Star Concepts, Inc. Statement of Policies and Procedures Revision #5starPP-06.05.07 ~ June 5th, 2007 POLICIES AND PROCEDURES: These Policies and Procedures govern the way an Independent Representative conducts business with 5 Star Concepts, Inc., other Independent Representatives as well as customers. With the Compensation Plan, the Independent Representative Agreement Form, Terms and Conditions, these Policies and Procedures constitute a complete contract between every Independent Representative and 5 Star Concepts. These Policies and Procedures in there present form and as amended at the sole discretion of 5 Star Concepts Inc., doing business as 5 Star Concepts are incorporated into, and form an integral part of the 5 Star Concepts Independent Representative Agreement. It is the responsibility of each Independent Representative (hereafter IR) 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, agreeing to them via electronic signature. Failure to comply with the provisions of any of these documents may result in the loss of an IR's right to receive compensation and/or the termination of their IR status and or 5 Star Product and all benefits associated with either product. 5 Star Concepts reserves the right to change any of these Policies and Procedures at its discretion. MISSION STATEMENT: 5 Star Concepts, Inc. is a company dedicated to putting people first. As part of our business model, many of our representatives promote our products to family, friends and co-workers. Our representatives stake their reputations on their belief in what we have to offer. Our motto is: People and their reputations are more important than money. This core value is the premise that all decisions are based upon. Another facet of our mission is making a positive impact on the environment. Through our revolutionary product line, we desire to help reduce the percentages of emissions released into the atmosphere as well as reducing over all fuel consumption world wide. It is also 5 Star Concept's desire to help our members achieve the dream of financial independence. With honor and integrity, and through our business model, we are committed to always providing service, unique products, and remain on the cutting edge within the industry as it relates to our Program. Our goal is to help families across this great nation to get control of their expenses, while developing a long-term profitable company of their own. With our richly rewarding, compensation plan, members may become debt free and financially independent. It is the desire of this company that the 5 Star Concepts products and opportunity will bring glory to God and fill a need in your life in reaching your personal goals and dreams. 5 Star Concepts CODE of ETHICS: As an Independent Representative (IR) of 5 Star Concepts I promise and agree that: I will abide by the Direct Sales Associates (DSA) code of ethics. I will be courteous and respectful to every person I contact in the course of my 5 Star Concepts business. I will be honest and fair in all of my dealings while conducting business as a 5 Star Concepts IR. I will perform my professional activities in a way that will enhance my own reputation and the positive reputation of 5 Star Concepts, Inc. I will fulfill my leadership responsibilities as a sponsor by providing training, assistance, and otherwise supporting my personally sponsored IRs and those in their sales teams. I will not willfully misrepresent the 5 Star Concepts services and products or Compensation Plan, nor will I knowingly engage in any other deceptive or illegal practice that could bring harm to 5 Star Concepts or myself. I am solely responsible as an IR for all financial and/or legal obligations incurred by me in the course of my business as an IR of 5 Star Concepts Inc.. I will respect the sponsor relationship of any IR in the 5 Star Concepts family and will support the ethical activities of all IRs throughout the company. DEFINITIONS: Independent Representative (also known as an IR): An IR is any person or legal entity that has completed a 5 Star Concepts Agreement Form accepted by 5 Star Concepts. 5 Star Concepts considers any IR Agreement on file, whether written, electronically sent or received by facsimile, an authentic and binding legal document. An IR agrees to adhere to and follow 5 Star Concept’s Policies and Procedures. All IRs are Independent Contractors. Independent Representative ID Number: When a person completes the 5 Star Concepts IR Agreement and via electronic signature submits it to 5 Star Concepts corporate office for acceptance and assignment, they receive an ID Number used by 5 Star Concepts to monitor sales and pay commissions earned in our unique sales plan. Contract: The Agreement and these Policies and Procedures, the Terms and Conditions and the Compensation Plan comprise the complete agreement or contract between 5 Star Concepts and the Independent Representative. No other agreement is implied. Company: 5 Star Concepts, Inc. Independent Representative Agreement: The Agreement, which upon acceptance by the Company is part of the Contract between the IR and the Company. Compensation Plan: The sales compensation plan that governs the commissions, bonuses and other payments from 5 Star Concepts to an IR as set forth in a separate document. Sponsor: An IR who has enrolled another person who has completed an Agreement Form. Sponsor infers a responsibility to perform as a sales leader or trainer to each IR personally enrolled and their sales team. ARTICLE I. BECOMING A 5 Star Concepts INDEPENDENT BUSINESS REP: 1.1 An Independent Representative is one who has executed a 5 Star Concepts Agreement via electronic signature and has been accepted and approved by 5 Star Concepts. Only residents or legally registered business entities with legitimate and current mailing address and verifiable Social Security or Federal Taxpayer ID number(s) in the United States may become an IR. 5 Star Concepts reserves the exclusive right to accept or reject anyone as an IR and or client. If 5 Star Concepts rejects an application, notification of such rejection will be given within thirty (30) days from the date the IR Agreement is received at the 5 Star Concepts corporate office. 1.2 For a corporation or partnership, the following requirement must be met: a) The IR Agreement must include the name of a principal person, client, or officer of the corporation or partnership. b) A corporation or partnership must provide 5 Star Concepts with a Federal Employer's Identification Number, F.E.I.N. 1.3 IRs are Independent Representatives of 5 Star Concepts and are not to be considered purchasers of a franchise or distributorship. The virtual distributorship web site is the property of 5 Star Concepts. It is provided solely for use by an IR in good standing for the convenience of tracking purchases and earned commissions. The Agreement between the Company and its IR does not create an employer/employee relationship, agency, partnership or joint venture between the Company and the IR. 1.4 Each IR will hold harmless 5 Star Concepts from any claims, damages, or liabilities arising out of the IR's business practices. The IR has no authority to bind the Company to any obligations. 1.5 Each IR is encouraged to set his or her own methods of sale so long as he or she complies with these Policies and Procedures, Compensation Plan, Terms and Conditions and IR Agreement Form of 5 Star Concepts. Article II. IR SPONSORING, RESPONSIBILITIES AND RESTRICTIONS: 2.1 An IR applicant must be of legal age in his or her state of residence (usually eighteen years old). 2.2 An IR may not be sponsored again out of his or her original line of sponsorship as it relates to a personal or corporate or partnership. Nor may an IR transfer from one sponsor to another. In the event that he/she wishes to terminate their IR status they may be responsored anywhere they choose after a 6-month waiting period of complete inactivity. In addition, once a person has been placed from the sponsor's Holding Tank into the binary genealogy structure, the placement may not be changed under any circumstances. Those clients or IRs that would request such a change within the first 30 days after sign up will be granted the refund and charged a one-time $30.00 administrative fee. 2.3 All IR's personally sponsored representatives must be placed below them in their own sales team. Corporations and partnerships electing to participate as a client and or IR must be placed in the same organizational line as any personal site they may own. All of the activity of an IR must take place within and placed below their originally established business center and ID number. It is strictly prohibited for an IR to recruit an IR from another 5 Star Concepts sales team into their own sales team. Any such attempts will result in termination as an IR. 2.4 If one spouse is already an IR, the non-participating spouse may elect to become an IR, but must be placed in his or her spouse's sales team or may join the same IR's business center as his or her partner. 2.5 In the case of the IRs marrying, 5 Star Concepts will not cause the IRs to abandon one IR's business. Both husband and wife will be allowed to retain his or her existing business center. 2.6 No service or product purchase is required to be an IR. Any and all purchases are made at the sole discretion of the IR. IRs should make clear in each presentation that no service or product purchase is required to market 5 Star Concepts services and products. 2.7 All new IRs have the right to receive training and support from their sponsor. A sponsor is expected to provide information on how to obtain 5 Star Concepts approved literature. 2.8 The cooperation and networking among IRs leads to the total success of all concerned, even where IRs are in different teams of sponsorship. Networking with other IRs has many benefits, including the training and motivation of IRs in a group environment. 2.9 All IRs are encouraged to host meetings and training sessions. You may not charge IRs or clients for attendance at business overview or opportunity meetings. If training is held after a business meeting, you may not charge an IR over $5 per person for the training. 2.10 If additional training literature and tools bearing the company name, logos, trademarks, etc. are made available, they must be purchased from 5 Star Concepts and/or approved for use and circulation. Any and all training materials and literature must be sold at cost or a reasonable markup as determined in the 5 Star Concepts tools and literature ordering section of the IR web site or catalog. 2.11 Any and all products, training tools, printed materials, recorded materials, and the like that contain the company name, logos, trademarks or any of 5 Star Concept’s affiliate suppliers or vendors names, logos, trademarks, etc., may not be de-compiled, reproduced, or disseminated. Such materials may be distributed or re-sold only if originally supplied by 5 Star Concepts. Absolutely no products, training tools, printed or recorded materials, either audio or video, may not be produced, reproduced, distributed or sold containing 5 Star Concept’s company name, logos, trademarks, etc., or those of the company's suppliers and/or vendors, by anyone other than 5 Star Concepts or their licensed suppliers. 2.12 IRs who reach a qualified status may be permitted to produce for distribution and or sale, personally developed marketing materials. To be considered qualified; an IR must have achieved a minimum requirement as set by 5 Star Concept’s recognition levels. 5 Star Concepts will set and may alter this qualifying status, as it deems necessary. Those qualifying IRs wishing to produce any such items must first seek written approval to do so from 5 Star Concepts. If approval is granted, all materials must be submitted in its entirety along with a nonrefundable fee charged specifically and intended for the review of the submitted material. Materials will be subject, only if approved in writing by 5 Star Concepts Inc., to an annual licensing fee to be paid to 5 Star Concepts prior to any material distribution. 5 Star Concepts reserves the right to set pricing on any approved and licensed materials. All printed, recorded audio and/or video, or web-based materials and tools must adhere to the rules stated in Section 2.11 regarding the non-allowed use of company name, logos, trademarks, etc. Materials must be made available to all IRs requesting such product, no matter where they fall into the business model. Any breech of these terms may be cause for immediate and permanent dismissal as an IR, with no further right of operating one's business center, or earning of any commissions. Accountability may be requested from 5 Star Concepts at any time to secure the integrity of the field meetings and it's pricing. 2.13 Each IR has the right to sponsor others. Each person has the ultimate right to choose his or her sponsor. If two IRs should claim to be the sponsor of the same new IR, 5 Star Concepts will regard the first agreement received by the corporate office as the controlling sponsor. 5 Star Concept’s corporate office reserves the right to correct and change a sponsorship or position dispute at its sole discretion if it is determined that such a correction is the proper and correct decision to make. 2.14 Disputes involving IRs and or clients will be settled by a pre-selected board of IR peers in an informal binding mediation arbitration format. All disputes must be in writing and sent to the corporate office address by registered mail. All parties involved with the dispute will be contacted by corporate office by registered mail informing each party of the dispute filing and will be given not more then 10 days to submit in writing their response to the issue addressed in the filed dispute. All mail to and from corporate office and all involved parties must be sent by registered mail. Copies of all written disputes received will then be mailed to each named party and given an additional 10 days to respond to the written accusations once they are mailed. The selected board of IRs will then be given 10 days to respond in writing with their decision. This board of peers will be allowed to review and discuss all received written material and in any fashion they personally deem necessary to render their written decision. Based on the written decision from this board of peers, the corporate office of 5 Star Concepts will notify all parties involved of the final decision rendered. Any and all communication not in writing will not be considered and or reviewed in the review process. Once the corporate office announces a decision, the decision is final. 2.15 Sponsoring carries the responsibility of encouraging your IRs and helping them learn and understand the 5 Star Concepts opportunity. IRs that sponsor other IRs must fulfill the obligation of performing a supervisory, support and selling function in the sale of services and products to the ultimate consumer, and in the training of those sponsored IRs. An IR must have ongoing contact, communication and management with his or her personal enrollees. Examples of such supervision may include, but are not limited to: newsletters, written correspondence, personal meetings, telephone contact, voice mail, , email, training sessions, accompanying individuals to 5 Star Concepts training meetings, and sharing information with those sponsored and located in their line of sponsorship. 2.16 Although IRs are free agents, and may participate in other programs at will, it is counterproductive for most individuals to attempt to work more than one Network Marketing program at a time. It is against company policy to share or attempt to recruit others into other company programs at a 5 Star Concepts meeting, event, or business overview. These activities must be kept totally separate from your 5 Star Concepts functions. IR further agrees and acknowledges that the identities of all IRs are confidential and proprietary information of 5 Star Concepts, and as such, are considered trade secrets of 5 Star Concepts. 2.17 IR agrees that he/she will not use his/her knowledge of the identities and contact information of 5 Star Concepts IRs in any manner whatsoever except for the purpose of promoting and marketing 5 Star Concepts’ services and products. Any IR found harvesting or mining their genealogy for contact information of anyone, other than those they have personally sponsored, for the purpose of attempting to recruit into another program outside of 5 Star Concepts may be suspended, or have their IR business center revoked and closed indefinitely without any restitution on behalf of the IR. 2.18 Should IR cease to be an Independent Representative of 5 Star Concepts, IR agrees that he/she shall not call on or solicit, either for himself/herself or on behalf of any person, firm, corporation, association, or other entity, any 5 Star Concepts IR, customer or vendor with whom IR became acquainted, or learned of, while participating in 5 Star Concepts' sales program, for a period of at least one year after termination or expiration. IR further agrees neither to induce nor attempt to induce any 5 Star Concepts IR, customer or vendor to terminate their relationship with 5 Star Concepts. IR further agrees that he/she will not, in any manner at any time, hire or attempt to hire any employee or agent of 5 Star Concepts or otherwise encourage or attempt to encourage any employee or agent of 5 Star Concepts to leave their employment or terminate their relationship or employment with 5 Star Concepts. ARTICLE III. BONUS AND COMMISSION QUALIFICATIONS: 3.1 An IR must remain active and in compliance with the Agreement to qualify for bonuses and commissions. So long as an IR complies with the terms of the Agreement, 5 Star Concepts shall pay commissions to such IR in accordance with the Marketing and Compensation plan. The minimum amount for which 5 Star Concepts will issue a check is $25.00. If an IR's bonuses and commissions do not equal or exceed $25.00, the Company will accrue the commissions and bonuses until they total $25.00 or greater with a check being issued at the next scheduled commission payout date once $25.00 has been accrued. A processing fee of $1.98 will be deducted from each earned commission check to cover postage and handling costs. Members earning more than one check in a pay period will only have the $1.98 deducted from the first check issued. Article IV. RENEWAL FEE: 4.1 IRs must renew their IR status annually by submitting an annual renewal fee in accordance with pricing as listed with schedule "C". If IR wishes to continue their status as holder of one of our Products, they must also renew this Product annually. The IR will be contacted via email about their renewal within 30 days of its due date. The renewal and fee payment is due on or before the anniversary of the IR's acceptance date. Responsibility for renewal rests on each IR. IRs that do not renew their IR status by the renewal deadline will voluntarily terminate their IR status and forfeit all sponsored rights, sales tracking ID numbers and corresponding compensation without further notice from 5 Star Concepts. Article V. TERMINATION: 5.1 An IR who voluntarily terminates his or her IR Agreement, or is a partner in a partnership that terminates its IR Agreement or is a shareholder in a Corporation that terminates its IR Agreement, must wait at least six (6) months before re-enrolling as an IR or becoming an active participant with an IR under a different sponsor. An IR who voluntarily terminates, loses all rights to any sales team genealogy, privileges and awards of an IR. The Company, with or without cause, may elect to terminate IRs. 5 Star Concepts has the right to take quick and decisive action in terminating the contract of any IR who is found in violation of these Policies and Procedures, the IR Agreement Form, Terms and Conditions, rules governing the Compensation Plan, or any state, or federal laws, statutes, and/or regulations that pertain to the business of 5 Star Concepts. If an IR wishes to appeal a disciplinary action, 5 Star Concepts must receive the appeal, in writing and sent by registered mail, within fifteen (15) days from the date the Company's disciplinary or termination notice, unless the Company grants a greater time period in writing. If the appeal is not received within the appropriate time period, the termination will automatically be final. If an IR files a timely appeal of termination, 5 Star Concepts will review the circumstances, consider any other appropriate action, and promptly notify the IR of its decision. The decision of the Company will be final and subject to no further review. If the termination is not rescinded, the termination will be effective as of the date of the Company's original termination notice. Article VI. TRANSFER OF BUSINESS: 6.1 Each business center located in the binary is owned by 5 Star Concepts and is assigned a unique tracking ID number. The IR may transfer the rights of an ID number only with the written approval of 5 Star Concepts, Inc. In the event of an IR's death, the rights of the tracking ID number and business center may be conveyed to the IR's heirs upon approval by 5 Star Concepts, which may not be unreasonably withheld provided that a certified copy of a Last Will and Testament or court order is given to the Company within 90 days of the date of death. Transfer fee of $50 will apply with any and all approved transfers. Should an IR divorce, they must notify the Company in writing, signed and notarized by both parties, about how the IR's business is to be managed. In matters such as this or the termination of a partnership also as it relates to any partnership, husband, wife and or significant other, the IR position and all related materials, information, benefits, assets and liabilities and commissions are solely the responsibility of the named IR party or named entity. 5 Star Concepts will continue to service the IR position only to the named entity and or individual and at the address located in their business center without change to said information. 5 Star Concepts will continue to service the IR business center until written request to cease and desist or other instructions are provided by court document or signed and notarized statement from all involved persons. Otherwise, the Company will consider the person whom they originally listed as the applicant to be continuing as the IR. Article VII. WARRANTIES AND CLAIMS: 7.1 No unreasonable, misleading, or intentional misrepresentation of earnings may be made by IRs. Income guarantees or representations of any kind are prohibited. This business is like any other business venture whereas a business center can both generate income as well as lose monies. IRs will avoid any suggestion that it is easy to attain highincome levels, and will always explain that each individual's success depends solely upon the level of effort expended and their personal commitment to the 5 Star Concepts program. IRs occasionally are tempted to represent hypothetical income figures based upon the inherent power of network marketing as actual income projections. Remember new IRs may be quickly disappointed if their results are not as rapid as a hypothetical model would suggest. 5 Star Concepts believes that the income potential is great enough to be highly attractive in reality without resorting to unrealistic projections. 7.2 The IR, as an independent contractor, is fully responsible for all of his or her verbal and written statements made regarding the services, products and sales program that are not expressly contained in writing in the current IR Agreement. IRs agree to indemnify 5 Star Concepts, its suppliers and vendors, and hold them harmless from any and all liability, including judgments, civil penalties, refunds, attorney fees, court costs, or lost business incurred by 5 Star Concepts as a result of IR's unauthorized representations. Article VIII. USE OF COMPANY NAME, LOGOS AND TRADEMARKS: 8.1 The name of 5 Star Concepts and other names that may be adopted by 5 Star Concepts are proprietary trade names and trademarks of the company. As such, those are of great value to 5 Star Concepts and are supplied to IRs for the IR's use only in an expressly authorized manner. 5 Star Concepts as well as any suppliers or venders affiliated with 5 Star Concepts will not permit the use of its copyrights, designs, logos, trade names, trademarks, etc. without its prior written permission. The reproduction of any materials, logos, or products in any format for any reason is strictly prohibited. The use of photos or digital images of the gas card in any manor and or the reproduction of the card or it's likeness in any way is not permitted. Any violation as it specifically pertains to the image of the gas card will violate this contract forfeiting all rights allowed to an IR. 8.2 The use of the Company name or copyrighted materials may not be made with automatic calling devices or boiler room operations, to solicit either IRs or customers. IRs may not answer their telephones in any manner that would give callers a reason to believe that they have reached the corporate offices of 5 Star Concepts. Specifically, IRs will not answer the telephone by saying, 5 Star Concepts or in any way be viewed as misleading to the party being called on or calling. When using the Company name, 5 Star Concepts, IR's must identify themselves by stating their name, followed by Independent Representative of 5 Star Concepts. Article IX. WEBSITES: 9.1 IRs are provided with the Company Self-Replicated website to properly market their business. There are to be NO individual websites created or used by individual IRs bearing any of the copyrights, designs, logos, trade names, trademarks, etc. of 5 Star Concepts or it's vendors or suppliers, other than those provided as part of the IR License Agreement. 5 Star Concepts is taking a zero tolerance policy on the use of Non-Approved IR websites, banner advertising, links or Internet advertising to promote their business. Only the Company sponsored IR replicated websites, and the main corporate website are to be used in marketing to other IRs and customers. An IR may maintain a Landing Page site that promotes only the concept of owning your own home based business, but must NOT use any names, logos, trademarks, or graphics owned by or associated with 5 Star Concepts or any affiliate suppliers or venders. The use of a customized and or personalized URL may only be permitted when the URL simply redirects to the IRs 5 Star Concepts self replicated company web site. 5 Star Concepts has the right to reject the use of any and all replicating user names chosen by individual IRs, as well as all names associated with 5 Star Concepts or any affiliates, suppliers or venders. A landing page may be used to capture basic contact information of a prospective customer, client or IR as long as all provisions of this Policies and Procedures are met. IRs found not adhering to these rules will be warned by phone, email, and/or First Class Mail, and will be given a period of time to comply, or may lose their right to continue their IR Business Center, with no right of further compensation or IR benefits. Article X. ADVERTISING: 10.1 IRs agree not to advertise 5 Star Concepts services and products, or any affiliate vendors or suppliers, in any way other than the advertising or promotional materials made available to IRs by 5 Star Concepts. IRs agree not to use any written, printed, recorded or any other material in advertising, promoting or describing the services, products or 5 Star Concepts sales program, or any material that has not been copyrighted and supplied by 5 Star Concepts, unless such material has been submitted to 5 Star Concepts and approved in writing by 5 Star Concepts before being disseminated, published or displayed. 10.2 IRs may not place any business card or advertisement of any nature at any location public or private with out the expressed written permission from the property owner and or property manager. It is strictly prohibited to place any business card or the like on a service station fuel pumping system. Any violation of this policy will be cause for termination of the IR contract. Bulletin boards approved for this type of content are acceptable. 10.3 Any display ads, institutional or trademark advertising copy must be submitted to 5 Star Concepts and approved in writing by 5 Star Concepts before publication. 10.4 No 5 Star Concepts IR may contract for a display-type ad in any telephone directory service or publication. In fairness to all IRs, old and new, only text-based listings may be used, but only by IRs that have reached at least the One Star level of recognition in 5 Star Concepts (having complete at least one full business cycle). IRs may not list their telephone number with the telephone company as to lead directory assistance operators to refer callers searching for the 5 Star Concepts corporate office or any satellite office to their number. An example of a company-approved listing is: 5 Star Concepts - Independent Representative IR's Name IR's Telephone Number 10.5 It is also agreed that I am not to sell, or offer for sale, any products or services offered by 5 Star Concepts, including any information regarding our product or IR programs through the use of eBay or any online auction sites or electronic bulletin boards, blogs, or banner ads. You may NOT purchase advertising displaying any information using company name, logos, trademarks, or those of 5 Star Concepts' suppliers or products from any online ad source such as, but not limited to Google Ads, etc. Any IR or client found marketing, or attempting to market in this manner will be at risk of dismissal from 5 Star Concepts. Article XI. MEDIA: 11.1 All materials, whether printed, on film, or produced by sound recording, are not to be reproduced in whole or in part by IRs or any other person except as authorized by 5 Star Concepts. 11.2 In the promotion of the 5 Star Concepts products or services, and the 5 Star Concepts opportunity, IRs agree that they will not do so through the use of roadside billboards, television or radio ads, or ads in major newspapers, except in generic, nonspecific detail only. Any such advertising may only refer to the basic concept of what our program or product offers, and may in no way mention any of the copyrights, designs, logos, trade names, trademarks, etc. of 5 Star Concepts or it's vendors or suppliers. As used in this section, a major newspaper is defined as a daily or weekly newspaper with a circulation of 25,000 or more. Moreover, there are no pre-approved advertising materials suitable for use on billboards or in radio or television spots. If a generic form of advertising is used, meeting these guidelines, there can be no linking to the 5 Star Concepts Corporate website or any IR's self-replicated sites from that ad. Only telephone, email, or linking to a generic promotional site may be used, adhering to all current rules of the most recent Policies and Procedures. Therefore, the use of roadside billboards, television ads, radio ads and ads in major newspapers to promote any aspect of 5 Star Concepts are prohibited, unless specifically approved in writing by 5 Star Concepts. 11.3 IRs must not attempt to respond to media inquiries regarding 5 Star Concepts, it's products and services, or their independent business. All inquiries by any type of media must be immediately referred to 5 Star Concepts’ 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. Article XII. PRESENTATIONS: 12.1 All public and/or private presentations must include a disclaimer indicating that all sales and income figures shown are not guarantees of income, but merely a representation of what can be achieved. IRs shall not promise to pay any income or represent that 5 Star Concepts will pay any income or other monies that are not articulated in the 5 Star Concepts Compensation Plan. This applies to statements made regarding the number of products sold or IR licenses granted. If an IR wishes to share with a prospective client or IR what the actual number of clients and/or IRs in his/her own organization is, they may do so, but must be sure to disclose that this number applies only to that individual IR's personal business, and not that of the entire company. 12.2 Moreover, the Federal Trade Commission and several states have laws or regulations that regulate or even prohibit certain types of income claims and testimonials made by persons engaged in network marketing. While IRs may believe it beneficial to provide copies of checks, or to disclose the earnings of themselves or others, such approaches have legal consequences that can negatively impact 5 Star Concepts as well as the IR making the claim unless appropriate disclosures required by law are also made contemporaneously with the income claim or earnings representation. Because 5 Star Concepts IRs do not have the data necessary to comply with the legal requirements for making income claims, an IR, when presenting or discussing the 5 Star Concepts opportunity or Marketing and Compensation Plan to a prospective IR, may not make income projections, income hypothetical, income claims, or disclose his or her 5 Star Concepts income (including the showing of checks, copies of checks, IR Back Office Commission Pages, bank statements, or tax records). Article XIII. TAXES: 13.1 Just as in any other business, 5 Star Concepts IRs will be subject to sales, income and self-employment taxes. The IR is completely responsible for filing all taxes. IRs are independent contractors for federal, state and provincial income tax purposes, and do not have income taxes withheld from compensation. Each IR is responsible for reporting and paying income taxes to local, provincial, state, or federal authorities. 5 Star Concepts will provide the appropriate form to regulatory agencies when required. 5 Star Concepts will provide a copy of this reporting to the IR annually in accordance with respective tax laws. IRs must individually pay self-employment taxes. Forms and instructions may be obtained from the local government office. Article XIV. PRESIDENTIAL ADVISORY BOARD: 14.1 The Presidential Advisory Board represents the IRs in the field regarding their challenges, concerns and issues. The Board evaluates such issues and proposes possible solutions and recommendations to the corporate office. The Board recommends standards and guidelines for the field and advises on policies for the corporate office. The Board acts only as an advisory council to the office of 5 Star Concepts. Article XV. DELAYS: 15.1 5 Star Concepts will not be responsible for delays or failures in performance of its obligations when performance is made commercially impracticable due to circumstances beyond its reasonable control. This includes, without limitation, strikes, labor difficulties, riot, terrorism, war, fire, death, curtailment of a party's source of supply, or government decrees or orders. Article XVI. REFUNDS: 16.1 An IR will be entitled to cancel participation in the sales program at any time and for any reason upon written notice to the Company. Upon notification or termination, 5 Star Concepts will repurchase unused and currently marketable inventory and sales aids purchased from 5 Star Concepts within 30 days (or longer where regulated by state law) from the date of receipt of merchandise first ordered, at 90% of the IR's net cost, less appropriate set-offs and legal claims. The term of the company IR agreement is one year. IRs must renew annually. Fees for renewal are subject to change without notice. Current fees are set forth in 5 Star Concepts Schedule "B". 16.2 Should an IR terminate his affiliation with 5 Star Concepts, 5 Star Concepts will buy back any un-opened, un-damaged product within their possession. Questionable product will be returned to the manufacture for determination of usability. Appropriate refund will be forwarded upon proper determination. Furthermore 5 Star Concepts will not arbitrarily forward product to the manufacture without cause. Returns of this nature should be the exception and not the rule. 16.3 A 5 Star Client returning property will be responsible for appropriate shipping and handling costs. The only exception to this rule is property returned due to manufacture defect and/or defects that are no fault of the 5 Star Client. 16.4 Due to the nature of the E commerce sign up procedures and the fact that various computers operate at different levels, a warning is placed on the sign up page advising the individual to only "Click" once when submitting payment information. In the unlikely event that a transaction devise is improperly debited, 5 Star Concepts, upon notice, will immediately research the transaction. Upon determination that a re-credit is due, 5 Star Concepts will remit reversal of the charges within 2 business days of the verification. Whenever feasible, 5 Star Concepts will make every attempt to reverse the charge immediately upon verification.