POLICIES PROCEDURES MANUAL

TABLE OF CONTENTS

SECTION 1 - CORPORATE MISSION STATEMENT

SECTION 2 - INTRODUCTION

2.1 - Policies and Compensation Plan Incorporated into Distributor Agreement

2.2 - Changes to the Agreement

2.3 - Policies and Provisions Severable

2.4 - Waiver

 

SECTION 3 - BECOMING A DISTRIBUTOR

3.1 - Requirements to Become a Distributor

3.2 - Product Purchases

3.3 - Distributor Benefits

3.4 - Term and Renewal of Your Komstar^® Business

 

SECTION 4 - OPERATING AN KOMSTAR BUSINESS

4.1 - Adherence to the Komstar Compensation Plan

4.2 - Advertising

4.2.1 - General

4.2.2 - Trademarks and Copyrights

           4.2.2.1 - Independent Komstar Distributor Logo

4.2.3 - Media and Media Inquiries

4.2.4 - Unsolicited Email

4.2.5 - Unsolicited Faxes

4.2.6 - Telephone Directory Listings

4.2.7 - Television and Radio Advertising

4.2.8 - Advertised Prices

4.2.9 – Unauthorized Vendor/Supplier Contact

4.3 - Online Conduct

4.3.1 - Distributor Websites

4.3.2 - Komstar Marketing Websites

4.3.3 - Registered External Website and Email Content

4.3.4 - Komstar Independent Distributor Disclosures

4.3.5 - Registered External Websites and Emails Must Exclusively Promote Komstar

4.3.6 - Registered External Website Termination

4.3.7 - Team Websites

4.3.8 - Domain Names, Email Addresses and Online Aliases

4.3.9 - Komstar Hotlinks

4.3.10 - Monetizing Registered External Websites

4.3.11 - Online Classifieds

4.3.12 - eBay/Online Auctions

4.3.13 - Online Retailing

4.3.14 - Banner Advertising

4.3.15 - Spam Linking

4.3.16 - Digital Media Submission (YouTube, iTunes, PhotoBucket, etc.)

4.3.17 - Sponsored Links/Pay-Per-Click (PPC) Ads

4.3.18 - Domain Names and Email Addresses

4.3.19 - Social Media

4.4 - Business Entities

4.4.1 - Changes to a Business Entity

4.5 - Change of Sponsor

4.5.1 - Misplacement

4.5.2 - Cancellation and Re-Application

4.5.3 - Cross-Sponsoring or Poaching

4.6 - Waiver of Claims

4.7 - Unauthorized Claims and Actions

4.7.1 - Indemnification

4.7.2 - Compensation Plan Claims

4.7.3 - Income Claims

4.8 - Trade Shows, Expositions and Other Sales Forums

     4.8.1 - Distributor Sponsored Events

4.9 - Conflicts of Interest

4.9.1 - Non-solicitation

4.9.2 - Distributor Participation in Other Network Marketing Programs

4.9.3 - Confidential Information

4.10 - Targeting Other Direct Sellers

4.11 - Errors or Questions

4.12 - Governmental Approval or Endorsement

4.13 - Holding Applications or Orders

4.14 - Income Taxes

4.15 - Independent Contractor Status

4.16 - Insurance

4.17 - International Marketing

4.18 - Bonus Buying

4.19 - Adherence to Laws and Regulations

4.20 - One Komstar Business Per Distributor

4.21 - Actions of Household Members or Affiliated Parties

4.22 - Requests for Records

4.23 - Roll-up of Marketing Organization

4.24 - Sale, Transfer, or Assignment of Komstar Business

4.25 - Separation of an Komstar Business

4.26 - Sponsoring Online

4.27 - Succession

4.28 - Telemarketing Techniques

4.29 - Back Office Access

 

SECTION 5 - RESPONSIBILITIES OF DISTRIBUTORS

5.1 - Change of Address, Telephone and Email Addresses

5.2 - Continuing Development Obligations

5.2.1 - Ongoing Training

5.2.2 - Increased Training Responsibilities

5.2.3 - Ongoing Sales Responsibilities

5.3 - Non-Disparagement

5.4 - Providing Documentation to Applicants

 

SECTION 6 - SALES REQUIREMENTS

6.1 - Product Sales

6.2 - No Territory Restrictions

6.3 - Sales Receipts

 

SECTION 7 - BONUSES AND COMMISSIONS

7.1 - Bonus and Commission Qualifications and Accrual

7.2 - Adjustment to Bonuses and Commissions

7.2.1 - Adjustments for Returned Products

7.2.2 – Commission Payment Providers

7.2.3 - Tax Withholdings

7.3 - Reports

7.4 - Refunds, Chargebacks and Roll-ups

 

SECTION 8 - PRODUCT GUARANTEES, RETURNS AND INVENTORY REPURCHASE

8.1 - Product Guarantee, Warranty and Rescission

     8.1.1 – Cooling Off Period

     8.1.2 - Returns By Distributors (Products Returned by Customers)

8.2 - Refunds to Distributors and Customers

8.3 - Return of Sales Aids by Distributors Upon Cancellation

8.3.1 Montana Residents

8.4 - Procedures for All Returns

 

SECTION 9 - DISPUTE RESOLUTION AND DISCIPLINARY PROCEEDINGS

9.1 - Disciplinary Sanctions

9.2 - Grievances and Complaints

9.3 - Mediation

9.4 - Arbitration

9.5 - Governing Law, Jurisdiction and Venue

9.5.1 - Louisiana Residents

 

SECTION 10 - PAYMENTS

10.1 - Restrictions on Third-Party Use of Credit Cards and Checking Account Access

10.2 - Sales Taxes

 

SECTION 11 - INACTIVITY, RECLASSIFICATION, AND CANCELLATION

11.1 - Effect of Cancellation

11.2 - Cancellation Due to Inactivity

11.2.1 - Failure to become or remain an Active Distributor

11.2.2 - Failure to Pay Renewal fee for Website Tools, Resources and Services

11.2.3 - Failure to Earn Commissions

11.3 - Involuntary Cancellation

11.4 - Voluntary Cancellation

 

11.5 - Exceptions to Activity Requirements

11.5.1 - Maternity

11.5.2 - Military Deployment

 

SECTION 12 - DEFINITIONS

 

 

 

SECTION 1 - CORPORATE MISSION STATEMENT

Komstar Corporate Mission Statement

At Komstar, our mission is Serving society by helping people live a healthy and successful life.

 

SECTION 2 - INTRODUCTION

2.1 - Policies and Compensation Plan Incorporated into Distributor Agreement

These Policies and Procedures and the Compensation Plan, in their present form and as amended by KOMSTAR (USA) LTD., hereinafter referred to as "we", "us", "our" or “Komstar”, are incorporated into, and form an integral part of, the Komstar Independent Distributor Agreement (“Independent Distributor Agreement”). It is the responsibility of each Distributor, hereinafter referred to as “Distributor(s)”, “you” or “your”, 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. Throughout these Policies, when the term “Agreement” is used, it collectively refers to the Komstar Distributor Application and Independent Distributor Agreement, these Policies and Procedures, and the Komstar Compensation Plan. These documents are incorporated by reference into the Komstar Independent Distributor Agreement (all in their current form and as amended by Komstar).

2.2 - Changes to the Agreement

Komstar reserves the right to amend the Agreement and its prices in its sole and absolute discretion. By executing the Distributor Agreement, a Distributor agrees to abide by all amendments or modifications that Komstar elects to make. Amendments shall be effective thirty (30) days after publication of notice that the Agreement has been modified. Amendments shall not apply retroactively to conduct that occurred prior to the effective date of the amendment.

Notification of amendments shall be published by one or more of the following methods: (1) posting on the Company’s official website; (2) electronic mail (email); (3) posting in Distributors’ back offices; (4) inclusion in Company periodicals; (5) inclusion in product orders or bonus checks; or (6) special mailings. The continuation of a Distributor’s Komstar business, the acceptance of any benefits under the Agreement, or a Distributor’s acceptance of bonuses or commissions constitutes acceptance of all amendments.

2.3 - 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. The severed provision, or portion thereof, shall be reformed to reflect the purpose of the provision as closely as possible.

2.4 - 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 business. No failure of Komstar to exercise any right or power under the Agreement or to insist upon strict compliance by a Distributor 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 Komstar’s right to demand exact compliance with the Agreement. The existence of any claim or cause of action of a Distributor against Komstar shall not constitute a defense to Komstar’s enforcement of any term or provision of the Agreement.

 

SECTION 3 - BECOMING A DISTRIBUTOR

3.1 - Requirements to Become a Distributor

To become a Komstar Distributor, each applicant must:

·        Be at least 18 years of age.

·        Provide Komstar with his/her valid Social Security or Federal Tax ID number.

·        Submit a properly completed Distributor Agreement to Komstar and make a purchase of any Komstar product in any quantity..

Komstar reserves the right to accept or reject any Distributor Agreement for any reason or for no reason.

3.2 –  Product Purchases

With the exception of the one-time product purchase at the initial registration, no person is required to purchase Komstar products, services or sales aids, or to pay any charge or fee to become a Distributor.

3.3 - Distributor Benefits

Once a Distributor Agreement has been accepted by Komstar, the benefits of the Compensation Plan and the Distributor Agreement are available to the new Distributor. These benefits include the right to:

·        Sell Komstar products;

·        Participate in the Komstar Compensation Plan (receive bonuses and commissions, if eligible);

·        Sponsor other individuals as Distributors into the Komstar business and thereby, build a sales organization and progress through the Komstar Compensation Plan;

·        Receive periodic Komstar literature and other Komstar communications;

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

·        Participate in promotional and incentive contests and programs sponsored by Komstar for its Distributors.

3.4 - Term and Renewal of Your Komstar Business

The term of the Distributor Agreement is one year from the date of its acceptance by Komstar and is automatically renewed unless terminated pursuant to the provisions of the Distributor Agreement.

 

SECTION 4 - OPERATING A KOMSTAR BUSINESS

4.1 - Adherence to the Komstar Compensation Plan

Distributors must adhere to the terms of the Komstar Compensation Plan as set forth in official Komstar literature. Distributors shall not offer the Komstar opportunity through, or in combination with, any other system, program, sales tools, or method of marketing other than that specifically set forth in official Komstar literature. Distributors shall not require or encourage other current or prospective Distributors to execute any agreement or contract other than official Komstar agreements and contracts in order to become a Komstar Distributor. Similarly, Distributors shall not require or encourage other current or prospective Distributors to make any purchase from, or payment to, any individual or other entity to participate in the Komstar Compensation Plan other than those purchases or payments identified as recommended or required in official Komstar literature

4.2 - Advertising

4.2.1 - General

All Distributors shall safeguard and promote the good reputation of Komstar and its products. The marketing and promotion of Komstar, the Komstar opportunity, the Compensation Plan, and Komstar products must avoid all discourteous, deceptive, misleading, unethical or immoral conduct or practices.

To promote both the products and services, and the tremendous opportunity Komstar offers, Distributors must use the sales aids, business tools, and support materials produced by Komstar. The Company has carefully designed its products, product labels, Compensation Plan, and promotional materials to ensure that they are promoted in a fair and truthful manner, that they are substantiated, and the materials comply with the legal requirements of federal and state laws.

Accordingly, Distributors may only advertise or promote their Komstar business using approved tools, templates or images acquired through Komstar. No approval is necessary to use these approved tools. If you wish to design your own online or offline marketing materials of any kind, your designs must be submitted to the Komstar compliance department https://us-komstar.tiens.com/singlePage?id=10002  for consideration and inclusion/registration in the template/image library. Unless you receive specific written approval from Komstar to use such tools, the request shall be deemed denied.

Distributors may not sell sales aids to other Komstar Distributors. Therefore, Distributors who receive authorization from Komstar to produce their own sales aids may not sell such material to any other Komstar Distributor. Distributors may make approved material available to other Distributors free of charge if they wish, but may not charge other Komstar Distributors for the material.

Komstar further reserves the right to rescind approval for any sales tools, promotional materials, advertisements, or other literature, and Distributors waive all claims for damages or remuneration arising from or relating to such rescission.

4.2.2 - Trademarks and Copyrights

The name of Komstar and other names, slogans and phrases as may be adopted by Komstar are proprietary trade names, trademarks and service marks of Komstar (collectively “marks”). As such, these marks are of great value to Komstar and are supplied to Distributors for their use only in an expressly authorized manner. Komstar will only allow the use of its marks, designs, or symbols, or any derivatives thereof, solely for use by a Distributor in the furtherance or operation of his or her Komstar business. Komstar will not allow the use of its marks, designs, or symbols, or any derivatives thereof, by any person, including Komstar Distributors, in any manner without its prior, written permission.

The content of all Company sponsored events is copyrighted material. Distributors may not produce for sale or distribution any recorded Company events and speeches without written permission from Komstar, nor may Distributors reproduce for sale or for personal use any recording of Company produced audio or videotape presentations.

As an independent Distributor, you may use the Komstar name in the following manner:

Distributor’s Name

Independent Komstar Distributor

Example:

Alice Smith

Independent Komstar Distributor

Or

Alice Smith

Komstar

Independent Distributor

Distributors may not use the name Komstar in any form in your team name, a tagline, an external website domain name, your personal website address or extension, in an email address, as a personal name, or as a nickname. Additionally, only use the phrase Independent Komstar Distributor in your phone greeting or on your answering machine to clearly separate your independent Komstar business from Komstar (the corporate entity). For example, you may not secure the domain name www.buyKOMSTAR.com, nor may you create an email address such as KOMSTARsales@hotmail.com.

Distributors are strictly prohibited from using KOMSTAR (Komstar) or any variation of the company name in emails, domains, or any other written format whether digital or not.

4.2.2.1 - Independent Komstar Distributor Logo

If you use a Komstar logo in any communication, you must use the Independent Distributor title in combination with the use of the Komstar logo. Using any other Komstar logo requires written approval.

4.2.3 - Media and Media Inquiries

Distributors must not attempt to respond to media inquiries regarding Komstar, its products, or their independent Komstar business. All inquiries by any type of media must be immediately referred to the Komstar 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.

4.2.4 - Unsolicited Email

Komstar does not permit Distributors to send unsolicited commercial emails unless such emails strictly comply with applicable laws and regulations including, without limitation, the federal CAN-SPAM Act. Any email sent by a Distributor that promotes Komstar, the Komstar opportunity, or Komstar products and services must comply with the following:

·        There must be a functioning return email address to the sender.

·        There must be a notice in the email that advises the recipient that he or she may reply to the email, via the functioning return email address, to request that future email solicitations or correspondence not be sent to him or her (a functioning “opt-out” notice).

·        The email must include the Distributor’s physical mailing address.

·        The email must clearly and conspicuously disclose that the message is an advertisement or solicitation.

·        The use of deceptive subject lines and/or false header information is prohibited.

·        All opt-out requests, whether received by email or regular mail, must be honored. If a Distributor receives an opt-out request from a recipient of an email, the Distributor must forward the opt-out request to the Company.

Komstar may periodically send commercial emails on behalf of Distributors. By entering into the Distributor Agreement, Distributor agrees that the Company may send such emails and that the Distributor’s physical and email addresses will be included in such emails as outlined above. Distributors shall honor opt-out requests generated as a result of such emails sent by the Company.

4.2.5 - Unsolicited Faxes

Except as provided in this section, Distributors may not use or transmit unsolicited faxes in connection with their Komstar business. The term "unsolicited faxes" means the transmission via telephone facsimile or computer of any material or information advertising or promoting Komstar, its products, its compensation plan or any other aspect of the company which is transmitted to any person, except that these terms do not include a fax: (a) to any person with that person's prior express invitation or permission; or (b) to any person with whom the Distributor 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 Distributor and a person, on the basis of: (a) an inquiry, application, purchase or transaction by the person regarding products offered by such Distributor; or (b) a personal or familial relationship, which relationship has not been previously terminated by either party.

4.2.6 - Telephone Directory Listings

Distributors may list themselves as an “Independent Komstar Distributor” in the white or yellow pages of the telephone directory, or with online directories, under their own name. No Distributor may place telephone or online directory display ads using Komstar's name or logo. Distributors may not answer the telephone by saying “Komstar”, “Komstar Incorporated”, or in any other manner that would lead the caller to believe that he or she has reached corporate offices of Komstar. If a Distributor wishes to post his/her name in a telephone or online directory, it must be listed in the following format:

Distributor's Name

Independent Komstar Distributor

4.2.7 - Television and Radio Advertising

Distributors may not advertise on television or radio except with Komstar’s express written approval.

4.2.8 - Advertised Prices

Distributors may not create their own marketing or advertising material offering any Komstar products at a price less than the current prices shown on the Komstar website.  Furthermore, Distributors shall not publicly display or advertise prices that are shown on the Komstar website.

4.2.9 - Unauthorized Vendor/Supplier Contact

Komstar has developed special relationships with certain vendors, service providers, and suppliers in connection with its business. To preserve these relationships and the goodwill associated with them, Distributors are not permitted to directly contact any vendor, service provider or supplier with whom Komstar contracts. An exception would exist if a Distributor has a specific, personal business relationship with such a vendor or provider separate and distinct from his or her Komstar business.

4.3 - Online Conduct

4.3.1 - Distributor Websites

If a Distributor desires to utilize an Internet web page to promote his or her business, he or she may do so through the Company’s official website, using their official Komstar Marketing Website.

Alternatively, Distributors may develop their own External Approved Websites. However, any Distributor who wishes to develop their own non-Marketing website for marketing purposes must receive the Company’s prior written approval before going live with the website.

Subject to the requirements set forth below, Distributors may create and utilize their own websites to promote their Komstar business. Once a website is approved by Komstar in writing, it is an External Approved Website. Any changes to the website must be submitted to Komstar for additional approval, and the Distributor must receive Komstar’s written authorization to make the change before going live with the change.

Distributors may create their own websites, so long as the website and its content comply with the terms of Komstar’s Policies and Procedures. It is the Distributor’s obligation to ensure that his or her online marketing activities are truthful, are not deceptive and do not mislead Members or potential Distributors in any way. Websites and web promotion activities and tactics that mislead or are deceptive, regardless of intent, will result in disciplinary action. Misleading tactics include, but are not limited to, spam linking (or blog spam), unethical search engine optimization (“SEO”) tactics, misleading click-through ads (i.e. having the display URL of a Pay-Per-Click (“PPC”) campaign appear to be directed to an official Komstar Corporate Site when it, in fact, goes elsewhere), unapproved banner ads, and unauthorized press releases. Komstar will be the sole determinant of truthfulness and whether specific activities are misleading or deceptive.

4.3.2 - Komstar Marketing Websites

Distributors can create a Komstar Marketing Website (yourname.Komstar.com) to facilitate online buying experience for their Members and enrollments for Distributors.

Because Marketing Websites reside on the Komstar.com domain, Komstar reserves the right to receive analytics and information regarding the usage of your website.

You can select any name or title for your Komstar Marketing Website. However, the name you choose must NOT:

a)  Be confused with other portions of the Komstar corporate website;

b)  Confuse a reasonable person into thinking they have landed on an Komstar corporate page;

c)  Be confused with any Komstar name;

d)  Contain any discourteous, misleading, or off-color words or phrases that may damage Komstar’s image.

4.3.3 - Registered External Website and Email Content

Distributors are solely responsible and liable for their own Registered External Website content, messaging, claims and information, and must ensure that each appropriately represents and enhances the Komstar brand and adheres to Komstar’s Policies and Procedures. Additionally, Registered External Websites must not contain disingenuous popup ads or promotions or malicious code. Decisions and corrective actions in this area are at Komstar’s sole discretion.

4.3.4 - Komstar Independent Distributor Disclosures

To avoid confusion, the following three elements must be prominently displayed at the top of every page of your Registered External Website and in your email signatures:

1.  The Komstar Independent Distributor Logo

2.  Your Name and Title

3.  Komstar Corporate Website Link (if applicable your Referral link, i.e., yourlink.Komstar.com)

Although Komstar brand themes and images are desirable for consistency, anyone landing on any page of a Distributor’s External Website must clearly understand that they are at an Independent Distributor site, and not a Komstar corporate page.

4.3.5 - Registered External Websites and Emails Must Exclusively Promote Komstar

Your Komstar external website and any email using our domains (example: yourname@Komstar.com) must contain content and information that is exclusive to Komstar. You may not advertise other products or services other than the Komstar product line and the Komstar opportunity.

4.3.6 - Registered External Website Termination

In the event of the voluntary or involuntary cancellation of your Distributor Agreement, you must remove your Registered External Website from public view within three days and redirect (forward) all traffic from that domain to www.Komstar.com. Your external website may be transferred to another Komstar Distributor, subject to Komstar’s approval, on a case-by-case basis.

4.3.7 - Team Websites

You may use team websites for the purposes of connecting, communicating, training, education and sharing best practices among team members. Because these sites may contain sensitive and Company specific information, these team websites must be password protected and may only be shared with members of your Sales Organization.

4.3.8 - Domain Names, Email Addresses, Online Aliases

You are not allowed to use or register Komstar or any of Komstar’s trademarks, product names, or any derivatives (like, but not limited to Comstar or KOM-STAR), with any trademark or tradename registry, internet domain name, email address or online aliases. Additionally, you cannot use or register domain names, email addresses, and/or online aliases that could cause confusion, or be misleading or deceptive, in that they cause individuals to believe or assume that the communication is from, or is the property of Komstar.

Examples of the improper use of Komstar include, but are not limited to any form of Komstar showing up as the sender of an email or examples such as:

 

www.MyKOMSTARBiz.com	www.KOMSTARDreamTeam.com
www.ISellKOMSTAR.com	www.KOMSTARbyJaneDoe.com
www.KOMSTARMoney.net	www.JanesKOMSTAROpportunity.net

 

 

4.3.9 - Komstar Hotlines

When directing readers to your Registered External Website or Marketing Website, it must be evident from a combination of the link and the surrounding context to a reasonable reader that the link will be resolving to the site of an independent Komstar Distributor. Attempts to mislead web traffic into believing they are going to a Komstar corporate site, when in fact they land at a Distributor site (Marketing or registered external) will not be allowed. The determination as to what is misleading or what constitutes a reasonable reader will be at Komstar’s sole discretion.

4.3.10 - Monetizing Registered External Websites

Distributors may not monetize their Marketing Website or their Registered External Website through Distributor programs, AdSense or similar programs.

4.3.11 - Online Classifieds

You may not use online classifieds (including Craigslist) to list, offer, or sell specific Komstar products. You may use online classifieds (including Craigslist) for prospecting, recruiting, sponsoring and informing the public about the Komstar business opportunity, provided Komstar-approved templates/images are used. These templates will identify you as an Independent Komstar Distributor. If a link or URL is provided, it must link to your Marketing Website or your Registered External Website.

4.3.12 - eBay / Online Auctions

Komstar’s products may not be listed on eBay or other online auctions, nor may Distributors enlist or knowingly allow a third party to sell Komstar products or services on eBay or other online auctions.

4.3.13 - Online Retailing

Distributors may not list or sell Komstar products on any online retail store or eCommerce site, nor may you enlist or knowingly allow a third party to sell Komstar products on any online retail store or eCommerce site.

4.3.14 - Banner Advertising

You may place banner advertisements on a website provided you use Komstar-approved templates and images. All banner advertisements must link to your Marketing Website or a Registered External Website. Distributors may not use blind ads (ads that do not disclose the identity of the Company) or web pages that make product or income claims that are ultimately associated with Komstar products or the Komstar opportunity.

4.3.15 - Spam Linking

Spam linking is defined as multiple consecutive submissions of the same or similar content into blogs, wikis, guest books, websites or other publicly accessible online discussion boards or forums, and is not allowed. This includes blog spamming, blog comment spamming and/or spamdexing. Any comments you make on blogs, forums, guest books, etc. must be unique, informative and relevant.

4.3.16 - Digital Media Submission (YouTube, iTunes, PhotoBucket, etc.)

Distributors may upload, submit or publish Komstar-related video, audio or photo content that they develop and create so long as it aligns with Komstar values, contributes to the Komstar community greater good, and is in compliance with Komstar Policies and Procedures. All submissions must clearly identify you as an Independent Komstar Distributor in the content itself and in the content description tag, must comply with all copyright/legal requirements, and must state that you are solely responsible for this content. Distributors may not upload, submit or publish any content (video, audio, presentations or any computer files) produced by Komstar or captured at official Komstar events or in buildings owned or operated by Komstar without prior written permission unless said content is publicly available on the Komstar public-facing website. If the Distributor’s Komstar business is canceled for any reason or if the Distributor becomes inactive, the Distributor must remove all content posted while they were active within 30 days of termination or inactivity with Komstar.

4.3.17 - Sponsored Links / Pay-Per-Click (PPC) Ads

Sponsored links or pay-per-click ads (PPC) are acceptable. The destination URL must be to either the sponsoring Distributor’s Marketing Website or to the sponsoring Distributor’s Registered External Website. The display URL must also be to either the sponsoring Distributor’s Marketing Website or to your Registered External Website, and must not portray any URL that could lead the user to believe they are being directed to a Komstar Corporate site, or be inappropriate or misleading in any way.

4.3.18 - Domain Names and Email Addresses

Distributors may not use or attempt to register any of Komstar’s trade names, trademarks, service names, service marks, product names, the Company’s name, or any derivative of the foregoing, for any Internet domain name, email address, or social media name or address. Distributors are authorized to use Komstar’s official corporate email exclusively for Komstar business purposes only.

4.3.19 - Social Media

In addition to meeting all other requirements specified in these Policies and Procedures, should a Distributor utilize any form of social media, including but not limited to Facebook, Twitter, LinkedIn, YouTube, Instagram or Pinterest, the Distributor agrees to each of the following:

·        No product sales or enrollments may occur on any social media site. To generate sales, a social media site must link only to the Distributor’s Komstar Marketing Website.

·        It is each Distributor’s responsibility to follow the social media site’s Terms of Use. If the social media site does not allow its site to be used for commercial activity, you must abide by the site’s Terms of Use.

·        Any social media site that is directly or indirectly operated or controlled by a Distributor, that is used to discuss or promote Komstar’s products or the Komstar opportunity may not link to any website, social media site, or site of any other nature, other than the Distributor’s Komstar Marketing Website.

·        During the term of this Agreement and for a period of 12 calendar months thereafter, a Distributor may not use any social media site on which they discuss or promote, or have discussed or promoted, the Komstar business or Komstar’s products to directly or indirectly solicit Komstar Distributors for another direct selling or network marketing program (collectively, “direct selling”). In furtherance of this provision, a Distributor shall not take any action that may reasonably be foreseen to result in drawing an inquiry from other Distributors relating to the Distributor’s other direct selling business activities. Violation of this provision shall constitute a violation of the non-solicitation provision in Section 4.9 below. 

·        A Distributor may post or “pin” photographs of Komstar products on a social media site, but only photos that are provided by Komstar and downloaded from the Distributor’s Back Office may be used.

If a Distributor creates a business profile page on any social media site that promotes or relates to Komstar, its products or opportunity, the business profile page must relate exclusively to the Distributor’s Komstar business and Komstar products. If the Distributor’s Komstar business is canceled for any reason, or if the Distributor becomes inactive, the Distributor must deactivate the business profile page

4.4 - 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 Komstar Distributor by submitting a properly completed Independent Distributor Agreement together with a properly completed Business Entity Registration form.  At any time, Komstar may request that the Distributor provide its Certificate of Incorporation, Partnership Agreement or trust documents (these documents are collectively referred to as the “Entity Documents”) to Komstar. 

It is the responsibility of those persons involved in the Business Entity to conform to the laws of the state or territory in which their Business Entity is formed.  Komstar reserves the right to approve or disapprove any Distributor Agreement submitted by a Business Entity as well as any Distributor Agreement submitted by any current Distributor(s) for the formation of a Business Entity. 

4.4.1 - Changes to a Business Entity

A distributorship may change its status under the same sponsor from an individual to a Business Entity, or from one type of Business Entity to another.  To do so, the Distributor must submit a properly completed Distributor Agreement and Business Entity Registration form to Komstar.  The Business Entity form must be signed by all of the shareholders, partners, trustees or individuals having an ownership interest in the business.  Members of the Business Entity are jointly and severally liable for any indebtedness or other obligation to Komstar.  As set forth in Section 4.20, no individual may participate in more than one Komstar distributorship. 

4.5 - Change of Sponsor

Komstar prohibits changes in sponsorship. Accordingly, the transfer of a Komstar business from one Sponsor to another is rarely permitted. Requests for change of sponsorship must be submitted in writing to Komstar’s Support Department and must include the reason for the transfer. Transfers will only be considered in the following circumstances:

4.5.1 - Misplacement or Preference

In cases in which the new Distributor is sponsored by someone other than the individual he or she was led to believe would be his or her Sponsor, or in the event the new Distributor is not satisfied with his/her current Sponsor, a Distributor may request that he or she be transferred to another organization with his or her entire marketing organization intact. Requests for transfer under this policy will be evaluated on a case-by-case basis and must be made within fourteen days (14 days) from the date of activation as a Komstar Distributor via a properly completed and fully executed Sponsorship Transfer Form. The Distributor requesting the change has the burden of proving that he or she was placed beneath the wrong Sponsor or explaining why they can’t work with their current Sponsor. It is up to Komstar’s discretion whether the requested change will be implemented.

We will notify the current Sponsor when a formal request is submitted to our staff for processing. We will give the current Sponsor 3 days to reach out to the Distributor requesting the change of Sponsor. If we receive an email from the person requesting the change wishing to cancel the request, the request will be canceled. Otherwise, we will make the change 3 days after notifying the Distributor.

Sponsoring Distributors cannot object to the change of Sponsor in cases where the Distributor is within 7 days of activation and still eligible for a refund.

4.5.2 - Cancellation and Re-Application

A Distributor may legitimately change his or her Sponsor by voluntarily canceling his or her Komstar business. Former Distributors may reapply under a new Sponsor. However, the former Distributor’s downline will remain in their original line of sponsorship, and any benefits or unpaid commissions in the canceled account will be forfeited and not subject to refunds. Distributors are never allowed to have 2 or more accounts or positions with Komstar.

In any event, the cancellation of a Distributor in order to re-enter under a different Sponsor, will not and should NOT trigger any refunds as we allow changes within 7 days of a Distributor’s date of activation in order to avoid refunds and repayments.

If a refund and/or dispute is processed for any reason, then that Distributor will permanently lose all rights to participate in the Komstar Distributor Program and ALL accounts will be terminated.

4.5.3 - Cross-Sponsoring or Poaching

“Cross-Sponsoring” or “Poaching” or attempts to cross sponsor or poach is strictly prohibited. “Cross-Sponsoring” or “Poaching” is defined as the attempt to enroll or the enrollment of an individual that is already a Komstar Distributor (regardless if they are active or not), or anyone who has been a Komstar Distributor within the preceding six (6) calendar months, within a different line of sponsorship. The use of a spouse’s or relative’s name, assumed names, any straw-man or other artifices to circumvent this policy is prohibited. Distributors shall not demean, discredit or defame other Komstar Distributors in an attempt to entice another Distributor to become part of their Marketing Organization.

If “Cross-Sponsoring” or “Poaching” is discovered, it must be brought to the attention of the Komstar Compliance Department immediately. Komstar may take disciplinary action against the Distributor that changed organizations and/or those Distributors who encouraged or participated in the Cross-Sponsoring or Poaching of other Distributors. Komstar may also move all or part of the offending Distributor’s Downline to his or her original Downline organization if the Company deems it equitable and feasible to do so. However, Komstar is under no obligation to do this, and the ultimate disposition of the organization remains within the sole discretion of Komstar. All Komstar Distributors waive all claims and causes of action against the Company arising from or relating to the disposition of the Cross-Sponsored Distributor’s Downline organization.

4.6 - Waiver of Claims

In cases in which the appropriate sponsorship change procedures have not been followed, and a downline organization has been developed in the second business by a Distributor, Komstar reserves the sole and exclusive right to determine the final disposition of the downline organization. Resolving conflicts over the proper placement of a downline that has developed under an organization that has improperly switched Sponsors is often extremely difficult. Therefore, DISTRIBUTORS WAIVE ANY AND ALL CLAIMS AGAINST KOMSTAR, ITS OFFICERS, DIRECTORS, OWNERS, EMPLOYEES AND AGENTS THAT RELATE TO OR ARISE FROM KOMSTAR’S DECISION REGARDING THE DISPOSITION OF ANY DOWNLINE ORGANIZATION THAT DEVELOPS BELOW AN ORGANIZATION THAT HAS IMPROPERLY CHANGED LINES OF SPONSORSHIP.

4.7 - Unauthorized Claims and Actions

4.7.1 - Indemnification

A Distributor is fully responsible for all of his or her verbal and written statements made regarding Komstar’s products and the Compensation Plan that are not expressly contained in official Komstar materials. This includes statements and representations made through all sources of communication media, whether person-to-person, in meetings, online, through Social Media, in print, or any other means of communication. Distributors agree to indemnify Komstar and Komstar’s directors, officers, employees, and agents, and hold them harmless from all liability including judgments, civil penalties, refunds, attorney fees, court costs or lost business incurred by Komstar as a result of the Distributor’s unauthorized representations or actions. This provision shall survive the termination of the Distributor Agreement.

4.7.2 - Compensation Plan Claims

When presenting or discussing the Komstar Compensation Plan, you must make it clear to prospects that financial success with Komstar requires commitment, effort and sales skills. Conversely, you must never represent that one can be successful without diligently applying themselves. Examples of misrepresentations in this area include:

·        It’s a turnkey system;

·        The system will do the work for you;

·        Just get in and your upline will build the business for you;

·        Just join and I’ll build your downline for you;

·        The company does all the work for you; or

·        You don’t have to sell anything.

The above are just examples of improper representations about the Compensation Plan. It is important that you do not make these or any other representations that could lead a prospect to believe that they can be successful as a Komstar Distributor without commitment, effort and sales skills.

4.7.3 - Income Claims

Because Komstar Distributors do not have the data necessary to comply with the legal requirements for making income claims, a Distributor, when presenting or discussing the Komstar opportunity or Compensation Plan to a prospective Distributor, may not make income projections, income claims, or disclose his or her Komstar income (including, but not limited to, the showing of checks, copies of checks, bank statements, or tax records).

4.8 - Trade Shows, Expositions and Other Sales Forums

Distributors may display, promote, and/or sell Komstar products at trade shows and professional expositions. Before submitting a deposit to the event promoter, Distributors must contact the Marketing Department in writing for conditional approval, as Komstar’s policy is to authorize only one Komstar Distributor representation per event. Final approval will be granted to the first Distributor who submits an official advertisement of the event, a copy of the contract signed by both the Distributor and the event official, and a receipt indicating that a deposit for the booth has been paid. Approval is given only for the event specified. Any requests to participate in future events must again be submitted to the Marketing Department.

Komstar 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 Komstar opportunity. 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 Komstar wishes to portray.

4.8.1 – Distributor Sponsored Events

Distributors may organize and sponsor their own training or marketing events. If Distributors are expecting a Komstar corporate representative to attend the event, they must first complete the Event Request Form and receive approval. The Event Request Form is available in the Distributor’s back office. In this case, the completed Event Request Form should be submitted to the Komstar Compliance Department by clicking on the Support button located at the top right of your Distributor back office page, choose Legal Questions from the drop down and click submit. Distributors are strongly advised to receive this approval prior to taking any steps to organize or advertise an event for which a corporate executive is expected to attend.

Distributors shall not make a profit off of any event that they organize or sponsor. If a Distributor charges money for admission to the event, the amount charged must be minimal and only in an amount to cover the Distributor’s costs of conducting the event.

4.9 - Conflicts of Interest

4.9.1 - Non-solicitation

Komstar Distributors are free to participate in other multilevel or network marketing business ventures or marketing opportunities (collectively “network marketing”).  During the term of this Agreement, Distributors (regardless of level) may not directly or indirectly Recruit other Komstar Distributors for any other network marketing business.

Following the cancellation of a Distributor’s Independent Distributor Agreement, and for a period of six calendar months thereafter, with the exception of a Distributor who is personally sponsored by the former Distributor, a former Distributor may not Recruit any Komstar Distributor for another network marketing business.  Distributors and the Company recognize that because network marketing is conducted through networks of independent contractors dispersed across the entire United States and internationally, and business is commonly conducted via the internet and telephone, an effort to narrowly limit the geographic scope of this non-solicitation provision would render it wholly ineffective. Therefore, Distributors and Komstar agree that this non-solicitation provision shall apply nationwide and to all international markets in which Distributors are located. This provision shall survive the termination or expiration of the Distributor Agreement.

The term “Recruit” means the actual or attempted sponsorship, solicitation, enrollment, encouragement, or effort to influence in any other way, either directly, indirectly, or through a third party, another Komstar Distributor to enroll or participate in another multi-level marketing, network marketing or direct sales opportunity.

4.9.2 - Distributor Participation in Other Network Marketing Programs

If a Distributor is engaged in other non-Komstar direct selling programs, it is the responsibility of the Distributor to ensure that his or her Komstar business is operated entirely separate and apart from any other program. To this end, the following must be adhered to:

·        Distributors must not sell, or attempt to sell, any competing non-Komstar programs, products or services to Komstar Distributors.  Any program or product in the same generic categories as Komstar products is deemed to be competing, regardless of differences in cost, quality or other distinguishing factors.

·        Distributors shall not display Komstar promotional material, sales aids, or products in the same location as any non-Komstar promotional material or sales aids or products.

·        Distributors shall not offer the Komstar opportunity or products to prospective or existing Distributors in conjunction with any non-Komstar program, opportunity, product or service.

·        Distributors may not offer any non-Komstar opportunity, products or services at any Komstar related meeting, seminar, convention, webinar, teleconference, or other function.

4.9.3 - Confidential Information

“Confidential Information” includes, but is not limited to, Downline Genealogy Reports, the identities of Komstar Distributors, contact information of Komstar Distributors, Distributors’ personal and group sales volumes, and Distributor rank and/or achievement levels. All Confidential Information is proprietary information of Komstar and constitutes a business trade secret belonging to Komstar. Confidential Information is or may be available to Distributors in their respective back offices. Distributor access to such Confidential Information is password protected, is confidential and constitutes proprietary information and business trade secrets belonging to Komstar. Such Confidential Information is provided to Distributors in the strictest confidence and is made available to Distributors for the sole purpose of assisting Distributors in working with their respective downline organizations in the development of their Komstar business. Distributors may not use the reports for any purpose other than for developing their Komstar business. Distributors should use the Confidential Information to assist, motivate, and train their downline Distributors. The Distributor and Komstar agree that, but for this agreement of confidentiality and nondisclosure, Komstar would not provide Confidential Information to the Distributor.

To protect the Confidential Information, Distributors shall not, on his or her own behalf, or on behalf of any other person, Distributorship, association, corporation or other entity:

·        Directly or indirectly disclose any Confidential Information to any third party;

·        Directly or indirectly disclose the password or other access code to his or her back office;

·        Use any Confidential Information to compete with Komstar or for any purpose other than promoting his or her Komstar business;

·        Recruit or solicit any Distributor of Komstar listed on any report or in the Distributor’s back office, or in any manner attempt to influence or induce any Distributor or Customer of Komstar to alter their business relationship with Komstar; or

·        Use or disclose to any person, Distributorship, association, corporation or other entity any Confidential Information.

The obligation not to disclose Confidential Information shall survive cancellation or termination of the Agreement and shall remain effective and binding irrespective of whether a Distributor’s Agreement has been terminated, or whether the Distributor is or is not otherwise involved with the Company.

4.10 - Targeting Other Direct Sellers

Komstar does not condone Distributors specifically or consciously targeting the sales force of another direct sales company to sell Komstar products or to become Distributors for Komstar, nor does Komstar condone Distributors solicitation or enticement of members of the sales force of another direct sales company to violate the terms of their contract with such other company. Should Distributors engage in such activity, they bear the risk of being sued by the other direct sales company. If any lawsuit, arbitration or mediation is brought against a Distributor alleging that he or she engaged in inappropriate recruiting activity of its sales force or Customers, Komstar will not pay any of the Distributor’s defense costs or legal fees, nor will Komstar indemnify the Distributor for any judgment, award or settlement.

4.11 - Errors or Questions

If a Distributor has questions about or believes any errors have been made regarding commissions, bonuses, genealogy lists or charges, the Distributor must notify Komstar in writing within 60 days of the date of the purported error or incident in question. Komstar will not be responsible for any errors, omissions or problems not reported to the Company within 60 days.

4.12 - Governmental Approval or Endorsement

Distributors shall not represent or imply that Komstar or its Compensation Plan have been "approved", "endorsed" or otherwise sanctioned by the federal government, state regulatory agencies or any government agency.

4.13 - Holding Applications or Orders

Distributors must not manipulate enrollments of new applicants and purchases of products. All Distributor Agreements and product orders must be submitted to Komstar within 24 hours from the time a prospective Distributor has indicated interest to activate their account.

4.14 - Income Taxes

Each Distributor is responsible for paying local, state/provincial, and federal taxes, and if a resident or citizen of a country other than the United States, your local tax authority agency, on any income generated as an Independent Distributor. Unfortunately, Komstar cannot provide you with any personal tax advice. Please consult your own tax accountant, tax attorney, or other tax professional. Every year, Komstar will provide an IRS Form 1099 MISC (Non-employee Compensation) earnings statement to each U.S. resident who: (1) Had earnings of $600 and over in the previous calendar year; or (2) Made purchases during the previous calendar year in excess of $5,000.

4.15 - Independent Contractor Status

Distributors are independent contractors. The agreement between Komstar and its Distributors does not create an employer/employee relationship, agency, partnership, or joint venture between the Company and the Distributor. Distributors shall not be treated as an employee for his or her services or for Federal or State tax purposes, or equivalent tax rates if resident or citizen of any country other than the United States. All Distributors are responsible for paying local, state, and federal taxes, or any other government taxes, due from all compensation earned as a Distributor of the Company. The Distributor has no authority (expressed or implied), to bind the Company to any obligation. Each Distributor shall establish his or her own goals, hours, and methods of sale, so long as he or she complies with the terms of the Distributor Agreement, these Policies and Procedures, and applicable laws.

4.16 - Insurance

You may wish to arrange insurance coverage for your business. Your homeowner’s insurance policy does not cover business-related injuries or the theft of or damage to inventory or business equipment. Contact your insurance agent to make certain that your business property is protected. This can often be accomplished with a simple “Business Pursuit” endorsement attached to your present homeowner’s policy.

4.17 - International Marketing

Distributors are authorized to sell Komstar products and services, and enroll Members and/or Distributors in any country where Komstar’s business can be legally conducted. Komstar products or sales aids may not be offered in prohibited countries. Please check our website/ back office for a complete listing of these countries (including but not limited to: North Korea, Iran, etc.) Distributors may not, in any unauthorized country: (a) conduct sales, enrollment or training meetings; (b) enroll or attempt to enroll potential Members or Distributors; or (c) conduct any other activity for the purpose of selling Komstar products, establishing a marketing organization, or promoting the Komstar opportunity. Distributors are responsible to know and fully comply with any and all laws that apply to network marketing or the Komstar business in any regard, and in all countries where they conduct Komstar business. Distributors are advised to contact the Komstar Legal Department for direction prior to conducting any international business activities.

4.18 - Bonus Buying

Bonus buying is strictly prohibited. Bonus buying includes any mechanism or artifice to qualify for rank advancement, incentives, prizes, commissions or bonuses that is not driven by bona fide product purchases by end-user consumers. Bonus buying includes, but is not limited to, purchasing products through a straw man or other artifice.

4.19 - Adherence to Laws and Regulations

Distributors shall comply with all federal, state, and local laws, regulations, ordinances, and codes in the conduct of their businesses. Many cities and counties have laws regulating certain home-based businesses. In most cases, these ordinances are not applicable to Distributors because of the nature of their business. However, Distributors must obey those laws that apply to them.

4.20 - One Komstar Business Per Distributor

A Distributor may operate or have an ownership interest, legal or equitable, as a sole proprietorship, partner, shareholder, trustee, or beneficiary, in only one Komstar business. No individual may have, operate or receive compensation from more than one Komstar business.

4.21 - Actions of Household Members or Affiliated Parties

If any member of a Distributor’s immediate household, or anyone acting on behalf of a Distributor, engages in any activity that, if performed by the Distributor, would violate any provision of the Agreement, such activity will be deemed a violation by the Distributor and Komstar may take disciplinary action pursuant to the Distributor Agreement and these Policies and Procedures against the Distributor.

4.22 - Requests for Records

Any request from a Distributor for physical copies of invoices, applications, downline activity reports, or other records will require a fee of $100.00 per request. This fee covers the expense of mailing and the time required to research files and make copies of the records.

4.23 - Roll-up of Marketing Organization

When a vacancy occurs in a Distributor’s marketing organization due to the termination of a Komstar business, each Distributor in the first level immediately below the terminated Distributor on the date of the cancellation will be moved to the first level (“front line”) of the terminated Distributor’s sponsor.  For example, if A sponsors B, and B sponsors C1, C2, and C3, if B terminates her business, C1, C2, and C3 will “roll-up” to A and become part of A’s first level. The Company may choose to delay the timing of a roll-up or decline to allow a roll-up, for any reason at its sole discretion.

4.24 - Sale, Transfer, or Assignment of Komstar Business

Although a Komstar business is a privately owned and independently operated business, the sale, transfer or assignment of a Komstar business, and the sale, transfer, or assignment of an interest in a Business Entity that owns or operates a Komstar business, is subject to certain limitations.

If a Distributor wishes to sell his or her Komstar business, the Distributor must complete and submit the Distributorship Sale or Transfer form and receive written approval from Komstar.

4.25 - Separation of a Komstar Business

Komstar Distributors sometimes operate their Komstar businesses as a husband-wife Distributorship. At such a time as a marriage may end in divorce, 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.

During the divorce, the parties must adopt one of the following methods of operation:

·        One of the parties may, with consent of the other(s), operate the Komstar business pursuant to an assignment in writing whereby the relinquishing spouse authorizes Komstar to deal directly and solely with the other spouse.

·        The parties may continue to operate the Komstar business jointly on a “business-as-usual” basis, whereupon all compensation paid by Komstar will be paid according to the status quo as it existed prior to the divorce filing or dissolution proceedings. This is the default procedure if the parties do not agree on the format set forth above.

Under no circumstances will the Downline Organization of divorcing spouses be divided. Similarly, under no circumstances will Komstar split commission and bonus payments between divorcing spouses. Komstar will recognize only one Downline Organization and will issue only one commission payment per Komstar business per commission cycle. Commission payments shall always be issued to the same individual.

If a former spouse has completely relinquished all rights in the original Komstar business pursuant to a divorce, he or she is thereafter free to enroll under any Sponsor of his or her choosing. The former spouse shall have no rights to any Distributors in their former organization or to any former Customer. They must develop the new business in the same manner as would any other new Distributor.

4.26 - Sponsoring Online

When sponsoring a new Distributor through the online enrollment process, the Sponsor may assist the new applicant in the enrollment process. However, the applicant must personally review and agree to the online agreement(s), Komstar Policies and Procedures, and the Komstar Compensation Plan. The Sponsor may not fill out the online agreement on behalf of the applicant and agree to these materials on behalf of the applicant.

4.27 - Succession

Upon the death of a Distributor in good standing, the deceased Distributor’s Komstar business may be transferred to his/her spouse or one other individual provided the deceased Distributor was active. The transferee of the deceased Distributor’s business shall, upon the transfer, acquire the right to operate the business and to collect all bonuses and commissions of the deceased Distributor’s marketing organization.

If a Distributor who is not active dies, his or her Distributor Agreement shall automatically terminate.

If the deceased Distributor’s Komstar business is eligible for transfer under this policy, the business may only be transferred to the deceased Distributor’s legal spouse or to one other individual. The business may not be passed to multiple individuals or to a business or other legal entity. If pursuant to the deceased Distributor’s will or other testamentary process multiple heirs are designated for the business, they must designate one of them as the individual to whom the business will pass. In no event may the business be divided among multiple beneficiaries.

To initiate the transfer of an Komstar business pursuant to this policy, the executor, trustee or personal representative of the deceased Distributor’s estate must provide the following to Komstar: (1) a certified death certificate; (2) certified letters testamentary or letters of administration appointing the executor or personal representative or similar testamentary instrument; and (3) written instructions to Komstar specifying to whom the business and income should be transferred. In order to complete the transfer, the designated transferee must submit a properly completed and executed Distributor Agreement to Komstar.

4.28 - Telemarketing Techniques

The Federal Trade Commission and the Federal Communications Commission each have laws that restrict telemarketing practices. Both federal agencies (as well as a number of states and countries) have “do not call” regulations as part of their telemarketing laws. Although Komstar does not consider Distributors to be “telemarketers” in the traditional sense of the word, these government regulations broadly define the term “telemarketer” and “telemarketing” so that your inadvertent action of calling someone whose telephone number is listed on the federal “do not call” registry could cause you to violate the law. Moreover, these regulations must not be taken lightly, as they carry significant penalties.

Therefore, Distributors must not engage in telemarketing in the operation of their Komstar businesses. The term “telemarketing” means the placing of one or more telephone calls to an individual or entity to induce the purchase of a Komstar product or to Recruit them for the Komstar opportunity. “Cold calls" made to prospective Customers or Distributors that promote either Komstar’s products or the Komstar opportunity constitute telemarketing and are prohibited. However, a telephone call(s) placed to a prospective Customer or Distributor (a "prospect") is permissible under the following situations:

·        If the Distributor has an established business relationship with the prospect. An “established business relationship” is a relationship between a Distributor and a prospect based on the prospect’s purchase, rental, or lease of goods or services from the Distributor, or a financial transaction between the prospect and the Distributor, within the eighteen (18) months immediately preceding the date of a telephone call to induce the prospect's purchase of a product.

·        The prospect’s personal inquiry or application regarding a product offered by the Distributor, within the three (3) months immediately preceding the date of such a call.

·        If the Distributor receives written and signed permission from the prospect authorizing the Distributor to call. The authorization must specify the telephone number(s) which the Distributor is authorized to call.

·        You may call family members, personal friends, and acquaintances. An “acquaintance” is someone with whom you have at least a recent first-hand relationship within the preceding three months. Bear in mind, however, that if you engage in “card collecting” with everyone you meet and subsequently calling them, the FTC may consider this a form of telemarketing that is not subject to this exemption. Thus, if you engage in calling “acquaintances”, you must make such calls on an occasional basis only and not make this a routine practice.

·        Distributors shall not use automatic telephone dialing systems or software relative to the operation of their Komstar businesses.

Distributors shall not place or initiate any outbound telephone call to any person that delivers any pre-recorded message (a "robocall") regarding or relating to the Komstar products, services or opportunity.

4.29 - Back Office Access

Komstar makes online back offices available to its Distributors. Back offices provide Distributors access to confidential and proprietary information that may be used solely and exclusively to promote the development of a Distributor’s Komstar business and to increase sales of Komstar products. However, access to a back office is a privilege and not a right. Komstar reserves the right to deny Distributors’ access to the back office at its sole discretion.

 

SECTION 5 - RESPONSIBILITIES OF DISTRIBUTORS

5.1 - Change of Address, Telephone and Email Addresses

To ensure timely delivery of products, support materials, commission, and tax documents, it is important that Komstar’s files are current. A Distributor whose contact information changes must provide their new contact information to Komstar through the Distributor’s Back Office.

5.2 - Continuing Development Obligations

5.2.1 - Ongoing Training

Any Distributor who sponsors another Distributor into Komstar must perform a bona fide assistance and training function to ensure that his or her downline is properly operating his or her Komstar business. Distributors must have ongoing contact and communication with the Distributors in their downline organizations. 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 downline Distributors to Komstar meetings, training sessions, and other functions. Upline Distributors are also responsible to motivate and train new Distributors in Komstar product knowledge, effective sales techniques, the Komstar Compensation Plan, and compliance with Company Policies and Procedures and applicable laws.

Distributors should monitor the Distributors in their downline organizations to guard against downline Distributors making improper product or business claims, violation of the Policies and Procedures, or engaging in any illegal or inappropriate conduct.

5.2.2 - Increased Training Responsibilities

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

5.2.3 - Ongoing Sales Responsibilities

Regardless of their level of achievement, Distributors have an ongoing obligation to continue to personally promote sales through the generation of new Customers and through servicing their existing Customers.

5.3 - Non-Disparagement

Komstar wants to provide its independent Distributors with the best products, compensation plan and service in the industry. Accordingly, we value your constructive criticism and comments. All such comments should be submitted in writing to the Komstar Support Department. Remember, to best serve you, we must hear from you! While Komstar welcomes constructive input, negative comments and remarks made in the field by Distributors about the Company, its products or compensation plan serve no purpose other than to sour the enthusiasm of other Komstar Distributors. For this reason, and to set the proper example for their downline, Distributors must not disparage, demean, or make negative remarks about Komstar, other Komstar Distributors, Komstar’s products, the Marketing and Compensation Plan or Komstar’s directors, officers, or employees.

5.4 - Providing Documentation to Applicants

Distributors must provide the most current version of the Policies and Procedures and the Compensation Plan to individuals whom they are sponsoring to become Distributors before the applicant signs a Distributor Agreement or ensure that they have online access to these materials.

 

SECTION 6 - SALES REQUIREMENTS

6.1 - Product Sales

The Komstar Compensation Plan is based on the sale of Komstar products to end consumers. Distributors must fulfill personal and downline organization sales requirements (as well as meet other responsibilities set forth in the Agreement) to be eligible for bonuses, commissions and advancement to higher levels of achievement.  The following sales requirements must be satisfied for Distributors to be eligible for commissions:

1. At least 70% of a Distributor’s total monthly sales must be sold to Customers or used by the Distributors and his or her immediate family.

2. Distributors are prohibited from shipping Komstar products to locations outside of the United States or its Territories.  All sales of Komstar products must occur with persons who are located within the United States or its Territories.

6.2 - No Territory Restrictions

There are no exclusive territories granted to anyone.

6.3 - Sales Receipts

Komstar encourages all Customers to purchase products directly from Komstar and they will be provided with all necessary sales receipts. If a Distributor chooses to sell any Komstar products directly to a Customer, the Distributors must provide the Customer with two copies of an official Komstar Product Sales Receipt Form at the time of the sale. These receipts set forth the Customer Satisfaction Guarantee for Komstar products, as well as any consumer protection rights afforded by law. Distributors must maintain all Product Sales Receipts for a period of two years and furnish them to Komstar at the Company’s request. Distributors must ensure that the following information is contained on each Product Sales Receipt:

(1) the date of the transaction;

(2) the date (not earlier than the third business day following the date of the transaction) by which the buyer may give notice of cancellation; and

(3) the name and address of the selling Distributor. Remember that Customers must receive two copies of the Product Sales Receipt. In addition, Distributors must orally inform the buyer of his or her cancellation rights.

SECTION 7 - BONUSES AND COMMISSIONS

7.1 - Bonus and Commission Qualifications and Accrual

A Distributor must be active and in compliance with the Independent Distributor Agreement to qualify for bonuses and commissions. So long as a Distributor complies with the terms of the Independent Distributor Agreement, Komstar shall pay commissions to such Distributor in accordance with the Komstar Compensation Plan.

7.2 - Adjustment to Bonuses and Commissions

7.2.1 - Adjustments for Returned Products

Distributors receive bonuses, commissions, or overrides based on the actual sales of products to end consumers. When a product is returned to Komstar for a refund or is repurchased by the Company, at the Company’s discretion bonuses, commissions, or overrides attributable to the returned or repurchased product(s) will be deducted from payments to the Distributor and upline Distributors who received bonuses, commissions, or overrides on the sales of the refunded product(s), in the month in which the refund is given, and continuing every pay period thereafter until the commission is recovered.

7.2.2 – Commission Payment Providers

The Company pays commissions via a third-party payment provider. The third-party payment provider or providers may allow withdrawals of commissions via, but not limited to, the Distributors’ bank accounts or via direct payment onto a prepaid debit card or other financial instruments as set forth by the third-party payment provider. Pricing and fees applicable to the method of receiving commissions can vary, so check with payment provider(s) for details.

7.2.3 - Tax Withholdings

If a Distributor, who is a legal citizen or resident of the United States, fails to submit a W-9 form, Komstar will deduct the necessary withholdings from the Distributor’s commission checks as required by law.

7.3 - Reports

All information provided by Komstar in downline activity reports, including but not limited to personal and sales organization sales volume (or any part thereof), and downline sponsoring activity is believed to be accurate and reliable. Nevertheless, due to various factors including but not limited to the inherent possibility of human, digital, and mechanical error; the accuracy, completeness, and timeliness of orders; denial of credit card and electronic check payments; returned products; credit card and electronic check charge-backs; the information is not guaranteed by Komstar or any persons creating or transmitting the information.

ALL PERSONAL AND SALES ORGANIZATION SALES VOLUME INFORMATION IS PROVIDED "AS IS" WITHOUT WARRANTIES, EXPRESS OR IMPLIED, OR REPRESENTATIONS OF ANY KIND WHATSOEVER. IN PARTICULAR, BUT WITHOUT LIMITATION THERE SHALL BE NO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, OR NON-INFRINGEMENT.

TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, KOMSTAR AND/OR OTHER PERSONS CREATING OR TRANSMITTING THE INFORMATION WILL IN NO EVENT BE LIABLE TO ANY DISTRIBUTOR OR ANYONE ELSE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT ARISE OUT OF THE USE OF OR ACCESS TO TOTAL TEAM SALES VOLUME INFORMATION (INCLUDING BUT NOT LIMITED TO LOST PROFITS, BONUSES, OR COMMISSIONS, LOSS OF OPPORTUNITY, AND DAMAGES THAT MAY RESULT FROM INACCURACY, INCOMPLETENESS, INCONVENIENCE, DELAY, OR LOSS OF THE USE OF THE INFORMATION), EVEN IF KOMSTAR OR OTHER PERSONS CREATING OR TRANSMITTING THE INFORMATION SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. TO THE FULLEST EXTENT PERMITTED BY LAW, KOMSTAR OR OTHER PERSONS CREATING OR TRANSMITTING THE INFORMATION SHALL HAVE NO RESPONSIBILITY OR LIABILITY TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY OR OTHER THEORY WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR TERMS AND CONDITIONS RELATED THERETO.

Access to and use of Komstar’s online and telephone reporting services and your reliance upon such information is at your own risk. All such information is provided to you "as is". If you are dissatisfied with the accuracy or quality of the information, your sole and exclusive remedy is to discontinue use of and access to Komstar’s online and telephone reporting services and your reliance upon the information.

7.4 - Refunds, Chargebacks and Roll-ups

Refunds during valid cancellation period.

When a legitimate refund request is properly received and processed by our Operations team, a full chargeback of any commission earned will be processed for all parties that benefit from that sale, whether directly or indirectly.

Refunds approved after valid cancellation period.

Although rare, there are instances where the Company approves the refund of one or multiple payments of certain Customers under certain circumstances. The reasons for approving these refunds after the valid cancellation period include and are not limited to: serious health-related reasons and for misrepresentation of the Company products by the sponsoring Distributor. Misrepresentation occurs when a Distributor makes claims that are not accurate and causes the Customer to express their complaint in writing. These written complaints are examined and reviewed by our legal team. If misrepresentation is proven, Distributors will be disciplined and possibly terminated. In these rare cases, a full or partial refund can be processed. When refunds are processed that are after the valid cancellation period, the Company has the right to chargeback ALL commissions paid to all benefiting Distributors and apply special penalties and fees. The Company will charge back the direct Sponsor of the Customer being refunded and has the right to charge back all other Sponsors at its own discretion if they are found to have played a role in the misrepresentation.

Disputes.

Payment disputes, also called chargebacks, are payments disputed by the payor with the bank and/or card provider and can have significant negative impact on our company’s reputation with our card processing providers as well as represent important financial losses to our company. As a result, we reserve the right to penalize the sponsors of any payor that places a dispute, which results in a chargeback to our company.

Special penalties and fees.

Distributors proven to be misrepresenting our products will pay the following penalties and fees:

·        10% of all invoices and amounts refunded as an administrative fee.

·        15% of all invoices and amounts refunded as a penalty to mitigate sponsor commissions that will not be charged back due to no fault of their own.

Roll-ups.

A roll-up occurs when a downline Distributor has a negative commission amount due to refunds, the ensuing chargebacks, and/or fees and penalties applied due to those refunds. A roll-up is the assumption of that negative commission amount by the upline Sponsor. If a Distributor has a negative commission amount for more than 30 days, the Company, at its own discretion will put a hold on any Reward Points or any future compensation amount to settle that debt. If the debt remains unchanged for more than 30 days, then a roll-up to the next Sponsoring Distributor of the entire amount will occur, per the schedule below:

·        Negative balance of $100 or less for more than 30 days

·        Negative balance of $250 or less for more than 60 days

·        Negative balance of $500 or less for more than 90 days

·        Negative balance equal to or greater than $500 for more than 120 days

Roll-ups will not occur as long as the debt is being diminished during the period of time based on the amount; meaning that earned commissions are being applied to reduce the negative balance.

 

SECTION 8 - PRODUCT GUARANTEES, RETURNS AND INVENTORY REPURCHASE

8.1 - Product Guarantee, Warranty, and Rescission

Komstar offers a 100% 7-day money-back satisfaction guarantee (less shipping and handling charges) to all Distributors. Komstar Distributors shall honor this guarantee on all products that they sell to their Customers. The product return policy for Customers is different and can be located at the official Komstar web site. Distributors may return no more than $300 (at purchase price) worth of merchandise to Komstar for a refund annually. Any returns over $300 annually shall be considered an inventory repurchase and the Distributor account shall be canceled. The Company shall deduct from the Distributors’s subsequent commission checks and/or from the refund paid to the Distributors any commissions, bonuses, rebates, or other incentives received by the Distributors that were associated with the merchandise that is returned.

 8.1.1 – COOLING OFF PERIOD

When a Customer purchases product directly from a Komstar Distributor, the Customer has three business days after the sale or execution of a contract to cancel the order and receive a full refund consistent with the cancellation notice on Komstar Product Sales Receipt Form (Alaska residents have five days). When a Distributor makes a sale or takes an order from a Customer who cancels or requests a refund within the 72-hour period, the Distributor must promptly refund the Customer’s money as long as the products are returned to the Distributor in substantially as good a condition as when received. Additionally, Distributors must orally inform Customers of their right to rescind a purchase or an order within 72 hours and ensure that the date of the order or purchase is entered on the order form.  All Customers must be provided with two copies of an official Komstar Product Sales Receipt Form at the time of the sale. The Receipt provides the Customer with written notice of his or her rights to cancel the sales agreement.

8.1.2 – RETURNS BY DISTRIBUTORS (PRODUCTS RETURNED BY CUSTOMERS)

If a Customer returns a product to the Distributor from whom it was purchased, the Distributor may return it to the Company for an exchange or refund (less shipping and handling). All products returned by Customers must be returned to the Company within ten days from the date on which the product was returned to the Distributor along with the Product Sales Receipt that the Distributor gave to the Customer.

8.2 - Refunds to Distributors and Customers

Komstar offers a 7 day money-back guarantee for all purchases. If for any reason, a Customer or Distributor is dissatisfied with any Komstar product, they may request within those 7 days to receive a refund of the amount paid for the product.

[ Alaska Residents: 5 days ] [ Kentucky Residents: 3 days ] [ Missouri Residents: 3 days ]

[ Nevada Residents: 3 days ] [ Virginia Residents: 7 days ] [ Washington Residents: 7 days ]

[ Wisconsin Residents: 15 days ]

Puerto Rico Residents: Customers can request a refund up to 7 days. Distributors and Customers can cancel and request a refund up to 90 days under certain conditions.

8.3 - Return of Sales Aids by Distributors Upon Cancellation

Upon cancellation of a Distributor’s Agreement, the Distributor may return any optionally purchased sales aids that he or she personally purchased from Komstar (purchases from other Distributors or third parties are not subject to refund) that are in Resalable (see Definition of “Resalable” below) condition and which have been purchased within one year prior to the date of cancellation.

If you optionally bought any additional sales aids , then upon receipt of the Resalable products and sales aids, the Distributor will be reimbursed 90% of the net cost of the original purchase price(s). Neither shipping and handling charges incurred by a Distributor when  products or sales aids were purchased, nor return shipping fees, will be refunded. If the purchases were made through a credit card, the refund will be credited back to the same account.

8.3.1 - Montana Residents

A Montana resident may cancel his or her Distributor Agreement within 15 days from the date of enrollment, and may request a full refund within such time period.

8.4 - Procedures for All Returns

Subject to the Membership Agreement, the following procedures apply to all refund requests:

·        The request must be received by Komstar in writing within the 7 days following the purchase.

·        All approved requests will be responded to in writing and include a refund code provided by the Komstar Support Staff.

·        No refunds will be made if the conditions of these rules are not met.

 

SECTION 9 - DISPUTE RESOLUTION AND DISCIPLINARY PROCEEDINGS

9.1 - Disciplinary Sanctions

Violation of the Independent Distributor Agreement or these Policies and Procedures or violation of any common law duty, including but not limited to any applicable duty of loyalty, any illegal, fraudulent, deceptive or unethical business conduct, or any act or omission by a Distributor that, in the sole discretion of the Company, may damage its reputation or goodwill (such damaging act or omission need not be related to the Distributor’s Komstar business), may result, at Komstar's discretion, in one or more of the following corrective measures:

·        Issuance of a written warning or admonition;

·        Requiring the Distributor to take immediate corrective measures;

·        Imposition of a fine, which may be withheld from bonus and commission payment;

·        Loss of rights to one or more bonus and commission payment(s);

·        Komstar may withhold from a Distributor all or part of the Distributor’s bonuses and commissions during the period that Komstar is investigating any conduct allegedly violative of this Agreement. If a Distributor’s business is canceled for disciplinary reasons, the Distributor will not be entitled to recover any commissions withheld during the investigation period;

·        Suspension of the individual’s Distributor Agreement for one or more pay periods;

·        Permanent or temporary loss of, or reduction in, the current and/or lifetime rank of a Distributor (which may subsequently be re-earned by the Distributor);

·        Transfer or removal of some or all of a Distributor’s downline Distributors from the offending Distributor’s downline organization.

·        Involuntary termination of the offender’s Distributor Agreement;

·        Suspension and/or termination of the offending Distributor’s Komstar website or website access;

·        Any other measure expressly allowed within any provision of the Independent Distributor Agreement or which Komstar deems practicable to implement and appropriate to equitably resolve injuries caused partially or exclusively by the Distributor’s policy violation or contractual breach;

·        In situations deemed appropriate by Komstar, the Company may institute legal proceedings for monetary and/or equitable relief.

·        Also in situations deemed appropriate by Komstar, the Company may impose a penalty or fine on the upline Distributors of an offending Distributor in situations where the upline Distributors have failed to adequately monitor or supervise the behavior of the offending Distributor, as determined by Komstar in its sole discretion.

9.2 - Grievances and Complaints

When a Distributor has a grievance or complaint with another Distributor regarding any practice or conduct in relationship to their respective Komstar businesses, the complaining Distributor 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 upline Sponsor. If the matter involves interpretation or violation of Company policy, it must be reported in writing to the Support Department at the Company. The Support Department will review the facts and attempt to resolve it.

9.3 - Meditation

Prior to instituting arbitration, the parties shall meet in good faith and attempt to resolve any dispute arising from or relating to the Agreement through non-binding mediation. One individual who is mutually acceptable to the parties shall be appointed as mediator. The mediation shall occur within 60 days from the date on which the mediator is appointed. The mediator’s fees and costs, as well as the costs of holding and conducting the mediation, shall be divided equally between the parties. Each party shall pay its portion of the anticipated shared fees and costs at least 10 days in advance of the mediation. Each party shall pay its own attorney’s fees, costs, and individual expenses associated with conducting and attending the mediation. Mediation shall be held in New York, New York, and shall last no more than two business days.

9.4 - Arbitration

If mediation is unsuccessful, any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration. For residents of the United States and its Territories, the arbitration will be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) and will be held in New York, New York, U.S.A. The arbitration shall be conducted in the English language. There shall be a single arbitrator, and this person shall have experience and qualifications in resolving commercial disputes involving network marketing. The parties shall be responsible for their own travel expenses related to attending or otherwise participating in the arbitration. 

Each party shall bear its own costs and expenses, including attorneys’ fees, and an equal share of the arbitrators' and administrative fees of arbitration. Should the arbitrator find that either you or the Komstar Companies have pursued claims, defenses or discovery that are frivolous, lack evidentiary support or are presented for any improper purpose, such as to harass, cause unnecessary delay or needlessly increase the expenses of arbitration, the arbitrator may order the offending party to reimburse the other party for some or all of the arbitration fees, compensation and expenses, and attorneys’ fees. The Komstar Companies shall retain all statutory or legal rights to seek or recover attorneys’ fees or expenses of arbitration to which they may be entitled. 

As to any claims against either party, the arbitrator may award any damages or other relief that a court of competent jurisdiction could award under the laws applicable to each claim. Dispositive motions are permitted and will be considered and ruled upon as if submitted under the U.S. Federal Rules of Civil Procedure. A transcript of the proceeding will be made, and the arbitrator will state his or her findings of fact and conclusions of law along with the award. All aspects of the arbitration, including transcripts and documents, will be kept confidential to the maximum extent permitted by law.

If any court is asked to review the award, the court will review the entire record of the arbitration proceeding. 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. The rules of evidence that would apply in any civil case in the United States Federal court will apply in the arbitration. The U.S. Federal Arbitration Act will govern the interpretation and enforcement of this Section, notwithstanding any other provision of this Agreement regarding which laws apply.

If for any reason there is an actual court case on any matter related to your relationship with the Komstar Companies, you and the Komstar Companies waive the right to a jury trial. Each Komstar Company and Distributor and their officers, directors or employees, and if named as a party to a dispute with the foregoing, any other Komstar agent, is intended to be a third-party beneficiary of this provision and has the same right to enforce it as do you and Komstar.

Injunctions in aid of arbitration are permitted. In the interest of prompt and inexpensive resolution of disputes, to the extent permitted by law, no dispute subject to arbitration under this section shall be consolidated with any other Distributor’s dispute or prosecuted as a class action, except as agreed by all parties.

Furthermore, both you and the Komstar Companies each waives the right to litigate in court or arbitrate any claim or dispute related to your relationship with the Komstar Companies as a class action, either as a member of a class or as a representative of a class, or to act as a private attorney general.

Each Komstar Company and Distributor and their officers, directors or employees, and if named as a party to a dispute with the foregoing, any other Komstar agent, is intended to be a third party beneficiary of this provision and has the same right to enforce it as do you and Komstar.

9.5 - Governing Law, Jurisdiction, and Venue

Jurisdiction and venue of any matter not subject to arbitration shall reside exclusively in New York, State of New York. The Federal Arbitration Act shall govern all matters relating to arbitration. The law of the State of New York shall govern all other matters relating to or arising from the Agreement.

9.5.1 - Louisiana Residents

Notwithstanding the foregoing and the arbitration provision in Section 9.4, residents of the State of Louisiana shall be entitled to bring an action against Komstar in their home forum and pursuant to Louisiana law.

 

SECTION 10 - PAYMENTS

10.1 - Restrictions on Third-Party Use of Credit Cards and Checking Account Access

Distributors shall not permit other Distributors or Customers to use their credit card, or permit debits from their checking accounts, to enroll as Distributor or to make any purchases from the Company. Each Distributor or Customer needs to enroll, upgrade and otherwise make a payment to the Company with their own financial instrument, that being a debit from their bank account, a credit card, or any other payment allowed by the company.

10.2 - Sales Taxes

Komstar is required to charge sales taxes on all purchases made by Distributors and Customers and remit the taxes charged to the respective states. Accordingly, Komstar will collect and remit sales taxes on behalf of Distributors, based on the suggested retail price of the products, according to applicable tax rates in the state or province to which the shipment is destined. If a Distributor has submitted, and Komstar has accepted, a current Sales Tax Exemption Certificate and Sales Tax Registration License, sales taxes will not be added to the invoice and the responsibility of collecting and remitting sales taxes to the appropriate authorities shall be on the Distributor. Exemption from the payment of sales tax is applicable only to orders that are shipped to a state for which the proper tax exemption papers have been filed and accepted. Applicable sales taxes will be charged on orders that are drop-shipped to another state. Any sales tax exemption accepted by Komstar is not retroactive.

 

SECTION 11 - INACTIVITY, RECLASSIFICATION, AND CANCELLATION

11.1 - Effect of Cancellations

So long as a Distributor remains active and complies with the terms of the Independent Distributor Agreement and these Policies and Procedures, Komstar shall pay commissions to such Distributor in accordance with the Compensation Plan. A Distributor’s bonuses and commissions constitute the entire consideration for the Distributor's efforts in generating sales and all activities related to generating sales (including building a downline organization). Following a Distributor’s non-renewal of his or her Distributor Agreement, cancellation for inactivity, or voluntary or involuntary cancellation of his or her Distributor Agreement (all of these methods are collectively referred to as “cancellation”), the former Distributor shall have no right, title, claim or interest to the marketing organization which he or she operated, or any commission or bonus from the sales generated by the organization. A Distributor whose business is canceled will lose all rights as a Distributor. This includes the right to sell Komstar products and the right to receive future commissions, bonuses, or other income resulting from the sales and other activities of the Distributor’s former downline sales organization. In the event of cancellation, Distributors agree to waive all rights they may have, including but not limited to property rights, to their former downline organization and to any bonuses, commissions or other remuneration derived from the sales and other activities of his or her former downline organization.

Following a Distributor’s cancellation of his or her Distributor Agreement, the former Distributor shall not hold himself or herself out as a Komstar Distributor and shall not have the right to sell Komstar products or services. A Distributor whose business is canceled 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 termination).

11.2 - Cancellation Due to Inactivity

11.2.1 - Failure to Become or Remain an Active Distributor

If a Distributor fails to personally generate and maintain at least 2 actively paying Customer sales during the most recent 6 consecutive months, his or her Distributor Agreement shall be canceled for inactivity.

11.2.2 - Failure to Pay Renewal fee for Website Tools, Resources and Services

If a Distributor fails to pay his/her marketing website renewal fees, he/she will be inactive and not eligible to earn commissions from that point forward.

11.2.3 - Failure to Earn Commissions

If a Distributor has not earned a commission during the most recent twelve consecutive months (and thus become “Inactive”), his or her Distributor Agreement shall be subject to cancellation for inactivity.

11.3 - Involuntary Cancellation

A Distributor’s violation of any of the terms of the Agreement, including any amendments that may be made by Komstar in its sole discretion, may result in any of the sanctions listed in Section 9.1, including the involuntary cancellation of his or her Distributor Agreement. Cancellation shall be effective on the date on which written notice is mailed, emailed, faxed, or delivered to an express courier, to the Distributor’s last known address, email address, or fax number, or to his/her attorney, or when the Distributor receives actual notice of cancellation, whichever occurs first.

Komstar reserves the right to terminate all Distributor 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 via direct selling.

11.4 - Voluntary Cancellation

A participant in this network marketing plan has a right to cancel at any time, regardless of reason. Cancellation must be submitted in writing (including email) to the Company at its principal business address. The written notice must include the Distributor’s full legal name, signature, and address.

In addition to written cancellation, Distributors who have consented to electronic contracting will cancel their Distributor Agreement should they withdraw their consent to contract electronically.

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11.5 - Exceptions to Activity Requirements

11.5.1 - Maternity

A pregnant Distributor or a father (who is a Distributor) of a newborn shall be exempt from meeting the personal minimum activity requirement for a period of four months following the birth of a child.

11.5.2 - Military Deployment

Military personnel shall be exempt from meeting the personal minimum activity requirement for the duration of the deployment and one full calendar month thereafter while deployed to a foreign country.

 

SECTION 12 - DEFINITIONS

Active Distributor — A Distributor who satisfies the personal minimum sales requirement as set forth in the Komstar Compensation Plan, to ensure that he or she is eligible to receive bonuses and commissions.

Active Title — The term “active title” refers to the current title of a Distributor, as determined by the Komstar Compensation Plan, for any pay period. To be considered “active” relative to a particular title, a Distributor must meet the criteria set forth in the Komstar Compensation Plan for his or her respective title. (See the definition of “Title” below).

Agreement — The contract between the Company and each Distributor that includes the Distributor Application and Agreement, the Komstar Policies and Procedures, and the Komstar Compensation Plan, and all in their current form and as amended by Komstar in its sole discretion. These documents are collectively referred to as the “Agreement”.

Cancel — The termination of a Distributor’s business. Cancellation may be either voluntary, involuntary, through non-renewal or inactivity.

Customer - A Customer who purchases Komstar products directly from a Komstar Distributor or directly from Komstar operated websites but does not participate in the Compensation Plan.

Downline Leg — Each one of the individuals enrolled immediately underneath you and their respective marketing organizations represents one “leg” in your marketing organization.

Level — The layers of downline Distributors in a particular Distributor’s marketing organization. This term refers to the relationship of a Distributor relative to a particular upline Distributor, determined by the number of Distributors between them who are related by sponsorship. For example, if A sponsors B, who sponsors C, who sponsors D, who sponsors E, then E is on A’s fourth level.

Official Komstar Material — Literature, audio or videos, websites, and other materials developed, printed, published and/or distributed by Komstar to Distributors.

Recruit — For purposes of Komstar’ Conflict of Interest Policy (Section 4.9), the term “Recruit” means the actual or attempted sponsorship, solicitation, enrollment, encouragement, or effort to influence in any other way, either directly, indirectly, or through a third party, another Komstar Distributor or Member to enroll or participate in another multi-level marketing, network marketing or direct sales opportunity.

Registered External Website — A Distributor’s Komstar-approved personal website that is hosted on non-Komstar servers and has no official affiliation with Komstar.

Marketing Website — A website provided to Distributors by Komstar which utilizes website templates developed by Komstar and a Distributor’s personal referral link.

Social Media — Any type of online media that invites, expedites or permits conversation, comment, rating, and/or user-generated content, as opposed to traditional media, which delivers content but does not allow readers/viewers/listeners to participate in the creation or development of content or the comment or response to content. Examples of Social Media include, but are not limited to: blogs, chat rooms, Facebook, Instagram, Twitter, LinkedIn, and YouTube.

Sponsor — A Distributor who enrolls a Member or another Distributor into the Company, and is listed as the Sponsor on the Komstar website. The act of enrolling others and training them to become Distributors is called “sponsoring”.

Title — The “title” that a Distributor holds pursuant to the Komstar Compensation Plan. “Title Rank” refers to the highest title a Distributor has achieved in the Komstar compensation plan at any time. “Paid As” title refers to the title at which a Distributor is qualified to earn commissions and bonuses during the current pay period.

Upline — This term refers to the Distributor or Distributors above a particular Distributor in a sponsorship line up to the Company. Conversely stated, it is the line of Sponsors that links any particular Distributor to the Company.