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November 1, 2013

Board of Directors Herbalife Ltd. P.O. Box 309GT Ugland House, South Church Street Grand Cayman, Cayman Islands

Re:

Director Liability Resulting from Share Repurchases

To the Board of Directors of Herbalife Ltd.: On the second and third quarter earnings calls, your CFO hinted that, after the auditors complete their re-audit of Herbalifes financial statements, the company would consider a leveraged share buyback. We are writing to suggest that you consider the propriety of any share repurchases in light of contingent exposures that could undermine Herbalifes solvency, particularly because under Cayman law each of you may become subject to massive personal liability if you are found to have gone over the line. Cayman law limits repurchases to the companys capital, share premium and profit accounts, and in any event permits a repurchase only if, after giving effect to the repurchase, the company remains solvent (i.e., remains able to pay its debts as they fall due in the ordinary course of business). Moreover, Cayman law imposes on directors an affirmative fiduciary duty to carefully consider the present and future solvency of the company before approving a share repurchase. In considering solvency, directors have a duty to take into account contingent exposures. The larger the repurchase, and the larger the contingent exposure, the more cautious directors should be. It would be particularly dangerous for a board to approve a large repurchase despite a large contingent exposure, especially given that a court evaluating your decision would have the benefit of hindsight if the contingent exposure comes to pass. If a director is found to have breached his or her fiduciary duties, that can result in enormous personal liability. For example, in Weavering Macro Fixed Income Fund Limited (in liquidation) v. Stefan Peterson and Hans Ekstrom (2011), two directors of a Cayman company were found personally liable for losses of $111 million each for failure to discharge their fiduciary duties. As you know, we believe Herbalife will eventually be found to be an illegal pyramid scheme and will be shut down (in which case the company will no longer be able to pay its debts as they come due). If that were to happen, a court with the benefit

of hindsight may well conclude that your belief in the solvency of the company when it repurchased its own shares was not reasonable (especially given your access to all the facts). In that case, the court, acting for the benefit of victims of the scheme and other creditors, could require you to make the company whole out of your own pockets for the cash wrongly used in share repurchases.

Very truly yours,

PERSHING SQUARE CAPITAL MANAGEMENT, L.P. By: PS Management GP, LLC, its General Partner

By: Name: William A. Ackman Title: Managing Member

cc:

Brett R. Chapman (Chief Legal Officer and Corporate Secretary)

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