1.3 Policies Incorporated in the Distributor Agreement
Throughout these Policies and Procedures, whenever the term "Agreement" is used, it refers collectively to the Young Living Distributor Application and Agreement, the order form, the Policies and Procedures, and the compensation plan. These documents are incorporated by reference into the YL Distributor Agreement (in their current form and as amended by Young Living). It is the responsibility of each distributor to read, understand, adhere to, and ensure that he/she is operating under the most current version of the Policies and Procedures.

1.4 Code of Ethics
Young Living has established the following Code of Ethics to govern the Independent Distributor's business. You are required to become familiar with and agree to abide by this code as a condition of extending your Independent Distributor relationship. Violations of the Code of Ethics or the Policies and Procedures may result in termination of your distributor contract and your opportunity to participate in the Young Living business. Be sure you understand the principles and policies each of these code commitments entails.

Code of Ethics

1.5 Amendments/Acceptance
The Company may from time to time amend the terms and conditions of the Distributor Agreement, Policies and Procedures, Compensation Plan, and Product Price List. The changes will become effective fifteen (15) days after first published by Young Living. Such amendments or modifications shall be made known through official Young Living publications distributed to all active distributors or posted to the web (e.g., e-News).

If a distributor is not willing to accept these changes, Young Living must be notified in writing within these fifteen (15) days prior to the change being effective. Any continued business, ordering, acceptance of a commission or bonus payout or any other benefit by a distributor pursuant to this Agreement constitutes acceptance of this Agreement in whole with any and all amendments.

1.6 Delays
Young Living shall not be responsible for delays and failures in performing its obligations due to circumstances beyond its reasonable control. This includes, without limitation, acts of God, strikes, labor difficulties, riots, wars, fire, flood, death, curtailment or interruption of a source of supply, government decrees or orders, etc.

1.7 Partial Validity
If any provision of the Distributor Agreement, in its current form or as it may be amended, is found to be invalid or unenforceable for any reason, only the invalid portion(s) of the provision shall be severed. The remaining terms and conditions shall remain in full force and effect and shall be construed as if such invalid or unenforceable provision never comprised a part of the Agreement. The continuation of a distributor's Young Living business or a distributor's acceptance of bonuses or commissions constitutes acceptance of any and all amendments.

1.8 Waiver
Young Living never forfeits its right to require compliance with this Agreement or with applicable laws and regulations governing business conduct. Only in rare circumstances will a policy be waived, and the Compliance Officer or another officer of the Company will convey such waivers in writing. The waiver will apply only to that specific case.

While Young Living attempts to enforce the Agreement uniformly, failure to enforce any provision of this Agreement does not waive Young Living's right to enforce any provisions with that same distributor or any other distributor.

1.9 Titles Not Substantive
The titles and headings to these Policies and Procedures are for reference only and therefore do not constitute and shall not be construed as substantive terms of the Distributor Agreement.

SECTION 2 - BECOMING A DISTRIBUTOR

2.1 Requirements to Become a Young Living Distributor
To become a Young Living distributor, each applicant must:

The Company reserves the right to reject any application from a new distributor.

2.2 Enrollment Kit
The applicant is required to purchase a Young Living Start Living Kit ($40.00) or an enrollment kit, containing the Start Living Kit, in order to become a distributor and receive wholesale pricing. The Start Living Kit contains materials designed to familiarize new distributors with Young Living's products, services, sales techniques, sales aids, and other training materials. The kit also includes samples of various products and promotional tools.

2.3 Distributor Application
Applicants must submit a Distributor Application and Agreement form to Young Living. Applications may be submitted through mail, fax, or the official Young Living website and must be received within thirty (30) days of enrollment to continue receiving distributor benefits. If not received, the applicant's account will be placed on hold until the form is received.

If a distributor, for whatever reason, fails to submit a completed Distributor Application, they hereby consent to these Policies and Procedures in their entirety, by participating as a distributor and receiving distributor pricing on orders.

2.4 Telephone Registration
You may also register via telephone. However, a completed Distributor Application, Agreement, and Order form must be submitted and received by corporate headquarters within thirty (30) days of any telephone registration. Failure to submit a completed application by the thirty-day deadline negates your ability to purchase Young Living products.

Preferred Customers may register via telephone and are not required to submit a Distributor Agreement.

2.5 Web Applications
If you register via the website (www.youngliving.com) or any official replicated website, you will not need to submit a paper application.

SECTION 3 - GENERAL POLICIES

3.1 Independent Contractor Status
As a Young Living distributor, you are an independent sales contractor and are not a purchaser of a franchise or business opportunity. The agreement between you and Young Living does not create an employer/employee relationship, agency, partnership, or joint venture. You have no authority (expressed or implied) to bind the Company to any obligation. You are encouraged to establish your own goals, hours, and methods of sale as long as you comply with applicable laws and the terms and conditions of the Distributor Agreement.

3.2 Types of Customers
Member:
The generic term used to identify a Young Living distributor, customer, or professional account.

Customer:
A member who chooses not to participate in the Young Living business opportunity, but rather desires only to purchase the products directly from the Company for personal consumption. Customers purchase products at the published customer/retail price. Customers' purchases apply toward the sponsor's Personal Volume (PV). Thus, orders placed by any of your customers count to qualify you in the compensation plan as if you had placed the order personally. Customers do not participate in the Young Living business or network marketing plan.

Preferred Customer:
A customer who is participating in the Essential Rewards autoship program (see Section 9.2). Preferred customers purchase products at preferred customer prices, which are discounted 12% below the published customer price. Preferred customers' purchases apply toward the sponsor's Personal Volume (PV). Thus, orders placed by any of your preferred customers count to qualify you in the compensation plan as if you had placed the order personally. Preferred customers do not participate in the Young Living business or network marketing plan and must participate in the Essential Rewards autoship program.

Young Living reserves the right to accept or reject new customers. A customer may become a distributor at any time by completing and submitting the Distributor Application and Agreement.

Distributor:
A distributor (you) may purchase product from Young Living at the published wholesale price and have the potential of earning commissions and bonuses based on qualification and achievement rank in the Young Living compensation plan. (See the published compensation clan details for specific information.) When enrolling in Young Living, you must read and agree to abide by the Policies and Procedures of Young Living and submit a completed Distributor Application and Agreement. (See Section 2.)

Professional:
A special account type for business entities that desire to purchase products for resale in their business establishment. Professional memberships will only be granted to those who submit a verifiable business license and Federal Employer Identification Number (EIN). Professionals receive a discount from the published customer price based on their order amount and the following schedule:

3.8 Taxes
3.8.1 Income Taxes
You are responsible for paying local, state, and federal income taxes on any earnings generated through your Young Living business. Distributors who enroll are required by law to provide their Social Security or Federal Tax Identification Number for tax reporting purposes. Those who do not submit a valid tax ID number may be subject to backup withholdings, possible processing fees, customer status change, and may be required to submit a W-9 form or other tax documentation. Any fines or penalties incurred by Young Living because of an incorrect taxpayer ID number or name will be your responsibility and you agree to reimburse Young Living for these costs. Every year, Young Living will provide an IRS Form 1099 MISC (Non-Employee Compensation) earnings statement to each U.S. resident who falls into one of the following categories:

a) Had earnings over $600 in the previous calendar year; or
b) Made purchases during the previous calendar year in excess of $5,000.

Preferred customers and customers are not required to provide their Social Security or Federal Tax Identification Number to Young Living.

Changes to a SSN or TIN must be received via a completed W-9 form. The name and TIN on a member's account must match. These forms must match the signature of the owner on the account. For tax reporting purposes, changes to these numbers will result in the creation of a new account, therefore assigning a new member number to ensure that the correct name is used with the correct TIN and owner of the account. No previous 1099s may be reissued under the new SSN or TIN. Earnings made before the change will be reported on the original TIN. Earnings after any change will be recorded on the new TIN.

A co-applicant may be added with the consent of the primary distributor. Taxes will be reported on the primary distributor's tax number.

3.8.2 Sales Taxes
Young Living is required to collect and remit sales taxes on your behalf based on the published customer price of the product and according to tax rates of the state in the "ship to" address on any given order. If you have a physical business location where you are retailing product, you must submit to the Company a valid resale exemption certificate, a business license, and a picture of the store front. Young Living reserves the right to verify the validity of the resale certificate and some evidence of resale. The responsibility of collecting and remitting sales taxes to the appropriate authorities will then fall to you. Any questions concerning retail tax requirements should be directed to your tax advisor.

3.9 Distributor Claims and Representation
3.9.1 Indemnification
You are fully responsible for all verbal and written statements you make regarding Young Living's products, services, and the Compensation Plan which are not expressly contained in official Young Living materials. You agree to indemnify Young Living and Young Living's directors, officers, employees, and agents, and hold them harmless from any and all liability including judgments, civil penalties, refunds, attorney fees, court costs, or lost business incurred by Young Living as a result of the distributor's unauthorized representations or actions. This provision shall survive the termination of the Distributor Agreement.

3.9.2 Product Claims
No improper claims about the products may be made. In particular, you may not make any claim that Young Living's products are useful in the prevention, treatment, or cure of any disease or condition. Do not make any statements or claims that are false or misleading concerning Young Living's products. You must comply with all laws, both state and federal, regarding any statements made.

You may not diagnose or prescribe any Young Living product unless you are a licensed medical professional authorized to do so. Anyone improperly diagnosing or prescribing Young Living's products may jeopardize the future of Young Living and all of its distributors and therefore will be subject to termination of their distributorship.

3.9.3 Income Claims
No false or misleading income projections may be made to prospective distributors. In their enthusiasm, distributors are occasionally tempted to represent hypothetical income figures based upon the inherent power of network marketing as actual income projections. This is counterproductive since new distributors may be quickly disappointed if their results are not as extensive or as rapid as a hypothetical model would suggest. The income potential of a Young Living distributor is great enough to be highly attractive in reality without resorting to artificial and unrealistic projections.

Moreover, the Federal Trade Commission and several states have laws or regulations that regulate or even prohibit certain types of income claims and testimonials made by persons engaged in network marketing. While distributors may believe it beneficial to provide copies of checks or to disclose the earnings of themselves or others, such approaches have legal consequences that can negatively impact Young Living, as well as the distributor making the claim, unless appropriate disclosures required by law are also made contemporaneously with the income claim or earnings representation. Because Young Living distributors do not have the data necessary to comply with the legal requirements for making income claims, a distributor, when presenting or discussing the Young Living opportunity or Compensation Plan to a prospective distributor, may not make income projections, income claims, or disclose his or her Young Living income (including the showing of checks, copies of checks, bank statements, or tax records). Young Living Distributors must comply with all local and federal laws.

3.10 Deceptive Practices
3.10.1 Unauthorized Recruiting
You are free to participate in other business ventures. However, during the term of this Agreement, you may not recruit other Young Living distributors or customers into any other venture. The term "recruit" means actual or attempted solicitation, enrollment, encouragement, or effort to influence in any other way, either directly or indirectly or through a third party, another Young Living distributor to participate in another multi-level, network marketing, or direct sales opportunity. This conduct constitutes recruiting even if the distributor's actions are in response to an inquiry made by another distributor, preferred customer, or customer.

3.10.2 Cross-Line Recruiting
Actual or attempted cross-line recruiting or sponsoring is strictly prohibited. "Cross-line recruiting" is defined as the sponsoring or attempted sponsoring of an individual or entity that already has a current Distributor Agreement on file with Young Living within a different line of sponsorship or with a different sponsor.

The use of a spouse's name, trade names, DBAs (Doing Business As), assumed names, corporations, trusts, federal ID numbers, or fictitious ID numbers to circumvent this policy is prohibited.

You shall not demean, discredit, or defame another Young Living distributor especially in an attempt to entice another distributor to become part of your marketing organization.

3.10.3 Bonus Buying and Stacking
"Bonus Buying" includes (a) the enrollment of individuals or entities without the knowledge of and/or execution of a Distributor Application and Agreement by such individuals or entities; (b) the fraudulent enrollment of an individual or entity as a distributor or customer; (c) the enrollment or attempted enrollment of non-existent individuals or entities as distributors or customers (phantoms); or (d) the use of a credit card by or on behalf of a distributor or customer when the distributor or customer is not the account holder of such credit card.

The term "Stacking" includes: (a) the failure to transmit to Young Living, or the holding of a Distributor Application and Agreement in excess of two (2) business days after its execution; (b) the placement or manipulation of Distributor Applications and Agreements for the purpose of maximizing compensation pursuant to Young Living's Compensation Plan; (c) providing financial assistance to new distributors for the purpose of maximizing compensation pursuant to Young Living's Compensation Plan; or d) buying products or drop shipping through another's account to increase the payout of your distributorship.

Bonus Buying and Stacking are material breaches of these Policies and Procedures and are strictly and absolutely prohibited.

3.10.4 Repackaging and Relabeling
You may not relabel, alter the labels of, repackage, or refill any Young Living product. Young Living's products must be sold in their original containers only. Such relabeling or repackaging would violate governing laws, which could result in severe criminal penalties.

3.11 Downline Genealogy Reports
The Young Living Genealogy Reports are confidential and contain proprietary business trade secrets. You may not use the report for any purpose other than for developing and supporting your Young Living business.

During any term of the Distributor Agreement and following the termination or expiration of the Agreement between you and Young Living for any reason whatsoever, you shall not, on your own behalf or on behalf of any other person, partnership, or other entity:

If you are the meeting leader:

• You should not arrange for a disease-cure testimonial.
• You should not personally give a disease-cure testimonial.
• If there is an impromptu disease-cure testimonial from someone, redirect the discussion by saying, "Our supplements are designed to improve nutrition; they are not intended to diagnose, treat, cure, or prevent any disease. However, scientific research has established a connection between nutrition and many disease conditions."

Third-party scientific literature that is compliant with local, state, and federal law may be distributed at a meeting but must be placed separate and apart from promotional material.

5.8 YLEO Personal Websites
Young Living offers a personalized website to assist in your marketing efforts. Contact DNS for more details or log in to your Virtual Office at the corporate website for more information.

SECTION 6 - SALES REQUIREMENTS

6.1 Product Sales
The Young Living Compensation Plan is based upon the sale of Young Living's products and services to end consumers. You must fulfill specified personal and downline organization sales requirements (as well as meet other responsibilities set forth in these Policies and Procedures) in order to be eligible for bonuses, commissions, and advancement to higher levels of achievement. The following sales requirements must be satisfied in order for you to be eligible for commissions:

• A minimum of 70% of your orders must be sold to customers, Preferred Customers, or other end users. The sales volume of your personally enrolled Preferred Customers shall be included with the sales determining compliance with the 70% requirement. You may not purchase additional product until at least 70% of the previous order has been sold to end consumers.
• You are required to furnish your customers with a sales receipt, which specifies the date of sale, the amount of sale, the items purchased, and the Young Living satisfaction guarantee. Additionally, if you sell product inventory to other distributors, you must provide the purchaser with a sales receipt. You should maintain copies of all sales receipts for a period of two (2) years and furnish them to Young Living at the Company's request. Young Living will maintain records documenting the purchases of distributor's customers and direct purchase customers.
• Young Living distributors agree not to stock excessive inventory and to abide by the 70% rule, which is that 70% of the distributor's inventory has been sold or consumed prior to ordering more. By ordering more product, the distributor certifies that 70% of all prior orders has been consumed or sold. The distributor also agrees not to purchase inventory for the sole purpose of qualifying for compensation payments.

6.2 Nonmembers
You may personally sell Young Living's products to nonmembers at any price you choose.

6.3 Customers and Sales Requirements
Nonmember, preferred customer, and customer orders satisfy customer sales requirements.

6.4 Excessive Purchases of Inventory Prohibited
Young Living strictly prohibits the purchase of products in unreasonable amounts solely for the purpose of qualifying for commissions, bonuses, or advancement in the Compensation Plan. You may not purchase more than you can reasonably resell or consume in any month, nor encourage others to do so.

6.5 No Price or Territory Restrictions
You are not required to sell Young Living's products at the suggested customer prices set by Young Living in the Young Living Product Price List. You may sell Young Living's products at any price you choose. There are no exclusive territories granted to anyone. No franchise fees are required.

SECTION 7 - COMMISSIONS AND BONUSES

7.1 Commissions and Bonus Checks
You must be active and in compliance with this Agreement to qualify for compensation. As long as you comply with the terms of the Agreement, Young Living shall pay commissions on approximately the 17th of each month for the prior month's sales. Commission amounts under $10 will not be issued as a check but retained as a credit on account for future product purchases.

7.2 Recap Statements
Detailed reports are available online in the Virtual Office of the corporate website. If you do not have Internet access, you may request that the report be faxed or mailed to you for a small fee.

7.3 Adjustments
Distributors agree that adjustments will be made to your commission check for any processing fees, unpaid balances, or debts owed for other services. When a product is returned to Young Living for a refund or is repurchased by the Company, the bonuses and commissions attributable to the returned or repurchased product(s) will be deducted from any future commission checks, including that of the upline. Any other debt may be offset against commission checks.

7.4 Deductions/Maintenance Fees
A monthly maintenance fee is assessed each month and is used to cover your subscription to the YL quarterly magazine, accounting, processing, and account maintenance. The fee may be tax deductible, so consult your personal tax advisor for details. The fee schedule is as follows:

7.5 Errors or Questions
Review your Commission and Bonus Recap statements and report any errors or discrepancies to Young Living within forty-five (45) days from the date on the check. Errors or discrepancies which are not brought to Young Living's attention within forty-five (45) days will be deemed waived.

7.6 Commissions and Bonuses
Deposit or cash commission and bonus checks within ninety (90) days of their issue date.

7.7 Unclaimed Compensation Checks
Young Living attempts to ensure checks are sent to the proper address (the address on record with Young Living). For various reasons beyond Young Living's control, some compensation checks are not cashed within ninety (90) days. If after ninety (90) days from issue a compensation check is not cashed, it will be voided and the amount credited to the distributor's account. After one hundred and eighty (180) days from issuance, any voided check amounts so credited will be subject to a monthly maintenance fee of 10% of the amount or $10.00, whichever is greater. This maintenance fee will allow Young Living to search for credit holders, maintain the accounts, and send out requests and search material. Distributors agree to handle compensation credits in this manner.

7.8 Other Credits
Any other account credits due to such things as product returns, credit in lieu of check, promotional credits, etc., will begin to accrue an account maintenance fee after one hundred eighty (180) days from issuance of the credit. The account maintenance fee will be 10% of the credit or $10.00, whichever is greater.

7.9 Reissue Requests
There is a $35 service charge for reissuing a check before thirty (30) days have passed from the original date of the check. This charge will be deducted from the balance owed to the distributor.

SECTION 8 - PRODUCT RETURNS

8.1 Return Policy
Young Living reserves the right to review each return or exchange on a case-by-case basis. Returns will cause promotions, credits, commissions, and bonuses to be adjusted or reversed, both for the person making the return and for any upline distributors who received compensation on such purchases.

8.1.1 Return Guidelines
Any member who is dissatisfied with any Young Living products may return:

• any unopened product within thirty (30) days after shipment for a full refund in the same method of payment of the purchase price and applicable sales tax (less shipping charges).
• any opened product with which the member is dissatisfied within thirty (30) days after shipment for a credit on the member's Young Living account of the purchase price and applicable sales tax (less shipping charges).
• any sealed or opened product or defective product with which a member is dissatisfied up to ninety (90) days after shipment for credit of the purchase price and applicable sales tax (less shipping charges and a 10% handling fee).

9.2.3 Essential Rewards Autoship Changes
An Autoship order may be changed up to midnight on the date selected for processing through the corporate website or telephone.

Participation in the Essential Rewards autoship program is purely optional and does not relieve you from compliance with the customer sales requirement or compliance with the 70% resale rule.

9.2.4 Essential Rewards Autoship Cancellation
If an autoship order is cancelled or returned, any unused product credits will be forfeit and the consecutive months of participation in the program will be reset to zero. If you wish to cancel your Essential Rewards autoship order, you must do so by speaking with an operator at 1-800-371-2928 or via the Live Help feature on the Young Living website.

9.2.5 Essential Rewards Autoship Program
Because the Essential Rewards autoship program is an incentive-driven program designed to help regulate and stimulate sales, it is subject to change at any time. Contact Customer Service or visit the corporate website for details on the current Essential Rewards autoship program.

9.3 General Ordering Policies
On mail orders with invalid or incorrect payment, Young Living will attempt to contact you by phone, mail, or e-mail to obtain another payment. If these attempts are unsuccessful after five (5) business days, the order will be cancelled.

For orders to be counted in a given month, they must be received and accepted on or before the last day of the month.

If an item ordered is out of stock or discontinued, Young Living will attempt to contact you by phone or e-mail so you may select an alternative item, if qualifications are negatively affected. If we are unable to contact you or do not receive a response from you within one to two (1-2) business days, Young Living will remove the item and process the order.

No C.O.D. orders will be accepted.

Payment plans are not allowed when purchasing product. The balance may be paid with different credit cards, but must be paid in full before the order will be shipped.

9.3.1 Back Orders
Because back orders often cause qualification problems and because some of our products are dependent on uncertain international supplies beyond our control, Young Living does not usually offer back orders. Only under unusual circumstances will Young Living offer a back order. If a back order does occur, no additional shipping charges will be incurred in shipping the back-dated product.

9.3.2 Month-End Order Processing Cutoff
The month-end order processing cutoff is the last calendar day of the month at 11:59 p.m. Mountain Time. Mailed and faxed orders must be received by the last day of the month. All mailed-in orders will be credited to the month in which they are received. Even when the end of the month falls on a weekend, holiday, or a day that the Young Living office is closed, the deadline will not normally be extended. The Automated Phone Ordering System, the fax line, and the website are available 7 days a week, 24 hours a day, making it possible to place all orders by the end of the month.

9.3.3 Back-Dating Orders
Orders will be processed in the month they are received. No orders will be credited for a prior sales month.

SECTION 10 - SHIPPING

10.1 Shipping Methods and Charges
Domestic orders are generally shipped within two (2) business days (excluding weekends and holidays). A packing slip is included in each shipment. It contains the order number, member number and name, product code, product name, price, and the amount and method of payment. Distributors should keep these packing slips for personal accounting records. Package tracking is available through most major carriers.

10.2 Shipping Discrepancies
When an order is received, the products should be checked against the packing slip to make certain there is no discrepancy or damage. Please notify Young Living of any shipping discrepancies or damage as soon as possible. Failure to notify Young Living of any shipping discrepancy or damage within five (5) business days of receipt of shipment will forfeit your right to request a correction.

A completed Shipping Discrepancy/Damage Claim form, Return Merchandise Authorization (RMA) number, and a copy of the packing slip are required for the processing of all shipping discrepancies or damage claims. If the required forms are not included, Young Living will not process shipping discrepancies, issue credits, or replace damaged products. These forms are included in each order when packaged for shipment.

To correct any problems you may have encountered with your shipments, please contact Distributor Network Services (DNS). Your DNS representative will discuss the steps to rectify the situation and issue a Return Merchandise Authorization (RMA) number. You may contact us by telephone or by fax.

SECTION 11 - PAYMENT

11.1 Methods of Payment
Young Living accepts the following payment methods:

• Credit Cards/Debit Cards—VISA, MasterCard, American Express, and Discover. Using someone else's credit card without their written permission is illegal and may be grounds for involuntary termination of your distributorship as well as possible legal action.
• ACH Check Payments—US checking accounts only. The Automatic Clearing House (ACH) program authorizes Young Living to draft against a member's bank account for the amount of the order.
• Money Orders or Cashier's Checks—US funds (mail-in orders only).
• Personal Checks—US funds (mail-in orders only).

11.2 Returned Checks and Insufficient Funds
It is your responsibility to ensure that there are sufficient funds available in your account to cover regular orders and Autoship orders. If a personal check or ACH check is returned for non-sufficient funds (NSF), you will not be able to place orders using personal checks or ACH checks until the balance is paid with a credit card or a money order. An NSF check will be sent to a collection service and appropriate processing fees will be charged, and your account will be placed on suspension. Failure to promptly resolve an NSF check may result in legal action and possible termination of your distributorship. Any uncollected amount may be deducted from commissions.

11.3 Commission and Bonus Release Form
You may choose to retain your commissions and bonuses (all or in part) in the form of a credit on your Young Living account. This credit would be used against future product purchases, in accordance with Section 7.8. The Commission and Bonus Release form must be received and approved by Young Living before your compensation check can be issued as a credit on account.

SECTION 12 - DISTRIBUTOR ACCOUNT MANAGEMENT

12.1 Changes to a Distributor Account
You must immediately notify Young Living of all changes to the information contained on the Distributor Application and Agreement. You may update your existing information by submitting a written request indicating the changes, by submitting a Personal Information Change Form, or by making such changes in the Virtual Office of the corporate website. The modifications permitted within the scope of this paragraph do not include a change of sponsor or tax information.

12.1.2 Sponsor Changes
To protect the integrity of all marketing organizations and safeguard the hard work of all distributors, Young Living strongly discourages changes in sponsorship. Accordingly, the transfer of a Young Living business from one sponsor to another is rarely permitted. Requests for a change of sponsor must be submitted in writing to DNS and must include the reason for the transfer. Transfers or changes will be considered only under the following circumstances:

1. In cases involving fraudulent inducement or unethical sponsoring, a distributor may request that he or she be transferred to another organization with his or her entire marketing organization intact. All requests for transfer alleging fraudulent enrollment practices shall be evaluated on a case-by-case basis.
2. The distributor seeking to transfer submits a written request including the written approval of the five (5) upline members whose income will be affected by the transfer. The request is subject to approval by the Young Living Executive Committee. Any downline distributors shall remain in the original genealogy and shall not be moved with the transferring distributor.
3. A distributor who has not placed an order in six (6) months is eligible to transfer to another sponsor of his/her choosing. Any downline distributors shall remain in the original genealogy and shall not be moved with the transferring distributor.
4. The enroller will be set to null.

Problems of attitude, non-support, personality conflicts, or social preferences are not acceptable reasons for a change.

12.1.3 Sponsor/Enroller Changes
A change of sponsor or enroller may be granted if requested during the new member's first thirty (30) days of enrollment. The request must be in writing. Once a sponsor/enroller change is made, no other changes are allowed.

12.2 Downline Genealogy Reports
Downline Genealogy Reports are optional and may be ordered at any time. Members with a personal website may receive two (2) free e-mailed downline reports per month, upon request, and all reports after two (2) are $5.00 each. Members who do not have a personal website will pay $5.00 for each e-mail report requested. Members who wish to have the e-mailed report sent out automatically each month will pay $5.00 for each e-mail report, regardless of the member's personal website status. Members who wish to have the report faxed or mailed will pay $5.00 for the first ten (10) pages and ten (10) cents per page after ten (10). Downline Genealogy Reports contain trade secret information, which is proprietary to Young Living. Refer to Section 3.11 for restrictions on using these reports.

12.3 Leadership Support Team
Upon reaching the rank of Silver, you have access to the Leadership Services Team. These specialists provide you with additional information and services that may be beneficial in supporting your Young Living business.

SECTION 13 - DISPUTE RESOLUTION AND DISCIPLINARY ACTION

13.1 Disputes Between Distributors
If you have a grievance or complaint with another distributor regarding any practice or conduct in relationship to your respective Young Living business, you should first discuss the problem with the other distributor. If this does not resolve the problem, report the problem to your upline leader who is a Silver or above to resolve the issue at a local level. If the matter cannot be resolved, it must be reported in writing to the Young Living Distributor Compliance Department. The complaint should identify specific instances of alleged improper conduct and, to the extent possible, identify the relevant dates on which the event(s) complained of took place, the location(s) where they occurred, and all persons who have first-hand knowledge of the improper conduct.

Upon receipt of a written complaint, the Young Living Distributor Compliance Department will investigate the matter, review the applicable policies, and render a decision on how the dispute shall be resolved. Distributor Compliance may also issue disciplinary sanctions consistent with the provisions of Section 13.3.

13.2 Disputes Between Young Living and Distributors
13.2.1 Arbitration
All disputes and claims relating to Young Living, its Compensation Plan, its products, the rights and obligations of its distributors and Young Living, or any other claim or cause of action relating to product purchase(s) or performance, either of a distributor or of Young Living under the Distributor Agreement, shall be settled totally and finally by arbitration in Salt Lake City, Utah, unless the laws of the state in which you reside expressly require otherwise. There shall be an arbitrator, an attorney-at-law with expertise in transactional law (there being a strong preference for an attorney knowledgeable in the direct selling industry), selected from the panel in which the American Arbitration Panel provides. Each party to the arbitration shall be responsible for its own costs and expenses of arbitration, including legal and filing fees. If you file a claim or counterclaim against Young Living, you may do so only on an individual basis and not with any other distributor or as part of a class action. The decision of the arbitrator shall be final and binding upon the parties and may, if need be, be reduced to a judgment in any court of competent jurisdiction. This agreement to arbitrate shall survive any cancellation or expiration of the Distributor Agreement. Nothing in these Policies and Procedures shall prevent Young Living from applying to and obtaining from any court having jurisdiction a writ of attachment, temporary injunction, preliminary injunction, permanent injunction, or available relief to safeguard and protect Young Living's interest prior to, during, or following the filing of any arbitration or other proceeding, or pending the rendering of a decision or award in connection with any arbitration or other proceeding. The existence of any distributor claim or cause of action against Young Living does not preclude Young Living from enforcing the distributor's covenants and agreements contained in the Distributor Agreement.

13.2.2 Jurisdiction, Venue, and Choice of Law
Jurisdiction and venue of any matter not subject to arbitration shall reside in any state or federal court located in Salt Lake City, Utah, unless the laws of the state or country in which the distributor resides expressly require otherwise, despite this jurisdiction clause. By signing the Distributor Agreement, you consent to jurisdiction within these two forums. The laws of the state of Utah shall govern disputes involving the Distributor Agreement.

13.3 Disciplinary Actions
At Young Living's discretion, violation of any of the terms and conditions of the Distributor Agreement, these Policies and Procedures, or any illegal, fraudulent, deceptive, or unethical business conduct may result in one or more of the following sanctions:

• Written warning clarifying the meaning and application of a specific policy or procedure and advising that a continued breach will result in further sanctions;
• Probation, which may include requiring you to take remedial action and will include follow-up monitoring by Young Living to ensure compliance with the Distributor Agreement;
• Withdrawal or denial of an award or recognition, or restricting participation in Young Living-sponsored events for a specified period of time or until you satisfy certain specified conditions;
• Suspension of certain privileges of distributorship including, but not limited to, placing a product order, participating in Young Living programs, progressing in the compensation plan, or participating as a distributor for a specified period of time or until you satisfy certain specified conditions;
• Withholding commissions or bonuses for a specified period of time or until the distributor satisfies certain specified conditions;
• Imposing fair and reasonable fines or other penalties in proportion to actual damages incurred by Young Living and as permitted by law; and/or
• Termination of the Distributor Agreement.

13.4 Appeals of Disciplinary Action
Following issuance of a sanction or disciplinary action (other than a suspension pending an investigation), you may appeal the sanction to the Executive Review Committee. The appeal must be in writing and received by the Company within fifteen (15) days from the date of the disciplinary action. If the appeal is not received within the fifteen-day period, the sanction will be final. Submit all supporting documentation with appeal correspondence. The Executive Committee will review and reconsider the sanction, consider other appropriate action, and notify the distributor in writing of its decision.

SECTION 14 - INACTIVITY, REACTIVATION, AND CANCELLATION

14.1 Inactivity
If you do not meet the personal volume (PV) requirement in any particular month, you will be deemed inactive for that month and will not receive commissions or bonuses for the sales generated through the downline organization.

If you remain inactive for a period of twelve (12) consecutive months, you will be effectively dropped from the Young Living sales organization and your Distributor Agreement cancelled. Any existing sales organization or downline will in effect "roll-up" to your first active upline distributor.

14.2 Reactivation
Distributors dropped for inactivity may reactivate their membership by contacting DNS and requesting reactivation. Reactivating members must thereafter satisfy the PV requirements, and they will be reactivated under their prior sponsor/enroller unless otherwise requested. Should the prior sponsor be inactive, the member will be reactivated under the first active upline member. Reactivating members have no claim to downline that was lost when they were dropped for inactivity and are treated as a new member.

14.3 Involuntary Cancellation or Termination
Violation of any of the terms of the Distributor Agreement constitutes a material breach of the Distributor Agreement and may result in any disciplinary actions listed in Section 13.3, including cancellation or termination of the Distributor Agreement. Involuntary cancellation or termination will result in the loss of all rights to the downline organization and any commissions or bonuses generated thereby. Distributors who are terminated shall receive compensation for the last full calendar month prior to termination of their distributorship.

When a distributor is terminated for cause, the distributor will be notified by mail or other delivery method, calculated to reach the recipient at the address on file. Cancellation is effective on the date on which written notice is issued. The terminated distributor must immediately cease representing himself or herself as a Young Living distributor.

A distributor who has been terminated for cause may reapply to become a distributor twelve (12) calendar months from the date of termination. Any such distributor wishing to reapply must submit a letter to the Young Living Distributor Compliance Department setting forth the reasons why he/she believes he/she should be allowed to operate a Young Living business. It is within Young Living's sole discretion whether or not to permit such a request.

14.4 Voluntary Cancellation
You may cancel your Distributor Agreement at any time and for any reason. Written notice must be provided to the Company and must include your signature, printed name, member number, address, PIN, and telephone number.

If you voluntarily cancel your Distributor Agreement, you may become a Preferred Customer or customer. Additionally, you may reapply to become a distributor six (6) months after the cancellation date.

14.5 Effects of Cancellation
Upon cancellation or termination, you release all rights to your distributor benefits including the downline organization and all future commissions and bonuses resulting from the downline sales production.