lifebrook'" Advocate Compensation Plan Lifebrook Compensation Plan Overview There are nine (9) different ways for you, as a Lifebrook Independent Advocate, to make money in this Compensation Plan. As each one is cumulative, it is possible for you to make money in one, a few, or in all nine ways. Becoming an Independent Advocate You can become an Independent Advocate with Lifebrook by completing the Independent Advocate Application and purchasing an Electronic Business Kit for $39.95 or hard copy Business Kit for $59.95. Once your application is accepted you can begin selling Lifebrook products through your individual website, provided as a part of your monthly business support program. You will then be eligible to receive commissions on your total product sales, offer the Lifebrook opportunity to others, and earn bonuses on their sales. 9 Ways to Earn Income a The Marketing Phase Compensates you for your personal product sales 1 Retail Commission 2 Up to 15% BV Enhanced Bonuses 3 Preferred Customer (PC) Program 4 First Order Bonuses a The Leadership Phase Pays you bonuses on the sales of your team. 5 6% BV Direct Enroller (E1) AND 6% BV Indirect Enroller (E2) Bonuses 6 Up to 5 levels of 4% BVTeam Bonuses a The Executive Phase Generously rewards you for leadership in mentoring other emerging leaders. 7 Up to 4% BV Personal Group Bonuses 8 Up to 3 Generational Bonuses of up to 4% BV 9 Enroller Check Match Bonuses Page 1
The Marketing Phase ft Base Retail Commission Personal Retail Your Sales (PRS) Commission Paid weekly in the form of a Discount Base Commission Rebate Enhanced Bonuses on Personal Bonus Value () Number of personally enrolled PCs shipped in a qualifying month Enhanced Bonus Rate to be applied to (Paid Monthly*) 2 to4 5% 5 to 9 10% Preferred Customer (PC) Program Your Preferred Customers (PCs) PC Discount Your customer becomes a PC for Discount FREE just by on their placing a monthly monthly autoship order. autoship order Your Enhanced Bonuses increase by up to 15% based on your total personal PCs. Your Benefits Enroller Bonus 6%BV Level Bonus Total Earned 10% BV +J *NOTE: You must be "Active" by having $103 Personal BV in the Qualifying month to receive Enhanced Bonuses. A 10 or more 15% Bonus Value (BV): Every product carries an assigned Bonus Value, usually based on 80% of Suggested Retail Value. Occasionally a low profit margin product may be assigned a Bonus Value that is lower than 80% so it can be supported by the compensation plan. Personal Bonus Value (): The cumulative BV of all products purchased by your retail customers, your PCs and you during a given pay period is combined to determine your "Personal Bonus Value" () for that pay period. *NOTE: You must be "Active" by having $103 Personal BV in the Qualifying month to receive Enhanced Bonuses. *Note: First Order Bonus is being applied to PC first orders in lieu of up to 15% () Enhanced Retail Commissions. Therefore, NO Enhanced Commissions will be paid on PC's first orders, and will not count towards qualified number of personally enrolled PCs. First Order Bonuses 25% of all Direct Enrollees' (E1) and personal PC's first orders of up to $500 wholesale. Paid weekly The BV on each first order by PCs or Advocates (up to $500 wholesale) is based on 50% of the normal BV. Page 2
The Leadership Phase Rank Qualification and Maintenance Requirements Independent Advocate (IA) Business Builder (BB) Team Builder (TB) Team Leader (TL) Director (D) To Qualify (you must meet ALL requirements in the same month) Enroll as an Independent Advocate AND Purchase the Advocate Business Kit for $49.95. Purchase the optional Fast Start Pack and get your Kit FREE! Personally Enroll a Tota I of 3 Active' Independent Advocates 4 Qualified Legs', including 1 BB Create $4,000 TGBV 3 in one month 5 Qualified Legs' with 1 TB and 1 BB in separate Legs Create $8,000 TGBV 3 in one month Complete Team Leader Training 5 Qualified Legs' including 1 TL and 1 TB in separate Legs Create $20,000 TGBV 3 in one month To Maintain (Monthly) 3 Qualified Legs' $1,500 TGBV 3 Maintain above structure $3,000 TGBV 3 60% Rule 4 applies Maintain above structure $6,000 TGBV 3 60% Rule 4 applies Maintain above structure $15,000TGBV 3 60% Rule 4 applies Base Commission Enhanced Bonuses (based on number of personally enrolled PCs) a Level 1 5% up to 15% 5% upto 15% E2-3% BV 5% upto 15% Enroller Residual Bonus (Must be Active) E2-4% BV Level Bonuses 5% up to 15% E2-5% BV 5% up to 15% E2-6% BV Level2 Level3 Level4 Levels 1 Active: Maintain at least $103 personal BV () each month to be considered "Active" for that month. 2 Qualified Leg: A leg that has a total of at least $300 BV somewhere in the depth of the Leg. 3 Total Group Bonus Value (TGBV): Total Group Bonus Value, which is the total created by all your downline Advocates in the sponsor genealogy calculated to infinite depth. It is sometimes subject to either the 60% Rule or the 40% Rule. 4 60% or 40% Rule: No more than 60% or 40% (as specified) of your required TGBV can be counted from any one Leg. Page 3
The Executive Phase Personal Group & Executive Generation Bonuses Executive Director (ED) Senior Executive (SE) National Executive (NE) Understanding Generations You As An Executive Director (ED) Promotion Requirements (You must meet ALL requirements in the same month.) Be Active 1 Be Active 1 Be Active 1 Remain a Qualified Remain a Qualified ED Remain a Qualified SE Director with one with one Qualified ED with one Qualified SE Qualified Dir in any and one Qualified and one Qualified ED Leg' Director in different in different Legs Legs' Accumulate $50,000 Accumulate $200,000 TGBV 3 in one month Accumulate $100,000 TGBV 3 in one month TGBV 3 in one month 40% Rule Applies' 40% Rule Applies' 40% Rule Applies' The above is a simplified graphic representation of a downline and is not intended to precisely indicate rank qualification requirements. You As A Senior Executive (SE) a Personal Group 1 st Generation Monthly Maintenance Requirements Remain Active 1 $35,000 TGBV 3 40% Rule Applies' Remain Active 1 $70,000 TGBV 3 40% Rule Applies' Remain Active 1 $150,000 TGBV 3 40% Rule Applies' Personal Group and Generation Bonuses 2% PGBV 3% PGBV 4% PGBV 2% EGBV 3% EGBV 4% EGBV 2"d Generation 3% EGBV 4% EGBV 3,d Generation 123'* NOTE: See bottom of Page 3 for definitions. 4% EGBV The above is a simplified graphic representation of a downline and is not intended to precisely indicate rank qualification requirements. You As A National Executive (NE) Enroller Check Match Bonuses (Based on the earnings of all your personal enrollees) The above is a simplified graphic representation of a downline and is not intended to precisely indicate rank qualification requirements. Rank Bonus** Executive Director 5% ECM Senior Executive 10% ECM National Executive 15% ECM ** NOTE: Enroller Check Match Bonuses are NOT applicable to Retail Commissions, to Enhanced Bonuses on personal sales, to Enroller First Order Bonuses or to Check Match Bonuses earned by your Enrollees. "Compression" and "Roll Up" are not applicable to Enroller Check Match Bonuses. Page4
GLOSSARY ACTIVE: You will need to maintain at least $103 personal BV () in a month to be considered Active as an Advocate for that month. When you re Active, you ll be eligible to receive bonuses in the form of overrides on the sales of other Advocates you have recruited, or that they have recruited, and so on. This is known as your Team (sometimes also referred to as your group, your downline or your organization ). Advocate: The generic name for an independent contractor who has signed an Advocate Application and Agreement form with the Company, and whose Advocate Application and Agreement the Company has accepted. Upon acceptance of such Agreement by the Company, an Advocate is eligible to purchase the Company's products at a wholesale price for resale and can enroll and sponsor other people into their downline retail sales organization. An Advocate is eligible to earn Commissions and Bonuses in accordance with the terms and provisions of the Compensation Plan. ADVOCATE BUSINESS KIT: Sometimes referred to as a Starter Kit, this kit contains the tools, brochures, manuals and application forms relative to the Lifebrook business. APPLICATION AND AGREEMENT FM: This is a legally binding agreement between you and the Company that covers your rights, duties and responsibilities, and those of the Company. This is vital and necessary information. The Company s published Policies & Procedures is an extension of this Agreement and should be read carefully. BONUS: Not to be confused with Commission. This is the remuneration that is based on the assigned Bonus Value of sales volume by others, downline of the payee, in accordance with the respective provisions of the Compensation Plan. BONUS QUALIFIED: You are bonus qualified when you are an Advocate in good standing and have met the minimum personal sales requirements to be considered Active for the applicable pay period (see definition above). BONUS VALUE (BV): The assigned value on which downline bonuses are calculated. Bonus Value falls into two categories, Personal Bonus Value () and Total Group Bonus Value (TGBV). The assigned BV calculation is based on 80% of suggested retail. As Lifebrook adds additional products to its line, some lower profit margin products may be assigned a different BV rate, so they can be supported by the compensation plan. (Refer to product BV assignment in the Advocate Manual in the Back Office of your personal Lifebrook website.) CODED BONUS: All bonuses in this compensation plan are the result of a relationship between the Advocate who made the sale to the end user and the upline Advocate being paid the bonus. The purpose of the bonus is to incentivize and reward the upline Advocate for activities that support the seller, including training, encouragement, coaching and leadership. Most bonuses are based on a structural relationship determined by level, group or generation. In certain circumstances (such as Sponsor Placement, compression or upline rank advancements that may shift volume from one ED group to another), these structural relationships may change. However, the Enroller First Order Bonus, the E1 and E2 Enroller Bonuses, and the Enroller Check Match Bonuses, are permanently assigned in the Company s software by Advocate number ( coded ) to the actual enroller. As such, these bonuses are NOT subject to compression or group redefinition. COMMISSION: Although it is sometimes taken as a discount against the SRP and therefore shows up as the Advocate s gross profit on the sale, the amount of money that an Advocate earns when a product is sold at retail to a customer is considered to be Commission. This should not to be mistaken as a Bonus (see definition above). Some other companies refer to bonuses as commissions. It is important to understand the difference. COMPANY: The Lifebrook corporate or home office. COMPENSATION PLAN: Sometimes erroneously called the Marketing Plan, the compensation plan is actually only one part of the company s overall marketing plan. The compensation plan is the company s official set of definitions and performance requirements, as published in the Lifebrook Advocate Manual, by which it pays Advocates. COMPRESSION: As an Active Advocate, you can qualify to earn Level Bonuses on up to five Active levels of your team, based on your Paid As rank (see below). If a downline Advocate fails to meet the minimum Active requirement, the Company will search downline until it finds an Advocate who is Active, no matter how far down the line it has to look. That Active Advocate s for the Level plan then compresses to include all the volume that may have been generated by all non-active Advocates in between to create the next level. The company will continue this process until it has satisfied its payout requirements to you, based on the number of levels on which you are eligible to be paid. The term Compression is used to describe the temporary condition that occurs when an Advocate fails to meet their Active requirement for a particular month and is automatically reset for each month. NOTE: Compression does NOT apply to Enroller First Order Bonuses, E1 or E2 Enroller Bonuses, or to Enroller Check Match Bonuses (see also Rollup ). COMPRESSION (Generational): Generation Bonuses are earned by and paid to qualified Executive Director or higher rank Advocates. Should an Executive Director, Senior Executive or National Executive not meet their qualifications for maintaining their rank status during a pay period, they will be Paid As the rank for which they do meet the qualifications, even if it s a rank lower than Executive Director. In that case, they would not receive Generation Bonuses. However, for the purpose of paying upline qualified Executive Directors or higher rank Advocates, the BV created in that non-qualified Executive s generation will be subject to compression. The Company's computer searches that Executive s entire downline until it finds a Qualified Executive Director or higher rank. It will then compress the non-qualified generational BV with that of the first qualified downline generation creating a Compressed Qualified Generation for payment purposes. This compression process continues through three Qualified Generations, no matter how deep in the genealogy it must search until it has satisfied its payout requirements with qualified generations. The term compression is used to describe the temporary condition that occurs when someone fails to meet their Executive rank maintenance requirements for a particular pay period. DIRECT: An Advocate that you have personally and directly enrolled (see Leg ). DOWNLINE: Those people directly sponsored by an Advocate, plus all the people whose line of sponsorship resulted from and came through that Advocate. Your Downline consists of all Advocates on your Level 1, Level 2, Level 3 and so on, to infinite depth in each Leg. NOTE: The Compression rule may extend your paid levels beyond the first five natural levels of your unilevel structure. ENROLL: To sign an Advocate Application and Agreement form and submit it to Lifebrook for the purpose of becoming an Advocate for the company. ENROLLEE: An enrolling or newly enrolled Advocate. ENROLLER: An authorized Lifebrook Advocate, who introduces an enrollee to the opportunity, explains the program, assists in the enrollment, and provides preliminary training to the enrollee. ENROLLER BONUS: When you enroll a new Advocate, as the qualified Enroller, you will receive a special 6% BV E1 Enroller Bonus on any direct Enrollee s Personal BV, as long as you are personally Active. When your E1 enrolls a new Advocate, you may qualify for an E2 Enroller Bonus of up to 6% BV on that new Advocate s personal BV. NOTE: Enroller Bonuses are paid on the personal BV of direct and indirect Enrollees only and Enroller Check Match Bonuses are paid on the personal earnings of direct enrollees only. Therefore, these bonuses are not subject to compression (see definition of Compression ). ENROLLER AND SPONS RELATIONSHIPS: Lifebrook tracks two different types of relationships among its Advocates the Enroller relationship and the Sponsor relationship. An Enroller is an existing Advocate of any rank that first explains Lifebrook business opportunity to a potential new Advocate, and subsequently helps them to enroll as an Advocate. Lifebrook s computer thereby recognizes an Enroller relationship between these two Advocates and maintains it accordingly. A Sponsor is an Advocate of any rank who is immediately upline in the placement Sponsor genealogy from a new or existing Advocate, and is generally responsible for the day-to-day coaching, encouragement, and assistance of the Advocates immediately below them. The Enroller and the Sponsor of a new Advocate are usually the same person, though this is not always the case, if the Enroller is qualified to use Strategic Placement. FRONT LINE: Refers to all Advocates that are personally enrolled (in the Enroller tree) or sponsored (Level 1 in the placement Sponsor tree) by a particular Advocate or by the Company. GENEALOGY: The complete set of relationships (as defined by Enroller tree, Sponsor tree, Levels and Legs ) between an Advocate and his or her upline and downline. It is the family tree of any Advocate. GENEALOGY REPT: A computer display, electronic file or printout of your downline. I.D. #: The identification number used by the Company to identify each Advocate for Compensation Plan purposes. INDIRECT: All Advocates in your Downline that are not directly enrolled by you are Indirect in your Enroller tree, and all Advocates who are not on your Level 1 are indirect to you in your placement Sponsor tree. (See also Downline. ) LEG: Each Advocate on your first level is part of your total Downline and is a separate Leg. You and your entire Sales Organization (Downline) are one Leg to your sponsor. LEVEL: The Advocates you have directly sponsored (whether you enrolled them or they were placed under you as their placement Sponsor by an upline Enroller) are your Level 1 or L1. Their L1s are your L2s, and so on. LEVEL BONUS: Compensation that is based upon fixed Sponsorship genealogical relationships. MAINTENANCE: The standard of performance required for an Advocate to continue being Paid As a particular rank after meeting the initial qualification requirements for that rank. PAID AS : As you advance through specific ranks in the Compensation Plan, you will need to meet certain maintenance requirements every month in order to be Paid As your earned rank for that month. If you do not meet the maintenance requirements for your highest earned rank in a particular month, you will retain your title for that rank, but you will be Paid As the lower rank for which are qualified in that month. If your volume increases in any subsequent month, such that you achieve the maintenance requirements for a higher rank, up to your highest earned rank, you will be Paid As the rank for which you have qualified in that month. Page 5
PERSONAL BONUS VALUE (): The accumulated Bonus Value of all products purchased by you, along with the BV of all products purchased by any retail and Preferred Customers who you have personally enrolled is combined during a given pay period to determine your Personal Bonus Value for that pay period. NOTE: For Active status, rank maintenance, rank advancement and other personal volume requirements, is deemed to include personally enrolled Preferred Customer volume. However, for the purpose of calculating individual bonus payments, Preferred Customer purchases are treated as E1 volume in the Enroller Tree and Level 1 volume the Sponsor Tree. PERSONAL RETAIL SALES (PRS): The total retail value (based on SRP) of all products purchased by you or sold by you to your retail customers, whether individually or online, during a given pay period is your Personal Retail Sales for that pay period. All retail commissions are calculated on the basis of PRS. POLICIES & PROCEDURES: The governing rules of Lifebrook that define the relationship between the company and its Advocates, as well as between Advocates and other Advocates. The Policies & Procedures are specifically incorporated into and made a part of the Advocate Agreement, which each Advocate must sign in order to enroll. PROSPECT: A person to whom you want to offer the Lifebrook business opportunity. RANK: As you meet certain performance criteria (as defined in this Compensation Plan) you will earn progressive title designations known as ranks. As you move to higher ranks, you will become eligible to receive increased levels of bonus participation. You will always carry the title of the highest rank you reach, but are paid at the rank for which you qualify each month. RECRUITING: Inviting others to join your organization to share the same opportunity. RENEWAL: Lifebrook Advocates must renew their Advocate Agreement each year no later than the anniversary date of their joining the Company. If an Advocate does not renew their relationship with Lifebrook, they will be dropped from the computer files and any sponsored or enrolled Advocates will be moved up to the next Active Advocate. If they wish to rejoin Lifebrook at a later date, they may not reclaim their previous rank or Downline, but must join at the standard entry level in the program (see Roll-up ). RETAIL: Sales of Lifebrook products to the end users of those products. Retail sales are the foundation of your Lifebrook business, and the ultimate purpose of all other activities within the business, including enrolling, sponsoring, training, etc. RETAIL COMMISSION: Regardless of your rank, you have the opportunity to sell products and receive a retail commission on all of Lifebrook products. ROLL-UP: The permanent form of Compression. When an Advocate terminates his Advocate Agreement or does not exercise his yearly renewal, his entire Downline rolls upline to his sponsor or the next qualified person and his name is deleted from the Company records (see also Compression ). SALES GANIZATION: Your Sales Organization consists of you and the people that you directly enroll as Advocates, and the people that they enroll as Advocates, and so on. There is no limit to how deep that your Sales Organization can grow (see Downline and Leg ). SPONS: An Advocate who agrees to be responsible for helping and developing another Advocate with her or his business by teaching the new Advocate how to do the business, and by assisting, encouraging and supporting them. Every Advocate must be sponsored, either by another Advocate in good standing with the Company, or by the Company itself. As consideration for being a Sponsor, the Advocate may earn bonuses based on the Personal Bonus Value of Advocates in their Downline, to the extent that the Sponsor is qualified. It is important to note that in some other Direct Selling companies, the term Sponsor may include the act of introducing prospective new Advocates to the opportunity and helping them sign up as new Advocates. In Lifebrook, this is called enrolling. While bonuses may be earned for being a Sponsor of someone who creates product sales, no payment is ever made for the mere act of recruiting or enrolling (See Enroll ), although an Enroller may earn Enroller Relationship Bonuses based on the personal sales of her or his Direct or Indirect Enrollees. SUGGESTED RETAIL PRICE (SRP): The retail price as suggested by the Company. An Advocate may sell the product or service for whatever price he or she chooses. TOTAL GROUP BONUS VALUE (TGBV): The total created by you and all your downline Advocates in the sponsor genealogy calculated to infinite depth. This TGBV is used to determine qualification for earning new rank promotions and rank maintenance in various phases of the Compensation Plan. It is sometimes subject to either the 60% rule or the 40% rule. UPLINE: The term upline refers to that portion of either your Enroller or Sponsor genealogy that precedes you. Your upline consists of the Advocate who is your Enroller and/or Sponsor, and his Enroller and/or Sponsor, and his Enroller and/or Sponsor, etc., all the way to the Company (see also Enroller and Sponsor ). WHOLESALE PRICE: All Lifebrook products have a Suggested Retail Price and may be purchased by Advocates at a Wholesale price that is less than the SRP. This difference between the SRP and the Wholesale price may either be taken as a discount or received as a rebate, depending on how the funds are received by the Company, and is called a commission. 60% RULE/40% RULE: No more than 60% or 40%, as specified, of the TGBV (based on rank) required for qualification or maintenance can be counted from any one leg. The purpose of this rule is to encourage each Advocate to build multiple strong Legs. Any amount greater than the specified percentage of the rank required TGBV that comes from one Leg of an Advocate s downline will not be counted toward the total required for advancement to, or maintenance of, that rank. However, the Advocate will be paid bonuses on all the volume, from whatever source, that the Advocate is entitled to be paid upon for the Paid As rank for which that Advocate is qualified, AFTER application of the 60% rule or the 40%, regardless of whether or not that volume was used to determine the Paid As rank. Page 6