P O L I C I E S A N D P R O C E D U R E S UNITED STATES VERSION 13 CONSULTANT POLICIES AND PROCEDURES (U.S.) Version 13 LAST UPDATE: January 1, 2018 TABLE OF CONTENTS SECTION 1: THE COMPANY 1 SECTION 2: POLICIES AND PROCEDURES INCORPORATED INTO CONSULTANT AGREEMENT 1 SECTION 3: BECOMING A CONSULTANT 2 SECTION 4: CONSULTANT BENEFITS 3 SECTION 5: CONSULTANT REQUIREMENTS AND RESTRICTIONS 4 SECTION 6: CONSULTANT BUSINESS PRACTICES 10 SECTION 7: SPONSORING AND TRAINING 20 SECTION 8: ORDERING PROCEDURES 23 SECTION 9: SHIPMENTS 24 SECTION 10: RETURN PROCEDURES 26 SECTION 11: ADVERTISING AND USE OF R+F TRADEMARKS AND OTHER R+F CONTENT 28 SECTION 12: COMPENSATION 40 ® SECTION 13: RELATIONSHIP TO PROACTIV SOLUTION 43 SECTION 14: TRANSFER OF CONSULTANTSHIP 43 SECTION 15: TERMINATION AND SUSPENSION 47 SECTION 16: REMEDIAL ACTIONS, GRIEVANCES, AND COMPLAINTS 49 SECTION 17: WARRANTIES; LIMITATIONS OF LIABILITY; INDEMNIFICATION 50 SECTION 18: MISCELLANEOUS; DISPUTE RESOLUTION 51 APPENDIX A: COMPENSATION PLAN A1 SECTION 1: INTRODUCTION A1 SECTION 2: DEFINITIONS A2 SECTION 3: VOLUME A9 SECTION 4: RECOGNITION TITLES AND QUALIFICATIONS A10 SECTION 5: PAID-AS TITLES A13 SECTION 6: TITLE PROMOTION AND MAINTENANCE A13 SECTION 7: NON PROMOTION (“TIMER”) A14 SECTION 8: TITLE DEMOTION A14 SECTION 9: COMPENSATION PLAN CATEGORIES A14 SECTION 10: INCENTIVE TRIPS AND PERFORMANCE BONUSES A17 SECTION 11: CURRENCY EXCHANGE RATE A18 SECTION 12: PRICE BASIS FOR RETAIL PROFIT A18 SECTION 13: COMMISSION ADJUSTMENTS FOR RETURNED PRODUCTS A18 APPENDIX B: GLOSSARY B1 APPENDIX C: RODAN + FIELDS CODE OF ETHICS C1 PLEASE NOTE: If there are questions regarding any of the following Policies and Procedures, please contact the Sales Support Department at 415-273-8000 or via email at [email protected]. SECTION 1: THE COMPANY Rodan & Fields, LLC (“Rodan + Fields” or the “Company”) is changing skin and changing lives by partnering with entrepreneurs to redefine the future of aging. Founded by renowned dermatologists Dr. Katie Rodan and Dr. Kathy Fields, Rodan + Fields is committed to offering life-changing, dermatologically-inspired skincare solutions. Rodan + Fields' proprietary AMP MD™ System and Multi-Med® Therapy Regimens offer clinically-tested results at home. From partnering with Harvard Business School on a case study to being recognized as the #1 skincare brand in the U.S. in 2016* and the #1 fastest growing skincare brand in the U.S. over the last six years,** Rodan + Fields is redefining skincare and entrepreneurship. *Source Euromonitor International Limited; retail value RSP terms; all channels, USA; extracted from internal system on March 15, 2017; claim effective starting March 28, 2017. **Source Euromonitor International Limited; retail value RSP terms; all channels, USA; extracted from internal system on March 15, 2017; claim effective starting March 15, 2017. The Rodan + Fields Mission: We help people live better in their skin with life-changing products that exceed Customers' expectations and programs that define social commerce and change lives. With integrity beyond reproach, our commitment to community and marketplace values is creating an enduring legacy for our Independent Consultants and our employees. SECTION 2: POLICIES AND PROCEDURES INCORPORATED INTO CONSULTANT AGREEMENT These Policies and Procedures (including the Compensation Plan and the Glossary incorporated herein by reference and attached as Appendices A and B hereto), in their present form and as amended from time to time at the sole discretion of Rodan + Fields (the “Policies and Procedures”), are incorporated into and form an integral part of the Consultant Agreement, which sets forth Rodan + Fields’ and each Consultant’s legal rights and obligations. Throughout these Policies and Procedures, where the term “Consultant Agreement” is used, it refers to the legally binding agreement between Rodan + Fields and each Consultant, consisting of (i) a properly completed and submitted Consultant Application that has been accepted by Rodan + Fields; (ii) these Policies and Procedures that are incorporated into and form an integral part of the Consultant Agreement; and, if applicable, (iii) a properly completed Business Entity Registration Form that has been accepted by Rodan + Fields. In the event of any conflict between the applicable Consultant Application or the Business Entity Registration Form, on the one hand, and these Policies and Procedures, on the other hand, these Policies and Procedures shall control. It is the responsibility of each Consultant to read, understand, adhere to and ensure that she or he is aware of and operating under the most current version of these Policies and Procedures. When sponsoring a potential Consultant, it is the responsibility of the Sponsor to provide access to the most current version of these Policies and Procedures (including the Compensation Plan) to the new Applicant prior to that potential Consultant’s submission of the Consultant Application. Rodan + Fields may amend these Policies and Procedures at its discretion. Notice of any substantive changes will be provided to all Consultants by email and/or in The Insider Scoop weekly newsletter and posted in the PULSE Library. The amended Policies and Procedures will become effective thirty (30) days after notice is provided, at which time the final amended policies will be posted on the R+F Website at www.rodanandfields.com and in the PULSE Library. Amended policies shall not apply retroactively to conduct that occurred prior to the effective date of the amendment(s) except where indicated. Consultants are responsible for reading The Insider Scoop and for regularly reviewing Rodan + Fields publications in the PULSE Library for notices of substantive changes to the Policies and Procedures. | Consultant Policies and Procedures page 1 Consultants’ continued participation in the Program following the effective date of the amended Policies and Procedures constitutes acceptance of any changes or additions. Rodan + Fields is deeply committed to ethical business practices and doing the right thing. It is the Company’s expectation that, as the face of Rodan + Fields, Consultants review and uphold the R+F Code of Business Ethics, which is attached as Appendix C and which is also available on the R+F Website at www.rodanandfields.com. The mutual success of Rodan + Fields and its Independent Consultants relies on the Consultants’ understanding and execution of these Policies and Procedures, as well as all laws and regulations that apply to each Consultant’s Rodan + Fields Consultantship. The Code of Business Ethics is designed to protect Consultants and their businesses, the Rodan + Fields brand, and, importantly, all Consumers (namely, any potential and existing Customers or Consultants). Capitalized terms used throughout these Policies and Procedures are defined in the Glossary (Appendix B). SECTION 3: BECOMING A CONSULTANT 3a. To become a U.S. Consultant, one must: - be 18 years of age or older; - complete and submit a Consultant Application that is accepted by Rodan + Fields; - purchase a Business Portfolio; - be authorized to run a business, and have an address to which products, correspondence and other items may be sent, in the United States, the District of Columbia, Puerto Rico, Guam or a U.S. military base as permitted by the base commander; - provide a valid Social Security Number and associated legal name; - not be in jail or prison or otherwise confined to a correctional institution; - not have ever been convicted of a felony; - not be a current employee, officer or director of Rodan + Fields and/or its affiliates, or the spouse of any of the foregoing; - not be a current employee, officer or director of Guthy-Renker LLC, Nestlé Skin Health S.A. and/or their affiliates, or the spouse or registered domestic partner of any of the foregoing; and - provide a valid email address not already associated with another Rodan + Fields Consultant or Customer account, and valid credit card. Any proprietorship doing business under an assumed name (DBA) must also submit a true and complete copy of its certificate of DBA if requested by Rodan + Fields. A Business Entity (i.e., a corporation, limited liability company, partnership or trust) applying to be a Consultant must also comply with the requirements of Section 5j. 3b. Independent Contractor Status: Consultants shall not be treated as employees of Rodan + Fields for any purpose including, without limitation, for federal, state or local tax purposes or for retirement or unemployment benefits. Consultants are self-employed, non- exclusive independent contractors who are authorized by Rodan + Fields to market and sell the R+F Products and sponsor Consultants in the 50 United States, the District of Columbia, Puerto Rico and Guam, and in any Authorized Country subject to having legal authorization to run a business and work in the applicable jurisdiction. Consultants are not, and shall not represent themselves to be, employees, agents or representatives of Rodan + Fields or purchasers of | Consultant Policies and Procedures page 2 a franchise. Any agreement between Rodan + Fields and a Consultant does not create an employee/employer relationship, agency, partnership or joint venture between Rodan + Fields and such Consultant. Consultants have no authority (expressed or implied), and shall not represent that they have any authority, to bind Rodan + Fields to any obligation, contract or agreement. Consultants shall establish their own goals, hours, place of business and methods of sale, so long as they comply with the Consultant Agreement. Consultants are solely responsible for all decisions made and all costs incurred with respect to their Consultantships. All Consultants assume all entrepreneurial and business risk in connection with their Consultantships. Consultants are responsible for obtaining any state or local licenses, permits and other governmental approvals applicable to her or his business, including qualifications to transact business in states other than her or his domicile. There is no guarantee that there is or will be a market for the R+F Products or that Consultants will earn or will not lose money. 3c. Getting Activated: Once an Applicant has submitted a properly completed Consultant Application, purchased a Business Portfolio, submitted any other documents that Rodan + Fields may require, and Rodan + Fields has accepted and processed the Consultant Application, the Applicant will become a Consultant and will be assigned a unique Identification Number and will be required to select a Password. It is the responsibility of the Consultant to provide the correct Identification Number in all communication, verbal and written, to Rodan + Fields. - A Consultant’s Identification Number must be used by that Consultant to identify herself or himself to Rodan + Fields in all correspondence with Rodan + Fields and may also be required for transactions. A Consultant may, but is not required to, provide her or his Identification Number to Customers and potential Customers to assist Rodan + Fields in identifying and linking the Customer or potential Customer to that Consultant’s account for online orders. - A Consultant’s Password is considered Confidential Information and should not be shared with anyone. This Password is used by a Consultant to access the R+F Website, her or his Pulse Personal Websites (PWS), and Pulse, through which she or he can order the R+F Products and/or access the Consultant’s performance history records, organizational status and Performance Reports. For information regarding the Pulse Program, see Section 11j. SECTION 4: CONSULTANT BENEFITS Once an Applicant has become a Consultant as described above, the Consultant is able to participate in, and make good use of, the opportunities and benefits provided by the Program. These benefits include the ability of the Consultant to: - purchase the R+F Products at Consultant Prices; - sell the R+F Products as described herein; - qualify and participate in the Compensation Plan (receiving Commissions and Performance Bonuses, if eligible); - sponsor Preferred Customers and other potential Consultants into the Program to build a Downline and advance through the various levels under the Compensation Plan; - receive periodic Rodan + Fields communications; and - participate in Rodan + Fields-sponsored support, service and training, and in motivational, promotional, incentive and recognition programs for Consultants, upon payment of appropriate charges, if applicable. | Consultant Policies and Procedures page 3 SECTION 5: CONSULTANT REQUIREMENTS AND RESTRICTIONS 5a. Business Portfolio: In order to become a Consultant, an Applicant must purchase a Business Portfolio (either by itself or as part of the purchase of a Business Building Kit that includes a Business Portfolio) at the time she or he submits a Consultant Application to Rodan + Fields. A Consultant may return the initial Business Portfolio at any time within one year after activation and receive a complete refund of the purchase price (not including any shipping costs).* The return of a Business Portfolio will be considered a voluntary Termination by the Consultant. For additional information on Consultant return policies, refer to Section 10. *Consultants residing in Maryland, Wyoming, Massachusetts and Puerto Rico may exceed the one year Business Portfolio return period for a refund (one year limitation does not apply). 5b. No Inventory Requirements / 70% Rule: Consultants are not required or encouraged to purchase or carry any amount of inventory of the R+F Products. Indeed, Consultants have active accounts and earn Commissions and Performance Bonuses without carrying any inventory. Orders may be transacted directly with the Company on behalf of the Consultant through the R+F Website and/or Pulse Personal Websites (PWS). Consultants receive full credit for all such sales without the need to carry any inventory. Consultants may, at their option, purchase the R+F Products in bulk for resale to Customers, provided that the Consultant retains receipts showing that at least 70% of those R+F Products were resold to one or more different Retail Customers or were otherwise used in support of business activities (e.g., incentives or demonstrations) within thirty (30) days of the last applicable order delivery date. Products not sold to Retail Customers or used for business activities should be for personal use within thirty (30) days of the order delivery date. Any such purchases by a Consultant may not be for the purpose of qualification for Recognition Titles or Performance Bonuses, and must not be excessive in relation to the earnings of any Consultant who makes such purchases. Furthermore, falsely representing the sale or use of R+F Products is grounds for termination of the applicable Consultant Agreement and Consultantship. Rodan + Fields reserves the right to require further documentation concerning any bulk or large orders to ensure compliance with this Section. Moreover, any Consultant purchasing R+F Products in excess of $1000 in any calendar month will be subject to the requirements set forth in Section 5c, below. 5c. Purchase Limitations: All Consultants purchases of R+F Products in excess of $1000 during any calendar month are subject to review by Rodan + Fields. In addition to the 70% sale requirement stated in Section 5b above, such orders must be supported by receipts retained by a Consultant demonstrating they were sold to at least three (3) different Retail Customers and/or provided as incentives to at least three (3) individuals. Also as part of this review, and in addition to the sales receipts, Consultants may be required to complete a Monthly Retail Sales Record Form, available here, or in PULSE Library, detailing the date of the sale to the Retail Customer, the Retail Customer name, the products sold, the method of payment and the total sale amount. Rodan + Fields’ obligation to repurchase the R+F Products as set forth in Section 10 will not apply with respect to Consultant purchases that fail to comply with Sections 5b and 5c. Rodan + Fields reserves the right to rescind qualification for Recognition Titles or Performance Bonuses, including incentive trips and car allowances, or to claw back Commissions, in instances in which a Consultant is found to have placed excessive orders, whether those orders are placed in her or his own Consultant account or in a Customer account.5d. | Consultant Policies and Procedures page 4 Consultant Status: An Applicant becomes a Consultant when her or his Consultant Application or, in the case of a Business Entity, a Business Entity Registration Form, is accepted by Rodan + Fields. A Consultant remains a Consultant in the Program by: (i) renewing her or his Consultant Agreement in accordance with Section 5l below on each anniversary date and acceptance of such renewal by Rodan + Fields; (ii) complying with the requirements of the Consultant Agreement; and (iii) not have a terminated account status. 5e. Eligibility: Rodan + Fields reserves the right to accept or reject any Consultant Application or Business Entity Registration Form for any reason at its sole discretion. Without limiting the generality of the foregoing, Rodan + Fields reserves the right to reject any Consultant Application or Business Entity Registration Form if Rodan + Fields determines in its sole discretion that its acceptance of a Consultant Application would result in any actual or potential conflict of interest or would call into question the independence of a Consultant. 5f. Single Consultant Account: A Consultant may hold only one account under a single Sponsor. A person or entity may not be a party to more than one Consultant Agreement or hold, directly or indirectly, any interest in additional Consultantships, including any Consultantships operated by a Business Entity. Consultants whose credit card information appears on Consultant accounts other than their own will be in violation of this policy and subject to termination. 5g. Spouses and Common Law Married Couples Treated as a Single Consultantship: Except as described in Section 14c, if spouses or common law married couples both wish to be Consultants, they must be registered together as a single Consultantship under a single Sponsor using a single Social Security Number. Spouses and common law married couples may neither sponsor each other directly or indirectly, nor have different Sponsors. Children over the age of eighteen (18) residing with their parents who meet all of the eligibility requirements may have their own Consultantships. For information regarding the disposition of a spousal or common law Consultantship upon divorce or separation, see Section 14b. For information on Transferring a Consultantship to a Spouse, see Section 14a. 5h. Territory: No Consultant shall assert or imply that she or he has ownership of, or exclusivity in, any particular geographic area, territory, market or region. All Consultantships are nonexclusive, and all Active Consultants have the full right to market and sell the R+F Products and otherwise conduct their Consultantships in her or his Home Country and in any Authorized Country, in accordance with the terms of the Consultant Agreement. Consultants may not market or sell the R+F Products or otherwise conduct their Consultantships in any geographic area or territory outside of her or his Home Country or any Authorized Country. Consultants may only market or sell the R+F Products or otherwise conduct their Consultantships in jurisdictions outside of any Authorized Country in the event Rodan + Fields advises its Consultants that they may do business in that country, subject to any conditions and limitations of such advisory. Notwithstanding the foregoing, Consultants doing business in jurisdictions outside of the United States shall do so pursuant to that jurisdiction’s Policies and Procedures and the Consultant shall be responsible for complying with the laws of such jurisdiction, including tax and immigration laws. See Section 5n below for rules relating to cross-border activities. | Consultant Policies and Procedures page 5 5i. Consultant Information: Each Consultant is responsible for keeping her or his Consultant Information up to date and accurate, and must immediately update any changes in her or his Pulse account. It is particularly important that a Consultant provides Rodan + Fields with her or his current email address, since email is one of the primary ways that Rodan + Fields and a Consultant’s Upline will communicate with the Consultant. By agreeing to these Policies and Procedures, the Consultant consents to receiving emails from Rodan + Fields as well as from her or his Upline. Each Consultant may modify her or his Consultant Information (e.g., update an address, phone number or email address). Consultant agrees that Rodan + Fields may share with Consultant’s Upline her or his name, telephone number, address, email address and select sales performance data for all Consultants in their Downline. No Social Security Number nor credit card number shall be shared with a Consultant’s Upline without separate express permission by Consultant to allow such personal information sharing. By providing her or his email address and telephone number, Consultant agrees to disclose her or his email address and telephone number to Rodan + Fields as well as to her or his Upline. To change a Tax Identification Number, please refer to Section 5j. Without limitation of the foregoing, a Business Entity that is a Consultant must immediately report any changes in its Beneficial Ownership to Rodan + Fields. A Consultant must submit appropriate legal documentation in support of any name change request. Further information about R+F’s privacy practices and procedures is contained in its Privacy Policy available at www.rodanandfields.com/Pages/Company/About/More/Privacy. 5j. Business Entities/Change in Consultantships: A Consultant enrolled as an individual may apply to transfer her or his Consultantship to a corporation, limited liability company, partnership or trust. To effect such a transfer, a corporation, limited liability company, partnership or trust must: - be incorporated or organized in the United States, the District of Columbia, Puerto Rico or Guam; - have its principal place of business in the United States, the District of Columbia, Puerto Rico or Guam; - have a valid Federal Tax Identification Number; - complete, sign and submit a Business Entity Registration Form that is accepted by Rodan + Fields (see Business Entity Registration Form in the PULSE Library for more details); - if requested by Rodan + Fields, submit a true and complete copy of the organizational and charter documentation (e.g., certificate of incorporation, articles of organization, certificate of formation, operating agreement, trust agreement, etc.) of such corporation, limited liability company, partnership or trust; and - have a valid email address and a valid credit card. In addition, the Beneficial Owner of the corporation, limited liability company, partnership or trust, must assign her or his Consultant Agreement to the Business Entity Applicant pursuant to the Business Entity Registration Form. All other Beneficial Owners of the Business Entity must be identified in the Business Entity Registration Form. A corporation, limited liability company, partnership of any nature or trust is referred to in these Policies and Procedures as a “Business Entity.” All Beneficial Owners of a Consultantship that is a Business Entity shall be jointly and severally liable for, and shall indemnify and hold harmless Rodan + Fields from and against, any breach of the Consultant Agreement by such Business Entity or any indebtedness or other obligation to Rodan + Fields of such Business Entity. The Beneficial Owners of the Business Entity are responsible for the conduct of their employees, contractors or agents and will be held accountable for any violation of the Consultant Agreement, including the failure of their | Consultant Policies and Procedures page 6 employees, contractors or agents to adhere to these Policies and Procedures. See Section 5k for further information. A Consultantship that is a Business Entity and undergoes a change of Beneficial Ownership must comply with Section 14d or it may have its Consultant Agreement and Consultantship terminated. A Consultantship that is a Business Entity may not use any trade name, business name or DBA that includes any R+F Trademark. Subject to the above requirements and restrictions, a Consultant may change a Consultantship’s status from a sole proprietorship to a corporation, limited liability company, partnership or trust, or from one type of Business Entity to another, by submitting a new Business Entity Registration Form. In addition, a Consultant may add her or his spouse to a sole proprietorship as a co-applicant to the Consultant’s existing Consultantship by submitting a new Consultant Application in the form of a partnership. In each such case, upon Rodan + Fields’ acceptance of the new Consultant Application and, if applicable, the Business Entity Registration Form, the Consultant’s original Consultant Agreement will cease to be in effect and will be replaced and superseded by the newly formed Consultant Agreement. Note that none of the changes described above will permit a Consultant to change Sponsors, except as specified in Section 7d, or to assign or transfer a Consultantship except as specified in Section 14a. 5k. Actions of Household Members, Employees, Agents, etc.: Each Consultant is responsible for the actions of her or his immediate household members, except for children over the age of eighteen (18) who have their own Consultantship pursuant to Section 5g. Each Consultant is also responsible for the actions of the Consultant’s employees, contractors and agents, and each Consultantship that is a Business Entity is responsible for the actions of its owners, officers, directors, employees, contractors and agents. If any such household member or such owner, officer, director, employee, contractor or agent engages in any activity which, if performed by the Consultant, would violate the Consultant Agreement, including a failure to adhere to these Policies and Procedures, such activity will be deemed a breach by the Consultant and Rodan + Fields may terminate the Consultantship and/or seek other appropriate remedies against such Consultant as detailed in the Consultant Agreement. In appropriate circumstances, Rodan + Fields may elect to first provide notice to the Consultant allowing her or him time to cure the breach prior to taking further action. 5l. Consultant Agreement Renewal: A Consultant Agreement commences on the date of activation and must be renewed on an annual basis. A Consultant’s failure to renew her or his Consultant Agreement upon the one (1) year anniversary of the activation date may result in the termination of her or his Consultant Agreement. Rodan + Fields will send the Consultant a renewal notice no later than thirty (30) days prior to the anniversary date of acceptance by Rodan + Fields of the original Application. If a Consultant wishes to apply to renew her or his Consultant Agreement, the Consultant must complete the renewal process and pay a $25.00 fee. Failure to do so may result in termination of the Consultant Agreement within thirty (30) days. The $25.00 fee is waived for a Consultant who: (i) carries the Recognition Title of Executive Consultant or higher as of the Commission Period immediately prior to her or his anniversary month; or (ii) has achieved a minimum of 100 SV in any of the three (3) Commission Periods immediately prior to her or his anniversary month. Rodan + Fields reserves the right to refuse any renewal request. If a Consultant Agreement is terminated for non-renewal, the affected Consultant may re-enroll in accordance with Section 15d of the Policies and Procedures. | Consultant Policies and Procedures page 7