Herbalife has two different kinds of Members: Preferred Members use the products for personal consumption and purchase at a discount, while Herbalife Independent Distributors not only use the products for personal consumption, but also have the opportunity to sell products to customers, and work the Herbalife business opportunity. Until December 31, 2016, current Members may select to become a Charter Preferred Member (CPM).

Charter Preferred Members solely want to purchase Herbalife® products for their own personal consumption and are able to purchase at a discount. A Charter Preferred Member cannot sell the products, sponsor anyone into the business or receive multi-level marketing compensation under the Herbalife Sales & Marketing Plan. For a limited time only, an existing Member can become a Charter Preferred Member as long as he/she takes action before December 31, 2016.

Benefits include:

• New product previews, special promotions to support your product results, special product-focused communications, education and support
• Product purchases subject to sales tax on your actual purchase price after discount instead of the product’s Suggested Retail Price
• Exclusive access to the Herbalife Advantage Program (HAP), which allows you to set up an order to automatically receive products each month
• No required training or meetings
• Access to MyHerbalife.com to order products

A Charter Preferred Member will maintain his/her Charter Preferred Member status as long as he/she purchases 500 Volume Points (VP) of products for consumption annually. Charter Preferred Members who maintain their status do not need to requalify to maintain his/her discount level and will not be required to pay an Annual Membership Services Fee.

Discount Tiers

Members who convert to become a Charter Preferred Member will keep their current discount, but can achieve higher discount levels as outlined below:
• Members at 50% remain at 50%
• Members at 42% may acquire a maximum 50% discount by accumulating personal product purchases of 4,000 Volume Points in a consecutive 12-month period
• Members at 25% and 35% may acquire a maximum 42% discount by their personal product purchases as set forth below:
1. Move from 25% to 35% by accumulating personal product purchases of 500 Volume Points in a consecutive 12-month period
2. Move from 35% to 42% by accumulating personal product purchases of 2,500 Volume Points in a consecutive 12-month period

Conversion to Distributor

If, in the future, you decide to pursue the Herbalife business opportunity and wish to sell the products and sponsor others, you may convert back to Distributor status at any time at no cost. If you moved up to a higher discount as a Charter Preferred Member, you will maintain that
discount only for personal consumption purchases.

Purchases for retail sales will be at the same discount level you had when you originally converted from Distributor to Charter Preferred Member. However, if you had any downline Distributors at the time you converted to a Charter Preferred Member, they will not be moved back under you if you convert back to Distributor status.

How to Order Herbalife Products

There are three ways you can order Herbalife® products:

• Place an order on MyHerbalife.com
• Use the Herbalife App
• Call Member Services at 866-866-4744
• Visit a local Distribution, Sales or Quick Response Center

Our Customer Satisfaction Guarantee

We want you to be 100% satisfied with your purchases. If, for any reason, you are not completely satisfied with any Herbalife® product you purchased from either Herbalife or an Herbalife Independent Distributor, you may return it within 30 days of delivery for a refund of the purchase price or a product exchange. You may request a refund by calling our toll-free number at 866-866-4744, or by following the instructions you will find at Herbalife.com. If you purchased the product from an Herbalife Independent Distributor, you may also contact your Distributor to request a refund or exchange.

Cancellation

You may cancel your Charter Preferred Membership at any time by notifying Herbalife in writing at USARecAdmin@Herbalife.com. If you cancel your Charter Preferred Membership and wish to rejoin later, you and your spouse must complete a twelve (12) month waiting period before you may enroll as a Preferred Member under another Sponsor. You may also contact Herbalife at 866-866-4744 for more information. In the event that you become an Herbalife Independent Distributor, this Agreement will terminate automatically. Reselling Herbalife® products or recruiting or sponsoring activities may result in Herbalife’s cancellation of your Charter Preferred Membership.

Membership Conversion FAQ.

List of New Terms

Distributor (DS): Uses Herbalife® products for consumption and is interested in the business opportunity to earn income from the compensation plan. Distributors build their business by selling the products and recruiting and working with their customers, Preferred Members and Distributors.

Charter Preferred Member (CPM): Existing Members who convert between October 1 and December 31, 2016 who only want to consume the Herbalife® products at a discount and are not interested in the business opportunity. They are unable to sell the products or recruit others.

Preferred Member (PM): Uses Herbalife® products for consumption at a discount; cannot sell or recruit. Anyone who enrolls or converts on or after January 1, 2017 will be considered Preferred Members.

Charter Preferred Member

Q1: What is a Charter Preferred Member?

A1: A Charter Preferred Member is any current Member who converts to Preferred Member from October 1 through December 31, 2016. They will retain the discount they had at the time of conversion but lose their downline lineage (if any).

Q2: What are the benefits of converting to a Charter Preferred Member?

A2: There are several benefits for Charter Preferred Members:

• Simple conversion process (online only)
• Ability to increase discount if the Charter Preferred Member converts at 25%, 35% or 42%
o Those at 25% and 35% can work toward 42% discount (50% not available)
o Those at 42% can work toward 50%
o Those who convert at 50% can remain at 50%

• Herbalife Advantage Program (HAP) available
• Annual Membership Services Fee waived as long as they maintain 500 PPV annually
• No requalification required to maintain discount percentage as long as they maintain 500 PPV
annually
• Product purchases will be subject to sales tax on actual purchase price instead of the product’s
suggested retail price
• Access to Preferred Member website
• For those Distributors converting to CPM, they will receive a $25 credit on an order of $50 or more that needs to be used by December 31, 2016. The $25 credit is a one-time promotion only available to those that convert in October.

Q3: Can a Charter Preferred Member use the promotional $25 credit on an order placed on MyHerbalife.com?

A3: The CPM will need to walk into any Sales Center and apply the credit or call Member Services to place an order. The credit will not be available through the online ordering services.

Q4: Why has Herbalife decided to change the Nomenclature from Member back to Distributor?

A4: Now that we will have the ability to differentiate between our business builders and our customers, we can revert to using the term Distributor. Our business builders distribute Herbalife® products and therefore should be identified as Distributors.

Q5: Will a Distributor be able to keep their discount if they convert to Charter Preferred Member?

A5: Charter Preferred Members will retain their former Distributor level discount when converting. For Charter Preferred Members, if at the time of conversion you are at a 42% or QP level, you have the ability to achieve a 50% discount. If you were at the 25% or 35% discount level the highest level you can achieve is a 42% discount.

Q6: How do I become a Charter Preferred Member and/or Preferred Member?

A6: Anyone who converts to a Preferred Member between October 1, 2016 and December 31, 2016 will be given Charter Preferred Member status. New and converted Preferred Members will be those who do so on or after January 1, 2017.

Q7: When will segmentation begin?

A7: At the beginning of October 2016 the company will be reaching out to Members who may be interested in converting to a PM. We will also be working with our leaders on this outreach program, and as a special promotion anyone who converts within October 1, 2016 to December 31, 2016 will have the esteemed title of Charter Preferred Member for as long as they remain with Herbalife, which comes with some incredible benefits:
• Simple conversion process (online only)
• Ability to increase discount if the Charter Preferred Member converts at 25%, 35% or 42%
o Those at 25% and 35% can work toward 42% discount (50% not available)
o Those at 42% can work toward 50%
o Those who convert at 50% can remain at 50%
• Herbalife Advantage Program (HAP) available
• Annual Membership Services Fee waived as long as they maintain 500 PPV annually
• No requalification required to maintain discount percentage as long as they maintain 500 PPV
annually
• Product purchases will be subject to sales tax on actual purchase price instead of the
product’s suggested retail price
• Access to Preferred Member website

Q8: If I convert to Charter Preferred Member can I use the volume I placed prior to converting to qualify to a higher discount?

A8: Yes. You will have the ability to qualify to a higher discount by counting the volume you have purchased over the past 12 months.

Q9: What is the highest discount I can achieve as a Charter Preferred Member?

A9: If at the time of conversion you are at a QP/42% level you have the ability to achieve a 50% discount. If you were at 25% or 35% the highest level you can achieve is a 42% discount.

Q10: When can Distributors begin to sign up new Preferred Members?

A10: Beginning January 1, 2017 new Preferred Members will be able to sign up on MyHerbalife.com.

Q11: Will a Distributor be able to keep their same ID number if they convert to Charter Preferred Member?

A11: Yes, whether they convert to Charter Preferred Member or Preferred Member the ID number will remain the same.

Q12: If I decide to convert to a Charter Preferred Member and later convert back to a DS will I need to purchase a new IBP and what will my discount be?

A12: There will be no fee for Charter Preferred Members to convert to Distributor since they previously purchased an IBP/HMP. Once they convert to a DS from Charter Preferred Member, they will retain their current discount for their Personal Consumption purchases, however their purchases for retail sale will be at the discount they had when they originally converted to be a Charter Preferred Member. Example: DS converts at 35%, becomes a CPM and increases discount to 42%. If they then convert back to DS, their personal consumption orders will be at 42%, however their purchases for retail sale will start at 35%.

Q13: What happens if a Charter Preferred Member does not do 500 PPV in a year?

A13: A Charter Preferred Member will need to achieve 500 PPV annually in order to retain their Charter status. Those who do not achieve the 500 PPV will lose their Charter status and become a Preferred Member – rules being defined.

Q14: Will new Distributors that sign up after October 1 be able to convert to Charter Preferred Member?

A14: Yes, a newly signed up Distributor can convert to a Charter Preferred Member as long as they convert between October 1 through December 31, 2016.

Q15: If a Distributor decides to remain a DS and not convert to a CPM, are there any additional requirements needed?

A15: Distributors will need to complete a mandatory DS Training before May 2017. This training applies for all U.S. and PR Distributors. More information will follow.

Q16: When a Distributor converts to a Charter Preferred Member, will they keep their downline?

A16: If a Distributor decides to convert to a Charter Preferred Member, their downline will be moved to the next upline Distributor. A CPM is a customer, they are unable to sell, recruit or have a downline.

Q17: Can a Charter Preferred Member retail product?

A17: Charter Preferred Members cannot retail product. Purchases are for personal consumption only.

Q18: May a Charter Preferred Member who is eligible for a 50% discount purchase from their upline?

A18: Charter Preferred Members who are eligible for 50% discount must purchase directly from Herbalife.

Q19: What methods are available to convert to a Charter Preferred Member? May I convert by calling Herbalife.

A19: You will only be able to convert online at MyHerbalife.com. Unfortunately, we will not be able to accept verbal requests to convert.

Q20: Will a Charter Preferred Member have to requalify for their discount percentage annually?

A20: As long as they achieve 500 PPV (annual requirement) they will retain their discount.

Q21: Can a Charter Preferred Member/Preferred Member sell to friends at their discount?

A21: A CPM/PM can NOT sell product.

Q22: Are there any products or SKUs that are restricted from purchase as a Charter Preferred Member?

A22: Charter Preferred Members and Preferred Members will be able to purchase all Product type SKUs. Promote SKUs will be limited to apparel and select single unit items. Literature SKUs allowed will include single unit Product Brochure, donations, Distributor Conversion Kit and Annual Membership Services Fees (fee applicable to Preferred Members only). Herbalife Advantage Program (HAP)

Q23: What is the Herbalife Advantage Program (HAP)?

A23: The Herbalife Advantage Program is an automated monthly product shipment program only available in the U.S. (not available in Puerto Rico), providing Charter Preferred Members and Preferred Members with an effortless, flexible and convenient method for selecting and automatically shipping the products they use the most. This program will not be available for Distributors.

Q24: Why is HAP being discontinued for Distributors?

A24: As part of the FTC settlement order, Distributors are prohibited from participating in any autoshipment program or any similar program.