Important Policy Updates

Back in August at our International Sales Convention in Knoxville, TN we announced that we were going to be reviewing a number of existing policies and implementing changes before the end of the year. After careful consideration, we have made some decisions which are detailed below.

New Compensation Plan/New Six Month Safety Net

It has taken us longer than we planned to load up the new compensation plan with our down-line sales organizations. Some of this has been due to delays by our outside software provider (IDSTC) and some has been due to our desire to check and double check the loading to ensure it is fair and that it maximizes income when it goes live for our distributors overall. As you know, we also are working with Icentris to develop new back office websites and streamlined systems. At this time we believe it will be mid-December before you will see the complete new plan in action through the new system. For many distributors, our new compensation plan will pay more income for the same results; for some others, it will pay less. There are differences in the plans that may take a little time to get used to. Because of our commitment to being as fair as we can reasonably be, we will be announcing next week a plan to provide an Unprecedented 6 – Month Income Safety Net for the first half of 2010. Our distributors who have averaged $1,000 per month for the last half of 2009 will be eligible to protect their incomes with a Company subsidy for the first half of 2010. They will need to be “Active” and “Qualified” under the New Plan and to maintain at least 80% of the prior six months average PV/GV.

New Compensation Plan/Start Date

We are extending the transition date to pay under the old plan until January 3 (not December 27). The new plan will kick in as the sole pay plan beginning January 4, 2010. This means December under the old plan will consist of 5 weeks beginning November 30 and ending January 3 giving our distributors more opportunity for a big December payday and a fresh start on 2010 after the holidays!

Freight Policy

Free freight has been a very big overall expense to the Company. In order to keep product costs low and provide a strong compensation plan, beginning January 4, 2010 we will charge freight on all shipments (Autoships, Success Packs, Bulk Orders, Warranty). However, Success Packs and Bulk Orders freight costs will be priced at a discount (relative to the sum of the individual components) and will also generate special bonus incentives under the new compensation plan which will help offset shipping costs.

Warranty Policy

A. Prior Warranty claims have been very expensive, too expensive in fact. So we will be making some changes, including giving customers the chance to repair and replace units at very attractive prices. However, effective 12/1/09, DBG will no longer honor the warranty claims of the "old company" (i.e. Products that were sold prior to 3/28/09). Again, we do have some creative and fair solutions for customers as described in (c) below.

B. DBG will continue to honor the warranty claims of products sold on or after 3/28/09. However, there will likely be some changes to warranty coverage for products sold in 2010. Those changes will be announced sometime in the next few weeks.

C. Beginning 12/1/09, for products sold prior to 3/28/09 that are still under the "old company" warranty policy (i.e. products sold between 12/01/06 and 3/27/09), DBG will provide special options to the customer for the following products: Fresh Air, Eagle, EcoBox, Classic, Laundry Pure. Each of those units will be eligible for (a) a complete repair OR (b) a complete reconditioning including consumable items and a limited warranty, both at attractive, special pricing. The full details of these programs will be posted in a separate announcement in the dealer website.

Fresh Air Trade Up Program-

Effective 12/1/09, the price for the Fresh Air Trade Up will increase from $225 to $250. PV will decrease from 100 to 50. The Trade Up program was designed to help customers. It has been very expensive for DBG to continue the Trade Up program, but these changes will enable us to keep the program.

Commissions on Financed Sales

Current policy is to pay commissions as long as the financed receivable is paid within 12 months, even though terms are 90 days. Beginning 2010, accounts must be paid in full within 6 months otherwise the commissionable PV on the financed sale is forfeited. The Company currently absorbs a significant amount of bad debt and the longer it goes, the more money is lost. Very few payments are made past 6 months anyway, and the costs of collection go up over time. The Company will still lose money under the new program, but the subsidy will at least be reduced a little.

PAC Discounts

Current policy is to offer a 1% discount on orders paid via PAC (Pre Authorized Checks). This prior policy that dates back to times when the Company’s cost to process a credit card transaction was significantly higher than processing an ACH transaction. However, this is no longer the case. We still will welcome and accept PACs as ACHs; however, effective 12/1/09, the PAC discount will be eliminated.

Volume Transfers

These will not be allowed beginning January 4, 2010. We will allow them until January 3, 2010.

Special Holiday Promotion

EcoQuest dealers and their customers will receive a 40% discount until the end of the year on all products of affiliated company, Once Upon a Family. The discount code and link to OUAF website will be posted to the dealer web pages.

Water Units Financing

C7, P3 and U7 Living Water Units are eligible for special financing through DBG Account Services (Option A & B).

Laundry Pure Reconditioning

The Company has been losing a lot of money on the reconditioning of Laundry Pure units, so effective 12/1/09 the price will increase from $99 to $189.99. This service will carry 20 PV.