Policies & Procedures - USANA and Procedures... · products, services, sales techniques, sales...

TABLE OF CONTENTS

SECTION 1Introduction . . . . . . . . . . . . . . . . . . . . 21.1 Policies Incorporated into

Distributor Agreement. . . . . . . 21.2 Purpose . . . . . . . . . . . . . . . . . . . 21.3 Changes. . . . . . . . . . . . . . . . . . . 21.4 Delays . . . . . . . . . . . . . . . . . . . . 21.5 Policies and Provisions

Severable . . . . . . . . . . . . . . . . . . 21.6 Titles Not Substansive . . . . . . . 21.7 Waiver. . . . . . . . . . . . . . . . . . . . 2

SECTION 2 Becoming a Distributor . . . . . . . . . . . 22.1 To Become a USANA

Distributor . . . . . . . . . . . . . . . . 22.2 Starter Kit. . . . . . . . . . . . . . . . . 32.3 Identification and

Distributor Number. . . . . . . . . 32.4 Telephone and Internet

Enrollment . . . . . . . . . . . . . . . . 32.5 Distributorship Benefit. . . . . . . 32.6 Renewal of Distributorship . . . 4

SECTION 3Operating a USANADistributorship . . . . . . . . . . . . . . . . . . 43.1 Actions of Household Members

or Affiliated Individuals . . . . . . 43.2 Adherences to the USANA

Compensation Plan. . . . . . . . . . 43.3 Advertising . . . . . . . . . . . . . . . . 43.3.1 In General . . . . . . . . . . . . . . . . . 43.3.2 Television and Radio. . . . . . . . . 53.3.3 Media Enquiries . . . . . . . . . . . . 53.3.4 Trademarks and Copyrights . . . 53.4 Distributor Claims and

Representations. . . . . . . . . . . . . 63.4.1 Product Claims . . . . . . . . . . . . . 63.4.2 Income Claims . . . . . . . . . . . . . 63.5 Commercial Outlets . . . . . . . . . 63.6 Authorised Recruiting . . . . . . . 63.6.1 Post-Termination Solicitation. . 73.6.2 Downline Genealogy Reports . 73.7 Corporation, Partnership, and

Trust . . . . . . . . . . . . . . . . . . . . . 83.8 Deceptive Practices. . . . . . . . . . 83.9 Independent Contractor Status. 83.10 Insurance. . . . . . . . . . . . . . . . . . 93.10.1 Business Pursuits Coverage . . . 93.10.2 Product Liability Insurance . . . 93.11 International . . . . . . . . . . . . . . 93.12 Adherence to Laws

and Ordinances . . . . . . . . . . . . 93.13 One Distributorship . . . . . . . . 93.14 Repackaging and Relabelling

Prohibited . . . . . . . . . . . . . . . . 9

3.15 Sale, Transfer, or Assignmentof Distributorship . . . . . . . . . . 9

3.16 Separation of Distributorship 103.17 Succession . . . . . . . . . . . . . . . 103.18 Taxes . . . . . . . . . . . . . . . . . . . 103.18.1 Income Taxes . . . . . . . . . . . . . 103.19 Telephone and Email

Solitications . . . . . . . . . . . . . . 103.20 Territories. . . . . . . . . . . . . . . . 113.21 Trade Shows and Expositions 113.22 Transferring of Sponsorship. . 113.22.1 Conflicting Enrolments. . . . . 113.22.2 Cross Line Raiding . . . . . . . . 11

SECTION 4 Responsibilities of Distributors and Sponsors. . . . . . . . . 124.1 Ongoing Supervision, Training

and Sales. . . . . . . . . . . . . . . . . 124.2 Non-Disparagement . . . . . . . 124.3 Holding Applications

or Orders . . . . . . . . . . . . . . . . 124.4 Reporting Policy Violations . 12

SECTION 5Sales Requirements . . . . . . . . . . . . . . 125.1 Product Sales . . . . . . . . . . . . . 125.2 Retail Costumer Sales . . . . . . 135.3 Excessive Purchases

of Inventory Prohibited . . . . . 135.4 Deposits . . . . . . . . . . . . . . . . 13

SECTION 6 Bonuses and Commissions . . . . . . . . 13 6.1 Bonuses and Commisions

Cycles. . . . . . . . . . . . . . . . . . . 136.2 Adjustment of Bonuses and

Commissions . . . . . . . . . . . . . 136.3 Loss of Rights

to Commissions . . . . . . . . . . . 136.4 Unclaimed Comissions

and Credits. . . . . . . . . . . . . . . 14

SECTION 7 Product Guarantees, Returns, andInventory Repurchases . . . . . . . . . . . 147.1 Product Exchange

Guarantee. . . . . . . . . . . . . . . . 147.2 Thirty (30) Days Return

Policy . . . . . . . . . . . . . . . . . . . 147.2.1 Retail Customers . . . . . . . . . . 147.2.2 Preferred Customers . . . . . . . 147.2.3 Distributors . . . . . . . . . . . . . . 147.3 All Other Returns . . . . . . . . . 157.3.3 Procedure for All Return

and Repurchases . . . . . . . . . . 15

SECTION 8Dispute Resolution andViolation of Agreement. . . . . . . . . . . 158.1 Disputes Between

Distributors . . . . . . . . . . . . . . 158.1.1 Grievances and Complaints. . 158.1.2 Legal Services Department

Review . . . . . . . . . . . . . . . . . . 158.2 Disputes Between USANA

and Distributors . . . . . . . . . . 168.2.1 Arbitration. . . . . . . . . . . . . . . 168.2.2 Juridiction, Venue

and Choice of Law . . . . . . . . . 168.3 Disciplinary Action . . . . . . . . 16

SECTION 9Ordering . . . . . . . . . . . . . . . . . . . . . . 179.1 Ordering Method . . . . . . . . . 179.2 Autoship Programme . . . . . . 179.3 General Order Policies. . . . . . 179.4 Purchasing USANA

Products. . . . . . . . . . . . . . . . . 179.5 Back Order Policy . . . . . . . . . 189.6 Shipping Discrepancies . . . . . 18

SECTION 10Payment and Shipping . . . . . . . . . . . 1810.1 Methods of Payment . . . . . . . 1810.1.1 Credit Cards. . . . . . . . . . . . . . 1810.1.2 Electronic Bank Draft

Payment Programme. . . . . . . 1810.2 Insufficient Funds and

Declined or Disputed Credit. 1810.3 Autoship Programme . . . . . . 18

SECTION 11Distributor Services. . . . . . . . . . . . . . 1811.1 Changes to

Your Distributorship . . . . . . . 1811.1.1 In General . . . . . . . . . . . . . . . 1811.1.2 Addition of Co-Applicant. . . 1811.2 Downline Genealogy Reports &

Commission Statements . . . . 1911.2.1 Downline Genealogy

Reports. . . . . . . . . . . . . . . . . . 1911.2.2 Commission Statements . . . . 1911.3 Errors or Questions . . . . . . . . 1911.4 Resolving Problems. . . . . . . . 19

SECTION 12Inactivity and Termination Policies . 1912.1 Inactivity . . . . . . . . . . . . . . . . 1912.2 Involuntary Cancellation . . . . 1912.3 Written Cancellation . . . . . . . 2012.4 Effect of Termination. . . . . . . 20

SECTION 13Definitions. . . . . . . . . . . . . . . . . . 20-21

Policies & Procedures

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SECTION 1—INTRODUCTION

1.1 POLICIES INCORPORATED INTO

DISTRIBUTOR AGREEMENT

These Policies and Procedures, in their presentform and as amended from time to time atUSANA's discretion, are incorporated into theUSANA Distributor Agreement. It is theresponsibility of each Distributor to read,understand, adhere to, and ensure that he/she isaware of and operating under the most currentversion of these Policies and Procedures. Forthe purpose of these policies, the termDistributor refers to all individuals (andbusiness entities) who entered into aDistributor Application and Agreement withUSANA.

1.2 PURPOSE

The purpose of the Distributor Agreement is:

• To define the relationship betweenUSANA and the Independent Distributor;

• To set standards of acceptable businessbehavior;

• To assist you in building and protectingyour business.

1.3 CHANGES

The Company may from time to time amendthe terms and conditions of the DistributorAgreement, Policies and Procedures,Compensation Plan and Price List.Amendments shall be effective uponnotification of the changes in official USANApublications distributed to all activeDistributors.

1.4 DELAYS

USANA shall not be responsible for delays andfailures in performing its obligations due tocircumstances beyond its reasonable control,

such as strikes, labor difficulties, riots, war,fire, death, curtailment or interruption of asource of supply, government decrees or orders,etc.

1.5 POLICIES AND PROVISIONS SEVERABLE

If any provision of the Distributor Agreementas it currently exists or as may be amended isfound to be invalid, illegal, or unenforceablefor any reason, only the invalid provision willbe severed from the Distributor Agreement;the remaining terms and provisions shallremain in full force and effect and shall beconstrued as if such invalid, illegal, orunenforceable provision never comprised a partof the Distributor Agreement.

1.6 TITLES NOT SUBSTANTIVE

The titles and headings to these Policies are forreference purposes only and do not constitute,and shall not be construed as, substantiveterms of the Distributor Agreement.

1.7 WAIVER

USANA never forfeits its right to requireDistributor compliance with the DistributorAgreement or with applicable laws andregulations governing business conduct. Onlyin rare circumstances will a policy be waived,and such waivers will be conveyed in writingby the Legal Services Department or an officerof the company. The waiver will apply only tothat specific case.

SECTION 2—BECOMING A DISTRIBUTOR

2.1 TO BECOME A USANA DISTRIBUTOR

• Be at least the age of majority in yourcountry of residence;

• Reside in a geographic area whereUSANA has been approved for business;


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• Read the USANA Policies and Proceduresand USANA Compensation Plan;

• Submit an original signed DistributorApplication and Agreement to USANA;and

• Purchase a USANA Starter Kit for anominal cost (unless prohibited by law).

• Have a valid IC number.

• USANA reserves the right to accept orreject any application for any reason.

2.2 STARTER KIT

No person is required to purchase USANAproducts to become a Distributor. However, tofamiliarise new Distributors with USANAproducts, services, sales techniques, sales aids,and other matters, USANA requires newDistributors to purchase a Starter Kit exceptwhere prohibited by law. USANA willrepurchase any resalable kits from Distributorswho terminate their Distributor Agreement.

2.3 IDENTIFICATION AND

DISTRIBUTOR NUMBER

USANA requires Distributors to provide theirIC number on the Distributor Application andAgreement.

When USANA receives and accepts aDistributor's original Application andAgreement, USANA will assign a uniqueDistributor Number to that Distributor.Distributors must use their DistributorNumber whenever they call a USANADistributor Services Representative or OrderExpress Representative to place orders andtrack commissions and bonuses.

2.4 TELEPHONE AND INTERNET ENROLLMENT

After signing the Distributor Application andAgreement, a Distributor applicant may enrollby telephone or over the Internet to receive atemporary Distributor Number and temporary

authorisation for a new Distributorship whilethe written application is en route to USANA.The applicant must provide USANA with allthe necessary information to complete theDistributor Application and Agreement. Theapplicant may order a Starter Kit at that timeusing a valid credit card or bank draft.

The new Distributor's temporary DistributorNumber and authorisation will be valid for 21days, pending USANA's receipt of theDistributor's original Application andAgreement. Once USANA receives theoriginal Distributor Application andAgreement, USANA will assign a permanentDistributor Number to the Distributor andextend the initial Distributorship authorisationperiod to one full year.

2.5 DISTRIBUTOR BENEFITS

Once USANA accepts a Distributor'sApplication and Agreement, the benefits of theUSANA Compensation Plan and theDistributor Agreement are available to the newDistributor. These benefits include the rightto:

• Purchase USANA products and services atthe Distributor price;

• Participate in the USANA CompensationPlan (receive bonuses and commissions, ifeligible);

• Sponsor other individuals as PreferredCustomers or Distributors into theUSANA business and thereby build aDownline Organisation and progressthrough the USANA Compensation Plan;

• Receive USANA literature and otherUSANA communications;

• Participate in USANA-sponsored support,service, training, motivational, andrecognition functions upon payment ofappropriate charges, if applicable;


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• Participate in promotional and incentivecontests and programmes sponsored byUSANA for its Distributors.

• Retail USANA products or services andprofit from these sales.

2.6 RENEWAL OF DISTRIBUTORSHIP

USANA charges Distributors an annualDistributorship renewal fee of RM75.00USANA will automatically charge the fee tothe Distributor's credit card or bank accounton file with USANA on the anniversary date ofthe Distributor's application. Distributorswithout a credit card or bank account mustrenew by phone or mail. The annual renewalfee will:

• Automatically renew your subscription toUSANA publications;

• Renew your Distributor Agreement andmaintain your line of sponsorship; and

• Continue your entitlement to participatein USANA's Compensation Plan; purchaseUSANA products; enjoy USANA servicesupport programmes; participate incompany promotions, contests, andrecognition; and attend Company events.

SECTION 3—OPERATING A USANADISTRIBUTORSHIP

3.1 ACTIONS OF HOUSEHOLD MEMBERS OR

AFFILIATED INDIVIDUALS

If any member of a Distributor's immediatehousehold engages in any activity which, ifperformed by the Distributor would violateany provision of the Distributor Agreement,such activity will be deemed a violation by theDistributor.

3.2 ADHERENCE TO THE USANACOMPENSATION PLAN

Distributors must adhere to the terms of theUSANA Compensation Plan as set forth inofficial USANA literature. Distributors shallnot offer the USANA opportunity through, orin combination with, any other opportunity orunapproved method of marketing. Distributorsshall not require or encourage other current orprospective Preferred Customers orDistributors to participate in USANA in anymanner that varies from the programme as setforth in official USANA literature.Distributors shall not require or encourageother current or prospective PreferredCustomers or Distributors to execute anyagreement or contract other than officialUSANA agreements and contracts in order tobecome a USANA Distributor. Similarly,Distributors shall not require or encourageother current or prospective PreferredCustomers or Distributors to make anypurchase from, or payment to, any individualor other entity to participate in the USANACompensation Plan, other than those purchasesor payments identified as recommended orrequired in official USANA literature.

3.3 ADVERTISING

3.3.1 IN GENERAL

Distributors must avoid all discourteous,deceptive, misleading, illegal, unethical, orimmoral conduct or practices in theirmarketing and promotion of USANA, theUSANA opportunity, the USANACompensation Plan, and USANA's products.

Only those Distributors who have achieved therank of Gold Director or higher may produceindividual sales, marketing, and supportmaterials to market or promote USANA, theUSANA opportunity, the USANACompensation Plan, USANA's products, ortheir USANA businesses. All other


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Distributors may only use sales aids andsupport materials produced or currentlyapproved by USANA. Sales, marketing, andsupport materials include, but are not limitedto, training and recruiting information,brochures, flyers, pamphlets, posters, postcards,letters, classified advertisements, etc.promoting USANA's products andprogrammes, as well as e-mail messages, voicemail message recordings, and Internet websitesused to publicise USANA, its products,services, or USANA Compensation Plan.

Any Distributor who has achieved the rank ofGold Director or above who desires to createhis/her own promotional and marketingmaterials must submit a copy of the proposedmaterials to USANA for review and approvalbefore he/she may use the information topromote his/her business or the USANAopportunity. Upon receipt of the proposedpromotional material, USANA will review theinformation to determine the appropriatenessof the material's form and content. USANAwill promptly notify the Gold or higherranking Director in writing regarding theCompany's decision to approve or disapprovethe material for use in promoting andsupporting his/her USANA business activities.Gold and higher ranking Directors may onlyuse those sales, marketing, and supportmaterials that USANA has expressly approved.The advertising legal review process may besubject to fees.

3.3.2 TELEVISION AND RADIO

Distributors may advertise on television andradio subject to USANA's express writtenapproval.

3.3.3 MEDIA ENQUIRIES

Distributors must refer all media inquiriesregarding USANA to the USANA LegalServices Department. This will ensure thataccurate and consistent information reaches thegeneral public.

3.3.4 TRADEMARKS AND COPYRIGHTS

• A Distributor may not use the USANAtrademark or trade name or corporate logoto promote their independent business.Rather, they must use the “IndependentUSANA Distributors” logo to promotetheir business. A reproducible copy of thelogo can be obtained from USANA.

• Distributors may describe themselves as an“Independent USANA Distributor” in thebusiness pages of the telephone directory.

• Distributors should not answer thetelephone in any manner that mightindicate or suggest that the caller hasreached a USANA corporate office.

• Distributors may not record or reproducematerials from any USANA corporatefunction, event, speech, etc.

• Distributors may not record, reproduce, orcopy any presentation or speech by anyUSANA spokesperson, representative,speaker, officer, director, or otherDistributors.

• Distributors may not reproduce or copyany recording of a USANA-producedmedia presentations including audio tapes,or videotape

• Distributors may not publish, or cause tobe published, in any written or electronicmedia, the name, photograph or likeness,copyrighted materials, or property ofindividuals associated with USANAwithout express written authorisation fromthe individual and/or USANA.

• Distributors may not publish, or cause tobe published, in any written form orelectronic media, the copyrighted materialsor property of USANA, without expresswritten authorisation from USANA.


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3.4 DISTRIBUTOR CLAIMS ANDREPRESENTATIONS

3.4.1 PRODUCT CLAIMS

USANA Distributors may not make claimsthat USANA products have therapeutic orcurative properties except those contained inofficial USANA literature. In particular, noDistributor may make any claim that USANAproducts are useful in the cure, treatment,diagnosis, mitigation, or prevention of anydiseases. Such statements can be perceived asmedical or drug claims. Not only are suchclaims violative of the Distributor Agreement,but they also violate the laws and regulationsof the United States, Canada, and otherjurisdictions.

3.4.2 INCOME CLAIMS

Distributors may not make income projectionsor claims or disclose their USANA income(including the showing of cheques, copies ofcheques, or bank statements) when presentingor discussing the USANA opportunity orUSANA Compensation Plan, except as setforth in official USANA literature.

3.5 COMMERCIAL OUTLETS

Distributors who elect to be Distributors maydisplay and retail USANA products incommercial outlets where professional servicesare the primary source of revenue and productsales are secondary. Approved service-orientedestablishments may include (but are notlimited to) health spas, beauty shops, etc.except where expressly prohibited by law.Unapproved retail-oriented establishments mayinclude (but are not limited to) retail stores,Internet auction sites, and pharmacies. Allother Distributors may display USANAproducts in service-oriented establishments forthe purpose of recruiting new Distributors,however they do not have the right to retailUSANA products.

3.6 AUTHORISED RECRUITING

USANA Distributors may participate in otherdirect selling or network marketing ormultilevel marketing ventures (collectively,“multilevel marketing”), and Distributors mayengage in selling activities related to non-USANA products and services, if they desire todo so. Although a Distributor may elect toparticipate in another multilevel marketingopportunity, he/she is prohibited fromunauthorised recruiting activities, whichinclude the following:

• Recruiting or enrolling USANA customersor Distributors for other multilevelmarketing business ventures, eitherdirectly or through a third party. Thisincludes, but is not limited to, presentingor assisting in the presentation of othermultilevel marketing business ventures toany USANA Preferred Customer orDistributor, or implicitly or explicitlyencouraging any USANA PreferredCustomer or Distributor to join otherbusiness ventures. It is a violation of thispolicy to recruit or enroll a USANAPreferred Customer or Distributor foranother multilevel marketing business,even if the Distributor does not know thatthe prospect is also a USANA PreferredCustomer or Distributor;

• Producing any literature, tapes, orpromotional material of any nature foranother multilevel marketing businesswhich is used by the Distributor or anythird person to recruit USANA PreferredCustomers or Distributors for that businessventure;

• Selling, offering to sell, or promoting anycompeting products or services to USANAPreferred Customers or Distributors. Anyproduct or services in the same genericcategory as a USANA product or service isdeemed to be competing, (e.g., Anydietary supplement is in the same generic


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category as USANA's dietary supplementsand is, therefore, a competing product,regardless of differences in cost, quality,ingredients, or nutrient content;

• Offering USANA products or promotingthe USANA Compensation Plan inconjunction with any non-USANAbusiness plan, opportunity, product, orincentive;

• Offering any non-USANA products oropportunities in conjunction with theoffering of USANA products or businessplan or at any USANA meeting, seminar,launch, convention, or other USANAfunction; or

• Where a prospective Distributor orPreferred Customer accompanies aDistributor to a USANA meeting orfunction, no other USANA Distributormay recruit the prospect to enroll inUSANA or any other multilevel marketingbusiness for a period of fourteen (14) daysor unless and until the Distributor whobrought the prospect to the functionadvises the other USANA Distributor thatthe prospect has elected not to enroll inUSANA and that the Distributor is nolonger recruiting the prospect to enroll inUSANA, whichever occurs first. USANAwill immediately cancel theDistributorship of any Distributor whoviolates this provision. Violations of thispolicy are especially detrimental to thegrowth and sales of other Distributors'USANA businesses and to USANA'sbusiness.

• Where a Distributor participates in othermultilevel marketing ventures they maynot participate in USANA's LeadershipBonus Programme.

• When a Distributor participates in othermultilevel marketing ventures he/she willlose access to USANA's DownlineManagement System.

3.6.1 POST CANCELLATION SOLICITATION

PROHIBITED

A former Distributor shall not directly orthrough a third party solicit any USANADistributor or Preferred Customer to enroll inany direct sales, network marketing, ormultilevel marketing programme oropportunity for a period of one (1) year afterthe cancellation of an individual or entity'sDistributor Agreement. This provision shallsurvive the expiration of the Distributor'sobligations to USANA, pursuant to theDistributor Agreement.

3.6.2 DOWNLINE GENEALOGY REPORTS

The USANA Downline Genealogy Reports areconfidential and contain proprietary businesstrade secrets. A Distributor may not use thereports for any purpose other than fordeveloping their USANA business. TheDistributor and USANA agree that, but forthis agreement of confidentiality andnondisclosure, USANA would not provideDownline Genealogy Reports to theDistributor. During any term of theDistributor Agreement and for a period of five(5) years after the termination or expiration ofthe Distributor Agreement betweenDistributor and USANA, for any reasonwhatsoever, a Distributor shall not, on his/herown behalf or on behalf of any other person,partnership, association, corporation, or otherentity:

• Disclose any information contained in thereports to any third party;

• Use the reports to compete with USANA;or

• Recruit or solicit any Distributor orPreferred Customer listed on the reports toparticipate in other multilevel marketingventures.

This provision shall survive the termination orexpiration of this Agreement.


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3.7 CORPORATION, PARTNERSHIPS, ANDTRUSTS

A corporation, partnership, or trust(collectively referred to in this section as an“Entity”) may apply to be a USANADistributor by submitting its Certificate ofIncorporation, Partnership Agreement, or trustdocuments (these documents are collectivelyreferred to as the “Entity Documents”) toUSANA. A Distributorship may change itsstatus under the same sponsor from anindividual to a partnership, corporation, ortrust, or from one type of entity to another. Todo so, the Distributor(s) must provide theEntity Documents and submit a properlycompleted Distributor Application andAgreement and Corporation, or PartnershipDBA Registration Form to USANA. TheCorporation, or Partnership Registration Formmust be signed by all of the shareholders,partners, trustees, or other individuals havingan ownership interest in the business. Membersof the Entity are jointly and severally liable forany indebtedness or other obligation toUSANA. As set forth in Section 3. 13, noindividual may participate directly orindirectly in more than one Distributorship.

It is the responsibility of those personsinvolved in the Entity to conform to the lawsof the state in which their Entity is formed.USANA reserves the right to approve ordisapprove any Distributor Application andAgreement submitted by an Entity, as well asany Distributor Application and Agreementsubmitted by any current Distributor(s) for theformation of an Entity for tax, estate planning,and limited liability purposes.

3.8 DECEPTIVE PRACTICES

Distributors must fairly and truthfully explainthe USANA products, opportunity, USANACompensation Plan, and Policies andProcedures to prospective Distributors. Thisincludes:

• Being honest and thorough in presentingmaterial from the USANA CompensationPlan to all potential Distributors;

• Making clear that income from theUSANA Compensation Plan is based onproduct sales and not merely onsponsoring other Distributors;

• Making estimates of profit that are basedon reasonable predictions for what anaverage Distributor would achieve innormal circumstances;

• Representing that past earnings in a givenset of circumstances do not necessarilyreflect future earnings;

• Not misrepresenting the amount ofexpenditure that an average Distributormight incur in carrying on the business;

• Not misrepresenting the amount of timean average Distributor would have todevote to the business to achieve the profitestimated, and not stating that profits orearnings are guaranteed for any individualDistributor;

• Never stating or inferring that you willbuild a Downline Organisation for anyoneelse;

• Never stating that profits or earnings areguaranteed for an individual Distributor;and

• Never stating that any consumer, business,or government agency has approved orendorsed the USANA products or itsUSANA Compensation Plan.

3.9 INDEPENDENT CONTRACTOR STATUS

Distributors are independent contractors andare not purchasers of a franchise or businessopportunity. The agreement between USANAand its Distributors does not create anemployer/employee relationship, agency,partnership, or joint venture between theCompany and the Distributor. All Distributors


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are responsible for paying their own incometaxes. Each Distributor is encouraged toestablish his/her own goals, hours, andmethods of sale, so long as he/she complieswith applicable laws and the terms andconditions of the Distributor Agreement.

3.10 INSURANCE

3.10.1 BUSINESS PURSUITS COVERAGE

You may obtain insurance coverage for yourbusiness activities.

3.10.2 PRODUCT LIABILITY INSURANCE

USANA maintains insurance to protect theCompany and Distributors against productliability claims. USANA's insurance policycontains a “Vendors Endorsement” whichextends coverage to Independent Distributorsso long as they are marketing USANAproducts in accordance with applicable lawsand regulations and the DistributorAgreement. USANA's product liability policydoes not extend coverage to claims that arise asa result of a Distributor's misconduct inmarketing the products (see also Section 3. 4).

3.11 INTERNATIONAL

Distributors may sell and promote USANA'sproducts, opportunity, and services or recruitor enroll any potential Distributor or customeronly in countries in which USANA isapproved for business, as announced in officialUSANA communications. If a Distributordesires to conduct business in an authorisedcountry other than the one in which they are aDistributor, he/ she must comply with all theapplicable laws and regulations for thatcountry. In addition, he/she must enter into anInternational Sponsor Application andAgreement with USANA prior to conductingany international business.

3.12 ADHERENCE TO LAWS AND ORDINANCES

You must obey all laws that apply to yourbusiness.

3.13 ONE DISTRIBUTORSHIP

3.14 REPACKAGING AND RELABELLING PROHIBITED

3.15 SALE, TRANSFER, OR ASSIGNMENTOF DISTRIBUTORSHIP

A Distributor may not sell, transfer, or assigntheir Distributorship rights to any person orentity without USANA's express writtenapproval. To obtain approval, you must:

• Be a Distributor in good standing asdetermined by USANA in its solediscretion.

• Before any transfer will be approved byUSANA, any debt obligations the sellingDistributor has with USANA must besatisfied.

• The transferring Distributor must be ingood standing and not in violation of anyof the terms of the Distributor Agreementor these Policies and Procedures, totransfer his/her Distributorship.


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A Distributor may operate, receive compensation from, or have an ownership interest, legal or equitable, as a sole proprietorship, shareholder, trustee, or beneficiary in only one USANA Distributorship. However, notwithstanding this rule, your spouse may become an Associate and operate a second distributorship as long your spouse's distributorship is placed below one of your business centers and not in a cross line sales organization. The second business must be a bona fide independent business that is operated by the person listed on the agreement and not by the owner of the first business.

Distributors may not relabel or alter the labels on any USANA products, information, materials, or programmes in any way. Distributors may not repackage or refill any USANA products. USANA products must be sold in their original containers only. Such relabeling or repackaging would violate governing laws, which could result in severe criminal penalties. Civil liability may also result when the persons using the products suffer any type of injury or their property is damaged as a consequence of the repackaging or relabeling of products.

• The combining of Distributorships is notpermitted. USANA will not approve thetransfer of a Distributorship to anyindividual or Entity that is a currentDistributor or who has an ownershipinterest in any Distributorship. Similarly,USANA will not approve the transfer of aDistributorship to any individual or Entitythat has previously had any ownershipinterest in, or operated, a USANADistributorship.

• No individual Business Centres may betransferred separately from theDistributorship. If a Distributor wishes totransfer his/her Distributorship, allBusiness Centres must be included in thetransfer.

• The transferring Distributor must notifythe USANA Legal Services Department ofhis/her intent to transfer theDistributorship by completing andsubmitting a signed Transfer ofDistributorship and DistributorApplication form. No changes in line ofsponsorship can result from the transfer ofa Distributorship.

3.16 SEPARATION OF DISTRIBUTORSHIP

If Distributors wish to dissolve their jointlyheld Distributorship, they must do so in such away as to not disturb the income or interests oftheir Upline and Downline Organisations.Distributors should consider the followingwhen deciding whether or not to dissolve ajointly held Distributorship:

• If a jointly owned Distributorship isdissolved, anyone of the joint owners mayoperate the Distributorship, but the otherjoint owners must relinquish their rightsto, and interests in, the Distributorship.

• USANA cannot divide a DownlineOrganisation, nor can it split commissionor bonus between the joint owners.

• If a jointly owned Distributorship isdissolved, the individual(s) whorelinquished ownership in the originalDistributorship may apply as newDistributors under any Sponsor but maynot purchase or join an existingDistributorship.

3.17 SUCCESSION

If a Distributor dies or becomes incapacitated,his/her rights to commissions, bonuses, andDownline Organisation, together with allDistributor responsibilities, will pass to his/hersuccessor(s). Upon death or incapacitation, thesuccessor(s) must present the USANA LegalServices Department with proof of death orincapacitation, along with proof of succession,such as a Grant of Probate or an EnduringPower of Attorney, and a properly completedDistributor Application and Agreement. Youmay inherit and retain another Distributorshipeven though you currently own or operate aDistributorship.

3.18 TAXES

3.18.1 INCOME TAXES

Each Distributor is responsible for payingfederal, local, state, provincial, and territorialtaxes on any income generated as anindependent Distributor. USANA will notgive out personal tax advice. Please consultwith your local tax professional.

3.19 TELEPHONE AND E-MAIL SOLICITATION

The use of any automated telephonesolicitation equipment in connection with themarketing or promotion of USANA, itsproducts, or the USANA opportunity isstrictly prohibited. The use of “boiler-room”telemarketing operations to sell products orservices over the telephone, or to recruitDistributors, is strictly prohibited.Distributors are also forbidden from sending


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unsolicited e-mail messages or “spamming” tosell products or to recruit Distributors.

3.20 TERRITORIES

There are no exclusive territories for marketingUSANA products or services, nor shall anyDistributor imply or state that he/she has anexclusive territory to market USANA productsor services.

3.21 TRADE SHOWS AND EXPOSITIONS

Distributors may display and/or sell USANAproducts at trade shows and expositions, butmay not display or sell USANA products atevents that are not conducive to the imageUSANA wishes to portray. All literaturedisplayed at the event must be official USANAliterature and must clearly identify theindividual(s) as Independent Distributors.

3.22 TRANSFERRING OF SPONSORSHIP

3.22.1 CONFLICTING ENROLLMENTS

Every prospective Distributor has the ultimateright to choose his/her own Sponsor. As ageneral rule, the first Distributor who doesmeaningful work with a prospectiveDistributor is considered to have first claim tosponsorship. Basic tenets of common sense andconsideration should govern any dispute thatmay arise. In the event that a prospectiveDistributor or any Distributor on behalf of aprospective Distributor, submits more than oneDistributor Application and Agreement toUSANA, listing a different Sponsor on each,the Company will only consider valid the firstDistributor Application and Agreement that itreceives, accepts, and processes. If there is anyquestion concerning the sponsorship of aDistributor, the final decision will be made byUSANA.

3.22.2 CROSS-LINE RAIDING

USANA will not permit any change in the line

of sponsorship except in the followingcircumstances:

• Where a Distributor has been fraudulentlyor unethically induced into joiningUSANA.

• Where an incorrect placement was madedue to a Distributor error, a change in theline of sponsorship can be made to correctthe error where a request for a change ismade within 10 days of enrollment. If youmake such a request, you must also submitthe written consent of your Sponsor andthat person's Sponsor along with therequired placement change fee. If at thetime of the request you have any downlineorganisation in place, no change will bepermitted in the line of sponsorship. Inthe event that such a change is approved,commissions and bonuses earned will beadjusted accordingly. In no case will achange of placement be approved where asigned application has not been receivedby USANA.

• If you terminate your Distributorship inwriting you may rejoin under the Sponsorof your choice after a period of 6 months.Following termination of yourDistributorship, you may participate as aPreferred Customer during the 6-monthperiod. In the event you terminate yourDistributorship, you forfeit all rights,bonuses, and commissions under yourprevious line of sponsoring. You may notavoid compliance with this policy throughthe use of assumed names, corporations,partnerhsips, trusts, spouse names, socialinsurance numbers, social securitynumbers, employer identification numbers,fictitious ID numbers, etc.

• If you have been “inactive” (i.e., nopurchases or sales of USANA products orparticipation in any other form as aDistributor) for a period of 12 successivemonths, you may terminate your


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Distributorship in writing and rejoinimmediately under the Sponsor of yourchoice.

• Cross-line raiding is strictly prohibited.“Cross-line raiding” is defined as theenrollment or attempted enrollment of anindividual or Entity that already has acurrent Preferred Customer or DistributorAgreement on file with USANA, or whohas had such an agreement within thepreceding six (6) calendar months within adifferent line of sponsorship. The use oftrade names, assumed names, corporations,partnerships, trusts, spouse names, socialinsurance numbers, , social securitynumbers, employer identification numbers,or fictitious ID numbers to circumventthis policy is prohibited. Distributors maynot demean, discredit, or invalidate otherUSANA Distributors in an attempt toentice another Distributor to become partof the first Distributor's DownlineOrganisation.

SECTION 4—RESPONSIBILITIES OFDISTRIBUTORS AND SPONSORS

4.1 ONGOING SUPERVISION, TRAINING, ANDSALES

Any Distributor who sponsors anotherDistributor into USANA must train the newDistributor in product knowledge, effectivesales techniques, the USANA CompensationPlan, and the Policies and Procedures.Distributors must also supervise and monitorDistributors in their Downline Organisation toensure they conduct business professionally andethically, promote sales properly, and providequality customer service. As a Distributorprogresses through the various levels ofleadership, his/her responsibilities to train andmotivate downline Distributors will increase.

4.2 NON-DISPARAGEMENT

In setting the proper example for theirdownline, Distributors must not disparage

USANA, other USANA Distributors,USANA's Products, the USANACompensation Plan, or the Company'semployees. Such disparagement constitutes amaterial breach of these Policies andProcedures.

4.3 HOLDING APPLICATIONS OR ORDERS

All Distributors must forward to USANA anyforms and applications they receive from otherDistributors or applicant Distributors, orPreferred Customers or applicant PreferredCustomers, on the next business day afterwhich the forms or applications are signed.

4.4 REPORTING POLICY VIOLATIONS

Distributors should report any observedviolations of a policy violation to the USANALegal Services Department.

SECTION 5—SALES REQUIREMENTS

5.1 PRODUCT SALES

The USANA Compensation Plan is based uponthe sale of USANA products and services toend consumers. Distributors must fulfillspecified personal and Downline Organisationsales requirements (as well as meet otherresponsibilities set forth in these Policies andProcedures) in order to be eligible for bonuses,commissions, and advancement to higher levelsof achievement. The following salesrequirements must be satisfied in order forDistributors to be eligible for commissions:

• A minimum of seventy percent (70%) of aDistributor's orders must be for Customersor end users. The sales volume of aDistributor's personally enrolled PreferredCustomers shall be included for thepurposes of determining compliance withthe 70% requirement. The sales volume ofthe Distributor's retail sales will beincluded as well. Distributors may notpurchase additional product until at least


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seventy percent (70%) of the previousorder has been sold to end consumers.

• Distributors must develop or service atleast five customers every four-week rollingperiod. These customers can be RetailCustomers, Preferred Customers, or anycombination of the two.

• Distributors are required to furnish theirRetail Customers with a receipt whichspecifies the date of sale, the amount ofsale, the items purchased, and the USANAsatisfaction guarantee. Distributors mustretain all retail sales receipts for a period oftwo years and furnish them to USANA atthe Company's request. Recordsdocumenting the purchases ofDistributors' Preferred Customers will bemaintained by USANA.

5.2 RETAIL CUSTOMER SALES

Retail prices set by USANA arerecommended prices only. Distributors maysell USANA products at any price at or abovethe autoship price. We highly recommendthat the products are sold at wholesale prices.

All Distributors must provide their RetailCustomers with an official USANA salesreceipt.

5.3 EXCESSIVE PURCHASE OF INVENTORYPROHIBITED

USANA strictly prohibits the purchase ofproducts in unreasonable amounts solely forthe purpose of qualifying for commissions,bonuses, or advancement in the USANACompensation Plan. Distributors may notpurchase more than they can reasonably resellor consume in any four-week rolling period,nor encourage others to do so. Distributors arelimited to a product purchase of RM3,000.00per order at wholesale. Distributors mayreceive an exception to this rule if they haveevidence that they hold retail orders exceedingthe limit or submit an explanation justifyingthe need for inventory levels exceeding thislimit.

Distributors are not required to carry inventoryof products or sales aids other than the initialStarter Kit. Distributors who do so may findbuilding a Downline Organisation somewhateasier because of the decreased response time infilling customer orders or in meeting a newDistributor's needs. Each Distributor mustmake his/her own decision with regard to thesematters.

5.4 DEPOSITS

No monies should be paid to or accepted byDistributors for a sale except at the time ofproduct delivery.

SECTION 6—BONUSES AND COMMISSIONS

6.1 BONUS AND COMMISSION CYCLES

USANA pays commissions weekly. ADistributor must review his/her commissionsand report any errors or discrepancies toUSANA within thirty (30) days from the dateof the commission payment. Errors ordiscrepancies which are not brought toUSANA's attention within the thirty-dayperiod will be deemed waived by theDistributor.

6.2 ADJUSTMENT OF BONUSES AND

COMMISSIONS

Distributors earn commissions and bonusesbased on product sales to End Consumers.Accordingly, USANA will adjust commissionsand bonuses earned from any sale when theDistributor or any other End Consumer returnsthe sold product for a refund. USANA willdeduct the sales volume attributable to thereturned product from the Upline Distributor'sgroup volume within the first 2 weeks afterthe refund is given.

6.3 LOSS OF RIGHTS TO COMMISSIONS

You must be an active Distributor and incompliance with the terms of the DistributorAgreement to qualify for commissions andbonuses.


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6.4 UNCLAIMED COMMISSIONS AND CREDITS

Distributors who provide USANA withincomplete or invalid bank accountinformation will have their commission andbonus retained as a credit. Any unclaimedcredit will be held in trust for 6 years, duringwhich time USANA may periodically notifythe distributors in writing of their creditbalance. USANA will charge a fee of RM20.00 for each notification or attemptednotification, which is deducted from theDistributors' credit on account.

SECTION 7—PRODUCT GUARANTEES,RETURNS, AND INVENTORY REPURCHASE

7.1 PRODUCT EXCHANGE GUARANTEE

USANA warrants the quality of its productsand shall exchange any defective product.

Anyone returning a damaged or defectiveproduct must complete the DistributorProduct Exchange or Return Form.

7.2 THIRTY (30) DAY RETURN POLICY

7.2.1 RETAIL CUSTOMERS

USANA obligates its Distributors to honourthe Company's 100%, unconditional, 30-day,money-back guarantee to all Retail Customers.If for any reason a Retail Customer isdissatisfied with any USANA product, he/shemay return the product to the Distributorsfrom whom the product was purchased withinthirty (30) days from the date of purchase for areplacement, exchange, or full refund of thepurchase price. No return or refund will beentertained should the product in question beconsumed by one third or more. If the RetailCustomer requests a refund, the Distributorswho sold the product to the Retail Customermust immediately refund the RetailCustomer's purchase price. (Retail Customersmust return merchandise to the Distributorswho sold it to them; USANA will not acceptreturned merchandise directly from RetailCustomers.) The Distributors, in turn, should

complete a Dissatisfied Consumer ProductReturn and forward the form along with theoriginal sales receipt and returned merchandiseto USANA. USANA will then replace thereturned merchandise with like product andship it to the Distributors. All retail customersmust be provided with two copies of an officialUSANA sales receipt at the time of the sale.The back of the receipt provides the customerwith written notice of his / her rights to cancelthe sales agreement.

7.2.2 PREFERRED CUSTOMERS

USANA offers Preferred Customers a 100%,30-day, money back guarantee on everyproduct order. If for any reason a PreferredCustomer is dissatisfied with any USANAproduct, he/she may return that product to theCompany within thirty (30) days forreplacement, exchange, or full refund of thepurchase price. No return or refund will beentertained should the product in question beconsumed by one third or more.

7.2.3 DISTRIBUTORS

If a Distributor elects to cancel his/herDistributorship during the thirty-day periodimmediately following his/her enrollment,USANA will refund 100% of the price of theStarter Kit and all products purchased as partof the Distributor's initial order (excludingshipping). The canceling Distributor mustreturn the products and the entire Starter Kitto USANA, shipping prepaid, along with aletter explaining that he/she wishes toterminate his/her Distributorship and receive arefund. Please note that this 100% refund (lessshipping) does not apply once a Distributorplaces his/her second product order. After thefirst order, refunds for returned products,Starter Kits, and sales aids are made pursuantto section 7.3. If a Distributor returns his/herStarter Kit and/or merchandise equal to, orexceeding RM400.00, for a refund, the returnconstitutes a Voluntary Cancellation of his/herDistributor Agreement. Moreover, theCompany will adjust the appropriate


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Distributors' Sales Volume and Commissionpursuant to Section 6.2.

7.3 ALL OTHERS RETURNS

After the initial order, a Distributor mayreturn to USANA products, includingpromotional materials and sales aids, purchasedwithin the past 365 days for a refund of 90%of the purchase price (less handling anddelivery charges) if the merchandise is inresalable condition, unless otherwise requiredby law. However, returns that result in refundsin excess of RM400 may result in thetermination of the Distributorship. Moreover,USANA may deduct from the amount of therefund any commissions or bonuses theDistributor may have received as a result of theproducts that he/she is returning.

In Malaysia, USANA will only accept returnof products sold in Malaysia.

7.4 PROCEDURES FOR ALL RETURNS AND

REPURCHASES

To receive a refund, exchange, or replacementon product purchased a Distributor must:

• Obtain a Return MerchandiseAuthorisation Number (RMA#) from theDistributor Services Department. Thisnumber must accompany all returnedproducts;

• Return the product with the originalinvoice to USANA;

• Use proper shipping carton(s) andpackaging materials to return the productto USANA. The Distributor is responsiblefor tracing your return shipment shouldthat be necessary.

If a Distributor returns product from a RetailCustomer, he/she must:

• Send the product to USANA within 10days of the customer's return. The package must be accompanied by acompleted Dissatisfied Consumer Product

Return Form, a copy of the original salesreceipt, and the unused portion in theoriginal container.

• Only the Preferred Customer orDistributor who ordered the product fromUSANA may return it.

• USANA is not liable for items lost intransit.

SECTION 8—DISPUTE RESOLUTION ANDVIOLATION OF AGREEMENT

8.1 DISPUTES BETWEEN DISTRIBUTORS

8.1.1 GRIEVANCES AND COMPLAINTS

When a Distributor has a grievance orcomplaint with another Distributor regardingany practice or conduct in relationship to theirrespective USANA businesses, thecomplaining Distributor should first discussthe problem with the other Distributor. If thisdoes not resolve the problem, the complainingDistributor should report the problem tohis/her upline Gold Director to resolve theissue at a local level. If the matter cannot beresolved, it must be reported in writing to theUSANA Legal Services Department. The LegalServices Department will review the complaintand make a final decision. The complaintshould identify specific instances of allegedimproper conduct and, to the extent possible,identify the relevant dates on which theevent(s) complained of took place, thelocation(s) where they occurred, and all personswho have first hand knowledge of theimproper conduct.

8.1.2 LEGAL SERVICES DEPARTMENT REVIEW

Upon receipt of a written complaint, theUSANA Legal Services Department willinvestigate the matter, review the applicablepolicies, and render a decision on how thedispute shall be resolved. The Legal ServicesDepartment may also issue disciplinarysanctions consistent with the provisions ofSection 8.3.


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8.2 DISPUTES BETWEEN USANA ANDDISTRIBUTORS

8.2.1 ARBITRATION

All disputes and claims relating to USANA,its USANA Compensation Plan, its Products,the rights and obligations of its Distributorsand USANA, or any other claim or cause ofaction relating to product purchase(s) orperformance, either of a Distributor or ofUSANA under the Distributor Agreement,shall be settled totally and finally byarbitration in Salt Lake City, Utah unless thelaws of the state or province in which theDistributor resides expressly require otherwise.There shall be one arbitrator, an attorney atlaw, with expertise in transactional law (therebeing a strong preference for an attorneyknowledgeable in the direct selling industry),selected from the panel which the AmericanArbitration Panel provides. Each party to thearbitration shall be responsible for its owncosts and expenses of arbitration, includinglegal and filing fees. If a Distributor files aclaim or counterclaim against USANA, theDistributor may only do so on an individualbasis and not with any other Distributor or aspart of a class action. The decision of thearbitrator shall be final and binding upon theparties and may, if need be, be reduced to ajudgment in any court of competentjurisdiction. This agreement to arbitrate shallsurvive any cancellation or expiration of theDistributor Agreement.

Nothing in these Policies and Procedures shallprevent USANA from applying to andobtaining from any court having jurisdiction awrit of attachment, temporary injunction,preliminary injunction, permanent injunction,or other available relief to safeguard andprotect USANA's interest prior to, during, orfollowing the filing of any arbitration or otherproceeding, or pending the rendering of adecision or award in connection with anyarbitration or other proceeding.

The existence of any Distributor claim or causeof action against USANA does not precludeUSANA from enforcing the Distributor'scovenants and agreements contained in theDistributor Agreement.

8.2.2 JURISDICTION, VENUE, AND CHOICE OFLAW

Jurisdiction and venue of any matter notsubject to arbitration shall reside in Salt LakeCounty, State of Utah or in the United StatesDistrict Court, in and for the District of Utahunless the laws of the state or province inwhich the Distributor resides expressly requireotherwise. By signing the DistributorApplication Agreement, all Distributorsconsent to jurisdiction within these twoforums. The law of the State of Utah shallgovern disputes involving the DistributorAgreement.

8.3 DISCIPLINARY ACTIONS

Violation of any of the terms and conditions ofthe Distributor Agreement, or any illegal,fraudulent, deceptive, or unethical businessconduct by a Distributor, may result, atUSANA's discretion, in one or more of thefollowing sanctions:

• Violation of any of the terms andconditions of the Distributor Agreement,or any illegal, fraudulent, deceptive, orunethical business conduct by aDistributor, may result, at USANA'sdiscretion, in one or more of the followingsanctions:

• A written warning, clarifying the meaningand application of a specific policy orprocedure, and advising that a continuedbreach will result in further sanctions;

• Probation, which may include requiring aDistributor to take remedial action andwill include follow-up monitoring byUSANA to ensure compliance with theAgreement;


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• Withdrawal or denial of an award orrecognition, or restricting participation inUSANA-sponsored events for a specifiedperiod of time or until the Distributorsatisfies certain specified conditions;

• Suspension of certain privileges ofDistributorship, including but not limitedto placing a product order, participating inUSANA programmes, progressing in theUSANA Compensation Plan, orparticipating as a Sponsor (includingparticipating as an International Sponsor),for a specified period of time or until theDistributor satisfies certain specifiedconditions;

• Withholding commissions or bonuses for aspecified period of time or until theDistributor satisfies certain specifiedconditions;

• Imposing fair and reasonable fines or otherpenalties in proportion to actual damagesincurred by USANA and as permitted bylaw; and/or

• Terminating a Distributorship

SECTION 9—ORDERING

9.1 ORDERING METHODS

Distributors may place orders by telephone,fax, mail, e-mail, through the Internet, orthrough the Autoship Programme. CallCustomer Service for your PersonalIdentification Number (PIN) to order throughthe Internet.

When ordering by phone - be prepared topresent all information requested on theDistributor Product Order Form. Paymentsmust be made by credit card or Direct BankDebit (if already on file.)

When ordering by fax - print informationlegibly on the order form and use the whitecopy to fax. Payments may be made by creditcard or Direct Bank Debit (if already on file.)

When ordering by mail, send completed whiteorder form to UHS Essential Health (M) SdnBhd’s office in Kuala Lumpur.

Keep a copy of the order form for your records.Payment may be made by credit card or DirectBank Debit (if already on file).

9.2 AUTOSHIP PROGRAMME

Distributors and Preferred Customers in goodstanding may participate in the USANAAutoship Programme. A Distributor may inenroll in this programme through theirDistributor Application and Agreement or bycompleting a Distributor AutoshipAgreement, identifying the products theywish to order each four-week rolling period.The credit card or bank account from whichthey authorise payment will be automaticallycharged the amount of the order plusapplicable shipping and sales tax. Distributorsmust ensure that they have adequate funds intheir account the week prior to the processingof their Autoship order.

9.3 GENERAL ORDER POLICIES

On mail orders with invalid or incorrectpayment, USANA will attempt to contact theDistributor by telephone and/or mail to try toobtain payment. If these attempts areunsuccessful after five working days, the orderwill be returned unprocessed. No C.O.D.orders will be accepted. USANA maintains nominimum order requirements.

Orders for products and sales aids may becombined.

9.4 PURCHASING USANA PRODUCTS

Each Distributor must purchase his/herproducts directly from USANA in order toreceive the sales volume credits associated withthat purchase.


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9.5 BACK ORDER POLICY

As a general rule, USANA will not back orderout-of-stock items. However, USANA mayback order Autoship items, if necessary.

9.6 SHIPPING DISPREPANCIES

Failure to notify USANA of any shippingdiscrepancy or damage within thirty (30) daysof shipment will cancel a Distributor's right torequest a correction. Follow the procedure forcorrecting a shipping discrepancy outlined onthe Distributor Product Exchange or ReturnForm.

SECTION 10—PAYMENT AND SHIPPING

10.1 METHODS OF PAYMENT

All forms and authorisations must beaccompanied by the Distributor's signature.

10.1.1 CREDIT CARDS

USANA accepts VISA and MasterCard. In theevent that the charge is declined, the order willnot be accepted. Using someone else's creditcard without their express, written permissionis prohibited and may be grounds forinvoluntarily cancellation of a Distributorship.

10.1.2 DIRECT DEBIT

Distributors who have a bank account withPublic Bank Berhad may opt to pay for theirorders through Direct Debit to their bankaccounts. To do so, a Distributor has tocomplete Public Bank's Direct DebitAuthorisation Form and submit it toUSANA. It may take six to eight weeks forthe Direct Debit process to be approved.

10.2 INSUFFICIENT FUNDS AND DECLINED ORDISPUTED CREDIT

All electronic funds transfers returned unpaidby the bank will incur a RM20.00 charge. Anyoutstanding balance owed to USANA will be

deducted from subsequent commission orbonus cheques. Failure to resolve anyoutstanding balance owed to USANA mayresult in the involuntary cancellation ofdistributorship.

10.3 AUTOSHIP PROGRAMME

• Once initiated, the programme willremain in effect until a writtencancellation is received at the USANAPetaling Jaya.

• Any changes or cancellation must bereceived in writing no later than theTuesday of the week prior to the Autoship.

• Participation in the Autoship Programmeis purely optional and does not relieve aDistributor from compliance with theretail sales requirement or fromcompliance with the seventy percent(70%) resale rule.

SECTION 11—DISTRIBUTOR SERVICES

11.1 CHANGES TO YOUR DISTRIBUTORSHIP

11.1.1 IN GENERAL

Each Distributor must immediately notifyUSANA of all changes to the informationcontained on the Distributor Application andAgreement. Distributors may modify theirexisting Distributor Agreement by submittinga written request, a properly executedDistributor Application and Agreement, andappropriate supporting documentation.

11.1.2 ADDITION OF CO-APPLICANTS

When adding a co-applicant to an existingDistributorship, USANA requires both awritten request and a properly completedDistributor Application and Agreementcontaining the applicant's and co-applicant'sidentification numbers and signatures. Themodifications permitted within the scope of


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this paragraph do not include a change ofsponsorship.

11.2 DOWNLINE GENEALOGY REPORTS ANDCOMMISSION STATEMENTS

11.2.1 DOWNLINE GENEALOGY REPORTS

Downline Genealogy Reports are availableonline for Distributors who subscribe to theDownline Management System (DLM). TheReports contain trade secret informationwhich is proprietary to USANA. Refer tosection 3.6.2 for restrictions on using thesereports.

11.2.2 COMMISSION STATEMENTS

Commission Statements are available onlinefor all active Distributors receiving acommission, and are mailed to Distributorsonly on request.

11.3 ERRORS OR QUESTIONS

If the information on your downline genealogyreport is inaccurate or incomplete, you mustnotify USANA within 30 days of discoveringthe inaccuracy.

11.4 RESOLVING PROBLEMS

If you have any questions regarding shipments,orders, commissions and bonuses, or theUSANA Compensation Plan, please write orcall the Distributor Services Department.

SECTION 12—INACTIVITY ANDTERMINATION POLICIES

12.1 INACTIVITY

Distributors who do not meet the PersonalSales Volume requirements specified in theUSANA Compensation Plan for any four-weekrolling period will not receive a commissionfor the sales generated through their DownlineOrganisation for that four-week rolling period.

12.2 INVOLUNTARY CANCELLATION

A Distributor's violation of any of the terms ofthe Distributor Agreement, including anyamendments which may be made by USANAin its sole discretion from time to time,constitutes a material breach of the DistributorAgreement and may result, at USANA'soption, in any of the Disciplinary Actionslisted in Section 8.3, including cancellation ofhis/her Distributorship. InvoluntaryCancellation of a Distributorship will result inthe Distributor's loss of all rights to his/herDownline Organisation and any bonuses andcommissions generated thereby.

When a Distributorship is involuntarilycanceled, the Distributor will be notified bycertified mail at the address on file with theCompany. Cancellation is effective on the dateon which written notice is mailed via certifiedmail, return receipt requested, to theDistributor's last known address or when theDistributor receives actual notice ofcancellation, whichever occurs first. In theevent of such Involuntary Cancellation, theDistributor must immediately cease torepresenting himself/herself as a USANADistributor.

The Distributor may appeal the termination tothe USANA Legal Services Department. TheDistributor's appeal must be in writing andmust be received by the company withinfifteen (15) calendar days of the date ofUSANA's cancellation letter. If USANA doesnot receive the appeal within the fifteen-dayperiod, the cancellation will be final. TheDistributor must submit all supportingdocumentation with his/her appealcorrespondence. The written appeal will bereviewed by the Legal Services Department. Ifthe Distributor files a timely appeal oftermination, the Legal Services Departmentwill review and reconsider the termination,consider any other appropriate action, andnotify the Distributor in writing of its


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decision. This decision of the Legal ServicesDepartment will be final.

A Distributor whose Distributor Agreement isinvoluntarily canceled may reapply to becomea Distributor twelve (12) calendar monthsfrom the date of cancellation. Any suchDistributor wishing to reapply must submit aletter to the USANA Legal ServicesDepartment setting forth the reasons whyhe/she believes USANA should allow him orher to operate a Distributorship. It is withinUSANA's sole discretion whether to permitsuch an individual to again operate a USANAbusiness.

12.3 WRITTEN CANCELLATION

A Distributor or a Preferred Customer maycancel his/her Agreement with USANA at anytime and for any reason by providing writtennotice to USANA indicating his/her intent todiscontinue his/her Distributorship orPreferred Customer status. The written noticemust include the Distributor's or PreferredCustomer's signature, printed name, address,and appropriate identification number.

12.4 EFFECT OF TERMINATION

Following a Distributor's voluntary orinvoluntary cancellation, such formerDistributor shall have no right, title, claim, orinterest to the Downline Organisation whichhe/she operated or any bonus and/orcommission from the sales generated by theorganisation. Following a Distributor'svoluntary or involuntary cancellation, theformer Distributor shall not hold himself orherself out as a USANA Distributor, shall nothave the right to sell USANA products orservices, must remove any USANA sign frompublic view, and must discontinue using anyother materials bearing any USANA logo,trademark, or service mark.

A Distributor who is voluntarily canceled willreceive commissions and bonuses only for the

last full calendar week prior to his/hercancellation. A Distributor whose Agreementis involuntarily canceled will receivecommissions and bonuses only for the last fullcalendar week prior to cancellation, unlessmonies were withheld by the Company duringan investigation period. If an investigation ofthe Distributor's conduct results in his/herinvoluntary cancellation, he/she shall not beentitled to recover withheld commissions andbonuses.

Upon request, a Distributor who voluntarilycancels his/her Distributor Agreement maybecome a Preferred Customer by submitting aPreferred Customer Agreement to USANA.

SECTION 13—DEFINITIONS

DEFINITION OF TERMS

Active Distributor — A Distributor whosatisfies the minimum Personal Sales Volumerequirements as set forth in the USANACompensation Plan.

Business Centre — The term “BusinessCentre” is defined in the USANACompensation Plan.

Business Development System (BDS) — Aselection of USANA training materials andbusiness support literature that each newDistributor purchases. The BDS is sold toDistributors at USANA's cost.

Cancellation — Termination of an individual'sDistributor Agreement or Preferred CustomerAgreement. Cancellation may be eithervoluntary or involuntary.

Involuntary Cancellation — The terminationof a Distributor Agreement which is initiatedby USANA.

Voluntary Cancellation — The termination ofa Distributor or Preferred CustomerAgreement instituted by the Distributor orPreferred Customer who elects to discontinuehis/her affiliation with USANA for any reason.


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Commissionable Products — All USANAproducts on which commissions and bonusesare paid. Business Development Systems andsales aids are not commissionable products.

Company — The term “Company” as it isused throughout these Policies and Procedures,and in all USANA literature, means USANAHealth Sciences, Inc. and UHS EssentialHealth (Malaysia) Sdn Bhd.

Distributor — An individual or businessentity who has executed a distributorAgreement that has been accepted by USANA

Distributor Agreement — The termDistributor Agreement, as used in the Policiesand Procedures, refers to the DistributorApplication and Agreement, USANA'sPolicies and Procedures, and the USANACompensation Plan.

Downline Leg — All individuals, startingfrom a person directly placed under you, whoare then linked directly or indirectly to himor her represent one leg in your downlineorganisation.

End Consumer — A person who purchasesUSANA products for the purpose of personallyconsuming them.

Four-Week Rolling Period — The four payperiods (four Fridays) after a Distributor placesa product order of 100 volume points or more.If a Distributor places an order on a Friday, theFriday on which the order is placed counts asthe first of the four pay periods in theDistributor's volume period.

(See Four-Week Rolling Period Calendar forfurther clarification.)

The maintenance of a Distributor's activestatus during a volume period is critical to theDistributor's eligibility to earn bonuses andcommissions.

Genealogy Report — A report generated byUSANA that provides critical data relating tothe identities of Distributors and sales

information of each Distributor's DownlineOrganisation. This report contains proprietarytrade secret information. (See Section 3.6.2).

Group Sales Volume — The commissionablevolume of USANA products generated by aDistributor's Downline Organisation. GroupSales Volume does not include the PersonalSales Volume of the subject Distributor.(Starter Kits and sales aids have no SalesVolume.)

Immediate Household — A Distributor, his orher spouse, and dependent children.

Leg — See “Downline Leg” above.

Level — The layers of downline Distributorsin a particular Distributor's DownlineOrganisation. This term refers to therelationship of a Distributor relative to aparticular upline Distributor, determined bythe number of Distributors between them whoare related by sponsorship.

Lower Producing Leg - When comparing theGroup Sales Volume (GSV) of two differentlegs of your organisation, the leg with thelower GSV is the lower producing leg. If theygenerate the same GSV, then eigher leg canbe considered the lower producing leg.

Malaysian Distributor - A Distributor whoexecuted a USANA Malaysia DistributorApplication and Agreement. A Malaysiancitizen who resides overseas, and who enrollswith USANA in his or her country ofresidence is not considered a MalaysianDistributor.

Official USANA Material — Literature, audioor video tapes, and other materials developed,printed, published, or distributed by USANA.

Personal Sales Volume (PSV) — Thecommissionable value of products purchasedby a Distributor.

Titled Distributor — A Distributor who hasreceived commission and a title (i.e., Sharer orBeliever, for group volume sales.)


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