Policies and Procedures

Stratos Global, LLC. Policies and Procedures

SECTION 1. CODE OF ETHICS

Stratos Global (“Stratos”) has made a commitment to provide the finest direct sales experience backed by impeccable service to its Distributors. In turn, the company expects Stratos Distributors to reflect that image in their relationships with Customers and fellow Distributors.

As a Stratos Distributor you are expected to operate your business according to the highest standards of integrity and fair practice in your role as a Stratos Distributor. Failure to comply with the Code of Ethics can result in your termination as a Stratos Distributor. The Code of Ethics, therefore, states:

As an Distributor:

  • I will conduct my business in an honest, ethical manner at all times.

  • I will make no representations about the benefits of being a Distributor with Stratos other than those contained in officially-approved corporate literature and videos.

  • I will provide support and encouragement to my customers to ensure that their experience with Stratos is a successful one.

  • I will motivate and actively work with Distributors of my downline organization to help them build their Stratos business. I understand that this support is critical to each Distributor’s success with Stratos.

  • I will refrain from exaggerating my personal income or the income potential in general and will stress to Distributor-prospects the level of effort and commitment required to succeed in the business.

  • I will not abuse the goodwill of my association with Stratos to further or promote other business interests (particularly those which may be competitive to Stratos) without the prior written consent of Stratos.

  • I will not make disparaging remarks about other products, services, Distributors, or companies; likewise, I will not willfully denigrate the activities or personalities of fellow Stratos Distributors.

  • I will abide by all of the Policies and Procedures of Stratos as included herein, or as may be amended from time to time.

  • I will not make any payment(s) or promise to pay any prospective or existing Distributors in return for such Distributor’s enrollment, continued enrollment, or team building or recruiting activities with Stratos.

  • I will strive to sell and promote the products of Stratos in a professional manner to end user retail customers.

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SECTION 2. INTRODUCTION

2.1. Policies and Compensation Plan Incorporated into Distributor Agreement

These Policies and Procedures, in their present form and as amended at the sole discretion of Stratos, are incorporated into, and form an integral part of, the Stratos Distributor Agreement. Throughout these Policies, when the term “Agreement” is used, it collectively refers to the Stratos Distributor Application and Agreement Form, these Policies and Procedures and the Stratos Compensation Plan. These documents are incorporated by reference into the Stratos Distributor Agreement (all in their current form and as amended by Stratos).

2.2 – Purpose of Policies

Stratos is a direct sales company that markets education and training products through Distributors. It is important to understand that your success and the success of your fellow Distributors depends on the integrity of those who market our services. To clearly define the relationship that exists between Distributors and Stratos, and to explicitly set a standard for acceptable business conduct, Stratos has established the Agreement. Stratos Distributors are required to comply with all of the provisions set forth in the Agreement, which Stratos may amend at its sole discretion from time to time, as well as with all federal, state and local laws governing their Stratos business and their conduct. Because you may be unfamiliar with many of these standards of practice, it is very important that you read and abide by the Agreement. Please review the information in this document carefully. It explains and governs the relationship between you, as an independent contractor, and the Company. If you have any questions regarding any policy or rule, do not hesitate to seek an answer from the Stratos corporate office.

2.3 – Changes to the Agreement

Because laws and the business environment periodically change, Stratos reserves the right to amend the Agreement, compensation plan and its prices at its sole and absolute discretion. By signing the Distributor Agreement, an Distributor agrees to abide by all amendments or modifications that Stratos elects to make. Amendments shall be effective 30 days after publication of notice of amendments in official Stratos materials. The Company shall provide or make available to all Distributors a complete copy of the amended provisions by one or more of the following methods: (a) posting on the Company’s official website; (b) electronic mail (email); (c) inclusion in Company periodicals; (d) inclusion with commissions or bonus checks; or (e) special mailings. The continuation of a Distributor’s Stratos business or a Distributor’s acceptance of bonuses or commissions constitutes acceptance of any and all amendments.

2.4 Delays

Stratos shall not be responsible for delays or failures in performance of its obligations when performance is made commercially impracticable due to circumstances beyond its reasonable

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control. This includes, without limitation, strikes, labor difficulties, riot, war, fire, death, curtailment of a party’s source of supply, government decrees or orders, and acts of God.

2.5 – Policies and Provisions Severable

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

2.6 Waiver

The Company never gives up its right to insist on compliance with the Agreement and with the applicable laws governing the conduct of a business. No failure of Stratos to exercise any right or power under the Agreement or to insist upon strict compliance by an 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 Stratos’ right to demand exact compliance with the Agreement. Waiver by Stratos can be affected only in writing by an authorized officer of the Company. Stratos’ waiver of any particular breach by a Distributor shall not affect or impair Stratos’ rights with respect to any subsequent breach, nor shall it affect in any way the rights or obligations of any other Distributor. Nor shall any delay or omission by Stratos to exercise any right arising from a breach affect or impair Stratos’ rights as to that or any subsequent breach. The existence of any claim or cause of action of a Distributor against Stratos shall not constitute a defense to Stratos’ enforcement of any term or provision of the Agreement.

SECTION 3. BECOMING A DISTRIBUTOR
3.1 – Requirements to Become a Distributor
To become an Stratos Distributor, each applicant must:

3.1.1.1. Be at least 18 years of age;
3.1.1.2. Reside in countries, territories, or general locales officially opened by

Stratos;
3.1.1.3. Submit a properly completed and signed hardcopy or electronic

Distributor Agreement; and
3.1.1.4. Submit payments in accordance with non-commissionable enrollment 
fees.

The Company reserves the right to reject any applications for a new Distributor or applications for renewal.

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3.2 New Distributor Registration by the Internet

A prospective Distributor may self-enroll on his or her sponsor’s website. In such event, Stratos will accept the Agreement by way of an “electronic signature” rather than submission via physical hard copy of the Agreement. A Distributor’s acceptance of the “electronic signature” signifies his or her tacit acceptance of the terms and conditions of the Distributor Agreement, as well as the acceptance and understanding of these Policies. Please note that such electronic signature constitutes a legally binding agreement between you and the Company.

3.3 Terms and Renewal of a Stratos Business

Twelve (12) months from the date of enrollment, and each year anniversary thereafter, at Stratos, an Distributor must renew his or her business through the payment of a $40 fee. If an Distributor allows his or her business to expire due to nonpayment of this renewal fee, the Distributor will lose any and all rights to his or her downline organization unless payment occurs within thirty (30) days.

Upon payment of the renewal fee within the thirty-day grace period, the Distributor will resume the rank and position held immediately prior to the expiration of the Agreement. However, such Distributor‘s paid as level will not be restored unless he or she qualifies at that payout level in the new month. The Distributor is not eligible to receive commissions for the time period that the Distributor business was expired.

3.4 Distributor Benefits

Upon Stratos’ acceptance of a Distributor Agreement, the benefits of the Stratos Compensation Plan and the Distributor Agreement become immediately available. These benefits include the following rights:

  1. The ability to sell Stratos products;

  2. The ability to participate in the Company Compensation Plan (i.e.,receivebonuses  and commissions, if eligible);

  3. Sponsor other individuals as customers (“Customers”) and downline Distributors into the business, thereby building an organization and progressing through the Company Compensation Plan; and

  4. Receive periodic Company literature and other Corporate communications

SECTION 4. OPERATING A STRATOS BUSINESS

4.1. Adherence to the Stratos Compensation Plan

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

4.2. Bonus Buying Prohibited

Bonus buying is strictly and absolutely prohibited. “Bonus buying” includes:

  1. the enrollment of individuals without their knowledge and agreement and/or without execution of an Stratos Application;

  2. the fraudulent enrollment of an individual as a Stratos or merchant;

  3. the enrollment or attempted enrollment of non-existent individuals as Distributors or

    merchants;

  4. the use of a credit card by or on behalf of a Distributor or merchant when the

    Distributors or customer is not the account holder of such credit card;

  5. purchasing Stratos products on behalf of another Distributor, or under another

    Distributor’s ID number, to qualify for commissions or bonuses.

4.3. – Business Entities

A Partnership, LLC or Corporation may hold a Distributor business upon completion of the Distributor Application form, and providing on that form in the appropriate space, a Federal tax ID number. An individual may participate in multiple business centers, however, all must be under the same business name. The person signing the application on behalf of a business entity must have the authority of said entity for entering into the transaction. In addition, by signing for as a business entity, you certify that no person with an interest of debt or equity in the business has had an interest in a Distributor business in Stratos within six (6) months of the date of signature.

4.4. – Changes to a Stratos Business

4.4.1. General

Each Distributor must immediately notify Stratos of all changes to the information contained in his or her Distributor Application and Agreement. Distributors may modify their existing Distributor Agreement Form by submitting a written request and appropriate supporting documentation.

 

4.4.2. Change of Sponsor

To protect the integrity of all marketing organizations and safeguard the hard work of all Distributor, Stratos does not allow changes in sponsorship for active Distributors. Maintaining the integrity of sponsorship is critical for the success of every Distributors and marketing organization. Accordingly, the transfer of a Stratos business from one sponsor to another is not permitted.

Exception – A request for a change in sponsor, due to Stratoserror, will be accepted within 45 days of completion of the application.

4.4.3. Cancellation and Re-application

A Distributor may legitimately change organizations by:

  • Voluntarily cancelling his or her Stratos Agreement and remaining inactive (i.e., no purchases of Stratos products for resale; no sales of Stratos products; no sponsoring; and no attendance at any Stratos functions, participation in any other form of Distributor activity, or operation of any other Stratos business) for six (6) full calendar months.

  • Following the six (6) calendar month period of inactivity, the former Distributor may reapply under a new sponsor. However, the former Distributor will permanently lose any and all right to their former Distributor downline organization.

    4.5. Unauthorized Claims and Actions

4.5.1. Indemnification

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

4.5.2. Income Claims

As a way to conduct better business practices, Stratos hereby puts forth a disclaimer on income earnings (“Income Disclaimer”). This Income Disclaimer is to convey truthful, timely, and comprehensive information regarding the income that Stratos Distributors may earn. To accomplish this objective, you must discuss and present the Income Disclaimer to all prospective Distributors.

A copy of the Income Disclaimer must be presented to a prospective Distributor (someone who is not yet a party to a pre-existing Distributor Agreement) anytime the

Compensation Plan is presented or discussed, or any type of income claim or earnings representation is made.

The terms “income claim” and/or “earnings representation” (collectively “income claim”) includes all of the following:

(i) (ii) (iii) (iv) (v) (vi)

statements of average earnings; statements of non-average earnings; statements of earnings ranges; income testimonials;

lifestyle claims; and hypothetical claims.

An example of a Distributor earned over one million dollars last year,” or “Our average-ranking Distributor makes three thousand dollars per month.” An example of a “statement of earnings ranges” would be, “The monthly income for our higher-ranking Distributors is eight thousand dollars a month on the low end up to twenty-five thousand dollars a month on the high end.”

In any meeting that is open to the public in which discussion of the Compensation Plan or any type of income claim occurs, you must provide every prospective Distributor with a copy of the Income Disclaimer. Copies of the Income Disclaimer may be printed or downloaded without charge from the Company website.

4.6. Conduct at Stratos Events

4.6.1. No Selling or Recruiting at Stratos Events

Selling and recruiting at Stratos events is not permitted. These activities take away from the primary focus of the event and can negatively reflect on the professional image of Stratos as a company. You may, however, offer a business card and/or catalog.

4.6.2. No Selling or Recruiting for other Companies at Stratos Events

Stratos Distributors shall not sell any products or recruit for any business during Stratos events. This restriction most specifically applies to sales and recruitment efforts for any other direct sales or marketing program, regardless of the product category, including those that do not compete with Stratos’ product line.

4.7. Conflicts of Interest

4.7.1. Non-compete Policy

Stratos Distributors are free to participate in other multilevel or network marketing business ventures or marketing opportunities (collectively “network marketing”), with the

“statement of non-average earnings” would be, “Our number one exception of those products in the same generic category as a Stratos product that is deemed to be competing. Distributors may not display Stratos products with any other products or services in a fashion that might in any way confuse or mislead a prospective customer, merchant or Distributor into believing there is a relationship between the Stratos and non- Stratos products or services.

4.7.2. Non-solicitation

During the term of this Agreement, Distributors may not recruit other Stratos Distributors or Merchants or customers for any other network marketing business. Following the cancellation of this Agreement, and for a period of one year thereafter, a former Distributor may not recruit any Stratos Distributor or customer for another network marketing business, with the exception of a Distributor who is personally sponsored by the former Distributor. The Distributors and Company recognize that because network marketing is conducted through networks of independent contractors dispersed across the United Kingdom 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, the Distributors and Company agree that this non-solicitation provision shall apply to all markets in which Stratos conducts business.

The term “recruit” means actual or attempted solicitation, enrollment, encouragement or effort to influence in any other way, either directly or through a third party, another Stratos Distributor or customer to enroll or participate in another multilevel marketing, network marketing or direct sales opportunity. This conduct constitutes recruiting even if the Distributor’s actions are in response to an inquiry made by another Distributor or customer.

4.7.3. Downline Activity (Genealogy) Reports

Downline Activity Reports made available for Distributor access and viewing at Stratos’ official website, are considered confidential. Distributor access to their Downline Activity Reports is password protected. All Downline Activity Reports and the information contained therein are confidential and constitute proprietary information and business trade secrets belonging to Stratos. Downline Activity Reports are provided to Distributors in the strictest of confidence and are made available to Distributors for the sole purpose of assisting Distributors in working with their respective Downline Organizations in the development of their Stratos business. Distributors should use their Downline Activity Reports to assist, motivate and train their Downline Distributors. The Distributor and Stratos agree that, but for this agreement of confidentiality and nondisclosure, Stratos would not provide Downline Activity Reports to the Distributor. A Distributor shall not, on his or her own behalf, or on behalf of any other person, partnership, association, corporation or other entity:

Directly or indirectly disclose any information contained in any Downline Activity Report to any third party;

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  • Directly or indirectly disclose the password or other access code to his or her Downline Activity Report;

  • Use the information to compete with Stratos or for any purpose other than promoting his or her Stratos business;

  • Recruit or solicit any Distributor or Customer of Stratos listed on any report or in any manner attempt to influence or induce any Distributor or customer of Stratos to alter their business relationship with Stratos;

  • Use or disclose to any person, partnership, association, corporation or other entity any information contained in any Downline Activity Report.

    Upon demand by the Company, any current or former Distributor will return the original and all copies of Downline Activity Reports to the Company.

    4.8. Cross-Sponsoring

    Actual or attempted cross-sponsoring is strictly prohibited. “Crosssponsoring” is defined as the enrollment of an individual or entity that already has a current Customer, Merchant or Distributor Agreement on file with Stratos, or who has had such an agreement within the preceding 6 calendar months, within a different line of sponsorship. The use of a spouse or relative’s name, trade names, assumed names or fictitious ID numbers to circumvent this policy is prohibited. Distributors shall not demean, discredit or defame other Stratos Distributors in an attempt to entice another Distributor to become part of the first Distributor’s marketing organization. If a prohibited organization transfer occurs, Stratos shall take disciplinary action against the Distributor(s) who engaged, acquiesced and/or knowingly participated in the improper cross-sponsoring. However, it shall be entirely within Stratos’ discretion where in the genealogical structure, the cross-sponsored organization in question shall be placed or otherwise distributed.

    Because equities often exist in favor of both upline organizations, DISTRIBUTORS WAIVE ANY AND ALL CLAIMS AND CAUSES OF ACTION AGAINST THE COMPANY FOR ITS DECISION REGARDING THE FINAL DISPOSITION OR PLACEMENT OF THE CROSSSPONSORED ORGANIZATION.

    4.9. Errors or Questions

    If an Distributor has questions about or believes any errors have been made regarding commissions, bonuses, Downline Activity Reports, or charges, the Distributor must notify the Distributor Care Department at Stratos’s headquarters in Mesa, AZ, in writing, within 15 days of the date of the purported error or incident in question. Stratos will not be responsible for any errors, omissions or problems not reported to the Company within 15 days.

4.10. Governmental Approval or Endorsement

Neither federal nor state regulatory agencies nor officials approve or endorse any direct selling program. Therefore, Distributors shall not represent or imply that Stratos or its

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Compensation Plan have been “approved,” “endorsedor otherwise sanctioned by any government agency.

4.11. Holding Applications or Enrollments

Distributors must not manipulate enrollments of new applicants or Merchant enrollments. All Distributor Applications and Agreements and Service orders must be sent within 72 hours from the time they are signed by a Distributor or placed by a merchant.

4.12. Identification

All Distributors are required to provide their Social Security Number or Federal Tax Identification Number to Stratos on the Distributor Application and Agreement.
Upon enrollment, the Company will provide a unique Distributor Identification Number to the Distributor by which he or she will be identified. This number will be used to place orders and track commissions and bonuses.

4.13. Income Taxes

Each Distributor is responsible for paying local, state and federal taxes on any income generated as a Distributor. If a Stratos business is tax exempt, the Federal Tax Identification Number must be provided to Stratos. Every year, Stratos will provide IRS Form 1099 (non- employee compensation) earnings statement to each U.S. resident who (a) had earnings of over $600 in the previous calendar year or (b) made purchases during the previous calendar year in excess of $5,000 wholesale. Stratos cannot accept a tax-exempt certificate from a Distributor who resides in a state where tax exempt status is not granted for Direct Sales businesses. Distributors are encouraged to check with their state government before sending a form to Stratos.

4.14. Independent Contractor Status

Distributors are independent contractors and are not purchasers of a franchise or a business opportunity. The agreement between Stratos 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. All Distributors are responsible for paying local, state and federal 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 Form, and these Policies and Procedures, and applicable laws. If required by law to declare any Stratos Distributors be classified as employees, Stratos reserves the right to discontinue operating within the jurisdiction making such declaration.

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

Distributor’s Name Stratos Distributor

All Distributors may list themselves as an Stratos Distributorin the residential telephone directory (“white pages”) under their own name. Distributors may not place telephone directory display ads in the classified directory (“Yellow Pages”) using Stratos’ name or logo. Distributors have no right to use the name Stratosnot in the syntax of Stratoson any item not produced by the company.

Distributors may not answer the telephone by saying Stratos,” “Stratos Processing,” or in any other manner that would lead the caller to believe that he or she has reached the corporate offices of Stratos.

Advertising is not limited to print media; it also includes internet advertising and other forms of advertising. It is prohibited for a Distributor to use an internet or email address that utilizes the trade name Stratos, or includes Stratos in a portion of the address. It is also prohibited for a Distributor to use any website materials that reference or relate to Stratos that are not authorized in writing by Stratos on a website. It is also prohibited for a Distributor to place links to unauthorized websites or webpages onto a website or webpage that has been authorized by Stratos. It is also prohibited for a Distributor to use any website materials on a website that references or relates to Stratos that is not authorized in writing by Stratos.

4.15. Insurance
4.15.1. Business Pursuits Coverage

You may wish to arrange insurance coverage for your business. Your homeowner’s insurance policy may not cover business related injuries or the theft of or damage to your business. Contact your insurance agent to make sure that your business property is protected.

4.16. International Marketing

Because of critical legal product and tax considerations, Stratos must limit the marketing and enrollment of Stratos services and the presentation of the Stratos business to prospective customers, Merchants and Distributors located within any jurisdiction officially opened by Stratos. Distributors are only authorized to do business in the countries in which Stratos has announced are open for business in official Company literature.

4.17. Laws and Ordinances

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Distributors shall comply with all federal, state and local laws and regulations 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 do apply to them. If a city or county official tells an Distributor that an ordinance applies to him or her, the Distributor shall comply with the law.

4.18. Minors

Distributors shall not enroll or recruit individuals under the age of 18 into the Stratos program. The one exception to this is if the minor has been adjudicated as an emancipated minor by a court of competent jurisdiction.

4.19. Actions of Household Members or DISTRIBUTOR Individuals.

4.19.1. Generally

If any member of an Distributor household, family, or other Distributor individual 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 Stratos may take disciplinary action pursuant to the Statement of Policies against the Distributor.

An exception to the one-business-per- Distributor rule will be considered on a case-by- case basis if two Distributors marry. Requests for exceptions to this policy must be submitted in writing to the Compliance Department.

4.19.2. Stratos Household Restrictions

Individuals of the same family unit may only hold a single postition together. A “family unit” is defined as spouses or domestic partners.

4.20. Legal Status as Distributor

Some countries have recently passed legislation which further limits and identifies the requirements to maintain independent contractor status. It is important to know what your country laws are on this subject. Stratos will take no action which may subject them to a situation whereby the Representatives shall be considered employees.

4.21. Requests for Records

Any request from a Distributor for copies of invoices, agreements, Downline activity reports or other records/reports will require a fee of $1.00 per page per copy. This fee covers the expense of mailing and time required to research files and make copies of the records.

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4.22. Sale, Transfer or Assignment of Stratos Business

Although a Stratos business is a privately owned, independently operated business, the sale, transfer or assignment of a Stratos business, and the sale, transfer or assignment of an interest in a Business Entity that owns or operates a Stratos Distributor business, is subject to certain limitations. If a Distributor wishes to sell his or her Stratos business, or interest in a Business Entity that owns or operates a Stratos business, the following criteria must be met:

  • The selling Distributor must offer Stratos the right of first refusal to purchase the business on the same terms as agreed upon with a third-party buyer. Stratos shall have fifteen (15) days from the date of receipt of the written offer from the seller to exercise its right of first refusal.

  • The buyer or transferee must become a qualified Distributor. Before the sale, transfer or assignment can be finalized and approved by Stratos, any debt obligations the selling party has with Stratos must be satisfied.

  • The selling party must be in good standing and not in violation of any of the terms of the Agreement in order to be eligible to sell, transfer or assign a Stratos Distributor business.

    Prior to selling a Business Entity interest, the selling party must notify Stratos’ Compliance Department in writing and advise of his or her intent to sell Stratos’ business or Business Entity interest. The selling party must also receive written approval from the Compliance Department before proceeding with the sale.

4.23. Separation of a Stratos DISTRIBUTOR Business

In the event of a dissolution of marriage of a Stratos Distributor, and a spouse, arrangements must be made to assure that any division of the business assets is accomplished so as not to adversely affect the interests and income of other businesses up or down the line of sponsorship. If the separating parties fail to provide for the best interests of other Distributors and the Company, Stratos may be forced to involuntarily terminate the Distributor Agreement. Stratos will make no arrangements without court approval or direction.

During the pendency of a divorce or dissolution, the Company shall treat the business according to the status quo as existed prior to the filing of the divorce or dissolution.

Under no circumstances will the Downline Organization of divorcing spouses be divided. Similarly, under no circumstances will Stratos split commission and bonus checks between divorcing spouses. Stratos will recognize only one Downline Organization and will issue only one commission check per Stratos business per commission cycle. Commission checks shall always be issued to the individual whose name appears on the Distributor Agreement. Stratos will in no case be liable or responsible for any error in payment to either party to the divorce.

4.24. Sponsoring

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

4.25. The Data Management Rule

The Data Management Rule is intended to protect the Line of Sponsorship (LOS) for the benefit of all Distributor, as well as Stratos. LOS information is information compiled by the Company that discloses or relates to all or part of the specific arrangement of sponsorship within the Stratos business, including, without limitation, Distributor lists, sponsorship trees, and all Distributor information generated therefrom, in its present and future forms. The Stratos LOS constitutes a commercially advantageous, unique, and proprietary trade secret (Proprietary Information), which it keeps proprietary and confidential and treats as a trade secret. Stratos is the exclusive owner of all Proprietary Information, which is derived, compiled, configured, and maintained through the expenditure of considerable time, effort, and resources by Stratos and its Distributor. Through this Rule, Distributors are granted a personal, non-exclusive, non-transferable and revocable right by Stratos to use Proprietary Information only as necessary to facilitate their business as contemplated under these Policies and Procedures. The Company reserves the right to deny or revoke this right, upon reasonable notice to the Distributor stating the reason(s) for such denial or revocation, whenever, in the reasonable opinion of Stratos, such is necessary to protect the confidentiality or value of Proprietary Information. All Distributors shall maintain Proprietary Information in strictest confidence, and shall take all reasonable steps and appropriate measures to safeguard Proprietary Information and maintain the confidentiality thereof.

5. SECTION 5 – RESPONSIBILITIES OF DISTRIBUTORs

5.1. Change of Address or Telephone

To ensure timely delivery of products, support materials and commission checks, it is critically important that Stratos’ files are current. Distributors planning to move should mail Stratos corporate office, at 3707 E Southern Ave, Mesa, AZ 85206, their new address and telephone numbers. In the alternative, Distributor may email Stratos at customer service email provided on website. To guarantee proper delivery, two-weeks advance notice to Stratos is recommended on all changes.

5.2. Continuing Development Obligations

5.2.1. Ongoing Training

Any Distributor who sponsors another Distributor into Stratos must perform a bona fide assistance and training function to ensure that his or her Downline is properly operating

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his or her Stratos 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 Stratos meetings, training sessions, and other functions. Upline Distributors are also responsible to motivate and train new Distributors in Stratos product knowledge, effective sales techniques, the Stratos Compensation Plan and compliance with Company Policies and Procedures. Communication with and the training of Downline Distributors must not, however, violate Section 4.2 (regarding the development of Distributor -produced sales aids and promotional materials). Distributors cannot charge for training.

Upon request, every Distributor should be able to provide documented evidence to Stratos of his or her ongoing fulfillment of the responsibilities of a sponsor.

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 Stratos 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 or merchants and through servicing their existing customers or merchants.

5.3. Non-disparagement

Stratos wants to provide its Distributors with the best products, compensation plan and service in the industry. Accordingly, we value your constructive criticisms and comments. All such comments should be submitted in writing to the Stratos corporate offices. While Stratos 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 Stratos Distributors. For this reason, and to set the proper example for their Downline, Distributors must not disparage, demean or make negative remarks about Stratos, other Stratos Distributors, Stratos’ services, the Compensation Plan or Stratos’ 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 an Distributor Agreement. Additional copies of Policies and Procedures

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can be found on the Stratos website at mannasourceinternational.com, or in your business center under the forms section.

5.5. Reporting Policy Violations

Distributors observing a policy violation by another Distributor should submit a written report of the violation directly to the attention of the Stratos Compliance Department. Details of the incident(s), such as dates, number of occurrences, persons involved and any supporting documentation, should be included in the report.

SECTION 6. SALES REQUIREMENTS

6.1. Product Sales

The Stratos Compensation Plan is based upon the sale of Stratos products and services to end user 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.

6.2. Retail Sales

Distributors shall not be permitted to sell Stratos products in any stores, whether physical or online. Distributors shall not sell Stratos products through websites including Amazon, eBay, Facebook, or any other online platform.

6.3. Territory Restrictions

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

SECTION 7. BONUSES AND COMMISSIONS

7.1. Bonus and Commission Qualifications

A Distributor must be active and in compliance with the Agreement and these policies to qualify for bonuses and commissions. So long as a Distributor complies with the terms of the Agreement and these policies, Stratos shall pay commissions to such Distributor in accordance with the Compensation Plan. The minimum amount for which Stratos will issue a commission payment is $25.00.

7.2. Commission Payments and Promotions 7.2.1. Payments, Calculations, and Bonuses

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Commissions will be mailed out in accordance with the Compensation Plan. Commissions will be calculated according to the level for which a Distributor actually satisfied all of the requirements according to the Compensation Plan rather than the highest rank or title achieved. Commission reports will be provided to Distributors on- line, via web access.

7.2.2. Promotions

Promotions are determined based on business organization and sales activity for each applicable period.

7.3. Adjustment to Bonuses and Commissions

7.3.1. Adjustments for Returned Products

Distributors receive bonuses and commissions based on the actual enrollment for services to merchants. If a service is cancelled, no payments already made shall be refunded. Therefore, there will be no refunds to any bonuses and commissions attributable to any cancelled service(s).

7.4. Unclaimed Commissions and Credits

Distributors must deposit or cash commission and bonus checks within six months from their date of issuance. A check that remains uncashed after six months will be void. There shall be a $50.00 charge for reissuing a check. These charges shall be deducted from the balance owed to the Distributor.

7.5. Reports

All information provided by Stratos in online or telephonic Downline Activity Reports, including but not limited to personal and group sales volume (or any part thereof), and Downline sponsoring activity is believed to be accurate and reliable. Nevertheless, due to various factors, including the inherent possibility of human and mechanical error; the accuracy, completeness and timeliness of orders; denial of credit card and electronic check payments; returned products; and credit card and electronic check charge-backs, the information is not guaranteed by Stratos or any persons creating or transmitting the information. All personal and group sales volume information is provided as iswithout warranties, expressed 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, Stratos 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 personal and group sales volume information (including but not limited to lost profits, bonuses, or commissions, loss of opportunity and damages that may

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result from inaccuracy, incompleteness, inconvenience, delay or loss of the use of the information), even if Stratos 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, Stratos 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 Stratos’ online 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 Stratos’ online reporting services and your reliance upon the information.

SECTION 8. RETURNS AND SALES AIDS REPURCHASE

8.1. Retail Sales

Personal service and retail sales to the customer are the foundation of Stratos. The entire commission structure is based upon volume of retail sales referred by the individual Distributors as well as their entire organization.

SECTION 9. DISPUTE RESOLUTION AND DISCIPLINARY PROCEEDINGS

9.1. Disciplinary Sanctions

Violation of the Agreement, these Policies and Procedures or any illegal, fraudulent, deceptive or unethical business conduct by a Distributor may result, at Stratos’ 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 checks;

  • Loss of rights to one or more bonus and commission checks;

  • The withholding from a Distributor of all or part of the Distributor’s bonuses and

    commissions during the period that Stratos is investigating any conduct allegedly in violation of the 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;

  • Involuntary termination of the offender’s Distributor Agreement;

  • Any other measure expressly allowed within any provision of the Agreement or that

    Stratos deems practicable to implement and appropriate to equitably resolve injuries caused partially or exclusively by the Distributor policy violation or contractual breach; or

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

9.2. Grievances and Complaints

When an Distributor has a grievance or complaint with another Distributor regarding any practice or conduct in relationship to their respective Stratos 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 cannot be resolved, it must be reported in writing to the Company. The Company will review the facts and determine if a policy violation has occurred and take appropriate action.

9.3. Arbitration

Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association or other recognized arbitration service, under the American Arbitration Association rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Distributors waive all rights to trial by jury or to any court. All arbitration proceedings shall be held in Arizona unless the laws of the country in which a Distributor resides expressly require the application of its laws, in which case the arbitration shall be held in the capital of that state. All parties shall be entitled to all discovery rights pursuant to the Civil Procedure Rules of the state of Arizona. There shall be one arbitrator, an attorney at law, who shall have expertise in business law transactions, with a strong preference being an attorney knowledgeable in the direct selling industry, selected from the panel that the American Arbitration Association provides. The prevailing party shall be entitled to receive from the losing party, OR each party to the arbitration shall be responsible for its own, costs and expenses of arbitration, including legal and filing fees. The decision of the arbitrator shall be final and binding on the parties and may, if necessary, be reduced to a judgment in any court of competent jurisdiction. This agreement to arbitration shall survive any termination or expiration of the Agreement.

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

9.4. Governing Law, Jurisdiction and Venue

Jurisdiction and venue of any matter not subject to arbitration shall reside in Arizona. United States of America. The American Arbitration Association shall govern all matters relating to arbitration. The law of the United States shall govern all other matters relating to or arising from the Agreement.

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SECTION 10. INACTIVITY AND CANCELLATION

10.1. Effect of Cancellation

So long as a Distributor remains active and complies with the terms of the Distributor Agreement and these Policies and Procedures, Stratos shall pay commissions to such Distributor in accordance with the Compensation Plan. A Distributor bonuses and commissions constitute the entire consideration for the Distributor efforts in generating sales and all activities related to generating sales (including building a Downline Organization). Following an Distributor’s termination for inactivity, or voluntary or involuntary termination of his or her Distributor Agreement (all of these methods are collectively referred to as termination”), the former Distributor shall have no right, title, claim or interest to the marketing organization that he or she operated, or any commission or bonus from the sales generated by the organization. A Distributor whose business is terminated will lose all rights as an Distributor. This includes the right to sell Stratos products and services 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 termination, 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 termination of his or her Distributor Agreement, the former Distributor shall not hold himself or herself out as a Stratos Distributor. A Distributor whose Distributor Agreement is terminated 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).

10.2. Involuntary Termination

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

10.3. Voluntary Termination

A Distributor has a right to cancel, at any time, regardless of reason. Termination must be submitted in writing to the Company at its principal business address. The written notice must include the Distributor’s signature, printed name, address and Distributor ID number. Distributors who have resigned may re-apply to become a Distributor with Stratos after 6 months. A Distributor’s position is subject to termination due to inactivity (i.e., merchant enrollments, no commissions, no sponsoring; and no attendance at any Stratos functions,

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participation in any other form of Distributor’s activity, or operation of any other Stratos business) after being inactive for six (6) full calendar months.

10.4. Non-Renewal

An Distributor may also voluntarily cancel his or her Distributor Agreement by failing to maintain the Agreement annually. The Company may also elect not to renew a Distributor’s Agreement.

10.5. Complete Agreement

These Policies and Procedures, any and all modifications made by the Company, along with the Terms and Conditions and the Compensation Plan make up the entire agreement between Distributor and Company.

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