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LICENCE AGREEMENT

ASSOCIATE TERMS

Klabrate Member Agreement, Policy and Procedures

Apex International Group LLC, ("the Company") of 7702 East Doubletree Ranch Road, Ste. 300, Scottsdale, AZ 85260, USA, promotes this selling system under which sales of products and services as may be provided by the Company ("the Products"), and are effected by participants in the system as principals.

This Agreement is made between the applicant and the Company and shall not become effective until the Company has approved this agreement, and issued an Associate number. The Company shall have the right in its sole discretion to reject any application. All terms described in the Company's Marketing Plan will have the same meaning when used in these rules.

SECTION 1 — INTRODUCTION

Basis of Cooperation

The Company Apex International Group LLC, (here after Klabrate or the company) sells to ultimate customers by way of distance selling various products and services. The specific Klabrate distribution system is characterized by the fact that independent sales representatives, referred to as Associates or Members (hereafter Members) by way of distance selling offer inter alia to the participants of an online network the Klabrate products and services. In this connection the system is based on the Klabrate compensation plan called The Klabrate Marketing Plan. This plan sets out the tasks that Members may accomplish (at their own discretion) according to their functional position in the organization. Furthermore the plan sets out the performance criteria a Member should meet in order to reach certain individual functional positions in the organization as well as the compensation paid for the successful performance of the tasks.

1.1 — Policies and Compensation Program Incorporated into the Klabrate Member Agreement

These Klabrate Member Agreement, Rules of Operation and Policy and Procedures, in their present form and as amended at the sole discretion of Klabrate, LTD. (hereafter “Klabrate” or the “Company”), are the Klabrate Member Agreement. Throughout these Policies, when the term “Agreement” is used, it collectively refers to the Klabrate Member Application and Klabrate Member Agreement and Rules of Operation, the Policies and Procedures, the Marketing Plan, and the Klabrate Business Entity Registration Form (if applicable). These documents are incorporated by reference into the Klabrate Member Agreement (all in their current form and as amended by Klabrate). Other agreements have to be made in writing. This requirement can only be changed in writing as well. It is the responsibility of each Member (hereafter “Member”) to read, understand, adhere to, and ensure that he or she is aware of and operating under the most current version of these Policies and Procedures.

The Klabrate Member Agreement constitutes the entire contract between Klabrate and the Member. Any promises, representations, offers, or other communications not expressly set forth in the Agreement are of no force and effect.

1.2 — Purpose of Policies

Klabrate is a marketing company that distributes products and services through its online Web shop/store. Members can also choose to become active within our business plan. It is important to understand that your success and the success of your fellow Members is dependent upon the integrity of the individual Members who market our products and services. To clearly define the relationship that exists between Members and Klabrate and to explicitly set a standard for acceptable business conduct, Klabrate has established this Klabrate Member Agreement (Agreement).

Klabrate Members are required to comply with all of the Terms and Conditions set forth in the Agreement which Klabrate may amend at its sole discretion from time to time, as well as all federal, state, provincial, territorial, and local laws governing their

Klabrate business and their conduct. Because you may be unfamiliar with many of these standards of practice, it is very important that you read and abide by the Agreement. Please review this information carefully. It explains and governs the relationship between you, as an independent contractor and the Company. If you have any questions regarding any policy or rule, do not hesitate to seek an answer from your Sponsor or from Klabrate.

1.3 — Changes to the Agreement

Because federal, state, provincial, territorial and local laws, as well as the business environment, periodically change, Klabrate reserves the right to amend the Agreement and its prices in its sole and absolute discretion. By signing/excepting the Member Application and Agreement, a Member agrees to abide by all amendments or modifications that Klabrate elects to make. Amendments shall be effective upon notice to all Members that the Agreement has been modified. Notification of amendments shall be published in official Klabrate materials. The Company shall provide or make available to all Members a complete copy of the amended provisions by one or more of the following methods: (1) posting on the Company’s official web site; (2) electronic mail (e-mail); (3) voice mail system broadcast; (4) inclusion in Company periodicals; (5) inclusion in product orders or bonus payments; or (6) special mailings. The continuation of a Member’s Klabrate business or a Member’s acceptance of bonuses or commissions constitutes acceptance of any and all amendments if the Member doesn’t object to the changing by writing within 15 days beginning with receipt of the changing-information.

1.4 — Delays

Klabrate shall not be responsible for delays or failures in performance of its obligations when performance is made commercially impracticable due to circumstances beyond its reasonable control. This includes, without limitation, strikes, labor difficulties, riot, war, fire, death, curtailment of a party’s source of supply, or government decrees or orders.

1.5 — Policies and Provisions Severable

If any provision of the Agreement, in its current form or as may be amended, is found to be invalid, or unenforceable for any reason, only the invalid portion(s) of the provision shall be severed and the remaining terms and provisions shall remain in full force and effect and shall be construed as if such invalid, or unenforceable provision never comprised a part of the Agreement.

1.6 — Waiver

The Company never gives up its right to insist on compliance with the Agreement and with the applicable laws governing the conduct of a Member or an Klabrate business. No failure of Klabrate to exercise any right or power under the Agreement or to insist upon strict compliance by a Member with any obligation or provision of the Agreement, and no custom or practice of the parties at variance with the terms of the Agreement, shall constitute a waiver of Klabrate’s right to demand exact compliance with the Agreement. Waiver by Klabrate can be affected only in writing by an authorized officer of the Company. Klabrate’s waiver of any particular breach by a Member, or Klabrate’s waiver of any particular provision of the Agreement, shall not affect or impair Klabrate’s rights with respect to any subsequent breach, nor shall it affect in any way the rights or obligations of any other Member. Nor shall any delay or omission by Klabrate to exercise any right arising from a breach affect or impair Klabrate’s rights as to that or any subsequent breach.

The existence of any claim or cause of action of a Member against Klabrate shall not constitute a defense to Klabrate’s enforcement of any term or provision of the Agreement.

1.7 — Limitation of Liability

To the extent permitted by law, Members agree that Klabrate, its parent companies, directors, officers, shareholders, employees, assigns, successors, and agents (collectively referred to as “Associates”) shall not be liable for and Members release Klabrate and its Associates from, and waive all claims for, any loss of profits, indirect, direct, special or consequential damages or any other loss incurred or suffered by a Member as a result of:

The Member’s breach of the Agreement;
The improper promotion or operation of a Klabrate business by a Member (e.g. persuading anyone to join as a Member by promising benefits derived from getting others to join; claiming that high earnings can be easily hieved by joining as a Member) and any activities related thereto (e.g., the presentation of Klabrate’s products, services or Marketing Plan, the operation of a motor vehicle, the lease of meeting or training facilities, etc.);
Any incorrect or wrong data or information provided by a Member to Klabrate; or,
The Member’s failure to provide any information or data necessary for Klabrate to operate its business.

1.8 All claims of members against Klabrate fall under statute of limitation after one year.

SECTION 2 — BECOMING A MEMBER

2.1 — New Member Enrolment

Applicants enroll as Members at the Klabrate Web Site of his or her Sponsor. Online enrolments shall be effective upon the Applicant’s proper completion of the online Application and Agreement and Klabrate’s acceptance of the application.

2.2 — Member Benefits

Once a Member Application and Agreement has been accepted by Klabrate, the usage of the Business model with Compensation Program and the Agreement are made available. These benefits may include the right to:

a) Purchase Klabrate products and services at the Member price.

b) Market and promote Klabrate products and services via the Member’s personalized Klabrate Web Site, and profit from these sales.

c) Participate in the Marketing Plan(receive bonuses and commissions, if eligible);

d) Sponsor other individuals (Members) into the Klabrate business and thereby, build a Team and progress through the Marketing Plan.

e) Receive periodic Klabrate literature and other Klabrate communications.

f) Participate in Klabrate-sponsored support, service, training, motivational and recognition functions, upon payment of appropriate charges, if applicable; and

g) Participate in promotional and incentive contests and programs sponsored by Klabrate for its Members.

SECTION 3 – OPERATING AN Klabrate BUSINESS

3.1 — Adherence to the Klabrate Marketing Plan

Members must adhere to the terms of the Klabrate the Marketing Plan as set forth in official Klabrate literature. Members shall not offer the Klabrate Program through, or in combination with, any other system, program, or method of marketing other than that specifically set forth in official Klabrate literature. Members shall not require or encourage other current or prospective Members to participate in Klabrate in any manner that varies from the program as set forth in official Klabrate literature.

Members shall not require or encourage other current or prospective Members to execute any agreement or contract other than official Klabrate agreements and contracts in order to become an Klabrate Member. Similarly, Members shall not require or encourage other current or prospective Members to make any purchase from, or payment to, any individual or other entity to participate in the Marketing Plan other than those purchases or payments identified as recommended or required in official Klabrate literature.

Members shall make no reference or comparision to the performance of any similar product or service to those supplied by Klabrate.

3.2 — Advertising

3.2.1 — In General

All Members shall safeguard and promote the good reputation of Klabrate and its products. For Members who engage in the marketing and promotion of Klabrate, the Klabrate Program, the Marketing Plan, and Klabrate products and services, such marketing and promotion shall be conducted in consistence with the public interest, and all discourteous, deceptive, misleading, unethical or immoral conduct or practices must be avoided.

For Members who promote both the products and services, and the Klabrate Program, they must use the sales aids and support materials produced by Klabrate. The rationale behind this requirement is simple. Klabrate has carefully designed its products, services, the Marketing Plan and promotional materials to ensure that each aspect of Klabrate is fair, truthful, substantiated, and complies with the vast and complex legal requirements of federal, state, and provincial laws. If Klabrate Members were allowed to develop their own sales aids and promotional materials (which includes Internet advertising), notwithstanding their integrity and good intentions, the likelihood that they would unintentionally violate any number of statutes or regulations affecting a Klabrate business is almost certain. These violations, although they may be relatively few in numbers, would jeopardize the Klabrate Program for all Members.

Accordingly, Members must not produce their own literature, advertisements, sales aids and promotional materials, or Internet web pages.

3.2.2 – Spamming and Unsolicited Faxes

Except as provided in this section, Members may not use or transmit unsolicited faxes, mass e-mail distribution, unsolicited e-mail, or “spamming” relative to the operation of their Klabrate businesses. The terms "unsolicited faxes" and “unsolicited e-mail” mean the transmission via telephone facsimile or electronic mail, respectively, of any material or information advertising or promoting Klabrate, its products, its Compensation Program or any other aspect of the Company which is transmitted to any person, except that these terms do not include a fax or e-mail: (a) to any person with that person's prior express invitation or permission; or (b) to any person with whom the Member has an established business or personal relationship. The term "established business or personal relationship" means a prior or existing relationship formed by a voluntary two way communication between a Member and a person, on the basis of: (a) an inquiry, application, purchase or transaction by the person regarding products offered by such Member; or (b) a personal or familial relationship, which relationship has not been previously terminated by either party.

3.2.3 – Telemarketing

Members agree that they shall not engage in telemarketing relative to the operation of their Klabrate businesses. The term “telemarketing” means the placing of one or more telephone calls to an individual or entity to induce the purchase of an Klabrate product or service, or to recruit them for the Klabrate Program. “Cold calls" made to prospective customers or Members that promote either Klabrate's products or services or the Klabrate Program constitute telemarketing and are prohibited. Notwithstanding the foregoing, a Member may place telephone call(s) to a prospective customer or Member (a "prospect") under the following limited situations:

If the Member has an established business relationship with the prospect. An “established business relationship” is a relationship between a Member and a prospect based on:
1. The prospect’s purchase, rental, or lease of goods or services from the Member within the eighteen (18) months immediately preceding the date of a telephone call to induce the prospect's purchase of a product or service; or
2. A financial transaction between the prospect and the Member within the eighteen (18) months immediately preceding the date of such a call.
The prospect’s personal inquiry or application regarding a product or service offered by the Member, within the three (3) months immediately preceding the date of such a call.
If the Member receives written and signed permission from the prospect authorizing the Member to call. The authorization must specify the telephone number(s) which the Member is authorized to call.
Members may call family members, personal friends, and acquaintances. An “acquaintance” is someone with whom a Member has at least a recent first-hand relationship (i.e., the Member recently personally met him or her). Bear in mind, however, that if a Member makes a habit of “card collecting” everyone he or she meets and subsequently calling them, the Federal Trade Commission or state authority may consider this a form of telemarketing that is not subject to this exemption. Thus, if Members engage in calling “acquaintances,” the Member must make such calls on an occasional basis only and not as a routine practice.

In addition, Members shall not use automatic telephone dialing systems relative to the operation of their Klabrate businesses. The term “automatic telephone dialing system” means equipment which has the capacity to: (a) store or produce telephone numbers to be called, using a random or sequential number generator; and (b) to dial such numbers.

3.2.4 — Web Sites

Members are not permitted to develop their own web sites or web pages that promote, directly or indirectly, the Klabrate Program or any Klabrate products or services. All Members have the option of purchasing an Klabrate Package. No Member may independently design a web site that uses the names, logos, or product descriptions of v or otherwise promotes (directly or indirectly) Klabrate products or services or the Klabrate Program. Nor may a Member use "blind" ads on the Internet that make product or income claims which are ultimately associated with Klabrate products, the Klabrate Program, or the Marketing Plan. The use of any other Internet web site or web page (including without limitation auction sites such as eBay) to in any way promote the sale of Klabrate products, the Klabrate Program, or the Marketing Plan is a breach of the Agreement and may result in any of the disciplinary sanctions set forth in Section 8.1.

3.2.5 — Domain Names

Members may not use or attempt to register any of Klabrate’s trade names, trademarks, service names, service marks, product names, the Company’s name, or any derivative thereof, for any Internet domain name. Nor may Members incorporate or attempt to incorporate any of Klabrate’s trade names, trademarks, service names, service marks, product names, the Company’s name, or any derivative thereof, into any electronic mail address.

3.2.6 — Trademarks and Copyrights

Klabrate will not allow the use of its trade names, trademarks, designs, or symbols by any person, including an Klabrate Member, without its prior, written permission. Members may not produce for sale or distribution any recorded Company events and speeches without written permission from Klabrate nor may Members reproduce for sale or for personal use any recording of Company-produced audio or video tape presentations.

3.2.7 — Media and Media Inquiries

Members must not attempt to respond to media inquiries regarding Klabrate, its products or services. All inquiries by any type of media must be immediately referred to Klabrate’s Marketing Department. This policy is designed to assure that accurate and consistent information is provided to the public as well as a proper public image.

3.2.8 — Release

By entering into the Agreement, Member authorizes Klabrate to use his or her name and/or likeness in advertising or promotional materials and waives all claims for remuneration for such use. If the Member disagrees Klabrate will not disadvantage him/her.

3.3 — Bonus Buying

“Bonus buying” includes: (a) the enrolment of individuals or entities without the knowledge of and/or execution of a Member Application and Agreement by such individuals or entities; (b) the fraudulent enrolment of an individual or entity as a Member; (c) the enrolment or attempted enrolment of non-existent individuals or entities as Members (“phantoms”); or (d) the use of a credit card by or on behalf of a Member when the Member is not the account holder of such credit card. Bonus buying constitutes a material breach of these Policies and Procedures, and is strictly and absolutely prohibited.

3.4 — Business Entities

A corporation, limited liability company, partnership or trust (collectively referred to in this section as a “Business Entity”) may apply to be a Klabrate Member by completing a Application and Agreement and submitting its Certificate of Incorporation, Articles of Organization, Partnership Agreement or trust documents (these documents are collectively referred to as the “Entity Documents”) to Klabrate, along with a properly completed Business Entity Registration form. The Entity Documents and Business Entity Registration Form must be submitted to Klabrate within 30 days of the online enrolment. Any compensation earned will be held in a Pending State until the proper documentation is received. An Klabrate business may change its status under the same sponsor from an individual to a partnership, corporation or trust or from one type of entity to another. There is a €25.00 fee for each change requested, which must be included with the written request and a completed Member Application and Agreement. The Business Entity Registration form must be signed by all of the shareholders, members, partners or trustees. Shareholders of the entity are jointly and severally liable for any indebtedness or other obligation of the Member-entity to Klabrate. The liability of the entity itself remains untouched by this provision.

3.5 — Changes to the Klabrate Business

3.5.1 — Change of Sponsor

To protect the integrity of all Teams and safeguard the hard work of all Members, Klabrate strongly discourages changes in sponsorship. Maintaining the integrity of sponsorship is critical for the success of every Member and Team. Accordingly, the transfer of an Klabrate business from one sponsor to another is rarely permitted.

Requests for change of sponsorship must be submitted in writing to the Member Support Department, and must include the reason for the transfer. Transfers will only be considered in the following two (2) circumstances:

a) In cases involving fraudulent inducement or unethical sponsoring, a Member may request that he or she be transferred to another organization with his or her entire Team intact. All requests for transfer alleging fraudulent enrolment practices shall be evaluated on a case by case basis.

b) The Member seeking to transfer submits a properly completed and fully executed Sponsorship Transfer Form that includes the written approval of his or her immediate up-line active Sponsor/Member. Photocopied or facsimile signatures are acceptable. The Member who requests the transfer must submit a fee of €25.00 for administrative charges and data processing.

Members in the Team will not be moved with the transferring Member unless all of the requirements of this paragraph are met. Transferring Members must allow thirty (30) days after the receipt of the Sponsorship Transfer Forms by Klabrate for processing and verifying change requests.

3.5.2 — Cancellation and Re-application

A Member may legitimately change his or her Sponsor by voluntarily cancelling his or her Klabrate business and remaining inactive (i.e., no sales of Klabrate products, no sponsoring, no attendance at any Klabrate functions, participation in any other form of Member activity, or operation of any other Klabrate business) for six (6) full calendar months. Following the six month period of inactivity, the former Member may reapply under a new sponsor. Klabrate will consider waiving the six month waiting period under exceptional circumstances. Such requests for waiver must be submitted to Klabrate in writing.

3.6 — Unauthorized Claims and Actions

3.6.1 – Indemnification

A Member is fully responsible for all of his or her verbal and written statements made regarding Klabrate products, services, and the Compensation Program which are not expressly contained in official Klabrate materials. Members agree to indemnify Klabrate and Klabrate's directors, officers, employees, and agents, and hold them harmless from any and all liability including judgments, civil penalties, refunds, attorney fees, court costs, or lost business incurred by Klabrate as a result of the Member’s unauthorized representations or actions. This provision shall survive the termination of the Agreement.

3.6.2 — Income Claims

In their enthusiasm to enroll prospective Members, some Members are occasionally tempted to make income claims or earnings representations to demonstrate how the Klabrate Program works. This is counter-productive because new Members may become disappointed very quickly if their results are not as extensive or as rapid as the results others have achieved.

While Members may believe it beneficial to provide copies of commission payments, or to disclose the earnings of themselves or others, such approaches have legal consequences that can negatively impact Klabrate as well as the Member making the claim unless appropriate disclosures required by law are also made contemporaneously with the income claim or earnings representation. Because Klabrate Members do not have the data necessary to comply with the legal requirements for making income claims, a Member, when presenting or discussing the Klabrate Program or Compensation Program to a prospective Member, shall not make income projections, income claims, or disclose his or her Klabrate income (including the showing of commission payments, bank statements, or tax records).

3.7 — Commercial Outlets and Trade Shows

3.7.1 — Commercial Outlets

Klabrate strongly encourages the retailing and selling of its products and services through person to person contact. In an effort to reinforce this method of marketing and to help provide a standard of fairness for its Member base, Members may not display or sell Klabrate products, services, or literature in any retail or service establishment.

3.7.2 – Trade Shows, Expositions and Other Sales Forums

Members may display and/or sell Klabrate products at trade shows and professional expositions only with prior Klabrate corporate approval. Before submitting a deposit to the event promoter, Members must contact the Marketing Department in writing for approval. Any requests to participate in future events must again be submitted to the Marketing Department. Klabrate further reserves the right to refuse authorization to participate at any function which it does not deem a suitable forum for the promotion of its products, services, or the Klabrate Program. Approval will not be given for swap meets, garage sales, flea markets or farmer’s markets as these events are not conducive to the professional image Klabrate wishes to portray.

3.8 — Conflicts of Interest

3.8.1 — Non-solicitation

Klabrate Members are free to participate in other direct selling opportunities (including relationship marketing, network marketing, and multilevel marketing). However, during the term of this Agreement, Members may not recruit other Klabrate Members for any other direct selling business. Exception to the above is those individuals/members personally introduced/sponsored from a member to the Klabrate Program.

Members must not sell, or attempt to sell, any competing non-Klabrate products or services to Klabrate Members. Any product or services in the same generic category as an Klabrate product or service is deemed to be competing.

Members may not display Klabrate products or services with any other products or services in a fashion that might in any way confuse or mislead a prospective customer or Member into believing there is a relationship between the Klabrate and non-Klabrate products or services. Members may not offer the Klabrate Program, products or services to prospective or existing customers or Members in conjunction with any non-Klabrate program, opportunity, product or service. Members may not offer any non-Klabrate opportunity, products or services at any Klabrate-related meeting, seminar or convention, or immediately following such event.

3.9 — Cross-Sponsoring

Actual or attempted cross sponsoring is strictly prohibited. “Cross sponsoring” is defined as the enrolment of an individual who or entity that already has a current Agreement on file with Klabrate, or who has had such an agreement within the preceding six calendar months, within a different line of sponsorship. The use of a spouse’s or relative’s name, trade names, DBAs, assumed names, corporations, partnerships, trusts, federal ID numbers, or fictitious ID numbers to circumvent this policy is prohibited. Members shall not demean, discredit or defame other Klabrate Members in an attempt to entice another Member to become part of the first Member’s Team. This policy shall not prohibit the transfer of an Klabrate business in accordance with Section 3.22 or Section 3.5.

3.10 — Errors or Questions

If a Member has questions about, or believes any errors have been made regarding commissions, bonuses, Team Activity Reports or charges, the Member must notify Klabrate in writing within 30 days of the date of the purported error or incident in question. Klabrate will not be responsible for any errors, omissions or problems not reported to it within 30 days unless this was caused by willful intent or gross negligence.

3.11 — Governmental Approval or Endorsement

Neither federal/national nor state regulatory agencies nor officials approve or endorse any direct selling companies or programs. Therefore, Members shall not represent or imply that Klabrate or its Compensation Program have been "approved," "endorsed" or otherwise sanctioned by any government agency.

3.12 — Independent Contractor Status

Members are independent contractors, and are not purchasers of a franchise or a business opportunity. The agreement between Klabrate and its Members does not create an employer/employee relationship, agency, partnership, or joint venture between the Company and the Member. A MEMBER SHALL NOT BE TREATED AS AN EMPLOYEE FOR HIS OR HER SERVICES OR FOR FEDERAL/NATIONAL OR STATE TAX PURPOSES. All Members are responsible for paying local, state, and federal/National taxes due from all compensation earned as a Member of the Company. Klabrate is not responsible for withholding, and shall not withhold or deduct from a Member’s bonuses and commissions, if any, taxes of any kind, unless withholding becomes legally required. The Member has no authority (expressed or implied), to bind the Company to any obligation. Members are not authorized to and will not incur any debt, expense, obligation, or open any checking account on behalf of, for, or in the name of Klabrate. Each Member agrees that he or she shall control the manner and means by which he or she operates his or her Klabrate business, and shall establish his or her own goals, hours, and methods of sale, subject to compliance with these Policies and Procedures and applicable law.

Each Member shall be solely responsible for paying all expenses incurred, including but not limited to travel, food, lodging, secretarial, office, long distance telephone, and other expenses. He bears his own business risk.

Members are responsible for trade registration at the home community, being registered for social security and VAT. As long as no VAT-Number will be submitted to Klabrate, we assume that the member is still working as a “small business” and we pay commission without VAT only.

The name of Klabrate and other names as may be adopted by Klabrate are proprietary trade names, trademarks and service marks of Klabrate. As such, these marks are of great value to Klabrate and are supplied to Members for their use only in an expressly authorized manner. Use of Klabrate name on any item not produced by the Company is prohibited except as follows:

Member's Name
Independent Klabrate Member /Independent Business Associate
All Members may list themselves as an “Independent Klabrate Member” or “Independent Klabrate Associate” in the white or yellow pages of the telephone directory under their own name. No Member may place telephone directory display ads using Klabrate's name or logo. Members may not answer the telephone by saying “Klabrate”, “Klabrate Incorporated”, or in any other manner that would lead the caller to believe that he or she has reached corporate offices of Klabrate

3.13 — Insurance

You may wish to arrange insurance coverage for your business. Neither your homeowner’s insurance policy nor your automobile insurance policy covers business-related injuries, or the theft of or damage to inventory or business equipment. Contact your insurance agent to make certain that your property is protected. This can often be accomplished with a simple “Business Pursuit” endorsement attached to your present homeowner’s and automobile policies.

3.14 — Adherence to Laws and Ordinances

3.14.1 — Local Ordinances

Many cities and counties have laws regulating certain home-based businesses. In most cases these ordinances are not applicable to Members because of the nature of their business. However, Members must obey those laws that do apply to them. If a city or county official tells a Member that an ordinance applies to him or her, the Member shall be polite and cooperative, and immediately send a copy of the ordinance to the Compliance Department of Klabrate. In most cases there are exceptions to the ordinance that may apply to Klabrate Members

3.14.2 — Compliance with Federal/National, State, and Local Laws

Members shall comply with all federal, national, state, and local laws and regulations in the conduct of their businesses.

3.15 — Minors

Members of Klabrate must be at least 18 years of age. Members under the age of 18 are not eligible to participate in the Klabrate Program. When an Klabrate Member attains 18 years of age, he/she is eligible to participate in the Klabrate Program.

3.16 — Klabrate Businesses per Member and per Household

A Member may operate or have an ownership interest, legal or equitable, as a sole proprietorship, partner, shareholder, trustee, or beneficiary, in one or more Klabrate business as long as that individual can provide a Social Security number and or Tax Identification number for each entity. No single entity may use the same Social Security number or Tax Identification number. An individual may have, operate or receive compensation from more than one Klabrate business as long as all subsequent businesses are positioned below the initial business in the line of sponsorship. Individuals of the same family unit may enter into or have an interest in more than one Klabrate Business. A “family unit” is defined as spouses and dependent children living at or doing business at the same address.

3.16.1 — Actions of Household Members or Affiliated Individuals

If any member of a Member’s immediate household engages in any activity which, if performed by the Member, would violate any provision of the Agreement, such activity will be deemed a violation by the Member and Klabrate may take disciplinary action pursuant to the Statement of Policies against the Member. Similarly, if any individual associated in any way with a corporation, partnership, trust or other entity (collectively “Affiliated individual”) violates the Agreement, such action(s) will be deemed a violation by the entity, and Klabrate may take disciplinary action against the entity.

3.17 — Roll-Up

When a vacancy occurs in a Team due to the termination of an Klabrate business, the commissions from each Member in the first ring immediately around the terminated Member on the date of the cancellation will be moved to the direct team of the terminated Member’s sponsor. For example, if A sponsors B, and B sponsors C1, C2, and C3, if B terminates their business, C1, C2, and C3 will “roll-up” to A and become part of A’s direct team.

3.18 — Sale, Transfer or Assignment of Klabrate Business

A Member may not assign any rights or delegate any duties under the Agreement without the prior written consent of Klabrate. Any attempt to transfer or assign an Klabrate business without the express written consent of Klabrate will render the Agreement voidable at the option of Klabrate. Therefore, although an Klabrate business is a privately owned, independently operated business, the sale, transfer or assignment of an Klabrate business is subject to certain limitations. If a Member wishes to sell his or her Klabrate business, he or she must receive written authorization from the Company. In order to sell, transfer or assign an Klabrate business, the following criteria must be met:

Protection of the existing line of sponsorship must always be maintained so that the Klabrate business continues to be operated in that line of sponsorship.
The buyer or transferee must be (or must become) an active Klabrate Member. If the buyer is an active Klabrate Member, he or she must first terminate his or her Klabrate business simultaneously with the purchase, transfer, assignment or acquisition of any interest in the new Klabrate business. Also if the buyer is an active Klabrate Member, he or she must be in good standing and not in violation of any of the terms of the Agreement.
Before the sale, transfer or assignment can be finalized and approved by Klabrate, any debt obligations the selling Member has with Klabrate must be satisfied.
The selling Member must be in good standing and not in violation of any of the terms of the Agreement in order to be eligible to sell, transfer or assign an Klabrate business.

Prior to selling an Klabrate business, the selling Member must notify Klabrate Member Support Department of his or her intent to sell the Klabrate business. No changes in line of sponsorship can result from the sale or transfer of an Klabrate business.

If a Member desires to sell his or her Klabrate Membership, the Member's Sponsor must be given the first right and option, in writing and sent via certified mail/return receipt requested, to purchase the distributorship. If the Sponsor desires to purchase the distributorship, the purchased distributorship will merge with the Sponsor's marketing organization to create a single marketing organization.

If the Sponsor fails to notify the selling Member of his or her intention to purchase the distributorship within ten (10) business days after his or her receipt of selling Member's notice of intent to sell, the selling Member must offer (in succession beginning with the Member immediately above the seller's Sponsor) the distributorship to the first three immediate up-line Members of the seller's Sponsor upon the same terms provided in the option to the seller's Sponsor. If an up-line Member desires to purchase the selling Member's distributorship, the purchasing Member must first sell or resign from his or her own distributorship before purchasing another.

If each of the three up-line Members fails to notify the selling Member of his or her intention to purchase the distributorship within ten (10) business days after his or her receipt of selling Member's notice of intent to sell, the selling Member may proceed with the sale to a third party willing to purchase the existing distributorship upon the same terms provided in the offer to the seller's Sponsor. The buyer, transferee or assignee must complete a Member Agreement (or Transfer Agreement if he or she is a current Klabrate Member) and possess reasonable ability to satisfactorily perform the obligations of an Klabrate Member who is of the same rank or status as the selling Member.

Upon complete execution of the purchase and sale agreement, and the new Member Agreement, the parties must submit copies of the same to Klabrate's Member Support Department for review and approval. Klabrate reserves the right to request additional documentation that may be necessary to analyze the transaction between the buyer and seller. Klabrate's Member Support Department will, in its sole and absolute discretion, approve or deny the sale, transfer or assignment within thirty (30) days after its receipt of all necessary documents from the parties.

If the seller sells, transfers or assigns or attempts to sell, transfer or assign his or her distributorship upon terms different than those set forth in the offer to the seller's Sponsor, such transfer shall be voidable at Klabrate's option and Klabrate is entitled to claim for compensation. Further, if the parties fail to obtain Klabrate's approval for the transaction, the transfer shall be voidable at Klabrate's option. The purchaser of the existing distributorship will assume the obligations and position of the selling Member. A Member who sells his or her distributorship shall not be eligible to re-apply as an Klabrate Member for a period of at least six (6) full calendar months after the sale.

3.19 — Separation of an Klabrate Business

Klabrate Members sometimes operate their Klabrate businesses as husband-wife partnerships, regular partnerships, corporations, or trusts. At such time as a marriage may end in divorce or a corporation, partnership or trust (the latter three entities are collectively referred to herein as “entities”) may dissolve, arrangements must be made to assure that any separation or division of the business is accomplished so as not to adversely affect the interests and income of other businesses up or down the line of sponsorship. If the separating parties fail to provide for the best interests of other Members and the Company, Klabrate will involuntarily terminate the Agreement and roll-up their entire organization pursuant to Section 3.22. During the pendency of a divorce or entity dissolution, the parties must adopt one of the following methods of operation:

One of the parties may, with consent of the other(s), operate the Klabrate business pursuant to an assignment in writing whereby the relinquishing spouse, shareholders, partners or trustees authorize Klabrate to deal directly and solely with the other spouse or non-relinquishing shareholder, partner or trustee.

The parties may continue to operate the Klabrate business jointly on a “business-as-usual” basis, whereupon all compensation paid by Klabrate will continue to pay the original contract as usual or in the name of the entity to be divided as the parties may independently agree between themselves.

Under no circumstances will the Team of divorcing spouses or a dissolving business entity be divided. Similarly, under no circumstances will Klabrate split commission and bonus payments between divorcing spouses or members of dissolving entities. Klabrate will recognize only one Team and will issue only one commission check per Klabrate business per commission cycle. Commission payments shall always be issued to the same individual or entity. In the event that parties to a divorce or dissolution proceeding are unable to resolve a dispute over the disposition of commissions and ownership of the business, the Agreement shall be involuntarily cancelled.

If a former spouse or a former entity Associate has completely relinquished all rights in their original Klabrate business, they are thereafter free to enroll under any sponsor of their choosing, so long as they meet the waiting period requirements set forth in Section 3.5.2. In such case, however, the former spouse or partner shall have no rights to any Members in their former Team or to any former customer. They must develop the new business in the same manner as would any other new Member.

3.20 — Sponsoring

All active Members in good standing have the right to sponsor and enroll others into Klabrate. Each prospective Member has the ultimate right to choose his or her own Sponsor. If two Members claim to be the Sponsor of the same new Member, the Company shall regard the first application received by the Company as controlling.

3.21 — Stacking

The term “stacking” includes: (a) the failure to transmit to Klabrate, or the holding of an Member Application and Agreement in excess of two business days after its execution; (b) the placement or manipulation of Member Applications and Agreements for the purpose of maximizing compensation pursuant to Klabrate’s Compensation Program; or (c) providing financial assistance to new Members for the purpose of maximizing compensation pursuant to Klabrate’s Compensation Program. Stacking constitutes a material breach of these Policies and Procedures, and is strictly and absolutely prohibited.

3.22 — Succession

Upon the death or incapacitation of a Member, his or her business may be passed to his or her heirs. Appropriate legal documentation must be submitted to the Company to ensure the transfer is proper. Accordingly, a Member should consult an attorney to assist him or her in the preparation of a will or other testamentary instrument. Whenever an Klabrate business is transferred by a will or other testamentary process, the beneficiary acquires the right to collect all bonuses and commissions of the deceased Member’s Team provided the following qualifications are met. The successor(s) must:

Complete a new Next Generation Member Application and Agreement;
Comply with terms and provisions of the Agreement; and
Meet all of the qualifications for the deceased Member’s status.

Bonus and commission payments of an Klabrate business transferred pursuant to this section will be paid in a single payment jointly to the devisees. The devisees must provide Klabrate with an “address of record” to which all bonus and commission payments will be sent. If the business is bequeathed to joint devisees, they must form a business entity and acquire a federal/national taxpayer Identification number. Klabrate will issue all bonus and commission payments to the business entity.

3.23.1 — Transfer Upon Death of a Member

To effect a testamentary transfer of a Klabrate business, the successor must provide the following to Klabrate: (1) an original death certificate; (2) a notarized copy of the will or other instrument establishing the successor’s right to the Klabrate business; and (3) a completed and executed Member Application and Agreement.

3.23.2 — Transfer Upon Incapacitation of a Member

To affect a transfer of a Klabrate business because of incapacity, the successor must provide the following to Klabrate: (1) a notarized copy of an appointment as trustee; (2) a notarized copy of the trust document or other documentation establishing the trustee’s right to administer the Klabrate business; and (3) a completed Member Application and Agreement executed by the trustee.

SECTION 4 — RESPONSIBILITIES OF MEMBERS

4.1 — Change of Address or Telephone

To ensure timely delivery of products, support materials, and commission payments, it is critically important that Klabrate’s files are current. To guarantee proper delivery, two weeks advance notice must be provided to Klabrate on all changes.

4.2 — Continuing Development Obligations

4.2.1 — Ongoing Training

Any Member who sponsors another Member into Klabrate must perform a bona fide assistance and training function to ensure that his or her Team is properly operating his or her Klabrate business. Members must have ongoing contact and communication with the Members in their Teams. Examples of such contact and communication may include, but are not limited to: newsletters, written correspondence, personal meetings, telephone contact, voice mail, electronic mail, and the accompaniment of Team members to Klabrate meetings, training sessions, and other functions. Up-line Members are also encouraged to motivate and train new Members in Klabrate product knowledge, effective sales techniques, the Marketing Plan, and compliance with Company Policies and Procedures. Communication with and the training of Team members must not, however, violate Section 3.2 (regarding the development of Member-produced sales aids and promotional materials).

Members must monitor the Members in their Respective Teams to ensure that such Members do not make improper product, promotion or business claims, or engage in any illegal or inappropriate conduct. Upon request, every Member should be able to provide documented evidence to Klabrate of his or her ongoing fulfillment of the responsibilities of a Sponsor.

4.2.2 — Increased Training Responsibilities

As Members progress through the various levels of leadership, they will become more experienced in sales techniques, product knowledge, and understanding of the Klabrate program. They will be called upon to share this knowledge with lesser-experienced Members within their organization.

4.3 — Non-disparagement

Klabrate wants to provide its independent Members with the best products, compensation plan, and service in the industry. Accordingly, we value your constructive criticisms and comments. All such comments should be submitted in writing to the Member Support Department. Remember, to best serve you, we must hear from you! While Klabrate welcomes constructive input, negative comments and remarks made in the field by Members about the Company, its products, or Compensation Program serve no purpose other than to sour the enthusiasm of other Klabrate Members. For this reason, and to set the proper example for their Team members, Members must not disparage Klabrate, other Klabrate Members, Klabrate’s products, the Compensation Program, or Klabrate’s directors, officers, or employees. The disparagement of Klabrate, other Klabrate Members, Klabrate’s products, the Compensation Program, or Klabrate’s directors, officers, or employees constitutes a material breach of these Policies and Procedures.

4.4 — Reporting Policy Violations

Members observing a Policy violation by another Member should submit a written report of the violation directly to the attention of the Klabrate Compliance Department. Details of the incidents such as dates, number of occurrences, persons involved, and any supporting documentation should be included in the report.

SECTION 5 — SALES REQUIREMENTS

5.1 — Product Sales

The Marketing Plan is based upon the sale of Klabrate products and services to end consumers (“Customers/Members”). To become eligible for bonuses, commissions and advancement to higher levels of achievement, Members would have to fulfill personal and Team retail sales requirements (as well as meet other responsibilities set forth in the Marketing Plan).

5.2 — No Territory Restrictions

There are no exclusive territories granted to anyone. No franchise fees are required.

SECTION 6 — DISPUTE RESOLUTION AND DISCIPLINARY PROCEEDINGS

6.1 — Disciplinary Sanctions

Violation of the Agreement, these Policies and Procedures, or any illegal, fraudulent, deceptive or unethical business conduct by a Member may result, at Klabrate's sole discretion, in one or more of the following corrective measures:

Issuance of a written warning or admonition;
Requiring the Member to take immediate corrective measures;
Imposition of a fine, which may be withheld from bonus and commission payments;
Loss of rights to one or more bonus and commission payments;
Suspension of the individual’s Agreement for one or more pay periods;
Suspension or termination of the individual’s Resale Programme;
Involuntary termination of the offender’s Agreement; and/or
Any other measure expressly allowed within any provision of the Agreement or which Klabrate deems practicable to implement and appropriate to equitably resolve injuries caused partially or exclusively by the Member’s policy violation or contractual breach.

Klabrate may withhold from a Member all or part of the Member’s bonuses and commissions during the period that Klabrate is investigating any conduct allegedly volatile of the Agreement. If a Member’s business is cancelled for disciplinary reasons, the Member will not be entitled to recover any commissions withheld during the investigation period as long as the real damage is not verified by legally binding decision or an amicable agreement. In such cases the company is the final arbiter of any dispute. In situations deemed appropriate by Klabrate, the Company may institute legal proceedings for monetary and/or equitable relief.

6.2 — Grievances and Complaints

When a Member has a grievance or complaint with another Member regarding any practice or conduct in relationship to their respective Klabrate businesses, the complaining Member should first report the problem to his or her Sponsor who should review the matter and try to resolve it with the other party's up-line sponsor. If the matter cannot be resolved, it must be reported in writing to the Member Support Department at the Company. The Member Support Department will review the facts and attempt to resolve it. If it is not resolved, it will be referred to the Dispute Resolution Board for final review and determination.

6.3 — Dispute Resolution Panel

The purpose of the Dispute Resolution Panel is to: (1) review appeals of disciplinary sanctions; and (2) review matters between Klabrate Members. After the response or settlement instituted by Member Support has been denied or otherwise remains unresolved, the Dispute Resolution Panel reviews evidence, deliberates, and responds to current outstanding issues on a collective basis.

A Member may submit a written request for a telephonic or in-person hearing within seven business days from the date of: (1) the written notice by Klabrate of disciplinary action; or (2) the written decision of Member Support regarding disputes between Members. All communication with Klabrate and the Member seeking resolution of a dispute must be in writing. It is within the Dispute Resolution Panel’s discretion whether a claim is accepted for review. If the Dispute Resolution Panel agrees to review the matter, it shall schedule a hearing within 60 days of the receipt of the Member’s written request. All evidence (e.g., documents, exhibits, etc.) that a Member desires to have considered by the Dispute Resolution Panel must be submitted to Klabrate no later than seven business days before the date of the hearing. The Member shall bear all of the expenses related to his or her attendance and the attendance of any witnesses he or she desires to be present at the hearing. The decision of the Dispute Resolution Board will be final and subject to no further review. During the pendency of the claim before the Dispute Resolution Panel, the Member waives his or her right to pursue arbitration or any other remedy.

Following issuance of a sanction, the disciplined Member may appeal the sanction to the Dispute Resolution Panel. Member's appeal must be in writing and received by the Company within 15 days from the date of Klabrate's cancellation notice. If the appeal is not received by Klabrate within the 15 day period, the sanction will be final.

The Member must submit all supporting documentation with his or her appeal correspondence. If the Member files a timely appeal of cancellation, the Dispute Resolution Panel will review and reconsider the cancellation, consider any other appropriate action, and notify the Member in writing of its decision.

6.4 — Arbitration

Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. If a Member wishes to bring an action against Klabrate for any act or omission relating to or arising from this Agreement, such action must be brought within one year complying to provision 1.7 concerning the statute of limitation beginning with the alleged maturity of the claim or the reasonable knowledge this fact giving rise to the cause of action. Failure to bring such action within one year shall bar all claims by Member against Klabrate for such act or omission. Member waives all claims that any other statute of limitation applies. If a Member files a claim or counterclaim against Klabrate, he or she may only do so on an individual basis and not with any other Member or as part of a class or consolidated action. Members waive all rights to trial by jury or to any court. All arbitration proceedings shall be held in the State of Delaware, United States, unless the laws of the country in which a Member resides expressly require the application of its laws, in which case the arbitration shall be held in the capital of that Country. The parties shall be entitled to all discovery rights allowed under the National Rules of Civil Procedure. No other aspects of the National Rules of Civil Procedure shall be applicable to arbitration. There shall be one arbitrator, an attorney at law, who shall have expertise in business law transactions with a strong preference being an attorney knowledgeable in the direct selling industry. Each party to the arbitration shall be responsible for its own -- costs and expenses of arbitration, including legal and filing fees. The decision of the arbitrator shall be final and binding on the parties and may, if necessary, be reduced to a judgment in any court of competent jurisdiction. This agreement to arbitrate shall survive any termination or expiration of the Agreement.

Nothing in these Policies and Procedures shall prevent Klabrate from applying to and obtaining from any court having jurisdiction a writ of attachment, a temporary injunction, preliminary injunction, permanent injunction or other relief available to safeguard and protect Klabrate’s interest prior to, during or following the filing of any arbitration or other proceeding or pending the rendition of a decision or award in connection with any arbitration or other proceeding.

6.5 — Governing Law, Jurisdiction and Venue

Jurisdiction and venue of any matter not subject to arbitration shall reside in the laws of the State of Delaware USA unless the laws of the country in which a Member resides expressly require the application of its laws, in which case that countries law shall govern all issues related to jurisdiction and venue. The Federal/National Arbitration Act shall govern all matters relating to arbitration. The laws of the country shall govern all other matters relating to or arising from the Agreement unless the laws of the country in which a Member resides expressly require the application of its law.

SECTION 7 — ORDERING

7.1 — Purchasing Klabrate/Associate Products

Each Member should purchase sales aids from his/her personal Klabrate website. If a Member purchases products from another Member or any other source, the purchasing Member will not receive the personal sales volume that is associated with that purchase.

7.2 — General Order Policies

Klabrate maintains no minimum order requirements. Orders for products and sales aids may be combined.

7.3 — Confirmation of Order

A Member and/or recipient of an order must confirm promptly that the product received matches the product listed on the shipping invoice, and is free of damage. Failure to notify Klabrate or Associate of any shipping discrepancy or damage within thirty days of shipment will cancel a Member’s right to request a correction unless the damage appeared later.

SECTION 8 — PAYMENT AND SHIPPING

8.1 — Deposits

All sales are made online via the Member’s Klabrate Website.

8.2 — Restrictions on Third Party Use of Credit Cards and Account Access

Member shall not permit other Members or Members’ customers to use his or her credit card, or permit debits to their banking accounts, to enroll or to make purchases from the Company.

8.3 — Charge backs

Charge backs issued by any Klabrate Member for a purchase from Klabrate or any of our Associates are grounds for termination.

SECTION 9 — INACTIVITY AND CANCELLATION

9.1 — Effect of Cancellation

So long as a Member remains active and complies with the terms of the Agreement and these Policies and Procedures, Klabrate shall pay commissions to such Member in accordance with the MarketingPlan. A Member’s bonuses and commissions constitute the entire consideration for the Member's efforts in generating sales and all activities related to generating sales (including building a Team). Following a Member’s non-renewal of his or her Agreement, cancellation for inactivity, or voluntary or involuntary cancellation of his or her Agreement (all of these methods are collectively referred to as “cancellation”), the former Member shall have no right, title, claim or interest to the Team which he or she operated, or any commission or bonus from the sales generated by the organization.

The Klabrate Website of a Member whose Agreement is cancelled will be permanently deactivated and the former Member will permanently lose all rights under this Agreement. This includes the right to sell Klabrate products and services via an Klabrate Website and the right to receive future commissions, bonuses, or other income resulting from the sales and other activities of the Member’s former Team. In the event of cancellation, Members agree to waive all rights they may have, including but not limited to property rights, to their former Team and to any bonuses, commissions, or other remuneration derived from the sales and other activities from his or her former Team.

The former Member shall not hold himself or herself out as an Klabrate Member. A Member whose Agreement is cancelled shall receive commissions and bonuses only for the last full pay period he or she was active prior to cancellation (less any amounts withheld during an investigation preceding an involuntary cancellation).

9.2 — Cancellation Due to Inactivity

It is the Member's responsibility to lead his or her Team with the proper example in personal production of sales to end consumers. Without this proper example and leadership, the Member will lose his or her right to receive commissions from sales generated through his or her Team. Therefore, Members who personally produce less than the activity requirement for any pay period will not receive a commission for the sales generated through their Team for that pay period.

9.3 — Involuntary Cancellation

A Member’s violation of any of the terms of the Agreement, including any amendments that may be made by Klabrate in its sole discretion, may result in any of the sanctions listed in Section 6.1, including the involuntary cancellation of his or her Agreement. Cancellation shall be effective at the discretion of the company and may be done without notice.

Klabrate expressly reserves the right to terminate all Agreements upon thirty (30) days written notice in the event that it elects to: (1) cease business operations; (2) dissolve as a corporate entity; or (3) terminate distribution of its products and services via relationship marketing.

9.4 — Voluntary Cancellation

A participant in this relationship marketing plan has a right to cancel at any time, regardless of reason with notice of 14 days. Cancellation must be submitted in writing to the Company at its principal business address. The written notice must include the Member’s signature, printed name, address, user name and Member I.D. Number. Alternatively, the member can voluntarily cancel his position by simply not being active and not logging into the back office for a period of 180 days.

9.5 — Product Returns Policy

9.5 — Product Returns Policy

Klabrate offers a 100% 30-day money-back satisfaction guarantee (less 10% administration charges) to all Owners and Associates on their first purchase of a particular Klabrate product. Subsequent purchases may not be returned under this guarantee. This does not affect the statutory rights of the Customer.

9.5.1 —Customers

Klabrate offers, through its Associates, a 100% 30-day money-back guarantee to all Customers on the first purchase of a Klabrate product purchased directly from Klabrate only.

9.5.2 — Associates

If an Associate is unsatisfied with any Klabrate product purchased for personal use, the Company offers a 100% 30-day money-back guarantee (less 10% administration charges) on his or her first purchase of a Klabrate product. This guarantee is limited to the Associate’s initial purchase of a Klabrate product only. Subsequent purchases may only be returned if faulty or defective.

In the event of a Customer cancelling an E-Com card purchased directly from an Associate, Klabrate will reimburse the Associate in the form of a replacement E-Com card. Klabrate must be supplied with a copy of the original receipt and a cancellation form signed and addressed by the Customer including telephone number and email address. Klabrate must beinformed of a Customer cancellation within 10 days from the date on which the Associate was notified by the Customer.

The Associate has the right within a period of fourteen (14) days of entering into the Agreement to cancel the Agreement without penalty by written notice of termination and (i) to receive a refund of all monies paid in connection with his or her joining the Klabrate programme, (ii) to return any Products (including training and promotional materials, business manuals and kits) purchased within that period and which remain unsold provided that such unsold Products are in the condition in which they were in at the time of purchase and to require Klabrate to refund an amount equal to one hundred per cent (100%) of any monies paid in respect of such Products. After termination, the Associate understands that he or she must wait twelve (12) months from the date of termination of the Agreement before re-applying to become aAssociate.

Where the Associate terminates the Agreement more than fourteen (14) days after entering into it, the Associate shall have the right to return to Klabrate any Products he or she has purchased within a period of ninety (90) days prior to such termination and which remain unsold and to receive from Klabrate the price which he or she paid for the Products, less

(i) in the case of any Products, the condition of which has deteriorated due to an act or default on the part of the Associate, an amount equal to the diminution in their value resulting from such deterioration; and

(ii) a reasonable administration charge of ten per cent (10%) of the price.

Where Klabrate has terminated the Agreement, the Associate shall have the right to return to Klabrate any Products he or she has purchased within a period of ninety (90) days prior to such termination and which remain unsold and to receive from Klabrate the price which the Associate paid for the Products together with any costs incurred by him or her for returning the Products to the Company; any such refund shall be on terms whereby the Products not already held by Klabrate will be delivered within twenty-one (21) days of such termination at Klabrate’s expense to the address set out in the Application and Agreement Form or as notified by Klabrate to the Associate from time to time.

Any such refund shall be on terms whereby the purchase price is payable upon delivery of the Products or if the Products are already held by Klabrate forthwith.

Klabrate shall be entitled to request proof of ownership, e.g. sale receipts for the Products the Associate requires Klabrate to buy back in accordance with the Agreement.

Bonuses or commissions paid to the Associate on Products returned by and refunded to Associates in the Downline Organisation of the Associate, within the preceding one hundred and twenty (120) days shall be repayable by the Associate and may be deducted from the Associate’s account with Klabrate at any time where a Associate in the Downline Organisation terminates his/her Associate Agreement or it is terminated by Klabrate.

Payments of refunds will be made in the same form as the original payment and in accordance with Klabrate termination procedure in force from time to time.

9.5.3 — Procedures

The following procedures apply to all returns for refund, repurchase, or exchange:

a) All merchandise must be returned by the Associate or Customer who purchased it directly from Klabrate.

b) All products to be returned must have a Return Authorisation Number which is obtained by contacting KlabrateSupport Department. This Return Authorisation Number must accompany the return.

c) The return is accompanied by:

i. a completed and signed Consumer Return Form;

ii, a copy of the original dated retail sales receipt; and

iii. the product or its PIN numbers

If returned product is not received by the Company, it is the responsibility of the Associate to trace the return.

d) If an Associate is returning merchandise to Klabrate that was returned to him or her by a Customer, the product must be received by Klabrate within ten (10) days from the date on which the Customer returned the merchandise to the Associate, and must be accompanied by the sales receipt the Associate gave to the Customer at the time of the sale.

SECTION 10 — DEFINITIONS

Active Member - A Member who satisfies the minimum requirements, as set forth in the Marketing Plan, to ensure that he or she is eligible to receive bonuses and commissions.

Agreement - The contract between the Company and each Member includes the Member Application and Agreement, the Klabrate Policies and Procedures, the Marketing Plan, and the Business Entity Registration Form (where appropriate), all in their current form and as amended at the sole discretion of Klabrate. These documents are collectively referred to as the “Agreement.”
Cancel - The termination of a Member’s business. Cancellation may be either voluntary, involuntary, through non-renewal or inactivity.
Commissionable Products/Services - All Klabrate products and services on which commissions and bonuses are paid.
Company - The term “Company” as it is used throughout the Agreement means Klabrate (Klabrate).
End Consumer - Person who purchases Klabrate products and services for personal or business use and not for resale (Also referred to as “Customer” or “Retail Customer”).
Immediate Household - Heads of household and dependent family members residing in the same house.
Recruit - For purposes of Klabrate’s Conflict of Interest Policy (Section 3.8), the term “recruit” means actual or attempted solicitation, enrolment, encouragement, or effort to influence in any other way, either directly or through a third party, another Klabrate Member to enroll or participate in another direct selling opportunity. This conduct constitutes recruiting even if the Member’s actions are in response to an inquiry made by another Member.
Roll-Up - The method by which commissions compress past a vacancy in a Team left by a Member who is inactive or whose Agreement has been cancelled.
Sponsor - A Member who enrolls another Member into the Company and is as such on the applicant’s Member Application and Agreement. The act of enrolling others and training them to become Members is called “sponsoring.”
Team - All of the Members personally sponsored by a particular Member and the Members generated by their activity.
Up-line - This term refers to the Member or Members above a particular Member in a sponsorship line up to the Company. Conversely stated, it is the line of sponsors that links any particular Member to the Company.

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