To understand the principles upon which the Rules and Regulations are based, one must recognize that there are essential differences between the Pallada Program and that of other networking companies.

Because there is no conflict of interest between the company and its Members, there is no need for Pallada to prevent or police the attempts of Members to maximize their benefits unless it interferes or conflicts with the interests of other Members or groups of Members.

Also, because in Pallada one Member gains from the efforts of all, he becomes directly interested in the fruitful business development and success of all the other Members of Pallada. As this is recognized, the spirit of competition will be replaced with the spirit of cooperation.

The natural and logical result of understanding these features of Pallada is a willingness of a Member to abide by the Rules and Regulations of Pallada.

If a violation of the Rules and Regulations occurs, Pallada allows the violator to make amends for his wrongdoing by making a Contribution to the Common Cause (See Comment 5).

The value of the Contribution, which is measured in Credit Points, can be used to compensate for the damage he has caused to Pallada as a whole or to individual Member(s) of Pallada.

Using similarly objective criteria to what is used in awarding Credit Points for a Contribution to the Common Cause, Pallada measures the damage caused by the violation of some of the Rules and Regulations in Debit Points, which are issued to the Account whose Representative has committed the violation. Most Rules and Regulations include a minimum and maximum number of Debit Points which can be issued, depending on the severity of the violation.

One Credit Point is equal to one Debit Point, and the Account which has received Debit Points for a violation committed by its Representative can eliminate the Debit Points by returning to Pallada the same number of Credit Points from the total amount owned by the Account. Pallada can then issue the same quantity of Credit Points to the Member(s) who has suffered from the wrongful actions of the Representative of the above-mentioned Account. The party who receives these Counter Points is called Beneficiary.

A violation of the Rules and Regulations or any grievances unresolved in the normal course of business, to the extent that the complaining party or anyone else wishes to pursue the matter further, shall be brought before the appropriate Pallada Council.

When an alleged violation of the Rules and Regulations is brought before the Council, a special commission, called a Jury, is formed to settle the case. When a dispute or grievance is brought before the Council, an Arbitration Commission is formed to arbitrate the case.

The members of the Jury or Arbitration Commission are randomly selected by the computer and remain unknown to each other and to the general public so that there can be no influencing, lobbying, bribing or blaming.

The Jurors/Arbitrators and other Parties involved produce information, express their positions, and exchange their opinions in writing, using a special PIN number which is issued in order to give them access to a web page created for the purpose of trying this case.

Each issue is kept confidential within the Jury/Arbitration Commission unless all Parties involved in the case wish it to be open to the general public. If it is open, any person can express his opinion and have it posted on the web page. However, only the Jurors/Arbitrators will receive a special PIN number, which will identify them as such.

In most cases, the arbitration or trial will be conducted by the Local Council.

If the alleged violator or the disputing or complaining Member(s) holds Rank II and has a Downline Organization consisting mostly of Members living outside the area of his residence but still within the country, he can request that the case be tried or arbitrated by the National Council.

If the alleged violator or the disputing or complaining Member(s) holds Rank II and has a Downline Organization consisting mostly of Members living outside the country, he can request that the case be tried or arbitrated by the International Council.

A Jury/Arbitration Commission of the Local Council shall consist of 3 people.

The Jury/Arbitration Commission of the National Council shall consist of 5 people.

The Jury/Arbitration Commission of the International Council shall consist of 7 people.

A new Jury/Arbitration Commission is chosen for each case.

If the composition of the Council changes while the Jury/Arbitration Commission is working on a case, the case must be concluded before the Jury dissolves, even if the Jurors are no longer Members of the Council.

In trying or arbitrating the case, the Jury/Arbitration Commission must consider all the circumstances of the violation, dispute or grievance (See Comment 6).

Any report of a violation of the Policies and Procedures or accusation brought before the Jury/Arbitration Commission must be proven unequivocally before the Jury/Arbitration Commission takes any action. No conjecture or hypothesis will be accepted.

The conclusions of the Jury/Arbitration Commission as to the facts of the case and the decision regarding the penalty, if required, must be made by majority vote with no abstentions.

The Secretary of the Council must keep a record of each case and notify all the Parties involved of the conclusion of the case.

The decision of the Jury/Arbitration Commission is final and cannot be appealed or contested unless it was made in obvious violation of the Policies and Procedures of Pallada or in violation of the laws of the country in which the trial or arbitration takes place. In either of these cases, the Advisory Board can intervene and order an investigation to determine if the above-mentioned violation did indeed occur and, if so, assign a new Jury/Arbitration Commission to review the case.

In the course of the development of the business of Pallada, the Councils will gain experience in arbitrating and trying different cases. These cases shall be compiled and used as precedents in future cases.

A Member shall not be excused from bearing responsibility for a violation because he claims that he did not know that his action could be considered a violation. (See Comment 7).

If it is proven that the party suffering as a result of the violation consented to the violation, it does not justify it (See Comment 8).

Because Pallada is organized so that Pallada Members become co-owners of the whole business and participate in revenue-sharing, any damage caused to one Member or to Pallada as a whole becomes the concern of every other Member. So every Member must try to prevent violations from occurring and if they do occur, to report them to the proper Pallada authority, who could be a Council Member, official marketing representative of Pallada or an administrator.

Knowing about the occurrence of a violation and not reporting it to the appropriate Pallada authority is interpreted by Pallada as participating in the violation and therefore sharing responsibility with the violator(s). The extent of this responsibility is up to the discretion of the jury.

Pallada's Rules and Regulations include The Code of Conduct and The Code of Ethics.

1. A Pallada Member is expected to be respectful and fair when speaking about other Members and to refrain from starting or spreading gossip (See Comment 9).

Unsubstantiated negative statements made by one Member about another Member or group of Members in the context of Pallada is considered a violation and is penalized with 70 to 1400 Debit Points at the discretion of the Jury with the suffering party as the Beneficiary (See Comment 10).

a. Artificially creating vertically related accounts under or over existing or new accounts in order to benefit fraudulently from the same Downline Organization (Stacking) is considered a violation and is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary, plus the amount of Debit Points equal to the monetary benefits which could have been received by the Upline Sponsors if the violator had not done the stacking, with the Upline Sponsors as the Beneficiaries. All the monetary benefits received by the violator as a result of stacking must be returned to the suffering parties.

b. Registering a new Member in the Direct Group of an Account which the Lead does not own or represent is considered a violation (See Comment 11).

If the violation is proven, the new Account must be reinstated in the Downline Organization of the proper Lead. In all cases, the direct or indirect benefits earned as a result of the unlawful registration must be returned by the wrongful Upline Sponsors to the rightful ones (See Comment 12).

The penalty for the parties involved can vary depending on the nature of their involvement.

If the Lead knew about the registration and the Representative of the Account in whose Downline the new Account is placed is proven to be related to the Account owned or represented by the Lead, the Lead is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary. The new Member is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

If the registration is done without the knowledge of the Lead, it is considered an attempt of the new Member to leave his rightful Lead, which makes the Lead the suffering party. First, the proper Lead relationship must be reinstated. The violator is then penalized with 70 to 1400 Debit Points at the discretion of the Jury and the Beneficiary is the rightful Lead as the suffering party.

If it is proven that the wrongful Sponsor knew about the rightful Lead, this Sponsor is penalized with 70 to 1400 Debit Points at the discretion of the Jury and the Beneficiary is the rightful Lead as the suffering party. The new Member who has tried to leave the rightful Lead is penalized with 70 to 1400 Debit Points at the discretion of the Jury in favor of the rightful Lead as the suffering party.

4. A Pallada Member is expected to respect the confidential nature of some information shared with him by other Members or by Pallada.

If the Pallada Member reveals confidential information without attempting to damage but through lack of discipline, and if there are not severe consequences as a result of such action, the violator is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

5. A Pallada Member in a Downline Organization can expect reasonable assistance and fair treatment from his Sponsor. However, he cannot expect special privileges and favors unless deserved and specified within the general or special Marketing Programs of Pallada (See Comment 13).

An attempt of a Member in a Downline Organization to obtain special privileges or favors from his Upline Sponsors by putting pressure on or intimidating them is considered a violation. The penalty for the parties involved can vary depending on the nature of the involvement.

If an Upline Sponsor's complaint is proven, the intimidating Downline violator is penalized with 70 to 1400 Debit Points at the discretion of the Jury. The Beneficiary is the Complaining Upline Sponsor as the suffering party.

If the Upline Sponsor did not complain and the information comes from another source but is proven to be correct, both the Upline Sponsor and the Downline Member are penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary (See Comment 14).

a. An attempt to obtain confidential information about any anonymous special commission or Jury assigned by a Council is considered a violation, penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

b. The proven attempt to privately discuss or the actual discussion of a case which is currently being tried by a Council with any Member of the Council, irrespective of his participation on the Jury trying this case, is considered a violation. The penalty for the parties involved can vary depending on the nature of the involvement.

If the Council Member reports the violation and it is proven to have occurred, the violator is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

If the Council Member did not report the violation, he is penalized Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

a. Initiating an activity without going to a Council for prior approval when it adversely affects or could affect the business interests of a Member, group of Members or the image and/or interests of Pallada is considered a violation and is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

b. Refusal to follow instructions or recommendations given by the appropriate Council of Pallada concerning the Pallada business, with negative consequences to the Downline Organization, is considered a violation and is penalized with 70 to 1400 Debit Points with Pallada as the Beneficiary.

c. The production and/or distribution of self-created promotional or informational materials without the approval of the appropriate authority of Pallada is considered a violation, penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

a. Misinforming Pallada or neglecting to provide correct information requested by Pallada concerning the identity or business activity of the Account and/or its Representative when such a request does not conflict with Constitutional Principle #5 is considered a violation, penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

b. Neglecting to conduct one's business according to guidelines specified in Pallada's Marketing Programs and the Policies and Procedures of Pallada North America, Inc. is considered a violation, penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

a. Intentionally misinforming or misleading Pallada Members or intentionally distorting official information when sharing it with other Members or Prospects is considered a violation, penalized with 70 to 1400 Debit Points with Pallada as the Beneficiary.

b. Making claims as to potential earnings other than those explicitly mentioned within the Rebate Plan for Registered Customers of Pallada or the Marketing Plan for Organizers and Leaders of Pallada is considered a violation. The violator is penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

d. Showing one's own or another Member's earnings in an attempt to entice a Prospect or Member to make commitments beyond what is explicitly stated in the Marketing Program of Pallada is considered a violation, penalized with 70 to 1400 Debit Points at the discretion of the Jury with Pallada as the Beneficiary.

e. Inappropriate appearance, language and/or behavior while representing Pallada, (See Comment 15).

Violation of the Code of Conduct does not dishonor the violator, make him inferior to others, or damage his good standing in Pallada.

If an intentional violation of the Code of Conduct is so severe that the harm caused to another Pallada Member, group of Members or to Pallada as a whole is beyond repair or compensation, or if it threatens or could threaten the stability and/or integrity of Pallada, it can no longer be treated as misconduct. The conclusion must be drawn that the Member's attitude towards the organizational and moral standards of Pallada are in question. In this case, the action can be considered violating the Code of Ethics of Pallada, which can change the attitude of Pallada Members towards the violator.

I. A Pallada Member must conduct his business in accordance with the laws of the country in which he lives.

Involvement in any deceptive or unlawful business or trade practice as defined by any United States' or other country's, or International law or regulation while engaging in business activities of Pallada, with consequences adversely affecting the interests of Pallada, is considered a violation of the Code of Ethics of Pallada (See comment 16).

II. A Pallada Member is expected to treat others as he would like to be treated.

1. Discrimination or disrespectful treatment of one Member or Prospect against another because of race, creed, color, sex, national or ethnic origin, age or physical condition while engaging in activities related to Pallada is considered a violation of the Code of Ethics of Pallada.

2. Capricious and erratic change of Sponsor or Lead is considered a violation of the Code of Ethics of Pallada (See Comment 17).

There are three cases in which the Council can consider the change of Sponsor or Lead as not in violation of the Code of Ethics.

a. If it is proven beyond a doubt that a Sponsor's action caused irreparable damage to the business of the Member who has left the Sponsor's Downline Organization.

b. If it has been proven beyond a doubt that a Sponsor or Lead has violated the Code of Ethics himself.

Pallada recommends that, if the Member deems it necessary to leave his Sponsor or Lead, he consider as the first candidate for a new Sponsor the Member who is the Sponsor of the current one. If this is impossible, he must go to that Sponsor's Sponsor, and if that is unacceptable, he must go to the next Sponsor above him, etc. If none of these Members can become the new Sponsor, for whatever reason, the Member can ask Pallada to become his Sponsor. Pallada cannot refuse to accept a Member who asks the company to become his Sponsor. If there is a complaint or dispute, Pallada can keep this Account in escrow until the dispute is resolved. Pallada recommends that the Sponsor who is considering accepting the Member check all the circumstances surrounding the Member's intention to leave his current Sponsor. If it is later proven that the Member has violated the Code of Ethics in leaving his Sponsor or Lead, the Sponsor who accepts the Member shall share the responsibility with this Member.

The wrongful Sponsors, meaning the ones who became the Upline Sponsors of the violator as a result of the capricious and unfounded change of Sponsor or Lead, are obliged to return to the rightful Upline Sponsors and/or Lead the bonuses and benefits unlawfully received as a result of the change of Sponsor or Lead. The Jury trying this case can also issue Debit Points as punitive damages to the wrongful Upline Sponsors with the rightful Sponsors as Beneficiaries.

Even if the Member has reason to leave his Sponsor or Lead without violating the Code of Ethics, he is not obliged to do so. However, if the Member does not leave the Sponsor or Lead who has violated the Code of Ethics, the Members of his Downline Organization can leave him, and in this case it would not be considered a violation of the Code of Ethics because, by continuing to be in the Downline Organization of the Sponsor or Lead who has violated the Code of Ethics, this Member shares with him the moral responsibility.

3. Trying to recruit a Member who is already in someone else's Pallada Downline Organization is considered a violation of the Code of Ethics of Pallada.

III. It is in the best interest of a Pallada Member to support the structural and organizational integrity of Pallada in order to enjoy reliable and stable business conditions, from which he benefits.

So in Pallada, a clear understanding of one's individual benefits is inseparable from one's loyalty to the business as a whole.

1. An attempt to diminish or deny the authority of the Councils of Pallada, an attempt to amend, sabotage or eliminate any Constitutional Principle, and/or a refusal to follow the existing Rules and Regulations of Pallada is considered a violation of the Code of Ethics of Pallada (See Comment 18).

2. Willful acts which damage the image of Pallada and its commercial, political and other interests is considered a violation of the Code of Ethics of Pallada.

3. Negative statements which cast doubt on the image and/or reputation of Pallada and the competence and integrity of its Councils, Administrators and/or Representatives, when Pallada does not have the ability to respond immediately in order to prevent their adverse affect on the morale and vision of its Members or Members-to-be, is considered a violation of the Code of Ethics of Pallada (See Comment 19).

4. Deceiving Pallada in an attempt to obtain unearned or undeserved benefits or privileges is considered a violation of the Code of Ethics of Pallada.

5. Willful and deliberate refusal to compensate for the damage that a Member has caused to Pallada and/or other Members is considered a violation of the Code of Ethics of Pallada (See Comment 20).

6. Using one's position, influence or connections in Pallada to achieve a commercial, political, ideological or other goal within or outside of the business of Pallada and which results in or could result in damage to the interests and/or image of Pallada or its Members and/or adversely affects or could affect the interests of the general public is considered a violation of the Code of Ethics of Pallada.

If a Member is officially declared a violator of the Code of Ethics, it means Pallada can no longer defend him against the negative attitude towards him of other Members, including the Members of his Downline Organization. The situation could become irreparable, so that continuing to build or operate his business would no longer make sense to this Member. Therefore, in some cases, the Jury, could consider his sincere regret and expression of good will and agree to give him an opportunity to reinstate his status as a loyal Member by allowing him to make a special Contribution to the Common Cause.

No program, policy or official decision benefitting Pallada can be made if it is detrimental to society at large.

In Pallada, there cannot be any program, policy or official decision which discriminates against or favors any Member or potential Member of Pallada because of race, creed, color, sex, age, nationality, national or ethnic origin.

No Member of Pallada can have or earn the right to break or ignore the Rules and Regulations of Pallada without penalty or to be privileged in the resolution of a dispute.

No Member, group of Members or governing authority of Pallada has the right to interfere with, inquire about, request or probe into the private and/or corporate interests of an Account, and directly or indirectly attempt to obtain information about the Account which is considered confidential.

There cannot be a new program or a change in an existing program which alters the current proportion of distribution of benefits among the Members to favorably benefit members of any or all Governing Bodies of Pallada at the cost of the rest of the Organizers.

The Governing Structure of Pallada, in which the key leaders are the decision-makers, cannot be changed.

There cannot be a new program or a change in an existing program, or policy or official decision which prevents people from joining Pallada, or interferes with it’s permanent extensive development and growth.

The EIGHTH Constitutional Principle: