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LYONESS COMPENSATION PLAN DESCRIPTION AND DEFINITION JULY 8, 2012LYONESS LOYALTY PROGRAM:The Lyoness Loyalty program (“the program”) is based upon Lyoness’ relationships with Loyalty Merchants (SME/Chain store companies), whichin turn offer a benefit to LYONESS Member(s), hereinafter referred to as “Member(s)” and Lyoness Independent Business Representative(s),hereinafter referred to as an “IBR(s)” which may include individuals or business entities. Part of this benefit is reimbursed directly to the Memberand the IBR after a purchase, and part of it is reimbursed over time. Cashback and Friendship Bonuses are also paid out directly to Member(s)and IBR(s) after purchases are made within the Lyoness Loyalty Merchant network, whether they are offline or online, and the remainingLyoness Loyalty program benefits are paid out over time in various ways.The portion(s) of the benefits not paid out directly to Members and IBR(s) are called a “Loyalty Benefit” and they accumulate in what is knownas a “Loyalty Account” as purchases are being made. Making reference to Accounting Category 1, when a Member’s or IBR’s “Loyalty Account”accumulates seventy five dollars, a $75.00 “Accounting Unit” is created and booked (placed) into your Lyoness Accounting Program. TheMember’s or the IBR’s Accounting Program begins with that placement of that first Accounting Unit. Note: A Member’s or IBR’s initial AccountingUnit is booked into the program by his/her Referrer, who is the person who introduced the Member or IBR to Lyoness. From there, the Memberor IBR books its own Accounting Units according to the booking rules as described herein. There are five (5) Accounting Categories, (AC)within the Lyoness Accounting Program, known as AC-I, AC-II, AC-III, AC-IV, and AC-V. They represent five (5) Accounting Programs operatingsimultaneously in the Member’s and IBR’s online office.MEMBER AND INDEPENDENT BUSINESS REPRESENTATIVE COMPENSATIONMember(s) are eligible to receive the first four (4) parts of the Compensation Plan which consists of: “Cashback,” “Friendship Bonus,” “LoyaltyCash,” and Loyalty Credit” as described in sections 1 thru 4.An IBR is eligible to receive all ten (10) parts of the Compensation Plan which include commissions.As the Member or IBR starts to introduce others to the Lyoness Shopping Community he or she begins to create a “Lifeline.” Those personallyintroduced by the Member(s) or IBR(s) are known as “direct Members” and when a direct Member introduces another Member, they areknown as “indirect Members.” When your direct and indirect Members are shopping and as spending occurs, the Loyalty Benefit builds in theMember’s or IBR’s Loyalty Account leading to the creation of Accounting Units. The same happens for everyone who shops within the LyonessLoyalty Merchants network.DEFINITIONSMemberA Member is somebody who registered first as a 30 Day Trial Member and turned into a regular Member, whereby two (2) options are possible:1) You make a purchase at any store within the Lyoness Loyalty Merchant network with NO minimum requirement.2) You sign up another Trial Member who does a purchase at any store within the Lyoness Loyalty Merchant network with NO minimum requirement and you both turn into a regular Member.Independent Business RepresentativeYou simply sign up four (4) direct Members that each make a purchase at any store within the Lyoness Loyalty Merchant network with NOminimum purchase requirement. www.lyoness.net
CashbackMembers receive 1 or 2% Cashback on all of their PERSONAL purchases made within the Lyoness Loyalty Merchant network depending on theTotal Member Benefit.Direct MemberWhen a Member or IBR enrolls a new Member in Lyoness, the enrolling Member is a “Direct” of the enroller.Indirect MemberWhen a Member’s Direct enrolls a Direct, the new Member becomes the original Member’s “Indirect.”Example: If John enrolls Robert, Robert is John’s Direct. If Robert enrolls Jane, Jane is Robert’s Direct and John’s Indirect.Friendship Bonus0.5% paid on shopping by your “direct” Members and another 0.5% on shopping by your “indirect” Members.Total BenefitThe Total Benefit is the total amount that Lyoness pays the Members in various ways.Total Benefit = Cashback + Friendship Bonus + Loyalty BenefitLoyalty BenefitLoyalty Benefits are created by making purchases using one of the four Lyoness shopping methods: Cashback Card, Online Shopping, MobileVoucher Flex or Gift Cards (fully or partially paid orders). Loyalty Benefit = Total Benefit – (Cashback + Friendship Bonus)Member BenefitThis is the part of the discount which is credited directly to the Member who made the purchase with a Lyoness Loyalty Merchant.Member Benefit = Cashback + Loyalty Benefit Or Member Benefit = Total Benefit – Friendship BonusAccounting ProgramThe Accounting Program tabulates, tracks, and links a Member’s Accounting Units. The Program calculates Loyalty Cash, Loyalty Credits, LoyaltyCommissions, Loyalty Commission Bonuses, Bonus Units, Category Rebooking, Volume Commission and Volume Bonuses. Each Accounting Unitin the Accounting Program may have no more than two (2) other units linked to it directly.Accounting UnitsAn “Accounting Unit” is simply an accumulation of Loyalty Benefits.Accounting CategoriesThere are five (5) Accounting Categories in the Lyoness Loyalty program (AC-I thru AC-V). Each category requires a different amount of LoyaltyBenefits to accumulate before generating Accounting Units and has different maximum earnings potential on those Accounting Units.Cash AccountEvery Tuesday the money accumulated in the Cash Account will be transferred to the Members bank account if the balance is $10 or more.Loyalty AccountLoyalty Benefits are credited to the Members Loyalty Account. The Member(s) can decide in their online office for which Accounting Categorythe Loyalty Benefits shall be deposited.Purchase AccountEvery time an Accounting Unit is paying out a Loyalty Credit (as described in part 4 of the compensation plan) the money will be transferred tothe Member’s Purchase Account. The Member can order Gift Cards from any of our Lyoness Loyalty Gift Card Merchants or any products fromthe online store and also may use the Mobile Voucher Flex. www.lyoness.net
LYONESS Loyalty Program benefits1. CashbackMembers receive 1 or 2% Cashback on all of their PERSONAL purchases made within the Lyoness Loyalty Merchant network depending onthe Total Member Benefit. For example, if the Total Member Benefit is 4% or more the Cashback shall be 2%. Therefore, if the Total MemberBenefit is less than 4%, the Cashback shall be 1%.Example with 2% Cashback: If a member spends $100 in a store, $2.00 is paid as Cashback into the Member’s cash account. If the Member’scash account has accumulated $10 or more, the money will be automatically deposited via ACH into the Member’s bank account.2. Friendship Bonus0.5% paid on shopping by your “direct” Members and another 0.5% on shopping by your “indirect” Members.Example: If your directs are shopping within the Lyoness Loyalty Merchant network then you shall receive 0.5% of their purchases and if yourindirect members are shopping within the Lyoness Loyalty Merchant network then you shall receive 0.5% of their purchases. The FriendshipBonus is limited to two (2) levels.3. Loyalty CashYour first Accounting Unit when created from shopping occurs when your Loyalty Account accumulates $75, and is booked (placed) in theLyoness Accounting Program. After meeting set thresholds and having 70 Accounting Units in the first Accounting Category (35 above and 35below) following your accounting unit, the Lyoness program pays you Loyalty Cash. There are five (5) Accounting Categories as described below.4. Loyalty CreditAn Accounting Unit can also be created in your Accounting Program when placing a partially paid Gift Card order. This can be achieved bymaking a partial payment (down payment) for a specific order of Loyalty Merchant Gift Card(s) for one of the Lyoness Loyalty Merchants in theamount of the Member Benefit. After having 70 Accounting Units in Accounting Category I (35 above and 35 below) following your accountingunit that was created in this manner, the payment is in the form of Loyalty Credit deposited into your Purchase Account to be spent within theLyoness Loyalty Merchant Network. www.lyoness.net
In Accounting Category I with 70 units 35 above and 35 below $ 675.00 In Accounting Category II with 60 units 30 above and 30 below $ 1,275.00 In Accounting Category III with 50 units 25 above and 25 below $ 2,400.00 In Accounting Category IV with 50 units 25 above and 25 below $ 7,200.00 In Accounting Category V with 50 units 25 above and 25 below $24,000.00Only Independent Business Representatives are eligible to receive the next six (6) parts of the compensation plan:5. Loyalty CommissionTo earn a Loyalty Commission, a Member must be an IBR. Loyalty Commission is paid out to an IBR gradually based on the chart below whichindicates how many Accounting Units must follow an IBR’s particular Accounting Unit. As you enter higher Accounting Categories in theAccounting Program (see chart below) the payouts increase. The prerequisite to earn Loyalty Commissions is that there must be a minimum offour (4) Direct Members who each have at least one (1) Accounting Unit in the Accounting Program. The units within the Accounting Programmay be personally generated units, units generated by Members earlier in the Accounting Program, or units generated by Direct and IndirectMembers in a Member’s lifeline. Above and Below AC-I AC-II AC-III AC-IV AC-V 3/3 $ 12.00 $ 36.00 $ 120.00 $ 360.00 $ 1,200.00 5/5 $ 18.00 $ 54.00 $ 180.00 $ 540.00 $ 1,800.00 10/10 $ 24.00 $ 72.00 $ 240.00 $ 720.00 $ 2,400.00 15/15 $ 36.00 $ 108.00 $ 360.00 $ 1,080.00 $ 3,600.00 20/20 $ 48.00 $ 144.00 $ 480.00 $ 1,440.00 $ 4,800.00 25/25 $ 60.00 $ 180.00 $ 600.00 $ 1,800.00 $ 6,000.006. Loyalty Commission BonusTo earn a Loyalty Commission Bonus, a Member must be an Independent Business Representative, be eligible for Loyalty Commissions, andhave personally enrolled Direct Independent Business Representatives who are eligible for Loyalty Commissions by:• having four (4) personally enrolled Directs who have each personally generated at least one (1) Accounting UnitYou will receive an 18.75% bonus on all Loyalty Commissions that your “Direct” Members earn and 6.25% Loyalty Commission Bonus onall Loyalty Commissions that your “Indirect” Members earn. If any of your direct or indirect Members do not qualify for Loyalty Commission,meaning they do not have at least four (4) directs with each having at least one (1) Accounting Unit, then any Loyalty Commission Bonuses theymight have earned go to the first qualified person in that upline. www.lyoness.net
Example1:Example2:7. Bonus UnitsAs Accounting Units follow above and below any of your Accounting Units, whether they are yours or those of other Members in your lifeline,Bonus Units are created for you by the program. Each Accounting Unit generates four (4) new Bonus Units as follows:a) After 10 units (5 above and 5 below), a Bonus Unit is created for you and booked in the Continental American Accounting Program from top to bottom and left to right.b) After 20 units (10 above and 10 below), a Bonus Unit is created for you and booked in your Personal Accounting Program from top to bottom and left to right.c) After 30 units (15 above and 15 below), a Bonus Unit is created for you and booked in the National Accounting Program from top to bottom and left to right.d) After 40 units (20 above and 20 below), a Bonus Unit is created for you and booked again in the Continental American Accounting Program, from top to bottom and left to right.Bonus Units do not pay Loyalty Cash or Loyalty Credit. They pay Loyalty Commissions and Loyalty Commission Bonuses on Loyalty Commissions.In addition, they are rebooked onto the next Accounting Category and create Bonus Units. www.lyoness.net
8. Category RebookingUpon the payment of either the Loyalty Cash or Loyalty Credit, your Accounting Units will be rebooked as an Accounting Unit within the nexthigher Accounting Category. There, they will be eligible for Loyalty Commission, Bonus Units, and further Category Rebooking. They will not beeligible for further Loyalty Cash nor Loyalty Credit. In Accounting Category I with 70 units 35 above and 35 below Category Rebooking in AC II In Accounting Category II with 60 units 30 above and 30 below Category Rebooking in AC III In Accounting Category III with 50 units 25 above and 25 below Category Rebooking in AC IV In Accounting Category IV with 50 units 25 above and 25 below Category Rebooking in AC VRe-booking is the process of an Accounting Unit being placed in a higher Accounting Category. This event occurs when an Accounting Unitpays out Loyalty Cash or Loyalty Credit.9. Volume CommissionThe Career Level program is a volume based program having eight (8) different Career Levels. Each Career Level requires a minimum amountof new volume per month. In addition, the first month you reach a new Career Level is your qualification month. Then you must repeat thatCareer Level’s requirement the subsequent month to “confirm” that “qualified” Career Level. For Career Level 1 you will get paid the monthyou confirm it, AND FOR THE SUBSEQUENT TWELVE (12) MONTHS. If during those twelve (12) months you reconfirm that Career Level again,it will “prolong” your Career Level Status for an additional twelve (12) months. Volume comes from the IBR’s entire lifeline to an infinite level.For Career Level 2 through 8 you will get paid the month you confirm it, AND FOR THE SUBSEQUENT SIX (6) MONTHS. If during those six (6)months you reconfirm that Career Level (2 through 8) again, it will “prolong” your Career Level Status for an additional six (6) months. Volumecomes from the IBR’s entire lifeline to an infinite level. To qualify for a Career Level, the IBR may use no more than 50% of the required careerpoints needed for that Career Level from any one direct line. This is known as the 50% Rule. The value per Accounting Unit and the careerpoints attributed are as follows: Accounting Category I II III IV V Accounting Units in Dollars (Loyalty Benefit or Member Benefit) $ 75 $ 225 $ 600 $ 1,800 $ 6,000 Career points per Category 1 3 8 24 80 Career Level 1 2 3 4 5 6 7 8 Total Career points 100 200 500 1,200 3,000 8,000 20,000 50,000 $ per Career point 1.875 2.437 2.813 3.187 3.563 3.937 4.313 4.687The payment on your Volume Commission is paid at the difference between your confirmed Career Level and that of your “directs” Career Level.For example, if you are level 3 and are getting paid $2.813 per career point and you have a direct at level 1, you will get paid the difference.i.e.: $2.813 - $1.875 = $0.938 per career point. www.lyoness.net
You can “perfect” a Career Level as well, meaning locking in a Career Level whereby if you don’t meet production requirements you will notdrop down to lower levels. Perfection can only take place for Career Level 4 and above per the chart below. Career Level 1 2 3 4 5 8 7 7 6 6 5 Results in level of perfection 8 7 6 6 5 5 4 Results in level of perfection 7 6 5 5 4 4 3 Results in level of perfection 6 5 4 4 3 3 2 Results in level of perfection 5 4 3 3 2 2 1 Results in level of perfection 4Minimum requirements for Levels of perfection for Career Levels 4 through 8.10. Volume BonusCareer Levels 2 and above have a Volume Bonus associated with them. Once you have confirmed a Career Level, Lyoness will pay you a VolumeBonus as described in the chart below. Every Month you confirm a Career Level with the required Career Points you will receive the VolumeBonus for that Career Level. Career Level 1 2 3 4 5 6 7 8 Volume Bonus - $ 300 $750 $1,800 $4,500 $12,000 $30,000 $75,000Receipt of Payment of Member Benefits:THE LYONESS LOYALTY PROGRAM WORKS ON PRODUCTION WEEKS ENDING EACH SUNDAY AT 5:00 PM. MONIES ARE PAID OUT THE SECONDTUESDAY FOLLOWING THE END OF THE PRODUCTION WEEK.NOTE, THE VOLUME COMMISSION AND VOLUME BONUS ARE MONTHLY CALCULATIONS MADE AT THE END OF THE LAST PRODUCTION WEEKFOR THAT MONTH PER THE SCHEDULE POSTED IN YOUR ONLINE OFFICE. PAYMENTS ARE MADE THE SECOND TUESDAY THEREAFTER. www.lyoness.net