Form 10-K for the Fiscal Year Ended December 31, 2008

Definitive Proxy Statement on Schedule 14A

File Number: 000-24657

1.

Comment: Please revise your disclosure to describe the nature of the changes you made to your corporate governance practices as a result of the settlement of your lawsuit with the Attorney General of Texas and the shareholder derivative lawsuits. Please be as specific as possible in your discussion of these changes and be sure to include this discussions in all places in your annual report where it is appropriate to do so, for example, any relevant risk factor and in the corporate governance disclosure required by Part III of Form 10-K. Similarly, please revise your disclosure to discuss in more detail the changes and programs you agreed to implement to provide for comprehensive monitoring and compliance of your representations, advertisement and labeling of your products and associated research, as well as policies regarding the relationship between Mannatech and Manna Relief Ministries and the conduct of Mannatech-sponsored events and web sites.

(i)

the revision of the Company’s policies and procedures regarding associate conduct;

(ii)

the engagement of Cyveillance to conduct website monitoring for compliance with the Company’s policies and procedures;

(iii)

the establishment of the Company’s Compliance Committee of the board of directors;

(iv)

the posting of the Company’s Code of Ethics and Business Code of Conduct and committee charters for its Compliance, Audit, Compensation and Stock Option Plan, Nominating and Governance and Science Committees on the Company’s website;

(v)

the requirement that the Company’s general counsel report periodically to the Compliance Committee regarding the Company’s internet website monitoring results;

(vi)

the increase of additional legal and compliance staff to address compliance matters; and

(vii)

the appointment of director Professor Robert Blattberg, a qualified, independent director with no prior affiliations with the Company.

(i)

the designation of a corporate level Compliance Officer with oversight over (A) anonymous reporting of compliance violations, (B) responding to compliance-related questions from employees, members and associates, and (C) reviewing and disciplining associates for compliance violations;

(ii)

the disclosure of its policies and procedures and monitoring and compliance program to all employees, associates and members;

(iii)

the monitoring of employees, associates and members for compliance of (A) employee and associate websites used to advertise or promote Company products, (B) meetings held by employees and associates used to advertise or promote Mannatech products, and (C) employee and associate promotional materials not created by the Company; and

(iv)

mandatory investigation of reported compliance violations and termination of employees, members or associates for making claims that Company products can treat, cure, mitigate or prevent any disease unless such claim is de minimus and isolated.

2.

Comment: We note that pack sales entitle your associates to purchase your products at discounted prices and include certain products, promotional and educational information, and policies and procedures. Purchase of these packs appear to obligate you to perform services as noted on page 8 and 9 as well as making available products at discounted prices.

•

Please tell us why you recognize revenue for pack sales upon receipt by the customer.

•

Provide us your stated policy and/or a copy of the agreement you have with the customer for new and renewal pack sales.

•

Tell us your obligations and period over which you have obligations under new and renewal pack sales.

•

Provide us an analysis of the accounting literature including EITF 00-21 and SAB 104 supporting your accounting for new and renewal pack sales.

•

Tell us how your accounting for pack sales when the pack sales price exceeds the wholesale value of all individual components within the pack complies with GAAP.

3.

Comment: Refer to your disclosure for your product returns policies. Please revise your disclosure to address the following items:

•

Whether or not the returned product is resalable: and

•

When you exchange product from your inventory for returned product, tell us how you account for your estimate of returns at the time of the product sale, and how you account for returns when they are actually returned and make the exchange. Provide an analysis supporting your accounting treatment with reference to authoritative literature. It may also be helpful to provide us a supplemental example showing the journal entries made.

•

Inventory with a cost of $40 is sold for $100;

•

The product is subsequently returned for cash refund and written off pursuant to our policy;

•

Sales return is estimated to be $1.

a.

Cash/Accounts Receivable

100

      Cost of Sale

     40

Revenue

100

Inventory

40

b.

Reserve for return (contra revenue)

1

Liability for sales returns

1

c.

Inventory

40

     Sales refunds (contra revenue)

     100

     Cost of Sales – write offs

     40

Cost of Sales – returns

40

Cash

100

Inventory

40

d.

Liability for sales returns

1

Reserve for return (contra revenue)

1

a.

Cash/Accounts Receivable

100

     Cost of Sale

     40

Revenue

100

Inventory

40

b.

Reserve for return (contra revenue)

1

Liability for sales returns

1

c.

Inventory

40

     Cost of Sales – write offs

     40

     Cash/Accounts Receivable

     15

     Cost of Sale

     45

Cost of Sales – returns

40

Inventory

40

Revenue

- exchanges

15

Inventory

45

d.

Liability for sales returns

1

Reserve for return (contra revenue)

1

4.

Comment: We note your statements that you periodically compare the compensation you pay to your Named Executive Officers to “companies of our size” and that you used this information in 2008 to make salary adjustments. Please note that, to the extent you examine the compensation paid by comparable companies and weigh this information in your own compensation decisions, you should disclose the names of the companies you used as points of reference in making your executive compensation decisions. Please be as specific as possible in your discussion, particularly when stating the weight you give to the comparable companies in your determination.

5.

Comment: We note that in 2008 the Board awarded discretionary stock options to Named Executive Officers “in recognition of the difficult operating environment related to the lengthy litigation process.” However, you do not indicate the Board’s rationale for allocating the option awards among the officers listed in the table on page 32. In particular, the table indicates that Wayne Badovinus’ award was substantially greater than the other officers, by a factor of more than 20-30 times in most cases. Please explain the Board’s reasoning for this disparity and confirm that you will provide a similar discussion in next year’s proxy statement to the extent applicable.

1)

205,970 stock options in connection with Mr. Badovinus’ employment agreement dated June 16, 2008 when he joined the Company; and

2)

10,000 stock options related to the discretionary award issued to our Named Executive Officers.

•

the company is responsible for the adequacy and accuracy of the disclosure in the filings;

•

staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and

•

the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Sincerely,

/s/ Stephen D. Fenstermacher

Stephen D. Fenstermacher
Executive Vice President and Chief Financial Officer

cc:

Wayne L. Badovinus, President and Chief Executive Officer of Mannatech, Incorporated

Larry A. Jobe, Director and Chairman of the Audit Committee

B. Keith Clark, Sr. VP, Global Chief Legal Officer and Corporate Secretary of Mannatech, Incorporated

Karen Cope, Executive Director of Accounting of Mannatech, Incorporated

Tatiana Morosyuk, Executive Director of Financial Reporting of Mannatech, Incorporated

J. Kenneth Menges, Jr., P.C. and Nancy Sarmiento, Outside Legal/SEC Counsel, Akin Gump Strauss Hauer & Feld LLP

Randy A. Gregg, Partner, BDO Seidman, LLP

•

Mannatech Information Pack

•

Purchasing Privileges at Associate Cost

code no.

PRICE

Premium OsoLean^™ Pack

112101

$499

Premium Advanced Ambrotose® Health Pack

112201

$499

Premium Ambrotose® complex Health Pack

112301

$499

Premium Skin Care Pack

112401

$499

Premium Custom* Pack

112501

$499

Basic Support Pack

106201

$99

Basic Skin Care Pack

113201

$99

Basic Advanced Ambrotose® Bulk 150g Pack

100701

$109

Basic Ambrotose® complex Bulk 100g Pack

100901

$99

Basic Ambrotose AO® Pack

101001

$109

Basic OsoLean™ Pack (Chocolate)

109401

$109

Basic OsoLean™ Pack (Vanilla)

109501

$109

Associate Registration Pack

100301

$39

•

Check the box, “Yes, I want to save 10%.”

•

Choose the products you would like to receive each

3.

I understand that as an Independent Associate:

a.

I have the right to purchase products and services from the Company at Associate cost.

c.

I have the right to register persons in Mannatech.

X

Signature of Applicant

X

Signature of CO-Applicant

1

General Information

1.1

Member

1.2

Independent Associate

1.3

Associate Application and Agreement/Identification Numbers

1.4

Establishing a Corporation, Partnership or Trust

1.5

Combining a Third-Party Agreement with Your Mannatech Business

1.6

Responsibilities to Your Downline Organization

1.7

Voluntary Termination from the Company

2

Conducting Your Business, Internet Usage, Product Sales and Recruiting

2.1

Advertising

2.2

Classified Advertising

2.3

Telephone Directory Advertising

2.4

Answering the Telephone

2.5

Business Stationery

2.6

Use of Company Name, Logo or Trademarks

2.7

Creation, Use and Disclosure of Third-Party Materials

2.8

Representations as to Products

2.9

Reproducing Approved Educational and Promotional Material

2.10

Presidential Training Web Sites

2.11

Registration of In-Person Meetings and Telephone Conferences

2.12

Use of Testimonials

2.13

Use of Online Sales Media

2.14

Reserved for Future Expansion

2.15

Use and Registration of Internet Web Sites, Electronic Media and Company Trademarks

2.16

Company Intranet Guidelines

2.17

E-mail Correspondence

2.18

Broadcast Fax

2.19

Contacting the Media

2.20

Trade Shows and Expositions

2.21

Retail Sales

2.22

Promotion of Product for Animal Use

2.23

Misrepresenting the Company

2.24

Career & Compensation Plan and Income Earning Misrepresentations

2.25

Product Claims and Misrepresentations

2.26

Company Events

2.27

Compliance with OAG Settlement

3

International Policies

3.1

How to Conduct Business Internationally

3.2

Gift of Products

3.3

International Sponsoring

3.4

Country Relocation

4

Sponsorship Business Rules

4.1

Rights to Choose Sponsorship

4.2

Inducements to Select a Different Sponsor

4.3

Sponsor and Enroller Information

4.4

Changing Lines of Sponsorship

4.5

Sale or Transfer of Associate Position

4.6

Inheritance of Associate Positions

4.7

Multiple Positions

4.8

Cross-Sponsoring of Spouses/Household Members

4.9

Recruiting Associates into Other Companies

4.10

Renewals

4.11

Downline Reports

4.12

Confidential Proprietary Company Information/Reports Provided to Associates

4.13

Business Periods

4.14

Income Taxes

4.15

Commission Research Requests

5

Operations, Ordering, Product Returns,

Refunds and Shipping

5.1

Ordering Options

5.2

Mail Orders

5.3

Discount Automatic Orders

5.4

Canadian Orders/Registration

5.5

Payment Options

5.6

Returned Checks

5.7

Credit Cards

5.8

Sales Tax

5.9

Purchase for Own Use (Inventory Requirements)

5.10

Stockpiling Product

5.11

The 70% Rule

5.12

Replacement of Defective Product

5.13

Satisfaction Guarantee

5.14

Shipping

6

Laws, Regulations and Disciplinary Procedures

6.1

Amendments to Policies & Procedures

6.2

Removal of Policies & Procedures

6.3

Assignment

6.4

Governmental Laws

6.5

Contacts with Government Regulators

6.6

Military Personnel

6.7

Residents of Georgia, Louisiana and Montana

6.8

Requirement for Regulatory Training

6.9

Monitoring of Meetings

6.10

Reporting Violations

6.11

Resolution of Disputes

6.12

Disciplinary Procedure

6.13

Disciplinary Appeal Procedure

6.14

Termination of the Agreement by the Company

6.15

Effect of Termination

6.16

Sanctions

6.17

Reinstatement after Termination by Company

6.18

Indemnification

6.19

Arbitration and Governing Laws

1

General Information

1.1

Member

1.1.1

A Member is a person who, upon signing and completing a Member Application (MOD USA1801101 and CAN1801111), may purchase Company product(s) directly from the Company at a discount of approximately 5% from the Suggested Retail Price. If no product is purchased at the time of enrollment, the membership fee is $10.00. If product is ordered, then the membership fee is waived.

1.1.2

Since Member product orders are for personal consumption only, and not for resale, Members will not be required to submit any tax identification information.

1.1.3

Members are assigned an account number once the Member Application is accepted by the Company.

1.1.4

Only Members may order under their respective account number. A Member does not participate in the Career & Compensation Plan and does not earn commissions.

1.1.5

Members have no renewal requirements or obligations; however, they do participate in the Company retention program, which automatically deducts 45% of APO (Actual Pay Out) from their product order(s) placed on or after a complete year from their enrollment date. A Member must submit an Associate Application and Agreement in the event they wish to become an Independent Associate and participate in the Career & Compensation Plan.

1.1.6

A Member must abide by the terms and conditions set forth on the Member Application.

1.1.7

Members can only have one Member account per household. Husbands, wives and/or household members must share one Member account. Member accounts may not be registered as businesses (or DBA), trusts corporations or partnerships.

1.2

Independent Associate

1.2.1

To earn commissions and bonuses on sales of Company products throughout the United States, Canada, and any other Country of Operation as defined in Section 3 in which Mannatech does business.

1.2.2

You are an independent contractor for all purposes, including legal purposes and governmental tax purposes. There is no employer/employee relationship, partnership, agency, or joint venture relationship between an Associate and the Company. Associates set their own business hours and determine their own methods of procuring orders. Associates are solely responsible for paying all taxes or duties required by law, including income tax, national insurance contributions and the proper reporting, submission and payment of tax on sales and bonuses/commissions/incentives. You will keep all proper records necessary to ensure the proper assessment and payment of any such taxes and duties.

1.2.3

You may not bind the Company or incur any debt or expense in the name of the Company or open any checking account on behalf of, for, or in the name of the Company.

1.2.4

The Company shall not be liable for any debts or liabilities that you may incur, whether or not such liabilities are incurred during the term of the Agreement.

1.2.5

You must always identify yourself as an “Independent Associate” in all written and verbal communications.

1.2.6

The Company has the right to request information about your business and downline to ensure compliance with the Agreement.

1.2.7

You do not earn bonuses on your own personal product purchases and acknowledge that bonuses/commissions/incentives are paid only on product sales. No benefits or bonuses are paid or received solely from sponsoring other Associates in the Company Career & Compensation Plan, and no earnings are guaranteed from mere participation in the Career & Compensation Plan.

1.2.8

You must operate your business in accordance with applicable laws and/or regulations.

1.2.9

You are prohibited from promoting or selling to existing Associates or prospective Associates any products, services or opportunities not directly produced or approved by the Company whether at a Company presentation, training event or otherwise as stated in Section 4.9.

1.2.10

You shall not utilize the services of an Associate that has been terminated by the Company, or any Shareholder, Member, or Partner of such terminated Associate, in conjunction with your Mannatech business.

1.2.11

You shall not utilize the services of a person, whether acting as your agent or on your behalf, who has been determined by the Company to be acting in derogation of these policies and procedures.

1.2.12

You cannot serve as an officer, director, or employee of MannaRelief during the time you are an Independent Associate of Mannatech.

1.3

Associate Application and Agreement/Identification Numbers

1.3.1

Any person, corporation, or other entity desiring Independent Associate status must complete a Company Associate Application & Agreement. The Company reserves the right to refuse to accept any prospective applicant without explanation and in its sole discretion. The prospective applicant must possess and provide a valid employer identification number (EIN), social security number (SSN) or taxpayer identification num-ber (TIN) in the U.S., or a social insurance number (SIN) or business number (BN) in Canada.

1.3.2

The Company will reject any application, at its sole discretion, in the event the prospective applicant fails to provide this information. Applicants who choose not to provide the information may sign up as a Member. Associates who are not 18 years of age or older must be in a joint distributorship with their parent(s)/guardian(s). The parent/guardian must personally sign all relevant Mannatech agreements and acknowledgments as co-applicants. Any Associate found not to be 18 years of age will be

1.3.3

The Company must receive at Coppell, Texas, a fully completed and signed (by the prospective applicant) Associate Application and Agreement. The Agreement does not become effective until it is accepted by the Company at Coppell, Texas, and you have been assigned an account number. Incomplete applications will not be accepted and may not be returned. No commissions, bonuses and/or incentives will be paid until the Company receives the signed application, or, when registering electronically, the e-signature of the Associate accepting the Terms and Conditions.

1.3.4

Upon acceptance of the Application by the Company, you are assigned a company “Account Number” to serve as your official identification number when sponsoring new Associates or placing product orders. This account number is cross-referenced to your EIN, SSN, TIN, SIN or BN.

1.3.5

You must report changes to your account, DBA, sole proprietorship, Associate name or address to the Company within fourteen (14) days of the change occurring. If the change is clearly misspelling, inverted digit, or an incomplete entry in a name or address this change may be made by phone.

1.3.6

If you submit false EIN, SSN, TIN, SIN or BN to the Company, you may be subject to immediate termination. No EIN, SSN, TIN, SIN or BN may be used in connection with an Associate Application or order without that person’s prior consent. If you submit forged signatures or false information on any Mannatech forms for yourself or on behalf of another individual without the express written consent from the Associate and/or individual granting permission, your Agreement may be subject to immediate termination.

1.3.7

A new Associate may process an application by phone. However, the Company must receive a signed Application and Agreement from all new Associates. If a signed application or Signature Form for Applications by Phone (MOD USA1804601 and CAN1804611) is not received within 30 days from the phone application, the Company may suspend earned commissions until such time as the Company has received the signed Application. All accounts must have a valid contact name and telephone number to list on the account.

1.3.8

You are solely responsible for registering and/or obtaining any city, state or provincial licenses required to sell Company products.

1.4

Establishing a Corporation, Partnership or Trust

1.4.1

If your application is in the name of a corporation, partnership or trust, you must identify the shareholders, officers and directors of their corporate, partnership or trust entity by completing a Form C-1 (MOD USA1806401 and CAN1806411), Disclosure of Corporate Partnerships or Corporate Members, or a Form C-1 (a) (MOD CAN1806301 and CAN1806311), Disclosure of Trust Members. Any and all officers and directors of the Corporation or Partnership must provide a Statement of Guarantee and Indemnity (Form C-2 or Form C-2 [a]), respectively to the Company at the time the Associate Application and Agreement is submitted.

1.4.2

The Associate Application and Agreement may not be processed without all of the proper attachments. If the business entity adds new officers and/or directors, another Statement of Guarantee and Indemnity, Form C-2 or Form C-2 (a), must be completed and submitted to the Company. You must notify the Company of changes in individual shareholders, partners or directors within fourteen days of the change occurring.

1.4.3

The Company reserves the right to approve or disapprove your change of business name (“DBA Name”) in the event it is offensive or conflicts with its trade names, trademarks, service marks or English law. If the Company approves such a change; the organization’s name and the names of the principals of the organization must appear on the Change of Associate Information Form, or a disclosure form with signed Guarantee of Indemnity. You may not use the name “Mannatech” or any of its product or trade names in your business name which might be confused with the Company.

1.5

Combining a Third-Party Agreement with Your Mannatech Business

1.5.1

A “third party” includes, but is not limited to, another Independent Associate or an unrelated individual/company offering business-building services or related/non-related goods and services.

1.5.2

The Company does not endorse or permit any third-party income representations, guarantees or other such representations to build your downline organization. In addition, the Company does not endorse any third-party individual or company making income representations through the use of third-party sales aids.

1.5.3

If you choose to enter into any such agreement with a third party, you do so at your own risk. The Company will not be bound by any such agreement or contract. The Company will not reimburse you for costs incurred as a result of any such agreement or contract described above.

1.5.4

You may not enter into third-party contracts combining any aspect of the Company business, as presented by the Company, with another offering having to do with the sale of the Company products, opportunity or the Career & Compensation Plan with any other non-Company component, agreement, business plan, method or device. The Company does not honor these agreements. The Company will not settle disputes resulting from third-party agreements or between Associates.

1.5.5

The Company does not allow the Mannatech Products or Career & Compensation Plan to be presented/offered in conjunction with any other business plan or other form of business. Violation of this Policy will be considered a breach of your Agreement and subject to termination of your Agreement.

1.5.6

You must not induce third parties to acquire the Company’s products by representing to that third party that they would, after the acquisition of the Company’s products receive cash bonuses, commissions or any other benefit from you in return for assisting you to supply the Company’s products to others.

1.6

Responsibilities to Your Downline Organization

1.6.1

You are responsible for training your downline organization on effective and lawful methods of building a successful business and you are restricted from advising Associates to restructure their downline in a fashion that gives the Sponsor or upline Associates an income advantage, doing potential long-term damage to his or her Associate position.

1.6.2

You are responsible for answering questions for Associates whom you have personally sponsored. Associates who have questions about any aspect of the Company should contact their upline sponsors for assistance.

1.6.3

You are responsible for discussing and determining with your downline (prior to completing a new Associate Application) or otherwise enrolling a new position, which party will receive the Direct Bonus. The Company will not settle any disputes among Associates regarding these or other types of financial agreements. The Company will pay commissions to the party listed in its computer database as supplied to the Company.

1.6.4

You are responsible for fully explaining the Satisfaction Guarantee policy as set forth in Section 5.13.1 of these Policies & Procedures.

1.7

Voluntary Termination from the Company

1.7.1

An Associate who wishes to terminate an Associate account must submit such request in writing (Tax ID, SSN, EIN, SIN, etc., account number and signature must be included) or by completing the Voluntary Termination form (MOD USA1806001 and CAN1806011).

1.7.2

An Associate who voluntarily terminates may apply for reinstatement after the expiration of six (6) full business periods (the “waiting period”). Applications submitted under this section shall not be processed until the first day after the expiration of the waiting period. Spouses, dependent children or other household members of Associates who have terminated may not apply to become an Associate or Member in another line of sponsorship until the terminated Associate is eligible for reinstatement. (See Changing Lines of Sponsorship 4.4.4; 4.4.5; and 4.4.6)

1.7.3

A terminated Associate cannot sponsor new Associates. If a terminated Associate is listed on the Associate Application as sponsor, the new Associate will be contacted to provide the Company with a valid Sponsor Identification Number which relates to an Associate in good standing.

1.7.4

Manitoba Residents Only: Manitoba Residents Only: You can send your notice by registered or certified mail to Mannatech Inc., c/o Thompson Dorfman Sweatman, 2200-201 Portage Ave., Winnipeg, MB R3B 3L3, or you may deliver it there in person.

1.7.5

Nova Scotia Residents Only: You can send your notice by registered mail, fax, personal delivery or any other method that will allow you to prove that you gave notice, to: Ms. Heather Miller, 2276 Davison Street, RR1, Wolfville, Nova Scotia, Canada B0P 1X0 (telephone number 902-542-2337).

1.7.6

Participants in the Member program must submit a termination in writing, and upon termination must wait six business periods before submitting an application to become either an Associate or a Member in another line of sponsorship. However, they may continue to order products at full retail price during the six-month reinstatement waiting period.

2

Conducting Your Business, Internet Usage, Product Sales and Recruiting

2.1

Advertising

2.1.1

Except in the case of advertising provided by the Company for the promotion of your MannaPages or subject to the provisions of Section 2.10 and 2.15, you may not advertise products by way of the Internet or any other form of media such as radio or television.

2.1.2

In order to protect its trademarks, the Company must restrict its Associates from producing their own advertisements to promote the Company or its products.

2.1.3

Prohibited materials include, but are not limited to:

2.1.3.1

Outdated Company-produced literature no longer in circulation, and

2.1.3.2

Those materials an Independent Associate creates and produces which are in violation of 2.7, 2.8 or 2.25 of these Polices and Procedures.

2.2

Classified Advertising

2.3

Telephone Directory Advertising

2.3.1

You may advertise in the telephone directory. Yellow Pages advertising must conform to all applicable Policies & Procedures. The approved White and Yellow Pages listing is as follows:

2.3.2

In the event the printer cannot insert the ® sign, there must be a line at the bottom of the ad that states “Mannatech is a registered trademark of Mannatech, Incorporated.”

2.3.3

You may not use a telephone or toll-free number which, when numbers are converted to letters, spells out all or part of the name Mannatech or any of its products.

2.4

Answering the Telephone

2.5

Business Stationery

2.6

Use of Company Name, Logo or Trademarks

2.6.1

Except as permitted in Section 2.10 and 2.15, you may not use the Company name, logo, trademarks and/or names of Company products in Associate-produced advertisements or materials.

2.6.2

You can use only the “Mannatech Independent Associate” logo. You may not reproduce the “Mannatech Incorporated” logo except as permitted in Section 2.10 and 2.15.

2.6.3

Except in the case of advertising or instructions provided by the Company for the promotion of your MannaPages, you may not use the name Mannatech or any of its trademarks as a part of your business name, Corporation name, Internet name, URL or domain name, metatags source and search code, or e-mail address.

2.6.4

You may not use the names or images of Company employees, executives, consultants, athletes, celebrities and/or organizations who endorse the Company, except as specifically written in current Company-approved materials or except as permitted in Section 2.10 and 2.15.

2.6.5

You are prohibited from using names of any other companies, hospitals or institutions when promoting the Company.

2.7

Creation, Use and Disclosure of Third-Party Materials

2.7.1

All sales aids, generic materials, or other materials not produced by the Company are considered “third-party materials.” This definition is intended to include sales aids and materials that are either in printed, audio, video or electronic formats.

2.7.2

Materials are considered “generic” if they can be utilized by any other company in our industry.

2.7.3

You are prohibited from creating, selling or distributing third-party materials which link the benefits of Mannatech products, the ingredients of Mannatech products and/or glyconutrients in conjunction with any particular disease,

2.7.4

In addition to the requirement set forth in 2.7.3, and except as permitted in Section 2.10, you may use generic materials only if:

2.7.4.1

they do not contain mention of the Company, its products, trade names, the specific ingredients of its products or the Compensation Plan, and

2.7.4.2

they have not been created solely for use in connection with the promotion or sale of Mannatech products or the opportunity.

2.7.5

You must notify the Company within 30 days of the first distribution of any new third-party promotional material (booklet, CD, DVD, or otherwise) related to the Company, its products or glyconutrients which is not produced by the Company and from which you derive (directly or indirectly) any compensation. You must:

2.7.5.1

Provide your name, Associate account number, the newly created third-party promotional material, the title, author and date of first distribution to the Company by:

2.7.5.1.1

e-mailing the requested information and CD/DVD transcripts in a Word or PDF format to

2.7.5.1.2

faxing the requested information to 972.471.5619; or

2.7.5.1.3

mailing a copy of said materials to

Mannatech, Incorporated, Attn: Legal Department, 600 S. Royal,

Suite 200, Coppell, TX 75019.

2.8

Representations as to Products

2.9

Reproducing Approved Educational and Promotional Material

2.10

Presidential Training Web Sites

2.10.1

Qualification. Those Associates that attain and maintain Presidential status for six (6) consecutive business periods qualify to establish a Company-approved internet training site (“Training Sites”).

2.10.2

Use of Company Marks. Training Sites may use the Company name, Company logo, Company marks, images and other representations of Company Products. The Company will supply these assets to persons authorized under Section 2.10.1. All training site content shall be password protected.

2.10.3

Permitted Information. Training Sites may contain the following materials:

2.10.3.1

Introductory training information for New Associates;

2.10.3.2

Basic/continuing training information for Associates;

2.10.3.3

Product-Specific training

2.10.3.4

Business Building training information;

2.10.3.5

Compliance training

information (provided by the Company);

2.10.3.6

Links to any Mannatech-controlled

2.10.3.7

Suggested Reading;

2.10.3.8

Calendar and Conference Call Information;

2.10.3.9

Biographical Information on the Presidential.

2.10.4

Precluded Information. Training Sites shall not:

2.10.4.1

Accept registrations of new Associates;

2.10.4.2

Offer Company Products for sale;

2.10.4.3

Contain information which violates the Associate Policies & Procedures;

2.10.4.4

Include blogs or message boards;

2.10.4.5

Contain information on Subjects not directly related to Mannatech;

2.10.4.6

Provide links to individual MannaPages or any web site not controlled by Mannatech; and

2.10.4.7

Provide links to any web site which assert/suggest Mannatech products and/or glyconutrients cure, treat, mitigate or prevent a specific disease.

2.10.5

Registration. Once an Associate has qualified to establish a Training Site, the Associate may do so by:

2.10.5.1

Submitting a request to associatetraining@mannatech.com;

2.10.5.2

Providing Associate name, account number, address, web domain and URL information and all necessary login/password information as required by the Company;

2.10.5.3

Posting material on the Training Site which complies with guidelines established by the Company;

2.10.6

Maintenance.

2.10.7

Loss of Privileges. An Associate shall disable a portion and/or the entire Training Site if:

2.10.7.1

Advised by the Company that a portion

2.10.7.2

Advised by the Company that a portion and/or the entire Training Site violates the guidelines established by the

2.10.7.3

Advised by the Company that the Associate had lost Presidential Status for three (3) consecutive business periods

2.10.7.4

Terminated or suspended by the Company.

2.10.7.5

Placed on probation by either the Compliance Committee or the Appeal Panel, and disabling the Training Site is a specific sanction ordered.

2.11

Registration of In-Person Meetings and Telephone Conferences

2.11.1

In-Person Meetings. You (as the “Meeting Sponsor”) are required to notify the Company of each in-person meeting where you intend to advertise or promote the Company, its products, or the business opportunity where more than 20 people are invited or reasonably expected to attend. You must provide the Company:

2.11.1.1

21-days advanced notice of the meeting, including your name, Associate account number, and the date, time and location of the meeting.

2.11.1.2

with notice within 24 hours of any meeting where 21-days advanced notice cannot be given, providing the information requested in 2.11.1.1. No meeting can be scheduled with less than 5 days advanced notice to the Company.

2.11.2

Telephone Conferences. You (as the “Meeting Sponsor”) are required to notify the Company of each telephone conference where you intend to advertise or promote the Company, its products, or the business opportunity where more than 20 people are invited or reasonably expected to attend. You must provide the Company:

2.11.2.1

5-days advanced notice of the meeting, including your name, Associate account number, and the date, time and access code information for the conference call.

2.11.2.2

with notice within 24 hours of any meeting where 5-days advanced notice cannot be given, providing the information requested in 2.11.2.1. No meeting can be scheduled with less than 24 hours advanced notice to the Company.

2.11.3

Notice of meetings or conference calls can be given to the Company by:

2.11.3.1

e-mailing the requested information to lec-meetings@mannatech.com;

2.11.3.2

faxing the requested information to 972.471.5619;

2.11.3.3

mailing the requested information to Mannatech, Incorporated, Attn: Legal Department, 600 S. Royal, Suite 200, Coppell, TX 75019.

2.12

Use of Testimonials

2.12.1

Testimonials. In conjunction with the sale of Mannatech Products, Independent Associates shall not use testimonials which link the benefits of Mannatech products, the ingredients of Mannatech products and/or glyconutrients in conjunction with any particular disease, disease process or disease claim.

2.12.2

Opportunity Meetings. Subject to 2.12.1, the host at opportunity meetings may allow attendees to make testimonials concerning generally improved health and well-being (statements which do not link the benefits of Mannatech products, ingredients of Mannatech products, and/or glyconutrients in conjunction with any particular disease, disease process, or disease claim) they have personally experienced after use of Company products. During the testimonial segment of the opportunity meeting, the proper disclaimers must be displayed (see text below).

2.12.3

Recording. The recording of permitted testimonials (by audio, video or otherwise) at opportunity meetings is not allowed, and is to be enforced by the host and/or meeting leaders.

2.12.4

Educational Meetings. Educational meetings are for informational purposes only; no promotion of the products or the business of the Company shall take place.

2.12.5

GlycoLEAN®. Associates are able to make testimonials relating to GlycoLEAN® products provided that:

2.12.5.1

All statements are truthful;

2.12.5.2

All statements are accurate;

2.12.5.3

All statements are verifiable; and

2.12.5.4

Notices are provided that individual

2.12.6

Mannatech Optimal Skin Care System™. Associates are able to make testimonials relating to Mannatech Optimal Skin Care System™ products provided that:

2.12.6.1

All statements are truthful;

2.12.6.2

All statements are accurate;

2.12.6.3

All statements are verifiable; and

2.12.6.4

Notices are provided that individual results

2.12.7

Mannatech OsoLean™. Associates are able to make testimonials relating to Osolean™ products provided that:

2.12.7.1

All statements are truthful;

2.12.7.2

All statements are accurate;

2.12.7.3

All statements are verifiable; and

2.12.7.4

Notices are provided that individual results may vary, and that Osolean™ must be taken in conjunction with a reduced caloric intake and a regime of physical exercise.

2.12.8

Photographs, Videotapes & Other Media. Except as allowed under these Policies and Procedures, use of “before-and-after” photographs, videotapes, or other forms of recorded media which suggest or imply a link between the benefits of Mannatech products, the ingredients of Mannatech products, and/or glyconutrients in conjunction with any particular disease or disease process is expressly forbidden.

2.13

Use of Online Sales Media

2.13.1

Associates may not sell Mannatech products on online auction web sites, virtual sales malls or other online sales media.

2.14

Reserved for Future Expansion

2.15

Use and Registration of Internet Web Sites, Electronic Media and Company Trademarks

2.15.1

Use of the lnternet. The Company maintains a web site at www.mannatech.com, and offers our Associates Company produced websites ("MannaPages"). Associates may also have their own web sites, blogs, and other electronic medium (such as YouTube, MySpace, Facebook, Twitter, etc.), hereinafter referred to as "Associate Internet Sites," to promote their Mannatech business by complying with the provisions below.

2.15.2

Registration Requirement. You must register each website, blog, or other electronic medium used in connection with your Mannatech business within ten (10) business days of the creation of the site, providing your name, account number, URL of the site, and any passwords necessary to fully access the site. You may provide this information by:

2.15.2.1

E-mailing the requested information to lec-registration@mannatech.com

2.15.2.2

Faxing the requested information to

2.15.2.3

Mailing the requested information to Mannatech, Incorporated, Attn: Legal Department, 600 S. Royal, Suite 200, Coppell, Texas 75019.

2.15.3

Use of Company Name/Intellectual Property. Associates must comply with the Intellectual Property stylebook (which can be found at Mannatech.com in the library section) in using the Corporate Name, trademarks, copyrights, product names, ingredients, or in discussing the business opportunity. Associates must prominently represent to the public they are Mannatech Independent Associates.

2.15.4

Links to Corporate Sites. Associates may provide a direct link from their Associate Intemet Site to their MannaPages website, to www.Mannatech.com, and to any other Company-controlled URL. An associate may also provide a direct link from their MannaPages website to their Associate Internet Site.

2.15.5

Search engines. Associates may provide a direct link to their MannaPages website and any Associate lnternet Site from internet search engines provide the search parameters (metatags, search and source codes, etc.) are compliant.

2.15.5.1

You may not bid on key words, advertise on websites, or utilize search parameters that address specifìc diseases, disease claims, or disease processes.

2.15.6

Precluded Actions. Your Associate Internet Site may not:

2.15.6.1

Contain content (text, testimonial, audio, photo, video, or otherwise) which asserts or implies that Mannatech products, Mannatech product ingredients, or glyconutrients cure, treat, mitigate or prevent a particular disease, disease claim, or disease process;

2.15.6.2

Link to another web site that contains contents which asserts or implies that Mannatech products, Mannatech product ingredients, or glyconutrients cure, treat, mitigate or prevent a particular disease, disease claim, or disease process;

2.15.6.3

Have the Company name, Company product names, Company trademarks, or disease names/conditions in the URL;

2.15.6.4

Contain content (text, testimonial, audio, photo, video, or otherwise) that misrepresents Mannatech, its products, or the business opportunity to the public; and

2.15.6.5

Offer Mannatech products under a different and/or generic product name, either by renaming, relabeling, or repackaging; and

2.15.6.6

Utilize an e-commerce feature other than offering a direct link to the Associate's MannaPages website or www.mannatech.com.

2.15.7

Responsibility for Site. The Company will hold Associates and any content providers strictly liable for the material contained on the Associate Internet Site.

2.15.8

Reservation of Rights. The Company reserves the right to seek any and all remedies available by law, including injunctive relief, in additional to a disciplinary compliance action by the Company to remove non-compliant or offensive material fiom the internet that relates to the Company, its officers, directors, employees, Associates, trademarks, proprietary property, products or business. Sanctions for a disciplinary compliance action are set forth in Section 6.12.13, and range from a warning to termination of the Associate.

2.16

Company Intranet Guidelines

2.17

E-mail Correspondence

2.17.1

Recipients who wish to be removed from a mail list should notify the sender directly. Upon receipt, the Associate must remove the requestor from the mailing list immediately as required by law.

2.17.2

Associates should not send or excerpt materials which violate 2.7, 2.8 or 2.25 of these Policies and Procedures to other Associates or prospects.

2.17.3

Associates must always comply with local and federal regulations, including but not limited to the CAN SPAM Act. Associates are strictly prohibited from sending unsolicited e-mail (i.e., e-mail blasts or “spam”) and/or posting electronic messages on Internet bulletin boards to advertise the Company, Career & Compensation Plan and/or the products. If you participate in chat rooms, you do so at your own risk and are solely responsible for any statements made in this medium and must observe Company Policies prohibiting medical, product and income misrepresentation in all electronic messaging formats.

2.17.4

You are prohibited from buying e-mail address lists and sending unsolicited materials to individuals from whom you have not received permission.

2.17.5

The Company may notify you via e-mail (in the event you have provided your e-mail address) of upcoming events or general information. If you do not want to receive this correspondence, contact the Associate Relations Department at the e-mail address provided in the document.

2.17.6

Associates may include links or references to their MannaPages if the originating source of the link does not violate Associate Policies and Procedures. Prohibited sources include, but are not limited to, non-compliant web sites, and/or sources that include disease references, personal testimonials, income claims, and the like.

2.18

Broadcast Fax

2.19

Contacting the Media

2.19.1

All media inquiries (radio, television, newspapers, magazines, or any other periodicals or media) are to be referred to the Executive Director of Marketing. Associates who contact the media directly or indirectly to participate in any fashion are strictly prohibited from discussing the Company, products, business or Career & Compensation Plan, or to provide testimonials of any kind. You are not authorized to represent the Company if contacted by the media.

2.19.2

Personal Appearances—You are prohibited from representing the Company either directly or indirectly on television, cable television or radio without prior written permission from the Company.

2.19.3

Public Relations—You are prohibited from employing broadcast media either directly or indirectly as a form of public relations, including but not limited to news releases, articles and talk-show appearances without prior written permission.

2.19.4

Meeting Notices—Notification for public opportunity meetings for insertion into newspapers or periodicals must comply with all Associate Policies and Procedures. Specifically, they may not allude to any income representations or medical/disease claims or reference disease names.

2.20

Trade Shows and Expositions

2.20.1

You may conduct your Mannatech business at trade shows, expositions or other public forums.

2.20.2

An Independent Associate is responsible for securing all approvals, admissions, floor space, etc., in conjunction with participation at said events.

2.20.3

An Independent Associate must be physically present at his booth at all times during an event.

2.20.4

Only materials which do not violate 2.7, 2.8 or 2.25 of these Policies and Procedures may be displayed,

2.21

Retail Sales

2.21.1

The Company uses network marketing as its chosen method to share its business opportunity. The foundation of this is based upon one-on-one contact with others who may want the products and who may want to become involved in the business opportunity. Once this method of marketing is chosen and independent sales Associates put their time, energy, and resources into building a business, the Company and all Associates have a responsibility to consistently support network marketing.

2.21.2

You may sell or display Company products in (1) offices or other areas located in a private club that are not accessible to, or in view of, the general public; or (2) private offices of professionals who operate by appointment only, including but not limited to, beauty salons, spas, medical offices, and dental offices. Your ability to sell Company products under this paragraph may be subject to state law or other rules or regulations of government agencies or professional organizations. You are solely

2.21.3

You may not sell or display Company products in a permanent retail establishment. Examples include, but are not limited to department stores, beauty supply stores, supermarkets, drug stores, newsstands, health food stores, vending machines, mall carts, and flea markets.

2.21.4

You may, however, offer Company products in a permanent retail establishment provided that (1) the proprietor is an Associate, (2) the store is dedicated to the promotion of wellness and complementary health care, (3) consultation on the use of Company products is available to the customers, (4) only Company approved promotional materials are used, and (5) Company products are kept in a locked display case, behind a counter, in a separate room, or are otherwise not accessible in a self-service environment.

2.21.5

You may sell products for any price you choose. Retail prices set by the Company are recommended prices only.

2.21.6

You may not re-label or in any manner alter the label on any Company product. Additionally, you may not repackage or refill products and must sell products in their original, unopened containers. If you participate in this activity, you expose yourself to potential criminal charges and/or civil damage claims.

2.21.7

You must supply all retail customers with a properly completed sales receipt in a format applicable to your jurisdiction. For more information and available forms, please see the Mannatech Online Document library. Associates must maintain copies of sales receipts for a period of no less than two years and must furnish them to the Company upon request.

2.21.8

You must inform the buyer of their cancellation rights at the time of the sale. You must allow retail customers the ability to cancel their order within ten business days and allow full refunds ten days after receipt. In the event that the Company must reimburse a dissatisfied retail customer on your behalf, refunds will be deducted from commissions and you may be subject to disciplinary review.

2.22

Promotion of Product for Animal Use

2.23

Misrepresenting the Company

2.23.1

You are prohibited from referencing research or publications that were conducted by or financed by Mannatech without clearly and conspicuously disclosing Mannatech’s participation in the research.

2.23.2

You are prohibited from referencing research or publications that were conducted by, financed by, or otherwise controlled by a Mannatech Independent Associate without clearly and conspicuously disclosing that the research/publication was conducted, financed by, or otherwise controlled by a Mannatech Independent

2.23.3

You are prohibited from referencing a publication that is directly or indirectly represented to be a scientific publication, published by a Mannatech Independent Associate, without clearly and conspicuously disclosing that the publication is controlled by a Mannatech Independent Associate who receives compensation from the sale of Mannatech products.

2.23.4

You are prohibited from referencing research or publications of the Fisher Institute without clearly and conspicuously disclosing the Independent Associate status of the Fisher Institute at the time the research was conducted or the publication was published.

2.24

Career & Compensation Plan and Income Earnings Misrepresentations

2.24.1

Reviewing the Career & Compensation Plan with any person without (i) clearly stipulating that no remuneration is received solely for enrolling or sponsoring new Associates and (ii) providing required compensation disclosure(s).

2.24.2

Reviewing the Career & Compensation Plan with any person without informing them that, other than the initial $39 application fee (enabling them to become an Associate), there is no ongoing purchase requirement to become or remain an Associate.

2.24.3

Reviewing the Agreement with prospective Associates without presenting all entry and upgrade levels, explaining the differences between Member, Preferred Associate and All-Star options before new recruits sign the Application & Agreement.

2.24.4

Reviewing the Automatic Order (AO) details, without disclosing that the AO is optional, generates 13 times a year (every 28 days), is automatically charged to the credit card provided or debited from their bank account, and that the products selected are shipped directly to the address provided each Business Period until the Company is notified in writing to discontinue the AO.

2.24.5

Representing, either directly or by implication, that all participants who enter into the business will succeed.

2.24.6

Misrepresenting the amount an average Associate might expect to earn in carrying on the business (for example, you may not

2.24.7

Misrepresenting the cost amount that an average Associate might expect to incur in carrying on the business.

2.24.8

Misrepresenting the amount of time an average Associate would have to devote to the business in order to achieve income or Leadership levels. You may not represent or imply that it is relatively easy to succeed in the business but may only represent that participant’s success occurs through hard work and diligence.

2.24.9

Representing through statements or implication that you will build a downline for a person.

2.24.10

Using any misleading, deceptive or unfair recruiting methods.

2.24.11

Discussing or making warranties, representations or statements concerning Company products in a manner that is inconsistent with the Company-produced literature.

2.24.12

Promoting the Company, its products and/or business plan in conjunction with the sale of stocks or securities related to the Company.

2.24.13

Manipulation or reconstruction of downline organizations through violations of the cross-sponsoring, inducement and/or multiple position policies.

2.25

Product Claims and Misrepresentations

2.25.1

Make any representation (oral, written or otherwise) about Company products which violate 2.7, 2.8 or the provisions of this section of these Policies and Procedures.

2.25.2

Discuss or make warranties, representations or statements concerning Company products in a manner that violates 2.7, 2.8, or the provisions of this section of these Policies & Procedures.

2.25.3

Use or distribute, for the purpose of marketing products or in promotion of the Career & Compensation Plan, materials which violate 2.7, 2.8 or the provisions of this section of these Policies & Procedures.

2.25.4

Re-label or in any manner alter the label of any Company product. Additionally, you must not repackage or refill Company products and must sell Company products in their original, unopened containers.

2.25.5

Use third-party individuals, business entities and/or organizations (such as Mannatech Members, MannaRelief, Fisher Institute, etc.) in any deceptive or misleading manner in connection with the promotion of Mannatech products.

2.26

Company Events

2.26.1

The Company will offer events during the course of the calendar year to provide training opportunities for Independent Associates, offering information on new and existing products, new marketing and training tools, business building techniques and education regarding compliance with the Associate Policies & Procedures. Independent Associates are strongly encouraged to attend all events sponsored by the Company.

2.26.2

While a Company event is in session, you are prohibited from recording (by audio, video, photo, electronic or otherwise) the speeches or the visual aids used in conjunction with said speeches. The Company may provide written materials and/or post materials on its web site for use by Independent Associates.

2.27

Compliance with OAG Settlement

2.27.1

A copy of the Agreed Final Judgment can be found on Mannatech’s web site MOD 1817801.

2.27.2

Questions regarding compliance with the Agreed Final Judgment or the Monitoring and Compliance Program therein may be directed to Mannatech, Incorporated, Attn: Senior Corporate Counsel – Compliance, 600 S. Royal, Suite 200, Coppell, TX 75019, or lec-monitoringprogram@mannatech.com,

3

International Policies

3.1

How to Conduct Business Internationally

3.1.1

Only after the Company has announced that a country is officially open for business may you do business in that country by promoting the Company and/or selling Product Packs. You are required to follow all laws, rules and regulations of any Country of Operation. You may use only promotional materials approved by the Company for use in that Country of Operation and sell only products approved for sale in that country. You must refer to the International Policy when traveling into unauthorized countries of operation. Currently, Mannatech is authorized only to conduct business in the countries set forth in MOD US/CAN 1817601. Any other countries are considered unauthorized countries of operation. Therefore, when you travel to these countries, the following Policy applies. You must not:

•

Advertise the Company, Career & Compensation Plan or products.

•

Offer Company products for sale or distribution.

•

Reproduce or self-produce literature for distribution.

•

Accept payment for enrollment or recruitment from citizens of countries where Mannatech does not conduct business.

•

Conduct opportunity meetings.

•

Promote International Expansion via the Internet or in promotional literature.

3.1.2

Products may only be lawfully sold in those jurisdictions for which they have been approved. Please refer to the product list for each country of operation.

3.1.3

If you are found to be in violation of an International Policy, you will be subject to the Associate disciplinary procedure.

3.1.4

You are solely responsible for compliance with all laws, tax requirements, immigration customs laws, rules and regulations of any Country of Operation. You accept the sole responsibility to conduct your independent business lawfully within the Country of Operation.

3.2

Gift of Products

3.3

International Sponsoring

3.3.1

Only Associates in good standing may act as an International Sponsor. The Company, at its sole discretion, reserves the right to reject at any time your international distribution and sponsoring rights upon written notice at your last known address.

3.3.2

Your right to act as an International Sponsor or to receive commissions in a Country of Operation may be revoked at any time if the Company determines that you have not conducted yourself in accordance with the terms and conditions contained herein or the governing laws of the Country of Operation.

3.3.3

You have no authority to take any steps in any country toward the introduction or furtherance of the Company. This includes, but is not limited to, any attempt to register or reserve Company names, trademarks or trade names, to secure approval for products or business practices, or to establish business or governmental contacts. You agree to indemnify the Company for all costs incurred by the Company for any remedial action needed to exonerate the Company in the event you improperly act purportedly on behalf of the Company.

3.3.4

The Company reserves the right to establish additional Policies and Procedures that are applicable to a specific country. Associates who conduct business internationally agree to abide by all special policies established by the Company for the specific Country of Operation.

3.4

Country Relocation

4

Sponsorship Business Rules

4.1

Rights to Choose Sponsorship

4.1.1

Prospective applicants have the right to choose his or her immediate line of sponsorship. Implied loyalty to an individual who made the initial Company introduction does not obligate one to accept that individual’s sponsorship. (For example, prospective applicants are not obligated to be sponsored/enrolled by someone who merely provides a Company video or other promotional material.) The Company does not have an obligation to settle or be a part of any disputes concerning sponsorship (or agreements in connection with sponsorship bonuses). The Sponsor/Enroller of a new Associate will be the Associate indicated in the Associate Application and Agreement signed by the prospective applicant and/or entered as the sponsor/enroller in the Company’s computer system.

4.1.2

Once an Associate Application and Agreement has been accepted by the Company and/or the account number assigned, sponsor/enroller changes are only permitted in the event of Company error, or if the Company is notified in writing by the new Associate and/or the Associate’s current and new Sponsor or Enroller before any commissions are paid.

4.2

Inducements to Select a Different Sponsor

4.2.1

Notwithstanding the Rights To Sponsorship Policy, it is against Company policy to induce or allow an individual, family member or business partner of an existing Associate to sign up under your line of sponsorship for the purpose of circumventing the original upline from future income.

4.2.2

Company meetings are open to all interested parties. You must not imply that interested parties are not welcome to attend the meetings or imply that assistance will not be given to them if they are not in your downline. Associates must feel secure when sending prospects to these meetings, and all prospects attending the meeting should be referred back to the person that sent them. It is against Company policy to sponsor a prospect at the meeting who was sent by another Associate.

4.2.3

You may not offer monetary rewards, free products or any other material inducement to entice a prospect to

4.3

Sponsor and Enroller Information

4.3.1

You must provide the Company with valid Sponsor and Enroller details at the time your application (this includes telephone

4.3.2

Associates have seven business days to make Sponsor/Enroller changes so long as there are seven business days left in the current business period. When less than seven business days are left in the current business period, Associates have until the end of that current business period to request Sponsor/Enroller changes. Please refer to the Sponsor Change Request Form, MOD USA 1807201 and CAN 1807211.

4.3.3

In order to sponsor a Member and earn commissions from your product purchases, you must be a Qualified Associate (as defined in the Career & Compensation Plan). Members will only have a Sponsor. Orphan positions (those being applications missing Sponsor information) will not be allowed and will be returned to the submitting party. Members will be placed in your downline organization as the Sponsor’s physical and pay level one. Members who want to become Associates

4.4

Changing Lines of Sponsorship

4.4.1

The Company will not permit any change in the line of sponsorship except in the following circumstances:

•

Where an Associate has been fraudulently induced into joining the Company or

•

Where, due to Company error, the sponsor has been entered incorrectly into the Company database.

4.4.2

If the request is made after seven days but no more than 28 days from the time of enrollment, the Associate must submit the written consent of his or her current Sponsor and the additional signatures as required on the Sponsor Change Request form on Mannatech Online Document USA1807201/CAN1807211. If, at the time of the request, the requesting Associate has a downline organization in place, the change will not be granted by the Company.

4.4.3

The Associate must supply written consent of all Associates in the organization whose income is arguably affected. However, the Company maintains right of

4.4.4

If you terminate your position in writing, you may rejoin under a line of Sponsorship of choice after six (6) full Business Periods. Termination of the position will result in forfeiture of all rights, bonuses and commissions under the previous line of sponsorship (see Policy 1.7). After the voluntary termination notice has been received by the Company, you may not hold meetings, attempt to enroll new Associates or sell product. If you are found to be actively pursuing the business during the termination period, the Company reserves the right to reject your Application and refuse to allow you to join under a new line of Sponsorship. Associates who voluntarily terminate their Associate positions may join in a new position under a new line or the same line of sponsorship provided all requirements are met. Position transfers are subject to the Company’s approval which may be withheld at any time.

4.4.5

You may sign up in a new position under a different Sponsor if you did not renew the original position after your effective renewal date, and there has been no activity in the original position for the previous six (6) full Business Periods. As an inactive Associate, you shall not refer to yourself as a Mannatech Independent Associate or hold or participate in educational or promotional meetings. You should discontinue using any materials bearing the Company logo, trademark or services mark(s), you shall not continue to communicate with the Company, not attempt to sponsor or enroll new Associates or otherwise sell Company product(s). If you are found to be actively pursuing the business during the inactive period, the Company reserves the right to refuse your application under a new line of Sponsorship. You must complete and submit a Voluntary Termination Notice (MOD USA1806001/CAN1806001), and submit a new Application and Agreement. Associates who wish to rejoin under these circumstances are eligible to join in a new position. Position transfers are subject to the Company’s approval which may be withheld at

4.4.6

You are not permitted to persuade or attempt to persuade any other Associate to terminate their enrollment with the Company in order to join your downline or use any unfair tactic or undue action to obtain any consent (see 4.2.1).

4.4.7

The Company reserves the right to assume any inactive or terminated position and transfer the position to another party at face value.

4.4.8

The Company will change a Member’s Sponsor at any time prior to the first order of product. Once the Member has ordered product, the position is locked in place and will not be moved unless there is a Company error.

4.4.9

Associates may request a Sponsor change for a Member pursuant to the Sponsor Change Request Form (MOD USA1807201 and CAN1807211).

4.5

Sale or Transfer of Associate Position

4.5.1

You (“Transferor”) cannot sell, assign or otherwise transfer the rights of your Associate position to any other person, firm or body corporate (“Transferee”) without the express consent of the Company, which may be delayed or denied in the sole discretion of the Company and without a statement of reason(s). The Company reserves the right to prohibit or impose various terms and

4.5.2

In order to receive such permission, the Transferor must be an Associate in good standing as determined by the Company, satisfy any outstanding debt obligations with the Company, and not be under any Compliance inquiry or sanction.

4.5.3

The Transferor must sign a Position Transfer Request authorizing the sale or transfer of their position. Additional information regarding the possible sale or transfer of an Associate position is available on Mannatech Online Document USA1805601 and CAN1805611.

4.5.4

The new owner is subject to all Associate Policies and Procedures and terms and conditions. The position is available for a transfer at any level shown on the face of the Associate Application and Agreement. All sale or transfers require that a Position Transfer and Associate Application and Agreement be signed by the Transferee and accepted by the Company. All signatures are

4.5.5

Terminated positions are eligible for sale or transfer if the position has remained terminated (and/or inactive) for six (6) full Business Periods. Positions terminated for disciplinary reasons are only eligible for sale or transfer once the six (6) full Business Periods have expired, and there is no litigation or possible litigation pending concerning the disciplinary actions taken by the Company.

4.5.6

Position Transfers for Associates who have voluntarily terminated and/or inactive positions as stated in 4.5.5 are strictly monitored for compliance with other policies as stated herein. The Company will deny position transfers at its sole discretion should it determine that the transaction will violate the Associate Policies and Procedures and/or the spirit of the policy for which they are intended. Associates using Position Transfers to violate policy may be subject to the Associate Disciplinary Procedure.

4.5.7

Members are not eligible for a Position Transfer into other existing Member positions in a downline organization. Members wishing to become Associates can sign up as a new Associate, but cannot position transfer into

4.5.8

Account balances from previous owners will not be carried forward on Position Transfers.

4.6

Inheritance of Associate Positions

4.6.1

Upon the death of an Associate, all rights to the Associate’s position, including rights to commissions, bonuses and Associate responsibilities, shall pass to successors as stated in the Associate’s will or as otherwise ordered by a court of competent jurisdiction. In the event the Associate had no will, the rights to commissions, bonuses and Associate responsibilities will be transferred according to the intestacy laws of the jurisdiction of the decedent’s estate as provided by a valid court order. In order to receive transfer, the inheriting party(ies) must provide a certified copy of the Associate’s death certificate or any other documentation required by the Company to evidence the true successor (including but not limited to a court order, copy of the Will, Letters Testamentary in the event there is a Will and/or Letters of Administration in the event there is no Will).

4.6.2

The heir(s) must fulfill all responsibilities of the Associate position and must sign the then-current version of the Associate Application and Agreement. The heir may inherit and retain another Associate position even though the heir(s) already operates an existing position.

4.7

Multiple Positions

4.7.1

You and your spouse may have an independent position and a third position as a sole proprietorship, corporation, partnership or trust. All of these positions must be in the same downline organization of the first position owned.

4.7.2

If a married couple divorces, the Company will abide by a final order of a court of competent jurisdiction concerning the division and award of property interests and rights to each party. The concerned party must supply any documentation required by the Company to support such a division.

4.7.3

The Company will not process any changes to an account during a pending divorce proceeding unless it receives written consent from both the husband and wife.

4.7.4

The Company reserves the right to intervene in any divorce proceeding and deposit commission checks with the applicable court of competent jurisdiction in the event of a dispute between the spouses as to earnings.

4.7.5

A single individual may hold two positions. One position may be an independent position and a second position may be a sole proprietorship, corporation, partnership or trust. All of these positions must be in the same downline organization of the first position owned.

4.8

Cross-Sponsoring of Spouses/Household Members

4.8.1

You may not circumvent your original line of sponsorship by joining another downline organization or a different leg of your sponsor by sponsoring yourself, your spouse, dependent children, a household member (“related party”) or any business or company operating under a business name (DBA) in which you and/or a related party have a direct or indirect ownership interest. Husband, wife, DBA household members, partners and/or dependent children must all be in the same downline underneath the first position owned. It is permissible to be in separate legs provided they are under the first position owned.

4.8.2

Violations of this Policy will result in the termination of the cross-sponsored account, and you will be instructed to work exclusively in the original position. Neither the cross-sponsored position nor the downline organization will be moved. If the Sponsor or Enroller is found to have knowingly or willingly encouraged the cross-sponsoring, the Sponsor/Enroller will be subject to further disciplinary action in accordance with the Compliance Disciplinary Procedure.

4.8.3

You may not participate as a partner, consultant or employee of another Associate position until after six full business periods in the event this policy is violated.

4.9

Recruiting Associates into Other Companies

4.9.1

Attempting to sponsor or recruit Associates other than those you have personally enrolled into any other program or selling other products unrelated to the Company to Associates is strictly prohibited.

4.9.2

For a period of one (1) year following termination of the Agreement, you shall not attempt to recruit any

4.10

Renewals

4.10.1

You will retain your status for a period of one year coinciding with your anniversary date. Associates and Members will have no renewal requirements, although will participate in the Company Retention Program which automatically deducts 45% of APO from their Product order(s) placed on or after the completion of one year from their enrollment date. Non-renewal of All-Star Associate status will result in the status being downgraded to the Preferred level when placing an order(s) on or after the fourteenth Business Period since his or her last renewal, if no accompanying All- Star Renewal Pack or equivalent PMPV is received.

4.10.2

If the position is not renewed, and no products have been ordered under the position for six (6) full Business Periods, the Enroller may transfer the position to another individual in accordance with the transfer policy.

4.10.3

Associates are prohibited from renewing positions without the effective consent of the person or entity owning the position.

4.10.4

There are no renewal requirements or Member positions.

4.11

Downline Reports

4.12

Confidential Proprietary Company Information/Reports Provided to Associates

4.12.1

You shall, at all times and without limit in time, treat such details as Confidential Information in the nature of a trade secret and shall not disclose such details to any other person (including any company or person in competition with the Company). You shall take all reasonable steps to protect and maintain the security of the information and shall use the details solely for the benefit of the business of the Company and for the stated purpose for which they were provided.

4.12.2

You shall not release, sell, reproduce for sale or in any way distribute confidential information to any other Associate, individual or any other party unrelated to

4.12.3

You shall not during the term of the Agreement or for a period of one (1) year thereafter take or encourage any action which would circumvent, breach, interfere with or diminish the value of benefit of the Company’s genealogies.

4.12.4

You shall only use the Confidential Information for your Mannatech business.

4.12.5

The Company shall suffer irreparable harm in the event its confidential and proprietary information is disseminated in a manner in contravention of its interest. The Company reserves the right to seek injunctive relief or any other remedy available at law to protect its Confidential Information.

4.12.6

The Company will suspend your access to its Confidential Information during any Associate Disciplinary proceeding, and thereafter.

4.13

Business Periods

4.13.1

Business Periods end every 28 days on Friday. (Business Period Calendar MOD USA1992001/CAN1992011)

4.13.2

Commissions of less than $5.00 will be carried to the next pay period. All commissions are paid in U.S. dollars.

4.13.3

Commissions paid on Member purchases will be paid on the product check issued two weeks after the end of the Business Period.

4.13.4

Commissions earned amounting to less than $5.00 in a calendar year will be forfeited after one year.

4.13.5

No commissions, bonuses, and/or incentives will be paid until the Company receives the signed application, or, when registering electronically, the e-signature of the Associate accepting the Terms and Conditions.

4.13.6

The preferred method of payment of commissions is via direct deposit which can be applied for online or by submitting MOD USA 1800701/ CAN 1800711.

4.14

Income Taxes

4.15

Commission Research Requests

4.15.1

All commission research inquiries must be submitted in writing to the Company within 45 days of the check in question.

4.15.2

Claims for errors in commission payments and requests for recalculation of commissions due to an Associate error must be submitted in writing and must include (i) a written approval from the upline Associate who received the income in error (ii) an approval from the upline for the Company to recalculate the commissions and (iii) the upline Associate’s authorization for the Company to deduct the full amount from the respective upline’s next commission. The Company is not responsible for recalculating commissions for Independent Associates who do not follow all the steps outlined above.

4.15.3

Only Company errors will be recalculated without written authorization from the upline.

4.15.4

The Company reserves the right to withhold any money owed by you to the Company from future commission payments, including but not limited to, any erroneous or other overpayment of commissions, including commissions paid on returned or refunded products or packs, or money owed to the Company or to other Associates.

5

Operations, Ordering, Product Returns, Refunds and Shipping

5.1

Ordering Options

5.1.1

Telephone orders will be accepted with credit card payment or checks. Call the Company at (800) 281-4469 to order. Do not mail the hardcopy of the order to the Company when ordering by telephone.

5.1.2

To order by e-commerce, enter the order via the Mannatech web site at www.mannatech.com. Payment option is credit card only.

5.1.3

To order by fax, fax the completed Product Order Form, including credit card information or a completed Check Via Fax Authorization Form, to (800) 267-2722. Do not mail the hardcopy of order to the Company.

5.1.4

To order by mail, send a completed Product Order Form with credit card information, check (U.S. only), cashier’s check or money order in U.S. funds to: Mannatech Incorporated, 600 S. Royal Lane, Suite 200, Coppell, TX, 75019.

5.2

Mail Orders

5.3

Discount Automatic Orders

5.3.1

You can receive a 10% discount from the Associate cost of products by participating in the Automatic Order Program. Actual Pay Out (APO) is discounted accordingly on all automatic orders. You may participate in the program upon enrollment as an Associate. Simply complete the Automatic Order Form (MOD USA1801601/CAN1801611) or place the order by phone at (800) 281-4469 and identify the products to be automatically sent to you each four-week period. The Company will automatically debit your credit card or other payment option for the amount of the product order, applicable taxes and shipping/handling charge until you notify the Company with instructions to discontinue the Automatic Order (AO). You must provide an updated expiration date for your debit or credit card to continue to receive automatic orders.

5.3.2

Once initiated, the AO will remain in effect until terminated by you in writing or by calling (800) 281-4469.

5.3.3

You may make changes to the AO order via the Internet.

5.3.4

AOs are processed earlier than the scheduled date during the last week of the business period and during holiday weeks. Early processing ensures timely qualifications and deliveries. To avoid delays, all automatic orders must be created or modified prior to Wednesday during business period close and holiday weeks. Orders created or modified later than Wednesday will not generate until the following week.

5.3.5

The Company must receive any changes or terminations for the AO in writing, by phone or online, five (5) days prior to the AO generation date, or the changes/termination may not take effect until the following Business Period.

5.3.6

Participation in the program is optional and may be canceled at any time.

5.3.7

Members’ Automatic Orders do not pay a 5% Bonus to the upline.

5.3.8

Members receive an additional 10% discount from the Member Price (approximately 5% less than the Suggested Retail Price)

5.3.9

Members may change their automatic order at any time without losing their discount.

5.3.10

Members will have their credit/debit card charged once each month (12 months) instead of every 13 Business Periods.

5.4

Canadian Orders/Registration

5.5

Payment Options

5.5.1

All payment for products and materials must be in U.S. funds. Acceptable methods of payment include cash for storefront orders only, personal checks (drawn on U.S. banks or Canadian banks in U.S. funds only), Company-accepted credit cards/debit cards, and the following which must be payable in U.S. funds: cashier’s checks, certified checks and money orders. Do not mail cash. The Company does not accept COD (cash on delivery) orders.

5.5.2

Personal Checks—U.S. funds only to be accepted by the Company. An Associate’s check must be imprinted with their name and address. A service charge will be added to the collection total of any check returned to the Company. The Company can accept checks or money orders payable in U.S. dollars only.

5.6

Returned Checks

5.7

Credit Cards

5.8

Sales Tax

5.8.1

U.S. Associate(s) will pay sales tax based on the suggested retail price of the product. Canadian Associate(s) will pay GST tax based on the Associate cost, less any applicable discount for Automatic Order.

5.8.2

The “Amount Due” on an Associate’s Product Order Form is inclusive of sales tax where applicable.

5.8.3

In order to eliminate the charging of sales taxes on product orders in the U.S., you must provide a valid resale tax certificate from the state of your residence or business address.

5.8.4

Member(s) will pay sales tax based on the Member price, less any applicable discounts for Automatic Order.

5.8.5

Resale certificates will not be accepted from Members since product purchases are for personal consumption only.

5.9

Purchase for Own Use (Inventory Requirements)

5.10

Stockpiling Product

5.10.1

Mannatech’s Career and Compensation Plan is based on retail product sales. You are not required to carry an inventory of product for retail sale. Stockpiling is the excessive ordering of products in amounts solely for the purpose of qualifying for commissions, bonuses or advancement in the Career & Compensation Plan. You should order only enough products for a four-week period to reasonably fill your needs and/or retail customer orders. Stockpiling is a manipulation of the Career & Compensation Plan and unfairly leads to one Associate’s gain and another’s loss.

5.10.2

Any Associate requesting a refund on stockpiled product may be refunded per the 70% Rule (see Policy 5.11) at the Company’s discretion and is subject to disciplinary action and/or termination if the Associate is found to be violating the 70% Rule.

5.11

The 70% Rule

5.11.1

Product Sales: The Company Marketing and Career & Compensation Plan is based upon the sale of Mannatech products and services to end-consumers. You must fulfill personal and downline organization retail sales requirements (as well as meet other responsibilities set forth in the Agreement) to be eligible for bonuses, commissions and advancement to higher levels of achievement.

5.11.2

The following sales requirements must be satisfied for you to be eligible for commissions:

5.12

Replacement of Defective Product

5.13

Satisfaction Guarantee

5.13.1

Associate and Member Return Procedures

5.13.1.1

Contact Customer Care to obtain a Return Authorization Request Form. Unauthorized returns will not be accepted and the contents may be destroyed.

5.13.1.2

Complete a Return Authorization Request Form.

5.13.1.3

Comply with instructions found on the Return Authorization Request Form.

5.13.1.4

Enclose bottles (empty or unused portions) in the package.

5.13.1.5

You are responsible for return shipping costs, any insurance, and tracing your return shipment package should it become necessary.

5.13.1.6

Associates who return sign up packs or whose product returns exceed $1,000 will be deemed by Mannatech to have voluntarily Terminated.

5.13.2

Retail Customer Return Procedures

5.13.2.1

If purchased directly from the Company, Mannatech will process the return directly on behalf of the Associate. Follow the procedures found in 5.13.1.

5.13.2.2

If purchased from an Associate, the Associate is obligated to honor Mannatech’s Satisfaction Guarantee (see 2.21.8). Upon receipt of the products and proof of refund to the  Customer, the Associate may return used Product to Mannatech for refund or exchange following the procedures found in 5.13.1.

5.13.3

Product Exchanges

5.13.3.1

The Company will exchange for equal value any product that is returned in marketable condition purchased within twelve (12) months of the purchase date.

5.13.3.2

Contact Customer Service to obtain a Return Merchandise Authorization following the procedures found in 5.13.1.

5.13.3.3

All exchanges will be done on a one-for-one, equal value basis. Opened or dirty bottles will not be exchanged or returned to you. The Company will only exchange unused promotional materials within thirty (30) days of purchase.

5.13.3.4

The Company will pay for the return postage for the product going back to the customer.

5.13.3.5

There is no additional Actual Pay Out (APO) or Personal Point Volume (PPV) on exchanged orders.

5.13.3.6

Returned product has no cash value and will not be credited to your Mannatech account.

5.13.4

Refunds to Independent Associates & Voluntary Termination

5.13.5

Commissions on Refunded Products

5.14

Shipping

5.14.1

Mannatech makes every effort to ship your order within 24 hours of receipt, excluding weekends and holidays. Heavier volumes such as incentives or other events may increase this period to 72 hours.

5.14.2

Please review the products contained within the package for accuracy. Please review the packing slip against your order and any items that may be backordered. Backordered items will be mailed separately, at no additional cost, as soon as they arrive at the warehouse. Please report all incomplete or inaccurate shipments within seven (7) days.

5.14.3

In the event your order does not arrive within ten (10) business days, contact Customer Services. Please provide information

5.14.4

Please inspect the package upon arrival for any damage and report the damage to Mannatech within seven (7) days.

6

Laws, Regulations and Disciplinary Procedures

6.1

Amendments to Policies & Procedures

6.2

Removal of Policies and Procedures

6.3

Assignment

6.4

Governmental Laws

6.4.1

You may not represent that the Company or any of its products have been approved or endorsed by any governmental agency.

6.4.2

If you are found to have violated federal, state or provincial law or the regulatory provision of any jurisdiction in the course of conducting your Mannatech business, offering the Company business plan, and/or engaging in the sale of any Company products, you will be subject to disciplinary action, up to and including the immediate termination of your Agreement.

6.4.3

You may not attempt to utilize public or private schools, teachers, instructors and/or administrators in any capacity related to product promotional endeavors due to various state prohibitions related to the same, except in their private capacities or as allowed by local applicable law. There may be state and/or local provisions against the use of public or private schools, teachers, instructors and/or administrators in any capacity related to product promotional endeavors. You are required to familiarize yourself with such provisions and comply with same in the course of promoting and conducting your Mannatech business.

6.4.4

Any Associate who is convicted of or pleads guilty to a criminal act that is in any way related to or occurred in the course of their Mannatech business is subject to disciplinary action, up to and including immediate termination.

6.4.5

For the purposes of these Policies & Procedures, whether an Independent Associate was engaged in conducting Mannatech business, offering the Company business plan, or engaged in the sale of any Company products shall be determined by the Company in its sole discretion.

6.5

Contacts with Government Regulators

6.6

Military Personnel

6.7

Residents of Georgia, Louisiana and Montana

6.7.1

An Associate in this multilevel marketing plan has a right to cancel at any time, regardless of reason. Cancellation must be submitted in writing to the Company at its principal business address. An official “Termination of Agreement” must be obtained, completed and returned to the Company at its principal business address in Coppell, Texas.

6.7.2

If the resigning Associate has purchased products or paid for administrative services while this Agreement was in effect, the Company shall repurchase all unencumbered products in reasonably resellable or reusable condition which were acquired by the Associate from the Company. Such repurchase shall be at a price not less than 90% of the original net cost to the Associate returning the goods, taking into account any sales made by or through such Associate prior to notification to the Company of the election to cancel.

6.7.3

The repayment of all administrative fees or services shall not be less than 90% of the costs to the Associate of such fees or

6.7.4

The Associate will be held responsible for all shipping expenses incurred in returning sales aids or products to the Company.

6.7.5

The Associate Application & Agreement is governed by and construed in accordance with the laws in the State of Texas, unless the laws of the state in which an Associate resides expressly require the application of its laws. Except as set forth in the Company Policies & Procedures, or unless the laws of the state in which the Associate resides expressly prohibit the consensual jurisdiction and venue provisions of this Agreement, in which case its laws shall govern.

6.7.6

Montana Residents: A Montana resident may cancel his or her Distributor pack within 15 days from the date of enrollment, and may return his or her Product Pack for a full refund within such time period.

6.8

Requirement for Regulatory Training

6.9

Monitoring of Meetings

6.10

Reporting Violations

6.11

Resolution of Disputes

6.12

Disciplinary Procedure

6.12.1

Allegations of a violation of a Policy (hereinafter referred to as “Issue”) may be brought against an Associate of the Company by any of the following as an “Initiator” of the procedure: an employee of the Company, an Associate of the Company, and/or any third person who has been affected by the conduct of an Associate. The Initiator will begin the process by completing the Compliance Complaint Form 1 (“F1”). The Issue may be reported via the web at www.ethicspoint.com or via telephone (US & Canada) by calling 866-292-4946. Notice that a F1 complaint has been filed will be communicated to the Respondent’s first upline Presidential and to the Respondent’s upline Platinum Presidential.

6.12.2

An “Issue” must be instituted within six (6) months of its occurrence, unless good cause is shown for the delay.

6.12.3

All references in these Policies & Procedures to the “Director of Compliance” shall refer to the officer or employee holding that title or their designee.

6.12.4

The Director of Compliance may determine from the face of the F1, or other evidence pertaining to the allegation, that it does not constitute a violation of any Policy of the Company. The Initiator will be sent a reply to this effect, and no other process shall ensue.

6.12.5

The Director of Compliance may determine that the allegations can be substantiated and do not warrant an investigation, in which case a Warning notice will be sent to the violating Associate directing them to cease the current activity. The Warning will include an agreement that the Associate must sign and return within the allotted time, and no other process shall ensue.

6.12.6

If the allegations warrant an investigation, a Response Form 2 (“F2”), will be forwarded to the Associate “Respondent” who has allegedly violated the Policy set forth in the Complaint. The F2 is designed to allow the Respondent to provide details of the “Issue,” and to clarify the facts for the Compliance Department. Upon receipt, the Director of Compliance will make a determination as to whether a policy violation has occurred and, if so, will be scheduled for Compliance Committee review. If the allegations cannot be substantiated due to insufficient evidence, or it is determined that there is no policy violation, all parties will receive a “No Violation” letter to this effect.

6.12.7

A Respondent must complete and return the Form 2 (Respondent’s Response to Complaint) within ten (10) business days of receipt of a request to do so by the Director of Compliance (or designee). It is presumed that you received the request to fill out a Form 2 no later than three (3) business days after it was sent by the Company (seven [7] business days if it was sent internationally).

6.12.8

The Compliance Committee (the “Committee”) shall be comprised of no less than three department heads selected at the sole discretion of the Director of Compliance. The following individuals may not serve on the Committee: the CEO, a current member of the Board of Directors, or the heads of Legal & Compliance, Marketing or Sales. Additionally, an individual may not serve on the Committee if to do so would be a conflict of interest.

6.12.9

The Initiator shall bear the greater burden of proof. The Complainant and Respondent are responsible for ensuring the Company receives witness statements on his or her behalf.

6.12.10

The Initiator must notify the Company in writing in the event he or she wishes to withdraw a complaint.

6.12.11

The Initiator and Respondent will each be afforded a reasonable amount of time at the meeting by teleconference to present their respective positions to the Committee. The Initiator and Respondent must supply the Director of Compliance with the correct telephone number at which they may be reached at the scheduled time, or a written acceptance or waiver of his or her desire to orally present a position.

6.12.12

The Committee shall only consider written statements and oral position presentations as to the alleged infraction. The decision of the Committee as to the validation and/or disciplinary action imposed (if any) shall be determined by a confidential majority vote.

6.12.13

Except as set forth in 6.12.14 below, the Committee may impose any one or a combination of the following sanctions:

6.12.13.1

A Written Warning clarifying the meaning and application of a specific Policy or Procedure and advising that a continued breach will result in further sanctions.

6.12.13.2

Probation, which may include requiring an Associate to take remedial action and could include follow-up monitoring by the Company to ensure compliance with the Agreement.

6.12.13.3

Suspension of certain Associate privileges, including but not limited to placing product orders, participating in Company programs, progressing in the Career & Compensation Plan, or participating as a sponsor (including participating as an International Sponsor) for a period of time or until the Associate satisfies certain specified conditions.

6.12.13.4

Withdrawal or denial of an award or recognition, or restricting participation in Company-sponsored events, either for a specified period of time or until you satisfy certain specified conditions.

6.12.13.5

Withholding commissions or bonuses for a specified period of time, or until you have satisfied certain specified conditions.

6.12.13.6

Imposing fines or other penalties permitted by law.

6.12.13.7

Termination of your Associate Agreement.

6.12.14

In cases where it is determined by the Compliance Committee that the Independent Associate has made a claim that Company products cure, treat, mitigate or prevent a specific disease (a “Disease Claim Violation”), the Compliance Committee shall make a specific finding whether the Disease Claim Violation was isolated and trivial.