Every independent Associate of The BookWise Company must become intimately familiar with these Policies and Procedures and agree to comply with all policies set forth herein. Submission of the Associate application and acceptance of any commissions constitutes acknowledgement on the part of the Distributor that he/she has read and agrees to abide by the Policies and Procedures. The BookWise Company has developed these guidelines to assist in the success of the Company and its independent associates. These Policies and Procedures will help provide the following benefits.

• Provide an equal and level field of opportunity to all BookWise Independent Associates
• Define the contractual relationship between BookWise and its Associates
• Inform and provide guidelines to Independent Associates regarding compliance issues and regulatory requirements.
• Protect the rights of all BookWise Associates by providing a framework within which each Associate may work in an ethical, effective and secure manner.

SECTION 1 - CORPORATE MISSION STATEMENT

The Mission of BookWise & Company is to increase literacy, reading and access to great books through neighbor-to-neighbor book selling. We champion the spirit of the corner bookstore and embrace the values of the independent bookseller with a passion for great literature and the personal connection with friends who love to read.

Our network of sales associates will buy discounted books for their personal libraries and will help others to the same. They can build an independent, on-line bookstore and make it a profitable home business or, they can simply choose to read more. You could say that our members and partners can choose to build wealth, or simply acquire a wealth of knowledge.

SECTION 2 - INTRODUCTION

2.1 - Policies and Compensation Plan Incorporated into Associate Agreement

These Policies and Procedures, in their present form and as amended at the sole discretion of BookWise (hereafter 'BookWise' or the 'Company'), are incorporated into, and form an integral part of, the BookWise Associate Agreement. Throughout these Policies, when the term 'Agreement' is used, it collectively refers to the BookWise Associate Application and Agreement, these Policies and Procedures, the BookWise Marketing and Compensation Plan, and the BookWise Business Entity Registration Form (if applicable). These documents are incorporated by reference into the BookWise Associate Agreement (all in their current form and as amended by BookWise). It is the responsibility of each Associate 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.

2.2 - Purpose of Policies BookWise is a direct sales company that markets books and book club memberships through Independent Associates. It is important to understand that your success and the success of your fellow Associates is dependent upon the integrity of the men and women who market our catalog of titles and services. To clearly define the relationship that exists between Associates and BookWise, and to explicitly set a standard for acceptable business conduct, BookWise has established the Agreement. BookWise Associates are required to comply with all of the Terms and Conditions set forth in the Agreement which BookWise may amend at its sole discretion from time to time, as well as all federal, state, and local laws governing their BookWise business and their conduct. Because you may be unfamiliar with many of these standards of practice, it is very important that you read and abide by the Agreement. Please review the information in this manual carefully. It explains and governs the relationship between you, as an independent contractor and the Company. If you have any questions regarding any policy or rule, do not hesitate to seek an answer from your Sponsor or from BookWise.

2.3 - Changes to the Agreement Because federal, state, and local laws, as well as the business environment, periodically change, BookWise reserves the right to amend the Agreement and its prices in its sole and absolute discretion. By signing the Associate Agreement, an Associate agrees to abide by all amendments or modifications that BookWise elects to make. Amendments shall be effective upon notice to all Associates that the Agreement has been modified. Notification of amendments shall be published in official BookWise materials. The Company shall provide or make available to all Associates a complete copy of the amended provisions by one or more of the following methods: (1) posting on the Company's official website; (2) electronic mail (e-mail); (3) fax-on-demand; (4) voice mail system broadcast; (5) inclusion in Company periodicals; (6) inclusion in product orders or bonus checks; or (7) special mailings. The continuation of an Associate's BookWise business or an Associate's acceptance of bonuses or commissions constitutes acceptance of any and all amendments.

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

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

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

SECTION 3 - BECOMING AN ASSOCIATE

3.1 - Requirements to Become an Associate To become a BookWise Associate, each applicant must: a) Be of the age of majority in his or her state of residence; b) Reside in the United States or U.S. Territories; c) Have a valid Social Security or Federal Tax ID number; d) Purchase a BookWise Starter Kit (not applicable in North Dakota); and e) Submit a properly completed Associate Application and Agreement to BookWise. (If the Application and Agreement is not submitted online, the applicant must submit original signed documents only; no copies will be accepted.) The Company reserves the right to reject any applications for a new Associate or applications for renewal.

3.2 - New Associate Enrollment As an online bookseller, BookWise accepts new Associate Applications and Agreement through the Internet only. A prospective Associate may enroll either at the replicated BookWise website of his or her Sponsor or at the official BookWise.com website.

3.3 - Associate Benefits Once an Associate Application and Agreement has been accepted by BookWise, the benefits of the Marketing and Compensation Plan and the Associate Agreement are available to the new Associate. These benefits include the right to: a) Purchase books from BookWise at the Associate price; b) Sell books from the BookWise catalog and profit from these sales; c) Participate in the BookWise Marketing and Compensation Plan (receive bonuses and commissions, if eligible); d) Sponsor other individuals as BookWise Members and/or Associates and thereby, build a marketing organization and progress through the BookWise Marketing & Compensation Plan; e) Receive periodic BookWise literature and other BookWise communications; f) Participate in BookWise-sponsored support, service, training, motivational and recognition functions, upon payment of appropriate charges, if applicable; and g) Participate in promotional and incentive contests and programs sponsored by BookWise for its Associates.

3.4 - Renewal of Your BookWise Business The term of the Associate Agreement is one year from the date of its acceptance by BookWise. Associates must renew their Associate Agreement each year by paying an annual renewal fee of $30.00 on or before the anniversary date of their Associate Agreement. If the renewal fee is not paid within 30 days after the expiration of the current term of the Associate Agreement, the Associate Agreement will be canceled. Associates may elect to utilize the Automatic Renewal Program ('ARP'). Under the ARP, the renewal fee may be: a) deducted from the Associate's bonus check for the anniversary month of the Associate Agreement; or b) charged to the Associate' credit card or checking account.

SECTION 4 - OPERATING A BookWise BUSINESS

4.1 - Adherence to the BookWise Marketing and Compensation Plan Associates must adhere to the terms of the BookWise Marketing and Compensation Plan as set forth in official BookWise literature. Associates shall not offer the BookWise opportunity through, or in combination with, any other system, program, or method of marketing other than that specifically set forth in official BookWise literature. Associates shall not require or encourage other current or prospective BookWise Book Club Members or Associates to participate in BookWise in any manner that varies from the program as set forth in official BookWise literature. Associates shall not require or encourage other current or prospective BookWise Book Club Members or Associates to execute any agreement or contract other than official BookWise agreements and contracts in order to become a BookWise Associate. Similarly, Associates shall not require or encourage other current or prospective BookWise Book Club Members or Associates to make any purchase from, or payment to, any individual or other entity to participate in the BookWise Marketing and Compensation Plan other than those purchases or payments identified as recommended or required in official BookWise literature.

4.2 - Advertising 4.2.1 - General All Associates shall safeguard and promote the good reputation of BookWise and its products and services. The marketing and promotion of BookWise, the BookWise opportunity, the Marketing and Compensation Plan, and titles available through BookWise shall be consistent with the public interest, and must avoid all discourteous, deceptive, misleading, unethical or immoral conduct or practices. To promote both the products and services, and the tremendous opportunity BookWise offers, Associates should use the sales aids and support materials produced by BookWise and authorized BookWise affiliates. The rationale behind this requirement is simple. BookWise has carefully designed its Book Club Membership program, Marketing and Compensation Plan, and promotional materials to ensure that each aspect of BookWise is fair, truthful, substantiated, and complies with the vast and complex legal requirements of federal and state laws. If BookWise Associates were allowed to develop their own sales aids and promotional materials (which includes Internet advertising), notwithstanding their integrity and good intentions, the likelihood that they would unintentionally violate any number of statutes or regulations affecting a BookWise business is almost certain. These violations, although they may be relatively few in number, would jeopardize the BookWise opportunity for all Associates. Accordingly, Associates must submit all written sales aids, promotional materials, advertisements, and other literature (including proposed Internet advertising) to the Company marketing compliance department for approval. Unless the Associate receives specific written approval to use the material, the request shall be deemed denied.

4.2.2 - Associate Websites If an Associate desires to utilize an Internet web page to promote his or her business, he or she may do so through the Company's replicated website program only. This program permits Associates to advertise on the Internet and to choose from among a variety of home page designs that can be personalized with the Associate's message and the Associate's contact information. These websites seamlessly link directly to the official BookWise website giving the Associate a professional and Company-approved presence on the Internet. No Associate may independently design a website that uses the names, logos, or product descriptions of BookWise or otherwise promotes (directly or indirectly) BookWise products or the BookWise opportunity. Nor may an Associate use 'blind' ads on the Internet that make product or income claims which are ultimately associated with BookWise products, the BookWise opportunity, or the BookWise Marketing and Compensation Plan. The use of any other Internet website or web page (including without limitation auction sites such as eBay) to in any way promote the sale of BookWise books, the BookWise opportunity, or the Marketing and Compensation Plan is a breach of the Agreement and may result in any of the disciplinary sanctions set forth in Section 9.1.

4.2.3 - Domain Names and Email Addresses Associates may not use or attempt to register any of BookWise's trade names, trademarks, service names, service marks, product names, the Company's name, or any derivative thereof, for any Internet domain name. Nor may Associates incorporate or attempt to incorporate any of the Company's trade names, trademarks, service names, service marks, product names, the Company's name, or any derivative thereof, into any electronic mail address.

4.2.4 - Trademarks and Copyrights BookWise will not allow the use of its trade names, trademarks, designs, or symbols by any person, including a BookWise Associates, without its prior, written permission. Associates may not produce for sale or distribution any recorded Company events and speeches without written permission from BookWise nor may Associates reproduce for sale or for personal use any recording of Company-produced audio or video tape presentations. The name of BookWise and other names as may be adopted by BookWise are proprietary trade names, trademarks and service marks of BookWise. As such, these marks are of great value to BookWise and are supplied to Associates for their use only in an expressly authorized manner. Use of BookWise name on any item not produced by the Company is prohibited except as follows: Associate's Name Independent BookWise Associate All Associates may list themselves as an 'Independent BookWise Associate' in the white or yellow pages of the telephone directory under their own name. No Associate may place telephone directory display ads using BookWise's name or logo. Associates may not answer the telephone by saying 'BookWise', 'BookWise Incorporated', or in any other manner that would lead the caller to believe that he or she has reached corporate offices of BookWise.

4.2.5 - Media and Media Inquiries Associates must not attempt to respond to media inquiries regarding BookWise, its products or services, or their independent BookWise business. All inquiries by any type of media must be immediately referred to BookWise's Public Affairs Department. This policy is designed to assure that accurate and consistent information is provided to the public as well as a proper public image.

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

4.3 - Bonus Buying Prohibited Bonus buying is strictly and absolutely prohibited. 'Bonus buying' includes: (a) the enrollment of individuals or entities without the knowledge of and/or execution of an Independent Associate Application and Agreement by such individuals or entities; (b) the fraudulent enrollment of an individual or entity as an Associate or BookWise Book Club Member; (c) the enrollment or attempted enrollment of non-existent individuals or entities as Associates or BookWise Book Club Members ('phantoms'); (d) the use of a credit card by or on behalf of an Associate or BookWise Book Club Member when the Associate or Member is not the account holder of such credit card; (e) Purchasing BookWise merchandise or services on behalf of another Associate or Book Club Member, or under another Associate's or Book Club Member's I.D. number, to qualify for commissions or bonuses.

4.4 - Business Entities A corporation, limited liability company, partnership or trust (collectively referred to in this section as a 'Business Entity') may apply to be a BookWise Associate by submitting a properly completed Business Entity Registration Form within 30 days of enrollment. (If not received within the 30-day period, the Associate Agreement shall automatically terminate.) A BookWise business may change its status under the same sponsor from an individual to a partnership, corporation or trust, or from one type of entity to another. There is a $25.00 fee for each change requested, which must be included with the written request and the completed Associate Application and Agreement. The Business Entity Registration Form must be signed by all of the shareholders, partners or trustees. Members of the entity are jointly and severally liable for any indebtedness or other obligation to BookWise.

4.5 - Changes to a BookWise Business 4.5.1 - General Each Associate must immediately notify BookWise of all changes to the information contained on his or her Associate Application and Agreement. Associates may modify their existing Associate Agreement (i.e., change Social Security number to Federal I.D. number, or change the form of ownership from an individual proprietorship to a business entity owned by the Associate) by submitting a written request, a properly executed Associate Application and Agreement, and appropriate supporting documentation. Changes shall be processed only once per year. All changes must be submitted by November 30 to become effective on January 1 of the following year.

4.5.2 - Addition of Co-Applicants When adding a co-applicant (either an individual or a business entity) to an existing BookWise business, the Company requires both a written request as well as a properly completed Associate Application and Agreement containing the applicant and co-applicant's Social Security Numbers and signatures. To prevent the circumvention of Section 4.23 (regarding transfers and assignments of BookWise business), the original applicant must remain as a party to the original Associate Application and Agreement. If the original Associate wants to terminate his or her relationship with the Company, he or she must transfer or assign his or her business in accordance with Section 4.23. If this process is not followed, the business shall be canceled upon the withdrawal of the original Associate. All bonus and commission checks will be sent to the address of record of the original Associate. Please note that the modifications permitted within the scope of this paragraph do not include a change of sponsorship. Changes of sponsorship are addressed in Section 4.5.3, below. There is a $75.00 fee for each change requested, which must be included with the written request and the completed Associate Application and Agreement. BookWise may, at its discretion, require notarized documents before implementing any changes to a BookWise business. Please allow thirty (30) days after the receipt of the request by BookWise for processing.

4.5.3 - Change of Sponsor To protect the integrity of all marketing organizations and safeguard the hard work of all Associates, BookWise strongly discourages changes in sponsorship and, in general, does not grant changes in sponsorship. Maintaining the integrity of sponsorship is critical for the success of every Associate and marketing organization. Accordingly, the transfer of a BookWise business from one sponsor to another is rarely permitted and must be approved in writing by BookWise. Such approval may be granted or denied in BookWise's sole and absolute discretion. Requests for change of sponsorship must be submitted in writing to the Associate Services Department, and must include the reason for the transfer. Transfers will only be considered in the following two (2) circumstances: a) In cases involving fraudulent inducement or unethical sponsoring, an Associate may request that he or she be transferred to another organization with his or her entire marketing organization intact. All requests for transfer alleging fraudulent enrollment practices shall be evaluated on a case by case basis. b) The Associate seeking to transfer submits a properly completed and fully executed Sponsorship Transfer Form which includes the written approval of his or her immediate nine (9) upline Associates. Photocopied or facsimile signatures are not acceptable. All Associate signatures must be notarized. The Associate who requests the transfer must submit a fee of $50.00 for administrative charges and data processing. If the transferring Associate also wants to move any of the Associates in his or her marketing organization, each downline Associate must also obtain a properly completed Sponsorship Transfer Form and return it to BookWise with the $75.00 change fee (i.e., the transferring Associate and each Associate in his or her marketing organization multiplied by $75.00 is the cost to move a BookWise business.) Downline Associates will not be moved with the transferring Associate unless all of the requirements of this paragraph are met. Transferring Associates must allow thirty (30) days after the receipt of the Sponsorship Transfer Forms by BookWise for processing and verifying change requests.

4.5.4 - Cancellation and Re-application An Associate may legitimately change organizations by voluntarily canceling his or her BookWise business and remaining inactive (i.e., no purchases of books from BookWise for resale, no sales of books from BookWise, no sponsoring, no attendance at any BookWise functions, participation in any other form of Associate activity, or operation of any other BookWise business) for six (6) full calendar months. Following the six month period of inactivity, the former Associate may reapply under a new sponsor. BookWise will consider waiving the six month waiting period under exceptional circumstances. Such requests for waiver must be submitted to the BookWise Associate Services Department in writing.

4.6 - Unauthorized Claims and Actions 4.6.1 - Indemnification An Associate is fully responsible for all of his or her verbal and written statements made regarding BookWise, its products and services, and the Marketing and Compensation Plan which are not expressly contained in official BookWise materials. Associates agree to indemnify BookWise and BookWise's directors, officers, employees, and agents, and hold them harmless from any and all liability including judgments, civil penalties, refunds, attorney fees, court costs, or lost business incurred by BookWise as a result of the Associate's unauthorized representations or actions. This provision shall survive the termination of the Associate Agreement.

4.6.2 - Income Claims In their enthusiasm to enroll prospective Associates, some Associates are occasionally tempted to make income claims or earnings representations to demonstrate the inherent power of network marketing. This is counterproductive because new Associates may become disappointed very quickly if their results are not as extensive or as rapid as the results others have achieved. At BookWise, we firmly believe that the BookWise income potential is great enough to be highly attractive, without reporting the earnings of others. 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 Associates 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 BookWise as well as the Associate making the claim unless appropriate disclosures required by law are also made contemporaneously with the income claim or earnings representation. Because BookWise Associates do not have the data necessary to comply with the legal requirements for making income claims, an Associate, when presenting or discussing the BookWise opportunity or Marketing and Compensation Plan to a prospective Associate, may not make income projections, income claims, or disclose his or her BookWise income (including the showing of checks, copies of checks, bank statements, or tax records). Hypothetical income examples that are used to explain the operation of the Marketing and Compensation Plan, and which are based solely on mathematical projections, may be made to prospective Associates, so long as the Associate who uses such hypothetical examples makes clear to the prospective Associates that such earnings are hypothetical and the Associate provides the prospect with a copy of the most current income disclosure chart prepared by the Company. Until such time as BookWise publishes an official income disclosure statement, Associates may not use hypothetical income examples in the promotion of their BookWise businesses.

4.7 - Conflicts of Interest 4.7.1 - Nonsolicitation BookWise Associates are free to participate in other multilevel or network marketing business ventures or marketing opportunities (collectively 'network marketing'). However, during the term of this Agreement, Associates may not recruit other BookWise Associates or BookWise Book Club Members for any other network marketing business. Following the cancellation of this Agreement, and for a period of six months thereafter, a former Associate may not recruit any BookWise Associate or Book Club Member for another network marketing business if: 1) that Associate or BookWise Book Club Member was in the former Associate's downline marketing organization; or 2) the former Associate met, developed a relationship with, or gained knowledge of the Associate or Book Club Member by virtue of their mutual participation in BookWise. The term 'recruit' means actual or attempted solicitation, enrollment, encouragement, or effort to influence in any other way, either directly or through a third party, another BookWise Associate or BookWise Book Club Member to enroll or participate in another multilevel marketing, network marketing or direct sales opportunity. This conduct constitutes recruiting even if the Associate's actions are in response to an inquiry made by another Associate or Book Club Member. Associates must not sell, or attempt to sell, any competing non-BookWise products or services to BookWise Book Club Members or Associates. Any product or services in the same generic category as a BookWise product or service is deemed to be competing (e.g., any book or book club membership program is a competing product.). Associates may not display BookWise products or services with any other products or services in a fashion that might in any way confuse or mislead a prospective customer or Associate into believing there is a relationship between the BookWise and non-BookWise products or services. Associates may not offer the BookWise opportunity, products or services to prospective or existing BookWise Book Club Members or Associates in conjunction with any non-BookWise program, opportunity, product or service. Associates may not offer any non-BookWise opportunity, products or services at any BookWise-related meeting, seminar or convention, or immediately following such event.

4.7.2 - Downline Activity (Genealogy) Reports Downline Activity Reports are available for Associate access and viewing at BookWise's official website. Associate access to their Downline Activity Reports is password protected. All Downline Activity Reports and the information contained therein are confidential and constitute proprietary information and business trade secrets belonging to BookWise. Downline Activity Reports are provided to Associates in strictest confidence and are made available to Associates for the sole purpose of assisting Associates in working with their respective Downline Organizations in the development of their BookWise business. Associates should use their Downline Activity Reports to assist, motivate, and train their downline Associates. The Associate and BookWise agree that, but for this agreement of confidentiality and nondisclosure, BookWise would not provide Downline Activity Reports to the Associate. An Associate shall not, on his or her own behalf, or on behalf of any other person, partnership, association, corporation or other entity: a) Directly or indirectly disclose any information contained in any Downline Activity Report to any individual, partnership, association, corporation, or other entity; b) Directly or indirectly disclose, to any individual, partnership, association, corporation, or other entity, the password or other access code to his or her Downline Activity Report; c) Use the information contained in any Downline Activity Report to compete with BookWise or for any purpose other than promoting or supporting his or her BookWise business; or d) Recruit or solicit any Associate or BookWise Book Club Member listed on any Downline Activity Report, or in any manner attempt to influence or induce any Associate or Book Club Member to alter their business relationship with BookWise. Upon demand by the Company, any current or former Associate will return any hard-copy original and all copies of Downline Activity Reports to the Company.

4.8 - Targeting Other Direct Sellers BookWise does not condone Associates specifically or consciously targeting the sales force of another direct sales company to become BookWise Associates. Nor does BookWise condone Associates soliciting or enticing members of the sales force of another direct sales company to violate the terms of their contract with such other company. Should Associates engage in such activity, they bear the risk of being sued by the other direct sales company. If any lawsuit, arbitration or mediation is brought against an Associate alleging that he or she engaged in inappropriate recruiting activity of its sales force or customers, BookWise will not pay any of Associate's defense costs or legal fees, nor will BookWise indemnify the Associate for any judgment, award, or settlement.

4.9 - Cross-Sponsoring Actual or attempted cross sponsoring is strictly prohibited. 'Cross sponsoring' is defined as the enrollment of an individual who or entity that already has a current Customer or Associate Agreement on file with BookWise, or who has had such an agreement within the preceding six calendar months, within a different line of sponsorship. The use of a spouse's or relative's name, trade names, DBAs, assumed names, corporations, partnerships, trusts, federal ID numbers, or fictitious ID numbers to circumvent this policy is prohibited. Associates shall not demean, discredit or defame other BookWise Associates in an attempt to entice another Associate to become part of the first Associate's marketing organization. This policy shall not prohibit the transfer of a BookWise business in accordance with Section 4.23. If Cross Sponsoring is discovered, it must be brought to the Company's attention immediately. BookWise may take disciplinary action against the Associate that changed organizations and/or those Associates who encouraged or participated in the Cross Sponsoring. BookWise may also move all or part of the offending Associate's downline, including those enrolled after an Associate changed organizations in violation of this policy, to his or her original downline organization if the Company deems it equitable and feasible to do so. However, BookWise is under no obligation to move the Cross Sponsored Associate's downline organization, and the ultimate disposition of the organization remains within the sole discretion of BookWise. Associates waive all claims and causes of action against BookWise arising from or relating to the disposition of the Cross Sponsored Associate's downline organization.

4.10 - Errors or Questions If an Associate has questions about or believes any errors have been made regarding commissions, bonuses, Downline Activity Reports, or charges, the Associate must notify BookWise in writing within 60 days of the date of the purported error or incident in question. BookWise will not be responsible for any errors, omissions or problems not reported to the Company within 60 days.

4.11 - Excess Inventory Purchases Prohibited The BookWise Compensation Plan is not designed to reward excess inventory purchases. With the exception of building a personal library, Associates are discouraged from carrying an inventory of books or sales aids. Because of the varying literary tastes of most people, an Associate who purchases a quantity of books from BookWise may have a difficult time reselling the books. Instead, Associates are encouraged to enroll their friends and acquaintances as Book Club Members and to refer occasional purchasers to their replicated BookWise websites. Nonetheless, each Associate must make his or her own decision with regard to these matters. To ensure that Associates are not encumbered with excess inventory that they are unable to sell, such inventory may be returned to BookWise upon the Associate's cancellation pursuant to the terms of Section 8.2.

4.12 - Governmental Approval or Endorsement Neither federal nor state regulatory agencies or officials approve or endorse any direct selling or network marketing companies or programs. Therefore, Associates shall not represent or imply that BookWise or its Marketing and Compensation Plan have been 'approved,' 'endorsed' or otherwise sanctioned by any government agency.

4.13 - Identification All Associates are required to provide their Social Security Number or a Federal Employer Identification Number to BookWise on the Associate Application and Agreement. Upon enrollment, the Company will provide a unique Associate Identification Number to the Associate by which he or she will be identified. This number will be used to place orders, and track commissions and bonuses.

4.14 - Income Taxes Each Associate is responsible for paying local, state, and federal taxes on any income generated as an Independent Associate. If a BookWise business is tax exempt, the Federal tax identification number must be provided to BookWise. Every year, BookWise will provide an IRS Form 1099 MISC (Non-employee Compensation) earnings statement to each U.S. resident who: 1) Had earnings of over $600 in the previous calendar year; or 2) Made purchases during the previous calendar year in excess of $5,000.

4.15 - Independent Contractor Status Associates are independent contractors, and are not purchasers of a franchise or a business opportunity. The agreement between BookWise and its Associates does not create an employer/employee relationship, partnership, or joint venture between the Company and the Associate. Associates shall not be treated as an employee for his or her services or for Federal or State tax purposes. All Associates are responsible for paying local, state, and federal taxes due from all compensation earned as an Associate of the Company. The Associate has no authority (expressed or implied), to bind the Company to any obligation. Each Associate shall establish his or her own goals, hours, and methods of sale, so long as he or she complies with the terms of the Associate Agreement, these Policies and Procedures, and applicable laws.

4.16 - Insurance 4.16.1 - Business Pursuits Coverage You may wish to arrange insurance coverage for your business. Your homeowner's insurance policy does not cover business-related injuries, or the theft of or damage to inventory or business equipment. Contact your insurance agent to make certain that your business property is protected. This can often be accomplished with a simple 'Business Pursuit' endorsement attached to your present home owner's policy.

4.16.2 - Commercial General Liability Coverage Associates who attain the Rank of Diamond or above shall during the term of their Associate Agreement maintain, at their sole cost, Commercial General Liability Insurance in an amount not less than One Million Dollars ($1,000,000.00) per occurrence and in the aggregate. This policy must include coverage for bodily injury, personal injury and property damage claims caused by or occurring in connection with the Associate's operation of his or her business, including the Associate's Premises. BookWise and BookWise's directors, officers, employees, and agents are to be added as additional insureds under the terms of the policy. BookWise may periodically increase the amounts and types of coverage required under the terms of this Agreement to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards or other relevant changes in circumstances. The Associate's insurance policies must be primary and non-contributory to any similar policies maintained by BookWise. Each policy must give BookWise thirty (30) days prior written notice of cancellation, nonrenewal and/or material modification. A certificate of insurance documenting the required coverages shall be sent to the BookWise Associate Services Department annually.

4.17 - International Marketing Because of critical legal and tax considerations, BookWise must limit the resale of BookWise products and services, and the presentation of the BookWise business to prospective customers, Book Club Members, and Associates located within the United States and U.S. Territories. Moreover, allowing a few Associates to conduct business in markets not yet opened by BookWise would violate the concept of affording every Associate the equal opportunity to expand internationally. Accordingly, Associates are authorized to sell BookWise books and enroll BookWise Book Club Members and Associates only in the countries in which BookWise is authorized to conduct business, as announced in official Company literature. BookWise products or sales aids cannot be shipped into or sold in any foreign country. Associates may sell, give, transfer, or distribute BookWise products or sales aids only in their home country. In addition, no Associate may, in any unauthorized country: (a) conduct sales, enrollment or training meetings; (b) enroll or attempt to enroll potential customers or Associates; or (c) conduct any other activity for the purpose of selling BookWise products, establishing a marketing organization, or promoting the BookWise opportunity.

4.18 - Adherence to Laws and Ordinances 4.18.1 - Local Ordinances Many cities and counties have laws regulating certain home-based businesses. In most cases these ordinances are not applicable to Associates because of the nature of their business. However, Associates must obey those laws that do apply to them. If a city or county official tells an Associate that an ordinance applies to him or her, the Associate shall be polite and cooperative, and immediately send a copy of the ordinance to the Compliance Department of BookWise. In most cases there are exceptions to the ordinance that may apply to BookWise Associates.

4.18.2 - Compliance With Federal, State, Local Laws Associates shall comply with all federal, state, and local laws and regulations in the conduct of their businesses.

4.19 - Minors A person who is recognized as a minor in his/her state of residence may not be a BookWise Associate. Associates shall not enroll or recruit minors into the BookWise program.

4.20 - One BookWise Business Per Associate and Per Household An Associate may operate or have an ownership interest, legal or equitable, as a sole proprietorship, partner, shareholder, trustee, or beneficiary, in only one BookWise business. No individual may have, operate or receive compensation from more than one BookWise business. Individuals of the same family unit may not enter into or have an interest in more than one BookWise Business. A 'family unit' is defined as spouses and dependent children living at or doing business at the same address. In order to maintain the integrity of the BookWise Marketing and Compensation Plan, husbands and wives or common-law couples (collectively 'spouses') who wish to become BookWise Associates must be jointly sponsored as one BookWise business. Spouses, regardless of whether one or both are signatories to the Associate Application and Agreement, may not own or operate any other BookWise business, either individually or jointly, nor may they participate directly or indirectly (as a shareholder, partner, trustee, trust beneficiary, or any other legal or equitable ownership) in the ownership or management of another BookWise business in any form. An exception to the one business per Associate rule will be considered on a case by case basis if two Associates marry or in cases of an Associate receiving an interest in another business through inheritance. Requests for exceptions to policy must be submitted in writing to the Compliance Department.

4.22.1 - Actions of Household Members or Affiliated Individuals If any member of an Associate's immediate household engages in any activity which, if performed by the Associate, would violate any provision of the Agreement, such activity will be deemed a violation by the Associate and BookWise may take disciplinary action pursuant to the Statement of Policies against the Associate. Similarly, if any individual associated in any way with a corporation, partnership, trust or other entity (collectively 'affiliated individual') violates the Agreement, such action(s) will be deemed a violation by the entity, and BookWise may take disciplinary action against the entity.

4.21 - Requests for Records Any request from an Associate for copies of invoices, applications, downline activity reports, or other records will require a fee of $5.00 per page per copy with a $25.00 minimum. This fee covers the expense of mailing and time required to research files and make copies of the records.

4.22 - Roll-up of Marketing Organization When a vacancy occurs in a Marketing Organization due to the termination of a BookWise business, each Associate in the first level immediately below the terminated Associate on the date of the cancellation will be moved to the first level ('front line') of the terminated Associate's sponsor. For example, if A sponsors B, and B sponsors C1, C2, and C3, if B terminates her business, C1, C2, and C3 will 'roll-up' to A and become part of A's first level.

4.23 - Sale, Transfer or Assignment of BookWise Business Although a BookWise business is a privately owned, independently operated business, the sale, transfer or assignment of a BookWise business is subject to certain limitations. If an Associate wishes to sell his or her BookWise business, the following criteria must be met: a) Protection of the existing line of sponsorship must always be maintained so that the BookWise business continues to be operated in that line of sponsorship. b) The buyer or transferee must be (or must become) a qualified BookWise Associate. If the buyer is an active BookWise Associate, he or she must first terminate (or sell) his or her BookWise business simultaneously with the purchase, transfer, assignment or acquisition of any interest in the new BookWise business. If the buyer is the selling Associate's Sponsor, he or she does not need to terminate or sell his or her BookWise business. The purchased business will merge with his or her BookWise business. c) Before the sale, transfer or assignment can be finalized and approved by BookWise, any debt obligations the selling Associate has with BookWise must be satisfied. d) The selling Associate must be in good standing and not in violation of any of the terms of the Agreement in order to be eligible to sell, transfer or assign a BookWise business. Prior to selling a BookWise business, the selling Associate must notify BookWise's Associate Compliance Department of his or her intent to sell the BookWise business. Upon complete execution of the purchase and sale agreement, the parties must submit copies of the same to the Compliance Department for review. BookWise reserves the right to request additional documentation that may be necessary to analyze the transaction between the buyer and seller. The Compliance Department will, in its sole and absolute discretion, approve or deny the sale, transfer or assignment within 30 days after its receipt of all necessary documents from the parties. If the parties fail to obtain BookWise's approval for the transaction, the transfer shall be voidable at BookWise's option. The purchaser of the existing BookWise business will assume the obligations and position of the selling Associate. An Associate who sells his or her BookWise business shall not be eligible to re-apply as a BookWise Associate for a period of at least six full calendar months after the date of the sale. No changes in line of sponsorship can result from the sale or transfer of a BookWise business.

4.24 - Separation of a BookWise Business BookWise Associates sometimes operate their BookWise businesses as husband-wife partnerships, regular partnerships, corporations, or trusts. At such time as a marriage may end in divorce or a corporation, partnership or trust (the latter three entities are collectively referred to herein as 'entities') may dissolve, arrangements must be made to assure that any separation or division of the business is accomplished so as not to adversely affect the interests and income of other businesses up or down the line of sponsorship. If the separating parties fail to provide for the best interests of other Associates and the Company, BookWise will involuntarily terminate the Associate Agreement and roll-up their entire organization pursuant to Section 4.22. During the pendency of a divorce or entity dissolution, the parties must adopt one of the following methods of operation: a) One of the parties may, with consent of the other(s), operate the BookWise business pursuant to an assignment in writing whereby the relinquishing spouse, shareholders, partners or trustees authorize BookWise to deal directly and solely with the other spouse or non-relinquishing shareholder, partner or trustee. b) The parties may continue to operate the BookWise business jointly on a 'business-as-usual' basis, whereupon all compensation paid by BookWise will be paid in the joint names of the Associates or in the name of the entity to be divided as the parties may independently agree between themselves. c) If the parties cannot mutually agree on how the business shall be allocated during the pendency of a divorce or dissolution, the Company shall treat the business according to the status quo as existed prior to the filing of the divorce or dissolution. Under no circumstances will the Downline Organization of divorcing spouses or a dissolving business entity be divided. Similarly, under no circumstances will BookWise split commission and bonus checks between divorcing spouses or members of dissolving entities. BookWise will recognize only one Downline Organization and will issue only one commission check per BookWise business per commission cycle. Commission checks shall always be issued to the same individual or entity. In the event that parties to a divorce or dissolution proceeding are unable to resolve a dispute over the disposition of commissions and ownership of the business, the Associate Agreement shall be involuntarily canceled. If a former spouse or a former entity affiliate has completely relinquished all rights in his or her original BookWise business, he or she is thereafter free to enroll under any Sponsor of his or her choosing. In such case, however, the former spouse or partner shall have no rights to any Associates in their former organization or to any former retail customer or BookWise Book Club Member. They must develop the new business in the same manner as would any other new Associate.

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

4.26 - Stacking 'Stacking' is strictly prohibited. The term 'stacking' includes: (a) the failure to transmit to BookWise or the holding of an Independent Associate Application and Agreement in excess of two business days after its execution; (b) the placement or manipulation of Independent Associate Applications and Agreements for the purpose of maximizing compensation pursuant to BookWise's Marketing and Compensation Plan; or (c) providing financial assistance to new Associates for the purpose of maximizing compensation pursuant to BookWise's Marketing and Compensation Plan; (d) violating the one business per household rule; and/or (e) enrolling fictitious individuals or entities into the BookWise compensation plan.

4.27 - Succession Upon the death or incapacitation of an Associate, his or her business may be passed to his or her heirs. Appropriate legal documentation must be submitted to the Company to ensure the transfer is proper. Accordingly, an Associate should consult an attorney to assist him or her in the preparation of a will or other testamentary instrument. Whenever a BookWise business is transferred by a will or other testamentary process, the beneficiary acquires the right to collect all bonuses and commissions of the deceased Associate's marketing organization provided the following qualifications are met. The successor(s) must: a) Execute an Associate Agreement; b) Comply with terms and provisions of the Agreement; and c) Meet all of the qualifications for the deceased Associate's status. Bonus and commission checks of a BookWise business transferred pursuant to this section will be paid in a single check jointly to the devisees. The devisees must provide BookWise with an 'address of record' to which all bonus and commission checks will be sent. If the business is bequeathed to joint devisees, they must form a business entity and acquire a federal taxpayer Identification number. BookWise will issue all bonus and commission checks and one 1099 to the business entity.

4.27.1 - Transfer Upon Death of an Associate To effect a testamentary transfer of a BookWise business, the successor must provide the following to BookWise: (1) an original death certificate; (2) a notarized copy of the will or other instrument establishing the successor's right to the BookWise business; and (3) a completed and executed Associate Agreement.

4.27.2 - Transfer Upon Incapacitation of an Associate To effect a transfer of a BookWise business because of incapacity, the successor must provide the following to BookWise: (1) a notarized copy of an appointment as trustee; (2) a notarized copy of the trust document or other documentation establishing the trustee's right to administer the BookWise business; and (3) a completed Associate Agreement executed by the trustee.

4.28 - Telemarketing The Federal Trade Commission and the Federal Communications Commission each have laws that restrict telemarketing practices. Both federal agencies (as well as a number of states) have 'do not call' regulations as part of their telemarketing laws. While you may not consider yourself a 'telemarketer' in the traditional sense of the word, these regulations broadly define the term 'telemarketer' and 'telemarketing' so that your inadvertent action of calling someone whose telephone number is listed on the federal 'do not call' registry could cause you to violate the law. Moreover, these regulations must not be taken lightly, as they carry significant penalties (up to $11,000.00 per violation). Therefore, Associates must not engage in telemarketing relative to the operation of their BookWise businesses. The term 'telemarketing' means the placing of one or more telephone calls to an individual or entity to induce the purchase of a BookWise product or service, or to recruit them for the BookWise opportunity. 'Cold calls' made to prospective customers or Associates that promote either BookWise's products or services or the BookWise opportunity constitute telemarketing and are prohibited. However, a telephone call(s) placed to a prospective customer or Associate (a 'prospect') is permissible under the following situations:

• If the Associate has an established business relationship with the prospect. An 'established business relationship' is a relationship between an Associate and a prospect based on the prospect's purchase, rental, or lease of goods or services from the Associate, or a financial transaction between the prospect and the Associate, within the eighteen (18) months immediately preceding the date of a telephone call to induce the prospect's purchase of a product or service.
• The prospect's personal inquiry or application regarding a product or service offered by the Associate, within the three (3) months immediately preceding the date of such a call.
• If the Associate receives written and signed permission from the prospect authorizing the Associate to call. The authorization must specify the telephone number(s) which the Associate is authorized to call.
• You may call family members, personal friends, and acquaintances. An 'acquaintance' is someone with whom you have at least a recent first-hand relationship (i.e., you have recently personally met him or her). Bear in mind, however, that if you make a habit of 'card collecting' with everyone you meet and subsequently calling them, the FTC may consider this a form of telemarketing that is not subject to this exemption. Thus, if you engage in calling 'acquaintances,' you must make such calls on an occasional basis only and not make this a routine practice.
• In addition, Associates shall not use automatic telephone dialing systems relative to the operation of their BookWise businesses. The term 'automatic telephone dialing system' means equipment which has the capacity to: (a) store or produce telephone numbers to be called, using a random or sequential number generator; and (b) to dial such numbers.

SECTION 5 - RESPONSIBILITIES OF ASSOCIATES

5.1 - Change of Address or Telephone To ensure timely delivery of products, support materials, and commission checks, it is critically important that the BookWise's files are current. Street addresses are required for shipping since UPS cannot deliver to a post office box. Associates planning to move should update their personal information via the Back Office function of the Associate's replicated BookWise website. To guarantee proper delivery, two weeks advance notice must be provided to BookWise on all changes. Special Note: If you are a BookWise Book Club Member, likewise update your Book Club Member profile through the Member Website. Please allow thirty (30) days after the receipt of the notice or Agreement by BookWise for processing.

5.2 - Continuing Development Obligations 5.2.1 - Ongoing Training Any Associate who sponsors another Associate into BookWise must perform a bona fide assistance and training function to ensure that his or her downline is properly operating his or her BookWise business. Associates must have ongoing contact and communication with the Associates in their Downline Organizations. Examples of such contact and communication may include, but are not limited to: newsletters, written correspondence, personal meetings, telephone contact, voice mail, electronic mail, and the accompaniment of downline Associates to BookWise meetings, training sessions, and other functions. Upline Associates are also responsible to motivate and train new Associates in BookWise product knowledge, effective sales techniques, the BookWise Marketing and Compensation Plan, and compliance with Company Policies and Procedures. Communication with and the training of downline Associates must not, however, violate Section 4.2 (regarding the development of Associate-produced sales aids and promotional materials). Associates must monitor the Associates in their Downline Organizations to ensure that downline Associates do not make improper income or business claims, or engage in any illegal or inappropriate conduct. Upon request, every Associate should be able to provide documented evidence to BookWise of his or her ongoing fulfillment of the responsibilities of a Sponsor.

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

5.2.3 - Ongoing Sales Responsibilities Regardless of their level of achievement, Associates have an ongoing obligation to continue to personally promote sales through the generation of new customers and through servicing their existing customers.

5.3 - Nondisparagement While BookWise welcomes constructive input, negative comments and remarks made in the field by Associates about the Company, its catalog of titles, or the compensation plan serve no purpose other than to sour the enthusiasm of other BookWise Associates. For this reason, and to set the proper example for their downline, Associates must not disparage, demean, or make negative remarks about BookWise, other BookWise Associates, BookWise's products, the Marketing and Compensation plan, or BookWise's directors, officers, or employees. Violation of this policy may result in imposition of any of the sanctions set forth in Section 9.1.

5.4 - Reporting Policy Violations Associates observing a Policy violation by another Associate should submit a written report of the violation directly to the attention of the BookWise Compliance Department. Details of the incidents such as dates, number of occurrences, persons involved, and any supporting documentation should be included in the report.

SECTION 6 - SALES REQUIREMENTS

6.1 - Book Sales The BookWise Marketing and Compensation Plan is based upon the sale of books from the BookWise catalog to end consumers. Associates must fulfill personal and Downline Organization retail sales requirements (as well as meet other responsibilities set forth in the Agreement) to be eligible for bonuses, commissions and advancement to higher levels of achievement. The following sales requirements must be satisfied for Associates to be eligible for commissions: a) Associates must satisfy the Personal Sales Volume and Group Sales Volume requirements to fulfill the requirements associated with their rank as specified in the BookWise Marketing and Compensation Plan. 'Personal Sales Volume' includes purchases made by the Associate and purchases made by the Associate's personally enrolled BookWise Book Club Members. Group Sales Volume shall include the total Sales Volume of all Associates in his or her marketing organization, but shall not include the Associate's Personal Sales Volume. b) At least 70% of an Associate's total monthly Personal Sales Volume must be sold to personal Retail Customers and BookWise Book Club Members. c) Associates must develop or service at least five customers every month. These customers can be personal Retail Customers and/or BookWise Book Club Members.

6.2 - No Price or Territory Restrictions Associates are not required to sell BookWise books at the suggested retail prices set by BookWise on the BookWise Price List. Associates may sell BookWise books at any price they choose. There are no exclusive territories granted to anyone. No franchise fees are required.

6.3 - Sales Receipts All Associates must provide their Retail Customers with two copies of an official BookWise sales receipt at the time of the sale. These receipts set forth the Customer Satisfaction Guarantee for BookWise books, as well as any consumer protection rights afforded by federal or state law. Associates must maintain all retail sales receipts for a period of two years and furnish them to BookWise at the Company's request. Records documenting the purchases of Associates' BookWise Book Club Members will be maintained by BookWise. Associates must ensure that the following information is contained on each sales receipt: (1) The date of the transaction; (2) The date (not earlier than the third business day following the date of the transaction) by which the buyer may give notice of cancellation; and (3) Name and address of the selling Associate. Remember that Retail Customers must receive two copies of the sales receipt. In addition, Associates must orally inform the buyer of his or her cancellation rights.

SECTION 7 - BONUSES AND COMMISSIONS

7.1 - Bonus and Commission Qualifications An Associate must be active and in compliance with the Agreement to qualify for bonuses and commissions. So long as an Associate complies with the terms of the Agreement, BookWise shall pay commissions to such Associate in accordance with the Marketing and Compensation plan.

7.2 - Adjustment to Bonuses and Commissions 7.2.1 - Adjustments for Returned Books Associates receive bonuses and commissions based on the actual sales of books from the BookWise catalog to end consumers. When a book is returned to BookWise for a refund or is repurchased by the Company, the bonuses and commissions attributable to the returned or repurchased book will be deducted, in the month in which the refund is given, and continuing every pay period thereafter until the commission is recovered, from the Associates who received bonuses and commissions on the sales of the refunded book.

7.2.2 - Other Deductions BookWise will deduct from all bonus and commission checks a data processing fee of $.01 per line for downline genealogy reports sent to Associates. The maximum fee is $5.00.

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

ALL REPORTED INFORMATION IS PROVIDED 'AS IS' WITHOUT WARRANTIES, EXPRESS OR IMPLIED, OR REPRESENTATIONS OF ANY KIND WHATSOEVER. IN PARTICULAR BUT WITHOUT LIMITATION THERE SHALL BE NO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, OR NON INFRINGEMENT. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, BookWise AND/OR OTHER PERSONS CREATING OR TRANSMITTING THE INFORMATION WILL IN NO EVENT BE LIABLE TO ANY ASSOCIATE OR ANYONE ELSE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT ARISE OUT OF THE USE OF OR ACCESS TO PERSONAL AND GROUP SALES VOLUME INFORMATION (INCLUDING BUT NOT LIMITED TO LOST PROFITS, BONUSES, OR COMMISSIONS, LOSS OF OPPORTUNITY, AND DAMAGES THAT MAY RESULT FROM INACCURACY, INCOMPLETENESS, INCONVENIENCE, DELAY, OR LOSS OF THE USE OF THE INFORMATION), EVEN IF BookWise OR OTHER PERSONS CREATING OR TRANSMITTING THE INFORMATION SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. TO THE FULLEST EXTENT PERMITTED BY LAW, BookWise OR OTHER PERSONS CREATING OR TRANSMITTING THE INFORMATION SHALL HAVE NO RESPONSIBILITY OR LIABILITY TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY OR OTHER THEORY WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR TERMS AND CONDITIONS RELATED THERETO.

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

SECTION 8 - SATISFACTION GUARANTEES, RETURNS AND INVENTORY REPURCHASE

8.1 - Satisfaction Guarantee BookWise offers a 100% 60 day money-back satisfaction guarantee (less shipping charges) to all BookWise Book Club Members and Associates.

8.1.1 - Returns by Retail Customers

BookWise offers, through its Associates, a 100% 30 day money-back guarantee to all Retail Customers. Every Associate is bound to honor the Retail Customer guarantee. If, for any reason, a Retail Customer is dissatisfied with any BookWise book, the Retail Customer may return the book to the Associate from whom it was purchased, within thirty (30) days, for a replacement, exchange or a full refund of the purchase price (including shipping costs). The following provision sets forth the minimum refund permitted by law to a Retail Customer: A Retail Customer who makes a purchase of $25.00 or more has three business days after the sale or execution of a contract to cancel the order and receive a full refund consistent with the cancellation notice on the order form. When an Associate makes a sale or takes an order from a Retail Customer who cancels or requests a refund within the 72 hour period, the Associate must promptly refund the Retail Customer's money as long as the products are returned to the Associate in substantially as good condition as when received. Additionally, Associates must orally inform Retail Customers of their right to rescind a purchase or an order within 72 hours, and ensure that the date of the order or purchase is entered on the order form. All Retail Customers must be provided with two copies of an official BookWise sales receipt at the time of the sale. The back of the receipt provides the Retail Customer with written notice of his or her rights to cancel the sales agreement.

8.1.2 - Returns by Associates (Products Purchased for Personal Consumption) If an Associate is unsatisfied with any title purchased from BookWise for personal use, the Company offers a 100% 60 day money-back guarantee (less shipping). This guarantee is limited to $100. If an Associate wishes to return books exceeding $100, in any 12 month period, the return will be deemed an inventory repurchase and the Company shall repurchase the books pursuant to the terms of Section 8.2, and the Associate's Agreement shall be canceled.

8.1.3 - Returns by Associates (Books Returned by Personal Retail Customers) If a personal Retail Customer returns a book to the Associate from whom it was purchased, the Associate may return it to the Company for an exchange or refund (less shipping). All books returned by personal Retail Customers must be returned to the Company within 10 days from the date on which it was returned to the Associate along with the sales receipt which the Associate gave to the Retail Customer.

8.2 - Return of Inventory and Sales Aids by Associates Upon cancellation of an Associate's Agreement, the Associate may return inventory and sales aids for a refund if he or she is unable to sell or use the merchandise. An Associate may only return products and sales aids purchased by him or her that are in resalable condition. Upon receipt of the products and sales aids, the Associate will be reimbursed 90% of the net cost of the original purchase price(s), less shipping charges. If the purchases were made through a credit card, the refund will be credited back to the same account. The Company shall deduct from the reimbursement paid to the Associate any commissions, bonuses, rebates or other incentives received by the Associate which were associated with the merchandise that is returned.

8.2.1 - Montana Residents A Montana resident may cancel his or her Associate Agreement within 15 days from the date of enrollment, and may return his or her starter kit for a full refund within such time period.

8.3 - Procedures for All Returns The following procedures apply to all returns for refund, repurchase, or exchange: a) All books must be returned by the Associate or BookWise Book Club Member who purchased them directly from BookWise. b) All books to be returned must have a Return Authorization Number which is obtained by calling the Associate Services Department. This Return Authorization Number must be written on each carton returned. c) The return is accompanied by: i. a completed and signed Consumer Return Form; and ii. a copy of the original dated retail sales receipt. d) Proper shipping carton(s) and packing materials are to be used in packaging the book(s) being returned for replacement, exchange or refund, and the best and most economical means of shipping is suggested. All returns must be shipped to BookWise shipping pre-paid. BookWise does not accept shipping-collect packages. The risk of loss in shipping for returned product shall be on the Associate. If a returned book is not received by the Company's Distribution Center, it is the responsibility of the Associate to trace the shipment. e) If an Associate is returning a book to BookWise that was returned to him or her by a personal Retail Customer, the book must be received by BookWise within ten (10) days from the date on which the Retail Customer returned the book to the Associate, and must be accompanied by the sales receipt the Associate gave to the Retail Customer at the time of the sale. No refund, exchange, or replacement will be made if the conditions of these rules are not met.

SECTION 9 - DISPUTE RESOLUTION AND DISCIPLINARY PROCEEDINGS

9.1 - Disciplinary Sanctions Violation of the Agreement, these Policies and Procedures, or any illegal, fraudulent, deceptive or unethical business conduct by an Associate may result, at BookWise's discretion, in one or more of the following corrective measures: a) Issuance of a written warning or admonition; b) Requiring the Associate to take immediate corrective measures; c Imposition of a fine, which may be withheld from bonus and commission checks; d) Loss of rights to one or more bonus and commission checks; e BookWise may withhold from an Associate all or part of the Associate's bonuses and commissions during the period that BookWise is investigating any conduct allegedly violative of the Agreement. If an Associate's business is canceled for disciplinary reasons, the Associate will not be entitled to recover any commissions withheld during the investigation period; f) Suspension of the individual's Associate Agreement for one or more pay periods; g) Involuntary termination of the offender's Associate Agreement; h) Any other measure expressly allowed within any provision of the Agreement or which BookWise deems practicable to implement and appropriate to equitably resolve injuries caused partially or exclusively by the Associate's policy violation or contractual breach; i) In situations deemed appropriate by BookWise, the Company may institute legal proceedings for monetary and/or equitable relief.

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

9.3 - Dispute Resolution Board The Dispute Resolution Board reviews evidence, deliberates, and responds to current outstanding issues on a collective basis. The purpose of the Dispute Resolution Board ('DRB') is to: (1) review appeals of disciplinary sanctions; and (2) review matters between BookWise Associates that have not been resolved following referral to the Associate Services Department. An Associate may submit a written request for a telephonic or in-person hearing within 15 business days from the date of: (1) the written notice by BookWise of a disciplinary sanction; or (2) the written decision of Associate Services regarding disputes between Associates. All communication with BookWise and the Associate(s) seeking resolution of a dispute must be in writing. It is within the DRB's discretion whether a claim is accepted for review. If the DRB agrees to review the matter, it shall schedule a hearing within 90 days of receipt of the Associate's written request. All evidence (e.g., documents, exhibits, etc.) that an Associate desires to have considered by the DRB must be submitted to BookWise no later than seven business days before the date of the hearing. The Associate shall bear all of the expenses related to his or her attendance and the attendance of any witnesses he or she desires to be present at the hearing. The decision of the DRB will be final and subject to no further review, except as provided in Section 9.4 below. During the pendency of the claim before the DRB, the Associate waives his or her right to pursue arbitration or any other remedy. Following issuance of a disciplinary sanction, the disciplined Associate may appeal the sanction to the DRB. The Associate's appeal must be in writing and received by the Company within 15 days from the date of BookWise's notice of the disciplinary sanction. If the appeal is not received by BookWise within the seven-day period, the sanction will be final. The Associate must submit all supporting documentation with his or her appeal correspondence. If the Associate files a timely appeal of a disciplinary sanction, the DRB will review and reconsider the sanction, consider any other appropriate action, and notify the Associate in writing of its decision.

9.4 - Arbitration Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Associates waive all rights to trial by jury or to any court. All arbitration proceedings shall be held in Salt Lake City, Utah, unless the laws of the state in which an Associate resides expressly require the application of its laws, in which case the arbitration shall be held in the capital of that state. All parties shall be entitled to all discovery rights pursuant to the Federal Rules of Civil Procedure. There shall be one arbitrator, an attorney at law, who shall have expertise in business law transactions with a strong preference being an attorney knowledgeable in the direct selling industry, selected from the panel which the American Arbitration Panel provides. Each party to the arbitration shall be responsible for its own costs and expenses of arbitration, including legal and filing fees. The decision of the arbitrator shall be final and binding on the parties and may, if necessary, be reduced to a judgment in any court of competent jurisdiction. This agreement to arbitration shall survive any termination or expiration of the Agreement. Nothing in these Policies and Procedures shall prevent BookWise from applying to and obtaining from any court having jurisdiction a writ of attachment, a temporary injunction, preliminary injunction, permanent injunction or other relief available to safeguard and protect BookWise's interest prior to, during or following the filing of any arbitration or other proceeding or pending the rendition of a decision or award in connection with any arbitration or other proceeding.

9.5 - Governing Law, Jurisdiction and Venue Jurisdiction and venue of any matter not subject to arbitration shall reside in Salt Lake County, State of Utah unless the laws of the state in which an Associate resides expressly require the application of its laws. The Federal Arbitration Act shall govern all matters relating to arbitration. The law of the State of Utah shall govern all other matters relating to or arising from the Agreement unless the laws of the state in which an Associate resides expressly require the application of its laws.

9.5.1 - Louisiana Residents Notwithstanding the foregoing, Louisiana residents may bring an action against the Company with jurisdiction and venue as provided by Louisiana law.

SECTION 10 - ORDERING

10.1 - Book Club Sales On the first day of each month, BookWise will post an email catalog of current titles. Associates shall have 7 days to make his or her selection. If a BookWise Associate does not make a selection, a book will automatically be sent to the Member based on the Member's Personal Default category selected when he or she registered as a BookWise Associate. In addition Associates are encouraged to promote the BookWise titles to their friends, acquaintances, and Retail Customers. BookWise Membership allows BookWise associates to purchase a book (or more) each month at the discounted BookWise Book Club associate prices.

10.2 - Purchasing BookWise Books Each Associate should purchase his or her books directly from BookWise. If an Associate purchases books from another Associate or any other source, the purchasing Associate will not receive the personal sales volume that is associated with that purchase.

10.3 - General Order Policies On mail orders with invalid or incorrect payment, BookWise will attempt to contact the Associate by phone, and/or mail to try to obtain another payment. If these attempts are unsuccessful after five working days the order will be returned unprocessed. No C.O.D. orders will be accepted. BookWise maintains no minimum order requirements. Orders for products and sales aids may be combined. 10.4 - Shipping and Back Order Policy BookWise will normally ship products within 10 days from the date on which it receives an order. BookWise will expeditiously ship any part of an order currently in stock. If, however, an ordered item is out-of-stock, it will be placed on back order and sent when BookWise receives additional inventory. Associates will be charged and given Personal Sales Volume on back ordered items unless notified on the invoice that the title has been discontinued. BookWise will notify Associates and Book Club Members if items are back-ordered and are not expected to ship within 30 days from the date of the order. An estimated shipping date will also be provided. Back ordered items may be canceled upon a Book Club Member's or Associate's request. BookWise Book Club Members and Associates may request a refund, credit on account, or replacement merchandise for canceled back orders. If a refund is requested, the Associate's Personal Sales Volume will be decreased by the amount of the refund in the month in which the refund is issued.

10.5 - Confirmation of Order An Associate and/or recipient of an order must confirm that the product received matches the product listed on the shipping invoice, and is free of damage. Failure to notify BookWise of any shipping discrepancy or damage within thirty days of shipment will cancel an Associate's right to request a correction.

SECTION 11 - PAYMENT AND SHIPPING

11.1 - Deposits No monies should be paid to or accepted by an Associate for a sale to a personal Retail Customer except at the time of product delivery. Associates should not accept monies from Retail Customers to be held for deposit in anticipation of future deliveries.

11.2 - Insufficient Funds It is the responsibility of each Associate to ensure that there are sufficient funds or credit available in his or her account to cover his or her monthly Book Club Membership fees and book order. BookWise will not contact Associates in regard to orders canceled due to insufficient funds or credit. This may result in an Associate's failure to meet his or her Personal Sales Volume requirements for the month.

11.3 - Returned Checks All checks returned by an Associate's bank for insufficient funds will be re-submitted for payment. A $25.00 returned check fee will be charged to the account of the Associate. After receiving a returned check from a customer or an Associate, all future orders must be paid by Credit Card, money order or cashier's check. Any outstanding balance owed to BookWise by an Associate for NSF checks and returned check fees will be withheld from subsequent bonus and commission checks.

11.4 - Restrictions on Third Party Use of Credit Cards and Checking Account Access An Associate shall not permit other Associates or Book Club Members to use his or her credit card, or permit debits to his or her checking accounts, to enroll or to make purchases from the Company.

11.5 - Sales Taxes In designing the BookWise opportunity, one of our guiding philosophies has been to free Associates from as many administrative, operational, and logistical tasks as possible. In doing so, Associates are free to concentrate on those activities that directly affect their incomes, namely book sales and the enrollment of BookWise Book Club Members and Associates. To these ends, BookWise relieves Associates of the burdens of collecting and remitting sales taxes, filing sales tax reports, and keeping records relative to sales taxes.

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

11.6 Pay Card System

To limit the amount of the cost to our associates of generating commissions checks (typically two-to-four dollars a check) BookWise Enterprises LLC has elected to pay commissions to a stored-value pay card account (your 'Commissions Account'). You will receive your stored-value pay card in the starter kit. You may retrieve commissions from this account or add funds to this account via your online Commissions Account management interface, reached from your BookWise back-office. You may also use any funds in your Commissions Account to pay for BookWise products or services by selecting it as your payment method when checking out.

Your Commissions Account requires a one-time setup fee of $2.00, which will be debited from your first commission payment. Each deposit into, or debit from your account will result in a $0.55 (fifty-five cent) transaction fee.

SECTION 12 - INACTIVITY AND CANCELLATION

12.1 - Inactivity It is the Associate's responsibility to lead his or her marketing organization with the proper example in personal production of sales to end consumers. Without this proper example and leadership, the Associate will lose his or her right to receive commissions from sales generated through his or her marketing organization. Associates who personally generate less than $30.00 in Personal Volume for any pay period will not receive a commission for the sales generated through their marketing organization for that pay period.

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

Following an Associate's cancellation of his or her Associate Agreement, the former Associate shall not hold himself or herself out as a BookWise Associate and shall not have the right to sell BookWise products or services. An Associate whose Associate Agreement is canceled shall receive commissions and bonuses only for the last full pay period he or she was active prior to cancellation (less any amounts withheld during an investigation preceding an involuntary cancellation).

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

12.4 - Voluntary Cancellation A participant in this network marketing plan has a right to cancel at any time, regardless of reason. Cancellation must be submitted in writing to the Company at its principal business address. The written notice must include the Associate's signature, printed name, address, and Associate I.D. Number. If an Associate is also a BookWise Book Club Member, the Associate's Book Club Membership shall continue in force unless the Associate also specifically requests that his or her Book Club Membership also be canceled.

12.5 - Non-renewal An Associate may also voluntarily cancel his or her Associate Agreement by failing to renew the Agreement on its anniversary date. The Company may also elect not to renew an Associate's Agreement upon its anniversary date. Associates have 60 days from agreement anniversary date to renew their membership or they will be automatically terminated.

SECTION 13 - DEFINITIONS

Active Associate - An Associate who satisfies the minimum Personal Sales Volume requirements, as set forth in the BookWise Marketing and Compensation Plan, to ensure that he or she is eligible to receive bonuses and commissions.

Active Rank - The term 'active rank' refers to the current rank of an Associate, as determined by the BookWise Marketing and Compensation Plan, for any volume period. To be considered 'active' relative to a particular rank, an Associate must meet the criteria set forth in the BookWise Marketing and Compensation Plan for his or her respective rank. (See the definition of 'Rank' below.)

Agreement - The contract between the Company and each Associate includes the Associate Application and Agreement, the BookWise Policies and Procedures, the BookWise Marketing and Compensation Plan, and the Business Entity Registration Form (where appropriate), all in their current form and as amended by BookWise in its sole discretion. These documents are collectively referred to as the 'Agreement.'

BookWise Book Club Member - A customer who has executed a BookWise Book Club Member Agreement and who agrees to pay a $10.00 annual Member fee.

Cancel - The termination of an Associate's business. Cancellation may be either voluntary, involuntary, through non-renewal or inactivity.

Commissionable Products/Services - All BookWise products and services on which commissions and bonuses are paid. Starter Kits and sales aids are not commissionable products.

Company - The term 'Company' as it is used throughout the Agreement means BookWise.

Compression - The process by which inactive Associates and Customers are excluded from the computation of bonuses and commissions for eligible Associates. BookWise's compression program ensures that Associates are paid on their group sales volume.

Downline - See 'Marketing Organization' below.

Downline Activity Report - A monthly report generated by BookWise that is available on each Associate's Internet Dashboard and that provides critical data relating to the identities of Associates, sales information, and enrollment activity of each Associate's Marketing Organization. This report contains confidential and trade secret information which is proprietary to BookWise.

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

End Consumer - A person who purchases BookWise products for personal use rather than for resale to someone else.

Group Sales Volume - The commissionable value of BookWise products generated by an Associate's Marketing Organization. Group Sales Volume does not include the Personal Sales Volume of the subject Associate. (Starter Kits and sales aids have no Sales Volume.

Immediate Household - Heads of household and dependent family members residing in the same house.

Level - The layers of downline Associates in a particular Associate's Marketing Organization. This term refers to the relationship of an Associate relative to a particular upline Associate, determined by the number of Associates between them who are related by sponsorship. For example, if A sponsors B, who sponsors C, who sponsors D, who sponsors E, then E is on A's fourth level.

Marketing Organization - The BookWise Book Club Members and Associates sponsored below a particular Associate.

Official BookWise Material - Literature, audio or video tapes, and other materials developed, printed, published and distributed by BookWise to Associates.

Personal Production - Moving product to an end consumer for personal use.

Personal Sales Volume (PSV) - The commissionable value of services and products sold in a calendar month: (1) by the Company to an Associate; and (2) by the Company to the Associate's personally enrolled BookWise Book Club Members.

Rank - The 'title' that an Associate has achieved pursuant to the BookWise Marketing and Compensation Plan.

Recruit - For purposes of BookWise's Conflict of Interest Policy (Section 4.7), the term 'recruit' means actual or attempted solicitation, enrollment, encouragement, or effort to influence in any other way, either directly or through a third party, another BookWise Associate, Book Club Member to enroll or participate in another multilevel marketing, network marketing or direct sales opportunity. This conduct constitutes recruiting even if the Associate's actions are in response to an inquiry made by another Associate or a BookWise Book Club Member.

Resalable - Products and sales aids shall be deemed 'resalable' if each of the following elements is satisfied: 1) they are unopened and unused; 2) packaging and labeling has not been altered or damaged; 3) the product and packaging are in a condition such that it is a commercially reasonable practice within the trade to sell the merchandise at full price; and 4) products are returned to BookWise within one year from the date of purchase. Any book or other merchandise that is clearly identified at the time of sale as nonreturnable, discontinued, or as a seasonal item, shall not be resalable.

Retail Customer - An individual who purchases BookWise products from an Associate.

Retail Profit - The difference between the wholesale price of products and the retail price an Associate receives for products when they are resold.

Roll-Up - The method by which a vacancy in a Marketing Organization left by an Associate whose Associate Agreement has been canceled is filled.

Sponsor - An Associate who enrolls a BookWise Book Club Member or another Associate into the Company, and is listed as the Sponsor on the Book Club Member Agreement or the Associate Application and Agreement. The act of enrolling others and training them to become Associates is called 'sponsoring.'

Starter Kit - A selection of BookWise training materials and business support literature that each new Associate is required to purchase. The Starter Kit is sold to Associates at the Company's cost.

Suggested Retail Price (SRP) - The price at which BookWise suggests Associates sell a particular product or service to Retail Customers. Notwithstanding the SRP, Associates are always free to sell BookWise products or services at any price they choose.

Upline - This term refers to the Associate or Associates above a particular Associate in a sponsorship line up to the Company. Conversely stated, it is the line of sponsors that links any particular Associate to the Company.

Wholesale Price (Wholesale) - The price of the products and or services that is paid to the Company by Associates. The wholesale price is also called Associate Cost. All commissions and bonuses are paid on the wholesale value of BookWise products or services.