Document:

EX-10.1

 Exhibit 10.1 

DAVID C. SHONKA 
 Acting General Counsel 

JANET AMMERMAN, CA Bar No. 113996 
 CHRISTINE M. TODARO, OH
Bar No. 0084976 
 DANIEL O. HANKS, DC Bar No. 495823; VA Bar No. 65523 

600 Pennsylvania Ave. NW, Mailstop: CC 8528, Washington, D.C. 20580 

(202) 326-2222/(202) 326-3395 (fax) 
 jammerman1@ftc.gov;
ctodaro@ftc.gov; dhanks@ftc.gov 
 LAURA SOLIS, WA Bar No. 36005 

915 Second Ave., Suite 2896, Seattle, WA 98174 
 (206)
220-4544/(206) 220-6366 (fax) 
 lsolis@ftc.gov 
 Local Counsel

 BARBARA CHUN, CA Bar No. 186907 
 Email: bchun@ftc.gov

 Federal Trade Commission 
 10877 Wilshire Blvd., Suite 700

 Los Angeles, CA 90024 
 Tel: (310) 824-4343 

Fax: (310) 824-4380 
 Attorneys for Plaintiff 

Federal Trade Commission 

                          
                          UNITED STATES DISTRICT COURT 

                          
              FOR THE CENTRAL DISTRICT OF CALIFORNIA 
  

			
	  

FEDERAL TRADE COMMISSION,
  

Plaintiff,
  

v.
  

HERBALIFE INTERNATIONAL OF
 AMERICA, INC.,

a corporation;
  

HERBALIFE INTERNATIONAL, INC.,
 a corporation; and

 
	  	 Case No.
                                

 
 STIPULATION TO ENTRY OF

ORDER FOR PERMANENT
 INJUNCTION AND MONETARY

JUDGMENT

  

                          
                                         
             1 

			
	
  HERBALIFE, LTD.,
   a corporation,

Defendants.
  
	  	

 Plaintiff, the Federal Trade Commission (“Commission”), filed its Complaint for 

Permanent Injunction and Other Equitable Relief (“Complaint”) in this matter, pursuant to 

Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b). The 

Commission and Defendants stipulate to entry of a Stipulated Order for Permanent 

Injunction and Monetary Judgment (“Order”), lodged concurrently with this Stipulation, 

with the following terms and provisions: 

THEREFORE, IT IS ORDERED as follows: 

                       
                                         
      FINDINGS 
 Plaintiff and Defendants stipulate to the following findings: 

 

	 	1.	This Court has jurisdiction over this matter. 

  

	 	2.	The Complaint charges that Defendants participated in unfair and deceptive 

 acts or practices in violation of
Section 5 of the FTC Act, 15 U.S.C. § 45, by: promoting 
 participation in a multi-level marketing program with a compensation
structure that causes 
 or is likely to cause harm to participants; making false or misleading income 

representations; making unsubstantiated claims regarding the retail sales income earned by 

participants in Defendants’ program; and providing participants in Defendants’ program 

with the means and instrumentalities to engage in deceptive acts and practices. 
  

	 	3.	Defendants neither admit nor deny any of the allegations in the Complaint, 

 except as specifically stated in
this Order. Only for purposes of this action, Defendants 
 admit the facts necessary to establish jurisdiction. 

 

	 	4.	Defendants waive any claim that they may have under the Equal Access to 

 Justice Act, 28 U.S.C.
§ 2412, concerning the prosecution of this action through the date of 
 this Order, and agree to bear their own costs and attorney fees. 

 

	 	5.	Defendants waive all rights to appeal or otherwise challenge or contest the 

  

                          
                                         
             2 

 validity of this Order. 

DEFINITIONS 
 For the
purpose of this Order, the following definitions apply: 
  

	A.	“Business Opportunity Participant” or “Participant” means any individual who 

  

	    	is participating in a Multi-Level Marketing Program. “Business Opportunity 

  

	    	Participant” or “Participant” does not include Preferred Customers. 

  

	B.	“Business Venture” means any written or oral business arrangement, however 

  

	    	denominated, whether or not covered by 16 C.F.R. Part 437, that consists of the 

  

	    	payment of any consideration for the right or means to offer, sell, or distribute goods 

  

	    	or services (whether or not identified by a trademark, service mark, trade name, 

  

	    	advertising or other commercial symbol). The definition of “Business Venture” 

  

	    	includes Multi-Level Marketing Programs. 

  

	C.	“Defendants” means all of the Defendants and their successors and assigns, 

  

	    	individually, collectively, or in any combination. 

  

	D.	“Downline” refers to the collection of all Business Opportunity Participants whom a 

  

	    	Business Opportunity Participant has personally recruited or sponsored (first level), 

  

	    	all Participants and Preferred Customers recruited or sponsored by first level 

  

	    	Participants (second level), all Participants and Preferred Customers recruited or 

  

	    	sponsored by second level Participants (third level), and so forth, however 

  

	    	denominated (including, but not limited to, “downline,” “tree,” “cooperative,” or 

  

	    	“income center”), whose activities are the basis, in whole or part, for any payment 

  

	    	or compensation from Defendants to the Business Opportunity Participant. 

  

	E.	“Multi-Level Compensation” means any payment or compensation (including, but 

  

	    	not limited to, “wholesale profit,” “commissions,” “royalties,” “overrides,” and 

  

	    	“bonuses”) in a Multi-Level Marketing Program from Defendants to a Business 

  

	    	Opportunity Participant that is based, in whole or in part, on the activities of the 

  

	    	Participant’s Preferred Customers and the Participant’s Downline. 

  

                          
                                         
         3 

	F.	“Multi-Level Marketing Program” or “Program” means any marketing program 

  

	    	in which Business Opportunity Participants have the right to (1) sell goods or 

  

	    	services; (2) recruit others into the Program; and (3) receive payment or other 

  

	    	compensation that is based, in whole or in part, upon the Product purchases, sales, 

  

	    	or other activities of the Participant’s Downline. 

  

	G.	“Net Rewardable Sales” for Defendants means the annual total of 

  

	 	1.	Net Sales generated by Preferred Customer Sales and Product sales that result 

  

	 	    	in Profitable Retail Sales; and 

  

	 	2.	Net Sales generated by Rewardable Personal Consumption, determined 

  

	 	    	pursuant to Subsection I.E. 

  

	    	Provided, however, that if the total of G.2 would exceed one-third of the combined 

  

	    	total of G.1 and G.2, then Net Rewardable Sales shall equal one-and-a-half times the 

  

	    	total of G.1. 

  

	H.	“Net Sales” means gross Product sales in the United States by Defendants, 

  

	    	including packaging and handling, freight recovery, and surcharges, and net of any 

  

	    	returns, refunds, Product Discounts, and allowances, including Wholesale 

  

	    	Commissions. 

  

	I.	“Preferred Customer” means an individual who joins or registers with a Multi- 

  

	    	Level Marketing Program as a customer only, and who does not have the right to 

  

	    	(1) sell goods or services; (2) recruit others into the Program; or (3) receive Multi- 

  

	    	Level Compensation. 

  

	J.	“Preferred Customer Sales” or “Sales to Preferred Customers” means sales of 

  

	    	Products made directly from Defendants to Preferred Customers. 

  

	K.	“Product” means any good sold by Defendants that can potentially generate Multi- 

  

	    	Level Compensation pursuant to Defendants’ compensation plan. 

  

	L.	“Product Discount” refers to the difference between Defendants’ suggested retail 

  

	    	price for a Product and the Product price charged by Defendants to the purchaser in 

  

	    	a purchase made directly from Defendants. 

  

                          
                                         
         4 

	M.	“Profitable Retail Sale” means a sale of Product by a Business Opportunity 

  

	    	Participant to a Retail Customer or a Preferred Customer that is a genuine sale made 

  

	    	at a price above the Business Opportunity Participant’s average wholesale cost over 

  

	    	the preceding twelve (12) months for the items sold (including tax and the actual or 

  

	    	approximate cost of shipping, handling, and any similar fees) and for which retail 

  

	    	sale information is collected and maintained by Defendants. 

  

	N.	“Retail Customer” means a purchaser of Products sold through a Multi-Level 

  

	    	Marketing Program who is not a Business Opportunity Participant or a Preferred 

  

	    	Customer, is not registered with the Program, and is not otherwise participating in 

  

	    	the Program. 

  

	O.	“Rewardable Personal Consumption” means sales of Product by Defendants to a 

  

	    	Business Opportunity Participant, for his own or his household’s use, that can 

  

	    	potentially be used to generate Multi-Level Compensation as set forth in Subsection 

  

	    	I.E. 

  

	P.	“Total Net Sales” for Defendants means the total of Net Sales in a fiscal year. 

  

	Q.	“Wholesale Commissions” means Multi-Level Compensation generated by a 

  

	    	Product purchase from Defendants that, in total for the transaction, equals the 

  

	    	difference between the purchaser’s Product Discount and the lesser of either the 

  

	    	maximum Product Discount for the Product under Defendants’ compensation plan 

  

	    	or 50% of the suggested retail price of the Product, and is paid by Defendants to 

  

	    	Participants whose Product Discount is greater than that of the purchaser and who 

  

	    	have such purchaser either in their Downline or as a Preferred Customer whom they 

  

	    	recruited or sponsored. 

  

                          
                                         
         5 

                          
                                         
     ORDER 

                          
                                         
           I. 

                          
                  PROHIBITED BUSINESS PRACTICES 

IT IS ORDERED that Defendants, Defendants’ officers, agents, employees, and all 

other persons in active concert or participation with any of them, who receive actual notice 

of this Order, whether acting directly or indirectly, are permanently restrained and enjoined 

from advertising, marketing, promoting, or offering any Multi-Level Marketing Program 

unless such program has the following characteristics: 
  

	 	A.	Limitations on Multi-Level Compensation. The program shall include, and 

  

	 	    	Defendants shall enforce, the following provisions: 

  

	 	1.	Any Multi-Level Compensation paid to a Participant for a given period shall be 

  

	 	    	generated solely by the following categories of transactions (“Rewardable 

  

	 	    	Transactions”) occurring in the same period or, during such Participant’s first six 

  

	 	    	months as a Business Opportunity Participant, the three months prior to that 

  

	 	    	period: 

  

	 	a.	Sales to Preferred Customers whom the Participant has personally recruited 

  

	 	    	or sponsored; 

  

	 	b.	Sales to Preferred Customers in the Participant’s Downline; 

  

	 	c.	Profitable Retail Sales of the Participant’s Downline, as calculated by 

  

	 	    	Defendants using the information collected pursuant to Subsection I.C; and 

  

	 	d.	All or a portion of Rewardable Personal Consumption transactions, 

  

	 	    	determined pursuant to Subsection I.E., of the Participant’s Downline; 

  

	 	    	provided that the Rewardable Personal Consumption transactions included in 

  

	 	    	a Participant’s Rewardable Transactions shall be limited such that no more 

  

	 	    	than one-third of the total value of the Participant’s Multi-Level 

  

	 	    	Compensation may be attributable to or generated by such transactions. 

  

	 	2.	If a Participant has transactions that are not Rewardable Transactions (“Non- 

  

	 	    	Rewardable Transactions”) in his or her Downline, the amount of any Multi- 

  

                          
                                         
             6 

	 	    	Level Compensation that the Participant may receive shall not vary from the 

  

	 	    	amount of Multi-Level Compensation that the Participant would be entitled to 

  

	 	    	receive if such Non-Rewardable Transactions were not in his or her Downline;  

  

	 	    	i.e., the total amount of a Participant’s Multi-Level Compensation shall not be 

  

	 	    	increased because the Non-Rewardable Transactions were in the Participant’s 

  

	 	    	Downline rather than in any other Participant’s Downline. 

  

	 	3.	Any point system or other method used to measure Rewardable Transactions 

  

	 	    	shall assign the same value to a given Product regardless of whether the Product 

  

	 	    	was sold to a Preferred Customer, to a Retail Customer, or to a Business 

  

	 	    	Opportunity Participant. Any system that calculates Multi-Level Compensation 

  

	 	    	shall not vary the compensation for a Rewardable Transaction based on whether 

  

	 	    	the Product was sold to a Preferred Customer, to a Retail Customer, or to a 

  

	 	    	Business Opportunity Participant for personal consumption. 

  

	 	4.	For any fiscal year, if the total of Net Rewardable Sales is less than 80% of Total 

  

	 	    	Net Sales, the sum of Multi-Level Compensation payments excluding Wholesale 

  

	 	    	Commissions by Defendants to Participants may not exceed forty-one point 

  

	 	    	seven five percent (41.75%) of the amount of Net Rewardable Sales, which 

  

	 	    	reflects a ten-percent (10%) increase over the percentage of Multi-Level 

  

	 	    	Compensation excluding Wholesale Commissions paid by Defendants in fiscal 

  

	 	    	year 2015. 

  

	 	5.	No compensation shall be paid solely for enrolling or recruiting a Participant or a 

  

	 	    	Preferred Customer into the Program. 

  

	 	B.	Preferred Customer Category. The program shall differentiate between Preferred 

  

	 	    	Customers and Business Opportunity Participants, including through the following 

  

	 	    	requirements: 

  

	 	1.	A Preferred Customer’s classification cannot change to Business Opportunity 

  

	 	    	Participant except upon the Preferred Customer’s written request or application 

  

                          
                                         
         7 

	 	    	or other written expression of intent made directly to and approved by 

  

	 	    	Defendants. 

  

	 	2.	A Business Opportunity Participant’s classification cannot change to Preferred 

  

	 	    	Customer except upon the Participant’s written request or application or other 

  

	 	    	written expression of intent made directly to and approved by Defendants. 

  

	 	3.	A Preferred Customer who becomes a Business Opportunity Participant may not 

  

	 	    	receive any benefit or status that depends in any way on that individual’s activity 

  

	 	    	as a Preferred Customer, except that any discount that the individual obtained as 

  

	 	    	a Preferred Customer may continue to be used to purchase Product that is 

  

	 	    	designated, at the time of purchase, as being for the individual’s own or 

  

	 	    	household use. 

  

	 	4.	All individuals who are registered with or participating in the Program as of the 

  

	 	    	Effective Date of this Section and who have not affirmatively elected to be 

  

	 	    	classified as Preferred Customers pursuant to Subsection I.B.2, above, shall be 

  

	 	    	classified as Business Opportunity Participants. 

  

	 	C.	Collection of Retail Sales Information. Defendants shall collect from Business 

  

	 	    	Opportunity Participants and maintain in a standardized format the following 

  

	 	    	information for any claimed Profitable Retail Sale: 

  

	 	1.	the method of payment; 

  

	 	2.	the Products and quantities sold; 

  

	 	3.	the date; 

  

	 	4.	the price paid by the purchaser; 

  

	 	5.	the first and last name of the purchaser; 

  

	 	6.	contact information for the purchaser, including at least two of the following: 

  

	 	    	telephone number, address or e-mail address; and 

  

	 	7.	for any paper receipt submitted to Defendants, the signature of the Retail 

  

	 	    	Customer or Preferred Customer. 

  

                          
                                         
         8 

	 	D.	Verification of Retail Sales and Preferred Customer Sales. The following 

  

	 	    	requirements shall apply regarding Profitable Retail Sales and Preferred Customer 

  

	 	    	Sales: 

  

	 	1.	Defendants shall take all reasonable steps, including both random and targeted 

  

	 	    	audits, to monitor Profitable Retail Sales and Preferred Customer Sales in order 

  

	 	    	to ensure that they are genuine sales of Products, rather than an attempt to 

  

	 	    	manipulate the Program’s compensation plan. 

  

	 	2.	Defendants shall take all reasonable steps, including both random and targeted 

  

	 	    	audits, to monitor Profitable Retail Sales in order to ensure that they in fact 

  

	 	    	occurred as reported in the information collected and maintained pursuant to 

  

	 	    	Subsection I.C. 

  

	 	3.	If the total amount of Product claimed by any Business Opportunity Participant 

  

	 	    	as Profitable Retail Sales exceeds the total amount of Product purchased by the 

  

	 	    	Participant subsequent to the Effective Date of this Section, less any amount 

  

	 	    	designated at the time of purchase as being for the Participant’s own or 

  

	 	    	household use, Defendants shall not pay any Multi-Level Compensation on the 

  

	 	    	excess amount of claimed Profitable Retail Sales. 

  

	 	E.	Limitations on Rewardable Personal Consumption. The Rewardable Personal 

  

	 	    	Consumption of a Business Opportunity Participant in a given period shall be 

  

	 	    	limited to purchases in that period that are designated by the Business Opportunity 

  

	 	    	Participant at the time of purchase as being for the Business Opportunity 

  

	 	    	Participant’s own or household use. Rewardable Personal Consumption shall also 

  

	 	    	be subject to the following additional limitations: 

  

	 	1.	For the first twelve (12) months following the date this Subsection becomes 

  

	 	    	effective, an individual Business Opportunity Participant’s own purchases in a 

  

	 	    	given month may be Rewardable Personal Consumption in an amount not to 

  

	 	    	exceed $200 of wholesale Product expenditures (including tax and actual or 

  

	 	    	approximate shipping, handling, and similar fees). 

  

                          
                                         
         9 

	 	2.	Beginning twelve (12) months after the date this Subsection becomes effective, 

  

	 	    	an individual Business Opportunity Participant’s own purchases (including tax 

  

	 	    	and actual or approximate shipping, handling, and similar fees) in a given month 

  

	 	    	may be Rewardable Personal Consumption in an amount not to exceed the 

  

	 	    	greater of: 

  

	 	a.	$125 in wholesale Product expenditures; or 

  

	 	b.	the 75th percentile of average monthly wholesale Product expenditures 

  

	 	    	among Preferred Customers over the prior twelve (12) months (the 

  

	 	    	“measurement window”). The population of Preferred Customers from 

  

	 	    	which the 75th percentile shall be computed shall consist exclusively of all 

  

	 	    	Preferred Customers who had the status of Preferred Customer for at least six 

  

	 	    	(6) months of the measurement window and who purchased product directly 

  

	 	    	from Defendants at least once during each of the calendar quarters in which 

  

	 	    	they had the status of Preferred Customer during the measurement window. 

  

	 	    	Each Preferred Customer’s “average monthly wholesale Product 

  

	 	    	expenditure” shall be calculated by summing up all Product expenditures 

  

	 	    	(including tax and shipping, handling, and similar fees) made by the 

  

	 	    	Preferred Customer directly from Defendants during the measurement 

  

	 	    	window and made while he or she had the status of Preferred Customer, and 

  

	 	    	dividing that sum by the total number of months in the measurement window 

  

	 	    	for which he or she had the status of Preferred Customer, regardless of 

  

	 	    	whether he or she made purchases in any of those months. This latter limit 

  

	 	    	option shall be available only if the population of Preferred Customers being 

  

	 	    	ranked consists of not less than 20,000 individuals. 

  

	 	3.	The limitation of Subsection I.E.2 shall be re-set annually, based on the prior 

  

	 	    	twelve (12) months of activity, through the procedure set forth in that 

  

	 	    	Subsection. 

  

                          
                                         
         10 

	 	F.	Limitations on Thresholds, Targets, and Requirements. The Program shall 

  

	 	    	include, and Defendants shall enforce, the following policies: 

  

	 	1.	Business Opportunity Participants shall not be required to purchase a minimum 

  

	 	    	quantity of products, except that Defendants may require Business Opportunity 

  

	 	    	Participants to purchase an initial start-up package or its equivalent, provided 

  

	 	    	that no Multi-Level Compensation is generated or paid on the purchase. 

  

	 	2.	To the extent the Program requires that a Participant meet a threshold or target in 

  

	 	    	order to (a) obtain or maintain a level or designation necessary to receive any 

  

	 	    	particular type or amount of Multi-Level Compensation; (b) qualify or become 

  

	 	    	eligible to receive Multi-Level Compensation; (c) otherwise increase the 

  

	 	    	Participant’s amount of Multi-Level Compensation; or (d) obtain, maintain, 

  

	 	    	increase, or qualify for a discount or rebate on Product purchased for resale; such 

  

	 	    	threshold or target shall be met exclusively through Profitable Retail Sales and 

  

	 	    	Sales to Preferred Customers. 

  

	 	3.	Business Opportunity Participants are prohibited from participating in any auto- 

  

	 	    	shipment program or any similar program involving standing orders of product. 

  

	 	G.	Refund Policies. The program shall include, and Defendants shall enforce, the 

  

	 	    	following policies related to product refunds or buybacks: 

  

	 	1.	For at least the first twelve (12) months after becoming a Business Opportunity 

  

	 	    	Participant, Participants are entitled to a full refund from Defendants of the cost 

  

	 	    	of any start-up package or its equivalent. If Defendants require, as part of their 

  

	 	    	refund procedure, that any part of the start-up package or its equivalent be 

  

	 	    	returned, Defendants will pay for any shipping costs associated with such return. 

  

	 	2.	Business Opportunity Participants are entitled to a full refund from Defendants 

  

	 	    	of the cost, including tax and any fees, of any unopened products purchased from 

  

	 	    	Defendants within the previous twelve (12) months. If Defendants require, as 

  

	 	    	part of their refund procedure, that refundable products be returned, Defendants 

  

	 	    	will pay for any shipping costs associated with such return. 

  

                          
                                         
         11 

	 	3.	Defendants shall take effective steps to notify Participants of both (i) the right to 

  

	 	    	return unopened product for a full refund and (ii) contact information, including 

  

	 	    	a telephone number, that may be used to promptly initiate a product return for 

  

	 	    	refund. Such steps shall include, at a minimum, providing clear and conspicuous 

  

	 	    	notice of the same on the following: 

  

	 	a.	Every product purchase invoice or receipt sent from Defendants to a 

  

	 	    	Participant; 

  

	 	b.	Any websites maintained by Defendants that promote or otherwise provide 

  

	 	    	information about the Program; 

  

	 	c.	Any application to join the Program as a Business Opportunity Participant; 

  

	 	    	and 

  

	 	d.	Any of Defendants’ booklets, brochures, or similar printed materials 

  

	 	    	promoting the Program. 

  

	 	4.	Preferred Customers are entitled to product refunds on terms and through 

  

	 	    	procedures that are at least as generous as those for Retail Customers. 

  

	 	H.	Required Training for Business Opportunity Participants. Defendants shall not 

  

	 	    	pay Multi-Level Compensation to any Participant, and shall prohibit and prevent 

  

	 	    	such Participant from recruiting or sponsoring other Participants, until such 

  

	 	    	Participant has successfully completed a training course conducted by Defendants 

  

	 	    	that is focused on the following topics: (a) the importance of purchasing only the 

  

	 	    	amount of product that the Participant expects to sell in the near future; (b) how to 

  

	 	    	document retail sales; (c) prohibitions on and consequences for falsifying retail sales 

  

	 	    	documentation; (d) how to identify and account for business-related expenses and 

  

	 	    	calculate profit or loss; (e) how to create a business budget and manage income and 

  

	 	    	expenses; (f) prohibited and permissible representations to Participants and potential 

  

	 	    	Participants; (g) how to receive a refund or buyback for unwanted product; and 

  

	 	    	(h) how to submit a complaint about the business opportunity to Defendants and to 

  

	 	    	law enforcement. 

  

                          
                                         
         12 

	 	I.	Policies Relating to Leased or Purchased Business Locations. The program shall 

  

	 	    	include, and Defendants shall enforce, the following policies relating to leased or 

  

	 	    	purchased business locations: 

  

	 	1.	Participants are prohibited from entering into any lease, sublease, or purchase of 

  

	 	    	a physical location or a portion of a physical location (other than their homes or 

  

	 	    	dwellings) for their Program-related businesses until they have: 

  

	 	a.	been Business Opportunity Participants for at least twelve (12) consecutive 

  

	 	    	months; 

  

	 	b.	successfully completed a training course conducted by Defendants that 

  

	 	    	focuses on the following topics as related to the operation of a leased or 

  

	 	    	purchased business location: (i) how to identify and account for all business- 

  

	 	    	related expenses and calculate profit or loss; (ii) how to create a budget and 

  

	 	    	manage income and expenses; (iii) how to learn about and comply with local 

  

	 	    	laws that may affect the Participant’s business; and (iv) how to create a 

  

	 	    	business plan meeting the requirements set forth in Subsection I.I.c, below; 

  

	 	    	and 

  

	 	c.	prepared a written business plan that such Participant must retain and make 

  

	 	    	available to Defendants or to the Independent Compliance Auditor upon 

  

	 	    	request, and that (i) identifies the facilities and equipment that will be used 

  

	 	    	for business operations and the costs of acquiring such facilities and 

  

	 	    	equipment; (ii) identifies applicable city, county, and state regulations and 

  

	 	    	the steps and costs necessary for the Participant to operate in compliance 

  

	 	    	therewith; (iii) estimates start-up costs and identifies the source of funding 

  

	 	    	for such costs; (iv) presents a promotional plan for attracting customers to the 

  

	 	    	location; (v) estimates the monthly and annual volume of customers and sales 

  

	 	    	necessary for the Participant’s retail business to operate profitably; and 

  

	 	    	(vi) forecasts income, overhead, and operating expenses by month for the 

  

	 	    	first two years of operation. 

  

                          
                                         
         13 

                          
                                         
 II. 

                          
              PROHIBITED MISREPRESENTATIONS 
 IT IS FURTHER
ORDERED that Defendants, Defendants’ officers, agents, and 
 employees, and all other persons in active concert or participation
with any of them, who 
 receive actual notice of this Order, whether acting directly or indirectly, in connection with 

the advertising, marketing, promoting, or offering of any Business Venture, are 

permanently restrained and enjoined from misrepresenting or assisting others in 

misrepresenting, including by providing others with the means and instrumentalities with 

which to misrepresent, expressly or by implication: 
  

	 	A.	That participants will or are likely to earn substantial income; 

  

	 	B.	The amount of revenue, income, or profit a participant actually earned or can likely 

  

	 	    	earn; 

  

	 	C.	The reasons participants do not earn significant income, including but not limited to 

  

	 	    	representations that participants fail to devote substantial or sufficient effort; and 

  

	 	D.	Any other fact material to participants concerning the Business Venture, such as: 

  

	 	    	the total costs to participate, including trainings, brochures, and sales aids; any 

  

	 	    	material restrictions, limitations, or conditions on operating the Business Venture; or 

  

	 	    	any material aspect of its performance, efficacy, nature, or central characteristics. 

                          
                                         
 III. 

                          
    PROHIBITED LIFESTYLE REPRESENTATIONS 
 IT IS FURTHER ORDERED that Defendants, Defendants’ officers,
agents, and 
 employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

the advertising, marketing, promoting, or offering of any Business Venture, are 

permanently restrained and enjoined from representing that participation in the Business 

Venture is likely to result in a lavish lifestyle, and from using images or descriptions to 

represent or imply that participation in the Business Venture is likely to result in a lavish  

  

                          
                                         
         14 

 lifestyle. For the purposes of this Section, the following are examples of prohibited claims 

when made to a general audience of prospective or current participants: 
  

	 	A.	Statements that participants can “quit your job,” “be set for life,” “earn millions of 

  

	 	    	dollars,” “make more money than they ever have imagined or thought possible,” 

  

	 	    	“realize unlimited income,” or any substantially similar representations; and 

  

	 	B.	Descriptions or images of opulent mansions, private helicopters, private jets, yachts, 

  

	 	    	exotic automobiles, or any substantially similar representations. 

                          
                                         
     IV. 
  PROHIBITION AGAINST MATERIAL OMISSIONS AND UNSUBSTANTIATED 

                          
                    INCOME REPRESENTATIONS 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, and 

employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

advertising, marketing, promoting, or offering any Business Venture, are permanently 

restrained and enjoined from: 
  

	 	A.	Failing to disclose, clearly and conspicuously, before any potential participant pays 

  

	 	    	any money to Defendants, all information material to the decision of whether to 

  

	 	    	participate in the Business Venture, including, but not limited to whether 

  

	 	    	Defendants have a refund or buyback policy and if so, all material terms and 

  

	 	    	conditions of the refund or buyback policy, including the specific steps consumers 

  

	 	    	must follow to obtain a refund or buyback; and 

  

	 	B.	Making any representation, expressly or by implication, regarding the amount or 

  

	 	    	level of income, including full-time or part-time income, that a participant can 

  

	 	    	reasonably expect to earn unless the representation is non-misleading and, at the 

  

	 	    	time such representation is made, Defendants possess and rely upon competent and 

  

	 	    	reliable evidence sufficient to substantiate that the representation is true. Implied 

  

	 	    	representations regarding the amount or level of income that a participant 

  

                          
                                         
         15 

	 	    	reasonably can expect to earn include but are not limited to representations 

  

	 	    	involving and images used to show an improved lifestyle. 

                          
                                         
     V. 

                          
      COMPLIANCE MONITORING BY DEFENDANTS 
 IT IS FURTHER ORDERED that Defendants, Defendants’
officers, agents, 
 employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

advertising, marketing, promoting, or offering any Multi-Level Marketing Program, are 

hereby permanently restrained and enjoined from: 
  

	 	A.	Failing to take all reasonable steps necessary to monitor and ensure that Defendants’ 

  

	 	    	agents, representatives, employees, and independent contractors act in compliance 

  

	 	    	with the requirements of Sections I–IV of this Order. For purposes of this 

  

	 	    	Subsection, an individual’s status as a Business Opportunity Participant alone does 

  

	 	    	not render him or her an agent, representative, employee, or independent contractor 

  

	 	    	of Defendants. 

  

	 	B.	Failing to take all reasonable steps necessary to monitor and ensure that Business 

  

	 	    	Opportunity Participants and Preferred Customers act in compliance with the 

  

	 	    	requirements of Sections II–IV of this Order. 

  

	 	C.	Providing any monetary compensation to any Business Opportunity Participant 

  

	 	    	when Defendants know or should know that such monetary compensation is or 

  

	 	    	would be based on claimed transactions that are not in accordance with the 

  

	 	    	requirements of Section I. 

  

	 	D.	Failing to claw back any monetary compensation to any Business Opportunity 

  

	 	    	Participant when Defendants learn or should have learned that such monetary 

  

	 	    	compensation was based on claimed transactions that were not in accordance with 

  

	 	    	the requirements of Section I. 

  

                          
                                         
         16 

	 	E.	Failing to implement and maintain a corrective action program that deters and 

  

	 	    	corrects behaviors of Business Opportunity Participants and Preferred Customers 

  

	 	    	that are not in compliance with the requirements of this Order. 

  

	 	F.	Failing to promptly and thoroughly investigate any complaint received by 

  

	 	    	Defendants relating to compliance with this Order and to notify the complainant of 

  

	 	    	the resolution of the complaint and the reason therefor, unless legitimate business 

  

	 	    	reasons exist not to notify the complainant. 

                          
                                         
        VI. 

                          
          INDEPENDENT COMPLIANCE AUDITOR 
 IT IS FURTHER ORDERED that an
Independent Compliance Auditor (“ICA”) 
 shall be appointed to further ensure compliance with Section I.A–F and I.I of this
Order, as 
 set forth below. The ICA shall be an independent third party, not an employee or agent of 

the Commission or of Defendants, and no attorney-client or other professional relationship 

shall be formed between the ICA and Defendants. No later than sixty (60) days after the 

entry of this Order, Commission staff and Defendants shall select the ICA by mutual 

agreement. If the parties are unable to agree on an ICA who is willing and able to perform 

the ICA’s duties under this Order, they shall submit the matter to the Court for 

determination. Defendants shall consent to the following terms and conditions regarding 

the ICA: 
  

	 	A.	The ICA shall serve, without bond or other security, at the expense of Defendants. 

  

	 	    	Defendants shall execute an agreement that, subject to the prior approval of 

  

	 	    	Commission staff, confers upon the ICA all the rights and powers necessary to 

  

	 	    	permit the ICA to perform its duties and responsibilities pursuant to and in 

  

	 	    	accordance with the provisions of this Order. Any individual who serves as ICA or 

  

	 	    	performs duties at the ICA’s direction shall agree not to be retained by the 

  

	 	    	Commission or Defendants for a period of two years after the conclusion of the 

  

	 	    	engagement. 

  

                          
                                         
         17 

	 	B.	Beginning at the Effective Date applicable to Section I of this Order, the ICA shall 

  

	 	    	have the duty and responsibility to diligently and competently review, assess, and 

  

	 	    	evaluate Defendants’ compliance with the following requirements of Section I of 

  

	 	    	this Order, namely the requirements that: 

  

	 	1.	Defendants are paying Multi-Level Compensation only in accordance with 

  

	 	    	Subsection I.A, and subject to the limitations set forth in Subsections I.D., I.E, 

  

	 	    	I.F, and I.H; 

  

	 	2.	Defendants are differentiating between Preferred Customers and Business 

  

	 	    	Opportunity Participants as required by Subsection I.B; 

  

	 	3.	Defendants are collecting and maintaining retail sales information as required by 

  

	 	    	Subsection I.C; 

  

	 	4.	Defendants are taking all reasonable steps necessary to monitor and ensure that 

  

	 	    	Profitable Retail Sales and Preferred Customer Purchases are genuine sales of 

  

	 	    	Products, rather than an attempt to manipulate the program’s compensation plan, 

  

	 	    	as required by Subsection I.D.1; 

  

	 	5.	Defendants are taking all reasonable steps necessary to monitor and ensure that 

  

	 	    	Profitable Retail Sales in fact occurred as reported in the information collected 

  

	 	    	and maintained pursuant to Subsection I.D.2; 

  

	 	6.	Defendants are complying with the requirements and limitations relating to 

  

	 	    	claimed Profitable Retail Sales set forth in Subsection I.D.3; 

  

	 	7.	Defendants are complying with the requirements and limitations relating to 

  

	 	    	Rewardable Personal Consumption set forth in Subsection I.E; 

  

	 	8.	Defendants are complying with the limitations on thresholds, targets, and 

  

	 	    	requirements set forth in Subsection I.F; 

  

	 	9.	Defendants are complying with and enforcing the requirements and limitations 

  

	 	    	on leased or purchased business locations set forth in Subsection I.I. 

  

                          
                                         
         18 

	 	C.	Subject to the terms of this Order, the ICA shall have authority to engage 

  

	 	    	professional staff, at the expense of Defendants, to assist the ICA in carrying out the 

  

	 	    	ICA’s duties and responsibilities. 

  

	 	D.	Except for information protected by any demonstrated legally-recognized privilege, 

  

	 	    	the ICA shall have full and complete access to all reasonably available information 

  

	 	    	in the possession, custody, or control of Defendants that is relevant to 

  

	 	    	accomplishing the ICA’s duties and responsibilities described in Section VI. 

  

	 	    	Defendants may consult with the ICA concerning the ICA’s work, including but not 

  

	 	    	limited to the ICA’s findings and recommendations, as appropriate. 

  

	 	E.	The ICA, and any staff engaged to assist the ICA in carrying out the ICA’s duties 

  

	 	    	and responsibilities, shall maintain the confidentiality of any of Defendants’ 

  

	 	    	information obtained in accordance with this Order, and shall not disclose such 

  

	 	    	information to any other person except in accordance with this Order; except that, 

  

	 	    	upon request, the ICA shall share records and information with Commission staff. 

  

	 	    	Nothing in this Section shall affect or impair the Commission’s ability to obtain 

  

	 	    	records and information pursuant to Section XII. 

  

	 	F.	Defendants may require the ICA, and any staff engaged to assist the ICA in carrying 

  

	 	    	out the ICA’s duties and responsibilities, to sign a customary confidentiality 

  

	 	    	agreement; provided, however, that such agreement shall not restrict the ICA (and 

  

	 	    	its representatives) from providing any information to Commission staff. 

  

	 	G.	Commission staff may require the ICA, and any staff engaged to assist the ICA in 

  

	 	    	carrying out the ICA’s duties and responsibilities, to sign an appropriate 

  

	 	    	confidentiality agreement related to Commission materials and information received 

  

	 	    	in connection with the performance of the ICA’s duties, and to take other 

  

	 	    	appropriate steps to protect the confidentiality of the same. 

  

	 	H.	The ICA shall serve for seven (7) years after the Effective Date applicable to 

  

	 	    	Section I of this Order. 

  

                          
                                         
         19 

	 	I.	The ICA shall periodically report in writing to Commission staff and to Defendants 

  

	 	    	on Defendants’ compliance with each of the subsections of Section I. For the first 

  

	 	    	three (3) years, the ICA shall make such reports every six (6) months, beginning six 

  

	 	    	months following the Effective Date applicable to Section I. After the first three 

  

	 	    	(3) years, the frequency of such reports shall be decreased to annually. 

  

	 	J.	If, at any time, the ICA determines that Defendants are not in substantial compliance 

  

	 	    	with Section I.A–F or I.I of this Order, the ICA shall so notify Commission staff and 

  

	 	    	consult with Defendants. Defendants may at any time submit to Commission staff 

  

	 	    	and to the ICA a written response to the ICA’s notification. 

  

	 	K.	The ICA shall prepare a budget and work plan as follows: 

  

	 	1.	No later than ninety (90) days prior to the Effective Date applicable to Section I 

  

	 	    	of this Order, the ICA shall, in consultation with Commission staff and 

  

	 	    	Defendants, prepare and present to Commission staff and Defendants an annual 

  

	 	    	budget and work plan (the “ICA Budget”) describing the scope of work to be 

  

	 	    	performed and the fees and expenses of the ICA and any professional staff to be 

  

	 	    	incurred during the first year following the Effective Date of Section I of this 

  

	 	    	Order. 

  

	 	2.	The scope of work, fees, and expenses to be incurred by the ICA and any 

  

	 	    	professional staff shall be reasonable and not excessive, in light of the ICA’s 

  

	 	    	defined duties, responsibilities, and powers prescribed in this Order. 

  

	 	3.	The ICA shall prepare and submit to Defendants and to Commission staff an 

  

	 	    	annual ICA Budget no later than ninety (90) days prior to the beginning of each 

  

	 	    	subsequent year of the ICA’s term. If Defendants and Commission staff both 

  

	 	    	approve the ICA Budget, the ICA shall adhere to and shall not exceed the 

  

	 	    	approved ICA Budget, unless such deviations are authorized by agreement of the 

  

	 	    	parties or order of the Court. 

  

	 	4.	Within 21 days of receipt of any ICA Budget, either Commission staff or 

  

	 	    	Defendants may serve an objection to the ICA, who, within 21 days of such 

  

                          
                                         
         20 

	 	    	objection, shall provide to Commission staff and Defendants a revised ICA 

  

	 	    	Budget or a notice that no such revision will be made. 

  

	 	5.	Following the ICA’s response to an objection provided in accordance with 

  

	 	    	Subsection VI.K.3, either Commission staff or Defendants may apply to the 

  

	 	    	Court to modify the ICA Budget. 

  

	 	6.	Pending the Court’s decision concerning any application pursuant to Subsection 

  

	 	    	VI.K.4, the ICA shall continue to perform its duties and implement the ICA 

  

	 	    	Budget as prepared by the ICA. 

  

	 	L.	Defendants shall indemnify the ICA and hold the ICA harmless against all losses, 

  

	 	    	claims, damages, liabilities, or expenses arising out of, or in connection with, the 

  

	 	    	performance of the ICA’s duties, including all reasonable fees of counsel and other 

  

	 	    	reasonable expenses incurred in connection with the preparations for, or defense of, 

  

	 	    	any claim, whether or not resulting in any liability, except to the extent that such 

  

	 	    	losses, claims, damages, liabilities, or expenses result from gross negligence, willful 

  

	 	    	or wanton acts, or bad faith by the ICA. 

  

	 	M.	In the event Commission staff determines that the ICA has ceased to act or failed to 

  

	 	    	act consistently with the terms of this Subsection, Commission staff may relieve the 

  

	 	    	ICA of its duties. 

  

	 	N.	If the ICA has been relieved of its duties, or if the ICA is no longer willing or able 

  

	 	    	to continue to serve, Commission staff and Defendants shall mutually agree on a 

  

	 	    	replacement ICA. If the parties are unable to agree on a replacement ICA within 

  

	 	    	thirty (30) days, they shall submit the matter to the Court for determination. If more 

  

	 	    	than three (3) months elapse without an ICA in place, the overall term of the ICA set 

  

	 	    	forth in Subsection VI.H shall be extended for a commensurate period. 

  

	 	O.	Not later than ten (10) days after the appointment of the replacement ICA, 

  

	 	    	Defendants shall execute an agreement that, subject to the prior approval of 

  

	 	    	 Commission staff, confers upon the replacement ICA all the rights and powers

  

                          
                                         
         21 

	 	    	necessary to permit the replacement ICA to perform its duties and responsibilities 

  

	 	    	pursuant to this Order. 

                          
                                         
       VII. 

                          
                            MONETARY JUDGMENT 

IT IS FURTHER ORDERED that: 
  

	 	A.	Judgment in the amount of Two Hundred Million Dollars ($200,000,000) is entered 

  

	 	    	in favor of the Commission against Defendants, jointly and severally, as equitable 

  

	 	    	monetary relief. 

  

	 	B.	Defendant Herbalife International of America, Inc. is ordered to pay to the 

  

	 	    	Commission Two Hundred Million Dollars ($200,000,000), within 7 days of entry 

  

	 	    	of this Order by electronic fund transfer in accordance with instructions previously 

  

	 	    	provided by a representative of the Commission. 

  

	 	C.	Defendants relinquish dominion and all legal and equitable right, title, and interest 

  

	 	    	in all assets transferred pursuant to this Order and may not seek the return of any 

  

	 	    	assets. 

  

	 	D.	The facts alleged in the Complaint will be taken as true, without further proof, in 

  

	 	    	any subsequent civil litigation by or on behalf of the Commission in a proceeding to 

  

	 	    	enforce its rights to any payment or monetary judgment pursuant to this Order, such 

  

	 	    	as a nondischargeability complaint in any bankruptcy case. 

  

	 	E.	The facts alleged in the Complaint establish all elements necessary to sustain an 

  

	 	    	action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy 

  

	 	    	Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect 

  

	 	    	for such purposes. 

  

	 	F.	Defendants acknowledge that their Taxpayer Identification Numbers or Employer 

  

	 	    	Identification Numbers, which Defendants must submit to the Commission, may be 

  

	 	    	used for collecting and reporting on any delinquent amount arising out of this Order, 

  

	 	    	in accordance with 31 U.S.C. § 7701. 

  

                          
                                         
         22 

	 	G.	All money paid to the Commission pursuant to this Order may be deposited into a 

  

	 	    	fund administered by the Commission or its designee to be used for equitable relief, 

  

	 	    	including consumer redress and any attendant expenses for the administration of any 

  

	 	    	redress fund. If a representative of the Commission decides that direct redress to 

  

	 	    	consumers is wholly or partially impracticable or money remains after redress is 

  

	 	    	completed, the Commission may apply any remaining money for such other 

  

	 	    	equitable relief (including consumer information remedies) as it determines to be 

  

	 	    	reasonably related to Defendants’ practices alleged in the Complaint. Any money 

  

	 	    	not used for such equitable relief is to be deposited to the U.S. Treasury as 

  

	 	    	disgorgement. Defendants have no right to challenge any actions the Commission 

  

	 	    	or its representatives may take pursuant to this Subsection. 

                          
                                         
      VIII. 

                          
                           CUSTOMER INFORMATION 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, and 

employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, are permanently restrained and enjoined from directly 

or indirectly failing to provide sufficient customer information to enable the Commission 

to efficiently administer consumer redress. Defendants represent that they have provided 

this redress information to the Commission. If a representative of the Commission requests 

in writing any information related to redress, Defendants must provide it, in the form 

prescribed by the Commission, within 14 days. 

                          
                                         
         IX. 

                          
                        ORDER ACKNOWLEDGMENTS 

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt 

of this Order: 
  

	 	A.	Each Defendant, within 7 days of entry of this Order, must submit to the 

  

	 	    	Commission an acknowledgment of receipt of this Order sworn under penalty of 

  

	 	    	perjury. 

  

                          
                                         
         23 

	 	B.	For ten (10) years after entry of this Order, Defendants must deliver a copy of this 

  

	 	    	Order to: (1) all principals, officers, directors, and LLC managers and members, 

  

	 	    	including Participants who serve as principals, officers, directors, and LLC 

  

	 	    	managers and members; (2) all employees, agents, and representatives having 

  

	 	    	managerial responsibilities concerning conduct covered by Sections I–IV of this 

  

	 	    	Order; (3) Business Opportunity Participants who are members of the Founder’s 

  

	 	    	Circle or Chairman’s Club or any group with similar stature under the marketing 

  

	 	    	plan; (4) any business entity resulting from any change in structure as set forth in the 

  

	 	    	Section titled Compliance Reporting. Delivery must occur within 7 days of entry of 

  

	 	    	this Order for current personnel. For all others, delivery must occur before they 

  

	 	    	assume their responsibilities. 

  

	 	C.	From each individual or entity to which a Defendant delivered a copy of this Order, 

  

	 	    	that Defendant must obtain, within 30 days, a signed and dated acknowledgment of 

  

	 	    	receipt of this Order. 

                          
                                         
          X. 

                          
                        COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that Defendants make timely submissions to the 

Commission: 
  

	 	A.	One year after entry of this Order, each Defendant must submit a compliance report, 

  

	 	    	sworn under penalty of perjury. Each Defendant must: 

  

	 	1.	Identify the primary physical, postal, and email address and telephone number, 

  

	 	    	as designated points of contact, which representatives of the Commission may 

  

	 	    	use to communicate with Defendant; 

  

	 	2.	Identify all of that Defendant’s businesses by all of their names, telephone 

  

	 	    	numbers, and physical, postal, email, and Internet addresses; 

  

	 	3.	Describe the activities of each business, including the goods and services 

  

	 	    	offered, the means of advertising, marketing, and sales, and the involvement of 

  

	 	    	any other Defendant; 

  

                          
                                         
         24 

	 	4.	Describe in detail whether and how that Defendant is in compliance with each 

  

	 	    	Section of this Order; and 

  

	 	5.	Provide a copy of each Order Acknowledgment obtained pursuant to this Order, 

  

	 	    	unless previously submitted to the Commission. 

  

	 	B.	For nine (9) years after entry of this Order, each Defendant must submit a 

  

	 	    	compliance notice, sworn under penalty of perjury, within 14 days of any change in 

  

	 	    	the following: 

  

	 	1.	Any designated point of contact; or 

  

	 	2.	The structure of Defendant or any entity that Defendant has any ownership 

  

	 	    	interest in or controls directly or indirectly that may affect compliance 

  

	 	    	obligations arising under this Order, including: creation, merger, sale, or 

  

	 	    	dissolution of the entity or any subsidiary, parent, or affiliate that engages in any 

  

	 	    	acts or practices subject to this Order. 

  

	 	C.	Each Defendant must submit to the Commission notice of the filing of any 

  

	 	    	bankruptcy petition, insolvency proceeding, or similar proceeding by or against such 

  

	 	    	Defendant within 14 days of its filing. 

  

	 	D.	Any submission to the Commission required by this Order to be sworn under 

  

	 	    	penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, 

  

	 	    	such as by concluding: “I declare under penalty of perjury under the laws of the 

  

	 	    	United States of America that the foregoing is true and correct. Executed on:  

  

	 	    	            ” and supplying the date, signatory’s full name, title (if applicable), and 

 

	 	    	signature. 

  

	 	E.	Unless otherwise directed by a Commission representative in writing, all 

  

	 	    	submissions to the Commission pursuant to this Order must be emailed to 

  

	 	    	DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: 

  

	 	    	Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade 

  

	 	    	Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject 

  

	 	    	line must begin: FTC v. Herbalife, Ltd., et al. 

  

                          
                                         
         25 

                          
                                         
         XI. 

                          
                                    RECORDKEEPING 

IT IS FURTHER ORDERED that Defendants must create certain records for nine 

(9) years after entry of the Order, and retain each such record for five (5) years. 

Specifically, Defendants must create and retain the following records: 
  

	 	A.	Accounting records showing the revenues from all goods or services sold to 

  

	 	    	participants in a Business Venture; 

  

	 	B.	Personnel records showing, for each person providing services, whether as an 

  

	 	    	employee or otherwise, that person’s name; addresses; telephone numbers; job title 

  

	 	    	or position; dates of service; and (if applicable) the reason for termination; 

  

	 	C.	Records accurately reflecting current Preferred Customers’ and Participants’ name, 

  

	 	    	address, telephone number, and e-mail address, and former Preferred Customers’ 

  

	 	    	and Participants’ name and last known address, telephone number, and e-mail 

  

	 	    	address; 

  

	 	D.	Records of all consumer complaints and refund requests, whether received directly 

  

	 	    	or indirectly, such as through a third party, and any response; 

  

	 	E.	All records necessary to demonstrate full compliance with each provision of this 

  

	 	    	Order, including all submissions to the Commission; 

  

	 	F.	A copy of each unique advertisement or other marketing material used or 

  

	 	    	disseminated by Defendants to consumers, Preferred Customers, or Participants; 

  

	 	G.	A copy of each unique training material used or disseminated by Defendants to 

  

	 	    	Preferred Customers or Participants; and 

  

	 	H.	Copies of all contracts or agreements entered into between Defendants and any 

  

	 	    	participant in Defendants’ Business Venture. 

                          
                                         
        XII. 

                          
                        COMPLIANCE MONITORING 

IT IS FURTHER ORDERED that for the purpose of monitoring Defendants’ 

compliance with this Order and any failure to transfer any assets as required by this Order: 

  

                          
                                         
         26 

	 	A.	Within 14 days of receipt of a written request from a representative of the 

  

	 	    	Commission each Defendant must: submit additional compliance reports or other 

  

	 	    	requested information, which must be sworn under penalty of perjury; appear for 

  

	 	    	depositions; and produce documents for inspection and copying. The Commission 

  

	 	    	is also authorized to obtain discovery, without further leave of court, using any of 

  

	 	    	the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including 

  

	 	    	telephonic depositions), 31, 33, 34, 36, 45, and 69. 

  

	 	B.	For matters concerning this Order, the Commission is authorized to communicate 

  

	 	    	with each Defendant through its counsel. Defendant must permit representatives of 

  

	 	    	the Commission to interview any employee or other person affiliated with any 

  

	 	    	Defendant who has agreed to such an interview. The person interviewed may have 

  

	 	    	counsel present. 

  

	 	C.	The Commission may use all other lawful means, including posing through its 

  

	 	    	representatives as consumers, suppliers, or other individuals or entities, to 

  

	 	    	Defendants or any individual or entity affiliated with Defendants, without the 

  

	 	    	necessity of identification or prior notice. Nothing in this Order limits the 

  

	 	    	Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of 

  

	 	    	the FTC Act, 15 U.S.C. §§ 49, 57b-1. 

                          
                                         
       XIII. 

                          
                                  EFFECTIVE DATE 

IT IS FURTHER ORDERED that this Order shall become effective upon entry, 

except that Section I shall become effective ten (10) months after entry of the Order. 

                          
                                         
       XIV. 

                          
                      RETENTION OF JURISDICTION 

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for 

purposes of construction, modification, and enforcement of this Order. 

  

                          
                                         
         27 

 SO STIPULATED AND AGREED: 

FOR PLAINTIFF FEDERAL TRADE COMMISSION 
  

			
	 /s/ Janet Ammerman
	  	Date:      July 15, 2016      

 JANET AMMERMAN, California Bar No. 113996 

Email: jammerman1@ftc.gov 
 CHRISTINE M. TODARO, OH Bar
No. 0084976 
 Email: ctodaro@ftc.gov 
 DANIEL O. HANKS, DC
Bar No. 495823; VA Bar No. 65523 
 Email: dhanks@ftc.gov 

600 Pennsylvania Ave. NW, Mailstop: CC 8528, Washington, D.C. 20580 

Tel: 202-326-3145 (Ammerman) 
 Tel: 202-326-3711 (Todaro) 

Tel: 202-326-2472 (Hanks) 
 Fax: (202) 326-3395 

LAURA SOLIS, WA Bar No. 36005 
 Email: lsolis@ftc.gov 

915 Second Ave., Suite 2896, Seattle, WA 98174 
 Tel:
(206) 220-4544 
 Fax: (206) 220-6366 
 Local Counsel

 BARBARA CHUN, California Bar No. 186907 
 Email:
bchun@ftc.gov 
 Federal Trade Commission 
 10877 Wilshire
Blvd., Suite 700 
 Los Angeles, California 90024 
 Tel:
(310) 824-4312 
 Fax: (310) 824-4380 
 FOR
DEFENDANTS HERBALIFE INTERNATIONAL OF AMERICA, INC., 
 HERBALIFE INTERNATIONAL, INC., AND HERBALIFE, LTD. 

 

			
	 /s/ Douglas A. Axel
	  	Date:      July 14, 2016                  

 DOUGLAS A. AXEL 
 Email:
daxel@sidley.com 
 NITIN REDDY 
 Email: nreddy@sidley.com 

Sidley Austin LLP 
 555 West Fifth Street 

Los Angeles, CA 90013 
 Tel: (213) 896-6035 (Axel) 

Tel: (213) 896-6929 (Reddy) 
 Fax: (213) 896-6600 

  

                          
                                         
         28 

 ANDREW J. STRENIO, JR. 

Email: astrenio@sidley.com 
 Sidley Austin LLP 

1501 K Street NW 
 Washington, DC 20005 

Tel: (202) 736-8614 
 Fax: (202) 736-8711 

 

			
	 /s/ John E. Villafranco
	  	Date:      July 14, 2016                  

 JOHN E. VILLAFRANCO 
 Email:
jvillafranco@kelleydrye.com 
 Kelley Drye & Warren LLP 

3050 K Street NW 
 Washington, DC 20007 

Tel: (202) 342-8400 
 Fax: (202) 342-8451 

 

			
	 /s/ JB Kelly
	  	      July 14, 2016                  

 JB KELLY 
 Email:
jbkelly@cozen.com 
 Cozen O’Connor 
 1200 19th Street
NW, 3rd Floor 
 Washington, DC 20036 
 Tel:
(202) 471-3418 
 Fax: (202) 861-1905 
 FOR
DEFENDANTS HERBALIFE INTERNATIONAL OF AMERICA, INC.,  
 HERBALIFE INTERNATIONAL, INC., AND HERBALIFE, LTD. 

 

			
	 /s/ Mark J. Friedman
	  	Date:      July 14, 2016                  

 MARK J. FRIEDMAN, as an officer of 

Herbalife International of America, Inc. 
  

			
	 /s/ Mark J. Friedman
	  	Date:      July 14, 2016                  

 MARK J. FRIEDMAN, as an officer of 

Herbalife International, Inc. 
  

			
	 /s/ Mark J. Friedman
	  	Date:      July 14, 2016                  

 MARK J. FRIEDMAN, as an officer of 

Herbalife, Ltd. 

  

                          
                                         
 29EX-10.2

 Exhibit 10.2 

July 15, 2016 
 Icahn Associates Corp. 

767 Fifth Avenue, 47th Floor 
 New
York, New York 10153 
 Attention: Keith Cozza 

Re: Second Amended and Restated Support Agreement 

Ladies and Gentlemen: 
 This
second amended and restated support agreement (this “Agreement”) amends and restates that certain amended and restated support agreement (the “2014 Agreement”) entered into between Herbalife Ltd., a Cayman Islands
corporation (the “Company”), Carl C. Icahn and certain affiliated entities of Mr. Icahn, dated March 23, 2014, which amended and restated that certain support agreement (the “Original Agreement”) entered
into between the Company, Mr. Icahn and certain affiliated entities of Mr. Icahn dated February 28, 2013. This Agreement sets forth our understanding and agreement with respect to your investment in and representation on the Board of
Directors of the Company (the “Board”) and certain restrictions and limitations to be placed on Mr. Icahn, Icahn Partners Master Fund LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Beckton Corp., Hopper Investments
LLC, Barberry Corp., High River Limited Partnership, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P., and Icahn Enterprises G.P. Inc. (collectively with you, the “Icahn Parties”). Pursuant to and in accordance with the
terms and conditions of the Original Agreement, the Icahn Parties designated, and the Company nominated, two designees of the Icahn Parties to the Board (the “2013 Icahn Designees”), both of whom were elected to the Board at the
2013 annual general meeting of shareholders on April 25, 2013. Pursuant to and in accordance with the terms and conditions of the 2014 Agreement, the Icahn Parties designated, and the Company nominated, two additional designees of the Icahn
Parties to the Board (the “2014 Icahn Designees” and, together with the 2013 Icahn Designees, the “Icahn Designees”), and an independent director (the “Independent Designee”), each of whom was
elected to the Board at the 2014 annual general meeting of shareholders on April 29, 2014. The Icahn Designees and the Independent Designee have each subsequently been nominated for re-election to the Board, and most recently at the
Company’s 2016 annual general meeting of shareholders, have each been re-elected to the Board. 
 In consideration of and reliance upon
the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledge, by signing this Agreement, the parties agree and acknowledge as follows: 

 

	1.	 Board Matters & Voting. 

(a) In consideration of the Icahn Parties’ agreement set forth in this Agreement, the Company shall nominate each Icahn Designee and the
Independent Designee (collectively, the “2017 Board Nominees”) for election to the Board at the 2017 annual general meeting of shareholders (the “2017 Annual Meeting”). 

The Company shall include the 2017 Board Nominees in the Company’s slate of nominees for election as directors of the Company at the 2017
Annual Meeting and shall use commercially reasonable efforts to cause the election of the 2017 Board Nominees to the Board at the 2017 Annual Meeting (including recommending that the Company’s shareholders vote in favor of the election of the
2017 Board Nominees, including such nominees in the Company’s proxy statement for the 2017 Annual Meeting and otherwise supporting such nominees for election in a manner no less rigorous and favorable than the manner in which the Company
supports its other nominees in the aggregate). The Icahn Parties, the Icahn Designees and the Independent Director shall provide the Company with such information with respect to 

 
the Icahn Parties, the Icahn Designees and the Independent Director as is required to be included in the proxy statement under applicable law. 

If any of the 2017 Board Nominees resigns from the Board or is rendered unable to, or refuses to, be appointed to, or to serve on, the Board,
the Icahn Parties shall be entitled to designate a replacement for each such designee that is approved by the Company’s Nominating and Corporate Governance Committee (such approval not to be unreasonably withheld or delayed) for each such
designee (and if such proposed designee is not approved by such committee, the Icahn Parties shall be entitled to continue designating a replacement until such proposed designee is approved by the Company and such committee) (a
“Replacement”), and the Company shall take all necessary action to promptly appoint such person to the Board. Any Replacement pursuant to this Agreement shall be deemed to be an Icahn Designee or Independent Director, as applicable,
for all purposes under this Agreement and prior to his or her appointment to the Board, shall be required to, and the Icahn Parties shall cause such person to, execute the resignation as director in the form attached hereto as Exhibit A and
deliver it to the Company. For the avoidance of doubt, any Replacement of the Independent Director pursuant to this Agreement shall (A) except as permitted by the Company, not be a director, officer, employee or consultant of, advisor to,
affiliated with or receive compensation from (including, without limitation, in connection with service on the Board) any of the Icahn Parties, and (B) be otherwise independent within the meaning of the rules and regulations of the New York
Stock Exchange and the Company’s independence guidelines, as determined in good faith by the Board. 
 The Company acknowledges and
agrees that any policy of the Company or of the Board, whether formal or informal, in existence as of the date hereof or subsequently adopted, including without limitation, any Insider Trading Policy, shall only be applicable to the Icahn Designees
and the Independent Director and in no event shall any such policies have any applicability with respect to any Icahn Party or any of their Affiliates. 

(b) As of the date hereof, the Company represents and warrants that the Board is composed of thirteen (13) directors and that there are
no vacancies on the Board. The Company agrees that it will not, from and after the date hereof, take any action, or support any Person (as defined below) who is seeking, to increase the size of the Board above fifteen (15) directors, each
having one vote on all matters; provided that the Company further agrees that, from and after the date hereof, and following the 2017 Annual Meeting, for so long as an Icahn Designee is a member of the Board or the Icahn Parties are in the process
of identifying a Replacement as permitted under the third paragraph of Section 1(a), if the Company or the Board increases the size of the Board to greater than thirteen (13) directors, then, for so long as the size of the Board is greater
than thirteen (13) directors, the Icahn Parties shall have the right to designate additional persons approved by the Company and reasonably acceptable to the Nominating and Corporate Governance Committee (such approval not to be unreasonably
withheld or delayed) as directors (and if such proposed designee is not approved by such committee, the Icahn Parties shall be entitled to continue designating a Replacement) to fill all such directorships and the Company shall take all necessary
action to promptly appoint such person to the Board. Any such person shall be deemed to be an Icahn Designee for all purposes under this Agreement and prior to his or her appointment to the Board, shall be required to, and the Icahn Parties shall
cause such person to, execute the resignation as director in the form attached hereto as Exhibit A and deliver it to the Company. 

(c) For any annual general meeting of Company shareholders subsequent to the 2017 Annual Meeting but only for so long as an Icahn Designee is
a member of the Board or the Icahn Parties are in the process of identifying a Replacement as permitted under the third paragraph of Section 1(a), the Company agrees to notify the Icahn Parties between the January 5th and 15th immediately
preceding such annual general meeting (which such date of notification shall in no event be less than 20 calendar days before the advance notice deadline (the “Advance Notice Deadline”) set forth in Sections 73 to 76 of the
Company’s Amended and Restated Memorandum and Articles of Association (as may be amended, the “Memorandum and Articles”), as such date may change from time to time) whether or not any Icahn Designee or the Independent Director
whose term of office is expiring at such annual general meeting 

  
 2 

 
(such notice, the “Company Notice”) will be nominated by the Company for election as a director at such annual general meeting and, if any Icahn Designee or the Independent
Director will be nominated, to use commercially reasonable efforts to cause the election of any such nominees so nominated by the Company (including recommending that the Company’s shareholders vote in favor of the election of any such
nominees, including such nominees in the Company’s proxy statement for such annual general meeting and otherwise supporting any such nominee for election in a manner no less rigorous and favorable than the manner in which the Company supports
its other nominees in the aggregate). In the event that the Company notifies the Icahn Parties that any Icahn Designee or the Independent Director will not be nominated by the Company for election as a director pursuant to the preceding sentence or
if within ten (10) days of the Company Notice the Icahn Designees or the Independent Director resign from the Board, then Company agrees that the Advance Notice Deadline for the upcoming annual meeting, will not be prior to March 15th of
the applicable year and that the Company shall set the date of such annual general meeting so that such Advance Notice Deadline will comply with this sentence. The Company agrees that the Advance Notice Deadline for the 2017 Annual Meeting will not
be prior to March 15, 2017, and that the Company shall set the date of the 2017 Annual Meeting so that such Advance Notice Deadline will comply with this sentence. 

(d) For so long as an Icahn Designee is a member of the Board or the Icahn Parties are in the process of identifying a Replacement as
permitted under the third paragraph of Section 1(a), the Company and the Icahn Parties agree that the Board shall not (i) create any new committee; provided that nothing in this Section 1(d) or elsewhere in this Agreement shall
prohibit the Company or the Board from creating a committee that does not include any Icahn Designees to consider specific matters that include conflicts of interest between the Company and the Icahn Parties if it would be prudent as a matter of law
to exclude the Icahn Designees from membership on such committee, or (ii) expand the scope of duties and responsibilities of any of the three existing committees of the Board (namely, the audit committee, the compensation committee and the
nominating and corporate governance committee), except to the extent required by applicable law, stock exchange or other regulatory requirement. 

(e) Notwithstanding anything to the contrary in this Agreement: (i) the rights and privileges set forth in this Agreement shall be
personal to the Icahn Parties and may not be transferred or assigned to any individual, corporation, partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature (each, a
“Person”), except that the Icahn Parties shall be permitted to transfer or assign this Agreement to their controlled Affiliates and (ii) if at any time after the date hereof, the Icahn Parties (together with their controlled
Affiliates) cease collectively to Beneficially Own, at least 7,007,575 Company common shares, as adjusted to account for any stock split, stock dividend or similar corporate action, (y) the Icahn Parties shall cause the Icahn Designees to
promptly tender their resignations from the Board and any committee of the Board on which they may be a member and (z) except as set forth in Sections 2 and 12, the Company and the Icahn Parties shall have no further obligations under this
Agreement. In furtherance of the foregoing, each Icahn Designee shall, prior to his or her appointment to the Board, and each member of the Icahn Parties shall cause each such Icahn Designee to, execute an irrevocable resignation as director in the
form attached hereto as Exhibit A and deliver it to the Company. For purposes of this Agreement: (I) the term “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated by the Securities and Exchange Commission
(“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (II) the term “Beneficially Own” or variations thereof shall have the meaning set forth in Rules 13d-3 and 13d-5
promulgated under the Exchange Act, except that a person or group shall be deemed to have “Beneficial Ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only
after the passage of time. 
 (f) The Company hereby agrees that no later than two (2) business days after the Company receives a
written request from the Icahn Parties, the Company shall provide to the Icahn Parties that number of shares used to calculate the denominator in the “Change of Control” threshold under the Company’s Amended and Restated Credit
Agreement, dated as of July 26, 2012 (as amended from time to time, the “Credit Agreement”). As of July 13, 2016, the Company represents that such number was 97,444,789 common shares. The Icahn Parties hereby agree that no later
than two (2) business days after receipt of a 

  
 3 

 
written request from the Company, the Icahn Parties shall provide to the Company that number of shares used to calculate the numerator in the calculation of the 34.99% threshold under
Section 2(a) below. 
  

	2.	 Standstill Agreement. 

In consideration of the Company’s agreement set forth herein, so long as the Company has complied and is complying with its obligations
under the first and second paragraphs of Section 1(a), Sections 1(b), 1(c) and 1(d), and Section 6, and has otherwise materially complied and is materially complying with its other obligations set forth in this Agreement, the Icahn Parties
agree that, from the date hereof until the later to occur of (i) the first date after the date hereof on which no Icahn Designee is a member of the Board and (ii) the earlier of (x) the completion of the 2017 Annual Meeting and
(y) May 31, 2017, the Icahn Parties shall not, and shall cause their respective directors, officers, partners, members, employees, agents (acting in such capacity) and controlled Affiliates (collectively,
“Representatives”) not to, directly or indirectly, without the prior written consent of either the Chief Executive Officer or the Board (which prior written consent of the Board shall require the approval of a majority of the
members of the Board who are not 2017 Board Nominees or a Replacement): 
 (a) except in connection with a Competing Offer (as defined
below), acquire, seek to acquire or agree to acquire (whether by market purchases, private purchases or otherwise) any common shares of the Company (or Beneficial Ownership thereof) or any securities convertible or exchangeable into or exercisable
for any common shares of the Company (or Beneficial Ownership thereof) (including any derivative securities or instruments having the right to acquire common shares of the Company) if after the consummation of any such acquisition, the Icahn Parties
would Beneficially Own more than 34.99% of the Company’s then outstanding common shares or voting power of the Company in the aggregate, other than securities issued pursuant to a stock split, stock dividend or similar corporate action
initiated by the Company or taken by the Company’s shareholders with respect to any securities Beneficially Owned by the Icahn Parties; provided that if the Icahn Parties, at any time, Beneficially Own more than 34.99% of the Company’s
then outstanding common shares or voting power of the Company in the aggregate, due solely to a reduction in the outstanding common shares of the Company (whether or not the Icahn Parties were aware of such a reduction in the outstanding common
shares of the Company), the Icahn Parties shall not have, and shall not be deemed to have, violated this clause (a); it being understood that for purposes of this Section 2(a), the 34.99% shall be calculated using the number of the
Company’s outstanding common shares as most recently disclosed by the Company in a Form 10-K, Form 10-Q or Form 8-K, as filed with the SEC. 

(b) (A) other than in connection with a Permitted Opposition (as defined below), encourage, advise or influence any other Person or
assist any third party in so encouraging, assisting or influencing any other Person with respect to the giving or withholding of any proxy, consent or other authority to vote or in conducting any type of referendum (other than such encouragement,
advice or influence that is consistent with Company management’s recommendation in connection with such matter) or (B) advise, influence or encourage any Person (other than the Icahn Parties and their Representatives) or effect or seek to
effect, whether alone or in concert with others, the election or nomination of a director other than as permitted in this Agreement or (C) advise, influence or encourage any Person, other than the Icahn Parties and their Representatives, to
commence a tender offer; provided, however, that neither this clause (b) nor any other provision in this Agreement shall restrict or otherwise limit the Icahn Parties’ from being able to vote any voting securities of the Company in favor
of or against any proposal, action or transaction; provided, further, that in the event of a third party tender or exchange offer for securities of the Company that has been commenced and not withdrawn by a Person other than the Icahn Parties or any
Affiliate of an Icahn Party (a “Third Party Offer”), the Icahn Parties shall be permitted to commence, and if successful, consummate, a competing tender or exchange offer for any and all of the outstanding voting securities of the
Company that would, if consummated, result in the Icahn Parties owning at least a majority of the then outstanding common shares or voting power of the Company in the aggregate, which tender offer will be conditioned on such purchases in the tender
offer, when added to number of common 

  
 4 

 
shares Beneficially Owned by the Icahn Parties’ immediately prior to the tender offer, equaling at least such majority of common shares (a “Competing Offer”); 

(c) other than in connection with a Permitted Opposition, solicit proxies or written consents of shareholders or conduct any other type of
referendum (binding or non-binding) with respect to the common shares of the Company, or from the holders of the common shares of the Company, or become a “participant” (as such term is defined in Instruction 3 to Item 4 of Schedule
14A promulgated under the Exchange Act) in or assist any third party in any “solicitation” of any proxy, consent or other authority (as such terms are defined under the Exchange Act) to vote any common shares of the Company (other than any
encouragement, advice or influence that is consistent with Company management’s recommendation in connection with such matter); provided that except as expressly agreed in Section 3, the Icahn Parties shall not be restricted from voting
any common shares of the Company in favor of or against any proposal or other action for which such solicitation is being made; 
 (d) form
or join in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act), for the avoidance of doubt, other than a group comprised solely of the Icahn Parties and their controlled Affiliates, with respect to any common shares
of the Company or agree to or deposit any common shares of the Company or any securities convertible or exchangeable into or exercisable for any such common shares in any voting trust or similar arrangement (other than to the named proxies included
in the Company’s proxy card for any annual general meeting); 
  

	(e)	 seek to have the Company waive, amend or modify any provisions of the Memorandum and Articles;

 (f) encourage or facilitate the taking of any actions by any other Person in connection with the foregoing that is
prohibited to be taken by the Icahn Parties; or 
 (g) publicly request that the Company or any Representative of the Company, directly or
indirectly, amend or waive any provision of this Section 2 (including this clause (g)); 
 provided, that nothing in this Agreement
shall limit or in any way apply to any actions or communications that may be taken by an Icahn Designee as a director of the Company. 

Nothing in this Section 2 or any other provision in this Agreement shall prohibit, be deemed to prohibit or otherwise restrict the Icahn
Parties from (1) commencing, and if successful, consummating a Competing Offer, or (2) in order to allow new directors designated by the Icahn Parties to satisfy any conditions included in such Competing Offer, (x) soliciting proxies,
(y) seeking to replace any member or members of the Board or (z) seeking to amend or modify the Memorandum and Articles; provided, in the case of clause (2), such action or actions having substantially the same or a similar purpose or
effect, have also been taken, or have been proposed to be taken, by the Person commencing the Third Party Offer. 
 For purposes of this
Agreement, “Permitted Opposition” means any opposition undertaken by the Icahn Parties to defeat any matter submitted to a meeting of shareholders including any matter to be proposed at an annual general meeting, other than the
election of directors, appointment of auditors, approval of “say-on-pay”, or other similar matters typically proposed at an annual general meeting in the ordinary course of business; provided, however, in connection with a Permitted
Opposition the Icahn Parties shall not, and shall cause their respective Representatives not to, directly or indirectly, furnish or cause to be furnished to any other shareholder of the Company a form of proxy. 

 

	3.	 Voting; Quorum. 

So long as the Company has complied and is complying with its obligations under the first and second paragraphs of Section 1(a), Sections
1(b), 1(c) and 1(d), and Section 6, and has otherwise materially complied and is materially complying with its other obligations set forth in this Agreement, in connection with the 2017 Annual Meeting, and, thereafter, for so long as an Icahn
Designee is a member of the Board, the Icahn Parties shall (1) cause, in the case of all common shares of the Company owned of 

  
 5 

 
record, and (2) instruct the record owner, in the case of all common shares of the Company Beneficially Owned but not owned of record, directly or indirectly, by it, as of the record date
for the 2017 Annual Meeting and all future meetings of shareholders (whether annual or special and whether by vote or by written consent) at which directors are elected, in each case that are entitled to vote at the 2017 Annual Meeting and all such
future meetings, to be present for quorum purposes and to be voted, at the 2017 Annual Meeting and all such future meetings or at any adjournments or postponements thereof, (i) for all directors nominated by the Board for election at all such
meetings and (ii) in accordance with the recommendation of the Board for the ratification of the appointment of the Company’s independent public accounting firm set forth in the Company’s proxy statement for such meetings; provided
that the Icahn Parties obligations set forth in this Section 3 shall terminate if the 2017 Annual Meeting is not held on or prior to May 31, 2017. 
  

	4.	 Communications. 

Until three (3) months after the date on which no Icahn Designee is a member of the Board, (a) neither the Icahn Parties nor any of
the Icahn Parties’ Representatives shall make, or cause to be made, by press release or similar public statement to the press or media, any statement or announcement that constitutes an ad hominem attack on, or otherwise disparages (as distinct
from objective statements reflecting business criticism), the Company, its officers or its directors or any person who has served as an officer or director of the Company in the past and (b) the Company shall not, and shall cause its directors
and officers not to, make, or cause to be made, by press release or similar public statement to the press or media, any statement or announcement that constitutes an ad hominem attack on, or otherwise disparages (as distinct from objective
statements reflecting business criticism), any Icahn Party, its officers or its directors or any person who has served as an officer or director of any Icahn Party in the past). The foregoing shall not prevent the making of any factual statement
including in any compelled testimony or production of information, either by legal process, subpoena, or as part of a response to a request for information from any governmental authority with purported jurisdiction over the party from whom
information is sought. 
  

	5.	 Public Announcements. 

The Company shall announce this Agreement and the material terms hereof by means of a press release substantially in the form of Exhibit
B. The Company shall provide a draft copy of the Form 8-K relating to this Agreement to the Icahn Parties at least two hours prior to filing with the SEC. The Company acknowledges that the Icahn Parties will comply with their obligations under
Section 13(d) of the Exchange Act and intend to file this Agreement as an exhibit to an amendment to its Schedule 13D. The Icahn Parties will provide a draft copy of such Schedule 13D/A to the Company at least two hours prior to filing with the
SEC. 
  

	6.	 Board Resolutions; Article 109; Rights Plan.  

(a) The Company hereby represents and warrants that the Board has previously adopted the resolutions in the form attached as Exhibit C
(the “Resolutions”) and as of the date hereof, the Resolutions are in full force and effect. The Company and the Board agree that the Resolutions are irrevocable and that at no time, regardless of whether this Agreement has been
terminated or whether the Company or the Icahn Parties have breached any of their obligations under this Agreement, shall the Company or the Board amend, revoke, rescind or otherwise modify the Resolutions. The Company and the Board agree that this
Section 6(a), and the Icahn Parties right to enforce the Resolutions, shall survive any termination of this Agreement regardless of the cause for termination. Pursuant to the provisions of Article 109 of the Memorandum and Articles, the Board
grants its irrevocable consent to the consummation by the Icahn Parties or any of them of a transaction or series of transactions, of whatever nature, pursuant to which the Icahn Parties or any of them will become an Interested Member (as defined in
the Memorandum and Articles) by acquiring the Company’s outstanding common shares (or securities or other instruments convertible into or exchangeable for such shares). 

  
 6 

 (b) The Company and the Board reserve the right to adopt at any time any “Rights Plan”
(which term shall include a plan or arrangement commonly referred to as a “rights plan” or “stockholder rights plan” or “shareholder rights plan” or “poison pill”), provided, however, in the event the Company
adopts a Rights Plan, it agrees that for so long as an Icahn Designee is a member of the Board (i) such Rights Plan will be designed so it does not prevent or otherwise frustrate the purchase of common shares of the Company by the Icahn Parties
to the extent expressly permitted by Section 2(a) of this Agreement and (ii) if the Company shall waive, modify or amend any term of such Rights Plan with respect to any third party, or if such Rights Plan shall include any provision that
is more advantageous or favorable with respect to any Person or type of Person than it is to the Icahn Parties, then such waiver, modification, amendment, or provision shall also apply to the Icahn Parties. 

(c) The Company and the Board acknowledge that the Icahn Parties have entered into this Agreement in reliance upon this Section 6 and
that the Icahn Parties have not conceded the enforceability of any Rights Plan. 
  

	7.	 Confidentiality Agreement.  

The Company hereby agrees that the Icahn Designees are permitted to and may provide confidential information in accordance with the terms of
the confidentiality agreement executed in connection with the execution of the 2014 Agreement (the “Confidentiality Agreement”) and that the Confidentiality Agreement remains in full force and effect. The parties hereto also agree
that for purposes of the Confidentiality Agreement, any reference therein to the “Letter Agreement” shall hereinafter refer to this Agreement and not the 2014 Agreement and any notices delivered under the Confidentiality Agreement shall be
provided to the addressees set forth in Section 11 hereof. 
  

	8.	 Representations and Warranties of the Company.  

The Company represents and warrants to the Icahn Parties that (a) the Company has the corporate power and authority to execute this
Agreement and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity
principles and (c) the execution, delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it or (ii) result in any
breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment,
acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound. 

 

	9.	 Representations and Warranties of the Icahn Parties.  

(a) Each Icahn Party represents and warrants to the Company that (i) the authorized signatories of such Icahn Party set forth on the
signature page hereto have the power and authority to execute this Agreement and to bind applicable Icahn Party to this Agreement, (ii) this Agreement has been duly authorized, executed and delivered by each Icahn Party, and is a valid and
binding obligation of each Icahn Party, enforceable against such Icahn Party in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws generally affecting the rights of creditors and subject to general equity principles and (iii) the execution, delivery and performance of this Agreement by such Icahn Party does not and will not violate or conflict with
(A) any law, rule, regulation, order, judgment or decree applicable to it or (B) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant
to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, 

  
 7 

 
agreement, contract, commitment, understanding or arrangement to which such Icahn Party is a party or by which it is bound. 

(b) Each Icahn Party shall cause its controlled Affiliates and Representatives to comply with the terms of this Agreement. 

 

	10.	 Securities Laws.  

The Icahn Parties acknowledge that the Icahn Parties are aware and that the Icahn Parties and the Icahn Parties’ Representatives have
been advised that the United States securities laws prohibit any Person having non-public material information about a company from purchasing or selling securities of that company in violation of applicable law. Notwithstanding anything set forth
herein to the contrary, nothing in this Agreement shall be interpreted in such a manner as to require an Icahn Party or the Company to violate the United States securities laws. 

 

	11.	 Notices.  

Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when delivered (i) by
email and (ii) in person, by overnight courier, by email, by facsimile transmission (with receipt confirmed by telephone, by email receipt notice or by automatic transmission report) as follows: 

If to the Company, to: 

Herbalife Ltd. 
 800 West Olympic
Boulevard, Suite 406 
 Los Angeles, California 90015 

Attention: General Counsel 

Facsimile: (213) 765-9890 

Email: markf@herbalife.com 
 with
a copy (which shall not constitute notice) to: 
 Gibson, Dunn & Crutcher LLP 

2029 Century Park East 
 Los
Angeles, CA 90067 
 Attention: Jonathan K. Layne 

Facsimile: (310) 552-7053 

Email: JLayne@gibsondunn.com 

and 
 Morgan, Lewis &
Bockius LLP 
 300 South Grand Ave., 22nd Floor 

Los Angeles, CA 90071 
 Attention:
John F. Hartigan 
 Facsimile: (213) 612-2501 

Email: jhartigan@morganlewis.com 

If to the Icahn Parties, to: 

Icahn Associates Corp. 
 767
Fifth Avenue, 47th Floor 
 New York, New York 10153 

Attention: Keith Cozza 

  
 8 

 Facsimile: (212) 688-1158 

Email: kcozza@sfire.com 
 with a
copy (which shall not constitute notice) to: 
 Icahn Associates Corp. 

767 Fifth Avenue, 47th Floor 
 New
York, New York 10153 
 Attention: Andrew Langham 

Facsimile: (212) 688-1158 

Email: alangham@sfire.com 
 Any
party may, by notice given in accordance with this paragraph to the other parties, designate updated information for notices hereunder. 
  

	12.	 Termination; Survival.  

If (a) the Company fails to comply with its obligations in Section 1, or (b) the Company or the Board breach or take any action
inconsistent with the Company and the Board’s obligations pursuant to Section 6 or otherwise is in material breach, then, at the election of the Icahn Parties, in each case, this Agreement shall terminate. In the event of a termination of
this Agreement for any reason, including pursuant to Section 1(e), (x) Sections 6, 16 and 18 shall survive indefinitely, (y) Section 2 shall survive (in accordance with its terms) until the later to occur of (i) the first
date after the date hereof on which no Icahn Designee is a member of the Board and (ii) the earlier of (x) the completion of the 2017 Annual Meeting and (y) May 31, 2017, and (z) Section 4 shall survive until three
(3) months after the date on which no Icahn Designee is a member of the Board. 
  

	13.	 Successors and Assigns.  

This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted
assigns. No party may assign or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties; provided, however, that the Icahn Parties may assign this
Agreement as set forth in Section 1(e). Any purported transfer requiring consent without such consent shall be void. No amendment, modification, supplement or waiver of any provision of this Agreement shall be effective unless it is in writing
and signed by the party or parties hereto affected thereby, and then only in the specific instance and for the specific purpose stated therein. Any waiver by any party hereto of a breach of any provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on one or more occasions shall not
be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. This Agreement constitutes the only agreement between the Icahn Parties and the Company with
respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. 
  

	14.	 Third Party Beneficiaries.  

This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other Persons. 

 

	15.	 Entire Agreement; Amendments.  

This Agreement (including the exhibits hereto) represents the entire understanding and agreement of the parties with respect to the matters
contained herein, and may be amended, modified or waived only by a separate writing executed by the Icahn Parties and the Company expressly so amending, modifying or 

  
 9 

 
waiving this Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. 

 

	16.	 Specific Performance.  

The parties recognize and agree that if for any reason any of the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy. Accordingly, each party agrees that in addition to other remedies the other party shall be
entitled to an injunction without posting a bond or other undertaking restraining any violation or threatened violation of the provisions of this Agreement. In the event that any action shall be brought in equity to enforce the provisions of the
Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law. 
  

	17.	 No Waiver.  

No failure or delay by a party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder. 
  

	18.	 Governing Law.  

Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery or other federal or state
courts of the State of Delaware in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the Court of Chancery or other federal or state courts of
the State of Delaware, and each of the parties irrevocably waives the right to trial by jury, (d) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable
relief, and (e) irrevocably consents to service of process by a reputable overnight delivery service, signature requested, to the address of such party’s principal place of business or as otherwise provided by applicable law. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING WITHOUT LIMITATION VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT
TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE. 
  

	19.	 Expenses.  

In the event of litigation or any other dispute arising under or in connection with this Agreement, each party shall pay its own costs and
expenses. 
  

	20.	 Captions.  

The Captions contained in this Agreement are for convenience only and shall not affect the construction or interpretation of any provisions of
this Agreement. 
  

	21.	 Counterparts.  

This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all of which shall constitute
one and the same Agreement. 
 [Remainder of Page Intentionally Left Blank] 

  
 10 

 Please confirm your agreement with the foregoing by signing and return to us a copy of this
Agreement. 
  

			
	HERBALIFE LTD.
	By:	 	/s/ Mark J. Friedman
	Name: Mark J. Friedman
	Title: Executive Vice President, General Counsel

 Agreed to and accepted as of the date first written above: 

ICAHN ASSOCIATES CORP. 
 ICAHN PARTNERS MASTER FUND LP

 ICAHN OFFSHORE LP 
 ICAHN PARTNERS LP 

ICAHN ONSHORE LP 
 BECKTON CORP. 

HOPPER INVESTMENTS LLC 
 By: Barberry Corp., its sole
member 
 BARBERRY CORP. 
 HIGH RIVER LIMITED
PARTNERSHIP 
 By: Hopper Investments LLC, general partner 

By: Barberry Corp., its sole member 
  

			
	By:	 	/s/ Sung Hwan Cho
	Name: Sung Hwan Cho
	Title: Authorized Signatory

 ICAHN CAPITAL LP 
 By: IPH
GP LLC, its general partner 
 By: Icahn Enterprises Holdings L.P., its sole member 

By: Icahn Enterprises G.P. Inc., its general partner 
 IPH GP
LLC 
 By: Icahn Enterprises Holdings L.P., its sole member 

By: Icahn Enterprises G.P. Inc., its general partner 
 ICAHN
ENTERPRISES HOLDINGS L.P. 
 By: Icahn Enterprises G.P. Inc., its general partner 

ICAHN ENTERPRISES G.P. INC. 

			
	By:	 	/s/ Sung Hwan Cho
	Name: Sung Hwan Cho
	Title:      Chief Financial Officer

  

	
	/s/ Carl C. Icahn
	Carl C. Icahn

  
 11 

 Exhibit A 

Resignation 
 [Date] 

Board of Directors 
 Herbalife Ltd. 

800 West Olympic Boulevard, Suite 406 
 Los Angeles, California
90015 
 Re: Resignation 
 Ladies and Gentlemen: 

This irrevocable resignation is delivered pursuant to that certain Second Amended and Restated Support Agreement, effective as of July 15, 2016, between
Herbalife Ltd. and certain members of the Icahn Parties signatory thereto (the “Agreement”). Capitalized terms used herein but not defined shall have the meaning set forth in the Agreement. Effective only upon, and subject to, [the
earlier of (i)] such time as the Icahn Parties (together with their Affiliates) ceases collectively to Beneficially Own at least 7,007,575 Company common shares, as adjusted to account for any stock split, stock dividend or similar corporate action
[or (ii) such time as the Board is composed of thirteen (13) or fewer directors]1, I hereby irrevocably resign from my position as a director of the Company and from any and all
committees of the Board on which I serve. 
 Sincerely, 
  

	
	   

 Name: 
  

 
  

1  To be inserted only for an additional Icahn Designee appointed pursuant to Section 1(b), if
any. 

  
 12 

 Exhibit B 

Press Release 
 [See Exhibit 99.2
to Herbalife Ltd.’s Current Report on Form 8-K filed on July 15, 2016] 

  
 13 

 Exhibit C 

Board Resolutions 
 1.1 Background 

The Chairman noted that the meeting had been convened in order to consider acquisitions by Icahn Partners Master Fund LP,
Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Beckton Corp., Hopper Investments LLC, Barberry Corp., High River Limited Partnership, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P., Icahn Enterprises G.P. Inc. and their
respective affiliates (collectively, the “Icahn Parties”) of additional Voting Shares (as defined in the Company’s Articles of Association) of the Company’s common shares (the “Voting Shares”) (or securities or
other instruments convertible into or exchangeable for such shares, including options, swaps or derivative securities (all of the foregoing, together with Voting Shares, the “Securities”)). The Icahn Parties “own” (as defined in
the Articles) approximately 17 million common shares of the Company and desire to purchase additional Securities. 
 It
was noted that the Articles provide, at Article 109, that the Company shall not engage in any Business Combination with any Interested Member for a period of three (3) years following the date that such Member became an Interested Member,
unless prior to such date the Board approves either the Business Combination or the transaction which resulted in the Member becoming an Interested Member (each capitalised term as defined in the Articles). 

1.2 Approved Transactions 

It was proposed to provide the approval of the Board required by the provisions of Article 109 to the consummation by the
Icahn Parties or any of them of a transaction or series of transactions, of whatever nature, pursuant to which the Icahn Parties or any of them will become an Interested Member by purchasing Securities (in market purchases, private transactions or
any other purchase or acquisition (each such purchase or acquisition, a “Purchase”) and thereby become the owner of 15% or more of the outstanding Voting Shares (each such Purchase, an “Approved Transaction”). 

Upon motion duly made, seconded and carried unanimously, IT WAS RESOLVED that, it being in the best interests of the
Company, each Approved Transactions be and hereby is, approved. 

  
 14

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