Policies and Procedures - Ambit Energy

Your guide todoing things right.6Policies andProceduresambit energy, l.p.

c2Policies and ProceduresContentsThese policies andprocedures have beendesigned to give ourIndependent Consultantsclear guidelines on how tooperate a successful networkmarketing business.Beyond these day-to-dayguidelines, Ambit Energy isa company that inspires andencourages ethical businesspractices in all we do.1 Code of Ethics1 Introduction2 Becoming a Consultant3 Operating anAmbit Business13 Responsibilities ofConsultants14 Sales Requirements15 Bonuses and Commissions16 Order Cancellationand Sales Toll InventoryRepurchase16 Dispute Resolution andDisciplinary Proceedings17 Inactivity andCancellation18 Definitions

ambit energy, l.p.1Ambit Energy Policies and Procedures Section 1: Code of EthicsAmbit Energy, L.P., and Ambit Marketing, L.P. (“Ambit” orthe “Company”), is guided by core principles establishedby our founders that emphasize integrity, excellence,commitment and enthusiasm in all that we do. Everythingwe do is based on our commitment to improve the lives ofour customers, employees and Independent Consultants(“Consultants”). We want Consultants who will embracethese values with us. Therefore, we insist that Consultantsoperate within the following Code of Ethics, which arepart of, and form the foundation of, the Policies andProcedures.1.1: Integrity and ResponsibilityConsultants will conduct themselves with integrity andresponsibility and will make the Golden Rule of “dounto others as you would have them do unto you” as thecornerstone on which they build their business.1.2: Deceptive and Unlawful PracticesConsultants will uphold the values of Ambit and will notengage in any deceptive, unlawful or unethical consumeror recruiting practice that may be detrimental or reflectpoorly on Ambit, the network marketing industry orthemselves. Consultants will support and advocate thePolicies and Procedures and will respect the spirit andintent in which they were written.1.3: Honesty in Representing theAmbit OpportunityConsultants will familiarize themselves with Ambit’sCompensation Plan and energy service and will representthose to their customers and prospective IndependentConsultants realistically and without misleading orproviding false expectations. Any claims, representationsor statements Consultants make regarding Ambit will bethose included in the Ambit literature.1.4: Downline SupportConsultants will, to the best of their ability, accept andfulfill their responsibilities to train, motivate, support andencourage all Independent Consultants who join theirsales organization. Consultants will treat their businesslike any other prestigious enterprise and will fulfillcommitments they make to their customers, their fellowConsultants and to employees of the company.1.5: Adherence with LawsConsultants will abide by local, state and federal lawsthat govern their independent business. Consultantsunderstand that it is their responsibility to comply withthese laws, the laws of their industry and with Ambit’sPolicies and Procedures as they may be amended fromtime to time.1.6: Compliance With Code of EthicsConsultants will uphold this Code of Ethics andrecognize that its success will require diligence to createawareness among all of Ambit’s Independent Consultants.Consultants will not, in any way, attempt to persuade,induce or coerce another party to breach this Code. Anysuch action is considered a violation of this Code andthereby a violation of Ambit’s Policies and Procedures. Section 2: Introduction2.1: Policies and Compensation PlanIncorporated into Consultant AgreementThese Policies and Procedures, in their present form andas amended at the sole discretion of Ambit Marketing, L.P.(hereafter “Ambit” or the “Company”), are incorporatedinto, and form an integral part of, the Ambit ConsultantAgreement. Throughout these Policies, when the term“Agreement” is used, it collectively refers to the AmbitConsultant Application and Agreement, these Policiesand Procedures, the Ambit Compensation Plan, and theAmbit Business Entity Application (if applicable). Thesedocuments are incorporated by reference into the AmbitConsultant Agreement (all in their current form andas amended by Ambit). It is the responsibility of eachConsultant to read, understand, adhere to, and ensure thathe or she is aware of and operating under the most currentversion of these Policies and Procedures. When sponsoring

2policies and proceduresor enrolling a new Consultant, it is the responsibility ofthe sponsoring Consultant to ensure that the applicant isprovided with, or has online access to, the most currentversion of these Policies and Procedures and the AmbitCompensation Plan prior to his or her execution ofthe Consultant Agreement.2.2: Purpose of PoliciesAmbit is a direct sales company that markets its productsthrough Independent Consultants. It is important tounderstand that your success and the success of yourfellow Consultants depends on the integrity of the menand women who market our products and services. To clearlydefine the relationship that exists between Consultantsand Ambit, and to explicitly set a standard for acceptablebusiness conduct, Ambit has established the Agreement.Ambit Consultants are required to comply with all of theTerms and Conditions set forth in the Agreement whichAmbit may amend at its sole discretion from time to time,as well as all federal, state, and local laws governing theirAmbit business and their conduct. Because you may beunfamiliar with many of these standards of practice, it isvery important that you read and abide by the Agreement.Please review the information in this manual carefully. Itexplains and governs the relationship between you, as anindependent contractor and the Company. If you have anyquestions regarding any policy or rule, do not hesitate toseek an answer from anyone in your upline or Ambit.2.3: Changes to the AgreementBecause federal, state, and local laws, as well as thebusiness environment, periodically change, Ambitreserves the right to amend the Agreement and itsprices in its sole and absolute discretion. By signing theConsultant Agreement, a Consultant agrees to abide byall amendments or modifications that Ambit elects tomake. Amendments shall be effective upon notice toall Consultants that the Agreement has been modified.Notification of amendments shall be published in officialAmbit materials. The Company shall provide or makeavailable to all Consultants a complete copy of theamended provisions by one or more of the followingmethods: (1) posting on the Company’s official website;(2) electronic mail (e-mail); (3) inclusion in Companyperiodicals; (4) inclusion in product bonus checks;or (5) special mailings. The continuation of aConsultant’s Ambit business or a Consultant’s acceptanceof bonuses or commissions constitutes acceptance ofany and all amendments.2.4: DelaysAmbit shall not be responsible for delays or failuresin performance of its obligations when performanceis made commercially impracticable due to circumstancesbeyond its reasonable control. This includes, withoutlimitation, strikes, labor difficulties, riot, war, fire, death,curtailment of a party’s source of supply, or governmentdecrees or orders.2.5: Policies and Provisions SeverableIf any provision of the Agreement, in its current form or asmay be amended, is found to be invalid, or unenforceablefor any reason, only the invalid portion(s) of the provisionshall be severed and the remaining terms and provisionsshall remain in full force and effect. The severed provision,or portion thereof, shall be reformed to reflect the purposeof the provision as closely as possible.2.6: WaiverThe Company never gives up its right to insist oncompliance with the Agreement and with the applicablelaws governing the conduct of a business. No failure ofAmbit to exercise any right or power under the Agreementor to insist upon strict compliance by a Consultantwith any obligation or provision of the Agreement, andno custom or practice of the parties at variance withthe terms of the Agreement, shall constitute a waiverof Ambit’s right to demand exact compliance with theAgreement. Waiver by Ambit can be effectuated only inwriting by an authorized officer of the Company. Ambit’swaiver of any particular breach by a Consultant shallnot affect or impair Ambit’s rights with respect to anysubsequent breach, nor shall it affect in any way the rightsor obligations of any other Consultant. Nor shall any delayor omission by Ambit to exercise any right arising froma breach affect or impair Ambit’s rights as to that or anysubsequent breach. The existence of any claim or cause ofaction of a Consultant against Ambit shall not constitute adefense to Ambit’s enforcement of any term or provisionof the Agreement. Section 3: Becoming a Consultant3.1: Requirements to Become a ConsultantTo become an Ambit Consultant, each applicant must:3.1.1. Be of the age of majority in his or her state of residence;3.1.2. Reside in the United States or U.S. Territories orcountry that Ambit has officially announced is openfor business;

ambit energy, l.p. 33.1.3. Have a valid Social Security or Federal Tax ID number;3.1.4. Submit a properly completed ConsultantApplication and Agreement to Ambit.3.2: No Product Purchase RequiredNo person is required to purchase Ambit servicesto become a Consultant. In order to familiarize newConsultants with Ambit products, services, salestechniques, sales aids, and other matters, the Companyrecommends that they purchase a Starter Kit. Ambitwill repurchase resalable kits from any Consultant whoterminates his or her Consultant Agreement pursuantto the terms of Section 8.2.3.3: Second-Party Purchase of the OptionalAmbit Support and Services ProgramAmbit strictly prohibits the purchase of the optionalSupport and Services Program by anyone other thanthe Consultant receiving that package. Purchase of theoptional Support and Services Program for a Consultantby a second party (including his/her sponsor or any otherConsultant) may result in termination of either or bothparty’s positions from Ambit’s program. No Consultantmay lend or advance money to a prospect in order to payfor the optional Support and Services Program to beginthe business or to promise reimbursement of any kind tothe prospective Consultant. A Consultant who purchasesthe optional Management Services Program via a PersonalWebsite must pay with his/her own credit card.3.4: Consultant BenefitsOnce a Consultant Application and Agreement has beenaccepted by Ambit, the benefits of the Compensation Planand the Consultant Agreement are available to the newConsultant. These benefits include the right to:3.4.1. Sell Ambit products and services;3.4.2. Participate in the Ambit Compensation Plan(receive bonuses and commissions, if eligible);3.4.3. Sponsor other individual Consultants into the Ambitbusiness and thereby build a marketing organization andprogress through the Ambit Compensation Plan;3.4.4. Receive periodic Ambit literature and other Ambitcommunications;3.4.5. Participate in Ambit-sponsored support, service,training, motivational and recognition functions, uponpayment of appropriate charges, if applicable; and3.4.6. Participate in promotional and incentive contestsand programs sponsored by Ambit for its Consultants.3.5: Term and Renewal of YourAmbit BusinessA Consultant’s Ambit Agreement will remain in force solong as: (a) the Consultant does not voluntarily cancel hisor her Consultant agreement, (b) become involuntarilycancelled, or (c) become cancelled for inactivity. Section 4: Operating an Ambit Business4.1: Adherence to the Ambit Compensation PlanConsultants must adhere to the terms of the AmbitCompensation Plan as set forth in official Ambitliterature. Consultants shall not offer the Ambitopportunity through, or in combination with, any othersystem, program, or method of marketing other thanthat specifically set forth in official Ambit literature.Consultants shall not require or encourage other currentor prospective customers or Consultants to participatein Ambit in any manner that varies from the programas set forth in official Ambit literature. Consultants shallnot require or encourage other current or prospectivecustomers or Consultants to execute any agreementor contract other than official Ambit agreements andcontracts in order to become an Ambit Consultant.Similarly, Consultants shall not require or encourageother current or prospective customers or Consultants tomake any purchase from, or payment to, any individualor other entity to participate in the Ambit CompensationPlan other than those purchases or payments identified asrecommended or required in official Ambit literature.4.2: Advertising4.2.1. general. All Consultants shall safeguard and promotethe good reputation of Ambit and its products. The marketingand promotion of Ambit, the Ambit opportunity, the CompensationPlan, and Ambit products shall be consistent with thepublic interest, and must avoid all discourteous, deceptive,misleading, unethical or immoral conduct or practices.4.2.2. use of company-produced advertisingmaterials only. To promote both the products andservices, and the tremendous opportunity Ambit offers,Consultants must use only the sales tools and supportmaterials approved by Ambit in writing. Accordingly,Consultants must not use any of their own literature,advertisements, sales tools and promotional materials, orweb pages, in promoting Ambit’s services or the Ambitbusiness unless they first submit it to Ambit in writing andreceive specific written approval for its use.

4policies and procedures4.2.3. consultant websites. All Ambit Consultantsare eligible to subscribe to an Ambit Personal Website.The Ambit Personal Website is a personalized onlinestore through which Ambit Consultants may promoteand market Ambit’s services and recruit other AmbitConsultants over the Internet. Consultant PersonalWebsite Addresses (URLs) and all subdomains of aPersonal Website address are wholly owned by Ambit.Ambit reserves the right to limit advertising of itswebsites. Only approved advertising and onlinepromotional tools may be used.4.2.4. independently produced websites.Ambit allows its Independent Consultants to placeapproved advertising on the Internet to promote theAmbit Opportunity, Ambit services and designatedAmbit websites only. However, any Websites (orURLs designating these websites) on which suchadvertisements or links are placed may not be obscene,pornographic or otherwise deemed harmful to Ambit’sreputation as determined by Ambit at its sole discretion.Additionally, URLs of websites used for advertising theAmbit Opportunity, Ambit products and services anddesignated Ambit websites may not contain any term thatis a trademark, service mark, copyright, or that violatesany other proprietary right held by another. Approvedadvertising includes only those advertising tools madeavailable to Ambit Consultants through Power Zone.Ambit prohibits the use of unapproved online advertisingto promote the Ambit Opportunity, Ambit productsand services or any Ambit website address (URL) orsubdomain of an Ambit URL.Other than through an Ambit-provided ConsultantPersonal Website, Ambit Consultants are prohibited fromusing websites to take orders for the Ambit Opportunityor for Ambit products and services.4.2.5. links to an ambit website. Personal websitesubscribers are granted a limited, non-exclusive right tocreate a hypertext link to the subdomain provided byAmbit that designates the Consultant’s personal store(example: http://www..goambit.com/),provided such link does not portray Ambit and/or itsaffiliates or any of their respective products and servicesin a false, misleading, derogatory or otherwise defamatorymanner. Also, a Consultant cannot create an impressionthat any subdomain is part of his or her own or othernon-Ambit-maintained site. This limited right maybe revoked at any time. Frames or framing techniquescannot be used to enclose any Ambit trademark, logo,or proprietary information, including the images foundat this website and the content of any text of the layout/design of any page or form contained on a page withoutAmbit’s express written consent. Ambit Consultantscannot send any unsolicited mail (mail to people whohave not signed up on a mailing list), which includes theaddress of any resources on Power Zone.Except as noted above, Ambit Independent Consultantsare not conveyed any patent, trademark, copyright, orproprietary right of Ambit Marketing, L.P., any of itsaffiliated companies or any third party.4.2.6. banner advertising. From time to time Ambitmakes banner ads and other online advertising toolsavailable to Ambit Consultants through Power Zone.These tools may be used by Ambit Consultants to promoteAmbit services and the Ambit Opportunity as they areintended and as Consultants are directed to use them inPower Zone. As with any Ambit online promotions, thesetools may not be placed on websites or linked to websitesor URLs that are obscene, pornographic or otherwisedeemed harmful to Ambit’s reputation as determined byAmbit at its sole discretion.4.2.7. domain names. Consultants may not use orattempt to register any of Ambit’s trade names,trademarks, service names, service marks, productnames, the Company’s name, or any derivative thereof,for any Internet domain name.4.2.8.trademarks and copyrights. Ambit will notallow the use of its trade names, trademarks, designs, orsymbols by any person, including Ambit Consultants,without its prior, written permission. Consultants may notproduce for sale or distribution any recorded Companyevents and speeches without written permission fromAmbit nor may Consultants reproduce for sale or forpersonal use any recording of Company-produced audioor video tape presentations.4.2.9. media and media inquiries. All mediarelations efforts must be coordinated through the AmbitPublic Relations Department (1-214-270-1900). AnyConsultant who is contacted by the media or wishes tocontact the media must first contact an Ambit PublicRelations representative before taking any action and/or issuing any statement. Any communications with TV,radio and print media should first be approved by AmbitPublic Relations.

ambit energy, l.p. 54.2.10. unsolicited email. Ambit does not permitConsultants to send unsolicited commercial emails unlesssuch emails strictly comply with applicable laws andregulations including, without limitation, the federal CANSPAM Act. Any email sent by a Consultant that promotesAmbit, the Ambit opportunity, or Ambit products andservices must comply with the following:• There must be a functioning return email address tothe sender.• There must be a notice in the email that advises therecipient that he or she may reply to the email, via thefunctioning return email address, to request that futureemail solicitations or correspondence not be sent to himor her (a functioning “opt-out” notice).• The email must include the Consultant’s physicalmailing address.• The email must clearly and conspicuously disclose that themessage is an advertisement or solicitation.• The use of deceptive subject lines and/or false headerinformation is prohibited.• All opt-out requests, whether received by email or regularmail, must be honored. If a Consultant receives an opt-outrequest from a recipient of an email, the Consultant mustforward the opt-out request to the Company.Ambit may periodically send commercial emails onbehalf of Consultants. By entering into the ConsultantAgreement, Consultant agrees that the Company maysend such e-mails and that the Consultant’s physical andemail addresses will be included in such emails as outlinedabove. Consultants shall honor opt-out requests generatedas a result of such emails sent by the Company.4.2.11. unsolicited faxes. Except as provided in thissection, Consultants may not use or transmit unsolicitedfaxes or use an automatic telephone dialing system relativeto the operation of their Ambit businesses. The term“automatic telephone dialing system” means equipmentwhich has the capacity to: (a) store or produce telephonenumbers to be called, using a random or sequentialnumber generator; and (b) to dial such numbers. Theterms “unsolicited faxes” means the transmission viatelephone facsimile of any material or informationadvertising or promoting Ambit, its products, itscompensation plan or any other aspect of the companywhich is transmitted to any person, except that theseterms do not include a fax or e-mail: (a) to any personwith that person’s prior express invitation or permission;or (b) to any person with whom the Consultant has anestablished business or personal relationship. The term“established business or personal relationship” means aprior or existing relationship formed by a voluntary twowaycommunication between a Consultant and a person,on the basis of: (a) an inquiry, application, purchase ortransaction by the person regarding products offered bysuch Consultant; or (b) a personal or familial relationship,which relationship has not been previously terminatedby either party.4.3: Bonus Buying ProhibitedBonus buying is strictly and absolutely prohibited. “Bonusbuying” includes: (a) the enrollment of individuals orentities without the knowledge of and/or execution of anIndependent Consultant Application and Agreement bysuch individuals or entities; (b) the fraudulent enrollmentof an individual or entity as a Consultant or customer;(c) the enrollment or attempted enrollment of nonexistentindividuals or entities as Consultants orcustomers (“phantoms”); (d) Purchasing Ambit productsor services on behalf of another Consultant or customer,or under another Consultant’s or customer’s I.D.number, to qualify for commissions or bonuses; and/or (e) any other mechanism or artifice to qualify forrank advancement, incentives, prizes, commissions orbonuses that is not driven by bona fide product or servicepurchases by end user consumers.4.4: Business Entities4.4.1. corporations. To become a new Consultant asa corporation or to change the status of the corporation,you must provide Ambit with the following:• Completed Consultant Agreement completed by anauthorized officer of the corporation.• A copy of the corporate Articles of Incorporation whichhas been file-stamped by the Secretary of State in the stateof incorporation.• Full name, address and Social Security Number of (1)each shareholder of the corporation who owns more than5% of the outstanding stock of the corporation; (2) eachofficer of the corporation; and (3) each director of thecorporation. A copy of the official notification from theInternal Revenue Service issuing the Federal EmployerIdentification Number (FEIN) for the corporation.• A copy of the corporate resolution authorizing thecorporation to enter into the Consultant Agreement.• Letter of designation from the corporation designatingone individual, who must be at least 18 years of age, as theresponsible party for the corporation’s operations and sales.

6policies and proceduresIf an active Consultant desires to change the status fromthat of an individual Consultant to that of a corporateConsultant, the Consultant must use the Sale/TransferForm available online through Power Zone. See “Sale/Transfer of Consultant Position” under “Consultant Rightsand Obligations” for more details.It is not permissible for stockholders, officers and directorsof the corporation applying as a Consultant corporationto have been Ambit Consultants, (1) as individuals, or(2) as members of a Consultant partnership, or (3) as astockholder, officer or director of another Consultantcorporation, or (4) as a trustee or a beneficiary of anConsultant trust, within six calendar months precedingthe execution of the Consultant Agreement.4.4.2. partnerships. To become a new Consultant asa partnership or to change the status of the partnership,you must provide Ambit with the following:• A completed Consultant Agreement;• A copy of the partnership agreement executed by all partners;• Full name, address and social security number of each partner;• A copy of the official notification from the InternalRevenue Service issuing the FEIN for the partnership;• A copy of the consent of the partnership to enter into theConsultant Agreement with Ambit; and• A letter of designation from the partnership designatingone individual, who must be at least 18 years of age, as theresponsible party for the partnership’s operations.It is not permissible for any partner applying as aConsultant partnership to have been an Ambit Consultant(1) as an individual, or (2) as a partner of anotherConsultant partnership, or (3) as a stockholder, officer ordirector of an Consultant corporation, or (4) as a trusteeor a beneficiary of an Consultant trust, within six calendarmonths preceding the execution of the ConsultantAgreement.4.4.3: trusts. To become a new Consultant as a trust orto change the status of the Consultant position to a trust,you must provide Ambit with the following:• Completed Consultant Agreement signed by all trustees ofthe trust.• A complete copy of the trust agreement.• Full name, address and Social Security number of alltrustees and beneficiaries.• A copy of the official notification from the InternalRevenue Service issuing the FEIN for the trust.• Letter of designation from the trustees designating oneindividual, who must be at least 18 years of age, as theresponsible party for the trust’s operations and sales.If an active Consultant desires to change status from thatof an individual Consultant to that of a trust Consultant,the Consultant must use the Sale/Transfer Form availableonline through Power Zone. See “Sale/Transfer ofConsultant Position” under “Consultant Rights andObligations” for more details.It is not permissible for any trustee or beneficiary of atrust applying as an Consultant trust to have been anAmbit Consultant (1) as an individual, or (2) as a partnerof an Consultant partnership, or (3) as a stockholder,officer or director of a Consultant corporation, or (4) asa trustee or a beneficiary of another Consultant trust,within six calendar months preceding the executionof the trust Consultant agreement.4.4.4: business entity transfers may not resultin sponsor changes. To prevent the circumventionof Section 4.24 (regarding transfers and assignments ofAmbit business), if an additional partner, shareholder,member, or other business entity affiliate is added toa business entity, the original applicant must remainas a party to the original Consultant Application andAgreement. If the original Consultant wants to terminatehis or her relationship with the Company, he or she musttransfer or assign his or her business in accordance withSection 4.24. If this process is not followed, the businessshall be cancelled upon the withdrawal of the originalConsultant. All bonus and commission checks will be sentto the address of record of the original Consultant.Please note that the modifications permitted withinthe scope of this paragraph do not include a changeof sponsorship. Changes of sponsorship are addressedin Section 4.5, below. In cases in which an impropersponsor change has occurred, Ambit reserves the soleand exclusive right to determine the final disposition ofthe downline organization. Resolving conflicts over theproper placement of a downline that has developed underan organization that has improperly switched sponsors isoften extremely difficult. Therefore, CONSULTANTS WAIVEANY AND ALL CLAIMS AGAINST AMBIT THAT RELATETO OR ARISE FROM AMBIT’S DECISION REGARDINGTHE DISPOSITION OF ANY DOWNLINE ORGANIZATIONTHAT DEVELOPS BELOW AN ORGANIZATION THAT HASIMPROPERLY CHANGED LINES OF SPONSORSHIP.4.5: Change of Sponsor

ambit energy, l.p. 7To protect the integrity of all marketing organizationsand safeguard the hard work of all Consultants, Ambitprohibits changes in sponsorship. Maintaining theintegrity of sponsorship is critical for the success of everyConsultant and marketing organization. Accordingly,the transfer of an Ambit business or customer accountfrom one sponsor to another is not permitted unless theConsultant or customer voluntarily cancels his or herAmbit business or service and remains inactive (i.e., nopurchases of Ambit services, no sales of Ambit services,no sponsoring, no attendance at any Ambit functions,participation in any other form of Consultant activity,or operation of any other Ambit business) for six fullcalendar months. Following the six-month period ofinactivity, the former Consultant or customer may reapplyunder a new sponsor.In cases in which an improper sponsor change hasoccurred, Ambit reserves the sole and exclusive rightto determine the final disposition of the downlineorganization. Resolving conflicts over the properplacement of a downline that has developed under anorganization that has improperly switched sponsors isoften extremely difficult. Therefore, CONSULTANTS WAIVEANY AND ALL CLAIMS AGAINST AMBIT THAT RELATETO OR ARISE FROM AMBIT’S DECISION REGARDINGTHE DISPOSITION OF ANY DOWNLINE ORGANIZATIONTHAT DEVELOPS BELOW AN ORGANIZATION THAT HASIMPROPERLY CHANGED LINES OF SPONSORSHIP.4.6: Unauthorized Claims4.6.1: indemnification. A Consultant is fullyresponsible for all of his or her verbal and writtenstatements made regarding Ambit products, services, andthe Compensation Plan which are not expressly containedin official Ambit materials. Consultants agree to indemnifyAmbit and Ambit’s directors, officers, employees, andagents, and hold them harmless from any and all liabilityincluding judgments, civil penalties, refunds, attorneyfees, court costs, or lost business incurred by Ambit as aresult of the Consultant’s unauthorized representations oractions. This provision shall survive the termination ofthe Consultant Agreement.4.6.2 income claims. In their enthusiasm toenroll prospective Consultants, some Consultants areoccasionally tempted to make income claims or earningsrepresentations to demonstrate the inherent power ofnetwork marketing. This is counterproductive becausenew Consultants may become disappointed very quicklyif their results are not as extensive or as rapid as the resultsothers have achieved. At Ambit, we firmly believe thatthe Ambit income potential is great enough to be highlyattractive, without reporting the earnings of others.Moreover, the Federal Trade Commission and severalstates have laws or regulations that regulate or evenprohibit certain types of income claims and testimonialsmade by persons engaged in network marketing. WhileConsultants may believe it beneficial to provide copiesof checks, or to disclose the earnings of themselves orothers, such approaches have legal consequences that cannegatively impact Ambit as well as the Consultant makingthe claim unless appropriate disclosures required by laware also made contemporaneously with the income claimor earnings representation. Because Ambit Consultantsdo not have the data necessary to comply with the legalrequirements for making income claims, a Consultant,when presenting or discussing the Ambit opportunity orCompensation Plan to a prospective Consultant, may notmake income projections, income claims, or disclose hisor her Ambit income (including the showing of checks,copies of checks, bank statements, or tax records).4.6.3: product claims. Consultants are prohibitedfrom making any claim regarding Ambit Energy productsthat deviates from the product’s terms, pricing, andconditions.4.6.4: claiming to be customer. Consultants arestrictly prohibited from holding themselves out as thecustomer. Consultants shall neither perform third-partyverification (“TPV”) for the customer nor interfere withTPV by guiding customer’s answers or remaining on theline during the recorded TPV call. Consultants shall notcomplete enrollment for the customer, sign documents forthe customer, or act on behalf of the customer.4.7: Trade Shows, Expositions andOther Sales ForumsConsultants may display and/or sell Ambit servicesat trade shows and professional expositions. Beforesubmitting a deposit to the event promoter, Consultantsmust contact Consultant Support in writing forconditional approval.4.8: Conflicts of Interest4.8.1. nonsolicitation. Ambit Consultants are freeto participate in other multilevel or network marketingbusiness ventures or marketing opportunities (collectively

8policies and procedures“network marketing”). However, during the term of thisAgreement, Consultants may not directly or indirectlyRecruit other Ambit Consultants or customers for anyother network marketing business.Following the cancellation of a Consultant’s IndependentConsultant Agreement, and for a period of one yearthereafter, with the exception of a Consultant who ispersonally sponsored by the former Consultant, a formerConsultant may not recruit any Ambit Consultant orCustomer for another network marketing business. “Recruit”means the actual or attempted sponsorship, solicitation,enrollment, encouragement, or effort to influence in anyother way, either directly, indirectly, or through a thirdparty, another Ambit Consultant or customer to enrollor participate in another multilevel marketing, networkmarketing or direct sales opportunity.Consultants and the Company recognize that becausenetwork marketing is conducted through networks ofindependent contractors broadly dispersed across the entireUnited States and internationally, and business is commonlyconducted via the Internet and telephone, an effort tonarrowly limit the geographic scope of this non-solicitationprovision would render it wholly ineffective. Therefore,Consultants and Ambit agree that this non-solicitationprovision shall apply throughout the United States.4.8.2. sale of competing energy services.Consultants must not sell, or attempt to sell, any non-Ambit energy related programs, products or services toAmbit customers or Consultants.4.8.3. consultant participation in other directselling programs. If a Consultant is engaged in othernon-Ambit direct selling programs, it is the responsibilityof the Consultant to ensure that his or her Ambit businessis operated entirely separate and apart from any otherprogram. To this end, the following must be adhered to:• Consultants shall not display Ambit promotional material,sales aids, products or services with or in the samelocation as any non-Ambit promotional material or salesaids, products or services.• Consultants shall not offer the Ambit opportunity,products or services to prospective or existing customersor Consultants in conjunction with any non-Ambitprogram, opportunity, product or service.• Consultants may not offer any non-Ambit opportunity,products, services or opportunity at any Ambit-relatedmeeting, seminar or convention, or within 2 hours and a5-mile radius of the Ambit event. If the Ambit meetingis held telephonically or on the Internet, any non-Ambitmeeting must be at least two hours before or after theAmbit meeting, and on a different conference telephonenumber or Internet address from the Ambit meeting.4.8.4. downline activity (genealogy) reports.Consultant access to their Downline Activity Reports ispassword protected. All Downline Activity Reports andthe information contained therein are confidential andconstitute proprietary information and business tradesecrets belonging to Ambit. Downline Activity Reportsare provided to Consultants in strictest confidenceand are made available to Consultants for the solepurpose of assisting Consultants in working with theirrespective Downline Organizations in the developmentof their Ambit business. Consultants should use theirDownline Activity Reports to assist, motivate, and traintheir downline Consultants. The Consultant and Ambitagree that, but for this agreement of confidentiality andnondisclosure, Ambit would not provide DownlineActivity Reports to the Consultant.A Consultant shall not, on his or her own behalf, or onbehalf of any other person, partnership, association,corporation or other entity:4.8.4.1. Directly or indirectly disclose any informationcontained in any Downline Activity Report to any third party;4.8.4.2. Directly or indirectly disclose the password orother access code to his or her Downline Activity Report;4.8.4.3. Use the information to compete with Ambit orfor any purpose other than promoting his or her Ambitbusiness;4.8.4.4. Recruit or solicit any Consultant or Customer ofAmbit listed on any report, or in any manner attempt toinfluence or induce any Consultant or preferred Customerof Ambit, to alter their business relationship with Ambit; or4.8.4.5. Use or disclose to any person, partnership,association, corporation, or other entity any informationcontained in any Downline Activity Report.Upon demand by the Company, any current or formerConsultant will return the original and all copies ofDownline Activity Reports to the Company.4.9: Targeting Other Direct SellersAmbit does not condone Consultants specifically orconsciously targeting the sales force of another direct sales

ambit energy, l.p. 9company to sell Ambit products or to become Consultantsfor Ambit, nor does Ambit condone Consultants’ solicitationor enticement of members of the sales force of anotherdirect sales company to violate the terms of their contractwith such other company. Should Consultants engage insuch activity, they bear the risk of being sued by the otherdirect sales company. If any lawsuit, arbitration or mediationis brought against a Consultant alleging that he or sheengaged in inappropriate recruiting activity of its salesforce or customers, Ambit will not pay any of Consultant’sdefense costs or legal fees, nor will Ambit indemnify theConsultant for any judgment, award, or settlement.4.10. Cross-SponsoringActual or attempted cross-sponsoring is strictly prohibited.“Cross-sponsoring” is defined as the enrollment ofan individual who or entity that already has a currentcustomer or Consultant Agreement on file with Ambit, orwho has had such an agreement within the preceding sixcalendar 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 tocircumvent this policy is prohibited. Consultants shall notdemean, discredit or defame other Ambit Consultants inan attempt to entice another Consultant to become part ofthe first Consultant’s marketing organization. This policyshall not prohibit the transfer of an Ambit business inaccordance with Section 4.5.If cross-sponsoring is discovered, it must be brought tothe Company’s attention immediately. Ambit may takedisciplinary action against the Consultant that changedorganizations and/or those Consultants who encouragedor participated in the cross-sponsoring. Ambit may alsomove all or part of the offending Consultant’s downline tohis or her original downline organization if the Companydeems it equitable and feasible to do so. However, Ambitis under no obligation to move the cross-sponsoredConsultant’s downline organization, and the ultimatedisposition of the organization remains within the solediscretion of Ambit. Consultants waive all claims andcauses of action against Ambit arising from or relatingto the disposition of the cross-sponsored Consultant’sdownline organization.4.11. SlammingConsultants must never switch, or attempt to switch, anyindividual or entity to Ambit Energy’s services unless theperson has authorized the transfer by signing a Letter ofAuthorization (LOA) consenting to change their service toAmbit’s service.4.12. Contacting SuppliersUnder no circumstances may a Consultant contact anyAmbit supplier of energy service or other Ambit supplierof services without prior written authorization froman authorized officer of Ambit Energy. Further, underno circumstances may a Consultant directly contacta competitive retail electricity provider on behalf ofAmbit or in connection with any Ambit business withoutreceiving prior written authorization from an authorizedofficer of Ambit.4.13. Errors or QuestionsIf a Consultant has questions about or believes anyerrors have been made regarding commissions, bonuses,downline activity reports, or charges, the Consultant mustnotify Ambit in writing within 60 days of the date of thepurported error or incident in question. Ambit will notbe responsible for any errors, omissions or problems notreported to the Company within 60 days.4.14. Governmental Approval or EndorsementNeither federal nor state regulatory agencies or officialsapprove or endorse any direct selling or network marketingcompanies or programs. Therefore, Consultants shall notrepresent or imply that Ambit or its Compensation Planhave been “approved,” “endorsed” or otherwise sanctionedby any government agency.4.15. IdentificationEvery Ambit Independent Consultant will be assigned aunique identification number “code” which will becometheir identification number and will be used in allcorrespondence. Every Ambit identification number musthave a corresponding tax ID number provided by theConsultant during the application process. Only SocialSecurity numbers or FEINs issued by the Social SecurityAdministration or Internal Revenue Service, for use bythe individual or organization filling out the ConsultantAgreement, will be accepted. Providing false or invalidSocial Security numbers or FEINs to Ambit will subject aConsultant to termination. All identification numberswill be kept strictly confidential, except where properlyand legally required.4.16. Naming Your IndependentConsultant Business.The name of a Consultant position is determined by the

10policies and proceduresname identified on the Consultant Agreement. No othername may be used in conjunction with a Consultantbusiness. To alter the Consultant name (including theaddition or deletion of a spouse, a change in last name,creating a D.B.A. “Doing Business As,” or any other namechange) the Sale/Transfer Packet must be used. In thesecases, the $45 administrative fee will be waived. Using aname other than the one appearing on the Consultantaccount is strictly prohibited.4.17. Income TaxesEach Consultant is responsible for paying local, state, andfederal taxes on any income generated as an IndependentConsultant. If an Ambit business is tax exempt, the Federaltax identification number must be provided to Ambit.Every year, Ambit will provide an IRS Form 1099-misc(Non-employee Compensation) earnings statement toeach U.S. resident who: (1) Had earnings of over $600 inthe previous calendar year; or (2) Made purchases duringthe previous calendar year in excess of $5,000.4.18. Independent Contractor StatusConsultants are independent contractors, and are notpurchasers of a franchise or a business opportunity.The agreement between Ambit Energy, L.P., and itsConsultants does not create an employer/employeerelationship, agency, partnership, or joint venture betweenthe Company and the Consultant. A Consultant shallnot be treated as an employee for his or her services orfor Federal or State tax purposes. All Consultants areresponsible for paying local, state and federal taxes duefrom all compensation earned as a Consultant of theCompany. The Consultant has no authority (expressedor implied), to bind the Company to any obligation.Consultants shall not hold themselves out as an employeeor affiliate of Ambit Marketing, L.P., Ambit Energy, L.P.,or any subsidiaries or related Ambit Marketing or AmbitEnergy entities. Each Consultant shall establish his or herown goals, hours, and methods of sale, so long as he orshe complies with the terms of the Consultant Agreement,these Policies and Procedures, and applicable laws.The name of Ambit and other names as may be adoptedby Ambit are proprietary trade names, trademarks andservice marks of Ambit. As such, these marks are of greatvalue to Ambit and are supplied to Consultants for theiruse only in an expressly authorized manner. Use of theAmbit name on any item not produced by the Companyis prohibited except as follows:• Consultant’s Name• Independent Ambit Consultant• Ambit’s corporate address• Ambit’s corporate phone numberAll Consultants may list themselves as an “IndependentAmbit Consultant” in the white or yellow pages of thetelephone directory under their own name using onlyyour personal email address, personal website andpersonal contact information. Consultants are prohibitedfrom listing any and all Ambit Energy or Ambit Marketingcontact information in any directory. No Consultantmay place telephone directory display ads using Ambit’sname or logo. Consultants may not answer the telephoneby saying “Ambit”, “Ambit Incorporated”, or in any othermanner that would lead the caller to believe that he or shehas reached corporate offices of Ambit.4.19. InsuranceYou may wish to arrange insurance coverage for yourbusiness. Your homeowner’s insurance policy doesnot cover business-related injuries, or the theft of ordamage to inventory or business equipment. Contactyour insurance agent to make certain that your businessproperty is protected. This can often be accomplished witha simple “Business Pursuit” endorsement attached to yourpresent homeowner’s policy.4.20. Adherence to Laws and OrdinancesConsultants shall comply with all federal, state, and locallaws and regulations in the conduct of their businesses.Many cities and counties have laws regulating certainhome-based businesses. In most cases these ordinancesare not applicable to Consultants because of the natureof their business. However, Consultants must obey thoselaws that do apply to them. If a city or county officialtells a Consultant that an ordinance applies to him orher, the Consultant shall be polite and cooperative,and immediately send a copy of the ordinance to theCompliance Department of Ambit. In most cases thereare exceptions to the ordinance that may apply toAmbit Consultants.4.21. MinorsA person who is under the age of 18 may not be an AmbitConsultant. Consultants shall not enroll or recruit minorsinto the Ambit program.4.22. Family Businesses4.22.1. one ambit business per couple. Ambitpermits a husband and wife, regardless of where each

ambit energy, l.p. 11lives, to operate only one position in Ambit, unless eachindividual is sponsored by the same Consultant, or unlesseach individual had a separate Consultant position priorto marriage. A husband and wife, by operating as a singleConsultant, represent to Ambit that each of them (1) isbound by the terms of the Consultant Agreement andthese Policies and Procedures; (2) is responsible for anyand all conduct by his or her spouse even though only onespouse is designated as a Consultant; and (3) understandsthat if the spouse of any Consultant acts in a manner thatwould be a violation of the Consultant Agreement and/or these Policies and Procedures, such violation will beattributed to the Consultant position, and thus to both thehusband and wife.4.22.2 family members within the samehousehold. All Consultants and their children, siblings,parents and in-laws residing in the same household may,at the time one or more of them is being sponsored, havethe same sponsor or may have one Ambit business. By wayof example, a parent and adult child living in the samehome may operate one Consultant position or may signup under the same sponsor. Similarly, if spouses do notelect to operate as a single Consultant, each spouse mustsign up under the same sponsor.4.22.3. actions of household members oraffiliated individuals. If any member of aConsultant’s immediate household engages in any activitywhich, if performed by the Consultant, would violateany provision of the Agreement, such activity will bedeemed a violation by the Consultant and Ambit maytake disciplinary action pursuant to the Statement ofPolicies against the Consultant. Similarly, if any individualassociated in any way with a corporation, partnership,trust or other entity (collectively “affiliated individual”)violates the Agreement, such action(s) will be deemed aviolation by the entity, and Ambit may take disciplinaryaction against the entity.4.23. Customers Without aDesignated ConsultantA Consultant may claim a customer who lacks adesignated Consultant when all three of the followingcriteria are met: (i) the Consultant can provide the nameand Ambit account number of the customer; (ii) thecustomer’s enrollment date is no more than 30 days priorto the Consultant’s start date; and (iii) the customer is inPreverify, Pending or Active status. Only the sponsoringConsultant may claim an orphan customer. Customerssponsored by cancelled ICs are not considered orphansand will not be transferred to another Consultant. Underno circumstances will a customer in cancelled status betransferred to another Consultant.4.24. Sale, Transfer or Assignment ofAmbit BusinessSubject to Ambit’s prior review and approval, whichapproval Ambit may grant at its sole option anddiscretion, a Consultant may sell or transfer his/herConsultant position to an individual, partnership, trust orcorporation. A sale will be defined as a change in whichthe individual(s) selling the Consultant position no longermaintain(s) a financial interest in the Consultant positionupon completion of the sale. A transfer will be definedas a change in name and/or identification number inwhich the Consultant still retains any financial interestin the Consultant position upon completion of thetransfer. Some examples of transfers are: transfer from onespouse to the other spouse; transfer from an individualto a corporation; trust or partnership or vice versa, inwhich the transferor or any individuals having an interesttherein still retains a financial interest; transfer from socialsecurity number to FEIN or vice versa. In all cases, thetransferor retains a financial interest/ownership interestafter the transfer. The review and approval process will notbegin until Ambit has received all of the documentationrequired in accordance with the requirements set forthin the Position Sale/Transfer Packet, including a check ormoney order for the applicable processing fees from theConsultant who is selling or transferring the position.Processing fees are determined by the level of promotionthe Consultant position has achieved at the time of thesale/transfer and are to be paid by the seller or transferorto Ambit. There is a $45.00 processing fee that must bepaid by the transferor, and an additional $45.00 processingfee that must be paid by the transferee.Ambit reserves the right, at its sole option and discretion,to determine a sale versus a transfer. A Sale/Transfer Formcan be obtained online by downloading it from PowerZone. Ambit will not approve any sale or transfer of aConsultant position for which Ambit receives a Notice ofLevy from the Internal Revenue Service or a court-orderedgarnishment (e.g., child support) against the transferringposition. Ambit will also revoke any sale or transfer of a

12policies and proceduresConsultant position that occurs within a 60-day period inwhich Ambit receives a Notice of Levy from the InternalRevenue Service or a court-ordered garnishment. Ambitalso will not approve any sale or transfer of a Consultantposition that involves a Consultant currently underinvestigation. Once the sale or transfer of a position hasbeen completed, the transferring Consultant may notoperate another Consultant position for six months fromthe date of the sale or transfer.4.25. Separation of an Ambit Business4.25.1. divorce. Should a married couple operatinga single Consultant position divorce, they must provideAmbit with (1) a certified copy of the final decree ofdivorce that sets forth ownership of the Consultantposition; (2) a completed Sale/Transfer Form dated nolater than ten (10) business days after the date of the finaldecree of divorce, and (3) a $45 nonrefundable check ormoney order for processing fees. Until Ambit receivesproper documentation, the Consultant position willretain its pre-divorce ownership and no changes to theConsultant position will be implemented.4.25.2. business entity dissolution. Upon thedissolution of a business entity (trust, partnership,corporation, etc.), the owners of the business entity shallprovide Ambit with written instruction on who shall bethe proper party(s) to continue to operate the business,and a $45.00 processing fee shall apply. The writteninstruction shall be signed by all owners, shareholders,partners, or trustees, and all signatures shall be notarized.4.25.3. no commission or downline division.Under no circumstances will the Downline Organizationof divorcing spouses or a dissolving business entity bedivided. Similarly, under no circumstances will Ambitsplit commission and bonus checks between divorcingspouses or members of dissolving entities. Ambit willrecognize only one Downline Organization and willissue only one commission check per Ambit business percommission cycle. Commission checks shall always beissued to the same individual or entity. In the event thatparties to a divorce or dissolution proceeding are unableto resolve a dispute over the disposition of commissionsand ownership of the business in a timely fashion asdetermined by the Company, the Consultant Agreementshall be involuntarily cancelled.If a former spouse has completely relinquished all rightsin the original Ambit business pursuant to a divorce, he orshe is thereafter free to enroll under any sponsor of his orher choosing without waiting six calendar months. In thecase of business entity dissolutions, the former partner,shareholder, member, or other entity affiliate who retainsno interest in the business must wait six calendar monthsfrom the date of the final dissolution before re-enrolling asa Consultant. In either case however, the former spouse orbusiness affiliate shall have no rights to any Consultants intheir former organization or to any former retail customer.They must develop the new business in the same manneras would any other new Consultant.4.26. SponsoringAll active Consultants in good standing have the right tosponsor and enroll others into Ambit. Each prospectivecustomer or Consultant has the ultimate right to choosehis or her own Sponsor. If two Consultants claim to bethe Sponsor of the same new Consultant or customer, theCompany shall regard the first application received by theCompany as controlling.4.27. SuccessionUpon the death or incapacitation of a Consultant, his orher business may be passed to his or her heirs. Appropriatelegal documentation must be submitted to the Companyto ensure the transfer is proper. Accordingly, a Consultantshould consult an attorney to assist him or her in thepreparation of a will or other testamentary instrument.Whenever an Ambit business is transferred by a willor other testamentary process, the beneficiary acquiresthe right to collect all bonuses and commissions of thedeceased Consultant’s marketing organization providedthe following qualifications are met. The successor(s) must:• Execute a Consultant Agreement;• Comply with terms and provisions of the Agreement, and• Meet all of the qualifications for the deceased orincapacitated Consultant’s status.Bonus and commission checks of an Ambit businesstransferred pursuant to this section will be paid in a singlecheck jointly to the devisees. The devisees must provideAmbit with an “address of record” to which all bonus andcommission checks will be sent.If the business is bequeathed to joint devisees, they mustform a business entity and acquire a federal taxpayerIdentification number. Ambit will issue all bonus andcommission checks and one 1099 to the business entity.4.27.1. transfer upon death of a consultant.

ambit energy, l.p. 13In addition to complying with the above provisions ofSection 4.27, to effect a testamentary transfer of an Ambitbusiness, the successor must provide the following toAmbit: (1) an original death certificate; (2) a notarizedcopy of the will or other instrument establishing thesuccessor’s right to the Ambit business; and (3) acompleted and executed Consultant Agreement.4.27.2. transfer upon incapacitation of aconsultant. In addition to complying with the aboveprovisions of Section 4.27, to effectuate a transfer of anAmbit business because of incapacity, the successor mustprovide the following to Ambit: (1) a notarized copy ofan appointment as trustee; (2) a notarized copy of thetrust document or other documentation establishing thetrustee’s right to administer the Ambit business; and (3) acompleted Consultant Agreement executed by the trustee.4.28. telemarketing techniques.The Federal Trade Commission and the FederalCommunications Commission each have laws that restricttelemarketing practices. Both federal agencies (as well as anumber of states) have “do not call” regulations as part oftheir telemarketing laws. Although Ambit does not considerConsultants to be “telemarketers” in the traditional senseof the word, these government regulations broadly definethe term “telemarketer” and “telemarketing” so that yourinadvertent action of calling someone whose telephonenumber is listed on the federal “do not call” registry couldcause you to violate the law. Moreover, these regulationsmust not be taken lightly, as they carry significantpenalties (up to $11,000 per violation).Therefore, Consultants must not engage in telemarketingin the operation of their Ambit businesses. The term“telemarketing” means the placing of one or moretelephone calls to an individual or entity to induce thepurchase of an Ambit product or service, or to recruitthem for the Ambit Opportunity. “Cold calls” made toprospective customers or Consultants that promote eitherAmbit’s products or services or the Ambit Opportunityconstitute telemarketing and are prohibited. However,a telephone call(s) placed to a prospective customeror Consultant (a “prospect”) is permissible under thefollowing situations:• If the Consultant has an established business relationshipwith the prospect. An “established business relationship”is a relationship between a Consultant and a prospectbased on the prospect’s purchase, rental or lease of goodsor services from the Consultant, or a financial transactionbetween the prospect and the Consultant, within the 18months immediately preceding the date of a telephone callto induce the prospect’s purchase of a product or service.• The prospect’s personal inquiry or application regarding aproduct or service offered by the Consultant, within the threemonths immediately preceding the date of such a call.• If the Consultant receives written and signed permissionfrom the prospect authorizing the Consultant to call.The authorization must specify the telephone number(s)that the Consultant is authorized to call.• You may call family members, personal friends, andacquaintances. An “acquaintance” is someone withwhom you have at least a recent first-hand relationshipwithin the preceding three months. 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 thatis not subject to this exemption. Thus, if you engage incalling “acquaintances,” you must make such calls on anoccasional basis only and not make this a routine practice.• In addition, Consultants shall not use automatic telephonedialing systems relative to the operation of their Ambitbusinesses. The term “automatic telephone dialing system”means equipment which has the capacity to: (a) store orproduce telephone numbers to be called, using a random orsequential number generator; and (b) to dial such numbers.4.29: door-to-door marketing. Consultants shallnot engage in door-to-door marketing in relation to theirAmbit Independent Consultant business.4.30: prospective consultant and customerinformation. Buying or selling or inducing others tobuy or sell customer or prospective customer informationis strictly prohibited at all times. Consultants shall notprovide any type of incentive for action(s) or proposedaction(s) to induce a Consultant or third party to sell anyinformation pertaining to an Ambit Energy customer orprospective customer. Section 5: Responsibilities ofConsultant5.1. Change of Address, Telephone,and E-Mail AddressesConsultants must report any change of address, emailaddress, or telephone number by calling ConsultantSupport or by sending written notice to Ambit at the

14policies and proceduresfollowing address:Ambit EnergyAttention: Consultant Support1801 North Lamar Street, Suite 200Dallas, Texas 75202Written notification of an address change must be signedby all parties when a position is owned by more than oneindividual (e.g., husband and wife). When mail is returnedto Ambit because Ambit has not been informed of anaddress change, the Consultant is placed on inactive status.5.2. Continuing Development Obligations5.2.1. ongoing training. Any Consultant whosponsors another Consultant into Ambit must performa bona fide assistance and training function to ensurethat his or her downline is properly operating his orher Ambit business. Consultants must have ongoingcontact and communication with the Consultants intheir Downline Organizations. Examples of such contactand communication may include, but are not limited to,newsletters, written correspondence, personal meetings,telephone contact, voice mail, electronic mail, and theaccompaniment of downline Consultants to Ambitmeetings, training sessions, and other functions. UplineConsultants are also responsible to motivate and trainnew Consultants in Ambit product knowledge, effectivesales techniques, the Ambit Compensation Plan, andcompliance with Company Policies and Procedures.Communication with and the training of downlineConsultants must not, however, violate Section 4.2(regarding the development of Consultant-producedsales aids and advertising materials).Consultants must monitor the Consultants in theirDownline Organizations to ensure that downlineConsultants do not make improper product or businessclaims, or engage in any illegal or inappropriate conduct.Upon request, every Consultant should be able to providedocumented evidence to Ambit of his or her ongoingfulfillment of the responsibilities of a Sponsor.5.2.2. increased training responsibilities.As Consultants progress through the various levels ofleadership, they will become more experienced in salestechniques, product knowledge, and understanding of theAmbit program. They will be called upon to share thisknowledge with lesser experienced Consultants withintheir organization.5.2.3. ongoing sales responsibilities. Regardlessof their level of achievement, Consultants have an ongoingobligation to continue to personally promote salesthrough the generation of new customers and throughservicing their existing customers.5.3. NondisparagementAmbit wants to provide its Independent Consultants withthe best products, compensation plan, and service in theindustry. Accordingly, we value your constructive criticismand comments. All such comments should be submittedin writing to Ambit’s Consultant Support Department.Remember, to best serve you, we must hear from you!While Ambit welcomes constructive input, negativecomments and remarks made in the field by Consultantsabout the Company, its products, or compensation planserve no purpose other than to sour the enthusiasm ofother Ambit Consultants. For this reason, and to set theproper example for their downline, Consultants must notdisparage, demean or make negative remarks aboutAmbit, other Ambit Consultants, Ambit’s products, theMarketing and Compensation plan, or Ambit’s directors,officers or employees.5.4. Providing Documentation to ApplicantsConsultants must provide the most current version ofthe Policies and Procedures and the Compensation Planto individuals whom they are sponsoring to becomeConsultants before the applicant signs a ConsultantAgreement. Additional copies of Policies and Procedurescan be downloaded from Ambit’s website.5.5. Reporting Policy ViolationsConsultants observing a Policy violation by anotherConsultant should submit a written report of the violationdirectly to the attention of the Ambit Compliance Department.Details of the incidents such as dates, number ofoccurrences, persons involved, and any supportingdocumentation should be included in the report.For questions regarding compliance with Ambit’s Policiesand Procedures or any applicable laws or to report knownor suspected Consultant misconduct, you are encouragedto contact Ambit Energy’s compliance department by(1) email at compliance@ambitenergy.com or (2) fax at877-506-2367 or (3) mail to: Ambit Energy, Attention:Compliance, 1801 North Lamar Street, Suite 200, Dallas,Texas 75202.If you are contacted by either Ambit Energy or a governmentauthority regarding policy violations that you either have

ambit energy, l.p. 15knowledge of or that you are alleged to have committed,you agree to fully assist with such investigation. Section 6: Sales Requirements6.1. Product SalesThe Ambit Compensation Plan is based on the saleof Ambit products and services to end consumers.Consultants must fulfill personal and DownlineOrganization retail sales requirements (as well as meetother responsibilities set forth in the Agreement) to beeligible for bonuses, commissions and advancement tohigher levels of achievement.6.2. Full Cost DisclosureWhen enrolling customers, you must provide to themall of the costs involved with the service. This includesall of the following, if applicable: cost per kilowatt-houror therm, monthly service fees, one-time fees, taxesand surcharges, time-of-day or other usage limitations,and other costs. All of this information is available fordownload in Power Zone.6.3. No Territory RestrictionsThere are no exclusive territories granted to anyone.No franchise fees are required.6.4. Sales ReceiptsAll Consultants must provide their retail customerswith two copies of an official Ambit sales receipt at thetime of the sale. These receipts set forth the CustomerSatisfaction Guarantee as well as any consumer protectionrights afforded by federal or state law. Consultants mustmaintain all retail sales receipts for a period of two yearsand furnish them to Ambit at the Company’s request.Remember that customers must receive two copies of thesales receipt. In addition, Consultants must orally informthe buyer of his or her cancellation rights. Section 7: Bonuses and Commissions7.1. Right of OffsetA Consultant is not required to subscribe to any AmbitService in order to become an Ambit IndependentConsultant. However, if the Consultant selects Ambitas the Consultant’s retail energy provider, billing mustbe paid when due. If a Consultant becomes 60 days pastdue in paying any Ambit bill, Ambit may, at Ambit’ssole option, deduct the amounts owed by the offendingConsultant from his or her commission check and mayterminate the Consultant. In addition, Ambit may offsetany amount certain owed to Ambit by a Consultantagainst commissions or other amounts owed to suchConsultant by Ambit.7.2. Waived Qualifications (Vesting)Waived qualifications or “vesting” means a Consultantis not required to meet weekly and monthly eligibilityrequirements because the Consultant met one of thefollowing vesting scenarios:scenario 1: Consultants who have achieved ExecutiveConsultant status, and who have maintained eligibilityrequirements for 6 levels of CRI commissions (20 customerpoints) for a period of 36 consecutive months afterachieving Executive Consultant status, and who have beena Consultant in good standing in excess of 365 days, maybecome vested upon written request to Ambit, verificationof their qualifications, and approval of their request.scenario 2: Upon attaining the age of 65 years or older,or upon permanent disability demonstrated to thesatisfaction of Ambit, a Consultant who has achievedSenior Consultant status, and who has been a Consultantin good standing in excess of 365 days, may becomevested upon written request to Ambit, verification oftheir qualifications, and approval of their request. If aConsultant transfers/sells their position, the buyer mustbe in good standing in excess of 365 days after the transfer/sale is finalized before applying to become vested.Vesting shall not entitle a Consultant to commissions orother payments that have been otherwise forfeited underthe terms of the Consultant Application and Agreement orthese Policies and Procedures.7.3. ReportsAll information provided by Ambit in online or telephonicdownline activity reports, including but not limited topersonal and group sales volume (or any part thereof),and downline sponsoring activity is believed to beaccurate and reliable. Nevertheless, due to various factorsincluding but not limited to the inherent possibility ofhuman and mechanical error; the accuracy, completeness,and timeliness of orders; denial of credit card andelectronic check payments; returned products; creditcard and electronic check chargebacks; the informationis not guaranteed by Ambit or any persons creating ortransmitting the information.

16policies and proceduresALL PERSONAL AND GROUP SALES VOLUMEINFORMATION IS PROVIDED “AS IS” WITHOUTWARRANTIES, EXPRESSED OR IMPLIED, ORREPRESENTATIONS OF ANY KIND WHATSOEVER. INPARTICULAR BUT WITHOUT LIMITATION THERE SHALLBE NO WARRANTIES OF MERCHANTABILITY, FITNESSFOR A PARTICULAR USE, OR NON- INFRINGEMENT.TO THE FULLEST EXTENT PERMISSIBLE UNDERAPPLICABLE LAW, AMBIT AND/OR OTHER PERSONSCREATING OR TRANSMITTING THE INFORMATIONWILL IN NO EVENT BE LIABLE TO ANY CONSULTANTOR ANYONE ELSE FOR ANY DIRECT, INDIRECT,CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVEDAMAGES THAT ARISE OUT OF THE USE OF ORACCESS TO PERSONAL AND GROUP SALES VOLUMEINFORMATION (INCLUDING BUT NOT LIMITED TOLOST PROFITS, BONUSES, OR COMMISSIONS, LOSS OFOPPORTUNITY, AND DAMAGES THAT MAY RESULT FROMINACCURACY, INCOMPLETENESS, INCONVENIENCE,DELAY, OR LOSS OF THE USE OF THE INFORMATION),EVEN IF AMBIT OR OTHER PERSONS CREATING ORTRANSMITTING THE INFORMATION SHALL HAVE BEENADVISED OF THE POSSIBILITY OF SUCH DAMAGES. TOTHE FULLEST EXTENT PERMITTED BY LAW, AMBIT OROTHER PERSONS CREATING OR TRANSMITTING THEINFORMATION SHALL HAVE NO RESPONSIBILITY ORLIABILITY TO YOU OR ANYONE ELSE UNDER ANY TORT,CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTSLIABILITY OR OTHER THEORY WITH RESPECT TO ANYSUBJECT MATTER OF THIS AGREEMENT OR TERMS ANDCONDITIONS RELATED THERETO.Access to and use of Ambit’s online reporting services andyour reliance upon such information is at your own risk.All such information is provided to you “as is.” If you aredissatisfied with the accuracy or quality of the information,your sole and exclusive remedy is to discontinue use ofand access to Ambit’s online and telephone reportingservices and your reliance upon the information. Section 8: Order Cancellation andSales Tool Inventory Re-Purchase8.1. Return of Inventory and Sales Aids byConsultants Upon CancellationUpon cancellation of a Consultant’s Agreement, theConsultant may return any products and sales aids heldin his or her inventory for a refund. Consultants may onlyreturn sales aids that he or she personally purchased fromAmbit (purchases from other Consultants or third partiesare not subject to refund) and which are in Resalablecondition. Upon receipt of a Resalable sales aid, theConsultant will be reimbursed 90% of the net cost of theoriginal purchase price(s). Shipping charges incurred bya Consultant when the sales aids were purchased will notbe refunded. If the purchases were made through a creditcard, the refund will be credited back to the same account.8.1.1. montana residents. A Montana resident maycancel his or her Consultant Agreement within 15 daysfrom the date of enrollment, and may return his or herstarter kit for a full refund within such time period. Section 9: Dispute Resolution andDisciplinary Proceedings9.1. Disciplinary SanctionsViolation of the Agreement, these Policies and Procedures,violation of any common law duty, including but notlimited to any applicable duty of loyalty, any illegal,fraudulent, deceptive or unethical business conduct,or any act or omission by a Consultant that, in the solediscretion of the Company may damage its reputationor goodwill (such damaging act or omission need not berelated to the Consultant’s Ambit business), may result,at Ambit’s discretion, in one or more of the followingcorrective measures:• Issuance of a written warning or admonition;• Requiring the Consultant to take immediate correctivemeasures;• Imposition of a fine, which may be withheld from bonusand commission checks;• Loss of rights to one or more bonus and commission checks;• Ambit may withhold from a Consultant all or part ofthe Consultant’s bonuses and commissions during theperiod that Ambit is investigating any conduct allegedlyin violation of the Agreement. If a Consultant’s business iscancelled for disciplinary reasons, the Consultant will notbe entitled to recover any commissions withheld duringthe investigation period;• Suspension of the individual’s Consultant Agreement forone or more pay periods;• Involuntary termination of the offender’s ConsultantAgreement;• Termination and/or suspension of the offending

ambit energy, l.p.17Consultant’s Ambit Marketing website or website access.• Any other measure expressly allowed within any provisionof the Agreement or which Ambit deems practicable toimplement and appropriate to equitably resolve injuriescaused partially or exclusively by the Consultant’s policyviolation or contractual breach;• In situations deemed appropriate by Ambit, the Companymay institute legal proceedings for monetary and/orequitable relief.9.2. Dispute Resolution9.2.1. mediation. Prior to instituting an arbitration, theparties shall meet in good faith and attempt to resolve anydispute arising from or relating to the Agreement throughnon-binding mediation. One individual who is mutuallyacceptable to the parties shall be appointed as mediator.The mediator’s fees and costs, as well as the costs ofholding and conducting the mediation, shall be dividedequally between the parties. Each party shall pay itsportion of the anticipated shared fees and costs at least10 days in advance of the mediation. Each party shall payits own attorneys’ fees, costs, and individual expensesassociated with conducting and attending the mediation.Mediation shall be held in the City of Dallas, Texas, andshall last no more than two business days.9.2.2. arbitration. If mediation is unsuccessful,any controversy or claim arising out of or relating tothe Agreement, or the breach thereof, shall be settled byarbitration administered by the American ArbitrationAssociation under its Commercial Arbitration Rules, andjudgment on the award rendered by the arbitrator may beentered in any court having jurisdiction thereof. Consultantswaive all rights to trial by jury or to any court. Allarbitration proceedings shall be held in Dallas, Texas. Allparties shall be entitled to all discovery rights pursuant tothe Federal Rules of Civil Procedure. There shall be onearbitrator, an attorney at law, who shall have expertise inbusiness law transactions with a strong preference beingan attorney knowledgeable in the direct selling industry,selected from the panel which the American ArbitrationPanel provides. Each party to the arbitration shall beresponsible for its own costs and expenses of arbitration,including legal and filing fees. The decision of the arbitratorshall be final and binding on the parties and may, if necessary,be reduced to a judgment in any court of competentjurisdiction. This agreement to arbitration shall surviveany termination or expiration of the Agreement.Nothing in these Policies and Procedures shall preventAmbit from applying to and obtaining from any courthaving jurisdiction a writ of attachment, a temporaryinjunction, preliminary injunction, permanent injunctionor other equitable relief available to safeguard and protectAmbit’s trade secrets and other intellectual propertyinterests prior to, during or following the filing of anyarbitration or other proceeding or pending the renditionof a decision or award in connection with any arbitrationor other proceeding.9.3. Governing Law, Jurisdiction and VenueJurisdiction and venue of any matter not subject toarbitration shall reside exclusively in Dallas County,State of Texas. The Federal Arbitration Act shall governall matters relating to arbitration. The law of the State ofTexas shall govern all other matters relating to or arisingfrom the Agreement. Notwithstanding the foregoing, andthe dispute resolutions provisions in Section 9.2, residentsof the State of Louisiana shall be entitled to bring anaction against Ambit in their home forum and pursuantto Louisiana law. Section 10: Inactivity and Cancellation10.1. Effect of CancellationSo long as a Consultant remains active and complies withthe terms of the Consultant Agreement and these Policiesand Procedures, Ambit shall pay commissions to suchConsultant in accordance with the Compensation Plan. AConsultant’s bonuses and commissions constitute the entireconsideration for the Consultant’s efforts in generatingsales and all activities related to generating sales (includingbuilding a downline organization). Following a Consultant’svoluntary or involuntary cancellation of his or her ConsultantAgreement (all of these methods are collectively referredto as “cancellation”), the former Consultant shall have noright, title, claim or interest to the marketing organizationwhich he or she operated, or any commission or bonusfrom the sales generated by the organization. A Consultantwhose business is cancelled will lose all rights as aConsultant. This includes the right to sell Ambit productsand services and the right to receive future commissions,bonuses, or other income resulting from the sales andother activities of the Consultant’s former downline salesorganization. In the event of cancellation, Consultantsagree to waive all rights they may have, including butnot limited to property rights, to their former downlineorganization and to any bonuses, commissions or other

18policies and proceduresremuneration derived from the sales and other activitiesof his or her former downline organization.Following a Consultant’s cancellation of his or herConsultant Agreement, the former Consultant shall nothold himself or herself out as an Ambit Consultant andshall not have the right to sell Ambit products or services.A Consultant whose Consultant Agreement is canceledshall receive commissions and bonuses only for the lastfull pay period he or she was active prior to cancellation(less any amounts withheld during an investigationpreceding an involuntary cancellation).10.2. Inactive StatusTo remain “active,” a Consultant must sponsor a newConsultant or enroll a new energy customer within thepreceding four months. If a Consultant does not sponsora new Consultant or enroll a new energy customer in thepreceding four months, the Consultant’s Ambit businesswill be placed into inactive status and no commission willtrigger until the position is reactivated by sponsoring anew customer or Consultant.10.3. Involuntary CancellationA Consultant’s violation of any of the terms of theAgreement, including any amendments that may be madeby Ambit in its sole discretion, may result in any of thesanctions listed in Section 9.1, including the involuntarycancellation of his or her Consultant Agreement.Cancellation shall be effective on the date on which writtennotice is mailed, faxed or delivered by an express courierto the Consultant’s last known address (or fax number),or to his/her attorney, or when the Consultant receivesactual notice of cancellation, whichever occurs first.10.4. Voluntary CancellationA participant in this network marketing plan has a right tocancel at any time, regardless of reason. Cancellation mustbe submitted in writing to the Company at its principalbusiness address, which is:Ambit EnergyAttention: Consultant Cancellation1801 North Lamar Street, Suite 200Dallas, Texas 75202The written notice must include the Consultant’ssignature, printed name, address, and Consultant I.D.number. If a Consultant is also a customer of AmbitEnergy, Ambit will continue to provide energy services tothe customer, and invoice the customer for such services,unless he or she also specifically requests that his or herenergy services also be cancelled. Section 11: DefinitionsActive Consultant: A Consultant who has sponsoreda new Consultant or enrolled a new energy customer inthe preceding four months.Active Rank: The term “active rank” refers to thecurrent rank of a Consultant, as determined by the AmbitCompensation Plan, for any month. To be considered“active” relative to a particular rank, a Consultant mustmeet the criteria set forth in the Ambit CompensationPlan for his or her respective rank.Agreement: The contract between the Company andeach Consultant includes the Consultant Applicationand Agreement, the Ambit Policies and Procedures, andthe Ambit Compensation Plan, all in their current formand as amended by Ambit in its sole discretion. Thesedocuments are collectively referred to as the “Agreement.”Cancel: The termination of a Consultant’s business.Cancellation may be either voluntary, involuntary,through non-renewal or inactivity.Customer: The term “customer” means current, pastand prospective Ambit Energy customers.Genealogy Report: A monthly report generated byAmbit that provides critical data relating to the identitiesof Consultants, sales information, and enrollment activityof each Consultant’s Marketing Organization. This reportcontains confidential and trade secret information whichis proprietary to Ambit.Official Ambit Material: Literature, audio or videotapes, and other materials developed, printed, publishedand distributed by Ambit to Consultants.Recruit: The actual or attempted sponsorship,solicitation, enrollment, encouragement, or effort toinfluence in any other way, either directly, indirectly,or through a third party, another Ambit Consultant orcustomer to enroll or participate in another multilevelmarketing, network marketing or direct sales opportunity.Resalable. Sales aids shall be deemed “resalable” ifeach of the following elements is satisfied: (1) they areunopened and unused; (2) packaging and labeling has notbeen altered or damaged; (3) they are in a condition such

ambit energy, l.p.19that it is a commercially reasonable practice within thetrade to sell the merchandise at full price; (4) it is returnedto Ambit within one year from the date of purchase;(5) the product contains current Ambit labeling. Anysales aids that are clearly identified at the time of sale asnonreturnable, discontinued, or as a seasonal item, shallnot be resalable.Retail Customer: An individual who purchases Ambitservices from a Consultant but who is not a participant inthe Ambit compensation plan.Upline: This term refers to the Consultant or Consultantsabove a particular Consultant in a sponsorship line up tothe Company. Conversely stated, it is the line of sponsorsthat links any particular Consultant to the Company.

20policies and proceduresNotes

Ambit Energy, L.P.1801 North Lamar StreetSuite 200Dallas, Texas 75202ambitenergy.comCopyright © 2009 Ambit Marketing, L.P. All rights reserved.b1004-0806 (rev 6 /0409) pdf

Policies and Procedures - Ambit Energy

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