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Rules of Conduct


1. Introduction
2. Definitions
3. Becoming an IBO
4. Responsibilities and Obligations
5. Presentation of the Plan, Sponsoring and Support
6. Preservation of the Lines of Sponsorship
7. Business Support Materials
8. Marks and Copyrighted Works
9. Complying With the IBO Contract (Remedies for Breach)
10. Modification of the IBO Contract
11. Dispute Resolution Procedures


1. Introduction

The Rules of Conduct (“Rules”) form an important part of the contract between Amway and the IBO (the “IBO Contract”). The Rules have been carefully developed in consultation with the IBOAI Board, and have been implemented following notice to IBOs and review of their comments.

IBOs own and operate their own Independent Businesses (“IBs”). Amway recognizes the value of the contributions that IBOs who have achieved business goals can make to the development of other IBOs whom they sponsor and support under the Rules. As IBOs develop into established leaders, they play an increasingly important role in mentoring, teaching and training other IBOs about the Amway business. Among other things, the Rules are designed to ensure that all IBOs have the support that they need to continue to develop their IBs with Amway.

Under the IBO Contract, IBOs receive substantial benefits, including: the right to purchase products through Amway at IBO cost for resale; the right to sponsor others to become IBOs and sell products offered at www.amway.com; the right to qualify for bonuses under the Amway IBO Compensation Plan (“Plan”); use of Amway’s intellectual property in accordance with the Rules; and a variety of support for IBOs and their Customers. As part of its commitment to support the opportunity made available to IBOs, Amway invests substantial resources in goodwill, in the Line of Sponsorship (“LOS”) and in LOS Information to provide Amway and IBOs with a competitive advantage. All IBOs and Amway share a competitive business interest in maintaining and protecting these assets and interests. The Rules provide important safeguards for IBOs and Amway in this regard, as well as contractual rights and obligations.

1.1. Contractual Relationship: Amway Corp. (“Amway”) has a contract with each IBO that includes all of the terms in the IBO Registration Agreement form executed by the IBO, the renewal form(s) executed or authorized by the IBO, the Plan and the Rules in effect at the time the IBO executed the IBO Registration Agreement, and any Entity Agreement for Independent Business Owners (IBOs) (“Entity Agreement”) or modifications to the Plan or Rules that become effective during the term of the contract (the “IBO Contract”). The current version of the Plan and Rules can be found at www.amway.com.

As part of the IBO Contract, IBOs have an obligation to comply with the Rules.

1.2. Choice of Law: Except to the extent that the Federal Arbitration Act applies to Rule 11, the formation, construction, interpretation, and enforceability of the IBO Contract, and all claims arising from or relating to the IBO Contract, shall be governed by Michigan law, without giving effect to any choice of law or conflicts of law rules or provisions (whether of the State of Michigan or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Michigan. The place where the IBO Contract is made is Michigan.

1.3. Severability: If an arbitrator or court of competent jurisdiction determines any portion of the Rules of Conduct is unenforceable in any respect, then it shall enforce the rest of the Rules of Conduct to the fullest extent permitted by law without affecting the enforceability of all remaining Rules of Conduct.

 

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2. Definitions

2.1. Amway IBO Compensation Plan (or Plan) means the business arrangement through which IBOs receive certain income or other compensation as described in Section A of the Business Reference Guide.

2.2. Copyrighted Works means works protectable by copyrights that are owned by, created by or licensed to Amway.

2.3. Customer means a non-IBO who is an end user of products and services offered through or by Amway.

2.4. Independent Business (IB) means an Amway independent business operated by an IBO(s) pursuant to the IBO Contract.

2.5. Independent Business Owner (IBO) means an individual(s) or entity operating an IB pursuant to the IBO Contract.

2.6. IBOAI Board shall refer to the Independent Business Owners Association International, Inc. Board of Directors.

2.7. Line of Sponsorship (LOS) means the structural arrangement of IBOs established by the contractual relationship that each IBO has with Amway.

2.8. LOS Information includes all information that discloses or relates to all or part of the Line of Sponsorship, including but not limited to IBO numbers and other IBO business identification data, IBO personal contact information, IBO business performance information, and all information generated or derived therefrom, in its past, present or future forms.

2.9. Marks means the trademarks, service marks, trade dress and trade names adopted or used by Amway and/or otherwise the subject of pending or existing trademark rights owned by or licensed to Amway, regardless of whether the trademarks, service marks, trade dress or trade names are the subject of trademark applications or registrations.

2.10. Prospect means a prospective IBO.

2.11. Region means the United States, Canada, Dominican Republic, Puerto Rico, U.S. Virgin Islands, Guam, Jamaica, the Pacific Islands of American Samoa, Federated States of Micronesia, Marshall Islands, Northern Mariana Islands, Palau, Wake Island and all authorized Atlantic & Caribbean islands operating under the Plan.

2.12. Use means: (a) with reference to Marks, directly or indirectly placing, affixing or displaying one or more Marks on or in connection with goods or services, in a manner that tends to create the impression of an affiliation, connection, or association between Amway and the IBO or Approved Provider; and (b) with reference to Copyrighted Works, to reproduce, distribute and/or display copies of the Copyrighted Works, in whole or in part, including by means of digital audio transmissions, and to create any derivative works.

 

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3. Becoming an IBO

3.1. Registration Agreement:To become an authorized IBO capable of merchandising products and services offered through or by Amway and registering other IBOs, an applicant must be 18 years of age, complete and sign the IBO Registration Agreement, and pay the Business Services and Support fee specified in the IBO Registration Agreement. An IBO Registration Agreement may be completed and signed in one of the following ways: (a) the applicant may complete, sign and submit an electronic version of the IBO Registration Agreement in accordance with the procedures on the Amway website; or (b) the applicant may complete, sign and return a paper version of the IBO Registration Agreement.

3.2. Acceptance or Rejection of IBO Registration Agreement: Amway reserves the right to accept or reject any IBO Registration Agreement. A registration shall be considered accepted by Amway when it receives a completed and signed IBO Registration Agreementin accordance with Rule 3.1, its contents are verified with Amway’s IBO records database, and the registration does not violate any Rule of Conduct. Pending receipt of a completed, signed IBO Registration Agreement, Amway may temporarily authorize an IBO to conduct business subject to the Rules of Conduct for up to 90 days.

3.3. Legal Entities as IBOs: IBs shall be formed initially by and in the name(s) of the individual applicant(s). After receiving an IBO number, an IBO who wishes to operate his/her IB as a corporation, limited liability company (LLC), formal partnership, limited partnership, limited liability partnership (LLP) or trust must complete the appropriate Entity Agreement for Independent Business Owners (IBOs) and submit it to Amway, which may accept or reject it. Existing IBOs as of September 2012 that are operating through a legal entity under an existing Entity Agreement approved by Amway may continue to operate under that agreement, but the IBO and entity must sign the currently applicable Entity Agreement upon request or in the event of a change in ownership or control in the entity.  

3.4. Husband and Wife IBOs: If both husband and wife wish to become IBOs, they must register together as a single IB. Husbands and wives may not sponsor each other. If one spouse is already an IBO, the other spouse, upon electing to become an IBO, must join his or her spouse’s IB. An IBO will be held accountable for the actions of a spouse, whether or not the spouse is an IBO, so far as the Rules of Conduct are concerned.

3.5. Minors as Independent Business Owners: Minors who are at least 16 years of age may become IBOs only for the single purpose of merchandising products and services offered through or by Amway. A minor who desires to become an IBO must: (a) obtain a parent’s or guardian’s signature on the IBO Registration Agreement; (b) be sponsored by or added to his or her parent’s or guardian’s IB if the parent or guardian of the minor is an IBO; and (c) must not be a signatory in any IB other than a parent’s or guardian’s IB.

3.6. Term: The term of the IBO Contract shall expire at the end of each calendar year, with the exception of initial registrations accepted by Amway between September 1 and December 31, in which case such initial term shall expire at the end of the subsequent calendar year.

3.7. Annual Renewal: In order to renew the IBO Contract, an IBO must annually file a request to renew the IBO Contract, along with the required annual business renewal fee, by December 31 of the year preceding the year for which the IBO is renewing. Amway reserves the right to reject anyrenewal request, or revoke any IBO’s renewal agreement, if the IBO is not in compliance with all provisions of the IBO Contract. An annual renewal agreement may be completed and signed in one of the following ways: (a) an IBO may complete, sign and submit an electronic version of the renewal agreement and pay the required annual business fee in accordance with the procedures on the Amway website; (b) an IBO may renew and pay the required annual business fee by telephone at 1-800-253-6500; (c) an IBO may sign an automatic renewal agreement with Amway; unless they instruct Amway otherwise, IBOs who have reached the level of Silver Producer or above will be automatically renewed in order to avoid an inadvertent interruption of their business; or (d) an IBO may complete, sign and return a paper version of the Renewal Agreement (SA-469), along with the required annual business renewal fee; if sent by mail, the envelope must be postmarked by December 31.

3.8. Late Renewal: In the event that Amway accepts an IBO’s renewal agreement that was not filed in compliance with Rule 3.7, Amway is not required to restore that IBO’s sponsoring relationship(s) with downline IBOs.

3.9. IBO Contract Termination: An IBO may terminate his or her IBO Contract at any time prior to expiration by written communication to the Amway Business Conduct and Rules Department. A person who terminates his or her IBO Contract may immediately become a Customer.

3.10. Death and Inheritance: An IB can be passed on to a deceased IBO’s spouse, heirs, or other beneficiary.

3.10.1. In cases where the IB is owned jointly, such as a husband and wife or partnership, and one spouse or partner dies, unless they have previously arranged otherwise, Amway will recognize the surviving spouse or partner(s) as the owner(s) of the IB. The survivor(s) must forward a certified copy of the death certificate in order for Amway to change its records.

3.10.2. In cases where the IB is operated as an entity under Rule 3.3, and one of the owners of the entity dies, the entity will continue to operate the IB, provided the entity remains in compliance with Rule 3.3 and the successor of the deceased owner is an IBO in full compliance with the Rules. The entity shall notify Amway of the change in ownership or control of the entity by submitting the currently applicable Entity Agreement reflecting the proposed changes, and any proposed changes in the ownership or control of the entity require the express approval of Amway in writing.

3.10.3. In cases where an IBO disposes of an IB in a will, Amway will recognize the terms of the transfer, provided the beneficiary is an IBO who is in compliance with the Rules.

3.10.4. If there is no qualified IBO in a position to operate an IB due to probate or other court procedures, Amway will have the option of entering into a servicing agreement with another IBO, preferably upline in the LOS, to manage the IB until the proceedings are complete.

 

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4. Responsibilities and Obligations

4.1. Duty of Good Faith:Under the terms of the IBO Contract, Amway and all IBOs agree to perform their obligations in accordance with the duty of good faith and fair dealing. An IBO will be held accountable for the actions of a partner, family member or third party acting or purporting to act on behalf of the IBO or IB, so far as the Rules of Conduct are concerned. An IBO shall not aid and abet another IBO to violate the Rules of Conduct. IBOs shall not conduct any activity that could jeopardize the reputation of Amway or IBOs.

4.2. Cross-Group Buying or Selling: No IBO shall engage in cross-group buying or selling. Cross-group buying and selling occurs when an IBO sells products and services offered through or by Amway to another IBO he or she did not personally sponsor, except (a) as may be permitted under a servicing agreement pursuant to Rule 5.5.4 or (b) when an IBO purchases from or through his or her upline Platinum products and services offered through or by Amway.

4.3. Unsolicited Electronic Messages: No IBO shall send, transmit, or otherwise communicate any unsolicited electronic messages relating to Amway, its business opportunity, products or services to persons with whom the IBO does not have a pre-existing personal or business relationship. (This includes, but is not limited to, sending messages through newsgroups, purchased mailing lists, “safe lists,” or other lists of individuals or entities with whom or which the IBO does not have a preexisting relationship.)

4.4. Advertising: IBOs may advertise only with the express approval of Amway in writing.

4.5. Retail Establishments: An IBO who works in or owns a retail establishment must operate his or her IB separate and apart from the retail establishment. No IBO shall permit products, services or literature offered through or by Amway to be sold or displayed in retail establishments, including, but not limited to, places like schools, fairs, kiosks, vending machines, unauthorized internet websites, military stores, salons or professional offices.

4.5.1. Event Sales: The sale of authorized product categories by IBOs are permitted only at temporary (no more than 10 days) events whose themes are consistent with the products being sold, and only with the express approval of Amway in writing. To allow Amway sufficient time to grant approval, the IBO must submit a completed Event Sales Application Form to Amway 30 days prior to the event. A copy of the Event Sales Application form may be obtained at www.amway.com.

4.5.2. Display Booths: The display only (no sales) of products and approved literature by IBOs is permitted only at temporary (no more than 10 days) events, and only with the express approval of Amway in writing. To allow Amway sufficient time to grant approval, the IBO must submit a completed Display Booth Application Form to Amway 30 days prior to the event. A copy of the Display Booth Application form may be obtained at www.amway.com.

4.6. Statements About Products, Services, and the Opportunity: An IBO shall make only truthful and accurate statements about the business opportunity, products and services offered through or by Amway. IBOs shall not make any claims about products or services offered through or by Amway other than those claims found in Amway authorized literature and at www.amway.com.

4.7. Repackaging: Products offered through or by Amway are to be sold only in their original packages and in their original formulations. IBOs may not repackage products or otherwise change or alter any of the packaging, labels or materials of products offered through or by Amway.

4.8. Written Sales Receipt: An IBO who takes and/or delivers an order in person for over $25 shall deliver to the customer at the time of sale a written and dated order or receipt which shall: (a) describe the product(s) sold; (b) state the price charged; (c) give the name, address, and telephone number of the selling IBO; and (d) include Amway’s Satisfaction Guarantee.

4.9. Satisfaction Guarantee: When a Customer requests Satisfaction Guarantee service within the stated guarantee period for a product purchased directly from an IBO, the IBO shall immediately offer the individual his or her choice of: (a) a full refund; (b) an exchange for a like product; or (c) full credit toward the purchase of another product. If a product is shipped directly to the Customer by Amway, the Customer should follow the return instructions on the packing slip. In the case of IBO purchases, only those that the IBO makes for personal, family or household use may be returned under the Satisfaction Guarantee. Whenever an IBO requests Satisfaction Guarantee service within the stated guarantee period, an IBO has the choice of a: (a) full refund; (b) exchange for the same or like product; or (c) full credit toward the purchase of another product. The current Satisfaction Guarantee can be found at www.amway.com.

4.10. Buy-Back Rule: IBOs leaving the Amway business have a right to return Amway products. A departing IBO may choose to sell inventory of currently marketable Amway products to an upline IBO at a mutually agreeable price. If a departing IBO is unable to secure the buy-back of inventory through an upline IBO, Amway shall repurchase the departing IBO’s unused currently marketable Amway products subject to the following: (a) Amway will make all appropriate Performance Bonus differential and Leadership Bonus charge backs to those IBs who originally received them; and (b) Amway will charge freight costs incurred by the IBO leaving the Amway business if the net reimbursement includes same, and a service charge equal to 10% of the IBO cost of the products being returned to cover handling and processing charges.

4.11. Other Returns: An IBO who is not leaving the Amway business may ask Amway to buy back Amway products where he or she may be experiencing financial hardship or other exceptional circumstances as explained by the IBO. Return requests are reviewed on a case-by-case basis. Amway reserves the right to repurchase only unused currently marketable Amway products subject to Rule 4.9.

4.12. Seventy Percent Rule: In order for an IBO to receive Performance Bonus or recognition due on all the products purchased, an average of seventy percent of the IBO’s personal Business Volume (BV) per month must come from products sold at a commercially reasonable price; if the IBO fails to meet this requirement, then such IBO may be paid that percentage of Performance Bonus measured by the amount of products that can be shown to have been actually sold, rather than the amount of products purchased, and recognized accordingly. For purposes of this Rule, a reasonable amount of products used for personal or family consumption or given out as samples can contribute to the 70% average.

4.13. Customer Volume: In order to obtain the right to earn a Performance Bonus on downline volume during a given month, an IBO must: (a) make not less than one sale to each of 10 different Customers; or (b) have at least 50 PV of sales to any number of Customers. For purposes of obtaining the rights referred to in this Rule, sales must be to Customers who either: (a) place an order directly with Amway; or (b) place an order with the IBO that the IBO reports to Amway through a system established by Amway for tracking such sales.

4.13.1. In producing proof of such sales, the IBO is not required to disclose the prices at which he or she made the Customer sales.

4.13.2. If such an IBO fails in any month to make said Customer sales and/or to produce proof of making such sales, then he or she will be denied his or her Performance Bonus that month on downline volume. It is the obligation of the IBO to ensure compliance by the official deadlines published by Amway, in order to qualify for his or her Performance Bonus. This Rule shall apply unless the IBO is currently a qualified Platinum or above.

4.14. Compliance with Applicable Laws, Regulations, and Codes: IBOs shall comply with all laws, regulations, and codes that apply to the operation of their IB wherever said business may be conducted. IBOs shall not directly or indirectly encourage, or aid and abet any person to violate any laws, regulations, codes, or term of the IBO Contract. No IBO may operate any illegal or unlawful business enterprise, or engage or participate in any deceptive, illegal or unlawful trade practices.

4.15. IBO Relationship: IBOs are independent contractors. IBOs shall not state or imply that they are employees, agents or legal representatives of Amway, its affiliates, and/or other IBOs. IBOs shall not represent or imply, either directly or indirectly, that registration creates an employment relationship between themselves and the IBOs whom they have sponsored or who have sponsored them.

4.16. Franchises and Territories: IBOs shall not represent to anyone that there are franchises or exclusive territories available under the Plan.

4.17. Enticement to Change Position in the Line of Sponsorship: Under no circumstances shall an IBO, directly or indirectly, solicit, assist, attempt to induce, or encourage, another IBO to request a change in position in the Line of Sponsorship.

4.18. Exporting and Importing: IBOs shall not export or import products or services offered through or by Amway, or knowingly sell to others who import or export such products or services, to or from the United States or its possessions or territories or any other country, regardless of whether or not Amway or its affiliates have established operations or are doing business in that country. Nothing in this Rule prohibits IBOs from personal use or resale within the Region in accordance with the IBO Contract.

4.19. Activity Outside The Region or Activity Outside The Market Where The IBO Is Registered: IBOs who engage, directly or indirectly, in any activity related to the Amway business in a jurisdiction outside of the Region must do so in a manner that complies with the letter and spirit of the applicable laws, regulations, rules, policies and procedures of the Amway affiliate in that jurisdiction, regardless of whether they are registered IBOs in that jurisdiction. Failure to do so shall be a breach of the IBO Contract.

4.20. Sound Business Practices: IBOs shall operate their IB in a financially responsible and solvent manner. Amway reserves the right to offset bonus payments for amounts an IBO owes to Amway. If an IBO or any member partner in his or her IB files a petition for bankruptcy or has bankruptcy proceedings commenced against him or her, or has any assets seized by court order or taken in execution of an unsatisfied judgment debt, the IBO must immediately inform Amway.

4.21. Fund-raising: No IBO shall use Amway products or services in conjunction with any type of fund-raising activity. Fund-raising includes the solicitation for the donation of funds or for the purchase of Amway products or services based on the representation that all, or some, of the gains, proceeds, donations, bonuses, or profits generated by such sale will benefit a particular group, organization, or cause.

4.22. IBO Plan Manipulation: IBOs shall not manipulate the Plan, point value (PV) or business volume (BV), in any way which results in the payment of bonuses or other awards and recognition that have not been earned in accordance with the terms of the IBO Contract.

4.23. Personal/Business Information Update: All IBOs are responsible for communicating any updates or changes to their personal information (e.g., name, address, email address and telephone numbers, etc.) or business information (e.g., business name, address, email address, telephone numbers, addition/deletion of partner, change of business status, etc.) to Amway.

4.24. Amway Contact: When the Rules require an IBO to contact Amway for notice, permission or approval, the IBO shall contact the Amway Business Conduct and Rules Department by mail at 7575 Fulton Street East, Ada, Michigan, 49355, by fax at 616-787-7896 or by email at BCR@amway.com. For questions or concerns please call 616-787-6712.

 

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5. Presentation of the Plan, Sponsoring and Support

5.1. Inviting:When inviting a Prospect to hear a presentation of the Plan, an IBO must make it clear that what is being described or offered is the Plan.

5.2. Describing the Plan: When describing the Plan: (a) an IBO’s statements must be truthful, accurate and not misleading; (b) the roles of a balanced business (retail sales, personal use and sponsoring) must be accurately described; and (c) all income representations must be limited to income from the Plan, based on actual experience or from Amway-authorized materials, and provide realistic income potential.

5.3. Required Disclosures: In seeking participation of a Prospect in the Plan, an IBO:

5.3.1. Must give each Prospect a copy of a brochure authorized by Amway for use with Prospects that contains the average profits, earnings, and sales figures and percentages as published by Amway, and orally inform the Prospect that the brochure contains the average profits, earnings, and sales figures and percentages as published by Amway.

5.3.2. Must use only Amway-authorized materials or Business Support Materials authorized for use with Prospects under Rule 7 (Business Support Materials).

5.4. Prohibited Sponsoring Practices: In seeking participation of a Prospect in the Plan, an IBO:

5.4.1. Must not cite lifestyle examples, e.g., travel, automobile, homes of successful IBOs, and contributions to charitable causes, unless such benefits were actually accrued as the result of building a successful IB.

5.4.2. Must not say or imply that a successful IB can be built in the form of a wholesale buying club.

5.4.3. Must not say or imply that there is no requirement for the retail sale or marketing of products by IBOs.

5.4.4. Must not promote potential tax benefits of the Plan.

5.4.5. Must not encourage or require a Prospect to purchase anything not included with the Business Services and Support fee specified in the IBO Registration Agreement and must not encourage the purchase of a product or service not identified on the IBO Registration Agreement. The only requirements which an IBO can impose upon a Prospect whom he or she is willing to register is that the Prospect shall pay the Business Services and Support fee and sign a completed IBO Registration Agreement and submit it to Amway.

5.4.6. Must not register or sponsor new IBOs in a way that manipulates the new IBO’s position in the LOS.

5.5. Sponsor’s Responsibilities: A sponsor must comply with the following obligations:

5.5.1. Rules Compliance: The sponsor must be an IBO in full compliance with the Rules of Conduct.

5.5.2. Access to the IBO Contract: The sponsor must ensure that all IBOs whom he or she sponsors have access to and the opportunity to read the IBO Contract.

5.5.3. Training and Motivation: The sponsor must be able to train and motivate the IBOs whom he or she has sponsored with a minimum of assistance from his or her first upline Platinum or above. IBOs may fulfill this obligation by use of Business Support Materials approved under Rule 7.

5.5.4. Servicing Arrangements: If an IBO is unable or unwilling to service IBOs whom he or she has sponsored with the proper training or motivation, he or she must make arrangements, in writing, with his or her first upline qualified Platinum to provide this service, in which case he or she must be willing to compensate that upline Platinum for this service. If a servicing arrangement is used, the full PV/BV must always be transferred to the serviced IBO so that bonuses are correctly paid.

5.5.5. Distribution of Performance Bonuses: Some IBOs receive a Performance Bonus from Amway, a part of which may be payable to downline IBOs. The IBO cannot retain any portion which may be payable to a downline IBO, even where the downline IBO owes a private debt to the upline IBO, unless there is a written agreement between the parties permitting such retention. Even with such a written agreement, the upline IBO may retain only the net portion of the Performance Bonus due that IBO, and not any portion that may be payable to other downline IBOs.

5.6. Platinum Responsibilities: IBOs who qualify as a Platinum or above have the following additional responsibilities:

5.6.1. Conduct or provide access to periodic sales meetings for the purpose of training and inspiring IBOs downline to the next qualified Platinum and maintain frequent contact with all of them.

5.6.2. Assure compliance with the Rules of Conduct by IBOs downline to the next qualified Platinum.

5.7. Prohibited Support Practices: Sponsors and upline IBOs shall not encourage or require downline IBOs, as a condition of receiving assistance in building their IB after registration, to (a) purchase any specified amount of Amway or non-Amway products or services, or (b) maintain a specified inventory of Amway or non-Amway products or services.

 

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6. Preservation of the Line of Sponsorship

6.1. Confidentiality of the LOS:Amway protects the LOS and LOS Information for the benefit of Amway and of all IBOs. Amway keeps LOS Information proprietary and confidential and treats it as a trade secret. Amway is the exclusive owner of all LOS Information, which is derived, compiled, configured, and maintained through the expenditure of considerable time, effort, and resources by Amway and its IBOs. IBOs can use Amway’s goodwill and LOS Information only for the purposes permitted under the IBO Contract.

6.1.1. IBOs acknowledge, and agree not to challenge, that: (i) LOS Information is confidential and a valuable trade secret owned by Amway; (ii) LOS Information is owned exclusively by Amway; and (iii) IBOs do not own any rights in LOS Information. IBOs agree not to challenge or interfere with Amway’s authority to license or sublicense LOS Information. IBOs shall not assert or seek any rights or protection of any kind in LOS Information other than those limited rights or protections that may be specifically granted by this Rule.

6.1.2. An IBO may use LOS Information only with Amway’s prior written permission, which may be expressed through general publication (to all IBOs) or through a specific writing to one or more IBOs. Any permission granted by Amway shall constitute a limited non-exclusive, non-transferable, and revocable license by Amway for an IBO to use LOS Information only as necessary to facilitate his or her IB as permitted under these Rules of Conduct. Amway reserves the right to deny or revoke any such license, upon reasonable notice to the IBO stating the reason(s) for such denial or revocation, whenever, in the reasonable opinion of Amway, such is necessary to protect the confidentiality or value of LOS Information.

6.1.3. All IBOs shall maintain LOS Information in strictest confidence, and shall take all reasonable steps and appropriate measures to safeguard LOS Information and maintain the confidentiality thereof. An IBO shall not compile, organize, access, create lists of, or otherwise use or disclose LOS Information except as authorized by Amway. An IBO also shall not disclose LOS Information to any third party, or use LOS Information in connection with any other businesses or to compete, directly or indirectly, with the Amway business.

6.1.4. An IBO shall promptly return any and all LOS Information to Amway upon resignation, non-renewal, or termination of his or her IB and shall immediately discontinue any further use thereof.

6.1.5. Every IBO acknowledges that use or disclosure of LOS Information, other than as authorized by Amway, will cause significant and irreparable harm to Amway, warranting an award of injunctive relief, including a temporary restraining order and/or a preliminary injunction, specific performance, and damages including costs, attorneys’ fees, and disgorgement of all profits made as a result of such unauthorized use or disclosure.

6.1.6. An IBO’s obligations under this Rule 6.1 shall survive and remain enforceable following the voluntary or involuntary resignation, non-renewal, or termination of that IBO’s IB.

6.2. Non-Competition and Non-Solicitation:    

6.2.1. Non-Competition (current IBOs): Every IBO agrees not to own, manage, operate, consult for, serve in a Key Position in, or participate as an independent distributor in (a) any other direct sales program using a multilevel or network marketing structure, or (b) any other enterprise that markets, through independent distributors, products or services functionally interchangeable with those offered through or by Amway.

6.2.2. Non-Solicitation (current IBOs): Every IBO agrees that he or she will not, on his or her own behalf or on behalf of any person or entity, directly or indirectly, encourage, solicit, or otherwise attempt to recruit or persuade (i) any IBO or (ii) any person who has been an IBO within the past two calendar years, to own, manage, operate, consult for, serve in a Key Position in, or participate as an independent distributor in (a) any other direct sales program using a multilevel or network marketing structure, or (b) any other enterprise that markets, through independent distributors, products or services functionally interchangeable with those offered through or by Amway.

6.2.3. Non-Competition (former IBOs): Every IBO agrees that, during the six-month period following the, resignation, non-renewal, or termination of that IBO’s IB, he or she shall not own, manage, operate, consult for, serve in a Key Position in, or participate as an independent distributor in (a) any other direct sales program using a multilevel or network marketing structure, or (b) any other enterprise that markets, through independent distributors, products or services functionally interchangeable with those offered through or by Amway.

6.2.4. Non-Solicitation (former IBOs): Every IBO agrees that, during the twenty-four-month period following the resignation, non-renewal, or termination of that IBO’s IB, he or she shall not, on his or her own behalf or on behalf of any person or entity, directly or indirectly, encourage, solicit, or otherwise attempt to recruit or persuade (i) any IBO or (ii) any person who has been an IBO within the past two calendar years, to own, manage, operate, consult for, serve in a Key Position in, or participate as an independent distributor in (a) any other direct sales program using a multilevel or network marketing structure, or (b) any other enterprise that markets, through independent distributors, products or services functionally interchangeable with those offered through or by Amway.

6.2.5. The time periods in Rules 6.2.3 and 6.2.4 above shall be extended by any period of time during which the former IBO is in violation of the applicable Rule.

6.2.6. The geographic scope of Rules 6.2.1, 6.2.2, 6.2.3 and 6.2.4 is the Region.

6.2.7. All IBOs agree that these Rules are reasonable in both time and geographic scope.

6.2.8. For purposes of this Rule 6.2, “Key Position” means an owner, employee, agent, or independent contractor who contributes to the profitability of his or her new business or who is in a position to receive benefit or competitive advantage from his or her new business by virtue of his or her access to LOS Information.

6.2.9. Nothing in this Rule 6.2 restricts the sale or distribution of privately developed Business Support Materials in accordance with Rule 7 and Rule 6.3.

6.2.10. Nothing in this Rule 6.2 restricts competition between IBOs (a) in the sale of products or services offered through or by Amway to Customers or (b) in the registration of new IBOs or Customers.

6.2.11. Every IBO acknowledges that this Rule 6.2 protects the reasonable competitive business interests of Amway and IBOs, and that a violation of any subsection of this Rule 6.2 will cause significant and irreparable harm to IBOs and Amway, warranting an award of injunctive relief, including a temporary restraining order and/or a preliminary injunction, specific performance, and damages including costs, attorneys’ fees, and disgorgement of all profits made as a result of such violation.

6.2.12. Except for obligations under Rule 6.2.1 and Rule 6.2.2, an IBO’s obligations under this Rule 6.2 shall survive and remain enforceable following the voluntary or involuntary resignation, non-renewal, or termination of that IBO’s IB.

6.3. Other Business Activities: Except as provided in Rule 6.2, IBOs may engage in other business ventures, including other selling activities, involving products, services, or business opportunities. However, IBOs may not take advantage of their knowledge of or association with other IBOs whom they did not personally register, including their knowledge resulting from or relating to Line of Sponsorship Information, in order to promote and expand such other business ventures.

6.3.1. Every IBO agrees not to solicit, directly or indirectly, other IBOs whom he or she did not personally sponsor in order to sell, offer to sell, or promote other products, services, business opportunities, investments, securities, or loans not offered through or by Amway. Every IBO agrees not to sell, offer to sell, or promote any other business opportunities, products, or services in connection with the Plan. Nothing in this Rule 6.3 restricts the sale or distribution of Business Support Materials in accordance with Rule 7.

6.3.2. Nothing in this Rule 6.3 restricts, for example, an IBO regularly engaged in the operation of a service station, auto dealership, retail establishment, salon, or a professional service (e.g., law, medicine, dentistry, or accounting) from serving customers who are IBOs and who have sought them out. But an IBO shall not actively solicit the patronage of other IBOs based on knowledge or information gained as a result of being an IBO.

6.4. Approval of Certain IBO Contract Changes: The sale of an ownership interest in an IB, transferring an IB, merging IBs, separating or dividing an IB, or assignment of any rights or obligations under an IBO Contract require express approval of Amway in writing. None of the foregoing may be used to manipulate the Line of Sponsorship.

6.5. Individual Transfers: An individual transfer involves the transfer of an IBO without any downline IBOs. Any IBO who wants to change his or her sponsor must submit a written request to Amway accompanied by (1) a written release signed by all the IBOs upline in the Line of Sponsorship up to and including the first qualified Platinum, (2) a written acceptance from the new IBO sponsor and new upline Platinum, and (3) a statement indicating the business reason for the transfer request. Upon Amway’s express approval in writing of the request, the written acceptance from the new sponsor and upline Platinum confirms that they will incur all responsibilities of the transferring IBO.

6.6. Group Transfers: A group transfer involves the transfer of an IBO with one or more downline IBOs.

6.6.1. An IBO who wishes to transfer to a different sponsor with one or more downline IBOs may do so only with the express approval of Amway in writing. In addition, an IBO must submit a written request to Amway accompanied by (a) written consent from all IBOs upline in the Line of Sponsorship up to and including the first qualified Platinum, and also the first qualified Emerald, (b) written consent of all IBOs whom the transferring IBO wishes to transfer with him or her, (c) written consent by the new sponsor and his or her upline qualified Platinum to which the requesting IBO wants to be transferred, and (d) a statement indicating the business reason for the transfer request.

6.6.2. No IBO currently qualified as a Silver Producer or above can be transferred with downline IBOs under this Rule.

6.6.3. An IBO formerly qualified as a Silver Producer or above may be transferred with downline IBOs if more than twelve months have elapsed since the IBO was so qualified.

6.7. Six-Month Inactivity: An IBO who wishes to transfer to a different sponsor but is unable to obtain the necessary consents may not register under a new sponsor until the IBO has terminated his or her IBO Contract or failed to renew and has been inactive for a period of 6 months or longer. Following the lapse of the inactive period, the former IBO may register as a new IBO under a new sponsor.

6.7.1. During the period of inactivity, a person shall not conduct any of the activities of an IBO under his or her name, or in the name of another person or IB.

6.7.2. The following shall not interrupt the running of the six-month inactivity period: (a) procuring and/or submitting a written request for transfer; (b) filing an application for an informal or formal conciliation; (c) operating an Amway-affiliated business in any other country in which an Amway affiliate conducts business; (d) directing an inquiry to Amway as to the status of his or her IB; or (e) purchasing Amway products or services as a Customer.

6.7.3. Two-Year Inactivity (Registering): An IBO who transfers to a new sponsor, or who following 6 months of inactivity applies for registration under a different sponsor, may not register downline from any IBO who was previously upline or downline to him or her in the Line of Sponsorship up to and down to the first qualified Platinum unless at least two years have elapsed since the termination or expiration of his or her IB.

6.7.4. Two-Year Inactivity (Sponsoring): An IBO who transfers to, or who registers under, a different sponsor following 6 months of inactivity, shall have no right to sponsor any IBO who was previously upline or downline to him or her in the Line of Sponsorship up to and down to the first qualified Platinum, unless at least two years have elapsed since the termination or expiration of the sponsored IB.

6.7.5. Two-Year Inactivity (Joining an existing IB): Former IBOs may not be added to an existing IB for a period of 24 months following the termination or expiration of their IBO Contract.

6.8. Sale of an IB: An IBO who owns and operates an IB may sell his or her ownership interest in such IB only to another IBO who is in compliance with the Rules of Conduct, and who has the sufficient skills, experience, judgment and resources to operate the IB, as reasonably determined by Amway. Amway requires that specific terms of sale be included in any sales agreement. Such terms and a sample sales agreement may be obtained from Amway. An IB may be sold only with the express approval of Amway in writing.

6.8.1. In order to preserve the Line of Sponsorship, the selling IBO must offer his or her IB in the order of priority stated below, and the IBO(s) interested in purchasing the IB must meet all of the terms and conditions set forth in these Rules.

6.8.1.1. the first option to purchase belongs to the selling IBO’s International Sponsor, who retains the right to acquire the IB throughout the negotiations to sell the IB by meeting the price and conditions of any bona fide offer received by and deemed acceptable to the selling IBO;

6.8.1.2. the second option to purchase belongs to the selling IBO’s local Foster Sponsor so long as the first option has not been exercised. In the event the selling IBO has no International Sponsor, the local Sponsor retains the right to acquire the IB throughout the negotiations to sell the IB by meeting the price and conditions of any bona fide offer received by and deemed acceptable by the selling IBO;

6.8.1.3. the third option, exercisable so long as the first or second options above have not been exercised, belongs to any one of the selling IBO’s personally registered IBOs;

6.8.1.4. the fourth option, exercisable so long as the first, second, or third options above have not been exercised, belongs to any qualified Platinum IBO or above either up or down the Line of Sponsorship from the selling IBO to the next qualified Diamond;

6.8.1.5. the final option, exercisable so long as the first, second, third or fourth options above have not been exercised, belongs to any IBO in good standing.

6.8.2. If Amway operates an IB, and has entered into a servicing agreement with an IBO to manage the IB, Amway shall have the option of selling the IB to the servicing IBO.

6.8.3. When an IB is sold, it will remain in its same position in the Line of Sponsorship.

6.9. Mergers and Combinations of IBs: Mergers of IBs resulting from failure to file a Renewal Agreement, termination, resignation, death (with no designation of succession by heirs) or some involuntary event or cause beyond the control of any of the owners, are permitted, only with the express approval of Amway in writing.

6.10. Two IBs Rule: An IBO may own or have an ownership interest in only one IB except: (a) where two IBOs marry; (b) where an existing IB purchases another IB pursuant to Rule 6.8; or (c) where the IB is, or will be, passed on to a deceased person’s spouse, heirs, or other beneficiary in accordance with Rule 3.10.

6.11. Parent-Child Integration: IBOs who are parents and children may integrate their respective IBs, provided that they submit a written request to Amway and meet the following:

6.11.1. the child(ren) must be personally registered by the parents; or the parents must be personally registered by the child(ren);

6.11.2. the parent’s IB and the child’s (children’s) IB must have operated as a separate IB for not less than 2 years by date of implementation;

6.11.3. the parent and the child(ren) shall be qualified at the level of Platinum or above as of the implementation date;

6.11.4. in the event that the parent(s) or the child(ren) are deceased or are not mentally or physically capable of running the IB before conditions 6.11.2 and 6.11.3 above have occurred, the child(ren) or parent(s) inheriting the IB shall have the right to integrate the separate IBs in accordance with this Rule;

6.11.5. provided the above conditions will be met no later than the implementation date, the Legal & Ethics Committee of the IBOAI Board shall review such request and provide Amway with a recommendation. Amway may or may not approve the request in light of such recommendation and the goals, objectives, and benefits of the Plan; and

6.11.6. upon express approval of Amway in writing of the request for integration or de-integration, implementation shall be the next September 1.

6.12. Divorce, Separation, or Other Dissolution of a Legal Entity: IBOs who become involved in an action for divorce, separation of marital property, or the dissolution of a legal entity formed under Rule 3.3, must continue to conduct themselves in compliance with the Rules of Conduct.

6.12.1. During the pendency of a divorce, separation of marital property or dissolution of a legal entity, the IBOs must adopt one of the following methods of operation: (a) the IBOs continue to operate the IB jointly on a “business-as-usual” basis; (b) one or more IBOs relinquishes his or her right and interest in the IB; (c) the IBOs may agree on a third party to operate the IB, subject to express approval of Amway in writing; or (d) if the IBOs cannot agree on a third party, Amway shall appoint a third party to act as a receiver during the pendency of the divorce or dissolution if Amway determines that such an appointment is necessary to prevent a negative impact on the business.

6.12.2. After a Final Decree or Judgment of Divorce, a Final Separation Agreement or other domestic contract that contains a legally enforceable Property Settlement or Division of Assets that addresses their IB, or after a final dissolution of a legal entity, IBOs may: (a) agree to continue to operate their IB in the form of a partnership or other legal entity permitted under Rule 3.3; or (b) agree that one IBO may relinquish all rights in the original IB to the other IBO(s), at which time the withdrawing IBO is free to immediately register under any sponsor.

6.12.3. IBOs below the level of qualified Platinum level may not divide their IB in the case of a divorce, separation of marital property or other dissolution.

6.12.4. IBOs who are qualified at the Platinum level may divide their IB with one IBO maintaining all legs recognized by Amway as a 25% Sponsor or above within the past one year (“qualified legs”), and the other IBO(s) maintaining all, some, or none of the remaining legs (“non-qualified legs”). The IBO maintaining the qualified legs will be registered by the IBO(s) not maintaining the qualified legs of the original IB. In order to divide their IB, the IBOs must sign a written request, accompanied by the written consent of all IBOs below the level of 25% Sponsor stating with whom they wish to work. Such request must be accompanied by a written release signed by the first IBO qualified at the Platinum level and the first qualified Emerald IBO. Amway will then notify the first qualified upline Diamond IBO of the request and will allow 15 days for comment. All changes to the Line of Sponsorship pursuant to this Rule are subject to express approval of Amway in writing.

6.12.5. Qualified Emeralds or above at the time of divorce, separation of marital property or dissolution may divide their IB, thereby creating two separate IBs, one of which is sponsored by the other, in which case a “phantom IB” will be imposed over their separate IBs. Under the “phantom IB” arrangement, regardless of how the parties may split their IB, their separate IBs will be considered a single IB for purposes of determining bonuses to be paid to upline IBOs. The parties will function as two separate IBOs so far as themselves, their respective IBs, and their respective sponsored IBOs are concerned. The IB of one IBO is not permitted to earn a Leadership Bonus or a Depth Bonus on the volume of the IB of the other IBO. Even though the original IB is divided into two separate IBs, Amway may, if the IBOs request, recognize both newly created IBs as a single entity for purposes of determining annual bonuses. Thus, the “phantom IB” arrangement continues the previously existing IB for purposes of calculating and paying higher award level bonuses to the IBOs of the original IB. If one IBO registers another IBO of the original IB, the downline sponsored IBO at maximum Performance Bonus level may count as a qualifying “leg” for recognition purposes only. Amway will issue all annual bonus checks in the joint names of the IBOs of the original IB, leaving it to them to determine how the funds are to be divided. Whenever an Emerald or above IB is divided, the IBOs of the original IB may rely on their former pin level to meet the requisite pin-level qualification for an invitation to Amway-sponsored events for one fiscal year following the fiscal year in which the divorce, separation or marital property or other dissolution occurred. Once an IB has been divided into two IBs, the new IBs will no longer be considered as a single combined IB for purposes of future higher pin/award recognition, but each separate IB must thereafter qualify on its own. To effect a division of the IB and to permit the IBOs to operate separate IBs, the IBOs must file a certified copy of the Final Decree or Judgment of Divorce, a Final Separation Agreement or other domestic contract that contains a legally enforceable Property Settlement or Division of Assets that addresses their IB, or a final Dissolution Agreement, and any additional documents requested by Amway.

6.13. Disposition of an IB: If an IBO resigns, fails to renew, terminates his or her IB, dies without transferring the IB, or is terminated by Amway, Amway shall decide the future of the IB in accordance with these Rules.

 

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7. Business Support Materials

Business Support Materials (or “BSM”) as used in these Rules means all products and services (including but not limited to business aids, books, magazines, flip charts, and other printed material, online literature, internet websites, advertising, audio, video or digital media, rallies, meetings, and educational seminars, and other types of materials and services) that are (i) designed to solicit and/or educate Prospects, Customers, or prospective Customers of Amway products or services, or to support, train, motivate, and/or educate IBOs, or (ii) incorporate or Use one or more of the Marks or Copyrighted Works of Amway, or (iii) are otherwise offered with an explicit or implied sense of affiliation, connection, or association with Amway. Unless otherwise specified in writing, IBOs acknowledge that nothing in this Rule, or in any other Rule, shall be construed or interpreted as a license or other permission to incorporate any LOS Information into any BSM.

7.1. General Rules on BSM

7.1.1.IBOs may sell BSM only in accordance with Rule 7.1 and 7.2. BSM used, promoted, distributed, or offered for sale by or to IBOs must: (a) comply with all Quality Assurance Standards and any applicable Rules of Conduct relating to their use, promotion, and sale; (b) be submitted to Amway for review prior to use, promotion, distribution or sale; (c) be authorized by Amway; and (d) if required for the category of BSM, bear the authorization number provided by Amway. Except as explicitly provided in the Quality Assurance Standards, BSM may not be offered for sale to Prospects. A copy of the currently applicable Quality Assurance Standards is available from Amway upon request by IBOs eligible to sell or promote BSM.

7.1.2. Amway’s Satisfaction Guarantee and Buy-Back Rules do not apply to materials not sold by Amway. BSM may only be sold subject to the right of the purchaser to return such BSM for a refund in accordance with the following:

7.1.2.1. The terms of the refund policy, including terms regarding procedures for the resolution of disputes and the responsible person for returns, must be clearly communicated to the purchaser prior to any sale. In addition to any other person designated to handle returns, the selling IBO and the Approved Provider shall be responsible for handling returns if the sale occurred under Rule 7.2, and the selling IBO together with the selling IBO’s upline Platinum IBO or above shall be responsible for handling returns of all other sales.

7.1.2.2. During the first 90 days following an IBO’s registration with Amway, the IBO may return all BSM of any form purchased, including meeting tickets, together with proof of purchase, for a 100% refund of the price paid for such BSM.

7.1.2.3. Except as provided in Rule 7.1.2.4, an IBO end-user of BSM may return BSM purchased, together with proof of purchase, within 180 days following purchase, for a refund on commercially reasonable terms.

7.1.2.4. Except as provided in Rule 7.1.2.2, each IBO who chooses to sell tickets to seminars, events, and other business meetings is obligated to buy back tickets purchased for the purchaser’s personal use for a period of 30 days after the event, provided the dissatisfied purchaser personally attended the event. Such refund shall be for that portion of the cost of the event related to admission to the event, exclusive of the cost of travel, meals, or hotel accommodations.

7.1.3. IBOs promoting, selling, distributing, or offering BSM for sale must: (a) ensure that such BSM are not sold or offered for sale in conjunction with the IBO’s registration with Amway; (b) provide purchasers of such BSM with any disclosures or other information that may be required by Amway from time to time; (c) clearly inform every IBO purchasing BSM that purchasing BSM is optional, is strictly voluntary, and may be helpful but is not necessary to build a successful independent business; and (d) advise the purchaser about refund policies that apply to such BSM in accordance with Rule 7.1.2.

7.1.4. No IBO may record an Amway presentation without the prior specific written consent of Amway. An IBO may make a single recording of the talks or presentations made by non-Amway employees at any Amway-sponsored meeting, provided the recording is for their personal use and is not reproduced for any purpose.

7.1.5. Although the specific content of live seminars, events, business meetings, or other similar BSM must comply with the Quality Assurance Standards, such BSM do not require prior authorization from Amway unless or until the content is reduced to a fixed media (such as in print, audio, or video) for use with IBOs or Prospects.

7.1.6. An IBO who purchases, promotes, distributes, or offers BSM for sale shall use reasonable efforts to determine that the quantity and cost of BSM are reasonably related to sales volume and profits of the purchaser’s IB.

7.1.7. IBOs who promote or distribute BSM to other IBOs may not compensate or remunerate other IBOs in connection with such distribution except in accordance with Rule 7.2.

7.1.8. IBOs may organize seminars, events, or business meetings for IBOs consistent with their training obligations as sponsors or Platinums.

7.1.9. IBOs selling, promoting, or distributing BSM apart from Rule 7.2 must obtain appropriate written authorization from Amway in accordance with Rule 8 in order to Use any Marks or otherwise use any copyrighted material or other intellectual property of Amway in connection with such BSM.

7.1.10. IBOs selling, promoting, or distributing BSM must not infringe the copyrights or intellectual property rights of Approved Providers, other IBOs or third-parties.

7.2. Sale and Promotion of BSM with Authorization from an Approved Provider

7.2.1. “Approved Provider” means any supplier authorized by Amway to provide BSM to IBOs or use BSM with Prospects, pursuant to the ACCREDITATION PLUS™ Program (“Program”).

7.2.2. IBOs who wish to sell, promote, or earn income from the sale of BSM from an Approved Provider must have a written contract or other binding authorization from that Approved Provider in accordance with the Program, obligating the IBO to adhere to applicable Quality Assurance Standards in connection with such activities.

7.2.3. BSM offered in the form of website subscriptions and downloadable media are subject to the following requirements, in addition to Rule 7.1.2:

7.2.3.1. Purchasers canceling website subscriptions are entitled to a refund for unused, whole months of any prepaid subscription(s).

7.2.3.2. Purchasers of downloadable media are entitled, if dissatisfied, to obtain a replacement download of equal value within 30 days of the purchase of the subject downloadable media.

7.2.4. IBOs who are authorized by an Approved Provider to sell, promote, or distribute an Approved Provider’s BSM in accordance with Rule 7.2 require no further written authorization from Amway to conduct such activity.

 

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8. Marks and Copyrighted Works

Amway’s Marks and Copyrighted Works are important and valuable business assets of Amway. The Marks help identify the source and reputation of Amway’s products and services worldwide and distinguish them from those of competitors. Amway makes commercially reasonable efforts to protect the Marks from improper use, including through the Rules of Conduct, accreditation of Approved Providers, and a corporate identity program that requires the correct and consistent use of the Marks, both in appearance and substance.

8.1. Use of Marks and Copyrighted Works: An IBO may Use Amway’s Marks and Copyrighted Works only with Amway’s prior written permission, which may be expressed through general publication (to all IBOs) or through a specific writing to one or more IBOs. Without limitation, Amway may require conformity with specifications, may require that materials that Use Amway’s Marks and/or Copyrighted Works be sourced from Amway or an Amway-approved supplier, and may otherwise condition Use of its Marks and Copyrighted Works. Any permission granted by Amway shall constitute a limited, non-exclusive, nontransferable and revocable license to Use such Marks and Copyrighted Works solely in connection with the Amway business in the Region. Subject to conditions and specifications published or specifically provided in writing from time to time, the Marks and Copyrighted Works may be Used only on: (a) exterior and interior office signs; (b) all forms of vehicle signs; (c) telephone listings; (d) promotional literature; (e) stationary; (f) premiums; and (g) business cards. Other proposed Uses will be considered upon request. Without limitation, Amway will not authorize an IBO to use the Marks on imprinted checks.

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9. Complying With the IBO Contract (Remedies for Breach)

Complying with the IBO Contract is essential for preserving a strong and viable business for IBOs and Amway. IBOs and Amway each have rights and responsibilities in case of a breach of the IBO Contract.

9.1. Amway’s Rights and Responsibilities: When Amway detects a potential breach of the IBO Contract, it will first investigate as appropriate. Before taking enforcement action, Amway shall attempt to contact the IBO in an effort to resolve the issue. If the communication does not resolve the issue, Amway may take any enforce­ment action authorized by the IBO Contract including, but not limited to, one or any combination of the following:

9.1.1. A written warning to an IBO, and/or upline or downline IBOs in the Line of Sponsorship.

9.1.2. Retraining an IBO, and/or upline or downline IBOs in the Line of Sponsorship.

9.1.3. Suspending some or all of the rights of an IBO for a specified period of time, or until certain conditions have been satisfied.

9.1.4. Withdrawing or denying an award, trip, pin recognition or other incentive.

9.1.5. Withholding any monthly or annual bonus or incentive payments.

9.1.6. Compensatory remedies, as applicable.

9.1.7. Transferring an IBO or a group of IBOs.

9.1.8. Terminating an IBO Contract.

If an IBO elects to challenge any action taken by Amway under this Rule, the IBO shall submit the issue to the Dispute Resolution Procedures described in Rule 11.

9.2. IBO Rights and Responsibilities: If an IBO believes that another IBO has breached the IBO Contract, the IBO first should contact the IBO in question in an effort to resolve the issue. If an IBO believes that Amway has breached the IBO Contract, the IBO first shall contact Amway in an effort to resolve the issue. If discussion with either an IBO or Amway does not resolve the issue, the IBO may file a written complaint with Amway. The complaint should explain the issue in as much detail as possible, and include all supporting documents. Amway will investigate as appropriate, and take enforcement or corrective action under the IBO Contract, if necessary. If any issue remains unresolved, it shall be submitted to the Dispute Resolution Procedures described in Rule 11.

9.2.1. An IBO who elects to challenge the validity of a Rule or other term of the IBO Contract shall first contact Amway in an effort to resolve the issue. If the IBO is not satisfied with Amway’s response, the dispute shall be resolved in Arbitration under Rule 11.5.

9.3. Duty To Cooperate: All IBOs are required to respond to inquiries and otherwise cooperate in a timely fashion with any investigation conducted by Amway. Failure to respond to inquiries or to otherwise cooperate in a timely fashion is a breach of the IBO Contract and may result in Amway taking action against the IB.

9.4. Non-Waiver. The failure of Amway or any IBO to enforce any breach of any provision of the IBO Contract shall not constitute a waiver of any prior, concurrent, or subsequent breach of the same or any other provision of the IBO Contract.

 

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10. Modification of the IBO Contract

Amway may modify the IBO Contract in accordance with the following procedures.

10.1. Any changes to Rule 11 require mutual agreement of the IBOAI and Amway. For all other Rules, final decision making authority on amendments to the IBO Contract rests with Amway. Amway will, prior to final action, submit to the IBOAI Board for discussion, evaluation, and recommendation all changes in the IBO Contract that materially affect IBOs.

10.2. Amway will notify IBOs of the proposed changes subject to Rule 10.1 by making them available to review by logging on to www.amway.com and solicit comments from IBOs concerning the proposed changes. Amway and the IBOAI Board will consider any comments submitted during the 30 days following such notice. The proposed changes shall become effective 15 days after the end of the comment period, unless Amway makes further modifications, after consultation with the IBOAI Board (and agreement in the case of Rule 11). Amway shall provide notice of any such further modifications on www.amway.com 15 days prior to the effective date of such further modifications. These time periods may be shortened when it is necessary for a particular change to comply with a new law or other government mandate, to protect IBOs from serious financial harm, or to protect the integrity of the Plan. Rule changes have prospective effect only.

10.3. Prior to the effective date of any proposed Rule change, any IBO who is unwilling to accept a Rule change can, if he or she wishes, provide notice of his/her intent to resign from the Amway business on the effective date of the Rule change. Unless the proposed Rule change is withdrawn, the IBO’s resignation will become effective, and Amway will refund a pro rata share of the IBO’s registration or renewal fee for that year. The resigning IBO may sell his or her IB in accordance with Rule 6.8. In addition, the resigning IBO can return any unused, marketable products pursuant to Rule 4.10.

 

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11. Dispute Resolution Procedures

Disputes arising out of or relating to an IB, the Plan or the IBO Contract, as well as disputes involving Business Support Materials (“Disputes”) shall be resolved in accordance with this Rule. The dispute resolution procedures in this Rule apply to Disputes involving the following parties: (1) an IBO, a former IBO, or any such IBO’s officers, directors, agents, or employees; (2) Amway, Amway Canada Corporation, and any parent, subsidiary, affiliate, predecessor, or successor thereof, or any of their officers, directors, agents, or employees; and (3) an Approved Provider or its officers, directors, agents, or employees (the “Party” or “Parties”). Rule 11 is reciprocal and applies to all of the Parties.

The only exception is when the claim made by an IBO or Amway is for a debt on account for product or services offered through or by Amway to or on behalf of the IBO, and the only Parties to that claim are Amway and the IBO, and the total value of the claim is less than $10,000.00. In such cases the IBO or Amway may elect to pursue the claim in any court of competent jurisdiction including small claims court. In all other cases the Parties will resolve the dispute as provided for under these Rules, up to and including binding arbitration if necessary.

11.1. Amendment Only With IBOAI Consent: This Rule 11 and its subparts shall be amended only by mutual agreement between Amway and the IBOAI Board, and such amendments shall not be retroactively applied to any dispute known to Amway or the IBOAI Board at the time of amendment.

11.2. Temporary or Preliminary Injunctive Relief: Nothing in these Rules prevents Amway, an IBO, Approved Provider or any other one of the Parties from seeking temporary or preliminary injunctive or other relief from a court of competent jurisdiction, notwithstanding the Parties’ obligation to participate in Conciliation or Arbitration under Rule 11.

11.3. Confidentiality: The Parties, when involved in the dispute resolution process in any manner, will not disclose to any other person not directly involved in the dispute resolution process: (a) the substance of, or basis for, the Dispute; (b) the content of any testimony or other information obtained through the dispute resolution process; or (c) the resolution (whether voluntary or not) of any matter that is subject to the dispute resolution process. However, nothing in these Rules shall preclude any one of the Parties from, in good faith, investigating a claim or defense, including interviewing witnesses and otherwise engaging in discovery.

11.4. Conciliation: The Conciliation procedures are designed to resolve disputes efficiently in a non-confrontational setting, through education, mediation, and conciliation. The Conciliation requirement is reciprocal and applies to all Parties. The Party first seeking resolution shall commence Conciliation by providing a Request for Conciliation form to the other affected Parties and, in any Dispute, the Amway Business Conduct and Rules Department. In cases where the IBOAI will be involved in the Conciliation, a copy of the Request for Conciliation form will also be given to the IBOAI and the IBOAI Hearing Panel Chairperson.

11.4.1. Mediation: The first step in Conciliation is non-binding mediation. The IBOAI Board provides experienced IBOs who are available to serve as mediators (“IBOAI Mediator”).

11.4.1.1. In cases where an Approved Provider is not a Party, an IBOAI Mediator will serve and conduct an informal conciliation with the Parties, unless one or more IBOs involved in the dispute objects to an IBOAI Mediator. In that case, the mediation will take place with an independent neutral mediator acceptable to all Parties. Amway can provide a list of possible mediators, but the Parties are not obligated to agree to any mediator on that list.

11.4.1.2. In cases where an Approved Provider is a Party, the dispute will be mediated by an independent neutral mediator acceptable to all Parties, unless all of the Parties involved in the dispute stipulate to informal conciliation with an IBOAI Mediator. Amway can provide a list of possible mediators, but the Parties are not obligated to agree to any mediator on that list.

11.4.1.3. In all instances where the Parties cannot agree on a mediator within ten business days of receiving the Request for Conciliation form, they authorize Amway to request the American Arbitration Association (AAA) to select a mediator.

11.4.1.4. Amway will pay the reasonable fees of the mediator for up to one full day, except that if an Approved Provider is a Party, the Approved Provider is responsible for its pro rata share of the mediator’s fee.

11.4.1.5. The mediation shall take place within 30 days of selection of a mediator. The Parties may agree to extend this date by 30 days. In addition, on a request of a Party, the mediator may extend the deadline for not more than an additional 30 days. All Parties must appear in person or, if authorized by the mediator, by telephone.

11.4.1.6. The mediation proceeding is confidential and not open to the public; but any participant may, if he or she chooses, be accompanied by an attorney or another personal representative, such as an upline IBO or a friend or family member, as long as the representative agrees to respect the confidentiality of the process.

11.4.1.7. All Parties who receive notice of the mediation are required to participate. The Parties are strongly encouraged to attend the mediation in person, but are not required to do so. Should the Parties choose to attend in person, they are responsible for their own expenses. Failure by Amway or any disputing IBO to participate in good faith is a breach of the IBO Contract, and the breaching Party shall reimburse the other Parties for any expense directly caused by the breach, as determined by the mediator.

11.4.1.8. The mediator shall within two weeks following the mediation provide the Parties with a written statement summarizing any agreement between the Parties resolving their disputes and, for any dispute not settled, declaring that the Parties are at impasse. The mediator may, at his/her discretion, recommend a resolution for any dispute not settled in the mediation. Within two weeks of receiving this summary, each Party shall state in writing whether or not it agrees with any recommendation by the mediator, in whole or in part.

11.4.2. Hearing Panel Procedures: If any part of the dispute is not resolved by mediation under Rule 11.4.1, any IBO who is a Party to the remaining dispute may request a Hearing Panel; except that any dispute involving an Approved Provider, or any challenge to the impartiality of the Hearing Panel itself, shall go directly to arbitration without a Hearing Panel.

11.4.2.1. A Request for Hearing Panel Form must be filed with the Business Conduct and Rules Department or the Hearing Panel Chairperson within four weeks after the mediator’s written statement pursuant to Rule 11.4.1.8. Upon receipt of a request, the matter is scheduled for the next Hearing Panel session, which shall be not more than 60 days following the request. All Parties who receive notice of the hearing are required to participate, unless excused by the Hearing Panel Chairperson or his/her designee. The Parties are strongly encouraged to attend the hearing in person, but are not required to do so. Should the Parties choose to attend in person, they are responsible for their own expenses.

11.4.2.2. The IBOAI Board Executive Committee selects the Hearing Panel Chairperson, three additional Panel members, and alternates who may serve on the Hearing Panel. The Hearing Panel Chairperson will confirm that no Panel member presents a conflict of interest with respect to the matters over which the Panel presides. Once selected, the Panel members are barred from discussing the dispute with anyone before the date of the hearing. Each Panel member and the Parties involved receive a copy of the conciliation file.

11.4.2.3. The Parties shall exchange all documents on which they intend to rely during the hearing at least 10 days in advance of the hearing. In addition, Parties must submit to the Panel all documents on which they intend to rely in proving or defending their claim at least 10 days in advance of the hearing. If a Party does not submit such documents in a timely fashion, the Hearing Panel Chairperson may refuse to allow their introduction.

11.4.2.4. The Chairperson of the Panel is empowered to control the conduct of the hearing, and to have authorized persons administer an oath to any witness. The rules of evidence do not apply.

11.4.2.5. When a voluntary resolution does not occur, the Hearing Panel, within 30 days following completion of the hearing, will issue to the Parties and Amway a written statement of facts and a non-binding recommendation for resolution, including, if appropriate, the imposition of certain sanctions. Within two weeks of receiving that recommendation each Party shall inform the Panel and the other Parties in writing whether that Party: (a) accepts the recommended resolution in its entirety; (b) accepts some specific portions of the recommended resolution and rejects the others; or (c) rejects the recommended resolution in its entirety. Any Party may demand arbitration of any unresolved Dispute under Rule 11.5.

11.5. Arbitration: The Parties shall submit any Disputes that were not resolved through the process described in Rule 11.4, through binding arbitration in accordance with this Rule 11.5.

11.5.1. The arbitration award shall be final and binding and judgment thereon may be entered by any court of competent jurisdiction. The Parties acknowledge that the IBO Contract and each of its parts evidence a transaction involving interstate commerce, and the Federal Arbitration Act shall apply in all cases and govern the interpretation and enforcement of the arbitration rules and arbitration proceedings.

11.5.2. Class Action Waiver: The Parties mutually waive any right to assert any Dispute as a class, collective or representative action, or to participate in any Dispute asserted as such.

11.5.3. No Class Arbitration: The Parties agree that, if the Class Action Waiver at Rule 11.5.2 is found to be void or unenforceable for any reason, any motion to have the Dispute certified as a class action, and any ensuing class action should it be certified, must be heard and disposed of only by a court, and not by an arbitrator; class action claims cannot be submitted to arbitration under these Rules under any circumstances.

11.5.4. Commencement of Arbitration: The complaining Party may file a demand for arbitration with either the American Arbitration Association (“AAA”) or JAMS. The arbitration will be commenced and conducted in accordance with the AAA or JAMS (whichever is chosen) fee schedules and commercial arbitration rules and this Rule 11.5. If there is any conflict between the JAMS or AAA arbitration rules and this Rule11.5, Rule 11.5 shall apply.

11.5.4.1. If an IBO demands arbitration against Amway or an Approved Provider and the IBO’s claim is less than $10,000, Amway or the Approved Provider, whichever is the applicable respondent, shall pay for all applicable fees of AAA or JAMS for initiating and administering the arbitration and the reasonable fees for the arbitrator for up to two days.

11.5.5. Limitations: Demand for arbitration shall be made within two years after the claim arose, but in no event after the date when the initiation of legal proceedings would have been barred by the applicable statute of limitations. The two-year period or any shorter statutory limitations period shall be tolled during the Conciliation process described in Rule 11.4, provided that Conciliation shall not revive any limitations period that has expired before the time a Party invokes Rule 11.4.

11.5.6. Single Arbitrator: Unless all Parties to the arbitration agree otherwise, a single arbitrator shall be chosen, and Arbitrator candidates must have at least five years’ experience as a state or federal judge or as a full-time ADR professional, including substantial experience in commercial arbitration.

11.5.7. Arbitrability Issues to Be Decided By Arbitrator: The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable.

11.5.8. Award: The arbitrator’s award shall be limited to deciding the rights and responsibilities of the Parties in the specific dispute being arbitrated. The arbitrator’s award shall have no collateral estoppel effect in any other proceeding. The arbitrator shall not provide a statement of reasons for his or her award unless requested to do so by all Parties.

11.5.9. Consolidation: Similar claims involving multiple Parties may be consolidated before a single arbitrator if all Parties agree. The arbitrator will decide any disputed consolidation issues.

11.5.10. Discovery: Notwithstanding any discovery provisions in the JAMS or AAA commercial arbitration rules incorporated in paragraph 11.5.4 above, no discovery shall occur in an arbitration under these Rules unless and until specifically authorized by the arbitrator. The arbitrator shall decide the amount, scope and timing of discovery as appropriate in each case. In addition, before requiring any discovery, the Parties involved in the arbitration shall agree on an appropriate confidentiality order consistent with the IBO Contract. If they fail to agree, the arbitrator shall impose appropriate confidentiality requirements on the Parties and witnesses.

 

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