The Code of Practice for Independent Distributors

Transcription

1 The Code of Practice for Independent Distributors Chapter I General Provisions Article 1 (Purpose) GNO Taiwan is hereinafter referred to as GNO. independent distributors. Its participants are hereinafter referred to as The Code of Practice aims to define the rights and obligations of GNO and independent distributors. Nothing herein intends to limit transactions or impose unreasonable restrictions on commercial activities. The Code of Practice is established for the purpose of ensuring that independent distributors have fair, reasonable and profitable business opportunities under GNO s multi-level sales plans. Article 2 (Validity) The Code of Practice constitutes part of GNO s Application and the Terms and Conditions for Independent Distributors and applicable applications and contracts affecting the rights and interests of independent distributors. Independent distributors are required to fully comply with the Code of Practice. The Code of Practice defines the relation between GNO and independent distributors, and such definition is also applicable to the relation among independent distributors. Article 3 (Definition of Independent Distributor) The independent distributors stated in the Code of Practice refer to the entities and individuals that participate in GNO s multi-level marketing plans by executing the Application and the Terms and Conditions for Independent Distributors, paying for operation information and Global Software System (GSS), and completing the registration procedure. Article 4 (Contractual Relation) Independent distributors are entitled to promote and sell GNO goods or services and recruit entities and individuals to become independent distributors only during the term of the contract, and shall assume relevant obligations. No partnership, employment, relation of principal and agent or relation of authorizer and agent is established between GNO and any of independent distributors. Article 5 (Personal Information) Personal information of an independent distribution may be collected, treated, used and internationally transmitted in the territory where GNO and the independent distributor perform their rights and obligations and in accordance with the Personal Information Protection Act. Personal information and the categories of personal information include but are not limited to identification category, characteristics category, financial items category, family status, social status, education, skills and other professional and employment status, financial information, commercial information and various information. 1 With a prior written notice to GNO, an independent distributor may exercise the right of inquiry or request for reviewing, obtaining, supplementing, correcting, ceasing collection, processing or use of, or deleting the personal information of the independent distributor in accordance with Article 3 of the Personal Information Protection Act. A fee may be paid by the independent distributor in accordance with GNO s regulations of free and charged services.

2 Article 6 (Confidential Agreement) Independent distributors are obligated to protect GNO s trade secrets and confidential information. All information, whether electronic, verbal or written, shall be the property of GNO. Neither personal information nor trade secrets shall be provided or disclosed to a third party or be granted to a third party to use. Independent distributors shall assume the responsible of protection and confidentiality and prevent personal information and trade secrets from being disclosed improperly. This Article shall survive after the termination or expiration of the contract of the independent distributor. Chapter II Distributor Acquisition and Change of the Qualifications for an Independent Article 7 (Acquisition of the Qualifications for an Individual Independent Distributor) An individual who reaches the age of 20 and has the capacity to make juridical acts or who reaches the age of 18 and is under 20 and obtains a written consent of his or her legal representative may apply for being an independent distributor on the recommendation of a GNO independent distributor. Article 8 (Obtainment of the Qualifications for a Corporate Independent Distributor, and Restrictions) An entity incorporating legally may provide with the information on its business registration certificate and apply for being an independent distributor on the recommendation of a GNO independent distributor. The rights exercisable by an independent distributor shall be granted to either the person in charge of the entity or one of its directors. The change of the person in charge or the director shall be approved by GNO in writing in advance for the changed person in charge or director to have the rights of the independent distributor. Article 9 (Transfer of the Rights of an Independent Distributor) An independent distributor may transfer the rights and obligations of the independent distributor to a third party based on the principle of good faith in accordance with the transfer procedure of GNO 6 months after obtaining the qualifications. Article 10 (Suspension and Revocation of Independent Distributor s Qualification) If an independent distributor violates national laws and statutes, the Code of Practice, GNO Personal Information Security and Maintenance Plan and the Regulations Governing Processing of Personal Information after Business Termination, or causes damage to the rights and interests of GNO, GNO may suspend the independent distributor s qualification for one to three months. If the situation is serious, the independent distributor s qualifications shall be revoked. Article 11 (Voluntary Cancellation and Termination of an Independent Distributor s Qualifications) An independent distributor may terminate the contract in writing any time, withdraw from GNO s multi-level marketing plans, and request for return of goods. However, termination informed via facsimile shall not be accepted. Article 12 (Prohibition of Re-participation) 2

3 An individual or entity whose qualifications for an independent distributor are revoked or who cancels or terminates the contract of the independent distributor voluntarily shall not reapply for being a GNO independent distributor. Chapter III Recommendation and Advertising Article 13 (Mandatory Obligation of Notification) When an independent distributor recruits an individual or entity to participate in GNO s multi-level marketing plans, the independent distributor shall inform the individual or entity of the following matters, without concealment or false or misleading statement: 1. Capital and business volume of GNO; 2. GNO s multi-level marketing plan and reward system, and participation conditions; 3. GNO s Code of Practice, operation guidelines and applicable laws and statutes of multi-level marketing; 4. Obligations and liabilities of independent distributors, and conditions of withdrawal from GNO marketing plans, and rights and obligations arising from the withdrawal; 5. Matters relevant to the goods or services of GNO; 6. Calculation methods, criterions and reasons for deduction of a devaluation amount from the price of repurchased goods when withdrawing from GNO s marketing plans; and 7. Other matters indicated by the competent authority; Article 14 (Prohibition of Improper Promotion Activities) When independent distributors promote GNO s marketing plans, they shall indicate that they are engaged in multi-level marketing activities, and shall not promote by means of the following: 1. Having individuals mistake it for an employment opportunity; 2. Promoting in the name of market and consumption survey or employee recruitment; 3. Having individuals mistake it for an investment, financial or similar activity; 4. Having individuals mistake it for an activity to give products for free or prize money; 6. Other similar deceptive or misleading methods; and 7. Promoting any products or services not offered by GNO by claiming that they are GNO s products or services. Article 15 (Principle of Income Declaration) When independent distributors promote and sell the goods and services of GNO or recruit individuals and entities to participate in GNO s marketing plans, independent distributors shall declare potential incomes pursuant to the following principles: 1. Independent distributors shall not explain that the major income of a GNO independent distributor shall be earned by recruiting individuals and entities to participate. 2. Independent distributors shall not promise or guarantee that an independent distributor has a specific income. 3

4 3. The estimated income to be earned by an independent distributor shall not exceed the reasonable range provided in GNO s marketing plan and reward system. Article 16 (Obligation of Explaining Cases of Success) When independent distributors promote or sell the goods or services of GNO and recruiting individuals and entities to participate in GNO s marketing plans by declaring cases of success, independent distributors shall not make false or misleading statements while explaining the time periods, benefits obtained, and course of development of such cases. Article 17 (Prohibition of Improper Comparison and Defamation) When independent distributors compare GNO s marketing plans, reward system, goods and services with those of another company, such comparison shall be made based on objective facts. Independent distributors shall not state or spread any untrue information that may damage the reputation of GNO or any company for the purpose of competition. Article 18 (Limitation of Advertising Activities) Independent distributors shall not conduct any of the following advertising activities for recruiting individuals or entities: 1. Promoting GNO s marketing plans, goods or services by means of leaflet, book, newspaper, magazine, broadcasting, TV, Internet or other means to have the public be informed without the written consent of GNO; 2. Printing promotional materials and publications and conducting open activities such as speech, exhibition, dinner party and charity sale in the name of GNO or by use of its trademark without the written consent of GNO, or running a profit-seeking business; 3. Broadcasting or reproducing the meetings held by GNO or its activity-related documents; 4. Declaring that products are helpful for cure, treatment, diagnosis, mitigation or prevention of any disease; 5. Repacking, reproducing or supplementing the products, information, materials or marketing plans of GNO, changing labels, or separating or dividing GNO products into a smaller unit for sale; or 6. Having GNO products and auxiliary goods sold or auctioned at retail stores or on virtual platforms, such as store, stand, market, Internet, etc. Article 19 (Prohibition of Improper Marketing Activities) Independent distributors shall not conduct any of the following activities: 1. Promoting or selling goods or services or recruiting individuals and entities to GNO marketing organization by deceptive or misleading methods; 2. Raising funds in the name of GNO; 3. Conducting marketing activities by using the methods violating public order or good morals, or the promotion and recruitment methods prohibited by the Code of Practice; 4. Affecting the rights and interests of consumers by improper and direct contact for sale; and 5. Conducting marketing activities that violate the Multi-Level Marketing Supervision Act, the Criminal Code or applicable laws and statutes. 4

5 If an independent distributor violates the provisions of the Article, GNO may revoke the independent distributor s qualification, and the independent distributor shall not request for return of goods. Chapter IV Organization Activities Article 20 (Prohibition of Cross-system Operation) An independent distributor shall not use the operation right obtained in the name of his or her family member or a third party to join a marketing organization rather than the originally recommended system. Violation of such prohibition by an independent distributor shall entitle GNO to restore the operation right used by the independent distributor to the originally recommended system. Article 21 (Prohibition of Competition) An independent distributor shall not directly or indirectly induce or encourage another independent distributor to, or help another independent distributor, separate from the originally recommended system. Article 22 (Participation Restriction) The independent distributor with a ranking of higher than GNO 4 Stars (inclusive) shall not engage or participate in any multi-level marketing enterprise offering goods or services similar to those offered by GNO. Violation of such restriction by an independent distributor shall entitle GNO to revoke the independent distributor s qualification. Article 23 (Prohibition of Unlawful Collection of Bonuses) An independent distributor shall not maliciously create a pattern of organizational development by means of artificial tools or through computer simulation in order to combine third parties or join GNO s marketing organization in the name of another individual based on the created pattern, and withdraw from GNO s marketing organization by applying for rescission or termination of the contract after receiving bonuses or remuneration, or unlawful profits. Violation of such restriction by an independent distributor shall entitle GNO to revoke the joint participants qualifications for independent distributors and take back the bonuses collected unlawfully. Chapter V Handling of Withdrawal and Return of Goods Article 24 (Rescission of Contract) An independent distributor may rescind or terminate the contract by giving a notice in writing to GNO within 30 after making the contract. Within 30 after effective rescission or termination of the contract, GNO shall accept the independent distributor s application for return of goods. The goods shall be returned by the independent distributor at its expenses. GNO shall return to the independent distributor all the payments for the returned goods and any fees paid to GNO when joining GNO. From the payments returned to the independent distributor in accordance with the preceding paragraph, GNO may deduct the value decreased due to the damage or loss attributable to the independent distributor when returning the goods, and any bonus or remuneration paid to the independent distributor for purchase of the goods. If the returned goods are collected by GNO, it may deduct the shipping expenses required for the collection. Article 25 (Termination of Contract) 5

6 After the expiration of the period provided in the preceding paragraph for rescission or termination of the contract, the independent distributor may still terminate the contract any time by giving a notice in writing to GNO, withdraw from GNO s marketing plans and organizations, and request to return the goods. However, the goods that have been possessed by the independent distributor for over eight months since the goods were collectable shall not be returned. Within 30 after the termination of the contract, GNO shall accept the application filed by the independent distributor for return of goods, and buy back all goods possessed by the independent distributor at 90% of the original purchase price. GNO may deduct the bonuses or remuneration paid to the independent distributor for the purchase and, if applicable, the amount of the decreased value of the goods. Article 26 (No Claim to Damages or Penalties for Rescission or Termination of the Contract) When the independent distributor exercises the right to rescind or terminate the contract in accordance with the two preceding articles, GNO shall not claim damages or penalties against the independent distributor for such rescission or termination. In case that the goods are supplied by a third party, when the independent distributor exercises the right to rescind or terminate in accordance with the two preceding articles, GNO shall return goods and make repurchases in accordance with the two preceding articles, and shall pay the damages or penalties incurred by the independent distributor due to the rescission or termination of the contract. Article 27 (Deduction of Value Decreased) In consideration of storage and reasonable sales duration, except as otherwise provided in the Code of Practice, the calculation methods and criterions for devaluation of the goods upon the termination of the contract are listed as follows: Duration After Purchase Percent (%) of the original purchase price for buying the goods back at 90% 80% 70% 60% 50% 40% 30% 1. For the return of the goods possessed for the period between 31 and 60 after the date of purchase, the decreased value shall be 0%. (In other words, the goods shall be bought back at 90% of the original purchase price.) 2. For the return of the goods possessed for the period between 61 and 90 after the date of purchase, the decreased value shall be 10% For the return of the goods possessed for the period between 91 and 120 after the date of purchase, the decreased value shall be 20%.

7 4. For the return of the goods possessed for the period between 121 and 150 after the date of purchase, the decreased value shall be 30%. 5. For the return of the goods possessed for the period between 151 and 180 after the date of purchase, the decreased value shall be 40%. 6. For the return of the goods possessed for the period between 180 and 210 after the date of purchase, the decreased value shall be 50%. 7. For the return of the goods possessed for the period between 210 and 240 after the date of purchase, the decreased value shall be 60%. Article 28 (Taking Back Bonuses) When an independent distributor rescinds or terminates the contract, GNO shall deduct from the refund or the payment for the repurchase the bonuses or remuneration received by the independent distributor for the original transactions. If any other independent distributors at immediate levels higher than the independent distributor receive bonuses or remuneration for the transactions of the returned goods, they shall be obligated to return the bonuses or remuneration, and GNO shall be entitled to deduct or take back such bonuses or remuneration. Article 29 (Return of Goods for Factors Attributable to Independent distributors) In case GNO suspends an independent distributor s qualification because the independent distributor violates national laws and statutes, the agreement of independent distributor or the Code of Practice, or causes damage to the rights and interests of GNO, GNO may refuse the application filed by the independent distributor for return of goods. Article 30 (Principle of Personal Attendance) When an independent distributor intends to rescind or terminate the contract, the independent distributor shall deal with the procedure of returning the goods in person in the business place of GNO. If the independent distributor is unable to deal with the procedure in person, he or she shall issue a power of attorney or an affidavit to authorize an attorney to deal with the procedure on his or her behalf. Chapter VI Supplementary Provisions Article 31 (Applicable Laws and Statutes) Independent distributors of GNO shall exercise and perform the rights and obligations provided in applicable agreements and the Code of Practice. Besides, they shall also comply with the Multi-Level Marketing Supervision Act and the laws and statutes governing taxes, food health management, cosmetics health management, etc. Article 32 (Establishment of the Guidelines for Operation Practice of Independent distributors) Acquisition and transfer of qualifications for an GNO independent distributor, change of information, performance of rights and obligations, payments of bonuses and other relevant procedures shall be provided for in the Code of Practice and be handled in accordance with the operating regulations established by GNO. Article 33 (Validity) 7 The Business Reward Plan, the Code of Practice for Independent Distributors and the operating regulations issued by GNO shall constitute part of the contract of the independent distributor.

8 Article 34 (Amendment and Implementation) GNO may amend the Application and Agreement of Independent Distributors, the Code of Practice and the operating regulations to meet the needs of the changeable market, any amendment to the law or other businesses. The amended provisions or terms shall be announced in each business place of GNO and on its publications and website, and shall come into effect and be implemented automatically on the date prescribed in accordance with applicable laws after being reported to the Fair Trade Commission. 8

9 Operating Regulations for Independent Distributors Chapter 1 Rules of Participation 1. All individuals, regardless of their sex, race, nationality or political or religious beliefs, may apply for being an independent distributor of GNO Taiwan (hereinafter referred to as GNO ). 2. If an individual wants to become an independent distributor of GNO, he or she may complete the Application and the Terms and Conditions for Independent Distributors of GNO Taiwan and file the Application with GNO under the recommendation of an existing independent distributor of GNO. 3. For being an independent distributor, the applicant must meet the following requirements: (1) The applicant must reach the age of 20. In case that the applicant reaches the age of 18 and is under 20, the applicant must obtain a prior written consent of his or her legal representative and attached it to the application of independent distributor. However, an independent distributor must reach the age of 20 before being eligible to recommend for an application filed by an individual for participation. (2) The applicant shall not be insane or feebleminded who is unable to deal with his or her own affairs. (3) The applicant shall not be a debtor whose properties have been seized or a company, an entity or an individual that has announced bankruptcy. (4) The applicant s business or professional qualification shall not be suspended or annulled by the commercial or professional institution, association or society where the applicant is a member. (5) The applicant shall not be an inmate of a prison or a correction institution when filing the application. (6) If the applicant is not a citizen of the Republic of China, the applicant shall submit the application together with a photocopy of a valid passport, a photocopy of the Alien Resident Certificate, front and back, or supporting documents concerning the established company. (7) If the applicant joins in the name of a company or an entity, it shall be a company, an entity or a profit-seeking organization incorporated in accordance with applicable laws of the Republic of China. 4. Neither expected independent distributors nor GNO independent distributors shall be required to conduct any of the following activities for any purposes. Any existing independent distributor shall not require a new independent distributor or an individual who wants to join GNO to conduct any of the following activities: (1) Purchasing a certain amount of goods or auxiliary products; (2) Maintaining a certain quantity of minimum inventory or auxiliary products; 9 (3) Purchasing any goods or services not offered by GNO;

10 (4) Purchasing tickets for the general meeting, conferences or workshops or attending any meeting; (5) Recommending individuals who want to become independent distributors; and (6) Financially supporting any promotional item or activity not organized by GNO. 5. An independent distributor may send to GNO a written notice any time to voluntarily rescind or terminate his or her contract and shall apply for return of goods pursuant to the procedure of returning goods. 6. Process and guidelines of the application procedure: (1) Fully read the explanation concerning GNO s business, products, bonus plans and e-commerce, and the agreement for participation of independent distributors, the Code of Practice and applicable regulations of practice. (2) Complete the Application and Agreement for Independent Distributors and attach the following documents to the Application: A. For the application filed in the name of an individual: A photocopy of the ID Card, front and back, of the applicant B. For the application filed in the name of a company or an entity: A photocopy of the Corporate License issued by the Ministry of Economic Affairs (Not applicable for a company or established after Nov. 15, 2001) A photocopy of the official letter indicating the approval of corporate establishment registration or the Certificate of Profit-seeking Enterprise A photocopy of the ID Card, front and back, of the person in charge of the company or entity C. For the application filed by a foreigner: A photocopy of a valid passport of the applicant A photocopy of the Alien Resident Certificate, front and back, of the foreign applicant (The foreigner shall come to Taiwan for seeking residence from his or her dependent relative, not for working in Taiwan, and the effective period shall be no less than 183.) For a company or an entity, a photocopy of the document issued by the country to certify that the company or the entity has been registered legally (3) Fully complete the Application and the Terms and Conditions for Independent Distributors of GNO Taiwan. On the field of the bonus and account information in the Application, paste a photocopy of the cover page of the passbook of the individual or the company or entity with a bank or the post office. Bonuses will be remitted to the indicated account. 10 (4) Deliver the completed Application, supporting documents and the informed consent letter to GNO in person or by registered letter.

11 (5) Complete the membership procedure online and pay for operation information and Global Software System (GSS). (6) Obtain the independent distributor s qualification, own personal cloud sales center, and enjoy supporting services from the website. (7) The contents of all attached documents provided by the applicant must be correct and those of all photocopies must be clear in order not to influence appropriation of bonuses. (8) When purchasing goods by a credit card, the independent distributor must provide with the credit card information correctly and confirm the limit of the credit card and the record of consumption. If the payment cannot be authorized by the issuing bank due to any cause on the side of the applicant, and thus the rights and interests of the applicant are impacted, the applicant shall assume all responsibilities. (9) The applicant must sign on the signature field of the Application and Agreement for Independent Distributors. If GNO proves, after investigation, that the applicant misstates or uses any ID document that belongs to another individual, the independent distributor s qualification shall be revoked immediately. The independent distributor shall assume all legal responsibilities. (10) After GNO has examined and approved the application filed by the applicant pursuant to the application procedure, the applicant shall obtain the qualifications for a GNO independent distributor and is eligible to promote and sell GNO products and introduce other individuals to GNO. GNO shall give bonuses based on the GNO products or services sold by the independent distributor under the business reward plan. (11) GNO retains the right to withhold its approval for any application, including re-application. Chapter 2 Procedure of Ordering 1. Online Ordering: The independent distributor may order products from GNO though RBC sales center. In order not to influence personal rights and interests, please pay attention to the following: Method of Ordering Day and Time of Ordering Procedure of Ordering / Delivery Order at GNO and pay in cash. 10:00 am 7:00 pm on Monday to Friday Fill out the order at GNO. Give the completed order to the administrative staff to complete the procedure of ordering and pay in cash. The ordered products may be collected in either of the following methods: 1. By picking up at GNO: The products are available after the procedure of ordering has completed and the payment has been made. 2. Through the delivery service: Ordered products will be delivered within 7 working by the logistics company 11

12 designated by GNO. Order on the Internet and pay by credit card. Monday ~ Sunday 24 hours a day Complete the procedure of ordering and pay by credit card online. The ordered products may be collected in either of the following methods: 1. By picking up at GNO: When the order is placed - (1) before the delivery time (summer time: 1:00pm; winter time: 2:00 pm) on the date when the order is placed, the products can be picked up after 4:00 pm of the day; or (2) after the delivery time (summer time: 1:00pm; winter time: 2:00 pm) on the date when the order is placed, the products can be picked up around 4:00 pm of the following day. 2. Through the delivery service: Ordered products will be delivered within 7 working by the logistics company designated by GNO. Notice: 1. GNO shall collect a handling fee based on the quantity of ordered products. 2. Please provide with the address for delivery correctly. If the products cannot be delivered as requested because the address is unknown or incorrect, the independent distributor shall be solely responsible. 3. Please confirm the limit of the credit card and the record of consumption. If the payment cannot be authorized by the issuing bank due to any cause on the side of the independent distributor, the delivery is thus delayed and the rights and interests of the independent distributor are impacted, the applicant shall assume all responsibilities. 4. After receiving the products, please inspect the contents and quantity of the products. In case of any shortage in quantity, quality defect, damage to the package, mistaken order, or excess of products delivered, please handle pursuant to the procedure of returning goods. 5. Bonus points of each independent distributor are managed and calculated by the global system of GNO. Independent distributors must order through RBC sales center in order to ensure relevant rights and interests. 6. If the independent distributor orders the products online at GNO and pay by credit card, the onsite collection practice is not applicable to the independent distributor in order to protect the rights and interests of both parties. The onsite collection practice shall be only applicable to those who order at GNO and pay in cash. 7. When the person placing the order is not the person making the payment, GNO shall deal with the order after confirming the order with both the person placing the order and the person making the payment. 8. Any change in the above rules of ordering will be published at GNO s website and announced on GNO s premises ADO Automatic Renewal Plan

13 (1) Purpose To provide with a convenient and efficient option for independent distributors to remain qualified continuously and accumulate sales results (2) Requirements for Being Qualified Each independent distributor needs to obtain a business volume of at least 50BV at the end of each qualification cycle in order to remain qualified and entitled to accumulate the BV value and earn bonuses. If an independent distributor fails to meet the above minimum requirement within the given period, the accumulated BV value will be cancelled and no bonus will be given to the independent distributor. (3) Advantages of ADO ADO helps you save the time spent on placing orders again and again every month. It helps you remain qualified continuously and entitled to collect business rewards. G points may also be used to pay. You do not have to be concerned for the qualification cycle of yourself and your partners. ADO helps you run for success of your GNO business. 3. Development of International Market In consideration of compliance with applicable laws and taxation, GNO shall prohibit independent distributors from selling, offering, transferring, importing, exporting or distributing goods, auxiliary materials and services, and introducing GNO s marketing plans, to the territory or country rather than Taiwan and other licensed territories. Chapter 3 Rules of Return and Replacement of Goods To protect the rights and interests of independent distributors and consumers, GNO have established the rules of return and replacement of goods in accordance with the Multi-Level Marketing Supervision Act and other applicable laws and statutes. The rules are stated as follows: 1. Replacement of Goods GNO does not require independent distributors to purchase products or request independent distributors to purchase a large quantity of products that cannot be consumed or sold out in a short period of time. Reasonable inventory is helpful for the retail plans of independent distributors. However independent distributors have to take actual sales and consumption demand into consideration before placing an order with GNO. Before a new order, more than 70% of the products listed in the previous order shall be sold. 2. Goods shall be returned pursuant to the Regulations Governing Withdrawal and Return of Goods stated in Chapter 5 of the Code of Practice for Independent Distributors. Goods delivered by GNO may be replaced based on the status of shortage, quality defect or damage to the package and shall not be returned or purchased back at a discounted price for other reasons. 3. Rules of Returning Goods Status of Goods Handling Period Procedure Notice 13

14 Shortage Within 7 after receiving goods - The independent distributor must complete the Application for Returning Goods, and send the Application together with the signed delivery document and a photocopy of the invoice back to GNO. Alternatively, the independent distributor may deal with the procedure at GNO in person. - After GNO has examined and confirmed the application, products will be delivered within 7 working. - The independent distributor must retain the delivered products and original package and keep the signed delivery document for GNO to inspect. - If any fraud is found during inspection, the independent distributor shall assume all legal responsibilities. Quality defect Damage to the package Within 7 after receiving goods - The independent distributor must complete the Application for Replacing Goods, and send the Application together with the invoice and the replaced products back to GNO. Alternatively, the independent distributor may deal with the procedure at GNO in person. - Conditions for replacement of goods Products are not damaged intentionally. Products are damaged not because of misuse or improper storage. - After GNO has examined and confirmed the application, new products will be delivered within 7 working. - If the returned or replaced products are collected by GNO, the shipping expenses required for the collection will be charged by GNO. 4. Practice of Returning Goods The independent distributor may return goods and complete the withdrawal procedure at the counter of GNO in accordance with the Multi-Level Marketing Supervision Act. Item Rescission/Termination Termination Conditions The independent distributor may apply in writing for returning goods and withdrawing from GNO within 30 after making the contract. The independent distributor may apply in writing for returning goods and withdrawing from GNO after 30 after making the contract. 14

15 Process of Returning Goods - The independent distributor must return or authorize another individual to return goods on his or her behalf. The following documents must be submitted: Application for Rescission or Termination and the Agreement for Independent Distributors The invoice for the purchase of goods, or the receipt of delivery Products to be returned Operation information of the independent distributor - The independent distributor must return or authorize another individual to return goods on his or her behalf. The following documents must be submitted: Application for Rescission or Termination and the Agreement for Independent Distributors The invoice for the purchase of goods, or the receipt of delivery, and the products to be returned 15 GNO Procedure of Dealing With the Return - GNO returns the fee of operation information paid by the independent distributor when it joins GNO, and buys back the products at the original purchase price. But the following amounts shall be deducted. Bonuses paid to the applicant already for the products Decreased value of the products due to the cause attributable to the independent distributor If the returned products are collected by GNO, it may deduct the shipping expenses required for the collection. If GNO does not receive the products sent back by the independent distributor, the independent distributor shall be responsible for making enquiries about transportation process. - Methods of Refund The refund will be paid back to your credit card account or remit to the applicant s account within 30 after the date of effective rescission/termination of the contract. When goods are returned, the bonuses, points and ranks obtained due to such goods by all the independent distributors at the level higher than the independent - GNO buys back the products at 90% of the original purchase price. But the following amounts shall be deducted. Bonuses paid to the applicant already for the products Decreased value of the returned products (based on the criteria of devaluation recognition for returned goods) If the returned products are collected by GNO, it may deduct the shipping expenses required for the collection. If GNO does not receive the products sent back by the independent distributor, the independent distributor shall be responsible for making enquiries about transportation process. - Methods of Refund The refund will be paid back to your credit card account or remit to the applicant s account within 30 after the date of effective rescission/termination of the contract. When goods are returned, the bonuses, points and ranks obtained due to such goods by all the independent distributors at the level higher than the independent distributor shall be returned to

16 distributor shall be returned to GNO. GNO. - GNO has the right not to accept the return of the goods that have been possessed by the independent distributor for over eight months since the goods were collectable. 5. Calculation of Decreased Value In consideration of storage and reasonable sales duration, GNO may deduct the decreased value of products from the refund or the repurchase payment when the independent distributor voluntarily rescinds or terminates the contract. The calculation methods and criterions for devaluation of the products are listed as follows: Duration After Purchase Percent (%) of the original purchase price for buying the goods back at 90% 80% 70% 60% 50% 40% 30% 1. For the return of the goods possessed for the period between 31 and 60 after the date of purchase, the decreased value shall be 0%. (In other words, the goods shall be bought back at 90% of the original purchase price.) 2. For the return of the goods possessed for the period between 61 and 90 after the date of purchase, the decreased value shall be 10%. 3. For the return of the goods possessed for the period between 91 and 120 after the date of purchase, the decreased value shall be 20%. 4. For the return of the goods possessed for the period between 121 and 150 after the date of purchase, the decreased value shall be 30%. 5. For the return of the goods possessed for the period between 151 and 180 after the date of purchase, the decreased value shall be 40%. 6. For the return of the goods possessed for the period between 180 and 210 after the date of purchase, the decreased value shall be 50%. 7. For the return of the goods possessed for the period between 210 and 240 after the date of purchase, the decreased value shall be 60%. 6. No Return of Goods 1. Products have expired Products have been unpacked and used.

17 3. Package or packing of the products is impaired or damaged. 4. Ordered products are from another independent distributor or purchased from other sources. No return of goods shall be accepted in any of the above situations. Chapter 4 Bonus Appropriation 1. Bonus Settlement and Appropriation (1) Sales results and bonuses are settled every Monday and bonuses are appropriated to the account indicated in the Application and Agreement for Dependent Distributor of GNO Taiwan on the fourth Thursday. (2) Bonuses are appropriated in USD. The minimum amount of bonuses appropriated per week shall be USD25. If an independent distributor s bonus is less than USD25, the bonus will be appropriated after it has reached USD25. (3) The New Taiwan Dollar to US Dollar exchange rate shall be NTD to USD Deductions from Bonuses and Payment of Expenses: (1) When GNO distributes bonuses, GNO shall withhold the Second Generation National health Insurance fee, If the distributed amount is more than NTD20,000, GNO shall withhold both the Second Generation National health Insurance fee equal to 2% of the total amount of bonuses and the income tax equal to 10% of the total amount of bonuses. (2) For a foreigner, the income tax equal to 20% of the total amount of bonuses shall be deducted from the distributed bonuses, regardless of the amount of the bonuses. (3) If the independent distributor s valid residence period is less than 183 when GNO distributes bonuses, the independent distributor shall be deemed as a foreigner. The withholding tax applicable to foreigners shall also be applicable to the independent distributor. (4) GNO has the right to deduct, from the bonuses received by an independent distributor, the expenses or bonuses owed by the independent distributor or payable to GNO. (In case of withdrawal or return of goods, the bonuses and a remittance fee shall be taken back.) (5) If the independent distributor joins in the name of a company, it shall issue an invoice covering the total amount of the bonuses (before deducting income tax) plus 5% business tax after it has received the bonuses remitted by GNO. If it is an entity that is allowed not to issue invoices, it shall issue a receipt covering the total amount of the bonuses (before deducting income tax). The words commission income shall be indicated in the field of product item in the invoice/receipt. The invoice/receipt shall be delivered to GNO in person or by registered letter. 17 (6) The tax imposed on the incomes obtained by a multi-level marketing enterprise participant from sale of products or services is explained in the explanation order Tai-Cai-Shui No from the Ministry of Finance. When a multi-level marketing enterprise participant accumulates certain of points (or

18 amounts) due to the purchases made by the independent distributors ranked lower than the participant, the participant will obtain bonuses and subsidies from the multi-level marketing enterprise based on the accumulated points or amounts. Such bonuses and subsidies are classified as commission income, which is the Category II income from professional practice (9A) defined in Article 14 (2) of the Income Tax Act. A supplementary insurance premium shall be collected for the income from professional practice under Category III of Article 3 (1) of the Regulations Governing the Deduction and Payment of the Supplementary Insurance Premium of the National Health Insurance. Chapter 5 Guidelines for Information Change 1. Information Change (1) If an independent distributor needs to change the contents of the Application and Agreement for Independent Distributors, the independent distributor must complete the Application for Change of Independent Distributor s Information and submit the Application together with supporting documents to GNO. (2) An independent distributor shall not apply for change the information of the person recommending the independent distributor to GNO, or the immediate supervisor of the independent distributor. (3) When the owner of operation right is changed from an individual to a company or an entity, the person in charge of the company or entity shall be the independent distributor himself or herself. The following documents shall also be submitted. A. A photocopy of the Corporate License issued by the Ministry of Economic Affairs (Not applicable for a company or established after Nov. 15, 2001) B. A photocopy of the official letter indicating the approval of corporate establishment registration or the Certificate of Profit-seeking Enterprise C. A photocopy of the ID Card, front and back, of the person in charge of the company or entity D. Application for bonus remittance and a photocopy of the bank passbook of the company E. Change from a company or an entity to an individual: The applicant must complete the Application and Agreement for Independent Distributors, and submit the Application together with a photocopy of the ID Card, front and back, of the applicant, and the application for bonus remittance (a photocopy of the passbook showing the account to receive bonuses). F. Change of the account to receive bonuses: The application for bonus remittance and a photocopy of the passbook showing the new account shall be submitted. (4) Change of household address: A photocopy of the ID Card, front and back, of the independent distributor shall be submitted. 18 (5) Change of name and ID card number: A photocopy of the ID Card, front and back, and the household certification of the independent distributor shall be submitted.

19 2. Transfer of Operation Right: (1) The independent distributor may apply for transfer any and all of his or her rights and obligations pursuant to the transfer procedure of GNO 6 months after obtaining the independent distributor s qualification. (2) GNO only accepts the application for transfer of operation right when the transferee is a direct relative of the transferor. (3) Application and Agreement for Independent Distributors completed by the transferee shall be attached. 3. Inheritance of Operation Right (1) If an independent distributor dies or becomes incapable, his or her rights and obligations relevant to the GNO enterprise shall be inherited by his or her legal inheritors in such order as provided in Article 1138 of the Civil Code. (2) The following documents shall be submitted: (3) A photocopy of the certificate of death or the certificate of diagnosis issued by a physician (4) Application and Agreement for Independent Distributors, and the application for bonus remittance (attached with a photocopy of the passbook showing the account to receive bonuses) completed by the inheritor (5) A photocopy of the certificate of household registration from which the deceased is moved out 19