TRUST AGREEMENT FOR HERBALIFE 2001 EXECUTIVE RETENTION PLAN Effective March 15, 2001 TRUST AGREEMENT FOR HERBALIFE 2001 EXECUTIVE RETENTION PLAN
EXHIBIT 10.7
FOR
HERBALIFE 2001 EXECUTIVE RETENTION PLAN
Effective March 15, 2001
FOR
HERBALIFE 2001 EXECUTIVE RETENTION PLAN
THIS TRUST AGREEMENT (the “Trust Agreement”) is made and entered into as of March 15, 2001 by and among Herbalife International, a Nevada corporation (the “Parent”), as trustor, and U.S. Bank National Association, a Delaware corporation, as trustee (the “Trustee”), to evidence the trust to be established pursuant to the Herbalife 2001 Executive Retention Plan, effective as of March 15, 2001 (the “Plan”), which was established by the Parent and the Company to provide financial incentives for a select group of management and highly compensated employees of the Parent and the Company and its subsidiaries that participate in the Plan, to provide services to the Parent and the Company and its subsidiaries both before and after certain Change in Control events.
ARTICLE 1
1.1 Name. The name of the Trust created by this Trust Agreement (the “Trust”) shall be:
Herbalife 2001 Executive Retention Trust
1.2 Initial Deposit. In the establishment of the Trust, the Company has paid to the Trustee a deposit of $100. The Trustee agrees to hold and administer the assets of the Plan that are delivered to it in accordance with this Trust Agreement.
1.3 Plan Definitions. Except as otherwise provided herein, capitalized terms in this Trust Agreement shall have the same meaning as under the Plan.
(a) “Trust Fund” shall mean the assets held by the Trustee pursuant to this Trust Agreement.
ARTICLE 2
(a) The Committee shall be identified to the Trustee by a copy of the resolution of the Board appointing the Committee. In the absence thereof, the Board shall be the Committee. Persons authorized to give directions to the Trustee on behalf of the Committee shall be identified to the Trustee by written notice from the Committee, and such notice shall contain specimens of the authorized signatures. The Trustee shall be entitled to rely on such written notice as evidence of the identity and authority of the persons appointed until a written cancellation of the appointment, or the written appointment of a successor, is received by the Trustee.
(b) Directions by the Committee, or its delegate, to the Trustee
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shall be in writing and signed by the Committee or persons authorized by the Committee, or may be made by such other method as is acceptable to the Trustee.
(c) The Trustee may conclusively rely upon directions from the Committee in taking any action with respect to this Trust Agreement, including the making of payments from the Trust Fund and the investment of the Trust Fund pursuant to this Trust Agreement. The Trustee shall have no liability for actions taken, or for failure to act, on the direction of the Committee. The Trustee shall have no liability for failure to act in the absence of proper written directions.
(d) The Trustee may request instructions from the Committee and shall have no duty to act or liability for failure to act if such instructions are not forthcoming from the Committee. If requested instructions are not received within a reasonable time, the Trustee may, but is under no duty to, act on its own discretion to carry out the provisions of this Trust Agreement.
2.4 Establishment of Accounts.
(a) The Trustee shall establish and maintain the all Participant’s Accounts, the Administrative Account and the Employer Death Benefit Account in accordance with the Plan.
(b) Allocations of the Employers’ contributions to the accounts described in Section 2.4(a) above, and the allocation of earnings on the Employer’s contributions held in the accounts described in Section 2.4(a) above, shall be made in accordance with Section 8.3(b) of the Plan. The Trustee may rely on information provided to it by any service provider providing record keeping services with respect to benefits under the Plan, and shall be deemed to have used reasonable efforts and to have fulfilled its obligations under the Section by relying on such information, unless it has reason to believe that the information from the service provider is unreliable. The accounts shall be maintained as “separate shares” in accordance with Code Section 663(c).
(c) Notwithstanding any provisions in this Trust to the contrary, the Participant’s Accounts shall be bookkeeping entries only and shall be utilized solely as devices for the measurement and determination of the amounts to be paid pursuant to the Plan.
ARTICLE 3
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recommend investments or investment changes; provided, that the Trustee may deposit cash on hand from time to time in any interest bearing account, bank savings account, certificate of deposit, or other instrument creating a deposit liability for a bank, including the Trustee’s own banking department if the Trustee is a bank, without such prior direction.
3.2 Investment Upon Change in Control.
(a) In the event of a Change in Control, the authority of the Committee to direct investments of the Trust Fund shall cease and the Trustee shall have complete authority to direct investments in accordance with the terms of the Plan and each Plan Agreement; provided, however, that should any of the Trust Fund be invested in Policies, the Trustee is directed to invest such portion of the Trust Fund in accordance with Section 3.2(c) below. In this connection, the Trustee, may, in its sole and absolute discretion, disregard any investment instructions received from the Committee on or after the date that is 90 days prior to a Change in Control.
(b) The President of the Parent shall notify the Trustee in writing when a Change in Control has occurred. The Trustee has no duty to inquire whether a Change in Control has occurred and may rely on notification by the President of the Parent of a Change in Control; provided, however, that if any officer, former officer, director or former director of any Employer (other than the President of the Parent), or any Participant notifies the Trustee that there has been or there may be a Change in Control, the Trustee shall have the duty to satisfy itself as to whether a Change in Control has in fact occurred. The Trustee shall be entitled to engage the services of counsel, consultants, accountants or service providers, which may be counsel, consultants, accountants or service providers to the Parent or the Company, to ascertain whether a Change in Control has occurred. The Parent and the Company shall each have a continuing obligation to cooperate in any reasonable manner with the Trustee or its agents in making such a determination. The Trustee shall be entitled to rely on any opinion rendered by counsel engaged by it for the purpose of determining if a Change in Control has occurred. The Employers shall indemnify and hold harmless the Trustee for any damages or costs (including attorneys’ fees) that may be incurred because of reliance on the President’s notice or lack thereof.
(c) If any of the Trust Fund is invested in Policies that permit the Trustee to change investments of cash surrender value within the Policy, as soon as practicable after the Change in Control, the Trustee shall change the investment in all such Policies to a short-term money market fund investment, or if such fund is unavailable, to a short-term governmental or commercial paper fund. In addition, the Trustee shall have the right to liquidate such Policies after a Change in Control and invest such proceeds in one or more money market funds (which can be tax-exempt). Such action shall be deemed to constitute a reasonable exercise of the Trustee’s authority to direct investments.
3.3 No Entitlement; Distributions.
(a) The establishment of the Trust and the payment or delivery to the Trustee of money or other property shall not vest in any Participant or Beneficiary any right, title or interest in and to any specific assets of the Trust.
(b) The Trustee shall from time to time, upon the written direction of the Committee or, after a Change in Control, in accordance with the terms of the Plan and each Plan Agreement (without regard to any directions of the Committee), make distributions from the Trust Fund to or for the benefit of such persons, in such manner, in such amounts and for such purposes as may be specified in such directions or, after a Change in Control, in accordance with the terms of the Plan and each Plan Agreement. Periodically, but no less frequently than once each calendar quarter, the Parent or the Company shall provide to the Trustee written information concerning all Participants (or Beneficiaries) who are (or may become) entitled to benefits under the terms of the Plan and the Plan Agreements, including the total dollar amount (or undivided percentage of the Trust Fund) such benefit is or would be if it were payable as of the date set forth in
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the written information provided. With respect to written information provided by the Parent or the Company pursuant to this subsection and received prior to 90 days prior to a Change in Control, the Trustee may rely on such information in determining distributions payable as of the date of the written information, if any, and can further rely on it as a starting point in determining distributions payable after the date of such written information. In determining any benefits payable after the date of the written information referred to in the previous sentence (including the making of allocations to accounts in accordance with Section 8.3(b) of the Plan), the Trustee shall be entitled engage the services of counsel, consultants, accountants or service providers, which may be counsel, consultants, accountants or service providers to the Parent or the Company, and shall be entitled to rely on conclusions drawn by such counsel, consultants, accountants or service providers, unless clearly erroneous under the terms of the Plan and the Plan Agreements. In directing the Trustee to make distributions, the Committee shall follow the provisions of the Plan and each Plan Agreement and shall not direct that any distribution be made, either during the existence or upon discontinuance of the Plan, which would cause any part of the Trust Fund to be used for or diverted to purposes other than as provided in the Plan, each Plan Agreement and this Trust Agreement. Prior to a Change in Control, the Trustee shall have no duty to inquire whether directions by the Committee or its delegate conform to the provisions of the Plan or a Plan Agreement.
(c) The Trustee, at the direction of the Committee or, after a Change in Control, on its own volition, may make any distribution required to be made by it hereunder by delivering:
(i) Its check payable to the person to whom such distribution is to be made, to such person;
(ii) Its check payable to an Insurer for the benefit of such person, to the Insurer;
(iii) Contracts held on the life of the Participant to whom or with respect to whom the distribution is being made, to the Participant or Beneficiary; or
(iv) If a distribution is being made to a person, in whole or in part, of other assets, assignments or other appropriate documents or certificates necessary to effect a transfer of title, to such person.
(d) The Trustee shall deduct from each payment under this Trust Agreement any federal, state, or local withholding or other taxes or charges which the Trustee may be required to deduct under applicable laws. In this regard, each Employer shall calculate and provide to the Trustee an itemization of federal, state and/or local taxes required to be withheld from each distribution to a Participant. The Trustee shall promptly report to each Employer the amounts deducted from each distribution, and it shall be the responsibility of each Employer to prepare and deliver to the appropriate persons, including Participants and governmental agencies, all tax returns, forms and reports as may be required by applicable laws in connection with any such withholding.
(e) Prior to a Change in Control, payments by the Trustee shall be delivered or mailed to addresses supplied by the Committee and the Trustee’s obligation to make such payments shall be satisfied upon such delivery or mailing. In this regard, prior to a Change in Control, the Trustee shall have no obligation to determine the identity of persons entitled to benefits or their mailing addresses.
3.5 Costs of Administration. The Trustee is authorized to incur
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reasonable obligations in connection with the administration of the Trust, including attorney’s fees, administrative fees and appraisal fees. Such obligations shall be paid by the Employers. The Trustee is authorized to pay such amounts first from the Administrative Account and thereafter from the general Trust Fund (and thereafter seek reimbursement from the Employers) if the Employers fail to pay them within 60 days of presentation of a statement of the amounts due.
The Trustee may hire agents, custodians, depositories, auditors, accountants, actuaries, investment advisors, brokers, financial consultants or other professionals, even if they are associated or affiliated with the Trustee, to assist it in performing any of its duties or obligations hereunder.
The Trustee is authorized to pay fees, expenses and compensation related to these services first from the Administrative Account and thereafter from the general Trust Fund (and thereafter seek reimbursement from the Employers) if the Employers fail to pay them within 60 days of presentation of a statement of the amounts due.
3.8 Payment on Court Order; Defense of Action.
(a) To the extent permitted by law, the Trustee is authorized to make any payments directed by court order in any action in which the Trustee has been named as a party.
(b) Prior to a Change in Control, the Trustee shall not be obligated to defend actions in which the Trustee is named, but shall notify the Employers or Committee of any such action and may tender defense of the action to the Employers, Committee, Participant or Beneficiary whose interest is affected. The Trustee may in its discretion, prior to a Change in Control, and shall, on or after a Change in Control, defend any action in which the Trustee is named, and any expenses incurred by the Trustee shall be paid by the Employers. The Trustee is authorized to pay such expenses first from the Administrative Account and thereafter from the general Trust Fund (and thereafter seek reimbursement from the Employers) if the Employers fail to pay them within 60 days of presentation of a statement of the amounts due.
(a) The Employers shall indemnify and hold the Trustee harmless from and against all loss or liability (including expenses and reasonable attorneys’ fees) to which it may be subject by reason of its execution of its duties under this Trust, or by reason of any acts taken in good faith in accordance with directions, or acts omitted in good faith due to absence of directions, from the Board, the Committee, the Participants (if such directions are given pursuant to this Trust Agreement) or any other person designated to act on such persons behalf, unless such loss or liability is due to the Trustee’s negligence,
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willful misconduct or similar conduct.
(b) In the event that the Trustee is named as a defendant in a lawsuit or proceeding involving the Plan, a Plan Agreement and/or the Trust Fund, the Trustee shall be entitled to receive on a current basis the indemnity payments provided for in this Section, provided, however, that if the final judgement entered in the lawsuit or proceeding holds that the Trustee is guilty of negligence, willful misconduct or similar conduct with respect to the Trust Fund, the Trustee shall be required to refund the indemnity payments that it has received.
(c) All releases and indemnities provided in this Trust Agreement shall survive the termination of this Trust Agreement.
ARTICLE 4
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to make inquiry as to the propriety of the Insurer, type or amount so specified.
ARTICLE 5
5.2 Annual Accounting; Final Accounting.
(a) Within 60 days following the end of each Plan Year and within 60 days after the removal or resignation of the Trustee or the termination of the Trust, the Trustee shall file with the Committee (and on or after a Change in Control, with a copy being sent to all Participants) a written account setting forth a description of all properties purchased and sold, all receipts, disbursements and other transactions effected by it during the Plan Year or, in the case of removal, resignation or termination, since the close of the previous Plan Year, and listing the properties held in the Trust Fund as of the last day of the Plan Year or other period and indicating their values. Such values shall be either cost or market as directed by the Committee in accordance with the Plan.
(b) The Committee may approve such account either by written notice of approval delivered to the Trustee or by its failure to express written objection to such account delivered to the Trustee within 90 days after the date of which such account was delivered to the Committee. On or after a Change in Control, the majority of Participants (by number and not percentage interest in the Trust Fund) may approve such account either by written notice of approval delivered to the Trustee or by the failure to express written objection to such account delivered to the Trustee within 90 days after the date of which such account was delivered to the Participants.
(c) Prior to a Change in Control, the approval by the Committee of an accounting, as provided in (b) above, shall be binding as to all matters embraced in such accounting on all parties to this Trust Agreement and on all Participants and Beneficiaries, to the same extent as if such accounting had been settled by a judgment or decree of a court of competent jurisdiction in which the Trustee, the Committee, the Employers and all persons having or claiming any interest in the Plan, a Plan Agreement or the Trust Fund were made parties. On or after a Change in Control, the approval by the Participants of an accounting, as provided in (b) above, shall be binding as to all matters embraced in such accounting on all parties to this Trust Agreement and on all Participants and Beneficiaries, to the same extent as if such accounting had been settled by a judgment or decree of a court of competent jurisdiction in which the Trustee, the Committee, the Employers and all persons having or claiming any interest in the Plan, a Plan Agreement or the Trust Fund were made parties.
(d) Despite the foregoing, nothing contained in this Trust Agreement shall deprive the Trustee of the right to have an accounting judicially settled, if the Trustee, in the Trustee’s sole discretion, desires such a settlement.
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ARTICLE 6
Resignation or Removal of Trustee
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discharge of the Trustee shall be as provided in such Section.
ARTICLE 7
Revocation, Creditor Claims,
Amendment and Termination
(i) By the Parent or the Company and the Trustee, provided, however, that if an amendment would in any way adversely affect the rights created by the Plan, any Plan Agreement or this Trust Agreement of any Participant or Beneficiary in the Trust Fund, each and every Participant and Beneficiary whose rights in the Trust Fund would be adversely affected must consent to the amendment before this Trust Agreement may be so amended; and
(ii) By the Parent or the Company and the Trustee, as may be necessary to comply with laws which would otherwise render the Trust void, voidable or invalid in whole or in part.
(i) Cause any of the assets of the Trust to be used for or diverted to purposes other than for the exclusive benefit of Participants, Beneficiaries and the Employers as set forth in the Plan and the respective Plan Agreements; and
(ii) Be inconsistent with the provisions of the Plan and the related Plan Agreements, including the provisions of the Plan regarding termination, amendment or modification of the Plan and any Plan Agreement.
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Parent or the Company may do so only to the extent that such amendment, modification or termination is not inconsistent with the provisions of the Plan and the related Plan Agreements, including the provisions regarding the amendment, modification or termination of the Plan or any Plan Agreement.
7.3 Final Termination. The Trust shall cease and terminate upon the last of the following to occur:
(a) The Trust Fund is exhausted and it is not anticipated that additional funds will be forthcoming from the Employers; or
(b) The claims of each and every Participant, Beneficiary and Employer under the Plan have been compromised, settled or paid.
If on termination of the Trust and the Plan (and only on such termination), there should be any balance in the Trust Fund after satisfaction of all liabilities with respect to Participants, Beneficiaries and Employers, such balance shall be paid by the Trustee to the Employers, in such amounts and in the manner instructed by the Parent or the Company, whereupon the Trustee shall be released and discharged from all obligations hereunder. From and after the date of termination and until final distribution of the Trust Fund, the Trustee shall continue to have all of the powers provided herein as are necessary or expedient for the orderly liquidation and distribution of the Trust Fund.
ARTICLE 8
Controversies, Legal Actions and Counsel
ARTICLE 9
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requested.
ARTICLE 10
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or after a Change in Control, the Plan or Plan Agreement, or any provision of the Plan or Plan Agreement, is determined by any court to be, rejected, invalid or unenforceable, then for purpose of this Trust Agreement, the Trustee shall still interpret and apply the Plan and Plan Agreement according to its written terms and not according to the court’s determination.
10.6 Applicable Law. This Trust Agreement shall be construed, administered and governed under the laws of the State of California, without regard to conflicts of law principles. If any provision of this Trust Agreement shall be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.
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TRUSTEE: |
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PARENT: |
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U.S. BANK NATIONAL ASSOCIATION |
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HERBALIFE INTERNATIONAL, INC., |
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By: |
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By: |
/s/ XXXXXXX X. XXXXXXX |
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Name: |
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Name: |
Xxxxxxx X. Xxxxxxx |
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Title: |
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Title: |
EVP-CFO |
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By: |
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By: |
/s/ XXXX X. XXXXX |
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Name: |
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Name: |
Xxxx X. Xxxxx |
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Title: |
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Title: |
SVP |
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