COMMISSION PLAN. Magnolia and Vine - Canada C O N F I D E N T I A L. Prepared for: MAY 1, 2015 VERSION 1.3. where style blooms

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1 where style blooms COMMISSION PLAN Prepared for: Magnolia and Vine - Canada MAY 1, 2015 VERSION 1.3 C O N F I D E N T I A L 2015 Magnolia and Vine - Canada 1

2 WELCOME TO MAGNOLIA AND VINE! This document explains how independent style consultants are compensated through our generous Compensation Plan. Magnolia and Vine provides seven different ways you can be compensated, plus you can earn additional bonuses on product sales during the new Consultant Fast Start Program. SEVEN WAYS TO EARN! 1. Base Personal Commission - Start off earning 20% Base Commission on your Personal Retail Sales and when you have achieved a lifetime Accumulated Personal Sales Volume (APV) of $1800, your base commission jumps to 25%. 2. Product Sales Bonus - Earn an additional 10% Bonus on all the Magnolia and Vine Snaps you sell in a month! This bonus is paid on the retail value of the Snaps. 3. Personal Sales Bonus Go for it! When your Personal Sales Volume reaches $2,400 or more in a month from all Magnolia and Vine products, you ll earn an additional 5% bonus on your total retail sales for the month! 4. Level Bonus Share the Magnolia and Vine opportunity and start earning by helping your recruits sell products! 5. Team Infinity Bonus Get rewarded for your leadership! As a Director and above you earn an additional 3% Team Infinity Bonus for sales in your entire team through infinity. Your Team includes all Style Consultants down to but not including your downline Directors. 6. Director Personal Sales CV Bonus As a Director you will earn an additional 5% bonus on your personal sales! This bonus is paid on your commission sales volume production each month. 7. Generation Bonus Build it big! Start growing your Structure by promoting out other Directors and you ll earn an additional Team bonus on each of those Directors and their team s production. Plus: Fast Start Bonus Program - Any consultant obtaining at least $600 in Personal Sales Volume within one of their first 3 full commission periods will receive 10% of the personal sales volume (PV) in Retail Product Credit that will be paid into their Retail Product Credit account. Month one begins on your enrollment date and includes the following month. i.e., sign your agreement on April 16th and your first Fast Start Month starts then, and runs through May 31st Magnolia and Vine - Canada 2

3 COMPENSATION PLAN - CANADA REQUIREMENTS: REWARDS: Based on PV Based on CV TITLE PERSONAL SALES VOLUME (PV) TEAM SALES VOLUME (TV) TOTAL DOWNLINE SALES VOLUME (TDV) QFL FIRST GEN. DIRECTOR BASE PERSONAL COMM. PRODUCT SALES BONUS PERSONAL SALES BONUS $2400+ DIRECTOR PERSONAL SALES CV BONUS LEVEL 1 LEVEL 2 LEVEL 3 TEAM INFINITY BONUS 1ST GEN. BONUS 2ND GEN. BONUS 3RD GEN. BONUS Jr. Style Up to 20% 10% Consultant $1,799 Style $1,800 25% 10% 5% Consultant Lifetime Star Style $600 $1, % 10% 5% 4% Consultant monthy monthy Senior Style $600 $3, % 10% 5% 4% 3% Consultant monthy monthy Executive Style $600 $6, % 10% 5% 4% 3% 2% Consultant monthy monthy Director $600 $4,800 $12,000 25% 10% 5% 5% 7% 4% 2% 3% 3% monthy monthy monthy Sr. Director $600 $4,800 $36, % 10% 5% 5% 7% 4% 2% 3% 3% 4% monthy monthy monthy Executive $600 $4,800 $96, % 10% 5% 5% 7% 4% 2% 3% 3% 4% 5% monthy monthy monthy Income Disclaimer We estimate that in Canadian plan participants will earn between $400 and $900 in commissions, exclusive of retail profits. PV = Personal Sales Volume CV = Commissionable Sales Volume TV = Team Sales Volume TPV = Total Downline Sales Volume QFL = Qualified Frontline Style Consultant 2015 Magnolia and Vine - Canada 3

4 COMPENSATION PLAN - DEFINITIONS Accumulated Personal Sales Volume (APV). The total of all personal sales volume credited to a Consultant since their inception in the business Active. With the exception of the June and December commission periods, all consultants who have not been terminated are considered Active. A Consultant is considered active if they have at least $360 in Personal Sales Volume (PV) within the current biannual calendar period. As this requirement is based on calendar periods, the Active requirement will only be checked during the June and December commission periods. Consultants are exempt from this Active check if their application date falls within the biannual period being checked. Example: A consultant has an application date of March, During the JUN2015 commission processing, they will be considered Active, regardless of sales volume. During the DEC2015 commission processing, they must have $360 PV accumulated from their application date to be considered Active. Starting with the JUN2016 processing, they must have the $360 PV within the biannual calendar period. A consultant must be Active to receive any bonuses or overrides or to be considered for title promotions unless otherwise specified. Breakaway. When Consultants are promoted to a certain title, they break away from their sponsors. Their team sales volume is no longer included in their sponsor s team sales volume. The title required to breakaway for this plan is Director. In the commission period that a consultant first promotes to the title of Director, Team Sales Volume from that leg will be blocked in that commission period and will not count as Team Sales Volume to their upline. Commissionable Sales Volume (CV). Each item has a Commissionable Sales Volume (CV) assigned to it. Commissionable Sales Volume (CV) is the volume on which upline commissions are paid. All bonuses and overrides are percentages of Commissionable Sales Volume unless otherwise specified in this plan. The Commissionable Volume will be equal to the 65% of the Retail Price unless otherwise disclosed. Commissionable Sales Volume is the basis of payment of the Level Bonus, the Team Infinity Bonus and the Generational Bonus. Host credits and Host discounts do not qualify for CV or Commissions. Compression. When a consultant is canceled and is no longer part of the company, their downline is compressed to their upline filling the gap left by the canceled consultant. For example, Sarah had three legs: Joseph, Emma, and John. Sarah failed to meet the requirements to maintain her status as a consultant and was therefore canceled. Because Sarah was canceled, Joseph, Emma, and John, and their respective downlines, were compressed up to Sarah s upline, Harry. Joseph, Emma, and John are now each considered legs to Harry (i.e. they now reside on his first level). Consultant. A person or entity in the genealogy who gets credit for a sale or can receive commissions. Downline. The Consultants personally sponsored by a Consultant, as well as all the Consultant they sponsor, etc. Example: You sponsor Jim, who sponsors Mary, who sponsors Ted. All these Consultants are in your downline. Enroller. The sponsor at the time the Consultant was entered into the computer. The sponsor may change because of genealogy changes or cancelations, but the enroller will not change. First Generation Director. The first Director in any leg is a first generation Director Magnolia and Vine - Canada 4

5 Generation. The relationship between an upline breakaway and a downline breakaway, not including non-breakaways. The first breakaway in any leg is a first generation breakaway. Generations are based on permanent title. For example, if in a given month a Director who is paid as demoted to the Executive Style Consultant title, she will still count as a breakaway generation and team sales volume from that consultant will not be included as team sales volume for the upline. If the Director actually loses their title (see Permanent Demotions ), they will once again become part of the team of their upline Director. Generation Overrides. Paid-as Director or higher may receive Generation Overrides on the Commissionable Volume (CV) from their downline Generations. For example, a first generation would pay out on the first downline Director or higher title and all the people below them, down to but not including the next Director or higher. Leg. Each personally sponsored Consultant and all his or her downline. A leg begins with a first level consultant and includes all the consultants beneath them. A consultant has as many legs as they have first level consultants. Level. The position a Consultant has in a downline relative to another upline or downline Consultant. Consultants personally sponsored are Level One. Those Consultants sponsored by Level One Consultants are Level Two, relative to the original Consultant. Level bonus are paid on commissionable sales volume (CV). Paid-As Title. Each consultant is paid at the title for which they qualify during the period. The paid-as title may be the same as or lower than the Consultant s actual title. All Consultants are paid based on their paid-as title. Period. The time of a commission period is defined as a calendar month. Personal Sales Volume (PV). The total of all qualification volume (QV) credited to a Consultant in a commission period. The total Qualifying Volume (QV) of a single consultant from the resale of orders placed personally and by their personally sponsored customers (orders placed directly with the company by customers). Host credits and Host discounts do not qualify for PV or Commissions. Personally Enrolled. All downline consultants where the Consultant is listed as the enroller. Typically, these will be first level consultants. Promotions. A consultant promotes to a new Title when they meet all of the qualifications for that title in the period. The promotion is effective the first day of the same period meaning that regardless of what day the promotion was actually qualified for, the new Title is effective for the entire period. For example, if a consultant meets the qualifications for a Star Style Consultant on June 23rd, she promotes to that title for the entire period of June (effective June 1) and will be paid-as a Star Style Consultant for the entire period of June. Qualified Frontline (QFL). In order to be considered a Qualified Front-line Style Consultant, a first-level consultant must a) be Active in the current commission period, b) have a permanent title of Junior Style Consultant or higher, and c) have a minimum of $240 in Personal Sales Volume (PV) within the current commission period. A Director may technically be on the frontline of another Style Consultant, but for the purpose of counting the number of Qualified Frontline Style Consultants in the compensation plan, Directors do not count. Qualifying Volume (QV). Each inventory item has a Qualifying Volume (QV) assigned to it. QV is used for Personal Sales Volume and is equal to the Retail Price (price paid) in this plan Magnolia and Vine - Canada 5

6 Sponsor. The Consultant s immediate upline. Team. All consultants downline to the first Director in any leg. The first Director in each leg, along with their downline, is not considered part of a consultant s Team. Team Sales Volume (TV). The combined commissionable volume (CV) from all sales generated by team members, including the CV from a consultant s personal sales down to but not including promoted Directors. Team Sales Volume also excludes hostess overage amounts. Total Downline Sales Volume (TDV). The combined commissionable volume (CV) from all sales within a consultant s entire downline, including the CV from a consultant s personal sales and including promoted Directors. TDV also excludes hostess overage amounts. Upline. A Consultant s sponsor, along with his or her sponsor, etc Magnolia and Vine - Canada 6

7 TITLE PROMOTION REQUIREMENTS All must be met for promotion to the specified title. JUNIOR STYLE CONSULTANT This is the initial title. STYLE CONSULTANT Accumulate a total of $1,800 in career Personal Sales Volume (APV). A consultant need not be active to be promoted to this title. STAR STYLE CONSULTANT A minimum of $600 in Personal Sales Volume (PV) within the current commission period. A minimum of $1,200 in Total Downline Sales Volume (TDV) within the current commission period. Note that in this plan, both TV and TDV are based on Commissionable Volume (CV) from sales generated within the downline. At least one (1) Qualified Front-line Style Consultant (QFL). In order to be considered a Qualified Front-line Style Consultant, a first-level consultant need not be personally enrolled. However, they must a) be Active in the current commission period, b) have a non- breakaway permanent title of Junior Style Consultant or higher, and c) have a minimum of $240 in Personal Volume (PV) within the current commission period. SENIOR STYLE CONSULTANT A minimum of $600 in Personal Sales Volume (PV) within the current commission period. A minimum of $3,000 in Total Downline Sales Volume (TDV) within the current commission period. At least one additional Qualified Front-line Style Consultants (QFL). EXECUTIVE STYLE CONSULTANT A minimum of $600 in Personal Sales Volume (PV) within the current commission period. A minimum of $6,000 in Total Downline Sales Volume (TDV) within the current commission period. At least one additional Qualified Front-line Style Consultants (QFL) Magnolia and Vine - Canada 7

8 DIRECTOR A minimum of $600 in Personal Sales Volume (PV) within the current commission period. A minimum of $4,800 in Team Sales Volume (TV) within the current commission period. A minimum of $12,000 in Total Downline Sales Volume (TDV) within the current commission period. Maintain Qualified Front-line Style Consultants (QFL). SENIOR DIRECTOR A minimum of $600 in Personal Sales Volume (PV) within the current commission period. A minimum of $4,800 in Team Sales Volume (TV) within the current commission period. A minimum of $36,000 in Total Downline Sales Volume (TDV) within the current commission period. Maintain Qualified Front-line Style Consultants (QFL). At least two (2) First Generation Breakaway within the current commission period. A consultant must be paid-as Director or higher within the current commission period to be considered a First-Generation Breakaway. EXECUTIVE DIRECTOR A minimum of $600 in Personal Sales Volume (PV) within the current commission period. A minimum of $4,800 in Team Sales Volume (TV) within the current commission period. A minimum of $96,000 in Total Downline Sales Volume (TDV) within the current commission period. Maintain Qualified Front-line Style Consultants (QFL). At least two additional Generation Breakaway within the current commission period Magnolia and Vine - Canada 8

9 TITLE MAINTENANCE Title Maintenance A consultant s Title is their recognition title or the highest title they have achieved. A consultant s Career Title does not change unless they are promoted or permanently demoted, unlike a Paid-as Title, which may vary from month to month. For example, Joanna met the requirements to promote to the title of Star Style Consultant in June. Her Career Title is now Star Style Consultant and will remain so until she promotes to a higher title or is permanently demoted. In July, she is paid-as a Star Style Consultant and her Career Title and Paid-as Title are the same. In August, she is paid-as a Junior Style Consultant. Her Career Title remains Star Style Consultant but her Paid-as Title for August is Junior Style Consultant. Paid As Demotions Any consultant not meeting the title maintenance (or grace period) requirements within the current commission period will be paidas demoted to the highest title for which they do meet the maintenance requirements. Permanent Demotions Any consultant of rank Director or higher that has been paid-as demoted to the title of Executive Style Consultant or lower for three consecutive commission periods (current and previous 2 periods) will lose their title and be permanently demoted to the title of Executive Style Consultant. Grace Period When a consultant first obtains the title of Director, their Team Sales Volume is blocked and no longer considered Team Sales Volume for their upline. This could cause the upline Director to no longer have sufficient Team Sales Volume for their title. In order to give the upline Director a chance to rebuild, they are given a Grace Period of three commission periods (the breakout period plus the following 2 commission periods). During this Grace Period, the Director is exempt from all Team Sales Volume requirements. A Director in Grace must still meet all other maintenance requirements, and must still meet all requirements, including Team Sales Volume requirements, in order to promote to a higher title. There is no change to the Grace Period rule if multiple consultants break away. If a Director currently in Grace from a previous break-out has an additional break-out in a later period, the grace period will extend to reflect the new breakout, but no additional changes will take place. Example: During the January commission period, a Director has a consultant break out of their team. They will be under grace period for the January, February, and March commission periods. During the February commission period, they have an additional break-out from their team. Their grace period will be extended to also include April (since a February breakout gives a grace period of February, March, and April) Magnolia and Vine - Canada 9

10 POLICIES AND REGULATIONS REGARDING PASSING BY, DEMOTIONS, LOSS OF DOWNLINE, REQUALIFICATION Demotions. See Title Maintenance section. Termination All consultants in this plan are required to maintain a minimum of $360 in Personal Sales Volume within each full bi-annual period (checked during the June and December commission periods). If they do not, they will not be considered Active in the current commission period (June or December) and will receive a DEACT commission pay code. This will serve as an indicator that this consultant has not met their minimum requirements and is to be terminated. There are exceptions to this rule as detailed under the Active definition. Magnolia and Vine personnel will be responsible for the actual termination of Consultants. When a consultant has been terminated, Magnolia and Vine personnel will have the option of where to place any downline consultants that belong to the terminated consultant. Passing By and Reassignment There is no requirement in this plan that a consultant maintain the same rank or higher as their downline. Re-qualification If a consultant is demoted, they must once again meet the promotion requirements in order to re-obtain their previous title Magnolia and Vine - Canada 10

11 BONUSES AND OVERRIDES Personal Commission All Consultants, regardless of rank or Active status, are eligible to receive a Personal Commission on the qualifying volume (QV) of all personal commissionable sales within the commission period. The amount of this bonus is 20% for Junior Style Consultants and 25% for all other titles. For personal sales, the bonus will be retained when the sale is placed. For the following sale types, the bonus will be paid during the month-end commission processing: In addition, during the commission period when a consultant first promotes from Junior Style Consultant to Style Consultant or higher, they will receiving a 5% differential to reflect that promotion on the qualifying volume (QV) of all personal commissionable sales within the commission period. Product Sales Bonus All Consultants, regardless of rank or Active status, are eligible to receive a 10% Product Sales Bonus on the qualifying volume (QV) of sales of items under the Snaps commission category on all personal commissionable sales within the commission period. Note: The Product Sales Bonus will not pay on any hostess overage purchases, regardless of commission category. Personal Sales Bonus All Consultants with a minimum of $2,400 PV within the commission period are eligible to receive a personal sales bonus of 5% on the qualifying volume (QV) of all personal sales within the period. Director Personal Wholesale Bonus Active Directors and above will receive an additional 5% Director Personal Sales CV Bonus on the commissionable volume (CV) of personal sales within the commission period. If a Director is paid-as demoted below the title of Director, then the Director Personal Wholesale Bonus will not be paid on their sales Magnolia and Vine - Canada 11

12 Level Overrides Active Star Style Consultants and above are eligible to receive level overrides on the commissionable volume (CV) of sales within up to three levels of downline consultants, according to the following table: If a Consultant is not active or is ineligible to receive the bonus at a given level, the Level Override at that level will not roll up, but will be retained by the company. Consultants need not be within the same team to generate a Level Override. Team Infinity Bonus Active Directors and above are eligible to receive a 3% Team Infinity Bonus on the commissionable volume (CV) of all sales within their team, including personal sales. Note that this is in addition to any level overrides that might be also paid on that same sales volume. If a Director is paid-as demoted below the title of Director, then the Team Infinity Bonus will not be paid on volume from their team, but will be retained by the company. Generation Overrides Active Directors and above are eligible to receive generation overrides on the commissionable volume (CV) of sales within three downline generations, according to the following table: Is a Director is paid-as demoted below the title of Director, or is ineligible to receive the bonus on a specific sale, the generation override will not roll on that sale, but will be retained by the company Magnolia and Vine - Canada 12

13 Fast Start Any consultant obtaining at least $600 PV within one of their first 3 full commission periods (first full period is the month after their application period) will receive 10% of the qualification volume (QV) in Retail Product Credit that will pay to their Retail Product Credit account. Example: A consultant with an application date of January will be eligible to receive the Fast Start bonus during the February, March, and April commission processing. Earning for one period is not contingent on having received the Fast Start bonus for previous periods, so if they have $600 PV in April, they will receive the Fast Start for April, regardless of whether the fast start was earned in February or March. For purposes of the Fast Start (and only for the Fast Start), any volume sales within the enrollment period will be included in the volume for the first full commission period. Example: For the above, volume in January will contribute towards the February Fast Start. If the consultant had $300 PV in January and another $350 PV in February, then the combined total of $300 and $350 within their enrollment and first full period will be sufficient and they will earn the 10% Retail Product Credit on the entire $650 during their February commission processing. Note: If a consultant has $600 or more PV within their enrollment period, the Fast Start on this volume will still not be awarded until their first full commission period. Fast Start Consistency Bonus Anyone qualifying for the Fast Start in each of their first three full commission periods will receive an additional Fast Start Consistency Bonus of $120 in Business Supply Credit, added to their Business Supply Credit account. Fast Start Sharing Bonus Consultants who achieved Fast Start Bonus can earn a Fast Start Sharing Bonus for helping a personally enrolled consultant generate $1800 in Personal Sales Volume under the following criteria: Personally enrolled consultant have an application date within the enroller s Fast Start period (within their application or first three commission periods) and this application date must be in the same month that the enroller earns the Fast Start Bonus. Personally enrolled consultant must have a total of $1,800 PV within their own Fast Start period (first four commission periods). If the enrollee s $1,800 PV is placed after the enrollment month, the Sharing Bonus will be paid to the enroller during the period in which the enrollee actually generates $1,800 PV Magnolia and Vine - Canada 13

14 Example 1: A consultant enrolls in January and achieves $600 PV in February. The consultant also helps a personally enrolled consultant (who enrolled in February) generate $1,800 PV between February and March. The enroller will then receive the Fast Start Sharing Bonus during the April commission processing. Example 2: A consultant enrolls in January and has a new recruit in April. The consultant also earns $600 PV in April. The consultant will have until July to help the new enrollee generate the $1,800 PV needed to trigger the Sharing Bonus. The amount of this bonus is $120 in Retail Product Credit, added to the Fast Start Product Credit. This bonus may be earned multiple times, but only once per personally enrolled consultant a consultant helps meet the above criteria Magnolia and Vine - Canada 14

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