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© 2011 The HairCare NetWork International, Inc.

HCN Policies and Procedures governing U.S. Independent Representatives are outlined below. Take time to read the entire document to fully understand the Policies and Procedures. These Policies and Procedures are incorporated by reference in the HCN Independent Representative Agreement. In the case of any conflict between these Policies and Procedures and the Independent Representative Agreement, the Independent Representative Agreement shall prevail.

HCN reserves the right to change these Policies and Procedures at any time.

HCN Statement of Operating Philosophy

The Founders of HairCare NetWork International, Inc. (HCN) believe in leadership by example rather than management by directive. HCN’s leadership has demonstrated a high degree of integrity and success at both sales and corporate levels. As such, they are committed to the following principles and standards as an expansion of their creed. For purposes of these Policies and Procedures, HCN, Inc., its parent, subsidiaries and affiliates shall be referred to as "HCN." Commitment to Excellence.

The HCN corporate management team is committed to supporting its customers and Independent Representatives, to giving them quality service and to calculating and mailing reports and commission payments in a timely manner. HCN has set these goals to give each Independent Representative the best opportunity to develop a successful business. HCN will not exclude anyone from this great opportunity based on race, age, sex, national origin, religion, disability or any other similar grounds prescribed or otherwise prohibited by law.

l. Independent Representative Rights and Obligations

A Ethics HCN conducts business in an ethical and credible manner and requires its representatives to deal ethically with their customers, with each other and with the company. HCN permits no unethical or illegal activity and will intercede when such behavior may exist, and HCN reserves the right to use its best judgment in deciding whether certain representative activities are unethical. Furthermore, HCN may use its own discretion in determining the appropriate course of action. If HCN determines that unethical activities may exist, then it reserves the right to suspend or terminate Independent Representative status, including but not limited to all commissions and payments of any kind. Under no circumstances would an Independent Representative who is terminated for unethical or illegal activity be entitled to a refund of their original application fee, nor are they entitled to sell or transfer their position.

FORGE EXAMPLES OF UNETHICAL OR ILLEGAL ACTIVITY INCLUDE, BUT ARE NOT LIMITED TO:

1. Falsify a signature on any document. This includes electronic signatures on any HCN customer portal, as well as on online representative agreements.

2. Making false or misleading representations of any kind including, but not limited to, misrepresentations about HCN services or the HCN Compensation Plan.

3. Depositing checks made payable to HCN into personal accounts instead of immediately forwarding them to HCN.

4. Cross-line recruiting: An HCN Independent Representative may not solicit an individual or entity that has been previously sponsored by another Independent Representative or that is considering joining HCN and being sponsored by another Independent Representative. For example, potential representatives sent to an Opportunity Presentation by another active representative cannot be recruited. During the term of their agreement and for a period of one (1) year after their Agreement has expired or terminated, HCN Independent Representatives are further prohibited from directly or indirectly soliciting an existing or pending Independent Representative into a sales organization in which he/she is not currently a member.

HCN Independent Representatives may not solicit an HCN Independent Representative, whether active, inactive, individual or an entity, to participate in a network marketing program offered by any other company, regardless of whether or not such network marketing company offers hair extensions or any beauty products or other services competitive to those offered by HCN. During the term of their agreement and for a period of 1 year after, HCN Independent Representatives are further prohibited from directly or indirectly soliciting an existing or pending Independent Representative into a sales organization in which he/she is not currently a member.

5. Spreading false or misleading remarks or rumors with malicious intent that may disparage HCN, HCN employees, or another HCN Independent Representative.

6. Any unauthorized use of HCN’s name, trademarks or copyrighted material (i.e. reproducing HCN’s forms, business cards, etc.).

7. Violation of any federal, state or local laws or regulations.

8. Stacking is strictly prohibited. Customer stacking is when you acquire customers and place them under a downline Independent Representative other than yourself.

9. HCN Representatives are prohibited from calling HCN and representing themselves as a customer for any products other than their own.

10. A representative’s upline or sponsor should not complete any agreement or purchase any HCN tools on behalf of the representative. An HCN Independent Representative is encouraged to act quickly and respond within the required timeframe to any request HCN may make and this situation should be their number one priority until it is resolved. If an HCN Independent Representative receives a letter notifying them that a investigation is currently underway for one of their customers, HCN will give details of the customer allegation, and which service is being disputed, plus guidance where to address questions or concerns. It is essential that the representative and the customer review where the misunderstanding was and detail all information within the "Investigation Report", included in the investigation letter. If the customer agrees to the information included in the investigation report, the customer’s signature must be notarized.

HCN will then respond with a decision regarding the investigation, which decision shall be final. In addition, if in HCN’s sole discretion, HCN determines that an Independent Representative is involved in submitting improper orders (other than forgeries or other egregious violations), HCN will issue a warning to the Independent Representative and require the Independent Representative to report back detailing the remedial actions it took to correct the problem. HCN will review each matter and will determine what disciplinary action is warranted, up to and including termination of the Independent Representative.

C. Offerings/Terms of Service Independent Representatives may only offer and sell services and products in accordance with rates, terms and conditions established by HCN, any regulatory agency or its partner/carrier/supplier/service provider(s). All sales representations and activities must be in full compliance with all applicable laws and regulations. Independent Representatives may only use those means of marketing and selling of services and products that are solely acceptable to HCN and its partner/carrier/supplier/service provider(s).

D. Co-Mingling of Funds Independent Representatives must make their application fees payable to HCN only. No Independent Representative shall accept funds for applications and co-mingle them with personal or association accounts. HCN may terminate any Independent Representative discovered co-mingling funds or operating a bank account in the name of HCN or any other similar name.

E. Personal Usage/Purchases An Independent Representative is not required to subscribe to or purchase any product or service marketed by HCN. Advancement to higher levels in the HCN Compensation Plan is based upon the acquisition of customers. However, if an Independent Representative chooses to purchase any products or services offered by HCN, he/she will be responsible for all billing when due. If an Independent Representative becomes past due on any bill, for services or products provided by HCN or a company with which HCN contracts, HCN may deduct amounts owed from future Bonuses or commission payments. HCN reserves the right to terminate an Independent Representative that is repeatedly past due in the payment of any service or product.

F. Unauthorized Contact Under no circumstances, is an Independent Representative permitted to directly contact any partner/carrier/supplier/service provider(s) with whom HCN contracts, unless it is in specific relation to a personal account they may currently have with said provider. In the event that your customer is experiencing difficulties with a specific provider, please inform your customer to contact HCN directly or the appropriate provider of service to resolve the matter.

G. Territorial Rights/Conducting Business Across Borders Team Trainers can market services and products and sponsor new Independent Representatives in any country where HCN conducts business, without exclusivity. Team Trainers may only promote HCN in countries where HCN currently operates. Independent Representatives conducting business in foreign countries must adhere to the HCN Policies and Procedures governing activities in that country. Furthermore, compensation will be based on the Compensation Plan of that specific country and be subject to conversion to U.S. funds. Independent Representatives are responsible for knowing and adhering to all laws and accepted business practices in the countries they choose to market. This includes but is not limited to Customs and Immigration Laws and accepted marketing practices.

H. Further Limitations HCN reserves the right to limit or disallow any activities that cast negative aspersions on the integrity, truthfulness, and/or reputation of HCN.

II. Status as an Independent Contractor

A. Claims of Employment Independent Representatives are independent contractors and not employees of HCN. The position of Independent Representative shall not be construed as creating a relationship of employee-employer, agency, partnership or joint venture between any participant, sponsor and HCN. It is impermissible to assert or imply that an Independent Representative or prospective Independent Representative is or will be employed by HCN.

B. Binding Arbitration In the event a dispute shall arise between an Independent Repre¬sentative and HCN as to the Independent Representative Agreement and/or the Policies and Procedures such disputes shall be resolved through binding arbitration before the American Arbitration Association pursuant to the Commercial Rules of Arbitration. The arbitration shall be held in Flint, Michigan, before a panel of three arbitrators, each side choosing one and then the two choosing the third. All claims hereunder must be brought within two (2) years of the date on which the facts or circumstances giving rise to the claim are alleged to have happened. Law of the state of Michigan will apply to the resolution of the dispute unless otherwise agreed in writing. The award of the arbitrator shall be final and may be entered in any court of competent jurisdiction. This provision shall not restrict HCN from seeking preliminary or permanent injunctive relief in any court of competent jurisdiction.

C. Contractual Obligations All Independent Representatives are responsible for any expenses which result from their business operation. Miscellaneous expenses include, but are not limited to, license or permits required to operate a business, legal fees connected with the use of a business name, telephone expenses, product advertising, etc. Independent Representatives shall not involve HCN in any contractual relationships relative to their businesses. Independent Representatives cannot and shall not sign contracts, rent or lease office space or equipment, open bank accounts, secure credit, cash negotiable instruments, make purchases or enter into agreements of any kind in the name of HCN. Such action is prohibited and cause for termination of Independent Representative status. Each Independent Representative shall hold HCN, its shareholders, partners, members, directors, officers and employees harmless from any claims, damages or liabilities arising out of such action.

D. Reporting Taxes Independent Representatives are not considered employees for purposes of the Social Security Act, the Federal Unemployment Tax Act, Federal Income Tax laws or any other laws governing employees. It is the Independent Representative’s responsibility to make self-employment and income tax payments as required by law. As such, HCN does not deduct any taxes from any commission and/or Bonus payments. HCN will send a Form 1099 to all applicable Independent Representatives who earn $600 or more in a tax year.

It is the Independent Representative’s responsibility to provide HCN with the proper Social Security Number or Taxpayer Identification Number. If the information that is provided is incorrect or if the Internal Revenue Service notifies HCN that the information does not match their records then HCN will hold all future payments until the matter is resolved.

III. Business and Legal Entities as an Independent Representative.

A. Companies A sole proprietorship, partnership, Limited Liability Company (LLC) or corporation may become an Independent Representative subject to review and approval by HCN. However, no individual may participate in more than one representative position without the prior written approval of HCN.

For the company to become a new Independent Representative, or to change their current representative status to a company, HCN must be notified in writing. Written notice is also required when changing an existing individual’s representative status to a company.

The following items are needed to apply for an HCN Independent Representative status as a company:

1. The name of the company

2. The company's Taxpayer Identification Number

3.A list of all partners/shareholders/members with more than 5% ownership – the document MUST include the Social Security Number for each person listed

4. A completed Independent Representative Agreement, signed by an individual authorized to enter into binding agreements on behalf of the business entity Individuals who submit the Independent Representative agreement must be authorized to enter into binding contracts on behalf of the company.

B. Trusts An Independent Representative can operate their representative status in the name of a trust. The person(s) that is (are) responsible for operating the business of the trust must be of legal age and cannot be another Independent Representative or have an ownership interest in another Independent Representative status.

To become a new Independent Representative as a trust or to change an existing representative status to a trust, HCN requires written notification and a new Independent Representative agreement.

The following items are needed to apply for an HCN representative status as a trust:

1. A legal document displaying the name of the trust and a legal opinion from an attorney stating that the trust is in compliance with all state and federal laws

2. A document that provides proof of the trust’s Taxpayer Identification Number

3. A document that lists all trustees including the Social Security Number for each person listed. For a Grantor Trust, a document that provides the Social Security Number of the Grantor.

4. A completed Independent Representative Agreement, signed by an individual authorized to enter into binding agreements on behalf of the trust The person who submits the written notification must be authorized to enter into binding contracts on behalf of the trust.

It is the Independent Representative’s responsibility to insure that HCN has received all the required documentation to list the representative status as a company or trust. If HCN has not received the appropriate documentation within 30 days, then HCN will suspend the Independent Representative position until all of the documentation is received and processed by HCN. In addition, any commissions or Bonuses earned during the suspension period will be held until the matter is resolved.

C. Marriage A husband and wife may operate under the same representative position or independently. If the husband and wife choose to operate independently, then one spouse must be sponsored by the other. HCN reserves the right to ensure that husband and wife distributorships independently operated are correctly sponsored and make any necessary corrections. Spouses that choose to operate the same position will be treated as partners.

D. Specifications for Independent Representative Names HCN reserves the right to approve or disapprove any representative’s choice of business names, formation of partnerships, corporations and trusts, for tax, estate planning and liability purposes. If the HCN approves such a change by the representative, the organization’s name and the names of the principals of the organization must appear on the Independent Representative Agreement along with a Social Security Number or Federal Tax Identification Number. Any request for a change in the name or a change in the Social Security Number or Tax Identification Number of the Independent Representative status is subject to a written agreement, signed by all parties involved, submitted to and approved by HCN. HCN reserves the right to verify all authorizations prior to making changes. In the absence of any agreement or notification, HCN will only recognize the individual whose Social Security Number was originally listed on the Independent Representative Agreement. Please note that HCN will only continue to service the Independent Representative who remains listed in our computer system. HCN reserves the right to intercede in disputes, and if it is determined that unethical activity exists, the status may be suspended and/or terminated.

IV. Identification Numbers

All representatives will be assigned a unique number that identifies them as a representative of HCN. This number is referred to as their Team ID Number. It is the representative's responsibility to provide this number on all Independent Representative Agreement when sponsoring a new Independent Representative.

V. Sponsoring New Representatives

A. Independent Representative Agreements New Independent Representatives must complete and sign an Independent Representative Agreement or complete the new representative sign up process on the HCN website at HCNinc.com. Only the new representative can complete the online Independent Representative Agreement. It cannot be completed by the sponsor or upline on behalf of the new representative. Application fees can be paid by Visa, MasterCard, American Express, Discover, check or money order. (Please note that HCN may assess a fee for any credit card payments that result in a charge back.) HCN does not accept postdated or third-party checks. The new Independent Representative or the sponsor can mail or fax the white copy of the Independent Representative Agreement to HCN for processing. If the application fee is being paid by check, the white copy of the Independent Representative Agreement must be mailed to HCN. The start date of an Independent Representative is the date that their completed Independent Representative Agreement is entered and payment is received or the date their first customer is entered. HCN assesses a fee for all returned checks. HCN reserves the right to refuse entry of an Independent Representative Agreement without payment and to adjust the start date accordingly.

B. Representation Independent Representatives shall make no claim or inference to prospective Independent Representatives as to the anticipated or actual income an Independent Representative might earn. HCN makes no guarantees of income, nor assurances of any profits or success. Furthermore, any profits or success resulting from activities as an Independent Representative will be based upon customer acquisition and the amount of services or products purchased by those customers. Any success achieved will be based solely upon the Independent Representative’s effort, commitment and skills.

Each Independent Representative understands that no Attorney General of any state, territory or other regulatory authorities ever reviews, endorses or otherwise approves any product membership or compensation program of any marketing company. As such, each Independent Representative shall make no such claim to a prospective HCN Independent Representative. In the event that a question arises concerning HCN’s compliance with the law, such question shall be submitted to HCN in writing. HCN Independent Representatives shall make no false claims or misleading statements concerning these relationships and understand that if they do, their relationship with HCN may be terminated and all commissions and bonuses forfeited.

Independent Representatives agree to indemnify and hold HCN and its shareholders, partners, members, directors, officers and employees harmless from all claims, damages and expenses, including attorneys’ fees arising out of actions or conduct in violation of the Agreement.

C. Independent Representative Disputes HCN may or may not mediate any disputes between two or more In-dependent Representatives if requested to do so by all of the parties involved in the dispute. HCN, however, reserves the right to review sponsoring practices. If HCN agrees to mediate any dispute, its findings shall be binding on all parties involved in the dispute.

D. Changing Sponsorship HCN believes in and maintains the maximum protection of the Independent Representative’s relationship with his or her sponsor. Therefore, changing sponsors is strictly prohibited. It is the responsibility of the Independent Representative to ensure the sponsor information submitted on the Independent Representative Agreement is accurate and complete.

An Independent Representative may join HCN under a new sponsor only after a period of no less than one full calendar year from the date of resignation or no less than one full calendar year after an Independent Representative fails to renew or cancels their distributorship. All resignations must be in writing and delivered to HCN.

HCN reserves the right to change sponsorship if it is found that unethical or misleading practices were used.

VI. Maintaining/Changing the Status of Your Business

A. Selling Your Independent Representative Position To protect the integrity of the business opportunity, HCN restricts the sale of Independent Representative positions. All requests for the sale of an Independent Representative position must be reviewed and approved by HCN. For permission to sell your Independent Representative position, forward a letter of intention to HCN, indicating your wish to sell. HCN will send all needed documentation to the seller for completion, before the process can begin. For more information, please contact Representative Services. HCN reserves the right to withhold or condition its consent to the sale of an Independent Representative position in its reasonable discretion.

The Independent Representative position WILL NOT be considered SOLD until the sale is approved by HCN. Therefore, DO NOT accept any funds from the potential buyer until the sale has been approved and finalized. HCN charges a $1,000 fee to process any approved sale. Do not send the $1,000 fee until HCN has approved the sale. Companies or partnerships that have a change of ownership greater than twenty percent (20%) must notify HCN of such change in ownership. The new owners/stockholders must comply with the terms of the independent representative agreement and these Policies and Procedures. If there is a change in ownership of 50% or greater then the rules regarding the sale of an Independent Representative position apply, including the $1,000 transfer fee.

B. Transfer/Disposition of Independent Representative Business Upon the death or incapacity of an Independent Representative, or of its principals, the rights to the commission and marketing position shall pass to the designated successor, provided said successor complies with all the terms of the HCN agreement, HCN’s Policies and Procedures and fulfills the duties and obligations required of an Independent Representative. In the case of a transfer to an existing Independent Representative, or to an individual listed as a partner/shareholder/trustee in an existing Independent Representative status, the individual will need to contact HCN to discuss his/her options in either maintaining the status or transferring it. If the transfer is of a temporary nature (i.e. the Independent Representative is temporarily incapacitated), the subsequent activation and deactivation will likewise be temporary.

C. Change of Independent Representative Information Independent Representatives must report any change of address, telephone number or email address online in My HCN for Representatives, by sending written notification to HCN World Headquarters, or by calling Representative Services.

VII. Commissions

A. Reports Hierarchy Reports and other reports are available for a fee from the HCN website (HCNinc.com). Personal Customer Lists are available free of charge in the Communication Center on My HCN. The Independent Representative acknowledges and agrees such information is proprietary and confidential to HCN and is transmitted to the Independent Representative in strict confidence. The information provided may not be distributed to any other individual or company. But for this agreement of confidentiality, HCN would not provide the above information.

B. Eligibility for Compensation In order to receive compensation, representatives must maintain a minimum number of points per HCN’s Compensation Plan.