USANA HEALTH SCIENCES INC

Our reputation depends upon the quality of our products and the integrity of our Brand Partners for our core nutritional business. We continually monitor and review our Brand Partners’ compliance with our policies and procedures as well as the laws and regulations applicable to our business around the world. Part of this review entails an assessment of our Brand Partners’ sales activities to ensure that they are actually selling products to consumers. Our policies and procedures require Brand Partners to present our products and the USANA opportunity ethically and honestly. Brand Partners are not permitted to make claims about our products or Compensation Plan that are not consistent with our policies and procedures and applicable laws and regulations. The majority of our Brand Partners use marketing and promotional materials provided by USANA. Brand Partners are permitted to produce their own marketing and promotional materials. However, prior to doing so, Brand Partners are required to complete an Advertising Certification to help educate them and prevent them from making unapproved product and business claims (with the exception of Mainland China where Brand Partners are only allowed to use advertising material created by the Company).

In the ordinary course of our business, we encounter Brand Partners who fail to adhere to our policies and procedures. We systematically review reports of alleged Brand Partner misbehavior. Infractions of the policies and procedures are reported to our Ethics and Education group, who determine what, if any, disciplinary action is warranted in each case. More serious infractions are also reported to our Ethics Committee, which includes USANA executives. If we determine that a Brand Partner has violated any of our policies and procedures, we may take a number of disciplinary actions, including warnings, fines or probation. Among other measures, we may also withdraw or deny awards, suspend privileges, withhold commissions until specific conditions are satisfied, or take other appropriate actions in our discretion, including termination of the Brand Partner’s purchase and distribution rights.

Because we believe that Brand Partner compliance is critical to the integrity of our business, we are aggressive in ensuring that our Brand Partners comply with our policies and procedures. When a Brand Partner fails to comply with our policies and procedures, we may terminate the Brand Partner’s purchase and distribution rights. From time to time, we become involved in litigation with Brand Partners whose purchase and distribution rights have been terminated. We consider such litigation to be routine and incidental to our business and we will continue to be aggressive in ensuring that our Brand Partners comply with our policies and procedures.