Joseph A. and Sari F. Deihl - Page 5

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               KareMor was structured as a multilevel network marketing               
          company with hierarchical levels of distributors.  In ascending             
          order from entry to the highest echelon, the levels included:               
          Consultant, Silver, Gold, Opal, Sapphire, Ruby, Emerald, Diamond,           
          and Crown.  Distributors were independent representatives who               
          purchased from KareMor and then resold the VitaMist products.               
          Distributors also had the opportunity to recruit additional                 
          distributors, resulting in a pyramid structure of what were                 
          referred to as “downline” distributors.  Advancement in the                 
          KareMor organization depended upon the volume of product                    
          purchases generated by the distributor and his or her downline              
          associates, as well as upon the width and depth of this downline            
          network.                                                                    
               The compensation earned by a distributor from participation            
          in the KareMor network similarly depended upon the volume of                
          product purchases generated by both the distributor and his or              
          her downline network.  For instance, higher volume distributors             
          received larger discounts on VitaMist product purchases,                    
          providing potentially greater profit margins on resales down                
          through their chains of downline associates and/or to ultimate              
          consumers.  The compensation credited to a distributor could thus           
          generally be characterized as equivalent to a system of                     
          commissions, bonuses, or “overrides”.                                       







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Last modified: May 25, 2011