WOOD JENKINS ue Mary Anne Q. Wood, No. 3539 Richard J. Armstrong, No. 7461 500 Eagle Gate Tower 60 East South Temple Salt Lake City, Utah 84111 ‘Telephone (801) 366-6060 Attorneys for Plaintiffs IN THE THIRD JUDICIAL DISTRICT COURT FOR THE STATE OF UTAH IN AND FOR SALT LAKE COUNTY BACKBONE WORLDWIDE, INC., a Florida corporation; and BURKE HEDGES, an COMPLAINT AND JURY individual, DEMAND Plaintiffs, civitno. YOO A S4Au udge Gl ANS, \ eS LIFEVANTAGE CORPORATION, a Colorado corporation; DAVID W. BROWN, an. individual; ERIC E, MARCHANT, an individual; KIRBY ZENGER, an individual; JOHN DOES 1 THROUGH 10, Defendants Plaintiffs Backbone Worldwide, Inc., and Burke Hedges, by and through their counsel of record, hereby complain of Defendants as follows: PARTIES, JURISDICTION, AND VENUE 1, Plaintiff Backbone Worldwide, Ine. (“Backbone”), is a Florida corporation and a former independent distributor of Defendant LifeVantage CorporationPlaintiff Burke Hedges is a resident of Clearwater, Florida 3. Defendant LifeVantage Corporation (“LVN") is a Colorado corporation, publically traded on the OTCBB under the letters LEVN. LVN’s corporate offices are located at 10813 S. River Front Parkway, Suite 500, South Jordan, Utah $4095 4, Defendant David W. Brown is the current President of LVN, and at the relevant time, was the Chief Executive Officer of LVN, and resides in San Diego, California. 5. Defendant Eric E, Marchant is a Vice President of LVN and, upon information and belief, resides in Salt Lake County, Utah, 6. Defendant Kirby Zenger is the current Chief Operating Officer of LVN, and resides in Salt Lake County, Utah, 7. Defendants John Does | through 10 are individuals and/or business entities associated with LVN. 8. Jurisdiction and venue are proper in this Court pursuant to Utah Code Ann, § 78A-5-102(1) and Utah Code Ann. § 78B-3-304(2) GENERAL ALLEGATIONS 9, This is an action for breach and wrongful termination of an Independent Distributor Agreement dated May 4, 2009, an “ ‘mendment of Independent Distributor Agreement” dated May 5,2009, an action for defamation, and an action for tortious interference with business relations, 10. LVN primarily manufactures and sells through its distributors a nutritional supplement named Protandim, as well as skin care products, Protandim is sold by LVN as aproven anti-aging supplement that provides a substantial benefit to help with the challenge of healthy aging. 11. Asanetwork marketing company, LVN utilizes a direct selling distribution model that markets its products directly to consumers by means of independent distributors on a referral and direct selling approach, Generally, LVN distributors are independent business owners and are paid commissions based on their personal and organizational volume based on product sales within their business organizations. 12. LVN business owners develop their independent distributor organizations by recruiting other business owners to purchase the product and to further develap a customer base that currently operates in the United States, Mexico, and Japan. The burden and expense of building such businesses fall on the distributor, not on LYN 13. Generally, distributors eam a commission based on the sales of products by their downline organization, which includes their own independent sales activities and the leveraged sales efforts of their downline organization. 14, The commissions owed and paid to LVN’s distributors are based on a hybrid compensation plan, which employs a general “Unilevel” component which pays commissions on sales made within nine (9) dynamically compressed levels, and a bonus component, consisting generally of “fast start” and “matching” bonuses. 15. To avoid violating state and federal anti-pyramid scheme or “endless chain” laws, the payment of commissions to distributors must be based on the sale of products, and not on the recruitment of other independent distributors into the company.