Yoli Distributor Policies - A Must Read!

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<ul><li>1.Yoli, Inc. Policies and Procedures August 15, 2009 SKU # </li></ul><p>2. TABLE OF CONTENTS SECTION 1 INTRODUCTION ................................................................................................................ 11.1 Policies and Compensation Plan Incorporated into Distributor Agreement .......................... 11.2 Changes to the Agreement ..................................................................................................... 11.3 Delays...................................................................................................................................... 11.4 Policies and Provisions Severable ........................................................................................... 11.5 Waiver ..................................................................................................................................... 1 SECTION 2 BECOMING A DISTRIBUTOR ................................................................................................ 22.1 Requirements to Become a Distributor .................................................................................. 22.2 One Yoli Business Per Distributor and Per Household ........................................................... 22.3 Distributor Success Kit ............................................................................................................ 32.4 Distributor Benefits ................................................................................................................ 3 SECTION 3 - OPERATING A YOLI BUSINESS ........................................................................................... 33.1 Adherence to the Yoli Marketing and Compensation Plan .................................................... 33.2 Advertising .............................................................................................................................. 4 3.2.1 General ............................................................................................................................ 4 3.2.2 Distributor Web Sites ...................................................................................................... 4 3.2.3 Domain Names and E-mail Addresses ............................................................................ 4 3.2.4 Trademarks and Copyrights ............................................................................................ 43.3 Media and Media Inquiries ..................................................................................................... 43.4 Unsolicited E-mail ................................................................................................................... 53.5 Unsolicited Faxes .................................................................................................................... 53.6 Business Entities ..................................................................................................................... 53.7 Changes to a Yoli Business ...................................................................................................... 6 3.7.1 General ............................................................................................................................ 6 3.7.2 Addition of a Spouse as a Co-Applicant .......................................................................... 63.8 Change of Sponsor .................................................................................................................. 6 Yoli Policies and Procedures- Updated August 2009Page i 3. 3.9Unauthorized Claims and Actions........................................................................................... 73.9.1Indemnification ............................................................................................................... 73.9.2Product Claims ................................................................................................................ 73.9.3Income Claims ................................................................................................................. 8 3.10 Commercial Outlets ................................................................................................................ 83.10.1 Retail Locations ............................................................................................................... 83.10.2 Online Auctions and Sales Forums .................................................................................. 83.10.3 Trade Shows, Expositions and Other Sales Forums ........................................................ 8 3.11 Conflicts of Interest ................................................................................................................ 93.11.1 Non-solicitation ............................................................................................................... 93.11.2 Downline Activity (Genealogy) Reports .......................................................................... 9 3.12 Cross-Sponsoring .................................................................................................................. 10 3.13 Errors or Questions ............................................................................................................... 11 3.14 Governmental Approval or Endorsement ............................................................................ 11 3.15 Income Taxes ........................................................................................................................ 11 3.16 Independent Contractor Status ............................................................................................ 11 3.17 Insurance .............................................................................................................................. 12 3.18 International Marketing ....................................................................................................... 12 3.19 Inventory Loading and Bonus Buying ................................................................................... 12 3.20 Adherence to Laws and Ordinances ..................................................................................... 12 3.21 Actions of Household Members or Affiliated Individuals ..................................................... 13 3.22 Sale, Transfer or Assignment of Yoli Business ...................................................................... 13 3.23 Separation of a Yoli Business ................................................................................................ 13 3.24 Succession ............................................................................................................................. 143.24.1 Transfer Upon Death of a Distributor ........................................................................... 153.24.2 Transfer Upon Incapacitation of a Distributor .............................................................. 15 3.25 Telemarketing Techniques.................................................................................................... 15 SECTION 4 - RESPONSIBILITIES OF DISTRIBUTORS ............................................................................. 16 4.1Change of Address or Telephone ......................................................................................... 16 4.2Continuing Development Obligations .................................................................................. 16 Yoli Policies and Procedures- Updated August 2009Page ii 4. 4.2.1Ongoing Training ........................................................................................................... 16 4.2.2Increased Training Responsibilities ............................................................................... 16 4.2.3Ongoing Sales Responsibilities ...................................................................................... 174.3Non-disparagement .............................................................................................................. 174.4Providing Documentation to Applicants............................................................................... 174.5Reporting Policy Violations ................................................................................................... 17 SECTION 5 - SALES REQUIREMENTS .................................................................................................... 175.1Product Sales ........................................................................................................................ 175.2No Territory Restrictions ...................................................................................................... 175.3Sales Receipts ....................................................................................................................... 17 SECTION 6 - BONUSES AND COMMISSIONS ....................................................................................... 186.1Bonus and Commission Qualifications ................................................................................. 186.2Adjustments to Bonuses and Commissions .......................................................................... 18 6.2.1Returns and Refunds ..................................................................................................... 18 6.2.2Commission Processing Fee .......................................................................................... 186.3Reports.................................................................................................................................. 18 SECTION 7 - PRODUCT GUARANTEES, RETURNS AND INVENTORY REPURCHASE ............................ 197.1Product Guarantee ............................................................................................................... 197.2Three Day Right to Cancel .................................................................................................... 197.3Return of Product Inventory and Sales Aids by Distributors ................................................ 20 7.3.1Montana Residents ....................................................................................................... 207.4Procedures for All Returns .................................................................................................... 20 SECTION 8 - DISPUTE RESOLUTION AND DISCIPLINARY PROCEEDINGS ............................................ 218.1Disciplinary Sanctions ........................................................................................................... 218.2Grievances and Complaints .................................................................................................. 218.3Arbitration ............................................................................................................................ 228.4Governing Law, Jurisdiction and Venue ............................................................................... 22 SECTION 9 - PAYMENT AND SHIPPING ............................................................................................... 229.1Returned Checks ................................................................................................................... 229.2Sales Taxes ............................................................................................................................ 23 Yoli Policies and Procedures- Updated August 2009 Page iii 5. SECTION 10 - INACTIVITY, RECLASSIFICATION, AND CANCELLATION ................................................ 2310.1 Effect of Cancellation ............................................................................................................ 2310.2 Cancellation Due to Inactivity ............................................................................................... 2310.3 Distributor Reclassification ................................................................................................... 2410.4 Involuntary Cancellation ....................................................................................................... 2410.5 Voluntary Cancellation ......................................................................................................... 2410.6 Non-renewal ......................................................................................................................... 24 SECTION 11 TERMS AND DEFINITIONS ............................................................................................ 24 Yoli Policies and Procedures- Updated August 2009Page iv 6. SECTION 1 INTRODUCTION1.1 Policies and Compensation Plan Incorporated into Distributor Agreement These Policies and Procedures, in their present form and as amended at the sole discretion of Yoli, Inc. (hereafter Yoli. or the Company), are incorporated into, and form an integral part of, the Yoli Distributor Agreement. Throughout these Policies, when the term Agreement is used, it collectively refers to the Yoli Distributor Application and Agreement, these Policies and Procedures, the Yoli Marketing and Compensation Plan, and the Yoli Business Entity Application and Agreement (if applicable). These documents are incorporated by reference into the Yoli Distributor Agreement (all in their current form and as amended by Yoli). It is the responsibility of each Distributor to read, understand, adhere to, and ensure that he/she is aware of and operating under the most current version of these Policies and Procedures. When sponsoring or enrolling a new Distributor, it is the responsibility of the sponsoring Distributor to ensure that the applicant is provided with, or has online access to, the most current version of these Policies and Procedures and the Yoli Marketing and Compensation Plan prior to his/her execution of the Distributor Agreement.1.2Changes to the Agreement Yoli reserves the right to amend the Agreement and its prices in its sole and absolute discretion. By executing the Distributor Agreement, a Distributor agrees to abide by all amendments or modifications that Yoli elects to make. Amendments shall be effective upon notice to all Distributors that the Agreement has been modified. Notification of amendments shall be published in official Yoli materials. The Company shall provide or make available to all Distributors a complete copy of the amended provisions by one or more of the following methods: (1) posting on the Companys official web site; (2) electronic mail (e-mail); (3) inclusion in Company periodicals; (4) inclusion in product orders or bonus checks; or (5) special mailings. The continuation of a Distributors Yoli business or a Distributors acceptance of bonuses or commissions constitutes acceptance of any and all amendments.1.3 Delays Yoli shall not be responsible for delays or failures in performance of its obligations when performance is made commercially impracticable due to circumstances beyond it...</p>