

 

3.7                                 FICA TAXES For each Plan Year in which an Annual
Deferral Amount is being withheld, the Participant’s Employer(s) shall ratably
withhold from that portion of the Participant’s Base Annual Salary and/or Annual
Bonus that is not being deferred, the Participant’s share of FICA taxes on
deferred amounts. If necessary, the Committee shall reduce the Annual Deferral
Amount in order to comply with this Section.

 

ARTICLE 4

SHORT-TERM PAYOUT, UNFORESEEABLE FINANCIAL EMERGENCIES;

WITHDRAWAL ELECTION

 

4.1                                 SHORT-TERM
PAYOUT. Subject to the Deduction Limitation, in connection With each
election to defer an Annual Deferral Amount, a Participant may elect to receive
a future “Short-Term Payout” from the Plan with respect to that Annual Deferral
Amount. The Short-Term Payout shall be a lump sum payment in an amount that is
equal to the Annual Deferral Amount plus interest credited at the Crediting
Rate on that amount. Subject to the other terms and conditions of this Plan,
each Short-Term payout elected shall be paid within 60 days of the first day of
the Plan Year that is five or more years after the first day of the Plan Year
in which the Annual Deferral Amount is actually deferred. Notwithstanding the
foregoing, should an event occur that triggers a benefit under Article 5,
6, or 7, any Annual Deferral Amount, plus interest thereon, that is subject to
a Short-Term Payout election under this Section 4.1 shall not be paid in
accordance with Section 4.1, but shall be paid in accordance with the
other applicable Article.

 

4.2                                 WITHDRAWAL
PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES. If the
Participant experiences an Unforeseeable Financial Emergency, the Participant
may petition the Committee to (a) suspend any deferrals required to be made by
a Participant and/or (b) receive partial or full payout from the Plan. The
payout shall not exceed the lesser of the Participant’s Account Balance,
calculated as if such Participant were receiving a Termination Benefit, or the
amount reasonably needed to satisfy the Unforeseeable Financial Emergency. If,
subject to the sole and absolute discretion of the Committee, the petition for
a suspension and/or payout is approved, suspension shall take effect upon the
date of approval and any payout shall be made within 60 days of the date of
approval.

 

8

 

4.3                                 WITHDRAWAL ELECTION. A Participant may elect, at any
time, to withdraw all of his or her Account Balance, calculated as if such Participant
were receiving a Termination Benefit, less a 10 percent withdrawal penalty (the
net amount shall be referred to as the “Withdrawal Amount”). No partial
withdrawals of that balance shall be allowed. The Participant shall make this
election by giving the Committee advance written notice of the election in a
form determined from time to time by the Committee. The penalty shall be equal
to 10 percent of the Participant’s Account Balance determined immediately prior
to the date of his or her election. Once the Withdrawal Amount is paid. the
Participant shall be suspended permanently from further participation in the
Plan.

 

ARTICLE 5

RETIREMENT BENEFIT

 

5.1                                 RETIREMENT BENEFIT. Subject to the Deduction
Limitation, a Participant who retires shall receive, as a Retirement Benefit,
his or her Account Balance.

 

5.2                                 PAYMENT OF RETIREMENT BENEFITS. A
Participant in connection with his or her commencement of participation in the
Plan, shall elect on an Election Form to receive the Retirement Benefit in a
lump sum or in equal monthly payments over a period of 60 months. The
Participant may change this election to an allowable alternative payout period
by submitting a new Election Form to the Committee, provided that any such
Election Form is submitted at least three years prior to the Participant’s
Retirement. The Election Form most recently accepted by the Committee shall
govern the payout of the Retirement Benefit. The lump sum payment shall be
made, or installment payments shall commence, no later than 60 days from the
date the Participant Retires.

 

5.3                                 DEATH PRIOR TO COMPLETION OF
RETIREMENT BENEFITS If a Participant dies after Retirement but before the
Retirement Benefit is paid in full, the Participant’s unpaid Retirement Benefit
payments shall continue and shall be paid to the Participant’s Beneficiary (a)
over the remaining number of months and in the same amounts as that benefit
would have been paid to the Participant had the Participant survived, or (b) in
a lump sum, if requested by the beneficiary and allowed at the sole and
absolute discretion of the Committee. The lump sum payment will be the
Participant’s Account Balance at the time of his or her death.

 

ARTICLE 6

PRE-RETIREMENT SURVIVOR BENEFIT

 

6.1                                 PRE-RETIREMENT SURVIVOR BENEFIT. Subject
to the Deduction Limitation, if a Participant dies before he or she Retires,
the Participant’s Beneficiary shall receive a Pre-Retirement Survivor Benefit
equal to the Participant’s Account Balance.

 

9

 

6.2                                 PAYMENT OF PRE-RETIREMENT SURVIVOR
BENEFITS. The Pre-Retirement Survivor Benefit shall be paid in the
payment period previously elected by the Participant for the payment of the
Retirement Benefit, or, if no election was made, monthly for 5 years. However,
the Pre-Retirement Survivor Benefit payment may be made as a lump sum at the
request of the Beneficiary and at the sole and absolute discretion of the
Committee. The first (or only payment, if made in lump sum) shall be made
within 60 days of the Committee’s receiving proof of the Participant’s death.

 

ARTICLE 7

TERMINATION BENEFIT

 

7.1                                 TERMINATION BENEFITS. Subject to the Deduction
Limitation, if a Participant experiences a Termination of Employment prior to
his or her Retirement, the Participant shall receive a Termination Benefit,
which shall be equal to the Participant’s Account Balance, with interest
credited in the manner provided in Section 3.5 hereof.

 

7.2                                 PAYMENT OF TERMINATION BENEFIT. A
Participant’s Termination Benefit shall be paid in a lump sum no later than 60
days following the date of the Participant’s Termination of Employment.

 

7.3                                 DEATH PRIOR TO COMPLETION OF
TERMINATION BENEFITS. If a Participant dies after Termination of
Employment, but before the Termination Benefit is paid, the Participant’s unpaid
Termination Benefit shall be paid to the Participant’s Beneficiary.

 

ARTICLE 8

DISABILITY WAIVER AND BENEFIT

 

8.1                                 DISABILITY WAIVER.

 

(a)                                  ELIGIBILITY.
By participating in the Plan, all Participants are eligible for this waiver.

 

(b)                                 WAIVER OF
DEFERRAL, CREDIT FOR PLAN YEAR OF DISABILITY. A Participant who is determined
by the Committee to be suffering from a Disability shall be excused from
fulfilling that portion of the Annual Deferral Amount commitment that would
otherwise have been withheld from a Participant’s Base Annual Salary and/or
Annual Bonus for the Plan Year during which the Participant first suffers a
Disability. During the period of Disability, the Participant shall not be
allowed to make any additional deferral elections.

 

10

 

(c)                                  RETURN TO
WORK. If a Participant returns to employment or service as a director with an
Employer after a Disability ceases, the Participant may elect to defer an
Annual Deferral Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while a Participant in
the Plan; provided such deferral elections are otherwise allowed and an
Election Form is delivered to and accepted by the Committee for each such
election in accordance with Section 3.3 above.

 

8.2                                 BENEFIT ELIGIBILITY. A Participant suffering a
Disability shall, for benefit purposes under this Plan but subject to
Section 8.1, above, continue to be considered to be employed and shall be
eligible for the benefits provided for in Articles 4, 5, 6 and 7 in accordance
with the provisions of those Articles. Employee shall be considered an active
employee for purposes of Section 1.33 hereof during a Disability.
Notwithstanding the above, the Committee shall have the right, in its sole and
absolute discretion and for purposes of this Plan only, to terminate a
Participant’s employment at any time after such Participant is determined to be
permanently and totally disabled under the Participant’s Employer’s long-term
disability plan or would have been determined to be permanently and totally
disabled had he or she participated in such plan.

 

ARTICLE 9

BENEFICIARY DESIGNATION

 

9.1                                 BENEFICIARY.
Each Participant shall have the right, at any time, to designate his or her
Beneficiary (both primary as well as contingent) to receive any benefits
payable under the Plan to a Beneficiary upon the death of a Participant. The
Beneficiary designated under this Plan may be the same as or different from the
Beneficiary designation under any other plan of an Employer in which the
Participant participates.

 

9.2                                 BENEFICIARY
DESIGNATION: CHANGE: SPOUSAL CONSENT. A Participant shall designate his or her
Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its designated agent. A Participant shall have
the right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the Beneficiary Designation Form and the
Committee’s rules and procedures, as in effect from time to time. Where
required by law or by the Committee, in its sole and absolute discretion, if
the Participant names someone other than his or her spouse as a Beneficiary, a
spousal consent, in the form designated by the Committee, must be signed by
that Participant’s spouse and returned to the Committee. Upon the acceptance by
the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.

 

11

 

9.3                                 ACKNOWLEDGMENT.
No designation or change in designation of a Beneficiary shall be effective
until received, accepted and acknowledged in writing by the Committee or its
designated agent.

 

9.4                                 NO
BENEFICIARY DESIGNATION. If a Participant fails to designate a Beneficiary as
provided in Sections 9.1, 9.2 and 9.3 above, or, if all designated
Beneficiaries predecease the Participant or die prior to complete distribution
of the Participant’s benefits, then the Participant’s designated Beneficiary
shall be his or her surviving spouse. If the Participant has no surviving
spouse, the benefits remaining under the Plan shall be paid to the
Participant’s issue upon the principle of representation, and if there is no
such issue, to the Participant’s estate.

 

9.5                                 DOUBT AS TO
BENEFICIARY. If the Committee has any doubt as to the proper Beneficiary to
receive payments pursuant to this Plan, the Committee shall have the right,
exercisable in its sole and absolute discretion, to cause the Participant’s
Employer to withhold such payments until this matter is resolved to the
Committee’s satisfaction.

 

9.6                                 DISCHARGE
OF OBLIGATIONS. The payment of benefits under the Plan to a Beneficiary shall
fully and completely discharge all Employers and the Committee from all further
obligations under this Plan with respect to the Participant, and that
Participant’s Plan Agreement shall terminate upon such full payment of
benefits.

 

ARTICLE 10

LEAVE OF ABSENCE

 

10.1                           PAID LEAVE
OF ABSENCE. If a Participant is authorized by the Participant’s Employer for
any reason to take a paid leave of absence from the employment of the Employer,
the Participant shall continue to be considered actively employed by the
Employer for purposes of Section 1.33 hereof and the Annual Deferral
Amount shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.

 

10.2                           UNPAID
LEAVE OF ABSENCE. If a Participant is authorized by the Participant’s Employer
for any reason to take an unpaid leave of absence from the employment of the
Employer, the Participant shall continue to be considered actively employed by
the Employer for purposes of Section hereof, but the Participant shall be
excused from making deferrals until the earlier of the date the leave of
absence expires or the date the Participant returns to paid employment status.
Upon such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based on the
deferral election, if any, made for that Plan Year. If no election was made for
that Plan Year, no deferral shall be withheld.

 

12

 

ARTICLE 11

TERMINATION, AMENDMENT OR MODIFICATION

 

11.1                           TERMINATION.
Any Employer reserves the right to terminate the Plan at any time with respect
to Participants employed by the Employer. Upon the termination of the Plan, the
Participant’s Account Balance shall be paid out as though the Participant had
experienced a Termination of Employment on the date of Plan termination, or, if
Plan termination occurs after the date upon which the Participant was eligible
to Retire, the Participant had Retired on the date of Plan termination, or, if
Plan termination occurs after the Participant Retired and commenced (but not
completed) distribution hereunder, benefits shall continue to the Participant
pursuant to the terms hereof without regard to the termination. Prior to a
Change in Control, an Employer shall have the right, in its sole and absolute
discretion, and notwithstanding any elections made by the Participant, to pay
all such benefits in a lump sum.

 

11.2                           AMENDMENT.
Any Employer may, at any time, amend or modify the Plan in whole or in part
with respect to that Employer; provided, however, that no amendment or
modification shall be effective to decrease a Participant’s Account Balance,
calculated as though the Participant had experienced a Termination of
Employment as of the effective date of the amendment or modification, or, if
the amendment or modification occurs after the date upon which the Participant
was eligible to Retire, the Participant had Retired as of the effective date of
the amendment or modification. In addition, no amendment or modification of the
Plan shall affect the right of any Participant or Beneficiary who was eligible
to or did Retire on or before the effective date of such amendment or
modification to receive benefits in the manner he or she elected.

 

11.3                           EFFECT OF
PAYMENT. The full payment of the applicable benefit under Articles 4, 5, 6, or
7 of the Plan shall completely discharge all obligations to a Participant under
this Plan and the Participant’s Plan Agreement shall terminate.

 

ARTICLE 12

ADMINISTRATION

 

12.1                           COMMITTEE
DUTIES. This Plan shall be administered by a Committee, to be known as the
Herbalife Deferred Compensation Plan Committee, which shall consist of
individuals approved by the Board. Members of the Committee may be Participants
under this Plan. The Committee shall also have the discretion and authority to
make, amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and decide or resolve any and all questions
including interpretations of this Plan, as may arise in connection with the
Plan. Any Committee member must recuse himself or herself on any matter of
personal interest to such member that comes before the Committee.

 

13

 

12.2                           AGENTS. In
the administration of this Plan, the Committee may, from time to time, employ
agents and delegate to them such administrative duties as it sees fit and may
from time to time consult with counsel who may be counsel to any Employer.

 

12.3                           BINDING
EFFECT OF DECISIONS. The decision or action of the Committee with respect to
any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Plan.

 

12.4                           INDEMNITY
OF COMMITTEE. All Employers shall indemnify and hold harmless the members of
the Committee against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with respect to this
Plan, except in the case of willful misconduct by the Committee or any of its
members.

 

12.5                           EMPLOYER
INFORMATION. To enable the Committee to perform its functions, each Employer
shall supply full and timely information to the Committee on all matters
relating to the compensation of its Participants, the date and circumstances of
the Retirement, Disability, death or Termination of Employment of its
Participants, and such other pertinent information as the Committee may
reasonably require.

 

ARTICLE 13

CLAIMS PROCEDURE

 

13.1                           PRESENTATION
OF CLAIM. Any Participant or Beneficiary of a deceased Participant (such
Participant or Beneficiary being referred to below as a “Claimant”) may deliver
to the Committee a written claim for a determination with respect to the
amounts distributable to such Claimant from the Plan. If such a claim relates
to the contents of a notice received by the Claimant, the claim must be made
within 60 days after such notice was received by the Claimant. All other claims
must be made within 180 days of the date on which the event that caused the
claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.

 

13.2                           NOTIFICATION
OF DECISION. The Committee shall consider a Claimant’s claim within 60 days of
the making of the claim, and shall notify the Claimant in writing:

 

(a)                                  that the
Claimant’s requested determination has been made, and that the claim has been
allowed in full; or

 

14

 

(b)                                 that the
Committee has reached a conclusion contrary, in whole or in part, to the
Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:

 

(i)                                     the
specific reason(s) for the denial of the claim, or any part of it;

 

(ii)                                  specific
reference(s) to pertinent provisions of the Plan upon which such denial was
based;

 

(iii)                               a
description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or
information is necessary; and

 

(iv)                              an
explanation of the claim review procedure set forth in Section 13.3 below.

 

13.3                           REVIEW OF A
DENIED CLAIM. Within 60 days after receiving a notice from the Committee that a
claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly
authorized representative) may file with the Committee a written request for a
review of the denial of the claim. Thereafter, but not later than 30 days after
the review procedure begins. the Claimant (or the Claimant’s duly authorized
representative):

 

(a)                                  may review
pertinent documents;

 

(b)                                 may submit
written comments or other documents; and/or

 

(c)                                  may request
a hearing, which the Committee, in its sole discretion, may grant.

 

13.4                           DECISION ON
REVIEW.  The Committee shall render its
decision on review promptly, and not later than 60 days after the filing of a
written request for review of the denial. unless a hearing is held or other
special circumstances require additional time, in which case the Committee’s
decision must be rendered within 120 days after such date. Such decision must
be written in a manner calculated to be understood by the Claimant, and it must
contain:

 

(a)                                  specific
reasons for the decision;

 

(b)                                 specific
reference(s) to the pertinent Plan provisions upon which the decision was
based; and

 

(c)                                  such other
matters as the Committee deems relevant.

 

15

 

13.5                           LEGAL ACTION.
A Claimant’s compliance with the foregoing provisions of this Article 13
is a mandatory prerequisite to a Claimant’s right to commence any arbitration
under Section 13.6 with respect to any claim for benefits under this Plan.

 

13.6                           ARBITRATION.
If, after the review process, a claimant seeks further redress. the subject of
the dispute shall be submitted to arbitration in accordance with the procedures
hereinafter provided in this Section 13.6 (the “Procedures”), which
arbitration shall be the exclusive remedy of the parties hereto. The resulting
arbitration award shall be deemed a final order of a court having jurisdiction
over the subject matter and shall not be appealable.

 

(a)                                  Should any
controversy arise between the parties as to which the parties are unable to
effect a satisfactory resolution, upon demand of any party, such controversy
shall be submitted to arbitration in Los Angeles County, California, in
accordance with the terms and provisions of these Procedures and the rules then
prevailing of the American Arbitration Association (or any successor
organization) to the extent that such rules are not inconsistent with the
provisions of these Procedures.

 

(b)                                 A party
desiring to submit to arbitration any such controversy shall furnish its demand
for arbitration in writing to the other party, which demand shall contain a
brief statement of the matter in controversy, as well as a list containing the
names of three (3) suggested arbitrators from which list, or from other
sources, the parties shall choose one (1) mutually acceptable arbitrator. If
the parties are unable to agree upon the identity of a single arbitrator within
ten (10) days from the receipt of such demand, then any party, on behalf of and
upon notice to the other party, may request appointment of a single arbitrator
by the American Arbitration Association (or any organization successor thereto)
in accordance with its rules then prevailing. If the American Arbitration
Association (or any organization successor thereto) should fail to appoint the
arbitrator within fifteen (15) days after such request is made, then any party,
may apply upon notice to the other party, to the court as provided in
California Code of Civil Procedure Section 1281.6 or any successor
provision for the appointment of such arbitrator. The arbitrator chosen or
appointed pursuant to these Procedures (“Arbitrator”) shall not be a past or
present officer, director or employee of any party to the dispute or any of its
affiliates.

 

(c)                                  The parties
shall be entitled to conduct discovery as permitted under Section 1283.05
of the California Code of Civil Procedure.

 

16

 

(d)                                 Each party
shall furnish the Arbitrator and the other party with a written statement of
matters it deems to be in controversy for purposes of the arbitration
procedures. Such statement shall also include all arguments, contentions and
authorities which it contends substantiate its position. Each party shall also
submit a proposed award to the Arbitrator and the other party.

 

(e)                                  Such
Arbitrator shall render this decision as soon as possible but not later than
thirty (30) days after conclusion of hearings before such Arbitrator. The
decision shall be in writing and counterpart copies thereof shall be delivered
to each of the parties. The decision shall adopt, unchanged and in its
entirety, the award proposed by one of the parties.

 

ARTICLE 14

TRUST

 

14.1                           ESTABLISHMENT
OF TRUST. The Company shall establish the Trust, and the Employers shall
transfer over to the Trust such assets, if any, as the Committee determines,
from time to time and in its sole discretion, are appropriate.

 

14.2                           INTERRELATIONSHIP
OF THE PLAN AND THE TRUST. The provisions of the Plan shall govern the rights
of a Participant to receive distributions pursuant to the Plan. The provisions
of the Trust shall govern the rights of the Participant and the creditors of
the Employers to the assets transferred to the Trust. The Employers shall at
all times remain liable to carry out their obligations under the Plan. The
Employers’ obligations under the Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust.

 

ARTICLE 15

MISCELLANEOUS

 

15.1                           UNSECURED
GENERAL CREDITOR. Participants and their Beneficiaries, heirs, successors and assigns
shall have no legal or equitable right, interest or claim in any property or
assets of an Employer. Any and all of an Employer’s assets shall be, and
remain, the general, unpledged and unrestricted assets of the Employer. An
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

 

15.2                           EMPLOYER’S
LIABILITY. An Employer’s liability for the payment of benefits shall be defined
only by the Plan. An Employer shall have no obligation to a Participant under
the Plan except as expressly provided in the Plan.

 

17

 

15.3                           NONASSIGNABILITY.
Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt, the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are expressly declared to be unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.

 

15.4                           COORDINATION
WITH OTHER BENEFITS. The benefits provided for a Participant and Participant’s
Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the
Participant’s Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may otherwise be
expressly provided.

 

15.5                           NOT A
CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between any Employer and the
Participant. Such employment is hereby acknowledged to be an “at will”
employment relationship that can be terminated at any time for any reason, with
or without cause, unless expressly provided in a written employment agreement.
Nothing in this Plan shall be deemed to give a Participant the right to be
retained in the service of any Employer, either as an employee or a director,
or to interfere with the right of any Employer to discipline or discharge the
Participant at any time.

 

15.6                           FURNISHING
INFORMATION. A Participant or his or her Beneficiary will cooperate with the
Committee by furnishing any and all information requested by the Committee and
take such other actions as may be requested in order to facilitate the
administration of the Plan and the payments of benefits hereunder, including
but not limited to taking such physical examinations as the Committee may deem
necessary.

 

15.7                           TERMS.
Whenever any words are used herein in the singular or in the plural, they shall
be construed as though they were used in the plural or the singular, as the
case may be, in all cases where they would so apply. The masculine pronoun
shall be deemed to include the feminine and VICE VERSA, unless the context
clearly indicates otherwise.

 

15.8                           CAPTIONS.
The captions of the articles, sections and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.

 

18

 

15.9                           GOVERNING
LAW. Subject to ERISA, the provisions of this Plan shall be construed and
interpreted according to the laws of the State of California.

 

15.10                     NOTICE. Any
notice or filing required or permitted to be given to the Committee under this
Plan shall be sufficient if in writing and hand- delivered, or sent by
registered or certified mail, to:

 

Mr. Brian Kane

Senior Vice President of Human Resources

HERBALIFE INTERNATIONAL OF AMERICA, INC.

Post Office Box 80210

Los Angeles,

CA 90080-0210

 

Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.

 

Any notice or filing required or permitted
to be given to a Participant under this Plan shall be sufficient if in writing
and hand-delivered, or sent by mail, to the last known address of the
Participant.

 

15.11                     SUCCESSORS.
The provisions of this Plan shall bind and inure to the benefit of the
Participant’s Employer and its successors and assigns and the Participant, the
Participant’s Beneficiaries, and their permitted successors and assigns.

 

15.12                     SPOUSE’S
INTEREST. The interest in the benefits hereunder of a spouse of a Participant
who has predeceased the Participant shall automatically pass to the Participant
and shall not be transferable by such spouse in any manner, including but not
limited to such spouse’s will, nor shall such interest pass under the laws of
intestate succession.

 

15.13                     VALIDATION.
In case any provision of this Plan shall be illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal or invalid
provision had never been inserted herein.

 

15.14                     INCOMPETENT.
If the Committee determines in its discretion that a benefit under this Plan is
to be paid to a minor, a person declared incompetent or to a person incapable
of handling the disposition of that person’s property, the Committee may direct
payment of such benefit to the guardian, legal representative or person having
the care and custody of such minor, incompetent or incapable person. The Committee
may require proof of minority, incompetency, incapacity or Guardianship. as it
may deem appropriate prior to distribution of the benefit. Any payment of a
benefit shall be a pavement for the account of the Participant and the
Participant’s Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Plan for such payment amount.

 

19

 

15.15                     DISTRIBUTION
IN THE EVENT OF TAXATION. If, for any reason, all or any portion of a Participant’s
benefit under this Plan becomes taxable to the Participant prior to receipt, a
Participant may petition the Committee for a distribution of assets sufficient
to meet the Participant’s tax liability (including additions to tax, penalties
and interest). Upon the grant of such a petition, which grant shall not be
unreasonably withheld, a Participant’s Employer shall distribute to the
Participant immediately available funds in an amount equal to that
Participant’s federal, state and local tax liability associated with such
taxation (which amount shall not exceed the Participant’s vested Account
Balance), which liability shall be measured by using that Participant’s then
current highest federal, state and local marginal tax rate, plus the rates or amounts
for the applicable additions to tax, penalties and interest. If the petition is
granted, the tax liability distribution shall be made within 90 days of the
date when the Participant’s petition is granted.  Such a distribution shall reduce the benefits
to be paid under this Plan.

 

15.16                     LEGAL FEES
TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company is aware that upon the
occurrence of a Change in Control, the Board (which might then be composed of
new members) or a shareholder of the Company, or of any successor corporation
might then cause or attempt to cause the Company or such successor to refuse to
comply with its obligations under the Plan and might cause or attempt to cause
the Company to institute, or may institute, arbitration or litigation seeking
to deny Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly, if,
following a Change in Control, it should appear to any Participant that the
Company or the Committee has failed to comply with any of its obligations under
the Plan or any agreement thereunder or, if the Company or any other person
takes any action to declare the Plan void or unenforceable or institutes any
arbitration, litigation or other legal action designed to deny, diminish or to
recover from any Participant or Beneficiary the benefits intended to be
provided, then the Company irrevocably authorizes such person to retain counsel
of his or her choice at the expense of the Company to represent such person in
connection with the initiation or defense of any arbitration, litigation or
other legal action, whether by or against the Company, the Committee, or any
director, officer, shareholder or other person affiliated with the Company or
any successor thereto in any jurisdiction.

 

IN WITNESS WHEREOF, the Company has signed
this Plan document as of 12/29, 1995.

 

	
   

  	
  HERBALIFE INTERNATIONAL OF AMERICA, INC. 

  
	
   

  	
  a California corporation.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  

 

20EXHIBIT 10.5

 

HERBALIFE
INTERNATIONAL OF AMERICA, INC.

MASTER
TRUST AGREEMENT

EFFECTIVE
JANUARY 1, 1996

 

 

HERBALIFE INTERNATIONAL OF AMERICA, INC.

MASTER TRUST AGREEMENT

EFFECTIVE JANUARY 1, 1996

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 Name, Intentions,
  Irrevocability, Deposit and Definitions

  	
   

  
	
  1.1

  	
   

  	
  Name

  	
   

  
	
  1.2

  	
   

  	
  Intentions

  	
   

  
	
  1.3

  	
   

  	
  Irrevocability; Creditor
  Claims

  	
   

  
	
  1.4

  	
   

  	
  Initial Deposit

  	
   

  
	
  1.5

  	
   

  	
  Additional Definitions

  	
   

  
	
  1.6

  	
   

  	
  Grantor Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 General Administration

  	
   

  
	
  2.1

  	
   

  	
  Committee Directions

  	
   

  
	
  2.2

  	
   

  	
  Administration
  Upon Change in Control

  	
   

  
	
  2.3

  	
   

  	
  Contributions

  	
   

  
	
  2.4

  	
   

  	
   Trust Fund

  	
   

  
	
  2.5

  	
   

  	
  Distribution
  of Excess Trust Fund to Employer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 Powers and Duties of Trustee

  	
   

  
	
  3.1

  	
   

  	
  Investment Directions

  	
   

  
	
  3.2

  	
   

  	
  Investment Upon
  Change in Control

  	
   

  
	
  3.3

  	
   

  	
  Management of Investments

  	
   

  
	
  3.4

  	
   

  	
  Securities

  	
   

  
	
  3.5

  	
   

  	
  Substitution

  	
   

  
	
  3.6

  	
   

  	
  Distributions

  	
   

  
	
  3.7

  	
   

  	
  Trustee
  Responsibility Regarding Payments on Insolvency

  	
   

  
	
  3.8

  	
   

  	
  Costs of Administration

  	
   

  
	
  3.9

  	
   

  	
  Trustee Compensation
  and Expenses

  	
   

  
	
  3.10

  	
   

  	
  Professional Advice

  	
   

  
	
  3.11

  	
   

  	
  Payment on Court Order

  	
   

  
	
  3.12

  	
   

  	
  Protective Provision

  	
   

  
	
  3.13

  	
   

  	
  Indemnifications

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 Insurance Contracts

  	
   

  
	
  4.1

  	
   

  	
  Types of Contracts

  	
   

  
	
  4.2

  	
   

  	
  Ownership

  	
   

  
	
  4.3

  	
   

  	
  Restrictions on
  Trustee’s Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 Trustee’s Accounts

  	
   

  
	
  5.1

  	
   

  	
  Records

  	
   

  
	
  5.2

  	
   

  	
  Annual Accounting:
  Final Accounting

  	
   

  
	
  5.3

  	
   

  	
  Valuation

  	
   

  
	
  5.4

  	
   

  	
  Delegation of Duties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 Resignation or Removal of
  Trustee

  	
   

  
	
  6.1

  	
   

  	
  Resignation Removal

  	
   

  
	
  6.2

  	
   

  	
  Successor Trustee

  	
   

  
	
  6.3

  	
   

  	
  Settlement of Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7 Controversies, Legal Actions
  and Counsel

  	
   

  
	
  7.1

  	
   

  	
  Controversy

  	
   

  
	
  7.2

  	
   

  	
  Joinder of Parties

  	
   

  
	
  7.3

  	
   

  	
  Employment of Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 Insurers

  	
   

  
	
  8.1

  	
   

  	
  Insurer Not a Party

  	
   

  
	
  8.2

  	
   

  	
  Authority of Trustee

  	
   

  
	
  8.3

  	
   

  	
  Contract Ownership

  	
   

  
	
  8.4

  	
   

  	
  Limitation of Liability

  	
   

  
	
  8.5

  	
   

  	
  Change of Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9 Amendment and Termination

  	
   

  
	
  9.1

  	
   

  	
  Amendment

  	
   

  
	
  9.2

  	
   

  	
  Final Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10 Miscellaneous

  	
   

  
	
  10.1

  	
   

  	
  Directions
  Following Change in Control

  	
   

  
	
  10.2

  	
   

  	
  Taxes

  	
   

  
	
  10.3

  	
   

  	
  Third Persons

  	
   

  
	
  10.4

  	
   

  	
  Nonassignability:
  Nonalienation

  	
   

  
	
  10.5

  	
   

  	
  The Plans

  	
   

  
	
  10.6

  	
   

  	
  Applicable Law

  	
   

  
	
  10.7

  	
   

  	
  Notices and Directions

  	
   

  
	
  10.8

  	
   

  	
  Successors and Assigns

  	
   

  
	
  10.9

  	
   

  	
  Gender and Number

  	
   

  
	
  10.10

  	
   

  	
  Headings

  	
   

  
	
  10.11

  	
   

  	
  Counterparts

  	
   

  
	
  10.12

  	
   

  	
  Third Party Beneficiaries

  	
   

  

 

i

 

HERBALIFE

 

MASTER TRUST AGREEMENT

 

FOR

 

DEFERRED COMPENSATION PLANTS

 

THIS MASTER TRUST AGREEMENT (“Master Trust
Agreement”) is made and entered into as of January 1,1996, between
Herbalife International of America, Inc., a California corporation (the
“Company”), and Imperial Trust Company, a California corporation (the
“Trustee”), to evidence the master trust (the “Trust”) to be established,
pursuant to any nonqualified deferred compensation plan or plans of the Company
now or hereafter existing (each, a “Plan,” together, the “Plans”) that require
or authorize the establishment of a trust, for the benefit of a select group of
management, highly compensated employees and/or Directors who contribute
materially to the continued growth development and business success of the
Company and those subsidiaries of the Company, if any, that participate in the
Plans (collectively, “Subsidiaries,” or singularly, “Subsidiary”).

 

ARTICLE I

 

NAME, INTENTIONS, IRREVOCABILITY,

DEPOSIT AND DEFINITIONS

 

1.1                  NAME.  The name of the Trust created by this
Agreement (the “Trust”) shall be the Herbalife Master Deferred Compensation
Trust.

 

1.2                  INTENTIONS. 
The Company wishes to establish the Trust and to contribute to the Trust
assets that shall be held therein, subject to the claims of the Company’s and
the Subsidiaries’ creditors in the event of their Insolvency, as herein
defined, until paid to Participants and their Beneficiaries in such manner and
at such times as specified in the Plans. It is the intention of the parties
that this Trust shall not affect the status of the Plans as unfunded plans
maintained for the purpose of providing supplemental compensation for a select
group of management, highly compensated employees and/or Directors for purposes
of Title I of ERISA (as defined below). 
In addition, it is the intention of the Company and the Subsidiaries to
make contributions to the Trust to provide themselves with a source of funds to
assist them in the meeting of their liabilities under the Plans.

 

1.3                  IRREVOCABILITY; CREDIT CLAIMS.  The 
Trust  hereby  established 
shall be  irrevocable. Except as
otherwise provided in Section 2.5 and 9.2, the principal of the Trust, and
any earnings thereon, shall be held separate and apart from other funds of the
Company and the Subsidiaries and shall be used exclusively for the uses and
purposes of the Participants and general creditors of the Company and the
Subsidiaries as herein set forth.  The
Participants and their Beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust.  Any rights created under the Plans and this
Master Trust Agreement shall be mere unsecured contractual rights of the
Participants and their Beneficiaries against the Company and the
Subsidiaries.  Any assets held by the
Trust will be subject to the claims of the Company’s and the Subsidiaries’
general creditors under federal and state law in the event of Insolvency (as
defined below).

 

1.4                  INITIAL DEPOSIT. 
The Company hereby deposits with the Trustee in trust $100,  which shall become the principal of the Trust
to be held, administered and disposed of by the Trustee as provided in this
Master Trust Agreement.

 

1.5                  ADDITIONAL DEFINITIONS. 
In addition to the definitions set forth above, for purposes hereof,
unless otherwise clearly apparent from the context, the following terms have
the following indicated meanings:

 

(a) 
“Beneficiary” shall mean one or more persons, trusts, estates or other
entities, designated in accordance with a Plan, that are entitled to receive
benefits under a Plan upon the death of a Participant.

 

1

 

(b) 
“Board” shall mean the board of directors of the Company. (c) “Change in
Control” shall mean the first to occur of any of the following events:

 

(1)  Any “person” (as that term is used in
Section 13 and 14(d)(2) of the Securities Exchange Act of 1934 (“Exchange
Act”)), after the date hereof becomes the beneficial owner (as that term is
used in Section 13(d) of the Exchange Act), directly or indirectly, of 50
percent or more of the Company’s capital stock entitled to vote in the election
of directors;

 

(2)  During 
any  period  of  two  consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, under the election or nomination for
election by the Company’s shareholders of each new director was approved by a
vote of at least three-quarters of the directors then still in office who
either were directors at the beginning of the period;

 

(3)  Any consolidation or merger of the Company,
other than a consolidation or merger of the Company in which the holders of the
common stock of the Company immediately prior to the consolidation or merger
hold more than 50 percent of the common stock of the surviving corporation
immediately after the consolidation or merger;

 

(4)  The shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company; or

 

(5)  Substantially all of the assets of the
Company are sold or otherwise transferred to parties that are not within a
“controlled group of corporations” (as defined in Section 1563 of the
Internal Revenue Code of 1986, as amended) in which the Company is a member.

 

(d) 
“Committee” shall mean the Deferred Compensation Committee appointed by
the Board of Directors of the Company to administer the Plans.

 

(e) 
“Director” shall mean any member of the board of directors of the
Company or any Subsidiary.

 

(f) 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974,
as may be amended from time to time.

 

(g) 
“Insolvent” shall have the meaning set forth in Section 3.7(a)
below.

 

(h) 
“Insolvent Entity” shall have the meaning set forth in
Section 3.7(a) below.

 

(i) 
“IRS” shall mean the Internal Revenue Service.

 

(j) 
“Participant” shall mean a person who is a participant in one or more of
the Plans in accordance with their terms and conditions.

 

(k) 
“Payment Schedule” shall have the meaning set forth in
Section 3.6(b) below.

 

(1) 
“Plan(s)” shall mean one or more of the executive deferral plans
established now or in the future by the Company that require or authorize the
establishment of a trust.

 

(m) 
“Trust Fund” shall mean the assets held by the Trustee pursuant to the
terms of this Master Trust Agreement and for the purposes of the Plans.

 

1.6                  GRANTOR TRUST.  The
Trust is intended to be a “grantor trust,” of which the Company, and the
Subsidiaries are the grantors, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended. and the Trust shall be construed accordingly.

 

2

 

ARTICLE 2

GENERAL ADMINISTRATION

 

2.1                  COMMITTEE DIRECTIONS. 
Until a Change in Control has occurred, this Section 2.1 shall be
effective and the Committee shall direct the Trustee as to the administration
of the Trust in accordance with the following provisions:

 

(a) 
The Committee shall be identified to the Trustee by a written
certification of the Board.  Persons
authorized to give directions to the Trustee on behalf of the Committee shall
be identified to the Trustee by written notice from the Committee, and such
notice shall contain specimens of the authorized signatures. The Trustee shall
be entitled to rely on such written notice as evidence of the identity and
authority of the persons appointed until a written cancellation of the
appointment, or the written appointment of a successor, is received by the
Trustee.

 

(b) 
Directions by the Committee, or its delegate, to the Trustee shall be in
writing and signed by the Committee or persons authorized by the Committee, or
may be made by such other method as is acceptable to the Trustee.

 

(c) 
The Trustee may conclusively rely upon directions from the Committee in
taking any action with respect to this Master Trust Agreement, including the
making of payments from the Trust Fund and the investment of the Trust Fund
pursuant to this Master Trust Agreement.  The Trustee shall have no liability for
actions taken, or for failure to act, on the direction of the Committee. The
Trustee shall have no liability for failure to act in the absence of proper
written directions.

 

(d) 
The Trustee may request instructions from the Committee and shall have
no duty to act or liability for failure to act if such instructions are not
forthcoming from the Committee.  If
requested instructions are not received within a reasonable time, the Trustee
may, but is under no duty to, act on its own discretion to carry out the
provisions of this Master Trust Agreement in accordance with this Master Trust
Agreement and the Plans.

 

2.2                  ADMINISTRATION UPON CHANGE IN CONTROL.  In the event of a Change in Control, the
authority of the Committee to administer the Trust and direct the Trustee, as
set forth in Section 2.1 above, shall cease, and the Trustee shall have
complete authority to administer the Trust.

 

2.3                  CONTRIBUTIONS.  The
Company and the Subsidiaries, in their sole discretion, may at any time, or
from time to time, make additional deposits of cash or other property in trust
with the Trustee to augment the principal to be held, administered and disposed
of by the Trustee as provided in this Master Trust Agreement.  Neither the Trustee nor any Participant or
Beneficiary shall have any right to compel such additional deposits.  The Trustee shall have no duty to collect or
enforce payment to it of any contributions or to require that any contributions
be made, and shall have no duty to compute any amount to be paid to it nor to
determine whether amounts paid comply with the terms of the Plans.

 

2.4                  TRUST FUND.  The
contributions received by the Trustee from the Company and the Subsidiaries
shall be held and administered pursuant to the terms of this Master Trust
Agreement as a single fund without distinction between income and principal and
without liability for the payment of interest thereon except as expressly
provided in this Master Trust Agreement. 
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.

 

2.5                  DISTRIBUTION OF EXCESS TRUST FUND TO
EMPLOYER.  In the event that the
Committee, prior to a Change in Control, or the Trustee in its sole and
absolute discretion, after a Change in Control, determines that the Trust Fund
assets consisting solely of cash or cash equivalents exceed 120 percent of the
anticipated benefit obligations and administrative expenses that are to be paid
under the Plans, the Trustee, but only at the direction of the Committee and
only prior to a Change in Control, shall distribute to the

 

3

 

Company and the
Subsidiaries such excess portion of the Trust Fund.  After a Change in Control, assets may be
distributed to the Company or Subsidiary only as provided in Section 9.2
hereof.

 

ARTICLE 3

POWERS AND DUTIES OF TRUSTEE

 

3.1                  INVESTMENT DIRECTIONS. 
Except as provided in Section 3.2, the Committee shall provide the
Trustee with all investment instructions. 
The Trustee shall neither affect nor change investments of the Trust
Fund, except as directed in writing by the Committee, and shall have no right,
duty or responsibility to recommend investments or investment changes;
provided, that the Trustee may (i) deposit cash on hand from time to time in
any bank savings account, certificate of deposit, or other instrument creating
a deposit liability for a bank, including the Trustee’s own banking department
if the Trustee is a bank, without such prior direction, or (ii) invest in
government securities, bonds with specific ratings, or stock of “Fortune 500”
companies, all within broad investment guidelines established by the Committee
from time to time.

 

3.2                  INVESTMENT UPON CHANGE IN CONTROL.  In the event of a Change in Control, the
authority of the Committee to direct investments of the Trust Fund shall cease
and the Trustee shall have complete authority to direct investments of the
Trust Fund; provided that, except to the extent it is clearly prudent not to do
so, the Trustee shall retain any investments in life insurance policies and do
all that is necessary to maintain such policies.  The president of the Company shall notify the
Trustee in writing when a Change in Control has occurred.  The Trustee has no duty to inquire whether a
Change in Control has occurred and may rely on notification by the president of
the Company of a Change in Control; provided, however, that if any officer,
former officer, director or former director of the Company or any Subsidiary
(other than the president of the Company), or any Participant notifies the
Trustee that there has been or there may be a Change in Control, the Trustee
shall have the duty to satisfy itself as to whether a Change in Control has in
fact occurred.  The Company and the
Subsidiaries shall indemnify and hold harmless the Trustee for any damages or
costs (including attorneys’ fees) that may be incurred because of reliance on
the president’s notice or lack thereof.

 

3.3                  MANAGEMENT OF INVESTMENTS. 
Subject to Section 3.1 above, the Trustee shall have, without
exclusion, all powers conferred on the Trustee by applicable law, unless
expressly provided otherwise herein, and all rights associated with assets of
the Trust shall be exercised by the Trustee or the person designated by the
Trustee, and shall in no event be exercisable by or rest with
Participants.  The Trustee shall have
full power and authority to invest and reinvest the Trust Fund in any
investment permitted by law, exercising the judgment and care that persons of
prudence, discretion and intelligence would exercise under the circumstances
then prevailing, considering the probable income and safety of their capital,
including, without limiting the generality of the foregoing, the power:

 

(a) 
To invest and reinvest the Trust Fund, together with the income
therefrom, in common stock, preferred stock, convertible preferred stock,
mutual funds, bonds, debentures, convertible debentures and bonds, mortgages,
notes, time certificates of deposit, commercial paper and other evidences of
indebtedness (including those issued by the Trustee or any of its affiliates),
other securities, policies of life insurance, annuity contracts, options to buy
or sell securities or other assets, and other property of any kind (personal,
real, or mixed, and tangible or intangible); provided, however, that in no
event may the Trustee invest in securities (including stock or rights to
acquire stock) or obligations issued by the Company or the Subsidiaries, other
than a de minimis amount held in common investment vehicles in which the
Trustee invests;

 

(b) 
To deposit or invest all or any part of the assets of the Trust Fund in
savings accounts or certificates of deposit or other deposits which bear a
reasonable interest rate in a bank, including the commercial department of the
Trustee, if such bank is supervised by the United States

 

4

 

or any State;

 

(c) 
To hold, manage, improve, repair and control all property, real or
personal, forming part of the Trust Fund and to sell, convey, transfer,
exchange, partition, lease for any term, even extending beyond the duration of
this Trust, and otherwise dispose of the same from time to time in such manner,
for such consideration, and upon such terms and conditions as the Trustee shall
determine;

 

(d) 
To have, respecting securities, all the rights, powers and privileges of
an owner, including the power to give proxies, pay assessments and other sums
deemed by the Trustee to be necessary for the protection of the Trust Fund, to
vote any corporate stock either in person or by proxy, with or without power of
substitution, for any purpose; to participate in voting trusts, pooling
agreements, foreclosures, reorganizations, consolidations, mergers and
liquidations, and in connection therewith to deposit securities with and
transfer title to any protective or other committee under such terms as the
Trustee may deem advisable; to exercise or sell stock subscriptions or
conversion rights; and, regardless of any limitation elsewhere in this
instrument relative to investment by the Trustee, to accept and retain as an
investment any securities or other property received through the exercise of
any of the foregoing powers;

 

(e) 
To hold in cash, without liability for interest, such portion of the
Trust Fund which, in its discretion, shall be reasonable under the
circumstances, pending investments, or payment of expenses, or the distribution
of benefits;

 

(f) 
To take such actions as may be necessary or desirable to protect the
Trust Fund from loss due to the default on mortgages held in the Trust,
including the appointment of agents or trustees in such other jurisdictions as
may seem desirable, to transfer property to such agents or trustees, to grant
such powers as are necessary or desirable to protect the Trust or its assets,
to direct such agents or trustees, or to delegate such power to direct, and to
remove such agents or trustees;

 

(g) 
To employ such agents including custodians and counsel as may be reasonably
necessary and to pay them reasonable compensation; to settle, compromise or
abandon all claims and demands in favor of or against the Trust assets;

 

(h) 
To cause title to property of the Trust to be issued, held or registered
in the individual name of the Trustee, or in the name of its nominee(s) or
agents, or in such form that title will pass by delivery;

 

(i) 
To exercise all of the further rights, powers, options and privileges
granted, provided for, or vested in trustees generally under the laws of the
State of California, so that the powers conferred upon the Trustee herein shall
not be in limitation of any authority conferred by law, but shall be in
addition thereto;

 

(j) 
To borrow money from any source (including the Trustee) and to execute promissory
notes, mortgages or other obligations and to pledge or mortgage any Trust
assets as security;

 

(k) 
To lend certificates representing stocks, bonds, or other securities to
any brokerage or other firm selected by the Trustee;

 

(l) 
To institute, compromise and defend actions and proceedings; to pay or
contest any claim; to settle a claim by or against the Trustee by compromise,
arbitration, or otherwise; to release, in whole or in part, any claim belonging
to the Trust to the extent that the claim is uncollectible;

 

(m) 
To use securities depositories or custodians and to allow such
securities as may be held by a depository or custodian to be registered in the
name of such depository or its nominee or in the name of such custodian or its
nominee;

 

5

 

(n) 
To invest the Trust Fund from time to time in one or more investment
funds, which funds shall be registered under the Investment Company Act of
1940; and

 

(o) 
To do all other acts necessary or desirable for the proper
administration of the Trust Fund, as if the Trustee were the absolute owner
thereof However, nothing in this section shall be construed to mean the
Trustee assumes any responsibility for the performance of any investment made
by the Trustee in its capacity as trustee under the operations of this Master
Trust Agreement.

 

Notwithstanding any powers granted to the
Trustee pursuant to this Master Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within the meaning of
section 301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code of 1986, as amended.

 

3.4                  SECURITIES. 
Voting or other rights in securities shall be exercised by the person or
entity responsible for directing such investments, and the Trustee shall have
no duty to exercise voting or proxy or other rights relating to any investment
managed or directed by the Committee. If any foreign securities are purchased
pursuant to the direction of the Committee, it shall be the responsibility of
the person or entity responsible for directing such investments to advise the
Trustee in writing of any laws or regulations, either foreign or domestic, that
apply to such foreign securities or to the receipt of dividends or interest on
such securities.

 

3.5                  SUBSTITUTION. 
Notwithstanding any provision of any Plan or the Trust to the contrary,
the Company and/or any Subsidiary shall at all times have the power to
reacquire the Trust Fund bv substituting readily marketable securities (other
than stock, an obligation or other security issued by the Company or any
Subsidiary) and/or cash of an equivalent value and such other property shall,
following such substitution, constitute the Trust Fund.

 

3.6                  DISTRIBUTIONS.

 

(a) 
The establishment of the Trust and the payment or deliver, to the
Trustee of money or other property shall not vest in any Participant or
Beneficiary any right, title, or interest in and to any assets of the Trust. To
the extent that any Participant or Beneficiary acquires the right to

 

6

 

receive payments under any of the Plans,
such right shall be no greater than the right of an unsecured general creditor
of the Company and the Subsidiaries and such Participant or Beneficiary shall
have only the unsecured promise of the Company and the Subsidiaries that such
payments shall be made.

 

(b) 
Concurrent with the establishment of this Trust, the Company shall
deliver to the Trustee a schedule (the “Payment Schedule”) that indicates
the amounts payable in respect of each Participant (and his or her
Beneficiaries) on a Plan by Plan basis, that provides a formula or formulas or
other instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the applicable Plans), and the time of commencement for payment
of such amounts. The Payment Schedule shall be updated from time to time
as is necessary.  Except as otherwise
provided herein, prior to a Change in Control the Trustee shall make payments
to the Participants and their Beneficiaries in accordance with such Payment
Schedule. Despite the foregoing, after a Change in Control, the Trustee shall
make payments in accordance with the terms and provisions of each of the Plans
and related plan agreements.  The
Trustee, at the direction of the Committee or, after a Change in Control, on
its own volition, may make any distribution required to be made by it hereunder
by delivering:

 

(i) 
Its check payable to the person to whom such distribution is to be  made, to the person, or, if prior to a Change
in Control, to the  Company for
redelivery to such person; provided that before a  Change in Control, the Committee may direct
the Trustee to deliver  one or more lump
sum checks payable to the Company, and the Company  shall prepare and deliver individual checks
for each Participant or  Beneficiary; or

 

(ii) 
Its check payable to an insurer for the benefit of such person,  to the insurer or, if prior to a Change in
Control, to the Company  for redelivery
to the insurer; or

 

(iii) 
Contracts held on the life of the Participant to whom or with  respect to whom the distribution is being
made, to the Participant  or Beneficiary,
or, if prior to a Change in Control, to the Company  for redelivery to the person to whom such
distribution is to be  made; or

 

(iv) 
If a distribution is being made, in whole or in part, of other  assets, assignments or other appropriate
documents or certificates  necessary to
effect a transfer of title, to the Participant or  Beneficiary, or, if prior to a Change in
Control, to the Company  for redelivery
to such person.

 

(c) 
If the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms of the
Plans, the Company and the Subsidiaries shall make the balance of each such
payment as it falls due.  The Trustee
shall notify the Company and the Subsidiaries when principal and earnings are
not sufficient.

 

(d) 
The Company and the Subsidiaries may make payment of benefits directly
to Participants or their Beneficiaries as they become due under the terms of
the Plans.  The Company and the
Subsidiaries shall notify the Trustee of their decisions to make payment of
benefits directly prior to the time amounts are payable to Participants or
their Beneficiaries.

 

(e) 
Notwithstanding anything contained in this Master Trust Agreement to the
contrary, if at any time the Trust is finally determined by the IRS not to be a
“grantor trust” with the result that the income of the Trust Fund is not
treated as income of the Company or the Subsidiaries pursuant to Sections 671
through 679 of the Internal Revenue Code of 1986, as amended or if a tax is
finally determined by the IRS to be payable by one or more Participants or
Beneficiaries with respect to any interest in the Plans or the Trust Fund prior
to payment of such interest to such Participant or Beneficiary, then the Trust
shall immediately

 

7

 

terminate, the Trustee shall immediately
determine each Participant’s share of the Trust Fund in accordance with the
Plans, and the Trustee shall immediately distribute such share in a lump sum to
each Participant or Beneficiary entitled thereto, regardless of whether such
Participant’s employment has terminated and regardless of form and time of
payments specified in or pursuant to the Plans.  Any remaining assets (less any expenses or
costs due under Sections 3.8 and 3.9 of this Master Trust Agreement) shall then
be paid by the Trustee to the Company and the Subsidiaries in such amounts, and
in the manner instructed by the Committee. 
Prior to a Change in Control, the Trustee shall rely solely on the
directions of the Committee with respect to the occurrence of the foregoing
events and the resulting distributions to be made, and the Trustee shall not be
responsible for any failure to act in the absence of such direction.

 

(f) 
The Trustee shall make provision for the reporting and withholding of
any federal, state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the Plans and shall
pay amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by the Company and the
Subsidiaries.

 

(g) 
Prior to a Change in Control, payments by the Trustee shall be delivered
or mailed to addresses supplied by the Committee and the Trustee’s obligation
to make such payments shall be satisfied upon such delivery or mailing.   Prior to a Change in Control, the Trustee
shall have no obligation to determine the identity of persons entitled to
benefits or their mailing 
addresses.  After a Change in
Control, the Trustee shall have such obligations.

 

(h) 
Prior to a Change in Control, the entitlement of a Participant or his or
her Beneficiaries to benefits under the Plans shall be determined by the
Company and the Subsidiaries or such party as they shall designate under the
Plans, and any claim for such benefits shall be considered and reviewed under
the procedures set out in the Plans.

 

8

 

3.7                  TRUSTEE RESPONSIBILITY REGARDING
PAYMENTS ON INSOLVENCY.

 

(a) 
As provided in Section 3.7(b), the Trustee shall cease payment of
benefits to Participants and their Beneficiaries if the Company or any
Subsidiary is Insolvent (the “Insolvent Entity”).  The Insolvent Entity shall be considered
“Insolvent” for purposes of this Master Trust Agreement if:

 

(i) 
the Insolvent Entity is unable to pay its debts as the, become  due, or

 

(ii) the Insolvent Entity is subject to a
pending proceeding as a  debtor under the
United States Bankruptcy Code.

 

For purposes of this Section 3.7, if
an entity is determined to be Insolvent, each Subsidiary in which such entity
has an equity interest shall also be deemed to be an Insolvent Entity. However,
the insolvency of a Subsidiary will not cause a parent corporation to be deemed
Insolvent.

 

(b) 
At all times during the continuance of this Trust, as provided in
Section 1.3 above, the principal and income of the Trust shall be subject
to claims of the general creditors of the Company and its Subsidiaries under
federal and state law as set forth below:

 

(i) 
The Board and the president of the Company shall have the duty to inform
the Trustee in writing of the Company’s or any Subsidiary’s Insolvency.  If a person claiming to be a creditor of the
Company or any Subsidiary alleges in writing to the Trustee that the Company or
any Subsidiary has become Insolvent, the Trustee shall determine whether the
Company or any Subsidiary is Insolvent and, pending such determination, the
Trustee shall discontinue payment of benefits to the Insolvent Entity’s
Participants or their Beneficiaries. 
Prior to a Change in Control, the Trustee may conclusively rely on any
determination it receives from the Board or the president of the Company with
respect to the Insolvency of the Company or any Subsidiary.

 

(ii) 
Unless the Trustee has actual knowledge of the Company’s or a
Subsidiary’s Insolvency, or has received notice from the Company, a Subsidiary,
or a person claiming to be a creditor alleging that the Company or a Subsidiary
is Insolvent, the Trustee shall have no duty to inquire whether the Company or
any Subsidiary is Insolvent.  The Trustee
may in all events rely on such evidence concerning the Company’s or any
Subsidiary’s solvency as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination concerning the
Company’s or any Subsidiary’s solvency. 
In this regard, the Trustee may rely upon a letter from the Company’s or
a Subsidiary’s auditors as to the Company’s or any Subsidiary’s financial
status.

 

(iii) 
If at any time the Trustee has determined that the Company or any
Subsidiary is Insolvent, the Trustee shall discontinue payments to the
Insolvent Entity’s Participants or their Beneficiaries, and shall hold the
portion of the assets of the Trust allocable to the Insolvent Entity for the
benefit of the Insolvent Entity’s general creditors.  Nothing in

 

9

 

this Master Trust Agreement shall in any
way diminish any rights of Participants or their Beneficiaries to pursue their
rights as general creditors of the Insolvent Entity with respect to benefits
due under the Plans or otherwise.

 

(iv) The Trustee shall resume the payment
of benefits to Participants or their Beneficiaries in accordance with this
Article 3 of this Master Trust Agreement only after the Trustee has
determined that the alleged Insolvent Entity is not Insolvent (or is no longer
Insolvent).

 

(c)                   Provided
that there are sufficient assets, if the Trustee discontinues the payment of
benefits from the Trust pursuant to Section 3.7(b) hereof and subsequently
resumes such payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Participants or their
Beneficiaries under the terms of the Plans for the period of such
discontinuance, less the aggregate amount of any payments made to Participants
or their Beneficiaries by the Company or any Subsidiary in lieu of the payments
provided for hereunder during any such period of discontinuance.  Prior to a Change in Control, the Committee
shall instruct the Trustee as to such amounts, and after a Change in Control,
the Trustee shall determine such amounts in accordance with the terms and
provisions of the Plans.

 

3.8                  COSTS OF ADMINISTRATION. 
The Trustee is authorized to incur reasonable obligations in connection
with the administration of the Trust, including attorneys’ fees, administrative
fees and appraisal fees.  Such
obligations shall be paid by the Company and the Subsidiaries.  The Trustee is authorized to pay such amounts
from the Trust Fund if the Company or the Subsidiaries fail to pay them within
60 days of presentation of a statement of the amounts due.

 

3.9                  TRUSTEE COMPENSATION AND EXPENSES. The
Trustee shall be entitled to reasonable compensation for its services as from
time to time agreed upon between the Trustee and the Company.  If the Trustee and the Company fail to agree
upon a compensation, or following a Change in Control, the Trustee shall be
entitled to compensation at a rate equal to the rate charged by the Trustee for
similar services rendered by it during the current fiscal year for other trusts
similar to this Trust.  The Trustee shall
be entitled to reimbursement for expenses incurred by it in the performance of
its duties as the Trustee, including reasonable fees for legal counsel.  The Trustee’s compensation and expenses shall
be paid by the Company and the Subsidiaries. The Trustee is authorized to
withdraw such amounts from the Trust Fund if the Company or the Subsidiaries
fail to pay them within 60 days of presentation of a statement of the amounts
due.

 

3.10            PROFESSIONAL ADVICE. 
The Company and the Subsidiaries specifically acknowledge that the
Trustee may find it desirable or expedient to retain legal counsel (who may
also be legal counsel for the Company generally) or other professional advisors
to advise it in connection with the exercise of any duty under this Master
Trust Agreement including, but not limited to, any matter relating to or
following a Change in Control or the Insolvency of the Company or any
Subsidiary.  The Trustee shall be fully
protected in acting upon the advice of such legal counsel or advisors.

 

3.11            PAYMENT ON COURT ORDER. 
To the extent permitted by law, the Trustee is authorized to make any
payments directed by court order in any action in which the Trustee has been
named as a party.  The Trustee is not
obligated to defend actions in which the Trustee is named, but shall notify the
Company or Committee of any such action and may tender defense of the action to
the Company, Committee or Participant or Beneficiary whose interest is
affected. The Trustee may in its discretion defend any action in which the
Trustee is named, and any expenses incurred by the Trustee shall be paid by the
Company and the Subsidiaries. The Trustee is authorized to pay such amounts
from the Trust Fund if the Company or the Subsidiaries fail to pay them within
sixty (60) days of presentation of a statement of the amounts due.

 

3.12            PROTECTIVE PROVISION. 
Notwithstanding any other provision contained in this Master Trust
Agreement to the contrary, the Trustee shall have no obligation to (i)
determine the existence of any conversion, redemption, exchange, subscription
or other right relating to any securities purchased of

 

10

 

which notice was
given prior to the purchase of such securities and shall have no obligation to
exercise any such right unless the Trustee is advised in writing by the
Committee both of the existence of the right and the desired exercise thereof
within a reasonable time prior to the expiration of the right to exercise, or
(ii) advance any funds to the Trust. 
Furthermore, the Trustee is not a party to the Plans.

 

3.13                           INDEMNIFICATIONS.

 

(a) 
The Company and the Subsidiaries shall indemnify and hold the Trustee
harmless from and against all loss or liability (including expenses and
reasonable attorneys’ fees) to which it may be subject by reason of its execution
of its duties under this Trust, or by reason of any acts taken in good faith in
accordance with any directions, or acts omitted in good faith due to absence of
directions, from the Company, the Committee or a Participant, unless such loss
or liability is due to the Trustee’s negligence or willful misconduct.  The indemnity described herein shall be
provided by the Company and the Subsidiaries.

 

(b) 
In the event that the Trustee is named as a defendant in a lawsuit or
proceeding involving one or more of the Plans or the Trust Fund, the Trustee
shall be entitled to receive on a current basis the indemnity payments provided
for in this Section, provided however that if the final judgement entered in
the lawsuit or proceeding holds that the Trustee is guilty of gross negligence
or willful misconduct with respect to the Trust Fund, the Trustee shall be
required to refund the indemnity payments that it has received.

 

(c) 
All releases and indemnities provided in this Master Trust Agreement
shall survive the termination of this Master Trust Agreement.

 

11

 

ARTICLE 4

 

INSURANCE CONTRACTS

 

4.1                  TYPES OF CONTRACTS. 
To the extent that the Trustee is directed by the Committee prior to a
Change in Control to invest part or all of the Trust Fund in insurance
contracts, the type and amount thereof shall be specified by the
Committee.  The Trustee shall be under no
duty to make inquiry as to the propriety of the type or amount so specified.

 

4.2                  OWNERSHIP.  Each insurance contract issued shall provide
that the Trustee shall, subject to Section 3.7 hereof, be the owner
thereof with the power to exercise all rights, privileges, options and
elections granted by or permitted under such contract or under the rules of the
insurer.  The exercise by the Trustee of
any incidents of ownership under any contract shall, prior to a Change in
Control, be subject to the direction of the Committee.

 

4.3                  RESTRICTIONS ON TRUSTEE’S RIGHTS.  The Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the policy (as
distinct from conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any borrowing
against such policy.  Except as the
Committee may direct prior to a Change in Control, the Trustee may not (i) loan
to the Company or any Subsidiary the proceeds of any borrowing against an
insurance policy held in the Trust Fund or (ii) except as provided in
Section 9.2 hereof, assign all, or any portion, of a policy to the Company
or any Subsidiary.

 

ARTICLE 5

 

TRUSTEE’S ACCOUNTS

 

5.1                  RECORDS.  The Trustee shall maintain accurate records
and detailed accounts of all investments, receipts, disbursements and other
transactions hereunder.  Such records
shall be available at all reasonable times for inspection by the Company and
Subsidiaries or their authorized representative. The Trustee, at the direction
of the Committee shall submit to the Committee and to any insurer such
valuations, reports or other information as the Committee may reasonably
require and, in the absence of fraud or bad faith, the valuation of the Trust
Fund by the Trustee shall be conclusive.

 

5.2                  ANNUAL ACCOUNTING: FINAL ACCOUNTING.

 

(a) 
Within 60 days following the end of each Plan Year and within 60 days
after the removal or resignation of the Trustee or the termination of the
Trust, the Trustee shall file with the Committee a written account setting
forth a description of all properties purchased and sold, all receipts, disbursements
and other transactions effected by it during the Plan Year or, in the case of
removal, resignation or termination, since the close of the previous Plan Year,
and listing the properties held in the Trust Fund as of the last day of the
Plan Year or other period and indicating their values.  Such values shall be either cost or market as
directed by the Committee in accordance with the terms of the Plans.

 

(b) 
The Committee may approve such account either by written notice of

 

12

 

approval delivered to the Trustee or by its
failure to express written objection to such account delivered to the Trustee
within 60 days after the date of which such account was delivered to the
Committee.

 

(e) 
The approval by the Committee of an accounting shall be binding as to
all matters embraced in such accounting on all parties to this Master Trust
Agreement and on all Participants and Beneficiaries, to the same extent as if
such accounting had been settled by a judgment or decree of a court of
competent jurisdiction in which the Trustee, the Committee, the Company, the
Subsidiaries and all persons having or claiming any interest in any Plan or
Trust Fund were made parties.

 

(d) 
Despite the foregoing, nothing, contained in this Master Trust Agreement
shall deprive the Trustee of the right to have an accounting judicially
settled, if the Trustee, in the Trustee’s sole discretion, desires such a
settlement.

 

5.3                  VALUATION.  The
assets of the Trust Fund shall be valued at their respective fair market values
on the date of valuation, as determined by the Trustee based upon such sources
of information as it may deem reliable, including, but not limited to, stock
market quotations, statistical evaluation services, newspapers of general
circulation, financial publications, advice from investment counselors,
brokerage firms or insurance companies, or any combination of sources. Prior to
a Change in Control, the Committee shall instruct the Trustee as to the value
of assets for which market values are not readily obtainable by the Trustee. If
the Committee fails to provide such values, the Trustee may take whatever
action it deems reasonable, including employment of attorneys, appraisers, life
insurance companies or other professionals, the expense of which shall be an
expense of administration of the Trust Fund and payable by the Company and the
Subsidiaries. The Trustee may rely upon information from the Company and the
Subsidiaries, the Committee, appraisers or other sources and shall not incur
any liability for an inaccurate valuation based in good faith upon such
information.

 

5.4                  DELEGATION OF DUTIES. 
The Company or the Committee, or both, may at any time employ the
Trustee as their agent to perform any act, keep any records or accounts and
make any computations that are required of the Company, any Subsidiary or the
Committee by this Master Trust Agreement or the Plans. The Trustee may be
compensated for such employment and such employment shall not be deemed to be
contrary to the Trust. Nothing done by the Trustee as such agent shall change
or increase its responsibility or liability as Trustee hereunder.

 

ARTICLE 6

 

RESIGNATION OR REMOVAL OF TRUSTEE

 

6.1                  RESIGNATION REMOVAL. 
The Trustee may resign at any time by written notice to the Company,
which shall be effective 60 days after receipt of such notice unless the
Company and the Trustee agree otherwise. Prior to a Change in Control, the
Trustee may be removed by the Company on 60 days notice or upon shorter notice
accepted by the Trustee. After a Change in Control, the Trustee may be removed
by a majority vote of the Participants, and if a Participant is dead, his or
her Beneficiaries (who collectively shall have one vote among them and shall
vote in place of such deceased Participant), on 60 days notice or upon shorter
notice accepted by the Trustee.

 

6.2                  SUCCESSOR TRUSTEE. 
If the Trustee resigns or is removed, a successor shall be appointed by
the Company, in accordance with this Section, by the effective date of the
resignation or removal under Section 6.1 above. The successor shall be a
bank, trust company, or similar independent third party that is granted
corporate trustee powers under state law. After the occurrence of a Change in
Control, a successor Trustee may not be appointed without the consent of a
majority of the Participants. If no such appointment has been made, the Trustee
may apply to a court of competent jurisdiction for appointment of a successor
or for instructions. All expenses of the Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.

 

13

 

6.3                  SETTLEMENT OF ACCOUNTS. 
Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within 90 days after receipt
of notice of resignation, removal or transfer, unless the Company extends the
time limit. Upon the transfer of the assets, the successor Trustee shall
succeed to all of the powers and duties given to the Trustee in this Master
Trust Agreement. The resigning or removed Trustee shall render to the Committee
an account in the form and manner and at the time prescribed in
Section 5.2. The approval of such accounting and discharge of the Trustee
shall be as provided in such Section.

 

ARTICLE 7

 

CONTROVERSIES, LEGAL ACTIONS AND
COUNSEL

 

7.1                  CONTROVERSY.  If
any controversy arises with respect to the Trust, the Trustee shall take action
as directed by the Committee or, in the absence of such direction or after a
Change in Control, as it deems advisable, whether by legal proceedings,
compromise or otherwise. The Trustee may retain the funds or property involved
without liability pending settlement of the controversy. The Trustee shall be
under no obligation to take any legal action of whatever nature unless there
shall be sufficient property in the Trust to indemnify the Trustee with respect
to any expenses or losses to which it may be subjected.

 

7.2                  JOINDER OF PARTIES. 
In any action or other judicial proceedings affecting the Trust, it
shall be necessary to join as parties the Trustee, the Committee, the Company
and the Subsidiaries. No Participant or other person shall be entitled to any
notice or service of process. Any judgment entered in such a proceeding or
action shall be binding on all persons claiming under the Trust. Nothing in
this Master Trust Agreement shall be construed as to deprive a Participant or
Beneficiary of his or her right to seek adjudication of his or her rights by
administrative process or by a court of competent jurisdiction.

 

7.3                  EMPLOYMENT OF COUNSEL. 
The Trustee may consult with legal counsel (who may be counsel for the
Company or any Subsidiary) and shall be fully protected with respect to any
action taken or omitted by it in good faith pursuant to the advice of counsel.

 

ARTICLE 8

 

INSURERS

 

8.1                  INSURER NOT A PARTY. 
No insurer shall be deemed to be a party to the Trust and an insurer’s
obligations shall be measured and determined solely by the terms of contracts
and other agreements executed by it.

 

8.2                  AUTHORITY OR TRUSTEE. 
An insurer shall accept the signature of the Trustee to any documents or
papers executed in connection with such contracts.  The signature of the Trustee shall be
conclusive proof to the insurer that the person on whose life an application is
being made is eligible to have a contract issued on his or her life and is
eligible for a contract of the type and amount requested.

 

8.3                  CONTRACT OWNERSHIP. 
An insurer shall deal with the Trustee as the sole and absolute owner of
any insurance contracts and shall have no obligation to inquire whether any
action or failure to act on the part of the Trustee is in accordance with or
authorized by the terms of the Plans or this Master Trust Agreement.

 

8.4                  LIMITATION OF LIABILITY. 
An insurer shall be fully discharged from any and all liability for any
action taken or any amount paid in accordance with the direction of the Trustee
and shall have no obligation to see the proper application of the amounts so
paid. An insurer shall have no liability for the operation of the Trust or the
Plans, whether or not in accordance with their terms and provisions.

 

14

 

8.5                  CHANGE OF TRUSTEE. 
An insurer shall be fully discharged from any and all liability for
dealing with a party or parties indicated on its records to be the Trustee
until such time as it shall receive at its home office written notice of the
appointment and qualification of a successor Trustee.

 

ARTICLE 9

 

AMENDMENT AND TERMINATION

 

9.1                  AMENDMENT.  Subject to the limitations set forth in this
Section 9.1, this Master Trust Agreement may be amended by a written
instrument executed by the Trustee and the Company.  Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plans or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1.3
above.  Any amendment, change or
modification shall be subject to the following rules:

 

(a) 
GENERAL RULE.  Subject to Sections
9.1(b), (c) and (d) below, this Master Trust Agreement may be amended:

 

(i) 
By the Company and the Trustee, provided, however, that if an  amendment would in any way adversely affect
the rights accrued under  the Plans in
the Trust Fund by any Participant or Beneficiary, each  and every Participant and Beneficiary whose
rights in the Trust  Fund would be
adversely affected must consent to the amendment  before this Master Trust Agreement may be so
amended; and

 

(ii) 
By the Company and the Trustee as may be necessary to comply  with laws which would otherwise render the
Trust void, voidable or  invalid in whole
or in part.

 

(b) 
LIMITATION.  Notwithstanding that
an amendment may be permissible under Section 9.1(a) above, this Master
Trust Agreement shall not be amended by an amendment that would:

 

(i) 
Cause any of the assets of the Trust to be used for or  diverted to purposes other than for the
exclusive benefit of  Participants and Beneficiaries
as set forth in the Plans, except  as is
required to satisfy the claims of the Company’s or a  Subsidiary’s general creditors; or

 

(ii) 
Be inconsistent with the terms of any Plan, including the terms  of any plan regarding termination, amendment
or modification of the  plan

 

(c) 
WRITING AND CONSENT.  Any
amendment to this Master Trust Agreement shall be set forth in writing and
signed by the Company and the Trustee and, if consent of any Participant or
Beneficiary is required under Section 9.1(a), the Participant or
Beneficiary whose consent is required. Any amendment may be current,
retroactive or prospective, in each case as provided therein.

 

(d) 
THE COMPANY AND TRUSTEE.  In
connection with the exercise of the rights under this Section 9.1:

 

(i) 
prior to a Change in Control, the Trustee shall have no  responsibility to determine whether any
proposed amendment complies  with the
terms and conditions set forth in Sections 9.1(a) and (b)  above and may conclusively rely on the
directions of the Committee  with respect
thereto, unless the Trustee has knowledge of a 
proposed transaction or transactions that would result in a Change  in Control; and

 

(ii) 
after a Change in Control, the power of the Company to amend  this Master Trust Agreement shall cease, and
the power to amend that  was previously
held by the Company shall, instead, be exercised by a  majority of the Participants and, if a
Participant is dead, his or her Beneficiaries (who collectively shall have one
vote among them and

 

15

 

shall vote in place of such deceased
Participant), with the consent of  the
Trustee, provided that such amendment otherwise complies with the  requirements of Sections 9.1(a), (b) and (c)
above.

 

(e) 
TAXATION.  This Master Trust
Agreement shall not be amended, altered, changed or modified in a manner that
would cause the Participants and/or Beneficiaries under any Plan to be taxed on
the benefits under any Plan in a year other than the year of actual receipt of
benefits.

 

9.2                  FINAL TERMINATION. 
The Trust shall not terminate until the date on which Participants and
their Beneficiaries are no longer entitled to any benefits pursuant to the
terms of the Plans, and on such date the Trust shall terminate.  Upon termination of the Trust, any assets
remaining in the Trust after the satisfaction of all liabilities hereunder and
under the Plans shall be returned to the Company and the Subsidiaries.  Such remaining assets shall be paid by the
Trustee to the Company and the Subsidiaries in such amounts and in the manner
instructed by the Company, whereupon the Trustee shall be released and
discharged from all obligations hereunder. 
From and after the date of termination and until final distribution of
the Trust Fund, the Trustee shall continue to have all of the powers provided
herein as are necessary or expedient for the orderly liquidation and
distribution of the Trust Fund.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.1            DIRECTIONS FOLLOWING CHANGE IN CONTROL.  Despite any other provision of this Master
Trust Agreement that may be construed to the contrary, following a Change in
Control, all powers of the Committee, the Company and the Board to direct the
Trustee under this Master Trust Agreement shall terminate, and the Trustee
shall act on its own discretion to carry out the terms of this Master Trust
Agreement in accordance with the Plans and this Master Trust Agreement.

 

10.2            TAXES.  The Company and the Subsidiaries shall from
time to time pay taxes of any and all kinds whatsoever that at any time are
lawfully levied or assessed upon or become payable in respect of the Trust
Fund, the income or any property forming a part thereof, or any security
transaction pertaining thereto.  To the
extent that any taxes lawfully levied or assessed upon the Trust Fund are not
paid by the Company and the Subsidiaries, the Trustee shall have the power to
pay such taxes out of the Trust Fund and shall seek reimbursement from the
Company and the Subsidiaries.  Prior to
making any payment, the Trustee may require such releases or other documents
from any lawful taxing authority as it shall deem necessary.  The Trustee shall contest the validity of
taxes in any manner deemed appropriate by the Company or its counsel, but at
the Company’s and the Subsidiaries’ expense, and only if it has received an
indemnity bond or other security satisfactory to it to pay any such
expenses.  Prior to a Change in Control,
the Trustee (i) shall not be liable for any nonpayment of tax when it distributes
an interest hereunder on directions from the Committee, and (ii) shall have no
obligation to prepare or file any tax return on behalf of the Trust Fund, any
such return being the sole responsibility of the Committee.  The Trustee shall cooperate with the
Committee in connection with the preparation and filing of any such return.

 

10.3            THIRD PERSONS.  All
persons dealing with the Trustee are released from inquiring into the decisions
or authority of the Trustee and from seeing to the application of any moneys,
securities or other property paid or delivered to the Trustee.

 

10.4            NONASSIGNABILITY: NONALIENATION.  Benefits payable to Participants and their
Beneficiaries under this Master Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered or
subjected to attachment, garnishment, levy, execution or other legal or
equitable process.

 

10.5            THE
PLANS.  The Trust and the Plans
are parts of a single, integrated employee benefit plan system and shall be
construed together, except to the

 

16

 

extent the rights
of parties to each are determined uniquely under this Master Trust Agreement or
a Plan, as the case may be.  In the event
of any conflict between the terms of this Master Trust Agreement and the agreements
that constitute the Plans, such conflict shall be resolved in favor of this
Master Trust Agreement.

 

10.6            APPLICABLE LAW. 
Except to the extent, if any, preempted by ERISA, this Master Trust
Agreement shall be governed by and construed in accordance with the laws of the
State of California.  Any provision of
this Master Trust Agreement prohibited by law shall be ineffective to the
extent of any such prohibition, without invalidating the remaining provisions hereof.

 

10.7            NOTICES AND DIRECTIONS. 
Whenever a notice or direction is given by the Committee to the Trustee,
it shall be in the form required by Section 2.1. Actions by the Company
shall be by the Board or a duly authorized officer, with such actions certified
to the Trustee by an appropriately certified copy of the action taken.  The Trustee shall be protected in acting upon
any such notice, resolution, order, certificate or other communication believed
by it to be genuine and to have been signed by the proper party or parties.

 

10.8            SUCCESSORS AND ASSIGNS. 
This Master Trust Agreement shall be binding upon and inure to the
benefit of the Company, the Subsidiaries and the Trustee and their respective
successors and assigns.

 

10.9            GENDER AND NUMBER. 
Words used in the masculine shall also apply to the feminine where
applicable, and when the context requires, the plural shall be read as the
singular and the singular as the plural.

 

10.10      HEADINGS.  Headings in this Master Trust Agreement are
inserted for convenience of reference only and any conflict between such
headings and the text shall be resolved in favor of the text.

 

10.11      COUNTERPARTS. 
This Master Trust Agreement may be executed in an original and any
number of counterparts, each of which shall be deemed to be an original of one
and the same instrument.

 

10.12      THIRD PARTY BENEFICIARIES.  It is intended that wherever the rights and
obligations of the parties hereto require, or may be exercised only with, the
consent of any Participant or Beneficiary of a Plan, such third party shall be
a third party beneficiary of the parties’ agreement hereunder and may initiate
an action in law or in equity in a court of competent jurisdiction to enforce
any right granted hereunder. If any action is initiated by a third party
hereunder, he or she shall be entitled to recover reasonable attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which the
trust may be entitled.

 

17

 

IN WITNESS WHEREOF the Company and the
Trustee have signed this Master Trust Agreement as of the date first written
above.

 

 

	
  TRUSTEE:

  	
   

  	
  THE COMPANY:

  
	
   

  	
   

  	
   

  
	
  Imperial Trust Company,

  a California corporation

  	
   

  	
  HERBALIFE INTERNATIONAL OF

  AMERICA, INC.

  a California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  {sig}

  	
   

  	
  By:

  	
  {sig}

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
    Title:

  	
  Sr. Vice President

  
							

 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]