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Distributor Policies and Procedures - Section 4

Sponsor/Placement Changes and Transfers

A. Sponsor & Placement Changes. A Distributor may apply to change the Sponsor and/or Placement of itself or a personally Sponsored Distributor, subject to the limitations described below. However, Distributor is permitted only one Sponsor change and one Placement change as described herein, and the respective change will be final. Because of the need to maintain the integrity of Downline Organizations, a Sponsor/Placement change may not be feasible.

1. A fee of thirty five dollars ($35 USD or equivalent local currency) will be charged for each Sponsor/Placement change request submitted. This fee will be charged even if the request is rejected by the Company. Change-request forms must be completed and received at the Company by 5 p.m. Mountain Time (-7 UTC Standard and -6 UTC Mountain Daylight Time) on the 20th day of the month. Requests received after this deadline will be processed for the following month. A discounted fee of twenty five dollars ($25 USD or equivalent local currency) will apply to all Sponsor/Placement changes submitted and received at the Company by 5 p.m. Mountain Time (-7 UTC Standard and -6 UTC Mountain Daylight Time) on the 15th day of the month.

2. .A current and accurate Distributor Agreement and Statement of Beneficial Interest, if applicable, must be on file for all Distributors requesting a Sponsor/Placement change.

B. Placement Change Process. A Distributorship may be moved to a new position in the Downline Organization of its immediate Placement if its Distributor obtains the written authorization of the original Sponsor and the Distributor itself, provided that:

1. the move is within ninety (90) days from the Date of Sign-up;

2. the move is three (3) levels or less below its current Placement; and

3. the Distributor’s Downline Organization has not surpassed 2,500 in monthly group Volume.

C. Moving Up. A Distributorship may be moved to a new Placement Upline provided it obtains written authorization from each Distributorship it moves above in Placement. Likewise, A Distributorship may be moved Upline to a new Sponsor provided its Distributor obtains written authorization from each Distributorship it moves above in Sponsorship.

D. Sponsor Change Process. A Distributorship may be moved to a new Sponsor within its original Sponsor’s Downline Organization if the Distributor obtains the written authorization of the original Sponsor, provided that:

1. the move is within six (6) months from the Date of Sign-up; and

2. the Distributor has not reached the Title of 20K.

E. Selling or Transferring a Distributorship. A Distributorship sale or transfer occurs when a Person assigns, sales, or transfers ownership or control of a Distributorship to another Person. A Distributor may sell, assign, or otherwise transfer the Contract, subject to the conditions herein. The transferee Distributor will retain the same Downline Organization and the same Rank/Title held before the approved transfer.

F. Right of First Refusal. Distributorship transfers are subject to a Right of First Refusal (“RFR”) to the Company, followed by a RFR to the transferring Distributor’s direct Placement Upline who is not in violation of the Contract and who the previous month qualified for earnings under the Compensation Plan (the “Qualified Direct Upline”, as used in this section only).

1. If a Distributor receives a Bona Fide Offer (as hereinafter defined) to purchase his or her Distributorship Rights, the Distributor shall first offer to sell such Distributor Rights to the Company on the same terms and conditions contained in the Bona Fide Offer. The Distributor shall deliver the Bona Fide Offer in writing to the Company, and the Company shall have fifteen (15) business days in which to accept the offer. A “Bona Fide Offer” is an arm’s length written offer to purchase the Distributorship Rights by a Person that is not a Distributor, which the Company, in its sole discretion, determines to be a legitimate offer. Evidence of a legitimate offer may include, but is not limited to, cash or securities deposited into an escrow account, evidence of a loan commitment, and other substantial steps taken for the sole purpose of purchasing such Distributorship Rights.

2. If the Company fails to exercise its RFR within the fifteen (15) day time period, the Distributor shall extend the same offer to its Qualified Direct Upline on the same terms and conditions as those contained in the Bona Fide Offer. The Company shall convey the Bona Fide Offer by providing written notice of the same to the Distributor’s Qualified Direct Upline. The Qualified Direct Upline shall have ten (10) business days in which to accept or reject such offer. If the Qualified Direct Upline accepts the offer, he or she must provide written notice to the Company upon acceptance.

3. If the Qualified Direct Upline fails to exercise his or her RFR within the time allotted, the Distributor may transfer the Distributorship to the third party according to the same terms and conditions contained in the Bona Fide Offer, provided, however, that the Distributor comply with all other transferring procedures contained in this Section and as may be established from time to time by the Company.

4. The RFR shall apply to each new Bona Fide Offer received by the Distributor.

5. The following circumstances are not subject to the RFR requirements in subparagraph 1 above; however, each instance requires that an amended Distributor Agreement and Statement of Beneficial Interest be filed with the Company.

a. When the name of a Person who has a Beneficial Interest in the Distributorship is added to the Distributor Agreement (e.g., a wife adding her husband).

b. When the name of a Person who no longer has a Beneficial Interest in the Distributorship is removed from the Distributor Agreement (e.g., a member who is removed from a limited liability company or a shareholder who sells all of his or her interest in a corporation.)

c. When the Distributor is an individual and is transferring his or her ownership rights to a legal entity in which only that Distributor has a Beneficial Interest (e.g., a husband and wife form a limited liability company to operate their Distributorship and are the only members/ managers).

G. Limitations on Sales and Transfers.

1. An existing Distributor may not purchase another Distributorship.

2. A Distributor who sells or transfers his or her Distributorship may not reapply to become a Distributor under another Sponsor for a period of not less than six (6) months after the Company has approved the sale.

3. A Person may not merge with, or acquire an interest in, a pre-existing Distributorship if the Person has engaged in Distributor Business within the past two (2) years.

4. The Company must first give express written approval for any Distributorship sale or transfer, which the Company may grant in its sole discretion.

5. Should a Distributor transfer his or her Distributorship and Distributorship Rights to the Qualified Direct Upline, the Distributorship will be merged into the Qualified Direct Upline’s existing Distributorship in accordance with the Distributorship transfer procedures.

H. Process. Additional processing requirements include:

1. The selling/transferring Distributor must either provide or have on file a current and accurate Distributor Agreement and Statement of Beneficial Interest for all Business Entities requesting the transfer.

2. Specific documentation available on the Company’s website must be submitted in order to process a sale or transfer of a Distributorship.

3. An application for a sale or transfer must be received by the Distributor Education and Conduct department at the Company by the 20th day of a month in order for the change to be effective for the given month.

4. Any requests received after the 20th will be processed for the following month.

5. A one hundred dollar ($100 USD or local currency equivalent) fee will be assessed per each request.

6. An additional thirty-five dollar ($35 USD or local currency equivalent) fee may be assessed for any application that is incomplete, incorrect, or rejected.

I. Interpretation. The interpretation of these Policies & Procedures pertaining to sale or transfer of a Distributorship will be made in a manner that considers and serves the best interests of the Company. The Company reserves the right to reject any transferee or buyer.

J. Change of Residence: If a Distributor changes his or her country of residence, the Distributor must submit to the Company: (i) a Distributor Agreement for the new country of residence (with the “AMENDED” box at the top checked); (ii) a signed and dated notification request (iii) authoritative documentation as proof of the new residence (e.g., a copy of the driver's license, passport, etc.); and (iv) a one hundred dollar ($100USD or local currency equivalent) processing fee. The Distributor will be responsible for complying with all terms and conditions of the Contract, including those specific to the new country of residence.

Section 9 Termination

A. Termination.
1. A Distributor may terminate the Contract by failing to renew on the annual anniversary of the acceptance of his or her Distributor Agreement or by submitting to the Company in writing a request to terminate.

2. The Company may terminate the Contract if the Distributor violates the terms of the Contract and any amendments thereto.

3. Upon termination, the Company may in its sole discretion retain the distributorship or dissolve and remove it from the Sponsorship and Placement trees.

B. Return of Confidential Information. A Distributor must return all Confidential Information over which he or she has direct or indirect control to the Company upon termination or upon demand of the Company. If any such Confidential Information cannot be returned because it is in electronic format, the Distributor shall permanently delete and erase the Confidential Information upon termination or upon demand.

C. Buyback: The Company will buy back Products pursuant to the refund policies in Section 6 from a Distributor who voluntarily terminates his Distributorship. Subject to the restrictions included herein, any distributor kit and sales material, opened or unopened, may be returned within thirty (30) days of the shipping date for a full refund, minus shipping costs. If a Distributorship is in breach, the Company reserves the right to stop or delay the buy-back
process until such time as it has determined what, if any, actions are have taken place.

D. Effects of Termination for Breach of Contract.
1. A Distributor whose Contract is terminated by the Company must wait one (1) year before applying for a new Distributorship. During that time, the Distributor can have no Beneficial Interest in any other Distributorship. Prior to applying, he or she must first petition the Company through the Distributor Education and Conduct department. The petition will include an affidavit that must be signed under penalty of perjury and notarized in which the Distributor confirms that he or she has had no Beneficial Interest in any Distributorship during the prior one year.

2. Upon termination, a Distributor’s license to the Distributorship is revoked and all rights to the Distributor Business are terminated. Any unpaid commissions may be withheld by the Company for 30 days beyond their due date to determine damages, if any. If damages are assessed, the Distributor consents to the damages being offset from the commissions.

3. The Company may elect to reorganize the Downline of a Distributorship terminated for breach in a manner that serves the best interests of the Company and the Downline.

4. Where the Company elects to revoke a license to a Distributorship in which there is more than one Beneficial Interest holder, the following may apply:
a. the departing Beneficial Interest holder(s) must relinquish all rights to, and interests in,
the Distributorship;
b. The Company may not divide nor reassign any of the Downline Organization; and
c. The Company may not split Commissions between the prior or current Beneficial
Interest holders of the Distributorship.

E. Effects of Voluntary Termination by the Distributor.
1. The Contract can be voluntarily terminated by a Distributor who is not in breach of the Contract for any reason, at any time, by providing written notice to the Company signed by all Person(s) listed on the Distributor Agreement. The termination is effective on the date the Company receives the written notice, although processing of the termination request may be delayed until the following month if there is current Volume in the Distributorship.

2. Upon termination, a Distributor’s license to the Distributorship is revoked and all rights to the Distributor Business are terminated.

3. A Distributor who voluntarily terminates may re-apply for a new Distributorship under a new Sponsor no earlier than six (6) months from the date the Company receives written notice of the termination. During this six (6)-month period, the voluntarily terminated Distributor is not permitted to participate in any Distributor Business or have a Beneficial Interest in any Distributorship. Prior to applying, the Distributor must first petition the Company through the Distributor Education and Conduct department. The petition will include an affidavit that must be signed under penalty of perjury and notarized in which the Distributor confirms that he or she has had no Beneficial Interest in any Distributorship during the prior one year.

4. A Distributor may not terminate voluntarily if the Distributorship is not in good standing with
the Company.